Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (date of earliest event reported) December 27, 2023

Bright Health Group, Inc.

(Exact name of registrant as specified in its charter)


Delaware	001-40537	47-4991296
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)


8000 Norman Center Drive Suite 900, Minneapolis, Minnesota						55437
Address of Principal Executive Office						(Zip Code)

(612) 238-1321

Registrant's telephone number, including area code

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	BHG	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 1.01 Entry into a Material Definitive Agreement.

As previously disclosed, on June 29, 2023, Bright Health Group, Inc., a Delaware corporation (the “Company”), entered into a Stock Purchase Agreement by and among Molina Healthcare, Inc., a Delaware corporation (“Molina”), Bright Health Company of California, Inc., a California corporation (“BHCC”), Central Health Plan of California, Inc., a California corporation (“CHP”), Universal Care, Inc. d/b/a Brand New Day, a California corporation (“BND”), and the Company, as amended by that certain amendment thereto dated as of December 13, 2023, pursuant to which, among other things, BHCC agreed to sell to Molina all of its shares of capital stock in CHP and BND (such sale, the “CMA Disposition”).

On December 27, 2023, the Company, JPMorgan Chase Bank, N.A., as Collateral Agent and Administrative Agent (in each such capacity, the “Agent”) and as Issuing Bank under the Credit Agreement (as defined below), the financial institutions party thereto, as lenders (the “Lenders”), and the Guarantors party thereto entered into a letter agreement (the “Letter Agreement”) in relation to that certain Credit Agreement dated as of March 1, 2021 (as amended, restated, supplemented or otherwise modified prior to the date hereof, the “Credit Agreement”), by and among the Company, the Agent, the Lenders, and the other agents, arrangers and bookrunners identified therein. Pursuant to the Letter Agreement, in each case subject to the Agent’s receipt of (a) the payment in an amount equal to $273.5 million (the “Payoff Condition”) and (b) payment to the issuer (the “L/C Issuer”) of letters of credit outstanding under the Credit Agreement (the “Existing Letters of Credit”) cash in an amount equal to $24.1 million, which is equal to 105% of the aggregate face amount of the Existing Letters of Credit (the “Cash Collateral”), which shall be held by the Issuing Bank as collateral for the obligation of the Company to reimburse the Issuing Bank in an amount equal to the amount of any drawing under the Existing Letters of Credit and to pay certain fees in respect of Existing Letters of Credit until the Existing Letters of Credit have terminated or expired (collectively, the “L/C Condition”), (i) the Lenders and the Agent consented to the CMA Disposition (this clause (i), the “Consent”) and (ii) all liabilities, obligations and indebtedness of the Company and its applicable subsidiaries that are guarantors under the Credit Agreement and the other Loan Documents (collectively, the “Credit Documents”), other than customary obligations that survive termination of the Credit Agreement by their express terms and the Company’s obligations in respect of the Existing Letters of Credit, owing by the Company and such subsidiaries under the Credit Documents shall be released, discharged and satisfied in full, all liens securing the obligations under the Credit Agreement (other than in respect of the Cash Collateral) shall be terminated and all guarantees under the Credit Agreement shall be released (this clause (ii), the “Termination”).

Item 7.01 Regulation FD Disclosure.

On December 29, 2023, the Company issued a press release announcing the entry into the Letter Agreement. A copy of the press release is furnished herewith as Exhibit 99.1 to this Current Report on Form 8‑K.

The information set forth under this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information of exhibits be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.


Exhibit No.						Description
99.1						Press release dated December 29, 2023
104						The cover page from the Current Report on Form 8-K formatted in Inline XBRL.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


		BRIGHT HEALTH GROUP, INC.

Date:	December 29, 2023	By:	/s/ Jeff Craig
		Name:	Jeff Craig
		Title:	General Counsel and Corporate Secretary

Exhibit 99.1

Bright Health Group Strengthens Capital Position with Amendment to its Credit Facility,

Impending Close of the Sale of its California Medicare Advantage Business

•Received all required regulatory approvals on the sale of the California Medicare Advantage Business; the transaction is expected to close on or about January 1, 2024

•Amended Company’s secured credit facility to reduce the final repayment resulting in approximately $30 million in savings

•Meaningfully improves capital position to support continuing business, NeueHealth, a value-driven consumer care delivery and provider enablement business

MINNEAPOLIS – December 29, 2023 – Bright Health Group, Inc. (“Bright Health” or the “Company”) (NYSE: BHG), the technology enabled, value-driven healthcare company, today announced that it entered into an amendment to its credit facility with J.P. Morgan that will reduce the final repayment amount by approximately $30 million to approximately $298 million. Upon payment of such amount, which is expected to be made concurrently with the closing of the sale of the Company’s California Medicare Advantage business (the “MA Sale”), the Company’s secured debt will be eliminated. The Company expects to use the remaining proceeds from the MA Sale to meaningfully improve the capital position of Bright Health’s continuing business. The Company expects the MA Sale to close on or about January 1, 2024, and has received all required regulatory approvals.

“I am really proud of all we have accomplished this year and look forward to further focusing on the long-term success of our NeueHealth business, which has proven to drive differentiated value for health consumers, providers, and payors across the healthcare ecosystem,” said Mike Mikan, President and CEO of Bright Health. “While we have been working on maturing as a company and improving our capital position, we have also continued to relentlessly focus on serving people every day who are in need of high-quality care. We are excited to continue to advance our value-driven, consumer-centric care model as we help align providers and payors to better serve consumers."

Upon closing of the MA Sale and the repayment of its secured debt, the Company expects to begin 2024 with approximately $90 million of unregulated cash. In addition, the Company expects to have approximately $155 million in excess cash surplus after reserving for expected medical costs and other anticipated wind-down expenses in its discontinued insurance business (other than the Company's risk adjustment obligations due under the repayment agreements with the Centers for Medicare & Medicaid Services (the "CMS Repayment Agreements")).1 Additionally, subject to adjustments and the conditions in the MA Sale agreement, the Company expects to receive an additional $110 million from escrow. The Company intends to use such funds if and when received to offset liabilities in its discontinued ACA insurance business, such as the obligations under the CMS Repayment Agreements which come due on or before March 14, 2025.

In 2024, Bright Health will solely focus on its continuing business, NeueHealth, increasing access to high-quality healthcare through its differentiated, value-driven care model that serves all populations across the ACA Marketplace, Medicare, and Medicaid. The Company will share its outlook for 2024, which is expected to be positive on an EBITDA basis after adjusting for certain non-cash expenses, in its Fourth Quarter 2023 earnings release.

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 value-based, consumer-driven 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

1 Excludes any excess cash held by Bright HealthCare Insurance Company of Texas since such entity is subject to a liquidation order effective November 29, 2023.

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 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 a waiver 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.

Investor Contact:

IR@brighthealthgroup.com

Media Contact:

media@brighthealthgroup.com

Cover Page	Dec. 27, 2023
Cover [Abstract]
Document Type	8-K
Document Period End Date	Dec. 27, 2023
Entity Registrant Name	Bright Health Group, Inc.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-40537
Entity Tax Identification Number	47-4991296
Entity Address, Address Line One	8000 Norman Center Drive Suite 900
Entity Address, City or Town	Minneapolis
Entity Address, State or Province	MN
Entity Address, Postal Zip Code	55437
City Area Code	612
Local Phone Number	238-1321
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	BHG
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Entity Central Index Key	0001671284
Amendment Flag	false