NIB Holdings Limited (ASX:NHF) share price soars higher after huge profit upgrade

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The NIB Holdings Limited (ASX:NHF) share price has jumped 49 cents or 8.6 per cent higher to $6.19 in Monday morning trade after the health insurance company said FY18 profits would be $184 million, up from its previous guidance of $165 million.

nib’s Managing Director, Mark Fitzgibbon, said a benign claims environment especially in its Australian residents health insurance (arhi) business was the main factor behind the revised outlook.

Mr Fitzgibbon said there were several factors that explain the lower trajectory of claims inflation including tighter cost containment, price reductions in medical devices spearheaded by the Federal Government and some downgrading in cover.

Mr Fitzgibbon said he hoped lower claims inflation reflected a new norm although inevitably a combination of an ageing population and future growth in household incomes would stoke higher growth in treatment volumes.

Even after today’s jump, NIB Holdings Limited shares have fallen 7.9 per cent since the beginning of the year, while the S&P/ASX 200 Index has gained roughly 3.6 per cent.

NIB Holdings is a member of The Capital Club 10, a group of ten ASX 200 shares to beat the traditional blue chips over the next 3 years. Click here to find out the names of the other nine shares.

Contributors to this article may own shares in some of the companies mentioned in this article. The Capital Club has a thorough disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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Bruce Jackson has 30 years of hands on investing experience. He is passionate about stock market investing, running his own portfolio and SMSF. His focus is on small cap growth stocks. You can contact Bruce at brucej@thecapitalclub.com.au