The Medibank Private Limited (ASX: MPL) share price is down after revealing its FY21 half-year result.
Medibank is the biggest private health insurer in Australia.
Medibank FY21 half-year result
The private health insurer announced that its revenue grew by 0.6% to $3.44 billion.
The health insurance operating profit grew by 13.6% to $254.6 million. There was a 1.8% reduction in gross claims, partially offset by the risk equalisation expense. Premium revenue was up 0.3%. There was a six-month postponement of premium increases and the impact of suspensions. The net claims expense decreased by $24.1 million, or 0.8%, to $2.8 billion. This reflects a 1.8% decrease in the gross claims expense which includes a $99 million COVID-related reduction in claims and risk equalisation payable for the period.
Medibank Health operating profit went up by 41.4% to $18.8 million. There was increased demand for in-home care and telehealth services, which was offset by lower demand in travel insurance. Medibank Health’s operating profit margin improved by 260 basis points (2.60%) to 12.9%.
Medibank revealed that its grew its policyholders by 49,000, including 17,600 for the Medibank brand. This is the first time it has seen growth in the Medibank brand in any 6-month period since 2013 and this trend has continued into February.
Net investment income grew by 86.5% to $71.8 million because of stronger returns in growth and defensive assets.
Continuing net profit operations rose 26.8% to $226.4 million. Underlying net profit after tax grew 13.4% to $203.4 million.
Medibank dividend
The Medibank interim dividend was increased by 1.8% cents to 5.8 cents.
Medibank said that its balance sheet remains strong, with health insurance related capital of $908.6 million.
Management comments and outlook
Medibank CEO Craig Drummond said: “Our short stay model of care is gaining traction, with our no gap joint replacement pilot expanding to six regions.
“We will continue to pursue more partnerships and investments in healthcare and are in advanced discussions with several well-known partners to expand our short stay model of care.
“Medibank is now very well placed to continue to win in the market and grow the business. The time to be bolder is now, given the challenging market conditions.”
This seems like a solid result from Medibank, given the circumstances. I think it’s a decent idea in the ASX dividend shares space considering the steady growth of the dividend and the high dividend payout ratio. However, I wouldn’t expect a lot of profit or capital growth over the medium term.
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