• Net Revenue: $118.3 million for Q3 2024, compared to $132 million in Q3 2023.
• Internal Captive Agent Submissions: Increased by 46% year-over-year.
• GPS Channel Submissions: Declined by 46% due to broader market pressures.
• Adjusted EBITDA: Negative $12.1 million, a decrease of $600,000 from the prior year.
• Direct Operating Cost per Submission: Reduced by 11%.
• Cash Flow from Operations: Positive $35.1 million for TTM Q3 2024, an increase of $38.3 million from the prior year.
• Debt Repayment: Paid down $75 million of debt during 2024.
• e-TeleQuote Acquisition: Added $90.5 million in contract assets and $22.5 million in cash; gain on bargain purchase of $77.4 million.
• Term Loan Refinancing: New $475 million term loan facility maturing in 2029 with an interest rate of SOFR plus 7.5%.
• Technology Incident Impact: Reduced Q3 revenue by over $8.8 million and earnings by more than $7.8 million.

• Warning! GuruFocus has detected 3 Warning Signs with GOCO.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• GoHealth Inc (NASDAQ:GOCO) reported strong operational progress in Q3 2024, driven by internal captive team performance and improved efficiency.
• The acquisition of e-TeleQuote added significant assets and nearly 400 licensed agents, enhancing GoHealth's capacity and financial stability.
• Internal captive agent submissions increased by 46% year-over-year, highlighting effective training and technological tools.
• The company successfully refinanced its term loan credit facility, extending maturity to 2029 and demonstrating financial stability.
• GoHealth's PlanFit CheckUp and PlanFit Save initiatives have enhanced consumer engagement and operational efficiency.

Negative Points

• Net revenues for Q3 2024 decreased to $118.3 million from $132 million in the same period last year.
• Submissions from the GPS channel declined by 46% due to broader market pressures affecting external broker partners.
• A cyber attack on Change Healthcare disrupted Medicaid eligibility assessments, reducing Q3 revenue by over $8.8 million.
• Adjusted EBITDA for the quarter was negative $12.1 million, a slight decrease compared to the prior year.
• The company faces ongoing challenges in the external broker market, impacting the GPS channel's performance.

Q & A Highlights

Q: How did the training process go for the new agents from the e-TeleQuote acquisition, and were they ready for the Annual Enrollment Period (AEP)? A: Vijay Kotte, CEO, stated that the e-TeleQuote team was seasoned and skilled, aligning well with GoHealth's values. They were onboarded into GoHealth's technology in September, which enhanced their productivity. The integration has been successful and accretive, with the agents and leadership aligning with GoHealth's consumer-focused approach.

Q: What are GoHealth's plans regarding debt reduction and target debt-to-EBITDA ratio? A: Brendan Shanahan, CFO, explained that GoHealth evaluates the best use of capital based on market dynamics. Currently, they are investing in marketing to grow their consumer base. The new five-year term loan provides flexibility, allowing GoHealth to make strategic investment decisions without immediate pressure to pay down debt.

Q: Can you discuss the strong growth in internal captive agent submissions and plans for the GPS agent side? A: Vijay Kotte highlighted the 46% year-over-year growth in internal agent submissions due to improved technology and marketing. The decline in GPS submissions was attributed to market pressures, but new agencies are being onboarded to contribute during AEP. The internal growth is expected to continue, driven by efficiency and targeted marketing.

Q: How is GoHealth working to reduce customer acquisition costs (CAC), and what are the future expectations? A: Vijay Kotte detailed efforts to reduce CAC through better marketing targeting, AI-driven tools, and operational efficiencies. The focus is on decreasing average handle time and improving supply-demand matching. These initiatives are expected to continue driving down CAC and enhancing operational performance.

Q: What impact do you anticipate from the recent election, and how will GoHealth adapt to potential changes? A: Vijay Kotte noted that it's early to predict specific impacts, but GoHealth is focused on serving Medicare consumers effectively. With over 50% of the Medicare population choosing Medicare Advantage, GoHealth's role in helping consumers find suitable plans remains valuable, regardless of administrative changes.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.