Clover cuts losses, logs $84M loss in Q4

Photo: Jasmin Merdan/Getty Images

Medicare Advantage insurtech company Clover logged an $84 million loss in the fourth quarter of 2022, much less than the $187.2 million loss it sustained during the same quarter in 2021, according to the company's earnings report.

The year-over-year numbers were also an improvement: while Clover lost $338.8 million for the full year, that's down significantly from the $587.8 million it shed in 2021.

The strategy moving forward, said CEO Andrew Toy, is to focus on attaining profitability.

"In 2022, we emphasize profitability over growth," said Toy during an earnings call. "This strategic shift impacted both the insurance and non-insurance lines of business. We expect the combination of improved 2022 insurance results and the enhanced strategic emphasis on profitability over growth to position us for a successful 2023 as we demonstrate the strength of our approach to Medicare and deliver significant progress towards profitability."

Part of Clover's rosy outlook is based on the revenues it generated in 2022. The company logged $898.8 million for the quarter and $3.5 billion for the year – both big jumps over 2022, which saw revenues hit $423 million in Q4 and $1.5 billion for the year.

Medical cost ratio (MCR) also contributed to the improved financial picture, said CFO Scott Leffler.

 "Full year Insurance MCR significantly improved year-over-year to 91.8%, and fourth quarter Insurance MCR improved to 92.4%," he said. "The improved MCR compared to the prior year period was driven by continued favorability in underlying operational trends. Non-Insurance MCR for the full year and fourth quarter was 103.4% and 103.6%, respectively. We also finished the year with restricted and unrestricted cash, cash equivalents, and investments of $555.3 million on a consolidated basis and $331.7 million at the parent entity and unregulated subsidiary level, both of which we expect to be sufficient for our 2023 operating needs."

WHAT'S THE IMPACT

For 2023, Clover's insurance revenue is expected to be in the range of $1.15 billion to $1.20 billion, a growth rate of 6-11% as compared to full year 2022 insurance revenue. Insurance MCR is expected to be in the range of 89-91%.

Non-Insurance revenue is expected to be in the range of $0.75 billion to $0.80 billion in 2023, while non-insurance MCR is expected to be in the range of 98-100%.

Toy said the company is achieving "real momentum" toward profitability, and intentionally priced its insurance plans for 2023 with profitability in mind. He said he still expects growth in to-line insurance revenue.

"We believe this, coupled with a maturing membership base and increased reimbursements based on our improved star ratings, will enable us to achieve continued meaningful improvement in our Insurance MCR in 2023," he said. "For our non-insurance business we plan to execute our previously disclosed strategic shift to focus on a targeted group of participant providers aligned to our strategy and capabilities."

THE LARGER TREND

In November, Clover said it was scaling back its participation in the federal government's Accountable Care Organization Realizing Equity, Access and Community Health program, in part to improve the company's medical cost ratio.

Also, there's still unpredictability in the new model, according to Toy. ACO REACH is not yet a statutory program, so its rules can change and its rates could get tweaked, he said. Clover still intends to be one of its larger participants.

In July 2022, Clover pushed its Medicare Advantage footprint into 13 new counties across three states.
 

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com