How is the 49% of membership (referring to the slide) split between year 1 and year 2 for the 2025 and 2026 cohorts, to understand the year 2 to year 3 transition for 2027?

The 2025 new member cohort represents about 21% of current membership, and the 2026 cohort is about 28%. This means a higher percentage of members will shift from year 1 to year 2 than year 2 to year 3 in 2027. “about 21% or so of the membership we see in this year, the new member cohort -- excuse me, the new member cohort from '25 represents about 21% and then the 2026 cohort is at about 28%.”

What caused the sequential decline in SG&A from Q1 to Q2?

The decline was primarily due to the elimination of one-time, non-recurring events that occurred in Q1, such as a claims adjustment expense related to IBNR reserves. “in the first quarter, I did mention there are a few one-time events that were nonrecurring. For instance, the claims adjustment expense that we incurred in the first quarter when our IBNR reserves went up.”

How did Clover approach its 2027 bids (balanced vs. growth-focused), and what were the underlying cost trend assumptions?

Clover assumed cost trends similar to national peers but uniquely factored in cohort maturation for 2027, which offsets near-term margin headwinds from new members. The bid strategy was similar to prior years, aiming for a strong, profitable product, leveraging cohort maturation to inform growth posture. “underlying cost trends, I would say we're generally not going to assume anything meaningfully different than the large national peers would on the underlying cost trend itself. But what is unique about us when you think about 2027 is the cohort maturation that will impact 2027.”

CLOV

Clover Health (CLOV) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Health Care· Aug 5, 2026

Source: earnings call transcript

Executive summary

Clover Health Q2 FY26 — Strong MA Membership Growth and Profitability

Clover Health delivered strong Q2 FY26 results, driven by market-leading MA membership growth and improved profitability, with H1 GAAP net income up $67 million. The recalculation to a 4.5-Star rating for PY2027 provides flexibility, but core confidence for 2027 is grounded in continued cohort maturation under Clover Assistant, which is expected to drive further earnings expansion. Management also highlighted new AI initiatives for back-office operations to streamline administrative functions and lower overhead.

Highlights

Medicare Advantage membership grew 48% YoY in H1 2026.
GAAP net income increased by $67 million YoY in H1 2026.
Total revenue increased by over $550 million YoY to $1.5 billion in H1 2026.
Consolidated gross profit increased by $104 million in H1 2026.
Operating leverage expanded by over 200 bps in H1 2026.
All MA members now enrolled in 4.5 Stars plans for Payment Year 2027.

Concerns

CMS has filed notice of intent to appeal the 4.5-Star rating court decision.
Outpatient medical cost trends remain elevated from prior years, though moderated in Q2.
Adjusted EBITDA is expected to return to a seasonal loss in Q4 FY26.

Guidance & targets

Category	Target	Timeline	Confidence
Full Year 2026 Average Medicare Advantage Membership	156,000 to 158,000 members high materiality	FY26 · 2026	High
Full Year 2026 Total Revenue	$2.92 billion to $3 billion high materiality	FY26 · 2026	High
Full Year 2026 Consolidated Gross Profit	$525 million to $555 million high materiality	FY26 · 2026	High
Full Year 2026 Adjusted EBITDA	$70 million to $85 million high materiality	FY26 · 2026	High
Full Year 2026 GAAP Net Income	$20 million to $35 million high materiality	FY26 · 2026	High
Q4 FY26 Adjusted EBITDA	return to a more typical seasonal loss medium materiality	Q4 · 2026	High
2027 Earnings Potential	increasing confidence in the earnings potential of the business heading into 2027 high materiality	FY27 · 2027	High
2027 Growth Position	feel very good about our growth position heading into next year high materiality	FY27 · 2027	High

Risks & headwinds

CMS appeal of 4.5-Star rating court decision ongoing

pending litigation

Mitigation:prepared to defend it on appeal; remain focused on bringing affordable, high-quality care to seniors on Medicare in our 4.5-Star plans.

Elevated outpatient medical cost trends Q2 FY26

remain elevated from prior years

Mitigation:within our expectations, and we continue to monitor closely.

Seasonal loss in Adjusted EBITDA Q4 FY26

return to a more typical seasonal loss

Mitigation:expected quarterly shape is consistent with how we plan the business; investments to increase during the fourth quarter, including AEP-related activities.

What to watch in Q3 FY26

CMS appeal outcome for 4.5-Star rating

Ongoing

Current CMS has filed notice of intent to appeal the District Court's decision.

Target Resolution of the appeal, confirmation of 4.5-Star rating for PY2027.

Why it matters

The 4.5-Star rating provides flexibility for product offerings, growth, and profitability for PY2027.

CMS has filed notice of its intent to appeal the District Court's decision. Because this regards pending litigation, I'll be brief, we believe the District Court's ruling was thorough and well reasoned, and we are prepared to defend it on appeal.

Find out whether CLOV delivers this. Inve re-checks your case every morning.

Q&A highlights

What percentage of members in the 2025 and 2026 cohorts are managed under Clover Assistant, especially given the focus on New Jersey and Georgia?

Clover Assistant coverage for the 2025 and 2026 cohorts is in the low 60s, which is slightly lower than the overall population average but generally trends up over time as members stay longer with Clover.

“It's a little bit lower than the 2/3 across our overall population, but you're looking in the low 60s, and then that generally trends up over time.”

asked by Richard Close · answered by Clay Thornton

2 min read 6 chapters

Detailed narrative

AI-Powered Care Model and Clover Assistant

Clover Health emphasizes its AI-powered model, Clover Assistant, as a core differentiator. The technology helps physicians make better decisions, leading to improved clinical care, membership growth, and increased profitability. This approach has contributed to Clover becoming the top-rated HEDIS PPO plan in the country, and the company is extending this model through Counterpart Health, recognizing the broader industry's potential for technology built around clinical decisions.

Impact of 4.5-Star Rating for 2027

Following a court order and CMS recalculation, all Medicare Advantage members are now enrolled in plans rated 4.5 Stars for payment year 2027. While CMS intends to appeal, the company is confident in the ruling and believes the higher rating provides flexibility to reinvest in members, maintain a competitive product, support growth, and expand profitability.

However, management clarifies that the rating provides flexibility in value allocation, but Clover Assistant is what creates the value.

Cohort Maturation as Key Earnings Driver

The primary driver of confidence for 2027 and beyond is the continued maturation of member cohorts under Clover Assistant. New members initially create near-term pressure, but their economics improve over time as they engage with the platform. The company expects cohorts to improve by approximately $70 PMPM in gross profit from year 1 to year 2, with further step-ups in year 3, leading to increasing confidence in the business's earnings potential.

Strong First Half 2026 Performance

The first half of 2026 demonstrated strong performance with market-leading MA membership growth of 48% and a $67 million year-over-year increase in GAAP net income. Total revenue grew by over $550 million to $1.5 billion, and consolidated gross profit increased by $104 million. Operating leverage expanded by over 200 basis points, validating the AI-powered model's ability to improve care and strengthen the business.

Medical Cost Trends and SG&A Efficiency

Medical cost trends are performing better than expected, particularly inpatient utilization, which is tracking below prior year's new member cohort. Outpatient trends moderated in Q2 after peaking in March, remaining within expectations. Adjusted SG&A totaled $112 million in Q2, representing 15% of total revenue, an improvement of 220 basis points YoY, demonstrating operating leverage as the company scales.

Future AI Integration in Operations

Beyond clinical applications, Clover Health plans to integrate AI into its back-office insurance operations to improve claims processing speed and accuracy, and to streamline administrative functions. This initiative is expected to further lower overhead and compound margin opportunities over time, driving both clinical and operational efficiency and positioning the business well for the years ahead.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.