Medibank held their AGM update. We review, with an eye towards Ramsay Healthcare (RHC), which we own. RHC and MPL are opposites in the sense that MPL would like to collect premiums, and not have patients claim (in a very stylised sense, in that it would be good for profits, all else equal) and to not have to pay the private hospital providers much. So there is a tension between MPL’s margins, and RHC’s revenues.

Some snippets we found interesting.

Firstly, growth in coverage continues. From MPL’s perspective, the growth in the < 30s cohort is a very good thing, as they don’t tend to claim as much. But growing coverage is good, overall. We’ll come back to this at the end, however (as guidance probably requires growth to be a touch faster).

However, given rising cost of living pressures, they don’t anticipate the growth in volume will be all that strong. Perhaps the “good bit” in the below is that private health cover is semi-discretionary, and so MPL aren’t seeing people drop cover. How “recession proof” it might prove to be is perhaps still debatable, but it is clearly better than footwear.

MPL touch on the drivers, namely aging populations, an increased propensity to spend on medical care in later stages of life.

All of these should be on net beneficial to Ramsay.

Returning back to the MPL specific thoughts, the below snippet from MS is useful. Growth is looking a little light relative to what is implied by guidance, and given the stock is on 20x, probably doesn’t want to disappoint.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

Receive our investment insights

Something went wrong. Please check your entries and try again.