The Motley Fool

Medibank share price higher after announcing $458.7 million profit and special dividend

The Medibank Private Ltd (ASX: MPL) share price has been amongst the best performers on the ASX 200 index on Thursday following the release of its full year results.

In afternoon trade the private health insurer’s shares are up 3.5% to $3.50.

How did Medibank perform in FY 2019?

In FY 2019 the company posted a 1.9% increase in group operating profit to $528.5 million and a 3.1% lift in group net profit after tax to $458.7 million.

This was driven by a 2.3% increase in premium revenue, the addition of 15,100 net resident policyholders, and a small reduction in its expense ratio to 8.7%.

This positive form allowed the Medibank board to declare a fully franked final 7.4 cents per share dividend and a 2.5 cents per share fully franked special dividend. Management advised that the latter was due to a reduction in its capital range from 12%-14% to 11%-13% of premium revenue.

The company’s chief executive officer, Craig Drummond, was pleased with its performance.

He said: “This is a good quality result, demonstrating that the investment we have made to improve the value and service proposition for our customers is making our business stronger and more sustainable in a challenging market environment. The ongoing strong recovery of the Medibank brand has seen policyholder growth in all four quarters of the financial year for the first time in four years.”

Looking ahead, Mr Drummond believes the company is well-positioned for growth.

He commented: “Looking forward to 2020, the Health Insurance business is positioned to grow, and we are well placed to become a leader in the in-home care market. Our strategy is unchanged and remains driven by the needs of our customers. We continue to pursue opportunities to differentiate and deepen our offer for customers and transform into a broader healthcare company.”

The chief executive officer expects flat overall PHI market volumes in FY 2020 and Medibank brand volumes stabilise by the end of FY 2020 and grow during FY 2021.

Hospital and extras utilisation growth is also expected to remain around current levels for FY 2020, with prostheses expenditure expected to add modestly to claims growth compared to FY 2019.

Elsewhere in the industry, the NIB Holdings Limited (ASX: NHF) share price has edged higher and the Ramsay Health Care Limited (ASX: RHC) share price has dropped 1.5% lower.

NEW! Top 3 Dividend Bets for 2019

With interest rates likely to stay at rock bottom for months (or YEARS) to come, income-minded investors have nowhere to turn... except dividend shares. That’s why The Motley Fool’s top analysts have just prepared a brand-new report, laying out their top 3 dividend bets for 2019.

Hint: These are 3 shares you’ve probably never come across before.

They’re not the banks. Not Woolies or Wesfarmers or any of the “usual suspects.”

We think these 3 shares offer solid growth prospects over the next 12 months. Each of these three companies boasts fully franked yields and could be a great fit for your diversified portfolio. You’ll discover all three names and codes in "The Motley Fool’s Top 3 Dividend Shares for 2019."

Even better, your copy is free when you click the link below. Fair warning: This report is brand new and may not be available forever. Click the link below to be among the first investors to get access to this timely, important new research!

The names of these top 3 dividend bets are all included. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies move – we may be forced to remove this report.

Click here to claim your free copy right now!

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended NIB Holdings Limited and Ramsay Health Care Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

FREE REPORT: Five Cheap and Good Stocks to Buy now…

Our Motley Fool experts have FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.7% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.