|
Delaware
(State or other jurisdiction of
incorporation or organization) |
| |
6324
(Primary Standard Industrial
Classification Code Number) |
| |
47-4991296
(I.R.S. Employer
Identification Number) |
|
|
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 |
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|
Large accelerated filer
☐
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| |
Accelerated filer
☐
|
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|
Non-accelerated filer
☒
|
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Smaller reporting company
☐
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| | | |
Emerging growth company
☐
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Title of Each Class
of Securities to be Registered |
| | |
Amount to be
Registered(1) |
| | |
Proposed Maximum
Aggregate Offering Price per Share(2) |
| | |
Proposed Maximum
Aggregate Offering Price(1)(2) |
| | |
Amount of
Registration Fee |
|
|
Common stock, $0.0001 par value per share
|
| | |
67,200,000
|
| | |
$23.00
|
| | |
$1,545,600,000
|
| | |
$168,625
|
|
| | |
Per
Share |
| |
Total
|
| ||||||
Public offering price
|
| | | $ | | | | | $ | | | ||
Underwriting discounts and commissions(1)
|
| | | $ | | | | | $ | | | ||
Proceeds, before expenses, to us
|
| | | $ | | | | | $ | | | |
|
J.P. Morgan
|
| |
Goldman Sachs & Co. LLC
|
| |
Morgan Stanley
|
| | Barclays | |
|
BofA Securities
|
| |
Citigroup
|
| |
Piper Sandler
|
|
|
Nomura
|
| |
RBC Capital Markets
|
|
| | |
Page
|
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| | | | 69 | | | |
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| | | | 93 | | | |
| | | | 122 | | | |
| | | | 129 | | | |
| | | | 166 | | | |
| | | | 168 | | | |
| | | | 173 | | | |
| | | | 181 | | | |
| | | | 184 | | | |
| | | | 187 | | | |
| | | | 196 | | | |
| | | | 196 | | | |
| | | | 196 | | | |
| | | | F-1 | | |
| | |
Year Ended December 31,
|
| |
Three Months
Ended March 31, |
| ||||||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |
2020
|
| |
2021(6)
|
| |
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 | | | | | | 208,240 | | | | | | 74,444 | | |
Depreciation and amortization
|
| | | | 8,289 | | | | | | 1,134 | | | | | | 1,030 | | | | | | 10,623 | | | | | | 4,581 | | | | | | 787 | | |
Total operating costs
|
| | | | 1,464,923 | | | | | | 406,010 | | | | | | 193,273 | | | | | | 1,677,066 | | | | | | 897,391 | | | | | | 205,846 | | |
Operating loss
|
| | | | (248,442) | | | | | | (125,337) | | | | | | (62,641) | | | | | | (273,583) | | | | | | (22,833) | | | | | | (7,280) | | |
Interest expense
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 546 | | | | | | — | | |
Loss before income taxes
|
| | | | (257,603) | | | | | | (125,337) | | | | | | (62,641) | | | | | | (273,583) | | | | | | (23,379) | | | | | | (7,280) | | |
Income tax (benefit) expense
|
| | | | (9,161) | | | | | | — | | | | | | — | | | | | | (9,161) | | | | | | 1,166 | | | | | | — | | |
Net loss
|
| | | | (248,442) | | | | | | (125,337) | | | | | | (62,641) | | | | | | (264,422) | | | | | | (24,545) | | | | | | (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) | | | | | | (262,978) | | | | | | (25,587) | | | | | | (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) | | | | | | $ (262,978) | | | | | | $ (26,204) | | | | | | $ (6,329) | | |
Non-GAAP Metric: | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||
Adjusted EBITDA(2)
|
| | | | $ (238,912) | | | | | | $ (121,091) | | | | | | $ (61,354) | | | | | | $ (252,558) | | | | | | $ (9,584) | | | | | | $ (3,855) | | |
| | |
Year Ended December 31,
|
| |
Three Months Ended
March 31, |
| | ||||||||||||||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |
2020
|
| |
2021(6)
|
| |
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
|
| | | | $ (1.82) | | | | | | $ (0.93) | | | | | | $ (0.47) | | | | | | $ (0.55) | | | | | | $ (0.18) | | | | | | $ (0.05) | | | | | | $ (0.05) | | | | ||
Weighted average common shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted
|
| | | | 136,193 | | | | | | 134,486 | | | | | | 131,975 | | | | | | 476,818 | | | | | | 140,175 | | | | | | 137,125 | | | | | | 557,659 | | | |
| | |
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(6)
|
| |
Pro Forma(4)
(Unaudited) |
| |
Pro Forma As
Adjusted(5) (Unaudited) |
| |||||||||
| | |
(in thousands)
|
| |||||||||||||||
Balance sheet data: | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 975,933 | | | | | $ | 975,933 | | | | | $ | 2,010,640 | | |
Total assets
|
| | | | 2,488,118 | | | | | | 2,488,118 | | | | | | 3,519,993 | | |
Total debt
|
| | | | 200,000 | | | | | | 200,000 | | | | | | — | | |
Total liabilities
|
| | | | 1,231,556 | | | | | | 1,231,556 | | | | | | 1,031,556 | | |
Total stockholders’ equity (deficit)
|
| | | | (519,807) | | | | | | 1,216,345 | | | | | | 2,448,220 | | |
| | |
Year Ended December 31,
|
| |
Three Months Ended March 31,
|
| ||||||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |
2020
|
| |
2021
|
| |
2020
|
| ||||||||||||||||||
| | |
Actual
|
| |
Pro Forma
(Unaudited) |
| |
Actual
|
| |||||||||||||||||||||||||||
| | |
(in thousands)
|
| |||||||||||||||||||||||||||||||||
Net loss(6)
|
| | | $ | (248,442) | | | | | $ | (125,337) | | | | | $ | (62,641) | | | | | $ | (264,422) | | | | | $ | (24,545) | | | | | $ | (7,280) | | |
Interest expense
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 546 | | | | | | — | | |
Income tax (benefit) expense
|
| | | | (9,161) | | | | | | — | | | | | | — | | | | | | (9,161) | | | | | | 1,166 | | | | | | — | | |
Depreciation and amortization
|
| | | | 8,289 | | | | | | 1,134 | | | | | | 1,030 | | | | | | 10,623 | | | | | | 4,581 | | | | | | 787 | | |
Transaction costs(a)
|
| | | | 4,950 | | | | | | 1,248 | | | | | | — | | | | | | 4,950 | | | | | | 2,020 | | | | | | 1,695 | | |
Share-based compensation expense(b)(6)
|
| | | | 5,452 | | | | | | 1,864 | | | | | | 257 | | | | | | 5,452 | | | | | | 5,176 | | | | | | 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) | | |
| | |
Year Ended
December 31, 2020 |
| |
Three Months
Ended March 31, 2021 |
| ||||||
| | |
(in thousands, except
per share amounts) |
| |||||||||
Numerator: | | | | | | | | | |||||
Net loss attributable to common stockholders(6)
|
| | | $ | (264,422) | | | | | $ | (25,162) | | |
Denominator: | | | | | | | | | |||||
Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted
|
| | | | 136,193 | | | | | | 140,175 | | |
Pro forma adjustment to reflect the assumed conversion of preferred stock
|
| | | | 340,625 | | | | | | 417,484 | | |
Pro forma weighted-average number of shares outstanding used to compute pro forma net loss per share, basic and diluted
|
| | | | 476,818 | | | | | | 557,659 | | |
Pro forma net loss per share, basic and diluted
|
| | | $ | (0.55) | | | | | $ | (0.05) | | |
| | |
As of March 31, 2021
|
| |||||||||||||||
| | |
Actual(2)
|
| |
Pro Forma
|
| |
Pro Forma
As Adjusted |
| |||||||||
| | |
(in thousands, except share and par value)
|
| |||||||||||||||
Cash and cash equivalents
|
| | | $ | 975,933 | | | | | $ | 975,933 | | | | | $ | 2,010,640 | | |
Debt: | | | | | | | | | | | | | | | | | | | |
Total debt(1)
|
| | | | 200,000 | | | | | | 200,000 | | | | | | — | | |
Redeemable equity: | | | | | | | | | | | | | | | | | | | |
Redeemable noncontrolling interests
|
| | | | 40,217 | | | | | | 40,217 | | | | | | 40,217 | | |
Preferred stock, $0.0001 par value; 168,065,332 shares
authorized, actual, 165,664,947 shares issued and outstanding, actual, 168,065,332 shares authorized, pro forma, no shares issued and outstanding, pro forma, 100,000,000 shares authorized, pro forma as adjusted, no shares issued and outstanding, pro forma as adjusted |
| | | | 1,736,152 | | | | | | — | | | | | | — | | |
Stockholders’ equity (deficit): | | | | | | | | | | | | | | | | | | | |
Common stock, $0.0001 par value; 674,593,725 shares
authorized, actual, 142,323,510 shares issued and outstanding, actual, 674,593,725 shares authorized, pro forma, 564,020,214 shares issued and outstanding, pro forma, 3,000,000,000 shares authorized, pro forma as adjusted, 624,020,214 shares issued and outstanding, pro forma as adjusted |
| | | | 14 | | | | | | 56 | | | | | | 62 | | |
Additional paid-in capital
|
| | | | 19,946 | | | | | | 1,756,056 | | | | | | 2,987,925 | | |
Accumulated deficit
|
| | | | (541,151) | | | | | | (541,151) | | | | | | (541,151) | | |
Accumulated other comprehensive income (loss)
|
| | | | 1,384 | | | | | | 1,384 | | | | | | 1,384 | | |
Total stockholders’ equity (deficit)
|
| | | $ | (519,807) | | | | | $ | 1,216,345 | | | | | $ | 2,448,220 | | |
Total capitalization
|
| | | $ | 1,456,562 | | | | | $ | 1,456,562 | | | | | $ | 2,488,437 | | |
| | |
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 | | | | | | 1,705(b) | | | | | | 10,623 | | |
Total operating costs
|
| | | | 1,464,923 | | | | | | 210,470 | | | | | | | | | | | | 1,677,066 | | |
Operating loss
|
| | | | (257,603) | | | | | | (14,307) | | | | | | | | | | | | (273,583) | | |
Interest expense, net
|
| | | | — | | | | | | (565) | | | | | | 565(c) | | | | | | — | | |
Loss before income taxes
|
| | | | (257,603) | | | | | | (14,872) | | | | | | | | | | | | (273,583) | | |
Income tax (benefit) expense
|
| | | | (9,161) | | | | | | — | | | | |
|
(d)
|
| | | | | (9,161) | | |
Net loss
|
| | | | $ (248,442) | | | | | | $ (14,872) | | | | | | | | | | | | $ (264,422) | | |
Basic and diluted loss per share and pro forma loss per share attributable to common shareholders
|
| | | | $ (1.82) | | | | | | | | | | | | | | | | | | $ (0.55)(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 |
| | | | 136,193 | | | | | | | | | | | | | | | | | | 476,818 | | |
| | |
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) | | |
| | |
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 | | | | | | 10 | | | | | | 67 | | |
New depreciation and amortization expense
|
| | | | | | | | | | | | | | | | 2,334 | | |
Eliminate historical Brand New Day depreciation and amortization expense
|
| | | | | | | | | | | | | | | | (629) | | |
Pro forma depreciation and amortization adjustment
|
| | | | | | | | | | | | | | | $ | 1,705 | | |
| | |
For the
Year Ended December 31, 2020 |
| |||
(in thousands, except per share amounts) | | | | | | | |
Numerator: | | | | | | | |
Pro forma net loss attributable to common stockholders
|
| | | | $ (264,422) | | |
Denominator: | | | | | | | |
Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted
|
| | | | 136,193 | | |
Pro forma adjustment to reflect the assumed conversion of preferred stock
|
| | | | 340,625 | | |
Pro forma weighted-average number of shares outstanding used to compute pro forma net loss per share, basic and diluted
|
| | | | 476,818 | | |
Pro forma net loss per share, basic and diluted
|
| | | | $ (0.55) | | |
|
Assumed initial public offering price per share
|
| |
|
| | | $ | 21.50 | | | |||
|
Net tangible book deficit per share as of March 31, 2021 before giving effect to this
offering |
| | | $ | (7.14) | | | | | | | | |
|
Increase in net tangible book value per share attributable to conversion of outstanding preferred stock
|
| | | | 8.42 | | | | |||||
|
Increase in net tangible book value per share attributable to new investors purchasing shares in this offering
|
| | | | 1.85 | | | | |||||
|
Net tangible book value per share as adjusted to give effect to this offering and the automatic conversion of all of our outstanding preferred stock into 421,696,704 shares of common stock
|
| | | | | | | | | | 3.13 | | |
|
Dilution per share to new investors in this offering
|
| | | | | | | | | $ | 18.37 | | |
| | |
Shares Purchased
|
| |
Total Consideration
|
| |
Average
Price Share |
| |||||||||||||||||||||
| | |
Number
|
| |
Percent
|
| |
Amount
|
| |
Percent
|
| ||||||||||||||||||
| | |
(in millions)
|
| | | | | | | |
(in millions)
|
| | | | |||||||||||||||
Existing stockholders(1)
|
| | | | 564.0 | | | | | | 90% | | | | | | 1,721.1(2) | | | | | | 57% | | | | | | 3.05 | | |
New investors
|
| | | | 60.0 | | | | | | 10% | | | | | | 1,290.0 | | | | | | 43% | | | | | | 21.50 | | |
Total
|
| | | | 624.0 | | | | | | 100.0% | | | | | | 3,011.1 | | | | | | 100.0% | | | | | | 4.83 | | |
|
Shares of common stock issuable upon conversion of the preferred stock
|
| | | | 421,696,704 | | |
|
Common shares issued and outstanding
|
| | | | 142,323,510 | | |
|
Total common shares purchased by existing stockholders
|
| | | | 564,020,214 | | |
| | |
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(2)
|
| | | | $ (248,442) | | | | | | $ (125,337) | | | | | | $ (62,641) | | | | | | $ (24,545) | | | | | | $ (7,280) | | |
Adjusted EBITDA(3)
|
| | | | $ (238,912) | | | | | | $ (121,091) | | | | | | $ (61,354) | | | | | | $ (9,584) | | | | | | $ (3,855) | | |
| | |
Year Ended December 31,
|
| |
Three Months Ended March 31,
|
| ||||||||||||||||||||||||
(in thousands)
|
| |
2020
|
| |
2019
|
| |
2018
|
| |
2021
|
| |
2020
|
| |||||||||||||||
Net loss(a)
|
| | | | $ (248,442) | | | | | | $ (125,337) | | | | | | $ (62,641) | | | | | | $ (24,545) | | | | | | $ (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(b)
|
| | | | 4,950 | | | | | | 1,248 | | | | | | — | | | | | | 2,020 | | | | | | 1,695 | | |
Share-based Compensation expense(a)(c)
|
| | | | 5,452 | | | | | | 1,864 | | | | | | 257 | | | | | | 5,176 | | | | | | 943 | | |
Change in fair value of contingent consideration(d)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1,472 | | | | | | — | | |
Adjusted EBITDA
|
| | | | $ (238,912) | | | | | | $ (121,091) | | | | | | $ (61,354) | | | | | | $ (9,584) | | | | | | $ (3,855) | | |
| | |
Three Months Ended March 31,
|
| |||||||||
Consolidated statements of income (loss) and operating data:
|
| |
2021(3)
|
| |
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
|
| | | | 208,240 | | | | | | 74,444 | | |
Depreciation and amortization
|
| | | | 4,581 | | | | | | 787 | | |
Total operating costs
|
| | | | 897,391 | | | | | | 205,846 | | |
Operating Loss
|
| | | | (22,833) | | | | | | (7,280) | | |
Interest Expense
|
| | | | 546 | | | | | | — | | |
Loss before income taxes
|
| | | | (23,379) | | | | | | (7,280) | | |
Income tax (benefit) expense
|
| | | | 1,166 | | | | | | — | | |
Net loss
|
| | | | (24,545) | | | | | | (7,280) | | |
Net earnings attributable to noncontrolling interest
|
| | | | (617) | | | | | | — | | |
Net loss attributable to Bright Health Group, Inc. common
shareholders |
| | | $ | (25,162) | | | | | $ | (7,280) | | |
Adjusted EBITDA
|
| | | $ | (9,584) | | | | | $ | (3,855) | | |
Medical Cost Ratio (MCR)(1)
|
| | | | 79.5% | | | | | | 68.5% | | |
Operating Cost Ratio(2)
|
| | | | 23.8% | | | | | | 37.5% | | |
| | |
Three Months Ended March 31,
|
| |||||||||
Statements of income (loss) and operating data:
|
| |
2021(2)
|
| |
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
|
| | | | 189,973 | | | | | | 66,975 | | |
Depreciation and amortization
|
| | | | 2,357 | | | | | | 262 | | |
Total operating costs
|
| | | | 867,386 | | | | | | 197,852 | | |
Operating loss
|
| | | $ | (24,215) | | | | | $ | (6,110) | | |
Medical Cost Ratio (MCR)
|
| | | | 80.2% | | | | | | 69.2% | | |
| | |
Three Months Ended March 31,
|
| |||||||||
Statements of income (loss) and operating data:
|
| |
2021(1)
|
| |
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
|
| | | | 25,451 | | | | | | 10,176 | | |
Depreciation and amortization
|
| | | | 2,224 | | | | | | 525 | | |
Total operating costs
|
| | | | 47,157 | | | | | | 10,701 | | |
Operating income (loss)
|
| | | $ | 1,382 | | | | | $ | (1,170) | | |
| | |
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% | | |
| | |
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% | | |
| | |
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) | | | | | | $ — | | | | | | $ — | | |
| | |
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 | | | |
| | |
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 | | |
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) | | |
Name
|
| |
Age
|
| |
Position
|
|
G. Mike Mikan | | |
50
|
| | Chief Executive Officer, President and Director | |
Catherine R. Smith | | |
57
|
| | Chief Financial and Administrative Officer | |
Sam K. Srivastava | | |
53
|
| | Chief Executive Officer, NeueHealth | |
Tomás Valdivia | | |
59
|
| | Chief Health and Equity Officer | |
Keith Nelsen | | |
57
|
| | General Counsel and Corporate Secretary | |
Simeon Schindelman | | |
58
|
| | Chief Executive Officer, Bright HealthCare | |
Robert J. Sheehy | | |
63
|
| | Chairman of the Board | |
Kedrick D. Adkins Jr. | | |
68
|
| | Director | |
Naomi Allen | | |
47
|
| | Director | |
Jeffrey Folick | | |
73
|
| | Director | |
Linda Gooden | | |
68
|
| | Director | |
Jeffery R. Immelt | | |
65
|
| | Director | |
Manuel Kadre | | |
55
|
| | Director | |
Stephen Kraus | | |
44
|
| | Director | |
Mohamad Makhzoumi | | |
41
|
| | Director | |
Adair Newhall | | |
42
|
| | Director | |
Company Name
|
| |
Business Segment
|
|
Adobe Inc. | | | Software | |
Allscripts Healthcare Solutions, Inc. | | | HC Technology | |
American Renal Associates Holdings | | | HC Providers & Services | |
AMN Healthcare Services Inc. | | | HC Providers & Services | |
Athenahealth Inc.* | | | HC Technology | |
Acadia Healthcare | | | HC Providers & Services | |
Cerner Corporation | | | HC Technology | |
DaVita Inc. | | | HC Providers & Services | |
Encompass Health Corporation | | | HC Providers & Services | |
Envision Healthcare Corporation* | | | HC Providers & Services | |
Evolent Health, Inc. | | | HC Providers & Services | |
Gartner, Inc. | | | IT Services | |
Intuit Inc. | | | Software | |
LifePoint Health* | | | HC Providers & Services | |
Magellan Health Inc. | | | HC Providers & Services | |
Mednax, Inc. | | | HC Providers & Services | |
Molina Healthcare Inc. | | | HC Providers & Services | |
Owens & Minor, Inc. | | | HC Providers & Services | |
Paychex, Inc. | | | IT Services | |
VMWare, Inc. | | | Software | |
Workday, Inc. | | | Software | |
Compensation Element
|
| |
Description
|
| |
Objectives
|
|
Base Salary
|
| | Fixed compensation | | | Provide a competitive, fixed level of cash compensation to attract and retain talented and skilled executives | |
Annual Cash Bonus
|
| | Discretionary annual cash bonus determined after considering financial and individual performance | | | Retain and motivate executives to achieve or exceed financial goals and company objectives | |
Stock Options
|
| | Equity-linked compensation that is subject to vesting based on continued employment | | | The value of options is directly related to the appreciation in value delivered to our stockholders over time, aligning the interests of our executives with those of our stockholders | |
Employee Benefits and Perquisites
|
| | Participation in all broad-based employee health and welfare programs and retirement plans | | | Aid in retention of key executives in a highly competitive market for talent by providing an overall competitive benefits package | |
Name
|
| |
Fiscal
Year End 2019 Base Salary ($) |
| |
Fiscal
Year End 2020 Base Salary ($)(1) |
| |
Percentage
Increase (%) |
| |||||||||
G. Mike Mikan
|
| | | | 300,000 | | | | | | 600,000 | | | | | | 100 | | |
Cathy Smith
|
| | | | — | | | | | | 450,000 | | | | | | — | | |
Robert Sheehy
|
| | | | 300,000 | | | | | | 600,000 | | | | | | 100 | | |
Keith Nelsen
|
| | | | — | | | | | | 400,000 | | | | | | — | | |
Simeon Schindelman
|
| | | | 300,000 | | | | | | 400,000 | | | | | | 33 | | |
Sam Srivastava
|
| | | | 300,000 | | | | | | 400,000 | | | | | | 33 | | |
Name
|
| |
2021 Base
Salary ($) |
| |||
G. Mike Mikan
|
| | | | 1,300,000 | | |
Cathy Smith
|
| | | | 650,000 | | |
Keith Nelsen
|
| | | | 550,000 | | |
Simeon Schindelman
|
| | | | 575,000 | | |
Sam Srivastava
|
| | | | 575,000 | | |
Name
|
| |
2020 Base
Salary ($) |
| |
Target Bonus
(%) |
| |
Target Bonus
Amount ($) |
| |
Actual Bonus
Paid ($)(1) |
| ||||||||||||
G. Mike Mikan
|
| | | | 600,000 | | | | | | 75 | | | | | | 450,000 | | | | | | 585,000 | | |
Cathy Smith
|
| | | | 450,000 | | | | | | 75 | | | | | | 337,500 | | | | | | 454,375 | | |
Robert Sheehy
|
| | | | 600,000 | | | | | | 75 | | | | | | 450,000 | | | | | | 540,000 | | |
Keith Nelsen
|
| | | | 400,000 | | | | | | 60 | | | | | | 240,000 | | | | | | 193,600 | | |
Simeon Schindelman
|
| | | | 400,000 | | | | | | 60 | | | | | | 240,000 | | | | | | 327,000 | | |
Sam Srivastava
|
| | | | 400,000 | | | | | | 60 | | | | | | 240,000 | | | | | | 327,000 | | |
Name
|
| |
2021 Target
Bonus (%) |
| |||
G. Mike Mikan
|
| | | | 130 | | |
Cathy Smith
|
| | | | 90 | | |
Keith Nelsen
|
| | | | 70 | | |
Simeon Schindelman
|
| | | | 75 | | |
Sam Srivastava
|
| | | | 75 | | |
Name
|
| |
Grant Date
|
| |
Number of
Options Granted |
| |
Exercise Price
per Share ($) |
| |||||||||
G. Mike Mikan
|
| | | | 2/19/2020 | | | | | | 5,235,000 | | | | | | 1.77 | | |
| | | | | 11/19/2020 | | | | | | 1,650,000 | | | | | | 2.30 | | |
Cathy Smith
|
| | | | 2/19/2020 | | | | | | 600,000 | | | | | | 1.77 | | |
| | | | | 11/19/2020 | | | | | | 450,000 | | | | | | 2.30 | | |
Robert Sheehy
|
| | | | 2/19/2020 | | | | | | 4,008,000 | | | | | | 1.77 | | |
| | | | | 11/19/2020 | | | | | | 750,000 | | | | | | 2.30 | | |
Keith Nelsen
|
| | | | 5/28/2020 | | | | | | 1,800,000 | | | | | | 1.77 | | |
| | | | | 11/19/2020 | | | | | | 225,000 | | | | | | 2.30 | | |
Simeon Schindelman
|
| | | | 2/19/2020 | | | | | | 75,534 | | | | | | 1.77 | | |
| | | | | 5/28/2020 | | | | | | 450,000 | | | | | | 1.77 | | |
| | | | | 11/19/2020 | | | | | | 300,000 | | | | | | 2.30 | | |
Sam Srivastava
|
| | | | 2/19/2020 | | | | | | 68,667 | | | | | | 1.77 | | |
| | | | | 5/28/2020 | | | | | | 450,000 | | | | | | 1.77 | | |
| | | | | 11/19/2020 | | | | | | 300,000 | | | | | | 2.30 | | |
Name
|
| |
Number of
Options Granted |
| |||
G. Mike Mikan
|
| | | | 7,812,288 | | |
Cathy Smith
|
| | | | 1,200,000 | | |
Robert Sheehy
|
| | | | — | | |
Keith Nelsen
|
| | | | 675,000 | | |
Simeon Schindelman
|
| | | | 1,050,000 | | |
Sam Srivastava
|
| | | | 1,200,000 | | |
Vesting Tranche (25% of PSUs)
|
| |
Appreciation
Required From Public Offering Price |
| |
Price Per
Share Goal |
| ||||||
First Vesting Tranche
|
| | | | 50% | | | | | $ | | | |
Second Vesting Tranche
|
| | | | 100% | | | | | $ | | | |
Third Vesting Tranche
|
| | | | 150% | | | | | $ | | | |
Fourth Vesting Tranche
|
| | | | 200% | | | | | $ | | | |
Name
|
| |
Title
|
| |
Total
PSU Grant |
|
G. Mike Mikan | | | Chief Executive Officer | | | 7,350,000 | |
Cathy Smith | | | Chief Financial and Administrative Officer | | | 1,050,000 | |
Keith Nelsen | | | General Counsel | | | 1,050,000 | |
Simeon Schindelman | | |
Chief Executive Officer – Bright HealthCare
|
| | 1,050,000 | |
Sam Srivastava | | | Chief Executive Officer – NeueHealth | | | 1,050,000 | |
Other Executive Leadership Team Members | | | N/A | | | 3,150,000 | |
Name and Principal Position
|
| |
Year
|
| |
Salary
($)(1) |
| |
Bonus
($)(2) |
| |
Option Awards
($)(3) |
| |
All Other
Compensation ($)(4) |
| |
Total
($) |
| ||||||||||||||||||
G. Mike Mikan
Chief Executive Officer 5/1/20 – 12/ 31/20 |
| | | | 2020 | | | | | | 600,000 | | | | | | 585,000 | | | | | | 4,141,805 | | | | | | 162,018 | | | | | | 5,488,823 | | |
Cathy Smith
Chief Financial Officer |
| | | | 2020 | | | | | | 445,096 | | | | | | 454,375 | | | | | | 672,660 | | | | | | 10,125 | | | | | | 1,582,256 | | |
Robert Sheehy
Chief Executive Officer 1/1/20 – 4/30/20 |
| | | | 2020 | | | | | | 600,000 | | | | | | 540,000 | | | | | | 2,783,174 | | | | | | 17,925 | | | | | | 3,941,099 | | |
Keith Nelsen
General Counsel |
| | | | 2020 | | | | | | 265,384 | | | | | | 193,600 | | | | | | 1,195,830 | | | | | | 5,000 | | | | | | 1,659,814 | | |
Simeon Schindelman
Chief Executive Officer – Bright HealthCare |
| | | | 2020 | | | | | | 400,000 | | | | | | 327,000 | | | | | | 525,350 | | | | | | 13,031 | | | | | | 1,265,381 | | |
Sam Srivastava
Chief Executive Officer – NeueHealth |
| | | | 2020 | | | | | | 400,000 | | | | | | 327,000 | | | | | | 521,617 | | | | | | 12,946 | | | | | | 1,261,563 | | |
Name
|
| |
Award
Type |
| |
Grant
Date(1) |
| |
All
Other Stock Awards: Number of Shares of Stock or Units (#) |
| |
All Other
Option Awards: Number of Securities Underlying Options (#) |
| |
Exercise
or Base Price of Option Awards ($/ share) |
| |
Grant
Date Fair Value of Stock and Option Awards ($)(2) |
| |||||||||||||||
G. Mike Mikan
|
| | | | Options | | | | | | 2/19/2020 | | | | | | | | | 5,235,000 | | | | | | 1.77 | | | | | | 2,894,955 | | |
| | | | | Options | | | | | | 11/19/2020 | | | | | | | | | 1,650,000 | | | | | | 2.30 | | | | | | 1,246,850 | | |
Cathy Smith
|
| | | | Options | | | | | | 2/19/2020 | | | | | | | | | 600,000 | | | | | | 1.77 | | | | | | 331,800 | | |
| | | | | Options | | | | | | 11/19/2020 | | | | | | | | | 450,000 | | | | | | 2.30 | | | | | | 340,860 | | |
Robert Sheehy
|
| | | | Options | | | | | | 2/19/2020 | | | | | | | | | 4,008,000 | | | | | | 1.77 | | | | | | 2,216,424 | | |
| | | | | Options | | | | | | 11/19/2020 | | | | | | | | | 750,000 | | | | | | 2.30 | | | | | | 566,750 | | |
Keith Nelsen
|
| | | | Options | | | | | | 5/28/2020 | | | | | | | | | 1,800,000 | | | | | | 1.77 | | | | | | 1,025,400 | | |
| | | | | Options | | | | | | 11/19/2020 | | | | | | | | | 225,000 | | | | | | 2.30 | | | | | | 170,430 | | |
Simeon Schindelman
|
| | | | Options | | | | | | 2/19/2020 | | | | | | | | | 75,534 | | | | | | 1.77 | | | | | | 41,070 | | |
| | | | | Options | | | | | | 5/28/2020 | | | | | | | | | 450,000 | | | | | | 1.77 | | | | | | 257,040 | | |
| | | | | Options | | | | | | 11/19/2020 | | | | | | | | | 300,000 | | | | | | 2.30 | | | | | | 227,240 | | |
Sam Srivastava
|
| | | | Options | | | | | | 2/19/2020 | | | | | | | | | 68,667 | | | | | | 1.77 | | | | | | 37,337 | | |
| | | | | Options | | | | | | 5/28/2020 | | | | | | | | | 450,000 | | | | | | 1.77 | | | | | | 257,040 | | |
| | | | | Options | | | | | | 11/19/2020 | | | | | | | | | 300,000 | | | | | | 2.30 | | | | | | 227,240 | | |
| | | | | | | | | | | | | | |
Option Awards
|
| ||||||||||||||||||||||||
Name
|
| |
Grant
Date |
| |
Vesting
Commencement Date(1) |
| |
Number of
Securities Underlying Unexercised Options Exercisable (#)(2) |
| |
Number of
Securities Underlying Unexercised Options Unexercisable (#)(3) |
| |
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
| |
Option
Exercise Price ($) |
| |
Option
Expiration Date(4) |
| ||||||||||||||||||
G. Mike Mikan
|
| | | | 1/23/2019 | | | | | | 1/15/2019 | | | | | | 5,412,186 | | | | | | 5,882,814 | | | | | | | | | 1.04 | | | | | | 1/22/2029 | | |
| | | | | 2/19/2020 | | | | | | 2/19/2020 | | | | | | | | | | | | 5,235,000 | | | | | | | | | 1.77 | | | | | | 2/18/2030 | | |
| | | | | 11/19/2020 | | | | | | 11/19/2020 | | | | | | | | | | | | 1,650,000 | | | | | | | | | 2.30 | | | | | | 11/18/2030 | | |
Cathy Smith
|
| | | | 11/4/2019 | | | | | | 1/6/2020 | | | | | | | | | | | | 2,550,000 | | | | | | | | | 1.77 | | | | | | 11/3/2029 | | |
| | | | | 2/19/2020 | | | | | | 2/19/2020 | | | | | | | | | | | | 600,000 | | | | | | | | | 1.77 | | | | | | 2/18/2030 | | |
| | | | | 11/19/2020 | | | | | | 12/18/2020 | | | | | | | | | | | | 450,000 | | | | | | | | | 2.30 | | | | | | 11/18/2030 | | |
Robert Sheehy
|
| | | | 2/19/2020 | | | | | | 2/19/2020 | | | | | | | | | | | | 4,008,000 | | | | | | | | | 1.77 | | | | | | 2/18/2030 | | |
| | | | | 11/19/2020 | | | | | | 11/19/2020 | | | | | | | | | | | | 750,000 | | | | | | | | | 2.30 | | | | | | 11/18/2030 | | |
Keith Nelsen
|
| | | | 5/28/2020 | | | | | | 5/4/2020 | | | | | | | | | | | | 1,800,000 | | | | | | | | | 1.77 | | | | | | 5/27/2030 | | |
| | | | | 11/19/2020 | | | | | | 12/18/2020 | | | | | | | | | | | | 225,000 | | | | | | | | | 2.30 | | | | | | 11/18/2030 | | |
Simeon Schindelman
|
| | | | 11/4/2019 | | | | | | 9/16/2019 | | | | | | 459,237 | | | | | | 1,134,375 | | | | | | | | | 1.77 | | | | | | 11/3/2029 | | |
| | | 2/19/2020 | | | | | | 9/16/2019 | | | | | | 23,604 | | | | | | 51,930 | | | | | | | | | 1.77 | | | | | | 2/18/2030 | | | ||
| | | 5/28/2020 | | | | | | 5/28/2020 | | | | | | | | | | | | 450,000 | | | | | | | | | 1.77 | | | | | | 5/27/2030 | | | ||
| | | 11/19/2020 | | | | | | 12/18/2020 | | | | | | | | | | | | 300,000 | | | | | | | | | 2.30 | | | | | | 11/18/2030 | | | ||
Sam Srivastava
|
| | | | 11/4/2019 | | | | | | 9/16/2019 | | | | | | 468,750 | | | | | | 1,031,250 | | | | | | | | | 1.77 | | | | | | 11/3/2029 | | |
| | | | | 2/19/2020 | | | | | | 9/16/2019 | | | | | | 21,456 | | | | | | 47,211 | | | | | | | | | 1.77 | | | | | | 2/18/2030 | | |
| | | | | 5/28/2020 | | | | | | 5/28/2020 | | | | | | | | | | | | 450,000 | | | | | | | | | 1.77 | | | | | | 5/27/2030 | | |
| | | | | 11/19/2020 | | | | | | 12/18/2020 | | | | | | | | | | | | 300,000 | | | | | | | | | 2.30 | | | | | | 11/18/2030 | | |
| | |
Option Awards
|
| |||||||||
Name
|
| |
Number of Shares
Acquired on Exercise (#) |
| |
Value Realized on
Exercise ($)(1) |
| ||||||
Simeon Schindelman
|
| | | | 56,388 | | | | | | 29,698 | | |
Benefit
|
| |
Termination
Without Cause other than in connection with Change in Control ($) |
| |
Death ($)
|
| |
Termination
Without Cause in connection with Change in Control ($) |
| |||||||||
Cash Severance Payment (Salary and Bonus)
|
| | | | 2,100,000(1) | | | | | | | | | | | | 2,100,000(1) | | |
Option Value
|
| | | | 4,821,595(2) | | | | | | 8,331,380(3) | | | | | | 10,169,446(4) | | |
Total
|
| | | | 6,921,595 | | | | | | 8,331,380 | | | | | | 12,269,446 | | |
Benefit
|
| |
Termination
Without Cause ($) |
| |||
Cash Severance Payment (Salary)
|
| | | | 300,000(1) | | |
Total | | | | | 300,000 | | |
Benefit
|
| |
Termination
Without Cause ($) |
| |||
Cash Severance Payment (Salary)
|
| | | | 200,000(1) | | |
Total | | | | | 200,000 | | |
Benefit
|
| |
Termination
Without Cause ($) |
| |||
Cash Severance Payment (Salary and Bonus)
|
| | | | 421,875(1) | | |
Total | | | | | 421,875 | | |
Benefit
|
| |
Termination
Without Cause ($) |
| |||
Cash Severance Payment (Salary)
|
| | | | 400,000(1) | | |
Total | | | | | 400,000 | | |
Employee Level
|
| |
Employee Grade
|
| |
Weeks of Severance Pay
|
|
Executive Leadership Team | | |
23 – 24
|
| | 18 months | |
Senior Vice President | | |
20 – 22
|
| | 12 months | |
Vice President | | |
19
|
| | 6 months | |
Director and Senior Director | | |
17 – 18
|
| | Four weeks plus one week for each completed year of service, with a minimum of 12 weeks and a maximum of 26 weeks | |
All other employees | | |
10 – 16
|
| | Four weeks plus one week for each completed year of service, with a maximum of 26 weeks | |
Employee Level
|
| |
Employee Grade
|
| |
Weeks of Severance Pay
|
|
Executive Leadership Team (ELT) | | |
23 – 24
|
| | 78 weeks of base pay plus an amount equal to 1.5 times the participant’s target bonus, paid over the Severance Period | |
Senior Vice President (SVP) | | |
20 – 22
|
| | 52 weeks of base pay plus an amount equal to the participant’s target bonus, paid over the Severance Period | |
Vice President | | |
19
|
| | 26 weeks of base pay plus an amount equal to 0.5 times the participant’s target bonus amount, paid over the Severance Period | |
Director and Senior Director | | |
17 – 18
|
| | Four weeks plus one week for each completed year of service, with a minimum of 12 weeks and a maximum of 26 weeks | |
All other employees | | |
10 – 16
|
| | Four weeks plus one week for each completed year of service, with a maximum of 26 weeks | |
Employee Level
|
| |
Employee Grade
|
| |
Benefit Subsidy Period
|
|
Executive Leadership Team | | |
23 – 24
|
| | 18 months | |
Senior Vice President | | |
20 – 22
|
| | 12 months | |
Vice President | | |
19
|
| | 6 months | |
Director and Senior Director | | |
17 – 18
|
| | Each calendar month during the Severance Period, with a minimum of 3 months and maximum of 6 months | |
All other employees | | |
10 – 16
|
| | Each calendar month during the Severance Period, with a maximum of 6 months. | |
Employee Grade
|
| |
Non-competition,
non-solicitation and non-disparagement period |
|
23 – 24 | | | 18 months | |
19 – 22 | | | 12 months | |
10 – 18 | | | For the Severance Period (defined above) | |
Name
|
| |
Fees Earned or
Paid in Cash ($)(1) |
| |
Option
Awards ($)(2)(3)(4) |
| |
Total ($)
|
| |||||||||
Kedrick D. Adkins Jr.
|
| | | | 17,250 | | | | | | 298,620 | | | | | | 315,870 | | |
Naomi Allen
|
| | | | 17,250 | | | | | | 298,620 | | | | | | 315,870 | | |
Jeffrey R. Immelt
|
| | | | — | | | | | | 308,448 | | | | | | 308,448 | | |
Manuel Kadre
|
| | | | 2,300 | | | | | | 408,060 | | | | | | 410,360 | | |
Name
|
| |
Shares of
Series C Preferred Stock(1) |
| |
Shares of
Series D Preferred Stock(2) |
| |
Shares of
Series E Preferred Stock(3) |
| |
Aggregate
Purchase Price |
| ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
(in thousands)
|
| |||
New Enterprise Associates and affiliated funds(4)
|
| | | | 8,471,262 | | | | | | 28,572,947 | | | | | | 6,970,570 | | | | | | $ 636,623 | | |
Bessemer Venture Partners and affiliated funds(5)
|
| | | | 3,258,177 | | | | | | 3,993,424 | | | | | | 2,602,800 | | | | | | 138,071 | | |
Greenspring and affiliated funds(6)
|
| | | | 2,606,540 | | | | | | 1,663,924 | | | | | | 1,714,200 | | | | | | 80,000 | | |
Jeffrey Folick(7)
|
| | | | 32,079 | | | | | | 13,311 | | | | | | — | | | | | | 446 | | |
Jeffery R. Immelt(8)
|
| | | | — | | | | | | 13,311 | | | | | | 14,693 | | | | | | 500 | | |
| | | | | | | | | | | | | | |
Shares Beneficially
Owned After The Offering |
| |||||||||||||||||||||
| | |
Shares
Beneficially Owned Prior To The Offering |
| |
Shares
Beneficially Owned Prior to The Offering |
| |
If Underwriters’
Option To Purchase Additional Shares Is Not Exercised |
| |
If Underwriters’
Option To Purchase Additional Shares Is Exercised In Full |
| ||||||||||||||||||||||||
Name Of Beneficial Owner
|
| |
Shares
|
| |
Percentage
|
| |
Shares
|
| |
Percentage
|
| |
Shares
|
| |
Percentage
|
| ||||||||||||||||||
5% Stockholders: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
New Enterprise Associates and affiliated funds(1)
|
| | | | 216,267,684 | | | | | | 37.7% | | | | | | 216,267,684 | | | | | | 34.1% | | | | | | 216,267,684 | | | | | | 33.8% | | |
Bessemer Venture Partners and affiliated funds(2)
|
| | | | 79,937,724 | | | | | | 13.9% | | | | | | 79,937,724 | | | | | | 12.6% | | | | | | 79,937,724 | | | | | | 12.5% | | |
Greenspring and affiliated funds(3)
|
| | | | 43,040,376 | | | | | | 7.5% | | | | | | 43,040,376 | | | | | | 6.8% | | | | | | 43,040,376 | | | | | | 6.7% | | |
Directors and Named Executive Officers(4):
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
G. Mike Mikan(5)
|
| | | | 10,263,435 | | | | | | 1.8% | | | | | | 10,263,435 | | | | | | 1.6% | | | | | | 10,263,435 | | | | | | 1.6% | | |
Catherine R. Smith(6)
|
| | | | 1,168,749 | | | | | | * | | | | | | 1,168,749 | | | | | | * | | | | | | 1,168,749 | | | | | | * | | |
Sam Srivastava(7)
|
| | | | 840,843 | | | | | | * | | | | | | 840,843 | | | | | | * | | | | | | 840,843 | | | | | | * | | |
Keith Nelsen(8)
|
| | | | 525,000 | | | | | | * | | | | | | 525,000 | | | | | | * | | | | | | 525,000 | | | | | | * | | |
Simeon Schindelman(9)
|
| | | | 912,741 | | | | | | * | | | | | | 912,741 | | | | | | * | | | | | | 912,741 | | | | | | * | | |
Robert J. Sheehy(10)
|
| | | | 21,474,735 | | | | | | 3.7% | | | | | | 21,474,735 | | | | | | 3.4% | | | | | | 21,474,735 | | | | | | 3.3% | | |
Kedrick D. Adkins Jr.(11)
|
| | | | 191,250 | | | | | | * | | | | | | 191,250 | | | | | | * | | | | | | 191,250 | | | | | | * | | |
Naomi Allen(12)
|
| | | | 191,250 | | | | | | * | | | | | | 191,250 | | | | | | * | | | | | | 191,250 | | | | | | * | | |
Jeffrey Folick(13)
|
| | | | 1,599,810 | | | | | | * | | | | | | 1,599,810 | | | | | | * | | | | | | 1,599,810 | | | | | | * | | |
Linda Gooden
|
| | | | — | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | | | | |
Jeffery R. Immelt(14)
|
| | | | 230,262 | | | | | | * | | | | | | 230,262 | | | | | | * | | | | | | 230,262 | | | | | | * | | |
Manuel Kadre
|
| | | | — | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | | | | |
Steve Kraus(2)
|
| | | | — | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | | | | |
Mohamad Makhzoumi(1)(15)
|
| | | | 216,209,181 | | | | | | 37.7% | | | | | | 216,209,181 | | | | | | 34.1% | | | | | | 216,209,181 | | | | | | 33.7% | | |
Adair Newhall(16)
|
| | | | 224,628 | | | | | | * | | | | | | 224,628 | | | | | | * | | | | | | 224,628 | | | | | | * | | |
All directors and executive officers
as a group (16 persons) |
| | | | 236,748,123 | | | | | | 40.4% | | | | | | 236,748,123 | | | | | | 36.6% | | | | | | 236,748,123 | | | | | | 36.2% | | |
Earliest Date Available for Sale in the Public Market
|
| |
Number of Shares of Common Stock
|
|
On or after September 7, 2021, provided that the closing price of our common stock on the NYSE is at least 33% greater than the initial public offering price per share set forth on the cover page of this prospectus for the periods described in the section titled “Underwriting (Conflicts of Interest).” | | | Up to 56.4 million shares based on the number of shares of common stock outstanding as of March 31, 2021, assuming the conversion of our preferred stock. | |
180 days after the date of this prospectus, provided that if such release were to occur during or within nine trading days of the start of a regularly scheduled trading black-out period, the above referenced expiration period will instead be the tenth trading day immediately preceding the commencement of such trading black-out period. | | | All remaining shares held by our stockholders not previously eligible for sale, subject to volume limitations applicable to “affiliates” under Rule 144 as described below. | |
Name
|
| |
Number of
Shares |
| |||
J.P. Morgan Securities LLC
|
| | | | | | |
Goldman Sachs & Co. LLC
|
| | | | | | |
Morgan Stanley & Co. LLC
|
| | | | | | |
Barclays Capital Inc.
|
| | | | | | |
BofA Securities, Inc.
|
| | | | | | |
Citigroup Global Markets Inc.
|
| | | | | | |
Piper Sandler & Co.
|
| | | | | | |
Nomura Securities International, Inc.
|
| | | | | | |
RBC Capital Markets, LLC
|
| | | | | | |
Total
|
| | | | 60,000,000 | | |
| | |
Without
option to purchase additional shares exercise |
| |
With full
option to purchase additional shares exercise |
|
Per Share
|
| | $ | | | $ | |
Total
|
| | $ | | | $ | |
| Unaudited Condensed Consolidated Financial Statements of Bright Health Group, Inc. | | | | | | | |
| | | | | F-2 | | | |
| | | | | F-3 | | | |
| | | | | F-4 | | | |
| | | | | F-5 | | | |
| | | | | F-6 | | | |
| | | | | F-7 | | | |
| Audited Consolidated Financial Statements of Bright Health Group, Inc. | | | | | | | |
| | | | | F-25 | | | |
| | | | | F-29 | | | |
| | | | | F-30 | | | |
| | | | | F-31 | | | |
| | | | | F-32 | | | |
| | | | | F-33 | | | |
| | | | | F-34 | | | |
| | | | | F-35 | | | |
| Condensed Unaudited Financial Statements of Universal Care, Inc. | | | | | | | |
| | | | | F-65 | | | |
| | | | | F-66 | | | |
| | | | | F-67 | | | |
| | | | | F-68 | | | |
| | | | | F-69 | | | |
| Audited Financial Statements of Universal Care, Inc. | | | | | | | |
| | | | | F-81 | | | |
| | | | | F-82 | | | |
| | | | | F-83 | | | |
| | | | | F-84 | | | |
| | | | | F-85 | | | |
| | | | | F-86 | | |
| | |
March 31
2021 (As Restated, See Note 14) |
| |
December 31
2020 |
| ||||||
Assets | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 975,933 | | | | | $ | 488,371 | | |
Short-term investments
|
| | | | 274,578 | | | | | | 499,928 | | |
Accounts receivable, net of allowance of $3,750 and $2,602, respectively
|
| | | | 85,486 | | | | | | 60,522 | | |
Prepaids and other current assets
|
| | | | 164,321 | | | | | | 130,986 | | |
Total current assets
|
| | | | 1,500,318 | | | | | | 1,179,807 | | |
Other assets: | | | | | | | | | | | | | |
Long-term investments
|
| | | | 448,903 | | | | | | 175,176 | | |
Property, equipment and capitalized software, net
|
| | | | 15,784 | | | | | | 12,264 | | |
Goodwill
|
| | | | 328,983 | | | | | | 263,035 | | |
Intangible assets, net
|
| | | | 166,726 | | | | | | 152,211 | | |
Other non-current assets
|
| | | | 27,404 | | | | | | 28,309 | | |
Total other assets
|
| | | | 987,800 | | | | | | 630,995 | | |
Total assets
|
| | | $ | 2,488,118 | | | | | $ | 1,810,802 | | |
Liabilities, Redeemable Noncontrolling Interest, Redeemable Preferred Stock and Shareholders’ Deficit
|
| | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Medical costs payable
|
| | | $ | 488,859 | | | | | $ | 249,777 | | |
Accounts payable
|
| | | | 85,146 | | | | | | 57,252 | | |
Unearned revenue
|
| | | | 39,311 | | | | | | 34,628 | | |
Risk adjustment payable
|
| | | | 326,310 | | | | | | 187,777 | | |
Short-term borrowings
|
| | | | 200,000 | | | | | | — | | |
Other current liabilities
|
| | | | 56,707 | | | | | | 35,847 | | |
Total current liabilities
|
| | | | 1,196,333 | | | | | | 565,281 | | |
Other liabilities
|
| | | | 35,223 | | | | | | 28,578 | | |
Total liabilities
|
| | | | 1,231,556 | | | | | | 593,859 | | |
Commitments and contingencies (Note 10) | | | | | | | | | | | | | |
Redeemable noncontrolling interests
|
| | | | 40,217 | | | | | | 39,600 | | |
Redeemable preferred stock, $0.0001 par value; 168,065,332 and 166,307,087 shares
authorized in 2021 and 2020, respectively; 165,664,947 and 164,244,893 shares issued and outstanding in 2021 and 2020, respectively |
| | | | 1,736,152 | | | | | | 1,681,015 | | |
Shareholders’ deficit: | | | | | | | | | | | | | |
Common stock, $0.0001 par value; 674,593,725 and 658,993,725 shares authorized in
2021 and 2020, respectively; 142,323,510 and 137,662,698 shares issued and outstanding in 2021 and 2020, respectively |
| | | | 14 | | | | | | 14 | | |
Additional paid-in capital
|
| | | | 19,946 | | | | | | 9,877 | | |
Accumulated deficit
|
| | | | (541,151) | | | | | | (515,989) | | |
Accumulated other comprehensive income
|
| | | | 1,384 | | | | | | 2,426 | | |
Total shareholders’ deficit
|
| | | | (519,807) | | | | | | (503,672) | | |
Total liabilities, redeemable noncontrolling interests, redeemable preferred stock and shareholders’ deficit
|
| | | $ | 2,488,118 | | | | | $ | 1,810,802 | | |
| | |
Three Months Ended March 31,
|
| |||||||||
| | |
2021
(As Restated, See Note 14) |
| |
2020
|
| ||||||
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
|
| | | | 208,240 | | | | | | 74,444 | | |
Depreciation and amortization
|
| | | | 4,581 | | | | | | 787 | | |
Total operating costs
|
| | | | 897,391 | | | | | | 205,846 | | |
Operating loss
|
| | | | (22,833) | | | | | | (7,280) | | |
Interest expense
|
| | | | 546 | | | | | | — | | |
Loss before income taxes
|
| | | | (23,379) | | | | | | (7,280) | | |
Income tax (benefit) expense
|
| | | | 1,166 | | | | | | — | | |
Net loss
|
| | | | (24,545) | | | | | | (7,280) | | |
Net earnings attributable to noncontrolling interests
|
| | | | (617) | | | | | | — | | |
Net loss attributable to Bright Health Group, Inc. common shareholders
|
| | | | $ (25,162) | | | | | | $ (7,280) | | |
Basic and diluted loss per share attributable to Bright Health Group, Inc. common shareholders
|
| | | | $ (0.18) | | | | | | $ (0.05) | | |
Basic and diluted weighted-average common shares outstanding
|
| | | | 140,175 | | | | | | 137,125 | | |
| | |
Three Months Ended March 31,
|
| |||||||||
| | |
2021
(As Restated, See Note 14) |
| |
2020
|
| ||||||
Net loss
|
| | | | $ (24,545) | | | | | | $ (7,280) | | |
Other comprehensive income (loss): | | | | | | | | | | | | | |
Unrealized investment holding gains (losses) arising during the year, net of tax of $0 and $0, respectively
|
| | | | (980) | | | | | | 890 | | |
Less: reclassification adjustments for investment gains (losses), net of
tax of $0 and $0, respectively |
| | | | 62 | | | | | | (61) | | |
Other comprehensive income (loss)
|
| | | | (1,042) | | | | | | 951 | | |
Comprehensive loss
|
| | | | (25,587) | | | | | | (6,329) | | |
Comprehensive income attributable to noncontrolling interests
|
| | | | (617) | | | | | | — | | |
Comprehensive loss attributable to Bright Health Group, Inc. common shareholders
|
| | | | $ (26,204) | | | | | | $ (6,329) | | |
| | |
Redeemable Preferred Stock
|
| | |
Common Stock
|
| |
Additional
Paid-In Capital |
| |
Retained
Earnings (Deficit) |
| |
Accumulated
Other Comprehensive Income (Loss) |
| |
Total
|
| ||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| | |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||
Balance at January 1, 2021
|
| | | | 164,245 | | | | | | 1,681,015 | | | | | | | 137,663 | | | | | | $ 14 | | | | | | $ 9,877 | | | | | | $ (515,989) | | | | | | $ 2,426 | | | | | | $ (503,672) | | |
Net loss(1)
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (25,162) | | | | | | — | | | | | | (25,162) | | |
Issuance of preferred stock(1)
|
| | | | 1,420 | | | | | | 55,137 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of common stock
|
| | | | — | | | | | | — | | | | | | | 4,661 | | | | | | — | | | | | | 4,893 | | | | | | — | | | | | | — | | | | | | 4,893 | | |
Share-based compensation(1)
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 5,176 | | | | | | — | | | | | | — | | | | | | 5,176 | | |
Other comprehensive loss
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,042) | | | | | | (1,042) | | |
Balance at March 31, 2021 (As Restated)
|
| | | | 165,665 | | | | | | $ 1,736,152 | | | | | | | 142,324 | | | | | | $ 14 | | | | | | $ 19,946 | | | | | | $ (541,151) | | | | | | $ 1,384 | | | | | | $ (519,807) | | |
Balance at January 1, 2020
|
| | | | 119,222 | | | | | | 871,990 | | | | | | | 135,509 | | | | | | 14 | | | | | | 3,184 | | | | | | (267,547) | | | | | | 982 | | | | | | (263,367) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (7,280) | | | | | | — | | | | | | (7,280) | | |
Issuance of common stock
|
| | | | — | | | | | | — | | | | | | | 183 | | | | | | — | | | | | | 13 | | | | | | — | | | | | | — | | | | | | 13 | | |
Share-based compensation
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 943 | | | | | | — | | | | | | — | | | | | | 943 | | |
Other comprehensive income
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 951 | | | | | | 951 | | |
Balance at March 31, 2020
|
| | | | 119,222 | | | | | | $ 871,990 | | | | | | | 135,692 | | | | | | $ 14 | | | | | | $ 4,140 | | | | | | $ (274,827) | | | | | | $ 1,933 | | | | | | $ (268,740) | | |
| | |
Three Months Ended March 31,
|
| |||||||||
| | |
2021
(As Restated, See Note 14) |
| |
2020
|
| ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net loss
|
| | | | $ (25,162) | | | | | | $ (7,280) | | |
Adjustments to reconcile net loss to net cash provided by operating activities:
|
| | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 4,581 | | | | | | 787 | | |
Share-based compensation
|
| | | | 5,176 | | | | | | 943 | | |
Deferred income taxes
|
| | | | 1,166 | | | | | | — | | |
Other, net
|
| | | | 2,694 | | | | | | 146 | | |
Changes in assets and liabilities, net of acquired assets and liabilities:
|
| | | | | | | | | | | | |
Accounts receivable
|
| | | | (23,188) | | | | | | (6,805) | | |
Other assets
|
| | | | (15,707) | | | | | | (2,552) | | |
Medical cost payable
|
| | | | 225,814 | | | | | | 53,822 | | |
Risk adjustment payable
|
| | | | 137,215 | | | | | | 48,597 | | |
Accounts payable and other liabilities
|
| | | | 30,096 | | | | | | (6,246) | | |
Unearned revenue
|
| | | | 918 | | | | | | 874 | | |
Net cash provided by operating activities
|
| | | | 343,603 | | | | | | 82,286 | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Purchases of investments
|
| | | | (298,957) | | | | | | (387,665) | | |
Proceeds from sales, paydown, and maturities of investments
|
| | | | 265,521 | | | | | | 49,314 | | |
Purchases of property and equipment
|
| | | | (4,215) | | | | | | (8) | | |
Business acquisition, net of cash acquired
|
| | | | (18,624) | | | | | | — | | |
Net cash used in investing activities
|
| | | | (56,275) | | | | | | (338,359) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Proceeds from short-term borrowings
|
| | | | 200,000 | | | | | | — | | |
Proceeds from issuance of common stock
|
| | | | 4,893 | | | | | | 13 | | |
Payments for debt issuance costs
|
| | | | (3,391) | | | | | | — | | |
Payments for IPO offering costs
|
| | | | (1,268) | | | | | | — | | |
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 – beginning of year
|
| | | | 488,371 | | | | | | 522,910 | | |
Cash and cash equivalents – end of period
|
| | | | $ 975,933 | | | | | | $ 266,850 | | |
Supplemental disclosures of cash flow information: | | | | | | | | | | | | | |
Changes in unrealized gain (loss) on available-for-sale securities in OCI
|
| | | | $ (1,042) | | | | | | $ 951 | | |
Cash paid for interest
|
| | | | 244 | | | | | | — | | |
Supplemental schedule of noncash activities: | | | | | | | | | | | | | |
Redeemable preferred stock issued for acquisitions
|
| | | | $ 32,982 | | | | | | $ — | | |
| | |
2021
|
| |
2020
|
| ||||||
Compensation and fringe benefits
|
| | | | $ 57,026 | | | | | | $ 25,554 | | |
Professional fees
|
| | | | 39,463 | | | | | | 17,212 | | |
Marketing and selling expense
|
| | | | 50,205 | | | | | | 8,640 | | |
Other operating expenses
|
| | | | 61,546 | | | | | | 23,038 | | |
Total operating costs
|
| | | | $ 208,240 | | | | | | $ 74,444 | | |
|
Accounts receivable
|
| | | $ | 5,674 | | |
|
Prepaids and other current assets
|
| | | | 18,692 | | |
|
Property and equipment
|
| | | | 353 | | |
|
Intangible assets
|
| | | | 110,000 | | |
|
Total Assets
|
| | | | 134,719 | | |
|
Medical costs payable
|
| | | | 71,709 | | |
|
Accounts payable
|
| | | | 2,371 | | |
|
Other current liabilities
|
| | | | 7,426 | | |
|
Other liabilities
|
| | | | 17 | | |
|
Total liabilities
|
| | | | 81,523 | | |
|
Net identified assets acquired
|
| | | | 53,196 | | |
|
Goodwill
|
| | | | 199,438 | | |
|
Total purchase consideration
|
| | | $ | 252,634 | | |
| | |
Pro Forma Consolidated Statements of Income (Loss)
(Unaudited) |
| |||||||||||||||||||||
| | |
Three Months Ended March 31,
|
| |
Years Ended December 31,
|
| ||||||||||||||||||
| | |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||
Revenue
|
| | | | $ 1,003,428 | | | | | | $ 330,438 | | | | | | $ 1,766,527 | | | | | | $ 769,722 | | |
Net loss
|
| | | | (13,531) | | | | | | (6,387) | | | | | | (221,023) | | | | | | (132,636) | | |
| | |
THNM
|
| |
Zipnosis
|
| ||||||
Accounts receivable
|
| | | | $ 714 | | | | | | $ 1,062 | | |
Short-term investments
|
| | | | 4,677 | | | | | | $ — | | |
Prepaids and other current assets
|
| | | | 8,337 | | | | | | 141 | | |
Property and equipment
|
| | | | — | | | | | | 232 | | |
Intangible assets
|
| | | | 7,300 | | | | | | 8,970 | | |
Long-term investments
|
| | | | 13,081 | | | | | | — | | |
Other non-current assets
|
| | | | 1,324 | | | | | | 766 | | |
Total Assets
|
| | | | 35,433 | | | | | | 11,171 | | |
Medical costs payable
|
| | | | 13,268 | | | | | | — | | |
Accounts payable
|
| | | | 14,663 | | | | | | 136 | | |
Unearned revenue
|
| | | | 3,645 | | | | | | 120 | | |
Other current liabilities
|
| | | | 2,682 | | | | | | 665 | | |
Other liabilities
|
| | | | 2,499 | | | | | | 2,730 | | |
Total liabilities
|
| | | | 36,757 | | | | | | 3,651 | | |
Net identified assets acquired
|
| | | | (1,324) | | | | | | 7,520 | | |
Goodwill
|
| | | | 4,739 | | | | | | 62,827 | | |
Total purchase consideration
|
| | | | $ 3,415 | | | | | | $ 70,347 | | |
| | |
Pro Forma Consolidated
Statements of Income (Loss) (Unaudited) |
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Revenue
|
| | | | $ 922,457 | | | | | | $ 233,210 | | |
Net loss
|
| | | | (27,133) | | | | | | (8,330) | | |
| | |
Amount Recognized as
of Acquisition Date (as previously reported) |
| |
Measurement
Period Adjustments |
| |
Amounts Recognized as
of Acquisition Date (as adjusted) |
| |||||||||
Accounts receivable
|
| | | | $ 74,128 | | | | | | $ — | | | | | | $ 74,128 | | |
Prepaids and other current assets
|
| | | | 30,583 | | | | | | — | | | | | | 30,583 | | |
Property and equipment
|
| | | | 4,375 | | | | | | — | | | | | | 4,375 | | |
Intangible assets
|
| | | | 72,600 | | | | | | 1,900 | | | | | | 74,500 | | |
Other non-current assets
|
| | | | 2,906 | | | | | | — | | | | | | 2,906 | | |
Total Assets
|
| | | | 184,592 | | | | | | 1,900 | | | | | | 186,492 | | |
Medical costs payable
|
| | | | 119,408 | | | | | | — | | | | | | 119,408 | | |
Other current liabilities
|
| | | | 51,744 | | | | | | 174 | | | | | | 51,918 | | |
Other liabilities
|
| | | | 1,236 | | | | | | 108 | | | | | | 1,344 | | |
Total liabilities
|
| | | | 172,388 | | | | | | 282 | | | | | | 172,670 | | |
Net identified assets acquired
|
| | | | 12,204 | | | | | | 1,618 | | | | | | 13,822 | | |
Goodwill
|
| | | | 197,886 | | | | | | (1,618) | | | | | | 196,268 | | |
Total purchase consideration
|
| | | | $ 210,090 | | | | | | $ — | | | | | | $ 210,090 | | |
| | |
March 31, 2021
|
| |||||||||||||||||||||
| | |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Carrying
Value |
| ||||||||||||
Cash equivalents
|
| | | | $ 233,427 | | | | | | $ — | | | | | | $ — | | | | | | $ 233,427 | | |
Available for sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 459,870 | | | | | | 1,165 | | | | | | (193) | | | | | | 460,842 | | |
Corporate obligations
|
| | | | 219,839 | | | | | | 877 | | | | | | (90) | | | | | | 220,626 | | |
State and municipal obligations
|
| | | | 19,213 | | | | | | 86 | | | | | | — | | | | | | 19,299 | | |
Commercial paper
|
| | | | 4,996 | | | | | | 1 | | | | | | — | | | | | | 4,997 | | |
Certificates of deposit
|
| | | | 5,700 | | | | | | 1 | | | | | | — | | | | | | 5,701 | | |
Mortgage-backed securities
|
| | | | 3,035 | | | | | | 131 | | | | | | | | | | | | 3,166 | | |
Other
|
| | | | 1,100 | | | | | | — | | | | | | — | | | | | | 1,100 | | |
Total available-for-sale securities
|
| | | | 713,753 | | | | | | 2,261 | | | | | | (283) | | | | | | 715,731 | | |
Held to maturity: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 7,220 | | | | | | — | | | | | | — | | | | | | 7,220 | | |
Certificates of deposit
|
| | | | 1,119 | | | | | | — | | | | | | — | | | | | | 1,119 | | |
Total held-to-maturity securities
|
| | | | 8,339 | | | | | | — | | | | | | — | | | | | | 8,339 | | |
Total investments
|
| | | | $ 955,519 | | | | | | $ 2,261 | | | | | | $ (283) | | | | | | $ 957,497 | | |
| | |
December 31, 2020
|
| |||||||||||||||||||||
| | |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Carrying
Value |
| ||||||||||||
Cash equivalents
|
| | | | $ 153,743 | | | | | | $ — | | | | | | $ (3) | | | | | | $ 153,740 | | |
Available for sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 291,834 | | | | | | 1,246 | | | | | | (1) | | | | | | 293,079 | | |
Corporate obligations
|
| | | | 280,557 | | | | | | 1,104 | | | | | | (30) | | | | | | 281,631 | | |
State and municipal obligations
|
| | | | 18,459 | | | | | | 107 | | | | | | — | | | | | | 18,566 | | |
Commercial paper
|
| | | | 14,990 | | | | | | 1 | | | | | | — | | | | | | 14,991 | | |
Certificates of deposit
|
| | | | 53,504 | | | | | | 2 | | | | | | (1) | | | | | | 53,505 | | |
Other
|
| | | | 5,534 | | | | | | 2 | | | | | | — | | | | | | 5,536 | | |
Total available-for-sale securities
|
| | | | 664,878 | | | | | | 2,462 | | | | | | (32) | | | | | | 667,308 | | |
Held to maturity: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 6,677 | | | | | | — | | | | | | — | | | | | | 6,677 | | |
Certificates of deposit
|
| | | | 1,119 | | | | | | — | | | | | | — | | | | | | 1,119 | | |
Total held-to-maturity securities
|
| | | | 7,796 | | | | | | — | | | | | | — | | | | | | 7,796 | | |
Total investments
|
| | | | $ 826,417 | | | | | | $ 2,462 | | | | | | $ (35) | | | | | | $ 828,844 | | |
| | |
March 31, 2021
|
| |||||||||||||||||||||||||||||||||
| | |
Less Than 12 Months
|
| |
12 Months or Greater
|
| |
Total
|
| |||||||||||||||||||||||||||
Description of Investments
|
| |
Fair
Value |
| |
Unrealized
Losses |
| |
Fair
Value |
| |
Unrealized
Losses |
| |
Fair
Value |
| |
Unrealized
Losses |
| ||||||||||||||||||
U.S. government and agency obligations
|
| | | | $ 204,999 | | | | | | $ (193) | | | | | | $ — | | | | | | $ — | | | | | | $ 204,999 | | | | | | $ (193) | | |
Mortgage-backed securities
|
| | | | 21 | | | | | | — | | | | | | | | | | | | | | | | | | 21 | | | | | | | | |
Corporate obligations
|
| | | | 89,185 | | | | | | (90) | | | | | | — | | | | | | — | | | | | | 89,185 | | | | | | (90) | | |
Certificates of deposit
|
| | | | 700 | | | | | | — | | | | | | — | | | | | | — | | | | | | 700 | | | | | | — | | |
Total bonds
|
| | | | $ 294,905 | | | | | | $ (283) | | | | | | $ — | | | | | | $ — | | | | | | $ 294,905 | | | | | | $ (283) | | |
| | |
December 31, 2020
|
| |||||||||||||||||||||||||||||||||
| | |
Less Than 12 Months
|
| |
12 Months or Greater
|
| |
Total
|
| |||||||||||||||||||||||||||
Description of Investments
|
| |
Fair
Value |
| |
Unrealized
Losses |
| |
Fair
Value |
| |
Unrealized
Losses |
| |
Fair
Value |
| |
Unrealized
Losses |
| ||||||||||||||||||
Cash equivalents
|
| | | | $ 25,007 | | | | | | $ (3) | | | | | | $ — | | | | | | $ — | | | | | | $ 25,007 | | | | | | $ (3) | | |
U.S. government and agency obligations
|
| | | | 2,507 | | | | | | (1) | | | | | | — | | | | | | — | | | | | | 12,507 | | | | | | (1) | | |
Corporate obligations
|
| | | | 121,006 | | | | | | (30) | | | | | | — | | | | | | — | | | | | | 121,006 | | | | | | (30) | | |
Commercial paper
|
| | | | 999 | | | | | | — | | | | | | — | | | | | | — | | | | | | 999 | | | | | | — | | |
Certificates of deposit
|
| | | | 14,003 | | | | | | (1) | | | | | | — | | | | | | — | | | | | | 14,003 | | | | | | (1) | | |
Total bonds
|
| | | | $ 173,522 | | | | | | $ (35) | | | | | | $ — | | | | | | $ — | | | | | | $ 173,522 | | | | | | $ (35) | | |
| | |
Amortized
Cost |
| |
Fair
Value |
| ||||||
Due in one year or less
|
| | | | $ 272,016 | | | | | | $ 272,809 | | |
Due after one year through five years
|
| | | | 441,248 | | | | | | 442,409 | | |
Due after five years through 10 years
|
| | | | 489 | | | | | | 513 | | |
Due after 10 years
|
| | | | — | | | | | | — | | |
Total debt securities
|
| | | | $ 713,753 | | | | | | $ 715,731 | | |
| | |
March 31, 2021
|
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash equivalents
|
| | | | $ 221,018 | | | | | | $ 625 | | | | | | $ — | | | | | | $ 221,643 | | |
Available for sale:
|
| | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 320,911 | | | | | | 139,931 | | | | | | — | | | | | | 460,842 | | |
Corporate obligations
|
| | | | 2,384 | | | | | | 218,242 | | | | | | — | | | | | | 220,626 | | |
State and municipal obligations
|
| | | | — | | | | | | 19,299 | | | | | | — | | | | | | 19,299 | | |
Commercial paper
|
| | | | — | | | | | | 4,997 | | | | | | — | | | | | | 4,997 | | |
Certificates of deposit
|
| | | | — | | | | | | 5,701 | | | | | | — | | | | | | 5,701 | | |
Mortgage-backed securities
|
| | | | 3,166 | | | | | | — | | | | | | — | | | | | | 3,166 | | |
Other
|
| | | | — | | | | | | 1,100 | | | | | | — | | | | | | 1,100 | | |
Forward contract on equity securities(1)
|
| | | | — | | | | | | 4,243 | | | | | | — | | | | | | 4,243 | | |
Total assets at fair value
|
| | | | $ 547,479 | | | | | | $ 394,138 | | | | | | $ — | | | | | | $ 941,617 | | |
Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | |
Contingent consideration
|
| | | | $ — | | | | | | $ — | | | | | | $ 7,188 | | | | | | $ 7,188 | | |
| | |
December 31, 2020
|
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash equivalents
|
| | | | $ 149,499 | | | | | | $ 4,019 | | | | | | $ — | | | | | | $ 153,518 | | |
Available for sale:
|
| | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 197,886 | | | | | | 95,193 | | | | | | — | | | | | | 293,079 | | |
Corporate obligations
|
| | | | — | | | | | | 281,631 | | | | | | — | | | | | | 281,631 | | |
State and municipal obligations
|
| | | | — | | | | | | 18,566 | | | | | | — | | | | | | 18,566 | | |
Commercial paper
|
| | | | — | | | | | | 14,991 | | | | | | — | | | | | | 14,991 | | |
Certificates of deposit
|
| | | | — | | | | | | 53,505 | | | | | | — | | | | | | 53,505 | | |
Other
|
| | | | — | | | | | | 5,536 | | | | | | — | | | | | | 5,536 | | |
Total assets at fair value
|
| | | | $ 347,385 | | | | | | $ 473,441 | | | | | | $ — | | | | | | $ 820,826 | | |
Liabilities
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Contingent consideration
|
| | | | $ — | | | | | | $ — | | | | | | $ 5,716 | | | | | | $ 5,716 | | |
| | |
March 31, 2021
|
| | | | | | | | | | |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| | | | ||||||||||||||||||
Cash equivalents
|
| | | | $ 11,784 | | | | | | $ — | | | | | | $ — | | | | | | $ 11,784 | | | | | | ||||||
Held to maturity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
U.S. government and agency obligations
|
| | | | 7,220 | | | | | | — | | | | | | — | | | | | | 7,220 | | | | | | ||||||
Certificates of deposit
|
| | | | — | | | | | | 1,119 | | | | | | — | | | | | | 1,119 | | | | | | ||||||
Total held to maturity
|
| | | | $ 19,004 | | | | | | $ 1,119 | | | | | | $ — | | | | | | $ 20,123 | | | | | |
| | |
December 31, 2020
|
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Cash equivalents
|
| | | | $ 222 | | | | | | $ — | | | | | | $ — | | | | | | $ 222 | | |
Held to maturity: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 6,732 | | | | | | — | | | | | | — | | | | | | 6,732 | | |
Certificates of deposit
|
| | | | — | | | | | | 1,119 | | | | | | — | | | | | | 1,119 | | |
Total held to maturity
|
| | | | $ 6,954 | | | | | | $ 1,119 | | | | | | $ — | | | | | | $ 8,073 | | |
| | |
2021
|
| |
2020
|
| ||||||
Balance at beginning of period
|
| | | | $ 5,716 | | | | | | $ 5,716 | | |
Change in fair value of contingent consideration
|
| | | | 1,472 | | | | | | — | | |
Balance at end of period
|
| | | | $ 7,188 | | | | | | $ 5,716 | | |
| | |
Bright HealthCare
|
| |
NeueHealth
|
| ||||||||||||||||||
| | |
Gross Carrying
Amount |
| |
Cumulative
Impairment |
| |
Gross Carrying
Amount |
| |
Cumulative
Impairment |
| ||||||||||||
Balance at December 31, 2020
|
| | | | $ 197,886 | | | | | | $ — | | | | | | $ 65,149 | | | | | | $ — | | |
Acquisitions
|
| | | | 4,739 | | | | | | | | | | | | 62,827 | | | | | | | | |
Purchase adjustments
|
| | | | (1,618) | | | | | | | | | | | | — | | | | | | | | |
Balance at March 31, 2021
|
| | | | $ 201,007 | | | | | | $ — | | | | | | $ 127,976 | | | | | | $ — | | |
| | |
March 31, 2021
|
| |
December 31, 2020
|
| ||||||||||||||||||
| | |
Gross Carrying
Amount |
| |
Accumulated
Amortization |
| |
Gross Carrying
Amount |
| |
Accumulated
Amortization |
| ||||||||||||
Customer relationships
|
| | | | $ 123,751 | | | | | | $ 6,590 | | | | | | $ 117,451 | | | | | | $ 3,664 | | |
Trade names
|
| | | | 42,831 | | | | | | 2,283 | | | | | | 38,161 | | | | | | 1,604 | | |
Developed technology
|
| | | | 6,200 | | | | | | | | | | | | | | | | | | | | |
Other
|
| | | | 3,000 | | | | | | 183 | | | | | | 2,000 | | | | | | 133 | | |
Total
|
| | | | $ 175,782 | | | | | | $ 9,056 | | | | | | $ 157,612 | | | | | | $ 5,401 | | |
| | |
Fair Value
|
| |
Weighted-Average
Useful Life (in years) |
| ||||||
Customer relationships
|
| | | | $ 5,100 | | | | | | 14.3 | | |
Trade names
|
| | | | 3.970 | | | | | | 13.1 | | |
Developed technology
|
| | | | 6,200 | | | | | | 7.0 | | |
Other
|
| | | | 1,000 | | | | | | 7.0 | | |
Total
|
| | | | $ 16,270 | | | | | | 10.8 | | |
|
2021 (April — December)
|
| | | | $ 11,984 | | |
|
2022
|
| | | | 15,979 | | |
|
2023
|
| | | | 15,979 | | |
|
2024
|
| | | | 15,979 | | |
|
2025
|
| | | | 15,979 | | |
|
2026
|
| | | | 15,864 | | |
| | |
2021
|
| |
2020
|
| ||||||
Medical costs payable — January 1
|
| | | | $ 249,777 | | | | | | $ 44,804 | | |
Incurred related to:
|
| | | | | | | | | | | | |
Current year
|
| | | | 689,572 | | | | | | 141,065 | | |
Prior year
|
| | | | (3,076) | | | | | | (8,324) | | |
Total incurred
|
| | | | 686,496 | | | | | | 132,741 | | |
Paid related to:
|
| | | | | | | | | | | | |
Current year
|
| | | | 307,442 | | | | | | 55,980 | | |
Prior year
|
| | | | 153,240 | | | | | | 22,939 | | |
Total paid
|
| | | | 460,682 | | | | | | 78,919 | | |
Acquired claims liabilities
|
| | | | 13,268 | | | | | | — | | |
Medical costs payable — March 31
|
| | | | $ 488,859 | | | | | | $ 98,626 | | |
| | |
2021
|
| |
2020
|
| ||||||
Claims unpaid
|
| | | | $ 19,652 | | | | | | $ 2,326 | | |
Risk sharing amounts payable
|
| | | | 36,592 | | | | | | 3,564 | | |
Claims adjustment expense liability
|
| | | | 5,038 | | | | | | 3,283 | | |
Incurred but not reported (IBNR)
|
| | | | 427,577 | | | | | | 89,453 | | |
Total medical costs payable
|
| | | | $ 488,859 | | | | | | $ 98,626 | | |
| | |
2021
|
| |
2020
|
| ||||||
Risk-free interest rate
|
| | | | 0.77% | | | | | | 1.45% | | |
Expected volatility
|
| | | | 33.3% | | | | | | 29.0% | | |
Expected dividend rate
|
| | | | 0.0% | | | | | | 0.0% | | |
Forfeiture rate
|
| | | | 14.5% | | | | | | 14.5% | | |
Expected life in years
|
| | | | 6.1 | | | | | | 6.1 | | |
| | |
Shares
|
| |
Weighted-
Average Exercise Price |
| |
Weighted-Average
Remaining Contractual Life (In Years) |
| |
Aggregate
Intrinsic Value |
| ||||||||||||
Outstanding at January 1, 2021
|
| | | | 63,925 | | | | | | 1.47 | | | | | | 8.7 | | | | | | $ 53,573 | | |
Granted
|
| | | | 17,772 | | | | | | 2.30 | | | | | | | | | | | | | | |
Exercised
|
| | | | (4,661) | | | | | | 0.97 | | | | | | | | | | | | | | |
Forfeited
|
| | | | (123) | | | | | | 1.62 | | | | | | | | | | | | | | |
Expired
|
| | | | — | | | | | | — | | | | | | | | | | | | | | |
Outstanding at March 31, 2021
|
| | | | 76,913 | | | | | | $ 1.69 | | | | | | 8.9 | | | | | | $861,932 | | |
| | |
2021
|
| |
2020
|
| ||||||
Net loss attributable to Bright Heath Group, Inc. common shareholders
|
| | | | $ (25,162) | | | | | | $ (7,280) | | |
Weighted-average number of shares outstanding used to compute net loss per share
attributable to common stockholders, basic and diluted |
| | | | 140,175 | | | | | | 137,125 | | |
Net loss per share attributable to common stockholders, basic and
diluted |
| | | | $ (0.18) | | | | | | $ (0.05) | | |
| | |
2021
|
| |
2020
|
| ||||||
Redeemable preferred stock
|
| | | | 421,697 | | | | | | 282,367 | | |
Stock options to purchase common stock
|
| | | | 76,913 | | | | | | 50,573 | | |
Total
|
| | | | 498,610 | | | | | | 332,940 | | |
Three Months Ended March 31, 2021
|
| |
Bright
HealthCare |
| |
NeueHealth
|
| |
Eliminations
|
| |
Consolidated
|
| ||||||||||||
Premium revenue
|
| | | | $ 841,925 | | | | | | $ 18,706 | | | | | | $ — | | | | | | $ 860,631 | | |
Service revenue
|
| | | | — | | | | | | 8,438 | | | | | | — | | | | | | 8,438 | | |
Investment income
|
| | | | 1,246 | | | | | | 4,243 | | | | | | — | | | | | | 5,489 | | |
Total unaffiliated revenue
|
| | | | 843,171 | | | | | | 31,387 | | | | | | — | | | | | | 874,558 | | |
Affiliated revenue
|
| | | | — | | | | | | 17,152 | | | | | | (17,152) | | | | | | — | | |
Total segment revenue
|
| | | | 843,171 | | | | | | 48,539 | | | | | | (17,152) | | | | | | 874,558 | | |
Operating loss
|
| | | | (24,215) | | | | | | 1,382 | | | | | | — | | | | | | (22,833) | | |
Depreciation and amortization
|
| | | | $ 2,357 | | | | | | $ 2,224 | | | | | | $ — | | | | | | $ 4,581 | | |
Three Months Ended March 31, 2020
|
| |
Bright
HealthCare |
| |
NeueHealth
|
| |
Eliminations
|
| |
Consolidated
|
| ||||||||||||
Premium revenue
|
| | | | $ 188,733 | | | | | | $ 2,004 | | | | | | $ — | | | | | | $ 190,737 | | |
Service revenue
|
| | | | — | | | | | | 4,820 | | | | | | — | | | | | | 4,820 | | |
Investment income
|
| | | | 3,009 | | | | | | — | | | | | | — | | | | | | 3,009 | | |
Total revenue
|
| | | | 191,742 | | | | | | 6,824 | | | | | | — | | | | | | 198,566 | | |
Affiliated revenue
|
| | | | — | | | | | | 2,707 | | | | | | (2,707) | | | | | | — | | |
Total segment revenue
|
| | | | 191,742 | | | | | | 9,531 | | | | | | (2,707) | | | | | | 198,566 | | |
Operating loss
|
| | | | (6,110) | | | | | | (1,170) | | | | | | — | | | | | | (7,280) | | |
Depreciation and amortization
|
| | | | $ 262 | | | | | | $ 525 | | | | | | $ — | | | | | | $ 787 | | |
| | |
Redeemable
Noncontrolling Interest |
| |||
Balance at January 1, 2021
|
| | | | $ 39,600 | | |
Earnings attributable to noncontrolling interest
|
| | | | 288 | | |
Measurement adjustment
|
| | | | 329 | | |
Balance at March 31, 2021
|
| | | | $ 40,217 | | |
| | |
As
Previously Reported |
| |
Adjustments
|
| |
As Restated
|
| |||||||||
Condensed Consolidated Balance Sheet as of March 31, 2021 | | | | | | | | | | | | | | | | | | | |
Goodwill
|
| | | $ | 306,828 | | | | | $ | 22,155 | | | | | $ | 328,983 | | |
Redeemable preferred stock
|
| | | | 1,713,997 | | | | | | 22,155 | | | | | | 1,736,152 | | |
Additional paid-in capital
|
| | | | 16,904 | | | | | | 3,042 | | | | | | 19,946 | | |
Accumulated deficit
|
| | | | (538,109) | | | | | | (3,042) | | | | | | (541,151) | | |
Condensed Consolidated Statement of Income (Loss) for the Three Months Ended March 31, 2021
|
| | | | | | | | | | | | | | | | | | |
Operating costs
|
| | | | 205,198 | | | | | | 3,042 | | | | | | 208,240 | | |
Net loss
|
| | | | (21,503) | | | | | | (3,042) | | | | | | (24,545) | | |
Net loss attributable to Bright Health Group, Inc. common shareholders
|
| | | | (22,120) | | | | | | (3,042) | | | | | | (25,162) | | |
Condensed Consolidated Statement of Comprehensive Income (Loss) for the Three Months Ended March 31, 2021
|
| | | | | | | | | | | | | | | | | | |
Net loss
|
| | | | (21,503) | | | | | | (3,042) | | | | | | (24,545) | | |
Comprehensive loss attributable to Bright Health Group, Inc. common shareholders
|
| | | | (23,162) | | | | | | (3,042) | | | | | | (26,204) | | |
Condensed Consolidated Statement of Changes in Redeemable Preferred Stock and Shareholders’ Deficit for the Three Months Ended March 31, 2021
|
| | | | | | | | | | | | | | | | | | |
Net loss
|
| | | | (22,120) | | | | | | (3,042) | | | | | | (25,162) | | |
Issuance of preferred stock
|
| | | | 32,982 | | | | | | 22,155 | | | | | | 55,137 | | |
Share-based compensation
|
| | | | 2,134 | | | | | | 3,042 | | | | | | 5,176 | | |
Condensed Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2021
|
| | | | | | | | | | | | | | | | | | |
Net loss
|
| | | | (22,120) | | | | | | (3,042) | | | | | | (25,162) | | |
Share-based compensation
|
| | | | 2,134 | | | | | | 3,042 | | | | | | 5,176 | | |
| | |
As of December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Assets | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | | $ 488,371 | | | | | | $ 522,910 | | |
Short-term investments
|
| | | | 499,928 | | | | | | 107,682 | | |
Accounts receivable, net of allowance of $2,602 and $287, respectively
|
| | | | 60,522 | | | | | | 787 | | |
Prepaids and other current assets
|
| | | | 130,986 | | | | | | 17,221 | | |
Total current assets
|
| | | | 1,179,807 | | | | | | 648,600 | | |
Other assets: | | | | | | | | | | | | | |
Long-term investments
|
| | | | 175,176 | | | | | | 115,348 | | |
Property, equipment and capitalized software, net
|
| | | | 12,264 | | | | | | 3,231 | | |
Goodwill
|
| | | | 263,035 | | | | | | 20,125 | | |
Intangible assets, net
|
| | | | 152,211 | | | | | | 18,712 | | |
Other non-current assets
|
| | | | 28,309 | | | | | | 14,339 | | |
Total other assets
|
| | | | 630,995 | | | | | | 171,755 | | |
Total assets
|
| | | | $ 1,810,802 | | | | | | $ 820,355 | | |
Liabilities, Redeemable Noncontrolling Interest, Redeemable Preferred Stock
and Shareholders’ Deficit |
| | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Medical costs payable
|
| | | | $ 249,777 | | | | | | $ 44,804 | | |
Accounts payable
|
| | | | 57,252 | | | | | | 33,143 | | |
Unearned revenue
|
| | | | 34,628 | | | | | | 16,005 | | |
Risk adjustment payable
|
| | | | 187,777 | | | | | | 86,803 | | |
Other current liabilities
|
| | | | 35,847 | | | | | | 14,140 | | |
Total current liabilities
|
| | | | 565,281 | | | | | | 194,895 | | |
Other liabilities
|
| | | | 28,578 | | | | | | 16,837 | | |
Total liabilities
|
| | | | 593,859 | | | | | | 211,732 | | |
Commitments and contingencies (Note 14) | | | | | | | | | | | | | |
Redeemable noncontrolling interests
|
| | | | 39,600 | | | | | | — | | |
Redeemable preferred stock, $0.0001 par value; 166,307,087 and 152,878,225 shares
authorized in 2020 and 2019, respectively; 164,244,893 and 119,221,767 shares issued and outstanding in 2020 and 2019, respectively |
| | | | 1,681,015 | | | | | | 871,990 | | |
Shareholders’ deficit: | | | | | | | | | | | | | |
Common stock, $0.0001 par value; 658,993,725 and 563,612,706 shares authorized in 2020
and 2019, respectively; 137,662,698 and 135,509,085 shares issued and outstanding in 2020 and 2019, respectively |
| | | | 14 | | | | | | 14 | | |
Additional paid-in capital
|
| | | | 9,877 | | | | | | 3,184 | | |
Accumulated deficit
|
| | | | (515,989) | | | | | | (267,547) | | |
Accumulated other comprehensive income (loss)
|
| | | | 2,426 | | | | | | 982 | | |
Total shareholders’ deficit
|
| | | | (503,672) | | | | | | (263,367) | | |
Total liabilities, redeemable noncontrolling interests, redeemable preferred stock and shareholders’ deficit
|
| | | | $ 1,810,802 | | | | | | $ 820,355 | | |
| | |
For the Years Ended December 31,
|
| |||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
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
|
| | | | 409,334 | | | | | | 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) | | |
Basic and diluted loss per share attributable to Bright Health, Inc. common shareholders
|
| | | | $ (1.82) | | | | | | $ (0.93) | | | | | | $ (0.47) | | |
Basic and diluted weighted-average common shares outstanding
|
| | | | 136,193 | | | | | | 134,486 | | | | | | 131,975 | | |
| | |
For the Years Ended December 31,
|
| |||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Net loss
|
| | | | $ (248,442) | | | | | | $ (125,337) | | | | | | $ (62,641) | | |
Other comprehensive income (loss): | | | | | | | | | | | | | | | | | | | |
Unrealized investment holding gains arising during the year,
net of tax of $0, $0 and $0, respectively |
| | | | 1,556 | | | | | | 1,211 | | | | | | 72 | | |
Less: reclassification adjustments for investment gains (losses),
net of tax of $0, $0 and $0, respectively |
| | | | 112 | | | | | | 38 | | | | | | (17) | | |
Other comprehensive income
|
| | | | 1,444 | | | | | | 1,173 | | | | | | 89 | | |
Comprehensive loss
|
| | | | $ (246,998) | | | | | | $ (124,164) | | | | | | $ (62,552) | | |
| | |
Redeemable Preferred Stock
|
| | |
Common Stock
|
| |
Additional
Paid-In Capital |
| |
Retained
Earnings (Deficit) |
| |
Accumulated
Other Comprehensive Income (Loss) |
| |
Total
|
| ||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| | |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||
Balance at January 1, 2018
|
| | | | 64,122 | | | | | | $ 241,690 | | | | | | | 130,262 | | | | | | $ 13 | | | | | | $ 746 | | | | | | $ (79,498) | | | | | | $ (280) | | | | | | $ (79,019) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (62,641) | | | | | | — | | | | | | (62,641) | | |
Issuance of preferred stock
|
| | | | 26,660 | | | | | | 203,000 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of common stock
|
| | | | — | | | | | | — | | | | | | | 3,864 | | | | | | — | | | | | | 57 | | | | | | — | | | | | | — | | | | | | 57 | | |
Share-based compensation
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 257 | | | | | | — | | | | | | — | | | | | | 257 | | |
Other comprehensive gain
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 89 | | | | | | 89 | | |
Balance at December 31, 2018
|
| | | | 90,782 | | | | | | 444,690 | | | | | | | 134,126 | | | | | | 13 | | | | | | 1,060 | | | | | | (142,139) | | | | | | (191) | | | | | | (141,257) | | |
Impact of adoption of accounting standards
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (71) | | | | | | — | | | | | | (71) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (125,337) | | | | | | — | | | | | | (125,337) | | |
Issuance of preferred stock
|
| | | | 28,440 | | | | | | 427,300 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of common stock
|
| | | | — | | | | | | — | | | | | | | 1,383 | | | | | | 1 | | | | | | 260 | | | | | | — | | | | | | — | | | | | | 261 | | |
Share-based compensation
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 1,864 | | | | | | — | | | | | | — | | | | | | 1,864 | | |
Other comprehensive gain
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,173 | | | | | | 1,173 | | |
Balance at December 31, 2019
|
| | | | 119,222 | | | | | | 871,990 | | | | | | | 135,509 | | | | | | 14 | | | | | | 3,184 | | | | | | (267,547) | | | | | | 982 | | | | | | (263,367) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (248,442) | | | | | | — | | | | | | (248,442) | | |
Issuance of preferred stock
|
| | | | 45,023 | | | | | | 809,025 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of common stock
|
| | | | — | | | | | | — | | | | | | | 2,154 | | | | | | — | | | | | | 1,241 | | | | | | — | | | | | | — | | | | | | 1,241 | | |
Share-based compensation
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 5,452 | | | | | | — | | | | | | — | | | | | | 5,452 | | |
Other comprehensive gain
|
| | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,444 | | | | | | 1,444 | | |
Balance at December 31, 2020
|
| | | | 164,245 | | | | | | $ 1,681,015 | | | | | | | 137,663 | | | | | | $ 14 | | | | | | $ 9,877 | | | | | | $ (515,989) | | | | | | $ 2,426 | | | | | | $ (503,672) | | |
| | |
For the Years Ended December 31,
|
| |||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Cash flows from operating activities: | | | | | | | | | | | | | | | | | | | |
Net loss
|
| | | | $ (248,442) | | | | | | $ (125,337) | | | | | | $ (62,641) | | |
Adjustments to reconcile net loss to net cash used in operating activities:
|
| | | | | | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 8,289 | | | | | | 1,134 | | | | | | 1,030 | | |
Share-based compensation
|
| | | | 5,452 | | | | | | 1,864 | | | | | | 257 | | |
Other, net
|
| | | | 2,667 | | | | | | (1,331) | | | | | | 89 | | |
Changes in assets and liabilities:
|
| | | | — | | | | | | — | | | | | | — | | |
Accounts receivable
|
| | | | 24,631 | | | | | | (201) | | | | | | (568) | | |
Other assets
|
| | | | (44,061) | | | | | | (8,788) | | | | | | (3,697) | | |
Medical cost payable
|
| | | | 78,591 | | | | | | 21,826 | | | | | | 17,133 | | |
Accounts payable and other liabilities
|
| | | | 97,012 | | | | | | 95,690 | | | | | | 17,948 | | |
Unearned revenue
|
| | | | 18,623 | | | | | | 6,935 | | | | | | 3,415 | | |
Net cash used in operating activities
|
| | | | (57,238) | | | | | | (8,208) | | | | | | (27,034) | | |
Cash flows from investing activities: | | | | | | | | | | | | | | | | | | | |
Purchases of investments
|
| | | | (916,823) | | | | | | (300,325) | | | | | | (166,817) | | |
Proceeds from sales, paydown, and maturities of investments
|
| | | | 463,887 | | | | | | 238,330 | | | | | | 160,571 | | |
Purchases of property and equipment
|
| | | | (6,474) | | | | | | (793) | | | | | | (694) | | |
Business acquisitions, net of cash acquired
|
| | | | (230,332) | | | | | | (31,855) | | | | | | — | | |
Net cash used in investing activities
|
| | | | (689,742) | | | | | | (94,643) | | | | | | (6,940) | | |
Cash flows from financing activities: | | | | | | | | | | | | | | | | | | | |
Proceeds from issuance of common stock
|
| | | | 1,241 | | | | | | 260 | | | | | | 57 | | |
Proceeds from issuance of preferred stock
|
| | | | 711,200 | | | | | | 423,800 | | | | | | 203,000 | | |
Net cash provided by financing activities
|
| | | | 712,441 | | | | | | 424,060 | | | | | | 203,057 | | |
Net increase (decrease) in cash and cash equivalents
|
| | | | (34,539) | | | | | | 321,209 | | | | | | 169,083 | | |
Cash and cash equivalents – beginning of year
|
| | | | 522,910 | | | | | | 201,701 | | | | | | 32,618 | | |
Cash and cash equivalents – end of year
|
| | | | $ 488,371 | | | | | | $ 522,910 | | | | | | $ 201,701 | | |
Supplemental disclosures of cash flow information: | | | | | | | | | | | | | | | | | | | |
Changes in unrealized gain on available-for-sale securities in OCI
|
| | | | $ 1,444 | | | | | | $ 1,173 | | | | | | $ 89 | | |
Supplemental schedule of noncash investing activities: | | | | | | | | | | | | | | | | | | | |
Redeemable preferred stock issued for acquisitions
|
| | | | $ 97,825 | | | | | | $ 3,500 | | | | | | $ — | | |
Contingent consideration
|
| | | | — | | | | | | 5,716 | | | | | | — | | |
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Compensation and fringe benefits
|
| | | | $ 133,009 | | | | | | $ 50,325 | | | | | | $ 30,037 | | |
Professional fees
|
| | | | 78,740 | | | | | | 40,601 | | | | | | 24,446 | | |
Technology | | | | | 19,433 | | | | | | 7,243 | | | | | | 2,541 | | |
Marketing and selling expense
|
| | | | 96,942 | | | | | | 49,711 | | | | | | 26,750 | | |
Other operating expenses
|
| | | | 81,210 | | | | | | 32,609 | | | | | | 12,062 | | |
Total operating costs
|
| | | | $ 409,334 | | | | | | $ 180,489 | | | | | | $ 95,836 | | |
|
Accounts receivable
|
| | | | $ 10,238 | | |
|
Prepaids and other current assets
|
| | | | 76 | | |
|
Property and equipment
|
| | | | 1,071 | | |
|
Intangible assets
|
| | | | 66,300 | | |
|
Other non-current assets
|
| | | | 6,468 | | |
|
Total Assets
|
| | | | 84,153 | | |
|
Medical costs payable
|
| | | | 6,973 | | |
|
Other current liabilities
|
| | | | 3,004 | | |
|
Other liabilities
|
| | | | 5,534 | | |
|
Total liabilities
|
| | | | 15,511 | | |
|
Net identified assets acquired
|
| | | | 68,642 | | |
|
Goodwill
|
| | | | 45,142 | | |
|
Redeemable noncontrolling interest
|
| | | | (39,600) | | |
|
Total purchase consideration
|
| | | | $ 74,184 | | |
| | |
Pro Forma Consolidated
Statements of Income (Loss) (Unaudited) |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Revenue | | | | | $ 1,293,923 | | | | | | $ 359,074 | | |
Net loss
|
| | | | (239,907) | | | | | | (123,415) | | |
|
Accounts receivable
|
| | | | $ 74,128 | | |
|
Prepaids and other current assets
|
| | | | 30,583 | | |
|
Property and equipment
|
| | | | 4,375 | | |
|
Intangible assets
|
| | | | 72,600 | | |
|
Other non-current assets
|
| | | | 2,906 | | |
|
Total Assets
|
| | | | 184,592 | | |
|
Medical costs payable
|
| | | | 119,408 | | |
|
Other current liabilities
|
| | | | 42,356 | | |
|
Other liabilities
|
| | | | 10,624 | | |
|
Total liabilities
|
| | | | 172,388 | | |
|
Net identified assets acquired
|
| | | | 12,204 | | |
|
Goodwill
|
| | | | 197,886 | | |
|
Total purchase consideration
|
| | | | $ 210,090 | | |
| | |
Pro Forma Consolidated
Statements of Income (Loss) (Unaudited) |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Revenue | | | | | $ 1,403,483 | | | | | | $ 776,751 | | |
Net loss
|
| | | | (264,400) | | | | | | (173,439) | | |
|
Prepaids and other current assets
|
| | | | $ 2,725 | | |
|
Property and equipment
|
| | | | 1,341 | | |
|
Intangible assets
|
| | | | 18,712 | | |
|
Other non-current assets
|
| | | | 3,962 | | |
|
Total Assets
|
| | | | 26,740 | | |
|
Other current liabilities
|
| | | | 2,776 | | |
|
Other liabilities
|
| | | | 3,018 | | |
|
Total liabilities
|
| | | | 5,794 | | |
|
Net identified assets acquired
|
| | | | 20,946 | | |
|
Goodwill
|
| | | | 20,007 | | |
|
Total purchase price
|
| | | | $ 40,953 | | |
| | |
Pro Forma Consolidated
Statements of Income (Loss) (Unaudited) |
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Revenue | | | | | $ 310,092 | | | | | | $ 155,196 | | |
Net loss
|
| | | | (125,565) | | | | | | (63,416) | | |
| | |
2020
|
| |||||||||||||||||||||
| | |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Carrying
Value |
| ||||||||||||
Cash equivalents
|
| | | | $ 153,743 | | | | | | $ — | | | | | | $ (3) | | | | | | $ 153,740 | | |
Available for sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 291,834 | | | | | | 1,246 | | | | | | (1) | | | | | | 293,079 | | |
Corporate obligations
|
| | | | 280,557 | | | | | | 1,104 | | | | | | (30) | | | | | | 281,631 | | |
State and municipal obligations
|
| | | | 18,459 | | | | | | 107 | | | | | | — | | | | | | 18,566 | | |
Commercial paper
|
| | | | 14,990 | | | | | | 1 | | | | | | — | | | | | | 14,991 | | |
Certificates of deposit
|
| | | | 53,504 | | | | | | 2 | | | | | | (1) | | | | | | 53,505 | | |
Other
|
| | | | 5,534 | | | | | | 2 | | | | | | — | | | | | | 5,536 | | |
Total available-for-sale securities
|
| | | | 664,878 | | | | | | 2,462 | | | | | | (32) | | | | | | 667,308 | | |
Held to maturity: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 6,677 | | | | | | — | | | | | | — | | | | | | 6,677 | | |
Certificates of deposit
|
| | | | 1,119 | | | | | | — | | | | | | — | | | | | | 1,119 | | |
Total held-to-maturity securities
|
| | | | 7,796 | | | | | | — | | | | | | — | | | | | | 7,796 | | |
Total investments
|
| | | | $ 826,417 | | | | | | $ 2,462 | | | | | | $ (35) | | | | | | $ 828,844 | | |
| | |
2019
|
| |||||||||||||||||||||
| | |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Carrying
Value |
| ||||||||||||
Cash equivalents
|
| | | | $ 444,314 | | | | | | $ 1 | | | | | | $ — | | | | | | $ 444,315 | | |
Available for sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 143,746 | | | | | | 638 | | | | | | (10) | | | | | | 144,374 | | |
Corporate obligations
|
| | | | 69,034 | | | | | | 353 | | | | | | (4) | | | | | | 69,383 | | |
Asset-backed securities
|
| | | | 2,501 | | | | | | 4 | | | | | | — | | | | | | 2,505 | | |
Total available-for-sale securities
|
| | | | 215,281 | | | | | | 995 | | | | | | (14) | | | | | | 216,262 | | |
Held to maturity: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 5,577 | | | | | | — | | | | | | — | | | | | | 5,577 | | |
Certificates of deposit
|
| | | | 1,191 | | | | | | — | | | | | | — | | | | | | 1,191 | | |
Total held-to-maturity securities
|
| | | | 6,768 | | | | | | — | | | | | | — | | | | | | 6,768 | | |
Total investments
|
| | | | $ 666,363 | | | | | | $ 996 | | | | | | $ (14) | | | | | | $ 667,345 | | |
| | |
December 31, 2020
|
| |||||||||||||||||||||||||||||||||
| | |
Less Than 12 Months
|
| |
12 Months or Greater
|
| |
Total
|
| |||||||||||||||||||||||||||
Description of Investments
|
| |
Fair
Value |
| |
Unrealized
Losses |
| |
Fair
Value |
| |
Unrealized
Losses |
| |
Fair
Value |
| |
Unrealized
Losses |
| ||||||||||||||||||
Cash equivalents
|
| | | | $ 25,007 | | | | | | $ (3) | | | | | | $ — | | | | | | $ — | | | | | | $ 25,007 | | | | | | $ (3) | | |
U.S. government and agency obligations
|
| | | | 12,507 | | | | | | (1) | | | | | | — | | | | | | — | | | | | | 12,507 | | | | | | (1) | | |
Corporate obligations
|
| | | | 121,006 | | | | | | (30) | | | | | | — | | | | | | — | | | | | | 121,006 | | | | | | (30) | | |
Commercial paper
|
| | | | 999 | | | | | | — | | | | | | — | | | | | | — | | | | | | 999 | | | | | | — | | |
Certificates of deposit
|
| | | | 14,003 | | | | | | (1) | | | | | | — | | | | | | — | | | | | | 14,003 | | | | | | (1) | | |
Total bonds
|
| | | | $ 173,522 | | | | | | $ (35) | | | | | | $ — | | | | | | $ — | | | | | | $ 173,522 | | | | | | $ (35) | | |
| | |
December 31, 2019
|
| |||||||||||||||||||||||||||||||||
| | |
Less Than 12 Months
|
| |
12 Months or Greater
|
| |
Total
|
| |||||||||||||||||||||||||||
Description of Investments
|
| |
Fair
Value |
| |
Unrealized
Losses |
| |
Fair
Value |
| |
Unrealized
Losses |
| |
Fair
Value |
| |
Unrealized
Losses |
| ||||||||||||||||||
U.S. government and agency obligations
|
| | | | 8,469 | | | | | | (9) | | | | | | 1,645 | | | | | | (1) | | | | | | 10,114 | | | | | | (10) | | |
Corporate obligations
|
| | | | 5,498 | | | | | | (4) | | | | | | — | | | | | | — | | | | | | 5,498 | | | | | | (4) | | |
Total bonds
|
| | | | $ 13,967 | | | | | | $ (13) | | | | | | $ 1,645 | | | | | | $ (1) | | | | | | $ 15,612 | | | | | | $ (14) | | |
| | |
2020
|
| |||||||||
| | |
Amortized
Cost |
| |
Fair
Value |
| ||||||
Due in one year or less
|
| | | | $ 497,885 | | | | | | $ 498,865 | | |
Due after one year through five years
|
| | | | 165,793 | | | | | | 167,242 | | |
Due after five years through 10 years
|
| | | | — | | | | | | — | | |
Due after 10 years
|
| | | | 1,200 | | | | | | 1,200 | | |
Total debt securities
|
| | | | $ 664,878 | | | | | | $ 667,307 | | |
| | |
2020
|
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Cash equivalents
|
| | | | $ 149,499 | | | | | | $ 4,019 | | | | | | $ — | | | | | | $ 153,518 | | |
Available for sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 197,886 | | | | | | 95,193 | | | | | | — | | | | | | 293,079 | | |
Corporate obligations
|
| | | | — | | | | | | 281,631 | | | | | | — | | | | | | 281,631 | | |
State and municipal obligations
|
| | | | — | | | | | | 18,566 | | | | | | — | | | | | | 18,566 | | |
Commercial paper
|
| | | | — | | | | | | 14,991 | | | | | | — | | | | | | 14,991 | | |
Certificates of deposit
|
| | | | — | | | | | | 53,505 | | | | | | — | | | | | | 53,505 | | |
Other
|
| | | | — | | | | | | 5,536 | | | | | | — | | | | | | 5,536 | | |
Total assets at fair value
|
| | | | $ 347,385 | | | | | | $ 473,441 | | | | | | $ — | | | | | | $ 820,826 | | |
Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | |
Contingent consideration
|
| | | | $ — | | | | | | $ — | | | | | | $ 5,716 | | | | | | $ 5,716 | | |
| | |
2019
|
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Cash equivalents
|
| | | | $ 444,215 | | | | | | $ 100 | | | | | | $ — | | | | | | $ 444,315 | | |
Available for sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 95,149 | | | | | | 49,225 | | | | | | — | | | | | | 144,374 | | |
Corporate obligations
|
| | | | — | | | | | | 69,383 | | | | | | — | | | | | | 69,383 | | |
Asset-backed securities
|
| | | | — | | | | | | 2,505 | | | | | | — | | | | | | 2,505 | | |
Total assets at fair value
|
| | | | $ 539,364 | | | | | | $ 121,213 | | | | | | $ — | | | | | | $ 660,577 | | |
Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | |
Contingent consideration
|
| | | | $ — | | | | | | $ — | | | | | | $ 5,716 | | | | | | $ 5,716 | | |
| | |
2020
|
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Cash equivalents
|
| | | | $ 222 | | | | | | $ — | | | | | | $ — | | | | | | $ 222 | | |
Held to maturity: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | 6,732 | | | | | | — | | | | | | — | | | | | | 6,732 | | |
Certificates of deposit
|
| | | | — | | | | | | 1,119 | | | | | | — | | | | | | 1,119 | | |
Total held to maturity
|
| | | | $ 6,954 | | | | | | $ 1,119 | | | | | | $ — | | | | | | $ 8,073 | | |
| | |
2019
|
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Held to maturity: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government and agency obligations
|
| | | | $ 5,577 | | | | | | $ — | | | | | | $ — | | | | | | $ 5,577 | | |
Certificates of deposit
|
| | | | — | | | | | | 1,191 | | | | | | — | | | | | | 1,191 | | |
Total held to maturity
|
| | | | $ 5,577 | | | | | | $ 1,191 | | | | | | $ — | | | | | | $ 6,768 | | |
| | |
2020
|
| |
2019
|
| ||||||
Software | | | | | $ 13,202 | | | | | | $ 3,235 | | |
Leasehold improvements
|
| | | | 3,604 | | | | | | 2,331 | | |
Medical equipment
|
| | | | 705 | | | | | | 33 | | |
Gross property and equipment
|
| | | | 17,511 | | | | | | 5,599 | | |
Less accumulated depreciation
|
| | | | (5,247) | | | | | | (2,368) | | |
Property and equipment, net
|
| | | | $ 12,264 | | | | | | $ 3,231 | | |
| | |
Bright HealthCare
|
| |
NeueHealth
|
| ||||||||||||||||||
| | |
Gross Carrying
Amount |
| |
Cumulative
Impairment |
| |
Gross Carrying
Amount |
| |
Cumulative
Impairment |
| ||||||||||||
Balance at January 1, 2019
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Acquisitions
|
| | | | — | | | | | | — | | | | | | 20,125 | | | | | | — | | |
Balance at December 31, 2019
|
| | | | — | | | | | | — | | | | | | 20,125 | | | | | | — | | |
Acquisitions
|
| | | | 197,886 | | | | | | | | | | | | 45,142 | | | | | | | | |
Purchase adjustments
|
| | | | — | | | | | | — | | | | | | (118) | | | | | | — | | |
Balance at December 31, 2020
|
| | | $ | 197,886 | | | | | $ | — | | | | | $ | 65,149 | | | | | $ | — | | |
| | |
December 31, 2020
|
| |
December 31, 2019
|
| ||||||||||||||||||
| | |
Gross Carrying
Amount |
| |
Accumulated
Amortization |
| |
Gross Carrying
Amount |
| |
Accumulated
Amortization |
| ||||||||||||
Customer relationships
|
| | | | $ 117,451 | | | | | | $ 3,664 | | | | | | $ 11,251 | | | | | | $ — | | |
Trade names
|
| | | | 38,161 | | | | | | 1,604 | | | | | | 7,461 | | | | | | — | | |
Other | | | | | 2,000 | | | | | | 133 | | | | | | — | | | | | | — | | |
Total | | | | | $ 157,612 | | | | | | $ 5,401 | | | | | | $ 18,712 | | | | | | $ — | | |
| | |
2020
|
| |
2019
|
| ||||||||||||||||||
| | |
Fair Value
|
| |
Weighted-
Average Useful Life (in years) |
| |
Fair Value
|
| |
Weighted-
Average Useful Life (in years) |
| ||||||||||||
Customer relationships
|
| | | | $ 106,200 | | | | | | 10.6 | | | | | | $ 11,251 | | | | | | 10.0 | | |
Trade names
|
| | | | 30,700 | | | | | | 15.0 | | | | | | 7,461 | | | | | | 15.0 | | |
Other | | | | | 2,000 | | | | | | 10.0 | | | | | | — | | | | | | — | | |
Total | | | | | $ 138,900 | | | | | | 11.6 | | | | | | $ 18,712 | | | | | | 12.0 | | |
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Medical costs payable – January 1
|
| | | | $ 44,804 | | | | | | $ 22,978 | | | | | | $ 5,845 | | |
Incurred related to:
|
| | | | | | | | | | | | | | |||||
Current year
|
| | | | 1,057,064 | | | | | | 233,447 | | | | | | 97,587 | | |
Prior year
|
| | | | (8,622) | | | | | | (7,427) | | | | | | (1,181) | | |
Total incurred
|
| | | | 1,048,442 | | | | | | 226,020 | | | | | | (96,406) | | |
Paid related to:
|
| | | | | | | | | | | | | | |||||
Current year
|
| | | | 941,401 | | | | | | 188,919 | | | | | | 74,750 | | |
Prior year
|
| | | | 33,479 | | | | | | 15,275 | | | | | | 4,523 | | |
Total paid
|
| | | | 974,880 | | | | | | 204,194 | | | | | | 79,273 | | |
Acquired claims liabilities
|
| | | | 131,411 | | | | | | — | | | | | | — | | |
Medical costs payable – December 31
|
| | | | $ 249,777 | | | | | | $ 44,804 | | | | | | $ 22,978 | | |
| | |
2020
|
| |
2019
|
| ||||||
Claims unpaid
|
| | | | $ 23,269 | | | | | | $ 3,245 | | |
Risk sharing amounts payable
|
| | | | 16,963 | | | | | | 3,572 | | |
Claims adjustment expense liability
|
| | | | 2,487 | | | | | | 1,345 | | |
Incurred but not reported (IBNR)
|
| | | | 207,058 | | | | | | 36,642 | | |
Total medical costs payable
|
| | | | $ 249,777 | | | | | | $ 44,804 | | |
| | |
Incurred Claims and Allocated Claim Adjustment
Expenses, Net of Reinsurance (in thousands) |
| |
Total Incurred but
Not Reported Liabilities Plus Expected Development on Reported Claims |
| ||||||||||||||||||
| | |
For the Years Ended December 31,
|
| |||||||||||||||||||||
Accident Year
|
| |
(Unaudited)
2018 |
| |
(Unaudited)
2019 |
| |
2020
|
| |||||||||||||||
2018 | | | | | 435,729 | | | | | | 435,230 | | | | | | 436,786 | | | | | | 41 | | |
2019 | | | | | — | | | | | | 733,216 | | | | | | 724,120 | | | | | | 1,321 | | |
2020 | | | | | — | | | | | | — | | | | | | 1,303,467 | | | | | | 244,593 | | |
Total
|
| | | | | | | | | | | | | | | | $ 2,464,373 | | | | | | | | |
| | |
Cumulative Paid Claims and Allocated Claim Adjustment
Expenses, Net of Reinsurance (in thousands) |
| |||||||||||||||
| | |
For the Years Ended December 31,
|
| |||||||||||||||
Accident Year
|
| |
(Unaudited)
2018 |
| |
(Unaudited)
2019 |
| |
2020
|
| |||||||||
2018 | | | | | 366,558 | | | | | | 435,065 | | | | | | 436,882 | | |
2019 | | | | | — | | | | | | 620,495 | | | | | | 717,624 | | |
2020 | | | | | — | | | | | | — | | | | | | 1,065,531 | | |
Total
|
| | | | | | | | | | | | | | | | $ 2,220,037 | | |
All outstanding liabilities before 2018, net of reinsurance
|
| | | | | | | | | | | | | | | | 121 | | |
Liabilities for claim and claim adjustment expenses, net of reinsurance
|
| | | | | | | | | | | | | | | | $ 244,457 | | |
| | |
December 31, 2020
|
| |||
Net outstanding liabilities
|
| | | | $ 244,457 | | |
Reinsurance recoverable on unpaid claims
|
| | | | 5,320 | | |
Total gross liability for unpaid claims and claims
|
| | | | $ 249,777 | | |
Preferred Stock Series
|
| |
Preferred
Shares Authorized |
| |
Preferred
Shares Issued |
| |
Preferred
Shares Outstanding |
| |
Carrying
Value |
| |
Liquidation
Preference |
| |
Common Stock
Issuable Upon Conversion |
| ||||||||||||||||||
A | | | | | 32,439 | | | | | | 32,439 | | | | | | 32,439 | | | | | | $ 81,690 | | | | | | $ 82,718 | | | | | | 22,018 | | |
B | | | | | 32,278 | | | | | | 32,278 | | | | | | 32,278 | | | | | | 163,000 | | | | | | 163,000 | | | | | | 96,834 | | |
C | | | | | 26,065 | | | | | | 26,065 | | | | | | 26,065 | | | | | | 200,000 | | | | | | 200,000 | | | | | | 78,196 | | |
D | | | | | 48,101 | | | | | | 48,101 | | | | | | 48,101 | | | | | | 718,500 | | | | | | 722,710 | | | | | | 144,304 | | |
E | | | | | 27,424 | | | | | | 25,362 | | | | | | 25,362 | | | | | | 517,825 | | | | | | 517,825 | | | | | | 76,085 | | |
Total | | | | | 166,307 | | | | | | 164,245 | | | | | | 164,245 | | | | | | $ 1,681,015 | | | | | | $ 1,686,253 | | | | | | 417,437 | | |
Preferred Stock Series
|
| |
Preferred
Shares Authorized |
| |
Preferred
Shares Issued |
| |
Preferred
Shares Outstanding |
| |
Carrying
Value |
| |
Liquidation
Preference |
| |
Common Stock
Issuable Upon Conversion |
| ||||||||||||||||||
A | | | | | 39,778 | | | | | | 32,439 | | | | | | 32,439 | | | | | | $ 81,690 | | | | | | $ 82,718 | | | | | | 22,018 | | |
B | | | | | 32,278 | | | | | | 32,278 | | | | | | 32,278 | | | | | | 163,000 | | | | | | 163,000 | | | | | | 96,834 | | |
C | | | | | 26,065 | | | | | | 26,065 | | | | | | 26,065 | | | | | | 200,000 | | | | | | 200,000 | | | | | | 78,196 | | |
D | | | | | 54,757 | | | | | | 28,440 | | | | | | 28,440 | | | | | | 427,300 | | | | | | 427,300 | | | | | | 85,319 | | |
Total | | | | | 152,878 | | | | | | 119,222 | | | | | | 119,222 | | | | | | $ 871,990 | | | | | | $ 873,018 | | | | | | 282,367 | | |
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Risk-free interest rate
|
| | | | 0.88% | | | | | | 2.22% | | | | | | 2.75% | | |
Expected volatility
|
| | | | 31.3% | | | | | | 28.3% | | | | | | 28.5% | | |
Expected dividend rate
|
| | | | 0.0% | | | | | | 0.0% | | | | | | 0.0% | | |
Forfeiture rate
|
| | | | 14.5% | | | | | | 14.5% | | | | | | 14.5% | | |
Expected life in years
|
| | | | 6.1 | | | | | | 6.1 | | | | | | 6.1 | | |
| | |
Shares
|
| |
Weighted-
Average Exercise Price |
| |
Weighted-Average
Remaining Contractual Life (In Years) |
| |
Aggregate
Intrinsic Value |
| ||||||||||||
Outstanding at January 1, 2020
|
| | | | 37,872 | | | | | | 1.06 | | | | | | 9.0 | | | | | | $ 27,065 | | |
Granted
|
| | | | 30,975 | | | | | | 1.90 | | | | | | | | | | | | | | |
Exercised
|
| | | | (2,154) | | | | | | 0.74 | | | | | | | | | | | | | | |
Forfeited
|
| | | | (2,731) | | | | | | 1.24 | | | | | | | | | | | | | | |
Expired
|
| | | | (37) | | | | | | 1.02 | | | | | | | | | | | | | | |
Outstanding at December 31, 2020
|
| | | | 63,925 | | | | | | $ 1.47 | | | | | | 8.7 | | | | | | $ 53,573 | | |
| | |
Shares
|
| |
Weighted-Average
Grant Date Fair Value per Share |
| ||||||
RSA unvested at January 1, 2020
|
| | | | 291 | | | | | | 0.01 | | |
RSA granted during the year
|
| | | | — | | | | | | — | | |
RSA canceled during the year
|
| | | | — | | | | | | — | | |
RSA vested during the year
|
| | | | (291) | | | | | | 0.01 | | |
RSA unvested at December 31, 2020
|
| | | | — | | | | | | $ — | | |
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Net loss
|
| | | | $ (248,442) | | | | | | $ (125,337) | | | | | | $ (62,641) | | |
Weighted-average number of shares outstanding used to compute
net loss per share attributable to common stockholders, basic and diluted |
| | | | 136,193 | | | | | | 134,486 | | | | | | 131,975 | | |
Net loss per share attributable to common stockholders, basic and diluted
|
| | | | $ (1.82) | | | | | | $ (0.93) | | | | | | $ (0.47) | | |
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Redeemable preferred stock
|
| | | | 417,437 | | | | | | 282,367 | | | | | | 197,047 | | |
Stock options to purchase common stock
|
| | | | 63,925 | | | | | | 37,872 | | | | | | 12,719 | | |
Total | | | | | 481,362 | | | | | | 320,239 | | | | | | 209,766 | | |
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Current | | | | | $ — | | | | | | $ — | | | | | | $ — | | |
Deferred | | | | | (9,161) | | | | | | — | | | | | | — | | |
Total income tax (benefit) expense
|
| | | | $ (9,161) | | | | | | $ — | | | | | | $ — | | |
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Tax (benefit) expense at federal statutory rate
|
| | | | $ (52,173) | | | | | | $ (26,321) | | | | | | $ (13,155) | | |
Increase (decrease) in income taxes resulting from: | | | | | | | | | | | | | | | | | | | |
Adjustment to deferred tax valuation allowance
|
| | | | 43,012 | | | | | | 26,321 | | | | | | 13,155 | | |
Income tax (benefit) expense
|
| | | | $ (9,161) | | | | | | $ — | | | | | | $ — | | |
Effective tax rate
|
| | | | 3.6% | | | | | | 0.0% | | | | | | 0.0% | | |
| | |
2020
|
| |
2019
|
| ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Net operating loss carryforward
|
| | | | $ 107,002 | | | | | | $ 53,325 | | |
Premiums received in advance
|
| | | | 1,454 | | | | | | 672 | | |
Accrued salaries and benefits
|
| | | | 5,246 | | | | | | 1,557 | | |
Section 195 startup expenditures
|
| | | | 2,164 | | | | | | 2,364 | | |
Other
|
| | | | 1,173 | | | | | | 371 | | |
| | | | | 117,039 | | | | | | 58,289 | | |
Less valuation allowance
|
| | | | (99,537) | | | | | | (57,491) | | |
Total deferred tax assets
|
| | | | 17,502 | | | | | | 798 | | |
Deferred tax liabilities: | | | | | | | | | | | | | |
Prepaid expenses
|
| | | | (1,195) | | | | | | (373) | | |
Fixed assets
|
| | | | (628) | | | | | | (151) | | |
Goodwill and intangible assets
|
| | | | (15,447) | | | | | | — | | |
Unrealized gains
|
| | | | (509) | | | | | | — | | |
Investment income
|
| | | | (3) | | | | | | (274) | | |
Total deferred tax liabilities
|
| | | | (17,782) | | | | | | (798) | | |
Net deferred tax liabilities
|
| | | | $ (280) | | | | | | $ — | | |
| | |
Balance Sheet Location
|
| |
2020
|
| |
2019
|
| |||||||||
Assets | | | | | | | | | | | | | | | | | | | |
Operating lease ROU assets
|
| | | | Othernon-currentassets | | | | | | $ 26,965 | | | | | | $ 14,028 | | |
Liabilities | | | | | | | | | | | | | | | | | | | |
Operating lease liabilities — current
|
| | | | Othercurrentliabilities | | | | | | 6,569 | | | | | | 3,520 | | |
Operating lease liabilities — noncurrent
|
| | | | Otherliabilities | | | | | | 21,851 | | | | | | 10,950 | | |
Total lease liabilities
|
| | | | | | | | | | $ 28,420 | | | | | | $ 14,470 | | |
| | |
2020
|
| |
2019
|
| ||||||
Operating cash flows from operating leases
|
| | | | $ 6,131 | | | | | | $ 1,998 | | |
ROU assets obtained in exchange for new lease liabilities
|
| | | | 7,793 | | | | | | 274 | | |
ROU assets obtained from acquisitions
|
| | | | 8,392 | | | | | | 3,925 | | |
Weighted-average remaining lease term (in years)
|
| | | | 5.6 | | | | | | 5.2 | | |
Weighted-average discount rate
|
| | | | 6.0% | | | | | | 6.0% | | |
| | |
Minimum Lease
Payments |
| |||
Years ending December 31: | | | | | | | |
2021
|
| | | | $ 7,356 | | |
2022
|
| | | | 6,692 | | |
2023
|
| | | | 5,409 | | |
2024
|
| | | | 4,858 | | |
2025
|
| | | | 3,553 | | |
Thereafter
|
| | | | 6,073 | | |
Undiscounted future minimum payments
|
| | | | 33,941 | | |
Imputed interest
|
| | | | (5,521) | | |
Total reported lease liability
|
| | | | $ 28,420 | | |
| | |
Bright
HealthCare |
| |
NeueHealth
|
| |
Eliminations
|
| |
Consolidated
|
| ||||||||||||
Premium revenue
|
| | | | $ 1,172,545 | | | | | | $ 7,793 | | | | | | $ — | | | | | | $1,180,338 | | |
Service revenue
|
| | | | — | | | | | | 18,514 | | | | | | — | | | | | | 18,514 | | |
Investment income
|
| | | | 8,468 | | | | | | — | | | | | | — | | | | | | 8,468 | | |
Total unaffiliated revenue
|
| | | | 1,181,013 | | | | | | 26,307 | | | | | | — | | | | | | 1,207,320 | | |
Affiliated revenue
|
| | | | — | | | | | | 10,840 | | | | | | (10,840) | | | | | | — | | |
Total segment revenue
|
| | | | 1,181,013 | | | | | | 37,147 | | | | | | (10,840) | | | | | | 1,207,320 | | |
Loss before income taxes
|
| | | | (248,896) | | | | | | (8,707) | | | | | | — | | | | | | (257,603) | | |
Depreciation and amortization
|
| | | | $ 6,394 | | | | | | $ 1,895 | | | | | | $ — | | | | | | $ 8,289 | | |
| | |
Redeemable
Noncontrolling Interest |
| |||
Balance at January 1, 2020
|
| | | | $ — | | |
Acquisitions
|
| | | | 39,600 | | |
Balance at December 31, 2020
|
| | | | $ 39,600 | | |
| | |
For the Years Ended December 31,
|
| |||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Revenue: | | | | | | | | | | | | | | | | | | | |
Investment income
|
| | | | 26 | | | | | | 16 | | | | | | 8 | | |
Total revenue
|
| | | | 26 | | | | | | 16 | | | | | | 8 | | |
Operating costs: | | | | | | | | | | | | | | | | | | | |
Operating costs
|
| | | | 5,867 | | | | | | 2,194 | | | | | | 892 | | |
Total operating costs
|
| | | | 5,867 | | | | | | 2,194 | | | | | | 892 | | |
Loss before income taxes and equity in net loss of subsidiaries
|
| | | | (5,841) | | | | | | (2,178) | | | | | | (884) | | |
Income tax (benefit) expense
|
| | | | — | | | | | | (123) | | | | | | (151) | | |
Loss before equity in net loss of subsidiaries
|
| | | | (5,841) | | | | | | (2,055) | | | | | | (733) | | |
Equity in net loss of subsidiaries
|
| | | | (242,601) | | | | | | (123,282) | | | | | | (61,908) | | |
Net loss
|
| | | | (248,442) | | | | | | (125,337) | | | | | | (62,641) | | |
Unrealized investment holding gains
|
| | | | 1,556 | | | | | | 1,211 | | | | | | 72 | | |
Less: reclassification adjustments for investment gains (losses)
|
| | | | 112 | | | | | | 38 | | | | | | (17) | | |
Other comprehensive income
|
| | | | 1,444 | | | | | | 1,173 | | | | | | 89 | | |
Comprehensive loss
|
| | | | $ (246,998) | | | | | | $ (124,164) | | | | | | $ (62,552) | | |
| | |
As of December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Assets | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | | $ 1,708 | | | | | | $ 563 | | |
Short-term investments
|
| | | | 1,119 | | | | | | 1,191 | | |
Investment in subsidiaries
|
| | | | 1,172,126 | | | | | | 605,702 | | |
Related-party receivable, net
|
| | | | — | | | | | | 123 | | |
Other assets
|
| | | | 64 | | | | | | 62 | | |
Total assets
|
| | | | 1,175,017 | | | | | | 607,641 | | |
Liabilities, Redeemable Preferred Stock and Shareholders’ Deficit | | | | | | | | | | | | | |
Related-party payable, net
|
| | | | 100 | | | | | | — | | |
Commitments and contingencies (Note 14) | | | | | | | | | | | | | |
Redeemable preferred stock, $0.0001 par value; 166,307,087 and 152,878,225 shares authorized in 2020 and 2019, respectively; 164,244,893 and 119,221,767 shares issued and outstanding in 2020 and 2019, respectively
|
| | | | 1,681,015 | | | | | | 871,990 | | |
Shareholders’ equity (deficit): | | | | | | | | | | | | | |
Common stock, $0.0001 par value; 658,993,725 and 563,612,706 shares authorized in 2020 and 2019, respectively; 137,662,698 and 135,509,085 shares issued and outstanding in 2020 and 2019, respectively
|
| | | | 14 | | | | | | 14 | | |
Additional paid-in capital
|
| | | | 9,877 | | | | | | 3,184 | | |
Retained earnings (deficit)
|
| | | | (515,989) | | | | | | (267,547) | | |
Total shareholders’ deficit
|
| | | | (506,098) | | | | | | (264,349) | | |
Total liabilities, redeemable preferred stock and shareholders’ deficit
|
| | | | $ 1,175,017 | | | | | | $ 607,641 | | |
| | |
For the Years Ended December 31,
|
| |||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Net cash used in operating activities
|
| | | | (168) | | | | | | (557) | | | | | | (284) | | |
Cash flows from investing activities: | | | | | | | | | | | | | | | | | | | |
Purchases of investments
|
| | | | (1,119) | | | | | | (1,191) | | | | | | (455) | | |
Proceeds from sales, paydown, and maturities of investments
|
| | | | 1,191 | | | | | | 455 | | | | | | 1,727 | | |
Capital contributions to operating subsidiaries
|
| | | | (480,869) | | | | | | (390,945) | | | | | | (204,300) | | |
Business acquisition, net of cash acquired
|
| | | | (230,331) | | | | | | (31,855) | | | | | | — | | |
Net cash used in investing activities
|
| | | | (711,128) | | | | | | (423,536) | | | | | | (203,028) | | |
Cash flows from financing activities: | | | | | | | | | | | | | | | | | | | |
Proceeds from issuance of common stock
|
| | | | 1,241 | | | | | | 260 | | | | | | 57 | | |
Proceeds from issuance of preferred stock
|
| | | | 711,200 | | | | | | 423,800 | | | | | | 203,000 | | |
Net cash provided by financing activities
|
| | | | 712,441 | | | | | | 424,060 | | | | | | 203,057 | | |
Net increase in cash and cash equivalents
|
| | | | 1,145 | | | | | | (33) | | | | | | (255) | | |
Cash and cash equivalents – beginning of year
|
| | | | 563 | | | | | | 596 | | | | | | 851 | | |
Cash and cash equivalents – end of year
|
| | | | $ 1,708 | | | | | | $ 563 | | | | | | $ 596 | | |
| | |
THNM
|
| |
Zipnosis
|
| ||||||
Cash and cash equivalents
|
| | | | $ 24,059 | | | | | | $ 3,194 | | |
Accounts receivable
|
| | | | 714 | | | | | | 1,062 | | |
Short-term investments
|
| | | | 4,677 | | | | | | — | | |
Prepaids and other current assets
|
| | | | 8,337 | | | | | | 141 | | |
Property and equipment
|
| | | | — | | | | | | 232 | | |
Intangible assets
|
| | | | 8,250 | | | | | | 8,580 | | |
Long-term investments
|
| | | | 13,081 | | | | | | — | | |
Other non-current assets
|
| | | | 1,324 | | | | | | 766 | | |
Total Assets
|
| | | | 60,442 | | | | | | 13,975 | | |
Medical costs payable
|
| | | | 13,268 | | | | | | — | | |
Accounts payable
|
| | | | 14,663 | | | | | | 136 | | |
Other current liabilities
|
| | | | 6,327 | | | | | | 785 | | |
Other liabilities
|
| | | | 993 | | | | | | 1,998 | | |
Total liabilities
|
| | | | 35,251 | | | | | | 2,919 | | |
Net identified assets acquired
|
| | | | 25,191 | | | | | | 11,056 | | |
Goodwill
|
| | | | 2,282 | | | | | | 46,180 | | |
Total purchase consideration
|
| | | | $ 27,473 | | | | | | $ 57,236 | | |
| | |
As of April 30,
2020 |
| |||
Assets | | | | | | | |
Current assets: | | | | | | | |
Cash
|
| | |
|
$ 2,500
|
| |
Premiums and risk adjustment receivables
|
| | |
|
74,578
|
| |
Other receivables
|
| | |
|
25,162
|
| |
Prepaid and other assets
|
| | |
|
4,971
|
| |
Total current assets
|
| | | | 107,211 | | |
Other assets: | | | | | | | |
Restricted cash
|
| | |
|
359
|
| |
Property, plant and equipment, net
|
| | |
|
4,375
|
| |
Other receivables
|
| | |
|
350
|
| |
Deposits and other assets
|
| | |
|
176
|
| |
Total other assets
|
| | | | 5,260 | | |
Total assets
|
| | | | $ 112,471 | | |
Liabilities and Stockholders’ Deficit | | | | | | | |
Current liabilities: | | | | | | | |
Medical claims payable
|
| | |
|
$ 90,118
|
| |
Risk-sharing arrangements
|
| | |
|
31,152
|
| |
Accrued expenses
|
| | |
|
36,074
|
| |
Accounts payable
|
| | |
|
2,354
|
| |
Accrued payroll and related liabilities
|
| | |
|
1,688
|
| |
Total current liabilities
|
| | | | 161,386 | | |
Subordinated notes payable – related parties
|
| | |
|
33,000
|
| |
Total liabilities
|
| | | | 194,386 | | |
Stockholders’ Deficit | | | | | | | |
Common stock:
|
| | | | | | |
Class A-1, no par value, 450,000 shares authorized, 100,000 shares issued and
outstanding |
| | |
|
—
|
| |
Class A-2, no par value, 450,000 shares authorized, 100,000 shares issued and
outstanding |
| | |
|
—
|
| |
Class B, no par value, 100,000 shares authorized, 4,500 shares issued and outstanding
|
| | |
|
—
|
| |
Additional paid-in capital
|
| | |
|
13,322
|
| |
Accumulated deficit
|
| | |
|
(95,237)
|
| |
Total stockholders’ deficit
|
| | | | (81,915) | | |
Total liabilities and stockholders’ deficit
|
| | | | $ 112,471 | | |
| | |
Ten Months
Ended April 30, 2020 |
| |||
Revenue | | | | | | | |
Medicare premiums
|
| | |
|
$ 446,381
|
| |
Medi-Cal premiums
|
| | |
|
370
|
| |
Other revenue
|
| | |
|
109
|
| |
Total revenue
|
| | | | 446,860 | | |
Expenses | | | | | | | |
Healthcare services
|
| | |
|
434,607
|
| |
Healthcare services to affiliates
|
| | |
|
2,620
|
| |
Marketing, general and administrative expenses
|
| | |
|
47,906
|
| |
Salaries and benefits
|
| | |
|
15,467
|
| |
Depreciation and amortization
|
| | |
|
1,293
|
| |
Interest expense, net
|
| | |
|
1,312
|
| |
Other expense
|
| | |
|
4
|
| |
Total expenses
|
| | | | 503,209 | | |
Loss before taxes
|
| | | | (56,349) | | |
Income tax (benefit) expense
|
| | | | 1 | | |
Net loss
|
| | | | $ (56,350) | | |
| | |
Class A-1
Common Stock |
| |
Class A-2
Common Stock |
| |
Class B
Common Stock |
| |
Additional
Paid-In Capital |
| |
Accumulated
Deficit |
| |
Total
|
| ||||||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||
Balance at June 30, 2019
|
| | | | 100,000 | | | | | | — | | | | | | 100,000 | | | | | | — | | | | | | 4,500 | | | | | | — | | | | | | 13,322 | | | | | | (38,887) | | | | | | (25,565) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (56,350) | | | | | | (56,350) | | |
Balance at April 30, 2020
|
| | | | 100,000 | | | | | | — | | | | | | 100,000 | | | | | | — | | | | | | 4,500 | | | | | | — | | | | | | 13,322 | | | | | | (95,237) | | | | | | (81,915) | | |
| | |
Ten Months
Ended April 30, 2020 |
| |||
Cash flows from operating activities | | | | | | | |
Net loss
|
| | |
|
$ (56,350)
|
| |
Adjustments to reconcile net loss to net cash and restricted cash (used in) provided by operating activities:
|
| | | | | | |
Depreciation and amortization
|
| | |
|
1,293
|
| |
Loss on disposal of equipment
|
| | |
|
4
|
| |
Changes in assets and liabilities:
|
| | | | | | |
Premiums and risk adjustment receivable
|
| | |
|
(28,920)
|
| |
Other receivables
|
| | |
|
(11,263)
|
| |
Prepaid and other assets
|
| | |
|
11,444
|
| |
Deposit and other assets
|
| | |
|
411
|
| |
Medical claims payable
|
| | |
|
27,357
|
| |
Risk-sharing arrangements
|
| | |
|
14,701
|
| |
Accrued expenses
|
| | |
|
34,186
|
| |
Accounts payable
|
| | |
|
(322)
|
| |
Accrued payroll and related liabilities
|
| | |
|
237
|
| |
Unearned premiums
|
| | |
|
(41,541)
|
| |
Net cash and restricted cash used in operating activities
|
| | |
|
(48,763)
|
| |
Cash Flows from Investing Activities | | | | | | | |
Purchases of property, plant and equipment
|
| | |
|
(2,600)
|
| |
Net cash and restricted cash used in investing activities
|
| | |
|
(2,600)
|
| |
Cash Flows from Financing Activities
|
| | | | | | |
Proceeds from subordinated notes payable – related party
|
| | |
|
8,000
|
| |
Net cash and restricted cash provided by financing activities
|
| | |
|
8,000
|
| |
Net change in cash and restricted cash
|
| | | | (43,363) | | |
Cash and restricted cash, beginning of year
|
| | | | 46,222 | | |
Cash and restricted cash, end of period
|
| | | | $ 2,859 | | |
Supplemental disclosure information: | | | | | | | |
Cash paid during the period for interest
|
| | |
|
$ 1,366
|
| |
| | |
As of April 30,
2020 |
| |||
Cash
|
| | |
|
$ 2,500
|
| |
Restricted cash
|
| | |
|
359
|
| |
Total cash and restricted cash shown on statement of cash flows
|
| | |
|
$ 2,859
|
| |
| | |
Estimated Lives
|
|
Buildings and improvement equipment | | |
5 to 30 years
|
|
Equipment | | |
5 to 7 years
|
|
Leasehold improvements | | |
Shorter of the none-cancelable lease term or the unique useful life of the asset
|
|
Furniture and fixtures | | |
5 years
|
|
Computer and software | | |
3 to 4 years
|
|
| | |
As of April 30,
2020 |
| |||
CMS risk adjustment – Part C
|
| | |
|
$ 71,292
|
| |
CMS risk adjustment – Part D
|
| | |
|
2,748
|
| |
HealthNet SPD adjustment
|
| | |
|
450
|
| |
CMS Medical Premiums AR
|
| | |
|
88
|
| |
Total
|
| | |
|
$ 74,578
|
| |
| | |
As of April 30,
2020 |
| |||
Current other receivables | | | |||||
Pharmacy rebates
|
| | |
|
$ 18,211
|
| |
Provider IBNR receivable
|
| | |
|
4,490
|
| |
Due from providers
|
| | |
|
1,697
|
| |
Insurance settlement
|
| | |
|
764
|
| |
Total current other receivables
|
| | |
|
25,162
|
| |
Non-current secured third-party note receivable(1)
|
| | |
|
350
|
| |
Total
|
| | |
|
$ 25,512
|
| |
| | |
As of April 30,
2020 |
| |||
Advertising and sales commission
|
| | |
|
$ 3,641
|
| |
Deferred charges
|
| | |
|
790
|
| |
Other
|
| | |
|
540
|
| |
Total
|
| | |
|
$ 4,971
|
| |
| | |
As of April 30,
2020 |
| |||
Equipment
|
| | |
|
$ 5,973
|
| |
Furniture and fixtures
|
| | |
|
573
|
| |
Leasehold improvements
|
| | |
|
567
|
| |
Computer hardware and software
|
| | |
|
7,199
|
| |
Total property, plant and equipment
|
| | |
|
14,312
|
| |
Less: accumulated depreciation and amortization
|
| | |
|
(9,937)
|
| |
Total
|
| | |
|
$ 4,375
|
| |
| | |
As of April 30,
2020 |
| |||
IBNR Beginning balance
|
| | |
|
$ 55,749
|
| |
Incurred related to: | | | | | | | |
Current period
|
| | |
|
184,012
|
| |
Prior periods
|
| | |
|
11,245
|
| |
| | | | | 195,257 | | |
Paid related to: | | | | | | | |
Current period
|
| | |
|
(159,878)
|
| |
Prior periods
|
| | |
|
(25,440)
|
| |
| | | | | (185,318) | | |
IBNR Ending balance
|
| | |
|
65,688
|
| |
Claims payable, risk share, and other reserves
|
| | |
|
24,430
|
| |
Total
|
| | |
|
$ 90,118
|
| |
| | |
As of April 30,
2020 |
| |||
UCAP Promissory Note
|
| | |
|
$ 16,500
|
| |
Family Notes
|
| | |
|
16,500
|
| |
Total
|
| | |
|
$ 33,000
|
| |
As of April 30,
|
| |
Total
|
| |||
Remainder of 2020
|
| | | | $ 204 | | |
2021
|
| | | | 1,250 | | |
2022
|
| | | | 1,188 | | |
Total
|
| | | | $ 2,642 | | |
| | |
As of June 30,
2019 |
| |||
Assets | | | | | | | |
Current assets: | | | | | | | |
Cash
|
| | | | $ 45,870 | | |
Premiums and risk adjustment receivables
|
| | | | 45,658 | | |
Other receivables
|
| | | | 14,249 | | |
Prepaid and other assets
|
| | | | 16,415 | | |
Total current assets
|
| | | | 122,192 | | |
Other assets: | | | | | | | |
Restricted cash
|
| | | | 352 | | |
Property, plant and equipment, net
|
| | | | 3,072 | | |
Deposits and other assets
|
| | | | 587 | | |
Total other assets
|
| | | | 4,011 | | |
Total assets
|
| | | | $ 126,203 | | |
Liabilities and Stockholders’ Deficit | | | | | | | |
Current liabilities: | | | | | | | |
Medical claims payable
|
| | | | $ 62,761 | | |
Risk-sharing arrangements
|
| | | | 16,451 | | |
Accrued expenses
|
| | | | 1,888 | | |
Accounts payable
|
| | | | 2,676 | | |
Accrued payroll and related liabilities
|
| | | | 1,451 | | |
Unearned premiums
|
| | | | 41,541 | | |
Total current liabilities
|
| | | | 126,768 | | |
Subordinated notes payable – related parties
|
| | | | 25,000 | | |
Total liabilities
|
| | | | 151,768 | | |
Stockholders’ Deficit | | | | | | | |
Common stock: | | | | | | | |
Class A-1, no par value, 450,000 shares authorized, 100,000 shares issued and outstanding
|
| | | | — | | |
Class A-2, no par value, 450,000 shares authorized, 100,000 shares issued and outstanding
|
| | | | — | | |
Class B, no par value, 100,000 shares authorized, 4,500 shares issued and outstanding
|
| | | | — | | |
Additional paid-in capital
|
| | | | 13,322 | | |
Accumulated deficit
|
| | | | (38,887) | | |
Total stockholders’ deficit
|
| | | | (25,565) | | |
Total liabilities and stockholders’ deficit
|
| | | | $ 126,203 | | |
| | |
Year Ended
June 30, 2019 |
| |||
Revenue | | | | | | | |
Medicare premiums
|
| | | | $ 419,175 | | |
Medi-Cal premiums
|
| | | | 520 | | |
Other revenue
|
| | | | 83 | | |
Total revenue
|
| | | | 419,778 | | |
Expenses | | | | | | | |
Healthcare services
|
| | | | 371,480 | | |
Healthcare services to affiliates
|
| | | | 3,536 | | |
Marketing, general and administrative expenses
|
| | | | 33,054 | | |
Salaries and benefits
|
| | | | 12,280 | | |
Depreciation and amortization
|
| | | | 1,115 | | |
Interest expense, net
|
| | | | 1,235 | | |
Total expenses
|
| | | | 422,700 | | |
Loss from continuing operations before taxes
|
| | | | (2,922) | | |
Income tax expense
|
| | | | 1 | | |
Loss from continuing operations
|
| | | | (2,923) | | |
Discontinued operations (Note 2) | | | | | | | |
Loss from HealthNet operations
|
| | | | (4,865) | | |
Loss from discontinued operations
|
| | | | (4,865) | | |
Net loss
|
| | | | $ (7,788) | | |
| | |
Class A-1
Common Stock |
| |
Class A-2
Common Stock |
| |
Class B
Common Stock |
| |
Additional
Paid-In Capital |
| |
Accumulated
Deficit |
| |
Total
|
| ||||||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||
Balance at June 30, 2018
|
| | | | 100,000 | | | | | | $ — | | | | | | 100,000 | | | | | | $ — | | | | | | 4,500 | | | | | | $ — | | | | | | $ 13,322 | | | | | | $ (31,099) | | | | | | $ (17,777) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (7,788) | | | | | | (7,788) | | |
Balance at June 30, 2019
|
| | | | 100,000 | | | | | | $ — | | | | | | 100,000 | | | | | | $ — | | | | | | 4,500 | | | | | | $ — | | | | | | $ 13,322 | | | | | | $ (38,887) | | | | | | $ (25,565) | | |
| | |
Year Ended
June 30, 2019 |
| |||
Cash flows from operating activities | | | | | | | |
Net loss
|
| | | | $ (7,788) | | |
Adjustments to reconcile net loss to net cash and restricted cash (used in) provided by operating activities:
|
| | | | | | |
Depreciation and amortization
|
| | | | 1,115 | | |
Changes in assets and liabilities:
|
| | | | | | |
Premiums and risk adjustment receivable
|
| | | | (19,746) | | |
Other receivables
|
| | | | (3,985) | | |
Prepaid and other assets
|
| | | | (309) | | |
Deposit and other assets
|
| | | | (270) | | |
Medical claims payable
|
| | | | 20,165 | | |
Risk-sharing arrangements
|
| | | | 6,382 | | |
Accrued expenses
|
| | | | (2,028) | | |
Accounts payable
|
| | | | 1,899 | | |
Accrued payroll and related liabilities
|
| | | | 254 | | |
Unearned premiums
|
| | | | 13,739 | | |
Net cash provided by operating activities
|
| | | | 9,428 | | |
Cash Flows from Investing Activities | | | | | | | |
Purchases of property, plant and equipment
|
| | | | (2,056) | | |
Net cash used in investing activities
|
| | | | (2,056) | | |
Cash Flows from Financing Activities | | | | | | | |
Proceeds from subordinated notes payable-related party, net of payments
|
| | | | 10,000 | | |
Net cash provided by financing activities
|
| | | | 10,000 | | |
Net change in cash and restricted cash
|
| | | | 17,372 | | |
Cash and restricted cash, beginning of year
|
| | | | 28,850 | | |
Cash and restricted cash, end of period
|
| | | | $ 46,222 | | |
Supplemental disclosure information: | | | | | | | |
Cash paid during the year for interest
|
| | | | $ 1,297 | | |
| | |
As of June 30,
2019 |
| |||
Cash
|
| | |
|
$ 45,870
|
| |
Restricted cash
|
| | |
|
352
|
| |
Total cash and restricted cash shown on statement of cash flows
|
| | |
|
$ 46,222
|
| |
| | |
Estimated Lives
|
|
Buildings and improvement equipment | | |
5 to 20 years
|
|
Equipment | | |
5 to 7 years
|
|
Leasehold improvements | | | Lesser of remaining life of lease or 15 years | |
Furniture and fixtures | | |
7 to 10 years
|
|
Computer and software | | |
3 to 5 years
|
|
| | |
As of June 30,
2019 |
| |||
Revenues: | | | | | | | |
Total net revenue
|
| | | | $ 6,488 | | |
Expenses: | | | | | | | |
Healthcare services
|
| | | | 9,892 | | |
Payroll and benefits
|
| | | | 1,068 | | |
Other expenses
|
| | | | 393 | | |
Total expenses
|
| | | | 11,353 | | |
Loss on discontinued operations before taxes
|
| | | | (4,865) | | |
Tax expense
|
| | | | — | | |
Total loss on discontinued operations in statement of operations
|
| | | | $ (4,865) | | |
| | |
As of June 30,
2019 |
| |||
CMS risk adjustment – Part C
|
| | | | $ 38,873 | | |
CMS risk adjustment – Part D
|
| | | | 5,084 | | |
HealthNet SPD adjustment
|
| | | | 1,188 | | |
Medi-Cal Capitation
|
| | | | 513 | | |
Total
|
| | | | $ 45,658 | | |
| | |
As of June 30,
2019 |
| |||
Due from providers
|
| | | | $ 2,766 | | |
Pharmacy rebates
|
| | | | 10,002 | | |
Insurance settlement
|
| | | | 1,331 | | |
Secured third-party note receivable(1)
|
| | | | 150 | | |
Total
|
| | | | $ 14,249 | | |
| | |
As of June 30,
2019 |
| |||
Advance capitation payment to providers
|
| | | | $ 9,671 | | |
Advertising and sales commission
|
| | | | 3,833 | | |
Deferred charges
|
| | | | 704 | | |
Other
|
| | | | 2,793 | | |
Total
|
| | | | $ 17,002 | | |
| | |
As of June 30,
2019 |
| |||
Equipment
|
| | | | $ 5,762 | | |
Furniture and fixtures
|
| | | | 547 | | |
Leasehold improvements
|
| | | | 353 | | |
Computer hardware and software
|
| | | | 5,050 | | |
Total property, plant and equipment
|
| | | | 11,712 | | |
Less: accumulated depreciation and amortization
|
| | | | 8,640 | | |
Total
|
| | | | $ 3,072 | | |
| | |
As of June 30,
2019 |
| |||
IBNR Beginning balance
|
| | | | $ 40,670 | | |
Incurred related to: | | | | | | | |
Current period
|
| | | | 169,256 | | |
Prior periods
|
| | | | (808) | | |
| | | | | 168,448 | | |
Paid related to: | | | | | | | |
Current period
|
| | | | (114,455) | | |
Prior periods
|
| | | | (38,913) | | |
| | | | | (153,369) | | |
IBNR Ending balance
|
| | | | 55,749 | | |
Claims payable, risk share, and other reserves
|
| | | | 7,012 | | |
Total
|
| | | | $ 62,761 | | |
| | |
As of June 30,
2019 |
| |||
UCAP Promissory Note
|
| | | | $ 12,500 | | |
Family Notes
|
| | | | 12,500 | | |
Total
|
| | | | $ 25,000 | | |
Years Ending June 30,
|
| |
Total
|
| |||
2020
|
| | | | $ 1,037 | | |
2021
|
| | | | 1,191 | | |
Total
|
| | | | $ 2,228 | | |
| | |
As of June 30,
2019 |
| |||
Current: | | | | | | | |
Federal
|
| | | | $ — | | |
State
|
| | | | 1 | | |
| | | | | 1 | | |
Deferred: | | | | | | | |
Federal
|
| | | | (809) | | |
State
|
| | | | (1,134) | | |
Valuation Allowance
|
| | | | 1,943 | | |
| | | | | — | | |
Provision for income taxes
|
| | | | $ 1 | | |
| | |
As of June 30,
2019 |
| |||
Federal statutory rate
|
| | | | 21.0% | | |
Effect of:
|
| | | | | | |
Change in valuation allowance
|
| | | | (17.9)% | | |
Non-deductible expenses
|
| | | | (3.3)% | | |
Other
|
| | | | 0.2% | | |
Provision for taxes
|
| | | | 0.0% | | |
| | |
As of June 30,
2019 |
| |||
Deferred tax assets: | | | | | | | |
Net operating losses
|
| | | | $ 7,540 | | |
Charitable contributions
|
| | | | 40 | | |
Tax credits
|
| | | | 97 | | |
Accrued expenses
|
| | | | 171 | | |
Deferred rent
|
| | | | 2 | | |
State taxes
|
| | | | 272 | | |
Total deferred tax assets
|
| | | | 8,122 | | |
Less: valuation allowance
|
| | | | (7,680) | | |
Total deferred tax assets
|
| | | | 442 | | |
Deferred tax liabilities: | | | | | | | |
Deferred gain on installment sale
|
| | | | — | | |
Property, plant and equipment
|
| | | | (400) | | |
State taxes
|
| | | | — | | |
Prepaid expenses
|
| | | | (42) | | |
Total deferred tax liabilities
|
| | | | (442) | | |
Deferred tax assets, net
|
| | | | $ — | | |
|
BofA Securities
|
| |
Citigroup
|
| |
Piper Sandler
|
|
|
Nomura
|
| |
RBC Capital Markets
|
|
| | |
Amount to be Paid
|
| |||
SEC Registration Fee
|
| | | | $ 168,625 | | |
FINRA Filing Fee
|
| | | | 225,500 | | |
NYSE Initial Listing Fee
|
| | | | 25,000 | | |
Legal Fees and Expenses
|
| | | | 3,250,000 | | |
Accounting Fees and Expenses
|
| | | | 1,986,500 | | |
Printing Fees and Expenses
|
| | | | 300,000 | | |
Transfer Agent and Registrar Fees
|
| | | | 20,000 | | |
Miscellaneous Expenses
|
| | | | 549,375 | | |
Total
|
| | | | $6,525,000 | | |
|
Exhibit
Number |
| |
Description
|
| |||
| | | 1.1 | | | | | |
| | | 3.1* | | | | | |
| | | 3.2* | | | | | |
| | | 3.3* | | | | | |
| | | 3.4* | | | | | |
| | | 3.5* | | | | | |
| | | 5.1 | | | | | |
| | | 10.1* | | | | | |
| | | 10.2* | | | | | |
| | | 10.3* | | | | | |
| | | 10.4*† | | | | | |
| | | 10.5*† | | | | | |
| | | 10.6*† | | | | | |
| | | 10.7*† | | | | | |
| | | 10.8† | | | | | |
| | | 10.9*† | | | | | |
| | | 10.10*† | | | | | |
| | | 10.11*† | | | | | |
| | | 10.12*† | | | | | |
| | | 10.13*† | | | | | |
| | | 10.14*† | | | | | |
| | | 10.15*† | | | | | |
| | | 10.16*† | | | | | |
| | | 10.17*† | | | | | |
| | | 10.18*† | | | | |
|
Exhibit
Number |
| |
Description
|
| |||
| | | 10.19*† | | | | | |
| | | 10.20*† | | | | | |
| | | 10.21*† | | | | | |
| | | 16.1* | | | | | |
| | | 21.1* | | | | | |
| | | 23.1 | | | | | |
| | | 23.2 | | | | | |
| | | 23.3 | | | | | |
| | | 23.4 | | | | | |
| | | 24.1* | | | | Power of Attorney (included in the signature page to the Registration Statement) | |
|
SIGNATURE
|
| |
TITLE
|
|
|
/s/ G. Mike Mikan
G. Mike Mikan
|
| |
Chief Executive Officer, Director
(Principal Executive Officer) |
|
|
/s/ Catherine R. Smith
Catherine R. Smith
|
| |
Chief Administrative and Financial Officer
(Principal Financial Officer) |
|
|
/s/ Jeffrey J. Scherman
Jeffrey J. Scherman
|
| |
Chief Accounting Officer
(Principal Accounting Officer) |
|
|
*
Robert J. Sheehy
|
| |
Chairman
|
|
|
*
Kedrick D. Adkins Jr.
|
| |
Director
|
|
|
*
Naomi Allen
|
| |
Director
|
|
|
*
Jeffrey Folick
|
| |
Director
|
|
|
*
Linda Gooden
|
| |
Director
|
|
|
*
Jeffery R. Immelt
|
| |
Director
|
|
|
*
Manuel Kadre
|
| |
Director
|
|
|
*
Stephen Kraus
|
| |
Director
|
|
Exhibit 1.1
BRIGHT HEALTH GROUP, INC.
[___] Shares of Common Stock
Underwriting Agreement
[___], 2021
J.P. Morgan Securities LLC
Goldman Sachs & Co. LLC
Morgan Stanley & Co. LLC
Barclays Capital Inc.
As Representatives of the
several Underwriters listed
in Schedule 1 hereto
c/o J.P. Morgan Securities LLC
383 Madison Avenue
New York, New York 10179
c/o Goldman Sachs & Co. LLC
200 West Street,
New York, New York 10282
c/o Morgan Stanley & Co. LLC
1585 Broadway
New York, New York 10036
c/o Barclays Capital Inc.
745 Seventh Avenue
New York, New York 10019
Ladies and Gentlemen:
Bright Health Group, Inc., a Delaware corporation (the “Company”), proposes to issue and sell to the several underwriters listed in Schedule 1 hereto (the “Underwriters”), for whom you are acting as representatives (the “Representatives”), an aggregate of [___] shares of common stock, par value $0.0001 per share (the “Common Stock”), of the Company (the “Underwritten Shares”) and, at the option of the Underwriters, up to an additional [___] shares of Common Stock of the Company (the “Option Shares”). The Underwritten Shares and the Option Shares are herein referred to as the “Shares.” The shares of Common Stock of the Company to be outstanding after giving effect to the sale of the Shares are referred to herein as the “Stock.”
The Company hereby confirms its agreement with the several Underwriters concerning the purchase and sale of the Shares, as follows:
1. Registration Statement. The Company has prepared and filed with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder (collectively, the “Securities Act”), a registration statement on Form S-1 (File No. 333-256286), including a prospectus, relating to the Shares. Such registration statement, as amended at the time it became effective, including the information, if any, deemed pursuant to Rule 430A, 430B or 430C under the Securities Act to be part of the registration statement at the time of its effectiveness (“Rule 430 Information”), is referred to herein as the “Registration Statement”; and as used herein, the term “Preliminary Prospectus” means each prospectus included in such registration statement (and any amendments thereto) before effectiveness, any prospectus filed with the Commission pursuant to Rule 424(a) under the Securities Act and the prospectus included in the Registration Statement at the time of its effectiveness that omits Rule 430 Information, and the term “Prospectus” means the prospectus in the form first used (or made available upon request of purchasers pursuant to Rule 173 under the Securities Act) in connection with confirmation of sales of the Shares. If the Company has filed an abbreviated registration statement pursuant to Rule 462(b) under the Securities Act (the “Rule 462 Registration Statement”), then any reference herein to the term “Registration Statement” shall be deemed to include such Rule 462 Registration Statement. Capitalized terms used but not defined herein shall have the meanings given to such terms in the Registration Statement and the Prospectus.
At or prior to the Applicable Time (as defined below), the Company had prepared the following information (collectively with the pricing information set forth on Annex A, the “Pricing Disclosure Package”): a Preliminary Prospectus dated [___], 2021 and each “free-writing prospectus” (as defined pursuant to Rule 405 under the Securities Act) listed on Annex A hereto.
“Applicable Time” means [___] P.M., New York City time, on [___], 2021.
2. Purchase of the Shares.
(a) On the basis of representations, warranties and agreements set forth herein and subject to the conditions set forth herein, the Company agrees to issue and sell the Underwritten Shares to the several Underwriters as provided in this underwriting agreement (this “Agreement”), and each Underwriter, on the basis of the representations, warranties and agreements set forth herein and subject to the conditions set forth herein, agrees, severally and not jointly, to purchase at a price per share of $[___] (the “Purchase Price”) from the Company the respective number of Underwritten Shares set forth opposite such Underwriter’s name in Schedule 1 hereto. The public offering price of the Shares is not in excess of the price recommended by Citigroup Global Markets Inc., acting as a “qualified independent underwriter” within the meaning of Rule 5121 of the Financial Industry Regulatory Authority, Inc. (“FINRA”).
2
In addition, on the basis of representations, warranties and agreements set forth herein and subject to the conditions set forth herein, the Company agrees to issue and sell the Option Shares to the several Underwriters as provided in this Agreement, and the Underwriters, on the basis of the representations, warranties and agreements set forth herein and subject to the conditions set forth herein, shall have the option to purchase, severally and not jointly, from the Company the Option Shares at the Purchase Price less an amount per share equal to any dividends or distributions declared by the Company and payable on the Underwritten Shares but not payable on the Option Shares.
If any Option Shares are to be purchased, the number of Option Shares to be purchased by each Underwriter shall be the number of Option Shares which bears the same ratio to the aggregate number of Option Shares being purchased as the number of Underwritten Shares set forth opposite the name of such Underwriter in Schedule 1 hereto (or such number increased as set forth in Section 10 hereof) bears to the aggregate number of Underwritten Shares being purchased from the Company by the several Underwriters, subject, however, to such adjustments to eliminate any fractional Shares as the Representatives in their sole discretion shall make.
The Underwriters may exercise the option to purchase Option Shares at any time in whole, or from time to time in part, on or before the thirtieth day following the date of the Prospectus, by written notice from the Representatives to the Company. Such notice shall set forth the aggregate number of Option Shares as to which the option is being exercised and the date and time when the Option Shares are to be delivered and paid for, which may be the same date and time as the Closing Date (as hereinafter defined) but shall not be earlier than the Closing Date nor later than the tenth full business day (as hereinafter defined) after the date of such notice (unless such time and date are postponed in accordance with the provisions of Section 10 hereof). Any such notice shall be given at least two business days prior to the date and time of delivery specified therein.
(b) The Company understands that the Underwriters intend to make a public offering of the Shares, and initially to offer the Shares on the terms set forth in the Pricing Disclosure Package. The Company acknowledges and agrees that the Underwriters may offer and sell Shares to or through any affiliate of an Underwriter.
(c) Payment for the Shares shall be made by wire transfer in immediately available funds to the account specified by the Company to the Representatives in the case of the Underwritten Shares, at the offices of Goodwin Procter LLP, 601 Marshall Street, Redwood City, California 94063 at 10:00 A.M. New York City time on [___], 2021, or at such other time or place on the same or such other date, not later than the fifth business day thereafter, as the Representatives and the Company may agree upon in writing or, in the case of the Option Shares, on the date and at the time and place specified by the Representatives in the written notice of the Underwriters’ election to purchase such Option Shares. The time and date of such payment for the Underwritten Shares is referred to herein as the “Closing Date,” and the time and date for such payment for the Option Shares, if other than the Closing Date, is herein referred to as the “Additional Closing Date.”
3
Payment for the Shares to be purchased on the Closing Date or the Additional Closing Date, as the case may be, shall be made against delivery to the Representatives for the respective accounts of the several Underwriters of the Shares to be purchased on such date or the Additional Closing Date, as the case may be, with any transfer taxes payable in connection with the sale of such Shares duly paid by the Company. Delivery of the Shares shall be made through the facilities of The Depository Trust Company (“DTC”) unless the Representatives shall otherwise instruct.
(d) The Company acknowledges and agrees that the Representatives and the other Underwriters are acting solely in the capacity of an arm’s length contractual counterparty to the Company with respect to the offering of Shares contemplated hereby (including in connection with determining the terms of the offering) and not as a financial advisor or a fiduciary to, or an agent of, the Company or any other person. Additionally, none of the Representatives nor any other Underwriter is advising the Company or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction, and none of the activities of the Underwriters in connection with the transactions contemplated herein constitutes a recommendation, investment advice, or solicitation of any action by the Underwriters with respect to any entity or natural person. The Company shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and none of the Representatives nor the other Underwriters shall have any responsibility or liability to the Company with respect thereto. Any review by the Representatives and the other Underwriters of the Company, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of the Underwriters and shall not be on behalf of the Company.
3. Representations and Warranties of the Company. The Company represents and warrants to each Underwriter that:
(a) Preliminary Prospectus. No order preventing or suspending the use of any Preliminary Prospectus has been issued by the Commission, and each Preliminary Prospectus included in the Pricing Disclosure Package, at the time of filing thereof, complied in all material respects with the applicable requirements of the Securities Act, and no Preliminary Prospectus included in the Pricing Disclosure Package, at the time of filing thereof, contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation or warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in any Preliminary Prospectus, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 7(b) hereof.
4
(b) Pricing Disclosure Package. The Pricing Disclosure Package as of the Applicable Time did not, and as of the Closing Date and as of the Additional Closing Date, as the case may be, will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation or warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in such Pricing Disclosure Package, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 7(b) hereof. No statement of material fact included in the Prospectus has been omitted from the Pricing Disclosure Package and no statement of material fact included in the Pricing Disclosure Package that is required to be included in the Prospectus has been omitted therefrom.
(c) Issuer Free Writing Prospectus. Other than the Registration Statement, the Preliminary Prospectus and the Prospectus, the Company (including its agents and representatives, other than the Underwriters in their capacity as such) has not prepared, made, used, authorized, approved or referred to and will not prepare, make, use, authorize, approve or refer to any “written communication” (as defined in Rule 405 under the Securities Act) that constitutes an offer to sell or solicitation of an offer to buy the Shares (each such communication by the Company or its agents and representatives (other than a communication referred to in clause (i) below) an “Issuer Free Writing Prospectus”) other than (i) any document not constituting a prospectus pursuant to Section 2(a)(10)(a) of the Securities Act or Rule 134 under the Securities Act or any document that complies with Rule 135 under the Securities Act or (ii) the documents listed on Annex A hereto, each electronic road show and any other written communications approved in writing in advance by the Representatives. Each such Issuer Free Writing Prospectus, if any, complies in all material respects with the applicable provisions of the Securities Act, has been or will be (within the time period specified in Rule 433) filed in accordance with the Securities Act (to the extent required thereby) and does not conflict with the information contained in the Registration Statement or the Pricing Disclosure Package, and, when taken together with the Pricing Disclosure Package, such Issuer Free Writing Prospectus, as of the Applicable Time, did not, and as of the Closing Date and as of the Additional Closing Date, as the case may be, will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation or warranty with respect to any statements or omissions made in each such Issuer Free Writing Prospectus or Preliminary Prospectus in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in such Issuer Free Writing Prospectus or Preliminary Prospectus, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 7(b) hereof.
5
(d) Testing-the-Waters Materials. The Company (i) has not alone engaged in any Testing-the-Waters Communications other than Testing-the-Waters Communications with the consent of the Representatives (x) with entities that the Company reasonably believed to be qualified institutional buyers (“QIBs”) within the meaning of Rule 144A under the Securities Act or institutions that are accredited investors within the meaning of Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act (“IAIs”) and otherwise in compliance with the requirements of Section 5(d) of the Securities Act or (y) with entities that the Company reasonably believed to be QIBs or IAIs and otherwise in compliance with the requirements of Rule 163B under the Securities Act and (ii) has not authorized anyone other than the Representatives to engage in Testing-the-Waters Communications. “Testing-the-Waters Communication” means any oral or written communication with potential investors undertaken in reliance on either Section 5(d) of, or Rule 163B under, the Securities Act. The Company reconfirms that the Representatives have been authorized to act on its behalf in undertaking Testing-the-Waters Communications by virtue of a writing substantially in the form of Exhibit A hereto. The Company has not distributed or approved for distribution any Written Testing-the-Waters Communications other than those listed on Annex B hereto. “Written Testing-the-Waters Communication” means any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the Securities Act. Any individual Written Testing-the-Waters Communication listed on Annex B hereto does not conflict with the information contained in the Registration Statement or the Pricing Disclosure Package, complied in all material respects with the applicable provisions of the Securities Act, and when taken together with the Pricing Disclosure Package as of the Applicable Time, did not, and as of the Closing Date and as of the Additional Closing Date, as the case may be, will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(e) Registration Statement and Prospectus. The Registration Statement has been declared effective by the Commission. No order suspending the effectiveness of the Registration Statement has been issued by the Commission, and no proceeding for that purpose or pursuant to Section 8A of the Securities Act against the Company or related to the offering of the Shares has been initiated or, to the knowledge of the Company, threatened by the Commission; as of the applicable effective date of the Registration Statement and any post-effective amendment thereto, the Registration Statement and any such post-effective amendment complied and as of the Closing Date or any Additional Closing Date will comply in all material respects with the Securities Act, and did not, as of the applicable effective date, and will not as of the Closing Date or any Additional Closing Date, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading; and as of the date of the Prospectus and any amendment or supplement thereto and as of the Closing Date and as of the Additional Closing Date, as the case may be, the Prospectus (including any amendment or supplement thereto, as applicable) complied and will comply in all material respects with the applicable provisions of the Securities Act and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation or warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in the Registration Statement and the Prospectus and any amendment or supplement thereto, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 7(b) hereof.
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(f) Financial Statements. The financial statements (including the related notes thereto) of the Company and its consolidated subsidiaries included in the Registration Statement, the Pricing Disclosure Package and the Prospectus comply in all material respects with the applicable requirements of the Securities Act and present fairly in all material respects the financial position of the Company and its consolidated subsidiaries as of the dates indicated and the results of their operations and the changes in their cash flows for the periods specified; such financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States applied on a consistent basis throughout the periods covered thereby; and the other financial information included in the Registration Statement, the Pricing Disclosure Package and the Prospectus has been derived from the accounting records of the Company and its consolidated subsidiaries and presents fairly in all material respects the information shown thereby; all disclosures included in the Registration Statement, the Pricing Disclosure Package and the Prospectus regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of Commission) comply in all material respects with Regulation G of the Exchange Act and Item 10 of Regulation S-K of the Securities Act, to the extent applicable; and the pro forma financial information and the related notes thereto included in the Registration Statement, the Pricing Disclosure Package and the Prospectus have been prepared in all material respects in accordance with the applicable requirements of the Securities Act and the assumptions underlying such pro forma financial information are reasonable and are set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
(g) No Material Adverse Change. Since the date of the most recent financial statements of the Company included in the Registration Statement, the Pricing Disclosure Package and the Prospectus, (i) there has not been any change in the capital stock (other than the issuance of options or other equity awards to purchase shares of Common Stock, or the issuance of Common Stock upon the exercise of options or other equity awards granted under, or contracts or commitments pursuant to, the Company’s employee benefit plans described in the Registration Statement, the Pricing Disclosure Package and the Prospectus) or borrowings under the Credit Agreement or long-term debt of the Company or any of its subsidiaries, or any dividend or distribution of any kind declared, set aside for payment, paid or made by the Company on any class of capital stock, or any material adverse change, or any development involving a prospective material adverse change, in or affecting the business, properties, management, consolidated financial position or consolidated results of operations of the Company and its subsidiaries taken as a whole; (ii) neither the Company nor any of its subsidiaries has entered into any transaction or agreement (whether or not in the ordinary course of business) that is material to the Company and its subsidiaries taken as a whole or incurred any liability or obligation, direct or contingent, that is material to the Company and its subsidiaries taken as a whole; and (iii) neither the Company nor any of its subsidiaries has sustained any loss or interference with its business that is material to the Company and its subsidiaries taken as a whole and that is either from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor disturbance or dispute or any action, order or decree of any court or arbitrator or governmental or regulatory authority, except in each case of clauses (i) through (iii), as otherwise disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
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(h) Organization and Good Standing. The Company and each of its subsidiaries have been duly organized and are validly existing and in good standing under the laws of their respective jurisdictions of organization, are duly qualified to do business and are in good standing in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such qualification, and have all power and authority necessary to own or hold their respective properties and to conduct the businesses in which they are engaged, except where the failure to be so qualified or in good standing or have such power or authority would not, individually or in the aggregate, have a material adverse effect on the business, properties, management, consolidated financial position or consolidated results of operations of the Company and its subsidiaries taken as a whole or on the performance by the Company of its obligations under this Agreement (a “Material Adverse Effect”). The Company does not own or control, directly or indirectly, any corporation, association or other entity other than the subsidiaries listed in Exhibit 21.1 to the Registration Statement.
(i) Capitalization. The Company has an authorized capitalization as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus under the heading “Capitalization”; all the outstanding shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable and are not subject to any pre-emptive or similar rights; except as described in or expressly contemplated by the Registration Statement, the Pricing Disclosure Package and the Prospectus, there are no outstanding rights (including, without limitation, pre-emptive rights), warrants or options to acquire, or instruments convertible into or exchangeable for, any shares of capital stock or other equity interest in the Company or any of its subsidiaries, or any contract, commitment, agreement, understanding or arrangement of any kind relating to the issuance of any capital stock of the Company or any such subsidiary, any such convertible or exchangeable securities or any such rights, warrants or options; the capital stock of the Company conforms in all material respects to the description thereof contained in the section titled “Description of Capital Stock” in the Registration Statement, the Pricing Disclosure Package and the Prospectus; and all the outstanding shares of capital stock or other equity interests of each subsidiary owned, directly or indirectly, by the Company have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly or indirectly by the Company, free and clear of any lien, charge, encumbrance, security interest, restriction on voting or transfer or any other claim of any third party (other than liens securing the Credit Agreement together with any other documents, agreements or instruments delivered in connection therewith).
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(j) Stock Options. With respect to the stock options and other equity awards granted pursuant to the stock-based compensation plans of the Company and its subsidiaries (the “Company Stock Plans”), (i) each such stock option intended to qualify as an “incentive stock option” under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) so qualifies, (ii) each such grant was duly authorized no later than the date on which such grant was by its terms to be effective by all necessary corporate action, including, as applicable, approval by the board of directors of the Company (or a duly constituted and authorized committee thereof) and any required stockholder approval by the necessary number of votes or written consents, and the award agreement governing such grant (if any) was duly executed and delivered by each party thereto, (iii) each such grant was made in accordance with the terms of the Company Stock Plans and all applicable laws and regulatory rules or requirements, and (iv) each such grant was properly accounted for in accordance with GAAP in the financial statements (including the related notes) of the Company. The Company has not knowingly granted, and there is no and has been no policy or practice of the Company of granting, stock options or other equity awards prior to, or otherwise coordinating the grant of Stock Options or other equity awards with, the release or other public announcement of material information regarding the Company or its subsidiaries or their results of operations or prospects.
(k) Due Authorization. The Company has full corporate right, power and authority to execute and deliver this Agreement and to perform its obligations hereunder; and all corporate action required to be taken for the due and proper authorization, execution and delivery by it of this Agreement and the consummation by it of the transactions contemplated hereby has been duly and validly taken.
(l) Underwriting Agreement. This Agreement has been duly authorized, executed and delivered by the Company.
(m) The Shares. The Shares to be issued and sold by the Company hereunder have been duly authorized by the Company and, when issued and delivered and paid for as provided herein, will be duly and validly issued, will be fully paid and nonassessable and will conform in all material respects to the descriptions thereof in the section titled “Description of Capital Stock” in Registration Statement, the Pricing Disclosure Package and the Prospectus; and the issuance of the Shares is not subject to any preemptive or similar rights that have not been duly waived or satisfied.
(n) Description of the Underwriting Agreement. This Agreement conforms in all material respects to the description thereof contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
(o) No Violation or Default. Neither the Company nor any of its subsidiaries is (i) in violation of its charter or by-laws or similar organizational documents; (ii) in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any property or asset of the Company or any of its subsidiaries is subject; or (iii) in violation of any applicable law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority having jurisdiction over the Company and its subsidiaries, except, in the case of clauses (ii) and (iii) above, for any such default or violation that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
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(p) No Conflicts. The execution, delivery and performance by the Company of this Agreement, the issuance and sale of the Shares and the consummation by the Company of the transactions contemplated by this Agreement or the Pricing Disclosure Package and the Prospectus will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, result in the termination, modification or acceleration of, or result in the creation or imposition of any lien, charge or encumbrance upon any property, right or asset of the Company or any of its subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any property, right or asset of the Company or any of its subsidiaries is subject, (ii) result in any violation of the provisions of the charter or by-laws or similar organizational documents of the Company or any of its subsidiaries or (iii) result in the violation of any applicable law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority having jurisdiction over the Company and its subsidiaries, except, in the case of clauses (i) and (iii) above, for any such conflict, breach, violation, default, lien, charge or encumbrance that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(q) No Consents Required. No consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or governmental or regulatory authority is required for the execution, delivery and performance by the Company of this Agreement, the issuance and sale of the Shares and the consummation by the Company of the transactions contemplated by this Agreement, except for the registration of the Shares under the Securities Act and such consents, approvals, authorizations, orders and registrations or qualifications (i) as have been obtained or made, (ii) as may be required by FINRA and under applicable state securities laws in connection with the purchase and distribution of the Shares by the Underwriters or (iii) as would not, individually or in the aggregate, reasonably be expected to materially adversely affect the consummation of the transactions contemplated by this Agreement.
(r) Legal Proceedings. There are no legal, governmental or regulatory investigations, actions, demands, claims, suits, arbitrations or proceedings (“Actions”) to which the Company or any of its subsidiaries is a party or to which any property of the Company or any of its subsidiaries is the subject that, individually or in the aggregate, that if determined adversely to the Company or any of its subsidiaries, would reasonably be expected to have a Material Adverse Effect; to the Company’s knowledge, no such Actions are threatened by any governmental or regulatory authority or by others that, individually or in the aggregate, if determined adversely to the Company or any of its subsidiaries, would reasonably be expected to have a Material Adverse Effect; and (i) there are no current or pending Actions that are required under the Securities Act to be described in the Registration Statement, the Pricing Disclosure Package or the Prospectus that are not so described in the Registration Statement, the Pricing Disclosure Package and the Prospectus and (ii) there are no statutes, regulations or contracts or other documents that are required under the Securities Act to be filed as exhibits to the Registration Statement or described in the Registration Statement, the Pricing Disclosure Package or the Prospectus that are not so filed as exhibits to the Registration Statement or described in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
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(s) Independent Accountants. Deloitte & Touche LLP and RSM US LLP, who have certified certain financial statements of the Company and its subsidiaries, and BDO USA, LLP, who have certified certain financial statements of Universal Care, Inc., is each an independent registered public accounting firm with respect to the Company and its subsidiaries within the applicable rules and regulations adopted by the Commission and the Public Company Accounting Oversight Board (United States) and as required by the Securities Act.
(t) Title to Real and Personal Property. The Company and its subsidiaries have good and marketable title in fee simple to, or have valid rights to lease or otherwise use, all items of real and personal property that are material to the respective businesses of the Company and its subsidiaries, in each case free and clear of all liens, encumbrances, claims, defects and imperfections of title except those that (i) secure the Credit Agreement together with any other documents, agreements or instruments delivered in connection therewith, (ii) do not materially interfere with the use made and proposed to be made of such property by the Company and its subsidiaries or (iii) would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
(u) Intellectual Property. Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, (i) the Company and its subsidiaries own, possess or have the right to use all patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, domain names and other source indicators, copyrights and copyrightable works, know-how (including trade secrets, data and other unpatented and/or unpatentable proprietary systems or procedures), software, proprietary or confidential information and all other worldwide intellectual property, industrial property and proprietary rights (including all registrations, and applications for registration of, and all goodwill associated with, the foregoing) (collectively, “Intellectual Property”) used in or necessary for, the conduct of their respective businesses; (ii) the Company’s and its subsidiaries’ conduct of their respective businesses does not infringe, misappropriate or otherwise violate any valid Intellectual Property of any person; (iii) other than in connection with proceedings with the relevant patent, trademark, or similar intellectual property offices in relevant jurisdictions (including the United States Patent and Trademark Office) in the ordinary course of prosecuting, maintaining, obtaining, or registering patent rights, trademark rights, copyrights, or other Intellectual Property of the Company or its Subsidiaries, there is no claim, action, suit, investigation or proceeding pending against or threatened against the Company or its subsidiaries (A) based upon, or challenging or seeking to deny or restrict, any rights of the Company and its subsidiaries in any Intellectual Property owned by, purported to be owned by the Company or any of its subsidiaries, (B) challenging the ownership, validity, enforceability or scope of any Intellectual Property owned by the Company or its subsidiaries, or (C) alleging that the Company or any of its subsidiaries have infringed, misappropriated or otherwise violated any Intellectual Property of any person; (iv) the Intellectual Property owned by the Company and its subsidiaries has not been infringed, misappropriated or otherwise violated by any person; (v) none of the Intellectual Property owned by the Company and its subsidiaries has been adjudged invalid or unenforceable and all such Intellectual Property is valid and enforceable; and (vi) the Company and its subsidiaries have taken reasonable steps in accordance with normal industry practice to maintain the confidentiality of all Intellectual Property of the Company and its subsidiaries the value of which to the Company and its subsidiaries is contingent upon maintaining the confidentiality thereof, and to the knowledge of the Company, no such Intellectual Property has been disclosed other than to employees, representatives, partners, legal or financial advisors and agents of the Company, or other authorized third parties.
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(v) No Undisclosed Relationships. No relationship, direct or indirect, exists between or among the Company or any of its subsidiaries, on the one hand, and the directors, officers, stockholders, customers, suppliers or other affiliates of the Company or any of its subsidiaries, on the other, that is required by the Securities Act to be described in each of the Registration Statement and the Prospectus and that is not so described in such documents and in the Pricing Disclosure Package.
(w) Investment Company Act. The Company is not and, after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, will not be required to register as an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder (collectively, the “Investment Company Act”).
(x) Taxes. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the Company and its subsidiaries have paid all federal, state, local and foreign taxes (other than taxes that are being contested in good faith) and filed all tax returns required to be paid or filed through the date hereof; and except as otherwise disclosed in each of the Registration Statement, the Pricing Disclosure Package and the Prospectus or as would not reasonably be expected to have a Material Adverse Effect, there is no tax deficiency that has been, or could reasonably be expected to be, asserted against the Company or any of its subsidiaries or any of their respective properties or assets.
(y) Licenses and Permits. The Company and its subsidiaries possess, and during the past three years have possessed, all licenses, sub-licenses, certificates, permits, approvals, consents and other authorizations (collectively, “Governmental Licenses”) issued by, and have made all declarations and filings with, the appropriate federal, state, local or foreign governmental or regulatory authorities that are necessary for the ownership or lease of their respective properties or the conduct of their respective businesses as described in each of the Registration Statement, the Pricing Disclosure Package and the Prospectus, except where the failure to possess or make the same would not, individually or in the aggregate, have a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received notice of any revocation, suspension or modification of any such Governmental License, except where such notice would not, individually or in the aggregate, have a Material Adverse Effect. Neither the Company nor its subsidiaries has any reason to believe that any such Governmental License will not be renewed in the ordinary course of business, except where such non-renewal would not, individually or in the aggregate, have a Material Adverse Effect.
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(z) No Labor Disputes. Except as would not, individually or in the aggregate, have a Material Adverse Effect, (i) no labor disturbance by, or dispute with, employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company, is contemplated or threatened, and the Company is not aware of any existing or imminent labor disturbance by, or dispute with, the employees of any of its or its subsidiaries’ principal suppliers, contractors or customers, and (ii) neither the Company nor any of its subsidiaries has received any notice of cancellation or termination with respect to any collective bargaining agreement to which it is a party.
(aa) Certain Environmental Matters. (i) The Company and its subsidiaries (x) are in compliance with all, and have not violated any, applicable federal, state, local and foreign laws (including common law), rules, regulations, judgments, decrees, orders and other legally enforceable requirements relating to pollution or the protection of human health or safety (to the extent relating to exposure to pollutants or contaminants), the environment, or natural resources, or as relating to the control or remediation of hazardous or toxic substances or wastes, pollutants or contaminants (collectively, “Environmental Laws”); (y) have received and are in compliance with all, and have not violated any, permits, licenses, certificates or other governmental authorizations or approvals required of them under any Environmental Laws to conduct their respective businesses; and (z) have not received written notice of any actual or alleged liability or obligation under or relating to, or any actual or alleged violation of, any Environmental Laws, including for the investigation or remediation of any disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants, and have no knowledge of any event or condition that would reasonably be expected to result in any such notice; and (ii) there are no costs or liabilities associated with Environmental Laws of or relating to the Company or its subsidiaries, except in the case of each of (i) and (ii) above, for any such matter as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and (iii) (x) there is no proceeding that is pending, or that is known to be contemplated, against the Company or any of its subsidiaries under any Environmental Laws in which a governmental entity is also a party, other than such proceeding regarding which it is reasonably believed no monetary sanctions of $300,000 or more will be imposed, (y) the Company and its subsidiaries are not aware of any facts or issues regarding compliance with Environmental Laws, or liabilities or other obligations under Environmental Laws or concerning hazardous or toxic substances or wastes, pollutants or contaminants, that would reasonably be expected to have a material effect on the capital expenditures, earnings or competitive position of the Company and its subsidiaries, and (z) none of the Company or its subsidiaries anticipates material capital expenditures relating to any Environmental Laws.
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(bb) Compliance with ERISA. (i) Each employee benefit plan, within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), for which the Company or any member of its “Controlled Group” (defined as any entity, whether or not incorporated, that is under common control with the Company within the meaning of Section 4001(a)(14) of ERISA or any entity that would be regarded as a single employer with the Company under Section 414(b),(c),(m) or (o) of the Code) would have any liability (each, a “Plan”) has been maintained in compliance with its terms and the requirements of any applicable statutes, orders, rules and regulations, including but not limited to ERISA and the Code; (ii) no prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to any Plan, excluding transactions effected pursuant to a statutory or administrative exemption; (iii) for each Plan that is subject to the funding rules of Section 412 of the Code or Section 302 of ERISA, no Plan has failed (whether or not waived), or is reasonably expected to fail, to satisfy the minimum funding standards (within the meaning of Section 302 of ERISA or Section 412 of the Code) applicable to such Plan; (iv) no Plan is, or is reasonably expected to be, in “at risk status” (within the meaning of Section 303(i) of ERISA) and no Plan that is a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA is in “endangered status” or “critical status” (within the meaning of Sections 304 and 305 of ERISA) (v) the fair market value of the assets of each Plan exceeds the present value of all benefits accrued under such Plan (determined based on those assumptions used to fund such Plan); (vi) no “reportable event” (within the meaning of Section 4043(c) of ERISA and the regulations promulgated thereunder) has occurred or is reasonably expected to occur; (vii) each Plan that is intended to be qualified under Section 401(a) of the Code is so qualified, and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification; (viii) neither the Company nor any member of the Controlled Group has incurred, nor reasonably expects to incur, any liability under Title IV of ERISA (other than contributions to the Plan or premiums to the Pension Benefit Guarantee Corporation, in the ordinary course and without default) in respect of a Plan (including a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA); and (ix) none of the following events has occurred or is reasonably likely to occur: (A) a material increase in the aggregate amount of contributions required to be made to all Plans by the Company or its Controlled Group affiliates in the current fiscal year of the Company and its Controlled Group affiliates compared to the amount of such contributions made in the Company’s and its Controlled Group affiliates’ most recently completed fiscal year; or (B) a material increase in the Company and its subsidiaries’ “accumulated post-retirement benefit obligations” (within the meaning of Accounting Standards Codification Topic 715-60) compared to the amount of such obligations in the Company and its subsidiaries’ most recently completed fiscal year, except in each case with respect to the events or conditions set forth in (i) through (ix) hereof, as would not, individually or in the aggregate, have a Material Adverse Effect.
(cc) Disclosure Controls. The Company, on a consolidated basis, maintains an effective system of “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act) that complies with the requirements of the Exchange Act applicable to the Company and that has been designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, including controls and procedures designed to provide reasonable assurances that such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure.
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(dd) Accounting Controls. The Company, on a consolidated basis, maintains a system of “internal control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that (i) is designed to comply with the requirements of the Exchange Act, (ii) has been designed by, or under the supervision of, their respective principal executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company, on a consolidated basis, maintains internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, there are no material weaknesses in the Company’s internal controls (it being understood that this subsection shall not require the Company to comply with Section 404 of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated in connection therewith (the “Sarbanes-Oxley Act”) as of an earlier date than it would otherwise be required to so comply under applicable law). The Company’s auditors and the Audit Committee of the Board of Directors of the Company have been advised of: (i) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting known to the Company which have adversely affected or are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and (ii) any fraud known to the Company, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.
(ee) Insurance. Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, the Company and its subsidiaries taken as a whole are insured against such losses and risks and in such amounts as are adequate to protect the Company and its subsidiaries and are prudent and customary in the businesses in which they are engaged or as required by law; and neither the Company nor any of its subsidiaries has (i) received written notice from any insurer or agent of such insurer that material capital improvements or other material expenditures are required or necessary to be made in order to continue such insurance or (ii) any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage at reasonable cost from similar insurers as may be necessary to continue its business.
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(ff) Cybersecurity; Data Protection. Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, (i) the Company and its subsidiaries’ information technology assets and equipment, computers, systems, networks, hardware, software, websites, applications, and databases (collectively, “IT Systems”) are adequate for, and operate and perform in all respects as required in connection with the operation of the business of the Company and its subsidiaries as currently conducted, free and clear of all bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants, (ii) the Company and its subsidiaries have implemented and maintained commercially reasonable controls, policies, procedures, and safeguards to maintain and protect their confidential information and the integrity, continuous operation, redundancy and security of all IT Systems and data, including “Personal Data,” used in connection with their business. “Personal Data” shall include, but not be limited to (i) a natural person’s name, street address, telephone number, e-mail address, photograph, social security number or tax identification number, driver’s license number, passport number, credit card number, bank information, or customer or account number; (ii) any information which would qualify as “personally identifying information” under the Federal Trade Commission Act, as amended; (iii) “personal data” as defined by the European Union General Data Protection Regulation (“GDPR”) (EU 2016/679); (iv) any information which would qualify as “protected health information” as defined in 45 C.F.R. § 160.103; and (v) any other piece of information that allows the identification of such natural person, or his or her family, or permits the collection or analysis of any data related to an identified person’s health or sexual orientation. There have been no breaches, violations, outages or unauthorized uses of or accesses to Personal Data, except for those that have been remedied without material cost or liability or the duty to notify any other person (other than where such notification was appropriately made). The Company and its subsidiaries are presently in compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems and Personal Data and to the protection of such IT Systems and Personal Data (collectively, “Privacy Obligations”) from unauthorized use, access, misappropriation or modification, except any such non-compliance that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of its subsidiaries: (i) has received written notice of any actual or potential liability under or relating to, or actual or potential violation of, any Privacy Obligations, and has no actual and specific knowledge of any event or condition that would reasonably be expected to result in any such notice; (ii) is currently conducting or paying for, in whole or in part, any material investigation, remediation, or other corrective action required by any governmental or regulatory agency with respect to privacy or protection of Personal Data; or (iii) is a party to any order, decree, or agreement that imposes any material obligation or liability with respect to privacy or protection of Personal Data.
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(gg) No Unlawful Payments. Neither the Company nor any of its subsidiaries nor any director, officer or employee of the Company or any of its subsidiaries nor, to the knowledge of the Company, any agent, affiliate or other person associated with or acting on behalf of the Company or any of its subsidiaries has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made or taken an act in furtherance of an offer, promise or authorization of any direct or indirect unlawful payment or benefit to any foreign or domestic government official or employee, including of any government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, or any applicable law or regulation implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, or committed an offence under the Bribery Act 2010 of the United Kingdom or any other applicable anti-bribery or anti-corruption law; or (iv) made, offered, agreed, requested or taken an act in furtherance of any unlawful bribe or other unlawful benefit, including, without limitation, any rebate, payoff, influence payment, kickback or other unlawful or improper payment or benefit. The Company and its subsidiaries have conducted their businesses in compliance with all applicable anti-bribery and anti-corruption laws, and have instituted, maintain and enforce, and will continue to maintain and enforce, policies and procedures designed to promote and ensure compliance with all applicable anti-bribery and anti-corruption laws. Neither the Company nor any of its subsidiaries will use, directly or indirectly, the proceeds of the offering in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any person in violation of any applicable anti-corruption laws.
(hh) Compliance with Anti-Money Laundering Laws. The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements, including those of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the applicable money laundering statutes of all jurisdictions where the Company or any of its subsidiaries conducts business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines issued, administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
(ii) No Conflicts with Sanctions Laws. Neither the Company nor any of its subsidiaries, directors, officers, or employees, nor, to the knowledge of the Company, any agent, affiliate or other person associated with or acting on behalf of the Company or any of its subsidiaries is, or is owned or controlled by one or more persons that are (A) currently the subject or the target of any sanctions administered or enforced by the U.S. government, (including, without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”) or the U.S. Department of State and including, without limitation, the designation as a “specially designated national” or “blocked person”), the United Nations Security Council (“UNSC”), the European Union, Her Majesty’s Treasury (“HMT”) or other relevant sanctions authority (collectively, “Sanctions”) or (B) located, organized or resident in a country or territory that is the subject or target of Sanctions, including, without limitation, Crimea, Cuba, Iran, North Korea and Syria (each, a “Sanctioned Country”). The Company will not directly or indirectly use the proceeds of the offering of the Shares hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity (i) to fund or facilitate any activities of or business with any person that, at the time of such funding or facilitation, is the subject or target of Sanctions, (ii) to fund or facilitate any activities of or business in any Sanctioned Country or (iii) in any other manner that will result in a violation by any person (including any person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions. The Company and its subsidiaries have not knowingly engaged in and are not now knowingly engaged in any dealings or transactions with any person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with any Sanctioned Country.
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(jj) No Restrictions on Subsidiaries. No subsidiary of the Company is currently prohibited, directly or indirectly, under any agreement or other instrument to which it is a party or is subject, from paying any dividends to the Company, from making any other distribution on such subsidiary’s capital stock or similar ownership interest, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary’s properties or assets to the Company or any other subsidiary of the Company, except for any such restrictions contained in the Credit Agreement.
(kk) No Broker’s Fees. Neither the Company nor any of its subsidiaries is a party to any contract, agreement or understanding with any person (other than this Agreement) that would give rise to a valid claim against any of them or any Underwriter for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Shares.
(ll) No Registration Rights. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, no person has the right to require the Company or any of its subsidiaries to register any securities for sale under the Securities Act by reason of the filing of the Registration Statement with the Commission or the issuance and sale of the Shares.
(mm) No Stabilization. Neither the Company nor any of its subsidiaries or affiliates has taken, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Shares.
(nn) Forward-Looking Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) included in any of the Registration Statement, the Pricing Disclosure Package or the Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.
(oo) Industry Statistical and Market Data. Nothing has come to the attention of the Company that has caused the Company to believe that the industry statistical and market-related data included in each of the Registration Statement, the Pricing Disclosure Package and the Prospectus is not based on or derived from sources that are reliable and accurate in all material respects.
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(pp) Sarbanes-Oxley Act. To the extent applicable to the Company on the date hereof, there is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply with any provision of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated in connection therewith (the “Sarbanes-Oxley Act”), including Section 402 related to loans and Sections 302 and 906 related to certifications.
(qq) Status under the Securities Act. At the time of filing the Registration Statement and any post-effective amendment thereto, at the earliest time thereafter that the Company or any offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the Securities Act) of the Shares and at the date hereof, the Company was not and is not an “ineligible issuer,” as defined in Rule 405 under the Securities Act. The Company has paid the registration fee for this offering pursuant to Rule 456(b)(1) under the Securities Act or will pay such fee within the time period required by such rule (without giving effect to the proviso therein) and in any event prior to the Closing Date.
(rr) No Ratings. There are (and prior to the Closing Date, will be) no debt securities, convertible securities or preferred stock issued or guaranteed by the Company or any of its subsidiaries that are rated by a “nationally recognized statistical rating organization”, as such term is defined in Section 3(a)(62) under the Exchange Act.
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(ss) Compliance with Healthcare Laws. Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, the Company and each of its subsidiaries is and at all times has been in compliance with all applicable Healthcare Laws. For purposes of this Agreement, “Healthcare Laws” shall include, but not be limited to, all applicable federal, state, local, or foreign governmental or other laws relating to: (i) the licensure, certification, qualification or authority to transact business in connection with the provision of, payment for, or arrangement of, healthcare services, health benefits or health insurance; (ii) the licensure of health practitioners and groups, independent practice associations and other provider networks, pharmacies and pharmacists, laboratories, healthcare or services facilities, durable medical equipment suppliers, and any other general, specialty, ancillary or allied health professional or facility (“Providers”), managed care entities, third-party administrators, third-party payors, utilization review entities and any other individual or entity (“Persons”) bearing the financial risk for, or providing administrative or other functions in connection with, the provision of, payment for or arrangement of healthcare services and, including applicable laws relating to Healthcare Programs (defined below); (iii) the Federal anti-kickback law (42 U.S.C. § 1320a-7b), the Stark Law (42 U.S.C. § 1395nn), the Federal False Claims Act (31 U.S.C. §§ 3729, et seq.), the Federal Civil Monetary Penalties Law (42 U.S.C. § 1320a-7a), the Federal Program Fraud Civil Remedies Act (31 U.S.C. § 3801 et seq.) and the Federal Health Care Fraud Law (18 U.S.C. § 1347); (iv) the Controlled Substances Act and applicable state laws governing the prescribing or dispensing of controlled substances; (vi) state laws regulating insurance, insurance products, health maintenance organizations or managed care (including Medicaid programs), including form and rate filing, reserving, marketing, investment, financial, claims, underwriting, premium collection, refunding, prompt payment; (vii) the Medicare Prescription Drug, Improvement, and Modernization Act of 2003; (viii) the Medicare Improvements for Patients and Providers Act of 2008; (ix) the Health Insurance Portability and Accountability Act of 1996 (Pub. L. No. 104-191), as amended by the Health Information Technology for Economic and Clinical Health Act (Pub. L. No. 111-5); (x) the Patient Protection and Affordable Care Act (Pub. L. 111-148) as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152); (xi) 42 U.S.C. § 1320a-7a(a)(5), 42 C.F.R. § 1003.101, commonly referred to as the “Beneficiary Inducement Law”; (xii) applicable state laws restricting the corporate practice of medicine or fee splitting by licensed healthcare professionals; (xiii) coding, coverage, reimbursement, claims submission, billing, and collections; (xv) healthcare risk sharing products, services and arrangements; (xvi) Section 340B of the Public Health Service Act, 42 U.S.C. § 256b; (xvii) the Mental Health Parity and Addiction Equity Act of 2008; (xviii) the Eliminating Kickbacks in Recovery Act of 2018 (18 U.S.C. § 220); (xix) Section 4002 of the 21st Century Cures Act; and (xx) the applicable regulations promulgated pursuant to such statutes. “Healthcare Programs” means all lines of business, programs and types of services offered by the Company or its subsidiaries that involve or relate to providing, arranging to provide, reimbursing, or otherwise administering healthcare services, as applicable, including “federal health care programs” as defined under 42 U.S.C. § 1320a-7b(f), commercial risk (individual, small group, large group), workers compensation, the Federal Employees Health Benefits Program (FEHBP), the Children’s Health Insurance Program (CHIP), TRICARE, administrative services only (ASO) and network rental, including self-funded group health plans;
(tt) Certain Healthcare Laws Matters. Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, neither the Company nor any of its subsidiaries has received written notice of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any court or arbitrator or governmental or regulatory authority or third party alleging that any operation or activity is in violation of any applicable Healthcare Laws nor, to the Company’s knowledge, is any such claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action threatened. Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, (i) the Company and its subsidiaries have filed, maintained or submitted all reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Healthcare Laws, and (ii) all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were complete and accurate on the date filed in all respects (or were corrected or supplemented by a subsequent submission). Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, neither the Company nor any subsidiary is a party to any corporate integrity agreement, monitoring agreement, consent decree, settlement order, or similar agreement with or imposed by any governmental or regulatory authority. Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, neither the Company, any of its subsidiaries, nor any of its or their respective employees, officers, directors or, to the Company’s knowledge, agents has been excluded, suspended or debarred from participation in any U.S. federal health care program or is subject to a governmental inquiry, investigation, proceeding, or other similar action that could reasonably be expected to result in debarment, suspension, exclusion or any other adverse action. Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, the Company and each subsidiary has not allowed any individual with an ownership or control interest (as defined in 42 U.S.C. § 1320a-3(a)(3)) in the Company or any subsidiary or any officer, director or managing employee (as defined in 42 U.S.C. § 1320a-5(b)) of the Company or any subsidiary who would be a person debarred, suspended or excluded from participation in any federal healthcare program (as defined in 42 U.S.C. § 1320a-7b(f)) as described in 42 U.S.C. § 1320a- 7(b)(8) maintained by the Company or any subsidiary.
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(uu) Insurance Laws. Any insurance subsidiary (as defined in the Registration Statement) of the Company is an entity required to be certified, registered or licensed, as applicable, as an insurance company, health maintenance organization, health care service plan, health care service contractor, health care services organization, third-party administrator of benefits (including any independent adjuster), preferred provider program administrator, preferred provider network, organized delivery system, utilization review organization, utilization review agent, utilization review company, private review agent, independent review organization, provider of telephone medical advice or other entity required to be certified, registered or licensed, as applicable, under applicable Healthcare Laws or Insurance Laws (“Regulated Business”). “Insurance Laws” means all state and federal laws, regulations, permits, approvals, or other requirements applicable to the provision of, payment for, or arrangement of any type of insurance coverage, including health insurance, life insurance, disability insurance, long term care insurance, critical illness insurance, specific disease insurance, travel insurance, travel health insurance, reinsurance, home insurance, renters insurance, vehicle insurance, and liability insurance. Except where the failure to do so would not reasonably be expected to have a Material Adverse Effect, the Company (i)(1) has filed all reports, data, documents, agreements, claims, submissions, notices, registrations, statutory financial statements of such Regulated Business (and for each subsequent quarterly period, together with all exhibits, statements and schedules thereto) and all other filings (including filings related to premium rates, rating plans, policy terms and other terms established or used by such Regulated Business), together with any amendments required to be made with respect thereto, that it was required to file with any governmental entity, including the Centers for Medicare and Medicaid Services (“CMS”), state insurance departments, state departments of health, other applicable state Medicaid authorities, and any other agencies with jurisdiction over the Health Care Programs and including filings that it was required to file under the Patient Protection and Affordable Care Act (Pub. L. 111-148) as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), and (2) as of its respective filing date, and, if amended, as of the date of the last amendment prior to the date hereof, each such filing complied with applicable law; (ii) all such filings were correct and in compliance with applicable law when filed (or were timely corrected in or supplemented by a subsequent filing) and no deficiencies have been asserted by any governmental entity related to any such filing which have not been fully and finally resolved; (iii) all premium rates, rating plans and policy terms established or used by the Company that are required to be filed with or approved by any governmental entity have been so filed or approved and the premiums charged conform to the premiums so filed or approved and comply with applicable Insurance Laws; and (iv) each Regulated Business that participates in such Healthcare Program (1) meets the requirements for participation in, and receipt of payment from, the Health Care Programs in which such Regulated Business currently participates, and (2) is a party to one or more valid agreements with the appropriate Person, including CMS or applicable state entities. Except where the failure to do so would not reasonably be expected to have a Material Adverse Effect, all premium rates, rating plans and policy terms established or used by the Company that are required to be filed with and/or approved by governmental entities have been so filed and/or approved, the premiums charged conform to the premiums so filed and/or approved and comply with the Insurance Laws applicable thereto and no such premiums are subject to any investigation by any governmental entity. Except where the failure to do so would not reasonably be expected to have a Material Adverse Effect, the Company has implemented policies, procedures and/or programs reasonably designed to assure that its employees are in compliance with all applicable laws, including Healthcare Laws, Insurance Laws and laws and regulations of governmental entities relating to advertising, licensing and sales practices. The Company, its subsidiaries, and, to the to the knowledge of the Company, each agent or third party service provider acting on behalf of the Company, has marketed, administered, sold and issued insurance and healthcare products in material compliance with all applicable Insurance Laws.
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(vv) Market Stand-Off Agreements. The holders of shares of Common Stock or securities convertible into or exercisable or exchangeable for Common Stock (such shares of Common Stock or securities convertible into or exercisable or exchangeable for Common Stock, the “Securities”) representing substantially all of the Securities that have not delivered executed lock lock-up agreements in the form of Exhibit D hereto to the Representatives are bound by market stand-off provisions with the Company pursuant to the 2016 Equity Plan (as defined in the Registration Statement), the Company’s Second Amended and Restated Registration Rights Agreement, dated as of November 15, 2018, as amended, among the Company and the other parties thereto, or the Company’s Fourth Amended and Restated Stockholders’ Agreement, dated as of September 9, 2020, as amended, among the Company and the other parties thereto, that impose restrictions on transfer with respect to such holder’s securities during the Restricted Period (as defined in the form of lock-up agreement attached as Exhibit D hereto) without the consent of the Company (“Market Stand-Off Provisions”) that are enforceable by the Company. Each such Market Stand-Off Provision is in full force and effect as of the date hereof and shall remain in full force and effect during the Restricted Period; provided that this provision shall not prevent the Company from lifting previously imposed stop transfer instructions or effecting a release, waiver or amendment of such Market Stand-Off Provisions to permit a transfer of securities that would be permissible with respect to such holders under the terms of a lock-up agreement substantially in the form attached as Exhibit D hereto.
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4. Further Agreements of the Company. The Company covenants and agrees with each Underwriter that:
(a) Required Filings. The Company will file the final Prospectus with the Commission within the time periods specified by Rule 424(b) and Rule 430A, 430B or 430C under the Securities Act, will file any Issuer Free Writing Prospectus to the extent required by Rule 433 under the Securities Act; and the Company will furnish copies of the Prospectus and each Issuer Free Writing Prospectus (to the extent not previously delivered) to the Underwriters in New York City prior to 10:00 A.M., New York City time, on the second business day next succeeding the date of this Agreement in such quantities as the Representatives may reasonably request.
(b) Delivery of Copies. The Company will, if requested, deliver, without charge, to each Underwriter (i) an electronic conformed copy of the Registration Statement as originally filed and each amendment thereto (without exhibits) and (ii) during the Prospectus Delivery Period (as defined below), as many copies of the Prospectus (including all amendments and supplements thereto and each Issuer Free Writing Prospectus) as the Representatives may reasonably request. As used herein, the term “Prospectus Delivery Period” means such period of time after the first date of the public offering of the Shares as in the opinion of counsel for the Underwriters a prospectus relating to the Shares is required by law to be delivered (or required to be delivered but for Rule 172 under the Securities Act) in connection with sales of the Shares by any Underwriter or dealer.
(c) Amendments or Supplements, Issuer Free Writing Prospectuses. Before using, authorizing, approving, referring to or filing any Issuer Free Writing Prospectus, and before filing any amendment or supplement to the Registration Statement, the Pricing Disclosure Package or the Prospectus, the Company will furnish to the Representatives and counsel for the Underwriters a copy of the proposed Issuer Free Writing Prospectus, amendment or supplement for review and will not make, prepare, use, authorize, approve, refer to or file any such Issuer Free Writing Prospectus or file any such proposed amendment or supplement to which the Representatives reasonably object.
(d) Notice to the Representatives. The Company will advise the Representatives promptly, and confirm such advice in writing, (i) when the Registration Statement has become effective; (ii) when any amendment to the Registration Statement has been filed or becomes effective; (iii) when any supplement to the Pricing Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus or any Written Testing-the-Waters Communication or any amendment to the Prospectus has been filed or distributed; (iv) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or the receipt of any comments from the Commission relating to the Registration Statement or any other request by the Commission for any additional information including, but not limited to, any request for information concerning any Testing-the-Waters Communication; (v) of the issuance by the Commission or any other governmental or regulatory authority of any order suspending the effectiveness of the Registration Statement or preventing or suspending the use of any Preliminary Prospectus, any of the Pricing Disclosure Package, the Prospectus or any Written Testing-the-Waters Communication or, to the Company’s knowledge, the initiation or threatening of any proceeding for that purpose or pursuant to Section 8A of the Securities Act; (vi) of the occurrence of any event or development within the Prospectus Delivery Period as a result of which the Prospectus, any of the Pricing Disclosure Package, any Issuer Free Writing Prospectus or any Written Testing-the-Waters Communication as then amended or supplemented would include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing when the Prospectus, the Pricing Disclosure Package, any such Issuer Free Writing Prospectus or any Written Testing-the-Waters Communication is delivered to a purchaser, not misleading; and (vii) of the receipt by the Company of any notice with respect to any suspension of the qualification of the Shares for offer and sale in any jurisdiction or, to the Company’s knowledge, the initiation or threatening of any proceeding for such purpose; and the Company will use its reasonable best efforts to prevent the issuance of any such order suspending the effectiveness of the Registration Statement, preventing or suspending the use of any Preliminary Prospectus, any of the Pricing Disclosure Package or the Prospectus or any Written Testing-the-Waters Communication or suspending any such qualification of the Shares and, if any such order is issued, will use its reasonable best efforts to obtain as soon as possible the withdrawal thereof.
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(e) Ongoing Compliance. (1) If during the Prospectus Delivery Period (i) any event or development shall occur or condition shall exist as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances existing when the Prospectus is delivered to a purchaser, not misleading or (ii) it is necessary to amend or supplement the Prospectus to comply with law, the Company will promptly notify the Underwriters thereof and forthwith prepare and, subject to paragraph (c) above, file with the Commission and furnish to the Underwriters and to such dealers as the Representatives may designate such amendments or supplements to the Prospectus as may be necessary so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances existing when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus will comply with law and (2) if at any time prior to the Closing Date (i) any event or development shall occur or condition shall exist as a result of which the Pricing Disclosure Package as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances existing when the Pricing Disclosure Package is delivered to a purchaser, not misleading or (ii) it is necessary to amend or supplement the Pricing Disclosure Package to comply with law, the Company will promptly notify the Underwriters thereof and forthwith prepare and, subject to paragraph (c) above, file with the Commission (to the extent required) and furnish to the Underwriters and to such dealers as the Representatives may designate such amendments or supplements to the Pricing Disclosure Package as may be necessary so that the statements in the Pricing Disclosure Package as so amended or supplemented will not, in the light of the circumstances existing when the Pricing Disclosure Package is delivered to a purchaser, be misleading or so that the Pricing Disclosure Package will comply with law.
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(f) Blue Sky Compliance. If required by applicable law, the Company will qualify the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Representatives shall reasonably request and will continue such qualifications in effect so long as required for distribution of the Shares; provided that the Company shall not be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so subject.
(g) Earning Statement. The Company will make generally available to its security holders and the Representatives as soon as practicable an earning statement that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 of the Commission promulgated thereunder covering a period of at least twelve months beginning with the first fiscal quarter of the Company occurring after the “effective date” (as defined in Rule 158) of the Registration Statement; provided that the Company will be deemed to have furnished such statement to its security holders and the Representatives to the extent they are filed on the Commission’s Electronic Data Gathering, Analysis, and Retrieval system or any successor thereto (“EDGAR”).
(h) Clear Market. For a period of 180 days after the date of the Prospectus, the Company will not (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, or submit or file with, the Commission a registration statement under the Securities Act relating to, any shares of Stock or any securities convertible into or exercisable or exchangeable for Stock, or (ii) enter into any swap, hedging or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Stock or any such other securities, or publicly disclose the intention to undertake any of the foregoing, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Stock or such other securities, in cash or otherwise, without the prior written consent of the Representatives, other than the Shares to be sold hereunder.
The restrictions described above do not apply to (i) the issuance of shares of Stock or securities convertible into or exercisable for shares of Stock pursuant to the conversion or exchange of convertible or exchangeable securities or the exercise of warrants or options (including net exercise, conversion or settlement and in respect of tax withholding payments due upon the exercise of options or the vesting of equity-based awards) or the settlement of restricted stock units or other equity awards (including net settlement and in respect of tax withholding payments), in each case, outstanding on the date of this Agreement and described in the Prospectus; (ii) grants of stock options, stock awards, restricted stock, restricted stock units or other equity awards and the issuance of shares of Stock or securities convertible into or exercisable or exchangeable for shares of Stock (whether upon the exercise of stock options or otherwise) to the Company’s employees, officers, directors, advisors or consultants pursuant to the terms of any equity compensation plan or arrangement in effect as of the Closing Date and described in the Prospectus, provided that, to the extent that such recipients are not party to a lock-up agreement with the Underwriters or subject to Market Stand-Off Provisions (as defined below), such recipients enter into a lock-up agreement with the Underwriters; (iii) the issuance of up to 10% of the outstanding shares of Stock (as of immediately following the Closing Date), or securities convertible into, exercisable for, or which are otherwise exchangeable for, Stock, in acquisitions or other similar strategic transactions, provided that such recipients enter into a lock-up agreement with the Underwriters substantially in the form of Exhibit D; or (iv) the filing of any registration statement on Form S-8 relating to securities granted or to be granted pursuant to any equity compensation plan or arrangement described in the Prospectus or any assumed benefit plan pursuant to an acquisition or similar strategic transaction.
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If the Representatives, in their sole discretion, agree to release or waive the restrictions set forth in a lock-up letter described in Section 6(k) hereof for an executive officer or director of the Company and provide the Company with notice of the impending release or waiver substantially in the form of Exhibit B hereto at least three business days before the effective date of the release or waiver, the Company agrees to announce the impending release or waiver by a press release substantially in the form of Exhibit C hereto through a major news service at least two business days before the effective date of the release or waiver.
(i) Use of Proceeds. The Company will apply the net proceeds from the sale of the Shares as described in each of the Registration Statement, the Pricing Disclosure Package and the Prospectus under the heading “Use of Proceeds.”
(j) No Stabilization. Neither the Company nor its subsidiaries or affiliates will take, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Stock.
(k) Exchange Listing. The Company will use its reasonable best efforts to list, subject to notice of issuance, the Shares on the New York Stock Exchange (the “Exchange”).
(l) Reports. For a period of two (2) years from the date of this Agreement, so long as the Shares are outstanding, the Company will furnish to the Representatives, as soon as they are available, copies of all reports or other communications (financial or other) furnished to holders of the Shares, and copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange or automatic quotation system; provided the Company will be deemed to have furnished such reports and financial statements to the Representatives to the extent they are filed on EDGAR.
(m) Record Retention. For a period of two (2) years from the date of this Agreement, the Company will, pursuant to reasonable procedures developed in good faith, retain copies of each Issuer Free Writing Prospectus that is not filed with the Commission in accordance with Rule 433 under the Securities Act.
(n) Filings. The Company will file with the Commission such reports as may be required by Rule 463 under the Securities Act.
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(o) Market Stand-Off Restrictions. During the Restricted Period, the Company (i) will enforce all, and, without the prior written consent of the Representatives in their sole discretion, will not release, waive or amend any, provisions of any Market Stand-Off Provisions and (ii) take all reasonable steps to ensure that the holders subject to such Market Stand-Off Provisions will not, directly or indirectly, sell, transfer or otherwise dispose of shares and other securities of the Company in violation of the Market Stand-Off Provisions during the Restricted Period, including, but not limited to, imposing stop-transfer instructions with respect to such shares or other securities of the Company that are subject to such Market Stand-Off Provisions during such period; provided that this provision shall not prevent the Company from lifting previously imposed stop transfer instructions or effecting a release, waiver or amendment of such Market Stand-Off Provisions to permit a transfer of securities that would be permissible with respect to such holders under the terms of a lock-up agreement substantially in the form attached as Exhibit D hereto.
(p) Certificate of Beneficial Ownership. Upon request, the Company will deliver to the Representatives (or its agent), on or prior to the date of execution of this Agreement, a properly completed and executed Certification Regarding Beneficial Owners of Legal Entity Customers, together with copies of identifying documentation, and the Company undertakes to provide such additional supporting documentation as the Representatives may reasonably request in connection with the verification of the foregoing Certification.
5. Certain Agreements of the Underwriters. Each Underwriter hereby represents and agrees that:
(a) It has not and will not use, authorize use of, refer to or participate in the planning for use of, any “free writing prospectus”, as defined in Rule 405 under the Securities Act (which term includes use of any written information furnished to the Commission by the Company and not incorporated by reference into the Registration Statement and any press release issued by the Company) other than (i) a free writing prospectus that contains no “issuer information” (as defined in Rule 433(h)(2) under the Securities Act) that was not included (including through incorporation by reference) in the Preliminary Prospectus or a previously filed Issuer Free Writing Prospectus, (ii) any Issuer Free Writing Prospectus listed on Annex A or prepared pursuant to Section 3(c) or Section 4(c) above (including any electronic road show approved in advance by the Company), or (iii) any free writing prospectus prepared by such underwriter and approved by the Company in advance in writing (each such free writing prospectus referred to in clauses (i) or (iii), an “Underwriter Free Writing Prospectus”).
(b) It has not and will not, without the prior written consent of the Company, use any free writing prospectus that contains the final terms of the Shares unless such terms have previously been included in a free writing prospectus filed with the Commission; provided that Underwriters may use a term sheet substantially in the form of Annex C hereto without the consent of the Company; provided, further that any Underwriter using such term sheet shall notify the Company, and provide a copy of such term sheet to the Company, prior to, or substantially concurrently with, the first use of such term sheet.
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(c) It is not subject to any pending proceeding under Section 8A of the Securities Act with respect to the offering (and will promptly notify the Company if any such proceeding against it is initiated during the Prospectus Delivery Period).
6. Conditions of Underwriters’ Obligations. The obligation of each Underwriter to purchase the Underwritten Shares on the Closing Date or the Option Shares on the Additional Closing Date, as the case may be, as provided herein is subject to the performance by the Company of its covenants and other obligations hereunder and to the following additional conditions:
(a) Registration Compliance; No Stop Order. No order suspending the effectiveness of the Registration Statement shall be in effect, and no proceeding for such purpose or pursuant to Section 8A under the Securities Act shall be pending before or threatened by the Commission; the Prospectus and each Issuer Free Writing Prospectus shall have been timely filed with the Commission under the Securities Act (in the case of an Issuer Free Writing Prospectus, to the extent required by Rule 433 under the Securities Act) and in accordance with Section 4(a) hereof; and all requests by the Commission for additional information shall have been complied with to the reasonable satisfaction of the Representatives.
(b) Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct on the date hereof and on and as of the Closing Date or the Additional Closing Date, as the case may be; and the statements of the Company and its officers made in any certificates delivered pursuant to this Agreement shall be true and correct on and as of the Closing Date or the Additional Closing Date, as the case may be.
(c) No Material Adverse Change. No event or condition of a type described in Section 3(g) hereof shall have occurred or shall exist, which event or condition is not described in the Pricing Disclosure Package (excluding any amendment or supplement thereto) and the Prospectus (excluding any amendment or supplement thereto) and the effect of which in the judgment of the Representatives makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Shares on the Closing Date or the Additional Closing Date, as the case may be, on the terms and in the manner contemplated by this Agreement, the Pricing Disclosure Package and the Prospectus.
(d) Officer’s Certificate. The Representatives shall have received on and as of the Closing Date or the Additional Closing Date, as the case may be, a certificate of the chief financial officer or chief accounting officer of the Company and one additional senior executive officer of the Company who is reasonably satisfactory to the Representatives (i) confirming that such officers have carefully reviewed the Registration Statement, the Pricing Disclosure Package and the Prospectus and, to the knowledge of such officers, the representations set forth in Sections 3(b) and 3(d) hereof are true and correct, (ii) confirming that the other representations and warranties of the Company in this Agreement are true and correct and that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date or the Additional Closing Date, as the case may be, and (iii) to the effect set forth in paragraphs (a) and (c) above.
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(e) Comfort Letters. [(i)] On the date of this Agreement and on the Closing Date or the Additional Closing Date, as the case may be, each of Deloitte & Touche LLP, RSM US LLP and BDO USA, LLP shall have furnished to the Representatives, at the request of the Company, letters, dated the respective dates of delivery thereof and addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives, containing statements and information of the type customarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in each of the Registration Statement, the Pricing Disclosure Package and the Prospectus; provided that the letters delivered on the Closing Date or the Additional Closing Date, as the case may be, shall use a “cut-off” date no more than two business days prior to such Closing Date or such Additional Closing Date, as the case may be.
[(ii) On the date of this Agreement and on the Closing Date or the Additional Closing Date, as the case may be, the Company shall have furnished to the Representatives a certificate, dated the respective dates of delivery thereof and addressed to the Underwriters, of its chief financial officer with respect to certain financial data contained in the Pricing Disclosure Package and the Prospectus, providing “management comfort” with respect to such information, in form and substance reasonably satisfactory to the Representatives.]
(f) Opinion and 10b-5 Statement of Counsel for the Company. Simpson Thacher & Bartlett LLP, counsel for the Company, shall have furnished to the Representatives, at the request of the Company, their written opinion and 10b-5 statement, dated the Closing Date or the Additional Closing Date, as the case may be, and addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives.
(g) Opinion of the General Counsel of the Company. Keith Nelsen, the General Counsel of the Company, shall have furnished to the Representatives, at the request of the Company, his written opinion, dated the Closing Date or the Additional Closing Date, as the case may be, and addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives.
(h) Opinion and 10b-5 Statement of Counsel for the Underwriters. The Representatives shall have received on and as of the Closing Date or the Additional Closing Date, as the case may be, an opinion and 10b-5 statement, addressed to the Underwriters, of Goodwin Procter LLP, counsel for the Underwriters, with respect to such matters as the Representatives may reasonably request, and such counsel shall have received such documents and information as they may reasonably request to enable them to pass upon such matters.
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(i) No Legal Impediment to Issuance and Sale. No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of the Closing Date or the Additional Closing Date, as the case may be, prevent the issuance or sale of the Shares; and no injunction or order of any federal, state or foreign court shall have been issued that would, as of the Closing Date or the Additional Closing Date, as the case may be, prevent the issuance or sale of the Shares.
(j) Good Standing. The Representatives shall have received on and as of the Closing Date or the Additional Closing Date, as the case may be, reasonably satisfactory evidence of the good standing of the Company and its significant subsidiaries in their respective jurisdictions of organization, in each case in writing or any standard form of telecommunication from the appropriate governmental authorities of such jurisdictions.
(k) Exchange Listing. The Shares to be delivered on the Closing Date or the Additional Closing Date, as the case may be, shall have been approved for listing on the New York Stock Exchange, subject to official notice of issuance.
(l) Lock-up Agreements. The “lock-up” agreements, each substantially in the form of Exhibit D hereto, between you and certain shareholders, officers and directors of the Company relating to sales and certain other dispositions of shares of Stock or certain other securities, delivered to you on or before the date hereof, shall be in full force and effect on the Closing Date or the Additional Closing Date, as the case may be.
(m) Additional Documents. On or prior to the Closing Date or the Additional Closing Date, as the case may be, the Company shall have furnished to the Representatives such further certificates and documents as the Representatives may reasonably request.
All opinions, letters, certificates and evidence mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Underwriters.
7. Indemnification and Contribution.
(a) Indemnification of the Underwriters. The Company agrees to indemnify and hold harmless each Underwriter, its affiliates, directors and officers and each person, if any, who controls such Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, reasonable and documented legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, not misleading, or (ii) any untrue statement or alleged untrue statement of a material fact contained in the Prospectus (or any amendment or supplement thereto), any Preliminary Prospectus, any Issuer Free Writing Prospectus, any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act, any Written Testing-the-Waters Communication prepared or authorized by the Company, any road show as defined in Rule 433(h) under the Securities Act (a “road show”) or any Pricing Disclosure Package (including any Pricing Disclosure Package that has subsequently been amended), or caused by any omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, in each case except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in paragraph (b) below.
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The Company also agrees to indemnify and hold harmless Citigroup Global Markets Inc., its affiliates, directors and officers and each person, if any, who controls Citigroup Global Markets Inc. within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities incurred as a result of Citigroup Global Markets Inc.’s participation as a “qualified independent underwriter” within the meaning of FINRA Rule 5121 in connection with the offering of the Shares.
(b) Indemnification of the Company. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to such Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in the Registration Statement, the Prospectus (or any amendment or supplement thereto), any Preliminary Prospectus, any Issuer Free Writing Prospectus, any Written Testing-the-Waters Communication, any road show or any Pricing Disclosure Package (including any Pricing Disclosure Package that has subsequently been amended), it being understood and agreed upon that the only such information furnished by any Underwriter consists of the following information in the Prospectus furnished on behalf of each Underwriter: the concession and reallowance figures appearing in the third paragraph under the caption “Underwriting (Conflicts of Interest)” and the information contained in the sixteenth and seventeenth paragraphs relating to price stabilization, short positions and penalty bids under the caption “Underwriting (Conflicts of Interest).”
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(c) Notice and Procedures. If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnification may be sought pursuant to the preceding paragraphs of this Section 7, such person (the “Indemnified Person”) shall promptly notify the person against whom such indemnification may be sought (the “Indemnifying Person”) in writing; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under the preceding paragraphs of this Section 7 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under the preceding paragraphs of this Section 7. If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person (who shall not, without the consent of the Indemnified Person, be counsel to the Indemnifying Person) to represent the Indemnified Person and any others entitled to indemnification pursuant to this Section that the Indemnifying Person may designate in such proceeding and shall pay the reasonable and documented fees and expenses in such proceeding and shall pay the reasonable and documented fees and expenses of such counsel related to such proceeding, as incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the reasonable and documented fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such reasonable and documented fees and expenses shall be paid or reimbursed as they are incurred; provided, however, that if indemnity may be sought pursuant to the second paragraph of Section 7(a) above in respect of such proceeding, then in addition to such separate firm of the Underwriters, their affiliates, directors, officers and such control persons of the Underwriters the indemnifying party shall be liable for the reasonable and documented fees and expenses of not more than one separate firm (in addition to any local counsel) for Citigroup Global Markets Inc. in its capacity as a “qualified independent underwriter,” its affiliates, directors, officers and all persons, if any, who control Citigroup Global Markets Inc. within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act. Any such separate firm for any Underwriter, its affiliates, directors and officers and any control persons of such Underwriter shall be designated in writing by the Representatives and any such separate firm for the Company, its directors, its officers who signed the Registration Statement and any control persons of the Company shall be designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss or liability by reason of such settlement. No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (x) includes an unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.
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(d) Contribution. If the indemnification provided for in paragraphs (a) or (b) above is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Underwriters or Citigroup Global Markets Inc. in its capacity as a “qualified independent underwriter”, as the case may be, on the other, from the offering of the Shares or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company, on the one hand, and the Underwriters or Citigroup Global Markets Inc. in its capacity as a “qualified independent underwriter”, as the case may be, on the other, in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters or Citigroup Global Markets Inc. in its capacity as a “qualified independent underwriter”, as the case may be, on the other, shall be deemed to be in the same respective proportions as the net proceeds (before deducting expenses) received by the Company from the sale of the Shares and the total underwriting discounts and commissions received by the Underwriters in connection therewith, in each case as set forth in the table on the cover of the Prospectus, or the fee to be received by Citigroup Global Markets Inc. in its capacity as a “qualified independent underwriter”, as the case may be, bear to the aggregate offering price of the Shares. The relative fault of the Company, on the one hand, and the Underwriters or Citigroup Global Markets Inc. in its capacity as a “qualified independent underwriter”, as the case may be, on the other, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters or Citigroup Global Markets Inc. in its capacity as a “qualified independent underwriter”, as the case may be, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
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(e) Limitation on Liability. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to paragraph (d) above were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any reasonable and documented legal or other expenses incurred by such Indemnified Person in connection with any such action or claim. Notwithstanding the provisions of paragraphs (d) and (e), in no event shall an Underwriter be required to contribute any amount in excess of the amount by which the total underwriting discounts and commissions received by such Underwriter with respect to the offering of the Shares exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations to contribute pursuant to paragraphs (d) and (e) are several in proportion to their respective purchase obligations hereunder and not joint.
(f) Non-Exclusive Remedies. The remedies provided for in this Section 7 paragraphs (a) through (e) are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Person at law or in equity.
8. Effectiveness of Agreement. This Agreement shall become effective as of the date first written above.
9. Termination. This Agreement may be terminated in the absolute discretion of the Representatives, by written notice (which may be by email) to the Company, if after the execution and delivery of this Agreement and on or prior to the Closing Date or, in the case of the Option Shares, prior to the Additional Closing Date (i) trading generally shall have been suspended or materially limited on or by any of the New York Stock Exchange or The Nasdaq Stock Market; (ii) trading of any securities issued or guaranteed by the Company shall have been suspended on any exchange or in any over-the-counter market; (iii) a general moratorium on commercial banking activities shall have been declared by federal or New York State authorities; or (iv) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis, either within or outside the United States, that, in the judgment of the Representatives, is material and adverse and makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Shares on the Closing Date or the Additional Closing Date, as the case may be, on the terms and in the manner contemplated by this Agreement, the Pricing Disclosure Package and the Prospectus.
10. Defaulting Underwriter.
(a) If, on the Closing Date or the Additional Closing Date, as the case may be, any Underwriter defaults on its obligation to purchase the Shares that it has agreed to purchase hereunder on such date, the non-defaulting Underwriters may in their discretion arrange for the purchase of such Shares by other persons satisfactory to the Company on the terms contained in this Agreement. If, within 36 hours after any such default by any Underwriter, the non-defaulting Underwriters do not arrange for the purchase of such Shares, then the Company shall be entitled to a further period of 36 hours within which to procure other persons satisfactory to the non-defaulting Underwriters to purchase such Shares on such terms. If other persons become obligated or agree to purchase the Shares of a defaulting Underwriter, either the non-defaulting Underwriters or the Company may postpone the Closing Date or the Additional Closing Date, as the case may be, for up to five full business days in order to effect any changes that in the opinion of counsel for the Company or counsel for the Underwriters may be necessary in the Registration Statement and the Prospectus or in any other document or arrangement, and the Company agrees to promptly prepare any amendment or supplement to the Registration Statement and the Prospectus that effects any such changes. As used in this Agreement, the term “Underwriter” includes, for all purposes of this Agreement unless the context otherwise requires, any person not listed in Schedule 1 hereto that, pursuant to this Section 10, purchases Shares that a defaulting Underwriter agreed but failed to purchase.
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(b) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by the non-defaulting Underwriters and the Company as provided in paragraph (a) above, the aggregate number of Shares that remain unpurchased on the Closing Date or the Additional Closing Date, as the case may be, does not exceed one-eleventh of the aggregate number of Shares to be purchased on such date, then the Company shall have the right to require each non-defaulting Underwriter to purchase the number of Shares that such Underwriter agreed to purchase hereunder on such date plus such Underwriter’s pro rata share (based on the number of Shares that such Underwriter agreed to purchase on such date) of the Shares of such defaulting Underwriter or Underwriters for which such arrangements have not been made.
(c) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by the non-defaulting Underwriters and the Company as provided in paragraph (a) above, the aggregate number of Shares that remain unpurchased on the Closing Date or the Additional Closing Date, as the case may be, exceeds one-eleventh of the aggregate amount of Shares to be purchased on such date, or if the Company shall not exercise the right described in paragraph (b) above, then this Agreement or, with respect to any Additional Closing Date, the obligation of the Underwriters to purchase Shares on the Additional Closing Date, as the case may be, shall terminate without liability on the part of the non-defaulting Underwriters. Any termination of this Agreement pursuant to this Section 10 shall be without liability on the part of the Company, except that the Company will continue to be liable for the payment of expenses as set forth in Section 11 hereof and except that the provisions of Section 7 hereof shall not terminate and shall remain in effect.
(d) Nothing contained herein shall relieve a defaulting Underwriter of any liability it may have to the Company or any non-defaulting Underwriter for damages caused by its default.
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11. Payment of Expenses.
(a) Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, the Company will pay or cause to be paid all costs and expenses incident to the performance of its obligations hereunder, including without limitation, (i) the costs incident to the authorization, issuance, sale, preparation and delivery of the Shares and any issue, stamp, transfer or other similar taxes payable in that connection; (ii) the costs incident to the preparation, printing and filing under the Securities Act of the Registration Statement, the Preliminary Prospectus, any Issuer Free Writing Prospectus, any Pricing Disclosure Package and the Prospectus (including all exhibits, amendments and supplements thereto) and the distribution thereof; (iii) the fees and expenses of the Company’s counsel and independent accountants; (iv) the fees and expenses incurred in connection with the registration or qualification and determination of eligibility for investment of the Shares under the laws of such jurisdictions as the Representatives may designate and the preparation, printing and distribution of a Blue Sky Memorandum (including the related fees and expenses of counsel for the Underwriters); (v) the cost of preparing stock certificates; (vi) the costs and charges of any transfer agent and any registrar; (vii) all expenses and application fees incurred in connection with any filing with, and clearance of the offering by, FINRA (including the fees and expenses of Citigroup Global Markets Inc. acting as “qualified independent underwriter” within the meaning of the aforementioned FINRA Rule 5121 (together with any counsel fees and disbursements incurred pursuant to clause (iv) in an amount not to exceed $[___]); (viii) all expenses incurred by the Company in connection with any “road show” presentation to potential investors; and (ix) all expenses and application fees related to the listing of the Shares on the Exchange. It is further understood, however, that except as provided in this Section 11 and Section 7 hereof, the Underwriters will pay all of their costs and expenses, including fees and disbursements of their counsel, stock transfer taxes payable on the resale of any of the Shares held by them and any advertising expenses connected with any offers they may make and lodging expenses incurred by them in connection with any “road show,” as applicable.
(b) If (i) this Agreement is terminated pursuant to Section 9(ii), (ii) the Company for any reason fails to tender the Shares for delivery to the Underwriters or (iii) the Underwriters decline to purchase the Shares for any reason permitted under this Agreement, the Company agrees to reimburse the Underwriters for all reasonable and documented out-of-pocket costs and expenses (including the reasonable and documented fees and expenses of their counsel) , other than those of a defaulting Underwriter in connection with a termination under Section 10 hereof, reasonably incurred by the Underwriters in connection with this Agreement and the offering contemplated hereby.
12. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and any controlling persons referred to herein, and the affiliates of each Underwriter referred to in Section 7 hereof. Nothing in this Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. No purchaser of Shares from any Underwriter shall be deemed to be a successor merely by reason of such purchase.
13. Survival. The respective indemnities, rights of contribution, representations, warranties and agreements of the Company and the Underwriters contained in this Agreement or made by or on behalf of the Company or the Underwriters pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and payment for the Shares and shall remain in full force and effect, regardless of any termination of this Agreement or any investigation made by or on behalf of the Company or the Underwriters or the directors, officers, controlling persons or affiliates referred to in Section 7 hereof.
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14. Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise expressly provided, the term “affiliate” has the meaning set forth in Rule 405 under the Securities Act; (b) the term “business day” means any day other than a day on which banks are permitted or required to be closed in New York City; (c) the term “subsidiary” has the meaning set forth in Rule 405 under the Securities Act; and (d) the term “significant subsidiary” has the meaning set forth in Rule 1-02 of Regulation S-X under the Exchange Act.
15. Compliance with USA Patriot Act. In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Underwriters are required to obtain, verify and record information that identifies their respective clients, including the Company, which information may include the name and address of their respective clients, as well as other information that will allow the Underwriters to properly identify their respective clients.
16. Miscellaneous.
(a) Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted and confirmed by any standard form of email and other telecommunication. Notices to the Underwriters shall be given to the Representatives c/o J.P. Morgan Securities LLC, 383 Madison Avenue, New York, New York 10179 (fax: (212) 622-8358), email: [ ], Attention: Equity Syndicate Desk; c/o Goldman Sachs & Co. LLC, 200 West Street, New York, New York 10282-2198, email: [ ], Attention: Registration Department; c/o Morgan Stanley & Co. LLC, 1585 Broadway, New York, New York 10036, email: [ ], Attention: Equity Syndicate Desk, with a copy to the Legal Department; and c/o Barclays Capital Inc., 745 Seventh Avenue, New York, New York 10019, email: [ ], Attention: Syndicate Registration. Notices to the Company shall be given to it at Bright Health Group, Inc., 8000 Norman Center Drive, Suite 1200, Minneapolis, Minnesota 55437, email: knelsen@brighthealthgroup.com, Attention: General Counsel.
(b) Governing Law. This Agreement and any claim, controversy or dispute arising under or related to this Agreement shall be governed by and construed in accordance with the laws of the State of New York.
(c) Submission to Jurisdiction. The Company hereby submits to the exclusive jurisdiction of the U.S. federal and New York state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. The Company waives any objection which it may now or hereafter have to the laying of venue of any such suit or proceeding in such courts. The Company agrees that final judgment in any such suit, action or proceeding brought in such court shall be conclusive and binding upon the Company and may be enforced in any court the jurisdiction of which the Company is subject by a suit upon such judgment.
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(d) Waiver of Jury Trial. Each of the parties hereto hereby waives any right to trial by jury in any suit or proceeding arising out of or relating to this Agreement.
(e) Recognition of the U.S. Special Resolution Regimes.
(i) In the event that any Underwriter that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from such Underwriter of this Agreement, and any interest and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, and any such interest and obligation, were governed by the laws of the United States or a state of the United States.
(ii) In the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate of such Underwriter becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised against such Underwriter are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States.
As used in this Section 16(e):
“BHC Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k).
“Covered Entity” means any of the following:
(i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
(ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or
(iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.
38
(f) Counterparts. This Agreement may be signed in counterparts (which may include counterparts delivered by any standard form of telecommunication), each of which shall be an original and all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes. In addition, the words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Agreement or any document to be signed in connection with this Agreement shall be deemed to include electronic signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, and the parties hereto consent to conduct the transactions contemplated hereunder by electronic means.
(g) Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto.
(h) Headings. The headings herein are included for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.
39
If the foregoing is in accordance with your understanding, please indicate your acceptance of this Agreement by signing in the space provided below.
Very truly yours, | ||
BRIGHT HEALTH GROUP, INC. | ||
By: | ||
Name: | ||
Title: |
Accepted: As of the date first written above
J.P. MORGAN SECURITIES LLC
Goldman Sachs & Co. LLC
MORGAN STANLEY & CO. LLC
Barclays Capital Inc.
Each for itself and on behalf of the
several Underwriters listed
in Schedule 1 hereto.
J.P. MORGAN SECURITIES LLC
By: | ||
Authorized Signatory |
Goldman Sachs & Co. LLC
By: | ||
Authorized Signatory |
MORGAN STANLEY & CO. LLC
By: | ||
Authorized Signatory |
Barclays Capital Inc.
By: | ||
Authorized Signatory |
40
Schedule 1
41
Annex A
a. Pricing Disclosure Package
[ ]
b. Pricing Information Provided Orally by Underwriters
[Underwritten Shares: [___] shares
Option Shares: [___] shares]
Public Offering Price Per Share: $[___]
42
Annex B
Written Testing-the-Waters Communications
[ ]
43
Annex C
Bright Health Group, Inc.
Pricing Term Sheet
[___]
44
Exhibit A
Testing the waters authorization (to be delivered by the issuer to J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC and Barclays Capital Inc. in email or letter form)
In reliance on Rule 163B under the Securities Act of 1933, as amended (the “Act”), Bright Health Group, Inc. (the “Issuer”) hereby authorizes J.P. Morgan Securities LLC (“J.P. Morgan”), Goldman Sachs & Co. LLC (“Goldman”), Morgan Stanley & Co. LLC (“Morgan Stanley”) and Barclays Capital Inc. (“Barclays”) and their affiliates and their respective employees (collectively, the “Authorized Underwriters”), to engage on behalf of the Issuer in oral and written communications with potential investors that are reasonably believed to be “qualified institutional buyers”, as defined in Rule 144A under the Act, or institutions that are “accredited investors”, within the meaning of Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Act, to determine whether such investors might have an interest in the Issuer’s contemplated initial public offering (“Testing-the-Waters Communications”). A “Written Testing-the Waters Communication” means any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the Act. Each of the Authorized Underwriters, individually and not jointly, agrees that it shall not distribute any Written Testing-the-Waters Communication that has not been approved by the Issuer’s Chief Financial Officer, other than communications that are solely administrative in nature.
The Issuer represents that (i) except as disclosed to the Authorized Underwriters, it has not alone engaged in any Testing-the-Waters Communication and (ii) it has not authorized anyone other than the Authorized Underwriters to engage in Testing-the-Waters Communications. The Issuer agrees that it shall not authorize any other third party to engage on its behalf in oral or written communications with potential investors without the written consent of the Authorized Underwriters.
If at any time following the distribution of any Written Testing-the-Waters Communication there occurs an event or development as a result of which such Written Testing-the-Waters Communication included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at that subsequent time, not misleading, the Issuer will reasonably promptly notify the Authorized Underwriters and will reasonably promptly amend or supplement, at its own expense, such Written Testing-the-Waters Communication to eliminate or correct such untrue statement or omission.
Nothing in this authorization is intended to limit or otherwise affect the ability of the Authorized Underwriters and their affiliates and their respective employees to engage in communications in which they could otherwise lawfully engage in the absence of this authorization, including, without limitation, any written communication containing only one or more of the statements specified under Rule 134(a) under the Act. This authorization shall remain in effect until the Issuer has provided to the Authorized Underwriters a written notice revoking this authorization. All notices as described herein shall be sent by email to the attention of [ ] at [ ], [ ] at [ ] and [ ] at [ ], [ ] at [ ], and [ ] at [ ], with copies to [ ], [ ] and [ ].
45
Exhibit B
Form of Waiver of Lock-up
[___]
Bright Health Group, Inc.
Public Offering of Common Stock
, 2021
[Name and Address of
Officer or Director
Requesting Waiver]
Dear Mr./Ms. [Name]:
This letter is being delivered to you in connection with the offering by Bright Health Group, Inc. (the “Company”) of ______ shares of common stock, $0.0001 par value (the “Common Stock”), of the Company and the lock-up letter dated__________________, 2021 (the “Lock-up Letter”), executed by you in connection with such offering, and your request for a [waiver] [release] dated__________________, 2021, with respect to ______ shares of Common Stock (the “Shares”).
[___] and [___] hereby agree to [waive] [release] the transfer restrictions set forth in the Lock-up Letter, but only with respect to the Shares, effective __________________, 2021; provided, however, that such [waiver] [release] is conditioned on the Company announcing the impending [waiver] [release] by press release through a major news service at least two business days before effectiveness of such [waiver] [release]. This letter will serve as notice to the Company of the impending [waiver] [release].
Except as expressly [waived] [released] hereby, the Lock-up Letter shall remain in full force and effect.
46
Yours very truly,
[___]
By: | ||
Authorized Signatory |
[___]
By: | ||
Authorized Signatory |
cc: Bright Health Group, Inc.
47
Exhibit C
Form of Press Release
Bright Health Group, Inc.
[Date]
Bright Health Group, Inc. (the “Company”) announced today that [___] and [___], book-running managers in the Company’s recent public sale of shares of common stock, are [waiving] [releasing] a lock-up restriction with respect to shares of the Company’s common stock held by [certain officers or directors] [an officer or director] of the Company. The [waiver] [release] will take effect on ____________________, 2021, and the shares may be sold on or after such date.
This press release is not an offer for sale of the securities in the United States or in any other jurisdiction where such offer is prohibited, and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the United States Securities Act of 1933, as amended.
48
Exhibit D
FORM OF LOCK-UP AGREEMENT
49
Exhibit 5.1
Simpson Thacher & Bartlett llp | ||
2475 hanover street palo alto, ca 94304
|
||
telephone: +1-650-251-5000 facsimile: +1-650-251-5002 |
||
Direct Dial Number |
E-mail Address |
June 15, 2021
Bright Health Group, Inc.
8000 Norman Center Drive, Suite 1200
Minneapolis, MN 55437
Ladies and Gentlemen:
We have acted as counsel to Bright Health Group, Inc., a Delaware corporation (the “Company”), in connection with the Registration Statement on Form S-1 (as amended, the “Registration Statement”) filed by the Company with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Act”), relating to the issuance by the Company of an aggregate of 67,200,000 shares of common stock, par value $0.0001 per share (together with any additional shares of such stock that may be issued by the Company pursuant to Rule 462(b) (as prescribed by the Commission pursuant to the Act) in connection with the offering described in the Registration Statement, the “Shares”).
We have examined the Registration Statement, a form of the share certificate and a form of Ninth Amended and Restated Certificate of Incorporation of the Company (the “Amended and Restated Charter”), each of which have been filed with the Commission as an exhibit to the Registration Statement. In addition, we have examined, and have relied as to matters of fact upon, originals, or duplicates or certified or conformed copies, of such records, agreements, documents and other instruments and such certificates or comparable documents of public officials and of officers and representatives of the Company and have made such other investigations as we have deemed relevant and necessary in connection with the opinions hereinafter set forth.
New York | BEIJING | HONG KONG | Houston | LONDON | Los Angeles | SÃO PAULO | TOKYO | Washington, D.C. |
Bright Health Group, Inc. | -2- | June 15, 2021 |
In rendering the opinion set forth below, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as duplicates or certified or conformed copies and the authenticity of the originals of such latter documents. We have also assumed that the Amended and Restated Charter is filed with the Secretary of State for the State of Delaware in the form filed with the Commission as an exhibit to the Registration Statement prior to the issuance of any of the Shares.
Based upon the foregoing, and subject to the qualifications, assumptions and limitations stated herein, we are of the opinion that, (1) when the Board of Directors of the Company (the “Board”) has taken all necessary corporate action to authorize and approve the issuance of the Shares, (2) when the Amended and Restated Charter has been duly filed and (3) upon payment and delivery in accordance with the applicable definitive underwriting agreement approved by the Board, the Shares will be validly issued, fully paid and nonassessable.
We do not express any opinion herein concerning any law other than the law of the State of New York and the Delaware General Corporation Law.
We hereby consent to the filing of this opinion letter as Exhibit 5.1 to the Registration Statement and to the use of our name under the caption “Legal Matters” in the prospectus included in the Registration Statement.
Very truly yours, | |
/s/ SIMPSON THACHER & BARTLETT LLP | |
SIMPSON THACHER & BARTLETT LLP |
Exhibit 10.8
BRIGHT HEALTH group, INC.
2021 OMNIBUS INCENTIVE PLAN
1. Purpose. The purpose of the Bright Health Group, Inc. 2021 Omnibus Incentive Plan is to provide a means through which the Company and the other members of the Company Group may attract and retain key personnel and to provide a means whereby directors, officers, employees, consultants and advisors of the Company and the other members of the Company Group can acquire and maintain an equity interest in the Company, or be paid incentive compensation, including incentive compensation measured by reference to the value of Common Stock, thereby strengthening their commitment to the welfare of the Company Group and aligning their interests with those of the Company’s stockholders.
2. Definitions. The following definitions shall be applicable throughout the Plan.
(a) “Absolute Share Limit” has the meaning given to such term in Section 5(b) of the Plan.
(b) “Adjustment Event” has the meaning given to such term in Section 12(a) of the Plan.
(c) “Affiliate” means any Person that directly or indirectly controls, is controlled by or is under common control with the Company. The term “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting or other securities, by contract or otherwise.
(d) “Award” means, individually or collectively, any Incentive Stock Option, Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Other Equity-Based Award and Cash-Based Incentive Award granted under the Plan.
(e) “Award Agreement” means the document or documents by which each Award (other than a Cash-Based Incentive Award) is evidenced.
(f) “Board” means the Board of Directors of the Company.
(g) “Cash-Based Incentive Award” means an Award denominated in cash that is granted under Section 11 of the Plan.
(h) “Cause” means, as to any Participant, unless the applicable Award Agreement states otherwise, (i) “Cause,” as defined in any employment or consulting agreement between the Participant and the Service Recipient in effect at the time of the Participant’s Termination; or (ii) in the absence of any such employment or consulting agreement (or the absence of any definition of “Cause” contained therein), the Participant’s (A) willful neglect in the performance of the Participant’s duties for the Service Recipient or willful or repeated failure or refusal to perform such duties; (B) engagement in conduct in connection with the Participant’s employment or service with the Service Recipient, which results in, or could reasonably be expected to result in, material harm to the business or reputation of the Company or any other member of the Company Group; (C) conviction of, or plea of guilty or no contest to, (I) any felony; or (II) any other crime that results in, or could reasonably be expected to result in, material harm to the business or reputation of the Company or any other member of the Company Group; (D) material violation of the written policies of the Service Recipient, including, but not limited to, those relating to sexual harassment or the disclosure or misuse of confidential information, or those set forth in the manuals or statements of policy of the Service Recipient; (E) fraud or misappropriation, embezzlement or misuse of funds or property belonging to the Company or any other member of the Company Group; or (F) act of personal dishonesty that involves personal profit in connection with the Participant’s employment or service to the Service Recipient.
(i) “Change in Control” means:
(i) the acquisition (whether by purchase, merger, consolidation, combination or other similar transaction) by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty percent (50%) of either (A) the then outstanding shares of common stock, taking into account as outstanding for this purpose such common stock issuable upon the exercise of options or warrants, the conversion of convertible stock or debt, and the exercise of any similar right to acquire such common stock; or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, that, for purposes of the Plan, the following acquisitions shall not constitute a Change in Control: (I) any acquisition by the Company or any Affiliate; (II) any acquisition by any employee benefit plan sponsored or maintained by the Company or any Affiliate; or (III) in respect of an Award held by a particular Participant, any acquisition by the Participant or any group of Persons including the Participant (or any entity controlled by the Participant or any group of Persons including the Participant);
(ii) during any period of twelve (12) months, individuals who, at the beginning of such period, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board; provided, that any person becoming a director subsequent to the Effective Date, whose election or nomination for election was approved by a vote of at least two-thirds (2/3rd) of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest, as such terms are used in Rule 14a-12 of Regulation 14A promulgated under the Exchange Act, with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director; or
(iii) the sale, transfer or other disposition of all or substantially all of the assets of the Company Group (taken as a whole) to any Person that is not an Affiliate of the Company.
(j) “Code” means the Internal Revenue Code of 1986, as amended, and any successor thereto. Reference in the Plan to any section of the Code shall be deemed to include any regulations or other interpretative guidance under such section, and any amendments or successor provisions to such section, regulations or guidance.
(k) “Committee” means the Compensation Committee of the Board or any properly delegated subcommittee thereof or, if no such Compensation Committee or subcommittee thereof exists, the Board.
(l) “Common Stock” means the common stock of the Company, par value $0.0001 per share (and any stock or other securities into which such Common Stock may be converted or into which it may be exchanged).
(m) “Company” means Bright Health Group, Inc., a Delaware corporation, and any successor thereto.
(n) “Company Group” means, collectively, the Company and its Subsidiaries.
(o) “Date of Grant” means the date on which the granting of an Award is authorized, or such other date as may be specified in such authorization.
(p) “Designated Foreign Subsidiaries” means all members of the Company Group that are organized under the laws of any jurisdiction or country other than the United States of America that may be designated by the Board or the Committee from time to time.
(q) “Disability” means, as to any Participant, unless the applicable Award Agreement states otherwise, (i) “Disability,” as defined in any employment or consulting agreement between the Participant and the Service Recipient in effect at the time of the Participant’s Termination; or (ii) in the absence of any such employment or consulting agreement (or the absence of any definition of “Disability” contained therein), a condition entitling the Participant to receive benefits under a long-term disability plan of the Service Recipient or other member of the Company Group in which such Participant is eligible to participate, or, in the absence of such a plan, the complete and permanent inability of the Participant by reason of illness or accident to perform the duties of the position at which the Participant was employed or served when such disability commenced. Any determination of whether Disability exists in the absence of a long-term disability plan shall be made by the Company (or its designee) in its sole and absolute discretion.
(r) “Effective Date” means June 5, 2021.
(s) “Eligible Person” means any (i) individual employed by any member of the Company Group; provided, that no such employee covered by a collective bargaining agreement shall be an Eligible Person unless and to the extent that such eligibility is set forth in such collective bargaining agreement or in an agreement or instrument relating thereto; (ii) director or officer of any member of the Company Group; or (iii) consultant or advisor to any member of the Company Group who may be offered securities registrable pursuant to a registration statement on Form S-8 under the Securities Act.
(t) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor thereto. Reference in the Plan to any section of (or rule promulgated under) the Exchange Act shall be deemed to include any rules, regulations or other interpretative guidance under such section or rule, and any amendments or successor provisions to such section, rules, regulations or guidance.
(u) “Exercise Price” has the meaning given to such term in Section 7(b) of the Plan.
(v) “Fair Market Value” means, on a given date, (i) if the Common Stock is listed on a national securities exchange, the closing sales price of the Common Stock reported on the primary exchange on which the Common Stock is listed and traded on such date, or, if there are no such sales on that date, then on the last preceding date on which such sales were reported; (ii) if the Common Stock is not listed on any national securities exchange but is quoted in an inter-dealer quotation system on a last sale basis, the average between the closing bid price and ask price reported on such date, or, if there is no such sale on that date, then on the last preceding date on which a sale was reported; or (iii) if the Common Stock is not listed on a national securities exchange or quoted in an inter-dealer quotation system on a last sale basis, the amount determined by the Committee in good faith to be the fair market value of the Common Stock; provided, that, as to any Awards granted on or with a Date of Grant of the date of the pricing of the Company’s initial public offering, “Fair Market Value” shall be equal to the per share price at which the Common Stock is offered to the public in connection with such initial public offering.
(w) “GAAP” has the meaning given to such term in Section 7(d) of the Plan.
(x) “Immediate Family Members” has the meaning given to such term in Section 14(b) of the Plan.
(y) “Incentive Stock Option” means an Option which is designated by the Committee as an incentive stock option as described in Section 422 of the Code and otherwise meets the requirements set forth in the Plan.
(z) “Indemnifiable Person” has the meaning given to such term in Section 4(e) of the Plan.
(aa) “Nonqualified Stock Option” means an Option which is not designated by the Committee as an Incentive Stock Option.
(bb) “Non-Employee Director” means a member of the Board who is not an employee of any member of the Company Group.
(cc) “Option” means an Award granted under Section 7 of the Plan.
(dd) “Option Period” has the meaning given to such term in Section 7(c) of the Plan.
(ee) “Other Equity-Based Award” means an Award that is not an Option, Stock Appreciation Right, Restricted Stock or Restricted Stock Unit, that is granted under Section 10 of the Plan and is (i) payable by delivery of Common Stock, and/or (ii) measured by reference to the value of Common Stock.
(ff) “Participant” means an Eligible Person who has been selected by the Committee to participate in the Plan and to receive an Award pursuant to the Plan.
(gg) “Performance Criteria” means specific levels of performance of the Company (and/or one or more of the Company’s Affiliates, divisions or operational and/or business units, business segments, administrative departments, or any combination of the foregoing) or any Participant, which may be determined in accordance with GAAP or on a non-GAAP basis including, but not limited to, one or more of the following measures: (i) terms relative to a peer group or index; (ii) basic, diluted, or adjusted earnings per share; (iii) sales or revenue; (iv) earnings before interest, taxes, and other adjustments (in total or on a per share basis); (v) cash available for distribution; (vi) basic or adjusted net income; (vii) returns on equity, assets, capital, revenue or similar measure; (viii) level and growth of dividends; (ix) the price or increase in price of Common Stock; (x) total shareholder return; (xi) total assets; (xii) growth in assets, new originations of assets, or financing of assets; (xiii) equity market capitalization; (xiv) reduction or other quantifiable goal with respect to general and/or specific expenses; (xv) equity capital raised; (xvi) mergers, acquisitions, increase in enterprise value of Affiliates, Subsidiaries, divisions or business units or sales of assets of Affiliates, Subsidiaries, divisions or business units or sales of assets; and (xvii) any combination of the foregoing. Any one or more of the Performance Criteria may be stated as a percentage of another Performance Criteria, or used on an absolute or relative basis to measure the performance of the Company and/or one or more Affiliates as a whole or any divisions or operational and/or business units, business segments, administrative departments of the Company and/or one or more Affiliates or any combination thereof, as the Committee may deem appropriate, or any of the above Performance Criteria may be compared to the performance of a selected group of comparison companies, or a published or special index that the Committee, in its sole discretion, deems appropriate, or as compared to various stock market indices.
(hh) “Permitted Transferee” has the meaning given to such term in Section 14(b) of the Plan.
(ii) “Person” means any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).
(jj) “Plan” means this Bright Health Group, Inc. 2021 Omnibus Incentive Plan, as it may be amended and/or restated from time to time.
(kk) “Qualifying Director” means a person who is, with respect to actions intended to obtain an exemption from Section 16(b) of the Exchange Act pursuant to Rule 16b-3 under the Exchange Act, a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act.
(ll) “Restricted Period” means the period of time determined by the Committee during which an Award is subject to restrictions, including vesting conditions.
(mm) “Restricted Stock” means Common Stock, subject to certain specified restrictions (which may include, without limitation, a requirement that the Participant remain continuously employed or provide continuous services for a specified period of time), granted under Section 9 of the Plan.
(nn) “Restricted Stock Unit” means an unfunded and unsecured promise to deliver shares of Common Stock, cash, other securities or other property, subject to certain restrictions (which may include, without limitation, a requirement that the Participant remain continuously employed or provide continuous services for a specified period of time), granted under Section 9 of the Plan.
(oo) “SAR Period” has the meaning given to such term in Section 8(c) of the Plan.
(pp) “Securities Act” means the Securities Act of 1933, as amended, and any successor thereto. Reference in the Plan to any section of (or rule promulgated under) the Securities Act shall be deemed to include any rules, regulations or other interpretative guidance under such section or rule, and any amendments or successor provisions to such section, rules, regulations or guidance.
(qq) “Service Recipient” means, with respect to a Participant holding a given Award, the member of the Company Group by which the original recipient of such Award is, or following a Termination was most recently, principally employed or to which such original recipient provides, or following a Termination was most recently providing, services, as applicable.
(rr) “Stock Appreciation Right” or “SAR” means an Award granted under Section 8 of the Plan.
(ss) “Strike Price” has the meaning given to such term in Section 8(b) of the Plan.
(tt) “Subsidiary” means, with respect to any specified Person:
(i) any corporation, association or other business entity of which more than fifty percent (50%) of the total voting power of shares of such entity’s voting securities (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and
(ii) any partnership (or any comparable foreign entity) (A) the sole general partner (or functional equivalent thereof) or the managing general partner of which is such Person or Subsidiary of such Person or (B) the only general partners (or functional equivalents thereof) of which are that Person or one or more Subsidiaries of that Person (or any combination thereof).
(uu) “Substitute Award” has the meaning given to such term in Section 5(e) of the Plan.
(vv) “Sub-Plans” means any sub-plan to the Plan that has been adopted by the Board or the Committee for the purpose of permitting the offering of Awards to employees of certain Designated Foreign Subsidiaries or otherwise outside the United States of America, with each such sub-plan designed to comply with local laws applicable to offerings in such foreign jurisdictions. Although any Sub-Plan may be designated a separate and independent plan from the Plan in order to comply with applicable local laws, the Absolute Share Limit and the other limits specified in Section 5(b) shall apply in the aggregate to the Plan and any Sub-Plan adopted hereunder.
(ww) “Termination” means the termination of a Participant’s employment or service, as applicable, with the Service Recipient for any reason (including death).
3. Effective Date; Duration. The Plan shall be effective as of the Effective Date. The expiration date of the Plan, on and after which date no Awards may be granted hereunder, shall be the tenth (10th) anniversary of the Effective Date; provided, that such expiration shall not affect Awards then outstanding, and the terms and conditions of the Plan shall continue to apply to such Awards.
4. Administration.
(a) General. The Committee shall administer the Plan. To the extent required to comply with the provisions of Rule 16b-3 promulgated under the Exchange Act (if the Board is not acting as the Committee under the Plan), it is intended that each member of the Committee shall, at the time such member takes any action with respect to an Award under the Plan that is intended to qualify for the exemptions provided by Rule 16b-3 promulgated under the Exchange Act, be a Qualifying Director. However, the fact that a Committee member shall fail to qualify as a Qualifying Director shall not invalidate any Award granted by the Committee that is otherwise validly granted under the Plan.
(b) Committee Authority. Subject to the provisions of the Plan and applicable law, the Committee shall have the sole and plenary authority, in addition to other express powers and authorizations conferred on the Committee by the Plan, to (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number of shares of Common Stock to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled in, or exercised for, cash, shares of Common Stock, other securities, other Awards or other property, or canceled, forfeited, or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) to accelerate the vesting of any Award at any time and for any reason; (vii) determine whether, to what extent, and under what circumstances the delivery of cash, shares of Common Stock, other securities, other Awards or other property and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the Participant or of the Committee; (viii) interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the Plan and any instrument or agreement relating to, or Award granted under, the Plan; (ix) establish, amend, suspend, or waive any rules and regulations and appoint such agents as the Committee shall deem appropriate for the proper administration of the Plan; (x) adopt Sub-Plans; and (xi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.
(c) Delegation. Except to the extent prohibited by applicable law or the applicable rules and regulations of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or traded, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Committee at any time. Without limiting the generality of the foregoing, the Committee may delegate to one or more officers of any member of the Company Group, the authority to act on behalf of the Committee with respect to any matter, right, obligation, or election which is the responsibility of, or which is allocated to, the Committee herein, and which may be so delegated as a matter of law, except with respect to grants of Awards to persons (i) who are Non-Employee Directors, or (ii) who are subject to Section 16 of the Exchange Act.
(d) Finality of Decisions. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan, any Award or any Award Agreement shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon all Persons, including, without limitation, any member of the Company Group, any Participant, any holder or beneficiary of any Award, and any stockholder of the Company.
(e) Indemnification. No member of the Board, the Committee or any employee or agent of any member of the Company Group (each such Person, an “Indemnifiable Person”) shall be liable for any action taken or omitted to be taken or any determination made with respect to the Plan or any Award hereunder (unless constituting fraud or a willful criminal act or omission). Each Indemnifiable Person shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense (including attorneys’ fees) that may be imposed upon or incurred by such Indemnifiable Person in connection with or resulting from any action, suit or proceeding to which such Indemnifiable Person may be a party or in which such Indemnifiable Person may be involved by reason of any action taken or omitted to be taken or determination made with respect to the Plan or any Award hereunder and against and from any and all amounts paid by such Indemnifiable Person with the Company’s approval, in settlement thereof, or paid by such Indemnifiable Person in satisfaction of any judgment in any such action, suit or proceeding against such Indemnifiable Person, and the Company shall advance to such Indemnifiable Person any such expenses promptly upon written request (which request shall include an undertaking by the Indemnifiable Person to repay the amount of such advance if it shall ultimately be determined, as provided below, that the Indemnifiable Person is not entitled to be indemnified); provided, that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding and once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Company’s choice. The foregoing right of indemnification shall not be available to an Indemnifiable Person to the extent that a final judgment or other final adjudication (in either case not subject to further appeal) binding upon such Indemnifiable Person determines that the acts, omissions or determinations of such Indemnifiable Person giving rise to the indemnification claim resulted from such Indemnifiable Person’s fraud or willful criminal act or omission or that such right of indemnification is otherwise prohibited by law or by the organizational documents of any member of the Company Group. The foregoing right of indemnification shall not be exclusive of or otherwise supersede any other rights of indemnification to which such Indemnifiable Persons may be entitled under the organizational documents of any member of the Company Group, as a matter of law, under an individual indemnification agreement or contract or otherwise, or any other power that the Company may have to indemnify such Indemnifiable Persons or hold such Indemnifiable Persons harmless.
(f) Board Authority. Notwithstanding anything to the contrary contained in the Plan, the Board may, in its sole discretion, at any time and from time to time, grant Awards and administer the Plan with respect to any Awards. Any such actions by the Board shall be subject to the applicable rules of the securities exchange or inter-dealer quotation system on which the Common Stock is listed or quoted. In any such case, the Board shall have all the authority granted to the Committee under the Plan.
5. Grant of Awards; Shares Subject to the Plan; Limitations.
(a) Grants. The Committee may, from time to time, grant Awards to one or more Eligible Persons. All Awards granted under the Plan shall vest and become exercisable in such manner and on such date or dates or upon such event or events as determined by the Committee, including, without limitation, attainment of Performance Criteria. Notwithstanding any vesting dates or events, the Committee may, in its sole discretion, accelerate the vesting of any Award at any time and for any reason.
(b) Share Reserve and Limits. Awards granted under the Plan shall be subject to the following limitations: (i) subject to Section 12 of the Plan, no more than forty-two million (42,000,000) shares of Common Stock (the “Absolute Share Limit”) shall be available for Awards under the Plan; provided, that the Absolute Share Limit shall be automatically increased on the first day of each fiscal year commencing on January 1, 2022 in an amount equal to the lesser of (x) five percent (5%) of the total number of shares of Common Stock outstanding on the last day of the immediately preceding fiscal year and (y) such number of shares Common Stock as determined by the Board; (ii) subject to Section 12 of the Plan, no more than the number of shares of Common Stock equal to the Absolute Share Limit may be issued in the aggregate pursuant to the exercise of Incentive Stock Options granted under the Plan; and (iii) the maximum number of shares of Common Stock subject to Awards granted during a single fiscal year to any Non-Employee Director, taken together with any cash fees paid to such Non-Employee Director during the fiscal year, shall not exceed $650,000 in total value (calculating the value of any such Awards based on the grant date fair value of such Awards for financial reporting purposes).
(c) Share Counting. Other than with respect to Substitute Awards, to the extent that an Award expires or is canceled, forfeited, or terminated without issuance to the Participant of the full number of shares of Common Stock to which the Award related, the unissued shares will again be available for grant under the Plan. Shares of Common Stock shall be deemed to have been issued in settlement of Awards if the Fair Market Value equivalent of such shares is paid in cash in connection with such settlement; provided, that no shares shall be deemed to have been issued in settlement of a SAR or Restricted Stock Unit that provides for settlement only in cash and settles only in cash or in respect of any Cash-Based Incentive Award. In no event shall shares (i) tendered or withheld on exercise of Options or other Awards for the payment of the exercise or purchase price or withholding taxes, (ii) not issued upon the settlement of a SAR that by the terms of the Award Agreement would settle in shares of Common Stock (or could settle in shares of Common Stock), or (iii) purchased on the open market with cash proceeds from the exercise of Options, again become available for other Awards under the Plan.
(d) Source of Shares. Shares of Common Stock issued by the Company in settlement of Awards may be authorized and unissued shares, shares held in the treasury of the Company, shares purchased on the open market or by private purchase or a combination of the foregoing.
(e) Substitute Awards. Awards may, in the sole discretion of the Committee, be granted under the Plan in assumption of, or in substitution for, outstanding awards previously granted by an entity directly or indirectly acquired by the Company or with which the Company combines (“Substitute Awards”). Substitute Awards shall not be counted against the Absolute Share Limit; provided, that Substitute Awards issued in connection with the assumption of, or in substitution for, outstanding options intended to qualify as “incentive stock options” within the meaning of Section 422 of the Code shall be counted against the aggregate number of shares of Common Stock available for Awards of Incentive Stock Options under the Plan. Subject to applicable stock exchange requirements, available shares under a stockholder-approved plan of an entity directly or indirectly acquired by the Company or with which the Company combines (as appropriately adjusted to reflect the acquisition or combination transaction) may be used for Awards under the Plan and shall not reduce the number of shares of Common Stock available for issuance under the Plan.
6. Eligibility. Participation in the Plan shall be limited to Eligible Persons.
7. Options.
(a) General. Each Option granted under the Plan shall be evidenced by an Award Agreement, which agreement need not be the same for each Participant. Each Option so granted shall be subject to the conditions set forth in this Section 7, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. All Options granted under the Plan shall be Nonqualified Stock Options unless the applicable Award Agreement expressly states that the Option is intended to be an Incentive Stock Option. Incentive Stock Options shall be granted only to Eligible Persons who are employees of a member of the Company Group, and no Incentive Stock Option shall be granted to any Eligible Person who is ineligible to receive an Incentive Stock Option under the Code. No Option shall be treated as an Incentive Stock Option unless the Plan has been approved by the stockholders of the Company in a manner intended to comply with the stockholder approval requirements of Section 422(b)(1) of the Code; provided, that any Option intended to be an Incentive Stock Option shall not fail to be effective solely on account of a failure to obtain such approval, but rather such Option shall be treated as a Nonqualified Stock Option unless and until such approval is obtained. In the case of an Incentive Stock Option, the terms and conditions of such grant shall be subject to, and comply with, such rules as may be prescribed by Section 422 of the Code. If for any reason an Option intended to be an Incentive Stock Option (or any portion thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option or portion thereof shall be regarded as a Nonqualified Stock Option appropriately granted under the Plan.
(b) Exercise Price. Except as otherwise provided by the Committee in the case of Substitute Awards, the exercise price (“Exercise Price”) per share of Common Stock for each Option shall not be less than one hundred percent (100%) of the Fair Market Value of such share (determined as of the Date of Grant); provided, that, in the case of an Incentive Stock Option granted to an employee who, at the time of the grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of any member of the Company Group, the Exercise Price per share shall be no less than one hundred ten percent (110%) of the Fair Market Value per share on the Date of Grant.
(c) Vesting and Expiration.
(i) Options shall vest and become exercisable in such manner and on such date or dates or upon such event or events as determined by the Committee.
(ii) Options shall expire upon a date determined by the Committee, not to exceed ten (10) years from the Date of Grant (the “Option Period”); provided, that, if the Option Period (other than in the case of an Incentive Stock Option) would expire at a time when trading in the shares of Common Stock is prohibited by the Company’s insider trading policy (or Company-imposed “blackout period”), then the Option Period shall be automatically extended until the thirtieth (30th) day following the expiration of such prohibition. Notwithstanding the foregoing, in no event shall the Option Period exceed five (5) years from the Date of Grant in the case of an Incentive Stock Option granted to a Participant who on the Date of Grant owns stock representing more than ten percent (10%) of the voting power of all classes of stock of any member of the Company Group.
(d) Method of Exercise and Form of Payment. No shares of Common Stock shall be issued pursuant to any exercise of an Option until payment in full of the Exercise Price therefor is received by the Company and the Participant has paid to the Company an amount equal to any Federal, state, local and non-U.S. income, employment and any other applicable taxes required to be withheld. Options which have become exercisable may be exercised by delivery of written or electronic notice of exercise to the Company (or telephonic instructions to the extent provided by the Committee) in accordance with the terms of the Option accompanied by payment of the Exercise Price. The Exercise Price shall be payable: (i) in cash, check, cash equivalent and/or shares of Common Stock valued at the Fair Market Value at the time the Option is exercised (including, pursuant to procedures approved by the Committee, by means of attestation of ownership of a sufficient number of shares of Common Stock in lieu of actual issuance of such shares to the Company); provided, that such shares of Common Stock are not subject to any pledge or other security interest and have been held by the Participant for at least six (6) months (or such other period as established from time to time by the Committee in order to avoid adverse accounting treatment applying generally accepted accounting principles (“GAAP”)); or (ii) by such other method as the Committee may permit, in its sole discretion, including, without limitation (A) in other property having a fair market value on the date of exercise equal to the Exercise Price; (B) if there is a public market for the shares of Common Stock at such time, by means of a broker-assisted “cashless exercise” pursuant to which the Company is delivered (including telephonically to the extent permitted by the Committee) a copy of irrevocable instructions to a stockbroker to sell the shares of Common Stock otherwise issuable upon the exercise of the Option and to deliver promptly to the Company an amount equal to the Exercise Price; or (C) a “net exercise” procedure effected by withholding the minimum number of shares of Common Stock otherwise issuable in respect of an Option that are needed to pay the Exercise Price. Any fractional shares of Common Stock shall be settled in cash.
(e) Notification upon Disqualifying Disposition of an Incentive Stock Option. Each Participant awarded an Incentive Stock Option under the Plan shall notify the Company in writing immediately after the date the Participant makes a disqualifying disposition of any Common Stock acquired pursuant to the exercise of such Incentive Stock Option. A disqualifying disposition is any disposition (including, without limitation, any sale) of such Common Stock before the later of (i) the date that is two (2) years after the Date of Grant of the Incentive Stock Option, or (ii) the date that is one (1) year after the date of exercise of the Incentive Stock Option. The Company may, if determined by the Committee and in accordance with procedures established by the Committee, retain possession, as agent for the applicable Participant, of any Common Stock acquired pursuant to the exercise of an Incentive Stock Option until the end of the period described in the preceding sentence, subject to complying with any instructions from such Participant as to the sale of such Common Stock.
(f) Compliance With Laws, etc. Notwithstanding the foregoing, in no event shall a Participant be permitted to exercise an Option in a manner which the Committee determines would violate the Sarbanes-Oxley Act of 2002, as it may be amended from time to time, or any other applicable law or the applicable rules and regulations of the Securities and Exchange Commission or the applicable rules and regulations of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or traded.
8. Stock Appreciation Rights.
(a) General. Each SAR granted under the Plan shall be evidenced by an Award Agreement. Each SAR so granted shall be subject to the conditions set forth in this Section 8, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. Any Option granted under the Plan may include tandem SARs. The Committee also may award SARs to Eligible Persons independent of any Option.
(b) Strike Price. Except as otherwise provided by the Committee in the case of Substitute Awards, the strike price (“Strike Price”) per share of Common Stock for each SAR shall not be less than one hundred percent (100%) of the Fair Market Value of such share (determined as of the Date of Grant). Notwithstanding the foregoing, a SAR granted in tandem with (or in substitution for) an Option previously granted shall have a Strike Price equal to the Exercise Price of the corresponding Option.
(c) Vesting and Expiration.
(i) A SAR granted in connection with an Option shall become exercisable and shall expire according to the same vesting schedule and expiration provisions as the corresponding Option. A SAR granted independent of an Option shall vest and become exercisable in such manner and on such date or dates or upon such event or events as determined by the Committee.
(ii) SARs shall expire upon a date determined by the Committee, not to exceed ten (10) years from the Date of Grant (the “SAR Period”); provided, that, if the SAR Period would expire at a time when trading in the shares of Common Stock is prohibited by the Company’s insider trading policy (or Company-imposed “blackout period”), then the SAR Period shall be automatically extended until the thirtieth (30th) day following the expiration of such prohibition.
(d) Method of Exercise. SARs which have become exercisable may be exercised by delivery of written or electronic notice of exercise to the Company in accordance with the terms of the Award, specifying the number of SARs to be exercised and the date on which such SARs were awarded.
(e) Payment. Upon the exercise of a SAR, the Company shall pay to the Participant an amount equal to the number of shares subject to the SAR that is being exercised multiplied by the excess of the Fair Market Value of one (1) share of Common Stock on the exercise date over the Strike Price, less an amount equal to any Federal, state, local and non-U.S. income, employment and any other applicable taxes required to be withheld. The Company shall pay such amount in cash, in shares of Common Stock valued at Fair Market Value, or any combination thereof, as determined by the Committee. Any fractional shares of Common Stock shall be settled in cash.
9. Restricted Stock and Restricted Stock Units.
(a) General. Each grant of Restricted Stock and Restricted Stock Units shall be evidenced by an Award Agreement. Each Restricted Stock and Restricted Stock Unit so granted shall be subject to the conditions set forth in this Section 9, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement.
(b) Stock Certificates and Book-Entry; Escrow or Similar Arrangement. Upon the grant of Restricted Stock, the Committee shall cause a stock certificate registered in the name of the Participant to be issued or shall cause share(s) of Common Stock to be registered in the name of the Participant and held in book-entry form subject to the Company’s directions and, if the Committee determines that the Restricted Stock shall be held by the Company or in escrow rather than issued to the Participant pending the release of the applicable restrictions, the Committee may require the Participant to additionally execute and deliver to the Company (i) an escrow agreement satisfactory to the Committee, if applicable; and (ii) the appropriate stock power (endorsed in blank) with respect to the Restricted Stock covered by such agreement. If a Participant shall fail to execute and deliver (in a manner permitted under Section 14(a) of the Plan or as otherwise determined by the Committee) an agreement evidencing an Award of Restricted Stock and, if applicable, an escrow agreement and blank stock power within the amount of time specified by the Committee, the Award shall be null and void. Subject to the restrictions set forth in this Section 9, Section 14(c) of the Plan and the applicable Award Agreement, a Participant generally shall have the rights and privileges of a stockholder as to shares of Restricted Stock, including, without limitation, the right to vote such Restricted Stock. To the extent shares of Restricted Stock are forfeited, any stock certificates issued to the Participant evidencing such shares shall be returned to the Company, and all rights of the Participant to such shares and as a stockholder with respect thereto shall terminate without further obligation on the part of the Company. A Participant shall have no rights or privileges as a stockholder as to Restricted Stock Units.
(c) Vesting. Restricted Stock and Restricted Stock Units shall vest, and any applicable Restricted Period shall lapse, in such manner and on such date or dates or upon such event or events as determined by the Committee.
(d) Issuance of Restricted Stock and Settlement of Restricted Stock Units.
(i) Upon the expiration of the Restricted Period with respect to any shares of Restricted Stock, the restrictions set forth in the applicable Award Agreement shall be of no further force or effect with respect to such shares, except as set forth in the applicable Award Agreement. If an escrow arrangement is used, upon such expiration, the Company shall issue to the Participant, or the Participant’s beneficiary, without charge, the stock certificate (or, if applicable, a notice evidencing a book-entry notation) evidencing the shares of Restricted Stock which have not then been forfeited and with respect to which the Restricted Period has expired (rounded down to the nearest full share). Dividends, if any, that may have been withheld by the Committee and attributable to any particular share of Restricted Stock shall be distributed to the Participant in cash or, in the sole discretion of the Committee, in shares of Common Stock having a Fair Market Value (on the date of distribution) equal to the amount of such dividends, upon the release of restrictions on such share and, if such share is forfeited, the Participant shall have no right to such dividends.
(ii) Unless otherwise provided by the Committee in an Award Agreement or otherwise, upon the expiration of the Restricted Period with respect to any outstanding Restricted Stock Units, the Company shall issue to the Participant or the Participant’s beneficiary, without charge, one (1) share of Common Stock (or other securities or other property, as applicable) for each such outstanding Restricted Stock Unit; provided, that the Committee may, in its sole discretion, elect to (A) pay cash or part cash and part shares of Common Stock in lieu of issuing only shares of Common Stock in respect of such Restricted Stock Units; or (B) defer the issuance of shares of Common Stock (or cash or part cash and part shares of Common Stock, as the case may be) beyond the expiration of the Restricted Period if such extension would not cause adverse tax consequences under Section 409A of the Code. If a cash payment is made in lieu of issuing shares of Common Stock in respect of such Restricted Stock Units, the amount of such payment shall be equal to the Fair Market Value per share of the Common Stock as of the date on which the Restricted Period lapsed with respect to such Restricted Stock Units.
(e) Legends on Restricted Stock. Each certificate, if any, or book entry representing Restricted Stock awarded under the Plan, if any, shall bear a legend or book entry notation substantially in the form of the following, in addition to any other information the Company deems appropriate, until the lapse of all restrictions with respect to such shares of Common Stock:
TRANSFER OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY IS RESTRICTED PURSUANT TO THE TERMS OF THE BRIGHT HEALTH GROUP, INC. 2021 OMNIBUS INCENTIVE PLAN AND A RESTRICTED STOCK AWARD AGREEMENT BETWEEN BRIGHT HEALTH GROUP, INC. AND PARTICIPANT. A COPY OF SUCH PLAN AND AWARD AGREEMENT IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF BRIGHT HEALTH GROUP, INC.
10. Other Equity-Based Awards. The Committee may grant Other Equity-Based Awards under the Plan to Eligible Persons, alone or in tandem with other Awards, in such amounts and dependent on such conditions as the Committee shall from time to time in its sole discretion determine. Each Other Equity-Based Award granted under the Plan shall be evidenced by an Award Agreement and shall be subject to such conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement.
11. Cash-Based Incentive Awards. The Committee may grant Cash-Based Incentive Awards under the Plan to any Eligible Person. Each Cash-Based Incentive Award granted under the Plan shall be evidenced in such form as the Committee may determine from time to time.
12. Changes in Capital Structure and Similar Events. Notwithstanding any other provision in the Plan to the contrary, the following provisions shall apply to all Awards granted hereunder (other than Cash-Based Incentive Awards):
(a) General. In the event of (i) any dividend (other than regular cash dividends) or other distribution (whether in the form of cash, shares of Common Stock, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase or exchange of shares of Common Stock or other securities of the Company, issuance of warrants or other rights to acquire shares of Common Stock or other securities of the Company, or other similar corporate transaction or event that affects the shares of Common Stock (including a Change in Control); or (ii) unusual or nonrecurring events affecting the Company, including changes in applicable rules, rulings, regulations or other requirements, that the Committee determines, in its sole discretion, could result in substantial dilution or enlargement of the rights intended to be granted to, or available for, Participants (any event in (i) or (ii), an “Adjustment Event”), the Committee shall, in respect of any such Adjustment Event, make such proportionate substitution or adjustment, if any, as it deems equitable, to any or all of (A) the Absolute Share Limit, or any other limit applicable under the Plan with respect to the number and class of shares of common stock that may be delivered under the Plan; (B) the number, class and price of shares of common stock or other securities of the Company (or number and kind of other securities or other property) which may be issued in respect of Awards or with respect to which Awards may be granted under the Plan or any Sub-Plan; and (C) the terms of any outstanding Award, including, without limitation, (I) the number and class of shares of common stock or other securities of the Company (or number and kind of other securities or other property) subject to outstanding Awards or to which outstanding Awards relate; (II) the Exercise Price or Strike Price with respect to any Award; or (III) any applicable performance measures (including, without limitation, Performance Criteria); provided, that, in the case of any “equity restructuring” (within the meaning of the Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor pronouncement thereto)), the Committee shall make an equitable or proportionate adjustment to outstanding Awards to reflect such equity restructuring.
(b) Change in Control. Without limiting the foregoing, in connection with any Change in Control, the Committee may, in its sole discretion, provide for any one or more of the following:
(i) substitution or assumption of Awards, or to the extent that the surviving entity (or Affiliate thereof) of such Change in Control does not substitute or assume the Awards, full acceleration of vesting of, exercisability of, or lapse of restrictions on, as applicable, any Awards; provided, that, unless the applicable Award Agreement provides for different treatment upon a Change in Control, with respect to any performance-vested Awards, any such acceleration of vesting, exercisability, or lapse of restrictions shall be based on (A) the target level of performance if the applicable performance period has not ended prior to the date of such Change in Control, and (B) the actual level of performance attained during the performance period if the applicable performance period has ended prior to the date of such Change in Control; and
(ii) cancellation of any one or more outstanding Awards and payment to the holders of such Awards that are vested as of such cancellation (including, without limitation, any Awards that would vest as a result of the occurrence of such event but for such cancellation or for which vesting is accelerated by the Committee in connection with such event pursuant to clause (i) above), the value of such Awards, if any, as determined by the Committee (which value, if applicable, may be based upon the price per share of Common Stock received or to be received by other stockholders of the Company in such event), including, without limitation, in the case of an outstanding Option or SAR, a cash payment in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Committee) of the shares of Common Stock subject to such Option or SAR over the aggregate Exercise Price or Strike Price of such Option or SAR (it being understood that, in such event, any Option or SAR having a per share Exercise Price or Strike Price equal to, or in excess of, the Fair Market Value of a share of Common Stock subject thereto may be canceled and terminated without any payment or consideration therefor).
For purposes of clause (i) above, an award will be considered granted in substitution of an Award if it has an equivalent value (as determined consistent with clause (ii) above) with the original Award, whether designated in securities of the acquiror in such Change in Control transaction (or an Affiliate thereof), or in cash or other property (including in the same consideration that other stockholders of the Company receive in connection with such Change in Control transaction), and retains the vesting schedule applicable to the original Award.
Payments to holders pursuant to clause (ii) above shall be made in cash or, in the sole discretion of the Committee, in the form of such other consideration necessary for a Participant to receive property, cash, or securities (or combination thereof) as such Participant would have been entitled to receive upon the occurrence of the transaction if the Participant had been, immediately prior to such transaction, the holder of the number of shares of Common Stock covered by the Award at such time (less any applicable Exercise Price or Strike Price).
(c) Other Requirements. Prior to any payment or adjustment contemplated under this Section 12, the Committee may require a Participant to (i) represent and warrant as to the unencumbered title to the Participant’s Awards; (ii) bear such Participant’s pro rata share of any post-closing indemnity obligations, and be subject to the same post-closing purchase price adjustments, escrow terms, offset rights, holdback terms, and similar conditions as the other holders of Common Stock, subject to any limitations or reductions as may be necessary to comply with Section 409A of the Code; and (iii) deliver customary transfer documentation as reasonably determined by the Committee.
(d) Fractional Shares. Any adjustment provided under this Section 12 may provide for the elimination of any fractional share that might otherwise become subject to an Award.
(e) Binding Effect. Any adjustment, substitution, determination of value or other action taken by the Committee under this Section 12 shall be conclusive and binding for all purposes.
13. Amendments and Termination.
(a) Amendment and Termination of the Plan. The Board or Committee may amend, alter, suspend, discontinue, or terminate the Plan or any portion thereof at any time; provided, that no such amendment, alteration, suspension, discontinuance or termination shall be made without stockholder approval if (i) such approval is necessary to comply with any regulatory requirement applicable to the Plan (including, without limitation, as necessary to comply with any rules or regulations of any securities exchange or inter-dealer quotation system on which the securities of the Company may be listed or quoted) or for changes in GAAP to new accounting standards; (ii) it would materially increase the number of securities which may be issued under the Plan (except for increases pursuant to Sections 5 or 12 of the Plan); or (iii) it would materially modify the requirements for participation in the Plan; provided, further, that any such amendment, alteration, suspension, discontinuance or termination that would materially and adversely affect the rights of any Participant or any holder or beneficiary of any Award theretofore granted shall not to that extent be effective without the consent of the affected Participant, holder or beneficiary. Notwithstanding the foregoing, no amendment shall be made to Section 13(c) of the Plan without stockholder approval.
(b) Amendment of Award Agreements. The Committee may, to the extent consistent with the terms of the Plan and any applicable Award Agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted or the associated Award Agreement, prospectively or retroactively (including after a Participant’s Termination); provided, that, other than pursuant to Section 12, any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of any Participant with respect to any Award theretofore granted shall not to that extent be effective without the consent of the affected Participant.
(c) No Repricing. Notwithstanding anything in the Plan to the contrary, without stockholder approval, except as otherwise permitted under Section 12 of the Plan, (i) no amendment or modification may reduce the Exercise Price of any Option or the Strike Price of any SAR; (ii) the Committee may not cancel any outstanding Option or SAR and replace it with a new Option or SAR (with a lower Exercise Price or Strike Price, as the case may be) or other Award or cash payment that is greater than the intrinsic value (if any) of the cancelled Option or SAR; and (iii) the Committee may not take any other action which is considered a “repricing” for purposes of the stockholder approval rules of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or quoted.
14. General.
(a) Award Agreements. Each Award (other than a Cash-Based Incentive Award) under the Plan shall be evidenced by an Award Agreement, which shall be delivered to the Participant to whom such Award was granted and shall specify the terms and conditions of the Award and any rules applicable thereto, including, without limitation, the effect on such Award of the death, Disability or Termination of a Participant, or of such other events as may be determined by the Committee. For purposes of the Plan, an Award Agreement may be in any such form (written or electronic) as determined by the Committee (including, without limitation, a Board or Committee resolution, an employment agreement, a notice, a certificate or a letter) evidencing the Award. The Committee need not require an Award Agreement to be signed by the Participant or a duly authorized representative of the Company.
(b) Nontransferability.
(i) Each Award shall be exercisable only by such Participant to whom such Award was granted during the Participant’s lifetime, or, if permissible under applicable law, by the Participant’s legal guardian or representative. No Award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant (unless such transfer is specifically required pursuant to a domestic relations order or by applicable law) other than by will or by the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against any member of the Company Group; provided, that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
(ii) Notwithstanding the foregoing, the Committee may, in its sole discretion, permit Awards (other than Incentive Stock Options) to be transferred by a Participant, without consideration, subject to such rules as the Committee may adopt consistent with any applicable Award Agreement to preserve the purposes of the Plan, to (A) any person who is a “family member” of the Participant, as such term is used in the instructions to Form S-8 under the Securities Act or any successor form of registration statement promulgated by the Securities and Exchange Commission (collectively, the “Immediate Family Members”); (B) a trust solely for the benefit of the Participant and the Participant’s Immediate Family Members; (C) a partnership or limited liability company whose only partners or stockholders are the Participant and the Participant’s Immediate Family Members; or (D) a beneficiary to whom donations are eligible to be treated as “charitable contributions” for federal income tax purposes (each transferee described in clauses (A), (B), (C) and (D) above is hereinafter referred to as a “Permitted Transferee”); provided, that the Participant gives the Committee advance written notice describing the terms and conditions of the proposed transfer and the Committee notifies the Participant in writing that such a transfer would comply with the requirements of the Plan.
(iii) The terms of any Award transferred in accordance with clause (ii) above shall apply to the Permitted Transferee and any reference in the Plan, or in any applicable Award Agreement, to a Participant shall be deemed to refer to the Permitted Transferee, except that (A) Permitted Transferees shall not be entitled to transfer any Award, other than by will or the laws of descent and distribution; (B) Permitted Transferees shall not be entitled to exercise any transferred Option unless there shall be in effect a registration statement on an appropriate form covering the shares of Common Stock to be acquired pursuant to the exercise of such Option if the Committee determines, consistent with any applicable Award Agreement, that such a registration statement is necessary or appropriate; (C) neither the Committee nor the Company shall be required to provide any notice to a Permitted Transferee, whether or not such notice is or would otherwise have been required to be given to the Participant under the Plan or otherwise; and (D) the consequences of a Participant’s Termination under the terms of the Plan and the applicable Award Agreement shall continue to be applied with respect to the Participant, including, without limitation, that an Option shall be exercisable by the Permitted Transferee only to the extent, and for the periods, specified in the Plan and the applicable Award Agreement.
(c) Dividends and Dividend Equivalents. The Committee may, in its sole discretion, provide a Participant as part of an Award with dividends, dividend equivalents, or similar payments in respect of Awards, payable in cash, shares of Common Stock, other securities, other Awards or other property, on a current or deferred basis, on such terms and conditions as may be determined by the Committee in its sole discretion, including, without limitation, payment directly to the Participant, withholding of such amounts by the Company subject to vesting of the Award or reinvestment in additional shares of Common Stock, Restricted Stock or other Awards. Without limiting the foregoing, unless otherwise provided in the Award Agreement, any dividend otherwise payable in respect of any share of Restricted Stock that remains subject to vesting conditions at the time of payment of such dividend shall be retained by the Company and remain subject to the same vesting conditions as the share of Restricted Stock to which the dividend relates.
(d) Tax Withholding.
(i) A Participant shall be required to pay to the Company or one or more of its Subsidiaries, as applicable, an amount in cash (by check or wire transfer) equal to the aggregate amount of any income, employment and/or other applicable taxes that are statutorily required to be withheld in respect of an Award. Alternatively, the Company or any of its Subsidiaries may elect, in its sole discretion, to satisfy this requirement by withholding such amount from any cash compensation or other cash amounts owing to a Participant.
(ii) Without limiting the foregoing, the Committee may (but is not obligated to), in its sole discretion, permit or require a Participant to satisfy, all or any portion of the minimum income, employment and/or other applicable taxes that are statutorily required to be withheld with respect to an Award by (A) the delivery of shares of Common Stock (which are not subject to any pledge or other security interest) that have been both held by the Participant and vested for at least six (6) months (or such other period as established from time to time by the Committee in order to avoid adverse accounting treatment under applicable accounting standards) having an aggregate fair market value equal to such minimum statutorily required withholding liability (or portion thereof); or (B) having the Company withhold from the shares of Common Stock otherwise issuable or deliverable to, or that would otherwise be retained by, the Participant upon the grant, exercise, vesting or settlement of the Award, as applicable, a number of shares of Common Stock with an aggregate fair market value equal to an amount, subject to clause (iii) below, not in excess of such minimum statutorily required withholding liability (or portion thereof).
(iii) The Committee has full discretion to allow Participants to satisfy, in whole or in part, any additional income, employment and/or other applicable taxes payable by them with respect to an Award by electing to have the Company withhold from the shares of Common Stock otherwise issuable or deliverable to, or that would otherwise be retained by, a Participant upon the grant, exercise, vesting or settlement of the Award, as applicable, shares of Common Stock having an aggregate fair market value that is greater than the applicable minimum required statutory withholding liability (but such withholding may in no event be in excess of the maximum statutory withholding amount(s) in a Participant’s relevant tax jurisdictions).
(e) Data Protection. By participating in the Plan or accepting any rights granted under it, each Participant consents to the collection and processing of personal data relating to the Participant so that the Company and its Affiliates can fulfill their obligations and exercise their rights under the Plan and generally administer and manage the Plan. This data will include, but may not be limited to, data about participation in the Plan and shares offered or received, purchased, or sold under the Plan from time to time and other appropriate financial and other data (such as the date on which the Awards were granted) about the Participant and the Participant’s participation in the Plan.
(f) No Claim to Awards; No Rights to Continued Employment; Waiver. No employee of any member of the Company Group, or other Person, shall have any claim or right to be granted an Award under the Plan or, having been selected for the grant of an Award, to be selected for a grant of any other Award. There is no obligation for uniformity of treatment of Participants or holders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant and may be made selectively among Participants, whether or not such Participants are similarly situated. Neither the Plan nor any action taken hereunder shall be construed as giving any Participant any right to be retained in the employ or service of the Service Recipient or any other member of the Company Group, nor shall it be construed as giving any Participant any rights to continued service on the Board. The Service Recipient or any other member of the Company Group may at any time dismiss a Participant from employment or discontinue any consulting relationship, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or any Award Agreement. By accepting an Award under the Plan, a Participant shall thereby be deemed to have waived any claim to continued exercise or vesting of an Award or to damages or severance entitlement related to non-continuation of the Award beyond the period provided under the Plan or any Award Agreement, except to the extent of any provision to the contrary in any written employment contract or other agreement between the Service Recipient and/or any member of the Company Group and the Participant, whether any such agreement is executed before, on or after the Date of Grant.
(g) International Participants. With respect to Participants who reside or work outside of the United States of America, the Committee may, in its sole discretion, amend the terms of the Plan and create or amend Sub-Plans or amend outstanding Awards with respect to such Participants in order to conform such terms with the requirements of local law or to obtain more favorable tax or other treatment for a Participant or any member of the Company Group.
(h) Designation and Change of Beneficiary. Each Participant may file with the Committee a written designation of one or more Persons as the beneficiary or beneficiaries, as applicable, who shall be entitled to receive the amounts payable with respect to an Award, if any, due under the Plan upon the Participant’s death. A Participant may, from time to time, revoke or change the Participant’s beneficiary designation without the consent of any prior beneficiary by filing a new designation with the Committee. The last such designation received by the Committee shall be controlling; provided, that no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Participant’s death, and in no event shall it be effective as of a date prior to such receipt. If no beneficiary designation is filed by a Participant, the beneficiary shall be deemed to be the Participant’s spouse or, if the Participant is unmarried at the time of death, the Participant’s estate.
(i) Termination. Except as otherwise provided in an Award Agreement, unless determined otherwise by the Committee at any point following such event: (i) neither a temporary absence from employment or service due to illness, vacation or leave of absence (including, without limitation, a call to active duty for military service through a Reserve or National Guard unit) nor a transfer from employment or service with one Service Recipient to employment or service with another Service Recipient (or vice-versa) shall be considered a Termination; and (ii) if a Participant undergoes a Termination of employment, but such Participant continues to provide services to the Company Group in a non-employee capacity, such change in status shall not be considered a Termination for purposes of the Plan. Further, unless otherwise determined by the Committee, in the event that any Service Recipient ceases to be a member of the Company Group (by reason of sale, divestiture, spin-off or other similar transaction), unless a Participant’s employment or service is transferred to another entity that would constitute a Service Recipient immediately following such transaction, such Participant shall be deemed to have suffered a Termination hereunder as of the date of the consummation of such transaction.
(j) No Rights as a Stockholder. Except as otherwise specifically provided in the Plan or any Award Agreement, no Person shall be entitled to the privileges of ownership in respect of shares of Common Stock which are subject to Awards hereunder until such shares have been issued or delivered to such Person.
(k) Government and Other Regulations.
(i) The obligation of the Company to settle Awards in shares of Common Stock or other consideration shall be subject to all applicable laws, rules, and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of any Award to the contrary, the Company shall be under no obligation to offer to sell or to sell, and shall be prohibited from offering to sell or selling, any shares of Common Stock pursuant to an Award unless such shares have been properly registered for sale pursuant to the Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel (if the Company has requested such an opinion), satisfactory to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption therefrom and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation to register for sale under the Securities Act any of the shares of Common Stock to be offered or sold under the Plan. The Committee shall have the authority to provide that all shares of Common Stock or other securities of any member of the Company Group issued under the Plan shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the Plan, the applicable Award Agreement, the Federal securities laws, or the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or quoted and any other applicable Federal, state, local or non-U.S. laws, rules, regulations and other requirements, and, without limiting the generality of Section 9 of the Plan, the Committee may cause a legend or legends to be put on certificates representing shares of Common Stock or other securities of any member of the Company Group issued under the Plan to make appropriate reference to such restrictions or may cause such Common Stock or other securities of any member of the Company Group issued under the Plan in book-entry form to be held subject to the Company’s instructions or subject to appropriate stop-transfer orders. Notwithstanding any provision in the Plan to the contrary, the Committee reserves the right to, at any time, add any additional terms or provisions to any Award granted under the Plan that the Committee, in its sole discretion, deems necessary or advisable in order that such Award complies with the legal requirements of any governmental entity to whose jurisdiction the Award is subject.
(ii) The Committee may cancel an Award or any portion thereof if it determines, in its sole discretion, that legal or contractual restrictions and/or blockage and/or other market considerations would make the Company’s acquisition of shares of Common Stock from the public markets, the Company’s issuance of Common Stock to the Participant, the Participant’s acquisition of Common Stock from the Company and/or the Participant’s sale of Common Stock to the public markets, illegal, impracticable or inadvisable. If the Committee determines to cancel all or any portion of an Award in accordance with the foregoing, the Company shall, subject to any limitations or reductions as may be necessary to comply with Section 409A of the Code, (A) pay to the Participant an amount equal to the excess of (I) the aggregate Fair Market Value of the shares of Common Stock subject to such Award or portion thereof canceled (determined as of the applicable exercise date, or the date that the shares would have been vested or issued, as applicable); over (II) the aggregate Exercise Price or Strike Price (in the case of an Option or SAR, respectively) or any amount payable as a condition of issuance of shares of Common Stock (in the case of any other Award). Such amount shall be delivered to the Participant as soon as practicable following the cancellation of such Award or portion thereof, or (B) in the case of Restricted Stock, Restricted Stock Units or Other Equity-Based Awards, provide the Participant with a cash payment or equity subject to deferred vesting and delivery consistent with the vesting restrictions applicable to such Restricted Stock, Restricted Stock Units or Other Equity-Based Awards, or the underlying shares in respect thereof.
(l) No Section 83(b) Elections Without Consent of Company. No election under Section 83(b) of the Code or under a similar provision of law may be made unless expressly permitted by the terms of the applicable Award Agreement or by action of the Company in writing prior to the making of such election. If a Participant, in connection with the acquisition of shares of Common Stock under the Plan or otherwise, is expressly permitted to make such election and the Participant makes the election, the Participant shall notify the Company of such election within ten (10) days of filing notice of the election with the Internal Revenue Service or other governmental authority, in addition to any filing and notification required pursuant to Section 83(b) of the Code or other applicable provision.
(m) Payments to Persons Other Than Participants. If the Committee shall find that any Person to whom any amount is payable under the Plan is unable to care for the Participant’s affairs because of illness or accident, or is a minor, or has died, then any payment due to such Person or the Participant’s estate (unless a prior claim therefor has been made by a duly appointed legal representative) may, if the Committee so directs the Company, be paid to the Participant’s spouse, child, relative, an institution maintaining or having custody of such Person, or any other Person deemed by the Committee to be a proper recipient on behalf of such Person otherwise entitled to payment. Any such payment shall be a complete discharge of the liability of the Committee and the Company therefor.
(n) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Committee nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Committee or Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of equity-based awards otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases.
(o) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between any member of the Company Group, on the one hand, and a Participant or other Person, on the other hand. No provision of the Plan or any Award shall require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor shall the Company be obligated to maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes. Participants shall have no rights under the Plan other than as unsecured general creditors of the Company, except that insofar as they may have become entitled to payment of additional compensation by performance of services, they shall have the same rights as other service providers under general law.
(p) Reliance on Reports. Each member of the Committee and each member of the Board shall be fully justified in acting or failing to act, as the case may be, and shall not be liable for having so acted or failed to act in good faith, in reliance upon any report made by the independent public accountant of any member of the Company Group and/or any other information furnished in connection with the Plan by any agent of the Company or the Committee or the Board, other than himself or herself.
(q) Relationship to Other Benefits. No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, profit sharing, group insurance or other benefit plan of the Company except as otherwise specifically provided in such other plan or as required by applicable law.
(r) Governing Law. The Plan shall be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and performed wholly within the State of Delaware, without giving effect to the conflict of laws provisions thereof.
EACH PARTICIPANT WHO ACCEPTS AN AWARD IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION, OR OTHER PROCEEDING INSTITUTED BY OR AGAINST SUCH PARTICIPANT IN RESPECT OF THE PARTICIPANT’S RIGHTS OR OBLIGATIONS HEREUNDER.
(s) Severability. If any provision of the Plan or any Award or Award Agreement is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be construed or deemed stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.
(t) Obligations Binding on Successors. The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company.
(u) Section 409A of the Code.
(i) Notwithstanding any provision of the Plan to the contrary, it is intended that the provisions of the Plan comply with Section 409A of the Code, and all provisions of the Plan shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A of the Code. Each Participant is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or in respect of such Participant in connection with the Plan (including any taxes and penalties under Section 409A of the Code), and neither the Service Recipient nor any other member of the Company Group shall have any obligation to indemnify or otherwise hold such Participant (or any beneficiary) harmless from any or all of such taxes or penalties. With respect to any Award that is considered “deferred compensation” subject to Section 409A of the Code, references in the Plan to “termination of employment” (and substantially similar phrases) shall mean “separation from service” within the meaning of Section 409A of the Code. For purposes of Section 409A of the Code, each of the payments that may be made in respect of any Award granted under the Plan is designated as a separate payment.
(ii) Notwithstanding anything in the Plan to the contrary, if a Participant is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, no payments in respect of any Awards that are “deferred compensation” subject to Section 409A of the Code and which would otherwise be payable upon the Participant’s “separation from service” (as defined in Section 409A of the Code) shall be made to such Participant prior to the date that is six (6) months after the date of such Participant’s “separation from service” or, if earlier, the date of the Participant’s death. Following any applicable six (6) month delay, all such delayed payments will be paid in a single lump sum on the earliest date permitted under Section 409A of the Code that is also a business day.
(iii) Unless otherwise provided by the Committee in an Award Agreement or otherwise, in the event that the timing of payments in respect of any Award (that would otherwise be considered “deferred compensation” subject to Section 409A of the Code) would be accelerated upon the occurrence of (A) a Change in Control, no such acceleration shall be permitted unless the event giving rise to the Change in Control satisfies the definition of a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation pursuant to Section 409A of the Code; or (B) a Disability, no such acceleration shall be permitted unless the Disability also satisfies the definition of “Disability” pursuant to Section 409A of the Code.
(v) Clawback/Repayment. All Awards shall be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i) any clawback, forfeiture or other similar policy adopted by the Board or the Committee and as in effect from time to time; and (ii) applicable law. Further, to the extent that the Participant receives any amount in excess of the amount that the Participant should otherwise have received under the terms of the Award for any reason (including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative error), the Participant may be required to repay any such excess amount to the Company.
(w) Right of Offset. The Company will have the right to offset against its obligation to deliver shares of Common Stock (or other property or cash) under the Plan or any Award Agreement any outstanding amounts (including, without limitation, travel and entertainment or advance account balances, loans, repayment obligations under any Awards, or amounts repayable to the Company pursuant to tax equalization, housing, automobile or other employee programs) that the Participant then owes to any member of the Company Group and any amounts the Committee otherwise deems appropriate pursuant to any tax equalization policy or agreement. Notwithstanding the foregoing, if an Award is “deferred compensation” subject to Section 409A of the Code, the Committee will have no right to offset against its obligation to deliver shares of Common Stock (or other property or cash) under the Plan or any Award Agreement if such offset could subject the Participant to the additional tax imposed under Section 409A of the Code in respect of an outstanding Award.
(x) Expenses; Titles and Headings. The expenses of administering the Plan shall be borne by the Company Group. The titles and headings of the sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use in this Registration Statement No. 333-256286 on Form S-1 of our report dated March 17, 2021 (April 21, 2021, as to the acquisitions and investment described in Note 18, and June 4, 2021 as to the effects of the stock split described in Note 18), relating to the financial statements of Bright Health Group, Inc. We also consent to the reference to us under the heading "Experts" in such Registration Statement.
/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
June 15, 2021
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the use in this Amendment No. 2 to the Registration Statement (No. 333-256286) on Form S-1 of Bright Health Group, Inc. of our report dated March 17, 2021, except for the effects of the stock split as discussed in Note 18 as to which the date is June 4, 2021, relating to the consolidated financial statements of Bright Health Group, Inc., appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to our firm under the heading "Experts" in such Prospectus.
/s/ RSM US LLP
Chicago, Illinois
June 15, 2021
Exhibit 23.3
Consent of Independent Registered Public Accounting Firm
Universal Care, Inc.
Westminster, California
We hereby consent to the use in the Prospectus constituting a part of this Registration Statement of our report dated December 23, 2019, relating to the financial statements of Universal Care, Inc. dba Brand New Day, which is contained in that Prospectus.
We also consent to the reference to us under the caption “Experts” in the Prospectus.
/s/ BDO USA, LLP | |
Costa Mesa, California | |
June 15, 2021 |