GoHealth Shares Drop 6% After 2Q Loss

GoHealth shares are declining almost 6% in Thursday’s pre-market trading as the online health insurance company incurred a 2Q net loss of $22.9 million after posting net income of $15.3 million in the prior-year period.

Meanwhile, GoHealth (GOCO) saw a 71% surge in 2Q revenues to $127.1 million, surpassing Street estimates of $123.98 million. Revenues were driven by strong Medicare Advantage enrollments, the company said. Adjusted EBITDA of $26.9 million rose 56% from the year-ago period.

Looking ahead, the company expects 2020 revenues in the range of $840 -890 million, versus the consensus estimate of $860.6 million. Adjusted EBITDA in 2020 is forecast to be in the range of $265 -290 million.

GoHealth CEO Clint Jones stated, “Given the trajectory of our business and the investments we have been making in our direct-to-consumer marketplace, we believe we are on track for another record year of results in fiscal 2020.”

On Aug. 10, RBC Capital analyst Frank Morgan initiated coverage on the stock with a Buy rating and a price target of $22 (15.7% upside potential). Morgan said that the company is the leading DTC (direct-to-consumer) insurance distributor of Medicare Advantage plans and is catering to a “large and underpenetrated market.”

The analyst pointed out that GoHealth appears to be unaffected by the COVID-19 pandemic or the economic slowdown. He added that the company should emerge as a “key segment leader” given its relationships with insurance carrier customers.” (See GOCO stock analysis on TipRanks).

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 9 Buys and 1 Hold. The average price target of $23.11 implies an upside potential of about 21.5%.

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