A web-based health insurance broker is trying to turn itself into a publicly traded company — and giving the world a peek at how its revenue works.
The web broker, GoHealth, aims to use an initial public offering (IPO) of stock to help the partners who now own the company cash out, and to raise money for general corporate purposes.
If all goes well, the 19-year-old, Chicago-based company could end up getting about $705 million in extra cash.
Resources
- Links to GoHealth stock offering resources are available here.
- An article about GoHealth hiring is available here.
Here are seven more things to know about the IPO, based on offering documents the company has filed with the U.S. Securities and Exchange Commission.
1. The Focus
The company sells individual and family major medical insurance, and related products, such as hospital indemnity insurance.
But it's emphasizing that it's now focusing on selling Medicare plans, and that Medicare plan sales accounted for about 80% of revenue in 2019, up from about 50% in 2018.
The company is also emphasizing its interest in displacing traditional insurance agents.
"The insurance distribution incumbents, such as field-based and carrier-employed agents, offered neither the broad choice of health insurance plans we are able to offer nor the unbiased support in health insurance plan selection based on the years of consumer shopping data we have gathered and the sophisticated models we have developed to match health insurance plans to consumers," the company says in the IPO registration statement.
2. The Company
As of March 31, GoHealth had 1,857 full-time employees, including 781 agents, and no part-time employees.
The company had 47 employees in Slovakia. The rest were in the United States.
The company said it hires more people to help with the Medicare annual enrollment period surge.
The main Medicare Advantage plan annual enrollment period runs from Oct. 15 through Dec. 7.
In addition to the main office in Chicago, and a second office in Chicago, the company has offices in Charlotte, North Carolina; Lindon, Utah; and Slovakia.
3. The Financials
GoHealth reported a net loss of $57 million for 2019 on $231 million in revenue, compared with $28 million in net income on 226 million in revenue for 2018.
Commission revenue increased to $176 million, from $144 million.
For the first quarter of 2020, GoHealth is reporting a $937,000 net loss on $141 million in revenue, compared with $5 million in net income on $69 million in revenue for the first quarter of 2019.
The company has arranged for about $467 in loans and borrowing capacity since September 2019. As of March 31, it owed lenders $415.5 million. It had $30 million of borrowing capacity available in a revolving credit facility.
The company submitted 132,014 applications for Medicare plans in the first quarter, up from 43,283 in the year-earlier quarter.
About 124,000 applications submitted were for Medicare Advantage plans; 4,483 were for Medicare supplement insurance (Medigap) policies; and 3,292 were for Medicare Part D prescription drug plans.
4. Commissions
GoHealth assigns each customer a lifetime value, based on how much revenue the customer relationship might produce. That's based partly on estimates of how long a customer will keep coverage, and partly on commission levels.
For 2019, here was the estimated lifetime value for three types of products. compared with the 2018 lifetime value estimate:
- Medicare Advantage: $978 ($1,024)
- Medigap: $957 ($944)
- Medicare Part D drug coverage: $206 ($213)
5. Carrier Relationships
GoHealth runs its own brokerage operations, and it also helps carriers sell their own products.
