GoHealth (GOCO) 11 Nov 222022 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the GoHealth Third Quarter 2022 Earnings Conference Call. At this time, all participants on a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference call recorded. to call like Farley. to now would turn over the Brian I

you, Thanks call. XXXX everyone. good joining Thank afternoon, quarter for and GoHealth's third earnings

ability me and contains forward-looking and based Executive on Financial Kotte, expectations. are statements This Schulz, Numerous current risks Officer. that actual to call our Chief may beyond statements. Many these results projected or in are Joining predict. to Officer; conference afternoon's cause or results our the today uncertainties control differ will factors anticipated the future materially Vijay company's from Jason those Chief determine of

not or reliance to the and update should After today, closed otherwise. new statements, a any obligation the any XXXX. revise forward-looking to of these the release for market You statements, results place issued containing undue our or whether third we no events company press of future undertakes quarter due on information,

the other forward-looking the you and tab. number release, reports with under the posted Commission website the Securities GoHealth have factors statements. encourage information. described risk XX-K of have Relations Investor consider additional factors Form we you to for that release in We should conjunction press We filed the the our consider listed on XX-Q In Exchange our and in with Form risk a

call I'd like earnings the most comparable in During And the forth GAAP that, refer reconciliation turn non-GAAP during comparable directly GAAP the the to of most be to measures measures measures press discussed certain over discussing are we call. today's the measure this the set Vijay. release with to are to for this financial Please will call, reconciled release. non-GAAP financial to reconciliations These and press measures.

to us XXXX Thank this third discuss you quarter all for our joining results. afternoon

fill some AEP. the a full time As we're promised elements to go-forward our with our call, key more to addressing strategy come look of last spend going quarterly on after

a transactional ourselves XXX,XXX over calls, and to Together consumer trusted with XXX,XXX beneficiaries. e-broker XXX,XXX quarter, we external we marketplace. beneficiaries completed over do, of partners, past retention to over completed In fielded from the at XX,XXX what center agents put with the Medicare conversations a valuations nearly continue enrollments. We transforming internal our Medicare started our

and main of get I that call, shared have just Encompass in that today's we've things these slides our high-level when overview later a be we into our website more with a to topics presentation Jason on I financials detail than for let in more kick Before numbers referencing we into want off on deeper overview dive the I'll of comprehensive provides before. a Encompass posted into go quarter third call. IR bit. the We'll a note

a will delta cash positive result million of this ramping to from from up million operations our of third $XX Our flow has a $XX flow loss year's a last solution cash in quarter meaningfully in $XXX The quarter. dynamics is our to and million the continue improved strategic for we're Encompass direct getting as trends these confident This during with back Encompass basics cash solution. has cost lean implemented flow our and initiatives the fundamentally changed business, we into positive we further the of quarter.

albeit revenue we efforts with $XXX force. as our on anticipated, year-over-year smaller million higher-quality more focused down As have a of revenue experienced is sales

quality ago renewed now revenue. flat despite and roughly As made quarter, to to in our calculated a adjusted Last in initiatives. I'll EBITDA invest generating a compared to our was less quality, we emphasize $XX decision Encompass. testament turn on million to strategic focus year a

here of XX% Last shift least our just least we for on for they're already at Our over at have year, X X high-quality under agents been is sales experienced, of had beneficial. quality This time, improved AEP. been year, XX% were delivering targeting. AEP, just focusing rather agents more GoHealth to volume the at agent than this and of proving agents

ahead our This has still spend increased conversion makes a rate higher it's turn conversion efficiency of even AEP, and conversion the go With year-over-year. every model, agents in early rate by is lease. expectations. of our seasoned of XX% new most making improved our each in and While and marketing further October

expect We all efficiency year-over-year XX% under AEP. just operating a improvement of for in

the hard market rigor operating the transparency, in to can We a right and are health working highly and we manner regulators plans commitment are prove deliver to with experience, and beneficiaries, compliant seeking. that

rate relationship efficiency important trusted step we operating an in the as experience While first establishing conversion is beneficiary. with enrollment a the indicator, view the

we multi-payer Medicare beneficiaries understand of value and market. bring strengthening We investment we differentiated to a funding us ability deliver we September, range look forward in significant higher to the to our of coverage late enhance of announced marketplace to from received partners. the that service, customer will quality empower strategic Next, alternatives. two our improving additional further help millions $XX million our This ever-growing an

game the shift Encompass we critical profile will being rooted customer, from of business. our trusted for relationships, business transactional be As the a for health financial Encompass the for primarily anticipate changer a and being in is We component. to plans

Turning to the slides.

excellent plan and And their the five, us beneficiary operating experienced agents our you We If over one, trusted million individuals including to beneficiaries doing Medicare positioned and to have XXX based partners. agents. Three, platform, our trust-based marketing we expectations thing deliver needs tool, aligning the Four, effectively decade. evaluations, plan can we better of health we right with proven high-quality believe preferences. have available, past over have relationships experience. consumer turn the with is technology Slide we insights consumer to proprietary by Two, on the with fit enables agile over a GoHealth individual the and qualify because, matching redefine match our interactions understand best with planned we marketing Medicare and our X, have with to beneficiary history a Medicare needs. model well XX for million truly allowing journey

similar of lead even a a of right the beneficiary's a on has industry year-over-year. opposed based From support among The health more been always a putting a disjointed at it's with lack has are about the rich focus, of lower satisfaction face needs, broker To standpoint, sometimes of The than when brokers, to get to Moving beneficiary plans challenge an center. you industry most to valuing plans thing confusing of to of many Medicare trusted and trust penalized policy plan Many thing to right the landscape. to engagement remind the can consumers navigate measured complaints for consumer hand. are one plans, In as Slide out are problems to number doing do enrollment space given with all don't economics options bombarded as high star benefit. on ratings. an of beneficiary. plans that how confused They're basis the and the Once the overall and fully this in health customer with face a are in abrasive the consumers, relationships enrollments there new at There they're be environment, beneficiaries beneficiaries. is with moving process. historically information. this churn, environment, In for which plans the no focused number lower and brokers varying and total hard benefits for health the enrolled X. truly plans, the this

a the to solve if see journey, XX you end-to-end seeing beneficiary press refer Next, we press solution and drive and Medicare details. will release scale critical We're Medicare turn for in our with demonstrated you in release, a marketplace, XX% in discussed and year. the expanded Please Slide in outcomes more to positive member supports already helping our improvement at reduction the as complaints X, across enrollment benefits that our to satisfaction. a XX% to October increase Encompass retention engagement need this

Connect of financial several limited the Slide perspective. financial we our build significantly the of traditional to it LTV is as many offers more a to our factors on the and model, dynamics, our economics changes milestones including, to Adoption predictable year X of subject from to as we not compensates Connect and still put Encompass opposed outside unit what Connect. health like the in at other long-term behavior, factors, the work of model the economics. dependencies are the but model our diversify from traditional more of consumer to of in The beneficiary and volatility LTV shift and the the the short LTV model. We this Now and quality the and achieve ability the Encompass deliver relationships, model model within is opportunity to LTV a model, center of predictable uncertainty to model Encompass time us the believe do profile run and of benefits specific and directly support to prudent control. of which well. exposure marketing enables drive the from given Encompass Connect the benefits, favorable for plan to cash but to that reduces margin the discuss service-based to

our advantages One in of certain Connect means shift we even before the is Encompass GoHealth that engage agreed-upon subsequent prefunded cash partners health received of majority Encompass our of forecast of That we an and Connect is the the major volumes, on we producing based some the work plan quarter. anticipate in activity.

of against against reconciliation the forecast the the over happening period. of And forecast, we Put agreed will recognition revenue we future simply, if the reconcile revenue If the difference. the deliver that work. recognize respective quarter build agreed we quarters. With upon in against upon we'll upon will forecast, completion in for under cash we agreed we performed the and deliver

you year year models change will cash $XXX basis. a moving basis or respective year significant cash flow a on cash one in on from the a a negative flow in $XXX cash improvement one dynamics unit result, a $XXX As the unit positive of one to see

shifts kept deliver so different both own talented and to their beneficiaries. teams efficiency. we simplicity, From way use partner are we there for the health with and plan our the requirements operational transformational across each opportunities value additional, proprietary with cost models, these for to consistent in technology For

this view we quarter. our The are to force and less guidance. providing more results adjustments as we model. our mentioned, focus material to high-value reported on as cash and margin not are We expect But sales XXXX predictable full more year with subject dynamics be last from we deployed consistent is to stable our

of believe that that X to full to its I change we takes While years. next X the in company, achieve acknowledge potential can the time it trajectory GoHealth a

We reverse In at benefit XX for addition, approval, XX the time all X at split a or stock split a completing will shareholder intend currently ratio. this on following effectuate stakeholders. to reverse we last believe around month's November stock

as for initiatives, evidenced we Finally, I the want now in Jason? a progress the the look am to to I early the reiterate New how have success by AEP. I over strategic a in Year. forward to at about update on Jason the look excited seeing call numbers. I'll detailed made fulsome more we are giving turn more our

joining discussing and the up with Thanks, have Vijay, financial and going to Encompass platform our it I'll sheet. the of positive a you the thank I'm our impact results, to off Then highlights for will us from business. quarter balance with all performance couple I'll the wrap start of review today. third and

Encompass this the highly. the unmatched Medicare journey. market service and believe the in carrier mentioned, supports across and that that our Vijay As technology that We our engagement leverages regard proprietary is enrollment partners very offering beneficiary

role, business oriented our well. transaction a a to from partner financial makeup evolve as will trusted we evolve As

cash against overall We business our to and a expect margin traditional to have our impact flow to LTV our profile. to dramatic improve Encompass diversify

deferred Connect is QX flow year-over-year, our is This $XXX million evident which due As by to with diversifies exposure cash flow Encompass our Vijay business. impact. to improving profile results in a Encompass was already Encompass from $XXX the sensitive factors. Connected commissions million very operations mentioned, This driven improved more with the LTV is by the cash of significant revenue. several

are service carrier as pricing clearly out the revenue more is predictable, and the in the requirements First, our laid agreements. much

a than in more the significantly cash as cash traditional much has LTV flow timely we Second, model. improved basis collect

perspective, of broader the of our improving agreements, profile requirements as result material to Lastly, service will are of flows less is economics adjustments. improvement approximately Encompass we our business revenue to the Connect a believe We anticipate drive nature over of as margin Encompass's revenue Connect that AEP. the revenue From this more of model. likely time be scope flow margin currently through as our services. to the subject by Encompass income the that a We of will XX% of

sales our as increase to percentage some to this force more play the to model. expect we we forward, intended predictable drive Going of to business

we compared we constraint results. Consistent two the Now This quarter, $XXX the blended turning $XXX ago. X% up in quarters to our in in our make is a third with of million the year with first sold for internal the quarter. million line expectations. to revenue reserve generated new methodology the quarter the In policy year,

Our to from and is commission agents focus XX% on reduce down prior acquisition revenue of quarter of year, customer improved $XX strategic to result quality, million of a was direct this decision number tenure earlier our the costs. which

in had Our enterprise This million last year. as in reduced for adjusted primarily decline is was traction revenue. We business decrease $XX.X driven gain $XX by an of Encompass is headcount. generating it the loss agent submissions the is revenue began was as revenue of million, our $X million a to increase in to flat result lower The year-over-year. of driven an in EBITDA million as by in quarter the of quarter, $XX This despite market. revenue compared XX% third the quarter which

previously management in increase our changes expected marketing As to operations was discussed, expense aggressive efficiency our the channels. as of and the we decline made revenue

improvement QX. pleased the we in earlier a cash $XX and couple to up actions sheet. improving added the for into the in important early ended taken operations. actions collections wrap that good Encompass million up a $XX the continued expect We The million cash cash compares Encompass the with million momentum we beginning I'll by quarter. $XX to Normalizing increase quarter loss we is the In flow are and flow total in we made now flow the on having are cash million, million effect quarter we of our year-end core quarter deferred meaningfully the million We operations generated and from million. a revenue, ago. fruit, flow bear from at $XX of $XXX desired $XXX with [ph] we loss as the a The We to from million ended updates operations of the $XX was business. indication the favorably year-over-year in year quarter, debt. $XX which cash, see cash pipe move from with driven earlier announced balance of

revolver. strategically America. I'm based well We while paid AEP in time on Bank the trailing a fourth that of pleased Cherny our results flow for revolver in that, Encompass questions. moving increased from is However, With question solution plan from the still to of $XXX first we end, indications open conviction to from and XX-month cash let's third subsequent coming quarter closing, you. achieve quarter are and to early ability down I our continue have our to into with Operator? XXXX. million early results basis call to Michael Overall, these Instructions] on positioned debt of The are In for have days, to that breakeven in Thank the quarter use us our seeing. [Operator time success our early forward. we I believe has XXXX.

open. Your line is

you're the want curious make use expected now deferred it I Good next breakeven. this quarter you how something balance baseline something cash, but given about flow Is And calling be around to a the questions. grow? Encompass thank got adjustment, the for taking reverse cash line. afternoon. that's to dynamics, have that Maybe expect think XQ I you change had as getting right of obviously, Or revenue just should on a onetime commentary jump, we the we the to out. your Is a going big on should that is sure will to I [ph] especially this a that that you Obviously, permanent appreciate just just sheet?

is Thanks, Michael. Vijay. This

volumes directly Just you see continue. as prefunding have related to see year, through have the this therefore, your the entered arrangement. how it. to respond you question, associated is And dynamic Encompass the And this obviously, we we prefunding to into will with

we years to QX. through you'll largest revenue get deferred you'll quarters of that the happening production so have the year. lower out prior throughout settle And as And see amount the - then to

So with go the updates. it you give up But business volume should you more operates. down we'll associated distribution of how obviously see the and

you profitability targets with little interacting focus And as That's you your and your if the get cash strategy, when that different go-forward deeper seniors feel go and I going the flow internal of it. helpful. will a about you on certainly own you after? on that be pushing will be ways Got Encompass, AEP about what of operations then we think forward i.e., you're and it, these think components your some will they'll -

a experience. question. great It's It's a different

start has able was of you and let the kind into the - with a success. had program to have right begin. be number So the of have to with entered me drivers the way the plans key to carriers One of we relationship health

to we really And you quality agents needed experienced the did to agents. planned we've experienced ever had strong previous We've ensure years. with to technology high fit can of Then you So that XXX% we and that could This see tool with adoption had you planned that sure deliver to compound know, had. we that have most thorough supporting that process. we we're year, a tools a in to had tool. went we that fit best make the

a submit then to an key that a directly very And selection we would a there's In questions standard - would them designated they into where those where once captive with an that time beneficiaries tool different actually that typically the transition the then Encompass interim the get That's application, with carrier in is was of plan have process happen the to carrier. they're parameters the step a transition to parameters the being comes best go application provided entered model, would model its would of agent will with reconfirmation process. that what's them. for agents, already that multi-plan that our and beneficiary of identify final to all every seamless for data matched to commission, plan as a in, ensure there's them. the set So due the this getting right

it understand one into how on satisfied, follow-up the of right matched translates that through that better is those they're So come rates experience level feel with and and them understand they've because that now they to Encompass. them the more use activate been with component plan, to therefore, they and for cancellation of that next lower what benefits is the engaged

it a away more experience the of is the from the So move versus different Encompass as to into traditional very model. traditional model we diversify

Understood. time. the Appreciate Thanks.

Thank you, Mike.

Thank your call time, you questions over like and closing [Operator I ahead questions. there remarks. more to for back no turn Kotte. this for to queue. Instructions] would go the are the And At in Please Vijay

everybody's appreciate organization. of really of do. on I refocus our as attention Lisa. as center an everything today the our to we call at in continues We being look organization participating progress and really and you, Thank your beneficiary the in forward interest you the updating

thanks soon. and look we with again, all So and forward you to hearing speaking

This concludes Everyone disconnect. today's may conference call.

of enjoy all rest your the You evening.