- Clover is a next-generation Medicare Advantage insurance
company offering best-in-class plans that combine wide access to
healthcare and rich supplemental benefits with low out-of-pocket
expenses
- A unique model in health insurance, Clover partners with
primary care physicians using its software platform, the Clover
Assistant, to deliver data-driven, personalized insights at the
point of care
- The transaction is expected to fuel Clover’s trajectory as one
of the nation’s fastest growing Medicare Advantage plans
- Transaction values Clover at an enterprise value of $3.7
billion and is expected to provide up to $1.2 billion in cash
proceeds, including a fully committed PIPE of $400 million and up
to $828 million of cash held in the trust account of Social Capital
Hedosophia Holdings Corp. III (“SCH”)
- PIPE led by $100 million from Chamath Palihapitiya, Founder and
CEO of SCH, and $50 million from Hedosophia, as well as commitments
from Fidelity Management & Research Company, LLC., and funds
affiliated with Jennison, Senator Investment Group LP, Casdin and
Perceptive Advisors
- Clover is expected to receive up to $728 million of transaction
proceeds, and up to $500 million of cash proceeds is expected to be
allocated to existing Clover shareholders
Clover Health Investments, Corp. (“Clover” or “the Company”),
which operates next-generation Medicare Advantage plans, has
entered into a definitive agreement to become publicly traded via a
merger with Social Capital Hedosophia Holdings Corp. III (“SCH”)
(NYSE: IPOC), a special purpose acquisition company. Upon closing,
the transaction will support Clover’s mission to improve every
life, providing significant capital for the Company to scale and
improve health outcomes for seniors across the United States.
Company Overview
Founded in 2013, Clover has pioneered a fundamentally different
approach to Medicare Advantage that focuses on driving
affordability and partnering closely with physicians to deliver the
best possible health outcomes for members. The Company offers
affordable Medicare Advantage plans to eligible individuals, giving
consumers access to broad and open healthcare networks, rich
supplemental benefits and low out-of-pocket expenses.
Technology is at the core of Clover’s business – the Company is
a true innovator in the Medicare Advantage space, deploying its own
internally-developed software to assist physicians with clinical
decision-making at the point of care.
Clover’s flagship platform, the Clover Assistant, aggregates
millions of relevant health data points – including claims, medical
charts and diagnostics, among others – and uses machine learning to
synthesize that data with member-specific information. This
provides physicians with actionable and personalized insights at
the point of care, offering suggestions for medications and dosages
as well as the need for tests or referrals, among others, to
ultimately improve health outcomes.
The Clover Assistant enables a virtuous growth cycle, whereby
improved health outcomes lead to superior economics that the
Company shares with members through lower costs and rich benefits.
In turn, the Company believes its best-in-class plans will continue
to deliver market-leading growth, allowing the Clover Assistant to
capture and synthesize more data and ultimately drive better
care.
Medicare Advantage is one of the largest and fastest growing
markets in the U.S. healthcare system – but it is one that has seen
little innovation and remains ripe for disruption. Worth $270
billion today and with an estimated value of $590 billion by 2025,
the Medicare Advantage market provides a tremendous opportunity for
growth.
Today, Clover is the fastest growing Medicare Advantage insurer
in the United States – among insurers with more than 50,000 members
– and serves more than 57,000 members in 34 counties across 7
states. Spurred by favorable demographic tailwinds and its
differentiated, technology-driven approach, Clover has captured an
average of 50 percent of the net increase in membership across its
established markets over the last three years. Further, the
Company’s software-centric approach enables efficient expansion
into new markets, including to historically underserved and rural
communities. The Company plans to expand into an additional 74
counties and eighth state next year and recently announced a new
partnership with Walmart to make joint Clover-Walmart plans
available to half a million Medicare-eligibles in eight Georgia
counties.
Clover’s management team, led by CEO and Co-Founder Vivek
Garipalli and President and Co-Founder Andrew Toy, will continue to
lead Clover following the transaction. Chamath Palihapitiya,
Founder and CEO of SCH, will act as a senior advisor to the
Company’s management.
Management Comments
“I launched Clover eight years ago to fix fundamental flaws in
our healthcare system, including unequal access, abysmal customer
service and wasteful spending. Chamath and the SCH team are fervent
believers and true champions of Clover’s mission to improve every
life,” said Garipalli. “Our philosophy is that everyone should be
able to afford great healthcare. The Clover team empowers
physicians to deliver the best possible outcomes for our members,
and the Clover Assistant does just that by delivering vital
clinical insights to physicians at the point of care.”
“We have made it our business to make healthcare affordable. Our
technology helps doctors, leading to better outcomes and lower
out-of-pocket expenses for members,” said Toy. “I believe that more
and more doctors are embracing the Clover Assistant because it
allows them to focus on what they want to do, which is to look
after patients. Importantly, the platform is powered by a closed
feedback loop, linking clinical data and physician action, which
improves continuously as membership grows, allowing us to
constantly evolve new ways of helping physicians and their
patients.”
Palihapitiya said, “We need companies like Clover to help fix
our broken healthcare system. The Company’s rapid growth is a
testament to the effectiveness of its tech-enabled approach, which
resonates powerfully with consumers and physicians alike. I believe
Clover is uniquely positioned to disrupt the entire Medicare
Advantage market as well as expand into new and exciting
opportunities in Original Medicare. I am proud to partner with
Vivek, Andrew and the entire Clover team on the next phase of their
mission to improve lives across the country.”
Transaction Overview
On October 6, 2020, SCH entered into a definitive agreement to
combine with Clover through a combination of stock and cash
financing. The transaction values Clover at an enterprise value of
approximately $3.7 billion.
The transaction is expected to deliver up to $1.2 billion of
gross proceeds, including the contribution of up to $828 million of
cash held in SCH’s trust account from its initial public offering
in April 2020. The transaction is further supported by a $400
million PIPE at $10.00 per share, including $100 million from
Palihapitiya, $50 million from Hedosophia, and the remainder from
investors including Fidelity Management & Research Company,
LLC., and funds affiliated with Jennison, Senator Investment Group
LP, Casdin and Perceptive Advisors. Clover will receive up to $728
million of transaction proceeds, and up to $500 million of cash
proceeds will be allocated to existing Clover shareholders. Vivek
Garipalli, Andrew Toy and other officers of the company will roll
100 percent of their equity into the new company. All references to
cash on the balance sheet, available cash from the trust account,
cash proceeds allocated to existing shareholders and retained
transaction proceeds are subject to any redemptions by the public
shareholders of SCH and payment of transaction expenses.
The transaction, which has been unanimously approved by SCH’s
boards of directors and the independent directors of Clover’s board
of directors, is expected to close in the first quarter of 2021,
and is subject to approval by SCH's shareholders and other
customary closing conditions, including any applicable regulatory
approvals.
Advisors
Connaught acted as financial advisor, Credit Suisse acted as
financial advisor, placement agent and capital markets advisor and
Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor
to SCH.
Citigroup acted as financial advisor, placement agent and
capital markets advisor, J.P. Morgan and Jefferies LLC also acted
as financial advisors and Orrick, Herrington & Sutcliffe LLP
acted as legal advisor to Clover.
Additional information about the proposed transaction, including
a copy of the merger agreement and investor presentation, will be
provided in a Current Report on Form 8-K that will contain an
investor presentation to be filed by SCH with the Securities and
Exchange Commission and available at www.sec.gov.
Investor Conference Call Information
Management of Clover and SCH will host an investor conference
call on October 6, 2020 at 16:00 ET to discuss the proposed
transaction and review an investor presentation. For those
investors who wish to participate, the conference call can be
accessed by visiting www.cloverhealth.com/investors.
About Clover Health
Clover Health is a healthcare technology company with a deeply
rooted mission of helping its members live their healthiest lives.
Clover uses its proprietary technology platform to collect,
structure, and analyze health and behavioral data to improve
medical outcomes and lower costs for patients. As a company whose
business goals fully align with its members' health needs, Clover
works with members and their doctors to become a valued partner.
This trust is built by proactively identifying at-risk individuals
and teaming up with physicians to accelerate care coordination and
simultaneously improve health outcomes and reduce avoidable costs.
Clover has offices in San Francisco, Jersey City, Nashville, and
Hong Kong. For more information, visit www.CloverHealth.com.
About Social Capital Hedosophia Holdings
Social Capital Hedosophia Holdings is a partnership between the
investment firms of Social Capital and Hedosophia. Social Capital
Hedosophia Holdings unites technologists, entrepreneurs and
technology-oriented investors around a shared vision of identifying
and investing in innovative and agile technology companies. To
learn more about Social Capital Hedosophia Holdings, visit
www.socialcapitalhedosophiaholdings.com.
Cautionary Statement Regarding Forward Looking
Statements
This press release contains certain forward-looking statements
within the meaning of the federal securities laws with respect to
the proposed transaction between Clover and SCH, including
statements regarding the anticipated benefits of the transaction,
the anticipated timing of the transaction, expansion plans, and
market opportunities of Clover. These forward-looking statements
generally are identified by the words “believe,” “project,”
“expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,”
“opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,”
“will continue,” “will likely result,” and similar expressions.
Forward-looking statements are predictions, projections and other
statements about future events that are based on current
expectations and assumptions and, as a result, are subject to risks
and uncertainties. Many factors could cause actual future events to
differ materially from the forward-looking statements in this press
release, including but not limited to: (i) the risk that the
transaction may not be completed in a timely manner or at all,
which may adversely affect the price of SCH’s securities, (ii) the
risk that the transaction may not be completed by SCH’s business
combination deadline and the potential failure to obtain an
extension of the business combination deadline if sought by SCH,
(iii) the failure to satisfy the conditions to the consummation of
the transaction, including the adoption of the merger agreement by
the shareholders of SCH, the satisfaction of the minimum trust
account amount following redemptions by SCH’s public shareholders
and the receipt of certain governmental and regulatory approvals,
(iv) the lack of a third-party valuation in determining whether or
not to pursue the transaction, (v) the inability to complete the
PIPE investment in connection with the transaction, (vi) the
occurrence of any event, change or other circumstance that could
give rise to the termination of the merger agreement, (vii) the
effect of the announcement or pendency of the transaction on
Clover’s business relationships, operating results and business
generally, (viii) risks that the proposed transaction disrupts
current plans and operations of Clover and potential difficulties
in Clover employee retention as a result of the transaction, (ix)
the outcome of any legal proceedings that may be instituted against
Clover or against SCH related to the merger agreement or the
transaction, (x) the ability to maintain the listing of SCH’s
securities on a national securities exchange, (xi) the price of
SCH’s securities may be volatile due to a variety of factors,
including changes in the competitive and highly regulated
industries in which SCH plans to operate or Clover operates,
variations in operating performance across competitors, changes in
laws and regulations affecting SCH’s or Clover’s business and
changes in the combined capital structure, (xii) the ability to
implement business plans, forecasts, and other expectations after
the completion of the proposed transaction, and identify and
realize additional opportunities, and (xiii) the risk of downturns
and a changing regulatory landscape in the highly competitive
healthcare industry. The foregoing list of factors is not
exhaustive. You should carefully consider the foregoing factors and
the other risks and uncertainties described in the “Risk Factors”
section of SCH’s registration on Form S-1 (File No. 333-236776),
the registration statement on Form S-4 discussed above and other
documents filed by SCH from time to time with the U.S. Securities
and Exchange Commission (the “SEC”). These filings identify and
address other important risks and uncertainties that could cause
actual events and results to differ materially from those contained
in the forward-looking statements. Forward-looking statements speak
only as of the date they are made. Readers are cautioned not to put
undue reliance on forward-looking statements, and Clover and SCH
assume no obligation and do not intend to update or revise these
forward-looking statements, whether as a result of new information,
future events, or otherwise. Neither Clover nor SCH gives any
assurance that either Clover or SCH or the combined company will
achieve its expectations.
Additional Information and Where to Find It
This press release relates to a proposed transaction between
Clover and SCH. This press release does not constitute an offer to
sell or exchange, or the solicitation of an offer to buy or
exchange, any securities, nor shall there be any sale of securities
in any jurisdiction in which such offer, sale or exchange would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. SCH intends to file a
registration statement on Form S-4 with the SEC, which will include
a document that serves as a prospectus and proxy statement of SCH,
referred to as a proxy statement/prospectus. A proxy
statement/prospectus will be sent to all SCH and Clover
shareholders. SCH also will file other documents regarding the
proposed transaction with the SEC. Before making any voting
decision, investors and security holders of SCH and Clover are
urged to read the registration statement, the proxy
statement/prospectus and all other relevant documents filed or that
will be filed with the SEC in connection with the proposed
transaction as they become available because they will contain
important information about the proposed transaction.
Investors and security holders will be able to obtain free
copies of the registration statement, the proxy
statement/prospectus and all other relevant documents filed or that
will be filed with the SEC by SCH through the website maintained by
the SEC at www.sec.gov.
The documents filed by SCH with the SEC also may be obtained
free of charge at SCH’s website at
http://www.socialcapitalhedosophiaholdings.com/docsc.html or upon
written request to 317 University Ave, Suite 200, Palo Alto,
California 94301.
Participants in Solicitation
SCH and its respective directors and executive officers may be
deemed to be participants in the solicitation of proxies from SCH’s
shareholders in connection with the proposed transaction. A list of
the names of such directors and executive officers and information
regarding their interests in the business combination will be
contained in the proxy statement/prospectus when available. You may
obtain free copies of these documents as described in the preceding
paragraph.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201006005484/en/
Clover Health: Media Andy Robinson +1.718. 915.1519
press@cloverhealth.com Investors Whitney Kukulka The Blueshirt
Group investors@cloverhealth.com Social Capital Hedosophia
Holdings Corp. III: Media Sara Evans / Kerry Golds Finsbury
sara.evans@finsbury.com / kerry.golds@finsbury.com +1.917.344.9279
/ +1.646.957.2279 Jonathan Gasthalter / Carissa Felger Gasthalter
& Co. SCH@gasthalter.com
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