Here's Why You Should Retain CLOV Stock in Your Portfolio for Now

Clover Health Investments CLOV is well poised for growth in the coming quarters, courtesy of its broad product spectrum. This optimism is primarily driven by its technology-first care model, as evident from solid membership growth, rising revenues and sustained adjusted EBITDA profitability. However, elevated medical costs, margin pressure and execution risks in scaling Clover Assistant present near-term challenges.

Shares of this Zacks Rank #3 (Hold) company have lost 18.3% over the past six months compared with the industry’s 14% decline. However, the S&P 500 Index has risen 12.9% in the same time frame.

Clover Health, a tech-enabled Medicare Advantage insurer leveraging its proprietary AI-powered platform, has a market capitalization of $1.31 billion. The company projects 40% earnings growth for the first quarter of 2026.

Its earnings surpassed estimates in two of the trailing four quarters, missed in one and met in the other, delivering an average surprise of 50.00%.

Factors Favoring CLOV Stock

Clover Assistant Drives Strong Cohort Economics: Clover Assistant remains the key element of Clover Health’s economic model, clearly differentiating the company from traditional Medicare Advantage peers. Management highlighted that returning members managed under Clover Assistant generate approximately $217 in contribution profit per member per month compared to a loss of about $110 for first-year members.

This stark contrast underscores the cohort-driven nature of the business. Importantly, Clover Health’s internal data shows roughly 700 basis points of medical cost ratio improvement from year one to year two, expanding to 1,400 basis points by year three, reinforcing confidence in long-term margin expansion as cohorts mature.

Above-Market Membership Growth With Industry-Leading Retention: Clover Health has reported strong results from the 2026 Annual Enrollment Period (AEP), delivering 53% year-over-year growth in Medicare Advantage PPO membership. After a strong enrollment period, the company is starting 2026 with total membership increasing to 153,000, reflecting growth in core markets where Clover Health has broad Clover Assistant (CA) coverage and an integrated Home Care model. As a result, Clover Health believes it will achieve full-year GAAP net income profitability in 2026.

By maintaining stable plan benefits year over year, Clover Health retained more than 95% of its members during the enrollment period and built a stronger presence in local communities. This shows the durability of the company’s membership base and its plans to continue to offer strong value to members. CLOV saw intentional growth in its PPO plans, with new members switching from other Medicare Advantage plans within Clover Health’s core markets.

Clover Health’s 2026 AEP results underscore the effectiveness of its focused growth strategy. More than 97% of its Medicare Advantage members are enrolled in its main PPO plan. For the second consecutive year, this plan is ranked the number one PPO plan in the country based on HEDIS quality measures.

Counterpart Health Expands Monetization Optionality: Counterpart Health represents a strategic extension of Clover Assistant beyond Clover Health’s owned Medicare Advantage plans. The platform targets smaller, independent physicians who lack the infrastructure to succeed in value-based care — an area management describes as a “blue ocean” opportunity.

During the quarter, Clover Health expanded Counterpart’s enterprise capabilities and go-to-market resources, citing early traction with provider groups and payers. Over time, Counterpart could evolve into a scalable, software-enabled revenue stream, diversifying Clover Health’s earnings profile and allowing the company to monetize its core technology well beyond its MA membership base.

Key Challenges

Near-Term Margin Compression From New Member Mix: Clover Health’s aggressive growth strategy has come with a clear short-term tradeoff. A higher-than-expected mix of first-year members — who carry elevated medical costs, marketing expenses and commissions — has pressured profitability.

While returning cohorts remain profitable, the dilution from new members forced management to lower full-year 2025 adjusted EBITDA guidance, even as the company stays profitable year to date. Management emphasized that this dynamic is structural rather than cyclical, framing 2025 as the peak year of cohort drag. Execution risk remains around how quickly new members are brought under full Clover Assistant management.

Elevated Medical Utilization Across Services: Clover Health saw increased utilization across both inpatient and outpatient services in the third quarter, particularly in oncology, cardiac and surgical procedures. Management characterized these trends as consistent with broader industry patterns, rather than company-specific missteps. Still, utilization volatility materially impacted medical costs and weighed on margins in the third quarter.

While Clover Health believes these pressures are now reflected in updated guidance and 2026 bids, utilization remains a critical swing factor. Any persistence of elevated trends could delay the expected margin recovery tied to cohort maturation, making medical cost management a central execution priority heading into 2026.

Pharmacy Weakness: Management pointed specifically to weak performance in pharmacy-related measures, which offset strong clinical quality results, including industry-leading HEDIS scores. Improving pharmacy execution is now a key focus area. Closing this gap is critical, as sustained 4-star performance would meaningfully enhance margins and strengthen Clover Health’s competitive positioning.

Clover Health Investments, Corp. Price

Clover Health Investments, Corp. price | Clover Health Investments, Corp. Quote

Estimate Trend

Clover Health is witnessing a stable estimate revision trend for 2026. In the past 30 days, the Zacks Consensus Estimate for earnings has remained stable at 6 cents per share.

The Zacks Consensus Estimate for first-quarter 2026 revenues and earnings per share is pegged at $646.2 million and 7 cents, respectively.

Stocks to Consider

Some better-ranked stocks from the broader medical space are AtriCure ATRC, Charles River Laboratories International CRL and Pediatrix Medical Group, Inc. MD.

AtriCure, currently flaunting a Zacks Rank #1 (Strong Buy), reported a third-quarter 2025 adjusted loss per share of 1 cent, 90.9% narrower than the Zacks Consensus Estimate. Revenues of $134.3 million beat the Zacks Consensus Estimate by 2.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.

ATRC’s loss estimate narrowed 8 cents to 2 cents per share in the past 60 days. The company beat earnings estimates in the trailing four quarters, the average surprise being 67.1%.

Charles River Laboratories International, currently carrying a Zacks Rank #2 (Buy), reported a third-quarter 2025 adjusted EPS of $2.43, which surpassed the Zacks Consensus Estimate by 4.7%. Revenues of $1.0 billion beat the Zacks Consensus Estimate by 2.1%.

CRL’s earnings per share estimate for 2026 has moved up 3 cents to $10.72 in the past 60 days. The company’s earnings beat estimates in the trailing four quarters, the average surprise being 12.4%.

Pediatrix Medical Group, currently carrying a Zacks Rank #2, reported a third-quarter 2025 adjusted EPS of 67 cents, which surpassed the Zacks Consensus Estimate by 45.7%. Revenues of $492.8 million beat the Zacks Consensus Estimate by 1.8%.

MD’s earnings per share estimate for 2026 has moved up 1 cent to $2.09 in the past 60 days. The company beat earnings estimates in the trailing four quarters, the average surprise being 35.4%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research