iSelect falls shy of first targets
Newly floated insurance website iSelect failed to meet its revenue target for the 2013 financial year, blaming the unexpected weakness on a shift to lower-priced private health insurance products in the second half.
The company, which was listed on the Australian Securities Exchange in June, told the market in its prelisting prospectus that it expected revenue for the financial year to climb to $122 million, driving its profit to a record high of $14.5 million.
The company missed this guidance on Thursday, reporting a full-year net profit of $13.4 million, with revenues of $118 million.
The lower earnings disappointed investors, who sent shares down 6.1 per cent on Thursday, to close at $1.62.
Chief executive Matt McCann said changes to the private health rebate had an impact on the type of policies the company was selling in the second half of the year.
"We saw people make lower-price purchases in terms of their private health insurance policies. That for us was part of the cause."
"But demand for private health insurance is still strong, the market is still growing."
The comparison website made a dismal debut in June, slumping 29¢ to $1.56. The bulk of the company's revenues are generated through commission payments. These are typically in upfront fees or trailing commissions.