Bupa Announce 2022 Group Half Year Financial Results

Bupa has announced its 2022 group half year financial results. 

• Revenue¹ of £6.7bn was up 4% (HY 2021: £6.4bn) at constant exchange rates (CER) with year-on-year financial growth in all our lines of business.
• Underlying profit² before taxation of £225m was up 24% at CER (HY 2021³: £181m). Continued implementation of our 3x6 strategy has driven portfolio growth in health insurance, alongside good trading performance in health provision businesses. This was offset by the continued challenges from further waves of COVID-19 in Australia and New Zealand and the recruitment and retention of healthcare workers impacting our health provision businesses, notably UK Dental, and aged care businesses in UK and Australia. While achieving this positive growth year-on-year, we continue to invest in digitalisation and meeting our sustainability ambitions in line with our strategy.
• Statutory profit before taxation of £134m was down 44% at AER (HY 2021: £241m). This was driven by: non-underlying trading items, including a net monetary loss in Türkiye due to hyperinflation (£38m); continued market uncertainty from both the war in Ukraine and inflationary pressures, which lead to volatility and losses in our return-seeking assets (£41m); the accelerated amortisation of aged care bed licences in Australia following changes in government regulations which will become effective in 2024 (£17m); and the non-recurrence of a gain made upon the transfer of CS Healthcare customers in 2021 (£39m).
• Solvency II capital coverage ratio⁴ remains strong at 181% (FY 2021: 179%) with leverage (excluding IFRS 16 liabilities) improving to 18.8% (HY 2021: 24.1%).

Business context

• These results reflect continuing good organic growth across many of our insurance businesses, increased activity in our health provision businesses with ongoing challenges from COVID-19 and sector-wide staff shortages in some of our dental and aged care businesses.
• Although many markets have largely emerged from the pandemic, the impact of COVID-19 will continue to be felt across several businesses for the foreseeable future, particularly as inflationary pressures are felt globally as economies reopen and the war in Ukraine adds pressure to energy prices.

Iñaki Ereño, Group CEO, commented, “These results show positive progress across our business as we continue to deliver our 3x6 strategy which will position Bupa to satisfy major shifts in customer expectations and engagement with healthcare. We’re pleased that our focus on driving transformation across digitalisation and customer service has led to strong organic growth.”

Market performance (all at CER)

• Bupa Asia Pacific⁵: Revenue decreased by 3% to £2,691m largely due to the continued commitment to return savings from COVID-19 to our Australian Health Insurance customers, ongoing portfolio optimisation in our dental and aged care businesses as well as the impact of the pandemic across these underlying businesses. Underlying profit was £118m, a decrease of 6% reflecting localised lockdowns and staff availability in our Health Services business and increased costs and reduced occupancy in our aged care businesses due to the impacts of COVID-19.
• Europe and Latin America: Revenue grew by 11% to £2,138m, however underlying profit declined by 35% to £45m as customer growth across most businesses was more than offset by increased claims levels in our insurance businesses due to the reduced disruption from COVID-19 and ongoing challenges in Bupa Chile as a result of regulatory interventions and judicial decisions.
• Bupa Global and UK: Revenue was up 9% to £1,822m through an increase in customers across insurance and provision businesses, alongside improved occupancy rates in our UK aged care business. Underlying profit grew to £64m (HY 2021: £8m) as a result of the performance of the insurance businesses, with Bupa Global, our International Private Medical Insurance (IPMI) business, returning to profitability.
• Other businesses: Underlying profit of £30m is flat year-on-year driven by performance in our associate businesses as they continue to emerge from the pandemic.

Financial position

• Solvency II capital coverage ratio of 181% (FY 2021: 179%).
• Leverage is 25.9% (HY 2021: 31.1%) when including IFRS 16 leases as liabilities. Excluding these liabilities, the leverage ratio is 18.8% (HY 2021: 24.1%).
• Net cash generated from operating activities was £689m, up £252m on prior year (HY 2021: £437m) primarily due to higher revenue across the Market Units (MUs) and lower claims in Australia as a result of the continued disruption from COVID-19.

Other highlights

• We launched a new sustainability strategy through which we will achieve our ambition to become a Net Zero business by 2040 across all emissions scopes.
• Through our business in Poland, LuxMed we have been providing a substantial package of free healthcare support to thousands of Ukrainian refugees who have been forced to flee the war.
• We became the Official Healthcare Partner to ParalympicsGB, joining our existing partnerships with Paralympians in Spain, Poland and Chile.

Read the full Bupa Group 2022 half year financial results statement here

¹ Revenues from associate businesses are excluded from reported revenue figures.

² Underlying profit is a non-GAAP financial measure. This means it is not comparable to other companies. Underlying profit reflects our trading performance and excludes a number of items included in statutory profit before taxation, to facilitate year-on-year comparison. These items include impairment of intangible assets and goodwill arising on business combinations, as well as market movements such as gains or losses on foreign exchange, on return-seeking assets, on property revaluations and other material items not considered part of trading performance. A reconciliation to statutory profit before taxation can be found in the notes to the condensed consolidated financial statements. Please refer to the reconciliation on page 32.

³ 2021 underlying profit has been restated following the quantification of historical underpayments of employee entitlements. See note 1.4a for details of the restatement.

⁴ The Solvency II capital coverage ratio is an estimate and unaudited. 

⁵ On 1 July 2021, we formed the new Bupa Asia Pacific Market Unit, comprising our businesses in Australia, New Zealand and Hong Kong SAR. These results and comparatives are presented as the new Market Unit.

⁶ Our total customers as reported in 2021 Annual Report.