South Africa’s largest private hospital group, Netcare, has lowered its full-year patient volume forecasts as medical schemes implement stricter cost-containment measures. However, the company continues to deliver robust financial growth, buoyed by a multi-year digitisation and artificial intelligence strategy that is yielding significant operational savings.
For the six months to the end of March 2026, the group reported a 4.8% increase in revenue to R13.28 billion. Adjusted headline earnings per share climbed by nearly 22% to 71.7 cents, allowing the board to declare an interim dividend of 44 cents per share, representing a 22.2% increase and a total payout of approximately R600 million. Normalised group earnings before interest, taxes, depreciation, and amortisation (EBITDA) grew by 6.6% to R2.5 billion, reflecting an improved margin of 18.8%.
The strong bottom-line performance comes despite headwinds in patient admissions. Total paid-patient days — a key industry metric measuring days spent in hospital beds funded by medical schemes or insurers — grew by just 0.7% during the period. This included a modest 0.4% rise in acute patient days and a stronger 3.4% increase in mental health admissions. Consequently, Netcare downgraded its full-year guidance for paid-patient day growth from a previous target of up to 2.4% to a revised range of 1.1% to 1.6%.
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The volume downgrade highlights the mounting pressures within the South African medical scheme industry. Schemes, including major players like the Government Employees Medical Scheme (GEMS), are grappling with solvency pressures driven by high hospital admission costs. To protect their reserves, schemes are increasingly downgrading members to network-restricted options, altering benefit structures, and enforcing tighter managed healthcare protocols. These interventions have introduced variability in acute hospital volumes across the private sector.
Despite these external pressures, outgoing chief executive Richard Friedland maintained that underlying demand for quality private healthcare remains resilient, driven by an ageing insured population and a rising disease burden. He noted that gradual improvements in certain macroeconomic indicators and the continuation of inflation-linked medical tax credits should provide ongoing relief to scheme members. Friedland is scheduled to step down in December, handing the reins to Melanie da Costa, the current executive director of strategy and health policy.
Netcare’s financial resilience is increasingly underpinned by its CareOn digitisation project. Friedland reported that the benefits of the group’s AI and digitisation initiatives are accelerating, having generated R118 million in savings during the first half of the year alone. Since the 2022 financial year, these digital interventions have produced cumulative gross cash savings and cost avoidance of R705 million, surpassing the total capital and operational investment of R670 million. The strategy is expected to deliver an internal rate of return exceeding 30%.
The group, valued at approximately R23.5 billion on the JSE, operates 49 acute hospitals and 15 mental health facilities, employing over 18,000 staff. During the half-year, Netcare also benefited from lower finance costs and deployed approximately R542 million to repurchase roughly 2.5% of its issued share capital.