Medibank (ASX:MPL) share price on watch after 40% jump in profit

A 4,900% rise in investment income boosted total profits by 40%.

| More on:
A doctor looks unsure, indicating share price uncertainty for ASX medical companies

Image source: Getty images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Medibank Private Ltd (ASX: MPL) share price will be one to watch when trading resumes this Wednesday. That's after the health insurance company released its full-year results for FY21.

At close of trade yesterday, shares in the company were swapping hands for $3.53 – down 1.67%. The S&P/ASX 200 Index (ASX: XJO), meanwhile, ended the day 0.17% higher.

Let's take a closer look at today's announcement.

Medibank share price in focus with falling dividend payout ratio

  • Revenue increased 1.99% on the prior corresponding period (pcp) to $6.9 billion.
  • Net profit after tax (NPAT) jumped 39.8% to $441 million. Despite operating expenses increasing 1.12% on the pcp, a 4,900% leap in net investment income ($120 million) aided the rocketing NPAT.
  • Earnings per share (EPS) of 16 cents – up 39.8% on the pcp.
  • A full-year dividend payout of 12.7 cents per share (6.9 cent final + 5.8 cent interim payment), fully franked. It's an increase of only 5.8% on the pcp – despite the larger profit rise. The payout ratio fell from 90.1% to 87.7%. At the current share price, the payout represents a dividend yield of 3.60%.

What happened in FY21 for Medibank?

The biggest news of the year — in general and for the Medibank share price — would arguably be the coronavirus pandemic.

Medibank CEO David Koczkar addressed the impact of the virus on the company in today's release:

More people continue to prioritise their health and wellbeing and see greater value in private health, given the uncertainty around COVID and heightened pressure on the public system.

The investments we have made over the last few years have enabled us to step up and provide broader support to our customers during this period, while accelerating our growth at the same time.

Koczkar became CEO in this financial year, taking the helm on 17 May. His predecessor, Craig Drummond, announced his retirement in late February.

What else did management say?

Koczkar also addressed the company's performance at large, saying:

We have delivered a high-quality result underpinned by strong policyholder growth across both brands, our highest ever customer advocacy, growth in Medibank Health, and ongoing focus on management expenses.

This result is a clear demonstration that focusing on our customers' needs and being disciplined in how we run our business delivers strong results.

What's next for Medibank?

Medibank is forecasting a 2.4% growth in underlying average net claims in FY22. This is in line with the second half of the prior financial year. It is also hoping to achieve a 3% growth in policyholders.

The company also has a $15 million target for productivity savings and is targeting inorganic growth for Medibank Health and Health Insurance for FY22. Let's see what this will mean for the Medibank share price.

Medibank share price snapshot

Over the past 12 months, the Medibank share price has increased 23.4%. This is about 1.5 percentage points better than the ASX 200. Year-to-date, Medibank shares have increased 16.1% – outpacing the benchmark index by around 4 percentage points.

Medibank Private has a market capitalisation of approximately $9.7 billion.

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Earnings Results

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Technology Shares

Guess which ASX 200 tech stock is crashing 14% on results day

This tech stock is having a rough time today. But why?

Read more »

Worried woman calculating domestic bills.
Earnings Results

ANZ share price falls on half-year results

How did the bank perform during the first half? Let's find out.

Read more »

Man looking happy and excited as he looks at his mobile phone.
Bank Shares

NAB share price jumps on solid half year results

Investors have responded positively to the bank's results.

Read more »

Lines of codes and graphs in the background with woman looking at laptop trying to understand the data.
Earnings Results

Westpac share price sinks on half-year results miss

Let's see how the big four bank performed during the first half.

Read more »

Miner looking at a tablet.
Gold

Newmont share price lifts off on first-quarter results

The ASX 200 gold stock is charging higher on Thursday.

Read more »

A man wakes up happy with a smile on his face and arms outstretched.
Healthcare Shares

ResMed shares jump 8% on strong Q3 update

It was yet another strong quarter from this high-quality company.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Financial Shares

Up 53% in a year, why is this ASX 200 financial stock leaping higher again today?

Investors are sending the ASX 200 financial stock soaring on Wednesday. Let’s see why.

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Why is this ASX 200 uranium stock rocketing 17% on Wednesday?

The ASX 200 uranium stock is racing higher today. But why?

Read more »