Medibank Private Limited reported a 6% rise in operating profit for the half-year ended December 2025, despite an 11% drop in net profit after tax amid ongoing cybercrime-related costs and legal challenges. The company also raised its interim dividend by 6.4%, signalling confidence in its capital position and growth strategy.
- 6.0% increase in group operating profit to $381.7 million
- 11.0% decline in net profit after tax attributable to shareholders to $302.9 million
- Health Insurance revenue up 4.3% with stable gross margin
- Medibank Health segment profit surges 28.5%, boosted by Better Medical acquisition
- Ongoing cybercrime costs and legal contingencies impacting expenses and outlook
Solid Operating Growth Amid Challenging Conditions
Medibank Private Limited has released its half-year financial results for the period ending 31 December 2025, revealing a nuanced performance marked by steady operational growth tempered by external pressures. The group’s operating profit rose 6.0% to $381.7 million, reflecting disciplined policyholder growth and effective claims management within its core Health Insurance business.
Revenue from Health Insurance climbed 4.3% to $4.26 billion, supported by a stable gross margin of 16.2%. This stability was achieved despite a challenging economic environment that saw customer growth skewed towards lower-tier products and elevated switching rates. Medibank’s strategic focus on retention and brand differentiation, including investments in its Live Better rewards program, helped maintain a flat operating margin of 8.5%.
Medibank Health Accelerates Growth with Acquisition
The Medibank Health segment delivered a standout performance, with segment profit soaring 28.5% to $48.3 million. This surge was driven by organic growth across wellbeing, primary care, and community services, alongside the recent acquisition of Better Medical Group in December 2025. The acquisition expanded Medibank’s primary care network to 168 clinics, enhancing its capacity to meet evolving healthcare needs and scale virtual health offerings.
Revenue in Medibank Health increased 27.5% to $291.1 million, with notable gains in wellbeing services and publicly funded programs. Despite a 240 basis point reduction in gross margin due to increased investment in customer engagement and business mix shifts, the segment improved its expense ratio by 250 basis points, reflecting operational efficiencies and scale benefits.
Investment Income and Cybercrime Costs Weigh on Profit
Net investment income declined 17.1% to $94.9 million, primarily due to lower returns from growth and defensive portfolios amid a reduced average Reserve Bank of Australia cash rate. After normalising for short-term market fluctuations, underlying net investment income fell by $11 million, highlighting the sensitivity of investment returns to macroeconomic factors.
Medibank continues to manage the financial and operational fallout from a significant cybercrime event in 2022. Non-recurring cybercrime-related costs of $15 million were recorded in the half, down from $17.2 million in the prior period, covering IT security enhancements and legal expenses linked to ongoing regulatory investigations and litigation. The company anticipates full-year cybercrime costs of approximately $35 million, excluding any potential penalties or settlements.
Capital Position and Dividend Policy
Medibank’s capital position remains robust, with Health Insurance capital at 1.9 times the prescribed capital amount and a capital ratio of 13.8%, above the target range to accommodate a temporary APRA supervisory adjustment related to the cybercrime event. The group’s unallocated capital and strong cash flow generation provide capacity for further organic and inorganic growth, including potential Tier 2 debt issuance.
The board declared a fully franked interim dividend of 8.3 cents per share, up 6.4% from the previous year, reflecting confidence in the company’s financial resilience and commitment to shareholder returns. The payout ratio stands at 76.8% of underlying net profit after tax.
Looking Ahead
Medibank’s outlook remains cautiously optimistic. The company expects continued disciplined policyholder growth and claims management amid economic headwinds, with a focus on expanding its Medibank Health footprint and integrating recent acquisitions. However, the unresolved cybercrime-related legal proceedings and regulatory investigations pose ongoing risks that could influence future financial results and operational priorities.
Bottom Line?
Medibank balances steady growth and dividend uplift against cybercrime-related uncertainties, setting the stage for a pivotal second half of FY26.
Questions in the middle?
- How will ongoing cybercrime litigation and regulatory outcomes impact Medibank’s financial position and reputation?
- What is the integration progress and expected contribution of Better Medical Group to Medibank Health’s growth trajectory?
- How will changes in the economic environment and RBA cash rate influence Medibank’s investment income and expense management?