In the media

AfroCentric earnings remain steadfast in the face of challenging economic and healthcare landscapes

15 March 2022

Highlights:

• EBITDA: R535 million
• Group revenue: +10%
• Group operating profit: +4.6%
• Basic earnings: +5.6%
• Headline earnings: +3.4%

Johannesburg, 15 March 2022 – Despite challenging market conditions and a shifting post-vaccine health landscape, the AfroCentric Group, the level-1 majority black-owned and most diversified healthcare group on the JSE, today announced a satisfactory set of interim results for the six months ended 31 December 2021.

Group revenue rose 10% to R4.28 billion. Group profit before tax decreased by 0.2% to R323.8 million (2020: R324.4 million), while profit after tax increased by 1.3% amounting to R233.6 million (2020: R230.7 million). Headline earnings increased by 3.4% to R154.5 million while normalised headline earnings increased by 0.3% to R152.5 million.

The Group said profitability was negatively affected by its participation in the nationwide vaccination programme, which cost the group R25 million. Nevertheless, the Group declared an interim gross dividend of 17 cents per share.

According to AfroCentric Group CEO Ahmed Banderker, the results, although mixed, show that the Group remains resilient, having overcome most macro market conditions and continues to make progress towards its strategic plans for growth and expansion.

AfroCentric’s Services Cluster, which mainly comprises medical scheme administration, posted a 16.6% increase in revenue. This is despite constrained member growth over the period as South African consumers tighten their belts in the tough economic environment.  “Overall, membership is under pressure across most medical schemes. This is indicative of the overall economic pressure being felt by South Africans as our economy remains in a state of recovery and minimal growth,” Banderker said.

The Pharma Cluster performed reasonably well, supported by a diverse mix of entities, despite the headwinds affecting Pharmacy Direct and Activo Health as a result of the decline in member adherence to chronic medication, which cost the Group R22 million “This is a challenge for chronic medication across the globe and COVID-19 fatigue could possibly be a driver of this trend,” Banderker said. The cluster achieved a 4.2% increase in revenue and 9.7% growth in operating profit. This was driven largely by efficiencies, cost controls and a well-coordinated and managed pharmacy network in Scriptpharm.

During the period under review, AfroCentric pharmaceuticals subsidiary Activo Health concluded its acquisition of Forrester Pharma, effective from 1 August 2021. This deal, the Group said, allows Activo to expand its product offering to the pharmaceutical market. AfroCentric Health also concluded the acquisition of the Sanlam Gap cover business effective 1 September 2021, which it is expected will provide supplementary services to the Group’s medical scheme offerings.

Banderker said the results were indicative of the current economic environment, which has been marked by job losses, higher fuel prices, and increasing food prices. This, he said, meant that consumers where increasingly reducing spend where they could, including on healthcare and spend on items such as complementary medicines, including vitamin supplements. He said, however, that AfroCentric remained poised to take advantage of opportunities to broaden its interests in the healthcare industry.

“It remains our strategic objective to deliver quality and affordable healthcare to both private and public healthcare sectors in a bid to transform the future of this nation for the good of all South Africans,” Banderker concluded.