Australian Unity Posts FY2026 Statutory Loss with $7.8 Million Adjusted EBITDA

Financial Performance Under Pressure Amid Sector Reforms

Australian Unity Limited (ASX:AYU) delivered a challenging FY2026 financial performance, reporting a statutory loss after tax of $155.2 million, a sharp reversal from prior years’ profits. Adjusted EBITDA from continuing operations shrank to $7.8 million, down from $136.2 million in FY2025. This downturn was driven by a complex mix of regulatory changes, notably the implementation of the Aged Care Act 2024 and delays in the Government’s Support at Home program, which disrupted service volumes and workforce utilisation in Home Health services.

Operational inefficiencies and IT project delivery challenges further weighed on earnings, alongside significant non-cash asset impairments totalling $107.1 million after tax. These impairments included goodwill write-downs in Wealth & Capital Markets and valuation adjustments to the Herston Quarter development and capitalised software assets.

Despite revenue holding steady at $2.93 billion, the Group’s operating expenses surged by $254.8 million, reflecting wage inflation, increased claims costs in Private Health Insurance, and upfront costs associated with cost-base restructuring initiatives aimed at improving future efficiency.

Strategic Moves: Acquisition and Divestment

Amid the financial headwinds, Australian Unity progressed strategic portfolio reshaping. The acquisition of Plena Healthcare for $70.3 million expanded the Home Health platform, adding around 800 clinicians and broadening allied health services across community and residential aged care settings. Plena contributed $65.9 million in revenue and $4.0 million in profit before tax since acquisition.

Conversely, the Group completed the sale of its banking operations to Bank Australia in November 2025, simplifying its structure and releasing approximately $94.5 million of capital. This divestment marked a significant shift away from banking and loan facilities as core activities.

The Group also issued $209.8 million in Mutual Capital Instruments (MCIs) during the year to support acquisitions and reduce debt, followed by a $200 million private placement of medium-term notes post-balance date, pre-funding debt maturities until FY2029. These moves strengthened the balance sheet and enhanced financial flexibility.

Segment Performance Reflects Sector Challenges and Market Conditions

The Home Health segment grew revenue by $104.9 million to $1.06 billion, boosted by Plena’s contribution. However, earnings growth was constrained by transitional policy impacts and operational investments ahead of demand, with Adjusted EBITDA rising modestly to $57.3 million. The segment maintained a strong Net Promoter Score of +372 despite sector disruption.

Private Health Insurance faced a tough environment, with modest revenue growth to $723.5 million but a decline in Adjusted EBITDA to $42.1 million, pressured by claims inflation exceeding premium increases and a slight policyholder decline to around 160,000. Australian Unity was named Roy Morgan Health Insurer of the Year (Retail) for the third consecutive year, underscoring strong member satisfaction.

Residential Aged Care revenue dipped slightly to $246.7 million, impacted by the absence of $18.3 million in non-recurring valuation gains from FY2025. Rising labour costs outpaced government funding, squeezing Adjusted EBITDA down to $32.9 million. Occupancy remained robust at 96.3%, outperforming sector averages, with a Net Promoter Score improving to +42.

Wealth & Capital Markets saw revenue fall sharply by $64.2 million to $186.2 million, reflecting portfolio simplification, investor outflows, and adverse market conditions. Despite this, Retirement Communities performed well with increased resale settlements and strong occupancy. Funds under management declined 12.2% to $11.4 billion.

Leadership Transition and Governance

FY2026 marked a significant leadership transition with Kelly Bayer Rosmarin appointed Group Managing Director & CEO in December 2025, succeeding Rohan Mead after a 21-year tenure. The Board expressed confidence in Bayer Rosmarin’s experience and energy to lead the Group’s next growth phase amid industry change.

Deputy Chair Melinda Cilento retired after 12 years on the Board, with the Chair, Lisa Chung, acknowledging her substantial contributions. The Board remains committed to strategic alignment and operational excellence to deliver sustainable growth and member value.

Climate Risk Integration and Sustainability Disclosures

Australian Unity’s FY2026 Annual Report includes its inaugural climate-related disclosures prepared under AASB S2 Climate-related Disclosures, reflecting a maturing approach to managing physical and transition climate risks. The Group identified two medium-term high-rated climate risks: physical service disruption in Home Health due to extreme weather affecting infrastructure and access, and government carbon reduction policies impacting operating and capital costs, particularly in Residential Aged Care.

The Group has begun implementing emissions reduction initiatives such as rooftop solar installations across aged care and retirement sites, energy efficiency programs, and waste management pilots. However, it has not set formal climate targets or an internal carbon price during the reporting period, though these are under consideration as part of its evolving Enterprise Risk Management Framework.

Governance of climate risk is embedded through the Board’s Risk & Compliance Committee, Audit Committee, and an ESG Forum, with senior management accountable for integration into strategy, risk management, and financial planning.

What to Watch Next

Australian Unity faces a pivotal period as it navigates regulatory headwinds, operational transformation, and climate-related pressures. Investors should monitor the Group’s progress on realising benefits from its transformation programs, the pace and impact of government aged care reforms, and execution of its climate risk mitigation strategies. The upcoming FY2027 results and quarterly updates will be critical to assessing whether Australian Unity can return to sustainable profitability while balancing its mutual ethos and growth ambitions.

Meanwhile, the Group’s exposure to rising carbon costs and physical climate risks underscores the importance of strategic capital allocation and operational resilience. How Australian Unity manages these evolving challenges will be a key determinant of its long-term competitive position in Australia’s health, wealth, and care sectors.

Notably, the Group’s recent $200 million private placement and partial buyback of Series D Bonds form part of a broader capital management strategy that will shape its financial flexibility through to 2029, warranting close attention from market participants.