NIB share price gains 6% despite net profit drop in FY22

Shares in the health care fund are shooting higher on the release of the company's earnings results today.

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Key points

  • The NIB share price is up almost 6% in early Monday trading after the company posted its annual results
  • Revenue gained year on year but net profit took a hit 
  • The NIB share price is more than 8% higher in 2022 so far

The NIB Holdings Ltd (ASX: NHF) share price is up from the open following the release of the company's full-year results for FY22.

At the time of writing, the NIB share price is trading 5.57% higher at $7.675.

Let's check what the company reported.

NIB grows revenue, slumps profit

Key takeouts from the period include:

  • Group underlying revenue of $2.8 billion, up 7.2% year on year
  • Operating profit of $235.3 million, up 14.8% from the same time last year
  • Net profit after tax (NPAT) came in at $133.8 million, down 16.6% from "investment losses"
  • Group claims expense (total claims for underwriting segments only) came in at $2.1 billion, up 4%
  • Statutory earnings per share (EPS) of 29.6 cents, down 15.9% from the previous year's result
  • Final dividend of 11.0 cents per share fully franked, down from 14.0 cps in FY21

What else happened for NIB?

Whilst revenue was up 7% for the year, NPAT was more than 16% lower due to volatility in the financial markets.

"The losses represented a negative swing of $81.8 million on previous year earnings of $51.8 million," NIB explained today.

The company also increased the value of support measures to its customers to $100 million following COVID-19 impacts.

Meanwhile, premium revenue in its flagship Australian Residents Health Insurance (ARHI) business gained 5% year on year, whereas claims fell 3% to $1.5 billion.

Management commentary

Speaking on the announcement, NIB managing director Mark Fitzgibbon said:

Our Australian Residents Health Insurance business (ARHI) grew 3.2%, well above what we expect the industry will report. Premium revenue rose 5.2% to $2,286.2 million, even though we deferred the 2022 annual premium increase. Our final quarter of FY22 was particularly good; the best we've experienced in seven years.

Across the Group, we're especially pushing hard on our Payer to Partner (P2P) strategy and making our value proposition as much about maintaining good health as it is today about financial protection.

What's next for NIB?

The company is reportedly looking forward to more favourable macroeconomic conditions for each of its businesses looking ahead.

Fitzgibbon noted the company's payer to partner (P2P) strategy is looking to ramp up and increase digital engagement with customers.

He said:

AHRI is in very good shape and away to a very good start adding 4,399 members in the first six weeks of FY23. We expect net growth of 3-4% this year [in the segment] …

NIB New Zealand will continue to grow as we further develop our integrated life and living products and pursue additional partnerships with Māori communities. NIB Travel is positioned well to ride the back of resurgent travel with new, superior underwriting arrangements.

The NIB share price is down more than 5% in the last 12 months but has gained more than 8% year to date.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended NIB Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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