Gohealth WACC - Weighted Average Cost of Capital
The WACC of Gohealth Inc (GOCO) is 16.5%.
| Range | Selected | |
| Cost of equity | 11.4% - 15.8% | 13.6% |
| Tax rate | 0.1% - 0.1% | 0.1% |
| Cost of debt | 9.9% - 23.9% | 16.9% |
| WACC | 10.1% - 22.9% | 16.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.63 | 1.96 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.4% | 15.8% |
| Tax rate | 0.1% | 0.1% |
| Debt/Equity ratio | 7.32 | 7.32 |
| Cost of debt | 9.9% | 23.9% |
| After-tax WACC | 10.1% | 22.9% |
| Selected WACC | 16.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| GOCO | Gohealth Inc | 7.32 | 0.78 | 0.09 |
| BRO | Brown & Brown Inc | 0.12 | 0.35 | 0.31 |
| BRP | BRP Group Inc | 0.34 | 0.95 | 0.71 |
| CUII | China United Insurance Service Inc | 6936.1 | -0.38 | 0 |
| EHTH | eHealth Inc | 0.52 | 0.31 | 0.21 |
| FANH | Fanhua Inc | 0.35 | -0.35 | -0.26 |
| GSHD | Goosehead Insurance Inc | 0.02 | 0.45 | 0.44 |
| HUIZ | Huize Holding Ltd | 0.35 | 0.37 | 0.28 |
| NXG.V | NexgenRx Inc | 0.03 | 1 | 0.98 |
| SLQT | SelectQuote Inc | 1.86 | 0.72 | 0.25 |
| Low | High | |
| Unlevered beta | 0.23 | 0.29 |
| Relevered beta | 1.94 | 2.43 |
| Adjusted relevered beta | 1.63 | 1.96 |
Gohealth's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for Gohealth:
cost_of_equity (13.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.63) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.