Medibank Private Ltd. · ASX:MPL
Medibank Private — FY2021 Earnings Presentation
35 slides from Medibank Private's earnings presentation, Aug 25, 2021
Slide 1: 2021 full year results
2021 full year results Investor presentation David Koczkar – Chief Executive Officer Mark Rogers – Group Executive Chief Financial Officer & Group Strategy 25 August 2021
Slide 2: Important notice
Important notice The information contained in this presentation is general information only. The Such forward‐looking statements involve known and unknown risks, uncertainties and information contained in this presentation is not investment or financial product advice other factors. The nature of su
Slide 3: Highlights
Highlights David Koczkar Chief Executive Officer
Slide 4: FY21 highlights
FY21 highlights Our ongoing focus on customers has led to improved advocacy and retention, driving financial performance Experience 37.1 (+5.3) Medibank c.38% 1.3m c. 43.0 (+1.8) ahm of Medibank customer service interactions were through customers registered for My Medibank app, record levels of cus
Slide 5: FY21 financial results summary
FY21 financial results summary Our financial performance reflects customer growth, ongoing cost discipline and positive investment market returns Customer outcomes +82.5k (+4.6 ) % +6.8k 27.3% reported net resident FY22 reported net resident +37bps (12 months) policyholder growth policyholder growth
Slide 6: Industry snapshot
Industry snapshot Our national priority is to achieve high levels of COVID-19 vaccination rates among all Australians Australia’s health needs COVID-19 accelerating Private health playing a greater are evolving changing consumer trends role in broader healthcare Increasing incidence of Renewed focus
Slide 7: Our strategy
Our strategy Building a strong and connected business to drive broader system change and sustainability Focus on our Grow our Transform into a customers and people core business health company Deliver leading Further differentiate Invest in prevention, customer experiences our customer offerings cho
Slide 8: Focus on our customers and people
Focus on our customers and people FY21 achievements Future focus • Record high level of customer advocacy • Digitisation of health offerings and personalisation of the experience. For example: • Integration of Live Better with My Medibank app – Seamless digital claiming experience with the addition
Slide 9: Grow the core business
Grow the core business FY21 achievements Future focus • Market share up 37bps – the strongest increase over a • Our differentiated customer offerings will support acquisition and retention, 12-month period in more than 10 years specifically: • Dual brand strategy is working: – Leverage our dual bran
Slide 10: Transform into a health company
Transform into a health company Drive engagement in health and wellbeing, and preventative programs at scale FY21 achievements Future focus Health and wellbeing • Launch new Live Better partnerships and rewards, and expand • Ongoing personalised health engagement program had 4.7m into broader health
Slide 11: Transform into a health company
Transform into a health company Deliver a new customer focused approach to healthcare that’s accessible and sustainable FY21 achievements Future focus Primary care and navigation • Assist Myhealth to strengthen its digital capability to support more proactive, • Myhealth grew to 95 clinics predictiv
Slide 12: Financial results
Financial results Mark Rogers Group Executive – CFO & Group Strategy
Slide 13: Group financial summary
Group financial summary Financial year ended 30 June ($m) 2020 2021 Change • Corporate overheads: Group revenue from external customers1 6,769.6 6,910.4 2.1% – Inflation and a $3.8m increase in D&O insurance expense Health Insurance operating profit 470.6 538.6 14.4% – FY22 D&O insurance cost to be
Slide 14: COVID-19 impacts – claims recovery
COVID-19 impacts – claims recovery Private hospital claims1 Private hospital claims1 – FYTD May 21 $ growth vs pcp 2 Total: • Victorian claims -6% due to Jul – Oct lockdown (FYTD Nov 2020: -15%) 3 -6% Total 2% • Other states claims +2% (FYTD Nov 2020: +2%) • Gap between non-surgical and surgical cla
Slide 15: Health Insurance result
Health Insurance result Operating performance reflects policyholder growth and benefits from our productivity agenda Financial year ended 2020 2021 Change COVID-19 COVID-19 Reported performance 30 June ($m) impact Adj.1 • Reported gross profit up 5.5%: Premium revenue 6,545.6 6,680.3 2.1% 226.0 6,90
Slide 16: Health Insurance – policyholders
Health Insurance – policyholders Stronger underlying resident policyholder growth of 3.5% in the last 12 months COVID-19 Adjusted2 • PHI market remains buoyant: Change – Industry hospital participation up 95bps Financial year ended 30 June ($m) 2020 2021 Change 2021 vs 2020 to 44.5% Policyholders1 (
Slide 17: Health Insurance – underlying resident claims
Health Insurance – underlying resident claims Underlying resident claims growth per policy unit declined to 2.5% Financial year ended 30 June ($m)1 2020 2021 Change Indicative composition & movement $ value (5,477.8) (5,706.2) 4.2% in dollar value1 vs. FY20 movement Claims expense Risk equalisation
Slide 18: Health Insurance – underlying portfolio performance
Health Insurance – underlying portfolio performance Strong underlying gross margin performance driven by resident portfolio Resident Overseas Total 1 Financial year ended 30 June ($m) 2020 2021 Change 2020 2021 Change 2020 2021 Change Premium revenue 6,457.2 6,754.8 4.6% 168.4 151.5 (10.0%) 6,625.6
Slide 19: Health Insurance – management expenses
Health Insurance – management expenses Benefits of our productivity agenda and scale delivered a 40bps reduction in MER to 7.9% Financial year ended 30 June ($m) 2020 2021 Change Premium revenue 6,545.6 6,680.3 2.1% Management expenses (543.4) (530.9) (2.3%) - Depreciation and amortisation (45.7) (4
Slide 20: Medibank Health result
Medibank Health result Strong earnings growth despite short-term travel insurance headwind Financial year ended 30 June ($m) 2020 2021 Change • Segment profit up by 12.9% to $31.4m: – Operating profit up 15.8% to $32.2m Revenue 270.0 283.8 5.1% – 2H21 Operating profit down versus 1H21 largely due to
Slide 21: Investment portfolio and investment income
Investment portfolio and investment income Strong investment returns driven by post COVID-19 recovery in equity and credit markets Investment returns Financial year ended 30 June ($m) 2020 2021 Change 2020 2021 Change Net investment income: Growth (26.6) 85.9 n.m. (5.74%) 18.46% n.m. Defensive1 33.6
Slide 22: Capital and dividend
Capital and dividend Our capital position reflects strong capital generation and disciplined capital management Financial year ended 30 June ($m) 2020 2021 • Health Insurance capital: – Ratio at the top end of 11% to 13% target range3 Total equity 1 1,797.8 1,906.1 – Increase supports premium revenu
Slide 23: Key areas of focus for FY22
Key areas of focus for FY22 Claims management capabilities: Investment in core enablers – • Payment integrity innovation technology, digitisation and people • Investment in preventative health and new care settings Increasing scale and productivity Focus on top line growth and allows capacity to inv
Slide 24: Conclusion
Conclusion David Koczkar Chief Executive Officer
Slide 25: Sustainability of the health system
Sustainability of the health system The role of reform Our focus on innovation Aligning prostheses prices with the public sector and overseas • The price of medical devices in Australia is c. 30% higher than in New Zealand, France and the UK1 • Prostheses reform consultation underway with potential
Slide 26: Key points
Key points Our strategy has evolved but We will continue to expand Supported by our We will continue to our customers and people our customer and provider differentiated offering and invest and partner to evolve remain at the centre of relationships, offer broader focus on key markets, new models of
Slide 27: FY22 outlook
FY22 outlook We continue to assess claims activity and any permanent net Customer claims savings due to COVID-19 will be given back to customers relief through additional support in the future Policyholder Aiming to achieve c. 3% policyholder growth1 in FY22, growth including continued growth in the
Slide 28: Appendix
Appendix
Slide 29: FY21 milestone scorecard
FY21 milestone scorecard Objectives1 FY21 outcomes Customer advocacy: Service NPS (average) Employee advocacy 1. Customer and employee advocacy FY20 FY21 FY21 target FY21 FY21 target Continue to achieve a high level of advocacy by delivering exceptional experiences for our customers and employees Me
Slide 30: 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 Financial year ended 30 June ($m) 2020 2021 Total Financial year ended 30 June ($m) 2020 2021 1H21 6mth waiver of April 2020 premium increase 65 96
Slide 31: Reconciliation of Group operating profit and Underlying NPAT
Reconciliation of Group operating profit and Underlying NPAT ($m) FY20 FY21 Change Group operating profit – continuing operations 461.0 528.3 14.6% Operating loss – discontinued operations (0.8) - n.m. Group operating profit – total operations 460.2 528.3 14.8% Underlying NPAT ($m) 1H20 2H20 FY20 1H
Slide 32: Group financial summary – half by half
Group financial summary – half by half Change ($m) 1H20 2H20 1H21 2H21 2H21 v 2H20 2H21 v 1H21 1H21 v1H20 1 Group revenue from external customers 3,421.5 3,348.1 3,442.2 3,468.2 3.6% 0.8% 0.6% Health Insurance operating profit 224.2 246.4 254.6 284.0 15.3% 11.5% 13.6% Medibank Health segment profit1
Slide 33: Health Insurance policyholders – half by half
Health Insurance policyholders – half by half Change 1H20 2H20 1H21 2H21 2H21 v 2H20 2H21 v 1H21 1H21 v1H20 Premium revenue ($m) 3,315.5 3,230.1 3,324.5 3,355.8 3.9% 0.9% 0.3% 1 Policyholders (thousand): Opening balance 1,796.0 1,807.7 1,806.6 1,855.6 2.6% 2.7% 0.6% Acquisitions 98.3 97.5 102.6 118.
Slide 34: Investment portfolio
Investment portfolio As at 30 June 2021 Balance ($m) Portfolio composition Target asset allocation 119.3 Australian equities 4.8% 5.0% International equities 147.4 6.0% 6.0% Property 169.3 6.9% 7.0% Infrastructure 52.5 2.1% 2.0% Growth 488.5 19.8% 20.0% Fixed income1,2 1,421.9 57.8% 60.0%6 Cash3 552
Slide 35: Glossary
Glossary Term Definition Term Definition 1H Six months ended/ending 31 December of the relevant financial year The primary person who is insured under a private health insurance policy (other than 2H Six months ended/ending 30 June of the relevant financial year Policyholder in relation to overseas