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Why FY25 is make-or-break for every NDIS provider

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If FY24 was rough, FY25 may be the year many NDIS providers hit the wall. The data is no longer ambiguous. According to StewartBrown, more than 67.1% of NDIS organisations are now operating at a loss, with 55% reporting total bottom-line deficits. Worse still, a 28% increase in assets held for sale between FY23 and FY24 suggests that organisations are cashing out long-held assets just to keep the lights on.


“This isn’t about belt-tightening,” said Siobhain Simpson, Audit Partner, said during a recent industry webinar. “This is about avoiding liquidation.”


The situation is deteriorating. StewartBrown’s national benchmark data shows a negative 3.5% average operating margin for FY24. Not only has the NDIS pricing model failed to keep up with inflation and real-world cost drivers, but many of the temporary lifelines - COVID incentives, JobKeeper, and TTP uplifts - have expired. What remains is a system that’s now laying bare a decade of under-costed services and structural inefficiencies.


“The balance sheets aren’t saving anyone anymore,” Simpson added. “Providers are effectively trading insolvent without even knowing it.”


The silent burn: 'Balance sheet flight'


For years, providers offset operating losses by dipping into cash reserves or liquidating assets. FY24 marked an inflection point: organisations began selling long-held infrastructure, including buildings and vehicles. The practice now resembles a form of “balance sheet flight”—a last-resort survival mechanism.


But this is a strategy with a short runway. Once those assets are gone, there’s no parachute.


Pricing model misfit


The Disability Support Worker cost model, which underpins most frontline NDIS services, has not undergone fundamental structural changes since 2017. During that time, providers have faced rising wage pressures, increased compliance obligations, and growing workforce turnover. While annual indexation has been applied to service prices, many providers report that funded hours often do not reflect the actual time required to deliver supports - particularly for high-intensity needs and services in regional areas.


In parallel, the federal government has introduced an annual NDIS expenditure growth cap of 8% to be reached by 2026. As a result, providers are reporting constrained participant plans and reduced service packages, compounding the financial viability challenges for many organisations.


The clock is ticking


Most leaders aren’t in denial about their reality, but many are stuck in indecision. Hope that future pricing reforms will rescue the sector is increasingly seen as magical thinking. The message from the financial frontlines is clear: there is no cavalry coming.


FY25 is not the time to delay viability reviews or avoid hard restructuring decisions. It’s the year to understand your unit costs to the cent, revisit your cost allocation model, and install a real-time GRC system that flags margin erosion before it hits your payroll.


Because next year, survival may no longer be a matter of effort. It may simply come down to timing.


Build a resilient and financially sustainable NDIS business


Protect your funding, reduce financial risk, and create a stronger, more sustainable future with Drova.


Get started by downloading the free NDIS Financial Recovery Playbook. It’s a practical framework, tailored to NDIS providers and built to help you spot risk before it escalates, drive smarter financial decisions, and strengthen compliance without increasing overhead.



 
 

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