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 📚 - Q3 2024 Medicare eBroker Financials Side-By-Side

3. Sponsor Snapshot 🚀 - brought to you by Adsync Media

4. Compliance Chatter 📢 - Michigan, Wisconsin, Iowa & Oklahoma

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

DEEP DIVE 📚

Q3 2024 Medicare eBroker Financials Side-By-Side 🦃

This week, we will explore Q3 2024 financials for publicly traded Direct-to-Consumer distributors, also known as eBrokers.

The following companies’ Q3 2024 financial results will be compared below, side-by-side. (note: Q2 2024 results are here, and a section on “What are eBrokers?” can be found here.)

• GoHealth (“GOCO”)

• eHealth (“EHTH”)

• SelectQuote (“SLQT”)

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Before comparing these 3 companies, it’s worth mentioning some notable changes in the eBroker industry recently.

First, you’ll notice that e-Telequote is no longer included in this analysis.

That’s because GOCO acquired e-TeleQuote from Primerica as of 9/30/2024. For an analysis of what the combination looks like go here.

Second, Willis Towers Watson recently announced the sale of TRANZACT. The transaction is expected to close by year-end (more here).

Finally, earlier this year Prudential shut down Assurance IQ.

There is one other large eBroker worth mentioning that are part of publicly traded company, but does not report segment financials.

•  HealthMarkets - part of UnitedHealth Group

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Okay, now back to eHealth, GoHealth and SelectQuote. These publicly traded eBrokers do have some unique characteristics worth noting.

GOCO utilizes 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 into the most recent financial results…

Side-By-Side Results

To compare and contrast Q3 2024 results we are looking at the Income Statement, a few key Balance Sheet items, LTV metrics, and Sales metrics.

Some key observations:

• Each company recorded operating losses in Q3 2024.

• SLQT continues to lead the field in revenues, acquisition/overhead ratios and profit margin.

• EHTH leads Medicare Advantage LTVs at $990.

• GOCO added the most policies with over 166k.

YoY % Change

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

Revenues

• Revenue growth was led by SLQT (61% growth in through Select Rx vertical).

• GOCO, EHTH, experienced a decline in revenue compared to Q3 2023

• GOCO Encompass revenues decreased significantly (Other Revenues)

Expenses

• GOCO and EHTH reduced overall expenses slightly

• SLQT increased expenses, but less than the increase in revenue

Profitability (Loss)

• Overall Loss improved 10% driven by SLQT’s 47% improvement

LTV Changes

• MA LTV increased for SLQT but decreased for the other two.

• MS LTV increased significantly for EHTH.

Approved Policies

• Overall approved policies down in Q3 2024

• MA continues to be the significant majority of approved polices 

• SLQT grew SelectRx customers 64% YoY

Conclusion

Traditionally, Q2 and Q3 make up the least profitable portion of the year for these companies. The relationship between LTV and customer acquisition cost (CAC) continues to challenge eBrokers.

In Q3 2024, SLQT shines as the only eBroker with revenues that outpaced expenses.

It was anticipated that eBrokers would be very busy this AEP helping seniors make decisions. Traditionally Q4 is where these companies make their profits for the year. It will be interesting to watch year-end results in a few months!

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One last note… since next Thursday is Thanksgiving Day, we’re going to take a week off to eat turkey, watch football and count our blessings. We hope you do too! 🍗🍂❤🦃

If you’re ready, here are some ways we can help you:

• Newsletter Sponsorship opportunities: Promote your product or services to leaders in the Medicare space. Let’s discuss. (link)

• Market Research: Reports that help you wrap your arms around the Senior focused insurance markets. (link)

• Consulting: We can help you develop new insurance products for the Medicare market, appraise your books of business, and keep you compliant. Let’s discuss. (link)