I remain of two minds regarding Clover Health Investments (NASDAQ:CLOV). On the one hand, I like the vision of chief technology officer Andrew Toy. Most of America’s healthcare bills are built on chronic conditions like heart disease and diabetes. Data and virtual doctor visits can improve compliance and lower costs.

On the other hand, I distrust CEO Vivek Garipalli. His control of three CarePoint hospitals in New Jersey has come in for harsh scrutiny.

While I have been dithering, the price of the stock has been falling. The last time I wrote about it, the shares opened at $3.60 each. They closed last week at $3.11 and pre-market this morning has them down a further 3.22%. There may soon be nothing to invest in. But would that be the end of the story?

A Chance to Grow

Investors seem to be ignoring some very good news, announced at a recent JPMorgan Chase (NYSE:JPM) health conference.

Clover’s Medicare Advantage enrollments for 2022 were up 25% from a year ago. They’re ahead of projections for 82,000 customers. The average growth in that market segment was 10%. That makes it the hottest market in healthcare.

Growth for Clover was especially strong in Georgia, Toy told the JPM conference. There, Clover Health had partnered with Walmart (NYSE:WMT) in 2020 to sell plans under the LiveHealthy brand name. The giant retailer has six “health centers” in the state, providing low-cost care.

To spark that growth, Clover expanded its services. It now offers lower-cost insulin, dental, hearing and vision care, fitness center memberships, and zero copays on selected medicines in Clover formularies, when bought through participating pharmacies. 

All these “expanded benefits” can pay for themselves. People who eat well, who exercise, who get regular checkups and who take prescribed medications stay out of hospitals. The telehealth appointments of the Clover Assistant cut costs further.

Free Falling

Despite its success, Clover stock continued to fall, helped by a $34.5 million loss in the third quarter and a secondary stock offering that diluted the stake of existing shareholders. Since spiking briefly in June to over $22 a share, Clover Health shares have lost more than 85% of their value.

Many of Toy’s innovations have been adopted by bigger plans. United Healthcare (NYSE:UNH), the largest player in the medical insurance space by far, launched a “virtual first” plan called NavigateNOW. Cigna (NYSE:CI) launched a telehealth plan based on a system it bought called MDLive. Teledoc Health (NYSE:TDOC), which specializes in virtual care, partnered with Trustmark (NASDAQ:TRMK) on a plan built around its Primary360.

In short, many of Toy’s innovations no longer look so innovative. The entire industry is moving toward managed care of chronic conditions, toward telehealth and toward partnerships with low-cost providers using in-store clinics.

If Clover can hit analyst revenue estimates, $2.64 billion against $1.45 billion in revenue for 2021, the stock may have room to run. But not if risk appetite doesn’t improve. The best estimate on earnings by five Clover analysts is for a loss of 24 cents a share.

The Bottom Line

If you believe in Toy’s vision of the managed care future, now may look like a good time to jump into Clover Health stock.

But these shares still aren’t cheap. Centene (NYSE:CNC), the leader in managed care, carries a market cap of $47 billion on expected 2021 revenue of $121 billion. Clover is currently worth $1.47 billion on expected 2022 revenue of $2.64 billion. The difference is that Centene makes money. Clover does not.

The only way a Clover Health investment would make sense to me is if the Clover Assistant software is worth more than the business. That’s something you can speculate on, but I’ll still pass.

On the date of publication, Dana Blankenhorn held no positions in any company mentioned in this story. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com, tweet him at @danablankenhorn, or subscribe to his Substack newsletter.