Clover Health’s Strong Financial Performance Driven by Membership Growth

Clover Health, a leading provider of Medicare Advantage (MA) plans, has reported impressive financial results for the first quarter of 2025. The company’s strong performance was primarily driven by significant growth in its membership base, which increased by approximately 30% compared to the same period in 2024.

Membership and Premiums Earned A key metric for Clover Health is the number of members enrolled in its MA plans. The company defines new and returning members on a calendar year basis, with any member active on July 1 of a given year considered a returning member the following year. As of March 31, 2025, Clover Health had 103,418 members, up from 79,527 in the same period of 2024.

This growth in membership directly translated to an increase in premiums earned, which rose by 33.7% to $456.9 million in the first quarter of 2025, compared to $341.7 million in the same period of 2024. Premiums earned represent the amount Clover Health receives from the Centers for Medicare & Medicaid Services (CMS) for providing healthcare coverage to its members.

Medical Claims Incurred As Clover Health’s membership grew, so did its medical claims incurred, which increased by 33.3% to $353.4 million in the first quarter of 2025, compared to $265.2 million in the same period of 2024. Medical claims incurred represent the costs associated with providing healthcare services to Clover Health’s members.

The company’s benefits expense ratio, a non-GAAP measure that represents the percentage of premiums earned that is used to pay for medical claims and quality improvement initiatives, increased from 83.2% in the first quarter of 2024 to 86.1% in the first quarter of 2025. This increase was primarily driven by the growth in medical claims incurred, which outpaced the growth in premiums earned.

Operational Expenses and Profitability Clover Health’s operational expenses, which include salaries and benefits, general and administrative expenses, and depreciation and amortization, increased by 25.4% to $463.6 million in the first quarter of 2025, compared to $369.6 million in the same period of 2024. This increase was largely due to higher general and administrative expenses, which rose by 13.7% to $50.7 million, primarily driven by higher professional fees and broker fees associated with the company’s membership growth.

Despite the increase in operational expenses, Clover Health’s financial performance improved significantly in the first quarter of 2025. The company reported a net loss from continuing operations of $1.3 million, compared to a net loss of $23.2 million in the same period of 2024, representing a 94.5% improvement.

This improvement in profitability was largely driven by the company’s non-GAAP financial measures, which exclude certain non-cash and non-recurring expenses. Clover Health’s Adjusted EBITDA, a non-GAAP measure that excludes items such as depreciation, amortization, stock-based compensation, and non-recurring expenses, increased from $6.8 million in the first quarter of 2024 to $25.8 million in the first quarter of 2025. Similarly, the company’s Adjusted Net Income from continuing operations, a non-GAAP measure that excludes the same items as Adjusted EBITDA, increased from $6.0 million in the first quarter of 2024 to $25.3 million in the first quarter of 2025.

Liquidity and Capital Resources Clover Health’s liquidity and capital resources remain strong, with total cash, cash equivalents, and investments of $390.8 million as of March 31, 2025, compared to $437.6 million as of December 31, 2024. The company’s regulated insurance subsidiaries held $265.0 million in cash, cash equivalents, and investments as of March 31, 2025, with an additional $235.4 million in available-for-sale and held-to-maturity investment securities.

The parent company, Clover Health Investments, Corp., and its unregulated subsidiaries held $125.9 million in cash, cash equivalents, and investments as of March 31, 2025, down from $151.5 million as of December 31, 2024, primarily due to cash used in financing activities, such as the acquisition of treasury stock and repurchases of Class A Common stock.

Clover Health’s management believes that the company’s current cash, cash equivalents, investments, and projected cash flows from operations will be sufficient to meet its projected operating and regulatory requirements for the next 12 months. However, the company may need to seek additional equity or debt financing in the future to support its business growth, respond to new business opportunities, or address unforeseen circumstances.

Strengths and Weaknesses Clover Health’s key strengths include its strong membership growth, which has driven increases in premiums earned and allowed the company to leverage its operational expenses. The company’s use of non-GAAP financial measures, such as Adjusted EBITDA and Adjusted Net Income, has also helped to highlight its underlying profitability and operational efficiency.

However, Clover Health’s benefits expense ratio has increased, indicating that its medical claims incurred are growing at a faster rate than its premiums earned. This could put pressure on the company’s profitability if it is unable to effectively manage its medical costs or negotiate favorable reimbursement rates with healthcare providers.

Additionally, Clover Health’s reliance on CMS as its primary source of revenue and the highly regulated nature of the healthcare industry in which it operates present ongoing risks and challenges that the company must navigate.

Outlook and Future Considerations Clover Health’s strong financial performance in the first quarter of 2025, driven by its membership growth, suggests that the company is well-positioned to continue its expansion and solidify its position in the MA market. However, the company will need to closely monitor its medical claims costs and find ways to improve its benefits expense ratio to maintain its profitability.

Additionally, Clover Health will need to continue investing in its technology and data-driven insights to enhance the quality of care for its members and drive further operational efficiencies. The company’s ability to effectively leverage its Clover Assistant platform, which uses artificial intelligence and machine learning to improve care delivery and chronic condition management, will be crucial to its long-term success.

Overall, Clover Health’s first-quarter 2025 results demonstrate the company’s ability to execute on its growth strategy and deliver strong financial performance. As the company continues to navigate the challenges of the healthcare industry, investors will be closely watching its ability to balance membership growth, medical cost management, and operational efficiency to drive sustainable profitability and shareholder value.