Clover Health Investments, Corp. Q2 FY2025 earnings call

• Execution of strategy: Clover is executing well against its strategy, having exceeded adjusted EBITDA profitability target in 2024, and achieving membership and revenue growth in 2025 while maintaining adjusted EBITDA profitability. - Technology - first care model value: Bringing earlier care management via Clover Assistant technology to Medicare Advantage seniors, and a clinical white paper on COPD showed a relationship with Clover Assistant provider was correlated with fewer hospitalizations and readmissions. - Future outlook: 2026 is a 4 - star payment year, and Clover expects to accelerate growth and profitability. The new Health Tech ecosystem initiative by CMS and the White House resonates with Clover's foundational principles. - Counterpart Health progress: Clover Assistant technology has broad interest and uptake from third - party risk - bearing entities, with resonance in plans needing assistance with star ratings, HEDIS quality scores, and cost management, and a pilot with independent pharmacies.

In the second quarter of 2025, Clover Health's Medicare Advantage book continued to grow membership. Second - quarter 2025 Medicare Advantage membership grew 32% year - over - year to above 106,000 members. Insurance revenue in the second quarter increased 34% to $470 million, and year - to - date insurance revenue reached $927 million, a 34% increase compared to the prior year period. Adjusted SG&A as a percentage of total revenues improved to 17% this quarter, a 280 basis point improvement year - over - year. In the second quarter, adjusted EBITDA was $70 million and adjusted net income was $70 million. Year - to - date, adjusted EBITDA reached $43 million and adjusted net income is $42 million. The insurance BER was 88.4% in the second quarter of 2025, bringing the year - to - date insurance BER to 87.3%, and the full - year insurance BER guidance was updated to a range of 88.5% to 89.5%.

• Medicare Advantage membership guidance: Increased to average between 104,000 and 108,000 members. - Insurance revenue guidance: Between $1.800 billion and $1.875 billion. - Adjusted SG&A guidance: Between $335 million and $345 million. - Adjusted EBITDA and adjusted net income guidance: Between $50 million and $70 million. - Insurance BER guidance: Range of 88.5% to 89.5%. - 2026 outlook: Anticipates building on 2025 strategy with a sharper focus on profitable growth in bids, emphasizing expansion of Clover Assistant's reach and member cohort management, and benefits from being in a 4 - star payment year.

• Part D IRA changes: First year of the IRA changes brings variability in modeling performance as there is less historic baseline. - Industry managed care pressures: Broader industry pressures in managed care, and elevated cost trends in Medicare Advantage. - Part B utilization: Elevated Part B utilization levels pose a risk. - Market plan data: Not all market plan data is available yet, which is a risk.

Q: The MCR BER came in above expectations. How much conservatism is embedded in there and how much visibility do you have into how that trend will develop in the back half of the year?

A: The increase in the BER guide for the full year is mostly related to Part D and supplemental, mostly actually dental. There's some relief on the Part D pressure from the IRA as we go into 2026. And as we model out parts, especially the Part D side which is the first year, we are still figuring out what the baseline models look like, and the direct subsidy will increase going to 2026 so industry - wide will price it in going into next year.

Q: What are the drivers for the improvement in adjusted SG&A? Are you holding back on some hiring or finding new efficiencies within the model?

A: Mostly cost efficiencies. We started a company - wide cost initiative to rationalize the price and volume terms we get with most of our partnership contracts. Now that we are growing well off the industry, and we're estimating that same growth also to remain for the next couple of years, so a lot of that also comes from term renegotiations with partners.

Q: What kind of response have you been getting from the COPD white paper? Are there other similar types of papers that you can publish that kind of highlight the benefits of using CA and kind of driving incremental business?

A: We're very proud of these papers that we're putting out. We plan to keep producing this material, and we think that Clover Assistant definitely in our data shown to be as you can see the white paper is correlated with management, care, total cost of care. It also flows into how we're talking about being in the counterpart context as well, where we point to these results that are being driven by our technology with our own plan, and it's something that we can bring to other plans in other markets.

Q: Is the elevated cost trend you're seeing like kind of more localized in that like on a newer cohort? Or is it pretty broad based? Is there any differences in geography there?

A: The cohorts in our unique model, tech - first model are performing as expected in line. So for Part D and supplemental, we don't see a specific split or between new and returning members. And as we model out parts, especially the Part D side which is the first year, we are still figuring out what the baseline models look like, and the direct subsidy will increase going to 2026 so industry - wide will price it in going into next year, and we are also making sure that we keep an eye on supplemental benefits throughout the year.

Q: Is there anything like different that you'd call out on how your competitors are approaching this year going into 2026? Are they like maybe pulling back a little bit less than they did last year?

A: I think that, obviously, we're noting that cost trends like within managed care in general and even Medicare Advantage, there's been a lot of motion this year by the national players. The way that we see it is that the products that they're most pulling back, while all of them pretty much are pulling back to some extent, where they're pulling back count and where they're pulling back is generally within that PPO, white work they struggle to deploy their existing managed care capabilities I think that's an area where we are very strong based upon our technology from the counterpart side. So we feel good in our core markets, we feel that that people are pulling back, they're quite likely to pull back within those same markets because those are challenging for the same reasons that they're good for us. So that's why within our commentary, we said that while we don't have all the data yet, we feel like we're likely to be very well placed into this coming growth season.