Growth Fueled by Strong Medicare Advantage Enrollments
CHICAGO, August 19, 2020 — GoHealth, Inc. (GoHealth) (Nasdaq: GOCO), a leading health insurance marketplace, announced financial results for the three and six months ended June 30, 2020.
- Second quarter 2020 net revenues of $127.1 million increased 71% compared to the prior year period, and first half 2020 net revenues of $268.1 million increased 87% compared to the prior year period
- Second quarter 2020 net loss of $(22.9) million compared to net income of $15.3 million in the prior year period, and first half 2020 net loss of $(23.8) million compared to net income of $20.3 million in the prior year period
- Second quarter 2020 adjusted EBITDA1 of $26.9 million increased 56% compared to the prior year period, and first half 2020 adjusted EBITDA of $61.9 million increased 154% compared to the prior year period
The Company also provided a full year 2020 outlook, including net revenues of $840-890 million and adjusted EBITDA1 of $265-290 million.
Clint Jones, co-founder and CEO said, “We delivered 71% revenue growth in the second quarter, powered by strong Medicare Advantage enrollments. Our strategic focus on LTV/CAC ensures that these high rates of growth convert into industry-leading margins and strong cash returns. Given the trajectory of our business and the investments we have been making in our direct-to-consumer marketplace, we believe we are on track for another record year of results in fiscal 2020.”
Jones continued, “GoHealth is one of the largest enrollers of Medicare Advantage plans in the United States. Our targeted marketing efforts help spur seniors to evaluate their Medicare plans as we continue to expand our carrier offerings and geographic footprint. The COVID-19 pandemic has accelerated the shift from traditional field agents to our technology enabled model, as consumers seek the expert advice of our agents from the comfort and safety of their homes. Importantly, we are rapidly scaling up in a fast growing, 60 million plus person market where our larger scale and leadership position will allow us to better help both consumers and carriers.”
Year-to-date highlights
- LTV/CAC2 for the Medicare-Internal segment increased from 2.3x to 2.7x during the first half 2020, driven by lower marketing costs per opportunity and higher conversion, resulting in EBITDA margins of 23% vs 17% in the prior year period. Trailing twelve-month LTV/CAC jumped from 2.8x to 3.6x.
- LTV per carrier approved Medicare Advantage submission increased 1.3% from $868 to $879 during the first half 2020 compared to the prior year period
- 79% of consumer leads were generated internally vs 30% in the prior year period
- Total Medicare Submitted Policies3 grew 148% in the first half 2020 to 245,396
- Medicare – Internal revenue increased 242% in the first half 2020 to $182.5 million
- Medicare – Internal profit increased 276% in the first half 2020 to $74.5 million
- 76% increase in customer care and enrollment investments in the first half 2020 ahead of the Annual Enrollment Period
- On track for over 1,000 new agents in 2020 (957 hired as of August 1st, 2020) and four new virtual sales centers, substantially resolving COVID-19 related state licensing delays to date
- TeleCare team engaging with customers to maximize benefits, deliver them into value-based care models and administer health based assessments through GoHealth’s Encompass Platform
- Expanded footprint through carrier additions that drive consumer choice and fit into 2021
- Added UnitedHealthcare and Aetna nationally, in addition to multiple regional carriers
Financial Outlook
The trajectory of the US economy remains challenging to predict, particularly given the heightened uncertainty associated with the COVID-19 pandemic. During these times, demand for healthcare has demonstrated great resilience, and we believe that the COVID-19 pandemic has created favorable industry dynamics for technology-driven direct-to-consumer models such as GoHealth’s insurance marketplace. The Company is providing an outlook for the fiscal year ending December 31, 2020 based on current market conditions and expectations:
- 1. Full year 2020 net revenue of $840 – $890 million, representing year-over-year growth of 56% – 65%
- 2. Full year 2020 adjusted EBITDA of $265 – $290 million, representing year-over-year growth of 55% – 71%
Jones concluded, “Our recent IPO marked an important milestone nearly two decades after Brandon Cruz and I founded the Company, providing us with the necessary capital to deliver our long-term plan. We believe we have the winning strategy necessary to deliver great results for our shareholders over the coming years by working to improve access to healthcare in America.”
Conference Call Details
The Company will host a conference call today, Wednesday, August 19, 2020 at 5:00 pm (ET) to discuss its financial results. A live audio webcast and a supplemental presentation will be available online at https://investors.gohealth.com. The conference call can also be accessed by dialing 1-833-519-1310 for U.S. participants, or 1-914-800-3876 for international participants, and referencing participant code 9537505. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web link.
About GoHealth
As a leading health insurance marketplace, GoHealth’s mission is to improve access to healthcare in America. Enrolling in a health insurance plan can be confusing for customers, and the seemingly small differences between plans can lead to significant out-of-pocket costs or lack of access to critical medicines and even providers. GoHealth combines cutting-edge technology, data science and deep industry expertise to match customers with the healthcare policy and carrier that is best for them. Since its inception, GoHealth has enrolled millions of people in Medicare and individual and family plans. For more information, visit https://www.gohealth.com
1 Adjusted EBITDA is a non-GAAP measure. For a definition of Adjusted EBITDA and a reconciliation to the most comparable GAAP measure, please refer to the appendix.
2 LTV/CAC defined as (i) aggregate commissions estimated to be collected over the estimated life of all Approved Submissions for the relevant period based on multiple factors, including but not limited to, contracted commission rates, carrier mix and expected policy persistency with applied constraints, or LTV, divided by (ii) the cost to convert a prospect into a customer less other non-commission carrier revenue for such period, or CAC.
3 Total Medicare Advantage Submitted Policies includes Commissionable and non-Commissionable Policies.
Investor Relations:
Jay Koval, VP of Investor Relations
jkoval@gohealth.com
Media Relations:
pressinquiries@gohealth.com
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this press release may be forward-looking statements. Statements regarding the Company’s future results of operations and financial position, business strategy and plans and objectives of management for future operations, including, among others, statements regarding expected financial performance and operational performance for the fiscal year 2020, including with respect to revenue and Adjusted EBITDA, are forward-looking statements. In some cases, you can identify forward-looking statements by terms, such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. There are or will be important factors that could cause the Company’s actual results to differ materially from those indicated in these forward-looking statements, including, but are not limited to, the following: the Company’s ability to comply with the numerous, complex and frequently changing laws regulating the marketing and sale of Medicare plans; the potential for an adverse change in our relationships with carriers, including a loss of a carrier relationships; failure to grow the Company’s customer base or retain our existing customers; carriers’ ability to reduce commissions paid to the Company and adversely change their underwriting practices; significant consolidation in the healthcare industry which could adversely alter the Company’s relationships with carriers; information technology systems failures or capacity constraints interrupting the Company’s operations; factors that adversely impact the Company’s estimate of LTV; the Company’s dependence on agents to sell insurance plans; changes in the health insurance system and laws and regulation governing health insurance markets; the inability to effectively advertise the Company’s products; and our ability to successfully implement our business plan during a global economic downturn caused by the COVID-19 pandemic.
The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this press release, as well as the cautionary statements and other risk factors set forth in the Company’s Quarterly Report on Form 10-Q for the second quarter ended June 30, 2020 filed with the SEC. If one or more events related to these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, actual results may differ materially from what the Company anticipates. Many of the important factors that will determine these results are beyond the Company’s ability to control or predict. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as otherwise required by law, the Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Use of Non-GAAP Financial Measures and Key Performance Indicators
In this press release, we use supplemental measures of our performance that are derived from our consolidated financial information, but which are not presented in our consolidated financial statements prepared in accordance with GAAP. These non-GAAP financial measures include net income (loss) before interest expense, income tax expense (benefit) and depreciation and amortization expense, or EBITDA; Adjusted EBITDA and Adjusted EBITDA margin. Adjusted EBITDA is the primary financial performance measure used by management to evaluate its business and monitor its results of operations.
Adjusted EBITDA represents EBITDA as further adjusted for share-based compensation, change in fair value of earnout liability, Centerbridge Acquisition costs, severance costs and incremental organizational costs in connection with the IPO. Adjusted EBITDA margin represents Adjusted EBITDA divided by net revenues.
We use non-GAAP financial measures to supplement financial information presented on a GAAP basis. We believe that excluding certain items from our GAAP results allows management to better understand our consolidated financial performance from period to period and better project our future consolidated financial performance as forecasts are developed at a level of detail different from that used to prepare GAAP-based financial measures. Moreover, we believe these non-GAAP financial measures provide our stakeholders with useful information to help them evaluate our operating results by facilitating an enhanced understanding of our operating performance and enabling them to make more meaningful period to period comparisons. There are limitations to the use of the non-GAAP financial measures presented in this press release. For example, our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.
The non-GAAP financial measures are not meant to be considered as indicators of performance in isolation from or as a substitute for net income (loss) prepared in accordance with GAAP, and should be read only in conjunction with financial information presented on a GAAP basis. Reconciliations of each of EBITDA and Adjusted EBITDA to its most directly comparable GAAP financial measure, net income (loss), are presented in the tables below in this press release. We encourage you to review the reconciliations in conjunction with the presentation of the non-GAAP financial measures for each of the periods presented. In future periods, we may exclude similar items, may incur income and expenses similar to these excluded items and include other expenses, costs and non-recurring items.
Management has provided its outlook regarding adjusted EBITDA, which is a non-GAAP financial measures and exclude certain charges. Management has not reconciled these non-GAAP financial measures to the corresponding GAAP financial measures because guidance for the various reconciling items are not provided. Management is unable to provide guidance for these reconciling items because we cannot determine their probable significance, as certain items are outside of the company’s control and cannot be reasonably predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measures are not available without unreasonable effort.
“LTV/CAC” refers to the Lifetime Value of Commissions per Consumer Acquisition Cost, which we define as (i) aggregate commissions estimated to be collected over the estimated life of all commissionable Approved Submissions for the relevant period based on multiple factors, including but not limited to, contracted commission rates, carrier mix and expected policy persistency with applied constraints, or LTV, divided by (ii) the cost to convert a prospect into a customer less other noncommission carrier revenue for such period, or CAC. CAC is comprised of cost of revenue, marketing and advertising expenses and customer care and enrollment expenses less other revenue and is presented on a per commissionable Approved Submission basis. “Approved Submissions” refer to Submitted Policies approved by carriers for the identified product during the indicated period. “LTV Per Approved Submission” refers to the Lifetime Value of Commissions per Approved Submission, which we define as (i) aggregate commissions estimated to be collected over the estimated life of all commissionable Approved Submissions for the relevant period based on multiple factors, including but not limited to, contracted commission rates, carrier mix and expected policy persistency with applied constraints, divided by (ii) the number of commissionable Approved Submissions for such period.
To view GoHealth’s Second Quarter 2020 Results and 2020 Outlook in its entirety, please visit the GoHealth Investor Relations Site.
