Health insurance company Clover Health (NASDAQ: CLOV) missed Wall Street’s revenue expectations in Q1 CY2025, but sales rose 33.3% year on year to $462.3 million. Its non-GAAP profit of $0.05 per share was significantly above analysts’ consensus estimates.

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StockStory’s Take

Clover Health’s first quarter results reflected significant growth in its Medicare Advantage business, highlighted by a 30% increase in membership and notable improvements in operating margins. Management attributed these outcomes to robust enrollment in core markets, successful onboarding of new members, and the expanding use of the Clover Assistant technology to drive earlier intervention and more efficient care. CEO Andrew Toy emphasized, “We’re giving our doctors the tools they need to provide better care and it’s showing in the results.”

Looking ahead, management’s guidance for the rest of the year is underpinned by expectations of continued strong member retention, disciplined cost management, and further expansion of Clover Assistant. The leadership team pointed to the positive impact of the recent CMS (Centers for Medicare & Medicaid Services) rate notice and anticipated benefits from a 4 Star PPO plan, projecting increased growth and profitability in 2026 and beyond. CFO Peter Kuipers highlighted that the company is “well-positioned with tailwinds going into 2026 due to an increase to a 4 Star payment year.”

Key Insights from Management’s Remarks

Clover Health’s management highlighted several operational and strategic developments that shaped quarterly performance and set the stage for future growth:

• Medicare Advantage Expansion: Membership rose sharply in core New Jersey markets, supported by successful enrollment seasons and strong retention. Management credited this to their network’s depth and the effectiveness of Clover Assistant in onboarding and engaging members.
• Technology-Driven Care Model: The Clover Assistant platform continues to be central, showing measurable impact in early diagnosis and disease management, particularly for chronic conditions like congestive heart failure. Recent internal research pointed to fewer hospitalizations among users of the platform.
• Cost Control and Operating Leverage: SG&A (selling, general, and administrative) expenses as a percentage of revenue declined year over year, reflecting improved operating leverage even as variable costs increased with membership growth. Management cited proactive engagement and technology-enabled efficiencies as key contributors.
• Care Services Expansion: The Clover Care Services division provided tailored in-home support for high-need members, with offerings such as the Welcome Home visit to assist those transitioning from inpatient care. These services are designed to improve outcomes and further differentiate Clover’s offering.
• Counterpart Health Partnerships: Clover continues to pursue third-party partnerships to extend Clover Assistant’s reach beyond its own plans, with early traction reported and additional implementation resources being allocated. Management expects this to become a more significant growth area over time.

Drivers of Future Performance

Management’s outlook for the remainder of the year centers on sustaining membership growth, deepening technology adoption, and capitalizing on regulatory and quality-rating tailwinds.

• Star Rating Improvement: Moving from a 3.5 Star to a 4 Star plan next year is expected to enhance payment benchmarks, supporting benefit competitiveness and profitability.
• Clover Assistant Expansion: Broader deployment of Clover Assistant, both within Clover’s plans and through new Counterpart Health partnerships, aims to improve care management and drive long-term operating efficiencies.
• Market and Regulatory Tailwinds: The recent CMS rate notice and anticipated maturation of new member cohorts are expected to support favorable unit economics and incremental margin gains, though management noted typical seasonality in utilization patterns as a risk.

Top Analyst Questions

• Jonathan Yong (UBS): Sought details on differences in cost trends between new and existing member cohorts, with management confirming both are tracking as expected and in line with projections.
• Jonathan Yong (UBS): Asked about progress and future contribution of Counterpart Health partnerships; management stated they are seeing promising traction and will provide more updates as partnerships mature, emphasizing a focus on Insurance segment profitability for now.
• Matt Hewitt (Craig-Hallum Capital): Requested feedback on initial implementations of Counterpart, with CEO Andrew Toy reporting early data is positive and engagement metrics are encouraging, aligning with in-house performance.
• Matt Hewitt (Craig-Hallum Capital): Questioned changes in the competitive landscape; Toy observed that competitors are pulling back on benefits and investments, while Clover maintains its technology-driven wide network approach.
• Richard Close (Canaccord Genuity): Asked about sources of future growth beyond rate and star improvements; management cited improved unit economics from larger cohorts, benefit adjustments, and continued technology investment as drivers.

Catalysts in Upcoming Quarters

Looking forward, the StockStory team will be monitoring (1) continued growth and retention in core Medicare Advantage markets, especially New Jersey; (2) the pace and impact of new Counterpart Health partnerships as Clover Assistant is adopted by external organizations; and (3) evidence of further operating leverage as membership scales. The maturation of new member cohorts and progress toward a 4 Star payment year will also be important indicators of future margin improvement.

Clover Health currently trades at a forward EV-to-EBITDA ratio of 48.7×. Should you double down or take your chips? The answer lies in our free research report.

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