Bright Health Group Closes the Sale of its California Medicare Advantage Business to Molina Healthcare

Rhea-AI Summary

Bright Health Group, Inc. (NYSE: BHG) completes final repayment on secured credit facility, focuses on increasing access to value-driven healthcare, and reaffirms expectation for Adjusted EBITDA profitability in 2024.

Insights

Financial Analyst

The completion of Bright Health Group's sale of its Medicare Advantage business to Molina Healthcare and the final repayment on its secured credit facility are significant financial maneuvers that have a direct impact on the company's balance sheet. By divesting non-core assets and eliminating secured debt, Bright Health has improved its liquidity position. This strategic move could potentially enhance investor confidence, especially with the reaffirmation of Adjusted EBITDA profitability in 2024, a key metric for evaluating a company's operating performance and forecasting its financial health.

However, stakeholders should carefully consider the impact of divesting a revenue-generating asset on the company's future revenue streams. While this sale may contribute to a more focused business strategy, it is critical to monitor how the capital generated is reinvested into the company's remaining operations. The ability of NeueHealth to scale and drive profitability will be essential in compensating for the divested business. Investors should await the full financial outlook to be shared in the upcoming earnings call for a comprehensive understanding of the long-term implications.

Healthcare Industry Analyst

Bright Health Group's strategic refocus towards value-driven healthcare through NeueHealth signifies an alignment with industry trends that emphasize cost-effective care and improved patient outcomes. The healthcare industry is increasingly moving towards models that prioritize value over volume and Bright Health's move to increase access to healthcare across various populations is a response to this shift.

From an industry perspective, the partnership with providers and payors to deliver coordinated care is an approach that can lead to better health outcomes and potentially lower costs. The success of this strategy hinges on the effective integration of technology and patient care, which Bright Health purports to enhance. The impact of such initiatives on market share and competitive positioning will be crucial metrics to assess over time. Stakeholders should consider the company's ability to execute its strategy against established players and emerging competitors in the value-driven healthcare landscape.

Market Research Analyst

With the sale of its Medicare Advantage business, Bright Health is likely to experience a shift in its customer base and market dynamics. The withdrawal from the California Medicare Advantage market could alter the competitive landscape, potentially benefiting Molina Healthcare with an expanded customer base and market share. It is important for market analysts to track how this consolidation affects consumer choices and pricing within the market.

Furthermore, the focus on NeueHealth's expansion within the ACA Marketplace, Medicare and Medicaid indicates a strategic targeting of diverse and growing segments of the healthcare market. The demand for affordable healthcare options is on the rise and Bright Health's emphasis on accessibility could position it well to capture this demand. However, the success of these initiatives will largely depend on the company's ability to deliver on its promises of seamless, coordinated care and to navigate the regulatory environment effectively. Continuous market analysis will be necessary to gauge the effectiveness of Bright Health's strategic shift and its resonance with consumers' evolving healthcare needs.

• Completes final repayment on secured credit facility eliminating the Company’s secured debt
• Further focuses on increasing access to value-driven healthcare for all populations across the ACA Marketplace, Medicare, and Medicaid through its continuing business, NeueHealth
• Reaffirms expectation for Adjusted EBITDA profitability in 2024

MINNEAPOLIS--(BUSINESS WIRE)-- Bright Health Group, Inc. (“Bright Health” or the “Company”) (NYSE: BHG), the technology enabled, value-driven healthcare company, today announced that it has successfully completed the sale of its California Medicare Advantage business, Brand New Day and Central Health Plan, to Molina Healthcare, Inc. (“Molina”). The sale closed, effective as of January 1, 2024.

Concurrent with the closing of the sale, the Company also made the final repayment on its amended credit facility with J.P. Morgan, eliminating its secured debt. The remaining proceeds of the sale are expected to provide a solid foundation for the Company to continue to advance its continuing business, NeueHealth, in 2024 and beyond.

“We are pleased to announce the close of this transaction as it meaningfully improves our capital position and allows us to focus on making high-quality healthcare accessible and affordable to all populations,” said Mike Mikan, President and CEO of Bright Health. “We see tremendous opportunities in our NeueHealth business and look forward to continuing to partner with providers and payors to deliver a more seamless, coordinated care experience for health consumers.”

Bright Health expects to drive strong results in its NeueHealth business, reaffirming its expectation to be profitable on an Adjusted EBITDA basis in 2024. The Company expects to share its full outlook for 2024 on its Fourth Quarter earnings call.

Moelis & Company LLC served as Bright Health’s financial advisor and Simpson Thacher & Bartlett LLP acted as Bright Health’s legal advisor in connection with the sale.

About Bright Health Group

Bright Health Group is a technology enabled, value-driven healthcare company that organizes and operates networks of affiliate care providers to be successful at managing population risk. We focus on serving aging and underserved consumers that have unmet clinical needs through our value-based, consumer-driven care model in Florida, Texas and California, some of the largest markets in healthcare where 26% of the U.S. aging population call home. We believe everyone should have access to personal, affordable, and high-quality healthcare. Our mission is to Make healthcare right. Together. For more information, visit www.brighthealthgroup.com.

Forward-Looking Statements

Statements made in this release that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. These statements often include words such as “anticipate,” “expect,” “plan,” “believe,” “intend,” “project,” “forecast,” “estimates,” “projections,” “outlook,” “ensure,” and other similar expressions. These forward-looking statements include any statements regarding our plans and expectations with respect to Bright Health Group, Inc. Such forward-looking statements are subject to various risks, uncertainties and assumptions. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Factors that might materially affect such forward-looking statements include: our ability to continue as a going concern; our ability to comply with the terms of our credit facility, including financial covenants, both during and after any waiver period, and/or obtain any additional waivers of any terms of our credit facility to the extent required; our ability to receive the remaining proceeds from the sale of our Medicare Advantage business in California in a timely manner; our ability to obtain any short or long term debt or equity financing needed to operate our business; our ability to quickly and efficiently complete the wind down our IFP businesses and MA businesses outside of California, including by satisfying liabilities of those businesses when due and payable; potential disruptions to our business due to corporate restructuring and any resulting headcount reduction; our ability to accurately estimate and effectively manage the costs relating to changes in our businesses offerings and models; a delay or inability to withdraw regulated capital from our subsidiaries; a lack of acceptance or slow adoption of our business model; our ability to retain existing consumers and expand consumer enrollment; our and our Care Partner’s abilities to obtain and accurately assess, code, and report risk adjustment factor scores; our ability to contract with care providers and arrange for the provision of quality care; our ability to accurately estimate our medical expenses, effectively manage our costs and claims liabilities or appropriately price our products and charge premiums; our ability to obtain claims information timely and accurately; the impact of any pandemic or epidemic on our business and results of operations; the risks associated with our reliance on third-party providers to operate our business; the impact of modifications or changes to the U.S. health insurance markets; our ability to manage the growth of our business; our ability to operate, update or implement our technology platform and other information technology systems; our ability to retain key executives; our ability to successfully pursue acquisitions and integrate acquired businesses; the occurrence of severe weather events, catastrophic health events, natural or man-made disasters, and social and political conditions or civil unrest; our ability to prevent and contain data security incidents and the impact of data security incidents on our members, patients, employees and financial results; our ability to comply with requirements to maintain effective internal controls; our ability to adapt to the new risks associated with our ACO Reach businesses, including any unanticipated market or regulatory developments; and the other factors set forth under the heading “Risk Factors” in the Company’s reports on Form 10-K, Form 10-Q, and Form 8-K (including all amendments to those reports) and our other filings with the SEC. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or changes in our expectations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240102567029/en/

Investor Contact:

IR@brighthealthgroup.com

Media Contact:

media@brighthealthgroup.com

Source: Bright Health Group, Inc.

FAQ

What did Bright Health announce?

Bright Health Group, Inc. announced the successful completion of the sale of its California Medicare Advantage business, Brand New Day and Central Health Plan, to Molina Healthcare, Inc., and the final repayment on its amended credit facility with J.P. Morgan, eliminating its secured debt.

What are the expectations for Bright Health's business, NeueHealth, in 2024?

Bright Health expects to drive strong results in its NeueHealth business and reaffirms its expectation to be profitable on an Adjusted EBITDA basis in 2024.

Who served as Bright Health's financial advisor in connection with the sale?

Moelis & Company LLC served as Bright Health's financial advisor in connection with the sale.