Q4 2022 eHealth Inc Earnings Call
Good afternoon, everyone and welcome to Ehealth, Inc Conference call.
To discuss the company's fourth quarter and fiscal year 2022 financial results at.
At this time, all participants have been placed in a listen only mode.
The floor will open up for your questions. Following the presentation. It is now my pleasure to turn the floor over to Ely <unk> Senior Investor Relations manager. Please go ahead.
And thank you all for joining us today on the call. This morning <unk>.
Chief Executive Officer, and John <unk>, Chief Financial Officer will discuss our fourth quarter and fiscal year 2022 financial results and our financial outlook for 2023.
Following these prepared remarks, we will open the line for a Q&A session with industry analysts.
As a reminder, this call is being recorded and webcast from the Investor Relations section of our website.
A replay of the call will be available on our website later today.
Today's press release, our historical financial news releases and our filings with the SEC are also available on our Investor Relations website.
We will be making forward looking statements on this call about certain matters that are based upon management's current beliefs and expectations relating to future events impacting the company and our future financial or operating performance.
Forward looking statements on this call represent ehealth speed today and actual results could differ materially.
Undertake no obligation to publicly address or update any forward looking statements in future filings or communications regarding our business or results.
<unk> looking statements, we will be making during this call are subject to a number of uncertainties and risks, including but not limited to those described in today's press release, our annual report on Form 10-K, and our other filings with the SEC.
We will also be discussing certain non-GAAP financial measures on this call managements definitions of these non-GAAP measures and reconciliation to the most directly comparable GAAP financial measures are included in today's press release.
I'll turn the call over to franchise.
Thank you Levi and good morning to everyone joining us today as we report our fiscal year and fourth quarter 2022 financial results.
On this call I will review, our annual enrollment period performance, which exceeded our expectations and reflected the early progress of our transformation plan.
To update our strategic and operational priorities for 2023, and finally share our outlook for this year.
I'd like to begin by sharing our view of the Medicare market helps critically important role.
The Medicare advantage program offer strong value propositions to seniors through superior health outcomes compared to traditional Medicare and a wide selection of quality and robust plans at affordable premiums.
Today seniors have a large choice of provider networks coverage options and supplemental benefits such as over the counter medications dental vision and hearing as well as gym memberships through the plans offered by multiple health insurance carriers.
Further many carriers provide beneficiaries with access to programs to address social determinants of health, including transportation and food assistance as examples.
For certain segments of the senior demographic a combination of traditional Medicare with nets up can also be an attractive choice for top coverage complemented with ancillary services, such as dental vision and hearing.
With all the robust options however comes complexity.
We view our role in this industry, it's a trusted and transparent advisor to seniors as they make the critical decision are assessing their options in choosing a health care plan that best fits their needs and preferences.
We are well positioned to deliver on this mission based on our broad network of leading carriers unbiased plan recommendation tools and our unique omnichannel consumer platform.
Our omnichannel platform allows customers to seamlessly shift between telephonic self serve online and online assisted interactions with ehealth, while researching and enrolling in the plan.
Simply put.
We aim to meet consumers on their terms guiding them through their health insurance and related options, when where and how they prefer.
Our strategic and operational decisions are informed by the company wide goal of being a gold standard in quality and distribution at scale Medicare individual small group and ancillary products.
As I shared on our last earnings call. This Michigan has been operationalized drove our customer pledge outlining our commitment to beneficiaries consumers and caregivers and the experience. They can expect when they work with Ehealth.
We also remain committed to maintaining close and collaborative relationships with our carrier partners and supporting their customer experience goals.
Following the Aep's completion, we have received positive preliminary feedback from several of our largest carrier partners with respect to our enrollment quality, including a meaningful reduction in Medicare complaint tracking module or <unk> scores and an improvement in persistency compared to a year ago.
As a reminder, cts reflect beneficiary complaints filed directly with CMS.
Since implementing a host of enrollment quality related initiatives in the third quarter of 2021 Ehealth.
Ehealth has observed a 50% decrease in its ATM rates from 2021 through the most recent AEP based on preliminary data available to date.
We also continue to receive positive anecdotal feedback from carriers, including for one of our largest carrier partners.
We shared that our enrollment quality metrics are in line with their own internal sales channel.
We are steadily moving towards our goal of becoming the gold standard in enrollment quality within our sector, while also achieving and exceeding our financial targets.
Last month, we released our preliminary fourth quarter and fiscal year 'twenty two results, which came in above annual guidance ranges that we provided earlier in the year.
Today, we will share more detail about our fourth quarter financial and operating performance and the key drivers behind our effective AEP execution.
Shortly after I joined Ehealth as CEO in November of 2021, we mapped out a business transformation plan that included several strategic initiatives and clothing overhauling, our marketing and sales processes to lower the cost of acquisition improved the quality of leads and improve our sales advisors selling techniques.
All with the ultimate goal of improving conversion rates.
Further we were focused on evolving the customer journey to create a memorable shop educate advise and enroll experience.
From a financial standpoint, returning to sustainable profitable growth and positive cash flow generation became our north star.
In early 'twenty, two we initiated a companywide cost reduction plan and purposefully slowed down our enrollment growth choosing to predict enrollment volume did not support our target margins.
During this last AEP, we pursue targeted demand generation campaigns and deemphasize certain channels, such as Directv, while driving strong performance within our affiliate and strategic partner channels as well as through dedicated carrier arrangements.
Driven by changes to our marketing program implemented in 2022, we were able to generate higher quality lead starting to AEP compared to a year ago and converted them at much improved rates within our call centers.
Higher conversion rates were also driven by meaningful process improvements in our telesales organization.
For our license insurance agents or benefit advisors ahead of the AEP, we redesigned our advisor hiring and training program.
Produce new advisor facing technology tools and launched our local market operating model, where our benefit advisors specialized by region, which better aligns our sales model with the local community based nature of healthcare delivery and the health insurance industry.
To better bridge are online and telesales experiences last year, we introduced co browsing and chat capabilities.
The online channel in particular had a pronounced positive impact on the AAP on conversion rates for the online visitors who used it.
Also positively impacted approval rate and initial retention for these enrollments based on data we have to date.
In addition to creating a positive user experience chat also effectively leveraged as time and capacity of our benefit advisors as one person can manage multiple chats simultaneously.
As a testament to the success of these initiatives our fourth quarter telephonic conversion rates increased approximately 25% compared to Q4 of 2021.
This represents a meaningful operating lever given the significant call volume we've received in Q4.
Adjusted EBITDA margins on our fourth quarter Medicare enrollments for more than doubled as Medicare advantage lifetime values remained stable, while total variable acquisition costs per approved MAA equivalent member declined by 18% compared to a year ago.
Through a combination of strategic and operational initiatives, along with cost transformation measures.
We increased fourth quarter, adjusted EBITDA by 76% year over year.
Partially driven buyer intentionally reduced enrollment volumes and revenue compared to a year ago.
Fourth quarter revenue of $196 $3 million represented a decrease of 19% year over year and drove adjusted EBITDA of $49 5 million up from $28 2 million in Q4 of 'twenty one.
Fourth quarter GAAP net income was $20 7 million.
Yes.
It's important to note that over the past several months, we have observed trends, suggesting that our industry peers are taking similar actions in terms of prioritizing sustainable profitability versus growth at all cost.
In fact, we believe that the Medicare distribution market has reached an inflection point with brokers refocusing their effort and resources on enrollment margins and member retention.
In addition to bringing a more rational approach to demand generation, which benefits all players in the industry. We see this trend is having a positive effect on consumers as brokers place increased emphasis on the overall customer enrollment experience, including planned fit in our long term member retention.
During the fourth quarter, we managed our liquidity much more effectively than we initially forecasted.
More specifically total cash outflow for fiscal year 2022, excluding the impact of our $70 million term loan and associated cost in net securities activities was $44 million favor.
Favorable to our guidance range of $110 million to $90 million of outflow.
We ended the year with sufficient liquidity to support our business needs and objectives in 2023.
Business transformations are driven by people and then the period of time following our last earnings call. We've rounded out the senior leadership team with three new additions John <unk> joined Ehealth as Chief Financial Officer of November of 'twenty two.
John has significant financial leadership experience in health care. Most recently at Cvs Health, Aetna, where he had multiple roles, including CFO government services Division covering Medicare Medicaid Federal employees program and public exchange businesses.
John has already made his impact felt driving the development of our 2023 financial plan.
This year, we announced the cayton barbaria, joining ehealth as our Chief Digital officer.
<unk> extensive track record building strategic digital Roadmaps at customer focused companies make him the ideal person to further our technology leadership in the sector.
Third and finally, Lars Askin's returned to Ehealth at the beginning of February as senior Vice President of Communications.
While our returns with a wealth of knowledge and experience to once again lead ehealth communication initiatives and activities.
With these three hires I've completed the new senior leadership team.
Executing on our transformation plan strategic initiatives and pursuing the exciting opportunities we see ahead of us.
We are pleased with the significant operational achievements made over the course of last year, culminating in a successful annual enrollment period.
However, we are just getting started.
And see even greater upside to the efficiency of our marketing and sales organizations.
'twenty two we intentionally reduced enrollment volumes and total revenue as we implemented necessary organizational and operational changes ultimately with the goal of returning to sustainable profitable growth.
We expect to achieve this through disciplined volume growth further improvement in our enrollment margins strict fixed cost controls and developing revenue streams outside of our core MA broker business.
At the midpoint, our 2023 annual guidance reflects 6% revenue growth, while achieving significant year over year improvement in adjusted EBITDA, John will elaborate further in his remarks that will fall in line.
Moving now to our 2023 operational priorities. These objectives are meant to build on the success of our transformational initiatives implemented last year and reflect our commitment to continued improvement across all areas of operations.
The four objectives are as follows.
First to continue to build on last year's progress within Ehealth, Omnichannel marketing and lead generation engine.
To improve conversion rates across our entire enrollment platform, regardless of how the customer chooses to interact with ehealth.
<unk> to introduce the next phase of our customer retention strategy.
And finally to further diversify ehealth revenue streams.
I will now provide further detail on each of these objectives.
First we will continue building out our unified Omnichannel marketing engine.
Last year, we significantly improved our lead quality and lowered our acquisition costs by narrowing down our marketing channels campaigns to pursue only the highest ROI initiatives.
This year, we see an opportunity to start diversifying our channel mix through a disciplined test based approach.
Under the strong leadership of our CMO Michel Barbell re.
Re engineered marketing initiatives will be increasingly driven by audience segmentation and targeting leveraging differentiated messages that highlights what's unique about ehealth and extending touch points with non converting website visitors as well as our existing customers.
We will also be aligning our marketing engine more closely with the new structure of our telesales organization by emphasizing local market and product specific campaigns.
Ultimately the goal is to further customer engagement and establish a strong distinct brand that effectively communicates our differentiated value proposition.
As a fully transparent advisor to customers in a complex health insurance industry.
Second we will continue to prioritize improving consumer experience and conversion rates across our entire platform regardless of how the customer first interacted with ehealth or how the final enrollment is made.
As I mentioned earlier in the call last year's introduction of the new Omni channel features including co browsing and chat capabilities at a positive impact on our ability to close sales. This.
This year we.
We will be further refining our digital funnel to make the user experience, even more frictionless and intuitive.
Another goal of these optimizations is to enhance the accuracy of the information we collect in order to provide the best Advisory service and plan recommendations.
The telesales side, we are expanding the percentage of benefit advisers, who specialize in specific geography, and lower product, which has demonstrated a positive impact on the depth of their expertise and effectiveness in serving our customers.
On the technology side work is already underway to add a new feature that further enhances the enrollment experience through multiple touch points in our omnichannel customer journey.
The fundamental success of Ehealth sales operation depends on our investment in people and will continue to foster the skill and career growth of our strong base of benefit advisors.
Our third priority is to introduce the next phase of our customer retention strategy with the intention of reaching aggressive two year goals that we've set for ourselves internally.
Our retention program starts before the enrollment through marketing and branding built to create long lasting impressions.
One of the keys to our branding strategy is to create a lasting awareness of who ehealth is and what we do with the ultimate goal of long term customer loyalty.
The retention effort continues during the enrollment process by providing an excellent customer experience an optimal plan matching through enhanced recommendation analytic tools and carries on post enrollment through continued engagement using a data driven approach targeting the optimal times to engage our existing customers.
The success of these initiatives will be measured by our ability to keep our beneficiaries and the Ehealth advisory ecosystem, even as they switch plans or carriers based on changes to their personal needs our plan design.
In aggregate this new retention strategy will bring a more thoughtful approach to building a year round personal lines relationship with our beneficiaries focusing on high impact rather than high volume customer communications.
Before can final operational priority is to further diversify <unk> revenue stream.
While we continue to hold the utmost conviction in the MA opportunity, we believe supplementing broker of record Medicare advantage sales with other revenue streams will help us improve our LTV to CAC ratios, while playing an important role on our path to reaching sustainable profitability and improved liquidity.
This includes our plan to expand dedicated carrier arrangements bto business opportunities to account for a larger share of total enrollments.
These arrangements play to our core strengths and are becoming a valuable supplement to our core MA business as they carried no direct marketing cost it can offer attractive unit economics.
In fact earlier this month, we learned we have the winning proposal for a new carrier dedicated arrangement with one of our major carrier partners in support of this strategy.
We also plan to place an increased emphasis on our individual family and small business or ISP segment, which has been consistently profitable over the last several years.
We believe that the growing adoption of the individual coverage health reimbursement arrangements or era.
And the potential impact for Medicaid Redetermination will drive increased interest and demand for major medical IOP plans and create incremental opportunities for ehealth in this market.
This year, we also plan to market targeted investments for growth in our Medicare supplement and ancillary product business.
Additionally, we will be leaning into member engagement services that both deepen our relationship with beneficiaries and offer valuable revenue opportunities in the lower volume quarters of the year.
Recapping 2022, it was a pivotal year and progressing towards our goal of sustainable profitable growth, while strengthening our standing as a gold standard in health insurance and ancillary product distribution at scale and demonstrating ehealth value proposition to our carrier partners.
We expect to continue to build on this momentum in 2003 with a number of impactful operational initiatives underway.
The guidance, we published earlier this morning as part of our earnings release is indicative of the progress we continue to make as an organization and puts ehealth on a path towards achieving profitable growth in 2024.
Further we are currently in the process of planning our first Investor day since 2019 to be held in person in New York in May of this year, where we intend to discuss our longer term strategic and financial goals.
Finally, I would like to take a moment to acknowledge Ehealth senior leadership team our management at all of the employees of the company for their important work that supported the strong results that we reported today.
It is inspiring to see the commitment and the dedication of our teams across the organization United and their goal with helping beneficiaries find the best possible health care coverage.
I believe this team will continue to excel in 2023, and I look forward to sharing our progress throughout the coming year.
I'll now pass the Baton to our Chief Financial Officer, John <unk> John .
Thank you Brian .
I am excited to join Ehealth at this vital time in the company's evolution.
Our 2022 financial results reflect the impact of the transformational plan that touched every area of the organization drove strong execution during the annual enrollment period and allowed us to enter this year.
Typically reduced cost run rate in a solid liquidity position.
In the fourth quarter, we achieved significant improvements in <unk>.
Critical financial and operating metrics compared to Q4, a year ago.
We turn to profitability on a GAAP net income basis and reported a meaningful expansion on adjusted EBITDA margins year over year, Despite an intentional reduction in enrollment volumes and total revenue.
This was accomplished in part by driving higher quality leads to our Omnichannel consumer platform and converting those leads at higher rates compared to a year ago.
The preparation for this AEP, we made a decision to reduce our total marketing spend and our licensed benefit advisor head count compared to a year ago, while we implemented a more disciplined ROI driven approach to demand generation and focused on increasing benefit.
<unk> productivity.
The emphasis on best performing marketing channels and higher count sales conversion led to a significant increase in per unit gross margin in our Medicare business compared to last year.
We defined per unit gross margin as a spread between lifetime value or LTV and total variable acquisition costs per new enrollment.
Fourth quarter Medicare advantage LTV is grew 2% year over year, while combined fourth quarter marketing and talent sales cost per approved Medicare member declined 18%.
The resulting Q4 per unit gross margin for Medicare advantage premium of 29%.
Above our expectations and a meaningful improvement compared to 12% in the fourth quarter of last year.
I see further upside to its important metric as we continue to execute on the transformation plan, which is reflected in our 2023 annual guidance.
Moving to our top line results.
Fourth quarter 2022 revenue was $196 3 million down 19% on a year over year basis.
This revenue decline represents an intentional decision to progress the company towards profitable growth with temporarily decreased but more efficient marketing spend.
Fourth quarter Medicare advantage approved members.
<unk> 131000, or a decrease of 26% compared to Q4 of 'twenty one.
Total Medicare approved applications for fiscal year 'twenty two.
$161500 were down 33% year over year.
Fourth quarter Medicare segment revenue was $184 million down 22% year over year.
At the same time Medicare segment profit of $53 2 million was up sharply by 56% compared to Q4 'twenty one.
Our ability to generate significantly higher profitability on lower sales and marketing investment represents an important operating level.
As we plan to resume enrollment growth next AEP, we expect to do so under its improved operational and cost foundation driving additional increases in Medicare segment and overall profitability.
In Q4, 29% of Medicare data applications were submitted through our online channel.
Channel and.
34% were online assisted.
We view, our Omnichannel platform as an important differentiator and plan to continue making targeted investments in further enhancing customer experience on our platform and driving higher conversions.
Fourth quarter MA LTV of 1033 grew 2% year over year, representing an increase in average commission rates as well as stabilizing retention.
Fourth quarter tail revenue in our Medicare business with a concrete at $6 7 million, reflecting favorable persistency trend on some of our historical cohorts.
Our estimated Medicare advantage paying membership at the end of the year was approximately 646000 lines up 2% from 21 year end.
Our total estimated Medicare membership, including net and prescription drug plan policies was 976000 lives also up 2% on a year over year basis.
Fourth quarter Medicare Non commission revenue comprised primarily of carrier advertising revenue was $25 million.
Down 2% from Q4 'twenty one.
Moving on to our individual family and small business or IP segment, which also includes our ancillary products.
Fourth quarter segment revenue was $15 9 million.
An increase of 23% year over year, driven primarily by an increase in <unk> revenue.
We continue observing favorable retention trends on our major medical ISP products with Q4, LTV is up 16% for non subsidized plans.
Gotcha program with a goal to accelerate a return to profitable grill and reached positive cash flow generation.
Through targeted cut to both our variable and fixed calm.
The program generated 114 million.
Operating cost savings compared to 21, which exceeded our internal goals.
The most pronounced impact of cost reductions was seen in Q4.
Our highest operating expense court.
Importantly, we enter 2023 on this new car foundation, reflecting significant year over year reduction in first quarter cough compared to Q1 of 22.
Our total fourthquarter, non-GAAP operating expense, which excludes stock based compensation restructuring charges.
<unk> tangibles and impairment charges was $152.3 million a.
A reduction of 68.6 million or 31% compared to two 421.
Fourth quarter GAAP net income was $20.7 million compared to a net loss of $32.2 million in queue for a year ago.
Fourth quarter, adjusted EBITDA with $49.5 million, an increase of 76% from $28.2 million in queue for 2021.
Full year 2022 gap that loss.
88.7 million with adjusted EBITDA of negative $41.7 million.
Our cash flow for fiscal year 22 significantly outperformed our guidance.
Primarily by more effective deployment of marketing a call center budgets that forecast it.
Better than expected cash collection on some of our membership co workers.
And outperformance of the goals set under our cost reduction program.
Total cash outflow, excluding the impact of our term loan and that's securities activities was 44 million compared to an outflow of 110 to 90 million contemplated by our guidance.
We ended the year in a strong liquidity position.
With $144.4 million in cash cash equivalents and marketable securities.
This compares to $123 2 million at the end of 2021.
Our balance sheet also reflects 242.8 million and short term commission receivables expect it to be collected over the next 12 months.
And 641.6 million in longterm intermission receivables.
E health positive net tail revenue for 2022 points to the quality and continued stability of our commissions receivable balance.
In fact, our net tail revenue across all products has been positive each year since we adopted a S. C. Six O six and 2018.
Moving on now to our financial guidance for 2023.
We are forecasting total revenue to be in the <unk> 422 $440 million.
We expect GAAP net loss to be in the range of 55 to 35 nine.
We expect adjusted EBITDA to be in the range of negative 15 million two positive five nine.
Operating cash flow is expected to be in the range of negative 30 million.
Negative 15 million.
At the mid point of our guidance, we expect to grow revenue by approximately 6% compared to a year ago with similar underlying growth in Medicare enrollment.
We also expect to deliver meaningful improvement and profitability driven by continued right sizing of our demand generation and benefit advisor related spend.
Improvements to our marketing efficiency and tell sales conversions.
And an associated increase of L. T V. The CAC margin.
And a positive impact from the cost reduction program launched in April of 22.
We can she needs to be laser focused unexpressed management, and we will be implementing targeting cuts on the sixth call side to layer on top of savings achieved last year.
Or just an EBITDA guidance represents a year over year improvement roughly 37 million at the midpoint, including positive adjusted EBITDA at the high end of our guidance range.
The annual guidance also reflects our revenue diversification efforts, including stronger contribution from <unk>.
I P and ancillary products.
Carrier dedicated arrangements.
An additional supplementary revenue opportunities.
At the same time, we expect a decline carrier advertising revenue compared to 22.
While our 22 results and guidance for this you're demonstrate significant progress in improving our operating and financial performance.
Including key profitability metric.
He house longterm goal was to reach a run rate a profitable growth coupled with positive cash flow generation.
This involves diversifying our revenue streams improve.
Improving our unit economics.
Improving retention and managing our fixed cough to gain leverage.
These efforts coupled with working capital management will move it towards that goal.
Looking at our operating cash flow guidance for this year.
Mid point of our range implies the outflow of $22.5 million.
Slight improvement compared to 2022.
This year over year improvement is certainly not as pronounced as what we project for gap net income and adjusted EBITDA.
This is driven by the seasonal timing of our cash collections and are operating decision or decelerating enrollment growth last eight E T.
Given that the majority of initial conditions associated with a E P sales.
And during the first quarter.
Q1, 23 cash collection will reflect the reduced enrollment volumes from this last a E P.
At the same time, the cash benefit of the investment we will be making this year to resume enrollment growth this coming <unk>.
Will not be felt until Q1 of 24.
In fact on a trailing 12 month basis, ending March 31, 2024, we expect to be right around breakeven.
Operating cash flow basis.
Based on the ending cash balance and or cash flow projections. We believe we have sufficient liquidity to execute on our 2023 operating <unk>.
I would also like to comment on our expectations for Q1.
Given that our extensive cost reduction program was not implemented until April of last year.
We expect a significant decline in marketing and customer care and enrolled in expenses in the first quarter twenty-three compared to Q1 of 22.
As a result, we also expect a corresponding decrease in our first quarter enrolled in volume, resulting revenue.
Q and revenue is expected to decline in excess of 30%.
For over a year.
We expect high wherever for adjusted EBITDA in the first quarter to be roughly flat compared to Q1 22.
Operator please.
Please open the line for questions.
Thank you.
Ladies and gentlemen.
And answer session.
You have a question. Please press the star followed by the one on your Touchtone phone.
Prompt acknowledging a request.
From the polling process. Please press the star followed by the two.
If you're using a speaker phone please lift the handset before pressing any cheese one moment. Please for your first question.
Your first question comes from Georgia Sutton of Craig Harlem. Please go ahead.
Thank you it is nice to be able to say congratulations on the results and outlook.
So.
Your co browsing and chat tools, which were obviously very successful.
Curious how much you were able to use those this season vs. As we look further into the future will that become a more significant part of your offering and therefore have a bigger impact overall.
Good morning, George It's Fran thanks for the encouraging words, and we're just so happy to be able to put a smile on your face and all of our.
All of those who cover us.
Your questions are good when.
I I think it's fair to say that our chat capabilities was a important contributor to our a P performance.
I can also tell you that we were making adjustments to that check capabilities throughout the U P C.
So it's.
It's fair to say, we didn't enjoy all of its benefits, meaning it didn't perform.
As strong as I think it could have through the beginning of AEP, but when we made some course corrections it really kicked in rather nicely and that just to be transparent it was about <unk>.
Moving the chat capabilities further up into the.
The call as opposed to the enrollment it was done more in the shopping experience. So it works it's scalable.
And it provides a wonderful experience for beneficiaries.
And certainly supports our efforts to increase conversion rates.
Co browsing a little different in that it it's really about providing a better experience for beneficiaries as well as enhancing our agents capabilities.
Through the shop.
<unk> advise educate and enrolled process.
It takes.
It could be viewed as a one dimensional encounter meaning verbal too now verbal and sharing of the screen. So the documents can be viewed simultaneously with the conversation, which just makes for a much more productive process in a much more favourable experience for beneficiaries. So I do see.
S evolving our capabilities this year.
And adding new capabilities beyond the chat.
That's great.
Question, when we look at the 6% growth expected for 2023, and I'm not sure what macro.
Numbers, you're you're looking at are you assuming that as a share maintenance is that a ah modest share gain how are you thinking of your relative performance in 2023.
Sure I'll start out certainly ask John to to supplement my comment.
You know, it's it's important growth, meaning that it's coming from.
A more diversified set of products and capabilities. It's in the past it's been nearly entirely reliant on.
Broker a wrecker traditional Medicare advantage business and it's spread out a much more widely between RMA business are dedicated carrier.
Business mess up and ancillary so it's.
And those.
Particularly the dedicated carrier and that's up ancillary have much more favorable cash flow dynamics, which is important as I know you appreciate to meet our liquidity needs. So let me see if John would like to add to that.
Yeah, Georgia, I would say that the B P. O deal that Fran mentioned I mean, just prepared remarks, plus improvement in Medicare sub sales.
Drive a good chunk of the year over year growth, but we still have absolute growth in the core M a business.
Okay perfect. Thanks, guys.
Sure.
Thank you. The next question comes from Daniel Gross Lane of the Citigroup. Please go ahead.
Hey, This is Louise offered Daniel gross while I just had one quick question, what's greater emphasis on returning agents. What is your approach outside the busy AEP N O U P seasons, and how should we think about agent <unk> throughout the year. Thank you.
I missed the very first part of that I heard the last part in terms of ancient compensation, let me dress that annoys you to repeat your first part of the question the ancient compensation.
Is market based it's performance based as well, so clearly we need to be mark and competitive and attracting.
The talent that we need for our telesales capabilities and that has not been a challenge in the past year, and and where already underway to begin ramping up for the current year, so, but but it all starts with market competitive compensation and then emphasis on performance.
Which is pretty I would say consistent with the industry and the first part of your question.
The first part of my question is more so what is your approach like outside of the busy a piano a P. C. Simpson how should we think about that.
Oh for the first three quarters of the year.
Well I think the most important point would be in the first quarter where in 2022.
We had spent a fairly large sum of variable cost for marketing activities.
To support our agents were.
Being much more prudent this year and clearly we Wanna keep agents productive.
But we can do that through.
The progress we've made on the on the lead quality side. So we don't have to spend as much but keeping you know our our agents productive.
And we've also begun.
Begun ramping up our myths up capabilities. So you can sell that all year round as you know and we believe that that's gonna be a contributor.
For a revenue goals as well as keeping agents productive and sharp.
Thank you.
Thank you.
Once again, ladies and gentlemen, if you do have a question. Please press star one.
At this time.
Next question comes from.
Please go ahead.
Yeah. Good morning, guys and thanks for taking my question is you guys look to diversify the revenue streams with the carrier dedicated segments I'd say, that's kind of the opposite of how the business model has been built historically on the side I guess, so can you talk about how you think about those two businesses kind of running side by side and just one tend to compete with the other.
And and do you worry at all about kind of being able to maintain that that that unbiased kind of shopping point for the the M. A consumer.
George Thanks for the question good to hear you.
They complement one another I mean, this business, whether it's dedicated carrier or conventional worker.
Medicare advantage selling is the same it's it's product expertise is the ability to listen carefully to beneficiaries needs.
<unk> needs and preferences, and then help them through that shopping experience they.
They don't compete in that we maintain the purity of a house that you will when we represent all of our carrier partners and then the dedicated carriers think of US as an extension of of their organization and that's walled off from the rest of the house. So it simply provides <unk>.
Them, the dedicated carrier partner with an opportunity to focus exclusively on their product as an extension so dedicated people supporting that and never shallow to me in terms of you know.
Health as a.
As as an independent neutral channel distribution channel.
Well I mean, I I imagine that you guys can probably manage that pretty pretty separately. If I. If I could do two quick follow ups I think probably most investors are focused about kind of cash flow and whether or not the company will need to raise capital at any point in the future given that what you've provided today it looks like that probably won't be need and then just if you could talk for another second about the fixed costs, you're talking about <unk>.
Getting we'd love to hear more about what this cost savings are coming from thank you.
Or again, thanks for the questions I'll take the first I'll ask John to take the second our liquidity needs based on all of our modeling wearing in good shape for twenty-three.
But to your point longer term, we are looking at all of our options for sources of capital to make sure that he house can continue to perform up to our expectations and capitalize on the opportunities and 12 manufacturer opportunities.
So I feel.
A lot of focus is on that getting good guidance from our board.
And I'm confident we'll have something more to report on in the next several months.
John you want to take the fixed cost question sure on on the fixed costs are several areas I mean, it's really.
You look at everything, but it's gonna be it's gonna be continued on our space, where virtual first company.
We certainly took an impairment against that to reduce future rent costs.
It's gonna be vendor cost software redundancies and using our people more efficiently.
As we grow up.
Great I appreciate the collar guys. Thank you.
Thank you.
There are no further questions at this time, please continue with closing remarks.
This is for and again, thank you again for joining US. This morning, we look forward to our conversations in the coming days and weeks.
Thank you operator.
Thank you ladies and gentlemen, this does conclude the conference call for today.
Thank you for your participation and ask that you. Please.
Connect your lines.
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