Medibank Private Ltd. · ASX:MPL
Medibank Private — FY2024 Earnings Presentation
40 slides from Medibank Private's earnings presentation, Aug 22, 2024
Slide 1: Full year results 2024
Full year results 2024 Investor presentation 22 August 2024
Slide 2: Important notice
Important notice General & Summary Information The information contained in this presentation is general information about Medibank Private Limited (“MPL”) You are therefore cautioned not to place undue reliance on any forward-looking statements 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 Relentless focus on our customers • Maintained our customer centric mindset delivering value, health and experience • Delivered on promise to not profit from COVID-19, committed to returning an additional $305m to customers • Expanded Live Better rewards and no gap network, helping with c
Slide 6: Relentless focus on our customers
Relentless focus on our customers Delivering value, health and experience Giving back to our customers Supporting affordability Reducing out-of-pockets Value $305m Premiums $23m+ customer savings through COVID-19 financial support1 3.31% average premium increase Members’ Choice Advantage3 $1.46b tot
Slide 7: Solid financial result delivering earnings and dividend growth
Solid financial result delivering earnings and dividend growth Discipline will sustain growth and shareholder returns for the long term Net resident Health Insurance Medibank Health Health Insurance policyholder growth operating profit segment profit management expense ratio1 +14.4k (+0.7 ) % $692.3
Slide 8: Significant progress on our strategy
Significant progress on our strategy Delivering greater value and driving growth as a health company FY24 achievements Deliver leading Artificial intelligence Began trial expanding Strong employee Proudly supported experiences now assisting almost our corporate health engagement, driven by Indigenou
Slide 9: Industry fundamentals remain strong
Industry fundamentals remain strong Maintaining discipline as we grow for the long term Resident PHI industry growth We’ve focused on our customers, We remain disciplined, targeting remains strong as competitive making deliberate decisions as growth in priority segments intensity continues we grew i
Slide 10: A stronger health system requires a significant health transition
A stronger health system requires a significant health transition Medibank is accelerating this transition through our investments and partnerships The health transition Australia needs Our investments and partnerships aim to accelerate this shift A health transition could prevent Our investments al
Slide 11: Medibank’s differentiated insurance and health services strategy
Medibank’s differentiated insurance and health services strategy Strengthens our business and enables future growth Insurance Health and wellbeing, prevention Investing in product and service differentiation to strengthen our insurance • Preventative health offerings Increasing Empowering customer c
Slide 12: Multiple benefits to growth in corporate health and wellbeing
Multiple benefits to growth in corporate health and wellbeing Strengthened by our existing customer base, capabilities and new investments Market size Employees Employers Corporate • Medium to large businesses in • Growing importance of physical • Increasing interest to support their health is an Au
Slide 13: Primary and virtual care is the gateway to health in our community
Primary and virtual care is the gateway to health in our community Positioned to improve patient choice, provider experience and population health Large market with growing demand for customer-centred primary care • $8.7b spent through Medicare1 on 166m GP consultations in FY23 • c. 50% of Australia
Slide 14: Financial results
Financial results Mark Rogers Group Lead – Chief Financial Officer & Group Strategy
Slide 15: Group financial summary
Group financial summary Underlying EPS up 14.1% to 20.7 cps Financial year ended 30 June ($m) 2023 2024 Change Group operating profit up 7.9% (restated) 1 • Resident Health Insurance business continues to be resilient, with important Group revenue from external customers 7,807.0 8,175.8 4.7% contrib
Slide 16: Resident claims remain below expectations
Resident claims remain below expectations Favourable impact from Extras and Private Hospital non-surgical claims continues Hospital cash claims per policy unit Variance to expected hospital & extras cash claims ($m/month) 6 months to May 24 claims per policy unit vs pre-COVID-19 period 1,2 3% below
Slide 17: Health Insurance result
Health Insurance result Operating profit up 6.3% and operating margin up 20bps to 8.8% Financial year ended 30 June ($m) 2023 2024 Change Revenue up 4.0% to $7,903.0m (restated) • Total policy unit growth of 2.1% Premium revenue1 7,600.4 7,903.0 4.0% • Resident downgrading stable at 50bps despite ec
Slide 18: Health Insurance – resident policyholders
Health Insurance – resident policyholders Industry policyholder growth remains strong with ADR continuing to deliver benefit Financial year ended 30 June 2023 2024 Change Industry growth3 for the 12 months to June 2024 expected to be similar to FY23 (1.9%) • Adult Dependent Reform (ADR) impact incre
Slide 19: Health Insurance – resident claims
Health Insurance – resident claims FY24 claims growth per policy unit down 20 basis points to 2.2% 2023 2024 Change Resident gross claims up 2.8% Financial year ended 30 June ($m) (restated) • Risk equalisation provided a 10bps benefit to net claims growth Claims expense1 (6,212.6) (6,384.1) 2.8% th
Slide 20: Health Insurance – portfolio performance
Health Insurance – portfolio performance Strong non-resident growth benefits gross margin and operating profit growth Resident Non-resident Total Financial year ended 30 June ($m) 2023 2024 Change 2023 2024 Change 2023 2024 Change (restated) (restated) Premium revenue 7,402.9 7,636.6 3.2% 197.5 266.
Slide 21: Health Insurance – management expenses
Health Insurance – management expenses Sales commissions and inflation impacting expense growth 2023 2024 Change Financial year ended 30 June ($m) (restated) Premium revenue 7,600.4 7,903.0 4.0% Management expenses (568.6) (614.9) 8.1% – Depreciation and amortisation (41.5) (41.3) (0.5%) – Resident
Slide 22: Medibank Health result
Medibank Health result Segment profit up 36.7% includes strong organic growth and increase in Myhealth investment Medibank Health (excl. Myhealth) Myhealth2,3 Total Financial year ended 30 June ($m) 2023 2024 Change 2023 2024 Change 2023 2024 Change Revenue 277.1 290.4 4.8% 69.7 n.m. 277.1 360.1 30.
Slide 23: Investment portfolio and investment income
Investment portfolio and investment income Net investment income up $43.6m, includes $33.1m higher RBA cash rate benefit Reported performance2 Underlying performance2 Financial year ended 30 June ($m) 2023 2024 Change 2023 2024 Change Net investment income Growth portfolio income 43.2 36.9 (14.6%) 3
Slide 24: Capital and dividend
Capital and dividend Strong dividend growth and unallocated capital supports M&A aspirations Capital ($m) Proforma Strong capital position maintained 1 July 2023 30 June 2024 • Includes impact of $250m temporary APRA supervisory adjustment Total equity 2,243.8 2,305.1 • Unallocated capital increased
Slide 25: Financial priorities for FY25
Financial priorities for FY25 Improve revenue • Increase resident policyholder growth in a disciplined way Resident momentum • Leverage our portfolio management capabilities to manage downgrading health • Increased focus on customer life cycle management insurance Manage margins whilst • Partnership
Slide 26: Conclusion
Conclusion
Slide 27: Outlook
Outlook Customer promise: any permanent net claims savings due to COVID-19 will be returned Customer to customers value Customer give back program: expect the finalisation of our customer give back program to be announced in FY25 Industry growth: anticipate moderating industry growth in FY25 relativ
Slide 28: A strong and resilient company delivering sustainable growth
A strong and resilient company delivering sustainable growth Resilient company with a track Medium-term priorities build on Multiple avenues for growth, which record navigating through cycles our foundations for future growth we are well-capitalised to pursue Customer centric: strategy Customer grow
Slide 29: Go further with Medibank Overseas
Go further with Medibank Overseas Student Health Cover.
Slide 30: Appendix
Appendix
Slide 31: Our strategy – growing as a health company
Our strategy – growing as a health company Deliver leading Differentiate our Expand in health experiences insurance business Create personalised and connected Deliver more value, choice, and control Accelerate growth in prevention, customer experiences for customers primary and virtual care and othe
Slide 32: Solid result demonstrates our disciplined approach to growth
Solid result demonstrates our disciplined approach to growth A strong and resilient resident Making progress on our growth Delivering earnings and dividend private health insurance business potential growth for shareholders Underlying 16.4% Underlying resident health Medibank Health 20.7cps segment
Slide 33: 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 FY25 March FY23 FY27 aspiration FY24 FY24 - FY26 target FY24 benchmark benchmark FY24 Org
Slide 34: Net Promoter Score (NPS) transition from sNPS to jNPS
Net Promoter Score (NPS) transition from sNPS to jNPS By FY26, a new mix of NPS measures will provide a robust and useful understanding of our customers' experience In FY25, we will begin • Since 2018, Medibank and ahm have reported Service NPS (sNPS) to measure customer advocacy and experience to t
Slide 35: Summary of ESG achievements and progress
Summary of ESG achievements and progress Our sustainability strategy is anchored by our vision of Better Health for Better Lives FY24 key achievements Future focus • 823k Live Better rewards participants • Target 900k total Live Better rewards participants in FY25 Customer • 132k preventative progra
Slide 36: 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 Medical Group for c. $63m in 2021. Ownership interest GP-led proa
Slide 37: Group financial summary – half by half
Group financial summary – half by half Change 1H23 2H23 1H24 2H24 2H24 v 2H23 2H24 v 1H24 1H24 v 1H23 ($m) (restated) (restated) (restated) (restated) Group revenue from external customers 3,897.1 3,909.9 4,024.0 4,151.8 6.2% 3.2% 3.3% Health Insurance operating profit 303.8 347.5 317.0 375.3 8.0% 1
Slide 38: Health Insurance resident policyholders – half by half
Health Insurance resident policyholders – half by half Change 1H23 2H23 1H24 2H24 2H24 v 2H23 2H24 v 1H24 1H24 v 1H23 1 Policyholders (thousand): Opening balance 1,950.0 1,951.7 1,960.9 1,964.3 0.6% 0.2% 0.6% Acquisitions 97.7 107.5 103.2 114.2 6.2% 10.7% 5.6% Lapses (96.0) (98.3) (99.8) (103.2) 5.0
Slide 39: Investment portfolio
Investment portfolio As at 30 June 2024 Target asset Portfolio Spot balance ($m) Average balance Average balance allocation composition ($m) ($m) FY24 FY23 Australian equities 6.0% 4.5% 127.0 129.4 146.6 International equities 5.0% 3.9% 109.9 106.1 108.3 Property 7.0% 5.4% 151.9 165.1 183.4 Infrastr
Slide 40: Glossary
Glossary Term Definition Term Definition 1H Six months ended/ending 31 December of the relevant financial year MER Management expense ratio. Calculated as management expenses divided by 2H Six months ended/ending 30 June of the relevant financial year revenue Adult Dependent Reform that allows adult