Good morning, and welcome to the GoHealth First Quarter 2023 Earnings Conference Call. My name is Michelle, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Followed by the prepared remarks, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. I'll now turn the call over to John Shave, Vice President of Investor Relations. John, you may begin.

Thank you, and good morning, everyone. Thanks for joining GoHealth's First Quarter 2023 Quarterly Results Call. Joining me today are Vijay Kotte, Chief Executive Officer and Jason Schulz, Chief Financial Officer. This morning'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 or revise any of these statements, whether due to new information, future events or otherwise. Before the market opened today, we issued a press release containing our results for the first quarter of 2023. We have posted the release on the GoHealth 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 statements. We encourage you to consider the other risk factors described in our Form 10-K and Form 10-Q reports filed with the Security and Exchange Commission for additional information. 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 reconciliations are set forth in the press release. Please refer to today's press release for reconciliations of non-GAAP measures to the most comparable GAAP measures discussed during this earnings call. For reference in the Investor Relations section of the GoHealth website, we have provided a supporting slide presentation and exhibits that I encourage you to review. And with that, I'd like to turn the call over to Vijay.

Good morning, and thank you all for joining us today. I'm pleased to report a strong quarter and start to the year. We achieved about $183 million in revenue $29 million in adjusted EBITDA and $20 million in positive cash flow. Together with our external partners, we helped over 214,000 Medicare beneficiaries assess their current coverage and potential Medicare options and enroll in our plan. Jason will provide more insight into the financial results in his section. At a high level, our first quarter performance highlights our operational efficiencies and the progress we are making with Encompass and supports our competence in our full year 2023 guidance. The ebroker industry has long believed that growth is directly tied to the acquisition of more agents and thus more leads. However, this traditional approach often leads to diseconomies of scale, where the cost of adding more agents and leads drives up customer acquisition costs, due to lower quality agents and lower quality leads. We believe technology can drive economies of scale and meaningfully elevate the consumer experience by matching consumers with the right plan for them. Encompass our proprietary operational technology and data science platform allows us to streamline the purchase process for consumers simplifying the cumbersome and confusing experience of healthcare purchasing, while allowing our agents to focus on what's most important showing empathy and care for our consumers. By leveraging our machine learning platform, we're able to better-serve these consumers and deliver better outcomes for our business. I am incredibly proud of our team and their tireless efforts towards achieving our goals and I'm excited to share our progress with you. As we have discussed previously the increasing propensity for consumers to shop coupled with the seemingly ever increasing number of Medicare Advantage choices for consumers can prove overwhelming. This…

Thanks, Vijay. We are pleased to announce our Q1 2023 performance. After normalizing for the exit of our non-Encompass BPO services, we generated revenue of $176 million and adjusted EBITDA of $27 million, driven by 214,000 submissions. Our Q1, 2023 results are in line with our expectations, and keep us on track toward our full year guidance. These results represent a $62 million decrease in revenue and an increase in adjusted EBITDA of $22 million versus Q1 2022. After normalizing for the exit of our non-Encompass BPO services and the $2 million look back recorded in Q1 2022. As a reminder, the revenue decline was a deliberate strategy, to scale down our agent workforce, focus on quality, achieve operational efficiencies and improve our unit economics and profitability. We continue to see good momentum with our cash flow from operations, where this quarter we achieved a positive $20 million, which results in a year-over-year improvement of $303 million on a trailing 12-month basis. We believe trailing 12 months is the most appropriate way to view our performance, as it normalizes for seasonality throughout the calendar year. As detailed in our quarterly results presentation posted on our website, we are focused on driving high-quality enrollment and operational efficiencies, while reducing our curing cost. This approach has allowed us to streamline our operations and position ourselves for long-term success. We are confident that this decision will continue to have a positive impact on our overall profitability. For Q1 2023, we have changed our segment reporting to reflect our continued focus on driving high-quality Medicare business and our exit from non-Encompass BPO services. Going forward, we will be operating under a single reporting segment, which aligns with how we manage and operate the business and incentivize our associates. As a part of our reporting…

[Operator Instructions] Our first question comes from Mike Cherny with Bank of America. Your line is now open.

Good morning and thanks for taking the questions. I have a question about the transition to Encompass from the carrier side and maybe this is something that we'll learn more about during AEP. But in terms of the way that you've changed your go-to-market strategy, what has been the carrier reaction? And what changes in terms of the interplay that they have with you have you had to make if any? And have they caused any either stripe or I guess better communication either way?

Good morning, Mike, thanks for the question. Let me start with we have been working collaboratively with the carriers and the health plans for some time on this transition to Encompass. The primary focus being driving a better quality experience and better funnel metrics. As you think about that, there are dynamics around driving better effectuation, meaning a submission actually turning into an effective policy and then ultimately moving to a 90-day and then moving to being the retained policy over time. That dynamic, as we left AEP and all those test statistics and kind of running through what we did last Q4, resulted in material improvements on those metrics. So there's very strong support from our health plan partners to expand the scope of how we're delivering that consistent experience with them. They absolutely appreciate that we are aligned in our approach to looking at and protecting the consumer. And the standardized approach and the auditable experience I mean the simple fact that we record every element of this and we need technology to ensure that there's a standard flow through Tier 1 to Tier 2 and then specifically our Tier 3, which has been really focusing on that subject matter expertise of a agent who learned everything about a given health plan and then that final element taking the application from the beneficiary and being able to explain to them what specifically happens next to that health plan has been very exciting, right? We work with them on the script we're making sure that aligned experience. And then we follow up beyond that. So the short story is there's been a lot of very strong support for the model itself. I would say that as you look at the competitive marketplace elements of it, everybody loves to have…

No, no, no. It does fully understanding that as you lean on Encompass, we're going to see what happens as we go especially, into AEP still being such a big component of the year just because of how your market works. So I appreciate that look, and I appreciate the transparency you're giving us on that. And I guess just one last more technical question. I appreciate you breaking out the revenue and EBITDA contribution on the BPO. Any impact on cash flow, or would it be subsequent or similar to what you'd see from an EBITDA contribution, as you wind that business down?

Yes, Mike this is Jason. Appreciate the question. It's de minimis in terms of the BPO contribution on cash flow. So I would think of it just, pro rata as you kind of stated so best on it.

Thanks so much.

[Operator Instructions] The next question comes from Jonathan Yong with Credit Suisse. Your line is open.

Hi, thanks for taking the question, I just wanted to get your thoughts on the finalized CMS marketing rules given that there is some concern on the 48-hour SLA rule. Just how are you thinking about the impact on your business? And similarly, what have your carrier partners brought up in relation to that rule? Thanks.

Thanks for the question, Jonathan. I think there's a lot that we can address that. I think first and foremost, I think it's fair to say that, given all the comments we've provided earlier in the prepared comments and how we think strategically, the consumer and protecting the consumer is -- and that high-quality shopping experience is Paramount. And so, we are fully aligned with what CMS is intending to do and what the regulations are intended to protect. We do believe that leaving out bad actors and bad actions are really where we all need to focus that we can do the right thing. As you think about year-to-year, right with CMS every year, there's some sort of change of regulation around marketing and how you go to market. And all of that is contemplated in how we think about our operating plan, and our performance in any given year. As part of that, you're always working with the different carriers to understand how they're interpreting things, and how that flows through into our operations. And one of the things that is really interesting, is that I think we're all again in the business where we have a full auditing capability for every one of our calls good to know [ph]. We know where the lead came from because we do the majority of our own lead generation. We run that through and we have recorded specialized individuals for our Encompass platform that do verification of eligibility and interest to shop, all the way through to the enrollment and the onboarding process. So, we have a fairly unique platform that can be -- that is uniquely positioned, to be able to be responsive to any of the changes and interpretations that might have over time, in any other regulatory events. But again, this is an annual thing. Every year, there's something new that comes up. And we assume there will be things like this that will come up. So in short, we don't believe there will be any material negative impact based upon some of the different discussions that are going on today. Obviously, more details to come. But we actually believe, it could be on the flip side of this, that we think this could be a strategic opportunity for us. As we are standardizing our process, as we have more infrastructure and technology built around that standardized process, we're able to one again leverage the high-quality fully regulated marketing tactics we use to generate leads to manage that funnel process in a number of different environments and be responsive to those moves. They can lead to us grabbing more share. But at this point, we believe our model gives us a strategic advantage that we're pretty excited about regardless of where things ultimately fall out.

Great. Thanks.

Please stand by for our next question. Our next question comes from Ben Hendrix with RBC Capital Markets. Your line is open.

Hey, thank you very much. We've heard some commentary from carriers this earning season suggesting increased shopping behavior in the upcoming AEP as carriers adjust to via new MA risk models. I wanted to get your thoughts on implications for the traditional agency business and measures you're taking to mitigate any potential increased churn there? Thanks.

Thank you, Ben. It's a great question. As we've told you and as we've anticipated in even in the last call that we did, we described the fact that we are accepting and kind of leaning into the idea that shopping will happen. That has been reflected in all of our estimates, not only our guidance, but also all of the other estimates that are related to this thing. We think it's wonderful. As long as the consumer is winning and they're getting the best benefit options and they're being able to actually compare them effectively, that is the concern right is that with so much change potential within the different options and so many tweaks that happen around the edges beneficiaries can't always understand how does that impact them. They don't know how to make a relative comparison. And by actually building our infrastructure the way we have, taking all those benefit plans into account, understanding the beneficiary's individual needs, we're able to navigate that shopping experience. So yes, we expect more shopping to happen as we said last quarter. That is what our whole operating plan for the year is based upon. We have some presumptions on what that does to overall behavior around individual policies and we factor that into our thought process as well. And as we've said last quarter and we have reiterated now, this is a part of our strategy. We've leaned into it. It is exactly what we believe should be happening and that is that they shop. Shopping doesn't mean you switch. Shopping means you need to comparison shop. Shopping means you need to have an individualized experience. And so our agents our Tier 2 shoppers they are high-quality trained associates who spend the time to understand the beneficiaries' needs, to understand all of their benefit alternative and then make sure that even if it's not -- there's no change necessary, they're incentivized from the way we compensate them. And our plans before AEP will be just that that our agents are being -- are able to be rewarded for providing high-value shopping experience even if the conclusion is, the beneficiary just stays at their current plan. And they need to have that piece of mind. And so that's the way we're thinking about it. From our operational standpoint, that's exactly what we're expecting more shopping. And if it happens in an accelerated pace based on the MA rates and the risk adjusters, that will only lean to more of a positive for us as we think of the shopping dynamic in AEP.

Thank you.

[Operator Instructions] I show no further questions at this time. I would now like to turn the call back to Vijay for closing remarks. End of Q&A:

Thank you. Thank you, again for joining us today. We are really proud of everything that we've been able to accomplish thus far this year. Our team has been phenomenal. We have some of the best in the industry, who are really focused on doing the right thing and doing it right. And we are absolutely committed to continuing to do that. We hope you leave knowing we remain focused on delivering long-term value for our shareholders, while providing high-quality experiences to our consumers and health plans. Thank you for your continued support, and we look forward to updating you on our progress during the next quarterly results call and webcast. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.