Nib Holdings Sees Record FY24 Sales, Focuses on Health Management

About NIB Holdings Limited

Nib Holdings Limited, (Nib, the Group, ASX: NHF) is a private health insurer operating in Australia and New Zealand. Nib’s core product offering is Australian Residents Health Insurance. The Group also offers health insurance products for international students and workers and distributes travel insurance products.

Record FY24 sales driven by combined hospital and extra policies

Nib’s flagship business, Australian Residents Health Insurance, achieved record sales in FY24, driven by higher combined hospital and extra policies. Record inbound worker and student private health coverage also boosted policy holder numbers to an historic high.

On the costs side, medical cost inflation, rising claims utilisation and intense pressure from private hospitals for greater remuneration were key challenges confronting the business in FY24. Although Nib is in business to pay benefits and make medical treatment more affordable, how it deals with these challenges ultimately determines its economic sustainability and returns to shareholders.

Overall, Nib’s private health insurance business delivered above system growth in a very competitive market in FY24. The Group currently provides health and medical insurance to over 1.6 million Australian and New Zealand residents and provides health insurance to more than 190,000 international students and workers in Australia.

Developing new businesses to manage claims growth

Nib management understand that the insurer’s response to medical cost inflation and rising health insurance claims can’t just be about higher prices for patients. Their response must encompass initiatives that bring about shorter hospital stay episodes, and treatment at home for patients by investing in health management and preventative care programs.

Nib is pro-actively part of the solution by designing and investing in products and services that provide health checks and health management programs for members that manage health risks. This includes Investing in med-tech company Midnight Health and Honeysuckle Health, that supports health risk management.

Midnight Health’s mission is to enhance patient outcomes through technology by consolidating the fragmented health industry and simplifying patient experiences and improving accessibility, particularly in regional and remote areas where it can take weeks to access a GP.

Midnight Health uses individual healthcare data of patients to deliver better health outcomes for individuals by understanding their current and future health needs using targeted telephonic and digital health programs. These programs generate insights from data to understand future healthcare risks before contracting with hospital, medical and ancillary providers to optimise future medical claim costs.

Honeysuckle Health acts as Nib’s agent in relation to Nib’s Hospital, MediGap and First Choice networks. Under this arrangement, Honeysuckle Health represents Nib as its agent to manage all of Nib’s existing hospital, medical and ancillary agreements as well as negotiate future agreements and funding models.

The over-arching purpose of both the Midnight Health and Honeysuckle Health partnerships with Nib is to achieve target margins by investing in primary and preventative care to avoid chronic diseases that may require hospitalisation. Nib seeks to differentiate its insurance offering by making health fund membership as much about promoting health and wellbeing as it is the treatment of sickness and injury.

Strong start to FY25

Management have reported the strongest start to FY25 since the 2008 financial year. FY25 underlying operating profit guidance is in the range of $235 to $250 million. This compares to $257 million underlying operating profit in FY24.

Nib’s longer term business strategy is to apply data science, predictive analytics and Artificial Intelligence to assess and manage health and wellbeing of members and travellers. Nib can then connect members with products and services relevant to their risk profile and health goals. “Personalising” health and wellbeing in this way supports healthcare providers in treating patients within more appropriate and efficient settings, including their homes.

Proactively managing claims growth through a broader health management focus, and growing hospital and extras policy coverage at record levels, while maintaining a prudentially sound capital position, are the foundations of a quality health insurance business. Shareholders can reasonably expect steady medium-term earnings growth, complemented by a 75 percent dividend payout ratio to deliver consistent shareholder returns in the period ahead.