Clover Health Investor Day Presentation Deck
Components of the Medicare Advantage P&L
(1)
Premium revenue
+Investment & Other Income
= Revenue
- Medical Expenses
= Gross Profit
- General & administrative
- Salaries & benefits
- Other items
Income from Operations
- Interest Expense
- Income taxes
= Net Income
Calculated from membership multiplied by monthly per member payment; payment amount varies, reflecting multiple factors at an
individual level, including demographics, health status (higher revenue to care for sicker members), new vs returning MA status (new
members' health status is often not available or accurately documented)
Current projections include less than 1% of MA premiums
Cost of health care services delivered to members (e.g., doctor visits, hospital stays, prescription drugs, etc.); typically modestly
higher in 1Q and 4Q relative to 2Q and 3Q
While Gross Margin is a key profitability metric, industry also looks at Medical Care Ratio (MCR) (¹) defined as Medical Expenses /
Premium Revenue
Includes professional and consulting fees, particularly in support of operations, sales and marketing costs, including broker
commissions, software expenses, license and other overhead costs
Includes cost of wages and benefits for Clover employees (including stock-based compensation)
Depreciation & Amortization (minimal), other non-recurring expenses
Interest Expense relates to term loan and convertible securities
NOLS expected to significantly reduce tax burden through at least 2025
MCR is not a direct equivalent of the federal MLR. CMS does not regulate MCR, but does put an 85% minimum threshold on MLR.
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