- Q2’23 Revenue from Continuing Business of $298.0 million, up
100% year over year
- Value-Based Consumers served of 371,000, an increase of 214%
on a comparable basis from last year on strong growth in Care
Delivery
- Q2’23 Net Loss from Continuing Business of $31.7 million;
Positive Adjusted EBITDA of $6.4 million in Q2’23, positive
Operating Income in Care Delivery and Care Solutions
segments
- Maintaining expectation for 2023 consolidated Adjusted
EBITDA profitability†
Bright Health Group, Inc. (“Bright Health” or the “Company”)
(NYSE: BHG), the technology enabled, value-driven healthcare
company serving aging and underserved consumers with unmet clinical
needs, today reported financial results for its second quarter
ended June 30, 2023.
“Bright Health showed continued strong performance in the Second
Quarter, including reporting our first quarter with positive
Adjusted EBITDA. Our Care Delivery and Care Solutions operating
segments both performed well, with each generating positive
Operating Income in the quarter,” said Mike Mikan, President and
CEO of Bright Health. “Additionally, we expect the sale of our
California Medicare Advantage announced at the end of the Second
Quarter will bolster our Balance Sheet to continue on our path to
long-term profitable growth.”
Key Metrics
As of June 30,
2023
2022
Consumer and Patient Metrics
Value-Based Consumers served1
371,000
118,000
1The value-based care consumers
at June 30, 2022 have been recast for comparability to exclude
approximately 384,000 consumers attributable to our Bright
HealthCare- Commercial business that we exited beginning in
2023.
Three Months Ended
Six Months Ended
($ in thousands)
June 30
June 30
2023
2022
2023
2022
Financial Metrics
Revenue
$
297,982
$
149,340
$
598,532
$
330,104
Net Loss from Continuing Operations
$
(31,692
)
$
(74,762
)
$
(85,610
)
$
(196,340
)
Adjusted EBITDA (non-GAAP)
$
6,413
$
(23,277
)
$
670
$
(44,758
)
See the table at the end of this release for additional
information and a reconciliation of the non-GAAP measures used in
the table above.
Financial Outlook
For full year 2023, Bright Health is providing the following
guidance and commentary:
Bright Health is revising its 2023 financial outlook to reflect
the movement of our California Medicare Advantage business to Held
for Sale accounting.
- Bright Health’s Enterprise Revenue is expected to be between
$1.15 billion and $1.2 billion
- On a segment basis, Care Solutions Revenue is expected to be
between $900 million and $925 million, while Care Delivery Revenue
is expected to be between $250 million and $275 million
- Enterprise Adjusted Operating Cost Ratio is expected to be
between 17.5% and 18.5%†
- Bright Health expects to be Adjusted EBITDA profitable in
2023†
† Reconciliations of projected Adjusted EBITDA and projected
Adjusted Operating Cost Ratio to the most directly comparable GAAP
financial measures are not provided because the Company is unable
to provide such reconciliations without unreasonable effort. The
inability to provide a reconciliation is due to the uncertainty and
inherent difficulty predicting the occurrence, the financial impact
and the periods in which the non-GAAP adjustments may be
recognized. With respect to Adjusted EBITDA, these GAAP measures
may include the impact of such items as interest expense, income
tax expense, transaction costs, depreciation and amortization,
share-based compensation expense, impairment of goodwill or
intangible assets, restructuring costs, contract termination costs,
changes in the fair value of contingent consideration, changes in
the fair value of equity securities; and the tax effect of all such
items. Historically, the Company has excluded these items from
non-GAAP financial measures. With respect to Adjusted Operating
Cost Ratio, these GAAP measures may include the impact of such
items as share-based compensation and the impact of investment
income. The Company currently expects to continue to exclude these
items in future disclosures of non-GAAP financial measures and may
also exclude other items that may arise (collectively, “non-GAAP
adjustments”). The decisions and events that typically lead to the
recognition of non-GAAP adjustments, such as a decision to exit
part of the business, are inherently unpredictable as to if or when
they may occur. For the same reasons, the Company is unable to
address the probable significance of the unavailable information,
which could be material to future results.
Earnings Conference Call
As previously announced, Bright Health Group will discuss the
Company’s results, strategy, and outlook on a conference call with
investors at 8:00 a.m. Eastern Time today. Bright Health Group will
host a live webcast of this conference call which can be accessed
from the Investor Relations page of the company’s website
(investors.brighthealthgroup.com). Following the call, a webcast
replay will be available on the same site. This earnings release
and the Form 8-K filed August 9, 2023 can be accessed on the
Investor Relations page of the Company’s website. We routinely post
important information on our website, including corporate and
investor presentations and financial information. We intend to use
our website as a means of disclosing material, non-public
information and for complying with our disclosure obligations under
Regulation FD. Such disclosures will be included in the Investor
Relations section of our website. Accordingly, investors should
monitor this portion of our website, in addition to following our
press releases, U.S. Securities and Exchange Commission (“SEC”)
filings and public conference calls and webcasts.
About Bright Health Group
Bright Health Group is a technology enabled, value-driven
healthcare company that organizes and operates networks of
affiliate care providers to be successful at managing population
risk. We focus on serving aging and underserved consumers that have
unmet clinical needs through our Fully Aligned Care Model in
Florida, Texas and California, some of the largest markets in
healthcare where 26% of the U.S. aging population call home. We
believe everyone should have access to personal, affordable, and
high-quality healthcare. Our mission is to Make healthcare right.
Together. For more information, visit
www.brighthealthgroup.com.
Forward-Looking Statements
Statements made in this release that are not statements of
historical fact, including statements about our beliefs and
expectations, are forward-looking statements and should be
evaluated as such. Forward-looking statements include information
concerning possible or assumed future results of operations,
including descriptions of our business plan and strategies. These
statements often include words such as “anticipate,” “expect,”
“plan,” “believe,” “intend,” “project,” “forecast,” “estimates,”
“projections,” “outlook,” “ensure,” and other similar expressions.
These forward-looking statements include any statements regarding
our plans and expectations with respect to Bright Health Group,
Inc. Such forward-looking statements are subject to various risks,
uncertainties and assumptions. Accordingly, there are or will be
important factors that could cause actual outcomes or results to
differ materially from those indicated in these statements. Factors
that might materially affect such forward-looking statements
include: our ability to continue as a going concern; our ability to
comply with the terms of our credit facilities, including financial
covenants, both during and after any applicable waiver period,
and/or obtain any additional waivers of any terms of our credit
facilities to the extent required; our ability to sell our Medicare
Advantage business in California on acceptable terms, including our
ability to receive the proceeds thereof in a manner that would
alleviate our current financial position; the failure to satisfy or
obtain any waiver, if applicable, of any closing condition in our
agreement to sell our Medicare Advantage business in California to
Molina (the “Purchase Agreement”); our ability to comply with the
terms of the Purchase Agreement; whether our new credit facility
will satisfy our working capital needs pending the closing of our
sale of our Medicare Advantage business in California; our ability
to obtain any additional short or long term debt or equity
financing needed to operate our business; our ability to quickly
and efficiently wind down our IFP businesses and MA businesses
outside of California, including by satisfying liabilities of those
businesses when due and payable; ; potential disruptions to our
business due to our corporate restructuring and resulting headcount
reduction; our ability to accurately estimate and effectively
manage the costs relating to changes in our businesses offerings
and models; a delay or inability to withdraw regulated capital from
our subsidiaries; a lack of acceptance or slow adoption of our
business model; our ability to retain existing consumers and add
new consumers; our and our Care Partner’s abilities to obtain and
accurately assess, code, and report risk adjustment factor scores;
our ability to contract with care providers and arrange for the
provision of quality care; our ability to accurately estimate our
medical expenses, effectively manage our costs and claims
liabilities or appropriately price our products and charge
premiums; our ability to obtain claims information timely and
accurately; the impact of the ongoing COVID-19 pandemic on our
business and results of operations; the risks associated with our
reliance on third-party providers to operate our business; the
impact of modifications or changes to the U.S. health insurance
markets; our ability to manage the growth of our business; our
ability to operate, update or implement our technology platform and
other information technology systems; our ability to retain key
executives; our ability to successfully pursue acquisitions and
integrate acquired businesses; the occurrence of severe weather
events, catastrophic health events, natural or man-made disasters,
and social and political conditions or civil unrest; our ability to
prevent and contain data security incidents and the impact of data
security incidents on our members, patients, employees and
financial results; our ability to comply with requirements to
maintain effective internal controls; our ability to adapt to the
new risks associated with our expansion into ACO REACH; and the
other factors set forth under the heading “Risk Factors” in the
Company’s reports on Form 10-K, Form 10-Q, and Form 8-K (including
all amendments to those reports) and our other filings with the
SEC. Except as required by law, we undertake no obligation to
update publicly any forward-looking statements for any reason after
the date of this release to conform these statements to actual
results or changes in our expectations.
Bright Health Group, Inc. and
Subsidiaries
Consolidated Balance
Sheets
(in thousands, except share and
per share data)
(Unaudited)
June 30, 2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
107,660
$
217,006
Short-term investments
$
156
869
Accounts receivable, net of allowance of
$7,653 and $6,098, respectively
$
27,633
19,576
ACO REACH performance year receivable
$
623,609
99,181
Current assets of discontinued operations
(Note 14)
$
3,030,870
3,187,464
Prepaids and other current assets
61,198
46,538
Total current assets
3,851,126
3,570,634
Other assets:
Long-term investments
$
344
5,401
Property, equipment and capitalized
software, net
$
18,474
21,298
Goodwill
$
401,385
401,385
Intangible assets, net
$
99,084
104,952
Long-term assets of discontinued
operations (Note 14)
$
—
529,117
Other non-current assets
22,740
32,265
Total other assets
542,027
1,094,418
Total assets
$
4,393,153
$
4,665,052
Liabilities, Redeemable Noncontrolling
Interest, Redeemable Preferred Stock and Shareholders’ Equity
(Deficit)
Current liabilities:
Medical costs payable
$
179,855
$
116,021
Accounts payable
$
18,476
18,714
ACO REACH performance year obligation
$
474,700
—
Short-term borrowings
$
303,947
303,947
Current liabilities of discontinued
operations (Note 14)
$
2,584,890
3,157,236
Other current liabilities
73,221
97,241
Total current liabilities
3,635,089
3,693,159
Other liabilities
28,792
32,208
Total liabilities
3,663,881
3,725,367
Commitments and contingencies (Note 9)
Redeemable noncontrolling interests
$
244,561
219,758
Redeemable Series A preferred stock,
$0.0001 par value;750,000 shares authorized in 2023 and 2022;
750,000 shares issued and outstanding in 2023 and 2022
$
747,481
747,481
Redeemable Series B preferred stock,
$0.0001 par value; 175,000 shares authorized in 2023 and 2022;
175,000 shares issued and outstanding in 2023 and 2022
$
172,936
172,936
Shareholders’ equity (deficit):
Common stock, $0.0001 par value;
3,000,000,000 shares authorized in 2023 and 2022; 7,972,033 and
7,878,394 shares issued and outstanding in 2023 and 2022*,
respectively
$
1
1
Additional paid-in capital
$
3,021,430
2,972,333
Accumulated deficit
$
(3,444,238
)
(3,156,395
)
Accumulated other comprehensive loss
$
(899
)
(4,429
)
Treasury Stock, at cost, 31,526 shares at
June 30, 2023, and December 31, 2022*, respectively
(12,000
)
(12,000
)
Total shareholders’ equity
(deficit)
(435,706
)
(200,490
)
Total liabilities, redeemable
noncontrolling interests, redeemable preferred stock and
shareholders’ equity (deficit)
$
4,393,153
$
4,665,052
*Shares have been retroactively
adjusted to reflect the decreased number of shares resulting from a
1 for 80 reverse stock split
Bright Health Group, Inc. and
Subsidiaries
Consolidated Statements of
Income (Loss)
(in thousands, except share and
per share data)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenue:
Capitated revenue
$
49,764
$
17,641
$
99,312
$
46,289
ACO REACH revenue
236,994
137,205
476,801
320,002
Service revenue
11,222
10,732
22,409
20,962
Investment income (loss)
2
(16,238
)
10
(57,149
)
Total revenue
297,982
149,340
598,532
330,104
Operating expenses:
Medical costs
245,160
130,793
505,280
310,249
Operating costs
70,280
78,997
149,798
175,785
Restructuring charges
1,285
2,793
1,586
9,657
Depreciation and amortization
4,671
8,276
10,154
16,336
Total operating expenses
321,396
220,859
666,818
512,027
Operating loss
(23,414
)
(71,519
)
(68,286
)
(181,923
)
Interest expense
9,170
337
16,957
1,530
Other income
—
2
—
2
Loss from continuing operations before
income taxes
(32,584
)
(71,858
)
(85,243
)
(183,455
)
Income tax expense
(892
)
2,904
367
12,885
Net loss from continuing
operations
(31,692
)
(74,762
)
(85,610
)
(196,340
)
Loss from discontinued operations, net of
tax (Note 14)
(56,935
)
(176,568
)
(172,478
)
(235,619
)
Net Loss
(88,627
)
(251,330
)
(258,088
)
(431,959
)
Net earnings from continuing operations
attributable to noncontrolling interests
(24,205
)
(23,336
)
(29,755
)
(37,941
)
Series A preferred stock dividend
accrued
(9,942
)
(9,461
)
(19,656
)
(18,399
)
Series B preferred stock dividend
accrued
(2,231
)
—
(4,411
)
—
Net loss attributable to Bright Health
Group, Inc. common shareholders
$
(125,005
)
$
(284,127
)
$
(311,910
)
$
(488,299
)
Basic and diluted loss per share
attributable to Bright Health Group, Inc. common
shareholders
Continuing operations
$
(8.55
)
$
(13.68
)
$
(17.59
)
$
(32.14
)
Discontinued operations
(7.15
)
(22.45
)
(21.76
)
(29.97
)
Basic and diluted loss per share
(15.70
)
(36.13
)
(39.35
)
(62.11
)
Basic and diluted weighted-average common
shares outstanding*
7,962
7,865
7,928
7,862
*Shares have been retroactively adjusted
to reflect the decreased number of shares resulting from a 1 for 80
reverse stock split
Bright Health Group, Inc. and
Subsidiaries
Consolidated Statements of
Cash Flows
(in thousands)
(Unaudited)
Six Months Ended June
30,
2023
2022
Cash flows from operating activities:
Net loss
$
(258,088
)
$
(431,959
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
16,026
26,270
Impairment of intangible assets
—
6,720
Share-based compensation
49,095
53,141
Deferred income taxes
873
1,154
Unrealized loss on equity securities
—
57,151
Amortization of investments
(14,173
)
2,748
Other, net
3,891
1,834
Changes in assets and liabilities, net of
acquired assets and liabilities:
Accounts receivable
6,284
(31,404
)
ACO REACH performance year receivable
(524,428
)
(396,104
)
Other assets
57,846
(60,991
)
Medical cost payable
(567,932
)
231,899
Risk adjustment payable
10,925
916,713
Accounts payable and other liabilities
(111,174
)
35,312
Unearned revenue
132,129
3,577
ACO REACH performance year obligation
474,700
310,603
Net cash (used in) provided by
operating activities
(724,026
)
726,664
Cash flows from investing activities:
Purchases of investments
(828,546
)
(1,140,896
)
Proceeds from sales, paydown, and
maturities of investments
988,749
204,775
Purchases of property and equipment
(2,394
)
(15,154
)
Business divestitures, net of cash
disposed of
(682
)
—
Business acquisitions, net of cash
acquired
—
(310
)
Net cash provided by (used in)
investing activities
157,127
(951,585
)
Cash flows from financing activities:
Repayments of short-term borrowings
—
(155,000
)
Proceeds from issuance of preferred
stock
—
747,481
Proceeds from issuance of common stock
2
672
Distributions to noncontrolling interest
holders
(4,952
)
(1,894
)
Net cash (used in) provided by
financing activities
(4,950
)
591,259
Net increase (decrease) in cash and
cash equivalents
(571,849
)
366,338
Cash and cash equivalents – beginning of
year
1,932,290
1,061,179
Cash and cash equivalents – end of
period
$
1,360,441
$
1,427,517
Supplemental disclosures of cash flow
information:
Changes in unrealized loss on
available-for-sale securities in OCI
$
3,530
$
(47,051
)
Cash paid for interest
7,700
1,168
Bright Health Group, Inc. and
Subsidiaries
Segment Information
(in thousands)
(Unaudited)
Care Delivery
($ in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
Statement of income (loss) and
operating data:
2023
2022
2023
2022
Revenue:
Capitated revenue
$
49,764
$
17,641
$
99,312
$
46,289
Service revenue
10,530
10,691
21,466
20,910
Total unaffiliated revenue
60,294
28,332
120,778
67,199
Affiliated revenue
5,774
204,271
7,969
572,391
Total segment revenue
66,068
232,603
128,747
639,590
Operating expenses
Medical Costs
19,720
194,531
43,442
585,998
Operating Costs
32,139
32,401
61,328
63,596
Depreciation and amortization
3,178
6,369
6,310
12,745
Total operating expenses
55,037
233,301
111,080
662,339
Operating Income (Loss)
$
11,031
$
(698
)
$
17,667
$
(22,749
)
Care Solutions
($ in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
Statement of income (loss) and
operating data:
2023
2022
2023
2022
Revenue:
ACO REACH Revenue
236,994
137,205
476,801
320,002
Service revenue
692
41
943
52
Total segment revenue
237,686
137,246
477,744
320,054
Operating expenses
Medical Costs
231,279
134,274
469,874
310,908
Operating Costs
3,411
2,147
6,383
4,157
Total operating expenses
234,690
136,421
476,257
315,065
Operating Income
$
2,996
$
825
$
1,487
$
4,989
Bright Health Group, Inc. and
Subsidiaries
Historical Financials
Recast Income
Statement(1)
(in thousands)
($ in thousands)
Three Months Ended
Year Ended
Consolidated Statements of Income
(loss) and operating data:
March 31,
June 30,
September 30,
December 31,
December 31,
2022
2022
2022
2022
2022
Revenue:
Capitated revenue
$
28,648
$
17,641
$
33,006
$
33,609
$
112,904
ACO REACH revenue
182,797
137,205
145,433
188,652
654,087
Service revenue
10,230
10,732
10,076
8,563
39,601
Investment income (loss)
(40,911
)
(16,238
)
4,848
(3,128
)
(55,429
)
Total revenue
180,764
149,340
193,363
227,696
751,163
Operating costs
Medical costs
179,456
130,793
152,150
200,573
662,972
Operating costs
96,788
78,997
85,577
93,044
354,406
Restructuring charges
6,864
2,793
5
19,559
29,221
Intangibles impairment
—
—
42,611
—
42,611
Depreciation and amortization
8,060
8,276
8,947
5,427
30,710
Total operating costs
291,168
220,859
289,290
318,603
1,119,920
Operating Income (Loss)
(110,404
)
(71,519
)
(95,927
)
(90,907
)
(368,757
)
Interest expense
1,193
337
4,905
6,387
12,822
Other income
—
2
(2
)
—
—
Loss from continuing operations before
income taxes
(111,597
)
(71,858
)
(100,830
)
(97,294
)
(381,579
)
Income tax expense (benefit)
9,981
2,904
3,401
(12,622
)
3,664
Net loss from continuing
operations
(121,578
)
(74,762
)
(104,231
)
(84,672
)
(385,243
)
Loss from discontinued operations, net of
tax (Note 2)
(59,051
)
(176,568
)
(155,129
)
(583,890
)
(974,638
)
Net loss
(180,629
)
(251,330
)
(259,360
)
(668,562
)
(1,359,881
)
Net earnings from continuing operations
attributable to noncontrolling interests
(14,605
)
(23,336
)
(46,711
)
(11,012
)
(95,664
)
Series A preferred stock dividend
accrued
(8,938
)
(9,461
)
(9,684
)
(9,806
)
(37,889
)
Series B preferred stock dividend
accrued
—
—
—
(1,798
)
(1,798
)
Net loss attributable to Bright
Health
Group, Inc. common shareholders
$
(204,172
)
$
(284,127
)
$
(315,755
)
$
(691,178
)
$
(1,495,232
)
Operating Cost Ratio
53.5
%
52.9
%
44.3
%
40.9
%
47.2
%
(1)The 2022 quarterly Statements of Income
(Loss) have been recast to reflect the move of the IFP, MA Legacy
and California MA business to discontinued operations as well as to
correct the accounting for gross versus net revenue recognition
conclusion from certain value-based care arrangements and an error
identified in the data to account for our risk adjustment
factor.
Bright Health Group, Inc. and
Subsidiaries
Historical Financials
Recast Income
Statement(1)
(in thousands)
($ in thousands)
Three Months Ended
Consolidated Statements of Income
(loss) and operating data:
March 31,
June 30,
2023
2023
Revenue:
Capitated revenue
$
49,548
$
49,764
ACO REACH revenue
239,807
236,994
Service revenue
11,187
11,222
Investment income
8
2
Total revenue
300,550
297,982
Operating costs
Medical costs
260,120
245,160
Operating costs
79,518
70,280
Restructuring charges
301
1,285
Depreciation and amortization
5,483
4,671
Total operating costs
345,422
321,396
Operating Income (Loss)
(44,872
)
(23,414
)
Interest expense
7,787
9,170
Loss from continuing operations before
income taxes
(52,659
)
(32,584
)
Income tax expense (benefit)
1,259
(892
)
Net loss from continuing
operations
(53,918
)
(31,692
)
Loss from discontinued operations, net of
tax
(115,543
)
(56,935
)
Net loss
(169,461
)
(88,627
)
Net earnings from continuing operations
attributable to noncontrolling interests
(5,550
)
(24,205
)
Series A preferred stock dividend
accrued
(9,714
)
(9,942
)
Series B preferred stock dividend
accrued
(2,180
)
(2,231
)
Net loss attributable to Bright
Health
Group, Inc. common shareholders
$
(186,905
)
$
(125,005
)
Operating Cost Ratio
26.5
%
23.6
%
(1)The 2023 quarterly Statement of Income
(Loss) have been recast to reflect the move of the IFP, MA Legacy
and California MA business to discontinued operations as well as to
correct the accounting for gross versus net revenue recognition
conclusion from certain value-based care arrangements and an error
identified in the data to account for our risk adjustment
factor.
Bright Health Group, Inc. and
Subsidiaries
Historical Financials
Recast Segment Information
(1)
(in thousands)
(Unaudited)
Care Delivery
($ in thousands)
Three Months Ended
Year Ended
March 31,
June 30,
September 30,
December 31,
December 31,
Statement of income (loss) and
operating data:
2022
2022
2022
2022
2022
Revenue:
Capitated revenue
$
28,648
$
17,641
$
33,006
$
33,609
$
112,904
Service revenue
10,219
10,691
10,050
8,527
39,487
Total unaffiliated revenue
38,867
28,332
43,056
42,136
152,391
Affiliated revenue
368,120
204,271
257,707
209,522
1,039,620
Total segment revenue
406,987
232,603
300,763
251,658
1,192,011
Operating expenses
Medical Costs
391,467
194,531
264,013
367,731
1,217,742
Operating Costs
31,195
32,401
30,392
30,797
124,785
Intangible Asset Impairment
—
—
42,611
—
42,611
Depreciation and amortization
6,376
6,369
6,374
3,115
22,234
Total operating expenses
429,038
233,301
343,390
401,643
1,407,372
Operating loss
$
(22,051
)
$
(698
)
$
(42,627
)
$
(149,985
)
$
(215,361
)
Care Delivery
($ in thousands)
Three Months Ended
March 31,
June 30,
Statement of income (loss) and
operating data:
2023
2023
Revenue:
Capitated revenue
$
49,548
$
49,764
Service revenue
10,936
10,530
Total unaffiliated revenue
60,484
60,294
Affiliated revenue
2,195
5,774
Total segment revenue
62,679
66,068
Operating expenses
Medical Costs
23,722
19,720
Operating Costs
29,189
32,139
Depreciation and amortization
3,132
3,178
Total operating expenses
56,043
55,037
Operating income
$
6,636
$
11,031
(1)The segment financials have been recast
to reflect the change in our reportable segments and the move of
the IFP, MA Legacy and California MA business to discontinued
operations as well as to correct the accounting for gross versus
net revenue recognition conclusion from certain value-based care
arrangements.
Bright Health Group, Inc. and
Subsidiaries Historical Financials Recast Segment
Information (1) (in thousands) (Unaudited)
Care Solutions
($ in thousands)
Three Months Ended
Year Ended
March 31,
June 30,
September 30,
December 31,
December 31,
Statement of income (loss) and
operating data:
2022
2022
2022
2022
2022
Revenue:
ACO REACH Revenue
182,797
137,205
145,433
188,652
654,087
Service revenue
11
41
26
36
114
Total segment revenue
182,808
137,246
145,459
188,688
654,201
Operating expenses
Medical Costs
176,634
134,274
146,253
187,108
644,269
Operating Costs
2,010
2,147
2,321
2,030
8,508
Total operating expenses
178,644
136,421
148,574
189,138
652,777
Operating income (loss)
$
4,164
$
825
$
(3,115
)
$
(450
)
$
1,424
Care Solutions
($ in thousands)
Three Months Ended
March 31,
June 30,
Statement of income (loss) and
operating data:
2022
2023
Revenue:
ACO REACH Revenue
239,807
236,994
Service revenue
251
692
Total segment revenue
240,058
237,686
Operating expenses
Medical Costs
238,595
231,279
Operating Costs
2,972
3,411
Total operating expenses
241,567
234,690
Operating income (loss)
$
(1,509
)
$
2,996
(1)The segment financials have been recast to reflect the change in
our reportable segments and the move of the IFP, MA Legacy and
California MA business to discontinued operations as well as to
correct the accounting for gross versus net revenue recognition
conclusion from certain value-based care arrangements.
Non-GAAP Financial Measures
We use the non-GAAP financial measures Adjusted EBITDA and
Adjusted Operating Cost Ratio. We define Adjusted EBITDA as Net
Loss excluding loss from discontinued operations, interest expense,
income taxes, transaction costs, depreciation and amortization,
share-based compensation expense, restructuring costs, contract
termination costs, changes in the fair value of contingent
consideration, and changes in the fair value of equity securities.
We define Adjusted Operating Cost Ratio as Operating Cost Ratio
excluding share-based compensation expense. These non-GAAP measures
have been presented in this quarterly Earnings Release as
supplemental measures of financial performance that are not
required by or presented in accordance with GAAP because we believe
they assist management and investors in comparing our operating
performance across reporting periods on a consistent basis by
excluding and including items that we do not believe are indicative
of our core operating performance. Management believes these
measures are useful to investors in highlighting trends in our
operating performance, while other measures can differ
significantly depending on long-term strategic decisions regarding
capital structure, the tax jurisdictions in which we operate and
capital investments. Management uses Adjusted EBITDA and Adjusted
Operating Cost Ratio to supplement GAAP measures of performance in
the evaluation of the effectiveness of our business strategies, to
make budgeting decisions, to establish discretionary annual
incentive compensation and to compare our performance against that
of other peer companies using similar measures. Management
supplements GAAP results with non-GAAP financial measures to
provide a more complete understanding of the factors and trends
affecting the business than GAAP results alone.
Adjusted EBITDA is not a recognized term under GAAP and should
not be considered as an alternative to Net Income (Loss) as a
measure of financial performance or any other performance measure
derived in accordance with GAAP. Additionally, Adjusted EBITDA is
not intended to be a measure of free cash flow available for
management’s discretionary use as it does not consider certain cash
requirements such as interest payments, tax payments and debt
service requirements. The presentation of Adjusted EBITDA has
limitations as an analytical tool and should not be considered in
isolation or as a substitute for analysis of our results as
reported under GAAP. Because not all companies use identical
calculations, the presentation of these measures may not be
comparable to other similarly titled measures of other companies
and can differ significantly from company to company.
Adjusted Operating Cost Ratio is not a recognized term under
GAAP and should not be considered as an alternative to Operating
Cost Ratio as a measure of financial performance or any other
performance measure derived in accordance with GAAP. The
presentation of Adjusted Operating Cost Ratio has limitations as an
analytical tool and should not be considered in isolation or as a
substitute for analysis of our results as reported under GAAP.
Because not all companies use identical calculations, the
presentation of these measures may not be comparable to other
similarly titled measures of other companies and can differ
significantly from company to company.
The following table provides a reconciliation of net loss to
Adjusted EBITDA for the periods presented:
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousands)
2023
2022
2023
2022
Net loss
$
(88,627
)
$
(251,330
)
$
(258,088
)
$
(431,959
)
Loss from Discontinued Operations (a)
56,935
176,568
172,478
235,619
EBITDA adjustments from continuing
operations
Interest expense
9,170
337
16,957
1,530
Income tax benefit (expense)
(892
)
2,904
367
12,885
Transaction costs (b)
8,096
271
9,948
382
Depreciation and amortization
4,671
8,276
10,154
16,336
Share-based compensation expense (c)
15,775
20,220
49,095
53,141
Restructuring costs (d)
1,285
2,793
1,586
9,657
Contract termination costs (e)
—
500
—
500
Change in fair value of contingent
consideration (f)
—
—
(1,827
)
—
Change in fair value of equity
securities
—
16,184
—
57,151
EBITDA adjustments from continuing
operations
$
38,105
$
51,485
$
86,280
$
151,582
Adjusted EBITDA
$
6,413
$
(23,277
)
$
670
$
(44,758
)
(a)
Beginning in the fourth quarter of 2022,
Adjusted EBITDA excludes the impact of discontinued operations. The
comparable period in 2022 has been recast to exclude these impacts.
Represents losses associated with the Commercial business segment
and MA Legacy operations that we exited at the end of 2022 and the
California Medicare Advantage business classified as held for
sale.
(b)
Transaction costs include accounting, tax,
valuation, consulting, legal and investment banking fees directly
relating to financing initiatives. These costs can vary from period
to period and impact comparability, and we do not believe such
transaction costs reflect the ongoing performance of our
business.
(c)
Represents non-cash compensation expense
related to stock option and restricted stock unit award grants,
which can vary from period to period based on a number of factors,
including the timing, quantity and grant date fair value of the
awards.
(d)
Restructuring costs represent severance
costs as part of a workforce reduction and impairment of certain
long-lived assets relating to our decision to exit the Commercial
business for the 2023 plan year.
(e)
Represents amounts paid for early
termination of existing vendor contracts and leases. Beginning in
the second quarter of 2023, this amount excludes the impact of MA
legacy operations that we exited at the end of 2022 as these
amounts are now included in the Loss from Discontinued Operations.
The adjustment in the comparable period in 2022 has been recast to
include these impacts.
(f)
Represents the non-cash change in fair
value of contingent consideration from business combinations, which
is remeasured at fair value each reporting period.
The following table provides a reconciliation of Adjusted
Operating Cost Ratio for the periods presented:
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Operating Cost Ratio
23.6%
52.9%
25.0%
53.3%
Impact of share-based compensation expense
(a)
(5.3)%
(13.5)%
(8.2)%
(16.1)%
Adjusted Operating Cost Ratio
(b)
18.3%
39.4%
16.8%
37.2%
(a)
Represents non-cash compensation expense
related to stock option and restricted stock unit award grants,
which can vary from period to period based on a number of factors,
including the timing, quantity and grant date fair value of the
awards.
(b)
The Three Months Ended June 30 and the Six
Months Ended June 30 are higher by 3.9% and 5.5%, respectively, due
to the impacts of income (loss) driven from unrealized gains and
losses on equity securities and realized gains and losses on sales
of investments
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230809707967/en/
Investor Contact: Stephen Hagan
IR@brighthealthgroup.com
Media Contact: media@brighthealthgroup.com
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