A 3-year-old health-insurance company just raised a massive $635 million funding round as it seeks to double its footprint for next year.
Bright Health provides health plans for individuals under the Affordable Care Act and to seniors in Medicare Advantage. It was founded in 2016 and has now raised more than $1 billion. A representative for the company declined to provide its valuation.
The venture-capital firm NEA led the new round, and Bright now represents the largest single investment in a company in NEA’s 42-year history, the firm’s general partner Mohamad Makhzoumi, who sits on Bright’s board, told Business Insider.
“It was a pretty easy decision,” Makhzoumi said. “It’s an exceptional business.”
Bright Health is part of a group of health-insurance startups that have raised large sums from investors to take new approaches to health insurance. In August 2018, Oscar Health raised $375 million from Alphabet as part of plans to enter the Medicare Advantage market in 2020. Devoted Health in October 2018 raised $300 million ahead of launching its first Medicare Advantage plans in Florida this year. Clover Health in January raised $500 million. Altogether, the four venture-backed health insurance startups have raised $3.6 billion.
The Minneapolis-based Bright Health posted a net loss of $9.3 million for the first three quarters of 2019, a deeper net loss than the $4.2 million loss the company had over the same period in 2018. The company made $164.3 million in revenue and recorded $127.9 million in medical claims.
The startup covered 60,434 members as of September 30, mostly in ACA health plans for individuals and families.
Bright’s plans for 2020
The funding will come in handy as the startup looks to expand its reach in 2020.
The company said in July that it would operate in parts of 12 states in 2020, roughly double its geographic footprint for 2019.
That’ll include specific cities and counties in Florida, Illinois, North Carolina, Oklahoma, and South Carolina as well as the whole state of Nebraska. It builds on Bright’s presence in Alabama, Arizona, Colorado, Tennessee, Ohio, and New York.
Bright typically partners with one health system in each market to help set up its insurance plan. For instance, in New York, it’s working with Mount Sinai Health System, and in Colorado it partnered with Centura Health.
The idea is that by working directly with one health system in a region rather than contracting more broadly, Bright can make its members’ care better and less expensive.