Bright Health Group is mulling a reverse stock split after it shares dipped below the price threshold to remain listed on the New York Stock Exchange, the health insurance company announced Monday.
The insurtech received a notice from the New York Stock Exchange Dec. 6 that, because its average stock price has been below $1 for the past 30 days, the company is in danger of being dropped from the exchange if it does not raise its share prices within six months.
Bright Health alerted the stock exchange that it intends to increase its stock’s value and will consider all available options, a spokesperson wrote in an email. The NYSE notice does not affect ongoing operations, the spokesperson wrote. Bright Health aims to achieve profitability next year on an adjusted earnings before interest, taxes and depreciation basis, the company previously advised investors.
The insurtech’s stock price has fallen 95.3% since its public debut in June 2021 and opened trading at 81¢ Tuesday.
Bright Health is considering a reverse stock split, which would entail consolidating shares to increase their overall value.
“Anybody with a brain doesn’t get fooled by it,” said Harry Kraemer, a professor at Northwestern University’s Kellogg School of Management and executive partner with Madison Dearborn Partners, a private equity firm. A reverse stock split wouldn’t improve Bright Health’s capital position and would signal to investors that the company is in financial trouble, said Kraemer, a former CEO of the medical device company Baxter International.
Source: Modern Healthcare