Clover Health Investments, Corp Canaccord Genuity's 46th Annual Growth Conference

Thanks, Richard. I'll try to be pretty brief this morning, save as much time as we can for Q&A. I'll start really with what is our vision at Clover? I think it's simple to state. It's incredibly difficult to execute. Ultimately, what we're looking to do at Clover is empower every physician with AI-powered technology to identify, manage, and treat chronic disease earlier. Emphasis on the word earlier, which you'll see that appear as I talk through the model here this morning. When we do that, what happens is earlier diagnosis and treatment, earlier disease management, higher quality clinical care, which ultimately outputs affordable and accessible care for our Medicare Advantage members. There's really five pillars where Clover has made structural decisions to be different in our industry.

Those pillars are how we approach technology, how we approach care strategy, how we go into the home through our employed clinicians with Clover Care services, our approach to risk strategy and delegation with providers, and then ultimately, our network strategy. On the technology side, our technology as an insurer is clinically focused, not administratively focused. We've been very intentional about delivering AI-powered physician enablement at scale through our Clover Assistant platform, and I'll talk about that in a little bit more detail later. From care strategy, we're really focused on being proactive versus reactive. One of the biggest problems in healthcare in our country is that healthcare is reactive. By leveraging our technology to identify chronic disease earlier, that makes us proactive and allows us to act before an acute event occurs.

From our Clover Care services arm, you can't just identify disease early, you must continue to treat that on a longitudinal basis, and we do that in the home at scale. From a risk strategy perspective, we retain full risk on the economics of our business. It's very common in the Medicare Advantage space to delegate risk down to the providers. We don't do that at Clover. We take full risk on our business, which means we also have full upside on the economics we produce. Lastly, on our network strategy, we are 98% PPO. What that means is members have broad access to care. They have low-cost in-network benefits, but they can also go anywhere out of network and receive care.

The industry, in general, is starting to retreat from this PPO model and move back toward HMO because that's an easier lever for them to control cost. On the technology side, ultimately, our technology is powered by data and powered by AI and machine learning models. The Clover Assistant platform sits on top of over 100 unique patient data sources, and we run over 100 AI and machine learning models on top of that data. What happens when you do both of those things is you have millions of individualized personal insights that are deployed at the point of care for our Medicare Advantage members. The other important point there is at the point of care. Our clinicians are using our technology when they're in the room with the patient.

This is not a back office person that's looking at a spreadsheet and determining who to call. This is a doctor in the room with a patient, leveraging our technology to make decisions at the point of care. When that happens, we see incredible results play out on the other side. We see lower hospitalizations. We see lower readmissions. We see members that are diagnosed with CKD stage 3, that's chronic kidney disease, 18 months earlier when clinicians are utilizing our technology versus those that are not. We also see diabetes treatment start 36 months earlier. Again, that's that earlier theme. The earlier we get, the earlier upstream we can be, which allows us to prevent those acute events that often drive high costs and leave members in the hospital.

Possibly as important as the technology itself is how you deploy that technology across our network through our in-network physicians, but also through our Clover Care Services arm. Something that's truly unique about Clover is two-thirds of our members in a given year are going to get at least one visit from a CA-powered clinician. That's a very high number. Not only have we developed an industry-leading point-of-care technology, but we're deploying it at scale and reaching two-thirds of our members in any given year through two primary channels. I'll talk a little bit more about what we do in the home, because it's incredibly important how we deploy this technology in the network so that when members are going into their provider's office, they're receiving care that's CA powered, but then we also bring that into the home.

We do that through Clover Care visits, which are largely an assessment-based function or a readmission prevention function. Those assessments are incredibly important for new members in particular, so that we can get to know those new members, understand their chronic disease, get them into the right clinical program for them. Which often results in enrollment in what we call our in-home care program. This is longitudinal primary care in the home for our most chronic patients. Generally, the rule of thumb in Medicare is about 10% of your membership represents 60% of your cost. It's the 80/20 rule really for us becomes the 60/10 rule, and those are the members that we're managing longitudinally in-home. These members need multiple visits in their home across the course of the year, and those visits are all powered by our Clover Assistant technology.

This is an area in particular where we've seen a lot of growth over the past year or so. We've seen enrollment in this program increase 84% relative to 2025. That's against about 50% membership growth across our full book of business. What that really means is we have a higher percentage of our members in 2026 that are enrolled in this program, which means we're managing a higher percentage of that 60. That's incredibly important. How does this ultimately play out in our economics? When we deploy our technology at scale, reaching two-thirds of our membership, and then manage that 10% of the population that's driving 60% of the cost, it ultimately allows for this compounding effect of economics over time.

What I'm talking about here is how we view our model relative to a fully delegated model that's pretty common in our industry. To set the stage quickly on the fully delegated model itself, when other payers deploy this model, they're delegating risk down to a provider. What that means is they're effectively fixing a margin for themselves, which is X percent of whatever premium they delegate against their administrative expense. What that means is you're pretty stable regardless of the year that a member is in your plan. You're generating a pretty fixed margin over time. It may increase slightly as the revenue increases.

In our model, because we take full risk on the economics of our population, we are disadvantaged in the first 2 years of a member's journey relative to many of the peers that we compete against. But as we hit the third year, the fourth year, the fifth year, we start to see this compounding effect on our economics, and the reason for that is what I mentioned before around earlier identification, earlier disease management. By getting there earlier, we see our results really show up in the latter part of a member's tenure. When you start to hit the third year and the fourth year, we start to pull away meaningfully from the delegated models.

That's really important for where we are today, because with the growth that we've seen in our business over the last 2 years, about 49% of our membership is still in these first 2 years of the LTV curve. We're really early on in this exhibit, and as we move into '27, we move into '28, members start to move up this curve and things get really interesting for us. To put in context, Richard, I think it might have been you that asked the question on the call last week, but when you look at this chart, about 28% of our membership is in this first year. About 21% is in the second year. As you play that out into '27 and '28, these members start to move up this curve.

That is ultimately the foundation of our model, and that is why we think we are truly different in that most payers in our space are kind of facing a trade-off of growth versus profitability within a given year. That is one of the most common questions that I get is, did you prioritize growth in 2027 bids? Did you prioritize margin? Really the answer for us can be both. The reason it can be both is this layering effect of cohort maturation. What ultimately happens in our model when we are growing at the rate we are growing, is we have a significant amount of our membership population that is moving up that curve that I just referenced on the previous slide. That significant population, in the case of 2027, will be that 49% moving up the curve.

That creates a significant bottom-line impact that is incredibly favorable, that then allows us to fund new member growth. We are ultimately generating incremental economics from the returning members, which funds our new member growth. Over time, they start to layer on top of each other and create a really interesting economic picture. Let me talk about what has happened in the state of New Jersey over the past couple of years, which is our number one market within the country, and then really what we think this means for the coming years. I have mentioned before, we have grown our overall membership book about 100% in a two-year period. In doing that, our New Jersey market share has gone from 20% to 31%. We are now the number one market share player in the state of New Jersey for non-special needs Medicare Advantage plans.