Clover Health made significant strides in addressing its medical cost ratio (MCR), which executives said Tuesday sets the company up for its future profitability goals.
The Medicare Advantage insurtech reported an MCR of 86.6% in the first quarter of 2023, down from 96.4% in the prior-year quarter. Clover Health also slimmed its losses to $72.6 million in the first quarter, down from $75.5 million in the first quarter of 2022.
Revenues were down substantially, however. Clover brought in $527.8 million in revenue for the first quarter, compared to its $874.4 million haul in the first quarter of 2022. That said, premium revenue grew year over year, reaching $317.1 million.
CEO Andrew Toy told investors that between the improvements made in the first quarter and the company's recently announced cost reduction initiative, it's on a path to success.
"We believe this progress is durable," Toy said.
On the back of the results, the company boosted its guidance to include an MCR between 87% and 89% and insurance revenue of between $1.18 billion and $1.23 billion, according to the earnings report.
Clover expects adjusted earnings before interest, taxes, depreciation and amortization to land between a $125 million loss and a $175 million loss.
Toy said the company is seeing care utilization on par with pre-COVID levels, which likely played a role in mitigating its high MCR.
"I think compared to even a year ago we're seeing that things have stabilized," he said.
On the call, Toy touted the company's move to outsource its core health plan operations to UST HealthProof's platform, part of its broader cost cutting effort. Clover also announced in mid-April that it would cut its workforce by 10%.
Like its rivals in this space, profitability has proven difficult to achieve for Clover. Last month, the company said in a Securities and Exchange Commission filing that it is at risk of being delisted from the Nasdaq due to its stock price, which was trading at about 93 cents at market close Tuesday.
In addition, Clover Health announced that it settled one of several shareholder lawsuits alleging the company committed securities fraud by failing to disclose key information, such as a Department of Justice investigation, as part of its initial public offering in 2021.