GoHealth Inc. (NASDAQ: GOCO) reported a challenging third quarter as the company navigates significant changes in the Medicare Advantage environment. Net revenues declined to $34.2 million from $118.3 million a year ago, reflecting an intentional reduction in Medicare Advantage volume, decreased non-agency activity, and broader industry shifts toward margin integrity and renewal stability.
The substantial revenue decline stems from multiple factors affecting GoHealth's core business segments. Medicare agency revenue decreased by 71.5% year-over-year, while non-agency revenue declined by 96.5%. These reductions reflect the company's strategic decision to pull back volume in response to changing market conditions. However, other revenue categories showed growth as GoHealth Protect and related offerings continued to scale, providing diversification beyond traditional commission streams.
This news matters because it highlights the broader transformation occurring within the Medicare Advantage industry, where companies are prioritizing sustainable margins over volume growth. The significant revenue contraction at GoHealth reflects industry-wide pressures that could affect consumer access to Medicare plan options and broker services. As one of the prominent players in this space, GoHealth's performance serves as a barometer for the health insurance brokerage sector's adaptation to regulatory and market changes.
Strategic initiatives during the quarter included advancing capital measures built around the super priority term loan facility finalized earlier in the year. The senior secured super priority term loan, including $80.0 million of new money, continues to support working capital and enhance strategic flexibility while maintaining compliance with debt covenants. The company also refreshed its Board of Directors and continues to evaluate integration opportunities across what it describes as a fragmented broker landscape.
Sales metrics showed significant pressure during the quarter, with sales per submission declining by 34.3% year-over-year to $461. The Sales/Direct Operating Cost of Submission ratio moved down to 0.6x from 1.1x as lower scale and mix shifts weighed on operational leverage. Management expects a more balanced contribution from GoHealth Protect and agency relationships to help mitigate revenue volatility over time, suggesting the company is building a more resilient business model.
Customer acquisition costs presented additional challenges, with average CAC increasing 14.0% year-over-year to $716. While near-term margins remain compressed due to the intentional volume pullback and higher quarterly unit costs, management maintains a disciplined approach to acquisition efficiency. The company is focusing on agent productivity, enhanced training, and data-driven marketing strategies that should support better unit economics in future periods.
The implications for investors and the healthcare industry are substantial. Stonegate Capital Partners' valuation analysis, available at https://www.stonegateinc.com, uses a combined historical FY24 EBITDA blended with expected FY27 EBITDA to normalize to a medium-term EBITDA of approximately $85.0 million. Applying an EV/EBITDA range of 9.0x to 11.0x results in a valuation range of $7.46 to $14.32 with a midpoint of $10.89.
As 2025 progresses, management remains focused on retention, quality, and disciplined execution through the current Annual Enrollment Period. The company's strategic positioning suggests it aims to re-accelerate growth when market conditions stabilize, potentially positioning itself for consolidation opportunities in what management describes as a fragmented broker landscape. The ongoing development of GoHealth Protect represents a critical diversification strategy that could reduce reliance on traditional commission-based revenue streams.
