Clover Health Investments, Corp.

Good day, and thank you for standing by. Welcome to the Clover Health's first quarter 2021 earnings call. At this time, all participants are in a listen-only mode. After the speaker's prepared remarks, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Derek Newman, Head of Investor Relations and Corporate Strategy. Please go ahead.

Good morning, everyone. I want to introduce myself as this is the first earnings call as the head of investor relations and corporate strategy at Clover. And I wanted to express how excited I am about the opportunity here, as well as Clover's opportunity to make healthcare better. With that out of the way, thank you for joining our call today, where our CEO, Vivek Garipalli, our president, Andrew Toy, and our CFO, Joe Wagner, will discuss first quarter results and answer your questions. Note this call is being recorded. I'd also like to caution you that we may make forward-looking statements during today's call that are subject to risk and uncertainties. Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings, including the Form 8 file today containing our earnings release. Information about any non-GAAP financial measures referenced, including a reconciliation of those measures to GAAP measures, can also be found in our SEC filing and the earnings materials available on our website. With that, I will now turn over the call to Vivek.

Thank you, Derek. Welcome aboard, and thank you, everyone, for joining us today. We founded Clover to improve every life, and every day that passes brings us one step closer to that goal. We entered 2021 with strong momentum and continue to execute. Today, Clover is partnering with physicians to care for more than 130,000 individuals. That is nearly double the number of lives we had under management on January 1st. From the outside, we look like a typical health insurance company. From the inside, Clover is building and employing technology to refocus health insurance on improving patient outcomes. Our unconventional approach aligns interests and incentives so that healthcare puts people first. That's why we developed the Clover Assistant, disruptive technology designed to drive systemic change on a nationwide scale. In particular, the Clover system lets us bring equitable care to a broad and diverse community. We were recently interviewed by the National Committee for Quality Assurance, which is conducting a study with Rand on behalf of CMS's Office of Minority Health on strategies to drive the delivery of equitable quality care. They contacted us because of preliminary evidence showing our plan's strong performance on a prototype of the Medicare Advantage Health Equity Summary Score, or HESS for short. This is a newly developed measurement tool for identifying plans that do well at providing high-quality, equitable care to their members, including groups who are disproportionately affected by social risk factors. As a reminder, at the end of 2019, CMS data showed that approximately 50% of our members identified themselves as being of minority descent, which is substantially higher than the percentage of individuals who identify as minority in Medicare Advantage overall. CMS has stopped collecting and collating data on race and ethnicity, but we have no reason to believe that those figures have meaningfully changed. Thankfully, this new HES score, we believe, acknowledges the unique challenges in serving members at higher social risk and rightfully prioritizes health equity. We have consistently advocated that CMS reform its star rating system to better account for social risk factors and are hopeful that CMS will incorporate HES scores or something akin to it into the star rating soon. Doing so would recognize and reward rather than punish plans like Clover that take seriously the intractable problem of healthcare disparities in our nation and are committed to providing high quality care to underserved populations. Importantly, this test score would hold plans accountable if they do not ensure that solving this important problem is core to their model. Our high performance on this health equity score is significant validation of both our core mission to improve every life and our approach in doing so. In an effort to highlight strategies to drive equitable care that we shared with NCQA, we also intend to release a white paper soon summarizing our efforts around health equity. We are focused on delivering equitable quality care and are hopeful that this becomes a significant topic of discussion across the entire industry. We urge you to read the document and join the conversation. We believe our approach enables us to deliver what patients want, better care for less money, with more choice, and what physicians want, information they need to make the best decisions every time. At quarter end, we had over 66,300 Medicare Advantage members. And during the quarter, we generated over $200 million in revenue, a record for Clover. On April 1st, we launched our direct contracting entity, or DCE, named Clover Health Partners, And with it, added approximately 65,000 new lives across eight states through claims alignment alone. And we do not intend to stop there, as we will be adding more lives to our management through the voluntary alignment process throughout the year. Moving beyond Medicare Advantage into the largest segment of Medicare, original Medicare, not only is a strategic milestone for Clover, but also demonstrates the scalability of the Clover assistance. While other companies may be constrained by antiquated technologies, geographic limitations, or asset-heavy approaches, we believe our tech-centric strategy enables us to quickly and cost-effectively deploy software to physicians nationwide. Strategically, growing lives under management through DC feeds our virtuous cycle because we believe that as more physicians use the Clover Assistant, the software will get smarter and outcomes will improve, which will then reduce the cost of care. And perhaps, just as importantly, it allows us to more effectively scale to new geographies in Medicare Manage. As we follow into DC geographies with MA plans, we'll already have an installed base of physicians actively engaging with the CA platform. Additionally, we believe our direct contracting entity will have a material impact on lowering costs and improving outcomes for all patients across the Clover ecosystem. Clover is perfectly positioned to be a pioneer of the DC program for a few important reasons. First, our market-leading technology platform, the Clover Assistant, is designed specifically to align priorities, i.e., to lower overall medical expenses while enhancing the quality of care. And 100% of our DCE primary care providers are expected to use the Clover Assistant, which perpetuates our flywheel. We believe that having our value proposition centered around software will allow us to scale more rapidly than others who are dependent on brick and mortar or other asset-heavy approaches. Second, we already specialize in managing care on a wide and open network, which is critical expertise when seeking to manage the large population within original Medicare. At launch, we had contracted with approximately 1,800 individual providers across eight states and had over 65,000 claims-aligned beneficiaries. We believe we have access to up to 200,000 Medicare beneficiaries through our contracts with participating providers and are focused on growing our beneficiary base through voluntary alignment throughout the year. Our provider partners have already begun voluntary alignment activities, including making available both online digital enrollment forms and paper-based enrollment kits. There are still a lot of unknowns, as this is a brand-new program. But we see substantial opportunities to grow lives attributed to our direct contracting entity. The traction we have seen to date gives us conviction in our ability to grow through direct contracting. And as we do, we'll also be scaling our innovative home-based care operation. Today, the vast majority of Clover's members receive care through primary care physicians and get the benefits of Clover Assistant through this channel. But what most don't realize is that Clover Assistant also powers our home-based care operations. The Clover Assistant is vital here, underpinning two clinical models. The first clinical model covers the majority of our lives under management, those who receive care via regular visits with their PCP. In this sense, we believe we can truly scale like software. Our influence can scale to any PCP in the provider ecosystem through the deployment of the Clover Assistant. The second clinical model is our approach to home-based care, called Clover Home Care. It caters to our sickest, most medically complex members. often with advanced comorbidities. Our home-based care program is an innovative model and a further opportunity for the Clover Assistant to reduce costs and raise the standard of care. We believe that, unlike healthier members who can visit their PCP, the best place to care for our sickest members is in the home, and that's exactly what Clover Home Care does. We consider the Clover Home Care model to be progressive and note that there is a significant opportunity to control Med-X. as this small minority of members accounts for a disproportionate portion of our overall med-ex. Powered by the Clover Assistant, we are enabling primary care providers to help patients, whether they are homebound or able to attend visits, which helps deliver more efficient and better outcomes. We're encouraged by data showing Clover Home Care's ability to reduce hospitalizations, emergency room visits, and skilled nursing facility stays, and the impact that has had on patients' quality of life. Finally, we continue to strengthen our organization to support our growth as a public company. This quarter, we announced two new board members, Bill Robinson, formerly the president of Broadgate Human Capital and an HR executive at General Electric, and Dimitris Kouzoukas, who served as general counsel of UnitedHealthcare's Medicare and Retirement Division and as the director of the Center for Medicare and principal deputy administrator of CMS. We believe both will add a lot of value. We also hired Derek Newman, whom you met earlier, who will run our investor relations and corporate strategy. I'm proud of what we've accomplished and am energized by the opportunities ahead of us despite the pandemic's near-term uncertainty. Our software-based infrastructure enabled us to quickly stand up a direct contracting entity and rapidly double our lives under management. We believe this foreshadows our ability to enter adjacent markets in a highly scalable way, enabling Clover Health to lower costs, increase choice, and improve care for hundreds of thousands of people. We have a lot of hard work to do, and we're hard at work doing it. With that, I'll turn the call over to Andrew, who will talk about our tech and our work to expand the number of places where our members can get care. Andrew.