Why Clover Health Stock Sank Today

This article was originally published on this site

© Provided by The Motley Fool Why Clover Health Stock Sank Today

What happened

Shares of Clover Health Investments (NASDAQ: CLOV) were sinking 9.4% as of 3:10 p.m. EDT on Monday. The decline came after the Medicare-focused health insurer announced its first-quarter results

So what

The good news was that Clover Health reported record revenue of $200.3 million in the first quarter, up 21% year over year. However, based on the performance of the health insurance stock today, it appears that investors are focused more on the company’s bad news.

© Getty Images Documents with “Medicare Advantage Plan” printed on the cover sheet

Clover posted a Q1 net loss of $48.4 million, much worse than its net loss of $28.2 million in the prior-year period. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss also widened to $76.2 million in the first quarter of 2021 from $21.7 million in the same quarter of 2020.

Load Error

In addition, the company’s medical care ratio (MCR) — the percentage of medical costs to premiums received — increased to 107.6% from 89.4% in the year-ago period, based on generally accepted accounting principles (GAAP). Clover Health’s normalized adjusted MCR was lower, however, coming in at 95.4%. The company believes that its MCR ratio tends to be higher than competitors because of its lower out-of-pocket costs for members and increased benefit levels.

Now what

Clover’s direct contracting program targeting the original Medicare program could help boost its fortunes going forward. The company expects to sign up between 70,000 and 100,000 Medicare beneficiaries by the end of 2021. If it reaches this goal, the program will enable Clover to at least double its Medicare Advantage membership.

SPONSORED:

10 stocks we like better than Clover Health Investments

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now… and Clover Health Investments wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

See the 10 stocks

 

*Stock Advisor returns as of May 11, 2021

 

Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Clover Health Investments. The Motley Fool has a disclosure policy.

Continue Reading