Good day and thank you for standing by. Welcome to the GoHealth Second Quarter 2023 Earnings Conference Call. 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]. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, John Shave, Vice President of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Thanks for joining GoHealth's second quarter 2023 earnings call. Joining me today are Vijay Kotte, Chief Executive Officer; and Jason Schulz, Chief Financial Officer. Today’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. Earlier today, we issued a press release containing our results for the second quarter of 2023. We have posted the release on the GoHealth website under the Investor Relations tab. In the press release, we've listed a number of risk factors, which you should consider in conjunction with our forward-looking statements. We encourage you to consider the other Risk Factors described in our Form 10-K and Form 10-Q reports filed with the Securities 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 the Investor Relations section of our website for reconciliations of non-GAAP measures to the most comparable GAAP measures discussed this earnings call. I'll now turn the call over to GoHealth's CEO, Vijay Kotte.

Thank you, John. Good morning and thank you all for joining us today. I'm pleased to report another strong quarter. Together with our external partners, we helped over 162,000 Medicare consumers assess their coverage, review potential Medicare options, and enroll in a plan. Our marketplace model is distinct from traditional brokers in several ways. At GoHealth, we remain unbiased and put the consumer at the center of all we do. We achieved $140 million in revenue, nearly $1 million in adjusted EBITDA, and almost $11 million in positive cash flow. We continue to see improved profitability as we accomplished a significant milestone by reaching positive adjusted EBITDA in Q2 compared to a loss of just under $32 million in second quarter of 2022, which is particularly noteworthy given the historical dynamics of losses in the quarter due to carrying costs versus volume. This accomplishment is a testament to the intentional resizing decisions we made last year, which had a positive impact on our exit runway. Additionally, our strategic deployment of automation and technology played a pivotal role in driving operational efficiencies, while turning the corner to prudent growth going forward on a year-over-year basis. Our growth and exceptional results have exceeded expectations providing us with the competence to elevate our financial guidance for the remainder of the year. With this impressive performance, we now expect 2023 total net revenue of between $800 million and $850 million, an increase from the previous lower bound of $750 million. Furthermore, our projected adjusted EBITDA range is set to reach between $120 million and $140 million surpassing the previously lower bound of $100 million. Please recall there our guidance excludes non-Encompass BPO services. I want to highlight that with our strategic exit of non-Encompass BPO services, we believe we have transitioned to a phase…

Thanks, Vijay. I'm pleased to present our Q2 2023 financial results. Our Q2 performance has exceeded expectations with margin expansion and improved operational efficiency leading to a strong quarter. Second quarter revenue after adjusting for the exit of our non-Encompass BPO services was $140.3 million demonstrating growth compared to the $138.7 million generated in the second quarter of last year. While our year-over-year growth is modest, we are pleased to be turning the corner for long-term sustained top and bottom line financial growth. Our strong Q2 revenue performance was driven by over 162,000 submissions representing a increase of 5% year-over-year. Our second quarter adjusted EBITDA of $800,000 marks like $33 million improvement compared to the same period of last year. The year-over-year increase is largely driven by the continued benefits from the Encompass operating model, which has created significant efficiency gains. These improvements are a testament to our continued commitment for sustained growth and profitability. In Q2, we recorded $11 million for legal exposure related to our securities litigation. This accrual is not indicative of any procedural developments in the litigation and will remain confident in our defenses. In the second quarter of 2023, we achieved $11 million of positive cash flow from operations, a significant turnaround from the negative cash flow of $48 million in the prior year period. As illustrated in our quarterly results presentation posted on our website, our trailing 12-month cash flow from operations as of Q2 2023 is $86 million. This accomplishment represents a $346 million improvement compared to the same trailing 12-month period last year. While $107 million of this improvement can be attributed to the non-agency revenue, $254 million of the change is driven by our more efficient Encompass operating model. In Q2, we made a payment of $14 million on our term…

Before I move to the question-and-answer session, I want to first make a brief comment on a recent unsolicited [ph] and everything. In May, our Board of Directors confirmed that it had received an unsolicited acquisition proposal. The details can be found in our SEC filings. We also announced that our Board had established a special committee of independent directors to carefully consider the proposal received. As included in our earnings release, the special committee has concluded that the offer undervalue the company and is not in the best interest of GoHealth or its stockholders. We do not have any further updates at this time. We remain appreciative of the continued support and trust from our stockholders. We are focused on delivering value and driving the success of our business while maintaining high standards of corporate governance. With that, we would like to open the call to questions. Operator?

Thank you. [Operator Instructions]. Our first question comes from the line of Ben Hendrix with RBC Capital Markets. Your line is open. Please go ahead.

Great. Thank you very much. Congratulations on the quarter. Can you remind us of the mix of Encompass revenue assumed in full-year guidance and then how you're thinking about that evolving over time? Thank you.

Yes. Ben thanks for the question. So we are not going to go ahead and provide the mixed assumption for Encompass for the full-year guidance, but we do believe that it will have a meaningful improvement into our cash flow from operations for the rest of the year. Additionally, I think what's important; as we talked about in the last quarter, when we have our Encompass model, our operating model materially all of our business is going that -- through that operations. And so I think that's the more important point because that is going to go ahead and continue to drive the more efficient outcomes that we're talking about on the cost per submission. And so that's the primary thing I would guide you towards.

Yes, and I'll add to that, Ben that as just as a disclaimer, right? We said early on this year with all the hard work the team's done that we wanted to standardize on the Encompass workflow, and that was for our internal captive channel. As you know, you have the external down line agencies, who work with us and collaborate with us, but they're not on that same platform. So you would see the LION'S share, if not all of the volume running through the Encompass platform and the internal captive agents. And then externally though, we're starting to test that model. It's going to be a small portion of that, and so the majority of our external production will be running through the agency line with the LION's share of the internal volume going through the non-agency line. So hopefully, that's helpful to you, but I think it's confident to say that nearly all of the internal volume is going to be running through the Encompass workflow.

Thanks for that color. And then separately, I wondered if you give us an update on how agent retention is trending. It seems like this Plan Fit checkup would be a good way to support agent retention. Just any comments there?

Yes. No, thanks, Ben. On the question, I would say that our team has been super excited about what we've been doing with the tools we're providing for them to make their jobs easier, make it more efficient, a more standardized workflow that comes through Encompass. We have really committed and said out loud, as we said on these calls, that we were going to commit to doing the right thing and even paying our agents for not enrolling a beneficiary, but giving them a high quality selling or shopping experience. And that was really important to us. So we augmented our compensation plans to do just that. If they deliver a high quality shopping experience where they assess the individual's needs, match them with plans, present those to them, and even if they decide that they're already in the right plan, they tell them that, they will be compensated for that that time that they spent in the high quality work they did. That on top of the efficiencies delivered by our unified agent experience and even bringing in Customer 360, those bring efficiencies into the process that allow them to speak to more beneficiaries and more of our consumers. And so that gives them an opportunity to make more ultimately in that process. So with all those tools and our commitment to doing the right thing, which our agents want to do the right thing. And when we say we're now going to compensate them, even though many of them were already doing it, but now that we're compensating them for doing that, they realize they were aligned in our intentions to support consumers. The effect of that has been that our attrition is lower than we expected. And we are able to recruit at a higher pace, and we're recruiting when we need to add new agents with agents who are actually already licensed. They're actually more experienced in the space. And so in total, it's been a very, very exciting transition that the team's been able to work towards to achieve higher satisfaction amongst that group by delivering them tools and a very unique compensation model that's unparalleled in the industry.

Thank you. And I'm showing no further questions at this time. And I'd like to hand the conference back over to Vijay Kotte for any further remarks.

Thanks again for joining us today. We are really excited about our progress. It is safe to say that we're -- we have been on a transformation. It has been an interesting transition over that timeframe over the last year plus we deployed our Encompass strategy and it worked. We have shifted and can really stay focused to the fact that we've built a strong foundation upon, which now to grow as we were able to grow this quarter with half of the agents that we used to have, but still have year-over-year growth in this channel, built off of the hard work of our team. And so 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 our next quarterly results call and webcast. Thank you.

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