Clover Health is going public in a deal worth over $3 billion

  • Clover Health is going public in a $3.7 billion blank check deal.
  • And the insurtech is setting itself up as a force to be reckoned with in the Medicare Advantage space.
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The insurtech is set to go public via a “blank check” deal worth $3.7 billion through which it’ll merge with a special purpose acquisition company (SPAC), per MedCity News.

The number of medicare advantage plans that beneficiaries can choose from is rising

Clover Health goes public with $3.7 billion deal.

Business Insider Intelligence

For context, startups use SPACs as an avenue to the public market for a few reasons: These deals are often quicker due to a streamlined negotiation process and can be safer during periods of market volatility—which we’re seeing amid the pandemic—because they’re not contingent on raising capital through other investors.

Clover Health plans to use the funds to fuel its expansion into new geographic markets—and we think the startup is on track to see a surge in users. The insurtech offers Medicare Advantage (MA) plans in 34 counties across seven states—and Clover Health CEO Vivek Garipalli recently said the startup plans to use the funds from its public debut to expand into 74 more counties and an eighth state in 2021, per MedCity News.

Looking ahead to next year, investor Chamath Palihapitiya shared a document on Twitter indicating that Clover Health expects to have 273,000 members in 2021—a more than four-fold increase over its current base of nearly 57,000 enrollees, signalling a boom period may very well be on the horizon for the insurtech.

Between the funding haul and its recent tie-up with Walmart, Clover is laying the groundwork to become a powerhouse in the MA space. This news comes on the heels of Clover Health’s partnership with Walmart to create two new insurance plans, which will give Clover’s MA members access to services from select Walmart Health centers in Georgia, in addition to in-network access to over 31 hospitals.

Clover Health is gaining significant momentum as it works to entrench itself in the growing MA space: There were 3,148 MA plans available in 2020—up 414 plans from 2019. As the size of the MA pie continues to grow, we don’t think Clover Health will be the last insurtech to grab itself a bigger piece by taking the leap to go public.

In fact, we think Oscar is poised to be the next insurtech to do so: After recently announcing it’d be launching a cobranded MA plan with Holy Cross Health and Memorial Healthcare System in southern Florida, we expect it to leverage the learnings that come out of this tie-up and perfect its MA offerings ahead of a public debut.

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