After a challenging quarter, insurance company Bright Health is raising $750 million in financing. In an unusual move, another insurance company is joining as an investor. Cigna Ventures and Bright’s largest shareholder, New Enterprise Associates, both participated in the financing.
Head of Cigna Ventures Tom Richards talked about potential opportunities to collaborate with NeueHealth, Bright’s provider enablement platform to help practices move to value-based contracts.
“We seek to be partners of choice and we look forward to exploring new ways that NeueHealth and Evernorth can potentially provide services to each other’s customers and clients,” he said in a news release.
Bright, which was founded in 2016 by former UnitedHealthcare CEO Bob Sheehy, mostly focuses on individual market plans and Medicare Advantage plans, though it has also expanded into some small group plans. It operates in 13 states.
In June, the company went public for $1.3 billion, with plans to expand into new markets. While its IPO was priced at $18 per share, its stock has since shrunk to a fraction of that, trading below $4 per share.
The company has been operating in the red, reporting a net loss of $296.7 million in the most recent quarter, compared to a $59.3 million net loss in Q3 2020. Part of that was driven by higher than expected medical costs as the Delta variant caused a new wave of Covid-19 cases at the end of the summer. For the third quarter, Bright reported a medical cost ratio of 103%, meaning it spent more on medical costs than the premiums it was bringing in.
The financing is expected to close in January. Bright Health’s stock rose on the news, closing at $4.35 on Thursday.
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