CEO’s review

❝ These hardships fuel our determination to innovate relentlessly, driving us to refine our offerings and steadfastly pursue our mission of creating a new integrated model that measurably improves access to high-quality, affordable healthcare. ❞

DRIVING ACCESS TO HEALTHCARE WITHIN A DYNAMIC CONTEXT

In a challenging economic environment, where sluggish growth, high unemployment, and volatile market conditions are placing immense pressure on household incomes, access to healthcare has become increasingly difficult, and affordability is a growing concern. Yet, our resolve has only grown stronger. These hardships fuel our determination to innovate relentlessly, driving us to refine our offerings and steadfastly pursue our mission of creating a new integrated model that measurably improves access to high-quality, affordable healthcare.

Amid these economic trials, we are also at a critical juncture in healthcare reform. With the NHI now signed into law, our role in shaping a system that integrates private sector expertise has never been more pivotal. AfroCentric is committed and driven to ensure the success of the NHI framework, fully recognising that the private sector's involvement is essential in realising its transformative potential.

This commitment is exemplified by our involvement in government's CCMDD programme (for more information, see our Chairman's review). Additionally, our growth in primary healthcare services and value-based care initiatives further underscore our commitment to driving positive health outcomes for all, ensuring that accessible, affordable, and quality healthcare becomes a reality.

PERFORMANCE AND STRATEGIC OUTLOOK

We pride ourselves on our unique positioning as the most diversified healthcare group in Southern Africa. Our diverse enterprises afford us a comprehensive approach to seamlessly integrate medical scheme administration, risk management, and technology with pharmaceutical services and corporate health solutions, allowing us to navigate the complexities of the healthcare landscape with agility and foresight.

Within the medical scheme administration, risk management and technology cluster, we focused on ensuring sustainability, innovation, and improved member experience. This has been achieved by developing digital solutions to enhance benefit access and service delivery. The cluster saw a 6.0% growth in revenue, linked to an increase in membership across major open and closed schemes. However, increased clinical servicing, product development, and IT modernisation costs have resulted in marginal operating profit growth.

The pharmaceutical cluster faced several challenges, particularly in the over-the-counter and chronic medicine segments, due to reduced patient adherence, single-exit pricing reductions, and fluctuating consumer spending on preventative medicine. Despite these headwinds, the cluster achieved a 7.3% growth in operating profit, although off a low base following the closure of our hospital surgical consumables business in 2023. To further improve profitability, various targeted interventions were implemented throughout the year, resulting in enhancing efficiency and reducing costs in both our private sector and state contracts. These efforts included projects to re-engage non-adherent patients, digitise several clinical activities to generate savings and optimise courier costs. These action plans have already begun to deliver tangible results, with a reduction in overall costs per script and a corresponding increase in the number of scripts processed. These improvements underscore our commitment to driving efficiency and setting the stage for stronger future performance within the Pharmacy Direct business.

Our acquisition of the Sanlam Gap cover business has bolstered profitability in the corporate solutions cluster, which provides integrated health and wellness solutions to corporate clients. The primary health insurance book has seen a 25.1% increase off a low base, and the gap cover book size has increased by 27.9%. These gains demonstrate the strength and growth potential of our employee-focused offerings.

In our ongoing efforts to position AfroCentric for sustainable growth, we acquired control of AfroCentric Employee Health Solutions and Essential Group from their minority shareholders. These entities, now fully integrated within our corporate solutions cluster, are vital components of our growth strategy. They play a crucial role in our broader objective to capture growth across the healthcare value chain, leveraging our synergies and strengths.

Looking forward, our strategy is clear: we aim to become the leading integrated healthcare solutions provider by 2030. Our focus on vertical integration within the Sanlam ecosystem supports this ambition, leveraging technology to accelerate our digital transformation and embracing value-based care models that prioritise health outcomes. These efforts will not only position us as a leader in the industry but will also ensure that we continue to meet the evolving needs of our stakeholders.

INVESTING IN OUR PEOPLE AND CULTURE

Our commitment to transformation and empowerment is central to building a diverse and inclusive workforce. As the Group evolves, we are reinforcing our value-driven culture and enhancing our organisational design to support sustained growth. Our values – acting with integrity and trust, going the extra mile, cultivating uniqueness, thriving together, and making a positive difference – are the bedrock of our efforts.

This year, AfroCentric was recognised as a Top Employer by the Top Employers Institute, reflecting our dedication to exceptional human capital practices, including diversity and inclusion. Our positive pulse survey results indicate a highly engaged workforce, underscoring our resilience and ability to fulfil our mission.

OUTLOOK

We are confident in the resilience and strength of our core business, which is well-diversified across private and public medical scheme memberships. As we move into the new financial year, our focus will remain on optimising our investments in IT and resources. By enhancing our technological infrastructure, we will drive greater efficiency and effectiveness in our service model, setting the stage for sustainable growth.

Our priority is to capitalise on synergies and deepen the integration of our various businesses and products. By aligning these elements, we will unlock the full potential of being the most diversified healthcare group in Southern Africa, ensuring we continue to deliver value across the healthcare spectrum.

The foundation for a powerful partnership with Sanlam has already been laid, and we are excited about the opportunities ahead. With improved sales capabilities and innovative product enhancements for medical scheme and insurance members, we are well-positioned to seize new opportunities in the market. We look forward to sharing more about these advancements as we continue to lead the way in integrated healthcare solutions.

APPRECIATION

I want to express my deep gratitude to our leadership team and employees for welcoming me into AfroCentric with such warmth and openness. Their dedication to our mission and commitment to excellence have made my transition seamless. I also extend my thanks to the Board for their trust and guidance, which has been invaluable as we navigate this complex environment. It is the collective effort of our entire team that enables us to fulfil our vision of transforming healthcare and, in so doing, improve the quality of life of our stakeholders.

Gerald van Wyk
Group CEO