DALLAS, TX -- March 24th, 2025 -- GoHealth Inc. (NASDAQ: GOCO): Stonegate Capital Partners initiates their coverage on GoHealth Inc. (NASDAQ: GOCO). GoHealth, Inc. delivered a strong fourth quarter in 2024, highlighted by substantial revenue growth and operational efficiencies. Net revenues surged 41% year-over-year to $389.1M, driven by a 67% increase in submissions. The Company posted net income of $58.0M, marking a substantial turnaround from the prior year’s loss, while Adj. EBITDA more than doubled to $117.8M. 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 enters 2025, management remains focused on sustainable growth and expanding market share through innovation and disciplined execution.
Company Updates:
E-TeleQuote Acquisition: GOCO’s acquisition of e-TeleQuote proved to be a pivotal move, transforming an underperforming asset into a key growth driver. Despite being acquired just before the 2024 Annual Enrollment Period (AEP), GOCO successfully integrated e-TeleQuote’s operations, training agents and leveraging artificial intelligence to improve efficiency. The result was a 170% year-over-year increase in submissions from e-TeleQuote, showcasing GoHealth’s ability to rapidly scale its platform. This strategic acquisition not only strengthens the Company’s competitive positioning but also signals potential for further industry consolidation through acquisitions.
Renewals: In 4Q24, the renewals business continued to provide a stable and growing revenue stream, reducing dependency on new customer acquisitions. The Company’s PlanFit Save initiative played a critical role in FY24, allowing GOCO to receive compensation from health plans for retaining members. With nearly 3 million Medicare consumers engaged in plan assessments, the Company solidified its position as a top partner for insurers. This focus on customer retention as well as a low CAC, is expected to enhance lifetime value per customer while lowering the churn.
Cost of Acquisition: A key highlight of 4Q24 was GOCO’s industry-leading efficiency in customer acquisition. Direct Operating Cost per Submission improved by 27% year-over-year to $501, 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 to lowering, further growing margins.
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 $25.62 to $31.17 with a mid-point of $28.40.
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