Medibank Private Limited: FY26 result: MPL‘s margin promise meets a volume slowdown in the face of strong competition. Cheap, but guidance faces some risks

Research evidence excerpt

J P M O R G A N

Asia Pacific Equity Research

20 August 2026

Medibank Private Limited

FY26 result: MPL’s margin promise meets a volume

slowdown in the face of strong competition. Cheap, but

guidance faces some risks

Neutral

MPL.AX, MPL AU

Price (20 Aug 26):A$4.71

▼Price Target (Jun-27):A$5.15

Prior (Jun-27):A$5.50

MPL's FY26 results were broadly in line with our numbers at the underlying level.

Health Insurance operating profit was in line, but Medibank Health (though

showing very strong growth on an absolute basis) decelerated in 2H (organically).

Resident volume was weak and MPL lost share in FY26 again, yet management

still guides to disciplined share gains in FY27, which we find hard to reconcile

against a 4Q26 exit rate of ~nil growth and elevated competition in the industry.

This could also affect Health Insurance MERs given a desire to grow expenses in

FY27 at a similar rate to FY26. MPL guides to flat resident gross margins into

FY27, which we break down as a 5.1% April rate against inflation of ~3.6% and

downgrading of ~1.5%. Medibank Health segment growth is also guided to ~25%

(~20% organic), which we do not give full credit for given limited clarity around

how they will achieve this and a softer than guided 2H. We adjust FY27/FY28

UNPAT by -1.7%/-1.2%. We remain Neutral with a $5.15/share PT, but

acknowledge there is potential value upside if they hit their guidance, particularly

given the sharp share price reaction in recent days. Key points:

MPL for FY26 reported 1) Adjusted Profit after tax (before abnormals) of $

$636.8mnmn (JPMF $637.1mnmn; Cons $638.0mn ) 2) Operating margin

(health insurance) of 9.0% ( JPMF 8.9%; Cons 9.0% ) 3) Health Insurance

operating profit of $769.8mn ( JPMF $769.4mn; Cons $774.0mn ) 4) DPS (cps)

of 19.2 ( JPMF 19.4; Cons 19 ) 5) Complementary services segment profit of

$100.7mn ( JPMF $107.9mn; Cons $104.0mn ) 6) Statutory NPAT of $639m

(JPMF $630m; Cons $641m- better investment income than JPMF).

Australia

Insurance and Diversified Financials

Siddharth Parameswaran AC

(61-2) 9003-8629

J.P. Morgan Securities Australia Limited

Tharan Jeyathasan

(61-2) 9003-6098

J.P. Morgan Securities Australia Limited

Rishi S Parihar

…