NIB Holdings Limited (ASX: NHF) shares are edging higher on Friday.
In morning trade, the private health insurer's shares are up almost 1% to $6.96.
Image source: Getty Images
What's going on with NIB shares today?
Investors have been buying the company's shares today after it released an update on its profit expectations.
According to the release, it expects to report non-recurring one-off items that will impact its statutory operating profit (SOP) but not its underlying operating profit (UOP).
The company advised that non-recurring cash expenses in first half are expected to be around $17 million, which is higher than previously indicated at its FY 2025 results briefing in August.
Its one-off and non-recurring expenses, including M&A and integration costs, were $21.5 million for the half. These expenses partly relate to a net cash expense (before tax) of approximately ~$8 million relating to historical adjustments for the Private Health Insurance Australian Government Rebate (AGR) and NSW Hospital Insurance Levy (HIL).
With respect to the AGR, NIB highlights that the Department of Health, Disability and Ageing has recently clarified that the AGR could not be claimed on some historical marketing offers and COVID customer givebacks. In response, NIB has amended its approach moving forward.
For HIL, as a result of recent legal determinations, NIB has confirmed that a different basis of calculation can be utilised for the HIL. This includes refunding some historically charged levies and providing some offset to the AGR impact. This approach has also been amended going forward.
Outside this, the company's non-recurring cash expenses include restructuring costs associated with the group-wide productivity program, as well as strategic initiatives such as the strategic review of NIB Travel, with an outcome expected in FY 2026.
What else?
NIB also revealed that a non-cash expense (before tax) of around $4.5 million is expected to be incurred in the first half. This is for the reduction in the value of redundant acquired software relating to acquisitions in NIB Thrive.
Management advised that this will be recognised in the amortisation of acquired intangibles.
Since 2022, the company has acquired six NDIS plan management businesses, a support coordination business, and an NDIS marketplace platform.
Over the last 12 months, it has consolidated the majority of these businesses onto a single technology platform to enhance automation, operating efficiency, and ongoing business model simplification.
Underlying profit on target
While we are not quite at the end of the half, management highlights that it is currently performing to expectations for group UOP during the first half. Though, it acknowledges that this is subject to the second quarter risk equalisation outcome.
