Here’s why the Medibank (ASX:MPL) share price is up 12% in the last 3 months

A premium relief policy announced in June has garnered positive sentiment towards the health insurer.

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The Medibank Private Ltd (ASX: MPL) share price has had a stellar run recently.

In the last 3 months, shares in the health insurer have rallied nearly 12%.

Let’s take a look at what’s been fuelling the Medibank share price.

Why is the Medibank share price booming?

There have been several catalysts that have helped propel the Medibank share price higher since June.

Working back, the initial push came from the health insurer’s premium relief payments policy.

On 29 June, the company announced that it will return approximately $105 million to customers impacted by the COVID-19 pandemic through premium relief payments.

Medibank noted that the premium relief program would cover approximately 2 million accounts.

Positive outlook notes from various brokers and funds also help improve sentiment towards the health insurer.

The Medibank share price received an additional boost in late August after releasing its full-year report.

How did Medibank perform in FY21?

Medibank released a promising full-year report for FY21, fuelled by consumers prioritising their health and wellbeing.

The company’s report was headlined by a 40% increase in net profit after tax (NPAT) of $441 million.

Other highlights from Medibank’s full-year report included:

  • Revenue increase of 1.99% on the prior corresponding period (pcp) to $6.9 billion
  • 4,900% increase in net investment income of $120 million
  • Earnings per share (EPS) of 16 cents – up 39.8% on the pcp
  • A full-year dividend payout of 12.7 cents per share

Medibank is forecasting a 2.4% growth in underlying average net claims in FY22.

The company also has a $15 million target for productivity savings and is targeting a heavier focus on inorganic growth for FY22.

Snapshot of the Medibank share price

In addition to a solid past 3 months, shares in Medibank have also had a stellar year thus far.

Since the start of 2021, shares in the health insurer have soared more than 17% higher.

By comparison, the broader S&P/ASX200 Index (ASX: XJO) has only managed to climb 11% higher for the year.

The Medibank share price closed yesterday’s session slightly higher at $3.55.

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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.

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