10-K: Clover Health Reports Widening Losses Amidst Growth & Tech Push

Clover Health reported a net loss of $85.5 million for 2025, despite significant revenue growth and increased Medicare Advantage membership, as it continues to invest in its AI-powered Clover Assistant platform and expand its Counterpart Health subsidiary.

Summary

• Net loss from continuing operations widened to $85.5 million in 2025, compared to $46.3 million in 2024.
• Total revenues increased by 40.3% to $1,924.3 million in 2025 from $1,371.1 million in 2024.
• Premiums earned, net, grew 41% to $1,891.7 million in 2025, primarily due to a 33% increase in average members.
• Net medical claims incurred rose 56% to $1,568.4 million in 2025, driven by membership growth and increased Part D cost sharing due to the Inflation Reduction Act.
• The Insurance Benefits Expense Ratio (BER) increased to 90.9% in 2025 from 81.2% in 2024, with the Normalized BER at 91.5% in 2025 compared to 84.2% in 2024.
• Medicare Advantage (MA) membership at period end was 113,803 at December 31, 2025, up from 82,664 at December 31, 2024.
• During the 2026 Annual Election Period, MA membership grew 53% year-over-year, reaching over 153,000 members, with more than 97% enrolled in PPO plans.
• The Star Rating for PPO MA plans decreased to 3.5 Stars for the 2026 rating year (affecting 2027 payment year), while the HMO MA plan rating increased to 4.0 Stars.
• Net cash used in operating activities from continuing operations was $66.9 million in 2025, a shift from $82.5 million provided in 2024.
• The company launched Counterpart Health, Inc. in Q2 2024, a Software-as-a-Service (SaaS) and Tech Enabled Services Solution to offer Clover Assistant technology to external payors and providers.
• The Board authorized a $20.0 million share repurchase program on May 6, 2024, which was exhausted in Q1 2025, with $18.3 million repurchased in 2025.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a mixed report with significant concerns. While revenue and membership growth are strong, the widening net loss, negative operating cash flow, and increased medical loss ratio indicate challenges in achieving profitability and efficient cost management. The PPO Star Rating downgrade is a notable negative, impacting future payments and marketability.

Positives

• Total revenues increased significantly by 40.3% to $1,924.3 million in 2025.
• Medicare Advantage membership grew 33% in 2025 and achieved a 53% year-over-year growth during the 2026 Annual Election Period, reaching over 153,000 members.
• The launch of Counterpart Health, Inc. in Q2 2024 provides a new Software-as-a-Service (SaaS) and Tech Enabled Services Solution, aiming for new growth and high-margin business opportunities by extending Clover Assistant technology to external partners.
• The HMO MA plan's Star Rating increased to 4.0 Stars for the 2026 rating year, which will affect the 2027 payment year.
• Management concluded that internal control over financial reporting was effective at December 31, 2025.
• The SEC Staff concluded its investigation into the company and does not intend to recommend an enforcement action, reducing regulatory uncertainty.

Negatives

• Net loss from continuing operations widened to $85.5 million in 2025 from $46.3 million in 2024.
• Net cash used in operating activities from continuing operations was $66.9 million in 2025, a significant deterioration from $82.5 million provided in 2024.
• Net medical claims incurred increased by 56% to $1,568.4 million, outpacing revenue growth.
• The Insurance Benefits Expense Ratio (BER) increased to 90.9% in 2025 from 81.2% in 2024, indicating higher medical costs relative to premiums.
• The Star Rating for PPO Medicare Advantage plans, which cover over 97% of the company's insurance members, decreased to 3.5 Stars for the 2026 rating year, impacting 2027 payment and marketability.
• Total restricted and unrestricted cash, cash equivalents, and investments decreased to $319.9 million at December 31, 2025, from $437.6 million at December 31, 2024.
• General and administrative expenses increased by 21% to $214.3 million, driven by higher professional and broker fees.

Risks

• Incurred net losses in the past and may not achieve or maintain profitability in the future, with an accumulated deficit of approximately $2.3 billion as of December 31, 2025.
• Long-term success depends on maintaining and improving Clover Assistant (CA) and its expansion to external partners (Counterpart Assistant), and past results may not be indicative of future performance.
• Future performance depends on increasing the lifetime value of enrollments and utilizing clinical care capabilities to improve care, with failure potentially negatively affecting financial condition and profitability.
• Lower than expected adoption and use of Clover Assistant, or a decline in the number of Insurance members, could adversely affect results of operations.
• Failure to effectively estimate, price for, and manage medical expenses could lead to declining profitability.
• CMS's risk adjustment payment system makes revenue and profitability difficult to predict and could result in material retroactive adjustments.
• Substantial reliance on Medicare Advantage premiums means changes in Medicare laws and regulations could materially adversely affect the business.
• May require additional capital to support business growth, which might not be available on acceptable terms or at all.
• Inability to maintain or expand Medicare Advantage plan membership could harm the business.
• Member concentration in certain geographic areas (e.g., 87% in New Jersey at December 31, 2025) exposes the company to unfavorable local changes.
• Adverse effects on results of operations if unable to grow provider networks or contract on competitive terms.
• Inability to effectively manage growth could materially adversely affect the business.
• International research and development operations (Hong Kong, Canada, other countries) pose risks different from domestic operations, including political unrest, trade disruptions, and data security risks.
• Failure to protect sites, networks, and systems against security breaches, or to protect confidential/health information, could damage reputation and harm business.
• Subject to investigations and litigation, which could be costly and time-consuming, with unpredictable outcomes.
• Use and disclosure of personally identifiable information is subject to federal and state privacy and security regulations; non-compliance could result in significant liability or reputational harm.
• Failure to protect or enforce intellectual property rights could impair the ability to protect internally-developed technology and brands.
• Market prices and trading volume of Class A common stock have experienced extreme volatility and steep declines, which may continue.
• Sales of substantial amounts of securities in public markets, or the perception of such sales, could cause the stock price to decline.
• Dual class common stock structure concentrates voting power (71.2% with directors, executive officers, and affiliates at December 31, 2025), limiting other stockholders' influence.
• Certain provisions in corporate charter documents and Delaware law may prevent or hinder attempts by stockholders to change management or acquire a controlling interest.
• Ability to use net operating losses to offset future taxable income may be limited by Section 382 of the U.S. Internal Revenue Code.
• Restrictions on obtaining funds from regulated subsidiaries could adversely affect cash flows and liquidity.
• Requirements of being a public company may strain resources and divert management's attention.
• Unanticipated changes in effective tax rates or adverse outcomes from tax return examinations could lead to greater than anticipated tax liabilities.
• Trading price and volume could decline if securities or industry analysts do not publish research or publish unfavorable research.
• Applicable insurance laws may make it difficult to effect a change of control.
• Designation of Delaware Court of Chancery and federal district courts as exclusive forums for certain disputes restricts stockholders' choice of judicial forum.
• Issues in the development and use of artificial intelligence (AI), combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences.

Future Outlook

The company expects to continue investing significantly in improving its Clover Assistant platform and technology infrastructure, developing clinical care programs, increasing adoption of Clover Assistant (including through Counterpart Health), expanding marketing and outreach efforts, and growing its operations geographically. These efforts are anticipated to be expensive and may not sufficiently increase revenue to offset expenses. The company cannot guarantee future results, levels of activity, performance, or achievements, and its future capital requirements will depend on business growth, opportunities, challenges, and unforeseen circumstances. There is also uncertainty surrounding potential changes to the healthcare regulatory environment in the United States.

Management Comments

• "Our vision is to empower every physician with technology to identify, manage, and treat chronic diseases earlier."
• "We strongly believe in providing our members with provider choice and consider our PPO plans to be our flagship insurance product."
• "We believe Clover Assistant makes home care for high-risk individuals more scalable than fixed-site-based care."
• "Counterpart Health is complementary to Clover Health, and enables the Company to deploy and expand the reach of its existing technology asset for new potential growth and high margin business opportunities, with low startup costs."
• "We believe we have an opportunity to fundamentally change healthcare by providing easy access to care via technology-enabled providers across the country."
• "We believe the use and continuous improvement of Clover Assistant has resulted in not only improved clinical decision-making but also enhanced MA plan performance."
• "We believe that developing widespread brand recognition and maintaining and enhancing our reputation is critical to our relationships with existing providers and members, and to our ability to attract new providers and members to our platform and offerings."
• "Management believes that the unpaid claims and unpaid claims adjustment expense liability is adequate and represents management's best estimate of the ultimate cost of all reported and unreported claims incurred through the balance sheet date."
• "We expect that our cash, cash equivalents, restricted cash, investments, and our current projections of cash flows, taken together, will be sufficient to meet our projected operating and regulatory requirements for the next 12 months based on our current plans."

Industry Context

StockSavvy.ai notes that Clover Health operates in the highly competitive and rapidly evolving Medicare Advantage market, facing large national insurers like United Health, Aetna, Humana, Centene, and Elevance Health, as well as regional players. The company's focus on its AI-powered Clover Assistant platform and expansion into Software-as-a-Service (SaaS) with Counterpart Health aligns with broader industry trends towards technology-driven value-based care and physician enablement. The decrease in PPO Star Rating for 2026, while the HMO rating increased, highlights the ongoing challenges in maintaining quality metrics in a complex regulatory environment, especially given the company's concentration in underserved markets. The industry is also grappling with inflationary pressures and regulatory changes, such as the Inflation Reduction Act, impacting medical costs and reimbursement.

Comparison to Industry Standards

• Clover Health's Insurance Benefits Expense Ratio (BER) of 90.9% (Normalized 91.5%) in 2025 is higher than the ACA's minimum 85% threshold, indicating less favorable cost management performance compared to the prior year's 81.2% (Normalized 84.2%) and potentially higher than some industry peers who consistently operate closer to or below the 85% threshold to maximize profitability.
• The decrease in PPO Medicare Advantage Star Rating to 3.5 Stars for 2026 (affecting 2027 payment year) places a significant portion of Clover's membership (over 97% in PPO plans) below the 4.0-Star threshold often targeted by leading MA plans for enhanced bonus payments and year-round open enrollment. Competitors like UnitedHealth Group and Humana often have a higher percentage of their MA members in 4.0-Star or higher plans, providing a competitive advantage in member acquisition and retention.
• The 53% year-over-year MA membership growth during the 2026 Annual Election Period is a strong indicator of market acceptance and competitive offering, potentially outpacing the average MA market growth rate, which typically ranges from 5-10% annually. This growth, however, needs to be balanced against the rising medical claims incurred and overall profitability.
• The launch of Counterpart Health as a SaaS offering for external payors and providers positions Clover Health to diversify revenue streams, similar to how some larger health tech companies or established insurers are leveraging their proprietary technology beyond their core insurance offerings.

Corporate Governance

Legal Proceedings

• Subject to various legal proceedings, investigations (both formal and informal), and claims incidental to the conduct of a highly regulated business.
• Received an inquiry from the U.S. Department of Justice (DOJ).
• Subject to regular and special governmental market conduct and other audits, investigations, inquiries, and reviews by federal and state agencies.
• The SEC Staff concluded its investigation (related to Hindenburg Article disclosures and business aspects) and, as of September 26, 2024, does not intend to recommend an enforcement action against the Company.
• CarePoint Health and its affiliates filed for Chapter 11 bankruptcy on November 3, 2024, and its plan became effective May 22, 2025, transferring assets to Hudson Regional Hospital; CarePoint Health is no longer deemed a related party.

Related Party Transactions

• Contracts with CarePoint Health System (formerly controlled by Vivek Garipalli, Executive Chairman) for inpatient and hospital-based outpatient services, with expenses of $4.4 million in 2025, $7.0 million in 2024, and $13.0 million in 2023. CarePoint Health is no longer a related party as of May 22, 2025.
• Contract with Medical Records Exchange, LLC (Credo), indirectly owned by Vivek Garipalli, for administrative services related to medical records retrieval, with expenses of $1.5 million in 2025, $0.7 million in 2024, and $0.8 million in 2023.
• Contract with Thyme Care, Inc., an oncology care management company, where Vivek Garipalli is a board member and holds an equity interest. Expenses incurred were $8.3 million in 2025, $4.1 million in 2024, and $2.3 million in 2023.
• Master Services Agreement with Guidehealth, LLC for value-based care enablement and outsourced administrative services, where Thomas Tran, a Board Director, serves as a director and holds an ownership interest. The company recognized $1.2 million for 2025.
• Non-controlling equity investment in Character Biosciences, Inc. (CB), where Vivek Garipalli serves as Clover's representative on the board. The fair value of this investment was $8.3 million at December 31, 2025. The company lost significant influence over CB on September 30, 2025.

Stakeholder Impact

• Shareholders face potential dilution from future equity raises, continued stock price volatility, and limited influence on corporate matters due to the dual-class stock structure. The share repurchase program was exhausted in Q1 2025.
• Members may benefit from enhanced benefits and lower out-of-pocket costs through Clover Assistant, but the downgrade of PPO Star Ratings could impact future benefits and enrollment options. Increased Part D cost sharing due to the Inflation Reduction Act also affects members.
• Providers are empowered by Clover Assistant technology and receive enhanced payment rates for its use, but face risks if CA adoption is low or if the company struggles to grow competitive provider networks.
• Employees are subject to ongoing investments in R&D and stock-based compensation plans, operating within a remote-first culture. The company faces challenges in attracting and retaining highly qualified talent.
• Creditors may be impacted by potential future debt financings, which could include restrictive covenants. The $40.0 million surplus note to Clover Insurance Company remains unpaid and has an extended payment term.

Next Steps

• Continue investing in improving the Clover Assistant platform and technology infrastructure.
• Develop clinical care programs to enhance member care and manage costs.
• Increase adoption of the Clover Assistant platform, including through the Counterpart Health subsidiary, to expand reach to external payors and providers.
• Expand marketing and outreach efforts to attract new members and providers.
• Expand operations geographically to new markets.
• Develop future offerings to improve care and supplement revenue streams.
• Monitor and manage compliance with evolving federal and state healthcare regulations.
• Address the $40.0 million surplus note due to Clover Insurance Company, with an extension requested until December 31, 2027.
• Evaluate the impact of recently issued accounting pronouncements (ASU 2024-03, 2025-05, 2025-06, 2025-07) on consolidated financial statements and related disclosures.

Key Dates

Recommendation

Clover Health demonstrates strong membership and revenue growth, driven by its innovative Clover Assistant platform and expansion into new markets with Counterpart Health. However, the widening net losses, negative operating cash flow, and a significant increase in the Insurance Benefits Expense Ratio (BER) raise concerns about the path to sustainable profitability. The downgrade of the PPO Star Rating, which impacts the vast majority of its members, is a material negative that could affect future payments and marketability. While the company's technology-first approach has potential, the current financial performance and operational challenges warrant a cautious 'Hold' stance, awaiting clearer signs of improved cost management and a definitive path to profitability.

Keywords

Medicare Advantage, healthcare technology, Clover Assistant, Counterpart Health, health insurance, AI in healthcare, risk adjustment, medical loss ratio, chronic disease management, PPO, HMO, SEC filing, 10-K, financial results, corporate governance, health tech, digital health, value-based care