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Jul 8, 2021
[3 min Read]
This will be a long one. I, being the retard and masochist that I am, read the ENTIRE 10-K for you filthy degenerates to get a better grasp of the actual fundamental value of CLOV - not some random price someone pulled out of their ass and decided to throw at you
Let's start with their market.
· Over 60 million Americans were enrolled in Medicare in 2020.
· The company believes this number will continue to rise and equate to $1 trillion in expenses by 2025.
· The Medicare Advantage market (the market CLOV operates in), made up about $270 Billion of annual spend in 2020 and is expected to grow to $590 billion by 2025.
· At the time of them writing this 10K, they operated in 108 counties across 7 states - this represents 4.3 million available Medicare-eligible beneficiaries.
o As we all know, they just announced they will be expanding into another 101 counties. To get a rough estimate of the new number available Medicare-eligible beneficiaries, let's assume each county represents 39,815 of them (4.3M/108 counties). That would get you to a total of approx. 8.321M Medicare-Eligible beneficiaries after the announced expansion.
o They also plan to expand beyond Medicare Advantage - explaining how they will do this is beyond the scope of this post.
We've all probably heard about Clover Assistant by now, but who actually knows what the fuck it is? I for sure didn't before I read the 10-K, so let me break it down for you.
· At a high level, Clover Assistant is a machine learning AI. Every day, it sucks up claims data, medical charts, medication data, diagnostic data, and electronic health records data into its black box and spits out rich insights that doctors can use to make better decisions at the point of care.
· On top of that, Clover Assistant is also the portal through which all administrative tasks are done on the physician side (and through which they get paid). Way less headaches. There is some other cool stuff that it does, but you can read that portion of the 10-K if you want.
Since their entire business is structured on software, they can scale rapidly and into any market in the states, provided Clover Assistant is adopted by physicians. Additionally, being asset-light they can shovel a lot of that money they generate into plan benefits (as we have already seen with the Walmart grocery news).
In terms of risk factors, there are the obvious ones - it's a growth stock and currently neither profitable or cash flow positive - and it is heavily reliant on adoption of Clover Assistant - and since the vast majority of the revenue the company currently generates is from premiums, it needs a strong sales force (which costs money). I skip a lot here. It's kind of funny, the vast majority of their 10-K is the risk factors section, think of that what you will.
The rest of the 10-K doesn't really give you any info. I use the most recent 10-Q for the next part.
As others have said in their own posts, Medicare Advantage membership was 66,300 in Q1, with this number we can derive incremental revenue per member (200M Rev in Q1/ 66.3k Members = 3k per quarter or 12K per year). Their total lives under management are now over 130,000 with the new Direct Contracting Entity (expect a small bump in maybe Q2 or Q3 rev they don't give a timeline on how this will roll out and it doesn't generate nearly as much revenue as MA).
Guidance for the year is 17% growth in MA members so 66300*.17 = 11,271*12,000 = 135.2M incremental revenue generated. They're generating this kind of incremental on .007% market share. Yes, you read that right. .007% market share. This thing can be a money printer if scaled effectively.
In short, CLOV to andromeda.
POS: 1.9K shares and adding.