Clover Health authorizes $20 million share buyback program, slightly raises full-year guidance

Clover Health is raising its full-year adjusted EBITDA guidance and announced a share repurchase program of up to $20 million over the next two years, the insurtech said ahead of its first quarter earnings call.

The company’s net loss from continuing operations improved to $23.2 million, compared to a nearly $80 million loss in the first quarter of 2023. However, adjusted EBITDA profit for the quarter was $6.8 million and insurance revenue grew 8% year-over-year to $341 million.

Its medical cost ratio (MCR) improved to 77.9%, and the company boasted step change improvements to adjusted selling, general and administrative expenses.

“We have intentionally built Clover’s foundation to flourish in the future of the Medicare Advantage program,” said CEO Andrew Toy in a statement. “We expect to build upon this momentum in our full-year 2024 financial results, which is reflected in our updated guidance, as we continue to invest in our care management platform to deliver increasing value to members.”

Clover raised its full-year adjusted EBITDA range from $10 million to $30 million on Tuesday. Last quarter, the low end of the range was a loss of $20 million.

Toy echoed last quarter’s remarks in several respects, reiterating the company has a strong liquidity position and sufficient capital. He also said Clover is continuing to not see an increased utilization trend, unlike other major payers experienced toward the end of last year.

The company also expects its insurance revenue to now fall between $1.30 billion and $1.35 billion but lowered its max MCR range from 83% to 81%. The insurtech recorded a net loss per share of 0.05 cents, slightly better than analysts predicted.

“Given our software-centric approach, we strongly believe that we are well-positioned to move with agility against the backdrop of industry headwinds, including a lower MA rate environment and the phase-in of the new V28 coding rules in the years to come,” said Toy.

He said this is primarily because Clover Assistant, a proprietary platform that integrates into electronic health records for doctors, has always focused on chronic disease management and is constantly adding new features.

Although utilization has not ticked up drastically, the company is holding a “significant amount” of incurred but not reported (IBNR) claims. This is because claims inventory has increased while payments have decreased as claims processing systems are transitioned. Additionally, the company used Change Healthcare as Clover’s primary clearinghouse.

“We quickly pivoted to allow our providers to submit claims through alternative pathways, but claims receipt volume and processing volume remained very low during the second half of quarter one,” said Toy.

Claims submissions have since normalized after implementing a conservative buffer in the company’s reserves, he added. Clover is also shifting around its operating structure.

“Starting last month, Clover established an affiliate entity for the purpose of unifying Clover Health’s non-clinical quality improvement services offering,” said Toy.

The affiliate will service the company’s New Jersey plan, as well as third parties in the future. Although sparse on details, execs hope the affiliate will lead to more partnerships with physicians by bringing together health IT and care coordination services.

Nasdaq previously threatened Clover with delisting the company from its market exchange after its stock price fell below $1 for 30 consecutive days. It’s the second time Clover has been warned. The first time Clover’s stock fell similarly, the company scheduled a meeting to vote on a reverse stock split, but the vote was canceled once Clover regained compliance.

Next quarter, the company intends on unveiling BER, or benefits expense ratio, as another metric to compare company performance to others in the industry.

Clover expects to pay Centers for Medicare & Medicaid Services (CMS) $39 million in the second half of the year for its ACO REACH participation, a program the company exited at the year’s beginning. It will be the final payment toward the program.