What Happened?
Shares of health insurance company Clover Health (NASDAQ: CLOV) jumped 10% in the afternoon session after the company announced a 53% year-over-year increase in its Medicare Advantage membership and stated that it expected its first-ever full year of net income profitability in 2026.
Following a strong Annual Enrollment Period, Clover's membership grew to approximately 153,000. The company attributed the positive outlook to this disciplined growth, strong member retention of over 95%, and improved operational efficiencies. Management also highlighted that better cohort economics and enhanced Star Ratings supported the company's path toward profitability and potential margin expansion.
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What Is The Market Telling Us
Clover Health’s shares are extremely volatile and have had 36 moves greater than 5% over the last year. But moves this big are rare even for Clover Health and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 2 months ago when the stock dropped 24.2% on the news that the company reported disappointing third-quarter financial results and cut its full-year profitability forecast.
While the Medicare-focused company saw its revenue climb by 50.1% compared to the previous year, its earnings per share missed forecasts. Looking ahead, Clover Health lowered its full-year guidance for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to a midpoint of $22.5 million, which was significantly below analysts' expectations and implied a reduction from previous forecasts. The company attributed the weaker outlook to higher-than-expected medical costs and increased healthcare usage trends among its members. This guidance overshadowed its revenue, which beat Wall Street's estimates, as investors focused on the pressure on future profitability.
Clover Health is up 18% since the beginning of the year, but at $2.85 per share, it is still trading 41% below its 52-week high of $4.82 from January 2025. Investors who bought $1,000 worth of Clover Health’s shares 5 years ago would now be looking at an investment worth $203.07.
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