When insurtech Bright Health Group first emerged back in 2015, it had bold goals of disrupting the insurance industry by leveraging technology. It raised a whopping $2.4 billion — including from Cigna Ventures — and went public in 2021 before the IPO market dried up.
Once a high-flying insurtech that aimed to shake up the legacy insurance industry, Bright Health has since seen its wings clipped. And even a recent corporate rebrand is unlikely to burnish its image.
In the third quarter of 2023, the company reported a $462.8 million operating loss and in April opted to get out of the insurance business altogether. In January, it sold the remaining bits of that business — two California Medicare Advantage plans — to Molina Healthcare for $500 million, $100 million less than what was previously planned.
After jettisoning its insurance business, the company shifted focus to its existing value-based consumer care business called NeueHealth. NeueHealth has two segments: NeueCare and NeueSolutions. NeueCare delivers “value-driven” care to consumers across the ACA Marketplace, Medicare and Medicaid through its owned clinics and partnerships with providers. NeueSolutions helps independent providers and medical groups take on value-based arrangements through population health tools and partnerships with health plans and government programs.
NeueHealth serves more than 500,000 consumers and partners with more than 3,000 affiliated providers. Eager to shake off associations with a failed venture in insurance, Bright Health announced last month that NeueHealth would be its corporate brand name. It also moved its headquarters from Minneapolis, Minnesota to Doral, Florida.
But will several thousand miles and a new avatar save the company?
No one from NeueHealth agreed to be interviewed. Several industry experts said the company had no choice but to rebrand given the shift in its focus but most weren’t bullish about its future.
“The name may be ‘neue’ but their problems are old,” quipped Ari Gottlieb, principal of A2 Strategy Corp., in an interview. “It doesn’t change anything. This was a fundamentally failed company when its name was Bright and it’s a failed company when the name is Neue. You can leave behind your old name and the legacy that comes with it, but you can’t leave behind your liabilities.”
The company is roughly $1.4 billion in debt, Gottlieb estimated. This includes money owed to the Centers for Medicare and Medicaid Services (CMS) in risk adjustment payments, as well as money to Cigna Ventures, New Enterprise Associates and CalSTRS, he said.
In addition, $100 million of its $500 million from its MA sale to Molina Healthcare is being put into an escrow account, in which a third party holds onto the funds until certain obligations are met, according to an SEC filing. The funds will be provided if there is a successful consolidation of Bright Health’s two MA plans — Brand New Day and Central Health Plan — or if Brand New Day is able to achieve at least three stars for its Part D plans from CMS. So there is a possibility that NeueHealth won’t even get all of this money, Gottlieb said.
Gottlieb added that the NeueHealth business is not worth $1.4 billion, making it unlikely that it will survive.
“I just think this is a zombie company that nobody cares about. … I think they just drain this and then file for bankruptcy protection in March of 2025 before they owe the federal government money and there’s nothing anybody can do about it,” he said.
Another expert echoed Gottlieb essentially implying the internal problems cannot be glossed over by a rebranding — even though a rebranding was necessary to direct focus to a consumer-focused venture.
“It’s changing the window dressing, but it doesn’t change anything meaningful about their balance sheet,” said Wesley Sanders, a health plan consultant at Evensun Consulting, in an interview.
Sanders said he anticipates NeueHealth either going under or being acquired, particularly because he hasn’t “seen anything special about their value-based care arrangements that makes me think that they’re going to have a better model than anybody else.”
According to Gottlieb, some of NeueHealth’s competitors in the value-based care space include Cano Health (which just filed for bankruptcy) and CareMax.
While Gottlieb and Sanders don’t foresee a future for NeueHealth, one industry follower has a more optimistic view.
“Bright Health is operating in an arena that has a lot of momentum and tailwinds as payers look to partner with organizations that are willing to take financial risk for the care they are providing,” said Tyler Giesting, director of healthcare and life sciences at West Monroe, in an email. “Large payers are vertically integrating by building or acquiring their way into the space NeueHealth operates in, which I’d expect to only continue.
“Between Medicare ACO, Medicare Advantage and Medicaid, there will continue to be opportunities for them to help providers transition to value-based arrangements in new markets or to build or acquire their own clinics in new areas. I’d expect more geographic expansion as they build additional scale and grow covered lives.”
Unsurprisingly Mike Mikan, president and CEO of NeueHealth, said in a news release that he anticipates a positive future for the company.
“Taking the NeueHealth name signifies our commitment to delivering value through our differentiated care model that uniquely aligns the interests of health consumers, providers, and payers. Our NeueHealth identity has been a core and successful part of our organization’s story, and we look forward to building on its strong performance as we take the lead in the industry’s shift to value-based care.”
The sunny tone notwithstanding, Giesting of West Monroe believes the company’s success will ultimately be determined by how well its operating and care models perform in value-based contracts.
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