- Total GAAP Revenues of $1,114 million grew 275% from $297
million in Q2’20
- Bright HealthCare Membership of 662,825, up 220% from
207,224 in Q2’20
- NeueHealth Value-Based Patients of 42,305, up 118% from
Q2’20, with further growth to 169,983 after adjusting for the
acquisition of Centrum Medical Holdings, which closed on July 1,
2021
Bright Health Group, Inc. (NYSE: BHG, or the “Company”), a
diversified healthcare services provider building a national
Integrated System of Care, today reported financial results for its
second quarter ended June 30, 2021.
“We began our journey as a public company with strong second
quarter results, demonstrating significant growth across both
NeueHealth, our personalized care delivery business, and Bright
HealthCare, our healthcare financing and distribution business,”
said Mike Mikan, President and CEO of Bright Health Group. “We are
focused on changing healthcare in America for consumers and our
Care Partners through our alignment model which has shown to make
healthcare more personal, simple, and affordable. Bright Health
remains focused on growing and diversifying our business and is
excited to continue to bring our differentiated model to more
communities across the country.”
Bright Health Group’s total revenue of $1,114 million in the
second quarter of 2021 increased by $817 million, or 275%, compared
to the prior-year period. These results were driven primarily by
organic membership growth in Bright HealthCare during the 2020 open
enrollment period and special enrollment period for the commercial
business that began on February 15, 2021, and both organic and
inorganic growth at NeueHealth. The Company also experienced an
increase in investment income due to a $58.5 million unrealized
gain on equity securities.
Bright Health Group’s medical cost ratio (“MCR”) for the second
quarter of 2021 was 86.8% on a reported basis and 82.0% on an
adjusted basis. This is an improvement over last year’s second
quarter adjusted MCR of 82.7%. “As we step back and look at
year-to-date 2021 compared to the first half of 2020, our growth
and ability to demonstrate performance is truly remarkable. Our
first half revenue has more than quadrupled since last year, all
while maintaining a consistent adjusted MCR below 80%,” said Cathy
Smith, Chief Financial and Administrative Officer. In addition, the
Company continues to leverage operating costs as the business
scales with an operating cost ratio of 23.4% for the second
quarter, an improvement of 6.5 percentage points over the same
period last year.
The Company’s GAAP net loss was ($43.7) million in the second
quarter of 2021, an increase in net loss of $25.6 million compared
to the prior-year period. The Company’s non-GAAP adjusted EBITDA
was a loss of ($35.3) million in the second quarter of 2021,
compared to a loss of ($23.2) million in the prior-year period.
Key Metrics
($ in thousands)
Three Months Ended June
30
2021
2020
Consumer and Patient Metrics
Bright HealthCare Commercial Consumers
552,759
153,083
Bright HealthCare Medicare Advantage
Consumers
110,066
54,141
NeueHealth Value-Based Patients
42,305
19,419
Financial Metrics
Revenue
$
1,113,840
$
296,856
Adjusted Medical Cost Ratio(1)
82.0
%
82.7
%
Operating Cost Ratio
23.4
%
29.9
%
GAAP Net Loss
$
(43,723
)
$
(18,074
)
Adjusted EBITDA(1)
$
(35,255
)
$
(23,248
)
(1) Adjusted Medical Cost Ratio and
Adjusted EBITDA are non-GAAP financial measures. See the tables at
the end of this release for additional information and a
reconciliation of these non-GAAP measures.
Financial Outlook
For full year 2021, Bright Health Group is providing the
following guidance and commentary:
Bright Health Group’s revenue is expected to be $4.0 billion to
$4.2 billion with an expected enterprise medical cost ratio of
approximately 86% plus or minus 200 bps. On a segment basis, Bright
HealthCare end-of-year membership is expected to be approximately
650,000, while NeueHealth revenue is expected to be approximately
$425 million. Finally, intercompany revenue elimination, comprised
of payments from Bright HealthCare to NeueHealth for managing
patient care and for network services, is expected to be
approximately ($275) million.
About Bright Health Group
Bright Health Group is built upon the belief that by aligning
the best local resources in healthcare delivery with the financing
of care we can drive a superior consumer experience, optimize
clinical outcomes, reduce systemic waste, and lower costs. We are a
healthcare company building a national Integrated System of Care in
close partnership with our Care Partners. Our differentiated
approach is built on alignment, focused on the consumer, and
powered by technology. We have two market facing businesses:
NeueHealth and Bright HealthCare. Through NeueHealth, we deliver
high-quality virtual and in-person clinical care to nearly 170,000
patients under value-based contracts through our 44 owned primary
care clinics and support 87 additional affiliated clinics. Through
Bright HealthCare, we offer Commercial and Medicare health plan
products to approximately 663,000 consumers in 14 states and 99
markets. We are making healthcare right. Together. For more
information, visit www.brighthealthgroup.com.
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 using the access code
142113. This earnings release and the Form 8-K dated August 3,
2021, 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, Securities and
Exchange filings and public conference calls and webcasts.
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,” 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: a lack of acceptance or slow adoption of our business
model; our ability to retain existing consumers and expand consumer
enrollment; 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; the impact of the 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; and the other
factors set forth under the heading “Risk Factors” in Bright Health
Group’s prospectus filed pursuant to Rule 424(b)(4) on June 25,
2021. 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.
Condensed Consolidated Balance
Sheets
(in thousands, except share and
per share data)
(Unaudited)
June 30,
2021
December 31,
2020
Assets
Current assets:
Cash and cash equivalents
$
1,506,319
$
488,371
Short-term investments
283,337
499,928
Accounts receivable, net of allowance of
$4,535 and $2,602, respectively
93,086
60,522
Prepaids and other current assets
208,693
130,986
Total current assets
2,091,435
1,179,807
Other assets:
Long-term investments
633,029
175,176
Property, equipment and capitalized
software, net
19,101
12,264
Goodwill
565,020
263,035
Intangible assets, net
262,420
152,211
Other non-current assets
28,773
28,309
Total other assets
1,508,343
630,995
Total assets
$
3,599,778
$
1,810,802
Liabilities, Redeemable Noncontrolling
Interest, Redeemable Preferred Stock and Shareholders’ Equity
(Deficit)
Current liabilities:
Medical costs payable
$
565,620
$
249,777
Accounts payable
86,527
57,252
Unearned revenue
38,060
34,628
Risk adjustment payable
507,853
187,777
Other current liabilities
166,227
35,847
Total current liabilities
1,364,287
565,281
Other liabilities
44,453
28,578
Total liabilities
1,408,740
593,859
Redeemable noncontrolling interests
41,012
39,600
Redeemable preferred stock, $0.0001 par
value; 100,000,000 and 166,307,087 shares authorized in 2021 and
2020, respectively; 0 and 164,244,893 shares issued and outstanding
in 2021 and 2020, respectively
—
1,681,015
Shareholders’ deficit:
Common stock, $0.0001 par value;
3,000,000,000 and 658,993,725 shares authorized in 2021 and
2020,
respectively; 625,691,448 and 137,662,698
shares issued and outstanding in 2021 and 2020, respectively
63
14
Additional paid-in capital
2,735,099
9,877
Accumulated deficit
(585,669)
(515,989)
Accumulated other comprehensive income
533
2,426
Total shareholders’ equity
(deficit)
2,150,026
(503,672)
Total liabilities, redeemable
noncontrolling interests, redeemable preferred stock and
shareholders’
equity (deficit)
$
3,599,778
$
1,810,802
Condensed Consolidated
Statements of Income (Loss)
(in thousands, except share and
per share data)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Revenue:
Premium revenue
$
1,042,086
$
290,972
$
1,902,717
$
481,709
Service revenue
12,085
3,604
20,523
8,424
Investment income
59,669
2,280
65,158
5,289
Total revenue
1,113,840
296,856
1,988,398
495,422
Operating expenses:
Medical costs
904,630
233,180
1,589,200
363,795
Operating costs
261,060
88,827
469,300
163,271
Depreciation and amortization
7,195
2,085
11,776
2,872
Total operating expenses
1,172,885
324,092
2,070,276
529,938
Operating loss
(59,045)
(27,236)
(81,878)
(34,516)
Interest expense
4,142
—
4,688
—
Loss before income taxes
(63,187)
(27,236)
(86,566)
(34,516)
Income tax (benefit) expense
(19,464)
(9,162)
(18,298)
(9,162)
Net loss
(43,723)
(18,074)
(68,268)
(25,354)
Net earnings attributable to
noncontrolling interests
(795)
—
(1,412)
—
Net loss attributable to Bright Health
Group, Inc. common
shareholders
$
(44,518)
$
(18,074)
$
(69,680)
$
(25,354)
Basic and diluted loss per share
attributable to Bright Health Group, Inc. common
shareholders
$
(0.28)
$
(0.13)
$
(0.46)
$
(0.19)
Basic and diluted weighted-average common
shares outstanding
160,942
135,801
150,616
135,719
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(Unaudited)
Six Months Ended June
30,
2021
2020
Cash flows from operating activities:
Net loss
$
(69,680)
$
(25,354)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
11,776
2,872
Share-based compensation
19,054
2,193
Deferred income taxes
(18,018)
—
Unrealized gains on equity securities
(62,754)
—
Other, net
8,681
486
Changes in assets and liabilities, net of
acquired assets and liabilities:
Accounts receivable
(14,427)
23,681
Other assets
(39,883)
(3,844)
Medical cost payable
223,125
21,739
Risk adjustment payable
318,758
108,787
Accounts payable and other liabilities
120,847
(46,376)
Unearned revenue
(333)
2,860
Net cash provided by operating
activities
497,146
87,044
Cash flows from investing activities:
Purchases of investments
(596,811)
(486,873)
Proceeds from sales, paydown, and
maturities of investments
449,636
209,155
Purchases of property and equipment
(10,554)
(319)
Business acquisition, net of cash
acquired
(210,492)
(174,090)
Net cash used in investing
activities
(368,221)
(452,127)
Cash flows from financing activities:
Proceeds from issuance of preferred
stock
—
211,200
Proceeds from issuance of common stock
9,616
131
Payments for debt issuance costs
(3,391)
—
Proceeds from IPO
887,328
—
Payments for IPO offering costs
(4,530)
—
Net cash provided by financing
activities
889,023
211,331
Net increase (decrease) in cash and
cash equivalents
1,017,948
(153,752)
Cash and cash equivalents – beginning of
year
488,371
522,910
Cash and cash equivalents – end of
period
$
1,506,319
$
369,158
Non-GAAP Financial Measures
We use the non-GAAP financial measures Adjusted EBITDA and
Adjusted MCR in this release. We define Adjusted EBITDA as net loss
excluding interest expense, income taxes, depreciation and
amortization, adjusted for the impact of acquisition and
financing-related transaction costs, share-based compensation and
changes in the fair value of contingent consideration. We define
Adjusted Medical Cost Ratio (“Adjusted MCR”) as reported Medical
Cost Ratio (“MCR”), excluding both the impact of COVID-related
medical costs and prior period divergence from estimates and
including an estimate for the impact of deferred utilization. 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 (and with respect to
Adjusted MCR, are helpful to investors to understand the Company’s
financial performance and operations without the temporary
distortion caused by the COVID-19 pandemic and prior period
developments). 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 these measures 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 and Adjusted MCR are not recognized terms under
GAAP and should not be considered as alternatives to Net Income
(Loss) or Reported MCR as measures 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 these measures has limitations as analytical tools
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)
2021
2020
2021
2020
Net loss
$
(43,723)
$
(18,074)
$
(68,268)
$
(25,354)
Interest expense
4,142
—
4,688
—
Income tax (benefit) expense
(19,464)
(9,162)
(18,298)
(9,162)
Depreciation and Amortization
7,195
2,085
11,776
2,872
Transaction Costs (a)
3,130
653
5,150
2,347
Share-based Compensation expense (b)
13,878
1,250
19,054
2,193
Change in Fair Value of Contingent
Consideration (c)
(413)
—
1,059
—
Adjusted EBITDA
$
(35,255)
$
(23,248)
$
(44,839)
$
(27,104)
- Transaction costs include accounting, tax, valuation,
consulting, legal and investment banking fees directly relating to
business combinations and certain costs associated with our initial
public offering. 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.
- Represents non-cash compensation expense related to stock
option and restricted stock 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.
- Represents the non-cash change in fair value of contingent
consideration from business combinations, which is remeasured at
fair value each reporting period. There was no material activity
for periods prior to the first quarter of 2021.
The following table provides a reconciliation of Reported
Medical Cost Ratio to Adjusted Medical Cost Ratio for the periods
presented:
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Reported Medical Cost Ratio
86.8
%
80.1
%
83.5
%
75.5
%
Non-COVID prior-period developments(a)
(1.6)
%
0.3
%
(0.9)
%
0.3
%
COVID impact(b)
(3.2)
%
(2.2)
%
(3.6)
%
(1.3)
%
Deferred utilization(c)
—
%
4.4
%
—
%
2.6
%
Adjusted Medical Cost Ratio
82.0
%
82.7
%
79.1
%
77.1
%
Note: Totals above may not sum due to
rounding
- Medicare Advantage (“MA”) prior period development (“PPD”)
primarily related to unfavorable developments at acquired assets,
with net non-COVID PPD gross margin impact to MA unfavorable by
($19.1) million. Individual and Family Plan (“IFP”) PPD primarily
related to favorable non-COVID IFP medical cost PPD of $21.7
million driven by a population that was slightly healthier than
expectations, offset by an unfavorable risk adjustment impact to
revenue of ($22.3) million driven by the same population
dynamic.
- Direct costs of COVID-related care.
- Estimates of eliminated or deferred care driven by a reduced
demand for medical services during the COVID-19 pandemic.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210803005382/en/
Investor Contact: IR@brighthealthgroup.com
Media Contact: Kris Patrow 651.492.1556
Kris.Patrow@padillaco.com
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