Medibank Private (MPL) SNAPSHOT
Profile: Medibank Private Limited (MPL) is an ASX listed private health insurer headquartered in Melbourne. Its brands include Medibank and ahm. MPL also distributes travel, life and pet insurance. In addition, the company provides a range of health services, including health management and telehealth services, for government and corporate customers.
History: MPL was established in 1976 by the Australian Government as a not-for-profit private health insurer (as a division of the Health Insurance Commission). In 1990, MPL merged with Health Australia. MPL acquired ahm in 2009. In the same year, Health Services Australia was transferred to MPL from the Australian Government and MPL converted to a for-profit entity. In 2010, MPL acquired McKesson Australia Pacific and Carepoint. MPL was privatised and listed in 2014. In August 2018, MPL acquired Home Support Services for $70m.
Earnings composition: In FY19, the Health Insurance segment generated $543m (96%) of group operating profit. The Medibank Health segment reported $22m (4%) of operating profit.
Most recent result – FY19: Group operating profit increased 1.9% on the prior corresponding period (pcp) to $529m. Underlying Net Profit After Tax (NPAT) increased 2.6% on the pcp to $448m. Health Insurance operating profit increased 1.3% on the pcp to $543m. Health Insurance operating margins decreased slightly to 8.4%, from 8.5% in the pcp, while premium revenue increased 2.3% to $6.5bn. The latter was driven by an increase in annualised average revenue per policy unit of 2.0% to $1,380 and a 0.3% increase in average policy units to 4.7 million. Medibank Health operating profit increased 27% on the pcp to $22m. Statutory NPAT increased 3.1% on the pcp to $459m. The Garrison Health Services contract ceased on 30 June 2019 – in FY19 it contributed $21m to statutory NPAT. A dividend of 7.4 cents was declared, as was a 2.5 cent special dividend, bringing total dividends for the year to 15.6 cents, up from 12.7 cents in the pcp.
Company outlook: MPL expects flat overall private health insurance market volumes. It expects Medibank brand volumes to stabilise by the end of FY20 and grow in FY21. MPL has a target dividend payout ratio of 75-85% and expects the ratio to remain in the upper end of the range.
Important dates: Ex-dividend date is 4 September 2019. Payment date is 26 September 2019. AGM is scheduled for 14 November 2019.
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