NASDAQ:GOCO GoHealth Q3 2024 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-$3.73Consensus EPS -$3.19Beat/MissMissed by -$0.54One Year Ago EPS-$2.61GoHealth Revenue ResultsActual Revenue$118.29 millionExpected Revenue$105.93 millionBeat/MissBeat by +$12.36 millionYoY Revenue GrowthN/AGoHealth Announcement DetailsQuarterQ3 2024Date11/7/2024TimeBefore Market OpensConference Call DateThursday, November 7, 2024Conference 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 Q3 2024 Earnings Call TranscriptProvided by QuartrNovember 7, 2024 ShareLink copied to clipboard.There are 8 speakers on the call. Operator00:00:00Good morning, and welcome to GoHealth's Third Quarter 2024 Earnings Conference Call. My name is Hope, and I will be your operator for today's call. Currently, all participants are in a listen only mode. Following the prepared remarks, we will conduct a question and answer session. As a reminder, this conference is being recorded. Operator00:00:19I will now turn the call over to John Shave, Vice President of Investor Relations. John, you may begin. Speaker 100:00:29Thank you, and good morning. Welcome to GoHealth's Q3 2024 earnings call. Joining me today are Vijay Cote, Chief Executive Officer and Brendan Channahhead, Chief Financial Officer. Today's conference call contains forward looking statements based on our current expectations. Numerous risks and uncertainties may cause actual results to differ materially from those anticipated or projected in these statements. Speaker 100:00:55Many 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, whether due to new information, future events or otherwise. Earlier today, we issued a press release containing our results for the Q3 of 2024. We have posted the release on the GoHealth website under the Investor Relations tab. In the press release, we have listed several risk factors that you should consider in conjunction with our forward looking statements. Speaker 100:01:30We encourage you to consider the risk factors described in our 2023 Annual Report on Form 10 ks and our other 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 measure and the reconciliations are set forth in the press release. You may also refer to the Investor Relations presentation posted to the Investor Relations section of our website for reconciliations of non GAAP measures to the most comparable GAAP measures discussed during this quarterly results call. I will now turn the call over to GoHealth's CEO, Vijay Kote. Speaker 200:02:13Thank you, John, and good morning, everyone. First, I'm pleased to welcome Brendan Shanahan as our new Chief Financial Officer. Brendan joins us with over 30 years of financial leadership experience, including more than 20 years in the Medicare Advantage space. His expertise in financial strategy, mergers and acquisitions and operational leadership will be invaluable as we continue to execute our strategy and pursue profitable growth. With his extensive background and passion for helping consumers navigate their healthcare options, I'm confident that Brendan will be a tremendous asset to our team as we capitalize on the opportunities ahead. Speaker 200:02:50I would also like to thank Katie O'Halloran for her dedication during her time as Interim CFO. Her leadership has been crucial throughout this transition. Katie will remain a key leader in the finance organization continuing to serve as Chief Accounting Officer. For those new to the GoHealth story, our mission is to provide support, clarity and ultimately peace of mind to Medicare consumers in a landscape often marked by confusion and uncertainty. There are over 65,000,000 Medicare eligibles in the U. Speaker 200:03:22S, about half of whom are enrolled in Medicare Advantage Plans. Many consumers face an overwhelming number of options as 1 third of Medicare eligibles live in counties with 30 or more plans available. This complexity often deters consumers from exploring better options as they may not know who to trust or where to begin. At GoHealth, we aim to empower these individuals with proprietary objective technological tools and a highly trained and experienced agent team. We have evolved from a traditional Medicare enrollment company to a Medicare engagement company, focusing on building long term high quality relationships with our consumers. Speaker 200:04:01We believe this shift allows us to deliver a more integrated and personalized approach to care, reinforcing our unique role in the Medicare landscape. Turning to our Q3 results, I'm pleased to report solid operational progress, driven by strong performance from our internal captive team and continued improvements in efficiency and cost effectiveness. Our efforts this quarter were focused on guiding consumers through their Medicare options and delivering value to our stakeholders, while ensuring we are adequately prepared for the expected dynamic and disruptive annual enrollment period. Notably, we completed the E Telequo insurance acquisition, further strengthening our platform. Following the quarter's end, we also refinanced our term loan credit facility with new lenders and a 5 year term, reinforcing confidence in GoHealth's financial stability and positioning us for sustained growth. Speaker 200:04:56More importantly, the 5 year new term allows management the ability to fully focus on the investment and optimization of the business going forward. Brendan will provide further details on this shortly. In Q3, we continue to support consumers in navigating their Medicare choices through the plan to check up, leveraging our encompass workflow with our internal captive team supporting nearly 650,000 consumer experiences through this process. Overall, this resulted in over 166,000 submissions and added to just under 40,000 consumers peace of mind by ensuring that their current plans met their needs. Our performance during the Q3 special enrollment period exceeded our expectations, particularly in terms of submissions, revenue and adjusted EBITDA. Speaker 200:05:45Overall submissions were up 3% year over year with our internal captive agent submissions increasing by 46%, highlighting the effectiveness of our training and tools. In contrast, submissions from our Go partner solutions channel or GPS declined by 46%, reflecting the previously discussed broader market pressures impacting our external broker partners. Despite these challenges, we have been actively onboarding several new agencies that we expect will meaningfully contribute to GPS submissions during AEP. The strength of our internal team has been especially evident given the stable shopping and switching dynamics since last AEP. As anticipated, the market dynamics have been stagnant through Q3, but we are optimistic about improvements in Q4 as new benefits have become available alongside significant benefit disruption. Speaker 200:06:37We believe the differentiation and efficiency of our proprietary model continues to show via our Encompass workflow and plan fit checkup process. These improvements have significantly lowered our direct operating cost per submission or customer acquisition costs, driving greater cost effectiveness and enhancing both our operational performance and customer experience. I will address this further later in my prepared remarks. The most significant development this quarter was GoHealth's acquisition of Etelloquel, which closed on September 30. This strategic move adds approximately $90,500,000 in contract assets and $22,500,000 in cash to our balance sheet, which is inclusive of Speaker 300:07:20our initial $5,000,000 investment. Through this investment, we acquired an 18.9% stake in Etelloquote with the previous owner relinquishing their 81.1 percent ownership, making GoHealth the sole owner of Etelequot and allowing us to secure all assets, inclusive of Speaker 200:07:39the $5,000,000 paid to Etelequot at transaction closing. The acquisition also led to a substantial improvement in net income, largely due to the significant gain on bargain purchase of $77,400,000 as the fair market value of the Etelloquote assets acquired exceeded the fair market value of the liabilities assumed. The addition of Etelequote also brought nearly 400 licensed agents into the GoHealth fold, significantly expanding our agent capacity and strengthening both our financial and operational capabilities. This cash efficient increase in capacity comes at a critical time and we believe it will allow us to meet the high demand for Medicare Advantage shopping without the need for further hiring, thus optimizing our customer acquisition efforts. Etelequotes will operate within our GPS program, continuous operations while maintaining independence and benefiting from our plans and tools and marketing channels. Speaker 200:08:39Integrating Etelloqua agents into GPS enhances our reach during AEP and with reduced broker marketing capacity across the industry, we are confident that GoHealth is well positioned to leverage this expanded agent base without any perceived risk to the typical diseconomies of scale. The transaction is delivering immediate accretive benefits, reinforcing our market leadership and positioning us to seize growth opportunities in the coming quarters. Health plan disruption and consumer shopping behavior during the 2024 AEP is unfolding as we anticipated with over 2,000,000 individuals having lost coverage and more than 6,000,000 consumers seeing reduced plan benefits. These shifts are driving increased shopping for new plan options, creating a unique opportunity for us to capture demand more effectively, drive continued momentum and help consumers find better coverage. With favorable market dynamics, reduced competition and our strategic emphasis on quality, we believe GoHealth is well positioned for success this AEP and beyond. Speaker 200:09:42We anticipate these positive trends to continue through the 1st 3 quarters of 2025, driving sustained growth and new opportunities. A cornerstone of our transformation into a Medicare engagement company has been the successful rollout of our PlanFit checkup introduced in Q4, 2023. Powered by our AI driven plan fit tool, this initiative has significantly enhanced the Medicare Advantage shopping experience for consumers. Plan fit checkup offers 3 key outcomes: 1, enrolling in a new plan 2, informing consumers about a better option or 3, reassuring them that their current plan is the right choice. By compensating our agents for each completed checkup regardless of outcome, we ensure a strong focus on delivering the best possible guidance to our consumers. Speaker 200:10:34Building on the success of PlanFit Checkup, we continue to rollout PlanFitSafe, a targeted initiative aimed at retaining existing memberships with our health plan partners. Since its initial launch, implementation has been smooth and we are seeing continued interest from health plans looking to integrate this program. Given the expected market dynamics for the 2025 plan benefit year with more justified scenarios for appropriate plan switching, we expect a smaller target population for Plan 6 saves versus the 2024 benefit year. As we expand Plan 6 saves, we remain focused on growing our partnerships and enhancing the value we deliver to both consumers and health plans regardless of what the future dynamics will be for the benefit plan year 2026 and beyond. We remain committed to reducing our direct operating cost per submission through AI, automation and our plan fit tools. Speaker 200:11:29We have already achieved material improvements, some of which I will describe to you in further detail and expect this multi year effort to drive continued substantial reductions while enhancing marketing efficiency. As we scale our agency business, these strategies will support a strong profit profile by combining ongoing cost savings with higher lifetime value from deeper consumer relationships. Advancing our technology is also central to improving consumer experiences, agent efficiency and service quality. We have streamlined processes cutting average call times from 90 to 67 minutes, a 25% reduction. Additionally, Speaker 300:12:08we Speaker 200:12:08have deployed AI to reduce agent onboarding time by 40%. With the introduction of planned GPT, an AI driven tool for quicker access to extensive plan details, we are boosting productivity and allowing for more accurate comparisons and personalized support. Further enhancements include chronic condition special needs plan optimization, making it easier for agents to verify eligibility, driving efficiency and retention while increasing sales. Additionally, our automatic prescription drug lookup tool has shown a reduction in drug lookup time by approximately 40%, providing convenience and simplicity for both agents and consumers. These innovations via our proprietary built for purpose technology and platform are anticipated to deliver strong financial outcomes during AEP by improving speed, precision and service quality, positioning GoHealth for sustained growth. Speaker 200:13:05And with significant runway ahead, we believe we are well positioned to continue making improvements and enhancements, further extending our multi year lead in developing and implementing proprietary solutions against competitors in our space. With that, I will turn it over to Brendan to detail our financial results. Speaker 400:13:23Thank you, BJ. I am thrilled to join GoHealth during such an exciting time for the company. The Medicare landscape is evolving rapidly and I believe GoHealth's focus on delivering clarity and value to consumers combined with its commitment to innovation positions us exceptionally well for growth. I am eager to work alongside Vijay and the entire GoHealth team to build on the sturdy foundation that has already been established, driving our strategic priorities, ensuring we deliver sustainable long term value to our stakeholders. Now let me turn to our results. Speaker 400:13:59In the Q3 of 2024, GoHealth achieved net revenues of $118,300,000 compared to $132,000,000 in the same period last year. Internal captive agent submissions saw a 46% year over year increase, thanks to enhanced training, improved technology and more targeted marketing efforts. This growth was offset by a 46% decline in submissions from our GPS channel, which faced broader market pressures. I would like to address the technology incident involving Change Healthcare and its ongoing impact on GoHealth's financial results. We rely on Change Healthcare to assess Medicaid eligibility during enrollment and their cyber attack earlier this year and subsequent outage disrupted our ability to enroll some consumers. Speaker 400:14:55This led to a reduction in 3rd quarter revenue of over $8,800,000 and earnings by more than $7,800,000 Our teams adapted swiftly, shifting more submissions to traditional agency contracts and continue to work diligently to mitigate this issue going forward. Though we expect this to be materially mitigated going into the annual enrollment period, despite our efforts, this situation continues to impact our financial performance. Our adjusted EBITDA for the quarter was negative $12,100,000 a slight decrease of $600,000 compared to the prior year. While revenues were down, we made considerable progress in reducing our direct operating cost per submission by 11%, a testament to the cost saving initiatives we have implemented. These savings stem from our targeted marketing strategies and the operational efficiencies gained through investments in our proprietary technology and updated operating model. Speaker 400:16:05Q3 2024 trailing 12 months or TTM had a positive cash flow from operations of $35,100,000 an increase of $38,300,000 compared to the TTM negative cash flow from operations of $3,200,000 in the prior year period. Our use of cash is strategically aligned with the opportunities we identify in the market. Last year, we anticipated challenging market dynamics, which led us to prioritize paying down $75,000,000 of debt during 2024 as the most prudent use of our cash. This year with more favorable market conditions, we are taking a different approach. We are deploying cash to seize the significant opportunities ahead, which we believe will position us to maximize growth and capitalize on the outsized potential we see in the current environment. Speaker 400:17:02As Vijay has already covered, we completed the acquisition of eTelequote under unique circumstances. Specifically, the company obtained control of E Telequo without the ultimate transfer of any consideration. On the acquisition date, we recognized a gain on bargain purchase of approximately $77,400,000 This gain is recorded in the gain on bargain purchase line in our condensed consolidated statement of operations. To provide additional context, this gain reflects the difference between the fair value of E Telequotes net assets at the acquisition date and the fair value of the consideration transferred, which in this case was 0. After the quarter end, we completed the refinancing of our term loan credit facility. Speaker 400:17:54This refinancing demonstrates confidence in GoHealth's financial stability and positions the company for long term growth. The new $475,000,000 term loan facility maturing in 2029 features improved financial terms, including an interest rate of sulfur plus 7.5 percent with a 25 basis point reduction upon the termination of our current revolver. This refinancing extends the maturity of GoHealth's term loans through November, 2029 and positions the company to continue investing in growth initiatives and innovation. We are pleased with the outcome of this refinancing, which not only extends the maturity of our term loans, but also signals renewed confidence from our investors in GoHealth's business model and financial health. The strong demand for this offering underscores the market's trust in our operational and financial capabilities. Speaker 400:18:55With the extended maturities, we can remain laser focused on growing our business during this incredibly unique and opportune time. We believe our strategic focus on cost control paired with the integration of eTelequot and the rollout of initiatives like Plants That Save positions us well to navigate the current environment. We are confident that the enhancements to our encompass workflow, plan fit tools and the addition of licensed agents from eTelequo have bolstered our operational capacity and set us up for success. This AEP evolving market dynamics are driving strong demand, which we expect to boost our submissions revenue and adjusted EBITDA. We anticipate a year over year decline in cash flow from operations due to the shift away from non agency revenue and the investments of available cash into high return on investment marketing. Speaker 400:19:52Our conservatism in calculating lifetime values or LTVs ensures that our projections remain sustainable and risk managed. This disciplined approach not only underpins our current strategy, but also sets a solid foundation for future growth. Our commitment to this conservative data driven strategy is an underappreciated strength of GoHealth and one of the key reasons I was eager to join Vijay and the GoHealth team. I believe it uniquely positions us for long term success, allowing us to navigate industry challenges while maintaining a focus on delivering value to our stakeholders. As we move forward, we remain highly confident in our performance outlook for the remainder of 2024 as we continue to leverage our strategic initiatives and technology advancements to capitalize on unique growth opportunities while maintaining financial discipline. Speaker 400:20:51We believe that the favorable market dynamics driving demand today will persist throughout the 1st 3 quarters of 2025, positioning us strongly for sustained success. Thank you to our GoHealth team for all their hard work and to our investors and analysts for your continued support. I will now turn the call back to Vijay for closing remarks. Speaker 200:21:16Thank you, Brendan, and thank you to everyone joining us today. This annual enrollment period is generally developing as we expected and we believe it is set up to be an outside success for GoHealth, driven by our multi year focus on strategic initiatives. Through sustained investments in market leading technology, operational efficiency and reductions in our direct operating cost per submission, we have built a solid foundation that uniquely positions us within the industry. Our unique and innovative solutions such as PlantFit Checkup and PlantFit Save along with strategic commercial structures empower consumers and position us well for sustained long term growth. As we look ahead, we remain committed to providing exceptional service to Medicare consumers, building lasting relationships and adapting seamlessly to changes in the regulatory landscape. Speaker 200:22:09We are eager to work collaboratively with the incoming administration to continue delivering value to our consumers. With our strategic approach and the dedication of our team, I'm confident that we will continue to be a market leader and significantly outpace the competition, creating lasting value for our stakeholders. Thank you for your continued support and I look forward to sharing our progress as we close out 2024 and enter the New Year. We are now ready to take your questions. Operator00:22:38Thank you. At this time, we will conduct the question and answer session. Our first question comes from Pat McCan with NOBLE Capital Markets. Your line is now open. Speaker 500:23:16Hey, good morning. Congrats on the quarter. I just have a I guess my first question would be regarding the acquisition. Of course, we know we're heading into or we're in a strong season now. And I'm just wondering with those new agents, how the training process went with them? Speaker 500:23:37Were they did you feel like the new agents from E Telequo were ready to go for AEP? Were there any surprises in that process? Speaker 200:23:48Thank you, Pat. I appreciate the question. I would start out with this. 1st and foremost, we are so excited about Etelloquo. The team has been amazing. Speaker 200:23:57They come in seasoned, very skilled, focused on doing the right thing and that's the right starting point. And so when we started with that and we're very thoughtful in the way we entered into the transaction where we also had commercial relationship they gave us the time in September to onboard that team into our technology. As you know, our marketplace tools, our plan bid tools, the automation build within that, that is a real unlock of capacity and consistency that enables agents to be very productive. So we were able to spend that time, effectively the second half of September and the early parts of October, making sure that they were trained on it, prepared for it and that we could help them understand how to optimize their performance. And we've been very excited about how that's worked so far. Speaker 200:24:43And as we said in our prepared comments, it's been accretive already. So we're very excited about that. And I would just stress again that the quality of that team and the agents that came along with it and the leadership there was fully in line with the way we think about protecting and helping consumers and that was probably the most valuable piece of the integration and onboarding. Speaker 500:25:04Great, thanks. And then I just wanted to ask about your balance sheet, maybe one for Brendan. And by the way, congrats Brendan on the position. So you talked about the refinance and of course using capital to invest in the growth of the business given the strong market dynamics that we're in. But I was just wondering as we look further down the line, what would be your plans as far as additional paydowns to reduce the total amount of debt as we go forward? Speaker 500:25:42And then maybe going along with that, what would be a target debt to EBITDA ratio if you do have one there? Speaker 200:25:51Thanks, Pat. I'll actually start now and turn it over to Brendan. What I would start with is, as he stated in the earlier comments, we are always looking at the best use of capital, right? If we see the market dynamics are there, it's just that you should be investing in more capacity or more opportunities to help more consumers, then you should do that. If you see a better if you don't see the dynamics being positive and you really stare at what's the best use of that capital, then you pay down debt, because obviously there's a cost to that capital. Speaker 200:26:21So you're always looking at the return on invested capital in such a way to ensure that we're optimizing the outcomes. So with that, I'll let Brendan talk a little bit about how we're thinking about our overall balance sheet optimization. Speaker 400:26:34Thanks, Vijay. Thanks, Pat, for welcoming me to GoHealth. I'm really excited to be here with the team. And as Vijay said, right, we look at the situation in the market and deploy cash. Right now, it's a good place to put it into our marketing efforts to increase our consumer base and who buys health insurance through us for MA. Speaker 400:26:55And then over time, we'll evaluate what is the best place for us and timing to pay down that debt going forward. That's we have a new 5 year term with new lenders. We're excited to work with them. And so we will figure that out as we're going forward. Speaker 200:27:07Yes. And I think that's just one good thing to highlight again is giving us the 5 year runway allows us to have the flexibility as opposed to having any ticking deadline that says you have to pay so much down. We can retain the flexibility to make those investment decisions in either technology, capacity or maybe even other potential acquisitions as there may be in the marketplace. Speaker 500:27:30Great. Much appreciated. I'll hand the Speaker 200:27:32floor over to someone else. Thanks, Matt. Operator00:27:36Thank you. Our next question comes from Ben Hendricks with RBC Capital Markets. Your line is now open. Speaker 600:27:44Hey, great. Thanks guys. I was wondering if you can talk a little bit more about the internal captive agent submissions that you received. Looks like we had really strong growth there. Total submissions were ahead of our expectations. Speaker 600:27:57Just wanted to get your comments first on that internal piece, the sustainability of that momentum. And then on the flip side, kind of what your plans are on the GPS agent side, it looks like that was down a little bit. If there are kind of efforts in place to turn that around or is that how much of a focus is that recovery? Thanks. Speaker 200:28:18Thanks, Ben. Appreciate you joining the call and appreciate the question. First and foremost, our internal agents. I can't thank them enough for their commitment to what we have used as data to support the way to optimize their performance. So they have been in lockstep with our technology team to redesign and build this product for purpose that's optimized how they want to serve consumers. Speaker 200:28:41So instead of having to go to 3 different websites, how do we integrate that into the tool? So it's pulling the data and then making it available to them before they even know they need it. That's part of what the AI automation tools that we've been able to deliver. And what comes out of that is that they're able to focus more time on listening to the consumer, focus more time on answering questions very specifically as to put them to seek those answers. And that yields more capacity for them to serve more consumers and have a higher probability outcome and matching them with a better plan if appropriate and build that confidence. Speaker 200:29:13And that's what's coming through and what you've seen a year over year performance improvement of 46% for our internal captive agents. And most of that is coming through more efficiency through the tool and being able to be more targeted in the way our marketing is identifying consumers who need support. So when you have better marketing targeting to get consumers who likely need the help to come in as well as having more efficient tools to serve them, that has that step function and capacity. And therefore, we believe that is going to continue. There's no reason to believe that it can't maintain that, if not continue to improve as we add more tools and automations in place and allow the AI to keep learning off of the more interactions that happen and building off of our 30,000,000 consumer interaction data set. Speaker 200:29:57That will always help refine that and make it better. As we think about the GPS channel, our external channel, there should be no significant change in what we have been communicating all year as that there's been instability in those external channels of brokers, which has also led to a tailwind for us, which is in that competitors, generally speaking, of those other brokerages who maybe didn't make it work, they couldn't optimize the cash equation. They're not buying those leads. And so because they don't have the capacity, they didn't have the cash. And so that's giving us a tailwind on the internal marketing channels that we have. Speaker 200:30:34But on the flip side, external brokers are still a source under the GPS channels that we've discussed. And so we had to reset and re recruit and we recruited a number of new downline GPS partners to participate in under that structure. We purposely sought to not launch those in Q3 given that we saw those dynamics are still not great, a lot of uncertainty at the product stability. And so we have really supported that growth coming to Q4 as we've onboarded a number of those to have a material contribution to the volume and number of consumers we can serve in the Q4. And just on the last piece there that you asked how strategically important it is to us. Speaker 200:31:16We believe it's an opportunity to 1, serve more consumers in those times when the demand is really high, but to avoid the cash burn of maintaining that capacity all year long, because then you're prone to those diseconomies of scale. So it gives us a very symbiotic relationship with those external agencies to support them with tools, technology and training in for Medicare when maybe they're selling other things for the rest of the year and don't have this as a primary focus all year long. And then for us, it gives us that access to variable capacity without the cash burn that I think is strategically valuable, especially in a period like we're seeing today. Speaker 600:31:56Thank you. Appreciate that commentary. And then just one more for me on cash flow. I mean, clearly a strong turnaround from this time last year. Just wanted to get all the pieces and puts and takes of that. Speaker 600:32:09I assume most of that is kind of the explained in the shift from non agency to agency, but just want to get your take. Thanks. Speaker 200:32:18It's a great question, Ben. I would actually say that most people have assumed it was that shift from agency to non agency. More material driver of that was really good thoughtful decisions around operational efficiencies and capital deployment. We have invested in operational standardization that yielded I think as we've mapped some of that in prior conversations and other presentations externally, nearly 2 thirds of the gain in total cash flow from operations came from operational simplicity, standardization, deployment of technology. Agency, non agency mix, yes, does have a factor in that, but it's more about how we decide to deploy the capital. Speaker 200:32:59As we said in last AEP, we saw the market dynamics and we pulled back on the spend, so that we could retain more of that capital because it wasn't a good ROI to continue to deploy it. We saved it and we paid down debt of $75,000,000 because we thought avoiding that interest expense was more important at that point in time in a better investment. As we come into this AEP, if you think about those dynamics, we're seeing a very different market dynamic. So I guess what I'm saying is there's a lot of operational efficiency that drove our cash improvement. Then there is a portion of agency versus non agency and more materially it's about meeting the market opportunity to determine whether you're going to deploy the cash or retain the cash that you've generated through those efficiency and contracting efforts. Speaker 600:33:45Thanks guys and congratulations on the quarter. Speaker 200:33:49Thanks Ben. Operator00:33:58Our next question comes from Robert M. Maguire with Granite Research. Your line is now open. Speaker 300:34:04Good morning. Thank you for taking my questions. Can you Vijay, can you kind of give us a discussion on your efforts to reduce CAC? And I'm interested in just to understand how you anticipate CAC to play out in the Q4 with the E Telequo acquisition, how that will play out over time? And then would love to hear what you're thinking a few years out from now, where you think CAT could go? Speaker 200:34:29Great. Welcome, Rob. Appreciate you asking the question today. A very thoughtful question and really timely given the amount of progress we've made on the direct cost per submission as we reported or also some refer to as a cash cost of acquisition. And the way we think about it is we've had continuous improvement in it by automating, so decreasing average handle time is one piece of it. Speaker 200:34:53The other piece is better than marketing targeting. So if you look at our direct cost per submission, there are 3 primary buckets, right? The first one is going to be marketing costs. The second one is going to be really what we call TC and E or is it going to be the selling time or average handle time is my best KPI, there are agent costs. And then the third one is going to be the cost related to the GPS channel, right. Speaker 200:35:15So all that flows in there. Put the GPS channel aside because that's really going to be a factor based upon the mix of that volume to our total number of submissions. So really where we're focusing our efforts is on marketing, making sure that we have really aligned contracts with partners when we do partner marketing and also optimizing the internal marketing we do to make sure that we're identifying consumers at the top of funnel who have the most significant or highest likelihood of needing to make a switch or to need different coverage options. That is critically important to getting that efficiency out of marketing. And then you have it so if you look at that distinctively one way with 1 bucket. Speaker 200:35:57The second bucket is on overall efficiency of the technology platform to ensure that we can decrease the amount of time, the average handle time for an enrollment or a non enrollment or a sale notice. So you want to be efficient on both, but you don't want to be so efficient that you're walking away from consumers who really need help. So there's a balancing act there that we use our technology to enable. And then there's the way you look at both of them together. And what I've been most proud of our team is our marketing and our sales operations team work in tandem to do what I think is really not highlighted enough, which is that supply demand matching. Speaker 200:36:33Our ability to look minute by minute to make sure you're not over or understaffed that you have the right amount of a queue time and being able to manage that throughout the day when you have peaks in the middle and you have off hours in the beginning and the end and then being able to optimize that against your outbound and inbound phone calls and then layering in when mail hits so that you pull back digital and if TV is up running, you pull back digital and if it's not working, you pop it up. Those are the components that together with marketing and sales, as to Bock as I highlighted, that gives you that step function improvements that we've been seeing. So I would really say it's a few different things. Again, it's targeting and marketing, it's making sure that we continue to use AI and automation to make the tools more efficient, so you decrease the average handle times in those calls. And then finally, it's the way you do the matching together so that we can continuously more real time, if it's not it might not take every 2 to 3 minutes to make the modifications of supplydemand matching, decrease the amount of time to even refine it further. Speaker 200:37:36Is that responsive Rob to your question? Speaker 300:37:40That is. I appreciate it. Maybe I'll just move on. For the E Telequat acquisition, is that repeatable? I guess that is probably one page of your playbook, but are there other opportunities out there you can talk about with or without the abandonment structure? Speaker 200:37:56Yes, it's a great question, Rob. There's been a lot of different attempted transactions in the marketplace by large entities, standalones, etcetera. Not everybody has been able to really think through the investments that are necessary to be great in this business. And I think because of the platform, the technology and tools we've built, we have a unique synergy opportunity to unlock potential of these types of organizations. And we do keep an eye open and an ear out and listening to see if there are other opportunities to do more of that. Speaker 200:38:31So we're excited about the opportunity to do it. And by having the technology continuously getting more efficient as we think about the long term as part of your first question, we expect that to continuously get more efficient and give us more opportunities to tap into consolidation in the industry if it makes sense. Speaker 300:38:49Okay, great. Thank you. And then a separate topic, just on agency versus non agency. Can you just talk to us about what you anticipate the mix is going to be going forward? And then tell us what are you seeing from your perspective in terms of how are you determining that you want to go with more agency at this point in time? Speaker 300:39:09What are some of the factors you're looking at that's telling you that that lifetime value is going to be greater with one plan over another? Speaker 200:39:16Yes. So it's a very it's a simple question, a little bit more complicated to answer, but let me try to keep it as efficient as possible. Any given year, we think about the probabilities of a product as it's written that year and think about what is the likelihood of the benefit accretion, stable or degradation. And that will help us illuminate whether we should go through an agency or non agency structure. If you think there's likely more likelihood of disruption, you want to be on a non agency structure. Speaker 200:39:46If you think there's more likelihood of stability or upward movement, you want to be on an agency structure. And then it's also based on track record. And sometimes we also choose to go non agency just because we have a more exhaustive enrollment process where we're doing additional services on the back end to support a health plan for onboarding or continuous engagement. But all that said, that is how we go in into the contracting phase. But what ultimately comes out on the back end of the mix of agency versus non agency is more dependent upon the consumers that we connect with and what made more sense for them. Speaker 200:40:20So we don't put our thumb on the scale there. Whatever we ultimately start out with contracts and then however competitive the products end up being on a relative basis and how that individually matches for that unique consumer who called us, that will determine ultimate mix of agency versus non agency. And we want to make sure that we implore our ability to be nimble within that. And that's why things like the refi that we did for 5 years gives us that opportunity, right, of being able to be nimble and just present the best products available as opposed to only wanting to provide products that give us a different cash profile on any given year. You want to let the product speak to the consumers' needs and that's how we operate. Speaker 200:41:01Is that responsive to your question, Ron? Operator00:41:07Thank you. Our next question comes from Jim Sidoti with Sidoti and Co. Thanks Speaker 700:41:16for Operator00:41:17taking the question. Jim, your line is now open. Speaker 700:41:20Okay. Good morning and thank you for taking the questions and welcome, Brendan. Can you talk about what you think the impact will be from the election earlier this week? What do you think will happen with the new administration? How do you think you can adapt to it? Speaker 200:41:37Thanks for the question. Good to hear from you, Jim. It's still early, right? We've got to listen more, pay more attention. Obviously, we were we're going to do all the right things and want to serve as many consumers as possible under whichever scenario was a result from the election. Speaker 200:41:54So we're staying heads down focused on delivering this AEP right now serving as many consumers as possible. And we expect to be prepared for whichever way the path goes forward with the new administration and how they want to direct the product. But we believe and continue to believe that when you have over 50% of the Medicare population choosing Medicare Advantage Program and for us to be one of the leaders in helping them choose between those and finding great coverage, that's a program that's going to be valuable to any administration. And our role in that, making sure we do it the right way and putting the consumer at the center of it will be valuable to all relevant constituents. So not much more to say. Speaker 200:42:33I know it's not a great answer as to how things may play forward because we still haven't learned enough about that. But long story short, we think we're a contributor to value in the overall equation and we're happy to partner with the new administration to help them achieve their goals as well. Speaker 700:42:51Right. And it sounds like with the current environment, you're in a mode more to deploy cash than to keep it. And what are the things you think are make the most sense to spend the cash on? Is it bringing on new agents, new marketing initiatives? Where do you think you'll be spending money over the next 6 months? Speaker 200:43:14It's a great question. How would we deploy cash over the next 6 months? Because you highlight a great point when you asked that question is that the market dynamics we see in the Q4 actually extend all the way through the 1st 3 quarters of next year, that there's continued instability, there's continued need for reach of the shop and it's opportune for organizations like us who are set up for it. And so we've already made some of those bets by things like the TeleQuad acquisition to give us the capacity with experienced agents that you can onboard and deploy on our technology. Then if you see more opportunities, what you would do is you would invest in more marketing to do it in more hours and extend your access points to consumer, so you can meet more of that demand that's out there. Speaker 200:44:00As we already know, there's not as much supply of agent capacity this year than there has been in previous years, given to the challenges that many organizations in the broker space outside of us have had in being able to maintain and or grow their capacity. So, it's not really efficient at this point of the game, meaning for ADP. But if you think about it, what you would be paying for today Speaker 600:44:23as we Speaker 200:44:23go into next year for OUP and then continuously to kind of feed that engine of growth and opportunity through the special enrollment period next year as well. So we look at all those tactics, but agents aren't necessarily the place to focus on. We've got a great agent base and our attrition is actually doing better than we expected given the market dynamics and the amount of efficiency they get through our tool. So it's really about making sure we can access more consumers by extending more availability of our agents that exist and are trained and giving them great opportunities through marketing. Speaker 700:45:02All right. Thank you. Speaker 200:45:04Thank you, Tim. Operator00:45:06I'm showing no further questions at this time. I would now like to turn it back to Vijay for closing remarks. Speaker 200:45:12I really would like to extend my appreciation and thanks to all of you for joining your time and focusing your interest on our continued evolution into an engagement company that's really focused on serving consumers and making sure that they're centered everything we do. We don't bring them services that we'd like to sell them. We match the consumers based on their personalized needs and try to find things that can give them peace of mind and help them access the best health care for them and using our tools to find the most suitable plan that meets those needs. As we continue on that journey to serve as many consumers as possible, I'd be remiss not to thank my team who is committed to doing this every day with a laser focus on serving as many consumers as possible with the highest quality as possible. And that's from our corporate support infrastructure all the way to the frontline associates who have the privilege of helping consumers on a day to day basis. Speaker 200:46:07So thank you all. I appreciate it and I look forward to updating you on our progress as we continue that evolution. Thanks. Operator00:46:15Thank you for your participation in today's conference. This does now conclude the program. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallGoHealth Q3 202400:00 / 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.comThe Trump Dump is starting; Get out of stocks now?The first 365 days of the Trump presidency… Will be the best time to get rich in American history.April 26, 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. 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There are 8 speakers on the call. Operator00:00:00Good morning, and welcome to GoHealth's Third Quarter 2024 Earnings Conference Call. My name is Hope, and I will be your operator for today's call. Currently, all participants are in a listen only mode. Following the prepared remarks, we will conduct a question and answer session. As a reminder, this conference is being recorded. Operator00:00:19I will now turn the call over to John Shave, Vice President of Investor Relations. John, you may begin. Speaker 100:00:29Thank you, and good morning. Welcome to GoHealth's Q3 2024 earnings call. Joining me today are Vijay Cote, Chief Executive Officer and Brendan Channahhead, Chief Financial Officer. Today's conference call contains forward looking statements based on our current expectations. Numerous risks and uncertainties may cause actual results to differ materially from those anticipated or projected in these statements. Speaker 100:00:55Many 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, whether due to new information, future events or otherwise. Earlier today, we issued a press release containing our results for the Q3 of 2024. We have posted the release on the GoHealth website under the Investor Relations tab. In the press release, we have listed several risk factors that you should consider in conjunction with our forward looking statements. Speaker 100:01:30We encourage you to consider the risk factors described in our 2023 Annual Report on Form 10 ks and our other 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 measure and the reconciliations are set forth in the press release. You may also refer to the Investor Relations presentation posted to the Investor Relations section of our website for reconciliations of non GAAP measures to the most comparable GAAP measures discussed during this quarterly results call. I will now turn the call over to GoHealth's CEO, Vijay Kote. Speaker 200:02:13Thank you, John, and good morning, everyone. First, I'm pleased to welcome Brendan Shanahan as our new Chief Financial Officer. Brendan joins us with over 30 years of financial leadership experience, including more than 20 years in the Medicare Advantage space. His expertise in financial strategy, mergers and acquisitions and operational leadership will be invaluable as we continue to execute our strategy and pursue profitable growth. With his extensive background and passion for helping consumers navigate their healthcare options, I'm confident that Brendan will be a tremendous asset to our team as we capitalize on the opportunities ahead. Speaker 200:02:50I would also like to thank Katie O'Halloran for her dedication during her time as Interim CFO. Her leadership has been crucial throughout this transition. Katie will remain a key leader in the finance organization continuing to serve as Chief Accounting Officer. For those new to the GoHealth story, our mission is to provide support, clarity and ultimately peace of mind to Medicare consumers in a landscape often marked by confusion and uncertainty. There are over 65,000,000 Medicare eligibles in the U. Speaker 200:03:22S, about half of whom are enrolled in Medicare Advantage Plans. Many consumers face an overwhelming number of options as 1 third of Medicare eligibles live in counties with 30 or more plans available. This complexity often deters consumers from exploring better options as they may not know who to trust or where to begin. At GoHealth, we aim to empower these individuals with proprietary objective technological tools and a highly trained and experienced agent team. We have evolved from a traditional Medicare enrollment company to a Medicare engagement company, focusing on building long term high quality relationships with our consumers. Speaker 200:04:01We believe this shift allows us to deliver a more integrated and personalized approach to care, reinforcing our unique role in the Medicare landscape. Turning to our Q3 results, I'm pleased to report solid operational progress, driven by strong performance from our internal captive team and continued improvements in efficiency and cost effectiveness. Our efforts this quarter were focused on guiding consumers through their Medicare options and delivering value to our stakeholders, while ensuring we are adequately prepared for the expected dynamic and disruptive annual enrollment period. Notably, we completed the E Telequo insurance acquisition, further strengthening our platform. Following the quarter's end, we also refinanced our term loan credit facility with new lenders and a 5 year term, reinforcing confidence in GoHealth's financial stability and positioning us for sustained growth. Speaker 200:04:56More importantly, the 5 year new term allows management the ability to fully focus on the investment and optimization of the business going forward. Brendan will provide further details on this shortly. In Q3, we continue to support consumers in navigating their Medicare choices through the plan to check up, leveraging our encompass workflow with our internal captive team supporting nearly 650,000 consumer experiences through this process. Overall, this resulted in over 166,000 submissions and added to just under 40,000 consumers peace of mind by ensuring that their current plans met their needs. Our performance during the Q3 special enrollment period exceeded our expectations, particularly in terms of submissions, revenue and adjusted EBITDA. Speaker 200:05:45Overall submissions were up 3% year over year with our internal captive agent submissions increasing by 46%, highlighting the effectiveness of our training and tools. In contrast, submissions from our Go partner solutions channel or GPS declined by 46%, reflecting the previously discussed broader market pressures impacting our external broker partners. Despite these challenges, we have been actively onboarding several new agencies that we expect will meaningfully contribute to GPS submissions during AEP. The strength of our internal team has been especially evident given the stable shopping and switching dynamics since last AEP. As anticipated, the market dynamics have been stagnant through Q3, but we are optimistic about improvements in Q4 as new benefits have become available alongside significant benefit disruption. Speaker 200:06:37We believe the differentiation and efficiency of our proprietary model continues to show via our Encompass workflow and plan fit checkup process. These improvements have significantly lowered our direct operating cost per submission or customer acquisition costs, driving greater cost effectiveness and enhancing both our operational performance and customer experience. I will address this further later in my prepared remarks. The most significant development this quarter was GoHealth's acquisition of Etelloquel, which closed on September 30. This strategic move adds approximately $90,500,000 in contract assets and $22,500,000 in cash to our balance sheet, which is inclusive of Speaker 300:07:20our initial $5,000,000 investment. Through this investment, we acquired an 18.9% stake in Etelloquote with the previous owner relinquishing their 81.1 percent ownership, making GoHealth the sole owner of Etelequot and allowing us to secure all assets, inclusive of Speaker 200:07:39the $5,000,000 paid to Etelequot at transaction closing. The acquisition also led to a substantial improvement in net income, largely due to the significant gain on bargain purchase of $77,400,000 as the fair market value of the Etelloquote assets acquired exceeded the fair market value of the liabilities assumed. The addition of Etelequote also brought nearly 400 licensed agents into the GoHealth fold, significantly expanding our agent capacity and strengthening both our financial and operational capabilities. This cash efficient increase in capacity comes at a critical time and we believe it will allow us to meet the high demand for Medicare Advantage shopping without the need for further hiring, thus optimizing our customer acquisition efforts. Etelequotes will operate within our GPS program, continuous operations while maintaining independence and benefiting from our plans and tools and marketing channels. Speaker 200:08:39Integrating Etelloqua agents into GPS enhances our reach during AEP and with reduced broker marketing capacity across the industry, we are confident that GoHealth is well positioned to leverage this expanded agent base without any perceived risk to the typical diseconomies of scale. The transaction is delivering immediate accretive benefits, reinforcing our market leadership and positioning us to seize growth opportunities in the coming quarters. Health plan disruption and consumer shopping behavior during the 2024 AEP is unfolding as we anticipated with over 2,000,000 individuals having lost coverage and more than 6,000,000 consumers seeing reduced plan benefits. These shifts are driving increased shopping for new plan options, creating a unique opportunity for us to capture demand more effectively, drive continued momentum and help consumers find better coverage. With favorable market dynamics, reduced competition and our strategic emphasis on quality, we believe GoHealth is well positioned for success this AEP and beyond. Speaker 200:09:42We anticipate these positive trends to continue through the 1st 3 quarters of 2025, driving sustained growth and new opportunities. A cornerstone of our transformation into a Medicare engagement company has been the successful rollout of our PlanFit checkup introduced in Q4, 2023. Powered by our AI driven plan fit tool, this initiative has significantly enhanced the Medicare Advantage shopping experience for consumers. Plan fit checkup offers 3 key outcomes: 1, enrolling in a new plan 2, informing consumers about a better option or 3, reassuring them that their current plan is the right choice. By compensating our agents for each completed checkup regardless of outcome, we ensure a strong focus on delivering the best possible guidance to our consumers. Speaker 200:10:34Building on the success of PlanFit Checkup, we continue to rollout PlanFitSafe, a targeted initiative aimed at retaining existing memberships with our health plan partners. Since its initial launch, implementation has been smooth and we are seeing continued interest from health plans looking to integrate this program. Given the expected market dynamics for the 2025 plan benefit year with more justified scenarios for appropriate plan switching, we expect a smaller target population for Plan 6 saves versus the 2024 benefit year. As we expand Plan 6 saves, we remain focused on growing our partnerships and enhancing the value we deliver to both consumers and health plans regardless of what the future dynamics will be for the benefit plan year 2026 and beyond. We remain committed to reducing our direct operating cost per submission through AI, automation and our plan fit tools. Speaker 200:11:29We have already achieved material improvements, some of which I will describe to you in further detail and expect this multi year effort to drive continued substantial reductions while enhancing marketing efficiency. As we scale our agency business, these strategies will support a strong profit profile by combining ongoing cost savings with higher lifetime value from deeper consumer relationships. Advancing our technology is also central to improving consumer experiences, agent efficiency and service quality. We have streamlined processes cutting average call times from 90 to 67 minutes, a 25% reduction. Additionally, Speaker 300:12:08we Speaker 200:12:08have deployed AI to reduce agent onboarding time by 40%. With the introduction of planned GPT, an AI driven tool for quicker access to extensive plan details, we are boosting productivity and allowing for more accurate comparisons and personalized support. Further enhancements include chronic condition special needs plan optimization, making it easier for agents to verify eligibility, driving efficiency and retention while increasing sales. Additionally, our automatic prescription drug lookup tool has shown a reduction in drug lookup time by approximately 40%, providing convenience and simplicity for both agents and consumers. These innovations via our proprietary built for purpose technology and platform are anticipated to deliver strong financial outcomes during AEP by improving speed, precision and service quality, positioning GoHealth for sustained growth. Speaker 200:13:05And with significant runway ahead, we believe we are well positioned to continue making improvements and enhancements, further extending our multi year lead in developing and implementing proprietary solutions against competitors in our space. With that, I will turn it over to Brendan to detail our financial results. Speaker 400:13:23Thank you, BJ. I am thrilled to join GoHealth during such an exciting time for the company. The Medicare landscape is evolving rapidly and I believe GoHealth's focus on delivering clarity and value to consumers combined with its commitment to innovation positions us exceptionally well for growth. I am eager to work alongside Vijay and the entire GoHealth team to build on the sturdy foundation that has already been established, driving our strategic priorities, ensuring we deliver sustainable long term value to our stakeholders. Now let me turn to our results. Speaker 400:13:59In the Q3 of 2024, GoHealth achieved net revenues of $118,300,000 compared to $132,000,000 in the same period last year. Internal captive agent submissions saw a 46% year over year increase, thanks to enhanced training, improved technology and more targeted marketing efforts. This growth was offset by a 46% decline in submissions from our GPS channel, which faced broader market pressures. I would like to address the technology incident involving Change Healthcare and its ongoing impact on GoHealth's financial results. We rely on Change Healthcare to assess Medicaid eligibility during enrollment and their cyber attack earlier this year and subsequent outage disrupted our ability to enroll some consumers. Speaker 400:14:55This led to a reduction in 3rd quarter revenue of over $8,800,000 and earnings by more than $7,800,000 Our teams adapted swiftly, shifting more submissions to traditional agency contracts and continue to work diligently to mitigate this issue going forward. Though we expect this to be materially mitigated going into the annual enrollment period, despite our efforts, this situation continues to impact our financial performance. Our adjusted EBITDA for the quarter was negative $12,100,000 a slight decrease of $600,000 compared to the prior year. While revenues were down, we made considerable progress in reducing our direct operating cost per submission by 11%, a testament to the cost saving initiatives we have implemented. These savings stem from our targeted marketing strategies and the operational efficiencies gained through investments in our proprietary technology and updated operating model. Speaker 400:16:05Q3 2024 trailing 12 months or TTM had a positive cash flow from operations of $35,100,000 an increase of $38,300,000 compared to the TTM negative cash flow from operations of $3,200,000 in the prior year period. Our use of cash is strategically aligned with the opportunities we identify in the market. Last year, we anticipated challenging market dynamics, which led us to prioritize paying down $75,000,000 of debt during 2024 as the most prudent use of our cash. This year with more favorable market conditions, we are taking a different approach. We are deploying cash to seize the significant opportunities ahead, which we believe will position us to maximize growth and capitalize on the outsized potential we see in the current environment. Speaker 400:17:02As Vijay has already covered, we completed the acquisition of eTelequote under unique circumstances. Specifically, the company obtained control of E Telequo without the ultimate transfer of any consideration. On the acquisition date, we recognized a gain on bargain purchase of approximately $77,400,000 This gain is recorded in the gain on bargain purchase line in our condensed consolidated statement of operations. To provide additional context, this gain reflects the difference between the fair value of E Telequotes net assets at the acquisition date and the fair value of the consideration transferred, which in this case was 0. After the quarter end, we completed the refinancing of our term loan credit facility. Speaker 400:17:54This refinancing demonstrates confidence in GoHealth's financial stability and positions the company for long term growth. The new $475,000,000 term loan facility maturing in 2029 features improved financial terms, including an interest rate of sulfur plus 7.5 percent with a 25 basis point reduction upon the termination of our current revolver. This refinancing extends the maturity of GoHealth's term loans through November, 2029 and positions the company to continue investing in growth initiatives and innovation. We are pleased with the outcome of this refinancing, which not only extends the maturity of our term loans, but also signals renewed confidence from our investors in GoHealth's business model and financial health. The strong demand for this offering underscores the market's trust in our operational and financial capabilities. Speaker 400:18:55With the extended maturities, we can remain laser focused on growing our business during this incredibly unique and opportune time. We believe our strategic focus on cost control paired with the integration of eTelequot and the rollout of initiatives like Plants That Save positions us well to navigate the current environment. We are confident that the enhancements to our encompass workflow, plan fit tools and the addition of licensed agents from eTelequo have bolstered our operational capacity and set us up for success. This AEP evolving market dynamics are driving strong demand, which we expect to boost our submissions revenue and adjusted EBITDA. We anticipate a year over year decline in cash flow from operations due to the shift away from non agency revenue and the investments of available cash into high return on investment marketing. Speaker 400:19:52Our conservatism in calculating lifetime values or LTVs ensures that our projections remain sustainable and risk managed. This disciplined approach not only underpins our current strategy, but also sets a solid foundation for future growth. Our commitment to this conservative data driven strategy is an underappreciated strength of GoHealth and one of the key reasons I was eager to join Vijay and the GoHealth team. I believe it uniquely positions us for long term success, allowing us to navigate industry challenges while maintaining a focus on delivering value to our stakeholders. As we move forward, we remain highly confident in our performance outlook for the remainder of 2024 as we continue to leverage our strategic initiatives and technology advancements to capitalize on unique growth opportunities while maintaining financial discipline. Speaker 400:20:51We believe that the favorable market dynamics driving demand today will persist throughout the 1st 3 quarters of 2025, positioning us strongly for sustained success. Thank you to our GoHealth team for all their hard work and to our investors and analysts for your continued support. I will now turn the call back to Vijay for closing remarks. Speaker 200:21:16Thank you, Brendan, and thank you to everyone joining us today. This annual enrollment period is generally developing as we expected and we believe it is set up to be an outside success for GoHealth, driven by our multi year focus on strategic initiatives. Through sustained investments in market leading technology, operational efficiency and reductions in our direct operating cost per submission, we have built a solid foundation that uniquely positions us within the industry. Our unique and innovative solutions such as PlantFit Checkup and PlantFit Save along with strategic commercial structures empower consumers and position us well for sustained long term growth. As we look ahead, we remain committed to providing exceptional service to Medicare consumers, building lasting relationships and adapting seamlessly to changes in the regulatory landscape. Speaker 200:22:09We are eager to work collaboratively with the incoming administration to continue delivering value to our consumers. With our strategic approach and the dedication of our team, I'm confident that we will continue to be a market leader and significantly outpace the competition, creating lasting value for our stakeholders. Thank you for your continued support and I look forward to sharing our progress as we close out 2024 and enter the New Year. We are now ready to take your questions. Operator00:22:38Thank you. At this time, we will conduct the question and answer session. Our first question comes from Pat McCan with NOBLE Capital Markets. Your line is now open. Speaker 500:23:16Hey, good morning. Congrats on the quarter. I just have a I guess my first question would be regarding the acquisition. Of course, we know we're heading into or we're in a strong season now. And I'm just wondering with those new agents, how the training process went with them? Speaker 500:23:37Were they did you feel like the new agents from E Telequo were ready to go for AEP? Were there any surprises in that process? Speaker 200:23:48Thank you, Pat. I appreciate the question. I would start out with this. 1st and foremost, we are so excited about Etelloquo. The team has been amazing. Speaker 200:23:57They come in seasoned, very skilled, focused on doing the right thing and that's the right starting point. And so when we started with that and we're very thoughtful in the way we entered into the transaction where we also had commercial relationship they gave us the time in September to onboard that team into our technology. As you know, our marketplace tools, our plan bid tools, the automation build within that, that is a real unlock of capacity and consistency that enables agents to be very productive. So we were able to spend that time, effectively the second half of September and the early parts of October, making sure that they were trained on it, prepared for it and that we could help them understand how to optimize their performance. And we've been very excited about how that's worked so far. Speaker 200:24:43And as we said in our prepared comments, it's been accretive already. So we're very excited about that. And I would just stress again that the quality of that team and the agents that came along with it and the leadership there was fully in line with the way we think about protecting and helping consumers and that was probably the most valuable piece of the integration and onboarding. Speaker 500:25:04Great, thanks. And then I just wanted to ask about your balance sheet, maybe one for Brendan. And by the way, congrats Brendan on the position. So you talked about the refinance and of course using capital to invest in the growth of the business given the strong market dynamics that we're in. But I was just wondering as we look further down the line, what would be your plans as far as additional paydowns to reduce the total amount of debt as we go forward? Speaker 500:25:42And then maybe going along with that, what would be a target debt to EBITDA ratio if you do have one there? Speaker 200:25:51Thanks, Pat. I'll actually start now and turn it over to Brendan. What I would start with is, as he stated in the earlier comments, we are always looking at the best use of capital, right? If we see the market dynamics are there, it's just that you should be investing in more capacity or more opportunities to help more consumers, then you should do that. If you see a better if you don't see the dynamics being positive and you really stare at what's the best use of that capital, then you pay down debt, because obviously there's a cost to that capital. Speaker 200:26:21So you're always looking at the return on invested capital in such a way to ensure that we're optimizing the outcomes. So with that, I'll let Brendan talk a little bit about how we're thinking about our overall balance sheet optimization. Speaker 400:26:34Thanks, Vijay. Thanks, Pat, for welcoming me to GoHealth. I'm really excited to be here with the team. And as Vijay said, right, we look at the situation in the market and deploy cash. Right now, it's a good place to put it into our marketing efforts to increase our consumer base and who buys health insurance through us for MA. Speaker 400:26:55And then over time, we'll evaluate what is the best place for us and timing to pay down that debt going forward. That's we have a new 5 year term with new lenders. We're excited to work with them. And so we will figure that out as we're going forward. Speaker 200:27:07Yes. And I think that's just one good thing to highlight again is giving us the 5 year runway allows us to have the flexibility as opposed to having any ticking deadline that says you have to pay so much down. We can retain the flexibility to make those investment decisions in either technology, capacity or maybe even other potential acquisitions as there may be in the marketplace. Speaker 500:27:30Great. Much appreciated. I'll hand the Speaker 200:27:32floor over to someone else. Thanks, Matt. Operator00:27:36Thank you. Our next question comes from Ben Hendricks with RBC Capital Markets. Your line is now open. Speaker 600:27:44Hey, great. Thanks guys. I was wondering if you can talk a little bit more about the internal captive agent submissions that you received. Looks like we had really strong growth there. Total submissions were ahead of our expectations. Speaker 600:27:57Just wanted to get your comments first on that internal piece, the sustainability of that momentum. And then on the flip side, kind of what your plans are on the GPS agent side, it looks like that was down a little bit. If there are kind of efforts in place to turn that around or is that how much of a focus is that recovery? Thanks. Speaker 200:28:18Thanks, Ben. Appreciate you joining the call and appreciate the question. First and foremost, our internal agents. I can't thank them enough for their commitment to what we have used as data to support the way to optimize their performance. So they have been in lockstep with our technology team to redesign and build this product for purpose that's optimized how they want to serve consumers. Speaker 200:28:41So instead of having to go to 3 different websites, how do we integrate that into the tool? So it's pulling the data and then making it available to them before they even know they need it. That's part of what the AI automation tools that we've been able to deliver. And what comes out of that is that they're able to focus more time on listening to the consumer, focus more time on answering questions very specifically as to put them to seek those answers. And that yields more capacity for them to serve more consumers and have a higher probability outcome and matching them with a better plan if appropriate and build that confidence. Speaker 200:29:13And that's what's coming through and what you've seen a year over year performance improvement of 46% for our internal captive agents. And most of that is coming through more efficiency through the tool and being able to be more targeted in the way our marketing is identifying consumers who need support. So when you have better marketing targeting to get consumers who likely need the help to come in as well as having more efficient tools to serve them, that has that step function and capacity. And therefore, we believe that is going to continue. There's no reason to believe that it can't maintain that, if not continue to improve as we add more tools and automations in place and allow the AI to keep learning off of the more interactions that happen and building off of our 30,000,000 consumer interaction data set. Speaker 200:29:57That will always help refine that and make it better. As we think about the GPS channel, our external channel, there should be no significant change in what we have been communicating all year as that there's been instability in those external channels of brokers, which has also led to a tailwind for us, which is in that competitors, generally speaking, of those other brokerages who maybe didn't make it work, they couldn't optimize the cash equation. They're not buying those leads. And so because they don't have the capacity, they didn't have the cash. And so that's giving us a tailwind on the internal marketing channels that we have. Speaker 200:30:34But on the flip side, external brokers are still a source under the GPS channels that we've discussed. And so we had to reset and re recruit and we recruited a number of new downline GPS partners to participate in under that structure. We purposely sought to not launch those in Q3 given that we saw those dynamics are still not great, a lot of uncertainty at the product stability. And so we have really supported that growth coming to Q4 as we've onboarded a number of those to have a material contribution to the volume and number of consumers we can serve in the Q4. And just on the last piece there that you asked how strategically important it is to us. Speaker 200:31:16We believe it's an opportunity to 1, serve more consumers in those times when the demand is really high, but to avoid the cash burn of maintaining that capacity all year long, because then you're prone to those diseconomies of scale. So it gives us a very symbiotic relationship with those external agencies to support them with tools, technology and training in for Medicare when maybe they're selling other things for the rest of the year and don't have this as a primary focus all year long. And then for us, it gives us that access to variable capacity without the cash burn that I think is strategically valuable, especially in a period like we're seeing today. Speaker 600:31:56Thank you. Appreciate that commentary. And then just one more for me on cash flow. I mean, clearly a strong turnaround from this time last year. Just wanted to get all the pieces and puts and takes of that. Speaker 600:32:09I assume most of that is kind of the explained in the shift from non agency to agency, but just want to get your take. Thanks. Speaker 200:32:18It's a great question, Ben. I would actually say that most people have assumed it was that shift from agency to non agency. More material driver of that was really good thoughtful decisions around operational efficiencies and capital deployment. We have invested in operational standardization that yielded I think as we've mapped some of that in prior conversations and other presentations externally, nearly 2 thirds of the gain in total cash flow from operations came from operational simplicity, standardization, deployment of technology. Agency, non agency mix, yes, does have a factor in that, but it's more about how we decide to deploy the capital. Speaker 200:32:59As we said in last AEP, we saw the market dynamics and we pulled back on the spend, so that we could retain more of that capital because it wasn't a good ROI to continue to deploy it. We saved it and we paid down debt of $75,000,000 because we thought avoiding that interest expense was more important at that point in time in a better investment. As we come into this AEP, if you think about those dynamics, we're seeing a very different market dynamic. So I guess what I'm saying is there's a lot of operational efficiency that drove our cash improvement. Then there is a portion of agency versus non agency and more materially it's about meeting the market opportunity to determine whether you're going to deploy the cash or retain the cash that you've generated through those efficiency and contracting efforts. Speaker 600:33:45Thanks guys and congratulations on the quarter. Speaker 200:33:49Thanks Ben. Operator00:33:58Our next question comes from Robert M. Maguire with Granite Research. Your line is now open. Speaker 300:34:04Good morning. Thank you for taking my questions. Can you Vijay, can you kind of give us a discussion on your efforts to reduce CAC? And I'm interested in just to understand how you anticipate CAC to play out in the Q4 with the E Telequo acquisition, how that will play out over time? And then would love to hear what you're thinking a few years out from now, where you think CAT could go? Speaker 200:34:29Great. Welcome, Rob. Appreciate you asking the question today. A very thoughtful question and really timely given the amount of progress we've made on the direct cost per submission as we reported or also some refer to as a cash cost of acquisition. And the way we think about it is we've had continuous improvement in it by automating, so decreasing average handle time is one piece of it. Speaker 200:34:53The other piece is better than marketing targeting. So if you look at our direct cost per submission, there are 3 primary buckets, right? The first one is going to be marketing costs. The second one is going to be really what we call TC and E or is it going to be the selling time or average handle time is my best KPI, there are agent costs. And then the third one is going to be the cost related to the GPS channel, right. Speaker 200:35:15So all that flows in there. Put the GPS channel aside because that's really going to be a factor based upon the mix of that volume to our total number of submissions. So really where we're focusing our efforts is on marketing, making sure that we have really aligned contracts with partners when we do partner marketing and also optimizing the internal marketing we do to make sure that we're identifying consumers at the top of funnel who have the most significant or highest likelihood of needing to make a switch or to need different coverage options. That is critically important to getting that efficiency out of marketing. And then you have it so if you look at that distinctively one way with 1 bucket. Speaker 200:35:57The second bucket is on overall efficiency of the technology platform to ensure that we can decrease the amount of time, the average handle time for an enrollment or a non enrollment or a sale notice. So you want to be efficient on both, but you don't want to be so efficient that you're walking away from consumers who really need help. So there's a balancing act there that we use our technology to enable. And then there's the way you look at both of them together. And what I've been most proud of our team is our marketing and our sales operations team work in tandem to do what I think is really not highlighted enough, which is that supply demand matching. Speaker 200:36:33Our ability to look minute by minute to make sure you're not over or understaffed that you have the right amount of a queue time and being able to manage that throughout the day when you have peaks in the middle and you have off hours in the beginning and the end and then being able to optimize that against your outbound and inbound phone calls and then layering in when mail hits so that you pull back digital and if TV is up running, you pull back digital and if it's not working, you pop it up. Those are the components that together with marketing and sales, as to Bock as I highlighted, that gives you that step function improvements that we've been seeing. So I would really say it's a few different things. Again, it's targeting and marketing, it's making sure that we continue to use AI and automation to make the tools more efficient, so you decrease the average handle times in those calls. And then finally, it's the way you do the matching together so that we can continuously more real time, if it's not it might not take every 2 to 3 minutes to make the modifications of supplydemand matching, decrease the amount of time to even refine it further. Speaker 200:37:36Is that responsive Rob to your question? Speaker 300:37:40That is. I appreciate it. Maybe I'll just move on. For the E Telequat acquisition, is that repeatable? I guess that is probably one page of your playbook, but are there other opportunities out there you can talk about with or without the abandonment structure? Speaker 200:37:56Yes, it's a great question, Rob. There's been a lot of different attempted transactions in the marketplace by large entities, standalones, etcetera. Not everybody has been able to really think through the investments that are necessary to be great in this business. And I think because of the platform, the technology and tools we've built, we have a unique synergy opportunity to unlock potential of these types of organizations. And we do keep an eye open and an ear out and listening to see if there are other opportunities to do more of that. Speaker 200:38:31So we're excited about the opportunity to do it. And by having the technology continuously getting more efficient as we think about the long term as part of your first question, we expect that to continuously get more efficient and give us more opportunities to tap into consolidation in the industry if it makes sense. Speaker 300:38:49Okay, great. Thank you. And then a separate topic, just on agency versus non agency. Can you just talk to us about what you anticipate the mix is going to be going forward? And then tell us what are you seeing from your perspective in terms of how are you determining that you want to go with more agency at this point in time? Speaker 300:39:09What are some of the factors you're looking at that's telling you that that lifetime value is going to be greater with one plan over another? Speaker 200:39:16Yes. So it's a very it's a simple question, a little bit more complicated to answer, but let me try to keep it as efficient as possible. Any given year, we think about the probabilities of a product as it's written that year and think about what is the likelihood of the benefit accretion, stable or degradation. And that will help us illuminate whether we should go through an agency or non agency structure. If you think there's likely more likelihood of disruption, you want to be on a non agency structure. Speaker 200:39:46If you think there's more likelihood of stability or upward movement, you want to be on an agency structure. And then it's also based on track record. And sometimes we also choose to go non agency just because we have a more exhaustive enrollment process where we're doing additional services on the back end to support a health plan for onboarding or continuous engagement. But all that said, that is how we go in into the contracting phase. But what ultimately comes out on the back end of the mix of agency versus non agency is more dependent upon the consumers that we connect with and what made more sense for them. Speaker 200:40:20So we don't put our thumb on the scale there. Whatever we ultimately start out with contracts and then however competitive the products end up being on a relative basis and how that individually matches for that unique consumer who called us, that will determine ultimate mix of agency versus non agency. And we want to make sure that we implore our ability to be nimble within that. And that's why things like the refi that we did for 5 years gives us that opportunity, right, of being able to be nimble and just present the best products available as opposed to only wanting to provide products that give us a different cash profile on any given year. You want to let the product speak to the consumers' needs and that's how we operate. Speaker 200:41:01Is that responsive to your question, Ron? Operator00:41:07Thank you. Our next question comes from Jim Sidoti with Sidoti and Co. Thanks Speaker 700:41:16for Operator00:41:17taking the question. Jim, your line is now open. Speaker 700:41:20Okay. Good morning and thank you for taking the questions and welcome, Brendan. Can you talk about what you think the impact will be from the election earlier this week? What do you think will happen with the new administration? How do you think you can adapt to it? Speaker 200:41:37Thanks for the question. Good to hear from you, Jim. It's still early, right? We've got to listen more, pay more attention. Obviously, we were we're going to do all the right things and want to serve as many consumers as possible under whichever scenario was a result from the election. Speaker 200:41:54So we're staying heads down focused on delivering this AEP right now serving as many consumers as possible. And we expect to be prepared for whichever way the path goes forward with the new administration and how they want to direct the product. But we believe and continue to believe that when you have over 50% of the Medicare population choosing Medicare Advantage Program and for us to be one of the leaders in helping them choose between those and finding great coverage, that's a program that's going to be valuable to any administration. And our role in that, making sure we do it the right way and putting the consumer at the center of it will be valuable to all relevant constituents. So not much more to say. Speaker 200:42:33I know it's not a great answer as to how things may play forward because we still haven't learned enough about that. But long story short, we think we're a contributor to value in the overall equation and we're happy to partner with the new administration to help them achieve their goals as well. Speaker 700:42:51Right. And it sounds like with the current environment, you're in a mode more to deploy cash than to keep it. And what are the things you think are make the most sense to spend the cash on? Is it bringing on new agents, new marketing initiatives? Where do you think you'll be spending money over the next 6 months? Speaker 200:43:14It's a great question. How would we deploy cash over the next 6 months? Because you highlight a great point when you asked that question is that the market dynamics we see in the Q4 actually extend all the way through the 1st 3 quarters of next year, that there's continued instability, there's continued need for reach of the shop and it's opportune for organizations like us who are set up for it. And so we've already made some of those bets by things like the TeleQuad acquisition to give us the capacity with experienced agents that you can onboard and deploy on our technology. Then if you see more opportunities, what you would do is you would invest in more marketing to do it in more hours and extend your access points to consumer, so you can meet more of that demand that's out there. Speaker 200:44:00As we already know, there's not as much supply of agent capacity this year than there has been in previous years, given to the challenges that many organizations in the broker space outside of us have had in being able to maintain and or grow their capacity. So, it's not really efficient at this point of the game, meaning for ADP. But if you think about it, what you would be paying for today Speaker 600:44:23as we Speaker 200:44:23go into next year for OUP and then continuously to kind of feed that engine of growth and opportunity through the special enrollment period next year as well. So we look at all those tactics, but agents aren't necessarily the place to focus on. We've got a great agent base and our attrition is actually doing better than we expected given the market dynamics and the amount of efficiency they get through our tool. So it's really about making sure we can access more consumers by extending more availability of our agents that exist and are trained and giving them great opportunities through marketing. Speaker 700:45:02All right. Thank you. Speaker 200:45:04Thank you, Tim. Operator00:45:06I'm showing no further questions at this time. I would now like to turn it back to Vijay for closing remarks. Speaker 200:45:12I really would like to extend my appreciation and thanks to all of you for joining your time and focusing your interest on our continued evolution into an engagement company that's really focused on serving consumers and making sure that they're centered everything we do. We don't bring them services that we'd like to sell them. We match the consumers based on their personalized needs and try to find things that can give them peace of mind and help them access the best health care for them and using our tools to find the most suitable plan that meets those needs. As we continue on that journey to serve as many consumers as possible, I'd be remiss not to thank my team who is committed to doing this every day with a laser focus on serving as many consumers as possible with the highest quality as possible. And that's from our corporate support infrastructure all the way to the frontline associates who have the privilege of helping consumers on a day to day basis. Speaker 200:46:07So thank you all. I appreciate it and I look forward to updating you on our progress as we continue that evolution. Thanks. Operator00:46:15Thank you for your participation in today's conference. This does now conclude the program. You may now disconnect.Read morePowered by