- Insurtech Bright Health is getting a major infusion of $750 million in capital from existing investor New Enterprise Associates and Cigna's venture arm.
- Cigna, a new investor in the company, is investing a significant chunk of change — $550 million — in an apparent competitor, attracted by its clinical network as more insurers look to snap up doctor's groups.
- The Connecticut-based payer plans to explore ways that Bright subsidiary NeueHealth and Cigna health services business Evernorth can potentially provide services to each other's clients, according to Cigna Ventures head Tom Richards.
Minneapolis-based Bright has two market-facing businesses: Bright HealthCare, which manages commercial and Medicare products covering some 720,000 lives in the U.S., and NeueHealth, which provides care through 131 owned and affiliated clinics. Bright manages some 170,000 additional patients through NeueHealth's value-based arrangements.
During the company's initial public offering, executives told investors NeueHealth would become increasingly important to Bright's long-term revenue growth. Management reiterated that sentiment at Bright's investor day Tuesday, telling investors that diversifying revenue with external payers is a key focus for 2022.
The first of those external payers appears to be Cigna, which — by comparison — is significantly larger than Bright, with about 17 million medical customers.
Owning more medical practices is an increasingly lucrative business for insurers looking to keep a broader swath of care in-house. UnitedHealth, for example, has seen success with its Optum provider network, allowing it to reimburse OptumHealth for medical services rather than other hospitals or physicians — saving money while retaining revenue.
NEA, Bright's largest and longest-standing existing shareholder, is also investing $200 million more in Bright as part of the funding round.
Under the terms of the investment, Cigna and NEA will purchase 750,000 shares of preferred stock with a purchase price of $1,000 per share.
The financing is expected to close Jan. 3 at the earliest.
Cigna launched Evernorth last year, folding its pharmacy benefit management arm Express Scripts and other services businesses like specialty pharmacy and medical benefit management into the new division. With the Bright Health investment, the payer is exploring new ways to create value linking its Evernorth capabilities and NeueHealth's differentiated care delivery model, likely both for its own members and for third-party clients.
Bright is one of a handful of insurtechs jockeying for a slice of the trillion-dollar, highly concentrated health insurance market that went public this year. Its insurance arm continues to hemorrhage money, but Bright is bullish on its overall prospects — especially in light of the new investment to support growth.
Bright is slated to wrap up 2021 with a presence in 10 states, but has plans to expand into seven more next year. The five-year-old startup expects to bring in revenue of about $6.4 billion in 2022, reflecting upward of 50% growth from this year.
Bright expects NeueHealth to grow to contribute about a third of that revenue.
But like other insurtechs, Bright reported a feverishly high medical loss ratio of 103% in the third quarter of this year, slammed by higher-than-expected COVID-19 costs from the delta variant and the assumption of risk of new members in the individual exchanges gained during the special enrollment period.
However, the startup reported strong year-over-year revenue growth of 206% up to $1.1 billion, spurred by a 247% membership increase.