CLOV - Earnings call 3 2023 | Clover Health Investments, Corp.

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Operator

Ladies and gentlemen, good afternoon, and welcome to the Clover Health Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. . I would now like to turn the call over to Ryan Schmidt, Investor Relations for Clover Health. Please go ahead, sir.

Ryan Schmidt

Good afternoon, everyone.

Chief call Andrew discuss Executive Toy, Scott the our quarter company's Officer; on Leffler, are results Clover company's me today the to third and Joining Officer. Financial Health's Chief

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

you caution today's Factors to on to that can like we of subject in annual may fans, risks filings. website. detailed during section materials other also SEC including I'd recent actual most including differ measures Factors statements available Form forward-looking measures on that be expectations those are about future of and in call to Risk to non-GAAP results measures report Information make our GAAP a found from may cause in performance. are financial our that materially including in earnings expectations XX-K SEC the and uncertainties, about the our filings, reconciliation

I'll that, now Andrew. call turn to With over the

Andrew Toy

and joining us. Thank everyone, you, thanks, Ryan, for

company today once profitability again highlight upon delivering excellent derived segment continue during we've progress driving towards first third our performance half overall sustained the impressive our Our that Clover Assistant. results with year and insurance our reported value great quarter. built the to from We've of strong the results,

ranges. further year needing our potential adjusted with basis on our full which show additional our Our again next upon without to achieve believe turn, XXXX that to us results our to QX coupled guidance raise has and once strategic first EBITDA shift prioritize profitability capital. represent proof an profitability in . We this year, our another point to in improve half year results, led momentum,

use we results, Clover into AI-powered highlighted Before showcase last our I everyone replay so I'll examples I gave on the done where our of real-world later check the into they Clover if Assistant. haven't QX seen in month, out website Assistant able more platform the call, but of to and touch of Relations this already. we've on I through tune that our more our event encourage Investor hope our dive impact was everyone cloud-based to the

We this of third Beginning increase revenue the quarter, plan MA first XX.X%, insurance capabilities to MA to efforts that looking growth our as operations of improvements accelerate results. continued in constantly next revenue delivering only optimize with to of our year. MCR our optimize year-over-year. improvement segment during plan MedEx trajectory our XXXX. This We're segment into grow and $XXX aspect continue I'm results. our year shine proud and representing of a an million strong to great to QX XX% margin blunt through an compared its reported our

performance Insurance our population. segment our support how and better management MA truly the believe increasingly mature We of can technology operations any care within further highlights

population percentage of low As that membership plans, have our technology-centric accessing believe of to power generally strong, difficulty We that disease the have while burden demonstrates our support care. also economics higher needed comprehensively a ability sustainable this model. and delivering income. more considered a diverse shown higher diverse members ethnically has our to more compared both and MA much low and similar populations have Studies is other income

performance publication the for Now cycle. year move on XXXX to of the STAR's measurement let's recent

we outlier. we dictates cycle year do XXXX, X.X many very near efforts And receive the future. rating gives measurement an us with the increase which see the for guardrails the stars significant deploy for for Stars as on XXXX, increased CMS stronger ability X.X us, we reimbursement overall the predictability optimism year even points. We our rating through star to our year cut we stars While in scores disappointing close given new number in areas us XXXX. this in This measurement XXXX, measurement to is about payment year for an received improvement result rating, to significant came to star plus obviously our X-star of in but regain

overall Stars, in summary a on an disappointed event X-star we rating for see likely X-year it As are but the as XXXX.

we and we to it its mitigate committed momentum intend do as over we're long-term see a Shifting increasing top terms sustained year, on to our in insurance that double-digit and churn financial in revenue index performance barrier to and to measurement years. growth profitable growth new star continue improving revenue high measure single combination a line to not revenue, to and us targeting Similar to in we lives, profitability, For XXXX, XXXX. having we effects, anticipate member reduction insurance to of are of through future strong ourselves initiatives. member per growth. segment to low Expect

believe mature, year. obviously to balanced performance approach our next X earnings. broader on next enrollment we to is us We'll our the right our sustained achieve of help more about at reaching to talk adjusted annual goal continues this our basis As EBITDA that have profitability business an regarding

the to XXX% performance. For in original are number in performance MCR this below of we of continue noninsurance again to reduction challenges of though we the that our design the we a we physicians target our XXXX, with committed see program. participating approach, Even to a to Medicare. noninsurance continuing exposure as for next MCR Consistent a the evaluate expect value-based of third segment's to therefore, year are rightsizing NCR segment, continue million, reported XXX.X% to on we of bringing XX.X%. revenue year-to-date $XXX quarter an and

that much care total Assistant But evidence clear plan of future have use management. our have couple started to we we We ability the help strength value-based go MA this Medicare. in risk ACO believe original great of For physicians Advantage in with and to we the patients to this non-Clover Clover reach in with Medicare. very segment, years, seen last for Medicare

panel likely noninsurance we use is, to exposure while see Advantage plans will manage this go their increase to continue We're Clover it about for a Medicare, look closely Assistant risk entire investment to will to That by we to those will within Medicare all able physicians incredibly across value-based excited us segment. to MA to be noninsurance lives. strategy, enable to talking and the on our in you As adjustment we forward such, MA to original look and more. our

it a to that, With update. now financial hand for more detailed Scott I'll

Scott Leffler

in adjusted full first improved $XX highlights and third XXXX. of Adjusted financial then outlook our Thanks, the prior last from performance of by SG&A million QX loss and period. significantly $X QX in Andrew. reduction I'll this to improved the year, cover loss to of for EBITDA continued an million year driven relative EBITDA year quarter review adjusted a year, a in of strong insurance

of the from For in in building our delivered Insurance QX momentum to last segment, . year, half on QX XX.X% in year. XX.X% we the first strong MTR improved of this

performance MCR XX% driven $XXX to strong to growth growth revenue QX million year-to-date XX% was in of $XXX and by Our million.

underlying XX.X% minimal in these various I only to from the impacting initiatives good in As and TPD we in and continued have year, is from representation QX. all we performance. see operating PPD resulted XXXX earlier a of year-to-date amounts contains of modest favorable impacts -- our of MCR mentioned our initiatives past, have

initiatives. operations, quarter now plan versus we Clover PMPM with More focused our During design, primary program experienced network, contributing Care to initiatives powered holding trend payment post-acute improvements integrity continues care a clinical showing delivering in-home performance to increasing specifically, our including care need is QX, the capabilities X% we're our and by where of planned of general trend plan, key be always CA to medical MA Assistant cost on from and medical QX, M&A hospitalization last to reduce a manage MedEx down steady. focused numbers costly Met and sequentially to to through expansion highest our the We're Home lever product utilization. on similar expense to impacts optimization

and members higher increasingly members. inpatient risk seeing new admissions for lower into enrolling this program are are We participating

our plan being stars to also benefited quarters X.X year year. similar earlier this for PPO on from We this paid

Our this the versus providers of year by smaller revenue declined million participant primarily noninsurance driven of at $XXX XX% prior the period segment start year. the to group

performance reductions quarter in total noninsurance determining a under performance was XX.X%. performance versus the XXX.X% intend for from was reach XXX.X% participating program. in in third participation XXXX ACO used the more third driven this performance earlier We comments, beginning XX% in our benchmark positions with in reduce This year-to-date relatively believe quarter to largely further earlier XXXX. by MCR reiterate was the relating Andrew's deterioration The approximately MCR XXXX. to of improve we should by flat with assumptions in the segment's To Our XXXX. of conservative

on settlement regarding update an in provide noninsurance XXXX to wanted segment. the also I our performance

repayment performance we lag with book performance reminder, between amount from share currently a relates of settled under program it capital there which is the as being million of when XXXX year a working profits losses total time to the settlement expect million, or received to the obligations. that owed in CMS CMS. to is the and report settle final our $XXX We've QX. settlement settlement As during $XX of for CMS for We cash remainder significant approximately the estimate loss. the accounts versus The

in SG&A reduction million, a XXXX. million adjusted $XX QX quarter to improved X% Third from $XX year-over-year of

initiatives we impact originally we and this mission-critical of name XXXX. partnership of operations the reported some center Proof be MA that take for Proof related believe XXXX. into this That to changeover advantage scale the UST the year. quarter of of a still of to remain We still to contemplated benefits functions operational efficiencies successful savings already and most continue work us and of We ecosystem. up kits, said, Health expect We our with a the realize favorable will administrative This earlier welcome member in underway enrollment, starting in the many are savings Health a includes is cost to streams from claims, the plan initiatives. transition few. the operations economies USD capture realized this configured our see excited for full from sets with call many UST actively to The expect to yet

Turning sheet. to balance the

We finished and subsidiary entity million with a level. on totaling cash, $XXX million parent with unrestricted the $XXX unregulated equivalents and basis and quarter investments third at the cash consolidated restricted

to We to not our improve sustainable. profitability financial we're this XXXX an positions the full progressing do we believe us adjusted our step this so I achieve year continued performance is EBITDA EBITDA in that mission to any on that achieve basis. the adjusted right well results giving on believe for additional quarter, well need improvement performance capital. year in are profitability. another us our direction Assurance important driving QX our step Our sustainable of change in performance I'm that and strong proud favorable confidence the this business that

We update difficult in the This Finally, risk XXXX our I'll reflective certain and amount year provide we narrowing guidance consideration to of $X.XX in seasonality an revenue $X.XX in billion of of of QX. full between -- a for to guidance. guidance QX line business conservatism are insurance billion. our is

improving are of We range guidance insurance to XX%. to XX% MCR a

previous to XXX%. $XXX are $XXX revenue a to guidance of MCR our million We maintaining noninsurance XX% million and at range of

our $XX $XXX SG&A and million. improving $XX also and guidance of negative improved million adjusted an are in million. We changes $XXX between between These to negative EBITDA resulted adjusted million

in with segment on well In insurance from momentum MCR conclusion, in our profitability with improved goals should this year, that in adjusted updated full quarter XXXX. a believe previous SG&A point proof reduction I execution our year achieve for further our coupled set up durable another the expectations significantly continued to path to profitability EBITDA, and insurance this we great with results our us adjusted initiatives. delivered strong our

continue Our business accelerate of growth sustained this aim side is the to momentum our for and other profitability. on

some me closing to the turn back let call for Andrew Now comments.

Andrew Toy

Thanks, Scott.

with Medicare patient I'll economics. gets the noninsurance Clover us own plan right medical Assistant. And with commentary the great . strategy our they that is future them From some Clover Assistant what helps outcomes do to make and As segment, plans that, the confidence continually of demonstrating on close our get better gives is Advantage always, MA better right physicians the when the arming that data decisions. in

an emissions with managing those compared resistance over and we analysis, do points We published returning complications. with CA inception. further severe our in continue reduced technology to of a clip to earlier, we month, unfortunately And earlier earlier are research and outlined is associated an has the clinical very technology using basis with derive patient efficacy, MCR important improvement plus whose population used in hypoglycemia improved from the from diabetes common how its been reduction great disease care many highlighting in how our focus use members in outcomes. a X,XXX not. who of that of diagnosis, That's Diabetes Assistant paper, CA's as can our PCPs resulting diabetes hyperglycemia in diabetes Last Medicare in-depth for treatment, showing why is result Clover insulin. value diagnosing treatment

patient coordination how insights. recent the from and management of better through analysis Assistant leveraging Clover put identification our incredible care how showcase, chronic how Clover display so to shared in-depth platform improving new see timely impact integration. associated advancements deep learning and of machine our and increasing we assistance how in demonstrated Most to we're on need and the have clinical importantly, earlier clinicians we're accessibility efficacy through patients conditions During we with we're their is illustrate EHR they we AI platform. We that to information care for the

and what's features always algorithms. current even and untapped the as that always and alongside shared potential exciting in active constantly than models or in currently of testing dozens We're machine patent-pending and our our technologies launching more we Clubrsystems past over forward. new use the XXX learning is active going is platform results Lastly, We've improving. of have learning

Clover able year, comments generated exciting on this progress the strength believe focus plenty towards Our proud entire team our such our applaud we've the through the accomplish we've our Medicare quarters We've far our is whose the physician-focused managed sustained I technology I into quarter have go, entire of demonstrating so X while been model the based am the to of we entire on and profitability. great push to that we upon conviction Clover risk and we model all it. in X have are AI-powered care software. only is and managing of made year. momentum for we today, organization more

let's to With Q&A. on move that,

Operator

Instructions] [Operator

from comes . Our first question Jason Cassorla, Citi.

Jason Cassorla

Great.

quick clarification a settlement. on the CMS Just

you million said the quarter. $XXX have You due that's fourth in

helpful. it us noted fourth I sure next raise losses to And then making within you help sounds but Just like cash position given Can the your be settlement heard capital, you just additional implied to quarter few dollars. guidance right. just over help that the would or wouldn't EBITDA need you bridge maybe quarters

Scott Leffler

Scott. This is that I'll take question. Yes.

incremental needing in certainly need a capital the The positivity bridge, I is of is capital future that of capital capital. reiterate to total we right. related profitability kind objective we're cash cash relates that for million the share in in anticipating indicated, expectation flow terms a that under QX little our of and of for in operating pay any was years. into international a our then we a desettlement $XX -- advancing the over to flow without certain heard just the amount as back working I'll you But loss just our that And yes, of So settlement program, working have no was and $XXX where program. at dynamics reach million, that XXXX. you program least yes, remainder the think to XXXX

as bridge, we far unregulated do parent -- million finished equivalents and cash and with mentioned we investments cash flow the As and $XXX quarter as cash level. sub of entity we I

extent to that going that continue QX that from that well. CMS the And and to of -- EBITDA out settlement in amount to then is would so come would an deliver it as come due out amount do forward, we

over at our in we level, strong capital an are inflate position capital. continue to of entity capital time. look that . we to organic occurs comfortable general, that's for and flow again, that and we any to But opportunities XXXX regulated a look from to with leverage now have ourselves remaining obviously, the Although, the kind requiring forte

Jason Cassorla

medical member if XX% wanted I Okay. doing caveats than you're XX% trends to Helpful. the of helpful. are more And you about X% quarter. versus looks year-over-year on curious any in a per you medical know MLR. were X% maybe result it it. Got about trend cost grew that just be XX.X% covering with member like revenue cost strong year-over-year. Obviously, I a per follow-up. a per month utilization But what with quarter ask in would per second the the first the kind driving front, PMPM. that But utilization month and there's . on saw just that to the

Scott Leffler

Yes.

So I'll comment on that.

trends earlier anything QX First, at the utilization a not from we're QX, were high seeing seen from standpoint, what reminder, very -- we standpoint. seeing when we've we level, a reported it indicated benign fairly tells And you year. as and from that a utilization we in a different

increase Medix medic little a referencing you're year year. is something in by that and in the of which QX our effects had On we where distorts some distorted last in PPV bit happened year-over-year bit. top favorable last PMC a that the little

and more what's the our quarter as last any especially now, of performance quarter, to and quarter instead being anchor year. at to representative, overall this X more year-to-date year, people think looking tried I last of this we to compared performance representative

. as at which representative And basis. we've is on Smadex year-to-date X%, when said our year-to-date about prepared is that only look XX% benign more of PMPM, utilization MCR up in running about a comments, trend so the we're an the And you I at referenced.

Operator

next John comes Genuity. question Our Canaccord from Penny,

Unknown Analyst

John Penny Close. on Richard for

quarter. applied great. but I Just you're color utilization, want EBITDA to some flesh Can adjusted just talk you increased exactly out? what ramp that be expecting? in additional possibly any about fourth the And see would

Scott Leffler

Yes.

way the appropriate guidance with due we've to to in just all year, increased we updates the is is year. about our utilization recently, the questions year. of Cod seasonality of the continue to historically think guidance, in risk to QX we implied we model risk, is in was COVID-related what season to what due QX, where course, made of due So you X remaining fleet been or second see when that the we got And elevated year more around our earlier similar off the of in this half utilization. part particular, level kind any answering services

number And by nothing so pointing that the conservatism we're there's really is specific to. but in that exposure, driven that

Unknown Analyst

retention Or then give guess there. is period, can you would is in pretty we're can that's X great early give looking what annual perhaps Okay. like? Great. or but And enrollment follow-up. there you commentary like any proceeding how the be on any color I

Andrew Toy

Andrew. is This Yes.

initiatives. giving So year, a What now it right in obviously AEP. next on is we're looking come and insurance what guidance during combination the from any maintain will remarks at do fulsome of our reiterate this But in in we are we'll We growth not that of the reduction that like AP, through membership to just and member churn that earnings. discussed we'll discuss do revenue revenue. in growth membership way is per growth will the year I the more during a

digit focused highly So focused. where . insurance growing as our range that's that double-digit we is as are very maintaining low revenue attention to growth, and profitable single on well that in

Operator

Instructions] next Cassorla, Our [Operator question comes from Jason Citi.

Jason Cassorla

to give in more the years. reduce just in decision time wanted for noninsurance the X to you go us just I color on reducing can Maybe second commentary the around indirect exposure your business. to

context, can there? and that relatively loan, around membership correct, decision I it I on looking about any you side, to think that small you has in as sounds the even you reducing shifted more smaller physicians remind that guess to business just higher-performing there. working . us you're still last but year, profitability get then think help color SG&A with towards like offset a

Andrew Toy

Yes.

noninsurance one, interesting our do So to an specifically role Number -- is insurer, that of would just points earlier the the Medicare, us. we do today a made I component with business. clear noninsurance we a not as which couple original to ACR the reach I'm play sure remarks remains different the are the Thanks, segment, Jason. remarks where make of we're in that there.

the area, possibility while continue rightsize what we excited but noninsurance Advantage and And look means and so that our segments. fact helping manage there but in capability assure, very over Advantage we exposure reduce business. side, right? we discussed original to I are are increasing our within Medicare providers that of exposure that So Medicare are the was Medicare -- to the the about our on also to we not risk. the

I just that clarify make I particular So want point. to sure that

a yes, Your it's sense before last smaller SG&A of which of question, part load, said because the nature makes particular that that we our of relatively program.

I'll where what at that move places we think say partnerships that And Assistant and can for of entire applying introducing program our Medicare. and looking MA, terms of original the their providers of we're book last rightsizing is terms towards in part Clover of including at help I in of book is this is program Medicare just thing that's there MA Medicare that the risk side of versus risk, that looking

noninsurance where So should you as go. the the that's look we at future segment, of us to expect

Jason Cassorla

Okay. last maybe follow-up it. just helpful. Got here. X Very And

at us, terms Fed. Would that be MA for you of now? of any but there entirely in I you just where or noninsurance any your a Can business this do of almost point? the the now. is to on Just there of at new clarity ACO at side kind of a you're get just on where remind generally that now. reach, membership there you're color in thought that trying jump I in I'm offering would lives non-transfer the have sense -- or most the

Andrew Toy

question. fair really Yes,

discussions. that but that's of So program of is in original right that and for we whether it now, sizing what We've particular haven't Medicare any sure. program, of we see in the have terms shared been opportunities majority approached. We've definitely actually there. we of had that the

shared there. that given that. the and we we're in we about very we're actually that are . exactly sharing haven't how like can of go we terms of while excited have so any program, with we we numbers with lives today haven't And where where many

Operator

remarks. turn and would any back Toy over for portion concludes now the This Instructions] like call to to [Operator closing today's additional of Q&A conference. Andrew I the

Andrew Toy

Great. everyone, your of all questions. for Thanks,

year-to-date ability And So results for give great results and third that again journey. on proof durable point quarter all drive our I this another our exciting you really us everyone thank to highlighting joining hope this year.

Operator

This Quarter XXXX Earnings Clover concludes today's Webcast. Health Call Third and

this lines your disconnect . may Have day. a You time. at wonderful

Clover Health Investments (CLOV) 6 Nov 232023 Q3 Earnings call transcript