The deal will exit Bright Health from the insurance business as it shifts its focus to consumer care.
Molina Healthcare is set to acquire floundering Bright Health Group's Medicare Advantage (MA) business in California in a deal worth approximately $510 million, net of certain tax benefits, the company announced today.
With the sale, which is expected to close in the first quarter of 2024, Bright Health is now completely out of the insurance business and will turn its efforts to its consumer care products, according to a press release put out by the insurer.
Bright Health said it will take the proceeds of the sale to pay off its debts and obligations to benk lenders, with the remaining funds going towards liabilities in its discontinued Affordable Care Act insurance business.
"We are excited to enter into this agreement with Molina as it will allow Brand New Day and Central Health Plan to continue delivering localized, personal care to California consumers and will position Bright Health's Consumer Care Delivery business for long-term success," Mike Mikan, president and CEO of Bright Health, said in a statement. "The sale allows us to focus on driving differentiation and sustainable growth through our Consumer Care Delivery business."
For Molina, the deal gains them Bright Health's Medicare membership of approximately 125,000 enrollees in 23 counties in California, with 60% overlap with Molina's Medicaid footprint.
As part of the purchase, Bright Health will also enter into an agreement with Molina to serve Medicaid and ACA Marketplace members in Florida and Texas in 2024.
Joe Zubretsky, president and CEO of Molina, said in a statement: "These additions fit perfectly with our strategy of serving high-acuity, low-income members and represent a textbook execution of our growth playbook. We acquire viable assets at attractive valuations, then deploy our proven team of operators to deliver improved financial results. We are pleased to continue our meaningful growth in California as the latest realization of our national growth strategy."
Jay Asser is the CEO editor for HealthLeaders.