Clover Health Investments(US:CLOV)2025-05-09 12:05markdown [FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) [Filing Details](index=1&type=section&id=Filing%20Details) This document is a Quarterly Report on Form 10-Q for the period ended March 31, 2025, filed by Clover Health Investments, Corp. The company is an accelerated filer and is not a shell company - The report is a **Quarterly Report on Form 10-Q** for the period ended March 31, 2025[2](index=2&type=chunk) Filing Status Indicators | Indicator | Status | | :-------------------------------- | :----- | | Filer Type | **Accelerated filer** | | Shell Company | **No** | | Class A Common Stock Symbol | **CLOV** | | Class A Common Stock Outstanding (May 2, 2025) | **416,541,578 shares** | | Class B Common Stock Outstanding (May 2, 2025) | **92,375,003 shares** | [Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Forward-Looking Statements Disclosure](index=3&type=section&id=Forward-Looking%20Statements%20Disclosure) This report contains forward-looking statements subject to various risks, uncertainties, and assumptions, including those detailed in the 'Risk Factors' section, with actual results potentially differing materially from expectations - Forward-looking statements are based on current expectations and projections about future events and trends, subject to risks, uncertainties, and assumptions[10](index=10&type=chunk) - Key risks include expectations regarding operations, financial condition, cash flows, development of the Insurance business, adoption of Clover Assistant, market entry, regulatory changes (ACA, Medicare), beneficiary and provider network management, Star Ratings, new feature development, employee retention, investment timing, litigation, stock price fluctuations, intellectual property, general economic conditions, inflation, and interest rates[12](index=12&type=chunk) - The company cautions against undue reliance on forward-looking statements and undertakes no obligation to update them, except as required by law[11](index=11&type=chunk) [Additional Information and Disclosure Channels](index=4&type=section&id=Additional%20Information%20and%20Disclosure%20Channels) Clover Health's SEC filings are available free of charge on its website, and the company uses various channels, including SEC filings, press releases, and social media, to disclose material information - Company's **SEC filings** are available free of charge on its website: www.cloverhealth.com[15](index=15&type=chunk) - Material information is routinely announced via **SEC filings**, press releases, public conference calls, presentations, webcasts, and the investor relations page of its website (investors.cloverhealth.com)[16](index=16&type=chunk) - Social media channels (@CloverHealth, CloverHealth on X, and LinkedIn accounts of CEO and CFO) are also used for disclosing information, though not all social media content is material[16](index=16&type=chunk) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Clover Health's unaudited condensed consolidated financial statements, including Balance Sheets, Statements of Operations, Statements of Changes in Stockholders' Equity, and Statements of Cash Flows, along with detailed explanatory notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Summary | Metric (in thousands) | March 31, 2025 | December 31, 2024 | Change (vs. Dec 31, 2024) | | :-------------------- | :------------- | :---------------- | :------------------------ | | **Assets** | | | | | Cash and cash equivalents | **$155,439** | **$194,543** | **$(39,104)** | | Total current assets | **$331,409** | **$343,124** | **$(11,715)** | | Total assets | **$583,717** | **$580,742** | **$2,975** | | **Liabilities** | | | | | Unpaid claims | **$151,038** | **$156,396** | **$(5,358)** | | Total current liabilities | **$215,653** | **$213,516** | **$2,137** | | Total liabilities | **$247,642** | **$239,599** | **$8,043** | | **Stockholders' Equity** | | | | | Total stockholders' equity | **$336,075** | **$341,143** | **$(5,068)** | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Income Statement Summary | Metric (in thousands, except per share) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Premiums earned, net | **$456,906** | **$341,722** | **$115,184** | | Other income | **$5,425** | **$5,200** | **$225** | | Total revenues | **$462,331** | **$346,922** | **$115,409** | | Net medical claims incurred | **$353,442** | **$265,162** | **$88,280** | | Salaries and benefits | **$59,022** | **$59,223** | **$(201)** | | General and administrative expenses | **$50,675** | **$44,569** | **$6,106** | | Total operating expenses | **$463,605** | **$369,625** | **$93,980** | | Loss from continuing operations | **$(1,274)** | **$(22,703)** | **$21,429** | | Net loss | **$(1,274)** | **$(19,170)** | **$17,896** | | Basic and diluted loss per share (continuing operations) | **$0.00** | **$(0.05)** | **$0.05** | | Comprehensive income (loss) | **$236** | **$(19,360)** | **$19,596** | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) - **Total stockholders' equity decreased** from **$341,143 thousand** at December 31, 2024, to **$336,075 thousand** at March 31, 2025[24](index=24&type=chunk) - Key changes include **$26,437 thousand** in **stock-based compensation**, **$1,510 thousand** in **unrealized gains** on available-for-sale investment securities, and a **net loss** of **$1,274 thousand**[24](index=24&type=chunk) - The company repurchased **common stock** totaling **$18,297 thousand** and acquired **treasury stock** of **$13,659 thousand** during the three months ended March 31, 2025[24](index=24&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Net cash (used in) provided by operating activities | **$(16,293)** | **$25,935** | **$(42,228)** | | Net cash provided by investing activities | **$8,930** | **$9,185** | **$(255)** | | Net cash used in financing activities | **$(31,741)** | **$(3,359)** | **$(28,382)** | | Net (decrease) increase in cash and cash equivalents | **$(39,104)** | **$31,761** | **$(70,865)** | | Cash and cash equivalents, end of period | **$155,439** | **$208,255** | **$(52,816)** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Organization and Operations](index=9&type=section&id=Note%201.%20Organization%20and%20Operations) Clover Health empowers physicians with its Clover Assistant software to manage chronic diseases early, offering affordable Medicare Advantage plans, and in 2024, launched Counterpart Health to extend its AI-powered care management platform - Clover Health's core strategy is to empower physicians with technology (Clover Assistant) to identify and manage chronic diseases early, providing affordable, high-quality Medicare Advantage plans (PPO and HMO)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - In **2024**, the company launched Counterpart Health, Inc., a Software-as-a-Service (SaaS) and Tech Enabled Services Solution, to offer its AI-powered care management platform to external Medicare Advantage payors and providers[32](index=32&type=chunk) - Counterpart Health aims to extend the benefits of Clover's technology for new potential growth and high-margin business opportunities with low startup costs[32](index=32&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=9&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) The financial statements adhere to GAAP and SEC regulations, relying on management estimates for key areas, with the company operating as one 'Insurance' segment and evaluating new accounting pronouncements for future impact - The condensed consolidated financial statements are prepared in conformity with GAAP and SEC rules, including normal recurring adjustments[34](index=34&type=chunk) - Significant estimates are made for incurred but not reported claims, risk adjustment provisions, investment securities valuation, reinsurance, premium deficiency reserve, stock-based compensation, and recoveries from third parties[37](index=37&type=chunk) - The Company operates as one reportable segment: Insurance, providing PPO and HMO plans to Medicare Advantage members[41](index=41&type=chunk) - New accounting pronouncements ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation) are effective in future periods (fiscal years beginning after Dec 15, 2024, and Dec 15, 2026, respectively) and are currently being evaluated for impact[46](index=46&type=chunk)[47](index=47&type=chunk) [Note 3. Investment Securities](index=11&type=section&id=Note%203.%20Investment%20Securities) At March 31, 2025, total investment securities were **$235.2 million**, a decrease from **$242.6 million** at December 31, 2024, with net investment income of **$4.6 million** for Q1 2025, and all securities were investment grade Investment Securities Summary | Investment Category (in thousands) | March 31, 2025 (Fair Value) | December 31, 2024 (Fair Value) | Change | | :--------------------------------- | :-------------------------- | :----------------------------- | :----- | | Held-to-maturity securities | **$14,011** | **$13,928** | **$83** | | Available-for-sale securities | **$221,162** | **$228,716** | **$(7,554)** | | Total | **$235,173** | **$242,644** | **$(7,471)** | Net Investment Income | Net Investment Income (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Investment income, net | **$4,608** | **$4,468** | **$140** | - At March 31, 2025, all securities were **investment grade** (BBB or higher), and unrealized losses were not indicative of impairment, primarily related to changes in interest rates[50](index=50&type=chunk) [Note 4. Fair Value Measurements](index=13&type=section&id=Note%204.%20Fair%20Value%20Measurements) The company's financial instruments measured at fair value totaled **$221.9 million** at March 31, 2025, primarily comprising Level 2 securities and Level 3 warrants receivable, which remained at **$0.8 million** with no recognized unrealized losses Fair Value of Financial Instruments | Financial Instrument (in thousands) | March 31, 2025 (Fair Value) | December 31, 2024 (Fair Value) | | :---------------------------------- | :-------------------------- | :----------------------------- | | U.S. government and government agencies | **$129,068** | **$138,261** | | Corporate debt securities | **$91,808** | **$88,502** | | Other | **$286** | **$1,953** | | Warrants receivable (Level 3) | **$764** | **$764** | | Total assets at fair value | **$221,926** | **$229,480** | - Private warrants, accounted for as **Level 3 assets**, had a fair value of **$0.8 million** at March 31, 2025, with no unrealized losses recognized during the quarter[53](index=53&type=chunk) [Note 5. Healthcare Receivables](index=14&type=section&id=Note%205.%20Healthcare%20Receivables) Healthcare receivables, encompassing pharmaceutical rebates, Medicare Part D settlements, and member premiums, increased to **$53.5 million** at March 31, 2025, from **$51.5 million** at December 31, 2024 - Healthcare receivables include pharmaceutical rebates, Medicare Part D settlement receivables, member premium receivables, and other CMS receivables[54](index=54&type=chunk) Healthcare Receivables Summary | Metric (in thousands) | March 31, 2025 | December 31, 2024 | | :-------------------- | :------------- | :---------------- | | Healthcare receivables | **$53,529** | **$51,539** | [Note 6. Related Party Transactions](index=14&type=section&id=Note%206.%20Related%20Party%20Transactions) Expenses with CarePoint Health System and Credo increased in Q1 2025, and Thyme Care expenses rose significantly to **$2.7 million**, reflecting expanded clinical services and value-based payment terms - Expenses related to contracts with CarePoint Health System, for which Vivek Garipalli previously held control, increased from **$0.5 million** in Q1 2024 to **$1.8 million** in Q1 2025[55](index=55&type=chunk)[56](index=56&type=chunk) - Expenses with Credo (formerly ChartFast), in which Mr. Garipalli has an indirect interest, increased from **$0.1 million** in Q1 2024 to **$0.2 million** in Q1 2025[57](index=57&type=chunk) - Expenses with Thyme Care, where Mr. Garipalli is a board member and equity holder, increased from none in Q1 2024 to **$2.7 million** in Q1 2025, reflecting expanded clinical services and value-based payment terms[58](index=58&type=chunk) [Note 7. Unpaid Claims](index=15&type=section&id=Note%207.%20Unpaid%20Claims) The **unpaid claims liability decreased** to **$151.0 million** at March 31, 2025, driven by faster claims processing and a **favorable development** of **$11.5 million** for prior years' claims Unpaid Claims Activity | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Gross and net balance, beginning of period | **$156,396** | **$137,100** | | Total incurred | **$346,376** | **$260,224** | | Total paid | **$351,734** | **$157,841** | | Gross and net balance, end of period | **$151,038** | **$239,483** | - **Unpaid claims liability decreased** due to improved claim submission and payment processes, leading to a faster claims processing speed[60](index=60&type=chunk) - A **favorable development** of **$11.5 million** was recognized in Q1 2025 for prior years' claims, compared to **$17.6 million** in Q1 2024[60](index=60&type=chunk) [Note 8. Variable Interest Entity and Equity Method of Accounting](index=15&type=section&id=Note%208.%20Variable%20Interest%20Entity%20and%20Equity%20Method%20of%20Accounting) Clover Health's **ownership interest** in Character Biosciences, a variable interest entity, decreased to approximately **9.1%** as of March 31, 2025, with no shared loss recognized in Q1 2025 due to prior cumulative losses reducing the investment carrying amount to zero - Clover Health's **ownership interest** in Character Biosciences decreased to approximately **9.1%** as of March 31, 2025[61](index=61&type=chunk) - The company accounts for its investment in Character Biosciences using the equity method, but recognized no shared loss in Q1 2025 as the investment carrying amount was reduced to zero by cumulative shared losses as of March 31, 2024[62](index=62&type=chunk)[63](index=63&type=chunk) [Note 9. Employee Benefit Plans](index=16&type=section&id=Note%209.%20Employee%20Benefit%20Plans) The company maintains a 401(k) Plan and various equity incentive plans, with **total stock-based compensation expense** of **$26.4 million** in Q1 2025 and approximately **$383.0 million** in unrecognized expense at March 31, 2025 - The company's **401(k) Plan** includes safe harbor matching contributions, amounting to approximately **$0.5 million** for both Q1 2025 and Q1 2024[64](index=64&type=chunk) Stock-based Compensation Expense | Stock-based Compensation (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Stock options | **$178** | **$618** | | RSUs | **$23,024** | **$20,917** | | PRSUs | **$3,083** | **$7,213** | | ESPP | **$152** | **$50** | | Total compensation cost | **$26,437** | **$28,798** | - At March 31, 2025, there was approximately **$383.0 million** of unrecognized **stock-based compensation expense** related to unvested stock options, RSUs, PRSUs, and the ESPP[70](index=70&type=chunk) [Note 10. Income Taxes](index=20&type=section&id=Note%2010.%20Income%20Taxes) The company's consolidated **effective tax rate** was **0.0%** for both Q1 2025 and Q1 2024, as it remains in a **net operating loss** position with a **valuation allowance** reducing **net deferred tax assets** to zero - The consolidated **effective tax rate** was **0.0%** for the three months ended March 31, 2025 and 2024[80](index=80&type=chunk) - The company remains in a **net operating loss** position and has recorded a **valuation allowance** to reduce **net deferred tax assets** to zero[80](index=80&type=chunk) [Note 11. Net Loss per Share](index=20&type=section&id=Note%2011.%20Net%20Loss%20per%20Share) **Basic and diluted net loss per share** from continuing operations was **$0.00** for Q1 2025, an improvement from **$(0.05)** in Q1 2024, with **99.7 million potentially dilutive securities** excluded due to their anti-dilutive effect Net Loss per Share Details | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss from continuing operations attributable to common stockholders (in thousands) | **$(1,274)** | **$(23,170)** | | Weighted average common shares outstanding, basic and diluted | **497,056,331** | **486,374,644** | | Basic and diluted loss per share from continuing operations | **$0.00** | **$(0.05)** | Potentially Dilutive Shares Excluded | Potentially Dilutive Shares Excluded | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Options to purchase common stock | **24,108,874** | **24,851,924** | | RSUs | **46,399,272** | **49,186,140** | | PRSUs | **29,214,073** | **31,829,294** | | Total excluded shares | **99,722,219** | **105,867,358** | [Note 12. Commitments and Contingencies](index=20&type=section&id=Note%2012.%20Commitments%20and%20Contingencies) The company is involved in various legal proceedings, including an SEC investigation that concluded with no enforcement action, a **securities class action** settled for **$22 million**, and **shareholder derivative actions** settled with **corporate governance enhancements** and a **$2.5 million** payment for counsel fees - The **SEC** concluded its investigation into the company in September 2024, with the Staff not intending to recommend an enforcement action[85](index=85&type=chunk) - A **securities class action** was settled for **$22 million** in October 2023, with **$19.5 million** funded by insurance proceeds[86](index=86&type=chunk) - **Shareholder derivative actions** were settled in February 2024, resulting in **corporate governance enhancements** and a **$2.5 million** payment for plaintiffs' counsel fees, with no monetary payment from the company[87](index=87&type=chunk) [Note 13. Operating Segments](index=22&type=section&id=Note%2013.%20Operating%20Segments) Clover Health operates as one reportable segment, Insurance, which provides Medicare Advantage plans, with its **net loss improved** to **$(19.4) million** in Q1 2025, and **total assets** of **$412.4 million** at March 31, 2025 - The company has one reportable segment: Insurance, which offers PPO and HMO plans to Medicare Advantage members[88](index=88&type=chunk) Insurance Segment Performance | Insurance Segment (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------- | :-------------------------------- | :-------------------------------- | | Premiums earned, net | **$456,906** | **$341,722** | | Net medical claims incurred | **$367,887** | **$266,076** | | Segment net loss | **$(19,390)** | **$(26,590)** | | Total Assets | **$412,426** | **$498,360** | [Note 14. Dividend Restrictions](index=22&type=section&id=Note%2014.%20Dividend%20Restrictions) The company's regulated insurance subsidiaries are subject to state regulations that restrict **dividend payments** to parent companies, requiring prior approval, and neither subsidiary has paid any dividends as of March 31, 2025 - Regulated insurance subsidiaries are subject to state regulations limiting **dividend payments** to parent companies, requiring prior approval[90](index=90&type=chunk) - Neither regulated insurance subsidiary had been authorized to pay, nor paid, any dividends at March 31, 2025, or December 31, 2024[90](index=90&type=chunk) [Note 15. Restructuring costs](index=22&type=section&id=Note%2015.%20Restructuring%20costs) **Restructuring costs** were zero in Q1 2025, down from **$0.4 million** in Q1 2024, as business transformation initiatives, including a **10% workforce reduction**, concluded by December 31, 2024 - **Restructuring costs** were zero in Q1 2025, compared to **$0.4 million** in Q1 2024[91](index=91&type=chunk) - Business transformation initiatives, including transitioning MA operations to UST HealthProof and a **10% workforce reduction**, concluded by December 31, 2024[91](index=91&type=chunk) [Note 16. Discontinued Operations](index=23&type=section&id=Note%2016.%20Discontinued%20Operations) The company recognized no **net income from discontinued operations** in Q1 2025, compared to **$4.0 million** in Q1 2024, reflecting its exit from the **ACO REACH Program** - **Net income from discontinued operations** was zero in Q1 2025, compared to **$4.0 million** in Q1 2024[92](index=92&type=chunk) - The company exited the **ACO REACH Program**, with remaining activities related to the December 2024 settlement with CMS for prior performance years[92](index=92&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Clover Health's financial condition and results of operations for Q1 2025, covering vision, strategy, key performance measures, and a detailed comparison of financial results, liquidity, and capital resources [Overview](index=24&type=section&id=Overview) Clover Health aims to empower physicians with its Clover Assistant platform to manage chronic diseases, offering high-quality, affordable PPO and HMO Medicare Advantage plans to **103,418 members** across five states and **200 counties** as of March 31, 2025 - Clover Health's vision is to empower physicians with technology (Clover Assistant) to identify, manage, and treat chronic diseases earlier[94](index=94&type=chunk) - The company operates PPO and HMO Medicare Advantage plans, focusing on providing high-quality, affordable healthcare with wide network access and low out-of-pocket costs for members[95](index=95&type=chunk) - As of March 31, 2025, Clover Health served **103,418 members** in five states and **200 counties**[95](index=95&type=chunk) [Key Performance Measures](index=24&type=section&id=Key%20Performance%20Measures) Clover Health manages its operations through one Insurance segment, evaluating performance using key metrics such as membership, **premiums earned**, and **medical claim expenses** to assess financial performance, member growth, and the effectiveness of Clover Assistant - The company operates based on one reportable segment: Insurance, which provides PPO and HMO plans to Medicare Advantage members[96](index=96&type=chunk) - Key performance measures include **Insurance members** at period end, **Premiums earned** (gross and net), **Insurance medical claim expense incurred** (gross and net), **Benefits expense ratio** (gross and net), **Adjusted SG&A**, **Adjusted EBITDA**, and **Adjusted Net income from continuing operations**[100](index=100&type=chunk) - Member growth and retention are vital for driving revenues, expanding brand awareness, deepening market penetration, and generating data to improve Clover Assistant's insights and lower **medical claim expenses**[101](index=101&type=chunk) [Non-GAAP Financial Measures](index=26&type=section&id=Non-GAAP%20Financial%20Measures) Clover Health utilizes non-GAAP financial measures, including **Insurance Benefits Expense Ratio (BER)**, **Adjusted SG&A**, **Adjusted EBITDA**, and **Adjusted Net income from continuing operations**, to provide a clearer understanding of its core financial performance and operational trends by excluding items like **stock-based compensation** and non-recurring legal expenses - Non-GAAP measures used include **Insurance BER**, **Adjusted SG&A**, **Adjusted EBITDA**, and **Adjusted Net income from continuing operations**, which are supplemental to GAAP and used by management for performance assessment, planning, and forecasting[109](index=109&type=chunk)[110](index=110&type=chunk) Non-GAAP Financial Metrics | Non-GAAP Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | | :---------------- | :-------------------------------- | :-------------------------------- | :----------- | | Benefits expense ratio, gross | **86.2 %** | **83.6 %** | **2.6 pp** | | Benefits expense ratio, net | **86.1 %** | **83.2 %** | **2.9 pp** | | Adjusted SG&A (in thousands) | **$83,107** | **$74,940** | **$8,167** | | Adjusted SG&A as a percentage of Total revenues | **18.0 %** | **21.6 %** | **(3.6 pp)** | | Adjusted EBITDA (in thousands) | **$25,782** | **$6,820** | **$18,962** | | Adjusted Net income from continuing operations (in thousands) | **$25,316** | **$6,035** | **$19,281** | - **Adjusted SG&A** excludes **stock-based compensation** and non-recurring legal expenses, providing a useful view of operating spend and operational leverage[114](index=114&type=chunk) - **Adjusted EBITDA** and **Adjusted Net income from continuing operations** exclude various non-cash and non-recurring items to provide a clearer understanding of core operating performance[116](index=116&type=chunk)[118](index=118&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) For Q1 2025, **total revenues increased by 33.3%** to **$462.3 million**, driven by **34% growth in net premiums earned** due to increased membership, while **net medical claims incurred** rose by **33%** to **$353.4 million**, and **net loss from continuing operations** significantly reduced by **94.5%** to **$(1.3) million** Consolidated Results of Operations | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | Change (%) | | :-------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Premiums earned, net | **$456,906** | **$341,722** | **$115,184** | **33.7 %** | | Total revenues | **$462,331** | **$346,922** | **$115,409** | **33.3 %** | | Net medical claims incurred | **$353,442** | **$265,162** | **$88,280** | **33.3 %** | | Salaries and benefits | **$59,022** | **$59,223** | **$(201)** | **(0.3) %** | | General and administrative expenses | **$50,675** | **$44,569** | **$6,106** | **13.7 %** | | Net loss from continuing operations | **$(1,274)** | **$(23,170)** | **$21,896** | **(94.5) %** | | Net loss | **$(1,274)** | **$(19,170)** | **$17,896** | **(93.4) %** | - The increase in **net premiums earned** was primarily driven by approximately **30% growth** in members[122](index=122&type=chunk) - **General and administrative expenses increased by 14%** due to higher professional fees and broker fees, the latter driven by membership growth[126](index=126&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) Clover Health expects sufficient liquidity for the next **12 months**, with **total cash, cash equivalents, and investments decreasing** to **$390.8 million** at March 31, 2025, and regulated subsidiaries holding **$265.0 million** subject to dividend restrictions - The company expects its cash, cash equivalents, investments, and projected cash flows to be sufficient to meet operating and regulatory requirements for the next **12 months**[128](index=128&type=chunk) Liquidity and Capital Resources Summary | Metric (in thousands) | March 31, 2025 | December 31, 2024 | | :-------------------- | :------------- | :---------------- | | Total cash, cash equivalents, and investments | **$390,800** | **$437,600** | | Unregulated Entities (Parent & Unregulated Subsidiaries) | **$125,900** | **$151,500** | | Regulated Entities | **$265,000** | **$286,100** | - Regulated insurance subsidiaries are subject to state regulations that restrict their ability to declare and pay dividends to the parent company[131](index=131&type=chunk) [Cash Flows](index=31&type=section&id=Cash%20Flows) In Q1 2025, **net cash used in operating activities** from continuing operations was **$16.3 million**, a significant decrease from **$34.0 million** provided in Q1 2024, while **net cash used in financing activities increased** substantially to **$31.7 million** due to **treasury stock acquisitions** and **common stock repurchases** Cash Flow Summary | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash (used in) provided by operating activities from continuing operations | **$(16,293)** | **$33,954** | | Net cash provided by investing activities | **$8,930** | **$9,185** | | Net cash used in financing activities | **$(31,741)** | **$(3,359)** | - **Operating cash flows** are primarily from capitated payments from CMS, with primary uses for medical benefits and operating expenses[136](index=136&type=chunk) - **Net cash used in financing activities** in Q1 2025 was primarily due to **$13.7 million** in **treasury stock acquired** and **$18.3 million** in repurchases of **Class A Common stock**[141](index=141&type=chunk) [Contractual Obligations and Commitments](index=32&type=section&id=Contractual%20Obligations%20and%20Commitments) The company anticipates sufficient funds from projected **operating cash flows**, cash, cash equivalents, and investments to meet its contractual obligations for at least the next **12 months**, with material cash requirements including **$2.3 million** in **operating lease obligations** - The company expects sufficient funds from projected **operating cash flows**, cash, cash equivalents, and investments to meet future operations and commitments for at least the next **12 months**[143](index=143&type=chunk) - Material cash requirements from known contractual obligations at March 31, 2025, include **$2.3 million** in **operating lease obligations**[144](index=144&type=chunk) [Off-balance Sheet Arrangements](index=32&type=section&id=Off-balance%20Sheet%20Arrangements) Clover Health has no **off-balance sheet arrangements** that are reasonably likely to materially affect its financial condition, results of operations, liquidity, capital expenditures, or capital resources - The company does not have any **off-balance sheet arrangements** that are reasonably likely to have a material effect on its financial condition, results of operations, liquidity, capital expenditures, or capital resources[146](index=146&type=chunk) [Critical Accounting Policies and Estimates](index=32&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) No significant changes occurred in the company's **critical accounting policies and estimates** during the three months ended March 31, 2025, compared to those disclosed in the 2024 Form 10-K - No significant changes in **critical accounting policies and estimates** occurred during the three months ended March 31, 2025[147](index=147&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Clover Health's primary market risk is **interest rate risk** from fixed-maturity investments, with **credit risk** managed by investing in high-quality, diversified, **investment grade** securities, prioritizing capital preservation, liquidity, and modest yield - The primary market risk is **interest rate risk** from fixed-maturity investments[151](index=151&type=chunk) - **Credit risk** on the investment portfolio is managed by investing in high-quality, diversified securities; all fixed-maturity securities were **investment grade** (BBB or higher) at March 31, 2025[152](index=152&type=chunk)[153](index=153&type=chunk) - The investment policy focuses on capital preservation, liquidity, and earning a modest yield[153](index=153&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Clover Health's management concluded that its disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the most recent fiscal quarter - Disclosure controls and procedures were evaluated and deemed effective as of March 31, 2025[154](index=154&type=chunk) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[156](index=156&type=chunk) [PART II. OTHER INFORMATION](index=34&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various legal proceedings, investigations, and claims incidental to its highly regulated business, with detailed information incorporated by reference from Note 12 (Commitments and Contingencies) - The company is subject to various legal proceedings, investigations, and claims incidental to its highly regulated business[158](index=158&type=chunk) - Information concerning legal proceedings is incorporated by reference from Note 12 (Commitments and Contingencies)[159](index=159&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors from those disclosed in the 2024 Form 10-K, but various recurring and new risks could materially adversely affect its business, financial condition, and results of operations - No material changes in risk factors from the 2024 Form 10-K, except as subsequently disclosed in periodic reports[160](index=160&type=chunk) - The company is exposed to a variety of recurring and new risks that could materially adversely affect its business, financial condition, and results of operations[160](index=160&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Board authorized a **$20 million share repurchase program** for **Class A Common Stock** on May 6, 2024, which has been achieved as of March 31, 2025, with **5,069,423 shares** repurchased in March 2025 at an average price of **$3.60 per share** - The Board authorized a **$20,000,000 share repurchase program** for **Class A Common Stock** on May 6, 2024[161](index=161&type=chunk) - As of March 31, 2025, the total authorized dollar value of shares under the repurchase plan has been achieved[161](index=161&type=chunk) Share Repurchase Activity | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :----------------------- | :------------------------------- | :--------------------------- | | March 1 - March 31, 2025 | **5,069,423** | **$3.60** | [Item 3. Defaults Upon Senior Securities](index=34&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the period - No defaults upon senior securities[163](index=163&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[164](index=164&type=chunk) [Item 5. Other Information](index=35&type=section&id=Item%205.%20Other%20Information) Two company officers, Conrad Wai and Jamie Reynoso, adopted **Rule 10b5-1 trading plans** in March 2025 for potential sales of **Class A Common Stock**, facilitating personal financial planning and subject to specified market conditions and cooling-off periods - Conrad Wai, CEO of Counterpart Health, adopted a **Rule 10b5-1 trading plan** on March 3, 2025, for potential sale of up to **1,725,426 shares** of **Class A Common Stock**[166](index=166&type=chunk) - Jamie Reynoso, CEO of Medicare Advantage, adopted a **Rule 10b5-1 trading plan** on March 13, 2025, for potential sale of up to **336,824 shares** of **Class A Common Stock**[167](index=167&type=chunk) - Both plans include a **90-day cooling-off period** and are intended for personal financial planning, including tax and diversification strategies[166](index=166&type=chunk)[167](index=167&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, and Inline XBRL documents - Exhibits include certifications of the Principal Executive Officer and Principal Financial Officer (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[170](index=170&type=chunk) [SIGNATURES](index=37&type=section&id=SIGNATURES) [Signatures](index=37&type=section&id=Signatures) The report is duly signed on behalf of Clover Health Investments, Corp. by Andrew Toy, Chief Executive Officer, and Peter Kuipers, Chief Financial Officer, both dated May 9, 2025 - The report is signed by Andrew Toy, Chief Executive Officer, and Peter Kuipers, Chief Financial Officer, on May 9, 2025[176](index=176&type=chunk)