Medibank share price charges higher amid profit boost

Medibank said it is continuing to strengthen its cybersecurity environment in the wake of the October data breach.

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Key points

  • The Medibank share price is up 5% in early trade
  • Underlying half-year profits increased by 6.7% to $227 million
  • Medibank declared a fully franked dividend of 6.3 cents per share

The Medibank Private Ltd (ASX: MPL) share price is up 4.9% in early trade. 

Shares in the S&P/ASX 200 Index (ASX: XJO) healthcare stock, Australia's largest health insurer, closed yesterday trading for $3.08. Shares are currently changing hands for $3.23 apiece.

This comes following the release of the company's half-year results for the six months ending 31 December (1H FY23).

Here are the highlights.

Medibank share price takes off on profit boost

  • Revenue of $3.63 billion, up 1.3% from 1H FY22
  • Underlying net profit after tax (NPAT) of $227 million, up 6.7%
  • Earnings per share (EPS) of 8.5 cents, up from 8.0 cents in 1H FY22
  • Fully franked interim dividend of 6.3 cents per share, up from 6.1 cents

What else happened during the half year?

Medibank reported its Health Insurance operating profits increased by 8.7% year on year to $305 million for the six months.

Profits at the company's Medibank Health segment went the other way, falling 4.3% to $25 million.

Gross margins increased by 1.0% to 16.4% for the period.

Medibank's net investment income of $56 million increased by 81%.

Other factors influencing the Medibank share price over the six months include its payouts, with $3.0 billion in total claims paid.

Medibank also updated the market on its response to the October data breach, which saw cybercriminals hack its customers' health data.

The ASX 200 insurer said it's working with Australian authorities and supporting its customers through its Cyber Response Support Program. The company is also launching additional security measures, such as adding further detection and forensics capabilities.

"We recognise the significant impact the cybercrime event has had on our customers," Medibank CEO David Koczkar said. "There is more work to do, and the lessons we have learnt from the cybercrime will continue to shape our response and we will emerge stronger."

What did management say?

Commenting on the results helping lift the Medibank share price today, Koczkar said:

We are a resilient business with great people, a unique offering in health, and a track record of responding to whatever challenge is in front of us. Whether it be COVID, inflation, cost-of-living pressures or the cybercrime event, our strategy has and will continue to put our customers and their needs at the heart of our business.

While we did see some impacts to resident policyholder growth in the second quarter, there are positive signs of recovery. The performance in Medibank Health was steady despite the external environment.

Koczkar noted that Medibank's resident policyholder numbers increased by almost 35,000 over the past 12 months.

What's next?

Looking at what might influence the Medibank share price over the months ahead, the company said it will continue to strengthen its cybersecurity environment to ensure its customers have confidence in the protection of their data.

Koczkar said Medibank has multiple areas for the business to grow.

"We will continue to use our strong balance sheet to invest in opportunities to support our ambitions in areas such as health and wellbeing, primary care, and new care models including additional short stay hospitals," he said.

Medibank share price snapshot

As you can see in the chart below, the Medibank share price has enjoyed a healthy lift over the past weeks and is currently up 9.5% in 2023.

Motley Fool contributor Bernd Struben 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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