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.

Category: Technology

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Published On: 2024-11-07 @ 12:00:00 (10 hours ago)

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