Clover Health Prices Class A Common Stock Offering Worth $300M

Clover Health Investments (CLOV) has priced a previously announced underwritten public offering of 52.17 million shares of its Class A common stock at $5.75 per share. The total gross proceeds from the offering, excluding related expenses, are expected to be $300 million.

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Shares of the next-generation healthcare company rose 4.8% in the extended trading session on Thursday after closing 12.8% lower on the day.

Details of the Offering

Along with the offering, Clover Health has granted underwriters a 30-day option to purchase up to 7.83 million additional shares of the common stock at the same price, excluding the underwriting discounts and commissions.

The offering is likely to conclude on or around November 22, 2021.

The company intends to use the proceeds as working capital and for general corporate purposes. Notably, Citigroup (C) and Deutsche Bank (DB) Securities are serving as joint book-running managers for the offering.

Earnings Snapshot

Recently, Clover Health posted upbeat revenues for the third quarter of 2021. Total revenues of $427.2 million surpassed analysts’ expectations of $417.8 million and more than doubled on a year-over-year basis. The company recorded a normalized Medicare Advantage (MA) Medical Care Ratio (MCR) of 94.8%, compared to 96.4% in the same quarter last year. (See Clover Health stock charts on TipRanks)

For 2021, the company projects total revenues to be in the range of $1.42 billion to $1.47 billion. Normalized MA MCR is expected to be in the range of 94% to 96%. Additionally, normalized adjusted EBITDA loss is forecast to be between $250 million and $230 million.

Wall Street’s Take

Recently, a Credit Suisse analyst maintained a Hold rating and a price target of $9 (60.43% upside potential) on the stock.

In September, Cowen & Co. analyst Gary Taylor initiated coverage on the stock with a Sell rating and a price target of $7 (24.78% upside potential).

Taylor is skeptical regarding the company’s core business thesis that its Clover Assistant and the unmanaged FFS physician practices will result in best-in-class care management and per-capita medical costs.

Overall, the Street is bearish on the stock and has a Moderate Sell consensus rating based on 2 Holds and 1 Sell. The average Clover Health price target of $8.67 implies 54.55% upside potential to current levels. Shares have decreased 43.8% over the past year.

Risk Analysis

According to the new TipRanks’ Risk Factors tool, the Clover Health stock is at risk mainly from two factors: Finance and Corporate, and Legal and Regulatory, which contribute 49% and 14%, respectively, to the total 65 risks identified for the stock.