Dive Brief:
- Less than a month after fully exiting the Affordable Care Act exchanges and slashing its Medicare Advantage footprint to just Florida and California, Bright Health Group has announced it’s also ending MA operations in Florida.
- As a result, the insurtech will only operate MA plans in California starting in 2023, CFO Cathy Smith told investors on a third-quarter earnings call Wednesday.
- Implementing restructuring plans to a more focused business model should result in Bright’s MA and NeueHealth businesses being well positioned for 2023, management argued on the call. Bright expects adjusted EBITDA to be profitable next year as a result, despite previously disclosing revenue is expected to fall by half due to the cuts.
Dive Insight:
Bright is contracting its business for a third time to focus on care delivery and provider enablement business NeueHealth and Medicare Advantage in higher performing markets. In April, the Minneapolis, Minnesota-based payer said it planned to exit six states starting next year. Then, in October, Bright further winnowed its footprint as it chases profitability following recent losses.
“We've got a pretty significant change in our cost structure as we exit the ACA insurance business and the MA business in the other states other than California. We are well underway in the plans for that business cost structure change year-over-year which will help that cost come down pretty quickly,” Smith said.
The payer is remaining in “some of the largest markets in healthcare,” with 26% of the country’s aging population, CEO Mike Mikan said on the call. Mikan also noted that the MA open enrollment period in California, which is still ongoing, has been better than Bright expected so far.
Bright is increasingly focusing on its NeueHealth care delivery business, which provides care through 180 owned and affiliated clinics and is expected to make up a larger share of Bright’s revenue in the future.
NeueHealth ended the quarter with 520,000 patients in value-based arrangements, compared to 170,000 at the same time last year. NeueHealth’s revenue doubled year over year to $502 million, as moving customers into fully aligned models and direct contracting spurred growth.
Overall, Bright brought in $1.6 billion in revenue in the quarter, up 51% year over year. It reported a medical loss ratio of 90.6%, compared to 103% at the same time last year when it was slammed by COVID-19 headwinds.
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.
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, according to reporting from the Star Tribune.
Bright has taken a number of steps to shore up its finances, management said on Wednesday. For example, the insurtech is working with state regulators to wind down its ACA and MA businesses, and expects to recoup $250 million after it’s paid out the claims due over the next six to 18 months.
Mikan said Bright will be “90%-ish complete on claims” by the end of the first quarter.
“We’ll be engaged with regulators on the release of that capital. It’ll be staged over time. We believe that some states will be more proactive early, and some will tail on for a period of time,” Mikan said.
Bright reported a net loss of $259.3 million in the third quarter, compared to a loss of $296.7 million from the same time last year. The payer came in below Wall Street expectations on both earnings and revenue.
