Cases & investigations

Cases & investigations

Bright Health Group

Kaskela Law LLC is investigating Bright Health Group, Inc. (NYSE: BHG) on behalf of the company’s long-term investors.

Bright Health is an integrated care delivery company that engages in the delivery and financing of health insurance plans in the Unites States.  Recently a securities fraud complaint was filed against Bright Health on behalf of certain investors who purchased shares of the company’s stock between June 24, 2021 through March 1, 2022.

According to the complaint, following the company’s initial public offering (“IPO”) of common stock in June 2021 at a price of $18.00 per share, Bright Health and certain of the company’s senior executive officers made a series of false and misleading statements about the company’s business, operations and prospects.  Specifically, defendants are alleged to have failed to disclose that: (i) Bright Health had overstated its post-IPO business and financial prospects; (ii) Bright Health was ill-equipped to handle the impact of COVID-19-related costs; (iii) Bright Health was experiencing a decline in premium revenue because of a failure to capture risk adjustment on newly added lives; and (iv) all the foregoing was reasonably likely to have a material negative impact on Bright Health’s business and financial condition.

On August 3, 2021, Bright Health reported its first quarterly financial and operational results since completing its IPO.  Among other things, Bright Health reported a net loss of $43.7 million, or $0.28 per share, which was substantially larger than the consensus estimates which projected a loss of $0.18 per share.  Following this news, shares of the company’s common stock declined approximately 22% in value, to close at $8.49 per share on August 3, 2021.

Then on November 11, 2021, Bright Health posted a surprise quarterly net loss of nearly $300 million, nearly triple the loss analysts were expecting.  The miss was attributed to Bright Health’s ballooning Medical Cost Ration (“MCR”) for the quarter of 103%, up from 90.1% in the previous year’s quarter and the first nine months of the year. The Company attributed the disappointing results to ongoing COVID-19 challenges, as well as the Company’s failure to accurately perform risk assessments.  On this news, shares of the company’s common stock declined an additional $2.36 per share, or 32% in value, to close at $4.94 per share on November 11, 2021.

Finally, on March 2, 2022, Bright Health reported (i) a quarterly net loss of $813.4 million, a loss approximately three times larger than consensus estimates, and (ii) a net loss of approximately $1.2 billion for the full-year 2021. Bright Health further revealed that its MCR had exploded to 134.1% for the quarter, and that its full year MCR had come in at 101.3%.  In response to this news, shares of the company’s common stock further declined, to close as low as $1.79 on March 7, 2022.

The investigation seeks to determine whether the members of Bright Health’s board of directors violated the securities laws and/or breached their fiduciary duties in connection with the above alleged misconduct.

Current Bright Health stockholders who purchased or acquired their BHG shares prior to August 3, 2021 are encouraged to contact Kaskela Law LLC (D. Seamus Kaskela, Esq. or Adrienne Bell, Esq.) at (484) 229 – 0750, or by completing the form on this page, for additional information about this investigation and their legal rights and options.

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