Medibank Private Ltd. · ASX:MPL
Medibank Private — Investor Presentation (February 2024)
36 slides from Medibank Private's investor presentation, Feb 22, 2024
Slide 1: Half year results
Half 2024 year results Investor presentation 22 February 2024
Slide 2: Important notice
Important notice General & Summary Information The information contained in this presentation is general information about Medibank Private Limited You are therefore cautioned not to place undue reliance on any forward-looking statements (“MPL”) and / or its related bodies corporate (together, “MPL
Slide 3: Acknowledgment of Country
Acknowledgment of Country Medibank acknowledges Aboriginal and Torres Strait Islander peoples as the First Peoples of this nation. We proudly recognise Elders past, present and emerging as the Traditional Owners and Custodians of the lands on which we work and live. We’re committed to supporting sel
Slide 4: Highlights
Highlights David Koczkar Chief Executive Officer
Slide 5: Highlights
Highlights Strong business with a constant focus on our customers • Improved Service NPS, with increased value provided to customers • Continued growth across the Health Insurance and Medibank Health segments, with standout growth in our non-resident business Industry drivers support our long-term s
Slide 6: A strong business with a constant focus on our customers
A strong business with a constant focus on our customers Giving back to our customers Supporting affordability Reducing out-of-pockets Value for our $215m $12m+ saved through Premiums customers Keeping premium increases below COVID-19 financial support1 Members' Choice Advantage the level of headlin
Slide 7: Solid result demonstrates our disciplined approach to growth
Solid result demonstrates our disciplined approach to growth Net resident Health Insurance Medibank Health segment Health Insurance policyholder growth operating profit profit management expense ratio1 +12.6k (+0.6%) $317.0m (+4.3%) $26.7m (+8.5%) 7.6% (+50bps) +0.2% $303.8m $317.0m $24.6m $26.7m 7.
Slide 8: Our strategy delivers value for our customers and enables growth
Our strategy delivers value for our customers and enables growth Our 2030 vision to create the best health and wellbeing for Australia 1H24 achievements Deliver leading Initiated local community Empowered our people Advocated health and Proudly supported service trials to deliver through workplace c
Slide 9: Industry drivers support our long-term strategy
Industry drivers support our long-term strategy We remain disciplined in our approach to growth and our investments are enabling positive change Industry drivers Our response Private health insurance industry remains buoyant We remain disciplined in our approach to sustainable growth Industry reside
Slide 10: Medibank's differentiated insurance and health services strategy
Medibank’s differentiated insurance and health services strategy Delivers long-term benefits to our customers and core business Insurance Health and wellbeing, prevention Investing in product and service differentiation to strengthen our core insurance offering • Preventative health Increasing Empow
Slide 11: Our health, wellbeing and prevention strategy
Our health, wellbeing and prevention strategy Benefits our core insurance offering, supports better health and positions us for growth Opportunity to grow in a market • $35b health & wellbeing and prevention industry, with expected growth by 2030 to $57b1 with significant potential • c. 50% of Austr
Slide 12: Created one of Australia's largest multi-disciplinary primary care networks
Created one of Australia’s largest multi-disciplinary primary care networks Myhealth investment unlocks opportunities to drive future growth Primary care is the gateway to health in our community • GPs and other primary care health professionals play a critical role in health • Prevention, proactive
Slide 13: Financial results
Financial results Mark Rogers Group Lead - Chief Financial Officer & Group Strategy
Slide 14: Group financial summary
Group financial summary Underlying EPS up 16.3% to 9.5 cps Six months ended 31 Dec ($m) 1H23 1H24 Change Group operating profit up 4.2% (restated) 1 • Health Insurance resident business remained resilient, with Group revenue from external customers 3,897.1 4,024.0 3.3% continued momentum in non-resi
Slide 15: Resident claims remain below expectations
Resident claims remain below expectations Private rehab referral rates remain subdued Hospital cash claims per policy unit Variance to expected private hospital cash claims ($m/month) 6 months to Nov claims per policy unit vs pre-COVID-19 period1,2 2% below expected claims growth for the 6 months to
Slide 16: Health Insurance result
Health Insurance result Operating profit up 4.3% and operating margin up 10bps to 8.1% Six months ended 31 Dec ($m) 1H23 1H24 Change Revenue up 3.6% to $3,925.3m (restated) • Total policy unit growth of 2.3% Premium revenue1 3,789.5 3,925.3 3.6% • Downgrading improved by 20 basis points despite econ
Slide 17: Health Insurance – resident policyholders
Health Insurance – resident policyholders Industry remains buoyant – ADR increasing hospital lives insured Six months ended 31 Dec ($m) 1H23 1H24 Change Industry growth 3 for the 12 months to December 2023 expected to be similar to FY23 (1.9%) despite Adult Dependent Reform (ADR) impact Policyholder
Slide 18: Health Insurance – resident claims
Health Insurance – resident claims FY24 expected claims growth per policy unit reduced to 2.2% - 2.4% Six months ended 31 Dec ($m) 1H23 1H24 Change Resident gross claims up 2.4% (restated) • Risk equalisation had 20bps benefit to net claims growth this period Claims expense1 (3,129.8) (3,205.9) 2.4%
Slide 19: Health Insurance – portfolio performance
Health Insurance – portfolio performance Strong non-resident performance continues – growth and gross margin benefit Resident Non-resident Total Six months ended 31 Dec ($m) 1H23 1H24 Change 1H23 1H24 Change 1H23 1H24 Change (restated) (restated) Premium revenue 3,698.7 3,799.5 2.7% 90.8 125.8 38.5%
Slide 20: Health Insurance – management expenses
Health Insurance – management expenses Sales commissions and inflation impacting expense growth 1H23 1H24 Change Six months ended 31 Dec ($m) (restated) Premium revenue 3,789.5 3,925.3 3.6% Management expenses (269.6) (298.9) 10.9% - Depreciation and amortisation (20.7) (20.8) 0.5% - Resident sales
Slide 21: Medibank Health result
Medibank Health result Operating profit up 16.1% as business returns to more normal operating conditions Six months ended 31 Dec ($m) 1H23 1H24 Change Operating profit up 16.1% to $27.4m Revenue 139.5 141.4 1.4% • Partly offset by lower contribution from healthcare investments due to initial Gross p
Slide 22: Investment portfolio and investment income
Investment portfolio and investment income Underlying net investment income up $37.2m, includes $21.8m higher RBA cash rate benefit Reported performance2 Underlying performance2 Six months ended 31 Dec ($m) 1H23 1H24 Change 1H23 1H24 Change Net investment income: Growth portfolio income 21.4 16.2 (2
Slide 23: Capital and dividend
Capital and dividend Strong capital position – supports M&A aspirations Strong capital position Proforma1 Capital ($m) 31 Dec 2023 • Presented on AASB17 basis and in line with new APRA capital standards 1 July 2023 • $167m favourable impact on 1 July proforma capital position Total equity 2,243.8 2,
Slide 24: Financial priorities for the remainder of FY24
Financial priorities for the remainder of FY24 Continue revenue growth Mitigate inflationary Deliver on Medibank Maintain operating momentum in PHI pressure on claims Health’s growth potential efficiency • Increase resident policyholder • Investment in hospital contracting • Attractive market fundam
Slide 25: Conclusion
Conclusion
Slide 26: A clear strategy to deliver sustainable growth
A clear strategy to deliver sustainable growth Strong foundations in place to build on our momentum We will always put We will continue to build momentum We are well positioned to grow our customers first into FY25 from strong fundamentals as a health company • Continue to deliver value to our • Bui
Slide 27: FY24 outlook
FY24 outlook We continue to assess claims activity. Any permanent net claims savings due to Customer relief COVID-19 will be given back to customers through additional support in the future Targeted organic and inorganic growth for Medibank Health and Health Insurance remain Growth areas of focus We
Slide 28: Appendix
Appendix
Slide 29: Milestones scorecard and update
Milestones scorecard and update Deliver leading experiences Differentiate our insurance business Expand in health Customer advocacy: Service NPS (average) Resident policyholder market share Medibank Health FY24 FY23 1QFY24 FY26 aspiration 1H24 FY24 - FY26 target 1H24 benchmark1 Organic $27.4m Target
Slide 30: Our strategy – growing as a health company
Our strategy – growing as a health company Deliver leading experiences Differentiate our Expand in health insurance business Create personalised and Deliver more value, choice Focus growth on prevention connected customer experiences and control for customers and integrated care models Empower our p
Slide 31: Our health investments
Our health investments Target Ownership Investments Description Benefits to Medibank markets interest (%) Myhealth Medical Holdings Pty Ltd 90% • Medibank acquired a non-controlling interest in Myhealth Support preventative health and GP-led Medical Group for c. $63m in 2021. Ownership interest proa
Slide 32: Group financial summary – half by half
Group financial summary – half by half Change 1H23 2H23 1H24 1H24 v 1H24 v ($m) (restated) (restated) 1H23 (restated) 2H23 (restated) Group revenue from external customers 3,897.1 3,909.9 4,024.0 3.3% 2.9% Health Insurance operating profit 303.8 347.5 317.0 4.3% (8.8%) Medibank Health segment profit
Slide 33: Health Insurance resident policyholders – half by half
Health Insurance resident policyholders – half by half Change 1H23 2H23 1H24 1H24 v 1H23 1H24 v 2H23 Policyholders1 (thousand): Opening balance 1,950.0 1,951.7 1,960.9 0.6% 0.5% Acquisitions 97.7 107.5 103.2 5.6% (4.0%) Lapses (96.0) (98.3) (99.8) 4.0% 1.5% Closing balance 1,951.7 1,960.9 1,964.3 0.
Slide 34: Investment portfolio
Investment portfolio As at 31 December 2023 Target asset Portfolio Spot balance ($m) Average balance Average balance allocation composition ($m) ($m) 1H24 1H23 Australian equities 6.0% 5.2% 122.3 133.7 141.1 International equities 5.0% 4.1% 96.4 107.6 105.2 Property 7.0% 6.7% 158.5 172.4 184.4 Infra
Slide 35: Glossary
Glossary Term Definition Term Definition 1H Six months ended/ending 31 December of the relevant financial Members' Choice An enhanced network of ancillary providers where customers can enjoy better value on year Advantage eligible extras services. Includes dental and optical providers, physiotherapy
Slide 36: Q&A
Q&A
Medibank Private — Investor Presentation (February 2024) on 6ix