Medibank share price plunges 15% as cyberattack bites into outlook

The Medibank share price has plummeted on its return to trade.

| More on:
A worried doctor looks through a glass door.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Medibank share price is tumbling 15% to $2.99 on Wednesday morning following a week-long trading halt
  • The company has confirmed a hacker gained access to the personal and medical-related data of all its customers 
  • At this point, Medibank estimates the cyberattack will cost it between $25 million and $35 million before potential remediation, regulatory, or litigation impacts

The Medibank Private Ltd (ASX: MPL) share price is plummeting 15% as the company returns to trade on news a continuously worsening cyberattack will likely bite into its financial year 2023 (FY23) earnings.

The company has confirmed a hacker gained access to the personal data and "significant amounts" of medical-related data of all Medibank, international student, and ahm customers.

Medibank ­– which doesn't have cyber insurance – estimates the attack could dint its bottom line by between $25 million and $35 million. The company has also withdrawn its FY23 policyholder growth outlook on the back of the attack.

The Medibank share price is plummeting 14.69% to $2.99 in late morning trade on Wednesday.

Let's take a closer look at what's going on with the S&P/ASX 200 Index (ASX: XJO) health insurer today.

Medibank share price tumbles 15% on return to trade

The Medibank share price is tumbling in its return to trade on Wednesday – the first time it's moved in around a week.

The stock was frozen last Wednesday while the company continued to work on understanding the unfurling cyberattack and informing the market and its customers.

A cybercriminal was previously found to have removed some data from the company's systems.

Medibank believes they have likely stolen additional data, meaning the number of impacted customers could soar.

However, it doesn't yet think its systems have been encrypted by ransomware. The company is prioritising the prevention of further unauthorised access to its network and monitoring for further activity.

The Australian Federal Police (AFP) is also investigating the hack. Medibank continues to work with the AFP, specialised cybersecurity firms, and the Australian Cyber Security Centre.

Medibank CEO David Koczkar commented in Wednesday's release, saying:

I apologise unreservedly to our customers. This is a terrible crime – this is a crime designed to cause maximum harm to the most vulnerable members of our community.

Guidance update

The Medibank share price could also be feeling the impact of the company's newly-revised guidance.

The company estimates the cyberattack will drag on its first half earnings – likely costing $25 million to $35 million pre-tax. Such non-recurring costs doesn't include the potential for further remediation, regulatory, or litigation-related costs.

It has also scrapped its net resident policyholder growth guidance following the cyberattack.

Though, it said its policyholder growth for the September quarter was 14,600. That represents a rolling 12-month growth rate of 3.2% – above the 2.7% growth previously expected.

Yesterday, the company committed to defer premium increases for Medibank and ahm policyholders until 16 January. The resulting cost will be partially offset by savings brought about by lower-than-expected underlying net claims expenses, bolstering the company's savings to around $62 million.

Medibank's health insurance capital ratio was 13.4% as of 30 September and its unallocated capital was around $150 million.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Financial Shares

A man looking at his laptop and thinking.
Financial Shares

ASX 200 stock plunges 15% on CBA deal news

The stock sold off sharply from market open.

Read more »

A male sharemarket analyst sits at his desk looking intently at his laptop with two other monitors next to him showing stock price movements
Financial Shares

QBE shares drop on half year update and strategic review

Here's how QBE performed during the first half and its plans in North America.

Read more »

Woman looking at her smartphone and analysing share price.
Financial Shares

Which ASX 200 company director just sold $545,000 in shares?

We also reveal what brokers are saying about this ASX 200 financials stock.

Read more »

Man smiling at a laptop because of a rising share price.
Broker Notes

Macquarie shares have 10% upside: Morgan Stanley

Another bullish broker on Macquarie.

Read more »

a group of business people sit dejectedly around a table, each expressing desolation, sadness and disappointment by holding their head in their hands, casting their gazes down and looking very glum.
Financial Shares

Guess which ASX 200 stock crashed 8% on Thursday

It wasn't a happy day for this company's stock.

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Financial Shares

Why QBE shares could deliver huge returns for investors that buy them today

Goldman Sachs thinks this stock could offer big returns

Read more »

A large transparent piggy bank contains many little pink piggy banks, indicating diversity in a share portfolio
Financial Shares

Considering investing in AFIC shares? Here's what you're buying

This LIC has a very diversified portfolio. What’s in it?

Read more »

A man looking at his laptop and thinking.
Financial Shares

Medibank shares dip as huge potential fines loom from 2022 data breach

The regulator has stepped in on the case.

Read more »