Bright Health to Fund Growth by Raising $750M

Diversified healthcare financing and distribution platform Bright Health Group, Inc. (BHG) has revealed plans to raise about $750 million capital to finance its growth strategies.

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The capital is being provided by Cigna Ventures, a wholly-owned indirect subsidiary of Cigna Corporation (CI), as a new investor. Also, one of the existing shareholders, New Enterprise Associate (NEA), will join as a co-investor. (See Bright Health stock chart on TipRanks)

As per the agreed terms, both the investors will buy convertible perpetual preferred stock with a purchase price of $1,000 per share. The shares will be convertible into shares of the company’s common stock at an initial conversion price of about $4.55 per share.

The President and CEO of Bright Health, Mike Mikan, said, “The investment from Cigna and NEA signifies continued conviction in Bright Health Group’s alignment model. We are excited about the partnership opportunities for both Bright Health Group and Cigna to bring affordable, personalized healthcare to all consumers.”

Bright Health expects the financing to close in January 2022, subject to customary closing conditions. (See Insiders’ Hot Stocks on TipRanks)

Price Target

Last month, J.P. Morgan analyst Lisa Gill reiterated a Hold rating on the stock with a price target of $6, which implies 58.7% upside potential from current levels. Gill expects Bright Health to report a loss of $0.48 per share for the fourth quarter of 2021.

Overall, the consensus among analysts is a Moderate Buy based on 3 Buys and 4 Holds. The average Bright Health price target stands at $8 and implies upside potential of 138.1%.

Hedge Fund Trading Activity

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Bright Health is currently Very Negative, as the cumulative change in holdings across all 4 hedge funds that were active in the last quarter was a decrease of 1.5 million shares.