DALLAS, TX -- August 8th, 2025 -- GoHealth Inc. (NASDAQ: GOCO): Stonegate Capital Partners updates their coverage on GoHealth Inc. (NASDAQ: GOCO). GoHealth, Inc. delivered a challenged second quarter in 2025, highlighted by revenue declines and contracting margins. Net revenues decreased 11.2% year-over-year to $94.0M, driven by a decrease of 44.4% and 79.4% in partner revenue and non-agency revenue, respectively. This decrease was buoyed by a strong increase in other revenues, spearheaded by GoHealth Protect, discussed below. This overall decline was driven in large part by the telegraphed softness in the overall market. Management notes that they will continue to read and react to the market, taking advantage of opportunities where they see fit. As the Company continues through 2025, and following the updated strategic initiatives mentioned below, management remains focused on the upcoming AEP.
Company Updates:
Strategic Initiatives: GoHealth’s provided a comprehensive update to its strategic initiatives that was highlighted by the Company securing a new senior secured super priority term loan facility. We note that this new term loan includes $80.0M in new money, which will give GOCO ample room to support working capital and provide strategic flexibility. This term loan brings GOCO back into compliance with current debt covenants and leaves open the possibility of additional acquisitions with a $250.0M debt basket for such transactions. We view this, along with the equity stake granted in this transaction, as the lenders vote of confidence in the Company’s ability to grow, given sufficient funds. In concert with this new loan, GOCO has negotiated amendments to its current debt facility, allowing for a reset of financial covenants and a pause in interest rate payments through 2026. Overall, we are impressed with management’s creativity in shoring up the balance sheet, allowing GOCO to turn its focus on the upcoming AEP.
Sales: In 2Q25 the Company saw sales per submission decline by 4.8% y/y to $657. This was driven by the macro headwinds that the entire industry is facing. This was seen as agency revenue decreased by 4.1% while non-agency revenue declined by 79.4% year over year. Of note, the Company saw strong other revenues of $8.7M as it continues to ramp up the GoHealth Protect initiative. We expect that the continued integration of GoHealth Protect will smooth out some of the lumpiness seen in the Company’s revenue streams. While the sales to direct operating costs of submission remained flat y/y at 1.1, this decrease in revenue contributed to a tightening spread between sales per submission and cost of customer acquisition.
Cost of Acquisition: GOCO maintained a competitive cost of customer acquisition in the quarter with average CAC of $613. This was an improvement of 4.8% year over year. While margins did contract slightly, when considering the current macro environment we are impressed with the Company’s cost management. We expect GOCO to continue focusing on cost management through initiatives such enhancing call center productivity, better agent training, and improved marketing strategies.
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 7.0x to 8.0x with a midpoint of 7.5x which moves GOCO closer to comp companies. Our EV/EBITDA valuation results in a range of $11.45 to $15.40 with a mid-point of $13.43.
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