Good day and thank you for standing by. Welcome to the Clover Health’s Second Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. It is my pleasure to hand the conference over to Derrick Nueman, Vice President of Investor Relations. Please go ahead.

Good morning, everyone. Joining me on today’s call is our CEO, Vivek Garipalli; our President and CTO, Andrew Toy; and our CFO, Joe Wagner. We will discuss second quarter results, recent trends and answer your questions. This call is also being recorded. Before we get started, I would like you to remind you that our second quarter earnings materials, including the release, are available on our website at clovehealth.com. I’d also like to caution you that we may make forward-looking statements during today’s call that are subject to risks and uncertainties. Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings including in the Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2020 and in our other periodic SEC filings, including our quarterly reports on Form 10-Q for the quarter ended June 30, 2021. Information about non-GAAP financial measures referenced, including a reconciliation of these measures to GAAP measures, can also be found in the earnings materials available on our website. With that, I will now turn over the call to Vivek.

Thanks, Derrick and thanks everyone for joining us today. As I have said many times before, we have ambitious goals, delivering on our aggressive growth trajectory, improving health equity for America’s underserved seniors, regardless of economic standing, and aligning incentives across a broken healthcare system. We are making progress toward those goals both on an ICL basis and serving more seniors. Getting into the key points from the quarter, we delivered $412 million in total revenue, up 140% year-over-year. We think this is important to note, because we are going after the entire $1 trillion plus Medicare market, including both Medicare Advantage and fee-for-service. Our lives under Clover management nearly doubled to 129,000 versus last quarter. This growth was driven by the launch of direct contracting and our MA business continuing to grow steadily. Clover Assistant continues to be a differentiator, which Andrew will address in his commentary. While we continue to do a better job on health equity than most Medicare-focused companies by serving more minority or underserved beneficiaries. As a reminder, Clover MA plans over index towards underserved populations and historically over 50% of our members are minorities versus an industry average of a little more than 30%. We expect these growth trends to only continue and we believe we are building a strong foundation as we go after a bigger piece of the $1 trillion plus Medicare market we just referenced. Specifically, we recently announced our MA plans are expanding to another 101 counties in 2022, subject to CMS approval and we are preparing for the fall annual enrollment Period. We are adding more DCE providers and moving into new states as evidenced by the recent press release announcing our DCE’s expansion into Florida. The DCE efforts will also provide us with the ability to expand our…

Thanks, Vivek. I am similarly excited about the growth and scale we are reporting this quarter, especially around direct contracting. I have a few comments to point to what I think are indicators of success in our unique Clover Assistant model. As a reminder, our vision is to transform healthcare through personalized data-driven primary care powered by the Clover Assistant. And unlike most other approaches, we aim to do that over a wide open network of physicians that gives maximum flexibility and choice to our Clover members. By doing this, we believe we can access the full potential of $1 trillion Medicare market, as evidenced by our ability to use the Clove Assistant in both the Medicare Advantage market and the fee-for-service market via direct contracting. In both cases, and in contrast to other models, Medicare eligibles continue to see the physicians they wish to see and we believe we can then deliver better outcome and lower costs via CA. We believe that the success we’ve demonstrated building and scaling both programs, combined with the fact that very few healthcare companies even participate as significantly in both of these programs, is evidence of our differentiated ability to access this larger, total addressable market. This is why I am so excited that the Clover Assistant launch to the fee-for-service population in the last quarter via direct contracting. This has grown our lives under Clover Assistant management to around 95,000, which represents growth of 229% year-over-year. That same growth puts us on track to manage over $1 billion of annualized Medicare revenue via the Clover Assistant. This growth is not only important to driving our financial results, but we believe it enables the Clover Assistant to get better from a direct feedback loop with physicians, a key engineering differentiator and mode for…

Thanks, Andrew. We are thrilled to have delivered $412 million in revenue in the second quarter, up 140% year-over-year. This growth was driven by the launch of direct contracting and growth in our MA membership. As of quarter end, we now have approximately 129,000 lives under Clover management, roughly double the second quarter of 2020. This is comprised of MA membership and direct contracting lives of 66,600 and 62,000 respectively as of June 30, 2021. Moving to MCR, our net medical claims incurred for the quarter were $459 million, up year-over-year primarily due to the inclusion of direct contracting. As Vivek discussed, COVID-19 continues to impact the GAAP MCRs as we incurred significant direct costs caring for members that were diagnosed with COVID-19 though less than last quarter and we saw increased utilization from outpatient deferred care and chronic conditions that weren’t diagnosed during the pandemic. This impact was amplified as our largest markets are in New Jersey and New York, where the impact from COVID-19 and the measures to mitigate it have been outside. In Q2, our MA GAAP MCR was 111%. We estimate that direct COVID costs were 490 basis points. Prior period development was 200 basis points. Excess utilization due to COVID was 330 basis points. And risk adjustment normalization was 380 basis points. This equates to a normalized non-GAAP MCR of approximately 97%. Our final financial results for direct contracting will not be finalized until the CMS reconciliation for year 1 occurs. So, there remains a lot of moving parts. With that said direct contracting net medical claims incurred on a GAAP basis were $241.9 million and were impacted by the same COVID-19 factors as our MA plans, as roughly 75% of our DCE lives are in either New Jersey or New York. We don’t yet…

Thank you, Joe. I am proud of the Clover team for accomplishing so much already this year. Despite the impact of our achievements, we are only scratching the surface. We believe that we are pursuing operational initiatives that demonstrate our commitment to our guiding mission, improve every life. We will continue to focus on delivering on our strategic priorities and we look forward to demonstrating our progress in the quarters and years to come. Operator, we are ready for questions.

Thank you. Our first question is from Jailendra Singh with Credit Suisse.

Yes, good afternoon, everyone. This is Carlos in for Jailendra and a great quarter. So the first question I have for you guys is I just was wondering you could flush out a little bit on the utilization trends, what kind of risks are you building to your assumptions for second half from here and also any data around what percent of your members are currently vaccinated?

Hi, it’s Vivek. Hey, thanks for the question. Appreciate the kind words. I think in terms of overall utilization, it’s actually from our perspective really and may for other part as well, pretty difficult to project out for second half, just particularly the – in terms of COVID impact, so hence why we presented our data on a normalized basis. From a vaccination perspective, in terms of data we have access to from a claims perspective it’s not going to always be complete from un-claims in terms of who has gotten vaccinated. But when we look at overall data, take New Jersey, for example, where we have a large majority of our members and New Jersey data shows that over 80% of individuals over 65 are fully vaccinated. So, we believe that’s where our membership stands, but we are still pressure testing that data via outreach surveys and so forth.

Okay. One other question, just really quickly on direct contracting, I think you guys noted flatter, I heard it correctly, I was just curious since I think you have guided for $700,000 before, just wanted to double check on that? Thank you.

Would just was your question around rest of your guidance, just want to make sure I’m answering the…

Yes, correct.

Yes. So I think just in terms of the program itself, so a lot of the rules are still a bit influx, from CMS’ perspective – CMS perspective in terms of what is permitted and not permitted on involuntary alignment, in terms of process wise. So I think we will learn more about over the next quarter or two. And in general, our direct contracting model is much more focused on signing up net new practices with the vast majority or majority of our lives we think will come from claims alignment. So, practices are signing up now will see an impact on claims alignment starting January of next year. But putting that aside, as some of the guidance gets clarified in terms of voluntary alignment, we do think there is a meaningful opportunity over time. General folks see a voluntary alignment.

In terms of members, sorry, maybe you make that clear. Thank you.

In terms of lives, yes.

Yes, lives if it was flat, that’s what my question was.

Yes. I think for the rest of the year, it’s hard for us to really project that what that’s going to look like. But I think what we can say is that the vast majority of increase generally is going to come from year-over-year driven by claims alignment.

Okay, thank you.

Our next question comes from Kevin Fischbeck with Bank of America.

Okay, great. Thanks. I guess just maybe to follow-up on that point. So then, I guess is the right way to think about it that whatever growth rate we were expecting you to pickup next year, it should be off of that lower base, it’s not like the number necessarily has been pushed back to a bigger January 1 increase per se, it’s just that it’s more going to be about claims alignment, then it’s going to be about voluntary alignment. So it’s really kind of a lower base that we should be using as well as the ending run-rate?

Yes. In terms of next year, we’re now not giving any incremental guidance. We do understand we haven’t shared any data externally yet with any of the conversations and status of conversations we’ve been having with new practices that have yet to join our DCE. And so we are aware of that. And it probably does make it a little bit difficult, we understand, in terms of projecting next year. But at the appropriate time we will share more information around that.

Okay. And then I guess this is one of the questions I’ve been asking pretty much all the companies is just when we see like MLR coming in higher and in this case negative PPD as well. I guess, how confident are you that what’s happening here is purely COVID related versus some underlying higher long-term trend. I guess, what’s your visibility into getting back to a normal trajectory for next year for MLR? Should we expect MLR to be higher next year as well?

Yes. So – and we’ve definitely been following other companies as well, just to make sure we’re getting a complete perspective because it’s definitely a phenomenon, an unfortunate phenomenon for all organizations in healthcare, and obviously individuals. So I think when we think about our normalized MCR calculation, we feel really good about it from the perspective of we believe it’s intellectually honest. And importantly, it’s really how we look at our business internally. So if we just think about kind of high level, MCR has two components. You’ve got the revenue side and you’ve got the MedEx side. So last year, you had a couple of components. You had a lower utilization of services. So essentially a artificial compression in medical expenses. But then you also had an artificial drop in primary care visits, specialist visits, which in turn leads to an artificial drop in risk adjustment this year, artificial meaning not normal. And so there is an imputed normalization of that risk adjustment that will impute into next year’s revenue. So to kind of the latter part of your question, if there is a component of MedEx this year, to your point, that could be driven by exacerbation of conditions, that’s also going to show up in risk adjustment next year because we’re talking about complexity of conditions. So just as a base example, diabetes to maybe diabetes with complications. So that’s why we’re reasonably confident that next year, just in terms of the way the calendar year is working, Medicare from an MCR perspective, they’ll be much closer to what we think will be kind of the normal MCR for next year.

Yes. And Kevin, it’s Joe. One thing I’ll add is we enhanced kind of our analysis of our claims over this quarter with, using third-party actuaries in addition to our in-house team. And I think what we learned from that was there – we were able to kind of say, okay, there is a piece of this that clearly is deferred. And that piece will likely be moderated later in the year as the patients kind of defeat – complete their services. And then there is kind of this – along with that, the pent-up demand. And then to Vivek’s point, to the extent that there is a morbidity change, that’s the piece then that’s going to be captured via risk score. So again, it’s tough to predict where it’s going to be in the second quarter – or I’m sorry, in the second half of the year. But again, we took a really, really hard look at this. Obviously you can see from the press release that we spent a lot of time kind of helping to understand what pieces really went into our normalized MCR calculation. And to Vivek’s point, we feel comfortable there is a piece of it that’s likely going to continue, which will ultimately be captured and rescored. But then there is a piece that will be moderated as patients complete those deferred services.

Okay. And one way or another MLR should look better next year?

Yes. And just – thanks, Joe. And just kind of one more interesting point to add that is very relevant to how we think about our business internally. So we realize the press release we shared there was fairly lengthy, but buried in there we – it’s the first time we’ve given an illustrative breakout of MCR across counties in terms of just cohorts. So you’ll see that the top six counties in terms of size of membership. It’s just about 59% of our total members. We use Q1 there just because it’s more fully run-out claims, but you’ll see the normalized MCR there is 86.5%. And you’ll see individuals in those counties we had over a 70% CA visit rate. And you’ll see in the rest of the counties, MCR was a little over 100% with CA visit rate under 40% and again, newer counties. And so we will share more information in the coming quarters in some of these breakouts. But that’s really to kind of give good folks an understanding as to how our counties evolve, how MCRs evolve as we get more and more CA coverage as well.

Okay. And actually that might answer my last question, but I was going to ask about the improvement because you guys are looking at this adjusted MLR number and kind of saying that that’s your best view about what underlying trend is. And it looks like it went from 97.5% down to 97%. And, well, given a terribly big improvement year-over-year and is the answer just this new counties versus old counties or is there anything else that you would kind of point to as to how to think about a 50 basis point improvement versus what the kind of long-term MLR targets are?

Yes. I think – yes, I appreciate that call out. So I think directionally, what you said on the latter point is totally accurate. I would – the only adjustment I would make to that is it’s not necessarily newer or older, but there is definitely a correlation between length of time we’ve been in an accounting CA coverage. And so the way to think about whether it’s the 92% normalized MCR in Q1 or the 97% normalized in Q2 or the little over 94% normalized for first half this year. The way we think about it is how are our markets doing from a CA coverage standpoint. And so I think that’s really the lever. So as you think about building your financial models, the biggest lever for us is CA coverage. And that’s – and this is sort of the first data point we’ve shared externally from an illustrative perspective on the impact of CA coverage.

Okay. That’s helpful. Actually maybe then just a follow-up on that point then, do you have any stats about like how fast CA coverage is expanding in those two types of geographies? I guess it would be interesting to see kind of how – what the progression normally is for county so that we can kind of maybe build it into our models a little bit better?

Yes. I think – unfortunately, I can’t give you sort of the most precise answer right now, just in the sense of – I’ll phrase it this way, which is our ability to scale Clover Assistant and achieve coverage today is more rapid than it was a year ago or 2 years ago. I think there is a couple of reasons for that. So reason number one is Andrew and his team have led a pretty meaningful sized wholesale move of our original Clover Assistant platform onto our new platform, which DCE was built on. And so that’s going to dramatically ease the use of – ease the process of onboarding. And we shared some information yesterday on our first kind of what we think is a pretty meaningful accomplishment on being able to – first version of relevant integration to various EHR platforms. So that’s going to help as well. And I think the other really interesting thing when we think about the ability to leverage Clover Assistant across different lines of business. And so if a practice that, let’s say, was – has Clover MA lives, but is not yet on Clover Assistant, but let’s say signs up for direct contracting, let’s say, that practice is going live in January 1. Direct contracting would have essentially been the prong to unlock coverage for that practice. So if we take practices that might have less than 10 Clover MA lives, but then signs up for direct contracting, the probability of that practice getting live on Clover Assistant goes up.

Okay, makes sense. Thank you.

Our next question comes from Lisa Gill with JPMorgan.

Hi, good afternoon. This is Cal Sternick on for Lisa. Can you just walk through some of the changes in the direct contracting revenue recognition, because obviously it was sort of a big step up in your guidance versus your prior expectations and just want to be clear on what the mechanics are and what changed from the first quarter? Thanks.

Yes. Yes, happy to take that one. Yes, I mean we’ve been aware since last year that many of our other publicly traded companies with a presence have been giving direction that the entirety of their at-risk Medicare spend would be fully recorded as revenue on their income statements. The one thing I’ll say is every direct contracting entity is unique in terms of the relationship with the physicians, some are fully owned, some are contracted. And so we knew kind of all along there was not one answer, and there continues to be kind of not one answer that is relevant for the entire industry. And so because of that, we took a conservative position based on discussions with our auditors at the time. As we continue those – again, as we continue those discussions, we knew there was a chance that the full at-risk revenue wouldn’t be permitted to be recorded, new government program and no final consensus view. As we looked at it more, we’ve had kind of more discussions with the SEC, via not only our auditors, but other accounting firms. So we determined really in this quarter that was appropriate for all of our at-risk Medicare spend to be recorded as revenue. And then therefore that’s why we’re adjusting our – not only our accounting for that, but also our guidance going forward. And I think for us it makes sense because of the fact that we view that business very much based on benchmark as opposed to kind of the small piece of revenue. And obviously, that has an impact on our revenue guidance. But again, it was really just about unique circumstances of each individual DCE and our desire to be conservative and to not overpromise something on the revenue side that would be – end up being materially smaller.

Thanks Joe. And I think just to add to that, the revenue recognition is definitely not a surprise to us. But I think to Joe’s point, given it was a new program, our auditor was, at the time we were making terminations around this, they were not in a position to give 100% confirmation on how accounting would work, we felt it was appropriate to take that into account as we were having conversations externally.

Okay. And you also mentioned that CMS could retrospectively trend the benchmarks. Can you just maybe elaborate a bit on how that could impact your revenue recognition, and when you would expect to get some more guidance back on that?

Yes, I can handle that one. Every – on a quarterly basis, CMS has the ability to make retroactive adjustments to the trend factor that was used in determining benchmarks. And so as opposed to MA, where you have got a lot of things that are fixed and you have got, I would say, limited movement, you have got risk scores. But obviously, your underlying bid data that is used to determine your revenue is currently fixed. Under our contracting again, there are – there is some movement, and some of that may not be complete until the final settlement for a given year. And so, again, these are quarterly adjustments that CMS makes looking at both national data as well as regional data to the trend factors that they use to determine benchmarks. And so for us, we can’t – we don’t know exactly which way it’s going to go. Obviously, we provide CMS our data, the early additional data that we have. But those are adjustments that we will record as those trends adjustments are made by CMS. It could be, Q3 could be Q4. We don’t know, but we do know that CMS has the ability to retro actively make those adjustments under the confines of the program.

Got it? And then for direct contracting, I think a while ago, you guys had suggested that it could be roughly breakeven for the year. I mean, it looks like the MLR was above this quarter, but how are you thinking about margins and profitability for direct contracting for the balance of the year?

I think at this point it because it – because all we have is Q2. And there is still, I think we may have only received, April and May data enough in a format for us to form. And the initial views – with the approach we took is to really not form any conclusions. On a normalized basis, we think probably the next quarter or two quarters as Joe referenced earlier, we will be in a better position to have a clear understanding and there is a lot of programs that we are putting in place as well, that will take effect in the back half.

Alright. And just last one for me. You mentioned you saw some higher outpatient costs. Can you talk about anything, is there anything notable you are seeing on the inpatient side? And then, how do you see direct COVID costs and non-COVID utilization tracking from where things stand today? And then on the PDR, also, how much of that charge is related to MA versus direct contracting lives?

Yes.

Joe, if you want to hit the PDR and then…?

Yes.

If you want to hit the PDR in-patient, I can hit kind of our thinking on COVID going forward.

Yes. So, I will answer again two of those. On the PDR, that’s really related to our M&A business. And again, that’s just an intra-year charge. Basically, we – it was accrued this quarter. It’s going to be amortized in over the next two quarters. So, that’s just really just a timing issue on the M&A side. So, that’s fully on the M&A side. And then I will hit the in-patient, and then Vivek can may be talk a little bit about just – on the in-patient side, I am going to – obviously, we have seen direct COVID costs, which we call out in our normalized MCR calculations. So, that’s kind of there for all to see even though we have not seen necessarily an acuity increase on the in-patient side that we view, kind of in any material way. Again, what we are seeing, as we call it, and the normalized calculation is exacerbation of some conditions, that are manifesting themselves on the outpatient side. Again, I would say nothing worth calling out on the in-patient side, that we – that is kind of from a future standpoint, that give us pause, just in terms of higher in-patient acuity at this point.

Thanks Joe. And just in terms as we think about COVID impact for remainder of the year, I mean, obviously, COVID doesn’t care about calendar years. And so, just in terms of – just from my personal view, so not represent Clover’s view, but just my personal view on how I think about COVID impact. And so, obviously the Delta variant is really what’s driving an uptick in hospital utilization. I think at the same time, as FDA approval comes, pretty soon, probably starting with Pfizer Moderna. In my knowledge, I think it’s probably the first approval for an mRNA vaccine. And so subsequent approvals of booster shots are going to be, I think, pretty rapid. And you are seeing vaccine production capacity going up pretty dramatically, probably coming online, closer to the back half, or towards the end of the back half of this year. So, I would say greater than 50% chance we will see more variance, particularly coming from countries that have pretty low vaccination rates, and derived from those who are immunocompromised. But I do think the increased capacity vaccine production, the ability to roll out booster shots, taking into account new variants that eventually come, we will see, at least in the United States, I think a path to more and more normalization, over the next year to 18 months, just from like a science perspective. But from my perspective, it seems like a probable outcome.

Great. Thanks very much.

Our next question comes from Ralph Giacobbe with Citi.

Thanks. Just have a quick few for me. I guess one the change in the normalized MLR definition from 1Q? That’s just largely risk adjustment, or is there other stuff in terms of the changes and how you looked at it 1Q to 2Q?

Yes, so it’s.

Sorry. Go ahead.

Yes, sorry. Go ahead Joe.

Yes. That’s essentially, I mean, look we – what we determined really in the second quarter is, the way that we run the business internally is to make sure that we are extracting anything that we think is temporary as it relates to COVID. And so yes and so what we have done is say, okay. In the second quarter, obviously, you see our estimate of pent-up demand of deferred care there as a result of COVID. And then also, really kind of finalizing and firming up that risk adjustment piece, with the help of our actuarial team. So, yes, so those are the main differences. And again, this is just a definition that we really feel comfortable about as we think about how we run our business.

Okay, alright. Fair enough. And then the MA revenue guidance, I think, a little bit lower, but the live stayed the same. Is that just related to risk adjustment, or what changed that revenue assumption?

Yes. Ralph, it’s more just timing more than anything else. We are seeing already kind of some more growth in the third quarter. It’s probably – the growth is probably a little bit more back ended. For the back of the year, we instituted a grocery benefit that we think, we are seeing some positive results about. And so there is nothing really related to risk adjustment there. I think a very, very small piece is risk adjustment. But it’s mostly just due to the timing of some of the membership and how quickly it’s come on board on the MA side.

Okay, fair enough. And then I guess, can you give us a sense like, how did you book for MLR for direct contracting this quarter? So just around the math, it looks like it’s on 111% on a GAAP basis, which is obviously in line with the total aggregate. But clearly, it’s a new population base. Your existing MA still has some benefit from Clover Assist I guess, I am just trying to get a sense of how much visibility you really have on that point. It sounds like you only have April and May. So, how comfortable I guess, are you guys in terms of how you book that this quarter from a GAAP perspective?

Yes. No, I think that those numbers are fairly right on, Ralph. And I think, because of the fact that we had very limited data, we took a conservative position and how we recorded that, as we have said, there are some timing things later in the year, as it relates to stop loss and some other things which will end up flowing through that will likely benefit us in the second half, along with some assumptions on pick up with Clover Assist and things like that. And so I would say we have booked it conservatively. It’s we feel really comfortable about where we are later in the year, but again, because of the fact that we didn’t have a ton of visibility, we had kind of be able to make claims, and not much else. We took a conservative view of that. And again, we don’t have enough data yet to even normalize. We do know that there were some COVID costs in there, and there is clearly some pent-up demand. We haven’t yet been able to kind of quantify that. So, again, I think, we haven’t seen anything in that population that was, I think, different than what we had expected. But again, I do think that what you see here in Q2 represents the conservative view of MCR, at least based on that limited data that we have.

Okay, fair enough. Thank you.

Alright. Starting with some of the retail community questions we have got, the first one coming from Maarten Stekelenburg. And this will go to Andrew Toy, what advantages does Clover Assistant have compared to the competitors software and we are trying to replace or compete with?

Yes. Thanks for that question. As we discussed here, we are definitely seeing that the effect of MLR scales with Clover Assistant visit rate in our top counties and that’s in the press release. And we think that there is a lot of advantages that are coming from Clover Assistant because of that. Quickly running through them, number one, we are able to provide a longitudinal view of data, which means versus just having internally to your EHR, internally to your health system, most of this is just for that information. Because we are the health plan, we can provide additional data from all aspects, all the person’s care team, and that just flows through Clover Assistant. And that’s one big advantage. Second of all, sort of annual wellness visits or software, which is what tends to be the norm. So, we are very personalized, very focused with those five minutes per visit. And I think we get a lot of benefit from that as well. And then thirdly, we have a lot of effort from our clinical and product teams to provide analytics and analysis for what is the best use of time within any given visits, to let PCPs know where to focus their attention. And so that might mean that we might even be directing our attention to help manage conditions that are outside the primary complaints, drawing them – their attention to recent hospitalization. And we see a lot of engagement with those features as well. So, I think that there is a lot of differentiation in the platform from both the technology fitting and the data points perspective, plus, we are seeing that impact flow through to our markets and our MLR as we just discussed.

Great. The next question will be targeted towards Vivek from Livent who happens to post a lot of Clover material on the retail board. How is DC revenue being realized? And how did the unit economics compared to Medicare Advantage? How often do you see a contractor providers take on risk sharing arrangements with Clover? Vivek?

Thanks, Andrew. Just want to echo that there is definitely been some great materials. I think there was a media post written by him on – about direct contracting. And I found to be one of the more thoughtful pieces out there. Just in terms of – just a full question. In terms of just unit economics of DCE revenue versus MA, I think what’s really interesting about the way we have constructed our business model is its very much provider focused. And so when we think about traditional payer organizations, you have a separate operating infrastructure to manage each line of business. The way we think about our business is really managing the relationship with the physician effectively. And so as part of that, the incremental OpEx to manage DCE lives is much less relative to the Clover MA lives that are in that practice. So, there is a lot of operating synergies as practice partners with us not just in Clover MA, but on direct contracting. And then from a gross margin standpoint, we do believe there is a meaningful opportunity over time to generate pretty reasonable and attractive margins on direct contracting. I am sorry, Joe, do you mind mentioning the other two parts of the question.

The last part of the question was how often do you see contracted providers take on risk-sharing agreements with Clover?

Yes. So we definitely have a bit of a unique lens on – as it relates to Medicare Advantage and risk sharing. So, within Medicare Advantage risk-sharing is called full capitation. So, that’s where a practice will get a significant percentage of premiums. And so those who follow a lot of the news about Medicare Advantage, there has definitely been a lot of controversy around risk adjustment and risk-adjustment inflation. What we have seen and learned and talking to industry experts, folks who have worked at various large payers, a huge amount of the risk adjustment inflation happens within practices that are fully capitated. I think this is starting to get more and more well understood by folks out in the regulatory community and so forth. And so we do think full capitation a lot of the times can actually incentivize the wrong behavior, particularly around risk adjustment coding. And so one of the things that we are very proud of at Clover is setting up our financial alignment with physicians that removes any of those incentives and so when we think about alignment with physicians, it’s really around ensuring that they are using the Clover Assistant and getting value out of it from a clinical perspective for their patients, but ensuring there is no incentives one way or the other around coding. And so the right way to think about risk-sharing is if it’s really aligning folks around cost management, a way that makes sense for the patient. But unfortunately, a huge amount of the value that plans and practices get around risk-sharing is actually a risk adjustment.

Great. And our final retail question, which is going to be targeted towards Andrew, comes from Moomba 17. How do you market Clover Assistant to physicians?

Yes, great question. So as a reminder, Clover Assistant is our flagship technology platform, but we don’t charge for it directly to physicians. We provide it to them to help them provide better personalized data-driven primary care, which helps our members, it helps physician, and then it definitely helps Clover plan performance from there. So, we don’t actually have to charge for the software. So, we don’t actually go out there and market it per se as a piece of software that we are selling, but we do say we want to pay more, pay well for a data-driven primary care and Clover Assistant is our means of doing that. In addition to that, we constantly measure our net promoter scores, and we measure our satisfaction rate with physicians, which we then share and we tell them, hey, we are always open to feedback. We are measuring what features you find most useful in our data. And we are spending more R&D time there. And because we are very reactive to the feedback from physicians, we are able to then continually drive up that engagement rate that I talked about earlier, which then leads to the higher visit rates that Vivek talked about in those top counties and so constantly investing over there. So, when we are thinking of meeting with a physician group, we emphasize we care a lot about primary care. We want to share data on clinical insight to help them do a better job. Just like Vivek said just now, we also shared that we want to pay very fairly for that without putting them at risk or via useful capitation methods, but we want to give them our software. And because of that, we have achieved very, very high engagement rates with Clover Assistant. The thing I am really excited about is we achieved all of that without yet having launched our wave of EHR integrations, which are upcoming. And those will be coming out very soon on the CA 2.0 platform. And we think that will only drive those engagement rates even further up. And we will see even more impact from CA.

Great. Operator, I think this concludes our retail portion of the call. Vivek, do you want to say anything for closing comments?

Thanks, Derrick. Just want to give a thank you for the whole Clover team on their efforts so far this year. And thank you again for – to Joe, and you have been a great partner to all of us at Clover. And we are extremely excited about the rest of the year and many, many quarters to come. I think just to reiterate, we believe we are in the very, very early innings of what’s possible at Clover.

Thank you. And this concludes today’s conference. Thank you for your participation and you may now disconnect.