Ladies and gentlemen, good afternoon and welcome to the Clover Health Fourth Quarter and Full Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow with prepared remarks. [Operator Instructions] As a reminder, today's call is being recorded. I would now like to turn the call over to Ryan Schmidt, Investor Relations for Clover Health. Please go ahead.

Good afternoon, everyone. Joining me on our call today to discuss the company's fourth quarter and full year 2024 results are Andrew Toy, Clover Health's Chief Executive Officer; and Peter Kuipers, the company's Chief Financial Officer. You can find today's press release in the accompanying supplemental slides, as well as the company's most recent investor deck in the Investor Events & Presentation section of our website at investors.cloverhealth.com. This webcast is being recorded and a replay will be available in the Investor Relations section of the Clover Health website. 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, including expectations about future performance. 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 most recent annual report on Form 10-K and other SEC filings. Information about non-GAAP financial measures referenced, including a reconciliation of those measures to GAAP measures can be found in the earnings materials available on our website. With that, I'll turn the call over to Andrew.

Thank you, Ryan. And a warm welcome to everyone joining us today. 2024 was a pivotal year for Clover. We set out with a clear mission to drive sustainable growth, achieve adjusted EBITDA profitability and reinforce our differentiation in Medicare Advantage. And I feel we have executed very well in delivering on these goals. Firstly, during 2024 we delivered meaningful full year adjusted EBITDA profitability. We previously shared that achieving this would position us to return to growth during a period where our competitors would be retreating. This profitability and return to growth has happened as anticipated and we believe our profitable core of returning membership cohorts sets us up well to invest in bringing on significant new membership every year. Secondly, we surpassed 100,000 Medicare Advantage members this year during AEP, reflecting well above market year-over-year 27% growth and a 95% AEP retention rate, proving that when members experience the Clover model, they stay. And more importantly, we achieved this growth while improving clinical outcomes and cohort performance, all of which are a testament to our discipline in managing the total cost of care and driving to better outcomes. Thirdly, we've again strengthened our star ratings. We now have over 95% of our members in four star rated PPO -- star rating year. With nation leading clinical measures, highlighting our commitment to delivering higher quality care. As a reminder, the financial effect of this four star rating will be enjoyed next year in 2026. Practically speaking, this means higher benchmarks for our plans which will flow through to top line PMPM revenue, even more competitive benefits and long-term stability for our members. Fourthly, we successfully launched Counterpart Health, our software business that houses Clover Assistant for third-party partnerships where we brand it as Counterpart Assistant. We signed and implemented…

Thank you, Andrew. I am very pleased with our strong 2024 results and I'm excited about our growth and momentum in 2025. Our 2024 results demonstrate our capacity to execute effectively, achieve our objectives and generate strong business momentum. In short, we accomplished precisely what we promised and more. I will begin with our 2024 results covering our strong revenue growth, achieving meaningful profitability with industry leading loss ratios, our progress on cost optimization efforts, and lastly our strong balance sheet position. Clover's fundamentals are strong. We continue to achieve strong insurance revenue growth during the year, growing 9% in both the fourth quarter and the full year 2024 to $331 million and $1,345 million as compared to the prior periods respectively. Complementing our strong top line revenue growth was continued year-over-year margin improvement. During the fourth quarter of 2024 our insurance benefit expense ratio or BER, improved to 82.8% compared to 87.4% in the same period of 2023. And our insurance MCR improved to 73.5% in the fourth quarter this year from 82.4% last year. We also experienced modestly favorable prior period development or PPD during the fourth quarter, which is similar to what we experienced during the third quarter and this favorable development as effectively lower than full year BER. That said, BER for the full year 2024 was 81.2% and MCR was 75.1%, both of which represent strong improvements of more than 500 basis points year-over-year. Overall, our results were driven by strong cohort economics and returning member retention as well as our ability to deliver earlier and better care outcomes for our members. Our technology-first care model has continued to manage [Medx] (ph) in our results. Additionally, the meaningful incremental impact of Clover Assistance and our home care platform in our results this year occurred slightly…

Thanks Peter. Clover is indeed very well-positioned for success as we move into our new phase of growth. In the years to come, we're excited to bring our technology-first model to as many people as possible while maintaining strong profitability. Our investments into growth, Clover Assistant technology and our differentiated model will be both strategic and judicious to ensure that we have plenty of room to run as we aim to increase overall business value for Clover. What makes Clover different has and will continue to remain the same. We aim to actively manage and deliver care as we equip more and more physicians with technology to identify, manage and treat chronic diseases earlier. As early intervention not only benefits the patient via reducing the need for extensive treatment, but also helps flatten the medics curve and lowers the total cost of care. This differentiation is also our fundamental advantage that sets us apart and why we believe we are positioned better than ever to execute against our vision in the coming years. We'll continue expanding our impact, driving better outcomes for our members, achieving financial discipline for our business and delivering long-term value for our shareholders. Now with that, let's open it up for questions.

Thank you. We will now be taking questions from Clover's research analyst. [Operator Instructions] We will take our first question from Jonathan Young with UBS.

Hey, thanks for taking a question here. I guess, I know we are early in the Counterpart Health store, but kind of when can we start expecting to see some of the revenue metrics kind of show up into the financials? And what's your expectations for this year in terms of pipeline growth?

Hey Jonathan, thanks for the question. So regarding Counterpart, we are very excited by that business. We have a strong pipeline, as we said in the remarks. We are not yet saying when we're going to be incorporating that into the revenue and into the financial results. Of course, it's a newer business, as Peter said during his section. And the way that we're looking at it is that we are really looking at it as a way to expand reach first of all. So we're looking at bringing more lives under Clover management, which is a key KPI of ours, and under Clover Assistant management. Those economics will eventually become significant, we believe. But right now, of course, the core of the financials are being driven by the MA plan itself. So look for more announcements on launches, certainly look at more -- for more partnerships. We'll be talking a little bit more later this year, I think about how we see the lives growing under management and the clinical results. And then I think you'll see the financial side come a little later.

Okay, thanks. And then just on the G&A load kind of as it's a lot, it's a little bit higher than what we were thinking. I guess, how much is kind of the cost related to the AEP growth that you kind of saw? And then as we kind of think about 2026, it sounds like you're going to grow a decent clip. Are we going to experience that kind of a similar G&A pickup in relation to that? And how much do you think you can lop off via the G&A optimization efforts? Thanks.

Yes, thanks Jonathan. This is Peter. Also from an SG&A perspective, the growth SG&A is a significant portion of the SG&A growth year-over-year. Wanted to point out though that we already are scaling and having some leverage, right? So the guide at the midpoint for SG&A for 2025 represents about a 200 basis points improvement if you will if you measure SG&A as a percentage of revenue. But we do have growth expenses in there variable expenses, we're optimizing as well. And we think that for this year, our fixed SG&A is actually slightly down year-over-year. We are, of course, executing on an efficiency program, but directionally, from a growth going from 2025 into 2026, you would expect a similar direction, but I would say at a lower rate of increase.

Yes. Thanks.

[Operator Instructions] We will move next to Matt Hewitt with Craig Hallam.

Hey, Matt.

Hi. Thank you for taking our question. This is Tolf Cormanon for Matt Hewitt. Can you please provide some color on your expectations for continued growth? The home care arm in 2025 and beyond? Thank you.

Yes, absolutely. So this is highlighted as an area that we're very proud of. Our investment into care being delivered with Clover Assistant in the home, I think is an anchor stone of our entire strategy. Looking at the most expensive, most comorbid, most vulnerable members in that home care program is a critical aspect of how we do total cost of care control as well as improve outcomes. As such, we are planning to invest more into that arm. We are bringing that capability into new markets and expanding that team and expanding its capabilities and expanding its GR reach. So we don't have a specific guidance around that, but you should expect that to be a key part of our strategy and you see that total cost of care control flow into our financials as well.

All right. Thank you.

[Operator Instructions] With no other questions holding, this will conclude the Q&A portion of today's conference. I would like to turn the call back to Andrew Toy for any additional or closing remarks.

Great. Thank you two for the questions there. In closing, I'm proud of the Clover team's many accomplishments this past year, including adjusted EBITDA profitability and corresponding strong membership growth to start the year. Our improved star ratings, of course, and our efforts with Counterpart. 2024 was a defining year for Clover Health, where we continue to reinforce our competitive advantages within MA. And as I've said before, this is just the beginning. I look forward to updating you all on our progress during our next call. Thanks again for joining today and everyone, have a great evening.

Thank you. Ladies and gentlemen, this concludes today's Clover Health fourth quarter and full-year 2024 earnings call and webcast. You may disconnect your line at this time. Have a wonderful day.