Clover Health Investments, Corp.

everyone. Joining me on our call today is our CEO, Vivek Garipalli, our president and CTO, Andrew Toy, and our interim CFO, Mark Herbers. We will discuss fourth quarter and full year results, recent trends, and answer your questions. This call is being recorded. Before we get started, I would like to remind you that our fourth quarter and full year earnings materials, including the release, are available on our website at cloverhealth.com. 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, including expectations about future performance. Factors that may cause actual results to differ materially from our expectations are detailed in our SEC filings, including in the risk factors section of our latest annual report on Form 10-K and in our other periodic SEC filings. The forward-looking statements are made as of the date hereof. We assume no obligation and do not intend to update these forward-looking statements as a result of future events or developments. Information about non-GAAP financial measures referenced, including definitions and a reconciliation of those measures to GAAP measures, can also be found in earnings materials available on our website. With that, let me now turn over the call to Vivek. Vivek?

Thanks, Derek, and thanks, everyone, for joining us today. We are really excited about where Clover sits today, the progress we expect to make in 2022, and our goals for the future. Not just enabling physicians to provide great healthcare to all, especially those in underserved communities, but to do this with a growing, sustainable, and ultimately profitable model. Let me now reflect quickly on the past year and some recent accomplishments and events. 2021 was an eventful year for us. We went public, dealt with COVID challenges, and we accomplished a lot. We more than doubled our revenue to $1.47 billion. Lives under Clover management increased by 124% to approximately 130,000. We launched our first non-insurance line of business, direct contracting, underpinned by the Clover Assistant. The Clover Assistant can be a differentiator with an MA-MCR differential of over 1,000 basis points for returning members whose PCPs use the Clover Assistant versus those who don't. And we did this while operating on a wide network and driving a positive impact on health equity with more minority and underserved beneficiaries than typical for Medicare Advantage plans of scale. We also had a strong AEP in Medicare Advantage, growing well above industry levels at 28% year-over-year. In Georgia, we nearly tripled our lives and believe we're on a trajectory there similar to New Jersey, where we are a market leader. We believe our increasing scale, attractive benefit plans, and the Clover Assistant will enable us to keep gaining share in core markets while at the same time driving improved MCRs. In direct contracting, we started 2022 with over 100,000 more lives than we ended 2021, and with providers in over 20 states. Largely due to this growth, our lives under Clover Assistant Management increased to approximately 200,000, and our non-insurance lives now represent about two-thirds of our total lives. We believe the more lives under Clover Assistant Management, the more opportunities we'll have to drive clinical and financial improvements for Clover and our participating providers. Finally, I wanted to touch upon the recent CMS calendar year 2023 advance notice for MA. Obviously, many in the industry are pleased with the rate increase. We are as well. But we are even more excited about the increasing focus on health equity, specifically CMS's commitment to continue to explore ways to revise risk adjustment model in order to more appropriately pay for subgroups of Medicare beneficiaries. This is something that will get much more focus over the next year or so, but we believe Clover's well-positioned given that almost half of our MA beneficiaries are in underserved communities compared to 34% for the average MA plan. We encourage you to read our Health Equity White Paper for more specifics. With that, let me hand over the call to Andrew to talk about the Clover Assistant and specifics around how it is driving a material impact.

Thanks, Vivek. 2021 was a great year for the Clover Assistant. Along with unlocking an entire new business line with our entrance into Medicare fee-for-service through direct contracting, we continued to invest in its evolution at the preeminent physician enablement platform and increased our annualized MedEx under Clover Assistant management to over $1 billion. The Clover Assistant was built on open FHIR standards in an effort to break down data silos and improve interoperability across the healthcare system. This enabled us to deliver our first major integration of Clever Assistant within Athena Health's market-leading EHR, with more integrations coming soon. We also launched clinical programs and data models specifically targeting some of our most vulnerable members suffering from cancer and chronic kidney disease. These successes are validation of our differentiated software-first approach. The Clover Assistant allows us to iterate quickly, and we can adapt it to fit the needs of different facets of Medicare, as demonstrated by our rapid scaling of both our MA and fee-for-service businesses. To summarize our opportunity, we believe we can fundamentally change healthcare by providing an easy-to-access, on-ramp to value-based care for every single provider in the country. In 2021, the Clover Assistant platform surfaced nearly 1 million clinical recommendations to clinicians and flagged more than 200,000 potential care gaps for action. Clinicians that used the Clover Assistant grew 43% year-over-year to approximately 3,000 in the fourth quarter, and on average, the platform aided physicians in managing more than 35,000 care plans per month. By leveraging the Clover Assistant platform, we believe we can raise the level of care given by every provider and rapidly and broadly scale in ways that traditional managed care plans and risk-bearing provider groups cannot. This engagement translates to improved MCR. Not only is there a difference in MCR between members whose providers use the Clover Assistant and those who don't, but there is also a benefit from the length of Clover Assistant use. We measure this in terms of cohorts of when the physician went live on CA. For example, in service year 2021, our MA members with PCPs who went live on Clover Assistant in 2019 had a 2.7% lower incurred MCR than members with PCPs who went live on Clover Assistant in 2020. Similarly, members with PCPs who went live on Clover Assistant in 2018 had a 4.9% lower incurred MCR than members whose PCPs went live on Clover Assistant in 2019. Further, the Clover Assistant is a key to unlocking non-insurance business lines. For example, in direct contracting, we principally scale our model of care by deploying physician enablement software to providers versus acting as an insurer. In these scenarios, we provide care coordination primarily through our software, the Clover Assistant. This year, we expect to have approximately 250,000 lives under management with about two-thirds of these lives and two-thirds of our revenue to come from these non-insurance scenarios. We'll be talking more about expanding this non-insurance opportunity in the future. Ultimately, we believe our success in fee-for-service is not indicative of anything program-specific regarding direct contracting, but rather proof of our ability to provide software that allows any physician to be successful in value-based care. This has been demonstrated by our leading growth in fee-for-service, and we fully believe our software platform will be successful in other Medicare value-based models as well. We are highly supportive of innovation in the healthcare space, whether it be through new programs like direct contracting, Medicare for All, or Medicare Advantage as it evolves. In all these cases, the one constant, one that we feel we are well poised to address, is how do we quickly bring more physicians into these programs and make them successful? We believe the Clover system is proving to be this digital on-ramp onto value-based care, and we feel very confident about our ability to be successful as new programs launch and old programs are changed.