TLDR: I work in the Medicare industry and $CLOV is severely undervalued (full analysis below). It should be at least $15+.

ALL the credit goes to u/livinittt he doesn’t have enough Karma to post on WSB

Link to his original DD https://www.reddit.com/r/CLOV/comments/ns496q/tldr_i_work_in_the_medicare_industry_and_clov_is/?utm_source=share&utm_medium=ios_app&utm_name=iossmf

CLOV Valuation

  • Low End
    • 70,000 MA patients (end of 2021) x $22,800 per patient = $1.6B
    • 70,000 DC patients (end of 2021) x $66,667 per patient = $4.67B
    • Total market cap = $6.27B
    • $15.35 per share
  • High End
    • 70,000 MA patients (end of 2021) x $22,800 per patient = $1.6B
    • 100,000 DC patients (end of 2021) x $76,667 per patient = $7.67B
    • Total market cap = $9.27B
    • $22.86 per share

WHAT ARE THESE GREEDY SHORTS THINKING?!!!!!!!

πŸš€πŸŒ•πŸš€πŸŒ•πŸš€πŸŒ•πŸš€πŸŒ•πŸš€πŸŒ•πŸš€πŸŒ•πŸš€πŸŒ•πŸš€πŸŒ•πŸš€πŸŒ•πŸš€πŸŒ•πŸš€πŸŒ•πŸš€πŸŒ•

[NOTE: formatting better on a desktop]

Full Breakdown of CLOV Valuation

Shorts are trying to profit off of the Direct Contracting (DC) enrollment numbers announced in May. The 65,000 DC members were far below the 200,000 members that the market was expecting. This has already been priced in with analysts adjusting down to an average price target of $9.33 (source). GREEDY SHORTS ARE JUST TRYING TO STICK IT TO CHAMATH BY TRYING TO PUSH THIS BELOW $9.

The 200,000 DC members are the number of Medicare Part B patients they have access to through the 1,800 providers using their software. They still have access to all those patients and will enroll them over time. They set forecasts at 70,000 to 100,000 by end of 2021. They already have 65,000 enrolled in April. They intentionally set expectations extremely low to absorb the negative market reaction upfront and then outperform going forward.

To understand what CLOV should be worth today, look at OSH and AGL. All three companies are Direct Contracting Entities (DCE) competing for risk-bearing Medicare patients. They all should be valued based on the number of risk-based patients they have and how fast they're growing that number. The value of each risk-based patient depends on each company's model, which drives profit rates.

OSH = $14.3B market cap

OSH is obviously liked the most by the market, probably because they employ the clinicians so they can keep more of the Medicare premium and could theoretically do more to improve health outcomes and control costs. In this model, the MA Plan takes 15% off the top, and the rest goes to OSH.

  • OSH gross margin = 6.7% (source)
  • 6,500 DC risk-based patients (source)
  • 75,500 total risk-based patients growing to 112,000 this year (source)
  • That's a valuation of $125,000 per patient

AGL = $14.3B market cap

AGL holds the contract with the MA plan and then pays the contracted (not employed) provider practices. In this model, the MA Plan takes 15% of the premium off the top, and the rest is split between AGL and the provider practices.

  • AGL gross margin = 7% (source)
  • 50,000 DC risk-based patients (source)
  • 165,300 total risk-based patients growing to 210,000 this year (source)
  • That's a valuation of $66,667 per patient

CLOV = $3.65B market cap

CLOV has historically been just a MA plan, taking the 15% of the premium off the top and paying the rest to cover the patient's costs. MA plans have an average profit margin of 4.3% after all their admin and sales expenses are accounted for (source).

  • CLOV historical gross margin (before COVID effect) = 2.5-4.1 % (source)
  • 65,000 DC risk-based patients (source)
  • 132,000 total risk-based patients growing to 160,000 this year (source)
  • That's a valuation of $22,800 per patient

AGL is a good preview of how the DC model could be valued per patient, except the DC model should be even better. There is no MA plan taking 15% off the top in between the risk-bearer (Direct Contracting Entity: CLOV, AGL, or OSH) and Medicare. Direct Contracting patients could be valued as high as $76,667 (15% premium over current AGL patients).

The CEO of OSH was recently quoted "the per-patient economics of that program will potentially be better than the company had initially estimated" (source).

CLOV Valuation

  • Low End
    • 70,000 MA patients (end of 2021) x $22,800 per patient = $1.6B
    • 70,000 DC patients (end of 2021) x $66,667 per patient = $4.67B
    • Total market cap = $6.27B
    • $15.35 per share
  • High End
    • 70,000 MA patients (end of 2021) x $22,800 per patient = $1.6B
    • 100,000 DC patients (end of 2021) x $76,667 per patient = $7.67B
    • Total market cap = $9.27B
    • $22.86 per share

WHAT ARE THESE GREEDY SHORTS THINKING?!!!!!!!

[NOTE: formatting better on a desktop]

Full Breakdown of CLOV Valuation

Shorts are trying to profit off of the Direct Contracting (DC) enrollment numbers announced in May. The 65,000 DC members were far below the 200,000 members that the market was expecting. This has already been priced in with analysts adjusting down to an average price target of $9.33 (source). GREEDY SHORTS ARE JUST TRYING TO STICK IT TO CHAMATH BY TRYING TO PUSH THIS BELOW $9.

The 200,000 DC members are the number of Medicare Part B patients they have access to through the 1,800 providers using their software. They still have access to all those patients and will enroll them over time. They set forecasts at 70,000 to 100,000 by end of 2021. They already have 65,000 enrolled in April. They intentionally set expectations extremely low to absorb the negative market reaction upfront and then outperform going forward.

To understand what CLOV should be worth today, look at OSH and AGL. All three companies are Direct Contracting Entities (DCE) competing for risk-bearing Medicare patients. They all should be valued based on the number of risk-based patients they have and how fast they're growing that number. The value of each risk-based patient depends on each company's model, which drives profit rates.

OSH = $14.3B market cap

OSH is obviously liked the most by the market, probably because they employ the clinicians so they can keep more of the Medicare premium and could theoretically do more to improve health outcomes and control costs. In this model, the MA Plan takes 15% off the top, and the rest goes to OSH.

  • OSH gross margin = 6.7% (source)
  • 6,500 DC risk-based patients (source)
  • 75,500 total risk-based patients growing to 112,000 this year (source)
  • That's a valuation of $125,000 per patient

AGL = $14.3B market cap

AGL holds the contract with the MA plan and then pays the contracted (not employed) provider practices. In this model, the MA Plan takes 15% of the premium off the top, and the rest is split between AGL and the provider practices.

  • AGL gross margin = 7% (source)
  • 50,000 DC risk-based patients (source)
  • 165,300 total risk-based patients growing to 210,000 this year (source)
  • That's a valuation of $66,667 per patient

CLOV = $3.65B market cap

CLOV has historically been just a MA plan, taking the 15% of the premium off the top and paying the rest to cover the patient's costs. MA plans have an average profit margin of 4.3% after all their admin and sales expenses are accounted for (source).

  • CLOV historical gross margin (before COVID effect) = 2.5-4.1 % (source)
  • 65,000 DC risk-based patients (source)
  • 132,000 total risk-based patients growing to 160,000 this year (source)
  • That's a valuation of $22,800 per patient

AGL is a good preview of how the DC model could be valued per patient, except the DC model should be even better. There is no MA plan taking 15% off the top in between the risk-bearer (Direct Contracting Entity: CLOV, AGL, or OSH) and Medicare. Direct Contracting patients could be valued as high as $76,667 (15% premium over current AGL patients).

The CEO of OSH was recently quoted "the per-patient economics of that program will potentially be better than the company had initially estimated" (source).

submitted by /u/alllixxx0102
[link] [comments]

Jump To The Original Source

Share this Story
Load More Related Articles
Load More In Stock News

Facebook Comments

Check Also

Brazil passes half a million COVID-19 deaths, experts warn of worse ahead

Published by Reuters By Eduardo SimΓ΅es SAO PAULO ...

Archives