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AfroCentric sees group revenue up, but Medscheme membership decline

Renewed contracts with Gems and Polmed, as well as the introduction of telemedicine and the Pharmacy Direct business are ‘working exceptionally well for us’, says group CEO Ahmed Banderker.

SIMON BROWN: I’m chatting now with the group chief executive from AfroCentric, Ahmed Banderker. Ahmed, I appreciate the early morning. [Annual] results to end June saw revenue up 25.8%, Heps normalised up 9.9%. You did see a decline in medical scheme membership, as well as people downgrading their plans. In a sense, I suppose it’s a perfect storm. Unemployment at 34%, which has been increasing, means some people are exiting and it’s just very tough out there for the consumer.

AHMED BANDERKER: …Good morning, Simon. Thanks for having me on your show this morning. You’re absolutely right. But, having said that, it’s actually been better than expected. What I mean by that is last year when we saw [two million more unemployed people], at that point in time we did not see the impact of that in our medical-scheme membership, which tells us that that unemployment was actually at the lower-income segment that did not have medical aid.

We’ve fallen slightly on medical aid membership, and that’s largely as a result of losing one client; it was Sasolmed…. So that accounts for about a 70 000 loss of members. 

And then lastly we have the ‘buy downs’. That also has been not as bad as we anticipated; we had about 10 000 members buying down. To put it into context, that’s out of a universe of 3.9 million.

SIMON BROWN: I get your point. I know from my household budget, medical aid is almost the first item I put in every month. I don’t want to not have it. If I can avoid buying down, I’m going to stick with it. This is one of the top priorities in households across the country.

AHMED BANDERKER: Absolutely. We are seeing that trend as well. 

SIMON BROWN: You picked up some more services from the Government Employees Medical Scheme, Gems; you’ve already got that contract. But you’re able to sort of add more to it, in other words, get more value, more income out of the services being offered. Is that one of those incremental issues that you can manage over time, and to grow revenue streams?

AHMED BANDERKER: Yes. Gems actually has been one of our growing medical schemes in terms of the membership that they’ve had. So firstly that’s good news for us. 

Secondly, the contract that we secured again has been for another five years. But, as you rightly point out, it was managed-care services plus some additional services. That makes it a lot more meaningful for us going forward than the previous five years were. And in addition to that, we were also successful in securing the Polmed ( closed medical scheme for the South African Police Service) contract as well for another few years. 

So that leaves us with quite an exciting outlook over the next few years with certainty of income.

SIMON BROWN: Your virtual care, which is a new product, telemedicine – the pandemic obviously has really brought this to the fore. Telemedicine is something which, pandemic or not, is going to be a large part of the future of healthcare – locally and globally.

AHMED BANDERKER: Simon, I believe passionately about this aspect of telemedicine and virtual care, and I’ll tell you why. Yes, the pandemic has really helped to bring it to the fore, but if we really want to make a remarkable impact on the burden of disease in this country – we’ve got a high burden of disease in this country – we need to figure out ways to make healthcare more accessible.

And this technology of virtual consultations does make [healthcare] more accessible; it takes it to the people so there’s no reason why somebody cannot and should not consult with a doctor or nurse. 

It also helps tremendously to bring down the cost of healthcare because you get the triage of services right: consult first virtually with a nurse, then you can do a virtual consult with a doctor before you physically have to go and see a doctor. It takes away the cost of public transport to get to a clinic. It really is an answer to some of our challenges in the country.

SIMON BROWN: That’s actually more than I thought [this would be]. For example, I live in a community … I go to my clinic, and perhaps the nurse there is able to patch me into an expert, a specialist. But you are actually saying I can do this from my home and make that an even easier and, as you point out, lower-cost process for me.

AHMED BANDERKER: Absolutely. In the apps that we’ve launched and [we’re] literally in the process of (placing) in the app stores, making it available for our members, virtual consultations are built in within that. So [you’re] no further than a click of a button away and you can be connected to a nurse or a doctor.

SIMON BROWN: Last question. Your Pharmacy Direct business had a really, really good year, up 35.2% on the revenue. This is driven, I imagine, in large part by the pandemic. But also you mentioned vitamins, people want their shopping more, again sort of installing that trend. People tried things under the pandemic we hadn’t done before, and now they’ve become a way of life for us.

AHMED BANDERKER: Simon, there are [a few] big things that have taken off … in that business, actually. 

Number one, when the pandemic hit and people were doing home shopping, no longer did you want to go stand in the store to get your chronic medications. People then signed up for our services to get the chronic medication delivered to their home or work. So that’s seen a big increase. 

The Department of Health’s CCMDD (Central Chronic Medicine Dispensing and Distribution) programme, where we deliver the antiretrovirals, has seen at a little bit of growth as well. And then, as you rightly point out, the multivitamin sales literally just shot through the roof because that was all that everybody was stocking up on and buying. And so we’ve seen a big spike in growth there. That was further exacerbated, Simon, (so) that we launched our online store. So along with your chronic meds, you can go a few clicks away on our store and get your over-the-counter medicine or multivitamins delivered with your chronic medication. 

So the model is working exceptionally well for us. We’re doing well in excess of a million scripts a month now that we are delivering to people’s homes.

SIMON BROWN: A million a month. We’ll leave it there. 

Ahmed Banderker, group chief executive of AfroCentric, I appreciate the time this morning, sir.

Listen to Wednesday’s full MoneywebNOW podcast here.

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