CLOVER HEALTH INVESTMENTS, CORP. /DECLOV
CLOVER HEALTH INVESTMENTS, CORP. /DE Income Taxes Disclosure
Income Taxes
The components of income before income taxes are as follows:
| Year ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| U.S. Federal | $ | (85,574) | $ | (43,198) | $ | (214,203) | ||||||||||||||
| Foreign | 25 | 189 | 842 | |||||||||||||||||
| Components of income taxes | $ | (85,549) | $ | (43,009) | $ | (213,361) | ||||||||||||||
The provision for income taxes consisted of the following for the years ended December 31, 2025, 2024, and 2023, respectively:
| Year ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
Current: | ||||||||||||||||||||
| U.S Federal | $ | — | $ | — | $ | — | ||||||||||||||
| Foreign | — | — | — | |||||||||||||||||
| State | — | — | — | |||||||||||||||||
| $ | — | $ | — | $ | — | |||||||||||||||
Deferred: | ||||||||||||||||||||
| U.S. Federal | $ | — | $ | — | $ | — | ||||||||||||||
| Foreign | — | — | — | |||||||||||||||||
| State | — | — | — | |||||||||||||||||
| $ | — | $ | — | $ | — | |||||||||||||||
The Company’s income tax benefit differs from the amount computed by applying the U.S. federal statutory income tax rate of 21% to loss before income taxes primarily due to changes in the valuation allowance, tax credits, and permanent differences. Because the Company has recorded a full valuation allowance against its U.S. deferred tax assets, the tax benefit that would otherwise be expected from current-year losses is substantially offset, resulting in an effective tax rate of zero for the periods presented. For the years ended December 31, 2025, 2024 and 2023, the Company incurred losses from continuing operations before income taxes, all of which were attributable to domestic operations. The Company does not have material foreign operations. A reconciliation of the U.S. Federal statutory tax rate to our December 31, 2025, 2024, and 2023 annual tax rate is as follows:
| Year ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
Amount | Tax Rate | Amount | Tax Rate | Amount | Tax Rate | |||||||||||||||||||||||||||||||||
| (in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||||||||||||||||||||
| $ | (17,965) | 21.00 | % | $ | (9,032) | 21.00 | % | $ | (44,806) | 21.00 | % | |||||||||||||||||||||||||||
| State and local income taxes, net of federal benefits | — | — | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||
| Change in valuation allowance | 7,188 | (8.40) | % | 3,903 | (9.07) | % | 27,376 | (12.83) | % | |||||||||||||||||||||||||||||
| Foreign tax effects | — | — | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||
| Tax credits | — | — | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||
| Nontaxable or nondeductible expenses: | ||||||||||||||||||||||||||||||||||||||
| 162(m) limitation | 9,765 | (11.42) | % | 4,297 | (9.99) | % | 1,488 | (0.70) | % | |||||||||||||||||||||||||||||
| Stock based compensation | 816 | (0.95) | % | 7,495 | (17.43) | % | 16,408 | (7.69) | % | |||||||||||||||||||||||||||||
| Nontaxable or nondeductible expenses, other | 55 | (0.06) | % | 33 | (0.08) | % | 45 | (0.02) | % | |||||||||||||||||||||||||||||
| Prior year true-up | 141 | (0.17) | % | (7,637) | 17.76 | % | (221) | 0.10 | % | |||||||||||||||||||||||||||||
| Other, net | — | — | % | 941 | (2.19) | % | (290) | 0.14 | % | |||||||||||||||||||||||||||||
Reported tax | $ | — | — | % | $ | — | — | % | $ | — | — | % | ||||||||||||||||||||||||||
A summary of income taxes paid in 2025 is as follows:
| Year ended December 31, | 2025 | |||||||
| (in thousands) | ||||||||
U.S. Federal | $ | — | ||||||
U.S. State and Local | — | |||||||
Foreign | — | |||||||
Total income taxes paid | $ | — | ||||||
Principal components of net deferred tax balances at December 31, 2025 and 2024, respectively, were as follows:
| Year ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in thousands) | ||||||||||||||
| Deferred income tax assets: | ||||||||||||||
| Net operating loss carryforward (NOL) | $ | 331,313 | $ | 319,934 | ||||||||||
| Stock based compensation | 72,346 | 71,475 | ||||||||||||
| Unpaid claim reserve discounting | 499 | 475 | ||||||||||||
| Operating lease liabilities | 615 | 696 | ||||||||||||
| Fixed assets and intangible assets | — | 257 | ||||||||||||
| Accruals | 2,746 | 6,060 | ||||||||||||
| Goodwill | 3,476 | 3,601 | ||||||||||||
| Other | 77 | 583 | ||||||||||||
| Total deferred income tax assets | 411,072 | 403,081 | ||||||||||||
| Less: valuation allowance | (407,997) | (400,809) | ||||||||||||
| Total deferred income tax assets, net of valuation allowance | 3,075 | 2,272 | ||||||||||||
| Deferred income tax liabilities: | ||||||||||||||
| Operating lease right-of-use assets | (484) | (484) | ||||||||||||
| Nontaxable gain on deconsolidation of entity | (845) | (845) | ||||||||||||
| Fixed assets and intangible assets | (964) | — | ||||||||||||
| Other | (782) | (943) | ||||||||||||
| Total deferred income tax liabilities | (3,075) | (2,272) | ||||||||||||
| Net deferred income tax assets | $ | — | $ | — | ||||||||||
Operating loss and tax credit carryforwards and protective tax deposits
At December 31, 2025 and 2024, the Company had a Federal net operating loss carryforward of $1,577.7 million and $1,523.5 million. Of the $1,577.7 million, Federal net operating loss carryforwards, $249.2 million begin to expire in 2035, and $1,328.5 million may be carried forward indefinitely, with the exception of net operating losses for the insurance companies. Under Internal Revenue Code Section 382, if a corporation undergoes and "ownership change", the corporation's ability to use its pre-change NOL. carryforwards and other pre-change tax attributes to offset its post-change income may be limited. The Company has completed a study through January 7, 2021 and concluded that ownership changes have occurred that may limit their utilization in future periods.
Future realization of the tax benefits of existing temporary differences and net operating loss carryforwards ultimately depends on the existence of sufficient taxable income within the carryforward period. At December 31, 2025 and 2024, the company performed an evaluation to determine whether a valuation allowance was needed. The Company considered all available evidence, both positive and negative, which included the results of operations for the current and preceding years. The Company determined that it was not possible to reasonably quantify future taxable income and determined that it is more likely than not that all of the deferred tax assets will not be realized. Accordingly, the Company maintained a full valuation allowance as of December 31, 2025 and 2024.
The Company does not have deposits admitted under Section 6603 of the Internal Revenue Code.
Impact of tax planning strategies
The Company does not have any tax planning strategies that include the use of reinsurance and there are no deferred tax liabilities not recognized.
The Company files income tax returns in the United States. The U.S. Internal Revenue Service ("IRS") is not currently conducting any income tax audits of the Company's returns. The Company's federal income tax returns filed related to tax years subsequent to 2022 remain subject to examination by the IRS. The Company is not aware of any material adjustments that may be proposed as a result of any ongoing or future examinations and does not have material uncertain tax positions reflected in the Consolidated Balance Sheets.
On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022 (the “IRA”), which contains a number of tax-related provisions, including a 15% corporate alternative minimum tax imposed on certain corporations that meet an income-based test, as well as a 1% nondeductible excise tax on certain stock repurchases. The Company is not subject to the alternative minimum tax in 2025 based on the income-based test and it will continue to evaluate the IRA’s impact as further information becomes available.
Other
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”), which enacts significant changes to the US federal corporate income tax system. The legislation includes, among other provisions, modifications to the treatment of research and development expenditures, permanent 100% bonus depreciation, and changes to the interest deduction limitation under Section 163(j). The legislation does not have a material impact on the Company’s consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update aim to provide more transparency regarding tax disclosures mainly related to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-09 applied on a prospective basis as of December 31, 2025. The adoption impacted income tax disclosures only, primarily related to the effective tax rate reconciliation and income taxes paid, and did not have a material impact on the Company’s consolidated financial statements.
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 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.