Bright Health Group’s board of directors is reviewing bids for its final health insurance product as it negotiates a stay with creditors, CEO Mike Mikan told investors Tuesday.
company overdrawn its $350 million credit facility earlier this year and secured a deal with the lenders to extend the loan by the end of June. but it depends on the system Finding a buyer for its Medicare Advantage business in California by the end of May. Bright Health last year stopped selling health insurance exchange plans, small employer plans and Medicare Advantage plans in other states.
“The potential sale of the business will substantially strengthen our company’s financial position and allow for future growth in the attractive value-based care market,” Mikan said.
Bright Health executives took a call Tuesday to announce its first-quarter financial performance, but declined to answer investor questions.
During the first quarter, the company’s net loss decreased 42% to $94.7 million and revenue increased 23% to $756.3 million. Bright Health’s NuHealth chain of 74 retail clinics in Florida and Texas posted a $4.3 million profit versus a $70 million loss in the first quarter of 2022, even as patient visits fell 30% to 373,000 .
The company had 123,000 Medicare Advantage members in California at 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 the state’s capital requirements, said Chief Financial Officer Cathy Smith.
A spokesman for the California Department of Managed Health Care wrote in an email that Universal Care last year agreed to keep twice as much as the state’s requirement to get regulatory approval to expand its exchange operations. The spokeswoman did not respond to a question about whether Universal Care currently has a required minimum balance.
The subsidiary was not in compliance at the end of 2022, according to a financial report the company submitted to the state last week. The parent company has transferred $39.1 million to its California operation so far this year, the company said.
Smith said Bright Health has more than $142 million in non-regulated cash in corporate and more than $2.3 billion in state subsidiaries.
Bright Health reported a combined $163 million reduction in its Florida and Texas insurance subsidiaries at the end of last year. If Florida or Texas regulators place the company in receivership, lenders can cancel its credit. Florida’s insurance regulators last week extended their oversight of the company through the end of June, requiring Bright Health executives to obtain regulatory approval to spend the money.
The company is working with state officials to close the insurance subsidiaries as it exits the exchange, small business and Medicare Advantage markets. Mikan said Bright Health will pay 95 percent of outstanding claims to former members by the end of next month.
Bright Health plans to execute One-to-80 reverse stock split To raise its share price above the $1 threshold to remain listed on the New York Stock Exchange on May 19, the company notified the Securities and Exchange Commission on Tuesday. Shares opened at 18 cents on Tuesday, down 92% from the May 9, 2022 52-week high of $2.24. Bright Health shares were priced at $17.25 at the time of the June 2021 initial public offering.
Correction: A previous version of this article incorrectly stated that Bright Health must sell its California Medicare Advantage business by the end of May under the terms of its credit arrangement.