Clover Health Investments, Corp. · NASDAQ:CLOV
Clover Health Investments — Social Capital Hedosophia Holdings Corp. III — SPAC Merger (November 2020)
48 slides from Clover Health Investments's SPAC merger presentation, Nov 19, 2020
Slide 1: Clover Health: A Deeper Dive
Filed by Social Capital Hedosophia Holdings Corp. III Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934 Subject Company: Clover Health Investments, Corp. Commission File No. 001-39252 Clover Health A Deeper Dive Conf
Slide 2: Disclaimer
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Slide 3: Disclaimer (Cont'd)
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Slide 4: Agenda
Agenda Time (ET) Topic Presenters 11:00-11:25 Clover Flywheel Vivek Garipalli, Chief Executive Officer & Founder tni2s-t1e40 Direct Contracting Platform & Andrew Toy, President & Chief Technology Officer ov Economics Joe Wagner, Chief Financial Officer The Clover d phi 9, Chief i TOE) Provider Panel
Slide 5: Our Ethos
Our Ethos Our mission is to improve every life Our strategy is centered around deploying the Clover Assistant to physicians to improve and reduce variability in clinical decision-making Our thesis is that Clover Assi: d physicians drive supporting our ability to offer GaInn wider choice healthcare c
Slide 6: Source: CMS, Kaiser Family Foundation, L.E.K.
6 Source: CMS, Kaiser Family Foundation, L.E.K.6 Source: CMS, Kaiser Family Foundation, L.E.K.
Slide 7: Our Virtuous Growth Cycle
Our Virtuous Growth Cycle 1. Capture and, synthesize data 7 “ 2. Apply machine 5. Drive strong, market- lain to provide data- Teading organic driven, personalized membership growth insights atthe point of via the Clover ‘ Assistant 4, Share superior economics with members via lower cost and better b
Slide 8: Data Platform and Clover Assistant Closed Loop System
• • Data • • Data Platform • • The Clover Assistant • 8 Closed loop system• • Data • • Data Platform • • The Clover Assistant • 8 Closed loop system
Slide 9: Combining Rich Data With Action
Combining Rich Data With Action Other Payors HCIT Big Tech Limited Data Actionability Engaging 9 Data Richness Shallow DeepCombining Rich Data With Action Other Payors HCIT Big Tech Limited Data Actionability Engaging 9 Data Richness Shallow Deep
Slide 10: How The Clover Assistant Surfaces Evidence-Based Protocols
Step 2 Example: How The Clover Assistant Surfaces Evidence-Based Protocols At The Point Of Care ° reatment pan — ° recommendation is being made ea Identifies clinical guidelines on treatment protocols disease burden Identifies potential costs or blockers that could recommendations. Physicians provid
Slide 11: Accurate risk adjustment as by-product of improved decision-making
With the Clover Assistant, accurate risk adjustment comes as a by-product of improved decision- making and, most importantly, leads to earlier treatment of conditions. 11With the Clover Assistant, accurate risk adjustment comes as a by-product of improved decision- making and, most importantly, lead
Slide 12: Machine Learning Enables Proactive Care
Step 2 Example: Machine Learning Enables Proactive Care Planning 4 : bine lesen eb . hronie conditions predicted by our technology. This results in earlier, personalized care planning for our members. Chronic Conditions Surfaced Via ML Personalized Care Planning 1. Congestive Heart Failure Evidence-
Slide 13: Physicians contracted to use the Clover Assistant
In just over 2 years since product launch, we have (2) over 2k highly engaged physicians contracted to use the CA across geographies and practice types. 13 (1) Based on estimated CMS 2021 base Medicare reimbursement fee rate for primary care visit. (2) Excludes physicians contracted for Direct Contr
Slide 14: Clover Assistant physician and usage metrics
3 weeks 92% +59 68% Physician feedback Onboarded PCPs used Trailing 6-month Net Of CA physicians work helps drive new product the CA for 92% of Promoter Score from in practices with 10 or releases on average eligible visits in 2019 physician survey less physicians every 3 weeks 22 4 days 11% 1 hour
Slide 15: Building Telehealth Into The Clover Assistant
Step 3: Swiftly Building Telehealth Into The Clover Assistant Helped To Maintain Preventative Care During COVID-19 ly into the Clover jisits for members that see a Gi Assistant. This resulted in virtually n our closed loop system, we were able to rapidly build and di p- off i Clover Assistant physic
Slide 16: Program savings across greater scale of eligible population
Clover generates program savings across a greater scale of the eligible population by having more accurate identification and higher engagement. 16Clover generates program savings across a greater scale of the eligible population by having more accurate identification and higher engagement. 16
Slide 17: How We Measure The Clover Assistant's Impact
How We Measure The Clover Assistant’s Impact At Clover, we take a physician-centric view to measure the impact of our platform given that it is, at this stage, a physician-facing platform As such, when measuring key metrics such as Medical Care Ratio (MCR), we compare the panels of Clover Assistant-
Slide 18: Medical care ratio and Star rating impact
Note: MCR is not a direct equivalent of the federal MLR. CMS does not regulate MCR, but does put an 85% minimum threshold on MLR. Unlike MCR, MLR takes into account, in its numerator, quality improvement expenditures, which would include Clover’s investment in technology for clinical care capabiliti
Slide 19: Clover Assistant impact results
(1) In 2020 through October. Represents net new diagnoses surfaced and confirmed via machine learning and clinical rules within our technology platform. (2) Compared to propensity-matched control group from May 2017 to Q1 2020. (3) Compared to members who see a non-CA PCP. Figures represent Q1 2020
Slide 20: Star rating improvement yields revenue to reinvest
We estimate an improvement from 3.0 to 3.5 Stars and from 3.5 Stars to 4.0 Stars would each yield ~500 bps (total of ~1,000 bps) improvement in revenue to be reinvested into more benefits for our members, consistent with our growth strategies. 20 (1) Based on recommendations from the Medicare Paymen
Slide 21: Upending the Trade-off: Access vs Cost
Upending the Trade-off: Access vs Cost Is my PCP in the network? Is my hospital in the network? Typical PPOs Is my specialist in the network? Are drugs covered? Typical HMOs High Low Annual Cost What is the plan going to cost me? We offer plans with the access of a PPO at lower than HMO costs. 21 Ac
Slide 22: Member cost comparison versus competitors
Note: Assumes lifetime of 7 years (1) Company analysis. Competitor column represents MA plans offered by the competitor with largest market share in the five counties where Clover has the most members. (2) Kaiser Family Foundation. (3) Calculated assuming a 20% coinsurance rate applied to the estima
Slide 23: Medicare Advantage market and take rate
Clover today only offers plans in markets that service 3.1mm lives The Medicare Advantage market is expected to grow 14% annually from $270bn to $590bn Clover has over 50% take rate (1) across established markets Between market growth, take rate in existing markets, and new market expansion, we beli
Slide 24: Scaling into new markets with transaction capital
Our attention has been focused on our initial, now established markets. With the capital from this transaction, we believe that we can scale our model more rapidly – accelerating our potential growth trajectory in 2023+ by adding millions of Medicare-eligibles to our addressable population. Source:
Slide 25: Clover Assistant can scale in many ways
While we’ve begun our efforts in Medicare Advantage, we believe the Clover Assistant can scale in many ways. 25While we’ve begun our efforts in Medicare Advantage, we believe the Clover Assistant can scale in many ways. 25
Slide 26: Direct Contracting as extension of the platform
Our play in DC is a natural extension of the Clover Assistant platform, adding significantly more lives under management from a physician panel. 26Our play in DC is a natural extension of the Clover Assistant platform, adding significantly more lives under management from a physician panel. 26
Slide 27: Go To Market Strategy
Go To Market Strategy B2B B2C Advantage the Clover B2B Direct consumer channels, Contracting attributes a portion of a contracted + Lives managed require bot ad bees nd B2C juisition Lives managed largely captured vie B2B with about via claims
Slide 28: Direct Contracting metrics and expected lives
200k 10 months >50% 8 Expected total lives in Of contracting in 2020 Acceptance rate with States with contracted 2021 with 100% CA ahead of launch independent practices physicians in 2021 coverage >1k >120k 500k+ >1,500 Unique beneficiaries Expected 2021 lives Projected total lives in Individual PCP
Slide 29: Open networks and software-driven care management playbook
We believe our focus on open networks and software-driven care management makes this playbook among the most scalable in all of healthcare. 29We believe our focus on open networks and software-driven care management makes this playbook among the most scalable in all of healthcare. 29
Slide 30: Physician-led ACO outperformance
• • • — • — — • — — • — • — • — • — 30 (1) Medicare Shared Savings Programs. Source: https://avalere.com/press-releases/physician-led-accountable-care-organizations-outperform-hospital-led-counterparts• • • — • — — • — — • — • — • — • — 30 (1) Medicare Shared Savings Programs. Source: https://avaler
Slide 31: Clover Assistant design concept
Note: This slide illustrates the functionality that Clover is currently in the process of developing for the Clover Assistant. It is intended as a design concept and does not represent a screenshot of the Clover 31 Assistant in active use today. The final product may evolve and appear significantly
Slide 32: Clover Assistant design concept
Note: This slide illustrates the functionality that Clover is currently in the process of developing for the Clover Assistant. It is intended as a design concept and does not represent a screenshot of the Clover 32 Assistant in active use today. The final product may evolve and appear significantly
Slide 33: Clover Assistant design concept
Note: This slide illustrates the functionality that Clover is currently in the process of developing for the Clover Assistant. It is intended as a design concept and does not represent a screenshot of the Clover 33 Assistant in active use today. The final product may evolve and appear significantly
Slide 34: Medicare Advantage vs. Direct Contracting: Illustrative
Medicare Advantage vs. Direct Contracting: Illustrative Recap Medicare Advantage Direct Contracting Estimated Overall Benchmark ~ $1000 PMPM ~ $1,000 PMPM Dependent on provider arrangements; ~5% of Expected Revenue ~ $1,000 PMPM benchmark in Year 1 (increasing over time) + shared savings settlements
Slide 35: Financial Deep Dive
Financial Deep Dive
Slide 36: Financial Highlights
Financial Highlights Large and growing market Aligned incentives Predictable revenue stream Margin enhancement over time Strong unit economics Attractive free cash flow generation free cash flow
Slide 37: Medical care ratio trends
37 (1) MCR is not a direct equivalent of the federal MLR. CMS does not regulate MCR, but does put an 85% minimum threshold on MLR. 37 (1) MCR is not a direct equivalent of the federal MLR. CMS does not regulate MCR, but does put an 85% minimum threshold on MLR.
Slide 38: 2018A and 2019A financial summary
(in millions) 2018A 2019A Counties 19 26 Average Membership 31,485 41,165 YoY Growth (%) 31% (1) Total Revenue $358 $462 YoY Growth (%) 29% (2) Total Medical Costs $343 $450 YoY Growth (%) 31% Gross Profit $15 $12 Gross Margin (%) 4.1% 2.5% MCR, Gross 97.1% 98.8% (3) Operating Expenses $188 $186 Oth
Slide 39: 2020 quarterly financial summary
(in millions) Q120A Q220A Q320A YTD 20A Counties 34 Average Membership 55,444 56,782 57,315 56,519 Growth Q3 YTD 20 vs. Q3 YTD 19 (%) 39% (1) Total Revenue $166 $172 $169 $507 Growth Q3 YTD 20 vs. Q3 YTD 19 (%) 46% Medical Costs $146 $120 $145 $411 Growth Q3 YTD 20 vs. Q3 YTD 19 (%) 22% Gross Profit
Slide 40: Medical cost and loss ratio commentary
40 (1) We saw earlier and more long-term script refills in anticipation of the pandemic. (2) As an illustrative example, Humana’s FY2019 Benefits / Premiums resulted in a loss ratio of 85.6%. Humana’s Q1 2019 Benefits / Premiums resulted in a loss ratio of 86.2%.40 (1) We saw earlier and more long-t
Slide 41: 2021E-2023E outlook
(1) Metric 2021E 2022E 2023E Long-Term Commentary (1) Clover’s formal 2021 outlook will be provided in early 2021, after the completion of AEP and following further CMS guidance on Direct Contracting (2) Excludes Direct Contracting and any other non-MA subsidiaries/entities. (3) Represents average n
Slide 42: Star rating MCR impact
(1) (1) (1) Theoretical maximum MCR impact from incremental Star rating. In practice, Clover will cede some margin back to members in the form of more 42 obvious plan designs, consistent with our growth strategy.(1) (1) (1) Theoretical maximum MCR impact from incremental Star rating. In practice, Cl
Slide 43: Pro forma ownership
5% 10% 21% 64% 43 Source: Latest Estimate, updated from S-4 filed with the SEC on 10/20/205% 10% 21% 64% 43 Source: Latest Estimate, updated from S-4 filed with the SEC on 10/20/20
Slide 44: Appendix
Appendix
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Slide 46: Clover's View Of Payor/Provider Relations
Clover’s View Of Payor/Provider Relations Contrasts With That Of Legacy I b And 's Alike ec sf Data Exchange {fore Chen i irrelevant. coming asa by-product. : ot y Networks improve healthcare. based recommendations at the point of care. Sh we pay for , outcomes. Partnership care, not risk-sharing. A
Slide 47: Physician reimbursement footnote
47 (1) Based on estimated CMS 2021 base Medicare reimbursement fee rate for primary care visit.47 (1) Based on estimated CMS 2021 base Medicare reimbursement fee rate for primary care visit.
Slide 48: Net loss to Adjusted EBITDA reconciliation
` 2018A 2019A Q120A Q220A Q320A YTD20A Net Loss ($201.9) ($363.7) ($28.2) $5.4 $12.8 ($10.0) Adjustments: Interest Expense 7.0 23.2 7.8 8.4 9.2 25.6 Amortization of Notes and Securities Discounts - 15.9 5.7 4.8 4.4 14.9 Income Taxes - - - - - - Depreciation and Amortization 0.5 0.6 0.1 0.2 0.1 0.4 C
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