Clover Health Investments, Corp 2026 Jefferies Healthcare Services and Technology Conference
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Are we live here? Can you hear me? It sounds like you can.
Can you hear me? Yep.
Yeah. Fantastic. Thanks, everybody. I'm Dave Windley with Jefferies Healthcare Equity Research. We're here in Nashville at our Healthcare Services and Technology Conference. Appreciate your attention if you're listening live, here in the room live or listening live. We also, I told Clay that we're competing against a CMS CIO topic with AI in the title. That probably attracted some ears and eyeballs. I'm, again, Dave Windley. I'm here with Clay Thornton, the Interim Chief Financial Officer for Clover Health. We're going to talk a little bit about MA over the next 30 minutes or so. Clay, I'm going to start you off with just Clover does have a different model. You're an emerging player in Medicare Advantage, and just talk to us to start with, level set on Clover's differentiation and how you guys are trying to grow.
Yeah, we've definitely taken a contrarian approach to the MA business in a number of ways. First off is we've spent years developing our own proprietary platform called the Clover System, which really serves as our physician enablement platform that engages both the in-network physicians in our network, as well as powers our own employed clinicians that are seeing our members. Ultimately, everything starts with that technology platform. From there, where we get really interesting, is the actual reach of the platform itself. In any given year, we're reaching two-thirds of our members with at least one visit that's powered by our technology. Lastly, where we really differentiate just from an economics approach standpoint, is that we take full risk on our entire population. We don't delegate risk downstream to value-based providers.
We are holding 100% of the risk on our population, which creates interesting dynamics, particularly with a company like ours that's growing at the rate we're growing. Happy to get into that later, Dave.
Yeah. We may come back to that. At a high level, let's start kind of MA level profitability and margin sustainability. The basic question here is the industry through the worst of this? Over the last few years we've dealt with V28, we've been through an elevated utilization cycle, Part D redesign, stars volatility. There's a lot of things that have gone on. Are we through the worst of it?
We don't have a crystal ball, so it's tough to say. It's definitely been a turbulent few years, and I think what you've seen really starting in 2026, and you're starting to see this heading into 2027 as we get first looks, is plans are starting to adjust for that volatility through pricing discipline. So we've seen a lot of that through the national players itself. And I think that'll play out in margins at large in the industry. As far as what happens into 2028, 2029, and beyond, that's really anybody's guess at this point.
Sure. But your reference, so in first looks, you are seeing the pricing discipline, AKA some benefit, stable to down, not up for the most part.
Yeah. That is largely what we have seen. Really, in the past two years, you have started to see a lot of the national players, I would say, move away from PPO and move away from $0 PPO. We are seeing that trend continue, and then again, a little bit more pricing discipline into 2027.
Yeah. On this topic of, I mentioned the utilization cycle and the messaging maybe for the last two plus quarters has been certainly within year 2026, has been elevated but stable utilization or trend. We got some competitor news in the space this morning that called out a couple of areas of utilization as maybe heating back up again. What views, insights, or comments would you have on that?
Yeah. I think some of those comments were largely focused around inpatient and SNF specifically. Those are two areas that we highlighted on our second quarter call that have actually been bright spots for us this year. Our position on that really has not changed. So we are seeing really favorable trends on the inpatient and SNF side within our business. Where there has been trend pressure, but as we said in the second quarter kind of started to moderate, is more on the outpatient side, less so on inpatient.
So sorry, trend pressure, outpatient, but even that is moderating. Is that- Yeah, definitely moderated.
Like we said at the second quarter, we kind of saw those trends peak in March, and then start to level off a little bit into the second quarter. Yeah. Okay. Good segue into margins.
You commented on a price discipline in first looks, but also some commentary about a moderating utilization, perhaps. I think we all want to be a little careful predicting that too strongly. But how do you think about the contributors to a margin recovery where most MA players are underearning these days?
Yeah. From what we're seeing on benefit design in 2026 and then the first looks in 2027, pricing discipline has been the number one lever that the industry at large is pulling. And really, I think Clover is the beneficiary of that. When we've seen significant disruption in the MA space, the natural reaction from other players is to use benefit design to offset that pressure. So when they use benefit design to offset that pressure, that drives more shopping, that drives more growth within our plan, which ultimately feeds our cohort maturation model.
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