- Q3’23 Revenue from Continuing Business of $269.4 million, up
39% year over year
- Value-Based Consumers served of 355,000, an increase of
208.7% on a comparable basis from last year on strong growth in
Care Delivery
- Q3’23 Net Loss from Continuing Business of $479.3 million,
including a $401.4 million non-cash Goodwill impairment charge;
Positive Adjusted EBITDA of $1.2 million in Q3’23
- Maintaining expectation for 2023 consolidated Adjusted
EBITDA profitability†
Bright Health Group, Inc. (“Bright Health” or the “Company”)
(NYSE: BHG), the technology enabled, value-driven healthcare
company serving aging and underserved consumers with unmet clinical
needs, today reported financial results for its Third Quarter ended
September 30, 2023.
“Bright Health’s solid 2023 performance continued in the Third
Quarter, with our second consecutive quarter of positive Adjusted
EBITDA. Excluding a Goodwill impairment, our Care Delivery segment
reported Operating Income profitability based on strong
performance,” said Mike Mikan, President and CEO of Bright Health.
“We also continued to make good progress in the quarter on the
wind-down of our ACA insurance business and the sale of our
California Medicare Advantage business.”
Bright Health continues to work toward the approval of the sale
of the Company’s California Medicare Advantage business to Molina
Healthcare, which was announced on June 30, 2023. The Company
expects to close the transaction by the First Quarter of 2024.
Key Metrics
As of September 30,
2023
2022
Consumer and Patient Metrics
Value-Based Consumers served1
355,000
115,000
1The value-based care consumers at
September 30, 2022 have been recast for comparability to exclude
approximately 409,000 consumers attributable to our Bright
HealthCare- Commercial business that we exited beginning in
2023.
Three Months Ended
Nine Months Ended
($ in thousands)
September 30,
September 30,
2023
2022
2023
2022
Financial Metrics
Revenue
$
269,399
$
193,363
$
867,931
$
523,467
Net Loss from Continuing Operations
$
(479,305
)
$
(104,231
)
$
(564,915
)
$
(300,571
)
Adjusted EBITDA (non-GAAP)
$
1,205
$
(8,047
)
$
1,876
$
(52,805
)
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 updating its 2023 financial outlook to reflect
revised Revenue forecasts for the Care Solutions segment.
- Bright Health’s Enterprise Revenue is expected to be between
$1.14 billion and $1.19 billion
- On a segment basis, Care Solutions Revenue is expected to be
between $890 million and $910 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 derivatives, financial
solvency of contractual counterparties; 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. 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 November 7, 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 credit facilities will
satisfy our working capital needs pending the closing of our sale
of our Medicare Advantage business in California; our ability to
comply with the terms of the risk adjustment repayment agreements;
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 expand consumer enrollment; 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)
September 30,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
113,430
$
217,006
Short-term investments
156
869
Accounts receivable, net of allowance of
$8,932 and $6,098, respectively
32,663
19,576
ACO REACH performance year receivable
350,478
99,181
Current assets of discontinued
operations
1,368,694
3,187,464
Prepaids and other current assets
46,542
46,538
Total current assets
1,911,963
3,570,634
Other assets:
Long-term investments
344
5,401
Property, equipment and capitalized
software, net
17,517
21,298
Goodwill
—
401,385
Intangible assets, net
96,150
104,952
Long-term assets of discontinued
operations
—
529,117
Other non-current assets
29,792
32,265
Total other assets
143,803
1,094,418
Total assets
$
2,055,766
$
4,665,052
Liabilities, Redeemable Noncontrolling
Interest, Redeemable Preferred Stock and Shareholders’ Equity
(Deficit)
Current liabilities:
Medical costs payable
$
169,778
$
116,021
Accounts payable
10,687
18,714
ACO REACH performance year obligation
224,908
—
Short-term borrowings
353,947
303,947
Current liabilities of discontinued
operations
974,502
3,157,236
Warrant liability
9,874
—
Other current liabilities
86,806
97,241
Total current liabilities
1,830,502
3,693,159
Other liabilities
30,655
32,208
Total liabilities
1,861,157
3,725,367
Commitments and contingencies
Redeemable noncontrolling interests
327,263
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; 7,981,802 and
7,878,394 shares issued and outstanding in 2023 and 2022*,
respectively
1
1
Additional paid-in capital
3,037,946
2,972,333
Accumulated deficit
(4,078,133
)
(3,156,395
)
Accumulated other comprehensive loss
(885
)
(4,429
)
Treasury Stock, at cost, 31,526 shares at
September 30, 2023, and December 31, 2022*, respectively
(12,000
)
(12,000
)
Total shareholders’ equity
(deficit)
(1,053,071
)
(200,490
)
Total liabilities, redeemable
noncontrolling interests, redeemable preferred stock and
shareholders’ equity (deficit)
$
2,055,766
$
4,665,052
*Shares have been retroactively
adjusted to reflect the reverse stock split effective May 22,
2023
Bright Health Group, Inc. and
Subsidiaries
Consolidated Statements of
Income (Loss)
(in thousands, except share and
per share data)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenue:
Capitated revenue
$
60,371
$
33,006
$
159,683
$
79,295
ACO REACH revenue
200,044
145,433
676,845
465,435
Service revenue
8,978
10,076
31,387
31,038
Investment income (loss)
6
4,848
16
(52,301
)
Total revenue
269,399
193,363
867,931
523,467
Operating expenses:
Medical costs
226,438
152,150
731,718
462,399
Operating costs
72,532
85,566
221,697
261,351
Goodwill impairment
401,385
—
401,385
—
Intangible assets impairment
—
42,611
—
42,611
Bad debt expense
22,421
11
23,054
11
Restructuring charges
5,281
5
6,867
9,662
Depreciation and amortization
4,117
8,947
14,271
25,283
Total operating expenses
732,174
289,290
1,398,992
801,317
Operating loss
(462,775
)
(95,927
)
(531,061
)
(277,850
)
Interest expense
10,041
4,905
26,998
6,435
Warrant expense
9,874
—
9,874
—
Other income
—
(2
)
—
—
Loss from continuing operations before
income taxes
(482,690
)
(100,830
)
(567,933
)
(284,285
)
Income tax (benefit) expense
(3,385
)
3,401
(3,018
)
16,286
Net loss from continuing
operations
(479,305
)
(104,231
)
(564,915
)
(300,571
)
Loss from discontinued operations, net of
tax
(67,843
)
(165,899
)
(240,321
)
(401,518
)
Net Loss
(547,148
)
(270,130
)
(805,236
)
(702,089
)
Net earnings from continuing operations
attributable to noncontrolling interests
(86,747
)
(46,710
)
(116,502
)
(84,651
)
Series A preferred stock dividend
accrued
(10,178
)
(9,684
)
(29,834
)
(28,083
)
Series B preferred stock dividend
accrued
(2,284
)
—
(6,695
)
—
Net loss attributable to Bright Health
Group, Inc. common shareholders
$
(646,357
)
$
(326,524
)
$
(958,267
)
$
(814,823
)
Basic and diluted loss per share
attributable to Bright Health Group, Inc. common
shareholders
Continuing operations
$
(72.52
)
$
(20.41
)
$
(90.36
)
$
(52.55
)
Discontinued operations
(8.51
)
(21.07
)
(30.25
)
(51.05
)
Basic and diluted loss per share
(81.03
)
(41.48
)
(120.61
)
(103.60
)
Basic and diluted weighted-average common
shares outstanding*
7,977
7,871
7,945
7,865
*Shares have been retroactively
adjusted to reflect the reverse stock split effective May 22,
2023
Bright Health Group, Inc. and
Subsidiaries
Consolidated Statements of
Cash Flows
(in thousands)
(Unaudited)
Nine Months Ended September
30,
2023
2022
Cash flows from operating activities:
Net loss
$
(805,236
)
$
(702,089
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
20,149
40,173
Impairment of intangible assets
—
49,331
Impairment of goodwill
401,385
74,165
Share-based compensation
65,611
77,263
Deferred income taxes
(3,063
)
1,590
Unrealized loss on equity securities
—
58,821
Amortization of investments
(17,946
)
3,236
Warrant expense
9,874
—
Other, net
3,812
6,377
Changes in assets and liabilities, net of
acquired assets and liabilities:
Accounts receivable
(27,438
)
10,934
ACO REACH performance year receivable
(251,297
)
(234,776
)
Other assets
132,645
(77,551
)
Medical cost payable
(610,027
)
149,970
Risk adjustment payable
(1,541,536
)
377,789
Accounts payable and other liabilities
(124,295
)
(21,188
)
Unearned revenue
127,135
142,597
ACO REACH performance year obligation
224,908
155,145
Net cash (used in) provided by
operating activities
(2,395,319
)
111,787
Cash flows from investing activities:
Purchases of investments
(830,176
)
(1,422,025
)
Proceeds from sales, paydown, and
maturities of investments
1,978,925
980,763
Purchases of property and equipment
(2,626
)
(21,579
)
Business divestitures, net of cash
disposed of
(682
)
—
Business acquisitions, net of cash
acquired
—
(310
)
Net cash provided by (used in)
investing activities
1,145,441
(463,151
)
Cash flows from financing activities:
Net proceeds from short-term
borrowings
50,000
148,947
Proceeds from issuance of preferred
stock
—
747,481
Proceeds from issuance of common stock
2
1,314
Distributions to noncontrolling interest
holders
(8,997
)
(2,032
)
Net cash (used in) provided by
financing activities
41,005
895,710
Net (decrease)/ increase in cash and
cash equivalents
(1,208,873
)
544,346
Cash and cash equivalents – beginning of
year
1,932,290
1,061,179
Cash and cash equivalents – end of
period
$
723,417
$
1,605,525
Bright Health Group, Inc. and
Subsidiaries
Segment Information
(in thousands)
(Unaudited)
Care Delivery
($ in thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Statement of income (loss) and
operating data:
2023
2022
2023
2022
Revenue:
Capitated revenue
$
60,371
$
33,006
$
159,683
$
79,295
Service revenue
8,245
10,050
29,711
30,960
Total unaffiliated revenue
68,616
43,056
189,394
110,255
Affiliated revenue
(1,482
)
257,707
6,487
830,098
Total segment revenue
67,134
300,763
195,881
940,353
Operating expenses
Medical Costs
20,883
264,013
64,325
850,011
Operating Costs
32,329
30,388
93,026
93,984
Goodwill impairment
401,385
—
401,385
—
Intangible assets impairment
—
42,611
—
42,611
Bad debt expense
8
4
639
4
Restructuring charges
130
—
130
—
Depreciation and amortization
3,160
6,374
9,470
19,119
Total operating expenses
457,895
343,390
568,975
1,005,729
Operating income (loss)
$
(390,761
)
$
(42,627
)
$
(373,094
)
$
(65,376
)
Care Solutions
($ in thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Statement of income (loss) and
operating data:
2023
2022
2023
2022
Revenue:
ACO REACH revenue
$
200,044
$
145,433
$
676,845
$
465,435
Service revenue
733
26
1,676
78
Total segment revenue
200,777
145,459
678,521
465,513
Operating expenses
Medical Costs
204,017
146,253
673,891
457,161
Operating Costs
3,702
2,321
10,083
6,478
Bad debt expense
22,413
—
22,415
—
Total operating expenses
230,132
148,574
706,389
463,639
Operating income
$
(29,355
)
$
(3,115
)
$
(27,868
)
$
1,874
Non-GAAP Financial Measures
We use the non-GAAP financial measures Adjusted EBITDA, Adjusted
Operating Cost Ratio, and Consumer Care Adjusted EBITDA (Consumer
Care is defined as an aggregation of our Care Delivery and Care
Solutions segments). 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 and contract
termination costs, impairment of goodwill and intangible assets,
changes in the fair value of contingent consideration, and changes
in the fair value of equity securities and derivatives, and losses
related to the bankruptcy of one of our ACO REACH partners. We
define Adjusted Operating Cost Ratio as Operating Cost Ratio
excluding share-based compensation expense. We define Consumer Care
Adjusted EBITDA as Consumer Care Net Loss excluding depreciation
and amortization, restructuring and contract termination costs,
impairment of goodwill and intangible assets, losses related to the
bankruptcy of one of our ACO REACH partners, and changes in fair
value of contingent consideration. These non-GAAP measures have
been presented in this quarterly Earnings Release or in the
earnings conference call 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, Adjusted Operating Cost Ratio, and Consumer Care Adjusted
EBITDA 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.
Consumer Care Adjusted EBITDA is not a recognized term under
GAAP and should not be considered as an alternative to Consumer
Care Net Loss as a measure of financial performance or any other
performance measure derived in accordance with GAAP. The
presentation of Consumer Care 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.
The following table provides a reconciliation of net loss to
Adjusted EBITDA for the periods presented:
Three Months Ended September
30,
Nine Months Ended September
30,
($ in thousands)
2023
2022
2023
2022
Net loss
$
(547,148
)
$
(270,130
)
$
(805,236
)
$
(702,089
)
Loss from Discontinued Operations (a)
67,843
165,899
240,321
401,518
EBITDA adjustments from continuing
operations
Interest expense
10,041
4,905
26,998
6,435
Income tax (benefit) expense
(3,385
)
3,401
(3,018
)
16,286
Transaction costs (b)
8,941
4
18,889
386
Depreciation and amortization
4,117
8,947
14,271
25,283
Share-based compensation expense (c)
16,515
24,123
65,611
77,263
Restructuring and contract termination
costs (d)
5,281
5
6,867
10,162
Impairment of goodwill and intangible
assets
401,385
42,611
401,385
42,611
ACO REACH care partner bankruptcy (e)
27,741
—
27,741
—
Change in fair value of warrant liability
(f)
9,874
—
9,874
—
Change in fair value of contingent
consideration (g)
—
—
(1,827
)
—
Change in fair value of equity
securities
—
12,188
—
69,340
EBITDA adjustments from continuing
operations
$
480,510
$
96,184
$
566,791
$
247,766
Adjusted EBITDA
$
1,205
$
(8,047
)
$
1,876
$
(52,805
)
(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 and contract termination
costs represent severance costs as part of a workforce reduction,
amounts paid for early termination of leases, and impairment of
certain long-lived assets primarily relating to our decision to
exit the Commercial business for the 2023 plan year.
(e)
Represents the costs expected to be
incurred as a result of one of our ACO REACH care partners filing
for bankruptcy; includes the full allowance established for the
outstanding receivable and ongoing costs incurred to manage and
provide service to members attributed to the care partner that
would have otherwise been reimbursed prior to the care partner’s
bankruptcy.
(f)
Represents the non-cash change in the fair
value of the warrant liability established for warrants included in
our financing arrangements, which are remeasured at fair value each
reporting period.
(g)
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 September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Operating Cost Ratio
26.9%
44.3%
25.5%
49.9%
Impact of share-based compensation expense
(a)
(6.1)%
(12.5)%
(7.6)%
(14.8)%
Adjusted Operating Cost Ratio
(b)
20.8%
31.8%
18.0%
35.2%
(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 September 30, 2022
is lower by 0.8% and the nine months ended September 30, 2022 is
higher by 3.2%, 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.
The following table provides a reconciliation of Care Delivery
net loss to Care Delivery Adjusted EBITDA for the periods
presented:
Care Delivery
Three Months Ended September
30,
Nine Months Ended September
30,
($ in thousands)
2023
2022
2023
2022
Care Delivery Net Loss
$
(390,761
)
$
(42,627
)
$
(373,094
)
$
(65,376
)
Interest expense
—
—
—
—
Income tax (benefit) expense
—
—
—
—
Transaction costs (a)
—
—
—
—
Depreciation and amortization
3,160
6,374
9,470
19,119
Share-based compensation expense (b)
—
—
—
—
Restructuring and contract termination
costs (c)
130
—
130
—
Impairment of goodwill and intangible
assets
401,385
42,611
401,385
42,611
ACO REACH care partner bankruptcy (d)
—
—
—
—
Change in fair value of warrant liability
(e)
—
—
—
—
Change in fair value of contingent
consideration (f)
—
—
(1,827
)
—
Change in fair value of equity
securities
—
—
—
—
Care Delivery Adjusted EBITDA
$
13,914
$
6,358
$
36,064
$
(3,646
)
The following table provides a reconciliation of Care Solutions
net loss to Care Solutions Adjusted EBITDA for the periods
presented:
Care Solutions
Three Months Ended September
30,
Nine Months Ended September
30,
($ in thousands)
2023
2022
2023
2022
Care Solutions Net loss
$
(29,355
)
$
(3,115
)
$
(27,868
)
$
1,874
Interest expense
—
—
—
—
Income tax (benefit) expense
—
—
—
—
Transaction costs (a)
—
—
—
—
Depreciation and amortization
—
—
—
—
Share-based compensation expense (b)
—
—
—
—
Restructuring and contract termination
costs (c)
—
—
—
—
Impairment of goodwill and intangible
assets
—
—
—
—
ACO REACH care partner bankruptcy (d)
27,741
—
27,741
—
Change in fair value of warrant liability
(e)
—
—
—
—
Change in fair value of contingent
consideration (f)
—
—
—
—
Change in fair value of equity
securities
—
—
—
—
Care Solutions Adjusted EBITDA
$
(1,614
)
$
(3,115
)
$
(127
)
$
1,874
The following table combines Care Delivery Adjusted EBITDA and
Care Solutions Adjusted EBITDA, the aggregation of which we refer
to as Consumer Care Adjusted EBITDA, for the periods presented:
Three Months Ended September
30,
Nine Months Ended September
30,
($ in thousands)
2023
2022
2023
2022
Care Delivery Adjusted EBITDA
$
13,914
$
6,358
$
36,064
$
(3,646
)
Care Solutions Adjusted EBITDA
(1,614
)
(3,115
)
(127
)
1,874
Consumer Care Adjusted EBITDA
$
12,300
$
3,243
$
35,937
$
(1,772
)
(a)
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.
(b)
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.
(c)
Restructuring and contract termination
costs represent severance costs as part of a workforce reduction,
amounts paid for early termination of leases, and impairment of
certain long-lived assets primarily relating to our decision to
exit the Commercial business for the 2023 plan year.
(d)
Represents the costs expected to be
incurred as a result of one of our ACO REACH care partners filing
for bankruptcy; includes the full allowance established for the
outstanding receivable and ongoing costs incurred to manage and
provide service to members attributed to the care partner that
would have otherwise been reimbursed prior to the care partner’s
bankruptcy.
(e)
Represents the non-cash change in the fair
value of the warrant liability established for warrants included in
our financing arrangements, which are remeasured at fair value each
reporting period.
(f)
Represents the non-cash change in fair
value of contingent consideration from business combinations, which
is remeasured at fair value each reporting period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231107262580/en/
Investor Contact: Stephen Hagan
IR@brighthealthgroup.com
Media Contact: media@brighthealthgroup.com
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