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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________________________________
FORM 10-Q
________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number: 001-39252
________________________________________
Clover Health Investments, Corp.
(Exact Name of Registrant as Specified in its Charter)
________________________________________
Delaware98-1515192
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
3401 Mallory Lane, Suite 210
Franklin, Tennessee
37067
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (201) 432-2133
________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per shareCLOVThe NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  x    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
Accelerated filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  o    No  x
As of November 2, 2022, the registrant had 383,548,896 shares of Class A Common Stock, $0.0001 par value per share, and 94,394,852 shares of Class B Common Stock, $0.0001 par value per share, issued and outstanding.


1


Table of Contents
Page

2


As used in this report, "Company," "Clover," "Clover Health," "we," "us," "our," and similar terms refer to Clover Health Investments, Corp. and its consolidated subsidiaries, unless otherwise noted or the context otherwise requires.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements contained in this document other than statements of historical fact, including statements regarding our future results of operations, financial position, market size and opportunity, our business strategy and plans, the factors affecting our performance and our objectives for future operations, are forward-looking statements. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "could," "should," "would," "can," "expect," "project," "outlook," "forecast," "objective," "plan," "potential," "seek," "grow," "target," "if," and the negative or plural of these words and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including the risk factors described in our filings with the Securities and Exchange Commission (the "SEC"). Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this document may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Forward-looking statements contained in this document involve a number of judgments, risks and uncertainties, including, without limitation, risks related to:

our expectations regarding results of operations, financial condition, and cash flows;
our expectations regarding the development and expansion of our Insurance and Non-Insurance businesses;
our ability to successfully enter new service markets and manage our operations;
anticipated trends and challenges in our business and in the markets in which we operate;
our ability to expand our beneficiary base and provider network;
our ability to maintain and increase adoption and use of Clover Assistant;
the anticipated benefits associated with the use of Clover Assistant, including our ability to utilize the platform to manage our medical care ratios;
our ability to develop new features and functionality that meet market needs and achieve market acceptance;
our ability to retain and hire necessary employees and staff our operations appropriately;
the timing and amount of certain investments in growth;
the effect of uncertainties related to the global COVID-19 pandemic on our business, results of operations, and financial condition;
the outcome of any known and unknown litigation and regulatory proceedings;
any current, pending, or future legislation, regulations or policies that could have a negative effect on our revenue and businesses, including rules, regulations, and policies relating to healthcare and Medicare;
our ability to maintain or improve our Star Ratings or otherwise continue to improve the financial performance of our business;
our ability to maintain, protect, and enhance our intellectual property; and
general economic conditions and uncertainty, including the societal and economic impact of the COVID-19 pandemic and its variants, inflation, and geopolitical uncertainty and instability.

We caution you that the foregoing list of judgments, risks, and uncertainties that may cause actual results to differ materially from those in the forward-looking statements may not be complete. You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur or may be materially different from what we expect. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by law, we undertake no obligation to update any of these forward-looking statements after the date of this document or to conform these statements to actual results or revised expectations.

This document contains estimates, projections, and other information concerning our industry, our business, and the markets for our products. We obtained the industry, market, and similar data set forth in this document from our own internal estimates and research and from industry research, publications, surveys, and studies conducted by third parties, including governmental agencies, and such information is inherently subject to uncertainties. Actual events or circumstances may differ materially from events and circumstances that are assumed in this information. You are cautioned not to give undue weight to any such information, projections, or estimates.

3


As a result of a number of known and unknown risks and uncertainties, including without limitation, the important factors described in our reports filed with the SEC, including the discussion under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements.

Additional Information

Our website address is www.cloverhealth.com. Our filings with the SEC are posted on our website and available free of charge as soon as reasonably practical after they are electronically filed with, or furnished to, the SEC. The content on our website or on any other website referred to in this document is not incorporated by reference in this document. Further, the Company's references to website URLs are intended to be inactive textual references only.

Channels for Disclosure of Information

Investors and others should note that we routinely announce material information to investors and the marketplace using filings with the SEC, press releases, public conference calls, presentations, webcasts, and the investor relations page of our website. We use the investor relations page of our website for purposes of compliance with Regulation FD and as a routine channel for distribution of important information, including news releases, analyst presentations, financial information, and corporate governance practices. We also use certain social media channels as a means of disclosing information about the Company and our products to our customers, investors, and the public, including @CloverHealth and #CloverHealth on Twitter, and the LinkedIn account of our President, Andrew Toy. The information posted on social media channels is not incorporated by reference in this report or in any other report or document we file with the SEC. While not all of the information that we post to the investor relations page of our website or to social media accounts is of a material nature, some information could be deemed to be material. Accordingly, we encourage investors, the media, and others interested in the Company to review the information that we share at the "Investors" link located on our webpage at https://investors.cloverhealth.com/investor-relations and to sign up for and regularly follow our social media accounts. Users may automatically receive email alerts and other information about the Company when enrolling an email address by visiting "Email Alerts" in the "Investor Resources" section of our website at https://investors.cloverhealth.com/investor-relations.
4



Part I
Item 1. Financial Statements and Supplementary Data


CLOVER HEALTH INVESTMENTS, CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share amounts)


September 30, 2022
(Unaudited)
December 31, 2021
Assets
Current assets
Cash and cash equivalents$382,869 $299,968 
Short-term investments153,799 293,851 
Investment securities, available-for-sale (Amortized cost: 2022: $179,774; 2021: $21,142)
175,116 21,131 
Investment securities, held-to-maturity (Fair value: 2022: $0; 2021: $307)
 305 
Accrued retrospective premiums13,894 34,923 
Other receivables23,085 14,282 
Healthcare receivable58,886 48,042 
Non-Insurance performance year receivable585,901  
Surety bonds and deposits11,844 12,613 
Prepaid expenses17,816 9,409 
Other assets, current36,782 18,022 
Total current assets1,459,992 752,546 
Investment securities, available-for-sale (Amortized cost: 2022: $76,339; 2021: $177,527)
70,237 175,604 
Investment securities, held-to-maturity (Fair value: 2022: $596; 2021: $364)
700 335 
Equity method investment970  
Property and equipment, net2,526 2,287 
Operating lease right-of-use assets4,259 5,367 
Goodwill and other intangible assets4,233 4,233 
Other assets, non-current14,762 10,432 
Total assets$1,557,679 $950,804 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


CLOVER HEALTH INVESTMENTS, CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share amounts)


September 30, 2022
(Unaudited)
December 31, 2021
Liabilities and Stockholders' Equity
Current liabilities
Unpaid claims$140,276 $138,604 
Due to related parties, net1,661 2,320 
Non-Insurance performance year obligation, current655,849 36,891 
Non-Insurance payable147,132 37,773 
Accounts payable and accrued expenses37,735 28,129 
Accrued salaries and benefits19,636 15,147 
Deferred revenue96,358  
Operating lease liabilities2,000 3,059 
Premium deficiency reserve27,657 110,628 
Other liabilities, current42 73 
Total current liabilities1,128,346 372,624 
Notes and securities payable, net of discounts and deferred issuance costs19,965 19,938 
Long-term operating lease liabilities4,267 4,830 
Other liabilities, non-current13,121 14,095 
Total liabilities1,165,699 411,487 
Commitments and Contingencies (Note 15)
Stockholders' equity
Class A Common Stock, $0.0001 par value; 2,500,000,000 shares authorized as of September 30, 2022, and December 31, 2021; 383,526,634 and 352,645,626 issued and outstanding as of September 30, 2022, and December 31, 2021, respectively
37 34 
Class B Common Stock, $0.0001 par value; 500,000,000 shares authorized as of September 30, 2022, and December 31, 2021; 94,394,852 and 118,206,768 issued and outstanding as of September 30, 2022, and December 31, 2021, respectively
9 12 
Additional paid-in capital2,280,697 2,154,187 
Accumulated other comprehensive loss(10,760)(1,934)
Accumulated deficit(1,871,536)(1,616,738)
Less: Treasury stock, at cost; 2,041,948 and 14,730 shares held as of September 30, 2022, and December 31, 2021, respectively
(6,467)(147)
Clover stockholders' equity391,980 535,414 
Noncontrolling interest 3,903 
Total stockholders' equity391,980 539,317 
Total liabilities and stockholders' equity$1,557,679 $950,804 


The accompanying notes are an integral part of these condensed consolidated financial statements.


6


CLOVER HEALTH INVESTMENTS, CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)
(Dollars in thousands, except per share and share amounts)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Revenues:
Premiums earned, net (Net of ceded premiums of $116 and $120 for the three months ended September 30, 2022 and 2021, respectively; net of ceded premiums of $354 and $370 for the nine months ended September 30, 2022 and 2021, respectively)
$267,892 $203,657 $814,566 $598,390 
Non-Insurance revenue585,311 222,647 1,757,579 439,020 
Other income3,614 859 5,751 2,550 
Total revenues856,817 427,163 2,577,896 1,039,960 
Operating expenses:
Net medical claims incurred839,799 436,325 2,560,307 1,109,248 
Salaries and benefits70,142 73,364 209,724 201,555 
General and administrative expenses47,832 45,846 152,569 130,110 
Premium deficiency reserve (benefit) expense(27,657)20,761 (82,971)48,661 
Depreciation and amortization616 120 2,028 398 
Other expense   191 
Total operating expenses930,732 576,416 2,841,657 1,490,163 
Loss from operations(73,915)(149,253)(263,761)(450,203)
Change in fair value of warrants payable (115,152) (66,146)
Interest expense404 404 1,197 2,790 
Amortization of notes and securities discounts9 22 27 13,708 
Loss (gain) on investment980  (10,187) 
Net loss$(75,308)$(34,527)$(254,798)$(400,555)
Per share data:
Net loss per share attributable to Class A and Class B common stockholders – basic and diluted (1)
$(0.16)$(0.08)$(0.54)$(0.98)
Weighted average number of common shares outstanding
Basic and diluted weighted average number of Class A and Class B common shares and common share equivalents outstanding (1)
477,690,204 414,572,706 475,609,571 410,417,493 
Net unrealized loss on available-for-sale investments$(2,407)$(197)$(8,826)$(620)
Comprehensive loss$(77,715)$(34,724)$(263,624)$(401,175)
(1) Because the Company had a net loss during the three and nine months ended September 30, 2022 and 2021, the Company's potentially dilutive securities, which include stock options, restricted stock, preferred stock, and warrants to purchase shares of common stock and preferred stock, have been excluded from the computation of diluted net loss per share, as the effect would be anti-dilutive.
The accompanying notes are an integral part of these condensed consolidated financial statements.
7


CLOVER HEALTH INVESTMENTS, CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (Unaudited)
(Dollars in thousands, except share amounts)
Convertible Preferred stock
Class A Common Stock (1)
Class B Common Stock (1)
Treasury StockAdditional paid-in capitalAccumulated
deficit
Accumulated
other
comprehensive
income (loss)
Noncontrolling
interest
Total stockholders' equity (deficit)
Shares
AmountSharesAmount
Shares
Amount
Shares
Amount
Balance, December 31, 2020
139,444,346 $447,747  $ 89,206,266 $9  $ $411,867 $(1,028,982)$10 $3,903 $(613,193)
Stock issuance for exercise of stock options, net of early exercise liability— — 761,480 — — — — — 1,282 — — — 1,282 
Stock-based compensation— — — — — — — — 42,713 — — — 42,713 
Unrealized holdings loss on investment securities, available-for-sale— — — — — — — — — — (493)— (493)
Preferred stock conversion(139,444,346)(447,747)— — 139,444,346 14 — — 447,733 — — — 447,747 
Issuance of common stock related to exercises of legacy warrants— — — — 7,205,490 1 — — 97,781 — — — 97,782 
Convertible debt conversion and other issuances— — — — 75,084,703 7 — — 16,052 — — — 16,059 
Issuance of common stock in connection with Business Combination and PIPE offering— — 146,373,904 15 (49,975,104)(5)— — 666,232 — — — 666,242 
Conversion from Class B Common Stock to Class A Common Stock— — 1,143,863 — (1,143,863)— — — — — — —  
Capital contribution for extinguishment of debt— — — — — — — — 126,795 — — — 126,795 
Acquisition of public and private placement warrants— — — — — — — — (147,582)— — — (147,582)
Net loss— — — — — — — — — (48,417)— — (48,417)
Balance, March 31, 2021 $ 148,279,247 $15 259,821,838 $26  $ $1,662,873 $(1,077,399)$(483)$3,903 $588,935 
Stock issuance for exercise of stock options, net of early exercise liability— — 204,366 — — — — — 435 — — — 435 
Stock-based compensation— — — — — — — — 43,026 — — — 43,026 
Unrealized holdings gain on investment securities, available-for-sale— — — — — — — — — — 70 — 70 
Conversion from Class B Common Stock to Class A Common Stock— — 77,364 — (77,364)— — — — — — —  
Net loss— — — — — — — — — (317,611)— — (317,611)
Balance, June 30, 2021 $ 148,560,977 $15 259,744,474 $26  $ $1,706,334 $(1,395,010)$(413)$3,903 $314,855 
Stock issuance for exercise of stock options, net of early exercise liability— — 2,893,802 — — — — — 3,830 — — — 3,830 
Stock-based compensation— — — — — — — — 46,803 — — — 46,803 
Vested restricted stock units— — 34,888 — — — — — — — — — — 
Unrealized holdings loss on investment securities, available-for-sale— — — — — — — — — — (197)— (197)
Conversion from Class B Common Stock to Class A Common Stock— — 117,425,763 12 (117,425,763)(12)— — — — — —  
Issuance of common stock related to exercises of public and private placement warrants— — 9,408,264 1 — — — — 81,672 — — — 81,673 
Treasury Stock— — (14,730)— — — 14,730 (147)— — — — (147)
Net loss— — — — — — — — — (34,527)— — (34,527)
Balance, September 30, 2021
 $ 278,308,964 $28 142,318,711 $14 14,730 $(147)$1,838,639 $(1,429,537)$(610)$3,903 $412,290 
8


Convertible Preferred stock
Class A Common Stock (1)
Class B Common Stock (1)
Treasury StockAdditional paid-in capitalAccumulated
deficit
Accumulated
other
comprehensive
income (loss)
Noncontrolling
interest
Total stockholders' equity (deficit)
Shares
AmountSharesAmount
Shares
Amount
Shares
Amount
Balance, December 31, 2021
 $ 352,645,626 $34 118,206,768 $12 14,730 $(147)$2,154,187 $(1,616,738)$(1,934)$3,903 $539,317 
Stock issuance for exercise of stock options, net of early exercise liability— — 151,620 — — — — — 331 — — — 331 
Stock-based compensation— — — — — — — — 40,640 — — — 40,640 
Vested restricted stock units— — 2,275,946 — 1,677,873 — — — — — — — — 
Vested performance restricted stock units— — 8,951 — — — — — — — — — — 
Unrealized holdings loss on investment securities, available-for-sale— — — — — — — — — — (5,324)— (5,324)
Conversion from Class A Common Stock to Class B Common Stock— — 25,436,433 3 (25,436,433)(3)— — — — — —  
Treasury stock acquired— — (1,879,063)— — — 1,879,063 (5,939)— — — — (5,939)
Issuance of common stock under Employee Stock Purchase Plan— — 214,797 — — — — — — — — — — 
Derecognition of noncontrolling interest— — — — — — — — — — — (3,903)(3,903)
Net loss— — — — — — — — — (75,309)— — (75,309)
Balance, March 31, 2022 $ 378,854,310 $37 94,448,208 $9 1,893,793 $(6,086)$2,195,158 $(1,692,047)$(7,258)$ $489,813 
Stock issuance for exercise of stock options, net of early exercise liability— — 4,016,336 — — — — — 563 — — — 563 
Stock-based compensation— — — — — — — — 41,927 — — — 41,927 
Vested restricted stock units— — 122,672 — — — — — — — — — — 
Treasury stock acquired— — (37,744)— — — 37,744 (105)— — — — (105)
Unrealized holdings gain on investment securities, available-for-sale— — — — — — — — — — (1,095)— (1,095)
Conversion from Class A Common Stock to Class B Common Stock— — 53,040 — (53,040)— — — — — — —  
Net loss— — — — — — — — — (104,181)— — (104,181)
Balance, June 30, 2022 $ 383,008,614 $37 94,395,168 $9 1,931,537 $(6,191)$2,237,648 $(1,796,228)$(8,353)$ $426,922 
Stock issuance for exercise of stock options, net of early exercise liability— — 190,052 — — — — — 408 — — — 408 
Stock-based compensation— — — — — — — — 42,641 — — — 42,641 
Vested restricted stock units— — 438,063 — — — — — — — — — — 
Treasury stock acquired— — (110,411)— — — 110,411 (276)— — — — (276)
Unrealized holdings gain on investment securities, available-for-sale— — — — — — — — — — (2,407)— (2,407)
Conversion from Class A Common Stock to Class B Common Stock— — 316 — (316)— — — — — — —  
Net loss— — — — — — — — — (75,308)— — (75,308)
Balance, September 30, 2022
 $ 383,526,634 $