GoHealth Reports Third Quarter 2024 Results
Quick Summary:
The following tables set forth the components of our results of operations for the periods indicated (unaudited): Three months ended Sep.30, 2024 2023 (in thousands, except percentages and per share amounts) Dollars % of Net Revenues Dollars % of Net Revenues $ Change % ChangeNet revenues $118,292 100.0% $132,037 100.0% $(13,745) (10.4) %Operating expenses: Revenue share 19,683 16.6% 35,992 27.3% (16,309) (45.3) %Marketing and advertising 45,270 38.3% 39,416 29.9% 5,854 14.9%Consumer care and enrollment 45,556 38.5% 46,472 35.2% (916) (2.0) %Technology 9,801 8.3% 11,652 8.8% (1,851) (15.9) %General and administrative 17,140 14.5% 12,967 9.8% 4,173 32.2%Amortization of intangible assets 23,514 19.9% 23,514 17.8% — —%Total operating expenses 160,964 136.1% 170,013 128.8% (9,049) (5.3) %Income (loss) from operations (42,672) (36.1) % (37,976) (28.8) % (4,696) 12.4%Interest expense 19,086 16.1% 17,565 13.3% 1,521 8.7%Gain on bargain purchase (77,363) (65.4) % — —% (77,363) NMOther (income) expense, net 250 0.2% 771 0.6% (521) (67.6) %Income (loss) before income taxes 15,355 13.0% (56,312) (42.6) % 71,667 (127.3) %Income tax (benefit) expense (11) —% (108) (0.1) % 97 (89.8) %Net income (loss) $15,366 13.0% $(56,204) (42.6) % $71,570 (127.3) %Net income (loss) attributable to non-controlling interests 8,591 7.3% (32,294) (24.5) % 40,885 (126.6) %Net income (loss) attributable to GoHealth, Inc. $6,775 5.7% $(23,910) (18.1) % $30,685 (128.3) %Net Income (Loss) Margin 13.0% (42.6) % Net income (loss) per share: Net income (loss) per share of Class A common stock — basic $0.58 $(2.61) Net income (loss) per share of Class A common stock — diluted $0.46 $(2.61) Weighted-average shares of Class A common stock outstanding — basic 10,077 9,489 Weighted-average shares of Class A common stock outstanding — diluted 14,580 9,489 Non-GAAP financial measures: EBITDA $60,860 $(12,482) Adjusted EBITDA $(12,106) $(11,475) Adjusted EBITDA Margin (10.2) % (8.7) % NM = Not meaningful Nine months ended Sep.30, 2024 2023 (in thousands, except percentages and per share amounts) Dollars % of Net Revenues Dollars % of Net Revenues $ Change % ChangeNet revenues $409,762 100.0% $457,974 100.0% $(48,212) (10.5) %Operating expenses: Revenue share 78,376 19.1% 117,876 25.7% (39,500) (33.5) %Marketing and advertising 136,049 33.2% 124,428 27.2% 11,621 9.3%Consumer care and enrollment 132,731 32.4% 134,035 29.3% (1,304) (1.0) %Technology 28,921 7.1% 31,706 6.9% (2,785) (8.8) %General and administrative 50,457 12.3% 73,440 16.0% (22,983) (31.3) %Amortization of intangible assets 70,542 17.2% 70,543 15.4% (1) —%Operating lease impairment charges — —% 2,687 0.6% (2,687) (100.0) %Total operating expenses 497,076 121.3% 554,715 121.1% (57,639) (10.4) %Income (loss) from operations (87,314) (21.3) % (96,741) (21.1) % 9,427 (9.7) %Interest expense 55,133 13.5% 51,721 11.3% 3,412 6.6%Gain on bargain purchase (77,363) (18.9) % — —% (77,363) NMOther (income) expense, net 332 0.1% 739 0.2% (407) (55.1) %Income (loss) before income taxes (65,416) (16.0) % (149,201) (32.6) % 83,785 (56.2) %Income tax (benefit) expense (122) —% (225) —% 103 (45.8) %Net income (loss) $(65,294) (15.9) % $(148,976) (32.5) % $83,682 (56.2) %Net income (loss) attributable to non-controlling interests (36,857) (9.0) % (86,945) (19.0) % 50,088 (57.6) %Net income (loss) attributable to GoHealth, Inc. $(28,437) (6.9) % $(62,031) (13.5) % $ 33,594 (54.2) %Net Income (Loss) Margin (15.9) % (32.5) % Net income (loss) per share: Net income (loss) per share of Class A common stock — basic $(3.14) $(7.04) Net income (loss) per share of Class A common stock — diluted $(3.14) $(7.04) Weighted-average shares of Class A common stock outstanding — basic 9,922 9,194 Weighted-average shares of Class A common stock outstanding — diluted 9,922 9,194 Non-GAAP financial measures: EBITDA $68,679 $(18,580) Adjusted EBITDA $2,479 $18,091 Adjusted EBITDA Margin 0.6% 4.0% NM = Not meaningful The following tables set forth the reconciliations of GAAP net income (loss) to EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin for the periods indicated (unaudited): Three months ended Sep.30, Nine months ended Sep.30,(in thousands) 2024 2023 2024 2023 Net revenues $118,292 $132,037 $409,762 $457,974 Net income (loss) 15,366 (56,204) (65,294) (148,976)Interest expense 19,086 17,565 55,133 51,721 Income tax expense (benefit) (11) (108) (122) (225)Depreciation and amortization expense 26,419 26,265 78,962 78,900 EBITDA 60,860 (12,482) 68,679 (18,580)Gain on bargain purchase(1) (77,363) — (77,363) — Share-based compensation expense (benefit)(2) 2,859 (545) 6,534 16,159 Professional services(3) 818 1,213 818 1,213 Legal fees(4) 654 339 1,331 14,692 Severance costs(5) 66 — 2,480 1,920 Operating lease impairment charges(6) — — — 2,687 Adjusted EBITDA $(12,106) $(11,475) $2,479 $18,091 Net Income (Loss) Margin 13.0% (42.6) % (15.9) % (32.5) %Adjusted EBITDA Margin (10.2) % (8.7) % 0.6% 4.0% (1)Represents the excess of the acquisition-date fair value of the net assets acquired over the acquisition-date fair value of the consideration transferred related to the acquisition of e-TeleQuote.(2)Represents non-cash share-based compensation expense (benefit) relating to equity awards as well as share-based compensation expense (benefit) relating to liability classified awards that will be settled in cash.(3)Represents costs primarily associated with non-recurring consulting fees and other professional services.(4)Represents legal fees, settlement accruals and other expenses related to certain acquisitions, litigation, Credit Agreement amendments and other non-routine legal or regulatory matters.(5)Represents severance costs and other fees associated with a reduction in workforce unrelated to restructuring activities.(6)Represents operating lease impairment charges, reducing the carrying value of the associated right-of-use ("ROU”) assets and leasehold improvements to the estimated fair values. The table below depicts the disaggregation of revenue and is consistent with how the Company evaluates its financial performance (unaudited): Three months ended Sep.30, Nine months ended Sep.30,(in thousands) 2024 2023 2024 2023Medicare Revenue Agency Revenue Commission Revenue(1) $ 77,868 $ 76,579 $ 228,154 $ 261,513Partner Marketing and Other Revenue 14,408 21,300 47,926 71,619Total Agency Revenue 92,276 97,879 276,080 333,132Non-Agency Revenue 24,377 33,510 130,723 106,586Total Medicare Revenue 116,653 131,389 406,803 439,718Other Revenue Non-Encompass BPO Services Revenue — — — 9,322Other Revenue 1,639 648 2,959 8,934Total Other Revenue 1,639 648 2,959 18,256Total Net Revenues $ 118,292 $ 132,037 $ 409,762 $ 457,974 (1)Commission revenue excludes commissions generated through the Company’s Non-Encompass BPO Services as well as from the sale of individual and family plan insurance products. The following table summarizes share-based compensation expense (benefit) by operating function for the periods indicated (unaudited): Three months ended Sep.30, Nine months ended Sep.30,(in thousands) 2024 2023 2024 2023Marketing and advertising $ 75 $ 149 $ 203 $ 378Customer care and enrollment 189 519 841 1,847Technology 293 676 780 2,365General and administrative(1) 2,302 (1,889) 4,710 11,569Total share-based compensation expense (benefit) $ 2,859 $ (545) $ 6,534 $ 16,159 (1)For the three and nine months ended September 30, 2024 and 2023, share-based compensation expense (benefit) includes expense (benefit) related to the stock appreciation rights ("SARs”), which are liability classified awards. The following table sets forth our balance sheets for the periods indicated (unaudited): (in thousands, except per share amounts) Sep.30, 2024 Dec.31, 2023Assets Current assets: Cash and cash equivalents $ 35,527 $ 90,809 Accounts receivable, net of allowance for doubtful accounts of $2 in 2024 and $27 in 2023 6,862 250 Commissions receivable - current 270,383 336,215 Prepaid expense and other current assets 21,271 49,166 Total current assets 334,043 476,440 Commissions receivable - non-current 627,341 575,482 Operating lease ROU asset 20,449 21,995 Property, equipment, and capitalized software, net 30,418 26,843 Intangible assets, net 326,011 396,554 Other long-term assets 2,891 2,256 Total assets $ 1,341,153 $ 1,499,570 Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity Current liabilities: Accounts payable $ 15,285 $ 17,705 Accrued liabilities 49,475 86,254 Commissions payable - current 80,899 118,732 Short-term operating lease liability 5,541 5,797 Deferred revenue 42,696 52,403 Current portion of long-term debt 65,000 75,000 Other current liabilities 23,075 14,122 Total current liabilities 281,971 370,013 Non-current liabilities: Commissions payable - non-current 177,023 203,255 Long-term operating lease liability 36,187 39,547 Deferred tax liabilities 24,995 — Long-term debt, net of current portion 416,332 422,705 Other non-current liabilities 7,363 9,095 Total non-current liabilities 661,900 674,602 Commitments and Contingencies Series A redeemable convertible preferred stock — $0.0001 par value; 50 shares authorized; 50 shares issued and outstanding as of both September 30, 2024 and December 31, 2023.
Liquidation preference of $53.7 million and $50.9 million as of September 30, 2024 and December 31, 2023, respectively. 52,023 49,302 Stockholders’ equity: Class A common stock – $0.0001 par value; 1,100,000 shares authorized; 10,440 and 9,823 shares issued; 10,121 and 9,651 shares outstanding as of September 30, 2024 and December 31, 2023, respectively. 1 1 Class B common stock – $0.0001 par value; 615,980 and 616,018 shares authorized; 12,775 and 12,814 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively. 1 1 Preferred stock – $0.0001 par value; 20,000 shares authorized (including 50 shares of Series A redeemable convertible preferred stock authorized and 200 shares of Series A-1 convertible preferred stock authorized); 50 shares issued and outstanding as of both September 30, 2024 and December 31, 2023. — — Series A-1 convertible preferred stock— $0.0001 par value; 200 shares authorized; no shares issued and outstanding as of both September 30, 2024 and December 31, 2023. — — Treasury stock – at cost; 319 and 173 shares of Class A common stock as of September 30, 2024 and December 31, 2023, respectively. (4,124) (2,640)Additional paid-in capital 665,020 654,059 Accumulated other comprehensive income (loss) (141) (127)Accumulated deficit (448,717) (420,280)Total stockholders’ equity attributable to GoHealth, Inc. 212,040 231,014 Non-controlling interests 133,219 174,639 Total stockholders’ equity 345,259 405,653 Total liabilities, redeemable convertible preferred stock and stockholders’ equity $ 1,341,153 $ 1,499,570 The following table sets forth the net cash provided by (used in) operating activities for the periods presented (unaudited): Net cash provided by (used in) operating activities Nine months ended Sep.30, Trailing Twelve Months ended Sep.30, 2024 2023 2024 2023 $(36,211) $37,840 $35,091 $(3,159) In addition to traditional financial metrics, we rely upon certain business and operating metrics to evaluate our business performance and facilitate our operations.
Completed the strategic acquisition of e-TeleQuote Insurance, Inc.("e-TeleQuote”), adding approximately $90.5 million in contract assets and $22.5 million in cash (inclusive of the Company’s initial $5.0 million investment), and recording a $77.4 million gain on bargain purchase, reinforcing GoHealth’s aspirations to expand its market leadership and operational capacity.Achieved an 11.0% improvement in Direct Operating Cost per Submission(2) in the third quarter of 2024 compared to the prior year period, through advancements in artificial intelligence ("AI”), automation, and marketing efficiencies, along with targeted operational improvements.
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Author / Journalist: GoHealth, Inc.
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Published On: 2024-11-07 @ 12:00:00 (2 weeks ago)
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