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What changed in GoHealth, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of GoHealth, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+483 added−544 removedSource: 10-K (2024-03-14) vs 10-K (2023-03-23)

Top changes in GoHealth, Inc.'s 2023 10-K

483 paragraphs added · 544 removed · 383 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeITEM 1. BUSINESS Overview We are a leading health insurance marketplace and Medicare-focused digital health company whose mission is to improve access to healthcare in America. Our proprietary technology platform leverages modern machine-learning algorithms powered by two decades of insurance behavioral data to reimagine the optimal process for helping individuals find the best health insurance plan for their specific needs.
Biggest changeOur proprietary technology platform leverages modern machine-learning algorithms, powered by over two decades of insurance purchasing behavior, to reimagine the process of matching a health plan to a consumer’s specific needs. Our unbiased, technology-driven marketplace coupled with highly skilled licensed agents has facilitated the enrollment of millions of consumers in Medicare plans since GoHealth’s inception.
These partners include healthcare industry participants, such as insurance health plan partners, financial and online services partners in industries, such as banking and insurance, as well as affiliate organizations. Government Regulation and Compliance The marketing and sale of insurance products and plans is a heavily regulated industry.
These partners include healthcare industry participants, such as health plan partners, financial and online services partners in industries, such as banking and insurance, as well as affiliate organizations. Government Regulation and Compliance The marketing and sale of insurance products and plans is a heavily regulated industry.
The use and disclosure of certain data that we collect from consumers are also regulated in some instances by other federal laws, including the Gramm-Leach-Bliley Act (“GLBA”), and state statutes implementing GLBA, which generally require brokers to provide customers with notice regarding how their non-public personal health and financial information is used and the opportunity to “opt out” of certain disclosures before sharing such information with a third party, and which generally require safeguards for the protection of personal information.
The use and disclosure of certain data that we collect from consumers are also regulated in some instances by other federal laws, including the Gramm-Leach-Bliley Act (“GLBA”), and state statutes implementing GLBA, which generally require brokers to provide consumers with notice regarding how their non-public personal health and financial information is used and the opportunity to “opt out” of certain disclosures before sharing such information with a third party, and which generally require safeguards for the protection of personal information.
CMS has regulatory authority over Medicare Plans and can influence the competitiveness of Medicare Plans compared to the original Medicare program, as well as the compensation that health plan partners are allowed to pay to us. Seasonality The Medicare annual enrollment period occurs from October 15 th to December 7 th .
CMS has regulatory authority over Medicare Plans and can influence the competitiveness of Medicare Plans compared to the original Medicare program, as well as the compensation that health plan partners are allowed to pay to us. Seasonality The Medicare annual enrollment period (“AEP”) occurs from October 15 th to December 7 th .
These requirements are evolving, and states are beginning to adopt additional requirements, including California, where the California Consumer Privacy Act of 2018 (“CCPA”) took effect beginning January 1, 2020, and was revised by the California Privacy Rights Act (CPRA), a ballot measure approved by California voters that became effective beginning January 1, 2023.
These requirements are evolving, and states are beginning to adopt additional requirements, including California, where the California Consumer Privacy Act of 2018 (“CCPA”) took effect beginning January 1, 2020, and was revised by the California Privacy Rights Act, a ballot measure approved by California voters that became effective beginning January 1, 2023.
If we were to be found to have breached our obligations under HIPAA, we could be subject to enforcement actions by the U.S. Department of Health and Human Services Office for Civil Rights (“OCR”) and state health regulators and lawsuits, including class action law suits, by private plaintiffs.
If we were to be found to have breached our obligations under HIPAA, we could be subject to enforcement actions by the U.S. Department of Health and Human Services Office for Civil Rights (“OCR”) and state health regulators and lawsuits, including class action lawsuits, by private plaintiffs.
We use LeadScore to make several decisions throughout the sales process about how to optimize the routing of the consumer lead and what agents or agencies are best suited to serve each consumer. • Contact Queuing: We utilize our SPLICE system, a proprietary contact queue prioritized by LTV and throttled by an integrated monitor of agent capacity, to optimize outreach to our most valuable online consumer leads at a point in time when they can be connected to our agents with minimal wait time. • Outbound Contact and Qualification: Following SPLICE’s automated decision for consumer outreach, our automatic telephony system contacts the consumer and immediately places them on the phone with an agent, who gathers information to personalize the consumer’s sales experience, who we refer to as an Advocate.
We use LeadScore to make several decisions throughout the sales process about how to optimize the routing of the consumer lead and what agents or agencies are best suited to serve each consumer. • Contact Queuing: We utilize our Automated Call Routing system (“ACR”), a proprietary contact queue prioritized by LTV and throttled by an integrated monitor of agent capacity, to optimize outreach to our most valuable online consumer leads at a point in time when they can be connected to our agents with minimal wait time. • Outbound Contact and Qualification: Following ACR’s automated decision for consumer outreach, our automatic telephony system contacts the consumer and immediately places them on the phone with an agent, who gathers information to personalize the consumer’s sales experience, who we refer to as an Advocate.
In addition to the risks associated with enforcement activities and potential contractual liabilities, our ongoing efforts to comply with evolving laws and regulations at the federal and state levels also might require us to make costly system purchases and/or modifications or otherwise divert significant resources to HIPAA compliance initiatives from time to time.
In addition to the risks associated with enforcement activities and potential contractual liabilities, our ongoing efforts to comply with evolving laws and regulations at the federal and state levels also might require us to make costly system purchases and/or modifications or otherwise divert significant resources to privacy-related compliance initiatives from time to time.
The key components of our platform are: • Data-Driven, Omnichannel Marketing: Based on predictive consumer lead targeting and a high cadence of multivariate testing on consumer lead generation properties, our data-driven, omnichannel marketing drives increased impressions and qualified prospects with a target return on marketing spend. • Proprietary LeadScore Technology: LeadScore, one of our proprietary machine-learning technologies, is built on large-scale, end-to-end sales data, predicts the LTV and conversion probability of consumer leads, and is utilized to optimize routing of the consumer leads in real-time regardless of their source. • Sophisticated Matching Technology: Our proprietary qualified prospect distribution, routing, and priority queuing technology based on LeadScore and agent performance data models help us to optimally match qualified prospects to those agents most likely to convert the qualified prospect to a customer. • The Marketplace: Our proprietary Marketplace technology features decision support tools and seamlessly integrates with health plan partner enterprise systems, empowering our highly skilled and trained agents to quickly and efficiently select the right health insurance plan for each consumer based on their specific needs and enroll them in those plans. • TeleCare Team: Our high-touch TeleCare team is focused on increasing consumer engagement with the GoHealth brand and helping consumers access their health insurance plan benefits.. • Scalable and Compliant Infrastructure: Our cloud infrastructure and compliance-by-design technology ensures scalability and compliance across our platform, essential in a highly regulated industry and crucial from a health plan partner perspective.
Our Platform The key components of our platform are: • Data-Driven, Omnichannel Marketing: Based on predictive consumer lead targeting and a high cadence of multivariate testing on consumer lead generation properties, our data-driven, omnichannel marketing drives increased impressions and qualified prospects with a target return on marketing spend. • Proprietary LeadScore Technology: LeadScore, one of our proprietary machine-learning technologies, is built on large-scale, end-to-end sales data, predicts the LTV and conversion probability of consumer leads, and is utilized to optimize routing of the consumer leads in real-time regardless of their source. • Sophisticated Matching Technology: Our proprietary qualified prospect distribution, routing, and priority queuing technology based on LeadScore and agent performance data models help us to optimally match qualified prospects to those agents best suited to help them achieve their objective. • The Marketplace: Our proprietary Marketplace technology features decision support tools and seamlessly integrates with health plan partner enterprise systems, empowering our highly skilled and trained agents to quickly and efficiently select the right health insurance plan for each consumer based on their specific needs and enroll them in those plans. • CARES Team: Our high-touch customer care team is focused on increasing consumer engagement with the GoHealth brand and helping consumers access their health plan benefits. • Scalable and Compliant Infrastructure: Our cloud infrastructure and compliance-by-design technology ensures scalability and compliance across our platform, essential in a highly regulated industry and crucial from a health plan partner perspective.
CMS also offers Medicare-plan online enrollment, information and comparison tools, and has established call centers for the sale of Medicare Advantage and Medicare Part D prescription drug plans (collectively, Medicare Plans).
CMS also offers Medicare-plan online enrollment, information and comparison tools, and has established call centers for the sale of Medicare Advantage and Medicare Part D prescription drug plans (collectively, “Medicare Plans”).
Violations of federal and state privacy and security laws and other contractual requirements may result in significant liability and expense, damage to our reputation or termination of relationship with government-run health insurance exchanges and our members, marketing partners and health plan partners.
Violations of federal and state privacy and security laws and other contractual requirements may result in significant liability and expense, damage to our reputation or the termination of relationships with government-run health insurance exchanges and our members, marketing partners and health plan partners.
We continue to focus on building out our health plan partner footprint in order to provide our consumers with a greater choice of health insurance plans. This expanded health plan partner footprint positions the Company well to help maximize the likelihood of finding the right policy for consumers, driving better conversion of incoming calls and higher persistency in plans.
We continue to focus on building out our health plan partner footprint in order to provide our consumers with a greater choice of health insurance plans. This expanded health plan partner footprint positions us to maximize the likelihood of finding the right policy for consumers, driving better conversion of incoming calls and higher persistency in plans.
Most of these health plan partners have brand recognition, significant financial resources, and have become experienced in marketing their products to consumers through traditional and emerging channels. • Independent Agents and Brokers: We compete with thousands of local insurance agents and brokers across the United States who sell insurance products in their communities.
Most of these health plan partners have brand recognition, significant financial resources, and have become experienced in marketing their products to consumers through traditional and emerging channels. • Independent Agents and Brokers: We compete with thousands of local insurance agents and brokers across the U.S. who sell insurance products in their communities.
We offer comprehensive benefit programs to our employees, including major medical, dental and vision benefits, life insurance coverage, flexible spending accounts, 401(k) retirement plan with a Company match, an employee stock purchase plan offering, along with numerous other offers aimed at supporting our employees both personally and professionally.
We offer comprehensive benefit programs to our employees, including major medical, dental and vision benefits, life insurance coverage, a flexible spending or health savings account, 401(k) retirement plan with a Company match, an employee stock purchase plan offering, along with numerous other offers aimed at supporting our employees both personally and professionally.
The types of supplemental benefits that health insurance plans cover increased in recent years and now cover transportation assistance, meal benefits, in-home support, telemonitoring, and caregivers support, among others.
The types of supplemental benefits that health plans cover increased in recent years and now cover transportation assistance, meal benefits, in-home support, telemonitoring, and caregiver support, among others.
These paid media efforts are supported by unpaid email and organic search campaigns. Our online advertising programs are delivered across all Internet-enabled devices, including desktop computers, tablet computers and smart phones. • Marketing Partners: Our marketing partner consumer acquisition channel consists of a network comprised of hundreds of partners that drive consumers to our ecommerce platform and Benefits Center.
These paid media efforts are supported by unpaid email and organic search campaigns. Our online advertising programs are delivered across all Internet-enabled devices, including desktop computers, tablet computers and smart phones. • Marketing Partners: Our marketing partner consumer acquisition channel consists of a broad network of partners that drive consumers to our platform.
Finally, our Consent Manager system ensures the capture of verifiable consent to call or text each consumer lead in compliance with the Telephone Consumer Protection Act (“TCPA”). • Lead Scoring: When consumers engage with us through the telephone or our website, our data systems capture attributes about the consumer, including the specific advertisement and channel that precipitated the consumer’s engagement.
Finally, our Consent Manager system ensures the capture of GoHealth, Inc. 2023 Form 10-K 7 verifiable consent to call or text each consumer lead in compliance with the Telephone Consumer Protection Act (“TCPA”). • Lead Scoring: When consumers engage with us through the telephone or our website, our data systems capture attributes about the consumer, including the specific advertisement and channel that precipitated the consumer’s engagement.
In addition, the United States regulates marketing and certain other communications by telephone and email, and individual states also impose restrictions on telephone marketing.
In addition, the U.S. regulates marketing and certain other communications by telephone and email, and individual states also impose restrictions on telephone marketing.
As a result, we experience an increase in the number of submitted Medicare-related applications during the fourth quarter and an increase in expense related to the Medicare segments during the third and fourth quarters.
As a result, we experience an increase in the number of Submissions during the fourth quarter and an increase in expense related to the Medicare Submissions during the third and fourth quarters.
In particular, regulations promulgated pursuant to the Health Insurance Portability and Affordability Act of 1996 (HIPAA) require us to maintain the privacy of individually-identifiable health information that we GoHealth, Inc. 2022 Form 10-K 10 collect on behalf of health plan partners, implement measures to safeguard such information and provide notification in the event of a breach in the privacy or confidentiality of such information.
In particular, regulations promulgated pursuant to the Health Insurance Portability and Affordability Act of 1996 (“HIPAA”) require us to maintain the privacy of individually-identifiable health information that we collect on behalf of health plan partners, implement measures to safeguard such information and provide notification in the event of a breach in the privacy or confidentiality of such information.
Additionally, as a result of the annual Medicare Advantage open enrollment period that occurs from January 1 st to March 31 st , commission revenue and Encompass revenue are typically second-highest in our first quarter. The second and third quarters are known as special election periods, and commission revenue and Encompass revenue are lower during these quarters.
Additionally, as a result of the annual Medicare Advantage open enrollment period that occurs from January 1 st to March 31 st , Medicare Submissions are typically second-highest in our first quarter. The second and third quarters are known as special election periods, during which Medicare Submissions are typically lowest.
For many consumers, choosing a health insurance plan is confusing and difficult, and seemingly small differences between health insurance plans can lead to significant out-of-pocket costs or lack of access to critical medicines, providers or facilities. We simplify the process by offering education, transparency and choice.
For many of these consumers, enrolling in a health insurance plan is confusing and difficult, and seemingly small differences between health plans may lead to significant out-of-pocket costs or lack of access to critical providers and medicines. We simplify the process by offering education, comparison guidance, transparency and choice.
Marketing and advertising expenses are generally higher in the fourth quarter during the Medicare annual enrollment period, but because commissions from approved customers are paid to us over time, our operating cash flows could be adversely impacted by a substantial increase in marketing and advertising expenses as a result of a higher volume of applications submitted during the fourth quarter or positively impacted by a substantial decline in marketing and advertising expenses as a result of lower volume of applications submitted during the fourth quarter.
Marketing and advertising expenses are generally higher in the fourth quarter during AEP, but because commissions from approved consumers are paid to us over time, our operating cash flows could be adversely impacted by a substantial increase in marketing and advertising expenses as a result of a higher volume of Submissions during the fourth quarter or positively impacted by a substantial decline in marketing and advertising expenses as a result of lower volume of Submissions during the fourth quarter.
Over the last two decades, we have consistently invested in our technology, data science and business processes to enroll people in health insurance plans while helping health plan partners scale their product and plan offerings.
Our Technology Throughout the past two decades, we have consistently invested in our technology, data science and business processes to enroll consumers in health plans while helping health plan partners scale their product and plan offerings.
Health plans owned by Humana, Elevance, United and Centene accounted for approximately 26%, 23%, 18% and 11% respectively, of net revenues for the twelve months ended December 31, 2022, approximately 28%, 22%, 16% and 17% respectively, of net revenues for the twelve months ended December 31, 2021 and approximately 40%, 29%, 13% and 9% respectively, of net revenues for the twelve months ended December 31, 2020.
Health plans owned by Humana, United, Elevance and Aetna accounted for approximately 28%, 20%, 19% and 17% respectively, of net revenues for the twelve months ended December 31, 2023, approximately 26%, 18%, 23% and 9%, respectively, of net revenues for the twelve months ended December 31, 2022 and approximately 28%, 16%, 22% and 9%, respectively, of net revenues for the twelve months ended December 31, 2021.
In addition to the increase in plan choices, the differences between health insurance plans has increased significantly. For 2019, the Centers for Medicare and Medicaid Services (“CMS”) eliminated the meaningful difference requirement to improve competition, innovation and available benefit offerings and provide beneficiaries with affordable health insurance plans that are tailored to a consumer’s specific healthcare needs and financial situation.
For 2019, the Centers for Medicare and Medicaid Services (“CMS”) eliminated the meaningful difference requirement to improve competition, innovation and available benefit offerings and provide consumers with affordable health insurance plans that are tailored to a consumer’s specific healthcare needs and financial situation.
Health plan partners also benefit from our platform, especially those looking to access the large and fast-growing Medicare-eligible population. We believe health plan partners utilize our large-scale data and technology as well as our efficient marketing and conversion processes to reduce their Cost of Submission, compared to health plan partner-employed agent workforces.
Health plan partners benefit from our platform by gaining access to the large and rapidly growing Medicare-eligible population. We believe health plan partners utilize our large-scale data, technology and efficient marketing processes to maximize scale and reduce their cost of submission, compared to health plan partner-employed agent workforces.
We have registered or applied to register certain of our trademarks in the United States and several other countries. Our registered trademarks have an original duration between 10 and 20 years. We also license intellectual property from third parties, including software that is incorporated in or bundled with our proprietary software applications.
Our registered trademarks have an original duration between 10 and 20 years. We also license intellectual property from third parties, including software that is incorporated in or bundled with our proprietary software applications.
In addition to an hourly wage, we also compensate our agents through a structured bonus program. Our bonus program is designed to compensate agents based on the quality and quantity of their enrollments. Our Marketing We employ data-driven, omnichannel marketing efforts to increase consumer phone calls and visits to our website and convert those calls and visits into customers.
Our bonus program is designed to compensate agents based on the quality and quantity of their enrollments. Our Marketing We employ data-driven, omnichannel marketing efforts to increase consumer phone calls and visits to our website and convert those calls and visits into high-quality consumer interactions.
We also use the data gathered by our Advocates to improve the sales process by testing the questions our Advocates ask and building data models of how consumers’ answers affect agent-consumer fit, consumer-product fit, Cost of Submission, LTV, and long-term customer satisfaction. • Lead Distribution: At the conclusion of the information-gathering process, and while the consumer is still on the phone, we use our proprietary lead auction system to make a health insurance market for the lead.
We also use the data gathered by our Advocates to improve the sales process by testing the questions our Advocates ask and building data models of how consumers’ answers affect agent-consumer fit, consumer-product fit, Cost of Submission, LTV, and long-term consumer satisfaction. • Lead Distribution: At the conclusion of the information-gathering process, and while the consumer is still on the phone, we use our proprietary platform to match consumers to health, wellness and quality of life offerings based on a comprehensive needs assessment.
GoHealth, Inc. 2022 Form 10-K 11 Patents, Trademarks and Other Intellectual Property We rely on a combination of copyright, trademark and trade secret laws as well as confidentiality procedures and contractual provisions to protect our proprietary software, including Marketplace, and our brands.
GoHealth, Inc. 2023 Form 10-K 10 Patents, Trademarks and Other Intellectual Property We rely on a combination of copyright, trademark and trade secret laws as well as confidentiality procedures and contractual provisions to protect our proprietary software, including Marketplace, and our brands. We have registered or applied to register certain of our trademarks in the U.S. and several other countries.
Agent, consumer lead, and cluster performance data are continuously gathered and regularly analyzed by machine-learning experts and sales managers alike to ensure optimal call-routing. • Consumer Lead Management: As consumer leads are assigned and connected to agents, our BrokerOffice technology provides guidance to the agents on the most appealing value proposition to the consumer based on the information previously collected about the consumer. • Marketplace: After reviewing the consumer’s profile in BrokerOffice, the agent launches our Marketplace technology.
Performance data is continuously gathered and continually retrained to ensure optimal call-routing based on current market dynamics. • Consumer Lead Management: As consumer leads are assigned and connected to agents, our Customer360 technology provides guidance to the agents on the most appealing value proposition to the consumer based on the information previously collected about the consumer. • Marketplace: After reviewing the consumer’s profile in Customer360, the agent launches our Marketplace technology.
These high-quality relationships have resulted in strong health plan retention rates; since our inception, we have GoHealth, Inc. 2022 Form 10-K 7 never had a health plan partner terminate for performance. We typically enter into contractual agency relationships with health plan partners that are non-exclusive and terminable on short notice by either party for any reason.
These high-quality relationships have resulted in strong health plan retention rates. We typically enter into contractual agency relationships with health plan partners that are non-exclusive and terminable on short notice by either party for any reason.
Our Assisted Live Transfer technology connects the call to the winner, via either warm (attended) transfer or cold (blind) transfer, dynamically chosen based on the availability of Advocates. • Optimized Call Routing: If the consumer lead is distributed from an Advocate further into our internal sales process, our CallRouter technology partitions the consumer leads into clusters based on lead and agent attributes.
Our Assisted Live Transfer technology connects the call to the relevant representative, via either warm (attended) transfer or cold (blind) transfer, dynamically chosen based on the availability of agents. • Optimized Call Routing: If the consumer lead is distributed from an Advocate further into our internal sales process, our CallRouter technology matches qualified consumers to those agents best suited to help them achieve their objective using a myriad of consumer and agent attributes.
There are also numerous state and federal laws and regulations related to the privacy and security of health information. Laws in all 50 states require businesses to provide notices to affected individuals whose personal information has been disclosed as a result of a data breach, and certain states require notifications for data breaches involving individually identifiable health information.
Laws in all 50 states require businesses to provide notices to affected individuals whose personal information has been disclosed as a GoHealth, Inc. 2023 Form 10-K 9 result of a data breach, and certain states require notifications for data breaches involving individually identifiable health information.
As a result, Medicare enrollment is expected to grow from approximately 63 million individuals in 2021 to approximately 93 million individuals by 2060. This growth in Medicare enrollment will increase the numbers of qualified prospects for our marketing efforts.
Medicare enrollment is expected to increase from approximately 66 million individuals in 2023 to approximately 93 million individuals by 2060. This growth in Medicare enrollment will increase the numbers of qualified prospects for our marketing efforts. In addition to the growth in Medicare enrollment, the interest in Medicare-eligible consumers in private Medicare plans is expected to continue to increase.
External agencies participate in the auction along with our internal agency and programs, and present a pricing bid based on the consumer lead’s profile.
External parties, along with our internal agency and programs, present offerings based on the consumer lead’s profile.
We also use post-sale data from health plan partners to model how retention outcomes relate to consumer, marketing, and customer journey attributes so that every piece of our technology can be further optimized to maximize customer satisfaction and improve the sales process. • Monitoring: We have also developed several enabling and monitoring technologies to detect and automatically address anomalies and inefficiencies in our operations based on deviations from baseline norms, and to ensure that our operations are fully compliant.
We also use post-sale data from health plan partners to model how retention outcomes relate to consumer, marketing, and consumer journey attributes so that every piece of our technology can be further optimized to maximize consumer satisfaction and improve the sales process.
This shift in focus has enabled us to capitalize on: • Strong demographic trends, with Medicare enrollment expected to grow from approximately 63 million individuals in 2020 to approximately 93 million individuals by 2060; • The increasing proportion of the Medicare-eligible population that is choosing commercial insurance solutions, with 48% of Medicare beneficiaries, or approximately 28.4 million people, enrolled in Medicare Advantage plans in 2022, an increase of approximately 2.2 million people from 2021 to 2022; and • Health plan partners’ historic reliance on an antiquated traditional field agent driven sales process lacking in transparency, choice and convenience and ripe for disruption by digitally-enabled and technology-driven marketplaces like our platform.
Our focus is on Medicare products, which enables us to capitalize on: • Strong demographic trends, with Medicare enrollment expected to grow from approximately 63 million individuals in 2020 to just over 93 million individuals in 2060; • The increasing proportion of the Medicare-eligible population that is choosing commercial insurance solutions, with 51% of Medicare beneficiaries, or approximately 31 million people, enrolled in Medicare Advantage plans in 2023, up from 42% in 2020. • Health plan partners’ historic reliance on a traditional field agent driven sales process, which lacks transparency, choice and convenience.
In addition, we specifically micro-target our marketing to precise populations to allow health plan partners to grow increasingly differentiated health insurance plans. This precise marketing is more difficult for traditional radio or television-based marketing channels.
In addition, we micro-target our marketing to specific audiences with the most to gain, enabling growth for the most differentiated health insurance plans. This precise marketing is more difficult for traditional radio or television-based marketing channels.
In addition, the laws and regulations applicable to the marketing and sale of Medicare-related plans are ambiguous, complex and, with respect to regulations and guidance issued by CMS for Medicare Advantage and Medicare Part D prescription drug plans, change frequently, and may do so as a result of the effects of the end of the national health emergency declared in response to the COVID-19 pandemic.
In addition, the laws and regulations applicable to the marketing and sale of Medicare-related plans are ambiguous, complex and, with respect to regulations and guidance issued by CMS for Medicare Advantage and Medicare Part D prescription drug plans, change frequently. There are also numerous state and federal laws and regulations related to the privacy and security of health information.
Our agents benefit from a rigorous training program consisting of four-to-eight weeks of classroom and interactive instruction prior to engaging with consumers. Our training courses cover insurance licensing, compliance requirements, customer service interactions, live role playing, and systems use. We competitively compensate agents to incentivize their productivity, increase member retention and improve customer satisfaction.
Our training courses cover insurance licensing, compliance requirements, customer service interactions, live role playing, and systems use. We competitively compensate agents to incentivize their productivity, increase member retention and improve consumer satisfaction. In addition to an hourly wage, we also compensate our agents through a structured bonus program.
Health plan partners often have the ability to terminate or amend our agreements unilaterally on short notice, including provisions in our agreements relating to our commission rates. We believe health plan partners see our method of acquiring consumers as scalable and efficient and, ultimately, as cost-advantageous compared to their own models, and provide us, in some cases, with marketing development.
We believe health plan partners see our method of acquiring consumers as scalable and efficient and, ultimately, as cost-advantageous compared to their own models, and provide us, in some cases, with marketing development funding. The health plan partners are responsible for paying our commissions and, for these purposes, act as our customers.
Our Health Plan Partner Relationships We maintain longstanding, deeply integrated relationships with leading health plan partners in the United States, who have some of the industry’s most widely recognizable brands.
Our Health Plan Partner Relationships We maintain longstanding, deeply integrated relationships with several leading health plan partners in the U.S., who have some of the industry’s most widely recognizable brands. For the twelve months ended December 31, 2023, 2022, and 2021, the primary health plan partners that we served were Humana, United, Elevance and Aetna.
We believe the increased penetration of Medicare Advantage, as well as the growth of the number of Medicare-eligible individuals, will lead to increased Submissions for marketplaces such as ours in the future.
We believe the growth of the number of Medicare-eligible consumers and increased penetration of Medicare Advantage will lead to increased Submissions for marketplaces such as ours in the future. We also believe that we are poised to benefit from market share gains in what has traditionally been a highly fragmented market.
Today, we estimate a total addressable market of nearly $30 billion for Medicare Advantage and Medicare Supplement products. We believe that these trends will drive a larger market in the coming years that, when taken together with our other product and plan offerings, will result in an even larger addressable market.
We believe that these trends will drive a larger market in the coming years that, when taken together with our other product and plan offerings, will result in an even larger addressable market. We also believe that we are poised to benefit from market share gains in what has traditionally been a highly fragmented market.
Our platform utilizes proprietary technology, machine-learning capabilities, data feedback, efficient business processes, and highly skilled and trained agents, to connect consumers with health plan partners through multiple channels. Through our platform, we primarily offer Medicare Advantage policies, but also offer a wide array of health insurance policies, including, but not limited to, Medicare Supplement and prescription drug plans.
Our platform utilizes proprietary technologies, machine-learning capabilities, data feedback, efficient business processes and highly skilled and trained agents to connect consumers with health plan partners through multiple channels. We have a technology culture that incentivizes the relentless improvement of every measurable point of the consumer experience.
A core element of our value proposition to health plan partners relates to our ability to reliably place policies in compliance with applicable regulations and health plan-specific requirements. As such, we work closely with health plan partners to develop approved scripts and to undertake regular audits of our compliance with health plan partner requirements.
We do not currently generate revenues directly from the consumers to whom we sell insurance policies on behalf of health plan partners. A core element of our value proposition to health plan partners relates to our ability to reliably place policies in compliance with applicable regulations and health plan-specific requirements.
In addition, our agents operate under compensation structures established to fully align their incentives with our compliance objectives.
As such, we work closely with health plan partners to develop approved scripts and to undertake regular audits of our compliance with health plan partner requirements. In addition, our agents operate under compensation structures established to fully align their incentives with our compliance objectives.
This includes providing a large selection of health insurance plan choices, advice informed by consumers’ specific needs, transparency of health insurance plan benefits and fit, assistance accessing available government subsidies and a high-touch TeleCare team. The TeleCare team is focused on increasing consumer engagement with the GoHealth brand and helping consumers access their health insurance plan benefits.
This includes providing a large selection of leading health plan choices, advice informed by consumers’ specific needs, transparency of health plan benefits and fit, assistance accessing available government subsidies and a high-touch customer care team. We primarily offer Medicare plans, including, but not limited to, Medicare Advantage, Medicare Supplement and prescription drug plans.
Our success is also rooted in hiring passionate employees, including sales professionals, entrepreneurs, analysts, marketers, engineers, and more – all of whom believe in our mission statement. We are proud of our lively, employee-driven culture and aim to offer our team the benefits and support they need to thrive.
We are proud of our committed, employee-driven culture and aim to offer our team the benefits and support they need to thrive.
Agent calls are continuously monitored so that we automatically redact PCI from compliant call recordings in real time. Various network and agent performance metrics are tracked so that we can exert control over our advertising and sales operations.
Various network and agent performance metrics are tracked so that we can exert control over our advertising and sales operations. Our Agents Since our inception, our highly skilled and trained agents have enrolled over 10 million people in Medicare plans.
Our diverse teams positively affect our relationships with consumers, health plan partners, and the communities we serve. We intend to continue to use the strength of our mission and our diverse people to continue to make a difference to the lives of our customers.
We will continue to use the strength of our purpose - keeping our consumers at the center of all we do - and our diverse and dedicated employees will continue to make a valued difference in the lives of the people we serve.
None of our employees are represented by a labor union or are party to a collective bargaining agreement, and we have had no labor-related work stoppages. We consider our employee relations to be good. We consider diversity and inclusion as part of what drives our success.
Human Capital Resources As of December 31, 2023, we employed 2,530 employees. We employed 2,469 people in the U.S. and 61 in Slovakia. During AEP, we typically hire additional full-time employees. None of our employees are represented by a labor union or are party to a collective bargaining agreement, and we have had no labor-related work stoppages.
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Our differentiated combination of a vertically integrated consumer acquisition platform and highly skilled and trained agents has enabled us to enroll millions of people in Medicare and individual and family plans since our inception.
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ITEM 1. BUSINESS Overview GoHealth is a leading health insurance marketplace and Medicare-focused digital health company whose purpose is to compassionately ensure peace of mind in consumers’ healthcare decisions so they can focus on living life.
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With a current commissionable market of nearly $30 billion, over 10,000 Americans turning 65 years old every day and our significant presence in the Medicare space, we believe we will continue to be one of the top choices for insurance advice to help navigate one of the most important purchasing decisions individuals make.
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With a widely scalable end-to-end platform and substantial presence in the Medicare landscape, we believe we are uniquely positioned as a trusted partner to the 65 million Medicare-eligible Americans, as well as the 11,000 Americans becoming eligible each day, as they navigate one of life's most important purchasing decisions.
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We also provide services to consumers in our Medicare segments through our Encompass Solution. The Encompass Solution offers a differentiated way for Medicare beneficiaries to navigate the complex Medicare Advantage plan selection process and begin to utilize their new plan benefits with greater confidence.
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Over the past year, we have evolved into a consumer-centric, market-leading solution, building on our culture of innovation. Our consumer-centric approach positions us to be a trusted, high-quality enrollment partner for both consumers and health plan partners. We have transitioned to our streamlined, standard Encompass operating model, which drives both high quality enrollments and a strong consumer experience.
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By working closely with our benefit consultants and dedicated health plan enrollment specialists, individuals can better understand the plan options available and receive more detailed, plan-specific information during the enrollment process. Coupled with the execution of our new member onboarding action plans, beneficiaries who enroll through our Encompass Solution typically exhibit higher customer persistency.
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We partner with health plans across the nation that provide access to high quality plans across all 50 states.
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Over the past two decades, we have grown significantly and expanded into new market segments of insurance products. We create significant value for both consumers and health plan partners, through our marketplace, which is evidenced by our growth and strong customer engagement dynamics. Over the last six years, we have increasingly shifted our focus towards Medicare products.
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Digitally-enabled and technology-driven marketplaces like GoHealth's are disrupting this outdated approach. In 2022, only about one in three Medicare beneficiaries, regardless of coverage, used traditional insurance brokers or agents to choose a plan.
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We also believe that we are poised to benefit from market share gains in what has traditionally been a highly fragmented market.
Added
Our Business Model Our Process Our Encompass operating model drives a high-quality enrollment experience: • Shop: Eligible consumers shop for a Medicare plan with us annually based on their evolving needs. Proprietary consumer-agent matching technology identifies and dynamically routes calls to the agent best-equipped to meet consumer needs.
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Our Business Model Our Platform GoHealth, Inc. 2022 Form 10-K 5 Our platform utilizes proprietary technology, machine-learning capabilities, data, efficient business processes, and highly skilled and trained agents to generate a revenue stream that benefits from favorable demographic trends.
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Initial contact is supported by our Connect Team. • Match: Our Advocate team empowers consumers to match with the right plan for their needs - even if it’s the same plan they already have - using our proprietary PlanFit technology.
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Our Value Proposition: Scale Benefits and Sales/Cost of Submission Focus We believe that Sales/Cost of Submission is the best metric to provide insight into the efficiency and performance of our integrated platform. We focus on strengthening the key drivers of Sales/Cost of Submission, including marketing costs, the consumer lead to customer conversion rate and customer satisfaction.
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The PlanFit tool evaluates over 180 factors to determine the Medicare Advantage plan that best fits the beneficiary’s profile and unique needs. • Confirm: Consumers confirm that they have selected the right plan with education and reassurance from our health plan dedicated Resolve team.
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While we offer both do-it-yourself and agent-assisted channels to accommodate consumers’ preferences, we believe that for most qualified Medicare prospects, an agent-assisted model maximizes Sales/Cost of Submission. As we continue to scale our platform, we improve our key drivers through specialization and optimization using our proprietary data and machine-learning.
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GoHealth, Inc. 2023 Form 10-K 5 • Activate: Consumers activate benefits in the first 90 days of their plan with the help of our Engage team, who provides personalized onboarding for each consumer. • Access: As consumers access their benefits throughout the year, our Engage team is on standby to answer key questions, enable plan usage, and monitor evolving consumer needs.
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We believe the key components of our platform are difficult to replicate for field-based agents, health plan partner-employed agents, and other digital or telesales competitors, making us increasingly valuable to health plans partners and consumers.
Added
Our Customer 360 technology provides a unified view of the consumer across every touchpoint, every year to ensure personalized service at every point in the consumer journey.
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As we increase the number of Submissions, our data on qualified prospect, agent, and health plan partner performance becomes richer, feeding into our machine-learning and data science-enabled feedback loops, making our marketing and technology even smarter.
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Our Products GoHealth primarily offers Medicare Advantage plans through its platform but also provides a variety of other health plans, including, but not limited to, Medicare Supplement and prescription drug plans. The primary services provided by the Company relate to the sale and administration of Medicare insurance products through our preferred Encompass operating model.
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This differentiates us from other channels and competitors, allowing us to generate more consumer leads, convert those consumer leads to customers at a higher rate, serve our customers over a longer period of time, and reduce our Cost of Submission.
Added
The Encompass operating model supports all Medicare services, including agency and non-agency revenue. Agency revenue refers to the commission revenue and partner marketing and other revenue the Company receives when GoHealth agents or the Company’s independent network of outsourced agents enroll the consumer and submit the policy application to the health plan partner, becoming the agent of record.
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Our Products We operate our business in four segments: (i) Medicare—Internal, (ii) Medicare—External, (iii) Individual and Family Plans, or IFP and Other—Internal and (iv) IFP and Other—External. The Medicare segments focus on sales of Medicare Advantage, Medicare Supplement, Medicare prescription drug plans, and Medicare Special Needs Plans (“SNPs”) for multiple health plan partners.
Added
Non-agency revenue refers to services provided by the Company that support enrollment and engagement activities in which the Company is not the agent of record. GoHealth’s Medicare Advantage offerings include Special Needs Plans (“SNPs”). SNPs are special kinds of Medicare Advantage plans that have benefits covering special health care or financial needs.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

221 edited+21 added−18 removed259 unchanged
Biggest changeDuring periods when we face challenges recruiting high-performing agents, we tend to experience higher turnover rates. The productivity of our agents is influenced by their average tenure. Without qualified individuals to serve in customer facing roles, we may produce less commission revenue, which could have a material adverse effect on our business, operating results and financial condition.
Biggest changeWithout qualified individuals to serve in consumer facing roles, we may produce less revenue, which could have a material adverse effect on our business, operating results and financial condition. Retaining tenured agents has a direct impact on our operating efficiency and, correspondingly, our financial results. We have implemented a work from home program for our agents.
The invasion of Ukraine and the retaliatory measures that have been taken, and could be taken in future, by the U.S., NATO, and other countries have created global security concerns that could result in a regional conflict and otherwise have a lasting impact on regional and global economies, any or all of which could adversely affect our business.
The invasion of Ukraine and the retaliatory measures that have been taken, and could be taken in the future, by the U.S., NATO, and other countries have created global security concerns that could result in a regional conflict and otherwise have a lasting impact on regional and global economies, any or all of which could adversely affect our business.
Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, general and economic conditions, our results of operations and financial condition, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions, and such other factors that our board of directors may deem relevant.
Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, general economic conditions, our results of operations and financial condition, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions, and such other factors that our board of directors may deem relevant.
In addition, any failure or perceived failure by us to maintain posted privacy policies which are accurate, comprehensive and fully implemented, and any violation or perceived violation of our privacy-, data protection- or information security-related obligations to customers, users or other third parties or any of our other legal obligations relating to privacy, data protection or information security may result in governmental investigations or enforcement actions, litigation, claims or public statements against us by consumer advocacy groups or others, and could result in significant liability, loss of relationships with key third parties including health plan partners, social media networks and other data providers, or cause our consumers to lose trust in us, which could have material impacts on our revenue and operations.
In addition, any failure or perceived failure by us to maintain posted privacy policies which are accurate, comprehensive and fully implemented, and any violation or perceived violation of our privacy-, data protection- or information security-related obligations to consumers, users or other third parties or any of our other legal obligations relating to privacy, data protection or information security may result in governmental investigations or enforcement actions, litigation, claims or public statements against us by consumer advocacy groups or others, and could result in significant liability, loss of relationships with key third parties including health plan partners, social media networks and other data providers, or cause our consumers to lose trust in us, which could have material impacts on our revenue and operations.
We cannot guarantee that our facilities and systems, and those of our third-party service providers, will be free of security breaches, cyber-attacks, acts of vandalism, computer viruses, malware, ransomware, denial-of-service attacks, misplaced or lost data, programming and/or human errors or other similar events, and we are required to expend significant amounts and other resources to protect against security breaches or to alleviate problems caused by security breaches and other threats to our information technology systems.
We cannot guarantee that our facilities and systems, and those of our third-party service providers, will be free from security breaches, cyber-attacks, acts of vandalism, computer viruses, malware, ransomware, denial-of-service attacks, misplaced or lost data, programming and/or human errors or other similar events, and we are required to expend significant amounts and other resources to protect against security breaches or to alleviate problems caused by security breaches and other threats to our information technology systems.
Our forecasted average plan duration and health insurance plan termination rates are calculated based on our historical data by plan type and for certain products, such as our Medicare Advantage products which constitute the majority of our revenue, and if we are unable to produce an accurate forecasted average plan duration, our business, operating results and financial condition may be adversely impacted.
Our forecasted average plan duration and health plan termination rates are calculated based on our historical data by plan type and for certain products, such as our Medicare Advantage products which constitute the majority of our revenue, and if we are unable to produce an accurate forecasted average plan duration, our business, operating results and financial condition may be adversely impacted.
These changes have in the past, and may in the future have the unintended consequence of adversely impacting our conversion rates. A decline in the percentage of consumers who submit health insurance applications on our platform and are converted into approved customers could cause an increase in our Cost of Submission and impact our revenue in any given period.
These changes have in the past, and may in the future have the unintended consequence of adversely impacting our conversion rates. A decline in the percentage of consumers who submit health insurance applications on our platform and are converted into approved consumers could cause an increase in our Cost of Submission and impact our revenue in any given period.
Problems faced by our third-party data center locations with the telecommunications network providers with whom we or they contract, or with the systems by which our telecommunications providers allocate capacity among their clients, including us, could adversely affect the experience of our clients and consumers. Our third-party data center operators could decide to close their facilities without adequate notice.
Problems faced by our third-party data center locations with the telecommunications network providers with whom we or they contract, or with the systems by which our telecommunications providers allocate capacity among their clients, including us, could adversely affect the experience of our consumers. Our third-party data center operators could decide to close their facilities without adequate notice.
We believe that our future success will depend on our continued ability to attract and retain highly skilled and qualified executive personnel for all areas of our organization, for which there is a high level of competition for such personnel in our industry.
We believe that our future success will depend on our continued ability to attract and retain highly skilled and qualified executive personnel for all areas of our organization, for which there is a high level of competition in our industry.
If these regulations change, we could be forced to reduce prices or provide rebates or other incentives for the health insurance plans sold through our technology platform, which would harm our business, operating results and financial condition.
If these regulations change, we could be forced to reduce prices or provide rebates or other incentives for the health insurance plans sold through our platform, which would harm our business, operating results and financial condition.
In addition, monitoring unauthorized uses of our intellectual property and unauthorized disclosures of our trade secrets and other confidential or proprietary information can be difficult, and even if we do detect violations, litigation may be necessary to enforce our intellectual property rights.
In addition, monitoring unauthorized uses of our intellectual property and unauthorized disclosures of our trade secrets and other confidential or proprietary information can be difficult and costly, and even if we do detect violations, litigation may be necessary to enforce our intellectual property rights.
In certain cases, payments under the Tax Receivable Agreement to the Continuing Equity Owners and the Blocker Shareholders may be accelerated or significantly exceed any actual benefits we realize in respect of the tax attributes subject to the Tax Receivable Agreement.
In certain cases, payments under the TRA to the Continuing Equity Owners and the Blocker Shareholders may be accelerated or significantly exceed any actual benefits we realize in respect of the tax attributes subject to the Tax Receivable Agreement.
Any compromise or perceived compromise of the security of our systems or the systems of one or more of our vendors or service providers could damage our reputation, cause the termination of relationships with government-run health insurance exchanges, health plan partners, and/or our customers, result in disruption or interruption to our business operations, marketing partners and health plan partners, reduce demand for our services and subject us to significant liability and expense as well as regulatory action and lawsuits, which would harm our business, operating results and financial condition.
Any compromise or perceived compromise of the security of our systems or the systems of one or more of our vendors or service providers could damage our reputation, cause the termination of relationships with government-run health insurance exchanges, health plan partners and/or our consumers, result in disruption or interruption to our business operations, marketing partners and health plan partners, reduce demand for our services and subject us to significant liability and expense as well as regulatory action and lawsuits, which would harm our business, operating results and financial condition.
These provisions provide for, among other things: • a classified board of directors with staggered three-year terms; • the ability of our board of directors to issue one or more series of preferred stock; • advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; • certain limitations on convening special stockholder meetings; • no cumulative voting in the election of directors; • subject to the rights of the holders of any preferred stock and the terms of the Stockholders Agreement, the number of directors shall be determined exclusively by a majority of the whole board or directors; GoHealth, Inc. 2022 Form 10-K 36 • the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% of the voting power represented by our then-outstanding common stock (other than directors appointed pursuant to the Stockholders Agreement, who may be removed with or without cause in accordance with the terms of the Stockholders Agreement); • at any time when Centerbridge beneficially owns, in the aggregate, less than 40% of the voting power entitled to vote generally in the election of our directors, that stockholders may not act by written consent; and • at any time when Centerbridge beneficially owns, in the aggregate, less than 40% of the voting power entitled to vote generally in the election of our directors, that certain provisions of our amended and restated certificate of incorporation may be amended only by the affirmative vote of at least 66 2/3% of the voting power represented by our then-outstanding common stock.
These provisions provide for, among other things: • a classified board of directors with staggered three-year terms; • the ability of our board of directors to issue one or more series of preferred stock; • advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; • certain limitations on convening special stockholder meetings; • no cumulative voting in the election of directors; • subject to the rights of the holders of any preferred stock and the terms of the Stockholders Agreement, the number of directors shall be determined exclusively by a majority of the whole board or directors; • the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% of the voting power represented by our then-outstanding common stock (other than directors appointed pursuant to the Stockholders Agreement, who may be removed with or without cause in accordance with the terms of the Stockholders Agreement); GoHealth, Inc. 2023 Form 10-K 35 • at any time when Centerbridge beneficially owns, in the aggregate, less than 40% of the voting power entitled to vote generally in the election of our directors, that stockholders may not act by written consent; and • at any time when Centerbridge beneficially owns, in the aggregate, less than 40% of the voting power entitled to vote generally in the election of our directors, that certain provisions of our amended and restated certificate of incorporation may be amended only by the affirmative vote of at least 66 2/3% of the voting power represented by our then-outstanding common stock.
These various laws in many cases are not preempted by HIPAA and may be subject to varying interpretations by the courts and government agencies, creating complex compliance issues for us and our customers and potentially exposing us to additional expense, adverse publicity and liability, any of which could adversely affect our business, operating results and financial condition.
These various laws in many cases are not preempted by HIPAA and may be subject to varying interpretations by the courts and government agencies, creating complex compliance issues for us and our consumers and potentially exposing us to additional expense, adverse publicity and liability, any of which could adversely affect our business, operating results and financial condition.
You may not be able to resell your shares at or above the price which you paid for them due to a number of factors included herein, including the following: • results of operations that vary from the expectations of securities analysts and investors; • results of operations that vary from those of our competitors; • changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors; • technology changes, changes in consumer behavior or changes in merchant relationships in our industry; • security breaches related to our systems or those of our merchants, affiliates or strategic partners; GoHealth, Inc. 2022 Form 10-K 39 • changes in economic conditions for companies in our industry; • changes in market valuations of, or earnings and other announcements by, companies in our industry; • declines in the market prices of stocks generally, particularly those of global payment companies; • strategic actions by us or our competitors; • announcements by us, our competitors or our strategic partners of significant contracts, new products, acquisitions, joint marketing relationships, joint ventures, other strategic relationships, or capital commitments; • changes in general economic or market conditions or trends in our industry or the economy as a whole and, in particular, in the consumer spending environment; • changes in business or regulatory conditions; • future sales of our Class A common stock or other securities; • investor perceptions of the investment opportunity associated with our Class A common stock relative to other investment alternatives; • the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC; • announcements relating to litigation or governmental investigations; • guidance, if any, that we provide to the public, any changes in this guidance, or our failure to meet this guidance; • the development and sustainability of an active trading market for our stock; • changes in accounting principles; • global macroeconomic conditions, including inflation, labor shortages, supply chain shortages, or other economic, political or legal uncertainties or adverse developments; • political tensions resulting in economic instability, such as due to military activity or civil hostilities among Russia and Ukraine and the related response, including sanctions or other restrictive actions, by the United States and/or other countries; and • other events or factors, including those resulting from system failures and disruptions, natural disasters, war, acts of terrorism, an outbreak of highly infectious or contagious diseases, such as COVID-19, or responses to these events.
You may not be able to resell your shares at or above the price which you paid for them due to a number of factors included herein, including the following: • results of operations that vary from the expectations of securities analysts and investors; • results of operations that vary from those of our competitors; • changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors; • technology changes, changes in consumer behavior or changes in merchant relationships in our industry; • security breaches related to our systems or those of our merchants, affiliates or strategic partners; • changes in economic conditions for companies in our industry; • changes in market valuations of, or earnings and other announcements by, companies in our industry; • declines in the market prices of stocks generally, particularly those of global payment companies; • strategic actions by us or our competitors; • announcements by us, our competitors or our strategic partners of significant contracts, new products, acquisitions, joint marketing relationships, joint ventures, other strategic relationships, or capital commitments; • changes in general economic or market conditions or trends in our industry or the economy as a whole and, in particular, in the consumer spending environment; • changes in business or regulatory conditions; • future sales of our Class A common stock or other securities; • investor perceptions of the investment opportunity associated with our Class A common stock relative to other investment alternatives; • the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC; • announcements relating to litigation or governmental investigations; • guidance, if any, that we provide to the public, any changes in this guidance, or our failure to meet this guidance; GoHealth, Inc. 2023 Form 10-K 38 • the development and sustainability of an active trading market for our stock; • changes in accounting principles; • global macroeconomic conditions, including inflation, labor shortages, supply chain shortages, or other economic, political or legal uncertainties or adverse developments; • political tensions resulting in economic instability, such as due to military activity or civil hostilities among Russia and Ukraine and the related response, including sanctions or other restrictive actions, by the U.S. and/or other countries; and • other events or factors, including those resulting from system failures and disruptions, natural disasters, war, acts of terrorism, an outbreak of highly infectious or contagious diseases, such as COVID-19, or responses to these events.
The existing tax basis acquired in connection with the Transactions, the actual increase in tax basis, and the actual utilization of any resulting tax benefits, as well as the amount and timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors: including the timing of redemptions by the Continuing Equity Owners; the price of shares of our Class A common stock at the time of the exchange; the extent to which such exchanges are taxable; the amount of gain recognized by such Continuing Equity Owners; the amount and timing of the taxable income allocated to us or otherwise generated by us in the future; the portion of our payments under the Tax Receivable Agreement constituting imputed interest; and the federal and state tax rates then applicable.
The existing tax basis acquired in connection with the Transactions, the actual increase in tax basis, and the actual utilization of any resulting tax benefits, as well as the amount and timing of any payments under the TRA, will vary depending upon a number of factors, including the timing of redemptions by the Continuing Equity Owners; the price of shares of our Class A common stock at the time of the exchange; the extent to which such exchanges are taxable; the amount of gain recognized by such Continuing Equity Owners; the amount and timing of the taxable income allocated to us or otherwise generated by us in the future; the portion of our payments under the TRA constituting imputed interest; and the federal and state tax rates then applicable.
Competition for referrals from third-party lead referral companies has increased, particularly during the enrollment periods for Medicare-related health insurance and individual and family health insurance. We may lose referrals if our competitors pay these companies more than we do or be forced to pay increased fees, which could harm our business, operating results and financial condition.
Competition for referrals from third-party lead referral companies has increased, particularly during the enrollment periods for Medicare-related health insurance. We may lose referrals if our competitors pay these companies more than we do or be forced to pay increased fees, which could harm our business, operating results and financial condition.
Although we expect that we could receive similar services from other third parties, if any of our arrangements with our Hosting Providers are terminated, we could experience interruptions on our platform and in our ability to make our products available to customers, as well as delays and additional expenses (including research and development expenses) in arranging alternative cloud infrastructure services.
Although we expect that we could receive similar services from other third parties, if any of our arrangements with our Hosting Providers are terminated, we could experience interruptions on our platform and in our ability to make our products available to consumers, as well as delays and additional expenses (including research and development expenses) in arranging alternative cloud infrastructure services.
If the information we provide on our website, through our Benefits Center, in our marketing materials or otherwise is not accurate or is construed as misleading, or if we do not properly assist individuals and businesses in purchasing health insurance, customers, health plan partners and others could attempt to hold us liable for damages, our relationships with health plan partners could be terminated or impaired and regulators could attempt to subject us to penalties, revoke our licenses to transact health insurance business in a particular jurisdiction, and/or compromise the status of our licenses to transact health insurance business in other jurisdictions, which could result in our loss of commission revenue.
If the information we provide on our website, through our Benefits Center, in our marketing materials or otherwise is not accurate or is construed as misleading, or if we do not properly assist individuals and businesses in purchasing health insurance, consumers, health plan partners and others could attempt to hold us liable for damages, our relationships with health plan partners could be terminated or impaired and regulators could attempt to subject us to penalties, revoke our licenses to transact health insurance business in a particular jurisdiction, and/or compromise the status of our licenses to transact health insurance business in other jurisdictions, which could result in our loss of revenue.
Any of the above circumstances or events may cause outages where we are unable to generate revenue, harm our reputation, cause customers to stop using our products, impair our ability to attract new customers and increase revenue from customers, subject us to financial penalties and liabilities under our service level agreements and otherwise harm our revenue, business, results of operations and financial condition.
Any of the above circumstances or events may cause outages where we are unable to generate revenue, harm our reputation, cause consumers to stop using our products, impair our ability to attract new consumers and increase revenue from consumers, subject us to financial penalties and liabilities under our service level agreements and otherwise harm our revenue, business, results of operations and financial condition.
Our amended and restated certificate of incorporation provides (A) (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or stockholder of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws (as either may be amended or restated) or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (iv) any action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware; and (B) the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
Our amended and restated certificate of incorporation provides (A) (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or stockholder of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws (as either may be amended or restated) or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (iv) any action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware; and (B) the federal district courts of the U.S. shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
If these third-party partners are not successful or do not provide us with quality leads, it may adversely impact our business. Additionally, we derive a significant portion of our website traffic from potential beneficiaries who search for health insurance through Internet search engines and through social media.
If these third-party partners are not successful or do not provide us with quality leads, it may adversely impact our business. Additionally, we derive a significant portion of our website traffic from potential consumers who search for health insurance through Internet search engines and through social media.
In addition, any loss of data could result in loss of customers and subject us to potential liability. Our databases and systems are vulnerable to damage or interruption from human error, fire, floods, power loss, telecommunications failures, physical or electronic break-ins, computer viruses, acts of terrorism, other attempts to harm our systems and similar events.
In addition, any loss of data could result in loss of consumers and subject us to potential liability. Our databases and systems are vulnerable to damage or interruption from human error, fire, floods, power loss, telecommunications failures, physical or electronic break-ins, computer viruses, acts of terrorism, other attempts to harm our systems and similar events.
If we, our agents, or a health plan partner violates any of the requirements imposed by CMS, or federal or state laws or regulations, a health plan partner may terminate our relationship or take other corrective action against us, or CMS may penalize a health plan partner by suspending, limiting, or terminating that health plan partners’ ability to market and sell Medicare plans.
If we, our agents, or a health plan partner violate any of the requirements imposed by CMS, or federal or state laws or regulations, a health plan partner may terminate our relationship or take other corrective action against us, or CMS may penalize a health plan partner by suspending, limiting, or terminating that health plan partners’ ability to market and sell Medicare plans.
See “—Our operating results may be adversely impacted by factors that impact our estimate of LTV.” Moreover, if we are not able to successfully retain existing beneficiaries and limit health insurance plan turnover, our cash flows from operations will be adversely impacted and our business, operating results and financial condition would be harmed.
See “—Our operating results may be adversely impacted by factors that impact our estimate of LTV.” Moreover, if we are not able to successfully retain existing consumers and limit health insurance plan turnover, our cash flows from operations will be adversely impacted and our business, operating results and financial condition would be harmed.
If we are unable to communicate effectively by e-mail or telephone with our customers and qualified prospects as a result of legislation, blockage, screening technologies or otherwise, our ability to attract and retain customers will be limited. Our business primarily generates revenue through the sale of Medicare Advantage plans.
If we are unable to communicate effectively by e-mail or telephone with our consumers and qualified prospects as a result of legislation, blockage, screening technologies or otherwise, our ability to attract and retain consumers will be limited. Our business primarily generates revenue through the sale of Medicare Advantage plans.
As a result of uncertainties with respect to financial institutions and the global credit markets and other macroeconomic challenges currently or potentially affecting the economy of the U.S. and other parts of the world, customers may experience serious cash flow problems and other financial difficulties, decreasing demand for the products of our health plan partners.
As a result of uncertainties with respect to financial institutions and the global credit markets and other macroeconomic challenges currently or potentially affecting the economy of the U.S. and other parts of the world, consumers may experience serious cash flow problems and other financial difficulties, decreasing demand for the products of our health plan partners.
Our business relies on the data provided to us by customers, health plan partners and third-party lead suppliers. The large amount of data that we use in operating our marketplace platform, and the accuracy of such data, is critical to our ability to provide a relevant, efficient and effective insurance shopping experience for customers.
Our business relies on the data provided to us by consumers, health plan partners and third-party lead suppliers. The large amount of data that we use in operating our marketplace platform, and the accuracy of such data, is critical to our ability to provide a relevant, efficient and effective insurance shopping experience for consumers.
For example, if the data provided to us by our customers during the insurance shopping process is not accurate, our ability to match our customers with relevant and suitable insurance products would be impaired, which could lead to an increase in rejections of policies that we submit to health plan partners.
For example, if the data provided to us by our consumers during the insurance shopping process is not accurate, our ability to match our consumers with relevant and suitable insurance products would be impaired, which could lead to an increase in rejections of policies that we submit to health plan partners.
In connection with such a termination, we would lose a source of commissions for future sales, and, in a limited number of cases, future commissions for past sales. Our business could also be harmed if we fail to develop new health plan partner relationships or offer customers a wide variety of insurance products.
In connection with such a termination, we would lose a source of commissions for future sales, and, in a limited number of cases, future commissions for past sales. Our business could also be harmed if we fail to develop new health plan partner relationships or offer consumers a wide variety of insurance products.
If paid search advertising costs or social media advertising costs increase or become cost prohibitive, whether as a result of competition, algorithm changes or otherwise, our advertising expenses could rise significantly or we could reduce or discontinue our paid search advertisements or social media advertisements, in either case which would harm our ability to attract and retain customers.
If paid search advertising costs or social media advertising costs increase or become cost prohibitive, whether as a result of competition, algorithm changes or otherwise, our advertising expenses could rise significantly or we could reduce or discontinue our paid search advertisements or social media advertisements, in either case which would harm our ability to attract and retain consumers.
These rules and regulations could adversely impact our business because health plan partners may exit the market of selling such plans due to regulatory concerns, determine it is not profitable to sell the plans or increase plan premiums to a degree that reduces customer demand for them.
These rules and regulations could adversely impact our business because health plan partners may exit the market of selling such plans due to regulatory concerns, determine it is not profitable to sell the plans or increase plan premiums to a degree that reduces consumer demand for them.
To the extent we do not effectively address capacity constraints, either through our Hosting Providers or alternative providers of cloud infrastructure, our business, results of operations and financial condition may be adversely affected. In addition, any changes in service levels from our Hosting Providers may adversely affect our ability to meet our customers’ requirements.
To the extent we do not effectively address capacity constraints, either through our Hosting Providers or alternative providers of cloud infrastructure, our business, results of operations and financial condition may be adversely affected. In addition, any changes in service levels from our Hosting Providers may adversely affect our ability to meet our consumers’ requirements.
We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”), the listing requirements of the Nasdaq and other applicable securities laws and regulations. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing.
We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010, the listing requirements of the Nasdaq and other applicable securities laws and regulations. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing.
Changes and developments in the health insurance system and laws and regulations governing the health insurance markets in the United States could materially adversely affect our business, operating results, financial condition and qualified prospects. Our business depends upon the public and private sector of the U.S. insurance system, which is subject to a changing regulatory environment.
Changes and developments in the health insurance system and laws and regulations governing the health insurance markets in the U.S. could materially adversely affect our business, operating results, financial condition and qualified prospects. Our business depends upon the public and private sector of the U.S. insurance system, which is subject to a changing regulatory environment.
Like the federal Anti-Kickback Statute, a person or entity need not have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; • the CAN-SPAM Act, which regulates commercial e-mail messages and specifies penalties for the transmission of commercial e-mail messages that do not comply with certain requirements, such as providing an opt-out mechanism for stopping future e-mails from senders; • the TCPA, which prohibits us from using an automatic telephone dialing system to make certain telephone calls or transmit text messages to wireless telephone numbers without prior express consent or without consulting the Federal Trade Commission’s, or FTC, national “Do Not Call” registry.
Like the federal Anti-Kickback Statute, a person or entity need not have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; • the CAN-SPAM Act, which regulates commercial e-mail messages and specifies penalties for the transmission of commercial e-mail messages that do not comply with certain requirements, such as providing an opt-out mechanism for stopping future e-mails from senders; • TCPA, which prohibits us from using an automatic telephone dialing system to make certain telephone calls or transmit text messages to wireless telephone numbers without prior express consent or without consulting the FTC’s national “Do Not Call” registry.
A critical factor in attracting beneficiaries to our website is whether we are prominently displayed in response to an Internet search relating to health insurance or on a social media platform. We rely primarily on paid advertisements to attract potential beneficiaries to our websites and otherwise generate demand for our services.
A critical factor in attracting consumers to our website is whether we are prominently displayed in response to an Internet search relating to health insurance or on a social media platform. We rely primarily on paid advertisements to attract potential consumers to our websites and otherwise generate demand for our services.
If we are not successful in cost-effectively converting consumer leads into customers for which we receive commissions, our business, operating results and financial condition would be harmed. Obtaining quality consumer leads is important to our business, but our ability to convert these consumer leads to customers is also a key to our success.
If we are not successful in cost-effectively converting consumer leads into consumers for which we receive commissions, our business, operating results and financial condition would be harmed. Obtaining quality consumer leads is important to our business, but our ability to convert these consumer leads to consumers for which we receive commissions is also a key to our success.
We rely upon third parties to operate our Marketplace technology and any disruption of or interference with our use of such third-party providers would adversely affect our business, results of operations and financial condition. We outsource our hosting infrastructure to Amazon Web Services and Rackspace, or together, our Hosting Providers, which host our Marketplace technology.
We rely upon third parties to operate our Marketplace technology and any disruption of or interference with our use of such third-party providers would adversely affect our business, results of operations and financial condition. We outsource our hosting infrastructure to Amazon Web Services and Rackspace (together, our “Hosting Providers”), which host our Marketplace technology.
We may not be able to adequately protect our intellectual property, which could harm our business and operating results. We believe that our intellectual property is an essential asset of our business and that our technology currently gives us a competitive advantage in the distribution of Medicare-related, individual and family health insurance.
We may not be able to adequately protect our intellectual property, which could harm our business and operating results. We believe that our intellectual property is an essential asset of our business and that our technology currently gives us a competitive advantage in the distribution of Medicare-related health insurance.
The Tax Receivable Agreement provides that if (1) we materially breach any of our material obligations under the Tax Receivable Agreement, (2) certain mergers, asset sales, other forms of business combinations or other changes of control were to occur, or (3) we elect an early termination of the Tax Receivable Agreement, then our obligations, or our successor’s obligations, under the Tax Receivable Agreement to make payments would be based on certain assumptions, including an assumption that we would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the Tax Receivable Agreement.
The TRA provides that if (1) we materially breach any of our material obligations under the TRA, (2) certain mergers, asset sales, other forms of business combinations or other changes of control were to occur, or (3) we elect an early termination of the TRA, then our obligations, or our successor’s obligations, under the TRA to make payments would be based on certain assumptions, including an assumption that we would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the TRA.
We have seen, in the past several quarters, and continue to see such negative changes which have resulted in a negative revenue adjustments.
We have seen in the past several quarters, and continue to see, such negative changes which have resulted in negative revenue adjustments.
However, we might not determine that we have effectively made an excess cash payment to a Continuing Equity Owner and/or a Blocker Shareholder, as applicable, for a number of years following the initial time of such payment and, if any of our tax reporting positions are challenged by a taxing authority, we will not be permitted to reduce any future cash payments under the Tax Receivable Agreement until any such challenge is finally settled or determined.
However, we might not determine that we have effectively made an excess cash payment to a Continuing Equity Owner and/or a Blocker Shareholder, as applicable, for a number of years following the initial time of such payment and, if any of our tax reporting positions are challenged by a taxing authority, we will not be permitted to reduce any future cash payments under the TRA until any such challenge is finally settled or determined.
We rely on telephone, call recording, customer relationship management and other systems and technology in our sales operations to sell Medicare plans, and we are dependent upon third parties for some of these systems and technologies, including our telephone services, which are provided by Five9, call recording systems and other communications systems.
We rely on telephone, call recording, consumer relationship management and other systems and technology in our sales operations to sell Medicare plans, and we are dependent upon third parties for some of these systems and technologies, including our telephone services, which are provided by Five9, call recording systems and other communications systems.
Additionally, we are also reliant on the systems of our health plan partners to submit plan enrollment applications from potential customers. We have in the past, and could in the future, experience significant failures and interruptions of our systems and the systems of our health plan partners, which would harm our business, operating results and financial condition.
Additionally, we are also reliant on the systems of our health plan partners to submit plan enrollment applications from potential consumers. We have in the past, and could in the future, experience significant failures and interruptions of our systems and the systems of our health plan partners, which would harm our business, operating results and financial condition.
While in many cases, health plan partners will still support existing customers in those geographic areas, because they are no longer offering new plans, the retention of those customers may be adversely impacted, thereby impacting our expected LTVs.
While in many cases, health plan partners will still support existing consumers in those geographic areas, because they are no longer offering new plans, the retention of those consumers may be adversely impacted, thereby impacting our expected LTVs.
If new laws or regulations are adopted, or existing laws and regulations are interpreted or enforced, to impose additional restrictions on our ability to advertise to our customers or qualified prospects, we may not be able to communicate with them in a cost-effective manner.
If new laws or regulations are adopted, or existing laws and regulations are interpreted or enforced, to impose additional restrictions on our ability to advertise to consumers or qualified prospects, we may not be able to communicate with them in a cost-effective manner.
If an Internet or e-mail service provider identifies e-mail from us as “spam” as a result of reports from these organizations or otherwise, we can be placed on a restricted list that will block our e-mail to customers or qualified prospects.
If an Internet or e-mail service provider identifies e-mail from us as “spam” as a result of reports from these organizations or otherwise, we can be placed on a restricted list that will block our e-mail to consumers or qualified prospects.
Our growth depends in large part upon growth in Submissions in a given period. The rate at which we grow our Submissions directly impacts our revenue. In addition, the rate at which qualified prospects turn into commissionable Submissions impacts the expected LTV of our customers, which impacts the revenue that we are able to recognize.
Our growth depends in large part upon growth in Submissions in a given period. The rate at which we grow our Submissions directly impacts our revenue. In addition, the rate at which qualified prospects turn into commissionable Submissions impacts the expected LTV of our consumers, which impacts the revenue that we are able to recognize.
We have seen pressure, within the industry, on plan duration based upon increased customer churn and have made corresponding revenue adjustments. Additionally, from time to time, health plan partners may stop offering products in a geographic area.
We have seen pressure, within the industry, on plan duration based upon increased consumer churn and have made corresponding revenue adjustments. Additionally, from time to time, health plan partners may stop offering products in a geographic area.
To the extent the competition for advertising is high, we may experience increases in the cost of paid Internet search advertising and social media advertising. Further, the competition for search engine placement and social media presence increases substantially during the enrollment periods for Medicare-related health insurance and for individual and family health insurance.
To the extent the competition for advertising is high, we may experience increases in the cost of paid Internet search advertising and social media advertising. Further, the competition for search engine placement and social media presence increases substantially during the enrollment periods for Medicare-related health insurance.
We currently do not have any key man insurance covering our Chief Executive Officer. If our executive officers were to leave us or become incapacitated, it might negatively impact our planning and execution of business strategy and operations.
We currently do not have any key person insurance covering our Chief Executive Officer. If our executive officers were to leave us or become incapacitated, it might negatively impact our planning and execution of business strategy and operations.
Although commissions do not currently have to be disclosed to the public, if commissions become more regulated and commissions paid to us have to be disclosed, it is possible that health plan partners may lower our commission rates, which could reduce our revenue.
Although commissions generally do not have to be disclosed to the public, if commissions become more regulated and commissions paid to us have to be disclosed, it is possible that health plan partners may lower our commission rates, which could reduce our revenue.
In addition, if these third party products do not provide the quality of service our customers expect, customers may correlate the negative experience with our service. Significant declines in the performance of these third-party products could subject us to reputational damage and litigation risk.
In addition, if these third party products do not provide the quality of service our consumers expect, consumers may correlate the negative experience with our service. Significant declines in the performance of these third-party products could subject us to reputational damage and litigation risk.
These factors include: • changes in customer shopping behavior due to circumstances outside of our control, such as economic conditions, customers’ ability or willingness to pay for health insurance, adverse weather conditions or natural disasters, the effects of pandemics, such as COVID-19, availability of unemployment benefits or proposed or enacted legislative or regulatory changes impacting our business, including healthcare reform; • the quality of, and changes to, the customer experience on our platform; • regulatory requirements, including those that make the experience on our platform cumbersome or difficult to navigate or reduce the ability of customers to purchase plans outside of enrollment periods; • the variety, competitiveness and affordability of the health insurance plans that we offer; • system failures or interruptions in the operation of our technology platform or call center operations; • changes in the mix of customers who are referred to us through our direct, marketing partner and online advertising customer acquisition channels; • health plan partners offering health insurance plans for which customers have expressed interest, and the degree to which our technology is integrated with those health plan partners; • health plan partner guidelines applicable to applications submitted by customers, the amount of time a health plan partner takes to make a decision on that application and the percentage of submitted applications approved by health plan partners; • the effectiveness of agents in assisting customers; and • our ability to enroll subsidy-eligible individuals in qualified health plans through government-run health insurance exchanges and the efficacy of the process we are required to use to do so.
These factors include: • changes in consumer shopping behavior due to circumstances outside of our control, such as economic conditions, consumers’ ability or willingness to pay for health insurance, adverse weather conditions or natural disasters, the effects of pandemics, availability of unemployment benefits or proposed or enacted legislative or regulatory changes impacting our business, including healthcare reform; • the quality of, and changes to, the consumer experience on our platform; • regulatory requirements, including those that make the experience on our platform cumbersome or difficult to navigate or reduce the ability of consumers to purchase plans outside of enrollment periods; • the variety, competitiveness and affordability of the health insurance plans that we offer; • system failures or interruptions in the operation of our technology platform or call center operations; • changes in the mix of consumers who are referred to us through our direct, marketing partner and online advertising consumer acquisition channels; • health plan partners offering health insurance plans for which consumers have expressed interest, and the degree to which our technology is integrated with those health plan partners; • health plan partner guidelines applicable to applications submitted by consumers, the amount of time a health plan partner takes to make a decision on that application and the percentage of submitted applications approved by health plan partners; • the effectiveness of agents in assisting consumers; and • our ability to enroll subsidy-eligible individuals in qualified health plans through government-run health insurance exchanges and the efficacy of the process we are required to use to do so.
If we do not have sufficient funds to pay tax or other liabilities, or to fund our operations (including, if applicable, as a result of an acceleration of our obligations under the Tax Receivable Agreement), we may have to borrow funds, which could materially and adversely affect our liquidity and financial condition, and subject us to various restrictions imposed by any lenders of such funds.
If we do not have sufficient funds to pay tax or other liabilities, or to fund our operations (including, if applicable, as a result of an acceleration of our obligations under the TRA), we may have to borrow funds, which could materially and adversely affect our liquidity and financial condition, and subject us to various restrictions imposed by any lenders of such funds.
We cannot assure you that we have not incorporated open-source software into our proprietary software in a manner that may subject our proprietary software to an open-source license that requires disclosure, to customers or the public, of the source code to such proprietary software.
We cannot assure you that we have not incorporated open-source software into our proprietary software in a manner that may subject our proprietary software to an open-source license that requires disclosure, to consumers or the public, of the source code to such proprietary software.
We estimate commission revenue for each product by using a portfolio approach to a group of approved customers that are organized based on a variety of attributes, which we refer to as “vintages.” We estimate the cash commissions we expect to collect for each approved customer vintage by evaluating various factors, including, but not limited to, commission rates, health plan partners, estimated average plan duration, the regulatory environment, and historic cancellations of health insurance plans offered by health plan partners with which we have a relationship.
We estimate commission revenue for each product by using a portfolio approach to a group of approved consumers that are organized based on a variety of attributes, which we refer to as “vintages.” We estimate the cash commissions we expect to collect for each approved consumer vintage by evaluating various factors, including, but not limited to, commission rates, health plan partners, estimated average plan duration, the regulatory environment, and historic cancellations of health insurance plans offered by health plan partners with which we have a relationship.
We will not be reimbursed for any cash payments previously made to the Continuing Equity Owners and the Blocker Shareholders under the Tax Receivable Agreement in the event that any tax benefits initially claimed by us and for which payment has been made to a Continuing Equity Owner or a Blocker Shareholder are subsequently challenged by a taxing authority and are ultimately disallowed.
We will not be reimbursed for any cash payments previously made to the Continuing Equity Owners and the Blocker Shareholders under the TRA in the event that any tax benefits initially claimed by us and for which payment has been made to a Continuing Equity Owner or a Blocker Shareholder are subsequently challenged by a taxing authority and are ultimately disallowed.
To the extent we do not distribute such excess cash as dividends on our Class A common stock, we may take other actions with respect to such excess cash, for example, holding such excess cash, or lending it (or a portion thereof) to GoHealth Holdings, LLC, which may result in shares of our Class A common stock increasing in value relative to the value of LLC Interests.
To the extent we do not distribute such excess cash as dividends on our Class A common stock, we may take other actions with respect to such excess cash, for example, holding such excess cash, or lending it (or a portion thereof) to GHH, LLC, which may result in shares of our Class A common stock increasing in value relative to the value of LLC Interests.
Under the Tax Receivable Agreement, we are required to make cash payments to the Continuing Equity Owners and the Blocker Shareholders equal to 85% of the tax benefits, if any, that we actually realize, or in certain circumstances are deemed to realize, as a result of (1) GoHealth, Inc.’s allocable share of existing tax basis acquired in connection with the Transactions (including the Blocker Company’s share of existing tax basis) and increases to such allocable share of existing tax basis; (2) the increases in our share of the tax basis of assets of GoHealth Holdings, LLC resulting from (a) the purchase of LLC Interests directly from GoHealth Holdings, LLC and the partial redemption of LLC Interests by GoHealth Holdings, LLC, (b) any future redemptions or exchanges of LLC Interests from the Continuing Equity Owners and (c) certain distributions (or deemed distributions) by GoHealth Holdings, LLC; and (3) certain other tax benefits arising from payments under the Tax Receivable Agreement.
Under the TRA, we are required to make cash payments to the Continuing Equity Owners and the Blocker Shareholders equal to 85% of the tax benefits, if any, that we actually realize, or in certain circumstances are deemed to realize, as a result of (1) GoHealth, Inc.’s allocable share of existing tax basis acquired in connection with the Transactions (including the Blocker Company’s share of existing tax basis) and increases to such allocable share of existing tax basis; (2) the increases in our share of the tax basis of assets of GHH, LLC resulting from (a) the purchase of LLC Interests directly from GHH, LLC and the partial redemption of LLC Interests by GHH, LLC, (b) any future redemptions or exchanges of LLC Interests from the Continuing Equity Owners and (c) certain distributions (or deemed distributions) by GHH, LLC; and (3) certain other tax benefits arising from payments under the TRA.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for certain stockholder litigation matters and the federal district courts of the United States are the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for certain stockholder litigation matters and the federal district courts of the U.S. are the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
See “—Risks Related to the Ownership of our Class A Common Stock.” Under the GoHealth Holdings, LLC Agreement, we intend to cause GoHealth Holdings, LLC, from time to time, to make distributions in cash to its equity holders (including us) in amounts sufficient to cover the taxes imposed on their allocable share of taxable income of GoHealth Holdings, LLC.
See “—Risks Related to the Ownership of our Class A Common Stock.” Under the GHH, LLC Agreement, we intend to cause GHH, LLC, from time to time, to make distributions in cash to its equity holders (including us) in amounts sufficient to cover the taxes imposed on their allocable share of taxable income of GHH, LLC.
As a result of the foregoing, we would be required to make an immediate cash payment equal to the present value of the anticipated future tax benefits that are the subject of the Tax Receivable Agreement, based on certain assumptions, which payment may be made significantly in advance of the actual realization, if any, of such future tax benefits.
As a result of the foregoing, we would be required to make an immediate cash payment equal to the present value of the anticipated future tax benefits that are the subject of the TRA, based on certain assumptions, which payment may be made significantly in advance of the actual realization, if any, of such future tax benefits.
As such, we have no independent means of generating revenue or cash flow, and our ability to pay our taxes and operating expenses or declare and pay dividends in the future, if any, are dependent upon the financial results and cash flows of GoHealth Holdings, LLC and its subsidiaries and distributions we receive from GoHealth Holdings, LLC.
As such, we have no independent means of generating revenue or cash flow, and our ability to pay our taxes and operating expenses or declare and pay dividends in the future, if any, are dependent upon the financial results and cash flows of GHH, LLC and its subsidiaries and distributions we receive from GHH, LLC.
In some instances, we may not be able to identify and/or remedy the cause or causes of these performance problems within a period of time acceptable to our customers.
In some instances, we may not be able to identify and/or remedy the cause or causes of these performance problems within a period of time acceptable to our consumers.
Further, if we are unable to maintain or effectively utilize the data provided to us, the value that we provide to customers and health plan partners may be limited as well.
Further, if we are unable to maintain or effectively utilize the data provided to us, the value that we provide to consumers and health plan partners may be limited as well.
As a result, the Founders and Centerbridge exercise significant influence GoHealth, Inc. 2022 Form 10-K 35 over all matters requiring stockholder approval, including the election and removal of directors and the size of our board, any amendment of our amended and restated certificate of incorporation or bylaws and any approval of significant corporate transactions (including a sale of all or substantially all of our assets), and will continue to have significant control over our business, affairs and policies, including the appointment of our management.
As a result, the Founders and Centerbridge exercise significant influence over all matters requiring stockholder approval, including the election and removal of directors and the size of our board, any amendment of our amended and restated certificate of incorporation or bylaws and any approval of significant corporate transactions (including a sale of all or substantially all of our assets), and will continue to have significant control over our GoHealth, Inc. 2023 Form 10-K 34 business, affairs and policies, including the appointment of our management.
If our ability to market and sell Medicare-related health insurance and individual and family plans is constrained during an enrollment period for any reason, such as technology failures, reduced allocation of resources, any inability to timely employ, license, train, certify and retain our employees and our contractors and their agents to sell plans, interruptions in the operation of our website or systems, disruptions caused by other external factors or issues with government-run health insurance exchanges, we could acquire fewer customers or suffer a reduction in our existing customer base and our business, operating results and financial condition could be harmed.
If our ability to market and sell Medicare-related health insurance is constrained during an enrollment period for any reason, such as technology failures, reduced allocation of resources, any inability to timely employ, license, train, certify and retain our employees and our contractors and their agents to sell plans, interruptions in the operation of our website or systems, disruptions caused by other external factors or issues with government-run health insurance exchanges, we could acquire fewer consumers or suffer a reduction in our existing consumer base and our business, operating results and financial condition could be harmed.
Because the Medicare products we sell are sourced from a relatively small number of health plan partners, if we lose the ability to market one of those health plan partners’ Medicare plans, GoHealth, Inc. 2022 Form 10-K 15 even temporarily, or if one of those health plan partners loses its Medicare product membership, our business, operating results and financial condition could be harmed.
Because the Medicare products we sell are sourced from a relatively small number of health plan partners, if we lose the ability to market one of those health plan partners’ Medicare GoHealth, Inc. 2023 Form 10-K 22 plans, even temporarily, or if one of those health plan partners loses its Medicare product membership, our business, operating results and financial condition could be harmed.
Changes of this nature could result in reduced commissions, or could impact our relationship with such health plan partners and potentially lead to contract termination.
Changes of this nature could result in reduced commissions, or could impact our relationships with such health plan partners and potentially lead to contract termination.
Pressure from existing and new competitors may adversely affect our business, operating results and financial condition. The market for selling health insurance plans is highly competitive. We compete with government provided tools and exchanges, local insurance agents throughout the United States, companies that advertise primarily through television, and companies that operate websites to provide services.
Pressure from existing and new competitors may adversely affect our business, operating results and financial condition. The market for selling health insurance plans is highly competitive. We compete with government provided tools and exchanges, local insurance agents throughout the U.S., companies that advertise primarily through television, and companies that operate websites to provide services.
Such disruptions could decrease efficiency, increase our costs and have an adverse effect on our business or results of operations. For example, following Russia’s military invasion of Ukraine in February 2022, NATO deployed additional military forces to Eastern Europe, and the United States, European Union, and other nations announced various sanctions against Russia.
Such disruptions could decrease efficiency, increase our costs and have an adverse effect on our business or results of operations. For example, following Russia’s military invasion of Ukraine in February 2022, NATO deployed additional military forces to Eastern Europe, and the U.S., European Union, and other nations announced various sanctions against Russia.
As a result, payments could be made under the Tax Receivable Agreement significantly in excess of any actual cash tax savings that we realize in respect of the tax attributes with respect to a Continuing Equity Owner and/or a Blocker Shareholder that are the subject of the Tax Receivable Agreement.
As a result, payments could be made under the TRA significantly in excess of any actual cash tax savings that we realize in respect of the tax attributes with respect to a Continuing Equity Owner and/or a Blocker Shareholder that are the subject of the TRA.
We believe that maintaining and enhancing our brand identity is critical to our relationships with our existing health plan partners and to our ability to attract new customers, marketing partners and health plan partners.
We believe that maintaining and enhancing our brand identity is critical to our relationships with our existing health plan partners and to our ability to attract new consumers, marketing partners and health plan partners.
For instance, if our brand receives negative publicity, the number of customers visiting our platforms or Benefits Center could decrease, and our cost of acquiring customers could increase as a result of a reduction in the number of consumers coming from our direct customer acquisition channel.
For instance, if our brand receives negative publicity, the number of consumers visiting our platforms or Benefits Center could decrease, and our cost of acquiring consumers could increase as a result of a reduction in the number of consumers coming from our direct consumer acquisition channel.
Although GoHealth Holdings, LLC is not currently subject to any debt instruments or other agreements that would restrict its ability to make distributions to us, the terms of our Credit Facilities and other outstanding indebtedness restrict the ability of our subsidiaries to pay dividends to GoHealth Holdings, LLC.
Although GHH, LLC is not currently subject to any debt instruments or other agreements that would restrict its ability to make distributions to us, the terms of our Credit Facilities and other outstanding indebtedness restrict the ability of our subsidiaries to pay dividends to GHH, LLC.
Furthermore, our future obligation to make payments under the Tax Receivable Agreement could make us a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax benefits that are the subject of the Tax Receivable Agreement.
Furthermore, our future obligation to make payments under the TRA could make us a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax benefits that are the subject of the TRA.
GoHealth Holdings, LLC is treated as a partnership for U.S. federal income tax purposes and, as such, generally is not subject to any entity-level U.S. federal income tax. Instead, any taxable income of GoHealth Holdings, LLC will be allocated to holders of LLC Interests, including us.
GHH, LLC is treated as a partnership for U.S. federal income tax purposes and, as such, generally is not subject to any entity-level U.S. federal income tax. Instead, any taxable income of GHH, LLC will be allocated to holders of LLC Interests, including us.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe our existing properties, which are used by all reportable segments, are in good operating condition and are suitable for the conduct of our business. As part of our continued cost savings initiatives during the year ended December 31, 2022, we evaluated our portfolio of properties to identify where we no longer utilize the property for our business operations.
Biggest changeAs part of our continued cost savings initiatives during the twelve months ended December 31, 2023 and 2022, we evaluated our portfolio of properties to identify where we no longer utilize the property for our business operations. As a result, we have entered into or are actively seeking sublease and termination agreements.
For additional information about the operating lease impairment charges related to our leased properties, see Note 3, “Fair Value Measurements” and Note 11, “Leases.” ITEM 3. LEGAL PROCEEDINGS Refer to Note 12, “Commitments and Contingencies,” of the Notes to Consolidated Financial Statements for information about legal proceedings.
LEGAL PROCEEDINGS Refer to Note 12, “Commitments and Contingencies,” of the Notes to Consolidated Financial Statements for information about legal proceedings.
ITEM 2. PROPERTIES Our corporate headquarters is located in Chicago, Illinois, and consists of approximately 30,052 square feet of space used to support our marketing and advertising, technology and software development, and general and administrative functions. We lease an additional 42,000 square feet of office space in Chicago, Illinois, to support our customer care and enrollment function.
ITEM 2. PROPERTIES Our corporate headquarters is located in Chicago, Illinois, and consists of approximately 91,297 square feet of space used to support our marketing and advertising, technology and general and administrative functions. We believe our existing properties are in good operating condition and are suitable for the conduct of our business.
As a result, we have entered into or are actively seeking sublease and termination agreements. This evaluation resulted in the complete or partial impairments of certain leased properties, including our properties in Lindon, Utah and Charlotte, North Carolina.
This evaluation resulted in the complete or partial impairments of certain leased properties, including properties in Chicago, Illinois, Lindon, Utah and Charlotte, North Carolina. For additional information about the operating lease impairment charges related to our leased properties, see Note 3, “Fair Value Measurements” and Note 11, “Leases.” ITEM 3.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES None. INFORMATION ABOUT OUR EXECUTIVE OFFICERS AND DIRECTORS The following table provides information regarding our executive officers as of the date of this Annual Report on Form 10-K: Name Age Position(s) Vijay Kotte 45 Chief Executive Officer Jason Schulz 46 Chief Financial Officer Shane E.
Biggest changeINFORMATION ABOUT OUR EXECUTIVE OFFICERS AND DIRECTORS The following table provides information regarding our executive officers as of the date of this Annual Report on Form 10-K: Name Age Position(s) Vijay Kotte 46 Chief Executive Officer Jason Schulz 47 Chief Financial Officer Michael Hargis 52 Chief Operating Officer Brad Burd 46 Chief Legal Officer and Corporate Secretary Executive Officers Vijay Kotte has served as GoHealth’s Chief Executive Officer since 2022 and serves on the Company’s Board of Directors.
Kotte holds a Bachelor’s degree in Business Administration with a focus on Finance and Organizational Management from Emory University and a MBA from Kellogg School of Management, Northwestern University. Jason Schulz has served as GoHealth’s Chief Financial Officer since June 6, 2022. Mr.
Mr. Kotte holds a Bachelor’s degree in Business Administration with a focus on Finance and Organizational Management from Emory University and a MBA from the Kellogg School of Management, Northwestern University. Jason Schulz has served as GoHealth’s Chief Financial Officer since 2022. Mr.
The following table provides information regarding our members of our board of directors as of the date of this Annual Report on Form 10-K: GoHealth, Inc. 2022 Form 10-K 41 Name Age Position(s) Clinton P. Jones 45 Co-Founder, Co-Chair of the Board of Directors Brandon M.
The following table provides information regarding our members of our Board of Directors as of the date of this Annual Report on Form 10-K: GoHealth, Inc. 2023 Form 10-K 41 Name Age Position(s) Clinton P. Jones 46 Co-Founder, Co-Chair of the Board of Directors Brandon M.
Schulz holds a Bachelor’s degree in Business Administration from the University of Northern Colorado, an MBA from Washington University of St. Louis, and is a Certified Management Accountant. Shane E. Cruz has served as GoHealth’s Chief Strategy Officer since 2022 and prior to that was the Chief Operating Officer since 2020 and the Chief Technology Officer since 2014. Mr.
Schulz holds a Bachelor’s degree in Business Administration from the University of Northern Colorado, an MBA from Washington University in St. Louis, and is a Certified Management Accountant. Michael Hargis joined GoHealth in 2022 and has served as GoHealth’s Chief Operating Officer since July 31, 2023. Mr.
Cruz 45 Co-Founder, Co-Chair of the Board of Directors Vijay Kotte 45 Chief Executive Officer David Fisher 53 Director Joseph G. Flanagan 51 Director Jeremy W. Gelber 47 Director Alexander E. Timm 34 Director Christopher Litchford 38 Director Karolina Hilu 41 Director GoHealth, Inc. 2022 Form 10-K 42 Part II
Cruz 46 Co-Founder, Co-Chair of the Board of Directors Vijay Kotte 46 Director and Chief Executive Officer David Fisher 54 Director Joseph G. Flanagan 52 Director Jeremy W. Gelber 48 Director Alexander E. Timm 35 Director Christopher C. Litchford 39 Director Karolina H. Hilu, M.D. 42 Director GoHealth, Inc. 2023 Form 10-K 42 Part II
Removed
Cruz 43 Chief Strategy Officer Brian Farley 53 Chief Legal Officer Executive Officers Vijay Kotte has served as GoHealth’s Chief Executive Officer since June 6, 2022 and serves on the Company’s Board of Directors. Mr.
Added
Hargis holds a Bachelor’s degree in Business Administration from Thomas More University and an MBA from the Kellogg School of Management, Northwestern University. Brad Burd has been with GoHealth since 2011, and served as the Company’s General Counsel prior to his promotion to GoHealth’s Chief Legal Officer and Corporate Secretary in February 2024. Mr.
Removed
Cruz holds Bachelor of Science degrees in Computer Science and Engineering and a Master of Engineering in Electrical Engineering and Computer Science from the Massachusetts Institute of Technology. Brian Farley has served as GoHealth’s Chief Legal Officer and Corporate Secretary since 2020. Mr.
Added
Burd has directed the legal department through the Company’s different phases, including the IPO in 2020. Mr. Burd holds a Bachelor’s degree in finance from Miami University in Oxford, Ohio and a Juris Doctor degree from the University of Cincinnati College of Law.
Removed
Farley holds a Bachelor of Arts in Political Economics from Colorado College, a Juris Doctor from The George Washington University National Law Center and an Executive Master’s in Business Administration from the University of Colorado.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−0 removed9 unchanged
Biggest changePurchase of Equity Securities by the Issuer and Affiliated Purchaser A total of 12,732 shares of Class A common stock were withheld to cover the tax liability resulting from the vesting of restricted stock units during the twelve months ended December 31, 2022. These withheld shares are recorded as treasury stock on the Consolidated Balance Sheets.
Biggest changePurchase of Equity Securities by the Issuer and Affiliated Purchaser A total of 160,000 shares of Class A common stock were withheld to cover the tax liability resulting from the vesting of restricted stock units during the twelve months ended December 31, 2023. These withheld shares are recorded as treasury stock on the Consolidated Balance Sheets. ITEM 6. [RESERVED]
As of March 8, 2023, there were 1 and 11 Class A and Class B common stockholders of record, respectively.
As of February 28, 2024, there were 1 and 11 Class A and Class B common stockholders of record, respectively.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

97 edited+49 added−98 removed21 unchanged
Biggest changeThe following table sets forth the components of our results of operations for the periods presented: Twelve months ended Dec. 31, (in thousands) 2022 2021 2020 Dollars Dollars Dollars Net revenues: Commission $ 341,467 $ 881,263 $ 671,140 Enterprise 290,208 181,152 206,210 Net revenues 631,675 1,062,415 877,350 Operating expenses: Cost of revenue 187,670 239,335 199,202 Marketing and advertising expense 207,559 365,141 206,864 Customer care and enrollment 260,902 319,103 165,497 Technology expense 46,094 48,429 59,348 General and administrative 116,530 98,183 197,229 Amortization of intangible assets 94,057 94,056 94,056 Operating lease impairment charges 25,345 1,062 — Restructuring and other related charges 12,184 — — Goodwill impairment charges — 386,553 — Change in fair value of contingent consideration liability — — 19,700 Total operating expenses 950,341 1,551,862 941,896 Income (loss) from operations (318,666) (489,447) (64,546) Interest expense 57,069 33,505 32,969 Loss on extinguishment of debt — 11,935 — Other (income) expense, net (115) (669) (358) Income (loss) before income taxes (375,620) (534,218) (97,157) Income tax expense (benefit) 764 (24) 43 Net income (loss) $ (376,384) $ (534,194) (97,200) Net income (loss) attributable to noncontrolling interests (227,678) (344,837) (52,933) Net income (loss) attributable to GoHealth, Inc. $ (148,706) $ (189,357) $ (44,267) Non-GAAP financial measures: EBITDA $ (211,549) $ (393,206) $ 34,364 Adjusted EBITDA $ (129,776) $ 33,821 $ 271,029 Adjusted EBITDA margin (20.5) % 3.2 % 30.9 % The following are our components of net revenue and results thereof for the twelve months ended December 31, 2022 and 2021: Commission net revenues Twelve months ended Dec. 31, % of Net Revenues 2022 2021 $ Change % Change 2022 2021 $ 341,467 $ 881,263 $ (539,796) (61.3) % 54.1% 82.9% The $539.8 million, or 61.3% decrease was primarily attributable to reduced agent headcount and lower penetration through commissions revenue in the Medicare-Internal segment, which reflects the expansion of the Encompass Solution within enterprise revenue.
Biggest changeThe following table sets forth the components of our results of operations for the periods presented: Twelve months ended Dec. 31, (in thousands) 2023 2022 2021 Net revenues $ 734,671 $ 631,675 $ 1,062,415 Operating expenses: Revenue share 158,961 187,670 239,335 Marketing and advertising expense 205,042 207,559 365,141 Customer care and enrollment 209,234 260,902 319,103 Technology expense 43,302 46,094 48,429 General and administrative 93,069 116,530 98,183 Amortization of intangible assets 94,057 94,057 94,056 Operating lease impairment charges 2,687 25,345 1,062 Restructuring and other related charges — 12,184 — Goodwill and intangible asset impairment charges 10,000 — 386,553 Total operating expenses 816,352 950,341 1,551,862 Income (loss) from operations (81,681) (318,666) (489,447) Interest expense 69,472 57,069 33,505 Loss on extinguishment of debt — — 11,935 Other (income) expense, net (37) (115) (669) Income (loss) before income taxes (151,116) (375,620) (534,218) Income tax expense (benefit) 154 764 (24) Net income (loss) $ (151,270) (376,384) (534,194) Net income (loss) attributable to noncontrolling interests (88,013) (227,678) (344,837) Net income (loss) attributable to GoHealth, Inc. $ (63,257) $ (148,706) $ (189,357) Non-GAAP financial measures: EBITDA $ 24,104 $ (211,549) $ (393,206) Adjusted EBITDA $ 75,091 $ (129,776) $ 33,821 Adjusted EBITDA margin 10.2 % (20.5) % 3.2 % The following is our net revenues and results thereof for the twelve months ended December 31, 2023 and 2022: Net revenues Twelve months ended Dec. 31, 2023 2022 $ Change % Change $ 734,671 $ 631,675 $ 102,996 16.3 % The $103.0 million, or 16.3% increase compared to the prior year period was primarily attributable to an increase in non-agency revenue, which reflects our investment in enrollment and engagement service offerings along with the $110.3 million negative revenue adjustment in the prior year.
Marketing and advertising costs are expensed and generally paid as incurred and since commission revenue is recognized upon approval of a submission but commission payments are paid to us over time, there are working capital requirements to fund the upfront cost of acquiring new policies.
Marketing and advertising costs are expensed and generally paid as incurred and since commissions revenue is recognized upon approval of a submission but commission payments are paid to us over time, there are working capital requirements to fund the upfront cost of acquiring new policies.
Sales Per Submission Medicare Segments Revenue per Submissions represents (x) the sum of (i) aggregate commissions estimated to be collected over the estimated life of all commissionable Submissions for the relevant period based on multiple factors, including but not limited to, contracted commission rates, health plan partner mix and expected policy persistency with applied constraints, excluding revenue adjustments recorded in the period, but relating to performance obligations satisfied in prior periods, (ii) Encompass revenue, and (iii) partner marketing and enrollment services, divided by (y) the number of Submissions for such period, as reported above.
Sales Per Submission Sales per Submission represents (x) the sum of (i) aggregate commissions estimated to be collected over the estimated life of all commissionable Submissions for the relevant period based on multiple factors, including but not limited to, contracted commission rates, health plan partner mix and expected policy persistency with applied constraints, excluding revenue adjustments recorded in the period, but relating to performance obligations satisfied in prior periods, (ii) Encompass revenue, and (iii) partner marketing and enrollment services, divided by (y) the number of Submissions for such period, as reported above.
The accounting estimates and judgments related to the recognition of revenue require us to make assumptions about numerous factors, such as the determination of performance obligations and determination of the transaction price.
The accounting estimates and judgments related to the recognition of commission revenue require us to make assumptions about numerous factors, such as the determination of performance obligations and determination of the transaction price.
Liabilities Pursuant to TRAs In connection with the IPO, the Company entered into the Tax Receivable Agreement with GHH, LLC, the Continuing Equity Owners and the Blocker Shareholders that will provide for the payment by the Company to the Continuing Equity Owners and the Blocker Shareholders of 85% of the amount of tax benefits, if any, that the Company actually realizes (or in some circumstances is deemed to realize) as a result of (1) the Company’s allocable share of existing tax basis acquired in connection with the Transactions (including the Blocker Company’s share of existing tax basis) and increases to such allocable share of existing tax basis; (2) increases in tax basis resulting from (a) the Company’s purchase of LLC Interests directly from GHH, LLC and the partial redemption of LLC Interests by GHH, LLC, (b) future redemptions or exchanges (or deemed exchanges in certain circumstances) of LLC Interests for Class A common stock or cash, and (c) certain distributions (or deemed distributions) by GHH, LLC; and (3) certain additional tax benefits arising from payments made under the Tax Receivable Agreement.
Liabilities Pursuant to the TRA In connection with the IPO, the Company entered into the TRA with GHH, LLC, the Continuing Equity Owners and the Blocker Shareholders that will provide for the payment by the Company to the Continuing Equity Owners and the Blocker Shareholders of 85% of the amount of tax benefits, if any, that the Company actually realizes (or in some circumstances is deemed to realize) as a result of (1) the Company’s allocable share of existing tax basis acquired in connection with the Transactions (including the Blocker Company’s share of existing tax basis) and increases to such allocable share of existing tax basis; (2) increases in tax basis resulting from (a) the Company’s purchase of LLC Interests directly from GHH, LLC and the partial redemption of LLC Interests by GHH, LLC, (b) future redemptions or exchanges (or deemed exchanges in certain circumstances) of LLC Interests for Class A common stock or cash, and (c) certain distributions (or deemed distributions) by GHH, LLC; and (3) certain additional tax benefits arising from payments made under the TRA.
With leading proprietary technology and consumer insights, our end-to-end Encompass Solution offers a differentiated way for Medicare beneficiaries to navigate the complex Medicare Advantage plan selection process and begin to utilize their new plan benefits with greater confidence.
With leading proprietary technology and consumer insights, our end-to-end Encompass model offers a differentiated way for Medicare beneficiaries to navigate the complex Medicare Advantage plan selection process and begin to utilize their new plan benefits with greater confidence.
Using machine learning technology, our agents aim to effectively qualify and match individuals with the best plan. This combination of technology and experienced agents delivers a personalized matching process that incorporates consumers’ top priorities and helps them to understand associated tradeoffs across various benefits as they select and enroll in a plan.
Using machine learning technology, our agents aim to effectively qualify and match individuals with the best plan through our PlanFit Tool. This combination of technology and experienced agents delivers a personalized matching process that incorporates consumers’ top priorities and helps them to understand associated tradeoffs across various benefits as they select and enroll in a plan.
GoHealth, Inc. is subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of GoHealth Holdings, LLC and is taxed at the prevailing corporate tax rates.
GoHealth, Inc. is subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of GHH, LLC and is taxed at the prevailing corporate tax rates.
Critical Accounting Policies and Estimates The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, and liabilities and disclosure of contingent assets and liabilities in our financial statements. We regularly assess these estimates; however, actual amounts could differ from those estimates.
Critical Accounting Policies and Estimates The preparation of Consolidated Financial Statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and the disclosure of contingent assets and liabilities. We regularly assess these estimates; however, actual amounts could differ from those estimates.
GoHealth, Inc. 2022 Form 10-K 45 Results of Operations The following is a discussion and analysis of changes in the financial condition and results of operations for fiscal year 2022 compared to fiscal year 2021.
GoHealth, Inc. 2023 Form 10-K 45 Results of Operations The following is a discussion and analysis of changes in the financial condition and results of operations for fiscal year 2023 compared to fiscal year 2022.
We utilize the expected value approach to do this, incorporating a combination of historical lapse and premium increase data, available industry and health plan partner experience data, historical payment data by segment and health plan partner, as well as current forecast data to estimate forecasted renewal considerations, and then to constrain revenue recognized to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur.
We utilize the expected value approach to do this, incorporating a combination of historical lapse and premium increase data, available industry and health plan partner experience data, historical payment data by health plan partner, as well as current forecast data to estimate forecasted renewal commissions, and then to constrain commission revenue recognized to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur.
The percentage ownership of total shares of Class A and Class B common stock issued and outstanding as of December 31, 2022, is as follows: The percentage of ownership noted above is inclusive of only Class A and Class B common stock issued and outstanding.
The percentage ownership of total shares of Class A and Class B common stock issued and outstanding as of December 31, 2023, is as follows: The percentage of ownership noted above is inclusive of only Class A and Class B common stock issued and outstanding.
The Company may benefit from the remaining 15% of any tax benefits that the Company actually realizes. The amounts payable under the Tax Receivable Agreement will vary depending upon a number of factors, including the amount, character, and timing of the taxable income of the Company in the future.
The Company may benefit from the remaining 15% of any tax benefits that the Company actually realizes. The amounts payable under the TRA will vary depending upon a number of factors, including the amount, character and timing of the taxable income of the Company in the future.
During the year ended December 31, 2022 and 2021, the Company was actively looking to terminate or sublease certain office spaces and call centers that were deemed no longer economically beneficial to the Company. As a result, these properties are considered individual asset groups for the purpose of testing for impairment.
During the twelve months ended December 31, 2023, 2022 and 2021, the Company was actively looking to terminate or sublease certain office spaces and call centers that were deemed no longer economically beneficial to the Company. As a result, these properties are considered individual asset groups for the purpose of testing for impairment.
If the Company determines that it will not be able to fully utilize all or part of the related tax benefits, the Company would reduce the portion of the Tax Receivable Agreement liability related to the tax benefits not expected to be utilized through earnings at that time.
If the Company determines that it will not be able to fully utilize all or part of the related tax benefits, the Company would reduce the portion of the TRA liability related to the tax benefits not expected to be utilized through earnings at that time.
Additionally, as a result of the annual Medicare Advantage open enrollment period that occurs from January 1 st to March 31 st , commission revenue and Encompass revenue are typically second highest in our first quarter. The second and third quarters are known as special election periods and are our seasonally smallest quarters.
Additionally, as a result of the annual Medicare Advantage open enrollment period that occurs from January 1 st to March 31 st , Medicare Submissions are typically second-highest in our first quarter. The second and third quarters are known as special election periods and are our seasonally smallest quarters.
In projecting future taxable income, the Company considers its historical results and incorporates certain assumptions, including revenue growth and operating margins, among others. The projection of future taxable income involves judgement and actual taxable income may differ from our estimates, which could impact the timing of payments under the Tax Receivable Agreement.
In projecting future taxable income, the Company considers its historical results and incorporates certain assumptions, including revenue growth and operating margins, among others. The projection of future taxable income involves judgement and actual taxable income may differ from our estimates, which could impact the timing of payments under the TRA.
A discussion and analysis regarding our results of operations for fiscal year 2021 compared to fiscal year 2020 that are not included in this Annual Report on Form 10-K can be found in our Annual Report on Form 10-K filed with the SEC on March 16, 2022.
A discussion and analysis regarding our results of operations for fiscal year 2022 compared to fiscal year 2021 that are not included in this Annual Report on Form 10-K can be found in our Annual Report on Form 10-K filed with the SEC on March 23, 2023.
Amortization of intangible assets Twelve months ended Dec. 31, % of Net Revenues 2022 2021 $ Change % Change 2022 2021 $ 94,057 $ 94,056 $ 1 — % 14.9% 8.9% Amortization of intangible assets expense was $94.1 million for both the twelve months ended December 31, 2022 and 2021, and relates to the amortization of developed technology and customer relationships.
Amortization of intangible assets Twelve months ended Dec. 31, % of Net Revenues 2023 2022 $ Change % Change 2023 2022 $ 94,057 $ 94,057 $ — — % 12.8% 14.9% Amortization of intangible assets expense was $94.1 million for both the twelve months ended December 31, 2023 and 2022, and relates to the amortization of developed technology and customer relationships.
Recent Accounting Pronouncements For a discussion of new accounting pronouncements recently adopted and not yet adopted, see Note 1. “Description of Business and Significant Accounting Policies,” to the Consolidated Financial Statements included in Item 8 to this Annual Report on Form 10-K. Liquidity and Capital Resources Overview Our liquidity needs primarily include working capital and debt service requirements.
Recent Accounting Pronouncements For a discussion of new accounting pronouncements recently adopted, see Note 1. “Description of Business and Significant Accounting Policies,” to the Consolidated Financial Statements included in Item 8 to this Annual Report on Form 10-K. Liquidity and Capital Resources Overview GoHealth, Inc. 2023 Form 10-K 51 Our liquidity needs primarily include working capital and debt service requirements.
There are limitations to the use of the non-GAAP financial measures presented in this Annual Report on Form 10-K. For example, our non- GoHealth, Inc. 2022 Form 10-K 48 GAAP financial measures may not be comparable to similarly titled measures of other companies.
There are limitations to the use of the non-GAAP financial measures presented in this Annual Report on Form 10-K. For example, our non-GAAP financial measures may not be comparable to similarly titled measures of other companies.
These non-GAAP financial measures include net income (loss) before interest expense, income tax (benefit) expense and depreciation and amortization expense, or EBITDA; Adjusted EBITDA and Adjusted EBITDA margin. Adjusted EBITDA is the primary financial performance measure used by management to evaluate its business and monitor its results of operations.
These non-GAAP financial measures include net income (loss) before interest expense, income tax (benefit) expense and depreciation and amortization expense, or EBITDA; Adjusted EBITDA; Adjusted EBITDA margin; Sales per Submission; Cost per Submission and Adjusted Gross Margin per Submission. Adjusted EBITDA is the primary financial performance measure used by management to evaluate its business and monitor its results of operations.
The weighted average ownership percentages for the applicable reporting periods are used to attribute net income (loss) and other comprehensive income (loss) to the Company and the non-controlling interest holders. The non-controlling interest holders' weighted average ownership percentages for the twelve months ended December 31, 2022, 2021, and 2020 were 61.1%, 67.0% and 73.8%, respectively.
The weighted average ownership percentages for the applicable reporting periods are used to attribute net income (loss) and other comprehensive income (loss) to the Company and the non-controlling interest holders. The non-controlling interest holders' weighted average ownership percentages for the twelve months ended December 31, 2023, 2022, and 2021 were 58.2%, 61.1% and 67.0%, respectively.
Significant management judgments and estimates must be made in connection with determination of the revenue to be recognized in any accounting period. If we made different judgments or utilized different estimates for any period, material differences in the amount and timing of revenue recognized could result.
Significant management judgments and estimates must be made to determine the commission revenue to be recognized in any accounting period. If we made different judgments or utilized different estimates for any period, material differences in the amount and timing of commission revenue recognized could result.
The non-GAAP financial measures are not meant to be considered as indicators of performance in isolation from or as a substitute for net income (loss) prepared in accordance with GAAP, and should be read only in conjunction with financial information presented on a GAAP basis.
The non-GAAP financial measures are not meant to be considered as indicators of performance in isolation from or as a substitute for the most directly comparable measures prepared in accordance with GAAP, and should be read only in conjunction with financial information presented on a GAAP basis.
Marketing and advertising expenses are generally higher in the fourth quarter during the Medicare annual enrollment period, but because commissions from approved customers are paid to us over time, our operating cash flows could be adversely impacted by a substantial increase in marketing and advertising expenses as a result of a higher volume of applications submitted during the fourth quarter or positively impacted by a substantial decline in marketing and advertising expenses as a result of lower volume of applications submitted during the fourth quarter.
Marketing and advertising expenses are generally higher in the fourth quarter during AEP, but because commissions from approved customers are paid to us over time, our operating cash flows could be adversely impacted by a substantial increase in marketing and advertising expenses as a result of a higher volume of Submissions during the fourth quarter or positively impacted by a substantial decline in marketing and advertising expenses as a result of lower volume of Submissions during the fourth quarter.
At December 31, 2022, cash and cash equivalents totaled $16.5 million. We believe that our current sources of liquidity, which include cash and cash equivalents and funds available under the Credit Facilities, as described further below, will be sufficient to meet our projected operating and debt service requirements for at least the next 12 months.
At December 31, 2023, cash and cash equivalents totaled $90.8 million. We believe that our current sources of liquidity, which include cash and cash equivalents and funds available under the Credit Facilities, as described further below, will be sufficient to meet our projected operating and debt service requirements for at least the next twelve months.
As a result, we experience an increase in the number of submitted Medicare-related applications during the fourth quarter and an increase in expense related to the Medicare segments during the third and fourth quarters.
As a result, we experience an increase in the number of Submissions during the fourth quarter and an increase in expense related to the Medicare Submissions during the third and fourth quarters.
The accounting policies we believe to reflect our more significant estimates, judgments and assumptions that are most critical to understanding and evaluating our reported financial results are: • Revenue recognition and commissions receivable; • Share-based compensation; • Goodwill and intangible assets; • Impairment of operating lease ROU assets; • Income taxes; and • Liabilities pursuant to tax receivable agreements (“TRAs”).
The accounting policies we believe to reflect our more significant estimates, judgments and assumptions that are most critical to understanding and evaluating our reported financial results are: • Commission revenue recognition and commissions receivable; • Share-based compensation; • Intangible assets; • Impairment of operating lease ROU assets; • Liabilities pursuant to the TRA.
GoHealth, Inc. 2022 Form 10-K 57 Revenue Recognition and Commissions Receivable In accordance with ASC 606, Revenue from Contracts with Customers , revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services.
Commission Revenue Recognition and Commissions Receivable In accordance with ASC 606, Revenue from Contracts with Customers , revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services.
As of December 31, 2022, the Company has determined that a $0.6 million liability related to the Tax Receivable Agreement arose from the Transactions. Should the Company determine that any additional Tax Receivable Agreement liability is considered probable at a future date based on new information, any changes will be recorded within earnings at that time.
As of December 31, 2023 and December 31, 2022, the Company determined that a $0.8 million and $0.6 million liability related to the TRA arose from the Transactions, respectively. Should the Company determine that any additional TRA liability is considered probable at a future date based on new information, any changes will be recorded within earnings at that time.
The fair values were estimated using a discounted cash flows approach on forecasted future cash flows expected to be derived from the property based on current sublease market rent, which is considered a level 3 input in the fair value hierarchy.
GoHealth, Inc. 2023 Form 10-K 55 The fair values were estimated using a discounted cash flow approach on forecasted future cash flows expected to be derived from the property based on current sublease market rent, which is considered a level 3 input in the fair value hierarchy.
The uncertainty associated with the variable consideration is subsequently resolved when the policy terminates. Commissions receivable includes the variable consideration for policies that may renew, and therefore, are subject to the same assumptions, judgments and estimates used when recognizing revenue as noted above.
The uncertainty associated with the variable consideration is subsequently resolved when the policy terminates. Commissions receivable includes the variable consideration for policies that may renew, and therefore, are subject to the same assumptions, judgments and estimates used when recognizing commission revenue as noted above. See Note 10, “Revenue,” for further discussion of commission revenue and commissions receivable.
As a result, GoHealth, Inc. consolidates GoHealth Holdings, LLC and records significant GoHealth, Inc. 2022 Form 10-K 44 non-controlling interests in a consolidated entity in GoHealth, Inc.’s Consolidated Financial Statements for the economic interest in GoHealth Holdings, LLC held directly or indirectly by the Continuing Equity Owners.
As a result, GoHealth, Inc. consolidates GHH, LLC and records significant non-controlling interest in a consolidated entity in GoHealth, Inc.’s Consolidated Financial Statements for the economic interest in GHH, LLC held directly or indirectly by the Continuing Equity Owners.
By working closely with our benefit consultants and dedicated health plan enrollment specialists, individuals can better understand the plan options available and receive more detailed, plan-specific information during the enrollment process. Coupled with the execution of our new member onboarding action plans, beneficiaries who enroll through our Encompass Solution exhibit higher customer persistency.
By working closely with our benefit consultants and dedicated health plan enrollment specialists, we believe individuals can better understand the plan options available and receive more detailed, plan-specific information during the enrollment process. Coupled with the execution of our new member onboarding action plans, consumers who enroll through our Encompass model have exhibited higher consumer persistency.
The following table presents a summary of cash flows for the twelve months ended December 31, 2022, 2021, and 2020; Twelve months ended Dec. 31, (in thousands) 2022 2021 2020 Net cash provided by (used in) operating activities $ 60,904 $ (299,006) $ (114,217) Net cash used in investing activities $ (13,512) $ (19,801) $ (14,523) Net cash (used in) provided by financing activities $ (115,051) $ 259,089 $ 260,663 Operating Activities GoHealth, Inc. 2022 Form 10-K 54 Cash provided by (used in) operating activities primarily consists of net income (loss) adjusted for certain non-cash items including share-based compensation, depreciation and amortization, amortization of intangible assets, amortization of debt discount and issuance costs, goodwill impairment charges, loss on extinguishment of debt, operating lease impairment charges, non-cash restructuring charges; non-cash lease expense and the effect of changes in working capital and other activities.
The following table presents a summary of cash flows for the twelve months ended December 31, 2023, 2022, and 2021; Twelve months ended Dec. 31, (in thousands) 2023 2022 2021 Net cash provided by (used in) operating activities $ 109,141 $ 60,904 $ (299,006) Net cash used in investing activities $ (13,732) $ (13,512) $ (19,801) Net cash (used in) provided by financing activities $ (21,106) $ (115,051) $ 259,089 Operating Activities Cash provided by (used in) operating activities primarily consists of net income (loss) adjusted for certain non-cash items including share-based compensation, depreciation and amortization, amortization of intangible assets, amortization of debt discount and issuance costs, goodwill and intangible impairment charges, operating lease impairment charges, non-cash restructuring charges, non-cash lease expense and the effect of changes in working capital and other activities.
Sales/Cost of Submission GoHealth, Inc. 2022 Form 10-K 53 Medicare Segments Sales/Cost of Submission represents (x) the sum of (i) aggregate commissions estimated to be collected over the estimated life of all commissionable Submissions for the relevant period based on multiple factors, including but not limited to, contracted commission rates, health plan partner mix and expected policy persistency with applied constraints, excluding revenue adjustments recorded in the period, but relating to performance obligations satisfied in prior periods, (ii) Encompass revenue, and (iii) partner marketing and enrollment services, divided by (y) the cost to convert a prospect into a Submission (comprised of cost of revenue, marketing and advertising expenses and customer care and enrollment expenses) for such period.
Sales/Cost of Submission and Cost Per Submission Sales/Cost of Submission represents (x) the sum of (i) aggregate commissions estimated to be collected over the estimated life of all commissionable Submissions for the relevant period based on multiple factors, including but not limited to, contracted commission rates, health plan partner mix and expected policy persistency with applied constraints, excluding revenue adjustments recorded in the period, but relating to performance obligations satisfied in prior periods, and such expenses related to our Non-Encompass BPO Services, (ii) Encompass revenue, and (iii) partner marketing and enrollment services, divided by (y) the aggregate cost to convert prospects into Submissions (comprised of revenue share, marketing and advertising expenses and customer care and enrollment expenses, excluding associated share-based compensation expense, the impact of revenue adjustments recorded in the period, but relating to performance obligations satisfied in prior periods, and such expenses related to our Non-Encompass BPO Services) for such period.
There are GoHealth, Inc. 2022 Form 10-K 59 additional estimates and assumptions used to arrive at estimated future cash flows, including discount rate, downtime, abatement, and commissions.
There are additional estimates and assumptions used to arrive at estimated future cash flows, including discount rate, downtime, abatement and commissions.
Submissions Medicare Segments Submissions are counted when an individual either (i) completes an application with our licensed agent that is submitted to the health plan partner and subsequently approved by the health plan partner during the indicated period, excluding applications through our dedicated services programs where GoHealth-employed agents are dedicated to certain health plan partners and agencies we partner with or (ii) is transferred by our agent to the health plan partner through the Encompass marketplace during the indicated period.
Submissions Submissions are counted when an individual either (i) completes an application with our licensed agent that is submitted to the health plan partner and subsequently approved by the health plan partner during the indicated period, excluding applications through our Non-Encompass BPO Services or (ii) is transferred by our agent to the health plan partner through the Encompass marketplace during the indicated period.
Ownership GoHealth, Inc. is the sole managing member of GoHealth Holdings, LLC. Although we have a minority economic interest in GoHealth Holdings, LLC, we have the sole voting interest in, and control of the business and affairs of, GoHealth Holdings, LLC and its direct and indirect subsidiaries.
Although we have a minority economic interest in GHH, LLC, we have the sole voting interest in, and control of the business and affairs of, GHH, LLC and its direct and indirect subsidiaries.
The fair value of RSUs and performance-based PSUs are determined based on the stock price on the date of grant. The fair value of stock options is calculated using a Black-Scholes-Merton pricing model. Embedded in the pricing model are several assumptions, including the expected life of the award, the expected dividend yield, the risk-free interest rate and the expected volatility.
Embedded in the simulation are several assumptions, including the expected life of the award, expected dividend yield, the risk-free interest rate and the expected volatility. The fair value of RSUs and performance-based PSUs are determined based on the closing stock price on the grant date.
(8) Represents the loss on debt extinguishment related to the Initial Term Loan Facility. (9) Represents goodwill impairment charges related to the Medicare— Internal and Medicare— External reporting units for the twelve months ended December 31, 2021.
(8) Represents the loss on debt extinguishment related to the Initial Term Loan Facility. (9) Represents indefinite-lived intangible asset impairment charges for the twelve months ended December 31, 2023 and the goodwill impairment charges for the twelve months ended December 31, 2021.
Not all Submissions will go into effect, as some individuals may fail to enroll or once enrolled may switch out of a policy within the disenrollment period during the first 90 days of the policy. The following tables present the number of Submissions by product for each of the Medicare segments for the periods presented.
Not all Submissions will go into effect, as some individuals may fail to enroll or once enrolled may switch out of a policy within the disenrollment period during the first 90 days of the policy.
As of December 31, 2022, the Company had a principal amount of $113.7 million, $305.4 million, and $99.0 million outstanding under the Incremental Term Loan Facility, the 2021 Incremental Term Loans, and the 2021-2 Incremental Term Loans, respectively. The Incremental Term Loan Facility effective interest rate was 11.2% and 7.5% at December 31, 2022 and 2021, respectively.
Term Loan Facilities As of December 31, 2023, the Company had a principal amount of $110.4 million, $296.3 million, and $96.1 million outstanding under the Incremental Term Loan Facility, the 2021 Incremental Term Loans, and the 2021-2 Incremental Term Loans, respectively. The Incremental Term Loan Facility effective interest rate was 13.0% and 11.2% at December 31, 2023 and 2022, respectively.
Share-Based Compensation We recognize compensation expense for all share-based awards, including time-vesting and performance-vesting profit units (collectively, “Profit Units”), restricted stock units (“RSUs”), stock options, performance stock units (“PSUs”), and stock appreciation rights ("SARs") based on the estimated grant date fair value of awards.
Share-Based Compensation We grant share-based awards to employees and non-employee directors. Share-based awards include time-vesting profits units (“Time-Vesting Units”), restricted stock units (“RSUs”), stock options, performance stock units (“PSUs”) and stock appreciation rights ("SARs").We recognize compensation expense for all share-based awards based on the estimated grant date fair value.
Impairment of Operating Lease ROU Assets The Company reviews operating lease ROU assets, in conjunction with other long-lived assets, for impairment when facts or circumstances indicate the carrying amount of an asset or asset group may not be recoverable.
See Note 4 "Goodwill and Intangible Assets, Net" for further discussion of our intangible assets. Impairment of Operating Lease ROU Assets The Company reviews operating lease right-of-use (“ROU”) assets, in conjunction with other long-lived assets, for impairment when facts or circumstances indicate the carrying amount of an asset or asset group may not be recoverable.
Net cash provided by operating activities was $60.9 million for the twelve months ended December 31, 2022, compared to cash used in operating activities of $299.0 million for the twelve months ended December 31, 2021.
Net cash provided by operating activities was $109.1 million for the twelve months ended December 31, 2023, compared to $60.9 million for the twelve months ended December 31, 2022.
The following table sets forth the reconciliations of GAAP net income (loss) to EBITDA and Adjusted EBITDA for the periods presented: Twelve months ended Dec. 31, Non-GAAP Financial Measures 2022 2021 2020 Net revenues $ 631,675 $ 1,062,415 $ 877,350 Net income (loss) (376,384) (534,194) (97,200) Interest expense 57,069 33,505 32,969 Income tax expense (benefit) 764 (24) 43 Depreciation and amortization expense 107,002 107,507 98,552 EBITDA (211,549) (393,206) 34,364 Share-based compensation expense (1) 32,124 27,297 6,929 Operating lease impairment charges (2) 25,345 1,062 — Restructuring and other related charges (3) 12,184 — — Professional services (4) 4,752 — — Severance costs (5) 3,340 — 77 Legal fees (6) 3,478 180 — Other (income) loss related to the adjustment of liabilities under the Tax Receivable Agreement (7) 550 — — Loss on extinguishment of debt (8) — 11,935 — Goodwill impairment charges (9) — 386,553 — Accelerated vesting of certain equity awards (10) — — 209,300 Change in fair value of contingent consideration liability (11) — — 19,700 IPO transactions costs (12) — — 659 Adjusted EBITDA $ (129,776) $ 33,821 $ 271,029 Adjusted EBITDA margin (20.5) % 3.2 % 30.9 % (1) Represents non-cash share-based compensation expense relating to equity awards, as well share-based compensation expense relating to liability classified awards that will be settled in cash.
The following table sets forth the reconciliations of GAAP net income (loss) to EBITDA and Adjusted EBITDA for the periods presented: GoHealth, Inc. 2023 Form 10-K 48 Twelve months ended Dec. 31, Non-GAAP Financial Measures 2023 2022 2021 Net revenues $ 734,671 $ 631,675 $ 1,062,415 Net income (loss) (151,270) (376,384) (534,194) Interest expense 69,472 57,069 33,505 Income tax expense (benefit) 154 764 (24) Depreciation and amortization expense 105,748 107,002 107,507 EBITDA 24,104 (211,549) (393,206) Share-based compensation expense (benefit) (1) 19,564 32,124 27,297 Legal fees (2) 14,840 3,478 180 Operating lease impairment charges (3) 2,687 25,345 1,062 Severance costs (4) 1,920 3,340 — Professional services (5) 1,548 4,752 — Restructuring and other related charges (6) — 12,184 — Other (income) loss related to the adjustment of liabilities under the Tax Receivable Agreement (7) 428 550 — Loss on extinguishment of debt (8) — — 11,935 Goodwill and intangible asset impairment charges (9) 10,000 — 386,553 Adjusted EBITDA $ 75,091 $ (129,776) $ 33,821 Adjusted EBITDA margin 10.2 % (20.5) % 3.2 % (1) Represents non-cash share-based compensation expense (benefit) relating to equity awards as well share-based compensation expense (benefit) relating to liability classified awards that will be settled in cash.
Persistency-adjustments allow us to estimate renewal revenue only to the extent probable that a material reversal in revenue would not be expected to occur. These factors may result in varying values from period to period. Sales per Submission represents revenues only from policies sold during the period, but excludes policies originally submitted in prior periods.
Persistency adjustments allow us to estimate renewal revenue only to the extent probable that a material reversal in revenue would not be expected to occur. These factors may result in varying values from period to period.
Additionally, the Company made the strategic decision to exit its non-Encompass BPO Services, or services in which we dedicate certain agents to specific health plan partners and agencies outside of the Encompass Solution, to focus on its core business.
GoHealth, Inc. 2023 Form 10-K 44 Additionally, the Company made the strategic decision to exit its non-Encompass BPO Services, or services in which we dedicate certain agents to specific health plan partners and agencies outside of the Encompass model, to focus on our core business. The exit was completed during the second quarter of 2023.
GoHealth, Inc. 2022 Form 10-K 47 Operating lease impairment charges Twelve months ended Dec. 31, % of Net Revenues 2022 2021 $ Change % Change 2022 2021 $ 25,345 $ 1,062 $ 24,283 2286.5 % 4.0% 0.1% As part of our continued cost savings initiatives, we are actively looking to terminate or sublease certain office spaces and call centers.
Operating lease impairment charges Twelve months ended Dec. 31, % of Net Revenues 2023 2022 $ Change % Change 2023 2022 $ 2,687 $ 25,345 $ (22,658) (89.4) % 0.4% 4.0% As part of our continued cost savings initiatives, we are actively looking to terminate or sublease certain office spaces and call centers.
Investing Activities Net cash used in investing activities decreased to $13.5 million for the twelve months ended December 31, 2022, from $19.8 million for the twelve months ended December 31, 2021. The decrease was primarily driven by a decrease in purchases of property and equipment and a decrease in capitalized internal-use software related to new technology, software, and systems.
Investing Activities Net cash used in investing activities increased to $13.7 million for the twelve months ended December 31, 2023, from $13.5 million for the twelve months ended December 31, 2022. The change was driven by an increase in capitalized internal-use software related to new technology, software and systems.
Restructuring and other related charges Twelve months ended Dec. 31, % of Net Revenues 2022 2021 $ Change % Change 2022 2021 $ 12,184 $ — $ 12,184 100.0 % 1.9% —% During the twelve months ended December 31, 2022, we implemented restructuring initiatives as part of our strategic transformation to drive efficiency and optimize costs.
GoHealth, Inc. 2023 Form 10-K 47 Restructuring and other related charges Twelve months ended Dec. 31, % of Net Revenues 2023 2022 $ Change % Change 2023 2022 $ — $ 12,184 $ (12,184) NM —% 1.9% _________________________ NM = Not meaningful During the second and third quarters of fiscal year 2022, we implemented restructuring initiatives as part of our strategic transformation to drive efficiency and optimize costs.
Aggregate commissions is equal to the sum of the commission revenue due upon the initial sale of a policy, and when applicable, an estimate of future renewal commissions per commissionable Submissions, and this figure excludes commissions through dedicated services programs where GoHealth-employed agents are dedicated to certain health plan partners and agencies we partner with.
Aggregate commissions are equal to the sum of the commission revenue due upon the initial sale of a policy, and when applicable, an estimate of future renewal commissions per commissionable Submissions, and this figure excludes commissions through our Non-Encompass BPO Services.
Factors that could cause such differences are discussed in the sections titled “Cautionary Note Regarding Forward-Looking Statements,” “Summary Risk Factors” and “Risk Factors” in this Annual Report on Form 10-K. We assume no obligation to update any of these forward-looking statements. Unless otherwise noted, all dollars are in thousands.
Factors that could cause such differences are discussed in the sections titled “Cautionary Note Regarding Forward-Looking Statements,” “Summary Risk Factors” and “Risk Factors” in this Annual Report on Form 10-K. The risks and uncertainties described in this 2023 Annual Report on Form 10-K are not the only risks and uncertainties we face.
The following are our key components of operating expenses and results thereof for the twelve months ended December 31, 2022 and 2021: Cost of revenue Twelve months ended Dec. 31, % of Net Revenues 2022 2021 $ Change % Change 2022 2021 $ 187,670 $ 239,335 $ (51,665) (21.6) % 29.7% 22.5% The $51.7 million, or 21.6%, decrease was primarily attributable to a $29.6 million increase in the cost of revenue impact of negative revenue adjustments relating to performance obligations satisfied in prior periods as well as declines in certain direct partner campaigns with revenue-sharing components, resulting in a decrease in cost of revenue.
The following are our key components of operating expenses and results thereof for the twelve months ended December 31, 2023 and 2022: Revenue share Twelve months ended Dec. 31, % of Net Revenues 2023 2022 $ Change % Change 2023 2022 $ 158,961 $ 187,670 $ (28,709) (15.3) % 21.6% 29.7% The $28.7 million, or 15.3% decrease was primarily attributable to declines in certain direct partner campaigns with revenue-sharing components.
As of December 31, 2022, the Company had no amounts outstanding under the Revolving Credit Facilities and had a remaining capacity of $200.0 million. To the extent that our current liquidity is insufficient to fund future activities, we may need to raise additional funds, which may include the sale of equity securities or through debt financing arrangements.
To the extent that our current liquidity is insufficient to fund future activities, we may need to raise additional funds, which may include the sale of equity securities or through debt financing arrangements.
In certain cases, numbers and percentages in the tables below may not foot due to rounding. Overview We are a leading health insurance marketplace and Medicare-focused digital health company whose mission is to improve access to healthcare in America.
In certain cases, numbers and percentages in the tables below may not foot due to rounding. Overview We are a leading health insurance marketplace and Medicare-focused digital health company whose purpose is to compassionately ensure consumers’ peace of mind when making healthcare decisions so they can focus on living life.
Technology expense Twelve months ended Dec. 31, % of Net Revenues 2022 2021 $ Change % Change 2022 2021 $ 46,094 $ 48,429 $ (2,335) (4.8) % 7.3% 4.6% The $2.3 million, or 4.8%, decrease was primarily attributable to reduced headcount in our technology support functions during the year.
Technology expense Twelve months ended Dec. 31, % of Net Revenues 2023 2022 $ Change % Change 2023 2022 $ 43,302 $ 46,094 $ (2,792) (6.1) % 5.9% 7.3% The $2.8 million, or 6.1% decrease was primarily attributable to reduced headcount in our technology support functions, partially offset by the third quarter technological enhancements in preparation for the 2023 AEP.
Encompass Engage includes post-enrollment member outreach and engagement services. Our agents strive to alleviate the confusion that beneficiaries often feel by facilitating an onboarding experience customized to a members’ plan and health needs.
During the second quarter of 2023, we expanded our Encompass Connect contracts and model to include our external partners, which we refer to as our vConnect program. Encompass Engage includes post-enrollment member outreach and engagement services. Our agents strive to alleviate the confusion that consumers often feel by facilitating an onboarding experience customized to a member’s plan and health needs.
The persistency-adjusted renewal period is determined based on our historical experience and available industry and health plan partner historical data. Persistency-adjustments allow us to estimate renewal revenue only to the extent probable that a material reversal in revenue would not be expected to occur. These factors may result in varying values from period to period.
Persistency adjustments allow us to estimate renewal revenue only to the extent probable that a material reversal in revenue GoHealth, Inc. 2023 Form 10-K 50 would not be expected to occur. These factors may result in varying values from period to period.
Reconciliations of each of EBITDA and Adjusted EBITDA to its most directly comparable GAAP financial measure, net income (loss), are presented in the tables below in this Annual Report on Form 10-K. We encourage you to review the reconciliations in conjunction with the presentation of the non-GAAP financial measures for each of the periods presented.
Reconciliations of each of EBITDA, Adjusted EBITDA, Sales per Submission, Cost per Submission and Adjusted Gross Margin per Submission to its most directly comparable GAAP financial measure, are presented in the tables below in this Annual Report on Form 10-K.
Marketing and advertising expense Twelve months ended Dec. 31, % of Net Revenues 2022 2021 $ Change % Change 2022 2021 $ 207,559 $ 365,141 $ (157,582) (43.2) % 32.9% 34.4% The $157.6 million, or 43.2%, decrease was primarily attributable to an intentional pullback on marketing and advertising spend as we focused on cash flow optimization.
Marketing and advertising expense Twelve months ended Dec. 31, % of Net Revenues 2023 2022 $ Change % Change 2023 2022 $ 205,042 $ 207,559 $ (2,517) (1.2) % 27.9% 32.9% The $2.5 million, or 1.2% decrease was primarily attributable to an intentional pullback on marketing and advertising spend as the Company focused on higher quality Submissions through targeted marketing.
In addition to tax expenses, we also incur expenses related to our status as a public company, plus payment obligations under the Tax Receivable Agreement, which could be significant.
In addition to tax expenses, we also incur expenses related to our status as a public company, plus payment obligations under the Tax Receivable Agreement (“TRA”), which could be significant. We intend to cause GHH, LLC to make distributions to us in an amount sufficient to allow us to pay these expenses and fund any payments due under the TRA.
Our proprietary technology platform leverages modern machine-learning algorithms powered by nearly two decades of insurance behavioral data to reimagine the optimal process for helping individuals find the best health insurance plan for their specific needs.
Our proprietary technology platform leverages modern machine-learning algorithms powered by over two decades of insurance behavioral data to reimagine the optimal process for helping consumers find the best health plan for their specific needs. Our unbiased, technology-driven marketplace and highly-trained agents have enabled us to enroll millions of people in Medicare and individual and family plans since our inception.
Intangible assets subject to amortization are also evaluated for impairment when indicators of impairment are determined to exist. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate from their use and eventual disposition.
Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate from their use and eventual disposition. If such review indicates that the carrying amount of intangible assets is not recoverable, the carrying amount of such assets is reduced to fair value.
Borrowings under the Class A Revolving Commitments bear interest at either ABR plus 5.50% per annum or LIBOR plus 6.50% per annum. Borrowings under the Class B Revolving Commitments bear interest at either ABR plus 3.00% per annum or LIBOR plus 4.00% per annum.
The New Class A Revolving Commitments mature on June 30, 2025 and bear interest at either ABR plus 5.50% per annum or SOFR plus 6.50% per annum. The Remaining Class B Revolving Commitments continue to mature on September 13, 2024 and bear interest at either ABR plus 3.00% per annum or SOFR plus 4.00% per annum.
General and administrative Twelve months ended Dec. 31, % of Net Revenues 2022 2021 $ Change % Change 2022 2021 $ 116,530 $ 98,183 $ 18,347 18.7 % 18.4% 9.2% The $18.3 million, or 18.7%, increase was primarily attributable to a $7.7 million increase in share-based compensation expense, a $5.2 million increase in consulting fees, and $2.2 million of executive severance expense.
General and administrative Twelve months ended Dec. 31, % of Net Revenues 2023 2022 $ Change % Change 2023 2022 $ 93,069 $ 116,530 $ (23,461) (20.1) % 12.7% 18.4% The $23.5 million, or 20.1% decrease was primarily attributable to an $11.4 million decrease in share-based compensation expense a $7.6 million decrease in expense related to employee incentive compensation, a $3.7 million decrease in expenses related to consulting fees, a $3.3 million decrease in expenses related to corporate insurance and a $2.5 million decrease in depreciation expense, partially offset by a $7.5 million increase in expenses related to legal fees.
In future periods, we may exclude similar items, may incur income and expenses similar to these excluded items and include other expenses, costs and non-recurring items.
We encourage you to review the reconciliations in conjunction with the presentation of the non-GAAP financial measures for each of the periods presented. In future periods, we may exclude similar items, may incur income and expenses similar to these excluded items and include other expenses, costs and non-routine items.
The Borrower is required to pay a commitment fee of 0.50% per annum under the Revolving Credit Facilities. The Company had no amounts outstanding under the Class A Revolving Credit Facilities and Class B Revolving Credit Facilities as of December 31, 2022.
The Company had no amounts outstanding under the Class A Revolving Credit Facilities and Class B Revolving Credit Facilities as of both December 31, 2023 and December 31, 2022. The Revolving Credit Facilities had a remaining capacity of $200.0 million in the aggregate as of both December 31, 2023 and December 31, 2022.
Amendment No. 5, as described above, also separates the Revolving Credit Facilities into two classes of revolving commitments consisting of Class A Revolving Commitments in the amount of $30.0 million and Class B Revolving Commitments in the amount of $170.0 million.
Revolving Credit Facilities The Company collectively refers to the Revolving Credit Facility, the Incremental Revolving Credit Facilities, and the Incremental No. 4 Revolving Credit Facility as the “Revolving Credit Facilities.” The Revolving Credit Facilities are separated into two classes of revolving commitments consisting of Class A Revolving Commitments in the amount of $30.0 million and Class B Revolving Commitments in the amount of $170.0 million before the signing of Amendment No. 11 in March 2024.
During second quarter of 2021, we recorded a $1.1 million operating lease impairment charge related to a sublease agreement entered into during the twelve months ended December 31, 2021. We continue to evaluate our portfolio of properties, and, therefore, it is possible that impairments could be identified in future periods, and such amounts could be material.
We continue to evaluate our portfolio of properties, and, therefore, it is possible that impairments could be identified in future periods, and such amounts could be material.
(4) Represents costs associated with non-recurring consulting fees and other professional services. (5) Represents costs associated with the termination of employment and associated fees unrelated to restructuring activities. (6) Represents non-recurring legal fees unrelated to our core operations. (7) Represents expense related to the measurement of our Tax Receivable Agreement obligation.
(5) Represents costs associated with non-routine consulting fees and other professional services. (6) Represents employee termination benefits and other associated costs related to restructuring activities, as described in Note 14. “ Restructuring Costs” of the Notes to Consolidated Financial Statements. (7) Represents expense related to the measurement of our TRA obligation.
The Company is forecasting to increase its investment in developing technologies to support the continued growth in the Encompass Solution. Financing Activities Net cash used in financing activities was $115.1 million for the twelve months ended December 31, 2022, from net cash provided by financing activities of $259.1 million for the twelve months ended December 31, 2021.
Financing Activities Net cash used in financing activities was $21.1 million for the twelve months ended December 31, 2023, from net cash used in financing activities of $115.1 million for the twelve months ended December 31, 2022.
Share-based compensation expense for Time-Vesting Units, RSUs, stock options, and PSUs are recognized on a straight-line basis over the requisite service or performance period, which is generally three to five years. Effective September 13, 2019 and in conjunction with the Centerbridge Acquisition, the Company authorized the grants of non-voting Profit Units.
Share-based compensation expense for Time-Vesting Units, RSUs, stock options and PSUs are recognized on a straight-line GoHealth, Inc. 2023 Form 10-K 54 basis over the requisite service or performance period, which is generally three to five years. We recognize forfeitures as they occur. The fair value of Time-Vesting Units and market-based PSUs are determined using a Monte Carlo simulation.
In response to these market pressures, during 2022, the Company focused its efforts on delivering efficiency, with an emphasis on optimization as opposed to revenue maximization.
In response to the pressures on LTVs in 2021 and 2022 that we discussed in our 2022 Annual Report on Form 10-K, we focused our efforts on delivering efficiency, with an emphasis on operational efficiency as opposed to revenue maximization.
(2) Represents operating lease impairment charges, reducing the carrying value of the associated ROU assets and leasehold improvements to the estimated fair values. (3) Represents employee termination benefits and other associated costs related to restructuring activities, as described in Note 15. “ Restructuring Costs” of the Notes to Consolidated Financial Statements.
(2) Represents non-routine legal fees, settlement accruals and other expenses unrelated to our corporate operations. (3) Represents operating lease impairment charges, reducing the carrying value of the associated ROU assets and leasehold improvements to the estimated fair values. (4) Represents costs associated with the termination of executive employment and associated fees unrelated to restructuring activities.
There was no impairment of goodwill for the twelve months ended December 31, 2020. Indefinite-lived intangible assets are tested for impairment on November 30 th of each year or whenever events or changes in circumstances indicate that an impairment may exist.
Intangible Assets Our trade names asset is an indefinite-lived intangible asset tested for impairment on November 30 th of each year or whenever events or changes in circumstances indicate that an impairment may exist. If the carrying amount of our indefinite-lived intangible trade names exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.
Update on Business Trends and Strategy The Company is part of a dynamic market and, as expectations evolve, the Company likewise works to evolve in parallel its business strategies and priorities. The pressures on LTVs in 2021 that we previously observed and discussed have continued throughout 2022, as beneficiaries appear to change plans more frequently.
Update on Business Trends and Strategy GoHealth is part of a dynamic market and, as expectations evolve, we likewise work to evolve our business strategies and priorities in parallel.
The following are our Sales/Cost of Submission as well as our Cost of Submission, for our Medicare segments for the twelve months ended December 31, 2022 and 2021: Twelve months ended Dec. 31, 2022 2021 2020 Sales/Cost of Submission $ 1.3 $ 1.1 $ 1.4 Cost of Submission $ 589,985 $ 781,515 $ 416,202 The increase in Sales/Cost of Submission is attributable to our strategic shift towards the Encompass model with improved operating efficiencies.
The increase in Sales/Cost of Submission, the decrease in Cost of Submission and decrease in Cost per Submission for the twelve months ended December 31, 2023 compared to the prior year period was primarily attributable to our strategic shift towards the Encompass operating model with improved operating efficiencies.

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