GoHealth Reports Third Quarter 2021 Results

CHICAGO, Nov. 9, 2021 /PRNewswire/ -- GoHealth, Inc. (NASDAQ: GOCO), a leading health insurance marketplace and Medicare-focused digital health company, announced financial results for the three and nine months ended September 30, 2021.

• Third quarter 2021 net revenue of $211.7 million increased 30% compared to the prior year period. YTD 2021 net revenue of $612.8 million increased 42% compared to the prior year period.
• Third quarter 2021 Medicare—Internal revenue of $158.6 million increased 19% compared to the prior year period. YTD 2021 Medicare—Internal revenue of $476.4 million increased 51% compared to the prior year period.
• Third quarter 2021 Medicare Advantage ("MA") Approved Submissions of 193,107 increased 100% compared to the prior year period. YTD 2021 MA Approved Submissions of 516,983 increased 67% compared to the prior year period.
• Third quarter 2021 MA LTV Per Approved Submission of $926 decreased 6% compared to the prior year period. YTD 2021 MA LTV Per Approved Submission of $957 increased 5% compared to the prior year period.
• Third quarter 2021 net loss of $55.4 million compared to a net loss of $206.5 million in the prior year period; Adjusted EBITDA¹ of negative $14.1 million decreased 136% compared to the prior year period due to the 2021 strategic investments in agent capacity, marketplace technology, branding and the Encompass Platform. YTD 2021 net loss was $101.9 million compared to a net loss of $230.3 million in the prior year period; Adjusted EBITDA¹ of $32.3 million decreased 68% compared to the prior year period.
• The Company reaffirmed its full-year 2021 outlook, and expects total net revenue of $1,200 - $1,300 million (+37% to +48%) powered by commission net revenue of $1,000 - $1,100 million (+49% to +64%). The Company also reaffirms its Adjusted EBITDA¹ outlook of $300 - $330 million (+11% to +22%).

Clint Jones, co-founder and CEO said, "During the third quarter, we delivered revenue growth of 30%, while also exceeding our agent hiring goals in preparation for a successful Annual Enrollment Period. We are excited about our ability to grow our membership base during AEP and deliver the trusted healthcare advice seniors need to navigate the increasingly complex Medicare market. This increase in our agent force will enable us to better serve more seniors during this year's AEP, grow our membership base and realize the potential of this enormous market opportunity. As a result of our agent hiring and momentum in our Encompass Platform, we are reaffirming our full-year 2021 guidance."

Third Quarter 2021 Highlights²

• Total company revenue grew 30% to $211.7 million, net of a $6.7 million negative revenue adjustment relating to revenue estimates from prior periods
• Medicare—Internal net revenue increased 19% to $158.6 million
• LTV Per carrier Approved MA Submission decreased 6% to $926
• Adjusted EBITDA¹ decreased 136% to negative $14.1 million
• Investment in customer care and enrollment grew to $87.8 million, an increase of 112% excluding non-cash share-based compensation expense relating to the accelerated vesting of performance-vesting units in connection with the IPO in prior year results, which primarily represents the costs to hire and onboard agents in advance of the Annual Enrollment Period ("AEP")
• Agent counts grew well ahead of the 50% target as the Company prepares for the AEP and fiscal 2022
• Total cost of revenue, marketing and advertising expense grew 28%, roughly in line with sales growth

YTD 2021 Highlights²

• Total company revenue grew 42% to $612.8 million
• Medicare—Internal net revenue increased 51% to $476.4 million
• LTV Per carrier Approved MA Submission increased 5% to $957
• Adjusted EBITDA¹ decreased 68% to $32.3 million
• Investment in customer care and enrollment grew to $196.8 million, an increase of 110% excluding non-cash share-based compensation expense relating to the accelerated vesting of performance-vesting units in connection with the IPO in prior year results, which primarily represents the costs to hire and onboard agents in advance of the AEP
• Total cost of revenue, marketing and advertising expense grew 44%, roughly in line with sales growth

2021 Financial Outlook

The trajectory of the U.S. economy remains challenging to predict, particularly given the continued uncertainty associated with the pace of recovery from the COVID-19 pandemic. The Company is reaffirming its financial outlook for the fiscal year ending December 31, 2021 based on current market conditions and expectations:

• Full-year 2021 net revenue of $1,200 - $1,300 million, representing year-over-year growth of 37% - 48%
• Full-year 2021 commission revenue of $1,000 - $1,100 million, representing year-over-year growth of 49% - 64%, fueled by the Company's continued investment in its Medicare business, including GoHealth's Encompass Platform
• Full-year 2021 Adjusted EBITDA¹ of $300 - $330 million, representing year-over-year growth of 11% - 22%

Conference Call Details

The Company will host a conference call today, Tuesday, November 9, 2021 at 5:00 p.m. (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 2553159. A replay of the call will be available for 30 days via webcast for on-demand listening shortly after the completion of the call, at the same web link.

About GoHealth, Inc.:

As a leading health insurance marketplace and Medicare-focused digital health company, 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 right for them. GoHealth has enrolled millions of people in Medicare plans and individual and family plans. For more information, visit https://www.gohealth.com.

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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 2021, including with respect to revenue and Adjusted EBITDA, the growth of our membership base, and our ability to realize the potential of our market opportunity 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 relationship; failure to grow the Company's customer base or retain its existing customers; the time and cost of training agents are significant and can increase during a period of high attrition; 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 Annual Report on Form 10-K for the year ended December 31, 2020 and other SEC filings. 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 ("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, as applicable for the period, EBITDA as further adjusted for share-based compensation expense, accelerated vesting of certain equity awards, loss on extinguishment of debt, loss on sublease, non-recurring legal fees, change in fair value of contingent consideration liability, IPO transaction costs, and severance costs. 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. Reconciliations of Adjusted EBITDA to its most directly comparable GAAP financial measure, net income (loss), is presented in the table below in this press release.

Glossary

"Adjusted EBITDA" represents, as applicable for the period, EBITDA as further adjusted for share-based compensation expense, accelerated vesting of certain equity awards, loss on extinguishment of debt, loss on sublease, non-recurring legal fees, change in fair value of contingent consideration liability, IPO transaction costs, and severance costs.

"Adjusted EBITDA Margin" refers to Adjusted EBITDA divided by net revenues.

"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, excluding revenue adjustments recorded in the period, but relating to performance obligations satisfied in prior periods, divided by (ii) the number of commissionable Approved Submissions for such period.

"Revenue Per Submission" refers to the total net revenues per Submitted Policy, which we define as (i) total net revenue, excluding revenue adjustments recorded in the period, but relating to performance obligations satisfied in prior periods, divided by (ii) the number of Submitted Policies for such period.

"Submitted Policies" refer to completed applications that, with respect to each such application, the consumer has authorized us to submit to the carrier.

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

The following tables set forth the reconciliations of GAAP net income (loss) to EBITDA and Adjusted EBITDA for the periods indicated (unaudited):

The following table summarizes share-based compensation expense by operating function for the periods indicated (unaudited):

The following table sets forth our balance sheets for the periods indicated (unaudited):

The following table sets forth our statements of cash flows for the periods indicated (unaudited):

The following tables set forth operating segment results for the periods indicated (unaudited):

The following table presents the number of Submitted Policies by product for the Medicare segments for the three and nine months ended September 30, 2021 and 2020, for those submissions that are commissionable (compensated through commissions received from carriers):

The following tables present the number of Approved Submissions by product relating to commissionable policies for the Medicare segments for three and nine months ended September 30, 2021 and 2020. Only commissionable policies are used to calculate LTV.