Clover Health (CLOV)

Health insurance company Clover Health (NASDAQ:CLOV) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 50.1% year on year to $496.7 million. Its GAAP loss of $0.05 per share was $0.02 below analysts’ consensus estimates.

Company Overview

Founded in 2014 to improve healthcare for America's seniors through technology, Clover Health (NASDAQ:CLOV) provides Medicare Advantage plans for seniors with a focus on affordable care and uses its proprietary Clover Assistant software to help physicians manage patient care.

Upfront premiums collected by health insurers lead to reliable revenue, but profitability ultimately depends on accurate risk assessments and the ability to control medical costs. Health insurers are also highly sensitive to regulatory changes and economic conditions such as unemployment. Going forward, the industry faces tailwinds from an aging population, increasing demand for personalized healthcare services, and advancements in data analytics to improve cost management. However, continued regulatory scrutiny on pricing practices, the potential for government-led reforms such as expanded public healthcare options, and inflation in medical costs could add volatility to margins. One big debate among investors is the long-term impact of AI and whether it will help underwriting, fraud detection, and claims processing or whether it may wade into ethical grey areas like reinforcing biases and widening disparities in medical care.

Clover Health competes with large national insurers like UnitedHealth, Aetna, Humana, Cigna, Centene, and Elevance Health, as well as regional players such as Blue Cross Blue Shield affiliates. It also faces competition from newer tech-focused Medicare Advantage providers like Alignment Health, Devoted Health, and Oscar Health, as well as provider-sponsored plans.

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With just $1.77 billion in revenue over the past 12 months, Clover Health is a small company in an industry where scale matters. This makes it difficult to build trust with customers because healthcare is heavily regulated, complex, and resource-intensive.

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, Clover Health’s 23.3% annualized revenue growth over the last five years was excellent. Its growth beat the average healthcare company and shows its offerings resonate with customers.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Clover Health’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 2% over the last two years.

Clover Health also reports its number of customers, which reached 109,226 in the latest quarter. Over the last two years, Clover Health’s customer base averaged 10.3% year-on-year growth. Because this number is better than its revenue growth, we can see the average customer spent less money each year on the company’s products and services.

This quarter, Clover Health reported magnificent year-on-year revenue growth of 50.1%, and its $496.7 million of revenue beat Wall Street’s estimates by 5.4%.

Looking ahead, sell-side analysts expect revenue to grow 31.9% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and indicates its newer products and services will catalyze better top-line performance.

Clover Health’s high expenses have contributed to an average operating margin of negative 14.8% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

On the plus side, Clover Health’s operating margin rose by 39.7 percentage points over the last five years, as its sales growth gave it operating leverage. Zooming in on its more recent performance, we can see the company’s trajectory is intact as its margin has also increased by 10.3 percentage points on a two-year basis. These data points are very encouraging and show momentum is on its side.

Clover Health’s operating margin was negative 4.9% this quarter.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Although Clover Health’s full-year earnings are still negative, it reduced its losses and improved its EPS by 21.4% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability. We hope to see an inflection point soon.

In Q3, Clover Health reported EPS of negative $0.05, down from negative $0.02 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Clover Health’s full-year EPS of negative $0.12 will reach break even.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

While Clover Health posted positive free cash flow this quarter, the broader story hasn’t been so clean. Clover Health’s demanding reinvestments have consumed many resources over the last five years, contributing to an average free cash flow margin of negative 6.9%. This means it lit $6.91 of cash on fire for every $100 in revenue.

Taking a step back, an encouraging sign is that Clover Health’s margin expanded by 16.9 percentage points during that time. The company’s improvement and free cash flow generation this quarter show it’s heading in the right direction, and continued increases could help it achieve long-term cash profitability.

Clover Health’s free cash flow clocked in at $11.41 million in Q3, equivalent to a 2.3% margin. The company’s cash profitability regressed as it was 12.7 percentage points lower than in the same quarter last year, but it’s still above its five-year average. We wouldn’t read too much into this quarter’s decline because investment needs can be seasonal, causing short-term swings. Long-term trends are more important.

Companies with more cash than debt have lower bankruptcy risk.

Clover Health is a well-capitalized company with $201 million of cash and no debt. This position is 11.1% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

We were impressed by how significantly Clover Health blew past analysts’ revenue expectations this quarter. We were also glad its customer base outperformed Wall Street’s estimates. On the other hand, its full-year EBITDA guidance missed and its EPS was in line with Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 17.5% to $2.90 immediately after reporting.

Updated: December 4, 2025 at 11:01 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Clover Health, you should also grasp the company’s longer-term business quality and valuation.

Clover Health is a fine business. First off, its revenue growth was impressive over the last five years and is expected to accelerate over the next 12 months. And while its operating margins reveal poor profitability compared to other healthcare companies, its rising cash profitability gives it more optionality. On top of that, its expanding adjusted operating margin shows the business has become more efficient.

Clover Health’s P/E ratio based on the next 12 months is 37.4x. At this valuation, there’s a lot of good news priced in. Add this one to your watchlist and come back to it later.

Wall Street analysts have a consensus one-year price target of $3.23 on the company (compared to the current share price of $2.66).