Oscar Health, Clover Health and Bright Health Group cited a variety of reasons for their financial misses, which ranged from a slew of unfamiliar customers gained during the special enrollment period, to technology problems, to high medical costs driven by the COVID-19 pandemic. Clover Health and Oscar Health framed their losses as promising signals. The former said it would be profitable this year if a few non-recurring expenses and one-time costs were excluded, while the latter highlighted membership growth and promised its insurance arm would be in the black by next year.

Alignment Healthcare, a Medicare Advantage-focused insurer with 86,100 members, appears like an exception among the upstart insurers. The company nearly broke even on a per-enrollee basis and reported a comparatively small net loss of $178 million.

According to Alignment Healthcare CEO John Kao, the company’s strategy to grow incrementally is working, he told investors when the insurer announced its earnings last Thursday. Alignment Healthcare identifies as a “payvider” and uses artificial intelligence to help its clinicians identify care opportunities.

“It’s always going to be competitive,” Kao said. “The legacy players are very good at this. You’ve got a lot of new entrants that have been very aggressive. I would say that the question at hand is the sustainability of the degree of aggressiveness.”

Bright Health Group lost $1.17 billion last year and will lose another $1.4 billion this year, according to an analysis by Cowen and Company. During the company’s fourth quarter earnings call last week, CEO Mike Mikan said he expects to lose up to $800 million in 2022 but promised the startup had “sufficient liquidity to meet our near-term needs.”

“Entering into the biggest markets in healthcare—Texas and Florida—has taken a lot of capital,” Mikan said. “We’re in those markets. We’ve got a strong capital position. As we’ve talked about before, once you get to scale, you don’t have the capital burn rate that you do leading up to it. We feel we’re in a favorable position.”

Bright Health Group has reached the appropriate scale to more effectively negotiate with vendors and providers and to manage population risk in 2022, Mikan said. The company also implemented a new technology platform that processes claims more efficiently, he said.

To help stabilize its losses, the insurer plans to hike premiums and potentially exit some of its more expensive markets in 2022. The company’s insurance arm also laid off about 5% of its workforce last week. Bright Health Group’s lackluster financial performance has turned into a legal fight. Bright faces a proposed class-action lawsuit from investors who allege the startup misled them about its operations at the time of its initial public offering last year.

Brigh Health Group essentially ran out of cash at the end of 2021 and received a $550 million bailout from Cigna. As part of the deal, Cigna has the right to match any buyout offer the startup receives, Gottlieb said. Former Cigna executive Matt Manders— who oversaw the big insurer’s $67 billion Express Scripts pharmacy integration and headed its government business—joined Bright Health Group as an independent director in February.

Cigna is likely to acquire Bright Health Group in the coming months, Gottlieb said. Cigna is attracted to the insurtech’s Medicare Advantage business and its NeueHealth provider services arm, which accounted for $86.9 million in losses last year, he said.

“There’s actually some value in Bright above what they’re trading,” Gottlieb said. “The pieces of value that it has are not their individual business. It’s the Medicare Advantage assets they purchased in California and the provider business in Florida. Those have more value than where it’s trading today. The rest of Bright is worthless and should just be shut down.”

There are signs that Bright Health Group is poised to be acquired, said Adam Block, a health economist and associate professor at New York Medical College, including Cigna’s investment, Manders coming aboard and CEO Simeon Schindelman resigning last month. And consolidation is already taking place across the insurance sector, he said.

Although Block acknowledges it’s too soon to make predictions, he believes none of these insurtechs have promising futures as independent companies.

“Oscar has an excellent brand value, as does Bright and some other insurtechs. I think there are aspects to them that could be synergistic,” Block said. “In addition, we see lots of insurer consolidation. That has been the trend in the industry. I don’t see why it would be any different for larger insurers buying insurtechs.”

For example, Molina Healthcare has invested in several smaller Medicare and Medicaid carriers over the past year, Block said. Consolidation efforts led by Cigna and Centene contributed to a 23% decline in the number of Medicare Part D prescription drug plans available this year, according to data compiled by the Kaiser Family Foundation.

As an alternative to being subsumed by larger national carriers, insurtechs could partner with regional health insurance companies that lack the resources to build consumer-focused technology platforms, said Rick Kes, a healthcare partner at RSM. Health First Health Plans in Florida outsourced its tech operations to Oscar Health, for example, and there will be more of in these types of deals, he said.

“You’re going to have to wait out some of this early, bumpy road to get to a point where you know what companies survive,” Kes said. “Hopefully, some become profitable through just survival of the fittest.”