Clover Health Investments, Corp. Q4 FY2025 earnings call

• 2025 achieved full-year adjusted EBITDA profitability, well-controlled medical cost trend, and re-established market-leading membership growth despite industry challenges. • 2026 entered with exceptional member retention, more operating experience, and focus on deep Clover Assistant engagement, expecting first full year of GAAP net income profitability. • 2027 views broader MA policy direction aligned with business, supports unlinked chart review records proposal, model built on encounter-based documentation. • Core New Jersey market leadership, technology-driven model, and Counterpart health as growth engine. • 2025 demonstrated financial resilience, growing membership above market with underwriting discipline, delivering adjusted EBITDA profitability in three and a half star payment year.

Medicare Advantage membership increased 38% year over year to approximately 114,000 members at year end. Insurance revenue in the fourth quarter was $486 million, an increase of 47% year over year. 2025 insurance revenue was $1.9 billion, an increase of 41% year-over-year. 2025 total revenue increased 40% year-over-year. Consolidated gross profit for the full year 2025 was $356 million. Insurance segment BER for 2025 was 90.9%, an increase of 970 basis points year over year. Fourth quarter adjusted SDNA of $98 million was slightly above expectations. Adjusted SD&A as a percentage of total revenue was 20% in the fourth quarter, improving 560 basis points year-over-year, and it was 17% for the full year, improving 410 basis points year-over-year. 2025 delivered $22 million of adjusted EBITDA and $20 million of adjusted net income.

• 2026 Medicare Advantage membership expected to average between 154,000 and 158,000 (46% growth at midpoint). • Total revenue expected to be between $2 billion and $810 million and $2 billion and $920 million. • Consolidated gross profit expected to be between $470 million and $510 million. • Adjusted EBITDA expected to be between $50 million and $70 million. • 2026 expected to be first full year of GAAP net income profitability with net income between breakeven and $20 million. • Drivers include strong 2025 execution, strong returning member retention, 2026 four-star payment year, favorable Part C final rate notice, expansion of Clover Assistant coverage, cost-efficient acquisition channels, Part D optimization, targeted remediation, and SG&A leverage.

• New member dilution impact on near-term profitability. • Potential unintended consequences of unlinked chart review records proposal related to switchers. • Industry pressure on medical costs, quality performance, and fragmented health data. • Dependence on specific market conditions and policy changes affecting Medicare Advantage.

Q: Can you talk about the driver of gross profit margin stepping down 150 bps year on year given improving cohort economics and membership cohorts, especially in four star payment year?

A: Peter said it's about leverage as they grow, large new cohort from 53% growth in AAP, confident in improving profitability of new group as it moves into year two, with volume leverage. Andrew added it's reasonable given significant growth and new cohort being less dilutive than other models.

Q: How about the risk model change and effective growth rate in CMS's rate update for 2027?

A: Peter said CMS's rate update trend is reasonable, industry expected higher, CMS looked at recent data, rate might move up but not relying on it. On risk adjustment, increasing data linking is good, but CMS needs to provide data for switching members to link claims and clinical data.

Q: Any update on counterpart health and its contribution to 2026 guidance?

A: Strategy is to bring significant number of folks under counterpart assistant management similar to Clover Assistant, no material economic guidance yet but making progress.

Q: Success proportion of new cohort being seen by CA-empowered physician in 2026?

A: Focus growth in core markets where expected same CA penetration as historical, want to increase further, Georgia is new market with focus on growing CA network there.