AfroCentric not losing sleep over NHI
In its financial year to end-June, the investment holding company concluded four acquisitions
At a time when the National Health Insurance Bill has had a negative affect on SA health companies, AfroCentric group CEO Ahmed Banderker says “it’s not something we’re losing sleep about”.
The bill, tabled in parliament in August, paves the way for the establishment of a central National Health Insurance (NHI) fund that will purchase services on behalf of the entire population. Medical schemes will ultimately be limited to offering cover for benefits not provided by the fund. The bill makes no provision for scheme administrators.
Shares in the country’s biggest medical aid administrators took a knock as details of the bill drove uncertainty in the market about the future of private health care.
However, AfroCentric, the health administration and health management services company, is instead worried about the uncertainty created by the bill in its current form, together with the unfavourable quality and management of public health as it stands, Banderker said on Sunday.
Public-private-partnerships would best serve the country in creating a more affordable health-care system, he said.
AfroCentric’s brands include medical aid company Medscheme and Pharmacy Direct, a courier pharmacy that delivers prescribed chronic medication to patients.
AfroCentric, which also operates in Kenya and Namibia, said on Friday that its headline earnings increased 1.6% to R265.2m in the year to end-June.
The company declared a final dividend of 17c in the period, in addition to a half-year dividend of 17c per ordinary share.
Its total revenue jumped 25.7% to R5.2bn and its health-care retail operating profit grew 90.6% to R129.2m.
“Their retail segment is doing particularly well at first look, but they made acquisitions to grow this number and it was funded with debt, which will increase finance costs,” said Gryphon Asset Management money manager Casparus Treurnicht. “I would like to see organic numbers from AfroCentric, which we do not have.”
During the financial year, AfroCentric concluded the acquisitions of Sanlam Health, iThrive Business Solutions Group, a 74% interest in Activo Health and an additional 25% stake in AFA Botswana.
Banderker said the company was done with acquisitions for now, but if a good deal comes along it may be considered if it complements the existing product and service offering.
AfroCentric’s profit before tax fell 1.8% to R528.5m, while its operating profit excluding lease reversals increased 8.8% to R677.7m.
Excluding the work done for the Government Employees Medical Scheme, Banderker said AfroCentric has a market share of 19.2%. In the next three years, he would like to see his company having “closer to 25% of the market”.
With about 8.5-million medically insured people in SA, he said there is an opportunity to insure another 5-million to 6-million who are economically active but unable to afford health-care cover. Banderker ascribes much of this problem to slow economic growth and high youth unemployment, bemoaning that more young people could be using their services.
AfroCentric’s share price was down 2.94% at R3.30 on Friday.