Bright Health Group has closed a $175 million investment round as the health insurer works to stabilize its troubled finances.
The insurtech sold 175,000 shares of Series B stock to support its newly “focused business,” the company announced Wednesday. The capital raise follows a strategic pivot to focus solely on Medicare Advantage and on direct patient care through its NeueHealth provider arm. Bright Health did not immediately respond to an interview request.
In January, Bright Health will exit the individual health insurance markets in Alabama, Colorado, Florida, Georgia, Nebraska, North Carolina, Texas and Tennessee after previously announced withdrawals from Illinois, New Mexico, Oklahoma, South Carolina, Utah and Virginia. The company may continue to offer individual coverage in California. Approximately 900,000 current policyholders will need to switch carriers for 2023.
Bright Health expects these exits will reduce costs and free up about $250 million after settling medical liabilities. The company was founded in 2016 with a focus on health insurance exchanges.
The strategic pivot followed multiple states saying they were monitoring Bright Health’s finances after the company was required to transfer nearly $150 million at the last minute to remain in compliance with state laws for insurance reserves.
Bright Health has lost $431.9 million so far this year. In August, CEO Mike Mikan said the company would need to raise outside capital to sustain its business. The insurtech aims to break even on an adjusted earnings before interest, taxes, depreciation and amortization basis in 2024.