MPL Witnesses A Share Price Uplift On Half Year FY19 Result Release

Australia’s leading private health insurance provider, Medibank Private Ltd (ASX:MPL) has released its half-year results for FY 2019. Following the release of the results, the share price of the company increased by 2.717 percent as on 15 February 2019 (AEST 03:59 PM).

In the half-year period, the company’s Health Insurance premium revenue increased by 2.1% to $3,240.3 million as compared to the previous corresponding period (pcp). Further, Medibank Health revenue increased by 9.8% to $320.6 million as compared to pcp. The increase in the Medibank Health revenue reflects the inclusion of Home Support Services which was acquired in August 2018.

During the period, the Health claims increased by 2.3% to $2.7 billion, reflecting a 1.7% increase in gross claims and a 50% reduction in risk equalization receipts. Further, Management expenses increased by 0.4% to $274.3 million. The Profit from ordinary activities decreased by 15.4% to $207.7 million as compared to pcp.

For the half year period, the company’s Net investment income was down from $59.7 million to $4.1 million, in line with relevant indices. In February 2019, the company’s domestic equities portfolio was transitioned to low carbon investments due to which the company’s entire equity investment portfolio is now low carbon, aligning with the company’s commitment to the health and wellbeing of its customers and the community.

The company has also declared an interim dividend of 5.70 cents per ordinary share for the half-year period with Payment Date of 28 March 2019. As at 31 December 2018, the company had Health Insurance related capital of $905.6 million, representing 14.0% of premium revenue, which is at the top end of the Board’s stated target range of 12.0% to 14.0%.

In November 2018, APRA (Australian Prudential Regulation Authority) announced its intention to harmonise the Health Insurance capital framework with the Life and General Insurance Capital Standards (LAGIC) framework. APRA has indicated that it will start an industry consultation process in March 2019. Subject to this, Medibank will look to provide an update on its capital management settings at the full year 2019 earnings release.

According to the company’s CEO, the half-year result demonstrates that Medibank’s core business is continuing to get stronger. He further told that the company’s focus on improving customer outcomes has driven a strong uplift in customer advocacy and delivered growth in resident policyholders of 6,400 in the first half, compared to a loss of 4,200 in pcp. According to him, it is a clear sign of the health of the company and reflects the success of its dual-brand strategy, critically the ongoing strong recovery of the Medibank brand and improved customer retention.

Now, let us have a quick look at Medibank Private Ltd’s stock performance and the return it has posted over the last few months. MPL’s share traded at $2.840 with a market capitalization of ~$7.6 Billion. The counter opened the day at $2.790, reached a day’s high of $2.980 & touched a day’s low of $2.780 with a daily volume of ~ 26,492,004. Meanwhile, the stock has generated a positive YTD return of 10.40% but posted negative returns of 14.55% in the last six months (as of February 14, 2019). It had a 52-week high price of $3.300 and touched 52 weeks low of $2.290, with an average volume of 7,873,099.

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