The freeze in Texas led to about a year’s worth of claims in the storm’s first few days, Lemonade said.
Dreamstime
The Texas winter storm in February that knocked out power for many in the state also had an impact on insurtech Lemonade ‘s earnings. The stock fell Wednesday morning after the company reported a wider-than-expected net loss partially due to claims filed from the storm.
Lemonade (ticker: LMND) reported quarterly results after the market closed on Tuesday. Its first-quarter net loss was $49 million, or 81 cents a share. Wall Street analysts had expected a net loss of 78 cents a share, according to FactSet. Total revenue of $23.5 million topped expectations for $21.9 million.
The company noted that the freeze in Texas led to about a year’s worth of claims in the storm’s first few days, and the event resulted in $6.5 million of net incurred losses. That uptick provided a stress test for Lemonade’s operations and financial model, and the company said it was reassured by its results.
The insurance start-up, which was backed by SoftBank Group, went public in July. After rallying as high as $188.30 in January, the stock was down about 15% to $62.69 in trading Wednesday.
For the full fiscal year, the company expects revenue between $117 million and $120 million. That is up from a prior range between $114 million and $117 million. It still anticipates a loss between $173 million and $163 million in adjusted earnings before interest, taxes, depreciation, and amortization. William Blair analyst Ralph Schackart noted the latter outlook was maintained despite the impact of the Texas freeze.
The company is also launching a Lemonade Car product, noting the car insurance industry within the U.S. is a roughly $300 billion market. Shai Wininger, Lemonade’s co-founder and chief operating officer, said in the company’s shareholder letter that early registration, which opened in April, for the new product has led to “overwhelming demand” from customers.
“Lemonade Car will use technology to handle emergencies and pay claims fast, will offer great prices to safe drivers, and will be attractive to drivers of EVs and environment-friendly cars,” Wininger added.
The insurtech hasn’t provided a launch date for Lemonade Car. It said its full-year outlook for annualized premiums doesn’t factor in material contributions from car insurance.
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