NIB Holdings Limited Adds Kiwi Insurance...

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NIB Holdings Limited Adds Kiwi Insurance And Telehealth Investment

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NIB Holdings Limited (ASX:NHF) announces $4 million investment in Midnight Health, signalling extension of its core business beyond health insurance.

  • Announced $4 million investment in digital health & $43 million acquisition of Kiwi Insurance Limited
  • FY21 total revenue $2.6 billion
  • FY21 Group Underlying Operating Profit (UOP) up 39.5 per cent at $204.9 million

International and domestic travel restrictions have undoubtedly delivered blows to the Australian economy throughout the pandemic. While plenty of such effects present in the form of material supply chain impediments, other less-material reductions in demand have proven difficult for NIB Holdings Limited’s (ASX:NHF) international and travel health insurance segments. Regardless and true to form, NIB is not without success to show, with its ability in diversifying its operational interests to hedge against under-performing divisions.

Just today, NIB updated its shareholders by announcing its investment in digital health start-up, Midnight Health. The investment sees NIB taking a 50 per cent equity stake in the digital healthcare platform provider, for a total considered amount of $4 million. Midnight Health was founded in October 2020, and focuses on supporting patients with integrated telehealth technology. Through its digital platforms, its service enables subscribers to access pharmacy and doctor networks conveniently and when they need it most.

NIB Managing Director Mark Fitzgibbon draws a parallel in comparing Midnight Health’s patient-led business model, to NIB’s ‘Payer to Partner’ (P2P) strategy. This strategy sees the Australian insurance provider extending its core business beyond providing healthcare support for members in immediate need, to include ‘good health and disease prevention’. Said the Managing Director, “There’s a large marketplace for healthcare products and services we’re generally not able to cover through private health insurance so this extends our reach. It also allows us to offer additional personalised support for private health insurance members.”

The investment is set to aid Midnight Health in growing its network far beyond its current membership count of 4,500 subscribers, and will produce no material impact on NIB’s FY22 earnings. NIB’s investment in Midnight Health follows up with an earlier reported acquisition of Kiwi Insurance Limited, announced at the start of the month. The $43 million acquisition deal is expected to complete in early 2022, and sees NIB accessing a network of retail customers via Kiwibank, a wholly-owned subsidiary of Kiwi Group Holdings Limited.

Moving Past Pandemic Difficulty Through Investment, Acquisition, and Partnership

These updates follow closely to NIB’s announcement of a distribution partnership with ING Bank Australia Limited (ASX:ING). Similarly, the ING partnership extends NIB’s existing network through involvement with peer insurance providers within the Australia New Zealand market segment. Apart from developing its growth strategy through careful acquisitions and partnerships, NIB has also managed to steer clear of pandemic challenges through strict fiscal management of its operations. Among such examples include reducing its operating expenses by over 53 per cent in FY21.

For its FY21 results, NIB reported total revenue of $2.6 billion, surpassing its anticipated Group UOP by 39.5 per cent at $204.9 million. For FY22, NIB maintains confidence in its performance, especially with pandemic-related operating challenges easing into the new year. Additionally, the company recently presented potential investors with positive sentiment in anticipation of performance from its Tasly joint venture in China, as well as opportunities pertaining to the National Disability Insurance Scheme sector. At the time of writing, NIB’s share price is trading at $7, up 40.56 per cent compared to this time last year.

Louis Mosmann

Louis Mosmann is a Private Wealth Client and Research Assistant at KOSEC- Kodari Securities. Louis covers macroeconomic events, global markets and ASX300 company announcements, allowing clients to make more informed investment decisions. Email Louis at l.mosmann@kosec.com.au.

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