Medibank Private Ltd. · ASX:MPL
Medibank Private — Investor Presentation (February 2021)
34 slides from Medibank Private's investor presentation, Feb 24, 2021
Slide 1: 2021 half year results
2021 half year results Investor presentation Craig Drummond – Chief Executive Officer | Mark Rogers – Chief Financial Officer 24 February 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 Craig Drummond – Chief Executive Officer
Slide 4: Results summary
Results summary High quality result underpinned by strong policyholder growth and ongoing vigilance on management costs Group results Operating profit NPAT Net investment income Interim dividend $255.2m $226.4m $71.8m 5.8 cps +16.6% +26.8% +86.5% (Up from $38.5m) +1.8% Health Insurance results Medib
Slide 5: Milestone scorecard
Milestone scorecard 1H21 update: all on track to be delivered Objectives Measures and targets Customer advocacy: Service NPS (average) Employee advocacy 1. Customer and employee advocacy 1H20 1H21 FY21 target 1H21 FY21 target Continue to achieve a high level of advocacy by delivering Medibank 30.7 3
Slide 6: Strategy and FY21 priorities
Strategy and FY21 priorities Our strategy is to accelerate our PHI growth and continue the transformation into a broader healthcare company Better Health for Better Lives Deliver differentiated Continue to improve Expand the offering Strategic products and services healthcare value and relevance for
Slide 7: Our dual brand strategy is working
Our dual brand strategy is working Top line growth gaining momentum Customer growth reflects the strength of our brands and proposition differentiation, driving significant improvement in retention and advocacy • Renewed focus on health in the community, pressure on the public system, low premium in
Slide 8: Improving long-term value and relevance of private healthcare
Improving long-term value and relevance of private healthcare Through more proactive preventative healthcare and enabling more choice outside of acute hospital settings Supporting health and wellbeing through preventative healthcare Enabling more choice in care Health engagement Clinical homecare •
Slide 9: Investment in Myhealth Medical Group
Investment in Myhealth Medical Group • Medibank announced on 5 February 2021 it would acquire a Myhealth 86 clinics across Australia non-controlling 33.4% economic interest in Myhealth Medical Group Delivers 2.5m patient consultations per year (Myhealth)1 for a total expected consideration of $63m M
Slide 10: A return to growth in FY21
A return to growth in FY21 Future growth will be driven by strengthening our competitive advantage in PHI, offering new products, and leveraging our strategic partnerships and investments Accelerating growth and scale in PHI New products and services Partnerships and investments • Continue to improv
Slide 11: Financial results
Financial results Mark Rogers – Chief Financial Officer
Slide 12: Group financial summary
Group financial summary Six months ended 31 Dec ($m) 1H20 1H21 Change • Profit before tax up 26.4% to $321.9m Group revenue from external customers1 3,421.5 3,442.2 0.6% • Other income / (expenses): Health Insurance operating profit 224.2 254.6 13.6% – One-off $3.3m AASB16 impact Medibank Health ope
Slide 13: COVID-19 impacts
COVID-19 impacts $310m balance sheet liability for deferred COVID-19 claims Policyholders PHI claims • Net policies suspended reduced from 18.2k at 30 June 2020 to • COVID-19 net claims expense impact of $99m in 1H21: 9.0k at 31 December 2020 – 1H21 claims $112m lower than pre-COVID expectations • E
Slide 14: COVID-19 impacts – claims recovery
COVID-19 impacts – claims recovery Private hospital claims paid in non-Victorian states has been mixed so far 2019 composition: Private hospital claims – YTD Nov 20 $ growth vs pcp1 • Private hospital claims comprised1: 7% – 34% in Victoria and 66% in non-Victorian states 2% – c. 60% surgical and c.
Slide 15: Health Insurance result
Health Insurance result Operating performance reflects policyholder growth and benefits of our productivity agenda Change vs Six months ended 31 Dec ($m) 1H20 1H21 Change COVID Adj. 2 1H20 Premium revenue 3,315.5 3,324.5 0.3% 3,433.9 3.6% Claims expense (2,851.6) (2,801.3) (1.8%) Risk equalisation 8
Slide 16: Health Insurance – policyholders
Health Insurance – policyholders Stronger resident policyholder growth of 2.6% in the last 12 months Six months ended 31 Dec ($m) 1H20 1H21 Change COVID Adj.2 Change vs 1H20 Policyholders1 (thousand): Opening balance 1,796.0 1,806.6 0.6% 1,824.8 1.6% Acquisitions 98.3 102.6 4.4% 102.6 4.4% Lapses (8
Slide 17: Health Insurance – claims
Health Insurance – claims Underlying claims growth per policy unit of 2.6% • Net claims expense down 0.8%: • Underlying claims growth of 2.6%: – 1.8% decline in gross claims – Adjusted for provision movements and COVID-19 impacts – Includes $99.0m reduction in claims expense due to COVID-19 – Broadl
Slide 18: Health Insurance – claims
Health Insurance – claims Claims growth impacted by COVID-19 restrictions Net claims expense Indicative composition & movement in dollar value1 vs. 1H20 $ value movement (including risk equalisation) Dental -1% 8% Hospital Extras 6% Optical -2% 6% Physiotherapy -1% $682.9m $673.9m 7% Extras 53% Chir
Slide 19: Health Insurance – management expenses
Health Insurance – management expenses Continued discipline on costs resulted in a 1.1% increase in management expenses and MER of 7.5% • Management expenses up 1.1% to $250.8m: • Productivity agenda: – Flat non-cash costs – On track to deliver $20m in FY21 – Operating expenses up 1.3% – Savings fro
Slide 20: Medibank Health result
Medibank Health result Result reflects period of growth and increasing take up of in-home care • Strong revenue growth of 13.2%, reflecting: • Operating profit up 41.4% to $18.8m, including: – Increased demand for in-home care and telehealth services – Benefit of strong revenue growth – Partly offse
Slide 21: Investment portfolio & investment income
Investment portfolio & investment income Investment income […] uplift driven by increased returns in growth and defensive assets • Growth portfolio investment income performance driven primarily by stronger • Asset allocation equity market returns and a positive return in property – Retained 20% gro
Slide 22: Capital & dividend
Capital & dividend Our capital position reflects strong capital generation and disciplined capital management • Health Insurance capital: Period ended ($m) 31 Dec 2019 30 Jun 2020 31 Dec 2020 – At top end of 11% to 13% target range1 Total equity 1,837.0 1,813.9 1,864.6 – Increase in required capital
Slide 23: Key success factors
Key success factors We remain focused on the execution of key success factors Business set to operate in continued lower rate rise environment Maintain • Leverage dual brand strength Maintain market • Hospital contracting policyholder • Continued focus on retention leading claims • Payment integrity
Slide 24: Conclusion
Conclusion Craig Drummond – Chief Executive Officer
Slide 25: COVID-19 has driven meaningful innovation through the health system – more is needed
COVID-19 has driven meaningful innovation through the health system – more is needed The short-term impacts of COVID-19 on the Australian healthcare system are significant • Large reduction in medical and inpatient rehab admissions to hospital, however wait times for elective surgery in the public s
Slide 26: Future reform must remain customer focused
Future reform must remain customer focused Centred on building participation, improving affordability and delivering more value, while driving broader system reform for mental health Future reforms Growth in hospital lives covered (‘000)1 To build participation To improve affordability – encouraging
Slide 27: FY21 outlook
FY21 outlook Policyholder Underlying Health Insurance Capital growth drawing rate management expenses We aim to increase Our underlying FY21 productivity Dividend payout ratio market share and drawing rate growth target of $20m expected to be achieve total or increase in towards the top end of polic
Slide 28: Appendix
Appendix
Slide 29: Reconciliation of Group operating profit and Underlying NPAT
Reconciliation of Group operating profit and Underlying NPAT Group operating profit – total operations ($m) 1H20 1H21 Change Group operating profit – continuing operations 218.8 255.2 16.6% Operating loss / profit – discontinued operations (1.0) - n.m. Group operating profit – total operations 217.8
Slide 30: Group financial summary – half by half
Group financial summary – half by half Change 1H21 vs 1H21 vs ($m) 1H20 2H20 1H21 1H20 2H20 Group revenue from external customers1 3,421.5 3,348.1 3,442.2 0.6% 2.8% Health Insurance operating profit 224.2 246.4 254.6 13.6% 3.3% Medibank Health operating profit1 13.3 14.5 18.8 41.4% 29.7% Segment ope
Slide 31: Health Insurance policyholders – half by half
Health Insurance policyholders – half by half Change 1H20 2H20 1H21 1H21 vs 1H20 1H21 vs 2H20 Premium revenue ($m) 3,315.5 3,230.1 3,324.5 0.3% 2.9% Policyholders1 (thousand): Opening balance 1,796.0 1,807.7 1,806.6 0.6% (0.1%) Acquisitions 98.3 97.5 102.6 4.4% 5.2% Lapses (86.6) (80.4) (62.8) (27.5
Slide 32: Cash flow
Cash flow Six months ended 31 Dec ($m) 1H20 1H21 Change • Movement in working capital was due to timing of claims payments Profit before net investment income and income tax 215.1 250.1 35.0 Changes in working capital (45.7) (20.4) 25.3 • Change in other operating assets Customer acquisition costs 0
Slide 33: Investment portfolio
Investment portfolio As at 31 December 2020 Balance ($m) Portfolio composition Target asset allocation Australian equities 105.5 4.7% 5.0% International equities 128.0 5.8% 6.0% Property 165.4 7.5% 7.0% Infrastructure 50.6 2.3% 2.0% Growth 449.5 20.3% 20.0% Fixed income1,2 1,207.6 54.7% 52.0% Cash3
Slide 34: Glossary
Glossary Term Definition Term Definition 1H Six months ended/ending 31 December of the relevant financial year PHI Private Health Insurance 2H Six months ended/ending 30 June of the relevant financial year PHIO Private Health Insurance Ombudsman APRA Australian Prudential Regulation Authority The pr
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