The NIB Holdings Limited (ASX: NHF) share price was trading 3.56% higher today. Over the past month, shares of NIB Holdings are down 2%. For comparison, the S&P/ASX 200 (INDEXASX: XJO) has risen 4% in the same time.
About NIB Holdings Limited
NIB is one of the ASX’s largest private health insurers and was founded in 1952. NIB provides health and medical insurance to over 1.5 million Australian and New Zealand residents. NIB also provides health insurance to more than 160,000 international students and workers in Australia. It’s also Australia’s third-largest travel insurer and global distributor of travel insurance through its World Nomads Group business.
NIB announced a correction this morning for one of the charts included in its FY19 report. The chart, appearing on slide 13 of the presentation, was a claims inflation chart for arhi, the company’s health insurance business, showing the rolling 12-month change in revenue, total costs, hospital and ancillary benefits per person.
Total costs and hospital benefits were both reported incorrectly in the chart. Change in total costs was actually 2.8%, instead of 3.7% as originally reported, and change in hospital benefits was 3.1% instead of 4.2%.
NIB emphasised that the error only related to the data used to construct the chart and it did not impact the underlying inflation assumptions and forecasts for FY20. This means that FY20 guidance is not impacted and underlying profit is still expected to be at least $200 million.
Buy, Hold or Sell?
The information released today doesn’t carry much significance given that the FY20 guidance is not impacted. Shares may be trading higher though because the increase in total costs for arhi was actually lower than originally reported.
In reality, valuations are typically based on future forecasts and assumptions, so with guidance unchanged, this doesn’t really affect the valuation of NIB.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.