GoHealth Navigates Medicare Advantage Challenges with Strategic Repositioning
TL;DR
GoHealth's strategic focus on margin integrity and renewal stability positions it to capitalize on market stabilization with a diversified revenue stream from GoHealth Protect.
GoHealth reported 3Q25 net revenues of $34.2M, down from $118.3M, due to intentional Medicare Advantage volume reduction and $80M new loan facility supporting working capital compliance.
GoHealth's focus on retention and quality member care aims to provide stable healthcare coverage during industry transitions, benefiting consumers through reliable service.
GoHealth Protect revenue grew meaningfully while traditional agency revenue dropped 71.5%, showing a strategic pivot toward diversified income streams beyond commission models.
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GoHealth Inc. reported a difficult third quarter as the company continued to navigate a materially different Medicare Advantage environment. Net revenues declined to $34.2 million from $118.3 million a year ago, reflecting an intentional pullback in Medicare Advantage volume, reduced non-agency activity, and a broader industry shift toward margin integrity and renewal stability. The significant revenue contraction highlights the ongoing challenges in the health insurance marketplace and the strategic repositioning required for sustainable operations.
Medicare agency and non-agency revenues both declined meaningfully year over year, while other revenue increased as GoHealth Protect and related offerings continued to scale and diversify the top line. Results were further pressured by significant non-cash impairment charges, which weighed on reported margins, even as management focused on preserving liquidity, platform efficiency, and a high-quality member base. As 2025 progresses, management remains focused on retention, quality, and disciplined execution through the current Annual Enrollment Period, with an eye toward re-accelerating when market conditions stabilize.
During the third quarter, GoHealth advanced its strategic and capital initiatives, building on the super priority term loan facility finalized earlier in the year. The senior secured super priority term loan, including $80.0 million of new money, continues to support working capital and enhance strategic flexibility, while keeping the company in compliance with its debt covenants and providing room for future consolidation. The company refreshed its Board of Directors and continues to evaluate integration opportunities across a fragmented broker landscape. Stonegate Capital Partners provides detailed analysis of these developments through their research coverage available at https://www.stonegateinc.com.
Sales metrics showed substantial changes in the quarter, with sales per submission declining by 34.3% year-over-year to $461. This reflected both the deliberate volume pullback and evolving revenue mix. Agency revenue decreased by 71.5% while non-agency revenue declined by 96.5% year-over-year. The growth in other revenue, supported by continued momentum in GoHealth Protect, indicates the company's efforts to diversify revenue beyond traditional commission streams. The Sales/Direct Operating Cost of Submission ratio moved down to 0.6x from 1.1x as lower scale and mix shifts weighed on leverage.
The company faced additional challenges in customer acquisition costs, with average CAC increasing 14.0% year over year to $716. While near-term margins remain compressed given the intentional pullback in volume and higher quarterly unit costs, management maintains a disciplined approach to acquisition efficiency, focusing on agent productivity, enhanced training, and data-driven marketing strategies. Stonegate Capital Partners' valuation analysis uses a combined historical FY24 EBITDA blended with expected FY27 EBITDA, normalizing to a medium-term EBITDA of approximately $85.0 million, resulting in a valuation range of $7.46 to $14.32 with a midpoint of $10.89.
Curated from Reportable
