The Medibank Private Ltd (ASX: MPL) share price is in focus after reporting its FY23 result.
Medibank is Australia’s largest private health insurer, with its Medibank and ahm brands.
Medibank Private share price
FY23 result
Here are some of the highlights from the report for the 12 months to June 2023:
- Revenue rose 3.2% to $7.35 billion
- Net resident policyholder growth of 0.6% (or 10,900)
- Net non-resident policy unit growth of 39.9% (or 78,400)
- Operating profit growth of 9% to $647.5 million
- Net investment income of $138.6 million
- Cybercrime costs of $46.4 million
- Net profit after tax (NPAT) growth of 29.8% to $511.1 million
- Annual dividend per share up 9% to $0.146
Several months ago, the business suffered a cybercrime event that saw a criminal access Medibank’s customers’ data. The company said this has cost over $46 million in terms of expenditure, and who knows how much in lost revenue from customers that left/didn’t join.
Overall operating expenses only increased by 3.4%, with cost inflation of approximately 4%.
Despite that, it grew its policyholders, operating profit and bottom line. Last year saw investment market volatility, and the 2023 financial year saw a big investment gain for Medibank. Medibank invests the insurance premium until it’s needed to pay a claim.
Medibank said the policyholder growth came from families, younger people and those taking out cover for the first time.
Outlook for the Medibank share price
The health insurer said it’s expecting further policyholder growth in FY24 in what will continue to be a “highly competitive market.” Industry growth is expected to be slower in FY24 compared to FY23.
It said it that it’s aiming to achieve 1.5% to 2% resident policyholder growth in FY24. It also said underlying claims per policy unit growth of 2.6% is expected for FY24 among resident policyholders.
The business is targeting $20 million of productivity savings across FY24 and FY25. However, it’s expecting to report another $30 million to $35 million of cybercrime costs. This is for a further IT security uplift, as well as legal and other costs, but excludes the impacts of any potential regulatory actions or litigation.
Medibank also implied that it’s considering acquisitions to boost growth.
If Medibank can keep growing its policyholders, then I believe it remains a solid potential investment choice because of the dividends and profit growth that gaining more policyholders should bring.
