CLOVER HEALTH INVESTMENTS, CORP. /DECLOV
CLOVER HEALTH INVESTMENTS, CORP. /DE Fair Value Disclosure
Fair Value Measurements
The following tables present a summary of fair value measurements for financial instruments at December 31, 2025 and December 31, 2024, respectively:
| December 31, 2025 | Level 1 | Level 2 | Level 3 | Total Fair Value | ||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| U.S. government and government agencies | $ | — | $ | 129,447 | $ | — | $ | 129,447 | ||||||||||||||||||
| Corporate debt securities | — | 80,495 | — | 80,495 | ||||||||||||||||||||||
Private equity investments | — | — | 12,226 | 12,226 | ||||||||||||||||||||||
| Warrants receivable | — | — | — | — | ||||||||||||||||||||||
Other | — | 281 | — | 281 | ||||||||||||||||||||||
| Total assets at fair value | $ | — | $ | 210,223 | $ | 12,226 | $ | 222,449 | ||||||||||||||||||
| December 31, 2024 | Level 1 | Level 2 | Level 3 | Total Fair Value | ||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| U.S. government and government agencies | $ | — | $ | 138,261 | $ | — | $ | 138,261 | ||||||||||||||||||
| Corporate debt securities | — | 88,502 | — | 88,502 | ||||||||||||||||||||||
| Warrants receivable | — | — | 764 | 764 | ||||||||||||||||||||||
Other | — | 1,953 | — | 1,953 | ||||||||||||||||||||||
| Total assets at fair value | $ | — | $ | 228,716 | $ | 764 | $ | 229,480 | ||||||||||||||||||
The changes in balances of Clover's Level 3 financial assets and liabilities were as follows:
Equity Investments | Warrants Receivable | Total | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||
| Balance, December 31, 2023 | $ | — | $ | 814 | $ | 814 | ||||||||||||||
| Unrealized gains | — | 50 | 50 | |||||||||||||||||
| Balance, December 31, 2024 | $ | — | $ | 764 | $ | 764 | ||||||||||||||
| Realized gains | — | 815 | 815 | |||||||||||||||||
| Unrealized gains (losses) | 10,400 | (835) | 9,565 | |||||||||||||||||
| Sales | — | (744) | (744) | |||||||||||||||||
| Transfers in | 1,826 | — | 1,826 | |||||||||||||||||
| Balance, December 31, 2025 | $ | 12,226 | $ | — | $ | 12,226 | ||||||||||||||
| $ | 10,400 | $ | — | $ | 10,400 | |||||||||||||||
Private Warrants
During the year ended December 31, 2025, the Company had exercisable private warrants which were embedded in several agreements as derivatives. These private warrants were accounted for as assets in accordance with ASC 815-40, Derivatives and Hedging, and are presented in Other assets, non-current in the Consolidated Balance Sheets. The warrant assets are measured at fair value at inception and on a recurring basis until redeemed, with changes in fair value presented in Change in fair value of warrants in the Consolidated Statements of Operations and Comprehensive Loss. These private warrants were classified within Level 3 due to the subjectivity and use of estimates in the calculation of their fair value.
During the year ended December 31, 2025, one of the Company's warrant receivable arrangements was fully liquidated. The liquidation resulted in a realized gain recorded in the Consolidated Statement of Operations and Comprehensive Loss. Immediately prior to liquidation, the fair value of the warrants receivable was $0.7 million. The Company received $1.6 million in total consideration for the warrants. The liquidation of the warrants resulted in a realized gain of $0.8 million recognized within the Other income line item within the Consolidated Statement of Operations and Comprehensive Loss.
In addition, the Company is eligible to receive a pro-rata portion of a contingent payment, upon the satisfaction of certain performance milestones. In accordance with ASC 450, Contingencies, the Company has not recognized any asset or gain related to this contingent payment right because realization is not considered probable. The Company will recognize any gain or revenue related to the contingent payment only when the performance criteria have been met and the payment is deemed certain and collectible.
During the year ended December 31, 2025, the Company determined that its remaining private warrant had become zero following financial distress and a subsequent sale of the underlying issuer, and the carrying value of the warrant was written off during the period.
As of December 31, 2025, the Company no longer held any private warrants.
Equity Investments
The Company owns equity securities in privately held companies. Their fair value is classified as Level 3 because the valuation relies primarily on unobservable inputs that require significant management judgment. While the valuation process utilizes inputs based on observable market transactions such as comparable company multiples or similar private placements, these must be significantly adjusted using unobservable assumptions to reflect the specific risks and characteristics of the non-marketable private investment. This reliance on subjective, unobservable inputs is the basis for the Level 3 classification and results in a higher degree of valuation uncertainty.
Character Biosciences, Inc.
On September 30, 2025, the Company determined it lost significant influence over Character Biosciences, Inc. ("Character Biosciences" or "CB") following dilution of its ownership. Refer to Note 12 "Variable Interest Entity" for additional information on the transition from equity method of accounting under ASC 323, Investments - Equity Method and Joint Ventures, to fair value measurement under ASC 321, Investments - Equity Securities.
The Company's investment in the equity securities of CB, which includes both Class A common stock and preferred stock, does not have a readily determinable fair value. It is measured at fair value on a recurring basis, with changes recognized in net income in accordance with ASC Topic 321, Investments - Equity Securities. This investment is classified as a Level 3 fair value measurement within ASC 820, Fair Value Measurement, hierarchy because its valuation relies on significant unobservable inputs.
As of December 31, 2025, the fair value of the investment was approximately $8.3 million. The fair value was determined using a third-party valuation that incorporated recent market transactions and updated company-specific financial information. The valuation reflected income- and market-based methodologies and included assumptions related to forecasted performance, discount rates, and a discount for lack of marketability.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Mar 14, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 31, 2021 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.