GoHealth Reports Third Quarter 2020 Results and Increases 2020 Outlook As a Result of Strong Medicare Enrollments and Operating Leverage
GoHealth reported strong financial results for Q3 2020, with net revenues of $163.4 million, a 52% increase year-over-year. YTD revenues reached $431.4 million, up 72%. However, the company faced a net loss of $206.5 million due to IPO-related expenses. Adjusted EBITDA surged by 142% to $39.3 million in Q3 2020. The company revised its FY 2020 outlook to projected revenues of $850-$890 million and adjusted EBITDA of $270-$290 million. The growth is attributed to a robust start to the Annual Enrollment Period, with a significant increase in submitted policies.
- Q3 2020 net revenues rose to $163.4 million, a 52% increase.
- YTD 2020 net revenues reached $431.4 million, up 72% year-over-year.
- Adjusted EBITDA for Q3 2020 increased 142% to $39.3 million.
- The company expects full-year 2020 revenues of $850-$890 million, a 58%-65% increase.
- Total submitted Medicare policies grew 103% to 355,544 in the first nine months.
- Q3 2020 net loss totaled $206.5 million, largely due to IPO-related accelerated vesting costs.
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 increased52% compared to the prior year period, and year-to-date 2020 net revenues of$431.4 million increased72% 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 increased142% compared to the prior year period, and year-to-date 2020 adjusted EBITDA of$101.1 million increased149% 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, with83% submission growth in October and a4% improvement in agent conversion
Clint Jones, co-founder and CEO said, "GoHealth's third quarter adjusted EBITDA growth of
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
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 from16.2% to23.4% - 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 of58% -65% - Full year 2020 adjusted EBITDA of
$270 -$290 million , representing year-over-year growth of58% -70%
Jones concluded, "We are increasing our expectations for fiscal 2020 given our robust start to the Annual Enrollment Period, with October submissions up
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
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 | Period from | Period from |
| ||||||||
(in thousands, except percentages, | Dollars | % of Net | Dollars | Dollars | Dollars | % of Net | $ Change | % Change | |||
Net revenues: | |||||||||||
Commission | $ 101,390 | $ 13,723 | $ 64,542 | $ 78,265 | $ 23,125 | ||||||
Enterprise | 61,970 | 6,067 | 22,868 | 28,935 | 33,035 | ||||||
Net revenues | 163,360 | 19,790 | 87,410 | 107,200 | 56,160 | ||||||
Operating expenses: | |||||||||||
Cost of revenue | 25,827 | 4,737 | 25,055 | 29,792 | (3,965) | - | |||||
Marketing and advertising | 62,848 | 7,140 | 21,332 | 28,472 | 34,376 | ||||||
Customer care and enrollment | 52,896 | 4,625 | 19,396 | 24,021 | 28,875 | ||||||
Technology | 39,520 | 518 | 31,856 | 32,374 | 7,146 | ||||||
General and administrative | 156,551 | 2,286 | 65,123 | 67,409 | 89,142 | ||||||
Amortization of intangible assets | 23,514 | 4,703 | - | 4,703 | 18,811 | ||||||
Acquisition related transaction costs | - | - | 6,245 | 1,968 | 8,213 | (8,213) | - | ||||
Total operating expenses | 361,156 | 30,254 | 164,730 | 194,984 | 166,172 | ||||||
(Loss) income from operations | (197,796) | - | (10,464) | (77,320) | (87,784) | - | (110,012) | ||||
Interest expense | 8,636 | 1,289 | 31 | 1,320 | 7,316 | ||||||
Other (income) expense | 2 | (10) | 67 | 57 | (55) | - | |||||
(Loss) income before income taxes | (206,434) | - | (11,743) | (77,418) | (89,161) | - | (117,273) | ||||
Income tax expense (benefit) | 62 | (37) | (78) | (115) | - | 177 | - | ||||
Net (loss) income | $ (206,496) | - | $ (11,706) | $ (77,340) | $ (89,046) | - | |||||
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 | |||||||||||
______________ |
* 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 | ||||
Three Months | Period from | Period from |
| |||
(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 | ||||||
______________ | |
(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 | Period from | Period from | Nine | Period from | Period from | ||||
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 | Period from | Period from |
| ||||||||
(in thousands, except percentages, | Dollars | % of Net | Dollars | Dollars | Dollars | % of Net | $ Change | % Change | |||
Net revenues: | |||||||||||
Commission | $ 310,506 | $ 13,723 | $ 189,557 | $ 120,949 | |||||||
Enterprise | 120,921 | 6,067 | 55,176 | 61,243 | 59,678 | ||||||
Net revenues | 431,427 | 19,790 | 231,010 | 250,800 | 180,627 | ||||||
Operating expenses: | |||||||||||
Cost of revenue | 104,520 | 4,737 | 79,169 | 83,906 | 20,614 | ||||||
Marketing and advertising | 110,556 | 7,140 | 37,769 | 44,909 | 65,647 | ||||||
Customer care and enrollment | 105,267 | 4,625 | 49,149 | 53,774 | 51,493 | ||||||
Technology | 49,818 | 518 | 40,312 | 40,830 | 8,988 | ||||||
General and administrative | 177,400 | 2,286 | 79,219 | 81,505 | 95,895 | ||||||
Change in fair value of contingent | 19,700 | - | - | - | - | 19,700 | NM | ||||
Amortization of intangible assets | 70,543 | 4,703 | - | 4,703 | 65,840 | ||||||
Acquisition related transaction costs | - | - | 6,245 | 2,267 | 8,512 | (8,512) | - | ||||
Total operating expenses | 637,804 | 30,254 | 287,885 | 318,139 | 319,665 | ||||||
(Loss) income from operations | (206,377) | - | (10,464) | (56,875) | (67,339) | - | (139,038) | ||||
Interest expense | 24,378 | 1,289 | 140 | 1,429 | 22,949 | ||||||
Other (income) expense | (494) | - | (10) | 114 | 104 | (598) | - | ||||
(Loss) income before income taxes | (230,261) | - | (11,743) | (57,129) | (68,872) | - | (161,389) | ||||
Income tax expense (benefit) | 38 | (37) | (66) | (103) | 141 | - | |||||
Net (loss) income | $ (230,299) | - | $ (11,706) | $ (57,063) | $ (68,769) | - | |||||
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 | |||||||||||
______________ |
* 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 | ||||
Nine Months | Period from | Period from |
| |||
(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 | ||||||
______________ | |
(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, | December 31, | ||||||
(Unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 294,598 | $ | 12,276 | |||
Accounts receivable, net of allowance for doubtful accounts of | 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 – | 8 | — | |||||
Class B common stock – | 23 | — | |||||
Preferred stock – | — | — | |||||
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 | Period from | Period from | |||||||
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 | Period from | Period from |
| ||||||||
(in thousands, except percentages) | Dollars | % of Net | Dollars | Dollars | Dollars | % of Net | $ Change | % Change | |||
Net revenues: | |||||||||||
Medicare - Internal | $ 133,723 | $ 14,208 | $ 48,872 | $ 63,080 | $ 70,643 | ||||||
Medicare - External | 20,252 | 3,865 | 16,577 | 20,442 | (190) | - | |||||
IFP and Other - Internal | 6,147 | 764 | 11,129 | 11,893 | (5,746) | - | |||||
IFP and Other - External | 3,238 | 953 | 10,832 | 11,785 | (8,547) | - | |||||
Total revenues | 163,360 | 19,790 | 87,410 | 107,200 | 56,160 | ||||||
Segment profit: | |||||||||||
Medicare - Internal | 49,464 | 2,500 | 20,218 | 22,718 | 26,746 | ||||||
Medicare - External | 720 | 734 | (4,178) | (3,444) | - | 4,164 | - | ||||
IFP and Other - Internal | (245) | - | (2,446) | 1,583 | (863) | - | 618 | - | |||
IFP and Other - External | 147 | 495 | 378 | 873 | (726) | - | |||||
Total segment profit | 50,086 | 1,283 | 18,001 | 19,284 | 30,802 | ||||||
Corporate expense | 224,368 | 799 | 93,353 | 94,152 | 130,216 | ||||||
Amortization of intangible assets | 23,514 | 4,703 | - | 4,703 | 18,811 | ||||||
Transaction costs | - | - | 6,245 | 1,968 | 8,213 | (8,213) | - | ||||
Interest expense | 8,636 | 1,289 | 31 | 1,320 | 7,316 | ||||||
Other (income) expense | 2 | (10) | 67 | 57 | (55) | - | |||||
Loss before income taxes | $ (206,434) | - | $ (11,743) | $ (77,418) | - | ||||||
______________ |
* NM = Not meaningful |
The following table sets forth operating segment results for the periods indicated:
Successor | Predecessor | Non-GAAP Combined | |||||||||
Nine Months Ended | Period from | Period from |
| ||||||||
(in thousands, except percentages) | Dollars | % of Net | Dollars | Dollars | Dollars | % of Net | $ Change | % Change | |||
Net revenues: | |||||||||||
Medicare - Internal | $ 316,211 | $ 14,208 | $ 199,807 | ||||||||
Medicare - External | 77,305 | 3,865 | 55,981 | 59,846 | 17,459 | ||||||
IFP and Other - Internal | 21,798 | 764 | 37,909 | 38,673 | (16,875) | - | |||||
IFP and Other - External | 16,113 | 953 | 34,924 | 35,877 | (19,764) | - | |||||
Total revenues | 431,427 | 19,790 | 231,010 | 250,800 | 180,627 | ||||||
Segment profit: | |||||||||||
Medicare - Internal | 123,946 | 2,500 | 40,024 | 42,524 | 81,422 | ||||||
Medicare - External | 892 | 734 | 4,893 | 5,627 | (4,735) | - | |||||
IFP and Other - Internal | 181 | (2,446) | 2,195 | (251) | - | 432 | - | ||||
IFP and Other - External | 789 | 495 | 1,748 | 2,243 | (1,454) | - | |||||
Total segment profit | 125,808 | 1,283 | 48,860 | 50,143 | 75,665 | ||||||
Corporate expense | 241,942 | 799 | 103,469 | 104,268 | 137,674 | ||||||
Change in fair value of contingent | |||||||||||
consideration liability | 19,700 | - | - | - | - | 19,700 | NM | ||||
Amortization of intangible assets | 70,543 | 4,703 | - | 4,703 | 65,840 | ||||||
Transaction costs | - | - | 6,245 | 2,267 | 8,512 | (8,512) | - | ||||
Interest expense | 24,378 | 1,289 | 140 | 1,429 | 22,949 | ||||||
Other (income) expense | (494) | - | (10) | 114 | 104 | (598) | - | ||||
Loss before income taxes | - | $ (11,743) | $ (57,129) | $ (68,873) | - | ||||||
______________ |
* 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 | Period from | Period from |
| Nine | Period from | Period from |
| |||||
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 | Period from | Period from |
| Nine | Period from | Period from |
| |||||
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 | Period from | Period from |
| Nine | Period from | Period from |
| |||||
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 | Period from | Period from |
| Nine | Period from | Period from |
| |||||
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 | ||||
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SOURCE GoHealth, Inc.
FAQ
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