February 22, 2024

“The name may be ‘Neue’, but their problems are old”: Will Bright Health’s rebrand save it?

When insurtech Bright Health Group it first appeared in 2015 and had bold goals of disrupting the insurance industry using technology. It raised as much as $2.4 billion — including from Cigna Ventures — and went public in 2021 before the IPO market dried up.

Once a high-flying insurtech that aimed to shake up the old insurance industry, Bright Health has since seen its wings clipped. And even a recent corporate rebranding is unlikely to polish its image.

In the third quarter of 2023, the company made reported an operating loss of $462.8 million and in April opted to get out of the insurance business altogether. In January, it sold the remaining parts of that business – two California Medicare Advantage plans – to Molina Healthcare for $500 million, $100 million less than what was previously planned.

After jettisoning its insurance business, the company shifted focus to its existing value-based consumer care business called NeueHealth. NeueHealth consists of two segments: NeueCare and NeueSolutions. NeueCare delivers “value-driven” care to consumers in the ACA Marketplace, Medicare and Medicaid through its own clinics and partnerships with healthcare providers. NeueSolutions helps independent providers and medical groups enter into value-based arrangements through public health tools and partnerships with health plans and government programs.

NeueHealth serves more than 500,000 consumers and partners with more than 3,000 affiliated providers. Bright Health would like to shake off its associations with a failed insurance company announced last month that NeueHealth would become the company’s brand name. It also moved its headquarters from Minneapolis, Minnesota to Doral, Florida.

But will a few thousand kilometers and a new avatar save the company?

No one from NeueHealth wanted to be interviewed. Several industry experts said the company had no choice but to rebrand given the shift in focus, but most were not optimistic about the future..

“The name may be ‘neue,’ but their problems are old,” Ari Gottlieb, president of A2 Strategy Corp., joked in an interview. “It doesn’t change anything. This was a fundamentally failed company when the name was Bright, and it’s a failed company when the name was Neue. You can leave behind your old name and the legacy that comes with it, but not your obligations.”

The company has about $1.4 billion in debt, Gottlieb estimates. This includes money owed to the Centers for Medicare and Medicaid Services (CMS) in risk adjustment payments, as well as money owed to Cigna Ventures, New Enterprise Associates and CalSTRS, he said.

In addition, $100 million of the $500 million from the MA sale to Molina Healthcare will be placed in an escrow account, where a third party will hold the funds until certain obligations are met, according to an SEC filing. The funds will be provided if there is a successful consolidation of Bright Health’s two MA plans – Brand New Day and Central Health Plan – or if Brand New Day is able to achieve at least three stars for its Part D plans from CMS. So there’s a possibility that NeueHealth won’t even get all this money, Gottlieb said.

Gottlieb added that the NeueHealth company is not worth $1.4 billion, making it unlikely to survive.

“I just think this is a zombie company that no one cares about. … I think they’re just going to empty this out and then file for bankruptcy protection in March 2025 before they owe the federal government any money and there’s nothing anyone can do about it,” he said.

Another expert echoed Gottlieb, essentially suggesting that the internal problems cannot be covered up by a rebranding – even though a rebranding was necessary to shift the focus to a consumer-facing business.

“It changes the storefront, but it doesn’t meaningfully change their balance sheet,” the company said Wesley Sanders, health plan advisor at Evensun Consulting, in an interview.

Sanders said he expects NeueHealth to go under or be acquired, especially because he “hasn’t seen anything special about their value-based care plans that makes me think they’ll have a better model than anyone else.”

According to Gottlieb, NeueHealth’s competitors in value-based care include Cano Health (which just filed for bankruptcy) and CareMax.

While Gottlieb and Sanders don’t foresee a future for NeueHealth, one industry follower has a more optimistic view.

“Bright Health is operating in an arena with a lot of momentum and tailwinds as payers look to partner with organizations that are willing to take financial risks on the care they provide,” said Tyler Giesting, director of healthcare and life sciences at West Monroe, in an email. “Major payers are integrating vertically by pushing their way into the space where NeueHealth operates, and I expect this will only continue to happen.

“Between Medicare ACO, Medicare Advantage and Medicaid, there will continue to be opportunities for them to help providers transition to value-based arrangements in new markets or build or acquire their own clinics in new areas. I would expect more geographic expansion as they build scale and grow covered lives.”

Not surprising Mike Mikan, president and CEO of NeueHealth, said in a press release that he expects a positive future for the company.

“Adopting the NeueHealth name signifies our commitment to delivering value through our differentiated care model that uniquely aligns the interests of healthcare consumers, providers and payers. Our NeueHealth identity has been an important and successful part of our organization’s story, and we look forward to building on its strong performance as we lead the industry’s shift to value-based care.”

Despite the sunny tone, West Monroe’s Giesting believes the company’s success will ultimately be determined by how well its operating and care models perform in value-based contracts.

Photo: Carloscastilla, Getty Images

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