Clover Health CEO Vivek Garipalli will step down and be succeeded by Andrew Toy at the start of next year, the company announced Monday.
Toy, currently the company's president and chief technology officer, will take over Jan. 1, when Garipalli will become executive chair. The outgoing CEO will be active in plotting Clover Health’s strategy for the foreseeable future, while Toy will focus on the company’s finances and day-to-day operations, Toy said during the company’s second-quarter earnings call Monday.
“The path to profitability is a huge focus for us right now,” Toy said. “We’ve been so focused on growth during the past few years there are a number of places where we can optimize and tune and there is a tremendous upside by focusing there.”
Clover Health cut its net loss by 67.1% to $104.2 million during the second quarter. Revenue more than doubled to $846.7 million, driven by membership growth among Medicare Direct Contracting enrollees. The number of lives Clover managed through this program more than doubled to 168,777. A redesigned version of this initiative with a greater focus on patient equity, dubbed ACO REACH, will launch next year. Clover Health counted 86,629 Medicare Advantage members during the second quarter, a 30.1% increase.
The Medicare Advantage carrier doubled its geographic footprint to 209 counties in nine states in 2021. This year, the insurtech asked the Centers for Medicare and Medicaid Services for approval to offer Medicare Advantage plans in 13 additional counties. Clover Health plans to exit the Arizona and El Paso, Texas, markets.
The company is waiting to hear from CMS about how star ratings will be calculated this year. As part of federal COVID-19 relief, regulators relaxed how they determined ratings on the program’s one to five scale, which led to a record number of Medicare Advantage policies receiving high marks. Those allowances were not intended to be permanent and stricter criteria could impact Clover Health’s ratings for next year, Toy said. Rivals Cigna and Centene also expect that changes to their ratings could cut into revenue, the companies previously disclosed.
“We always guided to looking for 3.5 stars coming out 2020 measurement year and we continue to reiterate that particular guidance,” Toy said. “It would be a great achievement if we were able to do that in the current world, and we think we can still do that.”
In May, Clover Health filed an S-3 notifying the Securities and Exchange Commission of its intent to raise capital, which could amount to as much as $300 million in the coming months.
Garipalli co-founded the startup in 2014. The company went public last year through a $3.7 billion special purpose acquisition deal with Social Capital, a blank-check company headed by investor Chamath Palihapitiya.
Clover Health's stock has fallen nearly 80% since its debut; shares closed at $3.40 on the Nasdaq Monday. The company reported the highest per-member loss among publicly traded insurers last year, when it lost more than $4,500 per enrollee.
Garipalli invested more than $40 million of his own money in Clover Health, didn't accept a salary or never sold his shares, he said in a news release. He will remain the company's largest individual and institutional shareholder.
Toy, who oversaw the Clover Assistant launch that helped the company enter the fee-for-service Medicare market, has been Garipalli's designated successor since 2018, Clover Health said in the news release. Toy joined Clover Health from Google.