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Bright Health is significantly growing its Medicare business while expanding into a new state with a deal announced Wednesday to purchase an insurance company that operates in Southern California.

Minneapolis-based Bright Health did not release financial terms for its proposed acquisition of Universal Care Inc., an insurer that does business as Brand New Day health plan.

The California insurer last year had about 41,000 enrollees, according to state data, and the vast majority of members were enrolled in Medicare health plans. Bright Health has been growing its Medicare business, but was a much smaller player last year with about 4,000 Medicare Advantage enrollees at the end of the third quarter, according to a Star Tribune review of regulatory filings.

"This transaction gives Bright Health Plan a strong presence in California with an established and philosophically aligned partner," said Mike Mikan, president and vice chairman of Bright Health, in a statement.

Since its launch in 2015, Bright Health has grown in markets where individuals buy coverage under the federal Affordable Care Act (ACA) as well as by selling Medicare Advantage plans, in which seniors opt to receive government benefits via private managed care companies. In December, Bright Health said it had raised another $635 million to support expansion efforts and build its technology platform, a sum that pushed total fundraising to more than $1 billion.

Universal Care has been around for more than 35 years. The company in 2018 reported about $250 million in revenue, according to data from the California Department of Managed Health Care.

Members of the family that founded the California health plan will work for Bright Health and lead local market operations.

"We are impressed by Bright Health's seasoned leadership, national scale and depth of experience," said Jeff Davis, the chief executive of Brand New Day, in a statement. "The speed with which they've grown demonstrates the strength of their consumer-focused health care model."

Bright Health was launched and has been led by a number of executives who at one time worked at Minnetonka-based UnitedHealth Group, the massive health care conglomerate that includes UnitedHealthcare, the nation's largest health insurer. Bright Health initially focused on the individual market, which primarily serves people under age 65 who are self-employed or don't get coverage from their employer.

The startup insurer has touted its connections with health care systems in regional markets that partner with the insurance company to coordinate care. These "narrow network" insurance products have become common in the individual market under the ACA.

Bright Health saw enrollment grow from about 24,000 people at the end of 2018 to about 60,000 people by the third quarter of 2019, according to the Star Tribune review. The majority of enrollees at the time were buying individual health plans, as opposed to Medicare coverage.

Through the first three quarters of 2019, Bright Health collected about $211 million in premium revenue in six states, according to the Star Tribune review. For 2020, the company expanded operations into six more states. California stands to become the 13th state with Bright Health coverage.

"This expansion will bring Bright Health Plan's national footprint to a total of 34 markets in 13 states, serving approximately 200,000 members," the company said in a statement. Bright Health currently employs about 464 people, while Brand New Day employs about 305 people.

The acquisition of Universal Care Inc. is the first example of Bright Health buying another health insurer.

Christopher Snowbeck • 612-673-4744