Here is what you’ll find in this week’s newsletter!

1. Important links 🔗 - the best articles we found this week about the Medicare Market along with links to Jared’s recent LinkedIn posts.

2. Deep Dive 📚 - Q1 2024 Medicare eBroker Financials Side-By-Side 🤸‍♀️

3. Compliance Chatter 📢 - Does HHS’ final nondiscrimination rule impact Medigap?

4. Sponsor Snapshot 🚀 - brought to you by Modivcare.

It’s only a 5 minute read, but it will make you 10x smarter.

DEEP DIVE 📚

Q1 2024 Medicare eBroker Financials Side-By-Side 🤸‍♀️

This week, we will explore Q1 2024 financials for publicly traded Direct-to-Consumer distributors, also known as eBrokers.

The following companies’ Q1 2024 financial results will be compared below, side-by-side. (note: Calender Year 2023 results are here, and a section on “What are eBrokers?” section can be found here.)

• GoHealth (“GOCO”)

• eHealth (“EHTH”)

• SelectQuote (“SLQT”)

• e-Telequote (“PRI“) - part of Primerica

Note: There are a few other large eBrokers that are part of publicly traded companies, but they do not report segment financials. Three examples are:

• Tranzact - part of Willis Towers Watson

• AssuranceIQ - part of Prudential [NOTE: Prudential announced they are shutting down the AssuranceIQ segment]

• HealthMarkets - part of UnitedHealth Group

It is important to note that there have been some tweaks to strategies for some of these eBrokers.

GOCO continues to utilize a model where they are not the agent of record, don’t receive agent commission, but instead get paid an up-front fee to generate warm leads to carrier partners. They refer to this model as Encompass.

SLQT has added a healthcare vertical in order to increase revenue per customer by cross selling Rx benefits. They now generate a significant amount of revenue from this vertical.

Let’s dive right in…

Side-By-Side Results

To compare and contrast Q1 2024 results we are looking at the Income Statement, a few key Balance Sheet items, LTV metrics, and Sales metrics.

Note the following:

• Other Revenues: for GOCO this is revenues earned under Encompass model; for SLQT this is revenues earned from SelectRx

• Cost of Revenues: for GOCO this is commissions paid to "downlines"; for SLQT this is cost of goods sold under SelectRx

• LTV: GOCO no longer reports LTV for separate product lines. It's assumed the majority of products fall under MA

• Insurance Approved Policies: GOCO no longer reports for separate product lines. It's assumed the majority of products fall under MA

YoY % Change

Let’s observe and discuss the year-over-year (“YoY”) Income Statement % changes.

Revenues

• e-Telequote Revenue was greatly impacted by a “negative tail adjustment” of $7.8 million... (had to reduce revenue this quarter to account for lower that expected LTV in prior cohorts)

• GOCO continues shift to non Commission Revenue

• SLQT continues significant growth in SelectRx Revenue

Operating Income (Loss)

• SLQT was the only company with Operating Income and held steady YoY. Adding revenues from SelectRx without increasing acquisition expenses (they already have the customers) looks to be working well.

• Both GOCO and EHTH saw Operating Losses in the quarter, but improved YoY (losses weren’t as bad).

Now let’s take a look at the year-over-year (“YoY”) Balance Sheet and KPI items % changes.

LTV

• up across the board as a result of increasing commission amounts combined with better customer persistency

Approved Policies

• EHTH and SLQT led the way in increasing MA approved policies

• though still a small portion, EHTH increased MS approved policies 35%

• SLQT grew SelectRx customers 67% YoY

Bottom Line

AssuranceIQ shutting down operations highlights the difficulty these companies face in operating profitably. LTV / CAC, and positive cash flow continues to be a focus of these companies.

SelectQuote’s strategy of increasing Revenue through their SelectRx offering to already acquired customers seems to be paying off.

Aside from e-Telequote which had a tough quarter due to the negative tail adjustment, the other eBrokers improved profitability, continuing to trend in the right direction.

That’s all for today. I hope this is helpful!

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