Bright Health receives credit lifeline to keep afloat
Summary
Bright Health Group has secured a $60 million credit agreement that enables the struggling startup to survive while it completes a sale of its final insurance operation to Molina Healthcare, the company wrote in a filing to the Securities and Exchange Commission Monday.The soon-to-be former health insurance company solidified a rotating credit agreement with existing lenders and original investor New Enterprise Associates on Friday that extends the contract until February or until all loans are repaid, and lifts a requirement that Bright Health renegotiate with lenders every three months, according to the Securities and Exchange Commission filing.The cash infusion should be enough to sustain Bright Health as it finalizes a $600 million deal to sell its California Medicare Advantage business to Molina, the company said in a news release Monday. Molina and New Enterprise Associates did not respond to interview requests.Bright Health shares opened at $16 on the New York Stock Exchange on Monday, up 5.8% from Fridays close. The New York Stock Exchange approved the action, according to Bright Health.Bright Health must hold the state-required reserves in its California insurance subsidiaries and receive lenders approval before taking on certain types of debt or selling its remaining assets, the company notified the Securities and Exchange Commission. If the company violates these terms, or if the deal with Molina does not go through, the creditors can accelerate the timeline under which Bright Health must cover its debts.New Enterprise Associates, a venture capital firm, and Bessemer Venture Partners jointly invested $80 million during a Series A round in 2016 and co-led a $750 million investment with Cigna Ventures in 2021.The cash infusion comes after Bright Health reported a $12.8 million shortfall in a California Medicare Advantage plan during the second quarter. Bright Healths Brand New Day subsidiary does not hold enough funds to satisfy its commitments to policyholders and providers, a California Department of Managed Health Care spokesperson wrote in an email.The DMHC continues to monitor the financial viability of the plan, the spokesperson wrote.