United States securities and exchange commission logo
May 28, 2021
G. Mike Mikan
Chief Executive Officer
Bright Health Group Inc.
8000 Norman Center Drive
Suite 1200
Minneapolis, MN 55437
Re: Bright Health Group
Inc.
Registration
Statement on Form S-1
Filed May 19, 2021
File No. 333-256286
Dear Mr. Mikan:
We have reviewed your amended registration statement and have the
following
comment. In our comment, we ask you to provide us with information so we
may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comment applies to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to this comment, we may have additional comments.
Registration Statement on Form S-1 Filed May 19, 2021
Notes to Consolidated Condensed Financial Statements for the Three
Months Ended March 31,
2021 and March 31, 2020
Note 8. Share-Based Compensation
Stock Options, page F-17
1. It is apparent from the
table at the bottom of page F-17 that you granted 5.9 million stock
options during the
first quarter of 2021 at a weighted-average exercise price of $6.90 per
share. It is also
apparent that this $6.90 per share price is your deemed fair value of
common stock at March
31, 2021 based on the aggregate intrinsic value and weighted-
average exercise price
for options outstanding at that date. Given that your expected
offering price range,
as communicated to us by your counsel, is substantially in excess of
G. Mike Mikan
FirstName LastNameG.
Bright Health Group Inc.Mike Mikan
Comapany
May NameBright Health Group Inc.
28, 2021
May 28,
Page 2 2021 Page 2
FirstName LastName
this amount, please provide us your analysis explaining the reasons
for the differences
between recent valuations of your common stock leading up to your
offering and
the estimated offering price. In your response, specifically tell us:
The grant dates, number of options, exercise prices, common stock
fair values, grant
date fair values and vesting provisions for all your stock
options granted since and
including June 30, 2020.
Your enterprise value and how you allocated that value between
common and
preferred stock for each of the option grant dates from the
preceding bullet and at
each quarter end since and including June 30, 2020.
How and when you applied the Option Pricing Method and the
Probability Weighted
Expected Return Method, as disclosed on page 88, in estimating
the fair values at
each of the dates in the preceding bullets.
The probability of completing an initial public offering (IPO) at
each quarter end
since and including June 30, 2020.
The common stock fair value at March 31, 2021 assuming a 100% IPO
scenario.
Why enterprise value increased at the dates requested above
through the estimated
enterprise value based on your IPO offering price range. Tell us
specifically what
apparently happened after March 31, 2021 to cause the substantial
increase in
enterprise value after that date. In this regard, we note that
your most recent business
acquisition of the Central Health Plan of California, Inc. closed
on April 1, 2021
almost certainly would have been considered probable of
completion at the March 31,
2021 valuation date.
Whether you used the Series E preferred issuance price in October
2020 in deriving
either enterprise value and/or common stock fair value for stock
option grants near
that time. If so, tell us how this issuance was conducted at arm
s length and the
resulting price indicative of the fair value of Series E
preferred at that time. In this
regard, we note from page 162 that at least 11.3 million shares
of this stock, or about
46% of the 24.5 million share issuance, were acquired by existing
shareholders. Tell
us what percentage of this issuance was acquired by existing
investors. Also tell us
who lead the pricing negotiations from the investors' side, how
many shares they
acquired and whether they were new or existing investors.
Why you apparently thought your Series E preferred stock was worth
about $28.07
per share during the month of March 2021 but ultimately
determined it to be $23.15
at March 31, 2021 upon receipt of a third party draft valuation
report as indicated in
your response to prior comment 3. In your response, tell us
specifically what factors
caused the decline, or in other words, what factors caused your
"high-level-estimate"
of fair value to apparently be overstated.
How the substantial increase in fair value from March 31, 2021 to
the IPO price
range over less than three months for Series E preferred
stockholders is
commensurate with their "expectations with respect to a rate of
return" when it
increased only 13.4% over the five plus month period from
issuance in October
2020 through March 31, 2021 as indicated in your response to
prior comment 3.
G. Mike Mikan
Bright Health Group Inc.
May 28, 2021
Page 3
You may contact Mark Brunhofer (202) 551-3638 or Sharon Blume at (202)
551-3474 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Eric Envall at (202) 551-3234 or J. Nolan McWilliams at (202) 551-3217
with any other
questions.
FirstName LastNameG. Mike Mikan Sincerely,
Comapany NameBright Health Group Inc.
Division of
Corporation Finance
May 28, 2021 Page 3 Office of Finance
FirstName LastName