- We just got a look at the 2019 financial results of Clover Health, a health-insurance startup that’s valued at $1.2 billion.
- Clover lost $67.4 million in 2019, a deeper loss than it posted in 2018 when it lost $40.9 million, according to state insurance filings reviewed by Business Insider.
- Clover added 10,000 new members by the end of 2019 compared to the end of 2018.
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The health insurance startup Clover Health deepened its net losses as it steadily grows its presence in the red-hot Medicare Advantage market.
Clover lost $67.4 million in 2019, according to state insurance filings reviewed by Business Insider. That compares to a $40.9 million loss in 2018. The deeper loss comes as Clover is growing its membership, adding roughly 10,000 new members in 2019, and enrolling an additional 12,000 going into 2020.
“Clover’s 2019 financial performance was consistent with expectations given the rapid membership growth that the Company experienced during 2019 (which has continued into 2020),” a spokeswoman for the company told Business Insider in an emailed statement.
The company, based in San Francisco, offers private health-insurance plans for seniors, a product called Medicare Advantage. Competition for the more than 22 million Americans enrolled in Medicare Advantage plans, and the thousands signing up daily as they turn 65, is fierce, with startups like Clover going up against industry giants like UnitedHealthcare, Humana, and Aetna.
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Clover got its start selling Medicare Advantage plans in New Jersey, which remains the company’s main market. The company also operates in Pennsylvania, Texas, Tennessee, Georgia, South Carolina, and Arizona.
Key financial results from Clover’s filings
- Clover’s revenue in New Jersey was $451.7 million in 2019, up from $290 million in 2018. Clover’s 2018 financials were affected by a reinsurance agreement. When factoring that in, Clover made $357 million in revenue.
- The company paid out $453.7 million in medical expenses for its customers over the year.
- That’s about 100% of the premium revenue it took in from its members, otherwise known as the medical loss ratio. “Members that are new to Clover typically have relatively high medical loss ratios since information and medical care are generally not well-coordinated prior to joining Clover,” the company told Business Insider in an emailed statement.
- Clover had 42,441 Medicare Advantage members by the end of 2019, up from 32,425 the year before.
- Going into 2020, Clover had enrolled 54,400 members, the company told Business Insider.
Clover president Andrew Toy told Business Insider that as the company grows, there are two big expenses that contribute to the high medical loss ratio Clover has: the cost to acquire the member, as well as the cost to coordinate the member’s care during that first year. For those who have been members for more than a year, the medical loss ratio is more favorable, he said.
“We are actually angling to be profitable sooner than you might think,” Toy said.
Clover’s busy 2019
Founded in 2014, Clover said it hoped to use data captured through its technology to improve patients’ health. But pulling that off hasn’t been easy.
When people in the US turn 65, they can choose to be part of either traditional Medicare or Medicare Advantage, which is operated through private insurers. It’s a big market for startups like Devoted, Clover Health, Bright Health, and Oscar Health — but it’s also a market with entrenched insurers like Humana, UnitedHealth Group, and CVS Health.
Over the years, Clover has raked in $925 million in funding from investors, including a $500 million round in January 2019.
In March 2019, the company said it was laying off 25% of its workforce, or about 140 employees, as part of a restructuring. Clover said it would open a new office in Nashville, Tennessee, which is known for being a hub for expertise in health IT and health insurance, to tap into a talent pool that fits the skill set it’s looking for better than what’s in the tech-focused Bay Area. For now, the company is maintaining its headquarters in San Francisco.
Genentech, a unit of the Swiss pharma giant Roche, in July signed a deal with the health-insurance startup Clover Health, in which the companies will use Clover’s data to better study eye diseases.
Coming up with new treatments for eye diseases is a key focus for Genentech, particularly for conditions like age-related macular degeneration, and Clover likely has useful data because it manages the health of seniors as an insurer.
Going into 2020, Toy said, the hope is to grow into more Medicare-related insurance products, strike up more partnerships with health systems to implement Clover’s technology, and expand Clover’s model into more states.
- Read more:
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