Here's why the Medibank (ASX:MPL) share price is edging higher today

The Medibank Private Ltd (ASX:MPL) share price is edging higher on Friday after announcing an investment in Myhealth…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Medibank Private Ltd (ASX: MPL) share price is edging higher on Friday after the release of an announcement.

At the time of writing, the private health insurance company's shares are up 0.5% to $3.04.

What did Medibank announce?

This morning Medibank announced that is strengthening its focus on preventative health and doctor-led partnerships through the acquisition of a non-controlling 33.4% economic interest in the Myhealth Medical Group.

According to the release, Myhealth is a leading operator of primary care clinics. It was founded in 2007 and delivers more than 2.5 million patient consultations each year.

The release notes that Myhealth is growing very quickly and has tripled its number of clinics over the last five years. As a result, it now has a network of 86 clinics in prime locations across New South Wales, Victoria, and Queensland.

Medibank is acquiring the 33.4% economic interest in Myhealth for a total expected consideration of $63 million. This will be funded entirely from existing cash resources and is expected to complete by 31 March 2021.

Management notes that the transaction is expected to be immediately earnings per share accretive. Myhealth is forecast to deliver operating earnings of approximately $21 million in FY 2021.

Management commentary

Medibank's Chief Executive Officer, Craig Drummond, believes that GPs are the very heart of Australia's health system and expects this investment to support them to enhance the health and quality of life of their patients.

This is turn should help reduce high-cost hospital admissions and alleviate pressure on the health system.

Mr Drummond also notes that this transaction reflects the ongoing transformation that Medibank is undertaking.

He commented: "Medibank's investment in Myhealth also reflects our ongoing transformation into a broader healthcare company and complements our existing partnerships with doctors across the Australian health system."

"We will continue to work within the healthcare system to contribute to a healthier community with a focus on preventative care, which will have a positive impact on avoidable hospitalisation, and contribute to a more sustainable health system that benefits all Australians. The announcement today is a further signal of our commitment to doctor-led and patient-centred partnerships that meet these objectives," he added.

The release stresses that patients will continue to be treated equitably, with no clinical priority given to Medibank or any other private health insurance customer.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Share Gainers

3 ASX All Ords shares up 50%+ in March

These ASX shares have been on fire this month. But why?

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Share Gainers

Why Mesoblast, Patriot Battery Metals, Sigma, and Zip shares are pushing higher

These shares are having a good session on hump day. But why?

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Consumer Staples & Discretionary Shares

If you'd put $20,000 in this ASX retail stock at the start of 2023, you'd have $134,000 now

This online retailer has executed a remarkable turnaround for its investors.

Read more »

Fancy font saying top ten surrounded by gold leaf set against a dark background of glittering stars.
Share Gainers

Here are the top 10 ASX 200 shares today

It was back to earth for ASX shares this Tuesday.

Read more »