Bright Health Group (BHG) Stock: Why The Price Jumped Today

By Amit Chowdhry ● Dec 7, 2021
  • The stock price of Bright Health Group Inc (NYSE: BHG) increased by over 15% pre-market today. This is why it happened.

The stock price of Bright Health Group Inc (NYSE: BHG) – the first technology-enabled fully aligned system of care, built for healthcare’s consumer retail market – increased by over 15% pre-market today. Investors responded positively to Bright Health Group reaffirming 2021 guidance of $4.1 to $4.2 billion in Revenue and introducing 2022 guidance that includes significant growth across both NeueHealth and Bright HealthCare businesses.

At the company’s investor day, the management team will speak to Bright Health Group’s next phase of growth as the business demonstrates the full potential of its differentiated and aligned model of care and provide an update on Bright HealthCare and NeueHealth’s strategy and financial outlook.

2022 Outlook

For full year 2022 Bright Health Group is providing the following guidance and commentary:

Enterprise Revenue: $6.3 billion – $6.5 billion

Enterprise Medical Cost Ratio: 86%-88%

Adjusted EBITDA: ($500 million) – ($400 million)

Intercompany Revenue: $1.2 billion-$1.4 billion

The Bright HealthCare segment is also expected to begin the year with approximately 900,000 members as a result of strong AEP / OEP enrollment with the end of year membership between 875,000 and 900,000 as a result of expected in-year attrition. And Bright HealthCare’s segment Medical Cost Ratio is expected to be between 85.0% and 87.0%.

The NeueHealth segment is expecting approximately $2 billion in Revenue with approximately one-third coming from external sources. And NeueHealth’s growth is primarily driven by an expected increase in value-based patients to approximately 400,000 in 2022.

$750 Million Capital Raise For Supporting Continued Growth

Bright Health Group also announced a $750 million financing to support continued growth. And the financing includes a strategic investment by Cigna Ventures, the corporate venture capital partner and wholly-owned indirect subsidiary of Cigna Corporation, as a new investor in the company. 

The company’s largest existing shareholder New Enterprise Associates (NEA) will also participate as a co-investor. And the investment from these two leading institutions demonstrates support for the expansion of Bright Health Group’s differentiated alignment model.

Under the terms of the investment, Cigna and NEA will purchase, in aggregate, $750 million of convertible perpetual preferred stock (the Series A Preferred) with a purchase price of $1,000 per share. And the Series A Preferred carries a 5.0% dividend, which will be payable in kind or in cash at the company’s election and will be convertible into shares of the company’s common stock at an initial conversion price of approximately $4.55 per share, representing a 25% premium to the arithmetic average of the company’s daily volume-weighted average price over the trailing 10 trading day period ending on December 3, 2021.

The financing is expected to close in January of 2022, subject to customary closing conditions. And the financing does not require additional regulatory approvals. 

KEY QUOTES:

“In 2022 we expect to serve over 1 million risk-based lives across our two businesses, providing a strong foundation to achieve our full potential. Our differentiated, fully aligned model connecting the financing and delivery of care, delivers improved outcomes for consumers and providers. We are confident in our strategy and have the team, capital, and model to execute on it.”

— Mike Mikan, President and CEO of Bright Health Group

“Cigna Ventures is committed to improving and expanding access to quality, affordable healthcare, and our investment in Bright Health Group aligns with our vision. We seek to be partners of choice and we look forward to exploring new ways that NeueHealth and Evernorth can potentially provide services to each other’s customers and clients.” The investment is also backed and partially funded through Cigna.

— Tom Richards, head of Cigna Ventures

“The investment from Cigna and NEA signifies continued conviction in Bright Health Group’s alignment model. We are excited about the partnership opportunities for both Bright Health Group and Cigna to bring affordable, personalized healthcare to all consumers.”

— Mike Mikan, President and CEO of Bright Health Group

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.