Clover Raised Outlook as Profitability Held Amid Slower Growth
The Medicare Advantage insurer lifted its full-year adjusted EBITDA outlook to $70 million to $85 million.
Clover Health Investments (CLOV) posted a second consecutive quarterly GAAP profit as cost control helped offset slowing revenue growth and higher medical claims. Net income was $28.0 million, compared with a $10.6 million loss a year earlier and $27.3 million in the first quarter.
The quarter marked a shift in Clover’s trajectory: year-over-year revenue growth moderated, while adjusted EBITDA growth accelerated and the company raised its full-year forecasts. Adjusted EBITDA increased 139.2% to $40.9 million, compared with 56.2% growth in the first quarter, and was nearly unchanged sequentially.
Second-quarter revenue rose 55.6% to $743.2 million, slowing from 62.1% growth in the prior quarter and slipping 0.8% sequentially. Consolidated gross profit increased 53.6% to $153.0 million, though gross margin narrowed to about 20.6% from 21.3% in the first quarter.
Insurance revenue grew 57.0% to $737.8 million as average Medicare Advantage membership increased 48.7% to 156,840. Membership rose 1.4% from the first quarter, while insurance revenue declined 0.9%.
Medical costs added pressure within the insurance business. Net medical claims rose 56.1% to $615.4 million and increased sequentially despite the decline in insurance revenue. Insurance BER improved 80 basis points from a year earlier to 87.6%, then worsened 110 basis points from the first quarter.
Lower overhead intensity supported earnings. Adjusted selling, general and administrative expenses rose 35.9% to $112.1 million, a slower pace than revenue, and declined from the prior quarter. The expense represented 15.1% of revenue, compared with 15.9% in the first quarter and 17.3% a year earlier.
Clover now expects full-year revenue of $2.92 billion to $3.00 billion, lifting the midpoint by $95 million. Its consolidated gross-profit forecast rises to $525 million to $555 million, while GAAP net-income guidance increases to $20 million to $35 million, placing the full range above zero.
Cash, cash equivalents and investments increased $24.8 million during the quarter to $443.0 million. That gain, alongside the higher earnings outlook, gives Clover more financial capacity as membership growth moderates and medical costs remain the central operating constraint.