Bright
Health, a Minneapolis-based health-insurance startup, just agreed to acquire a
California-based health insurer to beef up its presence in the red-hot Medicare
Advantage market.
The
acquisition comes on the heels of the insurer raising $635 million from
investors in December. According to PitchBook, Bright is valued at $2.2 billion.
The
acquisition would substantially increase Bright Health’s Medicare Advantage
business — from about 4,000 members to roughly 46,000.
Bright
offers insurance to individuals under the Affordable Care Act and coverage to
seniors in Medicare Advantage. It partners with a health system in each market
to help set up its insurance plan, and it plans to double its geographic
footprint in 2020.
The
$2.2 billion health insurer on Tuesday said it’s buying the privately-owned
Medicare Advantage health plan provider Brand New Day. The terms of the deal
were not disclosed.
The acquisition substantially expands Bright Health’s business
in the Medicare Advantage market — the private arm of the federally funded
Medicare program that provides health plans for seniors 65 and older — from
about 4,000 members to roughly 46,000.
Based in California, Brand New Day was founded in 1983 by the
Davis family. Executives Jeff and Jay Davis are staying on to lead operations
in California, where the company has HMO plans in 12 counties, covering seniors
and roughly 3,000 members who qualify for both Medicaid and Medicare. The
company operates in Los Angeles County and Orange County, as well as in the
state’s Central Valley region.
The companies expect the deal to close later in 2020. Combined,
Bright Health estimates it’ll have 200,000 members across 13 states in 2020.
The deal helps Bright Health enter California
The acquisition helps Bright get into California, a key market
for the insurer, Mike Mikan, Bright Health’s president and vice chairman told
Business Insider. The company had been exploring growing organically, but when
the opportunity to acquire Brand New Day and its complementary model emerged,
Bright went for it.
“We feel it accelerates our opportunity,” Mikan said.
The acquisition comes on the heels of the health-insurance
company raising a massive $635 million funding round in December, on top of its
plans to double its footprint in 2020, adding an additional state.
Bright Health provides health plans for individuals under the
Affordable Care Act and to seniors in Medicare Advantage. It was founded in
2016 and has now raised more than $1 billion. According to Pitchbook, it’s
valued at $2.2 billion.
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