Ladies and gentlemen, thank you for standing by and welcome to the GoHealth’s Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference to your speaker today, Jay Koval, VP of IR. Please go ahead, sir.

Thank you, Joelle and good afternoon everyone. First, I want to apologize for the press release getting out a little late. We had some issues with PR Newswire. But thank you all for taking the time to join us for GoHealth’s fourth quarter and full year 2020 earnings call. Joining me today are Clint Jones, Co-Founder and Chief Executive Officer; Travis Matthiesen, Chief Financial Officer; Shane Cruz, our Chief Operating Officer; and Jake Gudmundsen, President of Medicare. This afternoon’s conference call contains forward-looking statements based on our current expectations. Numerous risks and uncertainties may cause actual results to differ materially from those anticipated or projected in these statements. Many of the factors that will determine future results are beyond the company’s ability to control or predict. You should not place undue reliance on any forward-looking statements, and the company undertakes no obligation to update any of these statements whether due to new information, future events or otherwise. After the market closed today, we issued a press release containing our results for the fourth quarter of fiscal 2020, in addition to presentation materials that Clint and Travis will walk through momentarily. Both the release and the slides can be found on GoHealth’s website under the Investor Relations tab. In the press release, we have listed a number of the risk factors that you should consider in conjunction with our forward-looking statements. Other significant risk factors are described in our Form 10-K and 10-Q reports filed with the Securities and Exchange Commission. During this call, we will be discussing certain non-GAAP financial measures. These measures are reconciliation to the most directly comparable GAAP financial measures and the reason management believes they provide useful information to investors regarding the company’s financial condition and results of operation are contained in the press release and investor presentation. So with that, I would like to turn the call over to Clint.

Thanks, Jay and thanks for joining us to discuss our fourth quarter and full year 2020 results. As Jay mentioned, we have posted a slide deck to our website that we will walk through before opening up the call to Q&A. I will start with some highlights from the 2020 annual enrollment period as well as our focus areas in 2021 that will position us to deliver another year of high-quality growth and then Travis can discuss the financials. But first, let me thank my GoHealth colleagues for their hard work and long hours spent, educating and enrolling customers during AEP. This winning team executed well, as evidenced by revenue that came in above our own expectations for the quarter, driving strong full year revenue growth. These results were a huge accomplishment during what was anything but a normal year, shown on Slide 4. Our team worked through the challenges associated with the pandemic, an entirely remote working environment for AEP, not to mention a most unusual election cycle. We are particularly proud of the quality of results we delivered during the year with exceptional submission growth and growing LTVs. This is a testament to the strength of our people, process and technology. The pandemic highlighted the need to help seniors carefully choose their health care, and our marketplace platform and agent-assisted model enables us to do that in a Medicare market that is poised to grow rapidly for many years to come. Slide 5 looks at the key metrics that we use to measure our performance. While our marketplace has been built over 20 years, we only entered the Medicare space in 2016 and quickly became the largest enroller of Medicare plans by a wide margin, helping over 730,000 Medicare consumers enroll in 2020. A 60% increase in agent…

Thanks, Clint and good afternoon everyone. I also want to start by thanking our teams for their hard work as they delivered record revenue and EBITDA in 2020, including roughly 60% top and bottom line growth, demonstrating the scalability of our model. Turning to Slide 11, total revenue in the fourth quarter grew 55% to $446 million, fueled by Internal Medicare growth of 75%, ahead of our expectations and resulting in commission growth of 57% despite the declines from our under-65 or IFP offerings. We delivered 328,000 approved Medicare Advantage submissions during the quarter, industry leading and one-third more than our nearest public competitor. New carriers contributed to over 30% of total submissions in the quarter, and we expect the benefits from carrier expansion to continue through 2021 as we fully integrate additional carriers onto our technology platform. Medicare Advantage continues to grow quickly and our marketing teams were able to generate consumer demand in excess of agent capacity during the quarter, indicative of abundant market opportunities over the coming years. LTVs increased over 5% in the fourth quarter and almost 3% for the full year as we delivered quality submission growth, which manifests in our LTV-to-CAC ratio of 3x and our top-tier Medicare margins of 49% in the quarter. Slide 12 highlights the year-over-year change in our LTVs. And while there are various puts and takes, our investments are driving LTVs higher through improved persistency. As Clint mentioned, we made meaningful investments in our agents, continuing to align them on delivering high-quality volume growth through better consumer engagement and more time spent addressing their unique needs, as evidenced by the longer handle times in the quarter. Our agents also drove higher engagement with consumers through the warm handoff to our TeleCare team to increase consumer conviction at the point-of-sale,…

Thanks, Travis. Our team came together really well throughout the year to deliver record results in 2020 and we have taken our success stories and lessons learned to identify areas to improve and accelerate our profitable growth trajectory into 2021 as a stronger and better company. While 2020 was not without its challenges, our solid results continue to validate the need for our marketplace to help consumers in a very strong and growing Medicare market, and we are more bullish than ever on our position in this space, shown on Slide 25. With very attractive industry dynamics, we see a long runway ahead as the current Medicare Advantage market is massive at $30 billion and forecasted to grow by 10% per year with commission rate increases in the low to mid-single digits. We enjoy the leading position as the largest D2C broker in the Medicare market, yet we have only 1% market share today. Let me wrap up on Slide 26. As the market leader, we delivered the highest submissions and revenue, fast and profitable growth and the leading Medicare margins and increasing LTVs. When we reflect on 2020, our biggest takeaway is the sheer magnitude of the impact COVID has had on consumer behavior, creating a seismic shift in demand towards our marketplace from traditional distribution. This crystallized during AEP as we generated demand well in excess of agent capacity, highlighting the opportunity to pull forward some investments to lengthen our leadership position. The three areas of accelerated investment include agents, technology and GoHealth’s brand and Encompass platform. We believe these investments will position us well for the 2021 AEP, not to mention future years given our focus on delivering sustainable, long-term growth. After 20 years of running this business, I have never been more excited about GoHealth’s growth prospects, including strong market tailwinds. We will continue to do what we do best and focus our investments where we get the best returns, including growing our agent base and their efficiencies, enhancing our best-in-class proprietary technology for scalability and innovating with our carrier partners to strengthen our position as the industry leader. After a very memorable 2020, I am pleased to see our great start to the year as our team is laser-focused on over-delivering for all our stakeholders, consumers, carriers and other partners and our shareholders. Joelle, we would now like to open up the call to questions.

Thank you. [Operator Instructions] Our first question comes from Jailendra Singh with Credit Suisse. Your line is now open.

Yes, thank you. Thanks, everyone. I want to follow-up on some data points you gave around conversion rate in the quarter for agents and leads not unanswered, unaddressed. Is there anyway you can size that opportunity in terms of percentage of calls unanswered or percentage of leads unaddressed? And also brokers spending more time with seniors in the quarter, can you provide any data around what that meant for the year-over-year trends in agent productivity in fourth quarter and what are your expectations for 2021?

Yes, Jailendra, great question. So yes, just to take a step back, you think about us entering Q4 in a pandemic, in a work-from-home environment with a very kind of unpredicted election cycle, we had pre-bought a lot of media in preparation for that. And ultimately, what happened is we got into AEP. We noticed our consumers asking more questions. We revamped our needs analysis process with our expanded carrier footprint and we were spending more time with consumers walking them through their individual needs, which has ultimately led to increased LTVs, which we think is the right decision from a long-term. Our conversion rates were within our range of expectations. I think the one thing here is just that we were surprised by the amount of opportunities we generate from a marketing standpoint. The election had a factor there. There was some choppiness in supply and demand. For example, if we had advertisements running at 4:30, 5:30 and 7 and late-breaking news bumped to 5:30 – and the 4:30 and the 5:30 and they all headed to 7, obviously, we didn’t have the agent capacity to handle those calls and a lot fell on the floor. So good news is from a TAM standpoint, we’re really excited about the kind of the consumer shift and the need for our platform. And we have just kind of seen what we need to do from a 2021 standpoint to capture that opportunity.

Okay. And just a quick follow-up on your comments around increasing agent count by more than 50%, with the focus on internal agents now seems like you have priority across the industry, how do you think about your ability to hire, retain and attract more brokers and agents in a market which is likely to get more and more competitive?

Yes. It’s another great question. So we have – with work-from-home, obviously, there is pros and cons. And one of the pros is obviously expanding our footprint on the markets we’re able to recruit out of. So we’ve taken a much broader approach from a recruiting standpoint. Also, a high percentage of our agents, we hire as non-licensed folks. So we’ve taken through a licensing process, sales and training process to get them really well ramped-up where they can perform their duties. So we obviously have a very competitive pay package and focus on kind of a long-term career for an agent. And we maintain a high percentage of our top producers. So from a retention standpoint, we really focus on that kind of career-oriented mindset where agents can build a career here. So we don’t see that as a hindrance. If I look at 2020, the challenge we faced in Q2 and Q3 some of the states had shutdown their licensing platforms. That kind of limited our ability to get those agents through the funnel. We do not foresee that as a challenge this year as we move forward.

Okay. Thanks a lot.

Thank you. Our next question comes from Frank Morgan with RBC. Your line is now open.

Good afternoon. Yes, I guess a question on the enterprise revenue. I think I recall from last quarter, you said you thought that would be flat again from third quarter to the fourth quarter, and now obviously up very nicely. But – and I’m curious. You’re now saying it’ll be flat for all of 2021, so just a little more color on that? And also, the second question was, when you think about the sort of surge of demand relative to your sales capacity other than just hiring more brokers, is there anything else you can do? And is there any way you can monetize those excess leads that are coming in that you really can’t serve? Thanks.

Yes. Thanks, Frank. So I’ll take the first part of that question around enterprise. Again, 2020 with COVID was a very kind of unscripted year, and we were able to partner with our carriers and create opportunities there that they needed us to be good partners with. As I think about the outcomes and ultimately 2021, we over-delivered on our choice platform for carriers. And obviously, we see the ability to scale it up even further. So we’re going to be kind of conservative on the approach we take within the enterprise programs for 2021. We’ll give you some additional updates on Encompass on our next call in Q1 that will kind of give clarity there. Travis, anything to add on enterprise?

Yes. I would just add that as you think about the makeup of enterprise, while we are keeping it flat in our projections think about more and more of our enterprise revenue coming from Encompass and over-65 programs while we’re sun-setting some of our legacy, under-65 campaigns. As we mentioned, we’re bringing down IFP, continuing to bring down IFP. Some of those programs were enterprise campaigns, and so we’re shifting the mix there.

Yes. And then, Frank, in the second question around the surge in demand, we’re still seeing that most consumers want to talk to somebody and want to speak with one of our licensed agents where they can go through all their different options and the needs they have. And I think this year we had quite a few consumers that had traditionally bought in maybe more of a face-to-face environment that this is their first time going through this experience. So we are able to spend more time with them. We will focus on not only the kind of agent growth but the efficiencies per agent, a lot of the new technologies we can deliver around speech analytics and our Plan Fit score to help navigate consumers in more efficiently through the process. But I think that we’re really focused on that consumer journey and outcome. And I think that played out well this year with our expanded LTVs.

Thank you. Our next question comes from Michael Cherny with Bank of America. Your line is now open.

Good afternoon. Just to dive in, you mentioned, Clint, the LTV question. As you think on a go-forward basis, you have – the LTV has been a bit, I would say moving pieces, so to speak over the course of the year. How do you think about the further positioning of LTVs over time? And specifically within some of the incremental investments you’re making, is there anything that you can point to anything that you’re tracking to make sure that LTVs stay on this trajectory that you’ve been able to generate, especially over the course of 2020?

Yes, for sure. So, great question. So you think about taking a step back. We started investing in our TeleCare team and some of the retention activities 18 months ago, and there is – we’re still in early innings and early learnings. Now what you’ve seen in Q2, Q3 and Q4 in 2020 increased LTV over the prior year’s quarter. And we still think we are kind of early stages of making a pure impact there on what we can do. We also kind of – we mentioned we had some pilots in our Encompass platform in Q4 at a small scale, but we saw some really good leading indicators as we scale those out and more of a productive standpoint in 2021, some upside there as well. I think we are – from a planning standpoint, we’re going to be conservative with LTVs in 2021, with potential room for upside.

Got it. And as you head into ‘21, you mentioned, I think rightfully so, some of the dynamics from the election skewing with some of the ad buys. How do you think though about the reallocation of spend? Have you noticed anything in terms of the way that some of your returns and hits on some of the marketing you did could be used for further ad campaigns, further marketing spend in terms of where those allocation of dollars could go?

Yes. I mean obviously, any kind of time you’re running a marketing campaign across multiple verticals you are going to have winners and losers. We saw, from the actual cost of the opportunity, the raw lead within our range, and obviously, the cost here was a cost of acquisition standpoint. That’s where the higher costs were. But we still see kind of some of the traditional channels like TV and direct mail being extremely powerful. Our digital channel was really strong as well. One interesting note that we found this year is on our digital channels especially, we had about – we had 90% of those consumers start a journey on mobile, which if you think about that new buyer, you’re leveraging an iPhone or a tablet. So we – as we think about kind of moving into 2021 and creating technology and engagement solutions for that type of consumer, we think we have a big opportunity there as well.

Great. Thanks.

Thank you. Our next question comes from Tobey Sommer with Truist Securities. Your line is now open.

Thank you. What – how would you describe your visibility into enterprise revenue in 2021? In other words, in this case, sort of how much of it can you see versus ad-hoc projects that may come from your carrier partners throughout the year but you are not yet privy to?

Sure. Yes. So most of the enterprise revenue is contracted multiyear revenue. So you have got a pretty good line of sight there. Now there is some, what I’ll call, variable revenue that we might have carriers come to us in a particular quarter and ask for a special project. The other part this year that’s a little more variable because it’s newer is our – some of the Encompass activities we’re doing that are ramping up. Obviously, we’ve got really good early wins, but as we get those to more scale, that’s going to be a little bit less predictable in this early kind of journey with Encompass.

Kind of majority if you could give us a sense for the proportion that you actually do have visibility into?

Yes. I...

Yes. Travis will take that.

Yes. I can take that one, Tobey. So again, we were prudent with our modeling here. So as you think about the enterprise revenue being flat, that all falls into the bucket that Clint described as the multiyear contracts and the visibility there. So again, we will see what happens from carriers. But from where we’re at today, we’ve been conservative with our enterprise forecast for purposes of guidance.

And an incremental project that comes to you in the spring or summer is kind of gravy at this point.

It’s exactly right.

Okay. And could you give us a sense for the arc of your retention experience here in the first quarter-to-date, at least in your fourth quarter sales? Thanks.

Yes. So we mentioned in the script the – here in January, as you think about the renewal rate, so these are the legacy policies that were up for renewal this past AEP, the renewal rate we experienced here in January was higher than our expectations and higher than the prior year. So again, the investments we’ve made over the last 18 months in our TeleCare team, reminding individuals of all of their benefits and why their plans are the best, we’re continuing to see the fruits not just in higher effectuation of new vintages, but better overall persistency of legacy vintages as well.

Shane, anything you want to add to that?

No. I think Travis covered it pretty well. But as you know, with our retention curves, it’s pretty exponential. So we see early on, we call, our micro churn period. We see those effectuation rates in those early retention rates and we are really pleased with the results that we’re seeing, significant improvements year-over-year.

Okay, thank you very much.

Thank you. Our next question comes from Yaron Kinar with Goldman Sachs. Your line is now open.

Thank you very much. Good evening everybody. My first question goes to EBITDA for 2021, there is the margin specifically. So I think you have it flat. And in – I think in the script, you talked about the shift into the internal channel being offset by maybe moving some investments up. Can you maybe talk about kind of the decision to move these investments forward? And how do you think about maybe structurally the EBITDA margin over the long run, what can it get to?

Yes. It’s a great question. So I think that as we think about kind of exiting 2020 and understanding what we learned over the fourth quarter and just the opportunity in front of us, we’re still in a fairly new market when it comes to the business we’re in. And we think it’s prudent to look at this from a revenue and market share gain process here. So as we think about making investments earlier in agents and technology and the Encompass platform that will obviously bring down kind of EBITDA in the first 9 months of the year as we think about accelerating our growth in AEP next year and 2022 as well. With that said, we’ll still maintain a 30% overall EBITDA margin, which we’re happy with. And we think that just that position to continue to capture market share does multiple things. Obviously, as we build a leading platform, as I think about our carrier partners and things we can do that are more strategic from an integration standpoint and new types of products and services to these consumers, that’s really exciting as well. And Travis, anything to add to it?

Yes. I would just reiterate that we are investing ahead of the curve based off of the consumer demand we saw here in Q4 of more and more consumers moving to our platform. And so if you think about what we’re doing, investing in our agents, investing in our technology, focusing more on Medicare-Internal, we talked about even during a volatile election year, we still experienced 50% margins on Medicare-Internal. So to the extent we’re allocating those resources to that channel, it creates the opportunity to expand margins in ‘22 and beyond. But again, we’ll be thoughtful there by balancing the growth of the continued consumer demand that we’re seeing.

Okay. Maybe to follow-up on this, so what was the growth? And was the consumer demand greater than you expected, let’s say, a year ago as you were thinking of kind of this year’s AEP to the extent that you would move investments forward that you had previously not thought you would need to do? Look, this is a growing market and a nascent market, relatively speaking, and was so a year ago as well. So I am just trying to understand what caused the acceleration of investment now specifically?

Yes. So it’s a great question. So prior to COVID, we thought like there would be a movement from traditional distribution to this telephonic or e-commerce model over a period of years. And what we experienced this year is just a massive shift from that movement. So the demand we saw was nothing like we’ve seen in the past. And I think our ability to kind of accelerate investments to capture that market share and scale the platform is what we’re focused on. So I think that’s where we made the decision, like there is so much opportunity here. Let’s go after it. And we are in a kind of early market. And I think there is going to be a couple of clear winners here at the end of the day, and we’re going to make sure that we’re well positioned to be there.

Okay. And then my second question was just around the MA internal submissions. So, I think last quarter, you talked about kind of 83% growth in the month of October, I guess the first 2 weeks of AEP. It slowed down a bit for the overall AEP period. Is that because the election cycle turned out to be more demanding than you expected? Is it because the time spent on the phone with clients increased over the course of the period? I’m just trying to understand why that 83% ended up being a little lower than that for the full period?

Yes, another really good question. So, if we think about the first 2 weeks of AEP, we had the positives of a lot of follow-up meetings that our agents have set during the SEP time frame where consumers weren’t eligible to enroll during SEP. So a lot of those kind of calls happened during the first couple of weeks of AEP, which gave us a very high – but those calls tend to close a lot faster because our agents have already made the relationship with that consumer. So, that was kind of one factor. The second factor, you’re right, the election was not over on Election Day and those trends continue on. And I think that also was a little bit hard to forecast as we thought about that kind of going into AEP.

Thank you.

Thank you. Our next question comes from Jonathan Yong with Barclays. Your line is now open.

Thanks for taking our question. Just on the agent kind of marketing comments, it sounds like you’re going to be increasing marketing spend a pretty good clip; agents, up 50%. So I understand the election component kind of drove up rates, made it a little bit more difficult for your agents. But given when your competitors is leaving say the TV channel in terms of generating their leads, shouldn’t your marketing dollars go further in 2021? And given you’re hiring 50% agents, will that be enough to cover all the marketing dollars that you’re putting into the market?

Yes. I can take that one. So first and foremost, you are exactly right. We’re ramping up the agents. And in order to feed those agents, we’re focusing more directly on our own marketing and advertising. But when you think about our marketing and advertising, if you think about our P&L, there is two different items that drive customer acquisition. It’s our cost of revenue where we pay via revenue share as well as our marketing and advertising. If you think about those in aggregate, the actual growth in 2021 compared to expectations is actually right in line. It’s just more over-skewing on marketing and advertising. And then we are ensuring that we have additional agents to handle all of the over-demand that we experienced so we won’t need as many leads as an absolute level here in 2021. We’ll have more agents that will be able to handle the capacity and have fewer opportunities hit the floor. And so that’s how we are thinking about the balance of the growth there. But incrementally, between cost of revenue and marketing and advertising, it’s really just shifting more into our internal marketing and less from cost of revenue but those still going up from an absolute standpoint at the same level.

Okay. And then you obviously added new carriage in 2020. But for 2021, are you contemplating any new carrier adds or geographies where you’re going to focus a little bit more on or is it pretty much segregated for just 2020 where we would see that type of impact? Thanks.

No – a great question. So I think – obviously, 2020 was when we made the major carrier additions to the platform. And we’re obviously still going through integrations with some of those carriers as well, which we think will drive additional gains in 2021. As we think about new carriers, we’re constantly evaluating. We have identified a few smaller regional players that we’ll probably add this year just to give us some coverage of plans that we don’t currently have, but it’s not kind of a major initiative of ours.

Great. Thanks.

Thank you. Our next question comes from Lauren Schenk with Morgan Stanley. Your line is now open.

Hi. This is Nathan Feather on for Lauren. In terms of those new carriers you on-boarded this year, where are you relatively in terms of scaling? I know they are still ramping up, but how far left do you expect for a lot of these integrations? And then can you touch on the impact, if any, the new carriers have on LTV’s persistency and conversion rate within the quarter? Thank you.

Yes. So as far as kind of new carriers, the carriers are kind of different levels along the way from an integration standpoint. But I would say still first or second quarter, out of four if you play that just we’ve got a lot of technology. We are still investing in to get the right integrations, a lot of data sets we’re capturing. We have not rolled them out to all of our sales floor. And again, it takes time to get there. The early wins we’re seeing from LTVs and conversion rates are really, really strong though. So we get excited about what kind of opportunity that can lend to in 2021 as we think about growth there. And Travis, do you want to take the second one?

Yes. So specifically to the impact of new carriers on LTVs, as we mentioned on our Q2 and Q3 earnings call, so adding a new carrier to the platform can at times create a short-term drag on LTVs, depending on the override or the overall commission rate that we have with that carrier. Based off of the volume that we’ve done here in Q4, we mentioned 30% of our submissions were from new carriers we’ve onboarded. We see that as an opportunity to LTV here in 2021 as we’ve moved up to higher tiers of contracts with our carriers. And obviously, with new carriers, we have less data on. So we’ve been conservative with our assumptions with the LTVs. But as we aggregate more and more data around these new carriers, that also creates upside as we see more fulsome data sets around the persistency.

And Shane, do you want to add to it?

Yes. The only thing that I’d add to that is if you think about the power of our end-to-end marketplace, a lot of our investment this year is going into enhancing the decision support platform. And so as you think about new carriers coming on the platform, it’s not just about helping somebody find a plan, but there is been a proliferation of Medicare Advantage products that are available to the consumer. So we’re leveraging the data that we have about consumers, plan data, retention data to let our marketplace recommend not only the best plan for consumer to optimize their retention but even services, the optional supplemental benefits within these products, helping people find the right doctors to meet their needs, the pharmacies to optimize their prescription costs and then other options, transportation benefits and other things. So all of these things will play in to not only be helping build the GoHealth brand as a trusted adviser but also help improve our retention and LTVs over time.

Great. Thank you.

Thank you. And our last question comes from Elizabeth Anderson with Evercore. Your line is now open.

Hi, thanks so much for the question. I wanted to ask if there is anything to point out on the cash flow mix given the factors that you talked about during the year and the pace of collections that you guys have seen so far with your prior sales? Thanks.

Yes. It’s a great question. So as you think about cash here in 2021, clearly, a pivot towards more commissions, more internal Medicare and more marketing and advertising is going to create more short-term cash burn as opposed to leveraging revenue share relate or external relationships, but because of the power of the commissions receivable balance we’ve built, we have $810 million. We have $202 million through both our current cash balance as well as our seasonal revolver. So we’re still in a really strong place to continue to drive this growth. But just based off of the mix of where this growth is coming from and the investments, there will be some more cash burn here in 2021 than originally contemplated.

Got it. Thanks so much.

Okay. Thank you all for the interest and continued support of GoHealth. I wanted to take the time to thank all of our employees and partners who helped make 2020 a record year for us. We couldn’t be more excited about what the future holds and the opportunity in front of us. We’ll remain focused on delivering high-quality results and find ways to continue to innovate with our carrier partners. So we look forward to speaking to you and giving you more updates as we get further into 2021. Thanks again, and have a great week.

Thanks, everybody. Let me know if you have any additional questions.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.