Clover Health Sees PPO Edge, Cohort Gains as Medicare Advantage Pricing Tightens

Key Points

• Clover Health is positioning its PPO-heavy Medicare Advantage business for an industry shift away from zero-premium PPO plans. About 98% of its members are in PPO plans, which the company believes fit its operating model better than arrangements reliant on traditional value-based contracts.
• Member retention and aging cohorts are improving economics. Retention exceeds 95%, while insurance gross profit has historically risen by about $70 per member per month from year one to year two and another $85 from year two to year three.
• Clover is targeting its first year of GAAP net income profitability. Management cited Clover Assistant engagement, clinical programs and continued AI investment as key drivers, while assuming 4.5-star ratings for both PPO and HMO contracts in its 2027 bids.

Clover Health Investments NASDAQ: CLOV is positioning its Medicare Advantage business to benefit from industry pricing discipline, member retention and the maturation of member cohorts, Interim Chief Financial Officer Clay Thornton said at Jefferies’ Healthcare Services and Technology Conference in Nashville.

Speaking with Jefferies Healthcare Equity Research’s Dave Windley, Thornton described Clover’s approach as contrarian within Medicare Advantage. The company uses its proprietary Clover System, including its Clover Assistant physician-enablement platform, to support both contracted physicians and its employed clinicians. Thornton said the technology reaches roughly two-thirds of Clover members through at least one technology-powered visit in a given year.

Unlike some Medicare Advantage competitors, Clover retains full financial risk for its entire member population rather than delegating risk to downstream value-based providers, Thornton said.

Industry Pricing and Utilization Trends

Thornton said the Medicare Advantage industry has experienced several turbulent years, including changes related to V28 risk adjustment, elevated utilization, Part D redesign and Star Ratings volatility. While he said it is difficult to predict conditions beyond the near term, he has seen plans respond with more pricing discipline heading into 2026 and in early views of 2027 benefit offerings.

“We’ve seen a lot of that through the national players itself,” Thornton said, referring to pricing discipline. He said plans have increasingly moved away from PPO offerings, particularly zero-premium PPO products, while benefit designs have generally become less generous or remained stable rather than improving.

For Clover, utilization trends have been relatively favorable in inpatient and skilled nursing facility care, according to Thornton. He said outpatient utilization had created pressure, but those trends peaked around March and began moderating during the second quarter.

Thornton attributed Clover’s ability to manage certain areas of medical-cost trend to its clinical programs, including a longitudinal home-based primary care program focused on members with the greatest health needs. He said approximately 10% of members account for 60% of costs, a population that also has substantial inpatient utilization.

Retention and Cohort Economics

Clover has reported retention above 95%, which Thornton said has been supported primarily by benefit stability. The company enhanced its benefit offering in 2025 and emphasized stability in 2026 while other plans made broader changes, he said.

High Clover Assistant engagement also contributes indirectly to retention, Thornton said, because it supports better cohort economics and helps Clover maintain stable benefits. The company’s historical results show insurance gross profit improving by about $70 per member per month when a member moves from the first year to the second year, followed by a further $85 per member per month increase from the second to third year.

Thornton said Clover is closely monitoring these patterns and that current cohort performance and technology engagement are tracking in line with historical results. He added that each additional year of member tenure has generally produced incremental margin, though the company has not quantified the point at which those gains may level off.

“What Clover Assistant is designed to do is to identify chronic disease earlier and then enable clinicians to manage that chronic disease,” Thornton said. “When you identify that chronic disease earlier and you manage it, you see those savings accrue over a period of years.”

PPO Positioning and 2027 Outlook

Thornton said Clover expects continued disruption during the upcoming annual enrollment period, though he expects it to be selective across markets rather than uniform nationwide. He said the company continues to see competitors shift away from zero-premium PPO products and toward HMO offerings.

Clover believes its operating model is well suited for PPO plans because it does not depend heavily on traditional value-based contracts or capitation arrangements, Thornton said. Those arrangements are more difficult to manage in a PPO product than in an HMO, he said.

About 98% of Clover’s members are enrolled in PPO plans, Thornton said. While he did not provide survey data on why members choose those plans, he said Clover’s PPO benefit value is broadly consistent with its HMO offering in areas such as cost sharing, supplemental benefits and Part D coverage.

For 2027, Clover submitted bids assuming 4.5 Star Ratings for both its PPO and HMO contracts, Thornton said. He said the company’s benefit designs reflected expectations for continued competitive disruption, and early market observations have largely aligned with those assumptions.

Technology and AI Opportunities

Thornton said Clover continues to invest materially in research and development for Clover Assistant, which has been in development for more than eight years. He said artificial intelligence can accelerate the platform’s impact, while the company also sees opportunities to apply AI to administrative functions such as claims processing, payment integrity and member-service calls.

On the clinical side, Thornton emphasized that Clover intends to maintain a “human-in-the-loop” model. Clover Assistant is designed to provide information at the point of care and support clinician decision-making rather than replace it, he said.

Thornton said Clover is tracking toward its first year of GAAP net income profitability, while noting that 49% of its members remain in their first or second year with the company. He identified Clover Assistant engagement and continued product development as the primary indicators of future financial performance.

About Clover Health Investments (NASDAQ:CLOV)

Clover Health Investments, Inc is a healthcare technology and insurance company focused on providing Medicare Advantage plans to eligible Medicare beneficiaries. Its insurance business offers medical coverage and related healthcare benefits through plans available in select counties across the United States.

The company also develops and uses Clover Assistant, a technology platform designed to support physicians with patient information, clinical insights, care recommendations and tools intended to help improve healthcare outcomes.

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