John Pinney

John Pinney with Canaccord Genuity asked for an update on the new member cohort's performance in the initial months of 2026, the contribution of Counterpart Health to 2026 guidance, and the expected Clover Assistant (CA) penetration rate for the new cohort by the end of 2026.

Answer

CEO Andrew Toy confirmed that the profitability of new members is in line with expectations, with MMR files consistent and utilization trending down year-to-date. For Counterpart Health, CEO Andrew Toy stated that the near-term goal is to manage an equal number of members under Counterpart Assistant as under Clover Assistant, with no material economic contribution to 2026 guidance yet. Regarding CA penetration, CEO Andrew Toy expects some pressure due to growth but remains confident as growth is concentrated in core markets with high CA penetration, and efforts are underway to expand the CA network in new markets like Georgia.

John Pinney with Canaccord Genuity asked about any early surprises, positive or negative, regarding the new member cohort onboarded in January 2026. He also inquired about the current contribution of Counterpart Health to the 2026 guidance and sought an update on its progress. Finally, he asked about the expected Clover Assistant (CA) penetration for the new cohort, given the 2025 figure of two-thirds of members seen by a CA-empowered physician, and what would constitute success for this metric by the end of 2026.

Answer

Andrew Toy, CEO, stated that the new members' profitability is in line with expectations, supported by MMR files, and noted a decrease in overall utilization year-to-date for January and February. Regarding Counterpart Health, Andrew Toy, CEO, reiterated that the company will report economic contributions when they become material, with the current focus on bringing a significant number of patients under Counterpart Assistant management, aiming for a similar scale to Clover Assistant. For CA penetration, Andrew Toy, CEO, acknowledged potential pressure from growth but expressed confidence due to focusing growth in core markets with high CA penetration. He also mentioned efforts to expand the CA network in new markets like Georgia.

John Pinney from Canaccord Genuity asked if the elevated cost trends in the BER were localized to newer member cohorts or specific geographies. He also inquired about the competitive landscape for the upcoming AEP and how competitors are positioning for 2026.

Answer

CFO Peter Kuipers clarified that member cohorts are performing as expected and the Part D and supplemental cost pressures are broad-based, not specific to new members. CEO Andrew Toy addressed the competitive landscape, noting that national players are pulling back from wide-network PPO plans, which is Clover's area of strength. He expressed confidence that this positions them well for the upcoming growth season, a sentiment echoed by Peter Kuipers, who highlighted the financial tailwind from their upcoming 4-star payment year.

John Pinney questioned the company's cash flow generation, the timeline for resolving the Philips recall-related CapEx overspend, the attribution of the revenue decline across different factors, and the sustainability of the quarter's lower cost of inventory sold.

Answer

CFO Hardik Mehta explained that cash flow was affected by timing on CapEx and vendor financing programs. He noted the Philips recall creates a working capital drag that should stabilize over the next few quarters. While declining to break down the revenue drop, he pointed to historical seasonal patterns for context. Mehta also stated that the cost of goods sold normalized in Q2 and the year-to-date figure is consistent with prior periods.

John Pinney from Canaccord Genuity, on for Richard Close, asked for clarification on the divested assets. He inquired what percentage of the previously mentioned $100 million in annualized revenue to be divested is accounted for by the incontinence assets, and whether any other assets are still being considered for sale.

Answer

Executive Jason Clemens explained that annualizing the guidance reduction for the incontinence sale implies about $60 million in revenue. He stated that the company is not actively working on other dispositions beyond the incontinence and pending infusion asset sales. He concluded that after these transactions, the company feels it has a strong portfolio with significant organic and inorganic growth opportunities.

John Pinney of Canaccord Genuity asked about HealthStream's internal use of AI for productivity gains and whether the company is successfully incorporating price escalators into new and renewal contracts.

Answer

CEO Robert Frist detailed that HealthStream is exploring AI internally for sales and development, expecting a short-term cost increase for tools before realizing long-term productivity gains. He also confirmed a high success rate (over 95%) in adding price escalators to renewal contracts, which he expects will become a standard practice across all contracts over the next 36 months, providing a new baseline for growth.