Business Overview
GoHealth, Inc. is a leading health insurance marketplace and Medicare-focused digital health company dedicated to improving access to healthcare across the United States. The Company’s mission centers on simplifying the often-complex process of enrolling in health insurance plans, ensuring consumers can make informed decisions that best suit their healthcare needs. By leveraging advanced technology, data analytics, and deep industry expertise, GoHealth matches customers with optimal healthcare policies and carriers. Since its inception, the Company has successfully enrolled millions of individuals in Medicare, as well as individual and family plans.

GoHealth has evolved significantly from its early days as a high-volume Medicare distributor focused on a health plan-centric telephonic sales approach to becoming a consumer-centric, technology-driven leader in the Medicare space. Initially, the Company relied on large sales and marketing spending to meet annual enrollment period targets, but today, it operates a streamlined, standardized Encompass model that enhances efficiency and reduces revenue risk. Its scale has expanded from merely partnering with major health plans to offering high-quality, five-star plans across all 50 states, ensuring consumers receive the best coverage options. Furthermore, GoHealth has transformed its financial model, shifting from negative cash flow due to high upfront costs to generating substantial cash flow from high-quality enrollments and back-book policies,reinforcing its long-term sustainability and market leadership.

The Company’s revenue model primarily hinges on commissions earned from insurance carriers for each policy sold through its platform. These commissions vary based on the type and value of the insurance policy, offering a scalable and performance-based revenue stream. Additionally, GoHealth benefits from renewal commissions, as many health insurance policies renew annually, ensuring ongoing revenue from long-term policyholders.

In recent years, GoHealth has expanded its services to capture a broader range of healthcare solutions, reinforcing its commitment to enhancing healthcare accessibility. The Company’s dedication to innovation and customer-centric solutions has solidified its position as a trusted intermediary between consumers and insurance providers.

Financial Drivers and Platform Overview Revenue

• Two Types of Agents: GoHealth employs two types of agents; Internal agents (“Captive”) and external GoPartner Solutions (“GPS”) agents. Internal captive agents are directly employed by GoHealth and focus on providing personalized service and support to consumers. These services include but are not limited to, assisting and maintaining Medicare-eligible consumers with their enrollment process through GoHealth. Conversely, external GPS agents operate independently but are integrated into GoHealth’s system, allowing them to leverage GoHealth’s technology platform. Importantly, GPS agents generate their own marketing efforts, offering GoHealth’s services to a broader audience while benefiting from the company’s robust infrastructure and resources. This model allows GoHealth to expand its reach and maintain high standards of service and compliance.
• PlanFit Tool: Through the Company’s Encompass Platform (discussed further below), agents use the PlanFit Tool to determine the optimal plan for a prospective customer. This helps to streamline the process for agents increasing throughput and decreasing costs. For the customers this also ensures that any plan they select is the optimal one for their unique needs, solidifying the relationship that customers have with GOCO.
• Two Types of Contracts: GoHealth operates with two primary types of contracts; agency and nonagency. Agency contracts are any contract sourced by either Captive agents or GPS agents. These involve commissions from health plan partners for policies sold, including initial and renewal commissions. GOCO will then pay a commission to the agent that sourced this contract. Non-agency contracts involve enrollment and engagement services for which GoHealth is not the agent and is instead generating the lead for the health plan partners. In non-agency contracts GOCO collects fees directly from consumers or health plan partners once the contract is sold and does not receive
  commissions for renewals.
• Revenue Recognition: For non-agency contracts GoHealth receives cash fees once the customer is enrolled. For agency contracts GoHealth estimates the amount of revenue that a given contract will generate between initial commissions and renewal commissions known as the Lifetime Value of Commissions (LTV). The Company relies on its historical experience to make these estimations. GOCO re-estimates LTV at a vintage level for all of its outstanding vintages quarterly and makes adjustments as deemed necessary. This approach allows GoHealth to recognize revenue in a manner that matches the expected cash flows from the policies.

Costs

• Customer Acquisition Channels: GoHealth acquires customers through various channels, including direct mail, television, and digital marketing. These channels are optimized to reach a broad audience and drive high-quality leads. As of FY24, Marketing and advertising expenses made up ~33% of total operating expenses, representing the crucial role they play in customer acquisition.
• Customer Acquisition Cost (CAC): The average CAC for GoHealth is ~$578 as of 4Q24, which is competitive compared to industry peers whose CAC can amount to anywhere between ~$675- $845 (refer to Exhibit 4). This efficiency is attributed to GoHealth’s advanced marketing strategies and technology-driven approach. As a result, GoHealth’s costs are coming down due to their effective use of AI and automation, which streamline operations and reduce overhead. This has led to a significant reduction in the Direct Operating Cost per Submission. In FY24, Technology and Customer Care & Enrollment costs decreased by ~10% as compared to FY23.
  

AI-Enabled: Encompass is powered by AI-driven PlanFit technology, which optimizes plan selection and benefit utilization. This technology ensures that consumers are matched with the best Medicare plans based on their specific needs, resulting in higher satisfaction and retention rates.

PlanFit CheckUp: As part of the Encompass Solution Platform GoHealth’s proprietary PlanFit CheckUp tool helps consumers regularly assess their Medicare plans to ensure they are still appropriate for their needs. This proactive approach builds trust and drives retention by incentivizing agents to provide unbiased advice. As a result, GoHealth fosters long-term relationships with consumers as they feel confident that they are in the best plan for their needs. To incentive agents to provide the best possible outcome for customers, GOCO will still pay a commission even if the agent does not sell a new product. This removes significant amounts of churn from the process, further improving customer relationships.

Ability to Make Acquisitions

• e-TeleQuote Acquisition: GoHealth’s acquisition of e-TeleQuote Insurance, Inc., added significant value to the company by expanding its agent capacity by around 400 and enhancing its market position ahead of a pivotal Medicare Annual Enrollment Period (“AEP”). The acquisition included approximately $90.5 million in contract assets and $22.5 million in cash, reinforcing GoHealth’s ability to drive growth through strategic acquisitions.

• Part A: (Hospital Insurance): Covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care.
• Part B: (Medical Insurance): Includes doctor visits, outpatient care, medical equipment, and preventive services.
• Part C: (Medicare Advantage): An alternative to Original Medicare, these plans are offered by private companies approved by Medicare and include Part A, Part B, and usually Part D coverage.
• Part D: (Prescription Drug Coverage): Provides coverage for prescription medications, helping to lower
  prescription drug costs.
  
  Individual and Family Plans (IFP) Segment: This segment is for individuals under 65 and families seeking
  health insurance, there are various solutions in the market that cater to individuals and family plans. GoHealth
  aids consumers in comparing plan benefits, costs, and network coverage to make informed decisions. Small Business Segment: Recognizing the unique needs of small businesses, as small businesses tend to have unique needs with nuanced constraints compared to large employers. Providers service this segment offers guidance on selecting group health plans that balance comprehensive coverage with cost-effectiveness.
  Growth Outlook
  The U.S. health insurance market is undergoing significant growth, driven by demographic shifts, regulatory changes, and technological advancements. Through 2025, the market is projected to reach approximately $1.76 trillion, with an average per capita expenditure of $5,140. This growth is largely fueled by an aging population and increased awareness of the importance of health coverage.
  The Medicare segment is experiencing substantial expansion due to the rising number of individuals aged 65 and older. As the baby boomer generation continues to age, the demand for Medicare plans increases, presenting a significant opportunity for companies like GoHealth. In the 2025 open enrollment period, over 24.2 million consumers selected coverage through the Marketplaces, including 3.9 million new consumers, more than double the number of enrollees compared to 2021.

The company’s proprietary Encompass Platform integrates various aspects of the insurance enrollment process, enhancing operational efficiency and ensuring a seamless experience for both agents and consumers. Operating within a complex and ever-evolving regulatory landscape, GoHealth remains agile in adapting to changes in
healthcare policies and regulations. This adaptability enables the Company to seize opportunities arising from policy adjustments, such as expanded access to health insurance or modified enrollment procedures, thereby broadening its
potential customer base. The Centers for Medicare & Medicaid Services (CMS), as GoHealth’s regulator, acknowledges the Company’s efforts in making Medicare more accessible and valuable to consumers, ensuring that GoHealth’s platform remains a trusted resource for navigating Medicare options. As the U.S. population ages, with individuals becoming eligible for Medicare upon turning 65, GoHealth is well-positioned to serve this expanding demographic. The Company’s platform effectively connects with older adults, including those previously disengaged or underinsured, offering them access to Medicare Advantage
Plans that meet their healthcare needs. The CMS recognizes GoHealth’s value in making Medicare accessible and understandable, ensuring that even the most complex aspects of Medicare are navigable for consumers. The healthcare industry’s shift towards digital solutions has increased the demand for online platforms that simplify insurance enrollment. GoHealth’s user-friendly digital marketplace aligns with this trend, attracting tech-savvy consumers seeking convenient and efficient ways to obtain health coverage. The Company’s proprietary technology, including the AI-driven PlanFit tool, enhances the consumer experience by providing personalized plan recommendations and real-time support.

Risks

• Unmanageable Debt: The Company currently has a net debt to equity ratio above 100%. A high level of debt could strain the Company’s liquidity, limit its financial flexibility, and increase vulnerability to rising interest rates or operational downturns.
• Lifetime Value (LTV) Risk: The Company’s valuation and financial projections depend on expected lifetime value (LTV) assumptions of customers. Any miscalculations or shifts in customer behavior could lead to revenue shortfalls.
• Regulatory Uncertainty: Changes in healthcare regulations, including those related to Medicare and insurance marketplaces, could significantly impact GoHealth’s business model, profitability, and compliance costs. Exhibit 5: ACA Marketplace Premiums Source: Health System Tracker 7.
  

Valuation Overview
When valuing GOCO we rely on a comparative analysis. In deterring comp companies, we note that there are very few publicly traded direct competitors (eHealth and SelectQuote) and several publicly traded insurance brokers that are tangential competitors. Differences between direct competitors and tangential competitors include the GPM, typically driven by a higher level of automation and technical prowess, combined with a more defensible regulatory moat. Despite this, direct comps tend to trade at a slight discount to tangential comps, reflecting the nature of small sample sizes. Even still, direct and tangential comps were trading at a FY24 median EV/EBTIDA premium to GOCO of 216% and 164%, respectively.

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Regulation Analyst Certification:
I, Dave Storms, CFA, hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this report. For Additional Information Contact:
Stonegate Capital Partners, Inc.
Dave Storms, CFA
Dave@stonegateinc.com
214-987-4121

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