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- Less than a month after completely exiting Affordable Care Act exchanges and reducing its Medicare Advantage footprint to only Florida and California, Bright Health Group announced that it was also ending MA operations in Florida.
- As a result, the insurtech will not operate MA plans in California until 2023, chief financial officer Cathy Smith told investors on a third-quarter earnings call on Wednesday.
- Implementing restructuring plans towards a more focused business model should position Bright’s MA and NeueHealth businesses well for 2023, management argued on the call. Bright expects adjusted EBITDA to be profitable next year, although previously reported revenue is expected to fall by half due to the cuts.
Overview of the dive:
Bright contracts business for third time to focus on care delivery and provider empowerment NeueHealth and Medicare Advantage in the best performing markets. In April, the Minneapolis, Minnesota-based paymaster said he planned to leave six states starting next year. Then, in October, Bright further reduced its footprint as it sought profitability after recent losses.
“We have quite a significant change in our cost structure as we exit the AAFC insurance business and MA business in states other than California. We are well advanced in plans to change the company’s cost structure year-over-year, which will help that cost come down fairly quickly,” Smith said.
The payer remains in “some of the largest health care markets,” with 26% of the nation’s aging population, CEO Mike mike said on the call. mike also noted that the open registration period for the MA in California, which is still ongoing, has been better than Bright had anticipated so far.
Bright is increasingly focusing on its NeueHealth a care delivery business, which provides care through 180 owned and affiliated clinics and is expected to represent a larger share of Bright’s revenue going forward.
NeueHealth ended the quarter with 520,000 patients in value-based arrangements, compared to 170,000 in the same period last year. NeueHealth revenue doubled year over year to $502 million as the shift of customers to fully aligned models and direct contracts drove growth.
Overall, Bright generated $1.6 billion in revenue during the quarter, up 51% year over year. It reported a medical loss rate of 90.6%, compared to 103% in the same period last year when it was hit by the headwinds of COVID-19.
After a series of disappointing financial releases closing out 2021, shares of Bright plunged earlier this year amid the departure of two top executives, layoffs of around 5% of its workforce and a $1 million fine in April from Colorado for operational problems at the insurer.
Bright used reserve funds to cover his losses and told Florida regulators he had “substantial doubt” about his ability to remain financially viable without outside investment, according to Star Tribune reports.
Bright has taken a number of steps to shore up its finances, management said Wednesday. For example, the insurtech is working with state regulators to wind down its ACA and MA operations, and expects to recover $250 million after paying claims due over the next six to 18 months.
Mikan said Bright will be “90% complete on claims” by the end of the first quarter.
“We will be engaged with regulators on the release of this capital. It will be staggered over time. We think some states will be more proactive at first and others will continue for a while,” Mikan said.
Bright posted a net loss of $259.3 million in the third quarter, compared to a loss of $296.7 million in the same period last year. The payer came in below Wall Street expectations on earnings and revenue.