Clover Health Investments Corp.

08/07/2026 | Press release | Distributed by Public on 08/07/2026 06:05

Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. The discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto for the three and six months ended June 30, 2026, contained in this Quarterly Report on Form 10-Q (the "Form 10-Q") and the audited consolidated financial statements and notes thereto for the year ended December 31, 2025, contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the "SEC") on February 27, 2026 (the "2025 Form 10-K"). This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the "Risk Factors" section of the 2025 Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. See "Cautionary Note Regarding Forward-Looking Statements" for additional information. Unless the context otherwise requires, references in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" to "we," "us," "our," "Clover," "Clover Health," and the "Company" mean the business and operations of Clover Health Investments, Corp. and its consolidated subsidiaries.
Overview
At Clover Health, our vision is to empower every physician with the technology to identify, manage, and treat chronic diseases earlier. Our strategy is to improve the care of people with Medicare, develop wide physician networks, and provide technology to help empower physicians. Our proprietary software platform, Clover Assistant (licensed externally as Counterpart Assistant), helps us execute this strategy by enabling physicians to detect, identify, and manage chronic diseases earlier than they otherwise could. This technology is a cloud-based software platform that provides physicians with access to data-driven and personalized insights for the patients they treat.
We operate Preferred Provider Organization ("PPO") and Health Maintenance Organization ("HMO") Medicare Advantage ("MA") plans for Medicare-eligible individuals. We aim to provide high-quality, affordable healthcare for all Medicare beneficiaries. Among plans with similar major characteristics, we offer most members in our MA plans (the "members") among the lowest average out-of-pocket costs for primary care provider and specialist co-pays in their markets. We strongly believe in providing our members provider choice, and we consider our PPO plans to be our flagship insurance product. An important feature of our MA product is wide network access. We believe the use of Clover Assistant and related data insights allows us to improve clinical decision-making through a highly scalable platform. At June 30, 2026, we operated our MA plans in five states and 203 counties, with 157,309 members.
Executive Summary
The following summary highlights matters that management considers most significant to an understanding of our results for the three and six months ended June 30, 2026. It is not a complete description of, and should be read together with, the more detailed discussion that follows and our condensed consolidated financial statements.
Total revenues increased 56% to $743.2 million for the three months ended June 30, 2026, and 59% to $1,492.4 million for the six months ended June 30, 2026, compared to the respective prior-year periods, driven primarily by growth in our Medicare Advantage membership and higher per-member premium. We reported income from operations of $28.0 million and $55.3 million for the three and six month periods, respectively, compared to losses in the prior-year periods.
Our results reflect continued membership growth alongside disciplined management of administrative spend. Adjusted SG&A as a percentage of total revenues improved to 16% for the six months ended June 30, 2026, from 18% in the prior-year period, as revenue growth outpaced growth in our administrative cost base. Adjusted EBITDA increased to $81.2 million for the six months ended June 30, 2026, from $42.9 million in the prior-year period. We continued to maintain a strong liquidity position, with cash, cash equivalents, and investments of $443.0 million at June 30, 2026.
Consolidated gross profit increased approximately 50% to $312.5 million for the six months ended June 30, 2026, broadly in line with our membership growth.
As described under "Recent Developments" below, developments during the quarter relating to our 2026 Star Ratings are expected to affect payment year 2027 rather than our current period results.
Recent Developments
CMS Star Ratings
Pursuant to CMS's MA Star Ratings system, CMS annually awards between 1.0 and 5.0 Stars to MA plans based on performance in several categories. CMS released the Company's 2026 Star Ratings on October 9, 2025 and had awarded the Company's PPO (contract H5141) and HMO plans (contract H8010) with 3.5 Stars and 4.0 Stars, respectively.
As previously disclosed, on June 9, 2026, CMS informed the Company that, consistent with a court judgment in Clover Insurance Co. V. HHS, Civ. A. No. 25-142 (S.D. Ga) (the "Stars Litigation"), CMS had recalculated the 2026 Star Rating for the Company's PPO MA contract, H5141, from 3.5 Stars to 4.5 Stars for payment year 2027.
On June 17, 2026, CMS issued updated guidance informing all MA Organizations that it was voluntarily recalculating the 2027 Quality Bonus Payment ratings for certain MA contracts as a result of the decision in the Stars Litigation.
CMS's guidance stated that MA organizations can view their recalculated 2027 QBP ratings in the Health Plan Management System ("HPMS"). HPMS displays the Company's PPO MA contract, H5141, rated at 4.5 Stars for payment year 2027, and also displays that the 2026 Star Rating for the Company's HMO MA contract, H8010, increased from 4.0 Stars to 4.5 Stars, which also impacts payment year 2027.
On July 21, 2026, CMS filed its Notice of Appeal of the district court's decision in the Stars Litigation with the United States Court of Appeals for the Eleventh Circuit.
Key Performance Measures
We manage our operations based on one reportable segment: Insurance. Through our Insurance segment, we provide PPO and HMO plans to Medicare Advantage members in several states.
The segment grouping is consistent with the information used by our Chief Executive Officer (identified as our chief operating decision maker) ("CODM") to assess performance and allocate the Company's resources.
We review several key performance measures, discussed below, to evaluate our business and results, measure performance, identify trends, formulate plans, and make strategic decisions. We believe that the presentation of such metrics is useful to management and counterparties to model the performance of healthcare companies such as Clover.
Through our Insurance segment, we provide PPO and HMO plans to members in several states. We seek to improve care and lower costs for our members by empowering providers with intuitive data-driven, personalized insights to support treatment of members through our software platform, Clover Assistant.
The following table presents key financial measures for the periods indicated:
Three Months Ended June 30, Six months ended June 30,
2026 2025 2026 2025
Total
PMPM (1)
Total
PMPM (1)
Total
PMPM (1)
Total
PMPM (1)
(dollar amounts in thousands, except PMPM amounts)
Consolidated:
Total revenues $ 743,167 $ 1,579 $ 477,620 $ 1,509 $ 1,492,356 $ 1,597 $ 939,951 $ 1,510
Net medical claims incurred $ 590,165 $ 1,254 $ 377,992 $ 1,194 $ 1,179,813 $ 1,263 $ 731,434 $ 1,175
Consolidated Gross profit $ 153,002 $ 325 $ 99,628 $ 315 $ 312,543 $ 335 $ 208,517 $ 335
Adjusted SG&A $ 112,086 $ 238 $ 82,493 $ 261 $ 231,370 $ 248 $ 165,600 $ 266
Adjusted EBITDA $ 40,916 $ 87 $ 17,135 $ 54 $ 81,173 $ 87 $ 42,917 $ 69
Adjusted Net income $ 40,352 $ 86 $ 16,722 $ 53 $ 80,094 $ 86 $ 42,038 $ 68
Insurance Segment:
Average Medicare Advantage membership (#) 156,840 N/A 105,494 N/A 155,723 N/A 103,727 N/A
Premiums earned, net $ 737,767 $ 1,568 $ 469,826 $ 1,485 $ 1,481,956 $ 1,586 $ 926,732 $ 1,489
Insurance Net medical claims incurred $ 615,422 $ 1,308 $ 394,212 $ 1,246 $ 1,225,423 $ 1,312 $ 762,100 $ 1,225
Insurance Benefits Expense Ratio 87.6 % N/A 88.4 % N/A 87.1 % N/A 87.3 % N/A
(1) Calculated per member per month ("PMPM") figures are based on the applicable amount divided by member months in the given period. Member months represents the number of months members are enrolled in a Clover Health plan in the period.
Total revenues
Total revenues represents the sum of Premiums earned, net and Other income for a given period. Premiums earned, net reflects the earned portion of premiums under our Medicare Advantage contracts with CMS, net of premiums ceded to reinsurers and inclusive of risk adjustment revenue. Other income primarily consists of investment income and other ancillary revenues. We believe Total revenues is a useful measure of the overall scale and growth of our business, as it captures the aggregate economic inflows generated from our Insurance operations and related activities. Management uses Total revenues to evaluate period-over-period growth, assess the impact of membership levels and risk adjustment performance, analyze revenue trends relative to medical cost and operating expense trends, and support strategic planning and capital allocation decisions.
Membership and associated premiums earned and medical claim expenses
We define new and returning members on a calendar year basis. Any member who is active on July 1 of a given year is considered a returning member in the following year. Any member who joins a Clover plan after July 1 in a given year is considered a new member for the entirety of the following calendar year. We view our number of members and associated PMPM premiums earned and medical claim expenses, in the aggregate and on a PMPM basis, as useful metrics to assess our financial performance. Member growth and retention aligns with our mission, drives our Total revenues, expands brand awareness, deepens our market penetration, creates additional opportunities to inform our data-driven insights to improve care and decrease medical claim expenses, and generates additional data to continue to improve the functioning of Clover Assistant. Among other things, the longer a member is enrolled in one of our insurance plans, the more data we collect and synthesize and the more actionable insights we generate. We believe these data-driven insights lead to better care delivery as well as improved identification, documentation and management of members' chronic conditions, helping to lower PMPM medical claim expenses.
Premiums earned, net
Premiums earned, net represents the earned portion of our premiums earned, gross, less the earned portion that is ceded to third-party reinsurers under our reinsurance agreements. Premiums are earned in the period in which members are entitled to receive services, and are net of estimated uncollectible amounts, retroactive membership adjustments, and any adjustments to recognize rebates under the minimum benefit ratios required under the ACA.
We earn premiums through our plans offered under contracts with CMS. We receive premiums from CMS on a monthly basis based on our actuarial bid and the risk-adjustment model used by CMS. Premiums anticipated to be received within twelve months based on the documented diagnostic criteria of our members are estimated and included in revenues for the period, including the member months for which the payment is designated by CMS.
Premiums ceded is the amount of premiums earned, gross ceded to reinsurers. From time to time, we enter into reinsurance contracts to limit our exposure to potential losses as well as to provide additional capacity for growth. Under these agreements, the "reinsurer," agrees to cover a portion of the claims of another insurer, i.e., us, the "primary insurer," in return for a portion of their premium. Ceded earned premiums are earned over the reinsurance contract period in proportion to the period of risk covered. The volume of our ceded earned premium is impacted by the level of our premiums earned, gross and any decision we make to adjust our reinsurance agreements.
Insurance net medical claims incurred
Insurance net medical claims incurred are our medical expenses and consist of the costs of claims, including the costs incurred for claims net of amounts ceded to reinsurers. We enter into reinsurance contracts to limit our exposure to potential catastrophic losses. These expenses generally vary based on the total number of members and their utilization rate of our services.
Non-GAAP Financial Measures
We use non-GAAP measures in this Form 10-Q, including Consolidated Gross profit, Adjusted SG&A, Adjusted EBITDA, and Adjusted Net income from operations, and Insurance Benefits expense ratio ("BER"). These non-GAAP financial measures are provided to enhance the reader's understanding of Clover Health's past financial performance and our prospects for the future. Clover Health's management team uses these non-GAAP financial measures in assessing Clover Health's performance, as well as in planning and forecasting future periods. These non-GAAP financial measures are not computed according to GAAP, and the methods we use to compute them may differ from the methods used by other companies. Non-GAAP financial measures are supplemental to and should not be considered a substitute for financial information presented in accordance with GAAP and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.
For a description of these non-GAAP financial measures, including the reasons management uses such measures, and the reconciliations of these non-GAAP financial measures to the comparable GAAP measures, please see "Consolidated Gross profit", "Adjusted SG&A", "Adjusted EBITDA", "Adjusted Net income", and "Benefits expense ratio" below.
Consolidated Gross profit
Consolidated Gross profit represents net income (loss) before salaries and benefits, general and administrative expenses, depreciation and amortization, premium deficiency reserve expense, restructuring costs, impairment of goodwill and other intangible assets, interest expense, change in fair value of warrants, and loss on investment. We believe that Consolidated Gross profit provides management, investors, and others a useful view of consolidated business performance and is much more informative of operational results. Accordingly, we believe that Consolidated Gross profit provides investors and others useful information to understand and evaluate our operating results in the same manner as our management and our board of directors.
Three Months Ended
June 30, 		Six Months Ended
June 30,
2026 2025 2026 2025
(in thousands)
Net income (loss) (GAAP): $ 28,001 $ (10,578) $ 55,335 $ (11,852)
Adjustments:
Salaries and benefits 54,138 61,309 111,201 120,331
General and administrative expenses 70,299 48,484 144,928 99,159
Depreciation and amortization 564 394 1,079 860
Change in fair value of warrants - 19 - 19
Consolidated Gross profit (non-GAAP) $ 153,002 $ 99,628 $ 312,543 $ 208,517
Adjusted SG&A
Adjusted Salaries and benefits plus General and Administrative expenses ("SG&A") is a non-GAAP financial measure defined by us as total SG&A less stock-based compensation and non-recurring legal expenses and settlements. We believe that Adjusted SG&A provides management, investors, and others a useful view of our operating spend as it excludes non-cash, stock-based compensation and expenses related to investments that management believes do not reflect the Company's core operating expenses. We believe that Adjusted SG&A as a percentage of Total revenues is useful to management, investors, and others because it allows us to measure our operational leverage as revenue scales.
The table below provides a reconciliation of Total SG&A, a GAAP financial measure, to Adjusted SG&A, a non-GAAP measure:
Three Months Ended
June 30, 		Six Months Ended
June 30,
2026 2025 2026 2025
(in thousands)
Salaries and benefits $ 54,138 $ 61,309 $ 111,201 $ 120,331
General and administrative expenses 70,299 48,484 144,928 99,159
Total SG&A (GAAP) 124,437 109,793 256,129 219,490
Adjustments:
Stock-based compensation (9,084) (26,195) (21,355) (52,632)
Non-recurring legal expenses and settlements (3,267) (1,105) (3,404) (1,258)
Adjusted SG&A (non-GAAP) $ 112,086 $ 82,493 $ 231,370 $ 165,600
Total revenues (GAAP) $ 743,167 $ 477,620 $ 1,492,356 $ 939,951
Adjusted SG&A (non-GAAP) as a percentage of Total revenues 15.1 % 17.3 % 15.5 % 17.6 %
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure defined by us as net income (loss) before depreciation and amortization, loss on investment, interest expense, change in fair value of warrants, stock-based compensation, premium deficiency reserve expense, restructuring (recoveries) costs, impairment of goodwill and other intangible assets, and non-recurring legal expenses and settlements. Adjusted EBITDA is a key measure used by our management team and the board of directors to understand and evaluate our operating performance and trends, to prepare and approve our annual budget and to develop short and long-term operating plans. In particular, we believe that the exclusion of the amounts eliminated in calculating Adjusted EBITDA provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA provides investors and others useful information to understand and evaluate our operating results in the same manner as our management and our board of directors.
The table below provides a reconciliation of Net income (loss), a GAAP financial measure, to Adjusted EBITDA, a non-GAAP financial measure:
Three Months Ended
June 30, 		Six Months Ended
June 30,
2026 2025 2026 2025
(in thousands)
Net income (loss) (GAAP): $ 28,001 $ (10,578) $ 55,335 $ (11,852)
Adjustments:
Depreciation and amortization 564 394 1,079 860
Change in fair value of warrants - 19 - 19
Stock-based compensation 9,084 26,195 21,355 52,632
Non-recurring legal expenses and settlements 3,267 1,105 3,404 1,258
Adjusted EBITDA (non-GAAP) $ 40,916 $ 17,135 $ 81,173 $ 42,917
Adjusted Net income
Adjusted Net income is a non-GAAP financial measure defined by us as net income (loss) before stock-based compensation, premium deficiency reserve benefit, restructuring costs, non-recurring legal expenses and settlement, and impairment of goodwill and other intangible assets. Adjusted Net income is a key measure used by our management team and the board of directors to understand and evaluate our operating performance and trends. We believe that Adjusted Net income is helpful to investors in assessing the Company's financial performance in the same manner as our management and our board of directors.
Three Months Ended
June 30, 		Six Months Ended
June 30,
2026 2025 2026 2025
(in thousands)
Net income (loss) (GAAP): $ 28,001 $ (10,578) $ 55,335 $ (11,852)
Adjustments:
Stock-based compensation 9,084 26,195 21,355 52,632
Non-recurring legal expenses and settlements 3,267 1,105 3,404 1,258
Adjusted Net income (non-GAAP) $ 40,352 $ 16,722 $ 80,094 $ 42,038
Insurance Benefits Expense Ratio
Insurance Benefits Expense Ratio ("BER") is a non-GAAP financial measure. We calculate our BER by taking the total of Insurance net medical expenses incurred and quality improvements, and dividing that total by premiums earned on a net basis, in a given period. Quality improvements include expenses associated with activities that improve health outcomes, as defined by the U.S. Department of Health and Human Services ("HHS"), as well as those directly tied to enhancing healthcare quality, such as the Company's spend on health information technology, wellness and prevention programs, initiatives to reduce hospital readmissions, and our clinically focused Member Rewards program for the current year. We believe our BER is useful to management, investors, and others because it offers a clearer and more accurate representation of our investment in healthcare quality and member engagement, and gives a comprehensive view of costs related to maintaining and improving the quality of care of our members, which is crucial for sustaining member satisfaction and adherence to treatment regimens. The Company has discontinued disclosure of Normalized Insurance Benefits Expense Ratio ("Normalized BER") beginning in the first quarter of 2026, as management no longer uses this metric to evaluate operating performance or allocate resources. The Company will continue to present Insurance Benefits Expense Ratio.
The tables below provide reconciliations of Insurance Net medical claims incurred, net and Premiums earned, net which are GAAP measures, to Insurance BER, which represents a non-GAAP measure.
Three Months Ended
June 30, 		Six Months Ended
June 30,
2026 2025 2026 2025
(in thousands)
Insurance Net medical claims incurred, net (GAAP) $ 615,422 $ 394,212 $ 1,225,423 $ 762,100
Adjustments:
Quality improvements 30,636 21,191 64,683 46,903
Insurance Benefits Expense (non-GAAP) $ 646,058 $ 415,403 $ 1,290,106 $ 809,003
Premiums earned, net (GAAP) $ 737,767 $ 469,826 $ 1,481,956 $ 926,732
Insurance Benefits Expense Ratio (non-GAAP) 87.6 % 88.4 % 87.1 % 87.3 %
Results of Operations
Comparison of the Three Months Ended June 30, 2026 and 2025
The following table summarizes our condensed consolidated results of operations for the three months ended June 30, 2026 and 2025. The period-to-period comparison of results is not necessarily indicative of results for future periods.
Three Months Ended
June 30,
Change Between 2026 and 2025
2026 2025 ($) (%)
(in thousands)
Revenues
Premiums earned, net (Net of ceded premiums of $91 and $96 for the three months ended June 30, 2026 and 2025, respectively)
$ 737,767 $ 469,826 $ 267,941 57.0 %
Other income
5,400 7,794 (2,394) (30.7)
Total revenues 743,167 477,620 265,547 55.6
Operating expenses
Net medical claims incurred 590,165 377,992 212,173 56.1
Salaries and benefits
54,138 61,309 (7,171) (11.7)
General and administrative expenses 70,299 48,484 21,815 45.0
Depreciation and amortization 564 394 170 43.1
Total operating expenses 715,166 488,179 226,987 46.5
Income (loss) from operations 28,001 (10,559) 38,560 *
Change in fair value of warrants
- 19 (19) *
Net income (loss) $ 28,001 $ (10,578) $ 38,579 *
* Not presented because the current or prior period amount is zero or the amount for the line item changed from a gain to a loss (or vice versa) and thus yields a result that is not meaningful.
Premiums earned, net
Premiums earned, net increased $267.9 million, or 57%, to $737.8 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase was primarily driven by growth in our average membership over the period, which increased approximately 49%, together with an approximately 6% increase in per-member premium. The higher per-member premium reflected higher CMS premium rates, including the effect of being paid on 4.0 Stars in the current payment year compared to 3.5 Stars in the prior period for our PPO plans, which cover the large majority of our members.
Other income
Other income decreased by $2.4 million, or 31%, to $5.4 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The decrease was primarily driven by the absence in 2026 of a non-recurring gain recognized in the prior-year period from the fair value remeasurement of an equity investment in a privately held company, and by lower investment income resulting from a lower interest rate environment, to which our returns are closely correlated given the short-duration nature of our investment portfolio.
Net medical claims incurred
Net medical claims incurred increased $212.2 million, or 56%, to $590.2 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase was primarily driven by growth in our average membership during the period, which increased approximately 49%, together with higher per-member medical costs. On a per-member basis, net medical claims incurred increased approximately 5% to $1,254 from $1,194, driven by the current-year benefit design and general medical cost trends.
Salaries and benefits
Salaries and benefits decreased by $7.2 million, or 12%, to $54.1 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The decrease was driven primarily by lower stock-based compensation expense, reflecting the completion in January 2026 of the requisite service period for certain founder equity awards granted in 2021, partially offset by higher cash compensation, including base salaries associated with increased headcount to support our membership growth.
General and administrative expenses
General and administrative expenses increased $21.8 million, or 45%, to $70.3 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase was primarily driven by higher administrative costs to support the growth in our membership, including higher professional fees, broker commissions, and other operating expenses.
Comparison of the Six Months Ended June 30, 2026 and 2025
The following table summarizes our condensed consolidated results of operations for the six months ended June 30, 2026 and 2025. The period-to-period comparison of results is not necessarily indicative of results for future periods.
Six Months Ended
June 30,
Change Between 2026 and 2025
2026 2025 ($) (%)
(in thousands)
Revenues
Premiums earned, net (Net of ceded premiums of $183 and $192 for the six months ended June 30, 2026 and 2025, respectively)
$ 1,481,956 $ 926,732 $ 555,224 59.9 %
Other income
10,400 13,219 (2,819) (21.3)
Total revenues 1,492,356 939,951 552,405 58.8
Operating expenses
Net medical claims incurred 1,179,813 731,434 448,379 61.3
Salaries and benefits
111,201 120,331 (9,130) (7.6)
General and administrative expenses 144,928 99,159 45,769 46.2
Depreciation and amortization 1,079 860 219 25.5
Total operating expenses 1,437,021 951,784 485,237 51.0
Income (loss) from operations 55,335 (11,833) 67,168 *
Change in fair value of warrants
- 19 (19) *
Net income (loss) $ 55,335 $ (11,852) $ 67,187 *
* Not presented because the current or prior period amount is zero or the amount for the line item changed from a gain to a loss (or vice versa) and thus yields a result that is not meaningful.
Premiums earned, net
Premiums earned, net increased $555.2 million, or 60%, to $1,482.0 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase was primarily driven by growth in our average membership over the period, which increased approximately 50%, together with an approximately 7% increase in per-member premium. The higher per-member premium reflected higher CMS premium rates, including the effect of being paid on 4.0 Stars in the current payment year compared to 3.5 Stars in the prior period for our PPO plans, which cover the large majority of our members.
Other income
Other income decreased by $2.8 million, or 21%, to $10.4 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The decrease was primarily driven by the absence in 2026 of a non-recurring gain recognized in the prior-year period from the fair value remeasurement of an equity investment in a privately held company, and by lower investment income resulting from a lower interest rate environment, to which our returns are closely correlated given the short-duration nature of our investment portfolio.
Net medical claims incurred
Net medical claims incurred increased $448.4 million, or 61%, to $1,179.8 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase was primarily driven by growth in our average members during the period, which increased approximately 50%, together with higher per-member medical costs. On a per-member basis, net medical claims incurred increased approximately 7% to $1,263 from $1,175, driven by the current-year benefit design and general medical cost trends.
Salaries and benefits
Salaries and benefits decreased by $9.1 million, or 8%, to $111.2 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. This decrease was primarily driven by lower stock-based compensation expense, reflecting the completion in January 2026 of the requisite service period for certain founder equity awards granted in 2021, partially offset by higher cash compensation, including base salaries associated with increased headcount to support our membership growth.
General and administrative expenses
General and administrative expenses increased $45.8 million, or 46%, to $144.9 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase was primarily driven by higher administrative costs to support the growth in our membership, including higher professional fees, broker commissions, and other operating expenses.
Liquidity and Capital Resources
We manage our liquidity and financial position in the context of our overall business strategy. We continually forecast and manage our cash, investments, working capital balances, and capital structure to meet the short-term and long-term obligations of our businesses while seeking to maintain liquidity and financial flexibility.
Historically, we have financed our operations primarily from the proceeds we received through premiums earned under our MA plans. We expect that our cash, cash equivalents, investments, and our current projections of cash flows, taken together, will be sufficient to meet our projected operating and regulatory requirements for the next 12 months based on our current plans. Our future capital requirements will depend on many factors, including our needs to support our business growth, to respond to business opportunities, challenges or unforeseen circumstances, or for other reasons. We may be required to seek additional equity or debt financing to provide the capital required to maintain or expand our operations. Any future equity financing may be dilutive to our existing investors, and any future debt financing may include debt service requirements and financial and other restrictive covenants that may constrain our operations and growth strategies. If additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us, or at all. If we are unable to raise additional capital when desired, our business, results of operations, and financial condition would be adversely affected.
Consolidated Entities
Our cash equivalents and investment securities consist primarily of money market funds, U.S. government debt securities, and corporate debt securities. At June 30, 2026 and December 31, 2025, total cash, cash equivalents, and investments were $443.0 million and $319.9 million, respectively. These totals consist of $241.7 million and $224.6 million at June 30, 2026 and December 31, 2025, respectively, that specifically relate to available-for-sale and held-to-maturity investment securities.
Unregulated Entities
At June 30, 2026 and December 31, 2025, total cash, cash equivalents, and investments for the parent company, Clover Health Investments, Corp., and unregulated subsidiaries were $128.5 million and $122.0 million, respectively. We operate as a holding company in a highly regulated industry. As such, we may receive dividends and administrative expense reimbursements from our subsidiaries, two of which are subject to regulatory restrictions. We continue to maintain significant levels of aggregate excess statutory capital and surplus in our state-regulated insurance subsidiaries.
Regulated Entities
At June 30, 2026 and December 31, 2025, total cash, cash equivalents, and investments for our regulated subsidiaries were $314.5 million and $197.9 million, respectively. Additionally, our regulated insurance subsidiaries held $177.4 million and $178.1 million of available-for-sale and held-to-maturity investment securities at June 30, 2026 and December 31, 2025, respectively. Our use of operating cash derived from our unregulated subsidiaries is generally not restricted by departments of insurance (or comparable state regulatory agencies). Our regulated insurance subsidiaries are subject to regulations and standards in their respective jurisdictions on their ability to declare and pay dividends to the parent. As of June 30, 2026, there have been no dividends paid to the parent. Insurance regulators have broad powers to prevent reduction of statutory surplus to inadequate levels, and there is no assurance that dividends of the maximum amounts calculated under any applicable formula would be permitted. State insurance regulatory authorities that have jurisdiction over the payment of dividends by our regulated insurance subsidiary may in the future adopt statutory provisions more restrictive than those currently in effect.
For a detailed discussion of our regulatory requirements, including aggregate statutory capital and surplus as well as dividends paid from the subsidiaries to the parent, please refer to Notes 20 "Dividend Restrictions", 21 "Statutory Equity", and 22 "Regulatory Matters" in the 2025 Form 10-K.
Cash Flows
The following table summarizes our condensed consolidated cash flows for the six months ended June 30, 2026 and 2025.
Six Months Ended June 30,
2026 2025
(in thousands)
Cash Flows Data:
Net cash provided by (used in) operating activities
$ 133,083 $ (10,885)
Net cash (used in) provided by investing activities
(5,100) 44,496
Net cash used in financing activities
(7,447) (39,506)
Increase (decrease) in cash and cash equivalents
$ 120,536 $ (5,895)
Cash Requirements
Our cash requirements within the next twelve months include medical claims payable, accounts payable and accrued liabilities, current liabilities, purchase commitments, and other obligations. We expect the cash required to meet these obligations to be primarily generated through cash, cash equivalents, short-term investments, and our current projections of cash flows from operations.
Operating Activities
Our largest source of operating cash flows is capitated payments from CMS. Our primary uses of cash from operating activities are payments for medical benefits and payments of operating expenses.
For the six months ended June 30, 2026, Net cash provided by operating activities was $133.1 million, which reflects Net income of $55.3 million. The changes in operating assets and liabilities were largely attributable to a $97.6 million increase in Unpaid claims. Non-cash activities primarily included a $21.4 million charge to Stock-based compensation.
For the six months ended June 30, 2025, Net cash used in operating activities was $10.9 million, which reflects a Net loss of $11.9 million. Non-cash activities primarily included a $52.6 million charge to Stock-based compensation expense.
Investing Activities
Net cash used in investing activities for the six months ended June 30, 2026 of $5.1 million was primarily due to $68.1 million used to purchase investments. This was largely attributable to $64.5 million provided from the sales and maturities of investment securities.
Net cash provided by investing activities for the six months ended June 30, 2025 of $44.5 million was primarily due to $105.1 million provided from the sales and maturities of investment securities. This was partially offset by $59.9 million used to purchase investments.
For additional information regarding our investing activities, please refer to Note 3 "Investment Securities" to our condensed consolidated financial statements included in this Form 10-Q.
Financing Activities
Net cash used in financing activities for the six months ended June 30, 2026 of $7.4 million was primarily the result of cash paid for shares withheld related to stock-based compensation totaling $9.7 million.
Net cash used in financing activities for the six months ended June 30, 2025 of $39.5 million was primarily the result of cash paid for shares withheld related to stock-based compensation totaling $22.1 million in addition to repurchases of our Class A common stock totaling $18.3 million.
Financing Arrangements
There have been no material changes to our financing arrangements at June 30, 2026.
Contractual Obligations and Commitments
We believe that funds from projected future operating cash flows, cash, cash equivalents, and investments will be sufficient for future operations and commitments, and for capital acquisitions and other strategic transactions, over at least the next 12 months.
Material cash requirements from known contractual obligations and commitments at June 30, 2026 include operating lease obligations of $3.6 million. These commitments are associated with contracts that were enforceable and legally binding at June 30, 2026, and that specified all significant terms, including fixed or minimum services to be used, fixed, minimum, or variable price provisions, and the approximate timing of the actions under the contracts. There were no other material cash requirements from known contractual obligations and commitments at June 30, 2026. For additional information regarding our remaining estimated contractual obligations and commitments, see Note 12 "Commitments and Contingencies" in the accompanying notes to the condensed consolidated financial statements included in this Form 10-Q.
Indemnification Agreements
In the ordinary course of business, we enter into agreements, with various parties (providers, vendors, consultants, etc.), with varying scope and terms, pursuant to which we may agree to defend, indemnify, and hold harmless the other parties from any claim, demand, loss, lawsuit, settlement, judgment, fine, or other liability, and all related expenses that may accrue therefrom (including reasonable attorneys' fees), arising from or in connection with third party claims, including, but not limited to, negligence, recklessness, willful misconduct, fraud, or otherwise wrongful act or omission with respect to our obligations under the applicable agreements.
Off-balance Sheet Arrangements
We do not have any off-balance sheet arrangements, as defined by applicable regulations of the SEC, that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources.
Critical Accounting Policies and Estimates
We believe that the accounting policies and estimates involve a significant degree of judgment and complexity. There have been no significant changes in our critical accounting policies and estimates during the three months ended June 30, 2026, as compared to the critical accounting policies and estimates disclosed in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the 2025 Form 10-K.
Recently Issued and Adopted Accounting Pronouncements
See Note 2 "Summary of Significant Accounting Policies" in the accompanying notes to the consolidated financial statements included in this Form 10-Q for a discussion of accounting pronouncements recently adopted and recently issued accounting pronouncements not yet adopted and their potential impact to our consolidated financial statements.
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