CLOVER HEALTH INVESTMENTS, CORP. /DE Q1 FY2025 earnings call

Key Points - MA Plan Growth: 30% jump in MA membership, 33% revenue growth, 279% adjusted EBITDA growth year-over-year, driven by focus on providing right healthcare at right time, higher-quality and affordable. - Clover Assistant: Powers primary care, helps manage conditions like Congestive Heart Failure, leading to better care and fewer hospital visits. Also aids in navigating industry changes like HCC v28 phase. - Clover Care Services: Delivers personalized in-home care visits and coordinated care services, helping members transition from hospital stays and providing support for advanced illnesses. - CMS 2026 Rate Notice: Positive for the company, adding to momentum, especially with the upcoming 4 Star PPO plan. - Counterpart Health: Opportunity to partner with others and expand Clover Assistant's reach, with ongoing deal flow and efforts to add implementation resources for partners.

In the first quarter of 2025, Clover Health saw significant performance in its Medicare Advantage (MA) segment. MA membership jumped by 30%, revenue grew by 33%, and adjusted EBITDA soared 279% year-over-year. Insurance revenue was $457 million, a 34% year-over-year increase. The MA plan growth is driven by focus on providing right healthcare at the right time, being higher-quality and more affordable. Clover Assistant plays a key role, as seen in its impact on managing Congestive Heart Failure and improving care outcomes. The Part C and Part D utilization costs tracked as expected, and the HCC v28 phase was navigated smoothly with Clover Assistant.

Guidance - Medicare Advantage membership is expected to average between 103,000 and 107,000 members, reflecting 30% year-over-year growth at midpoint. - Insurance revenue is between $1.8 billion and $1.875 billion, reflecting 37% year-over-year growth at midpoint. - Adjusted SG&A is between $355 million and $365 million. - Adjusted EBITDA guidance is increased to between $50 million and $70 million. - Adjusted net income guide is increased to between $50 million and $70 million. - Insurance BER is expected to be within 87% to 88%.

Risks - Factors that may cause actual results to differ materially from expectations are detailed in SEC filings, including in the Risk Factors section of the most recent Annual Report on Form 10-K and other SEC filings. These include uncertainties related to market conditions, competitive landscape, and regulatory changes.

Q: Can you provide any color on how core medical trends are progressing there between kind of new versus the existing cohorts? And, how are members hitting the out-of-pocket drug max? Is it trending in-line with your expectations? And, has there been any change in behavior there?

A: Overall, cost trends are as expected. Both new members cohorts and returning members cohorts are trending in the way both in actuals and what we see in the coming quarters as expected as well.

Q: Just any color on how that go-to-market strategy is progressing, if there's been any more bigger wins and kind of as we look ahead, when can we start seeing contribution?

A: We remain excited about the Counterpart business, and we are looking to provide more updates on that as we grow up throughout the year. All contributions, revenue, etcetera, will of course be in the consolidated financials as well. And, we're going to be talking more about that as we proceed in the quarter. But right now, we're very focused on making sure that we improve profitability in the Insurance segment.

Q: Have you had some, I guess, feedback or how have the initial implementations gone and what are you hearing from those partners regarding kind of the key metrics that you would be looking from for once the platform is implemented and they've kind of had a chance to use it for a little bit?

A: The key KPIs we're looking for are whether we still see engagement with the physicians, earlier diagnosis and management of diseases, and improvement on the HEDIS side of things. Our initial data makes us feel optimistic, and our goal is for those metrics to be effectively equivalent to what we see within our own MA plan.

Q: Given some of your success over the past call it couple of years, has there been any changes in the competitive landscape? Are you seeing some of your peers adapting or kind of shifting to your model a little bit more? Are you seeing any new competitive entrants and how does that kind of change your game plan if at all?

A: We've been focused on the PPO and wide network with software backing for managing care. Others have struggled a bit on the PPO, pulling back on benefits, marketing, and commissions. We are staying the course, feeling our model is highly differentiated and working well.

Q: First, in terms of New Jersey, obviously, you have great penetration there. And, I'm curious with respect to this accelerating growth, how you think about like are you bumping up on where you can go in New Jersey and then do you have to go to new markets? And the second part of the question is you mentioned this affiliated entity related to BER, if you can go into that a little bit more for us as well?

A: Regarding New Jersey, we have plenty of room to run within the market. As for the affiliated entity related to BER, it's meant to drive higher-quality and better care for members, with activities including care coordination, care management, and partnerships with local physicians. Drivers of BER include new members in headwinds offset by returning members, MedEx trend, timing, and the role of the CA-enabled affiliated entity.