Clover Health Investments, Corp.

Ladies and gentlemen, good afternoon and welcome to the Clover Health Second Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the prepared remarks. At that time, if you would like to ask a question, please press star 1 on your telephone keypad. As a reminder, today's call is being recorded. I would now like to turn the call over to Ryan Schmidt, Investor Relations for Clover Health. Please go ahead.

Good afternoon, everyone. Joining me on our call today to discuss the company's second quarter 2025 results are Andrew Toy, Clover Health's chief executive officer, and Peter Kuypers, the company's chief financial officer. You can find today's press release and the company's supplemental slides, as well as the company's most recent investor deck, in the investor events and presentation section of our website at investors.cloverhealth.com. This webcast is being recorded, and a replay will be available in the investor relations section of the Clover Health website. I'd also like to caution you that we may make forward-looking statements during today's call that are subject to risks and uncertainties, including expectations about future performance. Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings, including in the risk factors section of our most recent annual report on Form 10-K and other SEC filings. Information about non-GAAP financial measures referenced, including a reconciliation of those measures to GAAP measures, can be found in the earnings materials available on our website. With that, I'll now turn the call over to Andrew.

Thank you, Ryan. Welcome everyone to our second quarter earnings call. We are happy to report that we've delivered yet another impactful quarter this year, building our momentum and demonstrating our ability to achieve meaningful growth alongside sustained adjusted EBITDA profitability in Medicare Advantage through the first half of the year. To start, I feel we are executing well against our strategy. We have always aimed to position Clover to win over the long term within Medicare Advantage, and our arc has been simple. First, achieve profitability, then return to growth while sustaining profitability, and then leverage our differentiated model to accelerate growth and profitability together. We exceeded our adjusted EBITDA profitability target in 2024. Through the first half of 2025, we are executing well and believe that we are proving that we can achieve sustained adjusted EBITDA profitability amidst meaningful membership and revenue growth all during a three and a half star payment year. And most importantly, we expect that our performance in 2025 will position us very well to accelerate both growth and profitability in 2026. which is a four-star payment year and where we will continue to offer our flagship wide network PPO plan while others retreat from that offering. Our trajectory is clear. We are confident in the path ahead, and while not all market plan data is available yet, we have reason to believe this will be another strong membership growth season for us, potentially even stronger than this year. Also, with next year being a four-star payment year, we feel we should be able to strongly grow 2026 adjusted EBITDA as well. Next, let's discuss how our second quarter highlights our strategic arc and the significant value our technology-first care model brings to our members. As I mentioned, we're continuing to deliver robust membership and revenue growth this year, alongside sustained adjusted EBITDA profitability in our business. Since last quarter, our Medicare Advantage book has continued to increase membership, and we are now projecting ending 2025 with even more members. This is not just growth for growth's sake. We're making a real difference by bringing earlier care management via Clover Assistant technology to more and more Medicare Advantage seniors. We're, of course, proud of our financial results so far this year, and I believe we have truly differentiated ourselves through the unmatched value we bring to our members. We continue to lead with physician choice. affordability and high-quality healthcare through our technology-first care model, and we are driving real-life results. And this, ultimately, is driving our growth, and we believe is why seniors are choosing Clover Medicare Advantage plans. As another example of our model's impact, earlier this month we published a clinical white paper on chronic obstructive pulmonary disease, or COPD, showing that a relationship with a Clover assistant provider was correlated with 15% fewer hospitalizations and 18% fewer readmissions. Our results are more than just numbers on a page. They're a testament to the momentum we're building and the effectiveness of Clover Assistant to make a real-world impact in better managing chronic diseases. Next, I would like to discuss broader industry managed care trends, particularly in the context of the pressures others are noting in the Medicaid and ACA markets. It's crucial to note that at Clover, our business is Medicare Advantage. We do not run standalone Medicaid plans, nor do we participate on the ACA exchanges. We do serve dual eligible members, but these Medicare Advantage individuals are, by definition, seniors or are disabled, meaning that they are not impacted by dynamics like work requirements within the construct of Medicaid redeterminations. As such, we believe that our Medicare Advantage focus should help insulate us from these broader industry pressures. However, we are also seeing some of the elevated cost trends within our MA book that others in the industry have identified. That said, we are generally satisfied with the underlying trends we're observing in our portfolio. I would note that we are keeping a particularly close watch on the impact from the Part D IRA changes this year. Given that this is the first year of the new program, there is less of a historic baseline to trend against, and so we anticipate more variability in our modeling of performance. As such, we are diligently monitoring this to see how it plays out through the remainder of the year. Put another way, while I think we are appropriately focused on delivering our care management model, we also recognize that Part D remains a big known unknown for the second half of the year. This is also consistent with the recently published Part D direct subsidy rate, which is materially higher for 2026 than for 2025, signaling higher costs than expected by the industry. The good news is that this also gives us a reason to believe that Part D pressure in 2025 might be alleviated in 2026. With all that said, against this backdrop of general managed care headwinds, we continue to believe our technology-centric care delivery model differentiates us. Remember that our approach to managing total cost of care is fundamentally different It's anchored on identifying and managing diseases as early as possible via Clover Assistant and simultaneously delivering crucial support through our Clover Care Services offering when and where our members need it most. This unique approach allows us the potential to truly bend the cost curve over time for our members and effectively manage trends amidst broader industry pressures. To that end, we're extremely excited about the new health tech ecosystem initiative unveiled last week by CMS and the White House that focuses on building a truly patient-centric, interoperable ecosystem. This initiative, fostering a smarter, more secure, and personalized healthcare experience through enhanced interoperability and real-time information sharing, resonates deeply with the foundational principles we've championed at Clover since day one. Clover Assistant is already built upon the very interoperability framework and FHIR standards highlighted last week, both utilizing data to generate actionable insights and contributing those insights back into the networks. Ultimately, Clover Assistant and AI technologies all scale with data. And we see this initiative as turbocharging data access, which will then bring a significant accelerant to our technology approach. Looking to 2026, we anticipate building on our successful 2025 strategy with an even sharper focus on profitable growth in our bids. Our commitment to expanding Clover Assistant's reach, emphasizing retention in existing markets, and balancing new and returning member cohorts remains central to accelerating our growth strategy. While the competitive MA landscape will undoubtedly evolve, We're confident in our pricing and positioning next year during a four-star payment year, as we've already proven we can deliver strong MA performance during a three-and-a-half-star payment year in 2025. This step up in our stars rating provides us with an additional financial tailwind in 2026, and we believe that this will also position us to continue to strengthen our insurance product. We're proud of the growth and momentum we've achieved in our results so far this year and look forward to our flywheel starting to spin much faster as we go into 2026. Now, let's discuss our counterpart health progress and overall strategy. Since we announced last year that we made our same CA technology platform available to other risk-bearing entities, we've seen broad interest and uptake. Our belief is that everything in healthcare ultimately revolves around the health outcomes and total cost of care of a patient. Involved in delivering these outcomes are a number of healthcare ecosystem players, primary care physicians, risk-bearing ACOs, pharmacies, large hospitals, and of course, health insurers, both regional and national. Counterpart assistance can benefit all these third parties, and the interest we've received through the deals we've already announced shows the varied application potential of the tool, both by scaling CA within our own plan and outside of it. In particular, we are seeing a lot of resonance with plans that need assistance with star ratings and HEDIS quality scores, as well as managing costs within their PPO-wide networks. Based on this, we are very excited to have pipeline deals and deployments across the healthcare ecosystem. As a reminder, while we aren't able to announce every customer, we have announced several large health system deals, and we're very pleased with our progress with payer partners. Our MA plan also recently announced a pilot to use CA with independent pharmacies, bringing our technology to yet another often overlooked site of care. I'm excited about our progress and I believe we are well on our way to showing that counterpart assistance is capable of powering Medicare Advantage, not just in our own plan, but in any managed care setting nationwide and that it's ready for prime time scale. In summary, we are focused on achieving our goals this year and are strategically positioning the company for the future. We're growing significantly, operating profitably, and differentiating ourselves through our technology-first model. Simultaneously, we are setting the stage for an even more impactful 2026, which we believe will cement our position as a leader in Medicare Advantage. Now, I'll hand it over to Peter for a more detailed financial update.