© Reuters. Clover Health (CLOV) Stock Erupts 14% on Smaller-than-expected Loss, Analyst Sees ‘Clean Quarter’

Shares of Clover Health (NASDAQ:) are up more than 14% in premarket trading Tuesday after the company reported better-than-expected Q1 revenue.

CLOV reported of $874.4 million, while analysts were looking for $790.3 million. Net loss totaled $75.3 million in the period. CLOV reported an adjusted EBITDA loss of $71.8 million, compared to the expected loss of $112.1 million.

For the full fiscal year, Clover Health expects revenue in the range of $3 billion to 3.4 billion, compared to the consensus estimates of $3.24 billion.

“2022 is off to a strong start, led by significant year-over-year revenue growth and quarter-over-quarter margin improvements in insurance (medicare advantage) and non-insurance (direct contracting),” said Clover Health CEO Vivek Garipalli.

Bank of America analyst Kevin Fischbeck reiterated an Underperform rating on CLOV stock but said results demonstrated “a first step to restoring confidence.”

“The focus is shifting to going deeper in existing markets, where growth is likely slower but the path to profitability is clearer. Overall, Q1 showed progress and is a good first step towards restoring confidence in the trajectory, but similar to CLOV’s own outlook we remain cautious until the outperformance is sustained throughout the year,” Fischbeck said in a client note.

Cowen analyst Gary Taylor reiterated a Market Perform rating and a $3.00 per share price target. The analyst still expects CLOV to raise equity capital this year.

“We are skeptical regarding CLOV’s core business thesis; that overlaying Clover Assistant (CA) on top of unmanaged FFS physician practices will yield best-in-class care management and per-capita medical costs. The company’s MA business risks all on this thesis. Further, CLOV is quadrupling its total actuarial risk profile by 2022 via participation in CMS’ new and untested Direct Contracting (DC) program,” Taylor wrote in a memo.

By Senad Karaahmetovic

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