Clover Health cuts losses, posting an $84M loss in the fourth quarter

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Medicare Advantage Clover Health posted an $84 million loss in the fourth quarter of 2022, far short of the $187.2 million loss it made in the same quarter of 2021, according to the company’s earnings report.

Year-to-date numbers also improved: while Clover lost $338.8 million for the entire year, that’s a significant decrease from the $587.8 million it lost in 2021.

According to CEO Andrew Toy, the next strategy is to focus on achieving profitability.

“In 2022, we are focusing on profitability, not growth,” Toy said during an earnings call. “This strategic shift has affected both insurance and non-insurance businesses. We expect the combination of improved insurance outcomes in 2022 and increased strategic focus on profitability over growth to ensure we have a strong 2023 as we demonstrate the strength of our approach to Medicare and make significant progress towards profitability.”

The partially rosy prospects for Clover are based on revenue generated in 2022. The company generated $898.8 million for the quarter and $3.5 billion for the year, both big jumps from 2022, when revenue reached $423 million in the fourth quarter and $1.5 billion for the year. .

According to CFO Scott Loeffler, the Medical Cost Ratio (MCR) has also helped improve the financial picture.

“The insurance MCR for the full year improved significantly from last year to 91.8%, and the insurance MCR for the fourth quarter improved to 92.4%,” he said. “The improvement in MCR year-over-year was driven by continued favorable underlying operating trends. The non-insurance MCR for the full year and fourth quarter was 103.4% and 103.6%, respectively. We also ended the year with limited and unlimited cash. , cash equivalents and an investment of $555.3 million on a consolidated basis and $331.7 million at the parent and non-regulated level, which we expect to be sufficient for our operating needs in 2023 “.

WHAT INFLUENCES

In 2023, Clover’s insurance revenue is expected to be in the range of $1.15 billion to $1.20 billion, which represents a 6-11% growth compared to full-year 2022 insurance revenue. The insurance MCR is expected to be in the range of 89-91%.

Non-insurance revenue is expected to be in the range of $0.75 to $0.80 billion in 2023, while non-insurance MCR is expected to be in the 98-100% range.

Toy said the company is achieving a “real momentum” towards profitability and deliberately priced its insurance plans for 2023 with profitability in mind. He said he still expects insurance revenue to rise.

“We believe this, combined with expanding our membership base and increased reimbursement based on our improved star ratings, will allow us to achieve further significant improvements to our insurance MCR in 2023,” he said. “For our non-insurance business, we plan to implement a strategic shift we previously announced to focus on a targeted group of participating providers that align with our strategy and capabilities.”

BIG TREND

In November, Clover said it was reducing its participation in the federal government’s Accountable Care Organization Realizing Health, Access and Community Health program, in part to improve the company’s medical expense ratio.

In addition, according to Toy, there is still unpredictability in the new model. According to him, ACO REACH is not yet an official program, so its rules may change and its tariffs may change. Clover still intends to be one of its big contributors.

In July 2022, Clover expanded its Medicare Advantage presence to 13 new counties in three states.

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