Bright Health Group Strengthens Capital Position with Amendment to its Credit Facility, Impending Close of the Sale of its California Medicare Advantage Business
29 December 2023 - 10:45PM
Business Wire
- Received all required regulatory approvals on the sale of the
California Medicare Advantage business; the transaction is expected
to close on or about January 1, 2024
- Amended Company’s secured credit facility to reduce the final
repayment resulting in approximately $30 million in savings
- Meaningfully improves capital position to support continuing
business, NeueHealth, a value-driven consumer care delivery and
provider enablement business
Bright Health Group, Inc. (“Bright Health”
or the “Company”) (NYSE: BHG), the technology enabled,
value-driven healthcare company, today announced that it entered
into an amendment to its credit facility with J.P. Morgan that will
reduce the final repayment amount by approximately $30 million to
approximately $298 million. Upon payment of such amount, which is
expected to be made concurrently with the closing of the sale of
the Company’s California Medicare Advantage business (the “MA
Sale”), the Company’s secured debt will be eliminated. The Company
expects to use the remaining proceeds from the MA Sale to
meaningfully improve the capital position of Bright Health’s
continuing business. The Company expects the MA Sale to close on or
about January 1, 2024, and has received all required regulatory
approvals.
“I am really proud of all we have accomplished this year and
look forward to further focusing on the long-term success of our
NeueHealth business, which has proven to drive differentiated value
for health consumers, providers, and payors across the healthcare
ecosystem,” said Mike Mikan, President and CEO of Bright Health.
“While we have been working on maturing as a company and improving
our capital position, we have also continued to relentlessly focus
on serving people every day who are in need of high-quality care.
We are excited to continue to advance our value-driven,
consumer-centric care model as we help align providers and payors
to better serve consumers.”
Upon closing of the MA Sale and the repayment of its secured
debt, the Company expects to begin 2024 with approximately $90
million of unregulated cash. In addition, the Company expects to
have approximately $155 million in excess cash surplus after
reserving for expected medical costs and other anticipated
wind-down expenses in its discontinued insurance business (other
than the Company’s risk adjustment obligations due under the
repayment agreements with the Centers for Medicare & Medicaid
Services (the “CMS Repayment Agreements”)).1 Additionally, subject
to adjustments and the conditions in the MA Sale agreement, the
Company expects to receive an additional $110 million from escrow.
The Company intends to use such funds if and when received to
offset liabilities in its discontinued ACA insurance business, such
as the obligations under the CMS Repayment Agreements which come
due on or before March 14, 2025.
In 2024, Bright Health will solely focus on its continuing
business, NeueHealth, increasing access to high-quality healthcare
through its differentiated, value-driven care model that serves all
populations across the ACA Marketplace, Medicare, and Medicaid. The
Company will share its outlook for 2024, which is expected to be
positive on an EBITDA basis after adjusting for certain non-cash
expenses, in its Fourth Quarter 2023 earnings release.
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 facilities including financial
covenants, both during and after any waiver period, and/or obtain
any additional waivers of any terms of our credit facilities to the
extent required; our ability to sell our Medicare Advantage
business in California on acceptable terms, including our ability
to receive the proceeds thereof in a manner that would alleviate
our current financial position; the failure to satisfy or obtain a
waiver of any closing condition in our agreement to sell our
Medicare Advantage business in California to Molina (the “Purchase
Agreement”); our ability to comply with the terms of the Purchase
Agreement; whether our credit facilities will satisfy our working
capital needs pending the closing of our sale of our Medicare
Advantage business in California; our ability to comply with the
terms of the risk adjustment repayment agreements; our ability to
obtain any additional short or long term debt or equity financing
needed to operate our business; our ability to quickly and
efficiently 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 our corporate restructuring and 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 the ongoing COVID-19 pandemic 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 expansion into ACO Reach; 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.
1 Excludes any excess cash held by Bright HealthCare Insurance
Company of Texas since such entity is subject to a liquidation
order effective November 29, 2023.
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version on businesswire.com: https://www.businesswire.com/news/home/20231229342862/en/
Investor Contact: IR@brighthealthgroup.com
Media Contact: media@brighthealthgroup.com
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