Healthcare

Mediclinic’s contribution to Remgro’s headline earnings, which includes the contribution of Manta Bidco Limited (Manta Bidco), amounted to R1 515 million (2023: R1 691 million), representing a decrease of 10.4%. As a result of the Mediclinic acquisition, Remgro’s indirect interest in Mediclinic increased from 44.6% to 50.0% (or by 5.4%) during June 2023. However, as Mediclinic has a March year-end, Remgro accounted for its results for the two months ended 31 May 2023 at 44.6% and for the ten months to 31 March 2024 at 50.0%. Mediclinic’s contribution includes transaction costs of R165 million (2023: R612 million) relating to the Mediclinic acquisition. Excluding these transaction costs, Mediclinic’s contribution to headline earnings decreased from R2 303 million to R1 678 million (or 27.1%).

Mediclinic (excluding Manta Bidco) reports adjusted earnings, which removes volatility associated with certain types of significant income and charges, to assess financial and operational performance and as a method to provide investors and analysts with complementary information to better understand its financial performance. These adjustments included the portion of the above-mentioned transaction costs incurred by Mediclinic. The year under review also included significant amounts relating to an increase of a redemption liability (re Hirslanden La Colline Grangettes) and an accelerated depreciation charge (re Klinik Aarau). The comparative year included amounts relating to a decrease of the redemption liability, an accelerated depreciation charge (re Klinik St. Anna) and a positive Swiss cantonal tax rate change. In US dollar terms, Mediclinic’s (excluding Manta Bidco) reported adjusted earnings remained flat at $230 million (31 March 2023: $229 million). Remgro’s portion of Mediclinic’s adjusted earnings increased by 22.3% to R2 137 million (2023: R1 748 million), reflecting a weakened average SA rand exchange rate against the US dollar and Remgro’s increased interest in Mediclinic.

Mediclinic’s results for the year ended 31 March 2024 were impacted by a weak performance in Switzerland, partially offset by a strong showing in the Middle East. Mediclinic revenue was up 5% at $4 592 million (2023: $4 356 million) and up 5% in constant currency terms. This result was driven by a 0.9% growth in inpatient admissions and a 1.6% growth in day-case admissions, partly offset by lower average revenue per case due to mix changes and ongoing tariff pressures.

Adjusted EBITDA was down 2% at $673 million (2023: $685 million) and down 2% in constant currency terms. Mediclinic’s adjusted EBITDA margin reduced to 14.7% (2023: 15.8%), reflecting above-inflationary increases in the cost base, particularly employee and contractor costs and consumables and supplies.

Mediclinic delivered cash conversion of 92% (2023: 102%), within the targeted 90-100% conversion rate.

During 2018, Mediclinic acquired 60% of Clinique des Grangettes. As part of the acquisition, Clinique des Grangettes and Clinique La Colline were combined. Mediclinic also entered into a written put/call option agreement over the remaining 40% interest of the entity. During the year under review, the minority shareholder exercised his put option and, consequently, Mediclinic acquired 30% of the combined company for an amount of $131 million. At 31 March 2024 there is a put/call option for the remaining 10%, which is exercisable not earlier than 31 March 2026.

Switzerland’s revenue increased by 0.3% to CHF1 905 million (2023: CHF1 900 million), with inpatient admissions up 0.8% compared to the prior year. The general insurance mix increased to 52.1% (2023: 51.7%). The average length of stay decreased by 4.7%, resulting in an occupancy rate of 58.1% (2023: 61.1%). Outpatient and day-case revenue were up 2% to CHF408 million (2023: CHF399 million), contributing 21% (2023: 21%) to total revenue during the year. Employee benefits and contractor costs were impacted by inflation-linked increases in salaries and ongoing spending on contracting and overtime costs. This, together with an increase in consumables and supplies driven by input costs, resulted in a 9% decrease in adjusted EBITDA to CHF255 million (2023: CHF280 million). The adjusted EBITDA margin was 13.4% (2023: 14.7%). Cash conversion of 82% (2023: 105%) reflects lower collections during the year.

Southern Africa’s revenue increased by 7% to R20 786 million (2023: R19 506 million). In comparison with the prior year, paid patient days (PPDs) increased by 0.5%, with day-case growth exceeding inpatient admissions. Occupancy decreased slightly to an average of 67.4% (2023: 67.7%) owing to new capacity generated for future growth. Average revenue per bed day was up 5.7% compared to the prior year which was below the average annual tariff increase largely due to the effect of network formations. The average length of stay was up 0.3%. Adjusted EBITDA was flat at R3 784 million (2023: R3 775 million), resulting in an adjusted EBITDA margin of 18.2% (2023: 19.4%), as revenue growth was more than offset by higher employee benefit and contract costs and an increased spend on ICT (information and communication technology). Cash conversion of 93% (2023: 103%) reflects slower collections in trade receivables.

The Middle East revenue for the year increased by 10% to AED4 892 million (2023: AED4459 million), driven by strong growth in client activity. Inpatient admissions and day cases were up 9% and 15%, respectively. Outpatient cases were up 4%. The volume increase was partly offset by a decrease in the average revenue per case driven by mix changes. Adjusted EBITDA increased by 11% to AED714 million (2023: AED 641 million), driven by the strong revenue performance which was partly offset by an increase in consumables and supplies due to specialty mix. The adjusted EBITDA margin increased to 14.6% (2023: 14.4%). The division’s cash conversion was 107% (2023: 99%).