Clover Health Seeks to Join Billion-Dollar Club

March 16, 2017

PUBLISHED BY Yuliya Chernova

SOURCE Wall Street Journal Pro

Health-insurance startup Clover Health is raising about $120 million in new capital at a valuation of more than $1 billion, according to a person familiar with the situation.

Clover Health aims to become what it calls “the largest health-care company in the U.S.,” according to a pitch deck seen by WSJ Pro Venture Capital. For now, the Jersey City, N.J., startup provides Medicare Advantage plans to seniors in New Jersey.

Clover Health is one of a few startups ambitious enough to launch their own insurance business, a highly regulated sector that requires large capital outlays.

Its focus is on using data to provide better management of chronic conditions and reducing emergency-room visits and other high-cost hospitalizations.
One of its main backers, Greenoaks Capital Management, is planning to lead the new round, the person said. Greenoaks also led Clover’s $160 million financing in 2016 at a post-money valuation of $820 million valuation, according an estimate by PitchBook Data Inc. Sequoia Capital led its Series B and First Round Capital was the lead in its Series A.
Clover Health representatives didn’t respond to requests for comment.
As of January, Clover Health was serving about 25,550 members, up from 15,968 a year ago, according to its pitch deck. Its run-rate revenue also increased to $275 million from $169 million in the same period.

Unlike Oscar Insurance Corp., however, which offers health plans for the individual health-care marketplace, Clover Health sells plans to seniors. Under the Medicare Advantage program, private plans receive federal government payments partially covering each enrollee. The government pays about $11,000 apiece per member on average, according to Clover. The government pays more for sicker patients, helping to keep insurer and patient incentives aligned.

Last year about 17.6 million people were covered by a Medicare Advantage plan, up from 5.3 million in 2004, according to data from the Kaiser Family Foundation.

Other investors in the company include Arena Ventures, Wildcat Ventures, AME Cloud Ventures, Casdin Capital, Floodgate, Nexus Ventures, Refactor Capital, and Spark Capital.

Read the full article on WSJ here.