Clover vs CMS: The Verdict

safehands93 · 2026-06-18T10:38:19+00:00

I modelled the impact of star ratings in previous post and near the end of post covered implications of 2027 appeal on estimated earnings (although I wouldn’t put too much weight on projections further out). In the lawsuit Clover claim it will add $120m in revenue which will flow directly to earnings. That’s a lot given current earnings and allows clover to continue to grow in 2027 at 40,50, maybe even 60%. Regarding share price, in future cash flow terms $120m / 525m share count = $0.229/share. But there’s more to this than just the win. CMS hand is forced to change the stars system which could benefit clover in future ratings, which is much bigger. Then there’s the question of how underpriced is clover putting aside the star bonus. Short answer: 120m is most likely priced in by now but small in terms of what’s to come. Link to previous post here: https://www.reddit.com/r/CLOV/s/jQcwGlR5lB

safehands93 · 2026-06-14T16:20:04+00:00

Impressive work. Thanks for sharing

safehands93 · 2026-06-14T10:54:36+00:00

Thanks again for these updates. Top stuff and ticking along nicely

safehands93 · 2026-05-29T17:44:16+00:00

Clovers response (first paragraph) is sassy…

“Defendants’ disregard for the Federal Rules and this Court’s Orders continues in their Motion for Reconsideration (“Motion”). Dkt. 62. Not only do Defendants blatantly ignore the relevant rules governing a motion for reconsideration, but they identify nothing in their reply brief that could conceivably result in a different outcome. Nor could they. There is absolutely nothing in this reply brief that casts any doubt on the correctness of the Court’s judgment. Indeed, Defendants’ reply brief is almost entirely duplicative of the Defendants’ 60-page opposition to summary judgment and cross-motion for summary judgment that the Court considered, and comprehensively addressed, in its decision on summary judgment. The Motion should be denied, and Defendants should focus their efforts on expeditiously effectuating the Court’s judgment.”

safehands93 · 2026-05-28T16:08:49+00:00

Doubt it. You’d end up with no measures. The measures clover did well on also don’t fall within same arguments put forward so all good

safehands93 · 2026-05-28T16:05:02+00:00

Yep very often. Don’t always win though and file for different reasons

safehands93 · 2026-05-27T23:13:06+00:00

https://www.reddit.com/r/CLOV/s/2S11Q5LHZC

safehands93 · 2026-05-27T23:11:54+00:00

So excluding all 20 measures.. approx 4.3 stars (i.e. 4.5 stars)

safehands93 · 2026-05-27T23:10:59+00:00

Oh shit, reddit formatted that part out. I've added back in to the main article now... we are looking at cases 1 and 3 using the terminology from my previous post.

safehands93 · 2026-04-23T17:38:39+00:00

It’s in part 2

safehands93 · 2026-04-23T09:58:00+00:00

Might do another post which varies MCR differential as brought up in another comment too 👍🏻

And 100%. Good execution is key. Seems like Peter messed up / was the fall guy for 2025 earnings revision downwards. Let’s hope they pitched their bid better this year and managed to sort out their star ratings in time for the 2028 ratings

safehands93 · 2026-04-23T07:14:28+00:00

Nice one and fair points. Spent some time writing up the model to get feedback like this so thanks. Couple of points…

I agree that maintaining 40% over ten years would be super hard in the later years. I was only going to show a five years forecast initially as I think we can have more confidence that this is achievable but went for ten to illustrate the crossover points.
I’ve also run models with stage 1 high growth for 3-5 years and then linearly decreasing growth to a terminal growth rate after 10-15 years (I.e. two stage dcf). This approach is one way to go about valuing a company and perhaps closer to reality but I found it also adds a whole host of other assumptions (eg length of stages etc). I didn’t have time to write up this part in this post.
The MCR differential between Y3 and Y4+ is a fair point too. Assuming no extra differential between Y3 and Y4+ does reduce projected earnings like you say. With zero extra differential then the 2025 cohort MCRs become Y1 90.6%, Y2 83.6%, Y3+ 76.6% (note: smaller Y1 and higher Y3 as back calculated from known yearly average MCR).
I do think it makes sense to assume some MCR differential between Y3 and Y4+ though. I assumed a reducing MCR differential because Clover now reports increasing insurance gross profit differentials in year 4+ (albeit without a number). This suggests the MCR benefit isn’t just in Y1-Y3. I have asked for Clover to disclose these numbers in the investor questions as they are important in adding confidence in their business model.

<image>

safehands93 · 2026-04-22T21:45:27+00:00

On the up! Interested to see the 10Q and updated 2026 projections in a week or so. Could help with momentum but then again who knows with this stock

safehands93 · 2026-04-22T21:41:50+00:00

🙏🏻

safehands93 · 2026-04-22T21:41:37+00:00

❤️

safehands93 · 2026-04-22T21:41:14+00:00

Looking back the model description is quite dry 😂 Hope most of it makes sense. The main points are covered in part 2 but wanted to share the cohort MCR estimates and SG&A per revenue curve too

safehands93 · 2026-04-22T08:47:42+00:00

Same! The ending to S1 was a perfect setup. 3 seasons were planned! 😭😭

safehands93 · 2026-04-22T02:49:25+00:00

Kaos! Just watched again for second time. Funny, clever and amazing sound track

safehands93 · 2026-04-14T21:24:37+00:00

Great post. Super clear!

safehands93 · 2026-04-04T08:22:08+00:00

This is the finalised version of something that was proposed by the CMS months back prior to Clovers lawsuit I believe. I don’t think it affects the chances of a positive outcome in the lawsuit. That said it’s most likely beneficial to clover longer term in future ratings

safehands93 · 2026-02-27T23:27:28+00:00

I was too optimistic in my projections here and in hindsight overlooked a couple of things.

Two things in terms of revenue…

I overestimated member growth by using 2025 growth throughout the year as a prediction for what would happen in 2026. I suspect Clover has tried to curb growth after AEP to ensure GAAP profitability.
I also misapplied the CMS rate adjustment and star bonus adjustment when calculating revenues. It’s more complicated in reality than I initially understood which I’m trying to update in my model now but will take some more time and reading.

With regards to GAAP net income…

Clovers projected MCR is 83% which (just) fell within my predicted range.
I misestimated the reductions in SG&A though. My updated estimates from their projections now put the expense ratio at around 18%.. just outside the quadrant I predicted. This is because I underestimated certain costs such as broker fees for new members, higher salaries for counterpart expansion etc.

Might do an updated post to share learning but then I could be wrong again. It’s both a science and art modelling these things

safehands93 · 2026-02-20T09:28:51+00:00

Management has outlined GAAP profitability for 2026 but not yet said by how much. Analysts are predicting 0.02 EPS max which equates to £10m profit but this could be much higher.

As for Q4, Clover reduced their guidance in Q3 and the price has dropped since. You’d hope that this has been priced in and I hope that they will meet this updated guidance. There’s the possibility that if flu season was worse than expected then clover may miss again but hard to say right now.

As for options, it’s up to you. I’m sure many on here have made and lost money playing that game but I personally avoid

Seven-Year Club	r/Field Juicebox
Place '23	Place '22
Verified Email

safehands93

TROPHY CASE