GoHealth, Inc. (GOCO) Earnings Call Transcript & Summary

Hi, everybody. Welcome to the session with GoHealth. My name is Elizabeth Anderson. I'm the health care technology and distribution analyst here at Evercore. I'm very pleased to be joined today by Clint Jones, CEO; and Travis Matthiesen, CFO of GoHealth. So maybe what might make sense is since you guys are a relatively new public entity, just to give the audience a pretty quick description of your business so to put things into context.

Yes. Thanks, Elizabeth, and thanks, everybody, attending today. Excited to be here and go through some Q&A. So GoHealth is an online marketplace focused on the Medicare market. We serve about a $20 billion TAM, helping individuals primarily that are 65 and older research, shop and enrolling coverage for their Medicare needs. As we sit here today, we are in our -- the latter half of our open enrollment period, which is October 15 to December 7. On our Q3 call, we started reporting some information in early October around our internal Medicare volume being 83% up year-over-year. We're continuing to see strong trends in November, which gets us really excited about closing this year off strong and having a lot of momentum as we get into 2021. So thanks for having us, and we can go from there.

Nice. Well, you sort of anticipated my first question, shockingly. I'm sure you're -- you could guess what it was going to be. So just in terms of, you said, obviously, AEP and to just how that's progressing, up 83% in October, and you just said it continuing strongly into November. How would you say, like operationally, it's going? Are there any differences in mix versus other expectations? Differences in terms of this year is obviously a pretty unique year, even just for something like Medicare sign-ups.

Yes. It's a great question. So this year is a little bit strained, right? We've got completely a work-from-home environment. And you had an election cycle, you have COVID to deal with. So there's a lot of -- as much planning as you can possibly do, there's still going to be a lot of unknowns we had to navigate. So some of the things we expected was noise around the election, and we saw that, right? We had the early media buying to combat some of that, but still there's going to be a supply and demand issue. If you think about it, we're having a power hour on a 6'oclock on a Tuesday. And we have a bunch of ads placed and a lot of our agents ready to work and the ads gets bumped because of a breaking news election announcement. You've got to manage that supply and demand. That noise is behind us. We saw that kind of even out over the last couple of weeks. So there was some of that noise in the election standpoint. As far as the agent-based and work-from-home environment, that was one of the other concerns we had. Like, how is that going to play out if you're asking people to work a lot of over time and long hours? No, they've done tremendous, right? We've asked them to put a lot of time and effort and then they've kind of answered that call and have done really well. And then on the demand side, we're seeing more demand than we had anticipated. Especially later in AEP, very long and/or high call cues and people wanting to come through. We didn't know from a shopping standpoint, what that was going to look like, especially with COVID. So obviously, had a lot of demand out there for these products. And the traditional way people may have bought in the past in a face-to-face environment or a local environment, that's, ultimately, changed with COVID. We're seeing a lot of new buyers to our marketplace that has traditionally bought maybe in their local communities through a local agent, come to a place like ours. So that was another thing that we saw this year that we expect that trend to continue. And a lot of the comments we get is, "Wow, this is so easy. You're able to compare plans very quickly. You can help me get enrolled and answer my questions." So we see that as a strong conviction point for the model as we move forward in the future years.

Yes. I think my own parents were an example. Example of that this year as they sort of change their traditional evaluation of this. It also is different. You see it like if people aren't getting together for Thanksgiving, does that mean that kids aren't helping their parents sign up, and so your pacing of orders, there's always -- I guess, sign-ups. But there -- does that push more volume to the last week? Or those kinds of things I'm sure are all TBD and will be interesting postmortem. So that makes sense. Is there any difference in terms of like agent productivity that you've been seeing so far, I mean? And then like maybe if you can distinguish a little bit between like your internal and external Medicare segments?

Sure. Yes. So let me -- I'll first start just kind of better explain the internal versus external. So our -- well, [ W2 ] employees, they work for us here on our platforms. Obviously, now they're in work-form-home environment, but traditionally, they've been in one of our sales centers. They get paid salary plus commission, plus bonus, what have you. And external are smaller agencies that we support, leveraging our technology, our compliance platform, our carrier contracts. Think about -- these are typically smaller family-run or mom-and-pop-type shops that we're helping them become more technically efficient and growing. That traditionally is a revenue share with those businesses. They generate most of their leads. They hire their own people, and we just take a revenue split from that. So we have more control and where we really focus on is on our internal side. And we had a really strong hiring year. We saw some delays in state licensing in Q2 and part of Q3 with COVID. It kind of caused us a delay in our ramp plans for the year. We, ultimately, decided some of those new agents that came in out of our training classes in kind of the Q3 period to put in a lot of enterprise programs and get them additional training during that period. And then, ultimately, put them back into our internal captive or internal channels for AEP. And we've seen the benefit of that. We've seen our new cohorts of agents more productive on a conversion rate and a sales per agent per day rate than we have in prior years with that new cohort. So I think it's a testament of giving them additional training and getting them more comfortable with the systems as we've gone along. So that's really impacted. And we've seen overall kind of conversion rates and some of the key metrics we look for increased over last year's numbers, even during the election period of time, which gives us a lot of conviction on kind of where we stand in the different decisions we've made throughout the year to kind of grow that channel.

That makes sense. And just in terms of that external business, I know it's been quite a question of like do you say like how many -- how do you think about like that segment? Like is there a way you can sort of frame like how many small agencies you work for? Like, do you even view that as like an acquisition pipeline or, no, totally separate? Like I guess that would just be helpful to frame that business a little bit.

Yes, so a lot of it is our carrier partners, your requests to release these agencies to sell their products. And the carriers don't have a lot of resources to manage those, especially from a compliance and a technology infrastructure standpoint. So a lot of them are pushed to us. And say, "Hey, you can work with GoHealth, and that's how you can ultimately sell our products." And that's where we get a lot of those agencies from. And for us, it's not really a margin play. It's a volume play, and it's also a way we can help about our carrier partners. As a percentage of margins, it's very small for us, but it's a way that we can help and just create another relationship with, and a value-add for our carrier partners. So as they come in, and a lot of those referrals are just bring -- brought to us by the carriers. And our focus in kind of internally is hiring our people and growing our internal channel, while supporting our carriers with the needs they have.

Okay. No, that's very helpful perspective. Then in terms of carrier mix, is there anything you want to call out in terms of like any differences versus your expectations right now? Or is that sort of progressing pretty much on plan?

Yes. So good. So as you know, this was a big carrier addition investment year for us. We've brought in a lot of new carriers to continue to fill out our carrier footprint. And we had talked about 1/3 of our new enrollments in October were from the new carriers. That trend has continued throughout this AEP. But you also have to remember that we're not getting all of our agents' license with all those new carriers right out of the gate. We're taking kind of a stair-step approach as we think about entering 2021 and growing that mix. If you think about it from a carrier mix standpoint, we've only been in Medicare 5 years. In the first several years, we had a couple of partners that we worked with to really learn the business and grow. So as we've added new carriers, we will expect as we get into later next year, our kind of composition of plans will more likely mirror what the market looks like from a percentage of sales but from a carrier mix standpoint.

Okay. Great. That's helpful. And then I think one of the things that was a little bit confusing or maybe just investors were curious post that. How should we think about the sequential growth of the enterprise revenue? Or maybe we should -- yes. Maybe just sort of talk about that sequential growth. Because I think some people viewed it as maybe it was like a one-off pop just because of the different -- the situation with the licenses and then other people were arguing, "No, it's sort of the beginning of a more stable trajectory given the additional services that you're providing for those carriers." So if you could help clarify that, that would be awesome.

It's a great question. So if you think about -- we are -- strategically want to help the carrier partners in any way we possibly can. We think that's a viable solution we have for the market. And we saw an opportunity in Q3 to really ramp that up and do just that. So in Q3, we decided to not have as many agents in our commissional model, which will hover our enterprise revenue up. You'll see enterprise revenue in Q4 continue to grow, not like we're going to take it down, where we see opportunity there. We also see our commissional line item grow as well as we've moved more and more resources back into our commission business, but we over hired this year, which gives the opportunity to put a lot of those agents to continue to support the Enterprise business. So as we sit here today and think about our -- where is this market moving and what's happened strategically, carriers are realizing that the mom-and-pop traditional feed-in-the-street business model is evolving quickly, right? There's going to be a lot -- not a lot of consumers are going to be very comfortable like having that face-to-face interaction and understand is there an easier, more efficient way of doing that. And now here we're seeing that. So they're going to invest in both their direct-to-consumer channel and these online marketplaces like we operate, which puts us in a great position to service both, right? Because we have the capability and a platform that powers both of those channels. And we're going to sit down with carriers in a strategic position and say, how do you want to grow? We can help you in both areas. So we expect not only that kind of platform, but also our encompass platform to continue to drive growth and opportunity in the Enterprise areas, while we grow our commissional revenue as well.

Okay. That makes sense. And I guess, maybe over the longer-term framework, not just sort of in 4Q and 3Q. But how do you see that ramp-up of the benefit in the Enterprise segment, maybe on a sort of stand-alone basis? And then how does this sort of like bleed into the other areas of your business as well?

Yes. So one example, as we think about our Enterprise business in Encompass, so as we bring in new members on our commissional model, we're starting to do services around screening for social determinants of health and health risk assessments, which are very, very important today. If you think about not as many people were going and getting wellness visits and checkup. So from a risk scoring, risk adjustment standpoint, care is going to have challenges this year. Understanding who that membership base is, our platform with the Encompass will help them understand and better understand who those folks are, which will ultimately help with the risk adjustments and risk scoring bases. So that's an idea of how our commission model will feed into our Enterprise model. And then the same thing with our Enterprise model, as we help people enroll there, a lot of the carriers that we're enrolling on the Enterprise side will also use our Encompass Platform there, too. So the things we're building, we're making investments that we can leverage in both sides of the -- our channels, which makes it just more efficient along the way.

Yes. No, that makes a lot of sense. And then maybe we have a new question from the audience. "Hi, I would love to get more information on GOCO's VMO? Is this a separate entity? How does this fit in with the broader overall business?"

Yes. Great question. So the VMO stands for Virtual Marketing Organization, and that's essentially our external channel. And you think about -- there's a terminology in the space called FMO, or fuel marketing organization. Your traditional feed-in-the-street, higher RPO model. When we got in the external business, we did not view ourselves as a field organization. So we kind of -- we put the name in it VMO for virtual marketing organization, that's our external channel. So that's how that plays out.

Okay. Perfect. That makes sense. Okay. So maybe just looking at the business more broadly, because I appreciate we've dived into some very like specific areas. So if we think about like the increase in carriers on your platform, along with the, like, broader rise in 0-dollar premium plans, more options, better benefit designs in terms of the consumers, how is this like -- how does this -- how has this helped in terms of providing maybe better outcomes to the consumers? And then maybe from the carrier mix perspective, does it -- have you noticed like any increasing changes in the competitive mix on that front?

Yes. So from a -- we have a very robust marketplace today, as you think about the Medicare Advantage space, the number of plans available to consumers. And you think about -- as you -- as consumers age, they kind of take more prescription medications, go to more specialists, more doctors. And with all these unique plan options, we're able to really narrow down and understand what's going to create the most value from a plan design and plan option for that consumer while that might come down to cost savings or drug benefits or something. So the more plan options we have, the technology can pull in and help them get the right plan that meets their needs, which -- what that does then for consumers, just they, ultimately, have access to better care, right, and you think about all the benefits downstream that creates. Carriers are looking at this kind of almost like a population health management standpoint. They're designing plans really around certain populations of health characteristics. I think if you think long term where this could go, there will be plan designs around different types of consumers in each cohort from a health standpoint. And having a technology platform that can rapidly go through dozens of plan options in the consumers area, put out the top 3, having an expert advice from an agent to really dial in and go through those top 3 plans to ensure that consumer is getting enrolled in the right plan, creates a lot of [indiscernible]. We're seeing that process happens, better LTVs, better retention rates, happier customers. You're seeing the same trends from a carrier standpoint. So that's -- we -- if you think about the overall power of the marketplace, that's exciting to us. We feel like we're still in our early stages of that. Again, we've only been in this 5 years, and we're still adding carriers. We're still adding capabilities. And carriers are doing the same thing. They're saying, "Wow, this is a very robust market, where we're going to continue to add plans in that market." So we're excited about where we sit here today. We're more excited about next year as well and the investments we made this year that will pan out next year, and that's kind of how we think about it.

Yes. No, that makes sense. And I guess there has been some questions in some quarters from -- there's obviously been a lot of, as you pointed out, election noises, but the incoming change in administration. Do you see that changing anything structurally about Medicare Advantage or perhaps sort of your role in helping enrollment?

Yes. We don't see any major changes in the forefront. You think about -- we're likely to have a kind of a slip congress here. And the kind of the big Medicare for all our kind of progressive ideas are unlikely to gain much traction. I think the good news is both the Republicans and the Democrats are in favor of Medicare Advantage. One of the plans that Biden has discussed is lowering the age of Medicare to 60. Again, we don't believe that has much merit early on, maybe 3 years down the road, there might be discussions there. But for the foreseeable future, we don't see any changes occurring. That may be different on the [indiscernible] 65 side. There could be some executive orders or something around that, that changes some things in the IoT market, which we remain in. But if something positive changes, we have the ability to scale that as well.

Got it. No, that makes a ton of sense. And just to 100% clarify probably once again. If Medicare -- if age for Medicare gets lowered, that looks -- you get sort of like a onetime bump from all of that 5 years, say, cohort enrolling in 1 year and then it would just sort of continue on like a aging population kind of basis. Is that the way to think about it?

Yes. I mean if they drop it out at 60, it's not like everybody at 60 to 64 is going to enroll in Medicare, right? There's going to be a lot of that population that's going to still be employed, have employer [indiscernible] health care. So it will be kind of a slower transition into the market. It would open the market up to another 20-or-so million people for us. It may change employer plan designs as you think about do they cut instead of cutting off at 65, they cut off at 60. We don't think that anything is really likely to happen in the next couple of years, but it's something to keep an eye on.

Okay. I think that's helpful. And then maybe back to sort of how you view agents. Like you talked about the extra training in the third quarter, really having a positive impact on the fourth quarter. How do you sort of think about the, like, continually improving agent productivity and sort of how to gain sort of efficiencies on that side so that you can -- obviously, margins can increase and you can also spend more on marketing and technology and other types of areas that you want to continue to spend on?

Yes. There's really 2 main areas of focus we have. One is around agent training, cost indication, providing as many resources as possible to them. And the other is around technology. How do we make -- help make patients be more efficient, how do we leverage technology to lower the amount of timing they spend with the consumer on the phone because we're able to get more information to them much quicker? How do we better match types of consumers with types of agents that are better fixed? And if you think about kind of a flywheel effect, as our business gets bigger, we have more data. We're able to better understand that, that 72-year-old male in Dallas, Texas, that has this kind of a background is best matched with this agent we have in Phoenix. That's really good at serving that type of customer that came off of the [indiscernible]. A lot of those, that's the kind of [indiscernible] that we're heavily investing in, that we've seen the ability to really improve conversion rates, as per acre agents, all the key metrics that drive much more and greater efficiency in the business.

Yes. No, that makes sense. And I think that's one of the things that people don't necessarily appreciate it's just like, "Oh, they have all this cool technology that does stuff." In terms of RAP signals in that kind of way, and I think there's sort of like an overall under appreciation for sort of the incremental improvements that you sort of see this track, you make changes, you go back, those kinds of things. So...

Yes. And you can imagine the kind of size we are today, an additional app per day per agent, what that could mean to our bottom line and our growth, right? So those are -- that's how we think about the business. What can we invest and that's going to either improve our LTVs, reduce our CAC, make our agents more efficient? That's kind of how we think about from a technology investment standpoint.

Yes. No, that makes sense. And then I have another question from the audience. Like how do you think -- obviously, you guys are a major player in this market. But do you see -- how do you see the industry shaping out over time? Is like further -- I guess the question is, does further consolidation makes sense because you get some sort of efficiencies? Or because they're sort of people businesses, does that just kind of create a bigger mess than you started with? How do you kind of see the -- I guess, the broader landscape there?

Yes. So there's a shift in the distribution model like we've talked about, right? And I think that traditional fuel model has been kind of going down over the last 5 years. So I think COVID accelerated that. So a lot those consumers are buying online. So you've seen the online market grow. You've got, obviously, the aging population, so you have the macro growth, you have micro growth factors around COVID and other aspects like that. We're still a fraction of a percentage of the overall market. We've got several peers out there that are doing really well. We want them to grow, too. And we think that's a robust market. From a consolidation standpoint, something may make sense in the future to bring some of these businesses together. I think right now, we have such a good runway organically, that there's such a rapid growth and opportunities for all of us to do well in the market. I think the other thing we're thinking of that's TAM. We're starting to -- identifying in our Enterprise and Encompass areas gives us another stool to go after. They were just now uncovering. We recently announced on Monday, we hired a Chief Medical Officer out of Blue Cross Blue Shield in Texas. And he's got a really good background in Medicaid and Medicare and how carriers think and the values we can bring to the table in that scope. So we think that there's a huge, huge opportunity for us in the Enterprise side and on the Encompass Platform to bring more value-adds to that carrier partnership going forward that, ultimately, helps both the carrier and the consumer out as well.

Yes. Okay. That makes sense. And then, I guess, somebody else is asking, just in terms of how are you seeing -- obviously, Medicare Advantage continues to be sort of a huge growth focus. Other carriers have announced continued emphasis on growth in that area. How are you seeing sort of med sup play out? Like is that something that you just sort of -- it's going to continue to lose share to MA? Like how do you see sort of that area playing out?

Yes. So we offer medsup for the -- in the right time of kind of consumer. We'll probably see a double in our medsup enrollments this year. But it's a small percentage of our overall enrollments. It's not a huge focus of ours. We think that the Medicare Advantage plans have become so much more robust, especially with all the ancillary benefits carriers are investing in them, and they will continue to be so. And that's really where our core focus is, but there are subsets of consumers that medsup is better for them. And we have that offering, but our clear focus on where we see that a lot of the growth is in Medicare Advantage.

And that just makes sense. You have the broad offering and you can offer people what makes sense to them from that perspective. So that makes sense. In terms of like the COVID environment, I know you guys have taken an experimental approach to online sign-ups. Can you talk about sort of what the main learnings have been so far? And like what are the biggest differences between sort of the sign-ups there and that process versus telephonically?

Sure. Yes. So we had kind of the ability for consumers to enroll on their own for a couple of years now. And we've never really seen the same LTV-to-CAC characteristics that we've seen on our kind of phone-based or telephonic-based enrollment. So we've always focused on having an agent assisted in that process. We see it's a better LTV-to-CAC ratio and kind of a better enrollment. We are seeing, especially the last several days, where our call queues might get up to 1,000 people in line. We begin to talk to an agent. All they say, "Listen, if you don't want to wait anymore and you're able to go online and enroll -- shop and enroll yourself." We're seeing some of that activity this week, which we saw a little bit that last year. So we kind of expected that, we planned for it. Our real focus is trying to connect somebody with an expert and making sure they understand their needs to get them enrolled in the right plan. Now some folks that might be a 5-minute conversation that said, "God, I want to buy this plan. I'm going to go online and do it. Thank you very much." [indiscernible] take it through the whole process. And I think the key thing for us is we want to help people enroll the way they want to enroll. And that's long we given the capability to do that, that's kind of how we're focused.

Why do you think it is that like enrollments over the phone are better from an LTV or an LTV-to-CAC perspective? Is it because like buying insurance online is not as exciting as like booking a vacation or buying, I don't know, whatever you buy online?

Yes, it's way more complicated. And the wrong decision is going to be way more expensive for you. I think that the trends we try to preach. You can enroll in a plan, and all of a sudden, you go to the pharmacist to refill a prescription and you're paid double that you were prior or your co-pay is much higher, right? So a lot of those factors -- or you try to go to your specialist, it's not a network, and you have to pay out-of-network fees. Those are the [indiscernible] It's not like, "Hey, I choose the wrong flights, and I have to go to the other end of the airport than I usually go to." Okay, you have to walk a little farther that day but...

But it's not big deal, yes.

Yes. Right. So that's kind of how we view it. So we've seen this -- the LTV to CAC, primarily on the retention characteristics, much stronger when you actually fully talk to somebody and go through that needs analysis and enroll.

Yes. Because I think that's another area that may be sort of underappreciated. Like how is an agent you kind of quickly establish like what's important to that person, whether it's sort of specialist access or like cost, like how do you ask, like, how important is cost to you? Without those kinds of things. So like how do you guys go through that in sort of a quick and efficient process?

Yes. We have a needs analysis process that we've kind of just -- we've been tailoring over the last many years to really quickly identify the doctors, the networks, the drugs, and then the most important factors in our plan, right? And that can be done very quickly, very efficiently. And then once we have that data, we could start narrowing down and starting to talk about specific plan designs, and then you get into supplemental benefits, right? Now that might be something we've identified -- maybe somebody doesn't have access to a close grocery store, so food deliveries for them. Or maybe they don't have access to transportation to get to and from providers. So ridesharing programs are key to that. So a lot of those elements, we go through that process to fully understand. And that's how it, ultimately, help somebody getting the right plan.

Okay. No, that's helpful. And then I think you've talked about this a little bit conceptually. But sort of how should we think about the LTV progression into 2021 given some of the new carrier integrations that have to, obviously, ramp? How do you sort of expect that to -- how should we think about that over the course of the year?

Yes. It's a good question. I'll take the first part of that and then, Travis, if you want to chime in as well. So we anticipated 2020 to be an investment year with new carriers. If you think about a new carrier, there's technology integrations, there's understanding other compliance and nuances, there's understanding all the different plan options and plan types and building that out. [Indiscernbile] side of things. So there's a -- and we also -- when you add a new carrier, you're typically not -- they don't view you as anybody special, right? They're going to give you just a normal commission level. You've got to prove yourself on volume and quality to move up the ranks. And typically, you'll see LTV compression there because you don't have the top commission rates, which we anticipated, we've modeled out, and we thought that would happen. As we think about where we've gone from a volume standpoint, we quickly rose through the ranks, we've proven ourselves, and we think there's more upside in 2021 from an LTV standpoint with carriers. We also know more about their effectuation rates, rapid disenrollment rates, things we can look at in the reporting because other -- every carrier is reporting is different as well. So once you -- it takes a while to understand all that stuff and get it into your platform. Now that we do, we think there's more upside as we get into 2021. And Travis, do you want to add anything to that?

No. I'll just reiterate what you said, Clint. I think we've gotten questions around new carriers, and it's important to understand that new carriers really are a short-term drag on LTV as you think about it. And again, based off of the volume that we're writing here in AEP for these new carriers, we'll be at those top-tier contracts, so those top-level contracts into next year, which will create more opportunity. And I think the other part of adding those carriers, while it can be a short-term drag on LTV, we've also seen, and this is what was exhibited in Q3, higher conviction at the point of sale by offering more choice across our carriers. So we're seeing higher effectuation rates, lower rapid disenrollment rates. And so as we continue to both create that conviction at the point of sale as well as building out and engaging with our consumers via TeleCare and actually helping them use the benefits that Clint just alluded to earlier. We're finding it's one thing to tell someone that they're in the best plan. It's another for them to actually know it by using all of those benefits. And so we're seeing those improvements. And that's what caused a little bit of the waterfall we showed in Q3 that, despite the short-term drag on these new carrier adds, we're still seeing higher persistency because of those things I just described.

And how do you -- how like -- how long -- how frequently or after how much time can you sort of start to renegotiate carrier contracts? Like do they have to see you prove yourself over 5 years, 5 months, 5 weeks? Like, I guess, I don't even have a perspective on that.

I mean it really honestly depends on the carrier and their philosophy. For us, we're going to just do the best we can, be the greatest partner as we possibly can, and then those conversations will actually take place. And I think that once we get on and we kind of deliver some high, high-volume that's good quality, then the specialist XXXXXXXXXXXXXXX change. But again, we want to be long-term partners with everybody we work with. And some -- those conversations will occur within the first 60 days of a new relationship, and others may take a bit more time. But we've been doing this for a long time now, and we've -- I think one of the key strengths we have is our carrier relations team was really, really strong. They do a great job, and we've formed really good partnerships.

No, that makes sense. And I guess also, I think, Travis, you alluded to this in terms of the TeleCare team and the impact. How are you seeing -- was -- it's obviously early days in sort of the benefit there. What are you seeing now? And sort of how do you see expectations ramping there over the next year or so?

Yes. So I think about -- when you think about TeleCare, I think, there's 2 important things to understand. First and foremost, the revenue opportunity that TeleCare has created through Encompass. So when Clint has described our Encompass initiatives and post-sale initiatives, that is the TeleCare team that is engaging in doing those. So it's created more revenue opportunities, specifically on Encompass, which flows through into Enterprise. And then kind of the other added benefit of that is, obviously, as you think about adding more services to the consumer, having more engagement with the consumer, it's also creating improvements in persistency. And you're exactly right. It is early days, but kind of the 2 biggest numbers we look at are effectuation rates, meaning from point of submission, how many of those actually effectuate into accepted policies. And then out of that rapid disenrollment, think about the first 30, 60, 90. And obviously educating someone on all the benefits they have. So that way, when they do go to the doctor for the first time, or do go to the pharmacy for the first time, there aren't any surprises because they've understood their benefits, and thus, we're seeing those lower rapid disenrollment rates. So again, I think it's one important thing to think about. When we talk about TeleCare, it isn't just about improving LTVs and persistency. It's actually creating new and additional revenue opportunities we previously didn't have. And then just another added positive and benefit of that is the improvements we're seeing in LTV.

Got it. Okay. That's really helpful. We only get a -- so we've a bunch of questions here. Okay. Can you talk about your post-enrollment engagement? How does that typically go for like all enrollees? Or is it different by carrier? Or could you sort of talk to that a bit more?

Yes. So we kind of have a standard problem release. There have been a parses off by carrier. I have a -- I'll say it's somewhat of a hybrid approach. And a lot of it's -- as we partner with carriers and -- we try to understand what they're doing. We don't want to step on toes vice versa. So we'll kind of come up with a multi-pronged strategy with both our efforts and their efforts. So we don't overlap with each other. We're trying to drive the highest retention possible for those consumers. And it's a combination of outreach, phone-based, tech space, e-mail-based, however the customer wants to be contacted. And we know certain touch points around frequency, their first time they used their plan, whether that's a prescription refill or going to a wellness or a doctor check up for the first time. So understanding all those different nuances. We've invested our TeleCare team this year, and we'll continue to invest in them next year. We're starting to see some really strong payoffs there. We had a very small team last year, maybe 15 people during AEP. We revamped up over to -- over 200 plus this year and we've seen some really strong outcomes, and we'll continue to invest in that as we think about retention efforts in the future.

Okay. That makes sense. And so you get -- so you know when somebody is first going to their first doctor visit or pharmacy, like you get the claims data from the carrier.

Yes, it depends on the carrier, not all carriers provide that, but it depends on those relationships, but more often that we do. And it's a really, really strong way to remain in contact and help consumers out. And part of the Encompass Platform, we're actually helping set appointments, too, for consumers to get their first wellness visit or what have you. We're helping them set their -- a rideshare program. They don't have a way to get there. So there's a kind of a concierge element, too, to Encompass that are helping members out, which, again, the goal here is straight very, very -- created a very, very strong condition with GoHealth, and all the third-party [indiscernible] members.

Yes. No, and I think that answer is also part of the question that [indiscernible] will rang up about like what's your relationship with the senior versus what's the carrier's relationship with the senior and to -- that -- I think, that sort of helps to put it in context and to the extent that they can kind of see you and them together and have that comfort, that's kind of a self-reinforcing trend, right? Is that...

I think we're still in early stages of that. We've seen tremendous amount of wins this year, but a long road ahead of us from an opportunity standpoint to be that firm kind of relationship for member advocate, which we've seen what it could look like this year.

Okay. No, that makes sense. So I guess this is more of like a systemic question coming from somebody. So if -- all the carriers keep introducing new plans and they get better and there's more competition. Doesn't that drive higher switching because people are saying, "Oh, there's a new plan that has whatever that I didn't have before," or something like that. And so how do you think about that dynamic in terms of the overall market?

Yes. So consumers are likely to switch if something dramatically changes in their plan, right? Maybe the formulary in their drug benefits change and they're paying more out of pocket. Perhaps one of the specialists in their network leaves. That's when we see the most rapid change in switching. We have all that data in our technology. So going into an AEP enrollment period, we know who's likely to potentially switch because they had a plan change. We can have a very proactive outreach program. In a situation where, let's say, everybody switched every single year, which is really unlikely to happen, we have a 0 CAC and just a 1-year LTV. You know what I mean? Like we have all these members and they call us and say, "Hey you know what, I am good for plan A, plan B." We just -- our CACs go dramatically down, but the LTVs drop as well, profit for policy stays the same. That's the extreme case, which will [indiscernible] but that's kind of how you would think about it.

Okay. And that's interesting in terms of the outlook. And I was also thinking about it from the chance that like, okay, let's say I'm a senior and I go from having access to 5 plans to 10 plans. Okay. Maybe there's like a better plan. But if I go from like having 27 plans to having like 30 plans, what's the -- like you have diminishing returns at some point unless there's some like major innovation in MA plans like, I don't know, everybody gets free pickle ball set or something, I don't know like, whatever the case may be.

Pick a ball and say, that would be a home run there. So...

I do. I like...

Well, obviously, the more plans there are, the more options there are, the more confusion there is, right? And that's really where a platform like this creates a lot of value for consumers to eliminate that confusion and really ensure that they're in the right plan. So I think that's where the more plan options that there are, actually the more powerful and strategic our position gets.

Yes. No, that makes sense. There's a question here on how do you expect cash flow to develop in terms of timing? When do you see potential breakeven point, et cetera?

Travis, do you want to take that?

Yes. So I think we shared on the Q3 earnings. One of the differentiators for us, if you think about the combination of our focus on LTV to CAC and being extremely efficient on our consumer acquisition costs, combined with our other revenue streams, mainly Enterprise and Encompass, has allowed us to be cash flow breakeven on our consumers within 1 year. And again, because we're making the right investments, driving the right consumer at the right price as well as driving these additional opportunities that we partnered with carriers on to drive more enterprise revenue. So we're going to continue to be very strategic around kind of how we allocate our resources in 2021 and beyond as we look at -- in Q3, we talked about enterprise revenue being in lieu of commission based off of the opportunities enterprise revenue in 2021 and beyond will be in addition to commission revenue. And for us, it's going to come down to profitability per seat, and allocating our resources appropriately to continue to drive the right revenue and margin growth. And so, for us, we have the capital in place to achieve our strategic plan. We don't need to raise additional capital, and we'll continue to be strategic as we partner with carriers. But I think that's the power of an LTV-to-CAC focus, is that it ensures a cash payback period quicker than our peers, and make sure that we're prudent about our growth and adding the appropriate amount of agents, the appropriate amount of carriers, making sure we understand our LTVs and being really thoughtful there.

Yes. No, that makes sense from that perspective. And can you just talk about like the the payback here for like the Enterprise? Like we all know that like if you sign up somebody in your internal business, you can pay the first year's commission and the second, whatever. What -- on those other businesses like, "Okay, I have like an enterprise, I help get somebody in some programs or something," how does that work?

Yes. So I think it's important to note that really, if you think about on the Enterprise side, we are doing a lot of the exact same things that we're doing on the commission side. We're just being compensated differently based off of the structure of having a direct campaign with the carrier. So they're paying for the technology. They're paying to have agents specific on their program. They're paying us enrollment and retention fees. They're paying us to do direct margins.

Like now? Like they pay you now not like in next year?

Exactly. And so when you think about it, in many instances, they're prepaid, or you're typical like net 15 or net 30. And so you saw in Q3, when we pivot resources that way, you can see both improvements in cash flow, and improvements in margin as we can negotiate unique deals to drive tech enrollment retention above and beyond just kind of that point of enrollment. So again, when you think about there's a lot of additional upside on Enterprise above and beyond what you see in the P&L, but on the balance sheet as well with bringing forward that cash.

Got it. No, that makes sense. Okay. There was -- I guess, one of the other areas that could confuse, maybe this is the last question, we were -- we got so many questions, we're running short on time. And that's, I guess, a good sign. In terms of -- how does lead sharing work? Because I think that's like a dynamic that doesn't exist in many industries like you guys have overflow. Or how do you sort that? And how does that work out?

Yes. Are you talking more on the lead sharing that we do? Or lead shares we get from other carriers or...

I think both. I think they're both sort of not super well understood by the the broader audience.

Yes. So let's talk about from our lead generation capabilities, right? We use both online, off-line, and then we have a partner channel as well. Most of that partner channel is comprised of carriers that have more leads or more calls than they can take. We have to funnel into our platform, we're able to score and route those leads differently or uniquely.

And do you have to route it to that carrier, or you can route it wherever is that most you think...

We have teams that have a -- the lead like that comes in. They're alert that this is a lead from carrier A, and we'll sell carrier A's products. [indiscernible] carrier's campaign. It's all like dynamic by the technology. And there might be situations where we generate what we'll call generic leads on our own, and these are leads that have no brand affinity. They'd come in just looking for Medicare. We've got a huge queue. We're able to then wrap that lead to one of our external partners or one of our VMO agencies that [indiscernible] that customer. So that's kind of how all of this works. We try to keep it at all in the GoHealth family, if you will. We want to control the customer experience. We know who we're routing it to. We are rounding it externally. We know how those external agents, from a quality standpoint, are, because it's all on our platform, we see the data, we have the full control over it.

The VMO is sort of like a secret weapon in that front that you can just kind of -- it gives you an opportunity there. All right. Well, we only have one more minute. But I guess, my last quick question is, Clint, what are you most excited about on like a 2- to 5-year basis with GOCO?

Yes. That's a great question. So obviously, we've got a lot of strong tailwinds from both a macro and a micro standpoint, right? The macro market is growing, you get a lot of consumers aging into Medicare. Micro standpoint, more and more people are leveraging platforms like us to buy over the phone and online. So we're seeing that trend. As I think about our investments made in 2020 and the acceleration, we have in 2021 to really optimize and continue to grow the business. Again, we've only been in this 5 years, right? So that's learning everything every day. So we have a huge opportunity to grow it. Really excited there. We've a team in place to do it. I think on top of that, some of the Enterprise opportunities we have, especially with Encompass. I think about 2, 3, 4 years down the road, where we can be a truly digital health care company, focused in the Medicare space is really exciting for us on where we want to go and where we want to be.

Awesome. All right. Well, unfortunately, we have to leave it there. I know we could keep going for a long time, but thank you, both Clint and Travis, so much for joining in today. This was a great conversation and really helpful. So have a nice day. Thank you.

Thank you. Appreciate it. Thanks, everyone.

Thanks, Everybody.

Awesome.