Molina amends terms for Bright Health Medicare Advantage acquisition
The purchase price for the transaction, net of certain tax benefits, is reduced from $510 million to approximately $425 million.
Photo: Martin Barraud/Getty Images
Molina Healthcare has amended its purchase agreement for the acquisition of Bright Health's California Medicare Advantage business.
The purchase price for the transaction, net of certain tax benefits, is reduced from the previously announced $510 million to approximately $425 million, and now represents 23% of expected 2023 premium revenue of $1.8 billion.
As previously stated by Molina, the acquisition adds $1.00 per share to new store embedded earnings and is expected to close on or about Jan. 1.
WHAT'S THE IMPACT
Bright Health and Molina announced the move in July.
Proceeds from the sale will strengthen Bright Health's capital position and will be used to satisfy its obligations to its bank lenders, the company said. The remaining funds will be used toward liabilities in its discontinued Affordable Care Act insurance business. Bright Health is also announcing that it has extended a waiver and amendment to its credit facility.
As part of the agreement, Bright Health Group's Consumer Care Delivery business will enter into a provider agreement with Molina to serve Medicaid and ACA Marketplace populations in Florida and Texas in 2024.
Bright Health, which has been trying to stop a financial slide, said it will focus on its value-based, consumer-driven care model in the healthcare delivery market.
"We see great potential to expand relationships with key payor partners as we continue to increase access to simpler, more personal and affordable healthcare," said Mike Mikan, president and CEO of Bright Health.
In October 2022, the company announced it would no longer offer individual and family health plans through Bright Health in 2023 and that it would be cutting Medicare Advantage products outside of California and Florida. The company had previously announced it would exit six markets in Illinois, New Mexico, Oklahoma, South Carolina, Utah and Virginia.
THE LARGER TREND
Bright Health is not alone in facing financial challenges. Other insurtechs such as Oscar Health and Clover Health were trading at far less than what they were when they went public, according to a June article in the The Wall Street Journal. This despite the promise of AI helping to upend the insurance business.
The business of health insurance, and how people pay for it, hasn't fundamentally changed, WSJ said, making it tough for startups to flourish at scale.
Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com
