GoHealth Reports Fourth Quarter and Fiscal 2022 Results

GoHealth, Inc. (NASDAQ: GOCO), a leading health insurance marketplace and Medicare-focused digital health company, today announced unaudited financial results and select operating metrics for the fourth quarter and year ended December 31, 2022.

  • Full year 2022 positive cash flow from operations of $60.9 million, a $359.9 million improvement compared to the prior year period, driven by strong operating results including improvements in efficiency year-over-year and Encompass penetration rates.
  • Fourth quarter 2022 net revenue of $69.4 million, net loss of $150.7 million, and Adjusted EBITDA1 of negative $94.8 million. Full year 2022 net revenue of $631.7 million, net loss of $376.4 million, and Adjusted EBITDA1 of negative $129.8 million.
  • Fourth quarter negative revenue adjustments that represent changes in estimates relating to performance obligations satisfied in prior periods (the “Lookback Adjustments”) reduced net revenue by $266.4 million and reduced both net loss and Adjusted EBITDA1 by $186.6 million. Full year 2022 Lookback Adjustments reduced net revenue by $275.7 million and reduced both net loss and Adjusted EBITDA1 by $192.7 million.
  • Excluding the Lookback Adjustments, fourth quarter 2022 net revenue was $335.8 million and full year 2022 net revenue was $907.4 million. Excluding the Lookback Adjustments, fourth quarter 2022 Adjusted EBITDA1 was $91.8 million and full year 2022 Adjusted EBITDA1 was $62.9 million.2

Full Year 2023 Guidance

  • The Company provided its full year 2023 outlook, and expects total net revenue of $750 - $850 million and Adjusted EBITDA1 of $100 - $140 million, both excluding non-Encompass BPO Services.3 The Company also expects positive cash flow from operations of $75 - $115 million.

“Our focus on the continued improvement of the beneficiary experience resulted in positive operating results, reinforcing our confidence in our business transformation strategy. Our top-tier team drove exceptional execution with improvements on key measures including conversion, customer acquisition costs, and effectuation during AEP. Full year cash flow of $60.9 million, driven by the Encompass model and our operating efficiency, validates our momentum,” said Vijay Kotte, CEO of GoHealth.

 

Kotte continued, “The move to Encompass was a strategic decision to reset the cash dynamics and margin profile of the business and deliver a better shopping experience for beneficiaries. With Encompass and our proprietary technology, GoHealth uniquely delivers an unbiased, personalized shopping experience for ever-changing beneficiary needs as well as seamless, customized onboarding by health plan dedicated resources. We believe beneficiaries are getting the best health plan for their needs, and more importantly gaining peace of mind.”

 

“After adjusting for trends we are seeing in today’s market and reflecting Q4 AEP results in our actuarial review of our back-book, we recorded a negative lookback adjustment of $266.4 million in revenue for policies sold in 2021 and prior years, which had an unfavorable impact of $186.6 million to net loss and Adjusted EBITDA1. With this adjustment, we believe we have done our best to mitigate the risk of any further out-of-period negative lookback adjustments,” said Jason Schulz, CFO of GoHealth. 

The Company made the strategic decision to exit its non-Encompass BPO Services3 to focus on its core business. The financial benefit of this change will begin to flow through the Company’s results in the second quarter of 2023, while the exit is expected to be complete in the third quarter of 2023. In 2022, non-Encompass BPO Services3 contributed $110.9 million of net revenue with a gross margin of $20.5 million. Full year 2022 net revenue excluding both non-Encompass BPO Services3 revenue of $110.9 million and the Lookback Adjustments of $275.7 million was $796.5 million, and Adjusted EBITDA1 excluding both the non-Encompass BPO Services3 gross margin of $20.5 million and the Lookback Adjustments of $192.7 million was $42.4 million.4

The unaudited results for the fourth quarter and year ended December 31, 2022 included in this release, which are the responsibility of management, were prepared by the Company's management in connection with the preparation of the Company's financial statements. The Company's independent registered public accounting firm has not completed its audit of the unaudited financial information, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, such unaudited financial information. These unaudited results should not be viewed as a substitute for complete financial statements prepared in accordance with generally accepted accounting principles ("GAAP"). Accordingly, investors are cautioned not to place undue reliance on this unaudited financial information. See the information below under the heading "Forward-Looking Statements" and "Risk Factors" and "Management's Discussion and Analysis of Financial Conditions and Results of Operations" in the Company's 2021 Form 10-K, Quarterly Report on Form 10-Q for the first quarter ended March 31, 2022, Quarterly Report on Form 10-Q for the second quarter ended June 30, 2022, Quarterly Report on Form 10-Q for the third quarter ended September 30, 2022, the forthcoming 2022 Form 10-K, and other SEC filings.

Conference Call Details

The Company will host a conference call today, Thursday, March 16, 2023 at 5:00 p.m. (ET) to discuss its financial results. Participants can pre-register for the conference call at the following link: https://register.vevent.com/register/BId24e31536feb464b907f05de8417ecf7. A live audio webcast of the conference call will be available via GoHealth's Investor Relations website, https://investors.gohealth.com/. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call.

About GoHealth, Inc.:

As a leading health insurance marketplace and Medicare-focused digital health company, 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 health plan that is right for them. GoHealth has enrolled millions of people in Medicare plans and individual and family plans. For more information, visit https://www.gohealth.com.

(1)

Adjusted EBITDA is a non-GAAP measure. For a definition of Adjusted EBITDA and a reconciliation to the most comparable GAAP measure, please see below.

(2)

Net revenue excluding the Lookback Adjustments and Adjusted EBITDA excluding the Lookback Adjustments are non-GAAP measures. For fourth quarter and full year impact on revenue and Adjusted EBITDA for the Lookback Adjustments and for a reconciliation to the most comparable GAAP measure, please see table provided below.

(3)

Non-Encompass BPO Services are those services in which we dedicate certain agents to specific health plans and agencies, outside of the Encompass Solution.

(4)

Net revenue excluding the Lookback Adjustments and non-Encompass BPO Services and Adjusted EBITDA excluding the Lookback Adjustments and non-Encompass BPO Services gross margin are non-GAAP measures. For a reconciliation to the most comparable GAAP measure, please see table provided below.

Forward-Looking Statements

This press release contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (“the Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“the Exchange Act”). All statements other than statements of historical facts contained in this press release may be forward-looking statements. Statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, including, among others, statements regarding our expected growth, level of cash flow, future capital expenditures and debt service obligations are forward-looking statements.

In some cases, you can identify forward-looking statements by terms, such as “may,” “will,” “should,” “aim,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “likely,” “future,” 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 we believe 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.

These forward-looking statements speak only as of the date of this press release and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including, but are not limited to, the following: the marketing and sale of Medicare plans are subject to numerous, complex and frequently changing laws, regulations and guidelines; our operating results have been, and may continue to be, adversely impacted by factors that impact our estimate of LTV; our gradual expansion of the Encompass Solution may not be as successful as we expect; our business may be harmed if we lose our relationships with health plans or if our relationships with health plans change; health plans may reduce the commissions paid to us and change their underwriting practices in ways that reduce the number of, or impact the renewal or approval rates of, insurance policies sold through our platform; our management identified a material weakness in our internal controls over financial reporting, and we may be unable to develop, implement and maintain appropriate controls in future periods, which may lead to errors or omissions in our financial statements; we currently depend on a small group of health plans for a substantial portion of our revenue; information technology system failures could interrupt our operations; factors that impact our estimate of LTV (as defined below); we may lose key employees or fail to attract qualified employees; our failure to grow our customer base or retain our existing customers; we may not realize the benefits we expect from our strategic cash flow optimization and other cash management initiatives; our ability to sell Medicare-related health insurance plans is largely dependent on our licensed health insurance agents; operating and growing our business may require additional capital; and the Founders and Centerbridge have significant influence over us, including control over decisions that require the approval of stockholders.

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 2021 Form 10-K, Quarterly Report on Form 10-Q for the first quarter ended March 31, 2022, Quarterly Report on Form 10-Q for the second quarter ended June 30, 2022, Quarterly Report on Form 10-Q for the third quarter ended September 30, 2022, the forthcoming 2022 Form 10-K, and other SEC filings. If one or more events related to these or other risks or uncertainties materialize, or our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Many of the important factors that will determine these results are beyond our 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, we do 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, we cannot assess the impact of each factor on our 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 (“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.

Additional non-GAAP financial measures, including net revenue excluding the Lookback Adjustments, Adjusted EBITDA excluding the Lookback Adjustments, net revenue excluding both the non-Encompass BPO services revenue and the Lookback Adjustments and Adjusted EBITDA excluding both the non-Encompass BPO Services gross margin and the Lookback Adjustments, are also discussed in this press release. The Lookback Adjustments are revenue adjustments that represent changes in estimates relating to performance obligations satisfied in prior periods and relate to the fiscal years 2021 and prior.

Adjusted EBITDA represents, as applicable for the period, EBITDA as further adjusted for certain items summarized below in this press release. 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. Adjusted EBITDA is used as a basis for certain compensation programs sponsored by the Company. 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, Adjusted EBITDA, net revenue excluding the Lookback Adjustments, Adjusted EBITDA excluding the Lookback Adjustments, net revenue excluding both the non-Encompass BPO Services revenue and the Lookback Adjustments, and Adjusted EBITDA excluding both the non-Encompass BPO Services contribution and the Lookback Adjustments to its most directly comparable GAAP financial measure, net revenue or 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.

The Company is unable to provide a full reconciliation of guidance for Adjusted EBITDA without unreasonable effort because it is not possible to predict certain adjustment items with a reasonable degree of certainty since they are not yet known or quantifiable, and do not relate to the Company’s routine activities. This information is dependent upon future events, which may be outside of the Company’s control and could have a significant impact on its GAAP financial results for fiscal 2023.

Glossary

  • EBITDA” represents net income (loss) before interest expense, income tax expense (benefit) and depreciation and amortization expense.
  • Adjusted EBITDA” represents, as applicable for the period, EBITDA as further adjusted for certain items summarized below in this press release.
  • Adjusted EBITDA Margin” refers to Adjusted EBITDA divided by net revenues.
  • Gross margin” refers to net revenue divided by cost of revenue, marketing and advertising expenses and customer care and enrollment expenses.
  • LTV” refers to the Lifetime Value of Commissions, which we define as aggregate commissions estimated to be collected over the estimated life of all commissionable Submissions for the relevant period based on multiple factors, including but not limited to, contracted commission rates, health plan mix and expected policy persistency with applied constraints.
  • Non-Encompass BPO Services” refer to programs in which GoHealth-employed agents are dedicated to certain health plans and agencies we partner with outside of the Encompass Solution.
  • Sales per Submission” refers to (x) the combination sum of (i) aggregate commissions estimated to be collected over the estimated life of all commissionable Submissions for the relevant period based on multiple factors, including but not limited to, contracted commission rates, health plan mix and expected policy persistency with applied constraints, excluding revenue adjustments recorded in the period, but relating to performance obligations satisfied in prior periods, (ii) Encompass revenue, and (iii) partner marketing and enrollment services, divided by (y) the number of Submissions for such period.
  • Submission” refers to either (i) a completed application with our licensed agent that is submitted to the insurance health plan partner and subsequently approved by the health plan partner during the indicated period, excluding applications through our non-Encompass BPO Services or (ii) a transfer by our agent to the health plan partner through the Encompass marketplace during the indicated period.

The following tables set forth the components of our results of operations for the periods indicated (unaudited):

 

 

Three months ended Dec. 31,

 

 

 

 

(in thousands, except percentages and per share amounts)

 

2022

 

2021

 

 

 

 

 

Dollars

 

% of Net

Revenues

 

Dollars

 

% of Net

Revenues

 

$ Change

 

% Change

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Commission

 

$

(73,268

)

 

(105.6

)%

 

$

384,826

 

 

85.6

%

 

$

(458,094

)

 

(119.0

)%

Enterprise

 

 

142,644

 

 

205.6

%

 

 

64,774

 

 

14.4

%

 

 

77,870

 

 

120.2

%

Net revenues

 

 

69,376

 

 

100.0

%

 

 

449,600

 

 

100.0

%

 

 

(380,224

)

 

(84.6

)%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

20,629

 

 

29.7

%

 

 

99,886

 

 

22.2

%

 

 

(79,257

)

 

(79.3

)%

Marketing and advertising expense

 

 

56,151

 

 

80.9

%

 

 

195,411

 

 

43.5

%

 

 

(139,260

)

 

(71.3

)%

Customer care and enrollment

 

 

64,752

 

 

93.3

%

 

 

122,269

 

 

27.2

%

 

 

(57,517

)

 

(47.0

)%

Technology expense

 

 

11,525

 

 

16.6

%

 

 

15,178

 

 

3.4

%

 

 

(3,653

)

 

(24.1

)%

General and administrative

 

 

25,671

 

 

37.0

%

 

 

29,007

 

 

6.5

%

 

 

(3,336

)

 

(11.5

)%

Amortization of intangible assets

 

 

23,514

 

 

33.9

%

 

 

23,513

 

 

5.2

%

 

 

1

 

 

%

Restructuring and other related charges

 

 

312

 

 

0.4

%

 

 

 

 

%

 

 

312

 

 

NM

 

Goodwill impairment charges

 

 

 

 

%

 

 

386,553

 

 

86.0

%

 

 

(386,553

)

 

NM

 

Operating lease impairment charges

 

 

 

 

%

 

 

1,062

 

 

0.2

%

 

 

(1,062

)

 

NM

 

Total operating expenses

 

 

202,554

 

 

292.0

%

 

 

872,879

 

 

194.1

%

 

 

(670,325

)

 

(76.8

)%

Income (loss) from operations

 

 

(133,178

)

 

(192.0

)%

 

 

(423,279

)

 

(94.1

)%

 

 

290,101

 

 

(68.5

)%

Interest expense

 

 

17,317

 

 

25.0

%

 

 

9,619

 

 

2.1

%

 

 

7,698

 

 

80.0

%

Other (income) expense, net

 

 

(50

)

 

(0.1

)%

 

 

(696

)

 

(0.2

)%

 

 

646

 

 

(92.8

)%

Income (loss) before income taxes

 

 

(150,445

)

 

(216.9

)%

 

 

(432,202

)

 

(96.1

)%

 

 

281,757

 

 

(65.2

)%

Income tax expense (benefit)

 

 

292

 

 

0.4

%

 

 

118

 

 

%

 

 

174

 

 

147.5

%

Net income (loss)

 

$

(150,737

)

 

(217.3

)%

 

$

(432,320

)

 

(96.2

)%

 

$

281,583

 

 

(65.1

)%

Net income (loss) attributable to noncontrolling interests

 

 

(89,338

)

 

(128.8

)%

 

 

(277,225

)

 

(61.7

)%

 

 

187,887

 

 

(67.8

)%

Net income (loss) attributable to GoHealth, Inc.

 

$

(61,399

)

 

(88.5

)%

 

$

(155,095

)

 

(34.5

)%

 

$

93,696

 

 

(60.4

)%

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share of common stock — basic and diluted

 

$

(7.00

)

 

 

 

$

(20.22

)

 

 

 

 

 

 

Weighted-average shares of Class A common stock outstanding — basic and diluted

 

 

8,895

 

 

 

 

 

7,669

 

 

 

 

 

 

 

Non-GAAP financial measures:

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

$

(106,550

)

 

 

 

$

(392,251

)

 

 

 

 

 

 

Adjusted EBITDA

 

$

(94,781

)

 

 

 

$

1,499

 

 

 

 

 

 

 

Adjusted EBITDA margin

 

 

(136.6

)%

 

 

 

 

0.3

%

 

 

 

 

 

 

_________________________

NM = Not meaningful

 

 

Twelve months ended Dec. 31,

 

 

 

 

(in thousands, except percentages and per share amounts)

 

2022

 

2021

 

 

 

 

 

Dollars

 

% of Net

Revenues

 

Dollars

 

% of Net

Revenues

 

$ Change

 

% Change

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Commission

 

$

341,467

 

 

54.1

%

 

$

881,263

 

 

82.9

%

 

$

(539,796

)

 

(61.3

)%

Enterprise

 

 

290,208

 

 

45.9

%

 

 

181,152

 

 

17.1

%

 

 

109,056

 

 

60.2

%

Net revenues

 

 

631,675

 

 

100.0

%

 

 

1,062,415

 

 

100.0

%

 

 

(430,740

)

 

(40.5

)%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

187,670

 

 

29.7

%

 

 

239,335

 

 

22.5

%

 

 

(51,665

)

 

(21.6

)%

Marketing and advertising expense

 

 

207,559

 

 

32.9

%

 

 

365,141

 

 

34.4

%

 

 

(157,582

)

 

(43.2

)%

Customer care and enrollment

 

 

260,902

 

 

41.3

%

 

 

319,103

 

 

30.0

%

 

 

(58,201

)

 

(18.2

)%

Technology expense

 

 

46,094

 

 

7.3

%

 

 

48,429

 

 

4.6

%

 

 

(2,335

)

 

(4.8

)%

General and administrative

 

 

116,530

 

 

18.4

%

 

 

98,183

 

 

9.2

%

 

 

18,347

 

 

18.7

%

Amortization of intangible assets

 

 

94,057

 

 

14.9

%

 

 

94,056

 

 

8.9

%

 

 

1

 

 

%

Operating lease impairment charges

 

 

25,345

 

 

4.0

%

 

 

1,062

 

 

0.1

%

 

 

24,283

 

 

NM

 

Restructuring and other related charges

 

 

12,184

 

 

1.9

%

 

 

 

 

%

 

 

12,184

 

 

NM

 

Goodwill impairment charges

 

 

 

 

%

 

 

386,553

 

 

36.4

%

 

 

(386,553

)

 

NM

 

Total operating expenses

 

 

950,341

 

 

150.4

%

 

 

1,551,862

 

 

146.1

%

 

 

(601,521

)

 

(38.8

)%

Income (loss) from operations

 

 

(318,666

)

 

(50.4

)%

 

 

(489,447

)

 

(46.1

)%

 

 

170,781

 

 

(34.9

)%

Interest expense

 

 

57,069

 

 

9.0

%

 

 

33,505

 

 

3.2

%

 

 

23,564

 

 

70.3

%

Loss on extinguishment of debt

 

 

 

 

%

 

 

11,935

 

 

1.1

%

 

 

(11,935

)

 

NM

 

Other (income) expense, net

 

 

(115

)

 

%

 

 

(669

)

 

(0.1

)%

 

 

554

 

 

(82.8

)%

Income (loss) before income taxes

 

 

(375,620

)

 

(59.5

)%

 

 

(534,218

)

 

(50.3

)%

 

 

158,598

 

 

(29.7

)%

Income tax expense (benefit)

 

 

764

 

 

0.1

%

 

 

(24

)

 

%

 

 

788

 

 

(3283.3

)%

Net income (loss)

 

$

(376,384

)

 

(59.6

)%

 

$

(534,194

)

 

(50.3

)%

 

$

157,810

 

 

(29.5

)%

Net income (loss) attributable to noncontrolling interests

 

 

(227,678

)

 

(36.0

)%

 

 

(344,837

)

 

(32.5

)%

 

$

117,159

 

 

(34.0

)%

Net income (loss) attributable to GoHealth, Inc.

 

$

(148,706

)

 

(23.5

)%

 

$

(189,357

)

 

(17.8

)%

 

$

40,651

 

 

(21.5

)%

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share of common stock — basic and diluted

 

$

(17.72

)

 

 

 

$

(26.80

)

 

 

 

 

 

 

Weighted-average shares of Class A common stock outstanding — basic and diluted

 

 

8,445

 

 

 

 

 

7,066

 

 

 

 

 

 

 

Non-GAAP financial measures:

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

$

(211,549

)

 

 

 

$

(393,206

)

 

 

 

 

 

 

Adjusted EBITDA

 

$

(129,776

)

 

 

 

$

33,821

 

 

 

 

 

 

 

Adjusted EBITDA margin

 

 

(20.5

)%

 

 

 

 

3.2

%

 

 

 

 

 

 

_________________________

NM = Not meaningful

The following tables set forth the reconciliations of GAAP net income (loss) to EBITDA and Adjusted EBITDA for the periods indicated (unaudited):

 

 

Three months ended Dec. 31,

(in thousands)

 

2022

 

2021

Net revenues

 

$

69,376

 

 

$

449,600

 

Net income (loss)

 

 

(150,737

)

 

 

(432,320

)

Interest expense

 

 

17,317

 

 

 

9,619

 

Income tax expense (benefit)

 

 

292

 

 

 

118

 

Depreciation and amortization expense

 

 

26,578

 

 

 

30,332

 

EBITDA

 

 

(106,550

)

 

 

(392,251

)

 

 

 

 

 

Share-based compensation expense (1)

 

 

6,256

 

 

 

7,197

 

Legal fees (2)

 

 

3,478

 

 

 

 

Professional services (3)

 

 

773

 

 

 

 

Other (income) loss related to the adjustment of liabilities under the Tax Receivable Agreement (4)

 

 

550

 

 

 

 

Severance costs (5)

 

 

400

 

 

 

 

Restructuring and other related charges (6)

 

 

312

 

 

 

 

Goodwill impairment charges (7)

 

 

 

 

 

386,553

 

Adjusted EBITDA

 

$

(94,781

)

 

$

1,499

 

Adjusted EBITDA margin

 

 

(136.6

)%

 

 

0.3

%

_________________________

(1)

Represents non-cash share-based compensation expense relating to equity awards as well as share-based compensation expense relating to liability classified awards that will be settled in cash..

(2)

Represents non-recurring legal fees unrelated to our core operations.

(3)

Represents costs associated with non-recurring consulting fees and other professional services.

(4)

Represents expense related to the measurement of our Tax Receivable Agreement obligation.

(5)

Represents costs associated with the termination of employment and associated fees unrelated to restructuring activities.

(6)

Represents employee termination benefits and other associated costs related to restructuring activities.

(7)

Represents goodwill impairment charges related to the Medicare— Internal and Medicare— External reporting units for the twelve months ended December 31, 2021.

 

 

Twelve months ended Dec. 31,

(in thousands)

 

2022

 

2021

Net revenues

 

$

631,675

 

 

$

1,062,415

 

Net income (loss)

 

 

(376,384

)

 

 

(534,194

)

Interest expense

 

 

57,069

 

 

 

33,505

 

Income tax expense (benefit)

 

 

764

 

 

 

(24

)

Depreciation and amortization expense

 

 

107,002

 

 

 

107,507

 

EBITDA

 

 

(211,549

)

 

 

(393,206

)

Share-based compensation expense (1)

 

 

32,124

 

 

 

27,297

 

Operating lease impairment charges (2)

 

 

25,345

 

 

 

1,062

 

Restructuring and other related charges (3)

 

 

12,184

 

 

 

 

Professional services (4)

 

 

4,752

 

 

 

 

Severance costs (5)

 

 

3,340

 

 

 

 

Legal fees (6)

 

 

3,478

 

 

 

180

 

Other (income) loss related to the adjustment of liabilities under the Tax Receivable Agreement (7)

 

 

550

 

 

 

 

Loss on extinguishment of debt (8)

 

 

 

 

 

11,935

 

Goodwill impairment charges (9)

 

 

 

 

 

386,553

 

Adjusted EBITDA

 

$

(129,776

)

 

$

33,821

 

Adjusted EBITDA margin

 

 

(20.5

)%

 

 

3.2

%

_________________________

(1)   

Represents non-cash share-based compensation expense relating to equity awards as well as share-based compensation expense relating to liability classified awards that will be settled in cash.

(2)   

Represents operating lease impairment charges, reducing the carrying value of the associated ROU assets and leasehold improvements to the estimated fair values.

(3)   

Represents employee termination benefits and other associated costs related to restructuring activities.

(4)   

Represents costs associated with non-recurring consulting fees and other professional services.

(5)   

Represents costs associated with the termination of employment and associated fees unrelated to restructuring activities.

(6)   

Represents non-recurring legal fees unrelated to our core operations.

(7)   

Represents expense related to the measurement of our Tax Receivable Agreement obligation.

(8)   

Represents the loss on debt extinguishment related to the Initial Term Loan Facility.

(9)   

Represents goodwill impairment charges related to the Medicare— Internal and Medicare— External reporting units for the twelve months ended December 31, 2021.

The following table summarizes net revenue and Adjusted EBITDA excluding the Lookback Adjustments and non-Encompass BPO Services for the periods indicated (unaudited):

 

 

Three months ended Dec. 31,

 

Twelve months ended Dec. 31,

(in thousands)

 

2022

 

2021

 

2022

 

2021

Net revenue

 

$

69,376

 

 

$

449,600

 

 

$

631,675

 

 

$

1,062,415

 

Lookback Adjustments reported during the indicated periods

 

 

266,383

 

 

 

155,002

 

 

 

275,709

 

 

 

165,296

 

Lookback Adjustments attributed to 2021

 

 

 

 

 

(57,942

)

 

 

 

 

 

(208,848

)

Net revenue excluding Lookback Adjustments

 

 

335,759

 

 

 

546,660

 

 

 

907,384

 

 

 

1,018,863

 

Exit of non-Encompass BPO Services

 

 

(34,198

)

 

 

(83,947

)

 

 

(110,865

)

 

 

(163,563

)

Net revenues excluding Lookback Adjustments and non-Encompass BPO Services

 

 

301,561

 

 

 

462,713

 

 

 

796,519

 

 

 

855,300

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

(94,781

)

 

$

1,499

 

 

$

(129,776

)

 

$

33,821

 

Lookback Adjustments reported during the indicated periods

 

 

186,617

 

 

 

105,373

 

 

 

192,693

 

 

 

111,863

 

Lookback Adjustments attributed to 2021

 

 

 

 

 

(42,484

)

 

 

 

 

 

(149,559

)

Adjusted EBITDA excluding Lookback Adjustments

 

 

91,836

 

 

 

64,388

 

 

 

62,917

 

 

 

(3,875

)

Exit of non-Encompass BPO Services

 

 

(6,980

)

 

 

(13,319

)

 

 

(20,476

)

 

 

(25,295

)

Adjusted EBITDA excluding Lookback Adjustments and non-Encompass BPO Services

 

$

84,856

 

 

$

51,069

 

 

$

42,441

 

 

$

(29,170

)

Adjusted EBITDA margin excluding Lookback Adjustments and non-Encompass BPO Services

 

 

28.1

%

 

 

11.0

%

 

 

5.3

%

 

 

(3.4

)%

The following table summarizes share-based compensation expense by operating function for the periods indicated (unaudited):

 

 

Three months ended Dec. 31,

 

Twelve months ended Dec. 31,

(in thousands)

 

2022

 

2021

 

2022

 

2021

Marketing and advertising

 

 

490

 

646

 

$

1,653

 

$

2,108

Customer care and enrollment

 

 

484

 

980

 

 

2,218

 

 

3,775

Technology

 

 

471

 

984

 

 

2,924

 

 

3,775

General and administrative

 

 

4,811

 

4,587

 

 

25,329

 

 

17,639

Total share-based compensation expense

 

$

6,256

 

7,197

 

$

32,124

 

$

27,297

The following table sets forth our balance sheets for the periods indicated (unaudited):

 

 

Dec. 31,

(in thousands, except per share amounts)

 

2022

 

2021

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

16,464

 

 

$

84,361

 

Accounts receivable, net of allowance for doubtful accounts of $89 in 2022 and $558 in 2021

 

 

4,703

 

 

 

17,276

 

Commissions receivable - current

 

 

335,796

 

 

 

268,663

 

Prepaid expense and other current assets

 

 

57,593

 

 

 

58,695

 

Total current assets

 

 

414,556

 

 

 

428,995

 

Commissions receivable - non-current

 

 

695,637

 

 

 

993,844

 

Operating lease ROU asset

 

 

21,483

 

 

 

23,462

 

Other long-term assets

 

 

1,721

 

 

 

3,608

 

Property, equipment, and capitalized software, net

 

 

25,282

 

 

 

24,273

 

Intangible assets, net

 

 

500,611

 

 

 

594,669

 

Total assets

 

$

1,659,290

 

 

$

2,068,851

 

Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

15,148

 

 

$

39,843

 

Accrued liabilities

 

 

53,334

 

 

 

52,788

 

Commissions payable - current

 

 

122,023

 

 

 

104,160

 

Short-term operating lease liability

 

 

8,974

 

 

 

6,126

 

Deferred revenue

 

 

50,594

 

 

 

536

 

Current portion of long-term debt

 

 

5,270

 

 

 

5,270

 

Other current liabilities

 

 

10,112

 

 

 

8,344

 

Total current liabilities

 

 

265,455

 

 

 

217,067

 

Non-current liabilities:

 

 

 

 

Commissions payable - non-current

 

 

253,118

 

 

 

274,403

 

Long-term operating lease liability

 

 

38,367

 

 

 

19,776

 

Long-term debt, net of current portion

 

 

504,810

 

 

 

665,115

 

Other non-current liabilities

 

 

5,839

 

 

 

 

Total non-current liabilities

 

 

802,134

 

 

 

959,294

 

Commitments and Contingencies

 

 

 

 

Series A redeemable convertible preferred stock — $0.0001 par value; 50 shares authorized; 50 shares issued and outstanding at December 31, 2022. No shares issued and outstanding as of December 31, 2021. Liquidation preference of $50.9 million at December 31, 2022.

 

 

49,302

 

 

 

 

Stockholders’ equity:

 

 

 

 

Class A common stock – $0.0001 par value; 1,100,000 shares authorized; 8,963 and 7,699 shares issued; 8,950 and 7,699 shares outstanding at December 31, 2022 and December 31, 2021, respectively.

 

 

1

 

 

 

1

 

Class B common stock – $0.0001 par value; 616,259 and 587,360 shares authorized; 13,054 and 13,690 shares issued and outstanding at December 31, 2022 and December 31, 2021, 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 at December 31, 2022; no shares issued and outstanding at December 31, 2021.

 

 

 

 

 

 

Series A-1 convertible preferred stock— $0.0001 par value; 200 shares authorized; no shares issued and outstanding at December 31, 2022 and December 31, 2021.

 

 

 

 

 

 

Treasury stock – at cost; 13 shares of Class A common stock at December 31, 2022

 

 

(345

)

 

 

 

Additional paid-in capital

 

 

626,269

 

 

 

561,477

 

Accumulated other comprehensive income (loss)

 

 

(144

)

 

 

(59

)

Accumulated deficit

 

 

(357,023

)

 

 

(208,317

)

Total stockholders’ equity attributable to GoHealth, Inc.

 

 

268,759

 

 

 

353,103

 

Non-controlling interests

 

 

273,640

 

 

 

539,387

 

Total stockholders’ equity

 

 

542,399

 

 

 

892,490

 

Total liabilities, redeemable convertible preferred stock and stockholders’ equity

 

$

1,659,290

 

 

$

2,068,851

 

The following table sets forth our statements of cash flows for the periods indicated (unaudited):

 

 

Twelve months ended Dec. 31,

(in thousands)

 

2022

 

2021

Operating Activities

 

 

 

 

Net income (loss)

 

$

(376,384

)

 

$

(534,194

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

Share-based compensation

 

 

27,142

 

 

 

27,297

 

Depreciation and amortization

 

 

12,945

 

 

 

13,451

 

Amortization of intangible assets

 

 

94,057

 

 

 

94,056

 

Amortization of debt discount and issuance costs

 

 

2,896

 

 

 

2,222

 

Loss on extinguishment of debt

 

 

 

 

 

11,935

 

Operating lease impairment charges

 

 

25,345

 

 

 

1,062

 

Goodwill impairment charges

 

 

 

 

 

386,553

 

Non-cash restructuring charges

 

 

976

 

 

 

 

Non-cash lease expense

 

 

4,017

 

 

 

5,033

 

Other non-cash items, net

 

 

(250

)

 

 

(5

)

Changes in assets and liabilities:

 

 

 

 

Accounts receivable

 

 

12,574

 

 

 

(2,758

)

Commissions receivable

 

 

231,274

 

 

 

(452,950

)

Prepaid expenses and other assets

 

 

2,140

 

 

 

(18,613

)

Accounts payable

 

 

(24,795

)

 

 

30,477

 

Accrued liabilities

 

 

546

 

 

 

25,745

 

Deferred revenue

 

 

50,058

 

 

 

(200

)

Commissions payable

 

 

(3,423

)

 

 

117,489

 

Operating lease liabilities

 

 

(6,597

)

 

 

(4,885

)

Other liabilities

 

 

8,383

 

 

 

(721

)

Net cash provided by (used in) operating activities

 

 

60,904

 

 

 

(299,006

)

Investing Activities

 

 

 

 

Purchases of property, equipment and software

 

 

(13,512

)

 

 

(19,801

)

Net cash used in investing activities

 

 

(13,512

)

 

 

(19,801

)

Financing Activities

 

 

 

 

Repayment of borrowings

 

 

(160,270

)

 

 

(298,970

)

Proceeds from stock option exercises

 

 

5

 

 

 

 

Proceeds from sale of Series A redeemable convertible preferred stock

 

 

50,000

 

 

 

 

Issuance cost payments from issuance of Series A redeemable convertible preferred stock

 

 

(1,641

)

 

 

 

Debt issuance cost payments

 

 

(2,697

)

 

 

(4,108

)

Repurchase of shares to satisfy employee tax withholding obligations

 

 

(345

)

 

 

 

Principal payments under capital lease obligations

 

 

(103

)

 

 

(318

)

Proceeds from borrowings

 

 

 

 

 

565,000

 

Call premium paid for debt extinguishment

 

 

 

 

 

(5,910

)

Advancement to NVX Holdings, Inc.

 

 

 

 

 

3,395

 

Net cash (used in) provided by financing activities

 

 

(115,051

)

 

 

259,089

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(238

)

 

 

(155

)

Increase (decrease) in cash and cash equivalents

 

 

(67,897

)

 

 

(59,873

)

Cash and cash equivalents at beginning of period

 

 

84,361

 

 

 

144,234

 

Cash and cash equivalents at end of period

 

$

16,464

 

 

$

84,361

 

Supplemental Disclosure of Cash Flow Information

 

 

 

 

Interest paid

 

 

56,920

 

 

 

28,244

 

Income taxes paid

 

 

486

 

 

 

879

 

The following tables set forth operating segment results for the periods indicated (unaudited):

 

 

Three months ended Dec. 31,

 

 

 

 

(in thousands, except percentages)

 

2022

 

2021

 

 

 

 

 

Dollars

 

% of Net

Revenues

 

Dollars

 

% of Net

Revenues

 

$ Change

 

% Change

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Medicare - Internal

 

$

34,477

 

 

49.7

%

 

$

368,503

 

 

82.1

%

 

$

(334,026

)

 

(90.6

)%

Medicare - External

 

 

28,504

 

 

41.1

%

 

 

72,447

 

 

16.1

%

 

 

(43,943

)

 

(60.7

)%

IFP and Other - Internal

 

 

6,069

 

 

8.7

%

 

 

6,182

 

 

1.4

%

 

 

(113

)

 

(1.8

)%

IFP and Other - External

 

 

327

 

 

0.5

%

 

 

2,468

 

 

0.5

%

 

 

(2,141

)

 

(86.8

)%

Net revenues

 

 

69,377

 

 

100.0

%

 

 

449,600

 

 

100.0

%

 

 

(380,223

)

 

(84.6

)%

Segment profit (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Medicare - Internal

 

 

(69,790

)

 

(100.6

)%

 

 

10,771

 

 

2.4

%

 

 

(80,561

)

 

(747.9

)%

Medicare - External

 

 

(15,631

)

 

(22.5

)%

 

 

3,075

 

 

0.7

%

 

 

(18,706

)

 

(608.3

)%

IFP and Other - Internal

 

 

1,986

 

 

2.9

%

 

 

2,162

 

 

0.5

%

 

 

(176

)

 

(8.1

)%

IFP and Other - External

 

 

(257

)

 

(0.4

)%

 

 

472

 

 

0.1

%

 

 

(729

)

 

(154.4

)%

Segment profit (loss)

 

 

(83,692

)

 

(120.6

)%

 

 

16,480

 

 

3.7

%

 

 

(100,172

)

 

(607.8

)%

Corporate expense

 

 

25,660

 

 

37.0

%

 

 

29,693

 

 

6.6

%

 

 

(4,033

)

 

(13.6

)%

Amortization of intangible assets

 

 

23,514

 

 

33.9

%

 

 

23,513

 

 

5.2

%

 

 

1

 

 

%

Restructuring and other related charges

 

 

312

 

 

0.4

%

 

 

 

 

%

 

 

312

 

 

NM

 

Goodwill impairment charges

 

 

 

 

%

 

 

386,553

 

 

86.0

%

 

 

(386,553

)

 

NM

 

Interest expense

 

 

17,317

 

 

25.0

%

 

 

9,619

 

 

2.1

%

 

 

7,698

 

 

80.0

%

Other (income) expense, net

 

 

(50

)

 

(0.1

)%

 

 

(696

)

 

(0.2

)%

 

 

646

 

 

(92.8

)%

Income (loss) before income taxes

 

$

(150,445

)

 

(216.9

)%

 

$

(432,202

)

 

(96.1

)%

 

$

281,757

 

 

(65.2

)%

_________________________

NM = Not meaningful

 

 

Twelve months ended Dec. 31,

 

 

 

 

 

 

2022

 

2021

 

 

 

 

(in thousands, except percentages)

 

Dollars

 

% of Net

Revenues

 

Dollars

 

% of Net

Revenues

 

$ Change

 

% Change

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Medicare - Internal

 

$

421,273

 

 

66.7

%

 

$

844,894

 

 

79.5

%

 

$

(423,621

)

 

(50.1

)%

Medicare - External

 

 

189,886

 

 

30.1

%

 

 

189,563

 

 

17.8

%

 

 

323

 

 

0.2

%

IFP and Other - Internal

 

 

17,972

 

 

2.8

%

 

 

19,687

 

 

1.9

%

 

 

(1,715

)

 

(8.7

)%

IFP and Other - External

 

 

2,544

 

 

0.4

%

 

 

8,271

 

 

0.8

%

 

 

(5,727

)

 

(69.2

)%

Net revenues

 

 

631,675

 

 

100.0

%

 

 

1,062,415

 

 

100.0

%

 

 

(430,740

)

 

(40.5

)%

Segment profit (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Medicare - Internal

 

 

(43,382

)

 

(6.9

)%

 

 

84,345

 

 

7.9

%

 

 

(127,727

)

 

(151.4

)%

Medicare - External

 

 

(31,260

)

 

(4.9

)%

 

 

2,622

 

 

0.2

%

 

 

(33,882

)

 

(1292.2

)%

IFP and Other - Internal

 

 

4,654

 

 

0.7

%

 

 

2,819

 

 

0.3

%

 

 

1,835

 

 

65.1

%

IFP and Other - External

 

 

(1,502

)

 

(0.2

)%

 

 

245

 

 

%

 

 

(1,747

)

 

(713.1

)%

Segment profit (loss)

 

 

(71,490

)

 

(11.3

)%

 

 

90,031

 

 

8.5

%

 

 

(161,521

)

 

(179.4

)%

Corporate expense

 

 

115,590

 

 

18.3

%

 

 

97,807

 

 

9.2

%

 

 

17,783

 

 

18.2

%

Amortization of intangible assets

 

 

94,057

 

 

14.9

%

 

 

94,056

 

 

8.9

%

 

 

1

 

 

%

Operating lease impairment charges

 

 

25,345

 

 

4.0

%

 

 

1,062

 

 

0.1

%

 

 

24,283

 

 

NM

 

Restructuring and other related charges

 

 

12,184

 

 

1.9

%

 

 

 

 

%

 

 

12,184

 

 

NM

 

Loss on extinguishment of debt

 

 

 

 

%

 

 

11,935

 

 

1.1

%

 

 

(11,935

)

 

NM

 

Goodwill impairment charges

 

 

 

 

%

 

 

386,553

 

 

36.4

%

 

 

(386,553

)

 

NM

 

Interest expense

 

 

57,069

 

 

9.0

%

 

 

33,505

 

 

3.2

%

 

 

23,564

 

 

70.3

%

Other (income) expense, net

 

 

(115

)

 

%

 

 

(669

)

 

(0.1

)%

 

 

554

 

 

(82.8

)%

Income (loss) before income taxes

 

$

(375,620

)

 

(59.5

)%

 

$

(534,218

)

 

(50.3

)%

 

$

158,598

 

 

(29.7

)%

_________________________

NM = Not meaningful

In addition to traditional financial metrics, we rely upon certain business and operating metrics to evaluate our business performance and facilitate our operations. Below are the most relevant business and operating metrics for each segment, except for EBITDA and Adjusted EBITDA, which are not presented on a segment basis.

The following tables present the number of Submissions by product for each of the Medicare segments for the periods presented.

 

 

Three months ended Dec. 31,

 

Twelve months ended Dec. 31,

Submissions

 

2022

 

2021

 

2022

 

2021

Medicare-Internal

 

 

 

 

 

 

 

 

Medicare Advantage

 

176,975

 

439,968

 

482,356

 

793,267

Medicare Supplement

 

76

 

471

 

281

 

1,025

Prescription Drug Plans

 

5,934

 

16,438

 

11,347

 

22,322

Medicare-Internal Submissions

 

182,985

 

456,877

 

493,984

 

816,614

Medicare-External

 

 

 

 

 

 

 

 

Medicare Advantage

 

128,529

 

145,616

 

346,900

 

266,795

Medicare Supplement

 

179

 

708

 

458

 

2,531

Prescription Drug Plans

 

12,440

 

11,628

 

21,314

 

12,344

Medicare-External Submissions

 

141,148

 

157,952

 

368,672

 

281,670

Total Submissions

 

 

 

 

 

 

 

 

Medicare Advantage

 

305,504

 

585,584

 

829,256

 

1,060,062

Medicare Supplemental

 

255

 

1,179

 

739

 

3,556

Prescription Drug Plans

 

18,374

 

28,066

 

32,661

 

34,666

Total Medicare Submissions

 

324,133

 

614,829

 

862,656

 

1,098,284

The following table presents the Sales per Submission by product for the Medicare segments for the periods presented:

 

 

Three months ended Dec. 31,

 

Twelve months ended Dec. 31,

Sales Per Submission

 

2022

2021

 

2022

2021

Medicare Advantage

 

$

918

 

$

785

 

$

929

 

$

813

Medicare Supplement

 

$

1,221

 

$

900

 

$

965

 

$

853

Prescription Drug Plans

 

$

108

 

$

215

 

$

109

 

$

215

 

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