Bright Health Group announced Tuesday that it won't offer individual and family health plans through its insurtech Bright HealthCare next year, and that it's cutting Medicare Advantage products outside of California and Florida.

The cutback will affect plans in Alabama, Arizona, Colorado, Florida, Georgia, Nebraska, North Carolina, Texas and Tennessee. The company had previously announced in April it would exit six markets: Illinois, New Mexico, Oklahoma, South Carolina, Utah and Virginia. In a footnote, it added that Bright HealthCare is in talks to continue an "immaterial" amount of individual and family plan business in states like California and Colorado.

The company said it would focus on its Fully Aligned Care Model, a risk-bearing care delivery business geared toward older and underserved populations. With the changes, it expects to reach profitability based on adjusted EBITDA in 2023. 

Bright also announced it had raised $175 million of committed convertible preferred equity capital, which it said will sustain the company to profitability. 

"This is not a decision we made lightly, but one we believe is in the best interest of progressing our mission and the next chapter in our continued story of transforming healthcare in America," CEO Mike Mikan said during a call with investors. 

THE LARGER TREND

Bright Health hit the public markets in June 2021, about a year after it raised a $500 million Series E round. But the company has struggled financially in recent quarters. It posted a GAAP net loss of $251.3 million and an adjusted EBITDA loss of $194.9 million for the second quarter ending June 30 of this year.

Bright reaffirmed its previous adjusted EBITDA guidance for 2022, expected to be a loss between $500 million and $800 million. During the call Mikan said revenue will likely be at the lower end of the guidance range, which was $6.8 billion to $7.1 billion.

ON THE RECORD

"We have demonstrated the power of the Fully Aligned Care Model in serving aging and underserved populations and progressed the marketplace towards seeing the promise in value-based care across all populations," Mikan said in a statement.

"The changes announced today give Bright Health a strong and stable platform for profitable growth at much lower risk. This is one more strategic step to building a differentiated and profitable business at scale."