0001801170-26-000057
SEC filingRevenue grew 40% to $1.92B, but medical cost increases outpaced growth, pressuring margins and reducing Adjusted EBITDA to $21.7M.
Clover Health Investments, Corp. describes itself as a technology-enabled Medicare Advantage insurer focused on empowering physicians with its proprietary software platform, Clover Assistant, to improve chronic disease detection, management, and treatment. The company's strategy centers on leveraging this platform to deliver affordable, high-quality care through wide physician networks, including open-network PPO plans that offer the same cost-sharing for in-network and out-of-network primary care visits. As of January 1, 2026, Clover Health operated MA plans in five states and 203 counties, targeting both broad markets and traditionally underserved communities.
The company operates through two primary segments. Its Medicare Advantage Plans segment offers PPO and HMO insurance products to Medicare-eligible seniors, managed via the Clover Assistant platform. The Counterpart Health segment, launched in 2024, provides a SaaS and tech-enabled services solution that licenses the Clover Assistant technology (branded as Counterpart Assistant) to external payors and providers. The filing explicitly states that Counterpart Health 'is not yet significant to our overall business or results of operations.'
The core product is Clover Assistant, a cloud-based platform that synthesizes data from over 100 sources to deliver real-time, data-driven clinical recommendations at the point of care. This platform is also offered externally as Counterpart Assistant. The company operates several clinical programs powered by Clover Assistant, including Clover Home Care (home-based primary care for high-acuity members), Supportive Care (palliative and advanced care planning), Welcome Home Program (care transition support), and Behavioral Health Program. Additional features include Care Connect for office staff and embedded analytics for quality gap closure and disease burden identification.
Clover Health markets its MA plans through insurance brokers, field marketing organizations, co-branding arrangements with providers, direct mail, internet marketing, telesales, and the Medicare Plan Finder. For the Counterpart Health segment, the company is pursuing external commercialization through direct sales of SaaS and tech-enabled services to other plans and providers. No specific customer concentration is disclosed; the primary customer base is Medicare-eligible seniors, while Counterpart Health targets external payors and healthcare organizations.
The company faces competition from large national insurers such as United Health, Aetna, Humana, Centene, and Elevance Health, as well as regional MA providers like Alignment Health, Devoted Health, Oscar Health, and Blue Cross Blue Shield affiliates. In the physician enablement space, competitors include EHR vendors, value-based care tools, and other healthcare technology platforms. The company believes its competitive advantages include the Clover Assistant platform's ability to improve clinical decision-making, its open network designs, and its focus on underserved markets.
The company's four-step strategy involves: (1) selecting markets for deployment, including underserved areas; (2) broadly disseminating Clover Assistant by contracting with a wide range of primary care providers using a simplified enhanced fee-for-service payment model; (3) deploying best-in-class plans with low out-of-pocket costs and open networks, driven by Clover Assistant's economic efficiencies; and (4) expanding externally through Counterpart Health to generate new SaaS and tech-enabled services revenue streams with low startup costs.
As of December 31, 2025, Clover Health had 724 employees, with approximately 93% in the United States, 6% in Hong Kong, and less than 1% in other countries. The company operates as a remote-first organization with a distributed team model from the Board of Directors downward. It emphasizes a total rewards program including base salary, cash incentives, equity awards, and comprehensive benefits such as health insurance, paid parental leave, a 401(k) match, and an employee stock purchase plan.
For the year ended December 31, 2025, total revenues increased 40.3% to $1.92 billion, driven primarily by a 33% increase in average members and higher risk adjustment revenue from strong member retention. However, net medical claims incurred rose 55.9% to $1.57 billion, outpacing revenue growth due to membership expansion, increased Part D cost sharing from the Inflation Reduction Act, and less favorable prior period development. Consequently, consolidated gross profit (non-GAAP) decreased 2.4% to $355.9 million, and gross margin contracted from 26.6% to 18.5%. Operating expenses grew 41.8%, with salaries and benefits declining 3% (lower variable compensation) but general and administrative expenses jumping 21% (higher professional and broker fees). Net loss from continuing operations widened 84.9% to ($85.5 million), and adjusted EBITDA fell 69% to $21.7 million.
The Insurance segment, the sole reportable segment, saw premiums earned, net increase 40.7% to $1.89 billion. Insurance net medical claims incurred rose to $1.62 billion, resulting in a benefits expense ratio (BER) of 90.9% (up from 81.2%). Normalized BER, adjusting for prior period development, increased from 84.2% to 91.5%, reflecting underlying cost pressures. Membership at period end grew 37.6% to 113,803, with PPO plans comprising the vast majority. The segment's performance was driven by scale but challenged by medical cost trends.
Management highlighted the 2026 Annual Election Period results, with membership growing 53% year-over-year to over 153,000 members, 97% enrolled in PPO plans. Geographic presence expanded to 203 counties across five states. However, CMS decreased the star rating for PPO plans to 3.5 (for payment year 2027), which may affect future revenue, while HMO plans improved to 4.0 stars. No specific financial guidance was provided, but the company expects sufficient liquidity from operations and existing cash ($122 million at unregulated entities) to meet obligations for the next 12 months. Strategic priorities include leveraging Clover Assistant to improve care and manage costs, with a focus on member retention and risk adjustment optimization.
As of December 31, 2025, Clover Health held $78.3 million in cash and cash equivalents, $17.0 million in short-term investments, and $224.5 million in investment securities (available-for-sale and held-to-maturity) at fair value. Total liquid assets were approximately $319.9 million. The company has no outstanding debt on its consolidated balance sheet, with total shareholders' equity of $308.7 million. The regulated insurance subsidiaries maintained statutory capital of $212.6 million, exceeding minimum RBC requirements.
No material purchase commitments or contractual obligations were disclosed in the Notes to Financial Statements. The company has operating lease obligations of $3.7 million with a weighted-average remaining term of 2.4 years. There are no significant off-balance-sheet arrangements.
During fiscal 2025, Clover repurchased 5.1 million shares of common stock for $18.3 million at an average price of $3.61 per share. No dividends were declared or paid. Capital expenditures totaled $2.0 million, primarily for capitalized software development. There was no debt issuance or repayment. The company also recognized $103.7 million in stock-based compensation expense.
Clover operates as a single reportable segment: Insurance, providing Medicare Advantage plans (PPO and HMO) in multiple states. Segment revenue was $1.892 billion (net of ceded premiums of $0.4 million), with net medical claims incurred of $1.618 billion, yielding a gross profit of $273.5 million (14.5% margin). The CODM uses gross profit as the primary measure of segment performance; selling, general and administrative expenses are reviewed on a consolidated basis and not allocated to the segment. No geographic breakdown within the segment was provided.
Clover Health's business is heavily regulated. The most material regulatory risks stem from Medicare Advantage (MA) funding and CMS policies. The company derives substantially all revenue from MA premiums, so any reduction in CMS benchmarks, changes to the risk adjustment model, or quality Star Ratings could severely impact revenues. Specifically, CMS's risk adjustment system creates uncertainty with potential retroactive adjustments. Additionally, the company faces ongoing scrutiny under the False Claims Act (FCA) related to diagnosis coding and risk adjustment, including a DOJ inquiry. Federal and state privacy laws (HIPAA, CCPA) impose compliance costs; a breach could cause significant liability. The FDA could classify Clover Assistant as a medical device, triggering premarket approval requirements. Geographic concentration (87% of members in New Jersey) amplifies exposure to state-level regulatory changes.
Clover Health's long-term success depends on the adoption and continuous improvement of Clover Assistant, its software platform. Failure to increase provider adoption or expand via Counterpart Assistant (SaaS for external payors) could stall growth. The platform's complexity introduces risks of errors, bugs, or security breaches, which could erode provider trust and member retention. The company relies on third-party cloud infrastructure (AWS, Google Cloud); disruptions could cause service outages. International operations (Hong Kong, Canada) add political and data security risks. AI usage in Clover Assistant raises ethical and regulatory concerns, with potential for flawed outputs leading to liability.
Clover Health has a history of net losses ($85.5M in 2025) and an accumulated deficit of $2.3B. Achieving profitability is uncertain and depends on effectively managing medical costs and member lifetime value. The MA market is highly competitive, with large insurers (UnitedHealth, Humana) possessing greater resources. Clover's small scale and lack of brand recognition in new markets hinder member acquisition. The company relies on third-party vendors for PBM, claims processing, and customer service; any failure could disrupt operations. Additional capital may be needed, potentially diluting stockholders. Overall, the risk factors indicate a high-risk profile tied to regulatory changes, competitive pressures, and the successful execution of its technology-driven strategy.
Net loss improved to $85.5M in 2025 from $43.0M in 2024, yet operating cash flow swung from positive $34.8M to negative $66.9M, indicating lower cash flow quality relative to net income. The primary driver was a large working capital outflow, notably healthcare receivables increasing by $43.3M and accrued retrospective premiums declining by $22.6M, more than offsetting a $103.7M non-cash stock-based compensation add-back. Capex remained modest at $2.0M, representing less than 1% of revenue, suggesting a low capital intensity business. Free cash flow is not explicitly stated, but CFO minus capex implies negative $68.9M in 2025, which did not cover the $18.3M in share repurchases. The $36.9M cash paid for shares withheld related to stock-based compensation further drained financing cash flows. Overall, the cash flow statement reflects a company still consuming cash from operations, with significant working capital volatility.