Molina Healthcare will cut to $425 million its payment for Bright Health Group's California Medicare Advantage plans.
Molina did not specify in a news release Monday why it reduced the agreed-upon purchase price of $510 million by 16.7%.
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Molina will seek regulatory approval to consolidate the two plans, Brand New Day and Central Health Plan, as part of the acquisition, according to a Securities and Exchange Commission filing Bright Health submitted Monday.
Molina will hold $100 million of the $425 million in escrow and release it to Bright Health next year if regulators approve consolidation of the two plans or if Brand New Day secures a Part D star rating of at least three out of five during the 2025 cycle, the filing said. Central Health Plan had a higher star rating than Brand New Day for the 2024 plan year. If regulators do not approve consolidation of the plans, or if Brand New Day does not increase its star rating, Molina will not release the $100 million.
The companies anticipate closing the deal around Jan. 1.
Molina and Bright Health did not immediately respond to interview requests.
Molina in June said it would acquire Bright Health's California Medicare Advantage plans—its final insurance business—for $600 million, with a $90 million tax benefit. The purchase came with several conditions, including the continued solvency of Bright Health Group, a minimum performance in the federal star ratings program and the maintenance of each plan's membership.
Bright Health was banking on using the funds from the initial deal to pay back its lenders at J.P. Morgan after it overdrew its $350 million revolving credit facility earlier this year. The insurer also owes rival carriers $380.2 million in risk-adjustment funds from its defunct exchange operations.
Once Bright Health sells the California plans, the company will operate a chain of risk-bearing clinics in Texas and California and manage care for 62,000 Accountable Care Organization Realizing Equity, Access and Community Health enrollees in 2024.
