NIB Holdings Ltd (ASX: NHF)

NHF Details

Capital raising for GU Health acquisition: On September 20, 2017, the securities of NIB Holdings Ltd entered into a trading halt while the group gained some attention as it inked an agreement to acquire specialist corporate private health insurer, GU Health, for a total consideration of $155.5 million. The group expects to complete the deal before the end of the calendar year 2017. The group also intends to fund the transaction through a combination of a fully underwritten institutional equity placement of $60 million, a non-underwritten Share Purchase Plan (SPP) of $15 million and a new debt facility for the balance. NHF has thus announced about launching a fully underwritten equity placement of ordinary shares to existing and new institutional investors to raise $60 million. It is worth noting that GU Health generated a premium revenue of $193.5 million for FY17. With this move, NHF will focus on growing both retail health insurance business and Remedy Healthcare.


NHF’s capability enhancement through announced acquisition (Source: Company Reports)
 
Meanwhile, NHF had reported NPAT growth of 30.9% for the year ended 30 June 2017 while the total group underlying revenue was of $2.0 billion (up 7.0%). Australian Residents Health Insurance (arhi) business was an outstanding performer that supported the group’s overall performance. NHF’s final dividend was 10.5 cents that led the full year dividend to 19 cents against 14.75 cents of FY16.

The stock has been recently added to S&P /ASX All Australian 200 Index and S&P /ASX 200 Index effective September 18, 2017. It will be prudent to watch out the developments on this health insurer.

Medibank Private Ltd (ASX: MPL)

MPL Details

Medibank to defend ACCC appeal: Medibank Private Ltd has announced that it will defend itself following the ACCC’s decision to appeal the decision handed down by the Federal Court on 30 August 2017. As opposed to the allegations made by the ACCC, Justice O'Callaghan found that Medibank had not engaged in misleading and deceptive or unconscionable conduct with respect to the communication of changes made to some provider arrangements in 2014. In August, this year Justice O’Callaghan handed down judgment where he comprehensively dismissed the ACCC’s allegations, stating that the ACCC had failed to discharge its burden of proof in relation to several elements of its case, and that there was nothing remotely unconscionable about Medibank’s actions.


On the guidance front, FY18 Health Insurance outlook is estimated to be impacted by flat overall market volumes due to further decline in the participation rate, while improvement is expected by the end of 2019. Given the outlook for FY18 with flat overall volumes and declining member participation in health insurance, and current trading levels, we give an “Expensive” recommendation on the stock at the current market price of $ 2.96

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