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Lemonade (LMND) Q1 Loss Wider Than Expected, Revenues Beat

·3 min read
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Lemonade, Inc. LMND reported first-quarter 2020 operating loss of 81 cents per share, wider than the Zacks Consensus Estimate of a loss of 76 cents. The loss was however narrower than a loss of $3.16 per share incurred in the year-ago quarter.

Gross earned premiums improved driven by increase in-force premium earned.

Lemonade, Inc. Price, Consensus and EPS Surprise

Lemonade, Inc. Price, Consensus and EPS Surprise
Lemonade, Inc. Price, Consensus and EPS Surprise

Behind the Q1 Headlines    

Total revenues declined 12.8% year over year to $24 million, primarily due to ceding commission income and increase in commission and other income. However, the top line beat the Zacks Consensus Estimate by 6.5%.

Gross earned premiums soared 84% year over year to $56 million driven by increase in in-force premium earned.

In-force premium of $252 million jumped 89% driven by higher number of customer and premium per customer. Premium per customer improved 25% year over year driven by continued shift of business mix toward products with higher average policy values, an increasing prevalence of multiple policies per customer, and growth in the overall average policy value.

Total operating expenses, excluding net loss and loss adjustment expense, increased 25% year over year to $55.1 million, attributable to higher other insurance expenses, technology development, and general and administrative expenses.

Adjusted EBITDA was negative $41.3 million, wider than negative $22.4 million in the year-ago quarter.

Loss ratio of 120 deteriorated 4800 basis points year over year.

Financial Update

Cash, cash equivalents, and investments were $1.2 billion at Mar 31, 2021, more than double from 2020 end, largely reflecting the net proceeds from the initial public offering, partially by cash used in operations.

As of Mar 31, 2021, Lemonade had assets worth $1.5 billion, up 78.3% from the level at 2020 end.

Shareholder equity at quarter end was $1.1 billion, more than double from 2020 end level.

Cash used in operations were $40.3 million, higher than $19.4 million used in the year- ago quarter.

Q2 Outlook

In-force premium at quarter end is projected between $283 and $288 million. Gross earned premium is expected in the range of $65.3-$65 million. Revenues are anticipated between $26 million and $27 million. Adjusted EBITDA loss is expected to be $40-$43 million. Capital expenditures is estimated to be $3 million.

2021 Outlook

In-force premium is projected between $376 million and $382 million (up from $372-$378 million guided earlier). Gross earned premium is expected in the range of $279 million and $283 million (up from $270 million and $275 million guided earlier). Revenues are anticipated between $117 million and $120 million (up from $114 million and $117 million guided earlier). Adjusted EBITDA loss is expected to be $163-$173 million. Capital expenditures is estimated to be $11 million (up from $8 million guided earlier).

Zacks Rank

Lemonade currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Multiline Insurers

Of the insurance industry players that have reported first-quarter results so far, CNO Financial CNO, Assurant AIZ and Old Republic International Corporation’s ORI earnings beat the Zacks Consensus Estimate.

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CNO Financial Group, Inc. (CNO) : Free Stock Analysis Report

Assurant, Inc. (AIZ) : Free Stock Analysis Report

Old Republic International Corporation (ORI) : Free Stock Analysis Report

Lemonade, Inc. (LMND) : Free Stock Analysis Report

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