Healthcare company Bright Health Group entered into an amendment to its credit facility with J.P. Morgan that will reduce the final repayment amount by approximately $30 million to approximately $298 million.
Upon payment of such amount, which is expected to be made concurrently with the closing of the sale of the company’s California Medicare Advantage business (the MA sale), the company’s secured debt will be eliminated. The company expects to use the remaining proceeds from the MA sale to improve the capital position of its continuing business. The company expects the MA sale, which has received all required regulatory approvals, to close on or about Jan. 1.
“I am really proud of all we have accomplished this year and look forward to further focusing on the long-term success of our NeueHealth business, which has proven to drive differentiated value for health consumers, providers and payors across the healthcare ecosystem,” Mike Mikan, president and CEO of Bright Health Group, said. “While we have been working on maturing as a company and improving our capital position, we have also continued to relentlessly focus on serving people every day who are in need of high-quality care. We are excited to continue to advance our value-driven, consumer-centric care model as we help align providers and payors to better serve consumers.”
Upon closing of the MA sale and the repayment of its secured debt, Bright Health expects to begin 2024 with approximately $90 million of unregulated cash. In addition, the company expects to have approximately $155 million in excess cash surplus after reserving for expected medical costs and other anticipated wind-down expenses in its discontinued insurance business (other than the company’s risk adjustment obligations due under the repayment agreements with the Centers for Medicare & Medicaid Services (the CMS repayment agreements)). Additionally, subject to adjustments and the conditions in the MA sale agreement, the company expects to receive an additional $110 million from escrow. Bright Health intends to use such funds if and when received to offset liabilities in its discontinued ACA insurance business, such as the obligations under the CMS repayment agreements, which will come due on or before March 14, 2025.
In 2024, Bright Health will solely focus on its continuing business, NeueHealth. The company will share its outlook for 2024, which is expected to be positive on an EBITDA basis after adjusting for certain non-cash expenses, in its Q4/23 earnings release.
