Molina Healthcare reduced its offer for Bright Health's California Medicare Advantage business.
In a Dec. 18 news release, Molina said it would pay $425 million, net of any tax benefits, for Bright Health's Medicare Advantage business, down from its originally announced purchase price of $510 million. The companies expect the deal to close on or around Jan. 1, according to the news release and SEC filings from Bright Health.
Bright Health's California Medicare Advantage offerings, its last insurance business, has around 100,000 members. The company pulled out of the ACA exchange business and ended all of its MA business outside of California at the end of 2022.
Bright Health Group previously said it would use the proceeds from the sale to pay off its debts and pay liabilities remaining from its shuttered individual insurance business. The company owes $380 million in risk adjustment payments to CMS.
CEO Mike Mikan told investors on a March 1 call the company needs to raise around $300 million to stay afloat, after the business overdrafted its credit.
With the sale of its last insurance business, Minneapolis-based Bright Health Group is pivoting to its consumer care business. The company served 355,000 consumers in value-based care arrangements in 2023, up from 115,000 in 2022, according to its third quarter earnings report.
Ari Gottlieb, a consultant at his firm A2 Strategy Corp, told Becker's the proceeds from the sale will be used to pay off Bright's debts — leaving state regulators waiting on risk adjustment payments.
"The question is, when do regulators lose patience? And it may be now," Mr. Gottlieb said.
Earlier this month, Texas placed Bright Health's subsidiary in the state in liquidation. Bright owes $89.6 million in risk adjustment payments in the state.
The deal will significantly expand Molina Healthcare's Medicare membership. The company had 173,000 Medicare members at the end of the third quarter of 2023, according to its earnings report.