Clover Health Investments, Corp. (CLOV) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed picture. While there is strong membership and revenue growth, profitability and star ratings have been negatively impacted. The Q&A section indicates management's confidence in addressing cost challenges and leveraging strategic growth initiatives. However, lowered guidance for 2025 EBITDA and ongoing cost pressures temper the positive aspects. The lack of clear guidance improvement and financial strain from new members further contribute to a neutral sentiment, suggesting limited short-term stock price movement.
Key Financial Performance
Membership Growth Membership grew by 35% year-over-year, reaching over 109,000 members. This growth was driven by market disruption as competitors retreated, allowing Clover to capture additional market share.
Revenue Growth Insurance revenue increased by 49% year-over-year to $479 million for the quarter, and year-to-date insurance revenue was $1.4 billion, up 39% year-over-year. This growth was attributed to the increase in membership and market share.
Adjusted EBITDA Adjusted EBITDA for the third quarter was $2 million, down $17 million year-over-year. Year-to-date adjusted EBITDA remained positive at $45 million, despite pressures from a higher proportion of new members and increased utilization trends.
Medical Cost Ratio (MCR) Returning member cohorts generated approximately $217 of contribution profit per member per month, while new member cohorts had a negative contribution of $110 per member per month. Year-to-date MCR excluding pharmacy increased by 4% year-over-year, reflecting higher medical costs from inpatient and outpatient services.
SG&A Expenses Third quarter adjusted SG&A totaled $71 million or 14% of revenue, representing a 440 basis point improvement year-over-year. Year-to-date adjusted SG&A was $237 million or 17% of revenue, improving 370 basis points year-over-year. This improvement was due to cost discipline and operating leverage.
Cash Flow Cash flow from operating activities during the third quarter was $12 million. The company ended the quarter with $396 million in cash, cash equivalents, and investments, with $122 million at the unregulated subsidiary level.
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Operating Highlights
Clover Assistant (CA): Continues to be the core driver of the company, enabling Clover to be the top PPO in the country for the second year running on core HEDIS clinical quality scores. New capabilities like integrated scribing and generative AI tools have been rolled out to reduce administrative burden and improve patient care.
Membership Growth: Membership grew by 35% year-over-year, with revenue increasing nearly 50%. The company expects to add 44,000 gross new members in 2025, ending the year with approximately 113,000 net members.
Market Positioning: Clover captured additional market share as competitors retreated, driven by its wide network PPO offerings with low out-of-pocket costs and physician choice.
Adjusted EBITDA: Despite challenges, the company remained adjusted EBITDA profitable year-to-date, with $45 million in adjusted EBITDA. However, profitability was impacted by a higher-than-expected proportion of new members and increased utilization.
Cost Management: Year-to-date underlying incurred medical cost trend increased by 4% year-over-year, with strong cost management despite elevated utilization trends.
SG&A Efficiency: Achieved a 440 basis point improvement in SG&A as a percentage of revenue year-over-year, reflecting strong operating leverage.
Star Ratings: Received a 3.5-star rating for 2026, below the company's aspiration of 4 stars. Plans are in place to improve performance, particularly in pharmacy measures.
Counterpart Health Expansion: Expanded capabilities of Counterpart Health, including new generative AI tools and scribing features. The organization is targeting partnerships with provider groups, health systems, and payers.
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Risk or Challenges
Lowered guidance for 2025 adjusted EBITDA profitability: Broad systemic utilization pressure compounded by growth has significantly impacted profitability. The company missed targets on adjusted EBITDA and star ratings, which are critical for financial performance.
Higher-than-expected proportion of new members: New members are generally loss-making in the first year due to marketing, commissions, and medical expenses. This has diluted adjusted EBITDA profitability and created financial strain.
Increased utilization across medical expenses and supplemental benefits: Higher medical costs, including inpatient and outpatient services, have exceeded expectations, adding pressure to margins.
Low star ratings (3.5 stars): The company’s star ratings fell short of the desired 4-star level, impacting financial incentives and potentially limiting growth opportunities.
Part D pharmacy pressures: Higher-than-expected branded and non-formulary pharmacy spend has created financial challenges. The company is launching initiatives to address this but faces ongoing pressure.
Abnormal activity in dental and DME: Unusual trends in dental and durable medical equipment (DME) have negatively impacted financial performance, though these are not expected to persist into 2026.
Competitor pullbacks and market disruption: While this has accelerated growth, it has also led to a higher proportion of new members, which are less profitable in the short term.
Regulatory and CMS star rating framework: The current star rating framework does not fully reflect the company’s clinical quality, creating a misalignment between performance and financial incentives.
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Guidance & Outlook
2025 Adjusted EBITDA Profitability: The company has lowered its guidance for 2025 adjusted EBITDA profitability due to systemic utilization pressure and growth-related challenges. However, it expects 2025 to be the peak year for these effects, with meaningful adjusted EBITDA profitability anticipated starting in 2026.
Membership Growth: Clover Health expects to add approximately 44,000 gross new members in 2025, resulting in a year-end population of around 113,000 net members. This growth is expected to bring a larger contribution profit-positive base of returning members in 2026 and beyond.
2026 Financial Projections: The company anticipates achieving meaningful adjusted EBITDA profitability and full-year positive GAAP net income in 2026, driven by a larger base of profitable returning members, increased Clover Assistant adoption, and favorable CMS rate updates.
Star Ratings Impact: Clover Health received a 3.5-star rating for 2026 but aims to achieve a 4-star rating in the future. The company believes its model can perform profitably even in 3.5-star payment years, with 4-star years serving as upside.
Cohort Dynamics: New members are generally loss-making in their first year but are expected to mature into profitable returning members by 2026. The company has observed a 700 basis point improvement in MCR between year 1 and year 2 cohorts, and a 1,400 basis point improvement by year 3.
2025 Revenue and Membership Guidance: The company has increased its 2025 Medicare Advantage membership guidance to average between 106,000 and 108,000 members, reflecting 33% growth year-over-year. Insurance revenue guidance has been raised to $1.850 billion to $1.880 billion, reflecting 39% growth year-over-year.
2026 Strategic Focus: The company plans to focus on increasing Clover Assistant coverage, enhancing platform capabilities, and optimizing cost-efficient growth channels. It also expects to benefit from favorable CMS Part C and Part D rate updates.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How should we think about 2026 from a BER perspective given the elevated utilization, richer benefits, and outsized growth? Is there a mispricing issue for 2026?
A:Peter Kuipers explained that the underlying incurred cost trends, excluding pharmacy, are around 4%, which is considered solid performance despite higher utilization trends and a higher mix of new members. He stated that this cost trend is baked into the bid for next year. Additionally, there are tailwinds such as the 4-star payment year, rate notice on Part C, and direct subsidy on Part D. He also emphasized their targeted growth strategy in priority markets with a solid Clover member base and good coverage from Clover Assistant and home care perspectives.
Q:Why does the BER step up while the core MCR basis seems to step down from 3Q to 4Q?
A:Peter Kuipers clarified that the intra-year PPV from the second half impacted the third quarter. He suggested averaging out the first three quarters to establish a baseline expectation for the fourth quarter.
Q:Review of Unclear Management Responses
A:Management did not avoid answering any questions directly, and their responses were clear and detailed.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Assistant member
Assistant model
CA
PPO country
PPO offering
SGA basis
access
adoption
base member
capability
choice
cohort Assistant
confidence
contribution member
cost trend
coverage
income date
increase
leverage
margin pressure
member base
month
network PPO
pharmacy
pocket
population
proportion member
rating star
score
star payment
star rating
subsidy
term trajectory
utilization trend
view
year
CLOV Transcript
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The earnings call presents a mixed picture. While there is strong membership and revenue growth, profitability and star ratings have been negatively impacted. The Q&A section indicates management's confidence in addressing cost challenges and leveraging strategic growth initiatives. However, lowered guidance for 2025 EBITDA and ongoing cost pressures temper the positive aspects. The lack of clear guidance improvement and financial strain from new members further contribute to a neutral sentiment, suggesting limited short-term stock price movement.
CLOV Slides
CLOV Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
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No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
