In major setback, Bright Health discontinues individual health insurance coverage

Bright Health Group will end individual and family health insurance coverage and reduce its Medicare Advantage coverage to just two states, a dramatic setback for the Bloomington company that has built a national presence in just five years.

The company, which has attracted billions of dollars in investment capital and embarked on Minnesota’s largest IPO last year, has come under financial strain due to rapid growth and pandemic-related payouts.

Bright Health currently sells coverage on government-run exchanges in 15 states. But it said on Tuesday that it would no longer offer cover in any of them from January, effectively silencing the line of business.

Bright also announced that it would withdraw Medicare Advantage plan offers in four states, leaving only California and Florida.

The company will exit the individual health insurance markets of Alabama, Arizona, Colorado, Florida, Georgia, Nebraska, North Carolina, Texas and Tennessee in January, joining thus the previously announced withdrawal of Illinois, New Mexico, Oklahoma, South Carolina, Utah and Virginia. . In a footnote to the document, Bright said there was a chance he would continue to cover some individual plans in California.

Bright Health said it will now focus on its non-insurance business. The company operates medical clinics that will be part of its “fully aligned model of care,” which integrates data and analytics aimed at delivering better value to aging and underserved patients in the company’s largest markets: California, Florida and Texas.

In a statement, the company said the reorganization provides “a faster path to profitability, greater predictability and improved capital efficiency.”

Bright Health also announced a new cash injection, raising $175 million in “preferred convertible capital”. Executives told investors in August there was “substantial doubt” the company could continue without raising more capital.

The company did not record a profit and in the first six months of 2022 posted a net loss of $432 million.

Bright Health was launched in 2016, one of many startups trying to disrupt the healthcare industry. It began offering plans in Colorado, its first state, in 2017. Co-founder and original chief executive Bob Sheehy was previously CEO of UnitedHealthcare, the health insurance arm of Minnetonka-based UnitedHealth Group.

As a startup, Bright Health has raised over $1.5 billion in funding, a record among Minnesota companies. It then raised more than $900 million in a listing on the New York Stock Exchange in June 2021, becoming the largest IPO by a Minnesota-based company.

But from an initial price of $18, shares of Bright Health plunged and closed Monday at a new low of 91 cents.

News of Bright’s restructuring sent its stock up more than 30% and it was trading around $1.18 at noon.

Bright does not offer any health plans in Minnesota.

As of June, Bright Health had about 970,000 enrollees in the individual market and 120,000 people in Medicare Advantage plans.

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