Medibank delivers 2.9% underlying profit lift as health diversification gathers pace
In its FY26 full-year results presentation, Medibank Private outlined a resilient result for the year ended 30 June 2026, delivering underlying profit growth alongside an increased dividend and accelerating momentum in its non-insurance health division.
Underlying net profit after tax (NPAT) reached $636.8m, up 2.9%, while group operating profit climbed 6.7% to $813.5m. Group revenue rose 5.9% to $9,115.2m, and statutory NPAT jumped 27.5% to $638.7m, largely reflecting the absence of prior-year COVID-19 reserve movements.
The strategic through-line management emphasised was earnings diversification. Medibank Health now represents approximately 12% of group operating profit, including a six-month contribution from Better Medical. Chief Executive Officer David Koczkar framed the result around a “quality over quantity” growth philosophy, prioritising retention and long-term value over chasing volume in a more competitive market.
The presentation noted that this growth was delivered despite intensified competition and lower investment income, which management positioned as a signal of underlying business quality. A fully franked ordinary dividend of 19.2 cents per share, up 6.7%, accompanied the result.
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FY26 result at a glance
The headline scorecard captures the balance between insurance discipline and health-segment acceleration.
| Metric | FY25 | FY26 | Change |
|---|---|---|---|
| Underlying NPAT | $618.7m | $636.8m | +2.9% |
| Group operating profit | $762.4m | $813.5m | +6.7% |
| Health Insurance operating profit | $741.5m | $769.8m | +3.8% |
| Medibank Health segment profit | $76.7m | $100.7m | +31.3% |
| Ordinary dividend (fully franked) | 18.0 cps | 19.2 cps | +6.7% |
Disciplined growth in a tougher insurance market
The Health Insurance division lifted operating profit 3.8% to $769.8m, with the gross margin held steady at 17.0% and the expense ratio maintained at 8.0%. Management stressed a “quality of growth” strategy, noting the competitive environment intensified in the fourth quarter as some competitors pursued aggressive growth tactics alongside increased aggregator marketing.
Resident policyholder momentum
Resident performance underpinned the result, with growth concentrated in priority segments. Key metrics presented include:
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Net resident policyholder growth of +1.1% to 2,025.3k
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Medibank brand growth doubling to 0.6%
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ahm growth of 2.4%
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Resident gross margin up 10bps to 16.3%
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Expense ratio held stable at 8.0%
The presentation retained the term “Revenue Mix”, which replaced “downgrading” in 1H26, reporting a 150bps impact broadly consistent with the prior half.
Retention and direct-channel strength provided further support for the resident PHI business, with direct joins in resident PHI rising to 81% in 2H26, up from 74% in the prior half.
Non-resident under pressure but stabilising
Non-resident policy units declined 2.3%, with gross profit easing 1.2% to $110.3m. Management attributed the softness to student run-off following visa reforms, partially offset by strong worker growth. The company expects non-resident to deliver solid gross profit growth in FY27, supported by student portfolio stabilisation and continued worker momentum.
How Medibank makes money — the diversification story explained
A private health insurer generates revenue primarily through premiums paid by policyholders, then pays out claims when customers use hospital or extras services. The difference forms the gross margin, while the expense ratio measures how much of each premium dollar is consumed running the business. A stable expense ratio, held at 8.0% in FY26, indicates cost discipline as the business grows.
Medibank Health is the group’s non-insurance division, spanning three areas. Diversifying beyond insurance matters to investors because it reduces reliance on a mature, regulated private health insurance (PHI) market and opens new avenues for earnings growth.
The three Medibank Health segments are:
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Wellbeing — Live Better, financial wellbeing and corporate health
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Primary care — a GP-led platform including Amplar Health and Better Medical
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Community and acute care — home-based and out-of-hospital care
This division grew segment profit 31.3%, making it the fastest-growing part of the group and the clearest lever for future earnings.
Medibank Health becomes the growth engine
The standout result of the presentation came from Medibank Health, where segment profit rose 31.3% to $100.7m on revenue of $634.8m, up 30.8%. Management characterised this as organic growth augmented by acquisition, with Better Medical contributing $6.2m across its six-month contribution.
Operational metrics reinforced the momentum:
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GP consultations up 26.7%
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Acute home health admissions up 13.7%
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194k hospital bed days saved through homecare programs
Management reaffirmed an FY30 aspiration of Medibank Health operating profit exceeding $200m, a target investors are positioned to track as the key long-term diversification milestone.
Capital strength underpins the dividend and growth options
The balance sheet remained well capitalised. A final dividend of 10.9 cents per share fully franked brought the full-year payout to 19.2 cents, up 6.7%, representing a payout ratio of 83.0% of Underlying NPAT, within the target range of 75%–85%.
The Prescribed Capital Amount (PCA) coverage ratio, a regulatory measure of the capital buffer an insurer holds above its minimum requirement, improved to 1.9x from 1.8x. The company also held additional capital to offset a $250m temporary APRA supervisory adjustment.
CEO Commentary
Management characterised the result as reflecting the group’s resilience, discipline and increased earnings diversification, with the prioritisation of growth quality over quantity described as supporting retention, future resilience and long-term value creation.
What management outlined for FY27 and beyond
The presentation set out guidance across each business pillar, framed as forward expectations rather than commitments. Management expects Medibank Health segment profit growth of approximately 25% in FY27, including a full-year contribution from Better Medical, while resident PHI gross margin is expected to be broadly consistent with FY26.
A key headwind flagged was the $74.8m non-recurring COVID-19 hospital claims benefit recorded in FY26, which will not repeat in FY27. Management also expects cybercrime costs of less than $20m in FY27, down from $34.9m, with the IT security uplift programme now largely embedded.
Further forward markers included:
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Joint venture hospital investments expected to break even in FY28
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FY30 aspiration for resident PHI market share above 26.8%
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Health engagement targeted to reach approximately 10m people
The presentation also highlighted a strong M&A pipeline, with management noting appetite and financial capacity to pursue further opportunities in primary care and wellbeing. Together with organic growth across the health segments, these avenues frame the forward investment case management presented for FY27 and beyond.
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