Medibank share price on watch amid 'standout customer growth'

How did Medibank perform in FY 2022?

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Key points

  • Medibank share price in focus following the release of the company's FY 2022 results
  • Group revenue grew 3.2% to $7,128.5 million, but on the bottom line, NPAT fell by 10.7% to $393.9 million
  • The Medibank board declared a final dividend of 7.3 cents per share

The Medibank Private Ltd (ASX: MPL) share price is on watch this morning after the company released its full year results for the 2022 financial year.

Shares in the private health insurer finished 0.28% higher to $3.52 yesterday.

Medibank share price on watch following 'another strong result'

Medibank has delivered its FY 2022 results for the 12 months ended 30 June 2022. Here are some of the key takeaways:

  • Group revenue from external customers up 3.2% year over year to $7,128.5 million
  • Segment operating profit up 11.9% to $638.1 million
  • Group net profit after tax (NPAT) down 10.7% to $393.9 million
  • Final dividend up 5.8% to 7.3 cents per share, fully franked.

What happened in FY 2022?

Medibank recorded a solid financial performance against the backdrop of the COVID-19 pandemic.

Net resident policyholders increased by 60,900 or 3.2% to more than 500,000 policyholders. This was led by strong growth in new to industry and younger customers, reflecting continued buoyancy in the market. The Medibank and ahm brands were positioned well and improved by 1.9% and 7.3% respectively.

In addition, Medibank achieved high levels of customer advocacy and its highest-ever brand advocacy results, with the group leading the top health insurers.

The group achieved operating profit growth in both its Health Insurance and Medibank Health businesses. These numbers lifted by 10% to $592.6 million, and by 33.9% to $45.5 million respectively.

Whilst group operating profit was up 12.5% to $594.1 million, this had been offset by a $24.8 million loss in net investment income compared to a $120 million gain in FY21. This dragged down Medibank's bottom line with NPAT decreasing 10.7% to $393.9 million.

What did management say?

Medibank CEO, David Koczkar touched on the results, saying:

Today we have delivered another strong result driven by continued policyholder growth, double-digit growth in Medibank Health and remaining disciplined in how we grow and run our business.

We have been able to deliver these results because of the hard work of everyone at Medibank and their unwavering focus on our customers.

The pandemic has triggered a new focus on health and wellbeing, which we expect to continue. A record number of Australians continue to take out private health insurance, especially younger customers.

What's the outlook for FY 2023?

Looking ahead to the new financial year, Medibank stated it will continue to assess claims activity. It said that any permanent net claims savings due to COVID-19 will be given back to customers through support programs.

In terms of policyholder numbers, the company is striving to reach roughly 2.7% in policyholder growth in FY 2023. This involves targeting areas in priority segments including corporate and regional customers.

Underlying average net claims expense per policy unit is forecast to increase by 2.3% among resident policyholders. Medibank is looking to increase penetration of preventative programs such as Live Better.

And lastly, management is aiming to invest $150 million to $250 million in total over the next three years. This will primarily be in health and wellbeing, primary care, and new care models.

Medibank share price snapshot

The Medibank share price has risen by 5% in 2022 but is flat when looking over the last 12 months.

For context, the S&P/ASX 200 Financials (ASX: XFJ) sector is down 2% for the current calendar year.

Medibank presides a market capitalisation of approximately $9.67 billion.

Motley Fool contributor Aaron Teboneras 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 Scott Phillips.

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