HomeInsuranceAlamosa News | The rise and decline of Friday Health Plans

Alamosa News | The rise and decline of Friday Health Plans

ALAMOSA — Embattled health insurance provider Friday Health was seized and shut down by Colorado regulators in July 2023. Colorado Insurance Commissioner Michael Conway in June had expressed confidence the company had enough capital to make it through the year. That prognostication proved wrong.

Friday Health was founded in 2015 when entrepreneurs Sal Gentile and David Pinkert bought the Alamosa-based insurance company Colorado Health Plans Inc. They soon renamed the company Friday Health Plans. Gentile and Pinkert left the company in December, 2022.

After a series of private placements to raise capital, Friday Health received $50 million in 2019 from Leadenhall Capital and Peloton Equity. In 2021, Friday raised an additional $160 million from Vestar Capital and Leadenhall who would lend Friday Health an additional $120 million in May of 2022.

Friday Health had a spectacular rise, raising and burning through hundreds of millions of dollars in financing, enrolling 300,000 to 400,000 customers who bought their health insurance from Friday, and the company hiring 300-400 employees. Most of the employees were based in Alamosa.

The unravelling began last year. March of 2022 was by all outward signs from Friday Health, a heady time of growth and expansion. It had bought a parking lot in Alamosa, leased another parking lot, and had plans for an expanded corporate headquarters in Alamosa. The company said it would break ground on the 35,000- square foot Alamosa building located at San Juan Avenue and 6th Street by May or June. Executives said the company was hiring as many as 15 new employees weekly. Those exuberant times would be short-lived.

In November 2022, Friday Health announced it was scaling back from operating in seven states to five states, eliminating offering insurance in Texas and New Mexico. At the time, Tracy Fagin with Friday Health told the Valley Courier the company had a banner year for enrollment, yet “Texas was our largest state in terms of the numbers of members… we enrolled more members than we anticipated which meant increased costs of operations.” The company laid off 55 employees.

New CEO Beth Bierbower was hired to run the company in December 2022.

The year 2023 would bring a steady stream of bad and finally fatal news for Friday Health Plans.

In early March 2023, Friday Health announced 98 employees would be terminated from Alamosa and Denver. In late March officials in Texas placed Friday Health in that state into liquidation.

In April, Friday Health was declared insolvent in Georgia. The company discontinued offering new policies in Oklahoma and North Carolina. Regulators in Oklahoma placed the company under its supervision.

Later in April, the North Carolina Department of Insurance placed the company in a state of “suspended suppression,” effectively barring the company from selling any more insurance.

By mid-April, the Colorado Division of Insurance was advocating changes to state law to protect consumers from failed insurers. Insurance Commissioner Michael Conway told the Valley Courier in an interview regarding the legislation and the actions taken by other states, “The state of Texas has put that license into liquidation, and the state of Oklahoma has taken action against its license. We are concerned about those issues, and we are staying very close to Friday [Health Plans Inc.].”

The company was reported to be in negotiations with creditors seeking additional financing.

In June, Nevada Insurance Commissioner, Scott Kipper, filed legal action with the Nevada District Court to place Friday Health Plans of Nevada under regulatory supervision (referred to as a receivership) due to growing concerns about the “reliability of Fridays. financial reporting to the Division.”

Also in June, regulators in Georgia forced Friday Health into receivership due to “reported insolvency and inability to raise additional funds from outside investors.”

Friday Health would announce that it was unable to raise capital and that it would work with Colorado regulators to cease operations by the end of the year.

In June, after the state of Colorado announced Friday Health would “wind down” operations in Colorado, the company issued this statement, “Friday Health Plans has grown incredibly quickly, which is a testament to our ability to deliver affordability, sustainability, and outstanding customer service. Unfortunately, Friday has been unable to scale our financial infrastructure to match the pace of our growth and secure the additional capital to run our business.”

By June, the lenders to Friday Health were tapped out. Several hundred million dollars were spent on the failed enterprise.

The Colorado Division of Insurance was optimistic Friday could make it through the year, “Currently, based on the company’s financial reporting, the Colorado licensed entity, Friday Health Plan of Colorado, has sufficient capital to continue for the remainder of 2023. Of course, we will continue to monitor the situation as we move forward,” according to a June statement from the Division of Insurance.

On June 19, 2023, Friday Health informed the Colorado Department of Labor and Employment it would lay off 323 employees.

In July, Insurance Commissioner Michael Conway told Colorado Public Radio, “The company literally handed over the keys and said, ‘We’re firing everybody as of July 6th‘.”

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