Stonegate Capital Partners has updated its coverage on GoHealth Inc. (NASDAQ: GOCO), following a challenging third quarter of 2025. The company reported a significant decline in net revenues to $34.2 million from $118.3 million a year earlier, reflecting an intentional reduction in Medicare Advantage volume, decreased non-agency activity, and a broader industry focus on margin integrity and renewal stability. Medicare agency and non-agency revenues both fell sharply year over year, while other revenue increased as GoHealth Protect and related offerings continued to scale, helping to diversify the top line. Results were further pressured by substantial non-cash impairment charges, which weighed on reported margins even as management prioritized liquidity, platform efficiency, and maintaining a high-quality member base.
During the third quarter, GoHealth advanced its strategic and capital initiatives, building on the super priority term loan facility finalized earlier in the year. The senior secured super priority term loan, which includes $80.0 million of new money, supports working capital and enhances strategic flexibility while keeping the company compliant with its debt covenants and providing room for future consolidation. The company also refreshed its Board of Directors and continues to evaluate integration opportunities within the fragmented broker landscape. Stonegate believes management has been creative in stabilizing the balance sheet and strengthening strategic optionality, allowing greater focus on execution and retention heading into and through the annual enrollment period (AEP).
Sales per submission declined 34.3% year over year to $461, reflecting both the deliberate volume pullback and an evolving revenue mix. Agency revenue decreased by 71.5%, while non-agency revenue dropped 96.5% year over year. Notably, other revenue grew meaningfully, supported by continued momentum in GoHealth Protect, which is becoming a more important contributor to the model and helping to diversify revenue beyond traditional commission streams. The sales-to-direct operating cost of submission ratio moved down to 0.6x from 1.1x, as lower scale and mix shifts weighed on leverage, though Stonegate expects a more balanced contribution from Protect and agency relationships to help mitigate revenue volatility over time.
GoHealth faced further challenges in cost of customer acquisition, with average CAC of $716, an increase of 14.0% year over year. While near-term margins remain compressed due to the intentional pullback in volume and higher quarterly unit costs, Stonegate believes management is maintaining a disciplined approach to acquisition efficiency, focusing on agent productivity, enhanced training, and data-driven marketing strategies that should support better unit economics.
For valuation, Stonegate is using a combined historical FY24 EBITDA, blended with expected FY27 EBITDA, which normalizes 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 yields a price range of $7.46 to $14.32, with a midpoint of $10.89. Stonegate Capital Partners, through its affiliate Stonegate Capital Markets (member FINRA), provides investor relations, equity research, and institutional investor outreach services for public companies.
