BRIGHT HEALTH GROUP INC. – 10-Q – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is intended to help the reader understand
our business, financial condition, results of operations, liquidity and capital
resources. This discussion should be read in conjunction with our unaudited
condensed consolidated financial statements and accompanying notes and the "Risk
Factors" included elsewhere in this Quarterly Report on Form 10-Q and Bright
Health Group, Inc.'s audited consolidated financial statements and the
accompanying notes as well as the "Risk Factors" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included in
Bright Health Group, Inc.'s Prospectus dated June 23, 2021 (File No.
333-256286), as filed with the SEC pursuant to Rule 424(b)(4) under the
Securities Act of 1933, as amended (the "Prospectus"). Unless the context
otherwise indicates or requires, the terms "we", "our", and the "Company" as
used herein refer to Bright Health Group, Inc. and its consolidated
subsidiaries.

Business Overview

Bright Health Group was founded in 2015 to transform healthcare. Our mission
of Making Healthcare Right. Together. is built upon the belief that by
connecting and aligning the best local resources in healthcare delivery with the
financing of care, we can drive a superior consumer experience, reduce systemic
waste, lower costs, and optimize clinical outcomes. We believe that for too
long, U.S. healthcare, primarily designed to cater to employers and large
institutions, has failed the consumer through unnecessary complexity, a lack of
transparency, and rising costs. We are making healthcare simple, personal, and
affordable.

To execute on our mission, we have developed a model for healthcare
transformation built upon the delivery, financing, and optimization of care. By
bringing these three core pillars together, we aim to build the national,
integrated healthcare system of the future, designed to break down historical
barriers and create an environment in which all stakeholders - from the
consumer, to the provider, to the payor - can win.

Bright Health Group consists of two reportable segments: NeueHealth and Bright
HealthCare:

NeueHealth is critical to our differentiated, aligned model of care. While
Bright HealthCare is currently a larger contributor to revenue, due in part to
the significant health plan premium revenue contribution from our consumers, we
believe NeueHealth has a disproportional impact on our enterprise today and
anticipate it will become increasingly important to our business and prospects,
contributing an increasing percentage of our overall revenue in the long-term.
We have presented NeueHealth first in the following discussion, consistent with
management's view of our business.

NeueHealth. Our healthcare enablement and technology business, NeueHealth, is
developing the next generation, integrated healthcare system. NeueHealth
significantly reduces the friction and current lack of coordination between
payors and providers to enable a truly consumer-centric healthcare experience.
As of September 2021, NeueHealth works with nearly 250,000 care provider
partners and delivers high-quality virtual and in-person clinical care through
our 44 owned primary care clinics within its integrated care delivery system.
Through those risk-bearing clinics, NeueHealth maintains over 200,000 unique
patient relationships as of September 30, 2021, over 170,000 of which are served
through value-based arrangements, across multiple payors. In addition to our
directly owned clinics, NeueHealth manages care for an additional 87 clinics
through its additional affiliated clinics.

NeueHealth engages in local, personalized care delivery in multiple ways,
including:

•Integrated Care Delivery - NeueHealth operates clinics providing comprehensive
care to all populations.
•Bright Health Network - A key component of our NeueHealth business is our
ecosystem of Care Partners with whom we contract in service of Bright HealthCare
today.
•Value Services Organization - NeueHealth empowers high-performing primary care
practices and care delivery organizations to succeed in their evolution towards
risk-bearing care delivery.

NeueHealth receives network rental fees from Bright HealthCare for the delivery
of NeueHealth's Care Partner and network services. In addition, NeueHealth
contracts directly with Bright HealthCare to provide care through its managed
and affiliated
                                       28

--------------------------------------------------------------------------------

Table of Contents
clinics. Other NeueHealth customers include external payors, third party
administrators, affiliated providers and direct-to-government programs.

Bright HealthCare. Our healthcare financing and distribution business, Bright
HealthCare, delivers simple, personal, and affordable solutions to integrate the
consumer into Bright Health's alignment model. Bright HealthCare currently
aggregates and delivers healthcare benefits to over 720,000 consumers through
its various offerings, serving consumers across multiple product lines in 14
states and 99 markets. We also participate in a number of specialized plans and
recently began offering employer group plans.

Bright HealthCare's customers include commercial health plans across 11 states,
which serve approximately 607,000 individuals, as well as MA products in 11
states, which serve approximately 114,000 lives and generally focus on higher
risk, special needs populations. We believe we are well-positioned to grow our
Medicaid and Employer administrative services only ("ASO") products, which would
provide strategic diversification and be highly complementary to our aligned
model.

Key Factors Affecting Our Performance

We believe that the growth and future success of our business depends on a
number of factors described below. While each of these factors presents
significant opportunities for our business, they also pose important challenges
that we must successfully address to sustain our growth and continue to improve
results of operations.

Bright HealthCare's ability to grow membership and retain consumers drives
revenue growth

Bright HealthCare products are primarily sold for the following year through an
annual selling season, which includes the open enrollment period for Individual
and Family Plan products and annual enrollment period for Medicare Advantage.
Outside of an annual selling season, IFP and MA products typically can only be
sold during special enrollment periods based on the consumer's eligibility
status and certain life events. It is critical to effectively engage both
prospective and existing consumers through our multi-channel distribution
strategy. For both IFP and MA products, we aim to offer competitive benefits at
an affordable price to meet the needs of our consumers. Our IFP products
membership typically peaks after the open enrollment period and experiences
modest levels of attrition until year-end. We have historically increased our MA
consumer base during special enrollment periods, given our consumers'
eligibility to enroll during those periods.

Our MA business is afforded additional in-year growth opportunity due to its
focus on serving low-income seniors and special needs individuals, who can
enroll in and change MA health plans at any time. Therefore, constant engagement
with this population is critical to effectively retain membership and drive
in-year growth. MA products are generally associated with higher revenue and
higher medical cost ratios ("MCR") as compared to IFP products, particularly
with respect to special needs plans.

Bright HealthCare's ability to capture complete and accurate risk adjustment
data affects revenue

Portions of premium revenue from our IFP products and MA plans are determined by
the applicable Centers for Medicare and Medicaid Services ("CMS") risk
adjustment models, which compensate insurers based on the underlying health
status (acuity) of insured consumers. CMS requires that a consumer's health
status be documented annually and accurately submitted to CMS to determine the
appropriate risk adjustment. Ensuring that complete and accurate health
conditions of our consumers are captured within documentation submitted to CMS
is critical to recognizing accurate risk adjustment, which is reflected in our
revenue year-over-year.

Bright HealthCare's ability to drive lower unit costs and medical utilization
reduces medical costs and MCR

Bright HealthCare utilizes our Bright Health Network to provide healthcare
services primarily within its exclusive provider networks under capitated
contracts and fee-for-service arrangements. Certain provider and payor contracts
include value-based incentive compensation based on providers meeting
contractually defined quality and financial performance metrics. To effectively
manage medical costs, Bright HealthCare must ensure a consumer's healthcare
needs are primarily delivered through its Care Partners to recognize discounted
contracted rates, which limits the amount of out-of-network utilization that
                                       29
--------------------------------------------------------------------------------
  Table of Contents
can have an adverse financial impact on medical costs and MCR. Out-of-network
utilization is typically higher upon entry into new markets, which increases
medical costs during periods of market expansion.

Our business is generally affected by the seasonal patterns of medical expenses.
With respect to IFP products, medical costs tend to be lower early in the year
and increase toward the end of year, driven by high deductible plan designs and
out-of-pocket maximums over the course of the policy year, which shift more
costs to us in the second half of the year as we pay a higher proportion of
claims. With respect to MA plans, medical costs are impacted by the severity of
the flu season, generally from December to March, and we typically experience
slightly higher Part D medical costs early in the year, which decline toward the
end of year due to standard plan design.

NeueHealth's ability to identify and align with high-performing care delivery
partners drives performance

NeueHealth engages providers through a variety of alignment options ranging from
having providers participate in our networks to having providers employed by us.
As we enter new markets and expand our offerings, we must build an ecosystem of
care delivery assets capable of supporting both our Bright HealthCare business
as well as third-party payors.

NeueHealth's ability to deliver and enable high-quality, value-based care drives
revenue

NeueHealth supports and manages providers in fee-for-service and value-based
contracts with payors. We help organizations enter value-based arrangements
designed around their needs, while simultaneously empowering them with the tools
and capabilities necessary to maximize their success. In order to drive
financial performance, NeueHealth must effectively manage risk and continue to
develop and deliver tools and services supporting both managed and affiliated
providers.

Bright Health Group's ability to achieve operating cost efficiencies and scale
profitably

Bright Health Group, including Bright HealthCare and NeueHealth, will need to
continue investing in operating platforms, processes, people, and resources to
enable our businesses to scale profitably. We leverage centralized shared
services for operational, clinical, technological, and administrative functions
to support the segments in a cost-effective and efficient manner.

Components of Our Results of Operations

Revenue

We generate revenue from premiums, including value-based provider revenue, and
fee-for-service provider revenue received from consumers and payors, as well as
income from our investments.

Premium revenue

Premium revenue is derived primarily from Bright HealthCare IFP products and MA
plans sold to consumers as well as NeueHealth value-based provider revenue from
serving patients.

Bright HealthCare Commercial premium revenue

The sources of commercial premium revenue are primarily IFP products which are
comprised of advanced premium tax credit subsidies that are based on consumers
income levels and compensated directly by the federal government, as well as
billed consumer premiums. IFP products reflect adjustments related to the
Patient Protection and Affordable Care Act ("ACA") risk adjustment program,
which adjusts premium revenue based on the demographic factors and health status
of each consumer as derived from current-year medical diagnoses.

Bright HealthCare MA premium revenue

The sources of MA premium revenue are Medicare Part C premiums related to
consumers' medical benefit coverage and Part D premiums related to consumers'
prescription drug benefit coverage. Medicare Part C premiums are comprised of
CMS monthly
                                       30
--------------------------------------------------------------------------------
  Table of Contents
capitation premiums that are risk adjusted based on CMS defined formulas using
consumers' demographics and prior-year medical diagnoses. Medicare Part D
premiums are comprised of CMS monthly capitation premiums that are risk
adjusted, consumer billed premiums and CMS low-income premium subsidies for the
Company's insurance risk coverage. Medicare Part D premiums are subject to risk
sharing with CMS under the risk corridor provisions based on profitability of
the Part D benefit. As a percentage of our total consolidated revenue, premium
revenues from CMS were 30% and 37% for the nine months ended September 30, 2021
and 2020, respectively, which are included in our Bright HealthCare segment.

NeueHealth premium revenue

NeueHealth premium revenue represents revenue under value-based arrangements
entered into by NeueHealth's Value Services Organization and affiliated medical
groups in which the responsibility for control of an attributed patient's
medical care is transferred, in part or wholly, to such medical groups. Such
revenue includes capitation payments, as well as quality incentive payments, and
shared savings distributions payable upon achievement of certain financial and
quality metrics. Value-based revenue shifts responsibility for control over the
medical care delivered to attributed patients to the Company and aligns
incentives around the overall well-being of the payor's consumers.

We expect that as our NeueHealth business continues to grow, NeueHealth premium
revenue will become an increasing proportion of our overall revenue.

Service revenue

Service revenue primarily represents revenue from fee-for-service payments
received by NeueHealth's affiliated medical groups. These include patient
copayments and deductibles collected directly from patients and payments from
private and government payors based upon contractual terms that define the
fee-for-service reimbursement for specific procedures performed.

In addition, service revenue includes network service revenue generated by
NeueHealth's Bright Health Network. Bright HealthCare is currently the only
customer of Bright Health Network.

Investment income

The sources of investment income are interest income and realized gains and
losses derived from the Company's investment portfolio that is comprised of debt
securities of the U.S. government and other government agencies, corporate
investment grade, money market funds and various other securities, as well as
realized and unrealized gains and losses from equity securities.

Operating Costs

Medical costs

Medical costs consist of reimbursements to providers for medical services, costs
of prescription drugs, supplemental benefits, reinsurance and quality incentive
and shared savings compensation to providers. The Company contracts with
hospitals, physicians and other providers of healthcare primarily within its
exclusive provider networks under fee-for-service and value-based arrangements.
Emergency medical services incurred out-of-network are a covered benefit to
consumers and reimbursed to providers according to the Company's payment
policies that are based on applicable regulations. Prescription drug costs are
determined based on the contract with our pharmacy benefits manager, which
includes pharmacy rebates that are received for certain drug utilization levels
or contracted minimums. Dental, vision, and other supplemental medical services
are provided to consumers under capitated arrangements. Reinsurance arrangements
enable us to cede a specified percent of our premiums and claims to our
third-party reinsurers. Under such contracts, the reinsurer is paid to cover
claims-related losses over a specified amount, which mitigates catastrophic
risk. We make quality incentive and shared savings compensation payments to
certain providers in accordance with the terms of the contractual arrangement
upon the achievement of certain financial and quality metrics.


                                       31
--------------------------------------------------------------------------------
  Table of Contents
Operating Costs

Operating costs are comprised of the expenses necessary to execute the Company's
business operations. These include employee compensation for salaries and
related benefit costs, share-based compensation, outsourced vendor contracted
service and technology fees, professional services, technological infrastructure
and service fees, facilities costs and other administrative expenses. Operating
costs also include payments made by Bright HealthCare to NeueHealth for the
provision of Bright Health Network services; selling and marketing expenses from
external broker commissions and advertising, primarily related to consumer
acquisition; and premium taxes, exchange fees and other regulatory costs, which
are primarily based on premium revenue. We expect operating costs to increase in
absolute amounts as our business grows, but to decrease as a percentage of our
revenue in the long-term.

Depreciation and Amortization

Depreciation and amortization consist of depreciation of property, equipment and
capitalized software, as well as amortization of definite-lived intangible
assets acquired in business combinations, including trade names, customer
relationships, and reacquired rights.

Other Income

Income Tax Expense (Benefit)

Income tax expense (benefit) consists primarily of changes to our current and
deferred federal tax assets and liabilities net of applicable valuation
allowances.

Initial Public Offering

On June 23, 2021, the Company's Registration Statement on Form S-1 for the
initial public offering of shares of common stock was declared effective by the
U.S. Securities & Exchange Commission. The Company's common stock began trading
on the NYSE under the ticker symbol "BHG" on June 24, 2021. The IPO closed on
June 28, 2021 and the Company sold 51,350,000 shares of common stock at a price
of $18.00 per share. In aggregate, the shares issued in the offering generated
$887.3 million in net proceeds, the amount of which is net of $37.0 million in
underwriters' discounts and commissions. Immediately effective upon the closing
of our IPO, all 167,731,830 shares of our then outstanding preferred stock were
converted into 427,897,381 shares of common stock, causing the Company to
reclassify $1.8 billion from redeemable preferred stock within temporary equity
to common stock and additional paid-in capital on our consolidated balance
sheet.

We utilized a portion of the net proceeds to repay the $200.0 million principal
balance of indebtedness outstanding under our revolving credit agreement
originally entered into on March 1, 2021 and the associated interest and other
costs of $3.2 million. Additionally, we used a portion of the proceeds to fund
the acquisition of Centrum as described in Note 2, Business Combinations. The
remainder of the net proceeds will be used for general corporate purposes.

See further discussion related to the IPO as described in Note 1, Basis of
Presentation, to Bright Health Group, Inc.'s unaudited condensed consolidated
financial statements.

COVID-19 Update

The COVID-19 pandemic, including its effect on the macroeconomic environment,
and the response of our local, state, and federal governments to contain and
manage the virus, continues to impact our business. The emergence of COVID-19
variants in the United States and abroad continues to prolong the risk of
additional surges of the virus. In addition, some individuals have delayed or
are not seeking routine medical care to avoid COVID-19 exposure. These and other
responses to the COVID-19 pandemic have meant that our MCR may be subject to
additional uncertainty as certain segments of the economy and workforce come
back on line, members resume care that may have been foregone, and the broader
population becomes vaccinated.

                                       32
--------------------------------------------------------------------------------
  Table of Contents
We have experienced impacts to our business from COVID-19, which have varied as
the pandemic progressed. Initially, as a result of the suspension of elective
surgeries and deferral of medical care, we experienced decreased medical
utilization, particularly in the second quarter of 2020. Since then, medical
utilization has returned to more normal levels and adverse financial impacts
from inpatient admissions emerged primarily due to increased average length of
stays.

In the third quarter of 2021, our results were impacted by COVID-19 trends in
two of our largest IFP markets. Florida and North Carolina both saw significant
increases in COVID-19 cases in the third quarter, with Centers for Disease
Control and Prevention ("CDC") data indicating average daily COVID-19 case
counts were up nearly 300% in each state when compared to the second quarter of
2021. In addition, during the third quarter of 2021, the Southeast United States
experienced average daily COVID-19 counts increasing nearly 250% when compared
against the second quarter of 2021. This drove our COVID-19 expense in the third
quarter of 2021 up 65.6% from the second quarter and our IFP COVID expense was
up more than 160% compared to the second quarter of 2021. For the three months
ended September 30, 2021 and 2020, the impact of COVID-19 increased our MCR by
540 basis points and 390 basis points, respectively, reflecting an increase in
medical costs of $55.6 million and $13.3 million, respectively. For the nine
months ended September 30, 2021 and 2020, the impact of COVID-19 increased our
MCR by 420 basis points and 290 basis points, respectively, reflecting an
increase in medical costs of $124.0 million and $23.8 million, respectively.

Overall measures to contain the COVID-19 outbreak may remain in place for a
significant period of time, as certain geographic regions have experienced a
resurgence of COVID-19 infections and new strains of COVID-19 that appear to be
more transmissible have emerged. Although the number of people who have been
vaccinated has been increasing, the duration and severity of this pandemic is
unknown and the extent of the business disruption and financial impact depends
on factors beyond our knowledge and control.

Business Update

We continue to make progress on our model that aligns the financing of care with
the delivery of care. We are focused on serving the consumer in retail
healthcare marketplaces, including the exchange and government
direct-to-consumer markets. Both businesses are supported by our Bright Health
Intelligent Operating System ("BiOS") technology platform, where we continue to
see efficiencies due to that investment. We view the following five key themes
as important in connection with our third quarter and year-to-date results:

1.We continue to demonstrate significant growth - We continue to experience
strong growth across both of our businesses. Bright HealthCare now serves over
720,000 consumers as of September 30, 2021, up 247% compared to the third
quarter of 2020. This includes over 114,000 MA members. In commercial, the
growth in members reflects the extended 2021 Special Enrollment Period in IFP
with enrollment of nearly 607,000 consumers at the end of the third quarter of
2021 up nearly 10% from the end of the second quarter of 2021. NeueHealth also
continues to demonstrate growth with a total of 131 owned and affiliated Primary
Care Clinics serving over 170,000 patients under value-based arrangements as of
September 30, 2021.

2.We have delivered consistent performance - Our third quarter 2021 results
reflect quarterly variability due to the negative impact of an increase in
direct COVID-19 costs, as well as risk adjustment pressures from the significant
contribution of new 2021 membership and COVID-19 related challenges in member
engagement. The extended Special Enrollment Period led to significant membership
growth beyond the interim capacity within the owned and affiliated parts of our
integrated systems of care, which we have alleviated through an accelerated pace
of clinic and affiliate development and additional investments in our operating
platform. While we did experience a modest reduction in utilization from
non-COVID related procedures, such as certain elective inpatient surgeries and
other diagnostic tests, the cost benefit was more than offset by the negative
impact to appropriately diagnose our newly attributed members, which resulted in
an increase in our risk adjustment payable. We believe our year-to-date results
better reflect the underlying performance of our business than the third quarter
results. We expect a number of the factors that drove volatility in the third
quarter of 2021 to normalize in 2022 as the contribution from retained consumers
increases, direct COVID-19 costs decrease, and as capacity improvements in our
aligned integrated systems of care drive improved gross margin.

                                       33
--------------------------------------------------------------------------------
  Table of Contents
3.We are driving differentiation through NeueHealth - We are seeing strong
growth in NeueHealth's revenue and operating income that we believe highlights
the power of our owned clinics and our affiliates within our aligned model. The
growth in our NeueHealth business reflects the continued investments we are
making in value-based care, as well as the Centrum acquisition, which closed on
July 1, 2021. We are continuing to expand on this model in Florida, as well as
bringing this model to new markets, including Texas and North Carolina in 2022.
Our previous target to open more than 25 de novo clinics in 2022 is still on
track. We are also bringing in more affiliates into a fully aligned model, where
providers are clinically, financially, and technologically aligned with Bright
HealthCare. In addition, we have a robust pipeline of third-party payors
interested in leveraging our integrated model across multiple populations as we
go into 2022 and, as a result, expect to see growth in health plan customers in
2022.

4.We are building one technology platform - We continue investing in the BiOS
back-end infrastructure, DocSquad consumer and provider-facing tools, and
acquisition integration. We have been making investments and accelerating our
timeline for integration to one platform, which has resulted in some near-term
cost structure headwinds. We are making progress on integrating the health plan
assets we acquired, with integration of appropriate corporate office and support
functions expected to be completed in 2022, our Bright HealthCare IFP business
expected on a single platform in 2023, and full operating platform unification
to follow.

5.Continued future growth - NeueHealth will continue to be an increasingly
important component of our business. We expect growth for the business in 2022
and continued integration of NeueHealth with our Bright HealthCare business. In
Florida and Texas, we expect to see movement toward health plan offerings that
leverage our owned and affiliated clinics within our aligned Integrated Systems
of Care. Direct Contracting also provides a new growth opportunity for
NeueHealth, adding to the total lives in fully aligned value-based arrangements
and contributing to revenue in a capital efficient model. In Bright HealthCare,
we expect growth in our core MA markets with a focus on higher complexity
patient populations, including C-SNP and D-SNP products, specific ethnic
communities requiring culturally competent care and service models, and states
with an opportunity for IFP consumers to age into MA plans. In IFP, we are
well-positioned based on where we have set rates for 2022, with our plans
consistently the lowest or second-lowest cost silver plan in core growth
markets. Additionally, we are expanding our addressable market next year,
entering four new states including Texas and Georgia, and offering IFP plans for
the first time California, which represent three of the largest ACA markets in
the country. At the same time, we will remain disciplined in our growth, making
appropriate rate adjustments based on our 2021 experience and competitive
positioning.

Key Metrics and Non-GAAP Financial Measures
In addition to our GAAP financial information, we review a number of operating
and financial metrics, including the following key metrics, to evaluate our
business, measure our performance, identify trends affecting our business,
formulate our business plan and make strategic decisions.
                                               As of September 30,
                                           2021                     2020
Bright HealthCare Consumers Served
Commercial(1)                           606,594                   149,794
Medicare Advantage                      114,094                    57,751

NeueHealth Patients
Value-based Care Patient Lives          170,211                    19,141

(1) Commercial plans include IFP and employer plans. Prior to 2021, our
commercial business was solely comprised of IFP products.
Bright HealthCare Consumers Served

Consumers served include Bright HealthCare individual lives served via health
insurance policies across multiple lines of business, primarily attributable to
IFP products and MA plans in markets across the country. We believe growth in
the number of consumers is a key indicator of the performance of our Bright
HealthCare business. It also informs our management of the
                                       34
--------------------------------------------------------------------------------
  Table of Contents
operational, clinical, technological and administrative functional area needs
that will require further investment to support expected future consumer growth.

Value-Based Care Patients

Value-based care patients are patients attributed to providers contracted under
varied value-based care delivery models in which the responsibility for control
of an attributed patient's medical care is transferred, in part or wholly, to
our NeueHealth managed medical groups. We believe growth in the number of
value-based care patients is a key indicator of the performance of our
NeueHealth business. It also informs our management of the operational,
clinical, technological and administrative functional area needs that will
require further investment to support expected future patient growth. Over time,
we expect our value-based care patients will increase as we convert
fee-for-service arrangements into value-based care financial arrangements.

                             Three Months Ended                     Nine Months Ended
                                September 30,                         September 30,
($ in thousands)             2021                2020               2021               2020
Net Loss             $          (296,722)      (59,256)     $         (364,990)      (84,610)
Adjusted EBITDA(1)   $          (245,918)      (54,084)     $         (290,757)      (81,188)

(1)See "Non-GAAP Financial Measures" below for reconciliations to the most
directly comparable financial measures calculated in accordance with GAAP and
related disclosures.

Non-GAAP Financial Measures

Adjusted EBITDA

We define Adjusted EBITDA as net loss excluding interest expense, income taxes,
depreciation and amortization, adjusted for the impact of acquisition and
financing-related transaction costs, share-based compensation, changes in the
fair value of contingent consideration and contract termination costs. Adjusted
EBITDA has been presented in this Quarterly Report as a supplemental measure of
financial performance that is not required by, or presented in accordance with,
GAAP, because we believe it assists management and investors in comparing our
operating performance across reporting periods on a consistent basis by
excluding items that we do not believe are indicative of our core operating
performance. Management believes Adjusted EBITDA is 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 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
cash provided by operating activities as a measure of liquidity, or any other
performance measure derived in accordance with GAAP. Additionally, this measure
is not intended to be a measure of free cash flow available for management's
discretionary use as we do not consider certain cash requirements such as
interest payments, tax payments and debt service requirements. The presentation
of this measure 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 this measure may not be comparable to other similarly titled
measures of other companies and can differ significantly from company to
company.

                                       35
--------------------------------------------------------------------------------
  Table of Contents
The following table provides a reconciliation of net loss to Adjusted EBITDA for
the periods presented:
                                                  Three Months Ended                     Nine Months Ended
                                                    September 30,                          September 30,
($ in thousands)                               2021                2020               2021                2020
Net loss                                   $ (296,722)         $ (59,256)         $ (364,990)         $ (84,610)
Interest expense                                1,594                  -               6,282                  -
Income tax expense (benefit)                       73                  -             (18,225)            (9,162)
Depreciation and amortization                  14,205              2,678              25,981              5,550
Transaction costs (a)                             448                965               5,598              3,312
Share-based compensation expense (b)           24,180              1,529              43,234              3,722
Change in fair value of contingent
consideration (c)                                 304                  -               1,363                  -
Contract termination costs (d)                 10,000                  -              10,000                  -
Adjusted EBITDA                            $ (245,918)         $ (54,084)         $ (290,757)         $ (81,188)



(a)Transaction costs include accounting, tax, valuation, consulting, legal and
investment banking fees directly relating to business combinations and certain
costs associated with our initial public offering. 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 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)Represents the non-cash change in fair value of contingent consideration from
business combinations, which is remeasured at fair value each reporting period.
There was no material activity for periods prior to the first quarter of 2021.
(d)Represents amount paid for early termination of an existing vendor contract.

                                       36
--------------------------------------------------------------------------------
  Table of Contents
Results of Operations
The following table summarizes our unaudited Condensed Consolidated Statements
of Income (Loss) data and other financial information for the three and nine
months ended September 30, 2021 and 2020.
                                                            Three Months Ended                                   Nine Months Ended
($ in thousands)                                              September 30,                                        September 30,
Condensed Consolidated Statements of Income
(loss) and operating data:                            2021                       2020                      2021                       2020

Revenue:
Premium revenue                               $           1,020,233       $          345,426       $           2,922,950       $          827,135
Service revenue                                              11,079                    4,920                      31,602                   13,344
Investment income                                            47,345                    1,774                     112,503                    7,063
Total revenue                                             1,078,657                  352,120                   3,067,055                  847,542
Operating expenses
Medical costs                                             1,050,943                  311,319                   2,640,143                  675,114
Operating costs                                             309,790                   97,379                     779,090                  260,650
Depreciation and amortization                                14,205                    2,678                      25,981                    5,550
Total operating expenses                                  1,374,938                  411,376                   3,445,214                  941,314
Operating loss                                            (296,281)                 (59,256)                   (378,159)                 (93,772)
Interest expense                                              1,594                        -                       6,282                        -
Other income                                                (1,226)                        -                     (1,226)                        -
Loss before income taxes                                  (296,649)                 (59,256)                   (383,215)                 (93,772)
Income tax expense (benefit)                                     73                        -                    (18,225)                  (9,162)
Net loss                                                  (296,722)                 (59,256)                   (364,990)                 (84,610)
Net earnings attributable to
   non-controlling interest                                 (3,942)                        -                     (5,354)                        -
Net loss attributable to Bright Health
Group, Inc. common shareholders               $           (300,664)       $         (59,256)       $           (370,344)       $         (84,610)
Adjusted EBITDA                               $           (245,918)       $         (54,084)       $           (290,757)       $         (81,188)
Medical Cost Ratio (1)                                       103.0%                    90.1%                       90.3%                    81.6%
Operating Cost Ratio (2)                                      28.7%                    27.7%                       25.4%                    30.8%

(1)Medical Cost Ratio is defined as medical costs divided by premium revenue.
(2)Operating Cost Ratio is defined as operating costs divided by total revenue.

Total revenues increased by $726.5 million, or 206.3%, for the three months
ended September 30, 2021 as compared to the same period in 2020, which was
largely driven by an increase in Bright HealthCare consumers of approximately
513,000 consumer lives, or 247.2%, primarily from organic growth in IFP within
our Commercial business, including the 2021 Special Enrollment Period, as well
as organic and inorganic contributions from the MA business. Increases in our
risk adjustment liability partially offset the total revenue increases. For the
three months ended September 30, 2021, we recognized a change in estimate for
risk adjustment of $134.0 million due to a change in our risk adjustment payable
accrual as a result of updated data inputs used to calculate IFP members'
expected full year risk scores, of which $89.3 million related to the first six
months of 2021. The three months ended September 30, 2021 included $200.0
million from the acquisitions of PMA, THNM, Zipnosis, CHP and Centrum. Total
revenues increased by $2.2 billion, or 261.9%, for the nine months ended
September 30, 2021 as compared to the same period in 2020, primarily driven by
organic consumer growth in our Commercial business, as well as favorable rate
impacts in our Commercial business. The nine months ended September 30, 2021
included $699.8 million from acquisitions for which there was no comparable
amount in the nine months ended September 30, 2020. The three and nine months
ended September 30, 2021 also experienced an increase in investment income
compared to the same periods in 2020, primarily driven by unrealized gains from
investments in equity securities of $46.3 million and $109.0 million,
respectively.
                                       37

--------------------------------------------------------------------------------

Table of Contents

Medical costs increased by $739.6 million, or 237.6%, for the three months ended
September 30, 2021 as compared to the same period in 2020. The increase in
medical costs was driven by an increase in consumers through both organic growth
in our Commercial and MA businesses and inorganic growth attributable to the
acquisitions of PMA, THNM, CHP and Centrum, as well as increased medical costs
from COVID-19. Medical costs increased by $2.0 billion, or 291.1%, for the nine
months ended September 30, 2021 as compared to the same period in 2020. The
increase in medical costs was driven by consistent factors with the three months
ended September 30, 2021 with additional impact from the acquisition of Brand
New Day, which was acquired on April 30, 2020.

Our MCR of 103.0% for the three months ended September 30, 2021 increased 1,290
basis points compared to the same period in 2020. The Special Enrollment Period
and our overall growth created challenges for capturing underlying risk, and we
were impacted by COVID-19 related costs given the significant portion of our
consumers in Florida, as well as our significant mix of new members given our
consumer growth in 2021. Our MCR for the three months ended September 30, 2021
included a 540 basis point unfavorable impact from COVID-19 related costs and a
900 basis point unfavorable impact from non-COVID prior period developments
("PPD") primarily related to a reduction in premium revenue related to an
increase in our risk adjustment payable. Our MCR for the three months ended
September 30, 2020 included a 390 basis point unfavorable impact from COVID-19
costs and a 530 basis point favorable impact from non-COVID PPD.

Our MCR of 90.3% for the nine months ended September 30, 2021 increased 870
basis points compared to the same period in 2020, which reflected the challenges
of COVID-19, significant growth and the Special Enrollment Period. Our MCR for
the nine months ended September 30, 2021 included a 420 basis point unfavorable
impact from COVID-19 related costs and a 90 basis point unfavorable impact from
non-COVID PPD. Our MCR for the nine months ended September 30, 2020 included a
290 basis point unfavorable impact from COVID-19 costs, a 200 basis point
favorable impact from non-COVID PPD and a 150 basis point favorable impact due
to deferred utilization. The MCR in both 2021 periods was also impacted by
increased medical costs from MA product mix as a result of the Brand New Day and
CHP acquisitions.

Operating costs increased by $212.4 million, or 218.1%, for the three months
ended September 30, 2021 as compared to the same period in 2020. Operating costs
increased by $518.4 million, or 198.9%, for the nine months ended September 30,
2021 as compared to the same period in 2020. The increase in operating costs in
both periods was primarily due to increases in operating costs from new market
entry, increased marketing and selling expenses related to the 2021 special
enrollment period in our Commercial business and increased compensation and
benefit costs driven by an increase in employees and an increase in share-based
compensation costs.

Our operating cost ratio of 28.7% for the three months ended September 30, 2021,
increased 100 basis points compared to the same period in 2020 primarily due to
increased compensation and benefit costs driven by an increase in employees and
an increase in share-based compensation costs as well as an early contract
termination charge in the current-year period. Our operating cost ratio of 25.4%
for the nine months ended September 30, 2021 improved 540 basis points compared
to the same period in 2020 primarily due to operating costs increasing at a
slower rate than the increased premium revenues earned due to consumer growth,
as we continue to gain leverage on our operating costs as we grow, partially
offset by an increase in broker commission costs associated with new membership
growth .

Depreciation and amortization increased by $11.5 million, or 430.4%, for the
three months ended September 30, 2021 as compared to the same period in 2020,
primarily due to the $11.3 million of amortization expense resulting from
intangible assets acquired in the PMA, THNM, Zipnosis, CHP, and Centrum
acquisitions, for which there were no comparable amounts in the three months
ended September 30, 2020. Depreciation and amortization increased by $20.4
million, or 368.1%, for the nine months ended September 30, 2021 as compared to
the same period in 2020, primarily due to $19.5 million from intangible assets
acquired for which there were no comparable amounts in the nine months ended
September 30, 2020.

Interest expense was $1.6 million and $6.3 million for the three and nine months
ended September 30, 2021, respectively, which was due to interest on the Credit
Agreement we entered into in March 2021, as well as amortization of debt
issuance costs. We did not have any interest expense for either of the
comparable periods in 2020.

Income tax was an expense of $0.1 million and a benefit of $18.2 million for the
three and nine months ended September 30, 2021, respectively. For the three
months ended September 30, 2021, the income tax expense largely relates to
amortization of

                                       38
--------------------------------------------------------------------------------
  Table of Contents
originating goodwill from asset acquisitions. For the nine months ended
September 30, 2021, the overall tax benefit is primarily due to the release of
valuation allowance in connection with new deferred tax liabilities recorded on
identifiable intangibles as part of business combination accounting for the
Zipnosis, THNM, and CHP stock acquisitions, as well as a measurement period
adjustment related to the BND acquisition. We recognized an income tax benefit
of $9.2 million during the nine months ended September 30, 2020, which was due
to the impact of goodwill and intangible assets acquired in the Brand New Day
acquisition in April 2020.
Bright HealthCare
                                                 Three Months Ended                      Nine Months Ended
($ in thousands)                                   September 30,                           September 30,
Statement of income (loss) and operating
data:                                         2021                2020                2021                2020

Bright HealthCare:
Commercial revenue                        $  625,926          $ 170,434          $ 1,930,925          $ 510,915
Medicare Advantage revenue                   368,599            173,038              929,374            310,270
Investment income                              1,087              1,774                3,491              7,063
Total revenue                                995,612            345,246            2,863,790            828,248
Operating expenses:
Medical costs                              1,019,081            311,319            2,588,196            675,114
Operating costs                              275,218             88,916              707,520            237,430
Depreciation and amortization                  4,584              2,274               11,524              4,131
Total operating expenses                   1,298,883            402,509            3,307,240            916,675
Operating loss                            $ (303,271)         $ (57,263)         $  (443,450)         $ (88,427)
Medical Cost Ratio (MCR)                       102.5  %            90.6  %              90.5  %            82.2  %



Commercial revenue increased by $455.5 million, or 267.3%, for the three months
ended September 30, 2021 as compared to the same period in 2020. Commercial
revenue increased by $1.4 billion, or 277.9%, for the nine months ended
September 30, 2021 as compared to the same period in 2020. The increase in
revenues in both 2021 periods compared to 2020, was driven by an increase in
consumer lives of approximately 513,000 due to organic growth, higher net
premium rates in certain markets, plan mix, and inorganic growth from the
acquisition of THNM, which are partially offset by an increase in risk
adjustment payables. The three months ended September 30, 2021 included a change
in estimate for the expected full-year risk adjustment scoring impact of $134.0
million, of which $89.3 million related to the first six months of 2021.

MA revenue increased by $195.6 million, or 113.0%, for the three months ended
September 30, 2021 as compared to the same period in 2020. MA revenue increased
by $619.1 million, or 199.5%, for the nine months ended September 30, 2021 as
compared to the same period in 2020. The three and nine months ended September
30, 2021 included $125.7 million and $266.8 million, respectively, of revenue
from our acquisition of CHP on April 1, 2021. The remaining increase was
primarily driven by volume increases due to organic growth.

Medical costs increased by $707.8 million, or 227.3%, for the three months ended
September 30, 2021 as compared to the same period in 2020. For the three months
ended September 30, 2021 and 2020, the impact of COVID-19 increased our medical
costs $55.6 million and $13.3 million, respectively. Medical costs increased by
$1.9 billion, or 283.4%, for the nine months ended September 30, 2021 as
compared to the same period in 2020. For the nine months ended September 30,
2021 and 2020, the impact of COVID-19 increased our medical costs by $124.0
million and $23.8 million, respectively. The increase in both 2021 periods is
also due to an increase in consumers driven by organic growth, unfavorable
medical cost rates and inorganic growth as a result of acquisitions.

Our MCR of 102.5% for the three months ended September 30, 2021 increased 1,180
basis points compared to the same period in 2020. Our MCR for the three months
ended September 30, 2021 included a 560 basis point unfavorable impact from
COVID-19 related costs and a 910 basis point unfavorable impact from non-COVID
PPD related to risk adjustment. Our MCR
                                       39
--------------------------------------------------------------------------------
  Table of Contents
for the three months ended September 30, 2020 included a 390 basis point
unfavorable impact from COVID-19 costs and a 530 basis point favorable impact
from non-COVID PPD.

Our MCR of 90.5% for the nine months ended September 30, 2021 increased 830
basis points compared to the same period in 2020. Our MCR for the nine months
ended September 30, 2021 included a 430 basis point unfavorable impact from
COVID-19 related costs and a 90 basis point unfavorable impact from non-COVID
PPD. Our MCR for the nine months ended September 30, 2020 included a 290 basis
point unfavorable impact from COVID-19 costs, a 210 basis point favorable impact
from non-COVID PPD and a 150 basis point unfavorable impact from deferred
utilization. The MCR in both 2021 periods was also impacted by increased medical
costs from MA product mix as a result of the Brand New Day and CHP acquisitions
and an increase in risk adjustment payable, which was partially offset by
favorable market mix and rate in IFP.

Operating costs increased by $186.3 million, or 209.5%, for the three months
ended September 30, 2021 as compared to the same period in 2020. Operating costs
increased by $470.1 million, or 198.0%, for the nine months ended September 30,
2021 as compared to the same period in 2020. The increase in both periods during
2021 compared to the same periods in 2020 was primarily due to increases in
operating costs from new market entry, increased marketing and selling expenses
related to the 2021 SEP in our Commercial business and increased compensation
and benefit costs driven by an increase in employees and an increase in
share-based compensation costs. In addition, the 2021 periods also have
increased operating costs from acquisitions, which do not have a comparable
prior period impact.

Depreciation and amortization increased by $2.3 million, or 101.6%, for the
three months ended September 30, 2021 as compared to the same period in 2020.
Depreciation and amortization increased by $7.4 million, or 179.0%, for the nine
months ended September 30, 2021 as compared to the same period in 2020. The
increase in the three and nine month periods ended September 30, 2021 was
primarily due to amortization expense of $2.6 million and $7.0 million,
respectively, resulting primarily from intangible assets acquired for which
there were no comparable amounts in the 2020 periods.
NeueHealth
                                                Three Months Ended                     Nine Months Ended
($ in thousands)                                   September 30,                         September 30,
Statement of income (loss) and operating
data:                                         2021               2020               2021               2020

NeueHealth:
Premium revenue                           $ 156,990          $   1,954          $ 221,836          $   5,950
Service revenue                              19,556              7,647             54,809             21,520
Investment income                            46,258                  -            109,012                  -
Total revenue                               222,804              9,601            385,657             27,470
Operating expenses
Medical costs                               163,279                  -            211,176                  -
Operating costs                              42,914             11,190             94,733             31,396
Depreciation and amortization                 9,621                404             14,457              1,419
Total operating expenses                    215,814             11,594            320,366             32,815
Operating income (loss)                   $   6,990          $  (1,993)         $  65,291          $  (5,345)
Medical Cost Ratio (MCR)                      104.0  %               -  %            95.2  %               -  %



Premium revenue increased by $155.0 million for the three months ended September
30, 2021 as compared to the same period in 2020. Premium revenue increased by
$215.9 million for the nine months ended September 30, 2021 as compared to the
same period in 2020. The increase in premium revenue for the three and nine
months ended September 30, 2021 includes $137.2 million and $170.3 million,
respectively, from the acquisitions of PMA and Centrum, as well as an organic
increase in patient lives.

                                       40
--------------------------------------------------------------------------------
  Table of Contents
Service revenue increased by $11.9 million, or 155.7%, for the three months
ended September 30, 2021 as compared to the same period in 2020. Service revenue
increased by $33.3 million, or 154.7%, for the nine months ended September 30,
2021 as compared to the same period in 2020. The increase in service revenue in
both 2021 periods is primarily driven by increased intercompany network contract
service revenue with our Bright HealthCare segment, which is charged on a per
consumer per month basis and has increased due to market expansion and an
increase in consumer lives. The acquisitions of PMA on December 31, 2020 and
Zipnosis on March 31, 2021 also contributed to the year-over-year increase in
service revenue.

Investment income was $46.3 million and $109.0 million for the three and nine
months ending September 30, 2021, respectively, due to unrealized gains on
equity securities acquired in 2021. NeueHealth did not hold any investments
during the three and nine months ended September 30, 2020.

Medical costs were $163.3 million and $211.2 million for the three and nine
months ended September 30, 2021, respectively, which were primarily driven by an
increase in patient lives as a result of the PMA and Centrum acquisitions, as
well as organic growth in our value-based arrangements. MCR was 104.0% and 95.2%
in the three and nine months ended September 30, 2021, respectively. There were
no medical costs in the three and nine months ended September 30, 2020.

Operating costs increased by $31.7 million, or 283.5%, for the three months
ended September 30, 2021 as compared to the same period in 2020. Operating costs
increased by $63.3 million, or 201.7%, for the nine months ended September 30,
2021 as compared to the same period in 2020. The increase in both 2021 periods
was primarily due to increased compensation and benefit costs from more
employees, and outsourced vendor fees in support of consumer growth, as well as
costs from the PMA, Zipnosis and Centrum acquisitions.

Depreciation and amortization increased by $9.2 million for the three months
ended September 30, 2021 as compared to the same period in 2020. Depreciation
and amortization increased by $13.0 million for the nine months ended September
30, 2021 as compared to the same period in 2020. The increase in the three and
nine months ended September 30, 2021 was primarily due to amortization expense
of $8.8 million and $12.4 million, respectively, resulting from intangible
assets acquired for which there were no comparable amounts in the 2020 periods.

Liquidity and Capital Resources

We assess our liquidity in terms of our ability to generate adequate amounts of
cash to meet current and future needs. Our expected primary uses on a short-term
and long-term basis are for geographic and service offering expansion,
acquisitions, and other general corporate purposes. We have historically funded
our operations and acquisitions primarily through the sale of preferred stock,
and more recently, through sales of our common stock, which generated cash
proceeds of $887.3 million upon closing of our IPO on June 28, 2021.

Cash and investment balances held at regulated insurance entities are subject to
regulatory restrictions and can only be accessed through dividends declared to
the non-regulated parent company or through reimbursements from administrative
services agreements with the parent company. The Company has declared one
dividend from the regulated insurance entities to the parent company during the
nine months ended September 30, 2021, and had no dividends for the same period
in 2020. The regulated legal entities are required to hold certain minimum
levels of risk-based capital and surplus to meet regulatory requirements. As of
September 30, 2021 and December 31, 2020, the amounts held in risk-based capital
and surplus at regulated insurance legal entities was in excess of the minimum
requirements.

We expect to continue to incur operating losses and generate negative cash flows
from operations for the foreseeable future due to the investments we intend to
continue to make in expanding our operations and due to additional general and
administrative costs we expect to incur in connection with operating as a public
company. We believe that existing cash on hand, investments and amounts
available under our Credit Agreement described below will be sufficient to
satisfy our anticipated cash requirements for the next twelve months. However,
we may seek additional capital to support our future growth plans and other
strategic opportunities that may arise.

                                       41
--------------------------------------------------------------------------------
  Table of Contents
Indebtedness

On March 1, 2021, we entered into a $350.0 million revolving credit agreement
with a syndicate of banks (the "Credit Agreement"). On August 2, 2021, the
Credit Agreement was amended to change the definition of "Qualified IPO" by
reducing the net proceeds required to be received by the Company from $1.0
billion to $850.0 million. In addition, prior to such amendment, the Credit
Agreement contained a covenant that required the Company to maintain a total
debt to capitalization ratio of (a) 0.25 to 1.00 prior to a Qualified IPO, and
(b) 0.30 to 1.00 after a Qualified IPO. The Amendment changed this covenant by
removing the increase in the ratio after a Qualified IPO such that the Company
is now required to maintain a total debt to capitalization ratio of 0.25 to
1.00. On August 4, 2021, we elected to extend the maturity date of the Credit
Agreement from February 28, 2022 to February 28, 2024. We utilized a portion of
the net IPO proceeds to repay the $200.0 million principal balance of
indebtedness outstanding under our revolving credit agreement originally entered
into on March 1, 2021 and the associated interest and other costs of $3.2
million. During the second quarter of 2021, we repaid the full amount and as of
September 30, 2021, we have no borrowings outstanding under the Credit
Agreement. The Credit Agreement also contains a covenant that require us to
maintain a minimum liquidity of $150.0 million.

The obligations under the Credit Agreement are secured by substantially all of
the assets of the Company and its wholly owned subsidiaries that are designated
as guarantors, including a pledge of the equity of each of its subsidiaries.
Borrowings under the Credit Agreement accrue interest at the Company's election
either at a rate of: the (i) the sum of (a) the greatest of (1) the Prime Rate
(as defined in the Credit Agreement), (2) the rate of the Federal Reserve Bank
of New York in effect plus 1/2 of 1.0% per annum, and (3) London interbank
offered rate ("LIBOR"), plus 1% per annum, and (b) a margin of 4.0%; or (ii) the
sum of (a) the LIBOR multiplied by a statutory reserve rate and (b) a margin of
5.0%. In addition, the commitment fee is 0.75% of the unused amount of the
Credit Agreement.

Furthermore, the Credit Agreement contains covenants that, among other things,
restrict the ability of the Company and its subsidiaries to make dividends or
other distributions, incur additional debt, engage in certain asset sales,
mergers, acquisitions or similar transactions, create liens on assets, engage in
certain transactions with affiliates, change its business or make investments.
In addition, the Credit Agreement contains other customary covenants,
representations and events of default.

Cash and Investments

As of September 30, 2021, we had $956.2 million in cash and cash equivalents,
$331.7 million in short-term investments and $681.9 million long-term
investments on the consolidated balance sheet. Our cash and investments are held
at non-regulated entities and regulated insurance entities.

As of September 30, 2021, we had non-regulated cash and cash equivalents of
$207.9 million, short-term investments of $206.8 million and long-term
investments of $88.3 million.

As of September 30, 2021, we had regulated insurance entity cash and cash
equivalents of $748.3 million, short-term investments of $124.9 million, of
which $3.5 million was restricted, and long-term investments of $593.6 million,
of which $4.1 million was restricted.

                                       42
--------------------------------------------------------------------------------
  Table of Contents
Cash Flows
The following table presents a summary of our cash flows for the periods shown:
                                                       Nine Months Ended
                                                         September 30,
($ in thousands)                                      2021           2020

Net cash provided by operating activities $ 233,114 $ 11,339
Net cash used in investing activities

               (653,128)      

(528,830)

Net cash provided by financing activities            887,832        687,714
Net increase in cash and cash equivalents            467,818        170,223

Cash and cash equivalents at beginning of period 488,371 522,910
Cash and cash equivalents at end of period $ 956,189 $ 693,133

Operating Activities

During the nine months ended September 30, 2021, net cash provided by operating
activities increased by $221.8 million compared to the nine-month period ended
September 30, 2020, primarily driven by the increase in consumer growth driving
the increased medical costs and risk adjustment payables, as well as accounts
payables and other liabilities, and increased medical costs in the MA business
driven by the Brand New Day and CHP acquisitions, partially offset by an
increase in our net loss.

Investing Activities

During the nine months ended September 30, 2021, net cash used in investing
activities increased by $124.3 million compared to the nine-month period ended
September 30, 2020. The increase was primarily attributable to a $257.6 million
increase in cash used for acquisitions, which was partially offset by a decrease
in purchases of investments, net of proceeds from sales, paydowns and maturities
of investments.

Financing Activities

During the nine months ended September 30, 2021, net cash provided by financing
activities increased by $200.1 million compared to the nine-month period ended
September 30, 2020, primarily driven by $887.3 million of proceeds from our IPO
in June 2021, offset by $6.7 million of cash paid for IPO offering costs, and an
increase in proceeds from the issuance of common stock resulting from stock
option exercise in the nine months ended September 30, 2021. These increases
were partially offset by $686.8 million of proceeds from issuance of preferred
stock in the nine months ended September 30, 2020.

Critical Accounting Policies and Estimates

The critical accounting policies that reflect our more significant judgements
and estimates used in the preparation of our condensed consolidated financial
statements include those described in the Prospectus under "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Critical Accounting Policies and Estimates."

There have been no material changes to our critical accounting policies and
estimates as compared to the critical accounting policies and estimates
disclosed in the Prospectus.

Recently Adopted Accounting Pronouncements

For a description of recently issued accounting pronouncements, see Note 1,
Organization and Basis of Presentation, in our condensed consolidated financial
statements of this Quarterly Report on Form 10-Q.

                                       43

--------------------------------------------------------------------------------

Table of Contents