Medibank Private Ltd. · ASX:MPL
Medibank Private — Investor Presentation (February 2023)
36 slides from Medibank Private's investor presentation, Feb 23, 2023
Slide 1: 2023 half year results
2023 half year results Investor presentation 23 February 2023 David Koczkar – Chief Executive Officer Mark Rogers – Group Executive Chief Financial Officer & Group Strategy
Slide 2: Important notice
Important notice General & Summary Information The information contained in this presentation is general information about Medibank Private MPL believes the expectations reflected in these forward‐looking statements are reasonable as Limited (“MPL”) and / or its related bodies corporate (together, “
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: Focusing on customers is our top priority
Focusing on customers is our top priority Doing the right things by our customers Support 60k c. 13k c. $1.01 b calls assisted through the customer interactions with our total COVID-19 financial cybercrime response hotlines Cyber Response Support support package to date to date Program1 Value Lowest
Slide 6: 1H23 financial results summary
1H23 financial results summary Solid financial performance despite recent disruption Customer growth +1.7k (+0.1%) -0.9k +33.4k (+17.0%) net resident net resident net non-resident policyholder growth policyholder growth policy unit growth (6 months) from 31 Dec 2022 to 18 Feb 2023 (6 months) Key fin
Slide 7: Cybercrime event impacts
Cybercrime event impacts Our focus remains on our customers Outline of what happened What we have done in response Key focus areas going forward • The criminal accessed our systems Our customers • Prioritise the support for our using a stolen Medibank username • Continued to support customers throug
Slide 8: Initial cybercrime impacts on business have started to subside
Initial cybercrime impacts on business have started to subside We expect to emerge at the end of FY23 with restored momentum in the core business Impacts on policyholder growth Positive signs of growth recovery • Q2FY23 policyholder volume impacted after a strong Q1FY23 • Our people feel informed an
Slide 9: Continuation of trends supporting industry growth
Continuation of trends supporting industry growth Resident PHI Non-resident PHI Nine consecutive quarters of industry growth to September 20221 Strong signs of post-COVID market recovery • Continued growth among younger customers and new to industry segment • International student arrivals reboundin
Slide 10: Megatrends in health continue to accelerate
Megatrends in health continue to accelerate We are uniquely positioned to grow and play our role to sustain the health system Consumerisation The shift to The rise of new Outcome-based of health prevention care settings care What’s A shift to personalised and connected Focus on better managing and N
Slide 11: Our strategy and longer-term growth remain the focus
Our strategy and longer-term growth remain the focus DRAFT We have reprioritised some activities in the short term to regain momentum in the core Deliver leading experiences Differentiate our Expand in health insurance business Create personalised and Deliver more value, choice Focus growth on preve
Slide 12: Deliver leading experiences
Deliver leading experiences 1H23 progress Immediate focus Longer-term focus Personalised and connected customer experiences • Simplify experience • Maintain customer support and • More self-service digital tools and o All claim types now available in My Medibank app transparent communication increas
Slide 13: Differentiate our insurance business
Differentiate our insurance business 1H23 progress Immediate focus Longer-term focus Resident business • Reinstate normal marketing and • Customer first approach continues to • Lowest premium increase in 22 years, supporting customers with retention activities be the foundation for differentiation a
Slide 14: Expand in health
Expand in health 1H23 progress Immediate focus Longer-term focus Prevention and integrated care models • Further scale and increase adoption of • Scale our health and wellbeing and • Growth momentum in prevention (+6%) and Live Better Rewards (+52%) prevention programs and Live Better healthcare off
Slide 15: Financial results
Financial results Mark Rogers – Group Executive Chief Financial Officer & Group Strategy
Slide 16: Group financial summary
Group financial summary Strong underlying EPS growth of 6.7% Six months ended 31 Dec ($m) 1H22 1H23 Change Group operating profit up 7.4% Group revenue from external customers 3,581.2 3,629.4 1.3% • Continued momentum in Health Insurance Health Insurance operating profit 280.9 305.2 8.7% • Solid Med
Slide 17: COVID-19 impacts – claims recovery
COVID-19 impacts – claims recovery Claims remain below underlying expectations with positive trends emerging in prosthesis Hospital cash claims per policy unit Total • Hospital payments significantly below expectations for underlying claims 6 months to November claims per policy unit vs pre-COVID-19
Slide 18: Health Insurance result
Health Insurance result Strong underlying operating margin up 20bps to 8.1% COVID-19 COVID-19 Major drivers of performance Six months ended 31 Dec ($m) 1H22 1H23 Change impact1 Adj. • Resident policyholder growth (1.8% growth since 1H22) Premium revenue 3,452.0 3,521.8 2.0% 267.7 3,789.5 • Continued
Slide 19: Health Insurance – resident policyholders
Health Insurance – resident policyholders Signs of recovery in acquisition and lapse since 31 December Six months ended 31 Dec ($m) 1H22 1H23 Change PHI market industry remains buoyant • Estimated 12 month rolling growth of 2.5% slightly below FY22 but impacted by Policyholders (thousand): Medibank
Slide 20: Health Insurance – underlying resident claims
Health Insurance – underlying resident claims Underlying claims growth in line with expectation of 2.3% per policy unit Six months ended 31 Dec ($m)1 1H22 1H23 Change Indicative composition & movement in claims expense Claims expense Claims expense (2,980.0) (3,123.6) 4.8% per policy unit1 vs. 1H22
Slide 21: Health Insurance – underlying portfolio performance
Health Insurance – underlying portfolio performance Strong growth in both resident and non-resident PHI businesses Resident Non-resident Total Six months ended 31 Dec ($m)1 1H22 1H23 Change 1H22 1H23 Change 1H22 1H23 Change Premium revenue 3,518.7 3,698.7 5.1% 69.9 90.8 29.9% 3,588.6 3,789.5 5.6% Ne
Slide 22: Health Insurance – management expenses
Health Insurance – management expenses Full year management expenses expected to be approximately $560 million Six months ended 31 Dec ($m) 1H22 1H23 Change Premium revenue 3,452.0 3,521.8 2.0% Management expenses (249.1) (273.9) 10.0% - Depreciation and amortisation (19.8) (20.7) 4.5% - DAC amortis
Slide 23: Medibank Health result
Medibank Health result Solid performance with operating profit from continuing businesses up 14.6% Continuing business1 Beyond Blue/1800 Respect3 Total Six months ended 31 Dec ($m) 1H22 1H23 Change 1H22 1H23 Change 1H22 1H23 Change Revenue 131.7 139.5 5.9% 24.0 - n.m. 155.7 139.5 (10.4%) Gross profi
Slide 24: Investment portfolio and investment income
Investment portfolio and investment income Investment income up 80.9% to $55.9m with the benefit of higher interest rates and narrowing credit spreads Reported performance2 Underlying performance2 Six months ended 31 Dec ($m) 1H22 1H23 Change 1H22 1H23 Change Net investment income: Growth portfolio
Slide 25: Capital and dividend
Capital and dividend Strong capital position with upside from final PHI capital standards Six months ended 31 Dec ($m) Dec 2021 Dec 2022 Health Insurance required capital up $55.4m • Ratio at the top end of 11% to 13% target range2 Total equity 1,937.7 1,976.5 • Increased due to premium revenue grow
Slide 26: Positioned for growth as we manage inflation
Positioned for growth as we manage inflation Key areas of focus and priorities for 2H23 Maintain PHI revenue momentum Scale Medibank Health through organic and inorganic growth Re-establish resident policyholder growth Megatrends in health continue to accelerate • Industry growth to soften but remai
Slide 27: Conclusion
Conclusion David Koczkar Chief Executive Officer
Slide 28: Immediate priorities: be there for our customers and regain momentum
Immediate priorities: be there for our customers, regaining resident policyholder momentum and continue to pursue growth We will always put our We are focused on regaining resident We are uniquely positioned to grow in customers first policyholder growth momentum multiple markets from strong foundat
Slide 29: FY23 outlook
FY23 outlook Customer We continue to assess claims activity and any permanent net claims savings due to COVID-19 will be relief given back to customers through additional support in the future Resident We expect resident policyholder growth of approximately 0.5%-0.75% assuming recent trends continue
Slide 30: Appendix
) »» ps Appendix
Slide 31: Our health investments
Our health investments Target Investments Ownership Description Benefits to Medibank markets interest (%) Myhealth Medical Holdings Pty Ltd 49% • Medibank acquired a non-controlling interest in Support preventative health and Myhealth Medical Group for c. $63m in 2021 GP-led proactive care managemen
Slide 32: Reconciliation of reported to underlying claims and COVID-19 impacts
Reconciliation of reported to underlying claims and COVID-19 impacts COVID-19 impacts – Health Insurance Reconciliation of reported to underlying claims Six months ended 31 Dec ($m) 1H22 1H23 Six months ended 31 Dec ($m) 1H22 1H23 2 Deferral of April 2022 premium increase 136.6 60.7 Total reported c
Slide 33: Group financial summary – half by half
Group financial summary – half by half Change ($m) 1H22 2H22 1H23 1H23 v 1H22 1H23 v 2H22 Group revenue from external customers 3,581.2 3,547.3 3,629.4 1.3% 2.3% Health Insurance operating profit 280.9 311.7 305.2 8.7% (2.1%) Medibank Health segment profit 25.7 19.8 24.6 (4.3%) 24.2% Segment operati
Slide 34: Health Insurance resident policyholders – half by half
Health Insurance resident policyholders – half by half Change 1H22 2H22 1H23 1H23 v 1H22 1H23 v 2H22 Premium revenue ($m) 3,452.0 3,407.8 3,521.8 2.0% 3.3% 1 Policyholders (thousand): Opening balance 1,889.1 1,917.2 1,950.0 3.2% 1.7% Acquisitions 106.2 116.8 97.7 (8.0%) (16.4%) Lapses (78.1) (84.0)
Slide 35: Investment portfolio
Investment portfolio Average Balance Portfolio Average Balance Target asset As at 31 December 2022 Spot Balance ($m) Portfolio composition ($m) allocation composition Australian equities 146.3 6.4% 141.1 5.7% 6.0% International equities 103.9 4.5% 105.2 4.2% 5.0% Property 182.1 8.0% 184.4 7.4% 7.0%
Slide 36: Glossary
Glossary Term Definition Term Definition 1H Six months ended/ending 31 December of the relevant financial year An enhanced network of ancillary providers where customers can enjoy better value on Members Choice eligible extras services. Includes dental and optical providers, physiotherapy, chiroprac
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