Last Update 06 Jan 26

GOCO: Focus On Cash Burn Discipline And Carrier Reset Supporting Future Stability

Narrative Update on GoHealth

Analysts have cut their 12 month price target for GoHealth to US$5.00 from US$12.00, reflecting weaker Q3 results tied to a suspended relationship with a large carrier, softer revenue and Medicare submissions, a pullback in new enrollment growth, and concerns around ongoing market headwinds and uncertainty about achieving sustainable positive cash flow.

Analyst Commentary

Recent research updates on GoHealth reflect a cautious reset of expectations following Q3 results that came in below prior estimates, with price targets and ratings adjusted to reflect execution risks and a more uncertain growth outlook.

Bullish Takeaways

Bullish analysts acknowledge that management is limiting cash burn, which they view as a disciplined move given current trading conditions and the need to focus on financial stability.
The company’s decision to pull back on new enrollment growth is seen as aligning with insurer priorities around profitability and member retention, which may support more sustainable unit economics over time.
Price targets, while reduced, still imply some value as analysts refresh models to reflect updated revenue and carrier assumptions rather than abandoning the equity story entirely.
Analysts view the emphasis on business model discipline and cash flow focus as a potential foundation for future execution improvement if operating conditions become more supportive.

Bearish Takeaways

Bearish analysts highlight that Q3 revenue and Medicare submissions came in below expectations, which directly pressures near term growth assumptions and valuation multiples.
The suspension of a relationship with a large carrier is a key concern, as it contributed to topline weakness and raises questions about GoHealth’s concentration risk and partner stability.
Several analysts moved to more neutral ratings, citing ongoing market headwinds and uncertainty around GoHealth’s ability to reach sustainable positive cash flow on a reasonable timeline.
Limited progress in diversifying the business model is viewed as a risk for execution, with concerns that reliance on current channels and products could cap growth and leave earnings more exposed to external changes.

What's in the News

GoHealth is promoting its PlanFit technology, which uses proprietary tools to help licensed insurance agents provide more personalized Medicare plan comparisons in a complex and volatile market. (Key Developments)
The company highlights industry estimates that about 2 million Medicare Advantage beneficiaries are affected by plan exits and roughly 10 million by plan degradation, including changes such as smaller provider networks and higher copays. (Key Developments)
GoHealth reports using its PlanFit CheckUp process to review coverage annually, and during the last Annual Enrollment Period it helped close to 30,000 consumers confirm that their existing Medicare plan was still the best fit. (Key Developments)
PlanGPT, GoHealth's AI powered assistant, is described as cutting average call times by about 10 minutes in 2024 by pulling key details from large volumes of plan documents to support real time consumer questions. (Key Developments)
With the Annual Enrollment Period running from October 15 through December 7, GoHealth is urging Medicare beneficiaries to take a proactive, informed approach and seek clear guidance from licensed professionals. (Key Developments)

Valuation Changes

Fair Value: Fair value remains unchanged at 7.7, indicating no adjustment in this core input.
Discount Rate: The discount rate is steady at 12.5%, so the risk assumption in the model remains consistent with the prior view.
Revenue Growth: Revenue growth expectations have improved slightly, shifting from an 11.55% decline to a 10.75% decline.
Net Profit Margin: Net profit margin is marginally higher, moving from 11.08% to 11.31%.
Future P/E: Future P/E has edged down from 3.68x to 3.51x, reflecting a slightly lower valuation multiple being applied.

Improved financial flexibility and strategic focus enable investment in technology, product expansion, and acquisitions, supporting future revenue growth and margin improvement.
Diversification into life insurance and enhanced tech capabilities boost efficiency, reduce earnings volatility, and position the company to capture greater market share.
Heavy reliance on debt, share dilution, and challenging acquisitions amid regulatory and market uncertainty heighten risks to sustainable growth and long-term value stability.

Catalysts

About GoHealth

Operates as a health insurance marketplace and Medicare-focused digital health company in the United States.What are the underlying business or industry changes driving this perspective?

The newly secured $115 million term loan facility, along with covenant relief and maturity extensions, grants GoHealth significant financial flexibility and removes immediate going concern issues, enabling proactive investment in technology, product growth, and M&A-positioning the company for revenue growth and improved net margins over the medium term.
The company's ability to actively pursue strategic acquisitions in a fragmented Medicare and senior health marketplace-with up to $250 million of lender-approved deal capacity and an empowered Transformation Committee-positions GoHealth to capture greater market share and drive scale-driven operating leverage, benefitting both revenue and margins.
Deployment and scaling of the GoHealth Protect (final expense/life insurance) product suite diversifies revenue sources beyond Medicare Advantage, reducing earnings volatility and creating new cross-sell opportunities-expected to support incremental revenue growth and margin stabilization as the digitalization of healthcare shopping accelerates.
Enhanced technology and data-driven supply/demand matching are enabling higher agent productivity and operational efficiency, which should allow for lower cost per acquisition and higher lead-to-policy conversion rates-supporting future earnings and margin expansion as consumer reliance on advisory platforms increases due to rising healthcare complexity.
GoHealth remains structurally levered to ongoing demographic aging and heightened regulatory/benefit disruption in core Medicare markets, creating sustained demand for unbiased, tech-enabled plan selection platforms-likely to translate into persistent customer acquisition opportunities and long-term top-line growth.

GoHealth Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming GoHealth's revenue will grow by 3.4% annually over the next 3 years.
Analysts are not forecasting that GoHealth will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate GoHealth's profit margin will increase from -3.7% to the average US Insurance industry of 11.1% in 3 years.
If GoHealth's profit margin were to converge on the industry average, you could expect earnings to reach $100.6 million (and earnings per share of $2.87) by about September 2028, up from $-30.2 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 8.5x on those 2028 earnings, up from -2.6x today. This future PE is lower than the current PE for the US Insurance industry at 14.6x.
Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 12.32%, as per the Simply Wall St company report.

GoHealth Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

GoHealth's recent issuance of significant equity to lenders as part of the new debt facility leads to share dilution, directly impacting per-share earnings and potentially limiting share price appreciation for existing shareholders despite operational improvements.
The company is undergoing an intangible asset impairment, indicative of prior overvaluation of assets or underperformance in acquired businesses; this raises concerns over GoHealth's ability to accurately forecast and deliver sustained value from acquisitions, increasing volatility and uncertainty in long-term earnings and revenue streams.
While GoHealth has secured a temporary covenant holiday and capital runway, its reliance on debt financing with high interest rates (SOFR + 550 bps) raises longer-term financial risk and higher interest expenses, which can compress net margins and reduce future profitability.
GoHealth's strategy to focus more intensely on industry consolidation and M&A, while potentially accretive, exposes it to substantial execution risk and integration challenges-if acquisitions fail to deliver expected synergies or results, this could hinder revenue growth and margin expansion.
The company's substantial pullback from Medicare Advantage activity in response to health plan uncertainty, along with ongoing regulatory and market disruptions, highlights its sensitivity to external factors (like plan benefit changes and regulatory shifts), which could further impact customer acquisition, retention, and revenue predictability going forward.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $17.2 for GoHealth based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $22.0, and the most bearish reporting a price target of just $12.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $909.1 million, earnings will come to $100.6 million, and it would be trading on a PE ratio of 8.5x, assuming you use a discount rate of 12.3%.
Given the current share price of $4.84, the analyst price target of $17.2 is 71.9% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Financial Flexibility And M&A Will Unlock Medicare And Senior Health Potential