NASDAQ:GOCO GoHealth Q1 2023 Earnings Report $10.27 -0.44 (-4.11%) Closing price 04/25/2025 04:00 PM EasternExtended Trading$10.26 -0.01 (-0.15%) As of 04/25/2025 04:05 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast GoHealth EPS ResultsActual EPS-$1.12Consensus EPS -$1.74Beat/MissBeat by +$0.62One Year Ago EPS-$1.80GoHealth Revenue ResultsActual Revenue$183.16 millionExpected Revenue$180.97 millionBeat/MissBeat by +$2.19 millionYoY Revenue GrowthN/AGoHealth Announcement DetailsQuarterQ1 2023Date5/8/2023TimeBefore Market OpensConference Call DateMonday, May 8, 2023Conference Call Time8:00AM ETUpcoming EarningsGoHealth's Q1 2025 earnings is scheduled for Thursday, May 8, 2025, with a conference call scheduled at 8:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by GoHealth Q1 2023 Earnings Call TranscriptProvided by QuartrMay 8, 2023 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:00Good morning, and welcome to the GoHealth First Quarter 2023 Earnings Conference Call. My name is Michelle, and I will be your operator for today's call. At this time, all participants are in a listen only mode. Followed by the prepared remarks, we will conduct a question and answer session. Operator. Operator00:00:41I'll now turn the call over to John Shave, Vice President of Investor Relations. John, you may begin. Speaker 100:00:52Thank you and good morning everyone. Thanks for joining GoHealth's Q1 2023 quarterly results call. Operator. Joining me today are Vijay Cote, Chief Executive Officer and Jason Scholes, Chief Financial Officer. This morning's conference call contains forward looking operator and answer session. Speaker 100:01:10Numerous risks and uncertainties may cause actual results to differ materially operator from those anticipated or projected in these statements. Many of the factors that will determine future results are beyond the company's ability to control or predict. You should not place undue reliance on any forward looking statements and the company undertakes no obligation to update or revise any of these statements operator, whether due to new information, future events or otherwise. Before the market opened today, we issued a press release containing our results for the Q1 of 2020 operator. We have posted the release on the GoHealth website under the Investor Relations tab. Speaker 100:01:49In the press release, we have listed a number of risk operator. We encourage you to consider the other risk factors described in our Form 10 ks operator and the SEC filings with the Securities and Exchange Commission for additional information. During this call, we will be discussing certain non GAAP financial measures. These measures are reconciled to the most directly comparable GAAP financial measures and the reconciliations are set forth in the press release. Operator. Speaker 100:02:19Please refer to today's press release for reconciliations of non GAAP measures to the most comparable GAAP measures discussed during this earnings call. Operator. For reference, in the Investor Relations section of the GoHealth website, we have provided a supporting slide presentation and exhibits that I encourage you to review. And with that, I'd like to turn the call over to Vijay. Speaker 200:02:43Good morning and thank you all for joining us today. I'm pleased to report a strong quarter and start to the year. We achieved $183,000,000 in revenue, dollars 29,000,000 in adjusted EBITDA At a high level, our Q1 performance highlights our operational efficiencies and the progress we are making with Encompass and supports our confidence in our full year The e broker industry has long believed that growth is directly tied to the acquisition of more agents and thus more leads. However, this traditional approach often leads to diseconomies of scale, where the cost of adding more agents and leads drives up Customer acquisition costs due to lower quality agents and lower quality leads. We believe technology can drive economies of scale meaningfully elevate the consumer experience by matching consumers with the right plan for them. Speaker 200:03:53Encompass, Our proprietary operational technology and data science platform allows us to streamline the purchase process for consumers, Simplifying the cumbersome and confusing experience of healthcare purchasing, while allowing our agents to focus on what's most important, By leveraging our machine learning platform, we're able to better serve operator. As we have discussed previously, the increasing propensity for consumers to shop, Coupled with the seemingly ever increasing number of Medicare Advantage choices for consumers can prove overwhelming. This makes the GoHealth value proposition to both consumers operator. GoHealth's core value proposition to consumers is providing a trustworthy shopping experience that allows consumers to select the Medicare Advantage Plan that meets their unique needs. With the Encompass platform, we offer a personalized, unbiased and no pressure shopping experience where consumers can feel comfortable and confident throughout the entire process. Speaker 200:05:10Operator. Our marketplace model is distinct from traditional brokers in several ways. At GoHealth, we put the consumer at the center of all we do. This has resulted in a passionate belief that we must remain unbiased in the servicing of our consumers. I'd like to take this opportunity to go a bit more in-depth 1st, I'll start with our associates. Speaker 200:05:40Our tenured agents and staffing model support the consumer through the end to end shopping process and ensure compliance. We have multiple teams of agents. Tier 1 ensures Medicare eligibility and confirms shopping interests. Tier 2 supports the needs assessment and planned shopping process and Tier 3 completes enrollment ensuring the consumers are satisfied with their plan choices, operator. Our quality assurance teams audit the entire process, provide feedback to improve processes along the way And their compensation is not based on the insurance product that consumers ultimately select. Speaker 200:06:25This approach ensures that each consumer receives an impartial evaluation and recommendation that is tailored to their specific needs and preferences. Now moving to technology. Our proprietary consumer matching technology drives value at the start of the consumer shopping process. We've identified many consumer and market level dynamics That correlate to a particular agent being more effective than another in serving a consumer's unique needs. Using machine learning, We identified these matches in real time and route to the best fit agent. Speaker 200:06:58We are continuing to test different populations for this matching And our first test have shown a 30% increase in conversion rate when applying this routing. Our Plan FIT tool has been built on millions of consumer interactions and leverages that data to create a customized guided multistep purchasing experience The results in a thorough and comprehensive understanding of our consumers' Medicare insurance needs. Each time we talk to a consumer, operator. PlanFit analyzes over 180 factors, including plan characteristics, consumer inputs and historical data to sort through thousands of Medicare Advantage op and help us provide the best recommendations to consumers. This allows us to help consumers make informed decisions about their healthcare and select the right plan for their unique needs. Speaker 200:07:46The tool continues to evolve as we write more policies, gather more data and add more features. Our proprietary unified agent experience creates a simpler, more efficient process for agents to assist consumers, Enables faster onboarding and drives compliance. These benefits tie directly to revenue, cash flow and adjusted EBITDA outcomes. The unified agent experience increases automation, creating a simpler and more efficient process. Our sales agents interact with many different applications for everything from determining op. Speaker 200:08:27We're able to shorten call time for both the agent and consumer. Shorter handle times increase agent and consumer satisfaction and lead to increased throughput in our model. Today, new agents receive rigorous training to complete a high quality compliant enrollment. But even with that, it takes repetition for new agents to hone their craft. Our standardized technology accelerates this learning curve and will enable faster onboarding for our new agents, Improving overall conversion rates and throughput. Speaker 200:08:58Standardization of shopping experience also enables us to drive compliance and adapt to regulatory changes operator. Finally, we created a data profile on each individual, operator, including their health preferences, financial situation and other relevant factors. Our evolving Customer 360 platform Organizes this information and will enable our agents to provide more efficient personalized service to each consumer that takes their historical relationship with GoHealth into account. This laser focus on the consumer is a win win and strengthens the value proposition we continue to bring to health plans. We serve the largest health plans in the country, while selectively adding new options in our marketplace to ensure we are offering consumers the highest quality options available. Speaker 200:09:47We believe our unbiased marketplace model and superior consumer experience attracts a broader set of consumers than health plans can reach and ultimately expands the number of consumers we can match to health plans. This expands the pie for health plans that participate in our marketplace operator and enables them to drive their own member growth so long as they have competitive consumer focused benefits. Additionally, Health plans can rely on our standardized and effective sales process to ensure that the consumers enrolled in their plans are informed and satisfied with their plan selections, operator. Experience technology allows us to drive compliance while also being nimble and responsive to the ever changing regulatory landscape. We have secured Encompass contracts with nearly all our health plan partners assuring them access to our high powered marketplace and guided shopping process operator. Speaker 200:10:54That culminates with an in house dedicated health plan enrollment team for each health plan to support final enrollment confirmation and initiate onboarding. As you can see, Encompass is much more than just a new way to contract. It is also a technology forward operating model designed with purpose, The efficiency of the model has already begun to flow through our financials with lower cash burn and lower costs. This lower cost per submission driven by significant marketing improvements, lower agent carrying costs during low season and expansion of technology and tools With every shift of volume to the Encompass model, we deliver greater revenue reliability operator, supported by a greater percentage of cash collected within the 1st 12 months. Our new model has transformed our cash flow profile as a business operator. Speaker 200:11:49We are now in the unique position in the industry of generating positive, dependable cash flow. This fundamental economic change in our business model recognizes the value of our differentiated approach to delivering elevated consumer experiences and allows us to build an enduring company. Jason will speak about how Encompass allows us to reach profitability with the new business we generate on a go forward basis and decouples the company's future from the macro headwinds seen throughout the industry from increasing shopping behavior. I want to take a moment to thank our associates, agents and partners. We have been diligently working to improve operational efficiency, operator, which will take time to show fully in results, but we are very encouraged by our progress, which Jason will now discuss. Speaker 300:12:46Thanks, PJ. We are pleased Speaker 400:12:48to announce our Q1 2023 performance. After normalizing for the exit of our non Encompass BPO services, We generated revenue of $176,000,000 and adjusted EBITDA of $27,000,000 driven by 214,000 submissions. Operator. Our Q1 2023 results are in line with our expectations and keep us on track toward our full year guidance. Operator. Speaker 400:13:10These results represent a $62,000,000 decrease in revenue and an increase in adjusted EBITDA of $22,000,000 versus Q1 2022. After normalizing for the exit of our non encompass BPO services and the $2,000,000 look back recorded in Q1 2022. Operator. As a reminder, the revenue decline was a deliberate strategy to scale down our agent workforce, focus on quality, achieve operational efficiencies operator and improve our unit economics and profitability. We continue to see good momentum with our cash flow from operations. Speaker 400:13:44Operator. For this quarter, we achieved a positive $20,000,000 which results in a year over year improvement of $303,000,000 on a trailing 12 month basis. Operator. We believe trailing 12 months is the most appropriate way to view our performance as it normalizes for seasonality throughout the calendar year. Operator. Speaker 400:14:02As detailed in our quarterly results presentation posted on our website, we are focused on driving high quality enrollment and operational efficiencies, while reducing our current cost. Operator. For Q1 2023, we have changed our segment reporting to reflect Going forward, we will be operating under a single reporting segment, which aligns with how we manage and operate the business and incentivize our associates. Operator. As a part of our reporting changes, we are also adjusting how we disaggregate revenue to better align with our operations. Speaker 400:14:53Operator. In our 10 Q filing, you will see a line item for our agency revenue, which is defined by GoHealth being the agent of record operator and represents what we have previously referred to as our traditional model. This includes a combination of commissions and partner marketing revenue. We also now have non agency revenue, which is defined by the revenue which we receive for specific services that support enrollment activities in which GoHealth is not the agent of record. Previously, we had labeled this as encompass revenue. Speaker 400:15:26Operator. As Vijay described, the Encompass model is more than just a contract or source of revenue. It is now our preferred operating platform Speaker 300:15:35operator. That puts the consumer in the center of Speaker 400:15:35all of our activities, including how we market, support enrollment activities, provide administrative services, operator. We acknowledge that this change may require our support for you to operator. We will provide a clear comparison in our upcoming reports and presentations operator to ensure that our stakeholders have a comprehensive understanding of our performance and progress. As I previously mentioned, our Q1 2023 adjusted EBITDA operator. Non Encompass BPO Services is $27,000,000 We have significantly increased our adjusted EBITDA margin profile operator from 2% in Q1 2022 to 16% in Q1 2023. Speaker 400:16:20This excludes non Encompass BPO Services operator and a $2,000,000 look back adjustment recorded in Q1 2022. This improvement reflects our more efficient operating model we established during the annual enrollment period quarter, which we continue to refine and enhance. As illustrated in our quarterly results presentation, our Q1 2023 gross margin This quarter, we have increased our agency commission constraint, which is the primary driver of the year over year sales per submission decline. Operator. However, this is more than offset by the efficiencies gained as reflected in the cost per submission improvement of 23%. Speaker 400:17:04Q1 2023 cash flow from operations is $20,000,000 We continue to see dependable and improving cash flow trends, operator. As illustrated in our quarterly results presentation, our trailing 12 month cash flow from operations as of Q1 2023 is $27,000,000 An improvement of $303,000,000 or the same time period measured in Q1 2022. While $78,000,000 of this improvement can be attributed to non agency revenue, $219,000,000 of the change is driven by more efficient Encompass operating model. We recognize that revenue, EBITDA and cash flow have always been subject to seasonality. However, because of our progress with the Encompass platform as well as the impacts of our non agency revenue, The seasonality of our business has changed from the past. Speaker 400:17:58The non agency revenue has shifted our cash collections, operator. Lowering the amount of cash collected in Q1 and smoothing collections in the remaining periods, but Q3 expected to be the highest collection quarter. Operator. We will continue to see our peak revenue and adjusted EBITDA in Q4 due to the high volumes in the annual enrollment period, followed by Q1 in the open enrollment period and much lower revenues and modest negative adjusted EBITDA in Q2 and Q3 operator due to the much lower volumes in the special enrollment period. That said, the Encompass operating model significantly lowered our cost per submission, which will result in a meaningful improvement in this year's special enrollment period compared to 2022. Speaker 400:18:44Our strong performance in Q1 allows us to reiterate our guidance for the year. We anticipate our revenue to be between $750,000,000 $850,000,000 with adjusted EBITDA in the range of $100,000,000 $140,000,000 In terms of cash flow from operations, we expect a positive $75,000,000 to $115,000,000 In conclusion, during Q1 2023, we achieved significant improvements in adjusted EBITDA, gross margin and cash flow from operations. The strong performance reflects our continued commitment to driving non agency revenue and executing on our more efficient Encompass model. Operator00:19:39Operator. Operator. Our first question comes from Mike Cherney with Bank of America. Your line is now open. Speaker 300:19:57Good morning and thanks for taking the question. I have a question about the transition to Encompass from the carrier side and maybe this is Something that we'll learn more about during AEP. But in terms of the way that you change your go to market strategy, what has been the carrier reaction? And What changes in terms of the interplay that they have with you have you had to make, if any, and have they caused any either strife or I guess better communication either way. Speaker 200:20:25Good morning, Mike. Thanks for the question. Let me start with We have been working collaboratively with the carriers and the health plans for some time on this transition To encompass, the primary focus being driving a better quality experience and better funnel metrics. As you think about that, there are dynamics around driving better effectuation, meaning a submission actually turning into an effective policy, And then ultimately moving to a 90 day and then moving to viewing a retained policy over time. That dynamic As we left AEC and all those test statistics and kind of running through what we did last Q4 resulted in Material improvements on those metrics. Speaker 200:21:12So there's been very strong support from our health line partners to expand the scope operator of how we're delivering that consistent experience with them. They absolutely appreciate that we are aligned in our approach to looking at and protecting And the standardized approach and the auditable experience, I mean the simple fact that we record every element of this and we use technology to ensure that there's Subject matter expertise of a agent who learns everything about a given health plan and then that final element of taking the application from the beneficiary And being able to explain to them what specifically happens next to that health plan has been very exciting, right. We work with them on the scripting. We're making sure that it's aligned experience. And then we follow-up beyond that. Speaker 200:22:05So the short story is there's been a lot of very strong support for the model itself. I would say that as you look at the competitive marketplace elements of it, everybody love to have an advantage, right? But they do appreciate the fact that when they come into our marketplace, If they have great quality and have a great opportunity a great set of benefits for the beneficiary and align that all together, Including things like rapid disenrollment rates and general churn rates, we factor that all in, that they can win on in any given year. The interesting part of the dynamic is any given health plan, let's say they want to be in or they don't want to be in that marketplace. It doesn't affect the number of shoppers who come to us. Speaker 200:22:47We have our shoppers are really driven by our marketing and they come to us and they say they want to understand what are the options for that. If a point of choose is not to be in our marketplace, for example, because they don't think they'll have a competitive product, well, that doesn't really affect Our volume. Planned participation or not participation in our marketplace is it really affects their volume and then it affects some of our mix. Operator. And I will tell you that as we've gone through that, our carriers are very interested in getting access to the beneficiaries to be part of that shopping experience operator. Speaker 200:23:24Is that answering your question, Mike, or too much too many words and not enough substance for Speaker 300:23:30No, no, no, it does. And we're fully understanding that as you lean on Compass, we're going to see what happens as we get especially into AEP still being such a big component of the year just because of how your market works. So I appreciate that look and I appreciate the transparency You're giving us on that. I guess just one last more technical question. I appreciate you breaking out the revenue and EBITDA contribution on the BPO. Speaker 300:23:55Any effect on cash flow or would it be subsequent or similar to what you'd see from an EBITDA contribution as you wind that business down? Yes, Mike. This is Jason. Speaker 400:24:04I appreciate the question. It's de minimis in terms of the BPO contribution on cash flow. So I would think of it just pro rata as you kind of stated. So that's about it. Speaker 300:24:18Got it. Thanks so much. Operator00:24:29Operator. At Suisse. Your line is now open. Speaker 500:24:49Hey, thanks for taking the question. I just wanted to get your thoughts on the finalized CMS market given that there is some concern on the 48 hour SOA rule. Just how are you thinking about the impact on your business? And Similarly, what have your carrier partners brought up in relation to that role? Thanks. Speaker 200:25:08Thanks for the question, Jonathan. I think there's a lot that we can address here. I think 1st and foremost, I think it's fair to say that given all the comments we've provided Earlier in the prepared comments and how we think strategically, the consumer and protecting the consumer is And that high quality shopping experience is paramount to us. And so we're fully aligned with what CMS is intending to do and what the regulations are intended to protect. We do believe that weeding out bad actors and bad actions are really where we all need to focus so we can do the right thing. Speaker 200:25:47As you think about year to year, right, with CMS, every year there's some sort of change of regulation around marketing and how you go to market. And all of that is contemplated on how we think about our operating plan and our performance in any given year. As part of that, you're always working with the different carriers to understand how they're interpreting things and how that flows through into our operation. And one of the things that It's really interesting is that I think we're all again in the business where we have a full auditing capability for every one of our calls from Stoop to Knott. We know where the lead came from because we do the majority of our own lead generation. Speaker 200:26:27We run that through and we have recorded Specialized individuals through our Encompass platform that do verification of eligibility and interest to SHOP All the way through to the enrollment and the onboarding process. So we have a fairly unique platform that can be That is uniquely positioned to be able to be responsive to any of the changes and interpretations that may have over time In any of the regulatory events, but again this is an annual thing. Every year there's something new that comes up and we assume there will be things like this that will come up. So in short, we don't believe there will be any material negative impact based upon some of the different discussions that are going on today. Obviously, more details to come. Speaker 200:27:10But we actually believe it could be on the flip side of this, that we think this could be a strategic opportunity for us. As we are standardizing our As we have more infrastructure and technology built around that standardized process, we're able to, 1, again leverage the High quality, fully regulated marketing tactics we use to generate leads to manage that funnel process In a number of different environments and be responsive to those moves, it could lead to us grabbing more share. But at this point, we believe our model gives us a strategic advantage that we're pretty excited about regardless of where things ultimately fall out. Operator00:28:02Operator. Our next question comes from Ben Hendricks with RBC Capital Markets. Your line is Speaker 500:28:10open. Hey, thank you very much. We've heard commentary from carriers this earnings season suggesting increased shopping behavior in the upcoming AEP as carriers adjust to the new MA risk models. I want to get your thoughts on implications for the traditional agency business and measures you're taking to mitigate any potential increased churn there. Thanks. Speaker 200:28:34Thank you, Ben. It's a great question. As we've told you and as we'd anticipated in even the last call that we did, We described the fact that we are accepting and kind of leaning into the idea that shopping will happen. That has been reflected in all of our Not only our guidance, but also all of the other estimates that are related to such things. We think it's wonderful. Speaker 200:28:55As long as the consumer is winning And they're getting the best benefit options and they're being able to actually compare them effectively. That is the concern, Right, is that with so much change potential within the different options and so many tweaks that happen around the edges, beneficiaries can't always understand how does that impact them. They don't know how to make a relative comparison. And by actually building our infrastructure the way we have, taking all those benefit plans into account, Understanding the beneficiaries' individual needs, we're able to navigate that shopping experience. So yes, we expect more shopping to happen as we said last quarter. Speaker 200:29:32That is what our whole operating plan for the year is based upon. We have some presumptions on what that does to overall behavior around individual policies and we factor that in And as we said last quarter and we reiterate now, this is a part of our strategy. We've leaned into it. It is exactly what we believe should be happening, and that is that they shop. Shopping doesn't mean you switch. Speaker 200:29:57Shopping means you need to comparison shop. Shopping means you need to have an individualized experience. And so our agents, our Tier 2 shoppers, They're high quality trained associates who spend the time to understand the beneficiaries' needs, to understand all of their benefit alternative. And then make sure that even if it's not there is no change necessary, They're incentivized from the way we compensate them and our plans before AEP will be just that, that our agents are being are able to be rewarded for providing high value shopping experience even if the conclusion is the beneficiary just stays at their current plan. And they need to have that peace of mind. Speaker 200:30:36And so that's the way we're thinking about it. From our operational standpoint, that's exactly where we're expecting. More shopping, if it happens in an accelerated pace based upon Operator00:31:05and wait for your name to be announced. Operator. I show no further questions at this time. I would now like to turn the call back to Vijay for closing remarks. Speaker 200:31:23Thank you. Thank you again for joining us today. We are really proud of everything that we've been able to accomplish thus far this year. Our team has been phenomenal. We have done the best in the industry who are really focused on doing the right thing and doing it right. Speaker 200:31:39And we are absolutely committed to continuing to do that. We hope you leave knowing we remain focused on delivering long term value for our shareholders operator for providing high quality experiences to our consumers and health plans. Thank you for your continued support and we look forward to updating you on our progress during the next quarterly resultsRead morePowered by Conference Call Audio Live Call not available Earnings Conference CallGoHealth Q1 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) GoHealth Earnings HeadlinesGoHealth (NASDAQ:GOCO) Trading Down 5.3% - What's Next?April 22, 2025 | americanbankingnews.comGoHealth Extends CEO Vijay Kotte’s Contract and CompensationApril 7, 2025 | tipranks.comFrom Social Security to Social Prosperity?In less than a decade, Social Security could be out of money. But a surprising plan from Trump’s inner circle may not just save the system — it could unlock a major opportunity for savvy investors. Financial insider Jim Rickards calls it “Social Prosperity,” and says those who act now could see the biggest gains.April 28, 2025 | Paradigm Press (Ad)RBC Capital Keeps Their Hold Rating on GoHealth (GOCO)March 11, 2025 | markets.businessinsider.comGoHealth, Inc.: GoHealth Reports Strong Fourth Quarter and Fiscal Year 2024 Results, Driven by a Successful Annual Enrollment PeriodFebruary 28, 2025 | finanznachrichten.deGoHealth (GOCO) Gets a Buy from Noble FinancialFebruary 28, 2025 | markets.businessinsider.comSee More GoHealth Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like GoHealth? Sign up for Earnings360's daily newsletter to receive timely earnings updates on GoHealth and other key companies, straight to your email. Email Address About GoHealthGoHealth (NASDAQ:GOCO) operates as a health insurance marketplace and Medicare-focused digital health company in the United States. The company operates a technology platform that leverages machine-learning algorithms of insurance behavioral data to optimize the process for helping individuals find the health insurance plan for their specific needs. It provides Medicare plans, including Medicare Advantage, Medicare Supplement and Prescription Drug, and Medicare Special Needs Plans. The company also offers partner marketing services. It sells its products through carriers and online platform, as well as independent and external agencies. The company was founded in 2001 and is headquartered in Chicago, Illinois.View GoHealth ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Markets Think Robinhood Earnings Could Send the Stock UpIs the Floor in for Lam Research After Bullish Earnings?Texas Instruments: Earnings Beat, Upbeat Guidance Fuel RecoveryMarket Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of Earnings Upcoming Earnings Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Mondelez International (4/29/2025)PayPal (4/29/2025)Starbucks (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Regeneron Pharmaceuticals (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 6 speakers on the call. Operator00:00:00Good morning, and welcome to the GoHealth First Quarter 2023 Earnings Conference Call. My name is Michelle, and I will be your operator for today's call. At this time, all participants are in a listen only mode. Followed by the prepared remarks, we will conduct a question and answer session. Operator. Operator00:00:41I'll now turn the call over to John Shave, Vice President of Investor Relations. John, you may begin. Speaker 100:00:52Thank you and good morning everyone. Thanks for joining GoHealth's Q1 2023 quarterly results call. Operator. Joining me today are Vijay Cote, Chief Executive Officer and Jason Scholes, Chief Financial Officer. This morning's conference call contains forward looking operator and answer session. Speaker 100:01:10Numerous risks and uncertainties may cause actual results to differ materially operator from those anticipated or projected in these statements. Many of the factors that will determine future results are beyond the company's ability to control or predict. You should not place undue reliance on any forward looking statements and the company undertakes no obligation to update or revise any of these statements operator, whether due to new information, future events or otherwise. Before the market opened today, we issued a press release containing our results for the Q1 of 2020 operator. We have posted the release on the GoHealth website under the Investor Relations tab. Speaker 100:01:49In the press release, we have listed a number of risk operator. We encourage you to consider the other risk factors described in our Form 10 ks operator and the SEC filings with the Securities and Exchange Commission for additional information. During this call, we will be discussing certain non GAAP financial measures. These measures are reconciled to the most directly comparable GAAP financial measures and the reconciliations are set forth in the press release. Operator. Speaker 100:02:19Please refer to today's press release for reconciliations of non GAAP measures to the most comparable GAAP measures discussed during this earnings call. Operator. For reference, in the Investor Relations section of the GoHealth website, we have provided a supporting slide presentation and exhibits that I encourage you to review. And with that, I'd like to turn the call over to Vijay. Speaker 200:02:43Good morning and thank you all for joining us today. I'm pleased to report a strong quarter and start to the year. We achieved $183,000,000 in revenue, dollars 29,000,000 in adjusted EBITDA At a high level, our Q1 performance highlights our operational efficiencies and the progress we are making with Encompass and supports our confidence in our full year The e broker industry has long believed that growth is directly tied to the acquisition of more agents and thus more leads. However, this traditional approach often leads to diseconomies of scale, where the cost of adding more agents and leads drives up Customer acquisition costs due to lower quality agents and lower quality leads. We believe technology can drive economies of scale meaningfully elevate the consumer experience by matching consumers with the right plan for them. Speaker 200:03:53Encompass, Our proprietary operational technology and data science platform allows us to streamline the purchase process for consumers, Simplifying the cumbersome and confusing experience of healthcare purchasing, while allowing our agents to focus on what's most important, By leveraging our machine learning platform, we're able to better serve operator. As we have discussed previously, the increasing propensity for consumers to shop, Coupled with the seemingly ever increasing number of Medicare Advantage choices for consumers can prove overwhelming. This makes the GoHealth value proposition to both consumers operator. GoHealth's core value proposition to consumers is providing a trustworthy shopping experience that allows consumers to select the Medicare Advantage Plan that meets their unique needs. With the Encompass platform, we offer a personalized, unbiased and no pressure shopping experience where consumers can feel comfortable and confident throughout the entire process. Speaker 200:05:10Operator. Our marketplace model is distinct from traditional brokers in several ways. At GoHealth, we put the consumer at the center of all we do. This has resulted in a passionate belief that we must remain unbiased in the servicing of our consumers. I'd like to take this opportunity to go a bit more in-depth 1st, I'll start with our associates. Speaker 200:05:40Our tenured agents and staffing model support the consumer through the end to end shopping process and ensure compliance. We have multiple teams of agents. Tier 1 ensures Medicare eligibility and confirms shopping interests. Tier 2 supports the needs assessment and planned shopping process and Tier 3 completes enrollment ensuring the consumers are satisfied with their plan choices, operator. Our quality assurance teams audit the entire process, provide feedback to improve processes along the way And their compensation is not based on the insurance product that consumers ultimately select. Speaker 200:06:25This approach ensures that each consumer receives an impartial evaluation and recommendation that is tailored to their specific needs and preferences. Now moving to technology. Our proprietary consumer matching technology drives value at the start of the consumer shopping process. We've identified many consumer and market level dynamics That correlate to a particular agent being more effective than another in serving a consumer's unique needs. Using machine learning, We identified these matches in real time and route to the best fit agent. Speaker 200:06:58We are continuing to test different populations for this matching And our first test have shown a 30% increase in conversion rate when applying this routing. Our Plan FIT tool has been built on millions of consumer interactions and leverages that data to create a customized guided multistep purchasing experience The results in a thorough and comprehensive understanding of our consumers' Medicare insurance needs. Each time we talk to a consumer, operator. PlanFit analyzes over 180 factors, including plan characteristics, consumer inputs and historical data to sort through thousands of Medicare Advantage op and help us provide the best recommendations to consumers. This allows us to help consumers make informed decisions about their healthcare and select the right plan for their unique needs. Speaker 200:07:46The tool continues to evolve as we write more policies, gather more data and add more features. Our proprietary unified agent experience creates a simpler, more efficient process for agents to assist consumers, Enables faster onboarding and drives compliance. These benefits tie directly to revenue, cash flow and adjusted EBITDA outcomes. The unified agent experience increases automation, creating a simpler and more efficient process. Our sales agents interact with many different applications for everything from determining op. Speaker 200:08:27We're able to shorten call time for both the agent and consumer. Shorter handle times increase agent and consumer satisfaction and lead to increased throughput in our model. Today, new agents receive rigorous training to complete a high quality compliant enrollment. But even with that, it takes repetition for new agents to hone their craft. Our standardized technology accelerates this learning curve and will enable faster onboarding for our new agents, Improving overall conversion rates and throughput. Speaker 200:08:58Standardization of shopping experience also enables us to drive compliance and adapt to regulatory changes operator. Finally, we created a data profile on each individual, operator, including their health preferences, financial situation and other relevant factors. Our evolving Customer 360 platform Organizes this information and will enable our agents to provide more efficient personalized service to each consumer that takes their historical relationship with GoHealth into account. This laser focus on the consumer is a win win and strengthens the value proposition we continue to bring to health plans. We serve the largest health plans in the country, while selectively adding new options in our marketplace to ensure we are offering consumers the highest quality options available. Speaker 200:09:47We believe our unbiased marketplace model and superior consumer experience attracts a broader set of consumers than health plans can reach and ultimately expands the number of consumers we can match to health plans. This expands the pie for health plans that participate in our marketplace operator and enables them to drive their own member growth so long as they have competitive consumer focused benefits. Additionally, Health plans can rely on our standardized and effective sales process to ensure that the consumers enrolled in their plans are informed and satisfied with their plan selections, operator. Experience technology allows us to drive compliance while also being nimble and responsive to the ever changing regulatory landscape. We have secured Encompass contracts with nearly all our health plan partners assuring them access to our high powered marketplace and guided shopping process operator. Speaker 200:10:54That culminates with an in house dedicated health plan enrollment team for each health plan to support final enrollment confirmation and initiate onboarding. As you can see, Encompass is much more than just a new way to contract. It is also a technology forward operating model designed with purpose, The efficiency of the model has already begun to flow through our financials with lower cash burn and lower costs. This lower cost per submission driven by significant marketing improvements, lower agent carrying costs during low season and expansion of technology and tools With every shift of volume to the Encompass model, we deliver greater revenue reliability operator, supported by a greater percentage of cash collected within the 1st 12 months. Our new model has transformed our cash flow profile as a business operator. Speaker 200:11:49We are now in the unique position in the industry of generating positive, dependable cash flow. This fundamental economic change in our business model recognizes the value of our differentiated approach to delivering elevated consumer experiences and allows us to build an enduring company. Jason will speak about how Encompass allows us to reach profitability with the new business we generate on a go forward basis and decouples the company's future from the macro headwinds seen throughout the industry from increasing shopping behavior. I want to take a moment to thank our associates, agents and partners. We have been diligently working to improve operational efficiency, operator, which will take time to show fully in results, but we are very encouraged by our progress, which Jason will now discuss. Speaker 300:12:46Thanks, PJ. We are pleased Speaker 400:12:48to announce our Q1 2023 performance. After normalizing for the exit of our non Encompass BPO services, We generated revenue of $176,000,000 and adjusted EBITDA of $27,000,000 driven by 214,000 submissions. Operator. Our Q1 2023 results are in line with our expectations and keep us on track toward our full year guidance. Operator. Speaker 400:13:10These results represent a $62,000,000 decrease in revenue and an increase in adjusted EBITDA of $22,000,000 versus Q1 2022. After normalizing for the exit of our non encompass BPO services and the $2,000,000 look back recorded in Q1 2022. Operator. As a reminder, the revenue decline was a deliberate strategy to scale down our agent workforce, focus on quality, achieve operational efficiencies operator and improve our unit economics and profitability. We continue to see good momentum with our cash flow from operations. Speaker 400:13:44Operator. For this quarter, we achieved a positive $20,000,000 which results in a year over year improvement of $303,000,000 on a trailing 12 month basis. Operator. We believe trailing 12 months is the most appropriate way to view our performance as it normalizes for seasonality throughout the calendar year. Operator. Speaker 400:14:02As detailed in our quarterly results presentation posted on our website, we are focused on driving high quality enrollment and operational efficiencies, while reducing our current cost. Operator. For Q1 2023, we have changed our segment reporting to reflect Going forward, we will be operating under a single reporting segment, which aligns with how we manage and operate the business and incentivize our associates. Operator. As a part of our reporting changes, we are also adjusting how we disaggregate revenue to better align with our operations. Speaker 400:14:53Operator. In our 10 Q filing, you will see a line item for our agency revenue, which is defined by GoHealth being the agent of record operator and represents what we have previously referred to as our traditional model. This includes a combination of commissions and partner marketing revenue. We also now have non agency revenue, which is defined by the revenue which we receive for specific services that support enrollment activities in which GoHealth is not the agent of record. Previously, we had labeled this as encompass revenue. Speaker 400:15:26Operator. As Vijay described, the Encompass model is more than just a contract or source of revenue. It is now our preferred operating platform Speaker 300:15:35operator. That puts the consumer in the center of Speaker 400:15:35all of our activities, including how we market, support enrollment activities, provide administrative services, operator. We acknowledge that this change may require our support for you to operator. We will provide a clear comparison in our upcoming reports and presentations operator to ensure that our stakeholders have a comprehensive understanding of our performance and progress. As I previously mentioned, our Q1 2023 adjusted EBITDA operator. Non Encompass BPO Services is $27,000,000 We have significantly increased our adjusted EBITDA margin profile operator from 2% in Q1 2022 to 16% in Q1 2023. Speaker 400:16:20This excludes non Encompass BPO Services operator and a $2,000,000 look back adjustment recorded in Q1 2022. This improvement reflects our more efficient operating model we established during the annual enrollment period quarter, which we continue to refine and enhance. As illustrated in our quarterly results presentation, our Q1 2023 gross margin This quarter, we have increased our agency commission constraint, which is the primary driver of the year over year sales per submission decline. Operator. However, this is more than offset by the efficiencies gained as reflected in the cost per submission improvement of 23%. Speaker 400:17:04Q1 2023 cash flow from operations is $20,000,000 We continue to see dependable and improving cash flow trends, operator. As illustrated in our quarterly results presentation, our trailing 12 month cash flow from operations as of Q1 2023 is $27,000,000 An improvement of $303,000,000 or the same time period measured in Q1 2022. While $78,000,000 of this improvement can be attributed to non agency revenue, $219,000,000 of the change is driven by more efficient Encompass operating model. We recognize that revenue, EBITDA and cash flow have always been subject to seasonality. However, because of our progress with the Encompass platform as well as the impacts of our non agency revenue, The seasonality of our business has changed from the past. Speaker 400:17:58The non agency revenue has shifted our cash collections, operator. Lowering the amount of cash collected in Q1 and smoothing collections in the remaining periods, but Q3 expected to be the highest collection quarter. Operator. We will continue to see our peak revenue and adjusted EBITDA in Q4 due to the high volumes in the annual enrollment period, followed by Q1 in the open enrollment period and much lower revenues and modest negative adjusted EBITDA in Q2 and Q3 operator due to the much lower volumes in the special enrollment period. That said, the Encompass operating model significantly lowered our cost per submission, which will result in a meaningful improvement in this year's special enrollment period compared to 2022. Speaker 400:18:44Our strong performance in Q1 allows us to reiterate our guidance for the year. We anticipate our revenue to be between $750,000,000 $850,000,000 with adjusted EBITDA in the range of $100,000,000 $140,000,000 In terms of cash flow from operations, we expect a positive $75,000,000 to $115,000,000 In conclusion, during Q1 2023, we achieved significant improvements in adjusted EBITDA, gross margin and cash flow from operations. The strong performance reflects our continued commitment to driving non agency revenue and executing on our more efficient Encompass model. Operator00:19:39Operator. Operator. Our first question comes from Mike Cherney with Bank of America. Your line is now open. Speaker 300:19:57Good morning and thanks for taking the question. I have a question about the transition to Encompass from the carrier side and maybe this is Something that we'll learn more about during AEP. But in terms of the way that you change your go to market strategy, what has been the carrier reaction? And What changes in terms of the interplay that they have with you have you had to make, if any, and have they caused any either strife or I guess better communication either way. Speaker 200:20:25Good morning, Mike. Thanks for the question. Let me start with We have been working collaboratively with the carriers and the health plans for some time on this transition To encompass, the primary focus being driving a better quality experience and better funnel metrics. As you think about that, there are dynamics around driving better effectuation, meaning a submission actually turning into an effective policy, And then ultimately moving to a 90 day and then moving to viewing a retained policy over time. That dynamic As we left AEC and all those test statistics and kind of running through what we did last Q4 resulted in Material improvements on those metrics. Speaker 200:21:12So there's been very strong support from our health line partners to expand the scope operator of how we're delivering that consistent experience with them. They absolutely appreciate that we are aligned in our approach to looking at and protecting And the standardized approach and the auditable experience, I mean the simple fact that we record every element of this and we use technology to ensure that there's Subject matter expertise of a agent who learns everything about a given health plan and then that final element of taking the application from the beneficiary And being able to explain to them what specifically happens next to that health plan has been very exciting, right. We work with them on the scripting. We're making sure that it's aligned experience. And then we follow-up beyond that. Speaker 200:22:05So the short story is there's been a lot of very strong support for the model itself. I would say that as you look at the competitive marketplace elements of it, everybody love to have an advantage, right? But they do appreciate the fact that when they come into our marketplace, If they have great quality and have a great opportunity a great set of benefits for the beneficiary and align that all together, Including things like rapid disenrollment rates and general churn rates, we factor that all in, that they can win on in any given year. The interesting part of the dynamic is any given health plan, let's say they want to be in or they don't want to be in that marketplace. It doesn't affect the number of shoppers who come to us. Speaker 200:22:47We have our shoppers are really driven by our marketing and they come to us and they say they want to understand what are the options for that. If a point of choose is not to be in our marketplace, for example, because they don't think they'll have a competitive product, well, that doesn't really affect Our volume. Planned participation or not participation in our marketplace is it really affects their volume and then it affects some of our mix. Operator. And I will tell you that as we've gone through that, our carriers are very interested in getting access to the beneficiaries to be part of that shopping experience operator. Speaker 200:23:24Is that answering your question, Mike, or too much too many words and not enough substance for Speaker 300:23:30No, no, no, it does. And we're fully understanding that as you lean on Compass, we're going to see what happens as we get especially into AEP still being such a big component of the year just because of how your market works. So I appreciate that look and I appreciate the transparency You're giving us on that. I guess just one last more technical question. I appreciate you breaking out the revenue and EBITDA contribution on the BPO. Speaker 300:23:55Any effect on cash flow or would it be subsequent or similar to what you'd see from an EBITDA contribution as you wind that business down? Yes, Mike. This is Jason. Speaker 400:24:04I appreciate the question. It's de minimis in terms of the BPO contribution on cash flow. So I would think of it just pro rata as you kind of stated. So that's about it. Speaker 300:24:18Got it. Thanks so much. Operator00:24:29Operator. At Suisse. Your line is now open. Speaker 500:24:49Hey, thanks for taking the question. I just wanted to get your thoughts on the finalized CMS market given that there is some concern on the 48 hour SOA rule. Just how are you thinking about the impact on your business? And Similarly, what have your carrier partners brought up in relation to that role? Thanks. Speaker 200:25:08Thanks for the question, Jonathan. I think there's a lot that we can address here. I think 1st and foremost, I think it's fair to say that given all the comments we've provided Earlier in the prepared comments and how we think strategically, the consumer and protecting the consumer is And that high quality shopping experience is paramount to us. And so we're fully aligned with what CMS is intending to do and what the regulations are intended to protect. We do believe that weeding out bad actors and bad actions are really where we all need to focus so we can do the right thing. Speaker 200:25:47As you think about year to year, right, with CMS, every year there's some sort of change of regulation around marketing and how you go to market. And all of that is contemplated on how we think about our operating plan and our performance in any given year. As part of that, you're always working with the different carriers to understand how they're interpreting things and how that flows through into our operation. And one of the things that It's really interesting is that I think we're all again in the business where we have a full auditing capability for every one of our calls from Stoop to Knott. We know where the lead came from because we do the majority of our own lead generation. Speaker 200:26:27We run that through and we have recorded Specialized individuals through our Encompass platform that do verification of eligibility and interest to SHOP All the way through to the enrollment and the onboarding process. So we have a fairly unique platform that can be That is uniquely positioned to be able to be responsive to any of the changes and interpretations that may have over time In any of the regulatory events, but again this is an annual thing. Every year there's something new that comes up and we assume there will be things like this that will come up. So in short, we don't believe there will be any material negative impact based upon some of the different discussions that are going on today. Obviously, more details to come. Speaker 200:27:10But we actually believe it could be on the flip side of this, that we think this could be a strategic opportunity for us. As we are standardizing our As we have more infrastructure and technology built around that standardized process, we're able to, 1, again leverage the High quality, fully regulated marketing tactics we use to generate leads to manage that funnel process In a number of different environments and be responsive to those moves, it could lead to us grabbing more share. But at this point, we believe our model gives us a strategic advantage that we're pretty excited about regardless of where things ultimately fall out. Operator00:28:02Operator. Our next question comes from Ben Hendricks with RBC Capital Markets. Your line is Speaker 500:28:10open. Hey, thank you very much. We've heard commentary from carriers this earnings season suggesting increased shopping behavior in the upcoming AEP as carriers adjust to the new MA risk models. I want to get your thoughts on implications for the traditional agency business and measures you're taking to mitigate any potential increased churn there. Thanks. Speaker 200:28:34Thank you, Ben. It's a great question. As we've told you and as we'd anticipated in even the last call that we did, We described the fact that we are accepting and kind of leaning into the idea that shopping will happen. That has been reflected in all of our Not only our guidance, but also all of the other estimates that are related to such things. We think it's wonderful. Speaker 200:28:55As long as the consumer is winning And they're getting the best benefit options and they're being able to actually compare them effectively. That is the concern, Right, is that with so much change potential within the different options and so many tweaks that happen around the edges, beneficiaries can't always understand how does that impact them. They don't know how to make a relative comparison. And by actually building our infrastructure the way we have, taking all those benefit plans into account, Understanding the beneficiaries' individual needs, we're able to navigate that shopping experience. So yes, we expect more shopping to happen as we said last quarter. Speaker 200:29:32That is what our whole operating plan for the year is based upon. We have some presumptions on what that does to overall behavior around individual policies and we factor that in And as we said last quarter and we reiterate now, this is a part of our strategy. We've leaned into it. It is exactly what we believe should be happening, and that is that they shop. Shopping doesn't mean you switch. Speaker 200:29:57Shopping means you need to comparison shop. Shopping means you need to have an individualized experience. And so our agents, our Tier 2 shoppers, They're high quality trained associates who spend the time to understand the beneficiaries' needs, to understand all of their benefit alternative. And then make sure that even if it's not there is no change necessary, They're incentivized from the way we compensate them and our plans before AEP will be just that, that our agents are being are able to be rewarded for providing high value shopping experience even if the conclusion is the beneficiary just stays at their current plan. And they need to have that peace of mind. Speaker 200:30:36And so that's the way we're thinking about it. From our operational standpoint, that's exactly where we're expecting. More shopping, if it happens in an accelerated pace based upon Operator00:31:05and wait for your name to be announced. Operator. I show no further questions at this time. I would now like to turn the call back to Vijay for closing remarks. Speaker 200:31:23Thank you. Thank you again for joining us today. We are really proud of everything that we've been able to accomplish thus far this year. Our team has been phenomenal. We have done the best in the industry who are really focused on doing the right thing and doing it right. Speaker 200:31:39And we are absolutely committed to continuing to do that. We hope you leave knowing we remain focused on delivering long term value for our shareholders operator for providing high quality experiences to our consumers and health plans. Thank you for your continued support and we look forward to updating you on our progress during the next quarterly resultsRead morePowered by