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The Negative Outlook on Netcare Limited’s (“Netcare” or “the group”) ratings reflect the significant adverse impact that COVID-19 continues to exert on its earnings and gearing profile. Nevertheless, the ratings remain reflective of the group’s strong domestic market position and liquidity profile. Netcare’s financial profile was substantially negatively impacted by the COVID-19 pandemic, as almost all elective procedures were brought to a halt during 2H FY20.
The Negative outlook reflects Netcare’s weakened financial profile as a result of the decrease in treatment volumes because of the COVID-19 pandemic. As GCR expects the pandemic to remain disruptive through FY21, earnings pressure is likely to persist, which could further weaken credit protection metrics. The rating outlook could return to stable post the COVID-19 disruptions if there is a meaningful improvement in the operating environment that bolsters earnings towards historical levels and helps strengthen credit protection metrics.