Healthcare company Bright Health Group (BHG) saw its stock drop soon after being listed on the New York Stock Exchange. With this poor performance, what's BHG's IPO prediction? Is it worth it?
Bright Health Group opened at $18 per share
Bright Health opened trading at $18 per share on Jun. 24, which is below the $20–$23 the company was originally targeting. By that afternoon, the stock was down to $16.77.
On Jun. 23, the company sold $51.4 million shares at $18 each, raising about $925 million. Originally, Bright officials were looking to raise $1.3 billion through the sale of 60 million shares. That would have put the company’s valuation at over $14 billion if shares were $23.
Bright Health plans to use the IPO proceeds to repay outstanding debt, acquire complementary businesses, and pay for other general corporate purposes. Nine banks are underwriting the Bright Health IPO, with JPMorgan Chase and Goldman Sachs acting as lead bookrunners.
BHG is one of several healthcare companies to go public this year
The Minneapolis-based company’s market debut comes just as several other healthcare companies have gone public. Earlier in Jun. 2021, Cano Health (CANO) went public through a merger with a SPAC (special purpose acquisition company). In Apr. 2021, Agilon Health (AGL) and Privia Health Group (PRVA) also went public through IPOs.
Like Bright Health, many of the healthcare companies that have gone public this year have yet to turn a profit, and few are projecting positive adjusting earnings, Bloomberg reports.
Even though Bright Health reported a 2020 revenue increase of over 330 percent year-over-year, the company has seen net losses every year since it started in 2015. In 2020, the company had a net loss of over $248 million. In 2019, its net loss was over $125 million. Bright Health officials are banking on the promising outlook of the healthcare market, which is expected to reach $4.2 trillion in 2021.
What's Bright Health Group?
Bright Health Group was founded in 2015 with the mission of “Making healthcare right. Together.” Its different approach to healthcare focuses on aligning with local resources and technology to improve customer care.
“For too long, U.S. healthcare, primarily designed to cater to employers and large institutions, has failed the consumer through unnecessary complexity, a lack of transparency, and skyrocketing costs. We are making healthcare simple, personal, and affordable,” states the company website.
Bright Health Group offers Medicare and commercial health plan products to 623,000 consumers in 14 states and 99 markets. Its NeueHealth division provides virtual and in-person clinical care to nearly 75,000 patients through its 61 primary care clinics.
“Our focus is really on serving all consumers. It’s very different than a lot of our other competitors who are focused on one part of the health care system,” Bright Health CEO Mike Mikan told Bloomberg.