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Clover Health Reports Strong Third Quarter 2024 Financial Results; Highlights Differentiated Market Opportunity to Grow Membership
来源: Nasdaq GlobeNewswire / 06 11月 2024 15:05:01 America/Chicago
Delivers 9% Total Revenue growth year-to-date compared to prior year period
Company improves 2024 year-to-date GAAP Net Loss from Continuing Operations by $117.4 million year-over-year and year-to-date Adjusted EBITDA by $87.2 million year-over-year
Increases Full-Year 2024 guidance midpoint to target updated range of Adjusted EBITDA profitability of $55 million - $65 million, strongly positioning the Company to invest in membership growth opportunity for 2025
FRANKLIN, Tenn., Nov. 06, 2024 (GLOBE NEWSWIRE) -- Clover Health Investments, Corp. (Nasdaq: CLOV) (“Clover,” “Clover Health” or the “Company”), today reported financial results for the third quarter 2024. Management will host a conference call today at 5:00 p.m. ET to discuss its operating results and other business highlights.
"We delivered another strong quarter on all metrics. This demonstrates the strength of our model during a period where other approaches are facing significant headwinds," said Clover Health CEO Andrew Toy. "Underpinned by our ability to use technology to empower any physician on a wide network, our results position us to drive membership growth while maintaining strong underlying financial performance. I am proud that, powered by Clover Assistant, our health plans are anchored on identifying and managing diseases as early as possible to better control the total cost of care. This has also contributed to our market-leading HEDIS performance and achievement of 4.0 Stars for our flagship PPO plan for payment year 2026. We believe this validates our care platform and positions us well to invest in growth in both our core Insurance plans and Counterpart offering."
For the third quarter 2024, GAAP Net loss from continuing operations improved to $8.8 million from $33.6 million in the third quarter of 2023, and Adjusted EBITDA increased to $19.3 million from $2.7 million in the third quarter of 2023. For the year-to-date 2024 period, GAAP Net Loss from continuing operations improved to $24.8 million from a loss of $142.2 million year-to-date in 2023, and year-to-date Adjusted EBITDA increased to $62.3 million in 2024 as compared to a loss of $24.9 million in the 2023 comparable period. Insurance revenue during the third quarter 2024 grew by 7% year-over-year to $322.6 million, and by 9% year-over-year to $1.0 billion on a year-to-date basis, driven by strong member retention and continued intra-year growth. Insurance BER in 2024 improved to 82.8% in the third quarter and 80.6% year-to-date, as compared to 83.3% in the third quarter and 86.2% in the year-to-date period of 2023.
"Our differentiated approach continues to drive our underlying financial momentum," said Clover Health CFO Peter Kuipers. "Strong execution during the third quarter drove meaningful Adjusted EBITDA profitability improvement. As a result, we have increased our full-year 2024 Adjusted EBITDA profitability guidance. We believe that our strong financial profile and momentum, combined with continued strong Stars performance for our flagship PPO plan, sets us up well to invest in and return to membership growth in 2025."
Key Company highlights are as follows:
Dollars in Millions 3Q24 3Q23(1) Change
Between
(%)Insurance revenue $ 322.6 $ 301.2 7.1 % Insurance net medical claims incurred 251.6 236.5 6.4 % Total revenue 331.0 306.0 8.2 % Insurance MCR 78.0 % 78.5 % (50 bps) Insurance BER(2) 82.8 % 83.3 % (50 bps) Salaries and benefits plus General and administrative expenses ("SG&A")(3) $ 90.2 $ 101.6 (11.2) % Adjusted Salaries and benefits plus General and administrative expenses ("Adjusted SG&A")(4)(5) 61.9 67.5 (8.3) % Net loss from continuing operations (8.8 ) (33.6 ) 73.8 % Adjusted EBITDA(5) 19.3 2.7 614.8 % Total restricted and unrestricted cash, cash equivalents, and investments $ 531.4 $ 672.0 (20.9) % Financial Outlook
For full-year 2024, Clover Health is updating its guidance as follows:
Current 2024 Guidance Previous 2024 Guidance Insurance revenue $1.35 billion - $1.375 billion $1.35 billion - $1.375 billion Insurance MCR 76% - 77% 77% - 79% Insurance BER(5) 81% - 82% 81% - 83% Adjusted SG&A(5) $290 million - $295 million $270 million - $280 million Adjusted EBITDA(5) $55 million - $65 million $50 million - $65 million 1 The results of operations for the Company's former Non-Insurance segment have been reclassified as discontinued operations for all periods presented due to the Company's decision to not participate in the ACO Reach program for the 2024 performance year. Refer to Note 17 - Discontinued Operations within the Company's most recent Form 10-Q for additional information.
2 Insurance Benefits Expense Ratio (“BER”) is a Non-GAAP financial measure. A reconciliation of BER to Insurance Net medical claims incurred, net, the most directly comparable GAAP measure, is provided in a table immediately following the consolidated financial statements below. Additional information about the Company's Non-GAAP financial measures can be found under the caption "About Non-GAAP Financial Measures" below and in Appendix A. Beginning in the second quarter 2024, the Company is presenting Insurance BER. Management believes that by adding quality improvement expenses into the Insurance BER calculation, this offers a clearer and more accurate representation of our investment in healthcare quality and member engagement, and more fully captures the cost of maintaining and enhancing the quality of care for our members.
3 Salaries and benefits plus General and administrative expenses ("SG&A") is the sum of Salaries and benefits plus General and administrative expenses presented as the GAAP measure in the condensed consolidated financial statements.
4 Adjusted SG&A (Non-GAAP) and Adjusted EBITDA (Non-GAAP) are Non-GAAP financial measures. Reconciliations of Adjusted SG&A (Non-GAAP) to SG&A and Adjusted EBITDA (Non-GAAP) to Net loss from continuing operations, respectively, the most directly comparable GAAP measures, are provided in the tables immediately following the consolidated financial statements below. Additional information about the Company's Non-GAAP financial measures can be found under the caption "About Non-GAAP Financial Measures" below and in Appendix A.
5 Reconciliations of projected Adjusted SG&A (Non-GAAP) to projected SG&A, and projected Adjusted EBITDA (Non-GAAP) to Net loss from continuing operations, the most directly comparable GAAP measures, are not provided because Stock-based compensation, which is excluded from Adjusted SG&A (Non-GAAP) and Adjusted EBITDA (Non-GAAP), cannot be reasonably calculated or predicted at this time without unreasonable efforts. A reconciliation of projected Insurance BER (Non-GAAP) to projected Net medical claims incurred, net, the most directly comparable GAAP measure, is not provided because quality improvements, which are included in Insurance BER (Non-GAAP), cannot be reasonably calculated or predicted at this time without unreasonable efforts. Additional information about the Company's Non-GAAP financial measures can be found under the caption "About Non-GAAP Financial Measures" below and in Appendix A.Lives under Clover Management
September 30, 2024 September 30, 2023 Insurance members 81,110 81,275 Earnings Conference Call Details
Clover Health’s management will host a conference call to discuss its financial results on Wednesday, November 6, at 5:00 PM Eastern Time. To access the call via telephone please dial 800-579-2543 (for U.S. callers) or 785-424-1789 (for callers outside the U.S.) and enter the conference ID: CLOVQ324. A live audio webcast will also be available online at: https://event.on24.com/wcc/r/4738366/21B4058D29B8D4F0F55BC3BAB4EA9B91 and related presentation materials will be available at Clover Health’s Investor Relations website at investors.cloverhealth.com. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web link and at Clover Health’s Investor Relations website at investors.cloverhealth.com, and will remain available for approximately 12 months.
Upcoming Investor Events & Conferences
- 2024 UBS Global Healthcare Conference at 5:00 p.m. Eastern Time, November 12, 2024
- Canaccord Genuity 2024 Medical Technology, Diagnostics, and Digital Health Forum, November 21, 2024
- 2024 Virtual BTIG Digital Health Forum, November 25, 2024
- 2024 Citi Global Healthcare Conference at 3:15 p.m. Eastern Time, December 3, 2024
Any live and archived webcasts and presentations associated with the conferences listed above may be accessed on Clover Health’s Investor Relations website at: investors.cloverhealth.com/news-and-events/investor-events-presentations.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements regarding future events and Clover Health's future results of operations, financial condition, market size and opportunity, business strategy and plans, and the factors affecting our performance and our objectives for future operations. Forward-looking statements are not guarantees of future performance and you are cautioned not to place undue reliance on such statements. In some cases, you can identify forward looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates," "going to," "can," "could," "should," "would," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," "outlook," "forecast," "guidance," "objective," "plan," "seek," "grow," "if," "continue" or the negative of these words or other similar terms or expressions that concern Clover Health's expectations, strategy, priorities, plans or intentions. Forward-looking statements in this press release include, but are not limited to, the following: statements under "Financial Outlook" and statements regarding expectations relating to potential improvements in Insurance MCR, operating expenses, Adjusted SG&A, Insurance BER, and the number of Clover Health's Insurance members, as well as the statements contained in the quotations of our executive officers, future capital needs and other expectations as to future performance, operations and results (including our updated guidance for full-year 2024). Statements regarding our Adjusted EBITDA profitability are also forward-looking, and are based on our current targets which are preliminary and are derived from our 2024 financial outlook. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from results expressed or implied by forward-looking statements in this press release. Forward-looking statements involve a number of judgments, risks and uncertainties, including, without limitation, risks related to: our expectations regarding results of operations, financial condition, and cash flows; our expectations regarding the development and management of our Insurance business; our ability to successfully enter new service markets and manage our operations; anticipated trends and challenges in our business and in the markets in which we operate; our ability to effectively manage our beneficiary base and provider network; our ability to maintain and increase adoption and use of Clover Assistant, including the expansion of Clover Assistant for external payors and providers under the brand name Counterpart Assistant; the anticipated benefits associated with the use of Clover Assistant, including our ability to utilize the platform to manage our medical care ratios; our ability to maintain or improve our Star Ratings or otherwise continue to improve the financial performance of our business; our ability to develop new features and functionality that meet market needs and achieve market acceptance; our ability to retain and hire necessary employees and staff our operations appropriately; the timing and amount of certain investments in growth; the outcome of any known and unknown litigation and regulatory proceedings; any current, pending, or future legislation, regulations or policies that could have a negative effect on our revenue and businesses, including rules, regulations, and policies relating to healthcare and Medicare; our ability to maintain, protect, and enhance our intellectual property; general economic conditions and uncertainty; persistent high inflation and interest rates; and geopolitical uncertainty and instability. Additional information concerning these and other risk factors is contained under Item 1A. “Risk Factors” in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on March 14, 2024, as such risks may be updated in our subsequent filings with the SEC. The forward-looking statements included in this press release are made as of the date hereof. Except as required by law, Clover Health undertakes no obligation to update any of these forward-looking statements after the date of this press release or to conform these statements to actual results or revised expectations.
About Non-GAAP Financial Measures
We use Non-GAAP measures including Insurance BER, Adjusted EBITDA, Adjusted SG&A, and Adjusted SG&A as a percentage of revenue. These Non-GAAP financial measures are provided to enhance the reader's understanding of Clover Health's past financial performance and our prospects for the future. Clover Health's management team uses these Non-GAAP financial measures in assessing Clover Health's performance, as well as in planning and forecasting future periods. These Non-GAAP financial measures are not computed according to GAAP, and the methods we use to compute them may differ from the methods used by other companies. Non-GAAP financial measures are supplemental to and should not be considered a substitute for financial information presented in accordance with generally accepted accounting principles in the United States ("GAAP") and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Readers are encouraged to review the reconciliations of these Non-GAAP financial measures to the comparable GAAP measures, which are attached to this release, together with other important financial information, including our filings with the SEC, on the Investor Relations page of our website at investors.cloverhealth.com.
For a description of these Non-GAAP financial measures, including the reasons management uses each measure, please see Appendix A: "Explanation of Non-GAAP Financial Measures."
The statements contained in this document are solely those of the authors and do not necessarily reflect the views or policies of CMS. The authors assume responsibility for the accuracy and completeness of the information contained in this document.
About Clover Health:
Clover Health (Nasdaq: CLOV) is a physician enablement technology company committed to bringing access to great healthcare to everyone on Medicare. This includes a health equity-based focus on seniors who have historically lacked access to affordable, high-quality healthcare. Our strategy is powered by our software platform, Clover Assistant, which is designed to aggregate patient data from across the healthcare ecosystem to support clinical decision-making and improve health outcomes through the early identification and management of chronic disease. For our members, we provide PPO and HMO Medicare Advantage plans in several states, with a differentiated focus on our flagship wide-network, high-choice PPO plans. For healthcare providers outside Clover Health's Medicare Advantage plan, we aim to extend the benefits of our data-driven technology platform to a wider audience via our subsidiary, Counterpart Health, and to enable enhanced patient outcomes and reduced healthcare costs on a nationwide scale. Clover Health has published data demonstrating the technology’s impact on Medication Adherence, as well as the earlier identification and management of Diabetes and Chronic Kidney Disease.Visit: www.cloverhealth.com
Investor Relations Contact:
Ryan Schmidt
investors@cloverhealth.comPress Contact:
Andrew Still-Baxter
press@cloverhealth.comCLOVER HEALTH INVESTMENTS, CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share amounts)September 30,
2024
(Unaudited)December 31,
2023Assets Current assets Cash and cash equivalents $ 287,956 $ 116,407 Short-term investments 1,779 12,218 Investment securities, available-for-sale (Amortized cost: 2024: $43,695; 2023: $101,412) 43,302 100,702 Investment securities, held-to-maturity (Fair value: 2024: $15; 2023: $6,778) 15 6,902 Accrued retrospective premiums 20,963 22,076 Other receivables 14,962 16,666 Healthcare receivables 37,314 64,164 Surety bonds and deposits 596 542 Prepaid expenses 12,949 14,418 Other assets, current 2,804 1,404 Assets related to discontinued operations 10,087 72,471 Total current assets 432,727 427,970 Investment securities, available-for-sale (Amortized cost: 2024: $182,840; 2023: $121,868) 184,085 120,208 Investment securities, held-to-maturity (Fair value: 2024: $14,178; 2023: $692) 14,294 793 Property and equipment, net 5,336 5,082 Operating lease right-of-use assets 2,585 3,382 Other intangible assets 2,990 2,990 Other assets, non-current 10,996 10,246 Total assets $ 653,013 $ 570,671 CLOVER HEALTH INVESTMENTS, CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share amounts)September 30,
2024
(Unaudited)December 31,
2023Liabilities and Stockholders' Equity Current liabilities Unpaid claims $ 166,070 $ 135,737 Due to related parties, net 1,340 1,363 Accounts payable and accrued expenses 25,746 37,184 Accrued salaries and benefits 35,340 20,951 Deferred revenue 17 3,099 Operating lease liabilities 1,345 1,665 Other liabilities, current 836 1,017 Liabilities related to discontinued operations 48,941 60,099 Total current liabilities 279,635 261,115 Long-term operating lease liabilities 2,321 2,998 Other liabilities, non-current 28,891 20,164 Total liabilities 310,847 284,277 Commitments and contingencies Stockholders' equity Class A Common Stock, $0.0001 par value; 2,500,000,000 shares authorized at September 30, 2024 and December 31, 2023; 411,256,965 and 401,183,882 issued and outstanding at September 30, 2024 and December 31, 2023, respectively 41 40 Class B Common Stock, $0.0001 par value; 500,000,000 shares authorized at September 30, 2024 and December 31, 2023; 89,032,305 and 87,867,732 issued and outstanding at September 30, 2024 and December 31, 2023, respectively 9 9 Additional paid-in capital 2,546,167 2,461,238 Accumulated other comprehensive loss 852 (2,370 ) Accumulated deficit (2,180,711 ) (2,159,794 ) Less: Treasury stock, at cost; 16,817,010 and 7,912,750 shares held at September 30, 2024 and December 31, 2023, respectively (24,192 ) (12,729 ) Total stockholders' equity 342,166 286,394 Total liabilities and stockholders' equity $ 653,013 $ 570,671 CLOVER HEALTH INVESTMENTS, CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (Dollars in thousands, except per share and share amounts) Three Months Ended
September 30,Nine Months Ended
September 30,2024 2023 2024 2023 Revenues: Premiums earned, net (Net of ceded premiums of $97 and $106 for the three months ended September 30, 2024 and 2023, respectively; net of ceded premiums of $301 and $341 for the nine months ended September 30, 2024 and 2023, respectively) $ 322,579 $ 301,230 $ 1,014,201 $ 932,699 Other income 8,407 4,798 19,967 15,459 Total revenues 330,986 306,028 1,034,168 948,158 Operating expenses: Net medical claims incurred 249,774 235,785 763,283 754,836 Salaries and benefits 54,995 60,567 169,717 191,985 General and administrative expenses 35,201 41,030 124,194 140,384 Premium deficiency reserve expense (benefit) — 392 — (6,556 ) Depreciation and amortization 339 557 987 1,835 Restructuring (recoveries) costs (538 ) 1,313 288 7,870 Total operating expenses 339,771 339,644 1,058,469 1,090,354 Loss from continuing operations (8,785 ) (33,616 ) (24,301 ) (142,196 ) Change in fair value of warrants — — 17 — Interest expense — — — 7 Loss on investment — — 467 — Net loss from continuing operations (8,785 ) (33,616 ) (24,785 ) (142,203 ) Net (loss) income from discontinued operations (370 ) (7,853 ) 3,868 (686 ) Net loss $ (9,155 ) $ (41,469 ) $ (20,917 ) $ (142,889 ) Per share data: Basic weighted average number of Class A and Class B common shares and common share equivalents outstanding 490,180,103 480,770,283 488,501,812 480,921,520 Diluted weighted average number of Class A and Class B common shares and common share equivalents outstanding 490,180,103 480,770,283 488,501,812 480,921,520 Continuing operations: Basic loss per share $ (0.02 ) $ (0.07 ) $ (0.05 ) $ (0.30 ) Diluted loss per share (0.02 ) (0.07 ) (0.05 ) (0.30 ) Discontinued operations: Basic earnings (loss) per share 0.00 (0.02 ) 0.01 0.00 Diluted earnings (loss) per share 0.00 (0.02 ) 0.01 0.00 Net unrealized gain on available-for-sale investments 3,111 1,643 3,222 4,302 Comprehensive loss $ (6,044 ) $ (39,826 ) $ (17,695 ) $ (138,587 ) Operating Segments Insurance Corporate/
OtherEliminations Consolidated
TotalThree Months Ended September 30, 2024 (in thousands) Premiums earned, net (Net of ceded premiums of $97) $ 322,579 $ — $ — $ 322,579 Other income 4,314 32,422 (28,329 ) 8,407 Intersegment revenues — 46,944 (46,944 ) — Net medical claims incurred 251,643 4,442 (6,311 ) 249,774 Gross profit (loss) $ 75,250 $ 74,924 $ (68,962 ) $ 81,212 CLOVER HEALTH INVESTMENTS, CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)Nine Months Ended
September 30,2024 2023 Cash flows from operating activities: Net loss $ (20,917 ) $ (142,889 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization expense 987 1,835 Stock-based compensation 84,686 107,795 Change in fair value of warrants and amortization of warrants 17 — Accretion, net of amortization (2,140 ) (3,096 ) Accrued interest earned (354 ) — Net realized gains on investment securities (174 ) (20 ) Loss on investment 467 — Premium deficiency reserve — (6,556 ) Changes in operating assets and liabilities: Accrued retrospective premiums 1,113 4,741 Other receivables 1,704 8,836 Surety bonds and deposits (54 ) (17 ) Prepaid expenses 1,469 2,920 Other assets (2,640 ) 5,244 Healthcare receivables 26,850 18,534 Operating lease right-of-use assets 797 405 Unpaid claims 30,310 (24,164 ) Accounts payable and accrued expenses (11,438 ) 2,851 Accrued salaries and benefits 14,389 371 Deferred revenue (3,082 ) 103,295 Other liabilities 8,546 179 Operating lease liabilities (997 ) (900 ) Net cash provided by operating activities from continuing operations 129,539 79,364 Net cash (used in) provided by operating activities from discontinued operations (8,861 ) 34,060 Net cash provided by operating activities 120,678 113,424 Cash flows from investing activities: Purchases of short-term investments, available-for-sale, and held-to-maturity securities (153,347 ) (142,359 ) Proceeds from sales of short-term investments and available-for-sale securities 47,804 60,436 Proceeds from maturities of short-term investments, available-for-sale, and held-to-maturity securities 108,788 139,122 Purchases of property and equipment (1,241 ) (848 ) Net cash provided by investing activities 2,004 56,351 Cash flows from financing activities: Issuance of common stock, net of early exercise liability 243 1,149 Repurchases of common stock (1,772 ) — Treasury stock acquired (9,691 ) (5,393 ) Net cash used in financing activities (11,220 ) (4,244 ) Net increase in cash, cash equivalents, and restricted cash for discontinued and continuing operations 111,462 165,531 Cash, cash equivalents, and restricted cash, beginning of period for discontinued and continuing operations 176,494 186,213 Cash, cash equivalents, and restricted cash, end of period for discontinued and continuing operations $ 287,956 $ 351,744 Reconciliation of cash and cash equivalents and restricted cash for discontinued and continuing operations Cash and cash equivalents $ 287,956 $ 299,014 Restricted cash — 52,730 Total cash, cash equivalents, and restricted cash for discontinued and continuing operations $ 287,956 $ 351,744 Supplemental disclosure of non-cash activities Performance year receivable $ — $ (185,404 ) Performance year obligation — 185,404 CLOVER HEALTH INVESTMENTS, CORP. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ADJUSTED EBITDA (NON-GAAP) RECONCILIATION (in thousands)(1) Three Months Ended September 30, 2024 2023 Net loss from continuing operations (GAAP): $ (8,785 ) $ (33,616 ) Adjustments Depreciation and amortization 339 557 Stock-based compensation 27,988 33,070 Premium deficiency reserve expense — 392 Restructuring (recoveries) costs (538 ) 1,313 Non-recurring legal expenses and settlements 259 1,007 Adjusted EBITDA (Non-GAAP) $ 19,263 $ 2,723 (1) The table above includes Non-GAAP measures. Non-GAAP financial measures are supplemental and should not be considered a substitute for financial information presented in accordance with GAAP. For a detailed explanation of these Non-GAAP measures, see Appendix A. CLOVER HEALTH INVESTMENTS, CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
ADJUSTED SG&A (NON-GAAP) RECONCILIATION
(in thousands)(1)Three Months Ended September 30, 2024 2023 Salaries and benefits $ 54,995 $ 60,567 General and administrative expenses 35,201 41,030 Total SG&A (GAAP) 90,196 101,597 Adjustments Stock-based compensation (27,988 ) (33,070 ) Non-recurring legal expenses and settlements (259 ) (1,007 ) Adjusted SG&A (Non-GAAP) $ 61,949 $ 67,520 Total revenues (GAAP) $ 330,986 $ 306,028 Adjusted SG&A (Non-GAAP) as a percentage of revenue 19 % 22 % (1) The table above includes Non-GAAP measures. Non-GAAP financial measures are supplemental and should not be considered a substitute for financial information presented in accordance with GAAP. For a detailed explanation of these Non-GAAP measures, see Appendix A. CLOVER HEALTH INVESTMENTS, CORP. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES INSURANCE BENEFITS EXPENSE RATIO (NON-GAAP) RECONCILIATION (in thousands)(1) Three Months Ended September 30, 2024 2023 Net medical claims incurred, net (GAAP): $ 251,643 $ 236,533 Adjustments Quality improvements 15,445 14,363 Insurance benefits expense, net (Non-GAAP) $ 267,088 $ 250,896 Premiums earned, net (GAAP) $ 322,579 $ 301,230 Insurance benefits expense ratio, net (Non-GAAP) 82.8 % 83.3 % (1) The table above includes Non-GAAP measures. Non-GAAP financial measures are supplemental and should not be considered a substitute for financial information presented in accordance with GAAP. For a detailed explanation of these Non-GAAP measures, see Appendix A. CLOVER HEALTH INVESTMENTS, CORP.
Appendix A
Explanation of Non-GAAP Financial MeasuresNon-GAAP Definitions
Adjusted EBITDA - A Non-GAAP financial measure defined by us as net loss from continuing operations before depreciation and amortization, loss on investment, stock-based compensation, premium deficiency reserve expense (benefit), restructuring (recoveries) costs, and non-recurring legal expenses and settlements. Adjusted EBITDA is a key measure used by our management team and the board of directors to understand and evaluate our operating performance and trends, to prepare and approve our annual budget and to develop short and long-term operating plans. In particular, we believe that the exclusion of the amounts eliminated in calculating Adjusted EBITDA provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA provides investors and others useful information to understand and evaluate our operating results in the same manner as our management and our board of directors.
Adjusted SG&A - A Non-GAAP financial measure defined by us as total SG&A less stock-based compensation and non-recurring legal expenses and settlements. We believe that Adjusted SG&A provides management, investors, and others a useful view of our operating spend as it excludes non-cash, stock-based compensation and expenses related to investments that management believes do not reflect the Company's core operating expenses. We believe that Adjusted SG&A as a percentage of revenue is useful to management, investors, and others because it allows us to measure our operational leverage as revenue scales.
Insurance Benefits Expense Ratio - A Non-GAAP financial measure defined by us as benefits expense ratio ("BER"). We calculate our Insurance BER by taking the total of Insurance net medical expenses incurred and quality improvements, and dividing that total by premiums earned on a net basis, in a given period. Quality improvements include expenses associated with activities that improve health outcomes, as defined by the U.S. Department of Health and Human Services ("HHS"), as well as those directly tied to enhancing healthcare quality, such as the Company's spend on health information technology, wellness and prevention programs, initiatives to reduce hospital readmissions, and our clinically focused Member Rewards program. We believe our Insurance BER is useful to management, investors, and others because it offers a clearer and more accurate representation of our investment in healthcare quality and member engagement, and gives a comprehensive view of costs related to maintaining and improving the quality of care of our members, which is crucial for sustaining member satisfaction and adherence to treatment regimens.
