New York, June 11, 2026, 05:08 EDT
- Clover Health ended Wednesday at $4.89, gaining 13.99%. The stock was last seen at $5.29 in premarket action Thursday.
- Clover shares rallied after CMS raised the 2026 Star Rating on its main PPO Medicare Advantage contract to 4.5 from 3.5 stars.
- The rating is key since CMS says 2026 Star Ratings will impact 2027 Medicare Advantage quality bonus payments.
Clover Health Investments, Corp. shares are up as the company finally got clarity on a key question hanging over its 2027 forecast: would its main Medicare Advantage plan land at 3.5 or 4.5 stars? Investors got an answer this week. On June 10, Clover said in a Form 8-K that CMS bumped the 2026 Star Rating for Contract H5141, its PPO plan, to 4.5 stars. The move follows a federal judge tossing the earlier 3.5-star rating.
Clover shares ended Wednesday at $4.89, up 13.99% on the day, giving the company a market cap of roughly $2.58 billion. Early Thursday, StockAnalysis showed CLOV at $5.29 in premarket activity, up another 8.18%. Google Finance put the stock’s 52-week high at $5.14, with that level reached as shares spiked.
Clover said this rating change wasn’t standard. On May 29, the U.S. District Court for the Southern District of Georgia gave a final judgment in Clover Insurance Co. v. U.S. Department of Health and Human Services, granting in part Clover Insurance Company’s motion for summary judgment. The court tossed the 3.5-star rating and told CMS to recalculate it as directed.
CMS told Clover on June 9 that its recalculated rating is 4.5 stars and told the company to send alternate bids at that level. For Medicare Advantage, a bid estimates what it costs to provide Medicare services. Ratings affect bonus eligibility and rebate mechanics, and those can shift benefits, premiums, and plan economics.
The sharp reaction is due to the concentration. Clover said its upgraded PPO contract now covers over 97% of members. The HMO plan, Contract H8010, wasn’t in the lawsuit and keeps its 4.0-star rating for 2026.
CMS uses Star Ratings, a one-to-five scale, to score Medicare Advantage and Part D plans. The agency says these scores track quality on health and drug benefits and give Medicare enrollees a way to compare plans. The new 4.5-star rating isn’t just marketing—investors are looking at it because it also shapes 2027 Medicare Advantage quality bonus payments.
The key bar is four stars. KFF says Medicare Advantage Star Ratings set bonus eligibility and shift how much savings above a benchmark are paid out. If a plan gets at least four stars, its benchmark goes up. There’s also a bigger rebate for plans with at least 4.5 stars versus those at exactly four stars, according to KFF.
Clover didn’t say how much the rating change is worth in its filing. The gap is key. The market is betting on a stronger 2027, but the company hasn’t laid out what the alternate bids could mean for revenue, benefits, margins or member counts.
Clover’s new rating comes after a sharp rebound. For the first quarter, Clover posted revenue of $749.2 million, climbing 62.1% from a year ago. The company showed GAAP net income of $27.3 million, and ended the quarter with 155,773 Medicare Advantage members. Adjusted EBITDA came in at $40.3 million.
Management is calling for GAAP net income between $0 million and $20 million and adjusted EBITDA of $50 million to $70 million for 2026. CEO Andrew Toy said in May that Clover was planning on “our first full year of GAAP Net Income profitability in 2026.” GlobeNewswire
The stock is now trading above at least one recent analyst target. Canaccord’s Richard Close upped his price target to $4.20 from $3.20 and kept his Buy rating as of June 4, TheFly reported via TipRanks. As of Wednesday’s close, shares had already passed that target before moving higher again in Thursday’s premarket.
The risk is the market could be pricing in the rating upgrade before there’s proof it helps the bottom line. Margins are still exposed to medical claims. 2027 bids need to become approved products. Lawmakers continue to focus on Medicare Advantage policy because quality bonus payments mean billions in federal spending. KFF puts those bonus payments at a minimum of $12.7 billion for 2025 and says the Star Ratings system keeps drawing criticism.
Investors are waiting for more than court news. What matters now is the company’s numbers: how those 4.5-star alternate bids impact Clover’s 2027 benefit design, pricing and what that could mean for the PPO plan’s earnings. That plan covers nearly all its members.
