Ladies and gentlemen, good afternoon and welcome to the Clover Health First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the 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 first quarter 2025 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 and the accompanying supplemental slides as well as the company’s most recent investor deck in the Investor Events and Presentations 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 now turn the call over to Andrew.

All right, everyone. Thanks for joining us today. I’m excited to dive into our first quarter 2025 results. We’ve been working hard at Clover and it’s really showing in our Medicare Advantage performance and overall business growth. Let’s break down what we’ve accomplished and why it matters. First, let’s talk about MA plan growth where we’re doing very well. We’ve seen some significant numbers this quarter. We’re looking at a 30% jump in MA membership, 33% growth in our revenue and a whopping 279% increase in adjusted EBITDA year-over-year. That’s not just numbers on a page, that’s real momentum. And what’s driving this? It’s our focus on getting people the right healthcare right when they need it. Earlier, higher-quality and critically more affordable. This isn’t just about growth for growth sake. It’s about making a real difference in people’s lives by lowering barriers in care, whether it be by reducing out-of-pocket costs or delivering care to them right in their homes. We even released a new whitepaper last week showing how Clover Assistant helps better manage Congestive Heart Failure, leading to better care and fewer hospital visits. That’s the kind of impact we are aiming for. Next up, let’s discuss our confidence in the rest of the year. This quarter’s performance really reinforces that we are on the right track to hit our full-year 2025 goals and improve guidance. We had a strong enrollment season and those new members are utilizing care at expected levels. That’s key. We are planning to keep this momentum going throughout the year. But what’s most important, it’s how we’re taking care of these new members. We’re using Clover Assistant to power their primary care, making sure they get the best health outcomes and the most efficient care. This isn’t just about enrolling more seniors.…

Thank you, Andrew. First, let’s start with the results, and then I will cover the drivers in more detail. I’m very pleased with our strong first quarter performance where we have delivered a combination of 30% membership growth and 33% total revenue growth, while growing adjusted EBITDA by 279% and adjusted net income by 322% year-over-year. We are executing fairly well against our strategy. Let’s now move into the drivers. Starting with membership and revenue, insurance revenue grew by 34% year-over-year to $457 million driven by 30% Medicare Advantage membership growth from strong AEP and OEP enrollment seasons. Member retention was also strong during both the AEP and OEP season. Our first quarter results give us conviction in our new member cohort management strategy. Similar to AEP, the majority of our OEP growth occurred in our core New Jersey markets where we have a strong Clover Assistant network presence. During the quarter, new members were effectively onboarded and our results demonstrate strong management of both our new member and profitable returning member cohorts with performance in-line with expectations. This is reflective of our pricing discipline, geographic growth strategy and our efforts to proactively engage with new members via Clover Assistant powered primary care. Given our experience over the last number of years, we have strong conviction that the unit economics for our new member cohort will improve. As we’ve seen on average a more than a 700 basis point improvement in loss ratios between Year 1 and Year 2 cohorts and an approximate 1,500 basis point improvement between Year 1 and Year 3 cohort members. This demonstrates the effectiveness of our model over the long-term by providing earlier and better care management at a lower total cost of care. Overall, we are confident that our medical costs are in-line with…

Thanks, Peter. In conclusion, we are incredibly proud of our strong start to 2025. These first quarter results clearly demonstrate our ability to meaningfully grow membership, expand profitability and execute our strategic plan effectively. Our differentiated model powered by Clover Assistant and our clinically focused Home Care platform is delivering tangible value and better clinical outcomes driving our strong Medicare Advantage performance. We are confident in our improved full-year 2025 guidance and are strategically investing in our growth model, managing our new and returning member cohorts and expanding Clover Assistant’s reach. These efforts are not only enhancing our current position, but also positioning us for accelerated growth and profitability in the future. We remain excited about Clover’s trajectory and are committed to driving long-term value for our members and shareholders alike. With that, let’s open it up for questions.

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

Hi, thanks. Thanks for taking the question here. Just starting with the insurance business, first. Can you provide any color on how core medical trends are progressing there between kind of new versus the existing cohorts? And, how are members hitting the out-of-pocket drug max? Is it trending in-line with your expectations? And, has there been any change in behavior there?

Yes. Thank you, Jonathan. It’s Peter. So overall, cost trends are as expected. We also say that the both the new members cohorts and the returning members cohorts are also from an MCR and BER perspective trending in the way both in actuals and what we see in the coming quarters as expected as well.

Okay. And then, we didn’t hear much on Counterpart Health here. Just any color on how that go-to-market strategy is progressing, if there’s been any more bigger wins and kind of as we look ahead, when can we start seeing contribution? Thanks.

Yes. Hey, Jonathan, it’s Andrew. Yes, definitely we remain excited about the Counterpart business, and we are looking to provide more updates on that as we grow up throughout the year. We remind everybody that, we are not necessarily intending to make announcements about every single deal that we make around there, however we remain excited about it. All contributions, revenue, etcetera, will of course be in the consolidated financials as well. And, we’re going to be talking more about that as we proceed in the quarter. But right now, we’re very focused on making sure that we improve profitability in the Insurance segment.

[Operator Instructions] We will go next to Matt Hewitt with Craig-Hallum Capital.

Good afternoon. Thanks for taking the questions. Maybe first up and kind of sticking with the Counterpart theme. Have you had some, I guess, feedback or how have the initial implementations gone and what are you hearing from those partners regarding kind of the key metrics that you would be looking from for once the platform is implemented and they’ve kind of had a chance to use it for a little bit?

Yes, thanks. So, definitely what we’re looking for and what we’re aiming to do is to make sure that we deliver the amount of value within our Counterpart customer base as similar to what we see within our own MA plan and within the providers that use the Assistant within our own network. So, that’s what our aim is. That’s the power of the software approach is that we can develop the product, we can then use it to help manage care, to identify diseases earlier within almost any part of the Medicare population, whether it be under our own plan or whether it be with other people’s plans, third-party plans. So, the key KPIs that we’re looking for there are, do we still see the engagement with the physicians? Do we still see the earlier diagnosis and management of diseases? Do we still see improvement on the HEDIS side of things? As we said, we’re very proud of our performance there. It’s all the same metrics that we use within our own plan, but translated into third-party Counterpart usage. And our initial data, we feel optimistic on that and our goal with that those would be effectively equivalent.

That’s great. And then maybe shifting gears a little bit, given some of your success over the past call it couple of years, has there been any changes in the competitive landscape? Are you seeing some of your peers adapting or kind of shifting to your model a little bit more? Are you seeing any new competitive entrants and how does that kind of change your game plan if at all? Thank you.

Yes, I think that what we see here is that we have been focused on the PPO and the wide network and managing care within that wide network for quite some time, and others have been focused and it’s perfectly legitimate as a model with two value based programs within their network, deploying those out, but rarely with a software backing, right, like most people’s development of software has been for employed physicians, it’s been for insurance operations. And, while those above good things the Assistants, Counterpart, Clover Assistant is usable by the broader wider network and that is a distinct mode and advantage there we have. So, that’s something we’re excited to bring as a model to drive clinical value, to lots of different markets, lots of different places we think we can look after a large percentage of the total Medicare population in the U.S. And, I think that what we’re seeing is that others have struggled a bit on the PPO and are pulling back on benefits, are perhaps not really investing as much as they used to, cutting back on marketing, cutting back on commissions. And, that is just a natural cycle of the market. We are staying the course. We feel good about where we are. We feel that our model is working. We feel that it is highly differentiated.

Got it. All right. Thank you.

[Operator Instructions] We’ll go next to Richard Close with Canaccord Genuity.

Yes. Congratulations on a great start to the year, first of all. Andrew and Peter, you guys mentioned accelerated growth in the years to come. You talked about the growth flywheel and expect faster growth next year. So, maybe can you break that down a little bit? Obviously, your positive rate adjustment for next year and then the 4 Stars, but how are you thinking about the building blocks to growth and where’s the acceleration come from beyond, I guess, the positive on rate and star?

Yes. Thank you, Richard. This is Peter. So, what we see of course now also now that we have experienced with a large core joining the plan this year, that’s a reconfirmation for us to really see the cohorts economics for both new members and then also the returning members. So, that is a large factor as we look at unit economics of profitability going to next year. Yes, absolutely, the rate notice will be a tailwind. But with our model, we don’t necessarily need that, if you will. We are, of course, now looking at bids, some more news to come there. So, likely there will be some adjustments there from a benefit perspective. And then, of course, we also have, of course, the cost actions we’ve taken as well. We’ll have more leverage from an SG&A perspective also. And then lastly, we believe that from our product road map, from a Clover Assistant technology perspective, we’ll have additional impact as well, starting with the clinical side and then, of course, the results flowing through to the financials as well over time.

Yes. And then just jumping in here. Obviously, we are, as a reminder to all, is that we’re going from a payment year, we’re being paid on 3.5 Stars this year, and we will be going to paid on 4 Stars next year, which affects the benchmark. And so, we’re looking at what we do. As Peter says, we’re still early on and we’re not talking about bid just yet, but obviously we’re factoring that into our bid discussions. Others in might be moving downwards in our markets on the star rating. And so, that will put some pressure on their benefits, whereas we can we think we have room as we are moving upwards. Another dimension on that, as Peter said, was a lot of that’s being driven by CA. CA helps our star ratings. We are very proud. We’re the Number 1 plan of over 2,000 lives on HEDIS under the star ratings. That’s driven by our technology platform. We look to maintain that advantage going forward, which will help us with stars, which will help us with benefits too.

Okay. And I guess I have or my follow-up is somewhat centered on New Jersey. First, in terms of New Jersey, obviously, you have great penetration there. And, I’m curious with respect to this accelerating growth, how you think about like are you bumping up on where you can go in New Jersey and then do you have to go to new markets? So, that’s one question. And then the second part of the question is you mentioned this affiliated entity related to BER, if you can go into that a little bit more for us as well?

Yes, I’ll jump in on the first part, Richard. I’ll let you take the second part. Regarding New Jersey, I think we have plenty of room to run. We have plenty of room within that market. We have our full platform deployed there. It’s our home state that we feel a lot of affection for New Jersey. We have plenty of market share. While we’re proud of the market share position we have, we also have room to take on more market share there. So, feel really good about where we are there. That doesn’t mean that we are not going to look at other geos. That’s not what I’m saying. I think we certainly will look at other geos. But, because we are just right around north of 20% market share on non-snip in New Jersey, we have plenty of room to go before we become saturated. And, I’ll let Peter take the second part.

Yes. So, when comparing BER year-over-year or sequentially quarter-over-quarter, a couple of things to keep in mind as far as drivers, right. So first of all, new members from a BER perspective are in headwinds. That is then offset by returning members as well. Of course, we do have a somewhat elevated MedEx trend as well, but it appears that, that is much lower than competitors that do not have a clinically technology focused approach. There’s a little bit of timing as well as far as PPD. And then lastly, going back to the CA-enabled affiliated entity that we signaled, I think last year that we were setting up, is really meant to drive higher-quality and better care for members. So, activities that that entity is deploying include, for example, care coordination, care management and also partnerships with local physicians. So, that is a fourth factor if you look at both quarter-over-quarter and year-over-year BER.

Okay. Thank you.

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

All right. Thank you all again for joining us today, and for the thoughtful questions. We appreciate your interest in Clover and look forward to updating you more in our next call. So, have a great evening everyone. Thank you.

Thank you. This concludes today’s Clover Health First Quarter 2025 Earnings Call and Webcast. You may disconnect your line at this time and have a wonderful day.