Despite a number of well-publicized hiccups, venture capitalists are betting another $500 million on health insurance provider Clover Health, TechCrunch has learned.
Existing investor Greenoaks Capital led the round, according to the startup, which confirmed it was closing a new round of capital in the coming weeks. Clover Health has raised a total of $925 million to date, garnering a valuation of $1.2 billion with a $130 million Series D funding in 2017. The company, backed by Alphabet’s venture arm GV, Sequoia Capital, Floodgate, Bracket Capital, First Round Capital and more, declined to disclose its latest valuation.
San Francisco-based Clover Health was founded in 2014 by chief executive officer Vivek Garipalli, the former founder of New Jersey healthcare system CarePoint Health; and Kris Gale, who served as the startup’s chief technology officer until transitioning into an adviser role in December 2017. As part of its latest funding round, the company told TechCrunch it’s promoting Andrew Toy, its chief technology officer since early 2018, to the role of president and CTO. He will also join its board of directors.
Varsha Rao, Airbnb’s former chief operating officer, joined the company in September 2017 as COO.
The tech-enabled health insurer differentiates itself from incumbents by collecting and analyzing health and behavioral data to lower costs and improve medical outcomes for its members. It’s part of a new cohort of heavily funded insurtech startups, including Devoted Health and Bright Health, both of which similarly provide Medicare Advantage plans. Devoted Health, backed by Andreessen Horowitz, raised a $300 million Series B funding round three months ago. Bright Health, for its part, brought in a $200 million Series C in late November at a $950 million valuation. It’s backed by Bessemer Venture Partners, Greycroft, NEA and Redpoint Ventures, among others.
Founded in 2014, Clover Health is years older than its aforementioned counterparts. The business, though supported by top-tier investors and plenty of capital, has struggled in the past to shrink its losses. In 2015, Clover Health posted a net loss of $4.9 million only to increase it 7x the following year to $34.6 million, according to financial documents obtained by Axios. At the time, Clover Health had 20,600 Medicare Advantage members, earning it $184 million in taxpayer revenue. According to reporting from CNBC, the company had initially planned to double its membership base each year but was only able to expand from 20,000 in 2016 to 27,000 in September 2017.
A source with knowledge of the matter said Clover Health currently has 40,000 members in Georgia, New Jersey, Arizona, Pennsylvania, South Carolina, Tennessee and Texas. The business earns roughly $10,000 in revenue per member from the Centers for Medicare and Medicaid Services, or currently about $400 million in annual revenue. As a Medicare Advantage plan, Clover Health makes a majority of its cash from the government.
“Clover’s continuously improving economic fundamentals have allowed us to build sustainably, thoughtfully enter new markets and increase our overall membership by 35 percent during the last 12 months, compared with nationwide growth of 8 percent for Medicare Advantage overall,” the company said in a statement provided to TechCrunch. “This has made Clover one of the fastest growing insurers in [Medicare Advantage] over the past three years. That said, there is much more to accomplish, which is why I am so excited about entering this next phase in our company’s history.”