Press Release Details

Investor Relations

GoHealth Reports Fourth Quarter and Fiscal 2020 Results

Mar 08, 2021 at 4:42 PM EST
Expects Continued Strong Growth in 2021

CHICAGO, March 8, 2021 /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, 2020.

  • Fourth quarter 2020 net revenue of $445.9 million increased 55% compared to the prior year period, and fiscal year 2020 net revenue of $877.4 million increased 63% compared to the prior year period
  • Fourth quarter 2020 Medicare Advantage (MA) Submitted Policies of 330,604 increased 58% compared to the prior year period, and fiscal year 2020 MA Submitted Policies of 644,669 increased 81% compared to the prior year period
  • Fourth quarter 2020 LTV per carrier Approved MA Submission of $1,073 increased 5% compared to the prior year period, and fiscal year 2020 LTV per carrier Approved MA Submission of $995 increased 3% compared to the prior year period
  • Fourth quarter 2020 net income of $133.1 million and fiscal year 2020 net loss of $97.2 million (including $209.3 million of accelerated vesting of certain equity awards in connection with the IPO1)
  • Fourth quarter 2020 adjusted EBITDA2 of $169.9 million increased 31% compared to the prior year period, and fiscal year 2020 adjusted EBITDA of $271.0 million increased 59% compared to the prior year period
  • The Company provided its full year 2021 outlook, and expects total net revenue of $1,150 - $1,300 million (+31% to +48%) powered by commission revenue of $950 - $1,100 million (+42% to +64%).  The company also expects adjusted EBITDA of $345 - $385 million (+27% to +42%)

 


Clint Jones, co-founder and CEO said, "GoHealth's fourth quarter revenue growth of 55% was driven by 75% revenue growth in our Internal Medicare segment, including LTV expansion of 5%.  These excellent top-line results reflect the great work of our agent force and a continuation of the strong full year trends where we grew revenue 63%, powered by a doubling of Internal Medicare revenue and leading to top-tier adjusted EBITDA margins of 31%.  We continue to see strong consumer demand for our services, particularly around education, transparency and choice when evaluating their Medicare options."
 

Jones continued, "We are the largest and most profitable DTC Medicare enroller with 730,000 submissions in 2020, and with 75 million potential customers, we have a long runway for growth.  Our tech-enabled telesales agents are able to help consumers shop for the right plan to fit their unique needs, and do so from the safety and comfort of their homes.  Given the abundant opportunities in a fast-growing Medicare market, we are accelerating investments in our leadership position in 2021, including hiring more agents earlier in the year, and providing them with enhanced training and technology tools to deliver high-quality submissions with greater efficiency.  We believe that these investments in our platform will help drive over 50% commissionable revenue growth in 2021, and position us for sustained growth in 2022 and beyond."
 

2020 Highlights

(1)

Total company revenue grew 63% to $877.4 million

 

a.

Total Medicare Submitted Policies3 grew 71% during 2020 to 729,912

(2)

Medicare—Internal revenue increased 110% to $667.3 million

 

a.

Medicare—Internal segment profit increased 79% to $296.9 million, with a 44% margin

(3)

Adjusted EBITDA grew 59% to $271.0 million, resulting in full-year adjusted EBITDA margins of 31%

(4)

LTV per carrier Approved MA Submission increased 3% to $995 during 2020

(5)

Grew commissions receivable balance by $427.5 million (+112%) in 2020 to $810.4 million

Fourth Quarter AEP Highlights

(1)

Total company revenue grew 55% to $445.9 million

 

a.

Total Medicare Submitted Policies grew 48% during the fourth quarter to 374,359

(2)

Medicare—Internal revenue increased 75% to $351.1 million

 

a.

Medicare—Internal segment profit increased 40% to $172.9 million, with a 49% margin

(3)

Adjusted EBITDA grew 31% to $169.9 million, resulting in adjusted EBITDA margins of 38% as the company invested in internal lead generation and agent initiatives to drive persistency improvements

 

a.

LTV per carrier Approved MA Submission increased 5% to $1,073 during the fourth quarter

2021 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. During this time, demand for healthcare has demonstrated great resilience, and we believe that the COVID-19 pandemic has created favorable, long-term industry dynamics for technology-driven, direct-to-consumer models such as GoHealth's insurance marketplace.

The Company has provided its financial outlook for the fiscal year ending December 31, 2021 based on current market conditions and expectations:

(1)

Full-year 2021 net revenue of $1,150 - $1,300 million, representing year-over-year growth of 31% - 48%

 

a.

Full-year 2021 commission revenue of $950 - $1,100 million, representing year-over-year growth of 42% - 64%, fueled by the Company's continued investment in its Medicare business

(2)

Full-year 2021 adjusted EBITDA of $345 - $385 million, representing year-over-year growth of 27% - 42%

Conference Call Details

The Company will host a conference call today, Monday, March 8, 2021 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 6590925. 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. Since its inception, GoHealth has enrolled millions of people in Medicare and individual and family plans. For more information, visit https://www.gohealth.com.

Investor Relations:
Jay Koval, VP of Investor Relations
IR@gohealth.com

Media Relations:
Pressinquiries@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 twelve months ended December 31, 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.

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 2021 and first quarter of 2021, including with respect to revenue and Adjusted EBITDA 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 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. 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 one time indirect costs in connection with our 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 non-commission 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 year ended December 31, 2019 are presented for two periods, the Predecessor 2019 Period and Successor 2019 Period, 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 period from January 1, 2019 through September 12, 2019 are referred to as those of the "Predecessor 2019 Period". The Company's financial results for the period from September 13, 2019 through December 31, 2019 are referred to as those of the "Successor 2019 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 January 1, 2019 through September 12, 2019 and the period from September 13, 2019 through December 31, 2019 separately, management views the Company's operating results for the year ended December 31, 2019 by combining the results of the applicable Predecessor 2019 Period and Successor 2019 Period because such presentation provides the most meaningful comparison to its results for the year ended December 31, 2020.

The Company cannot adequately benchmark the operating results of the period from September 13, 2019 through December 31, 2019 against any of the current periods reported in its Consolidated Financial Statements without combining it with 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 year ended December 31, 2019.

The combined results for the year ended December 31, 2019, which we refer to herein as the results for the "year ended December 31, 2019" represent the sum of the reported amounts for the Predecessor 2019 Period from January 1, 2019 through September 12, 2019 and the Successor 2019 Period from September 13, 2019 through December 31, 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 tables set forth the components of our results of operations for the periods indicated (unaudited):

(in thousands, except percentages and per share amounts)

Successor

       

Three months ended Dec.

31, 2020

 

Three months ended Dec.

31, 2019

       

Dollars

 

% of Net

Revenues

 

Dollars

 

% of Net

Revenues

 

$ Change

 

% Change

Net revenues:

                     

Commission

$

360,634

   

80.9

%

 

$

229,624

   

79.5

%

 

$

131,010

   

57.1

%

Enterprise

85,289

   

19.1

%

 

59,077

   

20.5

%

 

26,212

   

44.4

%

Net revenues

445,923

   

100.0

%

 

288,701

   

100.0

%

 

157,222

   

54.5

%

Operating expenses:

                     

Cost of revenue

94,682

   

21.2

%

 

85,648

   

29.7

%

 

9,034

   

10.5

%

Marketing and advertising

96,309

   

21.6

%

 

17,671

   

6.1

%

 

78,638

   

445.0

%

Customer care and enrollment

60,229

   

13.5

%

 

39,731

   

13.8

%

 

20,498

   

51.6

%

Technology

9,530

   

2.1

%

 

5,488

   

1.9

%

 

4,042

   

73.7

%

General and administrative

19,828

   

4.4

%

 

11,388

   

3.9

%

 

8,440

   

74.1

%

Change in fair value of contingent consideration liability

   

%

 

70,700

   

24.5

%

 

(70,700)

   

(100.0)

%

Amortization of intangible assets

23,514

   

5.3

%

 

23,514

   

8.1

%

 

   

%

Total operating expenses

304,092

   

68.2

%

 

254,140

   

88.0

%

 

49,952

   

19.7

%

Income from operations

141,831

   

31.8

%

 

34,561

   

12.0

%

 

107,270

   

310.4

%

Interest expense

8,591

   

1.9

%

 

6,787

   

2.4

%

 

1,804

   

26.6

%

Other (income) expense

135

   

%

 

(8)

   

%

 

143

   

N/M

Income (loss) before income taxes

133,105

   

29.8

%

 

27,782

   

9.6

%

 

105,323

   

379.1

%

Income tax expense (benefit)

5

   

%

 

82

   

%

 

(77)

   

(93.9)

%

Net income (loss)

$

133,100

   

29.8

%

 

$

27,700

   

9.6

%

 

$

105,400

   

380.5

%

Net income (loss) attributable to noncontrolling interests

97,143

   

21.8

%

               

Net income (loss) attributable to GoHealth, Inc.

$

35,957

   

8.1

%

               

Net income (loss) per share:

                     

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

$

0.43

                     

Net income (loss) per share of common stock — diluted (1)

$

0.41

                     

Weighted-average shares of common stock outstanding — basic

84,194

                     

Weighted-average shares of common stock outstanding — diluted

321,191

                     

Non-GAAP financial measures:

                     

EBITDA

$

166,806

       

$

58,512

             

Adjusted EBITDA

$

169,889

       

$

129,782

             

Adjusted EBITDA margin

38.1

%

     

45.0

%

           

_________________________

NM = Not meaningful

(1)

Net income per share of common stock - diluted of $0.41 is calculated by dividing net income of $133.1 million, which considers the reallocation of earnings after the assumed conversion of Class B Common Stock for Class A Common Stock, by the weighted-average shares of common stock outstanding - diluted of 321,191.

 

(in thousands, except percentages
and per share amounts)

Successor

 

Predecessor

 

Non-GAAP Combined

       

Twelve months ended Dec.

31, 2020

 

Period from

Sep. 13, 2019 

through Dec.

31, 2019

 

Period from

Jan. 1, 2019 

through Sep.

12, 2019

 

Twelve months ended Dec.

31, 2019

       

Dollars

 

% of Net

Revenues

 

Dollars

 

Dollars

 

Dollars

 

% of Net

Revenues

 

$ Change

 

% Change

Net revenues:

                             

Commission

$

671,140

   

76.5

%

 

$

243,347

   

$

175,834

   

$

419,181

   

77.7

%

 

$

251,959

   

60.1

%

Enterprise

206,210

   

23.5

%

 

65,144

 

55,176

   

120,320

   

22.3

%

 

85,890

   

71.4

%

Net revenues

877,350

   

100.0

%

 

308,491

 

231,010

   

539,501

   

100.0

%

 

337,849

   

62.6

%

Operating expenses:

                           

Cost of revenue

199,202

   

22.7

%

 

90,384

 

79,169

   

169,553

   

31.4

%

 

29,649

   

17.5

%

Marketing and advertising

206,864

   

23.6

%

 

24,811

 

37,769

   

62,580

   

11.6

%

 

144,284

   

230.6

%

Customer care and enrollment

165,497

   

18.9

%

 

44,356

 

49,149

   

93,505

   

17.3

%

 

71,992

   

77.0

%

Technology

59,348

   

6.8

%

 

6,006

 

40,312

   

46,318

   

8.6

%

 

13,030

   

28.1

%

General and administrative

197,229

   

22.5

%

 

13,674

 

79,219

   

92,893

   

17.2

%

 

104,336

   

112.3

%

Change in fair value of
contingent consideration
liability

19,700

   

2.2

%

 

70,700

 

   

70,700

   

13.1

%

 

(51,000)

   

(72.1)

%

Amortization of intangible
assets

94,056

   

10.7

%

 

28,217

 

   

28,217

   

5.2

%

 

65,839

   

233.3

%

Acquisition related transaction
costs

   

%

 

6,245

 

2,267

   

8,512

   

1.6

%

 

(8,512)

   

(100.0)

%

Total operating expenses

941,896

   

107.4

%

 

284,393

 

287,885

   

572,278

   

106.1

%

 

369,618

   

64.6

%

Income (loss) from operations

(64,546)

   

(7.4)

%

 

24,098

 

(56,875)

   

(32,777)

   

(6.1)

%

 

(31,769)

   

96.9

%

Interest expense

32,969

   

3.8

%

 

8,076

 

140

   

8,216

   

1.5

%

 

24,753

   

301.3

%

Other (income) expense

(358)

   

%

 

(17)

 

114

   

97

   

%

 

(455)

   

N/M

Income (loss) before income taxes

(97,157)

   

(11.1)

%

 

16,039

 

(57,129)

   

(41,090)

   

(7.6)

%

 

(56,067)

   

136.4

%

Income tax expense (benefit)

43

   

%

 

44

 

(66)

   

(22)

   

%

 

65

   

(295.5)

%

Net income (loss)

$

(97,200)

   

(11.1)

%

 

$

15,995

 

$

(57,063)

   

$

(41,068)

   

(7.6)

%

 

$

(56,132)

   

136.7

%

Net loss attributable to
noncontrolling interests

(52,933)

   

(6.0)

%

                     

Net loss attributable to
GoHealth, Inc.

$

(44,267)

   

(5.0)

%

                     

Net income (loss) per share:

                             

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

$

(0.22)

                             

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

84,189

                             

Non-GAAP financial measures:

                             

EBITDA

$

34,364

       

$

52,853

   

$

(52,742)

   

$

111

             

Adjusted EBITDA

$

271,029

       

$

130,465

   

$

39,973

   

$

170,438

             

Adjusted EBITDA margin

30.9

%

     

42.3

%

 

17.3

%

 

31.6

%

           

_________________________

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):

(in thousands)

 

Successor

 

Three months

ended Dec.

31, 2020

 

Three months

ended Dec.

31, 2019

Net revenues

 

$

445,923

   

$

288,701

 

Net income

 

133,100

   

27,700

 

Interest expense

 

8,591

   

6,787

 

Income tax expense

 

5

   

82

 

Depreciation and amortization expense

 

25,110

   

23,943

 

EBITDA

 

166,806

   

58,512

 

Share-based compensation expense (1)

 

3,083

   

448

 

Change in fair value of contingent consideration liability (2)

 

   

70,700

 

Severance costs (3)

 

   

122

 

Adjusted EBITDA

 

$

169,889

   

$

129,782

 

Adjusted EBITDA margin

 

38.1

%

 

45.0

%

_________________________

(1)

Represents non-cash, share-based compensation expense relating to stock options, restricted stock units and time-vesting units.

(2)

Represents the change in fair value of the contingent consideration liability due to the predecessor owners of the Company arising from the Centerbridge Acquisition.

(3)

Represents costs associated with the termination of employment.

 

(in thousands)

Successor

 

Predecessor

 

Non-GAAP

Combined

Twelve

months

ended Dec.

31, 2020

 

Period from

Sep. 13, 2019 

through Dec.

31, 2019

 

Period from

Jan. 1, 2019 

through Sep.

12, 2019

 

Twelve

months

ended Dec.

31, 2019

Net revenues

$

877,350

   

$

308,491

   

$

231,010

   

$

539,501

 

Net income (loss)

(97,200)

   

15,995

   

(57,063)

   

(41,068)

 

Interest expense

32,969

   

8,076

   

140

   

8,216

 

Income tax expense (benefit)

43

   

44

   

(66)

   

(22)

 

Depreciation and amortization expense

98,552

   

28,738

   

4,247

   

32,985

 

EBITDA

34,364

   

52,853

   

(52,742)

   

111

 

Share-based compensation expense (1)

6,929

   

448

   

   

448

 

Accelerated vesting of certain equity awards (2)

209,300

   

   

87,060

   

87,060

 

Change in fair value of contingent consideration liability (3)

19,700

   

70,700

   

   

70,700

 

Centerbridge Acquisition costs (4)

   

6,245

   

4,908

   

11,153

 

IPO transactions costs (5)

659

   

   

   

 

Severance costs (6)

77

   

219

   

747

   

966

 

Adjusted EBITDA

$

271,029

   

$

130,465

   

$

39,973

   

$

170,438

 

Adjusted EBITDA margin

30.9

%

 

42.3

%

 

17.3

%

 

31.6

%

_________________________

(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 twelve months ended December 31, 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.

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

(in thousands)

 

Successor

 

Predecessor

 

Twelve

months

ended Dec.

31, 2020

 

Period from

Sep. 13, 2019 

through Dec.

31, 2019

 

Period from

Jan. 1, 2019 

through Sep.

12, 2019

Marketing and advertising

 

$

24,890

   

$

53

   

$

1,674

 

Customer care and enrollment

 

12,599

   

20

   

 

Technology

 

33,085

   

66

   

27,059

 

General and administrative

 

145,655

   

309

   

58,327

 

Total share-based compensation expense

 

$

216,229

   

$

448

   

$

87,060

 

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

(in thousands, except per share amounts)

Successor

Dec. 31, 2020

 

Dec. 31, 2019

Assets

     

Current assets:

     

Cash and cash equivalents

$

144,234

   

$

12,276

 

Accounts receivable, net of allowance for doubtful accounts of $1,045 in 2020 and $904 in 2019

26,871

   

24,461

 

Receivable from NVX Holdings, Inc.

3,395

   

 

Commissions receivable - current

188,128

   

101,078

 

Prepaid expense and other current assets

29,194

   

5,954

 

Total current assets

391,822

   

143,769

 

Commissions receivable - non-current

622,270

   

281,853

 

Other long-term assets

2,072

   

998

 

Property, equipment, and capitalized software, net

17,353

   

6,339

 

Intangible assets, net

688,726

   

782,783

 

Goodwill

386,553

   

386,553

 

Total assets

$

2,108,796

   

$

1,602,295

 

Liabilities and Stockholders' / Members' Equity

     

Current liabilities:

     

Accounts payable

$

8,733

   

$

13,582

 

Accrued liabilities

26,926

   

22,568

 

Commissions payable - current

78,478

   

56,003

 

Deferred revenue

736

   

15,218

 

Current portion of long-term debt

4,170

   

3,000

 

Other current liabilities

8,328

   

2,694

 

Total current liabilities

127,371

   

113,065

 

Non-current liabilities:

     

Commissions payable - non-current

182,596

   

97,489

 

Capital lease obligations, less current portion

396,400

   

288,233

 

Contingent consideration

   

242,700

 

Other non-current liabilities

3,274

   

664

 

Total non-current liabilities

582,270

   

629,086

 

Stockholders' / members' equity:

     

Members' interest

   

860,161

 

Class A common stock – $0.0001 par value; 1,100,000 shares authorized; 84,196 shares issued and outstanding at
December 31, 2020

8

   

 

Class B common stock – $0.0001 par value; 619,004 shares authorized; 236,997 shares issued and outstanding at
December 31, 2020

24

   

 

Preferred stock – $0.0001 par value; 20,000 shares authorized; no shares issued and outstanding at December 31, 2020

   

 

Additional paid-in capital

397,504

   

 

Accumulated other comprehensive income (loss)

17

   

(17)

 

Accumulated deficit

(18,802)

   

 

Total stockholders' equity attributable to GoHealth, Inc. / members' equity

378,751

   

860,144

 

Non-controlling interests

1,020,404

   

 

Total stockholders' / members' equity

1,399,155

   

860,144

 

Total liabilities and stockholders' / members' equity

$

2,108,796

   

$

1,602,295

 

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

(in thousands)

Successor

 

Predecessor

Twelve

months

ended Dec.

31, 2020

 

Period from

Sep. 13, 2019 

through Dec.

31, 2019

 

Period from

Jan. 1, 2019 

through Sep.

12, 2019

Operating Activities

         

Net income (loss)

$

(97,200)

   

$

15,995

   

$

(57,063)

 

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

         

Share-based compensation

216,229

   

448

   

87,060

 

Depreciation and amortization

4,496

   

521

   

4,247

 

Amortization of intangible assets

94,056

   

28,217

   

 

Amortization of debt discount and issuance costs

2,430

   

472

   

 

Change in fair value of contingent consideration

19,700

   

70,700

   

 

Other non-cash items

(1,691)

   

417

   

150

 

Changes in assets and liabilities, net of acquisition:

         

Accounts receivable

(1,647)

   

(15,113)

   

(108)

 

Commissions receivable

(427,467)

   

(203,956)

   

(63,448)

 

Prepaid expenses and other assets

(24,021)

   

(2,316)

   

1,325

 

Accounts payable

(5,340)

   

5,031

   

(1,981)

 

Accrued liabilities

4,358

   

31

   

17,860

 

Deferred revenue

(14,482)

   

11,935

   

1,926

 

Commissions payable

107,583

   

80,828

   

19,228

 

Other liabilities

8,779

   

(2,494)

   

85

 

Net cash provided by (used in) operating activities

(114,217)

   

(9,284)

   

9,281

 

Investing Activities

         

Acquisition of business, net of cash

   

(807,591)

   

 

Purchases of property, equipment and software

(14,523)

   

(2,419)

   

(5,597)

 

Net cash used in investing activities

(14,523)

   

(810,010)

   

(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

   

   

 

Partner distributions

(400)

   

   

 

Borrowings under term loans

117,000

   

300,000

   

 

Principal payments under term loans

(3,878)

   

(750)

   

 

Borrowings under revolving credit facilities

   

   

56,534

 

Payments under revolving credit facilities

   

   

(59,915)

 

Debt issuance cost payments

(6,293)

   

(9,283)

   

 

Principal payments under capital lease obligations

(293)

   

(351)

   

(68)

 

Advancement to NVX Holdings, Inc.

(3,395)

   

   

 

Net cash provided by (used in) financing activities

260,663

   

830,879

   

(3,449)

 

Effect of exchange rate changes on cash

35

   

(17)

   

(32)

 

Increase in cash and cash equivalents

131,958

   

11,568

   

203

 

Cash and cash equivalents at beginning of period

12,276

   

708

   

505

 

Cash and cash equivalents at end of period

$

144,234

   

$

12,276

   

$

708

 

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

(in thousands, except percentages)

Successor

       

Three months ended Dec.

31, 2020

 

Three months ended Dec.

31, 2019

       

Dollars

 

% of Net

Revenues

 

Dollars

 

% of Net

Revenues

 

$ Change

 

% Change

Net revenues:

                     

Medicare - Internal

$

351,082

   

78.7

%

 

$

201,115

   

69.7

%

 

$

149,967

   

74.6

%

Medicare - External

78,355

   

17.6

%

 

55,286

   

19.1

%

 

23,069

   

41.7

%

IFP and Other - Internal

10,473

   

2.3

%

 

20,086

   

7.0

%

 

(9,613)

   

(47.9)

%

IFP and Other - External

6,013

   

1.3

%

 

12,214

   

4.2

%

 

(6,201)

   

(50.8)

%

Net revenues

445,923

   

100.0

%

 

288,701

   

100.0

%

 

157,222

   

54.5

%

Segment profit:

                     

Medicare - Internal

172,920

   

38.8

%

 

123,711

   

42.9

%

 

49,209

   

39.8

%

Medicare - External

5,051

   

1.1

%

 

9,849

   

3.4

%

 

(4,798)

   

(48.7)

%

IFP and Other - Internal

4,087

   

0.9

%

 

4,095

   

1.4

%

 

(8)

   

(0.2)

%

IFP and Other - External

1,121

   

0.3

%

 

89

   

%

 

1,032

   

N/M

Segment profit

183,179

   

41.1

%

 

137,744

   

47.7

%

 

45,435

   

33.0

%

Corporate expense

17,834

   

4.0

%

 

8,969

   

3.1

%

 

8,865

   

98.8

%

Change in fair value of contingent consideration liability

   

%

 

70,700

   

24.5

%

 

(70,700)

   

(100.0)

%

Amortization of intangible assets

23,514

   

5.3

%

 

23,514

   

8.1

%

 

   

%

Interest expense

8,591

   

1.9

%

 

6,787

   

2.4

%

 

1,804

   

26.6

%

Other (income) expense

135

   

%

 

(8)

   

%

 

143

   

N/M

Income before income taxes

$

133,105

   

29.8

%

 

$

27,782

   

9.6

%

 

$

105,323

   

379.1

%

_________________________

NM = Not meaningful

 

(in thousands, except percentages)

Successor

 

Predecessor

 

Non-GAAP Combined

       

Twelve months ended

Dec. 31, 2020

 

Period from

Sep. 13, 2019 

through Dec.

31, 2019

 

Period from

Jan. 1, 2019 

through Sep.

12, 2019

 

Twelve months ended Dec.

31, 2019

       

Dollars

 

% of Net

Revenues

 

Dollars

 

Dollars

 

Dollars

 

% of Net

Revenues

 

$ Change

 

% Change

Net revenues:

                             

Medicare - Internal

$

667,293

   

76.1

%

 

$

215,322

   

$

102,196

   

$

317,518

   

58.9

%

 

$

349,775

   

110.2

%

Medicare - External

155,660

   

17.7

%

 

59,152

 

55,981

   

115,133

   

21.3

%

 

40,527

   

35.2

%

IFP and Other - Internal

32,271

   

3.7

%

 

20,850

 

37,909

   

58,759

   

10.9

%

 

(26,488)

   

(45.1)

%

IFP and Other - External

22,126

   

2.5

%

 

13,167

 

34,924

   

48,091

   

8.9

%

 

(25,965)

   

(54.0)

%

Net revenues

877,350

   

100.0

%

 

308,491

 

231,010

   

539,501

   

100.0

%

 

337,849

   

62.6

%

Segment profit:

                           

Medicare - Internal

296,865

   

33.8

%

 

126,210

 

40,024

   

166,234

   

30.8

%

 

130,631

   

78.6

%

Medicare - External

5,944

   

0.7

%

 

10,584

 

4,893

   

15,477

   

2.9

%

 

(9,533)

   

(61.6)

%

IFP and Other - Internal

4,269

   

0.5

%

 

1,650

 

2,195

   

3,845

   

0.7

%

 

424

   

11.0

%

IFP and Other - External

1,910

   

0.2

%

 

584

 

1,748

   

2,332

   

0.4

%

 

(422)

   

(18.1)

%

Segment profit

308,988

   

35.2

%

 

139,027

 

48,860

   

187,887

   

34.8

%

 

121,101

   

64.5

%

Corporate expense

259,778

   

29.6

%

 

9,767

 

103,469

   

113,236

   

21.0

%

 

146,542

   

129.4

%

Change in fair value of
contingent consideration
liability

19,700

   

2.2

%

 

70,700

 

   

70,700

   

13.1

%

 

(51,000)

   

(72.1)

%

Amortization of intangible
assets

94,056

   

10.7

%

 

28,217

 

   

28,217

   

5.2

%

 

65,839

   

233.3

%

Transaction costs

   

%

 

6,245

 

2,267

   

8,512

   

1.6

%

 

(8,512)

   

(100.0)

%

Interest expense

32,969

   

3.8

%

 

8,076

 

140

   

8,216

   

1.5

%

 

24,753

   

301.3

%

Other (income) expense

(358)

   

%

 

(17)

 

114

   

97

   

%

 

(455)

   

N/M

Income (loss) before income
taxes

$

(97,157)

   

(11.1)

%

 

$

16,039

   

$

(57,129)

   

$

(41,090)

   

(7.6)

%

 

$

(56,067)

   

136.4

%

_________________________

NM = Not meaningful

The following table presents the number of Submitted Policies by product for the Medicare segments for the three and twelve months ended December 31, 2020 and 2019, for those submissions that are commissionable (compensated through commissions received from carriers):

 

Successor

 

Successor

 

Predecessor

 

Combined

 

Three

months

ended Dec.

31, 2020

 

Three

months

ended Dec.

31, 2019

 

Twelve

months

ended Dec.

31, 2020

 

Period from

Sep. 13, 2019 

through Dec.

31, 2019

 

Period from

Jan. 1, 2019 

through Sep.

12, 2019

 

Twelve

months

ended Dec.

31, 2019

Medicare Advantage

330,604

 

208,991

 

644,669

 

222,599

 

134,173

 

356,772

Medicare Supplement

2,955

 

6,681

 

9,119

 

7,444

 

11,205

 

18,649

Prescription Drug Plans

10,293

 

13,386

 

16,762

 

13,838

 

7,675

 

21,513

Total Medicare - Commissionable Submitted Policies

343,852

 

229,058

 

670,550

 

243,881

 

153,053

 

396,934

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, 2020 and 2019. Only commissionable policies are used to calculate our LTV.

Medicare - Internal

 

Successor

 

Successor

 

Predecessor

 

Combined

 

Three

months

ended Dec.

31, 2020

 

Three

months

ended Dec.

31, 2019

 

Twelve

months

ended Dec.

31, 2020

 

Period from

Sep. 13, 2019 

through Dec.

31, 2019

 

Period from

Jan. 1, 2019 

through Sep.

12, 2019

 

Twelve

months

ended Dec.

31, 2019

Medicare Advantage

250,251

 

151,029

 

478,863

 

159,969

 

86,544

 

246,513

Medicare Supplement

1,514

 

1,653

 

3,116

 

1,852

 

3,198

 

5,050

Prescription Drug Plans

8,263

 

8,630

 

13,582

 

8,943

 

5,078

 

14,021

Total Medicare - Internal Commissionable Approved
Submissions

260,028

 

161,312

 

495,561

 

170,764

 

94,820

 

265,584

Medicare - External

 

Successor

 

Successor

 

Predecessor

 

Combined

 

Three

months

ended Dec.

31, 2020

 

Three

months

ended Dec.

31, 2019

 

Twelve

months

ended Dec.

31, 2020

 

Period from

Sep. 13, 2019 

through Dec.

31, 2019

 

Period from

Jan. 1, 2019 

through Sep.

12, 2019

 

Twelve

months

ended Dec.

31, 2019

Medicare Advantage

77,669

 

50,411

 

158,325

 

53,852

 

48,341

 

102,193

Medicare Supplement

1,219

 

3,460

 

5,254

 

3,926

 

7,065

 

10,991

Prescription Drug Plans

1,798

 

4,756

 

3,036

 

4,895

 

2,597

 

7,492

Total Medicare - External Commissionable Approved
Submissions

80,686

 

58,627

 

166,615

 

62,673

 

58,003

 

120,676

The following table presents the LTV per Approved Submission by product for the Medicare segments for the three and twelve months ended December 31, 2020 and 2019:

 

Successor

 

Successor

 

Predecessor

 

Non-GAAP

Combined

 

Three

months

ended Dec.

31, 2020

 

Three

months

ended Dec.

31, 2019

 

Twelve

months

ended Dec.

31, 2020

 

Period from

Sep. 13, 2019 

through Dec.

31, 2019

 

Period from

Jan. 1, 2019 

through Sep.

12, 2019

 

Twelve

months

ended Dec.

31, 2019

Medicare Advantage

$

1,073

 

$

1,019

 

$

995

 

$

1,018

 

$

888

 

$

968

Medicare Supplement

$

683

 

$

934

 

$

849

 

$

936

 

$

911

 

$

920

Prescription Drug Plans

$

215

 

$

213

 

$

215

 

$

213

 

$

194

 

$

206

The following table presents the number of Submitted Policies by product for the Medicare segments for the three and twelve months ended December 31, 2020 and 2019, for those submissions that are non-commissionable (compensated via hourly fees and enrollment fees) and do not result in commission revenue:

 

Successor

 

Successor

 

Predecessor

 

Combined

 

Three

months

ended Dec.

31, 2020

 

Three

months

ended Dec.

31, 2019

 

Twelve

months

ended Dec.

31, 2020

 

Period from

Sep. 13, 2019 

through Dec.

31, 2019

 

Period from

Jan. 1, 2019 

through Sep.

12, 2019

 

Twelve

months

ended Dec.

31, 2019

Medicare Advantage

23,993

 

16,770

 

44,799

 

17,775

 

4,240

 

22,015

Medicare Supplement

3,520

 

3,951

 

8,782

 

4,185

 

1,051

 

5,236

Prescription Drug Plans

2,994

 

2,886

 

5,781

 

3,041

 

471

 

3,512

Total Medicare - Non-commissionable Submitted
Policies

30,507

 

23,607

 

59,362

 

25,001

 

5,762

 

30,763

The following table sets forth the components of our results of operations for each quarter of 2020 (unaudited):

(in thousands)

Successor

Three

months

ended Mar.

31, 2020

 

Three

months

ended Jun.

30, 2020

 

Three

months

ended Sep.

30, 2020

 

Three

months

ended Dec.

31, 2020

 

Twelve

months

ended Dec.

31, 2020

Net revenues:

                 

Commission

$

112,510

   

$

96,606

   

$

101,390

   

$

360,634

   

$

671,140

 

Enterprise

28,500

   

30,451

   

61,970

   

85,289

   

206,210

 

Net revenues

141,010

   

127,057

   

163,360

   

445,923

   

877,350

 

Operating expenses: