Clover Health Investments, Corp. · NASDAQ:CLOV
Clover Health Investments — SPAC Merger (October 2020)
46 slides from Clover Health Investments's SPAC merger presentation, Oct 6, 2020
Slide 1: Clover Health
Confidential Clover Health
Slide 2: Disclaimer
Disclaimer This presentation has been prepared for use by Social Capital Hedosophia Holdings Corp. III (“SCH”) and Clover Health LLC (“Clover”) in connection with their proposed business combination. This pres en tation is for information purposes only and is being provided to you solely in your cap
Slide 3: Disclaimer (Cont'd)
Disclaimer ( Cont’d) See the footnotes on the slides where these measures are discussed and the Appendix for reconciliations of these non - GAAP financ ial measures to the most directly comparable GAAP measures. Additionally, to the extent that forward - looking non - GAAP financial measures are pro
Slide 4: Solving The Big Issues In US Healthcare
4 Solving The Big Issues In US Healthcare Meaningful Impact as a Medicare Advantage Insurer “Own” and Leverage the Data Stack Opportunity for Economic Alignment Create Better Health Outcomes for Members Consumer - Driven Marketplace Increasing Demands on Physicians Widespread Misaligned Incentives V
Slide 5: Our Market: Medicare Advantage
5 Our Market: Medicare Advantage Largest, Undisrupted Market in Healthcare Spurred by Aging Demographic Tailwinds and Superior Value 2019 2025 $1.25tn TAM Overall Medicare $270bn Medicare Advantage Medicare Advantage $590bn 10,000 new baby boomers joining Medicare everyday MA penetration anticipated
Slide 6: Who We Are
Who We Are 6 We are a next - generation Medicare Advantage solution , deploying best - in - class technology to solve one of the world’s biggest data problems Our mission is to improve every life We execute upon our mission by empowering physicians with data - driven, personalized insights at the po
Slide 7: Founder-Led, Experienced Leadership Team
7 Founder - Led, Experienced Leadership Team GIA LEE General Counsel ANDREW TOY President, CTO JAMIE REYNOSO COO JOE WAGNER CFO VIVEK GARIPALLI Founder, CEO Clinical Tech G&A Dr. Sophia Chang Chief Clinical Informatics Officer Calvin Chock Chief Product Officer Luke Stepusin VP, Finance Dr. Mark Spe
Slide 8: Clover Is The Fastest Growing Medicare Advantage Plan In The US
8 Clover Is The Fastest Growing Medicare Advantage Plan In The US (1) Market Share (established markets (4) ) 25% – 5% 10% 15% 20% 25% 30% 2016 2017 2018 2019 Jun-20 Key Metrics (2) Gross Premium Revenue $354 $457 $664 2018 2019 2020E 57K 34 4.5x Members Counties LTV / CAC (3) CAGR: 37% Source: CMS
Slide 9: A Fundamentally Different Approach To Insurance
9 A Fundamentally Different Approach To Insurance Consumer Experience Physician Experience US Healthcare System A true payor / provider partnership model Increasing access and benefits while reducing costs Using data to enable high - quality, personalized care Improving health outcomes and accessibi
Slide 10: Why Choose Clover?
Providing members with better care at lower cost Why Choose Clover? 10
Slide 11: Designing "Obvious" Plans
11 Is my PCP in the network? Is my hospital in the network? Is my specialist in the network? Are drugs covered? What is the plan going to cost me? Designing “Obvious” Plans Five Burning Questions Upending the Trade - off: Access vs Cost Open High Access Narrow Low Annual Cost Typical PPOs Typical HM
Slide 12: Out of Pocket Costs Comparison
12 $0 $13,094 PCP Copay Drug Deductible Competitor Savings $5 - $20 $150 - $200 (5) $1,871 Specialist Copay Avg. Annual Cost Avg. Lifetime Cost $5 $15,801 $25 - $45 $200 - $240 $2,257 $5 (100%) $2,707 $20 - $40 (80% - 89%) $0 - $90 (0% - 38%) $387 Medicare $21 (3) $22,162 $30 (3) $651 (2) $3,166 (4)
Slide 13: Consumers Are Choosing Clover
13 Consumers Are Choosing Clover Top 3 Market share position in all established markets (2) >50% Take rate in established markets over the past three years Clover was the Fastest Growing Medicare Advantage Plan with at Least 50,000 Members over the Last 3 AEP / OEP Periods (1) (1) December 2017 to M
Slide 14: Partnering With Physicians
14 Partnering With Physicians Allowing doctors to focus on what matters most
Slide 15: For Physicians, The Clover Assistant Addresses Money And Time
15 For Physicians, The Clover Assistant Addresses Two Main Issues: Money And Time 15 (1) Based on estimated CMS 2021 base reimbursement fee rate for primary care visit. (2) Source: Medical Group Management Association. (3) Source: Annals of Internal Medicine: Allocation of Physician Time in Ambulato
Slide 16: Supplemental Clinical Programs Powered by the Clover Assistant
Comprehensive Complex Care Supplemental Clinical Programs Powered by the Clover Assistant Behavioral Health Program Comprehensive care coordination for members with behavioral health and social services needs Readmission Prevention Program Care transition support for members recently discharged from
Slide 17: The Clover Assistant
[] 17 The Clover Assistant Software platform that delivers data - driven insights to physicians at the point of care
Slide 18: Data Aggregation And Machine Learning At The Point Of Care
18 Data Aggregation And Machine Learning At The Point Of Care PCP Charts Specialist Charts EHR Data Pharmacy Data Lab Data Socioeconomic Data Evidence - Based Protocols • Evidence - Based Protocols • Potential Comorbidities • Cancer Screening Reminders • Medication Adherence • Annual Flu Shot • Clin
Slide 19: The Clover Assistant Via Telehealth
19 The Clover Assistant Via Telehealth • COVID - specific symptom prompts to help identify members in need of additional support from Clover • Embedded video functionality • Invite a member via text or email link Given our closed loop system, we were able to rapidly build and deploy telehealth suppo
Slide 20: Power To Bend The Cost Curve Over Time
20 Power To Bend The Cost Curve Over Time Surfacing of potential comorbidities enables early evaluation and treatment of disease, driving better care and reducing the likelihood of acute episodes Without The Clover Assistant With The Clover Assistant ~$208k in Savings ~$208k in Costs ‒ Mrs. James an
Slide 21: The Clover Assistant Is Scalable, Improving, Engaging
21 Scalable 1. Improving 3. Engaging 2. The Clover Assistant Is… 5.2x growth in CA primary care physicians from January 2019 to June 2020 61% of members are attributed to a provider already contracted on platform 92% of eligible member visits utilize CA 64 68 10 69 35 Net Promoter Score Category Lea
Slide 22: Our Playbook To Build A National MA Plan
22 Our playbook to build a national MA plan Growth
Slide 23: Our Virtuous Growth Cycle
Our Virtuous Growth Cycle 23 Apply machine learning to provide data - driven, personalized insights at the point of care via the Clover Assistant Capture and synthesize data Improve clinical decision - making to drive better care Share superior economics with members via lower cost and better benefi
Slide 24: We Are In Counties Representing 3.1mm Medicare Lives
24 We Are In 34 Counties Representing 3.1mm Medicare Lives 57k 8% $664mm Members Market Share FY20E Gross Premium Revenue (1) Individual, non - SNP lives in markets where Clover has over 500 members prior to AEP results . Established markets represent a total of 13 of our 34 counties. 25% Market Sha
Slide 25: A Scalable Playbook For Virtually The Entire US
25 A Scalable Playbook For Virtually The Entire US Hudson Cumberlan d Bergen Population Density (1) 13.7k 0.3k 3.9k Median Household Income $66k $53k $96k Minority (%) 71% 55% 45% MA Penetration 37% 33% 25% Market Share 48% 36% 24% Source: CMS and US Census. (1) Population per square mile. Leading M
Slide 26: In 2021, We Will Be In 108 Counties
26 (1) Estimates based on management projections. In 2021, We Will Be In 108 Counties Representing 4.4mm Medicare Lives 73k $872mm Members (1) FY21E Gross Premium Revenue States with new counties 7% Market Share (1) Attractive 2020 AEP performance, giving confidence to expand broadly across new geog
Slide 27: The Path To $25bn In Revenue
27 The Path To $25bn In Revenue ~28mm ~40% 12% Medicare Advantage Lives expected by 2030 (1) Of markets in the US (2) Market Share in addressed markets (2) Source: CMS data, census data, and company projections. (1) Individual, non - SNP Market. (2) Company projections.
Slide 28: Direct Contracting Expands Our Addressable Market
28 Direct Contracting Expands Our Addressable Market (1) Based on current MA penetration. (2) Market size represents 2025E. (3) According to a leading physician group practice focused on serving seniors, their per physician patient panels are about 400 pat ients. 73k 139k 200k+ 450k+ 2021E 2023E Med
Slide 29: Financials
29 Financials Building A Technology - Driven Financial Competitive Advantage
Slide 30: Market Leading Growth And Improving Margins
30 31,467 41143 56,128 31,467 41,143 2018 2019 1H20 Average Clover Members (50.1%) (38.3%) (16.7%) - 0.0100733 28 (50.1%) (38.3%) (16.7%) (1.0%) 2018 2019 1Q20 1H20 Adjusted EBITDA Margin (1) (%) $353.9 $456.9 Run rate: $664 $354 $457 $334 330 2018 2019 1H20 Gross Premium Revenue ($ in mm) Market Le
Slide 31: Clover Has Strong Unit Economics
~($250) ~$4,850 Year 1 Years 2-6 Cumulative LTV 31 Yearly LTV Contribution Note: LTV/CAC calculation based on Q1 MCR results and 1H Member Variable Operating Expenses. Year 1 assumes new member margins; year 2+ assumes returning member margins; CAC = ~ $1,050. ~$5,100 Stable, recurring revenue Stron
Slide 32: Our Best-In-Class Growth Directly Impacts Margin Results
32 Our Best - In - Class Growth Directly Impacts Margin Results New Members Returning Members Gross Premium Revenue Medical Expenses Medical Care Ratio (MCR) (1) Limited visibility into health profile (~$800 per member per month) Limited time to impact Cost savings over time 95% - 105% 70% - 85% Str
Slide 33: The Clover Assistant Has Already Made An Impact
33 The Clover Assistant Has Already Made An Impact 89.2% 82.0% ? FY2019 Q1 2020 Future (1) MCR, or Medical Care Ratio, is defined as total net medical claim expense incurred divided by premiums earned, in each case o n a gross or net basis, as the case may be, in a given period. (2) MCRs represent r
Slide 34: How We Achieve Enhanced Margins At Best-In-Class Growth
How We Achieve Enhanced Margins At Best - In - Class Growth 34 Metric 2019 Q1 2020 2022E Long - Term Target Member Growth (1) 31% 38% (4) 35% 30%+ Clover Assistant Penetration 59% 61% 68% 70%+ Clover Assistant Returning Member MCR (2) 89% 82% 76% <75% Consolidated MCR (2) 99% 89% 86% 82% - 83% Adjus
Slide 35: Continued Growth And Path To Profitability
(6.4%) (9.4%) - 0.0255126 09 0.009 (6.4%) (9.4%) (2.6%) 0.9% 2020E 2021E 2022E 2023E Adjusted EBITDA Margin (%) (2) Gross Premium Revenue ($ in mm) $664 $872 $1,214 $1,717 2020E 2021E 2022E 2023E Consolidated MCR (%) (1) 82.9% 89.3% 85.7% 84.0% 2020E 2021E 2022E 2023E 35 Continued Growth And Path To
Slide 36: Financial Summary 2018A-2023E
36 (in millions) 2018A 2019A 2020E 2021E 2022E 2023E CAGR Counties 19 26 34 108 161 219 Average Members 31,467 41,143 56,707 73,477 99,194 138,871 35% YoY Growth (%) 31% 38% 30% 35% 40% Total Revenue (1) $358 $462 $671 $880 $1,219 $1,723 37% YoY Growth (%) 29% 45% 31% 39% 41% Gross Profit $15 $12 $1
Slide 37: Investment Highlights
37 Obvious plan designs for consumers Clover offers richer benefits and lower costs to consumers Technology competitive advantage driven by software platform Home - grown software provides personalized, real - time insights at the point of care Rapid growth and scale Demonstrated ability to grow rap
Slide 38: Transaction Overview
38 Transaction Overview
Slide 39: Transaction Overview
Transaction Overview 39 Sources and uses Pro forma valuation IPOC illustrative share price $10.00 Pro forma shares outstanding (M) (1) 443.5 Total equity value $4,435 Net cash on balance sheet (2) ($733) Total enterprise value $3,702 Total Enterprise Value / Revenue 4.2x (based on 2021E Revenue of $
Slide 40: Transaction Overview (Cont'd)
Transaction Overview (Cont’d) 40 Pro forma ownership (1) Pro forma enterprise value of $3.70B $400M PIPE raised at $10.00 per share, including $155M from IPOC sponsors 100% rollover by existing Clover management Over $ 733 M of pro forma net cash held on balance sheet Completion of transaction is ex
Slide 41: Appendix
41 Appendix
Slide 42: The Clover Assistant Platform Enables Real-Time Actionable Insights
42 The Clover Assistant Platform Enables Real - Time Actionable Insights Patient Data Platform Clinical Expert System Machine Learning Platform Member Action Layer Provider Action Layer Provider Engagement Provides highly - actionable clinical content to providers at the point of care. Machine Learn
Slide 43: We Can Scale At The Breadth And Speed Of Software
43 We Can Scale At The Breadth And Speed Of Software Adjacencies: expand once landed Network: target markets that allow for quickest build - out of network adequacy Differentiation: target markets with least obvious incumbents Methodical Market Prioritization Broad Market Expansion Capabilities Beca
Slide 44: COVID-Impact
COVID - 19 Impact 44 • Implemented prescription medication home delivery and remote care support to provide continued care for members • Implemented multi - channel member communications , including provider network support for telehealth adoption, and a nurse practitioner COVID - 19 hotline • Rapid
Slide 45: Non-GAAP Reconciliations
Non - GAAP Reconciliations 45 Years ended December 31, Three months ended March 31, Six months ended June 30, (in millions) 2018 2019 2020 2020 Net Loss ($201.9) ($363.7) ($28.2) ($22.8) Adjustments: Interest Expense (including amortized debt discount) 7.0 39.0 7.8 16.3 Income Taxes - - - - Deprecia
Slide 46: Other Financial Measures
Other Financial Measures 46 Years ended December 31, Six months ended June 30, (in millions) 2018 2019 2020 Premiums Earned, Net 286.5 456.9 334.0 Ceded Premiums 67.4 0.8 0.3 Premiums Earned, Gross $353.9 $457.8 $334.3 Medical Care Ratio, Net 97.4% 98.6% 79.5% Medical Care Ratio, Gross 97.1% 98.8% 7