nib delivers another year of growth and continues NDIS expansion

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nib has announced an 11.1 per cent increase in underlying operating profit for the 12 months to 20 June 2023.

The company said the profit of $263.2 million, delivered with a 10.9 per cent increase in revenue to $3.1 billion, was driven by the strong performance of its Australian private health insurance business.

The company said 4.7 per cent policyholder growth was the highest in more than eight years and double the anticipated industry rate.

“This is another strong commercial result for the company and indicative of growth and progress across the Group,” said nib managing director Mark Fitzgibbon.

Mr Fitzgibbon said nib’s travel, international students and workers, and New Zealand operations also reported strong growth and profitability.

Investment returns also rebounded, adding $54.7 million to pre-tax earnings from a loss of $30 million in the previous year.

“A lingering pandemic didn’t stop us supporting members’ usual need for medical treatment,” said Mr Fitzgibbon.

“And this year’s approved 2.72% premium increase was our second lowest in 20 years following the lowest, of just 2.66%, in 2022. Both increases were deferred for substantial periods because of COVID-19 impacts, and to ease pressure on affordability,” he said.

“Most importantly, we got on with our business strategy to become as much a health management company as we are a private health insurer.

“We’re not trying to manufacture every element of healthcare, rather orchestrate people’s ability to meet most of their healthcare needs seamlessly in a single place. We call it our Payer to Partner or P2P transformation.”

In November 2022, the company raised $158.1 million in equity capital to create 'nib Thrive' and pursue opportunities within Australia’s National Disability Insurance Scheme (NDIS).

It has since finalised the acquisition of four plan managers and, in June, agreed to acquire information technology service platform Kynd.

The company said the acquisitions added more than 250 employees. For the 2023 financial year, nib Thrive reported an underlying profit of $3.1 million. Its plan management businesses support more than 27,000 NDIS participants.

The company recently entered into agreements to purchase two more plan management businesses, BudgetNet and DevelopingLinks, which would take participant numbers to around 37,000.

“We have more than 70 years’ experience in connecting those who need healthcare with doctors, dentists, hospitals and other clinical providers,” said Mr Fitzgibbon. “Our vision, and investment thesis, is that in time these skills and experiences can similarly help NDIS participants - and anyone else with a disability - connect with the right providers of support in pursuit of their goals.”

Mr Fitzgibbon said although several macroeconomic factors suggest a level of caution, the outlook across the nib business is positive.

“Our businesses are supported by a strong thematic,” he said. “COVID-19 made people more aware of risks to their health and the need for protection; public healthcare delivery and financing are under extreme pressure, immigration is adding to populations; foreign students are returning, foreign workers are in high demand; people have rediscovered travel,” said Mr Fitzgibbon.

“Technologies are making our P2P strategy more viable and NDIS sustainability requires the kind of sophistication we can deliver.”

Mr Fitzgibbon said he expects nib’s private health insurance business across Australia and New Zealand to continue to grow, notwithstanding pressure on household budgets. 

“And it would be defying history if nib didn’t do much better than average system growth,” he said.

“While we are all breathing easier about the threat of COVID-19, there remain consequences for private health insurers, in particular, uncertain demand for healthcare treatment and associated claims costs. To what extent that plays out and how fast, remains hard to predict with any precision."