Clover Health Investments, Corp. · NASDAQ:CLOV
Clover Health Investments — SPAC Merger (October 2020)
65 slides from Clover Health Investments's SPAC merger presentation, Oct 6, 2020
Slide 1: Social Capital Hedosophia III October 2020
SOCIAL CAPITAL HEDOSOPHIA III OCTOBER 2020 IPOC
Slide 2: Total shareholder return in the last decade
2 5.5x 4.8x 4.6x 2.9x 1.9x 1.0x S&P 500 TOTAL SHAREHOLDER RETURN IN THE LAST DECADE Note: Data sourced from FactSet; values shown relative to the S&P 500
Slide 3: Technology Company
3 TECHNOLOGY COMPANY
Slide 4: Better outcomes at a lower cost
4 BETTER OUTCOMES AT A LOWER COST
Slide 5: Growing 3x faster than the industry
5 GROWING 3X FASTER THAN THE INDUSTRY Note: Based on internal Company analysis
Slide 6: Sequoia
- SEQUOIA !: G/ Round
Slide 7: An incredibly valuable company
7 AN INCREDIBLY VALUABLE COMPANY
Slide 8: Once in a generation opportunity to do the right thing
8 ONCE IN A GENERATION OPPORTUNITY TO DO THE RIGHT THING
Slide 9: Healthcare moving at software speed
9 HEALTHCARE MOVING AT SOFTWARE SPEED
Slide 10: Clover
Clover
Slide 11: Backdrop
11 BACKDROP
Slide 12: Healthcare spending in 2019 was $3.65T
12 HEALTHCARE SPENDING IN 2019 WAS $3.65T Source: The Centers for Medicare & Medicaid Services (CMS)
Slide 13: Spending per capita since 1970
13 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 2018 Total National Health Expenditures Constant 2018 Dollars +31x +6x SPENDING PER CAPITA SINCE 1970 Note: Data sourced from the Kaiser Family Foundation
Slide 14: Average life expectancy
14 AVERAGE LIFE EXPECTANCY 78.6 80.7 OECD Average Note: Data sourced from the Organisation for Economic Cooperation and Development (OECD)and World Bank
Slide 15: Individuals with 2+ chronic conditions
15 INDIVIDUALS WITH 2+ CHRONIC CONDITIONS 28% 18% 15% 14% France Aus UK Note: Data sourced from the British Medical Journal (BMJ)
Slide 16: Administrative costs
16 ADMINISTRATIVE COSTS 8.3% 5.7% 2.7% 2.0% 0.6% United States France Canada UK Norway Note: Data sourced from the Organisation for Economic Cooperation and Development (OECD) Administrative costs as a % of total health expenditures
Slide 17: 81% of consumers are dissatisfied with their healthcare experience
17 81% OF CONSUMERS ARE DISSASTISFIED WITH THEIR HEALTHCARE EXPERIENCE Source: Study commissioned by Prophet and GE Healthcare Camden Group
Slide 18: Clover
18 CLOVER
Slide 19: Software that improves every interaction at the point of care
19 SOFTWARE THAT IMPROVES EVERY INTERACTION AT THE POINT OF CARE
Slide 20: Clover Assistant combines machine learning and an expert system
20 CLOVER ASSISTANT IS A COMBINATION OF MACHINE LEARNING AND AN EXPERT SYSTEM
Slide 21: Physicians use Clover Assistant to deliver better care
21 PHYSICIANS USE CLOVER ASSISTANT TO HELP THEM DELIVER BETTER CARE TO PATIENTS
Slide 22: Better outcomes for members
22 BETTER OUTCOMES FOR MEMBERS
Slide 23: Fewer ER visits and hospital admits than benchmark
23 252 197 Benchmark Clover HOSPITAL ADMITS PER 1,000 600 465 Benchmark Clover ER VISITS PER 1,000 23% FEWER ER VISITS 22% FEWER HOSPITAL VISITS Note: Based on internal Company analysis
Slide 24: Market
24 MARKET
Slide 25: Improving Medicare Advantage
25 IMPROVING MEDICARE ADVANTAGE
Slide 26: Chronic conditions among Medicare beneficiaries
26 80% HAVE 1+ CHRONIC CONDITION 68% HAVE 2+ CHRONIC CONDITIONS Source: Study commissioned by the National Council on Aging
Slide 27: Supported by Democrats and Republicans
27 SUPPORTED BY DEMOCRATS AND REPUBLICANS
Slide 28: Fast growing market
28 FAST GROWING MARKET 25.6% 9.3% 11.8% 28.2% 12.1% 13.0% 23.8% 8.8% 12.4% 25.7% 13.2% 16.1% 0 - 18 19 - 25 26 - 34 35 - 54 55 - 64 65+ 2018 2010 POPULATION DISTRIBUTION BY AGE COHORT OVER TIME (51m) (39m) Note: Data sourced from the Kaiser Family Foundation
Slide 29: Worth $270B today
29 WORTH $270B TODAY Note: Analysis based on data from the Centers for Medicare & Medicaid Services (CMS)
Slide 30: Estimated worth $590B by 2025
30 ESTIMATED WORTH $590B BY 2025 Note: Analysis based on data from the Centers for Medicare & Medicaid Services (CMS)
Slide 31: 10,000+ new people become eligible every day
31 10,000+ NEW PEOPLE BECOME ELIGIBLE EVERYDAY Note: Analysis based on data from the Centers for Medicare & Medicaid Services (CMS)
Slide 32: $150M each day, $1B each week, $55B each year
32 $150M EACH DAY $1B EACH WEEK $55B EACH YEAR Note: Analysis based on data from the Centers for Medicare & Medicaid Services (CMS)
Slide 33: Technology that delivers better outcomes at lower costs
33 TECHNOLOGY THAT DELIVERS BETTER OUTCOMES AT LOWER COSTS
Slide 34: Growth
34 GROWTH
Slide 35: Fastest growing Medicare Advantage plan in the U.S.
35 FASTEST GROWING MEDICARE ADVANTAGE PLAN IN THE U.S. 0% 5% 10% 15% 20% 25% 30% CLOVER MEAN MEDIAN CAGR VS NEXT 9 COMPETITORS Note: Based on internal Company analysis
Slide 36: Capture 50% of net membership growth in established markets
36 CAPTURE 50% OF NET MEMBERSHIP GROWTH IN THEIR ESTABLISHED MARKETS Note: Based on internal Company analysis
Slide 37: Market share growth per county
37 25% – 5% 10% 15% 20% 25% 30% 2016 2017 2018 2019 Today MARKET SHARE GROWTH PER COUNTY Note: Based on internal Company analysis
Slide 38: Superior gross margins with Clover Assistant
38 SUPERIOR GROSS MARGINS WITH CLOVER ASSISTANT 15% 18% ? Benchmark Clover Today Clover Tomorrow JUST IN THE FIRST 18 MONTHS Returning Member Gross Margin
Slide 39: 41% cheaper than Medicare
39 41% CHEAPER THAN MEDICARE 17% CHEAPER THAN NEAREST COMPETITOR Note: Based on internal Company analysis
Slide 40: Counties today, counties next year
40 34 COUNTIES TODAY 108 COUNTIES NEXT YEAR
Slide 41: Medicare Advantage members 2020E and 2021E
41 57K MEDICARE ADVANTAGE MEMBERS 2020E 73K MEDICARE ADVANTAGE MEMBERS 2021E Note: Company forecasts
Slide 42: Direct Contracting
42 DIRECT CONTRACTING
Slide 43: Provide value to Original Medicare
43 PROVIDE VALUE TO ORIGINAL MEDICARE
Slide 44: Contract directly with physicians to add thousands of lives
44 CONTRACT DIRECTLY WITH PHYSICIANS TO ADD THOUSANDS OF LIVES THROUGH ONE CONTRACT
Slide 45: Creates a low cost acquisition channel
45 CREATES A LOW COST ACQUISITION CHANNEL TO COVER MORE LIVES
Slide 46: Similar profitability as Medicare Advantage
46 WITH SIMILAR PROFITABILITY AS MEDICARE ADVANTAGE
Slide 47: 200K members already under contract for 2021
47 200K MEMBERS ALREADY UNDER CONTRACT FOR 2021
Slide 48: 450K members in 2023E
48 450K MEMBERS IN 2023E Note: Company forecasts
Slide 49: Total lives covered 2020E-2023E
49 0 100,000 200,000 300,000 400,000 500,000 600,000 2020E 2021E 2022E 2023E Medicare Advantage (MA) Direct Contracting (DC) 200k DC lives already under contract for 2021 TOTAL LIVES COVERED Note: Based on internal Company analysis 450k DC lives covered by 2023E 139k MA Members by 2023E
Slide 50: Building a virtuous cycle with compounding advantages of scale
50 BUILDING A VIRTUOUS CYCLE WITH COMPOUNDING ADVANTAGES OF SCALE
Slide 51: Virtuous cycle of data and membership growth
51 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 benefits Drive strong market lea
Slide 52: Merger details
52 MERGER DETAILS
Slide 53: Transaction details
53 Note: Pro Forma Net Cash on balance sheet includes unrestricted cash and marketable securities less corporate debt as of June 30, 2020 plus $668 mil lion of proceeds from this transaction. Transaction Details ($m) Investment from IPOC $828 PIPE / Co - Investment $400 Contribution from affiliates
Slide 54: Illustrative valuation at normalized industry economics
54 2021E 2023E UNITED, HUMANA, CENTENE MEDICARE ADVANTAGE 73,000 139,000 DIRECT CONTRACTING 200,000 450,000 TOTAL LIVES COVERED 273,000 589,000 PREMIUM/ (DISCOUNT) 13% (48%) ANNUAL REVENUE PER MEMBER/LIFE $12,000 $12,000 $12,000 ANNUAL PROFITABILITY PER MEMBER $800 $800 $800 EBITDA $218M $471M EBITD
Slide 55: Illustrative future acquisition value of Clover's MA book
55 2025E UNITED, HUMANA, CENTENE MEDICARE ADVANTAGE 323,000 DIRECT CONTRACTING 0 TOTAL LIVES COVERED 323,000 ANNUAL REVENUE PER MEMBER $12,000 $12,000 REVENUE $3.876B MERGER VALUATION $3.702B PRICE TO REVS 0.96X 1.31X ILLUSTRATIVE FUTURE ACQUISITION VALUE OF CLOVER’S MA BOOK
Slide 56: Investment thesis
56 INVESTMENT THESIS
Slide 57: Clover is a technology company whose software improves outcomes and lowers costs
57 CLOVER IS A TECHNOLOGY COMPANY WHOSE SOFTWARE ALLOWS THEM TO IMPROVE OUTCOMES AND LOWER COSTS CLOVER IS QUICKLY CAPTURING SHARE FROM INCUMBENTS AND ITS DIFFERENTIATION WILL MAKE IT HARD FOR OTHERS TO COPY DIRECT CONTRACTING SUPERCHARGES THE ENTIRE BUSINESS BY CREATING A LOW COST ACQUISITION CHANN
Slide 58: Clover is the fastest growing Medicare Advantage company in the US
58 CLOVER IS THE FASTEST GROWING MEDICARE ADVANTAGE COMPANY IN THE US MEDICARE ADVANTAGE IS THE FASTEST GROWING MARKET WITHIN HEALTHCARE WITH BROAD REGULATORY MOATS AND POLITICAL SUPPORT HEALTHCARE HAS GROWN FASTER THAN EVERYTHING INCLUDING BIG TECH
Slide 59: Growth * Growth * Growth
59 GROWTH * GROWTH * GROWTH
Slide 60: Team
60 TEAM
Slide 61: Better vs different
61 BETTER VS DIFFERENT
Slide 62: Vivek Garipalli CEO and Founder, Andrew Toy President & CTO
62 Vivek Garipalli CEO and Founder Andrew Toy President & CTO
Slide 63: IPOC + Clover
iPOC + Clover 83
Slide 64: Fin
64 FIN
Slide 65: Disclaimer
65 DISCLAIMER Confidentiality and Disclosures This presentation has been prepared for use by Social Capital Hedosophia Holdings Corp. III (“Social Capital”) and Clover Health LLC (“Clover”) in connection with their proposed business combination. This presentation is for information purposes only and