Earnings call transcript Q4 2022

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Operator

Good morning ladies and gentlemen and welcome to the Clover Health Fourth Quarter and Full Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the prepared remarks. [Operator Instructions].

As a reminder, today's call is being recorded. to for call Clover like Schmidt, to now Relations Investor Health. would turn over the Ryan I Please go ahead.

Ryan Schmidt

Good morning, everyone.

Toy; year Joining to me the are company’s full Officer. Scott discuss today Chief Andrew results the company’s Chief Officer on fourth quarter Leffler, the and Clover Health’s call Executive Financial and

a and available release webcast our of website the investors.cloverhealth.com. This You press accompanying section Clover slides section and can of find be in Health Presentations supplemental being replay recorded Investor Relations website. and is the in today's the will Investor Events the at

Report we I'd that in make XXXX call of detailed in a XX-K. of also materially like and future to that, found be caution over filings, to to Annual about cause section SEC subject our now measures on available that statements you uncertainties, call, to I differ in including that actual those on today's factors Factors expectations expectations referenced, will financial the to the Risk about may reconciliation website. performance, turn from during are our risks non-GAAP the materials Form including With earnings including can forward-looking measures measures, are may Andrew. our Information results GAAP

Andrew Toy

chronic Clover I'm by empower earlier, detail our clear which Most discuss the more shortly. for trends This MA performance our the data manage thanks we to Officer. business joining This improvement highlighted morning, on to by be I'm importantly, I'll to my basis XXXX. Thank diseases to and to to MCR here throughout XXXX, everyone points you, Executive over excited reflects us. XXXX pleased Ryan the our favorable Planned on today the Clover's Insurance ability as physicians first and for our I'm in results and highlight results impact continuation identify strong in Chief compared year. excited showing Medicare technology’s MCR assistance earnings improving share call of experienced

of This the emphasize business. shift XXXX, we non-insurance impacted growth. profitability both over In strategic lines insurance and

of emphasis and on profitability insurance the Medicare XXXX and we approach our profitability. a to significant expect position towards XXXX of successful the progress combination as results strength We deliver improved demonstrate over to for the us growth enhanced strategic

pleased a upon and result, XXXX As we're for last reiterate partial was guidance month. expand also issued to the that

as is Let's in Through continued network. delivered favorable low underpins high to mode in recent both prioritize and start better throughout most believe and the our profitability. we've proud our improvement to cost the value we Clover and core ability the of our our we proven to market, was and derived on our differentiated flip which grow with unique Assistant MCR core MCR revenue. we the plans Clover profitability, beating once offering growth by established afforded a us Clover we've allow sustainable, our approach, of industry at segment, insurance insurance value wide will in switch year Assistant full than XXXX reflective where of Insurance operations Assistant. We're XX.X%, guidance XXXX results from the

our an As from enjoy are we so paid stars on were yet X.X additional not being XXXX, three on of that will favorable we this paid stars during reminder, impact plan the our reflective for beginning year. results PPO

all plan combination for to positions on XX%. Insurance stronger we us PPO where and through our we MCR in XXXX care initially an well Clover XX% range stars, insurance of XXXX. Assistant of awarded star the improve are ability an also X.X strong our guiding even were a paid We our XXXX to fall to of X.X The plans that the for announced for being rating results,

XXXX. full non-insurance to XXX.X% improved the during compared year MCR For of business XXXX, our

with. this improve, did satisfied we a are we While is not result

we on calls, reduction number who the to to program in previous By of participating in beneficiaries XXXX aligned are approach, for focusing in resulted on XXX%. under strategically a program. XX% in range improve providers discussed a to to physicians of XXXX, reduced MCR expect the more which the As aligned we our closely

we is Another Care, directly multiple our business over part area to we're which are some alone, advanced member contributes home XXXX delivering retention. feedback Clover practice, higher really we insurance These Care, our excited member Clover institutional internal high members, a operations. clinical high our value primary by and care which serviced of comorbidities most complex, receiving claims. members. vulnerable most often about XXXX In in of great to with believe Home and satisfaction, is Home significant our members care also drives medically

focused this cohort rather palliative members of need models based hospital. enable complex our home the members, care on receive that we're including they home to than a care Clover supportive For in at most

eligible program approximately Care than of and and other in against to plan our members lower update. financial cost from increase primarily reductions million. With but hand $XXX medical that, not over to see That's management MA home practice in thereby panel more expenses increase in enrolled members size the to why the measured institutional cost XXXX When these our for I'll to Scott now XXXX under we Home plan near-term for reductions claims. the enrolled we come members, meaningful

Scott J. Leffler

our cover increased has Andrew. The review business. hard Thanks, in XXXX. financial and then XXXX resulted and I'll first momentum team’s fourth quarter the outlook year the for across highlights work Clover full

highlighted quarter year performance Andrew full and by growth. strong As and favorable fourth were XXXX significantly insurance revenue MCR Insurance results financial mentioned,

as continued compared also XXXX. adjusted SG&A We to moderate growth year-over-year to

reduced the last this of result of our improved insurance MCR was QX as by segment, expenses. quarter continued related and from insurance portfolio as COVID operations the well driven This maturation year. XXX.X% in XX.X% to For

meaningful compared class more insurance building operations and year to focus in XXXX normalizing We Our improvements full capabilities that best of improving our medical demonstrated believe are from and these XXX% improvement benefit from MCR a time reflection significantly in expanding year Insurance a the XXXX. with MCR period Assistant Clover full added of expense trends extended on a XX.X%, over reach, XXXX.

periods As did past, well. the from we've favorability as prior some mentioned in we experience

grew XX% During quarter, to fourth insurance the million. $XXX revenue

XXXX, For the billion. insurance full $X.XXX grew revenue to XX% year

both member For was growth primary periods, the driver.

deliver is do up so. of strategic that, narrower in our And MCR was line quarter to the shift year of XXX%. compared I'll reiterate Non-Insurance of to MCR fourth of priority QX this MCR XXX.X%, in our our better Non-Insurance Having XXXX Andrew's Full elevated a growth for broader XXX.X% slightly XXXX during compared MCR profit comment believe to to providers that we that business. positions of XXXX. Our towards XXXX a result XXX.X% of said was base positive

For XXX% $XXX fourth grew quarter, revenue million. Non-Insurance the to

aligned of During Favorability MCR the contributed to driven cost in also Year-over-year revenue in higher stronger program benchmark by $X.XX Non-Insurance revenue, growth the XXXX, year full our results revenue total primarily aligned growth QX which offset XXX% beneficiary. in was care by to grew was for beneficiary. billion.

improvement approximately the EBITDA prior $XX was Fourth million a quarter for million, Moderating for a for is quarter compared SG&A loss was $XX we million focus during us adjusted towards an negative remains adjusted million push profitability. $XXX as to SG&A $XXX and fourth year prior million year Adjusted period. the the $XXX negative of million. $XX the XXXX of EBITDA loss year. year compared the which was adjusted SG&A full was in Adjusted to

$XX the our investments equivalents, by working $XXX $XXX entity XXXX, at capital and At million the consolidated on impacted basis cash million XXXX. subsidiary the totaled provisional settlement the and QX restricted million $XX These normalization balances a of and of our unrestricted last the parent were call for unregulated DCE referenced and on end and benefit earnings cash, million level. during

While that consider the adequate the said profile, liquidity liquidity company healthy which XXXX. is always reiterate opportunistic current what expects our to we we've past, for financing, given in I'll have

provide unlevered positive to In addition have objective which strong achieve down and if our sources to opportunities cash order the a to sheet liquidity dilution our and of flows solid broadly, in needed. to shareholders. more for path Nonetheless, liquidity future our avoid we is accelerate profitability balance to should position

full provide XXXX an Finally, our overview I'll of guidance. year

focus top revenue business the line MCR grow line of $X.X $X.XX of to Insurance XX% heightened for between XX%. profitability an billion continue to a insurance on to expect to billion with We to targeting

$XXX We $XXX XXX% year expect ACO Non-Insurance We million of REACH the that adjusted estimate MCR participation SG&A revenue to negative million of to between is $X.X improve adjusted scale in program and between improved of expected result be XX% million. will in to and our Full $XXX the negative $X.XX $XXX billion. million. to reduced significantly billion to and EBITDA

look to business In from delivered strong excited strategic both summary, upon lines full our XXXX. positive and the XXXX the year will the XXXX, that fourth on quarter during impact emphasis for of performance we are insurance and as have performance on profitability about both momentum build we

for the some Andrew comments. final call Now I'll turn over to

Andrew Toy

with Assistant powering to an CMS's to we with approach Thank approach about model you, I close, closely adjustments our Clover chronic disease, the To all centric care of making with early emphasize Clover's recent helping differentiated that to diagnosis is technology Scott. progress Medicare. early and physicians Medicare management want believe aligned proposed the we're Advantage.

approach risk these MA XXXX have way they many diagnosis do adjusted to Because and been that established to that notice, incentives future see the large of operating to believes expect change remove it fundamentally rule MA. plans we advance their rethink not plan adjustment CMS have predict With has to cost. to changes, the have

the disease, identification identification cost on physicians hand, can this most health Indeed, outcomes doctors designed we care. to is early always the consequently why the MA other said improve allowing course and costs and conditions Assistant, On impact Clover chronic of early developed to those seeing be this at of the the care. have that Assistant through we're of the lower of we that members and Clover with help which both should early change focus management of is Clover and precisely that

diagnosed, For example, disease. identify of in documented history members Assistant to of a at risk And that shows no Clover diabetes for diabetes, our population physician the higher with data the Clover to those able was Assistant recent that can is diagnosis and earlier to treatment. prescribed. with often behavior, data was and positively evaluated, our This medication because help disease exciting interventions, early lead then physician demonstrates influence us Clover

You can QX take with I'm representation excited questions. very flight in deck. the but more data find as let's accompanying our share that, visual supplemental a year progresses, the to of

Operator

questions. open now for your is The floor

analysts. question First, research we from first Clovers Genuity. Canaccord will from questions [Operator take with Instructions]. Richard We'll Close take our

William Hoover

Will morning. Thank Hoover you Richard. on and for good This is

should your the baked with revenue Non-Insurance and think the guidance? In that So is How you growth past but guidance, MA roughly MA and wasn't included. ended about XXXX we you into for you. provided that members. and XX,XXX membership year Thank the member

Andrew Toy

question Yeah, the Will. thanks for

insurance the when recall issued on that And coming make a preliminary side AEP. relating in the with of that did be guidance may business we of of indicated the the beginning you line membership to we January, it our So we XXXX. out would early in comment at membership

in approximately have of on in XXXX. into beneficiaries Non-Insurance to the don't XX,XXX our front. And we side terms that any reflected so And And reference of coming under business, update the the points yes, we're that are expecting then of lives aligned be those guidance. both

William Hoover

you. Thank

Operator

Thank you. [Operator Instructions].

Cassorla Citigroup. comes next Our from with question Jason

Benjamin Rossi

Hello, morning. for you good Thank taking question. my

here Jason. Rossi You on for have Ben

to So you seeing how on forecasting coming course expense walk thinking we're health then your you that and behind XX% Would as us guidance, home over increases year-over-year. we that SG&A you the drivers cadence offering? of year? about are thinking some expand through despite some down And over of you the have the be flat back SG&A XXXX should revenue

Scott J. Leffler

the question. Thanks Sure. for

of the the the at all really of it variable is beneficiaries. is -- to revenue in for that that last company number the first of that decrease overall, that -- side it's that mentioned generally proportion isn't to side aligned overall relation call of the the isn't in look there there infrastructure a business SG&A and exclusively it you of on to dedicated XXXX such by the when SG&A business. I'll Non-Insurance significant is of nor vary guiding our would you driven relative And XXXX we as So exclusively remind to we're our

overall we're that to. level So decline seeing that's why in you're SG&A the not a guiding

an think a of SG&A how does I question commissions in to then incur just out And usually standpoint, QX of it coming the during some elevated part the we QX year’s SG&A sequence as your the we of do year broker marketing generally from result was out in the we seasonality see around AEP related that with associated have amount SG&A well next cycle. usually of elevated AEP of prior cycle. as and some costs

Benjamin Rossi

up stepping quick follow-up, And it. PMPM pretty commentary quarter-over-quarter on that? DCE Got the drivers as just a you. seeing the high, Thank were any just behind

Andrew Toy

kind effect. a rising I tide as of Yeah, that would characterize

drive side experience saw relevant revenue we of our But cost care aligned benchmarks favorable PMPM beneficiaries. the for movement in in on On also that revenue. saw total then some increases we similarly the claims

have two the and And overall in so wasn't there business. both line see for revenue significant the moving the effect increasing can a tandem MEDEX change performance you MCR of that in as of

Benjamin Rossi

Got it. Thank you.

Operator

Thank you.

Fischbeck from with next Bank America. Our comes Kevin question of

Kevin Fischbeck

through? appreciate Great, how number, going to a kind this for about an of thanks. the lose of what mean burn does way think go you we you're year. like if so comments much there cash million, the rule about $XXX to looks far just expect liquidity thumb cash I that how relative Is as as company’s to EBITDA as some

Scott J. Leffler

This burn the is kind line the quarters. important P&L that I of from several our by for is performance. disconnected capital Generally, business say working the the cycle EBITDA largely Non-Insurance approximates that our caveat of would cash

And you'd QX on the the effect the in to so XXXX of to performance. when that the cash expect of Non-Insurance see payment we XXXX performance expecting expect business to in of We XXXX, settle were see that.

Kevin Fischbeck

doing you would for the actually change like to is physicians the dynamics, it intervening Okay, how you actually X% this made maybe the around then around potentially a a see a But maybe and because is least good comment you they're the I you disproportionate at that are if paying coding integrated are documenting. that that to me documenting just back headway I have coding business? if that like would impact would then and interpreting sophistication the about the way even coding, you and still wouldn't your rate you a saying guys less, have sense. the CMS going bigger that coding and change Clover any industry And impact sound guys everything much am it coding MA that correctly more I understand guess to at run it or from are you makes feel the still see was

Andrew Toy

you is It slightly A there. either different a the Yeah. great good said, query. than just but version question ones

of we're saying places rules what think adjustments. the there's certainly [Indiscernible] there's is I lot because where we're a have impacted of lot a changed.

where what always is the also been However, Assistant, focused care we feel overall, involved, like because on the Clover diagnosis doing. management we have is which we've of CMS there's spirit

about that. so And pretty we good feel

may significantly look at is think you I are what projection, CMS some impact care out of coding believe of they from significantly bearing of a diagnosis been that's that risk has there more impact that providers, If coming somewhat we of the in because like I'm than prevalence we not impacted just are other plans, their cost maybe for just just more CMS. the and think

diagnosis what's CMS what projections. plan So impacted which the of any would more those significantly be number than or a provider we is inside getting disproportionate believe

to trying were we what say. that's think I

Kevin Fischbeck

more but the less industry? or do Okay, than you think you're

Andrew Toy

than look who be We what's of going obviously know know we're But these than think providers. are to downstream sort plans of we're We to do industry. plan. at other some better in -- don't every heavily when like we you delegated better

those kind likely of If we dedicated doing a lot who providers of rely to that we downstream on little a you're will risk more Assistant, very heavily delegated Clover bearing of downstream provider be because those delegation do are other and coding.

of have upstream. are those have will on of redo kinds to impacts or plans some probably of flow reliant those those we'll So contracts that or services those kinds contracts

are that that is a means because looking relative impacted, that bid, such not our all We So be all forward. other advantage out can future are not at relative probably we we we believe advantage of relative plans a have that less to impacted. MA But go out what that we're but believe we business to performance. will do that bit going performance bear and an as we is we that likely saying are

Kevin Fischbeck

great. Alright, Thanks.

Operator

And any in closing for queue. Toy further would we over Thank the this Instructions]. or back like Andrew additional at call have time, no to remarks. you. questions to [Operator turn I

Andrew Toy

Sure. Thanks.

certainly yeah, to close up XXXX shareholder just our for value that our So, very on will business. reiterate a want delivering to shape be year And absolutely priority. we're as to I pivotal focused that

changes executing clinical profitability. by that outcomes and deliver be are We're to path into against so helps widening value, resilient So and industry, for for We've why the our we'll discussed our this that our that's on of members. just many technology improving coming times. critical by to us course mode continue said that and going we

forward for to year. joining our today. everyone you throughout progression us you updating the Look thank So on

Operator

This and and quarter full webcast. fourth Health’s call Clover earnings concludes year today's XXXX

may You wonderful time this and day. have disconnect at your a line

Clover Health Investments (CLOV) 28 Feb 232022 Q4 Earnings call transcript