Q1 2024 GoHealth Inc Earnings Call

May 9, 2024

Operator: Good morning, and welcome to GoHealth's first quarter 2024 earnings conference call. My name is Victor, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode.

Good morning, and welcome to go Health's first quarter 2024 earnings Conference call.

Victor: My name is Victor 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. As a reminder, this conference is being recorded.

Operator: Following the prepared remarks, we will conduct a question and answer session. As a reminder, this conference is being recorded. I will now turn the call over to John Shave, Vice President of Investment Relations. John, you may begin. Thank you and good morning.

John: I'll turn the call over to John Reshaped Vice President of Investor Relations, John You May begin.

John Shave: Welcome to GoHealth's first quarter 2024 earnings call. Joining me today are Vijay Kotte, Chief Executive Officer, and Jason Schulz, Chief Financial Officer. Today's conference call contains forward-looking statements based on our current expectations. However, numerous known and unknown risks and uncertainties may cause actual results to differ materially from those anticipated or projected in these statements.

Speaker Change: Thank you and good morning, welcome to go Health's first quarter 2024 earnings call. Joining me today are Vijay Kotte, Chief Executive Officer, and Jason <unk>, Chief Financial Officer.

Speaker Change: Today's conference call contains forward looking statements based on our current expectations numerous known and unknown risks and uncertainties may cause actual results to differ materially from those anticipated or projected in these statements.

John Shave: Many of the factors that could determine future results are beyond the company's ability to control or predict. You should not place any undue reliance on 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 first quarter results for 2020. We have posted the release on the GoHealth website under the Investor Relations tab.

Speaker Change: Many of the factors that will determine future results are beyond the company's ability to control or predict.

John Shave: In the press release, we have listed a number of risk factors that you should consider in conjunction with our forward-looking statement. We encourage you to consider the other risk factors described in our annual report on Form 10-K 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.

Speaker Change: You should not place any undue reliance on 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.

Speaker Change: Earlier today, we issued a press release containing our first quarter results of 2024, we have posted the release on <unk> website under the Investor Relations tab.

Speaker Change: 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 annual report on Form 10-K filed with the Securities and Exchange Commission for additional information.

Speaker Change: 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 a reconciliation are set forth in the press release.

John Shave: You may also refer to the investor presentation posted in the investor relations section of our website for reconciliations of non-GAAP measures to the most comparable GAAP measures discussed on this earnings call. I will now turn the call over to Gohealth CEO Vijay Kotte. Thank you, John, and good morning, everyone.

Speaker Change: You May also refer to the Investor presentation posted to the Investor Relations section of our website for reconciliations of non-GAAP measures to the most comparable GAAP measures discussed this earnings call.

Speaker Change: I'll now turn the call over to go help CEO Vijay Kotte.

Vijay Kumar Kotte: Thank you John and good morning, everyone.

Vijay Kumar Kotte: I'm excited to share our first quarter results with you today. Our performance during Q1's open enrollment period exceeded our expectations for submissions, revenue, and adjusted EBIT. Notably, our internal captive channel grew submission volume by 20% year-over-year.

Vijay Kumar Kotte: Im excited to share our first quarter results with you today.

Vijay Kumar Kotte: Our performance during Q1 open enrollment period exceeded our expectations for submission revenue and adjusted EBITDA.

Vijay Kumar Kotte: Notably our internal captive channel grew submission volume by 20% year over year.

Vijay Kumar Kotte: In response to the challenging market dynamics observed during the annual enrollment period, we enhanced our targeted marketing efforts and successfully identified consumers in need of new plan options. I'm proud of our team's resilience and adaptability as they navigated these conditions, resulting in better than expected performance while maintaining the integrity of the Encompass workflow, and, more importantly, being great at doing good. We at Gohealth provide support and clarity to Medicare consumers in a landscape marked by confusion and uncertainty.

In response to the challenging market dynamics observed during the annual enrollment period, we enhanced our targeted marketing efforts and successfully identify consumers in need of new plant option.

Vijay Kumar Kotte: I am proud of our team's resilience and adaptability.

Vijay Kumar Kotte: They navigated these conditions, resulting in better than expected performance, while maintaining the integrity of the incumbents workflow and more importantly, being great at doing good.

Vijay Kumar Kotte: We had good health provides support and clarity to Medicare consumers in a landscape marked by confusion and uncertainty.

Vijay Kumar Kotte: Over 65 million people in the United States are eligible for Medicare, and about half of them are on Medicare Advantage. One-third of Medicare consumers live in a county with more than 50 plans available to choose from. Navigating these options can be confusing and stressful. As a result, not enough consumers are shopping as they don't know who to trust or where to begin.

Vijay Kumar Kotte: Over 65 million people in the United States are eligible for Medicare and about half of them are in Medicare advantage plan.

Vijay Kumar Kotte: One third of Medicare consumers living a county with more than 50 plans available to choose from <unk>.

Vijay Kumar Kotte: Now the getting these options can be confusing and stressful.

Vijay Kumar Kotte: As a result, not enough consumers are shopping and they don't know who to trust or where to begin.

Vijay Kumar Kotte: We believe GoHealth is the best resource to empower them to make this important and personal decision via our proprietary and objective tools, training, and incentive structure. In the first quarter of 2024, our dedicated team empowered nearly 600,000 consumers to navigate their Medicare options. We are enhancing the consumer decision-making process, utilizing the plan-fit check-up via our proprietary Encompass. Along with supporting over 215,000 new enrollments in Q1, we also provided peace of mind to over 94,000 consumers confirming that their current plan is best for their needs.

Vijay Kumar Kotte: We believe <unk> is the best resource to empower them to make this important and personal decision via our proprietary and objected tools training and incentive structures.

Vijay Kumar Kotte: In the first quarter of 2024 hour dedicated team empowered nearly 600000 consumers to navigate them Medicare option enhancing the consumer decision, making process utilizing the plants, a checkup via our proprietary encompass workflow.

Vijay Kumar Kotte: Along with supporting over 215000, new enrollment in Q1, we also provided peace of mind to over 94000 consumers confirming their current plan is best for their needs.

Vijay Kumar Kotte: We continue our evolution from a traditional Medicare enrollment company to Medicare engagement, focused on building high-quality, long-term relationships with our consumers. This shift emphasizes a more integrated and interactive approach to consumer care, cementing our unique and vital role in the Medicare landscape. In our last earnings call, we highlighted a handful of market factors that could influence our performance in the year. As a reminder, the first is the final rate notice on commissions for 2025. Second, is the final 2025 marketing rule from CMS. Third, is the degree to which there will be health plan product and benefit differentiation between 2024 and 2025. Fourth, is marketing efficiency within this election.

Vijay Kumar Kotte: We continue our evolution from a traditional Medicare enrollment company to Medicare engagement company focused on building high quality long term relationships with our consumer.

Vijay Kumar Kotte: This shift emphasizes a more integrated and interactive approach to consumer care cementing our unique and vital role in the Medicare landscape.

Vijay Kumar Kotte: In our last earnings call, we highlighted a handful of market factors that could influence our performance in the year.

Vijay Kumar Kotte: As a reminder, first is the final rate notice on commissions for the 2025 plan here.

Vijay Kumar Kotte: Second is the final 2025 marketing rule from CMS.

Vijay Kumar Kotte: Third is the degree to which there is health plan product and benefit differentiation between 2024 and 2025.

Fourth is marketing efficiency within this election season.

Vijay Kumar Kotte: And finally, there's the relative health plan competitiveness and the effect on plan mix. As we report our first quarter results, we have updates on the first two of these factors. First, CMS issued the final rate notice, which included a date commission schedule aligned with ours.

Vijay Kumar Kotte: And finally, there is the relative health plan competitiveness and the effect on plan mix.

Vijay Kumar Kotte: As we report our first quarter results, we have updates on the first two of these factors.

Vijay Kumar Kotte: First CMS issued the final rate notice, which included a base commission schedule aligned with our expectations.

Vijay Kumar Kotte: The 2025 final rate notice does increase margin pressure for health plans, which increases the likelihood of benefit disruptions and market exits, especially for non-special needs plans. Some major health plans have confirmed significant upcoming benefit disruptions in their Q1 earnings. These disruptions could lead to increased consumer shopping and switching during the 2024 annual enrollment period, which is a positive dynamic for GoHealth. Additionally, though health plans are facing margin pressure, many are seeking targeted growth in specific markets and products.

Vijay Kumar Kotte: The 2025 final rate notice does increase margin pressure for health plans, which increases the likelihood of benefit disruptions and market exits.

Vijay Kumar Kotte: Specially for non special needs plan.

Vijay Kumar Kotte: Some major health plans have confirmed significant upcoming benefit disruption in their Q1 earnings call.

Vijay Kumar Kotte: These disruptions could lead to increased consumer shopping and switching during the 2024 annual enrollment period, which is a positive dynamic for <unk> business model.

Vijay Kumar Kotte: <unk> health plans are facing margin pressure many are seeking targeted growth in specific markets and products.

Vijay Kumar Kotte: Some health plans have indicated a desire to grow in the special needs population, an audience that Gohealth is differentially able to attract and serve. These strategies and priorities will likely vary by health plan and be very geographic.

Vijay Kumar Kotte: Somehow plants have indicated a desire to grow in the special needs population and audience. They go how this differentially able to attract and serve.

Vijay Kumar Kotte: These strategies and priorities will likely vary by health plan and be very geographically diverse.

Vijay Kumar Kotte: We believe we are ideally positioned to help health plans achieve targeted growth in specific markets and products. Our Encompass workflow facilitates a seamless transition from validating enrollment to onboarding and engaging new plans. We've proven our marketing attracts consumers who should likely shop and who might benefit from a switch, and we can precisely target based on geographies and products. We believe we are the best in the industry at building trust with special needs populations, delivering high-quality plant-based checkups and enrollment at scale. Second, in April, CMS published the final 2025 marketing rules, including addressing independent agent and broker compensation, along with new marketing guidelines.

Vijay Kumar Kotte: We believe we are ideally positioned to help health plans achieved targeted growth in specific markets and products.

Vijay Kumar Kotte: Our encompass workflow facilitate a seamless transition from validating enrollment to onboarding and engaging new plan members.

Vijay Kumar Kotte: We've proven our marketing attract consumers, who should likely shop, and who might benefit from a switch and we can precisely target based on geography and product type.

Vijay Kumar Kotte: We believe we are the best in the industry at building Trust with special needs population delivering high quality plant that checkups and enrollment at scale.

Vijay Kumar Kotte: Second in April CMS published the final 2025, marketing rules, including addressing independent agent and broker compensation, along with new marketing guidelines.

Vijay Kumar Kotte: We continue to review these guidelines and discuss them with health plans for their interpretation. We remain cautiously optimistic that the final rule will have a neutral impact on Gohealth on a direct economic basis, with some modest impact on contract structure and oversight. Our proprietary Encompass contracts and workflow not only differentially support our strong cash performance, but we also believe they provide the appropriate constructs to support full compliance with a final rule with minimal modification. We support CMS for their efforts to restrict and enforce inappropriate practices amongst agents and brokers who place compensation above consumer needs. We also support the restrictions on third-party lead generators that blatantly violate marketing law.

Vijay Kumar Kotte: We continue to review these guidelines and discussed them with health plans for their interpretations.

Vijay Kumar Kotte: We remain cautiously optimistic that the final rule has a neutral impact to go help on a direct economic basis with some modest impact to contract structure and oversight.

Vijay Kumar Kotte: Our.

Vijay Kumar Kotte: <unk> incumbent contracts and workflow not only differentially support our strong cash performance, but we also believe they provide the appropriate construct to support all compliant with a final rule with minimal modification.

Vijay Kumar Kotte: We support CMS for their efforts to restrict and enforce against inappropriate practices amongst agents and brokers, who play compensation above consumer needs. We also support the restrictions on third party lead generators that blatantly violate marketing loss.

Vijay Kumar Kotte: We believe GoHealth has already set a new standard by compensating our agents when reassuring a consumer they're on the right path. As CMS sets higher industry standards, GoHealth is committed to exceeding these standards to deliver best-in-class service to our consumers and health plan partners. We continue to improve our Encompass operating model to enhance efficiency and the consumer experience. Last year, we introduced Planned Fit Checkups, using analytics from nearly 30 million consumer touchpoints and machine learning to help our licensed agents accurately match consumers with the best Medicare plans for them. We believe this tool has improved the shopping experience for Medicare Advantage plans and aligns with the final CMS marketing rules. Importantly, GoHealth agents are compensated even if the assessment does not result in an appointment.

Vijay Kumar Kotte: We believe go health has already set a new standard by compensating our agents when reassuring our consumer there on the rate plan.

Vijay Kumar Kotte: As CMS set higher industry standards go help is committed to exceeding these standards to deliver best in class service to our consumers and health plan partners.

Vijay Kumar Kotte: We continue to improve our encompass operating model to enhance efficiency and the consumer experience last year, we introduced plant that checkup using analytics from nearly $30 million consumer touch points and machine learning to help our licensed agents accurately match consumers with the best Medicare plans for their needs.

Vijay Kumar Kotte: We believe this tool has improved the shopping experience for Medicare advantage plans and aligns with the final CMS marketing role.

Vijay Kumar Kotte: Importantly go health agents are compensated even if the assessment is not result in an enrollment.

Vijay Kumar Kotte: This year, we're focusing on streamlining processes and improving call handling time based on consumer feedback. As part of this effort, we are launching Encompass Express, an enhanced consumer-centric model built on the chassis of our original Encompass work.

Vijay Kumar Kotte: This year, we're focusing on streamlining processes and improving call handle times based on consumer feedback.

Vijay Kumar Kotte: As part of this effort, we are launching encompass express and.

Vijay Kumar Kotte: Encompass express is an enhanced consumer centric model built on the chassis of our original encompass workflow.

Vijay Kumar Kotte: It includes streamlined scripting and handoffs using tech-driven standardization and automation to deliver efficiency and ultimately a better consumer experience while maintaining quality. These changes are anticipated to positively impact our financial results beginning in the second quarter and more substantively this fall during the annual enrollment. Additionally, we are continuing to invest in technology to improve the consumer experience, agent efficiency, and overall quality. Key areas of investment include expanding data and interactive capabilities in Customer 360 – Our Proprietary Consumer Engagement. Improving our plans at checkups to deepen consumer relationships and enhance service quality. And finally, launching and testing a digital-first consumer shopping experience, enabling consumers to start the shopping process online.

Vijay Kumar Kotte: It includes streamline scripting and Handoffs using tech driven standardization and automation to deliver efficiency and ultimately a better consumer experience while maintaining quality.

Vijay Kumar Kotte: These changes are anticipated to positively impact our financial results beginning in the second quarter and more substantively. This fall during the annual enrollment period.

Vijay Kumar Kotte: Additionally, we are continuing to invest in technology to improve consumer experience agent efficiency and overall quality.

Vijay Kumar Kotte: Key areas of investment include expanding data and interactive capabilities and customer 360, our proprietary consumer engagement tool.

Vijay Kumar Kotte: Improving our plant that checkup to deepen consumer relationships and enhanced service quality.

Vijay Kumar Kotte: And finally, launching and testing a digital first consumer shopping experience, enabling consumers to start the shopping process online.

Vijay Kumar Kotte: These investments are part of our long-term shift from a Medicare enrollment company to a Medicare-engaged company. While most of the other market factors I mentioned are more likely to play out in the second half of this video, they are still significant, and thus, we continue to expect the following in terms of our performance in 2024. We expect submission volume to grow in line with the overall Medicare population. Second, we expect our revenue to be flat year over year with incremental operating efficiency, resulting in modest margins. Finally, cash flow from operations is expected to be flat to slightly up as we continue our transition into the Encompass model and shift to non-HVAC.

Vijay Kumar Kotte: These investments are part of our long term shift from Medicare enrollment company to a Medicare engagement company.

Vijay Kumar Kotte: While most of the other market factors I mentioned are more likely to play out in the second half of this year. They are still significant and thus we continue to expect the following in terms of outperformance in 2024.

Vijay Kumar Kotte: First.

Vijay Kumar Kotte: We expect submission volume to grow in line with the overall Medicare market.

Vijay Kumar Kotte: Second we expect our revenue to be flat year over year with incremental operating efficiency, resulting in modest margin expansion.

Vijay Kumar Kotte: Finally cash flow from operations is expected to be flat to slightly up as we continue our transition into the encompass model and shift to non agency revenue.

Vijay Kumar Kotte: We are driven by our commitment to transforming the consumer health care journey with continuous innovation and strategic foresight. I'd like to thank our team for their commitment to our values and our shareholders for their ongoing support and dedication to delivering long-term value. With that, I will turn it over to Jason to detail our financials. Thank you, Vijay.

Vijay Kumar Kotte: We are driven by our commitment to transform the consumer health care journey with continuous innovation and strategic foresight.

Vijay Kumar Kotte: I'd like to thank our team for their commitment to our values and our shareholders for their ongoing support and dedication to delivering long term value.

Vijay Kumar Kotte: With that I will turn it over to Jason to detail our financial results.

Jason Schulz: Our 2024 first quarter performance demonstrated the overall improvement and resiliency in our business model. We reported Q1 net revenues of $186 million compared to $183 million in the prior year. Our captive channel, which involves Gohealth's internal sales teams, as opposed to relying on external agents or third-party brokers, experienced robust 20% growth due to a combination of enhanced training and technology, increased marketing efforts, and improved consumer retention strategies. We believe our ability to effectively leverage internal resources to optimize sales and enhance consumer relationships not only supports short-term revenue gains but also positions GoHealth well for the long term. Adjusted EBITDA, excluding non-encompassed BPO services, was $27 million for the quarter, a slight decrease from the same period of the prior year.

Jason: Thank you Vijay our 2024 first quarter performance demonstrated the overall improvement and resiliency in our business model.

Jason: We reported Q1 net revenues of $186 million compared.

Jason: Compared to $183 million in the prior year.

Jason: Our captive channels, which involves co health internal sales teams as opposed to relying on external agents or third party brokers experienced robust 20% growth due to a combination of enhanced training and technology increased marketing efforts and improved consumer retention strategies, we believe our ability to effectively leverage.

Jason: <unk> internal resources to optimize sales enhanced consumer relationships not only supports short term revenue gains, but also positions <unk> well for sustainable long term growth.

Jason: Adjusted EBITDA, excluding non encompass PPO services was $27 million for the quarter a slight decrease from the same period of the prior year. We are pleased with our strong unit economics performance for the quarter adjusted gross margin per submission increased by 7% year over year due to an 8% improvement to sales for submission.

Jason Schulz: We are pleased with our strong economic performance for the quarter. Adjusted gross margin per submission increased by 7% year-over-year due to an 8% improvement in sales per submission, partially offset by a higher cost per submission. She won 2024 cash from operations was $12.5 million, compared to $20.5 million in the same quarter last year. This includes a $10.5 million payment to settle a shareholder lawsuit related to the company's 2020 initial public offering. Excluding this one-time item, cash flow from operations for the quarter would have been $23 million.

Jason: Partially offset with a higher cost per submission.

Jason: Q1, 2020 forecast from whom operations was $12 5 million compared to $25 million in the same quarter last year. This includes a $10 $5 million payment to settle a shareholder lawsuit related to the company's 2020 initial public offering.

Jason: Excluding this onetime item cash flow from operations for the quarter would have been $23 million.

Jason: We continue to see dependable cash flow trends, reflecting our ongoing focus on cash management and operating efficiency.

Jason Schulz: We continue to see dependable cash flow trends, reflecting our ongoing focus on cash management and operating efficiency. As illustrated in our quarterly results presentation, our totaling 12-month cash flow from operations as of March 31, 2024 was $101 million, an improvement of $74 million versus the trailing 12 months ended March 31, 2023. In Q1, we generated a robust $70 million of cash-adjusted EBITDA compared to $78 million in the prior year period. We believe that cash-adjusted EBITDA is a helpful measure of our business as it neutralizes the impact of the LTV estimates related to the future year. As a reminder, cash adjusted EBITDA is simply taking our reported adjusted EBITDA plus the year-over-year change in our net contract assets.

Jason: As illustrated in our quarterly results presentation, our trailing 12 month cash flow from operations as of March 31, 2024 was $101 million.

Jason: An improvement of $74 million versus the trailing 12 months ended March 31 2023.

Jason: In Q1, we generated a robust $70 million of cash adjusted EBITDA compared to $78 million in the prior year period. We believe the cash adjusted EBITDA is a helpful measure of our business as it neutralizes the impact of the LTV estimates related to the future years.

Jason: As a reminder, tax adjusted EBITDA is simply taking our reported adjusted EBITDA plus the year over year change in our net contract assets as the net contract asset has decreased this was a result of higher cash collections from the back book and the inverse was true as the net contract asset has increased year over year.

Jason Schulz: And the inverse is true if the net contract asset has increased year over year. As we noted in our year-end filings, in the first quarter of 2024, we successfully negotiated an amendment to our debt agreement, adjusting the leverage ratio requirements for the duration of the loan facility.

Jason: As we noted in our year end filings in the first quarter of 2024, we successfully negotiated an amendment to our debt agreement adjusting those leverage ratio requirements for the duration of the loan facility.

Jason Schulz: We will focus on refinancing our debt over the next few months as we aim to optimize our debt structure. We believe that this amendment provides additional flexibility to support this goal while allowing us to continue investing in the systems for future growth. In conjunction with the amendment, we made a $50 million term loan payment in early April.

Jason: We will focus on refinancing our debt over the next few months as we aim to optimize our debt structure. We believe that this amendment provides additional flexibility to support this goal, while allowing us to continue investing in the business for future growth.

Jason: In conjunction with the amendment, we made a $50 million term loan payment in early April we expect to make an additional $25 million paydown in early Q4 of this year.

Jason Schulz: We expect to make an additional $25 million in pay down in early Q4 of this year. As we navigate the evolving market landscape, we continue to focus on profitability and value. I will now turn the call back to Vijay for closing remarks. Thank you, Jason.

Jason: As we navigate the evolving market landscape, we continue to focus on profitability and value creation.

Jason: I will now turn the call back to BJ for closing remarks.

Vijay Kumar Kotte: We believe our strategic initiatives, particularly the successful implementation of the Encompass workflow, have not only boosted our operational efficiency but also enhanced the service quality provided to Medicare. We are currently in advanced discussions with select health plan partners to roll out plan fit safe compensation. We aim to align our incentives more closely with consumer needs by ensuring they are enrolled in the most suitable plans rather than prioritizing the financial benefits of new policies.

Thank you, Jason we believe our strategic initiatives, particularly the successful implementation of the encompass workflow and not only boosted our operational efficiency, but also enhance the service quality provided to Medicare consumers.

BJ: We are currently in advanced discussions with select health plan partners to rollout the plan fit based compensation initiative.

BJ: Aiming to align our incentives more closely with consumer needs by ensuring they are enrolled in the most suitable plans rather than prioritizing the financial benefits of new policy enforcement.

Vijay Kumar Kotte: Our firm belief is that not only do our plan fit saves align with the overarching priority communicated by health plans to retain members, but this approach also prioritizes long-term consumer satisfaction and, Looking ahead, we are dedicated to using our insights and technology to further enhance the healthcare journey for consumers, empowering them to make well-informed Medicare decisions. We are now ready to take. Thank you, and at this time, as a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

BJ: Our firm belief is that not only do our plan fit saved align with the overarching priority communicated by health plans to retain membership, but this approach also prioritizes long term consumer satisfaction and trust.

BJ: Looking ahead, we are dedicated to using our insights and technology to further enhance them health care journey for consumers empowering them to make well informed Medicare decision.

Speaker Change: We are now ready to take your questions.

Speaker Change: Thank you and at this time as a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again once again Thats star one for questions. Please standby or compile the Q&A.

Speaker Change: Roster.

Operator: Once again, that's star 11 for questions. Please stand by while we compile the Q&A roster. One moment for the first question. Our first question will come from Ben Hendrix from RBC Capital Markets. Your line is open.

Speaker Change: Moment for our first question.

Speaker Change: Yes.

Speaker Change: Our first question will come from the line of Ben Hendrix from RBC capital markets. Your line is open.

Benjamin Hendrix: Thanks guys, and congratulations on the quarter. Just wanted to get some thoughts on the regulatory environment. It seems like, you know, there was some language from CMS and the rules targeting commissions within captive carrier arrangements with brokers. I wanted to just get more details on kind of how you're seeing the detail or the Provisions of the rule thus far and kind of what gives you confidence in that alignment with Encompass. Morning, Ben.

Benjamin Hendrix: Thanks, guys and congratulations on the quarter just wanted to.

Benjamin Hendrix: Get some thoughts on the regulatory environment. It seems like there was some language from CMS in the rules targeting commissions within captive carrier arrangements with brokers I wanted to just get more details on kind of how youre seeing the detail or the.

Benjamin Hendrix: Provisions of their rule, thus far and kind of what gives you confidence in that alignment with encompass.

Vijay Kumar Kotte: Great question. I really appreciate your joining us this morning. As we think about the final rule, and I think there have been a lot of different interpretations out there, but the general underlying concept here is that CMS is very focused on inappropriate incentives for independent agents and brokers, whereby an independent agent or broker may be influenced to write one health plan or policy type over another one based solely on their reimbursement. And uniquely for us, as GoHealth operates, our agents, as you know, are generally hourly wage or salary And even that variable compensation that they do receive is health plan agnostic.

Speaker Change: Good morning, Ben Great question really appreciate you joining this morning.

Speaker Change: As we think about the final rule and I think theres been a lot of different interpretations out there, but the general underlying concept here is that CMS is very focused on inappropriate incentives to independent agents and brokers, whereby a an independent agent or broker may be influenced too right, one health plan or a policy.

Speaker Change: Type over another one based solely on their reimbursement.

Speaker Change: And in uniquely for US as go health operates our agents as you know are generally hourly wage or salary wage and they had a very minimal variable compensation and even that variable compensation that they do receive is health plan agnostic and then on top of that.

Vijay Kumar Kotte: And then on top of that, we go further, as you know, to compensate our agents for not selling or enrolling a consumer in a new policy by just making sure they get peace of mind. So really, the variable tie for us is about providing a service as opposed to delivering a new enrollment. All of that, based upon the way we've interpreted the current rules or the way that was proposed and finalized.

Speaker Change: As we got further as you know to compensate our agents for not selling or enrolling in consumer and a new policy by just making sure. They get peace of mind, So really the variable tie for us is about providing a service as opposed to delivering a new enrollment all of that based upon the way we've interpreted the the.

Speaker Change: Current rules, whether it was proposed and finalized.

Vijay Kumar Kotte: It's consistent with the way the health plans have conversed with us on the topic as well, that is outside the realm of what CMS is targeting, meaning our model is separate and distinct from where they were trying to focus their efforts. In concert with that, though, what we will say is our efforts to go beyond the minimum standards established by the CMS regulations are what we're focused on. It's not about meeting the minimum threshold.

Speaker Change: It's consistent with where the health plan to.

Speaker Change: Converse with us on the topic as well is that that is outside the realm of what CMS is targeting meeting our model is separate and distinct from where they were trying to focus their efforts.

Speaker Change: In concert with that though what we will say is our efforts to go beyond the minimum standards established by the CMS regs.

Speaker Change: Our what we're focused on it's not about meeting the minimum threshold, it's about doing the right thing and being differentially better for consumers and for the health plans that we also partner within the process.

Vijay Kumar Kotte: It's about doing the right thing and being differentially better for consumers and for the health plans that we also partner with in the process. And we're feeling very good about that. And the fact that we really spent a lot of time designing the Encompass structure to be built off a fair market value basis to begin with on how we're reimbursed for the direct services we deliver, and then ensuring that our agents are incentivized to do the right thing.

Speaker Change: We're feeling very good about that and the fact that we really spent a lot of time in designing encompass structure to be built off of fair market value basis to begin with on how we're reimbursed for the direct services, we deliver and then ensuring that our agents are incentivized to do the right thing so.

Vijay Kumar Kotte: So we are cautiously optimistic as to how that's going to play out for us as we continue to advance the model forward to be consumer-centric and focus on engagement going forward. But as we think about where we go in the relationships with the health plans and how we think about the contracts, there are some elements of waivers that were in there before around marketing and admin dollars that we just need to tweak the way we address the way they're described in our contracts. But again, all of our contracts are built on a fair market value basis and ultimately do not influence what our agents sell or don't sell.

Speaker Change: We are cautiously optimistic as to how that's going to play out for us as we continue to advance the model forward to be consumer centric and focusing on engagement going forward.

Speaker Change: But as we think about where we go in the relationships with the with the health plans and how we think about the contract there are some elements.

Speaker Change: Waivers that were in there before around our marketing and admin.

Speaker Change: That we just need to tweak on the way we address adjust the way. They are described in our contract, but again all of our contracts are built on a fair market value basis.

Speaker Change: And ultimately do not influence what our agents sell or don't sell it's the appropriateness of the plan for our consumers on a personal basis that influences that so we're pretty excited about where things landed and we're pretty excited about how we can continue to deliver differential service with our with our model.

Vijay Kumar Kotte: It's the appropriateness of the plan for our consumers on a personal basis that influences that. So we're pretty excited about where things have landed, and we're pretty excited about how we can continue to deliver differentiated service with our model. Thank you.

Benjamin Hendrix: I appreciate that. And if we could move over to kind of positioning for AEP this year, it seems like, you know, the carriers in our coverage, United, are not backing away, targeting margins at the high end of their range. We have CVS and Humana, really an artist focused on margin recovery in 2025, you know, which could include pulling some plans in certain markets and replacing them. It seems like, all in all, a big setup for shopping behavior and, you know, in the fourth quarter.

Speaker Change: Thank you I appreciate that and if we can move over to kind of positioning for AEP. This year. It seems like you know the carriers in our coverage.

Speaker Change: It's not backing away from targeting margins at the high end of the range, we have Cvs and Humana really an artist focused on margin recovery you are getting in 2025.

Speaker Change: Even which could include pulling some plans in certain markets and replacing them. It seems like all in all.

Speaker Change: Big setup for shopping behavior in the fourth quarter as wanted to kind of without all that commentary.

Benjamin Hendrix: I just wanted to kind of, without all that commentary, you know, coming from the carriers, just wanted to get your thoughts on how you're positioning for AEP, and what that could mean from both the volume and also an LTV perspective. Thanks.

Speaker Change: Coming from the carriers just wanted to get your thoughts on how you are positioning for AEP, what that could mean.

Speaker Change: From both the volume and also an LTV perspective. Thanks.

Vijay Kumar Kotte: No, that's a very astute question given all the market dynamics that are out there, Ben. As we look at the market landscape... There are a number of consumers every year who always shop, right?

Speaker Change: No. That's a very astute question given all the market dynamics that are out there Ben as we look at the market landscape.

Speaker Change: We have there are a number of consumers every year, who always shop right Theyre always shopping always see if theres a better deal available the unique element of what's coming this upcoming annual enrollment period is youre going to have shoppers, who need to shop, who haven't previously they've been able to quote unquote Saturday and forget it.

Vijay Kumar Kotte: They're always shopping, always seeing if there's a better deal available. The unique element of what's coming this upcoming annual enrollment is you're gonna have shoppers who need to shop who haven't previously. They've been able to, quote unquote, set it in for. And as we've said in previous calls, we believe more consumers should be shopping every year. And what we expect this AAP is that you will have more of those consumers needing to shop because of the disruption that happened to their status quo benefits, either an exit from their current benefit plan or significant degradation to the benefit values for them that will motivate them to shop.

Speaker Change: And as we've said in previous calls we believe more consumers should be shopping every year and what we expect this AEP that you will have more of those consumers needing to shop because of the disruption that happened to their status quo benefit plan, either an exit of their current benefit plan or a significant degradation to the.

Speaker Change: The benefit values for them that will motivate them to shop, and we believe we're the best destination for that shopping to give them that true personalized assessments to other better alternatives for them and so when you think about shopping we have been pushing and hoping and advocating for more shopping in general we expect.

Vijay Kumar Kotte: And we believe we're the best destination for that shopping to give them that true personalized assessment as to whether there are better alternatives. And so when you think about shopping, we have been pushing and hoping and advocating for more shopping. In general, we expect shopping to increase. More significantly for us, as we've highlighted, we are proving that we have really put our money where our mouth is on ensuring that we're going to do only what's right for So even though shopping has been increasing, the dynamics and the disruption of the benefits also determine the justified volume of switching.

Speaker Change: Shopping to increase more significantly for us as we've highlighted we are proving we have really put our money where our mouth is on ensuring that we're going to do only what's right for the consumer so even though shopping has been increasing the dynamics and the disruption to benefit determines also the justified volume of switching and so we believe base.

Vijay Kumar Kotte: And so we believe, based upon these dynamics that you described with the different health plans, that there will be more of a justified reason for switching, which is a very positive dynamic for GoHealth and our operating model. I think it's also important to note that despite the fact that many health plans are having pain points, as I referred to in my prepared remarks, many of those health plans still want to grow in very targeted areas with different populations, et cetera. And we also bring that added advantage.

Speaker Change: Upon these dynamic that you described with a different health plans that there will be more of a justified reason for switching which is a very positive dynamic for <unk> health and our operating model I think it's also important to note that despite the fact that many health plans are having pain points.

Speaker Change: I referred to in my prepared remarks, many of those health plans still want to grow in very targeted areas with different populations et cetera, and we also bring that added advantage not everybody knows how targeted we can be with our unique marketing capabilities.

Vijay Kumar Kotte: Not everybody knows how targeted we can be with our unique marketing capabilities and what Steve Moffitt, our Chief Marketing Officer, has been able to do with the team to really get down to those unique demographic areas and geographies to be able to identify those pockets who have the greatest disruption. So where we can anticipate disruption using our predictive modeling and our strong XRL teams, we're going in in a laser-focused way with targeted messaging to help really mobilize that shopping and support the necessary switching that will likely be there.

Speaker Change: And what Steve <unk>.

Speaker Change: Our chief market marketing officer had been able to do with the team to really get down to those unique demographic areas and geographies to be able to identify those pockets who have the greatest disruption, so where we can anticipate disruption using our.

Speaker Change: Predictive modeling and our strong actuarial teams were going in in a laser focused way with targeted messaging to help.

Speaker Change: It really mobilized that shopping and support the necessary switching that'll likely be there. So that's generally how we're approaching our preparedness and our planning and the other piece I'll add is I was in the prepared remarks was our new launch of encompass express which is really learn how to be more efficient. So we can do more with less.

Vijay Kumar Kotte: So that's generally how we're approaching our preparedness and our planning. And the other piece I'll add to the prepared remarks was our launch of Encompass Express, which is really learning how to be more efficient so we can do more with less and deliver a better experience. And you started to see some of the learnings that we had in the first quarter where we delivered some strong year-over-year efficiencies on what we're actually doing with our. I appreciate that. Thank you very much.

Speaker Change: And deliver a better experience and you start to see some of the learnings that we had in the first quarter, where we delivered strong year over year efficiencies on what we're actually doing with our agents.

Operator: Thanks, Ben. Thank you. One moment for our next question, and our next question will come from Pat McCann from Noble Capital Markets. Your line is open.

Speaker Change: I appreciate that thank you very much.

Speaker Change: Thanks, Dan.

Speaker Change: Thank you one moment for your next question.

Speaker Change: And our next question will come from the line of Pat Mccann from Noble capital markets. Your line is open.

Patrick Joseph McCann: Good morning, and thanks for taking my questions. Really quickly, my first question will just be to piggyback on the last question. You've talked about how in the most recent AEP that we've come out of, there was low plan switching. It wasn't a big period for plan switching. When we look ahead to the next AEP and have an expectation for increased switching, would you characterize that as more relative to this past AEP?

Patrick Joseph McCann: Good morning, and thanks for taking my questions.

Patrick Joseph McCann: Quickly my first question would just be to piggyback on the last question.

Patrick Joseph McCann: You've talked about how in the in the most recent AEP that we've come out of there was the low plan switching.

Patrick Joseph McCann: And it wasn't.

Patrick Joseph McCann: Big period for plan switching.

Patrick Joseph McCann: When.

Patrick Joseph McCann: When we look ahead to the next AEP and the half and expectation for increased switching is would you characterize that as more relative to.

Patrick Joseph McCann: This past AEP or if you were to go back several years would you say just objectively.

Patrick Joseph McCann: Or if you were to go back several years, would you say just objectively that the upcoming AEP you would expect it to be a significant planned switching period? Does that question, I guess, make sense? No, it does, Pat.

Patrick Joseph McCann: The upcoming AEP, you would expect it to be.

Patrick Joseph McCann: A significant.

Patrick Joseph McCann: Plan switching period does that question I guess it makes sense.

Vijay Kumar Kotte: And it's a very kind of interesting way to think about and ask the question. So I appreciate the way you've asked it. Let me kind of repeat it for you.

Patrick Joseph McCann: It does that and it's a very kind of.

Speaker Change: It's an interesting way to think about and ask the question. So I appreciate the way you've asked it let me kind of replay. It for you I think the question Youre asking is okay. We get debt. This past AEP in Q4 of 23 versus what we are expecting to see in Q4 of 24 that there will likely be higher switching, but how do we think of that on <unk>.

Vijay Kumar Kotte: I think the question you're asking is, okay, we get that this past AEP in Q4 of 23 versus what we are expecting to see in Q4 of 24, that there will likely be higher switching. But how do we think of that on a relative basis compared to yesteryear, when there was a lot of benefit investment, and there was justified switching? Are we going to be more in line with those years? Or are we expecting it to be more? Is that an accurate replay?

Speaker Change: Relative basis compared to yesteryear when there was a lot of benefit investment and there was justified switching are we going to be more in line with those years are we expecting it to be more inaccurate replay.

Patrick Joseph McCann: Yeah, thanks for that, Vijay. That's perfect. Okay, so first, let me just say, we don't know for sure, right? We won't know until we understand the details of what the health plans do in their final bids, which are still in process. We won't know those final benefits officially till October, and so it's going to be really important that it's, It's going to be a changing dynamic for us to really predict.

Speaker Change: Yeah. Thanks for that that's perfect. Okay. So here's how.

Speaker Change: First let me just say, we don't know for sure right. We won't know until we understand the details of what the health plan to do in.

Speaker Change: In their final bids which are still in process. We won't know those final benefits officially till October and so it's going to be really important that.

Speaker Change: It's going to be a changing dynamic for us to really predict but let me tell you. How we think about this I think first and foremost we have to highlight that what motivated and.

Patrick Joseph McCann: But let me tell you how we think about this. I think first and foremost, we have to highlight what motivated us, and we said that on the Q4 call. In typical years, you can have three scenarios, right? You can have somebody plan playing offense to just improve benefits to grab share. And that's what happened in the last few years, putting last year aside a little bit.

Speaker Change: And we said this on the Q4 call in typical Geos are typical years you can have three scenarios right. You can have somebody playing playing offense to just improve benefit to grab share and that's what's happened in the last few years that putting last year's side, a little bit, but just you could talk about the last couple of years, you've been seeing that there is a clear winner in each one of those years.

Vijay Kumar Kotte: But just you can talk about the last couple of years; you've seen that there's a clear winner in each one of those years who've really invested in benefits. You can have a neutral spot where the major health plans really don't invest a lot in benefits. Or you can have a degradation time when they're pulling back on benefits. In the first and last scenario of investing in benefits and degrading benefits, those are high switching environments.

Speaker Change: <unk> really invested in benefits you can have a neutral.

Speaker Change: Spot when the major health plans really don't invest a lot into the benefits or are you can have a degradation time when theyre pulling back on benefits in the first and the last scenario of investing in benefits integrating benefits those are high switching environment.

Vijay Kumar Kotte: Now, what I would say is that, on average, if we were just talking about the same shopping consumers, it would probably be a little bit more similar to when there was high switching justified for offensive reasons over the last few years, maybe going beyond just the last AEP. But what I think is going to be interesting to observe is the disruption to the consumers who historically weren't shopping, right, who maybe selected a plan, became new to Medicare, and haven't looked at it again.

Speaker Change: Now what I would say is that on average if we were just talking about the same shopping consumers it would probably be a little bit more similar to when there is high switching justified for offensive reasons that over the last few years, maybe putting of going beyond just the last AEP, but what I think it was going to be interesting to observe is the disruption to the consumers who historically weren't shopping.

Speaker Change: Every year right, who may be selected the plan, we can new to Medicare and haven't looked at it again, but now because the benefits are not just staying the same or getting better. Some are getting worse are leading the market in total that's going to generate a new shopping population that will be net additive to the shopping and likely switching scenarios. So.

Vijay Kumar Kotte: But now, because the benefits are not just staying the same or getting better, some are getting worse or leaving the market in total, that's going to generate a new shopping population that will be net additive to the shopping and likely switching scenarios. So that's what we're going to want to monitor. So just to be clear on your question, what I would say is the same shopping population year over year will likely have switching dynamics, I would expect, but again, we will have to see the details later this year, more similar to those prior year AEPs that you're describing.

Speaker Change: That's what we're going to want to monitor so just to be clear on your question. What I would say is the same shopping population year over year will likely have switching dynamics I would expect but again, we will have to see the details later this year more similar to those prior year aep's that youre, describing but the real.

Speaker Change: Scenario to focus in on and what we're spending our time on all of those populations, who havent been historical shoppers. We're looking for a trusted resource because there is significant significant negative disruption that they haven't seen in the past and that's where we're really hoping that we can serve more of the population.

Vijay Kumar Kotte: But the real scenario to focus in on and what we're spending our time on are those populations who haven't been traditional shoppers, who are looking for a trusted resource because there's significant negative disruption that they haven't seen in the past. And that's where we're really hoping that we can serve more of the Right. No, that's very helpful.

Patrick Joseph McCann: And then also, you guys mentioned certain developments in the business enhancements you're making, for example, allowing consumers to shop and begin the shopping experience online. Could you just drill down a little more into that as far as what's driving you to make that enhancement and how that would drive demand? And I guess one of the things that crosses my mind is, you know, as we move forward year by year, the 65-year-old population is going to be more and more technologically literate, if you will. You know, as the years progress, so maybe you're just sort of setting yourself up for the long term. But could you just give it a little bit more color there?

Speaker Change: Great No. That's very helpful. And then also you guys mentioned.

Speaker Change: Youll certain developments in the business enhancements youre, making.

Speaker Change: For example, the.

Speaker Change: Bob.

Speaker Change: Allowing consumers to shop became a shopping experience.

Speaker Change: On line could you just drill down a little more into that as far as.

Speaker Change: What's driving you to make that enhancement and how that would drive demand and I guess one of the things that crosses my mind is.

Speaker Change: As we move forward year by year the 65.

Speaker Change: 65, plus population is going to be more and more technologically.

Speaker Change: Literally if you will.

Speaker Change: As the years progress so maybe youre, just sort of setting up for the long term, but could you just give a little bit more color there.

Vijay Kumar Kotte: Sure, Pat. As we think about the digital, direct digital space, that isn't going to go away as an opportunity, but to your point, it's going to be increasing over time. And the real question is, how do you access those populations and provide them with visibility, the self-driven approach to learning and educating themselves, while also providing them with the peace of mind of a good experience and the wraparound with somebody to confirm for you that you're doing the right thing for yourself and not doing harm to your benefit?

Speaker Change: Sure Pat as we think about the digital direct digital space that isn't going to go away as an opportunity but to your point, it's going to be increasing over time and the real question is how do you access those populations and provide them the visibility.

Speaker Change: The self driven approach to learning and educating themselves while also providing them the peace of mind of a good experience in the wraparound with somebody to confirm for you that youre doing the right thing for yourself and not doing harm to your benefit needs and so as we've been pursuing this we spent a lot of time segmenting out the Medicare population.

Vijay Kumar Kotte: And so as we've been pursuing this, we've spent a lot of time segmenting out the Medicare population, listening to consumers, finding out what could augment or bring those who need to shop, as I referred to before, to shop right, enabling them with tools that are not pressurized in a way that gives them the opportunity to educate themselves. And ultimately, where we're focusing our efforts is empowering the consumer how they want to be empowered to make a good Medicare decision.

Listening to consumers finding out what could augment or bring those who need to shop as I referred to before to shop right, enabling them with tools that are not pressurized in a way that gives me the opportunity to educate themselves and ultimately where we're focusing our efforts is empowering the consumer how they want to be empowered to make a good Medicare does.

Vijay Kumar Kotte: And part of that is providing transparency into their options in a very simple, transparent way that can give them the flexibility to get personalized treatment or just know general eligibility for operations. And so we've been continuing to invest in testing those types of tools. And we're going to continue to know that digital isn't going away. Digital will be there, and it will likely start to increase over time. And so we're trying to be responsive to that, and we're excited about what it could be for those consumers who really want to play in that space. Great And if I could just squeeze one more in,

Speaker Change: And part of that is providing transparency into their options in a very simple transparent in a way that can provide them the flexibility to get personalization or just no general eligibility of opportunity and so we've been continuing to invest in testing those types of tools and where we're going.

Speaker Change: Continue to know that digital isn't going to go away digital will be there and it will likely start to increase overtime and so were trying to be responsive to that and we're excited about what it could be for for those consumers, who really want to play in that space.

Speaker Change: Great and if I could just squeeze one more in you.

Patrick Joseph McCann: You mentioned Plan Fit Safe and the conversations you're having with the health plans about compensation arrangements and so forth. There are, I guess, two things. Is there any additional information you could give as far as what an arrangement might look like and then any timing updates on when we might expect, you know, additional announcements about that? No, it's something that we're very excited about, as I closed with here today, the plan fit, save compensation model, really based upon the fact that we have proven to our health plan partners that we can do the right thing.

Speaker Change: You mentioned.

Speaker Change: <unk> fits safe.

Speaker Change: Conversations youre, having with.

Speaker Change: With the health plans.

Speaker Change: Compensation arrangements and so forth is there I guess two things is there any.

Speaker Change: Additional information you could give as far as what what are the arrangement might look like.

Speaker Change: Then any timing updates on when we might expect additional announcements about that.

Speaker Change: No. It's something that we're very excited about as I closed with here today the plan fit save compensation model really based upon the fact that we have proven to our health plan partners that we can do the right thing and in these markets, where our retention and continuous engagement is extremely important.

Patrick Joseph McCann: And in these markets where retention and continuous engagement are extremely important to the health plans and valuable to consumers, we have, again, this quarter and the open enrollment period, 94,000. So between AEP and OEP, we've done just about 200, more than 200,000 plan fit saves already.

Speaker Change: To the health plans and valuable to consumers, we have again this quarter and open enrollment period did 94000, so between AEP and OSP. We've done just about 200 over 200000 plants that saved already.

Vijay Kumar Kotte: So as we think about that and the good, high-quality conversation we've had with nearly every major health plan, we're expecting to be launching some of these programs to be tested here in Q2 and Q3, and looking to have them substantively in place as we go into the annual enrollment period. So we're excited about that. I'm not ready to get into the economics of those arrangements, but needless to say, the cost is already built into our model today. And so anything coming from those will be additive. Great. Thanks so much.

Speaker Change: As we think about that and the good high quality conversations you've had with nearly every major health plan, we're expecting to be launching some of these programs to be tested here in Q2 and Q3.

Speaker Change: And we're looking to have them substantially substantively in operations as we go into the annual enrollment period. So.

Speaker Change: So we're excited about that I'm not ready to get into the economics.

Speaker Change: Those arrangements, but needless to say the cost is already borne in our model today, and so anything coming from those will be additive and incremental in the way we think about them.

Speaker Change: Great. Thanks, so much.

Operator: Thank you. One moment for our next question. And our next question comes from Jim Sidoti from Sidoti. Your line is open. Hi, good morning.

Speaker Change: Thank you.

Speaker Change: For next question.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: And our next question comes from the line of Jim Sidoti from Sidoti.

James Philip Sidoti: Your line is open.

James Philip Sidoti: Thank you for taking the questions. I'm looking at the revenue breakdown and non-agency revenue. It looks like it's about 45-46 percent of revenue, up from about 24% last year. Can we assume from this that there's a much lower risk of having any revenue reversals going forward? Yeah, I would say that on the business that we've written under that model, again, you should always think about it for the book that you just wrote, where you would have any kind of look back potential exposures.

James Philip Sidoti: Alright.

James Philip Sidoti: Good morning, Thank you for taking the questions.

James Philip Sidoti: I'm looking at the revenue breakdown non agency revenue looks like it's about 45, 46% of revenue.

James Philip Sidoti: 24% last year.

James Philip Sidoti: No.

James Philip Sidoti: Can we assume from this date.

James Philip Sidoti: Lower risk of having any revenue reversals.

James Philip Sidoti: Forward.

Speaker Change: Yeah, I would say that on the on the business that we've written under that model again, you should always think about it for the book that you just wrote where you would have any kind of a look back potential exposures and as you move away from agency to non agency and then it's also a little bit more nuanced. It's also how much you have left an agent.

James Philip Sidoti: And as you move away from agency to non-agency, then it's also a little bit more nuanced. It's also how much you've left an agency that is related to high quality, stable plans versus others. So there's a little bit of a mixed question there as well. But in short, the simple answer is, yes, when you write more non-agency, you have less intrinsic market risk for those things about tenure or churn rates, etc., that would impact back book value.

Speaker Change: C that is related to high quality stable plans versus others. So there's a little bit of a mix question, there as well, but in short the simple answer is yes. When you write more non agency you have less intrinsic maher.

Speaker Change: Market risk for those things about tenure or churn rates et cetera that would impact that book values.

Speaker Change: Okay.

Jason Schulz: Okay, sorry, and you generated more pre-cash in the quarter. I think this is the third quarter in a row with positive pre-cash flow. You're paying down some debt, and you talked about refinancing. Can you talk about, you know, what are your options with regard to refinancing? Are you looking at another straight debt? And how do the rates compare to what the existing debt is at now?

Speaker Change: We generated more free cash in the quarter third quarter or.

Speaker Change: Positive free cash flow.

Speaker Change: You paid down some debt.

Speaker Change: And you talked about refinancing can you talk about what are your options with regards to refinancing or you look another street and how did the rates compare to what the existing debt is it now.

Jason Schulz: Yeah, we're, it's a great question. We were obviously very focused on it. Let me just first talk about the task flow dynamics. We are so regimented. I'm very proud of our team.

Speaker Change: Yes.

Speaker Change: It's a great question, we were obviously very focused on it let me just first talk about those cash flow dynamics.

Speaker Change: We are so a regimented I'm very proud of our team Mike <unk> our CFO.

Speaker Change: And Jason Schultz, our CFO here work diligently.

Speaker Change: Day in and day out to find opportunities to drive efficiency really invest in both our agent experience as well as the obvious consumer experience in the process and we've been able to be very thoughtful as to how we make investments in our technology.

Jason Schulz: Mike Hargis, our COO, and Jason Schulz, our CFO here, work diligently, day in and day out, to find opportunities to drive efficiency, and really invest in both our agent experience, as well as the obvious consumer experience in the process. And we've been able to be very thoughtful as to how we make investments in our technology to really support that overall model that is the true driver of the cash dynamics of our business. It is that consistent workflow that is focused on standardization and less unnecessary variation in the pool.

Speaker Change: To really support that overall model that is the true driver of the cash dynamics of our.

Speaker Change: Business.

Speaker Change: Is that consistent workflow this focus on standardization and less unnecessary variation in the pool.

Jason Schulz: As we have been able to deliver that high-confidence cash flow, and as we've also been able to consistently show rigor around our operations, it has enabled us to make those debt paydowns that we've done and opened the door for us to have substantive thoughts around refinancing that debt to get to better interest rates and, you know, carrying cost levels for our debt. So we're exploring all of those alternatives right now, looking at refinancing, looking at any other market tools that could be there that help us utilize our assets to enhance our debt position so that we can decrease the interest expense that we have and continue to more differentially invest in growing the business.

Speaker Change: As we have been able to deliver that high confidence cash flow as we've also been able to consistently show rigor around our operations. It has enabled us to make those debt paydown that we've done.

Speaker Change: <unk> opened the door for us to have substantive thoughts around refinancing that debt to get to better interest rate and.

Speaker Change: Carrying cost levels for our debt. So we're exploring all of those alternatives right now looking at refinancing or getting any any other market tools that could be there that help us utilize our assets to enhance our debt position. So that we can decrease the interest expense that we have and continue to more differentially invest.

Speaker Change: In growing the business.

Jason Schulz: We think we are in a great spot to continue to invest in growth via our technology and the encompassed workflow we put in place. But as we look at the refinancing markets, as we look at those tools, no doubt our cash position and the stability that we've had there and our ability to continuously pay down that debt without taking even a dollar from our revolvers for over two years has enabled us to make some really good progress on the path of what we hope to speak more to you about over the coming months around our refinancing and finding ways to optimize our debt.

Speaker Change: We are in a great spot to continue to invest in our current state in growth VR technology in <unk> and the encompass workflow we put in place, but as we look at the refinancing markets. It was we look at those tools are no doubt our cash position and the stability that we've had there and our ability to continuously pay down that debt without taking.

Jason Schulz: I guess I should put it another way. Would you be disappointed if, after refinancing, you didn't have a better rate than you have today? Yes, I would be very disappointed in that. And I would expect that to be highly unlikely, but obviously possible.

Speaker Change: Even a dollar really from our revolvers.

Speaker Change: In over two years.

Speaker Change: Has enabled us to have some really good progress on the path of what we hope to speak more to you about over the coming months.

Speaker Change: Our refinancing and finding ways to optimize our debt structure.

Speaker Change: So let me put it a different way would you be disappointed if after refinancing you didn't have a better rate than you have today.

Speaker Change: Yes that would be very disappointed in that I would expect that to be highly unlikely, but obviously possible, but that is not adapted to very very succinct, yes, I'd be very disappointed by that.

Jason Schulz: But that is not, to be very succinct, yes, I'd be very disappointed. All right, thank you. Thanks, Jim. Really appreciate it. Any other questions from you, Jim? All right, Jim.

Speaker Change: Okay alright, thank you.

Speaker Change: Thanks, Jim really appreciate it.

Speaker Change: Any other question from me Jim.

Vijay Kumar Kotte: Well, thank you so much. I really appreciate Ben, Pat, and Jim's questions. Very thoughtful. We're going to close the call here, but I just want to highlight a couple of things. This is one of the most unique years we've seen as we approach this annual enrollment period. We will continuously be experimenting with this, you know, for Q2, the remainder of Q2 and Q3, as we think about all the different ways that we can serve an expanding population of shoppers who need our services more than ever.

Speaker Change: Alright, well. Thank you so much I really appreciate band Pat Jim your questions are very thoughtful.

Speaker Change: Going to close the call here, but I just want to highlight a couple of things.

Speaker Change: <unk> is one of the most unique years, we've seen as we approach this annual enrollment period.

Speaker Change: We will continuously be experimenting with that.

Speaker Change: For Q2, the remainder of Q2 and Q3 as we think about all the different ways that we can serve an expanding population of shoppers who need our services more than ever.

Vijay Kumar Kotte: We have a number of different tactics and tools to continue to build and enhance the trust of being that engagement company, as opposed to just an enrollment. If you think about what we did in AEP versus OEP, we had over 10% of the consumers who got plan fit saves in AEP come back to us in OEP for another plan save to reconfirm because there's uncertainty, because they're hearing that noise. We are excited about the opportunity to truly deliver on our value proposition of helping consumers, doing it the right way, and being absolutely opportunistic and being able to deliver high value and rewards for both consumers who seek our services and our stakeholders who are giving us the opportunity to deliver that service.

Speaker Change: We have a number of different tactics and tools to continue to build and enhance the trust of being that engagement company as opposed to just an enrollment company. If you think about what we did in.

Speaker Change: AEP versus OSP, we had over 10% of the consumers who got planted a stake in <unk>.

Speaker Change: AEP come back towards an OMB for another plan save to reconfirm because there is uncertainty because they are hearing that noise. We are excited about the opportunity to truly deliver on our value proposition of helping consumers doing it the right way and being absolutely opportunistic and being able to deliver high value and rewards.

Speaker Change: For both consumers, who seek our services and our stakeholders.

Speaker Change: Who are giving us the opportunity to deliver that service to them. So thank you all for your time and attention today and we look forward to speaking again very soon.

Vijay Kumar Kotte: So, thank you all for your time and attention today, and we look forward to speaking to you again very soon. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect everyone have a great day.

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Operator: [inaudible] ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good morning and welcome to GoHealth's first quarter 2024 earnings conference call. My name is Victor, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode.

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John Shave: 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. You may also refer to the investor presentation posted to the investor relations section of our website for reconciliations of non-GAAP measures to the most comparable GAAP measures discussed in this earnings call. I will now turn the call over to Gohealth CEO Vijay Kotte. Thank you, John, and good morning, everyone.

Benjamin Hendrix: Thanks, guys, and congratulations on the quarter. Just wanted to get some thoughts on the regulatory environment. It seems like, you know, there was some language from CMS in the rules targeting commissions within captive carrier arrangements with brokers.

Vijay Kumar Kotte: In response to the challenging market dynamics observed during the annual enrollment period, we enhanced our targeted marketing efforts and successfully identified consumers in need of new plan items. I'm proud of our team's resilience and adaptability as they navigated these conditions, resulting in better than expected performance, while maintaining the integrity of the Encompass workflow, and, more importantly, being great at doing good. We at Gohealth provide support and clarity to Medicare consumers in a landscape marked by confusion and uncertainty.

Vijay Kumar Kotte: I wanted to just get more details on kind of how you're seeing the detail or the... Provisions of the Rule thus far and kind of what gives you confidence in that alignment with Encompass. Morning, Ben.

Vijay Kumar Kotte: Over 65 million people in the United States are eligible for Medicaid, and about half of them are on Medicare Advantage. Additionally, one-third of Medicare consumers live in a county with more than 50 plans available to choose from. Navigating these options can be confusing and stressful. As a result, not enough consumers are shopping as they don't know who to trust or where to begin.

Vijay Kumar Kotte: Great question! I really appreciate your joining us this morning. As we think about the final rule, and I think there have been a lot of different interpretations out there, but the general underlying concept here is that CMS is very focused on inappropriate incentives for independent agents and brokers, whereby an independent agent or broker may be influenced to write one health plan or policy type over another one based solely on their reimbursement. And uniquely for us, as GoHealth operates, our agents, as you know, are generally hourly wage or salary workers, and they have very minimal variable compensation, and even that variable compensation that they do receive is health plan agnostic.

Vijay Kumar Kotte: We believe GoHealth is the best resource to empower them to make this important and personal decision via our proprietary and objective tools, training, and incentive structure. In the first quarter of 2024, our dedicated team empowered nearly 600,000 consumers to navigate their Medicare options and the Consumer Decision Making Process, utilizing the Plan-Fit Checkup via our proprietary Encompass website. Along with supporting over 215,000 new enrollments in Q1, we also provided peace of mind to over 94,000 consumers confirming that their current plan is best for their needs.

Vijay Kumar Kotte: We continue our evolution from a traditional Medicare enrollment company to Medicare engagement, focused on building high-quality, long-term relationships with our consumers. This shift emphasizes a more integrated and interactive approach to consumer care, cementing our unique and vital role in the Medicare landscape. In our last earnings call, we highlighted a handful of market factors that could influence our performance in the year. As a reminder, the first is the final rate notice on commissions for 2025. Second, is the final 2025 marketing rule from CMS. Third, is the degree to which there is health plan product and benefit differentiation between 2024 and 2025. Fourth, is marketing efficiency within this election.

Vijay Kumar Kotte: It's consistent with the way the health plans have conversed with us on the topic as well, that that is outside the realm of what CMS was targeting, meaning our model is separate and distinct from where they were trying to focus their efforts. In concert with that, though, what we will say is our efforts to go beyond the minimum standards established by the CMS regulations are what we're focused on. It's not about meeting the minimum threshold.

Vijay Kumar Kotte: It's about doing the right thing and being differentially better for consumers and for the health plans that we also partner with in the process. And we're feeling very good about that. And the fact that we really spent a lot of time designing the encompassed structure to be built off a fair market value basis to begin with on how we're reimbursed for the direct services we deliver, and then ensuring that our agents are incentivized to do the right thing.

Vijay Kumar Kotte: The 2025 final rate notice does increase margin pressure for health plans, which increases the likelihood of benefit disruptions and market exits, especially for non-special needs. Some major health plans have confirmed significant upcoming benefit disruption in their Q1 earnings. These disruptions could lead to increased consumer shopping and switching during the 2024 annual enrollment period, which is a positive dynamic for GoHealth. Though health plans are facing margin pressure, many are seeking targeted growth in specific markets and products.

Vijay Kumar Kotte: So we are cautiously optimistic as to how that's going to play out for us as we continue to advance the model forward to be consumer-centric and focus on engagement going forward. But as we think about where we go in the relationships with the health plans and how we think about the contracts, there are some elements of waivers that were in there before around marketing and admin dollars that we just need to tweak the way we adjust the way they're described in our contracts. But again, all of our contracts are built on a fair market value basis and ultimately do not influence what our agents sell or don't sell.

Vijay Kumar Kotte: We believe we are ideally positioned to help health plans achieve targeted growth in specific markets and products. Our Encompass workflow facilitates a seamless transition from validating enrollment to onboarding and engaging new planners. We've proven our marketing attracts consumers who should likely shop and who might benefit from a switch, and we can precisely target based on geographies and products. We believe we are the best in the industry at building trust with special needs populations, delivering high-quality plan-fit checkups and enrollment at scale. Second, in April, CMS published the final 2025 marketing rules, including addressing independent agent and broker compensation, along with new marketing guidance. We continue to review these guidelines and discuss them with health plans for their interpretation.

Benjamin Hendrix: I appreciate that. And if we could move over to some kind of positioning for AEP this year, it seems like, you know, the carriers in our coverage, United, are not backing away. We're targeting margins at the high end of their range. We have CVS and Humana really in earnest focused on margin recovery beginning in 2025, which could include pulling some plans in certain markets and replacing them. It seems like, all in all, a big setup for shopping behavior in the fourth quarter.

Vijay Kumar Kotte: We remain cautiously optimistic that the final rule has a neutral impact on Gohealth on a direct economic basis, with some modest impact on contract structure and oversight. Our proprietary Encompass contracts and workflow not only differentially support our strong cash performance, but we also believe they provide the appropriate constructs to support full compliance with the final rule with minimal monopoly. We support CMS for their efforts to restrict and enforce inappropriate practices amongst agents and brokers who place compensation above consumer needs. We also support the restrictions on third-party lead generators that blatantly violate marketing law.

Vijay Kumar Kotte: We believe GoHealth has already set a new standard by compensating our agents when reassuring a consumer they're on the right path. As CMS sets higher industry standards, GoHealth is committed to exceeding these standards to deliver best-in-class service to our consumers and health plan partners. We continue to improve our Encompass operating model to enhance efficiency and the consumer experience. Last year, we introduced Planned Fit Checkup, using analytics from nearly 30 million consumer touchpoints and machine learning to help our licensed agents accurately match consumers with the best Medicare plans for them. We believe this tool has improved the shopping experience for Medicare Advantage plans and aligns with the final CMS marketing rules. Importantly, GoHealth agents are compensated even if the assessment does not result in an appointment.

Vijay Kumar Kotte: No, that's a very astute question, given all the market dynamics that are out there, Ben, as we look at the market landscape. We have the there are a number of consumers every year who always shop right, right? They're always shopping, always seeing if there's a better deal available. The unique element of what's coming, this upcoming annual enrollment, is you're going to have shoppers who need to shop who haven't previously. They've been able to quote unquote set it and forget. And as we've said in previous calls, we believe more consumers should be shopping every year.

Vijay Kumar Kotte: And what we expect this AAP is that you will have more of those consumers needing to shop because of the disruption that happened to their status quo benefits, either an exit from their current benefit plan or significant degradation to the benefit values for them that will motivate them to shop. And we believe we're the best destination for that shopping to give them that true personalized assessment as to whether there are better alternatives for them.

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Vijay Kumar Kotte: It includes streamlined scripting and handoffs using tech-driven standardization and automation to deliver efficiency and ultimately a better consumer experience while maintaining quality. These changes are anticipated to positively impact our financial results beginning in the second quarter and more substantively this fall during the annual enrollment. Additionally, we are continuing to invest in technology to improve the consumer experience, agent efficiency, and overall quality. Key areas of investment include expanding data and interactive capabilities in Customer 360, our proprietary consumer engagement platform. Improving our plans at checkups to deepen consumer relationships and enhance service quality. And finally, launching and testing a digital-first consumer shopping experience, enabling consumers to start the shopping process online.

Vijay Kumar Kotte: And so, when you think about shopping, we have been pushing and hoping and advocating for more shopping in general. We expect shopping to, more significantly for us, as we've highlighted, we are proving that we have really put our money where our mouth is on ensuring that we're going to do only what's right for. So even though shopping has been increasing, the dynamics and the disruption to benefits also determine the justified volume of switch.

Vijay Kumar Kotte: These investments are part of our long-term shift from a Medicare enrollment company to a Medicare engagement company. While most of the other market factors I mentioned are more likely to play out in the second half of this video, they are still significant, and thus, we continue to expect the following in terms of our performance in 2024. We expect submission volume to grow in line with the overall Medicare population. Second, we expect our revenue to be flat year over year with incremental operating efficiency, resulting in modest margins. Finally, cash flow from operations is expected to be flat to slightly up as we continue our transition into the Encompass model and shift to non-HVAC.

Vijay Kumar Kotte: We are driven by our commitment to transforming the consumer healthcare journey with continuous innovation and strategic foresight. I'd like to thank our team for their commitment to our values and our shareholders for their ongoing support and dedication to delivering long-term value. With that, I will turn it over to Jason to detail our financial performance for 2024. Thank you, Vijay. We reported Q1 net revenues of $186 million compared to $183 million in the prior year.

Vijay Kumar Kotte: Not everybody knows how targeted we can be with our unique marketing capabilities and what Steve Moffitt, our Chief Marketing Officer, has been able to do with the team to really get down to those unique demographic areas and geographies to be able to identify those pockets who have the greatest disruption. So where we can anticipate disruption using our predictive modeling and our strong SRL teams, we're going in in a laser-focused way with targeted messaging to help really mobilize that shopping and support the necessary switching that'll likely be there.

Jason Schulz: Our captive channel, which involves Gohealth's internal sales teams, as opposed to relying on external agents or third-party brokers, experienced robust 20% growth due to a combination of enhanced training and technology, increased marketing efforts, and improved consumer retention strategies. We believe our ability to effectively leverage internal resources to optimize sales and enhance consumer relationships not only supports short-term revenue gains but also positions GoHealth well for the long term. Adjusted EBITDA, excluding non-encompassed BPO services, was $27 million for the quarter, a slight decrease from the same period of the prior year.

Vijay Kumar Kotte: So that's generally how we're approaching our preparedness and our planning. And the other piece I'll add in my prepared remarks was our launch of Encompass Express, which has really learned how to be more efficient so we can do more with less and deliver a better experience. And you started to see some of the learnings that we had in the first quarter where we delivered some strong year-over-year efficiencies in what we're actually doing with our... Appreciate that. Thank you very much.

Jason Schulz: We are pleased with our strong economic performance for the quarter. Adjusted gross margin per submission increased by 7% year-over-year due to an 8% improvement in sales per submission, partially offset by a higher cost per submission. Q1 2024 cash from operations was $12.5 million compared to $20.5 million in the same quarter last year. This includes a $10.5 million payment to settle a shareholder lawsuit related to the company's 2020 initial public offering. Excluding this one-time item, cash flow from operations for the quarter would have been $23 million.

Operator: Thanks, Ben. Thank you. One moment for our next question, and our next question will come from Pat McCann from Noble Capital Markets. Your line is open.

Jason Schulz: We continue to see dependable cash flow trends, reflecting our ongoing focus on cash management and operating efficiency. As illustrated in our quarterly results presentation, our totaling 12-month cash flow from operations as of March 31, 2024 was $101 million, an improvement of $74 million versus the trailing 12 months ended March 31, 2023. In Q1, we generated a robust $70 million of cash-adjusted EBITDA compared to $78 million in the prior year period. We believe that cash-adjusted EBITDA is a helpful measure of our business as it neutralizes the impact of the LTV estimates related to the future year. As a reminder, cash-adjusted EBITDA is simply taking our reported adjusted EBITDA plus the year-over-year change in our net contract assets.

Vijay Kumar Kotte: When we look ahead to the next AEP and have an expectation of increased switching, would you characterize that as more relative to this past AEP, or if you were to go back several years, would you say just objectively? The upcoming AEP, you would expect it to be a significant plan switching period. Does that question, I guess, make sense? No, it does, Pat.

Vijay Kumar Kotte: And it's a very kind of interesting way to think about and ask the question. So I appreciate the way you've asked it. Let me kind of repeat it for you.

Jason Schulz: We expect to make an additional $25 million pay-down in early Q4 of this year. As we navigate the evolving market landscape, we continue to focus on profitability and value. I will now turn the call back to Vijay for closing remarks. Thank you, Jason. We believe our strategic initiatives, particularly the successful implementation of the Encompass workflow, have not only boosted our operational efficiency but also enhanced the service quality provided to Medicare.

Vijay Kumar Kotte: I think the question you're asking is, okay, we get that this past AEP in Q4 of 23, versus what we're expecting to see in Q4 of 24, that there will likely be higher switching. But how do we think of that on a relative basis compared to yesteryear, when there was a lot of benefit investment, and there was justified switching? Are we going to be more in line with those years? Or are we expecting it to be more? Is that an accurate replay?

Jason Schulz: We are currently in advanced discussions with select health plan partners to roll out the Plan-Fit-Safe Compensation and aim to align our incentives more closely with consumer needs by ensuring they are enrolled in the most suitable plans, rather than prioritizing the financial benefits of new policies in place. Our firm believes that not only do our plan fit savings align with the overarching priority communicated by health plans to retain members, but this approach also prioritizes long-term consumer satisfaction. Looking ahead, we are dedicated to using our insights and technology to further enhance the healthcare journey for consumers, empowering them to make well-informed Medicare decisions.

Jason Schulz: We are now ready to take questions. Thank you. And, at this time, as a reminder to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Patrick Joseph McCann: But let me tell you how we think about this. I think first and foremost, we have to highlight what motivates them, and we said this on the Q4 call. In typical years, you can have three scenarios, right? You can have somebody playing offense to just improve benefits to grab share, and that's what happened in the last few years.

Vijay Kumar Kotte: They're putting last year aside a little bit, but just to talk about the last couple of years, you've been seeing that there's a clear winner in each one of those years who really invested in benefits. You can have a neutral spot where the major health plans really don't invest a lot in benefits, or you can have a degradation time when they're pulling back. In the first and the last scenario of investing in benefits and degrading benefits, those are high switching environments.

Vijay Kumar Kotte: Now, what I would say is that, on average, if we were just talking about the same shopping consumers, it would probably be a little bit more similar to when there was high switching justified for offensive reasons over the last few years, maybe going beyond just the last AEP. But what I think is going to be interesting to observe is the disruption to the consumers who historically weren't shopping, who maybe selected a plan, became new to Medicare, and haven't looked at it again.

Vijay Kumar Kotte: But now, because the benefits are not just staying the same or getting better, some are getting worse, or leading the market in total, that's going to generate a new shopping population that will be net additive to the shopping and likely switching scenarios. So that's what we're going to want to monitor. So just to be clear on your question, what I would say is the same shopping population year over year will likely have switching dynamics, I would expect, but again, we will have to see the details later this year, more similar to those prior year AEPs that you're describing.

Vijay Kumar Kotte: But the real scenario to focus in on and what we're spending our time on, all those populations who haven't been traditional shoppers, we're looking for a trusted resource because there's significant negative disruption that they haven't seen in the past. And that's where we're really hoping that we can serve more of the population. Right, no, that's very helpful.

Patrick Joseph McCann: And then also, you guys mentioned certain developments in the business enhancements you're making, for example, allowing consumers to shop and begin the shopping experience online. Could you just drill down a little more into that as far as what's driving you to make that enhancement and how that would drive demand? And I guess one of the things that crosses my mind is, you know, as we move forward year by year, the 65-plus population is going to be more and more technologically literate, if you will, as the years progress, so maybe you're just sort of setting up for the long term. But could you just give it a little bit more color there?

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Vijay Kumar Kotte: And part of that is providing transparency into their options in a very simple, transparent way that can give them the flexibility to get personalization or just know general eligibility for operations. And so we've been continuing to invest in testing those types of tools, and we're going to continue to know that digital isn't going away. Digital will be there, and it will likely start to increase over time.

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Patrick Joseph McCann: And so we're trying to be responsive to that, and we're excited about what it could be for those consumers who really want to play in that space.

Vijay Kumar Kotte: You mentioned Plan Fit Safe and the conversations you're having with the health plans about, you know, compensation arrangements and so forth. There are, I guess, two things. Is there any additional information you could give as far as what an arrangement might look like, and then any timing updates on when we might expect additional announcements about that? No, it's something that we're very excited about. As I closed here today, the plan fit save compensation model is really based on the fact that we have proven to our health plan partners that we can do the right thing.

Vijay Kumar Kotte: And in these markets where retention and continuous engagement are extremely important to the health plans and valuable to consumers, we have, again, this quarter and the open enrollment period, 94,000. So between AEP and OEP, we've done just about 200, more than 200,000 plan fit saves already.

Vijay Kumar Kotte: So as we think about that and the good, high-quality conversation we've had with nearly every major health plan, we're expecting to be launching some of these programs to be tested here in Q2 and Q3 and looking to have them substantively in place as we go into the annual enrollment period. So we're excited about that. I'm not ready to get into the economics of those arrangements, but needless to say, the cost is already built into our model today. And so anything coming from those will be additive. Great, thanks so much.

Speaker Change: Okay.

Operator: Thank you. One moment for our next question, and our next question will come from Jim Sidoti from Sidoti. Your line is open. Hi, good morning.

James Philip Sidoti: Thank you for taking the questions. I'm looking at the revenue breakdown and non-agency revenue. It looks like it's about 45-46% of revenue, up from about 24% last year.

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Jason Schulz: Can we assume from this that there's a much lower risk of having any revenue reversals going forward? Yeah, I would say that on the business that we've written under that model, again, you should always think about it for the book that you just wrote, where you would have any kind of look-back potential exposures. And as you move away from agency to non-agency, then it's also a little bit more nuanced.

Jason Schulz: It's also how much you've left in the agency that is related to high quality, stable plans versus others. So there's a little bit of a mixed question there as well. But in short, the simple answer is, yes, when you write more non-agency business, you have less intrinsic market risk for those things about tenure, or churn rates, etc., that would impact back book value.

James Philip Sidoti: Okay, and you generated more pre-cash in the quarter, I think it's the third quarter in a row with positive pre-cash flow, you're paying them some debt, and you talked about refinancing. Can you talk about, you know, what your options are with regard to refinancing? Are you looking at another straight debt? And how do the rates compare to what the existing debt is at now?

Jason Schulz: Yeah, we're, it's a great question. We were obviously very focused on it. Let me just first talk about those cash flow dynamics. We are so regimented.

Jason Schulz: I'm very proud of our team. Mike Hargis, our COO, and Jason Schulz, our CFO here, work diligently, day in and day out, to find opportunities to drive efficiency, and really invest in both our agent experience, as well as the obvious consumer experience in the process. And we've been able to be very thoughtful as to how we make investments in our technology to really support that overall model that is the true driver of the cash dynamics of our business. It is that consistent workflow that's focused on standardization and less unnecessary variation in the pool.

Jason Schulz: As we have been able to deliver that high-confidence cash flow, and as we've also been able to consistently show rigor around our operations, it has enabled us to make those debt paydowns that we've done and opened the door for us to have substantive thoughts around refinancing that debt to get to better interest rates and carrying cost levels for our debt. So we're exploring all of those alternatives right now, looking at refinancing, looking at any other market tools that could be there that help us utilize our assets to enhance our debt position so that we can decrease the interest expense that we have and continue to more differentially invest in growing the business.

Jason Schulz: We think we are in a great spot to continue to invest in our current state of growth, be it our technology and the encompassed workflow we put in place. But as we look at the refinancing markets, as we look at those tools, no doubt our cash position and the stability that we've had there and our ability to continuously pay down that debt without taking even a dollar from our revolvers for over two years has enabled us to make some really good progress on the path of what we hope to speak more to you about over the coming months around our refinancing and finding ways to optimize our debt.

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Jason Schulz: Yes, I'd be very, All right, Jim. Thanks, Jim. Really appreciate it. Any other questions from you, Jim? All right, Jim. Well, thank you so much. I really appreciate Ben, Pat, and Jim's questions. Very thoughtful. We're going to close the call here, but I just want to highlight a couple of things. This is one of the most unique years we've seen as we approach this annual enrollment period.

Vijay Kumar Kotte: We will continuously be experimenting with this, you know, for Q2, the remainder of Q2 and Q3 as we think about all the different ways that we can serve an expanding population of shoppers who need our services more than ever. We have a number of different tactics and tools to continue to build and enhance the trust of being that engagement company as opposed to just an enrollment. If you think about what we did in AEP versus OEP, we had over 10% of the consumers who got plan fit saves in AEP come back to us in OEP for another plan save to reconfirm because there's uncertainty, because they're hearing that noise.

Vijay Kumar Kotte: We are excited about the opportunity to truly deliver on our value proposition of helping consumers, doing it the right way, and being absolutely opportunistic in being able to deliver high value and rewards for both consumers who seek our services and our stakeholders who are giving us the opportunity to deliver that service. So thank you all for your time and attention today, and we look forward to speaking to you again very soon. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day.

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Speaker Change: Good morning, and welcome to go Health's first quarter 2024 earnings Conference call.

Victor: Turn the call over to John Shave, Vice President of Investor Relations, John You May begin.

John Shave: Thank you and good morning, welcome to go Health's first quarter 2024 earnings call. Joining me today are Vijay Kotte, Chief Executive Officer, and Jason <unk>, Chief Financial Officer.

Victor: Today's conference call contains forward looking statements based on our current expectations numerous known and unknown risks and uncertainties may cause actual results to differ materially from those anticipated or projected in these statements.

Victor: Many of the factors that were determined future results are beyond the company's ability to control or predict you should not place any undue reliance on 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.

Victor: Earlier today, we issued a press release containing our first quarter results of 2024, we have posted the release on the go health website under the Investor Relations tab.

Victor: 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 annual report on Form 10-K filed with the Securities and Exchange Commission for additional information.

Victor: During this call we'll 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.

Victor: You May also refer to the Investor presentation posted to the Investor Relations section of our website for reconciliations of non-GAAP measures to the most comparable GAAP measures discussed this earnings call I will now turn the call over to go help CEO Vijay Kotte.

Vijay Kumar Kotte: Thank you John and good morning, everyone.

Vijay Kumar Kotte: I'm excited to share our first quarter results with you today.

Vijay Kumar Kotte: Our performance during Q1 open enrollment period exceeded our expectations for submission revenue and adjusted EBITDA.

Vijay Kumar Kotte: Notably our internal captive channel grew submission volume by 20% year over year.

Vijay Kumar Kotte: I'm proud of our team's resilience and adaptability.

Vijay Kumar Kotte: <unk> navigated these condition, resulting in better than expected performance, while maintaining the integrity of the encompass workflow and more importantly, being great at doing good.

Vijay Kumar Kotte: We had go helped provide support and clarity to Medicare consumers in a landscape mark by confusion and uncertainty.

Vijay Kumar Kotte: Over 65 million people in the United States are eligible for Medicare and about half of them are Medicare advantage plan.

Vijay Kumar Kotte: One third of Medicare consumers live in a county with more than 50 plans available to choose from Nab.

Vijay Kumar Kotte: Navigating these options can be confusing and stressful.

Vijay Kumar Kotte: As a result, not enough consumers are shopping and they don't know who to trust a way to begin.

Vijay Kumar Kotte: We believe <unk> is the best resource to empower them to make this important and personal decision via our proprietary and objected tools training and incentive structures.

Vijay Kumar Kotte: In the first quarter of 2024 hour dedicated team empowered nearly 600000 consumers to navigate the Medicare option enhancing the consumer decision, making process utilizing the plants, a checkup via our proprietary encompass workflow.

Vijay Kumar Kotte: Along with supporting over 215000, new enrollment in Q1, we also provided peace of mind to over 94000 consumers confirming their current plan is best for their needs.

Vijay Kumar Kotte: This shift emphasizes a more integrated and interactive approach to consumer care cementing our unique and vital role in the Medicare landscape.

Vijay Kumar Kotte: In our last earnings call, we highlighted a handful of market factors that could influence our performance in the year.

Vijay Kumar Kotte: As a reminder, first is the final rate notice on commissions for the 2025 plan here.

Vijay Kumar Kotte: Second is the final 2025 marketing rule from CMS.

Vijay Kumar Kotte: Third is the degree to which there is health plan product and benefit differentiation between 2024 and 2025.

Vijay Kumar Kotte: Fourth is marketing efficiency within this election season.

Vijay Kumar Kotte: And finally, there is the relative health plan competitiveness and the effect on plan mix.

Vijay Kumar Kotte: As we report our first quarter results, we have updates on the first two of these factors.

Vijay Kumar Kotte: First <unk>.

Vijay Kumar Kotte: CMS issued the final rate notice, which includes a base commission schedule aligned with our expectations.

Vijay Kumar Kotte: The 2025 final rate notice does increase margin pressure for health plans, which increases the likelihood of benefit disruption and market exits, especially for non special needs plan.

Vijay Kumar Kotte: Some major health plans have confirmed significant upcoming benefit disruption in their Q1 earnings call.

Vijay Kumar Kotte: These disruptions could lead to increased consumer shopping and switching during the 2024 annual enrollment period, which is a positive dynamic for go health business model.

Vijay Kumar Kotte: They'll help plans are facing margin pressure many are seeking targeted growth in specific markets and products.

Vijay Kumar Kotte: Somehow plants have indicated a desire to grow in the special needs population and audience. They go how this differentially able to attract and serve.

Vijay Kumar Kotte: These strategies and priorities will likely vary by health plan and be very geographically diverse.

Vijay Kumar Kotte: We believe we are ideally positioned to help health plans achieved targeted growth in specific markets and products.

Vijay Kumar Kotte: Our encompass workflow facilitate a seamless transition from validating enrollment to onboarding and engaging new plan members.

Vijay Kumar Kotte: We've proven our marketing attract consumers, who should likely shop, and who might benefit from a switch and we can precisely target based on geography and product type.

Vijay Kumar Kotte: We believe we are the best in the industry and building trust with special needs population delivering high quality planted checkups and enrollment at scale.

Vijay Kumar Kotte: Second in April CMS published the final 2025, marketing rules, including addressing independent agent and broker compensation, along with new marketing guidelines.

Vijay Kumar Kotte: We continue to review these guidelines and discussed them with health plans for their interpretations.

Vijay Kumar Kotte: We remain cautiously optimistic that the final rule has a neutral impact to go help on a direct economic basis with some modest impact to contract structure and oversight.

Vijay Kumar Kotte: Our proprietary incumbent contracts and workflow not only differentially support our strong cash performance, but we also believe they provide the appropriate construct to support all compliant with a final rule with minimal modification.

Vijay Kumar Kotte: We support CMS for their efforts to restrict and enforce against inappropriate practices amongst agents or brokers, who placed compensation above consumer needs. We also support the restrictions on third party lead generators that blatantly violate marketing law.

Vijay Kumar Kotte: We believe <unk> has already set a new standard by compensating our agents when reassuring our consumer there on the rate plan.

Vijay Kumar Kotte: As CMS set higher industry standards go help is committed to exceeding these standards to deliver best in class service to our consumers and health plan partners.

Vijay Kumar Kotte: We believe this tool has improved the shopping experience for Medicare advantage plans and aligns with the final CMS marketing role.

Vijay Kumar Kotte: Accordingly go help agents are compensated even if the assessment is not result in an enrollment.

Vijay Kumar Kotte: This year, we're focusing on streamlining processes and improving call handle times based on consumer feedback.

Vijay Kumar Kotte: As part of this effort we are launching encompass express.

Vijay Kumar Kotte: Encompass express is an enhanced consumer centric model built on the chassis of our original encompass workflow.

Vijay Kumar Kotte: These changes are anticipated to positively impact our financial results beginning in the second quarter and more substantively. This fall during the annual enrollment period.

Vijay Kumar Kotte: Additionally, we are continuing to invest in technology to improve consumer experience agent efficiency and overall quality.

Vijay Kumar Kotte: Key areas of investment include expanding data and interactive capabilities and customer 360, our proprietary consumer engagement tool.

Vijay Kumar Kotte: Improving our plant at checkout to deepen consumer relationships and enhanced service quality.

Vijay Kumar Kotte: And finally, launching and testing a digital first consumer shopping experience, enabling consumers to start the shopping process online.

Vijay Kumar Kotte: These investments are part of our long term shift from Medicare enrollment company to our Medicare engagement company.

Vijay Kumar Kotte: First.

Vijay Kumar Kotte: We expect submission volume to grow in line with the overall Medicare market.

Vijay Kumar Kotte: Second we expect our revenue to be flat year over year with incremental operating efficiency, resulting in modest margin expansion.

Vijay Kumar Kotte: Finally cash flow from operations is expected to be flat to slightly up as we continue our transition into the encompass model and shift to non agency revenue.

Vijay Kumar Kotte: We are driven by our commitment to transform the consumer health care journey with continuous innovation and strategic foresight.

Vijay Kumar Kotte: I'd like to thank our team for their commitment to our values and our shareholders for their ongoing support and dedication to delivering long term value.

Vijay Kumar Kotte: With that I will turn it over to Jason to detail our financial results.

Jason Schulz: Thank you Vijay our 2024 first quarter performance demonstrated the overall improvement and resiliency in our business model.

Jason: We reported Q1 net revenues of $186 million compared to $183 million in the prior year.

Jason: Internal resources to optimize sales enhanced consumer relationships not only supports short term revenue gains, but also positions go help well for sustainable long term growth.

Jason: Adjusted EBITDA, excluding non encompass BPL services was $27 million for the quarter a slight decrease from the same period of the prior year. We are pleased with our strong unit economic performance for the quarter adjusted.

Jason: Adjusted gross margin per submission increased by 7% year over year due to an 8% improvement to sales per submission, partially offset with a higher cost per submission.

Jason: Q1, 2024 cash flow from operations was $12 5 million compared to $20 5 million in the same quarter last year. This includes a $10 $5 million payment to settle a shareholder lawsuit related to the company's 2020 initial public offering.

Jason: Excluding this onetime item cash flow from operations for the quarter would have been $23 million.

Jason: We continue to see dependable cash flow trends, reflecting our ongoing focus on cash management and operating efficiency.

Jason: As illustrated in our quarterly results presentation, our core 12 month cash flow from operations as of March 31, 2024 was $101 million.

Jason: An improvement of $74 million versus the trailing 12 months ended March 31 2023.

Jason: As a reminder, cash adjusted EBITDA is simply taking our reported adjusted EBITDA plus the year over year change in our net contract asset as the net contract asset has decreased this was a result of higher cash collections from our back book and the inverse was true as the net contract asset has increased year over year.

Jason: As we noted in our year end filings in the first quarter of 2024, we successfully negotiated an amendment to our debt agreement adjusting the leverage ratio requirements for the duration of the loan facility.

Jason: In conjunction with the amendment, we made a $50 million term loan payment in early April we expect to make an additional $25 million paydown in early Q4 of this year.

Jason: As we navigate the evolving market landscape, we continue to focus on profitability and value creation.

Jason: I will now turn the call back to BJ for closing remarks.

BJ: Thank you, Jason we believe our strategic initiatives, particularly the successful implementation of the encompass workflow and not only boosted our operational efficiency, but also enhance the service quality provided to Medicare consumers.

BJ: We are currently in advanced discussions with select health plan partners to roll out the plan fit based compensation initiatives aiming to align our incentives more closely with consumer needs by ensuring they are enrolled in the most suitable plans rather than prioritizing the financial benefits of new policy enrollment.

Jason: Our firm belief is that not only do our plan fit saved align with the overarching priority communicated by health plans to retain membership, but this approach also prioritizes long term consumer satisfaction and trust.

Jason: Looking ahead, we are dedicated to using our insights and technology to further enhance them health care journey for consumers empowering them to make well informed Medicare decision.

Speaker Change: We are now ready to take your questions.

Speaker Change: Thank you and at this time as a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again once again Thats star one to one for questions. Please standby or compile the Q&A.

Speaker Change: Roster.

Speaker Change: One moment for our first question.

Jason: Yes.

Jason: Our first question will come from the line of Ben Hendrix from RBC capital markets. Your line is open.

Benjamin Hendrix: Thanks, guys and congratulations on the quarter just wanted to.

Benjamin Hendrix: Get some thoughts on the regulatory environment. It seems like there was some language.

Benjamin Hendrix: From CMS in the rules targeting commissions within captive carrier arrangements with brokers I wanted to just get more details on kind of how youre seeing the the detail are the provisions of the rule, thus far and kind of what gives you confidence in that alignment with encompass.

Speaker Change: Good morning, Ben Great question really appreciate you joining this morning.

Benjamin Hendrix: We think about the final rule and I think they have been a lot of different interpretations out there, but the general underlying concept here is that CMS is very focused on inappropriate incentives to independent agents and brokers, whereby a an independent agent or broker may be influenced too right, one health plan or a policy.

Benjamin Hendrix: Over another one based solely on their reimbursement.

Benjamin Hendrix: And and uniquely for US as go health operates our agents as you know are generally hourly wage or salary wage and they had a very minimal variable compensation and even that variable compensation that did you receive is health plan agnostic and then on top of that.

Benjamin Hendrix: We got further as you know to compensate our agents for not selling or enrolling in consumer and a new policy by just making sure. They get peace of mind, So really the variable tie for us is about providing a service as opposed to delivering a new enrollment all of that based upon the way we've interpreted.

Benjamin Hendrix: The current rules, whether it was proposed and finalize.

Benjamin Hendrix: Is consistent with where the health plans of <unk>.

Benjamin Hendrix: Converse with us on the topic as well as debt that is outside the realm of what CMS was targeted meeting our model is separate and distinct from where they were trying to focus their efforts.

Benjamin Hendrix: In concert with that though what we will say is our efforts to go beyond the minimum standards established by the CMS Regs are what we're focused on it's not about meeting the minimum threshold, it's about doing the right thing and being differentially better for consumers and for the health plans that we also partner within the process.

Benjamin Hendrix: We're feeling very good about that.

Benjamin Hendrix: And the fact that we really spend a lot of time in designing encompass structure to be built off of fair market value basis to begin with on how we're reimbursed for the direct services, we deliver and then ensuring that our agents are incentivized to do the right thing so.

Benjamin Hendrix: Our cautiously optimistic as to how that's going to play out for us as we continue to advance the model forward to be consumer centric and focusing on engagement going forward.

Benjamin Hendrix: But as we think about where we go in the relationships with the with the health plans and how we think about the contract there are some elements of <unk>.

Benjamin Hendrix: Waivers that were in there before around our marketing and admin dollars that we just need to tweak on the way we address adjust the way. They are described in our contract, but again all of our contracts are billed on a fair market value basis.

Benjamin Hendrix: And ultimately do not influence what our agents sell or don't sell it's the appropriateness of the plan for our consumers on a personal basis that influences that so we're pretty excited about where things landed and we're pretty excited about how we can continue to deliver differential service with our with our model.

Speaker Change: Thank you I appreciate that and if we could move over to kind of positioning for AEP. This year. It seems like the carriers in our coverage.

Speaker Change: It's not backing away from targeting margins at the high end of the range, we have Cvs and Humana really an artist focused on margin recovery gain in 2025.

Speaker Change: Even which could include pulling some plans in certain markets and replacing them. It seems like all in all.

Speaker Change: <unk> set up for shopping behavior in the fourth quarter as wanted to without all that commentary.

Speaker Change: Coming from the carriers just wanted to get your thoughts on how you are positioning for AEP, what that could mean from both the volume and also an LTV perspective. Thanks.

Speaker Change: No. That's a very astute question given all the market dynamics that are out there Ben as we look at the market landscape.

Speaker Change: We have there are a number of consumers every year, who always shop right Theyre always shopping always see if theres a better deal available.

Speaker Change: Unique element of what's coming this upcoming <unk> annual enrollment period is youre going to have shoppers, who need to shop, who haven't previously they've been able to quote unquote veteran and forget it.

Speaker Change: And as we've said in previous calls we believe more consumers should be shopping every year and what we expect this AEP is that you will have more of those consumers needing to shop because of the disruption that happened to their status quo benefit plan, either an exit of their current benefit plan or a significant degradation to the.

Speaker Change: Third remarks, many of those health plans still want to grow in very targeted areas with different populations et cetera, and we also bring that added advantage not everybody knows how targeted we can be with our unique marketing capabilities.

Speaker Change: And what Steve <unk>.

Speaker Change: Our chief market marketing officer have been able to do with the team to really get down to those unique demographic areas and geographies to be able to identify those pockets who have the greatest disruption, so where we can anticipate disruption using our.

Speaker Change: Predictive modeling and our strong actuarial teams were going in in a laser focused way with targeted messaging to help.

Speaker Change: It really mobilize that shopping and support the necessary switching that will likely be there. So that's generally how we're approaching our preparedness and our planning and the other piece I'll add is I was in the prepared remarks was our launch of encompass express which is really learn how to be more efficient. So we can do more with less.

Speaker Change: And deliver a better experience and you started to see some of the learnings that we had in the first quarter, where we delivered strong year over year efficiencies on what we're actually doing with our agents.

Speaker Change: I appreciate that thank you very much.

Speaker Change: Thanks, Dan.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question will come from the line of Pat Mccann from Noble capital markets. Your line is open.

Patrick Joseph McCann: Good morning, and thanks for taking my questions.

Patrick Joseph McCann: Quickly my first question would just be to piggyback on the last question.

Patrick Joseph McCann: You talked about how in the in the most recent AEP that we've come out of there was the low plan switching.

Patrick Joseph McCann: And it wasn't.

Patrick Joseph McCann: Big period for plan switching.

Speaker Change: When.

Speaker Change: When we look ahead to the next AEP and the half and expectation for increased switching is would you characterize that as more relative to.

Speaker Change: This past AEP or if you were to go back several years would you say just objectively.

Speaker Change: The upcoming AEP, you would expect it to be.

Speaker Change: A significant.

Speaker Change: Plan switching period does that question I guess it makes sense.

Speaker Change: It does pad and it's a very kind of.

Speaker Change: Yes, thanks for everything that's perfect. Okay. So here's how.

Speaker Change: First let me just say, we don't know for sure right. We won't know until we understand the details of what the health plan to do in.

Speaker Change: In their final bids which are still in process. We won't know those final benefits officially till October and so it's going to be really important that.

Speaker Change: It's going to be a changing dynamic for us to really predict but let me tell you. How we think about this I think first and foremost we have to highlight that what motivated and.

Speaker Change: And we said this on the Q4 call in typical Geos are typical years you can have three scenarios right. You can have somebody playing playing offense to just improve benefit to grab share and that's what's happened in the last few years that putting last year's side, a little bit, but just you can talk about the last couple of years, you've been seeing that there is a clear winner in each one of those years.

Speaker Change: <unk> really invested in benefits you can have a neutral.

Speaker Change: Spot when the major health plans really don't invest a lot into the benefits or you can have a degradation time when they are pulling back on benefits in the first and the last scenario of investing in benefits integrating benefits those are high switching environment.

Speaker Change: Now what I would say is that on average if we were just talking about the same shopping consumers it would probably be a little bit more similar to when there was high switching justified for offensive reasons that over the last few years, maybe putting of going beyond just the last AEP, but what I think is going to be interesting to observe is the disruption to the consumers who historically weren't shopping.

Speaker Change: So we're going to want to monitor so just to be clear on your question. What I would say the same shopping population year over year will likely have switching dynamics I would expect but again, we will have to see the details later this year more similar to those prior year aep's that youre, describing but the real.

Speaker Change: Scenario to really focus in on and what we're spending our time on all of those populations, who havent been historical shoppers. We're looking for a trusted resource because theres significant significant negative disruption that they haven't seen in the past and that's where we're really hoping that we can serve more of the population.

Speaker Change: Great No that's very helpful.

Speaker Change: Then also you guys mentioned.

Speaker Change: Youll certain developments in the business enhancements youre, making.

Speaker Change: For example, the.

Speaker Change: Yeah.

Speaker Change: Allowing consumers to shop became a shopping experience.

Speaker Change: Online could you just drill down a little more into that as far as what's.

Speaker Change: What's driving you to make that enhancement and how that would drive demand and I guess one of the things that crosses my mind is.

Speaker Change: As we move forward year by year the 65.

Speaker Change: 65, plus population is going to be more and more technologically.

Speaker Change: <unk> if you will.

Speaker Change: As the years progressed, so so maybe youre just sort of setting up for the long term, but could you just give a little bit more color there.

Speaker Change: Sure Pat as we think about the digital direct digital space.

Speaker Change: That isn't going to go away as an opportunity but to your point, it's going to be increasing over time and the real question is how do you access those populations and provide them the visibility there.

Speaker Change: The self driven approach to learning and educating themselves while also providing them the peace of mind of a good experience in the wraparound with somebody to confirm for you that youre doing the right thing for yourself and not doing harm to your benefit needs and so as we've been pursuing this we've spent a lot of time segmenting out the Medicare population.

Speaker Change: Listening to consumers finding out what could augment or bring those who need to shop as I referred to before to shop right, enabling them with tools that are not pressurized in a way that gives me the opportunity to educate themselves and ultimately where we're focusing our efforts is empowering the consumer how they want to be empowered to make a good Medicare does.

Speaker Change: And part of that is providing transparency into their options in a very simple transparent.

Speaker Change: Way that can provide them the flexibility to get personalization or just no general eligibility of opportunity and so we've been continuing to invest in testing those.

Speaker Change: Types of tools, and where we're going to continue to know that digital isn't going to go away digital will be there and it will likely start to increase overtime and so where we're trying to be responsive to that and we're excited about what it could be for for those consumers, who really want to play in that space.

Speaker Change: Great and if I could just squeeze one more in you mentioned plant food safe and well.

Speaker Change: Conversations youre, having with.

Speaker Change: With the health plans.

Speaker Change: Compensation arrangements and so forth is there I guess two things is there any.

Speaker Change: Additional information you could give as far as what what are the arrangement might look like.

Speaker Change: And then any timing updates on when we might expect additional announcements about that.

Speaker Change: And to the health plans and valuable to consumers. We have again this quarter and open enrollment period did 94000, so between AEP and <unk> done just about 200 over 200000 plant that saved already.

Speaker Change: And in looking to have them substantially substantively in operations as we go into the annual enrollment period. So.

Speaker Change: So we're excited about that I'm not ready to get into the economics.

Speaker Change: Great. Thanks, so much.

Speaker Change: Thank you.

Speaker Change: For next question.

Speaker Change: Okay.

Speaker Change: And our next question comes from the line of Jim Sidoti from Sidoti.

James Philip Sidoti: Your line is open.

Speaker Change: Alright.

James Philip Sidoti: Hi, Good morning, Thank you for taking the questions.

James Philip Sidoti: I'm looking at the revenue breakdown non agency revenue looks like it's about 45, 46% of revenue.

James Philip Sidoti: About 24% last year.

James Philip Sidoti: No.

James Philip Sidoti: Can we assume from this that there is a.

Speaker Change: A much lower risk of having any revenue reversals.

Speaker Change: Forward.

Speaker Change: Yes, I would say that on the on the business that we've written under that model again, you should always think about it for the book that he just wrote where you would have any kind of a look back potential exposures and as you move away from agency to non agency and then it's also a little bit more nuance. It's also how much you have left in age.

Speaker Change: And see that is related to high quality stable plans versus others. So there's a little bit of a mix question, there as well, but ensure the simple answer is yes. When you write more non agency you have less intrinsic maher.

Speaker Change: Market risk for those things about tenure or churn rates et cetera that would impact that book values.

Speaker Change: Okay.

Speaker Change: You generated more free cash in the quarter third quarter or with the positive free cash flow.

Speaker Change: You.

Speaker Change: We paid down some debt.

Speaker Change: And you talked about refinancing can you talk about what are your options with regards to refinancing or you look another straight debt and how did the rates compare to what the existing debt as of now.

Speaker Change: Yes.

Speaker Change: It's a great question, we were obviously very focused on it let me just first talk about those cash flow dynamics.

Speaker Change: We are so a regimented I'm very proud of our team Mike <unk> our CFO.

Speaker Change: And Jason Schultz, our CFO here work diligently.

Speaker Change: To really support that overall model that is the true driver of the cash dynamics of our.

Speaker Change: Business.

Speaker Change: Is that consistent workflow this focus on standardization and less unnecessary variation in the pool.

Speaker Change: <unk> opened the door for us to have substantive thoughts around refinancing that debt to get to better interest rate and.

Speaker Change: Carrying cost levels for our debt. So we are exploring all of those alternatives right now looking at our refinancing will get any any any other market tools that could be there that help us utilize our assets to enhance our debt position. So that we can decrease the interest expense that we have and continue to more differentially invest.

Speaker Change: In growing the business.

Speaker Change: We are in a great spot to continue to invest in our current state and growth VR technology in <unk> and the encompass workflow we put in place, but as we look at the refinancing markets and as we look at those tools are no doubt our cash position and the stability that we've had there and our ability to continuously pay down that debt without taking.