Private Payers News

VC-Funded Payer Bright Health Secures $635M in Series D Round

Bright Health’s $635 million Series D funding was an oversubscription, potentially signaling continued interest in VC-funded payer startups.

Medicare advantage, ACA marketplace, Bright Health, health and wellness, health payer, industry consolidation

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By Kelsey Waddill

- Bright Health Plan today announced that it has secured $635 million in Series D funding from the NEA, as VC-funded payers look to 2020.

The funding was an oversubscription, exceeding the amount of funding that the health plan had intended to raise. It resulted in an overall equity of over $1 billion since 2016.

Bright Health shared that it will use the funding to further expand and increase its workforce. Its expansion will include a larger product, geographic, and consumer footprint.

“Real transformation will require disruption at every stage of the healthcare system and Bright Health designed its model with this in mind,” said Mike Mikan, president and vice chairman of Bright Health. “By eliminating the friction that has traditionally existed between payers and providers, we are creating true alignment to drive down costs and improve health outcomes. This funding will bring us one step closer to creating a value-based healthcare system that streamlines the healthcare experience for the consumer.”

Bright Health Plan named eight Series D investors aside from NEA, including Bessemer Venture Partners, Cross Creek Advisors, and Declaration Partners.

“The Series D funding marks not only a major investment in our company’s future but is an affirmation from our existing investors that we have tapped into an unmet consumer demand for a better healthcare experience,” said Bright Health chief executive officer Bob Sheehy. “Over the past four years, we have seen exceptional interest in our approach to transforming healthcare, which is reflected in our investors’ continued capital support, membership growth and geographic expansion year-over-year.”

The plan put its Series C funding of $200 million to work this year.

Bright Health expanded its Medicare Advantage plan footprint to almost twice the size of its 2018 footprint. It entered 13 new markets in six states--Florida, Illinois, Nebraska, Ohio, South Carolina, and Tennessee.

Bright Health leaders have attributed their Medicare Advantage plans’ high speed scaling to its Health Plan Care Partner Model. The model focuses on highly personalized care by arranging provider networks based on cross-specialty care, geographic reach, and quality.

In 2018, the fast-moving company had expanded its Medicare Advantage plan into Arizona, New York, Ohio, and Tennessee

The plan will also be joining more of the federal health insurance marketplaces. Whereas larger health plans have lately been tentative to re-enter the ACA exchanges due to past volatility and regulatory uncertainty, Bright Health and Oscar--as well as the larger health plan Centene--in particular are aiming for immense growth in these markets.

The payer will expand its ACA exchange plans in Florida, Nebraska, Ohio, South Carolina, and North Carolina. These plans will include traditional marketplace benefits as well as some selective Bright Health benefits, including financial rewards for satisfying health and wellness aims, meal delivery after hospital discharge, and transportation.

Bright Health is one of several emerging disruptors in the health payer space, with competitors such as Clover and Oscar health plans.

As industry consolidation appears to continue into 2020 with payers like Centene and Wellcare finalizing their mergers, one wonders what the new year holds for smaller payers that are still breaking into the industry. According to Ben Isgur, Health Research Institute Leader for PricewaterhouseCoopers in the US, the future is bright for Bright Health and its peers.

“What's amazing is that even with all that consolidation and all of that data pointing towards regional power or geographic power or market power, there's still room for startups. There's still room for disruptors,” Isgur told HealthPayerIntelligence.com.

“We're still in a world in 2020 where a good idea that fills a gap, that can produce it cheaper, that can produce it with better quality, or that can make it with a better experience, still has a shot. The big organizations with a lot of horizontal integration don't own it all. Healthcare is one part of our economy where there's a huge barrier to entry. But there are still disruptors that are able to get in there and clear a new pathway.”

Bright Health’s oversubscription may be evidence of this optimistic outlook. The payer’s Series D funding continues a history of strong funding performance. In 2017, the payer secured $160 million in Series B funding and it negotiated $80 million in Series A funding in 2016.