New Medicare Advantage members pushed Clover Health's revenue up 21% during the first quarter of 2021.
The Nashville, Tenn.-based insurtech reported $200.3 million in revenue during the first quarter ended March 21, up from $165.3 million the year prior. Much of this revenue growth came from new Medicare Advantage members, which grew 18% year-over-year to 66,300 enrollees. The company counted 130,000 total members.
The startup's net loss though grew to $48.4 million, up 71% from $28.2 million in 2020. The company attributed the loss to "updated guidance" from the U.S. Securities and Exchange Commission's requirements "related to our accounting for public and private placement warrants," Chief Financial Officer Joe Wagner said.
Earlier this year, Hindenburg Research issued a report saying that the DOJ was investigating the startup for failing to offer investors full information related to its business operations. Clover countered that the DOJ investigates every company before they go public, particularly ones that are focused on government business like Clover. The DOJ's investigation got the SEC involved in its own review. Clover said its merger with Social Capital Hedosophia Holdings Corp., which closed in the first quarter, was also related to the SEC investigation.
The COVID-19 pandemic also took a cut into the company's medical loss ratio, or MLR, which measures how much of every dollar is spent on members' care. Treatment costs for the company's Medicare Advantage members pushed Clover's MLR to 107.6% in Q1. Wagner noted that Clover was disproportionately impacted by COVID-19 compared to other Medicare Advantage insurers, since the majority of its members identify as minorities and contracted the virus at higher rates than white enrollees.
"Obviously we got hit pretty hard with COVID," Wagner said during the call. "We've seen some return of deferred care. We also have some headwinds, as every other MA plan does, in terms of depressed risk score coding, although again not as much of an issue for us, and the physician fee schedule increase."
The CMS' direct-contracting program proved a bright spot for the insurtech, however. The company counts 65,000 lives under this program, which pays insurers for managing traditional, fee-for-service Medicare individuals. The company expects its membership to grow to 200,000 through this program, with Wagner saying that its current number is below expectations because some members died, enrolled in Medicare Advantage, lost Medicare eligibility or "some beneficiaries belonging to select participating providers did not successfully exit their preexisting Medicare shared savings program relationships."
Clover's partnership with Walgreens serves as a differentiator for members in this program. The startup has launched a pilot program in 30 retail stores, which integrates its AI-powered Clover Assistant tool to update members' primary-care physician about flu shots, blood tests, body-mass-index or other readings received at these locations. The tool then recommends to clinicians next steps in a member's care. Additionally, clinicians can use Clover's Health Corner Walgreens partnership as a way to bridge member gaps in care, by recommending they pick up wellness items at the retail stores.
"This data further enables the Clover Assistant to personalize its recommendations for everything from powering specialist referrals, to calculating care gaps, to making recommendations for enrollment into our home-based care program," Chief Technology Officer Andrew Toy said during its earnings call.
Clarification: This story has been updated to reflect that the Department of Justice investigated Clover Health before the Securities and Exchange Commission launched its own review.
