eHealth, Inc. Announces First Quarter 2020 Results

(a)

Adjusted EBITDA is calculated by adding stock-based compensation, change in fair value of earnout liability, depreciation and amortization expense, amortization of intangible assets, other income, net, and provision (benefit) for income taxes to GAAP net income (loss).

(b)

Segment profit is calculated as revenue for the applicable segment less Marketing and Advertising, Customer Care and Enrollment, Technology and Content and General and Administrative operating expenses, excluding stock-based compensation, change in fair value of earnout liability, depreciation and amortization expense and amortization of intangible assets, that are directly attributable to the applicable segment and other indirect Marketing and Advertising, Customer Care and Enrollment and Technology and Content operating expenses, excluding stock-based compensation, depreciation and amortization expense and amortization of intangible assets, allocated to the applicable segment based on usage.

(c)

Corporate consists of other indirect General and Administrative operating expenses, excluding stock-based compensation and depreciation and amortization expense, which are managed in a corporate shared services environment and, since they are not the responsibility of segment operating management, are not allocated to the reportable segments.

(d)

Non-GAAP net income per diluted share is calculated by adding stock-based compensation expense per diluted share, change in fair value of earnout liability per diluted share, intangible asset amortization expense per diluted share and the income tax effect of these non-GAAP adjustments to GAAP net income per diluted share.

EHEALTH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

March 31, 2020

December 31, 2019

Assets

Current assets:

Cash and cash equivalents

$

184,167

$

23,466

Short-term marketable securities

33,683

—

Accounts receivable

668

2,332

Commissions receivable — current

125,252

174,526

Prepaid expenses and other current assets

9,202

7,822

Total current assets

352,972

208,146

Commissions receivable — non-current

435,465

414,696

Property and equipment, net

12,875

10,518

Long-term marketable securities

24,409

—

Operating lease right-of-use assets

43,396

36,621

Restricted cash

3,353

3,354

Other assets

19,300

18,004

Intangible assets, net

9,516

10,062

Goodwill

40,233

40,233

Total assets

$

941,519

$

741,634

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$

8,906

$

24,554

Accrued compensation and benefits

18,473

29,578

Accrued marketing expenses

4,711

12,041

Earnout liability — current

—

37,273

Lease liabilities — current

4,174

4,759

Deferred revenue

2,683

2,570

Other current liabilities

3,736

2,210

Total current liabilities

42,683

112,985

Deferred income taxes — non-current

61,623

64,130

Lease liabilities — non-current

41,992

34,305

Other non-current liabilities

3,535

3,050

Stockholders' equity:

Common stock

37

35

Additional paid-in capital

717,380

455,159

Treasury stock, at cost

(199,998)

(199,998)

Retained earnings

274,157

271,852

Accumulated other comprehensive income

110

116

Total stockholders' equity

791,686

527,164

Total liabilities and stockholders' equity

$

941,519

$

741,634

EHEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts, unaudited)

Three Months Ended March 31,

2020

2019

Revenue:

Commission

$

99,669

$

64,227

Other

6,739

4,546

Total revenue

106,408

68,773

Operating costs and expenses:

Cost of revenue

1,138

(77)

Marketing and advertising

37,764

23,941

Customer care and enrollment

30,535

19,944

Technology and content

15,740

9,017

General and administrative

19,653

11,278

Amortization of intangible assets

547

547

Change in fair value of earnout liability

—

13,306

Total operating costs and expenses

105,377

77,956

Income (loss) from operations

1,031

(9,183)

Other income, net

373

557

Income (loss) before benefit from income taxes

1,404

(8,626)

Benefit from income taxes

(2,048)

(3,467)

Net income (loss)

$

3,452

$

(5,159)

Net income (loss) per share:

Basic

$

0.14

$

(0.24)

Diluted

$

0.13

$

(0.24)

Weighted-average number of shares used in per share amounts:

Basic

24,719

21,831

Diluted

26,179

21,831

⁽¹⁾ Includes stock-based compensation as follows:

Marketing and advertising

$

1,730

$

629

Customer care and enrollment

662

273

Technology and content

1,617

549

General and administrative

4,705

1,778

Total stock-based compensation expense

$

8,714

$

3,229

EHEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

Three Months Ended March 31,

2020

2019

Operating activities:

Net income (loss)

$

3,452

$

(5,159)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

823

655

Amortization of internally developed software

1,501

719

Amortization of intangible assets

547

547

Stock-based compensation expense

8,714

3,229

Deferred income taxes

(2,141)

(3,543)

Change in fair value of earnout liability

—

13,306

Other non-cash items

223

(1,194)

Changes in operating assets and liabilities:

Accounts receivable

1,664

221

Commissions receivable

26,873

17,648

Prepaid expenses and other assets

(159)

1,111

Accounts payable

(16,279)

(768)

Accrued compensation and benefits

(11,104)

(9,390)

Accrued marketing expenses

(7,329)

(7,147)

Deferred revenue

113

2,897

Accrued expenses and other liabilities

2,009

(383)

Net cash provided by operating activities

8,907

12,749

Investing activities:

Capitalized internal-use software and website development costs

(3,564)

(1,487)

Purchases of property and equipment and other assets

(2,508)

(1,509)

Purchases of marketable securities

(58,064)

—

Cash used in investing activities

(64,136)

(2,996)

Financing activities:

Proceeds from issuance of common stock, net of issuance costs

228,024

126,051

Net proceeds from exercise of common stock options

1,091

2,367

Repurchase of shares to satisfy employee tax withholding obligations

(4,375)

(1,280)

Repayment of debt

—

(5,000)

Acquisition-related contingent payments

(8,751)

(9,542)

Principal payments in connection with leases

(58)

(25)

Net cash provided by financing activities

215,931

112,571

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(2)

62

Net increase in cash, cash equivalents and restricted cash

160,700

122,386

Cash, cash equivalents and restricted cash at beginning of period

26,820

13,089

Cash, cash equivalents and restricted cash at end of period

$

187,520

$

135,475

EHEALTH, INC.

SEGMENT INFORMATION

(In thousands, unaudited)

Three Months Ended March 31,

2020

2019

% Change

Revenue:

Medicare ⁽¹⁾

$

96,151

$

54,901

75

%

Individual, Family and Small Business ⁽²⁾

10,257

13,872

(26)

%

Total revenue

$

106,408

$

68,773

55

%

Segment profit:

Medicare segment profit ⁽³⁾

$

21,960

$

10,826

103

%

Individual, Family and Small Business segment profit ⁽³⁾

2,603

6,024

(57)

%

Total segment profit

24,563

16,850

46

%

Corporate ⁽⁴⁾

(13,448)

(8,296)

62

%

Stock-based compensation expense

(8,714)

(3,229)

170

%

Change in fair value of earnout liability

—

(13,306)

(100)

%

Depreciation and amortization

(823)

(655)

26

%

Amortization of intangible assets

(547)

(547)

—

%

Other income, net

373

557

(33)

%

Income (loss) before benefit from income taxes

$

1,404

$

(8,626)

(116)

%

We evaluate our business performance and manage our operations as two distinct reporting segments:

•

Medicare; and

•

Individual, Family and Small Business.

(1)

The Medicare segment consists primarily of amounts earned from our sale of Medicare-related health insurance plans, including Medicare Advantage, Medicare Supplement and Medicare Part D prescription drug plans, and to a lesser extent, ancillary products sold to our Medicare-eligible customers, including but not limited to, dental and vision plans, as well as our advertising program that allows Medicare-related carriers to purchase advertising on a separate website developed, hosted and maintained by us and our delivery and sale to third parties of Medicare-related health insurance leads generated by our ecommerce platforms and our marketing activities.

(2)

The Individual, Family and Small Business segment consists primarily of amounts earned from our sale of individual, family and small business health insurance plans and ancillary products sold to our non-Medicare-eligible customers, including but not limited to, dental, vision, and short-term insurance. To a lesser extent, the Individual, Family and Small Business segment consists of amounts earned from our online sponsorship program that allows carriers to purchase advertising space in specific markets in a sponsorship area on our website, our licensing to third parties the use of our health insurance ecommerce technology, and our delivery and sale to third parties of individual and family health insurance leads generated by our ecommerce platforms and our marketing activities.

(3)

Segment profit is calculated as revenue for the applicable segment less marketing and advertising, customer care and enrollment, technology and content and general and administrative operating expenses, excluding stock-based compensation, depreciation and amortization expense, acquisition costs, change in fair value of earnout liability, restructuring charges and amortization of intangible assets, that are directly attributable to the applicable segment and other indirect marketing and advertising, customer care and enrollment and technology and content operating expenses, excluding stock-based compensation, depreciation and amortization expense and amortization of intangible assets, allocated to the applicable segment based on usage.

(4)

Corporate consists of other indirect general and administrative operating expenses, excluding stock-based compensation, depreciation and amortization expense, which are managed in a corporate shared services environment and, because they are not the responsibility of segment operating management, are not allocated to the reportable segments.

EHEALTH, INC.

SUMMARY OF SELECTED METRICS

COMMISSION REVENUE BY PRODUCT

(In thousands, unaudited)

Three Months Ended March 31,

2020

2019

% Change

Medicare:

Medicare Advantage

$

68,347

$

39,843

72

%

Medicare Supplement

15,170

8,597

76

%

Medicare Part D

5,661

2,336

142

%

Total Medicare

89,178

50,776

76

%

Individual and Family: ⁽¹⁾

Non-Qualified Health Plans

1,446

2,629

(45)

%

Qualified Health Plans

1,210

3,508

(66)

%

Total Individual and Family

2,656

6,137

(57)

%

Ancillaries:

Short-term

2,216

1,316

68

%

Dental

743

790

(6)

%

Vision

243

462

(47)

%

Other

1,049

951

10

%

Total Ancillaries

4,251

3,519

21

%

Small Business

2,971

2,640

13

%

Commission Bonus

613

1,155

(47)

%

Total Commission Revenue

$

99,669

$

64,227

55

%

(1)

We define our individual and family plan offerings as major medical individual and family health insurance plans, which does not include Medicare-related, small business or ancillary plans. Individual and family health insurance plans include both qualified and non-qualified plans. Qualified health plans are individual and family health insurance plans that meet the requirements of the Affordable Care Act and are offered through the government-run health insurance exchange in the relevant jurisdiction. Non-qualified health plans are individual and family health insurance plans that meet the requirements of the Affordable Care Act and are not offered through the exchange in the relevant jurisdiction. Individuals that purchase non-qualified health plans cannot receive a subsidy in connection with the purchase of those plans.

EHEALTH, INC.

SUMMARY OF SELECTED METRICS

COMMISSION REVENUE SUMMARY

(Unaudited)

Three Months Ended March 31,

2020

2019

Medicare:

Commission Revenue from Members Approved During the Period ⁽¹⁾

$

81,125

$

50,582

Net Commission Revenue from Members Approved in Prior Periods ⁽²⁾

8,979

1,067

Total Medicare Segment Commission Revenue

$

90,104

$

51,649

Individual, Family and Small Business:

Commission Revenue from Members Approved During the Period ⁽¹⁾

$

5,796

$

6,225

Net Commission Revenue from Members Approved in Prior Periods ⁽²⁾

3,769

6,353

Total Individual, Family and Small Business Segment Commission Revenue

$

9,565

$

12,578

Total Commission Revenue

$

99,669

$

64,227

⁽¹⁾

These amounts include commission bonus revenue.

⁽²⁾ 

These amounts reflect our revised estimates of cash collections for certain members approved prior to the relevant reporting period that are recognized as adjustments to revenue within the relevant reporting period. These amounts include revenue associated with renewing small business health insurance members.

EHEALTH, INC.

SUMMARY OF SELECTED METRICS

APPROVED MEMBERS

(Unaudited)

Three Months Ended March 31,

2020

2019

% Change

Medicare:

Medicare Advantage

64,898

40,741

59

%

Medicare Supplement

10,838

8,631

26

%

Medicare Part D

8,966

8,527

5

%

Total Medicare

84,702

57,899

46

%

Individual and Family:

Non-Qualified Health Plans

4,820

6,071

(21)

%

Qualified Health Plans

4,545

5,527

(18)

%

Total Individual and Family

9,365

11,598

(19)

%

Ancillaries:

Short-term

12,138

14,932

(19)

%

Dental

9,710

13,056

(26)

%

Vision

4,501

6,415

(30)

%

Other

4,325

5,212

(17)

%

Total Ancillaries

30,674

39,615

(23)

%

Small Business

3,603

4,252

(15)

%

Total Approved Members

128,344

113,364

13

%

EHEALTH, INC.

SUMMARY OF SELECTED METRICS

NEW PAYING MEMBERS

(Unaudited)

Three Months Ended March 31,

2020

2019

% Change

Medicare:

Medicare Advantage

86,299

49,531

74

%

Medicare Supplement

11,560

9,786

18

%

Medicare Part D

63,705

40,796

56

%

Total Medicare

161,564

100,113

61

%

Individual and Family:

Non-Qualified Health Plans

9,553

14,012

(32)

%

Qualified Health Plans

5,957

7,390

(19)

%

Total Individual and Family

15,510

21,402

(28)

%

Ancillaries:

Short-term

12,260

20,119

(39)

%

Dental

10,413

14,384

(28)

%

Vision

5,571

8,848

(37)

%

Other

4,313

5,891

(27)

%

Total Ancillaries

32,557

49,242

(34)

%

Small Business

5,156

6,992

(26)

%

Total New Paying Members

214,787

177,749

21

%

EHEALTH, INC.

SUMMARY OF SELECTED METRICS

ESTIMATED MEMBERSHIP

(Unaudited)

As of March 31,

2020

2019

% Change

Medicare: ⁽¹⁾

Medicare Advantage

404,262

280,763

44

%

Medicare Supplement

97,527

76,875

27

%

Medicare Part D

224,154

146,239

53

%

Total Medicare

725,943

503,877

44

%

Individual and Family ⁽²⁾

113,483

130,297

(13)

%

Ancillaries: ⁽³⁾

Short-term

23,553

23,626

—

%

Dental

123,260

137,179

(10)

%

Vision

70,590

76,303

(7)

%

Other

36,012

37,985

(5)

%

Total Ancillaries

253,415

275,093

(8)

%

Small Business ⁽⁴⁾

44,113

42,972

3

%

Total Estimated Membership

1,136,954

952,239

19

%

⁽¹⁾

To estimate the number of members on Medicare-related health insurance plans, we take the sum of (i) the number of members for whom we have received or applied a commission payment for a month that may be up to three months prior to the date of estimation (after reducing that number using historical experience for assumed member cancellations over the period being estimated); and (ii) the number of approved members over that period (after reducing that number using historical experience for an assumed number of members who do not accept their approved policy and for estimated member cancellations through the date of the estimate). To the extent we determine we have received substantially all of the commission payments related to a given month during the period being estimated, we will take the number of members for whom we have received or applied a commission payment during the month of estimation.

⁽²⁾ 

To estimate the number of members on Individual and Family health insurance plans ("IFP"), we take the sum of (i) the number of IFP members for whom we have received or applied a commission payment for a month that may be up to three months prior to the date of estimation after reducing that number using historical experience for assumed member cancellations over the period being estimated; and (ii) the number of approved members over that period (after reducing that number using historical experience for an assumed number of members who do not accept their approved policy and for estimated member cancellations through the date of the estimate). To the extent we determine we have received substantially all of the commission payments related to a given month during the period being estimated, we will take the number of members for whom we have received or applied a commission payment during the month of estimation.

⁽³⁾ 

To estimate the number of members on ancillary health insurance plans (such as short-term, dental and vision insurance), we take the sum of (i) the number of members for whom we have received or applied a commission payment for a month that may be up to three months prior to the date of estimation (after reducing that number using historical experience for assumed member cancellations over the period being estimated); and (ii) the number of approved members over that period (after reducing that number using historical experience for an assumed number of members who do not accept their approved policy and for estimated member cancellations through the date of the estimate). To the extent we determine we have received substantially all of the commission payments related to a given month during the period being estimated, we will take the number of members for whom we have received or applied a commission payment during the month of estimation. The one to three-month period varies by insurance product and is largely dependent upon the timeliness of commission payment and related reporting from the related carriers.

⁽⁴⁾ 

To estimate the number of members on small business health insurance plans, we use the number of initial members at the time the group was approved, and we update this number for changes in membership if such changes are reported to us by the group or carrier. However, groups generally notify the carrier directly of policy cancellations and increases or decreases in group size without informing us. Health insurance carriers often do not communicate policy cancellation information or group size changes to us. We often are made aware of policy cancellations and group size changes at the time of annual renewal and update our membership statistics accordingly in the period they are reported.

EHEALTH, INC.

SUMMARY OF SELECTED METRICS

CONSTRAINED LIFETIME VALUE OF

COMMISSIONS PER APPROVED MEMBER

(Unaudited)

Three Months Ended March 31,

2020

2019

% Change

Medicare:

Medicare Advantage ⁽¹⁾

$

1,006

$

954

5

%

Medicare Supplement ⁽¹⁾

$

1,158

$

999

16

%

Medicare Part D ⁽¹⁾

$

260

$

258

1

%

Individual and Family:

Non-Qualified Health Plans ⁽¹⁾

$

199

$

178

12

%

Qualified Health Plans ⁽¹⁾

$

240

$

194

24

%

Ancillaries:

Short-term ⁽¹⁾

$

150

$

65

131

%

Dental ⁽¹⁾

$

67

$

71

(6)

%

Vision ⁽¹⁾

$

52

$

63

(17)

%

Small Business ⁽²⁾

$

160

$

155

3

%

⁽¹⁾

Constrained lifetime value ("LTV") of commissions per approved member represents commissions estimated to be collected over the estimated life of an approved member's policy after applying constraints in accordance with our revenue recognition policy. The estimate is driven by multiple factors, including but not limited to, contracted commission rates, carrier mix, estimated average plan duration, the regulatory environment, and cancellations of insurance plans offered by health insurance carriers with which we have a relationship. These factors may result in varying values from period to period.

⁽²⁾ 

For small business, the amount represents the estimated commissions we expect to collect from the plan over the following twelve months. The estimate is driven by multiple factors, including but not limited to, contracted commission rates, carrier mix, estimated average plan duration, the regulatory environment, and cancellations of insurance plans offered by health insurance carriers with which we have a relationship and applied constraints. These factors may result in varying values from period to period.

EHEALTH, INC.

SUMMARY OF SELECTED METRICS

CONSTRAINTS ON LIFETIME VALUE

OF COMMISSIONS PER APPROVED MEMBER

(Unaudited)

Three Months Ended March 31,

2020

2019

Medicare:

Medicare Advantage

7

%

7

%

Medicare Supplement

5

%

5

%

Medicare Part D

5

%

5

%

Individual and Family:

Non-Qualified Health Plans

15

%

15

%

Qualified Health Plans

4

%

20

%

Ancillaries

10

%

10

%

Small Business

—

%

—

%

EHEALTH, INC.

SUMMARY OF SELECTED METRICS

EXPENSE METRICS PER APPROVED MEMBER

(Unaudited)

Three Months Ended March 31,

2020

2019

% Change

Medicare variable cost per approved member:

Medicare variable marketing cost per approved Medicare Advantage ("MA")-equivalent member ⁽¹⁾

$

349

$

334

5

%

Medicare customer care and enrollment ("CC&E") cost per approved MA-equivalent member ⁽²⁾

364

344

6

%

Total Medicare cost per approved member

$

713

$

678

5

%

Individual and Family Plan ("IFP") variable cost per approved member:

IFP variable marketing cost per approved IFP-equivalent member ⁽³⁾

$

36

$

24

50

%

IFP CC&E cost per approved IFP-equivalent member ⁽⁴⁾

79

66

20

%

Total IFP cost per approved member

$

115

$

90

28

%

⁽¹⁾ 

Variable marketing cost per approved MA-equivalent member represents direct costs incurred in member acquisition for Medicare Advantage, Medicare Supplement and Medicare Part D plans from our direct marketing partners and online advertising channels divided by MA-equivalent approved members in a given period. MA-equivalent members is a derived metric and is equal to the sum of Medicare Part D approved members divided by 4, the number of Medicare Advantage approved members and the number of Medicare Supplement approved members in the given period.

⁽²⁾ 

Medicare CC&E cost per approved MA-equivalent member is equal to the CC&E expense of our Medicare business included in our operating costs divided by MA-equivalent approved members in a given period. MA-equivalent approved members is a derived metric and is equal to the sum of Medicare Part D approved members divided by 4, the number of Medicare Advantage approved members and the number of Medicare Supplement approved members in the given period.

⁽³⁾ 

Variable marketing cost per approved IFP-equivalent member represents direct costs incurred in member acquisition for IFP plans from our direct, marketing partners and online advertising channels divided by IFP-equivalent approved members in a given period. IFP-equivalent approved members is a derived metric and is equal to the sum of the number of short-term approved members divided by 3 and the IFP approved members in the given period.

⁽⁴⁾ 

IFP CC&E cost per approved IFP-equivalent member is equal to the CC&E expense of our IFP business included in our operating costs divided by IFP-equivalent approved members in a given period. IFP-equivalent approved members is a derived metric and is equal to the sum of the number of short-term approved members divided by 3 and the IFP approved members in the given period.

EHEALTH, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In thousands, except per share amounts, unaudited)

Three Months Ended March 31,

2020

2019

GAAP net income (loss)

$

3,452

$

(5,159)

Stock-based compensation expense ⁽¹⁾

8,714

3,229

Change in fair value of earnout liability ⁽²⁾

—

13,306

Amortization of intangible assets ⁽³⁾

547

547

Tax effect of non-GAAP adjustments ⁽⁴⁾

(2,396)

(4,687)

Non-GAAP net income

$

10,317

$

7,236

GAAP net income (loss) per diluted share

$

0.13

$

(0.24)

Stock-based compensation expense ⁽¹⁾

0.33

0.15

Change in fair value of earnout liability ⁽²⁾

—

0.61

Amortization of intangible assets ⁽³⁾

0.02

0.03

Tax effect of non-GAAP adjustments ⁽⁴⁾

(0.09)

(0.22)

Non-GAAP net income per diluted share

$

0.39

$

0.33

GAAP net income (loss)

$

3,452

$

(5,159)

Stock-based compensation expense ⁽¹⁾

8,714

3,229

Change in fair value of earnout liability ⁽²⁾

—

13,306

Depreciation and amortization ⁽⁵⁾

823

655

Amortization of intangible assets ⁽³⁾

547

547

Other income, net ⁽⁶⁾

(373)

(557)

Benefit from income taxes ⁽⁷⁾

(2,048)

(3,467)

Adjusted EBITDA

$

11,115

$

8,554

(1)

Non-GAAP net income, non-GAAP net income per diluted share and adjusted EBITDA exclude the effect of expensing stock-based compensation related to stock options and restricted stock units.

(2)

Non-GAAP net income, non-GAAP net income per diluted share and adjusted EBITDA exclude the change in fair value of earnout liability related to the acquisition of GoMedigap, which was completed in January 2018.

(3)

Non-GAAP net income, non-GAAP net income per diluted share and adjusted EBITDA exclude amortization of intangible assets.

(4)

Non-GAAP net income, non-GAAP net income per diluted share exclude the tax effect of non-GAAP adjustments.

(5)

Adjusted EBITDA excludes depreciation and amortization.

(6)

Adjusted EBITDA excludes other income, net.

(7)

Adjusted EBITDA excludes benefit from income taxes.

EHEALTH, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GUIDANCE

(In millions, except per share amounts, unaudited)

Year Ending December 31, 2020

Low

High

GAAP net income

$

70.0

$

85.0

Stock-based compensation expense

29.0

27.0

Amortization of intangible assets

1.5

1.5

Tax effect of non-GAAP adjustments

(7.0)

(6.6)

Non-GAAP net income ⁽¹⁾

$

93.5

$

106.9

GAAP net income per diluted share

$

2.55

$

3.10

Stock-based compensation expense

1.06

0.98

Amortization of intangible assets

0.05

0.05

Tax effect of non-GAAP adjustments

(0.25)

(0.23)

Non-GAAP net income per diluted share ⁽²⁾

$

3.41

$

3.90

GAAP net income

$

70.0

$

85.0

Stock-based compensation expense

29.0

27.0

Depreciation and amortization

5.0

4.0

Amortization of intangible assets

1.5

1.5

Other income, net

(1.5)

(2.5)

Provision for income taxes

21.0

25.0

Adjusted EBITDA ⁽³⁾

$

125.0

$

140.0

(1)

Non-GAAP net income is calculated by adding stock-based compensation, amortization of intangible assets, and the income tax effect of non-GAAP adjustments to GAAP net income.

(2)

Non-GAAP net income per diluted share is calculated by adding stock-based compensation expense per diluted share, amortization of intangible assets per diluted share per diluted share, and the income tax effect of non-GAAP adjustments to GAAP net income per diluted share.

(3)

Adjusted EBITDA is calculated by adding stock-based compensation, depreciation and amortization expense, amortization of intangible assets, other income, net, and provision for income taxes to GAAP net income.