Bright Health Group(BHG) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Unaudited condensed consolidated financial statements for Q1 2025 report a net loss of $10.8 million and operating income of $2.7 million, with a 'going concern' warning Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, the pending NEA Merger, a 'Going Concern' warning, $207.4 million in long-term borrowings, and $271.8 million risk adjustment payable - On December 23, 2024, NeueHealth entered into a merger agreement with an affiliate of New Enterprise Associates, Inc. (NEA), with stockholder approval obtained on May 7, 2025, pending other closing conditions[33][34][35] - The company has a $271.8 million risk adjustment payable related to its discontinued commercial insurance business, with modified repayment agreements extending the due date to September 15, 2026, at an 11.5% interest rate per annum[38][39][179] - Discontinued operations, including the sale of its California Medicare Advantage business and exit from commercial plans, resulted in a net loss of $9.4 million for Q1 2025[154][155][158] - The company participates in the CMS ACO REACH Model, recording a $468.3 million ACO REACH performance year receivable and a corresponding $382.5 million obligation as of March 31, 2025[142][143][147] Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Total Current Assets | 788,206 | 434,648 | | Total Assets | 895,680 | 544,383 | | Total Current Liabilities | 1,064,052 | 710,228 | | Total Liabilities | 1,288,652 | 930,491 | | Total Shareholders' Equity (Deficit) | (1,361,158) | (1,355,105) | Condensed Consolidated Statements of Income (Loss) Highlights (Unaudited) | Account | Three Months Ended Mar 31, 2025 ($ in thousands) | Three Months Ended Mar 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Total Revenue | 215,787 | 245,095 | | Total Operating Expenses | 213,126 | 268,197 | | Operating Income (Loss) | 2,661 | (23,102) | | Net (Loss) Income from Continuing Operations | (1,438) | 5,688 | | Loss from Discontinued Operations, Net of Tax | (9,410) | (9,865) | | Net Loss | (10,848) | (4,177) | | Net Loss Attributable to Common Shareholders | (24,875) | (28,518) | | Basic and Diluted Loss Per Share | (2.90) | (3.53) | - The company's history of net losses, negative operating cash flows, and significant obligations raises substantial doubt about its ability to continue as a going concern, as existing cash is insufficient for the next 12 months[38][43][45] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial results, noting a 12.0% revenue decline to $215.8 million, improved operating income to $2.7 million, and reiterating the 'going concern' warning - The company's strategic focus is on its two continuing segments: NeueCare (value-driven care delivery) and NeueSolutions (provider enablement)[183][184][185] Key Metrics (as of March 31) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Value-Based Consumers Served | 571,000 | 360,000 | | Enablement Services Lives | 138,000 | 109,000 | Adjusted EBITDA Reconciliation Highlight | Metric ($ in thousands) | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net Loss | (10,848) | (4,177) | | Adjusted EBITDA | 13,478 | 3,657 | - Management states that existing cash and investments are not sufficient to satisfy anticipated cash requirements for the next twelve months, leading to substantial doubt about its ability to continue as a going concern[222] Results of Operations Q1 2025 total revenues decreased 12.0% due to lower ACO REACH revenue, partially offset by capitated revenue growth, with significant reductions in medical and operating costs - Total revenues decreased by 12.0% YoY, driven by a $47.8 million decline in ACO REACH revenue, partially offset by a $19.5 million increase in capitated revenue from growth in third-party payor contracts[201] - Operating costs decreased by 27.1% YoY, mainly due to lower compensation-related costs from reduced employee headcount as part of ongoing restructuring efforts[203] Segment Performance NeueCare segment operating income increased to $23.0 million due to capitated revenue growth, while NeueSolutions reported a stable $3.0 million operating loss with 27.8% revenue decrease NeueCare Segment Performance ($ in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Segment Revenue | 90,517 | 73,623 | | Total Operating Expenses | 67,510 | 63,811 | | Operating Income | 23,007 | 9,812 | NeueSolutions Segment Performance ($ in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Segment Revenue | 127,610 | 173,896 | | Total Operating Expenses | 130,602 | 176,828 | | Operating Loss | (2,992) | (2,932) | Liquidity and Capital Resources The company's liquidity is critical, with $239.3 million in cash and investments and significant debt, raising substantial doubt about its ability to continue as a going concern - The company had $224.8 million in cash and cash equivalents and $14.5 million in short-term investments as of March 31, 2025, across both continuing and discontinued operations[249] - Cash used in operating activities decreased to $21.0 million in Q1 2025 from $48.7 million in Q1 2024, primarily due to lower payments for medical costs and risk adjustment obligations in discontinued operations[253] - The company has multiple debt facilities, including the 2023 Credit Agreement and the Hercules Credit Agreement, with significant covenants and conditions for accessing additional funds[228][237] Quantitative and Qualitative Disclosures about Market Risk This item is not applicable - Not applicable[257] Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - Based on an evaluation as of March 31, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[260] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control[261] PART II. OTHER INFORMATION Legal Proceedings The company is involved in several legal matters, including an appealed securities class action lawsuit and three lawsuits related to the pending NEA merger - A securities class action lawsuit (Marquez v. Bright Health Group, Inc. et al.) was dismissed on November 1, 2024, but the plaintiff filed an appeal on November 27, 2024[124] - Three lawsuits have been filed against the company related to the NEA Merger announced on December 23, 2024[125] Risk Factors No material changes to the risk factors previously disclosed in the 2024 Form 10-K - There have been no material changes to the risk factors disclosed in the 2024 Form 10-K[263] Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities None reported for this item - None[264] Defaults upon Senior Securities None reported for this item - None[265] Mine Safety Disclosures This item is not applicable - Not applicable[266] Other Information None reported for this item - None[267] Exhibits Exhibits filed with the Form 10-Q include the NEA Merger Agreement, corporate governance documents, CMS repayment agreements, and CEO/CFO certifications - Filed exhibits include the NEA Merger Agreement, corporate certificates, modified repayment agreements with CMS for Florida and Colorado, and CEO/CFO certifications[268]