Clover Health trends upward after Q4 earnings, posts adjusted EBITDA loss of $19M

Insurtech Clover Health execs are reiterating their path to profitability is headed in the right direction.

The Medicare Advantage company posted an adjusted EBITDA loss of $19.1 million in the fourth quarter and a full-year loss of $44.7 million last year, marking a significant improvement over 2022. The company recorded an adjusted EBITDA of $80 million for the fourth quarter and a full-year loss of $290.4 million during 2022.

But Clover Health executives touted the company's improved medical cost ratio (MCR) of 81.2% for 2024, during its fourth-quarter and full-year earnings call on Tuesday. The company also issued guidance indicating MCR would be between 79% and 83%. It also expects adjusted EBITDA profit up to $20 million and revenue to hit up to $1.3 billion, while continuing to invest in Clover Assistant.

"We will then be in a position to return to growth during a period where we anticipate our competitors will be retreating, and we'll aim to continually build on the strategic lead we have developed," said CEO Andrew Toy during the call.

He said the company has improved its insurance MCR by approximately 25%, a huge improvement from its MCR of 106% in 2021. That has driven an 181% increase in per-member/per-month insurance growth profit since 2022.

Clover's stock price is up, at the time of publication, around 11% Wednesday after its earning call took place Tuesday evening.

"Many in the industry have spent decades constructing their operations to manage utilization and financial performance within a narrow network HMO context," Toy said. "While this strategy was historically successful, we now see that the landscape is shifting rapidly. In fact, PPOs are growing at over two times the rate of these tightly controlled HMOs over the past five years. This is a clear reflection of consumer preference for choice.

"What that means is that we don't necessarily have to improve or increase the richness of our plans," he added. "As others pull back, we will enjoy a decrease in the overall customer acquisition cost."

The company did not see unusual utilization trends last quarter, though the company is layering in an "additional buffer" in reserving and 2024 forecasting.

In December, Clover exited the ACO REACH program.

"This transition creates both financial cost savings for Clover beyond our 2023 performance and also allows the team to focus more specifically on what we believe to be our competitive advantage," said interim CFO Terrence Roman.

Roman said the company's liquidity position is strong and there is no need for additional capital now, but the company will consider "opportunistic financing."