Bright Health sets terms for $1.3B IPO 

Insurance technology startup Bright Health Group is aiming to raise about $1.3 billion through its initial public offering, according to a Securities and Exchange Commission filing.

The Minneapolis-based company, which announced the terms of its IPO on Tuesday, will offer 60 million shares of its common stock. The IPO price is expected to be between $20 and $23 per share. Bright also plans to grant the underwriters a 30-day option to purchase up to an additional 7.2 million shares at the IPO price.

The company has a valuation of more than $14 billion, based on an estimated 624 million shares outstanding after the deal closes, MarketWatch reported.

Bright Health offers individual, family, small business and Medicare Advantage plans and works with local healthcare entities to develop and manage provider networks. It also provides an IT platform that can be used to track healthcare costs.

Bright’s membership totals 623,000, including around 515,000 commercial and 108,000 Medicare Advantage members.

In addition, the company includes NeueHealth, which provides virtual and in-person care through 61 affiliated primary care clinics.

Bright Health plans to use the funds raised from the IPO to repay all outstanding borrowings under its credit agreement. The remainder of the funds will be put toward working capital and other corporate purposes, including investments in growth. Bright intends to list its common stock on the New York Stock Exchange under the symbol “BHG.”

The company’s IPO terms are similar to rivals Oscar Health and Clover Health, which both aim to raise more than $1 billion through their respective IPOs.

Activity in the insurtech market is heating up — with these companies even moving into the telehealth arena — and investor interest is soaring. Annual insurtech funding reached an all-time high of $7.1 billion across 377 deals in 2020, according to a report by CB Insights.

These companies tend to report high revenues but are not immune to losses.

In fact, Bright Health’s net losses nearly doubled to $248 million in 2020 from $125 million the year prior. The company disclosed in its IPO filing that it had incurred net losses annually since its inception in 2015, and its losses have grown.

Similarly, Oscar had racked up a $1.4 billion deficit as of January.

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