Medibank Private Limited (ASX:MPL) released its first full year results since its IPO late last year. Results came in above Prospectus forecasts as the company profits from its booming Health Insurance Business.
The company reported an underlying Net Profit after Tax of $291 million, 13 per cent above Prospectus forecasts and up 12.9 per cent on FY14. The growth was predominantly due to improved operating profit from the Health Insurance Business. The company’s inaugural fully franked dividend of 5.3 cents came in ahead of Prospectus forecasts.
The Health Insurance business produced a record $5.1 billion paid in member benefits, a 33.8 per cent increase in operating profit, which reflects the focus on improved claims management processes and management expense improvements. Premium revenue growth came in lower than prospectus forecasts at 5.1 per cent, mainly due to cover reductions and changes to sales mix. Gross margins improved to 14.2 per cent and management expense ratio dropped to 8.6 per cent. Importantly investment income came in at $93.8 million, ahead of Prospectus forecast.
Managing Director, George Savvides commented, “We are pleased to report our first annual result as a listed company, delivering ahead of our prospectus earnings and dividends forecasts. While there have been changes associated with our transition to being a publically listed company, our purpose of delivering high quality, affordable healthcare for our members remains unchanged. This year we paid out a record $5.1 billion in member benefits and supported our members through over 400,000 surgeries, more than 1.2 million admissions to hospital and over 27 million ancillary services, including dental, optical, physio and chiro.”
Going forward the company has set a Premium Revenue growth target above 5.5 per cent for FY16, management expense ratio target of 8.3 per cent in FY16 and below 8.0 per cent in FY17, and Health Insurance operating profit target above $370 million in FY16.
Medibank’s share price performed well post IPO, however entered somewhat of a down trend after half year results in February this year. That was likely due to over excitement surrounding the IPO with investors over-buying the stock. Following this morning’s strong results, the company’s share price has gained 11.5 per cent in the first hour of trading.
Author: Ben Visser
Aug 21, 2015
Ben is a Wise-owl equity analyst focusing on ASX blue-chips stocks. Ben has a Bachelor of Business in Finance majoring in property valuations and management. In his role at Wise-owl Ben conducts in-depth fundamental and technical analysis which helps him to find profitable investment opportunities on the ASX and abroad.