This article first appeared on GuruFocus .
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Group Operating Profit:Up 6.7% to $813.5 million.
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Underlying EPS:$0.231 per share, up 2.9% on last year.
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Revenue:Grew 4.6%.
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Gross Profit:Increased to $1.46 billion.
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Gross Margin:Stable at 17%, with a 10 basis point increase in resident gross margin and a 210-basis-point decrease in non-resident.
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Operating Profit:Increased 3.8% to $769.8 million, with operating margin remaining at 9%.
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Expenses:Up 5.4% to $690.2 million, with the expense ratio stable at 8%.
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Resident Policyholder Growth:Increased 1.1%, with Medibank growth doubling to 0.6% and ahm growing 2.4%.
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Resident Claims Expense:Increased 4.6%, with claims growth per policy unit up 40 basis points to 2.6%.
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Non-Resident Policy Units:Declined 2.3%, with gross profit reducing 1.2% to $110.3 million and gross margin down 210 basis points to 34.8%.
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Medibank Health Segment Profit:Increased 31.3% to $100.7 million, with revenue up 30.8% and gross profit up 26.5%.
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Medibank Health Operating Margin:Down 50 basis points to 16.9%.
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Investment Income:Down $28.9 million, with underlying net investment return reducing 24 basis points to 5.62%.
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Final Dividend:Declared at $0.109 per share, bringing FY26 dividends to $0.192 per share, a 6.7% increase and 83% payout of underlying net profit after tax.
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Capital:$182.9 million of unallocated capital, with PCA coverage ratio increasing to 1.9 times and capital ratio at 13.3% of premium revenue.
Release Date: August 19, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Medibank Pvt Ltd ( MDBKY ) delivered strong growth across the business, with resident policyholder growth of 1.1%, including a doubling of Medibank brand growth to 0.6% and ahm growing 2.4%.
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Medibank Health achieved another record result, with segment profit up 31.3% to $100.7 million, driven by strong organic growth and a contribution from Better Medical.
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The company maintained a stable PHI gross margin and expense ratio, demonstrating disciplined cost management and a focus on quality growth over quantity.
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Medibank Pvt Ltd ( MDBKY ) returned significant value to shareholders with a fully franked final dividend of $10.9 cents per share, bringing FY26 dividends to $0.192 per share, a 6.7% increase.
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The company is well-positioned for future growth with a strong capital position, a robust M&A pipeline, and an ambitious plan to expand its primary care network and health services.
Negative Points
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The competitive environment intensified in Q4, with some competitors using aggressive growth tactics and increased aggregator marketing, which is not in line with Medibank Pvt Ltd ( MDBKY )'s strategy.
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The decision to remove ahm from an aggregator panel is expected to have a short-term volume impact, and escalating aggregator commissions are a growing cost concern for the industry.
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Non-resident PHI policy units declined 2.3%, with student policy units falling due to tighter migration settings and the natural runoff of large cohorts, impacting gross margin.
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Hospital claims growth per policy unit is expected to increase in FY27 due to the non-recurrence of a $74.8 million COVID utilization benefit, adding pressure to claims inflation.
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Lapse rates increased by 40 basis points, reflecting higher industry switching driven by premium increases, economic pressures, and more aggressive aggregator activity.
Q & A Highlights
Q: What is the outlook for resident policyholder growth and expenses in FY27, given the competitive environment and the decision to remove ahm from an aggregator panel? A: CEO David Koczkar stated the company aims to grow market share in a disciplined way, with strong confidence in increasing momentum for the Medibank brand. CFO Mark Rogers added that expense growth in FY27 is expected to be similar to the 5.4% growth in FY26, with an incremental marketing investment of around $10 million, similar to the current year.
Q: Can you unpack the second-half claims performance and provide guidance on claims inflation for FY27? A: CFO Mark Rogers explained that cash claims paid in the second half were lower than incurred claims due to a normalization in payment speeds. For FY27, the most material impact on hospital claims inflation is the unwinding of the $74.8 million COVID utilization benefit, which adds 150 basis points to utilization, taking underlying hospital claims inflation from 3.1% to 3.6%. Extras claims growth is expected to be lower than the 3.4% reported in FY26.
Q: What is the outlook for the non-resident business, and what will drive the expected turnaround in momentum? A: CFO Mark Rogers noted that the decline in FY26 was driven by the exit of large student cohorts that joined after borders reopened, which is a "graduating year." Policy units are expected to stabilize in FY27, with strong growth in the higher-margin workers portfolio (growing policy units north of 20%). CEO David Koczkar added that the overall visa market remains strong, with the mix shifting towards skilled workers and higher education, which are areas of strength for Medibank.
Q: How are you thinking about the competitive intensity in the market, and is it sustainable? A: CEO David Koczkar stated that the aggressive tactics seen in Q4 are not consistent with Medibank's long-term strategy, and the company expects the competitive environment to unwind over time. CFO Mark Rogers highlighted that maintaining discipline has allowed the resident gross margin to increase by 10 basis points, reinforcing the sustainability of the margin.
Q: What is the organic growth rate for the Medibank Health segment, and what are the expectations for FY27? A: CFO Mark Rogers clarified that subtracting the $6.2 million contribution from Better Medical from the reported 31.3% segment profit growth leaves organic growth in the 20% to 25% range. For FY27, the company expects segment profit growth of circa 25%, including a full-year contribution from Better Medical.
Q: What is the status of the APRA capital charge related to the cyber incident, and when might it be unwound? A: CEO David Koczkar stated that Medibank remains in close contact with APRA and has made great progress on the IT security uplift program, which is now largely embedded. The final decision on the $250 million supervisory adjustment rests with APRA, which may grant partial relief based on milestones or wait until the program is fully embedded.
Q: Does the FY27 gross margin guidance assume any changes to actuarial assumptions or the risk equalization scheme? A: CFO Mark Rogers confirmed there is no change to actuarial assumptions, with the probability of adequacy remaining at 98%. He also noted that Medibank was a modest beneficiary of the risk equalization pool in FY26, and the 12-month average should be a good indicator for FY27, subject to competitive behavior.
Q: Can you provide more color on the drivers of hospital claims inflation, particularly around the shift in the model of care? A: CFO Mark Rogers detailed three impacts on hospital claims: the skew towards younger customers joining the industry with lower claims intensity, the shift from Gold to Silver and Bronze policies with lower utilization, and the shift in the model of care (e.g., orthopedics moving to short-stay and rehab moving out of hospital) having a deflationary impact on the inflation component.
Q: What is the strategy for the corporate segment, and what are the growth opportunities? A: CEO David Koczkar highlighted that Medibank has 2,500 corporate accounts and has grown almost double the market growth rate in this segment. The corporate health and wellbeing market is estimated at around $1 billion by the end of the decade, and Medibank is well-positioned to grow through its Live Better program and broader health services, including the recent appointment as a preferred provider for the Pacific Australia Labour Mobility scheme.
Q: How will the government's private health sector reform paper, particularly around hospital-in-the-home and the minimum insurer payment, impact Medibank? A: CEO David Koczkar stated that Medibank has been championing the move to community care and is aligned with the reform's direction. Amplar Health already provides services to the health insurance business, so the company is already operating in this space. The reform is more about setting a default benefit for patients to be treated at home on discharge, and there is still detail to be worked through.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
