Full Year 2026 Medibank Private Ltd Earnings Call

August 19, 2026

Speaker #1: Thank you for standing by, and welcome to the Medibank full-year results 2026. All participants are in a listen-only mode. There will be a presentation, followed by a question-and-answer session.

Operator: Thank you for standing by, and welcome to the Medibank full year results 2026. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. David Koczkar, Chief Executive Officer. Please go ahead.

Operator: Thank you for standing by, and welcome to the Medibank Full-Year Results 2026. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. David Koczkar, Chief Executive Officer. Please go ahead.

Speaker #1: If you wish to ask a question, you will need to press the star key, followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. David Koczkar, Chief Executive Officer.

Speaker #1: Please go ahead.

Speaker #2: Thank you.

Speaker #3: Thanks, and good morning, everyone. It's great to be here with you today. I'm coming to you from Naarm, the home of the Wurundjeri Woi Wurrung peoples, and I pay my respects to their elders, past and present.

David Koczkar: Thanks, and good morning, everyone. It's great to be here with you today. I'm coming to you from Naarm, the home of the Wurundjeri Woi-wurrung peoples, and I pay my respects to their elders, past and present. I'm joined today by our executive leadership team, including our CFO, Mark Rogers. This morning we'll talk to Medibank's results for FY26. The first opening thoughts from me. We continue to deliver value to the 6 million people who trust us with their health and wellbeing. Despite cost of living pressures, people continue to prioritize their health, and private health cover has remained non-discretionary. People are looking for greater value and better access to care. The health system is increasingly struggling to meet those expectations. 1 in 4 people in Australia say they have delayed or avoided seeing a GP because of costs.

Speaker #3: I'm joined today by our Executive Leadership Team, including our CFO, Mark Rogers. This morning, we'll talk to Medibank's results for FY26. First, some opening thoughts from me: we continue to deliver value for the 6 million people who trust us with their health and well-being.

Speaker #3: Despite cost-of-living pressures, people continue to prioritize their health, and private health cover has remained non-discretionary. People are looking for greater value and better access to care.

Speaker #3: And the health system is increasingly struggling to meet those expectations. One in four people in Australia say they have delayed or avoided seeing a GP because of costs.

Speaker #3: At the same time, public hospitals are dealing with growing elective surgery waiting lists. So that's why accelerating the health transition has never been more important.

David Koczkar: While at the same time, public hospitals are dealing with growing elective surgery waiting lists. That's why accelerating the health transition has never been more important. Turning to our results. What stands out for me is the strong growth across the business. With improved momentum in the Medibank brand, ahm continuing to grow above the market, and Medibank Health delivering another record result. This combination sets us apart, helping us build a more resilient and growing health company. As you'd expect, given our strategy and the external environment, we're controlling the controllables and managing for the long term, balancing customer growth and profitability while investing for the future. Let's turn to slide 6. Aside from our financial outcomes, we think about our impact in 3 areas. First, customer value.

Speaker #3: Now, turning to our result: what stands out for me is the strong growth across the business, with improved momentum in the Medibank brand, AHM continuing to grow above the market, and Medibank Health delivering another record result.

Speaker #3: This combination sets us apart, helping us build a more resilient and growing health company. As you'd expect, given our strategy and the external environment, we're controlling the controllables and managing for the long term.

Speaker #3: Balancing customer growth and profitability while investing for the future. Now, let's turn to slide 6. Aside from our financial outcomes, we think about our impact in three areas.

Speaker #3: First, customer value. Customers saved around $250 million through our Members' Choice and no-gap networks, and claimed nearly $49 million in Live Better rewards. Second, customer health.

David Koczkar: Customers saved around AUD 250 million through our Members' Choice and No Gap networks, and claimed nearly AUD 49 million in Live Better rewards. Second, customer health. More customers are using our health services. Amplar Health alone supported more than 5.3 million patient interactions. We also know that engaged Live Better members are more active and report healthier behaviors. It's also a reason 1 in 3 people choose Medibank. Third, system innovation. We expanded care in the home and provided private hospitals with a further AUD 40 million to help accelerate the health transition. These are practical examples of how we're creating value for customers and patients, supporting their health outcomes, and helping them improve the sustainability of the health system. Now to slide 7.

Speaker #3: More customers are using our health services. Ampler Health alone supported more than 5.3 million patient interactions. We also know that engaged Live Better members are more active and report healthier behaviors.

Speaker #3: It's also a reason 1 in 3 people choose Medibank. And third, system innovation. We expanded care in the home and provided private hospitals with a further $40 million to help accelerate the health transition.

Speaker #3: So these are practical examples of how we're creating value for customers and patients, supporting their health outcomes, and helping them improve the sustainability of the health system.

Speaker #3: Now, onto slide 7. I won't go through all of these areas of the results, but for me, the highlights are resident policyholder growth of 1.1%, with Medibank growth doubling to 0.6% and AHM growing 2.4%, including strong growth in our priority segments.

David Koczkar: I won't go through all of these areas of the results, but for me, the highlights are resident policyholder growth of 1.1%, with Medibank growth doubling to 0.6% and ahm growing 2.4%, including strong growth in our priority segments. This is a pleasing outcome given an increasingly competitive environment and reflects our disciplined approach to growth. In PHI, we continue to balance margin and costs as we grew, and importantly, achieved a stable PHI gross margin and expense ratio. Medibank Health had another record result, up 31.3%. In line with our healthy capital position, we are delivering shareholders a fully franked final ordinary dividend of AUD 10.9 cents per share. To slide 8 now. Our strategy is driven by the needs of our customers and patients and the greater role Medibank is playing in supporting their health and wellbeing.

Speaker #3: This is a pleasing outcome given an increasingly competitive environment and reflects our disciplined approach to growth. In PHI, we continue to balance margin and costs as we grow, and importantly, achieved a stable PHI gross margin and expense ratio.

Speaker #3: Medibank Health had another record result, up 31.3%. In line with our healthy capital position, we are delivering shareholders a fully franked final ordinary dividend of 10.9 cents per share.

Speaker #3: Moving to slide 8 now. Our strategy is driven by the needs of our customers and patients, and the greater role Medibank is playing in supporting their health and well-being.

Speaker #3: As you know, our growth focus remains across five segments in health, from insurance to care delivery. In each segment, we have built strong foundations.

David Koczkar: As you know, our growth focus remains across five segments in health, from insurance to care delivery. In each segment, we have built strong foundations, and they all provide attractive growth opportunities. Together, importantly, they are driving our growth and diversification, creating long-term value and allowing us to make a positive impact to the health system. Now turn to slide 9. This year we made some important steps in building a stronger, more diversified health company. Again, some highlights for me were customer advocacy remained strong, health engagement improved, and our teams remained highly engaged, supported by investment in technology and AI. Across Medibank and ahm, we broadened our product offering, we strengthened our primary care footprint, and achieved strong growth in our community and acute business. We also further strengthened our foundations through RiskFit and technology modernization while delivering another year of productivity improvements.

Speaker #3: And they all provide attractive growth opportunities. Together, and importantly, they are driving our growth and diversification, creating long-term value and allowing us to make a positive impact on the health system.

Speaker #3: Now, let's turn to slide 9. This year, we made some important steps in building a stronger, more diversified health company. Again, some highlights for me were: customer advocacy remained strong, health engagement improved, and our teams remained highly engaged, supported by investment in technology and AI.

Speaker #3: Across Medibank and ahm, we broadened our product offering, strengthened our primary care footprint, and achieved strong growth in our community and acute business.

Speaker #3: And we also further strengthened our foundations through risk fit and technology modernization, while delivering another year of productivity improvements. Now, to slide 10. Growth in the resident health insurance market continues at healthy levels, including strong growth in customers under 30.

David Koczkar: Now to slide 10. Growth in the resident health insurance market continues at healthy levels, including strong growth in customers under 30. We did see an increasingly competitive environment, especially in Q4, with some competitors using aggressive growth tactics alongside increased aggregator marketing. These tactics are not in line with our strategy. Across both brands, we remain disciplined in our approach with a focus on our target segments and deepening customer engagement. Pleasingly, 57% of Medibank policyholders are now engaging with our health and wellbeing offerings, up on last year. But with consumers looking to us for more value and for the rest of the industry, we will continue to tackle unnecessary costs across the health system, including the growing cost of aggregators. Upfront commissions paid to aggregators by insurers are opaque to the consumer.

Speaker #3: We did see an increasingly competitive environment, especially in Q4, with some competitors using aggressive growth tactics alongside increased aggregator marketing. These tactics are not in line with our strategy.

Speaker #3: And across both brands, we remain disciplined in our approach, with a focus on our target segments and deepening customer engagement. Pleasingly, 57% of Medibank policyholders are now engaging with our health and well-being offerings, up on last year.

Speaker #3: But with consumers looking to us for more value—and for the rest of the industry—we will continue to tackle unnecessary cross-costs across the health system.

Speaker #3: Including the growing cost of aggregators. Upfront commissions paid to aggregators by insurers are opaque to the consumer. In just two years, aggregator sales have grown by 44%, and industry commissions have almost doubled, reaching about $200 million.

David Koczkar: In just two years, aggregator sales have grown by 44% and industry commissions have almost doubled, reaching about AUD 200 million. The numbers for the industry are significant. In FY25, about three-quarters of aggregator sales involved switching from one fund to the other, and only one-quarter of these sales were new entrants to the private health system. Aggregators do play a role, especially when consumers are looking for a good deal, but they don't represent every fund or every product. The only generally comprehensive comparison is available through the government's website. There is a risk of commission-driven churn. In December, we removed ahm from one of the aggregator panels rather than signing up to terms that were unacceptable. While we expect this decision to have some volume impact in the short term, we cannot support channels that add costs without a corresponding uplift in customer value and industry participation.

Speaker #3: So the numbers for the industry are significant. In FY25, about three-quarters of aggregator sales involve switching from one fund to another, and only one quarter of these sales were new entrants to the private health system.

Speaker #3: Aggregators do play a role, especially when consumers are looking for a good deal. But they don't represent every fund or every product. The only generally comprehensive comparison is available through the government's website.

Speaker #3: And there is a risk of commission-driven churn. In December, we removed AHM from one of the aggregator panels, rather than signing up to terms that were unacceptable.

Speaker #3: While we expect this decision to have some volume impact in the short term, we cannot support channels that add costs without a corresponding uplift in customer value and industry participation.

Speaker #3: Escalating commissions and lack of transparency are not in the long-term interests of consumers or the industry. That's why we've also championed reform on this issue through the CEO Forum.

David Koczkar: Escalating commissions and lack of transparency are not in the long-term interests of consumers or the industry, and that's why we've also championed reform on this issue through the CEO forum. In non-resident PHI, the market growth remains strong with growth in workers accelerating and student numbers normalizing, with lower visa approvals than expected in the last quarter. But pleasingly, we saw a strong improvement in our life cycle approach, with students, workers, and visitors contributing meaningfully to our resident policyholder growth. To support our non-resident growth into next year, we launched three new visitor health covers with average daily joins doubling since launch. In the workers sector, we were appointed as one of two preferred health insurance providers for the Pacific Australia Labour Mobility Scheme, creating a new growth pathway.

Speaker #3: In non-resident PHI, the market growth remained strong, with growth in workers accelerating and student numbers normalizing, with lower visa approvals than expected in the last quarter.

Speaker #3: But pleasingly, we saw a strong improvement in our lifecycle approach, with students, workers, and visitors contributing meaningfully to our resident policyholder growth. To support our non-resident growth into next year, we launched three new visitor health covers, with average daily joins doubling since launch.

Speaker #3: And in the workers' sector, we were appointed as one of two preferred health insurance providers for the Pacific Australia Labour Mobility Scheme, creating a new growth pathway.

Speaker #3: In FY27, we expect the student portfolio to stabilize and the non-resident business to deliver solid gross profit growth. Now, over to slide 11. In the resident business, our disciplined approach to growth has seen us prioritize quality over quantity.

David Koczkar: In FY27, we expect the student portfolio to stabilize and the non-resident business to deliver solid gross profit growth. Now to slide 11. In the resident business, our disciplined approach to growth has seen us prioritize quality over quantity, focusing acquisition in our target segments, strengthening direct relationships, and building customer loyalty. This has seen our retention outperform the industry. Our join mix continue to skew towards customers new to the industry rather than switchers, and growth in our direct channels. We've also continued to deliver productivity savings with around AUD 130 million delivered in under a decade. The results of these actions are clear. With our cost per policy remaining materially lower than the industry average, and our stable margins supporting a claims payout ratio above the industry average.

Speaker #3: Focusing acquisition in our target segments, strengthening direct relationships, and building customer loyalty. This has seen our retention outperform the industry. Our join mix continued to skew toward customers new to the industry, rather than switchers, and growth in our direct channels.

Speaker #3: We've also continued to deliver productivity savings, with around $130 million delivered in under a decade. The results of these actions are clear, with our cost per policy remaining materially lower than the industry average and our stable margins supporting a claims payout ratio above the industry average.

Speaker #3: These outcomes are increasingly important, as insurers are asked each year during the premium review process to meet the Minister's Statement of Expectations. Now, onto slide 12.

David Koczkar: These outcomes are increasingly important as insurers are asked each year during the premium review process to meet the minister's statement of expectations. Now to slide 12. The health transition remains central to both our growth strategy and systems sustainability. Having invested more than AUD 500 million over the past decade, we are seeing increased momentum across prevention, primary care, and care in the home. We're seeing a significant shift towards preventative health, with individuals and employers increasingly investing in physical, mental, and financial wellbeing. We remain very well-positioned to grow in this sector through our leading Live Better program, our breadth of financial wellbeing products, and our corporate health and wellbeing programs. Primary care reform remains critical to a sustainable health system. That's why with our acquisition of Better Medical, we have now created one of Australia's largest multidisciplinary primary care networks.

Speaker #3: The health transition remains central to both our growth strategy and system sustainability. Having invested more than $500 million over the past decade, we are seeing increased momentum across prevention, primary care, and care in the home.

Speaker #3: We're seeing a significant shift towards preventative health, with individuals and employers increasingly investing in physical, mental, and financial well-being. We remain very well positioned to grow in this sector through our leading Live Better program, our breadth of financial well-being products, and our corporate health and well-being programs.

Speaker #3: Primary care reform remains critical to a sustainable health system. That's why, with our acquisition of Better Medical, we have now created one of Australia's largest multidisciplinary primary care networks. We've delivered more than 4 million GP consults through 169 GP and medical clinics, and we have ambitious plans to bring more care to more people.

David Koczkar: We delivered more than 4 million GP consults through 169 GP and medical clinics, and have ambitious plans to bring more care to more people. The number of these clinics charging no out-of-pockets jumped 56% following the government's bulk billing reforms, a win for patients' access and affordability. With growth in virtual GP consults outpacing face-to-face consults in the market, and in support of our multi-channel differentiation, we recently launched the My Amplar Health app, giving patients one place to book and manage appointments. As health and aging needs increase, more care will shift into home and communities. In FY26, our community-based services supported more than 27,000 acute home health visits and saved 194,000 hospital bed days. Our virtual nursing pilot is now operating in 25 aged care homes.

Speaker #3: And the number of these clinics charging no out-of-pocket jumped 56%, following the government's bulk billing reforms. A win for patients, access, and affordability. With growth in virtual GP consults outpacing face-to-face consults in the market, and in support of our multi-channel differentiation, we recently launched the MyAmplyHealth app, giving patients one place to book and manage appointments.

Speaker #3: And as health and aging needs increase, more care will shift into homes and communities. In FY26, our community-based services supported more than 27,000 acute home health visits and saved $194,000 in hospital bed days.

Speaker #3: And our virtual nursing pilot is now operating in 25 aged care homes. Our contract to run My Home Hospital in South Australia was also extended for a further three years.

David Koczkar: Our contract to run My Home Hospital in South Australia was also extended for a further 3 years, and our transition care services has just recently doubled in capacity to around 100 beds. Together, these initiatives demonstrate our role across the care continuum whilst advancing the health transition. I will now hand over to Mark to take you through the financials and outlook.

Speaker #3: And our transition care services have just recently doubled in capacity, to around 100 beds. Together, these initiatives demonstrate our role across the care continuum, whilst advancing the health transition.

Speaker #3: I'll now hand over to Mark to take you through the financials and outlook.

Speaker #2: Well, good morning, everyone. This result demonstrates our ability to manage through the cycle, balance growth and profitability, and invest to build a more sustainable and diverse business.

Mark Rogers: Well, good morning, everyone. This result demonstrates our ability to manage through the cycle, balance growth and profitability, and invest to build a more sustainable and diverse business. Key financial highlights include group operating profit up 6.7% to AUD 813.5 million, with solid growth in resident health insurance, continued strong momentum in Medibank Health, and well-controlled corporate costs. Investment income was impacted by the lower RBA cash rate, and the increase in other income and expenses includes costs associated with acquiring Better Medical. Non-recurring cyber costs were lower, and with the IT security uplift program now largely embedded, we expect FY27 costs to be less than AUD 20 million and primarily related to ongoing litigation. Underlying EPS, which normalizes investment returns, was AUD 0.231 per share, which is up 2.9% on last year. Now moving to slide 15.

Speaker #2: Key financial highlights include group operating profit up 6.7% to $813.5 million, with solid growth in resident health insurance, continued strong momentum in Medibank Health, and well-controlled corporate costs.

Speaker #2: Investment income was impacted by the lower RBA cash rate, and the increase in other income and expenses includes costs associated with acquiring Better Medical.

Speaker #2: Non-recurring cyber costs were lower, and with the IT Security Uplift Program now largely embedded, we expect FY27 costs to be less than $20 million, and primarily related to ongoing litigation.

Speaker #2: And underlying EPS, which normalizes investment returns, was 23.1 cents per share, which is up 2.9% on last year. Now, moving to slide 15. Despite the challenging economic environment, the business remained resilient, reflecting our disciplined approach to managing growth, margins, and expenses.

Mark Rogers: Despite the challenging economic environment, the business remained resilient, reflecting our disciplined approach to managing growth, margins, and expenses. Revenue grew 4.6% and gross profit increased to AUD 1.46 billion. Gross margin was stable at 17%, with a 10-basis-point increase in resident gross margin and 210-basis-point decrease in non-resident. Operating profit increased 3.8% to AUD 769.8 million and the operating margin remains at 9%. Expenses were up 5.4% to AUD 690.2 million, and the expense ratio was stable at 8%. D&A increased in line with higher investment in digital assets. Resident commissions reduced due to lower ahm aggregator joins. The increase in operating expenses includes inflation of approximately 4%, volume-related increases, and investment in our foundations. There was also additional marketing investment, including reinvesting AUD 5 million of the lower spend on resident commissions. These were partially offset by AUD 10 million of productivity savings.

Speaker #2: Revenue grew 4.6%, and gross profit increased to $1.46 billion. Gross margin was stable at 17%, with a 10 basis point increase in resident gross margin and a 210 basis point decrease in non-resident.

Speaker #2: Operating profit increased 3.8% to $769.8 million, and the operating margin remains at 9%. Expenses were up 5.4% to $690.2 million, and the expense ratio was stable at 8%.

Speaker #2: DNA increased in line with high investment in digital assets. Resident commissions reduced due to lower AHM aggregator joins. The increase in operating expenses includes inflation of approximately 4%, volume-related increases, and investment in our foundations.

Speaker #2: There was also additional marketing investment, including reinvesting $5 million of the lower spend on resident commissions. These were partially offset by $10 million of productivity savings.

Speaker #2: The major drivers of expense growth in FY27 will be inflation and volume-related increases, additional investment to support resident policyholder growth—including AI uplift—and we are targeting a further $10 million of productivity savings.

Mark Rogers: The major drivers of expense growth in FY27 will be inflation and volume-related increases, additional investment to support resident policyholder growth, including AI uplift, and we are targeting a further AUD 10 million of productivity savings. We continue to target a stable to modestly improving expense ratio over time through disciplined cost management and productivity initiatives. But balance this with investing in growth where this makes commercial sense. Now moving to slide 16. The Resident PHI industry continues to grow, with the non-discretionary nature of healthcare underpinning future demand. Cost of living pressures have impacted the industry, with policyholder growth skewed to lower tier products, higher switching and aggregators increasing their share of joins. As a result, the competitive environment intensified in the Q4, with some competitors pursuing aggressive growth tactics alongside increased aggregator marketing. We have chosen to prioritize the quality of growth over quantity.

Speaker #2: We continue to target a stable to modestly improving expense ratio over time through disciplined cost management and productivity initiatives, but balance this with investing in growth where it makes commercial sense.

Speaker #2: Now, moving to slide 16. The resident PHI industry continues to grow, with the non-discretionary nature of health care underpinning future demand. Cost of living pressures have impacted the industry, with policyholder growth skewed to lower-tier products, higher switching, and aggregators increasing their share of joins.

Speaker #2: As a result, the competitive environment intensified in the fourth quarter, with some competitors pursuing aggressive growth tactics alongside increased aggregator marketing. We have chosen to prioritize the quality

Speaker #1: The focus is on growth over quantity. And pleasingly, we've grown in our priority segments, maintained the revenue mix impact at the 126 level, and increased the percentage of AHM joins through our direct channels.

Mark Rogers: And pleasingly, we've grown in our priority segments, maintained the revenue mix impact at the 1H26 level, and increased the percentage of ahm joins through our direct channels. Our number of policyholders increased 1.1%, with Medibank growth doubling to 0.6% and ahm growing 2.4%, despite lower aggregator joins. The acquisition rate was 10 basis points higher, with the increase in Medibank reflecting continued investment in brand, customer value and differentiation, and direct sales in ahm partially offsetting lower aggregator activity. Whilst laps increased 40 basis points, we expect that we've performed better than the industry, reflecting the value customers place on our differentiated products and broader health proposition. In FY27, we aim to increase growth in a disciplined way through continued brand and proposition differentiation, targeted investment in priority segments, and building stronger direct customer relationships that support retention. Now moving to slide 17.

Speaker #1: The number of policyholders increased 1.1%, with Medibank growth doubling to 0.6% and ahm growing 2.4%, despite lower aggregate joins. The acquisition rate was ten basis points higher, with the increase in Medibank reflecting continued investment in brand, customer value and differentiation, and direct sales.

Speaker #1: A.h.m. partially offsetting lower aggregator activity While slaps increased 40 basis points . We expect to be performed better than industry , reflecting the value customers place on our differentiated products and broader health proposition In FY 27 , we aim to increase growth in a disciplined way through continued brand and proposition differentiation , targeted investment and priority segments , and building stronger direct customer relationships that support retention .

Speaker #1: Now, moving to slide 17. Resident claims expense increased 4.6%, and risk equalisation provided a 20 basis point benefit to net claims growth.

Mark Rogers: Resident claims expense increased 4.6% and risk equalization provided a 20 basis point benefit to net claims growth, with the timing benefit we saw in the first half unwinding as expected. Resident claims growth per policy unit increased 40 basis points to 2.6%. In hospital, the decrease in inflation reflects higher private hospital indexation, offset by reduced additional investment in product benefits and lower public and medical indexation. Hospital utilization growth remained negative, reflecting prior period COVID impacts and policyholder growth skewed to lower tier products, and extras utilization increased as demand normalized following a period of subdued activity. In FY27, we expect hospital claims growth per policy unit to increase, reflecting the AUD 74.8 million COVID utilization benefit in FY26 not recurring, continued negative utilization growth driven by mix impacts, broadly stable private hospital indexation, and benefit from more procedures happening outside of traditional higher cost settings.

Speaker #1: With the timing benefit we saw in the first half unwinding as expected, resident claims growth per policy unit increased 40 basis points to 2.6% in hospital.

Speaker #1: The decrease in inflation reflects higher private hospital indexation, offset by reduced additional investment in product benefits and lower public and medical indexation. Hospital utilization growth remained negative, reflecting prior period COVID impacts and policyholder growth skewed to lower-tier products and extras.

Speaker #1: Utilization increased as demand normalized following a period of subdued activity In FY 27 . We expect hospital claims growth per policy unit to increase , reflecting the 74.8 million Covid utilization benefit in FY 26 , not recurring Continued negative utilization growth driven by mix impacts broadly stable private hospital indexation and benefit from more procedures happening outside of traditional higher cost settings We expect extras claims growth per policy unit to reduce , reflecting lower indexation and benefit investment .

Mark Rogers: We expect extras claims growth per policy unit to reduce, reflecting lower indexation and benefit investment. We are also monitoring utilization trends given historic customer behavior and current economic conditions. Slide 18 details health insurance performance, which shows continued solid gross profit growth of 4.6%. In Resident, our disciplined approach to growth resulted in gross margin increasing 10 basis points to 16.3%, with revenue and claims growth per policy unit of 2.7% and 2.6% respectively. Policyholder growth was skewed to lower tier products, with largely offsetting impacts to revenue and claims. Growth in revenue per policy unit was up 10 basis points, with the higher average premium increase partially offset by a higher revenue mix impact. This higher revenue mix impact reflects customer growth skewed to lower tier products, an increase in office spend and investment in Live Better, and we expect a similar impact in FY27.

Speaker #1: We are also monitoring utilization trends given historic customer behavior and current economic conditions. Slide 18 details health insurance performance, which shows continued solid gross profit growth of 4.6% in resident.

Speaker #1: Our disciplined approach to growth resulted in gross margin increasing ten basis points to 16.3% , with revenue and claims growth per policy unit of 2.7 and 2.6% , respectively Policyholder growth was skewed to lower tier products , was largely offsetting impacts to revenue and claims growth in revenue per policy unit was up ten basis points , with the higher average premium increase partially offset by a higher revenue mix impact This higher revenue mix impact reflects customer growth due to lower tier products and increase in office spend and investment in Ledbetter , and we expect a similar impact in FY 27 in non-resident policy , units declined 2.3% , with student policy units declining .

Mark Rogers: In Non-Resident, policy units declined 2.3%, with student policy units declining due to tighter migration settings and natural runoff of large cohorts acquired following borders reopening. This was largely offset by continued strong growth in worker policies. Gross profit reduced 1.2% to AUD 110.3 million and gross margin was down 210 basis points to 34.8%, largely due to tenure and mix impacts in the student portfolio. However, we expect Non-Resident to deliver solid gross profit growth in FY27, supported by a stabilizing student portfolio, continued momentum in workers, and growth in visitors following the launch of new products. Moving to slide 19, which covers Medibank Health. Medibank Health segment profit increased 31.3% to AUD 100.7 million, with strong organic growth in all three segments and a AUD 6.2 million contribution from Better Medical.

Speaker #1: Q2 Typekit migration settings and natural run off of large cohorts acquired following borders reopening This was largely offset by continued strong growth in worker policies Gross profit reduced 1.2% to $110.3 million , and gross margin was down 210 basis points to 34.8% , largely due to tenure and mix impacts in the student portfolio However , we expect non-resident to deliver solid gross profit growth in FY 27 , supported by stabilizing student portfolio , continued momentum in workers and growth in visitors .

Speaker #1: Following the launch of new products, moving to slide 19, which covers Medibank Health segment profit. Medibank Health segment profit increased 31.3% to $100.7 million, with strong organic growth in all three segments and a $6.2 million contribution from Better Medical. Operating margin was down 50 basis points to 16.9%, with the 180 basis point reduction in gross margin partially offset by an improving expense ratio. Revenue grew 30.8%, supported by strong customer and patient growth.

Mark Rogers: Operating margin was down 50 basis points to 16.9%, with the 180 basis point reduction in gross margin partially offset by an improving expense ratio. Revenue grew 30.8%, supported by strong customer and patient growth, higher consult fees in primary care, and a full year contribution from 100% ownership of Amplar Health Home Hospital. Gross profit was up 26.5%, with the reduction in gross margin due to additional investment in Live Better and business mix impacts, partially offset by efficiency benefits in community and acute and primary care. Whilst expenses increased, including AUD 10 million of additional investment to support future growth, with growing scale, the expense ratio was 140 basis points lower.

Speaker #1: Higher consult fees and primary care , and a full year contribution from 100% ownership of ampla health home hospital Gross profit was up 26.5% , with the reduction in gross margin due to additional investment in Lipitor and business mix impacts , partially offset by efficiency benefits in community and acute and primary care .

Speaker #1: And whilst expenses increased , including 10 million of additional investment to support future growth . With growing scale . The expense ratio was 140 basis points lower We continue to see strong organic growth potential in the business , with focus areas for FY 27 , including meeting more health needs of more customers , scaling existing services with a broader set of payers , realising synergy benefits across our primary care network and further performance uplift in in the JV hospital portfolio We aim to augment this organic growth with further M&A that scales and expands geographic coverage in primary care and adds capability in wellbeing and virtual care On slide 20 , we show a more granular breakdown of the financial results for our three Medibank Health segments and the key customer metrics driving performance in wellbeing Live Better Members increased 11.6% following investment in the proposition and Rewards Giveback offer last year , and Financial wellbeing policies increased despite subdued travel demand in primary care consultations increased 26.7% , reflecting a six month contribution from better medical and pleasingly community and acute delivered a significant improvement in profitability , supported by ongoing growth in publicly programs and increased capacity within transition care services .

Mark Rogers: We continue to see strong organic growth potential in the business, with focus areas for FY27, including meeting more health needs of more customers, scaling existing services with a broader set of payers, realizing synergy benefits across our primary care network, and further performance uplift in the JV hospital portfolio. We aim to augment this organic growth with further M&A that scales and expands geographic coverage in primary care and adds capability in wellbeing and virtual care. On slide 20, we show a more granular breakdown of the financial results for our three Medibank Health segments and the key customer metrics driving performance. In wellbeing, Live Better members increased 11.6%, following investment in the proposition and rewards feedback offer last year, and financial wellbeing policies increased despite subdued travel demand. In primary care, consultations increased 26.7%, reflecting a six-month contribution from Better Medical.

Mark Rogers: Pleasingly, community and acute delivered a significant improvement in profitability, supported by ongoing growth in publicly funded programs and increased capacity within transition care services. Now, moving to slide 21. Investment income was down AUD 28.9 million, including a AUD 7 million reduction in both the growth and defensive portfolios. The decrease in the growth portfolio reflects lower income from equities, partially offset by improved returns in both property and infrastructure. Income in the defensive portfolio was impacted by the lower RBA cash rate and widening credit spreads, with this partially offset by a higher asset balance. Other investment income was also impacted by the RBA cash rate and lower cash holdings. With the lower earnings on cash, underlying net investment income was down AUD 17.2 million.

Speaker #1: Now moving to slide 21. Investment income was down $28.9 million, including a $7 million reduction in both the growth and defensive portfolios. The decrease in the growth portfolio reflects lower income from equities, partially offset by improved returns in both property and infrastructure.

Speaker #1: Income defensive portfolio was impacted by the lower RBA cash rate and widening credit spreads, with this partially offset by a higher asset balance. Other investment income was also impacted by the RBA cash rate and lower cash holdings. With the lower earnings on cash, underlying net investment income was down $17.2 million.

Speaker #1: The underlying net investment return reduced 24 basis points to 5.62%, and the spread to the average RBA cash rate increased to 177 basis points. And in FY27, we expect underlying net investment income to benefit from growth in asset balances.

Mark Rogers: The underlying net investment return reduced 24 basis points to 5.62%, and the spread to the average RBA cash rate increased to 177 basis points. In FY27, we expect underlying net investment income to benefit from growth in asset balances, the higher RBA cash rate, and opportunities to increase liquidity and credit margins. Moving to slide 22 and capital. The business continues to be well capitalized with AUD 182.9 million of unallocated capital. This has reduced by AUD 69 million over the last 12 months due to funding the Better Medical acquisition, with this partially offset by strong capital generation. Health insurance capital was stable, with reduced insurance and asset risk charges offset by additional capital to support growth. The PCA coverage ratio increased to 1.9 times, and the capital ratio is 13.3% of premium revenue.

Speaker #1: The higher RBA cash rate and opportunities to increase liquidity and credit margins. Moving to slide 22 and capital, the business continues to be well capitalized with $182.9 million of unallocated capital.

Speaker #1: This has reduced by $69 million over the last 12 months due to funding the Better Medical acquisition, but this was partially offset by strong capital generation. Health insurance capital was stable, with reduced insurance and asset risk charges, offset by additional capital to support growth. The PCA coverage ratio increased to 1.9 times, and the capital ratio is 13.3% of premium revenue. We continue to hold additional capital to offset the $250 million supervisory adjustment, and this is why the capital ratio is above the target range of 10% to 12%.

Mark Rogers: We continue to hold additional capital to offset the AUD 250 million APRA supervisory adjustment, and this is why the capital ratio is above the target range of 10% to 12%. The AUD 163.5 million cost of acquiring Better Medical drove the increase in Medibank Health capital, with this partially offset by lower required capital. Our strong balance sheet supports our FY30 Medibank Health earnings aspiration of at least AUD 200 million, and we have capacity to raise tier 2 debt to support growth beyond this if further attractive opportunities arise. Given the strong capital position, the board has declared a final dividend of AUD 0.109 per share, bringing FY26 dividends to AUD 0.192 per share. This is a 6.7% increase and 83% payout of underlying net profit after tax. To finish, a few comments on our FY27 outlook.

Speaker #1: To $163.5 million . Cost of acquiring better medical drove the increase in Medibank Health Capital . With this partially offset by lower required capital Our strong balance sheet supports our FY 30 Medibank Health earnings aspiration of at least $200 million , and we have capacity to raise tier two debt to support growth beyond this , if further attractive opportunities arise and given the strong capital position the board has declared a final dividend of 10.9 cents per share , bringing FY 26 dividends to 19.2 cents per share This is a 6.7% increase and 8,083% payout of underlying net profit after tax And to finish a few comments on our FY 27 outlook In Resident Health Insurance , we continue to aim to grow market share in a disciplined way , including improved volume , momentum in Medibank brand We expect Resident health insurance , gross margin to be broadly consistent with FY 26 , as we continue to manage revenue mix and claims growth in line with premium increases in non-resident .

Mark Rogers: In resident health insurance, we continue to aim to grow market share in a disciplined way, including improved volume momentum in the Medibank brand. We expect resident health insurance gross margin to be broadly consistent with FY26 as we continue to manage revenue mix and claims growth in line with premium increases. In non-resident, we expect to deliver solid gross profit growth as the student portfolio stabilizes and growth in worker and visitor policy units continues. In Medibank Health, we expect segment profit growth of circa 25%, including a full year contribution from Better Medical, and our M&A pipeline remains strong, and we have both the appetite and financial capacity to pursue further strategic opportunities. Pass back to Dave to make some final comments.

Speaker #1: We expect to deliver solid gross profit growth as the student portfolio stabilises and growth in worker and visitor policy units continues in Medibank Health , we expect segment profit growth of circa 25% , including a full year contribution from better medical and our M&A pipeline remains strong and we have both the appetite and financial capacity to pursue further strategic opportunities .

Speaker #1: I'll now pass back to David to make some final comments.

Speaker #2: Thanks , Mark . And just now , moving to slide 25 . The opportunities ahead of us require us to stay focused on what matters most .

David Koczkar: Thanks, Mark. Just now moving to slide 25. The opportunities ahead of us require us to stay focused on what matters most: building customer trust, supporting better health, growing our business sustainably, and ensuring our organization is fit for the future. These priorities guide us where we invest and how we measure success. AI is becoming an important part of how we strengthen decision-making, simplify work, enhance customer outcomes, and unlock new growth opportunities. It is also becoming the front door to health. Increasingly, people are turning to AI first for answers about their health, their care, and the cover that is right for them. Used well, AI could be one of the biggest advances in access to care we have seen. We are very aware that the risks are real. In health, AI cannot just be fast and convenient. It has to be safe, accountable, and designed around people.

Speaker #2: Building customer trust, supporting better health, growing our business sustainably, and ensuring our organisation is fit for the future. These priorities guide us on where we invest and how we measure success.

Speaker #2: AI is becoming an important part of how we strengthen decision-making, simplify work, enhance customer outcomes, and unlock new growth opportunities. It's also becoming the front door to health.

Speaker #2: Increasingly , people are turning to AI first for answers about their health , their care , and the cover . That's right for them Used well , AI could be one of the biggest advances in access to care .

Speaker #2: We have seen , but we're very aware that the risks are real in health . AI cannot just be fast and convenient . It has to be safe , accountable , and designed around people and being trusted by more than 6 million people with their health and wellbeing gives us a responsibility to shape this world Now , briefly , slide 26 .

David Koczkar: Being trusted by more than 6 million people with their health and wellbeing gives us a responsibility to shape this well. Now briefly to slide 26. As we grow across our 5 segments, we are also focused on realizing value between our health and PHI businesses. As part of our 2030 vision, we have an ambition to deliver incremental value of around 5% to our PHI operating profit growth between FY25 and FY30 by increasing our role in customers' health. For example, we are already seeing this value through Live Better, which supports PHI growth, home care by reducing hospital bed days, and prevention programs, helping reduce the burden of chronic disease. Now, slide 27 to wrap up. FY26 demonstrated the benefits of staying disciplined while continuing to invest for the future.

Speaker #2: As we grow across our five segments , we're also focused on realising value between our health and our businesses . As part of our 2030 vision , we have an ambition to deliver incremental value of around 5% to our operating profit growth between FY 25 and FY 30 .

Speaker #2: By increasing our role in customers' health—and for example, we're already seeing this value through LiveBetter, which supports FY growth in home care by reducing hospital bed days and driving prevention programs—helping reduce the burden of chronic disease.

Speaker #2: So now slide 27 . To wrap up , FY 26 demonstrated the benefits of staying disciplined while continuing to invest for the future with strong customer advocacy , deeper health engagement , and growth across insurance and health Strengthening the resilience of the business with strong foundations in health , we are well positioned to continue to create long term value for customers and shareholders And on 1st October , Medibank marks 50 years of supporting the health and wellbeing of people in Australia .

David Koczkar: With strong customer efficacy, deeper health engagement, and growth across insurance and health, strengthening the resilience of the business. With strong foundations in health, we are well-positioned to continue to create long-term value for customers and shareholders. On 1 October, Medibank marks 50 years of supporting the health and wellbeing of people in Australia. Few companies have the privilege of playing such an important role in people's lives. We are proud of the contribution we have made to the Australian health system. Most of all, we are proud of the trust generations of people have placed in us and the role we have played alongside our partners in helping people live healthier lives. Finally, to our people, thank you for the care, commitment, and passion you have brought to Medibank over the last 50 years. Now it is over to you for any questions you might have.

Speaker #2: Few companies have the privilege of playing such an important role in people's lives. We are proud of the contribution we've made to the Australian health system, but most of all, we're proud of the trust generations of people have placed in us and the role we've played alongside our partners in helping people live healthier lives. And finally, to our people.

Speaker #2: Thank you for the care, commitment, and passion you've brought to Medibank over the last 50 years. So now, it's over to you for any questions you might have.

Speaker #3: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced.

Operator: Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Kieren Chidgey with UBS. Please go ahead.

Speaker #3: If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Karen Shoji with UBS.

Speaker #3: Please go ahead

Speaker #4: Good morning. David and Mark, two questions if I can. The first on sort of policy growth and sort of the outlook into '27. Obviously, second half you pulled back due to competition, very little resident growth. Just on your outlook statement—

Kieren Chidgey: Morning, David and Mark. Two questions, if I can. The first on policy growth and the outlook into 2027. Obviously, H2 you pulled back due to competition, very little resident growth. Just on your outlook statement, the aim to grow market share in a disciplined way. I just want to confirm if that is in aggregate across both brands and in totality, or if that is more alluding to particular segments where you are happy to grow, but maybe still below system in aggregate level. Related to that, how you think about the cost base, expenses for next year. You have alluded to additional reinvestment to help from a growth point of view. Can you just unpack what you are talking about in terms of quantum?

Speaker #4: Sort of the aim to grow market share in a disciplined way . I'm just want to confirm if that is in aggregate across sort of both brands and sort of in totality , or if that is sort of more alluding to particular segments where you're happy to grow .

Speaker #4: But maybe still, you know, below system at an aggregate level and sort of related to that, how you think about the cost base expenses for next year.

Speaker #4: You've alluded to additional reinvestment to sort of help from a growth point of view. Can you just unpack what you're talking about in terms of quantum?

Speaker #2: Yeah , thanks . Karen . I might start just with performance and then momentum . And then maybe Mark on that last part of the question .

David Koczkar: Yeah. Thanks, Kieren. I might start just with performance and then momentum, and then maybe Mark on that last part of the question. If we look to the full year, we are very pleased with the doubling of growth for Medibank. 2.4% growth in ahm despite taking ahm off one of the aggregator panels in December and what was quite a significant uptick in competitive environment in Q4. Pleasingly acquisition was up year on year. We saw growth in key segments. I think the corporate growth has been very strong. Growth in families, you can see that in the presentation, and also in our growth in lives. I think where we have focused, we have done very well.

Speaker #2: So if we look to the full year , you know , we're very pleased with the doubling of growth for Medibank and , you know , 2.4% growth in A-hem despite taking arm off one of the aggregator panels in December .

Speaker #2: And you know that , you know , what was quite a significant uptick in competitive environment in Q4 . Yeah . Pleasingly , the acquisition was up year on year .

Speaker #2: We saw growth in key segments. I think the corporate growth has been very strong, as well as growth in families. You can see that in the presentation.

Speaker #2: And also in our growth in lives . So I think where we've focused , we've done very well . And you know , you can see the benefits through our margin and cost position of that disciplined approach , which is particularly important as we look forward , as all insurers are asked to meet the statement of expectations .

David Koczkar: You can see the benefits through our margin and cost position of that disciplined approach, which is particularly important as we look forward, as all insurers are asked to meet the statement of expectations. That has enabled us to keep our claims payout ratio higher than the industry average. I think what gives us confidence, particularly in the Medibank and ahm brands, brand health is at very strong positions. As you say, we are investing in growth in those markets, and particularly AI, which is showing some very promising improvements in both retention and acquisition performance. I think something will play out, and we have to be mindful of what happens with competition. It will depend on what we do with aggregators, but our aim is to continue to grow at a total level where it makes sense.

Speaker #2: So that's enabled us to keep our claims payout ratio higher than the industry average. I think what gives us confidence, particularly in the Medibank and ahm brands.

Speaker #2: Brand health is in a very strong position. And as you say, we are investing in growth in those markets, and particularly in AI, which is showing some very promising improvements in both retention and acquisition performance.

Speaker #2: I think , you know , something will play out , and we have to be mindful of what happens with competition . We have to it will depend on what we do with aggregators .

Speaker #2: But our aim is to continue to grow at a total level where it makes sense, but particularly calling out some strong confidence in Medibank momentum increasing.

David Koczkar: Particularly calling out some strong confidence in Medibank momentum increasing.

Speaker #1: And Kieran, at the expense line, wouldn't expect expense growth to be too dissimilar to the 5.4% growth we had in FY26.

Mark Rogers: Kieran, at the expense line, would not expect expense growth to be too dissimilar to the 5.4% growth we had in FY26. The build-up of that will be slightly different. Would not expect the D&A to increase. We are expecting it to be broadly stable in 2027, and would not expect the same reduction in resident commissions. We invested, in round numbers, about AUD 10 million incremental in marketing during the course of the year, including redeploying AUD 5 million of resident commission savings into the marketing line. I would not expect the reinvestment next year to be too dissimilar to that AUD 10 million number. Really, from an expense ratio perspective, where we land will depend on the revenue growth equally.

Speaker #1: The build up of that would be slightly different , wouldn't expect the DNA to increase . We're expecting that to be broadly stable in 27 , and wouldn't expect the same reduction in resident commissions .

Speaker #1: We invested, in round numbers, about $10 million incremental in marketing during the course of the year, including redeploying $5 million of resident commission savings into the marketing line.

Speaker #1: I wouldn't expect the reinvestment next year to be too dissimilar to that $10 million number , and really from an expense ratio perspective , it's going to largely where we land will depend on the revenue growth .

Speaker #1: Equally

Speaker #4: Okay. And a second question: on claims inflation, the second half panned out, in my view, a little bit better than anticipated.

Kieren Chidgey: Okay. A second question on claims inflation, H2 handout, in my view, a little bit better than anticipated. The incurred inflation probably only 2.8% in H2. I guess more interestingly, the cash payments up only 1% on PCP in H2 of the year. Mark, maybe you can just unpack why that was a better result through H2 and how you are thinking. I guess you provide a bit of detail, but in aggregate for next year, are we talking 3.6%, 3.7% type levels?

Speaker #4: You know, the incurred inflation was probably only 2.8% in the second half. And I guess more interestingly, the cash payments were up only 1% on PCP in the second half of the year.

Speaker #4: Mark , maybe you can just unpack Why that was sort of a better result through the second half . And and how you're thinking , I guess you provide a bit of detail , but in aggregate for , for next year , are we talking sort of 3.6 , 3.7 type levels

Speaker #1: Thanks. Let me start with the first part of the question. So you need to go back to the first half of '26, where I think the industry saw quite a significant increase in processing speeds and payment speeds.

Mark Rogers: Thanks, Kieran. Let me start with the first part of the question. You need to go back to H1 2026 where I think the industry saw quite a significant increase in processing speeds and payment speeds, and cash claims paid were significantly higher across the industry than incurred claims. Whilst the payment patterns remained elevated, they were not as fast as they were last half. As a consequence, our actual cash claims paid in H2 were less than our incurred claims. I would expect looking forward now, through the COVID regime, subject to being no further change in payment patterns that incurred and cash are going to align much more closely going forward. On inflation, which is the second part of your question.

Speaker #1: And so cash claims paid were significantly higher across the industry than incurred claims. Whilst the payment patterns remain elevated, they weren't as fast as they were last half.

Speaker #1: So, as a consequence, our actual cash claims paid in the second half were less than our incurred claims. I'd expect.

Speaker #1: Looking forward now with through the Covid regime subject to be no further change in payment patterns that incurred in cash are going to align much more closely going forward On inflation , which is the second part of your question on on hospital inflation , I think the most important thing to call out is we did have New South Wales private rent rate increase in the first half , and so that elevated the claims inflation in the first half .

Mark Rogers: On hospital inflation, I think the most important thing to call out is we did have New South Wales private group rate increase in H1, and that elevated the claims inflation in H1, and we know that is now fully embedded in our claims line. As I think about FY27, Kieran, on the hospital product, by far the most material impact is that AUD 74.8 million COVID utilization benefit unwinding. That is 150 basis points of utilization. That would take the kind of underlying momentum in hospital claims inflation from 2.1% to 3.6%. That by far is the most notable item looking to FY27 for hospital claims.

Speaker #1: And we know that is now fully embedded in our claims line . As I think about FY 27 . Kieran , on the hospital product by far the most material impact is that 74.8 million Covid utilization benefit unwinding .

Speaker #1: So that's 150 basis points of utilization. So that would take the kind of underlying momentum in hospital claims inflation from 3.1% to 3.6%.

Speaker #1: And that, by far, is the most notable item looking to FY27 for hospital claims. Then, of course, set out really clearly in the presentation, we expect extras claims growth to be less than the 3.4% that we reported in FY26.

Mark Rogers: Then we have called out really clearly in the presentation, we expect excess claims growth to be less than 3.4% that we reported in 2026. I think all other factors, which there will be a whole series of other factors, Kieran, all other factors in terms of FY27 claims trajectory will be second or third order.

Speaker #1: I think all other factors which there will be a whole series of other factors . Karen , all other factors in terms of FY 27 claims will be second or third order .

Speaker #4: All right. Okay. All right. That's clear. Thank you.

Kieren Chidgey: All right. Okay. All right. That is clear. Thank you.

Speaker #3: Your next question comes from Andrew Buncombe with Macquarie. Please go ahead.

Operator: Your next question comes from Andrew Buncombe with Macquarie. Please go ahead.

Speaker #5: Hi guys. Thanks for taking my questions. Just the first one: I'm just interested whether you think you need to step up any of your CapEx to achieve your Medibank Health earnings targets over the medium term.

Andrew Buncombe: Hi, guys. Thanks for taking my questions. Just the first one. Just interested whether you think you need to step up any of your CapEx to achieve your Medibank Health earnings targets over the medium term. Thanks.

Speaker #5: Thanks

Speaker #1: Hi , Andrew . In fact , this year we invested an incremental $10 million in the future , growth prospects of that business .

Mark Rogers: Hi, Andrew. In fact, this year, we invested an incremental AUD 10 million in the future growth prospects of that business. So I feel pretty comfortable that we've invested in the OpEx base, and I wouldn't expect there to be too significant increase in the CapEx line either, Andrew. So I think we're pretty well-placed with FY26 has been a big year of investment in the Medibank Health segment. So I don't see that impacting the P&L going forward. Probably the area I'd get you to focus on would be the M&A investment. So our FY30 earnings aspiration, AUD 200 million, AUD 700 million capital base. We've invested AUD 560 million of capital employed now, so we've probably got another AUD 140 odd million to invest in support of our FY30 ambitions.

Speaker #1: So I feel pretty comfortable that we've invested in the OpEx base, and I wouldn't expect there to be too significant an increase in the CapEx line either.

Speaker #1: Andrew: So I think we're pretty well placed with FY26 having been a big year of investment in the Medibank Health segment, and so I don't see that impacting the P&L going forward.

Speaker #1: Probably the area I would get you to focus on would be the M&A investment. So, our FY30 earnings aspiration is $200 million, with a $700 million capital base.

Speaker #1: We've invested $560 million of capital employed now, so we've probably got another $140-odd million to invest in support of our FY30 ambitions.

Speaker #5: Great, thank you. And then the next one: how long, or how much longer, are you expecting to have to wait before APRA starts unwinding your additional capital charge related to the cyber incident?

Andrew Buncombe: Great. Thank you. And then the next one. How long or how much longer are you expecting to have to wait before APRA starts unwinding your additional capital charge related to the cyber incident? Thanks.

Speaker #5: Thanks

David Koczkar: As we say every six months or so when we get asked, we remain in very close contact with APRA. We have made great progress on our uplift program. In fact, as Mark alluded to or mentioned, the cost for FY27 now largely embedded. We are entering into an embed phase of the program. I think we both recognize the momentum, the progress, and the milestones achieving. We are moving forward at great pace and I think the final decision really is with APRA about that capital charge. I think there are instances where they have recognized partial relief based on milestone achievements or instances where they have waited to the very end of the program, including embedment. We will keep in close contact as you would expect us to do, and that decision will remain with APRA.

Speaker #2: Look , as we say , every six months or so when we get asked , we remain in , you know , very close contact with APRA .

Speaker #2: We've made great progress on our uplift program. In fact, as Mark alluded to or mentioned, the cost for FY27 is now largely embedded.

Speaker #2: So we are entering into an embed phase of the program. I think we both recognise the momentum, the progress, and the milestones being achieved.

Speaker #2: So , you know , we're moving forward at great pace . And I think the , the the final decision really is with APA about , you know , that capital charge .

Speaker #2: I think there are instances where they have recognised a partial relief based on milestone achievements, or instances where they have waited until the very end of the program, including Embedment.

Speaker #2: So we'll keep in close contact, as you would expect us to do. And that decision will remain with APRA.

Speaker #5: Great . And then the final one from me , please . Just interested whether your gross margin targets for FY 20 . Seven actually assume any actuarial assumption changes or any changes to the behavior of risk equalisation .

Andrew Buncombe: Great. Then the final one from me, please. Just interested whether your gross margin targets for FY27 actually assume any actuarial assumption changes or any changes to the behavior of risk equalization. Thanks.

Speaker #5: Thanks

Speaker #1: Andrew , thanks for your question . To ask that one . It's the third year in a row . So firstly , the first part of your question , no changes to actuarial assumptions .

Mark Rogers: Andrew, thanks for your question. You had asked that one, it is the third year in a row. The first part of your question, no change to actuarial assumptions. We have not assumed the probability of adequacy reduces from the current 90%. Sorry, what was the second part of your question?

Speaker #1: So, we haven't assumed that the probability of adequacy reduces from the current 98%. And sorry, what was the second part of your question?

Speaker #5: It was whether you're assuming any change in the risk equalisation scheme inside that margin guidance.

Andrew Buncombe: It was whether you are assuming any change in the risk equalization scheme inside that margin guidance.

Speaker #1: So looking . No . If you look across the whole 12 months of FY 26 , we were a modest beneficiary from the pool over the 12 months on average .

Mark Rogers: Looking, no. If you look across the whole 12 months of FY26, we were a modest beneficiary from the pool over the 12 months on average, and I would expect the 12-month average to be a good indicator of what will happen in FY27. That is obviously subject to competitive behavior and the like, Andrew. If a competitor has an uncommercial price on a product and has adverse selection that takes higher claiming younger customers from us and our competitors that could support our risk equalization position equally. We saw that in FY25.

Speaker #1: And I expect the 12-month average to be a good indicator of what will happen in FY27. That's obviously subject to competitive behaviour and the like.

Speaker #1: Andrew , if if a competitor has a uncommercial price on a product and has adverse selection that takes higher , claiming younger customers from us and our competitors , that could support our risk equalisation position equally , we saw that in FY 25 .

Speaker #5: Excellent. That's it from me. Thank you.

Andrew Buncombe: Excellent. That is it from me. Thank you.

Speaker #3: The next question comes from Julian Braganza with Goldman Sachs. Please go ahead.

Operator: The next question comes from Julian Braganza with Goldman Sachs. Please go ahead.

Speaker #6: Good morning guys . Just a quick one . So you have a comment in there saying stable FY indexation into FY 27 . Sounds a little bit contentious there .

Julian Braganza: Good morning, guys. Just a quick one. You have a comment in there saying stable PHI indexation into FY27. Sounds a bit contentious there, but how do you get comfortable with that sort of outlook? Yeah, thanks.

Speaker #6: But how do you get comfortable with that sort of outlook? Yeah, thanks.

Speaker #1: So we've got a very good view of what the current contracted arrangements provide for going into next year. And we've had a large proportion of our hospital contracts that have been recontracted in recent times.

Mark Rogers: We've got a very good view of what the current contracted arrangements provide for going into next year, and we've had a large portion of our hospital contracts that have been recontracted in the recent times. We've got a very good view on that, Julian.

Speaker #1: So, we've got a very good view on that. Julian.

Speaker #2: Yeah . Well , just just to add to that , for us through this whole last cycle , whilst there have been some challenges , we have ongoing conversations with hospitals and yeah , contracting has been , you know , an ongoing sort of conversations about inflation , indexation , but also partnership , investment .

David Koczkar: Well, just to add to that. For us, through this whole last cycle, whilst there have been some challenges, we have ongoing conversations with hospitals, and contracting has been an ongoing sort of conversations about inflation indexation, but also partnership investment. I'd say very much back to BAU, and you can see through our partnership payments, we are working very constructively with hospitals to not just support them, to support our customers, but also to help them support the health transition. As Mark said, we've got a lot of certainty, given the percentage of benefit outlays that are yet to be contracted. For hospitals, there's less unknown unknowns. We have a high degree of confidence that our partnership agreements will support our business going forward and support the health transition.

Speaker #2: I'd say very much back to Bau and you can see through our partnership payments , we are , you know , working very constructively with hospitals to not just support them , to support our customers , but also to help them support the health transition .

Speaker #2: As Mark said , we've got a we've got a lot of certainty given the percentage of benefit outlays that are yet to be contracted and for hospitals , there's less unknown unknowns .

Speaker #2: So we have a high degree of confidence that , you know , our partnership agreements will support , you know , business going forward .

Speaker #2: And support the health transition.

Speaker #1: And Julian , where you are in the contract contracting cycles with your larger hospitals will change between different providers . You'll see in FY 26 , we've called out that there was higher private hospital indexation .

Mark Rogers: And Julian, where you are in the contracting cycles with your larger hospitals will change between different providers. You'll see in FY26, we've called out that there was higher private hospital indexation. Maybe your assumption on what others will pay in FY27, we've already brought forward and paid in 26.

Speaker #1: So maybe your assumption on what others will pay in FY27, we've already brought forward and paid in '26.

Speaker #6: Okay . Got it . Now that's that's clear . And then just on the Medibank health business , I just want to be very clear what sort of organic growth that you're seeing , organic growth that you're seeing there in FY 26 .

Julian Braganza: Okay, got it. No, that's clear. Then just on the Medibank Health business, sort of be very clear what sort of organic growth that you're seeing there in FY26. Also just, I mean, if you look at your accounts in terms of impairment testing for goodwill, you're kind of assuming about 2.5% growth there for Medibank Health across the divisions. I just want to get comfortable, one, what are you seeing in the numbers on an underlying basis, ex the acquisitions? Then two, the reason for the difference then in terms of the accounts. Thanks.

Speaker #6: And also, just—I mean, if you look at your accounts in terms of impairment testing for goodwill, you kind of assume about 2.5% growth there for Medibank Health across the divisions.

Speaker #6: I just want to get comfortable. One, what are you seeing in the numbers on an underlying basis, ex the acquisitions? And then, two, the reason for the difference there in terms of the accounts.

Speaker #6: Thanks .

Speaker #1: Okay . So let me start with the first point . Julian . If you look at the 31.3% reported segment profit growth . I'd just subtract $6.2 million from that and you'll get organic growth .

Mark Rogers: Okay. Let me start with the first quick, Julian. If you look at the 31.3% reported segment profit growth, I would just subtract AUD 6.2 million from that and you will get organic growth. You will see that is still in the somewhere in the 20% to 25% range. I think you are referring to the impairment testing table. I think it is pretty standard industry practice to conserve the use a inflation-led capitalized inflation-led 2.5% or 3% number in your cap multiple. That does not indicate your earnings prospects over the next few years. That is more just applying a capitalization multiple for the terminal value calculation.

Speaker #1: So you'll see it's still somewhere in the 20 to 25% range . And I think you're referring to the impairment testing table . I think it's pretty standard industry practice to use a conservative use a inflation led , capitalized inflation led 2.5 or 3% number in your cap multiple .

Speaker #1: That doesn't indicate your earnings prospects over the next few years. That's more just applying a capitalization multiple at the terminal value calculation.

Speaker #6: Okay . Got it . So that's that's clear . And then just the last question in terms of just the outlook for the non-resident business , just in terms of , of pricing and inflation and margins from here .

Julian Braganza: Okay. Got it. That is clear. Just a last question in terms of just the outlook for the non-resident business, just in terms of pricing and inflation and margins from here. I am just wondering if you can kind of unpack that framework into FY27. Thanks.

Speaker #6: I'm just wondering if you could kind of unpack that framework into FY27. Thanks.

Speaker #1: So firstly, on pricing, it would depend on which segment you're talking about, given there are different claims growth rates and competitive dynamics. But you should assume that the higher claims growth that we saw during the second half of FY26 has been factored into our go-forward premium increases.

Mark Rogers: Firstly, on pricing, it would depend on which segment you are talking about, given there are different claims growth and competitive dynamics. You should assume that the higher claims growth that we saw during the H2 FY26 has been factored into our go-forward premium increases. Those went through in May. From a margin perspective, just the way we think about FY26 is across the two halves of 2026, we had broadly flat gross profit and gross margin. Why we had profit decline and margin decline really relates back to the performance in the H2 2025. We had a really strong outcome in the H2 2025. We had a 39% gross margin. The trajectory in 2026 is more about what happened in the H2 2025 rather than what happened across the two halves of 2026.

Speaker #1: Those went through in May from a margin perspective. Just the way we think about FY26 is across the two halves of '26, we had broadly flat gross profit and gross margin.

Speaker #1: While we had profit decline, and margin decline really relates back to the performance in the second half of '25, we had a strong outcome in the second half of '25. We had a 39% gross margin.

Speaker #1: So the trajectory in '26 is more about what happened in the second half of '25, rather than what happened across the two halves of '26.

Speaker #1: And that's why we're comfortable with the solid profit growth guidance that we've given you. And I'd hope that gross margin will be more stable in FY26 compared to FY25.

Mark Rogers: That is why we are comfortable with the solid profit growth guidance that we have given you. I would hope that gross margin will be more stable in 2026 compared to 2025. I would just qualify all those statements for Julian. We have three different segments in non-resident workers, students, and visitors. They have different premium increase characteristics and different gross margins. I will qualify my statement. I am saying it will depend, however, on where we see growth across those three segments.

Speaker #1: I would just qualify all those statements . Julian . We have three different segments in non-resident workers , students and visitors . They have different premium , increase characteristics and different gross margins .

Speaker #1: So I'll qualify my statement. I'm saying it will depend, however, on where we see growth across those three segments.

Speaker #6: Got it. And that's clear. Thanks so much for that, Mark and David.

Julian Braganza: Got it. That's clear. Thanks so much for that, Mark and David.

Speaker #3: Your next question comes from Nigel Pittaway with Citi. Please go ahead.

Operator: Your next question comes from Nigel Pittaway with Citi. Please go ahead.

Speaker #7: Oh, good morning, guys. Just first of all, on the resident claims inflation — I mean, I appreciate you've given gross profit guidance.

Nigel Pittaway: Good morning, guys. Just first of all, on the residents claims inflation. I appreciate you've given gross profit guidance, but it's the first time you haven't given specific resident claims inflation guidance, and it doesn't sound from what you've said about the indexation that you've any less confidence in being able to predict it. So just first of all, wondering why that is. Secondly, given what you've said, obviously, and you've said it before on COVID in New South Wales, it still sounds like you're batting for that 350, 360 basis point range, which I think was mentioned at the half year. So just checking that's still where you're expecting it to land.

Speaker #7: But it's the first time you sort of haven't given specific resident claims inflation guidance. And it doesn't sound, from what you've said about the indexation, that you're any less able to predict it.

Speaker #7: So just first of all , wondering why that is . And secondly , you know , given what you've said , obviously , and you've said it before on Covid in New South Wales , it still sounds like you're sort of batting for that .

Speaker #7: 353 60 basis point range . So which , which I think was mentioned at the half year . So just checking that still where you're expecting it to land .

Speaker #1: Yes . Let me start with your second question . Yeah . So consistent with the conversation at the half , we really the go forward inflation , particularly for hospital is going to be impacted , as you say , by the Utilization benefit unwind .

Mark Rogers: Well, let me start with your second question. Yeah. So consistent with the conversation at the half year, really the go forward inflation, particularly for hospital, is going to be impacted, as you say, by the utilization benefit unwind. The numbers, the maths you talk about, Nigel, aren't Well, I think they're pretty accurate in terms of how you've come up with those numbers. I think there are two factors I'll just call out that we're watching most quite closely. So in the hospital product, it's how acuity and the shift of the model of care impact inflation, in the hospital product going forward. Then on extras, it's the potential economic impact on utilization of extra services and particularly, more discretionary services. To your first question and why we've gone to gross margin outlook rather than claims. It's the way we're managing our business.

Speaker #1: And so the numbers—the maths—you talk about, Nigel, aren't... Well, I think they're pretty accurate in terms of how you've come up with those numbers.

Speaker #1: I think there are two factors I'll just call out that we're watching most closely. So, in the hospital product, it's how acuity and the shift of the model of care impact inflation in the hospital product going forward.

Speaker #1: And then on extras, it's the economic potential, economic impact on utilization of extra services, in particular more discretionary services. To your first question, and why we've gone to a gross margin outlook rather than claims….

Speaker #1: It's the way we're managing our business . So we look to generate a flat to flattish gross margin . And we manage our revenue mix impact and our claims inflation , including how much we reinvest in benefits to try and achieve that I think we tried we've tried to give you sufficient information to form a view on claims and we've indicated that we expect revenue mix impact for FY 27 to be similar to FY 26 , 150 basis points .

Mark Rogers: We look to generate a flat to flat gross margin, and we manage our revenue mix impact and our claims inflation, including how much we reinvest in benefits trying to achieve that. I think we have tried to give you sufficient information to form a view on claims. We have indicated that we expect revenue mix impact for FY27 to be similar to FY26, the 150 basis points.

Speaker #7: Fair enough . And just on utilization , presumably that's pointing towards favorable . Is it with what you're saying on the economics , is that what you're saying there ?

Nigel Pittaway: Fair enough. Just on utilization, presumably that is pointing towards favorable, is it? With what you are saying on the economics. Is that what you are saying there? Yeah.

Speaker #7: Yeah

Speaker #1: Well , so .

Mark Rogers: Well, if you think about-

Speaker #7: On the extras utilize . Yes , yes yes . On the extras utilization .

Nigel Pittaway: On the extra utilize. Yes. Sorry.

Mark Rogers: Yes.

Nigel Pittaway: On the extra utilization.

Speaker #1: Definitely . Yes . It's definitely the risk is to the downside rather than the upside . And utilization .

Mark Rogers: Definitely. Yeah. Definitely. The risk is to the downside of utilization rather than the upside of utilization.

Speaker #7: Yeah . Fair enough . And then just on back to sort of the the revenue growth and more sort of a broad , a broad question , I guess , because , I mean , you've talked about , you know , the competitive behavior in the market .

Nigel Pittaway: Yeah, fair enough. Then just on back to sort of the revenue growth and more sort of a broad question, I guess, because you have talked about the competitive behavior in the market. You thought it was temporary a while back, yet it seems to have gone on a lot longer than you anticipated. Have you sort of got any sight now that you think that could actually alleviate at some point? Is there a trigger point or is this just the new normal where this kind of competitive activity is likely to persist for some time?

Speaker #7: You thought it was temporary a while back , and yet it seems to have gone on a lot longer than you anticipated . I mean , are you still have you sort of got any sight now that you think that could actually alleviate at some point ?

Speaker #7: Is there a trigger point, or is this just the new normal where this kind of competitive activity is likely to persist for some time?

Speaker #1: Yeah .

Mark Rogers: Yeah. It is obviously the important thing we look at. For the first 9 months of the financial year, we had seen the competitive intensity reduce back to a sort of more normal level. But with what was happening, the backdrop of the economy, cost of living, and other insurers, and you can see that from our presentation, the industry average margin reducing. There were actions taken in that quarter that are just not consistent with our strategy of managing the business for the long term. That was coupled with increased aggregated marketing, which we were talking to you about before, which is a more systemic change, and particularly those costs of commissions almost doubling in the last 2 years. That really came together in that Q4. That is a cycle that we do see, and we would expect that to unwind over the long term.

David Koczkar: Yeah. It is obviously the important thing we look at. For the first 9 months of the financial year, we had seen the competitive intensity reduce back to a sort of more normal level. But with what was happening, the backdrop of the economy, cost of living, and other insurers, and you can see that from our presentation, the industry average margin reducing. There were actions taken in that quarter that are just not consistent with our strategy of managing the business for the long term. That was coupled with increased aggregated marketing, which we were talking to you about before, which is a more systemic change, and particularly those costs of commissions almost doubling in the last 2 years. That really came together in that Q4. That is a cycle that we do see, and we would expect that to unwind over the long term.

Speaker #2: It's obviously the important thing we look at. But for the first nine months of the financial year, we had seen the competitive intensity reduce back to a sort of more normal level.

Speaker #2: But with what was happening , the backdrop of the economy , cost of living and , you know , other insurers , and you can see that from our presentation .

Speaker #2: The industry average margin is reducing. You know, there are actions taken in that quarter that are just not consistent with our strategy of managing the business for the long term.

Speaker #2: So that was coupled with increased aggregated marketing , which we're talked to you about before , which is a more systemic Change and particularly those costs of commissions almost doubling in the last two years that that really came together in that Q4 .

Speaker #2: So that's a cycle that we do see . And we would expect that to unwind over the long term . So , you know , our settings won't change .

Mark Rogers: Our settings won't change. We'll continue to manage the business over the long term, being careful to balance volume with margin. And our individual half-yearly outcomes will depend a little bit on what happens in the market. But if you look at the overall trajectory of the industry, we expect that competitor environment won't sustain at that high level of intensity

David Koczkar: Our settings won't change. We'll continue to manage the business over the long term, being careful to balance volume with margin. And our individual half-yearly outcomes will depend a little bit on what happens in the market. But if you look at the overall trajectory of the industry, we expect that competitor environment won't sustain at that high level of intensity

Speaker #2: We'll continue to manage the business over the long term , being careful to balance volume with margin . And you know , our individual half yearly outcomes will depend a little bit on what happens in the market .

Speaker #2: But , you know , if you look at the overall trajectory of the industry . You know , we expect that that competitive environment won't sustain at that high level of intensity .

Speaker #2: You know , for every quarter going forward . But it does come in and out . And so , you know , the important thing for us is to manage the business over the long term .

David Koczkar: for every quarter going forward. But it does come in and out. The important thing for us is just to manage the business over the long term.

Speaker #1: And I think, Nigel, that's the most important point. When you see that particular competitive behavior, you've got to maintain your discipline.

Mark Rogers: Yeah. I think, Nigel, that's the most important point. When you see that particular competitive behavior, you've got to maintain your discipline. We saw this 12 months ago when one not-for-profit fund mispriced a Silver Plus product, won a lot of market share, then they've significantly changed the price at the most recent premium round. And we're trying to run the business on a flat to flattish gross margin. I think our discipline is one of the major drivers that's allowed our gross margin in resident to increase 10 basis points, and the probability of our margin sustainability is reinforced by that disciplined approach.

Speaker #1: We saw this 12 months ago when one not-for-profit fund mispriced the Silver Plus product; one, a lot of market share.

Speaker #1: They've significantly changed the price at the most recent premium round, and we're trying to run the business on a flat to flattish gross margin.

Speaker #1: I think our discipline is one of the major drivers that has allowed our gross margin in Resident to increase ten basis points, and the probability of our margin sustainability is reinforced by that disciplined approach.

Speaker #7: Okay, thank you for that. And then maybe just quickly and finally, I mean, is there any more clarity about the likely timing on litigation, or is that still pretty unclear?

Nigel Pittaway: Okay. Thank you for that. And then maybe just quickly and finally. Is there any more clarity about the likely timing on litigation, or is that still pretty unclear?

Speaker #2: Look , all activities and litigation still are at preliminary stages . There are we've published some court ordered dates that will signposts momentum in some of the proceedings during the next financial year .

David Koczkar: Look, all activities and litigation still are at the preliminary stages. We've published some court-ordered dates that will signpost momentum in some of the proceedings during the next financial year. There's nothing much more to say on that.

Speaker #2: But there's nothing much more to say on that.

Speaker #8: That's great .

Nigel Pittaway: Great. Okay. Thank you very much.

Speaker #7: Okay. Thank you very much.

Speaker #3: Your next question comes from Siddharth Parameswaran with JP Morgan. Please go ahead.

Operator: Your next question comes from Siddharth Parameswaran with J.P. Morgan. Please go ahead.

Speaker #4: Good morning . I had my first question was just on the lapse rates . They increased quite sharply in the in the second second half I was just keen to understand , you know , what actually happened there .

Siddharth Parameswaran: Good morning. My first question was just on the lapse rates. They increased quite sharply in the H2. I just need to understand what actually happened there. I know you flagged that there was some competitive intensity, but particularly how you think that actually led to your own lapse rates worsening and just what you're assuming in terms of your outlook on that going forward.

Speaker #4: I know you flagged that there was some competitor intensity , but particularly how that you know , how you think that actually led to your own lapse rates worsening and just what you're assuming in terms of your outlook on that going forward

Speaker #2: Well , at Harvard , then I'll head over to to mark . We have seen lapse rates increase in the industry over the last few years .

David Koczkar: Well, I will hold, but then I will hand over to Mark. We have seen lapse rates increase in the industry over the last few years. You can see in our presentation, the industry lapse rate has increased by 180 basis points over the last three or four years. Ours have also increased, but by a significantly less amount. For FY26, we believe that will still be the case. Lapse rates can be driven by competitor intensity on a short-term basis, as well as aggregator marketing, where there is a risk of commission-driven churn. That is why it is important for us as we balance volume and margin to manage for the long term. So it is a relative lapse rate that we pay most attention to, and Medibank still, as at March, had one of the lowest or has the lowest lapse rate of the majors.

Speaker #2: You can see in our presentation, the industry lapse rate has, you know, increased by 180 basis points over the last three or four years.

Speaker #2: Ours have have also increased . But by a significantly less amount . And I think for FY 26 , we believe that will still be the case lapse rates can be driven by competitor intensity in a short term basis , as well as aggregator marketing , where there is a risk of commission driven churn .

Speaker #2: And that's why it's important for us, as we balance volume and margin, to manage for the long term. So it's the relative lapse rate that we pay most attention to.

Speaker #2: And, you know, Medibank still, as at March, had one of the lowest, or has the lowest, lapse rate of the majors.

Speaker #1: Thanks , David . So Syd , I think as David mentioned , it's a combination of the aggregator marketing , the industry premium increases , and the more challenged economic environments just driven the switching rate across the industry to be elevated .

Mark Rogers: Thanks, David. Sid, as David mentioned, it is a combination of the aggregator marketing, the industry premium increases, and the more challenged economic environment. It has just driven the switching rate across the industry to be elevated. When we look through the most recent Australian Prudential Regulation Authority data and looking at our own data, it is more about switching than exits. What would have been slightly more concerning is if the exit rates in the industry had gone up materially, because that is a loss of the customer versus this is an increase in the cost of doing business through the commissions that we are paying. But generally, I think it is driven by the premium increase, the economic environment, and the aggregators becoming more aggressive.

Speaker #1: When we look through the most recent APRA data and look at our own data, it's more about switching than exits. So, what would have been slightly more concerning is if the exit rate from the industry had gone up materially, because that's a loss of the customer, versus this is an increase in the cost of doing business through the commissions that we're paying.

Speaker #1: But generally, I think it's driven by the premium increase, the economic environment, and the aggregators becoming more aggressive.

Speaker #4: Okay. Okay. Thank you for that color. My second question is just around the non-residents guidance that you have for into '27.

Siddharth Parameswaran: Okay. Thank you for that color. My second question is just around the non-residents guidance that you have for into 2027. You are expecting some solid growth to return. We saw some pressure in the second half. I think you flagged tenure and mix impacts. My understanding of the accounting of this is that you often, particularly on the students, you write long-term contracts, and you cannot change pricing, and there are these tenure-related impacts. I am just wondering, the turnaround that you are expecting in momentum into next year, what will drive that? Usually, when I have seen it before, it usually takes quite a bit of effort to turn around trends. If I think back to COVID, et cetera, there was a bit of pressure on these lines. Just keen to understand how you are expecting to turn it around quickly.

Speaker #4: You're expecting some solid growth to return. We saw some pressure in the second half. I think you flagged tenure and mix impacts.

Speaker #4: My understanding of the accounting of this is that you often , particularly on the students , you write long term contracts and you can't change pricing .

Speaker #4: And there are these these these tenure related impacts . I'm just wondering , you know , the turnaround that you're expecting in momentum into , into next year , how what will , what will drive that usually , you know , when I've seen it before , it usually takes a little bit to , you know , quite a bit of effort to turn around trends .

Speaker #4: You know , if I think back to Covid , etc. , there was there was a bit of pressure on these lines , just keen to understand , you know , how you're expecting to , to turn it around quickly .

Speaker #1: Sure . I might start with the momentum in the second half versus the first half . So it was the first and second half performance were broadly in line .

Mark Rogers: Sure. I might start with the momentum in the second half versus the first half. So the first and second half performance were broadly in line, Sid, around AUD 55 million of gross profit across each of the two halves. The decline in earnings this year reflected the fact that the gross margin was so high in the second half of last year. So last year, in the second half, we had stronger visa approvals, so positive tenure and mix impacts that unwound in the second half of this year. But probably the biggest driver on performance was the exit rate in the student portfolio this year. When borders reopened after COVID, we had a very big visa intake. Those students would have joined us for two or three years, so that is a graduating year this year.

Speaker #1: Saw around $55 million of gross profit across each of the two halves. The decline in earnings this year reflects the fact that the gross margin was so high in the second half of last year.

Speaker #1: So last year, in the second half, we had stronger visa approvals. So, positive tenure and mix impacts that unwound in the second half of this year.

Speaker #1: But probably the biggest driver on performance was the exit rate in the student portfolio this year. So, when borders reopened after COVID, we had a very big visa intake.

Speaker #1: Those students would have joined us for 2 or 3 years . So that's a graduation graduating year . This year . So the majority of the impact in that student portfolio , particularly in terms of volume , was driven by those students leaving after graduation rather than it being solely driven by visa numbers .

Mark Rogers: The majority of the impact in that student portfolio, particularly in terms of volume, was driven by those students leaving after graduation rather than it being solid driven by visa numbers. We would expect the policy mix to be more stable next year, and we wouldn't expect the Tenure and mixing packs to be as significant, and we have taken some pricing and portfolio actions. What gives us further confidence is we're growing really strongly in the workers portfolio. The worker portfolio would have grown policy units north of 20% in the last 12 months, and that is the actual higher margin business. You're right on students, you can't reprice the back book, you can only reprice the front book, but we're probably 12 months through that repricing cycle already.

Speaker #1: So we'd expect the policy units to be more stable next year, and we wouldn't expect the tenure in mixing packs to be as significant.

Speaker #1: And we have taken some pricing and portfolio actions. What gives us further confidence is we're growing really strongly in the work of portfolio. The work of portfolio would have grown policy units north of 20% in the last 12 months, and that is the actual higher margin business.

Speaker #1: And you're right on, students. You can't reprice the back book; you can only reprice the front book. But we're probably 12 months through that repricing cycle already.

Speaker #2: And so, when we look at the total market, you know, we have seen the overall visa market remain very strong. The growth has been very strong in the last year, and workers and students have sort of stabilised that from where it was a couple of years ago.

David Koczkar: Sid, when we look at the total market, we have seen the overall visa market remain very strong. The growth has been very strong in the last year in workers and students has stabilized back from where it was a couple of years ago. The total visa market remains actually very strong. The mix is changing, which really suits our strategy, moving to higher education services where we're stronger in the student market and our skilled workers, which are driving significant growth in that visa approval. I think we're also excited by our launch of our new products in the visitor market where we've been waiting for that investment, and that market also continues to grow. The total market remains very attractive and the mix is shifting towards areas of our strength.

Speaker #2: But the total visa market remains actually very strong . And the mix is changing , which really suits our strategy . Moving to higher education services , where we're stronger in the student market and skilled workers , which are driving significant growth in visa approval .

Speaker #2: I think we're also excited by our launch of our new products in the visitor market, where we've been waiting for that investment, and that market also continues to grow.

Speaker #2: So the the total market remains very attractive in the mix is shifting towards areas of our strength . I think the other point that we've shared in the presentation is around our work on life cycle , where non-resident policyholders form a material part of our acquisition pathway for resident .

David Koczkar: I think the other point that we shared in the presentation is around our work on last cycle where non-resident policyholders form a material part of our acquisition pathway for resident, and we saw a 15% improvement in acquisition there year on year. That's all part of our growth story, not just for non-resident, but also how we drive value across the enterprise.

Speaker #2: And we saw a 15% improvement in acquisition , their year on year . So that's that's all part of our growth story , not just for non-resident , but also how we drive value across the enterprise

Speaker #4: That's that's great color . Thank you . And just my last question is just on the reform agenda with the the minister , I think he's talked I think he's shifting his attention now to trying to make some of the elevated , the higher product tiering products like gold , etc.

Siddharth Parameswaran: That's great color. Thank you. My last question is just on the reform agenda with the minister. I think he's shifting his attention now to trying to make some of the higher product tiering products like Gold, et cetera, sustainable. Just keen to hear whether this could have any impact on margins themselves. What are the kinds of things that they're considering? Are they considering maybe putting obstetrics, et cetera, into the risk equalization pool? Is there a risk for for-profit providers who generally are underweight those categories?

Speaker #4: , sustainable . Just keen to hear whether this could have any impact on margins theirselves , you know , what are the kind of things that that they're considering ?

Speaker #4: Are they considering maybe putting obstetrics, etc., into the risk equalisation pool, and is there a risk for for-profit providers who generally are underweight those categories?

Speaker #2: Well , just generally on reform , I think the the large focus well , I'm not the minister . I can't second guess , but it appears to be the NDIS aged care .

David Koczkar: Well, just generally on reform, I think the large focus, I am not the minister, but I cannot second guess, but it appears to be the NDIS, aged care, and then the rebate that was part of the budget for over 65s. I think then the second main focus is on the public sector, particularly on primary care and driving the health transition, particularly to support a more sustainable growth in the public sector on hospital funding. So I think they are the top priorities. I think on the private sector, the department has just issued a consultation paper which looks at a variety of things, including driving out-of-hospital care, better matching hospital supply and demand, and then some other areas around product review. I mean, the Gold product question has been discussed at the CEO forum. It is part of that consultation paper.

Speaker #2: And then the rebate that was part of the budget for over 65 I think . Then the second main focus is on the public sector , particularly on primary care and driving the health transition , particularly to support a more sustainable growth in the public sector .

Speaker #2: On hospital funding . So I think that becomes that they are the top priorities . I think , on the private sector , yeah , the department just issued consultation paper , which looks at a variety of things , including driving out of hospital care , better matching hospital supply and demand , and then some other areas around product review .

Speaker #2: I mean , the gold product question has been discussed at the CEO forum . It is part of that consultation paper . It has become a catch all of lots of problems in the sector .

David Koczkar: It has become a catch-all of lots of problems in the sector, I would say. But there is some potential for some reform to make it more affordable. You would have to look at the risk equalization settings to make sure that it becomes sustainable for the system.

Speaker #2: I would say . But there is some potential for some reform to make it , you know , more affordable . You'd have to look at the risk equalisation settings to make sure that that it becomes sustainable for , for the system

Speaker #1: And said to you comment on whether it would impact for profit or not for profit . I think the ownership status is irrelevant .

Mark Rogers: And Sid, to comment on whether it would impact for-profit or not-for-profit, I think the ownership status is irrelevant. It is whether you have got on sale Gold products and the size of your Gold back book, which for us, we are a strong player in the Gold market through both of our brands. I think some of our competitors have effectively taken Gold off sale and do not participate in that market. So I am not seeing that as being a threat for us, but it will be for others. And I think the question on risk equalization is not just what happens with obstetrics and mental health and whether that is part of the risk equalization pool for a Gold product. It is more do we move to prospective risk equalization, and that is what we really hope for. I think for us as an organization, we manage our plans well.

Speaker #1: It's whether you've got on sale gold products and the size of your gold back book , which for us , we're a strong player in the gold market through both of our brands .

Speaker #1: I think some of our competitors have effectively taken gold off sale and don't participate in that market. So I'm not seeing that as being a threat for us, but it will be for others.

Speaker #1: And I think the question on risk equalisation is not just what happens with obstetrics and mental health, and whether that's part of the risk acquisition pool for gold product. It's more to be moved to a prospective risk equalisation.

Speaker #1: And that's what we really hope for . I think , for us as an organization , we manage our claims well . We're sharing a lot of the benefit with our competitors because of the risk equalisation basis .

Mark Rogers: We are sharing a lot of the benefit with our competitors because of the risk equalization basis. We would love the risk equalization pool to move to a prospective basis, and I think it will over time, probably not in one go. It will move progressively. But I think that is the area of risk equalization form that the industry really needs.

Speaker #1: We'd love the risk equalisation pool to move to a prospective basis, and I think it will over time—probably not in one go.

Speaker #1: It will move progressively, but I think that's the area of risk equalisation reform that the industry really needs.

Speaker #4: Okay. Thank you very much.

Siddharth Parameswaran: Okay. Thank you very much.

Speaker #3: Your next question comes from Andre Stadnik with RBC. Please go ahead.

Operator: Your next question comes from Andrei Stadnik with RBC. Please go ahead.

Speaker #9: Good morning . Can I ask my first question ? Just around the mix of your distribution on healthcare policies . So you mentioned that you were running at about 74% for several periods , and that's picked up now from 74% up towards 81% .

Andrei Stadnik: Good morning. Can I ask my first question just around the mix of your distribution on healthcare policies? You mentioned that you were running about 74% for several periods, and that has picked up now from 74% up towards 81%. Can you talk a little bit about some of the flow and benefits from that in terms of potentially lower commission or acquisition costs? Also, how high do you think you can sustainably drive that?

Speaker #9: So, can you talk a little bit about some of the flow-on benefits from that in terms of potentially lower commission or costs, and also, how high do you think you can sustainably drive that?

Speaker #2: Well, it is a stated strategy that we are very focused on the markets we're acquiring within, focusing on giving more value and better health engagement to existing members.

David Koczkar: Well, it is a stated strategy that we are very focused on the markets we are acquiring within, focusing on giving more value and better health engagement to existing members, and then driving direct distribution. As you may know, Medibank 100% of acquisition is direct and using direct channels. For ahm, it depends on our aggregator strategy. You see that has increased the direct share of ahm acquisition in the H2, in part because we removed ahm from one of the aggregator panels. We also saw a stronger growth in direct acquisition for ahm. The reason we do that is to help us manage the business for the long term. We see a lower cost to acquire through direct channels. We see stronger customer relationships developed, and that leads to lower lapse.

Speaker #2: And then driving direct distribution . As you may know , Medibank , 100% of acquisition is direct and using direct channels and for ahem , it depends on our aggregate strategy .

Speaker #2: And you see that that has increased the direct share of our acquisition in the second half, in part because we removed ARM from one of the aggregator panels.

Speaker #2: But also we saw a stronger growth in direct acquisition for , I , I think the reason we do that is to help us manage the business for the long term .

Speaker #2: We see a lower cost to acquire through direct channels. We see stronger customer relationships developed, and that leads to lower lapses.

Speaker #2: And so those three factors are the reasons in the majority why we focus on direct channels , where it can get to . It'll depend on other channels in the market and how we make sure we balance short and long term Economics around those .

David Koczkar: Those three factors are the reasons in the majority why we focus on direct channels where it can get to. It will depend on other channels in the market and how we make sure we balance short and long-term economics around those. I think at 80%, that is a very strong result. I would suspect, although it is not published, I think that will be the strongest result of the majors across the sector.

Speaker #2: But I think at 80% , you know , that's a very , very strong result . And I would suspect , although it's not published , I think that would be the strongest result of of the majors across the sector .

Speaker #1: And Andre , I think David's point on laps is actually really , really important . So particularly customers that switched through an aggregator in May or June after the premium increase will typically have a much higher lapse rate for switching rate in the following 12 month period .

Mark Rogers: Yeah. Andre, I think David's point on lapse is actually really important. Particularly customers that switch through an aggregator in May or June after the premium increase will typically have a much higher lapse rate or switching rate in the following 12-month period. The benefit of this disciplined approach to growth does not just impact you in the current period, we expect to have a benefit to our retention rates in FY27.

Speaker #1: And so the benefit of this disciplined approach to growth doesn't just impact you in the current period. It'll have a benefit.

Speaker #1: We expect to have a benefit to our retention rates in FY27.

Andrei Stadnik: Thanks so much. For my second question, can I ask around your corporate growth strategy? You mentioned in the health segment, you would like to do more on corporate, and you also mentioned the, I think, the Pacific Australia Labour Mobility. Can you talk a little bit about maybe some of the under the AUD or the proper growth benefits that can come from those?

Speaker #9: Thanks so much for my second question . Can I ask around your , you know , your corporate growth strategy ? You mentioned in , you know , in the health segment , you'd like to do more on corporate .

Speaker #9: And you also mentioned the , I think the Pacific Australia , labour mobility . So can you talk a little bit about maybe some of the under the dollar or the profit growth benefits that can come from those

Speaker #2: Well , the corporate strategy is both across the resident non-resident and health businesses . We've talked about the in non-resident , we've talked about the strong growth in visa approvals for non-resident workers , particularly skilled workers not in the palm contract is is a great win for the business to broaden out our growth on the resident business .

David Koczkar: Well, I think the corporate strategy is both across the resident, non-resident, and health businesses. In non-resident, we talked about the strong growth in visa approvals for non-resident workers, particularly skilled workers, and the PALM contract is a great win for the business to broaden out our growth. On the resident business, we have 2,500 corporate accounts, and they are looking for more support for their employees in health and wellbeing, particularly mental health. It is not just the sales of resident PHI that form part of the relationship where we have grown almost double the size of the market growth rate in corporate accounts this year. It is also the ability for us to provide more of those health services. That health and wellbeing market for corporates is growing rapidly.

Speaker #2: We have 2,500 corporate accounts, and they are looking for more support for their employees in health and wellbeing, particularly mental health.

Speaker #2: And it's not just the sales of resident . I that form part of the relationship where we have grown almost double the size of the market growth rate in corporate accounts this year , it is also the ability for us to provide more of those health services , and that health and wellbeing market for corporates , you know , is growing rapidly .

Speaker #2: We think it's about $1 billion in market size by the end of the decade . And with our account accounts that we have with our proposition that we can offer through Leadbetter and other things , you know , we're very confident about growth .

David Koczkar: We think it's about AUD 1 billion in market size by the end of the decade. With our accounts that we have and with our proposition that we can offer through Live Better and other things, we're very confident about growth. That's one of the planks of growth for Medibank Health, particularly in that wellbeing sector.

Speaker #2: And that's one of the planks of growth for Medibank Health, particularly in that wellbeing sector.

Speaker #9: Thank you

Andrei Stadnik: Thank you.

Speaker #3: Your next question comes from Vanessa Thompson with Jefferies. Please go ahead.

Operator: Your next question comes from Vanessa Thompson with Jefferies. Please go ahead.

Speaker #10: Good morning , and thank you for taking my questions . I just wondered if you could talk a little bit more about that private health sector reform paper in the hospital in the home services and the minimum insurer payment , just curious , wanting to understand how that impacts Medibank .

Vanessa Thompson: Good morning, and thank you for taking my questions. I just wondered if you could talk a little bit more about that private health sector reform paper in relation to the hospital in-home services and the minimum insurer payment. I'm just curious, wanting to understand how that impacts Medibank. Thank you.

Vanessa Thomson: Good morning, and thank you for taking my questions. I just wondered if you could talk a little bit more about that private health sector reform paper in relation to the hospital in-home services and the minimum insurer payment. I'm just curious, wanting to understand how that impacts Medibank. Thank you.

Speaker #10: Thank you

Speaker #2: Well, as you know, we've been championing for some time the move to support more care being done in the community. So that's great, and it's fantastic to see general alignment on that.

David Koczkar: Well, as you know, we have been championing for some time, the move to support more care being done in the community. That is great, and it is fantastic to see general alignment on that as an aspiration. We are seeing many of our hospital partners embrace that. It reduces length of stay in expensive settings and is better for patients. The direction of travel is now not just us talking about it. I think it is now very much an aligned objective. I think the reform paper talks about the how and the way that might happen. I think there are some trials we want to do with particular procedure types. But there is a bit to play out there on exactly how that works, and it would be premature to speculate a bit any further on how the policy may shape up.

Speaker #2: As an aspiration, we're seeing many of our hospital partners embrace that. It reduces length of stay in expensive settings and is better for patients.

Speaker #2: So, the direction of travel is now not just us talking about it; I think it's now very much an aligned objective. I think the reform paper talks about the how and, you know, the way that might happen.

Speaker #2: I think there are some trials we want to do with particular procedure types, but there's a bit to play out there on exactly how that works.

Speaker #2: Would be premature to speculate a bit any further on how the the policy may shape up . But yeah , we're very happy by the approach and the alignment on this move to embrace community care , which we've been championing .

David Koczkar: But we are very happy by the approach and the alignment on this move to embrace community care, which we have been championing, as you know, for many years.

Speaker #2: As you know, for many, many years.

Speaker #10: So , so in relation sorry , in relation to that the , the it's for registered hospitals . Would you guys fall into into that basket in terms of receiving those payments ?

Vanessa Thompson: In relation to that, it is for registered hospitals. Would you guys fall into that basket, in terms of receiving those payments? I just could not understand, would that be you paying yourself or?

Vanessa Thomson: In relation to that, it is for registered hospitals. Would you guys fall into that basket, in terms of receiving those payments? I just could not understand, would that be you paying yourself or?

Speaker #10: Would you be...? I just couldn't understand. Would that be you paying yourselves, or...?

Speaker #1: Or you already do. So Ampler provides services to the health fund, to our health insurance business already. So we're already doing that.

David Koczkar: We already do. Amplar provides services to the health fund, to our health insurance business already. We are already doing that.

Speaker #1: Okay. This is probably more a conversation about if a patient is admitted as an inpatient, and then is there a default benefit for them to be treated at home on discharge?

Vanessa Thompson: Okay.

Vanessa Thomson: Okay.

David Koczkar: This is probably more a conversation about if a patient is admitted as an inpatient, then is there a default benefit for them to be treated at home on discharge?

Speaker #10: Right . Okay . Okay . Thank you . And then I also wondered , I acknowledged that the Covid benefit ending is the biggest contributor to the lower expectation for hospital claims .

Vanessa Thompson: Right. Okay. Thank you. I also wondered, I acknowledge that the COVID benefit ending is the biggest contributor to the lower expectation for hospital claims. I just wondered if you could give us any more color on hospital claims. I think that you had seen some lower surgical claims in a previous period. Just was after some more color there. Thank you.

Vanessa Thomson: Right. Okay. Thank you. I also wondered, I acknowledge that the COVID benefit ending is the biggest contributor to the lower expectation for hospital claims. I just wondered if you could give us any more color on hospital claims. I think that you had seen some lower surgical claims in a previous period. Just was after some more color there. Thank you.

Speaker #10: I just wondered if you could give us any more color on hospital claims. I think you had seen some lower surgical claims in the previous period, just was after still color there.

Speaker #10: Thank you

Speaker #1: So the trends we spoke about coming out of COVID, which is softer claims growth in totality, but largely in non-surgical, I'd say they're all now fully embedded.

Mark Rogers: The trends we spoke about coming out of COVID, which is softer claims growth in totality, but largely in non-surgical, I would say they are all now fully embedded.

Speaker #10: And we

Vanessa Thompson: In surgical-

Vanessa Thomson: In surgical-

Speaker #1: Are however , the utilization growth on an underlying basis . So underlying so looking through all the Covid impacts is still negative . So we're probably 60 or 70 basis points negative utilization growth excluding the Covid benefit .

Mark Rogers: However, the utilization growth on an underlying basis. So underlying, looking through all the COVID impacts, is still negative. So we are probably 60 or 70 basis points negative utilization growth excluding the COVID benefit. So within that, it is slightly more negative in non-surgical than it is surgical, but probably not surprising because a lot of those specialties, such as mental health and obstetrics, are covering Gold policies, and there is a shift away from Gold policies. A couple of big call-outs I would make on surgical, and it is really important, Vanessa, because the model of care is shifting. So we are seeing obstetrics, because of the shift in the model of care to short stay, that is having a real benefit in the cost per procedure in, sorry, in orthopedics, not obstetrics, in orthopedics. Just having a real impact.

Speaker #1: So within that, it's slightly more negative in non-surgical than it is in surgical, but probably not surprising because a lot of those specialties, such as mental health and obstetrics, are covered in gold policies.

Speaker #1: And there's a shift away from gold policies . A couple of big callouts I'd make on surgical . And it's really important , Vanessa , because the model of care is shifting .

Speaker #1: So we're seeing obstetrics , the because of the shift in the model of care to short stay . That's having a real benefit in the cost per procedure in sorry , in orthopedics , not obstetrics .

Speaker #1: And orthopedics, it's having a real impact. The short stay model of care is having an impact on the cost per procedure.

Mark Rogers: The short stay model of care is having an impact on the cost per procedure. Similarly, in rehab, we are seeing more rehab episodes of care moving into out of hospital from in-hospital, and that has a deflationary impact as well. So you are seeing three impacts on hospital claims. You are seeing the skew towards younger customers joining the industry, lower claims intensity. You are seeing a shift from Gold to more Silver Plus and bronze policies, which have lower utilization, lower acuity. And you are definitely seeing the shift in the model of care having a deflationary impact on the inflation component of the hospital claims.

Speaker #1: Similarly , in rehab , we're seeing more rehab episodes of care moving into out from in-hospital . And that has a deflationary impact as well .

Speaker #1: So you're seeing three , three , three impacts in hospital claims . You're seeing the skew towards younger customers joining the industry . Lower claims propensity .

Speaker #1: You're seeing a shift from gold to more silver and bronze policies, which have lower utilization and lower acuity. And you're definitely seeing the shift in the model of care having a deflationary impact on the inflation component of the hospital claims.

Speaker #10: Thank you. Thanks. That's really interesting. Thank you. That's all I had.

Vanessa Thompson: Thank you. Thanks. That is really interesting. Thank you. That is all I had.

Vanessa Thomson: Thank you. Thanks. That is really interesting. Thank you. That is all I had.

Speaker #3: Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from Andrew Goodsell with MST Marquee.

Operator: Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from Andrew Goodsall with MST Marquee. Please go ahead.

Speaker #3: Please go ahead .

Speaker #11: Well , thanks very much . And actually my question is on exactly what Mark , just spoke to , which is I saw that you had your hospital claims for patient unit down 110 basis points .

Andrew Goodsall: Oh, thanks very much. My question is on exactly what Mark just spoke to, which is, I saw that you had your hospital claims per patient unit down 110 basis points. It sounds like it is pretty much a mix of those events. Maybe just to modify my question. I guess with the rebate reforms, are you getting any early sense that you might see some more downgrading, that obviously would then play into hospital claims?

Speaker #11: So it sounds like it's a pretty much a mix of , of those events . So maybe , maybe just to modify my question , I guess with the rebate reforms , getting any sense , any early sense that you might see some more downgrading that obviously would then play into that , that into hospital claims

Mark Rogers: The final form of the reform is still to be confirmed. You said 6 months ago, though. If you think about the cohort of customers that we are discussing, they are over 65s. I would break them into 65 to 70 and above 70. The above 70-age customers particularly are the most sticky customers we have and the least likely to change their cover. I think as a starting cohort, they are a very resilient cohort. There are two impacts that could occur as a consequence of the reform. You could have customers leaving the industry, and that would put burden on the public health system, but that would be a benefit for the private insurers because those aged 70 customers as a cohort are loss-making customers. You may, around the edges, have some of those customers downgrading.

Speaker #1: The final form of the reform is still to be confirmed . I think we said six months ago , though , there are we think about the cohort of customers that we're discussing now over 65 .

Speaker #1: I'd break them into 65 to 70 and above 70 . The above 70 age customers , particularly , are the most sticky customers we have .

Speaker #1: And the least likely to change their cover. So I think it's a starting cohort. They're a very resilient cohort. There are two impacts that could occur as a consequence of the reform.

Speaker #1: You could have customers leaving the industry And that would put burden on the public health system . But that would be a benefit for the private insurers because those aged 70 customers as a cohort , making customers , you may around the edges have some of those customers downgrading .

Speaker #1: If you've got a Silver Plus product, they're more likely to downgrade to Silver Plus. If you don't have a Silver Plus product, they are probably going to leave and go to someone that has a Silver Plus product.

Mark Rogers: If you have a Silver Plus product, they are more likely to downgrade to Silver Plus. If you do not have a Silver Plus product, they are probably going to leave and go to someone that has Silver Plus product. We have a Silver Plus product. Andrew, there has been a lot of noise about this reform. I think for us, it is a second order, second or third order conversation for FY28. If the reform ends up being narrowed to reduce the impact on customers that are least able to play increased premiums, I think the reform impact will be even less. We get asked a lot as to whether this is a particular business opportunity. I am not sure where that question comes from and what would drive that, given how sticky the customer cohort is, and we are already a big player in the Gold market.

Speaker #1: We have a Silver Plus silver plus product . So Andrew , there's been a lot of noise about this reform . I think for us , it's a second or thought second or third order conversation for FY 28 .

Speaker #1: And if the reform ends up being narrowed to reduce the impact on customers that are least able to pay any increased premiums, I think the reform impact will be even less.

Speaker #1: We get asked a lot as to whether this is a particular business opportunity. I'm not sure where that question comes from, and what would drive that, given how sticky the customer cohort is.

Speaker #1: And we're already a big player in the gold market. So, if we're talking about this at the full year '27, then a lot else has gone.

Mark Rogers: If we are talking about this at the full year 2027, then a lot else has gone. If this is the major theme, if this reform is the major theme for our FY27 result, then a lot has gone right for us and the industry.

Speaker #1: If this is the major theme, if this reform is a major theme for our FY27 result, then a lot has gone right for us and the industry.

Speaker #2: And I would just say on the on the reform itself , I mean , there's , you know , if you observe in the market , there's pretty universal opposition to the reform and to sort of change the goalposts for people who've spent their working life planning for their future , you know , it's a really tough ask for those customers .

David Koczkar: I would just say on the reform itself, if you observe in the market, there is pretty universal opposition to the reform. To sort of change the goalposts for people who have spent their working life planning for their future, it is a really tough ask for those customers. If anything, to Mark's point, it might put further stress on the public system. I think, we think that the better version of reform is one where you look at the underlying cost of the system to drive productivity and quality and growth and not sort of tinker around the edges. As Mark said, there is a bit to play out on the actual form of this reform.

Speaker #2: And if anything , to Mark's point , it might put further stress on the public system . So I think , you know , we , we , we think that the better version of reform is one where you look at the underlying cost of the system to drive productivity and quality and growth and not sort of tinker around the edges , but as Mark said , there's a bit to play out on the actual form of this , of this reform .

Speaker #11: And from that , I guess I take it that it's not 100% done deal , although we are sort of hearing it probably is , but I mean , maybe and maybe just to extend this a little further , just , you know , I guess , is there any sort of early signals you're about whether this , this breach of trust , if you like , has , you know , had had an effect on the way in which the marketplace is thinking about insurances and sort of a creating any sort of collateral damage in terms of the industry outlook , do you think ?

Andrew Goodsall: From that, I guess I take it that it is not 100% done deal, although we are sort of hearing it probably is. Maybe just to extend this a little further, just I guess, is there any sort of early signals you are getting about whether this breach of trust, if you like, has had an effect on the way in which the marketplace is thinking about insurance. Is it creating any sort of collateral damage in terms of the industry outlook, do you think?

Speaker #2: Look , we haven't seen anything in in our business today , but , you know , if you just listen to the community sentiment on this issue , you know , that's , you know , reflective of how particularly over 65 are viewing this change and will there be we can to , you know , support them depending where this reform gets to ?

David Koczkar: Look, we haven't seen anything in our business to date, but if you just listen to the community sentiment on this issue, that is reflective of how particularly over 65s are viewing this change, and we will do everything we can to support them, depending where this reform gets to.

Speaker #1: It's an interesting question . On breach of trust , we're lobbying against that on behalf of our customers . Andrew . So if there is a breach of trust , I'm not sure necessarily at some point in our direction

Mark Rogers: It is an interesting question on breach of trust. We are lobbying against that on behalf of our customers, Andrew. If there is a breach of trust, I am not sure necessarily it is pointed in our direction.

Speaker #11: Yeah . Okay . Yeah . Well , that's all my questions . I really appreciate it . Thank you

Andrew Goodsall: Okay. Yeah. Of course. Well, that's all my questions. I really appreciate it. Thank you.

Speaker #3: Thank you. There are no further questions at this time. And that does conclude our conference for today. Thank you for participating.

Operator: Thank you. There are no further questions at this time, and that does conclude our conference for today. Thank you for participating. You may now disconnect.

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