Rising costs of Covid-19 care sends Bright Health shares into tailspin

 

Shares of Bright Health stock plummeted Thursday following the company's release of its third-quarter results.

The stock closed at $4.94, down by 32% from the previous close of $7.30.

For the quarter ending Sept. 30, Bright Health Group Inc. posted a net loss of $296.7 million, or 48 cents per share, compared to a loss of $59.2 million, or 43 cents per share for the same same period last year. Revenue rose to just over $1 billion from $352 million in the year-ago quarter.

Analysts had expected a loss of 19 cents per share on revenue of $1 billion.

Bright, which went public in June, reported losses of $43 million in the second quarter.

The losses are attributed to Minneapolis-based health insurance startup's medical cost ratio (MCR) rising to 103% compared to 90.1% in the third of quarter of 2020. The ratio is found by dividing total medical expenses paid by the company by the total amount in premiums it collected.

Over 5% of this most recent ratio was caused by an unfavorable impact from Covid-19 related costs, and a 9% impact from a reduction in premium revenue due to the company being unable to capture risk adjustment on newly added members.

“Our year-to-date 2021 MCR of 90.3% represents solid performance, especially given the remarkable growth and unique factors we have experienced this year," said Cathy Smith, Bright's chief financial and administrative officer. "As a company still building to scale, we expect to see some quarterly variation in performance from time to time."

Smith added that because it's a new and rapidly growing business, population health risk is hard to gauge in the near-term, but will improve as markets and populations age. 

https://www.bizjournals.com/twincities/news/2021/11/11/bright-health-third-quarter-results.html