(Credit: NIH)
GoHealth says its strategy for optimizing the profitability of Medicare plan sales helped produce strong revenue and operating income growth in the second quarter.
The Chicago-based health insurance distributor is reporting a $23 million net loss for the quarter on $127 million in revenue, compared with $15 million in net income on $75 million in revenue for the second quarter of 2019.
GoHealth (Nasdaq:GOCO) completed an initial public offering (IPO) of stock July 17. The offering raised a total of about $914 million.
The company's latest results include charges related to the IPO.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), which reflects ordinary operating profits, increased to $62 million, from $24 million.
Commission revenue increased to $97 million, from $61 million.
GoHealth focuses on selling Medicare Advantage plans. It also sells Medicare supplement insurance policies and individual major medical insurance.
The number of individual major medical policies sold fell to 2 million, from $2.8 million, and the number of Medicare supplement insurance policies sold fell to 2.2 million, from 4.3 million.
The number of Medicare Advantage policies sold climbed to 99 million, from 47 million.
The percentage of leads generated internally increased to 79%, from 30%.
The estimated lifetime value for an approved Medicare Advantage coverage application increased 1.3%, to $879.
Clint Jones, the company's chief executive officer, said last week, during a conference call with securities analysts, that the company is using it website mainly to connect consumers with live-human agents in call centers.
"We obviously have the technology that a consumer can enroll on their own," Jones said.
GoHealth does make some sales to people who sign up entirely online, Jones said.
"But it's a very small part of our business," Jones said.
Sometimes, Jones said, when call center agents are very busy, they help a consumer pick a plan while on the phone, then direct the consumer to the website, to the consumer complete the coverage purchase online.
But, at this point, that's simply using the website to support the live-human agents, Jones said.
"We believe that, over time, we'll see more and more people enrolling online," Jones said. "We don't think that trend has occurred yet, but we have the capability of doing it."
Travis Matthiesen, the chief financial officer, said GoHealth expects the upcoming 2021 annual enrollment period for Medicare Advantage plans to be strong, because of the addition of more plans from top carriers.
Sales of individual major medical coverage could be soft, simply because all of the uncertainty around that market has led GoHealth to avoid investing much in the individual major medical market until it understands what's going to happen in the November elections, Matthiesen said.
The Marketing Alliance (OTC:MAAL)
The Marketing Alliance, another insurance distributor, is continuing to benefit from keeping its old life and annuity distribution business, in spite of the pain low interest rates are inflicting on annuity sales.
The St. Louis-based company owns an earth-moving company, and four children's play and party facilities, as well as the insurance distribution business.
COVID-19-related facility shutdowns cut revenue at the family entertainment business to $4,211 in the second quarter, from $859,334 in the second quarter of 2019.
