GoHealth Reports Third Quarter 2020 Results and Increases 2020 Outlook As a Result of Strong Medicare Enrollments and Operating Leverage
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 increased 52% compared
to the prior year period, and year-to-date 2020 net revenues of $431.4
million increased 72% 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
IPO(1), 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 IPO(1)
-- Third quarter 2020 adjusted EBITDA(2) of $39.3 million increased 142%
compared to the prior year period, and year-to-date 2020 adjusted EBITDA
of $101.1 million increased 149% 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 EBITDA(2) of $270-$290
million given the robust start to the Annual Enrollment Period, with 83%
submission growth in October and a 4% improvement in agent conversion
Clint Jones, co-founder and CEO said, "GoHealth's third quarter adjusted EBITDA growth of 142% was powered by 52% revenue growth and strong operating leverage as we continue to efficiently scale the business. These excellent results marked a continuation of year-to-date trends as consumers increasingly turn to GoHealth's leading DTC platform to find the best Medicare policies to meet their unique needs."
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 $33 million as well as a 5% increase in LTVs, fueled by improving persistency trends."
Year-To-Date 2020 Highlights
-- Total Medicare Submitted Policies(3) 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 from 16.2% to 23.4%
-- LTV/CAC(4) 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 of 58% - 65%
-- Full year 2020 adjusted EBITDA of $270 - $290 million, representing
year-over-year growth of 58% - 70%
Jones concluded, "We are increasing our expectations for fiscal 2020 given our robust start to the Annual Enrollment Period, with October submissions up 83% over the prior October and well ahead of the 53% implied midpoint of revenue growth for the fourth quarter. The Medicare market is large and growing quickly, and we are just beginning to realize our long-term growth opportunity as we create value for our partners and deliver great results for our shareholders."
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 100% interest in Norvax, LLC. We refer to this transaction as the "Centerbridge Acquisition." As a result of the Centerbridge Acquisition, the Company's financial results for the three and nine months ended September 30, 2019 are presented for two periods, the Predecessor and Successor periods, which relate to the period preceding the acquisition on September 13, 2019 and the period succeeding the acquisition, respectively. The Company's financial results for the periods from July 1, 2019 through September 12, 2019 and from January 1, 2019 through September 12, 2019 are referred to as those of the "Predecessor" period. The Company's financial results for the period from September 13, 2019 through September 30, 2019, the three months ended September 30, 2020 and the nine months ended September 30, 2020 are referred to as those of the "Successor" period. The Company's results of operations as reported in our Consolidated Financial Statements for these periods are prepared in accordance with GAAP. Although GAAP requires that we report on the Company's results for the period from July 1, 2019 through September 12, 2019, from January 1, 2019 through September 12, 2019 and the period from September 13, 2019 through September 30, 2019 separately, management views the Company's operating results for the three and nine months ended September 30, 2019 by combining the results of the applicable Predecessor and Successor periods because such presentation provides the most meaningful comparison to its results for the three and nine months ended September 30, 2020.
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
Sep 30, 2020 Sep 13, 2019 Jul 1, 2019 Three Months Ended
through through Sep 30, 2019
Sep 30, 2019 Sep 12, 2019
(in thousands, except percentages,
Dollars
% of Net
Dollars
Dollars
Dollars
% of Net
$ Change
% Change
share and per share amounts) Revenues Revenues
---
Net revenues:
Commission $101,390 62.1% $13,723 $64,542 $78,265 73.0% $23,125 29.5%
Enterprise 61,970 37.9% 6,067 22,868 28,935 27.0% 33,035 114.2%
Net revenues 163,360 100.0% 19,790 87,410 107,200 100.0% 56,160 52.4%
Operating expenses:
Cost of revenue 25,827 15.8% 4,737 25,055 29,792 27.8% (3,965) -13.3%
Marketing and advertising 62,848 38.5% 7,140 21,332 28,472 26.6% 34,376 120.7%
Customer care and enrollment 52,896 32.4% 4,625 19,396 24,021 22.4% 28,875 120.2%
Technology 39,520 24.2% 518 31,856 32,374 30.2% 7,146 22.1%
General and administrative 156,551 95.8% 2,286 65,123 67,409 62.9% 89,142 132.2%
Amortization of intangible assets 23,514 14.4% 4,703 4,703 4.4% 18,811 400.0%
Acquisition related transaction costs 6,245 1,968 8,213 7.7% (8,213) -100.0%
Total operating expenses 361,156 221.1% 30,254 164,730 194,984 181.9% 166,172 85.2%
(Loss) income from operations (197,796) -121.1% (10,464) (77,320) (87,784) -81.9% (110,012) 125.3%
Interest expense 8,636 5.3% 1,289 31 1,320 1.2% 7,316 554.2%
Other (income) expense 2 0.0% (10) 67 57 0.1% (55) -96.5%
(Loss) income before income taxes (206,434) -126.4% (11,743) (77,418) (89,161) -83.2% (117,273) 131.5%
Income tax expense (benefit) 62 0.0% (37) (78) (115) -0.1% 177 -153.9%
Net (loss) income $(206,496) -126.4% $(11,706) $(77,340) $(89,046) -83.1% $(117,450) 131.9%
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 24.0% 3.4% 17.8% 15.2%
______________
* 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
Combined
Three Months Period from Period from
Ended Sep 13, 2019 Jul 1, 2019 Three Months
Sep 30, 2020 through through Ended
Sep 30, 2019 Sep 12, 2019 Sep 30, 2019
(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 24.0% 3.4% 17.8% 15.2%
______________
(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
Ended Sep 13, 2019 July 1, 2019 Months Ended Sep 13, 2019 Jan 1, 2019
Sep 30, 2020 through through Sep 30, 2020 through through
Sep 30, 2019 Sep 12, 2019 Sep 30, 2019 Sep 12, 2019
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
Sep 30, 2020 Sep 13, 2019 Jan 1, 2019 Nine Months Ended
through through Sep 30, 2019
Sep 30, 2019 Sep 12, 2019
(in thousands, except percentages,
Dollars % of Net
Dollars
Dollars
Dollars % of Net
$ Change % Change
share and per share amounts) Revenues Revenues
---
Net revenues:
Commission $310,506 72.0% $13,723 $175,834 $189,557 75.6% $120,949 63.8%
Enterprise 120,921 28.0% 6,067 55,176 61,243 24.4% 59,678 97.4%
Net revenues 431,427 100.0% 19,790 231,010 250,800 100.0% 180,627 72.0%
Operating expenses:
Cost of revenue 104,520 24.2% 4,737 79,169 83,906 33.5% 20,614 24.6%
Marketing and advertising 110,556 25.6% 7,140 37,769 44,909 17.9% 65,647 146.2%
Customer care and enrollment 105,267 24.4% 4,625 49,149 53,774 21.4% 51,493 95.8%
Technology 49,818 11.5% 518 40,312 40,830 16.3% 8,988 22.0%
General and administrative 177,400 41.1% 2,286 79,219 81,505 32.5% 95,895 117.7%
Change in fair value of contingent 19,700 4.6% 19,700
NM
consideration liability
Amortization of intangible assets 70,543 16.4% 4,703 4,703 1.9% 65,840 1400.0%
Acquisition related transaction costs 6,245 2,267 8,512 3.4% (8,512) -100.0%
Total operating expenses 637,804 147.8% 30,254 287,885 318,139 126.8% 319,665 100.5%
(Loss) income from operations (206,377) -47.8% (10,464) (56,875) (67,339) -26.8% (139,038) 206.5%
Interest expense 24,378 5.7% 1,289 140 1,429 0.6% 22,949 1605.9%
Other (income) expense (494) -0.1% (10) 114 104 0.0% (598) -575.0%
(Loss) income before income taxes (230,261) -53.4% (11,743) (57,129) (68,872) -27.5% (161,389) 234.3%
Income tax expense (benefit) 38 0.0% (37) (66) (103) 0.0% 141 -136.9%
Net (loss) income $(230,299) -53.4% $(11,706) $(57,063) $(68,769) -27.4% $(161,530) 234.9%
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 23.4% 3.4% 17.3% 16.2%
______________
* 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
Combined
Nine Months Period from Period from
Ended Sep 13, 2019 Jan 1, 2019 Nine Months
Sep 30, 2020 through through Ended
Sep 30, 2019 Sep 12, 2019 Sep 30, 2019
(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 23.4% 3.4% 17.3% 16.2%
______________
(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,
2020 2019
---
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $
294,598 $
12,276
Accounts receivable, net of allowance for
doubtful accounts of $522 in 2020 and
$904 in 2019 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 - $0.0001 par value;
1,100,000,000 shares authorized;
84,182,961 shares issued and outstanding
at September 30, 2020 8
Class B common stock - $0.0001 par value;
690,000,000 shares authorized;
230,722,681 shares issued and outstanding
at September 30, 2020 23
Preferred stock - $0.0001 par value;
20,000,000 shares authorized; no shares
issued and outstanding at September 30,
2020 -
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
Ended September September 13, January 1, 2019
30, 2020 2019 through through
September 30, September 12,
2019 2019
---
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
Sep 30, 2020 Sep 13, 2019 Jul 1, 2019 Three Months Ended
through through Sep 30, 2019
Sep 30, 2019 Sep 12, 2019
(in thousands, except percentages)
Dollars % of Net
Dollars
Dollars Dollars % of Net
$ Change % Change
Revenues Revenues
---
Net revenues:
Medicare - Internal $133,723 81.9% $14,208 $48,872 $63,080 58.8% $70,643 112.0%
Medicare - External 20,252 12.4% 3,865 16,577 20,442 19.1% (190) -0.9%
IFP and Other - Internal 6,147 3.8% 764 11,129 11,893 11.1% (5,746) -48.3%
IFP and Other - External 3,238 2.0% 953 10,832 11,785 11.0% (8,547) -72.5%
Total revenues 163,360 100.0% 19,790 87,410 107,200 100.0% 56,160 52.4%
Segment profit:
Medicare - Internal 49,464 30.3% 2,500 20,218 22,718 21.2% 26,746 117.7%
Medicare - External 720 0.4% 734 (4,178) (3,444) -3.2% 4,164 -120.9%
IFP and Other - Internal (245) -0.1% (2,446) 1,583 (863) -0.8% 618 -71.6%
IFP and Other - External 147 0.1% 495 378 873 0.8% (726) -83.2%
Total segment profit 50,086 30.7% 1,283 18,001 19,284 18.0% 30,802 159.7%
Corporate expense 224,368 137.3% 799 93,353 94,152 87.8% 130,216 138.3%
Amortization of intangible assets 23,514 14.4% 4,703 4,703 4.4% 18,811 400.0%
Transaction costs 6,245 1,968 8,213 7.7% (8,213) -100.0%
Interest expense 8,636 5.3% 1,289 31 1,320 1.2% 7,316 554.2%
Other (income) expense 2 0.0% (10) 67 57 0.1% (55) -96.5%
Loss before income taxes $(206,434) -126.4% $(11,743) $(77,418) $(89,161) -83.2% $(117,273) 131.5%
______________
* 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
Sep 30, 2020 Sep 13, 2019 Jan 1, 2019 Nine Months Ended
through through Sep 30, 2019
Sep 30, 2019 Sep 12, 2019
(in thousands, except percentages)
Dollars % of Net
Dollars
Dollars Dollars % of Net
$ Change % Change
Revenues Revenues
---
Net revenues:
Medicare - Internal $316,211 73.3% $14,208 $102,196 $116,404 46.4% $199,807 171.6%
Medicare - External 77,305 17.9% 3,865 55,981 59,846 23.9% 17,459 29.2%
IFP and Other - Internal 21,798 5.1% 764 37,909 38,673 15.4% (16,875) -43.6%
IFP and Other - External 16,113 3.7% 953 34,924 35,877 14.3% (19,764) -55.1%
Total revenues 431,427 100.0% 19,790 231,010 250,800 100.0% 180,627 72.0%
Segment profit:
Medicare - Internal 123,946 28.7% 2,500 40,024 42,524 17.0% 81,422 191.5%
Medicare - External 892 0.2% 734 4,893 5,627 2.2% (4,735) -84.1%
IFP and Other - Internal 181 0.0% (2,446) 2,195 (251) -0.1% 432 -172.1%
IFP and Other - External 789 0.2% 495 1,748 2,243 0.9% (1,454) -64.8%
Total segment profit 125,808 29.2% 1,283 48,860 50,143 20.0% 75,665 150.9%
Corporate expense 241,942 56.1% 799 103,469 104,268 41.6% 137,674 132.0%
Change in fair value of contingent
consideration liability 19,700 4.6% 19,700
NM
Amortization of intangible assets 70,543 16.4% 4,703 4,703 1.9% 65,840 1400.0%
Transaction costs 6,245 2,267 8,512 3.4% (8,512) -100.0%
Interest expense 24,378 5.7% 1,289 140 1,429 0.6% 22,949 1605.9%
Other (income) expense (494) -0.1% (10) 114 104 0.0% (598) -575.0%
Loss before income taxes $(230,261) -53.4% $(11,743) $(57,129) $(68,873) -27.5% $(161,388) 234.3%
______________
* 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
Ended Sep 13, 2019 July 1, 2019 Three Months Sep 13, 2019 Jan 1, 2019 Nine
Sep 30, 2020 through through Months Ended through through Months
Sep 30, 2019 Sep 12, 2019 Ended Sep 30, 2020 Sep 30, 2019 Sep 12, 2019 Ended
Sep 30, 2019 Sep 30, 2019
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
Months Sep 13, 2019 July 1, 2019 Three Months Sep 13, 2019 Jan 1, 2019 Nine
Ended through through Months Ended through through Months
Sep 30, 2020 Sep 30, 2019 Sep 12, 2019 Ended Sep 30, 2020 Sep 30, 2019 Sep 12, 2019 Ended
Sep 30, 2019 Sep 30, 2019
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
Months Sep 13, 2019 July 1, 2019 Three Months Sep 13, 2019 Jan 1, 2019 Nine
Ended through through Months Ended through through Months
Sep 30, 2020 Sep 30, 2019 Sep 12, 2019 Ended Sep 30, 2020 Sep 30, 2019 Sep 12, 2019 Ended
Sep 30, 2019 Sep 30, 2019
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
Months Sep 13, 2019 July 1, 2019 Three Months Sep 13, 2019 Jan 1, 2019 Nine
Ended through through Months Ended through through Months
Sep 30, 2020 Sep 30, 2019 Sep 12, 2019 Ended Sep 30, 2020 Sep 30, 2019 Sep 12, 2019 Ended
Sep 30, 2019 Sep 30, 2019
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.
