Clover Health News: CLOV Stock Tanking, Is it Time to Buy?
Clover Health (Nasdaq: CLOV) stock is down 70% since going public earlier this year. A series of disappointing earnings and general market weakness is dragging the meme stock to new lows. But, the latest Clover Health news may change that…
So far, the health plan provider has been disappointing as investors’ high hopes are starting to diminish. Despite achieving over 100% annual revenue growth in the past two quarters, CLOV stock is still trending in the wrong direction.
It’s easy to write the performance off as a general market event. But, considering other SPAC’s are up over 30% on average this quarter, there’s more to it.
Since the company’s business model caters to higher expenses, will the company overcome the odds and turn a profit? In any case, the company is growing and aggressively targeting its market. Let’s take a look at the latest Clover health news to see if it’s time to buy.
Clover Health News – The Growth Continues
Although Clover Health isn’t profitable yet, it’s lowering debt while revenue expands. In fact, since going public, the company has achieved double-digit year-over-year (YOY) revenue growth in each quarter. With this in mind, the cost of revenue is also growing quickly. According to recent Clover Health news, it’s up 200% in the past year.
Even though growing revenue looks great as top-line growth, for the company to become profitable, it will need to work on trimming expenses. Conversely, higher expenses are a critical part of the company’s business plan.
For one thing, Clover Health pays a larger rate to physicians to give them more incentive to use the company’s Clover Assistant Platform. The platform features:
- Personalized options
- Data-driven information
- Cost savings
- And diagnosis support.
So far, the company is working on automating more tasks to streamline efficiency. As long as Clover’s sales continue climbing, the company expects to turn a profit next year. However, this will depend on if the company can continue its rapid growth with competition creeping in.
Clover Health’s Q3 Earnings
Recent Clover Heath news revealed its latest quarter was much of the same, showing top-line growth but rising expenses. On the other hand, low profit margins limit the company’s ability to turn a profit. With this in mind, here are a few highlights from the report.
- Total Revenue Growth – Clover’s top line grew 153% on the year to $427.2 million.
- Lives Under Clove Management – Total users increased 125% to 129,100.
- Lives Under Clove Assistant – Total CA users grew 223% to around 94,000.
- Clover Assistant Visits – Total visits to the program grew by 73%.
All in all, it was about what you would expect from the health plan provider. The company’s low margins are masking the impressive growth. Despite the increase in sales and users, Clover ended the quarter with a net loss of $34.5 million.
Clover’s unique business model is helping expand into new markets in need of affordable healthcare options. In light of this, Clover Health news revealed that CEO Vivek Garipalli believes:
“Our wide-open network provides us with the ability to grow in geographic areas, most traditional incumbents, and new upstarts have avoided.” Before adding how important this is, “over the next 5-10 years as we continue to increase physician access while driving more affordability.”
If the company can continue growing into these untapped markets, then look for them to be a real contender in the Medicare Advantage market.
PPO Plan Upgraded to 3.5 Stars
In recent clover health news, the company’s PPO plan was upgraded by the Centers for Medicare and Medicaid Services (CMO) to a 3.5-star rating. The news is big for the health plan provider looking to further its position in the industry.
Not only that, but over 90% of Clover’s Medicare Advantage users enroll in the PPO plan. The upgrade comes at a crucial time as the health plan provider tries to attract new users. Certainly, the promotion will give physicians another reason to make the switch.
Garipalli added: “Not only does the stars upgrade highlight our approach, but it will also have a significant financial benefit in 2023.”
Also, the CMS is approving the company’s plans to expand in 2022, giving Clover a larger market to work with. If Clover Health wants to hit its goal of profitability, then the company will need to continue attracting larger markets.
Keep reading for more info on Clover Health news.
Closing Public Offering
This past month, according to Clover Health news, it was closing its public offering of stock. The sale consists of $300 million in proceeds, with an optional 7,826,086 share offering.
Clover Health is using the profits to cover short-term expenses and other general purposes. With this in mind, the sale comes as Clover is burning through cash. Furthermore, as per Clover Health news, its stock is down 40% since the company announced the offering.
This could be partially due to investor worries of dilution. If the company fails to reach its profit targets, it could mean more selling.
Does the Latest Clover Health News Make It a Buy?
There’s a lot of potential with Clover Health stock and its target market. At the same time, it will be a difficult path for them to reach profitability by next year. The latest Clover Health news shows the company is still growing but will need to dial back on costs to achieve its goal.
With Clover Health stock reaching all-time lows, there’s a ton of upside potential. However, the next few quarters will be crucial for the health plan provider as it looks to stay on track.
So far, Medicare Advantage users have doubled in the past decade. What’s more, Medicare spending is expected to double in the next ten years.
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If Clover can continue attracting new users with its innovative business model, look for them to capture a fair share of the growth. On the other hand, if Clover is unable to manage its expenses, it could mean further dilution. Either way, Clover Health will be an exciting healthcare stock to watch next year.
About Pete Johnson
Pete Johnson is an experienced financial writer and content creator who specializes in equity research and derivatives. He has over ten years of personal investing experience. Digging through 10-K forms and finding hidden gems is his favorite pastime. When Pete isn’t researching stocks or writing, you can find him enjoying the outdoors or working up a sweat exercising.