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.
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