CLOVER HEALTH INVESTMENTS, CORP. /DE

Previous wording

The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. The discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto for the three and six months ended June 30, 2026, contained in this Quarterly Report on Form 10-Q (the "Form 10-Q") and the audited consolidated financial statements and notes thereto for the year ended December 31, 2025, contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the "SEC") on February 27, 2026 (the "2025 Form 10-K"). This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the "Risk Factors" section of the 2025 Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. See "Cautionary Note Regarding Forward-Looking Statements" for additional information. Unless the context otherwise requires, references in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" to "we," "us," "our," "Clover," "Clover Health," and the "Company" mean the business and operations of Clover Health Investments, Corp. and its consolidated subsidiaries.

Current wording

The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. The discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto for the three and nine months ended September 30, 2026, contained in this Quarterly Report on Form 10-Q (the "Form 10-Q") and the audited consolidated financial statements and notes thereto for the year ended December 31, 2025, contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the "SEC") on February 27, 2026 (the "2025 Form 10-K"). This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the "Risk Factors" section of the 2025 Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. See "Cautionary Note Regarding Forward-Looking Statements" for additional information. Unless the context otherwise requires, references in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" to "we," "us," "our," "Clover," "Clover Health," and the "Company" mean the business and operations of Clover Health Investments, Corp. and its consolidated subsidiaries.

Previous wording

We operate Preferred Provider Organization ("PPO") and Health Maintenance Organization ("HMO") Medicare Advantage ("MA") plans for Medicare-eligible individuals. We aim to provide high-quality, affordable healthcare for all Medicare beneficiaries. Among plans with similar major characteristics, we offer most members in our MA plans (the "members") among the lowest average out-of-pocket costs for primary care provider and specialist co-pays in their markets. We strongly believe in providing our members provider choice, and we consider our PPO plans to be our flagship insurance product. An important feature of our MA product is wide network access. We believe the use of Clover Assistant and related data insights allows us to improve clinical decision-making through a highly scalable platform. At June 30, 2026, we operated our MA plans in five states and 203 counties, with 157,309 members.

Current wording

We operate Preferred Provider Organization ("PPO") and Health Maintenance Organization ("HMO") Medicare Advantage ("MA") plans for Medicare-eligible individuals. We aim to provide high-quality, affordable healthcare for all Medicare beneficiaries. Among plans with similar major characteristics, we offer most members in our MA plans (the "members") among the lowest average out-of-pocket costs for primary care provider and specialist co-pays in their markets. We strongly believe in providing our members provider choice, and we consider our PPO plans to be our flagship insurance product. An important feature of our MA product is wide network access. We believe the use of Clover Assistant and related data insights allows us to improve clinical decision-making through a highly scalable platform. At September 30, 2026, we operated our MA plans in five states and 203 counties, with 158,907 members.

Previous wording

The following summary highlights matters that management considers most significant to an understanding of our results for the three and six months ended June 30, 2026. It is not a complete description of, and should be read together with, the more detailed discussion that follows and our condensed consolidated financial statements.

Current wording

The following summary highlights matters that management considers most significant to an understanding of our results for the three and nine months ended September 30, 2026. It is not a complete description of, and should be read together with, the more detailed discussion that follows and our condensed consolidated financial statements.

Previous wording

Total revenues increased 56% to $743.2 million for the three months ended June 30, 2026, and 59% to $1,492.4 million for the six months ended June 30, 2026, compared to the respective prior-year periods, driven primarily by growth in our Medicare Advantage membership and higher per-member premium. We reported income from operations of $28.0 million and $55.3 million for the three and six month periods, respectively, compared to losses in the prior-year periods.

Current wording

Total revenues increased 53% to $759.3 million for the three months ended September 30, 2026, and 57% to $2,251.7 million for the nine months ended September 30, 2026, compared to the respective prior-year periods, driven primarily by growth in our Medicare Advantage membership and higher per-member premium. We reported net income of $6.4 million and $61.8 million for the three and nine month periods, respectively, compared to losses in the prior-year periods.

Previous wording

Our results reflect continued membership growth alongside disciplined management of administrative spend. Adjusted SG&A as a percentage of total revenues improved to 16% for the six months ended June 30, 2026, from 18% in the prior-year period, as revenue growth outpaced growth in our administrative cost base. Adjusted EBITDA increased to $81.2 million for the six months ended June 30, 2026, from $42.9 million in the prior-year period. We continued to maintain a strong liquidity position, with cash, cash equivalents, and investments of $443.0 million at June 30, 2026.

Current wording

Our results reflect continued membership growth alongside disciplined management of administrative spend. Adjusted SG&A as a percentage of total revenues improved approximately 120 basis points for the nine months ended September 30, 2026 as compared to the prior-year period, as revenue growth outpaced growth in our administrative cost base. Adjusted EBITDA increased to $97.2 million for the nine months ended September 30, 2026, from $45.0 million in the prior-year period. We continued to maintain a strong liquidity position, with cash, cash equivalents, and investments of $512.6 million at September 30, 2026.

Previous wording

Consolidated gross profit increased approximately 50% to $312.5 million for the six months ended June 30, 2026, broadly in line with our membership growth.

Current wording

Consolidated gross profit increased approximately 57% to $442.4 million for the nine months ended September 30, 2026, broadly in line with our membership growth.

Previous wording

As described under "Recent Developments" below, developments during the quarter relating to our 2026 Star Ratings are expected to affect payment year 2027 rather than our current period results.

Current wording

As described under "Recent Developments" below, developments during the year relating to our Star Ratings are expected to affect payment years 2027 and 2028 rather than our current period results.

Previous wording

On June 17, 2026, CMS issued updated guidance informing all MA Organizations that it was voluntarily recalculating the 2027 Quality Bonus Payment ratings for certain MA contracts as a result of the decision in the Stars Litigation.

Current wording

As previously disclosed, on June 17, 2026, CMS issued updated guidance informing all MA Organizations that it was voluntarily recalculating the 2027 Quality Bonus Payment ("QBP") ratings for certain MA contracts as a result of the decision in the Stars Litigation.

Previous wording

CMS’s guidance stated that MA organizations can view their recalculated 2027 QBP ratings in the Health Plan Management System ("HPMS"). HPMS displays the Company's PPO MA contract, H5141, rated at 4.5 Stars for payment year 2027, and also displays that the 2026 Star Rating for the Company's HMO MA contract, H8010, increased from 4.0 Stars to 4.5 Stars, which also impacts payment year 2027.

Current wording

CMS's guidance stated that MA organizations can view their recalculated 2027 QBP ratings in the Health Plan Management System ("HPMS"). HPMS displayed the Company's PPO MA contract, H5141, rated at 4.5 Stars for payment year 2027, and also displayed that the 2026 Star Rating for the Company's HMO MA contract, H8010, increased from 4.0 Stars to 4.5 Stars, which also impacts payment year 2027.

Previous wording

We use non-GAAP measures in this Form 10-Q, including Consolidated Gross profit, Adjusted SG&A, Adjusted EBITDA, and Adjusted Net income from operations, and Insurance Benefits expense ratio ("BER"). These non-GAAP financial measures are provided to enhance the reader's understanding of Clover Health's past financial performance and our prospects for the future. Clover Health's management team uses these non-GAAP financial measures in assessing Clover Health's performance, as well as in planning and forecasting future periods. These non-GAAP financial measures are not computed according to GAAP, and the methods we use to compute them may differ from the methods used by other companies. Non-GAAP financial measures are supplemental to and should not be considered a substitute for financial information presented in accordance with GAAP and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

Current wording

We use non-GAAP measures in this Form 10-Q, including Consolidated Gross profit, Adjusted SG&A, Adjusted EBITDA, Adjusted Net income, and Insurance Benefits Expense Ratio ("BER"). These non-GAAP financial measures are provided to enhance the reader's understanding of Clover Health's past financial performance and our prospects for the future. Clover Health's management team uses these non-GAAP financial measures in assessing Clover Health's performance, as well as in planning and forecasting future periods. These non-GAAP financial measures are not computed according to GAAP, and the methods we use to compute them may differ from the methods used by other companies. Non-GAAP financial measures are supplemental to and should not be considered a substitute for financial information presented in accordance with GAAP and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

Previous wording

For a description of these non-GAAP financial measures, including the reasons management uses such measures, and the reconciliations of these non-GAAP financial measures to the comparable GAAP measures, please see "Consolidated Gross profit", "Adjusted SG&A", "Adjusted EBITDA", "Adjusted Net income", and "Benefits expense ratio" below.

Current wording

For a description of these non-GAAP financial measures, including the reasons management uses such measures, and the reconciliations of these non-GAAP financial measures to the comparable GAAP measures, please see "Consolidated Gross profit", "Adjusted SG&A", "Adjusted EBITDA", "Adjusted Net income", and "Insurance Benefits Expense Ratio" below.

Previous wording

Adjusted Salaries and benefits plus General and Administrative expenses ("SG&A") is a non-GAAP financial measure defined by us as total SG&A less stock-based compensation and non-recurring legal expenses and settlements. We believe that Adjusted SG&A provides management, investors, and others a useful view of our operating spend as it excludes non-cash, stock-based compensation and expenses related to investments that management believes do not reflect the Company's core operating expenses. We believe that Adjusted SG&A as a percentage of Total revenues is useful to management, investors, and others because it allows us to measure our operational leverage as revenue scales.

Current wording

Adjusted Salaries and benefits plus General and Administrative expenses ("SG&A") is a non-GAAP financial measure defined by us as total SG&A less stock-based compensation and non-recurring legal expenses and settlements. We believe that Adjusted SG&A provides management, investors, and others a useful view of our operating spend as it excludes non-cash, stock-based compensation and non-recurring legal expenses and settlements that management believes do not reflect the Company's core operating expenses. We believe that Adjusted SG&A as a percentage of Total revenues is useful to management, investors, and others because it allows us to measure our operational leverage as revenue scales.

Previous wording

Insurance Benefits Expense Ratio ("BER") is a non-GAAP financial measure. We calculate our BER by taking the total of Insurance net medical expenses incurred and quality improvements, and dividing that total by premiums earned on a net basis, in a given period. Quality improvements include expenses associated with activities that improve health outcomes, as defined by the U.S. Department of Health and Human Services ("HHS"), as well as those directly tied to enhancing healthcare quality, such as the Company's spend on health information technology, wellness and prevention programs, initiatives to reduce hospital readmissions, and our clinically focused Member Rewards program for the current year. We believe our BER is useful to management, investors, and others because it offers a clearer and more accurate representation of our investment in healthcare quality and member engagement, and gives a comprehensive view of costs related to maintaining and improving the quality of care of our members, which is crucial for sustaining member satisfaction and adherence to treatment regimens. The Company has discontinued disclosure of Normalized Insurance Benefits Expense Ratio ("Normalized BER") beginning in the first quarter of 2026, as management no longer uses this metric to evaluate operating performance or allocate resources. The Company will continue to present Insurance Benefits Expense Ratio.

Current wording

Insurance Benefits Expense Ratio ("BER") is a non-GAAP financial measure. We calculate our BER by taking the total of Insurance net medical claims incurred and quality improvements, and dividing that total by premiums earned on a net basis, in a given period. Quality improvements include expenses associated with activities that improve health outcomes, as defined by the U.S. Department of Health and Human Services ("HHS"), as well as those directly tied to enhancing healthcare quality, such as the Company's spend on health information technology, wellness and prevention programs, initiatives to reduce hospital readmissions, and our clinically focused Member Rewards program for the current year. We believe our BER is useful to management, investors, and others because it offers a clearer and more accurate representation of our investment in healthcare quality and member engagement, and gives a comprehensive view of costs related to maintaining and improving the quality of care of our members, which is crucial for sustaining member satisfaction and adherence to treatment regimens. The Company has discontinued disclosure of Normalized Insurance Benefits Expense Ratio ("Normalized BER") beginning in the first quarter of 2026, as management no longer uses this metric to evaluate operating performance or allocate resources. The Company will continue to present Insurance Benefits Expense Ratio.

Previous wording

The tables below provide reconciliations of Insurance Net medical claims incurred, net and Premiums earned, net which are GAAP measures, to Insurance BER, which represents a non-GAAP measure.

Current wording

The tables below provide reconciliations of Net medical claims incurred and Premiums earned, net, which are GAAP measures, to Insurance BER, which represents a non-GAAP measure.

Previous wording

Premiums earned, net increased $267.9 million, or 57%, to $737.8 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase was primarily driven by growth in our average membership over the period, which increased approximately 49%, together with an approximately 6% increase in per-member premium. The higher per-member premium reflected higher CMS premium rates, including the effect of being paid on 4.0 Stars in the current payment year compared to 3.5 Stars in the prior period for our PPO plans, which cover the large majority of our members.

Current wording

Premiums earned, net increased $269.7 million, or 56%, to $748.8 million for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The increase was primarily driven by growth in our average membership over the period, which increased approximately 46%, together with an approximate 7% increase in per-member premium. The higher per-member premium reflected higher CMS premium rates, including the effect of being paid on 4.0 Stars in the current payment year compared to 3.5 Stars in the prior period for our PPO plans, which cover the large majority of our members.

Previous wording

Other income decreased by $2.4 million, or 31%, to $5.4 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The decrease was primarily driven by the absence in 2026 of a non-recurring gain recognized in the prior-year period from the fair value remeasurement of an equity investment in a privately held company, and by lower investment income resulting from a lower interest rate environment, to which our returns are closely correlated given the short-duration nature of our investment portfolio.

Current wording

Other income decreased by $7.0 million, or 40%, to $10.5 million for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The decrease was primarily driven by the absence in 2026 of a non-recurring gain recognized in the prior-year period as a result of an accounting transition related to the Company's investment in Character Biosciences. This was partially offset by an unrealized gain from the fair value remeasurement from the Company's Thyme Care investment during the current period.

Previous wording

Net medical claims incurred increased $212.2 million, or 56%, to $590.2 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase was primarily driven by growth in our average membership during the period, which increased approximately 49%, together with higher per-member medical costs. On a per-member basis, net medical claims incurred increased approximately 5% to $1,254 from $1,194, driven by the current-year benefit design and general medical cost trends.

Current wording

Net medical claims incurred increased $206.0 million, or 49%, to $629.5 million for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The increase was primarily driven by growth in our average membership during the period, which increased approximately 46%, together with higher per-member medical costs. On a per-member basis, net medical claims incurred increased approximately 2% to $1,325 from $1,304, driven by the current-year benefit design and general medical cost trends.

Previous wording

Salaries and benefits decreased by $7.2 million, or 12%, to $54.1 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The decrease was driven primarily by lower stock-based compensation expense, reflecting the completion in January 2026 of the requisite service period for certain founder equity awards granted in 2021, partially offset by higher cash compensation, including base salaries associated with increased headcount to support our membership growth.

Current wording

Salaries and benefits increased by $7.8 million, or 16%, to $56.0 million for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The increase was driven primarily by higher cash compensation, including base salaries associated with increased headcount to support our membership growth, partially offset by lower stock-based compensation expense, reflecting the completion in January 2026 of the requisite service period for certain founder equity awards granted in 2021.

Previous wording

General and administrative expenses increased $21.8 million, or 45%, to $70.3 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase was primarily driven by higher administrative costs to support the growth in our membership, including higher professional fees, broker commissions, and other operating expenses.

Current wording

General and administrative expenses increased $17.9 million, or 37%, to $66.8 million for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The increase was primarily driven by higher administrative costs to support the growth in our membership, including higher professional fees, broker commissions, and other operating expenses.

Previous wording

The following table summarizes our condensed consolidated results of operations for the six months ended June 30, 2026 and 2025. The period-to-period comparison of results is not necessarily indicative of results for future periods.

Current wording

The following table summarizes our condensed consolidated results of operations for the nine months ended September 30, 2026 and 2025. The period-to-period comparison of results is not necessarily indicative of results for future periods.

Previous wording

Premiums earned, net increased $555.2 million, or 60%, to $1,482.0 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase was primarily driven by growth in our average membership over the period, which increased approximately 50%, together with an approximately 7% increase in per-member premium. The higher per-member premium reflected higher CMS premium rates, including the effect of being paid on 4.0 Stars in the current payment year compared to 3.5 Stars in the prior period for our PPO plans, which cover the large majority of our members.

Current wording

Premiums earned, net increased $824.9 million, or 59%, to $2,230.7 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The increase was primarily driven by growth in our average membership over the period, which increased approximately 49%, together with an approximately 7% increase in per-member premium. The higher per-member premium reflected higher CMS premium rates, including the effect of being paid on 4.0 Stars in the current payment year compared to 3.5 Stars in the prior period for our PPO plans, which cover the large majority of our members.

Previous wording

Other income decreased by $2.8 million, or 21%, to $10.4 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The decrease was primarily driven by the absence in 2026 of a non-recurring gain recognized in the prior-year period from the fair value remeasurement of an equity investment in a privately held company, and by lower investment income resulting from a lower interest rate environment, to which our returns are closely correlated given the short-duration nature of our investment portfolio.

Current wording

Other income decreased by $9.8 million, or 32%, to $20.9 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The decrease was primarily driven by the absence in 2026 of a non-recurring gain recognized in the prior-year period as a result of an accounting transition related to the Company's investment in Character Biosciences. This was partially offset by an unrealized gain from the fair value remeasurement from the Company's Thyme Care investment during the current period.

Previous wording

Net medical claims incurred increased $448.4 million, or 61%, to $1,179.8 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase was primarily driven by growth in our average members during the period, which increased approximately 50%, together with higher per-member medical costs. On a per-member basis, net medical claims incurred increased approximately 7% to $1,263 from $1,175, driven by the current-year benefit design and general medical cost trends.

Current wording

Net medical claims incurred increased $654.4 million, or 57%, to $1,809.3 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The increase was primarily driven by growth in our average membership during the period, which increased approximately 49%, together with higher per-member medical costs. On a per-member basis, net medical claims incurred increased approximately 5% to $1,284 from $1,219, driven by the current-year benefit design and general medical cost trends.

Previous wording

Salaries and benefits decreased by $9.1 million, or 8%, to $111.2 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. This decrease was primarily driven by lower stock-based compensation expense, reflecting the completion in January 2026 of the requisite service period for certain founder equity awards granted in 2021, partially offset by higher cash compensation, including base salaries associated with increased headcount to support our membership growth.

Current wording

Salaries and benefits decreased by $1.4 million, or 1%, to $167.2 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. This decrease was primarily driven by lower stock-based compensation expense, reflecting the completion in January 2026 of the requisite service period for certain founder equity awards granted in 2021, partially offset by higher cash compensation, including base salaries associated with increased headcount to support our membership growth.

Previous wording

General and administrative expenses increased $45.8 million, or 46%, to $144.9 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase was primarily driven by higher administrative costs to support the growth in our membership, including higher professional fees, broker commissions, and other operating expenses.

Current wording

General and administrative expenses increased $63.6 million, or 43%, to $211.8 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The increase was primarily driven by higher administrative costs to support the growth in our membership, including higher professional fees, broker commissions, and other operating expenses.

Previous wording

Our cash equivalents and investment securities consist primarily of money market funds, U.S. government debt securities, and corporate debt securities. At June 30, 2026 and December 31, 2025, total cash, cash equivalents, and investments were $443.0 million and $319.9 million, respectively. These totals consist of $241.7 million and $224.6 million at June 30, 2026 and December 31, 2025, respectively, that specifically relate to available-for-sale and held-to-maturity investment securities.

Current wording

Our cash equivalents and investment securities consist primarily of money market funds, U.S. government debt securities, and corporate debt securities. At September 30, 2026 and December 31, 2025, total cash, cash equivalents, and investments were $512.6 million and $319.9 million, respectively. These totals consist of $240.0 million and $224.6 million at September 30, 2026 and December 31, 2025, respectively, that specifically relate to available-for-sale and held-to-maturity investment securities.

Previous wording

At June 30, 2026 and December 31, 2025, total cash, cash equivalents, and investments for the parent company, Clover Health Investments, Corp., and unregulated subsidiaries were $128.5 million and $122.0 million, respectively. We operate as a holding company in a highly regulated industry. As such, we may receive dividends and administrative expense reimbursements from our subsidiaries, two of which are subject to regulatory restrictions. We continue to maintain significant levels of aggregate excess statutory capital and surplus in our state-regulated insurance subsidiaries.

Current wording

At September 30, 2026 and December 31, 2025, total cash, cash equivalents, and investments for the parent company, Clover Health Investments, Corp., and unregulated subsidiaries were $153.3 million and $122.0 million, respectively. We operate as a holding company in a highly regulated industry. As such, we may receive dividends and administrative expense reimbursements from our subsidiaries, two of which are subject to regulatory restrictions. We continue to maintain significant levels of aggregate excess statutory capital and surplus in our state-regulated insurance subsidiaries.

Previous wording

At June 30, 2026 and December 31, 2025, total cash, cash equivalents, and investments for our regulated subsidiaries were $314.5 million and $197.9 million, respectively. Additionally, our regulated insurance subsidiaries held $177.4 million and $178.1 million of available-for-sale and held-to-maturity investment securities at June 30, 2026 and December 31, 2025, respectively. Our use of operating cash derived from our unregulated subsidiaries is generally not restricted by departments of insurance (or comparable state regulatory agencies). Our regulated insurance subsidiaries are subject to regulations and standards in their respective jurisdictions on their ability to declare and pay dividends to the parent. As of June 30, 2026, there have been no dividends paid to the parent. Insurance regulators have broad powers to prevent reduction of statutory surplus to inadequate levels, and there is no assurance that dividends of the maximum amounts calculated under any applicable formula would be permitted. State insurance regulatory authorities that have jurisdiction over the payment of dividends by our regulated insurance subsidiary may in the future adopt statutory provisions more restrictive than those currently in effect.

Current wording

At September 30, 2026 and December 31, 2025, total cash, cash equivalents, and investments for our regulated subsidiaries were $359.3 million and $197.9 million, respectively. Additionally, our regulated insurance subsidiaries held $176.7 million and $178.1 million of available-for-sale and held-to-maturity investment securities at September 30, 2026 and December 31, 2025, respectively. Our use of operating cash derived from our unregulated subsidiaries is generally not restricted by departments of insurance (or comparable state regulatory agencies). Our regulated insurance subsidiaries are subject to regulations and standards in their respective jurisdictions on their ability to declare and pay dividends to the parent. Insurance regulators have broad powers to prevent reduction of statutory surplus to inadequate levels, and there is no assurance that dividends of the maximum amounts calculated under any applicable formula would be permitted. State insurance regulatory authorities that have jurisdiction over the payment of dividends by our regulated insurance subsidiaries may in the future adopt statutory provisions more restrictive than those currently in effect.

Previous wording

The following table summarizes our condensed consolidated cash flows for the six months ended June 30, 2026 and 2025.

Current wording

The following table summarizes our condensed consolidated cash flows for the nine months ended September 30, 2026 and 2025.

Previous wording

For the six months ended June 30, 2026, Net cash provided by operating activities was $133.1 million, which reflects Net income of $55.3 million. The changes in operating assets and liabilities were largely attributable to a $97.6 million increase in Unpaid claims. Non-cash activities primarily included a $21.4 million charge to Stock-based compensation.

Current wording

For the nine months ended September 30, 2026, Net cash provided by operating activities was $203.5 million, which reflects Net income of $61.8 million. The changes in operating assets and liabilities were largely attributable to a $115.9 million increase in Unpaid claims. Non-cash activities primarily included a $29.4 million charge to Stock-based compensation.

Previous wording

For the six months ended June 30, 2025, Net cash used in operating activities was $10.9 million, which reflects a Net loss of $11.9 million. Non-cash activities primarily included a $52.6 million charge to Stock-based compensation expense.

Current wording

For the nine months ended September 30, 2025, Net cash provided by operating activities was $1.2 million, which reflects a Net loss of $36.2 million. Non-cash activities primarily included a $78.7 million charge to Stock-based compensation expense.

Previous wording

Net cash used in investing activities for the six months ended June 30, 2026 of $5.1 million was primarily due to $68.1 million used to purchase investments. This was largely attributable to $64.5 million provided from the sales and maturities of investment securities.

Current wording

Net cash used in investing activities for the nine months ended September 30, 2026 of $8.0 million was primarily due to $73.1 million used to purchase investments, partially offset by $67.5 million provided from the sales and maturities of investment securities.

Previous wording

Net cash provided by investing activities for the six months ended June 30, 2025 of $44.5 million was primarily due to $105.1 million provided from the sales and maturities of investment securities. This was partially offset by $59.9 million used to purchase investments.

Current wording

Net cash provided by investing activities for the nine months ended September 30, 2025 of $39.1 million was primarily due to $139.5 million provided from the sales and maturities of investment securities. This was partially offset by $99.0 million used to purchase investments.

Previous wording

Net cash used in financing activities for the six months ended June 30, 2026 of $7.4 million was primarily the result of cash paid for shares withheld related to stock-based compensation totaling $9.7 million.

Current wording

Net cash used in financing activities for the nine months ended September 30, 2026 of $5.7 million was primarily the result of cash paid for shares withheld related to stock-based compensation totaling $9.7 million.

Previous wording

Net cash used in financing activities for the six months ended June 30, 2025 of $39.5 million was primarily the result of cash paid for shares withheld related to stock-based compensation totaling $22.1 million in addition to repurchases of our Class A common stock totaling $18.3 million.

Current wording

Net cash used in financing activities for the nine months ended September 30, 2025 of $44.8 million was primarily the result of cash paid for shares withheld related to stock-based compensation totaling $27.7 million in addition to repurchases of our Class A common stock totaling $18.3 million.

Previous wording

Material cash requirements from known contractual obligations and commitments at June 30, 2026 include operating lease obligations of $3.6 million. These commitments are associated with contracts that were enforceable and legally binding at June 30, 2026, and that specified all significant terms, including fixed or minimum services to be used, fixed, minimum, or variable price provisions, and the approximate timing of the actions under the contracts. There were no other material cash requirements from known contractual obligations and commitments at June 30, 2026. For additional information regarding our remaining estimated contractual obligations and commitments, see Note 12 "Commitments and Contingencies" in the accompanying notes to the condensed consolidated financial statements included in this Form 10-Q.

Current wording

Material cash requirements from known contractual obligations and commitments at September 30, 2026 include operating lease obligations of $3.9 million. These commitments are associated with contracts that were enforceable and legally binding at September 30, 2026, and that specified all significant terms, including fixed or minimum services to be used, fixed, minimum, or variable price provisions, and the approximate timing of the actions under the contracts. There were no other material cash requirements from known contractual obligations and commitments at September 30, 2026. For additional information regarding our remaining estimated contractual obligations and commitments, see Note 12 "Commitments and Contingencies" in the accompanying notes to the condensed consolidated financial statements included in this Form 10-Q.