GoHealth, Inc.

Good afternoon, and welcome to the GoHealth fourth quarter and full year 2022 earnings conference call. My name is Lisa, and I will be your operator for today's call. At this time, all participants are in listening mode. Following the prepared remarks, we will conduct a question and answer session. At that time, if you wish to ask a question, please press star 11 on your telephone. As a reminder, this conference is being recorded. I would now like to turn the call over to John Shave. Vice President of Investor Relations. John, you may begin.

Thank you, and good afternoon, everyone. Thanks for joining Go Health's fourth quarter and full year 2022 earnings call. Joining me today are Vijay Kote, Chief Executive Officer, and Jason Schultz, Chief Financial Officer. This afternoon's conference call contains forward-looking statements based on our current expectations. Numerous risks and uncertainties may cause actual results to differ materially from those anticipated or projected in these statements. Many of the factors that will determine future results are beyond the company's ability to control or predict. You should not place undue reliance on any forward-looking statements, and the company undertakes no obligation to update or revise any of these statements, whether due to new information, future events, or otherwise. After the market closed today, we issued a press release containing our results for the fourth quarter and full year of 2022. We have posted the release on the Go Health website under the Investor Relations tab. In the press release, we have listed a number of risk factors that you should consider in conjunction with our forward-looking statements. We encourage you to consider the other risk factors described in our Form 10-K and Form 10-Q reports filed with the Security and Exchange Commission for additional information. In addition, the results discussed here and contained in our press release were prepared by management and are unaudited as our independent registered public accounting firm has not completed its audit. 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. Please refer to today's press release for reconciliations of non-GAAP measures to the most comparable GAAP measures discussed during this earnings call. For reference, in the investor relations section of the Go Health website, we have provided a supporting slide deck and exhibits that I encourage you to review. And with that, I'd like to turn the call over to Vijay.

Thank you, John. Good afternoon, and thank you for joining us for our fourth quarter and full year 2022 earnings call. I want to start off by saying how proud I am of our team. Our internal agents fielded over 1 million calls in the fourth quarter. Together with our external partners, we helped over 320,000 Medicare beneficiaries assess their current coverage and potential Medicare options and enroll in a plan. GoHealth has been and continues to be a leading health insurance marketplace and Medicare-focused digital health company. Our unique combination of cutting-edge technology data science, and deep industry expertise allows us to build trusted relationships with consumers and match them with the health policy and health plan that is right for them. On today's call, I'll provide a brief recap of our annual enrollment period, or AEP, results and how we approach this season differently from the past. I'll also discuss why we are positioned for success in 2023 and beyond and our 2023 guidance. Jason will then review our operating and financial results for 2022. As many of you know, we've been executing a transformation of Go Health since Jason and I joined the company mid last year. In advance of the 2022 AEP, we made several strategic and operational changes and executed against three clearly defined goals during the second half of 2022. First, improve cashflow from operations. Second, maximize efficiency in our model And third, prioritize more experienced, high-quality sales agents over volume of agents. I'm pleased to share that we delivered on these key focus areas. For full year 2022, we achieved cash flow from operations of a positive $61 million ahead of our target to achieve cash flow break-even in the first half of 2023. This cash flow improvement was driven by not only the better-than-expected shift towards our Encompass solution, which delivered on revenue, margin, and cash, but also our improved operating efficiency. Jason will describe our encompass economics in more detail. We showed year-over-year improvement on key performance measures, including effectuation, conversion, cost-per-effectuated policy, and margin profile, due to our disciplined marketing approach, the high-quality performance of our tenured agents, and our proprietary PlanFit technology improvement. Based on these actions, we delivered more than 20% improvement in AEP operating efficiency year-over-year. The plan we laid out for you in advance of ADP delivered the strong operational results we anticipated. Now, I'd like to share some thoughts on the current state of our market, how it's changed, and how we expect it to evolve. Our diversification into the Encompass solution is an intentional strategic and financial move for us, as seen through the lens of the broader market landscape. This diversification is critical to our ability to win because our industry is evolving. In an increasingly complex Medicare market, beneficiaries have challenges figuring out what health plan option works best for them as their needs change over time. They are bombarded by marketing messages from numerous parties as soon as they become eligible for Medicare, and then again during every ADP thereafter. More beneficiaries are switching from original Medicare to Medicare Advantage every year, with nearly 5% net beneficiaries switching from original Medicare to Medicare Advantage annually. There are over 5,000 Medicare Advantage plan options available across the country, and the average beneficiary has access to over 43 Medicare Advantage plans, up from 20 in 2018. Plan benefits are improving year over year. Differences between plans are nuanced on traditional benefits and hard to compare on supplemental benefits. Switching costs are low given that clinicians and highly utilized prescription drugs are now covered by most plans. Historically, a beneficiary shopped two to three times and made one to two plan changes over their Medicare eligibility span. Those changes are happening more often. There's a nearly 50-50 split between beneficiaries who shop minimally and beneficiaries who shop annually. We believe beneficiaries now switch as many as three to five times over the course of their eligibility as their needs change. It's important to define how we look at shopping and switching in the context of Medicare. We believe shopping is a beneficiary reviewing their current plan's covered services or costs relative to their current needs to see whether they are in the optimal plan or if they might need to consider a new option. Switching means moving from one plan to another. While we do believe that on average, plan stability is important for a beneficiary's improvement of overall health, we also believe that any individual beneficiary's needs so dynamic, it's critical to reassess their needs at least annually to ensure they're in the best available plan. We believe more beneficiaries should be shopping to make sure they're in the most appropriate plan and they need a trusted resource to help them. We believe policy switching is unavoidable as shopping increases. As beneficiaries continue to shop more, LTVs based on the length of a policy have gone down, even if the number of policies written overall is increasing. We, however, are primed to turn shopping into a strategic advantage as we increase our focus on building beneficiary relationships for the long term. If beneficiaries are going to shop, we want them to shop with us, regardless of whether we originally enrolled them in their plan. More beneficiaries will shop with us as we build a trusted relationship by delivering an unbiased, high-quality consumer shopping experience, leveraging an agnostic consumer marketplace with multiple plan options and developing credibility with beneficiaries. We want to be the destination that provides beneficiaries with a needs-based plan assessment every year, where the results of such an assessment might mean the beneficiary stays in their current plan if it's the best plan for their needs. If it is not the best plan, we make it easy to enroll in the better one. Furthermore, we help support the onboarding process to ensure they are able to activate the benefits that motivated the change. We are reinforcing the focus on a thorough and unbiased customer experience this year by compensating our agents not only on new enrollments and plan changes, but also on high quality personalized assessments that may not result in a sale. Our new standard operating model and customer experience, inclusive of Encompass, is built on the concept that neither plans nor beneficiary needs are static. Available benefits change every year, as do the health and financial needs of each beneficiary. We use our proprietary technology uniform best practices, and highly skilled agent workforce to assess each beneficiary's unique individual priorities and match them with the right plan. Our agents are compensated to ensure that beneficiaries in the most appropriate plan for their needs, regardless of whether we enrolled them in the traditional LTV policy previously or not. A key piece of the model is that there are no cookie cutter ratings and comparisons. Two beneficiaries living next door to each other with the same basic demographics on paper may prioritize different benefit options and thus end up with different plan matches. More importantly, even the same beneficiary calling in two consecutive years may have changes in their health and preferences and thus have a different recommended plan option. We have demonstrated that our model brings customers back year over year. Our data shows that nearly 25% of our calls in each AEP are from beneficiaries we have served and or enrolled in the previous year. To enhance the experience we provide, we look forward to broadening the plan options we compare for beneficiaries as opposed to limiting plan options like others in the industry. We enable a more direct and transparent competitive marketplace where health plans compete on an even playing field and where winning is tied to the best benefits, quality, and experience for beneficiaries. Encompass is a new standard customer experience at GoHealth with our internal captive agents, and we intend to begin transitioning some of our external channel downline partners to the Encompass solution as well. A uniform and consistent experience for the beneficiary, regardless of where they live, what their needs are, what plan they choose, and which agent they speak to, is a critical piece of building a long-lasting, trusted relationship. This will be a key area of focus for us in 2023. We have made a strategic decision to focus on the Medicare shopping experience. To ensure success, remove distractions to our team, and streamline our operations, we have decided to exit our non-encompassed BPO enterprise services business or dedicated health plan and agency arrangement. This move allows us to redirect our most precious assets, our experience in high-quality agents, towards our most highly valued services. Jason will address the financial implications of this change in more detail. Looking ahead to 2023 and beyond, we are positioned to win We believe we will win because of our deep understanding of the new market reality and our strategic initiatives underway. People will continue to shop, and while others in the industry are reducing the plan options they offer, focusing on who pays more as opposed to who offers the best benefit and quality options, we are positioning GoHealth to be the chosen, trusted partner that consumers shop with. We're doing so by expanding our Encompass solution, adding more diverse, high-quality choices for beneficiaries in our marketplace. continuing to invest in our agents, and by developing our proprietary technology to complete assessments and build for the future. We're diversifying our operating model and marketing approach to expand our universe of beneficiaries, while at the same time, diversifying our business model and our financials away from the current LTB model, where LTB is measured on a policy basis. Finally, I'm pleased to share that we are reinstating guidance. Our 2023 guidance builds on our efficient exit run rate from 2022 and incorporates our strategic initiatives. We expect 2023 revenue to be between $750 million and $850 million. We anticipate adjusted EBITDA in the range of $100 million and $140 million. And we expect cash flow from operations of a positive $75 million to a positive $115 million. I'll now turn the call over to Jason to provide more details on the financials. Jason?