Ladies and gentlemen, thank you for standing by, and welcome to GoHealth's Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference to your speaker today, Jay Koval, Head of Investor Relations. Please go ahead, sir.

Thank you, Joelle, and good afternoon, everyone. I want to thank each of you for joining us today for GoHealth's third quarter earnings call. 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 closed today, we issued a press release containing our results for the third quarter of fiscal 2020 in addition to presentation materials that Clint and Travis will walk through momentarily. Both the release and the slides can be found on GoHealth's website under the Investor Relations tab. In the press release, we have listed a number of risk factors that you should consider in conjunction with our forward-looking statements. Other significant risk factors are described in our Form 10-K and 10-Q reports filed with the Securities and Exchange Commission. During the 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 operation are contained in the press release and investor presentation. So, with that, I'd like to turn the call over to Clint.

Thanks Jay. Thanks for joining us all on Veterans Day. We're excited to be here to share an update on the business. As Jay mentioned, we have posted a slide deck to our website that we will walk through before we open up the call to Q&A. I'll spend the majority of my time explaining what makes GoHealth unique and sets us apart in the DTC Medicare market. But first, let me share some quick highlights from our third quarter as well as a revised outlook for the full-year now that we have the first several weeks of the annual enrollment period under our belt. Turning to Slide 4, I first want to thank all of the GoHealth employees for their hard work and effort to prepare us so well for AEP in a year that has been filled with unknowns. Our team really came together in 2020, demonstrating resilience and positioning us to capitalize on the significant long-term growth opportunities for GoHealth. While Q3 is typically our smallest quarter of the year due to the seasonality of the Medicare market, we grew revenues 52% in the quarter, a continuation of the strong first-half trajectory, resulting in a 72% year-to-date top line growth. Adjusted EBITDA of $39 million came in ahead of expectations as we expanded our industry-leading margins from 15% to 24% and generated positive operating cash flow of $33 million in the quarter. And on the persistency front, our investments over the last year are yielding strong results, helping drive a 5% increase in LTVs during the third quarter. These results continue to set us apart from the competition. We delivered these solid results by also investing in the drivers of future profitability, including preparing for this year's AEP. We enhanced productivity of an expanded virtual agent base,…

Thanks, Clint, and good afternoon, everyone. Starting with slide 13. As Clint referenced, we couldn't be more pleased with the operating leverage we delivered through our rapidly scaling customer acquisition and retention funnel. Revenue grew 52% and adjusted EBITDA margins expanded to 24%, resulting in Q3 adjusted EBITDA growth of 142%, ahead of our own expectations. We also delivered positive operating cash flow during the quarter of $33 million, a strong increase over the prior year and helping us fund the AEP growth we anticipate delivering this year. Turning to slide 14. Our Medicare Internal segment grew revenue 112%, through the combination of commissionable growth and enterprise revenue. We also delivered this growth while realizing great success in our ongoing persistency efforts, resulting in an LTV increase of 5% in the third quarter. As you know, COVID created some challenges for traditional sales models. As a result, carriers have increasingly turned to us to address their business challenges through direct sales programs, marketing initiatives and overflow arrangements. These integrated partnerships helped increase our enterprise revenue in the quarter. COVID has accelerated a shift to our model that was already in motion and we believe, will result in continued growth in our enterprise revenue streams over the coming years. Internal commissionable revenue grew 73%, solid growth considering we purposefully allocated more agents to enterprise programs, increased training and tech onboarding in preparation for AEP, and delayed certifying agents for 2020 versus 2021 plan. So we could maximize productivity in the fourth quarter. Put another way, the incremental revenue and profit potential from more efficient and effective agents in AEP far outweighs the opportunity cost of some lower valued Q3 business. As evidenced by the 83% submission growth during the month of October. The continued reallocation of resources towards our highly profitable…

Thanks, Travis. To wrap things up, we feel really good about our year-to-date results and upgraded 2020 outlook, driven by our differentiated business model. Slide 21 is a simple way to describe what we have achieved in just five short years and why we believe we are so well-positioned to continue to deliver sustained growth over the coming years. We operate in a large and fast-growing market with commissionable TAM of $28 billion as MA gained share. We have grown quickly to become the largest DTC marketplace in this sector with TTM revenue of $720 million. We have grown efficiently delivering TTM adjusted EBITDA of $230 million, margins of 32% and EBITDA growth of 212%. Another indicator of our efficient growth is that we were able to deliver positive operating cash flow over the last 12 months. And we have not sacrificed quality, as year-to-date, LTVs are up 2% thanks to persistency gains on the heels of our carrier and TeleCare investments. These are industry leading metrics, no matter how you slice it, and we couldn't be more proud of what our teams are delivering through the winning culture at GoHealth. Even more exciting is that we are just scratching the surface of the long-term growth opportunity as the team executes against additional enterprise revenue opportunities, while increasing our efficiency. The best is yet to come for GoHealth. So during a period, when our teams are working early mornings, late evenings and weekends, I want to thank all our employees and say how much we appreciate your efforts as we help consumers find the best plans to meet their needs and create value for our carrier partners and shareholders as we march towards another record year of results in 2020. I also wanted to share a big thank you to all of our veterans who have helped serve our country over the years, including the many that work at GoHealth. We appreciate all you do for America. So with that, let me turn the call back over to the operator, so we can address your questions in the remaining time.

Thank you. [Operator Instructions] Our first question comes from Jailendra Singh with Credit Suisse. Your line is now open.

Hi. Thank you. Just a clarification on the revenue mix. Revenue clearly came in better than at least our expectation and I think better than Street as well. But the difference is happening between the mix of commission, other, which you call now enterprise revenue. How would you describe the mix in the quarter compared to your expectations? Because our understanding was that, in second quarter the submission policies and commission revenues were impacted by some licensing issues, so there was expected to be a step-up from Q2 to Q3. Just help us understand the mix compared to what you were thinking on commission versus enterprise revenue?

Yes. Jailendra, that's a great question. So yes, as we discussed in our Q2 call, we did see some licensing delays due to COVID shutting state licensing departments down. As we saw in the summer, more and more of those opening up and those licensings coming to fruition. We also made the strategic decision to take a subset of those agents, once we got into August and September, to get them certified for 2021 plans, so they would not sell during Q3, and we put them back through additional training. We also were able to put them into some enterprise programs in the quarter, which we did see the impact of that revenue increase. And then now we've seen those agents come back into some of the internal Medicare programs, you've seen an 83% kind of growth year-over-year October versus October submissions as we look at the first part of AEP. So really excited about that. It was more of a kind of a timing issue with the state licensing being shutdown and our decision to kind of move those agents. And Travis, do you want to add anything to that?

Yes. I would just add, Clint. As you think about the overall commission growth on the internal side or our Medicare-Internal side, those submissions, despite what Clint just mentioned of being strategic on how we allocated them, still grew 73% quarter-over-quarter. So as you think about kind of the commission growth line item, a lot of that was more driven by the external segment, which we mentioned kind of were hit a little bit harder with some of those COVID-related delays that moved to that just-in-time hiring prior to AEP.

Okay. And then one follow-up on your enterprise program expansion to 26 programs now. Does the third quarter fully reflect the full revenue potential from those programs? How should we think about the run rate going forward on that line item? And is this increased interest from insurance carriers on – in this program, is this anywhere related to the fact that COVID is impacting the traditional mom-and-pop independent brokers, so they want to work more closely with you on these enterprise expansion programs?

Yes. No, that's a great question, and you're absolutely right. We've had deep integrated carrier relationships for many years even dating back to the – started of the ACA in 2014, where carriers came to us for outsourced solutions and what have you. So we saw the same thing this year. I think carriers realize the wrapping and evolving distribution landscape that they had relied on for years and some of those changing. And I think that shows the power of our platform, our ability to use our underlying core technology and agent force to really partner with carriers and help them enroll members in unique channels. So we kind of equate this to how people buy an airline ticket. You might be loyal to American Airlines or United and go directly to those sites, or you're going to look for a price comparison model, like a KAYAK or Travelocity. Consumers buy Medicare products and -- research Medicare products the same way, and our platform has the power to essentially work in both of those channels. And you've seen that and this really pick up in Q3. We get excited about the remainder of the year and as we talk about new programs, especially our Encompass programs as we get into 2021 and beyond.

Got it. Thanks, guys.

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

Thanks so much for taking the question. I kind of want to comment to Jailendra's question a different way, but also tying into the 4Q implied guidance. So if I'm hearing you correctly, clearly, it seems like you sacrificed versus your initial expectations some Medicare Advantage internal approved submissions. Is that the way to think about how the quarter shook out in terms of that transitioning of resources into the Encompass platform?

Yes. I think one thing to note, in the Medicare world, you have to get an agent licensed in the markets they sell in. They have to be appointed with the carriers they sell, but they also have to have an AHIP certification to sell. And the way the certification works, it's by plan year. So if we get somebody licensed and ready to sell, let's say, August 1, if they want to sell Medicare August and September, they have to have a 2020 certification. And if you – if they started selling AEP, they'd have to get another certification for 2021. So we decided with a subset of our agents that were kind of new to the phones to put them through additional training. They could leverage some of the enterprise programs we have to help our carriers out and then ultimately get them certified for the 2021 plan, so that we're ready to sell in AEP. So the answer is, you're right. We basically said, hey, we're okay sacrificing some enrollments during Q3 to equip our agents to be more successful in Q4, which we're now seeing those results pay off. And Travis, is there anything you want to add?

Yes. I would also point out that as you think about the CMS-approved commission rates, those are for the 2021 plan year. So when you're talking about that trade-off that Clint mentioned, the LTVs based off of those increasing commissions for the plans we're selling in Q4 with the 1/1/21 effective date are obviously worth more than the Q3. So again, a strategic investment there that is paying off here with the volume increase we're seeing here in October.

I appreciate that. And then, I guess, just one other question kind of building on that. You talked about the strong start on AEP enrollments, which is great to see so far in October. Just to make sure I clarify, are those – that number you gave, the 83% internal submissions and then along those lines, the comment you made about the implied 4Q revenue, is there anything we should think about in terms of how that factors into your expectations for LTV? Or is that just tied to other revenue sources across the P&L?

Yes. So that 83% is our internal submissions. I think that, we're going to take a prudent approach as we think about the remainder of the year. Obviously, October, AEP is only two weeks of October. And we've got a long way to go. We're really excited about the position we're in. We're seeing our teams really come together and work and improve results day-over-day. And this is not our first AEP, and we understand that goes into it. But you tend to see a big surge after Thanksgiving as well. So like I said, we are excited to be in the position we are in. But we have a longer way to go for the remainder of the year.

Yes. And I would just -- this is Travis. I would just mention the last part around LTVs. Again, we're excited about the growth we've seen in persistency. And what we've illustrated here in Q3. We're expecting those same increases here, as you think about year-to-date of that 2% growth in LTVs year-to-date. Again, the growth coming from the volume, as Clint mentioned, with the 83% more so, than the unit economics around the LTVs.

Appreciate. Thanks.

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

Hi guys. Thanks for the question. I guess sort of similarly, I just wanted to dig in a little bit more on the LTV strength in the quarter. Your graph in terms of the year-to-date numbers was super helpful. But just in terms of anything specific in terms of like carrier mix, et cetera, that you would point to that specifically drove that like 9% your sequential acceleration in LTVs. Thank you.

Yes. No, it's a great question. I think it's a combination of a lot of things we've been investing in this year. And as you know, we've added a lot of carriers in -- I think, in years past, there's a lot of times when consumers came in, looking for a particular carrier that we didn't offer. Now we obviously offer a lot of the plans. So that will increase persistency, increase LTVs, increase effectuation rates. We've got improved technology that we've invested in around doctor lookup and drug compare capabilities, that really help put our consumers in the right plans, as our agents talk to them over the phone on their needs. And I think another thing that we've -- we started last year is the, investment in our TeleCare platform, to really help engage consumers, and make sure that they understand all the benefits they have available to them in their plan. And quite honestly, a lot of consumers just don't know everything they have. And it's -- we feel it's our job to better educate them and make sure that they do know all the things available to them. And maybe it turns out the plan they're in is not the right plan. And we can ultimately help them find a plan. Taking that methodology ultimately has helped improve our LTVs. And we see that is an opportunity for us to continue in the future.

Got it. That's helpful. And then when we think about the agent -- additional agent training you mentioned in the third quarter, what specifically are you seeing as a result of that training in the fourth quarter? Would you say the biggest impact is on -- seem to be on like persistency, or close rates? Or how do you think about that?

Yes. So the -- it's a great question. And I think this year is a little unique as well, simply because of the full ramp-up from a work-from-home model, where in years past, a lot of our training had been in person, which we could have a different hand on. But, our teams really pulled together and created an amazing kind of virtual training experience that has led to increased conversion rates and improved effectuation rates at the same time, which really highlights in our results that we're super proud of. And we learned a lot, right? We think there's a lot of things we can continue to improve on, as we look at 2021 and beyond. But I think we're in the kind of the early stages of seeing what that can actually do.

Got it. That's very helpful. Thanks.

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

Great. Thanks. I guess, just following up on, some of the earlier questions. Just taking a step back, the mix of internal versus external submissions and then the other enterprise revenue piece were very different, than maybe consensus expected or was communicated a few months ago. So has there been any change in strategy of how you think about balancing those three pieces of the business? Or is it purely just COVID-relating timing changes, training, things like that?

Yes, there's really not been a strategy change. I think that, we approach the market uniquely, and our platform allows us to do so. And kind of by working with carriers on what they're trying to achieve, we have the power to go after each of those different areas. I think, as Travis mentioned, the one thing that was a little bit out of our control this year, was the licensing delays that we experienced in kind of Q2 and early Q3. That's just off the forecast, right? Nobody could forecast COVID would pop up. But we saw opportunity. We're able to partner with our carriers to develop good strategies around helping them grow their membership base in Q3 and ultimately now in Q4. So as we think about kind of our full year and just the numbers that we need to hit, we're really confident on bringing those both, internally and with our enterprise programs, now that we've seen those, uptick as well, so no change in strategy. Again, we'll take the approach that we really partner with our carriers, to really help them maximize the needs they have. And that's how we've always approached things, and that's how we always will.

And I would just add, Clint, to that timing piece, as it relates to the external side, we've shared some of the internal metrics. On the external side, in that same period here in October as we've started AEP, we're seeing an increase on the external side of 31% quarter-over-quarter when looking at last year, so again, mainly around on the external side, again, that timing of them moving to a just-in-time approach of bringing their agents on right before AEP, as Clint laid out with some of the COVID-related delays.

Great. Thank you.

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

Good afternoon. Obviously impressive growth. I'm curious about the attribution you would associate with the new carrier relationship you have versus just the absolute number of brokers you have in place. And what would history tell you in terms of how long it really takes to see a larger impact by introducing new carriers would be my first question.

Yes. You may have to repeat that. I think the question was around the new carriers. But can you just -- can you repeat that? Sorry, it was kind of--

Yes, I'm sorry. I hear there's feedback on my line. But yes, it was around the growth that you've seen so far in October from -- during the AEP. How much of that do you really attribute just to having new carrier relationships versus just the sheer growth in number of agents out there? And I was just real curious about any more color around that relationship between the increase in these carriers and persistency. That was my first question.

Yes. No, that's a great question. And I think it really starts off at the top of the funnel. We've seen more call volume come in than anticipated. So, we've seen kind of a higher top of the funnel. We obviously have more agents than we did last year. Those better -- those agents are better trained, better equipped and converting higher. And we also, on top of that, because we've added such a strong carrier mix to the platform, we really have a product for everybody and I think that's ultimately, helping drive a lot of the results. As you recall, we've only been in the Medicare market for five years, and it's -- as we ramped up the business, we've taken our time to really add to the marketplace from a carrier footprint standpoint. And we feel we have that now, and we feel we're getting optimized to where we need to be. Obviously, there's a lot of room for improvement, but we're really excited about the growth we saw thus far in AEP.

Do you feel like what -- based on what you've seen so far, when you think about the normal weighting or distribution of your either revenue or earnings, do you see any differences in how that would potentially play out in 2021?

As far as the distribution of the carriers?

No, just -- I'm sorry, just the distribution of your revenues and your earnings, like the weightings across the course of the year.

Yes. So, right now, we're not giving 2021 guidance by any means. Just at a high level, from a strategic view, we see this market evolving faster from the traditional distribution models that may have been pre-COVID to where we are. And we think that it's a massive market and we think there are several players that are positioned to do well here. And we're obviously excited to be kind of the leader in that area and we think there's tremendous amount of upside for next year.

So, one of the things that a lot of the actual carriers talked about in earnings is the expectations around plan switching. So, I'm just curious, do you think plan switching will have any effect on your overall churn or your persistency? And then final question, just any comments on the Walmart entry? Thanks.

Yes. Good question. So, yes, so the benefit we have now is we have more carriers than we did in years past. So, if consumers are talking about -- and we do a Plan Fit Check with all of our customers. So, if we do find a customer that's not in the right plan, we do have the opportunity to help them move to another plan. We've not seen a material change, though, in that kind of year-over-year as we entered the first part of AEP. And we're right now just obviously seeing kind of really, really strong growth in the platform. And Travis, anything to add to that?

Yes, I would say you're exactly right. Carriers are investing heavily into their benefits to differentiate themselves. And as Clint mentioned, in aggregate, we have not seen a change in overall churn, but what we have seen is that churn by carrier, by state and even by county varies dramatically because of the competition and the benefits that these carriers are offering. So, for us, what does that mean? I think it means two really important things. I think, first, it validates our marketplace model because consumers want the education and transparency and choice, given some of the changes in the market. And then I think, two, it validates the investments that we've talked about, right, investing into TeleCare to educate them and investing in our carrier footprint knowing that we can see those churn characteristics vary pretty dramatically based off of even county, based off of carriers becoming more and more competitive with their benefits.

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

Thanks for the question. Just going back to the enterprise revenue for a second, the $62 million that you posted in the third quarter, is that the right run rate that we should think of for 4Q? And kind of is there any seasonality to this? Because, obviously, it has ramped up pretty dramatically over the years, so I just want to get a sense of how we should be thinking of this revenue growth right now.

Yes. I'll take part of that and Travis, you can add to it. But yes, from a seasonality standpoint, I mean, obviously, kind of the Q4 with AEP, you'd expect to be larger as that's where a lot of the activity is happening. I think that we saw a nice shift in Q3 from a lot of the trends in the market, some of the disruptions we've seen with traditional distribution models that we expect to continue throughout next year. So, we're really excited about that. And then, Travis, anything you want to add to that?

No. I would just reiterate Clint's exactly right. While we're excited about the growth here in Q3, we expect that to continue to grow here into Q4. And as we think about all those additional Encompass offerings combined with the new carriers we've added to the platform. To Clint's point about a larger pond to fish, we're excited about the opportunities that, that presents in 2021 and beyond.

Okay. And kind of sticking along that, and I believe Lauren asked this, just on the strategic view of that, I mean, based on at least what we see from the outside here is that you're going to allocate probably more resources into enterprise, call it, in the 2Q, 3Q periods when things are a little bit slower. Is that the right way to think about where the enterprise is going to be a little bit more pronounced mix versus what -- kind of what us on the Street have kind of thought about?

Yes. I mean, I think it's an ever-evolving market today. And I think as carriers think through and invest in their distribution strategies now and in future years, I think the power we have and the relationships we have will evolve with that as well. I kind of went back earlier to how consumers shop. And we're really well positioned to help those consumers, whether it's a multi-carrier experience or a kind of a white-labeled single-carrier experience to help the consumer and the carrier out. So we're excited about the discussions we're having with existing partners about growing their channels and new partners as well as we think about 2021 in growing the enterprise revenue.

Okay. Thanks.

Thank you. Our next question comes from Steve Halper with Cantor. Your line is now open.

Yes. Hi. Just going a little bit further on the enterprise revenue. Could you provide some specifics in terms of the components and sort of the revenue model around that especially now that -- especially in the quarter, it was a bigger contributor than we had expected? And the second part of the question is, as more of the agents go back to focusing on submitted applications, does that mean we'll see a fall-off in Q4 for enterprise revenue. So it's a two-part question.

Yes. So I'll take the latter half first. So we shouldn't see a fall-off in Q4. Obviously, from an enrollment standpoint, activity standpoint, much more heavily weighted in the Medicare season from a Q4 standpoint. So that's -- we're obviously, seeing opportunity there. And as we think about the mix of what those programs look like, we talked about in our script, we have 12, we call, kind of direct sales programs with carriers where carriers actually send us all of their web traffic, their calls into a team that we power with our technology platform, and it's kind of software with a service model, helping enroll consumers and plans. There was also a very large retention effort in Q3 as well helping carriers with that and other items. So, we see that as an expanded opportunity there. And then we also have built out eight unique marketing programs with carriers as well where we can get really pinpointed in by geography to help them gain customers down to a little bit the accounting level. So we sit and we kind of -- as a consultative approach on how they want to grow their members, and it may be based on how well their certain plans are positioned in a particular year or where they want to focus on membership growth. And we can give -- because of our size and scale and efficiencies, we can really help them gain membership.

Okay. So just to repeat that so when we think about Q4, we shouldn't expect -- we should expect sort of the same level of enterprise revenue as you reported in Q3?

That's correct.

Okay. Perfect. Thank you.

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

Hey, guys. Thanks for fitting me into your call. I'm calling in for Greg Peters tonight. Can you guys hear me?

Yes.

Yes.

Yep.

Excellent. Many of my questions have been answered. So, I guess, big picture with the potential pass for the election is now nearing, maybe give us an updated perspective on how a particular change in the White House can impact your business and the Medicare market overall.

Yes. Another good question. At a really high level, both Republicans and Democrats are in favor of Medicare Advantage. And obviously, that's our biggest market. So we don't see a material change there. And even with what looks to be a kind of split congress and government, we believe it's kind of business as usual for a period of time. Where Biden especially has been focusing on as the kind of improvements or making changes to the Affordable Care Act, which is obviously the under 65 business, that could be an opportunity for us. We've left that business or call it, on autopilot for the last several years with the assumptions that something may happen where that is a much more attractive market for us to get back into. So that could be an opportunity. It's also discussed lowering the age to enter Medicare to 60, again, not in our plans but just a potential opportunity we should be thinking through.

Excellent. Thank you. That's good color. A couple of modeling question, guys and building on Elizabeth's question on slide 16. But if we just take a step back and look towards 2021, I'm just curious what the balance will be of these factors if -- and impacting LTV next year. Will the carrier mix and plan type still be a headwind to 2021 LTV? And then the second modeling question is just around your commission receivable on your balance sheet. If I look at it on a sequential basis, it was up 13%, but net revenues on a sequential basis was up 29%. So maybe how should we think about your commission receivable? How should we think about it going forward?

Yes. I'll take the first part of that question and pass over to Travis for the commission receivable side of it. But yes, you think about any time you add a new carrier, there's a lot of unknowns, agent training, technology initiatives and builds, as you understand and roll out that product, which we think that most of that has passed us at this point. We're seeing the optimization of those plans. We're seeing great improvements in Q4. We mentioned a third of our new volume in Q4 is coming through these new partners, so we expect that to be an opportunity of growth in 2021. Same thing with plan type. Obviously, the D-SNPs or the special needs population is a different member. We've actually seen really great improvements on retention and persistency’s in that market with different things we're doing through our TeleCare initiatives. So we do see that as an upside opportunity as we think about 2021 as well.

Yes. And I would just add, as it relates to the commission receivables sitting on our balance sheet, so one unique thing to understand about kind of how commissions are paid by carriers, is that to the extent that it is a current year plan, they will pay kind of that full amount of year one commission immediately following the sale. So as you think about kind of the timing and the puts and takes of movement in the balance. In Q1, as an example, we will start -- we will receive all of our year one commission for the new business we've written as well as start collecting the renewal commissions on a month-by-month basis for all of our old vintage business. So Q3 is a little bit unique when you're looking at the growth of revenue versus the growth of the receivable just given the dynamics of how commissions are paid by the carriers as regulated by CMS.

So just to finalize that point, so outside of 3Q, should the commission receivable growth be more aligned with net revenue growth or maybe just a commission revenue line item?

Yes, exactly right. It would follow the commission revenue line item, and then the other portion of that is then the timing of the collections of the commissions with year one commission being paid in Q1 as well as the renewals relating to our old books beginning in Q1 as well.

Excellent. Thank you for your answers.

Our next question comes from Yaron Kinar with Goldman Sachs. Your line is now open.

Thank you and good evening, everybody. I guess I want to start with, I guess, going back to the commission revenues. I just want to make sure I'm thinking about this correctly. So Travis, I think I hear you talking about kind of the beginning of AEP being pretty strong and maybe even better than expectations. But at the same time, if I look at the overall revenue guidance for the year, it's relatively -- you took the lower end of that range up a bit, but the upper end remains unchanged. So I guess if I put all this together and look at the maybe slightly lower-than-expected commission revenues in the third quarter, it sounds like you're still not necessarily expecting to make up for that fully in the fourth quarter. Is that right?

Well, I would just state, again, we're very encouraged by the trends we've seen here at the beginning of October, but we're going to continue to be prudent knowing that October just represents the first two weeks of AEP given the volume that we do here in November and then the last week of AEP being the first week of December. So again, we're very encouraged by the commission growth we're seeing as evidenced by the 83% increase in submissions, but again, we're going to be prudent with the guidance we provide.

Okay. And then my second question, just looking at marketing costs and tax spend this quarter, it was up a bit. Is there -- are there any one-offs there? Any way to think about kind of a proper run rate to think about into next year?

Yes. So real quick, just to make sure on page 7 of the release, we gave the breakdown of the share-based comp. So I just want to make sure you're first making the adjustments there as it relates to share-based comp. But then, two, to the extent that you are, as Clint mentioned, a portion of that enterprise growth this quarter was around those direct carrier marketing campaigns that we mentioned, which obviously manifests itself in the marketing cost there. And then again, as much as we've mentioned, the growth that we're excited about, that we've seen in Q3 and this year, we're continuing to invest in our team and our platform as we think about Encompass and other initiatives in 2021 and beyond. And so that's kind of the put and take there as you think about the increases you've seen.

Okay. That's helpful. And then final quick one. Is there any way for us to think about the LTV to CAC for the external channel as opposed to the internal channel, how the 2 compare?

Sure. So, if you think about the external channel, the external channel is all compensated via a revenue share arrangement, meaning for every dollar of commission or LTV revenue, they're compensated the corresponding revenue share. And if you think about that revenue share that those are contracted amounts that range anywhere between $0.75 to $0.90 on the dollar. So again, the LTV to CAC isn't as helpful of a metric there because, ultimately, that's a locked-in rev share that, again, as they perform and write the policies, they'll get that corresponding rev share, which is why when we see any movement, either positive or negative, relating to that volume from the external channel, margins remain relatively unchanged because, again, our external channel is more of a strategic initiative we do, where we can drive more volume for our carrier partners through kind of a multifaceted distribution platform.

Okay. Got it. Appreciate the answers.

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

Thank you. I was wondering if I could get your medium- to long-term view on the trajectory of LTV. You did have some improvement in the quarter and if you could kind of enumerate the drivers of that long-term view.

Yes. No, it's a great question. As you know, this year, we've made some significant investments in the carrier platform, the number of carriers and our TeleCare team's initiatives, along with some pretty robust technology and data-driven insights that are starting to pay off from an LTV standpoint. So, I think that we want to continue investing in those to enhance the kind of the member journey and value, which should enhance LTV and persistency. I think the other thing that we get excited about is in our Encompass platform, a lot of those initiatives we're having real positive discussions, and six of them are already live. Additional revenue streams on top of that core commission related to the policy value. So, I think that is another driver that we can see over future years, as well as we think about really helping consumers engage and use those benefits and then helping carriers understand who the members are and creating additional value there.

Thank you, very much.

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Clint Jones for closing remarks.

Thank you. Thanks for joining us today. We want to thank all of our employees for their hard work so far this year, including a great start to AEP. As you can tell, we are very encouraged by our year-to-date results and progress towards our upgraded 2020 outlook and look forward to sharing more details on these results on our fourth quarter call. Thank you, everybody.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.