It's been a disheartening day for shareholders of Medibank Private Ltd (ASX: MPL) who have been eagerly waiting for the health insurer's first set of financial results. Its interim report was released this morning prior to the market's open and investors did not like what they saw.
In fact, the stock fell by as much as 7.4%, trending as low as $2.37 after hitting a new all-time high of $2.59 on Thursday. It recovered somewhat by mid-afternoon, although the shares are still sitting more than 4% lower for the day.
While you can read a more detailed review here; below are some of the highlights from the report:
- Pro-forma NPAT (net profit after tax) up 10.8% to $151.2 million
- Full-year earnings guidance of $258.2 million confirmed
- Premium revenue growth of 5.2%
- Operating margin up from 4.5% to 5.9%
- Management Expense Ratio (MER) down from 9.2% to 8.0%
- Confirmation of intention to pay first dividend in September 2015
- Investment income fell from $64.7 million to $43.4 million; targeted allocation to growth assets will increase from 17% to 25%
All in all, it wasn't a bad performance by the health insurer. While some investors will no doubt have been unnerved by management's warning of continued "industry headwinds" in the foreseeable future, others will simply be disappointed that the report wasn't better. After all, at yesterday's price the stock was trading on a valuation of more than 27x last year's earnings, making it one of the more expensive stocks on the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
