Clover Health, a Medicare Advantage insurtech, saw its stock drop more than 20% after its second quarter financial earnings release.
The company’s downward fall to around $2.22 per share is attributed to higher cost ratios, increased levels of Part D utilization—due to changes imposed by the Inflation Reduction Act—and higher supplemental benefits costs, says Zacks Investment Research.
“Although management reaffirmed its profitability guidance, the raised BER projection flagged near-term margin pressures, fueling investor concerns about cost management visibility for the remainder of 2025,” analysts at Zacks wrote.
Clover’s BER, or insurance benefits expense ratio, was 88.4% for the quarter. The company expects the metric to be between 88.5% and 89.5% for the full year.
CEO Andrew Toy told investors the insurer is relatively insulated from legislation out of Washington, D.C. so far, but elevated cost trends across the industry are impacting Clover as well.
The insurer is monitoring changes to Part D and foresees more variability in its modeling. The Centers for Medicare & Medicaid Services (CMS) also recently announced Part D premiums would increase next year and that the agency negotiated with insurers over bid terms.
“That said, we are generally satisfied with the underlying trends we’re observing in our portfolio,” he said.
Clover posted an earnings per share loss of three cents and quarterly revenue of $478 million. It had a net loss of $11 million.
The company modified its guidance, now estimating between 104,000 and 108,000 members and adjusted selling, general and administrative expenses between $335 million and $345 million.
Toy did state his support of a recent initiative from CMS and the White House to develop a Health Tech Ecosystem.
“Clover Assistant is already built upon the very interoperability framework and standards highlighted last week, both utilizing data to generate actionable insights and contributing those insights back into the networks,” he explained. Clover Assistant is an artificial intelligence tool used for clinical decision-making.
Last quarter, Clover raised guidance and posted a net loss of just $1 million.
The insurer was warned last year that its stock could get delisted from the Nasdaq for its stock price falling below $1 per share for 30 consecutive days. Its stock is down more than 27% in 2025.