NIB (ASX:NHF) reported a “strong set of results” for its FY26 first half, with management pointing to disciplined growth in core markets, improved customer value, and continued progress in operational, digital, and AI-led productivity initiatives.
Group performance and key metrics
Group underlying operating profit (UAOP) was AUD 129.1 million, up 22% on the prior corresponding period, supported by 7.7% top-line revenue growth. The company said positive contributions came from all business segments, with adjacent businesses delivering their highest first-half UAOP since FY2019.
A major highlight was a reduction in the group operating expense ratio, down 100 basis points to 16.5%. Return on invested capital (ROIC) increased to 14.7%. Net profit after tax (NPAT) was AUD 82.9 million, which management said was in line with expectations and reflected lower investment income versus a strong comparative period and higher one-offs previously guided.
The board declared a fully franked interim dividend of AUD 0.13 per share, unchanged from the prior year.
Australian residents: margin range maintained, claims inflation discussed
In Australian residents health insurance, nib reported continued performance “in line with expectations,” including revenue growth of 7% and margins within its 6%–7% target range. Reported margins were 6.8% and underlying margins were 6.5%. Management said the reduction in margin was expected given an “elevated” margin profile in past periods, while growth was “a little lower than we’d have wanted” amid competitive dynamics and negative product mix impacts on revenue.
Claims inflation in the period was described as 5.3% excluding the New South Wales bed rate impact, and 6.1% including it. CFO Nick Freeman said inflation was offset by pricing and productivity, and discussed how the company is separating certain items it does not expect to repeat, including earlier investments in “No Gap and Known Gap” offerings.
Management also highlighted what it termed “risk equalization volatility”, saying the growth in the industry gross deficit was more than 4% higher in the first half than in the preceding 12 months, particularly in the December quarter. Freeman said nib “basically paid the entire net risk equalization transfer in the pool,” increasing its inflation result, and added the company could not indicate whether this would reverse because it depends on other participants’ behavior. Adjusting for identified factors, nib described a base level of inflation of around 4.1%, including mix and downgrading effects.
On pricing, Freeman said mix impact was negative 1.3%, implying the company needed about 5.4% pricing to cover inflation. He cited pricing of 5.79 in the March quarter and 5.47 from April 2026 as being in a “reasonable range” to manage gross margins within targeted ranges.
Productivity in Australian residents was described as a standout, with a management expense ratio below 10% and a non-marketing expense ratio of 5.8%, the lowest since 2017. Operationally, nib said 94% of claims are processed within 24 hours and 86% are processed unassisted using automation.
Adjacent businesses: international strength, New Zealand turnaround, health services milestone
Across adjacent businesses, combined operating profit was AUD 30.4 million versus AUD 9.9 million in the prior comparable period, the best first-half performance since 1H19. Management cited particularly strong outcomes in international and New Zealand.
- International: UAOP increased 23%, with “stable gross margins” and tightly controlled expenses. Policyholder growth was driven by PALM participants, temporary graduates, and skilled workers. The segment posted a record NPS of +63, and nib said it retained preferred provider status for PALM.
- New Zealand: nib returned to profitability with UAOP of AUD 3.9 million, up AUD 14 million, driven by a management action plan and a stabilization in claims inflation. Management said repricing caused short-term pressure on policyholder trends and that focus is shifting toward customer experience and value. Executives said they are not providing forward-looking margin guidance for New Zealand given ongoing uncertainty.
- Health services: achieved profitability for the first time, in line with expectations.
Within the company’s NDIS plan management business (Thrive), management referenced a non-cash impairment of “a little over AUD 4 million” taken in December and described soft growth over the past 12 months, citing internal integration challenges from about 15 months earlier and regulatory changes affecting the sector. The company said it saw positive participant growth in January 2026 and is assuming more modest growth in forward projections.
Portfolio actions, capital position, and productivity agenda
nib said it continues to simplify its portfolio and announced the sale of the World Nomads international travel insurance business, while a strategic review of the remaining Australian and New Zealand travel business is ongoing. Freeman said that because most net assets are intangibles, the sale is expected to result in “high cash realization” of around AUD 20 million. In Q&A, management said “all options” remain on the table for the Australian and New Zealand travel operations and that any stranded costs would be “largely immaterial” if the perimeter exited.
On capital, nib reported the health fund PCA ratio at 1.91x, similar to last year and above its target minimum of 1.5–1.6x. Management said it would consider capital management initiatives in the second half as the travel review continues and proceeds are received.
Management said it has delivered AUD 39 million of cumulative productivity benefits since FY24. It also highlighted that more than 600 operational staff are using internal AI tools, supporting over 250,000 interactions since January 2025. The company said these initiatives are enabling further investment in customer value, noting that almost 80% of customers benefit from no or known gap coverage and that expanded provider networks have saved customers more than AUD 45 million in out-of-pocket costs.
FY26 outlook and guidance
nib reiterated that FY26 group performance is tracking in line with expectations and guided to FY26 group underlying operating profit of AUD 257 million to AUD 260 million. The company said further reductions in the group operating expense ratio are expected as productivity initiatives continue. For Australian residents, nib is targeting above-system policyholder growth and a stable full-year underlying net margin in the 6%–7% range. International is expected to continue contributing strongly, New Zealand is described as recovering strongly with focus on customer experience and value, and health services profitability is expected to continue for the full year.
About NIB (ASX:NHF)
Private health insurer
