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JSE-listed Netcare is one of SA’s largest private healthcare services providers. Netcare’s offering includes an extensive network of hospitals and day clinics, with treatments ranging from acute to primary care, dialysis; as well as emergency and mental health services. The group historically operated in both South Africa and the UK (via its stake in BMI Healthcare Ltd (“BMI”), a major independent service provider), although management took the decision to divest from the latter region as at 28 March 2018. This, as the UK business continued to struggle in the face of increased medical funder-led demand management initiatives amongst other pressures. Thus, in its current operational form, Netcare Limited now purely consists of the South African business, but still holds a 56.9% interest in GHG PropCo 2 (a portfolio of 6 properties where BMI is the tenant), which is carried at R203m as held for sale.
Factors that could trigger a rating action may include
Positive change: The ratings could benefit from its ability to gain market share and demonstrate continued revenue and earnings growth, as well as
Negative change: A material weakening in performance, and/or higher gearing could pressure the ratings. Significant industry-wide reimbursement or regulatory challenges could also bode negatively.