nib (NHF) H2 2024 earnings summary

Executive summary

• Transitioned from traditional health insurance to broader health management, with significant digital adoption and expanded health services beyond insurance.

• Group revenue rose 9.3% to $3.3b and net profit after tax increased 67.4% to $181.6m for FY24, with strong growth across all insurance segments and robust cash flow.

• Underlying operating profit surged 77.3% to $257.5m, with EPS up 58.9% to 38.3 cps and a fully franked dividend of 29.0 cps.

• Claims growth accelerated 6.7% due to inflation and normalization post-COVID, but margins in key segments returned to target ranges.

• New businesses (Honeysuckle Health, Midnight Health, nib Thrive) contributed to growth, though some remain cash flow negative as they scale.

Financial highlights

• Group revenue: $3.3b, up 9.3% year-over-year; UOP: $257.5m, up 77.3%; net profit after tax: $181.6m, up 67.4%.

• Net investment income increased 12.8% to $61.7m; operating cash flow up 4.2% to $257.1m.

• ROIC at 16.1%, down 150bps; EPS at 38.3 cps, up 58.9%; total dividend 29.0 cps, up 3.6%.

• Claims expense rose 6.7% to $2,487.2m; marketing expenses up 10.0% to $191.9m.

• Effective tax rate 31.3%, impacted by non-deductible losses from Midnight Health.

Outlook and guidance

• FY25 net policyholder growth expected at 3% for arhi, outpacing industry growth.

• Claims inflation expected to normalize to a 4%-6% range, with net margins stabilizing at 6%-7%.

• Breakeven expected for Honeysuckle Health in FY25 and Midnight Health in FY26.

• Thrive on track for ~50,000 participants by end FY25.

• Continued focus on cost containment, productivity, and digital innovation.