Thank you for standing by, and welcome to GoHealth's Fourth Quarter 2021 Earnings. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's conference call is being recorded. I would now like to turn the conference over to your host, Mr. Brian Farley, Chief Legal Officer. Sir, you may begin.

Thank you, and good afternoon, everyone. I want to thank each of you for joining GoHealth's 2021 fourth quarter and year-end earnings call. Joining me today are Clint Jones, Co-Founder and Chief Executive Officer; and Travis Matthiesen, our Interim Chief Financial Officer. 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 or any guidance provided, 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 and year-end fiscal 2021. In addition, 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 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. We filed a Form 12b-25 earlier this month in order to obtain a 15-day extension on our 10-K filing due date. We intend to file our 10-K for fiscal year 2021 tomorrow, March 16, in line with the 12b-25 extension. During this call, we will be discussing certain non-GAAP financial measures. These measures are reconciled to the most directly comparable GAAP financial measures and the reason management believes they provide useful information to investors regarding the company's financial conditions and results of operations. These are contained in the press release and investor presentation. And with that, I'd like to turn the call over to Clint.

Thank you, Brian, and thank you all for joining us to review our fourth quarter and full year 2021 results. As Brian mentioned, we have posted a slide deck to our Investor Relations website that we will walk through before opening to Q&A. Before I jump into our results for the year, let me thank all of our GoHealth employees for their hard work and long hours spent educating and enrolling customers during AEP. Their dedication to our mission has been inspiring and something we look to build on in 2022. 2021 was a challenging year on multiple fronts for us, and we are disappointed with our operating results. Entering AEP, we achieved our hiring goals, observed strong consumer demand, and we're optimistic with our agent conversion rates, leveraging our technology platform. The primary driver of our miss to plan was the lower effectuation and retention characteristics as a result of consumers shopping much more often than we expected. This affected both new members that were sold a plan in Q4 as well as members from older cohorts that we expect to stay on their plans. These drop-offs ultimately resulting in a Lookback Adjustment we took on previous vintages as well as a constraint we have added to our Q4 2021 enrollments to mitigate future lookbacks, which dampened our reported results. Travis will unpack these more when we discuss our full year financials. In addition to these LTV and churn challenges, which were observed by us and our peers, we also observed increased competition for MA advertising. We saw cost pressures and underperformance in certain marketing channels, which also negatively impacted retention. We don't think that last year's environment is sustainable for many players, and we believe there will be a pullback in marketing spend and overall competition, which we've…

Thanks, Clint, and good afternoon, everyone. I also want to start by thanking our teams for their hard work over the past year. Turning to Slide 12, you’ll see the key financial highlights for both the year and the quarter. Starting with the fourth quarter, total revenue grew 1% to $450 million, fueled by Medicare Advantage commissionable approved submissions of 654,000, growth of 99%. This policy growth was offset by a fourth quarter lookback totaling $155 million relating to Medicare Advantage policies sold in prior periods. Fourth quarter adjusted EBITDA totaled $2 million, down from $170 million in the prior year period. Again, this was mainly driven by the lookback taken in the current quarter relating to prior period policies. We will walk through that in greater detail later on in the call. Moving to full year 2021 results. Revenue increased 21% year-over-year, growing to $1.062 billion. Excluding the lookback from prior periods, revenue grew 40% to $1.227 billion. Medicare Advantage submissions grew 60% for the full year, totaling roughly 1.2 million submissions in 2021. Finally, adjusted EBITDA for the full year was $34 million and $146 million prior to the lookback. Slide 13 better illustrates the growth we’ve seen during the last few fourth quarters and AEP periods. As you can see on the far right side of the slide, when removing the lookback adjustment, the fourth quarter saw a 35% increase in revenue growth. This increase was driven by a 94% increase in Medicare Advantage submissions and offset by a 25% decrease in LTVs relative to last year’s reported MA LTVs, inclusive of a 15% constraint that was applied on top of previously modeled constraints. A lot has been said about the market dynamics in our sector regarding lookbacks, policy churn and ultimately reported LTVs, so I wanted…

Thanks, Travis. As I mentioned earlier, Slide 27 shows our five key priorities in 2022, focus on improved cash flow, quality LTVs and efficiency. In the next few slides, I’m going to unpack in a little more detail on each of these overarching priorities. Moving on to Slide 28. Our marketing focus is on driving higher-quality lead attributes as we slow down and are much more selective with how we allocate our marketing dollars. We can improve cash flow with lower overall marketing spend particularly reducing volume during the less-profitable SEP periods and on less-profitable channels. And we’ll focus on sources that drive quality LTVs. Our data and our analytics here with our scale will allow us to reduce the cost per retained member and increase our profitability. On Slide 29, we have a few key initiatives for our agent base. After a large investment in recruiting and onboarding in 2021, we are now in a position to leverage our agents and drive performance improvements via our guided selling platform and additional coaching and trainings. Our initial rollout of our Plan Fit tool, the subset of agents showed a relative gain of 20% in agent conversion, improved active rates, all while decreasing agent ramp-up time. We have plans to continue to improve agent performance through our advanced technology, coaching programs and revamped career development pathways. On Slide 30, we will focus our technology investments across our integrated platform from marketing, sales and consumer engagement. We are improving our marketing automation and dynamic lead scoring features to support efficiency and our company-wide focus on quality. Based on lead score and consumer demographics, our guided selling tools match the consumer to the agent providing the best plan options. We believe these tools will improve customer confidence and quality enrollments as well as…

Thank you. [Operator Instructions] Our first question comes from Elizabeth Anderson of Evercore ISI. Your line is open.

Hi guys, thanks so much for the question. My first question was you mentioned about sort of agent retention and sort of leveraging off of the hiring you did this year. How do you think about retention of agents over the course of the fiscal 2022, just given the fact that you go from sort of a super busy AEP period to modestly busy OEP period, and then you kind of have this almost dead time where commissions might be lower, there’s a robust hiring environment, so how do we think about sort of how you’re able to do that over the course of the year?

Yes, great question. Obviously, it’s something we’re heavily focused on this year and kind of gone through the experience we did last year with higher attrition. So continued focus on career pathing, agent development. There’s a lot of things that the agents can be doing during the SV periods outside of selling with kind of memory retention and other activities that they can earn commission on. So, we’ll be focusing heavily on that. It’s really around the career development and training and preparation for AEP.

Got it. And then in terms of the 15% additional constraint that you put on the LTVs this quarter, how did you get comfort that, that was the correct amount?

Yes. So as Travis mentioned, we brought in a third-party actuarial company just to help us validate that and think through that. We and many in this sector have been kind of hit by LTV pressures and dynamics in the space. And as we think through kind of applying a constraint on a move-forward basis, that’s what we got comfortable with. And as trends change or improve, we can – we’ll move from there. And Travis, anything?

So is it basically taking that 4Q number and like flat lining it forward in terms of the churn you saw?

Yes, exactly. I mean, if you think about what we saw in Q4 and assuming nothing improves in 2022 and kind of flat lining that out.

Okay. Got it. Okay. Thank you.

Thank you. Our next question comes from Jailendra Singh of Credit Suisse. Your line is open.

Thank you, and good afternoon everyone. Just following up on the second question of Elizabeth. So have you seen any data points you can share post the AEP or in the 2.5 months into the OEP, which gives you comfort around that constraint and just in general, anything from OEP experience so far?

Yes. I’ll take that one, Jailendra, This is Travis. So one of the big drivers of us ultimately arriving at that constraint was allowing ourselves and our models to observe effectuation rates and renewal rates that we’ve seen here, both in January and early February. And so we’ve taken into account when arriving at the constraint that we’re taking, both the early indicators of both effectuation rates of the policies sold in Q4 as well as renewal rates of historic vintages.

Okay. Because I mean, the growth in Q4 was very strong from an enrollment point of view. And clearly, you had some inexperienced agents during the quarter. So, I’m curious like if you have enough comfort there in terms of retention and the quality of policies sold. I mean that’s what I’m trying to understand.

Yes.

Yes. Just to add to that, if you look at some of the early metrics for kind of 2/1 and 3/1 early indicators, look within our plan. We don’t see any large outliers that would give us additional concern.

But I think, to your point, Jailendra, that is one of the drivers of the additional constraints we’re taking, given both the agent mix, the carrier mix and the consumer mix that we saw this past Q4.

Okay. And then my follow-up, I’m missing on the strong enrollment growth in the quarter. Some of your peers called out shortfall in the enrollment in 4Q. I understand the underlying demographics still remains pretty strong in MA. But given the market share e-brokers have gained over the past two, three years, do you see a risk that we might be approaching a point where majority of enrollment changes or shift might just be market share shift among e-brokers? Or are you still expecting market share gains from mom-and-pop independent brokers?

Yes. No, we expect – we saw obviously strong, strong consumer demand during good improved conversion rate. We mentioned we’ve got a guided selling platform that even new agents can get ramped up on quicker. So, we expect that trend to continue. I mean you think about the folks that are turning 65 more likely to shop online over the phone, they’re comfortable buying online. So we kind of expect that trend to continue.

Okay. Thanks guys.

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

Good afternoon and thanks for all the color. And I’m probably going to be on a similar theme, but maybe take a little bit of a different angle. I appreciate Clint Travis, the work you did in walking through some of the changes you’re making on the spend side and the focus points on agent activity levels and retention rates. Even if with the early data you’ve seen, however, in January and February, how are you going to track yourself? And where are the opportunities that give yourself the confidence to build into the end of the year, in particular now to hit this new cash flow target that you’re outlining. I think the focus on cash flow is certainly an admirable one. I just – is there a concern or a worry that the balance of rainy and on spending can actually have unintended consequences in other areas of the business?

Yes, that’s a good question. You think about a lot of the inputs of the business are highly variable, right? The number of leads that we generate, aka, the marketing spend that we have, the number of agents that we hire – those are the big variables in the business. And as we slow those down, especially on the marketing side to optimize, focus on LTV to CAC ratio with all the learning’s we had last year on the different channels we went into from a marketing standpoint, what drove higher effectuation rates, what drove better retention focusing on that and then having the agent force that's more tenured going into Q4. And we've got cohort data on our agent base, based on tenure and productivity. So that gives us a high degree of confidence of how to execute towards that. If you think about the plan of getting to cash flow positive next year.

And Michael, this is Shane Cruz. The one thing that I would add is as Clint mentioned, just to reiterate, as we slow down, there's a tremendous amount of variability in what those LTVs look like by the type of consumer demographic whether it be their geographic location, whether it’s D-SNP eligible or not and then on our agent performance. So by us slowing down dramatically, it enabled us to really focus on generating a good margin on every policy that we sell, so we can drive up that LTV to CAC, as Clint was mentioning.

Got it. And I guess another question. You've deemphasized the IFP business for a while. You've been past – focusing more on MA, just given where the growth is. At some point in time, does it make sense to still be in IFP?

Yes, it's a good question. I mean, we see so much opportunity right now in our Medicare business and the focus there. We obviously have a clear path this year to get to – we mentioned from a cash flow standpoint, and we see this market as growing and we experienced, such high demand in Q4 and strong enrollment volume. We know the markets there. The unit economics are changing – and we feel we're in a really good position to change with those unit economics as we slowed down and kind of focused on optimization there. To your point on IFP, it's we've been in that business for a long time. It's just an area we're going to kind of not focus on this year as we think about just strategically positioning ourselves with our Medicare business and executing to the plans we have.

Got it. Thanks.

Thank you. [Operator Instructions] Our next question comes from Tobey Sommer of Truist Securities. Your line is open.

Thanks. I was wondering if you could give us an update on sort of regulatory relations following the CMS letter, what you're hearing from them and your interactions as well as carriers because, the elevated churn has been kind of broad. And any color you can give us on those two aspects of your business would be helpful?

Yes. Are you – are you referring to the CMS marketing regulation changes that kind of came out right before AEP?

Yes, in interactions since then, which I'm sure you've had.

Yes. So the – from a marketing regulation standpoint, we were not impacted prior to AEP. Obviously, it was a short notice. But we – a lot of those practices around filing the marketing materials and other things, we've been doing for a long time. So it wasn't a big surprise to us or a change in our process. I think CMS is continually looking at ways to improve marketing within the space, which we think is great. So we'll continue to kind of see how that goes. And as far as anything else, we've not had any additional comment.

Okay. Another question on your labor force managing for a slower growth environment aiming towards cash. That all makes sense, what does this framework mean for the income of your agent network on – if we think of it as an individual basis, do they have sort of the same opportunity at the company to generate personal income with this growth outlook?

Yes, it's a great question. So Q4 and Q1 from a selling standpoint absolutely the same, if not more. You think about them being able to take on more activity themselves, especially the higher producers in Q4. And Q2 and Q3, the different subsets or cohorts of agents that will be doing selling activities and also kind of membership retention activities that they'll get paid for. So we don't see a big income variability going into this year.

And the only thing – Toby, again, this is Shane – I would add to that is that we're really focusing on developing our agents is we're slowing down, not hiring as many new ones. We're developing our agents. So each agent can continue to perform better and make more variable income so they can make the same amount or more income than they made in the past. So it's a good opportunity for us to really do more with less by slowing down.

Okay. Thank you.

Thank you. Our next question comes from Ben Hendrix of RBC Capital Markets. Your line is open.

Thanks for taking the question. I just have a quick mechanical question, accounting related question here. You mentioned that you were working with third parties to assess the commission’s receivable in arriving at that $155 million look back. And my question is that $155 million strictly limited to attrition that you've already seen to date in those older cohorts? Or is there some degree of conservatism in that that could turn out better in terms of attrition? Just trying to see if there's any conservatism in there or if that's just strictly kind of what you've observed?

Sure. So I believe I understand the question, but let me make sure I'm answering it. So two things to that. So it relates to policies that we've sold dating as far back as 2018 and as a recent as Q3 of 2021, and that $155 million is mainly driven by shortfalls of commission collections we're expecting to receive into the future, rather than what we've not collected thus far to date. Again, we are re-projecting the entire value of those policies moving forward with the majority of that being projections into the future around the commission collections, not just what we've observed thus far. Is that – does that answer the question?

Yes, it does. Thank you.

Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Clint Jones for any closing remarks.

Thank you so much. And thank you everybody that’s attended. We look forward to continuously updating you throughout 2022 and have a great night.

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may all disconnect. Have a great day.