Dive Brief:
- Starting next year, Bright Health will no longer offer Medicare Advantage plans outside of California and Florida as the insurer chases profitability following recent losses.
- The payer will also no longer offer individual and family plan products through its Bright HealthCare segment. The company said it expects to reach profitability on an adjusted EBITDA basis in 2023 due to the overhaul, despite revenue expected to fall by more than half as a result.
- The announcement comes just six months after the Minneapolis, Minnesota-based payer said it planned to exit six states starting next year.
Dive Insight:
Bright is doubling down on its decision earlier this year to contract its business, now fully halting the sale of Affordable Care Act plans to focus on care delivery and provider enablement business NeueHealth and Medicare Advantage in higher performing states. It is focusing on NeueHealth as Bright’s other market-facing business, Bright HealthCare, which manages commercial and Medicare products, continues to hemorrhage money.
The overhaul will reduce capital need and lower operating expenses in line with the size of the business, according to an investor presentation on the changes. Six-year-old Bright called the move a “faster path to profitability” in a release.
In addition to the previously announced market exits, Bright will no longer offer individual and family health plans in Alabama, Arizona, Colorado, Florida, Georgia, Nebraska, North Carolina, Texas, and Tennessee after 2022. The payer said it is in ongoing discussions to continue an “immaterial amount” of plans in select states, including California and Colorado.
In addition, Bright will no longer sell MA plans in Arizona, Colorado, Illinois and New York, but will continue to offer MA plans in California and Florida. It will also operate NeueHealth’s value-based business in Texas.
Bright, which went public in June last year, has struggled during the coronavirus pandemic with medical costs, as it and its insurtech peers like Oscar and Clover have proved more vulnerable to COVID-19 headwinds than larger, more diversified insurers.
Following a series of disappointing financial releases closing out 2021, Bright’s stock plunged earlier this year amid the departure of two top executives, layoffs of about 5% of its workforce and a $1 million fine in April from Colorado over operational issues at the insurer.
The overhaul greatly shrinks the size of Bright’s business, despite the insurer remaining in some of the largest U.S. healthcare markets. Bright is giving up its 970,000 commercial members, though it expects slight growth in its MA business from 120,000 members in the second quarter to 125,000 next year.
Bright also forecasts it will have some 150,000 NeueHealth ACO and value-based care members next year. That’s down from 500,000 as of the second quarter.
Bright’s expected revenue of $3 billion next year is also down significantly from the at least $6.8 billion in revenue expected in 2022 — though the change is not as dramatic compared to 2021, when Bright brought in roughly $4 billion in revenue.
Despite ongoing revenue growth, medical costs skyrocketed starting last year, spurring losses. In August, Bright released earnings showing a net loss of almost $432 million in the first half of 2022.
According to reporting from the Star Tribune, Bright has been using reserve funds to cover its losses, and told Florida regulators it had “substantial doubt” it could remain financially viable without outside investment.
Bright also said Tuesday it had raised $175 million in convertible preferred equity to help fund the business.
