For the first time as a public company, Clover Health is announcing its first quarterly net profit, the company said ahead of its second quarter earnings call.
Clover declared a net income of $7.2 million and an adjusted EBITDA of $36.2 million, both figures a substantial improvement year-over-year.
“I am delighted that our performance continues to validate Clover’s differentiated, technology-centric approach to healthcare, driven by our insurance offering and its ability to generate meaningful returns while leading with physician-choice for our members,” said Clover Health CEO Andrew Toy in a statement. “Through our Clover Assistant technology and integrated care management platform, we aim to empower physicians to improve clinical outcomes and lower the total cost of care for people with chronic diseases. This allows us to partner with a much wider range of physicians than other plans.”
Insurance revenue also soared 11% higher year-over-year to $349.9 million due to member retention and growth, whereas the company’s medical cost ration (MCR) improved to 71.3%, down from 77.9% the quarter before.
“We believe that our results, coupled with our recent star rating recalculation from 3 to 3.5 Stars for the 2025 payment year, positions us well to achieve our increased 2024 adjusted EBITDA guidance and improve our underlying cohort economics in 2025 to increase our long-term profitability capacity,” said CFO Peter Kuipers in a news release.
During the call, Toy said the star rating increase gives Clover more financial maneuverability to invest in plan design for members. He added that Clover was the only health plan to earn a star rating increase from CMS in its primary markets.
Clover also raised its full year guidance. Originally predicting $1.3 billion to $1.35 billion in insurance revenue, Clover now expects $1.35 billion to $1.375 billion, showing confidence and narrowing in on the targeted margin.
Adjusted EBITDA is now projected to land between $50 million and $65 million. During the fourth quarter of 2023, Clover was projecting a loss of $20 million to a gain of $20 million adjusted EBITDA.
The company reported diluted earnings per share at $0.01, slightly beating analysts’ expectations of a $0.05 loss.
Clover introduced a new metric this month called the insurance benefits expense ration (BER), calculating by dividing insurance medical expenses and quality improvement costs by insurance premiums. The figure will better reflect “our assessment in healthcare quality and member engagement,” said Kuipers.
The company’s BER improved to 76.1% this quarter from 82.1% in the second quarter of 2023.
One analyst asked Toy of his thoughts regarding recent Wall Street Journal reporting that major insurers task nurses to over-diagnose patients during home visits to receive more funds from Medicare.
Toy said Clover’s approach is different. Its medical professionals focus on only its sickest patients during home care visits, primarily assuming the role of primary care. Other nursing visits evaluate chronic disease management, before referring patients to primary care appointments.
“So if we think that someone is getting sicker and they need more close attention, we take over the primary care relationship,” he said. “I think that’s very different and a very different home care strategy than what you see others basically focusing on.”