Bright Health Group completed a reverse stock split Monday, raising its share price above the minimum required to remain on the New York Stock Exchange.
The insurtech, which is on the brink of bankruptcy, consolidated its shares by one-to-80, raising the price to $13.57 at the market open. The board of directors intends to reevaluate executive compensation following the reverse stock split. Shares were trading at 21 cents prior to consolidation.
Bright Health stock is still worth far less than when it debuted in 2021.
“What is most interesting is that, even with this one-for-80 reverse split, the stock will still be trading below the $17.25 IPO price of less than two years ago, reflecting how much shareholders have suffered,” Ari Gottlieb, principal at A2 Strategy Corp., wrote in a text message. Bright Health would have needed to pursue a one-to-100 split to match the initial public offering price, he wrote.
Bright Health did not immediately respond to an interview request.
At the time of its IPO, Bright Health reached a $12 billion valuation. Now, it's poised to completely exit the health insurance markets that were supposed to be its core business. Bright Health previously sold exchange, employer and Medicare Advantage policies in 15 states. The company is winding down all those lines and seeking a buyer for its Medicare Advantage plans in California, which is its last active insurance product.
Bright Health also operates a network of 74 primary care clinics in Florida and Texas that serve 375,000 patients. If insurance regulators in either state place the company under receivership, lenders may revoke their credit agreements. Bright Health reported a combined $163 million shortfall in its Florida and Texas insurance subsidiaries at the end of last year.
Florida insurance regulators this month extended their supervision of the company through June, requiring Bright Health executives to receive regulatory approval to spend money.
Chief Financial and Administrative Officer Cathy Smith resigned from the company this month. Smith did not resign because of conflicts with the board of directors, the management team or issues with the company’s financial reporting, the company said in a Securities and Exchange Commission filing. She will remain an adviser to the company and be paid $50,000 per month. Jay Matushak, former senior vice president of insurance, is the new CFO.