Bright Health Group completed a reverse stock split on Monday, lifting its share price above the bare minimum needed to stay on the New York Stock Exchange.
The insurtech company, which was on the verge of bankruptcy, consolidated its shares at a ratio of 1 to 80, raising the price to $13.57 at market open. The Board of Directors intends to reassess executive compensation following a reverse stock split. Shares were trading at 21 cents prior to the consolidation.
Bright Health stock is still worth much less than when it launched in 2021.
“Most interestingly, even with this 1-to-80 reverse split, the stock will still be trading below the $17.25 IPO price of less than two years ago, reflecting the extent of the damage that investors have suffered. shareholders have to bear,” Ari Gottlieb, principal at A2 Strategy Corp., wrote in a text message. Bright Health needs to pursue a 1 to 100 split to match the initial public offering price, he writes.
Bright Health did not immediately respond to a request for an interview.
At the time of the IPO, Bright Health reached a valuation of $12 billion. Now, it is poised to exit the health insurance market entirely, which is supposed to be its core business. Bright Health previously sold exchange, employer, and Medicare Advantage policies in 15 states. The company is shrinking all of those lines and looking for buyers of its Medicare Advantage plans in California, the company’s last working insurance product.
Bright Health also operates a network of 74 primary care clinics in Florida and Texas, serving 375,000 patients. If the insurance regulator in either state places the company under a takeover, the lender can revoke their credit agreement. Bright Health reported a total shortfall of $163 million in insurance subsidiaries in Florida and Texas late last year.
Florida insurance regulators this month extended their oversight of the company through June, requiring Bright Health executives to receive regulatory approval to spend the money. .
Chief financial and administrative officer Cathy Smith stepped down from the company this month. Smith did not resign because of conflicts with the board, management or problems with the company’s financial statements, the company said in a Securities and Exchange Commission filing. She will remain an advisor to the company and be paid $50,000 per month. Jay Matushak, former senior vice president of insurance, is the new chief financial officer.
