- Health insurance startup Bright Health is expanding into California, announcing Wednesday plans to acquire a small health plan in the state as the payer doubles down on the Medicare and complex condition markets.
- Financial terms of the snap-up of Universal Care, which does business under the moniker Brand New Day, were not disclosed. The deal is Bright Health's first acquisition of a payer and is expected to close this year subject to regulatory approval by California's insurance department.
- The buy, when finalized, will bring five-year-old Bright Health's national footprint to 34 markets in 13 states, covering about 200,000 members.
Since its founding in 2015, Bright Health has raked in more than $1 billion over four rounds of financing, allowing it to grow organically from selling plans in its pilot Colorado market to its current footprint spanning roughly a fourth of the nation.
Bright Health plans to jump into 13 new markets for 2020 in major cities in Florida, Illinois, North Carolina, Ohio, Oklahoma and South Carolina, along with rural and urban counties in Nebraska. The payer wants to triple its product offerings this year compared to 2019.
The acquisition of Brand New Day would add 12 markets and the Golden State as Bright Health continues to scale quickly.
Mike Mikan, Bright Health's president and vice chairman, in a statement called Brand New Day "a philosophically aligned partner," adding that the union would allow it to expand its "integrated clinical model of care to all our members across product lines and geographies."
Bright Health's plans include individual, family, Medicare Advantage and supplemental plans. The payer touts its care coordination model it says lowers out-of-pocket costs and readmissions for its members by narrowing networks.
Medicare Advantage plans, where a private payer contracts with the government to provide additional services to Medicare members, are en vogue. A number of payers have increased their MA offerings for 2020 and beyond, spurred by a 2019 rule change from the federal government bolstering reimbursement rates for supplemental benefits like at-home grocery delivery or non-emergency medical transportation.
Wednesday's deal is a bit like a small fish snapping up a bigger one, at least when it comes to Medicare: Brand New Day had more than 41,000 enrollees in 2019, according to the California Department of Managed Health Care. It reported more than $250 million in revenue in 2018 off its members, the large majority of which were in Medicare and Medi-Cal plans.
By comparison, Bright Health had about 4,000 MA enrollees at the end of the third quarter of last year, according to a Star Tribune review of regulatory filings, though the payer does cover roughly 60,000 people overall, mostly through its individual health plans. It has an estimated annual revenue of $36 million, according to Owler.
Bright Health was launched by a number of executives from UnitedHealth, owner of the nation's largest private payer, UnitedHealthcare. On Monday, the startup announced a new chief financial officer, Cathy Smith, who previously worked at pharmacy benefit management giant Express Scripts.
It's the first major acquisition for the privately held company, but its second overall: Bright Health quietly bought a marketing agency called Spyder Trap in 2017 for an undisclosed sum.
Brand New Day has operated in Southern California for more than 35 years, in Medicare, dual eligibles and those with complex or chronic conditions or living in long-term care facilities in 12 countries through a provider network of more than 7,300 primary care physicians and roughly triple that number of specialists.
Brand New Day's leadership will continue to lead local market operations in the Bright Health Plan leadership team.