GoHealth(GOCO) - 2025 Q2 - Quarterly Report

Cover Page and Filing Information Registrant Information GoHealth, Inc. is a Delaware corporation, trading as GOCO on Nasdaq Global Market, classified as a non-accelerated filer and smaller reporting company - GoHealth, Inc. is listed on the Nasdaq Global Market under the ticker symbol GOCO[4] - Company Filing Status | Status | Mark | | :--- | :--- | | Large Accelerated Filer | ☐ | | Accelerated Filer | ☐ | | Non-Accelerated Filer | ☒ | | Smaller Reporting Company | ☒ | | Emerging Growth Company | ☐ | - As of August 7, 2025, the company had 15,988,354 shares of Class A common stock and 12,620,884 shares of Class B common stock issued[5] Preliminary Information CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This report contains forward-looking statements concerning liquidity, future operations, business strategy, AI technology, regulatory impacts, and the e-TeleQuote acquisition integration - Forward-looking statements cover liquidity, future operating results, business strategy, AI technology application, regulatory changes, and e-TeleQuote acquisition integration[9] - Actual results may differ materially from forward-looking statements due to factors described in "Risk Factors" and "Management's Discussion and Analysis"[10][11] CERTAIN DEFINITIONS AND KEY TERMS This section defines key terms used in the report, including company entities, equity structure parties, and transactions - "We", "the Company", "GoHealth" refer to GoHealth, Inc. and its direct and indirect subsidiaries, including GoHealth Holdings, LLC[14] - "Continuing Equity Owners" are direct or indirect holders of GHH, LLC's LLC interests and the Company's Class B common stock, convertible into Class A common stock or cash under certain conditions[14] - "Transactions" refer to the Company's initial public offering (IPO) and related organizational transactions[19] NON-GAAP FINANCIAL MEASURES The company uses non-GAAP financial measures like EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin to supplement GAAP statements and assess operating performance - Non-GAAP financial measures include EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin, supplementing GAAP financial information[17][181] - Adjusted EBITDA is management's primary non-GAAP financial performance metric for evaluating the business, monitoring operating results, and is a basis for certain compensation plans[17][182] - Non-GAAP metrics may not be comparable to other companies and should not be considered in isolation or as a substitute for GAAP measures[17][182][183] - Non-GAAP Financial Measures Definitions | Metric | Definition | | :--- | :--- | | EBITDA | Net income (loss) plus interest expense, income tax expense (benefit), and depreciation and amortization expense | | Adjusted EBITDA | EBITDA adjusted for specific items such as share-based compensation, professional service fees, legal fees, asset impairment, and severance expenses | | Adjusted EBITDA Margin | Adjusted EBITDA divided by net revenue | KEY BUSINESS PERFORMANCE AND OPERATING METRICS Key business and operating metrics such as Submissions, Sales per Submission, and Direct Operating Cost per Submission are used to evaluate performance and drive operations - Key operating metrics include Sales per Submission and Direct Operating Cost per Submission, used to understand the company's underlying financial performance and trends[23] - "Submission" refers to a completed and approved Medicare application, an application referred through the Encompass model, or a completed and approved GoHealth Protect application[24][193] - "Sales per Submission" measures the average revenue generated per submission during the reporting period, including Medicare agency and non-agency revenue and GoHealth Protect revenue[24][195] - "Direct Operating Cost per Submission" measures the average cost directly incurred per submission during the reporting period, including revenue share, marketing and advertising, and consumer care and enrollment expenses[24][199] PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. This section presents GoHealth, Inc.'s unaudited condensed consolidated financial statements as of June 30, 2025, and December 31, 2024, with detailed notes CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the three months ended June 30, 2025, net revenue was $94,048 thousand, a 11.2% decrease year-over-year, with operating loss expanding to $99,386 thousand and net loss at $115,989 thousand - Condensed Consolidated Statements of Operations Summary (Unaudited, in thousands of dollars, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | 94,048 | 105,870 | 315,020 | 291,470 | | Total Operating Expenses | 193,434 | 146,480 | 407,737 | 336,112 | | Operating Income (Loss) | (99,386) | (40,610) | (92,717) | (44,642) | | Interest Expense | 16,945 | 18,096 | 32,899 | 36,047 | | Income Tax (Benefit) Expense | (353) | (40) | 749 | (111) | | Net Income (Loss) | (115,989) | (59,314) | (125,775) | (80,660) | | Net Income (Loss) Attributable to GoHealth, Inc. | (54,277) | (25,996) | (58,685) | (35,212) | | Net Income (Loss) Per Share of Class A Common Stock—Basic and Diluted | (5.10) | (2.70) | (5.72) | (3.76) | - Net revenue for Q2 2025 decreased by 11.2% year-over-year, primarily due to the company's conscious scaling back of Medicare Advantage business activities[26][169] - Operating loss and net loss for Q2 2025 significantly expanded year-over-year, partly due to a $53.0 million intangible asset impairment charge[26][179] CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) For the three months ended June 30, 2025, comprehensive loss expanded to $115,769 thousand from $59,361 thousand in the prior year, with comprehensive loss attributable to GoHealth, Inc. at $54,174 thousand - Condensed Consolidated Statements of Comprehensive Income (Loss) Summary (Unaudited, in thousands of dollars) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | (115,989) | (59,314) | (125,775) | (80,660) | | Other Comprehensive Income (Loss): | | | | | | Foreign Currency Translation Adjustment | 220 | (47) | 101 | (52) | | Comprehensive Income (Loss) | (115,769) | (59,361) | (125,674) | (80,712) | | Comprehensive Income (Loss) Attributable to Non-Controlling Interests | (61,595) | (33,344) | (67,038) | (45,477) | | Comprehensive Income (Loss) Attributable to GoHealth, Inc. | (54,174) | (26,017) | (58,636) | (35,235) | CONDENSED CONSOLIDATED BALANCE SHEETS As of June 30, 2025, total assets were $1,311,060 thousand, down from $1,488,423 thousand at December 31, 2024, reflecting increased liabilities and reduced stockholders' equity - Condensed Consolidated Balance Sheets Summary (Unaudited, in thousands of dollars, except per share amounts) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and Cash Equivalents | 35,590 | 40,921 | | Commissions Receivable - Current | 226,152 | 320,399 | | Total Current Assets | 288,802 | 400,411 | | Commissions Receivable - Non-Current | 770,452 | 733,161 | | Intangible Assets, Net | 202,469 | 302,497 | | Total Assets | 1,311,060 | 1,488,423 | | Liabilities | | | | Total Current Liabilities | 185,003 | 338,052 | | Long-Term Debt, Net of Current Portion | 560,003 | 447,865 | | Total Liabilities | 792,075 | 691,971 | | Stockholders' Equity | | | | Total Stockholders' Equity Attributable to GoHealth, Inc. | 191,775 | 241,839 | | Non-Controlling Interests | 87,317 | 163,599 | | Total Stockholders' Equity | 279,092 | 405,438 | - Net intangible assets were $202,469 thousand as of June 30, 2025, a significant decrease from $302,497 thousand at December 31, 2024, primarily due to a $53.0 million intangible asset impairment charge[33][65] - Long-term debt, net of current portion, increased from $447,865 thousand at December 31, 2024, to $560,003 thousand at June 30, 2025, reflecting increased borrowings[33][69] CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY For the six months ended June 30, 2025, total stockholders' equity attributable to GoHealth, Inc. decreased from $405,438 thousand to $279,092 thousand, primarily due to net loss and reduced non-controlling interests - Condensed Consolidated Statements of Changes in Stockholders' Equity Summary (Unaudited, in thousands of dollars) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Beginning Balance (January 1) | 405,438 | 405,653 | | Net Income (Loss) | (125,775) | (80,660) | | Net Income (Loss) Attributable to GoHealth, Inc. | (58,685) | (35,212) | | Net Income (Loss) Attributable to Non-Controlling Interests | (67,090) | (45,448) | | Share-Based Compensation Expense | 5,952 | 5,546 | | Treasury Stock Repurchases (Employee Tax Withholding) | (5,028) | (1,335) | | Class A Redeemable Convertible Preferred Stock Accrued Dividends | (1,928) | (1,799) | | LLC Interest Redemptions | — | — | | Ending Balance (June 30) | 279,092 | 327,799 | - As of June 30, 2025, the accumulated deficit attributable to GoHealth, Inc. increased to $481,893 thousand, reflecting ongoing net losses[41] - The weighted-average ownership percentage of non-controlling interests for the six months ended June 30, 2025, was 54.1%, down from 56.5% in the prior year period[85] CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the six months ended June 30, 2025, net cash used in operating activities increased to $50,222 thousand, while net cash from financing activities significantly increased due to higher Class A revolving credit facility borrowings - Condensed Consolidated Statements of Cash Flows Summary (Unaudited, in thousands of dollars) | Cash Flow Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | (50,222) | (23,984) | | Net Cash from Investing Activities | (5,877) | (7,258) | | Net Cash from Financing Activities | 50,667 | (45,391) | | Cash and Cash Equivalents, End of Period | 35,590 | 14,124 | - Net cash used in operating activities increased by $26.2 million, primarily due to increased net loss and reduced cash from working capital items like commissions receivable, prepaid expenses, and accrued liabilities[211] - Net cash provided by financing activities increased by $96.1 million, mainly due to increased borrowings under the Class A revolving credit facility and reduced term loan repayments[213] NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS This section provides detailed notes to the condensed consolidated financial statements, covering business description, accounting policies, fair value, intangible assets, debt, equity, and subsequent events 1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES GoHealth is a leading health insurance marketplace and Medicare-focused digital health company, using its platform and licensed agents to help consumers select Medicare plans - GoHealth serves 67 million Medicare-eligible Americans by simplifying Medicare plan selection through its technology platform and licensed agents[46][154] - The company primarily offers Medicare Advantage, Medicare Supplement, and prescription drug plans, utilizing machine learning algorithms to match consumer needs[47] - The company has secured additional liquidity through the Superpriority Credit Agreement and Amendment No. 14, with management believing going concern doubts have been alleviated[55] - The Medicare Annual Enrollment Period (AEP) in Q4 drives increased submissions and related expenses, with Q1 being the second highest and Q2/Q3 the lowest[57] 2. FAIR VALUE MEASUREMENTS The company measures financial instruments at fair value using a three-level hierarchy, recording impairment charges for operating leases and an indefinite-lived trade name using Level 3 inputs - The company categorizes fair value inputs into three levels: Level 1 (quoted prices in active markets), Level 2 (similar assets or non-active market quotes), and Level 3 (unobservable inputs)[61] - For the three and six months ended June 30, 2025, the company recorded $0.1 million and $0.8 million, respectively, in operating lease impairment charges due to termination or subleasing of office and call center spaces[63][180] - For the three and six months ended June 30, 2025, the company recorded a $53.0 million impairment charge to its indefinite-lived trade name, reducing its carrying value to $20.0 million, estimated using the relief-from-royalty method under the income approach (Level 3 inputs)[64][65][179] 3. INTANGIBLE ASSETS, NET As of June 30, 2025, net intangible assets were $202,469 thousand, a significant decrease from $302,497 thousand, primarily due to a $53.0 million impairment of an indefinite-lived trade name - In Q2 2025, the company recorded a $53.0 million impairment charge to its indefinite-lived trade name, reducing its carrying value to $20.0 million[65][179] - The impairment resulted from revised long-term forecasts reflecting a conscious scaling back of Medicare Advantage business activities due to tightening health plan economics[65] - Intangible Assets, Net (in thousands of dollars) | Category | Net Carrying Value June 30, 2025 | Net Carrying Value December 31, 2024 | | :--- | :--- | :--- | | Developed Technology | 85,029 | 120,457 | | Customer Relationships | 97,440 | 109,040 | | Indefinite-Lived Trade Name | 20,000 | 73,000 | | Total Intangible Assets | 202,469 | 302,497 | 4. LONG-TERM DEBT As of June 30, 2025, total long-term debt was $560,003 thousand, including existing term loans and a Class A revolving credit facility, with subsequent amendments further adjusting debt terms - Long-Term Debt Composition (in thousands of dollars) | Debt Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Existing Term Loan | 490,803 | 475,000 | | Class A Revolving Credit Facility | 89,741 | 30,000 | | Less: Unamortized Debt Discount and Issuance Costs | (20,541) | (17,635) | | Total Debt | 560,003 | 487,365 | | Less: Current Portion of Long-Term Debt | — | (39,500) | | Total Long-Term Debt | 560,003 | 447,865 | - As of June 30, 2025, the outstanding principal for the existing term loan was $490.8 million, with an effective interest rate of 11.78%[71] - As of June 30, 2025, the outstanding amount for the Class A revolving credit facility was $89.7 million, with no remaining available capacity[74] - Amendment No. 13, signed on June 30, 2025, extended the maturity date of the Class A revolving credit facility and allowed for payment-in-kind interest for both term loans and the Class A revolving credit facility[78] 5. STOCKHOLDERS' EQUITY The company's equity structure includes Class A common stock, Class B common stock, and redeemable convertible preferred stock, with specific voting, dividend, and conversion rights - The company's Class A and Class B common stock maintain a one-to-one ratio with GHH, LLC's LLC interests, and Class B common stockholders do not receive dividends[82][83] - Non-controlling interests represent the economic interests of Continuing Equity Owners in GHH, LLC, with weighted-average ownership percentages of 53.2% and 54.1% for the three and six months ended June 30, 2025, respectively[85][163] - Class A redeemable convertible preferred stock carries a 7.0% annual dividend rate and is convertible into Class A common stock or Class A-1 convertible preferred stock under certain conditions[90][91] - The company classifies Class A redeemable convertible preferred stock and Class A-1 convertible preferred stock as temporary equity because their redemption is not solely within the company's control[100] 6. SHARE-BASED COMPENSATION PLANS For the three months ended June 30, 2025, total share-based compensation expense (benefit) was $(135) thousand, compared to $1,892 thousand in the prior year period - Share-Based Compensation Expense (Benefit) by Operating Function (Unaudited, in thousands of dollars) | Operating Function | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Marketing and Advertising | 85 | 52 | 149 | 128 | | Consumer Care and Enrollment | 148 | 328 | 428 | 652 | | Technology | 219 | 247 | 506 | 486 | | General and Administrative | (587) | 1,265 | 1,585 | 2,409 | | Total Share-Based Compensation Expense (Benefit) | (135) | 1,892 | 2,668 | 3,675 | - Share-based compensation expense for Q2 2025 turned into a benefit, primarily due to a negative benefit related to stock appreciation rights (SARs) within general and administrative expenses[101] 7. NET INCOME (LOSS) PER SHARE For the three months ended June 30, 2025, basic and diluted loss per share of Class A common stock was $5.10, an increase from $2.70 in the prior year, with diluted loss equal to basic loss - Basic and Diluted Net Loss Per Share of Class A Common Stock Calculation (Unaudited, in thousands of dollars, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Loss Attributable to Common Stockholders - Basic and Diluted | (55,249) | (26,903) | (60,613) | (37,011) | | Weighted-Average Shares of Class A Common Stock - Basic and Diluted | 10,830 | 9,973 | 10,603 | 9,844 | | Net Loss Per Share of Class A Common Stock - Basic and Diluted | (5.10) | (2.70) | (5.72) | (3.76) | - Diluted loss per share is the same as basic loss per share because the inclusion of potentially issuable shares (including equity awards, redeemable convertible preferred stock, and Class B common stock) would be anti-dilutive[102][103] 8. INCOME TAXES GoHealth, Inc. is taxed as a corporation, while GHH, LLC is taxed as a partnership. The company's effective tax rates for the three and six months ended June 30, 2025, were 0.30% and (0.60)%, respectively, below the statutory rate - GoHealth, Inc. is taxed as a corporation, while GHH, LLC is taxed as a partnership and does not pay federal income tax[104] - Effective Tax Rate | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Effective Tax Rate | 0.30% | 0.07% | (0.60)% | 0.14% | - The effective tax rate is lower than the statutory rate, primarily due to loss entities and losses attributable to non-controlling interests[105] - As of June 30, 2025, and December 31, 2024, the liability related to the tax receivable agreement was $1.1 million[107] 9. REVENUE Company revenue primarily derives from Medicare insurance product sales and management. For the three months ended June 30, 2025, total net revenue decreased by 11.2% to $94,048 thousand - Revenue Breakdown (Unaudited, in thousands of dollars) | Revenue Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Medicare Agency Commission Revenue | 73,322 | 70,553 | 240,431 | 150,286 | | Medicare Partner Marketing and Other Revenue | 7,852 | 14,127 | 28,376 | 33,517 | | Total Medicare Agency Revenue | 81,174 | 84,680 | 268,807 | 183,803 | | Medicare Non-Agency Revenue | 4,211 | 20,444 | 35,982 | 106,346 | | Total Medicare Revenue | 85,385 | 105,124 | 304,789 | 290,149 | | Other Non-Agency Revenue | 8,417 | 309 | 9,701 | 472 | | Other Agency Revenue | 246 | 437 | 530 | 849 | | Total Other Revenue | 8,663 | 746 | 10,231 | 1,321 | | Total Net Revenue | 94,048 | 105,870 | 315,020 | 291,470 | - Medicare agency revenue, including commission revenue and partner marketing and other revenue, is estimated based on the expected policy life and historical experience[110][112] - Medicare non-agency revenue, including enrollment and engagement services like Encompass Connect and Encompass Engage, and GoHealth Protect products, is recognized when services are provided or near the point of sale[114][115][116] - As of June 30, 2025, the ending balance of commissions receivable was $996,604 thousand, with $770,452 thousand classified as non-current[122] - Revenue Concentration by Major Customer | Customer | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | United | 43.4 % | 22.2 % | 39.2 % | 18.3 % | | Humana | 22.7 % | 25.3 % | 27.2 % | 20.3 % | | Elevance Health | 14.2 % | 15.6 % | 12.3 % | 20.1 % | 10. LEASES The company has operating lease agreements maturing between 2025 and 2032, incurring net lease expenses of $1,312 thousand and $2,845 thousand for the three and six months ended June 30, 2025, respectively - Lease Expense Components (Unaudited, in thousands of dollars) | Lease Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Operating Lease Cost | 1,778 | 2,001 | 3,988 | 3,947 | | Short-Term Lease Cost | — | 16 | 3 | 37 | | Variable Lease Cost | 36 | 109 | 82 | 271 | | Sublease Income | (502) | (669) | (1,228) | (1,176) | | Total Net Lease Expense | 1,312 | 1,457 | 2,845 | 3,079 | - The company incurred $0.1 million and $0.8 million in operating lease impairment charges for Q2 and H1 2025, respectively, due to terminating or subleasing portions of office and call center spaces[127][180] - The company recognized a one-time gain of $0.1 million and $0.3 million for Q2 and H1 2025, respectively, from lease liability remeasurement and right-of-use asset adjustments due to early lease terminations[127] - As of June 30, 2025, the weighted-average remaining operating lease term was 6.2 years, with a weighted-average discount rate of 9.4%[129] 11. COMMITMENTS AND CONTINGENCIES The company faces multiple legal proceedings, including a derivative lawsuit and a False Claims Act lawsuit intervened by the Department of Justice, alleging violations in health plan partner arrangements - The company faces a derivative lawsuit alleging breaches of fiduciary duty by certain officers and directors, which is currently stayed[130][131] - The Department of Justice has intervened in a False Claims Act lawsuit against the company, alleging illegal compensation and discriminatory practices in arrangements with health plan partners[132][239] - This lawsuit could result in treble damages, civil penalties, and costs, which the company intends to vigorously defend, but the outcome could materially adversely affect its financial condition[132][239] 12. RELATED PARTY TRANSACTIONS The company has multiple lease agreements with entities controlled by significant stockholders, paying $1.0 million and $2.2 million in lease payments for the three and six months ended June 30, 2025, respectively - The company has lease agreements for office space with entities controlled by significant stockholders[133] - Related Party Lease Payments (Unaudited, in thousands of dollars) | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Lease Payments | 1,000 | 1,500 | 2,200 | 3,000 | 13. SEGMENT REPORTING The company operates as a single reportable segment focused on Medicare product sales and management, with the CEO assessing performance based on consolidated net income (loss) - The company has a single operating and reportable segment focused on Medicare product sales and management[134][135] - The Chief Operating Decision Maker (CEO) assesses the company's performance and allocates resources based on consolidated net income (loss)[135][137][138] - The vast majority of the company's revenue is derived from U.S. customers, and all assets are primarily located in the U.S[136] 14. SUBSEQUENT EVENTS On August 6, 2025, the company completed strategic capital and governance actions, including a Superpriority Credit Agreement for $115 million in senior secured superpriority term loans and Amendment No. 14 - On August 6, 2025, the company signed the Superpriority Credit Agreement, establishing a $115.0 million senior secured superpriority term loan, including $80.0 million in new money and $35.0 million in rolled-over loans[140][221] - Proceeds from the Superpriority Facility will be used for working capital, general corporate purposes, and transaction expenses, maturing on August 5, 2029[140][221] - The Superpriority Facility includes a minimum liquidity covenant requiring the company to maintain minimum liquidity between $5.0 million and $30.0 million on specific dates[144] - Amendment No. 14 terminated the Class A-1 and Class A revolving credit facility commitments, extended the maturity of the remaining Class A revolving loans to August 5, 2029, and waived principal payments on existing term loans until December 31, 2026[147][148][220] - As consideration for Amendment No. 14, the company issued 4,766,219 shares of Class A common stock to lenders, representing 19.99% of the total Class A and Class B common stock outstanding prior to the transaction[150][241][242] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS. This section provides management's discussion and analysis of the company's financial condition and operating results, covering business overview, strategy, ownership, performance, non-GAAP metrics, and liquidity Overview GoHealth is a leading health insurance marketplace and Medicare-focused digital health company, simplifying complex health plan choices for 67 million Medicare-eligible Americans - GoHealth aims to simplify the Medicare plan enrollment process by providing education, comparative guidance, transparency, and choice[154] - The company partners with health plans to offer high-quality health plans across all 50 states and the District of Columbia[154] Update on Business Trends and Strategy GoHealth is transitioning from a traditional Medicare enrollment company to a Medicare engagement company, focusing on high-quality consumer relationships through its Encompass operating model - The company has transitioned from a traditional Medicare enrollment company to a Medicare engagement company, focusing on consumer care through its Encompass operating model[155] - GoHealth Protect, launched in Q1 2025, expands into guaranteed issue life insurance, aiming to support the existing customer base and contribute future revenue[157] - The company leverages AI and automation to enhance its platform, improving operational efficiency and consumer engagement, including launching web self-enrollment workflows and AI agents[159] - In Q2 2025, the company consciously scaled back Medicare Advantage activities in response to tightening health plan economics and the non-commissioning of some plans[161] - The CMS 2026 plan year final rate notice announced an average 5.06% increase in Medicare Advantage revenue and a 10.72% increase in broker commissions[161] - The company's Board of Directors established a "Transformation Committee" to review, develop, and negotiate strategic alternatives, including refinancing, securitization, M&A, or restructuring[162] Ownership GoHealth, Inc. is the sole managing member of GHH, LLC, controlling its business and consolidating financial results, with non-controlling interests representing Continuing Equity Owners' economic stake - GoHealth, Inc. holds the sole voting and control rights of GHH, LLC and consolidates its financial results[163] - The weighted-average ownership percentage of non-controlling interests was 53.2% and 54.1% for Q2 and H1 2025, respectively[163] - The company is required to make distributions to GHH, LLC to cover expenses incurred as a public company and payments under the tax receivable agreement[167] Results of Operations For the three months ended June 30, 2025, net revenue decreased by 11.2% to $94,048 thousand, with operating loss expanding to $99,386 thousand and net loss at $115,989 thousand, impacted by a $53.0 million intangible asset impairment - Condensed Consolidated Results of Operations Summary (Unaudited, in thousands of dollars) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | 94,048 | 105,870 | 315,020 | 291,470 | | Operating Income (Loss) | (99,386) | (40,610) | (92,717) | (44,642) | | Net Income (Loss) | (115,989) | (59,314) | (125,775) | (80,660) | | EBITDA | (73,200) | (14,960) | (39,453) | 7,819 | | Adjusted EBITDA | (11,295) | (12,308) | 30,765 | 14,585 | | Net Income (Loss) Margin | (123.3)% | (56.0)% | (39.9)% | (27.7)% | | Adjusted EBITDA Margin | (12.0)% | (11.6)% | 9.8 % | 5.0 % | - Net revenue for Q2 2025 decreased by 11.2% year-over-year, primarily due to the company's conscious scaling back of Medicare Advantage activities, partially offset by the launch of GoHealth Protect[169] - Revenue share expenses for Q2 2025 increased by 56.7% year-over-year, mainly due to increased external agent submissions[170][171] - Marketing and advertising expenses for Q2 2025 decreased by 26.2% year-over-year, primarily due to a conscious reduction in marketing spend to align with the GoHealth Protect launch[172] - Consumer care and enrollment expenses for Q2 2025 decreased by 33.3% year-over-year, primarily due to a reduction in agent headcount[173] - Intangible asset impairment expense for Q2 2025 was $53.0 million, compared to zero in the prior year period[179] Non-GAAP Financial Measures The company uses non-GAAP financial measures like EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin to assess performance, with Adjusted EBITDA for the three months ended June 30, 2025, at $(11,295) thousand - Reconciliation of GAAP Net Income (Loss) to EBITDA and Adjusted EBITDA (Unaudited, in thousands of dollars) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | (115,989) | (59,314) | (125,775) | (80,660) | | EBITDA | (73,200) | (14,960) | (39,453) | 7,819 | | Share-Based Compensation Expense (Benefit) | (135) | 1,892 | 2,668 | 3,675 | | Professional Service Fees | 6,585 | — | 7,381 | — | | Legal Fees | 2,417 | 174 | 2,842 | 677 | | Operating Lease Impairment and Other Expenses | 38 | — | 512 | — | | Intangible Asset Impairment Expense | 53,000 | — | 53,000 | — | | Severance Expenses | — | 586 | 3,815 | 2,414 | | Adjusted EBITDA | (11,295) | (12,308) | 30,765 | 14,585 | | Adjusted EBITDA Margin | (12.0)% | (11.6)% | 9.8 % | 5.0 % | - Adjusted EBITDA loss for Q2 2025 narrowed by 8.2% year-over-year, driven by improved agent productivity, targeted marketing, and proprietary technology enhancements, partially offset by decreased net revenue[188] - Adjusted EBITDA for H1 2025 increased by 110.9% year-over-year, primarily due to increased net revenue and improved operating efficiency[188] Key Business Performance and Operating Metrics The company uses Submissions, Sales per Submission, and Direct Operating Cost per Submission to evaluate business performance, with Q2 2025 submissions down 7.5% and H1 2025 submissions up 20.5% - Key Business Performance and Operating Metrics (Unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Submissions | 140,991 | 152,394 | 444,103 | 368,542 | | Sales per Submission | 657 | 690 | 703 | 787 | | Direct Operating Cost per Submission | 613 | 641 | 551 | 640 | | Sales per Submission / Direct Operating Cost per Submission | 1.1 | 1.1 | 1.3 | 1.2 | - Submissions for Q2 2025 decreased by 7.5% year-over-year, primarily due to reduced internal agent submissions, reflecting a shift in focus to GoHealth Protect[194] - Submissions for H1 2025 increased by 20.5% year-over-year, primarily due to increased external agent submissions and higher agent headcount from the e-TeleQuote acquisition[194] - Sales per Submission decreased in Q2 and H1 2025, mainly due to a shift in focus to GoHealth Protect (which has lower revenue per submission) and changes in carrier mix within non-agency channels[198] - Direct Operating Cost per Submission decreased in Q2 and H1 2025, primarily driven by improved agent productivity and technology investments[202] Liquidity and Capital Resources As of June 30, 2025, cash and cash equivalents were $35.6 million. Management believes the company has sufficient liquidity for the next 12 months through operating cash flow, existing cash, and Superpriority New Money Term Loans - As of June 30, 2025, cash and cash equivalents were $35.6 million[204] - Management believes the liquidity provided by the Superpriority Facility is sufficient to meet operating and debt obligations for the next 12 months, alleviating substantial doubt about going concern[204] - Cash Flow Summary (Unaudited, in thousands of dollars) | Cash Flow Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | (50,222) | (23,984) | | Net Cash from Investing Activities | (5,877) | (7,258) | | Net Cash from Financing Activities | 50,667 | (45,391) | - Net cash used in operating activities for H1 2025 increased by $26.2 million, primarily due to increased net loss and changes in working capital[211] - Net cash provided by financing activities for H1 2025 was $50.7 million, a significant improvement from a net outflow of $45.4 million in the prior year period, mainly due to increased Class A revolving credit facility borrowings[213] Recent Accounting Pronouncements This section refers to the discussion of recent accounting pronouncements in Note 1 to the financial statements - The company is evaluating the impact of ASU 2023-09 (Income Tax Disclosures Improvements) and ASU 2024-03 (Expense Disaggregation Disclosures in the Income Statement) on its disclosures[58][59] Critical Accounting Policies and Estimates The company relies on estimates and assumptions in preparing financial statements, with intangible asset valuation being a critical area, including a $53.0 million impairment of an indefinite-lived trade name in Q2 2025 - The company relies on estimates and assumptions for revenue, expenses, assets, and liabilities when preparing financial statements[224] - In Q2 2025, the company recorded a $53.0 million impairment charge to its indefinite-lived trade name, reducing its carrying value to $20.0 million, due to revised long-term forecasts[226] - Fair value valuation of intangible assets involves significant estimates and assumptions, such as revenue forecasts, royalty rates, and discount rates, where changes could lead to additional impairments[226] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. As a smaller reporting company, GoHealth, Inc. is not required to include quantitative and qualitative disclosures about market risk in this report - As a smaller reporting company, the company is exempt from disclosing quantitative and qualitative information about market risk[227] ITEM 4. CONTROLS AND PROCEDURES. Management assessed the effectiveness of the company's disclosure controls and procedures and internal control over financial reporting as of June 30, 2025, concluding they were effective, excluding the e-TeleQuote acquisition - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[228][231] - Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP[229][230][232] - In assessing the effectiveness of internal control over financial reporting, the company excluded the e-TeleQuote acquisition, as SEC guidance permits exclusion during the first year post-acquisition[233] - No material changes occurred in internal control over financial reporting during the quarter[234] PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The company faces multiple legal proceedings, including a derivative lawsuit and a False Claims Act lawsuit intervened by the Department of Justice, alleging violations in health plan partner arrangements - The company faces a derivative lawsuit and a False Claims Act lawsuit intervened by the Department of Justice[132][237][239] - The False Claims Act lawsuit alleges illegal compensation and discriminatory practices in arrangements with health plan partners, potentially leading to treble damages, civil penalties, and costs[132][239] ITEM 1A. RISK FACTORS. Risk factors include potential adverse impacts from legal proceedings, renewed going concern doubts due to liquidity, and stock price depreciation from the issuance of Class A common stock - Legal proceedings and government investigations can be time-consuming, distract management, incur significant expenses, and harm relationships with partners, lenders, and investors[239] - The company's liquidity position previously raised substantial doubt about its ability to continue as a going concern, and despite new credit agreements, it could deteriorate or fail to comply with financial covenants in the future[240] - The issuance of 4,766,219 shares of Class A common stock to lenders on August 6, 2025, could lead to a decrease in stock price and dilution of existing stockholders' holdings[150][241] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. The company had no unregistered securities sales for the three months ended June 30, 2025, but issued 4,766,219 shares of Class A common stock to lenders on August 6, 2025, as consideration for a credit agreement amendment - No unregistered securities sales occurred in Q2 2025[242] - On August 6, 2025, as consideration for Amendment No. 14 to the credit agreement, the company issued 4,766,219 shares of Class A common stock to lenders[242] ITEM 3. DEFAULTS UPON SENIOR SECURITIES. No defaults upon senior securities occurred during this reporting period - No defaults upon senior securities occurred during this reporting period[244] ITEM 4. MINE SAFETY DISCLOSURES. The company is not required to provide mine safety disclosures for this reporting period - No mine safety disclosures are required for this reporting period[246] ITEM 5. OTHER INFORMATION. No Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by any director or officer during the quarter ended June 30, 2025 - No Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by company directors or senior officers during Q2 2025[247] ITEM 6. EXHIBITS. This section lists all exhibits filed with this quarterly report, including articles of incorporation, credit agreement amendments, equity incentive plans, and executive certifications - Exhibits include articles of incorporation, credit agreement amendments (e.g., Amendment No. 13 and Amendment No. 14), the Superpriority Senior Secured Credit Agreement, equity incentive plans, and executive certification documents[249] SIGNATURES Signatures This report was duly signed by GoHealth, Inc.'s Chief Executive Officer, Vijay Kotte, and Chief Financial Officer, Brendan Shanahan, on August 12, 2025 - This report was signed by CEO Vijay Kotte and CFO Brendan Shanahan on August 12, 2025[253]