Q3 2023 GoHealth Inc Earnings Call
Good morning, and welcome to the go Health third quarter 2023 earnings Conference call. My name is Michelle and I'll be your operator for today's call. At this time all participants are in a listen only mode. Following the prepared remarks, we will conduct a question answer session.
Reminder, this conference is being recorded I'll now turn the call over to John Shave Vice President of Investor Relations. John You may begin.
Thank you and good morning, everyone. Welcome to go Health's third quarter 2023 quarterly results call. Joining me today are Vijay Kotte, Chief Executive Officer, and Jason Charles Chief Financial Officer.
Today's conference call contains forward looking statements based on our current expectations.
There is none and unknown risks and uncertainties may cause actual results to differ materially from those anticipated or projected in these statements.
Many of the factors that will determine future results are beyond the company's ability to control or predict.
You should not place undue reliance on any forward looking statements and the company undertakes no obligation to update or revise any of these statements whether due to new information future events or otherwise.
Earlier today, we issued a press release containing our results for the third quarter of 2023, we have posted the release on the go health website under the Investor Relations tab.
In the press release, we have listed a number of risk factors that you should consider in conjunction with our forward looking statements.
We encourage you to consider the other risk factors described in our Form 10-K and Form 10-Q reports filed with the Securities and Exchange Commission for additional information.
During this call we will be discussing certain non-GAAP financial measures. These measures are reconciled to the most directly comparable GAAP financial measure and the reconciliations are set forth in the press release.
May also refer to the Investor relations presentation posted to the Investor Relations section of our website for reconciliations of non-GAAP measures to the most comparable GAAP measures discussed during this earnings call.
I will now turn the call over to go help CEO Vijay Kotte.
Thank you John and thank you all for joining US today I am pleased to report another strong quarter for <unk> with revenue and adjusted EBITDA in line with guidance.
Our quarterly results showcased the 12% year over year revenue growth, excluding look back adjustment and non encompass BPL services, while our full year guidance point at a substantial improvement in cash flow from operations and a rapid increase towards profitability as compared to last year.
During the third quarter together with our external agency partners, we helped over 161000 Medicare consumers access their current coverage review potential Medicare option and enrolled in our plan.
<unk> core value proposition to consumers it providing a trustworthy shopping experience that allows them to select the Medicare advantage plan that meets their unique needs.
Our marketplace model is distinct from traditional brokers in several ways.
Adult health, we put the consumer at the center of all we do.
This has resulted in a passionate belief that we must remain unbiased in the servicing of our consumers.
We accomplished this with our encompass platform operating a personalized no pressure shopping experience, where consumers can feel comfortable and confident throughout the entire process.
The E broker industry has long believed that growth is directly tied to the acquisition of more agents and thus more leads how's.
However, this traditional approach often leads to diseconomies of scale.
The cost of adding more agents and lead drives up customer acquisition costs due to lower quality agents and lower quality lead.
We believe technology can drive economies of scale and meaningfully elevate the consumer experience by matching them with the right plan for their needs.
Encompass our proprietary operating technology and data science platform allows us to streamline shopping simplifying the cumbersome and confusing experience of health care purchasing while allowing our agents to focus on what's most important.
Showing empathy and care for our Medicare consumers.
By leveraging our machine learning platform, we can better serve these consumers and deliver better outcomes for our business.
Even with personalization encompass provides a standardized workflow that facilitate the uniform consumer experience, while enhancing quality and improving cost efficiency.
Business flowing through the encompass workflow most significantly reflected in the non agency revenue line is.
Generally pre funded and de risked from policy lifetime values, and therefore should be considered as cash revenue.
Non agency revenue has increased by over 161% year over year from $12 9 million in Q3, 2022 to $33 5 million in Q3 2023.
The encompass model generate more predictable in period cash revenue and cash EBITDA.
Consistent with our expectations, we are seeing increased consumer shopping behavior amongst the Medicare consumers seeking our services.
Benefit and health plan changes, such as increasing or decreasing copays, mainly drugs on and off formulary regional shifts and provider networks and expansion or contraction of service areas resulted in shopping.
In addition material shifts and the centers for Medicare and Medicaid services, Medicare advantage star ratings, good or bad generate more shopping.
CMS recently announced 2020 for Medicare advantage Star ratings and amongst the top 15 health plans by enrollment about half improved our had stable ratings year over year, while the other half the other ratings decline.
When environmental factors aligned with the ever changing personal circumstances of the Medicare consumer it's no surprise that there is increased sharply.
We believe <unk> health has been ahead of the curve in terms of identifying shopping behavior and building tools that support it.
Our investment in technology is an important differentiation for <unk> and our consumers.
Our proprietary plant that tool utilizes a machine learning algorithm built on data from approximately $28 million consumer interactions over multiple years, plus star ratings and go help independently observed retention characteristics are.
Our planned bit tool helps our agents quickly select a recommended plan based on the consumers' individual needs to drive a more likely match for both immediate and short term consumer priorities.
Last quarter, we spoke about our new plant that checkup offering designed to create a personalized pressure free high quality shopping experience.
With that consumer needs to be at a plant that checkup, regardless of whether they had been in <unk> call. It for years or a first time caller.
We've seen three consumer outcomes for plant at checkout.
And the first outcome, we recommend a new plan to help them save money increased benefits or better cover their new needs and we enrolled.
And the second outcome, we make a recommendation, but the consumer chooses to stay in their current plan.
And the third outcome, we find that the consumer is in the best plan for their current needs and reassure that no new enrollment takes place.
<unk> agents, who complete the plant that checkup are compensated regardless of whether the assessment to result in an enrollment.
If after our plants a checkup our agent informed the consumer they are already on the right plan to suit their personalized needs and no new enrollment takes place we compensate our agent for investing their time to build trust with Medicare consumer.
In Q3 during our controlled launch we completed almost 5000 planned pit checkups and are proud to be doing what is needed in the industry building trusted long term relationships with consumers.
We expect the number of completed plant that checkups to increase overtime as the program is now deployed across our entire go help agent base.
Our agents are responding positively to plant the checkups as we further align agent interest with consumers and continue to build long term trusted relationships with consumers by putting them at the center of all we do.
Our standardized encompass model direct our focus to the lifetime value of a consumer and their relationship with <unk> health as opposed to the lifetime value of a transactional policy at a given point in time.
In addition, we are excited to share that we have made significant progress in both our unified agent experience and customer 360 technology initiatives, and we will share more over the coming quarters.
Both are aimed at driving improved efficiency for our agents, while also preparing us to succeed in a future where consumers are empowered to enroll in and manage their Medicare on their own terms with a telefonica <unk> digitally or some combination of the two.
Building off the foundation of our robust dataset within customer 360, we have invested a significant amount of time into understanding in testing our learning of the Medicare consumer.
Based on the work we have been doing in earnest over the last year. We've found there are very specific segments of the population that find value in the way, we have historically gone to market and the value proposition we have provided.
We have also learned there are larger segments of the market. They are looking for personalization not only in the benefit and plan matching process, but also in how they interact with us and our proprietary technology.
Based on this insight we have begun efforts to adapt our engagement model to meet more consumers wherever they are most comfortable to ultimately deliver them peace of mind and their Medicare coverage decision.
Our unique end to end solution is strategically designed to prioritize planned satisfaction and long term retention, ensuring the most favorable outcome for Medicare consumers, while aligning with the objectives of our health plan partners, who share our vision and values.
To that end the U S Senate Finance committee, along with other consortium of legislators have met and commented on Medicare advantage marketing practices and enrolment tested.
And we are pleased that they are focused on the same core topic, we are protecting Medicare consumers and ensuring an unbiased personalized shopping experience.
In addition earlier this week CMS issued the calendar year 2025 proposed rule for Medicare advantage and part D.
Those early and additional clarification and definition will be necessary to draw any conclusions on the implication is.
Important to highlight kickbacks and bolthouse operating model.
First in our model centered on the encompass workflow our licensed agents are compensated for quality plant that checkup, regardless of whether new enrollment takes place.
Second information on our commercial arrangements with health plans are not shared with our license frontline agents.
Third our licensed agents do not get compensated differently based on which health plan or product they recommend for the consumer.
Finally, as part of the encompass workflow after our unbiased tier two shopping agent recommends a plan.
Tier three agent reviews, the recommendation again with the consumer discusses the tradeoffs and reconfirmed. It is the right choice for them before they ultimately complete the application.
We are confident with this process, we can ensure through our technology training compensation model and real time quality assurance and our focus is doing what's right for the consumer.
As we embark on the next phase of our growth journey I take great Pride in the fact that go health, it's serving a large and important group of consumers by helping them navigate a challenging healthcare decision harnessing the potential of our advanced technology tools for a better experience and delivering strong financials.
I'll now I'll turn it over to Jason to discuss our financials in more detail.
Thanks, Vijay I am pleased to discuss our Q3 2023 financial results. Our Q3 performance met our expectations with revenue growth and improved profitability compared to Q3 of last year.
As a reminder, we fully exited the non encompass PPO services business in Q2 of this year.
Beginning this quarter all revenues related to our core business.
Our third quarter revenue was $132 million demonstrate.
Demonstrating growth compared to $118 3 million when excluding look back adjustments and non encompass PPO services in the third quarter of last year.
We are pleased with this growth, which was driven by over 161000 submissions, representing a 31% increase year over year.
Third quarter, adjusted EBITDA improved nearly 20% year over year with negative $11 5 million as compared to negative $14 3 million in Q3 2022.
In Q3, we generated $6 $5 million in cash flow from operations with approximately $72 million received in October shortly after the quarter ended as a few of our health plan partners, where slower processing invoices, which were expected in Q3.
Adjusting for the timing our Q3 cash flow from operations would have been approximately $79 million for the quarter.
We remain on track for our full year's expected cash flow from operations of $75 million to $115 million.
As illustrated in our quarterly results presentation, our trailing 12 month cash flow from operations as of Q3 2023 is a negative $3 2 million.
However, adjusting for the $72 million payment timing, our trailing 12 months would have been approximately $69 million.
Consistent with our performance in the first half of year, we continue to see strong momentum with our unit economics.
Our unwavering commitment to driving high quality enrollment and leveraging our proprietary tools and technology has yielded a remarkable operational efficiencies.
As discussed in prior quarters, beginning in Q1 of 2023, we've been booking at higher constraint on our agency revenue as compared to 2022.
This was primarily due to our expectation that shopping will continue to increase.
This changing constraint is a significant contributor to the year over year decline of 15% in sales per submission.
We are pleased by the efficiency improvement came through our encompass model.
In Q3, our cost per submission improved 14% year over year. This.
This rate of improvement is lower than previous quarters. As Q3 2022 already include some of the efficiencies gained by the actions we took to restructure the business.
It's also important to remember that Q3 is the least efficient quarter of the year with lower volumes and investments made in advance of AEP.
These investments include testing marketing strategy, introducing technology enhancements and the ramping up of new agents.
Given our in line third quarter results, we are maintaining our full year guidance.
We expect total net revenue, excluding non encompass BPL services between $800 million.
$850 million.
Our expected adjusted EBITDA range, excluding non incumbent CTO services is $120 million to $140 million.
And as I previously mentioned, we expect cash flow from operations of $75 million $250 million for the year.
Our reaffirmation of guidance is a testament to our extensive preparation strong performance and confidence in the future.
Our expectations for total revenue adjusted EBITDA and cash flow from operations reflects our dedication to sustained growth and the delivery of value to our shareholders.
The ship to our encompass model, increasing non agency revenue and driving further operational efficiencies fuels, our enthusiasm for quarters ahead, and we eagerly anticipate building on this momentum.
I'll now turn it over to BJ for closing remarks.
Thank you Jason as you wrap up this quarterly results call I want to underscore some key takeaways.
We are harnessing technology to empower our agents and offer our consumers pressure free shopping experience through our personalized plan fit checkups.
As we navigate the current annual enrollment period, our investments in technology commitment to efficiency and focus on long term retention all set us on a promising path.
Finally, I want to thank our dedicated team for their hard work. During this transformative time, our shareholders for their continued trust and support and our consumers for the opportunity to serve and provide peace of mind in their healthcare decision. We look forward to the exciting journey ahead and opportunities it brings to enhance the lives of Medicare consumers, while driving value.
<unk> growth will go home operator, we're now ready to open the floor for questions.
Thank you if you'd like to ask a question. Please press star one one if your question has been answered and you'd like to remove yourself from the queue. Please press star one again, one moment, while we compile the Q&A roster.
Okay.
Okay.
Okay.
Thank you. Our first question comes from Sandeep, So Soria with Delaware Street Capital. Your line is open.
Alright, Hey, J&J. So can you guys hear me okay.
Can you guys hear me okay.
Yes, we can hear you.
Okay.
Right.
My first question is can you guys discuss your debt maturities and your strategy around managing that over the next one to three years that I have a couple of other follow ups.
Sir please standby.
Your call will resume momentarily.
Yeah.
Sorry about that our line got cut off there and we just came back through if you wouldn't mind repeating the question I appreciate it.
Sure can you guys hear me now.
Thank you.
Okay, great great.
I have a couple of questions. The first is.
Can you discuss your debt maturities and your strategy around managing that over the next one to three years.
Yes. This is Jason happy to and thanks for the question. So yeah. Our term debt comes due in September 2025, and our revolver in September of 2024. Our plan is in early 2020 or to go ahead and refinance both of those.
And.
Part of that improve our overall interest rate as well.
Okay, Great and then.
I tried to keep my questions at some reasonable order, but they're a little all over the place so sorry, but when you think about general revenue.
Basically of two buckets and I appreciate your.
Our comments on the call you have the.
Agency, Our commission revenue, where some percentage is collected upfront and some over time and then you have the non agency.
Call. It non commission revenue, which is collected closer to <unk>.
Proximity of recognition is that the right way to think about that.
Or am I missing something.
No I think youre thinking about that correctly.
And the partner marketing and other services does that which bucket does that fall into.
David Moore Similarly resemble the non agency from a cash collection standpoint.
Okay got it and then within that context.
How do I think about.
Both of those buckets kind of growing over time and I know the business has been transitioning to kind of on campus and then some non commission revenue as well.
I'm trying to think and maybe the answer is look like longer term, maybe the business stabilizes and these revenue buckets for the mix over the next 12 to 18 months, but <unk>.
Longer term, how do I, how should I think about growth of each one of those revenue line items.
Yes, I think let's talk about kind of this sorry, needless Vijay as you.
Think about it what I would say is youre going to see more of a shift on a percentage basis towards the non agency <unk>.
As you see non agency shift over Youll see those marketing dollars in that line shrink.
As a percentage of the total distribution because that's more linked to our agency line, though as Jason Jason said it has the same cash dynamics of non agency, but linked to agency <unk> Agency go down as a percentage of total sales volume you will see that shift take place, but as we said earlier this.
Year, and we continue to operate where we're going to have more and more of our total operating workflow moved through the encompass platform and you'll have more of a shift towards that non agency line overtime.
Got it okay. Thanks, and then.
So just so I understand that when I think about third quarter cash flow. There was a 120 over $120 million improvement on a trailing 12 month basis.
Is that the right takeaway.
Yes.
Correct.
And then when you adjust for the health plan partner.
Payments.
<unk> it was closer to $200 million is that the right way to think about it.
All right. So on a reported basis, you've got it exactly right and then what we had was $72 million that came in in October that was expected in September.
So, yes, youre thinking about it exactly are you would make that additive to the 120.
Got it and.
First of all congratulations that's not an easy swing and improving cash flow over a 12 month period, that's very impressive, especially given your revenue base. So congratulations for that I don't want that to go unnoticed.
When you guys think about guidance, though property and cash flow of $75 million to $115 million. How do we think about the sustainability of that cash over the next few years.
And then can you also tie that the second part of the question is how do we think about capex over the next few years as well.
Yes, I think I think what we're seeing is that barring any really interesting advanced investments that you'd see in the within any given year, you're going to see some consistently stabilization and growth of that operating cash flow.
Pretty confident about that as we think about our growth rate is even kind of just look at the overall market growth.
Percent to 8% that's if everything just grew in line and we only grew in line with the marketplace.
We had in our prepared comments I described the fact that we've done a lot of work in our segmentation to identify there are a whole bunch of populations out there whose needs aren't being mapped out how the shop in shop effectively.
Im biased resource and so we are investing and building tools to address that marketplace and bring additional opportunities for growth on top of what the market is.
In total and so as you think about that and you think about my previous comments about more shift towards non agency versus agency you can see that we expect this to be stable and growing as time goes on.
And then capex.
Sorry on the Capex side, as we alluded to in our prepared comments.
And we have spoken about it over the course of the last year, we're making more and more investments in technology as time goes on.
As it relates to those that segmentation work. We have found there is a lot about our technology and tools that we wanted to answer each of those different populations in a unique way.
I wouldn't be surprised if you saw some step function adjustments in how we think about capex over time, but there will always be very pointed at driving near term growth.
Got it.
So should I think about it as a percentage of revenue or should I think about the currency.
At the end of this year, the capex level should grow in line with <unk>.
Market growth our revenue growth.
I think.
Look at what we spent this year and then put some incremental growth on that versus tying it directly to a revenue number.
Okay, great. Thanks, I'll get back in the queue, sorry about that thank you great. Thank you.
Thank you. Our next question comes from Jim Sidoti with Sidoti <unk> Company. Your line is open.
Hi, good morning, and thanks for taking the question.
First of all Im sorry, if I missed it but did you breakout.
The revenue spread agency versus non agency.
Yes, it's in our reported numbers.
Can give you those but yes, we do break it out other than specific lineup.
A line item for non agency and agency and for the quarter, Jason you want to give them, yes. So for the quarter. We had a total revenue of $131 million and the agency was $97 million.
Eight of that total.
Alright.
Yes.
Big picture view, it seems like you've done a lot.
Since you've been there to right size the business improved software.
To kind of make these improvements are there are there any near term initiatives.
That you need to complete.
To continue to make progress.
Now, it's a matter of just.
Increase in volume.
Yes, I think it's a great question, Jim and I. Appreciate you asking it there is a lot of opportunity as I said about addressing new populations. So if we wanted to just address the same population that we've been very good and efficient at addressing thus far theres not a lot of enhancement necessary to do that and as.
You think about our preparedness for this AEP.
Everything we wanted to deliver we did deliver for that purpose and are rolling forward with it.
At Florida at other opportunities.
Will.
We alluded to <unk> question earlier make strategic investments in our technology and other elements to be able to address our future growth.
<unk> growth opportunities for the company.
So hopefully.
Hopefully thats responsive to your question, but yes, I think there are going to be enhancements, but not for the current core population, we target, but as we expand that serviceable market, we will absolutely be banking mortgage and investment.
Alright.
No.
The recent some of the new regulations on Medicare plans, but.
Initial thoughts do you think thats, good bad or neutral to two prospects for <unk>.
So health.
No I appreciate the question and as we look at it first and foremost I think what we are absolutely excited about as I said earlier is that we are fully aligned with all efforts and initiatives by any related parties government or otherwise to help support protecting.
The Medicare consumer and enabling them to make a good personalized unbiased decision as we're very supportive of that and never we also do recognize that there is opportunity within the industry to eliminate bad actors and make sure that those behaviors are regularly.
That said not everybody in the industry as a bad actor and a lot of parties like ourselves are focused on doing the right thing and still today over 70% of all Medicare advantage enrollment is supported by independent brokers in some way shape or form and so we absolutely want to make sure that we're supporting all of that work.
That we have regulations that are put in place to enable those who are doing the right things to continue doing the right thing.
Theres consistent enforcement of those things.
And as we think about that there is no doubt that.
When we when we look at the incentives across the industry, we want to align all incentives with that of the consumer and their wellbeing.
And what we're excited about is the things we've already proactively done this year before any conversations about a number of these items that are addressed in the current proposed rules. We have already gotten ahead of including compensating. Our agents were just doing the right thing.
And making sure that there is no.
Tom on the scale per se about selecting different health plans.
So one thing is for sure as we think about all of those key underlying factors.
There is a lot of details still left to be said about the specific regulations.
We don't know how they'll be interpreted we know that as interpretations and definitions will be clarified over time as they always are year over year, and we're confident that the regulators in parties like ourselves will all come to the right conclusions about where we need to end up but it is very early.
The interpretation and discussion of those regulations.
Alright, thank you.
Thank you. Our next question comes from Greg <unk> with Noble capital. Your line is open.
Good morning, everybody. Thanks for taking my call I really appreciate it nice quarter in advance of.
Flurry of activity expected in Q4.
Question about.
Pricing changes.
In terms that we expect the consumer to pay more regardless of what they do because prices in part D. I think it's going up to some extent.
But fortunately therefore choices appears going forward as well, which helps you in terms of getting more shopping the eyeballs.
The question I have is.
Increased pricing affect your commission rates.
As a second part to my question.
You referenced constraints, how much do the constraints put a break on your revenue recognition.
And will that change over time.
Yes, let me.
Great. Let me hit your first question and then I'll, let Jason address the constraint item.
As it relates to pricing given most of the population that seeks our services.
We are targeting zero premium products in the Medicare advantage space, it's less about the pricing of the product specifically, it's more about their own challenges with their own pocket books right the availability of capital devoted disposable capital.
And what they are willing and able to spend on co pays and other things along the way and it is important to have a mechanism.
For using advanced proprietary technology to be able to enable a licensed agent to take that information understand the beginning needs of the consumer and then put them through the different trade offs, what different benefits are available for what they are able to pay for their coverage.
It very specifically aligned to what they need and we will likely need in India.
In the coming future for those benefits. So I think thats, a really important piece of the puzzle is just ensuring that we're cognizant of the fact that.
The via free and available cash for the consumer is getting compressed or challenged at that time and it's important for us to be able to factor that into the analysis of what plan and product we make available to them.
And as carriers introduce more and more plans every year. It is more important for them to do that checkout. So that we can help them with that if there is.
There are some better ways to maybe even support their income and their needs as opposed to what they had previously selected.
Is that responsive to your question on pricing in the sensitivity within the market that we serve.
Yes. Thank you I appreciate that and indeed, even if you're a premium though there's probably going to be a bump off for some consumers I don't think anybody pay a whole lot less does that have any change or impact on your commission that you generate per submission side.
Okay.
Sorry, I did miss that in my first response, so I appreciate you, bringing it back up no.
The net impact of changing our plan types et cetera that does not change the general reimbursement structures. The benefit design is independent of how we're compensated.
Okay. Thank you very much and then about the constraints issue. Thank you yeah no happy to so this is Jason there is a couple of components here I think they are worthwhile to talk about.
Number one.
We have actuarial models that go ahead and produce our LTV.
And related to that there are various assumptions are built into it on top of that.
That.
Appropriate balance in our estimation.
The appropriate conservatism there. The second thing is we have constraints based on both our internal and our external channels.
Those numbers those are individual constraints that are different for each component.
The short answer get to how to think about this is if you look at our prepared presentation on our Investor Relations site.
You look at Q3, we have about a 15% rps decline year over year and as I mentioned in our prepared remarks.
The large component of that decline is related to the changing constraint on a year over year and so.
10% would be.
Overstatement of the constraint, but it's within that.
Of that range.
Oh, great. That's a great answer. Thank you I appreciate it Andy just a quick follow up with you. So I understand this correctly will this constraint number change if it's based on actuarial or considerations I would assume it would but tell me if I'm wrong.
We have that leeway.
Every quarter we.
Would only change things, if we see something materially differ.
And the actual performance in the quarters that are most relevant or.
Coming out of AEP and then.
So OSP as of Q4 and Q1.
Yes, I think it's I think it's important to highlight and that process that as we assess those ltvs and the constrained part of it is what youre seeing in the actual data retrospectively and also the application of management discretion of understanding what we're anticipating to comp.
And those are not going to be seen in the numbers, yet and part of it with constrained is trying to see that right before the data is telling you that so for instance, all our references to increased shopping behaviors et cetera are more.
Are they apply the math more through the constraint of.
Prospective expectations as opposed to what Youre seeing in the actual data itself.
Terrific. Thank you for the explanation I really appreciate it.
Thanks, Greg.
Thank you. Our next question is a follow up from Sandeep <unk> with Delaware Street Capital. Your line is open.
Hi, Thanks.
We would ask another follow up question.
So can you talk about your comments about the plan fit Checkups you said you did.
I think you said you did 5000 I lost track of that and the different and the breakdown of the potential responses can you just go over that and then Mike.
Question was what is the what are you guys find.
Is the outcome is the proportion of the different outcomes and it usually a third a third a third between the three or do you find that the majority of time one of the outcomes is what happens.
No I love that you brought it up because we really plan to proud of what the plan fit checkup is doing for consumers.
The the way.
The highlight is the plan to checkup is a systematic technology driven standard a uniform experience for the consumer. So we have live agents that will ask key questions of the consumer that'll be fed into the plant fit tool.
Demographically, where they live what are their eligibility status at which we are verifying and integrated into the tool then we apply there the physicians are clinicians they utilize the drugs there are prescription medications that they're using a need and then their prioritization of other key benefits via debt provision, Harry OTC or otherwise.
And then through that process, then we will assess that against their current plans as well and we will present to the consumer whether that plan there on.
According to our proprietary algorithms is a better rated plan versus those that are otherwise available or they're eligible for in the marketplace and again, our scoring also takes into account the quality scores <unk> scores and some of our own proprietary information on retention year over year, and then and as you alluded to there are three likely outcomes that use.
One is we find out that they are on the best plan right and there is nothing to be done and we recommend that to them.
And I'll talk to you about what our agency are compensated island secondarily, but they are on the best plan already Theres nothing can be done we tell them that daily with peace of mind and we do nothing we just didn't call. It again next time when you are ready to do a plan to check up again.
<unk> benefits change or circumstances change the second scenario is we make.
Well I'd say the second bucket is really going to be broken out into two other outcomes. One is we find that.
They are not on the right the best plan available in the marketplace and we present them. Some alternative plans that are better for them.
And then the consumer May just say you know what I see the difference is not significant enough where I just feel more comfortable staying with my current plan. We say okay. Great. That's your personal choice, we completed support that if you ever want to.
Reconsider that or thinking about other options you call us back and we're happy to help you and again no enrollment would take place in that circumstance and then finally, if in that scenario, where again, we presented all the different plan. The plan. There on is it rated as one of the top plans available. According to our outgrowth algorithm and then our Asia presents one of those other plants.
I'd Love for you to help me enrolled that plan when that happens. We then transfer to our tier three our resolve agent and those agents then re verify that its the right choice for them. According to all of that same scoring methodology and then they take that application. So as you think about the distribution between that.
Again, we did 5000 plan to checkups and B. It is I'm sorry in Q3, and we're early in AEP. So I don't really have great stats provides suggest at this time, but I would say that.
The key is getting the consumer to get through the entire process because it's not always about the distribution of in each one of those.
Dispositions, it's more important that we provided a high quality experience and planted seeds or really kind of helped develop the relationship with consumer. So we're building that long term relationship with Dow.
So I think that's a big piece of how we think about distribution, but what I will tell you in all three of those scenarios when a good plant that checked off takes place regardless of what the.
The disposition is our agent is getting paid they earn money in all three of those dispositions because they did their job they build trust with the consumer and I think that's the most important piece of the bundle as well.
Can I follow up on that in terms of Asia payment. So does that mean, they get like a base salary and then and then how do we think about bonus productivity is that like like walk me through when you say that they are paid regardless and they can maintain their independence walk me through how to think about that from a kind of a base pay and a bonus that's driven by productivity basis.
Yes, that's a very good question, we haven't given all the specific particulars of our compensation is all I'll kind of give you directionally.
Arkansas, our agents are generally paid on an hourly basis.
And then they are given different quality and variable.
Variable quality and production components to them other compensation and so based upon the volume of good plan fit checkups. They do they will be compensated each time, they do a good plan to checkout.
And so that is you should think about there.
A material portion of their compensation, which is hourly and then there is.
A decent component of their kind of their compensation is variable tied to quality metrics, but when you think about the good plant, but checkup, that's not in the hourly wage that is incrementally compensated on a variable basis when they complete each one of those.
Great. Thank you I appreciate it.
Thanks, Nick.
Thank you there are no further questions at this time I'd like to turn the call over to Vijay Kotte for closing remarks.
Thank you Michelle.
Progress in our transformation our team is optimistic about the future and our commitment to excellence continues to be the cornerstone of our endeavors.
We look forward to connecting with you at upcoming conferences and speaking opportunities and until then thank you for your continued support.
Thank you for your participation. This does conclude the program you may now disconnect everyone have a great day.
Okay.
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