Keep on eye on Clover Health (NASDAQ:CLOV) today as the shares crawl back from a near-15% decline on Tuesday. CLOV stock was up 2.3% in this morning’s pre-market trading, although it has since dipped into the red.
Yesterday’s losses look tied to the expiration of the 180-day lock-up period following the stock’s initial public offering. Following an IPO, many companies put stipulations forward restricting the number of shares available to trade. Insiders such as early employees holding significant chunks of shares may be forced to hold onto those shares for a given period of time.
Today’s good news comes as the Medicare Advantage insurance firm said it would begin offering a grocery benefit to its members. That option was introduced in 2018 by the U.S. Centers for Medicare and Medicaid Services (CMS). Clover CEO Vivek Garipalli told Yahoo Finance yesterday that the goal is to help alleviate health-determining factors, known in the industry as social determinants of health, which include access to healthy food.
By 2030, 20% of the U.S. population will be older than 65 and Medicare will become a predominant source of health insurance coverage in the country. As seniors adapt to the post-pandemic environment, they will likely alter their buying behaviors. This includes spending more time shopping around and comparing benefits to forgoing choice and flexibility for higher quality and affordable plans that ensure certainty of coverage, consultant Oliver Wyman wrote.
CLOV Stock Was Early 2021 SPAC Merger
Clover has calculated an grocery annual benefit of between $300 to $500 per member, depending on the plan, which comes at no cost to members. But it’s less about the groceries that about what those purchases say about the health of members.
If members are using the grocery benefit — or not — Clover’s artificial intelligence models can make assumptions and recommendations to improve the social determinants of their health. The benefit is still pending CMS approval, which is expected by mid-September.
CLOV stock began trading in early January after completing its merger with special purpose acquisition company (SPAC) Social Capital Hedosophia Holdings. With its Medicare Advantage offering, Clover is challenging long-standing Medicare Advantage stalwarts, including Cigna (NYSE:CI) and Humana (NYSE:HU).
The company’s goal is to offer what it calls “obvious” plans that are easy to understand with data it provides through Clover Assistant. That could be a real advantage for the Tennessee-based firm.
A recent survey by J.D. Power revealed that 78% of all Medicare Advantage members are registered for their health plan’s member portal — up four percentage points from last year. Two-thirds of members have logged in to their health plan’s portal. Portal use is associated with higher levels of satisfaction and improved member engagement.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, including previous stints with Bloomberg News and as a buyside equity research editor. His Substack newsletter, TLV Strategist, covers the Israel business scene.