Clover Health Investments (CLOV) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01We have incurred net losses in the past, and we may not be able to achieve or maintain profitability in the future31% rewritten
2. 02Our long-term success depends on maintaining and continuing to improve CA, and the expansion of CA to external partners, as such, our past results may not be indicative of future performance24% rewritten
3. 03Our launch of Counterpart Assistant as a Software-as-a-Service (“SaaS”) product for external payors and providers serving the Medicare eligible population may not be successful, and, as a result, our business may be adversely affected
4. 04If adoption and use of Clover Assistant is lower than we expect, our growth may slow or stall. We may experience a decline in our lives under Clover management, and our results of operations could be adversely affected
5. 05If we fail to estimate, price for and manage medical expenses in an effective manner, the profitability of our business could decline, which could materially and adversely affect our results of operations, financial condition, and cash flows
6. 06CMS's risk adjustment payment system makes our revenues and profitability difficult to predict and could result in material retroactive adjustments to our results of operations
7. 07We may require additional capital to support business growth, and this capital might not be available on acceptable terms, or at all
8. 08If we are unable to succeed in maintaining or expanding the number of members under our MA plans, our business, financial condition, and results of operations could be harmed
9. 09As a result, there can be no assurance that we will be able to increase our number of lives under Clover management or provide assurance regarding the extent to which we will be able to achieve beneficiary growthNew
10. 10Our members remain concentrated in certain geographic areas and populations, which exposes us to unfavorable changes in local benefit costs, reimbursement rates, competition, and economic conditions
11. 11Our results of operations may be adversely affected if we are unable to grow our provider networks or contract with providers, medical facilities, and other entities on competitive terms
12. 12We may be unable to effectively manage our growth, which could have a material adverse effect on our business, financial condition, and results of operations
13. 13We operate in a competitive industry, and if we are not able to compete effectively, our business, financial condition, and results of operations will be harmed21% rewritten
14. 14We compete with larger companies that may have stronger brands, and consolidation among competitors would increase competition
15. 15Our failure to estimate incurred but not reported claims accurately would affect our results of operations
16. 16Estimating and accounting for Medicare Part D costs involves certain regulatory calculations that carry inherent risks. Should these estimates and assumptions deviate from actual outcomes, it could negatively impact our operational results
17. 17If we are unable to expand our sales and marketing infrastructure or if we fail to overcome challenges relating to marketing of our business, we may fail to enroll sufficient members to meet our forecasts
18. 18If we fail to develop widespread brand recognition or are unable to maintain or enhance our reputation, our business, financial condition, and results of operations will be harmed
19. 19If we do not continue to innovate and provide services that are useful to our members and providers, we may not remain competitive, and our business, financial condition, and results of operations could suffer
20. 20If we fail to offer high-quality customer support, our business, results of operations and reputation could suffer
21. 21Real or perceived errors, failures, vulnerabilities, or bugs in Clover Assistant would harm our business, results of operations, and financial condition
22. 22If we fail to manage our technical operations infrastructure, or experience service outages, interruptions, or delays in the deployment of our platform, our results of operations may be harmed
23. 23Issues in the development and use of artificial intelligence ("AI"), combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences to our business operations
24. 24Market, regulatory and political conditions, including global economic conditions, rates of inflation and political developments in the United States and abroad, may have adverse consequences on our business, financial condition and share price
25. 25Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate; even if the markets in which we compete achieve the forecasted growth, our business could fail to grow at similar rates, if at all
26. 26We may become subject to medical liability claims, which could cause us to incur significant expenses, may require us to pay significant damages if not covered by insurance, and could adversely affect our business, financial condition, and results of operations
27. 27Our international operations pose certain risks to our business that may be different from risks associated with our domestic operations
28. 28We conduct business in various jurisdictions and we are subject to significant expenses and risks related to compliance with state licensure requirements, which could impact our business and results of operations
29. 29We rely on third-party providers for computing infrastructure, network connectivity, and other technology-related services needed to deliver our technology platform and products. Any disruption in the services provided by such third-party providers could adversely affect our business and subject us to liability
30. 30Our growth depends in part on the success of our strategic relationships with third parties
31. 31Because competition for qualified personnel is intense, we may not be able to attract and retain the highly skilled employees we need to execute our business strategies and growth plans
32. 32We depend on our senior management team and other key employees; the loss of one or more of these employees or an inability to attract and retain additional qualified key personnel could adversely affect our business
33. 33We may engage in merger and acquisition activities, which would require significant management attention, disrupt our business, dilute stockholder value, and adversely affect our business, results of operations, and financial condition
34. 34If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected
35. 35We are currently, and may in the future be, subject to investigations and litigation, which could be costly and time-consuming to defend. The outcomes of these matters cannot be predicted

Risks Related to Governmental Regulation

1. 36Programs funded in whole or in part by the U.S. federal government account for a significant portion of our revenues
2. 37State corporate practice of medicine and fee-splitting laws govern at least some of our business operations; violation of such laws could result in penalties and adversely affect our arrangements with contractors and our results of operations and financial condition
3. 38Our business activities are highly regulated, and new and proposed government regulation or legislative reforms could increase our cost of doing business and reduce our number of members, profitability, and liquidity
4. 39Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to scrutiny or challenge under one or more of such laws
5. 40If Clover Assistant were to become subject to regulation by the FDA and we were unable to obtain the required approval or comply with these regulations, our business, results of operations, financial condition, and prospects may be materially and adversely affected
6. 41If we are required to maintain higher statutory capital levels for our existing operations or if we are subject to additional capital reserve requirements as we pursue new business opportunities, our cash flows and liquidity may be adversely affected78% rewritten
7. 42HIPAA requires healthcare payers and providers—and we are both—to develop and maintain policies and procedures with respect to PHI that is used or disclosed, including the adoption of administrative, physical and technical safeguards to protect such informationNew

Risks Related to Our Intellectual Property

1. 43Failure to protect or enforce our intellectual property rights could impair our ability to protect our internally-developed technology and our brands, and our business may be adversely affected
2. 44Our failure to obtain or maintain the right to use certain of our intellectual property could negatively affect our business
3. 45We could incur substantial costs as a result of any claim of infringement of another party's intellectual property rights
4. 46Our use of "open source" and third-party software could impose unanticipated conditions or restrictions on our ability to commercialize our solutions and could subject us to possible litigation

Risks Related to Ownership of our Securities

1. 47The price of our Class A common stock has fluctuated significantly in the past and may continue to be volatile, with the possibility for extreme price and volume fluctuations
2. 48Volatility or declines in our trading price could make it more difficult to attract and retain talent, adversely impact employee retention and morale, and may require us to issue more equity to incentivize team members, which could dilute stockholders
3. 49Our failure to satisfy NASDAQ's continued listing standards could result in a delisting of our Class A common stock, which could limit investors' ability to make transactions in our Class A common stock and subject us to additional trading restrictions
4. 50Our business and financial performance may differ from any projections that we disclose or any information that may be attributed to us by third parties
5. 51Sales of substantial amounts of our securities in the public markets, or the perception that they might occur, could cause the market price of our Class A common stock to decline
6. 52At December 31, 2025, our directors and officers and their affiliated entities collectively owned approximately 23.9% of the total outstanding shares of Class A and Class B common stock41% rewritten
7. 53As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of NASDAQ. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reportingNew
8. 54We do not intend to pay dividends for the foreseeable future
9. 55While the Company may enter into share repurchase programs from time to time, which are intended to enhance long-term shareholder value, we cannot provide assurance that this will occur, and any such program may be suspended or terminated at any time22% rewritten
10. 56Our dual class structure may negatively impact the trading price of our Class A common stock
11. 57Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations
12. 58Restrictions on our ability to obtain funds from our regulated subsidiaries could materially and adversely affect our results of operations, financial condition and cash flows
13. 59The requirements of being a public company may strain our resources and divert management's attention
14. 60Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could expose us to greater than anticipated tax liabilities
15. 61Our trading price and trading volume could decline if securities or industry analysts do not publish research about our business, or if they publish unfavorable research
16. 62Applicable insurance laws may make it difficult to effect a change of control
17. 63Certain provisions in our corporate charter documents and under Delaware law may prevent or hinder attempts by our stockholders to change our management or to acquire a controlling interest in us. The trading price of our Class A common stock may decline as a result