Earnings Call Transcript - GOCO Q2 2020

Operator, Operator

Good day and welcome to the GoHealth Second Quarter of Fiscal 2020 Conference Call. At this time all participants are in a listen only mode. Following the Company's prepared remarks, we will conduct the question-and-answer session and instructions will follow at that time. As a reminder, this call will be recorded. I would now like to introduce your host for today's conference call. Mr. Jay Koval, Vice President of Investor Relations. You may begin.

Jay Koval, Vice President of Investor Relations

Thank you, Joel, and good evening everyone. I want to thank each of you for joining GoHealth's second quarter earnings call. Our first as a newly listed company calling our IPO a month ago. Joining me today are Clint Jones, Co-Founder and Chief Executive Officer; Travis Matthiesen, Chief Financial Officer; and Shane Cruz, Chief Operating 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 second quarter of fiscal 2020. In addition to presentation materials, 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 are 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, I'd like to turn the call over to Clint.

Clint Jones, CEO

Thanks, Jay. Good evening everyone and thanks for joining us for our second quarter earnings call. This is our first as a public company and we're excited to announce GoHealth's results and share with investors our unique positioning in the marketplace as well as our future vision for the Company, as we focus on our mission to improve access to healthcare in America. I plan on covering two main topics today including; first, a quick review of our second quarter results and fiscal 2020 outlook; and second, a summary of how we actively manage our business to achieve the right balance of top-line growth, profitability, and cash returns. So with that, let's start with the second quarter results. No surprises here as results came in largely as expected. Total net revenue grew 71% in the quarter, powered by 169% growth in our Medicare Internal segment. This revenue growth is driven by additional agents and increased efficiency, which contributed to a 106% increase in Medicare Advantage commercial approved submissions. Revenue growth in the quarter was held back due to COVID-related state licensing delays that we experienced from April to June. As of August 1st, we're on track from a hiring standpoint for this upcoming AEP, making up substantial ground on licensing and carrier appointments during July. Despite these significant investments in our workforce, we delivered EBITDA growth of 56% in the second quarter. The Medicare Advantage market is very large and growing quickly, as seniors are increasingly interested in evaluating their plan options, with the expert advice of GoHealth and our agents. COVID has helped to accelerate the secular shift towards our business model as a traditional field force slowed down due to social distancing concerns. We partner closely with carriers to help them grow their member counts and we have a track record of exceeding expectations through educating consumers and providing them with the best policy options to address their own unique needs. We also are able to deliver high customer service levels and post-enrollment engagement through our TeleCare team, which ramped up dramatically over the last 12 months. First half revenue increased 87% thanks to a 242% growth in Medicare Internal and 156% growth in Medicare CAS. Internal Medicare margins increased 300 basis points to 49% on a TTM basis. Given the rapid growth we delivered in the first half plus the momentum behind our business initiatives, we believe we're well-positioned to deliver net revenue of $840 million to $890 million in 2020. We expect efficiency gains and a continued focus on our Medicare Advantage segment to help us maintain industry leading adjusted EBITDA margins, well above 30% in 2020. Despite an aggressive investment posture in people and technology that positions us for future growth, this will allow us to deliver adjusted EBITDA of $265 million to $290 million. These high margins are driven by a laser focus on LTV to CAC. As many of you know, LTV to CAC represents the lifetime value of commissions divided by the customer acquisition cost, that allows us to calculate how much we're willing to spend for a particular consumer based on their expected value, effectively deleveraging the market and delivering high quality volume growth. It's similar to GARP investing. Put simply, growth at the right price. I'm proud to say that the team continues to build on prior year momentum with trailing 12 months LTV to CAC, up almost a point as of June 30th to 3.69, and towards the high end of our optimal range of 2.5 to 4 times. This optimal range allows us to scale growth by shortening our payback period to roughly one year on Medicare policies. With a correlation of 95%, the relationship between TTM LTV to CAC and Medicare Internal margins is very high, validating the relevance of LTV to CAC as a correct guidepost for delivering quality profits. This is further validated by our ability to be cash flow positive, from a unit economic standpoint at the end of the first year. This leads to my second topic, the how behind delivering high gross margins and superior cash returns. We distinguish ourselves from the competition through utilizing technology and data to power our decisions and excellent execution. As you know, the majority of our costs are variable relating to marketing activities and agent costs. Our vertically integrated funnel allows us to optimize our results, balancing supply and demand in real time. Put another way, we work towards certain desired goals and metrics including LTV to CAC, by modulating levers. Let me use a few examples of the various levers at our disposal to win in this market. The first example I want to share is around volume growth. We can adjust the volume of lead generation we've produced for our agents through deleveraging the market and micro targeting. Because we focus on internal lead generation, we know a lot about our targeted customers before they even make a call. This enabled us to be surgical in our approach, spending a predetermined amount for a specific consumer because we already have an expected value for them. Our approach is precise and methodical, driving top tier LTV to CAC as we work backwards from our known cost to acquire the LTV. Our anticipated future conditions streams can vary based on carrier mix, customer segments, geographies, enrollment times of the year, among other factors that we incorporate into our LTVs. Over the last several quarters, we've enjoyed strong, high quality growth, driven in part by targeting special needs plans known as SNPs although SNP plans tend to have a lower LTV that pulled down our average LTV. We can achieve our target LTV to CAC levels because of our marketing efficiencies and the higher agent conversion rates that we deliver for these policies. The second lever we control is the investment in our own internal team of agents and how we schedule their time to match the demand that our marketing team creates. Given a specific number of lead generation opportunities, we can determine how many agents we need working during various times of the day. When COVID first hit, we were able to transition to a work-from-home environment within 72 hours with minimal disruption. We've now adjusted how we onboard, train, and license new agents and are continually optimizing through improved lead scoring and call routing technologies to drive higher conversion rates of consumers that are the best fit claims with shorter handle times. Our data tells us that agent engagement with consumers is supportive of happier customers, better plan usage, and ultimately better retention. In 2019, we more closely aligned our agent compensation around the long-term dynamics of these commission streams, not just at the point of sale. Our expanded TeleCare teams can then take over post-enrollment to educate consumers about their plan benefits and help minimize unexpected surprises during the two highest periods of churn, the first 90 days and during the next annual enrollment period. Throughout TeleCare data, we've been able to develop safe strategies for when members call to cancel their plans whether due to shopping for zero dollar premium plans or some other significant life event like a move or a new health issue. We have seen this retention strategy help keep over a quarter of those same customers enrolled on the GoHealth platform, either on their original plan or helping them find a new plan. In addition to increasing persistency, the TeleCare team also administers innovative offerings, such as health risk assessments and pharmacy benefit management programs for our carrier partners, positioning us to generate other revenue streams incremental to commissions for GoHealth to become the go-to health insurance marketplace for consumers. To be clear, our agent additions are an investment in our growth over the coming years. The third and final example of our levers has been a rifle shot approach to adding new carriers. From 2016 to 2018, we used our technology and data science to fine-tune our Medicare business model with a few strong carrier partners through deep technology integrations and a consulting-like partnership to help them grow their enrollments. As their Medicare business has grown, we've been methodically adding new carriers to the platform. This approach has enabled us to maintain high margins at our integrated marketplace and increase LTV to CAC through more plan choices and better consumer fit. Our LTV to CAC and retention rates are the highest in markets where we offer broad coverage of the leading plans versus markets with less carrier coverage. As we look towards 2021, we will have expanded coverage with many of the top carriers including United, Aetna, Kaiser and some others. While there's an initial ramp-up period for new carriers with forecasted lower LTVs as agents learn about new plans, adding policy choices over the long term supports higher LTVs and lower customer acquisition costs. Clearly, there are several macro factors that are out of our control, such as potential impacts from COVID-19, unemployment, and regulatory changes. We believe that most of these are also tilted in our favor right now, which when combined with our proven business strategy, positions us very well for future growth. And we expect our growth will be significant over the coming years given the size of the Medicare Advantage market, its underlying trajectory as consumers need traditional fee-for-service plans, not to mention the secular shift towards a virtual marketplace. Additionally, we believe there is a meaningful first mover advantage for those that can build scale. The bigger we get, the better our model optimizes. More consumers provide more data insights, which allows micro-targeting and enables us to hire more agents to specialize and better match those agents with prospects. This flywheel effect supports being more aggressive on the growth side during this COVID disruption with a careful eye towards our LTV to CAC ratio. This should allow us to generate industry-leading EBITDA growth through scale efficiencies, as we build a book of business that will generate strong cash flows for shareholders in the future. As we think about cash management, balance is the word that comes to mind. Brandon Cruz and I founded GoHealth two decades ago with our own money and maintaining a 30% ownership stake post-IPO because of our focus on minimizing unnecessary dilution through cash burn. So, we care a lot about these cash returns as a result of our business decisions. Rather than steal Travis' thunder on the new accounting standards, I'll simply say that paying your agents and marketing costs upfront and then waiting for the cash commissions to be collected creates some cash challenges, but we have found ways to fund our high rates of growth through a combination of existing cash flow, a seasonal revolver, and long-standing carrier relationships. Because of the depth of our relationship with carriers, we have been able to create programs where carriers pay upfront cash to GoHealth to cover agent costs and enrollment fees as well as marketing programs on the front end where the margins are lower than the commissionable business and it's helped reduce our reliance on external capital. Now post-IPO, we are in a strong position to reevaluate the balance between creating value for the carriers through traditional growth and generating additional revenue streams from these relationships. Non-commissionable revenue shows that other revenue on our P&L has been and will continue to be an important way of supplementing the profitability of commission streams, including the rollout of some of the innovative initiatives to enhance member utilization and drive value-based care engagement. More frequent customer interactions will help ensure member plan satisfaction and better health outcomes, creating a strong connection between provider, payer, and patient. I will spend more time running through our unconscious opportunities on future earnings calls. But for now, we are encouraged by the favorable response from our carriers. We can offer programs on behalf of carriers at a time of enrollment with compelling margins, leveraging our marketplace and TeleCare team. In the meantime, we aim to continue our legacy of over-delivering on our growth objectives and will do so through controlling what we can control and creating a visible path to value creation. We will continue to thoughtfully allocate our resources, invest ahead of the curve, and make sure that GoHealth earns more than our fair share of a very large, fast-growing Medicare Advantage market. Let me now turn the call over to Travis for some additional color on our financials and key metrics.

Travis Matthiesen, CFO

Thanks, Clint, and to all of you for joining us today for a review of our first-half results. Rather than repeat all of the financials in our release, I will use this time to hit a few key highlights from the first six months of 2020 as well as share some additional perspective on an issue that is front of mind for investors—churn. First, let me run through some key numbers from the first half. As Clint mentioned, we delivered strong growth in our Medicare Internal segment, our focus area as a company. Total Medicare submissions jumped 148% in the first half, as we continue to onboard and license new agents in advance of Q4's annual enrollment period. We are driving increased agent efficiency for better conversion and higher sales per day. And remember that our agents variable compensation is not only paid upon submission of an application, but also on long-term retention and other aspects from our balanced scorecard including customer satisfaction. This is 100% aligned with our focus on the value of a consumer versus the LTV of an individual policy. Regarding our Medicare External segment, let me remind you that these external agents are not outsourced call center agents, but rather independent virtual agencies that leverage the power of GoHealth's technology, compliance, and data to help enroll new members under GoHealth carrier contracts. They are also compensated in a similar manner to our internal agents with an eye towards long-term retention so they are only paid when commissions are received. For the reasons mentioned above, external segment LTVs are not materially different from our internal segments. The dynamics that have been powering our year-to-date growth show no signs of abating. In fact, we believe that COVID has only served to accelerate the shift to our business model. As Clint mentioned, we can acquire members more efficiently than carriers, and consumers are increasingly interested in utilizing the expert advice of our internal agents to help them navigate a decision with serious cost ramifications if they enroll in the wrong plan. Concerns over healthcare have become front of mind for Medicare-eligible consumers and they need education, transparency, and choice from the safety of their homes. We focus almost exclusively on our own marketing and advertising efforts, generating approximately 80% of our leads internally in the first half, because of the superior efficiency that results from an integrated approach. During the first half of 2020, our marketing team successfully grew customer acquisitions by 245%, with only a 190% increase in marketing and advertising costs, dramatically improving efficiency while scaling. These leads were generated through a balanced approach to online and offline channels. We continue to benefit from scale through greater breadth of corridor offerings that will create opportunities to build our brand and reach consumers on a nationwide basis. Scale benefits also drove down G&A as a percentage of revenue from 9.8% to 7.8% over the first six months of the year, despite headcount investments to support our growth objectives. We delivered meaningful operating leverage during the first half of the year with an adjusted EBITDA margin of 23.1% versus the prior year's 17%, an increase of over 600 basis points. Adjusted EBITDA came in at $61.9 million, a 154% increase above the prior year period, as we continue to find ways to generate high-quality profit growth beyond the annual enrollment period. From an operational perspective, it's equally important to create selling opportunities for our team of Medicare agents throughout the year, to maintain a large ongoing agent force that continuously improves over time. The trajectory of Medicare Advantage LTVs was a modest tailwind for revenue with first-half LTVs up 1.3% to $879. While the $879 is an average, it's important to note that not all policies are created equal, and we utilize our fully integrated technology platform to deleverage the market, as we micro-target and deliver top carriers LTV to CAC for the overall portfolio. In reference to Clint's comments around utilizing our LTV to CAC framework to target high-quality growth opportunities, let me point out that our strategy has several new large carriers with lower initial commission rates and LTV as a strategic decision to drive choice and better fit for us. Similarly, our increasing share of business this year across the SNP population is also high-margin business that results in lower LTVs. How does this make shift manifest in our results? While strong growth in SNP could create a near-term drag on our average LTV, our LTV to CAC focus ensures that we are always paying the appropriate amount for these new consumers, delivering high quality growth and strong cash returns on the CAC deployed. As Clint mentioned, our payback period is approximately one year. And over time, as we increase the carrier options for our consumers, you would expect to see better fit drive greater persistency. Let me share a few more thoughts on our perspective on our current book of business and the topic of churn. My first point is that we have not observed material changes in churn relative to our expectations. When we analyze churn, it's important to note that we are comparing like-for-like cohort and vintages across our book of business. My second point is the cash collections on LTV are a better business metric. As we sit here today and analyze our historic vintages, the cash we have collected has been in line with our expectations, validating our LTV, while changes in churn are not having a material impact on LTVs. The changing net of business will continue to impact average LTV, whether it's new carriers, new consumer segments, or new geographies, as they are all underwritten by our LTV to CAC target. Third, LTV to CAC is our North Star, because of the high correlation with margins and cash flow. Trailing 12 months LTV to CAC of 3.6 times is excellent and at the high end of our range, and it's driven by efficiencies in our cost to acquire consumers as we drive down marketing costs per opportunity and increase overall agent conversion rates. Fourth, and most importantly, our business model generates strong cash returns significantly faster than our competitors. We included a new slide in our investor deck to help highlight that. In 2019, the combination of first-year commissions and other revenue was higher than our CAC during that period. Moving now to some more details on our full year 2020 outlook, we expect total revenue to come in a range of $840 million to $890 million, driven primarily by the growth in Medicare Internal CAS. This represents a 60% increase at the midpoint, significantly faster growth than the competition, as we look to lengthen our lease and build scale that will further improve our ability to utilize our data and technology to create value for consumers and carriers alike, both of which will benefit our shareholders. As Clint mentioned in his comments, 2020 will be a strong year of growth in our other revenue. While commissionable revenue remains our main area of focus, these other revenue streams have been excellent ways to bridge our cash flow needs and generate incremental profits. They have been an important part of our strategy to monetize the value we create for carriers. With the early success of GoHealth's Encompass Platform, we believe we are uncovering new ways to create value for carriers that should result in additional revenue beyond commissions. In 2020, we expect scale efficiencies to offset the large investments we have made in additional internal agents, our TeleCare team, and our technology platform, resulting in adjusted EBITDA growth of 55% to 71% for the full year. It's worth noting that given our focus on better utilizing agents throughout the year, including during the seasonally low AEP, our business model delivers increasingly balanced profit growth. In 2020, we expect to generate roughly one-third of our EBITDA during the first nine months of the year and are tracking well towards achieving our full year range of $265 million to $290 million on the heels of large investments in our agents and carrier footprint expansion. Given the favorable cash characteristics of our business model, cash flow from operations in 2020 is expected to be only negative $60 million to $80 million, and we are on track to deliver our current growth plans post-IPO without needing to raise additional capital. For perspective, we believe we can add roughly $325 million in revenue this year, so this limited cash consumption speaks volumes about the cash efficiency of our business model, our focus on LTV to CAC, and our unique carrier relationships. To help you with your models, diluted share count for the full year is roughly 320 million shares, and net debt today post-IPO is roughly $115 million. So to summarize, we are confident that we have the winning differentiated business model to deliver high-quality growth for shareholders powered by multiple levers and financial discipline. Our teams have the plans in place to acquire new customers at the right price, generating high rates of returns on those investment dollars, measured by LTV to CAC and visible in our industry-leading EBITDA margins and cash returns. Our fully integrated platform and data-driven insights further position us to increase our efficiency over time as we gain scale in an enormous Medicare Advantage market, becoming better in the process. We are investing in additional revenue streams, which can augment our top and bottom line growth over the coming years. And with that, operator, we'd like to open up the call to Q&A.

Operator, Operator

Thank you. Our first question comes from Elizabeth Anderson with Evercore. Your line is now open.

Elizabeth Anderson, Analyst

I had a question regarding your churn levels in the quarter. You gave us a certain nice high to be covered as I think if you could give us a little bit more detail in terms of what you saw with the COVID special enrollment period? And then specifically, any commentary you have in terms of the newest cohort from 2019 to how that cohort has trended versus prior?

Clint Jones, CEO

Thanks for the question. Obviously, there's been a lot of noise and conversations in the market around churn. I want to take a little time to educate you on how we think about this, and kind of the key elements and how we run our business around this. So, obviously, churn is one element that goes into your LTV, and why is this important? Obviously, your LTVs, or what you're using to predict future cash flow, and we are hyper-focused on cash flow. I think we mentioned that several times in our prepared remarks. So that's kind of how we think about why this is so important. And if you think about, Travis has mentioned, that our cash collections are right in line with our expectations have been. So that's kind of point number one. Point number two, we have not seen material changes in churn in the business. So, I think those are the two main points I'm going to talk about. The way we look at in running the business, we have kind of two points in the period of our customer journey. Our first 90 days which has many levers in there that impact churn, the marketing source, agent performance, type of enrollment is the SNP plan new to Medicare, the carrier, the geography, and many other factors. A lot of these factors are in our control, and we see those elements in real-time and we're able to make modifications and adjustments, if we start seeing negative or positive trends. We don't want to see surprises and we are in a position with our data and insights, where we don't see surprises. So, that disenrollment period that I'm talking about in the first 90 days as we are hyper, hyper focused on there, and we obviously see different disenrollment numbers by cohorts, by different plans and the other things mentioned. Then the next part is post-90 days, we call it more of our macro area, macro churn area. And again, we haven't seen any trends that would lead us in a negative way there. We have a less control there, but we've ramped up and talked about the investment we made in our TeleCare team is close to 200 people now, and we're having over 30,000 conversations a month with consumers on why they may be interested in looking at another plan? How happy are they? So, we believe as we invest in that and get more data, there will be ways we can actually make positive impacts on that macro area as well. So, I think everybody in this industry defines LTV and churn metrics in unique ways. So, I think comparing us against a peer is not the right set. The other last point I'll just get to is, just the overall cash payback period that we're focused on. Again, why assurance is so important? It goes in your LTV calculations. Why is your LTV calculation so important? Because that's how you generate your cash flow and predict that.

Travis Matthiesen, CFO

And if I can just add in there, Clint really quickly, we do look at that early disenrollment and that 90-day turn very differently. And what we'll continue to build a golf brand, use marketing automation, customer outreach, through TeleCare to improve the post 90-day turn dynamics, we are focusing the majority of our efforts on the disenrollment period. Not only because it has a high impact on our LTVs and cash payback period, but it's the area where we can best leverage our data to de-average the market. So, we talk a lot about how we're going to de-average the market and leverage the different dynamics such that every consumer is different to arbitrage the market and get the results that we've seen. We see significant variances in attrition across our different data dimensions related to customers and agents during that early disenrollment period. As you mentioned, Clint, some of these, a good example here would be in geography. We see in markets where we have a really strong product footprint, and there's less competition, the 90-day retention of our submissions may be over 80% and keep in mind that, this includes both the effectuation rate of the submission that actually gets to the effective date and become a pain policy as well as it lasts without canceling during that first 90 days. But in other markets where we still are growing our carrier footprint, there's higher competition that 90-day range may be as low as 50% to 60% retention. So, those significant variances are things that we can leverage with both our business strategy to add carriers to our platform to ensure that we can get higher retention rates in all areas, but also to ensure that we're paying the right price for every single consumer. And again, de-averaging the market in certain geographies, we're going to pay more to acquire consumers because we know those early trends with disenrollment. As we mentioned earlier in the call as well, another example relates to the types of Medicare beneficiaries that we're enrolling. So, as we target and enroll consumers in SNP plans, they will exhibit lower effectuation rates and higher disenrollment rates during the first 90 days of the policy. But we'll continue to target as consumers do their attractive acquisition costs and the ability for us to leverage this population to reduce the seasonality of our business. These things are just key examples of how we can leverage our data to de-average the market and continue to pay the right price for every consumer. Instead of focusing on how we are performing in aggregate from a churn perspective or from a disenrollment perspective? We'll continue to focus on using our data to de-average the market and make sure that we're paying the right price for every consumer. So, we can be laser-focused on the important metric, which is our LTV to CAC.

Operator, Operator

Your line is on mute, please unmute.

Unidentified Analyst, Analyst

So on the cash flow slide, I think that's a very important differentiation you guys have that you're able to breakeven on cash less than 12 months. But can you help us reconcile the fact that you expect your other revenue to remain strong? And the fact that you should have renewal commission coming from prior years, but you still expect your cash flow guidance to be negative 60 million to negative 80 million this year. Just trying to understand like why should we expect positive cash flow in this year or even next year? Just help us reconcile that.

Clint Jones, CEO

I'll take the first part of that. So, in our other revenue, these are multi-year, in many cases, contracts with partners, whether that's around agent costs, enrollment fees, marketing development funds and our newly rolled out Encompass Platform. These are long-term contracts and we expect that recurring revenue to continue. We do leverage that in a way to drive results in our business and we'll continue to focus on that. I think Travis can speak from a cash flow standpoint, but at our growth rates from a cash flow, overall cash flow positive, we can slowdown and become cash flow positive really quickly. We don't think that's the right decision for the business and we're going to keep kind of expanding and growing in areas that match our LTV to CAC. And Travis, you want to speak a little bit more?

Travis Matthiesen, CFO

No. Great point, Clint, I would just reiterate. First and foremost, obviously, the cash consumption this year is predicated on growth. Again, continuing to accelerate our growth rate. The other important piece is, again, we gained kind of the full year guidance as of 12/31. Because of the seasonal nature of our business, what that $60 to $80 million represents is, again the cash that we will consume during the peak period. While our payback period is within one year, a lot of that payback will start coming in Q1 as we get that first initial commission, as well as start to receive renewal commissions from our book. Again, I think that combination of growth combined with the seasonality of the 12/31 guidance we're given are the two biggest drivers there.

Operator, Operator

Thank you. Our next question comes from Steve Valiquette with Barclays. Your line is now open.

Jonathan Yong, Analyst

It's Jonathan Yong now for Steve. Just in relation to your LTV outlook through mentioned that the large carrier may impact LTV a bit because of the mix. Is it something unique about the products that you're adding where the population you're targeting in terms of wide LTV would be somewhat negatively impacted from that regard? And then just quickly on, do you have any data on just to recapture for members that did churn off?

Travis Matthiesen, CFO

Yes, so I could start. So from a new carrier addition, obviously, as we think about adding new carriers, we may come in at lower commission rates. It takes a while for ramp up and agent really, the agents and the carrier on the platform. There may be an initial period of time where we see lower conversions potentially higher churn as our agents become educated and fully understand this plan. So, we've taken more of a conservative approach, from an LTV standard and think about how we plan and scale this out. We obviously won't roll out new carriers to the whole business, we'll start, we'll test, we'll learn, we'll ramp up, we'll gather data and grow from there. But I think it’d be just prudent for us to take much more of a conservative approach as we roll these out. That will shift over time as we learn the data, gain scale and grow from there. That's just how we think about new carriers and to that point, touching on the new agents.

Clint Jones, CEO

To follow up on the recapture question, as we think about recapture, we think about those consumers that are going to leave us. Travis mentioned the 30,000 consumers that we talk to with our TeleCare team on a monthly basis. We're engaging with consumers and we're using our predictive analytics to figure out which consumers we need to reach out to based on the likelihood that they will turn based on the product they selected and how we determined that product fits score using our technology. As we reach out to the consumers, we find that either they call us or we call them. We end up with about a 25% fail rate of those consumers that we speak to that are looking to cancel their plans.

Operator, Operator

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

Tobey Sommer, Analyst

I wonder if you could give us a little bit of color on your experiences in agent productivity in a virtual setting, and maybe give us a context of how it compares a year ago? And what your assumptions are for that productivity, as we head into the fourth quarter?

Travis Matthiesen, CFO

So it's a great question. Thank you. So obviously, yes, managing a remote workforce is creating unique challenges. And I think it's going into COVID and kind of moving everybody to a virtual, we really didn't know what to fully expect. The good news is productivity has stayed the same and even increased in many cases. If I look at our last several years AEP increases in conversion, we expect a modest increase this year, but it's not all driven by just the agent activity. Last year, we rolled out lead routing and plan matching capabilities, that really helped understand agents characteristics around what they sell the best, whether that's from a marketing source or a type of consumer. That data set has grown and we've gained more insight, which allows us to better match prospects with those agents. We are really excited about that as we get agents on board. In years past, we had a lot of hiring right before AEP where we didn't know a lot around these agents and their capabilities. Luckily this year we were able to get people on board sooner so we can learn more about that, which we're really excited as we get into AEP. We are devising ways to ensure the same energy that we typically see in our call centers during AEP. We can transfer that to in-home. We've got some really unique solutions we've been working on and testing that we've seen we are really excited about. This is going to be one of the challenges as we get AEP—you maintain that same momentum and energy levels at home, but we feel that's a really, really great way to do that.

Clint Jones, CEO

Yes, and I would just add, briefly, kind of two key metrics that we look at when we talk about measuring agent performance. We look at agent conversion rate, their ability to submit applications off of the qualified opportunities they receive, as well as their sales per agent per day. In Q2 of '20, over Q2 of '19, we've actually seen increases in both of those metrics. So those are two key reading indicators that we're very excited about as we continue to operate in this remote and post-COVID environment.

Tobey Sommer, Analyst

Thanks. If I could ask another question. You seem very enthusiastic about the non-commission sources of revenue and the new platform. If possible, could you give us some examples of what the new platform could unlock in terms of those opportunities? Thanks.

Clint Jones, CEO

Yes, absolutely, and we are extremely excited about it. I think especially now with this more telehealth and virtual capabilities, you think about the senior population that's much more vulnerable and our ability to make an impact there, virtually over the phone, that really gets us excited about how we can help folks out. A couple of examples that we can talk through, when you think about a health-risk assessment, right, really understanding once somebody is enrolled. We can help our carrier partners at the time of enrollment. We take them through a health risk assessment process, and deliver that new member to the carriers, they know exactly who that consumer is. Do they need immediate follow-up? Do we need to get them into a chronic care program? Do we need to get them in a prevention program? So, it really dialed in a much faster connection with that customer around that carrier and that plan's need, so that's one example. Enrollment and value-based care models. Obviously, there's a big industry shift into value-based care. We can help these consumers understand and enroll in value-based care models. We screen for social determinants of health. Obviously, with isolation during COVID, there's a big risk there from a mental health standpoint that we can help identify and go from there, other things around understanding their transportation needs to get to a provider and back, somebody can't make it to a doctor's appointment from a preventative care standpoint. How do we impact that? Meal delivery, right? If somebody is in a situation where they can't get to the grocery or they don't have the means, especially during COVID, is there an opportunity to set that up? These are all potential revenue triggers for us and where we can not only help the carriers but also the consumers as well. It’s a great ecosystem that we get really excited about, and we've got a list of unique services that we'll be adding to this platform as we move forward.

Operator, Operator

Thank you. And our next question comes from Lauren Cassel with Morgan Stanley. Your line is now open.

Clint Jones, CEO

Lauren, you'd like to unmute? Operator, okay, go ahead.

Operator, Operator

And our next question comes from Michael Cherny with Bank of America. Your line is now open.

Michael Cherny, Analyst

Good evening. And thanks for all the color so far. I hate to go back to this churn question, but because I know it's been the dominant topic. You talked about no real material changes also expectations. I guess, just on a more straightforward question. Can you tell us those up or down on a like-for-like basis?

Travis Matthiesen, CFO

Yes. Again, our churn rates have been relative to our expectations. Again, when we talk about our expectations, those were the LTVs that we recognized in books. We have not seen a material change. I would just, again, point back to what Clint mentioned earlier is that churn is not the only driver of LTV, it's carrier mix, it's consumer mix and geography. Again, based on all of those factors, our LTVs have been in line with our expectations as evidenced by our cash collections today. Thank you. Our next question comes from Steve Halper with Cantor Fitzgerald. Your line is now open.

Steve Halper, Analyst

If I'm doing the back of the envelope math, it looks like Medicare was around 93% of the commission revenue line. Is that correct? And then just generally, can you just talk about what your expectations are around the non-Medicare commission revenue going forward?

Travis Matthiesen, CFO

Yes. So, you're right, your hard folks have been on Medicare. That's where we've continued to see the opportunity, right above 90% at this point. We will continue to drive and invest in that strategy. Around other revenue, it will grow, but we don't expect it to grow as a percentage of overall revenue, just because our revenue streams from commission will outpace that pretty dramatically, but it's still a very important metric and part of our business. I think about our future opportunity, with additional enrollment fees or agent payback periods around Encompass strategy. We see, obviously not a meaningful amount of revenue this year per se where actually we're ahead of thought we'd be. As we get into 2021 and beyond, we get really excited about what that can deliver.

Operator, Operator

Thank you. And the last question comes from Lauren Cassel with Morgan Stanley. Your line is now open.

Clint Jones, CEO

I just wanted to ask about the new partners that you added. Is there any way to sort of quantify or help us think about your full year revenue guidance in terms of growth from new versus existing partners? And then, you mentioned Kaiser and some other smaller carriers that you're adding. Over the next, I guess, several quarters, is that a 2020 story? Is that more 2021? And then my follow-up is just on the agent side. Are there any stats that you can give around agent retention? Yes, I'd like to carry one first. So, we added United kind of around the beginning of Q2, and really focused on the SNP population and where that is. That's obviously grown as we kind of gone throughout the year. Some of the other carriers, we're not going to add until later on in the year to begin to AEP. We don't believe it'll be a meaningful part of this year as we think about, adding a new carrier. You really have close to a year to get fully integrated, build all the technology capabilities, all the reporting, all the data, training agents, get them up to speed and go from there. So, we don't think there's going to be, kind of a meaningful change necessarily this year. But as we think about future years, and with that kind of carrier concentration looks like we think there'll be a much more diversified. The question on agent churn, so our top, let's kind of break it down into cohorts. And obviously if there's a good churn and bad churn so our top kind of cohorts of agents that are strong performers, we see very little churn. By design, they have strong kind of commission model setup that are really around retaining not only the consumer but retaining the agent through future opportunities with the business they write for us. Now on the flip side, if there is lower end of that there will be forced churn and that's really driven around performance that we're constantly evaluating, how they perform, and there are certain expectations and standards we need to hit. I think that goes as in any other sales organization out there, how they would manage that population around performance.

Travis Matthiesen, CFO

And just to add to that, when we think about LTV to CAC, we look at LTV to CAC even of our agents. We look at how our agents are performing, and to Clint's point. Our top performers continue to be rewarded and have really great careers with us. We tell them to lose those agents, but we do aggressively manage or bottom performers.

Clint Jones, CEO

Yes, I would just add, as we think about, again, the back half of the year and the forecast we gave, we have a plan of having a little north of 2,000 licensed agents enrolling consumers into plans. I'm happy to announce that where we sit here today 96% of that workforce has been hired. As we think about the seasonal nature of our business, we've been very successful at onboarding, adding, and training our agents early in the process and we're really excited about the opportunity it can drive this upcoming annual enrollment period.

Operator, Operator

Thank you. And the last question comes from Yaron Kinar with Goldman Sachs. Your line is now open.

Rob Cox, Analyst

Hey, guys. This is Rob Cox filling in for Yaron. But I just wanted to ask, we got some updated views on online enrollment from some of your peers, and I just wanted to know. What percent of your policies are enrolling online in this new environment and to what extent are you investing in this capability going forward?

Clint Jones, CEO

Great question. We really focus and believe that connecting consumers to a licensed and trained expert is the right way to go now. So that's where the majority of our enrollments occur. We obviously have the technology that a consumer can enroll on their own and we do get some, but it's a very small part of our business. We do have the ability that will redeploy kind of a more aggressive strategy kind of an agent-assisted or kind of an emailed enrollment packet during peak times, especially during AEP, around deadline days or deadline weeks. So, if we have a huge call queue, we can enable our agents to talk to the consumer, help them choose a plan. But as opposed to enrolling them over the phone, we can then send them an electronic capability where they can do it themselves, which enables our agents to get back on the phone with the next consumer as our call queues are higher; we can bring them down. There are periods of time during AEP where we will deploy that technology that's very successful. We believe over time, we'll see more and more people enrolling online. We don't think that trend has occurred yet, but we have the capability of doing it and we'll continue to monitor it. Our best characteristics around our LTV to CAC still remain strongest when talking to one of our experts. Great. Well, thank you very much to all of you for joining us for our second quarter earnings call, and please feel free to reach out to us with any additional questions that you might have. Take care.

Operator, Operator

Ladies and gentlemen, that concludes today's program. You may all disconnect. Everyone have a great day.