Clover Health Investments, Corp. (CLOV) Earnings

Management highlights

### Core Business Performance and Model Validation - Delivered 48% MA membership growth in H1 2026, with a $67 million year-over-year increase in gap net income, $550 million year-over-year total revenue growth, and $104 million year-over-year consolidated gross profit growth - Expanded operating leverage by more than 200 basis points as the business scales, validating that the AI-powered Clover Assistant care model improves both member outcomes and underlying business performance - Clover Assistant is the core value creator for the business: it empowers physicians to identify disease earlier, manage chronic conditions more consistently, and improve care decisions, leading to stronger cohort economics over time ### Clover Assistant Cohort Maturation - Multiple cohorts of members have received Clover Assistant-powered care for multiple years, creating a compounding tailwind for earnings; historical data shows gross profit improves by ~$70 per member per month (PMPM) as members move from year one to year two, with additional improvement moving from year two to year three - The large 2025 member cohort is progressing as expected this year in its second year, matching the projected maturation curve that will drive improved earnings in 2027 - Two-thirds of all current members are managed under Clover Assistant; the 2025 and 2026 new member cohorts have coverage in the low 60% range, which rises over time as tenure increases, currently meeting the overall population average - Approximately 21% of current membership is the 2025 cohort, and 28% is the 2026 cohort; a larger share of members will shift to higher-maturity tenure classes in 2027 ### Star Rating Update - Following a district court order and CMS recalculation, all Clover MA members are now enrolled in 4.5-star rated plans for payment year 2027, which the company states reflects the long-standing quality of care it delivers - CMS has filed an intent to appeal the court ruling; Clover believes the district court's ruling was well-reasoned and is prepared to defend the decision - The 4.5-star rating provides additional flexibility to reinvest in members, maintain competitive products, support growth, and expand profitability, but it does not change the underlying earnings trajectory driven by cohort maturation ### Strategic Expansion - Clover's core strategy is built on a full-risk PPO model that offers broad physician network access, a differentiator from many competing MA plans - Clover has extended its Clover Assistant clinical model to the broader market via Counterpart Health, and is investing in Counterpart's go-to-market capabilities to capture additional industry opportunity - Growth remains concentrated in core markets of New Jersey and Georgia, where the company has the strongest ability to engage members clinically and manage long-term unit economics ### Operational Cost Trends - Overall medical cost trends are performing better than expected at the start of 2026; inpatient utilization is favorable overall, with year-one 2026 new member utilization tracking below the 2025 new member cohort - Outpatient cost trends peaked in March 2026 and moderated in Q2; they remain elevated from prior years but are within management expectations - Dental cost performance has improved following changes to out-of-network dental claims management, and Part D performance has been better than expected through H1 2026 with clearer visibility into IRA implementation seasonality - The company maintains a balance of expense discipline in the core business and targeted investments to support future growth, including Clover Assistant enhancements, Counterpart Health expansion, and health plan operations improvements

Guidance

- Full-year 2026 guidance is upgraded across all metrics, driven by stronger than expected H1 2026 performance and favorable cohort progression: - Average MA membership: 156,000 to 158,000 members - Total revenue: $2.92 billion to $3.00 billion - Consolidated gross profit: $525 million to $555 million - Adjusted EBITDA: $70 million to $85 million - Gap net income: $20 million to $35 million - The 2026 guidance remains balanced, with prudence around assuming current favorable trends will persist through the full year given the large share of early-tenure members - Seasonal expectations for H2 2026: consolidated gross profit will be higher in Q3 than Q4 (consistent with standard MA seasonality), investments will increase in Q4 for Annual Election Period (AEP) activities, adjusted EBITDA will remain positive in Q3 before returning to a typical seasonal loss in Q4; even with this pattern, H2 2026 performance is expected to be significantly improved year-over-year - No formal 2027 guidance is provided at this time, but management has increasing confidence in 2027 performance: - 2027 will see the 2025 cohort move to year three (with an expected step-up in profitability) and the 2026 cohort move to year two (also with improved margins), leaving Clover with a larger, more mature, higher-margin membership base entering 2027 - The 4.5-star rating gives additional flexibility for 2027 bids and balance between member value, growth, and profitability, but does not change the core earnings trajectory from cohort maturation - Management expects 2027 to benefit from continued operating leverage, a larger membership base, and continued cohort maturation that will drive expanded profitability

Segment performance

Clover Health reports results only for its consolidated Medicare Advantage (MA) business, with no breakdown of separate product segment financials provided in this call. For the full MA segment: Q2 2026 average MA membership reached 157,000, a 48% year-over-year increase. Total Q2 2026 revenue was $743 million, a 56% year-over-year increase. Adjusted EBITDA for Q2 2026 was $41 million, and gap net income was $28 million. Adjusted SG&A for Q2 2026 was $112 million, equal to 15% of total revenue, a 220 basis point improvement year-over-year. For the first half of 2026: total revenue hit $1.5 billion, adjusted EBITDA totaled $81 million, and gap net income was $55 million. The company ended Q2 2026 with $443 million in cash and investments, no outstanding debt, and $133 million in year-to-date operating cash flow.

Risks & headwinds

- CMS has appealed the district court's ruling that led to the 4.5-star recalculation for 2027, creating uncertainty around the final star rating outcome and associated financial benefits - Outpatient medical cost trends remain elevated compared to prior years, requiring ongoing close monitoring - A large share of current Clover's membership is still in early tenure, so full earnings power from recent growth will only materialize as members mature over time, creating near-term margin pressure - Star rating outcomes for future years beyond 2027 are still pending plan preview data, with no certainty that the 4.5-star rating will be maintained in future recalculations - Actual future results may differ materially from forward-looking statements due to a range of factors detailed in Clover's SEC filings, including the risk factors section of the most recent Form 10-K

Analyst Q&A

• Q: What percentage of the 2025 and 2026 new member cohorts are covered by Clover Assistant, how are these cohorts split between year one and year two for 2027, and why did SG&A decline sequentially from Q1 to Q2 2026? /

  A: The 2025 and 2026 cohorts have Clover Assistant coverage in the low 60% range, slightly below the overall company average of two-thirds, and coverage rises as member tenure increases. About 21% of current total membership is the 2025 cohort (moving to year three in 2027) and 28% is the 2026 cohort (moving to year two in 2027). The sequential SG&A decline was driven by the elimination of non-recurring one-time expenses recorded in Q1 2026, including a claims adjustment for increased IB&R reserves.

• Q: How did Clover approach 2027 plan bidding, how were cost trend assumptions set, did you factor in expected competitor market exit, and can you maintain your 4.5-star rating going forward? /

  A: Clover used the same balanced bidding approach it has used for the past two years, targeting profitable growth with strong member products. Underlying medical cost trend assumptions are aligned with large national MA peers, but Clover also accounts for the margin upside from 2027 cohort maturation that offsets near-term headwinds from new year-one members. The company factored in continued competitor market disruption in core New Jersey and Georgia markets into its bids. Clover has historically been the top-rated PPO in the country on HEDIS quality measures, and will provide more detail on future star ratings once plan previews are released.

• Q: Is the 4.5-star rating outcome baked into Clover's 2027 bids and planning? /

  A: Management confirmed the 4.5-star rating was incorporated into 2027 bid planning, providing additional flexibility for pricing and product investments while maintaining a balanced approach to growth and profitability. No further detail on bid assumptions was provided, as the company awaits enrollment results to quantify the full financial impact.