DALLAS, TX -- May 14th, 2025 -- GoHealth Inc. (NASDAQ: GOCO): Stonegate Capital Partners updates their coverage on GoHealth Inc. (NASDAQ: GOCO). GoHealth, Inc. delivered a strong first quarter in 2025, highlighted by substantial revenue growth and operational efficiencies. Net revenues surged 19.1% year-over-year to $221.0M, driven by a 40.2% increase in submissions to 303,026 from 216,148 in 1Q24. The Company posted operating income of $6.7M, marking a substantial turnaround from the prior year’s loss, while Adj. EBITDA grew by 56.4% to $45.1M. This performance underscores GOCO’s leadership in the Medicare-focused digital health marketplace, bolstered by strategic investments in technology and operational excellence. As the Company continues through 2025, management remains focused on sustainable growth and expanding market share through innovation and disciplined execution.
Company Updates:
GoHealth Protect: GOCO announced the launch of GoHealth Protect in the quarter. This marks GoHealth’s foray beyond medical solutions as the Company starts to offer guaranteed acceptance life insurance. This is expected to be the first step as GoHealth continues to ramp offerings and solutions over the coming quarters. We expect that this expansion will diversify out some of the lumpiness in current revenue streams while also offering a strong margin profile to drive profitability.
Sales and Cash Flows: In 1Q25 the Company saw sales per submission decline by ~15% year over year to $724. This was driven by a change in the mix of agency vs non-agency sales in the quarter. This was seen as agency revenue grew by 89.3% while non-agency revenue declined by 63.0% year over year. This resulted in a cash flow from operations of ($12.4)M, a decline of ~199% as agency sales are a net use of cash. This lumpiness seen is another reason that we are excited by the Company’s addition of GoHealth Protect to further diversify revenue streams and smooth earnings.
Cost of Acquisition: A key highlight of 1Q25 was GOCO’s industry-leading efficiency in customer acquisition. Direct Operating Cost per Submission improved by 18.4% year-over-year to $522, significantly outperforming competitors. This cost advantage was driven by enhanced call center productivity, better agent training, and improved marketing strategies. We expect GOCO to continue lowering it’s CAC, further growing margins. Lastly we note that this strength was seen despite having to shift e-TeleQuote agents to drive consistency.
Tech Stack: GoHealth’s continued investment in AI and advanced analytics is revolutionizing the Medicare enrollment process. The Company’s proprietary technology platform, which integrates machine learning algorithms with over two decades of insurance purchasing data, ensures more precise plan recommendations for consumers. The successful implementation of AI-driven tools in agent training and customer interactions has significantly boosted efficiency and conversion rates.
Valuation: We use a EV/EBITDA comp analysis to guide our valuation. We are using our FY26 expected EBITDA, and an EV/EBITDA range of 8.0x to 9.0x with a midpoint of 8.5x which moves GOCO closer to comp companies. Our EV/EBITDA valuation results in a range of $25.68 to $31.13 with a mid-point of $28.41.
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