Gross profit margin stepping down 150 bps year-on-year; driven by 53% AEP membership growth (new cohort dilutive), partially offset by maturation of 2024 cohort into year 2 and year 3+ improvements.
Management views the step-down as "perfectly reasonable" given the 4-star payment year and >50% growth; new cohort dilution is less severe than for other models.
On 2027 preliminary rate: benchmark trend is "reasonable" (industry sought higher); CMS removed fraud/waste/abuse and used recent data; risk model change increases claims-clinical data linking, but CMS oversight exists for first-year members switching from other MA plans (data not fully provided).
Mgmt stance: Neutral-to-bullish — confident in cohort profitability progression; rate trend acceptable; risk model gap expected to be closed by CMS.
Q2 — John Granville Pinney
Topic: New cohort early performance and Counterpart Health update
Key points:
New cohort profitability in line with expectations; MMR files match plan; utilization declining in January–February year-to-date for total population.
Counterpart Health: no material contribution to 2026 guidance yet; near-term goal is to bring equal number of patients under Counterpart technology as currently under Clover Assistant inside own insurance plan.
CA-empowered physician penetration: 2/3 of membership in 2025; growth in core markets expected to maintain similar CA penetration; Georgia (new market) may add pressure, but strategy includes growing CA network there.
Mgmt stance: Neutral — early cohort performance on track; Counterpart progress noted but no economic guidance impact yet; CA penetration pressure manageable.