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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): April 26, 2018

EHEALTH, INC.
(Exact Name of Registrant as Specified in its Charter)

 
 
 
Delaware
001-33071
56-2357876
(State or other jurisdiction of
(Commission File Number)
(I.R.S. Employer
incorporation)
 
Identification No.)

440 EAST MIDDLEFIELD ROAD
MOUNTAIN VIEW, CALIFORNIA 94043
(Address of principal executive offices)    (Zip Code)

(650) 584-2700
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company  ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
 
 





Section 2 - Financial Information

Item 2.02 Results of Operations and Financial Condition.

On April 26, 2018, eHealth, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter ended March 31, 2018. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Effective January 1, 2018, the Company adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers (ASC 606) to recognize revenue using the full retrospective method. The Company has revised financial information for annual periods associated with fiscal years ended December 31, 2015, 2016 and 2017 and for quarterly periods associated with fiscal years ended December 31, 2016 and 2017 to reflect the adoption of this new revenue recognition standard. The revised financial information and key metrics are furnished as Exhibit 99.2 to this Current Report on Form 8-K.

The information in Item 2.02 of this Current Report on Form 8-K and the exhibits attached hereto are intended to be “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Except as shall be expressly set forth by specific reference in such filing, the information contained herein and in the accompanying exhibits shall not be incorporated by reference into any filing with the Securities and Exchange Commission made by the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d)    Exhibits

Exhibit No.
Description
99.1
99.2






SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


 
 
 
Date:
April 26, 2018
/s/ David K. Francis                                                            
David K. Francis
Chief Financial Officer
(Principal Financial Officer)









EXHIBIT INDEX

Exhibit No.
Description
99.1
99.2



Exhibit



Exhibit 99.1
https://cdn.kscope.io/271e851917235bd907c264208e8fc3f9-ehealthlogoa01a02a01a01a12.jpg
eHealth, Inc. Announces First Quarter 2018 Results


First Quarter 2018 Overview

•
Revenue for the first quarter of 2018 was $43.1 million, a 4% increase compared to $41.6 million for the first quarter of 2017.
•
GAAP net loss for the first quarter of 2018 was $4.8 million compared to net income of $1.1 million for the first quarter of 2017.
•
Adjusted EBITDA was $(1.2) million for the first quarter of 2018 compared to $(1.0) million for the first quarter of 2017.
•
Net cash provided by operations for the first quarter of 2018 was $10.7 million compared to $8.4 million for the first quarter of 2017.

Effective January 1, 2018, eHealth adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers (ASC 606), using the full retrospective method. Prior period information presented has been adjusted to reflect the adoption of this new revenue recognition standard.

MOUNTAIN VIEW, Calif. — April 26, 2018 — eHealth, Inc. (NASDAQ: EHTH), a leading private online health insurance exchange, announced today its financial results for the first quarter ended March 31, 2018.

Scott Flanders, chief executive officer of eHealth stated, We had a great start to the year at eHealth with double-digit enrollment growth and 21% revenue growth in the Medicare segment. This growth generated significant Medicare segment profit as we meaningfully reduced variable marketing costs per approved member compared to a year ago and continued to improve customer conversion rates throughout the quarter.  We expanded and strengthened our approach to the Medicare Supplement market with the acquisition of GoMedigap whose early performance and integration are on target. Our small group business also performed well with the number of approved members increasing by more than 50% year-over-year. Only the individual and family plan business remained challenged for us, although we expect that recent changes in leadership and our go to market approach will allow us to gain better traction in the Individual market later in the year. The company is singularly focused on executing against the growth targets we established on our year-end earnings call, and I view our first quarter performance as a strong start toward achieving those objectives.”

GAAP — First Quarter of 2018 Results

Revenue — Revenue for the first quarter of 2018 totaled $43.1 million, a 4% increase compared to $41.6 million for the first quarter of 2017. Commission revenue for the first quarter of 2018 totaled $40.7 million, a 5% increase compared to $38.8 million for the first quarter of 2017. Other revenue for the first quarter of 2018 was $2.4 million, a 13% decrease compared to $2.7 million for the first quarter of 2017.

Revenue from our Medicare segment was $30.8 million for the first quarter of 2018, a 21% increase compared to $25.4 million for the first quarter of 2017. Revenue from our Individual, Family and Small Business segment was $12.3 million for the first quarter of 2018, a 24% decrease compared to $16.1 million for the first quarter of 2017.

Loss from Operations — Loss from operations for the first quarter of 2018 was $6.7 million compared to loss from operations of $4.1 million for the first quarter of 2017. Operating margin was (16)% for the first quarter of 2018 compared to (10)% for the first quarter of 2017.

Pre-tax Loss — Pre-tax loss for the first quarter of 2018 was $6.5 million compared to pre-tax loss of $3.8 million for the first quarter of 2017.

Benefit from Income Taxes — Benefit from income taxes for the first quarter of 2018 was $1.7 million compared to benefit from income taxes of $4.9 million for the first quarter of 2017.






Net Income (Loss) — Net loss for the first quarter of 2018 was $4.8 million, or $0.26 net loss per diluted share, compared to net income of $1.1 million, or $0.06 net income per diluted share, for the first quarter of 2017.

Segment Profit (Loss) — Profit from our Medicare segment was $3.2 million for the first quarter of 2018 compared to loss of $0.9 million for the first quarter of 2017. Profit from our Individual, Family and Small Business segment was $3.5 million for the first quarter of 2018, a 48% decrease compared to profit of $6.8 million for the first quarter of 2017.

Non-GAAP — First Quarter of 2018 Results

Non-GAAP Operating Loss & Non-GAAP Net Income — Non-GAAP operating loss for the first quarter of 2018 was $1.8 million compared to non-GAAP operating loss of $1.7 million for the first quarter of 2017. Non-GAAP operating margin was (4)% for each of the first quarter of 2018 and 2017. Non-GAAP net loss for the first quarter of 2018 was $1.3 million, or $0.07 net loss per diluted share, compared to non-GAAP net income of $2.5 million, or $0.13 net income per diluted share, for the first quarter of 2017.

Non-GAAP operating loss and operating margin for the first quarter of 2018 exclude $2.6 million of stock-based compensation expense, $1.9 million of restructuring costs, $0.1 million of acquisition costs related to our recently completed acquisition of GoMedigap, $0.5 million of amortization of intangible assets. Non-GAAP net loss and non-GAAP net loss per diluted share for the first quarter of 2018 exclude $2.6 million of stock-based compensation expense, $1.9 million of restructuring costs, $0.1 million of acquisition costs related to our recently completed acquisition of GoMedigap, $0.5 million of amortization of intangible assets and $1.4 million of benefit for income tax effect of these adjustments. Non-GAAP operating income for the first quarter of 2017 excludes $2.1 million of stock-based compensation expense and $0.3 million of amortization of intangible assets. Non-GAAP net income and non-GAAP net income per diluted share for the first quarter of 2017 exclude $2.1 million of stock-based compensation expense, $0.3 million of amortization of intangible assets and $1.0 million of benefit for income tax effect of these adjustments.

Adjusted EBITDA — Adjusted EBITDA was $(1.2) million for the first quarter of 2018 compared to $(1.0) million for the first quarter of 2017. Adjusted EBITDA is calculated by adding stock-based compensation, depreciation and amortization expense, acquisition costs related to our recently completed acquisition of GoMedigap, restructuring costs, amortization of intangible assets, other income (expense), net and provision (benefit) for income taxes to GAAP net income (loss).

Membership & Submitted Applications

Submitted Applications —Submitted applications for all Medicare products, which includes Medicare Advantage, Medicare Supplement and Prescription Drug Plans were 35,029 applications in the first quarter of 2018, a 12% increase compared to 31,277 applications in the first quarter of 2017. Submitted applications for individual and family plan products decreased 70% in the first quarter of 2018 to 6,570 applications compared to 22,011 applications in the first quarter of 2017.

Approved Members —Approved members for all Medicare products, which includes Medicare Advantage, Medicare Supplement and Prescription Drug Plans were 34,338 in the first quarter of 2018, a 12% increase compared to 30,796 applications in the first quarter of 2017. Approved members for individual and family plan products decreased in the first quarter of 2018 to 23,899 members compared to 41,403 member in the first quarter of 2017.

Membership — Total estimated membership as of March 31, 2018 was 893,319 members, which is flat compared to 892,707 estimated members we reported as of March 31, 2017. Estimated Medicare membership as of March 31, 2018 was 381,787, a 34% increase compared to 284,865 estimated members we reported as of March 31, 2017. Estimated individual and family plan membership as of March 31, 2018 was 182,655 members, a 31% decrease compared to 265,201 estimated members we reported as of March 31, 2017.

Cash — First Quarter of 2018

Cash Flows — Net cash provided by operating activities was $10.7 million for the first quarter of 2018 compared to net cash provided by operating activities of $8.4 million for the first quarter of 2017.






2018 Guidance

eHealth's guidance for the full year ending December 31, 2018 is based on information available as of April 26, 2018. These expectations are forward-looking statements, and eHealth assumes no obligation to update these statements. Actual results may be materially different and are affected by the risk factors and uncertainties identified in this release and in eHealth’s annual and quarterly filings with the Securities and Exchange Commission.

Dave Francis, chief financial and operating officer of eHealth said, “Our operational outlook for the year remains unchanged and we are reaffirming the revenue, GAAP net income, adjusted EBITDA, and segment revenue and profitability guidance for the full year 2018 that we initially provided on our fourth quarter 2017 earnings call. At the same time, our reporting of tax obligations as a result of adopting ASC 606 for GAAP purposes changed recently. While this change does not affect our cash tax expectations for this year, the accounting for our tax obligations has been adjusted, with the net effect being that we expect to report an effective full tax rate of approximately 27.5% for 2018 as opposed to tax expense of minimum cash taxes. As a result, we are adjusting our financial guidance as it relates to non-GAAP net income.”

eHealth is revising its non-GAAP net income guidance for the full year ending December 31, 2018 as follows:

•
Non-GAAP net income per diluted share is expected to be in the range of $0.69 to $0.95 per share. This compares to our prior expectations of $0.92 to $1.18 per share.

eHealth is reaffirming its remaining guidance for the full year ending December 31, 2018 as follows:

•
Total revenue is expected to be in the range of $217.5 million to $227.5 million. Revenue from the Medicare segment is expected to be in the range of $178.5 million to $183.5 million. Revenue from the Individual, Family and Small Business segment is expected to be in the range of $39.0 million to $44.0 million.

•
GAAP net income is expected to be in the range of $1.6 million to $6.6 million.

•
Adjusted EBITDA(a) is expected to be in the range of $21.9 million to $26.9 million.

•
Medicare segment profit(b) for the year ending December 31, 2018 is expected to be in the range of $45.5 million to $49.5 million. Individual, Family and Small Business segment profit(b) for the year ending December 31, 2018 is expected to be in the range of $6.0 million to $7.0 million. Corporate(c) shared service expenses, excluding stock-based compensation and depreciation and amortization expense, is expected to be approximately $29.5 million.

•
Adjusted EBITDA per diluted share(e) is expected to be in the range of $1.13 to $1.39 per share.

(a) Adjusted EBITDA is calculated by adding stock-based compensation, depreciation and amortization expense, restructuring charges, acquisition costs, amortization of intangible assets, other income (expense) and provision for income taxes to GAAP net income.
(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, 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, restructuring charges, acquisition costs, intangible asset amortization expense and the income tax effect of these adjustments to GAAP net income.
(e) Adjusted EBITDA per diluted share is calculated by adding stock-based compensation, depreciation and amortization expense, restructuring charges, acquisition costs, amortization of intangible assets, other income (expense) and provision for income taxes to GAAP net income per share.






Webcast and Conference Call Information

A Webcast and conference call will be held today, Thursday, April 26, 2018 at 5:00 p.m. Eastern / 2:00 p.m. Pacific Time.  The Webcast will be available live on the Investor Relations section on eHealth’s website at http://ir.ehealthinsurance.com. Individuals interested in listening to the conference call may do so by dialing (877) 930-8066 for domestic callers and (253) 336-8042 for international callers. The participant passcode is 2090739. A telephone replay will be available two hours following the conclusion of the call for a period of seven days and can be accessed by dialing (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. The call ID for the replay is 1988118. The live and archived webcast of the call will also be available on eHealth's website at http://www.ehealthinsurance.com under the Investor Relations section.

About eHealth, Inc.

eHealth, Inc. (NASDAQ: EHTH) operates eHealth.com, a leading private online health insurance exchange where individuals, families and small businesses can compare health insurance products from leading insurers side by side and purchase and enroll in coverage online. eHealth offers thousands of individual, family and small business health plans underwritten by many of the nation's leading health insurance companies. eHealth (through its subsidiaries) is licensed to sell health insurance in all 50 states and the District of Columbia. eHealth also offers educational resources and powerful online and pharmacy-based tools to help Medicare beneficiaries navigate Medicare health insurance options, choose the right plan and enroll in select plans online through PlanPrescriber.com (www.PlanPrescriber.com), eHealthMedicare.com (www.eHealthMedicare.com) and Medicare.com (www.Medicare.com) and GoMedigap.com (www.GoMedigap.com).

For more health insurance news and information, visit the eHealth consumer blog: Get Smart - Get Covered or visit eHealth's Consumer Resource Center.

Forward-Looking Statements

This press release contains statements that are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995. These include statements regarding our focus on executing against our growth targets, growth of our Medicare business and improvement in conversion rates, our approach to the Medicare supplement market, integration efforts with respect to GoMedigap, expectations regarding the individual and family business estimates regarding constrained lifetime values of commissions per member and constraints on lifetime value by product category, total memberships, Medicare memberships, Individual and Family plan memberships, ancillaries and small business memberships, our expected tax rate in 2018 and our guidance for the full year ending December 31, 2018, including our guidance for total revenue, revenue from the Medicare segment, revenue from the Individual, Family and Small Business segment, GAAP net income, Adjusted EBITDA, profit from the Medicare segment, profit from the Individual, Family and Small Business segment, Corporate shared service expense, GAAP net income per share, Non-GAAP net income per share and Adjusted EBITDA per share.

These forward-looking statements are inherently subject to various risks and uncertainties that could cause actual results to differ materially from the statements made. In particular, we are required by the new revenue recognition standard to make numerous assumptions that are based upon historical trends and management judgment. These assumptions may change over time and have a material impact on our revenue recognition, guidance, and results of operations. Please review the assumptions stated in this section carefully as well as the disclosures about our implementation of the new revenue recognition standard in our Form 10-Q for the fiscal quarter ended March 31, 2018.

Our forward-looking statements are inherently subject to other risks and uncertainties that could cause actual results to differ materially from the statements made, including risks associated with the impact of healthcare reform; our ability to retain existing members and enroll a large number of new members during the annual healthcare reform open enrollment period and Medicare annual enrollment period; the impact of annual enrollment period for the purchase of individual and family health insurance and its timing on our recognition of revenue; our ability to sell qualified health insurance plans to subsidy-eligible individuals and to enroll subsidy eligible individuals through government-run health insurance exchanges without users leaving our website for the upcoming open enrollment period; changes in laws and regulations, including in connection with healthcare reform; our ability to successfully make and integrate acquisitions; our health insurance benefit packages' ability to meet individual customer's specific health insurance and price needs; our ability to comply with CMS guidance and impact on conversion rates as a result of the federal exchange changes to enrollment; competition, including competition from government-run health insurance exchanges; seasonality of our business and the fluctuation of our operating results; our ability to retain existing members and limit member turnover; changes in consumer behaviors and their selection of individual and family health insurance products, including the selection of products for which we receive lower commissions; a reduction of product offerings among carriers and the resulting impact on our commission revenue; carriers exiting the market of selling





individual and family health insurance and the resulting impact on our supply and commission revenue; our ability to execute on our growth strategy in the Medicare and small business health insurance markets; the impact of increased health insurance costs on demand; our ability to timely receive and accurately predict the amount of commission payments from health insurance carriers; timing of commission payments from health insurance carriers; medical loss ratio requirements; delays in our receipt of items required to recognize Medicare revenue; changes in member conversion rates; our ability to accurately estimate membership; our relationships with health insurance carriers; customer concentration and consolidation of the health insurance industry; our success in marketing and selling health insurance plans and our unit cost of acquisition; our ability to hire, train and retain licensed health insurance agents and other employees; the need for health insurance carrier and regulatory approvals in connection with the marketing of Medicare-related insurance products; costs of acquiring new members; scalability of the Medicare business; lack of membership growth and retention rates; consumers satisfaction of our service; changes in competitive landscape; our ability to attract and to convert online visitors into paying members; changes in products offered on our ecommerce platform; changes and reductions in commission rates; maintaining and enhancing our brand identity; our ability to derive desired benefits from investments in our business, including membership growth initiatives; dependence on acceptance of the Internet as a marketplace for the purchase and sale of health insurance; reliance on marketing partners; the impact of our digital marketing efforts; timing of receipt and accuracy of commission reports; payment practices of health insurance carriers; dependence on our operations in China; compliance with insurance and other laws and regulations; exposure to security risks; and the performance, reliability and availability of our ecommerce platform and underlying network infrastructure.  Other factors that could cause operating, financial and other results to differ are described in eHealth’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K filed with the Securities and Exchange Commission and available on the investor relations page of eHealth’s website at http://www.ehealthinsurance.com and on the Securities and Exchange Commission’s website at www.sec.gov. eHealth does not undertake any obligation to update any forward-looking statement to conform the statement to actual results or changes in expectations.

Non-GAAP Financial Information
This press release includes financial measures that are not in accordance with U.S. generally accepted accounting principles (GAAP). To supplement eHealth’s condensed consolidated financial statements presented in accordance with GAAP, eHealth presents investors with certain non-GAAP financial measures, including non-GAAP operating income (loss); non-GAAP operating margins; adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA); non-GAAP net income (loss), non-GAAP net income (loss) per diluted share and Adjusted EBITDA per share.

•
Non-GAAP operating income (loss) consists of GAAP operating income (loss) excluding the following items:
•
the effects of expensing stock-based compensation related to stock options and restricted stock units,
•
acquisition costs,
•
restructuring charges, and
•
amortization of intangible assets.

•
Non-GAAP operating margins are calculated by dividing non-GAAP operating income (loss) by GAAP total revenue.

•
Non-GAAP net income (loss) consists of GAAP net income (loss) excluding the following items:
•
the effects of expensing stock-based compensation related to stock options and restricted stock units,
•
acquisition costs,
•
restructuring charges,
•
amortization of intangible assets, and
•
the income tax impact of excluded items.

•
Adjusted EBITDA is calculated by adding stock-based compensation, depreciation and amortization expense, acquisition costs, restructuring charges, amortization of intangible assets, other income (expense) and provision (benefit) for income taxes to GAAP net income (loss).

eHealth believes that the presentation of these non-GAAP financial measures provide important supplemental information to management and investors regarding financial and business trends relating to eHealth’s financial condition and results of operations. Management believes that the use of these non-GAAP financial measures provides consistency and comparability with eHealth’s past financial reports. Management also believes that the items described above provides an additional measure of eHealth’s operating results and facilitates comparisons of eHealth’s core operating performance against prior periods and business model objectives. This information is provided to investors in order to facilitate additional analyses of past, present and future operating performance and as a supplemental means to evaluate eHealth’s ongoing operations. eHealth believes that these non-GAAP financial measures are useful to investors in their assessment of eHealth’s operating performance.






Non-GAAP operating income (loss), non-GAAP operating margins, Adjusted EBITDA, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share and Adjusted EBITDA per share are not calculated in accordance with GAAP, and should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Non-GAAP financial measures used in this press release have limitations in that they do not reflect all of the revenue and costs associated with the operations of eHealth’s business and do not reflect income tax as determined in accordance with GAAP. As a result, you should not consider these measures in isolation or as a substitute for analysis of eHealth’s results as reported under GAAP. eHealth expects to continue to incur the stock-based compensation costs and purchased intangible asset amortization costs described above, and exclusion of these costs, and their related income tax benefits, from non-GAAP financial measures should not be construed as an inference that these costs are unusual or infrequent. eHealth compensates for these limitations by prominently disclosing GAAP operating income (loss), GAAP operating margins, GAAP net income (loss) and GAAP net income (loss) per diluted share and providing investors with reconciliations from eHealth’s GAAP operating results to the non-GAAP financial measures for the relevant periods.

The accompanying tables provide more details on the GAAP financial measures that are most directly comparable to the non-GAAP financial measures described above and the related reconciliations between these financial measures.


Investor Relations Contact:
Kate Sidorovich, CFA
Vice President Investor Relations
440 East Middlefield Road
Mountain View, CA 94043
(650) 210-3111
kate.sidorovich@ehealth.com
http://ir.ehealthinsurance.com

(Tables to Follow)

# # #







EHEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)

 
December 31, 2017
 
March 31,
 2018
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
40,293

 
$
34,742

Accounts receivable
1,475

 
668

Commissions receivable - current
109,666

98,322,000

98,768

Prepaid expenses and other current assets
4,305

 
6,008

Total current assets
155,739

 
140,186

Commissions receivable - non-current
169,751

 
173,714

Property and equipment, net
4,705

 
4,616

Other assets
7,287

 
7,900

Intangible assets, net
7,540

 
13,889

Goodwill
14,096

 
40,233

Total assets
$
359,118

 
$
380,538

Liabilities and stockholders’ equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
3,246

 
$
2,789

Accrued compensation and benefits
15,498

 
8,718

Accrued marketing expenses
4,693

 
2,802

Accrued restructuring charges
—

 
1,053

Earnout liability- current
—

 
14,580

Other current liabilities
2,008

 
1,785

Total current liabilities
25,445

 
31,727

Earnout liability - non-current
—

 
13,120

Deferred income taxes - non-current
45,089

 
43,353

Other non-current liabilities
1,920

 
2,235

Stockholders’ equity:
 
 
 
Common stock
30

 
30

Additional paid-in capital
281,706

 
289,925

Treasury stock, at cost
(199,998
)
 
(199,998
)
Retained earnings
204,725

 
199,880

Accumulated other comprehensive income
201

 
266

Total stockholders’ equity
286,664

 
290,103

Total liabilities and stockholders’ equity
$
359,118

 
$
380,538









EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)


 
Three Months Ended
March 31,
 
2017
 
2018
Revenue
 
 
 
Commission
$
38,837

 
$
40,707

Other
2,719

 
2,363

Total revenue
41,556

 
43,070

Operating costs and expenses:
 
 
 
Cost of revenue
181

 
152

Marketing and advertising
15,055

 
15,002

Customer care and enrollment
12,109

 
13,239

Technology and content
8,072

 
8,341

General and administrative
9,992

 
10,691

Restructuring charges
—

 
1,856

Acquisition costs
—

 
58

Amortization of intangible assets
260

 
451

Total operating costs and expenses
45,669

 
49,790

Loss from operations
(4,113
)
 
(6,720
)
Other income (expense), net
277

 
184

Loss before benefit for income taxes
(3,836
)
 
(6,536
)
Benefit for income taxes
(4,916
)
 
(1,691
)
Net income (loss)
$
1,080

 
$
(4,845
)
 
 
 
 
Net income (loss) per share:
 
 
 

Basic
$
0.06

 
$
(0.26
)
Diluted
$
0.06

 
$
(0.26
)
 
 
 
 
Weighted-average number of shares used in per share amounts:
 
 
 

Basic
18,370

 
18,873

Diluted
18,561

 
18,873

 
 
 
 
(1) Includes stock-based compensation as follows:
 
 
 
Marketing and advertising
$
215

 
$
370

Customer care and enrollment
12

 
165

Technology and content
394

 
343

General and administrative
1,512

 
1,672

Restructuring
—

 
251

Total stock-based compensation expense
$
2,133

 
$
2,801









EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)

    
 
Three Months Ended
March 31,
 
2017
 
2018
Operating activities
 

 
 

Net income (loss)
$
1,080

 
$
(4,845
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Deferred income taxes
(3,343
)
 
(1,736
)
Depreciation and amortization
762

 
619

Amortization of internally developed software
291

 
477

Amortization of intangible assets
260

 
451

Stock-based compensation expense
2,133

 
2,801

Other non-cash items
(59
)
 
389

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
787

 
807

Commissions receivable
18,960

 
22,409

Prepaid expenses and other assets
107

 
(1,793
)
Accounts payable
(3,417
)
 
(567
)
Accrued compensation and benefits
(3,023
)
 
(6,912
)
Accrued marketing expenses
(4,082
)
 
(1,891
)
Deferred revenue
(190
)
 
(289
)
Accrued restructuring charges
—

 
1,053

Accrued expense and other liabilities
(1,838
)
 
(236
)
Net cash provided by operating activities
8,428

 
10,737

Investing activities
 
 
 
Capitalized internal-use software and website development costs
(802
)
 
(989
)
Purchases of property and equipment and other assets
(862
)
 
(217
)
Acquisition of business, net of cash acquired
—

 
(14,929
)
Net cash used in investing activities
(1,664
)
 
(16,135
)
Financing activities
 
 
 
Proceeds from exercise of common stock options
—

 
109

Cash used to net-share settle equity awards
(300
)
 
(286
)
Principal payments in connection with capital leases
(32
)
 
(26
)
Net cash used in financing activities
(332
)
 
(203
)
Effect of exchange rate changes on cash and cash equivalents
15

 
50

Net increase (decrease) in cash and cash equivalents
6,447

 
(5,551
)
Cash and cash equivalents at beginning of period
61,781

 
40,293

Cash and cash equivalents at end of period
$
68,228

 
$
34,742









EHEALTH, INC.
SEGMENT INFORMATION
(In thousands, unaudited)

 
Three Months Ended
March 31
 
2017
 
2018
Revenue
 
 
 
Medicare (1)
$
25,410

 
$
30,763

Individual, Family and Small Business (2)
16,146

 
12,307

Total revenue
$
41,556

 
$
43,070

 
 
 
 
Segment profit (loss)
 
 
 
Medicare segment profit (loss) (3)
$
(929
)
 
$
3,180

Individual, Family and Small Business segment profit (3)
6,770

 
3,488

Total segment profit
5,841

 
6,668

Corporate (4)
(6,799
)
 
(7,854
)
Stock-based compensation expense
(2,133
)
 
(2,550
)
Depreciation and amortization
(762
)
 
(619
)
Restructuring charges
—

 
(1,856
)
Acquisition costs
—

 
(58
)
Amortization of intangible assets
(260
)
 
(451
)
Other income (expense), net
277

 
184

Loss before benefit from income taxes
$
(3,836
)
 
$
(6,536
)

Segment Information

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, vision, life, short term disability and long term disability insurance, 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 and family and small business health insurance plans and ancillary products sold to our non-Medicare-eligible customers, including but not limited to, dental, vision, life, short term disability and long term disability 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 (loss) 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, restructuring benefit 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,
2017
 
March 31,
 2018
 
Percent
Change
Medicare
 
 
 
 
 
Medicare Advantage
$
19,205

 
$
21,935

 
14
 %
Medicare Supplement
3,914

 
5,592

 
43
 %
Medicare Part D
1,378

 
1,159

 
(16
)%
Total Medicare
24,497

 
28,686

 
17
 %
 
 
 
 
 
 
Individual and Family (1)
 
 
 
 
 
Non-Qualified Health Plans
3,773

 
1,441

 
(62
)%
Qualified Health Plans
3,132

 
2,162

 
(31
)%
Total Individual and Family
6,905

 
3,603

 
(48
)%
 
 
 
 
 
 
Ancillaries
 
 
 
 
 
Short-term
1,846

 
1,250

 
(32
)%
Dental
1,847

 
1,599

 
(13
)%
Vision
570

 
340

 
(40
)%
Other
765

 
2,391

 
213
 %
Total Ancillaries
5,028

 
5,580

 
11
 %
 
 
 
 
 
 
Small Business
1,924

 
2,359

 
23
 %
 
 
 
 
 
 
Commission Bonus
483

 
479

 
(1
)%
 
 
 
 
 
 
Total Commission Revenue
$
38,837

 
$
40,707

 
5
 %

(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
SUBMITTED APPLICATIONS
(Unaudited)

 
Three Months Ended March 31,
 
 
 
2017
 
2018
 
Percent Change
Medicare (1)
 
 
 
 
 
Medicare Advantage
21,799

 
24,796

 
14
 %
Medicare Supplement
4,540

 
6,388

 
41
 %
Medicare Part D
4,938

 
3,845

 
(22
)%
Total Medicare
31,277

 
35,029

 
12
 %
 
 
 
 
 
 
Individual and Family (2)
 
 
 
 
 
Non-Qualified Health Plans
14,264

 
3,886

 
(73
)%
Qualified Health Plans
7,747

 
2,684

 
(65
)%
Total Individual and Family
22,011

 
6,570

 
(70
)%
 
 
 
 
 
 
Ancillaries (3)
 
 
 
 
 
Short-term
24,285

 
19,495

 
(20
)%
Dental
23,378

 
12,993

 
(44
)%
Vision
9,857

 
5,584

 
(43
)%
Other
4,699

 
13,341

 
184
 %
Total Ancillaries
62,219

 
51,413

 
(17
)%
 
 
 
 
 
 
Small Business (4)
1,162

 
1,720

 
48
 %
 
 
 
 
 
 
Total Submitted Applications
116,669

 
94,732

 
(19
)%

Submitted Applications

Applications are counted as submitted when the applicant completes the application and either clicks the submit button on our website or provides verbal authorization to submit the application. The applicant may have additional actions to take before the application will be reviewed by the insurance carrier, such as providing additional information. In addition, an applicant may submit more than one application.

(1)
Medicare-related health insurance applications submitted on our website or through our customer care center during the period, including Medicare Advantage, Medicare Part D prescription drug and Medicare Supplement plans.
(2)
Major medical Individual and Family plan ("IFP") health insurance applications submitted on our website during the period. An applicant may submit more than one application. We define our IFP offerings as major medical individual and family health insurance plans, which does not include Medicare-related, small business or ancillary plans.
(3)
Ancillary Plans consists primarily of short-term, dental and vision insurance plans submitted on our website during the period.
(4)
Applications for small business health insurance applications are counted as submitted when the applicant completes the application, the employees complete their applications, the applicant submits the application to us and we submit the application to the carrier.








EHEALTH, INC.
SUMMARY OF SELECTED METRICS
APPROVED MEMBERS
(Unaudited)

 
Three Months Ended March 31,
 
 
 
2017
 
2018
 
Percent Change
Medicare
 
 
 
 
 
Medicare Advantage
21,465

 
24,620

 
15
 %
Medicare Supplement
4,199

 
5,416

 
29
 %
Medicare Part D
5,132

 
4,302

 
(16
)%
Total Medicare
30,796

 
34,338

 
12
 %
 
 
 
 
 
 
Individual and Family
 
 
 
 
 
Non-Qualified Health Plans
24,799

 
9,213

 
(63
)%
Qualified Health Plans
16,604

 
14,686

 
(12
)%
Total Individual and Family
41,403

 
23,899

 
(42
)%
 
 
 
 
 
 
Ancillaries
 
 
 
 
 
Short-term
21,251

 
20,996

 
(1
)%
Dental
24,734

 
19,524

 
(21
)%
Vision
10,753

 
6,595

 
(39
)%
Other
5,028

 
9,026

 
80
 %
Total Ancillaries
61,766

 
56,141

 
(9
)%
 
 
 
 
 
 
Small Business
3,484

 
5,294

 
52
 %
 
 
 
 
 
 
Total Approved Members
137,449

 
119,672

 
(13
)%

Approved Members
Approved Members represents the number of individuals on submitted applications that were approved by the relevant insurance carrier for the identified product during the relevant period. Approved members may not pay for their plan and become paying members.








EHEALTH, INC.
SUMMARY OF SELECTED METRICS
ESTIMATED MEMBERSHIP
(Unaudited)

 
Three Months Ended March 31,
 
 
 
2017
 
2018
 
Percent Change
Medicare (1)
 
 
 
 
 
Medicare Advantage
174,561

 
218,685

 
25
 %
Medicare Supplement
24,654

 
58,507

 
137
 %
Medicare Part D
85,650

 
104,595

 
22
 %
Total Medicare
284,865

 
381,787

 
34
 %
 
 
 
 
 
 
Individual and Family (2)
265,201

 
182,655

 
(31
)%
 
 
 
 
 
 
Ancillaries (3)
 
 
 
 
 
Short-term
20,821

 
15,467

 
(26
)%
Dental
181,422

 
162,570

 
(10
)%
Vision
86,294

 
79,872

 
(7
)%
Other
23,361

 
35,423

 
52
 %
Total Ancillaries
311,898

 
293,332

 
(6
)%
 
 
 
 
 
 
Small Business (4)
30,743

 
35,545

 
16
 %
 
 
 
 
 
 
Total Estimated Membership
892,707

 
893,319

 
—
 %

Estimated Membership
Estimated membership represents the estimated number of members active as of the date indicated based on the number of members for whom we have received or applied a commission payment during the month of estimation.
(1)
For 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 is up to two 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 from the same month of the previous year 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. Estimated number of members active on Medicare-related health insurance as of the date indicated based on 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, 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 is up to six 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 by the percentage of members who do not accept their approved policy from the same month of the previous year 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. For IFP health insurance plans, a member who purchases and is active on multiple standalone insurance plans will be counted as a member more than once. For example, a member who is active on both an individual and family health insurance plan and a standalone dental plan will be counted as two continuing members.






EHEALTH, INC.
SUMMARY OF SELECTED METRICS
ESTIMATED MEMBERSHIP (Continued)
(Unaudited)

(3)
For 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 is 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 from the same month of the previous year 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)
For small business health insurance plans, we estimate the number of members using the number of initial members at the time the group is approved, and we update this number for changes in membership if such changes are reported to us by the group or carrier in the period it is reported. 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.

Health insurance carrier’s bill and collect insurance premiums paid by our members. The carriers do not report to us the number of members that we have as of a given date. The majority of our members who terminate their policies do so by discontinuing their premium payments to the carrier and do not inform us of the cancellation. Also, some of our members pay their premiums less frequently than monthly. Given the number of months required to observe non-payment of commissions in order to confirm cancellations, we estimate the number of members who are active on insurance policies as of a specified date.
After we have estimated membership for a period, we may receive information from health insurance carriers that would have impacted the estimate if we had received the information prior to the date of estimation. We may receive commission payments or other information that indicates that a member who was not included in our estimates for a prior period was in fact an active member at that time, or that a member who was included in our estimates was in fact not an active member of ours. For instance, we reconcile information carriers provide to us and may determine that we were not historically paid commissions owed to us, which would cause us to have underestimated membership. Conversely, carriers may require us to return commission payments paid in a prior period due to policy cancellations for members we previously estimated as being active. We do not update our estimated membership numbers reported in previous periods. Instead, we reflect updated information regarding our historical membership in the membership estimate for the current period. As a result of the delay in our receipt of information from insurance carriers, actual trends in our membership are most discernible over periods longer than from one quarter to the next. As a result of the delay we experience in receiving information about our membership, it is difficult for us to determine with any certainty the impact of current conditions on our membership retention. Health care reform and its impacts as well as other factors could cause the assumptions and estimates that we make in connection with estimating our membership to be inaccurate, which would cause our membership estimates to be inaccurate.






EHEALTH, INC.
SUMMARY OF SELECTED METRICS
CONSTRAINED LIFETIME VALUE OF
COMMISSIONS PER APPROVED MEMBER
(Unaudited)

 
Three Months Ended March 31,
 
 
 
2017
 
2018
 
Percentage Change
Medicare
 
 
 
 
 
Medicare Advantage (1)
$
892

 
$
880

 
(1
)%
Medicare Supplement (1)
$
932

 
$
1,029

 
10
 %
Medicare Part D (1)
$
268

 
$
270

 
1
 %
 
 
 
 
 
 
Individual and Family
 
 
 
 
 
Non-Qualified Health Plans (1)
$
139

 
$
140

 
1
 %
Qualified Health Plans (1)
$
134

 
$
134

 
—
 %
 
 
 
 
 
 
Ancillaries
 
 
 
 
 
Short-term (1)
 
$
87

 
$
60

 
(31
)%
Dental (1)
$
71

 
$
74

 
4
 %
Vision (1)
$
53

 
$
51

 
(4
)%
 
 
 
 
 
 
Small Business (2)
$
168

 
$
178

 
6
 %

Constrained Lifetime Value of Commissions Per Approved Member
(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, expected policy churn and applied constraints. 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 12-months. The estimate is driven by multiple factors, including but not limited to, contracted commission rates, carrier mix, expected policy churn 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 COMMISIONS PER APPROVED MEMBER
(Unaudited)

 
Three Months Ended
March 31,
 
2017
 
2018
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
20
%
 
20
%
 
 
 
 
Ancillaries
10
%
 
10
%
 
 
 
 
Small Business
—

 
—


Constraints on Lifetime Value of Commissions Per Approved Member
Constraints are applied to derive the constrained lifetime value ("LTV") of commissions per approved member for revenue recognition in accordance with our revenue recognition policy. The constraints are applied to help ensure that commissions estimated to be collected over the estimated life of an approved member’s plan are recognized as revenue only to the extent that is it probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with future commissions receivable from the plan is subsequently resolved. We evaluate constraints on an annual basis for factors affecting our estimate of LTV of commissions per approved member and apply management judgment to determine the constraints based on current trends impacting our business.






















EHEALTH, INC.
SUMMARY OF SELECTED METRICS
EXPENSE METRICS PER APPROVED MEMBER
(Unaudited)

 
Three Months Ended March 31,
 
 
 
2017
 
2018
 
Percent Change
Variable marketing cost per approved member
 
 
 
 
 
Medicare variable marketing cost per approved Medicare Advantage ("MA")-equivalent member (1)
$
408

 
$
289

 
(29
)%
Individual and Family Plan ("IFP") variable marketing cost per approved IFP-equivalent member (2)
$
35

 
$
41

 
17
 %
 
 
 
 
 
 
Customer care and enrollment ("CC&E") expense per approved member
 
 
 
 
 
Medicare CC&E expense per approved MA-equivalent member (3)
$
337

 
$
350

 
4
 %
IFP CC&E expense per approved IFP-equivalent member (4)
$
42

 
$
43

 
2
 %

Expense Metrics Per Approved Member

(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)
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.
(3)
Medicare CC&E expense per approved MA-equivalent member is equal to the CC&E expense of our Medicare business included in our operating costs and reported in our condensed consolidated statements of operations 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.
(4)
IFP CC&E expense per approved IFP-equivalent member is equal to the CC&E expense of our IFP business included in our operating costs and reported in our condensed consolidated statement of operations 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,
 
2017
 
2018
 
Amount
 
Percent of Total Revenue
 
Amount
 
Percent of Total Revenue
GAAP marketing and advertising expense
$
15,055

 
36%
 
$
15,002

 
35%
Stock-based compensation expense (1)
(215
)
 
(1)%
 
(370
)
 
(1)%
Non-GAAP marketing and advertising expense
$
14,840

 
36%
 
$
14,632

 
34%
 
 
 
 
 
 
 
 
GAAP customer care and enrollment expense
$
12,109

 
29%
 
$
13,239

 
31%
Stock-based compensation expense (1)
(12
)
 
—%
 
(165
)
 
—%
Non-GAAP customer care and enrollment expense
$
12,097

 
29%
 
$
13,074

 
30%
 
 
 
 
 
 
 
 
GAAP technology and content expense
$
8,072

 
19%
 
$
8,341

 
19%
Stock-based compensation expense (1)
(394
)
 
(1)%
 
(343
)
 
(1)%
Non-GAAP technology and content expense
$
7,678

 
18%
 
$
7,998

 
19%
 
 
 
 
 
 
 
 
GAAP general and administrative expense
$
9,992

 
24%
 
$
10,691

 
25%
Stock-based compensation expense (1)
(1,512
)
 
(4)%
 
(1,672
)
 
(4)%
Non-GAAP general and administrative expense
$
8,480

 
20%
 
$
9,019

 
21%
 
 
 
 
 
 
 
 
GAAP operating costs and expenses
$
45,669

 
110%
 
$
49,790

 
116%
Stock-based compensation expense (1)
(2,133
)
 
(5)%
 
(2,550
)
 
(6)%
Acquisition costs (2)
—

 
—%
 
(58
)
 
—%
Restructuring charges (3)
—

 
—%
 
(1,856
)
 
(4)%
Amortization of intangible assets (4)
(260
)
 
(1)%
 
(451
)
 
(1)%
Non-GAAP operating costs and expenses
$
43,276

 
104%
 
$
44,875

 
104%
 
 
 
 
 
 
 
 
GAAP loss from operations
$
(4,113
)
 
(10)%
 
$
(6,720
)
 
(16)%
Stock-based compensation expense (1)
2,133

 
5%
 
2,550

 
6%
Acquisition costs (2)
—

 
—%
 
58

 
—%
Restructuring charges (3)
—

 
—%
 
1,856

 
—%
Amortization of intangible assets (4)
260

 
1%
 
451

 
1%
Non-GAAP loss from operations
$
(1,720
)
 
(4)%
 
$
(1,805
)
 
(4)%

Explanation of Adjustments
(1)
Non-GAAP loss from operations and non-GAAP expenses exclude the effect of expensing stock-based compensation related to stock options and restricted stock units.
(2)
Non-GAAP loss from operations excludes costs related to the acquisition of GoMedigap, which was completed in January 2018.
(3)
Non-GAAP loss from operations excludes restructuring charges.
(4)
Non-GAAP loss from operations excludes amortization of intangible assets.








EHEALTH, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts, unaudited)

 
Three Months Ended
March 31,
 
2017
 
2018
GAAP net income (loss)
$
1,080

 
$
(4,845
)
Stock-based compensation expense (1)
2,133

 
2,550

Acquisition costs (2)
—

 
58

Restructuring charges (3)
—

 
1,856

Amortization of intangible assets (4)
260

 
451

Benefit for income taxes (5)
(975
)
 
(1,375
)
Non-GAAP net income (loss)
$
2,498

 
$
(1,305
)
 
 
 
 
GAAP net income (loss) per diluted share
$
0.06

 
$
(0.26
)
Stock-based compensation expense (1)
0.11

 
0.14

Acquisition costs (2)
—

 
—

Restructuring charges(3)
—

 
0.10

Amortization of intangible assets (4)
0.01

 
0.02

Benefit for income taxes (5)
(0.05
)
 
(0.07
)
Non-GAAP net income per diluted share
$
0.13

 
$
(0.07
)
 
 
 
 
GAAP net income (loss)
$
1,080

 
$
(4,845
)
Stock-based compensation expense (1)
2,133

 
2,550

Depreciation and amortization (6)
762

 
619

Acquisition costs (2)
—

 
58

Restructuring charges (3)
—

 
1,856

Amortization of intangible assets (4)
260

 
451

Other (income) expense, net (7)
(277
)
 
(184
)
Benefit for income taxes (5)
(4,916
)
 
(1,691
)
Adjusted EBITDA
$
(958
)
 
$
(1,186
)

Explanation of Adjustments

(1)
Non-GAAP net income (loss), Non-GAAP net income (loss) 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 (loss), Non-GAAP net income (loss) per diluted share and Adjusted EBITDA exclude costs related to the acquisition of GoMedigap, which was completed in January 2018.
(3)
Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share and Adjusted EBITDA exclude restructuring charges.
(4)
Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share and Adjusted EBITDA exclude amortization of intangible assets.
(5)
Non-GAAP net income (loss), Non-GAAP net income (loss) per share and Adjusted EBITDA exclude provision (benefit) for income taxes.
(6)
Adjusted EBITDA excludes depreciation and amortization.
(7)
Adjusted EBITDA excludes other income (expense), net.





EHEALTH, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GUIDANCE
(In millions, except per share amounts, unaudited)

 
Year Ending
December 31, 2018
Adjusted EBITDA:
 
GAAP net income
$1.6 - $6.6
Stock-based compensation expense
11.9
Depreciation and amortization
3.2
Amortization of intangible assets
2.1
Restructuring charges
2.1
Acquisition charges
0.1
Other income (expense), net
(0.7)
Provision for income taxes
1.6
Adjusted EBITDA (1)
$21.9 - $26.9
 
 
Adjusted EBITDA Per Diluted Share:
 
GAAP net income per diluted share
$0.08 - $0.34
Stock-based compensation expense
0.61
Depreciation and amortization
0.17
Amortization of intangible assets
0.11
Restructuring charges
0.11
Acquisition costs
0.01
Other income (expense), net
(0.04)
Provision for income taxes
0.08
Adjusted EBITDA per diluted share (2)
$1.13 - $1.39
 
 
Non-GAAP Net Income Per Diluted Share:
 
GAAP net income per diluted share
$0.08 - $0.34
Stock-based compensation expense
0.61
Amortization of intangible assets
0.11
Restructuring charges
0.11
Acquisition costs
0.01
Provision for income taxes
(0.23)
Non-GAAP net income per diluted share (3)
$0.69 - $0.95

Explanation of Adjustments
(1)
Adjusted EBITDA is calculated by adding stock-based compensation, depreciation and amortization expense, restructuring charges, amortization of intangible assets, other income (expense) and provision for income taxes to GAAP net income.
(2)
Adjusted EBITDA per diluted share is calculated by adding stock-based compensation, depreciation and amortization expense, restructuring charges, amortization of intangible assets, other income (expense) and provision for income taxes to GAAP net income per share.
(3)
Non-GAAP net income per share is calculated by excluding stock-based compensation expense, restructuring charges and intangible asset amortization expense to GAAP net income.







Exhibit
Exhibit 99.2
EHEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS PREVIOUSLY REPORTED AND AS ADJUSTED
FOR THE IMPACT OF ASC 606 ADOPTION
(In thousands, unaudited)

 
December 31, 2015
 
December 31, 2016
 
December 31, 2017
 
As
Reported
 
As
Adjusted
 
As
Reported
 
As
Adjusted
 
As
Reported
 
As
Adjusted
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
62,710

 
$
62,710

 
$
61,781

 
$
61,781

 
$
40,293

 
$
40,293

Accounts receivable
9,647

 
3,511

 
9,213

 
1,948

 
9,894

 
1,475

Commissions receivable - current
—

 
109,241

 
—

 
104,726

 
—

 
109,666

Prepaid expenses and other current assets
5,185

 
3,667

 
5,148

 
3,857

 
4,845

 
4,305

Total current assets
77,542

 
179,129

 
76,142

 
172,312

 
55,032

 
155,739

Commissions receivable - non current
—

 
140,505

 
—

 
153,051

 
—

 
169,751

Property and equipment, net
7,364

 
7,364

 
5,608

 
5,608

 
4,705

 
4,705

Other assets
4,697

 
2,831

 
4,473

 
3,807

 
7,317

 
7,287

Intangible assets, net
9,620

 
9,620

 
8,580

 
8,580

 
7,540

 
7,540

Goodwill
14,096

 
14,096

 
14,096

 
14,096

 
14,096

 
14,096

Total assets
$
113,319

 
$
353,545

 
$
108,899

 
$
357,454

 
$
88,690

 
$
359,118

Liabilities and stockholders’ equity
 
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
3,012

 
$
3,012

 
$
5,112

 
$
5,112

 
$
3,246

 
$
3,246

Accrued compensation and benefits
14,386

 
14,386

 
10,920

 
10,920

 
15,498

 
15,498

Accrued marketing expenses
10,698

 
11,963

 
7,158

 
8,058

 
4,088

 
4,693

Other current liabilities
3,840

 
1,261

 
4,734

 
1,428

 
3,815

 
2,008

Total current liabilities
31,936

 
30,622

 
27,924

 
25,518

 
26,647

 
25,445

Deferred income taxes - non-current
—

 
80,491

 
—

 
75,403

 
—

 
45,089

Other non-current liabilities
4,962

 
6,257

 
3,374

 
4,253

 
900

 
1,920

Stockholders’ equity:
 
 
 
 
 
 
 
 
 
 
 
Common stock
29

 
29

 
29

 
29

 
30

 
30

Additional paid-in capital
266,699

 
266,699

 
272,778

 
272,778

 
281,706

 
281,706

Treasury stock, at cost
(199,998
)
 
(199,998
)
 
(199,998
)
 
(199,998
)
 
(199,998
)
 
(199,998
)
Retained earnings (accumulated deficit)
9,498

 
169,252

 
4,616

 
179,295

 
(20,796
)
 
204,725

Accumulated other comprehensive income
193

 
193

 
176

 
176

 
201

 
201

Total stockholders’ equity
76,421

 
236,175

 
77,601

 
252,280

 
61,143

 
286,664

Total liabilities and stockholders’ equity
$
113,319

 
$
353,545

 
$
108,899

 
$
357,454

 
$
88,690

 
$
359,118





EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AS PREVIOUSLY REPORTED
(In thousands, except per share amounts, unaudited)

 
For the Three Months Ended
 
For the Year Ended December 31,
 
Mar. 31, 2016
 
Jun. 30, 2016
 
Sep. 30, 2016
 
Dec. 31, 2016
 
Mar. 31, 2017
 
Jun. 30, 2017
 
Sep. 30, 2017
 
Dec. 31, 2017
 
2015
 
2016
 
2017
As reported:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commission
$
69,387

 
$
34,649

 
$
29,941

 
$
36,873

 
$
76,182

 
$
25,802

 
$
24,663

 
$
31,777

 
$
171,257

 
$
170,850

 
$
158,424

Other
4,457

 
2,628

 
2,138

 
6,887

 
2,757

 
2,155

 
1,956

 
7,063

 
18,284

 
16,110

 
13,931

Total revenue
73,844

 
37,277

 
32,079

 
43,760

 
78,939

 
27,957

 
26,619

 
38,840

 
189,541

 
186,960

 
172,355

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue
2,184

 
533

 
30

 
429

 
1,629

 
204

 
176

 
264

 
4,178

 
3,176

 
2,273

Marketing and advertising
20,882

 
12,936

 
10,206

 
28,189

 
15,055

 
14,240

 
13,383

 
23,196

 
75,571

 
72,213

 
65,874

Customer care and enrollment
10,400

 
10,611

 
11,456

 
16,251

 
12,109

 
12,012

 
15,798

 
19,264

 
43,159

 
48,718

 
59,183

Technology and content
8,507

 
8,289

 
8,257

 
7,696

 
8,072

 
7,932

 
8,354

 
8,531

 
36,351

 
32,749

 
32,889

General and administrative
7,928

 
10,615

 
8,925

 
7,748

 
9,992

 
10,534

 
9,353

 
10,090

 
30,239

 
35,216

 
39,969

Restructuring charges (benefit)
—

 
(158
)
 
(139
)
 
—

 
—

 
—

 
—

 
—

 
4,541

 
(297
)
 
—

Acquisition costs
—

 
—

 
—

 
—

 
—

 
—

 
—

 
621

 
—

 
—

 
621

Amortization of intangible assets
260

 
260

 
260

 
260

 
260

 
260

 
260

 
260

 
1,153

 
1,040

 
1,040

Total operating costs and expenses
50,161

 
43,086

 
38,995

 
60,573

 
47,117

 
45,182

 
47,324

 
62,226

 
195,192

 
192,815

 
201,849

Income (loss) from operations
23,683

 
(5,809
)
 
(6,916
)
 
(16,813
)
 
31,822

 
(17,225
)
 
(20,705
)
 
(23,386
)
 
(5,651
)
 
(5,855
)
 
(29,494
)
Other income (expense), net
(11
)
 
(21
)
 
7

 
127

 
26

 
90

 
98

 
113

 
45

 
102

 
327

Income (loss) before provision (benefit) for income taxes
23,672

 
(5,830
)
 
(6,909
)
 
(16,686
)
 
31,848

 
(17,135
)
 
(20,607
)
 
(23,273
)
 
(5,606
)
 
(5,753
)
 
(29,167
)
Provision (benefit) for income taxes
5,638

 
(5,354
)
 
(1,173
)
 
18

 
(1,573
)
 
125

 
9

 
(2,315
)
 
(843
)
 
(871
)
 
(3,755
)
Net income (loss)
$
18,034

 
$
(476
)
 
$
(5,736
)
 
$
(16,704
)
 
$
33,421

 
$
(17,260
)
 
$
(20,616
)
 
$
(20,958
)
 
$
(4,763
)
 
$
(4,882
)
 
$
(25,412
)
Net income (loss) per share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.99

 
$
(0.03
)
 
$
(0.31
)
 
$
(0.91
)
 
$
1.82

 
$
(0.93
)
 
$
(1.11
)
 
$
(1.12
)
 
$
(0.26
)
 
$
(0.27
)
 
$
(1.37
)
Diluted
$
0.99

 
$
(0.03
)
 
$
(0.31
)
 
$
(0.91
)
 
$
1.80

 
$
(0.93
)
 
$
(1.11
)
 
$
(1.12
)
 
$
(0.26
)
 
$
(0.27
)
 
$
(1.37
)
Weighted-average number of shares used in per share amounts:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
18,153

 
18,258

 
18,329

 
18,345

 
18,370

 
18,481

 
18,565

 
18,632

 
18,008

 
18,272

 
18,512

Diluted
18,217

 
18,258

 
18,329

 
18,345

 
18,561

 
18,481

 
18,565

 
18,632

 
18,008

 
18,272

 
18,512







EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AS ADJUSTED FOR THE IMPACT OF ASC 606 ADOPTION
(In thousands, except per share amounts, unaudited)

 
For the Three Months Ended
 
For the Year Ended December 31,
 
Mar. 31, 2016
 
Jun. 30, 2016
 
Sep. 30, 2016
 
Dec. 31, 2016
 
Mar. 31, 2017
 
Jun. 30, 2017
 
Sep. 30, 2017
 
Dec. 31, 2017
 
2015
 
2016
 
2017
As adjusted:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commission
$
47,133

 
$
33,412

 
$
26,154

 
$
70,535

 
$
38,837

 
$
32,451

 
$
29,539

 
$
76,056

 
$
184,933

 
$
177,234

 
$
176,883

Other
4,278

 
2,444

 
2,488

 
6,880

 
2,719

 
2,115

 
1,927

 
7,062

 
18,414

 
16,090

 
13,823

Total revenue
51,411

 
35,856

 
28,642

 
77,415

 
41,556

 
34,566

 
31,466

 
83,118

 
203,347

 
193,324

 
190,706

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue
285

 
292

 
(245
)
 
530

 
181

 
56

 
(9
)
 
354

 
1,947

 
862

 
582

Marketing and advertising
20,882

 
12,936

 
10,206

 
28,189

 
15,055

 
14,240

 
13,383

 
23,196

 
75,571

 
72,213

 
65,874

Customer care and enrollment
10,400

 
10,611

 
11,456

 
16,251

 
12,109

 
12,012

 
15,798

 
19,264

 
42,540

 
47,930

 
59,183

Technology and content
8,507

 
8,289

 
8,257

 
7,696

 
8,072

 
7,932

 
8,354

 
8,531

 
36,351

 
32,749

 
32,889

General and administrative
7,928

 
10,615

 
8,925

 
7,748

 
9,992

 
10,534

 
9,353

 
10,090

 
30,858

 
36,004

 
39,969

Restructuring charges (benefit)
—

 
(158
)
 
(139
)
 
—

 
—

 
—

 
—

 
—

 
4,541

 
(297
)
 
—

Acquisition costs
—

 
—

 
—

 
—

 
—

 
—

 
—

 
621

 
—

 
—

 
621

Amortization of intangible assets
260

 
260

 
260

 
260

 
260

 
260

 
260

 
260

 
1,153

 
1,040

 
1,040

Total operating costs and expenses
48,262

 
42,845

 
38,720

 
60,674

 
45,669

 
45,034

 
47,139

 
62,316

 
192,961

 
190,501

 
200,158

Income (loss) from operations
3,149

 
(6,989
)
 
(10,078
)
 
16,741

 
(4,113
)
 
(10,468
)
 
(15,673
)
 
20,802

 
10,386

 
2,823

 
(9,452
)
Other income (expense), net
291

 
148

 
333

 
377

 
277

 
298

 
300

 
307

 
1,285

 
1,149

 
1,182

Income (loss) before provision (benefit) for income taxes
3,440

 
(6,841
)
 
(9,745
)
 
17,118

 
(3,836
)
 
(10,170
)
 
(15,373
)
 
21,109

 
11,671

 
3,972

 
(8,270
)
Provision (benefit) for income taxes
4,235

 
(8,336
)
 
(13,193
)
 
20,962

 
(4,916
)
 
(8,664
)
 
(13,197
)
 
(6,919
)
 
7,707

 
3,668

 
(33,696
)
Net income (loss)
$
(795
)
 
$
1,495

 
$
3,448

 
$
(3,844
)
 
$
1,080

 
$
(1,506
)
 
$
(2,176
)
 
$
28,028

 
$
3,964

 
$
304

 
$
25,426

Net income (loss) per share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
(0.04
)
 
$
0.08

 
$
0.19

 
$
(0.21
)
 
$
0.06

 
$
(0.08
)
 
$
(0.12
)
 
$
1.50

 
$
0.22

 
$
0.02

 
$
1.37

Diluted
$
(0.04
)
 
$
0.08

 
$
0.19

 
$
(0.21
)
 
$
0.06

 
$
(0.08
)
 
$
(0.12
)
 
$
1.47

 
$
0.22

 
$
0.02

 
$
1.34

Weighted-average number of shares used in per share amounts:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
18,153

 
18,258

 
18,329

 
18,345

 
18,370

 
18,481

 
18,565

 
18,632

 
18,008

 
18,272

 
18,512

Diluted
18,153

 
18,375

 
18,393

 
18,345

 
18,561

 
18,481

 
18,565

 
19,025

 
18,119

 
18,347

 
18,958







EHEALTH, INC.
SEGMENT INFORMATION
AS PREVIOUSLY REPORTED
(In thousands, unaudited)

 
For the Three Months Ended
 
For the Year Ended December 31,
 
Mar. 31, 2016
 
Jun. 30, 2016
 
Sep. 30, 2016
 
Dec. 31, 2016
 
Mar. 31, 2017
 
Jun. 30, 2017
 
Sep. 30, 2017
 
Dec. 31, 2017
 
2015
 
2016
 
2017
As reported:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare (1)
$
43,467

 
$
9,679

 
$
7,395

 
$
19,728

 
$
57,974

 
$
11,014

 
$
10,682

 
$
22,914

 
$
63,163

 
$
80,269

 
$
102,584

Individual, Family and Small Business (2)
30,377

 
27,598

 
24,684

 
24,032

 
20,965

 
16,943

 
15,937

 
15,926

 
126,378

 
106,691

 
69,771

Total revenue
$
73,844

 
$
37,277

 
$
32,079

 
$
43,760

 
$
78,939

 
$
27,957

 
$
26,619

 
$
38,840

 
$
189,541

 
$
186,960

 
$
172,355

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment profit (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare segment profit (loss) (3)
$
17,891

 
$
(14,131
)
 
$
(14,896
)
 
$
(22,005
)
 
$
30,695

 
$
(15,107
)
 
$
(18,058
)
 
$
(16,290
)
 
$
(23,284
)
 
$
(33,141
)
 
$
(18,760
)
Individual, Family and Small Business segment profit (3)
15,555

 
20,526

 
17,609

 
14,215

 
11,079

 
8,404

 
6,824

 
4,120

 
59,499

 
67,905

 
30,427

Total segment profit (loss)
33,446

 
6,395

 
2,713

 
(7,790
)
 
41,774

 
(6,703
)
 
(11,234
)
 
(12,170
)
 
36,215

 
34,764

 
11,667

Corporate (4)
(6,666
)
 
(8,996
)
 
(7,346
)
 
(6,063
)
 
(6,797
)
 
(6,942
)
 
(6,266
)
 
(6,964
)
 
(25,135
)
 
(29,071
)
 
(26,969
)
Stock-based compensation expense
(1,832
)
 
(2,177
)
 
(1,347
)
 
(1,910
)
 
(2,133
)
 
(2,569
)
 
(2,246
)
 
(2,746
)
 
(6,889
)
 
(7,266
)
 
(9,694
)
Depreciation and amortization
(1,005
)
 
(929
)
 
(815
)
 
(790
)
 
(762
)
 
(751
)
 
(699
)
 
(625
)
 
(4,148
)
 
(3,539
)
 
(2,837
)
Restructuring charges (benefit)
—

 
158

 
139

 
—

 
—

 
—

 
—

 
—

 
(4,541
)
 
297

 
—

Acquisition costs
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(621
)
 
—

 
—

 
(621
)
Amortization of intangible assets
(260
)
 
(260
)
 
(260
)
 
(260
)
 
(260
)
 
(260
)
 
(260
)
 
(260
)
 
(1,153
)
 
(1,040
)
 
(1,040
)
Other income (expense), net
(11
)
 
(21
)
 
7

 
127

 
26

 
90

 
98

 
113

 
45

 
102

 
327

Income (loss) before provision (benefit) for income taxes
$
23,672

 
$
(5,830
)
 
$
(6,909
)
 
$
(16,686
)
 
$
31,848

 
$
(17,135
)
 
$
(20,607
)
 
$
(23,273
)
 
$
(5,606
)
 
$
(5,753
)
 
$
(29,167
)






EHEALTH, INC.
SEGMENT INFORMATION
AS ADJUSTED FOR THE IMPACT OF ASC 606 ADOPTION
(In thousands, unaudited)

 
For the Three Months Ended
 
For the Year Ended December 31,
 
Mar. 31, 2016
 
Jun. 30, 2016
 
Sep. 30, 2016
 
Dec. 31, 2016
 
Mar. 31, 2017
 
Jun. 30, 2017
 
Sep. 30, 2017
 
Dec. 31, 2017
 
2015
 
2016
 
2017
As adjusted:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare (1)
$
22,433

 
$
21,389

 
$
16,909

 
$
61,425

 
$
25,410

 
$
24,161

 
$
22,999

 
$
69,877

 
$
98,038

 
$
122,156

 
$
142,448

Individual, Family and Small Business (2)
28,978

 
14,467

 
11,733

 
15,991

 
16,146

 
10,404

 
8,467

 
13,241

 
105,309

 
71,169

 
48,258

Total revenue
$
51,411

 
$
35,856

 
$
28,642

 
$
77,416

 
$
41,556

 
$
34,565

 
$
31,466

 
$
83,118

 
$
203,347

 
$
193,325

 
$
190,706

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment profit (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare segment profit (loss) (3)
$
(1,547
)
 
$
(2,414
)
 
$
(5,377
)
 
$
19,732

 
$
(929
)
 
$
(2,013
)
 
$
(5,796
)
 
$
30,875

 
$
13,598

 
$
10,394

 
$
22,137

Individual, Family and Small Business segment profit (3)
14,461

 
7,629

 
4,929

 
6,032

 
6,770

 
2,065

 
(404
)
 
1,141

 
38,654

 
33,050

 
9,573

Total segment profit (loss)
12,914

 
5,215

 
(448
)
 
25,764

 
5,841

 
52

 
(6,200
)
 
32,016

 
52,252

 
43,444

 
31,710

Corporate (4)
(6,668
)
 
(8,996
)
 
(7,347
)
 
(6,063
)
 
(6,799
)
 
(6,940
)
 
(6,268
)
 
(6,963
)
 
(25,135
)
 
(29,073
)
 
(26,970
)
Stock-based compensation expense
(1,832
)
 
(2,177
)
 
(1,347
)
 
(1,910
)
 
(2,133
)
 
(2,569
)
 
(2,246
)
 
(2,747
)
 
(6,889
)
 
(7,266
)
 
(9,694
)
Depreciation and amortization
(1,005
)
 
(929
)
 
(815
)
 
(790
)
 
(762
)
 
(751
)
 
(699
)
 
(623
)
 
(4,148
)
 
(3,539
)
 
(2,837
)
Restructuring charges (benefit)
—

 
158

 
139

 
—

 
—

 
—

 
—

 
—

 
(4,541
)
 
297

 
—

Acquisition costs
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(621
)
 
—

 
—

 
(621
)
Amortization of intangible assets
(260
)
 
(260
)
 
(260
)
 
(260
)
 
(260
)
 
(260
)
 
(260
)
 
(260
)
 
(1,153
)
 
(1,040
)
 
(1,040
)
Other income (expense), net
291

 
148

 
333

 
377

 
277

 
298

 
300

 
307

 
1,285

 
1,149

 
1,182

Income (loss) before provision (benefit) for income taxes
$
3,440

 
$
(6,841
)
 
$
(9,745
)
 
$
17,118

 
$
(3,836
)
 
$
(10,170
)
 
$
(15,373
)
 
$
21,109

 
$
11,671

 
$
3,972

 
$
(8,270
)






EHEALTH, INC.
SEGMENT INFORMATION
AS ADJUSTED FOR THE IMPACT OF ASC 606 ADOPTION (Continued)
(In thousands, unaudited)

Segment Information

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, vision, life, short term disability and long term disability insurance, 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 and family and small business health insurance plans and ancillary products sold to our non-Medicare-eligible customers, including but not limited to, dental, vision, life, short term disability and long term disability 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 (loss) 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, restructuring benefit 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.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
AS PREVIOUSLY REPORTED
(In thousands, except per share amounts, unaudited)

 
For the Three Months Ended
 
For the Year Ended December 31,
 
Mar. 31, 2016
 
Jun. 30, 2016
 
Sep. 30, 2016
 
Dec. 31, 2016
 
Mar. 31, 2017
 
Jun. 30, 2017
 
Sep. 30, 2017
 
Dec. 31, 2017
 
2015
 
2016
 
2017
As reported:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP income (loss) from operations
$
23,683

 
$
(5,809
)
 
$
(6,916
)
 
$
(16,813
)
 
$
31,822

 
$
(17,225
)
 
$
(20,705
)
 
$
(23,386
)
 
$
(5,651
)
 
$
(5,855
)
 
$
(29,494
)
Stock-based compensation expense (1)
1,832

 
2,177

 
1,347

 
1,910

 
2,133

 
2,569

 
2,246

 
2,746

 
6,889

 
7,266

 
9,694

Acquisition costs (2)
—

 
 
 
 
 
—

 
—

 
—

 
—

 
621

 
—

 
—

 
621

Restructuring charges (benefit) (3)
—

 
(158
)
 
(139
)
 
—

 
—

 
—

 
—

 
—

 
4,541

 
(297
)
 
—

Amortization of intangible assets (4)
260

 
260

 
260

 
260

 
260

 
260

 
260

 
260

 
1,153

 
1,040

 
1,040

Non-GAAP income (loss) from operations
$
25,775

 
$
(3,530
)
 
$
(5,448
)
 
$
(14,643
)
 
$
34,215

 
$
(14,396
)
 
$
(18,199
)
 
$
(19,759
)
 
$
6,932

 
$
2,154

 
$
(18,139
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP net income (loss)
$
18,034

 
$
(476
)
 
$
(5,736
)
 
$
(16,704
)
 
$
33,421

 
$
(17,260
)
 
$
(20,616
)
 
$
(20,958
)
 
$
(4,763
)
 
$
(4,882
)
 
$
(25,412
)
Stock-based compensation expense (1)
1,832

 
2,177

 
1,347

 
1,910

 
2,133

 
2,569

 
2,246

 
2,746

 
6,889

 
7,266

 
9,694

Acquisition costs (2)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
621

 
—

 
—

 
621

Restructuring charges (benefit) (3)
—

 
(158
)
 
(139
)
 
—

 
—

 
—

 
—

 
—

 
4,541

 
(297
)
 
—

Amortization of intangible assets (4)
260

 
260

 
260

 
260

 
260

 
260

 
260

 
260

 
1,153

 
1,040

 
1,040

Non-GAAP net income (loss)
$
20,126

 
$
1,803

 
$
(4,268
)
 
$
(14,534
)
 
$
35,814

 
$
(14,431
)
 
$
(18,110
)
 
$
(17,331
)
 
$
7,820

 
$
3,127

 
$
(14,057
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP net income (loss) per diluted share
$
0.99

 
$
(0.03
)
 
$
(0.31
)
 
$
(0.91
)
 
$
1.80

 
$
(0.93
)
 
$
(1.11
)
 
$
(1.12
)
 
$
(0.26
)
 
$
(0.27
)
 
$
(1.37
)
Stock-based compensation expense (1)
0.10

 
0.12

 
0.07

 
0.10

 
0.12

 
0.14

 
0.12

 
0.14

 
0.38

 
0.40

 
0.51

Acquisition costs (2)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
0.04

 
—

 
—

 
0.04

Restructuring charges (benefit) (3)
—

 
(0.01
)
 
—

 
—

 
—

 
—

 
—

 
—

 
0.25

 
(0.02
)
 
—

Amortization of intangible assets (4)
0.01

 
0.01

 
0.01

 
0.01

 
0.01

 
0.01

 
0.01

 
0.01

 
0.06

 
0.06

 
0.06

Non-GAAP net income (loss) per diluted share
$
1.10

 
$
0.09

 
$
(0.23
)
 
$
(0.79
)
 
$
1.93

 
$
(0.78
)
 
$
(0.98
)
 
$
(0.93
)
 
$
0.43

 
$
0.17

 
$
(0.76
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP net income (loss)
$
18,034

 
$
(476
)
 
$
(5,736
)
 
$
(16,704
)
 
$
33,421

 
$
(17,260
)
 
$
(20,616
)
 
$
(20,958
)
 
$
(4,763
)
 
$
(4,882
)
 
$
(25,412
)
Stock-based compensation expense (1)
1,832

 
2,177

 
1,347

 
1,910

 
2,133

 
2,569

 
2,246

 
2,746

 
6,889

 
7,266

 
9,694

Depreciation and amortization (6)
1,005

 
929

 
815

 
790

 
762

 
751

 
699

 
625

 
4,148

 
3,539

 
2,837

Acquisition costs (2)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
621

 
—

 
—

 
621

Restructuring charges (benefit) (3)
—

 
(158
)
 
(139
)
 
—

 
—

 
—

 
—

 
—

 
4,541

 
(297
)
 
—

Amortization of intangible assets (4)
260

 
260

 
260

 
260

 
260

 
260

 
260

 
260

 
1,153

 
1,040

 
1,040

Other (income) expense, net (7)
11

 
21

 
(7
)
 
(127
)
 
(26
)
 
(90
)
 
(98
)
 
(113
)
 
(45
)
 
(102
)
 
(327
)
Provision (benefit) for income taxes (5)
5,638

 
(5,354
)
 
(1,173
)
 
18

 
(1,573
)
 
125

 
9

 
(2,315
)
 
(843
)
 
(871
)
 
(3,755
)
Adjusted EBITDA
$
26,780

 
$
(2,601
)
 
$
(4,633
)
 
$
(13,853
)
 
$
34,977

 
$
(13,645
)
 
$
(17,500
)
 
$
(19,134
)
 
$
11,080

 
$
5,693

 
$
(15,302
)




EHEALTH, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
AS ADJUSTED FOR THE IMPACT OF ASC 606 ADOPTION
(In thousands, except per share amounts, unaudited)
 
For the Three Months Ended
 
For the Year Ended December 31,
 
Mar. 31, 2016
 
Jun. 30, 2016
 
Sep. 30, 2016
 
Dec. 31, 2016
 
Mar. 31, 2017
 
Jun. 30, 2017
 
Sep. 30, 2017
 
Dec. 31, 2017
 
2015
 
2016
 
2017
As adjusted:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP income (loss) from operations
$
3,149

 
$
(6,989
)
 
$
(10,078
)
 
$
16,741

 
$
(4,113
)
 
$
(10,468
)
 
$
(15,673
)
 
$
20,802

 
$
10,386

 
$
2,823

 
$
(9,452
)
Stock-based compensation expense (1)
1,832

 
2,177

 
1,347

 
1,910

 
2,133

 
2,569

 
2,246

 
2,746

 
6,889

 
7,266

 
9,694

Acquisition costs (2)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
621

 
—

 
—

 
621

Restructuring charges (benefit) (3)
—

 
(158
)
 
(139
)
 
—

 
—

 
—

 
—

 
—

 
4,541

 
(297
)
 
—

Amortization of intangible assets (4)
260

 
260

 
260

 
260

 
260

 
260

 
260

 
260

 
1,153

 
1,040

 
1,040

Non-GAAP income (loss) from operations
$
5,241

 
$
(4,710
)
 
$
(8,610
)
 
$
18,911

 
$
(1,720
)
 
$
(7,639
)
 
$
(13,167
)
 
$
24,429

 
$
22,969

 
$
10,832

 
$
1,903

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP net income (loss)
$
(795
)
 
$
1,495

 
$
3,448

 
$
(3,844
)
 
$
1,080

 
$
(1,506
)
 
$
(2,176
)
 
$
28,028

 
$
3,964

 
$
304

 
$
25,426

Stock-based compensation expense (1)
1,832

 
2,177

 
1,347

 
1,910

 
2,133

 
2,569

 
2,246

 
2,746

 
6,889

 
7,266

 
9,694

Acquisition costs (2)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
621

 
—

 
—

 
621

Restructuring charges (benefit) (3)
—

 
(158
)
 
(139
)
 
—

 
—

 
—

 
—

 
—

 
4,541

 
(297
)
 
—

Amortization of intangible assets (4)
260

 
260

 
260

 
260

 
260

 
260

 
260

 
260

 
1,153

 
1,040

 
1,040

Benefit for income taxes (5)
$
(853
)
 
$
(929
)
 
$
(598
)
 
$
(884
)
 
$
(975
)
 
$
(1,153
)
 
$
(1,021
)
 
$
(1,478
)
 
$
(5,129
)
 
$
(3,264
)
 
$
(4,628
)
Non-GAAP net income (loss)
$
444

 
$
2,845

 
$
4,318

 
$
(2,558
)
 
$
2,498

 
$
170

 
$
(691
)
 
$
30,177

 
$
11,418

 
$
5,049

 
$
32,153

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP net income (loss) per diluted share
$
(0.04
)
 
$
0.08

 
$
0.19

 
$
(0.21
)
 
$
0.06

 
$
(0.08
)
 
$
(0.12
)
 
$
1.47

 
$
0.22

 
$
0.02

 
$
1.34

Stock-based compensation expense (1)
0.10

 
0.12

 
0.07

 
0.10

 
0.11

 
0.14

 
0.12

 
0.14

 
0.38

 
0.40

 
0.51

Acquisition costs (2)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
0.03

 
—

 
—

 
0.03

Restructuring charges (benefit) (3)
—

 
(0.01
)
 
(0.01
)
 
—

 
—

 
—

 
—

 
—

 
0.25

 
(0.02
)
 
—

Amortization of intangible assets (4)
0.01

 
0.01

 
0.01

 
0.01

 
0.01

 
0.01

 
0.01

 
0.01

 
0.06

 
0.06

 
0.05

Benefit for income taxes (5)
$
(0.05
)
 
$
(0.05
)
 
$
(0.03
)
 
$
(0.05
)
 
$
(0.05
)
 
$
(0.06
)
 
$
(0.05
)
 
$
(0.08
)
 
$
(0.28
)
 
$
(0.18
)
 
$
(0.24
)
Non-GAAP net income (loss) per diluted share
$
0.02

 
$
0.15

 
$
0.23

 
$
(0.15
)
 
$
0.13

 
$
0.01

 
$
(0.04
)
 
$
1.57

 
$
0.63

 
$
0.28

 
$
1.69

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP net income (loss)
$
(795
)
 
$
1,495

 
$
3,448

 
$
(3,844
)
 
$
1,080

 
$
(1,506
)
 
$
(2,176
)
 
$
28,028

 
$
3,964

 
$
304

 
$
25,426

Stock-based compensation expense (1)
1,832

 
2,177

 
1,347

 
1,910

 
2,133

 
2,569

 
2,246

 
2,746

 
6,889

 
7,266

 
9,694

Depreciation and amortization (6)
1,005

 
929

 
815

 
790

 
762

 
751

 
699

 
625

 
4,148

 
3,539

 
2,837

Acquisition costs (2)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
621

 
—

 
—

 
621

Restructuring charges (benefit) (3)
—

 
(158
)
 
(139
)
 
—

 
—

 
—

 
—

 
—

 
4,541

 
(297
)
 
—

Amortization of intangible assets (4)
260

 
260

 
260

 
260

 
260

 
260

 
260

 
260

 
1,153

 
1,040

 
1,040

Other (income) expense, net (7)
(291
)
 
(148
)
 
(333
)
 
(377
)
 
(277
)
 
(298
)
 
(300
)
 
(307
)
 
(1,285
)
 
(1,149
)
 
(1,182
)
Provision (benefit) for income taxes (5)
4,235

 
(8,336
)
 
(13,193
)
 
20,962

 
(4,916
)
 
(8,664
)
 
(13,197
)
 
(6,919
)
 
7,707

 
3,668

 
(33,696
)
Adjusted EBITDA
$
6,246

 
$
(3,781
)
 
$
(7,795
)
 
$
19,701

 
$
(958
)
 
$
(6,888
)
 
$
(12,468
)
 
$
25,054

 
$
27,117

 
$
14,371

 
$
4,740





EHEALTH, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
AS ADJUSTED FOR THE IMPACT OF ASC 606 ADOPTION (Continued)
(In thousands, except per share amounts, unaudited)

Explanation of Adjustments

(1)
Non-GAAP income (loss) from operations, Non-GAAP net income (loss), Non-GAAP net income (loss) 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 income (loss) from operations, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share and Adjusted EBITDA exclude costs related to the acquisition of GoMedigap, which was completed in January 2018.
(3)
Non-GAAP income (loss) from operations, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share and Adjusted EBITDA exclude restructuring charges (benefit).
(4)
Non-GAAP income (loss) from operations, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share and Adjusted EBITDA exclude amortization of intangible assets.
(5)
Non-GAAP net income (loss), Non-GAAP net income (loss) per share and Adjusted EBITDA exclude provision (benefit) for income taxes.
(6)
Adjusted EBITDA excludes depreciation and amortization.
(7)
Adjusted EBITDA excludes other income (expense), net.





EHEALTH, INC.
COMMISSION REVENUE BY PRODUCT
AS ADJUSTED FOR THE IMPACT OF ASC 606 ADOPTION
FOR YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017
(In thousands, except per share amounts, unaudited)
 
Three Months Ended
Year Ending December 31,
 
Mar. 31, 2016
 
Jun. 30, 2016
 
Sep. 30, 2016
 
Dec. 31, 2016
 
Mar. 31, 2017
 
Jun. 30, 2017
 
Sep. 30, 2017
 
Dec. 31, 2017
 
2015
 
2016
 
2017
Medicare
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare Advantage
$
18,207

 
$
17,241

 
$
12,956

 
$
47,332

 
$
19,205

 
$
18,677

 
$
17,544

 
$
52,143

 
$
75,479

 
$
95,736

 
107,567

Medicare Supplement
2,414

 
2,295

 
2,048

 
4,804

 
3,914

 
2,886

 
3,442

 
5,193

 
9,271

 
11,561

 
15,435

Medicare Part D
1,276

 
1,214

 
1,113

 
5,197

 
1,378

 
1,203

 
977

 
7,527

 
6,771

 
8,800

 
11,085

Total Medicare
21,897

 
20,750

 
16,117

 
57,333

 
24,497

 
22,766

 
21,963

 
64,863

 
91,521

 
116,097

 
134,087

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individual and Family (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Qualified Health Plans
7,626

 
2,705

 
3,732

 
4,789

 
3,773

 
1,988

 
1,665

 
2,598

 
40,630

 
18,852

 
10,024

Qualified Health Plans
9,116

 
3,551

 
695

 
1,003

 
3,132

 
2,634

 
323

 
966

 
18,790

 
14,365

 
7,055

Total IFP
16,742

 
6,256

 
4,427

 
5,792

 
6,905

 
4,622

 
1,988

 
3,564

 
59,420

 
33,217

 
17,079

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ancillaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term
2,185

 
1,859

 
1,761

 
1,471

 
1,846

 
1,029

 
1,405

 
1,223

 
7,788

 
7,276

 
5,504

Dental
2,846

 
1,338

 
1,077

 
1,707

 
1,847

 
1,003

 
960

 
1,254

 
10,702

 
6,968

 
5,064

Vision
653

 
351

 
330

 
679

 
570

 
282

 
285

 
470

 
2,575

 
2,013

 
1,607

Other
457

 
695

 
536

 
501

 
765

 
762

 
1,040

 
1,305

 
2,326

 
2,189

 
3,871

Total Ancillaries
6,141

 
4,243

 
3,704

 
4,358

 
5,028

 
3,076

 
3,690

 
4,252

 
23,391

 
18,446

 
16,046

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Small Business
1,613

 
1,394

 
1,300

 
1,826

 
1,924

 
1,532

 
1,506

 
2,539

 
5,788

 
6,133

 
7,501

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commission Bonus
739

 
769

 
606

 
1,226

 
483

 
455

 
392

 
838

 
4,813

 
3,340

 
2,167

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total commission revenue
$
47,132

 
$
33,412

 
$
26,154

 
$
70,535

 
$
38,837

 
$
32,451

 
$
29,539

 
$
76,056

 
$
184,933

 
$
177,233

 
$
176,880

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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.
SUBMITTED APPLICATIONS
FOR YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

 
Three Months Ended
Year Ending December 31,

Mar. 31, 2016
 
Jun. 30, 2016
 
Sep. 30, 2016
 
Dec. 31, 2016
 
Mar. 31, 2017
 
Jun. 30, 2017
 
Sep. 30, 2017
 
Dec. 31, 2017
 
2015
 
2016
 
2017
Medicare (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare Advantage
23,126

 
24,923

 
17,131

 
55,921

 
21,799

 
23,071

 
21,010

 
60,109

 
96,235

 
121,101

 
125,989

Medicare Supplement
3,431

 
3,390

 
3,037

 
8,118

 
4,540

 
4,157

 
4,578

 
8,126

 
11,543

 
17,976

 
21,401

Medicare Part D
4,375

 
4,405

 
3,894

 
21,239

 
4,938

 
3,938

 
3,338

 
30,591

 
24,514

 
33,913

 
42,805

Total Medicare
30,932

 
32,718

 
24,062

 
85,278

 
31,277

 
31,166

 
28,926

 
98,826

 
132,292

 
172,990

 
190,195

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individual and Family (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Qualified Health Plans
33,193

 
8,369

 
7,823

 
29,437

 
14,264

 
4,098

 
4,041

 
17,871

 
160,576

 
78,822

 
40,274

Qualified Health Plans
41,080

 
1,411

 
1,121

 
15,653

 
7,747

 
1,327

 
1,086

 
16,994

 
140,322

 
59,265

 
27,154

Total Individual and Family
74,273

 
9,780

 
8,944

 
45,090

 
22,011

 
5,425

 
5,127

 
34,865

 
300,898

 
138,087

 
67,428

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ancillaries (3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term
42,846

 
27,212

 
27,737

 
23,314

 
24,285

 
22,414

 
26,527

 
20,219

 
145,874

 
121,109

 
93,445

Dental
37,263

 
21,638

 
17,303

 
22,134

 
23,378

 
16,734

 
14,523

 
15,817

 
136,600

 
98,338

 
70,452

Vision
13,087

 
6,668

 
6,061

 
9,943

 
9,857

 
6,204

 
5,937

 
7,470

 
49,424

 
35,759

 
29,468

Other
3,093

 
4,016

 
3,863

 
4,471

 
4,699

 
6,796

 
7,762

 
15,531

 
10,095

 
15,443

 
34,788

Total Ancillaries
96,289

 
59,534

 
54,964

 
59,862

 
62,219

 
52,148

 
54,749

 
59,037

 
341,993

 
270,649

 
228,153

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Small Business (4)
1,112

 
1,089

 
1,420

 
2,287

 
1,162

 
1,280

 
1,239

 
2,777

 
4,011

 
5,908

 
6,458

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Submitted Applications
202,606

 
103,121

 
89,390

 
192,517

 
116,669

 
90,019

 
90,041

 
195,505

 
779,194

 
587,634

 
492,234








EHEALTH, INC.
SUBMITTED APPLICATIONS (Continued)
FOR YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

Submitted Applications

Applications are counted as submitted when the applicant completes the application and either clicks the submit button on our website or provides verbal authorization to submit the application. The applicant may have additional actions to take before the application will be reviewed by the insurance carrier, such as providing additional information. In addition, an applicant may submit more than one application.
(1)
Medicare-related health insurance applications submitted on our website or through our customer care center during the period, including Medicare Advantage, Medicare Part D prescription drug and Medicare Supplement plans.
(2)
Major medical Individual and Family plan ("IFP") health insurance applications submitted on our website during the period. An applicant may submit more than one application. We define our IFP offerings as major medical individual and family health insurance plans, which does not include Medicare-related, small business or ancillary plans.
(3)
Ancillary Plans consists primarily of short-term, dental and vision insurance plans submitted on our website during the period.
(4)
Applications for small business health insurance applications are counted as submitted when the applicant completes the application, the employees complete their applications, the applicant submits the application to us and we submit the application to the carrier.







EHEALTH, INC.
APPROVED MEMBERS
FOR YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

 
Three Months Ended
Year Ending December 31,

Mar. 31, 2016
 
Jun. 30, 2016
 
Sep. 30, 2016
 
Dec. 31, 2016
 
Mar. 31, 2017
 
Jun. 30, 2017
 
Sep. 30, 2017
 
Dec. 31, 2017
 
2015
 
2016
 
2017
Medicare
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare Advantage
25,336

 
23,576

 
16,117

 
51,652

 
21,465

 
21,893

 
19,572

 
55,125

 
94,725

 
116,681

 
118,055

Medicare Supplement
2,695

 
2,586

 
2,165

 
4,868

 
4,199

 
3,179

 
3,550

 
5,064

 
8,811

 
12,314

 
15,992

Medicare Part D
4,967

 
4,082

 
3,724

 
20,195

 
5,132

 
4,163

 
3,265

 
29,058

 
25,864

 
32,968

 
41,618

Total Medicare
32,998

 
30,244

 
22,006

 
76,715

 
30,796

 
29,235

 
26,387

 
89,247

 
129,400

 
161,963

 
175,665

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individual and Family 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Qualified Health Plans
51,784

 
8,402

 
7,570

 
30,227

 
24,799

 
4,161

 
3,753

 
17,398

 
205,282

 
97,983

 
50,111

Qualified Health Plans
65,008

 
5,521

 
1,529

 
5,807

 
16,604

 
3,486

 
1,366

 
6,986

 
122,747

 
77,865

 
28,442

Total Individual and Family
116,792

 
13,923

 
9,099

 
36,034

 
41,403

 
7,647

 
5,119

 
24,384

 
328,029

 
175,848

 
78,553

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ancillaries 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term
30,225

 
24,181

 
25,656

 
20,257

 
21,251

 
18,470

 
24,116

 
21,269

 
122,280

 
100,319

 
85,106

Dental
37,783

 
19,610

 
16,429

 
21,315

 
24,734

 
15,679

 
13,640

 
13,871

 
142,927

 
95,137

 
67,924

Vision
14,437

 
6,979

 
6,532

 
10,994

 
10,753

 
6,593

 
6,194

 
7,820

 
58,245

 
38,942

 
31,360

Other
3,577

 
3,414

 
3,841

 
4,590

 
5,028

 
5,604

 
6,872

 
8,980

 
11,658

 
15,422

 
26,484

Total Ancillaries
86,022

 
54,184

 
52,458

 
57,156

 
61,766

 
46,346

 
50,822

 
51,940

 
335,110

 
249,820

 
210,874

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Small Business
2,308

 
1,655

 
1,702

 
3,079

 
3,484

 
2,455

 
2,861

 
6,502

 
7,031

 
8,744

 
15,302

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Approved Members
238,120

 
100,006

 
85,265

 
172,984

 
137,449

 
85,683

 
85,189

 
172,073

 
799,570

 
596,375

 
480,394


Approved Members
Approved Members represents the number of individuals on submitted applications that were approved by the relevant insurance carrier for the identified product during the relevant period. Approved members may not pay for their plan and become paying members.





EHEALTH, INC.
ESTIMATED MEMBERSHIP
FOR YEARS ENDED DECEMBER 31, 2016 AND 2017

 
Three Months Ended

Mar. 31, 2016
 
Jun. 30, 2016
 
Sep. 30, 2016
 
Dec. 31, 2016
 
Mar. 31, 2017
 
Jun. 30, 2017
 
Sep. 30, 2017
 
Dec. 31, 2017
Medicare (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare Advantage
133,665

 
150,942

 
149,511

 
191,904

 
174,561

 
185,819

 
195,970

 
236,857

Medicare Supplement
18,754

 
21,270

 
20,669

 
23,356

 
24,654

 
26,533

 
29,111

 
33,635

Medicare Part D
67,857

 
70,449

 
72,281

 
89,597

 
85,650

 
88,021

 
89,424

 
114,362

Total Medicare
220,276

 
242,661

 
242,461

 
304,857

 
284,865

 
300,373

 
314,505

 
384,854

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individual and Family (2)
522,998

 
481,318

 
390,421

 
360,634

 
265,201

 
244,897

 
227,330

 
224,396

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ancillaries (3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term
37,330

 
30,551

 
29,558

 
27,703

 
20,821

 
23,555

 
21,670

 
16,771

Dental
224,087

 
210,130

 
188,879

 
184,073

 
181,422

 
177,818

 
170,948

 
170,078

Vision
98,516

 
91,286

 
86,834

 
85,126

 
86,294

 
84,626

 
83,920

 
80,738

Other
20,847

 
22,292

 
21,776

 
23,271

 
23,361

 
23,361

 
22,701

 
28,356

Total Ancillaries
380,780

 
354,259

 
327,047

 
320,173

 
311,898

 
309,360

 
299,239

 
295,943

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Small Business (4)
28,851

 
27,659

 
28,375

 
29,542

 
30,743

 
31,172

 
33,029

 
31,702

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Estimated Membership
1,152,905

 
1,105,897

 
988,304

 
1,015,206

 
892,707

 
885,802

 
874,103

 
936,895


Estimated Membership

Estimated membership represents the estimated number of members active on health insurance as of the date indicated based on the number of members for whom we have received or applied a commission payment during the month of estimation.
(1)
For 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 is up to two 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 from the same month of the previous year 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. Estimated number of members active on Medicare-related health insurance as of the date indicated based on the number of members for whom we have received or applied a commission payment during the month of estimation.






EHEALTH, INC.
ESTIMATED MEMBERSHIP (Continued)
FOR YEARS ENDED DECEMBER 31, 2016 AND 2017

(2)
To determine the estimate on Individual and Family (" IFP") health insurance plans, 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 is up to six 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 by the percentage of members who do not accept their approved policy from the same month of the previous year 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. For IFP health insurance plans, a member who purchases and is active on multiple standalone insurance plans will be counted as a member more than once. For example, a member who is active on both an individual and family health insurance plan and a standalone dental plan will be counted as two continuing members.
(3)
For 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 is 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 from the same month of the previous year 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)
For small business health insurance plans, we estimate the number of members using the number of initial members at the time the group is approved, and we update this number for changes in membership if such changes are reported to us by the group or carrier in the period it is reported. 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.
Health insurance carrier’s bill and collect insurance premiums paid by our members. The carriers do not report to us the number of members that we have as of a given date. The majority of our members who terminate their policies do so by discontinuing their premium payments to the carrier and do not inform us of the cancellation. Also, some of our members pay their premiums less frequently than monthly. Given the number of months required to observe non-payment of commissions in order to confirm cancellations, we estimate the number of members who are active on insurance policies as of a specified date.
After we have estimated membership for a period, we may receive information from health insurance carriers that would have impacted the estimate if we had received the information prior to the date of estimation. We may receive commission payments or other information that indicates that a member who was not included in our estimates for a prior period was in fact an active member at that time, or that a member who was included in our estimates was in fact not an active member of ours. For instance, we reconcile information carriers provide to us and may determine that we were not historically paid commissions owed to us, which would cause us to have underestimated membership. Conversely, carriers may require us to return commission payments paid in a prior period due to policy cancellations for members we previously estimated as being active. We do not update our estimated membership numbers reported in previous periods. Instead, we reflect updated information regarding our historical membership in the membership estimate for the current period. As a result of the delay in our receipt of information from insurance carriers, actual trends in our membership are most discernible over periods longer than from one quarter to the next. As a result of the delay we experience in receiving information about our membership, it is difficult for us to determine with any certainty the impact of current conditions on our membership retention. Health care reform and its impacts as well as other factors could cause the assumptions and estimates that we make in connection with estimating our membership to be inaccurate, which would cause our membership estimates to be inaccurate.






EHEALTH, INC.
CONSTRAINED LIFETIME VALUE OF COMMISSIONS PER APROVED MEMBER
FOR YEARS ENDED DECEMBER 31, 2016 AND 2017

 
Three Months Ended

Mar. 31, 2016
 
Jun. 30, 2016
 
Sep. 30, 2016
 
Dec. 31, 2016
 
Mar. 31, 2017
 
Jun. 30, 2017
 
Sep. 30, 2017
 
Dec. 31, 2017
Medicare
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare Advantage
$
719

 
$
731

 
$
804

 
$
915

 
$
892

 
$
851

 
$
892

 
$
932

Medicare Supplement
$
896

 
$
888

 
$
946

 
$
987

 
$
932

 
$
908

 
$
969

 
$
1,024

Medicare Part D
$
257

 
$
297

 
$
299

 
$
257

 
$
268

 
$
289

 
$
299

 
$
259

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individual and Family
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-QHP
$
135

 
$
121

 
$
112

 
$
142

 
$
139

 
$
129

 
$
115

 
$
139

QHP
$
136

 
$
124

 
$
100

 
$
133

 
$
134

 
$
121

 
$
111

 
$
133

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ancillaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term
$
72

 
$
77

 
$
69

 
$
73

 
$
87

 
$
56

 
$
58

 
$
58

Dental
$
73

 
$
65

 
$
61

 
$
77

 
$
71

 
$
58

 
$
62

 
$
82

Vision
$
45

 
$
50

 
$
50

 
$
62

 
$
53

 
$
43

 
$
46

 
$
60

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Small Business
$
161

 
$
167

 
$
161

 
$
154

 
$
168

 
$
163

 
$
167

 
$
173


Constrained Lifetime Value of Commissions Per Approved Member
(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, expected policy churn and applied constraints. 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 12-months. The estimate is driven by multiple factors, including but not limited to, contracted commission rates, carrier mix, expected policy churn and applied constraints. These factors may result in varying values from period to period.






EHEALTH, INC.
CONSTRAINTS ON LIFETIME VALUE OF COMMISSIONS PER APPROVED MEMBER
FOR YEARS ENDED DECEMBER 31, 2016 AND 2017

 
Three Months Ended

Mar. 31, 2016
 
Jun. 30, 2016
 
Sep. 30, 2016
 
Dec. 31, 2016
 
Mar. 31, 2017
 
Jun. 30, 2017
 
Sep. 30, 2017
 
Dec. 31, 2017
Medicare
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare Advantage
7
%
 
7
%
 
7
%
 
7
%
 
7
%
 
7
%
 
7
%
 
7
%
Medicare Supplement
5
%
 
5
%
 
5
%
 
5
%
 
5
%
 
5
%
 
5
%
 
5
%
Medicare Part D
5
%
 
5
%
 
5
%
 
5
%
 
5
%
 
5
%
 
5
%
 
5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individual and Family
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-QHP
15
%
 
15
%
 
15
%
 
15
%
 
15
%
 
15
%
 
15
%
 
15
%
QHP
20
%
 
20
%
 
20
%
 
20
%
 
20
%
 
20
%
 
20
%
 
20
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ancillaries
10
%
 
10
%
 
10
%
 
10
%
 
10
%
 
10
%
 
10
%
 
10
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Small Business
—
%
 
—
%
 
—
%
 
—
%
 
—
%
 
—
%
 
—
%
 
—
%

Constraints on Lifetime Value of Commissions Per Approved Member
Constraints are applied to derive the constrained lifetime value ("LTV") of commissions per approved member for revenue recognition in accordance with our revenue recognition policy. The constraints are applied to help ensure that commissions estimated to be collected over the estimated life of an approved member’s plan are recognized as revenue only to the extent that is it probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with future commissions receivable from the plan is subsequently resolved. We evaluate constraints on an annual basis for factors affecting our estimate of LTV of commissions per approved member and apply management judgment to determine the constraints based on current trends impacting our business.






EHEALTH, INC.
EXPENSE METRICS PER APPROVED MEMBER
FOR YEARS ENDED DECEMBER 31, 2016 AND 2017

 
Three Months Ended
Year Ending December 31,
 
Mar. 31, 2016
 
Jun. 30, 2016
 
Sep. 30, 2016
 
Dec. 31, 2016
 
Mar. 31, 2017
 
Jun. 30, 2017
 
Sep. 30, 2017
 
Dec. 31, 2017
 
2015
 
2016
 
2017
Variable marketing cost per approved member
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare variable marketing cost per approved Medicare Advantage ("MA")-equivalent member (1)
$
337

 
$
343

 
$
405

 
$
391

 
$
408

 
$
416

 
$
396

 
$
254

 
$
286

 
$
372

 
$
337

Individual and Family Plan ("IFP") variable marketing cost per approved IFP-equivalent member (2)
$
63

 
$
24

 
$
25

 
$
62

 
$
35

 
$
25

 
$
31

 
$
94

 
$
85

 
$
55

 
$
50

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Customer care and enrollment ("CC&E") expense per approved member
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare CC&E expense per approved MA-equivalent member (3)
$
277

 
$
319

 
$
483

 
$
219

 
$
337

 
$
358

 
$
535

 
$
242

 
$
297

 
$
288

 
$
330

IFP CC&E expense per approved IFP-equivalent member (4)
$
13

 
$
62

 
$
87

 
$
49

 
$
42

 
$
131

 
$
147

 
$
66

 
$
23

 
$
32

 
$
74


Expense Metrics Per Approved Member

(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)
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.
(3)
Medicare CC&E expense per approved MA-equivalent member is equal to the CC&E expense of our Medicare business included in our operating costs and reported in our condensed consolidated statements of operations 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.
(4)
IFP CC&E expense per approved IFP-equivalent member is equal to the CC&E expense of our IFP business included in our operating costs and reported in our condensed consolidated statement of operations 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.