Name of each exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	o
Emerging growth company	o		o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of November ~~4, 2021~~7, 2022, the registrant had 630,077,675~~628,315,180~~ shares of common stock, $0.0001 par value per share, outstanding.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ~~or the Securities Act,~~(the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended or (“the Exchange ~~Act.~~Act”). Statements made in this Quarterly Report that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements, and should be evaluated as such. Forward-looking statements include any statement or information concerning possible or assumed future results of operations, ~~including descriptions of~~ our business plan and ~~strategies.~~strategies, and our operational and– financial outlook, estimates, projections, and guidance. These statements often include words such as “anticipate,” “expect,” “plan,” “believe,” “intend,” “project,” “forecast,” “estimates,” “projections,” “should,” “might,” “may,” “will” and other similar expressions. ~~These forward-looking statements include any statements regarding our plans and expectations with respect to Bright Health Group, Inc.~~ Such forward-looking statements are subject to various risks, uncertainties and assumptions. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Factors that might materially affect such forward-looking statements include: our ability to continue as a going concern; our ability to quickly and efficiently wind down our Individual and Family Plan (“IFP”) businesses and Medicare Advantage (“MA”) businesses outside of California; our ability to accurately estimate and effectively manage the costs relating to changes in our businesses offerings and models; a delay or inability to withdraw regulated capital from our subsidiaries; our ability to comply with ongoing regulatory requirements, including consent decrees or government orders; a lack of acceptance or slow adoption of our business model; our ability to retain existing consumers and expand consumer enrollment; our ability to obtain and accurately assess, code, and report IFP and MA risk adjustment factor scores for consumers; our ability to contract with care providers and arrange for the provision of quality care; our ability to accurately estimate our medical expenses, effectively manage our costs and claims liabilities or appropriately price our products and charge premiums; our ability to obtain claims information timely and accurately; the impact of the ongoing COVID-19 pandemic on our business and results of operations; the risks associated with our reliance on third-party providers to operate our business; the impact of modifications or changes to the U.S. health insurance markets; our ability to manage the growth of our business; our ability to operate, update or implement our technology platform and other information technology systems; our ability to retain key executives; our ability to successfully pursue acquisitions and integrate acquired businesses; the occurrence of severe weather events, catastrophic health events, natural or man-made disasters, and social and political conditions or civil unrest; our ability to prevent and contain data security incidents and the impact of data security incidents on our members, patients, employees and financial results; our ability to comply with requirements to maintain effective internal controls; our ability to adapt to new risks associated with our expansion into Direct Contracting; and the other factors set forth under the heading “Risk Factors” in this Quarterly Report and Bright Health Group’s ~~prospectus dated June 23,~~Annual Report on Form 10-K for the year ended December 31, 2021, ~~(File No.333-256286), as~~that was filed with the United States Securities and Exchange Commission ~~pursuant to Rule 424(b)(4) under~~(“SEC”) on March 18, 2022 (“2021 Form 10-K”) and our other filings with the ~~Securities Act of 1933, as amended.~~SEC.

The preceding list is not intended to be an exhaustive list of all of the factors that might affect our forward-looking statements. The forward-looking statements are based on our beliefs, assumptions and expectations of future performance, taking into account the information currently available to us. These statements are only predictions based upon our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Other sections of this Quarterly Report may include additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time and it is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make.

You should not rely upon forward-looking statements as predictions of future events. ~~Although~~Our forward-looking statements speak only as of the date of this Quarterly Report and, although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance and events and circumstances reflected in ~~the~~such forward-looking statements will be achieved or ~~occur.~~occur at all. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in our expectations.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Bright Health Group, Inc. and Subsidiaries

(in thousands, except share and per share data)

See accompanying Notes to Condensed Consolidated Financial Statements

(in thousands, except ~~share and~~ per share data)

See accompanying Notes to Condensed Consolidated Financial Statements

Bright Health Group, Inc. and Subsidiaries

See accompanying Notes to Condensed Consolidated Financial Statements

(in ~~thousands)~~thousands)

See accompanying Notes to Condensed Consolidated Financial Statements

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION

Organization: Bright Health Group, Inc. and subsidiaries (collectively, “Bright Health,” “we,” “our,” “us,” or the “Company”) was founded in 2015 to transform healthcare. Our mission of Making Healthcare Right. Together. is built upon the belief that by ~~connecting and~~ aligning the best local resources in healthcare delivery with the financing of care we can drive a superior consumer experience, optimize clinical outcomes, reduce systemic waste, and lower ~~costs,~~costs. We are a healthcare company building a national Integrated System of Care in close partnership with our Care Partners. Our differentiated approach is built on alignment, focused on the consumer, and ~~optimize clinical outcomes.~~powered by technology. We have two market facing businesses: NeueHealth and Bright HealthCare. NeueHealth provides care delivery and value-based enablement services through our owned and affiliated clinics. Bright HealthCare offers Commercial and Medicare health plan products across the nation.

~~Stock Split:~~ ~~On June 2, 2021, we effected a stock split of~~Beginning January 1, 2022, two Direct Contracting Entities (“DCEs”) aligned with our NeueHealth segment began participating in the ~~Company’s common stock on a 1-for-3 basis (the “Stock Split”~~Centers for Medicare and Medicaid Services' (“CMS”) Global and Professional Direct Contracting model (“DC Model”). ~~In connection with the Stock Split, the conversion rate~~Both DCEs assume full risk for the ~~Company’s preferred stock was proportionately adjusted such that the common stock issuable upon conversion~~total cost of such preferred stock was increased in proportion to the Stock Split. Accordingly, all common stock share and per share amounts for all periods presented in these financial statements have been retroactively adjusted to reflect this Stock Split.care of aligned beneficiaries.

~~Initial Public Offering:~~ ~~On June 28, 2021,~~In April 2022, we ~~completed our initial public offering (“IPO”)~~announced that Bright HealthCare will exit the Commercial marketplace in ~~which we issued~~six states for the 2023 plan year: Illinois, New Mexico, Oklahoma, South Carolina, Utah, and ~~sold~~ 51,350,000 shares of common stock, par value $0.0001 per share, at an offering price of $18.00 per share. We received net proceeds of $887.3 million from the sale of our common stock, after deducting underwriting discounts and commissions of $37.0 million. We used a portion of the net proceeds from our IPO to repay in full our outstanding borrowings under our revolving credit facility,Virginia, as well as ~~to fund the acquisition~~discontinuing our employer group business. In October 2022, we announced that Bright HealthCare will no longer offer Commercial products in 2023 or offer Medicare Advantage (“MA”) products outside of ~~Centrum Medical Holdings, LLC (“Centrum”). Refer to Note 2,~~ ~~Business Combinations, and~~ ~~Note 7,~~ ~~Short-Term Borrowings~~ ~~for more information.~~

~~The Company’s Common Stock is traded on the New York Stock Exchange (the “NYSE”) under the symbol “BHG”.~~

We incurred $6.7 million of deferred offering costs consisting primarily of accounting, legal and other fees related to our IPO, which were recorded against IPO proceeds within additional paid-in capital upon closing of our IPO.

~~Conversion of Preferred Stock into Common Stock:~~ OnJune 28, 2021, the Company issued 427,897,381 shares of common stock upon conversion (the “Conversion”) of all outstanding shares of its Series A Convertible Preferred Stock, par value $0.0001 per share, Series B Convertible Preferred Stock, par value $0.0001 per share, Series C Convertible Preferred Stock, par value $0.0001 per share, Series D Convertible Preferred Stock, par value $0.0001 per share, and Series E Convertible Preferred Stock, par value $0.0001 per share (collectively, the “Preferred Stock”), pursuant to its eighth amended and restated certificate of incorporation. Conversion of the preferred stock into shares of common stock occurred automatically immediately prior to the closing of our IPO.California.

Basis of Presentation: The condensed consolidated financial statements include the accounts of Bright Health Group, Inc. and all subsidiaries and controlled companies. All intercompany balances and transactions are eliminated upon consolidation. The condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by GAAP for annual financial statements. We have omitted certain footnote disclosures that would substantially duplicate the disclosures in our audited consolidated financial statements, unless the information contained in those disclosures materially changed or is required by GAAP. As such, the condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, ~~2020~~2021 included in our Form 10-K for the ~~prospectus dated June 23,~~year ended December 31, 2021 ~~(File No.333-256286) (the “Prospectus”~~(“2021 Form 10-K”)~~, as filed with the United States Securities and Exchange Commission (“SEC”) pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended.~~. The accompanying condensed consolidated financial statements include all normal recurring adjustments necessary for fair presentation of the interim financial statements.

Reportable Segments: During the three months ended September 30, 2022, our reportable segments changed. We now report our operating results through three reportable segments: Bright HealthCare – Commercial, Medicare Advantage and NeueHealth. See Note 12, Segments and Geographic Information, for additional information on our segments. We have reflected this change in all historical periods presented.

Use of Estimates: The preparation of our condensed consolidated financial statements in conformance with GAAP requires management to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Our most significant estimates include medical costs payable, risk adjustment revenue and associated payables and receivables, premium deficiency reserve, Direct Contracting performance year receivable and obligation, and valuation and impairment of goodwill and other intangible ~~assets, valuation and impairment of investments and estimates of share-based compensation.~~assets. Actual results could differ from these estimates.

Going Concern:~~For~~ The condensed consolidated financial statements have been prepared in accordance with GAAP assuming the ~~three~~Company will continue as a going concern. The Company has a history of operating losses, and we generated a net loss of $691.3 million for the nine months ended September 30, ~~2021, we recognized a change~~2022. These losses, as well as significant growth in ~~estimate~~consumers in the Bright HealthCare – Commercial segment, which has required us to set aside additional cash for ~~risk adjustment~~equity contributions to maintain minimum regulatory amounts, have reduced the cash available to fund operations. In addition, the Company amended the terms of ~~$134.0 million~~its debt covenants in November 2022 as further described in Note 7, Short-Term Borrowings. These conditions raise substantial doubt about the Company’s ability to continue as a ~~result of updated data inputs used~~going concern.

In response to ~~calculate Individual~~these conditions, management is implementing a restructuring plan to reduce our capital needs and ~~Family Plan (“IFP”) members’ expected full year risk scores, which resulted~~our operating expenses in anthe future to drive positive operating cash flow and increase ~~in risk adjustment~~liquidity. The Company’s Bright HealthCare business

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

~~payable~~is exiting the Commercial marketplace for the 2023 plan year and is focusing on its Medicare Advantage business in California. In addition to our market exits, management is implementing additional restructuring activities, which include reducing our workforce, exiting excess office space, and terminating or restructuring contracts. The Company also closed on a $175.0 million capital raise in October 2022 to capitalize our continuing operations as further described in Note 16, Subsequent Events.

The Company believes our restructuring initiatives, along with existing cash and investments, will provide sufficient liquidity to meet its obligations as they come due in the 12 months following the date the condensed consolidated financial statements are issued. As a result, the Company has concluded that management’s plans are probable of being achieved to alleviate substantial doubt about the Company’s ability to continue as a going concern.

Performance Guarantees: Through our participation in the DC Model, we determined that our arrangements with the providers of our DCE beneficiaries require us to guarantee their performance to CMS. We recognized our obligation to guarantee their performance for the duration of the performance year on the Condensed Consolidated Balance ~~Sheets and a reduction in premium~~Sheets. As we fulfill our obligation we ratably amortize the guarantee for the amount that represents the completed portion of the performance obligation as Direct Contracting revenue inon the Condensed Consolidated Statements of Income (Loss). Direct Contracting revenue is derived from the estimated annual sum of the capitation payments made to the DCEs for services within the scope of the capitation arrangement with CMS and fee-for-service (“FFS”) payments from CMS made directly to third-party providers for our aligned beneficiaries. For each performance year, the final consideration due to the DCEs by CMS (shared savings) or the consideration due to CMS by the DCEs (shared loss) is reconciled in the year following the performance year. Periodically during the performance year, CMS will measure the shared savings or loss and adjust the performance benchmark and thus the remaining performance obligation if we are in a probable shared loss position.

Net loss per share: Prior to 2022, basic net loss per share attributable to common stockholders was computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net loss attributable to common stockholders is computed by adjusting net losses attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share attributable to common stockholders is computed by dividing the diluted net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period, including potential dilutive common shares. Beginning in 2022, we also include our Series A Convertible Perpetual Preferred Stock (“Series A Preferred Stock”) issued in January 2022 as a participating security in the computation of net loss per share pursuant to the two-class method. The two-class method of calculating net income (loss) per share is an allocation method that calculates earnings per share for common stock and participating securities. Under the two-class method, total dividends due to the holders of the Series A Preferred Stock and undistributed earnings allocated to participating securities are subtracted from net income (loss) in determining net income (loss) attributable to common stockholders.

Operating Costs: Our operating costs, by functional classification for the three and nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, are as follows (in ~~thousands)~~thousands):

Recently Issued and Adopted Accounting Pronouncements: In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06, Debt—Debt with Conversion and Other Options

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. This guidance eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. We adopted ASU 2020-06 on January 1, 2022. The adoption did not have a material impact on our financial condition, results of operations or cash flows.

There were no other accounting pronouncements that were recently issued and not yet adopted or adopted since our audited consolidated financial statements were issued that had, or are expected to have, a material impact on our consolidated financial position, results of operations, or cash flows.

NOTE 2. BUSINESS COMBINATIONS

Centrum Acquisition: On July 1, 2021, we acquired 75% of the outstanding equity interests of Centrum Medical Holdings, LLC (“Centrum”) for cash consideration of $222.4 million and $75.0 million of common stock, for total purchase consideration of $296.2 million, net of $1.2 million of cash acquired. Centrum is a value-based primary care focused, multi-specialty medical group based in Florida. Centrum primarily operates 17 health centers in Florida and Texas serving Commercial, Medicare, and Medicaid consumers across multiple ~~payors, with secured expansion locations in Texas and North Carolina.~~payors. Centrum is included in our NeueHealth reportable segment. Transaction costs of $1.0 million incurred in connection with the acquisition are included in operating costs in the Condensed Consolidated Statements of Income (Loss) for the nine months ended September 30, 2021.

The total ~~preliminary~~ purchase consideration for the Centrum acquisition is allocated to tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of the acquisition date. The excess of the purchase price over the net assets acquired is recorded as goodwill, which is predominantly attributable to the incremental financial benefits achievable through Bright Health Group’s integrated care delivery model, whereby Bright HealthCare members are cared for under value-based arrangements with Centrum. This model brings together the financing, distribution, and delivery of high-quality healthcare and provides the opportunity to enhance overall margin potential for the Company.

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~~Notes~~ The goodwill from the Centrum acquisition is expected to ~~Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

be deductible for tax purposes.

The following table discloses the ~~preliminary estimated~~ fair values of assets and liabilities acquired by the Company in the Centrum acquisition (in ~~thousands)~~thousands):


Accounts receivable	$	1,874
Prepaids and other current assets	627
Property and equipment	2,557
Intangible assets	102,370
Other assets	8,917
Total assets	116,345
Medical payables	19
Accounts payable	359
Other current liabilities	861
Other liabilities	11,636
Total liabilities	12,875
Net identified assets acquired	103,470
Goodwill	~~277,831~~275,066
Redeemable noncontrolling interest	~~(85,075)~~(82,310)
Total purchase consideration, net of cash acquired	$	296,226

The preliminary fair values of acquired assets and liabilities assumed represent management’s estimate of fair value and are subject to change if additional information, such as post-close working capital adjustments, becomes available. The Company is in process of identifying any additional intangible assets that would reduce the goodwill recognized. The fair values of certain assets and liabilities have changed from previous disclosure. We obtained additional information to estimate the fair value of the right-of-use lease asset and liability included within other assets and other liabilities. We also updated the fair value of intangible assets based on the methodologies described below.

Our ~~preliminary estimate of~~ intangible assets related to the Centrum acquisition ~~consists~~consist of trade names with a 15-year useful life, customer relationships with 2-2 to 15-year useful lives, and a reacquired contract between Bright HealthCare and Centrum with a useful life of 4.5 years. In the third quarter of 2022, we fully impaired the reacquired contract as a result of our decision to no longer offer commercial

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

products for the 2023 plan year. The value of the trade name was determined using the relief of royalty method and the excess earnings method was used to value the customer relationships; both methods are considered Level 3 fair value measurements. The fair value of noncontrolling interest was determined using a market approach and included a discount to account for the lack of marketability of the noncontrolling interest.

The acquisition of Centrum would not have had a material impact on our revenue or net loss had it been included in the consolidated results of the Company for the nine months ended September 30, ~~2021 or the three and nine months ended September 30, 2020.~~2021.

Central Health Plan Acquisition: On April 1, 2021, we acquired all of the outstanding shares of Central Health Plan of California, Inc. (“CHP”) for cash consideration of $276.0 million and $79.8 million in Series E preferred stock and $13.9 million of working capital adjustments, for total purchase consideration of ~~$271.7~~$285.6 million, net of $84.1 million of cash acquired. All outstanding shares of Series E preferred stock were converted into shares of common stock automatically immediately prior to the closing of our initial public offering on June 28, 2021. CHP is an insurance provider of ~~Medicare Advantage~~MA Health Maintenance Organization (“~~MA”~~HMO”) ~~HMO~~ services. CHP is included in our ~~Bright HealthCare~~Medicare Advantage reportable segment. ~~Transaction costs~~ of $0.2 million incurred in connection with the acquisition are included in operating costs in the Condensed Consolidated Statements of Income (Loss) for the nine months ended September 30, 2021, out of $1.4 million of total transaction cost~~s we have incurred.~~

The total ~~preliminary~~ purchase consideration for the CHP acquisition is allocated to tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of the acquisition date. The excess of the purchase price over the net assets acquired is recorded as goodwill. The goodwill for CHP is attributable to synergies from leveraging CHP’s clinical model and California consumer expertise to continue to expand our MA business in the California market. The goodwill is not deductible for tax purposes.

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~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

The following table discloses the ~~preliminary estimated~~ fair values of assets and liabilities acquired by the Company in the CHP acquisition (in ~~thousands)~~thousands):


Accounts receivable	$	~~16,361~~17,240
Short-term investments	19,041
Prepaids and other current assets	~~25,520~~25,530
Property and equipment	370
Intangible assets	102,000
Other assets	1,249
Total assets	~~163,292~~165,430
Medical costs payable	~~79,450~~75,643
Accounts payable	2,371
Other current liabilities	~~17,212~~7,984
Other liabilities	~~28,622~~26,275
Total liabilities	~~127,655~~112,273
Net identified assets acquired	~~35,637~~53,157
Goodwill	~~236,037~~232,442
Total purchase consideration, net of cash acquired	$	~~271,674~~285,599

The ~~preliminary~~measurement period adjustments above primarily resulted from obtaining additional information for the valuation of deferred taxes included in other liabilities, to estimate the fair ~~values~~value of ~~acquired~~the right-of-use lease asset and liability included within other assets and other liabilities, ~~assumed represent management’s estimate of fair value~~ and ~~are subject~~ to ~~change if additional information, such as~~recognize post-close working capital ~~adjustments, becomes available.~~true-ups based on additional information.

Our ~~preliminary estimate of~~ intangible assets related to the CHP acquisition ~~consists~~consist of customer relationships with a 10-year useful life, trade names with a 15-year useful life and the provider network with a 7-year useful life. The value of the trade name was determined using the relief from royalty method and the excess earnings method was used to value the customer relationships; both methods are considered Level 3 fair value measurements.

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

If CHP had been included in the consolidated results of the Company for the nine months ended September 30, 2021, our pro forma revenue would have been $3.2 billion and ~~the three and nine months ended September 30, 2020~~ ~~(in thousands)~~:

Pro Forma Consolidated Statements of Income (Loss)
(Unaudited)
Three Months Ended Nine Months Ended
September 30,
September 30, 2020 2021 2020
Revenue $ 502,378 $ 3,195,925 $ 1,263,016
Net Loss (49,157) (358,935) (70,971)

our pro forma net loss would have been $358.9 million.

True Health New Mexico and Zipnosis Acquisitions: On March 31, 2021, we acquired all of the outstanding equity interests of True Health New Mexico, Inc. (“THNM”) for initial cash consideration of $27.5 million and $8.1 million of favorable risk-based capital adjustments, net of cash acquired of $24.1 million, for total purchase consideration of ~~$3.4~~$(4.7) million. THNM is a physician-led health insurance company offering policies available through the commercial market for individual on- and off-exchange and employer-sponsored health coverage. THNM is included in our Bright HealthCare – Commercial reportable segment. In addition, on March 31, 2021, we acquired Zipnosis, Inc. (“Zipnosis”), which is a telehealth platform that offers virtual care to health systems around the U.S., for aggregate consideration of $73.0 million, including $55.1 million in Series E preferred stock and adjusted for $0.5 million of tangible net equity adjustments. We acquired $3.2 million of cash as part of the Zipnosis acquisition, for net total purchase consideration of $69.8 million. Zipnosis is included in our NeueHealth reportable segment. Transaction costs of $0.5 million incurred in connection with these acquisitions are included in operating costs in the Condensed Consolidated Statements of Income (Loss) for the nine months ended September 30, 2021.

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~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

The total ~~preliminary~~ purchase consideration for the THNM and Zipnosis acquisitions is allocated to tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of the acquisition date. The excess of the purchase price over the net assets acquired is recorded as goodwill. The goodwill for THNM is attributable to synergies from leveraging THNM’s strong local clinical model of care and the ability to enter into a new state of strategic interest for future growth and expansion. The goodwill from the Zipnosis acquisition is attributable to benefits from the ability to enhance our proprietary technology platform, DocSquad, and Zipnosis’ attractive virtual care capabilities to enhance Bright Health’s consumer and provider connectivity. The goodwill from the THNM and Zipnosis acquisitions is not deductible for tax purposes.

The following table discloses the ~~preliminary estimated~~ fair values of assets and liabilities acquired by the Company in the THNM and Zipnosis acquisitions (in ~~thousands)~~thousands):

~~The preliminary fair values of acquired assets and liabilities assumed represent management’s estimate of fair value and are subject to change if additional information, such as~~We recognized measurement period adjustments for THNM for post-close working capital ~~adjustments, becomes available.~~true-ups of a $0.7 million reduction in medical costs payable (from the $13.3 million previously reported) and a $8.7 million increase in other current liabilities (from the $2.7 million previously reported) based on additional information.

~~Our preliminary estimate of intangible~~Intangible assets initially recognized related to the THNM acquisition ~~consists~~consisted of customer relationships with ~~10-to~~10- to 14-year useful lives, trade names with a 15-year useful life and the provider network with a 7-year useful life. In the first quarter of 2022, we fully impaired the intangible assets related to THNM as a result of our decision to no longer offer Commercial

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(Unaudited)

products in New Mexico for the 2023 plan year and exit the employer business as contracts expire. For the Zipnosis acquisition, our preliminary estimate of intangible assets consists of customer relationships with a 15-year useful life, trade names with a 5-year useful life and developed technology with a 7-year useful life. For these acquisitions the value of the trade names and developed technology was determined using the relief from royalty method and the excess earnings method was used to value the customer relationships; both methods are considered Level 3 fair value measurements.

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~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~The following pro forma financial information presents our revenue and net loss as if~~If THNM and Zipnosis had been included in the consolidated results of the Company for the nine months ended September 30, 2021, ~~and three and nine months ended September 30, 2020~~ ~~(in thousands)~~:

Pro Forma Consolidated Statements of Income (Loss)
(Unaudited)
Three Months Ended Nine Months Ended
September 30,
September 30, 2020 2021 2020
Revenue 384,797 $ 3,114,954 943,286
Net Loss (57,035) $ (372,315) (85,988)

~~PMA Acquisition:~~ On December 31, 2020, we acquired a 62% controlling interest in Premier Medical Associates of Florida, LLC (“PMA”) in exchange for $74.2 million. PMA provides care services to Medicare and Medicaid patients in Florida through a network of primary care providers and population health-focused specialists. The acquisition of PMA is expected to enhance our clinical capabilities to better serve enrollees as part of our Florida market expansion. The total purchase consideration for the PMA acquisition was allocated to tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of the acquisition date. The excess of the purchase price over the net assets acquired was recorded as goodwill. The purchase price allocation is preliminary and subject to change, including the valuation of property, equipment and capitalized software and intangible assets, among other items. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date.

~~BND Acquisition:~~ On April 30, 2020, we acquired all of the outstanding shares of Universal Care, Inc. (d.b.a. Brand New Day) (“BND”). BND is a leader in providing healthcare services in California and serves Medicare eligible seniors and special needs populations through their extensive network of primary care providers and specialists. BND combines analytics and evidence-based clinical programs with aligned provider relationships to provide high quality, affordable care for complex and vulnerable populations. The total consideration included $206.9 million in cash and $80.0 million in Bright Health Series D preferred stock. We have since applied indemnity escrow adjustments of $44.0 million to the acquisition price, bringing total consideration to $210.1 million, net of cash acquired of $32.8 million. Transaction costs of $3.8 million incurred in connection with the acquisition are included in operating costs in the Consolidated Statements of Income (Loss) for the year ended December 31, 2020. If BND had been included in the consolidated results of the Company for the nine months ended September 30, 2020, our pro forma revenue would have been ~~$1.0~~$3.1 billion and our pro forma net loss would have been ~~$(100.9)~~$372.3 million.

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~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

The total purchase consideration for the BND acquisition was allocated to tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of the acquisition date. The excess of the purchase price over the net assets acquired was recorded as goodwill. The goodwill is attributable to synergies from leveraging BND’s strong clinical model of care to drive growth in our MA business outside of California. The goodwill from the BND acquisition is not deductible for tax purposes. The following table discloses the preliminary estimated fair values of assets and liabilities acquired by the Company in the BND acquisition, as well as measurement adjustments made inDuring the nine months ended September 30, ~~2021 to~~2022, we completed an immaterial business combination which increased goodwill in the ~~amounts initially recorded in 2020~~ NeueHealth reportable segment.

Amount Recognized as of
Acquisition Date
(as previously reported) Measurement
Period
Adjustments Amounts Recognized as of
Acquisition Date
(as adjusted)
Accounts receivable $ 74,128 $ — $ 74,128
Prepaid and other currents assets 30,583 — 30,583
Property and equipment 4,375 — 4,375
Intangible assets 72,600 1,900 74,500
Other non-current assets 2,906 — 2,906
Total assets 184,592 1,900 186,492
Medical costs payable 119,408 — 119,408
Other current liabilities 51,744 174 51,918
Other liabilities 1,236 108 1,344
Total liabilities 172,388 282 172,670
Net identified assets acquired 12,204 1,618 13,822
Goodwill 197,886 (1,618) 196,268
Total purchase consideration $ 210,090 $ — $ 210,090

The measurement period adjustments above primarily resulted from completing valuations for certain intangible assets. The related impact to net earnings that would have been recognized in previous periods if the adjustments were recognized as of the acquisition date is immaterial to the consolidated financial statements. We recognized intangible assets related to the BND acquisition, which consist of $25.6 million for the BND trade name with an estimated useful life of 15 years, customer relationships valued at $46.9 million with a 12-year useful life, and $2.0 million of other intangibles related to the provider network with a 10-year useful life. The value of the trade name was determined using the relief from royalty method and the excess earnings method was used to value the customer relationships; both methods are considered Level 3 fair value measurements.

~~Table of Contents~~

~~Bright Health Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Fixed Maturity Securities

Available-for-sale securities are reported at fair value as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021. Held-to-maturity securities are reported at amortized cost as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021. The following is a summary of our investment securities as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 (in ~~thousands)~~thousands):

September 30, 2021
Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Carrying
Value
Cash equivalents $ 271,984 $ 1 $ (1) $ 271,984
Available for sale:
U.S. government and agency obligations 501,343 283 (376) 501,250
Corporate obligations 290,917 384 (106) 291,195
State and municipal obligations 15,437 51 (3) 15,485
Commercial paper 5,160 5 — 5,165
Certificates of deposit 26,809 — — 26,809
Mortgage-backed securities 2,533 — — 2,533
Other 12,876 1 (8) 12,869
Total available-for-sale securities 855,075 724 (493) 855,306
Held to maturity:
U.S. government and agency obligations 7,745 — — 7,745
Certificates of deposit 1,447 — — 1,447
Total held-to-maturity securities 9,192 — — 9,192
Total investments $ 1,136,251 $ 725 $ (494) $ 1,136,482

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Notes to Condensed Consolidated Financial Statements

(Unaudited)


	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Carrying Value
Cash equivalents	$	192,623	$	—	$	—	$	192,623
Available for sale:
U.S. government and agency obligations	311,936		259		(2,200)		309,995
Corporate obligations	313,965		326		(1,104)		313,187
State and municipal obligations	16,122		33		(38)		16,117
Certificates of deposit	18,752		—		—		18,752
Mortgage-backed securities	38,558		63		(67)		38,554
Other	42,889		13		(30)		42,872
Total available-for-sale securities	742,222		694		(3,439)		739,477
Held to maturity:
U.S. government and agency obligations	7,739		—		—		7,739
Certificates of deposit	1,447		—		—		1,447
Total held-to-maturity securities	9,186		—		—		9,186
Total investments	$	944,031	$	694	$	(3,439)	$	941,286

The fair value of available-for-sale investments, including those that are cash equivalents, with gross unrealized losses by major security type and length of time that individual securities have been in a continuous unrealized loss position at September 30, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows (in ~~thousands)~~thousands):

December 31, 2020
Less Than 12 Months 12 Months or Greater Total
Description of Investments Fair
Value Unrealized
Losses Fair
Value Unrealized
Losses Fair
Value Unrealized
Losses
Cash equivalents $ 25,007 $ (3) $ — $ — $ 25,007 $ (3)
U.S. government and agency obligations 12,507 (1) — — 12,507 (1)
Corporate obligations 121,006 (30) — — 121,006 (30)
Commercial paper 999 — — — 999 —
Certificates of deposit 14,003 (1) — — 14,003 (1)
Total bonds $ 173,522 $ (35) $ — $ — $ 173,522 $ (35)

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(Unaudited)


	December 31, 2021
	Less Than 12 Months				12 Months or Greater				Total
Description of Investments	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. government and agency obligations	286,823		(2,200)		—		—		286,823		(2,200)
Corporate obligations	234,070		(1,104)		—		—		234,070		(1,104)
State and municipal obligations	10,442		(38)		—		—		10,442		(38)
Mortgage-backed securities	32,715		(67)		—		—		32,715		(67)
Other	29,115		(30)		—		—		29,115		(30)
Total securities	$	593,165	$	(3,439)	$	—	$	—	$	593,165	$	(3,439)

As of September 30, ~~2021,~~2022, we had ~~744~~2,295 investment positions out of ~~1,859~~2,403 that were in an unrealized loss position. As of December 31, ~~2020,~~2021, we had ~~117~~1,343 investment positions out of ~~1,917~~1,836 that were in an unrealized loss position. We believe that we will collect the principal and interest due on our debt securities that have an amortized cost in excess of fair value. The unrealized losses were primarily caused by interest rate increases and not by unfavorable changes in the credit quality or issuer credit ratings associated with these securities. In addition, all issuers of debt securities we own remain current on all contractual payments as of September 30, 2022. At each reporting period, we evaluate debt securities for potential impairment when the fair value of the investment is less than its amortized ~~cost. We evaluated~~cost, and we intend to sell the ~~underlying credit quality and credit ratings~~securities or it is more likely than not that we will be required to sell the securities before recovery of ~~the issuers, noting no significant deterioration since purchase.~~their amortized cost basis. As of September 30, ~~2021,~~2022, we did not have the intent to sell any of the securities in an unrealized loss ~~position. Therefore,~~position, and it is not more likely than not that we ~~believe~~will be required to sell these ~~losses to be temporary.~~securities before recovery of their amortized cost basis.

As of September 30, ~~2021,~~2022, the maturity of available-for-sale securities, by contractual maturity, reflected at amortized cost and fair value were as follows (in ~~thousands)~~thousands):

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~~Bright Health Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Investment income in the Condensed Consolidated Statements of Income (Loss) for the three months ended September 30, 2022 and 2021, was $6.9 million and $1.1 million, respectively, and $13.2 million, and $3.5 million for the nine months ended September 30, ~~2021~~2022 and ~~2020, was $3.5 million, and $7.1 million,~~2021, respectively, related to our fixed maturity securities. The gross proceeds from the sale of available-for-sale securities for the nine months ended September 30, 2022 and 2021 were $723.4 million and $264.1 million, respectively. Realized (losses) gains ~~(losses)~~ from our fixed maturity securities of $~~0.4~~(4.1) million and ~~$0.1~~$0.4 million are included within total investment income, and reclassified out of accumulated other comprehensive income, for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

~~On April 1, 2021 we completed the purchase of 1.6 million shares of equity securities for aggregate cash consideration of $40.1 million.~~ As of September 30, 2022 and December 31, 2021, ~~the~~we held equity securities ~~had a~~with carrying value of ~~$149.1~~$29.3 million and $120.4 million, respectively, which is included in short-term investments in the Condensed Consolidated Balance Sheet. ~~We recognized an unrealized gain of $46.3 million and $109.0 million in investment~~Investment income (loss) in the Condensed Consolidated Statements of Income (Loss) for the three months ended September 30, 2022 and 2021, was $4.8 million and $46.3 million, respectively, and $(52.3) million and $109.0 million for the nine months ended September 30, 2022 and 2021, respectively, related to our equity securities. We recognized unrealized (losses) gains of $(12.2)

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

million and $46.3 million in investment income (loss) in the Condensed Consolidated Statements of Income (Loss) for the three months ended September 30, 2022 and 2021, respectively. We recognized unrealized (losses) gains of $(69.3) million and $109.0 million for the nine months ended September 30, 2022 and 2021, respectively. We recognized realized gains on equity securities of $17.0 million for the three and nine months ended September 30, ~~2021, respectively.~~2022, there were no realized gains on equity securities for the three and nine months ended September 30, 2021.

NOTE 4. FAIR VALUE MEASUREMENTS

Basis of fair value measurement:

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Quoted prices for similar assets or liabilities in active markets or quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

Certain assets and liabilities are measured at fair value in the condensed consolidated financial statements or have fair values disclosed in the notes to the condensed consolidated financial statements. These assets and liabilities are classified into one of three levels of a hierarchy defined by GAAP.

For a description of the methods and assumptions that are used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument ~~except for the equity securities,~~ see ~~note~~Note 5 ~~of notes~~ to the audited consolidated financial statements included in our ~~Prospectus filed with the SEC.~~2021 Form 10-K.

~~Equity Securities —~~ The following tables set forth our fair value measurements as of ~~the equity securities was determined based~~September 30, 2022 and December 31, 2021, for assets measured at fair value on ~~the quoted market price of the underlying securities~~ a recurring basis (in ~~an active market.~~thousands):


	September 30, 2022
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	327,948	$	27,223	$	—	$	355,171
Fixed maturity securities, available for sale:
U.S. government and agency obligations	333,349		58,323		—		391,672
Corporate obligations	—		492,514		—		492,514
State and municipal obligations	—		11,292		—		11,292
Certificates of deposit	—		13,367		—		13,367
Mortgage-backed securities	—		153,771		—		153,771
Asset-backed securities	—		64,831				64,831
Other	—		373		—		373
Total fixed maturity securities, available for sale:	333,349		794,471		—		1,127,820
Equity securities	29,295		—		—		29,295
Total assets at fair value	$	690,592	$	821,694	$	—	$	1,512,286
Liabilities
Contingent consideration	$	—	$	—	$	1,495	$	1,495

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

~~The following tables set forth our fair value measurements as of September 30, 2021 and December 31, 2020, for assets measured at fair value on a recurring basis~~ ~~(in thousands):~~


	December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	192,063	$	250	$	—	$	192,313
Fixed maturity securities, available for sale:
U.S. government and agency obligations	220,801		89,194		—		309,995
Corporate obligations	2,323		310,864		—		313,187
State and municipal obligations	—		16,117		—		16,117
Certificates of deposit	—		18,752		—		18,752
Mortgage-backed securities	2,404		36,150		—		38,554
Other	—		42,872		—		42,872
Total fixed maturity securities, available for sale:	225,528		513,949		—		739,477
Equity securities	120,364		—		—		120,364
Total assets at fair value	$	537,955	$	514,199	$	—	$	1,052,154
Liabilities
Contingent consideration	$	—	$	—	$	1,495	$	1,495

September 30, 2021
Level 1 Level 2 Level 3 Total
Assets
Cash equivalents $ 209,727 $ 35,507 $ — $ 245,234
Fixed maturity securities, available for sale:
U.S. government and agency obligations 358,202 143,048 — 501,250
Corporate obligations 2,234 288,961 — 291,195
State and municipal obligations — 15,485 — 15,485
Commercial paper — 5,165 — 5,165
Certificates of deposit 18,738 8,071 — 26,809
Mortgage-backed securities 2,533 — — 2,533
Other — 12,869 — 12,869
Total fixed maturity securities, available for sale: 381,707 473,599 — 855,306
Equity securities 149,144 — — 149,144
Total assets at fair value $ 740,578 $ 509,106 $ — $ 1,249,684
Liabilities
Contingent consideration $ — $ — $ 7,079 $ 7,079

December 31, 2020
Level 1 Level 2 Level 3 Total
Assets
Cash equivalents $ 149,499 $ 4,019 $ — $ 153,518
Fixed maturity securities, available for sale:
U.S. government and agency obligations 197,886 95,193 — 293,079
Corporate obligations — 281,631 — 281,631
State and municipal obligations — 18,566 — 18,566
Commercial paper — 14,991 — 14,991
Certificates of deposit — 53,505 — 53,505
Other — 5,536 — 5,536
Total assets at fair value $ 347,385 $ 473,441 $ — $ 820,826
Liabilities
Contingent consideration $ — $ — $ 5,716 $ 5,716

The following tables set forth the Company’s fair value measurements as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, for certain financial instruments not measured at fair value on a recurring basis (in ~~thousands)~~thousands):

~~Table of Contents~~


	December 31, 2021
	Level 1		Level 2		Level 3		Total
Cash equivalents, held to maturity	$	310	$	—	$	—	$	310
Fixed maturity securities, held to maturity:
U.S. government and agency obligations	7,732		—		—		7,732
Certificates of deposit	—		1,447		—		1,447
Total held to maturity	$	8,042	$	1,447	$	—	$	9,489

~~Bright Health Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

December 31, 2020
Level 1 Level 2 Level 3 Total
Cash equivalents, held to maturity $ 222 $ — $ — $ 222
Fixed maturity securities, held to maturity:
U.S. government and agency obligations 6,732 — — 6,732
Certificates of deposit — 1,119 — 1,119
Total held to maturity $ 6,954 $ 1,119 $ — $ 8,073

There have been no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy. The contingent consideration liability related to the acquisition of AssociatesMD Medical Group, Inc. is measured using Level 3 inputs based on a formulaic multiple of forecasted 2023 EBITDA per the terms of the purchase agreement discounted back to net present

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

value. The following table presents the changes in fair value of the contingent consideration liability for the nine months ended September 30, ~~2021~~2022 and year ended December 31, ~~2020~~2021 (in ~~thousands)~~thousands):

The carrying amounts reported on the Condensed Consolidated Balance Sheets for other current financial assets and liabilities approximate fair value due to their short-term nature. These assets and liabilities are not included in the tables above.

NOTE 5. GOODWILL AND INTANGIBLE ASSETS

As described in Note 12, Segments and Geographic Information, our reportable segments changed, and we now report our operating results through three reportable segments: Bright HealthCare – Commercial, Medicare Advantage and NeueHealth. The change in our reportable segments did not change our operating segments or our reporting units. Changes in the carrying value of goodwill by reportable segment were as follows (in ~~thousands)~~thousands):

Bright HealthCare NeueHealth
Gross Carrying
Amount Cumulative
Impairment Gross Carrying
Amount Cumulative
Impairment
Balance at December 31, 2020 $ 197,886 $ — $ 65,149 $ —
Acquisitions 240,776 340,108
Purchase adjustments (1,618) — — —
Balance at September 30, 2021 $ 437,044 $ — $ 405,257 $ —


	Bright HealthCare - Commercial				Medicare Advantage				NeueHealth
	Gross Carrying Amount		Cumulative Impairment		Gross Carrying Amount		Cumulative Impairment		Gross Carrying Amount		Cumulative Impairment
Balance at December 31, 2021	$	4,148	$	—	$	428,710	$	—	$	402,282	$	—
Impairment Losses	—		4,148		—		70,017		—		—
Acquisitions	—		—		—				310		—
Balance at September 30, 2022	$	4,148	$	4,148	$	428,710	$	70,017	$	402,592	$	—

2022 Interim Goodwill Impairment Test

Historically, we test goodwill for impairment annually at the beginning of the fourth quarter or whenever events or circumstances indicate the carrying value may not be recoverable. During the three months ended September 30, 2022, we determined that our decision to exit the Commercial markets and ~~accumulated amortization for definite-lived intangible assets were~~the decrease in our enterprise market capitalization due to a decrease in the price of our common stock, represented events that indicated the carrying values of our reporting units may not be recoverable. As such, we performed an interim impairment test as ~~follows~~ of September 30, 2022.

September 30, 2021 December 31, 2020
Gross Carrying
Amount Accumulated Amortization Gross Carrying
Amount Accumulated Amortization
Customer relationships $ 209,321 $ 19,257 $ 117,451 $ 3,664
Trade names 99,231 5,057 38,161 1,604
Reacquired contract 59,000 3,278 — —
Developed technology 6,200 443 — —
Other 6,400 598 2,000 133
Total $ 380,152 $ 28,633 $ 157,612 $ 5,401
We estimated the fair values of our Medicare Advantage and NeueHealth reporting units using a combination of discounted cash flows and comparable market multiples, which include assumptions about a wide variety of internal and external factors. As a result of our interim impairment test, we recognized a non-cash impairment loss of $70.0 million in our Medicare Advantage reporting unit, which had a goodwill carrying amount of $358.7 million after impairment. The impairment of our Medicare Advantage reporting unit was primarily driven by an increase in the discount rate, which was impacted by higher interest rates and other market factors. We estimated the fair value of our Bright HealthCare – Commercial reporting unit using an adjusted balance sheet approach as a result of our decision to exit the Commercial business for the 2023 plan year. We recognized a $4.1 million non-cash impairment loss related to our Bright HealthCare – Commercial reporting unit, which represented all of the goodwill associated with the Bright HealthCare – Commercial reporting unit. There was no impairment of our NeueHealth reporting unit.

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

The ~~acquisition date fair values~~gross carrying value and ~~weighted-average useful lives assigned to~~accumulated amortization for definite-lived intangible assets ~~acquired during~~were as follows (in thousands):


	September 30, 2022				December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Customer relationships	$	206,321	$	36,777	$	209,421	$	21,728
Trade names	96,041		11,458		99,241		6,738
Reacquired contract	—		—		59,000		6,556
Developed technology	6,300		1,350		6,300		675
Other	5,400		1,212		6,400		805
Total	$	314,062	$	50,797	$	380,362	$	36,502

We recognized $42.6 million of impairment expense and $49.3 million of impairment expense on the intangible assets related to our THNM and Centrum acquisitions in intangible assets impairment in the Condensed Consolidated Statements of Income (Loss) for the three and nine months ended September 30, ~~2021 were~~2022, respectively, as ~~follows~~a result of Bright HealthCare’s decision to no longer offer commercial products for the 2023 plan year. See Note 2 ~~(in thousands)~~Business Combinations,: for additional information on this impairment. There was no impairment expense for the three and nine months ended September 30, 2021.

Fair Value Weighted-Average
Useful Life
(in years)
Customer relationships $ 90,670 16.0
Trade names 60,370 14.9
Reacquired contract 59,000 4.5
Developed technology 6,200 7.0
Other 4,400 7.0
Total $ 220,640 9.8

Amortization expense relating to intangible assets for the three months ended September 30, 2022 and 2021 ~~and 2020~~ was ~~$13.3~~$10.4 million and ~~$1.8~~$13.3 million, respectively, and amortization expense for the nine months ended September 30, 2022 and 2021 ~~and 2020~~ was ~~$23.2~~$31.3 million and ~~$3.6~~$23.2 million, respectively. Estimated amortization expense relating to intangible assets for the remainder of ~~2021~~2022 and for each of the next five full years ending December 31 is as follows (in ~~thousands)~~thousands):

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 6. MEDICAL COSTS PAYABLE

The following table shows the components of the change in medical costs payable for the nine months ended September 30 (in ~~thousands)~~thousands):

Medical costs payable attributable to prior years decreased by $36.3 million and increased by ~~$1.7 million and~~ ~~decreased~~ by ~~$9.3~~$1.7 million for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Medical costs payable estimates are adjusted as additional information becomes known regarding claims; there were no significant changes to estimation methodologies during the periods.

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~~Bright Health Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

The table below details the components making up the medical costs payable as of September 30 (in ~~thousands)~~thousands):

Medical costs payable are primarily related to the current year. The Company has recorded claims adjustment expense as a component of operating costs in the Condensed Consolidated Statements of Income (Loss).

NOTE 7. SHORT-TERM BORROWINGS

~~On March 1, 2021, we entered into~~We have a $350.0 million revolving credit agreement with a syndicate of banks (the “Credit Agreement”)~~. On August 2, 2021,~~, which matures on February 28, 2024. In January 2022, we repaid the $155.0 million outstanding under the Credit Agreement ~~was amended to change~~as of December 31, 2021. During the ~~definition of “Qualified IPO” by reducing the net proceeds required to be received by the Company from $1.0 billion to $850.0 million. In addition, prior to such amendment,~~three months ended September 30, 2022, we borrowed $303.9 million under the Credit Agreement ~~contained~~at a weighted-average effective annual interest rate of 8.41%, which remains outstanding as of September 30, 2022.

The Credit Agreement contains a covenant that ~~required~~requires the Company to maintain a total debt to capitalization ratio of (a) 0.25 to 1.00 prior to a Qualified IPO, and (b) 0.30 to 1.00 after a Qualified IPO. The Amendment changed this covenant by removing the increase in the ratio after a Qualified IPO such that the Company is now required to maintain a total debt to capitalization ratio of 0.25 to 1.00. The Credit Agreement also contains a covenant that require us to maintain a minimum liquidity of $150.0 million. We were not in compliance with the total debt to capitalization ratio covenant as of September 30, 2022. On ~~August 4, 2021,~~November 8, 2022, we ~~elected~~executed an amendment to ~~extend the maturity date of~~ the Credit Agreement ~~from February 28,~~pursuant to which certain collateral related defaults were waived and, in

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

addition, it was agreed that we would (i) not be required to test our debt to capitalization ratio covenant during and including the four quarter test period ending September 30, 2022 through and including the four quarter test period ending September 30, 2023, (ii) be required to ~~February 28, 2024. During the second quarter~~maintain a minimum liquidity of ~~2021, we utilized a portion of the net IPO proceeds to repay the~~ $200.0 million ~~principal balance of indebtedness outstanding under our revolving credit agreement originally entered into on March 1, 2021~~from November 8, 2022 through and ~~the associated interest and other costs of $3.2 million. As of~~including September 30, ~~2021, we have no borrowings outstanding under the Credit Agreement.~~2023 and (iii) be required to maintain a minimum liquidity of $150.0 million after September 30, 2023.

NOTE 8. SHARE-BASED COMPENSATION

The Company adopted its 2016 Stock Incentive Plan (the “2016 Incentive Plan”) in March 2016. The 2016 Incentive Plan allowed for the Company to grant stock options, restricted stock awards (“RSAs”), and restricted stock units (“RSUs”) to certain employees, consultants and non-employee directors. The 2016 Incentive Plan was initially adopted on March 25, 2016, and most recently amended in December 2020. Following the effectiveness of our 2021 Omnibus Plan (the “2021 Incentive Plan”), no further awards will be granted under the 2016 Incentive Plan. However, all outstanding awards granted under the 2016 Incentive Plan will continue to be governed by the existing terms of the 2016 Incentive Plan and the applicable award agreements.

The 2021 Incentive Plan (the “2021 Incentive Plan”) was adopted by our Board of Directors on May 21, 2021 and approved by our stockholders on May 25, 2021 and June 5, 2021. The 2021 Incentive Plan allows the Company to grant stock options, RSAs, RSUs, stock appreciation rights, other equity based awards, and cash based incentive awards to certain employees, consultants and non-employee directors. There are ~~42.0~~73.4 million shares of common stock authorized for issuance under the 2021 Incentive Plan. As of September 30, ~~2021,~~2022, a total of ~~26.8~~16.7 million shares of common stock were available for future issuance under the 2021 Incentive Plan.

Share-Based Compensation Expense

We recognized share-based compensation expense of ~~$43.2~~$77.3 million and $~~3.7~~43.2 million for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, which is included in operating costs in the Condensed Consolidated Statements of Income (Loss).

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~~Bright Health Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

The Board of Directors, or the Compensation and Human Capital Committee of the Board of Directors, as applicable, determines the exercise price, vesting periods and expiration date at the time of the grant. Stock options granted prior to the third quarter of 2021 generally vest 25% at one year from the grant date, then ratably over the next 36 months with continuous employee service. Stock options granted after the beginning of the third quarter of 2021 generally vest ratably over three years. Option grants generally expire 10 years from the date of grant.

The calculated value of each option award iswas estimated on the date of grant using a Black-Scholes option valuation model that used the following weighted-average assumptions for options granted during the nine months ended September 30, ~~2021:~~2022:


	~~2021~~2022
Risk-free interest rate	~~0.8~~1.9	%
Expected volatility	~~33.3~~54.3	%
Expected dividend rate	0.0	%
~~Forfeiture rate~~	~~14.5~~	%
Expected life in years	~~6.1~~6.0

Risk-free interest rates are based on U.S. Treasury yields in effect at the time of grant. Expected volatilities are based on the historical volatility of our publicly traded industry ~~peers.~~peers and the implied volatility from exchange-traded options on the Company’s common stock. We use historical data to estimate option forfeitures within the valuation model. The expected lives

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of options granted represent the period of time that the awards granted are expected to be outstanding based on historical exercise patterns.

The activity for ~~the~~ stock options for the nine months ended September 30, ~~2021~~2022 is as follows (in ~~thousands,~~thousands, except exercise price and contractual life):

We recognized share-based compensation expense related to stock options of $39.8 million for the nine months ended September 30, 2022, which is included in operating costs in the Condensed Consolidated Statements of Income (Loss). The weighted-average grant date fair value of stock options granted during the nine months ended September 30, ~~2021~~2022 was ~~$10.86~~$0.96 per share. At September 30, ~~2021,~~2022, there was ~~$150.7~~$91.5 million of unrecognized compensation expense related to stock options that is expected to be recognized over a weighted-average period of ~~3.4~~2.4 years.

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Restricted Stock Units

RSUs represent the right to receive shares of our common stock at a specified date in the future and generally vest over a three-year ~~period.~~period, except for Board of Director grants which generally vest one year from the date of grant. The fair value of RSUs is determined based on the closing market price of our common stock on the date of grant.

The following table summarizes RSU award activity for the nine months ended September 30, ~~2021~~2022 (in ~~in thousands,~~thousands, except weighted average grant date fair value):

RSU
Number of RSUs Weighted Average Grant Date Fair Value
Unvested RSUs at December 31, 2020 — $ —
RSUs granted 364 9.11
RSUs canceled (19) 9.01
Unvested RSUs at September 30, 2021 345 $ 9.11


	Number of RSUs	Weighted Average Grant Date Fair Value
Unvested RSUs at December 31, 2021	15,651	$	3.98
Granted	28,948	1.77
Vested	(140)	8.76
Forfeited	(7,134)	2.99
Unvested RSUs at September 30, 2022	37,325	$	2.44

We recognized share-based compensation expense related to RSUs of ~~$0.2~~$16.8 million for the ~~three and~~ nine months ended September 30, ~~2021,~~2022, which is included in operating costs in the Condensed Consolidated Statements of Income (Loss). As of September 30, ~~2021,~~2022, there was ~~$2.5~~$60.5 million of unrecognized compensation expense related to the RSU grants, which is expected to be recognized over a weighted-average period of ~~2.7~~2.3 years.

Performance-based Restricted Stock Units (“PSUs”)

In connection with our IPO, our Board of Directors approved the grant of PSUs to members of our executive leadership team. The grant ~~encompasses~~encompassed a total of 14.7 million PSUs, separated into 4four equal tranches, each of which are eligible to vest based

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on the achievement of predetermined stock price goals and a minimum service period of 3 years. ~~This grant is intended to retain and incentivize our executive leadership to lead the Company to sustained, long-term financial and operational performance.~~ The fair value of the PSUs iswas determined using a Monte-Carlo simulation.

The following table summarizes PSU award activity for the nine months ended September 30, ~~2021~~2022 (in ~~thousands,~~thousands, except weighted average grant date fair value):

PSU
Number of PSUs Weighted Average Grant Date Fair Value
Unvested PSUs at December 31, 2020 — $ —
PSUs granted 14,700 9.30
PSUs canceled — —
Unvested PSUs at September 30, 2021 14,700 $ 9.30


	Number of PSUs	Weighted Average Grant Date Fair Value
Unvested PSUs at December 31, 2021	14,700	$	9.30
Granted	—	—
Forfeited	(3,150)	9.30
Unvested PSUs at September 30, 2022	11,550	$	9.30

We recognized share-based compensation expense related to ~~the PSU grant~~PSUs of ~~$10.0 million and $10.3~~$20.7 million for the ~~three and~~ nine months ended September 30, ~~2021, respectively,~~2022, which is included in operating costs in the Condensed Consolidated Statements of Income (Loss). At September 30, ~~2021,~~2022, there was ~~$108.5~~$57.0 million of unrecognized compensation expense related to the PSU grant, which is expected to be recognized over a weighted-average period of ~~2.7~~1.7 years.

NOTE 9. REDEEMABLE CONVERTIBLE PREFERRED STOCK

Series A Convertible Preferred Stock

On December 6, 2021, we entered into an investment agreement with certain subsidiaries of Cigna Corporation (“Cigna”) and certain affiliates of New Enterprise Associates (“NEA”) (collectively, the “Purchasers”) relating to the issuance of 750,000 shares of Series A Preferred Stock, par value $0.0001 per share, for an aggregate purchase price of $750.0 million, or $1,000 per share (the “Issuance”). The close of the Issuance occurred on January 3, 2022 (the “Closing Date”).

The Series A Preferred Stock ranks senior to the shares of the Company’s common stock with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. The Preferred Stock has an initial liquidation preference of $1,000 per share, which shall increase by accumulated quarterly dividends that are not paid in cash (“compounded dividends”). Holders of the Series A Preferred Stock are entitled to a dividend at the rate of 5.0% per annum, accruing daily and payable quarterly in arrears and subject to certain adjustments, as set forth in the Certificate of Designations. Dividends will be payable in cash, by increasing the amount of liquidation preference (compounded dividends) with respect to a share of Series A Preferred Stock, or any combination thereof, at the sole discretion of the Company. The Series A Preferred Stock had accrued compounded dividends of $28.1 million as of September 30, 2022.

The Series A Preferred Stock will be convertible at the option of the holders into (I) the number of shares of common stock equal to the quotient of (a) the sum of (x) the liquidation preference (reflecting increases for compounded dividends) plus (y) the accrued dividends with respect to each share of Series A Preferred Stock as of the applicable conversion date divided by (b) the conversion price (initially approximately $4.55 per share) as of the applicable conversion date plus (II) cash in lieu of fractional shares, subject to certain anti‑dilution adjustments. At any time after the third anniversary of the Closing Date, if the closing price per share of Common Stock on the New York Stock Exchange was greater than $7.96 for (x) each of at least twenty (20) trading days in any period of thirty (30) consecutive trading days and (y) the last trading day immediately before the Company provides the holders with notice of its election to convert all of the Series A Preferred Stock into the relevant number of shares of common stock, the Company may elect to convert all of the Series A Preferred Stock into the relevant number of shares of common stock.

Under the Certificate of Designations, holders of the Series A Preferred Stock are entitled to vote with the holders of the common stock on an as‑converted basis, solely with respect to (i) a change of control transaction (to the extent such change of control transaction is submitted to a vote of the holders of the common stock) or (ii) the issuance of capital stock by the Company in connection with an acquisition by the Company (to the extent such issuance is submitted to a vote of the holders of

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the common stock), subject to certain restrictions. Holders of the Series A Preferred Stock are entitled to a separate class vote with respect to, among other things, amendments to the Company’s organizational documents that have an adverse effect on the Series A Preferred Stock, authorizations or issuances by the Company of securities that are senior to the Series A Preferred Stock, increases or decreases in the number of authorized shares of Preferred Stock, and issuances of shares of the Series A Preferred Stock after the Closing Date.

At any time following the fifth anniversary of the original issuance date, the Company may redeem all of the Series A Preferred Stock for a per share amount in cash equal to: (i) the sum of (A) the liquidation preference (reflecting increases for compounded dividends) thereof plus (B) all accrued dividends as of the applicable redemption date, multiplied by (ii) (A) 105% if the redemption occurs at any time prior to the seventh anniversary of the Closing Date and (B) 100% if the redemption occurs at any time on or after the seventh anniversary of the Closing Date. Upon certain change of control events involving the Company, the holders of the Series A Preferred Stock may, at such holder’s election, convert their shares of Series A Preferred Stock into common stock at the then‑current conversion price or require the Company to purchase all or a portion of such holder’s shares of Preferred Stock that have not been so converted at a purchase price per share of Preferred Stock, payable in cash, equal to the greater of (I) (A) if the change of control effective date occurs at any time prior to the seventh anniversary of the Closing Date, the product of 105% multiplied by the sum of (x) the liquidation preference of such share of Series A Preferred Stock (reflecting increases for compounded dividends) plus (y) the accrued dividends in respect of such share of Series A Preferred Stock as of the change of control purchase date and (B) if the change of control effective date occurs on or after the seventh anniversary of the Closing Date, the sum of (x) the liquidation preference (reflecting increases for compounded dividends) of such share of Series A Preferred Stock plus (y) the accrued dividends in respect of such share of Series A Preferred Stock as of the change of control purchase date and (II) the consideration that would have been payable in connection with such change of control if such share of Series A Preferred Stock had been converted into Common Stock immediately prior to the change of control.

We have applied the guidance in ASC 480‑10‑S99‑3A, SEC Staff Announcement: Classification and Measurement of Redeemable Securities, and have therefore classified the Series A Preferred Stock outside of shareholders’ equity on the Condensed Consolidated Balance Sheet because the shares contain liquidation features that are not solely within the Company's control. The Series A Preferred Stock was recorded at its fair value on the date of issuance net of $2.5 million of issuance costs. The Company has elected not to adjust the carrying value of the Series A Preferred Stock to the liquidation preference of such shares because of the uncertainty of whether or when such an event would occur. Subsequent adjustments to increase the carrying value to the liquidation preferences will be made only when it becomes probable that such a liquidation event will occur.

NOTE 9.10. NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders for the three and nine months ended September 30, (in ~~thousands,~~thousands, except for per share amounts):

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The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share because including them would have had an anti-dilutive effect for the nine months ended September 30 (in ~~thousands)~~thousands):

NOTE ~~10.~~11. COMMITMENTS AND CONTINGENCIES

Legal proceedings: In the normal course of business, we could be involved in various legal proceedings such as, but not limited to, the following: lawsuits alleging negligence in care or general liability, violation of regulatory bodies’ rules and regulations, or violation of federal and/or state laws. ~~At September 30, 2021~~

On January 6, 2022, a putative securities class action lawsuit was filed against us and ~~December 31, 2020, there were no material known contingent liabilities.~~

~~Table~~certain of ~~Contents~~our officers and directors in the Eastern District of New York. The case is captioned

Marquez v. Bright Health Group, Inc.et al., 1:22-cv-00101 (E.D.N.Y.). The lawsuit alleges, among other things, that we made materially false and misleading statements regarding our business, operations, which in turn adversely affected our stock price. An amended complaint was filed on June 24, 2022, which expands on the allegations in the original complaint and alleges a putative class period of June 24, 2021 through March 1, 2022. The amended complaint also adds as defendants the underwriters of our initial public offering. The Company has served a motion to dismiss the amended complaint, which has not yet been ruled on by the court.

~~Notes~~

By letter dated January 28, 2022, we received a demand from a purported shareholder to ~~Condensed Consolidated Financial Statements~~inspect our books and records pursuant to Delaware law. The demand sought information related to the December 6, 2021 Investment Agreement that the Company entered into with NEA and Cigna. The Company and the shareholder’s counsel executed a confidentiality agreement, and we produced certain books and records in response to the demand. On June 3, 2022, the purported shareholder filed a putative class action complaint against us and our Board of Directors alleging that the standstill provisions and certain transfer restrictions in the Investment Agreement breached fiduciary duties to shareholders. The case is captioned Berger v. Adkins et al., 2022-0487 (Del. Ch.). The complaint seeks declaratory and injunctive relief, and an award of attorneys’ fees, but does not allege damages. The Company filed a motion to dismiss the complaint, which has not yet been ruled on by the court. The parties are also currently preparing to exchange discovery.

~~(Unaudited)~~

We intend to vigorously defend the Company in the above actions, but there can be no assurance that we will be successful in any defense. Based on our assessment of the facts underlying the claims and the degree to which we intend to defend the Company in these matters, the amount or range of reasonably possible losses, if any, cannot be estimated. As a result, we have not accrued for any potential loss as of September 30, 2022 for these actions.

Other commitments: As of September 30, 2022, we had $46.1 million outstanding, undrawn letters of credit under the Credit Agreement.

NOTE ~~11.~~12. SEGMENTS AND GEOGRAPHIC INFORMATION

~~Our 2~~Factors used to determine our reportable segments ~~are~~include the nature of operating activities, economic characteristics, existence of separate senior management teams and the type of information used by the Company’s chief operating decision maker (“CODM”) to evaluate its results of operations. We have identified three operating segments based on our primary product and service offerings: Bright HealthCare – Commercial, Medicare Advantage and NeueHealth.

~~The following tables present~~We have historically aggregated our Bright HealthCare – Commercial and Medicare Advantage operating segments into a single Bright HealthCare reportable segment. In the ~~reportable segment financial information for the~~ three ~~and nine~~ months ended September 30, ~~2021~~2022, we determined it was no longer appropriate to aggregate our Bright HealthCare – Commercial and ~~2020~~ ~~(in thousands)~~:

Three Months Ended September 30, 2021 Bright
HealthCare NeueHealth Eliminations Consolidated
Premium revenue $ 994,586 $ 25,647 $ — $ 1,020,233
Service revenue (61) 11,140 — 11,079
Investment income 1,087 46,258 — 47,345
Total unaffiliated revenue 995,612 83,045 — 1,078,657
Affiliated revenue — 139,759 (139,759) —
Total segment revenue 995,612 222,804 (139,759) 1,078,657
Operating income (loss) (303,271) 6,990 — (296,281)
Depreciation and amortization $ 4,584 $ 9,621 $ — $ 14,205

Three Months Ended September 30, 2020 Bright
HealthCare NeueHealth Eliminations Consolidated
Premium revenue $ 343,472 $ 1,954 $ — $ 345,426
Service revenue — 4,920 — 4,920
Investment income 1,774 — — 1,774
Total unaffiliated revenue 345,246 6,874 — 352,120
Affiliated revenue — 2,727 (2,727) —
Total segment revenue 345,246 9,601 (2,727) 352,120
Operating income (loss) (57,263) (1,993) — (59,256)
Depreciation and amortization $ 2,274 $ 404 $ — $ 2,678

Nine Months Ended September 30, 2021 Bright
HealthCare NeueHealth Eliminations Consolidated
Premium revenue $ 2,860,270 $ 62,680 $ — $ 2,922,950
Service revenue 29 31,573 — 31,602
Investment income 3,491 109,012 — 112,503
Total unaffiliated revenue 2,863,790 203,265 — 3,067,055
Affiliated revenue — 182,392 (182,392) —
Total segment revenue 2,863,790 385,657 (182,392) 3,067,055
Operating income (loss) (443,450) 65,291 — (378,159)
Depreciation and amortization $ 11,524 $ 14,457 $ — $ 25,981
Medicare Advantage operating segments, as the planned exit

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Nine Months Ended September 30, 2020 Bright
HealthCare NeueHealth Eliminations Consolidated
Premium revenue $ 821,185 $ 5,950 $ — $ 827,135
Service revenue — 13,344 — 13,344
Investment income 7,063 — — 7,063
Total unaffiliated revenue 828,248 19,294 — 847,542
Affiliated revenue — 8,176 (8,176) —
Total segment revenue 828,248 27,470 (8,176) 847,542
Operating income (loss) (88,427) (5,345) — (93,772)
Depreciation and amortization $ 4,131 $ 1,419 $ — $ 5,550
of the Commercial business for the 2023 plan year results in a significant difference in our long-term revenue and cash flow projections for the operating segments.

Our three reportable segments are Bright HealthCare – Commercial, Medicare Advantage and NeueHealth. The following is a description of the types of products and services from which our three reportable segments derive their revenues:

Bright HealthCare–Commercial: Our Commercial healthcare financing and distribution business focused on commercial plans delivers simple, personal, and affordable solutions to integrate the consumer into Bright Health’s alignment model. Bright HealthCare – Commercial serves approximately 1.0 million individuals through commercial health plan offerings across 16 states as of September 30, 2022.

Medicare Advantage: Our Medicare Advantage healthcare financing and distribution business focused on serving aging and underserved populations with unmet clinical needs through a Fully-Aligned Care Model. As of September 30, 2022, Medicare Advantage includes MA products in 6 states, which serve over 125,000 lives and generally focus on higher risk, special needs, or other traditionally underserved populations.

NeueHealth: Our healthcare enablement and technology business, NeueHealth, aims to significantly reduce the friction and current lack of coordination between payors by delivering on our Fully-Aligned Care Model with multiple payors. NeueHealth delivers virtual and in-person clinical care through its approximately 75 owned primary care clinics within an integrated care delivery system. Through these risk-bearing clinics and our affiliated network of care providers, NeueHealth maintains over 571,000 unique patient relationships as of September 30, 2022, approximately 520,000 of which are served through value-based arrangements, across multiple payors. NeueHealth receives network rental fees from Bright HealthCare for the delivery of NeueHealth’s Care Partner and network services. In addition, NeueHealth contracts directly with Bright HealthCare to provide care through its managed and affiliated clinics. Other NeueHealth customers include external payors, third party administrators, affiliated providers and direct-to-government programs.

The Company’s accounting policies for reportable segment operations are consistent with those described in Note 2, Summary of Significant Accounting Policies, in our 2021 Form 10-K. Transactions between reportable segments principally consist of care management and local care delivery provided by NeueHealth to Bright HealthCare. We utilize operating income (loss) before income taxes as the profitability metric for our reportable segments.

The following tables present the reportable segment financial information for the three and nine months ended September 30, 2022 and 2021 (in thousands):


Three Months Ended September 30, 2022	Bright HealthCare - Commercial		Medicare Advantage		NeueHealth		Corporate & Eliminations		Consolidated
Premium revenue	$	976,530	$	408,939	$	77,542	$	—	$	1,463,011
Direct contracting revenue	—		—		145,433		—		145,433
Service revenue	38		—		12,079		—		12,117
Investment income	6,849		36		4,846		—		11,731
Total unaffiliated revenue	983,417		408,975		239,900		—		1,632,292
Affiliated revenue	—		—		262,129		(262,129)		—
Total segment revenue	983,417		408,975		502,029		(262,129)		1,632,292
Operating income (loss)	(79,289)		(71,276)		(37,547)		(64,583)		(252,695)

Goodwill impairment	$	4,148	$	70,017	$	—	$	—	$	74,165
Intangible assets impairment	—		—		42,611		—		42,611
Depreciation and amortization	—		4,416		6,913		2,575		13,904

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Three Months Ended September 30, 2021	Bright HealthCare - Commercial		Medicare Advantage		NeueHealth		Corporate & Eliminations		Consolidated
Premium revenue	$	625,987	$	368,599	$	25,647	$	—	$	1,020,233
Direct contracting revenue	—		—		—		—		—
Service revenue	(61)		—		11,140		—		11,079
Investment income	1,058		29		46,258		—		47,345
Total unaffiliated revenue	626,984		368,628		83,045		—		1,078,657
Affiliated revenue			—		139,759		(139,759)		—
Total segment revenue	626,984		368,628		222,804		(139,759)		1,078,657
Operating income (loss)	(228,648)		(30,989)		11,312		(47,956)		(296,281)

Depreciation and amortization	$	145	$	3,781	$	9,563	$	716	$	14,205


Nine Months Ended September 30, 2022	Bright HealthCare - Commercial		Medicare Advantage		NeueHealth		Corporate & Eliminations		Consolidated
Premium revenue	$	3,084,958	$	1,258,846	$	236,986	$	—	$	4,580,790
Direct contracting revenue	—		—		465,435		—		465,435
Service revenue	108		—		37,282		—		37,390
Investment income	13,103		83		(52,306)		—		(39,120)
Total unaffiliated revenue	3,098,169		1,258,929		687,397		—		5,044,495
Affiliated revenue	—		—		857,716		(857,716)		—
Total segment revenue	3,098,169		1,258,929		1,545,113		(857,716)		5,044,495
Operating income (loss)	(260,483)		(109,893)		(105,981)		(201,405)		(677,762)

Goodwill impairment	$	4,148	$	70,017	$	—	$	—	$	74,165
Intangible assets impairment	6,720		—		42,611		—		49,331
Depreciation and amortization	145		13,291		20,572		6,165		40,173


Nine Months Ended September 30, 2021	Bright HealthCare - Commercial		Medicare Advantage		NeueHealth		Corporate & Eliminations		Consolidated
Premium revenue	$	1,930,896	$	929,374	$	62,680	$	—	$	2,922,950
Direct contracting revenue	—		—		—		—		—
Service revenue	29		—		31,573		—		31,602
Investment income	3,386		105		109,012		—		112,503
Total unaffiliated revenue	1,934,311		929,479		203,265		—		3,067,055
Affiliated revenue	—		—		182,392		(182,392)		—
Total segment revenue	1,934,311		929,479		385,657		(182,392)		3,067,055
Operating income (loss)	(214,039)		(105,351)		74,111		(132,880)		(378,159)

Depreciation and amortization	$	290	$	9,903	$	14,362	$	1,426	$	25,981

As a percentage of our total consolidated revenue, premium revenues and Direct Contracting revenues from CMS were 34% and 34% for the three months ended September 30, 2022 and 2021, respectively. For the nine months ended September 30, 2022 and 2021 premium revenues and Direct Contracting revenues from CMS were 34% and 30%, respectively. The revenues from CMS are included in premium revenue of our Bright HealthCare – Commercial and Medicare Advantage segments and

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Direct Contracting revenue of our NeueHealth segment. For all periods presented, all of our long-lived assets were located in the United States, and all revenues were earned in the United States. We do not include asset information by reportable segment in the reporting provided to the ~~chief operating decision maker.~~CODM.

NOTE ~~12.~~13. INCOME TAXES

Income tax ~~expense (benefit)~~ was an expense of ~~$0.1~~$1.8 million and ~~a benefit of $18.2~~$0.1 million for the three months ended September 30, 2022 and 2021, respectively. For the nine months ended September 30, 2022 and 2021, income tax was an expense of $7.9 million and benefit of $18.2 million, respectively. The impact from income taxes varies from the federal statutory rate of 21.0% due to state income taxes, changes in the valuation allowance for deferred tax assets and adjustments for permanent differences. For the three months ended September 30, ~~2021,~~2022, the expense largely relates to amortization of originating goodwill from asset ~~acquisitions.~~acquisitions and estimated state income taxes attributable to income earned in separate filing states without state net operating loss carryforwards. For the three and nine months ended September 30, 2021, the ~~overall tax~~ benefit ~~is primarily due~~largely relates to adjustments to the ~~release of~~ valuation allowance ~~in connection with new~~for federal and state deferred tax ~~liabilities~~assets, as well as the effect of deferred taxes recorded ~~on identifiable intangibles~~ as part of business combination accounting for the ~~BND,~~Universal Care, Inc. (d.b.a. Brand New Day), THNM, Zipnosis, ~~THNM,~~ and ~~CHP stock~~Central Health Plan of California acquisitions. ~~The Centrum acquisition was treated as an asset acquisition, and accordingly, no deferred tax assets or liabilities were recorded as part of business-combination accounting.~~

We assess whether sufficient future taxable income will be generated to permit the use of deferred tax assets. This assessment includes consideration of the cumulative losses incurred over the three-year period ended September 30, ~~2021.~~2022. Such objective evidence limits the ability to consider other subjective evidence, such as the Company’s projections for future earnings. On the basis of this evaluation, we have recorded a valuation allowance for deferred tax assets to the extent that they cannot be supported by reversals of existing cumulative temporary differences. Any federal tax benefit generated from losses in ~~2021~~2022 is expected to require an offsetting adjustment to the valuation allowance for deferred tax assets, and thus have no net effect on the income tax provision.

NOTE ~~13.~~14. REDEEMABLE NONCONTROLLING INTEREST

~~As part of the Centrum acquisition on July 1, 2021, we entered into put/call agreements with respect to the equity~~Redeemable noncontrolling interests in ~~Centrum held by the controlling~~our subsidiaries whose redemption is outside of our control are classified as temporary equity. The following table provides details of our redeemable noncontrolling interest ~~holder. The call options allow~~activity for the ~~Company to purchase the 25% noncontrolling interest equity over time beginning on~~three and nine months ended September 30, 2022 ~~or under certain other accelerating events as defined~~ and 2021 (in the agreement, solely at the Company’s discretion. The put options allow the noncontrolling interest holder the ability to cause the Company to purchase their noncontrolling equity interest on consistent terms with the call options.thousands):


	2022		2021
Balance at January 1	$	128,407	$	39,600
(Losses) earnings attributable to noncontrolling interest	(2,681)		288
Measurement adjustment	17,285		329
Balance at March 31	$	143,011	$	40,217
Earnings attributable to noncontrolling interest	3,625		640
Tax distributions to noncontrolling interest holders	(1,894)		—
Measurement adjustment	19,712		155
Balance at June 30	$	164,454	$	41,012
Earnings attributable to noncontrolling interest	30,765		85,075
Tax distributions to noncontrolling interest holders	(138)		(4,577)
Measurement adjustment	15,945		8,519
Balance at September 30	$	211,026	$	130,029

~~Based on~~

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NOTE 15. DIRECT CONTRACTING

Beginning January 1, 2022, we began participating in CMS’ DC Model with two DCEs participating through the ~~nature~~global risk arrangement and assuming full risk for the total cost of care of aligned beneficiaries. As part of our participation in the DC Model, we are guaranteeing the performance of our care network of participating and preferred providers. The intention of the ~~put option’s redemption features, which are outside~~DC Model is to enhance the ~~control~~quality of care for Medicare FFS beneficiaries while reducing the administrative burden, supporting a focus on complex, chronically ill patients, and encouraging physician organizations that have not typically participated in Medicare FFS programs to serve Medicare FFS beneficiaries.

Key components of the ~~Company,~~financial agreement for the ~~noncontrolling interests~~DC Model include:

•Performance Year Benchmark: The target amount for Medicare expenditures on covered services (Medicare Part A and B) furnished to a DCE’s aligned beneficiaries during a performance year. The Performance Year Benchmark will be compared to the DCE’s performance year expenditures. This comparison will be used to calculate shared savings and shared losses. The Performance Year Benchmark is established at the beginning of the performance year utilizing prospective trend estimates and is subject to retrospective trend adjustments, if warranted, before the Financial Reconciliation.

•Risk-Sharing Arrangements: Used in determining the percent of savings and losses that DCEs are ~~classified~~eligible to receive as ~~redeemable~~shared savings or may be required to repay as shared losses.

•Financial Reconciliation: The process by which CMS determines shared savings or shared losses by comparing the calculated total benchmark expenditures for a given DCE’s aligned population to the actual expenditures of that DCE’s aligned beneficiaries over the course of a performance year that includes various risk-mitigation options such as stop-loss reinsurance and risk corridors.

•Risk-Mitigation Options: Both DCEs elected to participate in a “stop-loss arrangement” for the current performance year offered by CMS. The “stop-loss arrangement” is designed to reduce the financial uncertainty associated with high-cost expenditures of individual beneficiaries. Additionally, CMS has created a mandatory risk corridor program that allocates the DCE’s shared savings and losses in bands of percentage thresholds, after a deviation of greater than 25.0% of the Performance Year Benchmark.

Performance Guarantees

Through our participation in the ~~accompanying~~DC Model, we determined that our arrangements with the providers of our DCE beneficiaries require us to guarantee their performance to CMS. At the beginning of the performance year, we recognized the Direct Contracting performance year obligation and receivable for the duration of the performance year. This receivable and obligation are measured at an amount equivalent to the Performance Year Benchmark per CMS that is representative of the expected Medicare expenditures for beneficiaries aligned to our DCEs. As we fulfill our obligation, we amortize the guarantee on a straight-line basis for the amount that represents the completed portion of the performance obligation. The receivable is reduced as we receive payments from CMS for in-network claims or receive CMS reporting detailing out-of-network claims paid by CMS on behalf of our aligned beneficiaries. At the end of each reporting period, we estimate both in-network claims and out-of-network claims incurred by beneficiaries aligned to our DCEs but not yet reported and record a reserve for the estimated amount which is included in medical costs payable on the Condensed Consolidated Balance ~~Sheets~~Sheets. For each performance year, the final consideration due to the DCEs by CMS (shared savings) or the consideration due to CMS by the DCEs (shared loss) is reconciled in the year following the performance year. On a quarterly basis CMS adjusts the Performance Year Benchmark based upon revised trend assumptions and changes in attributed membership. CMS will also estimate the shared savings or loss for the DCE on a quarterly basis based upon this revised Performance Year Benchmark, changes to membership, payments made to the DCE for in-network claims, out-of-network claims paid on behalf of the DCE and various other assumptions including incurred but not reported reserves. The Performance Year Benchmark is our best estimate of our obligation as we are unable to estimate the potential shared savings or loss due to the “stop-loss arrangement”, risk corridor components of the agreement, and a number of variables including but not limited to risk ratings and benchmark trends that could have an inestimable impact on estimated future payments.

There were no financial statement impacts of the performance guarantee at September 30, ~~2021.~~2021 or for the three and nine-month period then ended. The ~~put option redemption feature that is outside~~tables below include the ~~control~~financial statement impacts of the ~~Company is settled based on EBITDA, which is an other than~~performance guarantee at September 30, 2022 and for the three and nine-month period then ended (in thousands):

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Bright Health Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

~~fair value settlement amount. As such, we will make a measurement adjustment when the put option redemption price exceeds the carrying amount as calculated under ASC 810,~~ ~~Consolidation~~.

~~There~~ was no redeemable noncontrolling interest during the three and nine months ended September 30, 2020. The following table provides details of our redeemable noncontrolling interest activity for the three and nine months e~~nded September 30, 2021~~ ~~(in thousands)~~:


	Redeemable Noncontrolling InterestSeptember 30, 2022
~~Balance at January 1, 2021~~Direct contracting performance year receivable(1)(2)	$	~~39,600~~234,776
~~Earnings attributable to noncontrolling interest~~Direct contracting performance year obligation(2)	~~288~~
~~Measurement adjustment~~	~~329~~
~~Balance at March 31, 2021~~	$	~~40,217~~
~~Earnings attributable to noncontrolling interest~~	~~640~~
~~Measurement adjustment~~	~~155~~
~~Balance at June 30, 2021~~	$	~~41,012~~
~~Acquisition~~	~~85,075~~
~~Loss attributable to noncontrolling interest~~	~~(4,577)~~
~~Measurement adjustment~~	~~8,519~~
~~Balance at September 30, 2021~~	$	~~130,029~~155,145

(1) We estimate there to be $98.6 million in in-network and out-of-network claims incurred by beneficiaries aligned to our DCE but not reported as of September 30, 2022; this is included in medical costs payable on the Condensed Consolidated Balance Sheets.

(2) CMS updated benchmarks have resulted in the reduction of both our Direct Contracting performance year receivable and obligation by $7.5 million and $105.1 million for the three and nine months ended September 30, 2022, respectively.


	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
Amortization of Direct contracting performance year receivable	$	153,868	$	385,804
Amortization of Direct contracting performance year obligation	151,281		498,482
Direct contracting revenue	145,433		465,435

NOTE 16. SUBSEQUENT EVENTS

We entered into an Investment Agreement dated as of October 10, 2022 (as amended, the “Investment Agreement”) with certain purchasers (collectively, the “Purchasers”), relating to the issuance and sale by the Company to the Purchasers of 175,000 shares of the Company’s Series B Convertible Perpetual Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”), for an aggregate purchase price of $175.0 million, or $1,000 per share (the “Issuance”). On October 17, 2022, the Issuance was consummated. In connection with the closing, the Certificate of Designations for the Company’s Series A Convertible Perpetual Preferred Stock was amended to provide for a weighted average anti-dilution adjustment in connection with issuances of equity-linked securities with a purchase or conversion price less than the optional conversion price of the Series A Preferred Stock.

In October 2022, we announced our decision to further focus our business on our Fully Aligned Care Model, and we will no longer offer commercial plans through Bright HealthCare, or Medicare Advantage products outside of California in 2023. As a result of these strategic changes, on November 4, 2022, the Board of Directors approved a plan to restructure the Company’s workforce and reduce expenses based on the Company's updated business model. The Company expects to effectuate this plan over the next six to twelve months.

We expect this restructuring will include costs related to employee termination benefits, lease exits, contract modification or termination, as well as the potential for non-cash property, equipment and capitalized software impairments. The Company is currently unable in good faith to make a determination of an estimate of the amount or range of amounts expected to be incurred in connection with this plan, both with respect to each major type of cost associated therewith and with respect to the total cost, or an estimate of the amount or range of amounts that will result in future cash expenditures.

On November 8, 2022, we executed an amendment to the Credit Agreement pursuant to which certain collateral related defaults were waived and, in addition, it was agreed that we would (i) not be required to test our debt to capitalization ratio covenant during and including the four quarter test period ending September 30, 2022 through and including the four quarter test period ending September 30, 2023, (ii) be required to maintain a minimum liquidity of $200.0 million from November 8, 2022 through and including September 30, 2023 and (iii) be required to maintain a minimum liquidity of $150.0 million after September 30, 2023.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, liquidity and capital resources. This discussion should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes and the “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q and ~~Bright Health Group, Inc.’s~~our audited consolidated financial statements and the accompanying notes as well as the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in ~~Bright Health Group, Inc.’s Prospectus dated~~our 2021 Form 10-K and our Form 10-Qs for the quarterly periods ended March 31, 2022 and June ~~23, 2021 (File No. 333-256286), as filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (the “Prospectus”).~~30, 2022. Unless the context otherwise indicates or requires, the terms “we”, “our”, and the “Company” as used herein refer to Bright Health Group, Inc. and its consolidated subsidiaries.

Business Overview

Bright Health Group was founded in 2015 to transform healthcare. Our mission of Making Healthcare Right. Together.is built upon the belief that by ~~connecting and~~ aligning the best local resources in healthcare delivery with the financing of care we can drive a superior consumer experience, optimize clinical outcomes, reduce systemic waste, and lower ~~costs, and optimize clinical outcomes. We believe that for too long, U.S. healthcare, primarily designed to cater to employers and large institutions, has failed~~costs. Our value-driven approach is built on alignment, focused on the consumer, ~~through unnecessary complexity, a lack of transparency,~~ and ~~rising costs. We are making healthcare~~ ~~simple, personal, and affordable.~~

To execute on our mission, we have developed a model for healthcare transformation built upon the delivery, financing, and optimization of care. By bringing these three core pillars together, we aim to build the national, integrated healthcare system of the future, designed to break down historical barriers and create an environment in which all stakeholders — from the consumer, to the provider, to the payor — can win.

powered by technology. Bright Health Group consists of ~~two~~three reportable segments: NeueHealth, ~~and~~ ~~Bright HealthCare~~:

~~NeueHealth is critical to our differentiated, aligned model of care. While~~ Bright HealthCare is currently a larger contributor to revenue, due in part to the significant health plan premium revenue contribution from our consumers, we believe NeueHealth has a disproportional impact on our enterprise today– Commercial and anticipate it will become increasingly important to our business and prospects, contributing an increasing percentage of our overall revenue in the long-term. We have presented NeueHealth first in the following discussion, consistent with management’s view of our business.Medicare Advantage:

NeueHealth. Our healthcare enablement and technology business, NeueHealth, ~~is developing the next generation, integrated healthcare system. NeueHealth~~aims to significantly ~~reduces~~reduce the friction and current lack of coordination between payors ~~and providers to enable a truly consumer-centric healthcare experience.~~by delivering on our Fully-Aligned Care Model with multiple payors. As of September ~~2021,~~2022, NeueHealth ~~works with nearly 250,000 care provider partners and~~ delivers high-quality virtual and in-person clinical care through ~~our 44~~its approximately 75 owned primary care clinics within ~~its~~an integrated care delivery system. Through ~~those~~these risk-bearing clinics and our affiliated network of care providers, NeueHealth maintains over ~~200,000~~571,000 unique patient relationships as of September 30, ~~2021, over 170,000~~2022, approximately 520,000 of which are served through value-based arrangements, across multiple payors. ~~In addition to our directly owned clinics, NeueHealth manages care for an additional 87 clinics through its additional affiliated clinics.~~

~~NeueHealth engages in local, personalized care delivery in multiple ways, including:~~

•~~Integrated Care Delivery~~ ~~– NeueHealth operates clinics providing comprehensive care to all populations.~~

•~~Bright Health Network~~ ~~– A key component of our NeueHealth business is our ecosystem of Care Partners with whom we contract in service of Bright HealthCare today.~~

•~~Value Services Organization~~ ~~– NeueHealth empowers high-performing primary care practices and care delivery organizations to succeed in their evolution towards risk-bearing care delivery.~~

NeueHealth receives network rental fees from Bright HealthCare for the delivery of NeueHealth’s Care Partner and network services. In addition, NeueHealth contracts directly with Bright HealthCare to provide care through its managed and affiliated

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~~clinics. Other NeueHealth customers include external payors, third party administrators, affiliated providers and direct-to-government programs.~~

Bright ~~HealthCare.~~HealthCare–Commercial. Our Commercial healthcare financing and distribution business ~~Bright HealthCare,~~focused on commercial plans delivers simple, personal, and affordable solutions to integrate the consumer into Bright Health’s alignment model. Bright HealthCare ~~currently aggregates and delivers healthcare benefits to over 720,000 consumers~~– Commercial serves approximately 1.0 million individuals through ~~its various~~commercial health plan offerings ~~serving consumers~~ across ~~multiple product lines~~16 states as of September 30, 2022. In October 2022, we announced that we will no longer offer commercial health plans in ~~14 states and 99 markets.~~2023. We ~~also participate in a number~~anticipate that Bright HealthCare – Commercial will qualify for presentation as discontinued operations as of ~~specialized plans and recently began offering employer group plans.~~December 31, 2022, when we exit the business.

~~Bright HealthCare’s customers include commercial health plans across 11~~Medicare Advantage.Our Medicare Advantage healthcare financing and distribution business focused on serving aging and underserved populations with unmet clinical needs through a Fully-Aligned Care Model. As of September 30, 2022, Medicare Advantage includes MA products in 6 states, which serve ~~approximately 607,000 individuals, as well as MA products~~ ~~in 11 states, which serve approximately 114,000~~over 125,000 lives and generally focus on higher risk, special needs, or other traditionally underserved populations. ~~We believe~~In October 2022, we ~~are well-positioned to grow our Medicaid and Employer administrative services only (“ASO”) products, which would provide strategic diversification and be highly complementary to our aligned model.~~

~~Key Factors Affecting Our Performance~~

We believe that the growth and future success of our business depends on a number of factors described below. While each of these factors presents significant opportunities for our business, they also pose important challengesannounced that we ~~must successfully address~~plan to ~~sustain~~focus our ~~growth and continue to improve results of operations.~~

~~Bright HealthCare’s ability to grow membership and retain consumers drives revenue growth~~

~~Bright HealthCare products are primarily sold~~Medicare Advantage business on the California market for the ~~following year through an annual selling season, which includes the open enrollment period for~~ ~~Individual and Family Plan~~ products and annual enrollment period for Medicare Advantage. Outside of an annual selling season, IFP and MA products typically can only be sold during special enrollment periods based on the consumer’s eligibility status and certain life events. It is critical to effectively engage both prospective and existing consumers through our multi-channel distribution strategy. For both IFP and MA products, we aim to offer competitive benefits at an affordable price to meet the needs of our consumers. Our IFP products membership typically peaks after the open enrollment period and experiences modest levels of attrition until year-end. We have historically increased our MA consumer base during special enrollment periods, given our consumers' eligibility to enroll during those periods.

Our MA business is afforded additional in-year growth opportunity due to its focus on serving low-income seniors and special needs individuals, who can enroll in and change MA health plans at any time. Therefore, constant engagement with this population is critical to effectively retain membership and drive in-year growth. MA products are generally associated with higher revenue and higher medical cost ratios (“MCR”) as compared to IFP products, particularly with respect to special needs plans.

~~Bright HealthCare’s ability to capture complete and accurate risk adjustment data affects revenue~~

Portions of premium revenue from our IFP products and MA plans are determined by the applicable Centers for Medicare and Medicaid Services (“CMS”) risk adjustment models, which compensate insurers based on the underlying health status (acuity) of insured consumers. CMS requires that a consumer’s health status be documented annually and accurately submitted to CMS to determine the appropriate risk adjustment. Ensuring that complete and accurate health conditions of our consumers are captured within documentation submitted to CMS is critical to recognizing accurate risk adjustment, which is reflected in our revenue year-over-year.

~~Bright HealthCare’s ability to drive lower unit costs and medical utilization reduces medical costs and MCR~~

Bright HealthCare utilizes our Bright Health Network to provide healthcare services primarily within its exclusive provider networks under capitated contracts and fee-for-service arrangements. Certain provider and payor contracts include value-based incentive compensation based on providers meeting contractually defined quality and financial performance metrics. To effectively manage medical costs, Bright HealthCare must ensure a consumer’s healthcare needs are primarily delivered through its Care Partners to recognize discounted contracted rates, which limits the amount of out-of-network utilization that

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can have an adverse financial impact on medical costs and MCR. Out-of-network utilization is typically higher upon entry into new markets, which increases medical costs during periods of market expansion.

~~Our business is generally affected by the seasonal patterns of medical expenses. With respect to IFP products, medical costs tend to be lower early in the~~2023 plan year and increase toward the end of year, driven by high deductible plan designs and out-of-pocket maximums over the course of the policy year, which shift more costs to us in the second half of the year as we pay a higher proportion of claims. With respect to MA plans, medical costs are impacted by the severity of the flu season, generally from December to March, and we typically experience slightly higher Part D medical costs early in the year, which decline toward the end of year due to standard plan design.

~~NeueHealth’s ability to identify and align with high-performing care delivery partners drives performance~~

~~NeueHealth engages providers through a variety of alignment options ranging from having providers participate in~~exit our networks to having providers employed by us. As we enter new markets and expand our offerings, we must build an ecosystem of care delivery assets capable of supporting both our Bright HealthCare business as well as third-party payors.

~~NeueHealth’s ability to deliver and enable high-quality, value-based care drives revenue~~

NeueHealth supports and manages providers in fee-for-service and value-based contracts with payors. We help organizations enter value-based arrangements designed around their needs, while simultaneously empowering them with the tools and capabilities necessary to maximize their success. In order to drive financial performance, NeueHealth must effectively manage risk and continue to develop and deliver tools and services supporting both managed and affiliated providers.

~~Bright Health Group’s ability to achieve operating cost efficiencies and scale profitably~~

Bright Health Group, including Bright HealthCare and NeueHealth, will need to continue investing in operating platforms, processes, people, and resources to enable our businesses to scale profitably. We leverage centralized shared services for operational, clinical, technological, and administrative functions to support the segments in a cost-effective and efficient manner.

~~Components of Our Results of Operations~~

~~Revenue~~

~~We generate revenue from premiums, including value-based provider revenue, and fee-for-service provider revenue received from consumers and payors, as well as income from our investments.~~

~~Premium revenue~~

~~Premium revenue is derived primarily from Bright HealthCare IFP products and MA plans sold to consumers as well as NeueHealth value-based provider revenue from serving patients.~~

~~Bright HealthCare Commercial premium revenue~~

The sources of commercial premium revenue are primarily IFP products which are comprised of advanced premium tax credit subsidies that are based on consumers income levels and compensated directly by the federal government, as well as billed consumer premiums. IFP products reflect adjustments related to the Patient Protection and Affordable Care Act (“ACA”) risk adjustment program, which adjusts premium revenue based on the demographic factors and health status of each consumer as derived from current-year medical diagnoses.

~~Bright HealthCare MA premium revenue~~

~~The sources of MA premium revenue are~~other Medicare ~~Part C premiums related to consumers’ medical benefit coverage and Part D premiums related to consumers’ prescription drug benefit coverage. Medicare Part C premiums are comprised of CMS monthly~~

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capitation premiums that are risk adjusted based on CMS defined formulas using consumers’ demographics and prior-year medical diagnoses. Medicare Part D premiums are comprised of CMS monthly capitation premiums that are risk adjusted, consumer billed premiums and CMS low-income premium subsidies for the Company’s insurance risk coverage. Medicare Part D premiums are subject to risk sharing with CMS under the risk corridor provisions based on profitability of the Part D benefit. As a percentage of our total consolidated revenue, premium revenues from CMS were 30% and 37% forAdvantage markets. For the nine months ended September 30, ~~2021 and 2020, respectively, which are included in~~2022, our ~~Bright HealthCare segment.~~

~~NeueHealth premium revenue~~

~~NeueHealth~~Medicare Advantage markets outside of California generated $49.7 million of premium revenue ~~represents revenue under value-based arrangements entered into by NeueHealth’s Value Services Organization~~ and ~~affiliated~~$54.9 million in medical ~~groups in which the responsibility~~costs, for ~~control~~an MCR of ~~an attributed patient’s medical care is transferred, in part or wholly, to such medical groups. Such revenue includes capitation payments,~~110.5%, as well as ~~quality incentive payments, and shared savings distributions payable upon achievement~~incurring $11.5 million of certain financial and quality metrics. Value-based revenue shifts responsibility for control over the medical care delivered to attributed patients to the Company and aligns incentives around the overall well-being of the payor’s consumers.

~~We expect that as our NeueHealth business continues to grow, NeueHealth premium revenue will become an increasing proportion of our overall revenue.~~

~~Service revenue~~

Service revenue primarily represents revenue from fee-for-service payments received by NeueHealth’s affiliated medical groups. These include patient copayments and deductibles collected directly from patients and payments from private and government payors based upon contractual terms that define the fee-for-service reimbursement for specific procedures performed.

~~In addition, service revenue includes network service revenue generated by NeueHealth’s Bright Health Network. Bright HealthCare is currently the only customer of Bright Health Network.~~

~~Investment income~~

The sources of investment income are interest income and realized gains and losses derived from the Company’s investment portfolio that is comprised of debt securities of the U.S. government and other government agencies, corporate investment grade, money market funds and various other securities, as well as realized and unrealized gains and losses from equity securities.

~~Operating Costs~~

~~Medical costs~~

Medical costs consist of reimbursements to providers for medical services, costs of prescription drugs, supplemental benefits, reinsurance and quality incentive and shared savings compensation to providers. The Company contracts with hospitals, physicians and other providers of healthcare primarily within its exclusive provider networks under fee-for-service and value-based arrangements. Emergency medical services incurred out-of-network are a covered benefit to consumers and reimbursed to providers according to the Company’s payment policies that are based on applicable regulations. Prescription drug costs are determined based on the contract with our pharmacy benefits manager, which includes pharmacy rebates that are received for certain drug utilization levels or contracted minimums. Dental, vision, and other supplemental medical services are provided to consumers under capitated arrangements. Reinsurance arrangements enable us to cede a specified percent of our premiums and claims to our third-party reinsurers. Under such contracts, the reinsurer is paid to cover claims-related losses over a specified amount, which mitigates catastrophic risk. We make quality incentive and shared savings compensation payments to certain providers in accordance with the terms of the contractual arrangement upon the achievement of certain financial and quality metrics.

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~~Operating Costs~~

Operating costs are comprised of the expenses necessary to execute the Company’s business operations. These include employee compensation for salaries and related benefit costs, share-based compensation, outsourced vendor contracted service and technology fees, professional services, technological infrastructure and service fees, facilities costs and other administrative expenses. Operating costs also include payments made by Bright HealthCare to NeueHealth for the provision of Bright Health Network services; selling and marketing expenses from external broker commissions and advertising, primarily related to consumer acquisition; and premium taxes, exchange fees and other regulatory costs, which are primarily based on premium revenue. We expect operating ~~costs to increase in absolute amounts as our business grows, but to decrease as a percentage of our revenue in the long-term.~~

~~Depreciation and Amortization~~

Depreciation and amortization consist of depreciation of property, equipment and capitalized software, as well as amortization of definite-lived intangible assets acquired in business combinations, including trade names, customer relationships, and reacquired rights.

~~Other Income~~

~~Income Tax Expense (Benefit)~~

~~Income tax expense (benefit) consists primarily of changes to our current and deferred federal tax assets and liabilities net of applicable valuation allowances.~~

~~Initial Public Offering~~

On June 23, 2021, the Company’s Registration Statement on Form S-1 for the initial public offering of shares of common stock was declared effective by the U.S. Securities & Exchange Commission. The Company’s common stock began trading on the NYSE under the ticker symbol “BHG” on June 24, 2021. The IPO closed on June 28, 2021 and the Company sold 51,350,000 shares of common stock at a price of $18.00 per share. In aggregate, the shares issued in the offering generated $887.3 million in net proceeds, the amount of which is net of $37.0 million in underwriters’ discounts and commissions. Immediately effective upon the closing of our IPO, all 167,731,830 shares of our then outstanding preferred stock were converted into 427,897,381 shares of common stock, causing the Company to reclassify $1.8 billion from redeemable preferred stock within temporary equity to common stock and additional paid-in capital on our consolidated balance sheet.

We utilized a portion of the net proceeds to repay the $200.0 million principal balance of indebtedness outstanding under our revolving credit agreement originally entered into on March 1, 2021 and the associated interest and other costs of $3.2 million. Additionally, we used a portion of the proceeds to fund the acquisition of Centrum as described in Note 2, ~~Business Combinations. The remainder of the net proceeds will be used for general corporate purposes.~~

~~See further discussion related to the IPO as described in Note 1,~~ ~~Basis of Presentation,~~ ~~to Bright Health Group, Inc.’s unaudited condensed consolidated financial statements.~~costs.

COVID-19 Update

The ongoing COVID-19 ~~pandemic,~~endemic, including its effect on the macroeconomic environment, and the response of ~~our~~ local, state, and federal governments to contain and manage the virus, continues to impact our business. The emergence of COVID-19 variants in the United States and abroad continues to prolong the risk of additional surges of the virus. In addition, ~~some~~certain new variants have emerged that appear more transmissible and more resistant to current vaccines. Some individuals have also delayed or are not seeking routine medical care to avoid COVID-19 exposure. These and other responses to the COVID-19 ~~pandemic~~endemic have meant that our ~~MCR~~Medical Cost Ratio (“MCR”) may be subject to additional uncertainty as certain segments of the economy and workforce come back on line, members resume care that may have been foregone, and the broader population becomes vaccinated.

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We have experienced impacts to our business from COVID-19, which have varied as the pandemic progressed. Initially, as a result of the suspension of elective surgeries and deferral of medical care, we experienced decreased medical utilization, particularly in the second quarter of 2020. Since then, medical utilization has returned to more normal levels and adverse financial impacts from inpatient admissions emerged primarily due to increased average length of stays.

In the third quarter of 2021, our results were impacted by COVID-19 trends in two of our largest IFP markets. Florida and North Carolina both saw significant increases in COVID-19 cases in the third quarter, with Centers for Disease Control and Prevention (“CDC”) data indicating average daily COVID-19 case counts were up nearly 300% in each state when compared to the second quarter of 2021. In addition, during the third quarter of 2021, the Southeast United States experienced average daily COVID-19 counts increasing nearly 250% when compared against the second quarter of 2021. This drove our COVID-19 expense in the third quarter of 2021 up 65.6% from the second quarter and our IFP COVID expense was up more than 160% compared to the second quarter of 2021. For the three months ended September 30, 2021 and 2020, the impact of COVID-19 increased our MCR by 540 basis points and 390 basis points, respectively, reflecting an increase in medical costs of $55.6 million and $13.3 million, respectively. For the nine months ended September 30, 2021 and 2020, the impact of COVID-19 increased our MCR by 420 basis points and 290 basis points, respectively, reflecting an increase in medical costs of $124.0 million and $23.8 million, respectively.

Overall measures to contain the COVID-19 outbreak may remain in place for a significant period of time, as certain geographic regions have experienced a resurgence of COVID-19 infections and new strains of COVID-19 that appear to be more transmissible have emerged. Although the number of people who have been vaccinated has been increasing, the duration and severity of this pandemic is unknown and the extent of the business disruption and financial impact depends on factors beyond our knowledge and control.

~~Business Update~~

We continue to make progress on our model that aligns the financing of care with the delivery of care. We are focused on serving the consumer in retail healthcare marketplaces, including the exchange and government direct-to-consumer markets. Both businesses are supported by our Bright Health Intelligent Operating System (“BiOS”) technology platform, where we continue to see efficiencies due to that investment. We view the following five key themes as important in connection with our third quarter and year-to-date results:

1.~~We continue to demonstrate significant growth~~ – We continue to experience strong growth across both of our businesses. Bright HealthCare now serves over 720,000 consumers as of September 30, 2021, up 247% compared to the third quarter of 2020. This includes over 114,000 MA members. In commercial, the growth in members reflects the extended 2021 Special Enrollment Period in IFP with enrollment of nearly 607,000 consumers at the end of the third quarter of 2021 up nearly 10% from the end of the second quarter of 2021. NeueHealth also continues to demonstrate growth with a total of 131 owned and affiliated Primary Care Clinics serving over 170,000 patients under value-based arrangements as of September 30, 2021.

2.~~We have delivered consistent performance~~ – Our third quarter 2021 results reflect quarterly variability due to the negative impact of an increase in direct COVID-19 costs, as well as risk adjustment pressures from the significant contribution of new 2021 membership and COVID-19 related challenges in member engagement. The extended Special Enrollment Period led to significant membership growth beyond the interim capacity within the owned and affiliated parts of our integrated systems of care, which we have alleviated through an accelerated pace of clinic and affiliate development and additional investments in our operating platform. While we did experience a modest reduction in utilization from non-COVID related procedures, such as certain elective inpatient surgeries and other diagnostic tests, the cost benefit was more than offset by the negative impact to appropriately diagnose our newly attributed members, which resulted in an increase in our risk adjustment payable. We believe our year-to-date results better reflect the underlying performance of our business than the third quarter results. We expect a number of the factors that drove volatility in the third quarter of 2021 to normalize in 2022 as the contribution from retained consumers increases, direct COVID-19 costs decrease, and as capacity improvements in our aligned integrated systems of care drive improved gross margin.

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For the three months ended September 30, 2022 and 2021, the impact of COVID-19 increased our MCR by 140 basis points and 540 basis points, respectively, reflecting an increase in medical costs of $22.6 million and $55.6 million, respectively. For the nine months ended September 30, 2022 and 2021, the impact of COVID-19 increased our MCR by 200 basis points and 420 basis points, respectively, reflecting an increase in medical costs of $101.0 million and $124.0 million, respectively.

Business Update

Our mission – ~~We are driving differentiation through NeueHealth~~Making Healthcare Right. Together. – ~~We are seeing strong growth~~is built on the belief that by connecting and aligning the best local resources in ~~NeueHealth’s revenue and operating income that~~healthcare delivery with the financing of care, we believe highlights the power of our owned clinics and our affiliates within our aligned model. The growth in our NeueHealth business reflects the continued investments we are making in value-based care, as well as the Centrum acquisition, which closed on July 1, 2021. We are continuing to expand on this model in Florida, as well as bringing this model to new markets, including Texas and North Carolina in 2022. Our previous target to open more than 25 de novo clinics in 2022 is still on track. We are also bringing in more affiliates intocan deliver better outcomes at a fully aligned model, where providers are clinically, financially, and technologically aligned with Bright HealthCare. In addition, we have a robust pipeline of third-party payors interested in leveraging our integrated model across multiple populations as we go into 2022 and, as a result, expect to see growth in health plan customers in 2022.lower cost for all consumers.

4.~~We are building one technology platform~~ ~~– We continue investing~~In October 2022, we announced that our business will be a focused on delivering affordable healthcare for aging and underserved populations in the ~~BiOS back-end infrastructure, DocSquad consumer~~largest healthcare markets in the country and ~~provider-facing tools,~~continuing to leverage our Fully Aligned Care Model with external payor partners and ~~acquisition integration.~~affiliate care providers. We ~~have~~will continue to build on the value-driven care model that we’ve been ~~making investments and accelerating~~advancing since the start of the company. While we started to take the steps to move to this more focused model, while continuing to remain focused on delivering on our ~~timeline~~financial performance for integration to one platform, which has resulted in some near-term cost structure headwinds. We are making progress on integrating the health plan assets we acquired, with integration of appropriate corporate office and support functions expected to be completed in 2022, our Bright HealthCare IFP business expected on a single platform in 2023, and full operating platform unification to follow.2022.

5.~~Continued future~~In the third quarter, we continued to deliver strong top-line growth – while effectively managing medical costs. We ended the third quarter with over 1.0 million Commercial consumers, a modest increase from the second quarter on in-year Individual and Family Plan (“IFP”) enrollment, and more than 125,000 Medicare Advantage consumers, as well as approximately 520,000 NeueHealth ~~will~~value-based lives. Our medical cost management efforts continue to ~~be an increasingly important component~~achieve our cost savings targets and utilization remained stable in the third quarter.

As we move forward into 2023, we are focusing our business on our NeueHealth care delivery business and our Medicare Advantage business, and we will no longer offer Commercial health plans for 2023 or Medicare Advantage health plans outside of ~~our business.~~California. We ~~expect growth for the~~have a scaled Medicare Advantage business in ~~2022~~California, the largest market for seniors and ~~continued integration of NeueHealth~~underserved populations, and we have built a high performing Fully Aligned Care Model with our ~~Bright HealthCare business.~~Care Partners. In Florida and Texas, weour NeueHealth risk-bearing care delivery and provider affiliate management business continues to deliver differentiated results. We expect to ~~see movement toward~~expand our footprint over time serving the aging and underserved consumers in Medicare and the consumer marketplace, together with our key health plan ~~offerings that leverage~~partners. We will also continue to grow our ~~owned and affiliated clinics within our aligned Integrated Systems of Care.~~ Direct Contracting ~~also provides a~~business in the new ACO Reach program, building on our 2022 performance.

We have started implementing the restructuring plans to adjust our costs to our more focused business in order to achieve our 2023 gross margin and operating expense targets. We will continue to take steps to adjust our expenses in-line with milestones in the marketplace business through the end of the year and over the course of the run-out period of the exited markets.

While we wind down the marketplace business, we will remain focused on the growth ~~opportunity~~opportunities for our Medicare Advantage and NeueHealth ~~adding to the total lives~~businesses. Both businesses are in ~~fully aligned value-based arrangements and contributing to revenue in a capital efficient model. In Bright HealthCare, we expect growth in our core MA~~attractive markets with a focus on higher complexity patient populations, including C-SNP and D-SNP products, specific ethnic communities requiring culturally competent care and service models, and states with an opportunity for IFP consumers to age into MA plans. In IFP, we are well-positioned based onstrong tailwinds, where we have ~~set rates for 2022, with our plans consistently the lowest or second-lowest cost silver plan~~differentiated offerings. We will manage each business to reach operating profitability in core growth markets. Additionally, we are expanding our addressable market next year, entering four new states including Texas and Georgia, and offering IFP plans for the first time California, which represent three of the largest ACA markets in the country. At the same time, we will remain disciplined in our growth, making appropriate rate adjustments based on our 2021 experience and competitive positioning.2023, as well as managing corporate expenses to reach consolidated Adjusted EBITDA profitability.

Table of Contents

Key Metrics and Non-GAAP Financial Measures

In addition to our GAAP financial information, we review a number of operating and financial metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate our business plan and make strategic decisions. The following table provides the approximate consumers and patients served as of September 30, 2022 and 2021.


		As of September 30,			As of September 30,
		2021	2020		2022	2021
Bright HealthCare Consumers Served
Commercial(1)		606,594	149,794
Consumers Served				Consumers Served
Bright HealthCare - Commercial(1)				Bright HealthCare - Commercial(1)	1,025,000	600,000
Medicare Advantage	Medicare Advantage	114,094	57,751	Medicare Advantage	125,000	110,000

NeueHealth Patients	NeueHealth Patients			NeueHealth Patients
Value-based Care Patient Lives	Value-based Care Patient Lives	170,211	19,141	Value-based Care Patient Lives	520,000	170,000

(1) ~~Commercial plans include~~Bright HealthCare – Commercial includes IFP and employer plans. ~~Prior to 2021, our commercial business was solely comprised of IFP products.~~

~~Bright HealthCare~~ Consumers Served

Consumers served include ~~Bright HealthCare~~ individual lives served via health insurance policies across multiple lines of business, primarily attributable to ~~IFP~~commercial products and MA plans in markets across the country. We ~~believe~~historically believed growth in the number of consumers isat the Bright HealthCare level was a key indicator of the performance of our Bright HealthCare business. ItHowever, given Bright HealthCare’s decision to exit the commercial marketplace for the 2023 plan year, we expect Commercial consumers to decline to zero, and we will focus on growth in our Medicare Advantage consumers in California. The number of consumers served also informs our management of the

operational, clinical, technological and administrative functional area needs that will require further investment to support ~~expected~~ future consumer growth.

Value-Based Care Patients

Value-based care patients are patients attributed to providers contracted under varied value-based care delivery models in which the responsibility for control of an attributed patient’s medical care is transferred, in part or wholly, to our NeueHealth managed medical groups. We believe growth in the number of value-based care patients is a key indicator of the performance of our NeueHealth business. It also informs our management of the operational, clinical, technological and administrative functional area needs that will require further investment to support expected future patient growth. ~~Over time,~~While we expect ~~our~~the value-based ~~care~~patients NeueHealth supports in 2023 to decline compared to 2022 due Bright HealthCare’s commercial market exits, we expect external value-based payor contracts as well as the conversion of fee for service patients into value-based patients, will increase ~~as we convert fee-for-service~~the number of patients managed in value-based arrangements ~~into value-based care financial arrangements.~~over time.


Delaware			47-4991296
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

8000 Norman Center Drive, Suite ~~1200~~900, Minneapolis, MN			55437
(Address of principal executive offices)			(Zip Code)


PART I.	FINANCIAL INFORMATION	2

Item 1.	Financial Statements	2

	Condensed Consolidated Balance Sheets (Unaudited)	2

	Condensed Consolidated Statements of Income (Loss) (Unaudited)	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	4

	Condensed Consolidated Statements of ~~Stockholders’~~Changes in Redeemable Preferred Stock and Shareholders’ Equity (Deficit) (Unaudited)	5

	Condensed Consolidated Statements of Cash Flows (Unaudited)	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2831

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4 446

Item 4.	Controls and Procedures	4447

PART II.	OTHER INFORMATION	4548

Item 1.	Legal Proceedings	4548

Item 1A.	Risk Factors	4548

Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	4649

Item 3.	Defaults upon Senior Securities	4750

Item 4.	Mine Safety Disclosures	4750

Item 5.	Other Information	4750

Item 6.	Exhibits	4750


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	956,189	$	488,371	Cash and cash equivalents	$	1,605,525	$	1,061,179
Short-term investments	Short-term investments	331,719		499,928		Short-term investments	299,897		193,835
Accounts receivable, net of allowance of $5,701 and $2,602, respectively		99,216		60,522
Accounts receivable, net of allowance of $7,129 and $4,074, respectively						Accounts receivable, net of allowance of $7,129 and $4,074, respectively	120,489		113,474
Direct contracting performance year receivable						Direct contracting performance year receivable	234,776		—
Prepaids and other current assets	Prepaids and other current assets	240,545		130,986		Prepaids and other current assets	377,214		291,712
Total current assets	Total current assets	1,627,669		1,179,807		Total current assets	2,637,901		1,660,200
Other assets:	Other assets:					Other assets:
Long-term investments	Long-term investments	681,923		175,176		Long-term investments	865,677		675,192
Property, equipment and capitalized software, net	Property, equipment and capitalized software, net	30,932		12,264		Property, equipment and capitalized software, net	47,938		38,344
Goodwill	Goodwill	842,301		263,035		Goodwill	761,285		835,140
Intangible assets, net	Intangible assets, net	351,519		152,211		Intangible assets, net	263,265		343,860
Other non-current assets	Other non-current assets	40,751		28,309		Other non-current assets	36,061		45,603
Total other assets	Total other assets	1,947,426		630,995		Total other assets	1,974,226		1,938,139
Total assets	Total assets	$	3,575,095	$	1,810,802	Total assets	$	4,612,127	$	3,598,339
Liabilities, Redeemable Noncontrolling Interest, Redeemable Preferred Stock and Shareholders’ Equity (Deficit)	Liabilities, Redeemable Noncontrolling Interest, Redeemable Preferred Stock and Shareholders’ Equity (Deficit)					Liabilities, Redeemable Noncontrolling Interest, Redeemable Preferred Stock and Shareholders’ Equity (Deficit)
Current liabilities:	Current liabilities:					Current liabilities:
Medical costs payable	Medical costs payable	$	685,045	$	249,777	Medical costs payable	$	975,126	$	817,975
Accounts payable	Accounts payable	95,161		57,252		Accounts payable	111,272		118,140
Unearned revenue	Unearned revenue	34,917		34,628		Unearned revenue	195,892		53,295
Risk adjustment payable	Risk adjustment payable	548,352		187,777		Risk adjustment payable	1,308,959		931,170
Direct contracting performance year obligation						Direct contracting performance year obligation	155,145		—
Short-term borrowings						Short-term borrowings	303,947		155,000
Other current liabilities	Other current liabilities	88,133		35,847		Other current liabilities	201,014		207,238
Total current liabilities	Total current liabilities	1,451,608		565,281		Total current liabilities	3,251,355		2,282,818
Other liabilities	Other liabilities	56,254		28,578		Other liabilities	33,121		41,994
Total liabilities	Total liabilities	1,507,862		593,859		Total liabilities	3,284,476		2,324,812
Commitments and contingencies (Note 10)		0		0
Commitments and contingencies (Note 11)						Commitments and contingencies (Note 11)
Redeemable noncontrolling interests	Redeemable noncontrolling interests	130,029		39,600		Redeemable noncontrolling interests	211,026		128,407
Redeemable preferred stock, $0.0001 par value; 100,000,000 and 166,307,087 shares authorized in 2021 and 2020, respectively; — and 164,244,893 shares issued and outstanding in 2021 and 2020, respectively		—		1,681,015
Series A redeemable preferred stock, $0.0001 par value; 100,000,000 shares authorized in 2022 and 2021; 750,000 and — shares issued and outstanding in 2022 and 2021, respectively						Series A redeemable preferred stock, $0.0001 par value; 100,000,000 shares authorized in 2022 and 2021; 750,000 and — shares issued and outstanding in 2022 and 2021, respectively	747,481		—
Shareholders’ equity (deficit):	Shareholders’ equity (deficit):					Shareholders’ equity (deficit):
Common stock, $0.0001 par value; 3,000,000,000 and 658,993,725 shares authorized in 2021 and 2020, respectively; 628,133,782 and 137,662,698 shares issued and outstanding in 2021 and 2020, respectively		63		14
Common stock, $0.0001 par value; 3,000,000,000 shares authorized in 2022 and 2021; 629,915,081 and 628,622,872 shares issued and outstanding in 2022 and 2021, respectively						Common stock, $0.0001 par value; 3,000,000,000 shares authorized in 2022 and 2021; 629,915,081 and 628,622,872 shares issued and outstanding in 2022 and 2021, respectively	63		63
Additional paid-in capital	Additional paid-in capital	2,823,244		9,877		Additional paid-in capital	2,939,820		2,861,243
Accumulated deficit	Accumulated deficit	(886,333)		(515,989)		Accumulated deficit	(2,476,822)		(1,700,851)
Accumulated other comprehensive income		230		2,426
Accumulated other comprehensive loss						Accumulated other comprehensive loss	(81,917)		(3,335)
Treasury stock, at cost, 2,522,148 shares at September 30, 2022 and December 31, 2021, respectively						Treasury stock, at cost, 2,522,148 shares at September 30, 2022 and December 31, 2021, respectively	(12,000)		(12,000)
Total shareholders’ equity (deficit)	Total shareholders’ equity (deficit)	1,937,204		(503,672)		Total shareholders’ equity (deficit)	369,144		1,145,120
Total liabilities, redeemable noncontrolling interests, redeemable preferred stock and shareholders’ equity (deficit)	Total liabilities, redeemable noncontrolling interests, redeemable preferred stock and shareholders’ equity (deficit)	$	3,575,095	$	1,810,802	Total liabilities, redeemable noncontrolling interests, redeemable preferred stock and shareholders’ equity (deficit)	$	4,612,127	$	3,598,339


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Revenue:	Revenue:									Revenue:
Premium revenue	Premium revenue	$	1,020,233	$	345,426	$	2,922,950	$	827,135	Premium revenue	$	1,463,011	$	1,020,233	$	4,580,790	$	2,922,950
Direct contracting revenue										Direct contracting revenue	145,433		—		465,435		—
Service revenue	Service revenue	11,079		4,920		31,602		13,344		Service revenue	12,117		11,079		37,390		31,602
Investment income		47,345		1,774		112,503		7,063
Investment income (loss)										Investment income (loss)	11,731		47,345		(39,120)		112,503
Total revenue	Total revenue	1,078,657		352,120		3,067,055		847,542		Total revenue	1,632,292		1,078,657		5,044,495		3,067,055
Operating expenses:	Operating expenses:									Operating expenses:
Medical costs	Medical costs	1,050,943		311,319		2,640,143		675,114		Medical costs	1,456,862		1,050,943		4,435,624		2,640,143
Operating costs	Operating costs	309,790		97,379		779,090		260,650		Operating costs	297,445		309,790		1,122,964		779,090
Goodwill impairment										Goodwill impairment	74,165		—		74,165		—
Intangible assets impairment										Intangible assets impairment	42,611		—		49,331		—
Depreciation and amortization	Depreciation and amortization	14,205		2,678		25,981		5,550		Depreciation and amortization	13,904		14,205		40,173		25,981
Total operating expenses	Total operating expenses	1,374,938		411,376		3,445,214		941,314		Total operating expenses	1,884,987		1,374,938		5,722,257		3,445,214
Operating loss	Operating loss	(296,281)		(59,256)		(378,159)		(93,772)		Operating loss	(252,695)		(296,281)		(677,762)		(378,159)
Interest expense	Interest expense	1,594		—		6,282		—		Interest expense	4,905		1,594		6,435		6,282
Other income	Other income	(1,226)		—		(1,226)		—		Other income	(2)		(1,226)		(784)		(1,226)
Loss before income taxes	Loss before income taxes	(296,649)		(59,256)		(383,215)		(93,772)		Loss before income taxes	(257,598)		(296,649)		(683,413)		(383,215)
Income tax expense (benefit)		73		—		(18,225)		(9,162)
Income tax (benefit) expense										Income tax (benefit) expense	1,763		73		7,907		(18,225)
Net loss	Net loss	(296,722)		(59,256)		(364,990)		(84,610)		Net loss	(259,361)		(296,722)		(691,320)		(364,990)
Net earnings attributable to noncontrolling interests	Net earnings attributable to noncontrolling interests	(3,942)		—		(5,354)		—		Net earnings attributable to noncontrolling interests	(46,710)		(3,942)		(84,651)		(5,354)
Series A preferred stock dividend accrued										Series A preferred stock dividend accrued	(9,684)		—		(28,083)		—
Net loss attributable to Bright Health Group, Inc. common shareholders	Net loss attributable to Bright Health Group, Inc. common shareholders	$	(300,664)	$	(59,256)	$	(370,344)	$	(84,610)	Net loss attributable to Bright Health Group, Inc. common shareholders	$	(315,755)	$	(300,664)	$	(804,054)	$	(370,344)
Basic and diluted loss per share attributable to Bright Health Group, Inc. common shareholders	Basic and diluted loss per share attributable to Bright Health Group, Inc. common shareholders	$	(0.48)	$	(0.43)	$	(1.19)	$	(0.62)	Basic and diluted loss per share attributable to Bright Health Group, Inc. common shareholders	$	(0.50)	$	(0.48)	$	(1.28)	$	(1.19)
Basic and diluted weighted-average common shares outstanding	Basic and diluted weighted-average common shares outstanding	630,378		136,337		312,294		135,926		Basic and diluted weighted-average common shares outstanding	629,718		630,378		629,231		312,294


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net loss	Net loss	$	(296,722)	$	(59,256)	$	(364,990)	$	(84,610)	Net loss	$	(259,361)	$	(296,722)	$	(691,320)	$	(364,990)
Other comprehensive (loss) income:	Other comprehensive (loss) income:									Other comprehensive (loss) income:
Unrealized investment holding (losses) gains arising during the year, net of tax of $0 and $0, respectively		(143)		(958)		(1,808)		2,326
Less: reclassification adjustments for investment gains, net of tax of $0 and $0, respectively		160		119		388		68
Unrealized investment holding losses arising during the year, net of tax of $0 and $0, respectively										Unrealized investment holding losses arising during the year, net of tax of $0 and $0, respectively	(33,146)		(143)		(82,704)		(1,808)
Less: reclassification adjustments for investment (losses) gains, net of tax of $0 and $0, respectively										Less: reclassification adjustments for investment (losses) gains, net of tax of $0 and $0, respectively	(1,615)		160		(4,122)		388
Other comprehensive (loss) income	Other comprehensive (loss) income	(303)		(1,077)		(2,196)		2,258		Other comprehensive (loss) income	(31,531)		(303)		(78,582)		(2,196)
Comprehensive loss	Comprehensive loss	(297,025)		(60,333)		(367,186)		(82,352)		Comprehensive loss	(290,892)		(297,025)		(769,902)		(367,186)
Comprehensive loss attributable to noncontrolling interests	Comprehensive loss attributable to noncontrolling interests	(3,942)		—		(5,354)		—		Comprehensive loss attributable to noncontrolling interests	(46,710)		(3,942)		(84,651)		(5,354)
Comprehensive loss attributable to Bright Health Group, Inc. common shareholders	Comprehensive loss attributable to Bright Health Group, Inc. common shareholders	$	(300,967)	$	(60,333)	$	(372,540)	$	(82,352)	Comprehensive loss attributable to Bright Health Group, Inc. common shareholders	$	(337,602)	$	(300,967)	$	(854,553)	$	(372,540)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


		Redeemable Preferred Stock			Common Stock			Additional Paid-In Capital				Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)				Total			Redeemable Preferred Stock						Common Stock			Additional Paid-In Capital			Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
2021		Shares	Amount		Shares	Amount
Balance at January 1, 2021		164,245	1,681,015		137,663	$	14			$	9,877					$	(515,989)					$	2,426		$	(503,672)
2022																				2022	Shares			Amount			Shares	Amount				Additional Paid-In Capital						Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Treasury Stock		Total
Balance at January 1, 2022																				Balance at January 1, 2022	—			$	—		628,623	$	63
Net loss	Net loss	—	—		—	—		—				(25,162)		—				(25,162)		Net loss	—			—			—	—		—					(195,234)				—						—		(195,234)
Issuance of preferred stock	Issuance of preferred stock	1,420	55,137		—	—		—				—		—				—		Issuance of preferred stock	750			747,481			—	—		—			—			—			—			—
Issuance of common stock	Issuance of common stock	—	—		4,661	—		4,893				—		—				4,893		Issuance of common stock	—			—			370	—		257			—			—			—			257
Share-based compensation	Share-based compensation	—	—		—	—		5,176				—		—				5,176		Share-based compensation	—			—			—	—		32,921			—			—			—			32,921
Other comprehensive loss	Other comprehensive loss	—	—		—	—		—				—		(1,042)				(1,042)		Other comprehensive loss	—			—			—	—		—			—			(26,340)			—			(26,340)
Balance at March 31, 2021		165,665	$	1,736,152	142,324	$	14	$	19,946			$	(541,151)	$	1,384			$	(519,807)

Net loss		—	—		—	—		—				(44,518)		—				(44,518)
Issuance of preferred stock		2,067	79,807		—	—		—				—		—				—
Conversion of preferred stock to common stock		(167,732)	(1,815,959)		427,897	43		1,815,916				—		—				1,815,959
Issuance of common stock		—	—		4,120	1		4,722				—		—				4,723
Sale of common stock from IPO, net of offering costs		—	—		51,350	5		880,637				—		—				880,642
Share-based compensation		—	—		—	—		13,878				—		—				13,878
Other comprehensive loss		—	—		—	—		—				—		(851)				(851)
Balance at June 30, 2021		—	—		625,691	$	63	$	2,735,099			$	(585,669)	$	533			$	2,150,026
Balance at March 31, 2022																				Balance at March 31, 2022	750			$	747,481		628,993	$	63	$	2,894,421		$	(1,896,085)		$	(29,675)		$	(12,000)		$	956,724

Net loss	Net loss	—	—		—	—		—				(300,664)		—				(300,664)		Net loss	—			—			—	—		—			(274,666)			—			—			(274,666)
Issuance of common stock	Issuance of common stock	—	—		4,965	—		75,965				—		—				75,965		Issuance of common stock	—			—			329	—		415			—			—			—			415
Return of common stock from escrow settlement		—	—		(2,522)	—		(12,000)				—		—				(12,000)
Share-based compensation	Share-based compensation	—	—		—	—		24,180				—		—				24,180		Share-based compensation	—			—			—	—		20,220			—			—			—			20,220
Other comprehensive loss	Other comprehensive loss	—	—		—	—		—				—		(303)				(303)		Other comprehensive loss	—			—			—	—		—			—			(20,711)			—			(20,711)
Balance at September 30, 2021		—	—		628,134	$	63	$	2,823,244			$	(886,333)	$	230			$	1,937,204
Balance at June 30, 2022																				Balance at June 30, 2022	750			$	747,481		629,322	$	63	$	2,915,056		$	(2,170,751)		$	(50,386)		$	(12,000)		$	681,982

Net loss																				Net loss	—			—			—	—		—			(306,071)			—			—			(306,071)
Issuance of common stock																				Issuance of common stock	—			—			593	—		642			—			—			—			642
Share-based compensation																				Share-based compensation	—			—			—	—		24,122			—			—			—			24,122
Other comprehensive loss																				Other comprehensive loss	—			—			—	—		—			—			(31,531)			—			(31,531)
Balance at September 30, 2022																				Balance at September 30, 2022	750			$	747,481		629,915	63		2,939,820			(2,476,822)			(81,917)			(12,000)			369,144


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net loss	Net loss	$	(370,344)	$	(84,610)	Net loss	$	(691,320)	$	(370,344)
Adjustments to reconcile net loss to net cash provided by operating activities:	Adjustments to reconcile net loss to net cash provided by operating activities:					Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	25,981		5,550		Depreciation and amortization	40,173		25,981
Impairment of intangible assets						Impairment of intangible assets	49,331		—
Impairment of goodwill						Impairment of goodwill	74,165		—
Share-based compensation	Share-based compensation	43,234		3,722		Share-based compensation	77,263		43,234
Deferred income taxes	Deferred income taxes	(17,946)		—		Deferred income taxes	1,590		(17,946)
Unrealized gain on equity securities		(109,012)		—
Unrealized loss (gain) on equity securities						Unrealized loss (gain) on equity securities	58,821		(109,012)
Other, net	Other, net	14,555		1,022		Other, net	9,612		14,555
Changes in assets and liabilities, net of acquired assets and liabilities:	Changes in assets and liabilities, net of acquired assets and liabilities:					Changes in assets and liabilities, net of acquired assets and liabilities:
Accounts receivable	Accounts receivable	(18,683)		27,508		Accounts receivable	(7,015)		(18,683)
Direct contracting performance year receivable						Direct contracting performance year receivable	(234,776)		—
Other assets	Other assets	(86,836)		(24,980)		Other assets	(77,551)		(86,836)
Medical cost payable	Medical cost payable	342,531		35,458		Medical cost payable	157,151		342,531
Risk adjustment payable	Risk adjustment payable	359,257		68,186		Risk adjustment payable	377,789		359,257
Accounts payable and other liabilities	Accounts payable and other liabilities	53,853		(22,015)		Accounts payable and other liabilities	(21,188)		53,853
Unearned revenue	Unearned revenue	(3,476)		1,498		Unearned revenue	142,597		(3,476)
Direct contracting performance year obligation						Direct contracting performance year obligation	155,145		—
Net cash provided by operating activities	Net cash provided by operating activities	233,114		11,339		Net cash provided by operating activities	111,787		233,114
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchases of investments	Purchases of investments	(736,838)		(702,672)		Purchases of investments	(1,422,025)		(736,838)
Proceeds from sales, paydown, and maturities of investments	Proceeds from sales, paydown, and maturities of investments	536,110		349,113		Proceeds from sales, paydown, and maturities of investments	980,763		536,110
Purchases of property and equipment	Purchases of property and equipment	(20,682)		(1,181)		Purchases of property and equipment	(21,579)		(20,682)
Business acquisitions, net of cash acquired	Business acquisitions, net of cash acquired	(431,718)		(174,090)		Business acquisitions, net of cash acquired	(310)		(431,718)
Net cash used in investing activities	Net cash used in investing activities	(653,128)		(528,830)		Net cash used in investing activities	(463,151)		(653,128)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from short-term borrowings						Proceeds from short-term borrowings	303,947		200,000
Repayments of short-term borrowings						Repayments of short-term borrowings	(155,000)		(200,000)
Proceeds from issuance of preferred stock	Proceeds from issuance of preferred stock	—		686,840		Proceeds from issuance of preferred stock	747,481		—
Proceeds from issuance of common stock	Proceeds from issuance of common stock	10,581		874		Proceeds from issuance of common stock	1,314		10,581
Proceeds from short-term borrowings		200,000		—
Repayments of short-term borrowings		(200,000)		—
Distributions to noncontrolling interest holders						Distributions to noncontrolling interest holders	(2,032)		—
Payments for debt issuance costs	Payments for debt issuance costs	(3,391)		—		Payments for debt issuance costs	—		(3,391)
Proceeds from IPO	Proceeds from IPO	887,328		—		Proceeds from IPO	—		887,328
Payments for IPO offering costs	Payments for IPO offering costs	(6,686)		—		Payments for IPO offering costs	—		(6,686)
Net cash provided by financing activities	Net cash provided by financing activities	887,832		687,714		Net cash provided by financing activities	895,710		887,832
Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	467,818		170,223		Net increase in cash and cash equivalents	544,346		467,818
Cash and cash equivalents – beginning of year	Cash and cash equivalents – beginning of year	488,371		522,910		Cash and cash equivalents – beginning of year	1,061,179		488,371
Cash and cash equivalents – end of period	Cash and cash equivalents – end of period	$	956,189	$	693,133	Cash and cash equivalents – end of period	$	1,605,525	$	956,189
Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Changes in unrealized (loss) gain on available-for-sale securities in OCI		$	(2,196)	$	2,258
Changes in unrealized loss on available-for-sale securities in OCI						Changes in unrealized loss on available-for-sale securities in OCI	$	(78,582)	$	(2,196)
Cash paid for interest	Cash paid for interest	3,865		—		Cash paid for interest	3,171		3,865
Supplemental schedule of non-cash activities:	Supplemental schedule of non-cash activities:					Supplemental schedule of non-cash activities:
Redeemable convertible preferred stock issued for acquisitions	Redeemable convertible preferred stock issued for acquisitions	$	134,944	$	80,000	Redeemable convertible preferred stock issued for acquisitions	$	—	$	134,944
Conversion of redeemable convertible preferred stock to common stock upon initial public offering	Conversion of redeemable convertible preferred stock to common stock upon initial public offering	1,815,916		—		Conversion of redeemable convertible preferred stock to common stock upon initial public offering	$	—	$	1,815,916


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Compensation and fringe benefits	Compensation and fringe benefits	$	100,062	$	35,588	$	234,467	$	92,589	Compensation and fringe benefits	$	109,629	$	100,062	$	346,325	$	234,467
Professional fees	Professional fees	61,483		20,745		143,248		53,381		Professional fees	73,497		61,483		215,627		143,248
Marketing and selling expense		69,443		15,941		183,636		39,056
Marketing and selling expenses										Marketing and selling expenses	77,721		69,443		249,458		183,636
Premium taxes and fees										Premium taxes and fees	60,708		45,953		196,763		127,783
Premium deficiency reserve										Premium deficiency reserve	(78,990)		—		(42,233)		—
General and administrative expenses										General and administrative expenses	38,778		19,148		113,344		52,856
Other operating expenses	Other operating expenses	78,802		25,105		217,739		75,624		Other operating expenses	16,102		13,701		43,680		37,100
Total operating costs	Total operating costs	$	309,790	$	97,379	$	779,090	$	260,650	Total operating costs	$	297,445	$	309,790	$	1,122,964	$	779,090


	Pro Forma Consolidated Statements of Income (Loss)
	(Unaudited)
	Three Months Ended		Nine Months Ended September 30,
	September 30, 2020		2021		2020
Revenue	$	502,378	$	3,195,925	$	1,263,016
Net Loss	(49,157)		(358,935)		(70,971)


		THNM		Zipnosis			THNM		Zipnosis
Accounts receivable	Accounts receivable	$	714	$	1,062	Accounts receivable	$	714	$	1,062
Short-term investments	Short-term investments	4,677		—		Short-term investments	4,705		—
Prepaids and other current assets	Prepaids and other current assets	8,337		141		Prepaids and other current assets	8,337		141
Property and equipment	Property and equipment	—		232		Property and equipment	—		232
Intangible assets	Intangible assets	7,300		8,970		Intangible assets	7,300		9,180
Long-term investments	Long-term investments	13,081		—		Long-term investments	13,644		—
Other non-current assets	Other non-current assets	1,324		766		Other non-current assets	1,324		766
Total assets	Total assets	35,433		11,171		Total assets	36,024		11,381
Medical costs payable	Medical costs payable	13,268		—		Medical costs payable	12,617		—
Accounts payable	Accounts payable	14,663		136		Accounts payable	14,663		136
Unearned revenue	Unearned revenue	3,645		120		Unearned revenue	3,645		120
Other current liabilities	Other current liabilities	2,682		665		Other current liabilities	11,406		665
Other liabilities	Other liabilities	2,499		2,730		Other liabilities	2,499		2,730
Total liabilities	Total liabilities	36,757		3,651		Total liabilities	44,830		3,651
Net identified assets acquired		(1,324)		7,520
Net identified assets (liabilities) acquired						Net identified assets (liabilities) acquired	(8,806)		7,730
Goodwill	Goodwill	4,739		62,277		Goodwill	4,148		62,067
Total purchase consideration		$	3,415	$	69,797
Total purchase consideration, net of cash acquired						Total purchase consideration, net of cash acquired	$	(4,658)	$	69,797


	Amount Recognized as of Acquisition Date (as previously reported)		Measurement Period Adjustments		Amounts Recognized as of Acquisition Date (as adjusted)
Accounts receivable	$	74,128	$	—	$	74,128
Prepaid and other currents assets	30,583		—		30,583
Property and equipment	4,375		—		4,375
Intangible assets	72,600		1,900		74,500
Other non-current assets	2,906		—		2,906
Total assets	184,592		1,900		186,492
Medical costs payable	119,408		—		119,408
Other current liabilities	51,744		174		51,918
Other liabilities	1,236		108		1,344
Total liabilities	172,388		282		172,670
Net identified assets acquired	12,204		1,618		13,822
Goodwill	197,886		(1,618)		196,268
Total purchase consideration	$	210,090	$	—	$	210,090


	September 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Carrying Value
Cash equivalents	$	271,984	$	1	$	(1)	$	271,984
Available for sale:
U.S. government and agency obligations	501,343		283		(376)		501,250
Corporate obligations	290,917		384		(106)		291,195
State and municipal obligations	15,437		51		(3)		15,485
Commercial paper	5,160		5		—		5,165
Certificates of deposit	26,809		—		—		26,809
Mortgage-backed securities	2,533		—		—		2,533
Other	12,876		1		(8)		12,869
Total available-for-sale securities	855,075		724		(493)		855,306
Held to maturity:
U.S. government and agency obligations	7,745		—		—		7,745
Certificates of deposit	1,447		—		—		1,447
Total held-to-maturity securities	9,192		—		—		9,192
Total investments	$	1,136,251	$	725	$	(494)	$	1,136,482


		December 31, 2020									September 30, 2022
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Carrying Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Carrying Value
Cash equivalents	Cash equivalents	$	153,743	$	—	$	(3)	$	153,740	Cash equivalents	$	379,081	$	18	$	—	$	379,099
Available for sale:	Available for sale:									Available for sale:
U.S. government and agency obligations	U.S. government and agency obligations	291,834		1,246		(1)		293,079		U.S. government and agency obligations	402,690		9		(11,027)		391,672
Corporate obligations	Corporate obligations	280,557		1,104		(30)		281,631		Corporate obligations	540,226		4		(47,716)		492,514
State and municipal obligations	State and municipal obligations	18,459		107		—		18,566		State and municipal obligations	11,575		—		(283)		11,292
Commercial paper		14,990		1		—		14,991
Certificates of deposit	Certificates of deposit	53,504		2		(1)		53,505		Certificates of deposit	13,367		—		—		13,367
Mortgage-backed securities										Mortgage-backed securities	171,915		—		(18,144)		153,771
Asset-backed securities										Asset-backed securities	69,001		1		(4,171)		64,831
Other	Other	5,534		2		—		5,536		Other	390		—		(17)		373
Total available-for-sale securities	Total available-for-sale securities	664,878		2,462		(32)		667,308		Total available-for-sale securities	1,209,164		14		(81,358)		1,127,820
Held to maturity:	Held to maturity:									Held to maturity:
U.S. government and agency obligations	U.S. government and agency obligations	6,677		—		—		6,677		U.S. government and agency obligations	7,007		—		—		7,007
Certificates of deposit	Certificates of deposit	1,119		—		—		1,119		Certificates of deposit	1,447		—		—		1,447
Total held-to-maturity securities	Total held-to-maturity securities	7,796		—		—		7,796		Total held-to-maturity securities	8,454		—		—		8,454
Total investments	Total investments	$	826,417	$	2,462	$	(35)	$	828,844	Total investments	$	1,596,699	$	32	$	(81,358)	$	1,515,373


	Bright HealthCare				NeueHealth
	Gross Carrying Amount		Cumulative Impairment		Gross Carrying Amount		Cumulative Impairment
Balance at December 31, 2020	$	197,886	$	—	$	65,149	$	—
Acquisitions	240,776				340,108
Purchase adjustments	(1,618)		—		—		—
Balance at September 30, 2021	$	437,044	$	—	$	405,257	$	—


	Fair Value		Weighted-Average Useful Life (in years)
Customer relationships	$	90,670	16.0
Trade names	60,370		14.9
Reacquired contract	59,000		4.5
Developed technology	6,200		7.0
Other	4,400		7.0
Total	$	220,640	9.8


2021 (October-December)		$	10,513
2022		42,050
2022 (October - December)				2022 (October - December)	$	7,095
2023	2023	42,029		2023	28,360
2024	2024	41,890		2024	28,221
2025	2025	41,890		2025	28,221
2026	2026	26,323		2026	28,104
2027				2027	28,065


							September 30,
		2021		2020			2022		2021
Medical costs payable - January 1	Medical costs payable - January 1	$	249,777	$	44,804	Medical costs payable - January 1	$	817,975	$	249,777
Incurred related to:	Incurred related to:					Incurred related to:
Current year	Current year	2,647,719		685,637		Current year	4,443,878		2,647,719
Prior year	Prior year	1,726		(9,297)		Prior year	(36,322)		1,726
Total incurred	Total incurred	2,649,445		676,340		Total incurred	4,407,556		2,649,445
Paid related to:	Paid related to:					Paid related to:
Current year	Current year	2,074,602		610,161		Current year	3,538,386		2,074,602
Prior year	Prior year	232,312		29,974		Prior year	712,019		232,312
Total paid	Total paid	2,306,914		640,135		Total paid	4,250,405		2,306,914

Acquired claims liabilities	Acquired claims liabilities	92,737		118,662		Acquired claims liabilities	—		92,737
Medical costs payable - September 30	Medical costs payable - September 30	$	685,045	$	199,671	Medical costs payable - September 30	$	975,126	$	685,045


		Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (In Years)	Aggregate Intrinsic Value			Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (In Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2021		63,925	$	1.47	8.7	$	53,573
Outstanding at January 1, 2022								Outstanding at January 1, 2022	69,244	$	1.84	8.2	$	113,908
Granted	Granted	20,447	2.58					Granted	8,479	1.83
Exercised	Exercised	(9,373)	1.09					Exercised	(1,231)	1.07
Forfeited	Forfeited	(4,709)	1.75					Forfeited	(9,087)	2.05
Expired	Expired	(11)	1.09					Expired	(1,607)	1.99
Outstanding at September 30, 2021		70,279	$	1.83	8.5	$	445,246
Outstanding at September 30, 2022								Outstanding at September 30, 2022	65,798	$	1.82	7.2	$	1,318


	RSU
	Number of RSUs	Weighted Average Grant Date Fair Value
Unvested RSUs at December 31, 2020	—	$	—
RSUs granted	364	9.11
RSUs canceled	(19)	9.01
Unvested RSUs at September 30, 2021	345	$	9.11


	PSU
	Number of PSUs	Weighted Average Grant Date Fair Value
Unvested PSUs at December 31, 2020	—	$	—
PSUs granted	14,700	9.30
PSUs canceled	—	—
Unvested PSUs at September 30, 2021	14,700	$	9.30


Three Months Ended September 30, 2021	Bright HealthCare		NeueHealth		Eliminations		Consolidated
Premium revenue	$	994,586	$	25,647	$	—	$	1,020,233
Service revenue	(61)		11,140		—		11,079
Investment income	1,087		46,258		—		47,345
Total unaffiliated revenue	995,612		83,045		—		1,078,657
Affiliated revenue	—		139,759		(139,759)		—
Total segment revenue	995,612		222,804		(139,759)		1,078,657
Operating income (loss)	(303,271)		6,990		—		(296,281)

Depreciation and amortization	$	4,584	$	9,621	$	—	$	14,205


Three Months Ended September 30, 2020	Bright HealthCare		NeueHealth		Eliminations		Consolidated
Premium revenue	$	343,472	$	1,954	$	—	$	345,426
Service revenue	—		4,920		—		4,920
Investment income	1,774		—		—		1,774
Total unaffiliated revenue	345,246		6,874		—		352,120
Affiliated revenue	—		2,727		(2,727)		—
Total segment revenue	345,246		9,601		(2,727)		352,120
Operating income (loss)	(57,263)		(1,993)		—		(59,256)

Depreciation and amortization	$	2,274	$	404	$	—	$	2,678


Nine Months Ended September 30, 2020	Bright HealthCare		NeueHealth		Eliminations		Consolidated
Premium revenue	$	821,185	$	5,950	$	—	$	827,135
Service revenue	—		13,344		—		13,344
Investment income	7,063		—		—		7,063
Total unaffiliated revenue	828,248		19,294		—		847,542
Affiliated revenue	—		8,176		(8,176)		—
Total segment revenue	828,248		27,470		(8,176)		847,542
Operating income (loss)	(88,427)		(5,345)		—		(93,772)

Depreciation and amortization	$	4,131	$	1,419	$	—	$	5,550


	Three Months Ended September 30,			Nine Months Ended September 30,
($ in thousands)	2021		2020	2021		2020
Net Loss	$	(296,722)	(59,256)	$	(364,990)	(84,610)
Adjusted EBITDA(1)	$	(245,918)	(54,084)	$	(290,757)	(81,188)


Exhibit Number						Description
3.1						Ninth Amended and Restated Certificate of Incorporation of Bright Health Group, Inc. (incorporated by reference to Exhibit 4.1 filed with the Registrant’s Registration Statement on Form S-8 filed on June 28, 2021)
3.2						Certificate of Designations of Series A Convertible Perpetual Preferred Stock of Bright Health Group, Inc. (incorporated by reference to Exhibit 3.1 filed with the Registrant’s Current Report on Form 8-K filed on January 3, 2022)
3.3						Certificate of Amendment to the Certificate of Designations of Series A Convertible Perpetual Preferred Stock of Bright Health Group, Inc. (incorporated by reference to Exhibit 3.1 filed with the Registrant’s Current Report on Form 8-K filed on October 18, 2022)
3.4						Certificate of Designations of Series B Convertible Perpetual Preferred Stock of Bright Health Group, Inc. (incorporated by reference to Exhibit 3.2 filed with the Registrant’s Current Report on Form 8-K filed on October 18, 2022)
3.5						Amended and Restated Bylaws of Bright Health Group, Inc. (incorporated by reference to Exhibit 4.2 filed with the Registrant’s Registration Statement on Form S-8 filed on June 28, 2021)
10.1						Third Amended and Restated Registration Rights Agreement, dated as of October 17, 2022, by and among Bright Health Group, Inc. and the other parties named therein. (incorporated by reference to Exhibit 10.1 filed with the Registrant’s Current Report on Form 8-K filed on October 18, 2022)
10.2						Investment Agreement, dated as of October 10, 2022, by and among Bright Health Group, Inc. and the other parties named therein (incorporated by reference to Exhibit 10.1 filed with the Registrant’s Current Report on Form 8-K filed on October 11, 2022)
10.3						Amendment No. 3, dated as of November 8, 2022, among Bright Health Group, Inc., the other Loan Parties party thereto, the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 filed with the Registrant’s Current Report on Form 8-K filed on November 9, 2022)
31.1						Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2						Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1						Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)
32.2						Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)
101						The following financial information from our Quarterly Report on Form 10-Q for the third quarter of fiscal ~~2021,~~2022, filed with the SEC on November ~~15, 2021,~~14, 2022, formatted in Inline Extensible Business Reporting Language (“iXBRL”)
104						Cover Page Interactive Data File (formatted as ~~Inline XBRL~~iXBRL and embedded within Exhibit 101)


	BRIGHT HEALTH GROUP, INC.

Dated: November ~~15, 2021~~14, 2022	By:	/s/ G. Mike Mikan
	Name:	G. Mike Mikan
	Title:	Vice Chairman, President and Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Catherine R. Smith
	Name:	Catherine R. Smith
	Title:	Chief Financial and Administrative Officer
		(Principal Financial Officer)

	By:	/s/ Jeffrey J. Scherman
	Name:	Jeffrey J. Scherman
	Title:	Chief Accounting Officer
		(Principal Accounting Officer)