The Engine Boosting Clover Health Stock is a CTO Working to Disrupt Medicare


When Clover Health Investments (NASDAQ:CLOV) first came public, all the attention was focused on its sponsor, Chamath Palihapitiya. CLOV stock was just the latest in a series of his blank-check initial public offering deals.

a photo of a stethoscope laying atop medical papers
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I was among those who piled on. I called him the Great Gatsby of SPACs, the real Professor Harold Hill.

But now that CLOV stock has been on the market a while, attention should turn to CTO Andrew Toy and the Clover Assistant. This is what the company has always been about, using technology to cut the costs of primary care for those on Medicare.

Clover Assistant is a clinical support platform built from within a managed care company.

Toy’s theory is this: Three-quarters of healthcare costs come from managing chronic conditions like diabetes and high blood pressure. This is especially true for those over 65. If actionable data is within the payment system, primary care physicians will focus on it. This will align incentives between those who pay the bills and those who rack them up.

Toy, a Hong Kong native who sold his first start-up to Alphabet (NASDAQ:GOOGL), sees Clover Assistant as a bridge between patients and their doctors. At the height of the pandemic, he says, Clover Assistant helped insureds stay at home through telehealth and mail-in pharmacies. Then it helped them access vaccines. Clover created a Video on Wheels program to get patients iPads for these virtual visits.

The best thing government can do to cut health care costs, Toy now believes, is to assure cheap broadband service to everyone.

A Rocky Start for CLOV Stock

After Clover came public, I focused on its early relationship with Walmart (NYSE:WMT). This included a co-branding deal meant to gain attention and customers.

It was designed to capture data and experience, which Clover has used to offer Medicare Advantage plans in nine states. The 2022 enrollment period ends Dec. 7. The Assistant is integrated into these plans, which feature zero co-pays for primary care visits. The idea is that doctors can optimize care, through the Assistant, as patients use it to stay in touch with the health care system.

Medicare Advantage providers focus on selling patients through advertising. Clover this year is taking another route to the market, contracting directly with home healthcare providers. If the Clover model does cut costs and improve outcomes, the entire Medicare market is open to it.

Clover Numbers Emerge

Clover is just starting to generate significant revenue, about $1.5 billion worth in 2021. Analysts expect that to climb to $2.64 billion next year. This makes the $2.4 billion market cap look reasonable.

Just remember that this is a health insurance stock, not a tech stock. UnitedHealth Group (NYSE:UNH), the most successful U.S. health insurer, brings less than 6% of revenue to its net income line.

While part of Clover’s pitch is focused on reducing costs, the aim of that cost reduction is to create margins. But if Clover could just match UNH’s profitability next year, that $2.64 billion in revenue could deliver nearly $160 million in net income. If you buy CTO Toy’s argument, in other words, you’re paying just 15 times next year’s earnings for the stock now.

The Bottom Line

Clover’s past as a SPAC stock, and as a meme stock, will likely keep its price down for some time. Since the stock debuted Jan. 8, the price is down by nearly two-thirds. I doubt it will turn around before there’s proof of Toy’s case.

Even as Clover’s revenue has been growing, to $522 million in the third quarter, operating cash flow losses have been declining, to just $45 million in the last quarter.

Clover is still selling stock. It’s next due to report Feb. 8, having beaten estimates in its last report. Analysts are calling it a “sell.”

But I like what Andrew Toy is doing. It matches well with my own reporting from the 2000s, when I ran a health IT beat at ZDNet. Don’t tell Chamath I said this, but Clover Health is now an intriguing speculation.

On the date of publication, Dana Blankenhorn held no positions in any securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. Just in time for the holidays he has a collection of COVID-19 stories at the Amazon Kindle store. Write him at or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.

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