GoHealth Reports Third Quarter 2020 Results and Increases 2020 Outlook As a Result of Strong Medicare Enrollments and Operating Leverage

 

CHICAGO, Nov. 11, 2020 /PRNewswire/ -- GoHealth, Inc. (GoHealth or the Company) (Nasdaq: GOCO), a leading health insurance marketplace, announced financial results for the three and nine months ended September 30, 2020.

  • Third quarter 2020 net revenues of $163.4 million increased 52% compared to the prior year period, and year-to-date 2020 net revenues of $431.4 million increased 72% compared to the prior year period
  • Third quarter 2020 net loss of $206.5 million, included $209.3 million of accelerated vesting of certain equity awards in connection with the IPO1, and year-to-date 2020 net loss of $230.3 million, included $209.3 million of accelerated vesting of certain equity awards in connection with the IPO1
  • Third quarter 2020 adjusted EBITDA2 of $39.3 million increased 142% compared to the prior year period, and year-to-date 2020 adjusted EBITDA of $101.1 million increased 149% compared to the prior year period
  • The Company also updated its full year 2020 outlook, and now expects net revenues of $850-$890 million and adjusted EBITDA2 of $270-$290 million given the robust start to the Annual Enrollment Period, with 83% submission growth in October and a 4% improvement in agent conversion

Clint Jones, co-founder and CEO said, "GoHealth's third quarter adjusted EBITDA growth of 142% was powered by 52% revenue growth and strong operating leverage as we continue to efficiently scale the business.  These excellent results marked a continuation of year-to-date trends as consumers increasingly turn to GoHealth's leading DTC platform to find the best Medicare policies to meet their unique needs."

Jones continued, "Our proprietary, vertically-integrated technology platform and high performance marketing organization allow us to efficiently grow our carrier partners' Medicare membership base.  This growth is guided by our LTV/CAC focus, ensuring that we generate quick payback periods.  Our TeleCare team administers GoHealth's Encompass programs on behalf of our carrier partners and further supports consumer persistency by proactively engaging with and educating consumers about their benefits through Plan Fit Check calls.  The strength and differentiation of our business model is evident in our third quarter operating cash flow of $33 million as well as a 5% increase in LTVs, fueled by improving persistency trends."

Year-To-Date 2020 Highlights

  • Total Medicare Submitted Policies3 grew 103% during the first nine months to 355,544
    • Medicare - Internal revenue increased 172% to $316.2 million
    • Medicare - Internal profit increased 191% to $123.9 million
  • Adjusted EBITDA growth of 149% as margins expanded from 16.2% to 23.4%
  • LTV/CAC4 for the Medicare-Internal segment increased from 2.5x to 3.0x during the first nine months of 2020, driven by lower marketing costs per opportunity and higher agent sales conversion
    • LTV per carrier approved Medicare Advantage submission increased 2% from $899 to $913 during the first nine months of 2020
      • 2% improvement in persistency during the first nine months compared to the prior year period
    • LTV per carrier-approved Medicare Advantage submission increased 5% from $939 to $987 during the third quarter
  • Generated positive year-to-date cash flow from operations of $28.8 million while increasing commissions receivable by $117.9 million
  • 76% increase in Medicare – Internal licensed agents from 849 to 1,493 as of September 30, 2020 and made substantial investments in training ahead of the Annual Enrollment Period
    • Year-over-year new agent productivity +13%
  • TeleCare team of 275 agents ramped up retention conversations including Plan Fit Checks to maximize satisfaction and improve recapture rates into AEP
  • Expanded Enterprise programs to 26, including the addition of six new Encompass initiatives across multiple partners
  • Significantly expanded carrier footprint with UnitedHealthcare, Aetna, Cigna, Kaiser Permanente and Allwell, providing consumers with market-leading plan options in almost all counties in the United States

Financial Outlook
The trajectory of the US economy remains challenging to predict, particularly given the heightened uncertainty associated with the COVID-19 pandemic.  During this time, demand for healthcare has demonstrated great resilience, and we believe that the COVID-19 pandemic has created favorable industry dynamics for technology-driven, direct-to-consumer models such as GoHealth's insurance marketplace.  The Company has updated its outlook for the fiscal year ending December 31, 2020 based on current market conditions and expectations:

  • Full year 2020 net revenue of $850 - $890 million, representing year-over-year growth of 58% - 65%
  • Full year 2020 adjusted EBITDA of $270 - $290 million, representing year-over-year growth of 58% - 70%

Jones concluded, "We are increasing our expectations for fiscal 2020 given our robust start to the Annual Enrollment Period, with October submissions up 83% over the prior October and well ahead of the 53% implied midpoint of revenue growth for the fourth quarter.  The Medicare market is large and growing quickly, and we are just beginning to realize our long-term growth opportunity as we create value for our partners and deliver great results for our shareholders."

Conference Call Details
The Company will host a conference call today, Wednesday, November 11, 2020 at 5:00 pm (ET) to discuss its financial results. A live audio webcast and a supplemental presentation will be available online at https://investors.gohealth.com. The conference call can also be accessed by dialing 1-833-519-1310 for U.S. participants, or 1-914-800-3876 for international participants, and referencing participant code 4374976. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web link.

About GoHealth
As a leading health insurance marketplace, GoHealth's mission is to improve access to healthcare in America. Enrolling in a health insurance plan can be confusing for customers, and the seemingly small differences between plans can lead to significant out-of-pocket costs or lack of access to critical medicines and even providers. GoHealth combines cutting-edge technology, data science and deep industry expertise to match customers with the healthcare policy and carrier that is best for them. Since its inception, GoHealth has enrolled millions of people in Medicare and individual and family plans. For more information, visit https://www.gohealth.com.

1 Represents non-cash share-based compensation expense relating to the accelerated vesting of performance-vesting units in connection with the IPO for the three months ended September 30, 2020
2 Adjusted EBITDA is a non-GAAP measure. For a definition of Adjusted EBITDA and a reconciliation to the most comparable GAAP measure, please refer to the appendix.
3 Total Medicare Advantage Submitted Policies includes Commissionable and non-Commissionable Policies.
4 LTV/CAC defined as (i) aggregate commissions estimated to be collected over the estimated life of all Approved Submissions based on multiple factors, including but not limited to, contracted commission rates, carrier mix and expected policy persistency with applied constraints, or LTV, divided by (ii) the cost to convert a prospect into a customer less other non-commission carrier revenue for such period, or CAC.

Investor Relations:
Jay Koval, VP of Investor Relations
IR@gohealth.com

Media Relations:
Pressinquiries@gohealth.com

Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this press release may be forward-looking statements. Statements regarding the Company's future results of operations and financial position, business strategy and plans and objectives of management for future operations, including, among others, statements regarding expected financial performance and operational performance for the fiscal year 2020, including with respect to revenue and Adjusted EBITDA, and the Company's performance during the Annual Enrollment Period, including with respect to agent conversion and implied growth for the fourth quarter of 2020, are forward-looking statements. In some cases, you can identify forward-looking statements by terms, such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "targets," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar expressions. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.  There are or will be important factors that could cause the Company's actual results to differ materially from those indicated in these forward-looking statements, including, but are not limited to, the following: the Company's ability to comply with the numerous, complex and frequently changing laws regulating the marketing and sale of Medicare plans; the potential for an adverse change in the Company's relationships with carriers, including a loss of a carrier relationships; failure to grow the Company's customer base or retain its existing customers; carriers' ability to reduce commissions paid to the Company and adversely change their underwriting practices; significant consolidation in the healthcare industry which could adversely alter the Company's relationships with carriers; information technology systems failures or capacity constraints interrupting the Company's operations; factors that adversely impact the Company's estimate of LTV; the Company's dependence on agents to sell insurance plans; changes in the health insurance system and laws and regulation governing health insurance markets; the inability to effectively advertise the Company's products; and our ability to successfully implement our business plan during a global economic downturn caused by the COVID-19 pandemic.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this press release, as well as the cautionary statements and other risk factors set forth in the Company's Quarterly Report on Form 10-Q for the third quarter ended September 30, 2020 filed with the SEC. If one or more events related to these or other risks or uncertainties materialize, or if the Company's underlying assumptions prove to be incorrect, actual results may differ materially from what the Company anticipates. Many of the important factors that will determine these results are beyond the Company's ability to control or predict. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as otherwise required by law, the Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Use of Non-GAAP Financial Measures and Key Performance Indicators
In this press release, we use supplemental measures of our performance that are derived from our consolidated financial information, but which are not presented in our Consolidated Financial Statements prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures include net income (loss) before interest expense, income tax expense (benefit) and depreciation and amortization expense, or EBITDA; Adjusted EBITDA and Adjusted EBITDA margin. Adjusted EBITDA is the primary financial performance measure used by management to evaluate its business and monitor its results of operations.

Adjusted EBITDA represents EBITDA as further adjusted for share-based compensation, expense related to the accelerated vesting of certain equity awards, change in fair value of contingent consideration liability, Centerbridge Acquisition costs, severance costs and incremental organizational costs in connection with the IPO.  Adjusted EBITDA margin represents Adjusted EBITDA divided by net revenues.

We use non-GAAP financial measures to supplement financial information presented on a GAAP basis. We believe that excluding certain items from our GAAP results allows management to better understand our consolidated financial performance from period to period and better project our future consolidated financial performance as forecasts are developed at a level of detail different from that used to prepare GAAP-based financial measures. Moreover, we believe these non-GAAP financial measures provide our stakeholders with useful information to help them evaluate our operating results by facilitating an enhanced understanding of our operating performance and enabling them to make more meaningful period to period comparisons. There are limitations to the use of the non-GAAP financial measures presented in this press release. For example, our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

The non-GAAP financial measures are not meant to be considered as indicators of performance in isolation from or as a substitute for net income (loss) prepared in accordance with GAAP, and should be read only in conjunction with financial information presented on a GAAP basis. Reconciliations of each of EBITDA and Adjusted EBITDA to its most directly comparable GAAP financial measure, net income (loss), are presented in the tables below in this press release. We encourage you to review the reconciliations in conjunction with the presentation of the non-GAAP financial measures for each of the periods presented. In future periods, we may exclude similar items, may incur income and expenses similar to these excluded items and include other expenses, costs and non-recurring items.

Management has provided its outlook regarding adjusted EBITDA, which is a non-GAAP financial measure and excludes certain charges. Management has not reconciled these non-GAAP financial measures to the corresponding GAAP financial measures because guidance for the various reconciling items are not provided. Management is unable to provide guidance for these reconciling items because we cannot determine their probable significance, as certain items are outside of our control and cannot be reasonably predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measures are not available without unreasonable effort.

"LTV/CAC" refers to the Lifetime Value of Commissions per Consumer Acquisition Cost, which we define as (i) aggregate commissions estimated to be collected over the estimated life of all commissionable Approved Submissions for the relevant period based on multiple factors, including but not limited to, contracted commission rates, carrier mix and expected policy persistency with applied constraints, or LTV, divided by (ii) the cost to convert a prospect into a customer less other noncommission carrier revenue for such period, or CAC. CAC is comprised of cost of revenue, marketing and advertising expenses and customer care and enrollment expenses less other revenue and is presented on a per commissionable Approved Submission basis.  "Approved Submissions" refer to Submitted Policies approved by carriers for the identified product during the indicated period.  "LTV Per Approved Submission" refers to the Lifetime Value of Commissions per Approved Submission, which we define as (i) aggregate commissions estimated to be collected over the estimated life of all commissionable Approved Submissions for the relevant period based on multiple factors, including but not limited to, contracted commission rates, carrier mix and expected policy persistency with applied constraints, divided by (ii) the number of commissionable Approved Submissions for such period.

Combined Results
On September 13, 2019, Centerbridge Capital Partners III, L.P., indirectly through a subsidiary of GoHealth Holdings, LLC, (formerly known as Blizzard Parent, LLC), an entity formed in contemplation of the acquisition, acquired a 100% interest in Norvax, LLC. We refer to this transaction as the "Centerbridge Acquisition." As a result of the Centerbridge Acquisition, the Company's financial results for the three and nine months ended September 30, 2019 are presented for two periods, the Predecessor and Successor periods, which relate to the period preceding the acquisition on September 13, 2019 and the period succeeding the acquisition, respectively. The Company's financial results for the periods from July 1, 2019 through September 12, 2019 and from January 1, 2019 through September 12, 2019 are referred to as those of the "Predecessor" period. The Company's financial results for the period from September 13, 2019 through September 30, 2019, the three months ended September 30, 2020 and the nine months ended September 30, 2020 are referred to as those of the "Successor" period. The Company's results of operations as reported in our Consolidated Financial Statements for these periods are prepared in accordance with GAAP. Although GAAP requires that we report on the Company's results for the period from July 1, 2019 through September 12, 2019, from January 1, 2019 through September 12, 2019 and the period from September 13, 2019 through September 30, 2019 separately, management views the Company's operating results for the three and nine months ended September 30, 2019 by combining the results of the applicable Predecessor and Successor periods because such presentation provides the most meaningful comparison to its results for the three and nine months ended September 30, 2020.

The Company cannot adequately benchmark the operating results of the period from September 13, 2019 through September 30, 2019 against any of the current periods reported in its Consolidated Financial Statements without combining it with the period from July 1, 2019 through September 12, 2019 and the period from January 1, 2019 through September 12, 2019 and does not believe that reviewing the results of this period in isolation would be useful in identifying trends in or reaching conclusions regarding the Company's overall operating performance. Management believes that the key performance metrics such as revenue, net (loss) income and Adjusted EBITDA for the Successor period when combined with the Predecessor period provides more meaningful comparisons to other periods and are useful in identifying current business trends. Accordingly, in addition to presenting the Company's results of operations as reported in our Consolidated Financial Statements in accordance with GAAP, the tables and discussion throughout this press release also present the combined results for the three and nine months ended September 30, 2019.

The combined results for the three months ended September 30, 2019, which we refer to herein as the results for the "three months ended September 30, 2019" represent the sum of the reported amounts for the Predecessor period from July 1, 2019 through September 12, 2019 and the Successor period from September 13, 2019 through September 30, 2019. The combined results for the nine months ended September 30, 2019, which we refer to herein as the results for the "nine months ended September 30, 2019" represent the sum of the reported amounts for the Predecessor period from January 1, 2019 through September 12, 2019 and the Successor period from September 13, 2019 through September 30, 2019. The combined results do not reflect the actual results the Company would have achieved had the Centerbridge Acquisition occurred on January 1, 2019 and may not be indicative of future results. These combined results are not considered to be prepared in accordance with GAAP and have not been prepared on a pro forma basis, which would reflect pro forma adjustments including, but not limited to: amortization expense for intangible assets, share-based compensation expense related to the Centerbridge Acquisition and the IPO, and transaction-related costs related to the Centerbridge Acquisition and the IPO.

The following table sets forth the components of our results of operations for the periods indicated (unaudited):

   

Successor

Predecessor

Non-GAAP Combined

     
   

Three Months Ended
Sep 30, 2020

 

Period from
Sep 13, 2019
through
Sep 30, 2019

Period from
Jul 1, 2019
through
Sep 12, 2019


Three Months Ended
Sep 30, 2019

   

(in thousands, except percentages,
share and per share amounts)

Dollars

% of Net
Revenues

 

Dollars

Dollars

Dollars

% of Net
Revenues

 

$ Change

% Change

Net revenues:

                   
 

Commission

$    101,390

62.1%

 

$   13,723

$   64,542

$   78,265

73.0%

 

$    23,125

29.5%

 

Enterprise

61,970

37.9%

 

6,067

22,868

28,935

27.0%

 

33,035

114.2%

Net revenues

163,360

100.0%

 

19,790

87,410

107,200

100.0%

 

56,160

52.4%

                       

Operating expenses:

                   
 

Cost of revenue

25,827

15.8%

 

4,737

25,055

29,792

27.8%

 

(3,965)

-13.3%

 

Marketing and advertising

62,848

38.5%

 

7,140

21,332

28,472

26.6%

 

34,376

120.7%

 

Customer care and enrollment

52,896

32.4%

 

4,625

19,396

24,021

22.4%

 

28,875

120.2%

 

Technology

39,520

24.2%

 

518

31,856

32,374

30.2%

 

7,146

22.1%

 

General and administrative

156,551

95.8%

 

2,286

65,123

67,409

62.9%

 

89,142

132.2%

 

Amortization of intangible assets

23,514

14.4%

 

4,703

-

4,703

4.4%

 

18,811

400.0%

 

Acquisition related transaction costs

-

-

 

6,245

1,968

8,213

7.7%

 

(8,213)

-100.0%

Total operating expenses

361,156

221.1%

 

30,254

164,730

194,984

181.9%

 

166,172

85.2%

                       

(Loss) income from operations

(197,796)

-121.1%

 

(10,464)

(77,320)

(87,784)

-81.9%

 

(110,012)

125.3%

Interest expense

8,636

5.3%

 

1,289

31

1,320

1.2%

 

7,316

554.2%

Other (income) expense

2

0.0%

 

(10)

67

57

0.1%

 

(55)

-96.5%

(Loss) income before income taxes

(206,434)

-126.4%

 

(11,743)

(77,418)

(89,161)

-83.2%

 

(117,273)

131.5%

Income tax expense (benefit)

62

0.0%

 

(37)

(78)

(115)

-0.1%

 

177

-153.9%

Net (loss) income

$   (206,496)

-126.4%

 

$  (11,706)

$  (77,340)

$  (89,046)

-83.1%

 

$ (117,450)

131.9%

Net loss attributable to noncontrolling

                 
 

interests

(150,076)

NM

               

Net loss attributable to GoHealth, Inc.

$     (56,420)

NM

               
                       

Net loss per share:

                   

Net loss per share of Class A

                   
 

common stock - basic and diluted

$         (0.65)

                 

Weighted-average shares of Class A

                   
 

common stock outstanding -

                   
 

basic and diluted

84,182,961

                 
                       

Non-GAAP Financial Measures:

                   

EBITDA

$   (173,021)

   

$    (5,659)

$  (76,183)

$  (81,842)

       

Adjusted EBITDA

$      39,284

   

$        682

$   15,569

$   16,251

       

Adjusted EBITDA margin

24.0%

   

3.4%

17.8%

15.2%

       

______________

*      NM = Not meaningful

 

The following table sets forth the reconciliations of GAAP net loss to EBITDA and Adjusted EBITDA for the periods indicated:

   

Successor

Predecessor

Non-GAAP
Combined

   

Three Months
Ended
Sep 30, 2020

 

Period from
Sep 13, 2019
through
Sep 30, 2019

Period from
Jul 1, 2019
through
Sep 12, 2019


Three Months
Ended
Sep 30, 2019

(in thousands)

Dollars

 

Dollars

Dollars

Dollars

Net revenues

$    163,360

 

$      19,790

$      87,410

$    107,200

             

Net loss

$  (206,496)

 

$    (11,706)

$    (77,340)

$    (89,046)

 

Interest expense

8,636

 

1,289

31

1,320

 

Income tax (benefit) expense

62

 

(37)

(78)

(115)

 

Depreciation and amortization expense

24,777

 

4,795

1,204

5,999

EBITDA

(173,021)

 

(5,659)

(76,183)

(81,842)

 

Share-based compensation expense (1)

2,770

 

-

-

-

 

Accelerated vesting of certain equity awards (2)

209,300

 

-

87,060

87,060

 

Centerbridge Acquisition costs (3)

-

 

6,245

4,609

10,854

 

IPO transaction costs (4)

235

 

-

-

-

 

Severance costs (5)

-

 

96

83

179

Adjusted EBITDA

$      39,284

 

$           682

$      15,569

$      16,251

Adjusted EBITDA margin

24.0%

 

3.4%

17.8%

15.2%

______________

(1)

Represents non-cash share-based compensation expense relating to stock options, restricted stock units and time-vesting units.

(2)

Represents non-cash share-based compensation expense relating to the accelerated vesting of performance-vesting units in connection with the IPO for the three months ended September 30, 2020 and the accelerated vesting of profit interests and incentive share units in connection with the Centerbridge Acquisition for the period from July 1, 2019 through September 12, 2019.

(3)

Represents legal, accounting, consulting, and other costs related to the Centerbridge Acquisition.

(4)

Represents legal, accounting, consulting, and other indirect costs associated with the Company's IPO.

(5)

Represents costs associated with the termination of employment.

 

The following table summarizes share-based compensation by operating function:

 

Successor

Predecessor

 

Successor

Predecessor

 

Three Months
Ended
Sep 30, 2020

 

Period from
Sep 13, 2019
through
Sep 30, 2019

Period from
July 1, 2019
through
Sep 12, 2019

 

Nine
Months Ended
Sep 30, 2020

 

Period from
Sep 13, 2019
through
Sep 30, 2019

Period from
Jan 1, 2019
through
Sep 12, 2019

Marketing and advertising

$    24,709

 

$            -

$      1,674

 

$    24,829

 

$            -

$      1,674

Customer care and enrollment

$    11,993

 

$            -

$              -

 

$    12,050

 

$            -

$              -

Technology

$    32,748

 

$            -

$    27,059

 

$    32,907

 

$            -

$    27,059

General and administrative

$  142,620

 

$            -

$    58,327

 

$  143,360

 

$            -

$    58,327

Total share-based compensation expense

$  212,070

 

$            -

$    87,060

 

$  213,146

 

$            -

$    87,060

 

The following table sets forth the components of our results of operations for the periods indicated (unaudited):

   

Successor

Predecessor

Non-GAAP Combined

     
   

Nine Months Ended
Sep 30, 2020

 

Period from
Sep 13, 2019
through
Sep 30, 2019

Period from
Jan 1, 2019
through
Sep 12, 2019


Nine Months Ended
Sep 30, 2019

   

(in thousands, except percentages,
share and per share amounts)

Dollars

% of Net
Revenues

 

Dollars

Dollars

Dollars

% of Net
Revenues

 

$ Change

% Change

Net revenues:

                   
 

Commission

$    310,506

72.0%

 

$   13,723

$ 175,834

$  189,557

75.6%

 

$  120,949

63.8%

 

Enterprise

120,921

28.0%

 

6,067

55,176

61,243

24.4%

 

59,678

97.4%

Net revenues

431,427

100.0%

 

19,790

231,010

250,800

100.0%

 

180,627

72.0%

                       

Operating expenses:

                   
 

Cost of revenue

104,520

24.2%

 

4,737

79,169

83,906

33.5%

 

20,614

24.6%

 

Marketing and advertising

110,556

25.6%

 

7,140

37,769

44,909

17.9%

 

65,647

146.2%

 

Customer care and enrollment

105,267

24.4%

 

4,625

49,149

53,774

21.4%

 

51,493

95.8%

 

Technology

49,818

11.5%

 

518

40,312

40,830

16.3%

 

8,988

22.0%

 

General and administrative

177,400

41.1%

 

2,286

79,219

81,505

32.5%

 

95,895

117.7%

 

Change in fair value of contingent
     consideration liability

19,700

4.6%

 

-

-

-

-

 

19,700

 NM 

 

Amortization of intangible assets

70,543

16.4%

 

4,703

-

4,703

1.9%

 

65,840

1400.0%

 

Acquisition related transaction costs

-

-

 

6,245

2,267

8,512

3.4%

 

(8,512)

-100.0%

Total operating expenses

637,804

147.8%

 

30,254

287,885

318,139

126.8%

 

319,665

100.5%

                       

(Loss) income from operations

(206,377)

-47.8%

 

(10,464)

(56,875)

(67,339)

-26.8%

 

(139,038)

206.5%

Interest expense

24,378

5.7%

 

1,289

140

1,429

0.6%

 

22,949

1605.9%

Other (income) expense

(494)

-0.1%

 

(10)

114

104

0.0%

 

(598)

-575.0%

(Loss) income before income taxes

(230,261)

-53.4%

 

(11,743)

(57,129)

(68,872)

-27.5%

 

(161,389)

234.3%

Income tax expense (benefit)

38

0.0%

 

(37)

(66)

(103)

0.0%

 

141

-136.9%

Net (loss) income

$   (230,299)

-53.4%

 

$  (11,706)

$  (57,063)

$  (68,769)

-27.4%

 

$ (161,530)

234.9%

Net loss attributable to noncontrolling

                 
 

interests

(150,076)

NM

               

Net loss attributable to GoHealth, Inc.

$     (80,223)

NM

               
                       

Net loss per share:

                   

Net loss per share of Class A

                   
 

common stock - basic and diluted

$         (0.65)

                 

Weighted-average shares of Class A

                   
 

common stock outstanding -

                   
 

basic and diluted

84,182,961

                 
                       

Non-GAAP Financial Measures:

                   

EBITDA

$   (132,441)

   

$    (5,659)

$  (52,742)

$   (58,401)

       

Adjusted EBITDA

$    101,141

   

$        682

$   39,973

$    40,655

       

Adjusted EBITDA margin

23.4%

   

3.4%

17.3%

16.2%

       

______________

*      NM = Not meaningful

 

The following table sets forth the reconciliations of GAAP net loss to EBITDA and Adjusted EBITDA for the periods indicated:

   

Successor

Predecessor

Non-GAAP
Combined

   

Nine Months
Ended
Sep 30, 2020

 

Period from
Sep 13, 2019
through
Sep 30, 2019

Period from
Jan 1, 2019
through
Sep 12, 2019


Nine Months
Ended
Sep 30, 2019

(in thousands)

Dollars

 

Dollars

Dollars

Dollars

Net revenues

$    431,427

 

$      19,790

$    231,010

$    250,800

             

Net loss

$  (230,299)

 

$    (11,706)

$    (57,063)

$    (68,769)

 

Interest expense

24,378

 

1,289

140

1,429

 

Income tax (benefit) expense

38

 

(37)

(66)

(103)

 

Depreciation and amortization expense

73,442

 

4,795

4,247

9,042

EBITDA

(132,441)

 

(5,659)

(52,742)

(58,401)

 

Share-based compensation expense (1)

3,846

 

-

-

-

 

Accelerated vesting of certain equity awards (2)

209,300

 

-

87,060

87,060

 

Change in fair value of contingent consideration liability (3)

19,700

 

-

-

-

 

Centerbridge Acquisition costs (4)

-

 

6,245

4,908

11,153

 

IPO transaction costs (5)

659

 

-

-

-

 

Severance costs (6)

77

 

96

747

843

Adjusted EBITDA

$    101,141

 

$           682

$      39,973

$      40,655

Adjusted EBITDA margin

23.4%

 

3.4%

17.3%

16.2%

______________

(1)

Represents non-cash share-based compensation expense relating to stock options, restricted stock units and time-vesting units.

(2)

Represents non-cash share-based compensation expense relating to the accelerated vesting of performance-vesting units in connection with the IPO for the nine months ended September 30, 2020 and the accelerated vesting of profit interests and incentive share units in connection with the Centerbridge Acquisition for the period from January 1, 2019 through September 12, 2019.

(3)

Represents the change in fair value of the contingent consideration liability due to the predecessor owners of the Company arising from the Centerbridge Acquisition.

(4)

Represents legal, accounting, consulting, and other costs related to the Centerbridge Acquisition.

(5)

Represents legal, accounting, consulting, and other indirect costs associated with the Company's IPO.

(6)

Represents costs associated with the termination of employment.

 

GoHealth, Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands, except share and per share amounts)

 
 

Successor

 

Successor

 

September 30,
2020

 

December 31,
2019

 

(Unaudited)

   

Assets

     

Current assets:

     

Cash and cash equivalents

$

294,598

   

$

12,276

 

Accounts receivable, net of allowance for doubtful accounts of $522 in 2020 and $904 in 2019

7,921

   

24,461

 

Commissions receivable – current

95,122

   

101,078

 

Prepaid expenses and other current assets

19,530

   

5,954

 

Total current assets

417,171

   

143,769

 

Commissions receivable – non-current

405,697

   

281,853

 

Property, equipment, and capitalized software, net

15,463

   

6,339

 

Intangible assets, net

712,240

   

782,783

 

Goodwill

386,553

   

386,553

 

Other long-term assets

1,134

   

998

 

Total assets

$

1,938,258

   

$

1,602,295

 

Liabilities and stockholders/members' equity

     

Current liabilities:

     

Accounts payable

$

9,181

   

$

13,582

 

Accrued liabilities

20,775

   

22,568

 

Commissions payable – current

52,029

   

56,003

 

Deferred revenue

55,406

   

15,218

 

Current portion of debt

4,170

   

3,000

 

Other current liabilities

3,765

   

2,694

 

Total current liabilities

145,326

   

113,065

 

Non-current liabilities:

     

Commissions payable – non-current

129,446

   

97,489

 

Long-term debt, net of current portion

396,817

   

288,233

 

Contingent consideration

   

242,700

 

Other non-current liabilities

3,500

   

664

 

Total non-current liabilities

529,763

   

629,086

 

Commitments and contingencies (Note 11)

     

Stockholders'/members' equity:

     

Members' interest

   

860,161

 

Class A common stock – $0.0001 par value; 1,100,000,000 shares authorized; 84,182,961 shares issued and outstanding at September 30, 2020

8

   

 

Class B common stock – $0.0001 par value; 690,000,000 shares authorized; 230,722,681 shares issued and outstanding at September 30, 2020

23

   

 

Preferred stock – $0.0001 par value; 20,000,000 shares authorized; no shares issued and outstanding at September 30, 2020

   

 

Additional paid-in capital

392,491

   

 

Accumulated other comprehensive loss

(85)

   

(17)

 

Accumulated deficit

(54,758)

     

Total stockholders' equity attributable to GoHealth, Inc./members' equity

337,679

   

860,144

 

Non-controlling interests

925,490

   

 

Total stockholders'/members' equity

1,263,169

   

860,144

 

Total liabilities and stockholders'/members' equity

$

1,938,258

   

$

1,602,295

 

 

GoHealth, Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in thousands, unaudited)

 
 

Successor

Predecessor

 

Nine Months
Ended September
30, 2020

Period from
September 13,
2019 through
September 30,
2019

Period from
January 1, 2019
through
September 12,
2019

Operating activities:

     

Net loss

$

(230,299)

 

$

(11,706)

 

$

(57,063)

 

Adjustments to reconcile net loss to net cash provided by operating activities:

     

Share-based compensation

213,146

 

 

87,060

 

Depreciation and amortization

2,899

 

92

 

4,247

 

Amortization of intangible assets

70,543

 

4,703

 

 

Amortization of debt discount and issuance costs

1,744

 

79

 

 

Change in fair value of contingent consideration

19,700

 

 

 

Other non-cash items

(1,100)

 

285

 

150

 

Changes in assets and liabilities:

     

Accounts receivable

17,552

 

(122)

 

(108)

 

Commissions receivable

(117,888)

 

(15,405)

 

(63,448)

 

Prepaid expenses and other assets

(13,576)

 

(140)

 

1,325

 

Accounts payable

(4,402)

 

3,276

 

(1,981)

 

Accrued liabilities

(1,793)

 

(5,028)

 

17,860

 

Deferred revenue

40,188

 

18,098

 

1,926

 

Commissions payable

27,983

 

8,283

 

19,228

 

Other liabilities

4,138

 

13,728

 

85

 

Net cash provided by operating activities

28,835

 

16,143

 

9,281

 

Investing activities:

     

Acquisition of business, net of cash

 

(807,591)

 

 

Purchases of property, equipment and software

(12,023)

 

(813)

 

(5,597)

 

Net cash used in investing activities

(12,023)

 

(808,404)

 

(5,597)

 

Financing activities:

     

Proceeds from issuance of Class A common stock sold in initial public offering, net of offering costs

852,407

 

 

 

Payment of partial consideration of the Blocker Merger

(96,165)

 

 

 

Purchase of LLC Interests

(508,320)

 

 

 

Settlement of Senior Preferred Earnout Units

(100,000)

 

 

 

Issuance of preferred units

 

541,263

 

 

Proceeds received upon issuance of common units

10,000

 

 

 

Borrowings under term loans

117,000

 

300,000

 

 

Principal payments under term loans

(2,835)

 

 

 

Borrowings under revolving credit facilities

 

 

56,534

 

Payments under revolving credit facilities

 

 

(59,915)

 

Debt issuance cost payments

(6,291)

 

(9,283)

 

 

Principal payments under capital lease obligations

(218)

 

(270)

 

(68)

 

Net cash provided by (used in) financing activities

265,578

 

831,710

 

(3,449)

 

Effect of exchange rate changes on cash

(68)

 

(2)

 

(32)

 

Increase in cash and cash equivalents

282,322

 

39,447

 

203

 

Cash and cash equivalents at beginning of period

12,276

 

708

 

505

 

Cash and cash equivalents at end of period

$

294,598

 

$

40,155

 

$

708

 

Supplemental disclosure of cash flow information:

     

Non-cash investing and financing activities:

     

Purchases of property, equipment and software included in accounts payable

$

1,104

 

$

277

 

$

113

 

Purchases of property, equipment and software under capital leases

$

 

$

 

$

744

 

Issuance of senior preferred earnout units to settle contingent consideration liability

$

100,000

 

$

 

$

 

Issuance of common A and B units to settle contingent consideration liability

$

100,000

 

$

 

$

 

Issuance of Class A and Class B common stock in connection with the Transactions

$

30

 

$

 

$

 

Settlement of contingent consideration liability

$

62,400

 

$

 

$

 
 

 

Segment Information

The following table sets forth operating segment results for the periods indicated:

   

Successor

Predecessor

Non-GAAP Combined

     
   

Three Months Ended
Sep 30, 2020

 

Period from
Sep 13, 2019
through
Sep 30, 2019

Period from
Jul 1, 2019
through
Sep 12, 2019


Three Months Ended
Sep 30, 2019

   

(in thousands, except percentages)

Dollars

% of Net
Revenues

 

Dollars

Dollars

Dollars

% of Net
Revenues

 

$ Change

% Change

Net revenues:

                   
 

Medicare - Internal

$    133,723

81.9%

 

$   14,208

$   48,872

$  63,080

58.8%

 

$    70,643

112.0%

 

Medicare - External

20,252

12.4%

 

3,865

16,577

20,442

19.1%

 

(190)

-0.9%

 

IFP and Other - Internal

6,147

3.8%

 

764

11,129

11,893

11.1%

 

(5,746)

-48.3%

 

IFP and Other - External

3,238

2.0%

 

953

10,832

11,785

11.0%

 

(8,547)

-72.5%

Total revenues

163,360

100.0%

 

19,790

87,410

107,200

100.0%

 

56,160

52.4%

Segment profit:

                   
 

Medicare - Internal

49,464

30.3%

 

2,500

20,218

22,718

21.2%

 

26,746

117.7%

 

Medicare - External

720

0.4%

 

734

(4,178)

(3,444)

-3.2%

 

4,164

-120.9%

 

IFP and Other - Internal

(245)

-0.1%

 

(2,446)

1,583

(863)

-0.8%

 

618

-71.6%

 

IFP and Other - External

147

0.1%

 

495

378

873

0.8%

 

(726)

-83.2%

Total segment profit

50,086

30.7%

 

1,283

18,001

19,284

18.0%

 

30,802

159.7%

 

Corporate expense

224,368

137.3%

 

799

93,353

94,152

87.8%

 

130,216

138.3%

 

Amortization of intangible assets

23,514

14.4%

 

4,703

-

4,703

4.4%

 

18,811

400.0%

 

Transaction costs

-

-

 

6,245

1,968

8,213

7.7%

 

(8,213)

-100.0%

 

Interest expense

8,636

5.3%

 

1,289

31

1,320

1.2%

 

7,316

554.2%

 

Other (income) expense

2

0.0%

 

(10)

67

57

0.1%

 

(55)

-96.5%

Loss before income taxes

$  (206,434)

-126.4%

 

$  (11,743)

$  (77,418)

$ (89,161)

-83.2%

 

$ (117,273)

131.5%

______________

*      NM = Not meaningful

 

The following table sets forth operating segment results for the periods indicated:

   

Successor

Predecessor

Non-GAAP Combined

     
   

Nine Months Ended
Sep 30, 2020

 

Period from
Sep 13, 2019
through
Sep 30, 2019

Period from
Jan 1, 2019
through
Sep 12, 2019


Nine Months Ended
Sep 30, 2019

   

(in thousands, except percentages)

Dollars

% of Net
Revenues

 

Dollars

Dollars

Dollars

% of Net
Revenues

 

$ Change

% Change

Net revenues:

                   
 

Medicare - Internal

$   316,211

73.3%

 

$   14,208

$ 102,196

$ 116,404

46.4%

 

$  199,807

171.6%

 

Medicare - External

77,305

17.9%

 

3,865

55,981

59,846

23.9%

 

17,459

29.2%

 

IFP and Other - Internal

21,798

5.1%

 

764

37,909

38,673

15.4%

 

(16,875)

-43.6%

 

IFP and Other - External

16,113

3.7%

 

953

34,924

35,877

14.3%

 

(19,764)

-55.1%

Total revenues

431,427

100.0%

 

19,790

231,010

250,800

100.0%

 

180,627

72.0%

Segment profit:

                   
 

Medicare - Internal

123,946

28.7%

 

2,500

40,024

42,524

17.0%

 

81,422

191.5%

 

Medicare - External

892

0.2%

 

734

4,893

5,627

2.2%

 

(4,735)

-84.1%

 

IFP and Other - Internal

181

0.0%

 

(2,446)

2,195

(251)

-0.1%

 

432

-172.1%

 

IFP and Other - External

789

0.2%

 

495

1,748

2,243

0.9%

 

(1,454)

-64.8%

Total segment profit

125,808

29.2%

 

1,283

48,860

50,143

20.0%

 

75,665

150.9%

 

Corporate expense

241,942

56.1%

 

799

103,469

104,268

41.6%

 

137,674

132.0%

 

Change in fair value of contingent

                 
 

   consideration liability

19,700

4.6%

 

-

-

-

-

 

19,700

NM

 

Amortization of intangible assets

70,543

16.4%

 

4,703

-

4,703

1.9%

 

65,840

1400.0%

 

Transaction costs

-

-

 

6,245

2,267

8,512

3.4%

 

(8,512)

-100.0%

 

Interest expense

24,378

5.7%

 

1,289

140

1,429

0.6%

 

22,949

1605.9%

 

Other (income) expense

(494)

-0.1%

 

(10)

114

104

0.0%

 

(598)

-575.0%

Loss before income taxes

$ (230,261)

-53.4%

 

$  (11,743)

$  (57,129)

$  (68,873)

-27.5%

 

$ (161,388)

234.3%

______________

*      NM = Not meaningful

 

The following table presents the number of Submitted Policies by product for the Medicare segments for the three and nine months ended September 30, 2020 and 2019, split between those submissions that are commissionable (compensated through commissions received from carriers) and those that are non-commissionable (compensated via hourly fees and enrollment fees):

   

Successor

Predecessor

Combined

 

Successor

Predecessor

Combined

   

Three Months
Ended
Sep 30, 2020

 

Period from
Sep 13, 2019
through
Sep 30, 2019

Period from
July 1, 2019
through
Sep 12, 2019


Three
Months
Ended
Sep 30, 2019

 

Nine
Months
Ended
Sep 30, 2020

 

Period from
Sep 13, 2019
through
Sep 30, 2019

Period from
Jan 1, 2019
through
Sep 12, 2019


Nine
Months
Ended
Sep 30, 2019

Medicare Advantage

97,675

 

13,608

51,078

64,686

 

314,088

 

13,608

134,173

147,781

Medicare Supplement

1,245

 

763

3,091

3,854

 

6,164

 

763

11,205

11,968

Prescription Drug Plans

2,006

 

452

2,217

2,669

 

6,437

 

452

7,675

8,127

 

Total Medicare - Commissionable

100,926

 

14,823

56,386

71,209

 

326,689

 

14,823

153,053

167,876

Medicare Advantage

6,472

 

1,005

2,338

3,343

 

20,806

 

1,005

4,240

5,245

Medicare Supplement

1,716

 

234

635

869

 

5,262

 

234

1,051

1,285

Prescription Drug Plans

1,034

 

155

335

490

 

2,787

 

155

471

626

 

Total Medicare - Non Commissionable

9,222

 

1,394

3,308

4,702

 

28,855

 

1,394

5,762

7,156

Total Medicare Submitted Policies

110,148

 

16,217

59,694

75,911

 

355,544

 

16,217

158,815

175,032

 

The following tables present the number of Approved Submissions by product relating to commissionable policies for the Medicare segments for the three and nine months ended September 30, 2020 and 2019. Only commissionable policies are used to calculate our LTV.

 

Medicare—Internal

   

Successor

Predecessor

Combined

 

Successor

Predecessor

Combined

   

Three
Months
Ended
Sep 30, 2020

 

Period from
Sep 13, 2019
through
Sep 30, 2019

Period from
July 1, 2019
through
Sep 12, 2019


Three
Months
Ended
Sep 30, 2019

 

Nine
Months
Ended
Sep 30, 2020

 

Period from
Sep 13, 2019
through
Sep 30, 2019

Period from
Jan 1, 2019
through
Sep 12, 2019


Nine
Months
Ended
Sep 30, 2019

Medicare Advantage

77,186

 

8,940

36,270

45,210

 

228,612

 

8,940

86,544

95,484

Medicare Supplement

315

 

199

944

1,143

 

1,602

 

199

3,198

3,397

Prescription Drug Plans

1,574

 

313

1,611

1,924

 

5,319

 

313

5,078

5,391

 

Total Medicare - Internal

                     
 

Commissionble Approved Submissions

79,075

 

9,452

38,825

48,277

 

235,533

 

9,452

94,820

104,272

   
 

Medicare—External

   

Successor

Predecessor

Combined

 

Successor

Predecessor

Combined

   

Three
Months
Ended
Sep 30, 2020

 

Period from
Sep 13, 2019
through
Sep 30, 2019

Period from
July 1, 2019
through
Sep 12, 2019


Three
Months
Ended
Sep 30, 2019

 

Nine
Months
Ended
Sep 30, 2020

 

Period from
Sep 13, 2019
through
Sep 30, 2019

Period from
Jan 1, 2019
through
Sep 12, 2019


Nine
Months
Ended
Sep 30, 2019

Medicare Advantage

19,390

 

3,441

15,551

18,992

 

80,656

 

3,441

48,341

51,782

Medicare Supplement

844

 

466

1,852

2,318

 

4,035

 

466

7,065

7,531

Prescription Drug Plans

352

 

139

606

745

 

1,206

 

139

2,597

2,736

 

Total Medicare - External

                     
 

Commissionble Approved Submissions

20,586

 

4,046

18,009

22,055

 

85,897

 

4,046

58,003

62,049

 

The following table presents the LTV per Approved Submission by product for the Medicare segments for the three and nine months ended September 30, 2020 and 2019:

   

Successor

Predecessor

Combined Non-GAAP

 

Successor

Predecessor

Combined Non-GAAP

   

Three
Months
Ended
Sep 30, 2020

 

Period from
Sep 13, 2019
through
Sep 30, 2019

Period from
July 1, 2019
through
Sep 12, 2019


Three
Months
Ended
Sep 30, 2019

 

Nine
Months
Ended
Sep 30, 2020

 

Period from
Sep 13, 2019
through
Sep 30, 2019

Period from
Jan 1, 2019
through
Sep 12, 2019


Nine
Months
Ended
Sep 30, 2019

Medicare Advantage

$       987

 

$    1,013

$       922

$       939

 

$       913

 

$    1,013

$       888

$       899

Medicare Supplement

$       934

 

$       951

$       846

$       867

 

$       929

 

$       951

$       911

$       914

Prescription Drug Plans

$       215

 

$       200

$       198

$       198

 

$       216

 

$       200

$       194

$       194

 

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/gohealth-reports-third-quarter-2020-results-and-increases-2020-outlook-as-a-result-of-strong-medicare-enrollments-and-operating-leverage-301171322.html

SOURCE GoHealth, Inc.

 
 
Company Codes: NASDAQ-NMS:GOCO
 

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