Medibank Private shares have recovered the losses after the cyber breach 2 years ago, but what’s next?

Medibank Private shares took a big hit nearly 3 years ago due to the infamous cyber breach. Investors who chose to buy the dip and have held ever since have done quite well – shares rallied 80% in the following 3 years.

But shares have fallen over 12% since August, when it released its FY25 results. What’s next for the $10bn health insurer that was once government owned?

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Medibank’s history

Medibank began in 1976 as a not-for-profit private health insurer. It spent 2 decades operated by a statutory body formed for this purpose, before it became a company that was solely owned by the federal government. In the mid 2000s it diversified into other kinds of insurance and gradually became a for-profit entity. 2014 saw the company privatised and listed on the ASX, capped at $5.7bn. It is now over $12bn.

2022 was its annus horribilus with a data breach resulting in the personal details of 9.7 million current and former customers published on the dark web. Medibank tried to blame it on a third party contractor, but a federal court case would later reveal that the company was at least partially to blame.

Specifically, it failed to require workers to use multi-factor authentication and one particular IT service desk operator saved his username and password for several accounts to his personal internet browser, which had access to most of Medibank’s systems, including network drives.

That computer was compromised by malware, and credentials were obtained by the hacker, who logged in and was able to do because of a lack of Two-Factor-Authentication. He remained in the network for nearly two months.

Medibank Private shares have regained losses, but what is next?

Medibank shares took a hit in the fall out, but they have since recovered. Nonetheless, Medibank has new issues it had to address. The company faces intense competition from rivals that offer cheaper policies. There are calls from struggling private hospitals to get insurers (particularly larger, profitable companies) to put more money into the healthcare systems – a potential lose-lose situation for the company because it could lose members in a cost of living crisis. The 2025 collapse of Healthscope showed that the calls private hospitals were struggling were not sensationalists.

Medibank agreed to take ‘soft’ steps including out-of-cycle funding for private hospitals operators, but this did not save Healthscope. The most recent premium increase was an average of 3.99% from April 1, 2025 with an average of 4.81% in NSW specifically; after only hiking it 3.03% in the year before.

FY25 saw $8.6bn in total revenue, up 5.2%, and a $618.7m post-tax profit on an underlying basis, up 8.5%. A total of $6.6bn in claims were paid and there was 1.4% growth in net resident policyholders and 3.1% growth in non-resident policy units. The company completed its COVID-19 cash backs, paying out $228m taking the total to $1.7bn. The company’s dividend was 18cps, representing 80.1% of its profit.

For FY26, the company guided to claims per policy unit growth of 2.6-2.9%. But moderating of industry growth was anticipated and policyholder growth would be grown ‘in a disciplined way’.

Since its results in August, the company released a new target of Medibank Health segment earnings of at least $200m in FY30 and to gain a share of at least 26.8%. The company will strive to attain this by delivering greater value for money and through its Live Better (its health and wellbeing rewards program), corporate health and financial wellbeing offerings.

Medibank also announced it was buying Better Medical, a network of 61 GP and medical clinics for $159m. This complements its majority ownership of Myhealth Medical Group which has a network of 105 primary care networks. Medibank told investors it would help Better Medical by providing money to invest in its digital capabilities to free up clinicians time and improve patient experience and access. We wouldn’t be surprised to eventually see them eventually rebranded, or at least providing priority to Medibank members as happens with Bupa clinics.

Analysts are optimistic with a mean target price of $5.14, 13% above the $4.53 share price right now. They expect $9.1bn revenue in FY26, $9.5bn in FY27 and $10bn in FY28. Its bottom line growth is anticipated to be more nuanced. Medibank’s P/E for FY26 is 19.1x and its PEG 1.2x.

Conclusion

We congratulate investors who profited from ‘buying the dip’ on Medibank, but we are not so confident about its ability to grow from here, at least for the next 12 months. We’d wait until the first half of next year to see its 1H26 results and premium increases for the year commencing on April 1 as this will give us an idea of how the company is coping in an environment of higher premiums.