Revenue declines but insurance buoys underlying results says Bupa

Bupa’s UK revenue fell by 10% in 2018, but the global healthcare giant said today that underlying results had been buoyed by steady performance in the insurance business.

Revenue dropped from £2.8m to £2.5bn across the UK business following the sale of 110 of its care homes to HC One at the end of 2017 and a further 22 to Advinia in February 2018.

The disposals hit underlying UK profit, which plummeted 22% to £199m, but the Group said profit from continuing business was up 2% on the back of steady growth in the health insurance business.

Improved claims performance rather than increasing customer numbers was the main driver of growth in UK insurance, fuelling an 8% rise in underlying profit.

Insurance represented 61% of UK sales in 2018 against 55% in 2017. Bupa did not give a detailed breakdown of its UK business, which includes insurance, the expanding dental clinic division and Bupa Cromwell Hospital in London. However, based on the figures provided, LaingBuisson estimates UK insurance revenue was broadly in line with the previous year at £1.5bn in 2018.

‘Our UK health insurance business closed the year with 2.2m customers,’ said Bupa. ‘It remains the market leading health insurer in the country, with a market share of 37.5%. We launched Business Mental Health Advantage, offering our corporate customers the most extensive mental health coverage in the market. We also partnered with digital healthcare provider, Babylon, giving business customers access to face-to-face GP care around the clock.’

Bupa has reshaped its UK business significantly over the last two years. The disposal of a large chunk of its care home portfolio coincided with its continuing expansion in the high street dental market following its £835m acquisition of Oasis Dental Care in 2017. However, despite 12 full months of trading for Bupa Dental Care, performance in its healthcare provision service line declined as other parts of the business faced challenging trading conditions.

In total, Bupa, whose operations extend across Europe, Australia and New Zealand, Latin America and other international markets, reported flat revenue of £11.9bn at constant exchange rates. UK care home divestments alongside challenges in the Australian care home and health insurance markets reverberated across the business, with underlying pre-tax profit down 12% to £613m.

Commenting on the results, group CEO Evelyn Bourke said: ‘Health insurance, our largest business line, delivered revenue growth of 2% and stable underlying profit, with good performance in Spain and the UK. We continued to invest in our services to customers especially in digital, new propositions and information technology infrastructure.

‘Looking ahead, conditions in some of our key markets will continue to be challenging with a number of economic and political headwinds. However, Bupa’s strong financial position means we are well placed to continue to invest to meet the needs of customers. This financial strength enables us to balance short term delivery with long term investment for sustainable growth, while maintaining a focus on cost efficiency.’