Medibank’s health platform gains momentum as dividend climbs

Health Services Growth Takes a Larger Role

Medibank Private Limited (ASX:MPL) is becoming less dependent on the traditional health insurance engine. Its Medibank Health segment lifted profit 31.3% to A$100.7 million in FY26, with revenue up 30.8% to A$634.8 million, as primary care, wellbeing and community services expanded.

The result included a A$6.2 million contribution from Better Medical, acquired in December for A$163.5 million. The deal added 61 GP and medical clinics to Medibank’s network, taking its primary care footprint to 169 clinics nationally. Management is targeting at least A$200 million in Medibank Health segment earnings by FY30, compared with A$100.7 million in FY26.

Insurance Earnings Remain Resilient

The core Health Insurance business still supplied most of the group’s operating profit, rising 3.8% to A$769.8 million. Premium revenue increased 4.6% to A$8.585 billion, while the gross margin held at 17.0% and the operating margin remained at 9.0%.

Resident policyholders grew by 22,100, or 1.1%, with the Medibank brand growing 0.6% and ahm increasing 2.4%. Non-resident policy units, however, fell 2.3%, reflecting weaker student volumes after tighter migration settings and the run-off of cohorts acquired after border reopening. Medibank’s resident private health insurance market share was 26.3% at March 2026, below its 26.8% or higher FY30 aspiration.

Dividend Rises Despite Softer Investment Income

Group operating profit rose 6.7% to A$813.5 million, while underlying net profit after tax increased 2.9% to A$636.8 million. Statutory NPAT attributable to Medibank shareholders climbed 27.5% to A$638.7 million, aided by the absence of the prior year’s A$128.0 million COVID-19 reserve adjustment.

The board declared a fully franked final dividend of 10.9 cents per share, taking the FY26 total to 19.2 cents, up 6.7%. That represents 83.0% of underlying NPAT, within the stated 75% to 85% payout target. The increase came despite net investment income falling 13.9% to A$178.9 million as lower interest rates and weaker equity returns weighed on the portfolio.

Capital Supports Further Expansion

Medibank ended the year with a reported Health Benefits Fund prescribed capital amount coverage ratio of 1.9 times, or 2.1 times on the regulatory basis. Unallocated capital fell to A$182.9 million, mainly after funding the Better Medical acquisition, while the group said its balance sheet retained capacity for further growth.

Management expects Medibank Health segment profit to grow by about 25% in FY27, including a full-year contribution from Better Medical. It also expects resident health insurance gross margin to remain broadly consistent with FY26, subject to the outcome of the 1 April 2027 premium increase. Those targets place execution, integration and claims trends ahead of any grander strategic narrative.

Cybercrime Proceedings Remain a Material Unknown

The report continues to flag civil penalty proceedings brought by the Australian Information Commissioner, a representative complaint and consolidated consumer and shareholder class actions connected with the October 2022 cybercrime. Medibank is defending each matter, but says the outcomes and potential financial impacts remain unknown. The AIC proceedings include allegations under Australian Privacy Principle 11.1 and could involve penalties of up to A$2.2 million per contravention, depending on the court’s findings.

Medibank also recorded A$34.9 million of cybercrime-related costs in FY26, down from A$39.7 million, and expects costs below A$20 million in FY27 excluding any potential outcomes from regulatory investigations or litigation. The next test for the investment case is therefore dual-sided: whether the newer health businesses can scale without eroding insurance returns, and whether the legacy cybercrime exposure remains containable.