Bright Health announces sale of its remaining Medicare Advantage plans
Proceeds from the sale to Molina Healthcare will bolster its capital and satisfy lending obligations, the company says.
Photo: Jose Luis Pelaez/Getty Images
Bright Health Group has announced it is selling its California Medicare Advantage business to Molina Healthcare for an estimated $600 million in the purchase price for shares.
The MA business includes the plans Brand New Day and Central Health Plan.
Proceeds from the sale will strengthen Bright Health's capital position and will be used to satisfy its obligations to its bank lenders, the company said. The remaining funds will be used toward liabilities in its discontinued Affordable Care Act insurance business. Bright Health is also announcing that it has extended a waiver and amendment to its credit facility.
As part of the agreement, Bright Health Group's Consumer Care Delivery business will enter into a provider agreement with Molina to serve Medicaid and ACA Marketplace populations in Florida and Texas in 2024.
The closing is expected to occur by early 2024 and is not subject to a financing condition. Bright Health said it does not intend to comment or disclose further developments until the transaction is closed.
WHY THIS MATTERS
Bright Health, which has been trying to stop a financial slide, said it will focus on its value-based, consumer-driven care model in the healthcare delivery market.
"We see great potential to expand relationships with key payor partners as we continue to increase access to simpler, more personal and affordable healthcare," said Mike Mikan, president and CEO of Bright Health.
In October 2022, the company announced it would no longer offer individual and family health plans through Bright HealthCare in 2023 and that it would be cutting Medicare Advantage products outside of California and Florida. The company had previously announced it would exit six markets in Illinois, New Mexico, Oklahoma, South Carolina, Utah and Virginia.
This May, Bright Health Group said it was exploring the potential sale of its California Medicare Advantage business. The business serves an estimated 125,000 seniors.
THE LARGER TREND
Bright Health is not alone in facing financial challenges. Other insurtechs such as Oscar Health and Clover Health are trading at far less than what they were when they went public, according to The Wall Street Journal, despite the promise of AI helping to upend the insurance business.
The business of health insurance, and how people pay for it, hasn't fundamentally changed, WSJ said, making it tough for startups to flourish at scale.
ON THE RECORD
"We are excited to enter into this agreement with Molina as it will allow Brand New Day and Central Health Plan to continue delivering localized, personal care to California consumers and will position Bright Health's Consumer Care Delivery business for long-term success," Mikan said by statement. "The sale allows us to focus on driving differentiation and sustainable growth through our Consumer Care Delivery business."
Twitter: @SusanJMorse
Email the writer: SMorse@himss.org
