DALLAS, TX -- November 17th, 2025 -- GoHealth Inc. (NASDAQ: GOCO): Stonegate Capital Partners updates their coverage on GoHealth Inc. (NASDAQ: GOCO). GoHealth, Inc. reported a difficult 3Q25 as the Company continued to navigate a materially different Medicare Advantage environment. Net revenues declined to $34.2M from $118.3M 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. 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 AEP, with an eye toward re-accelerating when market conditions stabilize.
Company Updates:
Strategic Initiatives: During 3Q25, GoHealth advanced its strategic and capital initiatives, building on the super priority term loan facility finalized earlier in the year. As previously discussed last quarter, the senior secured super priority term loan, including $80.0M 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. Overall, we believe management has been creative in stabilizing the balance sheet and strengthening strategic optionality, allowing greater focus on execution and retention heading into and through AEP.
Sales: In 3Q25 the Company saw sales per submission decline by 34.3% y/y to $461. This reflected both the deliberate volume pullback and evolving revenue mix. This was seen as agency revenue decreased by 71.5% while non-agency revenue declined by 96.5% year-over-year. Of note, other revenue grew meaningfully, supported in part by continued momentum in GoHealth Protect, which is becoming a more important contributor to the model and helping 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, though we expect a more balanced contribution from Protect and agency relationships to help mitigate revenue volatility over time.
Cost of Acquisition: GOCO was further challenged in its cost of customer acquisition in the quarter with average CAC of $716. This was an increase of 14.0% year over year. While near-term margins remain compressed given the intentional pullback in volume and higher quarterly unit costs, we believe management is maintaining a disciplined approach to acquisition efficiency, focusing on agent productivity, enhanced training, and data-driven marketing strategies that should support better unit economics.
Valuation: We are using a combined historical FY24 EBITDA, blended with our expected FY27 EBITDA, which we believe helps normalize to a medium term EBITDA of ~$85.0M. We then apply an EV/EBITDA range of 9.0x to 11.0x with a midpoint of 10.0x and then further adjust for minority interest. This results in a range of $7.46 to $14.32 with a mid-point of $10.89.
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