Proposal 1: Election of DirectorsWho is paying for this proxy solicitation?
We currently have nine (9)will pay for the cost of soliciting proxies. In addition to these proxy materials, our directors on our Board. Atand employees may also solicit proxies in person, by telephone or by other means of communication. Directors and employees will not be paid additional compensation for soliciting proxies. We may reimburse brokers, banks and other agents for the Annual Meeting, three (3) Class I Directors, Rahm Emanuel, Helene D. Gaylecost of forwarding proxy materials to beneficial owners.
Will a stockholder list be available for inspection?
In accordance with Delaware law and Alexander E. Timm are to be elected to hold office until the Annual Meeting of Stockholders to be held in 2024 and until each such director’s respective successor is elected and qualified or until each such director’s earlier death, resignation or removal.
The proposal regarding the election of directors requires the approval of a plurality of the votes cast. This means that the nominees receiving the highest number of affirmative “FOR” votes will be elected as Class I Directors. Votes withheld and broker non-votes are not considered to be votes cast and, accordingly, will have no effect on the outcome of the vote on this proposal.
As set forth in our Amended and Restated Bylaws, a list of stockholders entitled to vote at the Special Meeting will be available at the virtual Special Meeting at www.virtualshareholdermeeting.com/GOCO2022SM and, for 10 days prior to the Special Meeting, at our corporate headquarters located at 214 West Huron St., Chicago, Illinois 60654 between the hours of 9:00 a.m. and 5:00 p.m. Central Time.
THE PROPOSAL
General
GoHealth is asking stockholders to adopt and approve a proposed amendment to our amended and restated certificate of incorporation to effect the Reverse Stock Split. On July 18, 2022, our Board unanimously approved and declared advisable the proposed amendment, and recommends that our stockholders adopt and approve the proposed amendment. The foregoing description of the proposed amendment is a summary and is subject to the full text of the proposed amendment, which is attached to this proxy statement as Annex A (the “Certificate of Amendment”).
If stockholders approve this Proposal, the Board will cause the Certificate of Incorporation,Amendment to be filed with the Delaware Secretary of State and effect the Reverse Stock Split only if the Board determines that the Reverse Stock Split would be in the best interests of DirectorsGoHealth and its stockholders. If this Proposal is currently divided into three classes with staggered, three-year terms. At each annual meeting of stockholders,approved, the successorsBoard, or an authorized committee thereof, in its sole discretion, will have the authority to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following election. The current class structure is as follows: Class I, whose term currently expires at the Annual Meeting and whose subsequent term will expire at the 2024 Annual Meeting of Stockholders; Class II, whose term will expire at the 2022 Annual Meeting of Stockholders and whose subsequent term will expire at the 2025 Annual Meeting of Stockholders; and Class III, whose term will expire atdecide, before the 2023 Annual Meeting of Stockholders, whether to implement the Reverse Stock Split. The Reverse Stock Split could become effective as soon as the business day immediately following the Special Meeting. The Board, in its sole discretion, may elect not to implement the Reverse Stock Split. However, the Board believes that having the time-limited authority to take such an action is an important proactive step to maintain and whose subsequent termbuild stockholder value. No further action on the part of stockholders will expirebe required to either implement or abandon the Reverse Stock Split.
The proposed amendment, if effected, will effect a Reverse Stock Split of the outstanding shares of Class A common stock and Class B common stock at a reverse stock split ratio range of 1-for-5 through 1-for-15, as determined by our Board at a later date. As of the Record Date, [●] shares of our Class A common stock and [●] shares of our Class B common stock were issued and outstanding. Based on such number of shares of our common stock issued and outstanding, immediately following the effectiveness of the Reverse Stock Split (and without giving any effect to the payment of cash in lieu of fractional shares), we will have, depending on the reverse stock split ratio selected by our Board, issued and outstanding shares of stock as illustrated in the table under the caption “—Effects of the Reverse Stock Split—Effect on Shares of Class A Common Stock and Class B Common Stock.”
All holders of GoHealth’s Class A common stock and Class B common stock will be affected proportionately by the Reverse Stock Split.
No fractional shares of Class A common stock and Class B common stock will be issued as a result of the Reverse Stock Split. Instead, any stockholder who would have been entitled to receive a fractional share as a result of the Reverse Stock Split will receive cash payments in lieu of such fractional shares. Each common stockholder will hold the same percentage of the outstanding common stock immediately following the Reverse Stock Split as that stockholder did immediately prior to the Reverse Stock Split, except to the extent that the Reverse Stock Split results in stockholders receiving cash in lieu of fractional shares. The par value of our common stock will continue to be $0.001 per share (see “—Effects of the Reverse Stock Split—”).
Reasons for the Reverse Stock Split
Reverse Stock Split. Our Board has determined that it is desirable and in the best interests of GoHealth and its stockholders to combine our shares of Class A common stock and Class B common stock at a reverse stock split ratio in the range of 1-for-5 through 1-for-15, as determined by the Board at a later date, in order to reduce the number of shares of Class A common stock and Class B common stock outstanding. Our Board authorized the reverse split of our Class A common stock and Class B common stock with the primary intent of increasing the per share trading price of our common stock in order to meet NASDAQ’s price criteria for continued listing on that exchange. Our Class A common stock is publicly traded and listed on NASDAQ under the symbol “GOCO.” Accordingly, for these and other reasons discussed below, we believe that effecting the Reverse Stock Split is in GoHealth’s and our stockholders’ best interests.
On May 25, 2022, we were notified in writing by Nasdaq Capital Market (“NASDAQ”) that the average closing trading price of our common stock was below the criteria of NASDAQ’s continued listing standards, as the average per share closing price of our common stock over 30 consecutive business days was less than $1.00. In the letter, NASDAQ stated that we have a six-month cure period that started on May 25, 2022 to bring the price of our common stock and the 30-trading day average closing price of our common stock above $1.00. In the letter, NASDAQ further stated that in the event a $1.00 share price and a $1.00 average share price over the preceding 30 trading days are not attained at the 2026expiration of the six-month cure period, NASDAQ will commence suspension and delisting procedures. NASDAQ has reserved the right to reevaluate its continued listing determinations relating to companies that are notified of non-compliance like GoHealth with respect to NASDAQ’s qualitative listing standards, including if our shares trade at sustained levels that are considered to be abnormally low.
In addition to bringing the per share trading price of our common stock back above $1.00, we also believe that the Reverse Stock Split will make our Class A common stock and Class B common stock more attractive to a broader range of institutional and other investors, as we have been advised that the current per share trading price of our Class A common stock may affect its acceptability to certain institutional investors, professional investors and other members of the investing public. Many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. In addition, some of those policies and practices may function to make the processing of trades in low-priced stocks economically unattractive to brokers.
Reducing the number of outstanding shares of our Class A common stock and Class B common stock through the Reverse Stock Split is intended, absent other factors, to increase the per share trading price of our common stock. However, other factors, such as our financial results, market conditions and the market perception of our business may adversely affect the per share trading price of our common stock. As a result, there can be no assurance that the Reverse Stock Split, if completed, will result in the intended benefits described above, that the per share trading price of our common stock will increase following the Reverse Stock Split or that the per share trading price of our common stock will not decrease in the future.
The purpose of seeking stockholder approval of exchange ratios within the Ratio Range (rather than a fixed exchange ratio) is to provide the Company with the flexibility to achieve the desired results of the Reverse Stock Split. If the stockholders approve this proposal, then the Board or an authorized committee thereof, in its sole discretion, would effect the Reverse Stock Split only upon the determination by the Board or an authorized committee thereof that a reverse split would be in the best interests of the Company and our stockholders at that time. If the Board, or an authorized committee thereof, were to effect the Reverse Stock Split, then the Board or such committee would set the timing for such a split and select the specific ratio within the Ratio Range (the “Final Ratio”). No further action on the part of stockholders would be required to either implement or abandon the Reverse Stock Split. If the stockholders approve the proposal, and the Board or an authorized committee thereof determines to effect the Reverse Stock Split, we would communicate to the public additional details regarding the Reverse Stock Split, including the Final Ratio selected by the Board or an authorized committee thereof. If the Board or an authorized committee thereof does not implement the Reverse Stock Split before the 2023 Annual Meeting of Stockholders.Stockholders, then the authority granted in this proposal to implement the Reverse Stock Split automatically will terminate. The currentBoard reserves its right, notwithstanding stockholder approval and without further action by the stockholders, to elect not to proceed with the Reverse Stock Split if, at any time prior to the filing of the certificate of amendment to the amended and restated certificate of incorporation with the Secretary of State of the State of Delaware, it determines, in its sole discretion, that this proposal is no longer in the best interests of the Company and our stockholders.
No Authorized Share Reduction. Under Delaware law, the implementation of the Reverse Stock Split does not require a reduction in the total number of authorized shares of our Class I Directors are Rahm Emanuel, Helene D. GayleA common stock and Alexander E. Timm;Class B common stock. If stockholders adopt and approve the current Class II Directors are Brandon M. Cruz, Joseph G. Flanaganamendment to the amended and Miriam A. Tawil; andrestated certificate of incorporation to effect the current Class III Directors are Jeremy W. Gelber, Clinton P. Jones and Anita V. Pramoda.
Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws provide thatReverse Stock Split, the authorized number of directorsshares of our Class A common stock and Class B common stock will not be reduced by a corresponding ratio.
Criteria to be Used for Determining Whether to Implement Reverse Stock Split
In determining whether to implement the Reverse Stock Split, if any, following receipt of stockholder approval of the amendment to our amended and restated certificate of incorporation to effect the Reverse Stock Split, the Board may consider, among other things, various factors, such as:
• the historical trading price and trading volume of our Class A common stock;
• our capitalization (including the number of shares of common stock issued and outstanding);
• NASDAQ Continued Listing Standards, other rules and guidance from NASDAQ;
• the potential devaluation of our market capitalization as a result of the reverse stock split;
• the then-prevailing trading price and trading volume of our Class A common stock and the expected impact of the Reverse Stock Split on the trading market for our Class A common stock in the short- and long-term; and
• prevailing general market and economic conditions.
Certain Risks and Potential Disadvantages Associated with the Reverse Stock Split
We cannot assure you that the proposed Reverse Stock Split will result in an increase of our stock price. We expect that the Reverse Stock Split will increase the per share trading price of our common stock. However, the effect of the Reverse Stock Split on the per share trading price of our common stock cannot be predicted with any certainty, and the history of reverse stock splits for other companies is varied, particularly since some investors may view a reverse stock split negatively. It is possible that the per share trading price of our common stock after the Reverse Stock Split will not increase in the same proportion as the reduction in the number of our outstanding shares of common stock following the Reverse Stock Split, and the Reverse Stock Split may not result in a per share trading price that would attract investors who do not trade in lower priced stocks. In addition, although we believe the Reverse Stock Split may enhance the marketability of our common stock to certain potential investors, we cannot assure you that, if implemented, our common stock will be more attractive to investors. Even if we implement the Reverse Stock Split, the per share trading price of our common stock may decrease due to factors unrelated to the Reverse Stock Split, including our future performance. If the Reverse Stock Split is consummated and the per share trading price of the common stock declines, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be changed fromgreater than would occur in the absence of the Reverse Stock Split.
We cannot assure you that our common stock will maintain its value as a result of the proposed Reverse Stock Split. There can be no assurance that the total market capitalization of the Class A common stock (i.e., the aggregate value of all shares of Class A common stock at the then market price) immediately after implementation of the Proposal will be equal to or greater than the total market capitalization immediately before the Proposal or that the per share market price of the Class A common stock following implementation of the Proposal will remain higher than the per share market price immediately before the implementation of the Proposal or equal or exceed the direct arithmetical result of the implementation of the Proposal.
The proposed Reverse Stock Split may decrease the liquidity of our common stock and result in higher transaction costs. The liquidity of our common stock may be negatively impacted by the Reverse Stock Split, given the reduced number of shares that would be outstanding after the Reverse Stock Split, particularly if the per share trading price does not increase as a result of the Reverse Stock Split. In addition, if the Reverse Stock Split is implemented, it will increase the number of our stockholders who own “odd lots” of fewer than 100 shares of common stock. Brokerage commission and other costs of transactions in odd lots are generally higher than the costs of transactions of more than 100 shares of common stock. Accordingly, the Reverse Stock Split may not achieve the desired results of increasing marketability of our common stock as described above.
Effective Time and Ratio Range
The effective time of the Reverse Stock Split (the “Effective Time”), if approved by stockholders and implemented by GoHealth, will be the date and time set forth in the Certificate of Amendment that is filed with the Delaware Secretary of State. The Board, or an authorized committee thereof, in its sole discretion, will have the authority to decide, before the 2023 Annual Meeting of Stockholders, whether to implement the Reverse Stock Split. The Effective Time could occur as soon as the business day immediately following the Special Meeting. The exact timing of the filing of the amendment will be determined by our Board based on its evaluation as to when such action will be the most advantageous to the Company and our stockholders.
If the Board or an authorized committee thereof does not implement the Reverse Stock Split by our 2023 Annual Meeting of Stockholders, then the authority granted in this Proposal to implement the Reverse Stock Split will automatically terminate. The Board reserves its right, notwithstanding stockholder approval and without further action by the stockholders, to elect not to proceed with the Reverse Stock Split if, at any time prior to the filing of the Certificate of Amendment with the Secretary of State of the State of Delaware, it determines, in its sole discretion, that this Proposal is no longer in the best interests of the Company and our stockholders.
The ratio of the reverse stock split, if approved and implemented, will be selected in the range of 1-for-5 through 1-for-15, as determined by the Board in its sole discretion. Our purpose for requesting authorization to implement the reverse stock split at a ratio to be determined by the Board, as opposed to a ratio that is fixed in advance, is to give the Board the flexibility to take into account then-current market conditions and changes in the price of Directors.our Class A common stock and to respond to any other developments that may be relevant when considering the appropriate ratio. If the stockholders approve the Reverse Stock Split, then the Board or an authorized committee thereof will be authorized to proceed with the Reverse Stock Split within the time period indicated. In determining whether to proceed with the Reverse Stock Split and setting the Final Ratio, if any, the Board or an authorized committee thereof will consider a number of factors, including market conditions, existing and expected trading prices of the Company’s common stock, actual or forecasted results of operations, NASDAQ listing requirements, the Company’s additional funding requirements and the amount of the Company’s authorized but unissued Class A common stock and Class B common stock.
Fractional Shares
We will not issue fractional shares for post-Reverse Stock Split shares in connection with the Reverse Stock Split. In lieu of issuing fractional shares, the Company may either (a) directly pay each stockholder who would otherwise have been entitled to a fraction of a share an amount in cash (without interest) equal to the closing sale price of the Class A common stock, as quoted on NASDAQ on the effective date of the Reverse Stock Split, multiplied by the fractional share amount, or (b) with respect to the Class A common stock or Class B common stock, make arrangements with the Company’s transfer agent or exchange agent to aggregate all fractional shares otherwise issuable in the Reverse Stock Split and sell these whole shares as soon as possible after the effective date of the Reverse Stock Split at then prevailing market prices on the open market on behalf of those holders, and then pay each such holder the applicable pro-rata portion of the sale proceeds.
The ownership of a fractional share interest will not give the holder any voting, dividend or other rights, except to receive the above-described cash payments. If you believe that you may not hold sufficient shares of GoHealth’s Class A common stock and Class B common stock at the Effective Time to receive at least one share in the Reverse Stock Split and you want to continue to hold GoHealth’s common stock after the Reverse Stock Split, you may do so by either:
• purchasing a sufficient number of shares of GoHealth’s common stock; or
• if you have shares of GoHealth’s common stock in more than one account, consolidating your accounts;
in each case, so that you hold a number of shares of our Class A common stock or Class B common stock in your account prior to the Reverse Stock Split that would entitle you to receive at least one share of Class A common stock or Class B common stock in the Reverse Stock Split. Shares of our Class A common stock and Class B common stock held in registered form and shares of our Class A common stock and Class B common stock held in “street name” (that is, through a broker, bank or other holder of record) for the same stockholder will be considered held in separate accounts and will not be aggregated when effecting the Reverse Stock Split.
Effects of the Reverse Stock Split
General
After the effective date of the Reverse Stock Split, if implemented by our Board, each stockholder will own a reduced number of shares of Class A common stock and Class B common stock. The principal effect of the Reverse Stock Split will be to proportionately decrease the number of outstanding shares of our Class A common stock and Class B common stock based on the reverse stock split ratio selected by our Board.
Voting rights and other rights of the holders of our Class A common stock and Class B common stock will not be affected by the Reverse Stock Split, other than as a result of the treatment of fractional shares as described above. For example, a holder of 2% of the voting power of the outstanding shares of our Class A common stock and Class B common stock immediately prior to the effectiveness of the Reverse Stock Split will generally continue to hold 2% (assuming there is no impact as a result of the payment of cash in lieu of issuing fractional shares) of the voting power of the outstanding shares of Class A common stock and Class B common stock after the Reverse Stock Split.
The number of stockholders of record will not be affected by the Reverse Stock Split (except to the extent any are cashed out as a result of holding fractional shares). If approved and implemented, the Reverse Stock Split may result in some stockholders owning “odd lots” of less than 100 shares of our Class A common stock and Class B common stock. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of transactions in “round lots” of even multiples of 100 shares. Our Board believes, however, that these potential effects are outweighed by the benefits of the Reverse Stock Split.
Effect on Shares of Class A Common Stock and Class B Common Stock
The Reverse Stock Split will not change the terms of the Class A common stock or Class B common stock. After the Reverse Stock Split, the shares of Class A common stock will have the same voting rights and rights to dividends and distributions and will be identical in all other respects to the Class A common stock now authorized, except to the extent that the Reverse Stock Split results in any stockholders owning a fractional share, and the shares of Class B common stock will have the same voting rights and will be identical in all other respects to the Class B common stock now authorized, except to the extent that the Reverse Stock Split results in any stockholders owning a fractional share. Each stockholder’s percentage ownership of the Company based on holdings of common stock will not be altered, except to the extent that the Reverse Stock Split results in any stockholders owning a fractional share.
The following table contains approximate information, based on share information as of [●], relating to our outstanding common stock based on illustrative ratios within the Ratio Range and information regarding our authorized shares assuming that the Proposal is approved and the Reverse Stock Split is implemented:
| | | | | | | | | | | | | | | | | | | | |
Status | Number of Shares of Class A Common Stock Issued and Outstanding | Number of Shares of Class B Common Stock Issued and Outstanding | Number of Shares of Class A Common Stock Reserved for Future Issuance | Number of Shares of Class B Common Stock Reserved for Future Issuance | Number of Shares of Class A Common Stock Authorized but Not Outstanding or Reserved | Number of Shares of Class B Common Stock Authorized but Not Outstanding or Reserved |
Pre-Reverse Stock Split | [●] | [●] | [●] | [●] | [●] | [●] |
Post-Reverse Stock Split 1:5 | [●] | [●] | [●] | [●] | [●] | [●] |
Post-Reverse Stock Split 1:10 | [●] | [●] | [●] | [●] | [●] | [●] |
Post-Reverse Stock Split 1:15 | [●] | [●] | [●] | [●] | [●] | [●] |
After the effective date of the Reverse Stock Split that our Board elects to implement, our Class A common stock would have a new committee on uniform securities identification procedures, or CUSIP number, a number used to identify our common stock.
Our common stock is currently registered under Section 12(b) of the Securities Exchange Act of 1934, as amended, the (“Exchange Act”), and we are subject to the periodic reporting and other requirements of the Exchange Act. The reverse stock split will not affect the registration of our Class A common stock under the Exchange Act or the listing of our common stock on NASDAQ. Following the reverse stock split, our Class A common stock will continue to be listed on NASDAQ under the symbol “GOCO,” although it will be considered a new listing with a new CUSIP number.
Because we will not reduce the number of authorized shares of Class A common stock and Class B common stock, the overall effect of the Reverse Stock Split will be an increase in authorized but unissued shares of Class A common stock and Class B common stock as a result of the Reverse Stock Split. These authorized shares of Class A common stock and Class B common stock may be issued at the discretion of the Board, subject to applicable limitations. Any additional directorships resulting fromfuture issuances of shares of Class A common stock or Class B common stock will have the effect of diluting the percentage of stock ownership and voting rights of the present holders of Class A common stock and Class B common stock.
Release No. 34-15230 of the staff of the SEC requires disclosure and discussion of the effects of any action, including the Proposal, that may be used as an anti-takeover mechanism. Because the Proposal provides that the number of authorized shares of (i) Class A common stock remains at 1,100,000,000 shares and (ii) Class B common stock remains at 690,000,000 shares the amendment that is filed with the Secretary of State of the State of Delaware, if any such amendment is filed, will result in a relative increase in the number of authorized but unissued shares of our Class A common stock and Class B common stock in relation to the number of outstanding shares of our Class A common stock and Class B common stock, respectively, after the Reverse Stock Split and could, under certain circumstances, have an anti-takeover effect, although this is not the purpose or intent of the Board. The primary purpose of the proposed Reverse Stock Split is to provide the Board with a mechanism to lower the number of shares outstanding and to raise the per share trading price of our Class A common stock. However, a relative increase in the number of our authorized shares of Class A common stock and Class B common stock could enable the Board to render more difficult or discourage an attempt by a party attempting to obtain control of the Company by tender offer or other means. The issuance of Class A common stock in a public or private sale, merger or similar transaction would increase the number of outstanding shares of Class A common stock entitled to vote, increase the number of votes required to approve a change of control of the Company and dilute the interest of a party attempting to obtain control of the Company. Any such issuance could deprive stockholders of benefits that could result from an attempt to obtain control of the Company, such as the realization of a premium over market price that such an attempt could cause. Moreover, the issuance of Class A common stock to persons friendly to the Board could make it more difficult to remove incumbent officers and directors from office even if such change were favorable to stockholders generally. The Company has no present intent to use the relative increase in the number of authorized shares of Class A common stock and Class B common stock for anti-takeover purposes, and the proposed amendment to the amended and restated certificate of incorporation is not part of a plan by the Board to adopt any anti-takeover provisions. However, if the Proposal is approved by the stockholders, then a greater number of shares of our Class A common stock and Class B common stock would be available for such purpose than currently is available. The Company is not aware of any pending or threatened efforts to obtain control of the Company, and the Board has no present intent to authorize the issuance of additional shares of Class A common stock or Class B common stock to discourage such efforts if they were to arise.
Effect on Preferred Stock
Pursuant to our amended and restated certificate of incorporation, our authorized stock includes 20,000,000 shares of Preferred Stock, par value $0.001 per share. The proposed amendment to our amended and restated certificate of incorporation to effect the Reverse Stock Split will not impact the total authorized number of shares of preferred stock or the par value of the preferred stock.
Effect on Par Value
The proposed amendments to our amended and restated certificate of incorporation will not affect the par value of our common stock, which will remain at $0.001.
Reduction in Stated Capital
As a result of the Reverse Stock Split, upon the Effective Time, the stated capital on our balance sheet attributable to our common stock, which consists of the par value per share of our common stock multiplied by the aggregate number of shares of our common stock issued and outstanding, will be distributed amongreduced in proportion to the three classes so that, as nearly as possible, each class will consist of one-thirdsize of the directors. The divisionReverse Stock Split, subject to a minor adjustment in respect of the treatment of fractional shares, and the additional paid-in capital account will be credited with the amount by which the stated capital is reduced. Our stockholders’ equity, in the aggregate, will remain unchanged.
Effect on GoHealth’s Stock Plans and Equity Compensation Arrangements
As of [●], we had approximately [●] shares subject to stock options and [●] shares subject to restricted stock units (including performance-based restricted stock units at target-level) outstanding under our 2020 Incentive Award Plan (the “Incentive Plan”). Under our Incentive Plan and our 2020 Employee Stock Purchase Plan (together with the Incentive Plan, the “Stock Plans”), the Compensation Committee of our Board (the “Compensation Committee”) has sole discretion to determine the appropriate adjustment to the awards granted under our Stock Plans in the event of Directorsa reverse stock split. Accordingly, if the Reverse Stock Split is effected, the number of shares available for issuance under the Stock Plans, as well as the number of shares subject to any outstanding award under the Stock Plans, and the exercise price, grant price or purchase price relating to any such award under the Stock Plans, will be proportionately adjusted by the Compensation Committee to reflect the Reverse Stock Split. The Compensation Committee will also determine the treatment of fractional shares subject to outstanding awards under the Stock Plans. Accordingly, pursuant to the authority provided under the Stock Plans, the Compensation Committee is expected to authorize the Company to effect any other changes necessary, desirable or appropriate to give effect to the Reverse Stock Split, including any applicable technical, conforming changes to our Stock Plans.
For illustrative purposes only, if a 1-for-10 reverse stock split is effected, the [●] shares that remain available for issuance under the Incentive Plan as of [●], are expected to be adjusted to [●] shares, subject to increase as and when awards made under the Incentive Plan expire or are forfeited and are returned per the terms of the Incentive Plan. Further, for illustrative purposes only, if a 1-for-10 reverse stock split is effected, an outstanding stock option for 10,000 shares of common stock, exercisable at $[●] per share, would be adjusted as a result of a 1-for-10 split ratio into three classes with staggered three-yearan option exercisable for 1,000 shares of common stock at an exercise price of $[●] per share.
Under the terms may delayof the GoHealth Holdings, LLC Second Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”), in the event of a recapitalization impacting either the Company’s shares or preventthe common units of GoHealth Holdings, LLC (the “GoHealth LLC���), the manager of the GoHealth LLC will make appropriate adjustments to preserve on a changeone-to-one basis the exchange ratio of the common units to shares of Company stock under the LLC Agreement. Accordingly, because certain of our managementemployees hold profits interests that settle in common units that are then exchangeable for Company shares, we expect that the profits units and GoHealth LLC common units will also be adjusted for the Reverse Stock Split in accordance with the terms of the LLC Agreement.
Effect of the Reverse Stock Split on Legal Ability to Pay Dividends
We currently intend to retain all available funds and any future earnings to fund the development and growth of our business and to repay indebtedness, and therefore we do not anticipate declaring or paying any cash dividends on our Class A common stock in the foreseeable future. Holders of our Class B common stock are not entitled to participate in any dividends declared by our Board. We are not in arrears on any dividends, and we do not believe that the reverse stock split would have any effect with respect to future distributions, if any, to holders of our Class A common stock.
No Going Private Transaction
Notwithstanding the decrease in the number of outstanding shares following the proposed Reverse Stock Split, our Board does not intend for this transaction to be the first step in a “going private transaction” within the meaning of Rule 13e-3 of the Exchange Act.
Shares Held in Book-Entry and Through a Broker, Bank or Other Holder of Record
If you hold registered shares of our common stock in a book-entry form, you do not need to take any action to receive your post-Reverse Stock Split shares of our common stock in registered book-entry form or your cash payment in lieu of fractional shares, if applicable. If you are entitled to post-Reverse Stock Split shares of our common stock, a transaction statement will automatically be sent to your address of record as soon as practicable after the Effective Time indicating the number of shares of our common stock you hold. In addition, if you are entitled to a payment of cash in lieu of fractional shares, a check will be mailed to you at your registered address as soon as practicable after the Effective Time. By signing and cashing this check, you will warrant that you owned the shares of GoHealth’s common stock for which you received a cash payment.
At the Effective Time, we intend to treat stockholders holding shares of our common stock in “street name” (that is, through a broker, bank or other holder of record) in the same manner as registered stockholders whose shares of our common stock are registered in their names. Brokers, banks or other holders of record will be instructed to effect the Reverse Stock Split for their beneficial holders holding shares of our common stock in “street name”; however,
these brokers, banks or other holders of record may apply their own specific procedures for processing the Reverse Stock Split. If you hold your shares of our common stock with a broker, bank or other holder of record, and you have any questions in this regard, we encourage you to contact your holder of record.
No Appraisal Rights
Our shareholders are not entitled to appraisal rights under Delaware law or our amended and restated certificate of incorporation with respect to the Certificate of Amendment, and the Company will not independently provide our shareholders with any such right.
No Dissenters’ Rights
Under Delaware law, stockholders are not entitled to dissenters’ rights with respect to the Reverse Stock Split.
Interest of Certain Persons in Matters to be Acted Upon
No officer or director has any substantial interest, direct or indirect, by security holdings or otherwise, in the Reverse Stock Split that is not shared by all of our other stockholders.
Certain U.S. Federal Income Tax Consequences of the Reverse Stock Split
The following discussion is a general summary of certain U.S. federal income tax consequences of the Reverse Stock Split that may be relevant to holders of our common stock that hold such stock as a capital asset for U.S. federal income tax purposes (generally, property held for investment). This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations promulgated thereunder, administrative rulings and judicial decisions as of the date hereof, all of which may change, possibly with retroactive effect, resulting in U.S. federal income tax consequences that may differ from those discussed below.
This discussion applies only to holders that are U.S. Holders (as defined below) and does not address all aspects of federal income taxation that may be relevant to such holders in light of their particular circumstances or to holders that may be subject to special tax rules, including: (i) holders subject to the alternative minimum tax; (ii) banks, insurance companies, or other financial institutions; (iii) tax-exempt organizations; (iv) dealers in securities or commodities; (v) regulated investment companies or real estate investment trusts; (vi) partnerships (or other flow-through entities for U.S. federal income tax purposes and their partners or members); (vii) traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; (viii) U.S. Holders (as defined below) whose “functional currency” is not the U.S. dollar; (ix) persons holding our common stock as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction; (x) persons who acquire shares of our common stock in connection with employment or other performance of services; or (xi) U.S. expatriates. If a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds shares of our common stock, the tax treatment of a holder that is a partner in the partnership generally will depend upon the status of the partner and the activities of the partnership.
We have not sought, and will not seek, an opinion of counsel or a change in controlruling from the Internal Revenue Service (“IRS”) regarding the U.S. federal income tax consequences of the Reverse Stock Split and there can be no assurance that the IRS will not challenge the statements and conclusions set forth below or a court would not sustain any such challenge. The following summary does not address any U.S. state or local or any foreign tax consequences, any estate, gift or other non-U.S. federal income tax consequences, or the Medicare tax on net investment income.
EACH HOLDER OF COMMON STOCK SHOULD CONSULT SUCH HOLDER’S TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT TO SUCH HOLDER.
For purposes of the discussion below, a “U.S. Holder” is a beneficial owner of shares of our Company. Our directorscommon stock that for U.S. federal income tax purposes is: (1) an individual citizen or resident of the United States; (2) a corporation (including any entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state or political subdivision thereof; (3) an estate the income of which is subject to U.S. federal income taxation regardless of its source; or (4) a trust, if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (ii) the trust has a valid election in effect to be treated as a U.S. person.
A U.S. Holder generally should not recognize gain or loss upon the Reverse Stock Split, except with respect to cash received in lieu of a fractional share of our common stock, as discussed below. A U.S. Holder’s aggregate tax basis in the shares of our common stock received pursuant to the Reverse Stock Split should equal the aggregate tax basis of the shares of our common stock surrendered (excluding any portion of such basis that is allocated to any fractional share of our common stock), and such U.S. Holder’s holding period in the shares of our common stock received should include the holding period in the shares of our common stock surrendered. Treasury regulations promulgated under the Code provide detailed rules for allocating the tax basis and holding period of the shares of our common stock surrendered to the shares of our common stock received pursuant to the Reverse Stock Split. Holders of shares of our common stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.
A U.S. Holder that receives cash in lieu of a fractional share of our common stock pursuant to the Reverse Stock Split and whose proportionate interest in us is reduced (after taking into account certain constructive ownership rules) should generally recognize capital gain or loss in an amount equal to the difference between the amount of cash received and the U.S. Holder’s tax basis in the shares of our common stock surrendered that is allocated to such fractional share. Such capital gain or loss should be long term capital gain or loss if the U.S. Holder’s holding period for our common stock surrendered exceeds one year at the Effective Time. A U.S. Holder that receives cash in lieu of a fractional share of our common stock pursuant to the Reverse Stock Split and whose proportionate interest in us is not reduced (after taking into account certain constructive ownership rules) should generally be treated as having received a distribution that will be treated first as dividend income to the extent paid out of our current or accumulated earnings and profits, and then as a tax-free return of capital to the extent of the U.S. Holder’s tax basis in our common stock, with any remaining amount being treated as capital gain.
A U.S. Holder (other than an exempt recipient) that receives cash in lieu of a fractional share of our common stock pursuant to the Reverse Stock Split generally will be subject to information reporting with respect to the cash payment. Furthermore, backup withholding (currently at a rate of 24%) may apply to such amount unless the U.S. Holder provides a valid taxpayer identification number and complies with certain certification procedures (generally, by providing a properly completed and executed IRS Form W-9). Any amounts withheld under the backup withholding rules generally will be removed only for cause byallowed as a credit against the U.S. Holder’s federal income tax liability and may entitle the U.S. Holder to a refund, provided that the required information is timely furnished to the IRS.
Vote Required
The approval of the amendment to the amended and restated certificate of incorporation requires the affirmative vote of the holders of at least two-thirds of ourthe outstanding voting stock entitled to vote in the electionshares of directors.
In connection with the IPO of our Class A common stock and Class B Common Stock entitled to vote. Because the vote is based on the total number of shares outstanding rather than the votes cast, abstentions and broker non-votes (if any) will have the effect of a vote against the Proposal.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in July 2020, we entered into a Stockholders’ Agreement between the Company and certain stockholdersSection 27A of the Company, including CenterbridgeSecurities Act of 1933, as amended, ( the “Securities Act”) and NVX Holdings. Mr. Gelber and Ms. Tawil were each designated by Centerbridge as a Class III Director and a Class II Director, respectively (and each as a Centerbridge Director, as defined below). Mr. Cruz and Mr. Jones were each designated by NVX Holdings as a Class II Director and a Class III Director, respectively (and each as a NVX Director, as defined below). Mr. Flanagan and Mr. Timm were designated by Centerbridge as a Class II Director and a Class I Director, respectively (and each as a Centerbridge-Designated Independent Director, as defined below). Ms. Gayle and Ms. Pramoda were each designated by NVX Holdings as a Class I Director and a Class III Director, respectively (and each as a NVX-Designated Independent Director). In addition, Mr. Emanuel was designated pursuant to the Stockholders Agreement as an initial director who satisfied the independence requirements described therein. As a resultSection 21E of the Stockholders’ Agreement and the aggregate voting powerExchange Act. All statements other than statements of the parties to the agreement, we expect that the parties to the agreement acting in conjunction will control the election of directors at GoHealth. For more information, see “Corporate Governance—Stockholders’ Agreement.”
If you submit a proxy but do not indicate any voting instructions, the persons named as proxies will vote the shares of common stock represented thereby for the election as a Class I Director of the person whose name and biography appears below. In the event that any of Mr. Emanuel, Ms. Gayle or Mr. Timm should become unable to serve, or for good cause will not serve, as a director, it is intended that votes will be cast for a substitute nominee designated by the Board of Directors or the Board may elect to reduce its size. The Board of Directors has no reason to believe that any of Mr. Emanuel, Ms. Gayle or Mr. Timm will be unable to serve if elected. Each of Mr. Emanuel, Ms. Gayle and Mr. Timm has consented to being namedhistorical facts contained in this proxy statement may be forward-looking statements. Statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, including, among others, statements regarding our expected growth, future capital expenditures and debt service obligations, are forward-looking statements.
In some cases, you can identify forward-looking statements by terms, such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this proxy statement are only predictions. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to serve if elected.