Medibank Private (ASX:MPL) executives said the group delivered “another good result” in the first half of FY26, pointing to improved customer engagement, stronger momentum in resident health insurance, and continued growth in its Medibank Health division. Chief Executive Officer David Koczkar said the company is continuing to “drive the health transition,” including through its expansion in primary care following the completed acquisition of Better Medical.
Customer and service highlights
Koczkar said Medibank continued to focus on value for customers amid cost-of-living pressures, citing several metrics discussed on the call:
- About 4.3 million customers across the group.
- Approximately AUD 105 million saved in out-of-pocket costs.
- About AUD 3.3 million saved through use of the No-Gap network.
- AUD 23 million in rewards earned by Live Better members.
Financial performance and dividend
Chief Financial Officer Mark Rogers said the half-year result reflected a balance between resident policyholder growth and gross margin, alongside “continued earnings diversification” and reinvestment for growth. The company reported group operating profit up 6% to AUD 381.7 million.
Rogers said investment income was affected by the lower Reserve Bank of Australia cash rate, and that other income and expenses were impacted by higher M&A costs. He also noted that non-recurring cyber costs were lower, and that FY26 cyber-related costs are expected to be around AUD 35 million as the IT security uplift program becomes largely embedded.
Underlying EPS (which management said normalizes investment returns) was 10.8 cents per share, in line with the prior year.
The board declared an interim fully franked dividend of AUD 0.083 per share. Rogers said this represented a 6.4% increase and a 76.8% payout of underlying net profit after tax.
Health insurance: growth, margins, and claims trends
Rogers said the health insurance business remained resilient despite a challenging economic environment. For the segment, gross profit rose 4.4% on 4.3% revenue growth, with gross margin stable at 16.2%. Health insurance operating profit increased 3.5% to AUD 361.5 million, and the operating margin remained 8.5%.
Operating expenses increased 5.4% to AUD 329.4 million, with an expense ratio 10 basis points higher at 7.7%. Rogers attributed the increase to inflation, volume impacts, and ongoing investment, partially offset by AUD 3 million of productivity savings. The company guided to FY26 expenses of AUD 690 million to AUD 695 million, including AUD 10 million of productivity savings.
On membership trends, management said resident policyholders increased 1.9% over the last 12 months, with Medibank and ahm growing 0.8% and 4.9%, respectively. Growth in the last six months was 0.9%, which Rogers said was more than double the prior period. Retention improved 10 basis points, which management contrasted with higher industry lapse rates.
Management discussed how policyholder growth has skewed toward lower-tier products, but said the impact to revenue and claims largely offsets. In response to analyst questions about “downgrading” and revenue mix, executives emphasized that revenue mix reflects three factors: customers changing cover, the mix of joins versus lapses, and investment choices (including Live Better, discounts, and offers). Rogers said the majority of the increase in the first-half revenue mix impact was driven by Live Better investment and offers.
On claims, Rogers said resident claims expense increased 4.9%, while resident claims growth per policy unit increased 20 basis points to 2.5%, driven by higher extras partially offset by lower hospital. He said risk equalization provided a 50 basis point benefit to net claims growth, with some of the benefit expected to be timing-related.
Executives also addressed the difference between FY26 and FY27 claim dynamics, citing two key items raised in Q&A: a “COVID tailwind” in FY26 because FY25 claims were AUD 74.8 million below expectations (worth about 100 basis points on claims), and the New South Wales private room rate (costing about 20 basis points in FY26 and then becoming embedded).
Medibank Health growth and primary care expansion
Medibank Health continued to be a major focus. Rogers said segment profit rose 28.5% to AUD 48.3 million, while revenue grew 27.5%. Operating margin increased 10 basis points to 17.7%. He said the revenue increase reflected strong volume growth in community and acute, increased ownership of Amplar Health Home Hospital, and strong customer growth in wellbeing.
Management said Live Better members increased to 13.6%, primary care consultations increased 2.8% with a higher proportion conducted virtually, and acute home admissions benefited from publicly funded program volumes and transition care capacity.
Koczkar said the group has now established a national network of 168 clinics and described primary care as a critical area for reform. He said the combination of Medibank’s majority interest in Myhealth, the Better Medical acquisition, and Amplar Health’s GP nursing and other offerings creates “one of the largest primary care networks in the country.”
Rogers said the company expects FY26 Medibank Health organic operating profit growth to be similar to the first half, plus an additional circa AUD 6 million contribution from Better Medical in the second half. He added that the M&A pipeline remains strong and that Medibank has “both the appetite and financial capacity” to pursue further opportunities.
Capital position and outlook
Rogers said the health insurance business remains well capitalized, with capital at 1.9 times the PCA and a capital ratio of 13.8% of premium revenue. He said the ratio sits above the 10%–12% target range partly because Medibank continues to hold additional capital to offset the AUD 250 million APRA supervisory adjustment. He also said the Better Medical acquisition was the main driver of the period’s capital movement and was funded from unallocated capital.
Looking ahead, Rogers said the resident and non-resident outlooks are unchanged, including expected resident claims growth per policy unit of 2.6% to 2.9%. Koczkar said the company remains on track to meet its FY26 outlook and will continue to focus on value for customers while advocating for broader health system reform and accelerating the shift to virtual, community, and home-based care models.
About Medibank Private (ASX:MPL)
Medibank Private Limited provides private health insurance and health services in Australia. The company operates in two segments, Health Insurance and Medibank Health. The Health Insurance segment provides private health insurance products, including hospital cover that offers members with health cover for hospital treatments; and ancillary cover, which provides members with health cover for healthcare services, such as dental, optical, and physiotherapy. This segment also offers health insurance products to overseas visitors and overseas students.
