Full Press Release Details
Clover Health, a Next-Generation Medicare
Announces Plans to Become Publicly-traded via Merger with Social
San Francisco & Palo Alto, Calif. -- October 6, 2020
-- 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.
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.
"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
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.
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.
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.
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