Company continues to meet Colorado financial conditions

AUSTIN, TX — On March 23, the Texas Department of Insurance placed Friday Health Insurance Company Inc. (Texas) into liquidation. Texas Insurance Commissioner Cassie Brown has been appointed to liquidate and take possession of the company.

The company was founded in 2015, and business peaked in May of 2022 with over 400,000 members in seven states. Last November, the Texas Department of insurance ordered Friday to cease offering plans as of 2023, a loss of about 75% of the total membership. The company also pulled out of New Mexico.

In court documents filed in Travis County, Texas, several findings of fact are recorded, including:  "Defendant [Friday Health] does not have admitted assets at least equal to all its liabilities together with a minimum surplus of $1,400,000 required to be maintained under Section 841.054. Defendant is insolvent...The continued conduct of the business of Defendant would not be in the best interest of Defendant's policyholders, creditors, or the public."

The liquidation only applies to operations in Texas. Vincent Plymell with the Colorado Department of Regulatory Agencies, Department of Insurance said in an email to the Valley Courier, "Friday Health in Colorado continues to meet the financial standards to be licensed as a health insurance company under Colorado law. The decision for the Texas entity of Friday is concerning, and the Division will continue to monitor the finances of Friday here in Colorado."

According to the healthcare industry publication, Beckers Payers, the law firm of Cantilo & Bennett, is now in control of day-to-day operations in Texas, and, "Any remaining claims will be paid by the Texas Life and Health Insurance Guarantee Association, meaning health plans in Texas could be financially impacted."

In financial records obtained by the Valley Courier from the Texas Department of Insurance, Friday Health [Texas] had total liabilities of $526.5 million and a net income (loss) of $159.3 million in financial statements as of September 30, 2022.

Ari Gottlieb, a financial analyst with A2 Strategic, wrote about the liquidation on Linkedin, "In Texas, it will be one of the largest health insurance failures ever. After almost $300 million in losses in just three years and ending with a quarter-billion-dollar liability, the Texas Department of Insurance moved to liquidate Friday Health Plans' Texas subsidiary."

Gottlieb told the Valley Courier, "Friday operates in the individual market and it is very price sensitive. The way that they were able to turbo-charge their growth was by ultimately underpricing their product. They missed badly in Texas. They had explosive growth and with explosive growth, they suffered explosive losses." Gottlieb added that Friday Health (Texas) has a $536 million payment due in August to the federal Department of Health and Human Services and about $285 million in cash on hand.

The company was founded in 2015, and business peaked in May of 2022 with over 400,000 members in seven states. Last November the Texas Department of insurance ordered Friday to cease offering plans as of 2023, a loss of about 75% of the total membership. The company also pulled out of New Mexico.

In November of last year, Friday Health Plans laid off 55 Alamosa-based employees and will lay off an additional 98 workers at the end of April.

One Friday Health employee who will be laid off soon spoke to the Valley Courier on the condition of anonymity, said this about their experience with the company, "It is very sad what is happening [to Friday Health] it started out as an oasis, working there. Everything was provider, and member friendly, very people-centric. Within the last year, the bottom fell out, week after week, a drip of bad news.

"When I started, it was very exciting; everyone was so positive, and everyone could voice their opinions. You felt like your voice mattered, maybe we disagreed, but people were willing to hear what you had to say...it started so great, and it is ending so spectacularly bad."

According to court documents, the owners of Friday (Texas) are Vestar Managers VII LLC [and related companies], Peloton Equity GP, LLC, Vestar Managers [and related companies), Biscayne Group SA, FHP Investment LP.

The Valley Courier has reached out to Friday health with specific questions that were not answered and has been directed to the Friday Health website.

On its website, Friday Health has this, "In coordination with the Texas Department of Insurance, Friday Health Plans will wind down its Texas business operations. Friday members in Texas will continue to have access to their benefits without disruption until then. This development in Texas does not impact our business operations in any other states."