Bright Health (BHG) S-1 IPO registration

As filed with the Securities and Exchange Commission on May 19, 2021.

Registration No. 333-     ​

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

BRIGHT HEALTH GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of
incorporation or organization) 6324 (Primary Standard Industrial
Classification Code Number) 47-4991296 (I.R.S. Employer
Identification Number)

8000 Norman Center Drive, Suite 1200
Minneapolis, MN 55437
(612) 238-1321

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Keith Nelsen
General Counsel and Corporate Secretary
8000 Norman Center Drive, Suite 1200
Minneapolis, MN 55437
(612) 238-1321

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With copies to:

William B. Brentani
Simpson Thacher & Bartlett LLP
2475 Hanover Street
Palo Alto, California 94304
Tel: (650) 251-5000
Fax: (650) 251-5002 Xiaohui (Hui) Lin
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Tel: (212) 455-2000
Fax: (212) 455-2502 Bradley C. Weber
Gregg L. Katz
Kim S. de Glossop
Goodwin Procter LLP
601 Marshall Street
Redwood City, California 94063
Tel: (650) 752 3100
Fax: (650) 853 1038

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☐
​	Emerging growth company ☐

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 7(a)(2)(B) of the Securities Act. ☐

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee
Common stock, $0.0001 par value per share	$100,000,000	$10,910

(1)

Includes           shares that the underwriters have the option to purchase. See “Underwriting (Conflicts of Interest).”

(2)

Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED        , 2021

Preliminary Prospectus

           Shares

COMMON STOCK

This is the initial public offering of Bright Health Group, Inc. We are selling           shares of our common stock.

We estimate the initial public offering price of our common stock to be between $      and $      per share. Prior to this offering, no public market existed for our common stock. We intend to apply to list our common stock on the New York Stock Exchange (the “NYSE”) under the symbol “BHG.”

Investing in the common stock involves risks. See the “Risk Factors” section beginning on page 19 of this prospectus.

​	Per Share			Total
Public offering price	​	$		​	$
Underwriting discounts and commissions(1)	​	$		​	$
Proceeds, before expenses, to us	​	$		​	$	​

(1)

See “Underwriting (Conflicts of Interest)” for a description of the compensation payable to the underwriters.

We have granted the underwriters an option for a period of 30 days to purchase up to           additional shares of common stock at the public offering price less the underwriting discounts and commissions.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The shares will be ready for delivery on or about            , 2021.

J.P. Morgan Goldman Sachs & Co. LLC Morgan Stanley Barclays

BofA Securities Citigroup Piper Sandler

Nomura RBC Capital Markets

Prospectus dated            , 2021.

TABLE OF CONTENTS

​	Page
Prospectus Summary	​	1
Risk Factors	​	19
Special Note Regarding Forward-Looking Statements	​	56
Use of Proceeds	​	58
Dividend Policy	​	59
Capitalization	​	60
Unaudited Pro Forma Condensed Combined Financial Information	​	62
Dilution	​	67
Management’s Discussion and Analysis of Financial Condition and Results of Operations	​	69
Business	​	90
Management	​	119
Executive and Director Compensation	​	126
Certain Relationships and Related Party Transactions	​	162
Principal Stockholders	​	164
Description of Capital Stock	​	169
Shares Eligible for Future Sale	​	177
Certain United States Federal Income and Estate Tax Consequences to Non-U.S. Holders	​	179
Underwriting (Conflicts of Interest)	​	182
Legal Matters	​	190
Experts	​	190
Where You Can Find Additional Information	​	190
Index to Consolidated Financial Statements	​	F-1

Through and including           , 2021 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

You should rely only on the information contained in this prospectus, any amendment or supplement to this prospectus or any free writing prospectus we may authorize to be delivered or made available to you. We and the underwriters have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus, any amendment or supplement to this prospectus or any free writing prospectuses prepared by us or on our behalf. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus, any amendment or supplement to this prospectus or any applicable free writing prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus, any amendment or supplement to this prospectus or any applicable free writing prospectus is current only as of its date, regardless of the time of delivery of this prospectus, any amendment or supplement to this prospectus or any applicable free writing prospectus or any sale of the shares. Our business, financial condition, results of operations and prospects may have changed since such date.

For investors outside the United States: We and the underwriters have not done anything that would permit a public offering of the shares of our common stock or possession or distribution of this prospectus, any amendment or supplement to this prospectus or any applicable free writing prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus, any amendment or supplement to this prospectus

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or any applicable free writing prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus, any amendment or supplement to this prospectus or any applicable free writing prospectus outside of the United States.

Unless otherwise indicated or the context otherwise requires:

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“2016 Equity Plan” refers to the Bright Health Group, Inc. 2016 Stock Incentive Plan;

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“2021 Equity Plan” refers to the Bright Health Group, Inc. 2021 Omnibus Incentive Plan, an equity incentive plan that our board of directors has adopted, and that we expect our stockholders to approve, prior to the completion of this offering;

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“ACA” refers to the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended;

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“ACO” refers to an accountable care organization, which is a group of doctors, hospitals, and other healthcare providers who come together voluntarily to deliver coordinated, high-quality care to their patients;

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“Acquisitions” refers to, collectively, (i) the transaction consummated on December 31, 2019, pursuant to which a subsidiary of the Company acquired substantially all the assets of Associates in Family Practice of Broward, L.L.C., (ii) the Brand New Day Acquisition, (iii) the transaction consummated on December 31, 2020, pursuant to which a subsidiary of the Company acquired a controlling interest in Premier Medical Associates of Florida, LLC, (iv) the transaction consummated on March 31, 2021, pursuant to which a subsidiary of the Company acquired True Health New Mexico, Inc., (v) the transaction consummated on March 31, 2021, pursuant to which a subsidiary of the Company acquired Zipnosis, Inc., and (vi) the transaction consummated on April 1, 2021, pursuant to which a subsidiary of the Company acquired Central Health Plan of California, Inc.;

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“AIP” refers to Bright Health Management Inc.’s Annual Incentive Plan;

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“annual enrollment period” refers to the yearly period when beneficiaries can enroll or disenroll in a Medicare or Medicare Advantage health plan. The annual enrollment period starts on October 15th and ends on December 7th of each year;

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“APTC” refers to advanced premium tax credits, a tax credit a person can take in advance to lower their monthly health insurance payment;

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“ASO” refers to administrative services only, an arrangement in which a company funds its own employee benefit plan, such as a health insurance program, while purchasing only administrative services from the insurer;

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“Bessemer Venture Partners” refers to certain investment funds of Bessemer Venture Partners and its affiliates;

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“Brand New Day Acquisition” refers to the transaction consummated on April 30, 2020, pursuant to which a subsidiary of the Company acquired Universal Care, Inc. (d.b.a. Brand New Day) (“Brand New Day”);

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“Bright Health Intelligent Operating System” or “BiOS” refers to Bright Health’s end-to-end intelligent technology platform comprised of consumer, care delivery, and administrative solutions, all designed to enable an integrated, aligned, and consumer-focused healthcare ecosystem;

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“Bright HealthCare” refers to Bright Health’s diversified healthcare financing and distribution platform that aggregates consumers and delivers healthcare benefits;

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“capitation” refers to a healthcare payment model in which healthcare providers receive a pre-arranged, fixed amount per individual over a defined timeframe;

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“Care Partner” refers to a physician or provider organization with which Bright Health partners to support the delivery of personalized healthcare for consumers;

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“CIN” refers to a structure that facilitates collaboration among healthcare providers, with shared goals in performance, quality, value and efficiency;

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“CMS” refers to Centers for Medicare and Medicaid Services;

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“consumer” refers to any individual covered by any of our health plans or served by our care delivery entities. When referred to within our Bright HealthCare business, a consumer covered under more than one of our health plans counts as a single consumer for the purposes of this metric;

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“Consumer360” refers to Bright Health’s proprietary intelligent data hub, which aggregates clinical and administrative data, as well as information derived from the consumer experience (i.e., from call center and other consumer interactions) and data relating to Social Determinants of Health;

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“Credit Agreement” refers to the $350.0 million revolving credit agreement, dated as of March 1, 2021, among the Company, JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent, and the other lenders and parties party thereto;

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“DCE” refers to a Direct Contracting entity, an organization that is participating or has been approved to participate in CMS’s Direct Contracting program;

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“DGCL” refers to the Delaware General Corporation Law, as amended;

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“Direct Contracting” refers to a CMS payment model aimed at reducing expenditures and preserving or enhancing quality of care for beneficiaries in Medicare fee-for-service, with a variety of options aimed at creating opportunities for a broad range of organizations to participate with CMS in testing risk-sharing arrangements to produce value and high-quality healthcare;

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“DocSquad” refers to Bright Health’s consumer and care provider solution, comprised of a purpose-built set of tools and experiences connecting consumers with the organizations responsible for their care, while giving providers a 360-degree view of a consumer to better manage their healthcare needs;

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“Exchange Act” refers to the U.S. Securities Exchange Act of 1934, as amended;

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“FFS” refers to fee-for-service, a method in which doctors and other healthcare providers are paid for each service performed;

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“GAAP” refers to U.S. generally accepted accounting principles;

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“GDP” refers to the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period;

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“Greenspring” refers to certain investment funds of Greenspring Associates and its affiliates;

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“Health Insurance Marketplaces” refers to the health insurance marketplaces established per the ACA and operated by the federal government for most states and other marketplaces operated by individual states, for individuals and small employers to purchase health insurance coverage in the Individual and Small Group markets that include minimum levels of benefits, restrictions on coverage limitations and premium rates, and APTC;

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“HIPAA” refers to the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and the privacy and security regulations that implement the Health Insurance Portability and Accountability Act and HITECH;

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“HMO” refers to a health maintenance organization;

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“IBNR” refers to healthcare costs incurred but not yet reported;

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“ICHRA” refers to individual coverage health reimbursement arrangement, a way for businesses and other organizations to offer employees health benefits, allowing businesses of any size to reimburse employees tax-free for healthcare, including individual health insurance policies;

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“IDN” refers to an integrated delivery network, an organization or group of healthcare providers, which, through ownership or formal agreements, aligns local healthcare organizations and manages them with one governing board;

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“IFP” refers to Individual and Family Plan;

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“IPA” refers to an independent physician association, an association of independent physicians that contract with independent care delivery organizations and provides services to managed care organizations on a negotiated per capita rate, flat retainer fee, or negotiated fee-for-service basis;

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“Joint Model of Health” refers, colloquially, to our collaborative approach with our Care Partners to manage clinical programs addressing the healthcare needs of the consumers we serve;

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“Large Group” refers to insurance products sold to employers with greater than 100 employees, though some states designate large group products to include those sold to employers with greater than 50 employees;

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“MA” refers to Medicare Advantage, an alternative to traditional fee-for-service Medicare where CMS pays health plans a monthly sum per consumer to manage all health expenses of a participating consumer, providing the health plans with an incentive to deliver lower-cost, high-quality care;

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“MAPD” refers to Medicare Advantage Prescription Drug plans which are Medicare Advantage plans that include Part D prescription drug benefits;

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“Managed Medicaid” refers to an alternative to traditional fee-for-service Medicaid where state Medicaid agencies pay health plans a monthly sum per consumer to manage all health expenses of a participating consumer, providing the health plans with an incentive to deliver lower-cost, high-quality care;

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“Medical Cost Ratio” or “MCR” refers to medical cost ratio, which we calculate by dividing medical costs by premium revenue;

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“Medicaid” refers to a federal and state program that helps with medical costs for some people with limited income and resources;

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“Medicare FFS” refers to traditional fee-for-service Medicare, a payment regime under which the government pays directly for the healthcare services a person receives;

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“Medicare Shared Savings Program” refers to a CMS payment model designed to improve healthcare quality and lower costs by engaging medical groups, hospitals, and other stakeholders to work together toward shared goals;

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“membership” refers to the aggregate number of unique consumers enrolled in our health plans at a particular point in time;

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“MSO” refers to a management services organization, a healthcare-specific administrative and management organization that provides a host of non-clinical administrative and management functions to managed care organizations;

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“NeueHealth” refers to Bright Health’s healthcare enablement and technology business, which builds, optimizes, delivers, and manages high-performing personalized care networks localized to each market, designed with the consumer in mind;

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“New Enterprise Associates” refers to certain investment funds of New Enterprise Associates and its affiliates;

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“NPS” refers to Net Promoter Score — a standardized tool that is widely used across various industries to measure consumer satisfaction, which is calculated by asking consumers to answer, on a 0 - 10 scale, “How likely is it that you would recommend a brand to a friend or colleague?” Respondents who provide a score of 9 or 10 are designated “Promoters”, those who provide a score of 7 or 8 are designated “Passive,” and those who provide a score of 0 to 6 are “Detractors.” The overall Net Promoter Score is then calculated by subtracting the percentage of Detractors from the percentage of Promoters and can range from -100 to 100;

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“NOLs” refer to net operating losses;

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“OECD” refers to the Organization for Economic Co-operation and Development, an international organization that works to build better policies for better lives;

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“open enrollment period” refers to the yearly period when individuals and families can enroll in a health plan or make changes to an existing health plan. In most states, the 2021 open enrollment period

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for the Individual market started on November 1, 2020 and ended on December 15, 2020; it ended as late as January 31, 2021 in certain states in which Bright Health does business. The Medicare Advantage open enrollment period, which permits switching between Medicare Advantage plans, started on January 1, 2021 and ends on March 31, 2021;

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“PCP” refers to any primary care provider;

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“Personalized Care Team” refers to the group of high-performing medical practitioners that are responsible for delivering care to a consumer based upon their unique medical needs and preferences;

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“population health management” refers to the process of improving clinical health outcomes of a defined group of individuals through improved care coordination and patient engagement supported by appropriate financial and care models;

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“PPO” refers to a preferred provider organization;

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“preferred stock” refers to our Series A preferred stock, par value $0.0001 per share, Series B preferred stock, par value $0.0001 per share, Series C preferred stock, par value $0.0001 per share, Series D preferred stock, par value $0.0001 per share, and Series E preferred stock, par value $0.0001 per share;

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“risk-bearing organization” or “RBO” refers to an organization that delivers, furnishes, or otherwise arranges for or provides healthcare services in an at-risk relationship with a managed care provider;

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“Securities Act” refers to the Securities Act of 1933, as amended;

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“SEC” refers to the U.S. Securities and Exchange Commission;

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“Silver Plan” refers to one of the four categories of Health Insurance Marketplace plans (sometimes called “metal tiers”), with the silver metal tier being the most common choice for Health Insurance Marketplace shoppers;

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“Small Group” refers to insurance products sold to employers with fewer than 100 employees, though some states designate small group products to include those sold to employers with fewer than 50 employees;

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“Social Determinants of Health” refers to the conditions in the environments where people are born, live, learn, work, plan, worship, and age that affect a wide range of health, functioning, and quality-of-life outcomes and risks;

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“SOX” refers to the U.S. Sarbanes-Oxley Act of 2002, as amended;

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“special enrollment period” refers to a time outside the Open Enrollment Period or Annual Election Period when an eligible person can enroll in a health plan or make changes to an existing health plan. A person is generally eligible for a special enrollment period if certain qualifying life events occur, such as losing certain health coverage, moving, getting married, having a baby, or adopting a child; and

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“value-based care”, or “value-based payment” or “value-based arrangements” refers to a healthcare delivery model in which providers, including hospitals and physicians, are paid based on patient health outcomes and rewarded for helping patients improve their health, reduce the effects and incidence of chronic disease, and live healthier lives in an evidence-based way.

For ease of reference, we have repeated definitions for certain of these terms in other portions of the body of this prospectus. All such definitions conform to the definitions set forth above.

Numerical figures included in this prospectus have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.

Trademarks and Service Marks

The Bright Health design logo, “Bright Health”, “DocSquad”, “Brand New Day”, “NeueHealth”, “Physicians Plus”, and our other registered or common law trademarks, service marks or trade names

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appearing in this prospectus are our property. Solely for convenience, our trademarks, tradenames, and service marks referred to in this prospectus appear without the ®, TM, and SM symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks, tradenames, and service marks. This prospectus contains additional trademarks, tradenames, and service marks of other companies that are the property of their respective owners. We do not intend our use or display of other companies’ trademarks, trade names or service marks to imply relationships with, or endorsement or sponsorship of us by, these other companies.

Market, Industry and Other Data

This prospectus contains statistical data that we obtained from industry publications and reports. These publications generally indicate that they have obtained their information from sources believed to be reliable. However, we have not independently verified any third-party information. In addition, some data and other information contained in this prospectus are also based on management’s estimates and calculations, which are derived from our review and interpretation of internal surveys and independent sources. While we believe such estimates and calculations are reliable, our internal data has not been verified by any independent source. In addition, assumptions and estimates of our and our industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors.” These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Forward-Looking Statements.”

Non-GAAP Financial Measures

This prospectus contains “non-GAAP financial measures” that are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with GAAP. Specifically, we make use of the non-GAAP financial measure “Adjusted EBITDA.”

Adjusted EBITDA has been presented in this prospectus as a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP, because we believe it assists management and investors in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes Adjusted EBITDA is useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Management uses Adjusted EBITDA to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation and to compare our performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone.

Adjusted EBITDA is not a recognized term under GAAP and should not be considered as an alternative to net income (loss) as a measure of financial performance or cash provided by operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. Additionally, this measure is not intended to be a measure of free cash flow available for management’s discretionary use as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. The presentation of this measure has limitations as an analytical tool and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentation of this measure may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. For a discussion of the use of this measure and a reconciliation of the most directly comparable GAAP measure, see “Summary — Summary Historical and Pro Forma Consolidated Financial and Other Data.”

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PROSPECTUS SUMMARY

This summary highlights information contained in greater detail elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes included elsewhere in this prospectus, and the information set forth under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Unless otherwise indicated in this prospectus, references to the “Company,” “Bright Health,” “we,” “us” and “our” refer to Bright Health Group, Inc., formerly known as Bright Health Inc., and its consolidated subsidiaries.

Our Mission

Making healthcare right. Together.

Our Company

Bright Health 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, reduce systemic waste, lower costs, and optimize clinical outcomes.

Since its inception, Bright Health has proven, expanded, and enhanced our aligned enablement model. As of April 2021, the 28 managed and affiliated risk-bearing primary care clinics in our NeueHealth business care for nearly 75,000 unique patients, approximately 30,000 of which are served through value-based arrangements, with a strong Net Promoter Score (NPS) of 78. In addition to our directly managed and affiliated clinics, NeueHealth manages care for an additional 33 clinics through its Value Services Organization. From serving 10,765 consumers in a single state and product line just five years ago, our Bright HealthCare business now serves approximately 623,000 consumers, including approximately 515,000 commercial consumers and approximately 108,000 Medicare Advantage consumers, with a national presence in 14 states and 99 core-based statistical areas, which we define as markets. We generated over $1.2 billion in total revenue in 2020, as well as $874.6 million in total revenue for the three months ended March 31, 2021, and we are well-positioned to continue achieving significant growth across our diversified enterprise. Led by a seasoned management team built for scale — with senior leaders previously holding executive leadership positions at Fortune 100 companies across multiple sectors, including healthcare, consumer retail, and technology — Bright Health is building the national, integrated healthcare system of the future.

At its core, Bright Health is a healthcare company. We are founded and led by industry veterans intimately familiar with the challenges that have plagued U.S. healthcare for decades. We believe that to drive meaningful change, we must leverage technology and bring together the financing and delivery of care, while strengthening healthcare’s strongest relationship: that between the consumer and their primary care physician.

We believe that for too long, U.S. healthcare, primarily designed to cater to employers and large institutions, has failed the consumer through unnecessary complexity, a lack of transparency, and rising costs. We are making healthcare simple, personal, and affordable.

The Bright Health Approach

U.S. healthcare has traditionally been designed to serve large employers and institutions, with limited focus on the consumer and a bias towards broad, impersonal networks. This dynamic has resulted in a highly fragmented system, where high-performing individual care providers have faced challenges given limited coordination and perverse incentives amongst key stakeholders that reward higher utilization. Traditional managed care organizations have primarily focused their efforts on cost containment, keeping their network participants at arm’s length and leaving the underlying healthcare consumer lost in the mix. We believe this one-dimensional approach has driven a poor consumer experience, sub-optimal clinical outcomes, and tremendous economic waste. While legacy managed care organizations have attempted to

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address these issues in recent years, we believe their failure to employ a consumer-centric approach has limited their success. The time is ripe for disruption.

To execute on our mission, we have developed a model for healthcare transformation built upon the delivery, financing, and optimization of care.

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Delivery of Care — Acknowledging that healthcare is local, we employ a tailored, market-specific approach to building deep relationships with high-performing care provider organizations, which we call Care Partners. We engage with our Care Partners through a full spectrum of alignment options ranging from having providers participate in our networks to having providers employed by us. Leveraging proprietary analytical tools and capabilities, we offer our Care Partners population health management support and directly deliver payor-agnostic care. Anchored around these Care Partners, we serve our consumers through Personalized Care Teams, employing a high-touch model of care. Our flexible approach to local Care Partner alignment enables us to enter new markets and rapidly scale our care delivery capabilities, while delivering a consistent consumer experience and driving superior outcomes nationally.

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Financing of Care — The financing of care is more than just insurance. Insurance, in its simplest form, protects against catastrophic loss. In contrast, the financing of care focuses not only on protection against loss, but also on the creation of overall consumer value, while enhancing access to healthcare through efficient resource distribution. Bright Health seeks to aggregate consumers and design and offer affordable benefits to help effectively manage risk. We structure value-based arrangements with our Care Partners that are designed to reward the quality of care delivered over the quantity of services rendered, reducing the total cost of care while enhancing clinical outcomes. Our model is designed to address the needs of all consumers, from high-acuity, special needs individuals requiring high-touch care management to lower acuity individuals seeking to protect themselves from catastrophic healthcare events. We engage deeply with providers, while giving consumers the tools and incentives they need to take a proactive role in their personal well-being. We endeavor to put the consumer in the driver seat.

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Optimization of Care — Our ability to optimize the delivery and financing of care is driven by our purpose-built, end-to-end technology platform, the Bright Health Intelligent Operating System, or BiOS. Using robust data generated through our Care Partner alignment model, BiOS enables an integrated healthcare system of the future. Within BiOS lies our proprietary technology, DocSquad, a set of tools and experiences which personalize the individual healthcare experience and are designed to seamlessly connect consumers with the providers responsible for their 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.

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How the Consumer Wins — We offer consumers a simple, affordable healthcare experience, empowering the consumer with a Personalized Care Team and equipping them with the information they need to take an active role in healthcare decision making.

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How the Provider Wins — We offer our Care Partners a multi-pronged value proposition, by aggregating and delivering consumers and enabling increased share of wallet, while providing innovative tools and solutions to support population health management and the evolution towards value-based care.

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How the Payor Wins — We offer payors — both Bright HealthCare and other third-party payors — the opportunity to participate in value-based payment arrangements, while managing risk-bearing care delivery on a payor-agnostic basis across multiple product lines. We provide payors predictability in medical cost spend, freeing them to focus on benefit design, administration, and other high-value priorities.

We believe that alignment among the consumer, provider, and payor results in a better healthcare experience for all and that through the creation and enablement of localized, high-performing, value-based systems of care that are centered around the consumer, everybody wins. We Partner. We Transform. We Care.

Through our aligned model of care, Bright Health is working to democratize access to healthcare. Rather than addressing only a specific segment of the market, such as health insurance, primary care delivery, or tech-enablement, our holistic approach gives us durability through enhanced consumer engagement. We believe we are well-positioned to transform healthcare through multiple channels that enable us to influence and optimize a consumer’s experience throughout their healthcare journey.

Future of Integrated Healthcare

At Bright Health, we are delivering what we believe is the future of integrated healthcare by deploying a differentiated approach that is:

Built on Alignment

Bright Health has created a new alignment model built upon three core principles applied consistently but flexed accordingly to “meet our Care Partners where they are”:

•

Clinical Alignment — We believe that alignment in healthcare starts with those responsible for delivering care locally. As each of our Care Partners has a unique set of clinical tools and capabilities to manage population health risk, our adaptable model lends them the support necessary to enhance local healthcare delivery and strengthen existing provider-consumer relationships. As Bright Health enters into each Care Partner relationship, we endeavor to understand that Care Partner’s existing clinical needs, tools, and capabilities. We then collaborate to develop a Joint Model of Health. This robust playbook outlines the division of accountability and supports Care Partners with evidence-based best practices to enhance outcomes, lower costs, and drive a consistent experience for consumers.

•

Financial Alignment — We have developed value-based payment structures that enable us to take a staged approach to financial alignment with our Care Partners. We first carefully consider each Care Partner’s ability and interest to take varying levels of population health risk. Whether through shared savings contracts, capitated arrangements, or other contractual incentives, we work collaboratively with our Care Partners to determine and structure the best financial alignment model for each local market and individual organization. Once aligned, we then work with our Care Partners over time to optimize the relationship and prepare them for success under more advanced models of value-based care.

•

Data and Technology Alignment — Our clinical and financial alignment with our Care Partners incentivizes maximum platform interoperability and data transparency, affording us and our Care

3

Partners a more holistic view of the consumers we serve. Using comprehensive clinical, administrative, and consumer data, BiOS and its suite of solutions drive consumer engagement and optimize clinical decision making. Recognizing that each of our Care Partners has unique infrastructure in place, we enhance clinical technology by providing each Care Partner with purpose-built tools and experiences that seamlessly embed into existing workflows. We are true partners in technology-enablement.

Bright Health recognizes that each market is different, and we have been able to apply our three core principles of alignment in a flexible manner to meet the specific needs of the local communities we serve and to drive differentiated experiences and outcomes.

Through Bright Health’s alignment model, we have demonstrated the ability to decrease healthcare utilization, while simultaneously increasing consumer engagement to drive behavior change and improve outcomes.

Focused on the Consumer

Our approach to healthcare is centered around the belief that there is a shift underway from broad, employer-driven, one-size-fits-all offerings to a model built on individual choice. This has driven us to implement what we believe is a novel approach to consumer empowerment that focuses on making healthcare simple, personal, and affordable. Bright Health provides the answers to the questions that we believe matter most for healthcare consumers:

•

Simple — Am I able to connect with my physician and care team when and how I want?At Bright Health, we connect you to your Personalized Care Team on your terms and help you choose the benefits, care setting, and follow-up options that best support your individual needs and preferences. We make healthcare simple.

•

Personal — Do you know me, and do you understand my healthcare needs?At Bright Health, we know you. We interact with you in your accustomed language, through your preferred channel, and can anticipate your needs. We ensure that your comprehensive healthcare information is made available to your Personalized Care Team, equipping them with the data they need to serve your individualized healthcare needs. We make healthcare personal.

•

Affordable — Do I have access to affordable healthcare without sacrificing quality?At Bright Health, we know that healthcare costs are a burden and consumers often feel that they do not receive value for their healthcare dollar. We deliver low cost, high-quality healthcare in every market we serve. We make healthcare affordable.

4

Powered by Technology

Bright Health’s aligned and consumer-focused model enables us to transform the way technology can effect meaningful change in healthcare. Historically, key stakeholders with misaligned incentives have generally been unwilling to share critical information, thereby limiting the effectiveness of healthcare technology. In addition, data has been transactional, serving the needs of payors and care providers, but not the individual. By aligning stakeholders across the financing and delivery of care and putting consumers in control of their healthcare data, Bright Health can capture a holistic view of the consumer and empower the individual and their care teams to drive better coordination and optimize clinical outcomes.

Bright Health has developed a differentiated consumer-centric healthcare platform, the Bright Health Intelligent Operating System (BiOS). BiOS is built upon our proprietary intelligent data hub, Consumer360, which integrates with an ecosystem of connected Care Partner data and technology infrastructure to power DocSquad, our suite of proprietary consumer and care provider solutions. We ensure information is available when and where it is needed, whether through interactions with Bright Health directly or through embedded experiences with our Care Partners. We allow consumers to see their providers on their terms, leveraging DocSquad to personalize interactions whether they occur in-person or virtually. BiOS is designed to make healthcare simple, personal, and convenient for consumers.

Bright Health’s Businesses

To deliver on our mission, we deploy our capabilities across two connected businesses, NeueHealth and Bright HealthCare, both working in tandem and leveraging technology to optimize the healthcare experience for all. By participating in and connecting both the delivery and financing of care, our approach allows us to control the healthcare dollar while rewarding us for reducing the total cost of care, all while engaging with and enhancing the experience and clinical outcomes for the underlying consumer.

NeueHealth

NeueHealth significantly reduces the friction and current lack of coordination between payors and providers to enable a truly consumer-centric healthcare experience. Providers are looking for solutions that will enable them to perform in a value-based world and focus on what matters most: their patients’ health. Payors are looking for systems of high-performing providers who can partner with them to deliver the best care locally. Consumers want personalized, easy-to-access care, regardless of who is paying for it. NeueHealth brings this together through a combination of technology and services that is scaled centrally and deployed locally.

As of April 2021, NeueHealth works with over 200,000 care provider partners and operates 28 managed and affiliated risk-bearing clinics within its integrated care delivery system. Through those risk-bearing clinics, NeueHealth maintains nearly 75,000 unique patient relationships as of April 2021,

5

approximately 30,000 of which are served through value-based arrangements, across multiple payors. In addition to our directly managed and affiliated clinics, NeueHealth manages care for an additional 33 clinics through its Value Services Organization.

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.

Bright HealthCare

Bright HealthCare delivers simple, personal, and affordable financing solutions to integrate the consumer into Bright Health’s alignment model. We tailor our plan design and experiences to meet consumer needs, align top-to-bottom incentives to drive the best outcomes for our stakeholders, and develop capabilities to enable superior performance.

Bright HealthCare currently aggregates and delivers healthcare benefits to approximately 623,000 consumers through its various offerings, serving consumers across multiple product lines in 14 states and 99 markets, with plans to expand to more states by 2022. We also participate in a number of specialized plans and are the nation’s third largest provider of Chronic Condition Special Needs Plans (C-SNPs).

Bright HealthCare’s customers include:

•

Commercial (IFP, Small Group, Large Group) — Bright HealthCare offers commercial health plans across 11 states and as of today serves approximately 515,000 individuals.

•

Medicare Advantage — Bright HealthCare offers Medicare Advantage products in 11 states. These plans serve approximately 108,000 lives and generally focus on higher risk, special needs populations.

•

Managed Medicaid — We operate a small Medicaid business in California today, and we believe that Managed Medicaid is highly complementary to our aligned model and that we will be well-positioned to support this complex population through innovative Bright HealthCare products in the future.

•

Employer ASO — We believe that continued expansion into the self-insured market is important to our diversification strategy. We are in the early stages of building an ASO business through several strategic partnerships, with efforts underway to continue to grow and develop this product line as we evolve our administrative service capabilities.

Through these diversified businesses, we believe we are able to align consumer, provider, and payor interests, creating localized, high-performing, value-based systems of care where everybody wins. We Partner. We Transform. We Care.

Our Competitive Advantages

We have a number of critical competitive advantages that we believe will propel Bright Health’s success:

•

We have a differentiated business model that integrates the delivery and financing of healthcare.

•

We have a national, diversified service model.

•

We have a purpose-built consumer and provider technology platform.

•

We have a flexible, differentiated model able to meet the needs of any market.

•

We have a seasoned management team built for scale.

•

We have a multi-pronged organic and inorganic growth strategy.

6

Market Challenges and Bright Health’s Opportunity

Market Challenges

The current U.S. healthcare system has deep-rooted, foundational issues that have impeded legacy providers from meeting changing patient needs. As a result, the current system is inefficient, ineffective, and expensive.

•

Unsustainably High Costs Coupled with Sub-Optimal Outcomes.   According to CMS, total healthcare spending in the United States will reach $4.2 trillion in 2021, approximately $12,641 per person, representing approximately 18% of U.S. GDP. This per capita healthcare spend is more than any other country in the world and is approximately twice the OECD average for comparable countries. However, quality outcomes are not correlated with the increased spend. Obesity rates, as well as the percentage of seniors with multiple chronic conditions, are significantly higher in the U.S. than in comparable countries. An above average mortality rate further highlights the ineffectiveness of the U.S. health system. With an average U.S. lifespan of approximately 77 years, the U.S. trails the OECD average of 82 years. The wasted spending in U.S. healthcare ranged from $760 billion to $935 billion, accounting for approximately 25% of total spend.

•

Negative Consumer Experience.   The U.S. healthcare system is built upon an employer-centric model, where group purchasing results in a lack of personalization. Expensive and inefficient PPO networks are still at the core of legacy managed care, and network structure and financing frameworks are still designed with employer-based populations in mind. This approach has resulted in an impersonal consumer experience. For example, according to a 2020 Harris Poll, over half of the U.S. consumers surveyed believe that they were treated as an “incident” and not a person when receiving care. This negative perception of the healthcare system as being transactional in nature makes it more difficult to proactively engage consumers in their healthcare decision-making.

•

Misaligned Incentives Rewarding Volume Over Value.   Only 2.9% of total U.S. healthcare spending in 2018 was related to preventative care. This underinvestment in proactive healthcare is reflective of a legacy fee-for-service (“FFS”) reimbursement model that rewards reactive “visit-based” decision making instead of a proactive “population health” focused approach. This dynamic leads to undesirable outcomes, from physician burnout and frustration to consumer dissatisfaction. Although there has been broad support for the idea of value-based payment models over the past decade, few organizations have been able to successfully bring together the analytics, capital, and provider buy-in necessary to operationalize the concept.

•

Inadequate Access to Quality Care at an Affordable Cost.   Vulnerable populations across the U.S. suffer from a lack of access to affordable, high-quality healthcare. According to the Commonwealth Fund, approximately 45% of U.S. adults who are considered underinsured reported a medical problem but did not visit a physician because of cost concerns. This has contributed to the United States ranking last overall among 11 industrialized countries on measures of health equity.

•

Disaggregated Health Data Leading to Suboptimal Outcomes.   While legacy billing and administrative tools help collect data, it is scattered across care settings, such as hospitals, physician offices, and pharmacies. Payors and providers are often reluctant to share data unless it serves their financial interests, creating barriers to evidence-based, real-time care delivery.

Foundation for Change

We believe the U.S. healthcare system is broken. In recent years, point solutions have emerged that are beginning to address the misalignment of incentives and evolving consumer needs, but have been unable to achieve meaningful change at scale for the following reasons:

•

New payment structures have seen limited adoption.

•

Effective integrated care models exist, but only on a regional basis.

•

Consumer dissatisfaction is increasing, in part due to rising expectations.

•

Approaches to healthcare innovation have been reactive and fragmented.

7

Our Market Opportunity

We have a tremendous addressable market opportunity, which we estimate will reach approximately $4.2 trillion in 2021, and we expect our addressable market opportunity to continue to expand.

•

Growing Retail Market Segments (Medicare, IFP, etc.).   We believe the Medicare Advantage market is the most dynamic segment of U.S. health insurance today. It is estimated that the 5-year CAGR from 2019 to 2024 will be 10% and that the market will grow by $170 billion over that time. CMS estimates that the total overall Medicare market will exceed $1 trillion by 2023. The IFP market has also significantly stabilized, maintaining between 11 million and 12 million covered lives since 2015. Furthermore, with tailwinds from recent political developments, we believe the IFP market is well-positioned to grow.

•

Shifting Employer Market Segments (ICHRA, etc.).   The employer market is evolving to be more consumer-directed. While currently in the early stages, we believe products like ICHRA will yield significant opportunity for employers to shift lives into consumer-directed plan options, a segment of the market in which we have historically demonstrated robust growth. In addition, employers overall are shifting business to ASO models, offering more flexible network options in order to better manage costs while continuing to meet employee healthcare expectations.

•

Government and Innovation (ACO / DCE, Medicaid, etc.) Programs.   In response to increased costs across traditional unmanaged populations, the federal and state governments have been introducing innovative programs that reward care providers and payors that are able to effectively manage risk. Notably, CMS recently announced a Direct Contracting model set to begin in 2021 to create value-based payment arrangements directly with provider groups for their current Medicare FFS patients, similar to the value-based contracts that we enter into with our provider partners. The Medicare FFS market is expected to represent an approximately $430 billion opportunity in 2021. Additionally, states are increasingly migrating to Managed Medicaid programs that specifically incentivize payor and care provider partnerships to drive better outcomes at a lower cost. As government-sponsored innovation continues to accelerate, we believe our model and national market presence position us well to succeed under these emerging programs.

Bright Health’s Growth Strategies

Bright Health’s alignment model allows us to pursue additional growth through the following avenues, aligned around the integration of delivery, financing, and optimization of care.

•

Increase Membership in Existing Markets.   We plan to continue to drive significant membership growth through greater consumer awareness of our brand and our ability to deeply align and integrate with high-performing Care Partners. We intend to grow market share in our existing, recently launched markets to comparable levels achieved in our oldest, most mature markets.

•

Enter New Markets.   Many of our Care Partners have national or regional footprints, which afford us the opportunity to continue to expand into new markets with existing, trusted partners, increasing our ability to scale nationally with greater efficiency. Further, we plan to leverage new provider partnerships to enter additional geographies of strategic interest.

•

Expand Our Care Delivery Footprint.   We plan to add new payor contracts to serve additional patients at our existing clinics, while integrating additional services. Additionally, our exportable model affords us valuable opportunities for de novo growth through the addition of new clinics across both existing and future markets.

•

Take and Support the Management of Population Health Risk.   We leverage our actuarial expertise, balance sheet, and population health management infrastructure to take population health risk under total cost of care arrangements in close collaboration with our Care Partners. In addition, we help our Care Partners maximize the benefit of value-based arrangements through tools and capabilities that enable high-touch, high-quality care for consumers at a lower total cost.

•

Participate in Emerging Direct-to-Government Programs.   We are well-positioned both to directly assume population health risk and to support care providers with the services needed to succeed under emerging direct-to-government programs, such as Managed Medicaid and Direct Contracting

8

models for Medicare fee-for-service populations. We have been approved for two Direct Contracting entities with January 1, 2022 start dates, and we continue to evaluate other direct-to-government contracting opportunities.

•

Monetize Our High-Performing Delivery Networks.   Our demonstrated track record of partnership success coupled with our dedicated network building team and analytics platform facilitate the selection of top-performing providers united towards a common goal. We believe that we can continue to customize our network services for additional Bright HealthCare products and geographies, while capturing incremental value through the commercialization of our high-performing Care Partner networks.

•

Introduce New Product Offerings.   Leveraging our trusted Care Partner relationships, we are well-positioned to launch new, innovative products within our NeueHealth and Bright HealthCare businesses focused on serving additional segments of the population.

•

Commercialize Our Technology and Services.   Our track record of optimizing data from leading provider organizations to create differentiated consumer engagement tools speaks to the potential value of our platform. We believe there is opportunity for the future commercialization of our Consumer360 intelligent data hub and DocSquad personalized health profile tools and capabilities.

•

Strategically Deploy Capital.   We believe our approach to healthcare transformation positions us to capitalize on strategic acquisitions. We plan to continue exploring acquisitions, partnerships, and other investment opportunities to help improve clinical outcomes, expand our geographic footprint, increase the scope of our technology and data solutions, add new product offerings, and pursue other avenues to make healthcare right.

Our Organizational Structure

The simplified diagram below depicts our organizational structure through which we operate our business.

(1)

We operate NeueHealth through Bright Health Services, Inc. and its subsidiaries.

(2)

We operate Bright HealthCare through Bright Health Management, Inc. and its subsidiaries.

(3)

Our operating system, BiOS, including our proprietary technologies, Consumer360 and DocSquad, are

9

held by subsidiaries of Bright Health Services, Inc. These technologies are utilized by subsidiaries across both Bright Health Services, Inc. and Bright Health Management, Inc.

Risk Factors Summary

Investing in our common stock involves a high degree of risk. You should carefully consider these risks before investing in our common stock, including the risks related to our business and industry described under “Risk Factors” elsewhere in this prospectus. In particular, the following considerations, among others, may offset our competitive strengths or have a negative effect on our business strategy, which could cause a decline in the price of our common stock and result in a loss of all or a portion of your investment:

•

a lack of acceptance or slow adoption of our model;

•

our ability to retain existing consumers and expand consumer enrollment;

•

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 limited operating history and ability to achieve and maintain profitability in the future;

•

the impact of the COVID-19 pandemic on our business and results of operations;

•

the effect of large-scale medical emergencies on our ability to operate our business;

•

the impact of security incidents or breaches, loss of data and other disruptions to our or our third-party service providers’ systems, information technology infrastructure, and networks;

•

our reliance on third-party providers to operate our business;

•

our ability to successfully pursue strategic acquisitions and integrate acquired businesses;

•

the impact of reductions in the quality ratings of our MA health plans;

•

any failure to comply with applicable laws and regulations, resulting in penalties or a requirement that we make significant changes to our operations;

•

the impact of modifications or changes to the U.S. health insurance markets;

•

changes to the legislative and regulatory environment in which we operate; and

•

the other factors discussed under “Risk Factors.”

Corporate Information

We were incorporated in Delaware on August 7, 2015 as KTNewPlanCo, Inc. and subsequently changed our name to Bright Health Inc. On February 8, 2021, we changed our name to Bright Health Group, Inc. Our principal executive offices are located at 8000 Norman Center Drive, Suite 1200, Minneapolis, MN 55437. Our telephone number is (612) 238-1321. Our website address is https://brighthealthgroup.com/. Information contained in, or that can be accessed through, our website does not constitute part of this prospectus, and inclusions of our website address in this prospectus are inactive textual references only.

10

THE OFFERING

Common stock offered by us

             shares.

Option to purchase additional shares

The underwriters have been granted an option to purchase up to               additional shares of common stock from us at any time within 30 days from the date of this prospectus.

Common stock to be outstanding immediately after this
offering

               shares, or                shares if the underwriters exercise their option to purchase additional shares of common stock in full.

Use of proceeds

We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $      million (or $      million if the underwriters exercise their option to purchase additional shares of common stock in full), based on the assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the front cover of this prospectus.

We intend to use the net proceeds received by us from this offering to repay all outstanding borrowings under the Credit Agreement and the remainder for working capital and other general corporate purposes, including continued investments in the growth of our business. We may also use a portion of our net proceeds to acquire or invest in complementary businesses, products, services or technologies. See “Use of Proceeds.”

A $1.00 increase (decrease) in the assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the front cover of this prospectus, would increase (decrease) the net proceeds to us from this offering by $      million, assuming the number of shares offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting the assumed underwriting discounts and commissions and estimated offering expenses payable by us. An increase (decrease) of 100,000 shares from the expected number of shares to be sold by us in this offering, assuming no change in the assumed initial public offering price per share, which is the midpoint of the price range set forth on the front cover of this prospectus, would increase (decrease) our net proceeds from this offering by $      million.

Risk factors

See “Risk Factors” and the other information included in this prospectus for a discussion of the factors you should consider carefully before deciding to invest in our common stock.

Dividend policy

We currently do not intend to declare any dividends on our common stock in the foreseeable future. See “Dividend Policy.”

Proposed NYSE symbol

“BHG”

Conflicts of interest

Affiliates of J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, Barclays Capital Inc. and BofA Securities, Inc., underwriters in this offering, will receive at least 5% of the net proceeds of this offering in connection with the repayment of all outstanding borrowings under the Credit

11

Agreement. See “Use of Proceeds.” Accordingly, these underwriters will have a conflict of interest within the meaning of Rule 5121 (“Rule 5121”) of the Financial Industry Regulatory Authority, Inc. (“FINRA”). Therefore, this offering is being made in compliance with the requirements of FINRA Rule 5121. This rule requires, among other things, that a “qualified independent underwriter” has participated in the preparation of, and has exercised the usual standards of “due diligence” with respect to, the registration statement and this prospectus.       has agreed to act as qualified independent underwriter for this offering and to undertake the legal responsibilities and liabilities of an underwriter under the Securities Act.       will not receive any additional fees for serving as qualified independent underwriter in connection with this offering. For more information, see “Underwriting (Conflicts of Interest).”

Except as otherwise indicated, all information in this prospectus:

•

assumes no exercise by the underwriters of their option to purchase additional shares of common stock from us;

•

assumes the effectiveness, at the time of this filing, of our ninth amended and restated certificate of incorporation and our third amended and restated bylaws, the forms of which are filed as exhibits to the registration statement of which this prospectus is a part;

•

assumes an initial public offering price of $      per share, which is the midpoint of the price range set forth on the cover of this prospectus;

•

assumes the automatic conversion of all outstanding shares of our preferred stock into an aggregate of 140,565,568 shares of common stock;

•

does not reflect an aggregate of           shares of common stock available for future issuance under our 2016 Equity Plan and our 2021 Equity Plan, including       shares of common stock underlying the performance-based restricted stock unit awards to be awarded as the Special IPO Equity Grants (as defined herein) effective upon the completion of this offering;

•

does not reflect           shares of common stock that may be issued upon the exercise of outstanding options at an average weighted exercise price of $      issued under our 2016 Equity Plan; and

•

reflects the (i)     -for-1 stock split with respect to our shares of common stock and (ii) related amendment to our existing certificate of incorporation increasing the authorized amount of our capital stock that we intend to effectuate prior to the effectiveness of the registration statement of which this prospectus forms a part.

12

SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL AND OTHER DATA

The following tables summarize our consolidated financial and other data for the periods and at the dates indicated. The statement of income (loss) and comprehensive income (loss) and cash flow data for the years ended December 31, 2020, 2019 and 2018 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The statement of income (loss) and comprehensive income (loss) and cash flow data for the three months ended March 31, 2021 and 2020 and the balance sheet data as of March 31, 2021 have been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future or any other period and our results for any interim period are not necessarily indicative of the results that may be expected for any full fiscal year.

The historical audited consolidated financial data for the year ended December 31, 2020 include the operating results of the Brand New Day Acquisition for the period from May 1, 2020 through December 31, 2020. The summary unaudited pro forma consolidated financial data presented below for the year ended December 31, 2020 has been derived from our unaudited pro forma consolidated financial statements included elsewhere in this prospectus. The summary unaudited pro forma condensed consolidated statement of income (loss) and comprehensive income (loss) data for the year ended December 31, 2020 give effect to the Brand New Day Acquisition, as if the Brand New Day Acquisition had occurred on January 1, 2020, and to reflect the automatic conversion of all outstanding shares of our preferred stock immediately prior to the closing of this offering. The Brand New Day Acquisition has been reflected in our historical unaudited consolidated financial and other data as of and for the three months ended March 31, 2021. The unaudited pro forma financial information includes various estimates which are subject to material change and may not be indicative of what our operations would have been had such transactions taken place on the dates indicated, or that may be expected to occur in the future. See “Unaudited Pro Forma Condensed Combined Financial Information” for a complete description of the adjustments and assumptions underlying the summary unaudited pro forma consolidated financial data. The unaudited pro forma consolidated financial data is included for information purposes only.

The summary consolidated financial data set forth below should be read in conjunction with “Risk Factors,” “Capitalization,” “Unaudited Pro Forma Condensed Combined Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and unaudited condensed consolidated financial statements included elsewhere in this prospectus.

13

​

Year Ended December 31,

Three Months Ended March 31,

​

2020

2019

​

2018

2020

2021

2020

​

Actual

Pro Forma(1) (Unaudited)

Actual

​

(in thousands)

Statement of income (loss) and comprehensive income (loss) data:

​

​

​

​

​

​

​

​

​

​

​

​

​

Revenue:

​

​

​

​

​

​

​

​

​

​

​

​

​

Premium revenue

​

$ 1,180,338

​

$ 272,323

​

​

$ 127,122

​

$ 1,376,476

​

$ 860,631

​

$ 190,737

Service revenue

​

18,514

​

—

​

​

—

​

18,514

​

8,438

​

4,820

Investment income

​

8,468

​

8,350

​

​

3,510

​

8,493

​

5,489

​

3,009

Total revenue

​

1,207,320

​

280,673

���

​

130,632

​

1,403,483

​

874,558

​

198,566

Operating costs:

​

​

​

​

​

​

​

​

​

​

​

​

​

Medical costs

​

1,047,300

​

224,387

​

​

96,407

​

1,233,725

​

684,570

​

130,615

Operating costs

​

409,334

​

180,489

​

​

95,836

​

432,718

​

205,198

​

74,444

Depreciation and amortization

​

8,289

​

1,134

​

​

1,030

​

10,651

​

4,581

​

787

Total operating costs

​

1,464,923

​

406,010

​

​

193,273

​

1,677,094

​

894,349

​

205,846

Operating loss

​

(248,442)

​

(125,337)

​

​

(62,641)

​

(273,611)

​

(19,791)

​

(7,280)

Interest expense

​

—

​

—

​

​

—

​

—

​

546

​

—

Loss before income taxes

​

(257,603)

​

(125,337)

​

​

(62,641)

​

(273,611)

​

(20,337)

​

(7,280)

Income tax (benefit) expense

​

(9,161)

​

—

​

​

—

​

(9,161)

​

1,166

​

—

Net loss

​

(248,442)

​

(125,337)

​

​

(62,641)

​

(264,450)

​

(21,503)

​

(7,280)

Other comprehensive income (loss):

​

​

​

​

​

​

​

​

​

​

​

​

​

Unrealized investment holding gains (losses) arising during the year

​

1,556

​

1,211

​

​

72

​

1,556

​

(980)

​

890

Less reclassification adjustments for investment gains (losses) included in net loss

​

112

​

38

​

​

(17)

​

112

​

62

​

(61)

Total other comprehensive income (loss)

​

1,444

​

1,173

​

​

89

​

1,444

​

(1,042)

​

951

Comprehensive loss

​

(246,998)

​

(124,164)

​

​

(62,552)

​

(263,006)

​

(22,545)

​

(6,329)

Comprehensive loss attributable to noncontrolling interests

​

—

​

—

​

​

—

​

—

​

(617)

​

—

Comprehensive loss attributable to Bright Health Group, Inc. common shareholders

​

$ (246,998)

​

$ (124,164)

​

​

$ (62,552)

​

$ (263,006)

​

$ (23,162)

​

$ (6,329)

Non-GAAP Metric:

​

​

​

​

​

​

​

​

​

​

​

Adjusted EBITDA(2)

​

$ (238,912)

​

$ (121,091)

​

​

$ (61,354)

​

$ (252,558)

​

$ (9,584)

​

$ (3,855)

14

​

Year Ended December 31,

Three Months Ended March 31,

​

2020

2019

2018

2020

2021

2020

2021

​

Actual

Pro Forma (Unaudited)(3)(4)

Actual

Pro Forma (Unaudited)(3)(4)

​

(in thousands, except per share amounts)

Per share data:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net loss per share attributable to common stockholders, basic and diluted

​

$ (5.47)

​

$ (2.80)

​

$ (1.42)

​

$ (1.66)

​

$ (0.47)

​

$ (0.16)

​

$

Weighted average common shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted

​

45,398

​

44,829

​

43,992

​

158,940

​

46,725

​

45,708

​

​

​

Year Ended December 31,

Three Months Ended March 31,

​

2020

2019

2018

2021

2020

​

(in thousands)

Cash flow data:

​

​

​

​

​

​

​

​

​

​

​

Net cash provided by (used in):

​

​

​

​

​

​

​

​

​

​

​

Operating activities

​

$

(57,238)

​

$

(8,208)

​

$

(27,034)

​

$

343,603

​

$

82,286

Investing activities

​

​

(689,742)

​

​

(94,643)

​

​

(6,940)

​

​

(56,275)

​

​

(338,359)

Financing activities

​

​

712,441

​

​

424,060

​

​

203,057

​

​

200,234

​

​

13

​	As of March 31, 2021
​	Actual			Pro Forma(4) (Unaudited)			Pro Forma As Adjusted(5) (Unaudited)
​	(in thousands)
Balance sheet data:	​	​	​	​	​	​	​	​	​
Cash and cash equivalents	​	$	975,933	​	$		​	$
Total assets	​	​	2,465,963	​	​	​	​	​	​
Total debt	​	​	200,000	​	​	​	​	​	​
Total liabilities	​	​	1,231,556	​	​	​	​	​	​
Total stockholders’ equity (deficit)	​	​	(519,807)	​	​	​	​	​	​

(1)

The pro forma column gives effect to the Brand New Day Acquisition. See “Unaudited Pro Forma Condensed Combined Financial Information.”

(2)

We define Adjusted EBITDA as net loss excluding interest expense, income taxes, depreciation and amortization, adjusted for the impact of acquisition and financing-related transaction costs, share-based compensation and changes in the fair value of contingent consideration. Adjusted EBITDA has been presented in this prospectus as a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. We describe these adjustments reconciling net loss to Adjusted EBITDA in the table below.

We present Adjusted EBITDA because we believe it assists management and investors in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes Adjusted EBITDA is useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. We use Adjusted EBITDA to supplement GAAP

15

measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation and to compare our performance against that of other peer companies using similar measures. We supplement GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone.

Adjusted EBITDA is not a recognized term under GAAP and should not be considered as an alternative to net income (loss) as a measure of financial performance or cash provided by operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. Additionally, this measure is not intended to be a measure of free cash flow available for management’s discretionary use as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. The presentation of this measure has limitations as an analytical tool and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentation of this measure may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed to imply that our future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on our GAAP results in addition to using Adjusted EBITDA supplementally.

Our Adjusted EBITDA measure has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•

it does not reflect costs or cash outlays for capital expenditures or contractual commitments;

•

it does not reflect changes in, or cash requirements for, our working capital needs;

•

it does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;

•

it does not reflect period to period changes in taxes, income tax expense or the cash necessary to pay income taxes;

•

it does not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations;

•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and they do not reflect cash requirements for such replacements; and

•

other companies in our industry may calculate this measure differently than we do, limiting its usefulness as a comparative measure.

16

Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to invest in business growth or to reduce indebtedness.

The following table provides a reconciliation of net loss to Adjusted EBITDA for the periods presented:

​

Year Ended December 31,

Three Months Ended March 31,

​

2020

2019

2018

2020

2021

2020

​

Actual

Pro Forma (Unaudited)

Actual

​

(in thousands)

Net loss

​

$

(248,442)

​

$

(125,337)

​

$

(62,641)

​

$

(264,450)

​

$

(21,503)

​

$

(7,280)

Interest expense

​

​

—

​

​

—

​

​

—

​

​

—

​

​

546

​

​

—

Income tax (benefit) expense

​

​

(9,161)

​

​

—

​

​

—

​

​

(9,161)

​

​

1,166

​

​

—

Depreciation and amortization

​

​

8,289

​

​

1,134

​

​

1,030

​

​

10,651

​

​

4,581

​

​

787

Transaction costs(a)

​

​

4,950

​

​

1,248

​

​

—

​

​

4,950

​

​

2,020

​

​

1,695

Share-based compensation expense(b)

​

​

5,452

​

​

1,864

​

​

257

​

​

5,452

​

​

2,134

​

​

943

Change in fair value of contingent consideration(c)

​

​

—

​

​

—

​

​

—

​

​

—

​

​

1,472

​

​

—

Adjusted EBITDA

​

$

(238,912)

​

$

(121,091)

​

$

(61,354)

​

$

(252,558)

​

$

(9,584)

​

$

(3,855)

(a)

Transaction costs include accounting, tax, valuation, consulting, legal and investment banking fees directly relating to business combinations and certain costs associated with our initial public offering. These costs can vary from period to period and impact comparability, and we do not believe such transaction costs reflect the ongoing performance of our business.

(b)

Represents non-cash compensation expense related to stock option and restricted stock award grants, which can vary from period to period based on a number of factors, including the timing, quantity and grant date fair value of the awards.

(c)

Represents the non-cash change in fair value of contingent consideration from business combinations, which is remeasured at fair value each reporting period. There was no material activity for periods prior to the first quarter of 2021.

(3)

Unaudited pro forma loss per share was computed to give effect to the conversion of the preferred stock. The following table presents the reconciliation of basic and diluted net loss per share to unaudited pro forma loss per share for the year ended December 31, 2020 and three months ended March 31, 2021 as if the conversion had occurred on January 1, 2020.

​	Year Ended December 31, 2020			Three Months Ended March 31, 2021
​	(in thousands, except per share amounts)
Numerator:	​	​	​	​
Net loss attributable to common stockholders	​	$	(264,450)	​	$
Denominator:	​	​	​	​
Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted	​	​	45,398	​	​	​
Pro forma adjustment to reflect the assumed conversion of preferred stock	​	​	113,542	​	​	​
Pro forma weighted-average number of shares outstanding used to compute pro forma net loss per share, basic and diluted	​	​	158,940	​	​	​
Pro forma net loss per share, basic and diluted	​	$	(1.66)	​	$	​

17

(4)

The pro forma balance sheet data as of, and the per share data for the three months ended, March 31, 2021 reflects (i) the automatic conversion of all outstanding shares of our preferred stock into an aggregate of 140,565,568 shares of common stock on a one-for-one basis immediately prior to the closing of this offering, except with respect to our 32,438,580 outstanding shares of Series A preferred stock which shall convert into an aggregate of 7,339,201 shares of common stock and (ii) the filing and effectiveness of our amended and restated certificate of incorporation in Delaware, which will occur immediately prior to the completion of this offering.

(5)

The pro forma as adjusted balance sheet data as of March 31, 2021 reflects (i) the as adjusted adjustments set forth in footnote (4) above, (ii) the sale by us of           shares of our common stock in this offering at an assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the front cover of this prospectus, and after deducting the underwriting discount and estimated offering expenses payable by us and (iii) the application of the net proceeds from this offering to repay all outstanding borrowings under the Credit Agreement, as described in “Use of Proceeds.”

The pro forma as adjusted information discussed above is illustrative only and will depend on the actual initial public offering price and other terms of this offering determined at pricing. A $1.00 increase or decrease in the assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the front cover of this prospectus, would increase or decrease, as applicable, on an as adjusted basis, cash and cash equivalents, total assets and total stockholders’ equity by $      million, assuming the number of shares offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting the assumed underwriting discount and estimated offering expenses payable by us and the application of the net proceeds thereof as described in “Use of Proceeds.” An increase or decrease of 100,000 shares in the number of shares sold in this offering by us would increase or decrease, as applicable, on an as adjusted basis, cash and cash equivalents, total assets and total stockholders’ equity by $      million, assuming an initial public offering price of $      per share, which is the midpoint of the price range set forth on the front cover of this prospectus, and after deducting the underwriting discount and estimated offering expenses payable by us and the application of the net proceeds thereof as described in “Use of Proceeds.”

18

RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors together with other information in this prospectus, including our consolidated financial statements and related notes included elsewhere in this prospectus, before deciding whether to invest in shares of our common stock. The occurrence of any of the events described below could harm our business, financial condition, results of operations and growth prospects. In such an event, the trading price of our common stock may decline and you may lose all or part of your investment.

Risks Related to Our Business

If our business model is not accepted or is slow to be adopted by the healthcare industry, our growth could be impacted and our business and results of operations could be adversely affected.

Our business model is based on the integration of the financing and delivery of healthcare. Key to the growth of our Bright HealthCare business is our ability to drive provider adoption of value-based care arrangements that give our Care Partners a stake in the financial and quality outcomes of our health plans. Given that the Health Insurance Marketplaces were only created within the last decade, value-based arrangements are a relatively new contracting mechanism for parties serving the IFP population. We cannot assure you that our contracting approach will achieve and sustain acceptance by care providers, consumers or the healthcare industry generally. Additionally, in some states, provider risk-sharing and value-based compensation models are less prevalent even among parties serving the MA population. Acceptance of our business model may be affected by a variety of factors, including but not limited to the lack of willingness of certain care providers to embrace value-based care payment arrangements with payors, and the entrenchment of historical fee-for-service models of compensation.

For the year ended December 31, 2020, 2.2% of our total revenue was generated by our NeueHealth business. The growth of our NeueHealth business will depend on our ability to attract high-performing care delivery partners. If we are unable to attract and successfully develop relationships with these provider organizations, we may not be successful in building and growing our NeueHealth business. Also, if we are unable to provide adequate tools and capabilities to support value-based care, to directly manage risk, and to deliver care under value-based arrangements, we may not be able to enter and rapidly scale our NeueHealth business across and within markets, or to deliver superior outcomes for consumers nationally.

If we are unable to retain existing consumers, expand consumer enrollment, or diversify and expand our portfolio of products and services, our business and results of operations may be adversely affected.

We generate, and expect to continue to generate, a substantial portion of our revenue from consumers enrolled in our IFP, MA, and employer health plans. As a result, the continued enrollment of individuals into and adoption of our health plans, through our platform, our broker network, employers, or other third parties, is paramount to our future growth and success. If we fail to retain existing consumers, grow consumer enrollment, or diversify and expand our portfolio of products and services, our business and results of operations may be negatively impacted. In addition, if we do not grow our membership, we could find it difficult to retain or increase the number of contracted Care Partners and other network providers at favorable rates or at all, which could jeopardize our ability to provide health plan products in our current markets and our ability to expand into new markets in a cost-efficient manner.

Our ability to retain existing consumers, expand consumer enrollment and diversify and expand our portfolio of products and services depends on a number of factors, some of which are beyond our direct control. Some of these factors include:

•

our ability to provide low-cost and high-value plans which meet a broad range of consumer needs;

•

the ease of our consumers’ adoption of, and enrollment into, our products and services;

•

our ability to seamlessly onboard our consumers and create a positive overall experience with our products and services;

•

our consumers’ ability to easily use our technology, including our DocSquad platform and our virtual care offerings;

19

•

our consumers’ ability to receive convenient and ready access to quality medical care and treatment through our Care Partner networks;

•

our ability to grow our provider networks and contract with Care Partners that support our model of care on competitive terms;

•

our ability to safeguard our consumers’ data;

•

our ability to anticipate and respond to shifting consumer preferences for healthcare products and services in a timely manner;

•

our ability to retain licenses required to conduct our existing business and obtain licensing in new geographies into which we intend to expand;

•

our ability to manage a reduction in the size of our target market due to continued expansion of public insurance financing options, including state expansions of Medicaid and a potential shift to public financing options administered by the federal government, which could encourage our consumers to explore and switch to these other options;

•

our ability to effectively compete against our competitors, who may offer products containing fewer restrictions on the network of care providers available to consumers, may provide higher quality levels of care, or may be priced more competitively than our offerings;

•

our ability to market and sell our plans effectively in our target markets, including our ability to retain and incentivize our broker network; and

•

regulatory changes pertaining to the marketing and/or enrollment of our consumers, which might negatively impact the overall pool of eligible beneficiaries across our health plans.

In addition, our ability to retain our existing consumers and expand consumer enrollment could be adversely impacted by delays in, or increased difficulty or cost associated with, the implementation of our growth strategies, strategic initiatives and operating plans, and the incurrence of unexpected costs associated with operating our business.

The growth in our membership is also highly dependent upon our success in attracting new consumers during annual enrollment periods, open enrollment periods and the current 2021 special enrollment period. If our ability or the ability of our partners, including our broker network, to market and sell our products and services is constrained during an enrollment period for any reason, such as technology failures, reduced allocation of resources, any inability on the part of our sales partners to timely employ, license, train, certify and retain employees and contractors and their agents to sell plans, interruptions in the operation of our website or systems, disruptions caused by other external factors, such as the COVID-19 pandemic, or issues with government-run health insurance exchanges, we could acquire fewer new consumers than expected or suffer existing consumer attrition and our business, operating results and financial condition could be adversely affected.

We may not be able to contract with care providers on favorable terms or at all, or to arrange for the provision of the quality care necessary to attract consumers.

Our strategy across both our Bright HealthCare and NeueHealth businesses requires that we successfully contract with care providers to ensure access to quality healthcare services for our consumers, to manage medical costs and utilization, and to better monitor and ensure the quality of care being delivered. We compete with other health plans and networks to contract with healthcare providers based on reimbursement rates, timeliness and accuracy of claims payments, the potential to deliver new patient volume and/or support the retention of existing patients, the effectiveness of resolution of calls and complaints, and other factors.

We cannot assure you that we will be able to continue to attract and retain the right Care Partners necessary to deliver healthcare through high-performing networks in the geographic areas we serve, while providing high-quality care to our consumers. In addition, certain care providers, particularly hospitals, physician/hospital organizations and specialists, or their related care provider networks, may have significant negotiating power due to their size or market positions and could demand higher payment rates or otherwise

20

negotiate contracts on terms that are less favorable to us. With respect to our Bright HealthCare business, if our health plans are unable to contract with care providers or if we contract with care providers on unfavorable terms, care provider access for our consumers could be restricted or limited, and we may not be able to deliver the high-quality healthcare that our consumers expect, which could drive consumer attrition or make it more difficult for us to attract new consumers. In addition, we could be exposed to higher medical costs and our health plans may not meet regulatory or accreditation requirements, which could restrict us from offering such plans and could lead to lower revenues.

Our NeueHealth business also contracts with physicians and other healthcare providers to create high-performing networks on behalf of its own risk-bearing organizations, or RBOs, and on behalf of its third-party payor or IPA clients. Our NeueHealth business is subject to the same risks described above relating to its ability to contract with healthcare providers on favorable terms, or at all. If NeueHealth is unable to contract with physicians and other healthcare providers at affordable rates and/or to create high-performing networks, it may yield poor financial and quality results for its own RBOs and may result in dissatisfaction amongst its third-party payor clients.

Furthermore, because the success of our business model depends on the integration of payor and provider capabilities, our ability to execute on our model will be limited to geographies where we have contracted with a sufficient number of care providers necessary to create a robust provider network. Our ability to grow our business could be adversely affected if we are unable to contract with a sufficient number of care providers in markets in which we operate or in which we seek to expand.

We may be required to work with care providers who are not contracted with our health plans or in our networks, which may result in costly out-of-network claims.

We may, from time to time, be required to work with care providers who are not contracted with our health plans. In those cases, there is no pre-established understanding between the provider or provider network and our health plan regarding the amount of compensation that is due to the provider or provider network for rendering healthcare services. This can result in high levels of out-of-network claims, which can be significantly more costly than claims based on rates that have been pre-negotiated with our provider network Care Partners. In particular, out-of-network utilization is typically higher upon entry into new markets, which increases medical costs during periods of market expansion. In some states, the amount of compensation for out-of-network claims is defined by law or regulation, but in most instances it is either not defined or it is established by a standard that makes the financial implications unclear. In such instances, care providers may claim that they are underpaid for their services and may either litigate or arbitrate their dispute with our health plan, and any subsequent adjustment of the payment made to such care providers could adversely affect our results of operations.

Furthermore, under the provisions of the Consolidated Appropriations Act, 2021, payor and provider parties are precluded from referencing government reimbursement rates as a benchmark for out-of-network disputes. As a result, providers may be incentivized to collectively set high rates for high-volume out-of-network services, which could result in ongoing price inflation for critical services. Any uncertainty in the amount that a consumer may pay as a co-pay or otherwise when visiting a provider who is not a contracted Care Partner may also hurt consumer satisfaction with our plan, which could adversely impact our ability to retain our existing consumers or grow the size of our membership base.

Failure to appropriately set premiums or effectively manage our costs could negatively affect our profitability, results of operations and cash flows.

The premiums we set for our health plans are a material source of our revenue. We set our premiums using actuarial estimates and our failure to set appropriate premiums, including as a result of inaccuracies in our actuarial estimates, could adversely affect our profitability and cash flows. We use a substantial portion of our health plan revenue to pay the costs of healthcare services delivered to our consumers. As such, our profitability depends in large part on our ability to accurately estimate and manage such costs. Relatively small differences between estimated and actual medical costs as a percentage of revenue can result in significant changes in our financial results.

21

Our use of actuarial methods to determine premiums and estimate other healthcare costs involves a significant degree of judgment and is subject to a number of inherent uncertainties and assumptions. Such actuarial methods are consistently applied, centrally controlled, and are based upon various data points, including our historical submissions and payment data, cost trends, patient and product mix, seasonality, utilization of healthcare services, contracted service rates and other factors for our consumers. Our ability to accurately estimate such costs depends on various factors, many of which are not within our control, including:

•

the utilization rates of medical facilities and services;

•

the cost of medical services;

•

the use or cost of prescription drugs, in particular the increased use of specialty prescription drugs;

•

the introduction or widespread adoption of new or costly treatments, including new technologies;

•

our membership mix;

•

variances in actual versus estimated levels of cost associated with new products, benefits, lines of business, product changes or benefit level changes;

•

changes in the demographic characteristics of an account or market;

•

changes in economic conditions;

•

changes or reductions related to our utilization management functions such as preauthorization of services, concurrent review, or requirements for physician referrals;

•

changes in our pharmacy volume rebates received from drug manufacturers;

•

catastrophes, including acts of terrorism, pandemics, epidemics or severe weather (e.g., hurricanes, wildfires or earthquakes);

•

medical cost inflation;

•

volatility with respect to the individual market risk pool, including public Health Insurance Marketplaces; and

•

potential changes in legislation or other rules and regulations, such as changes in government mandated benefits or consumer eligibility criteria.

The impact of many of these items on the ultimate costs for claims is difficult to estimate, and they could have a material impact on our business. In addition, the historical data on which our assumptions are based may not necessarily be indicative of the actual costs of claims due to our rapid growth in consumer enrollment and our recent expansion into new businesses and markets. When we commence operations in a new state, region, or other market, or introduce a new product line, we have limited information from which to estimate our potential medical claims liability. For a period of time after our entry into a new market, our inception of a new business, or our acquisition of an existing business, we base our estimates on government-provided and third-party historical actuarial data and limited actual incurred and received claims and inpatient acuity information. The addition of new categories of eligible individuals, as well as new plan designs we may offer, may make it difficult for us to estimate our medical claims liability and may result in the actual cost of claims being higher than we anticipate.

We set our premiums for twelve-month periods several months prior to the commencement of the premium period and do not change our premiums during such period, consistent with industry practice. Our inability to implement changes in premium rates within a given period is also governed by federal and state regulatory agencies. For example, we are required to submit data on all proposed rate increases to the U.S. Department of Health and Human Services (“HHS”) on many of our products, and under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (“ACA”), we are prohibited from implementing unreasonable rate increases. If our medical costs exceed our estimates, we will not be able to recover the difference through higher premiums, and our results of operations and financial condition could be adversely affected.

22

Conversely, if we set our premium rates too high, our existing membership may decline or we may not grow our membership. We operate in a competitive industry, and while health plans compete on the basis of many factors, including service, breadth of benefits, and the quality and depth of provider networks we believe that price is and will continue to be the most significant driver in our and our competitors’ ability to attract consumers. If we do not appropriately price our products, our results of operations and financial condition could be materially and adversely affected.

Furthermore, in order for our health plan premium revenue to adequately cover our losses and expenses and enable us to profitably grow our business, we must effectively manage our costs, including healthcare spend. To do so, we must negotiate appropriate unit rates for each healthcare service provided by our Care Partners to our consumers. If we are unable to negotiate new Care Partner contracts or renew existing Care Partner contracts with favorable provisions relating to unit costs, we may not be able to contain our medical costs at a level that would be adequately covered by the premium levels we set, and our profitability could be adversely impacted. In addition, we must drive effective utilization management to control our costs by evaluating the necessity, appropriateness, and efficiency of the use of healthcare services, procedures, and facilities, while successfully educating our health plan consumers and directing them to the most appropriate and cost-effective healthcare treatments, Care Partners, and sites of care.

Our NeueHealth managed and affiliated medical groups and MSOs negotiate agreements with our Bright HealthCare business and with other third-party payors for which the NeueHealth entities serve as RBOs. Our RBOs manage the medical costs and quality metrics on behalf of such payors and are at financial risk for the performance of those payors’ medical costs for consumers attributed to our RBOs. Our ability to earn savings depends on our ability to achieve quality targets and to accurately estimate and manage medical costs, and these estimates contain inherent uncertainties and assumptions similar to those facing our health plan business, which depend on various factors outside of our control, as described above. Additionally, third-party payors may modify their product mix, benefit designs, or member mix in ways that could limit the ability of NeueHealth RBOs to effectively manage the financial performance under our risk arrangements. Our failure to effectively drive quality outcomes, optimize financial performance, or manage medical cost spend could negatively impact the profitability and marketability of our NeueHealth business.

If we continue to grow rapidly, we may not be able to manage our growth effectively.

Since our inception, we have experienced rapid growth, with total revenue having grown from $130.6 million in 2018 to $1.2 billion in 2020. Our significant growth to date, attributable to both rapid organic membership growth and acquisitions of other businesses, has placed and we expect will continue to place significant demands on our management team and our operational and financial resources. Sustaining such growth will require additional resources to improve our operational, management, and financial controls, and we expect to continue to increase headcount, including specialized personnel in areas such as software engineering, finance, regulatory, and other mission-critical areas, to support our growth. We may also experience significant personnel changes related to acquisition-related integration efforts. Our organizational structure may also become more complex as we add these additional resources, making it more difficult to manage.

Furthermore, in order to effectively operate our business, we rely heavily on third-party vendors. Our rapid growth could outpace the capacity of our third-party service providers to effectively support our business needs. Certain of our third-party service providers have in the past been unable to effectively scale their operations to meet our increased demands resulting from our rapid expansion. In the event that our existing third-party service providers are unable to meet our needs as our business grows, we may need to find alternative service providers. If we are unable to do so in a timely manner or if we are unable to contract with new service providers on terms that are acceptable to us or at all, our ability to operate our business may be disrupted, which may adversely affect our business, financial condition, results of operations, and cash flows. See “— We rely on various third-party service providers to support the operation of our business. If these service providers fail to meet their contractual obligations to us or comply with applicable laws or regulations, or if we are unable to renew our contracts with them, our business may be adversely affected.”

Continued rapid growth in our business may exacerbate certain of the risks described elsewhere in this section, including our ability to accurately estimate costs, price our products, and charge appropriate

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premiums, as well as our ability to accurately assess, code and report IFP, MA and Small Group risk adjustment factor (“RAF”) scores for our consumers. If we are not able to manage our growth effectively while maintaining the quality of our services and consumer satisfaction, our business, financial condition and results of operations may be materially adversely affected.

We have incurred net losses each year since our inception, and we may not be able to achieve or maintain profitability in the future.

We have incurred net losses on an annual basis since our inception, and our net losses have grown as we have invested heavily in our business. We incurred net losses of $248.4 million, $125.3 million and $62.6 million for the years ended December 31, 2020, 2019 and 2018, respectively. We must generate and sustain higher revenue levels in future periods to become profitable, and, even if we do, we may not be able to maintain or increase our profitability. We will continue to invest to grow our consumer base, diversify our product offerings, add additional Care Partners, expand our operations across different geographies and into new markets (including through acquisitions), invest in additional assets related to the delivery of healthcare, and hire more employees. We expect our operating costs will increase and therefore expect to incur net losses in the near to medium term. We may not achieve the benefits anticipated from these investments, which could be more costly than we currently anticipate, or the realization of these benefits could be delayed. These investments may not result in increased revenue or growth in our business and, accordingly, we may not be able to generate sufficient revenue to offset these cost increases and achieve and sustain profitability. Our recent and historical growth should also not be considered indicative of our future performance. If we fail to achieve and sustain growth and profitability, the market price of our common stock could decline.

Our limited operating history makes it difficult to evaluate our business and assess our future prospects.

Our limited operating history makes it difficult to evaluate our business and assess our future prospects. We have encountered and will continue to encounter significant risks and uncertainties frequently experienced by new and growing companies in heavily regulated industries, such as difficulties determining appropriate investments given limited resources, effectively managing growth and efficiently navigating and complying with evolving regulations. We began offering our first health insurance plans in 2017, and our most substantial growth has occurred in the last 18 months. During that time, we have significantly expanded our products and services across both our Bright HealthCare and NeueHealth businesses, including as a result of the Acquisitions. We have also expanded our operations to different lines of business and geographies. As such, the complexity of our business has increased significantly in a short period of time, and our growth, strategy and profitability could be negatively impacted if we are unable to effectively manage this complexity. Any inability to manage our business effectively could result in slowing demand for our services, increased competition or a failure to capitalize on growth opportunities.

The COVID-19 pandemic has adversely affected, and may continue to adversely affect, our business and results of operations.

The severity and magnitude of the current COVID-19 pandemic continue to grow, and the duration of the pandemic continues to be uncertain. The pandemic has adversely affected our business and results of operations. The extent to which the COVID-19 pandemic will continue to impact our business, results of operations and financial condition will depend on future developments, which are unknown at this time. Factors that could impact our results include: the ultimate geographic spread, severity and duration of the COVID-19 pandemic; the impact of business closures, travel restrictions, social distancing and other actions taken to contain the spread of COVID-19; the effectiveness of actions taken to reduce transmission of the virus that causes COVID-19 (including the development and administration of vaccines and the continued research into treatments, the virus, and the disease); the ongoing emergence of new variants of the virus that causes COVID-19; the impact of the pandemic on economic activity; and any impairment in value of our tangible or intangible assets which could be recorded as a result of weaker economic conditions caused by the pandemic. In addition, the long-term impact of the COVID-19 pandemic may not be fully understood or reflected in our results of operations and overall financial condition until future periods.

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As a result of the COVID-19 pandemic and the associated protective and preventative measures, we have experienced and may continue to experience disruptions to our business. Risks presented by the ongoing effects of COVID-19 include, but may not be limited to, the following:

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Cost of Care for Consumers.   The COVID-19 pandemic disproportionately impacts older adults, especially those with chronic illnesses, who constitute a significant portion of our MA consumer base, particularly in California, our largest MA population. We have experienced increased internal and third-party medical costs attributable to the provision of care for consumers suffering from the virus, primarily attributable to inpatient hospitalizations. Additionally, those of our consumers who have been infected by and recovered from the disease potentially face long-term health consequences which medical researchers continue to investigate. The total financial impact of the COVID-19 pandemic as well as the unknowns surrounding the length of time that the public health emergency and associated public health measures will continue is difficult to estimate.

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Changes to Care for Consumers and Patients.   Many individuals have been prevented from seeking, have been reluctant to seek, or have intentionally delayed or postponed, in-person, non-life threatening medical care and treatment, including elective procedures. Such reduction in healthcare services in our managed and affiliated medical groups has resulted in reduced NeueHealth fee-for-service revenue, while concurrent COVID-19 prevention protocols have increased costs. If our medical groups and MSOs experience losses, NeueHealth’s financial results may be adversely affected. Furthermore, many of Bright HealthCare’s health plan consumers elected to seek medical care and treatment in the second half of 2020 prior to the expiration of their health plan for the year, resulting in increased patient visits and greater consumer costs for such period. Such delays in our consumers’ receipt of preventative and non-life threatening medical treatments may affect Bright HealthCare’s financial results in future periods.

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Documentation of Health Conditions.   Due to the COVID-19 pandemic, we may not be able to adequately document the health conditions of our consumers and patients, as many of them have avoided in-person medical visits. Our third-party clients for our NeueHealth MSO may similarly be unable to adequately document the health conditions of their members. Inaccurate or inadequate documentation could result in an inaccurate RAF score, which could adversely impact our Bright HealthCare revenue for future periods. In addition, inaccurate documentation could impact the ability of our NeueHealth MSOs to manage medical costs and quality metrics on behalf of its clients, putting it at greater financial risk and potentially adversely affecting the profitability of our NeueHealth business.

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Operational Disruptions and Heightened Cybersecurity and Data Privacy Risks.   The COVID-19 pandemic has resulted in our employees and those of many of our vendors working from home and conducting work via the internet. If the infrastructure of internet providers required for such work becomes overburdened by increased usage or is otherwise unreliable or unavailable, our employees’, our consumers’, and our vendors’ employees’ access to the internet could be limited. Such a disruption could result in work stoppages, delays, loss of productivity, and general business interruptions, all of which have the potential to harm our business operations, financial condition, and results of operations.

These remote working arrangements can also result in significantly more external touchpoints into our network and lead to a heightened risk of cybersecurity attacks or data security incidents. As we have grown and continued to operate remotely, we have experienced an increase in attempted cyber-attacks, targeted intrusion, ransomware and phishing campaigns, and the pandemic has created additional difficulties in managing risk in the work-from-home environment. We have incurred and may continue to incur increased expenses to improve our security controls and remediate security vulnerabilities in response to these heightened cybersecurity risks. If any such attempt were to be successful or if protected health information (“PHI”), or other proprietary, confidential, or personal data or information were to be exposed or compromised or our systems were shut down or became unavailable, our reputation, business and results of operations could be materially harmed. In addition, our vendors may be subject to increased risks due to the current remote working environment, and any attempted cyber-attacks or other security incidents impacting our vendors could also disrupt our business and harm our reputation, business and results of operation.

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Changes in Regulatory Requirements.   As a result of the COVID-19 pandemic, regulatory agencies may require significant temporary changes to benefit coverage requirements, enrollment standards or disenrollment standards, in each case, that could negatively impact our financial performance. For example, mandatory coverage of COVID-19 testing in the workplace could result in substantial expenses that are not contemplated by our current rates. Furthermore, mandatory termination deferrals due to nonpayment of insurance premiums could result in a situation where we incur significant medical expense without the ability to collect any associated premium revenue.

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Market Disruption.   If the pandemic continues to create disruptions or turmoil in the credit or financial markets, it could adversely affect the price of our common stock and our ability to access capital on favorable terms and continue to meet our liquidity and any acquisition financing needs.

To the extent the COVID-19 pandemic continues to adversely affect our business and financial results, it may also have the effect of heightening many of the other risks described in this section of the prospectus titled “Risk Factors.”

Large-scale medical emergencies in one or more states in which we operate our business could significantly increase utilization rates, medical costs or risk overwhelming and disrupting our systems.

Large-scale medical emergencies can take many forms which may be associated with widespread illness, such as COVID-19, medical conditions or general threats to wellness. Currently our largest markets are in Florida, California and Colorado, which can from time to time be impacted by hurricanes, flooding, earthquakes, wildfires winter storms and other similar natural events, including as a result of climate change. A significant event of this kind could impact one or more of our markets by affecting outsized portions of our consumer population and require increased medical care or intervention, which could result in an unexpected increase in our medical costs. For example, we have experienced increased costs attributable to the provision of care for consumers suffering from COVID-19. Other conditions that could impact our consumers include a particularly virulent influenza season, pandemics or epidemics, and other foreign or domestic viruses or new variants of existing viruses for which vaccines may not exist, are not effective, or have not been widely administered. The medical costs and operating costs associated with assisting our consumers in response to any of these large-scale medical emergencies is difficult to predict. However, if one of the states in which we operate were to experience a large-scale natural disaster, a viral epidemic or pandemic, or some other large-scale event affecting the health of a large number of our consumers, our consumer costs in that state could rise, which could have a material adverse effect on our business, financial condition, cash flows and results of operations.

Large-scale medical emergencies may also adversely impact our NeueHealth managed and affiliated medical groups, causing disruption in patient scheduling; displacement of patients, employees and care management personnel; or force clinics to close entirely for periods of time.

In addition, we may not be able to adequately maintain system functionality and business continuity due to any such events. This risk is further exacerbated by our reliance on third-party providers that perform critical operational functions for us. Any such disruption to our ability to conduct business could have a material adverse effect on our business, cash flows and results of operations.

Delays in our receipt of health plan premiums could adversely affect our operations, financial position and cash flows.

A substantial portion of our revenue is derived from health plan premiums. While we recognize premium revenue over the period that coverage is effective, there can be no assurance that we will receive premiums within a relevant coverage period. In addition, the implementation of certain policies by the state and federal governments could result in increased delays in the receipt of health plan premiums. For example, state insurance departments issued guidelines relating to policy cancellations and non-renewals due to nonpayment in response to the COVID-19 pandemic. Other states encouraged insurers to consider relaxing due dates for premium payments, extending grace periods, waiving late fees and other penalties, and permitting premium payment plans to avoid lapses in coverage. Some states further prohibited termination of plans due to nonpayment until specified dates. Premium write-offs have been immaterial to date but could be significant in the future. If such measures were to remain in place for an extended period, or if other

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measures are introduced by the state and federal governments in the future, we could experience delays in the receipt of health plan premiums, which could adversely affect our operations, financial position and cash flows.

Our membership is concentrated in certain geographic areas and amongst certain populations, exposing us to unfavorable changes in local benefit costs, reimbursement rates, competition and economic conditions in those areas or affecting those populations.

Our membership is concentrated in certain states in the United States. As of December 31, 2020, approximately 72% of our consumers were residents of California, Florida, Colorado and North Carolina. In addition, our MA business in California made up 36% of total revenue for the year ended December 31, 2020. Unfavorable changes in the regulatory environment for healthcare, unforeseen changes affecting the cost of living, other benefit costs, reimbursement rates or increased competition in these states or any other geographic area where our membership becomes concentrated in the future could therefore have a disproportionately adverse effect on our operating results.

Our new markets may not be as economical to serve as our existing markets.

We intend to expand our geographic, product and care delivery footprint across many markets throughout the United States for both our Bright HealthCare and NeueHealth businesses. Due to a variety of factors, such as novel local market dynamics and increased administrative costs relating to compliance with state laws and regulations, we may have difficulty providing the same level and types of healthcare in these new markets as we and our Care Partners currently provide in our established markets for the same cost. If we are unable to adequately price our new products in these markets, if the medical expenses of new consumers are higher than we anticipate, if the market is saturated with significant competition or if the rates of adoption for our business model or the demand for our product offerings in such new geographies are lower than we anticipate, we may not be able to serve those regions while realizing economic results as favorable as those results realized in the markets we currently serve. If we are unable to profitably grow and diversify our membership geographically, our results of operations may be materially and adversely affected.

We operate in competitive markets within a highly competitive industry.

The health insurance and care delivery markets are highly competitive. Competitors across the markets in which we compete are subject to dynamic regulatory requirements and industry expectations, emerging new product offerings, and constantly evolving consumer preferences and demands. Our principal competitors for consumers and payor contracts vary considerably in type and identity by market.

Our Bright HealthCare business currently faces competition from a range of health insurance companies targeting the IFP, MA, Medicaid, and employer markets, many of whom are developing their own technology or partnering with third-party technology providers to drive improvements in care. These competitors include large, national insurers, such as Aetna, Anthem, Centene, Cigna, Humana, and UnitedHealthcare and others, in addition to more regionally-focused insurers, such as Blue Cross Blue Shield licensees, Kaiser Permanente and other provider-sponsored health plan organizations.

Our NeueHealth business currently operates medical groups and competes with other medical groups in the same localities. NeueHealth also competes with MSOs, IPAs and other organizational entities aggregating and enabling providers to deliver primary care services under value-based care arrangements. These competitors include companies such as Agilon Health, ChenMed, Iora Health, Oak Street Health, OptumHealth and VillageMD. In addition, our NeueHealth business participates in the Medicare Shared Savings Program and other government programs designed to bring value-based care to fee-for-service Medicare beneficiaries, and NeueHealth competes with other participants in such programs. Furthermore, third-party payor clients may resist purchasing NeueHealth services because such clients may compete with Bright HealthCare in the same markets.

Many of our competitors have longer operating histories; greater brand recognition; stronger, more developed, and more extensive networks of physicians and other care providers; significantly greater financial, technical, marketing, and other resources; lower labor and development costs due to economies of scale; greater access to healthcare data; and larger membership bases, than we do. These competitors may

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engage in more extensive research and development efforts; undertake broader, more expensive, and more powerful marketing campaigns; and adopt more aggressive pricing or payment policies, each of which may enable them to build membership faster than us and to establish a larger patient base more quickly than us. Our competitors may also provide more differentiated products or services to their clients. Furthermore, the healthcare industry in the United States has experienced a substantial amount of consolidation. If our competitors were to be acquired by third parties with greater resources, these competitive risks could intensify, and we may face significant challenges in markets that have experienced significant competitor consolidation.

In addition, other companies may enter our markets in the future, including emerging competitors targeting IFP, MA and employer populations, or other markets or products we choose to enter or be in at the time. We do not believe the barriers to enter our markets are substantial, and new competitors with comparable, better, or differentiated healthcare products and plans may emerge, or competitors may develop new approaches to value-based care, which could put us at a competitive disadvantage. In addition, because health plans are generally renewed annually, consumers enjoy significant flexibility in moving between health plans.

One of the key factors on which we compete for our consumers, especially in uncertain economic environments, is overall cost. We are therefore under pressure to contain premium price increases despite being faced with increasing healthcare and other benefit costs, as well as increasing operating costs. If, as a result of the competition we face, we are unable to increase our premium rates or our prices commensurate with increasing costs, our profitability could be adversely affected. To the contrary, if we do not limit our price increases, we may lose consumers to our competitors offering more favorable pricing. In response to rising prices, our consumers may also purchase different types of products from us that are less profitable. If we are unable to compete effectively with our current and potential competitors for market share, we may also see a reduction in the demand for our products and services. Any of the foregoing could materially and adversely affect our business, results of operations and financial condition.

We may not be able to maintain the accuracy, integrity or availability of our data.

Our Bright HealthCare and NeueHealth businesses are highly dependent on the accuracy, integrity and availability of the data we generate and use to serve our consumers, Care Partners and other constituents, and to provide patient care. The volume of healthcare data generated, and the uses of data, including for electronic health records, are rapidly expanding. Our ability to implement new and innovative services, adequately price our products and services, provide timely and effective service to our consumers and clients and accurately report our results of operations depends on the accuracy and the integrity of the data in our information systems. If the data we rely upon to run our businesses is found to be inaccurate or unreliable, we could experience adverse effects on our ability to effectively conduct our business, including our ability to:

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accurately estimate revenue and medical costs;

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establish appropriate pricing and accurately code our consumers’ RAF scores;

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prevent, detect and control fraud;

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prevent disputes with consumers and network providers;

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prevent errors in medical records;

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manage value-based care contracts;

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prevent regulatory sanctions, scrutiny or penalties; and

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reduce the incurrence of increased operating expenses.

We are in the process of implementing a new enterprise resource planning system and may experience issues with the transition or the new system may prove ineffective.

We are in the process of implementing a new enterprise resource planning (“ERP”) system, including our systems for tracking revenue and day-to-day business activities, such as accounting, procurement, project and risk management, and supply chain. Our ERP system will be key to our ability to execute our strategy,

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provide important information to management, accurately maintain our books and records, prepare our financial statements in a timely and efficient manner and fulfill our contractual obligations. Our transition to this new ERP system may disrupt our business if the system does not work as planned or if we experience issues relating to the implementation. Such disruptions could impact our ability to make payments timely or accurately to our service providers, and could also inhibit our ability to invoice and collect from our consumers. This system may also discover or create data integrity problems or other technical issues, which could impact our business or financial results. In addition, periodic or prolonged disruption of our financial functions could result from our adoption of the new system, general use of the ERP system, regular updates or other external factors outside of our control. If unexpected issues arise with our ERP system or related systems or technology infrastructure, our business, results of operations and financial condition could be adversely affected. Additionally, if we do not effectively implement the ERP system as planned or the system does not operate as intended, the effectiveness of our internal control over financial reporting could be adversely affected or our ability to assess it adequately could be delayed.

Our technology platform may not operate properly or as we expect it to operate. We must continue to develop and maintain our technology platform to grow our business.

Our ability to drive brand awareness and to increase our membership and client base in our Bright HealthCare and NeueHealth businesses will depend, in part, on our ability to develop and improve our healthcare platform, BiOS, which includes our intelligent data hub and our suite of consumer and care provider solutions. We launched BiOS in 2021 and are in the process of making it fully operational with the completion of the rollout of DocSquad. We cannot assure you that it will be broadly adopted by the market, including our consumers, providers and third-party payors, or that we will timely complete the launch of DocSquad. This system may encounter unforeseen difficulties, such as performance problems, undetected defects or errors, data integrity problems or other technical glitches. Any of these issues could impact the user experience and cause us to lose consumers, providers and payors, which could adversely impact our ability to execute on our growth strategy and adversely affect our business and results of operations.

Furthermore, recent trends toward greater consumer and client engagement in healthcare require new and enhanced technologies, including more sophisticated applications for mobile devices. Our information systems platforms require an ongoing commitment of significant resources to maintain, protect and enhance existing systems and develop new systems to keep pace with continuing changes in information processing technology, evolving systems and regulatory standards and changing consumer and client preferences.

In addition, we periodically consolidate, integrate, upgrade and expand our information technology systems’ capabilities as a result of technology initiatives and new regulations, changes in our system platforms and integration of new business acquisitions. Any failure to protect, consolidate and integrate our systems successfully could result in higher-than-expected costs and diversion of management’s time and energy, which could materially and adversely affect our results of operations, financial position and cash flows. In addition, if any such failure causes our platform to malfunction or be temporarily unavailable, our existing consumers could become dissatisfied and leave our platform to join a competitor, we may be unable to attract new consumers and our brand and reputation could be adversely impacted. As a result, our revenue may not grow as expected, which could have a material adverse effect on our business, financial condition and results of operations.

Security incidents or breaches, loss of data and other disruptions to our or our third-party service providers’ systems, information technology infrastructure, and networks could compromise sensitive or legally protected information related to our business or consumers, disrupt our business operations, and expose us to liability, which could adversely affect our business and our reputation.

In the ordinary course of our business, we receive, collect, store, use, process, transmit and disclose (“Process”) sensitive data, including PHI, and other types of personal data, personal information or personally identifiable information protected by various laws and regulations (collectively, “PII”). We also use third-party service providers to Process PHI, PII, sensitive information and other confidential information, including that of our consumers and service providers. We manage and maintain our technology platform and data using a combination of on-site systems, managed data center systems and cloud-based systems. Because of the sensitivity of the PHI, other PII and other confidential information we and our consumers

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and service providers Process, the security of our technology platform and other aspects of our services, including those provided or facilitated by our third-party service providers, are critically important to our operations and business strategy.

The operation, stability, integrity and availability of our technology platform and underlying network infrastructure are critical to the implementation of our business strategy, our financial results, our brand and reputation, our relationship with our Care Partners, consumers, network providers, broker network, third-party providers and other key constituents. Any system failure, including network, software or hardware failure, that causes an interruption in our network or a decrease in the responsiveness of our technology platform could result in dissatisfaction and a loss of trust with those constituents and adversely impact our business and reputation. Although we have redundancies in place that will permit us to respond, at least to some degree, to service outages, it could take significant time to have all systems fully operational and our third-party cloud providers are also subject to vulnerabilities.

Security incidents and breaches of our infrastructure or our third-party service providers’ infrastructure, including physical or electronic break-ins, computer viruses, ransomware, or other malware, employee or contractor error or malfeasance, can disrupt or shut down our systems, or allow unauthorized access to, or misuse, disclosure, modifications or loss of confidential information, PHI, and other PII. Such breaches could result in legal claims or proceedings, liability under laws and regulations that protect the privacy of PHI or other PII, such as the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), the California Consumer Privacy Act (“CCPA”), and other state and federal laws and regulations. We may also be required to notify government authorities, individuals, the media, and other third parties in connection with a security incident or breach involving PHI or other PII, and could become subject to investigations, consent decrees, resolution agreements, monitoring agreements and similar agreements, and civil penalties. We require business associates and other outsourcing subcontractors who handle consumer and patient information to enter into business associate agreements, if applicable, and to agree to use reasonable efforts to safeguard PHI, other PII and other sensitive information. However, these measures may not adequately protect us from the risks associated with the Processing of such information.

In addition, breaches of our security systems or those systems used by our third-party service providers or other cyber security incidents could also result in the misappropriation of confidential or proprietary information of ourselves, our consumers, our patients, or other third parties; viruses, spyware, ransomware or other malware being served from our network, platform or systems; the deletion or modification of content or the display of unauthorized content on our platform; the loss of access to critical data or systems through ransomware, destructive attacks or other means; and business delays, service or system disruptions such as denials of service attacks. For example, one of our third-party suppliers of certain services was recently subject to a ransomware attack, which caused delays in our claims payment processing to consumers. While we have determined our consumers’ information (including PHI and other PII) was not put at risk, we are still evaluating the incident. We cannot guarantee that our recovery protocols and backup systems will be sufficient to prevent data loss now or in the future, or that our remedies against third-party service providers will be sufficient to protect us in the event such service provider suffers a security breach or similar incident.

If we are not or are perceived to not be able to prevent such security breaches or privacy violations or implement acceptable remedial measures, we may be unable to operate our platform, perform our services, provide consumer assistance services, maintain accurate patient medical records, conduct research and development activities, collect, process and prepare company financial information, or provide information about our current and future products. There is an increased risk that we may experience cybersecurity-related events such as COVID-19-themed phishing attacks and other security challenges as a result of our employees and service providers working remotely from non-corporate-managed networks during the ongoing pandemic and beyond. Any such breaches and violations may result in fines and penalties, require us to comply with breach notification laws and require us to verify the accuracy of database contents, all of which could result in increased costs. As a result, we could suffer a loss of business and we may suffer reputational harm, adverse impacts on consumer and investor confidence and negative impact to our results of operations.

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We rely on various third-party service providers to support the operation of our business. If these service providers fail to meet their contractual obligations to us or comply with applicable laws or regulations, or if we are unable to renew our contracts with them, our business may be adversely affected.

We rely on a number of third parties to perform certain operational functions and services for us, as well as to support our technology platform and our general services and administration functions. The continued growth of our business will depend, in part, on our ability to achieve and maintain successful business relationships with these third parties. These third parties include but are not limited to:

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Claims management vendors.   Our claims management vendors adjudicate and pay claims and generally manage the billing of medical services provided to our consumers and to members of NeueHealth’s third-party payors and other clients. We rely on two principal suppliers for ACA claims management and MA claims management, and which supplier we use depends on a variety of factors, including geography, specialty and capability. Any disruption or loss of these suppliers could cause considerable strain on our business, result in delays in billings and collections, and negatively impact the experience of our consumers, our network providers, and our third-party payors and other clients.

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Utilization management vendors.   Our utilization management vendors assist our business in managing healthcare costs by educating our health plan consumers and directing them to effective, efficient and personalized healthcare treatments based on evidence-based criteria or guidelines. If our utilization management vendors became less effective or were unable to provide their services to us, the costs of healthcare for our consumers may increase and our results of operations and financial condition may be adversely affected. Furthermore, our NeueHealth business also relies on the services of utilization management vendors when NeueHealth has been delegated responsibility for utilization management by its third-party payors and other clients.

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Pharmacy benefit management (“PBM”) service providers.   Our PBM services suppliers provide us and certain of our consumers with services that include claims processing, specialty pharmacy services, mail pharmacy services, formulary services and coordination of benefits, retail network pharmacy network, participating pharmacy audits and reporting, all of which are crucial to our business.

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Cloud service providers and internet infrastructure service providers.   We rely on cloud service providers and other service providers to host certain aspects of our IT infrastructure. We do not control the operation of our cloud service providers’ infrastructure or the facilities where their servers are located. The level of service provided by cloud service providers or managed data center providers could affect the availability or speed of our platform, which may also impact the usage of, and our consumers’, Care Partners’ and other constituents’ satisfaction with, our platform and could seriously harm our business and reputation. We also cannot guarantee that the contractual remedies we may have in place with these service providers would be sufficient to cover our losses.

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Software license providers.   Our technology platform utilizes and integrates software licensed from third parties. However, it is possible that this software may not continue to be available on commercially reasonable terms, or at all. Any loss of the right to use any of this software could result in delays in the provisioning of our services until equivalent technology is either developed by us, or, if available, is identified, obtained and integrated. We also cannot guarantee that the contractual remedies we may have in place with such software providers will adequately protect us in the event such software is modified in a manner such that it can no longer be integrated with our own systems and networks, or if such software includes viruses, malware, other corruptants, or security vulnerabilities that impact our own systems and networks.

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Other vendors of core business functions.   We rely on the systems of our third-party vendors to submit plan enrollment applications from potential consumers. If these systems were to fail or experience disruptions, we could experience significant failures and interruptions of our systems and the systems of our vendors, which could harm our business, operating results and financial condition. Because the ACA and Medicare annual enrollment periods are typically open for a limited time each year and are critical to our overall annual consumer enrollment, if these failures or interruptions occurred during that period or during other open enrollment periods, the negative impact on us would be amplified and could result in harm to our business and results of operations.

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While we have entered into agreements with these third-party service providers, they have no obligation to renew their agreements on similar terms or on terms that we find commercially reasonable, or at all. Identifying replacement third-party service providers, and negotiating agreements with them, requires significant time and resources. If any one of our material third-party service provider’s ability to perform their obligations was impaired, we may not be able to find an alternative supplier in a timely manner or on acceptable financial terms, and we may not be able to meet the full demands of our consumers and Care Partners within the time periods expected, or at all. While we believe we will be able to insource the responsibilities of many of our third-party service providers in the future, there can be no assurance that we will be able to do so in a manner that enables us to meet the demands of our consumers and Care Partners.

In addition, any shift in business strategy, corporate reorganization, or financial difficulties faced by our third-party providers, such as bankruptcy, may have negative effects on our ability to execute our business strategy. If our third-party providers are unable to keep up with our growing needs for capacity, it could have an adverse effect on our business and reputation, cause us to lose consumers or harm our ability to attract new consumers to our health plan business, or to maintain and grow our other businesses. In the event we make any material changes to our third-party service providers due to changes in our business needs or otherwise, such as mid-year changes or efforts to insource currently outsourced services, we may experience significant operational and service disruptions.

In addition, we may not be able to ensure that our third-party providers perform in accordance with agreed upon, regulated and expected standards, and we could be held accountable for their failure to do so which may subject us to fines or other sanctions or otherwise materially negatively impact our business and results of operations. See “— We are subject to inspections, reviews, audits and investigations under federal and state government programs and contracts. The results of such audits could adversely and negatively affect our business, including our results of operations, liquidity, financial condition and reputation.”

Any termination of our agreements with, or disruption in the performance of, one or more of these service providers could result in service disruption or unavailability, and harm our ability to continue to develop, maintain and improve our products. This could reduce our ability to attract Care Partners, limit enrollment in our health plan business, increase our medical costs, hinder expansion of our NeueHealth business, and result in an inability to meet our obligations or require us to seek alternative service providers on less favorable contract terms, any of which could adversely affect our business, brand, reputation or operating results.

The failure to enter into value-based care agreements with health plans or the renegotiation, non-renewal or termination of such agreements could materially negatively impact our business, results of operations, financial condition and cash flows.

The success of our NeueHealth business is dependent on our ability to enter into value-based care agreements with third-party payors and with Bright HealthCare. Even if we are successful at entering into these agreements, such agreements may be subject to renegotiation, and the renegotiated terms may not be as favorable to us. Additionally, under certain of our existing value-based care agreements with third-party payors, the health plan is permitted to modify their benefit designs, their pricing parameters, and the specific terms and conditions governing the value-based arrangement from time to time during the terms of the agreements. If a health plan makes such changes during the term of our agreement, or if we enter into contracts with unfavorable economic terms, we could suffer losses with respect to such contract. In particular, if we enter into capitation or other value-based care contracts with unfavorable terms, or such contracts are amended to include unfavorable terms, we could experience significant losses. Depending on the health plan at issue and the amount of revenue associated with the health plan’s agreement, if the contract permits a renegotiation of the terms triggered by health plan changes, the renegotiated terms or termination could materially negatively impact our business, results of operations, financial condition and cash flows.

If we are required to maintain higher statutory capital levels or if we are subject to additional capital reserve requirements as we pursue new business opportunities, our balance sheet may be adversely affected.

Our IFP, MA and employer plans are operated through regulated insurance subsidiaries in various states. These subsidiaries are subject to state regulations that, among other things, require us to maintain

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minimum levels of statutory capital, or net worth, as defined by each applicable state. Such states may raise or lower the statutory capital level requirements at will. Certain other states have adopted risk-based capital requirements based on guidelines adopted by the National Association of Insurance Commissioners, which tend to be, although are not necessarily, higher than existing statutory capital requirements. The state departments of insurance, or applicable bodies regulating insurance, in any state could require our regulated insurance subsidiaries to maintain minimum levels of statutory capital in excess of amounts required under the applicable state laws if they determine that maintaining additional statutory capital is in the best interests of our consumers. In addition, as we continue to expand our plan offerings and expand into new states, grow our membership, and pursue new business opportunities, we may be required to maintain higher levels of statutory capital. If higher level of statutory capital are required, this could reduce our available funds, which could harm our ability to execute our business strategy and invest in our growth opportunities. In addition, the laws in many states require increasing degrees of regulatory oversight and intervention if a company’s risk-based capital declines below certain thresholds. If our levels of statutory capital were to decline below these thresholds, we may be subject to heightened supervision, examination, rehabilitation or liquidation.

If we fail to achieve robust brand recognition or are unable to maintain or enhance our reputation, our business, financial condition and results of operations may be adversely affected.

Developing strong brand recognition and maintaining and enhancing our reputation in both our Bright HealthCare and NeueHealth businesses is critical to maintaining our existing relationships and to our ability to attract new consumers, Care Partners and other constituents to our platform. Promoting our brand requires substantial investments and we anticipate that, as our market remains increasingly competitive, our marketing initiatives will become increasingly expensive and challenging to successfully implement. Attempts to grow our brand and investments in marketing our platform and plans may not be successful or yield increased revenue as we expect, and even if these activities result in increased revenue, the increased revenue may not offset the expenses we incur to achieve such results. In addition, our current marketing efforts to date have been limited to certain geographic regions and markets where our business operates to ensure an efficient use of resources. If we grow nationally, we will need to spend additional resources to build strong national brand recognition and there can be no assurance that our efforts will be effective. If we do not successfully develop widespread brand recognition and maintain and enhance our reputation, our business may not grow and we could lose our existing relationships, which could harm our business, financial condition and results of operations.

If we fail to offer high-quality customer support in our business, our reputation and our ability to maintain or expand membership or attract Care Partners and third-party payors could suffer, which could adversely affect our results of operations.

Providing high-quality operational support and service to our consumers, Care Partners and third-party payors is an important part of our business. Our ability to attract and retain consumers is largely dependent upon our ability to offer an easy-to-navigate membership enrollment process as well as upon our ability to provide cost effective, quality customer service, including effective call center operations and claims processing support, that meets or exceeds our consumers’ expectations. Certain user support operations are supported by third-party vendors. If we or our vendors fail to provide services that meet our customers’ expectations, we may have difficulty retaining or growing our membership as well as Care Partner and third-party payor relationships, which could adversely affect our business, financial condition and results of operations.

We expect the importance of offering high-quality support to our consumers will increase as we expand our business, grow markets, add new products, and pursue new consumers, Care Partners, and third-party payors. Any failure to maintain high-quality customer support, or a market perception that we do not maintain high-quality user support, could harm our reputation and negatively impact our ability to grow membership, build Care Partner relationships, and attract third-party payors, which could adversely affect our business, results of operations, and financial condition. Additionally, as our number of consumers, Care Partners and third-party payors grows, we will need to hire additional support personnel to provide efficient platform support at scale. If we are unable to provide such support, our business, results of operations, financial condition and reputation could be harmed.

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Reductions in the quality ratings of our MA health plans could have a materially negative impact on our business, results of operations, financial condition and cash flows.

Many of the government healthcare coverage programs in which we participate are subject to the prior satisfaction of certain conditions or performance standards or benchmarks. For example, a portion of each Medicare Advantage plan’s reimbursement is tied to the plan’s Star Rating. A plan’s Star Rating affects its image in the market, and plans that perform well are able to offer enhanced benefits and market more effectively. The Star Rating system considers various measures adopted by CMS, including, among others, quality of care, preventive services, chronic illness management and consumer satisfaction. Only plans with a rating of four (4.0) stars or higher qualify for bonus payments. Medicare Advantage plans with Star Ratings of five (5.0) stars are eligible for year-round open enrollment; conversely, plans with lower Star Ratings have more restricted times for enrollment of beneficiaries. Medicare Advantage plans with Star Ratings of less than three (3.0) stars for three consecutive years are denoted as “low performing” plans on the CMS website and in the CMS “Medicare and You” handbook. In addition, in 2019, CMS had its authority reinstated to terminate Medicare Advantage contracts for plans rated below three (3.0) stars for three consecutive years. As a result, Medicare Advantage plans that achieve higher Star Ratings may have a competitive advantage over plans with lower Star Ratings. To date, we have not been able to achieve a four (4.0) Star Rating on our MA plans, which are therefore not currently eligible for quality bonuses. Furthermore, the Star Rating system is subject to change annually by CMS, which may make it more difficult to achieve and maintain three (3.0) Star Ratings or greater in the future. We cannot assure you that we will be successful in maintaining or improving our Star Ratings in the future. In addition, audits of our performance for past or future periods may result in downgrades to our Star Ratings. Our health insurance subsidiaries’ operating results, premium revenue, and benefit offerings will likely depend significantly on their Star Ratings, and there can be no assurances that we will be successful in achieving and maintaining favorable Star Ratings. If we do not achieve an acceptable level of Star Ratings, our plans will not be eligible for quality bonuses in the future and we may experience a negative impact on our revenue and the benefits that our plans can offer, which could materially and adversely affect the marketability of our plans, our membership levels, results of operations, financial position and cash flows. Any changes in standards or care delivery models that apply to government healthcare programs, including Medicare, or our inability to maintain or improve our quality scores and Star Ratings to meet government performance requirements or to match the performance of our competitors could result in limitations to our participation in or exclusion from these or other government programs, which in turn could materially negatively impact our results of operations, financial position and cash flows.

Similarly, healthcare accreditation agencies such as the National Committee for Quality Assurance (“NCQA”), evaluate health plans based on various criteria, including effectiveness of care and consumer satisfaction. Health insurers seeking accreditation from NCQA must pass a rigorous, comprehensive review, and must annually report their performance. If we fail to achieve and maintain accreditation from agencies, such as NCQA, we could lose the ability to offer our health plans on Health Insurance Marketplaces, or in certain jurisdictions, which could materially and adversely affect our results of operations, financial position, and cash flows.

We may be unsuccessful in identifying and acquiring suitable acquisition candidates or integrating acquired companies, which could impede our growth and ability to remain competitive.

Over the course of the last several years, we have acquired several other businesses, including in connection with the Acquisitions. Maintaining our current pace of growth will rely in part on our continued ability to successfully acquire and integrate companies that complement and accelerate the execution of our strategies in new and existing markets. However, we may not successfully identify suitable acquisition candidates or we may have difficulty in identifying prospective acquisition candidates. In addition, we may not be able to successfully complete an acquisition after identifying a candidate. We sometimes compete for acquisition and expansion opportunities with entities that have greater financial resources or are otherwise willing to pay more than us. We face higher risks if our acquisition strategy requires us to seek additional financing, as our ability to obtain additional financing on satisfactory terms and conditions will depend upon several factors, many of which are beyond our control.

Even after the successful acquisition of a business, we may be unable to successfully integrate the acquired business with our existing business and operations or the business may not perform in accordance

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with the projections that informed the purchase price for such acquisition. The integration of an acquired business involves a number of factors that may negatively affect our operations, including, but not limited to:

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distraction of management or lack of leadership within the acquired business to succeed retiring leaders;

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significant costs and difficulties, including implementing or remediating controls, procedures, and policies at the acquired company; integrating the acquired company’s accounting, human resource and other administrative systems; coordinating product and sales and marketing functions; transitioning operations, consumers, clients, and other users onto our existing technology platforms; and retaining of key personnel;

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tax and accounting issues, including the creation of significant future contingent liabilities relating to earn-outs for acquisitions or other financial liabilities; and

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unanticipated problems or legal liabilities, or lack of adequate compliance or regulatory policies, processes and resources.

Although we conduct due diligence with respect to the business and operations of each of the companies we acquire, we may not have identified all material facts concerning these companies. Unanticipated events or liabilities relating to these companies could have a material adverse effect on our results of operations, financial condition and cash flow. Furthermore, once we have integrated an acquired company, it may not achieve levels of revenue, profitability, or productivity comparable to our existing business, or otherwise perform as expected, and we cannot assure you that past or future acquisitions will be accretive to earnings or otherwise meet our operational or strategic expectations. Our failure to successfully acquire and integrate businesses may cause us to fail to realize the anticipated benefits of such acquisitions or investments, cause us to incur unanticipated liabilities and/or harm our business generally, which may have an adverse effect on our revenue, results of operations, financial condition and cash flow.

Medical liability claims made against us in the future could cause us to incur significant expenses and pay significant damages if not covered by insurance.

The risk of medical liability claims against our NeueHealth managed and affiliated medical groups, as well as against the treating physicians and other medical practitioners, is an inherent part of our business. While we endeavor to carry appropriate levels of insurance covering medical malpractice claims, successful medical liability claims might exceed our insurance coverage or the coverage held by our provider partners, which could make us secondarily liable for such incidents. Furthermore, professional liability insurance, including medical malpractice insurance, is expensive and insurance premiums may increase significantly in the future, especially as we expand our product offerings and as we become a public company. As a result, adequate professional liability insurance may not be available to our physicians and other medical practitioners or to us in the future at acceptable costs or at all.

Additionally, our health plan business may be targeted for medical liability lawsuits based on vicarious liability or other legal theories by which plaintiffs seek to hold our health plans liable for medical results associated with care rendered by our Care Partners or other network providers.

Any claims made against us that are not fully covered by insurance could be costly to defend against, result in substantial damage awards against us and divert the attention of our management and our partners from our operations, which could have a material adverse effect on our business, reputation, financial condition and results of operations. Additionally, any claims made against us, whether meritorious or not, may increase the cost of our insurance premiums.

Protecting our intellectual property rights may be expensive and demand management’s attention, and failure to protect or enforce our intellectual property rights could harm our business and results of operations.

We rely on a combination of trade secret, copyright and trademark laws and confidentiality agreements, along with other contractual provisions to protect our proprietary technology and intellectual property rights, including the content and design of our brand and logo, our website, our platform, our software code and our data. We believe that our intellectual property rights are an essential asset of our business and critical to our success. We endeavor to maintain and protect our intellectual property. Despite such efforts,

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unauthorized parties may attempt to copy aspects of our intellectual property or obtain and use information that we regard as proprietary and, if we do not adequately protect our intellectual property, our brand and reputation could be harmed and competitors may be able to erode or negate our competitive advantage, which could materially harm our business, negatively affect our position in the marketplace, limit our ability to commercialize our technology and delay or render impossible our achievement of profitability. We cannot guarantee that confidentiality agreements we have put into place will not be breached, that we will have adequate remedies in the event of a breach, or that such agreements will adequately protect our intellectual property rights, internally developed technology and other information that we consider proprietary. Moreover, there can be no assurance that our proprietary technology will not be independently developed by competitors or that the intellectual property rights we own or license will provide competitive advantages or will not be challenged or circumvented by our competitors.

Obtaining, maintaining and defending our intellectual property rights can be expensive, and a failure to protect our intellectual property rights in a cost-effective and meaningful manner could have a material adverse effect on our ability to compete. In particular, we believe it is important to maintain, protect and enhance our brands. Accordingly, we pursue the registration of domain names and our trademarks and service marks in the United States. Third parties may challenge our use of our trademarks, oppose our trademark applications, or otherwise impede our efforts to protect our brand. In the event that we are unable to register our trademarks in certain jurisdictions, we could be forced to rebrand our products, which could slow our growth in those jurisdictions, harm our brand recognition, or could require us to devote resources to advertising and marketing new brands.

In addition, we may not always detect or protect against infringement of our intellectual property rights. Litigation may be necessary to enforce or defend our intellectual property rights or determine the validity and scope of proprietary rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs and diversion of management attention and technical resources, any of which could adversely affect our business and results of operations. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims, countersuits and adversarial proceedings that attack the validity and enforceability of our intellectual property rights.

If we fail to maintain, protect and enhance our intellectual property rights, our business, results of operations and financial condition may be harmed and the market price of our common stock could decline.

In the future, we may be subject to claims that we violated intellectual property rights, which can be costly to defend and could require us to pay significant damages and limit our ability to operate.

We cannot be certain that the operation of our business does not and will not infringe the intellectual property rights of others, or that third parties will not claim, legitimately or otherwise, that our products and services infringe their intellectual property rights. Our future success could be affected by claims of intellectual property infringement, whether or not such claims have merit. There may be intellectual property rights held by others that cover important parts of our technologies, content, branding or business methods, and we may be unaware of such rights.

We may be subject to legal proceedings and claims in the ordinary course of our business, including claims of alleged infringement of intellectual property rights of third parties by us or our consumers in connection with their use of our products and services. These claims also could subject us to significant liability for damages and could force us to stop using technology, content, branding or business methods found to be in violation of another party’s intellectual property rights. We might be required or may opt to seek a license for rights to intellectual property rights owned by others, which may be unavailable on commercially reasonable terms, or at all. We could be required to pay significant royalties to license products, increasing our operating expenses. We may also be required to develop alternative non-infringing technology, content, branding or business methods, which could require significant effort and expense, be infeasible or make us less competitive in the market. Such disputes could also disrupt our business, which could adversely impact our consumer satisfaction and ability to attract consumers. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. If we cannot license or develop technology, content, branding or business methods for any allegedly infringing aspect of our business, we may be unable to execute our business strategy.

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Furthermore, we may be obligated to indemnify other parties as a result of litigation. In the case of infringement or misappropriation caused by technology that we obtain from third parties, the indemnification or other protections we receive from such third parties, if any, may be insufficient to cover the liabilities we incur as a result of such infringement or misappropriation. Any of these outcomes could have knock-on effects and harm our business and operating results.

We rely on our talent, and the loss of any members of senior management or other key employees or an inability to hire, retain, motivate or develop other highly skilled employees could harm our business or impact our ability to grow effectively.

We are led by a seasoned management team with decades of healthcare and public company operating experience. The continued growth and success of our business relies, in part, on the continued services of our senior management team and other key employees. Competition for talent is intense in our industry. While we use various measures to attract and retain talent, including fair and reasonable market-based compensation plans and an equity incentive program for key executive officers and other employees, these measures may not be adequate to hire, retain, motivate and develop the personnel we require to successfully scale our business and to operate our business effectively. Furthermore, members of our senior management team are difficult to replace. In particular, the loss of the employment contributions of our Chief Executive Officer, Mr. Mikan, or other key members of the executive management team, could significantly delay or prevent the achievement of our strategic objectives.

Global economic conditions and economic uncertainty or downturns, particularly as it impacts particular industries, could materially and adversely affect our business and operating results.

In recent years, our business has been and may continue to be affected by various factors and events that are beyond our control. The United States has experienced economic downturns and market volatility, and domestic and worldwide economic conditions remain uncertain. It may be extremely difficult for us, our Care Partners and our other key constituents to accurately plan future business activities and execute on our business objectives as a result of economic uncertainty and other macroeconomic factors. In addition, global economic conditions and economic uncertainty may cause our consumers to slow spending on our health plans or Care Partners to cease partnering with our business, which could ultimately harm our business. Furthermore, during uncertain economic times our consumers may face challenges or delays in obtaining access to funds used to make monthly premium payments, which could result in an impairment of their ability to make timely payments to us. In addition, our business relies on third parties, and we are susceptible to risks related to the potential financial instability of such third parties, including vendors that provide services to us or to whom we delegate certain functions. If these third-party vendors cease to do business as a result of broader economic conditions or if they become unable to provide us with the level of service we expect, we may not be able to find an alternative service provider in a timely manner, or on acceptable financial terms, which could impact our ability to meet the expectations and needs of our consumers.

We cannot predict the timing, severity or duration of any economic slowdown or the strength or speed of any subsequent recovery generally. If the conditions in the general economy and the markets in which we operate worsen from present levels, our business, financial condition and results of operations could be materially adversely affected.

We compete for physicians and other healthcare personnel for our NeueHealth business, and shortages of qualified personnel or other factors could increase our labor costs and adversely affect our revenue, profitability and cash flows.

Our NeueHealth business is dependent on the efforts, abilities and experience of employed and contracted physicians, nurse practitioners, registered nurses and other medical professionals. We compete with other healthcare providers, hospitals, clinics, networks and other facilities, in attracting physicians, nurses and medical staff required to support our business. Recruiting and retaining qualified management and support personnel responsible for the daily operations of our business is vital to the continued growth and success of our business, as well as our profitability. In some markets in which we operate, the lack of availability of clinical personnel, such as nurses and mental health professionals, has become a significant operating

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issue facing our business and all healthcare providers. As a result of this competition, we may need to continue to enhance wages and benefits to recruit and retain qualified personnel or to contract for more expensive temporary personnel. We may not be able to attract new physicians and clinical personnel to replace the services of terminating personnel or to service our growing membership.

We may not be able to raise rates or to grow our business to offset increased labor costs. Because a significant percentage of our revenue consists of fixed, prospective payments, our ability to pass along increased labor costs is limited.

We have employment contracts with physicians and other health professionals in Florida and anticipate growing into other geographies. Some of these contracts include provisions preventing these physicians and other health professionals from competing with us both during and after the term of our contract with them. The law governing non-compete agreements and other forms of restrictive covenants varies from state to state. A relatively recent law in Florida, and other states’ laws, may prohibit us from using non-competition covenants with our professional staff particularly in rural locations or in specialty practice areas. Some states are reluctant to strictly enforce non-compete agreements and restrictive covenants applicable to physicians and other healthcare professionals. There can be no assurance that our non-compete agreements related to physicians and other health professionals will be found enforceable if challenged in certain states. In such event, we would be unable to prevent physicians and other health professionals formerly employed by us from competing with us, potentially resulting in the loss of some of our patients and other health professionals.

Our health plan products are subject to risk adjustment programs, which if not managed properly can result in lost revenue, which could adversely impact our financial results and cash flows.

The IFP, MA and Small Group markets we serve employ risk adjustment programs that impact the revenue we recognize for our enrolled membership. These risk adjustment programs are designed to compensate us for the level of risk we take in providing healthcare services to our overall consumer population. In order to be reimbursed by government payors at a level commensurate with our consumer population risk, we must ensure that our Care Partners are identifying and properly inputting data to code all chronic and severe diagnoses to create an accurate health profile for each consumer. If our Care Partners do not accurately record this consumer data, including our consumers’ “risk scores”, we may not be able to accurately estimate our revenue and medical costs. If the data on our consumer population overstates the health risk of our consumer population, we may be obligated to return funds we have received to government payors. Conversely, if we understate the health risk of our consumer population, we will not receive funds from government payors that we would otherwise be entitled to receive. As a result of the variability of certain factors that go into the development of the risk adjustment we recognize, such as risk scores and other market-level factors where applicable, the actual amount of revenue could be materially more or less than our estimates. Consequently, our estimate of our health plans’ risk scores for any period, and any resulting change in our accrual of revenue related thereto, could have a material adverse effect on our results of operations, financial condition, and cash flows. The data provided to CMS to determine risk scores is subject to audit by CMS even several years after the annual settlements occur. If the risk adjustment data we submit is found to incorrectly overstate the health risk of our consumers, we may be required to refund monies previously received by us and/or be subject to penalties or sanctions, including potential liability under the federal False Claims Act (“FCA”), which could be significant and would reduce our revenue in the year that repayment or settlement is required. We have had in the past to take reserves against our premium revenue because of our difficulty to accurately estimate risk adjustment in our business. Furthermore, if the data we provide to CMS incorrectly understates the health risk of our consumers, we might be underpaid for the care that we must provide to our consumers, which could have a negative impact on our results of operations and financial condition.

It is possible that claims associated with consumers with higher RAF scores could be subject to more scrutiny in such an audit and that the findings of an audit could result in future adjustments to premiums or in adjustments to the payments made by CMS to us. CMS may also assess penalties for inaccurate or unsupportable RAF scores provided by us or our Care Partners. In addition, we could be liable for penalties to the government under the FCA that range from $5,500 to $11,000 (adjusted for inflation) for each false claim, plus up to three times the amount of damages caused by each false claim, which can be as much as the

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amounts received directly or indirectly from the government for each such false claim. On June 19, 2020, the Department of Justice announced a final rule regarding adjustments to FCA penalties, under which the per claim range increases to a range from $11,665 to $23,331 per claim, so long as the underlying conduct occurred after November 2, 2015. Because CMS conducts its audits at random, there can be no assurance that we will not be randomly selected or targeted for review by CMS or that the outcome of such a review will not result in a material adjustment in our revenue and profitability, even if the information we submitted to CMS is accurate and supportable. Substantial changes to the risk adjustment mechanism, including changes that result from enforcement or audit actions, could materially affect our reimbursement.

Our business may require additional capital, and this capital might not be available on acceptable terms, if at all. If capital is not available to us, our business and financial condition may be impaired.

We have invested heavily in the growth of our business. We intend to make additional investments to support our business growth and may require additional capital to respond to business needs, requirements and opportunities, including to develop and enhance new and existing products and services, enter new markets, further develop our infrastructure, and comply with any statutory capital and risk-based capital requirements as we continue to grow our enrollment of plan consumers. In addition, we intend to continue making strategic acquisitions as the opportunities arise, some of which may be material to our operations. Accordingly, we may make future commitments of capital resources and may need to engage in additional equity or debt financings to secure additional funds. Whether we issue debt or equity securities will, in part, depend on contractual, legal and other restrictions that may limit our ability to raise additional capital. For example, the Credit Agreement contains, and any agreements governing our future indebtedness could contain, restrictive covenants relating to our financial and operational matters, including covenants that limit the amount of debt we may incur. In addition, we may not be able to obtain additional or sufficient financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited or impaired.

Upon completion of this offering, our executive officers, directors and holders of 5% or more of our common stock will collectively beneficially own approximately    % of the outstanding shares of our common stock and continue to have substantial control over us, which may limit your ability to influence the outcome of important transactions.

Upon completion of this offering, our executive officers, directors and each of our stockholders who own 5% or more of our outstanding common stock and their affiliates, in the aggregate, will beneficially own approximately    % of the outstanding shares of our common stock, based on the number of shares outstanding as of March 31, 2021. As a result, these stockholders, if acting together, may continue to exercise significant influence over or control matters requiring approval by our stockholders, including the election and removal of directors and the approval of mergers, acquisitions or other extraordinary transactions. They may also have interests that conflict or differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentration of ownership may also have the effect of delaying, preventing or deterring a change in control of our company, and could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company or by discouraging others from making tender offers for our shares, which may ultimately affect the market price of our common stock.

Our level of indebtedness may reduce our financial flexibility, affect our ability to operate our business and divert cash flow from operations for debt service.

As of March 31, 2021, we had $200.0 million of outstanding borrowings under the Credit Agreement and $150.0 million of availability thereunder. We may incur substantial indebtedness under the Credit Agreement or otherwise in the future and, if we do so, the risks related to our level of indebtedness could increase. Our borrowings, current and future, will require interest payments and need to be repaid or refinanced, which could require us to divert funds identified for other purposes to debt service and could create additional cash demands or impair our liquidity position and add financial risk. Diverting funds identified for other purposes for debt service may adversely affect our business and growth prospects. If we cannot generate sufficient cash flow from operations to service our debt, we may need to refinance our

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debt, dispose of assets, reduce or delay expenditures or issue equity to obtain necessary funds. We do not know whether we would be able to take any of these actions on a timely basis, on terms satisfactory to us or at all.

Our level of indebtedness could affect our operations in several ways, including the following:

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it may be difficult for us to satisfy our obligations with respect to our debt;

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the covenants contained in the Credit Agreement or in future agreements governing our outstanding indebtedness may limit our ability to borrow additional funds, refinance debt, dispose of assets, and make certain investments;

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our debt covenants may also affect our flexibility in planning for, and reacting to, changes in the economy and in our industry;

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a high level of debt would increase our vulnerability to general adverse economic and industry conditions;

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a significant level of debt may place us at a competitive disadvantage compared to our competitors that are less leveraged and therefore may be able to take advantage of opportunities that our indebtedness would prevent us from pursuing; and

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a high level of debt may impair our ability to obtain additional financing in the future for working capital, capital expenditures, debt service requirements, acquisitions or other purposes.

In addition, borrowings under the Credit Agreement bear interest at variable rates based on prevailing LIBOR rates in the financial markets, and changes to those market rates affect both the amount of cash we pay for interest and our reported interest expense. Assuming the revolving credit facility was fully drawn, a 100 basis point increase to the applicable variable rate of interest would have increased the amount of interest by $3.5 million per annum. If we are unable to generate sufficient cash flows to pay the interest on our debt, future working capital, borrowings or equity financing may not be available to pay or refinance such debt. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital resources — Indebtedness.”

The Credit Agreement contains restrictions on our ability to operate our business and to pursue our business strategies, and our failure to comply with, cure breaches of, or obtain waivers for covenants could result in an acceleration of the due date of our indebtedness.

The Credit Agreement contains, and agreements governing future debt issuances may contain, covenants that restrict our ability to finance future operations or capital needs, to respond to changing business and economic conditions or to engage in other transactions or business activities that may be important to our growth strategy or otherwise important to us. The Credit Agreement restricts, subject to certain exceptions, among other things, our ability and the ability of our subsidiaries to:

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incur additional indebtedness and guarantee indebtedness;

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create or incur liens;

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make investments and loans;

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engage in mergers, consolidations or sales of all or substantially all of our assets;

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pay dividends or make other distributions, in respect of, or repurchase or redeem, capital stock;

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prepay, redeem or repurchase certain debt;

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engage in certain transactions with affiliates;

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sell or otherwise dispose of assets; and

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amend, modify, waive or supplement certain subordinated indebtedness to the extent such amendments would be materially adverse to lenders.

In addition, any future financing arrangements entered into by us or any of our subsidiaries may contain similar restrictions. As a result of these covenants and restrictions, through our subsidiaries we are

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and will be limited in how we conduct our business, and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. In addition, we are required to maintain specified financial ratios and satisfy other financial condition tests. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Indebtedness.” The terms of any future indebtedness we or our subsidiaries may incur could include more restrictive covenants. We cannot assure you that we will be able to maintain compliance with these covenants in the future and, if we fail to do so, that we will be able to obtain waivers from the lenders and/or amend the covenants.

Our or our subsidiaries’ failure to comply with the restrictive covenants described above as well as others contained in our or our subsidiaries’ future debt instruments from time to time could result in an event of default, which, if not cured or waived, could require us to repay these borrowings before their maturity. If we are forced to refinance these borrowings on less favorable terms or cannot refinance these borrowings, our results of operations and financial condition could be adversely affected. If we were unable to repay or otherwise refinance these borrowings, the lenders under the Credit Agreement could proceed against the collateral granted to them to secure such indebtedness, which could force us into bankruptcy or liquidation. Any acceleration of amounts due under the Credit Agreement, or the exercise by the applicable lenders or agent of their rights under the related security documents, would likely have a material adverse effect on our business.

Risks Related to Legal Proceedings and Governmental Regulations

Modifications or changes to the U.S. health insurance markets, including as a result of legislation, could adversely affect our business and operating results.

Our business operates in the evolving public and private sectors of the U.S. health insurance system, and our future financial performance will depend in part on growth in the market for private health insurance, as well as our ability to adapt to regulatory developments and the development of new state and federal government programs. Such modifications and changes could reduce demand and adversely affect our business. For example, some elected officials have recently introduced proposals to expand the Medicare program, which range from the creation of a new single-payor national health insurance program for all residents to less overarching proposals, including lowering the age of eligibility for the Medicare program, expanding Medicare to a larger population and creating a new public health insurance option that could compete with private insurers. In addition, in states such as New York and California, legislators have regularly introduced proposals to establish a single-payor or government-run healthcare system at the state level. Federally, the Biden administration and Congress may otherwise propose changes to elements of the ACA. In December 2019, a federal appeals court held that the individual mandate portion of the ACA was unconstitutional and left open the question of whether the remaining provisions of the ACA would be valid without the individual mandate. On November 10, 2020, the U.S. Supreme Court heard oral arguments in this matter, and is in the process of reviewing this case. A decision is expected later in 2021. On January 28, 2021, in response to an Executive Order issued by President Biden, HHS announced a special enrollment period from February 15, 2021 through May 15, 2021, for uninsured and under-insured individuals and families to seek coverage through the Health Insurance Marketplaces. On March 23, 2021, HHS announced the extension of this enrollment period to August 15, 2021. President Biden’s Executive Order also directed federal agencies to examine agency actions to determine whether they are consistent with the Biden administration’s commitment to strengthen the ACA, and to relatedly begin rulemaking to suspend, modify or rescind inconsistent actions. Areas of focus include policies or practices that may reduce affordability of coverage, present unnecessary barriers to coverage, or undermine protections for people with preexisting conditions. We continue to evaluate the effect that the ACA and its possible modifications, repeal and replacement has on our business.

As the regulatory and legislative environments within which we operate are evolving, we may not be able to ensure timely compliance with such changes due to limited resources. Furthermore, we may face challenges prioritizing the allocation of resources between implementing systems responsive to new legislative or regulatory requirements, focusing on growth-related operations and implementing management systems and controls related to becoming a public company. If our operations are found to be in violation of any of

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the federal and state regulations that apply to us, we may be subject to penalties that curtail our operations, which could adversely affect our ability to operate our business and our results of operations.

The ongoing challenges and changes to the ACA and related laws and regulations could adversely affect our business, cash flows, financial condition and results of operations.

Approximately 97.1% of our revenue for the year ended December 31, 2020 was derived from sales of health plans subject to regulation under the ACA. Consequently, changes to, or repeal of, portions or the entirety of the ACA, as well as judicial interpretations in response to legal and other constitutional challenges, could materially and adversely affect our business and financial position, results of operations, or cash flows. Even if the ACA is not amended or repealed, elected and appointed officials could continue to propose changes impacting the ACA, which could materially and adversely affect our business, results of operations, and financial conditions.

There have been significant efforts to repeal, or limit implementation of, certain provisions of the ACA. Such initiatives include the reduction to $0 of the financial penalty associated with not complying with the ACA’s individual mandate effective in 2019, as well as easing of the regulatory restrictions placed on short-term limited duration insurance plans, some or all of which may provide fewer benefits than the traditional ACA-mandated insurance benefits. In December 2018, a federal district court held that the ACA’s individual mandate requirement was essential to the ACA, such that the ACA could not remain in place without it. On appeal, the Fifth Circuit U.S. Court of Appeals held that the individual mandate is unconstitutional, and remanded the case to the lower court to reconsider its earlier invalidation of the full ACA. The case was further appealed to the Supreme Court in January 2020, and the Supreme Court heard oral argument with respect thereto on November 10, 2020. Its forthcoming decision, which is expected by mid-2021, could result in a final determination with respect to the constitutionality of the ACA, or it could otherwise remand the case to the lower courts for continued review. While the ACA remains operative until litigation of the matter is completed, the Biden administration and Congress have implemented changes to the ACA in the interim and may advance additional changes to the ACA in the future. We are unable to predict how these events will ultimately be resolved and what the potential impact may be on our business, products, services and relationships with our consumers and Care Partners. The legal challenges regarding the ACA, including a federal district court decision invalidating the ACA in its entirety, which judgment has been stayed pending appeal, continue to contribute to this uncertainty. Further regulations and modifications to the ACA at the federal or state level, including any judicial invalidation of the ACA, could have significant effects on our business and future operations, some of which may adversely affect our results of operations and financial condition.

We rely on the Health Insurance Marketplaces, which were established by the ACA, to promote our IFP products, to promote some of our Small Group products, and to increase membership. The perceived uncertainty and possible changes in the Health Insurance Marketplaces could result in reduced participation from individuals seeking insurance coverage and possible non-renewal of existing policies and could materially and adversely impact our business, financial condition, and results of operations.

The ACA also established significant subsidies to support the purchase of health insurance by individuals, in the form of APTCs, available through Health Insurance Marketplaces. The American Rescue Plan Act of 2021 (“ARPA”), which was enacted March 11, 2021, made several changes to premium tax credits and APTCs, including temporarily expanded eligibility for premium tax credits for unemployment compensation beneficiaries who receive such compensation in 2021 and for households with annual incomes above 400% of the federal poverty level; temporary increases in premium tax credit amounts; and a temporary suspension of the requirement to repay excess payments of 2020 APTCs. APRA’s changes will likely result in more IFP premium funded via APTCs and could have significant effects on our business and future operations, which could affect our results of operations and financial condition. There have been efforts to eliminate cost sharing subsidies and/or refusal to fund such subsidies. For the year ended December 31, 2020, approximately 57.5% of the premium revenue from our Bright HealthCare consumers was subsidized by such subsidies. Although individuals would still be able to purchase coverage, possibly through marketplaces that continue to be maintained by certain states or by purchasing coverage directly from an insurer, the elimination of subsidies would make such coverage unaffordable to some individuals and could thereby reduce overall membership and impact marketplace enrollment.

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Our MA plans, contracts with third-party MA plans and reimbursement from fee-for-service Medicare are subject to changes to the Medicare program.

We service approximately 108,000 MA consumers, primarily in California. The reimbursement rates for our MA plans and contracts with third-party MA plans are based on published Medicare rates. In addition, our managed and affiliated medical groups receive fee-for-service Medicare reimbursements. As a result, government funding levels for the MA program, as well as the policies and decisions of the federal government regarding the fee-for-service Medicare program have a substantial impact on our profitability and health plan consumer satisfaction. These governmental policies and decisions, which are not within our control, include:

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administrative or legislative changes to base rates or reimbursement policies and methodologies;

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reductions or restrictions in funding of programs;

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limits on the services or types of providers for which Medicare will provide reimbursement;

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expansion of benefits under Medicare without adequate funding;

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other changes in coverage;

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changes in methodology for patient assessment and/or determination of payment levels;

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the reduction or elimination of annual rate increases; and

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changes to timing of or delays in reimbursements.

Certain of these changes will affect the premiums or other revenue we receive with respect to our MA plans, the eligibility and enrollment of consumers in our MA plans, the services we provide to our MA plan consumers and the cost of such services to such consumers, as well as other costs relating to our participation in the Medicare program. Significant reductions or significant modifications of reimbursement policies and methodologies in the fee-for-service Medicare program could reduce the profitability of our managed and affiliated medical groups. We have no control over these changes, including when or how frequently they are made. These changes may be instituted by statutes, regulations, administrative or executive orders or judicial decisions. Budget pressures often lead the federal government to reduce or place limits on reimbursement rates under Medicare. Implementation of these and other types of measures could result in substantial reductions in our revenue and operating margins with respect to our MA plans and our NeueHealth business. The costs of compliance with any changes could be significant, and if we fail to meet implementation requirements, we could be exposed to fines and payment reductions.

In addition, CMS issues a final rule each year to establish the benchmark MA payment rates for the following calendar year. Any reduction to MA rates may have a material adverse effect on our business, results of operations, financial condition and cash flows. The final impact of the MA rates can vary from any estimate we may have, and may be exacerbated by the rapid growth of our MA membership. If we underestimate the impact of any change to the MA rates on our business, it could have a material adverse effect on our results of operations, financial condition and cash flows.

If we fail to comply with certain healthcare laws, including fraud and abuse laws, we could face substantial penalties and our business, results of operations and financial condition could be adversely affected.

Our business is highly regulated, and we are subject to broadly applicable federal and state fraud and abuse and other federal and state healthcare laws and regulations. These laws require significant compliance oversight, which can have the effect of constraining our businesses, financial arrangements and relationships through which we conduct our operations. Laws and regulations which particularly affect our business and operations, include the following:

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the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, offering, receiving or providing any remuneration (including any kickback, bribe or certain rebates), directly or indirectly, overtly or covertly, in cash or in kind, in return for, either the referral of an individual or the purchase, lease or order or arranging for or recommending the purchase, lease or order of any good, facility, item or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare. The federal

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Anti-Kickback Statute has been interpreted to apply to, among others, financial arrangements between entities that have the ability to refer and generate business that is subject to reimbursement under federal healthcare programs. There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution. The exceptions and safe harbors are drawn narrowly and practices that involve remuneration may be subject to scrutiny if they do not qualify for an exception or safe harbor. Our practices may not in all cases meet all of the criteria for protection under a statutory exception or regulatory safe harbor. A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it in order to have committed a violation, and a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA (described immediately below);

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the federal false claims laws, including the civil FCA, which, among other things, impose criminal and civil penalties against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment or approval that are false or fraudulent, knowingly making, using, or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making or causing to be made a false statement to avoid, decrease or conceal an obligation to pay money to the federal government. There has been increased government scrutiny and litigation involving Medicare plans under the federal FCA related to diagnosis coding and risk adjustment practices. While we believe that our risk adjustment practices and relationships with providers comply with applicable laws, we are and may be subject to audits, reviews and investigation of our practices and arrangements and the federal government might conclude that they violate the FCA, the Anti-Kickback Statute and/or other federal and state laws governing fraud and abuse. Further, the FCA can be enforced by private citizens through civil qui tam actions. A claim includes “any request or demand” for money or property presented to the U.S. government;

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Section 1877 of the Social Security Act (the “Stark Law”) provides that physicians, subject to certain exceptions, cannot refer Medicare or Medicaid patients to an entity providing “designated health services” in which such physician, or its immediate family member, has an interest or any compensation arrangement. Medical groups managed by and affiliated with our NeueHealth business provide one or more of these designated health services and as such are subject to the Stark Law. Those found in violation of the Stark Law are subject to denial of payment for services provided through an improper referral, civil monetary penalties and exclusion from the Medicare and Medicaid programs;

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the federal beneficiary inducement civil monetary laws, which generally prohibit giving something of value to an individual if the remuneration is likely to influence that beneficiary’s choice of a particular provider, supplier or practitioner for services covered by applicable federal healthcare programs. A violation of this statute includes fines or exclusion from federal healthcare programs;

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HIPAA, which created additional federal criminal statutes that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the control or custody of, any healthcare benefit program; willingly obstructing a criminal investigation of a healthcare offense; and knowingly and willfully falsifying, concealing or covering up by trick, scheme or device, a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Like the federal Anti-Kickback Statute, a person or entity need not have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; and

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analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may be more restrictive and may apply to healthcare items or services reimbursed by non-governmental third-party payors, including private insurers or by the patients themselves.

Ensuring business arrangements with third parties comply with applicable healthcare laws and regulations is a costly endeavor. If our operations are found to be in violation of any of the federal and state healthcare laws described above or any other current or future governmental regulations that apply to us, we may be subject to penalties, including without limitation, civil, criminal and/or administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion from participation in government

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programs, such as Medicare, injunctions, private “qui tam” actions brought by individual whistleblowers in the name of the government, or refusal to allow us to enter into government contracts, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings, additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

Our use and disclosure of PII and PHI is subject to federal and state privacy and security regulations, and our failure to comply with those regulations or to adequately secure the information we hold could result in significant liability or reputational harm and, in turn, a material adverse effect on our client base and revenue.

We are subject to numerous state and federal laws and regulations that govern the Processing, security, retention, destruction, confidentiality, availability and integrity of PII, including PHI. These laws and regulations include HIPAA and the California Consumer Privacy Act of 2018 (the “CCPA”). HIPAA establishes a set of basic national privacy and security standards for the protection of PHI by health plans, healthcare clearinghouses and certain healthcare providers, referred to as covered entities, which includes us, and the business associates with whom such covered entities contract for services, which also includes us.

HIPAA requires healthcare plans and providers — and we are both — to develop and maintain policies and procedures with respect to PHI that is used or disclosed, including the adoption of administrative, physical and technical safeguards to protect such information. HIPAA also implemented the use of standard transaction code sets and standard identifiers that covered entities must use when submitting or receiving certain electronic healthcare transactions, including activities associated with the billing and collection of healthcare claims.

Penalties for failure to comply with a requirement of HIPAA vary significantly depending on the nature of violation and could include civil monetary or criminal penalties. HIPAA also authorizes state attorneys general to file suit on behalf of their residents. Courts are able to award damages, costs and attorneys’ fees related to violations of HIPAA in such cases. While HIPAA does not create a private right of action allowing individuals to sue us in civil court for violations of HIPAA, its standards have been used as the basis for duty of care in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.

In addition, HIPAA mandates that the Secretary of HHS conduct periodic compliance audits of HIPAA-covered entities and business associates for compliance with HIPAA. It also tasks HHS with establishing a methodology whereby harmed individuals who were the victims of breaches of unsecured PHI may receive a percentage of the fine paid by the violator under the federal Civil Monetary Penalty Statute.

HIPAA further requires that individuals be notified of any unauthorized acquisition, access, use or disclosure of their unsecured PHI that compromises the privacy or security of such information, with certain exceptions related to unintentional or inadvertent use or disclosure by employees or authorized individuals. HIPAA specifies that such notifications must be made “without unreasonable delay and in no case later than 60 calendar days after discovery of the breach”, though states and contractual obligations may require us to provide notice within shorter timeframes, such as five days or less. If a breach of unsecured PHI affects 500 individuals or more, it must be reported to HHS without unreasonable delay, and HHS will post the name of the breaching entity on its public web site. Breaches affecting 500 individuals or more in the same state or jurisdiction must also be reported to the local media. If a breach involves fewer than 500 individuals, the covered entity must record it in a log and notify HHS at least annually.

Numerous other federal and state laws protect the Processing, security, retention, destruction, confidentiality, availability and integrity of, and may otherwise limit and restrict how we can use, PII, including PHI. These laws in many cases are more restrictive than, and may not be preempted by, the HIPAA rules and may be subject to varying interpretations by courts and government agencies, creating complex compliance issues for us and our Care Partners and business associates and potentially exposing us to additional expense, adverse publicity and liability. For example, the CCPA which came into effect on January 1, 2020 requires covered businesses that collect information on California residents to inform consumers about their data collection, use and sharing practices, to allow consumers to opt out of sales of their data to third parties, and to exercise certain individual rights regarding their personal information. The CCPA also

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provides a cause of action for some data breaches affecting certain types of personal information. Penalties for noncompliance with the CCPA are up to $2,500 per violation, or up to $7,500 per willful violation. Regulations from the California attorney general’s office have been available for less than one year, and uncertainty remains regarding enforcement of the CCPA. It also remains unclear how much private litigation will ensue under the data breach private right of action. Additionally, a new California ballot initiative, the California Privacy Rights Act, (“CPRA”) was approved by the electorate in November 2020, and the law will come into effect January 1, 2023, and apply to data collected starting January 1, 2022. Passage of the CPRA extended certain exemptions under the CCPA relating to employee data until January 1, 2023. CPRA imposes additional data protection obligations on companies doing business in California, including additional consumer rights with respect to their data. It also creates a new California data protection agency specifically tasked with enforcing the law, which will likely result in increased regulatory scrutiny of California businesses in the areas of data protection and security. Similar laws have been proposed or enacted in other states and at the federal level, and if passed, such laws may have potentially conflicting requirements that would make compliance challenging. Such changes may also require us to modify our products and features and may limit our ability to develop new products and features that make use of the data that we collect about our consumers.

New health information standards, whether implemented pursuant to HIPAA, state or federal legislative action or otherwise, could have a significant effect on the manner in which we must handle healthcare-related data, and the cost of complying with standards could be significant. If we do not comply with existing or new laws and regulations related to PHI, we could be subject to criminal or civil sanctions.

We also publish privacy statements to our consumers that describe how we handle and protect PII. Any failure or perceived failure by us to maintain posted privacy policies which are accurate, comprehensive and fully implemented, and any violation or perceived violation of our privacy-, data protection- or information security-related obligations to providers, consumers or other third parties could result in claims of deceptive practices brought against our Company, which could lead to significant liabilities and consequences, including, without limitation, governmental investigations or enforcement actions, costs of responding to investigations, defending against litigation, settling claims, complying with resolution, monitoring or other agreements, civil penalties, and complying with regulatory or court orders. Such liabilities and consequences could have material impacts on our revenue and operations.

Furthermore, the Federal Trade Commission and many state attorneys general continue to enforce federal and state consumer protection laws against companies for online collection, use, dissemination and security practices that appear to be unfair or deceptive. There are a number of legislative proposals in the United States, at both the federal and state level, that could impose new obligations. We cannot yet determine the impact that future laws, regulations and standards may have on our business.

Laws regulating the corporate practice of medicine could restrict the manner in which we are permitted to conduct our business, and the failure to comply with such laws could subject us to penalties or require a restructuring of our business.

Some of the states in which we currently operate have laws that prohibit business entities from directly owning physician practices, practicing medicine, employing physicians to practice medicine, exercising control over medical decisions by physicians or engaging in certain arrangements, such as fee-splitting, with physicians (such activities are generally referred to as the “corporate practice of medicine”). In some states these prohibitions are expressly stated in a statute or regulation, while in other states the prohibition is a matter of judicial or regulatory interpretation. Other states in which we may operate in the future may also generally prohibit the corporate practice of medicine. While we endeavor to comply with state corporate practice of medicine laws and regulations as we interpret them, the laws and regulations in these areas are complex, changing, and often subject to varying interpretations. The interpretation and enforcement of these laws vary significantly from state to state. Penalties for violations of the corporate practice of medicine vary by state and may result in physicians being subject to disciplinary action, as well as to forfeiture of revenue from payors for services rendered. For business entities such as us, violations may also bring both civil and, in more extreme cases, criminal liability for engaging in medical practice without a license.

Some of the relevant laws, regulations and agency interpretations in states with corporate practice of medicine restrictions have been subject to limited judicial and regulatory interpretation, and state laws and

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regulations are subject to change. Regulatory authorities and other parties may assert that our employment of physicians in some states means that we are engaged in the prohibited corporate practice of medicine. If this were to occur, we could be subject to civil and/or criminal penalties, our employment of physicians by our medical groups and the health plans’ agreements with physicians could be found legally invalid and unenforceable (in whole or in part) or we could be required to restructure our arrangements with physicians, in each case in one or more of the jurisdictions in which we operate. Any of these outcomes may have a material adverse effect on our business, results of operations, financial condition, cash flows and reputation.

From time to time we are and may be subject to litigation, administrative proceedings or investigations, which could be costly to defend and could strain corporate resources or harm our business.

Legal proceedings and claims that may arise in the ordinary course of business, such as claims brought by consumers, Care Partners and other network participants, third-party payor clients, consultants and vendors in connection with commercial disputes or employment claims made by our current or former associates could strain corporate responses and involve significant costs. In addition, from time to time, we are and may be subject to government requests or investigations, including market conduct examinations and requests for information from, various government agencies, regulatory authorities, states attorneys generals and other governmental authorities. In particular, investigating and prosecuting healthcare and other insurance fraud, waste and abuse has been of special interest to government authorities in the United States. With respect to healthcare, fraud, waste and abuse prohibitions constitute a spectrum of activities, such as kickbacks for referral of consumers, fraudulent coding practices, billing for unnecessary medical and/or other covered services, improper marketing and violations of patient privacy rights and Stark Law violations. Regulators have recently increased their scrutiny of healthcare payors and providers under the federal FCA, in particular, and there have been a number of investigations, prosecutions, convictions and settlements in the healthcare industry.

Litigation and audits, investigations or reviews by governmental authorities or regulators or compliance with applicable laws may result in fines, substantial costs, and potentially, the loss of a license, and may divert management’s attention and strain corporate resources, which may substantially harm our business, financial condition and results of operations. While we maintain general liability, umbrella, managed care errors and omissions and employment practices liability coverage, as well as other insurance, we cannot provide assurance that such insurance will cover such claims or provide sufficient payments to cover all of the costs to resolve one or more such claims and will continue to be available on terms acceptable to us, if available at all. It is possible that resolution of some matters against us may result in our having to pay significant fines, judgments or settlements that exceed the limits of our insurance policies. Further, settlements with governmental authorities or regulators could contain additional compliance and reporting requirements as part of a consent decree or settlement agreement, such as corporate integrity agreements, which could significantly increase our regulatory and compliance costs. Additionally, governmental or regulatory authorities could review our payment practices, including as part of their market conduct oversight, which could result in fines or other enforcement actions if such authorities determine that our payment practices do not comply with state laws and regulations. Any of the foregoing could adversely affect our results of operations and financial condition, thereby harming our business.

We are subject to inspections, reviews, audits and investigations under federal and state government programs and contracts. The results of such audits could adversely and negatively affect our business, including our results of operations, liquidity, financial condition and reputation.

From time to time we are subject to various state and federal governmental inspections, reviews, audits and investigations to verify our financial and/or operational compliance with governmental rules and regulations governing the products and services we sell. Care Partners may also reserve the right to conduct audits of our health plan business and third-party payors and government clients of NeueHealth will also have the right to audit NeueHealth businesses. We also periodically conduct internal audits and reviews of our regulatory compliance. An adverse inspection, review, audit or investigation could result in:

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refunding amounts we have been paid pursuant to the Medicare programs or from payors;

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state or federal agencies imposing fines, penalties and other sanctions on us;

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temporary suspension of payment for new consumers to the facility or agency;

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decertification, debarment, suspension or exclusion from participation in the Medicare programs or one or more payor networks;

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self-disclosure of violations to applicable regulatory authorities;

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damage to our reputation;

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the revocation of an agency’s license; and

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loss of certain rights under, or termination of, our contracts with payors or Care Partners.

The DOJ and the OIG have continuously increased their scrutiny of healthcare payors, providers and Medicare Advantage insurers under the FCA in particular, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. We expect this trend to continue, particularly in light of the HHS’s December 4, 2020 announcement regarding the creation of a new False Claims Act Working Group aimed at enhancing HHS’s partnership with the DOJ to combat fraud and abuse. CMS and the OIG also periodically perform risk adjustment data validation (“RADV”) audits of selected Medicare Advantage health insurance plans to validate the coding practices of, and supporting documentation maintained by healthcare providers. Certain of our health plans may be selected for such audits, which could in the future result in retrospective adjustments to payments made to our health plans, fines, corrective action plans or other adverse action by CMS. On November 24, 2020, CMS issued a final rule that amends the RADV program by: (i) revising the methodology for error rate calculations beginning with the 2019 benefit year; and (ii) changing the way CMS applies RADV results to risk adjustment transfers beginning with the 2020 benefit year. According to CMS, these changes are designed to give insurers more stability and predictability with respect to the RADV program and promote fairness in how health insurers receive adjustments. However, the future impact of these changes remains unclear, and such changes may ultimately increase financial recoveries from the government’s ability to retrospectively claw back or recover funds from health insurers. In particular, there has recently been increased scrutiny by the government on health insurers’ diagnosis coding and risk adjustment practices, particularly for Medicare Advantage plans. In some proceedings involving Medicare Advantage plans, there have been allegations that certain financial arrangements with providers violate other laws governing fraud and abuse, such as the federal Anti-Kickback Statute.

We may in the future be required to refund amounts we have been paid and/or pay fines and penalties as a result of these inspections, reviews, audits and investigations. In addition, due to our reliance on third-party providers to perform many critical health plan operations, we may not be able to adequately perform pre-delegation audits of such providers’ capabilities and/or adequately monitor and oversee their day-to-day performance of our delegated functions to ensure compliance with applicable laws and regulations. The occurrence of adverse inspections, reviews, audits or investigations or any of the results noted above could have a material adverse effect on our business and operating results. Furthermore, the legal, document production and other costs associated with complying with these inspections, reviews, audits or investigations could be costly.

Our employees, independent contractors, partners, suppliers and other third parties may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could expose us to liability and hurt our reputation.

We are exposed to the risk that our employees, independent contractors, Care Partners, care providers, partners, suppliers and others may engage in fraudulent conduct or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates laws and regulations that we are subject to, including, without limitation, healthcare fraud and abuse laws or laws that require the true, complete and accurate reporting of financial information or data. Such activities could result in regulatory sanctions and cause serious harm to our reputation. It is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. In addition, we are subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred.

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If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and financial results, including, without limitation, the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, reputational harm, adverse impact on profitability and our operations, any of which could adversely affect our business, results of operations and financial condition.

Risks Related to our Financial Statements

Accounting for health plan benefits is complicated and subject to foreseen and unforeseen risks.

Accounting for health plan benefits is complicated and involves the use of estimates, assumptions and judgment. While we spend considerable time establishing our estimates and assumptions, we cannot be certain they will be correct. If our estimates are incorrect or if actual circumstances differ from our assumptions, our results of operations could be negatively affected.

Risk Adjustment Programs

The IFP, Small Group and Medicare Advantage markets employ risk adjustment programs that impact the revenue we recognize for our enrolled membership. Risk adjustment is a process that takes into account the underlying health status and health spending of the enrollees in an insurance plan. It is designed to compensate payors for the level of risk present in their respective members. For proper reimbursement by CMS or payment to CMS, we must ensure that our Care Providers are identifying and properly documenting chronic and severe diagnosis codes/conditions to create an accurate health profile for each consumer. If our Care Partners do not accurately record a consumer’s health conditions, we may not be able to accurately estimate the appropriate risk adjustment reimbursement or payment; our estimate could be materially inaccurate due to the many factors that comprise our estimate. Consequently, our estimate of our health plans’ risk scores for any period, and any resulting change in our accrual of revenue related thereto, could adversely affect our results of operations, financial condition, and cash flows. Additionally, the data provided to CMS to determine the risk score are subject to audit even several years after the annual settlements occur. If the risk adjustment data we submit are found to incorrectly overstate the health risk of our consumers, we may be required to refund funds previously received and may be subject to penalties or sanctions, including potential liability under the FCA which could be significant. If the data we provide to CMS incorrectly understates the health risk of our consumers, we might be underpaid for the care that we provide to our consumers, which could have a negative impact on our results of operations and financial condition.

Incurred But Not Reported Claims

Because of the elapsed time between when medical services are actually rendered by care providers and when we receive, process and pay a claim for those medical services, our medical care costs incorporate estimates of our incurred but not reported (“IBNR”) claims. We estimate our medical cost liabilities using actuarial methods based on historical submissions and payment data, cost trends, patient and product mix, seasonality, utilization of healthcare services, contracted service rates and other relevant factors. Actual conditions could differ from the assumptions we use. We continually review and modify our cost estimation methods and the resulting accruals and make adjustments when the criteria used to determine IBNR claims change and when actual claim costs are ultimately determined. As a result of the uncertainties stemming from the factors used in these assumptions, the actual amount of medical expense that we incur may be materially higher or lower than the amount of IBNR claims originally estimated. If our estimates of IBNR claims are inadequate in the future, our reported results of operations would be negatively impacted. Further, our inability to estimate IBNR claims accurately may also affect our ability to take timely corrective actions, further exacerbating the extent of any adverse effect on our results of operations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates.”

Failure to comply with requirements to design, implement and maintain effective internal controls could adversely affect our stock price. We have identified a material weakness in our internal control over financial reporting.

As a privately-held company, we were not required to evaluate our internal control over financial reporting in a manner that meets the standards applicable to publicly traded companies required by

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Section 404(a) of the SOX (“Section 404”). As a public company, we will have significant requirements for enhanced financial reporting and internal controls. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. If we are unable to establish or maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial statements and harm our results of operations. In addition, we will be required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting in the second annual report following the completion of this offering. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. Testing and maintaining internal controls may divert our management’s attention from other matters that are important to our business. Our independent registered public accounting firm will be required to issue an attestation report on effectiveness of our internal controls following the completion of this offering.

In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the SOX for compliance with the requirements of Section 404. In addition, we may encounter problems or delays in completing the remediation of any deficiencies identified by our independent registered public accounting firm in connection with the issuance of their attestation report. For the year ended December 31, 2020, we identified a material weakness in Brand New Day’s internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. Areas of concern include lack of documentation or reconciliation controls supporting key account balances, and limited Brand New Day resources and competencies dedicated to performing the appropriate level of diligence around complex accounting and estimated balances.

We are currently undertaking and otherwise evaluating a number of steps to enhance our internal control over financial reporting and addressing the material weakness with respect to Brand New Day, including uplifting the accounting leadership and resources dedicated to that business, hiring additional personnel, further integrating Brand New Day’s accounts into Bright Health’s ERP system, and providing more direct monitoring and oversight over Brand New Day’s accounting and financial reporting processes. We cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the control deficiencies that led to such material weakness or that they will prevent or avoid potential future material weaknesses. In addition, neither our management nor an independent registered public accounting firm has performed an evaluation of our internal control over financial reporting in accordance with the provisions of the SOX because no such evaluation has been required. Had we or our independent registered public accounting firm performed an evaluation of our internal control over financial reporting in accordance with the provisions of the SOX, additional material weaknesses may have been identified. As a public company, we will be required in future years to document and assess the effectiveness of our system of internal control over financial reporting to satisfy the requirements of the SOX.

If we fail to effectively remediate the material weakness in our internal control over financial reporting, if we identify future material weaknesses in our internal control over financial reporting or if we are unable to comply with the demands that will be placed upon us as a public company, including the requirements of Section 404 of the SOX, in a timely manner, we may be unable to accurately report our financial results, or report them within the time frames required by the SEC. Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that could be deemed to be material weaknesses, and could result in a material misstatement of our annual or quarterly consolidated financial statements or disclosures that may not be prevented or detected. We may not be able to conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 or our independent registered public

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accounting firm may not issue an unqualified opinion. If either we are unable to conclude that we have effective internal controls over financial reporting or our independent registered public accounting firm is unable to provide us with an unqualified opinion, investors could lose confidence in our reported financial information, which could have a material adverse effect on the trading price of our common stock.

Our ability to use our NOLs and research and development tax credit carryforwards to offset future taxable income may be subject to certain limitations.

As of December 31, 2020, we had outstanding NOLs of approximately $483.1 million, which are available to reduce future taxable income. Our carryforwards are subject to review and possible adjustment by the appropriate taxing authorities.

In addition, the carryforwards that may be utilized in a future period may be subject to limitations based upon changes in the ownership of our stock in a future period. In general, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and corresponding provisions of state law, a corporation that undergoes an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a three year period, is subject to limitations on its ability to utilize its pre-change NOLs, research and development tax credit carryforwards and disallowed interest expense carryforwards to offset future taxable income. We believe that no such ownership change has taken place with respect to Bright Health Group, Inc.; however, we are in the process of having a study performed to confirm this to be the case. We may experience ownership changes in the future as a result of this offering and/or subsequent changes in our stock ownership (which may be outside our control). As a result, if, and to the extent that, we earn net taxable income, our ability to use our pre-change NOLs, research and development tax credit carryforwards and disallowed interest expense carryforwards to offset such taxable income may be subject to limitations. In addition, under the Tax Cuts and Jobs Act tax reform legislation, the amount of post 2017 NOLs that were generated by non-insurance companies that we are permitted to utilize in any taxable year after 2020 is limited to 80% of our taxable income in such year, where taxable income is determined without regard to the NOL deduction itself. The NOLs that were generated by insurance companies are not subject to the 80% limitation, but are subject to a 20-year carryforward.

Our balance sheet includes significant amounts of goodwill and intangible assets. The impairment of a significant portion of these assets would negatively affect our financial condition or results of operations.

A significant portion of our total assets consists of goodwill and intangible assets. Goodwill and intangible assets, net, together accounted for approximately 19.2% of total assets on our consolidated balance sheet as of March 31, 2021. We evaluate goodwill and intangible assets for impairment annually in the fourth quarter or whenever events or circumstances make it more likely than not that impairment may have occurred. Under current accounting rules, any determination that impairment has occurred would require us to record an impairment charge, which would adversely affect our earnings. An impairment of a significant portion of goodwill or intangible assets could adversely affect our operating results and financial condition.

Risks Related to this Offering and Ownership of Our Common Stock

No market currently exists for our common stock, and an active, liquid trading market for our common stock may not develop, which may cause our common stock to trade at a discount from the initial public offering price and make it difficult for you to sell the common stock you purchase.

Prior to this offering, there has not been a public market for our common stock. We cannot predict the extent to which investor interest in us will lead to the development of a trading market on the NYSE or otherwise or how active and liquid that market may become. If an active and liquid trading market does not develop or continue, you may have difficulty selling any shares of our common stock that you purchase. The initial public offering price for the shares has been determined by negotiations between us and the underwriters and may not be indicative of prices that will prevail in the open market following this offering. The market price of our common stock may decline below the initial public offering price, and you may not be able to sell your shares of our common stock at or above the price you paid in this offering, or at all.

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You will incur immediate and substantial dilution in the net tangible book value of the shares you purchase in this offering.

The initial public offering price of our common stock is higher than the net tangible book value per share of outstanding common stock prior to completion of this offering. Based on our net tangible book value as of March 31, 2021, upon the issuance and sale of           shares of common stock by us at an assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the front cover of this prospectus, if you purchase our common stock in this offering, you will suffer immediate and substantial dilution of approximately $      per share in net tangible book value. Dilution is the amount by which the offering price paid by purchasers of our common stock in this offering will exceed the pro forma net tangible book value per share of our common stock upon completion of this offering. A total of           and           shares of common stock have been reserved for future issuance under the 2016 Equity Plan and 2021 Equity Plan, respectively. You may experience additional dilution upon future equity issuances or the exercise of stock options to purchase common stock granted to our directors, officers and employees under our current and future stock incentive plans, including the 2016 Equity Plan and 2021 Equity Plan. See “Dilution.”

Our stock price may change significantly following this offering, and you may not be able to resell shares of our common stock at or above the price you paid or at all, and you could lose all or part of your investment as a result.

The trading price of our common stock is likely to be volatile. The stock market has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies. We and the underwriters have negotiated to determine the initial public offering price. You may not be able to resell your shares at or above the initial public offering price.

Broad market and industry fluctuations may materially adversely affect the market price of our common stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock are low.

In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.

Our quarterly operating results fluctuate and may fall short of prior periods, our projections or the expectations of securities analysts or investors, which could materially adversely affect our stock price.

Our operating results have fluctuated from quarter to quarter at points in the past, and they may do so in the future. Therefore, results of any one fiscal quarter are not a reliable indication of results to be expected for any other fiscal quarter or for any year. If we fail to increase our results over prior periods, to achieve our projected results or to meet the expectations of securities analysts or investors, our stock price may decline, and the decrease in the stock price may be disproportionate to the shortfall in our financial performance. Results may be affected by various factors, including those described in these risk factors.

We currently do not intend to declare dividends on our common stock in the foreseeable future and, as a result, your returns on your investment may depend solely on the appreciation of our common stock.

We currently do not expect to declare any dividends on our common stock in the foreseeable future. Instead, we anticipate that all of our earnings in the foreseeable future will be used to provide working capital, to support our operations and to finance the growth and development of our business. Any determination to declare or pay dividends in the future will be at the discretion of our board of directors, subject to applicable laws and dependent upon a number of factors, including our earnings, capacity to pay dividends under the Credit Agreement and overall financial condition. In addition, our ability to pay dividends in the future depends in part on the earnings and distributions of funds from our health insurance subsidiaries. Applicable state insurance laws restrict the ability of such health insurance subsidiaries to declare stockholder dividends and require our health insurance subsidiaries to maintain specified levels of statutory capital and surplus. Accordingly, your only opportunity to achieve a return on your investment in

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our company may be if the market price of our common stock appreciates and you sell your shares at a profit. The market price for our common stock may never exceed, and may fall below, the price that you pay for such common stock.

If securities analysts do not publish research or reports about our business or if they downgrade our stock or our sector, our stock price and trading volume could decline.

The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business or industry. We do not control these analysts. If no securities analysts commence coverage of us, or if one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline. Furthermore, if one or more of the analysts who do cover us were to downgrade our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business or industry, the price of our stock could decline.

Our management may use the proceeds of this offering in ways with which you may disagree or that may not be profitable.

Although we anticipate using the net proceeds from the offering as described under “Use of Proceeds,” we will have broad discretion as to the application of the net proceeds and could use them for purposes other than those contemplated by this offering. At this time, we have not specifically identified a large single use for which we intend to use the net proceeds and, accordingly, we are not able to allocate the net proceeds for specific uses due to a variety of factors. You may not agree with the manner in which our management chooses to allocate and use the net proceeds. Our management may use the proceeds for corporate purposes that may not increase our profitability or otherwise result in the creation of stockholder value. In addition, pending our use of the proceeds, we may invest the proceeds primarily in instruments that do not produce significant income or that may lose value.

Future sales, or the perception of future sales, by us or our existing stockholders in the public market following this offering could cause the market price for our common stock to decline.

After this offering, the sale of shares of our common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

Upon consummation of this offering, we will have a total of           shares of common stock outstanding. All shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, except for any shares purchased by our affiliates, as that term is defined under Rule 144 of the Securities Act (“Rule 144”), including our directors, executive officers and other affiliates, which may be sold only in compliance with the limitations described in “Shares Eligible for Future Sale,” and any shares purchased in our directed share program which are subject to the lock-up agreements described in “Underwriting (Conflicts of Interest).”

The           shares held by our directors, officers, employees and affiliates immediately following the consummation of this offering (or           if the underwriters exercise in full their option to purchase additional shares) will represent approximately    % of our total outstanding shares of common stock following this offering (or    % if the underwriters exercise in full their option to purchase additional shares), based on the number of shares outstanding as of March 31, 2021. Such shares will be “restricted securities” within the meaning of Rule 144 and subject to certain restrictions on resale following the consummation of this offering. Restricted securities may be sold in the public market only if they are registered under the Securities Act or are sold pursuant to an exemption from registration such as Rule 144, as described in “Shares Eligible for Future Sale.”

In connection with this offering, we, our directors, executive officers and significant equityholders have each agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of our or their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date           days after the date of this

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prospectus, except with the prior written consent of J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC and Barclays Capital Inc., on behalf of the underwriters. All remaining holders of common stock or securities convertible into or exchangeable for shares of common stock outstanding immediately prior to the consummation of this offering are subject to a market standoff agreement with us that restricts certain transfers of such securities for at least           days after the date of this prospectus. See “Underwriting (Conflicts of Interest)” for a description of these lock-up agreements and market standoff agreements.

Upon the expiration of the contractual lock-up and market standoff agreements pertaining to this offering, an additional           shares will be eligible for sale in the public market (or           shares if the underwriters exercise in full their option to purchase additional shares), of which           are held by directors, executive officers and other affiliates and will be subject to volume, manner of sale and other limitations under Rule 144 (or           if the underwriters exercise in full their option to purchase additional shares), excluding, in each case, shares of restricted stock that are unvested as of the date of this prospectus. Following completion of this offering, shares covered by registration rights would represent approximately    % of our outstanding common stock (or    %, if the underwriters exercise in full their option to purchase additional shares). Registration of any of these outstanding shares of common stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement. See “Shares Eligible for Future Sale.”

As restrictions on resale end or if these stockholders exercise their registration rights, the market price of our shares of common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities.

In addition, the shares of our common stock reserved for future issuance under the 2016 Equity Plan and the 2021 Equity Plan will become eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements, lock-up agreements and Rule 144, as applicable. A total of           and           shares of common stock have been reserved for future issuance under the 2016 Equity Plan and the 2021 Equity Plan, respectively.

In the future, we may also issue our securities in connection with investments or acquisitions. The amount of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to you.

Provisions in our organizational documents could delay or prevent a change of control.

Certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws may have the effect of delaying or preventing a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider to be in its best interest, including attempts that might result in a premium over the market price of our common stock.

These provisions will provide for, among other things:

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the authorization of undesignated preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval; and

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advance notice requirements for stockholder proposals.

These provisions could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares. See “Description of Capital Stock.”

Our amended and restated certificate of incorporation will provide, subject to limited exceptions, that the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States of America will be the sole and exclusive forums for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our current and former directors, officers, employees or stockholders.

Our amended and restated certificate of incorporation will provide, subject to limited exceptions, that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of

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Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of our company, (ii) action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, employee or stockholder of our company to the Company or our stockholders, (iii) action asserting a claim against the Company or any current or former director, officer, employee or stockholder of the Company arising pursuant to any provision of the DGCL, or our amended and restated certificate of incorporation or our amended and restated bylaws (as either might be amended from time to time) or (iv) action asserting a claim governed by the internal affairs doctrine of the State of Delaware. Unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the federal securities laws of the United States of America. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation. Although our amended and restated certificate of incorporation will contain the exclusive forum provision described above, it is possible that a court could find that such a provision is inapplicable for a particular claim or action or that such provision is unenforceable. Our exclusive forum provision shall not relieve the Company of its duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders will not be deemed to have waived our compliance with these laws, rules and regulations.

These choice of forum provisions may limit a stockholder’s ability to bring a claim in a different judicial forum, including one that it may find favorable or convenient for disputes with us or any of our directors, officers or other employees which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provisions that will be contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.

Our board of directors will be authorized to issue and designate shares of our preferred stock in additional series without stockholder approval.

Our amended and restated certificate of incorporation will authorize our board of directors, without the approval of our stockholders, to issue                 shares of our preferred stock, subject to limitations prescribed by applicable law, rules and regulations and the provisions of our amended and restated certificate of incorporation, as shares of preferred stock in series, to establish from time to time the number of shares to be included in each such series and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof. The powers, preferences and rights of these additional series of preferred stock may be senior to or on parity with our common stock, which may reduce its value.

We will incur increased costs as a result of operating as a publicly traded company, and our management will be required to devote substantial time to new compliance initiatives.

As a publicly traded company, we will incur additional legal, accounting, and other expenses that we did not previously incur. Although we are currently unable to estimate these costs with any degree of certainty, they may be material in amount. In addition, the SOX, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the rules of the SEC, and the stock exchange on which our shares of common stock are listed, have imposed various requirements on public companies. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives as well as investor relations. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to incur additional costs to maintain the same or similar coverage.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements made in this prospectus 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 information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. These statements often include words such as “anticipate,” “expect,” “suggest,” “plan,” “believe,” “intend,” “project,” “forecast,” “estimates,” “targets,” “projections,” “should,” “could,” “would,” “may,” “might,” “will,” and other similar expressions. These forward-looking statements are contained throughout this prospectus, including the sections entitled “Prospectus Summary,” “Risk Factors,” “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.”

We base these forward-looking statements or projections on our current expectations, plans and assumptions, which we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances and at this time. As you read and consider this prospectus, you should understand that these statements are not guarantees of performance or results. The forward-looking statements and projections contained herein are subject to and involve risks, uncertainties and assumptions, and therefore you should not place undue reliance on these forward-looking statements or projections. Although we believe that these forward-looking statements and projections are based on reasonable assumptions at the time they are made, you should be aware that many factors could affect our actual financial results, and therefore actual results might differ materially from those expressed in the forward-looking statements and projections. Factors that might materially affect such forward-looking statements and projections include:

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a lack of acceptance or slow adoption of our model;

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our ability to retain existing consumers and expand consumer enrollment;

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our ability to contract with care providers and arrange for the provision of quality care;

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our ability to accurately estimate our medical expenses, effectively manage our costs and claims liabilities or appropriately price our products and charge premiums;

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the impact of the COVID-19 pandemic on our business and results of operations;

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the risks associated with our reliance on third-party providers to operate our business;

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the impact of modifications or changes to the U.S. health insurance markets;

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our ability to manage the growth of our business;

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our ability to operate, update or implement our technology platform and other information technology systems;

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our ability to retain key executives;

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our ability to successfully pursue strategic acquisitions and integrate acquired businesses;

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the occurrence of severe weather events, catastrophic health events, natural or man-made disasters, social and political conditions or civil unrest; and

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the other factors discussed under “Risk Factors.”

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 prospectus 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

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factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Before investing in our common stock, investors should be aware that the occurrence of the events described under the caption “Risk Factors” and elsewhere in this prospectus could have a material adverse effect on our business, results of operations and future financial performance.

You should not rely upon forward-looking statements as predictions of future events. 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 forward-looking statements will be achieved or occur. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus to conform these statements to actual results or to changes in our expectations.

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USE OF PROCEEDS

We estimate that we will receive net proceeds of approximately $      million from the sale of shares of our common stock in this offering, based on an assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the front cover of this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses. If the underwriters exercise their option to purchase additional shares in full, the net proceeds to us will be approximately $      million.

We intend to use the net proceeds of this offering to repay all outstanding borrowings under the Credit Agreement and the remainder for working capital and other general corporate purposes, including continued investments in the growth of our business. We may also use a portion of our net proceeds to acquire or invest in complementary businesses, products, services or technologies, though we do not have any agreements or commitments for any material acquisitions or investments at this time. Pending the use of the proceeds from this offering, we intend to invest the proceeds in a variety of capital preservation investments, including short-term, investment-grade and interest-bearing instruments.

We entered into the Credit Agreement on March 1, 2021 and subsequently borrowed thereunder for our acquisition of Central Health Plan of California, Inc. The Credit Agreement matures on February 28, 2022; however, we may elect to extend the maturity date to February 28, 2024 after an IPO provided the net proceeds received by the Company are greater than or equal to $1.0 billion. Borrowings under the Credit Agreement accrue interest at the Company’s election either at a rate of: the (i) the sum of (a) the greatest of (1) the Prime Rate (as defined in the Credit Agreement), (2) the rate of the Federal Reserve Bank of New York in effect plus 1/2 of 1.0% per annum, and (3) London interbank offered rate (“LIBOR”), plus 1% per annum, and (b) a margin of 4.0%; or (ii) the sum of (a) the LIBOR multiplied by a statutory reserve rate and (b) a margin of 5.0%. As of March 31, 2021, we had $200.0 million of outstanding borrowings under the Credit Agreement. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Indebtedness.”

A $1.00 increase (decrease) in the assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the front cover of this prospectus, would increase (decrease) the net proceeds to us from this offering by $      million, assuming the number of shares offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting the assumed underwriting discounts and commissions and estimated offering expenses payable by us. An increase (decrease) of 100,000 shares from the expected number of shares to be sold by us in this offering, assuming no change in the assumed initial public offering price per share, which is the midpoint of the price range set forth on the front cover of this prospectus, would increase (decrease) our net proceeds from this offering by $      million.

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DIVIDEND POLICY

We currently do not expect to declare any dividends on our common stock in the foreseeable future. Instead, we anticipate that all of our earnings in the foreseeable future will be used to provide working capital, to support our operations and to finance the growth and development of our business. Any determination to declare dividends in the future will be at the discretion of our board of directors, subject to applicable laws, and will be dependent on a number of factors, including our earnings, capital requirements and overall financial condition. If we elect to pay dividends in the future, we may reduce or discontinue entirely the payment of such dividends at any time.

Because we are a holding company, our ability to pay dividends depends on our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability to pay dividends as a result of the laws of their jurisdiction of organization, agreements of our subsidiaries or covenants under the Credit Agreement and any future outstanding indebtedness we or our subsidiaries incur. In addition, applicable insurance laws restrict the ability of our health insurance subsidiaries to declare stockholder dividends and require our health insurance subsidiaries to maintain specified levels of statutory capital and surplus. State insurance regulatory authorities that have jurisdiction over the payment of dividends by our health insurance subsidiaries may also adopt statutory provisions in the future that are more restrictive than those currently in effect. See “Business — Government Regulation — State Regulation of Insurance Companies.”

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CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of March 31, 2021:

•

on an actual basis;

•

on a pro forma basis, giving effect to (i) the automatic conversion of all outstanding shares of our preferred stock into an aggregate of 140,565,568 shares of common stock on a one-for-one basis immediately prior to the closing of this offering, except with respect to our 32,438,580 outstanding shares of Series A preferred stock which shall convert into an aggregate of 7,339,201 shares of common stock and (ii) the filing and effectiveness of our amended and restated certificate of incorporation in Delaware, which will occur immediately prior to the completion of this offering; and

•

on a pro forma as adjusted basis, further giving effect to (i) the sale by us of           shares of our common stock in this offering at an assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the front cover of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us, and (ii) the application of the net proceeds from this offering to repay all outstanding borrowings under the Credit Agreement, as described in “Use of Proceeds.”

You should read this table together with “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our unaudited condensed consolidated financial statements and the related notes appearing elsewhere in this prospectus.

​	As of March 31, 2021
​	Actual			Pro Forma		Pro Forma As Adjusted
​	(in thousands, except share and par value)
Cash and cash equivalents	​	$	975,933	​	$	​	$
Debt:	​	​	​	​	​	​	​
Total debt(1)	​	​	200,000	​	​	​	​
Redeemable equity:	​	​	​	​	​	​	​
Redeemable noncontrolling interests	​	​	40,217	​	​	​	​
Preferred stock, $0.0001 par value; 168,065,332 shares authorized, actual, 165,664,947 shares issued and outstanding, actual,          shares authorized, pro forma, no shares issued and outstanding, pro forma as adjusted	​	​	1,713,997	​	​	​	​
Stockholders’ equity (deficit):	​	​	​	​	​	​	​
Common stock, $0.0001 par value;      shares authorized, actual, shares issued and outstanding, actual,     shares authorized, pro forma,      shares issued and outstanding, pro forma,      shares issued and outstanding, pro forma as adjusted	​	​	5	​	​	​	​
Additional paid-in capital	​	​	16,913	​	​	​	​
Accumulated deficit	​	​	(538,109)	​	​	​	​
Accumulated other comprehensive income (loss)	​	​	1,384	​	​	​	​
Total stockholders’ equity (deficit)	​	$	(519,807)	​	$	​	$
Total capitalization	​	$	1,434,407	​	$	​	$

(1)

We have made no additional borrowings under the Credit Agreement since March 31, 2021.

A $1.00 increase or decrease in the assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the front cover of this prospectus, would increase or decrease,

60

as applicable, on a pro forma as adjusted basis, cash and cash equivalents, additional paid-in capital, total stockholders’ equity and total capitalization by $      million, assuming the number of shares offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting assumed underwriting discounts and commissions and estimated offering expenses payable by us and the application of the net proceeds thereof as described in “Use of Proceeds.” An increase or decrease of 100,000 shares in the number of shares sold in this offering by us would increase or decrease, as applicable, on a pro forma as adjusted basis, cash and cash equivalents, additional paid-in capital, total stockholders’ equity and total capitalization by $      million, assuming an initial public offering price of $      per share, which is the midpoint of the price range set forth on the front cover of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us and the application of the net proceeds thereof as described in “Use of Proceeds.”

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined statement of income (loss) for the year ended December 31, 2020 is presented to give effect to the Brand New Day Acquisition on April 30, 2020, as if such transaction had occurred on January 1, 2020. The unaudited condensed combined statement of income (loss) also reflects the automatic conversion of all outstanding shares of our preferred stock into an aggregate of 139,145,514 shares of common stock on a one-for-one basis immediately prior to the closing of this offering, except with respect to our 32,438,580 outstanding shares of Series A preferred stock which shall convert into an aggregate of 7,339,201 shares of common stock. The unaudited pro forma condensed combined statement of income (loss) has been prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma condensed combined statement of income (loss) does not give effect to the Acquisitions other than the Brand New Day Acquisition, as the other Acquisitions are not significant individually or in the aggregate.

The unaudited pro forma condensed combined statement of income (loss) was prepared based on the historical consolidated statements of income (loss) of Bright Health and the historical combined statements of income (loss) of Brand New Day, after giving effect to the Brand New Day Acquisition using the acquisition method of accounting, and after applying the assumptions, reclassifications and transaction accounting adjustments described in the accompanying notes. The unaudited pro forma condensed combined statement of income (loss) for the year ended December 31, 2020 combines the historical consolidated statements of income (loss) of Bright Health for the year ended December 31, 2020 and of Brand New Day for the period from January 1, 2020 through April 30, 2020 and assumes the Brand New Day Acquisition occurred on January 1, 2020. The Brand New Day Acquisition has been reflected in our historical audited consolidated balance sheet as of December 31, 2020 and therefore no unaudited pro forma condensed combined balance sheet has been presented herein.

The unaudited pro forma condensed combined statement of income (loss) is based on and should be read in conjunction with Bright Health’s and Brand New Day’s historical financial statements referenced below:

•

Bright Health’s consolidated financial statements and related notes thereto as of and for the year ended December 31, 2020, included elsewhere in this prospectus; and

•

Brand New Day’s unaudited combined financial statements and related notes thereto as of and for the 10 months ended April 30, 2020, included elsewhere in this prospectus, from which the four month period from January 1, 2020 through April 30, 2020 used in preparing the pro forma condensed combined statement of income (loss) is derived.

The pro forma adjustments reflected in the unaudited pro forma condensed combined statement of income (loss) are related to transaction accounting adjustments determined in accordance with Article 11 of Regulation S-X. Bright Health has elected not to present management’s adjustments and will only be presenting transaction accounting adjustments in the unaudited pro forma condensed combined statement of income (loss).

The unaudited pro forma condensed combined statement of income (loss) is presented for informational purposes only and should not be relied upon as being indicative of our results of operations that would have occurred had the Brand New Day Acquisition been consummated as of the dates indicated, nor is it meant to be indicative of future results of operations for any future period or as of any future date.

The unaudited pro forma condensed combined statement of income (loss) does not give effect to the potential impact of current financial conditions, or any anticipated revenue enhancements, cost savings, or operating synergies that may result from the Brand New Day Acquisition. Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed combined statement of income (loss).

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Unaudited Pro Forma Condensed Combined Statement of Income (Loss)
For the Year Ended December 31, 2020

(in thousands, except per share amounts)

​	Bright Health Historical		Brand New Day As Adjusted (Note 3)		Transaction Accounting Adjustments (Note 4)		Bright Health Pro Forma Combined
Revenue	​	$ 1,207,320	​	$ 196,163	​	​	​	$1,403,483
Operating costs:	​	​	​	​	​	​	​	​
Medical costs	​	1,047,300	​	186,425	​	​	​	1,233,725
Operating costs	​	409,334	​	23,416	​	(32)(a)	​	432,718
Depreciation and amortization	​	8,289	​	629	​	1,733(b)	​	10,651
Total operating costs	​	1,464,923	​	210,470	​	​	​	1,677,094
Operating loss	​	(257,603)	​	(14,307)	​	​	​	(273,611)
Interest expense, net	​	—	​	(565)	​	565(c)	​	—
Loss before income taxes	​	(257,603)	​	(14,872)	​	​	​	(273,611)
Income tax (benefit) expense	​	(9,161)	​	—	​	(d)	​	(9,161)
Net loss	​	$ (248,442)	​	$ (14,872)	​	​	​	$ (264,450)
Basic and diluted loss per share and pro forma loss per share attributable to common shareholders	​	$    (5.47)	​	​	​	​	​	$    (1.66)(e)
Weighted-average number of shares outstanding and pro forma weighted-average number of shares used to compute net loss per share attributable to common stockholders, basic and diluted	​	45,398	​	​	​	​	​	158,940

The accompanying notes are an integral part of this unaudited pro forma condensed combined statement of income (loss).

63

Bright Health Group, Inc.
Notes to Unaudited Pro Forma Condensed Combined Statement of Income (Loss)

NOTE 1.

DESCRIPTION OF THE BRAND NEW DAY ACQUISITION

On April 30, 2020 (the “Closing Date”), we acquired all of the outstanding shares of Brand New Day. Brand New Day is a leader in providing healthcare services in California and serves Medicare eligible seniors and special needs populations through their extensive network of PCPs and specialists. Brand New Day combines analytics and evidence-based clinical programs with aligned provider relationships to provide high quality, affordable care for complex and vulnerable populations. The initial consideration was $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, representing total consideration of $210.1 million, less $32.8 million of cash acquired. Transaction costs of $3.8 million incurred in connection with the Brand New Day Acquisition are included in operating costs in the Company’s historical condensed combined statement of income (loss). The unaudited pro forma condensed combined statement of income (loss) has been prepared to illustrate the pro forma effects of the Brand New Day Acquisition.

NOTE 2.

BASIS OF PRESENTATION

The unaudited pro forma condensed combined statement of income (loss) was prepared using the acquisition method of accounting in accordance with ASC 805, Business Combinations (“ASC 805”). The acquisition method of accounting requires use of the fair value concepts defined in ASC 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Fair value measurements can be highly subjective and it is possible the application of reasonable judgment could develop different assumptions resulting in a range of alternative estimates using the same facts and circumstances.

ASC 805 requires the determination of the accounting acquirer, the acquisition date, the fair value of assets and liabilities of the acquiree, and the measurement of goodwill. Bright Health has been identified as the acquirer for accounting purposes based on the facts and circumstances specific to the Brand New Day Acquisition. As a result, Bright Health has recorded the business combination in its financial statements and applied the acquisition method to account for the acquired assets and liabilities of Brand New Day. Applying the acquisition method includes recording the identifiable assets acquired and liabilities assumed at their fair values and recording goodwill for the excess of the consideration transferred over the aggregate fair value of the identifiable assets acquired and liabilities assumed. Goodwill is attributable to synergies from leveraging Brand New Day’s strong clinical model of care to drive growth in our Medicare Advantage business outside of California.

NOTE 3.

CONFORMING RECLASSIFICATIONS

During the preparation of the unaudited pro forma condensed combined statement of income (loss) for the year ended December 31, 2020, we reviewed the historical financial statements of Brand New Day to determine if differences in financial statement presentation required reclassification for the period presented. We identified certain reclassifications that were necessary to conform Brand New Day’s historical combined statement of income (loss) presentation to that of the Company. As a result, we made the following adjustments to align Brand New Day’s historical statement of income (loss) presentation to that of Bright Health:

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​	Brand New Day Four Months Ended Historical April 30, 2020		Adjustments to Conform Presentation		Brand New Day Four Months Ended April 30, 2020 As Adjusted
(in thousands)	​	​	​	​	​	​
Total revenue*	​	$ 196,163	​	$       —	​	$ 196,163
Operating costs:	​	​	​	​	​	​
Medical costs*	​	—	​	186,425(i)	​	186,425
Operating costs*	​	—	​	23,416 (ii)	​	23,416
Healthcare services	​	186,425	​	(186,425)(i)	​	—
Marketing, general and administrative expenses	​	16,740	​	(16,740)(ii)	​	—
Salaries and benefits	​	6,676	​	(6,676)(ii)	​	—
Depreciation and amortization*	​	629	​	—	​	629
Total operating costs	​	210,470	​	—	​	210,470
Operating income (loss)	​	(14,307)	​	—	​	(14,307)
Interest expense, net	​	(565)	​	—	​	(565)
Loss before income taxes*	​	(14,872)	​	—	​	(14,872)
Income tax (benefit) expense	​	—	​	—	​	—
Net loss	​	$ (14,872)	​	$       —	​	$ (14,872)

*

Denotes a financial statement line item on the historical Bright Health financial statements

(i)

To reclassify $186.4 million of expenses from the healthcare services line item in the Brand New Day combined statements of income (loss) to the medical costs line item to conform to the Company’s presentation.

(ii)

To reclassify $16.7 million from the marketing, general and administrative expenses and $6.7 million of salaries and benefits line items in the Brand New Day combined statements of income (loss) to the operating costs line item to conform to the Company’s presentation.

NOTE 4.

TRANSACTION ACCOUNTING ADJUSTMENTS

The pro forma condensed combined statement of income (loss) includes $3.8 million of transaction costs incurred in connection with the Brand New Day Acquisition that are not expected to recur. The following represent the transaction accounting adjustments used in preparation of the pro forma condensed combined statement of income (loss):

(a)

Adoption of Accounting Standards Update (ASU) 2016-02, Leases (ASC 842) — To reflect the adoption of ASC 842 as of January 1, 2020 in the adjusted Brand New Day combined statement of income (loss). The amount represents the difference between the operating lease expense recognized in the Brand New Day combined statements of income (loss) under ASC 840, Leases, and the operating lease expense recognized under ASC 842. This adjustment was made to align the accounting policies of Brand New Day as of the pro forma date of January 1, 2020 to the Company’s accounting policies.

(b)

Depreciation and amortization — To record the assumed increase in depreciation and amortization expense based on the estimates of fair value of Brand New Day’s acquired property, equipment, capitalized software and intangible assets. The assumed incremental depreciation and amortization expense is calculated as follows:

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​	Estimated Fair Value			Estimated Useful Life (in years)		Depreciation and Amortization Expense for the 4 Months Ended April 30, 2020
(in thousands)	​	​	​	​	​	​	​	​
Property, equipment and capitalized software	​	$	4,375	​	3.7	​	$	394
Member relationships	​	​	46,900	​	12	​	​	1,304
Trade name	​	​	25,600	​	15	​	​	569
Provider network	​	​	2,000	​	7	​	​	95
New depreciation and amortization expense	​	​	​	​	​	​	​	2,362
Eliminate historical Brand New Day depreciation and amortization expense	​	​	​	​	​	​	​	(629)
Pro forma depreciation and amortization adjustment	​	​	​	​	​	​	$	1,733

(c)

Interest expense — To reflect the repayment of Brand New Day’s notes payable balances as of January 1, 2020, in order to align the pro forma combined statement of income (loss) to the Company’s financing structure following the Brand New Day Acquisition.

(d)

Income tax (benefit) — Brand New Day had sufficient net operating losses with offsetting valuation allowances. As a result, the pro forma impact of the Brand New Day Acquisition to income taxes in the combined statements of income (loss) would be immaterial.

(e)

Pro forma net loss attributable to common shareholders — To reflect the assumed impact of the unaudited pro forma adjustments to net loss per share attributable to common shareholders, basic and diluted, and to give effect to the automatic conversion of all outstanding shares of the Company’s preferred stock into common stock using the if-converted method, as though the conversion had occurred as of the beginning of the period or the original date of issuance, if later. The following table provides a reconciliation of basic and diluted pro forma net loss per share for the year ended December 31, 2020 as if the conversion had occurred on January 1, 2020:

​	For the Year Ended December 31, 2020
(in thousands, except per share amounts)	​	​
Numerator:	​	​
Pro forma net loss attributable to common stockholders	​	$ (264,450)
Denominator:	​	​
Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted	​	45,398
Pro forma adjustment to reflect the assumed conversion of preferred stock	​	113,542
Pro forma weighted-average number of shares outstanding used to compute pro forma net loss per share, basic and diluted	​	158,940
Pro forma net loss per share, basic and diluted	​	$   (1.66)

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DILUTION

If you invest in our common stock in this offering, your ownership interest in us will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the net tangible book value per share of our common stock as adjusted to give effect to this offering and the automatic conversion of all of our outstanding preferred stock into 140,565,568 shares of common stock. Dilution results from the fact that the per share offering price of the common stock is substantially in excess of the book value per share attributable to the shares of common stock held by existing stockholders.

Our net tangible book deficit as of March 31, 2021 was approximately $      million or $      per share. We calculate net tangible book value per share by taking the amount of our total tangible assets, reduced by the amount of our total liabilities, and then dividing that amount by the total number of shares of common stock outstanding.

After giving effect to our sale of the shares in this offering at an assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the front cover of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us and after giving effect to the application of the net proceeds from this offering as described under “Use of Proceeds,” our net tangible book deficit as adjusted to give effect to this offering on March 31, 2021 and the automatic conversion of all of our outstanding preferred stock into 140,565,568 shares of common stock would have been $      , or $      per share. This amount represents an immediate increase in net tangible book value of $      per share to existing stockholders and an immediate dilution in net tangible book value of $      per share to new investors purchasing shares in this offering at the initial public offering price.

The following table illustrates this dilution on a per share basis:

Assumed initial public offering price per share				$
Net tangible book deficit per share as of March 31, 2021 before giving effect to this offering	​	$		​	​
Increase in net tangible book value per share attributable to new investors purchasing shares in this offering	​	​		​
Net tangible book deficit per share as adjusted to give effect to this offering and the automatic conversion of all of our outstanding preferred stock into      shares of common stock	​	​	​	​
Dilution per share to new investors in this offering	​	​	​	$	​

Dilution is determined by subtracting net tangible book value per share of common stock as adjusted to give effect to this offering and the automatic conversion of all of our outstanding preferred stock into 140,565,568 shares of common stock, from the initial public offering price per share of common stock.

The following table summarizes, on a pro forma basis as of March 31, 2021, as described above, the differences between the number of shares purchased from us, the total consideration paid to us, and the average price per share paid by existing stockholders and by new investors. As the table shows, new investors purchasing shares in this offering will pay an average price per share substantially higher than our existing stockholders paid. The table below is based on           shares of common stock outstanding immediately after the consummation of this offering and does not give effect to shares of common stock reserved for future issuance under the 2016 Equity Plan or the 2021 Equity Plan. A total of           shares of common stock and                 shares of common stock have been reserved for future issuance under the 2016 Equity Plan and the 2021 Equity Plan. The table below is based on an assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the front cover of this prospectus, for shares purchased in this offering, assumes the automatic conversion of all of our outstanding preferred stock into 140,565,568 shares of common stock and excludes underwriting discounts and commissions and estimated offering expenses payable by us:

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​	Shares Purchased				Total Consideration				Average Price Share
​	Number		Percent		Amount		Percent
​	(in millions)		​	​	(in millions)		​
Existing stockholders(1)	​	​	​	​	​	​	​	​	​
New investors	​		​		​		​		​
Total	​	​	​	100.0%	​	​	​	100.0%	​

(1)

Shares purchased by existing stockholders is determined as follows:

Shares of common stock issuable upon conversion of the preferred stock
Common shares issued and outstanding	​
Less: Common treasury shares	​
Total common shares purchased by existing stockholders	​	​

If the underwriters were to fully exercise the underwriters’ option to purchase           additional shares of our common stock from us, the percentage of shares of our common stock held by existing stockholders would be approximately    % of the aggregate number of shares of common stock outstanding after this offering, and the percentage of shares of our common stock held by new investors would be    % of the aggregate number of shares of common stock outstanding after this offering.

Assuming the number of shares offered by us, as set forth on the front cover of this prospectus, remains the same, excluding assumed underwriting discounts and estimated commissions and offering expenses payable by us, a $1.00 increase or decrease in the assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the front cover of this prospectus, would increase or decrease total consideration paid by new investors and total consideration paid by all stockholders by approximately $      million.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion summarizes the significant factors affecting our operating results, financial condition, liquidity, and cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with the consolidated financial statements and the related notes thereto all included elsewhere in this prospectus. The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity, and capital resources, and all other non-historical statements in this discussion are forward-looking statements and are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this prospectus, particularly in the sections entitled “Special Note Regarding Forward-Looking Statements” and “Risk Factors.”

As discussed under “Acquisitions,” we have acquired several businesses since December 31, 2019, including Brand New Day. As a result of these transactions, our operating results for periods prior to the closing of the transactions and our operating results of periods after the closing of the transactions may not be comparable. The following discussion and analysis should be read in conjunction with “Unaudited Pro Forma Condensed Combined Financial Information.”

Executive 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, reduce systemic waste, 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 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.

Bright Health Group consists of two 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 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.

NeueHealth. Our healthcare enablement and technology business, NeueHealth, is developing the next generation, integrated healthcare system. NeueHealth significantly reduces the friction and current lack of coordination between payors and providers to enable a truly consumer-centric healthcare experience. As of April 2021, NeueHealth works with over 200,000 care provider partners and operates 28 managed and affiliated risk-bearing clinics within its integrated care delivery system. Through those risk-bearing clinics, NeueHealth maintains nearly 75,000 unique patient relationships as of April 2021, approximately 30,000 of which are served through value-based arrangements, across multiple payors. In addition to our directly managed and affiliated clinics, NeueHealth manages care for an additional 33 clinics through its Value Services Organization.

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.

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•

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 clinics. Other NeueHealth customers include external payors and TPAs, affiliated providers and direct-to-government programs.

Bright HealthCare. Our healthcare financing and distribution business, Bright HealthCare, 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 approximately 623,000 consumers through its various offerings, serving consumers across multiple product lines in 14 states and 99 markets. We also participate in a number of specialized plans and recently began offering employer group plans.

Bright HealthCare’s customers include commercial health plans across 11 states, which serve approximately 515,000 individuals, as well as Medicare Advantage products in 11 states, which serve approximately 108,000 lives and generally focus on higher risk, special needs populations. We believe we are well-positioned to grow our Medicaid and Employer 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 challenges that we must successfully address to sustain 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 for the following year through an annual selling season, which includes the open enrollment period for IFP products and annual enrollment period for MA. 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 MCRs 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 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. See “Risk Factors — Accounting for health plan benefits is complicated and subject to foreseen and unforeseen risks.”

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

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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 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 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 shifts 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 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.

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.

​	Year Ended December 31,						Three Months Ended March 31,
​	2020		2019		2018		2021		2020
​	($ in thousands)
Bright HealthCare Consumers Served	​	​	​	​	​	​	​		​
Commercial(1)	​	145,459	​	54,782	​	22,114	​	481,958	​	152,263
Medicare Advantage	​	61,663	​	4,146	​	2,262	​	67,567	​	5,784
NeueHealth Patients	​	​	​	​	​	​	​		​
Value-based Care Patients	​	21,126	​	—	​	—	​	30,890	​	20,294
Net loss	​	$ (248,442)	​	$ (125,337)	​	$ (62,641)	​	$ (21,503)	​	$  (7,280)
Adjusted EBITDA(2)	​	$ (238,912)	​	$ (121,091)	​	$ (61,354)	​	$  (9,584)	​	$  (3,855)

(1)

Commercial plans include Individual and Family Plans and employer plans. Prior to 2021, our commercial business was solely comprised of IFP products.

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(2)

See “Prospectus Summary — Summary Historical and Pro Forma Consolidated Financial and Other Data” and “— Non-GAAP Financial Measures” for more information as to how we define and calculate Adjusted EBITDA and for a reconciliation of net income or loss, the most comparable GAAP measure, to Adjusted EBITDA.

Key Metrics

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 products and MA plans in markets across the country. We believe growth in the number of consumers is a key indicator of the performance of our Bright HealthCare 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 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, we expect our value-based care patients will increase as we convert fee-for-service arrangements into value-based care financial arrangements.

Non-GAAP Financial Measures

Adjusted EBITDA

We define Adjusted EBITDA as net loss excluding interest expense, income taxes, depreciation and amortization, adjusted for the impact of acquisition and financing-related transaction costs, share-based compensation and changes in the fair value of contingent consideration. Adjusted EBITDA has been presented in this prospectus as a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP, because we believe it assists management and investors in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes Adjusted EBITDA is useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Management uses Adjusted EBITDA to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation and to compare our performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone.

Adjusted EBITDA is not a recognized term under GAAP and should not be considered as an alternative to net income (loss) as a measure of financial performance or cash provided by operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. Additionally, this measure is not intended to be a measure of free cash flow available for management’s discretionary use as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements. The presentation of this measure has limitations as an analytical tool and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentation of this measure may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company.

The following table provides a reconciliation of net loss to Adjusted EBITDA for the periods presented:

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​	Year Ended December 31,						Three Months Ended March 31,
(in thousands)	2020		2019		2018		2021		2020
Net loss	​	$ (248,442)	​	$ (125,337)	​	$ (62,641)	​	$ (21,503)	​	$ (7,280)
Interest expense	​	—	​	—	​	—	​	546	​	—
Income tax (benefit) expense	​	(9,161)	​	—	​	—	​	1,166	​	—
Depreciation and Amortization	​	8,289	​	1,134	​	1,030	​	4,581	​	787
Transaction Costs(a)	​	4,950	​	1,248	​	—	​	2,020	​	1,695
Share-based Compensation expense(b)	​	5,452	​	1,864	​	257	​	2,134	​	943
Change in fair value of contingent consideration(c)	​	—	​	—	​	—	​	1,472	​	—
Adjusted EBITDA	​	$ (238,912)	​	$ (121,091)	​	$ (61,354)	​	$  (9,584)	​	$ (3,855)

(a)

Transaction costs include accounting, tax, valuation, consulting, legal and investment banking fees directly relating to business combinations and certain costs associated with our initial public offering. These costs can vary from period to period and impact comparability, and we do not believe such transaction costs reflect the ongoing performance of our business.

(b)

Represents non-cash compensation expense related to stock option and restricted stock award grants, which can vary from period to period based on a number of factors, including the timing, quantity and grant date fair value of the awards.

(c)

Represents the non-cash change in fair value of contingent consideration from business combinations, which is remeasured at fair value each reporting period. There was no material activity for periods prior to the first quarter of 2021.

COVID-19 Impact

The severity, magnitude and duration of the current COVID-19 pandemic continues to grow. The pandemic has adversely affected our business and results of operations. The extent to which the COVID-19 pandemic will continue to impact our business, results of operations and financial condition will depend on future developments.

During the initial onset of the COVID-19 pandemic in 2020, Bright Health responded by forming an internal COVID-19 Task Force comprised of cross-functional leaders to address the quickly evolving situation. This included mobilizing to become a predominantly remote workforce, monitoring rapidly changing federal and state regulations related to health plan and clinical operations and implementing operational changes to address such regulations, such as covering COVID-19 medical expenses without requiring consumer cost sharing for testing, providing access to telemedicine and providing consumers with extended grace periods for insurance premium payments. During this time, the Colorado State Based Exchange instituted a special enrollment period for uninsured Coloradoans to purchase individual insurance policies, which resulted in an increase in our IFP products consumer base within Colorado.

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 normal levels and adverse financial impacts from inpatient admissions emerged primarily due to increased average length of stays. Through December 31, 2020, these impacts have increased our MCR by 400 basis points, reflecting an increase in medical costs of $46.6 million, of which $30.2 million was in our MA products, primarily in California, and $16.4 million was in our IFP products. For the three months ended March 31, 2021, the impact of COVID-19 increased our MCR by 410 basis points, reflecting an increase in medical costs of $34.8 million, of which $17.4 million was in our MA products and $17.4 million was in our IFP products.

The COVID-19 pandemic disproportionately impacts older adults, especially those with chronic illnesses, who constitute a significant portion of our consumer base in California. We have experienced increased internal and third-party medical costs attributable to the provision of care for consumers suffering

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from COVID-19. Additionally, those of our consumers who have been infected by and recovered from the disease potentially face long-term health consequences which medical researchers continue to investigate. The total financial impact of the COVID-19 pandemic as well as the unknowns surrounding the length of time that the public health emergency and associated public health measures will continue is difficult to estimate.

Certain of our consumers have been prevented from seeking, or are reluctant to seek, or have intentionally delayed or postponed, in-person non-life-threatening medical care and treatment, including elective procedures. Many of our consumers elected to seek medical care and treatment in the second half of 2020 prior to the expiration of their health plan for the year, resulting in increased patient visits and increased consumer costs for such period. Our NeueHealth business primary care locations experienced a decrease in volume of in-office visits and shifted to telemedicine visits, impacting NeueHealth revenue due to lower reimbursements for telemedicine as compared to reimbursements for in-office from health insurance plans.

Factors relating to the COVID-19 pandemic that could impact our results include: the ultimate geographic spread, severity and duration of the COVID-19 pandemic; the impact of business closures, travel restrictions, social distancing and other actions taken to contain the spread of COVID-19; the effectiveness of actions taken to reduce transmission of the virus that causes COVID-19 (including the administration of vaccines and the continued research into treatments, the virus, and the disease); the impact of the pandemic on economic activity; and any impairment in value of our tangible or intangible assets which could be recorded as a result of weaker economic conditions caused by the pandemic. In addition, the full impact of the COVID-19 pandemic may not be fully understood or reflected in our results of operations and overall financial condition until future periods. See also “Risk Factors — The COVID-19 pandemic has adversely affected, and may continue to adversely affect, our business and results of operations.”

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 APTC 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 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 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 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 revenue from CMS were 40%, 13% and 13% for the years ended December 31, 2020, 2019 and 2018, respectively, which are included in our Bright HealthCare segment.

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NeueHealth premium revenue

NeueHealth premium revenue represents revenue under value-based arrangements entered into by NeueHealth’s Value Services Organization and affiliated medical groups in which the responsibility for control of an attributed patient’s medical care is transferred, in part or wholly, to such medical groups. Such revenue include capitation payments, as well as quality incentive payments, and shared savings distributions payable upon achievement 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.

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.

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

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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 and customer relationships.

Other Income

Income Tax (Benefit) Expense

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

Acquisitions

Effective December 31, 2019, we acquired substantially all of the assets of Associates in Family Practice of Broward, L.L.C., a Florida limited liability corporation, renaming it to AssociatesMD Medical Group, Inc. (“AMD”), in exchange for cash and Series D preferred shares of the Company. This NeueHealth acquisition was completed to enhance our clinical capabilities to better serve enrollees as part of our planned Florida market entrance in 2020.

Effective April 30, 2020, we acquired Brand New Day, which is focused on serving primarily MA special needs consumers in exchange for cash and Series D preferred shares of the Company. This Bright HealthCare acquisition was completed to bolster our MA platform and provide entry into California.

Effective December 31, 2020, we acquired a 62% controlling interest in Premier Medical Associates of Florida, LLC (“PMA”), a Delaware limited liability company in exchange for cash and Series E preferred shares of the Company. This NeueHealth acquisition was completed to enhance our clinical capabilities to better serve enrollees as part of our Florida market expansion in 2021. See Note 16 to our audited consolidated financial statements included elsewhere in this prospectus for information regarding the redeemable noncontrolling interest in PMA.

On March 31, 2021, we acquired all of the outstanding equity interests of True Health New Mexico, Inc. (“THNM”) for aggregate cash consideration of $27.5 million, or $3.4 million net of cash acquired. 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. In addition, on March 31, 2021, we acquired Zipnosis, Inc., which is a telehealth platform that offers virtual care to health systems around the U.S., for aggregate consideration of $51.4 million, including $33.0 million in Series E preferred stock, or $48.2 million net of cash acquired. On April 1, 2021, we also acquired Central Health Plan of California, Inc. (“CHP”), an insurance provider that provides Medicare Advantage HMO services, for aggregate consideration of $323.7 million, including $47.7 million in Series E preferred stock, or $220.6 million net of cash acquired.

See Note 3 and Note 18 to our audited consolidated financial statements and Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this prospectus for more information regarding our completed Acquisitions.

Impact of the Initial Public Offering

Public Company Expenses

Following our initial public offering, we will incur significant expenses on an ongoing basis that we did not incur as a private company. Those costs include additional director retainer fees and director and officer liability insurance expenses, as well as third-party and internal resources related to accounting, auditing, SOX compliance, legal, and investor and public relations expenses. These costs will generally be classified as operating costs.

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Results of Operations

Three Months Ended March 31, 2021 and 2020

The following table summarizes our unaudited consolidated statements of income (loss) data for the three months ended March 31, 2021 and 2020.

​	Three Months Ended March 31,
Consolidated statements of income (loss) and operating data:	2021			2020
​	(in thousands, except percentages)
Revenue:	​	​	​	​	​	​
Premium revenue	​	$	860,631	​	$	190,737
Service revenue	​	​	8,438	​	​	4,820
Investment income	​	​	5,489	​	​	3,009
Total revenue	​	​	874,558	​	​	198,566
Operating costs:	​	​	​	​	​	​
Medical costs	​	​	684,570	​	​	130,615
Operating costs	​	​	205,198	​	​	74,444
Depreciation and amortization	​	​	4,581	​	​	787
Total operating costs	​	​	894,349	​	​	205,846
Operating Loss	​	​	(19,791)	​	​	(7,280)
Interest Expense	​	​	546	​	​	—
Loss before income taxes	​	​	(20,337)	​	​	(7,280)
Income tax (benefit) expense	​	​	1,166	​	​	—
Net loss	​	​	(21,503)	​	​	(7,280)
Net earnings attributable to noncontrolling interest	​	​	(617)	​	​	—
Net loss attributable to Bright Health Group, Inc. common shareholders	​	$	(22,120)	​	$	(7,280)
Adjusted EBITDA	​	$	(9,584)	​	$	(3,855)
Medical Cost Ratio (MCR)(1)	​	​	79.5%	​	​	68.5%
Operating Cost Ratio(2)	​	​	23.5%	​	​	37.5%

(1)

Medical Cost Ratio is defined as medical costs divided by premium revenue.

(2)

Operating Cost Ratio is defined as operating costs divided by total revenue.

Total revenues increased by $676.0 million, or 340.4%, to $874.6 million for the three months ended March 31, 2021 as compared to the same period in 2020. The increase in revenues was driven by an increase in Bright HealthCare commercial consumers of 0.3 million, or 217%, from organic growth and inorganic contributions from the Brand New Day acquisition in the Bright HealthCare segment and the PMA acquisition in the NeueHealth segment.

Medical costs increased by $554.0 million, or 424.1%, to $684.6 million for the three months ended March 31, 2021 as compared to the same period in 2020. Primary drivers of the quarter-over-quarter increase related to an increase in consumers through both organic and inorganic growth attributable to the acquisitions of PMA and Brand New Day, as well as increased medical costs from COVID-19.

Medical Cost Ratio of 79.5% for the three months ended March 31, 2021 increased 1,100 basis points compared to the same period in 2020. The increased MCR was primarily due to the increased medical costs from MA product mix as a result of the Brand New Day acquisition and increased medical costs from COVID-19.

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Operating costs increased by $130.8 million, or 175.6%, to $205.2 million for the three months ended March 31, 2021 as compared to the same period in 2020, primarily due to increased compensation and benefit costs driven by an increase in employees, as well as an increase in outsourced vendor fees, broker commissions, premium taxes and fees in support of consumer growth, acquisitions and business segment expansion.

Operating cost ratio of 23.5% for the three months ended March 31, 2021 improved 1,400 basis points compared to the same period in 2020. The improved operating cost ratio was primarily due to operating costs increasing at a slower rate than the increased premium revenues earned due to consumer growth, as we continue to gain leverage as we grow.

Depreciation and amortization increased by $3.8 million, or 482.1%, to $4.6 million for the three months ended March 31, 2021 as compared to the same period in 2020, primarily due to the $3.8 million of amortization expense resulting from intangible assets acquired in our PMA and Brand New Day acquisitions.

Interest expense was $0.5 million for the three months ended March 31, 2021, which was due to interest incurred on the outstanding amounts under the Credit Agreement, as well as amortization of debt issuance costs. We did not have any interest expense for the same period in 2020.

Income tax expense was $1.2 million for the three months ended March 31, 2021, which was due to an adjustment to the tax impact of goodwill and intangible assets acquired as part of the Brand New Day and THNM acquisitions. We did not have any income tax (benefit) expense for the same period in 2020.

Bright HealthCare

​	Three Months Ended March 31,
Statements of income (loss) and operating data:	2021			2020
​	(in thousands, except percentages)
Bright HealthCare:	​	​	​	​	​	​
Commercial premium revenue(1)	​	$	621,056	​	$	175,562
Medicare Advantage premium revenue	​	​	220,869	​	​	13,171
Investment income	​	​	1,246	​	​	3,009
Total revenue	​	​	843,171	​	​	191,742
Operating costs:	​	​	​	​	​	​
Medical costs	​	​	675,056	​	​	130,615
Operating costs	​	​	187,026	​	​	66,975
Depreciation and amortization	​	​	2,357	​	​	262
Total operating costs	​	​	864,439	​	​	197,852
Operating loss	​	$	(21,268)	​	$	(6,110)
Medical Cost Ratio (MCR)	​	​	80.2%	​	​	69.2%

(1)

Commercial premium revenue includes IFP premium revenue and employer premium revenue. Prior to 2021, our commercial business was solely comprised of IFP products.

Commercial premium revenue increased by $445.5 million, or 253.8%, to $621.1 million for the three months ended March 31, 2021 as compared to the same period in 2020. The increase in revenues was driven by an increase in consumers of 329.7 thousand, or 217%, and higher net premium rates in certain markets and mix of plans.

MA premium revenue increased by $207.7 million, or 1,576.9%, to $220.9 million for the three months ended March 31, 2021 as compared to the same period in 2020, primarily driven by the Brand New Day acquisition, which contributed $206.2 million of the revenue increase.

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Medical costs increased by $544.4 million, or 416.8%, to $675.1 million for the quarter ended March 31, 2021 as compared to the same period in 2020, primarily due to an increase in consumers, increased medical expense from COVID-19 of $34.8 million, or 4.1%, and inorganic growth as a result of the Brand New Day acquisition driving increased MA product mix.

Medical Cost Ratio of 80.2% for the period ending March 31, 2021 increased 11.0% compared to the same period in 2020. The increased MCR was primarily due to the increased medical costs from MA product mix as a result of the Brand New Day acquisition and increased medical costs from COVID-19.

Operating costs increased by $120.1 million, or 179.2%, to $187.0 million for the three months ended March 31, 2021 as compared to the same period in 2020, primarily due to increased compensation and benefit costs driven by an increase in employees, as well as an increase in outsourced vendor fees, broker commissions, premium taxes and exchange fees in support of consumer growth, and acquisitions.

Depreciation and amortization increased by $2.1 million, or 796.2%, to $2.4 million for the three months ended March 31, 2021 as compared to the same period in 2020, primarily due to the $2.1 million of amortization expense resulting from the intangible assets acquired in our Brand New Day acquisition.

NeueHealth

​	Three Months Ended March 31,
Statements of income (loss) and operating data:	2021			2020
​	(in thousands)
NeueHealth	​	​	​	​	​	​
Premium revenue	​	$	28,674	​	$	2,004
Service revenue	​	​	15,622	​	​	7,527
Investment income	​	​	4,243	​	​	—
Total revenue	​	​	48,539	​	​	9,531
Operating costs:	​	​	​	​	​	​
Medical costs	​	​	19,482	​	​	—
Operating costs	​	​	25,356	​	​	10,176
Depreciation and amortization	​	​	2,224	​	​	525
Total operating costs	​	​	47,062	​	​	10,701
Operating income (loss)	​	$	1,477	​	$	(1,170)

Premium revenue increased by $26.7 million, or 1,330.8%, to $28.7 million for the three months ended March 31, 2021 as compared to the same period in 2020. The increase in revenues was driven by an increase in patients both organically and inorganically as a result of the PMA acquisition.

Service revenue increased by $8.1 million, or 107.5%, to $15.6 million for the three months ended March 31, 2021 as compared to the same period in 2020, primarily driven by increased intercompany network contract service revenue with our Bright HealthCare segment, which is charged on a per consumer per month basis and has increased due to market expansion and an increase in consumers. The acquisition of PMA on December 31, 2020 also contributed to the year-over-year increase in service revenue.

Investment income was $4.2 million as of the three months ended March 31, 2021, due to recognition of a gain on a forward contract on equity securities.

Medical costs were $19.5 million for the quarter ended March 31, 2021, primarily due to an increase in patients both organically and inorganically as a result of the PMA acquisition.

Operating costs increased by $15.2 million, or 149.2%, to $25.4 million for the three months ended March 31, 2021 as compared to the same period in 2020, primarily due to increased compensation and benefit costs from more employees, and outsourced vendor fees in support of consumer growth and acquisitions.

Depreciation and amortization increased by $1.7 million, or 323.6%, to $2.2 million for the three months ended March 31, 2021 as compared to the same period in 2020, primarily due to the $1.7 million of amortization expense resulting from the intangible assets acquired in our PMA acquisition.

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Years Ended December 31, 2020, 2019 and 2018

The following table summarizes our audited consolidated statements of income (loss) data for the years ended December 31, 2020, 2019 and 2018.

​	Year Ended December 31,
Consolidated statements of income (loss) and operating data:	2020		2019		2018
​	(in thousands, except percentages)
Revenue:	​	​	​	​	​	​
Premium revenue	​	$ 1,180,338	​	$ 272,323	​	$ 127,122
Service revenue	​	18,514	​	—	​	—
Investment income	​	8,468	​	8,350	​	3,510
Total revenue	​	1,207,320	​	280,673	​	130,632
Operating costs:	​	​	​	​	​	​
Medical costs	​	1,047,300	​	224,387	​	96,407
Operating costs	​	409,333	​	180,489	​	95,836
Depreciation and amortization	​	8,289	​	1,134	​	1,030
Total operating costs	​	1,464,923	​	406,010	​	193,273
Loss before income taxes	​	(257,603)	​	(125,337)	​	(62,641)
Income tax (benefit) expense	​	(9,161)	​	—	​	—
Net loss	​	$ (248,442)	​	$ (125,337)	​	$ (62,641)
Adjusted EBITDA	​	$ (238,912)	​	$ (121,091)	​	$ (61,354)
Medical Cost Ratio (MCR)(1)	​	88.7%	​	82.4%	​	75.8%
Operating Cost Ratio(2)	​	33.9%	​	64.3%	​	73.4%

(1) Medical Cost Ratio is defined as medical costs divided by premium revenue.

(2) Operating Cost Ratio is defined as operating costs divided by total revenue.

Total revenue increased by $926.6 million, or 330.2%, to $1.2 billion for the year ended December 31, 2020 as compared to the same period in 2019. The increase in revenue was driven by an increase in Bright HealthCare consumers of 251% from organic growth and inorganic contributions from the Brand New Day Acquisition, as well as the creation of the NeueHealth segment with the acquisition of AMD. Total revenue increased by $150.0 million, or 114.9%, to $280.7 million for the year ended December 31, 2019 as compared to the same period in 2018. The increase in revenue was primarily driven by organic consumer growth of 142% in the Bright HealthCare segment.

Medical costs increased by $822.9 million, or 366.7%, to $1.0 billion for the year ended December 31, 2020 as compared to the same period in 2019, primarily due to an increase in consumers through both organic and inorganic growth, increased MA product mix at a higher MCR primarily due to the Brand New Day Acquisition and the adverse financial impacts of the COVID-19 pandemic on MA and IFP products inpatient admissions. In certain new IFP product markets, we experienced increased medical costs due to greater out-of-network utilization in 2020. Medical costs increased by $128.0 million, or 132.7%, to $224.4 million for the year ended December 31, 2019 as compared to the year ended December 31, 2018. Medical costs increased primarily due to the increase in the number of consumers and an increase in out-of-network medical claims utilization in certain new IFP product markets.

Medical Cost Ratio of 88.7% for year ended December 31, 2020 increased 630 basis points compared to the same period in 2019, primarily due to the increased medical costs from COVID-19, increased MA product mix as the result of the Brand New Day Acquisition and an increase in out-of-network utilization in certain new IFP product markets. MCR of 82.4% for year ended December 31, 2019 increased 660 basis

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points compared to the same period in 2018, primarily due to an increase in the number of new consumers as we entered new markets and an increase in out-of-network medical claims utilization in certain new IFP product markets.

Operating costs increased by $228.8 million, or 126.8%, to $409.3 million for the year ended December 31, 2020 as compared to the same period in 2019, primarily due to increased compensation and benefit costs from more employees, outsourced vendor fees, broker commissions, marketing, premium taxes and fees in support of consumer growth, acquisitions and business segment expansion. Operating costs increased by $84.7 million, or 88.3%, to $180.5 million for the year ended December 31, 2019 as compared to 2018. Operating costs increased primarily due to increased compensation from more employees, outsourced vendor fees, broker commissions, marketing, premium taxes and fees in support of consumer growth.

Operating cost ratio of 33.9% for the year ended December 31, 2020 improved 3,040 basis points compared to the same period in 2019, primarily due to operating costs increasing at a slower rate than revenue increases as the company grows. Operating cost ratio of 64.3% for the year ended December 31, 2019 improved 910 basis points compared to the same period in 2018, primarily due to operating leverage as the company grows.

Depreciation and amortization increased by $7.2 million, or 631.0%, to $8.3 million for the year ended December 31, 2020 as compared to the same period in 2019, primarily due to $5.4 million of amortization expense resulting from intangibles assets acquired in our acquisition of AMD and the Brand New Day Acquisition. There was no amortization expense in 2019 or 2018, nor was there a material change in depreciation expense for the years ended December 31, 2019 and 2018.

Income tax benefit was $9.2 million for the year ended December 31, 2020, which was due to the tax impact of goodwill and intangible assets acquired as part of the Brand New Day Acquisition in 2020. We did not have any income tax (benefit) expense in 2019 or 2018.

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Bright HealthCare

​	Year Ended December 31,
Statements of income (loss) and operating data:	2020		2019		2018
​	(in thousands, except percentages)
Bright HealthCare:	​	​	​	​	​	​
Commercial premium revenue(1)	​	$ 692,433	​	$ 236,290	​	$ 111,412
Medicare Advantage premium revenue	​	480,112	​	36,033	​	15,710
Investment income	​	8,468	​	8,350	​	3,510
Total revenue	​	1,181,013	​	280,673	​	130,632
Operating costs:	​	​	​	​	​	​
Medical costs	​	1,047,300	​	224,387	​	96,407
Operating costs	​	376,215	​	180,489	​	95,836
Depreciation and amortization	​	6,394	​	1,134	​	1,030
Total operating costs	​	1,429,909	​	406,010	​	193,273
Loss before income taxes	​	$ (248,896)	​	$ (125,337)	​	$ (62,641)
Medical Cost Ratio (MCR)	​	89.3%	​	82.4%	​	75.8%

(1)

Commercial premium revenue includes only IFP products for 2020, 2019 and 2018.

Commercial premium revenue increased by $456.1 million, or 193.0%, to $692.4 million for the year ended December 31, 2020 as compared to the same period in 2019. The increase was primarily driven by a 166% increase in consumers, with the remainder primarily attributable to higher premium rates in certain new markets. Commercial premium revenue increased by $124.9 million, or 112.1%, to $236.3 million for the year ended December 31, 2019 as compared to the same period in 2018, which was primarily driven by a 148% increase in consumers, partially offset by an increase in risk adjustment payables.

MA premium revenue increased by $444.1 million to $480.1 million for the year ended December 31, 2020 as compared to the same period in 2019. The increase in revenue was primarily driven by the Brand New Day Acquisition, which contributed $426.3 million of the revenue increase, and other organic growth, which together helped drive consumer growth of 1,387%. MA premium revenue increased by $20.3 million, or 129.4%, to $36.0 million for the year ended December 31, 2019 as compared to the same period in 2018. The increase in revenue was primarily driven by an 83% increase in consumers in MA plans, with the remainder primarily attributable to increased revenue rates for retained consumers.

Medical costs increased by $822.9 million, or 366.7%, to $1.0 billion for the year ended December 31, 2020 as compared to the same period in 2019, primarily due to increased consumers, impacts from the COVID-19 pandemic and the Brand New Day Acquisition driving increased MA product mix. In addition, certain new IFP product markets experienced increased levels of out-of-network utilization in 2020. Medical costs increased by $128.0 million, or 132.7%, to $224.4 million for the year ended December 31, 2019 as compared to 2018. Medical costs increased primarily due to an increase in our consumer base and an increase in out-of-network medical claims utilization in certain new IFP product markets.

MCR increased from 82.4% for the year ended December 31, 2019 to 89.3% for the year ended December 31, 2020, representing a 690 basis points increase, primarily due to the increased medical costs from COVID-19, increased MA product mix as a result of the Brand New Day Acquisition and an increase in out-of-network medical claims utilization in certain new IFP product markets. MCR of 82.4% for the year ended December 31, 2019 increased 660 basis points compared to the MCR of 75.8% for the same period in 2018, primarily due to an increase in new consumers as we entered new markets and higher out-of-network medical claims utilization in certain new IFP product markets.

Operating costs increased by $195.7 million, or 108.4%, to $376.2 million for the year ended December 31, 2020 as compared to the same period in 2019, primarily due to an increase in employee headcount leading to increased compensation and benefit costs, as well as an increase in outsourced vendor fees, broker commissions, marketing, premium taxes and fees in support of consumer growth and the Brand New Day Acquisition. Operating costs increased by $84.7 million, or 88.4%, to $180.5 million for the

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year ended December 31, 2019 as compared to the same period in 2018, primarily due to an increase in employee headcount, as well as an increase in outsourced vendor fees, broker commissions, marketing, premium taxes and fees in support of consumer growth.

Depreciation and amortization increased by $5.3 million, or 463.8%, to $6.4 million for the year ended December 31, 2020 as compared to the same period in 2019, primarily due to $3.2 million of amortization expense resulting from intangibles assets acquired in our Brand New Day Acquisition, as well as depreciation expense from the acquired property, equipment and capitalized software. There was no amortization expense in 2019 or 2018, nor was there a material change in depreciation expense for the years ended December 31, 2019 and 2018.

NeueHealth

​	Year Ended December 31,
Statements of income (loss) and operating data:	2020		2019		2018
​	(in thousands)
NeueHealth	​	​	​	​	​	​
Service revenue	​	$ 29,354	​	$ —	​	$ —
Premium revenue	​	7,793	​	—	​	—
Total revenue	​	$ 37,147	​	$ —	​	$ —
Operating costs:	​	​	​	​	​	​
Operating costs	​	43,959	​	—	​	—
Depreciation and amortization	​	1,895	​	—	​	—
Total operating costs	​	45,854	​	—	​	—
Loss before income taxes	​	$ (8,707)	​	$ —	​	$ —

No activity reflected in 2019 and 2018 due to establishment of segment in 2020.

Our NeueHealth segment was created in 2020 through the acquisition of AMD and the establishment of our Bright Health Network service. Service revenue reflects fee-for-service revenue attributable to AMD service patients and internal revenue generated by Bright Health Network for network contract services with Bright HealthCare. Premium revenue reflects AMD revenue related to capitation payments and other value-based revenue from third-party payors. There is no comparable activity in 2019 or 2018.

Liquidity and Capital Resources

We assess our liquidity in terms of our ability to generate adequate amounts of cash to meet current and future needs. Our expected primary uses on a short-term and long-term basis are for geographic and service offering expansion, acquisitions, and other general corporate purposes. We have historically funded our operations and acquisitions primarily through sale of preferred stock. Through December 31, 2020, we had received net proceeds of $1.6 billion from our sales of preferred stock. We did not receive any proceeds from sales of preferred stock during the three months ended March 31, 2021. See Note 9 to our audited consolidated financial statements included elsewhere in this prospectus for additional information regarding our preferred stock.

Cash and investment balances held at regulated insurance entities are subject to regulatory restrictions and can only be accessed through dividends declared to the non-regulated parent company or through reimbursements from administrative services agreements with the parent company. The Company has declared no dividends from the regulated insurance entities to the parent company during 2020 or 2019 or during the three-month period ending March 31, 2021. The regulated legal entities are required to hold certain minimum levels of risk-based capital and surplus to meet regulatory requirements. As of December 31, 2020 and 2019, $235.8 million and $119.0 million, respectively, was held in risk-based capital and surplus at regulated insurance legal entities, which was in excess of the minimum requirements in each year.

We expect to continue to incur operating losses and generate negative cash flows from operations for the foreseeable future due to the investments we intend to continue to make in expanding our operations

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and due to additional general and administrative costs we expect to incur in connection with operating as a public company. As a result, we may require additional capital resources to execute strategic initiatives to grow our business. We believe, however, that existing cash on hand plus amounts available under the Credit Agreement described below and the proceeds from this offering will be sufficient to satisfy our anticipated cash requirements for the next twelve months even with the uncertainty arising from the COVID-19 pandemic. Our future capital requirements will depend on many factors, including funding for potential acquisitions, investments, and other growth and strategic opportunities that might require use of existing cash. Our sources of liquidity could be affected by factors described under “Risk Factors” included elsewhere in this prospectus.

Indebtedness

In March 2021, we entered into a $350.0 million credit revolving credit agreement with a syndicate of lenders. The Credit Agreement matures on February 28, 2022; however, we may elect to extend the maturity date to February 28, 2024 after an IPO provided the net proceeds received by the Company are greater than or equal to $1.0 billion (a “Qualified IPO”). The Credit Agreement also contains covenant that require us to maintain (i) a total debt of capitalization ratio of (a) 0.25 to 1.00 prior to a Qualified IPO, or (b) 0.30 to 1.00 after a Qualified IPO; and (ii) a minimum liquidity of $150.0 million. As of March 31, 2021, we had $200.0 million of outstanding borrowings under the Credit Agreement.

The obligations under the Credit Agreement are secured by substantially all of the assets of the Company and its wholly owned subsidiaries that are designated as guarantors, including a pledge of the equity of each of its subsidiaries. Borrowings under the Credit Agreement accrue interest at the Company’s election either at a rate of: the (i) the sum of (a) the greatest of (1) the Prime Rate (as defined in the Credit Agreement), (2) the rate of the Federal Reserve Bank of New York in effect plus 1∕2 of 1.0% per annum, and (3) LIBOR, plus 1% per annum, and (b) a margin of 4.0%; or (ii) the sum of (a) the LIBOR multiplied by a statutory reserve rate and (b) a margin of 5.0%. In addition, commitment fee is 0.75% of the unused amount of the Credit Agreement.

Furthermore, the Credit Agreement contains covenants that, among other things, restrict the ability of the Company and its subsidiaries to make certain restricted payments, incur additional debt, engage in certain asset sales, mergers, acquisitions or similar transactions, create liens on assets, engage in certain transactions with affiliates, change its business or make investments. Following our initial public offering, the Credit Agreement will continue to contain these covenants, including a covenant that restricts the Company’s ability to make dividends or other distributions. In addition, the Credit Agreement contains other customary covenants, representations and events of default.

Commitments

At March 31, 2021, we had committed to acquire all of the outstanding shares of CHP for cash consideration of $276.0 million and $47.7 million in Series E preferred stock. The acquisition was completed on April 1, 2021. See Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this prospectus for additional information regarding the CHP acquisition.

Three Months Ended March 31, 2021 and 2020

As of March 31, 2021, we had $975.9 million in cash and cash equivalents, $274.6 million in short-term investments and $448.9 million long-term investments on the consolidated balance sheet. Our cash and investments are held at non-regulated entities and regulated insurance entities.

As of March 31, 2021, we had non-regulated cash and cash equivalents of $357.1 million and short-term investments of $151.2 million.

As of March 31, 2021, we had regulated insurance entity cash and cash equivalents of $618.8 million, short-term investments of $123.4 million and long-term investments of $448.9 million.

Years Ended December 31, 2020 and 2019

As of December 31, 2020, we had $488.4 million in cash and cash equivalents, $499.9 million in short-term investments and $175.2 million long-term investments on the consolidated balance sheet. As of

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December 31, 2019, we had $522.9 million in cash and cash equivalents, $107.7 million in short-term investments and $115.3 million of long-term investments on the consolidated balance sheet. Our cash and investments are held at non-regulated entities and regulated insurance entities.

As of December 31, 2020, we had non-regulated cash and cash equivalents of $133.3 million, short-term investments of $385.6 million of which $1.1 million was restricted, and long-term investments of $5.6 million. As of December 31, 2019, we had non-regulated cash and cash equivalents of $435.2 million and short-term investments of $38.5 million of which $1.1 million was restricted.

As of December 31, 2020, we had regulated insurance entity cash and cash equivalents of $355.1 million, short-term investments of $114.3 million and long-term investments of $169.5 million. As of December 31, 2019, we had regulated insurance entity cash and cash equivalents of $87.7 million, short-term investments of $69.2 million and long-term investments of $115.3 million.

Cash Flows

Three Months Ended March 31, 2021 and 2020

The following table presents a summary of our cash flows for the periods shown:

​	Three Months Ended March 31,
​	2021			2020
​	(in thousands)
Net cash provided by operating activities	​	$	343,603	​	$	82,286
Net cash used in investing activities	​	​	(56,275)	​	​	(338,359)
Net cash provided by financing activities	​	​	200,234	​	​	13
Net increase (decrease) in cash and cash equivalents	​	​	487,562	​	​	(256,060)
Cash and cash equivalents at beginning of period	​	​	488,371	​	​	522,910
Cash and cash equivalents at end of period	​	$	975,933	​	$	266,850

Operating Activities

During the three months ended March 31, 2021, net cash provided by operating activities increased by $261.3 million, primarily driven by the quarter-over-quarter increase in consumer growth driving the increased medical costs and risk adjustment payables, as well as accounts payables and other liabilities, and increased medical costs in the MA business driven by the Brand New Day acquisition.

Investing Activities

Net cash used in investing activities decreased $282.1 million compared to the same period ended 2020. The decrease was primarily attributable to a decrease in purchases of investments, net of proceeds from sales, paydown and maturities of investments. The net decrease in cash used for investment activities was partially offset by $18.6 million of cash used for acquisitions.

Financing Activities

Our net cash provided by financing activities increased by $200.2 million in the three months ended March 31, 2021 compared to the prior-year period, which was driven by $200.0 million of borrowings on the Credit Agreement and proceeds from the issuance of common stock, partially offset by cash paid for debt issuance and IPO offering costs. See Note 7 to our unaudited condensed consolidated financial statements included elsewhere in this prospectus.

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Years Ended December 31, 2020, 2019 and 2018

The following table presents a summary of our cash flows for the periods shown:

​	Year Ended December 31,
​	2020		2019		2018
​	(in thousands)
Net cash used in operating activities	​	$ (57,238)	​	$ (8,208)	​	$ (27,034)
Net cash used in investing activities	​	(689,742)	​	(94,643)	​	(6,940)
Net cash provided by financing activities	​	712,441	​	424,060	​	203,057
Net increase in cash and cash equivalents	​	(34,539)	​	321,209	​	169,083
Cash and cash equivalents at beginning of year	​	522,910	​	201,701	​	32,618
Cash and cash equivalents at end of year	​	$ 488,371	​	$ 522,910	​	$ 201,701

Operating Activities

During the year ended December 31, 2020, net cash used in operating activities increased by $49.0 million primarily driven by the year-over-year increase in our net loss, partially offset by consumer growth driving the increased medical costs and risk adjustment payables.

During the year ended December 31, 2019, net cash used in operating activities decreased by $18.8 million compared to 2018 primarily due to the increase in consumer growth driving increased medical costs and risk adjustment payables.

Investing Activities

Net cash used in investing activities increased $595.1 million compared to 2019. The increase was primarily attributable to growth of our investment portfolio, as purchases more than offset sales and maturities of investment in 2020. In addition, we used $230.3 million of cash to acquire Brand New Day and PMA in 2020.

In 2019, net cash used in investing activities increased compared to 2018 due to the acquisition of AMD and growth of our investment portfolio.

Financing Activities

Our net cash provided by financing activities was primarily related to cash received from our preferred stock financings in 2020, 2019 and 2018. See note 9 to our audited consolidated financial statements included elsewhere in this prospectus for additional detail on our preferred stock.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenue, and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts, and experience. The effects of material revisions in estimates, if any, are reflected in the consolidated financial statements prospectively from the date of change in estimates.

While our significant accounting policies are described in more detail in the notes to the consolidated financial statements appearing elsewhere in this prospectus, we believe the following accounting policies used in the preparation of our consolidated financial statements require the most significant judgments and estimates.

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Medical Costs Payable

Medical costs payable includes estimates for the costs of healthcare services consumers have received but for which claims have not yet been received or processed. Depending on the healthcare professional and type of service, the typical billing lag for services can be up to 90 days from the date of service. Approximately 90% of claims related to medical care services are known and settled within 90 days from the date of service and substantially all within twelve months.

In each reporting period, our operating results include the effects of more completely developed medical costs payable estimates associated with previously reported periods. If the revised estimate of prior period medical costs is less than the previous estimate, we will decrease reported medical costs in the current period (favorable development). If the revised estimate of prior period medical costs is more than the previous estimate, we will increase reported medical costs in the current period (unfavorable development). Medical costs in 2020, 2019 and 2018 included favorable medical cost development related to prior years of $8.6 million, $7.4 million, and $1.2 million, respectively.

In developing our medical costs payable estimates, we apply different estimation methods depending on the month for which incurred claims are being estimated. For example, for the most recent months, we estimate claim costs incurred by applying observed medical cost trend factors to the average per consumer per month (“PMPM”) medical costs incurred in prior months for which more complete claim data is available, supplemented by a review of near-term completion factors.

Completion Factors: A completion factor is an actuarial estimate, based upon historical experience and analysis of current trends, of the percentage of incurred claims in a given period adjudicated by us at the date of estimation. Completion factors are the most significant assumptions we use in developing our estimate of medical costs payable. For periods prior to the three most recent months, completion factors include judgments related to claim submissions such as the time from date of service to claim receipt, claim levels, and processing cycles, as well as other factors. If actual claims submission rates from providers (which can be influenced by a number of factors, including provider mix and electronic versus manual submissions) or our claim processing patterns are different than estimated, our reserve estimates may be significantly impacted. For the most recent three months, the completion factors are informed primarily from forecasted PMPM claims projections developed from our historical experience and adjusted by emerging experience data in the preceding months which may include adjustments for known changes in estimates of recent hospital and drug utilization data, provider contracting changes, changes in benefit levels, changes in consumer cost sharing, changes in medical management processes, product mix, and workday seasonality.

The following table illustrates the sensitivity of the completion factors and the estimated potential impact on our medical costs payable estimates as of December 31, 2020:

Completion Factors (Decrease) Increase in Factors	Increase (Decrease) in Medical Costs Payable
​	(in thousands)
(3.00)%	​	$ 25,826
(2.00)%	​	17,042
(1.00)%	​	8,435
1.00%	​	(8,268)
2.00%	​	(16,374)
3.00%	​	(24,322)

The completion factors analysis above includes a wide range of possible outcomes based on the early stage of development, combined with strong growth, that may drive additional volatility. Management believes the amount of medical costs payable is reasonable and adequate to cover our liability for unpaid claims as of December 31, 2020; however, actual claim payments may differ from established estimates as discussed above.

Assuming a hypothetical 1% difference between our December 31, 2020 estimates of medical costs payable and actual medical costs payable, excluding any potential offsetting impact from premium rebates, net earnings would have increased or decreased by approximately $2.5 million.

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See note 2 and note 8 to our audited consolidated financial statements included elsewhere in this prospectus for additional detail on our medical costs payable.

Risk Adjustment

The risk adjustment programs in the IFP and Medicare Advantage lines of business are designed to mitigate the potential impact of adverse selection and provide stability for health insurers.

Under the Individual and Small Group risk adjustment program, each plan is assigned a risk score based upon demographic and current year medical encounters information that is submitted to CMS for its consumers and calculated based on the CMS risk adjustment methodology. Plans with a plan level risk score that is lower than the State average risk scores will generally pay into the pool, while plans with a plan level risk score higher than State average risk scores will generally receive distributions. We refine our estimate as new information becomes available, and we receive the final report from CMS in August of the following year.

In the Medicare Advantage risk adjustment program, each consumer is assigned a risk score based on their demographic and prior year medical encounters information submitted to CMS that reflects the consumer’s predicted health costs based on the CMS risk adjustment methodology. Plans receive higher payments for consumers with higher risk scores than consumers with lower risk scores.

Goodwill

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. We test for goodwill impairment at the reporting unit level. When testing goodwill for impairment, we may first assess qualitative factors to determine if it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value. During a qualitative analysis, we consider the impact of changes, if any, to the following factors: macroeconomic trends, industry and market factors, cost factors, changes in overall financial performance, and any other relevant events and uncertainties impacting a reporting unit. If our qualitative assessment indicates that goodwill impairment is more likely than not, we perform additional quantitative analyses. We may also elect to skip the qualitative testing and proceed directly to the quantitative testing. For reporting units where a quantitative analysis is performed, we perform a test measuring the fair values of the reporting units and comparing them to their aggregate carrying values, including goodwill. If the fair value of the reporting unit is greater than its carrying value, no goodwill impairment is recognized. If the carrying value of the reporting unit is less than its calculated fair value, we recognize an impairment equal to the difference between the carrying value of the reporting unit and its calculated fair value.

We estimate the fair values of our reporting units using discounted cash flows, which include assumptions about a wide variety of internal and external factors. Significant assumptions used in the impairment analysis include financial projections of free cash flow (including significant assumptions about revenue growth rates, operating margins, capital requirements and income taxes), long-term growth rates for determining terminal value beyond the discretely forecasted periods and discount rates. We also utilize comparative market multiples to corroborate the results of our discounted cash flow analysis. The passage of time and the availability of additional information regarding areas of uncertainty with respect to the reporting units’ operations could cause these assumptions to change in the future.

As of October 1, 2020, we completed our annual impairment tests for goodwill with all of our reporting units having fair values significantly in excess of their carrying values.

Share-Based Compensation

We account for share-based payment awards granted to employees as share-based compensation expense at fair value. Our share-based payments primarily include stock options. The measurement date for employee awards is the date of grant, and we recognize share-based compensation expense over the related service period (generally the vesting period) of the award. Share-based compensation expense is classified in the Consolidated Statements of Income (Loss) in Operating costs — compensation and fringe benefits. We recognize share-based compensation expense for the portion of awards that have vested.

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We estimate the fair value on the date of grant using a Black-Scholes-based option valuation model, which uses the underlying fair value of our common stock as the most critical input for the estimate. The board of directors has historically determined the fair value of our common stock, as there has been no public market for our common stock. The board of directors has determined the fair value considering recent third-party valuations, financing investment rounds, operating and financial performance, the lack of liquidity of share capital and general and industry specific economic outlook, among other factors. The fair value of the underlying common stock will be determined by our board of directors until such time as our common stock is listed on an established stock exchange. Our board of directors determined the fair value of common stock based on valuations performed using the Option Pricing Method (“OPM”) and the Probability Weighted Expected Return Method (“PWERM”), subject to relevant facts and circumstances. The valuations using the OPM and PWERM utilized both the market approach and income approach. The market approach involved a public company market multiple and the income approach involved estimating future cash flows and discounting those cash flows at an appropriate rate.

Recently Adopted and Issued Accounting Standards

See note 2 to our audited consolidated financial statements included elsewhere in this prospectus for a discussion of accounting pronouncements recently adopted and recently issued accounting pronouncements not yet adopted and their potential impact to our financial statements.

Quantitative and Qualitative Disclosures About Market Risk

Our earnings and financial position are exposed to financial market risk, including those resulting from changes in interest rates.

Interest Risk

The level of our pretax earnings is subject to market risk due to changes in interest rates and the resulting impact on investment income and interest expense. We invest in a professionally managed portfolio of securities, which includes debt securities of publicly traded companies, obligations of the U.S. government, domestic government agencies, and state and political subdivisions. Our net, unrealized gain position increased $0.9 million from a net unrealized gain position of $0.1 million at December 31, 2018 to a net unrealized gain position of $1.0 million at December 31, 2019, and to a net unrealized gain position of $2.4 million at December 31, 2020. As of March 31, 2021 our net unrealized gain position decreased $1.0 million from a net unrealized gain position of $2.4 million at December 31, 2020 to a net unrealized gain of $1.4 million at March 31, 2021.

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BUSINESS

Overview

Bright Health 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, reduce systemic waste, 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 the consumer through unnecessary complexity, a lack of transparency, and rising costs. We are making healthcare simple, personal, and affordable.

At its core, Bright Health is a healthcare company. We are founded and led by industry veterans intimately familiar with the challenges that have plagued U.S. healthcare for decades. We believe that to drive meaningful change, we must leverage technology and bring together the financing and delivery of care, while strengthening healthcare’s strongest relationship: that between the consumer and their primary care physician.

To execute on our mission, we have developed a model for healthcare transformation built upon the delivery, financing, and optimization of care.

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Delivery of Care — Acknowledging that healthcare is local, we employ a tailored, market-specific approach to building deep relationships with high-performing care provider organizations, which we call Care Partners. We engage with our Care Partners through a full spectrum of alignment options ranging from having provi