RenaCare Dialysis Clinic — Financial Plan
The financial model overview and assumptions, the revenue model and operating cost structure, projected income statement, balance sheet and cash flow, break-even, sensitivity and the funding structure and returns.
Section 9 · Business Plan
Financial Plan
The financial model overview and assumptions, the revenue model and operating cost structure, projected income statement, balance sheet and cash flow, break-even, sensitivity and the funding structure and returns.
9.1 Financial Model Overview
The financial projections presented in this section cover a five-year
forecast horizon from Year 1 (first full year of operations) through
Year 5. All amounts are denominated in South African Rand (ZAR) at
nominal prices. The model was constructed bottom-up from operational
drivers (patient numbers, sessions, tariffs) rather than top-down from
revenue or margin targets. The base case presented here is the central
scenario; bear and bull scenarios are presented in Section 9.10.
9.2 Key Financial Assumptions
| Assumption | Value | Basis / Rationale |
|---|---|---|
| Dialysis stations | 20 | Single flagship clinic footprint |
| Shifts per day | 3 | Standard industry 3-shift operating model |
| Operating days per year | 312 | 6 days/week × 52 weeks (Sundays closed) |
| Theoretical maximum sessions/year | 18,720 | 20 × 3 × 312 |
| Year 1 station utilisation | 50% | Phased ramp during accreditation and referral build-out |
| Year 3 station utilisation | 85% | Steady-state benchmark; consistent with incumbent norms |
| Average tariff, Year 1 (blended) | R 2,650 / session | Weighted average across DSP, open scheme and private pay |
| Annual tariff escalation | 6.5% | Conservative vs 10.3%+ medical aid inflation observed in 2024–25 |
| Consumables cost / session, Year 1 | R 820 | Dialyser, bloodlines, concentrate, saline, heparin |
| EPO & biologics / session, Year 1 | R 120 | Blended across patient population |
| Year 1 staff costs | R 7.35 M | Phased hiring during ramp |
| Annual staff cost escalation | 7.0% | Above CPI to reflect scarcity of dialysis nurses |
| Rent & utilities, Year 1 | R 2.78 M | R 185 / m² × 850 m² + utilities |
| SA corporate tax rate | 27% | Current SARS rate for companies |
| Senior debt interest rate | 12.75% | Prime + 2.5% (DFI / commercial term) |
| Equipment lease rate | 13.5% | Typical equipment finance margin |
| Weighted Average Cost of Capital | 16.5% | Blended cost across debt, equity and leases |
9.3 Revenue Model
Revenue is modelled as the product of sessions delivered and blended
tariff per session. Sessions delivered are driven by station utilisation
ramping from 50% in Year 1 to 92% in Year 5. Blended tariff reflects the
weighted mix of DSP, open-scheme, PPP and private-pay patients, and
escalates at 6.5% annually. Ancillary revenue (nephrology consultations,
PD training) adds approximately 4.5% to core haemodialysis revenue.
| Revenue Driver | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Station utilisation | 50% | 72% | 85% | 90% | 92% |
| Annual sessions delivered | 9,360 | 13,478 | 15,912 | 16,848 | 17,222 |
| Average tariff (ZAR) | 2,650 | 2,822 | 3,006 | 3,201 | 3,410 |
| Haemodialysis revenue (ZAR) | 24,800,000 | 35,300,000 | 44,900,000 | 50,400,000 | 55,500,000 |
| Ancillary revenue (ZAR) | included | 1,600,000 | 1,900,000 | 2,200,000 | 2,400,000 |
| Total revenue (ZAR) | 24,800,000 | 36,900,000 | 46,800,000 | 52,600,000 | 57,900,000 |
9.4 Operating Cost Structure
Operating costs are grouped into consumables (variable with volume),
staff (semi-fixed), facility and utilities (fixed), and overheads
(semi-variable). The following table presents the detailed operating
expense schedule:
| Operating Cost (ZAR ’000s) | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Consumables & dialysate | 8,900 | 13,100 | 15,900 | 16,800 | 17,400 |
| Clinical & admin staff | 7,350 | 7,866 | 8,417 | 9,006 | 9,636 |
| Rent | 1,450 | 1,552 | 1,660 | 1,776 | 1,900 |
| Utilities (power, water, gas) | 950 | 1,025 | 1,107 | 1,196 | 1,292 |
| Insurance | 380 | 410 | 443 | 478 | 516 |
| Maintenance & servicing | 600 | 650 | 700 | 760 | 820 |
| Medical waste & infection control | 450 | 640 | 780 | 825 | 855 |
| Marketing | 520 | 480 | 420 | 380 | 350 |
| Administration & overheads | 780 | 840 | 907 | 980 | 1,058 |
| IT & EMR | 260 | 275 | 292 | 310 | 329 |
| Professional fees (audit, legal) | 180 | 195 | 210 | 230 | 250 |
| Total operating costs | 19,820 | 26,934 | 30,836 | 32,741 | 34,406 |
9.5 Projected Profit & Loss Statement
The five-year projected Profit and Loss Statement is presented below
in summary form. A full year-by-year schedule showing revenue, direct
costs, gross profit, operating expenses, EBITDA, depreciation, EBIT,
interest, profit before tax, tax and profit after tax follows.
| ZAR ’000s | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Revenue | 24,800 | 36,900 | 46,800 | 52,600 | 57,900 |
| Less: Consumables & dialysate | (8,900) | (13,100) | (15,900) | (16,800) | (17,400) |
| Gross profit | 15,900 | 23,800 | 30,900 | 35,800 | 40,500 |
| Gross margin | 64.1% | 64.5% | 66.0% | 68.1% | 69.9% |
| Less: Staff costs | (7,350) | (7,866) | (8,417) | (9,006) | (9,636) |
| Less: Facility & utilities | (2,780) | (2,987) | (3,210) | (3,450) | (3,708) |
| Less: Other operating costs | (790) | (991) | (1,233) | (1,345) | (1,422) |
| Less: Marketing & admin | (1,520) | (1,590) | (1,687) | (1,790) | (1,908) |
| Less: Insurance & maintenance | (980) | (1,060) | (1,143) | (1,238) | (1,336) |
| EBITDA | 2,480 | 9,306 | 15,210 | 18,971 | 22,490 |
| EBITDA margin | 10.0% | 25.2% | 32.5% | 36.1% | 38.8% |
| Less: Depreciation & amortisation | (1,670) | (1,670) | (1,670) | (1,670) | (1,670) |
| EBIT (Operating profit) | 810 | 7,636 | 13,540 | 17,301 | 20,820 |
| Less: Interest expense | (1,553) | (1,318) | (1,046) | (734) | (376) |
| Profit before tax | (743) | 6,318 | 12,494 | 16,567 | 20,444 |
| Less: Tax (27%) | 0 | (1,706) | (3,373) | (4,473) | (5,520) |
| Profit / (loss) after tax | (743) | 4,612 | 9,121 | 12,094 | 14,924 |
Year 1 reports a small accounting loss of R0.74M reflecting
first-year commissioning costs, phased utilisation and full-year
depreciation and interest charges. Tax losses carried forward shield
approximately R740k of taxable profits in Year 2. From Year 2 onward,
the business generates consistent profits with EBITDA margins expanding
from 25.2% to 38.8% as utilisation matures and the fixed-cost base
dilutes over higher volume.
9.6 Projected Balance Sheet
The projected balance sheet demonstrates progressive strengthening of
the capital structure through retained earnings, debt amortisation and
disciplined working capital management. Shareholders’ equity grows from
the R8 million opening contribution to approximately R45.7 million by
the end of Year 5, reflecting cumulative retained earnings net of
accounting loss in Year 1.
| ZAR ’000s | Y0 (Open) | Year 1 | Year 2 | Year 3 | Year 4 |
|---|---|---|---|---|---|
| ASSETS | |||||
| Property, plant & equipment (net) | 15,500 | 13,830 | 12,160 | 10,490 | 8,820 |
| Intangible assets (EMR, licences) | 500 | 375 | 250 | 125 | 0 |
| Total non-current assets | 16,000 | 14,205 | 12,410 | 10,615 | 8,820 |
| Trade & other receivables | 0 | 4,100 | 5,800 | 7,100 | 7,950 |
| Inventory (consumables) | 0 | 1,480 | 1,950 | 2,150 | 2,250 |
| Cash & cash equivalents | 4,000 | 2,890 | 6,520 | 12,620 | 21,320 |
| Total current assets | 4,000 | 8,470 | 14,270 | 21,870 | 31,520 |
| TOTAL ASSETS | 20,000 | 22,675 | 26,680 | 32,485 | 40,340 |
| LIABILITIES & EQUITY | |||||
| Share capital | 8,000 | 8,000 | 8,000 | 8,000 | 8,000 |
| Retained earnings | 0 | (743) | 3,869 | 12,990 | 25,084 |
| Total shareholders’ equity | 8,000 | 7,257 | 11,869 | 20,990 | 33,084 |
| Senior term loan (non-current) | 7,725 | 6,288 | 4,660 | 2,813 | 715 |
| Equipment finance lease | 2,470 | 1,867 | 1,182 | 405 | 0 |
| Deferred tax | 0 | 50 | 280 | 520 | 790 |
| Total non-current liabilities | 10,195 | 8,205 | 6,122 | 3,738 | 1,505 |
| Trade payables | 0 | 2,980 | 3,690 | 4,020 | 4,190 |
| Current portion of long-term debt | 1,805 | 2,041 | 2,312 | 2,625 | 880 |
| Other current liabilities | 0 | 2,192 | 2,687 | 1,112 | 681 |
| Total current liabilities | 1,805 | 7,213 | 8,689 | 7,757 | 5,751 |
| TOTAL LIABILITIES & EQUITY | 20,000 | 22,675 | 26,680 | 32,485 | 40,340 |
| Key ratio | Year 5 | Interpretation |
|---|---|---|
| Debt-to-equity ratio | 0.05x | Nearly debt-free by end of Year 5 |
| Current ratio | 5.2x | Strong short-term liquidity |
| Return on equity | 32.5% | Attractive shareholder returns |
| Return on assets | 18.4% | Efficient asset utilisation |
9.7 Projected Cash Flow Statement
The cash flow statement reconciles accounting profit to actual cash
generation. The business becomes free-cash-flow positive from Year 3
onwards and repays initial investors progressively from Year 4.
Cumulative free cash flow crosses zero approximately 34 months into
commercial operations.
| ZAR ’000s | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| OPERATING ACTIVITIES | |||||
| Profit / (loss) after tax | (743) | 4,612 | 9,121 | 12,094 | 14,924 |
| Add back: Depreciation & amortisation | 1,670 | 1,670 | 1,670 | 1,670 | 1,670 |
| Add back: Interest expense | 1,553 | 1,318 | 1,046 | 734 | 376 |
| Change in working capital | (2,600) | (1,870) | (960) | (480) | (250) |
| Cash from operations | (120) | 5,730 | 10,877 | 14,018 | 16,720 |
| Less: Interest paid | (1,553) | (1,318) | (1,046) | (734) | (376) |
| Less: Tax paid | 0 | (400) | (2,980) | (4,200) | (5,240) |
| Net cash from operating activities | (1,673) | 4,012 | 6,851 | 9,084 | 11,104 |
| INVESTING ACTIVITIES | |||||
| Initial CAPEX (Year 0) | (16,000) | ||||
| Replacement CAPEX | (180) | (250) | (350) | (480) | (620) |
| Net cash from investing activities | (180) | (250) | (350) | (480) | (620) |
| FINANCING ACTIVITIES | |||||
| Loan drawdown (Year 0) | 0 | 0 | 0 | 0 | 0 |
| Loan principal repayments | (1,275) | (1,437) | (1,627) | (1,847) | (2,097) |
| Equipment lease principal | (530) | (603) | (685) | (777) | (880) |
| Equity dividends | 0 | 0 | 0 | (500) | (1,500) |
| Net cash from financing activities | (1,805) | (2,040) | (2,312) | (3,124) | (4,477) |
| Net change in cash | (3,658) | 1,722 | 4,189 | 5,480 | 6,007 |
| Opening cash | 4,000 | 342 | 2,064 | 6,253 | 11,733 |
| Closing cash | 342 | 2,064 | 6,253 | 11,733 | 17,740 |
Year 1 closing cash of R0.34M is tight by design — maximising the use
of equity capital to fund growth rather than idle balance sheet
liquidity. A committed R3 million working-capital facility with the
Company’s commercial banker (drawn but not utilised in the base case)
provides additional headroom. This facility is available at marginal
cost unless drawn, and serves as a cushion against receivables timing
risk.
9.8 Capital Expenditure Detail
| CAPEX Item | Amount (ZAR) | Timing | Useful life |
|---|---|---|---|
| Leasehold improvements (850 m² fit-out) | 5,000,000 | M6 – M10 | 10 years (lease term) |
| Dialysis machines (20 units) | 8,000,000 | M7 – M9 | 8 years |
| Water treatment RO plant (dual-pass) | 2,000,000 | M8 – M10 | 10 years |
| Furniture, chairs, clinical fittings | 1,500,000 | M9 – M11 | 7 years |
| IT systems & EMR licence | 500,000 | M8 – M10 | 4 years |
| Working capital reserve | 3,000,000 | M10 – M12 | n/a |
| Total initial capital requirement | 20,000,000 |
9.9 Funding Structure
The proposed R20 million funding package is constructed to balance
cost of capital, covenant flexibility, and alignment of stakeholder
incentives. The senior term loan is targeted at development finance
institutions (such as the Industrial Development Corporation and the
Public Investment Corporation’s healthcare fund) or commercial banks
with demonstrated healthcare sector appetite (such as Nedbank Business
Banking or Investec). Equipment finance is vendor-sourced under a master
lease facility with indicative terms already negotiated with Fresenius
Medical Care’s South African operation. The equity tranche is sized to
maintain debt-service-coverage ratios above 1.8x in the base case,
providing sufficient cushion against the downside scenarios
modelled.
Debt service coverage
| Covenant / Metric | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA | 2,480 | 9,306 | 15,210 | 18,971 | 22,490 |
| Debt service | 3,358 | 3,358 | 3,358 | 3,358 | 3,358 |
| Debt service coverage ratio | 0.74x | 2.77x | 4.53x | 5.65x | 6.70x |
| Covenant floor | 1.20x | 1.20x | 1.20x | 1.20x | 1.20x |
| Headroom vs covenant | (0.46)x | 1.57x | 3.33x | 4.45x | 5.50x |
Year 1 DSCR is below the typical 1.2x covenant floor — an expected
feature of a greenfield project’s first year of operations. This is
addressed through a 12-month interest-only holiday negotiated as a
condition of drawdown, with principal repayments commencing month 13.
From Year 2 onwards, the business generates significant headroom against
debt-service covenants.
9.10 Scenario Analysis
Three scenarios have been modelled to stress-test the project’s
financial resilience: a Bear case reflecting slower utilisation ramp,
higher consumables inflation and a 10% lower blended tariff; a Base case
(the primary projections presented above); and a Bull case reflecting
faster utilisation, successful inclusion in a PPP programme, and opening
of a second clinic in Year 4.
| Metric (Year 5) | Bear | Base | Bull |
|---|---|---|---|
| Revenue (ZAR) | 43.0 M | 57.9 M | 70.2 M |
| EBITDA margin | 24% | 35% | 42% |
| Project IRR | 12.8% | 22.4% | 31.2% |
| Payback (months) | 52 | 34 | 26 |
| Net present value at 16.5% WACC | (R 1.6 M) | R 14.8 M | R 36.4 M |
9.11 Sensitivity Analysis
The tornado chart ranks the principal drivers of project IRR by
magnitude of impact. The two most sensitive levers are station
utilisation (a 10 percentage-point change in utilisation moves IRR by
±9.2 pp) and dialysis tariff (a 10% change in tariff moves IRR by ±7.5
pp). Management’s operational focus will correspondingly concentrate on
the drivers of these two variables: medical-aid DSP accreditation (which
drives tariff), and referrer engagement (which drives utilisation).
9.12 Investment Returns
| Returns summary Project IRR 22.4% | Equity IRR 28.7% | NPV at 16.5% WACC R14.8M | Payback month 34 | 5-year revenue CAGR 23.6% | 5-year EBITDA CAGR 72.4%. |
At a five-year exit based on 6.0x trailing EBITDA (a conservative
multiple relative to recent transactions in the SA healthcare sector),
enterprise value would be approximately R135 million. Net of residual
debt of R0.7 million, equity value would be approximately R134 million —
representing a cash-on-cash multiple of 16.8x on the R8 million equity
investment, equivalent to an equity IRR of 74.9% at five-year exit.
These figures assume no Phase 2 clinic opens; the opening of a second
clinic in Year 4 (base-case operational scenario) materially accelerates
enterprise value growth.
Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of RenaCare Dialysis Clinic (Pty) Ltd.