Today, NIB Holdings Limited (ASX: NHF) kicked off the third week of earnings season in good form showing solid increases in both revenue and profit.
In the year to 30 June 2015 nib reported a 9% increase in revenue to $1.67 billion, and a net profit after tax of $75.8 million, up 8% on the prior corresponding period.
Consolidated operating earnings jumped 13% to $81.7 million on the back of strong policyholder growth of 4.7% within the Australian Residents Health Insurance (arhi) business.
"Our arhi business was the 'star' performer with net policyholder growth of 4.7% well ahead of the overall industry average of 2.5%," CEO Mark Fitzgibbon said.
Nib's New Zealand Health Insurance business enjoyed an 8.1% increase in net premium revenue, but a larger net claims expense. Despite turning around a decade of policyholder decline, nib said a unique legacy product and one-off costs hurt the business' profit during the period.
A final dividend of 6 cents per share was announced, taking the full year payout to 11.5 cents. The fully franked distribution is payable on 9 October 2015.
Now what
Looking ahead the health insurer forecast a consolidated operating profit of between $85 million and $90 million – implying between 4% and 10% upside on 2015's result. It also said it is well positioned for the ongoing windfall which is expected to be created by a shift towards consumers increasing their uptake of private health insurance.
Are NIB shares a buy?
Following on from Medibank Private Ltd's (ASX: MPL) strong result last week, and a tough week expected on the ASX this week, savvy long-term investors should keep a keen eye on nib shares in coming months. It may appear expensive on first glance, but if the market discounts the company's shares significantly a sound buying opportunity could eventuate.
