Gohealth Inc (GOCO) 2020 Q2 法說會逐字稿

Good day, and welcome to the GoHealth Second Quarter of Fiscal 2020 Conference Call. (Operator Instructions) As a reminder, this call will be recorded. I would now like to introduce your host for today's conference call, Mr. Jay Koval, Vice President of Investor Relations. You may begin.

Thank you, Joelle, and good evening, everyone. I want to thank each of you for joining GoHealth's second quarter earnings call, our first as a newly listed company following our IPO a month ago. Joining me today are Clint Jones, Co-Founder and Chief Executive Officer; Travis Matthiesen, Chief Financial Officer; and Shane Cruz, Chief Operating Officer.

This afternoon's conference call contains forward-looking statements based on our current expectations. Numerous risks and uncertainties may cause actual results to differ materially from those anticipated or projected in these statements. Many of the factors that will determine future results are beyond the company's ability to control or predict. You should not place undue reliance on any forward-looking statements, and the company undertakes no obligation to update any of these statements, whether due to new information, future events or otherwise.

After the market close today, we issued a press release containing our results for the second quarter of fiscal 2020, in addition to presentation materials. Both the release and the slides can be found on GoHealth's website under the Investor Relations tab.

In the press release, we have listed a number of risk factors that you should consider in conjunction with our forward-looking statements. Other significant risk factors are described in our Form 10-K and 10-Q reports filed with the Securities and Exchange Commission.

During this call, we will be discussing certain non-GAAP financial measures. These measures are reconciliation to the most directly comparable GAAP financial measures, and the reason management believes they provide useful information to investors regarding the company's financial condition and results of operations are contained in the press release and investor presentation.

So with that, I'd like to turn the call over to Clint.

Thanks, Jay. Good evening, everyone, and thanks for joining us for our second quarter earnings call. This is our first as a public company, and we're excited to announce GoHealth's results and share with investors our unique position in the marketplace as well as our future vision for the company as we focus on our mission to improve access in health care in America.

I plan on covering 2 main topics today, including, first, a quick review of our second quarter results and fiscal 2020 outlook; and second, a summary of how we actively manage our business to achieve the right balance of top line growth, profitability and cash returns.

So with that, let's start with the second quarter results. No surprises here as results came in largely as expected. Total net revenue grew 71% in the quarter, powered by 169% growth in our Medicare-Internal segment. This revenue growth was driven by additional agents and increased efficiency, which contributed to 106% increase in Medicare Advantage commissionable approved submissions or Medicare CAS. Revenue growth in the quarter was held back due to COVID-related state licensing delays that we experienced from April to June. As of August 1, we are on track from a hiring standpoint for this upcoming AEP, making up substantial ground on licensing and carrier appointments during July. Despite these significant investments in our workforce, we delivered EBITDA growth of 56% in the second quarter.

The Medicare Advantage market is very large and growing quickly as seniors are increasingly interested in evaluating their plan options with the expert advice of GoHealth and our agents. COVID has helped to accelerate the secular shift towards our business model as the traditional field force slowed down due to social distancing concerns. We partner closely with carriers to help them grow their member counts, and we have a track record of exceeding expectations through educating consumers and providing them with the best policy options to address their own unique needs. We also are able to deliver high customer service levels and post-enrollment engagement through our TeleCare team that we ramped up dramatically over the last 12 months.

First half revenue increased 87%, thanks to a 242% growth in Medicare-Internal and 156% growth in Medicare CAS. Internal Medicare margins increased 300 basis points to 49% on a TTM basis. Given the rapid growth we delivered in the first half plus the momentum behind our business initiatives, we believe we are well positioned to deliver net revenue of $840 million to $890 million in 2020. We expect efficiency gains and a continued focus on our Medicare Advantage segment to help us maintain industry-leading adjusted EBITDA margins well above 30% in 2020, despite an aggressive investment posture in people and technology that positions us for future growth. This will allow us to deliver adjusted EBITDA of $265 million to $290 million.

These high margins are driven by our laser focus on LTV to CAC. As many of you know, LTV to CAC represents the lifetime value of commissions divided by the customer acquisition cost that allows us to calculate how much we're willing to spend for a particular consumer based on their expected value, effectively deaveraging the market and delivering high-quality volume growth. It's similar to GARP investing, rephrased as growth at the right price. I'm proud to say that the team continues to build on prior year momentum with trailing 12-month LTV to CAC up almost 1 point as of June 30 to 3.6x and towards the high end of our optimal range of 2.5 to 4x. This optimal range allows us to scale growth while shortening our payback period to roughly 1 year on Medicare policies. With a correlation of 95%, the relationship between TTM LTV to CAC and Medicare-Internal margins is very high, validating the relevance of LTV to CAC as a correct guidepost for delivering quality profits. This is further validated by our ability to be cash flow positive from a unit economic standpoint at the end of the first year.

This leads to my second topic, the how behind delivering high-growth margins and superior cash returns. We distinguish ourselves from the competition through utilizing technology and data to power our decisions and excellent execution. As you know, the majority of our costs are variable relating to the marketing activities and agent costs. Our vertically integrated funnel allows us to optimize our results, balancing supply and demand in real time. Put another way, we work towards certain desired goals and metrics, including LTV to CAC, by modulating these levers.

Let me use a few examples of the various levers at our disposal to win in this market. The first example I want to share is around volume growth. We can adjust the volume of lead generation we produce for our agents through deaveraging the market and micro-targeting. Because we focus on internal lead generation, we know a lot about our targeted customers before they even make a call. This enables us to be surgical in our approach, spending a predetermined amount for a specific consumer because we already have an expected value for them. Our approach is precise and methodical, driving top-tier LTV to CAC as we work backwards from our known cost to acquire that LTV.

Our anticipated future commission streams can vary due to carrier mix, customer segments, geographies, enrollment time of the year, amongst other factors that we incorporated into our LTVs. Over the last several quarters, we have enjoyed strong, high-quality growth, driven in part by targeting special needs plans known as SNPs. Although SNP plans tend to have a lower LTV that pull down our average LTV, we can achieve our target LTV to CAC levels because of our marketing efficiencies and the higher agent conversion rates that we deliver for these policies.

The second lever we control is the investment in our own internal team of agents and how we schedule their time to match the demand that our marketing team creates. Given a specific number of lead generation opportunities, we can determine how many agents we need working during various times of the day. When COVID first hit, we were able to transition to a work-from-home environment within 72 hours with minimal disruption. We have now adjusted how we onboard, train and license new agents and are continually optimizing through improved lead score and call routing technologies to drive higher conversion rates of consumers into the best fit plans with shorter handle times.

Our data tells us that agent engagement with consumers is supportive of happier customers, better plan usage and ultimately, better retention. In 2019, we more closely aligned our agent compensation around the long-term dynamics of these commission streams, not just at the point of sale. Our expanded TeleCare team can then take over post-enrollment to educate consumers about their plan benefits and help minimize unexpected surprises during the 2 highest periods of churn, the first 90 days and during the next annual enrollment period.

Through our TeleCare data, we have been able to develop save strategies when members call to cancel their plans, whether due to shopping for $0 premium plans or some other significant life event like a move or a new health issue. We have seen this retention strategy help keep over 1/4 of those save customers enrolled on the GoHealth platform either in their original plan or helping them find a new plan. In addition to increasing persistency, the TeleCare team also administers innovative offerings such as health risk assessments and pharmacy benefit management programs for our carrier partners, positioning us to generate other revenue streams incremental to commissions for GoHealth to become the go-to health insurance marketplace for consumers. To be clear, our agent additions are an investment in our growth over the coming years.

The third and final example of our levers has been our rifle-shot approach to adding new carriers. From 2016 to 2018, we used our technology and data science to fine-tune our Medicare business model with a few strong carrier partners through deep technology integrations and a consulting-like partnership to help them grow their enrollments. As our Medicare business has grown, we have been methodically adding new carriers to the platform. This approach has enabled us to maintain high margins through our integrated marketplace and increase LTV to CAC through more plan choices and better consumer fit. Our LTV to CAC and retention rates are the highest in markets where we offer broad coverage of the leading plans versus markets with less carrier coverage.

As we look towards 2021, we will have expanded coverage with many of the top carriers, including United, Aetna, Kaiser and some other regional [Blues]. While there's an initial ramp-up period for new carriers with forecasted lower LTVs as agents learn about the new plans, adding policy choices over the long term supports higher LTVs and lower customer acquisition costs.

Clearly, there are several macro factors that are out of our control, such as potential impacts from COVID-19, unemployment and regulatory changes. We believe that most of these are also tilted in our favor right now, which when combined with our proven business strategy, positions us very well for future growth. And we expect our growth will be significant over the coming years given the size of the Medicare Advantage market, its underlying trajectory as consumers leave traditional fee-for-service plans, not to mention, secular shift towards a virtual marketplace.

Additionally, we believe there are meaningful first-mover advantage for those that can build scale. The bigger we get, the better our model optimizes. More consumers provide more data insight, which allows micro-targeting, allowing us to hire more agents to specialize and better match those agents with prospects. This flywheel effect supports being more aggressive on the growth side during this COVID disruption with a careful eye towards our LTV to CAC ratio. This should allow us to generate industry-leading EBITDA growth through scale efficiencies as we build a book of business that will generate strong cash flows for shareholders in the future.

As we think about cash management, balance is the word that comes to mind. Brandon Cruz and I founded GoHealth 2 decades ago with our own money and maintain a 30% ownership stake post-IPO because of our focus on minimizing unnecessary dilution through cash burn. So we care a lot about these cash returns that result from our business decisions.

Rather than steal Travis' thunder on 606, I'll simply say that paying your agent and marketing costs upfront and then waiting for the cash commissions to be collected create some cash challenges. But we have found ways to fund our high rates of growth through a combination of existing cash flow, a seasonal revolver and long-standing carrier relationships.

Because of the depth of our relationship with carriers, we have been able to create programs where carriers pay upfront cash to GoHealth to cover agent cost and enrollment fees as well as marketing programs on the front end. While the margins are lower than the commissionable business, it has helped reduce our reliance on external capital. Now post-IPO, we are in a strong position to reevaluate the balance of creating value for the carriers through commissionable growth and generate additional revenue streams from these relationships.

Noncommissionable revenue, shown as other revenue on our P&L, has been and will continue to be an important way to supplement the profitability of commission streams, including the rollout of some of the Encompass initiatives to enhance member utilization and drive value-based care engagement. More frequent customer interactions will help ensure member plan satisfaction and better health outcomes, creating a strong connection between provider, payer and patient.

I will spend more time running through our Encompass opportunities on future earnings calls, but for now, we are encouraged by the favorable response from our carriers. We can offer programs on behalf of carriers at the time of enrollment with compelling margin, leveraging our marketplace and TeleCare team.

In the meantime, we aim to continue our legacy of over-delivering on our growth objectives, and we'll do so through controlling what we can control and creating a visible path to value creation. We will continue to thoughtfully allocate our resources, invest ahead of the curve and make sure that GoHealth earns more than our fair share of a very large, fast-growing Medicare Advantage market.

Let me now turn the call over to Travis for some additional color on our financials and key metrics.

Thanks, Clint, and to all of you for joining us today for a review of our first half results. Rather than repeat all of the financials in our release, I will use this time to hit a few key highlights from the first 6 months of 2020 as well as share some additional perspective on an issue that is front of mind for investors, churn.

First, let me run through some key numbers from the first half. As Clint mentioned, we delivered strong growth in our Medicare-Internal segment, our focus area as a company. Total Medicare submissions jumped 148% in the first half as we continue to onboard and license new agents in advance of Q4's annual enrollment period. We are driving increased agent efficiency through better conversion and higher sales per day. And remember that our agents' variable compensation is not only paid upon submission of an application, but also on long-term retention and other aspects from our balanced scorecard, including customer satisfaction. This is 100% aligned with our focus on the value of a consumer versus the LTV of an individual policy.

Regarding our Medicare-External segment, let me remind you that these external agents are not outsourced call center agents but rather independent virtual agencies that leverage the power of GoHealth's technology, compliance and data to be able to help enroll new members under GoHealth carrier contracts. They are also compensated in a similar manner to our internal agents with an eye towards long-term retention so they are only paid when commissions are received. For the reasons mentioned above, external segment LTVs are not materially different from our internal segment.

The dynamics that have been powering our year-to-date growth show no signs of abating. In fact, we believe that COVID has only served to accelerate the shift to our business model. As Clint mentioned, we can acquire members more efficiently than carriers and consumers are increasingly interested in utilizing the expert advice of our internal agents to help them navigate a decision with serious cost ramification if they enroll in the wrong plan. Concerns over health care have become front of mind for Medicare-eligible consumers, and they need education, transparency and choice from the safety of their homes. We focus almost exclusively on our own marketing and advertising efforts, generating approximately 80% of our leads internally in the first half because of the superior efficiency that results from this integrated approach.

During the first half of 2020, our marketing team successfully grew customer acquisitions by 245% with only a 190% increase in marketing and advertising costs, dramatically improving efficiency while scaling. These leads were generated through a balanced approach to online and offline channels. We continue to benefit from scale through greater breadth of carrier offerings that will create opportunities to build our brand and reach consumers on a nationwide basis.

Scale benefits also drove down G&A as a percentage of revenue from 9.8% to 7.8% over the first 6 months of the year, despite headcount investments to support our growth objectives. We delivered meaningful operating leverage during the first half of the year with an adjusted EBITDA margin of 23.1% versus the prior year's 17%, an increase of over 600 basis points.

Adjusted EBITDA came in at $61.9 million, 154% above the prior year period as we continue to find ways to generate high-quality profit growth beyond the annual enrollment period. From an operational perspective, it's equally important to create selling opportunities for our team of Medicare agents throughout the year to be able to maintain a large ongoing agent force that continuously improves over time.

The trajectory of Medicare Advantage LTVs was a modest tailwind for revenue, with first half LTVs up 1.3% to $879. While the $879 is an average, it's important to note that not all policies are created equally, and we utilize our fully integrated technology platform to deaverage the market as we micro-target and deliver top-tier LTV to CAC for the overall portfolio.

In reference to Clint's comments around utilizing our LTV-to-CAC framework to target high-quality growth opportunities, let me point out that our strategy to add several new large carriers with lower initial commission rates and LTVs is a strategic decision to drive choice and better fit for consumers.

Similarly, our increasing share of business this year across the SNP population is also high-margin business that results in lower LTVs. How does this mix shift manifest in our results? While strong growth in SNPs could create a near-term drag on our average LTV, our LTV-to-CAC focus ensures that we are always paying the appropriate amount for these new consumers, delivering high-quality growth and strong cash returns on the CAC deployed. As Clint mentioned, our payback period is approximately 1 year. And over time, as we increase the carrier options for our consumers, you would expect to see better fit drive greater persistency.

Let me share a few more thoughts on our perspective on our current book of business and the topic of churn. My first point is that we have not observed material changes in churn relative to our expectations. When we analyze churn, it's important to note that we are comparing like-for-like and apples-to-apples cohorts and vintages across our book of business.

My second point is that cash collections on LTV is a better business metric. As we sit here today and analyze our historic vintages, the cash we have collected has been in line with our expectation, validating our LTVs. While changes in churn are not having a material impact on LTVs, the changing mix of business will continue to impact average LTVs, whether it's new carriers, new consumer segments or new geographies as they are all underwritten by our LTV-to-CAC target.

Third, LTV to CAC is our North Star because of the high correlation with margins and cash flow. Trailing 12 months LTV to CAC of 3.6x is excellent and at the high end of our range. And it's driven by efficiencies in our cost to acquire consumers as we drive down marketing cost per opportunity and increase overall agent conversion rates.

Fourth, and most importantly, our business model generates strong cash returns significantly faster than our competitors. We included a new slide in our investor deck to help highlight that. In 2019, the combination of first year commissions and other revenue was higher than our CAC during that period.

Moving now to some more details on our full year 2020 outlook. We expect total revenue to come in at a range of $840 million to $890 million, driven primarily by the growth in Medicare-Internal CAS. This represents a 60% increase at the midpoint, significantly faster growth than the competition as we look to lengthen our lead and build the scale that will further improve our ability to utilize our data and technology to create value for consumers and carriers alike, both of which will benefit our shareholders.

As Clint mentioned in his comments, 2020 will be a strong year of growth in our other revenue. While commissionable revenue remains our main area of focus, these other revenue streams have been excellent ways to bridge our cash flow needs and generate incremental profit, and they have been an important part of our strategy to monetize the value we create for carriers. And with the early success of our GoHealth Encompass Platform, we believe we are uncovering new ways to create values for carriers that should result in additional revenue beyond commissions.

In 2020, we expect scale efficiencies to offset the large investments we have made in additional internal agents, our TeleCare team and our technology platform, resulting in adjusted EBITDA growth of 55% to 71% for the full year.

It's worth noting that given our focus on better utilizing agents throughout the year, including during the seasonally low SEP, our business model delivers increasingly balanced profit growth. In 2020, we expect to generate roughly 1/3 of our EBITDA during the first 9 months of the year and are tracking well towards achieving our full year range of $265 million to $290 million on the heels of large investments in our agents and carrier footprint expansion.

Given the favorable cash characteristics of our business model, cash flow from operations in 2020 is expected to be only negative $60 million to $80 million, and we are on track to deliver our current growth plan post-IPO without needing to raise additional capital. For perspective, we believe we can add roughly $325 million in revenue this year. So this limited cash consumption speaks volumes to the cash efficiency of our business model, our focus on LTV to CAC and our unique carrier relationships.

To help you with your models, diluted share count for the full year is roughly 320 million shares and net debt today post-IPO is roughly $115 million.

So to summarize, we are confident that we have the winning differentiated business model to deliver high-quality growth for shareholders, powered by multiple levers and financial discipline. Our teams have the plans in place to acquire new customers at the right price, generating high rates of returns on those investment dollars, measured by LTV to CAC and visible in our industry-leading EBITDA margins and cash returns. Our fully integrated platform and data-driven insights further position us to increase our efficiency over time as we gain scale in an enormous Medicare Advantage market, becoming better in the process. And we are investing in additional revenue streams which can augment our top and bottom line growth over the coming years.

And with that, operator, we'd like to open up the call to Q&A.

(Operator Instructions) Our first question comes from Elizabeth Anderson with Evercore.

Congrats on a first quarter out of the gate. I had a question regarding your churn levels in the quarter. You gave us some nice high-level detail, but I was wondering if you could give us a little bit more detail in terms of what you saw with the COVID special enrollment period and then specifically any commentary you have in terms of the newest cohort from 2019, sort of how that cohort has trended versus prior.

Yes. Thank you. Thanks for the question. Obviously, there's been a lot of noise in conversations in the market around churn. And I want to take a little time to educate you how we think about this and kind of the key elements in how we run our business around this.

So obviously, churn is one element that goes into your LTVs. And why is this important? Obviously, your LTVs are what you're using to predict future cash flow. And we are hyper-focused on cash flow. I think we've mentioned that several times in our prepared remarks. So that's kind of how we think about why this is so important. And if you think about Travis had mentioned that our cash collections are right in line with what our expectations have been. So that's kind of point number one. Point number two, we have not seen material changes in churn in the business. So I think those are the 2 main points I'm going to talk about.

The way we look at in running the business, we have kind of 2 points in the period of our customer journey. Our first 90 days, which has many levers in there that impact churn: the marketing source, agent performance, type of enrollment, is it a SNP plan, is it new to Medicare, the carrier, the geography and many other factors. A lot of these factors are in our control, and we see those elements in real time, and we're able to make modifications and adjustments if we start seeing negative or positive trends. We don't want to see surprises, and we are in a position with our data and insights where we don't see surprises. So that disenrollment period that I'm talking about in the first 90 days is we are hyper, hyper-focused on there. And we obviously see different disenrollment numbers by cohorts, by different plan types and those other things that I've mentioned.

Then the next part is post 90 days, we call it more of our macro area, macro churn area. And again, haven't seen any trends that would lead us in a negative way there. And we have less control there, but we've ramped up and talked about the investment we made in our TeleCare team. It's close to 200 people now, and we're having over 30,000 conversations a month with consumers on why they may be interested in looking at another plan, how happy are they. So we believe as we invest in that and get more data, there will be ways we can actually make positive impacts on that macro area as well. And I think everybody in this industry defines LTV and churn metrics in unique ways. So I think comparing us against a peer is not the right set.

The other, the last point I'll get to is just the overall cash payback period that we're focused on. Again, why is churn so important? It goes into your LTV calculations. Why is your LTV calculation so important? Because that's how you generate your cash flow and predict that.

And if I can just add in there, Clint, really quickly. We do look at that early disenrollment and that 90-day churn rate differently. And while we continue to build the GoHealth brand, use marketing automation, customer outreach through TeleCare to improve the post 90-day churn dynamic, we're focusing the majority of our efforts on the disenrollment period. And not only because it has the highest impact on our LTVs and our cash payback period, but it's the area where we can best leverage our data to deaverage the market. So we talk a lot about how we're going to deaverage the market and leverage the different dynamics and that every consumer is different to arbitrage the market and get the results that we've seen. And we see significant variances in attrition across our different data dimensions related to customers and agents during that early disenrollment period.

As you mentioned, Clint, some of these -- a good example here would be in geography. We see in markets where we have a really strong product footprint and there's less competition, the 90-day retention of our submissions may be over 80%. And keep in mind that this includes both the effectuation rate of the submission that actually get to the effective date and become a paying policy as well as did it last without canceling during that first 90 days. But in other markets where we still are growing our carrier footprint, there's higher competition, that 90-day rate may be as low as 50% to 60% retention.

So those significant variances are things that we can leverage with both our business strategy to add carriers to our platform to ensure that we can get higher retention rates in all areas, but also to ensure that we're paying the right price for every single consumer and again, deaveraging the market. So in certain geographies, we're going to pay more to acquire consumers because we know those early trends with disenrollment.

As we mentioned earlier in the call as well, another example relates to the types of Medicare beneficiaries that we're enrolling. So as we target and enroll consumers in SNP plans, they will exhibit lower effectuation rates and higher disenrollment rates during the first 90 days of the policy, but we'll continue to target consumers due to their attractive acquisition costs and the ability for us to leverage this population to reduce the seasonality of our business.

And so these things are just key examples of how we can leverage our data to deaverage the market and continue to pay the right price for every consumer. So instead of focusing on how are we performing in aggregate from a churn perspective or from a disenrollment perspective, we'll continue to focus on using our data to deaverage the market and make sure that we're paying the right price for every consumer so we can be laser-focused on the important metric, which is our LTV to CAC.

Our next question comes from Jailendra Singh.

This is Jailendra. Can you guys hear me okay?

Yes.

Yes. So maybe on the cash flow slide, I think that's a very important differentiation you guys have that you're able to break even on cash less than 12 months. But can you help us reconcile the fact that you expect your other revenue to remain strong and the fact that you should have renewal commission coming from prior years, but you still expect your cash flow guidance to be negative $60 million to negative $80 million this year. Just trying to understand like why shouldn't we expect positive cash flow trends in this year or even next year? Just help us reconcile that.

Yes. So I'll answer the first part of that. So in our other revenue, these are multiyear, in many cases, contracts with partners, whether that's around agent costs, enrollment fees, marketing development funds and our newly kind of rolled out Encompass Platform. These are long-term contracts, and we expect that recurring revenue to continue. And we do leverage that in a way to drive the results in our business. And we'll continue to focus on that. And I think Travis can speak from a cash flow standpoint, but at our growth rates, from a cash flow, overall cash flow positive, we can slow down and become cash flow positive really quickly. We don't think that's the right decision for the business, and we're going to keep kind of expanding and growing in areas that we can match our LTV to CAC. And Travis, do you want to speak a little bit more on?

No, great point, Clint. I would just reiterate, first and foremost, obviously, the cash consumption this year is predicated on growth and again, continuing to accelerate our growth rate. And then second, I think the other important piece is, again, we gave kind of the full year guidance as of 12/31. And again, because of the seasonal nature of our business, what that $60 million to $80 million represents is, again, the cash that we will consume during the AEP period. While our payback period is within 1 year, a lot of that payback will start coming in, in Q1 as we get that first initial commission as well as start to receive renewal commissions from our book. So again, I think that combination of growth, combined with the seasonality of the 12/31 guidance we're giving are the 2 biggest drivers there.

Our next question comes from Steve Valiquette with Barclays.

It's Jonathan Yong on for Steve. Just in relation to your LTV outlook, you mentioned that the large carrier adds may impact LTV a bit because of the mix. Is there something unique about the products that you're adding or the population you're targeting in terms of why the LTV would be somewhat negatively impacted from that regard? And then just quickly, do you have any data on just the recapture for members that did churn off?

Yes. So I could start. So from a new carrier addition, obviously, as we think about adding new carriers, we may come in at -- there are several elements here, lower commission rates. It takes a while to ramp up the agents and the carriers on the platform. So there may be an initial period of time where we see lower conversions, potentially higher churn as our agents become educated and fully understand those plans. So we've taken more of a conservative approach from an LTV stand and think about how we plan and scale this out. We obviously won't roll out new carriers to the whole business, if you will. We'll start, we'll test, we'll learn, we'll ramp up, we'll gather data and grow from there. But I think it's just prudent for us to take much more of a conservative approach as we roll these out. Now that will shift over time as we learn the data, gain scale and grow from there. That's just how we think about new carriers and to that point, potentially even new agents.

And then to follow up on the recapture question, as we think about recapture, we think about those consumers that are going to leave us. Travis mentioned the 30,000 consumers that we talk to with our TeleCare team on a monthly basis. We're engaging with consumers, and we're using our predictive analytics to figure out which consumers we should reach out to based on the likelihood that they will churn based on the product that they've selected and how we determine that product fit score using our technology. As we reach out to those consumers, we find that either they call us or we call them, we end up with about 25% save rate of those consumers that we speak to that are looking to cancel their plans.

Our next question comes from Tobey Sommer with Truist.

I wonder if you could give us a little bit of color on what your experience is in agent productivity in a virtual setting. And maybe give us the context of how it compares a year ago and what your assumptions are for that productivity as we head into the fourth quarter?

Yes. It's a great question, and thank you. So obviously, yes, managing a remote workforce creates unique challenges. And I think going into COVID and kind of moving everybody to a virtual, we really didn't know to fully -- what to fully expect. And I think the good news is that productivity has stayed the same or actually increased in many cases. And if I look at kind of our last several years AEP increases in conversion, we expect a modest increase this year, but it's not all driven by just the agent activity. Last year, we rolled out kind of our lead routing and plan matching capabilities that really, as we understand agents' characteristics around what they sell the best, whether that's from a marketing source or a type of consumer, that data set has grown and we've gained more insight, we can better match prospects with those agents. So we're really excited about that as we get agents onboard.

And I think in years past, we had a lot of hiring right before AEP where we didn't know a lot around these agents and their capabilities. Luckily, this year, we're able to get people in board sooner or onboard sooner where we can learn more about that, which we're really excited as we get into AEP. And we were devising ways to ensure the same energy that we typically see in our call centers during AEP, we can transfer that in home. So we've got some really unique solutions we've been working on and testing that we've seen and we're really excited about. So I think that will be obviously one of the challenges as we get into AEP is maintaining that same momentum and energy levels at home, but we feel we've got some really, really creative ways to do that.

Yes. And I would just add briefly kind of 2 key metrics that we look at when we talk about measuring agent performance. We look at agent conversion rate, their ability to submit applications off of the qualified opportunities they receive as well as their sales per agent per day. Q2 of '20 over Q2 of '19, we've actually seen increases in both of those metrics. So those are 2 key leading indicators that we're very excited about as we continue to operate in this remote and post-COVID environment.

And if I could ask another question. You seem very enthusiastic about the noncommission sources of revenue and the new platform. If possible, could you give us some examples of what the new platform could unlock in terms of those opportunities?

Yes. Absolutely. And we are extremely excited about it. And I think, especially now with this more like telehealth and virtual capabilities, you think about the senior population that's much more vulnerable and our ability to make an impact there virtually over the phone, that kind of really gets us excited on how we can help folks out.

So a couple of examples that we can talk through. When you think about a health risk assessment, right, really understanding once somebody's enrolled, we can help our carrier partners at the time of enrollment, we take them through a health risk assessment process, which is we deliver that now member to the carriers. They know exactly who that consumer is. Do they need immediate follow-up care? Do they need to get into a chronic care program? Do we need to get them in a prevention program? So it really dials in a much faster connection with that customer around that carrier and that plans need. So that's an example.

Enrollment in value-based care models, obviously, there's a big industry shift into value-based care. We can help these consumers understand and enroll in value-based care models. Screening for social determinants of health. Obviously, with isolation during COVID, there's a big risk there from a mental health standpoint that we can help identify and go from there. Other things around understanding their transportation needs to get to a provider and back. If somebody can't make it to a doctor's appointment from a preventative care standpoint, how do we impact that? Meal delivery, right? If somebody is in a situation where they can't get to the grocery or they don't have the means, especially during COVID, is there an opportunity to set that up, right? These are all potential revenue triggers for us and where we can not only help the carriers but the consumers as well. So it's a great ecosystem that we get really excited about. And we've got a list of unique services that we'll be adding to this platform as we move forward.

And our next question comes from Lauren Cassel with Morgan Stanley.

And our next question comes from Michael Cherny with Bank of America.

I hate to go back to this churn question, but just because I know it's been the dominant topic. You talked about no real material changes relative to expectations. I guess just on a more straightforward question, can you tell us if it was up or down on a like-for-like basis?

Yes. Again, our churn rates have been relative to our expectations. And again, when we talk about our expectations, those were the LTVs that we recognized and booked. And again, we have not seen a material change. And I would just, again, point back to what Clint mentioned earlier is that churn is not the only driver of LTV. It's carrier mix, it's consumer mix and geography. And again, based off of all of those factors, our LTVs have been in line with our expectations as evidenced by our cash collections to date.

I appreciate all the color and education on that front. One other question I want to dive into. I like your use of the term rifle approach on carrier relationships and adding carriers. As you think out, especially in a post-election world, how do you think about the future development of carrier relationships, especially with any of that or any significant ones that you don't have relationships with currently?

Yes. That's a great question. And I think to take a step back here, we've been offering a health insurance marketplace for nearly 20 years, but Medicare is relatively new for us, right? Actually, only 5 years. So we had a lot of the technology capabilities from enrollment and sales capabilities. But when we added Medicare, we said, you know what, this is a product that we don't fully understand yet. We want to be thoughtful and methodical in how we do this. We want to partner with a few select key partnerships and then learn that business and become a very valuable partner to delivering highly skilled and efficient memberships. That's what we did.

So now that we kind of fast forward a few years later, we see the data around the country where we can afford to add other carriers or other products in that to better serve customers, which we have begun doing. So I think that, that will play out over years to come. I think that as we scale, it will be a very important factor for us to ensure that from an LTV to CAC, and this is something we drive down to the lead metric, we're operating in the best areas. So if we see our either LTV maybe low in some areas or CAC high in some areas, that probably means we could add a carrier and a different plan there to impact that and change that. And we've proven that over the years. And I think was your second question around the election?

Just in general, we might be looking at different environments and likely a more optimistic environment potentially for Medicare, and I guess, how do you think about positioning the business and your relationships in the event that there is a broader TAM to go after?

Yes. No, absolutely. I think that we've been operating in the under 65 market, and we still are, to an extent, but for years. So we don't expect -- the big health care debate right now sits in the U65, especially around the ACA. Not a lot of discussion around changing Medicare Advantage other than potentially the Biden side bringing the Medicare eligibility age down, which obviously would be a big factor for us and something that we would be well positioned to help those consumers understand and enroll and the products that are available there.

Our next question comes from Steve Halper with Cantor Fitzgerald.

If I'm doing back of the envelope math, it looks like Medicare was around 93% of the commission revenue line. Is that correct? And then just generally, can you just talk about what your expectations are around the non-Medicare commission revenue going forward?

Yes. So you're right, our focus has been on Medicare. That's where we've continued to see the opportunity. You're right, it's above 90% at this point. And we will continue to drive and invest in that strategy. And around other revenue, it will grow, but we don't expect it to grow as a percentage of overall revenue just because our revenue streams from commission will outpace that pretty dramatically, but it's still a very important metric and part of our business. And I think about our future opportunity with additional enrollment fees or agent payback periods around the Encompass strategy, we see, obviously, not a meaningful amount of revenue this year per se, we're actually well ahead of where we thought we'd be. As we get into 2021 and beyond, we get really excited about what that can deliver.

Right. But I was just focused on in the commission line, the IFP business, the non-Medicare commission revenue in that line, what's sort of the outlook for that specific part of the business?

Yes. I mean we made the strategic decision last year to not necessarily get out of IFP, but to not really invest in IFP until we fully understand what's going to happen in the election. That's kind of where there's just such a kind of a turbulent issue around that market today that we wanted to keep it going because we still get a lot of call-ins and lead flow around helping people get enrolled in an ACA plan as we -- depending on what happens in the election and the opportunities that would come out of that, we'd be in a very good position to, again, reinvest and grow that if it made sense.

And our next question comes from Lauren Cassel with Morgan Stanley.

So I just wanted to ask about the new partners that you added. Is there any way to sort of quantify or help us think about your full year revenue guidance in terms of growth from new versus existing partners? And then you mentioned Kaiser and some other smaller carriers that you're adding over the next, I guess, several quarters. I guess, is that a 2020 story? Or is that more 2021? And then my follow-up is just on the agent side. Are there any stats that you can give around agent retention?

Yes. So I'll take the carrier one first. So we added United kind of around the beginning of Q2 and really focused on the SNP population and where that is. So that's obviously grown as we've kind of gone throughout the year. Some of the other carriers we're not going to add until later on in the year as we get into AEP. We don't believe it will be a meaningful part of this year. As we think about adding a new carrier, you really have close to 1 year to get fully integrated, build all the technology capabilities, all the reporting, all the data, train the agents, get them up to speed, and go from there. So we don't think there's going to be kind of a meaningful change in that necessarily this year. But as we think about future years and what that kind of carrier concentration looks like, we think it will be much more diversified.

And then the question on agent churn, we'll kind of break it down to the cohorts. And obviously, there's a good churn and bad churn. So our top kind of cohorts of agents that are strong performers, we see very little churn. By design, they have strong kind of commission model set up that are really around retaining not only the consumer, but retaining the agent through future opportunities with the business they write for us.

Now on the flip side, at the lower end of that, there will be forced churn, and that's really driven around performance that we're constantly evaluating how those agents perform, and there are certain expectations and standards we need to hit. And I think that would go as any other sales organization out there, how they would manage that population around performance.

Yes. And just to add to that. When we think about LTV to CAC, we look at LTV to CAC even of our agents. So we look at how our agents are performing. And to Clint's point, our top performers are continuing to be rewarded, have really great careers with us, and we then lose those agents, but we do aggressively manage our bottom performers.

And I talked earlier about some of the examples of different 90-day retention characteristics for different data dimensions. A big one that I didn't get into was the agents, and we see significant variances in retention. So we look at, obviously, conversion rates, sales volume. But even on the retention rates, the 90-day active rates of the business those agents are writing, and we will manage out those agents that are not kind of fulfilling the balanced scorecard that we've laid out because we want to make sure that their incentives are aligned with us and with agents that fit the GoHealth culture and are helping consumers in the way that we want to help them.

Yes. And I would just add, as we think about, again, the back half of the year and the forecast we gave, we have a plan of having a little north of 2,000 licensed agents enrolling consumers in the plan. I'm happy to announce that where we sit here today, 96% of that workforce has been hired. And so again, as we think about the seasonal nature of our business, we've been very successful in onboarding, adding and training our agents early in the process. So we're really excited about the opportunity it can drive this upcoming annual enrollment period.

And the last question comes from Yaron Kinar with Goldman Sachs.

It's actually Rob Cox filling in for Yaron. But I just wanted to ask, we got some updated views on online enrollment from some of your peers. And I just wanted to know what percent of your policies are enrolling online in this new environment? And to what extent are you focusing on or investing in this capability going forward?

Yes, great question. And we really focus and believe that connecting consumers to a license and trained expert is the right way to go now. So that's where the majority of our enrollments occur. We obviously have the technology that a consumer can enroll on their own. And we do get some, but it's a very small part of our business. Now we do have the ability that we'll deploy kind of a more aggressive strategy of kind of an agent-assisted or kind of an e-mailed enrollment packet during peak times, especially during AEP, around deadline days or deadline weeks. So if we have a huge call queue, we can enable our agents to talk to the consumer, help them choose a plan, but as opposed to enrolling them over the phone, we can then send them an electronic capability where they can do it themselves, which then enables our agents to get back on the phone with the next consumer as our call queues are higher, we can bring them down. So there are periods of time during AEP we'll deploy that technology that's very successful. We believe, over time, we'll see more and more people enrolling online. We don't think that trend has occurred yet, but we have the capability of doing it, and we'll continue to watch it. But our best characteristics around our LTV to CAC still remains strongest when talking to one of our experts.

Great. Well, hey, thank you very much to all of you for joining us for our second quarter earnings call. And please feel free to reach out to us with any additional questions that you might have. Take care.

Ladies and gentlemen, that concludes today's program. You may all disconnect. Everyone, have a great day.