Cybercrime Costs and Rising Claims Pose Challenges Despite Medibank’s Growth
Medibank has reported strong full-year results for 2025, with underlying net profit rising 8.5% and record policyholder growth, underpinned by disciplined cost management and strategic health investments.
- Underlying NPAT up 8.5% to $618.7 million
- Net resident policyholder growth doubles to 27,900
- Medibank Health segment profit surges 27%
- Final fully franked dividend increased to 10.2 cents per share
- $50 million committed to mental health initiatives over five years
Strong Customer Growth Amidst Cost Pressures
Medibank’s 2025 full-year results reveal a company capitalizing on its growing role in Australian health insurance and wellbeing services. The insurer reported an 8.5% increase in underlying net profit after tax to $618.7 million, driven by a doubling of net resident policyholder growth to 27,900. This momentum reflects Medibank’s focus on delivering value amid ongoing cost-of-living pressures, with customer advocacy reaching a three-year high and retention rates outperforming the market.
Non-resident policy units also grew by 3.1%, supported by a differentiated health and wellbeing offering that resonates with international workers and visitors. The company’s disciplined approach to cost management kept its management expense ratio among the industry’s lowest for a decade, enabling a premium increase well below competitors.
Expanding Health Services and Strategic Investments
Medibank’s health services arm, Medibank Health, delivered a 27% increase in segment profit, fueled by organic growth and acquisitions such as Myhealth clinics and Amplar Health. The company is actively piloting proactive primary care models and expanding its no gap network to 41 sites nationally, positioning itself for the anticipated shift toward home- and community-based healthcare over the next decade.
Significant investments include a $50 million commitment over five years to mental health initiatives and nearly $33 million in customer rewards through the Live Better program. These initiatives underscore Medibank’s strategy to diversify beyond traditional insurance and embed itself deeper into customers’ health journeys.
Financial Resilience and Forward Outlook
Despite absorbing $39.7 million in cybercrime-related costs and regulatory expenses linked to a 2022 incident, Medibank maintained a strong capital position with a Health Insurance capital coverage ratio of 1.8 times. The board declared a fully franked final dividend of 10.2 cents per share, bringing the total FY25 dividend to 18 cents, an 8.4% increase year-on-year.
Looking ahead, Medibank anticipates moderated industry growth but aims to continue disciplined market share expansion, particularly within its Medibank brand. The company expects claims per policy unit to rise modestly and projects low double-digit organic profit growth in its health services segment. Strategic acquisitions remain a priority, with plans to invest up to $250 million over the next two years to fuel long-term value creation.
CEO David Koczkar emphasized the company’s commitment to driving the health transition in Australia, advocating for prevention and innovation as keys to sustainable health outcomes and system productivity.
Bottom Line?
Medibank’s robust growth and strategic investments position it well for the evolving Australian health landscape, but ongoing cybercrime costs and market dynamics warrant close watch.
Questions in the middle?
- How will Medibank manage ongoing cybercrime-related costs and regulatory scrutiny?
- What impact will rising claims costs have on premiums and customer retention?
- How aggressively will Medibank pursue acquisitions to expand its health services footprint?