GoHealth Reports Fourth Quarter and Fiscal 2021 Results

Focusing on Optimization in 2022

CHICAGO, March 15, 2022 /PRNewswire/ -- GoHealth, Inc. (Nasdaq: GOCO), a leading health insurance marketplace and Medicare-focused digital health company, announced financial results for the three and twelve months ended December 31, 2021.

• Fourth quarter 2021 net revenue of $449.6 million increased 1% compared to the prior year period, and fiscal year 2021 net revenue of $1,062.4 million increased 21% compared to the prior year period. These are inclusive of an incremental 15% Medicare Advantage ('MA") lifetime value ("LTV") constraint applied to all MA policies sold in the fourth quarter of 2021 and negative revenue adjustments relating to performance obligations satisfied in 2018, 2019, 2020, and the first nine months of 2021 (the "Lookback Adjustments") of $155.0 million for the fourth quarter of 2021 and $165.3 million for the year ended December 31, 2021, as further described below.
• Fourth quarter 2021 net loss of $432.3 million and fiscal year 2021 net loss of $534.2 million, inclusive of $386.6 million of goodwill impairment charges.  
• Fourth quarter 2021 Adjusted EBITDA¹ of $1.5 million decreased 99% compared to the prior year period, and fiscal year 2021 Adjusted EBITDA¹ of $33.8 million decreased 88% compared to the prior year period. Adjusted EBITDA¹ includes the negative impact of the Lookback Adjustments for both the fourth quarter of 2021 and the year ended December 31, 2021 and is inclusive of an incremental 15% constraint applied to all MA policies sold in the fourth quarter of 2021. 
• Fourth quarter 2021 MA Carrier Approved Submissions ("CAS") of 653,620 increased 99% compared to the prior year period, and fiscal year 2021 MA CAS's of 1,170,603 increased 84% compared to the prior year period.
• Negative revenue Lookback Adjustments were $155.0 million for the fourth quarter of 2021 and $165.3 million for the year ended December 31, 2021.
• The Company provided its full year 2022 outlook, and expects total net revenue of $900 - $1,100 million (-15% to +4%) powered by commission revenue of $700 - $900 million (-21% to +2%). The company expects Adjusted EBITDA¹ of $110 - $150 million (+224% to +343%).  The Company also expects negative cash flow from operations of $50 - $10 million (+83% to +97%). 

2021 Highlights³

• Total company revenue grew 21% to $1,062.4 million
• Total Medicare Submitted Policies² grew 75% during 2021 to 1,273,859
• Medicare—Internal revenue increased 27% to $844.9 million
• Medicare—Internal segment profit decreased 72% to $84.3 million, with a 10% margin
• Encompass revenue of $72 million
• Adjusted EBITDA¹ decreased 88% to $33.8 million, resulting in full-year Adjusted EBITDA margins of 3%
• LTV per carrier Approved MA Submission decreased 7% from $900 in 2020 to $842 in 2021, adjusted for the impact of the Lookback Adjustments
• Grew commissions receivable balance by $452.1 million (+56%) in 2021 to $1,262.5 million

Fourth Quarter AEP Highlights³

• Total company revenue grew 1% to $449.6 million
• Total Medicare Submitted Policies grew 93% during the fourth quarter to 723,884
• Medicare—Internal revenue increased 5% to $368.5 million
• Medicare—Internal segment profit decreased 94% to $10.8 million, with a 3% margin
• Adjusted EBITDA¹ decreased 99% to $1.5 million, resulting in Adjusted EBITDA margins of 0.3%
• LTV per carrier Approved MA Submission decreased 15% from $949 in the fourth quarter of 2020 to $810 in the fourth quarter of 2021, adjusted for the impact of the Lookback Adjustments

2022 Financial Outlook

The trajectory of the US economy remains challenging to predict, particularly given the continued uncertainty associated with the pace of recovery from the COVID-19 pandemic. The Company has provided its financial outlook for the fiscal year ending December 31, 2022 based on current market conditions and expectations:

• Full-year 2022 net revenue of $900 - $1,100 million, representing year-over-year growth of (15)% - 4%
• Full-year 2022 commission revenue of $700 - $900 million, representing year-over-year growth of (21)% - 2%, fueled by the Company's continued investment in its Medicare business
• Full-year 2022 Adjusted EBITDA of $110 - $150 million, representing year-over-year growth of 224% - 343%
• Full-year 2022 cash flow from operations of ($50) - ($10) million, representing year-over-year improvement of 83% to 97%

Conference Call Details
The Company will host a conference call today, Tuesday, March 15, 2022 at 5:00 p.m. (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 2679849. A replay of the call will be available for 30 days via webcast for on-demand listening shortly after the completion of the call, at the same web link.

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 carrier that is right for them. GoHealth has enrolled millions of people in Medicare and individual and family plans. For more information, visit https://www.gohealth.com.

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 often include forwarding-looking statements, including, but not limited to, statements regarding expected financial performance and operational performance, including with respect to revenue and Adjusted EBITDA, the growth of our membership base, our ability to realize the potential of our market opportunity, and 2022 annual guidance. 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 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 relationship, reduction in revenue or consolidation of carriers; carriers' ability to reduce commissions paid to the Company and adversely change their underwriting practices; 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; our ability to obtain the capital needed to operate and grow our business; attracting qualified employees and retaining key employees; and the impact of global economic conditions. 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 Annual Report on Form 10-K for the year ended December 31, 2020 and other SEC filings. 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 and are reliant on the actions taken or to be taken by third parties. 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, including any guidance provided. 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.

In  addition, the Company is required to comply with  Accounting Standards Codification 606 – Revenue from Contracts with Customers.  This standard requires the Company to make numerous assumptions  that are based upon historical trends and management's judgment.  These assumptions may change over time and may have a material impact on revenue recognition, guidance and results of operations.  Please review our assumptions stated in this press release careful as well as our associated risk factors in our most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q.    You can obtain copies of GoHealth's filings with the SEC for free at the SEC's website (www.SEC.gov). 

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, as applicable for the period, EBITDA as further adjusted for goodwill impairment charges, share-based compensation expense, accelerated vesting of certain equity awards, loss on extinguishment of debt, loss on sublease, non-recurring legal fees, change in fair value of contingent consideration liability, one time indirect costs in connection with our IPO, and severance costs. 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 and guidance 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.

Glossary

"Adjusted EBITDA" represents, as applicable for the period, EBITDA as further adjusted for goodwill impairment charges, share-based compensation expense, accelerated vesting of certain equity awards, loss on extinguishment of debt, loss on sublease, non-recurring legal fees, change in fair value of contingent consideration liability, one time indirect costs in connection with our IPO, and severance costs.

"Adjusted EBITDA Margin" refers to Adjusted EBITDA divided by net revenues.

"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, excluding revenue adjustments recorded in the period, but relating to performance obligations satisfied in prior periods, divided by (ii) the number of commissionable Approved Submissions for such period.

"Submitted Policies" refer to completed applications that, with respect to each such application, the consumer has authorized us to submit to the carrier.

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

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

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

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

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

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

The following table presents the number of Submitted Policies by product for the Medicare segments for the three and twelve months ended December 31, 2021 and 2020, for those submissions that are commissionable (compensated through commissions received from carriers):

The following tables present the number of Approved Submissions by product relating to commissionable policies for the Medicare segments for the three and twelve months ended December 31, 2021 and 2020. Only commissionable policies are used to calculate our LTV.

Medicare - Internal

Medicare - External

The following table presents the LTV per Approved Submission by product for the Medicare segments, adjusted for the impact of the Lookback Adjustments, for the three and twelve months ended December 31, 2021 and 2020:

The following table presents the number of Submitted Policies by product for the Medicare segments for the three and twelve months ended December 31, 2021 and 2020, for those submissions that are non-commissionable (compensated via hourly fees and enrollment fees) and do not result in commission revenue:

The following table sets forth the components of our results of operations for each quarter of 2021 (unaudited):

The following table sets forth the share-based compensation expense embedded in the operating expense line items for each quarter of 2021 (unaudited):

The following table sets forth operating segment results for each quarter of 2021 (unaudited):

The following tables set forth the reconciliations of GAAP net income (loss) to EBITDA and Adjusted EBITDA for each quarter of 2021 (unaudited):