Executive Summary / Key Takeaways

• GoHealth is undergoing a strategic evolution from a traditional Medicare enrollment company to a tech-enabled Medicare engagement platform, leveraging proprietary AI tools to drive operational efficiency and enhance consumer relationships.
• Recent financial performance shows revenue growth (19% YoY in Q1 2025, 41% in Q4 2024) and significant Adjusted EBITDA expansion (56% in Q1 2025, 107% in Q4 2024), primarily driven by improved agent productivity and substantial reductions in customer acquisition costs (CAC decreased 18% in Q1 2025 to $522, 27% in Q4 2024 to $501).

• The company is diversifying its product portfolio with the launch of GoHealth Protect, starting with guaranteed acceptance life insurance, aiming to reduce seasonality and leverage its existing customer base for cost-effective growth and accelerated cash realization.
• While market dynamics, including anticipated health plan disruption and a significant CMS commission increase for 2026, present favorable tailwinds for future growth, the company faces substantial financial risk, including a going concern doubt related to potential inability to meet debt covenants and make scheduled payments within the next twelve months without successful implementation of mitigating plans.
• GoHealth's competitive positioning is increasingly defined by its technological edge in agent efficiency and consumer engagement tools, contrasting with larger insurers' scale and other marketplaces' digital focus, though high debt levels and customer concentration remain vulnerabilities.

Setting the Scene: A Medicare Marketplace in Transition

GoHealth, Inc., founded in 2001, operates within the complex and often confusing U.S. Medicare landscape. With over 67 million Medicare-eligible consumers, more than half enrolled in Medicare Advantage (MA), the sheer volume of plan options – often exceeding 40 in many regions – creates significant consumer uncertainty. GoHealth's core mission is to simplify these decisions, providing clarity and peace of mind through unbiased tools and guidance.

The company has strategically evolved from a traditional enrollment focus to a Medicare engagement model, prioritizing long-term, high-quality relationships with consumers. This pivot is critical in an industry marked by dynamic regulatory changes, evolving health plan strategies, and varying consumer shopping behaviors. GoHealth positions itself as a vital intermediary, enabling consumers to find suitable plans while providing value to health plan partners through efficient enrollment and retention services.

The competitive landscape includes large health insurers with their own distribution channels (like UnitedHealth Group (UNH) and Humana (HUM)), other online marketplaces (such as eHealth (EHTH)), and smaller brokers. GoHealth differentiates itself primarily through its proprietary technology platform and its focus on agent-assisted sales, aiming to combine personalized service with operational excellence.

The Technological Edge: Fueling Efficiency and Engagement

Central to GoHealth's strategic evolution and competitive positioning is its differentiated technology platform. The company has made significant investments in automation and artificial intelligence (AI) to enhance both the consumer experience and agent efficiency.

The core of this technology includes the Encompass workflow and the AI-driven PlanFit tool. PlanFit is designed to provide tailored guidance, whether for enrolling in a new plan, finding a better fit, or confirming a current plan is optimal. The PlanFit CheckUp, introduced in late 2023, operationalizes this, compensating agents for completed assessments regardless of enrollment outcome, reinforcing a focus on consumer best interests. PlanFit Checkups grew 27% year-over-year in Q1 2025 and a remarkable 72% in Q4 2024, indicating strong consumer engagement with the tool.

GoHealth's AI deployment yields tangible, quantifiable benefits. The company reported cutting enrollment average handle times by 12% in Q1 2025 compared to the prior year, while simultaneously improving conversion rates. AI-driven tools like PlanGPT provide agents with quicker access to extensive plan details, boosting productivity. Automation and AI have also reduced agent onboarding time by 40%, with new agents achieving double the productivity in their first three months compared to the previous year. The automatic prescription drug lookup tool has reduced lookup time by approximately 40%. These efficiencies directly translate into lower operational costs.

The impact of this technological focus is clearly reflected in GoHealth's direct operating cost per submission (CAC). This key metric saw substantial year-over-year decreases, dropping 18% to $522 in Q1 2025 from $640, and a significant 27% decrease to $501 in Q4 2024 from $688. Management believes this CAC level is "unseen from our perspective within the industry," suggesting a significant competitive advantage derived from their technology and operational refinements.

Further technological enhancements include the launch of MyGoHealth for consumer profile management, a piloted unified enrollment experience streamlining carrier applications, and GPS Express to improve efficiency for downline agencies. The company also deployed a differentiated approach for identifying and serving consumers who may qualify for Chronic Condition Special Needs Plans (C-SNPs).

While competitors like eHealth focus heavily on digital self-service and large insurers like UnitedHealth Group and Humana leverage vast data resources, GoHealth's strength lies in augmenting its agent workforce with AI and automation to deliver a high-quality, personalized, yet efficient experience. This hybrid approach aims to capture consumers who prefer guided assistance while benefiting from the cost efficiencies typically associated with digital channels.

Strategic Initiatives and Operational Performance

GoHealth's strategic evolution is marked by key initiatives aimed at driving growth, enhancing efficiency, and diversifying revenue streams.

The acquisition of e-TeleQuote (ETQ), which closed in September 2024, was a significant move to expand agent capacity in a cash-efficient manner ahead of the busy Annual Enrollment Period (AEP). Integrating ETQ agents onto GoHealth's proprietary platform proved highly effective, with ETQ delivering 54,000 submissions during the Q4 2024 AEP, a 170% year-over-year improvement for ETQ and materially higher than their pre-acquisition expectations. This demonstrated the power of GoHealth's platform, training, and lead optimization in boosting agent productivity.

The GoPartner Solutions (GPS) channel, comprising external agent partners, provides variable capacity. While this channel saw submissions decline year-over-year through Q2 2024 due to broader market pressures impacting smaller brokers, GoHealth is actively onboarding new agencies to offset this and leverage its platform. Management views GPS as strategically valuable, providing access to high-quality capacity without the fixed costs of maintaining a large internal team year-round.

A major strategic initiative is the launch of GoHealth Protect, a new suite of products starting with guaranteed acceptance life insurance (Final Expense Insurance). This move is a natural extension leveraging GoHealth's existing base of Medicare-eligible consumers and sales infrastructure. It aims to diversify the product portfolio, minimize the seasonality inherent in the core MA business, and potentially lower overall customer acquisition costs through multi-product engagement. While contributing minimally in Q1 2025 during early testing, GoHealth Protect is expected to ramp significantly in Q2 and Q3 2025 and become a meaningful contributor to full-year results. The economics are described as attractive, with accelerated cash realization similar to non-agency MA contracts and materially lower acquisition costs compared to the core business.

Financially, GoHealth has demonstrated top-line growth and significant margin expansion in recent quarters. Q1 2025 revenue grew 19% year-over-year to $221 million, and Adjusted EBITDA increased 56% to $42.1 million. Full-year 2024 revenue was $798.9 million, up 9% from 2023, with Adjusted EBITDA increasing 60% to $120.3 million. This profitability improvement is largely attributed to the substantial reduction in CAC and operational efficiencies driven by technology.

However, the shift in business mix towards agency contracts versus non-agency contracts has impacted cash flow from operations. Q1 2025 saw negative cash flow from operations of $12.4 million, compared to positive $12.5 million in Q1 2024, primarily due to this mix shift, which results in commissions being paid over time rather than upfront. Commissions receivable grew to over $1 billion at the end of Q1 2025, up nearly 19% year-over-year, reflecting this dynamic. Full-year 2024 cash flow from operations was negative $21.6 million, down from positive $130.7 million in 2023, influenced by the same mix shift and strategic capital deployment decisions.

Competitive Dynamics and Financial Standing

GoHealth operates in a competitive environment alongside large, well-capitalized insurers and other technology-enabled marketplaces. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, GoHealth's focus on the Medicare market positions it against players like eHealth, and indirectly against the distribution arms of major insurers like Humana, UnitedHealth Group, and CVS Health (TICKER:CVS, through Aetna).

Comparing key financial metrics based on available TTM data:

• Gross Profit Margin: GoHealth's TTM Gross Profit Margin is 85.28%, notably higher than EHTH (100% - likely different calculation), HUM (100%), UNH (22%), and CVS (14%). This suggests strong efficiency in managing direct costs of revenue.
• EBITDA Margin: GoHealth's TTM EBITDA Margin is 19.23%. This compares favorably to EHTH (4%) and CVS (2%), but lags behind UNH (8%) and HUM (2%). This indicates that while GoHealth is efficient below the gross profit line, larger insurers benefit from scale and integrated operations.
• Net Profit Margin: GoHealth's TTM Net Profit Margin is -0.42%, indicating it is not yet consistently profitable on a GAAP basis. This contrasts with positive net margins for EHTH (2%), HUM (1%), UNH (4%), and CVS (1%).
• Debt/Equity Ratio: GoHealth's TTM Debt/Equity Ratio is 0.32. This appears relatively low compared to EHTH (0.16), HUM (0.72), UNH (0.83), and CVS (1.10). However, this ratio can be misleading for GoHealth given its significant commissions receivable and the specific concerns around its debt covenants.
• Price to Sales (P/S) Ratio: GoHealth's TTM P/S ratio is 0.08, significantly lower than EHTH (0.52), HUM (0.26), UNH (1.17), and CVS (0.15). This suggests the market assigns a much lower valuation multiple to GoHealth's revenue compared to its peers, potentially reflecting the financial risks and historical performance volatility.

GoHealth's competitive advantages lie in its proprietary technology driving operational efficiency (lower CAC) and its agent network enabling personalized service. The acquisition of ETQ and the ongoing onboarding of new GPS agencies bolster this network capacity. The launch of GoHealth Protect leverages the existing customer base, a valuable asset.

However, vulnerabilities exist. The reliance on health plan partners for contracts introduces customer concentration risk. While the TTM Debt/Equity ratio appears low, the company's disclosure of substantial doubt about its ability to continue as a going concern due to potential debt covenant non-compliance highlights significant financial fragility not captured by this single ratio. This financial position could constrain investment in growth initiatives compared to larger, more financially robust competitors.

Industry trends, such as the exit of some midsize brokers due to market pressures and poor CAC management, are seen as potential tailwinds for GoHealth, reducing competition for leads and potentially making seasoned agents available. Regulatory changes, like restrictions on lead generators, are also viewed favorably by GoHealth, which states it already adheres to higher standards, potentially benefiting compliant players.

Outlook and Risks

GoHealth's outlook is shaped by anticipated favorable market dynamics and the execution of its strategic initiatives, but it is overshadowed by significant financial risks.

Management anticipates meaningful revenue growth and profit expansion in the first three quarters of 2025 compared to 2024, driven by ongoing operational refinements, enhanced efficiencies, and favorable market conditions. They expect the Q4 2025 AEP to have positive market dynamics, though with less disruption than the unique 2024 AEP. The CMS announcement of a 5.06% average increase in MA revenue and a 10.72% increase in the Broker Commission Schedule for the 2026 plan year is viewed as a significant positive, affirming the value of the MA program and the role of brokers.

Due to observed dynamics in the MA Special Enrollment Period (SEP) market in Q2 and Q3 2025, where health plans are de-emphasizing growth, GoHealth plans to shift more capacity into the newly launched GoHealth Protect initiative during this period, preparing for a dynamic Q4.

However, the most critical factor impacting the outlook is the substantial doubt about the company's ability to continue as a going concern. As disclosed in the NT 10-Q filed on May 16, 2025, management's current financial projections indicate a significant likelihood of being unable to maintain compliance with credit facility covenants and make scheduled payments within the next twelve months without successful implementation of mitigating plans. These plans include cost control measures and renegotiation of debt terms, but their success on acceptable terms is not assured. Failure to meet covenants could lead to acceleration of debt, which the company does not expect to have sufficient liquidity to repay.

Another pertinent risk is the DOJ intervention in a qui tam lawsuit alleging False Claims Act and Anti-Kickback Statute violations related to events between 2016 and 2021. GoHealth firmly denies these allegations and intends to vigorously defend against them, but ongoing litigation introduces uncertainty and potential costs.

Regulatory changes, while sometimes presenting opportunities (like lead generation restrictions), also pose risks as they can impact marketing effectiveness, compliance costs, and health plan funding. Market volatility, particularly regarding health plan benefit decisions and consumer switching behavior, remains a factor influencing AEP outcomes.

Conclusion

GoHealth is actively transforming its business, leveraging proprietary technology and strategic initiatives like GoHealth Protect to drive efficiency, diversify revenue, and capitalize on favorable Medicare market dynamics. The company's success in reducing customer acquisition costs and improving agent productivity through AI and automation is a clear differentiator in a competitive landscape. Recent financial results demonstrate top-line growth and significant Adjusted EBITDA expansion, reflecting the positive impact of these operational improvements.

However, the investment thesis is currently dominated by the significant financial risks disclosed by the company, including substantial doubt about its ability to continue as a going concern due to potential debt covenant issues. While the recent credit agreement amendment provides some near-term flexibility, successful renegotiation of debt terms and implementation of cost controls are critical to addressing this risk. The ongoing DOJ lawsuit adds another layer of uncertainty. For investors, the core question is whether GoHealth can successfully navigate its financial challenges and litigation while simultaneously executing on its strategic vision to leverage its technological edge and market opportunities in the evolving Medicare landscape. The outcome hinges on the success of mitigating financial plans and the company's ability to translate operational efficiencies and diversification efforts into sustainable, positive cash flow generation.