Thank you for standing by, and welcome to the GoHealth Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's conference call is being recorded.

I would now like to turn the conference over to your host, Mr. Brian Farley. Sir, you may begin..

Good afternoon, everyone. I want to thank each of you for joining GoHealth, Inc's third quarter 2021 earnings call. Joining me today are Clint Jones, Co-Founder and Chief Executive Officer; and Travis Matthiesen, Chief Financial 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 closed today, we issued a press release, containing our results for the third quarter of fiscal 2021, in addition to presentation materials that Clint and Travis will walk through momentarily. 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 on 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 reconciled to the most directly comparable GAAP financial measures and the reason management believes they provide us useful information to investors regarding the Company's financial conditions and results of operations are contained in the press release and investor presentation.

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

Thank you, and thanks, everyone for joining us today to discuss our third quarter and year-to-date results. I'll start with some highlights from the quarter and an update on the investments we made in our business to strategically position ourselves going into the annual enrollment period or AEP.

Travis will then cover a detailed review of our financial results before I wrap up with some updates on Encompass and early insights on this year's AEP. We will then open up the call to Q&A. Slide 4 provides an update on the strategic investments in our agents, technology, brand and Encompass Platform.

We believe the investments we have made and we will continue to make will act as a catalyst for GoHealth in 2022 and beyond, enabling us to capitalize on the market opportunity in front of us and position ourselves for the near and long-term.

In our last update, we told you our investment in agent capacity was more expensive and taken us longer than originally planned. I am pleased to report we've exceeded our goal of increasing our agent base by over 50% despite the continued tight labor market.

Most importantly, these new agents have completed 500 plus hours of training to ensure they have the knowledge necessary to educate consumers on their plan options. These short-term investments in our people will provide long-term benefits and meaningful upside for years to come.

It is worth noting that included in our increased agent base is an over 100% increase in associates on our TeleCare team. As a reminder, our TeleCare team is the group of dedicated employees who onboard new members and help them understand and utilize their plan benefits.

While we do not expect the material margin increase from our TeleCare investments this year, we expect these agents to play a meaningful role in our future success, including customer persistency and the expansion of our Encompass Platform.

Our technology investments combined with tight integrations with carriers and partners continue to differentiate us. These investments provide our specialized agents with the decision support technology needed to enroll consumers in the right plan from day one.

Our expanded carrier offering driven by our technology is a differentiator for GoHealth as we continue to be the trusted advisor for seniors. Lastly, our Encompass Platform and GoHealth brand investments are on track.

We are investing in our people so they can serve our customers, investing in our technology so we can accelerate our efficiency and investing in our brands so can customers know that when you are talking to a GoHealth agent, there is no better partner for their healthcare journey.

We are happy to announce that we are ahead of our Encompass Platform goals due to the success with various carriers and partners. This platform combined with an increasing scale positions us well for success. Slide 5 highlights our strong quarter and year-to-date topline financial performance with the revenue up 30% and 42%, respectively.

Additionally, commission revenue exceeded our expectations up 73% and 60% for the quarter and year-to-date. These results were driven by investments in our expanded agent force and powerful internal marketing engine.

Our growth continues to be driven by our Medicare-Internal business, which generated growth of 19% in the third quarter and 51% year-to-date, proving our ability to drive gains in the growing Medicare market by standing out as a leading choice platform for seniors.

Medicare Advantage enrollments continue to drive growth with third quarter Medicare Advantage carrier approved submissions increasing a 100% to roughly a 193,000. Our focus continues to be on acquiring members, engaging them and improving their health outcomes.

That is why we are and will continue to provide value added services beyond enrollment through our Encompass Platform. Our year-to-date Encompass revenue of $32 million is ahead of our expectations.

We are very excited about the progress we have made with Encompass and look forward to sharing more about our 2022 strategy around this important initiative on our fourth quarter call. Moving to Slide 6.

Given the progress we have made towards our full-year strategic investments, we are reaffirming our full-year outlook for revenue of $1.2 billion to $1.3 billion propelled by strong commission growth. We also expect adjusted EBITDA of $300 million to $330 million.

More importantly, we expect our 2021 investments in agents, technology, brand and Encompass will continue to drive profitable growth into 2022 and beyond as we distance ourselves as a leader in the Medicare market. With that as a quick intro, let me pass the call over to Travis to run through our third quarter results in more detail.

I will come back and provide an update on our Encompass Platform and our progress during this year's AEP.

Travis?.

Thanks, Clint. Slide 8 looks at our topline results during the third quarter and year-to-date, which was ahead of expectations. Total revenue grew 30% compared to the third quarter of 2021 and 42% year-to-date. Year-to-date total revenue of $613 million is ahead of internal expectations.

For both periods, you will notice the outpaced growth in commission revenue compared to our enterprise revenue line item. This was deliberate as our strategic focus during 2021 has been on commission growth, both in absolute dollars and as a percentage of our total revenue composition. The commission growth is partially due to Encompass.

One of the strategic investments Clint just mentioned, which saw $32 million of year-to-date revenue. As for enterprise, that portion of the business had lower revenue than anticipated in Q3. But this is a timing difference driven by carrier campaigns and is still pacing towards our $200 million annual target we shared earlier this year.

Fueling our topline growth is our Medicare Advantage carrier approved submission growth of 67% for the year-to-date period. This growth in market share speaks to the skill of our licensed agents, the breadth of our technology and the secular shift in consumers preferring our platform. On Slide 9, we highlight our revenue breakdown by segment.

Our Medicare-Internal segment delivered 19% revenue growth during the third quarter compared to the prior period and 51% growth versus the prior year-to-date period. We are also pleased with the performance of our Medicare-External segment, which grew revenue 52% year-to-date.

Our Medicare-External segment is powered by small and mid-sized agencies operating under our carrier agreements, compliance and technology platforms. Medicare-External contributes to our size and scale and deepens our carrier relationships.

In fact, in many instances, carriers are referring these partners to us demonstrating the power of our enrollment platform, our Encompass strategy and prominence in the Medicare space. Slide 10 highlights our quarterly Medicare Advantage LTV per approved submission.

The decrease compared to last year's third quarter is primarily attributable to three things. First, a changing mix both consumer and carrier; second, the impact of new agents and third, macro shopping trends. To provide more transparency, I want to briefly unpack each of these.

First, with respect to our changing mix, third quarter LTVs reflect a lower percentage of consumers who are new to Medicare and an increase in consumers that shop more often. The dynamics of these consumers is different and so are their persistency traits.

As it relates to carrier mix, we continue to see our enrollments more closely mirrored overall market penetration and these new carriers added have lower modeled LTVs. Second, as Clint mentioned earlier, Q3s main focus was on continuing to expand our agent base ahead of AEP.

While we are encouraged by the number of agents added in the quarter, it did have an expected short-term LTV hit as we saw our most recent cohorts of agents driving lower effectuation and persistency rates as compared to last year's vintages. As our agents become more tenured, we expect their performance to drive improved LTVs.

As mentioned on previous calls, we analyze and update our LTV model quarterly and have embedded into our LTVs the impact of these new agents. Finally, we continue to refine our LTV model quarterly and have included updated assumptions on our newest vintages to address the macro shopping trends that we and others in our space have experienced.

On Slide 11 you will see an update of our Medicare revenue per submission, which is up over 8% year-to-date compared to last year.

As we have mentioned previously, we believe this metric is an important barometer of our performance as it demonstrates our ability to outperform on a combined revenue basis, including commission, Encompass and enterprise revenue.

As a reminder, as Encompass and enterprise grow, our payback period shortens another validation of these strategic investments. Over time, we believe this view will become more important, especially as we lengthen our lead in the Medicare space through our Encompass Platform.

Slide 12 shows the progress we delivered towards our full-year adjusted EBITDA guidance. The investments we have made and we will continue to make during AEP gives us confidence in our ability to deliver on our full-year guidance.

As discussed in prior calls, our strategic investments in agent capacity, technology, the GoHealth brand and Encompass have had a short-term impact on profitability.

Customer care and enrollment costs, including our vitally important TeleCare team were up 112% in the third quarter compared to the prior year excluding non-reoccurring accelerated vesting related to the IPO. In addition to the cost to onboard and train new agents, short-term productivity from these newly hired agents was low.

As expected, given new agents entering our comprehensive training program generally have lower productive hours combined with the lower LTVs. As these agents gain more experience with our tools and technology, we expect productivity to increase. You will recall that agent capacity was a limiting factor for us last year, especially during AEP.

As such and as we have described previously, we have built the infrastructure necessary to capitalize on the large and growing Medicare market during this year's AEP by ensuring we have the right amount of agents ready to serve our customers. We expect this agent capacity growth to pay dividends over both the near and long-term.

Moving down the P&L, marketing and advertising costs combined with cost of revenue grew in line with our expectations. Combined costs were up 44% year-to-date, roughly in line with total revenue growth of 42%. Our marketing team continues to diversify our marketing mix to optimize the returns on investment.

Turning now to our full-year guidance shown on Slide 14. Our full-year 2021 revenue and adjusted EBITDA guidance remains unchanged. Our outlook for full-year net revenue is $1.2 billion to $1.3 billion and our adjusted EBITDA outlook is $300 million to $330 million much of which will be driven by this year's AEP. One key point on the revenue guidance.

While revenue guidance remains unchanged, we anticipate that the volume of Medicare Advantage submissions to be higher than originally anticipated. As Clint mentioned earlier, we have exceeded our goal of increasing our agent base by over 50%.

This combined with the continued outperformance of our Medicare-External segment will drive a higher volume of MA Submissions than originally anticipated. However, we expect LTVs to be down relative to last year given the current trends we are experiencing in carrier mix, new agents and macro shopping trends discussed earlier.

Moving now to our cash flow and capital profile on Slide 15. Cash and capital management are a priority for us. We have built a business and membership base that generates substantial cash flow with year-to-date cash receipts on our commission receivables totaling more than $335 million, up 74% from the prior year period.

We have $175 million in unused revolver capacity and $85 million cash on hand as of September 30.

While these sources of cash allow us the flexibility and opportunity to reinvest in our business, we continue to evaluate a variety of non-equity ways to fund our growth given favorable market conditions, including using our large and growing receivable balance of nearly $1 billion.

We expect that 2022 will not require the same level of investment as 2021. With that, Clint will now provide some updates on our Encompass initiatives and this year's AEP.

Clint?.

Thanks, Travis. As we've talked about in previous earnings, Slide 17 revisits the strategy behind our Encompass Platform as we build additional ways to monetize the rapidly growing member base and drive long-term growth.

We are seeing increased momentum and conviction from carriers and partners around our Encompass strategy and will serve as a key growth catalyst for 2022. Our Encompass Platform differentiates GoHealth's members value proposition in a number of ways.

First, we are uniquely positioned to help GoHealth members better navigate their healthcare journey and improve outcomes. Second, we enable carriers to improve their key financial and quality metrics by better understanding their customer's needs and driving an improved engagement experience.

And third, we advocate the consumers and connect them with high-quality care partners that further support the goals of consumers and carriers.

Our Encompass results year-to-date validate our belief that there is a significant market opportunity to expand GoHealth's downstream capabilities and are excited about the infrastructure we are investing in to strengthen our leadership position by creating a great experience for consumers and partners. Moving to Slide 18.

Executing on our Encompass strategy will lead to continued revenue growth through persistency gains and additional revenue opportunities as evidenced by our $32 million in Encompass revenue year-to-date.

We expect to drive $18 million to $28 million of Encompass revenue in Q4, driving roughly $50 million to $60 million for the full-year above our original $40 million 2021 Encompass expectations.

We are also encouraged by the number of Encompass partners making up this revenue with six carriers and multiple other non-carrier partners leveraging the platform. Being a largest Medicare Advantage enrollment platform has enabled this early success and momentum in Encompass strengthening our position in the market.

We plan continued investment to rapidly scale our Encompass Platform into 2022 and expect it to be a meaningful driver of sustainable and scaled growth, while helping our members navigate their healthcare journeys and improve overall outcomes. Prior to closing, I want to provide a brief update on AEP.

First, we have the trained agent force in place to serve our customers. Second, we continue to see strong demand from our customers for education and choice in this complex space. And third, we have the necessary carrier product offerings and quality standards to ensure we can enroll each consumer and the best plan for them.

All of which validate the investments we've made throughout this year. Finally, as we are focused on executing the remainder of AEP, I think it's important to put 2021 in perspective. We have invested more than originally planned in this challenging environment to achieve the following strategic objectives.

First, we are the biggest Medicare Advantage enroller with a very large and growing membership base. This scale is important to our carrier partners and is a launch pad for our Encompass Platform.

Second, we have a large base of licensed agents and TeleCare representatives that we can further optimize to execute our 2022 growth plans for our core business in Encompass Platform.

And third, we have demonstrated that the Encompass Platform engages the consumer, enhances their health outcomes and provides increased value to our carriers and other partners. In closing, I want to give a special call out and thanks to Travis given we are well into our CFO search, and this is likely Travis' last earnings call.

Travis has been a tremendous asset to GoHealth, and I am especially pleased that I and GoHealth will continue to benefit from Travis' many talents when he transitions to our Chief Transformational Officer, once a new CFO is onboard. Finally, I want to reiterate why GoHealth exists and why I'm more excited than ever at the opportunity in front of us.

During this time of year, our colleagues are working early mornings, late evenings, weekends and holidays to deliver on our mission to improve access to healthcare in America. I want to extend a sincere note of gratitude to all GoHealth employees.

You are the reason GoHealth is the largest Medicare Advantage marketplace in the United States, and the reason why I am so excited about our future. With that, I will turn the call over for questions..

Thank you. [Operator Instructions] Our first question comes from Elizabeth Anderson of Evercore. Your line is open..

Hi, guys. Thanks so much for the question this afternoon. I guess my question would just be focused on sort of the AEP and what you've seen so far. I mean, we've heard comments about longer CMS required scripts, et cetera, impeding productivity, and that might have also been a factor in the third quarter as well.

So I was wondering if you could talk about how that specifically impacting you guys, and it sounds like you also have some offsetting strategies that you've been working through. So any additional color there would be helpful..

Yes. Thanks, Elizabeth. Yes, I think this year more than ever we've seen a heightened awareness from CMS around quality standards and we've obviously heard that from our carriers as well.

So we've – since early this summer, we're really closely with our carrier partners to ensure that we have all the right quality standards and metrics in place, including additional training for our agents. We have not seen any sort of material impact on our AEP results thus far and we noted we expect to.

We think long-term this is a great thing for the industry, right, imposing higher quality standards for all players in the market. And we feel we were already in a really good position with the carriers and the partners we serve..

Got it. That's really helpful. And maybe if you could talk a little bit more about some of the tech investments. I mean, you said that you obviously pointed to that as sort of like an increase in investments over time, but that would help drive growth.

Where are you seeing those payoff in the near-term and where might we see some of that payoff as we get into 2022 and beyond?.

Yes. Great question. So this year primarily a couple different categories. The first category really around agent efficiency as you think about consumers calling in and helping our agents be more successful through improved needs analysis and plan finder tools that help agents identify and enroll people in the right plan upfront.

Obviously, you can imagine the amount of training that goes into an agent to get them onboarded and fully understanding everything about the different carrier options that we have and ensuring somebody has the right knowledge to make sure that they – we get our consumers in the right plan, so that's the first category.

Second category is within our Encompass Platform. Obviously, this is a newer initiative for us that really started late last year.

So you can imagine anytime you roll out a new platform and strategy, there's going to be meaningful investment behind that to ensure the technology can drive the results we're looking for, which we're really excited about kind of the year-to-date results and where we sit in the momentum we have not only going into Q4, but also as we think about our position for 2022 and beyond what that can mean.

We're still early stages, by no means are we declaring a victory here, but just the early momentum and kind of what we see setting up into 2022. I think that's where you're starting to see a lot of those returns on that investment..

That's helpful. Maybe just a quick follow-up to that one.

On the Encompass revenues, where are you seeing sort of – if we think about what the contribution buckets are for the Encompass revenue in the quarter, and maybe any kind of commentary you can provide for 4Q? Is that still predominantly sort of health-risk assessment? Are you finding traction in other areas? How do we think about that?.

Yes. Good question. So it's a kind of a menu options and each carrier partner has kind of a unique desire of some of the services that we offer as well as our non-carrier partner.

So think about health-risk assessments, preferred provider enrollment, preferred pharmacy enrollment, benefit navigation, preventative care models, a lot of success in SDOH or social determinants of health programs. And we continue to add and invest in those platforms and channels.

So it's a – our goal over the next several years is to continue to add products and services that serve our clientele and the need they have as well as a good partnership with our carriers and other partners as well..

Okay. That's super helpful. Thank you very much..

Thank you. Our next question comes from Michael Cherny of Bank of America. Your line is open..

Afternoon and congratulations on the strong progress you made in the quarter. Yes, I want to dive in a little bit about that salesforce and that agent base that you talked about hiring. I think you alluded to the fact of on the training side, as you think about the position that you have for the salesforce and think about also the build.

What is the salesforce now going to look like transitioning into next year? And especially with the Encompass Platform now in place, how do you think about the permanent nature of these agents that you've hired and the ability to keep them occupied, especially keep the good ones occupied so that you don't have some of the transient nature that sometimes impacts this industry as a whole?.

Yes. Michael, thanks for the question. We feel really – obviously this year was a very unique year hiring the amount of agents that we did with some of the kind of known labor issues. But our team has done a really good job of getting through that. And you're absolutely right, we’ve got a – the full salesforce in place for this AEP.

But from an investment standpoint, as we think about 2022 retaining and keeping those agents what I'll consider a less seasonal way where not only they can enroll folks in OEP and SEP. But you think about our ability to accelerate growth in our Encompass Platform, they'll play a vital role to that.

And as we think about the investments that we've made this year, that we won't necessarily have to make that same level of investment next year, that's what really – we get really excited about. And as you know, the more time we have an agent with us and the greater their tenure, the better performance they have.

So you think about that additional return as we get agents through this AEP and we'll continue to provide additional training programs throughout the different seasons we have. We feel really good about the investments we've made and then the long-term payoff we'll receive as well..

Got it. And then you talked about some of the LTV impacts tied to the new carriers that you brought on.

If I missed this, I apologize, but can you give us a sense on how LTVs shook out in terms of on apples-to-apples basis? So same carriers year-over-year, how those are trending?.

Yes. So I'll start on a high level.

Like we mentioned, we are – especially with newer agents and newer carriers, you do see different persistency and effectuation characteristics for – if you want to compare apples-to-apples on a tenured agent with what I'll call legacy carrier, no real material movement there, but you can imagine the amount of newer agents that we have going into Q3 and selling into Q3 that obviously moves the needle a little bit.

So that's kind of where we saw some LTVs come down in Q3 as we think about just the sheer size of newer agents we have on the platform..

Thanks. It's really helpful..

Thank you. Our next question comes from Jailendra Singh of Credit Suisse. Your line is open..

Thank you, and thanks for taking my questions here. I want to stay on topic of this MA LTV decline in the quarter.

Can you provide a breakdown of the three items you highlighted, like which one was most impactful and which one was less impactful? And when you talk about MA LTV to be down in 4Q, are they expecting down similar to the decline of 6% in 4Q? And are you assuming any of these three pressure points improving 4Q versus 3Q?.

Hey, Travis, do you want to take that?.

Sure. So Jailendra, you're exactly right. When we unpack the LTV decrease, we focused on carrier mix, agent mix, consumer mix and macro shopping trends. Think about the agent mix as being the biggest driver of those three and then the carrier mix being second, and then the macro shopping trends being third as you think about waiting them.

And then as you think about Q4 LTVs, you're exactly right. Q4 LTVs are our largest, there's obviously seasonality in our LTVs. But when you think Q4 relative to Q4 of last year, that mid single-digit decrease is where we're currently shaking out as we think about this year's guidance here and performance during AEP..

And if I can just – I didn't really follow what exactly you meant by the LTV modeling, like assumptions to address macro shopping trends.

Can you be a little bit more detailed there, what exactly changes you're doing there?.

Yes. So it's really to account for the persistency changes we've seen during this most recent SEP and beginning of AEP period..

Got it. And then one quick follow-up. I mean, as kind of all the challenges three e-brokers are going through and evaluations they are trading at.

I was just curious that you guys have any thoughts about this industry consolidation and I mean, there are various kind of combination people will talk about all the time, but just curious, like, what do you think about from industry consolidation point of view?.

Yes. I mean think that, obviously, we're still experiencing high rates of growth and we see a large organic opportunity in front of us. If you think about, we've invested in from – and our Encompass strategy moving forward, that's kind of where we're focused. Obviously, there's a subset of competitors in the space that are out there as well.

We think that as we continue to focus our Encompass strategy and things in the future, that's where we're going to focus our time and energy. And I think you're right, all three public peers have been kind of hit this year for different reasons. We think it's still a very robust industry.

We think we're doing a lot of good service and helping consumers enroll in the right plan. And I think that over time, hopefully, the investor base fully understands that as we get through this..

Great. Thanks guys..

Thank you. Our next question comes from Frank Morgan of RBC Capital Markets. Your line is open..

Good afternoon. I guess I'll stay on the topic of the decline in LTV, specifically the call-out around some of the carriers. Is there anything that you have been able to identify? Presumably, it's probably the product of the carrier than just the carrier themselves I presume.

So is there any thing that you're seeing in the product mix from some of these carriers that where this issue is more noticeable that you've been able to call-out or parse out?.

Yes. I'll take that one. I think the biggest thing to call-out there, it's not so much about the product differences of these new carriers. The biggest drivers of the lower LTVs with new carriers is usually around compensation and then our modeling around those carriers.

As you can appreciate when you have a new carrier, sometimes while CMS sets a ceiling for what carriers can pay, you don't always get the highest tier of commission when you're a new producer for a carrier. So that plays a role.

And then secondly, from a modeling perspective, we have less observed data around new carriers, which drives more conservative assumptions on the front end. So over time as we continue to produce, we would assume that those LTVs across carriers on an apples-to-apples basis would level out, but that's one of the implications of a new carrier added..

Got you. So it's not really necessarily for a bad reason like higher levels of churn. It's just basically you're getting paid less on the front end..

Yes. Exactly, right..

Okay. And then secondly, on the – I noticed that there was sort of a big drop in the non-commissionable from last year down around 1,500 from 6,472 last year, the lowest we’ve seen in a while.

Anything that you would call out there?.

Yes. We're just continuing to focus on our customer choice platform and on our consumer choice platform, that's where we get paid the commissions. So again, that's where our focus is right now. We have some timing differences there.

There are some unique carrier campaigns in the third quarter of last year as it related to COVID, but it's more of just our focus on the consumer choice platform..

Got it. And when you think about the – I noticed too, there was like a little negative tail revenue in the quarter.

But is that being driven the same factors that are driving LTV or is it sort of the same order of magnitude between those three things? Or is there something else that you would call out there?.

Yes. You're exactly right. The same trends that we're talking about again, are the drivers of the tail revenue adjustment. And again, we update and do that every quarter. And so all those findings make its way not just in our new LTVs we recognize, but we're also on our look back on a quarterly basis as well..

Okay. Thank you..

Thank you. Our next question comes from Tobey Sommer of Truist Securities. Your line is open..

Thank you.

I was hoping you could expand upon your description of needing to invest less next year in the context of is that because of slower growth, which can be a driver of investment or other factors?.

Yes. Thanks. Good question. So really that's around the context of the number of agents that we've added this year.

You think about the sheer number of agents that we had entering January of 2021 versus the amount of the number of agents that will enter in January 2022 to continue at the growth levels that we want to kind of maintain, so we feel really good about that. And I think that agent force will have an AEP under their belt and additional training.

So that's really the context around less investment on just that sheer number of increasing our salesforce..

Thanks. That's helpful. And could you elaborate on how you could utilize your receivable balance to generate spendable cash sort of quicker and what that market and the variables look like? Thanks..

Sure. So we've been looking at a number of non-equity financing ways to continue to fund and drive our growth. And one opportunity has been looking at different ways to leverage our receivables balance. And so given we have a large contract value asset, commissions receivable balance sitting on the balance sheet both short-term and long-term.

And so we've been looking at unique ways we might be able to leverage that vehicle to drive financing into the future..

Okay. Thank you very much..

Thank you. Our next question comes from Greg Peters of Raymond James. Your line is open..

Hey, guys. This is Alex Bolton calling in for Greg Peters. Sorry, I'm going to ask one more question on LTVs.

Maybe just between the factors, could you talk about your expected persistence of each one of these factors? It sounds like new agents is more short-term, but I guess how much time does it take for them to improve new carriers? It sounds like you can get better commissions over time.

Can you kind of talk through how long that might last?.

Sure. So yes, you're exactly right. When we think about both the agent mix and the carrier mix over time as we continue to have agents more tenured in on our platform, we expect them to improve. And the longer we have a carrier on our platform, the better the opportunity is for that to improve, so those are definitely levers at our disposal there.

The other thing we're keeping a close eye on though is the macro shopping trends. As we continue to see consumers shop in the space and brokers like us making it easier for them to do it. That's a factor that we continue to keep an eye on, and then which is why we update and do our look back quarterly..

Okay.

Are you seeing the new agents starting to improve going into AEP?.

Yes, we are. We had a much more robust training program throughout this year. And as you recall, last AEP, we had higher customer demand than we had agents to serve those customers, which is why we made this strategic decision earlier this year in Q1 to start our hiring and ramp process.

So a lot of those agents throughout the first couple of quarters have gone through really strenuous training programs. And if you think about the last classes that we've had before AEP, the same thing.

So we've seen continued improvement from all of those cohorts of agents in classes and especially throughout each week of AEP improvement as well by that. So we will expect that to continue.

And we have a kind of continuing training program for those agents that may take a little longer to get off the speed that we can help them be successful in their careers..

Okay. And then on free cash flow, I guess you had use of cash of over $100 million last year, in the fourth quarter you got $85 million on the balance sheet. I guess, can you talk about your need for capital and what that might look like? I know you said it's – will be less next year than this year, but maybe just talking about before..

Sure. Yes. We also mentioned we have access to a seasonal revolver of which $175 million is untapped.

And I think one thing that is a little bit misnomer sometimes in the spaces that we incur the bulk of our cash burn here right now, right, where we're spending the marketing, we're paying our agents, we start getting those first commission payments on all the policies that we're enrolling as early as mid to late December and then the bulk of them start to flow in, in January, which is why we've leveraged a seasonal revolver historically.

You're really talking about just a couple month timeframe where that cash is mismatched, which is why we have that revolver in place..

Okay. Great. Thanks for the answers..

Thank you. Our next question comes from Lauren Schenk of Morgan Stanley. Your line is open..

Hi. This is Nathan Feather on for Lauren Schenk.

On the salesforce, can you just provide some more color on the steps taken in the quarter to ensure you hit that hiring goal? And then any way to size the kind of one-time cost incurred to meet those goals that you expect maybe shouldn't occur in 2022? And then lastly, you noted previously that you continue to have solid consistent retention among existing agents, just confirming you kind of continued to see that in AEP? Thank you..

Yes. Thank you. So yes, we saw obviously when we talked on our Q2 call, yes, we are experiencing higher attrition, we had a robust top of the funnel, but a lot of – we are challenged to getting agents through the training program.

We saw attrition levels normalized kind of in the early part of fall and a continued robust top of the funnel recruiting class coming in. And we made some operational changes around the way we're recruiting. We are onboarding the way we're training.

And we kind of saw all those things come together right before AEP with our ability still to get them through the training program and get them ready for to sell for the October 15 start.

So that all looks good as far as investments – not really a one-time investment, I would point to, I would just think about the level of investment we put into 2021 that we won't necessarily need to put it in 2022 due to the size that we've recruited so far.

And we're still seeing kind of normalized attrition trends throughout AEP that we've seen in the past. So nothing really alarming there. And it's now just about executing for the remainder of AEP and putting us in a great position as we think about entering 2022..

Okay. Great. Thank you..

Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Clint Jones for any closing remarks..

Thank you, everybody. We are encouraged by the progress so far during AEP and then the momentum we continue to see with Encompass. We look forward to sharing our full-year results during the fourth quarter call.

As Veterans Day approaches, I also wanted to share a big thank you to all of our veterans who helped serve our country over the years, including the many that work at GoHealth. Thank you, everybody for the time today. Have a wonderful holiday season. We look forward to catching up soon..

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day..