Executive Summary

Q3 2023 continued revenue growth in continuing operations ($269.4 million, +39% YoY) and delivered a second consecutive quarter of positive Adjusted EBITDA ($1.2 million), but results were dominated by a non-cash goodwill impairment ($401.4 million) driving a large net loss from continuing operations ($479.3 million) .
Guidance was modestly trimmed for FY 2023 Enterprise Revenue to $1.14–$1.19 billion (from $1.15–$1.20 billion in Q2), with Care Solutions lowered and Care Delivery maintained; the company reiterated expectations for FY23 Adjusted EBITDA profitability and an adjusted operating cost ratio of 17.5–18.5% .
Segment trends: Care Delivery showed strong operating performance excluding impairment (positive operating income), while Care Solutions ACO REACH growth lifted revenue but was impacted by a care partner bankruptcy, increasing bad debt and pressuring segment operating income .
Liquidity actions and catalysts: repayment agreements for ACA risk adjustment obligations ($380 million principal at 11.5% interest) and the pending sale of California Medicare Advantage business to Molina (expected close by Q1 2024) are key near-term stock catalysts; management highlights going concern risks and covenant waivers while executing cost-reduction plans .

What Went Well and What Went Wrong

What Went Well

“Second consecutive quarter of positive Adjusted EBITDA” with $1.2 million in Q3, reflecting operating cost discipline and revenue growth in continuing operations .
Care Delivery “reported Operating Income profitability based on strong performance” excluding goodwill impairment; management cited medical cost management and member engagement initiatives as key drivers .
Value-based care footprint expanded: Value-Based Consumers served increased to 355,000 in Q3 (from 115,000 prior-year recast basis), reflecting strong growth in Care Delivery and third-party payor contracts .

What Went Wrong

A $401.4 million non-cash goodwill impairment (Care Delivery) drove a large GAAP loss in Q3; impairment was triggered by stock price and market cap declines .
Care Solutions segment hit by the bankruptcy of an ACO REACH care partner (Babylon Medical Group), resulting in a full allowance against receivables and a $22.4 million increase in bad debt expense, pressuring segment operating income .
Ongoing liquidity and going concern risks: substantial negative operating cash flows linked to discontinued operations, covenant waivers, and dependency on closing the Molina deal and bridge financing; management explicitly notes substantial doubt about the ability to continue as a going concern absent further actions .

Financial Results

Consolidated results vs prior quarters and YoY

Metric	Q1 2023	Q2 2023	Q3 2023
Total Revenue ($ in thousands)	$300,550	$297,982	$269,399
Net Loss from Continuing Operations ($ in thousands)	$(53,918)	$(31,692)	$(479,305)
Adjusted EBITDA ($ in thousands)	$670	$6,413	$1,205
Operating Cost Ratio (%)	26.5%	23.6%	26.9%
Adjusted Operating Cost Ratio (%)	14.1%	18.3%	20.8%
Diluted EPS – Continuing Ops ($)	N/A (pre-split basis)	$(8.55)	$(72.52)

Notes: Q1 EPS figures were reported pre-reverse split and are not comparable; later filings retroactively adjust share counts to reflect the 1-for-80 reverse stock split .

Segment breakdown (Continuing Operations)

Segment Metric ($ in thousands)	Q1 2023	Q2 2023	Q3 2023
Care Delivery Revenue	$62,679	$66,068	$67,134
Care Delivery Operating Income (Loss)	$6,636	$11,031	$(390,761) (impairment-driven)
Care Solutions Revenue	$240,058	$237,686	$200,777
Care Solutions Operating Income (Loss)	$(1,509)	$2,996	$(29,355)

KPIs

KPI	Q1 2023	Q2 2023	Q3 2023
Value-Based Consumers served	373,000	371,000	355,000

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Enterprise Revenue	FY 2023	$1.15B–$1.20B (Q2)	$1.14B–$1.19B (Q3)	Lowered
Care Solutions Revenue	FY 2023	$900M–$925M (Q2)	$890M–$910M (Q3)	Lowered
Care Delivery Revenue	FY 2023	$250M–$275M (Q2)	$250M–$275M (Q3)	Maintained
Enterprise Adjusted Operating Cost Ratio	FY 2023	17.5%–18.5% (Q2)	17.5%–18.5% (Q3)	Maintained
Adjusted EBITDA (enterprise)	FY 2023	Profitability expected† (Q2)	Profitability expected† (Q3)	Maintained

† Company does not provide GAAP reconciliations of projected non-GAAP measures due to inherent unpredictability of certain items .

Earnings Call Themes & Trends

Note: The Q3 2023 earnings call transcript could not be retrieved due to a database inconsistency. Themes reflect management’s prepared commentary in the Q3 press release and 10-Q and prior quarter materials.

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
ACO REACH performance	Q1/Q2: REACH ACO membership growth; segment operating income positive in Q2	Q3: ACO REACH revenue +37.6% YoY; bad debt tied to Babylon bankruptcy; margins expected to improve in 2024 with terminated providers	Growth with near-term margin pressure, improving 2024 outlook
Care Delivery profitability	Q1: positive operating income; Q2: strength in medical cost management	Q3: positive operating income excluding goodwill impairment; strong consumer satisfaction and medical cost metrics	Operationally solid ex-impairment
ACA wind-down and risk adjustment	Q1/Q2: exit of Commercial marketplace; progressing wind-down	Q3: 98% claims runout; $1.5B paid to CMS; repayment agreements ($380M, 11.5% interest)	Substantially complete claims; structured remaining obligations
Liquidity & covenants	Q1: reverse split approved; covenant waiver actions	Q3: going concern language; new credit facility ($60M, 15%); permanent waiver of minimum liquidity covenant with $25M threshold	Tight liquidity; reliant on financing and asset sale
California MA sale (Molina)	Q2: announced $600M sale; regulatory process underway	Q3: closing expected by Q1 2024; proceeds planned to address obligations	Key de-leveraging catalyst pending

Management Commentary

“Bright Health’s solid 2023 performance continued in the Third Quarter, with our second consecutive quarter of positive Adjusted EBITDA. Excluding a Goodwill impairment, our Care Delivery segment reported Operating Income profitability based on strong performance.” — Mike Mikan, President & CEO .
“We also continued to make good progress in the quarter on the wind-down of our ACA insurance business and the sale of our California Medicare Advantage business.” — Mike Mikan .
MD&A emphasized strong Care Delivery metrics and positive consumer satisfaction, and identified Babylon’s bankruptcy as the main headwind in ACO REACH, with an expectation of improved margins post-termination and partner pipeline additions in 2024 .

Q&A Highlights

The Q3 2023 earnings call transcript was unavailable due to a database inconsistency, so specific Q&A highlights cannot be provided. Based on management’s filed commentary, areas likely addressed included: liquidity and covenant waivers , timing and use of proceeds from the Molina transaction , ACO REACH margin outlook post-Babylon , and progress on ACA wind-down and risk adjustment repayments . Any guidance clarifications would have centered on modest revenue range updates and reiterated Adjusted EBITDA profitability expectations for FY23 .

Estimates Context

Wall Street consensus comparisons via S&P Global were unavailable for BHG due to a missing CIQ mapping, so we cannot quantify Q3 revenue or EPS beats/misses versus consensus using S&P Global at this time. If/when S&P Global estimates become available, we will anchor comparisons to those figures and highlight any significant surprises.

Key Takeaways for Investors

Positive Adjusted EBITDA for the second straight quarter, indicating operating discipline despite revenue mix shifts and restructuring .
Non-cash goodwill impairment ($401.4 million) overwhelmed GAAP results; adjust lens to operational performance (Care Delivery profitable excluding impairment) .
ACO REACH growth remains intact; near-term margin pressure from Babylon bankruptcy should abate in 2024 with partner changes and expected margin improvement .
ACA wind-down largely complete: ~98% claims runout; structured repayment agreements ($380M principal, 11.5% interest) reduce residual risk but carry interest cost until sale proceeds arrive .
FY 2023 guidance edged lower on revenue (Care Solutions down; Care Delivery flat), but FY23 Adjusted EBITDA profitability still targeted; watch cost ratio execution .
Liquidity and going concern risk are non-trivial near term; catalysts include closing the Molina sale (~Q1 2024) and continued adherence to waivers and minimum liquidity thresholds .
Trading implications: Near-term stock moves likely keyed to regulatory approvals and certainty on deal closing, plus any updates on partner performance in REACH; downside risk remains tied to financing and covenant compliance .

Appendix: Additional Data Points

Q3 revenue composition: Capitated $60.4M, ACO REACH $200.0M, Service $9.0M .
Operating cost ratio improved vs 2022; Adjusted Operating Cost Ratio 20.8% in Q3 (31.8% in Q3 2022) .
Discontinued operations (California MA and Commercial) drove substantial cash movements; negative operating cash flow and repayment schedules disclosed .

NeueHealth, Inc. (BHG)·Q3 2023 Earnings Summary