Clover Health Investments(CLOV) - 2024 Q1 - Quarterly Results

Executive Summary & Business Highlights Clover Health reported strong Q1 2024 financial results, exceeding expectations, and updated its full-year guidance towards profitability, while also authorizing a share repurchase program First Quarter 2024 Performance Overview Clover Health reported strong financial results for Q1 2024, exceeding expectations and demonstrating significant progress towards profitability, with key improvements including a reduced GAAP net loss, positive Adjusted EBITDA, and improved Insurance MCR | Metric | Q1'24 | Q1'23 | Change (%) | | :------------------------------------------------------------------ | :--------- | :--------- | :----------- | | Total revenue | $346.9M | $322.0M | 7.7% | | GAAP Net loss from continuing operations | ($23.2M) | ($79.7M) | (70.9%) | | Adjusted EBITDA (non-GAAP) | $6.8M | ($37.5M) | Favorable* | | Insurance revenue | $341.7M | $317.1M | 7.8% | | Insurance MCR | 77.9% | 86.6% | (870 bps) | | SG&A | $103.8M | $126.6M | (18.0%) | | Adjusted SG&A (non-GAAP) | $74.9M | $84.8M | (11.7%) | Updated Full-Year 2024 Financial Guidance The company has improved its full-year 2024 financial guidance, now targeting Adjusted EBITDA profitability and higher insurance revenue, while also narrowing the Insurance MCR range | Metric | Previous Guidance | Current Guidance | | :------------------------- | :---------------------------- | :---------------------------- | | Insurance revenue | $1.25 billion - $1.30 billion | $1.30 billion - $1.35 billion | | Insurance MCR | 79% - 83% | 79% - 81% | | Adjusted SG&A (Non-GAAP) | $270 million - $280 million | $270 million - $280 million | | Adjusted EBITDA (Non-GAAP) | ($20) million - $20 million | $10 million - $30 million | Strategic Initiatives & Share Repurchase Program Clover Health is focused on leveraging its AI-driven care management platform, Clover Assistant, to thrive in the Medicare Advantage PPO market, and the Board of Directors has also authorized a new share repurchase program - The Board of Directors authorized a share repurchase program of up to $20 million of Class A Common Stock over the next two years[12] - Clover's strategy is built on its care management platform, Clover Assistant, which uses differentiated AI technology and asset-light wraparound care services (Clover Home Care) to power a unique PPO-first offering[13] - The company aims to empower physicians with software to deliver better care at lower costs through earlier identification and management of disease[13] Lives Under Clover Management The number of insurance members under Clover Management decreased slightly year-over-year as of March 31, 2024 | Metric | March 31, 2024 | March 31, 2023 | | :---------------- | :------------- | :------------- | | Insurance members | 79,527 | 83,794 | First Quarter 2024 Financial Statements This section presents Clover Health's consolidated statements of operations, balance sheets, and operating segment data for the first quarter of 2024 Consolidated Statements of Operations The consolidated statements of operations show a significant reduction in net loss from continuing operations for Q1 2024 compared to Q1 2023, driven by increased revenues and decreased operating expenses, particularly in net medical claims and SG&A | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Premiums earned, net | $341,722 | $317,086 | | Other income | $5,200 | $4,906 | | Total revenues | $346,922 | $321,992 | | Net medical claims incurred | $265,162 | $274,789 | | Salaries and benefits | $59,223 | $68,981 | | General and administrative expenses | $44,569 | $57,644 | | Total operating expenses | $369,625 | $401,690 | | Loss from continuing operations | ($22,703) | ($79,698) | | Net loss from continuing operations | ($23,170) | ($79,698) | | Net income from discontinued operations | $4,000 | $7,092 | | Net loss | ($19,170) | ($72,606) | | Basic and diluted net loss per share | ($0.05) | ($0.17) | Consolidated Balance Sheets: Selected Metrics Clover Health maintained a strong liquidity position, with an increase in cash and investments from December 31, 2023, to March 31, 2024, alongside growth in total assets and stockholders' equity | Selected Balance Sheet Data (in thousands) | March 31, 2024 | December 31, 2023 | | :--------------------------------------------------- | :------------- | :---------------- | | Cash, cash equivalents, restricted cash, and investments | $440,279 | $417,317 | | Total assets | $671,770 | $570,671 | | Unpaid claims | $238,602 | $138,593 | | Total liabilities | $379,296 | $284,277 | | Total stockholders' equity | $292,474 | $286,394 | Operating Segments The Insurance segment generated the majority of premiums earned and contributed significantly to gross profit, while the Corporate/Other segment also showed a positive gross profit contribution | Metric (Three Months Ended March 31, 2024, in thousands) | Insurance | Corporate/Other | Eliminations | Consolidated Total | | :------------------------------------------------------- | :--------- | :-------------- | :----------- | :----------------- | | Premiums earned, net | $341,722 | — | — | $341,722 | | Other income | $3,727 | $15,681 | ($14,208) | $5,200 | | Net medical claims incurred | $266,076 | $4,938 | ($5,852) | $265,162 | | Gross profit (loss) | $79,373 | $59,208 | ($56,821) | $81,760 | Non-GAAP Financial Measures This section provides reconciliations and explanations for Clover Health's non-GAAP financial measures, including Adjusted EBITDA and Adjusted SG&A Adjusted EBITDA Reconciliation Clover Health's Adjusted EBITDA significantly improved to a positive $6.8 million in Q1 2024 from a loss of $37.5 million in Q1 2023, after adjusting for non-cash and non-recurring items from GAAP net loss | Metric (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss from continuing operations (GAAP) | ($23,170) | ($79,698) | | Adjustments: | | | | Depreciation and amortization | $318 | $279 | | Loss (gain) on investment | $467 | — | | Stock-based compensation expense | $28,798 | $38,617 | | Premium deficiency reserve benefit | — | ($1,810) | | Restructuring costs | $353 | $1,807 | | Non-recurring legal expenses and settlements | $54 | $3,258 | | Adjusted EBITDA (non-GAAP) | $6,820 | ($37,547) | Adjusted SG&A Reconciliation Adjusted SG&A decreased by 11.7% year-over-year, reaching $74.9 million in Q1 2024, and improved as a percentage of total revenues, reflecting better operational leverage after excluding stock-based compensation and non-recurring legal expenses | Metric (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Salaries and benefits | $59,223 | $68,981 | | General and administrative expenses | $44,569 | $57,644 | | Total SG&A (GAAP) | $103,792 | $126,625 | | Adjustments: | | | | Stock-based compensation expense | ($28,798) | ($38,617) | | Non-recurring legal expenses and settlements | ($54) | ($3,258) | | Adjusted SG&A (non-GAAP) | $74,940 | $84,750 | | Total revenues | $346,922 | $321,992 | | Adjusted SG&A (non-GAAP) as a percentage of revenue | 22% | 26% | Explanation of Non-GAAP Financial Measures Clover Health uses non-GAAP financial measures like Adjusted EBITDA and Adjusted SG&A to provide a clearer view of its core operating performance, excluding non-cash and non-recurring items that management believes do not reflect ongoing business expenses - Adjusted EBITDA is defined as net loss from continuing operations before depreciation and amortization, loss (gain) on investment, stock-based compensation expense, premium deficiency reserve benefit, restructuring costs, and non-recurring legal expenses and settlements[30] - Adjusted SG&A is defined as total SG&A less stock-based compensation expense and non-recurring legal expenses and settlements[47] - These non-GAAP measures are used by management and the board to evaluate operating performance, prepare budgets, and develop operating plans, providing useful information for period-to-period comparisons[30][47] Company Information & Events This section provides an overview of Clover Health, details on investor events, forward-looking statement disclaimers, and contact information About Clover Health Clover Health is a physician enablement technology company focused on providing access to quality healthcare for Medicare beneficiaries, particularly those historically underserved, through its AI-powered Clover Assistant platform - Clover Health (Nasdaq: CLOV) is a physician enablement technology company committed to bringing access to great healthcare to everyone on Medicare[9][34] - The company's strategy is powered by its software platform, Clover Assistant, designed to aggregate patient data to support clinical decision-making and improve health outcomes[34] Earnings Conference Call & Investor Events Clover Health hosted an earnings conference call on May 7, 2024, to discuss Q1 2024 results and will participate in upcoming investor conferences in May 2024 - A conference call to discuss Q1 2024 financial results was held on Tuesday, May 7, at 5:00 PM Eastern Time[17] - Upcoming investor events include the Bank of America 2024 Healthcare Conference (May 15, 2024) and the 2024 Leerink Partners Healthcare Crossroads Conference (May 29, 2024)[32] Forward-Looking Statements The report contains forward-looking statements regarding future performance, financial condition, and business plans, which are subject to known and unknown risks and uncertainties that could cause actual results to differ materially - Forward-looking statements include expectations regarding future events, results of operations, financial condition, market size, business strategy, and plans, including updated 2024 guidance and the share repurchase program[32] - These statements are not guarantees of future performance and are subject to various risks and uncertainties, including those detailed in the company's SEC filings[32] Investor Relations & Press Contacts Contact information is provided for investor relations and press inquiries - Investor Relations Contact: Ryan Schmidt, investors@cloverhealth.com[20][35] - Press Contact: Andrew Still-Baxter, press@cloverhealth.com[20][35]