GoHealth, Inc. (GOCO) Q1 2021 Earnings Call Transcript

GoHealth, Inc. (GOCO -2.98%)
Q1 2021 Earnings Call
May 12, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day and thank you for standing by. Welcome to GoHealth's first-quarter 2021 earnings conference call. [Operator instructions] I would now like to hand the conference over to your speaker today, Jay Koval, VP of IR. Please go ahead.

Jason Koval -- Vice President of Investor Relations

Thank you, Joel, and good afternoon, everyone. I want to thank each of you for joining GoHealth's first-quarter 2021 earnings call. Joining me today are Clint Jones, co-founder and chief executive officer; and Travis Matthiesen, our 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 close today, we issued a press release containing our results for the first 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've listed a number of risk factors that you should consider in conjunction with our forward-looking statements. Other significant risk factors are described in 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, a reconciliation to the most directly comparable GAAP financial measures and the reason management believes they provide useful information to investors regarding the company's financial condition and results of operations, are contained in the press release and investor presentation. So with that, let me turn the call over to Clint.

Clint Jones -- Co-Founder and Chief Executive Officer

Thanks, Jay, and thanks for joining us to discuss our first-quarter 2021 results. As Jay mentioned, we have posted a slide deck to our website that we will walk through before opening up the call to Q&A. I'll start with some highlights from the 2021 open enrollment period, as well as update you on our progress toward what we expect to be another strong year of growth. Travis will then dig into the financials before passing the call back to me to share more details on GoHealth's Encompass platform and our evolution as a digital health company.

A quick summary, shown on Slide 4, is that we are very pleased with our performance during the first quarter as the results were in line with our expectations and position us well to deliver our full-year 2021 outlook. During the first quarter, we delivered excellent top line growth of 45%, resulting in $204 million of revenue. Revenue growth was driven by strong gains in our Internal Medicare business, up 65%, as tailwinds powering Medicare Advantage and our Choice platform remain deeply entrenched in the market. Medicare Advantage carrier-approved submissions increased 48% to over 171,000, and LTVs grew 17% as our telecare investments and carrier expansion continued to drive persistency gains.

These LTV gains were also powered by our Encompass platform, which leverages our strong engagement with members to provide value-added services beyond enrollment, enabling them to maximize the benefits of their plans and improve health outcomes, further solidifying the differentiated relationships we have with our carriers and partners. Our telecare team positions us well to create value for partners and consumers alike, and we accelerated investments in our Encompass platform and infrastructure over the last 12 months. We are starting to see early returns on these Encompass investments with $9 million of incremental revenue in the first quarter. We believe the proof is in the results.

And similar to how we scaled up our Medicare marketplace in five short years to become one of the largest and most profitable enrollers in our sector, we believe that we are well ahead of the competition on rolling out our Encompass services, which we have built into the range of expectations for the year. Moving to Slide 5. Adjusted EBITDA was also in line with our expectations, reflecting the significant planned investments we made in the quarter. You will recall that during the fourth-quarter call, we identified certain initiatives we would be taking during 2021 in order to support our planned growth over the year and position us well for 2022 and beyond.

Let me share an update on our progress toward those initiatives. First is to grow our agent base by over 50% this year. Our CC&E growth is -- of 96% in Q1 is due to the planned investments in our infrastructure and agent count, including doubling our telecare team, as well as enhanced training and development. We are tracking slightly ahead of plan on increasing our agent capacity, both in terms of agents hired and early productivity gains as the initial cohorts of agents that graduate from GoHealth's training modules.

Second is to invest thoughtfully in our proprietary technology to enhance lead scoring and routing to provide our specialized agents with the decision support technology needed to enroll consumers in the right plans and with a high degree of conviction, as well as investing in tools for our telecare agents to execute our Encompass initiatives. We are tracking well toward our full-year goals, with technology investments more than double last year's level supported by efficiency gains. And third is to expand our Encompass platform and invest in the GoHealth brand as we become the trusted advisor for seniors by helping them seamlessly navigate their healthcare journey and drive better health outcomes. Our telecare team has been powering strong LTV increases through enhanced engagement and education.

And this team positions us to accelerate our value-added services through our Encompass platform over the coming years, which can drive LTV upside through direct revenue and improved persistency. Moving to Slide 6. Given the strength of our first-quarter results and the progress we made toward our full-year strategic priorities, we are reaffirming our full-year outlook for revenue of 1.15 to 1.3 billion, propelled by strong commission growth. We also expect adjusted EBITDA of 345 to 385 million, which would result in industry-leading margins of 30% despite our aggressive investment posture in 2021.

More important, we expect these 2021 investments will continue to drive high rates of growth into 2022 and beyond. With that as a quick intro, let me pass the call over to Travis to run through our first-quarter results in more detail. I'll come back at the end and share more color on how Encompass will help power GoHealth into a highly differentiated digital health company with industry-leading LTVs and diversified revenue streams. Travis?

Travis Matthiesen -- Chief Financial Officer

Thanks, Clint. Slide 8 looks at our top line results over the first three months of the year, which came in within our range of expectations for the quarter. The robust growth in Medicare more than offset the declines in IFP as we continued to reallocate resources toward the higher-margin Medicare business, resulting in 55% commissionable growth. Our internal Medicare team of agents delivered revenue growth of 65%.

Medicare commissions were fueled by the combination of 48% growth in carrier-approved submissions and 17% LTV gains, which benefited from 9 million of Encompass revenue in the quarter. Total revenue grew 45% during OEP to 204 million, including enterprise revenue of 30 million, up 6% in the quarter. Driving strong submission growth with improving LTVs is a testament to the quality of our marketplace as our tech-enabled agents help consumers find the best policy to meet their needs at the time of enrollment. Slide 9 examines the drivers of the LTV gains that GoHealth has been uniquely delivering for carrier partners consistently over the last four quarters.

These LTV gains are the result of large investments we made over a year ago in our telecare team and our Encompass platform, along with our expanded carrier footprint, all of which incrementally improve an already great platform. Let me explain the two main drivers of our 17% LTV improvement. The first relates to the continued persistency gains that our telecare team is driving through our consumer engagement strategy. We have seen steady improvements in persistency over the last 12 months, translating this quarter into a large improvement compared to a weak first quarter of 2020 when LTVs were down.

Remember, we increased investment in our telecare team during the spring of last year, so not surprisingly, the second quarter of 2020 was when our LTV started to move higher. The first quarter of 2021 also benefited from a large improvement in effectuation of new 2021 policies on the heels of our carrier expansion into the fourth quarter's annual enrollment period. We also benefited from enhanced call routing of consumers to agents that are best able to meet their needs. These items, combined with commission rate increases, helped power an 11% gain in LTV.

The second driver of LTV gains was the additional revenue from administering services for carrier partners under our Encompass platform. The 9 million Encompass contribution drove an additional 6 percentage points of LTV growth in the quarter. And our accelerated investment in Encompass infrastructure in 2021 positions us for future gains as we expand our services and carrier reach over the coming years. Slide 10 is an update of a fourth-quarter slide to highlight our focus beyond just LTVs as we look to drive higher Medicare revenue per submission through the combination of commissionable and enterprise growth, demonstrating the benefits of our unique carrier relationships.

This slide highlights the 15% growth in first-quarter revenue per submission, and it includes commissions, enterprise revenue, as well as our Encompass revenue. As a reminder, we collect cash for enterprise and Encompass services on an accelerated basis relative to commissions, and these accelerated collections further improve an already rapid payback period. Encompass is fast becoming a meaningful incremental revenue driver for us. We expect the majority of Encompass revenue this year to flow through the commissions line and impact LTVs as the services are tied to the policy.

But over time, as we roll out services across a broader group of carriers that are directly tied to our members, the revenue will also impact our enterprise line. We are moving thoughtfully to lengthen our lead at commercializing our Encompass programs, and we have a proven track record of over-delivering for our growing network of carrier partners. We have been encouraged by the carrier and partner response and believe Encompass can help drive our next leg of growth over the coming years as we help partners improve the effectiveness of programs beyond enrollment, positively impacting our carrier partners' long-term profitability as we leverage our position in the value chain to deliver results. You'll hear more on this from Clint in a minute.

Slide 11 walks through the progress we delivered toward our full-year investments and resulting EBITDA. Adjusted EBITDA of 32 million was consistent with our expectations as short-term profitability was offset by our planned strategic investments in agent capacity, technology and the GoHealth brand and Encompass. Aggregate customer care and enrollment including telecare and technology investments doubled, up 28 million in the first quarter. These planned investments include the direct costs of the new agents and training programs, along with the opportunity cost as the majority of new agents were in our training modules, limiting near-term revenue upside but positioning our agents to deliver high-quality submissions with improving efficiency during the upcoming AEP.

Recall that agent capacity was a material limiting factor for us last year, and we are aggressively building the infrastructure necessary to capitalize on the large and growing Medicare market. Increased marketing and advertising spend helped us drive the strong top line growth in the quarter as we create internally sourced opportunities for our agents. Combined cost of revenue and marketing and advertising grew 51%, roughly in line with revenue growth. Moving on to our 2021 outlook shown on Slide 13.

We are reaffirming full-year 2021 revenue of 1.15 to 1.3 billion and adjusted EBITDA of 345 to 385 million, driven by 40% revenue growth and 35% EBITDA growth at the midpoint. Regarding the seasonal cadence, revenue growth in the second quarter could come in toward the high end of the full-year growth outlook, given the easy comparison against last year's COVID impact and lost production. This is a timing issue already incorporated in our full-year outlook. As a reminder, in addition to the majority of our agent investments hitting the second and third quarters, including the short-term opportunity cost of keeping cohorts of agents off production to ensure they are highly efficient headed into AEP, we will have ramped up brand and Encompass investments against a relatively light period in the prior year.

We anticipate second-quarter EBITDA margins will come in at half of last year's level and then expect a steady build back toward the prior year's absolute level of EBITDA in the third quarter before delivering strong operating leverage during AEP. Moving down the P&L. The combined costs related to marketing and cost of revenue will be heavily weighted toward marketing costs as our marketing team drives more high-quality consumer volume internally while continuing to develop our GoHealth brand among consumers. Marketing and advertising expenses should represent two-thirds of the total cost for the full year as the cost of revenue declines year over year.

Investing now to execute well in AEP is a good trade-off as the EBITDA upside in Q4 far outweighs the short-term carrying costs from our accelerated investment posture. As we move into the fourth quarter's AEP, our plan anticipates continued strong revenue gains powered by our agent growth and marketing capabilities, as well as improvements in efficiency at capturing opportunities. We won't need a big increase in the number of qualified leads to hit our numbers, but rather, we are working toward better capitalizing on delivered opportunities through higher answer rates and increased conversion, which will improve our efficiency. Moving on to cash flow.

Slide 14 highlights our fast payback periods and strong returns generated for shareholders. We collected a record 183 million of cash commissions during the quarter, and cash collections during the last 12 months came in over 100% of expectations, supporting our confidence in our LTV calculations as a proxy for cash flow. Strong cash collections, combined with our highly efficient funnel, led to positive operating cash flow of 31 million in the first quarter and TTM operating cash flow of negative 107 million. We converted this 107 million in negative operating cash flow over the last year into a 309 million increase in net commissions receivable, equating to a market-leading three times return on investment even before incorporating the potential to further monetize our membership base through the expansion of our Encompass services.

In addition to our strong and growing cash collections and 174 million of cash on hand at quarter end, we recently increased our revolver to 200 million, all untapped, to ensure ample capacity to manage the seasonal cash flow demands of our rapidly growing business in 2021 without needing to access equity-linked financing. Clint will now walk you through some of the exciting early results we are seeing with our Encompass platform and why we are so encouraged about the future potential. Clint?

Clint Jones -- Co-Founder and Chief Executive Officer

Thanks, Travis. Since entering the Medicare market in 2016, we have taken a very targeted approach with select carrier partners to provide unique solutions, including technology, marketing and enrollment services. Our Encompass platform is a natural extension of these solutions where we leverage our position in the value chain between carriers and consumers to enhance the customer journey. As we build our trusted advisor status with consumers, we benefit from the compounding effect of improved retention and expansion of TAM.

Slide 16 highlights our unique positioning as a rapidly scaling membership platform that can connect consumers, carriers and other care delivery partners. Why is this a win-win? First, we help GoHealth members better navigate their healthcare journey and improve their health outcomes. Second, we enable carriers to better understand our customers' needs while improving the carrier's key financial and quality metrics. And third, we advocate for consumers and connect them with high-quality care delivery partners that further support the goals of consumers and carriers.

We believe there's an enormous market opportunity to expand GoHealth's downstream capabilities and are very excited about the infrastructure we are building to lengthen our leadership position by taking a thoughtful approach with a few select carriers to ensure that we create a great experience for consumers and partners. Doing this will lead to continued LTV growth through persistency gains and additional revenue opportunities in very attractive markets. Let's start with the value proposition for our members. Our choice platform helps educate consumers as they shop and enroll in the right plan that meets their individual needs.

But enrolling in the right plan is only the first step. To truly improve outcomes, consumers need to understand and utilize the benefits of their plan. By leveraging the telecare team and the value-added services of our Encompass platform, we are able to help consumers maximize their benefits, connect them with the right providers and ultimately improve health outcomes. Our Encompass platform also helps address many of the carriers' most important needs.

On better engaging consumers, we help optimize our medical loss ratio, improve star ratings, enhance risk scoring and drive greater retention. And we're well aligned to help care delivery partners as we can build relationships with companies that have great products and services but lack access to member growth and education. As we continue to scale up our membership base and become the trusted advisor for consumers, we can connect them to their planned benefits that will help improve their health outcomes. Slide 17 highlights how one Encompass initiative works.

In this example, we demonstrate how GoHealth's proprietary member care assessments, or MCAs, a foundational element of our Encompass platform, collects the necessary data to help provide early insights. The MCA represents the starting point of a consumer's health journey with us, providing the data needed to drive specialized customer experience. We can leverage our strategic positioning at the time of enrollment to deliver assessments earlier with greater efficiency than existing options. For example, consider our GoHealth member, Jane, from rural Tennessee.

We know from the data collected during the enrollment process that Jane is a 72-year-old woman that lives alone, has hypertension and uses three prescription drugs. Upon performing an MCA for her, we learned several additional things that allow us to create a unique GoHealth member action plan for Jane. First, Jane had limited access to transportation for wellness visits and other medical necessities. This has implications for Jane's ability to visit her primary care physician, pick up her medication, as well as access healthy food, which we can address by helping arrange complementary transportation and have prescriptions and healthy meals delivered to her home, all included in her plan.

Second, Jane has recently learned that her primary care physician is going to retire. After research, we found a new value-based care provider offers additional benefits in her local area. After further education and facilitating an introduction, Jane decides this is the right solution for her. And third, Jane lacks social interaction and community support, so we can facilitate home community socialization by connecting her to one of our partners.

These findings further emphasize the importance of having ongoing education and engagement with a GoHealth-licensed telecare agent to improve health outcomes through our Encompass platform. We also know that there are long-lasting benefits to GoHealth from improved persistency of Encompass members. Carriers also benefit from these MCA initiatives as we better identify chronic conditions and social determinants of health earlier in the member life cycle, which allow us to connect consumers with the supplemental benefits and programming to help carriers mitigate health risk of their beneficiaries. Moreover, in this MCA example, our Encompass platform helps carriers improve their own revenue streams by properly risk scoring new members closer to the time of enrollment.

Slide 18 lists a few of the Encompass services we are ramping today. As we move deeper into the healthcare value chain, we believe that these opportunities dramatically expand our TAM beyond a 30 billion commissionable market, including value-based care, preferred pharmacy engagement, health risk assessments and member care assessments. Longer term, we see opportunities to expand deeper into care and benefits navigation and supplemental benefit engagement. Let me wrap up with Slide 19, a summary of how our leading marketplace platform positions us well to capitalize on a large and fast-growing market with multiple sector tailwinds.

As a reminder, there will be 80 million potential Medicare Advantage consumers by the year 2030, and they are increasingly looking for education, choice and transparency as they make this critical healthcare decision. The pandemic accelerated the transition from traditional field agents toward our marketplace platform, and our team of licensed agents are better-equipped than ever to help consumers compare the cost and benefits of policies across our vastly expanded carrier footprint. The secular growth drivers remain entrenched, with expectations for 10% Medicare Advantage growth this year, as well as commission rate increases as MA continues to deliver superior outcomes and cost dynamics. So what sets us apart from our competitors? We have a data-driven internal omni-channel marketing strategy that efficiently delivers consumers into our wide funnel.

Our proprietary technology platform utilizes data to score and route consumers to the best agent for them while also providing a plan, fit, check to ensure our agents enroll customers in the right plan for their unique needs. We have built and continue to improve our tech-enabled agent force to be the go-to resource for seniors who are making an incredibly important and difficult healthcare decision. And finally, we have cultivated deep carrier healthcare delivery partner relationships that have allowed us to continue to innovate on our platform and drive additional revenue streams such as Encompass. We believe this high-performing platform positions us well to continue driving rapid growth over the coming years, with industry-leading margins and fast cash payback periods.

We delivered a great start to the year during the first quarter, with strong top line momentum and LTV increases powered by the investments we made in telecare, Encompass and our care expansion in 2020. We are also executing well toward our 2021 key initiatives that will help us improve on an already great business model. These investments position us to deliver another year of record result, which we have reaffirmed and, more importantly, create the foundation for a multiyear period of outsized growth and returns for shareholders. Joel, we'd now like to open up the call to questions.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Michael Cherny with Bank of America. Your line is now open.

Michael Cherny -- Bank of America Merrill Lynch -- Analyst

Good afternoon, and thanks for all the color so far. So I want to dive a little bit more into some of these enterprise dynamics and the Encompass platform. Clearly, you're starting to see the early returns on the investment. As we think out post 2021 maybe and over the next few years, how should we think about what the growth contribution should be from this business? And are there any concerns or questions that you have in terms of the potential for workforce distraction in the event that they're pursuing one area of the business versus the traditional planned selling?

Clint Jones -- Co-Founder and Chief Executive Officer

Yes, thanks for the question. So we identified last year some opportunities to improve the overall customer experience with our members. We realized that a lot of members had many questions about their plan, how to better leverage it, and we saw kind of a technology and a human capital element to help better educate consumers along the way. So that's what we've done.

We invested last year. We had some pilots going in Q4. Now we've rolled those into revenue-producing programs, which we're really excited about. We will ramp those up over the next several years as we think about the opportunity that exists in the marketplace.

And Travis, any commentary on this year itself?

Travis Matthiesen -- Chief Financial Officer

Yes. I would just reiterate; we are obviously pleased with the start we have. But again, we talked about when we gave our full-year guidance on the last call, think about Encompass driving a few points of growth for the year. And we believe that that is going to continue to persist as we see these early wins.

Michael Cherny -- Bank of America Merrill Lynch -- Analyst

Got it. And then, turning back to LTV, even backing out the Encompass contribution, really nice advancement, and I know there's a bit of a comp dynamic but still the results, as a whole, very solid. How do you think about the persistency, no pun intended, of that LTV trajectory and how it should continue in terms of what's built into the guidance for this year?

Clint Jones -- Co-Founder and Chief Executive Officer

Yes, thanks for the question again. So we are obviously pleased with the results. We started making the investments last year in our telecare team and post-sale member engagement programs. And throughout Q2, Q3 and Q4 of last year, we started to see those gains.

That's manifested into this year even further, which we're really excited about. So obviously, you mentioned it's kind of a lower comp Q1 over Q1 but we're still extremely pleased with those results. And it really goes back to our entire business strategy of spending the time upfront with the consumer, doing a full needs analysis, making sure they're in the right plan. And then, once they're in that plan, having an advocate there for them if they do have questions or need help arranging transportation or scheduling a doctor's appointment, we're there for them, which ultimately is going to continue to lead to deeper relationships and stronger customer engagement, which will lead to continued persistency gains over time.

Michael Cherny -- Bank of America Merrill Lynch -- Analyst

Cool. Thanks so much. Nice job on quarter. Thank you.

Clint Jones -- Co-Founder and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Jailen Singh with Credit Suisse. Your line is now open.

Jailen Singh -- Credit Suisse -- Analyst

Good. Thank you, and hello. This is Jailendra Singh. Following up on Michael's question on LTV, can you -- that 11 percentage points year-over-year increase you highlighted for, because of driven by persistency and effectuation, is it possible to further break down on the impact of those individual items? And the question, Michael, I was trying to get to that for the full year, I think in last earnings call, you talked about low single-digit year-over-year increase in LTV.

Are you still maintaining the outlook? Just trying to understand the impact of income versus other drivers for the rest of the year.

Clint Jones -- Co-Founder and Chief Executive Officer

Sure. Yes, I'll talk. So there's really no singular piece within that LTV increase that sticks out, right? It's a combination of kind of a lot of the investments and things that we've made over the previous quarters that have manifested into this, so better fluctuation rates, improved persistency, stickier members. I think the Encompass platform has also given us a, I don't want to say a surprise by any means, but enhanced opportunity to drive not only direct revenue through Encompass, but we're seeing indirect benefits of persistency as well there.

And Travis, any commentary you want to color?

Travis Matthiesen -- Chief Financial Officer

Yes. I would just say simply, to Clint's point, we're seeing more conviction and planned choice with our consumers throughout the first few weeks of the customer journey, again all driven by our investments in carrier footprint, our technology and planned fit, as well as telecare. As it relates to kind of full year LTV expectations, think about, on the full year, high-single-digit LTV improvement driven by the few points of growth coming from Encompass initiatives that are right now manifesting themselves in LTV improvement, given the Encompass initiatives are tied directly to the policy.

Jailen Singh -- Credit Suisse -- Analyst

OK. And then, my follow-up, I was wondering if you could provide a little bit more details around your comments in the prepared remarks that you are trending ahead of expectations with respect to agent hiring, with all the kind of push on internal agent hiring across your peers. Just curious if you're just making hiring market really competitive. And also, if you can provide any color around the agent mix you're targeting between in-person and remote.

Clint Jones -- Co-Founder and Chief Executive Officer

Yes. Thanks for the question. So yes, we are -- like we mentioned in our script, we're slightly ahead of plan on the agent hiring, which we remain encouraged. As you'll also recall, the majority of our agents become -- come in non-licensed.

So we've got a strong, I'll call it, top of the funnel recruiting platform now bringing those folks in. So we feel really good about the position we're at today and the position that we're in for the remainder of the year of bringing on the agents to kind of hit our targeted recruiting goals and hiring goals. The other thing we invested heavily in, in kind of the early parts of Q1 is just the overall infrastructure and enhancement of our training platform to provide kind of deeper and more range training services to ensure that agents exiting that training program are very capable of executing on their job when they hit the floor.

Jailen Singh -- Credit Suisse -- Analyst

OK. Thank you.

Operator

Thank you. Our next question comes from Jonathan Yong with Barclays. Your line is now open.

Jonathan Yong -- Barclays -- Analyst

Thanks for taking the question. Just going back to Encompass again. Can you help us understand, is the revenue contribution from that immediate or is it spread out over the lifetime of the member life? And are you performing additional services over time and thus, that's why it falls into the commission bucket?

Clint Jones -- Co-Founder and Chief Executive Officer

Yes, so thanks for the question. So we've got over a dozen products and services now within Encompass. And as you can imagine, each carrier we work with kind of has a unique need that we're able to tailor. Because of the flexibility of the platform, we're able to charge in different ways.

Most of the revenue today is captured upfront, which helps from a cash flow dynamic standpoint. There are opportunities to move more toward a PMPM type model or an annual model that we're in discussions with as well. So our main goal here was to really -- just like we kind of ramped up Medicare five years ago with what I'll call a rifle approach, same strategic approach with our Encompass Platform, choosing a couple of select key carrier partners as we work on these services and to ensure that it's really, really a solid experience for the customer, for the carrier and for GoHealth. And it's a win-win-win across the board, and that's what we've done and we'll continue that out throughout this year as we scale up the platform.

Jonathan Yong -- Barclays -- Analyst

OK, great. And is there any way to size the overall contribution that you're expecting from Encompass? I know you said a few points coming from it, but is there a way to provide us the absolute size there?

Travis Matthiesen -- Chief Financial Officer

Yes. So I'd say the only other way to think about it other than the few points of growth is, as Clint mentioned, the majority of our Encompass revenue is being driven at the point of enrollment, which is why it's tied to the policy. So as you think about the cadence throughout the year of that few points of growth, think about Encompass growing as the policy and submissions growth happens, with obviously the bulk of that occurring in Q4.

Jonathan Yong -- Barclays -- Analyst

OK. Thanks.

Operator

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

Greg Peters -- Raymond James -- Analyst

Good afternoon First question I wanted to talk about or have you give some feedback on, we've been hearing from the traditional field model, agents that are working in that that last year really worked against them because COVID forced seniors onto platforms such as yourself. And they believe that as we come out of the pandemic and everything opens up, the traditional field mechanism has some confidence that they think they're going to win some share back this year. And just curious about what your impressions are of that rhetoric in the marketplace because clearly, you've noted your success.

Clint Jones -- Co-Founder and Chief Executive Officer

Yes, you're absolutely right that obviously the acceleration into our model with COVID did happen. Obviously, you were seeing a trend over the last several years prior to COVID of more and more consumers leveraging platforms like us. And we don't think consumers that have gone through our experience and understand how efficient and easy it is to leverage will go back to a field or a face-to-face type of enrollment. You think about the old kind of the travel analogy.

It's not like we're going to travel agents on the corner of Main Street America to buy our tickets anymore. Once that evolution has happened, people continue to buy online. And I think that's how we view it. We're starting -- we still see very, very strong and continued demand.

And as we add services like Encompass, we think that just sets us up even further apart. I think the other thing to note is with our technology platform and our ability to provide a lot of choice, that gives consumers an easier way to shop for a lot of plans. Most field agents may represent one, two, maybe three carriers, and you can just imagine the value-add that we deliver to the market.

Greg Peters -- Raymond James -- Analyst

Great. The second question is going to be based on the information you're providing on Slide 14, which is your cash flow. You talked about the free cash flow being negative. I think you said $107 million on a trailing 12-month basis.

I don't -- if that number was -- if I'm misquoting that, it's -- just feel to correct me, I'm sure.

Travis Matthiesen -- Chief Financial Officer

That's correct.

Greg Peters -- Raymond James -- Analyst

So I guess, to be too candid, there is concern in the marketplace about your business model and others like yours getting to that free cash flow Holy Grail, if you will, on an annualized basis. And one of the issues that's popped up is if you're continuing to grow sales at an increasing rate, in other words, the rate of growth is accelerating such as in your business model, it's going to be very hard for you to get to a cash flow breakeven, where -- and ultimately, what we need to get you to cash flow breakeven and positive would be for the rates of growth to stabilize at some level or start to shrink a little bit. And so, that's a lot of words in -- around cash flow, but maybe you can give some thoughts on your cash flow, please.

Clint Jones -- Co-Founder and Chief Executive Officer

Yes. I mean, you're absolutely right. I mean, rates of growth are an indicator of cash flow in this business model. I think with a lot of high-growth business models themselves; we could easily slow down and generate cash pretty quickly.

We see a tremendous market opportunity here to continue to invest in our agents, our technology and our platform to scale out. And then, you look at other services around our enterprise or our Encompass strategies that ultimately drive quicker cash payback periods, that, in combination, sets us apart in a very unique position as we think about scaling out this platform. So we believe we're in a position to continue driving growth and driving membership while looking for adjacent products and services that could benefit us from a cash position standpoint.

Greg Peters -- Raymond James -- Analyst

Got it. Thank you for the answers.

Operator

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

Tobey Sommer -- Truist Securities -- Analyst

Thanks. Could you give us a sense for what you're seeing in terms of marketing rates as you look into the fourth quarter, the extent to which you have visibility into pricing in different channels and maybe how that compares to the elevated pricing around the election period?

Clint Jones -- Co-Founder and Chief Executive Officer

Yes, Tobey. Thanks for the question. You're absolutely right. If you remember last year, there were some challenges, some unknowns with the election, and that election ultimately lasted beyond election day, which caused some kind of rate challenges and some unknowns in the buying standpoint, which we don't expect.

This year, we expect a much more kind of normalized year. Obviously, year over year, just continued growth in the market. You may see some CPO increases in certain channels. But with efficiency gains and other things we're targeting, think about our overall CPAs, that's really how we run the business and operate.

Tobey Sommer -- Truist Securities -- Analyst

And if I could do a follow-up on the cash flow sort of self-sufficiency. Where do your models tell you that sort of steady state? How quickly could you grow in a steady-state fashion and then kind of get to that positive cash flow generation?

Travis Matthiesen -- Chief Financial Officer

Yes. So we're focused on continuing to grow our membership efficiently. And we've got the cash on hand, the access to the revolver to execute on our multiyear plan to continue to grow our membership base. And as we think about that growth in membership base, it's not just the opportunity to monetize them from a commission standpoint but from an Encompass standpoint as well.

And so, that is where we're focused today and we'll continue to be.

Tobey Sommer -- Truist Securities -- Analyst

I guess I understand the focus. I'm more curious about the rate of growth. I know you have an offset and a positive feature in this Encompass. You're clearly having some success in it, but is there even a range of growth that we can think about?

Clint Jones -- Co-Founder and Chief Executive Officer

Yes. I don't think that that's -- we're going to -- this industry is still kind of, we believe, new enough from our platform standpoint that setting us in a range of growth right now with the opportunity that we see is, I think, the wrong way to look at the business. Year over year, the opportunity is going to continue to grow. You think about the overall Medicare population, you think about the aging population, you think about the people leaving original Medicare and Medicare Advantage, those change frequently, and our carriers need to change as well, when new opportunities come to the market.

So I think as any high-growth business in a kind of a newer market, we're going to be opportunistic in tackling the market share and going after the opportunity, and that's kind of how we think about the business.

Tobey Sommer -- Truist Securities -- Analyst

OK. Thank you very much.

Operator

Thank you. And the last question in the queue comes from Elizabeth Anderson with Evercore. Your line is now open.

Elizabeth Anderson -- Evercore ISI -- Analyst

Thanks so much for the question. I just had a question about the Encompass business. How do you, a, sort of -- can you quantify how many of the carriers you're working with now? And two, I know obviously some of your peers are also entering this space. Can you just say anything about like any comments about differentiation? Or I assume, given the size of the market and the relative revenue, that you guys don't encounter each other in terms of a competitive situation.

But any clarity there would also be helpful.

Clint Jones -- Co-Founder and Chief Executive Officer

Yes. Thanks, Elizabeth. So yes, so we started -- we saw an opportunity about this time last year to start kind of working with our carrier partners in developing some Encompass strategies. And we purposely have kept it to a very small number of carrier partners as we think about ramping up and improving the model out.

Obviously, we think 9 million in Q1 is a pretty good start to that. Obviously, our competitors saw what we were doing and took a look at that and which we're flattered by. We think there's an opportunity here and we think that they see that as well. And as we think about setting up services to help both the carriers and the consumers better understand the healthcare journey, it's a massive market.

We don't believe there's any time soon we'll step on each other's toes. And we think that we have a unique opportunity here in front of us to really make impactful moves in the space.

Elizabeth Anderson -- Evercore ISI -- Analyst

And how replicable do you think like the learnings are in terms of the products you develop with -- for one carrier to the next? Like is it kind of the same thing they can basically do the same thing again, or are you sort of totally customizing it from one to the next?

Clint Jones -- Co-Founder and Chief Executive Officer

Yes. Good question. So yes, the way the platform is built, you think about a traditional SaaS-type model in some of the services or software with a service, so it is replicable. We can take it to different carriers.

And we may have two dozen modules that carriers can kind of choose from. And we may start with two, in a particular carrier's example, with the goal of expanding that to 10. Another carrier might say, hey, I'll take these five. But that's the goal here as we think about services and offerings.

It's something that we don't customize necessarily for each carrier, but we can take it to market and expand that way.

Elizabeth Anderson -- Evercore ISI -- Analyst

So that should also give you some opex leverage as that business continues to scale?

Clint Jones -- Co-Founder and Chief Executive Officer

You're exactly right.

Elizabeth Anderson -- Evercore ISI -- Analyst

OK. Thanks.

Operator

Thank you. I would now like to turn the call back over to Clint Jones for closing remarks.

Clint Jones -- Co-Founder and Chief Executive Officer

Thank you, Joel. Thank you to all the shareholders and analysts that attended today's call. We are very pleased with the results that we've seen so far in Q1 and our position to execute in 2021. I'd like to, again, thank all of our GoHealth team members for the work and effort they put in every single day, and we look forward to speaking to you soon.

Thank you and have a good night.

Operator

[Operator signoff]

Duration: 46 minutes

Call participants:

Jason Koval -- Vice President of Investor Relations

Clint Jones -- Co-Founder and Chief Executive Officer

Travis Matthiesen -- Chief Financial Officer

Michael Cherny -- Bank of America Merrill Lynch -- Analyst

Jailen Singh -- Credit Suisse -- Analyst

Jonathan Yong -- Barclays -- Analyst

Greg Peters -- Raymond James -- Analyst

Tobey Sommer -- Truist Securities -- Analyst

Elizabeth Anderson -- Evercore ISI -- Analyst

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