The Medibank Private Ltd (ASX: MPL) share price is marching higher today.
Shares in the S&P/ASX 200 Index (ASX: XJO) healthcare stock closed yesterday trading for $3.42. At the time of writing on Thursday, shares are changing hands for $3.48, up 1.8%, having earlier posted gains of more than 6%.
This comes following the release of Medibank's full-year results for the financial year ending 30 June (FY23).
Here are the highlights.
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Medibank share price gains on profit surge
- Revenue from external customers of $7.36 billion, up 3.2% from FY22
- Underlying net profit after tax (NPAT) of $500 million, up 14.8% year on year
- Statutory NPAT of $511 million, up 29.8% from FY22
- Management expenses in health were up 6.8% year on year to $572 million
- Final fully franked dividend of 8.3 cents per share, up from 7.3 cents per share in FY22
What else happened during the year?
On the dividend front, the full-year payout comes to 14.6 cents per share, 9% higher than last year. This equates to an 80.5% payout ratio of underlying NPAT, at the midpoint of management's target payout ratio range of between 75% to 85%.
The Medibank share price could also be getting some tailwinds from the strength of its investment income performance.
Stronger equity markets, higher interest rates and narrowing credit spreads saw Medibank's investment income soar to $138.6 million for the year, compared to a loss of $24.8 million in FY22.
During the year, the company incurred $46.4 million of non-recurring costs associated with the cybercrime, largely related to its incident response and the customer support package that followed.
FY23 saw Medibank pay a total of $6 billion in claims.
Over the 12 months, the company reported 0.6% net resident policyholder growth, while net non-resident policy unit growth increased by 39.9% year on year.
What did management say?
Commenting on the results sending the Medibank share price higher today, CEO David Koczkar said:
Momentum has returned to our business by focusing on our customers and managing the business well. We have worked really hard to regain the trust of our customers and while there is more to do, pleasingly we are growing again…
While consumers are paring back their spending in many areas, health is not one. People are still opting for private health insurance in record numbers…
Our unique dual brand strategy, our products and services and our health innovation set us apart from others and gives us confidence we will continue to grow.
What's next?
Looking at what could impact the Medibank share price in the year ahead, Koczkar said, "We expect further policyholder growth in FY24 in what will continue to be a highly competitive market."
The company is aiming to achieve 1.5% to 2% resident policyholder growth in FY24.
Medibank forecasts underlying claims per policy unit growth of 2.6% for FY24 among its resident policyholders.
And management expects costs of between $30 million to $35 million in FY24 for further IT security upgrades and legal and other costs related to regulatory investigations and litigation. The company noted this does not include any potential findings or outcomes from regulatory investigations or litigation.
Medibank share price snapshot
The Medibank share price has been a strong performer in 2023, up 19%.
