merger cash puzzle

The last residue of Bright Health Group’s medical insurance operation is up for sale as the business works out with loan providers to prevent insolvency, the business revealed Friday.

The insurtech should discover a purchaser for its California Medicare Advantage organization by the end of May to receive a credit extension through June, Bright Health informed financiers in a filing to the Securities and Exchange Commission. Under the regards to the modified credit center, the business would need to preserve $50 million in money, below $85 million under the existing arrangement.

Bright Health requires the credit to prevent personal bankruptcy: The business overdrew its $300 million credit line last month and had up until next Monday to reach the minimum limit to preserve access to loan providers. Bright Health did not right away react to an interview demand.

If the business offers its Medicare Advantage line in California, it would mark completion of the insurer’s insurance coverage company. Bright Health formerly took part in the Medicare Advantage, medical insurance exchange and employer-sponsored health insurance markets in 15 states. The business has 125,000 Medicare-Medicaid dual-eligible members in the Golden State, where it lost $40.8 million in 2015, according to regulative filings.

Moving forward, Bright Health will focus exclusively on its NeueHealth medical care service, which makes up 74 centers in Florida and Texas that serve 375,000 clients, the business stated in a press release Friday.

The credit arrangement revealed Friday needs Bright Health executives to go to weekly conferences with lenders about the Medicare Advantage sale and biweekly conferences about its financial resources. Bright Health is disallowed from handling brand-new financial obligation or financial investments.

If insurance coverage regulators in Texas or Florida put the business under receivership or under extra guidance, loan providers can liquify the credit contract. Bright Health reported a $163 million shortage in those 2 states at the end of 2022. Florida has actually currently positioned the business under administrative guidance.

“The banks did this since they desire their cash, and they understand this is their finest possibility to get it,” stated Ari Gottlieb, an independent health care expert at A2 Strategy Group. “This might be a race in between regulators and lenders with the selling of their California [Medicare Advantage] strategy, to see who gets the cash.”

Bright Health shares opened at 18 cents on the New York Stock Exchange Friday. The business deserved $17.25 per share at the time of its going public in 2021.