GoHealth Navigates Medicare Advantage Challenges with Strategic Focus on Retention and Revenue Diversification

GoHealth Inc. (NASDAQ: GOCO) reported substantial revenue declines in the third quarter of 2025 as the company continues to navigate significant changes in the Medicare Advantage environment. Net revenues decreased to $34.2 million from $118.3 million during the same period last year, reflecting an intentional reduction in Medicare Advantage volume, decreased non-agency activity, and broader industry shifts toward margin integrity and renewal stability.

The company's strategic initiatives during Q3 2025 focused on building upon the super priority term loan facility finalized earlier in the year. This senior secured super priority term loan, including $80.0 million of new capital, supports working capital needs and enhances strategic flexibility while maintaining compliance with debt covenants. The financing arrangement provides room for future consolidation opportunities across what management views as a fragmented broker landscape.

Sales performance showed notable shifts in the quarter, with sales per submission declining 34.3% year-over-year to $461. This reduction reflected both the deliberate volume pullback and evolving revenue mix patterns. Agency revenue decreased by 71.5% while non-agency revenue declined by 96.5% compared to the previous year. However, other revenue categories showed meaningful growth, supported by continued momentum in GoHealth Protect offerings, which are becoming increasingly important contributors to the business model and helping diversify revenue beyond traditional commission streams.

The Sales/Direct Operating Cost of Submission ratio decreased to 0.6x from 1.1x in the prior year period, as lower scale and mix shifts impacted operational leverage. Despite these challenges, management expects a more balanced contribution from Protect and agency relationships to help mitigate revenue volatility over the longer term.

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 reduction and higher quarterly unit costs, management maintains a disciplined approach to acquisition efficiency. This includes focusing on agent productivity, enhanced training programs, and data-driven marketing strategies designed to support improved unit economics.

Results were further affected by significant non-cash impairment charges that weighed on reported margins, even as the company prioritized liquidity preservation, platform efficiency, and maintaining a high-quality member base. As 2025 progresses, management remains focused on retention metrics, quality standards, and disciplined execution through the current Annual Enrollment Period, with plans to re-accelerate growth when market conditions stabilize.

Stonegate Capital Partners maintains its valuation assessment using a combined historical FY24 EBITDA blended with expected FY27 EBITDA, normalizing to a medium-term EBITDA of approximately $85.0 million. Applying an EV/EBITDA range of 9.0x to 11.0x with a midpoint of 10.0x and adjusting for minority interest results in a valuation range of $7.46 to $14.32, with a midpoint of $10.89. The company continues to evaluate integration opportunities while refreshing its Board of Directors to strengthen governance and strategic oversight during this transitional period.