What Led to GoHealth Inc (NASDAQ: GOCO) Stock Crash?
GoHealth Inc (NASDAQ: GOCO) stock fell over 7.3% on 20th August, 2020 (as of 11:04 am GMT-4; Source: Google finance) post second quarter of FY 20 performance. For fiscal 2020, the company expects net revenue to be in the range of $840 – $890 million, representing year-over-year growth of 56% – 65% and 2020 adjusted EBITDA to be in the range of $265 – $290 million, representing year-over-year growth of 55% – 71%.
The company in the second quarter of FY 20 has reported 71% revenue growth driven by strong Medicare Advantage enrollments. The company delivered 169% growth in the Medicare Internal segment driven by additional agents and increased efficiency, which contributed to 106% increase in Medicare Advantage commercial approved submissions are Medicare CAS. The company posted 87% rise in the first half 2020 net revenues to $268.1 million compared to the prior year period. The company has reported the second quarter 2020 net loss of $(22.9) million compared to net income of $15.3 million in the prior year period, and first half 2020 net loss of $(23.8) million compared to net income of $20.3 million in the prior year period. The company’s second quarter 2020 adjusted EBITDA increased 56% to $26.9 million compared to the prior year period. Further, the company’s strategic focus on LTV/CAC ensures that the high rates of growth convert into industry-leading margins and strong cash returns.
Meanwhile, LTV/CAC for the Medicare-Internal segment grew from 2.3x to 2.7x during the first half 2020, due to lower marketing costs per opportunity and higher conversion, which resulted in EBITDA margins of 23% compared to 17% in the prior year period. Trailing twelve-month LTV/CAC rose from 2.8x to 3.6x. LTV per carrier approved Medicare Advantage submission grew 1.3% from $868 to $879 during the first half 2020 compared to the prior year period. 79% of consumer leads were generated internally compared to 30% in the prior year period. Total Medicare Submitted Policies rose 148% in the first half 2020 to 245,396. Medicare’s internal revenue grew 242% in the first half 2020 to $182.5 million and Medicare’s internal profit rose 276% in the first half 2020 to $74.5 million. There has been 76% rise in customer care and enrollment investments in the first half 2020 ahead of the Annual Enrollment Period. The company is on track for over 1,000 new agents in 2020 (957 hired as of August 1st, 2020) and four new virtual sales centers, substantially resolving COVID-19 related state licensing delays to date.
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