GoHealth says its strategy for optimizing the profitability of Medicare plan sales helped produce strong revenue and operating income growth in the second quarter.
The Chicago-based health insurance distributor is reporting a $23 million net loss for the quarter on $127 million in revenue, compared with $15 million in net income on $75 million in revenue for the second quarter of 2019.
GoHealth (Nasdaq:GOCO) completed an initial public offering (IPO) of stock July 17. The offering raised a total of about $914 million.
The company’s latest results include charges related to the IPO.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), which reflects ordinary operating profits, increased to $62 million, from $24 million.
Commission revenue increased to $97 million, from $61 million.
GoHealth focuses on selling Medicare Advantage plans. It also sells Medicare supplement insurance policies and individual major medical insurance.
The number of individual major medical policies sold fell to 2 million, from $2.8 million, and the number of Medicare supplement insurance policies sold fell to 2.2 million, from 4.3 million.
The number of Medicare Advantage policies sold climbed to 99 million, from 47 million.
The percentage of leads generated internally increased to 79%, from 30%.
The estimated lifetime value for an approved Medicare Advantage coverage application increased 1.3%, to $879.
Clint Jones, the company’s chief executive officer, said last week, during a conference call with securities analysts, that the company is using it website mainly to connect consumers with live-human agents in call centers.
“We obviously have the technology that a consumer can enroll on their own,” Jones said.
GoHealth does make some sales to people who sign up entirely online, Jones said.
“But it’s a very small part of our business,” Jones said.
Sometimes, Jones said, when call center agents are very busy, they help a consumer pick a plan while on the phone, then direct the consumer to the website, to the consumer complete the coverage purchase online.
But, at this point, that’s simply using the website to support the live-human agents, Jones said.
“We believe that, over time, we’ll see more and more people enrolling online,” Jones said. “We don’t think that trend has occurred yet, but we have the capability of doing it.”
Travis Matthiesen, the chief financial officer, said GoHealth expects the upcoming 2021 annual enrollment period for Medicare Advantage plans to be strong, because of the addition of more plans from top carriers.
Sales of individual major medical coverage could be soft, simply because all of the uncertainty around that market has led GoHealth to avoid investing much in the individual major medical market until it understands what’s going to happen in the November elections, Matthiesen said.
The Marketing Alliance (OTC:MAAL)
The Marketing Alliance, another insurance distributor, is continuing to benefit from keeping its old life and annuity distribution business, in spite of the pain low interest rates are inflicting on annuity sales.
The St. Louis-based company owns an earth-moving company, and four children’s play and party facilities, as well as the insurance distribution business.
COVID-19-related facility shutdowns cut revenue at the family entertainment business to $4,211 in the second quarter, from $859,334 in the second quarter of 2019.
A lack of emergency response projects caused earth-moving revenue to fall to $218,649, from $403,341.
Life and annuity distribution revenue fell only slightly, to $7.4 million, from $7.7 million.
TMA is reporting a total of $318,565 in net income for the latest quarter on $7.6 million in revenue, compared with $278,193 in net income on $8.9 million in revenue for the year-earlier quarter.
The company paid affiliated producers $5.6 million on bonuses and commissions, down from $5.7 million in the year-earlier quarter.
Timothy Klusas, TMA’s chief executive officer, said in a comment in the earnings announcement that insurance operations held up well partly because of the company’s past work on distribution technology with its agency and carrier partners.
“Our agencies offered their brokers processes that minimized in-person exams and contact through our call center that allowed them to find acceptable coverage for their clients,” Klusas said. “While the pandemic has certainly created obstacles to completing applications such as clients deferring in-person medical exams, difficulties in medical record retrieval from vacated physician offices, and carriers instituting temporary waiting periods due to COVID, we felt these delays began to abate through the period and saw adoption of modern digital processes by our agencies brokers almost by necessity.”
LIFE AND ANNUITY
National Western Life Group (Nasdaq:NWLI)
National Western Life managed to increase earnings in the second quarter in spite of the effects of the COVID-19 pandemic.
The Austin, Texas-based life insurer is reporting $48 million in net income for the second quarter on $216 million in revenue, compared with $34 million in net income on $193 million in revenue for the second quarter of 2019.
Ordinary premium and fee income fell to $173 million, from $175 million, but gains on index options increased to $40 million, from $18 million.
Ross Moody, National Western Life’s chief executive officer, said in a comment in the earnings announcement that the results included $1.1 million in life insurance claims related to COVID-19. “Claim experience thus far has been well within our pricing assumptions,” Moody said.
National Western Life is continuing to monitor COVID-19-related life insurance claims, Moody said.
Ebix — a company that sells technology and online exchange services to insurers and other types of financial services companies — said its insurtech operations helped keep moving forward in spite of the effects of the COVID-19 pandemic on its other operations.
The Johns Greek, Georgia-based company provides the technology that supports much of the foreign currency exchange business in India. COVID-19 hit the foreign exchange business hard in the second quarter but had only a modest effect on its U.S. annuity exchange, AnnuityNet, and other U.S. insurtech businesses, the company said.
Ebix is reporting $23 million in net income for the second quarter on $111 million in revenue, compared with $29 million in net income on $144 million in revenue for the second quarter of 2019.
Revenue at the insurance exchange operations fell just 8%, to $43 million.
Majesco — a company that provides software and other technology services for insurers — said its business held up in the latest quarter in spite of the effects of the COVID-19 pandemic, in part because of insurers’ eagerness to shift systems to the “cloud,” or to networks of computers managed by outside computer services providers.
The Morristown, New Jersey-based company starts its fiscal year April 1.
The second quarter of the calendar year, which ended June 30, is the first quarter of Majesco’s 2021 fiscal year.
Majesco is reporting $1.3 million in net income for that quarter on $41 million in revenue, up from $1.3 million in net income on $37 million in revenue for the comparable period in calendar year 2019.
Majesco acquired another insurtech company, InsPro Technologies, April 1.
Majesco said the amount of cash and cash equivalents on hand fell to $31 million at the end of the latest quarter, from $51 million three months earlier, because of the payment it made to acquire InsPro.
Majesco had 11 big systems go live in the latest quarter, and it acquired two new customers, according to company figures. The company had 79 customers using its cloud-based systems.
— Read Centene CEO Sees COVID-19 Continuing to Make Big, Unpredictable Waves, on ThinkAdvisor.