Gohealth, Inc. · NASDAQ:GOCO
Gohealth — Q4 2021 Earnings Presentation
36 slides from Gohealth's earnings presentation, Mar 15, 2022
Slide 1: Fourth Quarter 2021 Earnings Slides
Fourth Quarter 2021 Earnings Slides March 15, 2022
Slide 2: Disclaimer
Disclaimer 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 re
Slide 3: Key Topics
Key Topics Year in Review + Market Reflection Detailed Review of Q421 & FY2021 2022 Outlook – Focus on Optimization 3
Slide 4: GoHealth – Year In Review
GoHealth – Year In Review We observed a variety of challenges in 2021 We are positioned to succeed in 2022+ Increased shopping and GoHealth is the leader in MA competition put pressure enrollments for our key partners on LTVs Large sector-wide advertising Encompass platform is gaining spend raised a
Slide 5: 2021 Lessons Learned
2021 Lessons Learned Category Lessons Learned Takeaways • Lookback adjustment on prior vintages • Constraint on Q4 2021 LTVs to mitigate future LTVs Macro shopping trends lookbacks • Additionally, lower LTVs assumed in 2022 Adjust spend to updated • Update marketing investment criteria based on LTVs
Slide 6: Medicare Advantage Market Overview
Medicare Advantage Market Overview Our market is large and growing, and the need for our services continues to rise MA Enrollment is expected to grow 7-8% p.a. until More Americans will be eligible for MA than ever in 2022 2028, from ~40% penetration today to ~50% in 2028 Est. Enrollees (millions) A
Slide 7: The GoHealth Platform
The GoHealth Platform Technology Agents Marketing LeadScore CallRouter Marketplace TeleCare / Encompass High-intent Prioritized by Matched with Proprietary tech Members receive consumers from expected LTV & specialized powers efficient support & added various channels conversion scoring agents plan
Slide 8: GoHealth has emerged as the enrollment leader
GoHealth has emerged as the enrollment leader Trailing Twelve Months Total Medicare Approved Submissions (in thousands) 1,211 867 771 716 662 GOCO 582 541 555 542 Peer 1 535 503 500 501 Peer 2 477 406 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Source: Public Filings 8
Slide 9: GoHealth – Key Metrics from FY 2021
GoHealth – Key Metrics from FY 2021 Extending our leadership position with continued volume growth Pre-Lookback Q4 2021 Results FY 2021 Results FY 2021 Results Revenue $450M $1,062M $1,227M Submissions 654K 1.2M 1.2M Adjusted EBITDA $2M $34M $146M Largest 1.2M Positive Target of Encompass $72M Enrol
Slide 10: FY 2022 Key Priorities
FY 2022 Key Priorities Optimizing unit economics to accelerate positive cash flow Key Initiatives 2022 Strategic Shift Outcomes • Reduce total volume of leads • Improve cash flow 1 Marketing • Selective sources for higher quality lead mix • Improve quality + LTVs with improved retention • Fewer new
Slide 11: Key Topics
Key Topics Year in Review + Market Reflection Detailed Review of Q421 & FY2021 2022 Outlook – Focus on Optimization 11
Slide 12: Q4 and FY 2021 Financial Summary
Q4 and FY 2021 Financial Summary Overview of financial performance Pre-Lookback Q4 2021 Results FY 2021 Results FY 2021 Results Revenue $450M $1,062M $1,227M YoY Revenue Growth +1% +21% +40% MA Submissions 654K 1.2M 1.2M MA Submissions YoY Growth +99% +84% +84% Adjusted EBITDA $2M $34M $146M Adjuste
Slide 13: Q4 2021 Results
Q4 2021 Results Q4 revenues were roughly flat YoY due to constraint + lookback; submissions up 99% +36% Net Revenues ($M) 605 +54% Lookback 446 450 289 450 Q4 2019 Q4 2020 Q4 2021 Q4 2021 Pre-Lookback 654K carrier approved Q4 Medicare Advantage submissions (+99%) 13
Slide 14: Lookback Adjustment to 2021 Financials
Lookback Adjustment to 2021 Financials We are reducing our estimates on previous enrollments due to recent churn data $1,514B • Between 2018 – 2021, we generated an Lookback 10.8% estimated $1.5B in forecasted Medicare revenues • We expect these revenues to be collected Commissions over time, but we
Slide 15: Q4 2021 LTVs vs. Prior Year Reported LTVs
Q4 2021 LTVs vs. Prior Year Reported LTVs LTV Change as of December 31, 2021 -25% 1,073 Lookback Macro Shopping Adjustment 953 15% • Lower percentage of Constraint 810 consumers who are new to Medicare and an increase in consumers that are switching their plans Carrier & Plan Mix 949 • Lower retaini
Slide 16: Q4 2021 Revenue Powered by Medicare-Internal
Q4 2021 Revenue Powered by Medicare-Internal Net Revenue Revenue – Segment Comparison1 ($ in millions) ($ in millions) +36% +36% 605 605 155 Lookback 155 Lookback 446 450 445 450 IFP 16 9 9 Enterprise 85 65 65 55 55 M-E 78 Commissions 361 385 385 386 386 M-I 351 Q4 2020 Q4 2021 Q4 2021 Pre- Q4 2020
Slide 17: Q4 2021 Results – Adjusted EBITDA
Q4 2021 Results Adjusted EBITDA ($ in millions) 170 130 107 Lookback 2 Q4 2019 Q4 2020 Q4 2021 See accompanying appendix for a reconciliation of Adjusted EBITDA, which is a non-GAAP financial measure, to the most comparable GAAP measure 17
Slide 18: FY 2021 Results
FY 2021 Results Net Revenue Adjusted EBITDA ($ in millions) ($ in millions) +21% -88% 1,062 271 877 34 FY 2020 FY 2021 FY 2020 FY 2021 See accompanying appendix for a reconciliation of Adjusted EBITDA, which is a non-GAAP financial measure, to the most comparable GAAP measure 18
Slide 19: Capital and Liquidity
Capital and Liquidity Cash on Hand • $84 million of cash and cash equivalents on-hand as of 12/31/2021 Borrowings and Capacity • $45 million in borrowing capacity remaining under revolving credit facilities as of 12/31/2021 • $665 million of long-term debt Receivables • Accounts receivable and commi
Slide 20: The Largest and Fastest Growing Commissions Receivable Book
The Largest and Fastest Growing Commissions Receivable Book Year over Year Change in Commissions Receivable ($ in millions) 453 (+56%) 154 (+21%) 116 (+15%) GOCO Peer 1 Peer 2 High quality book of future cash flow streams Note: Commissions receivable growth measured from 12/31/20 to 12/31/21. GoHeal
Slide 21: Key Topics
Key Topics Year in Review + Market Reflection Detailed Review of Q421 & FY2021 2022 Outlook – Focus on Optimization 21
Slide 22: FY 2021 Financial Summary and 2022 Outlook
FY 2021 Financial Summary and 2022 Outlook We are slowing down growth to accelerate cash and improve profitability FY 2021 Results FY 2022 Outlook Revenue $1,062M $900M – $1,100M Revenue Growth +21% (15%) - 4% Adjusted EBITDA $34M $110M - $150M Adjusted EBITDA Growth -88% +224% - 343% Adjusted EBITD
Slide 23: FY 2022 Revenue Outlook
FY 2022 Revenue Outlook We are forecasting revenues between $900M and $1,100M in 2022 Net Revenue – Net Revenue Commissionable and Enterprise ($ in millions) ($ in millions) (15%) to +4% (15%) to +4% 900 – 900 – 1,100 1,100 1,062 1,062 Enterprise Commission FY2021 FY2022 FY2021 FY2022 23
Slide 24: FY 2022 EBITDA Outlook of $110M - $150M
FY 2022 EBITDA Outlook of $110M - $150M We expect meaningful growth in EBITDA driven by our 2022 key priorities Adjusted EBITDA 2022 Key Optimization ($ in millions) Marketing Selectivity 146 110 - 150 Salesforce Optimization Lookback 34 Focus on Cash Flow 2021 2021 Pre- 2022 Lookback Higher quality
Slide 25: FY 2022 Cash Flow Bridge
FY 2022 Cash Flow Bridge Our 2022 plan is focused around accelerating our positive cash flow timeline Cash Flow from Operations ($ in millions) (50) – (10) (299) FY21 Cash Flow Increased Encompass More selective CC&E Other FY22 Estimated from Operations commissions growth marketing & Cash Flow from
Slide 26: Cumulative Cash Flow from Submissions
Cumulative Cash Flow from Submissions Our large book of business will continue to pay dividends despite slowing down in 2022 Cumulative Cash Flow from MA Submissions ($ in thousands) 400,000 In-Period 300,000 Prior Periods 200,000 100,000 0 2015 2016 2017 2018 2019 2020 2021 Commissions receivable f
Slide 27: FY 2022 Key Priorities
FY 2022 Key Priorities Optimizing unit economics to accelerate positive cash flow Key Initiatives 2022 Strategic Shift Outcomes • Reduce total volume of leads • Improve cash flow 1 Marketing • Selective sources for higher quality lead mix • Improve quality + LTVs with improved retention • Fewer new
Slide 28: Marketing: Focus on Efficiency
Marketing: Focus on Efficiency Optimizing sources and our marketing spend allocation to improve profitability Optimize lead Drive cost discipline generation capabilities • Increase source filtering to focus on • Enhance source management to highest-retaining characteristics improve marketing ROI • A
Slide 29: Sales: Improve Guided Selling Platform to Drive Performance
Sales: Improve Guided Selling Platform to Drive Performance Focus is on agent performance development and retention to drive efficiency Experience on our guided selling platform meaningfully improves performance • 20% relative improvement to conversion amongst high usage agents • Active rate improve
Slide 30: Technology: Drive Efficiency Across Key Business Groups
Technology: Drive Efficiency Across Key Business Groups A narrow set of high-leverage technology investments are planned for 2022 Marketing Sales Consumer Engagement • Improve targeted marketing • PlanFit guided selling tool • TeleCare platform for with better automation to improve sales quality mem
Slide 31: Continued Momentum with Encompass
Continued Momentum with Encompass Several retention and Encompass programs are underway to improve our economics Encompass Members have 19% Key Initiatives to Drive higher revenue per member Increased Retention Several initiatives are planned or +19% 1,012 underway to improve retention in 2022: 850
Slide 32: Sharp Focus on Profitability
Sharp Focus on Profitability $200M in 2022 cost savings Key levers to improve identified vs 2021 run-rate profitability in 2022 • Lower spending on marketing & SG&A advertising, particularly during less profitable selling periods • Building agent experience on our guided selling platform which impro
Slide 33: Summary: Commitment to Optimization
Summary: Commitment to Optimization We are the largest enroller in We have the most efficient tech our sector platform to capture the growth in consumer demand Our 2022 focus is improving We are targeting positive cash unit economics by optimizing flow from operations by the business for efficiency
Slide 34: Appendix
Appendix 34
Slide 35: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA Adjustments to EBITDA ($ in thousands) Description of Adjustments Q4 2019 Q4 2020 Q4 2021 FY 2020 FY 2021 Represents the loss on debt extinguishment related to the Initial Net Income (Loss) $27,700 $133,100 $(432,320) $(97,200) $(534,194) 1 Term Loan F
Slide 36: Reconciliation of Net Income to Adjusted EBITDA (Quarterly)
Reconciliation of Net Income to Adjusted EBITDA (Quarterly) Adjustments to EBITDA ($ in thousands) Description of Adjustments Q1 2021 Q2 2021 Q3 2021 Q4 2021 Net Income (Loss) $(7,286) $(39,175) $(55,431) $(432,320) Represents the loss on debt extinguishment related to the Initial 1 Term Loan Facili