The Medibank Private Ltd (ASX: MPL) share price is jumping on Thursday.
In morning trade, the private health insurer's shares are up 7% to a 52-week high of $4.31.
This follows the release of the company's half year results before the market open.
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Medibank share price jump on results day
- Revenue up 6.1% to $4,270.7 million
- Segment operating profit up 12.5% to $386.8 million
- Reported net profit after tax down 0.8% to $340.3 million
- Underlying net profit after tax up 13.8% to $298.7 million
- Fully franked interim dividend up 8.3% to 7.8 cents per share
What happened during the half?
For the six months ended 31 December, Medibank reported a 6.1% increase in revenue to $4,270.7 million. This was driven by a 4.1% increase in Health Insurance premium revenue and a 37% jump in net investment income. The latter reflects particularly strong international equities performance and foreign exchange benefits.
On the bottom line, the company reported a 0.8% decline in net profit after tax to $340.3 million. This reflects a 62% decline in COVID-19 reserve movements.
If you exclude this, Medibank's underlying net profit after tax was up a solid 13.8% to $298.7 million. This allowed the company's board to boost its fully franked interim dividend by 8.3% to 7.8 cents per share.
Also being returned will be a further $160 million to customers via another COVID-19 cash give back. This brings the company's total COVID-19 financial support package to a record $1.62 billion to date.
Commenting on the half, Medibank CEO, David Koczkar, said:
The health insurance market remains strong and we are growing in both our resident and non-resident businesses. Net resident policyholders are up 18,500 for the past 12 months. Our growth over this half was more than double what it was this time last year. We continue to see the benefits of our disciplined approach to growth amid ongoing competitive intensity in the insurance sector.
Despite some recent reductions in visa approvals, the non-resident market remains solid, with our policy units up 38,900 in the last year. This growth of 12.6% was largely driven by the student segment.
Koczkar also spoke about the difficult trading conditions that private hospitals are facing right now and how Medibank is responding. He said:
We know that some private hospitals are facing challenges, driven by rising costs and an over-supply of acute beds as patients choose short stay and day surgery options. We have provided more than $67 million in one-off financial support to private hospitals over the past 2 years, including $5 million this half.
But we must look beyond short-term circuit breakers and invest in the health transition. Alongside taking pressure off the health system, for us this will continue to drive growth in the Medibank Health business and further differentiate the experience we can offer to our customers.
Outlook
No earnings guidance has been provided for FY 2025. However, management has stated that it anticipates moderating industry growth relative to FY 2024 for resident health insurance.
In addition, it now expects resident health insurance claims per policy unit growth of 2.4% to 2.6% for FY 2025. This is lower than its previous expectation of ~2.7%.
The Medibank share price is now up almost 20% over the past 12 months.
