Bright Health Group has secured the credit necessary to avoid going belly-up as its sells off the last of its insurance business, the company disclosed Monday.
The company has entered into a $60 million credit facility with New Enterprise Associates (NEA) and secured a waiver to avoid defaulting on its existing credit facility, according to an announcement. The waiver expires in February.
Bright Health will deploy the financing to support its working capital needs until it closes the sale of its California Medicare Advantage plans to Molina Healthcare.
“We are excited to have the continued support of NEA, and all of our partners, as we continue to transform our business into one of the leading value-driven healthcare companies," CEO Mike Mikan said in the release.
Bright Health said that in conjunction with the new credit facility it will issue penny warrants to buy as many as 1.6 million shares to the lenders. Generally, a move like this would require shareholder approval, but Bright is moving forward without it as the audit committee of its board determined a delay "would jeopardize the financial viability of the company."
The New York Stock Exchange, where Bright trades, has signed off on the move. Shares in Bright Health Group were trading at about $15 at 3 p.m. Monday.
The insurtech said in a filing with the Securities and Exchange Commission that it entered into latest amendment to its credit agreement Aug. 4. From that date until the existing credit agreement ends, Bright Health will operate under a minimum liquidity covenant of at least $25 million.
Should the company fall out of compliance with the updated agreement or should its deal with Molina fall through, the timing of the agreement could be accelerated, according to the filing.
Bright Health Group will report its second-quarter earnings Aug. 9.