Health insurance marketplace GoHealth has said it will lay off about 800 employees, with approximately 100 of the reductions occurring in Chicago.
The cuts represent 20% of its workforce and come as the company has struggled to control costs despite seeing revenue growth, mostly on commissions from selling Medicare-related policies. In June, GoHealth shook up its top management, bringing in outsiders as CEO and chief financial officer. At the same time, two co-founders moved from day-to-day responsibilities to roles on the board of directors.
The reductions come just ahead of its announcement of its second-quarter earnings, expected Monday. Amid expectations of a recession and investor pressure for better results, many technology companies have cut jobs or at least scaled back hiring plans.
Monday, Groupon said it was cutting 500 jobs, most of them in Chicago, as it reduces its headcount by 15%.
The GoHealth cuts were announced in a message to employees from CEO Vijay Kotte posted Tuesday. “We fully recognize how unsettling this news will be for impacted team members and those of you who will remain on our team after today,” Kotte said. “Please know that this decision was not made lightly. It was only after an exhaustive analysis of our business needs and extensive consideration that we agreed this was the path forward to secure our long-term future and enable GoHealth to achieve its full potential.”
He said the company will help workers with outplacement, such as by allowing them to retain company-issued laptops used while working from home and releasing staff from noncompete agreements. Affected workers will get a minimum of 60 days’ severance with benefits, he said.
Kotte’s message did not disclose the number of layoffs. A company spokesperson provided that information. GoHealth’s headquarters is at 214 W. Huron St.
The spokesperson said, “We are grateful for our departing team members’ contributions and focused on fully supporting them in this transition. Further, with the transformational steps we are taking, we are confident that GoHealth is well positioned to succeed. We look forward to sharing news of such successes over the coming months and years.”
The company was founded in 2001 and began selling shares to the public in 2020, initially at $21 each. They traded Thursday at just 63 cents, having lost more than 80% of their value this year.
In its most recent earnings report, covering the first quarter, GoHealth said it lost $37.2 million, compared with a loss of $7.3 million for the same period in 2021. Revenue, however, rose 33% to $270.6 million.
The CEO at the time, co-founder Clint Jones, said he was pleased with the results because the company was executing its strategy to “slow our growth and optimize the customer experience.”
Just a month later, GoHealth announced Kotte would replace Jones, who took a new post as executive chairman of the board. Co-founder Brandon Cruz also moved from operational roles to become non-executive chairman.