Bright Health Group’s board of directors is reviewing bids for its final health insurance product as it negotiates with creditors to stay afloat, CEO Mike Mikan told investors Tuesday.
The company overdrew its $350 million credit facility earlier this year and secured a deal with lenders to extend credit until the end of June. But that arrangement is contingent on selling its Medicare Advantage business in California by the end of May. Bright Health halted sales of health insurance exchange plans, small employer plans and Medicare Advantage plans in other states last year.
“A potential sale of the business would substantially bolster our company’s financial standing and allow future growth in the attractive value-based care market,” Mikan said.
Bright Health executives held a call to announce its first quarter financial performance on Tuesday, but refused to answer questions from investors.
The company’s net loss narrowed 42% to $94.7 million and revenue rose 23% to $756.3 million during the first quarter. Bright Health’s NeueHealth chain of 74 retail clinics in Florida and Texas collected $4.3 million in profit, compared to a $70 million loss in the first quarter of 2022, even as patient visits declined 30% to 373,000.
The company had 123,000 Medicare Advantage members in California by the end of the first quarter, essentially flat from the year-ago period. Its Golden State Medicare Advantage business, including Universal Care and Central Health Plan, is in compliance with state capital requirements, Chief Financial Officer Cathy Smith said.
Universal Care agreed to hold twice as much as the state requires in reserve to win regulatory approval to expand its exchange operations last year, a California Department of Managed Health Care spokesperson wrote in an email. The spokesperson did not respond to questions about whether Universal Care currently has the necessary minimum balance.
The subsidiary was not in compliance at the end of 2022, according to financial reports the company submitted to the state last week. The parent company has transferred $39.1 million to the California operation so far this year, the company reported.
Bright Health held more than $142 million in non-regulated cash at the corporate and $2.3 billion at its state subsidiaries, Smith said.
Bright Health reported a combined $163 million shortfall in its Florida and Texas insurance subsidiaries at the end of last year. If Florida or Texas regulators place the company in receivership, lenders may revoke its credit. Florida insurance regulators last week extended their supervision of the company to the end of June, requiring Bright Health executives to receive regulatory approval to spend money.
The company is working with state officials to wind down insurance subsidiaries as it exits the exchange, small business and Medicare Advantage markets. Bright Health will have paid 95% of former members’ outstanding claims by the end of next month, Mikan said.
Bright Health plans to execute a one-to-80 reverse stock split on May 19 to raise its share price above the $1 threshold to remain listed on the New York Stock Exchange, the company notified the Securities and Exchange Commission Tuesday. Shares opened at 18 cents Tuesday, down 92% from its 52-week high of $2.24 on May 9, 2022. Bright Health’s shares were valued at $17.25 at the time of its initial public offering in June 2021.