Bright Health Group, Inc.

Hello and welcome to the Bright Health Group U2 2023 Earnings Call. My name is Alex. I'll be coordinating the call today. I'll now hand it over to our host, Stephen Hagen, Investor Relations Director, to begin. Please go ahead.

Good morning and welcome to Bright Health Group's second quarter 2023 Earnings Conference Call. As a reminder, this call is being recorded. We in the call today are Bright Health Group's President and CEO, Mike Mikan, and CFO, Jay Matuszak. Before we begin, we want to remind you that this call may contain forward-looking statements under U.S. federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the risk factors in our current and periodic reports we file with the SEC. Except as required by law, we undertake no obligation to revise or update any forward-looking statements or information. This call will also reference non-GAAP amounts and measures. A reconciliation of the non-GAAP to GAAP measures is available in the company's second quarter press release, available on the company's investor relations page at investors.brighthealthgroup.com. Information presented on this call is contained in the earnings release we issued this morning in our form 8K dated August 9th, 2023, which may be accessed from the investor relations page of the company's website. We announced on June 30th that we have entered into a definitive agreement to sell our California Medicare Advantage business. And as we were working through the regulatory approval and other closing conditions for the sale, We're not going to be conducting a Q&A session on this call. With that, I'll now turn the conference over to Bright Health Group Chief Executive Officer Mike Mykit.

Thank you, Stephen, and good morning, everyone. I'd like to begin by welcoming Jay Matuszak to his first earnings call as CFO of Bright Health Group. Jay has stepped into his new role at a pivotal moment in the company's history, and I can't be more pleased with how he has jumped in so far. And more importantly, for the wealth of knowledge and focus on execution Jay will bring as we continue our journey of transition. It goes without saying that Bright Health has gone through significant changes over the past few months. We have focused and simplified our business on what was core to Bright Health when it was founded, delivering personalized and affordable health care for aging and underserved consumers through our fully aligned care model. That focus and our mission of making healthcare right together does not change and is core to everything we do. We believe, and the results continue to demonstrate, when you connect the financing and delivery of care, you unlock the best outcomes. I'm excited to have Jay and I share with you the strong performance of our consumer care business through the second quarter and how we are positioning the business for the future. However, before I do, I wanted to note the key actions the board and management set out to accomplish when we announced the exit of the ACA insurance business at the end of 2022. First, focus and simplify our business. As I noted, Bright Health's core has always been the fully aligned care model and the belief that when you connect the financing and delivery of care, you get the best results. With the sale of the Medicare Advantage and discontinuation of ACA insurance businesses, the company will have a singular focus on value-driven care and the results we can drive with our aligned partners. Second, secure core external payer partners. While always an important part of our business, no longer having a captive insurance company accelerated the need to develop strong and deep partnerships with payers so that we can deliver and execute our model. The team has done a phenomenal job in, as I noted in the past, building and deepening relationships with some of the largest payers in the country. As Jay will discuss, we ended the second quarter serving 371,000 consumers through value-based arrangements, including approximately 65,000 through our REACH ACOs. We continue to build and expand on those relationships, as well as enter new ones like the provider agreement with Molina to serve Medicaid and ACA marketplace populations in Florida and Texas in 2024. These are all great partners that have millions of members where we can continue to expand value-based arrangements together. Third, demonstrate strong performance for those partners. While still early, with two quarters behind us, We are delivering results for our partners, and those results are coming through in our financials. As Jay will discuss, the consumer care business continued its solid performance in the second quarter, generating positive operating income in both consumer care segments. This positive segment operating income drove Bright Health to its first quarter of adjusted EBITDA profitability, a key milestone on our path to long-term profitable growth. We remain focused on delivering adjusted EBITDA profitability for the full year. Four, manage the liability for our discontinued operations. We have made substantial progress on the run-out of our ACA marketplace business, reaching approximately 95% claims completion as of June 30. We have also received the final details on the risk adjustment obligations by state. We believe that together the progress on the claims and risk adjustment means that our ultimate liability in the ACA marketplace business is much closer to a final outcome with the risks related to this business being much narrower at this point. Fifth, bolster the company's capital position. We announced on April 28th that we were exploring strategic alternatives for our California Medicare Advantage business. And on June 30th, we signed an agreement with Molina for them to acquire that business for $600 million. Earlier this week, we announced the company entered into a $60 million credit facility with NEA, along with a permanent waiver of default on our existing credit facility. Jay will discuss the details of this in a moment. But taken together, we believe these actions put the company in a strong capital position as we continue to execute against our transformation and our mission. And finally, as the team and I turn to the future, we couldn't be more excited about how the company is positioned and where it sits in today's healthcare landscape. We were pleased to report positive GAAP operating income in both care delivery and care solutions in the second quarter and the year-to-date period. The ongoing business at Bright Health is one of the largest providers of value-driven care in the country. As we've shown so far this year, through positive segment operating income and enterprise-adjusted EBITDA, we are focused on balancing risk and growth in the business and setting the company up for long-term profitable growth. I'll now hand it over to Jay to provide additional details on our second quarter performance and our updated outlook.