CLOVER HEALTH INVESTMENTS, CORP. /DE - POS AM filing on 2021-06-21

Reverse Capitalization

12 Months Ended

Dec. 31, 2020

3. Reverse capitalization

The Corporation entered into the Merger Agreement with SCH, a SPAC, on October 5, 2020. Pursuant to the Merger Agreement, and a favorable vote of SCH’s stockholders on January 6, 2021, Asclepius Merger Sub Inc., a Delaware corporation and a newly formed, wholly owned subsidiary of SCH (“Merger Sub”), was merged with and into the Corporation. Upon consummation of the business combination, the separate corporate existence of Merger Sub ceased, the Corporation survived and merged with and into SCH, with SCH as the surviving corporation, and SCH was renamed Clover Health Investments, Corp. (the “Business Combination”).

The Business Combination was accounted for as a reverse capitalization in accordance with U.S. GAAP. Under the g

uidance in ASC 805, C

lover Health Investments, Corp. is treated as the “acquirer” for financial reporting purposes. As such, Clover is deemed the accounting predecessor of the combined business, and Clover, as the parent company of the combined business, is the successor SEC registrant, meaning that the Clover financial statements for previous periods will be disclosed in the registrant’s future periodic reports filed with the SEC.

Pursuant to U.S. GAAP, the Corporation retroactively applied the reverse capitalization to our equity structure for the years ended December 31, 2020 and 2019, as summarized below and reflected in the Consolidated Balance Sheets, Consolidated Statements of Operations and Comprehensive Loss, and Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Deficit.

Unless otherwise indicated, all of the Corporation’s common stock as well as previously issued stock options presented in the accompanying retroactively revised Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Deficit or in the related notes are presented on an as- or as if-converted basis, converted at the ratio of approximately 2.0681 and presented as shares or awards of our common stock:

Retroactive application of reverse capitalization to Consolidated Balance Sheets


Date	Description	As previously reported		1/7/21 conversion ratio		Reverse capitalized shares
12/31/2019	Convertible preferred shares authorized		75,136,086		2.0681		155,387,025
12/31/2019	Convertible preferred shares issued and outstanding		67,427,138		2.0681		139,444,346
12/31/2019	Common shares authorized		170,000,000		2.0681		351,572,668
12/31/2019	Common shares issued		42,877,665		2.0681		88,674,206
12/31/2019	Common shares outstanding		42,686,624		2.0681		88,279,119
12/31/2020	Convertible preferred shares authorized		75,136,086		2.0681		155,387,025
12/31/2020	Convertible preferred shares issued and outstanding		67,427,138		2.0681		139,444,346
12/31/2020	Common shares authorized		170,000,000		2.0681		351,572,668
12/31/2020	Common shares issued		43,505,291		2.0681		89,972,184
12/31/2020	Common shares outstanding		43,134,938		2.0681		89,206,266

The following table summarizes the weighted-average outstanding shares, basic and diluted for the years ended December 31, 2020 and 2019 after factoring all retroactive application of capitalization.

Retroactive application of reverse capitalization to Consolidated Statements of Operations and Comprehensive Loss


Date	Description	As previously reported			1/7/21 conversion ratio		Reverse capitalized amounts
12/31/2019	Net loss per share attributable to common shareholders - basic and diluted	$	(8.56	)		2.0681	$	(4.14	)
12/31/2019	Basic and diluted weighted average number of common shares and common shares equivalents outstanding		42,469,175			2.0681		87,829,419
12/31/2020	Net loss per share attributable to common shareholders - basic and diluted	$	(3.18	)		2.0681	$	(1.54	)
12/31/2020	Basic and diluted weighted average number of common shares and common shares equivalents outstanding		42,886,067			2.0681		88,691,582

Retroactive application of reverse capitalization to Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Deficit


Date	Description	As previously reported		1/7/21 conversion ratio		Reverse capitalized amounts
12/31/2018	Convertible preferred stock - shares		67,427,138		2.0681		139,444,346
12/31/2018	Common stock - shares		42,243,445		2.0681		87,362,592
12/31/2018	Common stock - amount	$	4		2.0681	$	9