More New Reality: NeueHealth (Bright Health) CEO’s $1.9M bonus (updated), 2023 financials–and does Cano Health have a future?

April 5, 2024 | by

After 2023, how did NeueHealth’s CEO earn a bonus of $1.90, much less $1.9 million? As our Readers know from our last episode of ‘Facing the Music of the New Reality’ [TTA 14 Feb, 24 Jan], Bright Health Group at the top of 2024 rebranded with the oh-so-chic name of its value-based care medical practice division, moving its HQ from poky, cold, failing Minneapolis to Doral, Florida. All its health plans, launched some years back in a blaze of flashes, either were sold (Medicare Advantage to Molina) or collapsed in a heap of losses. Aside from owing money to Texas ($85 million) on ACA plans, Neue owes mucho money to the Center for Medicare and Medicaid Services on Repayment Agreements, reportedly around $400 million, due on or before 14 March 2025. But in a masterful move, using the Molina money to keep the investors at bay, NeueHealth has managed to pay off JP Morgan for a credit line, dodge all the bill collectors–and award its CEO Mike Mikan a $1.9 million bonus, up from $1.69 million in 2022. Now, like some other of the C-suite, Mr. Mikan took most of his 2023 compensation of $9.9 million in stock-based pay, most of which is (glub glub) underwater. But one has to wonder about a board of directors, including major investor New Enterprise Associates, that would reward Mr. Mikan for steering Bright Health into a brick wall, even if it came out the other side as Neue. And Neue still needs funding to continue as a going concern this year (see page 12 (page 18 of PDF) of their March 10-K). AOL News, Ari Gottleib on LinkedIn, FierceHealthcare 4 April update  Cash bonuses of $875,000 were paid to CFO Jay Matushak and Executive Vice President of Consumer Care Tomas Orozco.

Another surprise in their 10-K is on pages 115-116 of the document (PDF pages 121-122) of a ‘material weakness’ in their financial reporting that has existed since 2022, not remediated in 2023, but is planned to be remediated in 2024. “Our disclosure controls and procedures were not effective due to a material weakness in our internal control over financial reporting”.

Their Q4 and 2023 financials reported in March were also underwater, with net losses of $62.8 million for the quarter and $627.7 million for the year, with an adjusted EBITDA loss of $8.5 million. But for 2024, they present a bright (ahem) picture for NeueHealth’s two divisions: NeueCare (owned clinics and partnerships with affiliated providers) and NeueSolutions, a management services entity that organizes independent providers and physician groups into performance-based ACA Marketplace, Medicare, and Medicaid-based ACO models, including the advanced performance ACO REACH program. Projected revenue is $1 billion and adjusted EBITDA between $15 million and $25 million. NeueHealth release, FierceHealthcare 

Perhaps investors New Enterprise Association ($1 billion in) and CalSTRS are letting their chips ride on what most could see as a losing number–what is the alternative? At the risk of repeating myself, they’ve managed to play multiple ends against the middle and tie masterful Gordian knots (pick your analogy) around CMS and their investors, hoping to stay alive until 2025 and better times. Or, as Ari Gottlieb speculates, NeueHealth may file a Chapter 11 before the CMS payments are due in March 2025. And then what?

This Editor also notes that former GE CEO Jeff Immelt is on Neue’s BOD and is a venture partner in NEA. The late ‘Neutron Jack’ Welch was once heard to regret naming Mr. Immelt as his successor, given that once-mighty GE is now split into three relatively small companies after maximum losses and management turmoil at legacy GE.

(5 March updates in red) 

After a disastrous 2023, does Cano Health even have a future? The telenovela is not fin, but little has been heard from Cano since it entered Chapter 11 bankruptcy on 4 February. A 26 February story in local Florida news, the Sun-Sentinel, has a few updates:

  • Cano’s goal is to exit Chapter 11 by the end of Q2 (June)
  • Class A shareholders, who accepted a 1 to 100 reverse share split in December 2023, will be left with no value–including the ‘Cano 3’ of Barry Sternlicht, Elliot Cooperstone, and Lewis Gold who owned 35% of the shares.
  • They have $150 million in operating cash until then
  • In the reorganization, they have two tracks: continue as an independent company or sell
  • The focus will be on core operations, including Florida Medicare Advantage
  • They plan to close 80 locations. Their filing contains 72 ‘dark leases’ mainly in Florida. Cano has 95 medical centers operating in Florida so it is not clear whether the closures take into account the dark leases.

Cano is now operating in Florida only, having offloaded or closed operations in Texas, Nevada, California, New Mexico, Illinois, and Puerto Rico. According to the filing, they currently employ 3,000 people, including 2,800 full-time staffers including executives, clinical, and administrative staffers, including 300 doctors, nurses, and physician assistants. In addition, Cano has affiliate relationships with approximately 630 provider practices. 

If you wonder what happened to Cano’s former CEO….founder and former CEO Marlow Hernandez, with two other Cano former executives, started a new company called Soran Health based in Hollywood/Miramar, Florida. It provides patient and medical management services including care delivery systems.  Dr. Hernandez and the other former Cano executives were sued in January by Cano for allegedly breaching their non-compete agreements and taking proprietary information. While they have a website and a LinkedIn page, they are remarkably content-less, but listed by CMS as a group practice.

News roundup: Bright Health now NeueHealth; breached patient records double, RCM as vector for hacking; Amazon’s CCM marketplace; JPM reflects the new reality; fundings for Vita Health, Turquoise, CardioSignal

January 24, 2024 | by

Bright Health Group switches off, takes on NeueHealth name. Now that Bright Health has sold its remaining operating health plans to Molina Healthcare [TTA 3 Jan] with others closed down or insolvent like Texas [TTA 12 Dec 23], they have smartly pivoted to the name of their remaining value-based primary care operation, NeueHealth. (Inexpensive, too) Accordingly, on 29 January, their NYSE listing will convert from BHG to NEUE. The stock value closed today at $13.25, well down from its 52-week high of $79.04. NeueHealth’s operations are divided into NeueCare, which is comprised of their owned clinics and partnerships with affiliated providers, and NeueSolutions, which is a management services entity that organizes independent providers and physician groups into performance-based ACA Marketplace, Medicare, and Medicaid-based ACOs models, including the advanced performance ACO REACH program which covered 60,000 beneficiaries in 2023. Unsurprisingly, the company HQ is moving from chilly Minneapolis to much warmer Doral, Florida, nearer to three of their major clinic networks and 150,000 of its claimed 275-295,000 ‘health consumers’ forecast for 2023. 2023 revenue forecasts for NeueCare are $250-275 million and NeueSolutions $890 million. They have also stated that the corporate move will not affect jobs remaining in Minneapolis, which may be few.

As to the bills coming due for CMS liabilities and debt owed to New Enterprise Associates now that JP Morgan has been paid…not a word. We continue to hand it to Bright, now NeueHealth, for the Best Gordian Knots in Healthcare. Release, Healthcare Dive

Patient records exposed in data breaches doubled in 2023 versus 2022. According to an analysis by cybersecurity firm Fortified Health Security of HHS’ Office of Civil Rights (OCR), which tracks data breaches, in 2023 there were 116 million patient records exposed, topping the over 100 million of 2015, with over 655 breaches, a decrease from 2022’s peak of 721. Of that 116 million, over 112 million were from three health plan breaches: Anthem, Premera Blue Cross, and Excellus, Ten-year total? A stunning 489 million. What also increased over those 10 years by 143% were breaches stemming from business associates–vendors providing services to the covered entity. The just-published Horizon Report (free, available for download here) also reveals that the average recovery cost for a breach is $9.48 million. And health plans and systems are cutting IT staff?  Healthcare Dive

One way that hackers are finding their way into healthcare organizations is via ‘social engineering’, but not always of employees. They’re targeting business associates at revenue cycle management (RCM) companies serving health systems and hospitals. The American Hospital Association is warning members that hackers are cannily evolving their tactics to defeat security procedures such as multi-factor authentication and they have to anticipate hacker tactics. From Becker’s, hackers “steal the identities of revenue cycle employees or other finance staffers, calling IT help desks and correctly answering security questions. They then request to reset their passwords and enroll new devices, getting full access to the employees’ accounts and diverting payments to fraudulent bank accounts.” These are based in the US and then diverted overseas. The AHA recommends at minimum a call back to the employee on these new device enrollments, a call to the person’s supervisor, or as in the case of one health system, a physical appearance at the help desk. AHA article

Amazon enters the chronic care management field through a tried-and-true (for them) vector–e-commerce. Search for a health device like a glucose monitor, a blood pressure cuff, or pulse oximetry, and receive a ‘direction’ to a management service that they may be eligible for at no or low cost through their employer or private health insurance. The kickoff partner with Amazon is chronic care management company Omada Health in the diabetes prevention, diabetes, and hypertension categories. Omada claims 20 million eligible members across 1,900 enterprises. This mode may get better traction with Amazon shoppers than directly providing them with health services such as Amazon Pharmacy, One Medical (primary care), and Amazon Clinic (asynchronous telemedicine). Omada didn’t disclose the revenue model. Omada release, Healthcare Dive

Wrapping up the JP Morgan healthcare conference, the New Reality permeated it, even if some didn’t want to admit it. As this Editor projected back in December, the board is being cleared of the also-rans and never-should-have-beens. You see a general cleansing of the cant and hype infecting a sector, which is initially unnerving. We are cycling through this stage fairly rapidly to emerge…where, we don’t quite know yet. Unlike some other publications, MedCityNews can never be mistaken for an industry cheerleader (even if you have to read between the lines). Their extensive coverage confirmed this emerging view of 2024.

  • Katie Adams didn’t make it to SF for her article on nine JPM takeaways, but she sussed out that life sciences isn’t ready for AI, GLP-1 drugs won’t solve obesity, transactional telehealth for urgent and behavioral care is over, founders are trying to figure out fundraising timelines, and retail clinics are suddenly Not All That. And more.
  • Arundhati Parmar profiled a company—one of all too many–that cycled from high to low–Butterfly Health. They started in 2011 to develop the first point-of-care handheld ultrasonic probe using a semiconductor chip that connected to a smartphone, became a unicorn by 2018, went public via a SPAC in 2021 at over $19, cracked hard, and now trades around $1. Their new CEO used the JPM platform to explain that their 2023 revenue slide wasn’t so bad because they were working their way through the longer-than-they-ever-imagined adoption curve by cutting $200 million in costs out of the company and building up their cash reserve. They may survive, or not, given that competition has names like GE Healthcare, Philips, and Siemens. But their ideas around selling the technology of the semiconductor chip to healthcare companies outside of ultrasound and opening their POCUS to developers (like Apple) are clever. It sounds like a company that could fit into a PE portfolio, if only some wallets and checkbooks opened.

And another marker of the New Reality: Scripps Health in San Francisco, hit hard by a cyberattack in 2021, announced at JPM that they hired Todd Walbridge, recently retired from the FBI as their supervising agent in their San Diego cybersecurity hub, as senior director for corporate and system safety and security. He had worked with Scripps on their cyberattack during his diverse career with the FBI. Mr. Walbridge is not only in charge of cyber, but also of physical security as workplace violence and assaults on staff have soared. FierceHealthcare

And we’ll wind up with some fundings, modest ‘green shoots’ in winter:

  • Vita Health, based in Connecticut, secured $22.5 million from seven investors for their suicide prevention and therapeutic telehealth platform. An 2022 seed raise totaled $8.38 million. Release, Mobihealthnews
  • Turquoise Health, based in San Diego, gained a $30 million Series B investment from four investors for expansion of its healthcare pricing platform used by 160 healthcare organizations. 2021-22 seed and Series A raises totaled $25 million. Price transparency is a 2024 hot button issue from government to enterprises to payers. Release, FierceHealthcare  
  • CardioSignal raised another $10 million in a Series A from three investors, bringing total funding to $23 million. Based in Finland and Palo Alto, CardioSignal uses a smartphone’s accelerometer and gyroscope sensors to analyze precordial micro-vibrations caused by cardiac motion. The initial analysis is completed in one minute and after a transfer to their cloud site for additional analysis, is returned in about one minute. Release, Mobihealthnews

Living to fight another day: insurtechs Bright Health, Clover Health, and Oscar Health report improved Q2s, H1s (updated)

August 10, 2023 | by

Have the upstart payers turned a corner–even if that means exiting the business? ‘Insurtech’ is the term given to the tech-enabled, health tech-friendly US payers which were supposed to deliver health insurance plans more efficiently (buy online!), more conveniently using apps and telehealth, lead in value-based care through strong networks, provider software, internal automation tools, and wrap it up with a ribbon of lower delivery cost to consumers, from those who needed individual exchange plans to Medicare Advantage. This utopian model cracked like the SPACs of Bright Health and Clover Health, and the IPO of Oscar Health, as this Editor noted last month, perhaps to the glee of traditional payers. But when survival is at stake, some surprising things can happen. All three are Not Dead Yet.

Bright Health Group succeeded last month in selling its remaining plans to ‘pure payer’ Molina Healthcare–their California Medicare Advantage plans Brand New Day and Central Health Plan. The deal: purchase 100% of the issued and outstanding capital stock of the two plans in a deal structured to be about $600 million. The Catch-22: stay solvent and absorb plan operational costs and losses (which are many) until Q1 2024 when the Molina deal will close. [TTA 6 July]

Last Friday (4 August), Bright secured a life preserver and line just as the waves started to crash–$60 million through a credit facility with an investment partnership of New Enterprise Associates (NEA). They also entered into a permanent waiver of default on its existing credit facility, which expires in February 2024. This has to refer to their prior $500 million credit facility with JP Morgan which was long overdue and now waived until the Molina close, apparently. Bright also is issuing penny warrants to NEA to purchase up to 1,656,789 shares of the Company’s common stock to the lenders under the new credit facility, approved by the board without the usual shareholder approval. This leaves an open question about who is really controlling the company. Release, Healthcare Finance, FierceHealthcare

There seems to be an even brighter (sic) picture in that their adjusted EBITDA for Q2 and H1 were actually in the black: $6.4 million for Q2 and $670,000 for H1. Even more bullishly, they project a full-year profitable adjusted EBITDA.

  • Reduced Q2 and H1 net losses: Q2 was $125 million versus $284 million in prior year. For H1 2023, the losses were $312 million and $488 million respectively.
  • Their other businesses in consumer care delivery, value-based care with providers in shared risk including ACO REACH (NeueHealth), and enterprise seemingly perform well. Their 2023 totals: consumer care $250-275 million, care solutions $900-925 million, and enterprise $1.15 -$1.2 billion.
  • Lives covered in value-based care are up to 371,000, an increase of 214% over last year’s 118,000–excluding any covered under their now exited commercial plans. Release,  Healthcare Finance

Looking at Clover Health, it was revealed this week that they survived a delisting off Nasdaq, which happens when the minimum closing share price requirement falls below $1 for at least 10 consecutive days. Now with closings for 10 days over $1, they are in Nasdaq’s good graces for now. They are exploring a reverse stock split or authorized share reduction, to be discussed at the 30 August shareholder meeting.

Clover then followed this up with a cheerful lead in their Q2 results that they had adjusted profitable EBITDA of $10 million versus last year’s $83.9 million loss. This is also remarkable as their revenue fell by over $333 million to $513.6 million due to a drop in non-insurance revenue of $384 million. Insurance plan revenue made up some of it by growing 17% to $314.4 million. In total, Clover recorded a net loss of $28.8 million. But for the year, adjusted EBITDA is projected to remain in the red between $70 and $120 million. Mobihealthnews, FierceHealthcare, release

Clover provides both Medicare Advantage (MA) plans in eight states plus a tool for practices, Clover Assistant, which assists in patient chronic care management through machine learning and aggregated data. They also entered value-based care in 2021 in the Medicare Direct Contracting (now ACO REACH) model which was a major loss generator in 2022 (Healthcare Dive) and has been cut back. Clover also survived an epically cracked SPAC out of the gate in January 2021 with the news that the Department of Justice (DOJ) had been investigating the company on investor relationships and business practices starting in fall 2020. A little over a month ago, the company finally settled seven shareholder lawsuits over its non-disclosure of the DOJ investigation at the time of the SPAC [TTA 28 June]. 

Now to NYC-based Oscar Health reporting its Q2, the first under its new CEO Mark Bertolini [TTA 30 March]. Their adjusted EBITDA went from red to in the black with a Q2 of $35.6 million, an improvement of $111.4 million versus prior year, and the second profitable quarter in a row with H1 adjusted EBITDA of $86.6 million, improving by $198 million from 2022. Revenue for Q2 was $1.5 billion with H1 at $3 billion. Net loss narrowed substantially to $15.4 million, an improvement of $96.7 million versus prior year, with H1 loss at $55.3 million, reduced by 70% from last year’s $187.3 million. The year will still be in the red with projected EBITDA loss of $75 to $175 million. The reasons for this gap–two profitable quarters, but an overall disappointing year–are not clear.

Bertolini touted factors such as improved medical loss ratios and rate increases. Oscar also pulled out of unprofitable Affordable Care Act marketplaces in Arkansas, Colorado, and California, as well as trimming MA plans in New York and Texas. On the earnings call, they announced that they were given state approval to resume MA enrollments in Florida and that they were relaunching +Oscar with help from ChatGPT to build automation tools in its Campaign Builder platform. In other news, their CFO is stepping down on 13 August, but remains on the board. He will be replaced internally by the chief transformation officer. Other staff are reportedly changing. Release, Healthcare Dive, FierceHealthcare

Update: you may also want to read Ari Gottlieb’s comments on these three companies on LinkedIn from the view of an expert financial analyst. Further comments on Bright’s perilous situation and Clover’s ‘legitimately good quarter’ here.

Why the ‘insurtechs’ didn’t revolutionize health insurance–and the damage they may have done

July 7, 2023 | by

crystal-ballIce water on hopes that many placed in ‘insurtechs’. This is the umbrella term that healthcare dubbed the upstart tech-enabled, health tech-friendly US payers which were supposed to deliver health insurance plans more efficiently (buy online!), more conveniently using apps and telehealth, with strong networks and at a lower delivery cost to consumers, from those who needed individual plans to Medicare Advantage. Around 2019-2020, these insurers gained billions in funding before going public through IPO or SPAC: Bright Health’s $500 million Series E in 2020 was only a chunk of their total $2.4 billion; Oscar Health raised $1.6 billion, Clover Health $1.3 billion. All three have struggled to stay clear of the insolvency precipice, with Friday Health Plans going over [TTA 23 June]. Bright Health Group will be exiting the insurance business after this year with the stock sale of their plans to Molina Healthcare–provided they survive to Q1 2024 [TTA 6 July]. Oscar and Clover have exited states and cut back offerings. In April, in a real retrenching, Oscar hired on Mark Bertolini, late of Aetna, pushing back a founder to an operational role. 

This Editor, in a marketing assessment for a client two years ago, believed as many did that Insurtechs Were The Future. At the very least, their practices would be adopted by the legacy insurers: easy online enrollment, lower premiums, predictive analytics, machine learning, digital documentation, online health education via apps, outsourcing areas such as customer service 24/7 and even marketing. Even those like Cigna through their Ventures arm bet some millions on insurtechs redefining payer-member relationships and payer structure, gaining better margins at profitable lines of business like Medicare Advantage (MA) and special needs plans (SNPs). After all, these plans did have people with decades of experience at insurers in their management, didn’t they, and they’d know what NOT to do. (And that’s the problem with gazing into crystal balls…eyestrain.)

Marissa Plescia’s article in MedCityNews is an excellent review on why the insurtechs’ centre did not hold. Key points made from her dive among the experts:

  • They underpriced and took heavy losses to grow their member base
  • They didn’t understand that some ‘inefficiencies’ in the health insurance market exist for reasons–perhaps not good ones, like state mandates through their departments of banking and insurance, but they exist and cannot be ignored. [Ed.–health education for MA has to be provided or at least available in written form in most if not all states]. Compliance can’t be skirted or ignored. Were they paying attention to the compliance of their plans?
  • They didn’t pay provider claims efficiently or at all [the SSM lawsuit of Bright]–a nifty way to lose networks and be sued by states, very damaging if the network wasn’t all that competitive to begin with.
  • Contracted rates with providers weren’t competitive. Were they managing risk adjusting coding well? 
  • Did they leverage sales channels beyond online such as brokers and their provider network? What about customer service?
  • The plans were not sticky enough to create some loyalty to an infamously non-loyal product

The insurtechs perhaps expected the technology to do too much–and for legacy payers to not catch up to them if they weren’t already moving there. Another problem–they (largely) were.

Disruption–but not the Clayton Christensen definition. Their disruption so far has been financial and legal (insolvency, cracked SPACs, lawsuits, share prices below $1.00, and delistings pending), loss of coverage for members; unpaid providers. With this track record, investors will avoid this category beyond the legacies. States won’t approve new plans from new companies. (This Editor believes that there are some overlooked positives such as inclusion in marketing of specialized and underserved groups, as well as some forced streamlining of processes.) There will be survivors–Alignment Health, kind of a below-the-radar operation and an afterthought in funding at $375 million, is in a few states and is mentioned. It’s also hard to bet against Bertolini leading Oscar–except that this is maybe Act V for him and he’s had his share of bunts and misses (bunt–ActiveHealth Management, misses–Healthagen, CarePass, iTriage) before his contentious departure from CVS. But in this particular widening gyre, while more revelations will be at hand, innovative newcomers in health plans won’t be seen for a long time, if ever. If the saga of airline deregulation (1980-1995) is a model, payer disruption just took a fraction of that time.

When ‘the centre cannot hold’: three board members exit at Cano Health, failure looms at Bright Health Group

April 7, 2023 | by

Surely some revelation is at hand? The first: the high-profile board troubles at primary care provider Cano Health. Last Friday, three directors resigned loudly from the board: Barry Sternlicht, Elliot Cooperstone, and Lewis Gold. Sternlicht, the chairman of Starwood Capital Group and for some years the CEO of Starwood Hotels in the 1990s, is a ‘name’ real estate and private investor. The other two are hardly slouches: Cooperstone is founder and managing partner of private equity firm InTandem Capital Partners; Gold is co-founder and board chairman of behavioral health company Advanced Recovery Systems. They resigned as a group due to differences with the CEO and management. 

The trio filed a 13-D with the Securities and Exchange Commission as a partnership to change things, “including, but not limited to, the replacement of the CEO, sale of non-core assets and enhancement of shareholder value.” Sternlicht’s release detailed their grievances with CEO Marlow Hernandez, including dubious transactions with a Miami medical claims recovery company, MSP Recovery (also known as LifeWallet), but mainly around the burn-through of the $800 million PIPE raised along with the June 2021 SPAC via Sternlicht’s JAWS Acquisition Corp.–an eye-watering total of $1.4 billion for a valuation at that time of $4.4 billion. From his release, Sternlicht apparently could not get the time of day from Hernandez. “I have never witnessed such poor corporate governance at any company, let alone a public company, and I have been involved in at least nine and served as chairman or CEO of six.”

Certainly, there is a case around shareholder value. The stock has cracked by over 90% from the initial price of $15. Sternlicht also had $50 million reasons to be mad as an investor of that amount in the PIPE. Cano Health called his “method of resignation particularly reckless.” But one wonders what Cano’s physicians are thinking, as well as the health plans with which they work, when three high-profile board members bolt the company, one of them with a stellar track record and some fame, with prejudice. Yet the majority of the board members were seemingly fine with how the company was run.

Last October, Cano, a 4,000 employee value-based primary care provider to mainly underserved markets, had its tires kicked by CVS Health [TTA 21 Oct 22] but the deal never got beyond discussions, and Humana, which has a right-of-first-refusal, made no moves. Share price fell from that time from just above $8 to today’s close of $1.25 on the NYSE. The time may be right for a payer or a provider group to make a cheap pickup, but not if the company has intractable troubles–and now there is a deep-pocketed rival. MedCityNews, New Times (Miami)  The New Times article digs deeper into the MSP Recovery relationship and CEO John Ruiz. MSP Recovery specializes in collecting from primary insurers that don’t pay and put the burden on commercial or public plans like Medicare or Medicaid. As of December 2022, the company owed Cano roughly $60 million in receivables, not a drop in their bucket.

Now to Bright Health Group, an insurtech which may well be on the brink of utter failure and the dubious distinction of being one of the largest failures of a Minnesota business, if their local media (Star-Tribune, unfortunately tightly paywalled) is accurate. Reports one month ago were dire: investors were told that Bright was facing credit insolvency, having run through $350 million in revolving credit. It also violated a liquidity covenant and desperately needed $300 million to cover it by end of April.  This did not stop the company from paying out about $4 million in bonuses to its management team–outrageously at 100%. Two of the bonuses are to ex-company members. Meanwhile, hundreds of their once 2,800+ employee group are being discharged.

18 months ago, Bright Health seemed to be the most promising insurtech out there, with a healthy Medicare Advantage (MA) plan base, family and individual plans, substantial growth, acquisitions of Zipnosis (‘white label’ telehealth triage for health systems), development of the NeueHealth value-based care provider management network, and a blue-chip management group. But it also lost $1.5 billion in 2022 on top of $1.2 billion in 2021 and has $1.2 billion in debt. Bright exited individual and family plans in six states plus cut back MA expansion plans and will no longer offer individual, family, or Medicare Advantage plans outside of California.

With Bright Health shares down to $0.20 and delisting looming, Bright asked shareholders to attend a 4 May meeting to approve a reverse stock switch “at a ratio of not less than 1-for-15 and not greater than 1-for-80.” It’s just a small problem of the share price….

Far more disastrously for Bright, state departments of banking and insurance are taking action. Tennessee and Florida placed the company under supervision; reportedly Illinois is considering the same. Texas may precipitate matters. According to strategic analyst Ari Gottlieb, the Texas Department of Insurance is preparing to place Bright Health’s Texas subsidiary into receivership. Such an action will constitute an immediate Event of Default under Bright’s Credit Agreement. Bright can then choose default–or seek bankruptcy protection.

Shockingly, over a million Americans have had to find a new health plan due to what is happening at Bright. Now, where’s the Barry Sternlicht they need on the board to take action? Are the directors from investors like Bessemer and New Enterprise Associates in cloud-cuckoo land with management?

FierceHealthcare. Both Fierce’s and this article quote liberally from Ari Gottlieb’s posts on LinkedIn, the most incisive coverage this Editor has seen so far: Since Bright Health’s executive compensation approach is best described as pay-for-failure from one month ago, Bright Health’s $4 million pay-for-failure cash bonuses… from two weeks ago, and from earlier this week, The Texas Department of Insurance is preparing for anticipated litigation…  Others are listed in his feed here. 

‘Insurtech’ Bright Health’s IPO second largest to date, but falls slightly short of estimates (updated)

June 30, 2021 | by

Bright Health Group’s IPO last Friday (23 June) fell a little short of the $1 billion+ raise and valuation projection two weeks ago, but not by much on a bad market day. Their $924 million raise was based on a float of 51.3 million shares at an opening price of $18 per share, with a targeted price range of $20 to $23. (Thursday 1 July’s BHG close: $16.85, a typical pattern.)

The raise compares favorably to Oscar Health’s blockbuster $1.44 billion IPO, Clover Health’s controversial but lucrative SPAC [TTA 9 Feb]. and Alignment Health’s $490 million.  Bright Health also acquired Zipnosis, a telehealth/telemedicine ‘white label’ triage system for large health systems, in April [TTA 6 Apr].

The IPO now creates a company value of $11.23 billion, down from the expected $14 billion. Bright Health is unique in its category in not only offering exchange and Medicare Advantage plans but also NeueHealth, 61 advanced risk-bearing primary care clinics delivering in-person and virtual care to 75,000 unique patients. FierceHealthcare, Reuters, Bright Health Group release. Also see TTA 18 June and 28 May.