Startup Medicare Advantage insurer Clover Health is going public.
The payer, which offers tech-enabled Medicare Advantage plans, will become publicly traded by merging with Social Capital Hedosophia Holdings Corp., a special purpose acquisition company.
Through the deal, Clover will be valued at $3.7 billion in enterprise value.
SCH will acquire Clover through a combination of stock and cash financing, according to the announcement. The deal was unanimously approved by the board of directors at both SCH and Clover and is expected to close in the first quarter of 2021.
The merger will still be subject to approval from SCH's shareholders and regulatory agencies.
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Andrew Toy, president and co-founder of Clover, told Fierce Healthcare that the company considered pursuing a traditional initial public offering but decided that the merger strategy was the better play.
"We think this is a great pathway for us, to take this angle," Toy said.
Toy said the Clover team sees a "break-even line of sight" following the infusion of capital from the public offering. The insurer has invested heavily in growing its reach and finessing its technology, namely its Clover Assistant, and the additional funding would allow the company to significantly expand those efforts.
"It’s all about sort of turbo charging and expanding our model," Toy said.