CEO’s review

The work we do carries real consequence. Every decision influences affordability, access and outcomes across a system under pressure. This responsibility shapes how we lead, how we invest and how we respond when conditions are challenging. It has reinforced our commitment to a clinically integrated, digitally enabled healthcare platform capable of delivering consistently and at scale.

Delivering resilient performance in a demanding operating environment

The year unfolded within a challenging context, characterised by margin pressure in parts of the pharmaceutical value chain, contract-cycle developments, and subdued activity across certain healthcare segments. Against this backdrop, AfroCentric delivered a resilient operational performance, supported by disciplined execution and proactive cost management.

Total revenue for the year declined by 10% to R7.3 billion compared to a comparable twelve months period to December 2024, largely due to contract losses, lower private patient script volumes following the discontinuation of certain designated service provider arrangements, margin pressure in selected pharmaceutical products and lower membership in some medical schemes. Management responded by implementing cost-containment measures across the Pharmacy Direct private business, helping stabilise operating margins and protect the Group’s cash-generating capability.

Reported financial results were significantly impacted by once-off, non-cash adjustments relating to the impairment of goodwill. Following the announcement of the loss of the Bonitas Medical Scheme administration and managed care contracts effective 31 May 2026, the Group undertook a comprehensive impairment assessment of goodwill, resulting in impairments of R810.9 million. This non‑cash impairment resulted in a reported loss from continuing operations of R645.9 million. The reported loss was further exacerbated by an R613.3 million loss from discontinued operations related to Activo’s operational performance, which underperformed during the year. This loss was recognised under discontinued operations. It is a once-off event and does not affect the Group’s future operating performance.

While these adjustments materially affected reported earnings for the year, they do not reflect the Group’s underlying operating strength. On a normalised basis, excluding these once-off items, AfroCentric generated profit from continuing operations of R268.4 million, demonstrating the continued resilience of our core healthcare administration and pharmaceutical distribution businesses despite sector-wide pressures.

These adjustments represent an important reset of asset values and position the Group for long-term sustainability. Throughout the year, we maintained a disciplined focus on capital management and liquidity, strengthening the balance sheet, while continuing to invest in the capabilities required to support long-term growth.

Advancing clinically led innovation and value-based care

The shift to outcomes-based, coordinated care continues to accelerate, reinforcing our strategic direction. During the year, we refined our operating model to reduce fragmentation, strengthen end-to-end coordination and accelerate clinically led innovation. Targeted organisational changes were also implemented to address execution gaps, strengthen leadership accountability and enhance risk management.

Please see our strategy and approach discussion and cluster review for more information on this and other value-based care initiatives.

We also strengthened the integration of key capabilities across the Group. Scriptpharm was more closely integrated into Medscheme, enhancing alignment between managed care, pharmacy services and capitation functions.

These, among many other initiatives, support the practical realisation of value-based care through structured care pathways, coordinated provider engagement, and data-driven risk management, enabling us to improve access to appropriate, high-quality care for members across the healthcare continuum.

Building digital and data foundations for scale

Technology investment is not a support function; it is foundational to scaling cost-effective, high-quality healthcare delivery. We completed the relocation of our data centre infrastructure during the year, constituting one of the most complex technology programmes undertaken by the Group to date. The benefits were immediate, including improved system stability, resilience and responsiveness.

This migration provides the platform required to accelerate our data transformation journey and enable more advanced analytics and artificial intelligence capabilities. These capabilities will increasingly support improved risk management, care coordination and operational decision-making.

Beyond infrastructure, we advanced our Group data and platform architecture to enable secure, scalable integration across member, provider and scheme experiences. This supports outcomes-based contracting, risk management and a more connected healthcare journey.

Evolving our platform approach through partnerships and distribution

We continued to strengthen our partnership with Sanlam, recognising the importance of aligned capabilities across administration, managed care, data, technology, and clinical innovation. The integration of AfroCentric Distribution Services into Sanlam’s distribution environment supports a more coordinated approach to taking healthcare solutions to market.

As part of this strategic alignment, AfroCentric concluded transactions to sell AfroCentric Distribution Services Group and Wellworx to Sanlam Life. These transactions support our strategic objectives and are intended to strengthen joint operational efficiency and market reach.

We also progressed Health Rewards by Sanlam for Fedhealth members through the Fedhealth member app, providing a digital platform for health activities, engagement and rewards. The roadmap continues to develop, with an enhanced rewards and loyalty programme milestone reflected for 1 January 2027.

Responding to strategic inflection points with realism and focus

The withdrawal of the Fedhealth and Medshield amalgamation represented an inflection point for the Group, reinforcing the complexity of scheme-level integration in the South African environment. Our strategic intent remains intact, but the pathway to scale has evolved, with increased emphasis on a broader health platform approach designed to enable participation across multiple schemes, employers and individuals.

For more information on the amalgamation discussions and outcome, please see our stakeholder matters in focus.

Managing contract-cycle developments with integrity and service continuity

Contract lifecycles are an inherent feature of our business model, requiring continuous focus on service excellence, client relationships and disciplined execution. During the year, several important contract developments occurred across the portfolio, reflecting the competitive dynamics and ongoing renewal cycles within the medical scheme environment.

As outlined in the Chairman’s review, developments concerning the Bonitas Medical Scheme would have a significant impact on the Group. While the matter remains subject to legal and regulatory processes, management has remained focused on maintaining service continuity for members and clients to minimise disruption, while preparing the organisation for changes in the portfolio.

As we manage this uncertainty, service excellence remains non-negotiable. Throughout the year we continued to fulfil our contractual obligations and support members and clients with professionalism and care. This commitment was reflected in positive Customer Effort Score trends across the Group and in Bonitas taking first place in the Medical Aid category at the AskAfrica Orange Index Awards for a second consecutive year, demonstrating sustained strength in service experience outcomes.

In response to the Bonitas developments, a Board-approved programme was established to reposition the organisation around a leaner and more sustainable operating model. The programme focuses on resetting the cost base, stabilising core operations, simplifying the portfolio, and redesigning the operating model to ensure that our capabilities remain competitive and resilient.

The year also included other contract-cycle developments across the portfolio. Certain designated service provider contracts with Bonitas were not renewed, affecting aspects of the pharmaceutical cluster, including Pharmacy Direct, Activo and Curasana. In Namibia, the NHP managed care contract was also lost through a tender process and is currently transitioning to a new service provider.

At the same time, several important contract renewals and new business opportunities reinforced the strength of our core capabilities. The GEMS managed care, contribution and debt management contracts were successfully renewed, reflecting the scheme’s continued confidence in our delivery capability. Subsequent to year-end, Medscheme was also awarded the full suite of administration and managed care contracts for Sisonke Health Medical Scheme.

While the developments relating to Bonitas have introduced near-term uncertainty, we remain confident in the strength and long-term resilience of our healthcare services platform. Medscheme continues to serve approximately 3.3 million beneficiaries across multiple schemes, supported by deep clinical expertise, advanced managed care capabilities and a long track record of delivering value to clients and members.

Strengthening our people, culture and leadership accountability

The year placed extraordinary demands on our people. Despite uncertainty and pressure, service levels were maintained, major programmes delivered, and members supported with professionalism and care. Recognition as a Top Employer for the third consecutive year reflects the strength of our culture and the dedication of colleagues across the Group.

This resilience is sustained through clarity of purpose, alignment and care for our people. As the Group moves forward, we remain focused on strengthening leadership capability, accountability and engagement, ensuring that the lived experience of our people continues to reflect the values that define AfroCentric.

Looking ahead with clarity and resolve

The year ahead will be defined by disciplined execution. Over the next 18 months, management will focus on implementing the turnaround actions required to stabilise the business while maintaining the service standards that underpin our reputation and client relationships.

This includes delivering the cost-optimisation measures already underway, embedding structural efficiencies across the organisation, and ensuring that these improvements translate into a more sustainable operating model over time. At the same time, we remain focused on managing the transition of affected contracts responsibly and professionally, prioritising continuity of care for members and maintaining the trust of clients and partners.

As the organisation stabilises, we will continue progressing along the strategic pathway that differentiates AfroCentric in the healthcare ecosystem. Our long-term focus remains on clinically led innovation, value-based care models and the continued development of digital and data capabilities that enable better outcomes and more effective risk management.

In an increasingly competitive and outcomes-driven healthcare environment, sustainable growth is earned through measurable improvements in care delivery, affordability and member experience. Our priority is therefore clear: to stabilise the business, strengthen operational foundations and position AfroCentric to compete and succeed on the basis of demonstrable value.

For more detailed strategic outlook information, please refer to our strategy and approach section.

Appreciation

Our ability to execute with discipline is a direct result of the commitment and care our people bring to their work. In a year defined by complexity, pressure and strategic trade-offs, our teams continued to deliver with professionalism and an unwavering focus on achieving our purpose.

I am deeply grateful to our Board for their steadfast governance, thoughtful challenge and strategic guidance as we navigated a demanding operating environment.

Thank you to our clients, scheme members and partners for your trust, collaboration and shared dedication to improving healthcare access, quality and sustainability.

Together, we are shaping a system that better meets today’s needs and is prepared for the challenges and opportunities of tomorrow.

Gerald van Wyk

Group CEO