Bright Health secures $60 million in credit capacity

Photo: Kiyoshi Hijiki/Getty Images

Bright Health Group has secured $60 million in credit capacity, with the financing expected to support the working capital needs of the company until the closing of its California Medicare Advantage business to Molina Healthcare.

The insurer, which has been struggling financially, announced that on Aug. 4, it entered into a credit facility with an investment partnership of New Enterprise Associates with $60 million of credit capacity. Bright Health has also announced it has entered into a permanent waiver of default on its existing credit facility, which expires in February 2024.

In June, Barclays downgraded Bright Health due to reasons of liquidity and Medicare medical loss ratio pressure, according to Seeking Alpha.

Mike Mikan, president and CEO of Bright Health, said, "We are excited to have the continued support of NEA, and all of our partners, as we continue to transform our business into one of the leading value-driven healthcare companies."

More information is expected when Bright Health reports its second-quarter earnings on Aug. 9.

In connection with the new credit facility, Bright Health also announced that it will issue penny warrants to purchase up to 1.6 million shares of the company's common stock to the lenders under such new credit facility. The warrant issuance would typically require approval of shareholders. However, Bright Health's Audit Committee of the board of directors determined that delaying the debt financing transaction until shareholder approval would jeopardize the financial viability of the company. Therefore, the Audit Committee approved the company's omission to receive shareholder approval. The New York Stock Exchange approved Bright Health's reliance on the exception.

Bright Health said it expects to formally notify stockholders as soon as practicable that it intends to issue penny warrants in connection with the funding of loans under the new credit facility without seeking their approval. 

In July, Bright Health announced the sale of its remaining Medicare Advantage plans to Molina Healthcare for an estimated $600 million in the purchase price for shares. Proceeds would be used to satisfy its obligations to its bank lenders, with the remaining funds going toward liabilities in its discontinued Affordable Care Act insurance business, the company said. 
 

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org