Clover Health's stock could be delisted from the Nasdaq, the company disclosed.
Clover told investors in a filing last week with the Securities and Exchange Commission that it was notified by the stock exchange that its shares have failed to trade above $1 per share for 30 consecutive business days, as is required for inclusion on the Nasdaq.
Clover said it has 180 calendar days, or until Oct. 17, to regain compliance with the requirement, meaning its stock must trade above $1 for 10 consecutive business days. Clover could potentially obtain an additional 180 days to address the stock pricing issues by switching from the Nasdaq Global Select Market to the Nasdaq Capital Market, according to the filing.
"The Company intends to actively monitor the closing bid price of its Common Stock and will consider all available options to regain compliance with the Minimum Bid Price Requirement, which may include seeking stockholder approval to effect a reverse stock split," Clover wrote in the filing.
As of about 2 p.m. ET on Monday, Clover Health's stock was trading at 74 cents per share.
Fellow insurtech Bright Health Group also faces a stock delisting from the New York Stock Exchange as it has struggled to keep its stock above $1 per share. It was trading at 17 cents per share midafternoon Monday as it stares down potential bankruptcy at the end of this month.
In addition, on Monday, Clover announced that it settled the first of several class-action shareholder suits alleging that the company failed to disclose an investigation from the Department of Justice investigation and other key details ahead of its 2021 initial public offering, thereby committing securities fraud.
The insurer will pay $22 million to settle the suit but faces outstanding lawsuits on similar grounds in New York, Delaware and Tennessee, according to the press release. It will fund the settlement with $19.5 million financed by its insurers and $2.5 million out of pocket, and it is suing its insurers in Delaware to secure the funds necessary to settle, Clover said.
The settlement does not constitute an admission of guilt, Clover Health said.
“The Board and the Company are happy to have reached this settlement," Clover CEO Andrew Toy said in a statement. "While the Company believes that the securities class action was entirely without merit, we can now avoid the continued, substantial legal defense costs and distractions associated with the lawsuit."
"This resolution allows us to focus on what is important; building a strong, sustainable business which will benefit our members and shareholders alike," Toy said.
The settlement is subject to approval from the federal courts in the Middle District of Tennessee.
Clover Health and its peers in the insurtech space have yet to turn a profit and have largely struggled in the transition from startup to public company. Last week, Clover announced a restructuring effort, including layoffs for 10% of its workforce, that it said will back its push toward profitability.
The company posted an $84 million loss in the fourth quarter of 2022 and will release its first-quarter 2023 earnings on May 9.