nib Reports 9.4% NPAT Increase to $198.6M, Dividend Steady at 29c

Strong Revenue Growth Amid Margin Pressure

nib Group has delivered a robust FY25 performance, with group revenue climbing to $3.6 billion, up 7.8% from the prior year. Despite a slight dip in underlying operating profit to $239.2 million from $257.5 million, the company posted a 9.4% increase in net profit after tax to $198.6 million. This reflects a careful balancing act between growth and margin management in a competitive and inflationary environment.

The Australian private health insurance segment remains the engine of growth, with policyholder numbers rising 3.2%, surpassing industry averages. nib now covers nearly 2 million people across Australia and New Zealand, underscoring its expanding footprint. The company’s focus on customer value through expanded benefits and provider networks has helped manage claims inflation, which stood at 4.5% excluding government hospital bed rate increases.

Operational Efficiencies and Claims Management

nib’s operating expense ratio improved to 17.7%, down from 18.2% in FY24, driven by tighter cost controls and productivity gains. Investment income also contributed positively, rising nearly 29% to $79 million. The company’s strategic initiatives, including embedding AI and digital-first capabilities, are already enhancing customer experience and operational workflows.

Claims inflation remains a key challenge, particularly with the NSW Government’s hospital bed rate increases impacting costs. nib has responded with enhanced hospital contracting models and targeted funding to support both private and public hospital systems. These efforts aim to contain claims costs while maintaining customer access and affordability.

Mixed Results in New Zealand and Adjacent Businesses

While nib’s New Zealand operations faced a difficult first half with a $10.1 million loss, the business returned to profitability in the second half, ending FY25 with a modest loss overall. Management has implemented product changes and premium increases to address claims inflation and economic headwinds, with a full-year profit expected in FY26.

Adjacent businesses showed encouraging momentum. nib Travel grew underlying operating profit by 20% in the second half, though a strategic review is underway. nib Thrive, supporting participants in Australia’s National Disability Insurance Scheme, expanded revenue by 11.3%. Meanwhile, nib’s Health Services division, combining Honeysuckle Health and Midnight Health, saw gross revenue surge 51.6%, reflecting growing demand for integrated health and wellbeing services.

Dividend and Outlook

The board declared a fully franked full-year dividend of 29 cents per share, consistent with FY24, representing a payout ratio of 70.6% of net profit after tax. Looking ahead, nib aims to sharpen its focus on core private health insurance growth, digital innovation, and adjacent business expansion. The company targets above-industry policyholder growth of around 3% and continued margin management, while cautiously optimistic about New Zealand’s recovery and the outcome of the travel business review.