Bright Health Group will seek shareholder approval for a reverse stock split to enhance the value of its shares, the struggling insurer reported to the Securities and Exchange Commission today. Monday.
According to the company, a vote is scheduled to take place at the company’s annual meeting on May 4. The reverse stock split will merge Bright Health’s stock by a ratio of one to 80. , according to the company. Board of Directors will re-evaluate executive compensation if the reverse stock split takes place, the company has notified the SEC.
Bright Health finds itself in this position because its shares are at risk of being delisted by the New York Stock Exchange as soon as June 6 if they fail to reach at least $1 and hold that value for 30 years. consecutive days. Bright Health shares opened at 22¢ on Tuesday, down 98.7% from its initial public offering price of $17.25 in 2021.
The insurance company must must raise about 300 million USD to maintain liquidity, executives told investors last month. As an indicator of Bright Health’s difficult financial situation, at least two states have put its subsidiaries under supervision and limit the company’s ability to spend money amid concerns that the company lacks the funds to meet its obligations. Bright Health had a $12.9 million shortfall on state-regulated entities by the end of 2022, according to previous SEC filings filed this month.
By increasing the number of shares available for trading, Bright Health seeks to avoid delisting and make its shares more attractive to investors. Many institutional firms are prohibited from investing in or recommending low-priced stocks to their clients, and they charge fees to those who trade their shares, Bright Health wrote in the filing.
If the shareholders approved the reverse stock split, the investors who would otherwise have enjoyed partial ownership of the stock would instead receive a cash payment based on the proceeds of the stock split. sell.
