Discovery Health trading update

Discovery had a trading update yesterday, let us do the Jackie Selebi, I mean a copy and paste job. I should stop that. After being sentenced to 15 years in jail, he was released on medical parole. I have no idea of his medical condition even if the whole process seems like a farce. So, here goes the meaty part of the Discovery trading update: "Shareholders are advised that headline earnings per share will be between 15% and 25% higher than that of the corresponding reporting period of the previous year ("corresponding period"), while earnings per share will be between 10% and 20% higher than the corresponding period."


Over here at Vestact we see healthcare as a theme that one can comfortably invest in over the coming years. As folks in the middle class start to fall into the bracket where they can both afford and view private healthcare as a necessity and not a luxury. In many ways the private healthcare industry in South Africa can be seen as a failing of the state in some regard. I can think of a few other examples, Naspers winning because the SABC has failed to provide proper content to their viewers. MTN and Vodacom over Telkom. And so on. BUT, of course we know we live in a country where the disparities between the haves and have nots are huge. So, not everyone can afford luxuries such as private healthcare, but it becomes a necessity when you get the chance of formal employment. Check what I mean, hacked from the annual report:

Discovery has over 2.6 million lives covered by their health management scheme. Around 312 thousand people contribute monthly payments as individuals, that is interesting, those must be self employed professionals. I would think. They are pretty revolutionary in terms of their approach to technology, the HealthID iPad app is taking off. Only 5 percent of doctors use it, according to the annual report. The company is innovative. Very innovative. Unfortunately consent has only been given by 44 thousand odd folks so far, I am one of four in my family to let our family doctor have access to all our purchases and other visits, and so on! The risks are the National Health Insurance plan and the implementation thereof and what it means for Discovery. It is a risk, but I have no doubt that the smarts there are hard at work.


It is an innovative company. They have managed to embark and gain market share in places nobody ever thought that they could. The business is run by an incredibly brilliant South African mind in the form of Adrian Gore. Those who know him say that he is humble and brilliant at the same time. The company has learnt lessons from failures before, the obvious one is the USA, but fear not, they went back, stronger than before. I like the fact that they are tackling big territories and staying away from what are heavily subsidized by the state territories. More when the results come, but we are adding this one at the fringes for clients who want more healthcare exposure. Results are due a week today.