Health insurance group NIB Holdings (ASX: NHF) is moving to full control of online healthcare solutions startup Midnight Health in a staged exit for founders Nic Blair and Matt Anderson who established the company just four years ago.

NIB, which currently owns 80 per cent of Midnight Health, plans to merge the business with its data science and health management company Honeysuckle Health.

The health insurance group, which today posted a 20 per cent fall in net profit after tax to $82.9 million for the first half of FY25, has been steadily lifting its interest in Midnight Health since acquiring a 50 per cent stake in November 2021.

After a Series B funding round that raised $15 million in 2023, NIB topped up its holding in Midnight Health by an extra $9 million after the company met pre-determined performance targets in FY24. This took the Series B round to $24 million and lifted total funding for Midnight Health from inception in 2021 to $40 million.

NIB’s FY24 annual report offered further insight into this transaction, revealing that a $9 million investment saw its holding in Midnight Health increase by three percentage points to 77.4 per cent – a deal which would have priced Midnight Health at $300 million. However, sources close to the transaction claim the company had a $69 million pre-money valuation at the time. 

Midnight Health, which has been used by more than 226,000 Australians to date, provides medical advice and prescription medications for a range of men’s, women’s and non-binary health issues, including weight management, hair loss and sexual disfunction.

The planned merger of the business into NIB’s Honeysuckle Health division is expected to open strategic growth opportunities for Midnight Health across the newly acquired network.

“The intended merger of Honeysuckle Health and Midnight Health creates synergies to enhance operational efficiency and maximise value for clients and customers,” says NIB.

The private health insurer recently moved to full ownership of Honeysuckle Health, acquiring the remaining 50 per cent interest it didn’t own from US health insurance group Cigna during the latest half-year.

Blair, the Midnight Health CEO, says the merger of the operations with Honeysuckle will deliver “deep opportunities for growth” for the business.

“Our ambition is to remain a key driver of access to health for many Australians,” says Blair, who along with Anderson won the Health & Medicine category of the 2024 Brisbane Young Entrepreneur of the Year Awards.

“We look forward to working more closely with Honeysuckle Health and NIB to achieve that together.”

The merger will eventually lead to NIB taking full ownership of Midnight Health, with Blair and Anderson to remain with the business for the next few years as part of the buyout agreement.

While the Midnight Health business will be absorbed by the merger, the company’s consumer-facing brands, including are Hub.health, women’s health platform Youly.com.au and men’s brand Stagger.com.au, will be retained as part of the Honeysuckle Health portfolio.

In its half-year report announced today, NIB has announced a breakeven target for Honeysuckle Health in the fourth quarter of FY25 and for Midnight Health in the fourth quarter of FY26.

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