Former Bright Health, once a Minnesota IPO darling, goes private in $1.3B deal

The health care company formerly known as Bright Health, which benefited from Minnesota’s largest-ever initial public offering of stock less than three years ago, is going private again as executives retool the business.

NeueHealth, as the company is now known, is being taken private by a group of investors including venture fund New Enterprise Associates (NEA) in a deal that values the firm at $1.3 billion. The business has switched from selling health insurance plans to providing care to patients and accountable-care contracting solutions to providers.

The company moved its corporate headquarters from Bloomington to Doral, Fla., earlier this year.

The deal, announced late Monday, will provide holders of common stock $7.33 per share — a 70% premium over the stock’s closing price on Monday.

NEA and the dozen other investors who own the company’s preferred shares will exchange their existing NeueHealth stock for equity in the private company. NeueHealth’s existing loan facility with Hercules Capital will remain in place.

“We are pleased to announce this transaction as we believe it places NeueHealth in a strong position for continued growth while maximizing value for all of NeueHealth’s public stockholders,” NeueHelath CEO Mike Mikan said in a press release announcing the deal.

Bright Health was founded in 2015 as a health insurer that quickly grew to cover more than 1 million people through Obamacare individual insurance exchanges and 125,000 seniors in Medicare Advantage plans. In 2021, the company raised $924 million in an IPO that made it Minnesota’s must lucrative.

But going public during the COVID-19 pandemic proved challenging for the new insurer. The company stumbled by not accurately paying claims or calculating risk-adjustment payments.

Mikan said in 2021 that the company grew faster than it had capacity to handle. The timing of the pandemic coincided with difficulties in obtaining accurate data on the health status of individuals it was covering, as well as scaling up the company’s organizational capabilities and technologies. The company jettisoned it insurance business and in January announced its move to Florida, changing its name in the process.

Today, NeueHealth says it provides care to more than 500,000 “health consumers” through a network of clinics it owns and partnerships with more than 3,000 affiliated clinicians. The company says it works with patients with Medicare and Medicaid coverage and Obamacare, or Affordable Care Act, plans.

It also partners with independent doctors and medical groups to provide the advanced technology and services needed to enter “value-driven” payment arrangements, which are intended to align the costs and benefits of care by varying payments based on patients’ health outcomes.

In the most recent quarter, NeueHealth reported a $6 million operating loss on $152 million in revenue in the solutions business, and $16 million in profits from $83 million in revenue in its segment providing care.

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