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
GAAP — First Quarter of 2018 Results
Revenue — Revenue for the first quarter of 2018 totaled
Revenue from our
Loss from Operations — Loss from operations for the first quarter
of 2018 was
Pre-tax Loss — Pre-tax loss for the first quarter of 2018 was
Benefit from Income Taxes — Benefit from income taxes for the
first quarter of 2018 was
Net Income (Loss) — Net loss for the first quarter of 2018 was
Segment Profit (Loss)— Profit from our
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
Non-GAAP operating loss and operating margin for the first quarter of
2018 exclude
Adjusted EBITDA — Adjusted EBITDA was
Membership & Submitted Applications
Submitted Applications —Submitted applications for all
Approved Members —Approved members for all
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
Cash — First Quarter of 2018
Cash Flows — Net cash provided by operating activities was
2018 Guidance
eHealth's guidance for the full year ending
eHealth is revising its non-GAAP net income guidance for the full year
ending
-
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
-
Total revenue is expected to be in the range of
$217.5 million to$227.5 million . Revenue from theMedicare 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 endingDecember 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 endingDecember 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
About
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
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
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
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.
|
EHEALTH, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, unaudited) |
||||||||
|
December 31, |
March 31, |
|||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 40,293 | $ | 34,742 | ||||
| Accounts receivable | 1,475 | 668 | ||||||
| Commissions receivable - current | 109,666 | 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 |
||||||||
| 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 |
||||||||
| 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) |
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| Three Months Ended | ||||||||||
|
March 31, |
March 31, |
Percent |
||||||||
| 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. | |
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EHEALTH, INC. SUMMARY OF SELECTED METRICS SUBMITTED APPLICATIONS (Unaudited) |
||||||||
| Three Months Ended March 31, | ||||||||
| 2017 | 2018 |
Percent |
||||||
| 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 |
||||||
| 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 |
||||||||
| 2017 | 2018 |
Percent |
||||||
| 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. | |
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EHEALTH, INC. SUMMARY OF SELECTED METRICS ESTIMATED MEMBERSHIP (Continued) (Unaudited) |
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| (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.
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EHEALTH, INC. SUMMARY OF SELECTED METRICS CONSTRAINED LIFETIME VALUE OF COMMISSIONS PER APPROVED MEMBER (Unaudited) |
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Three Months Ended |
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| 2017 | 2018 |
Percentage |
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| Medicare | ||||||||||
| Medicare Advantage (1) | $ | 892 | $ | 880 | (1)% | |||||
| Medicare Supplement (1) | $ | 932 | $ | 1,029 |
10 % |
|||||
| Medicare Part D (1) | $ | 268 | $ | 270 |
1 % |
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| Individual and Family | ||||||||||
| Non-Qualified Health Plans (1) | $ | 139 | $ | 140 |
1 % |
|||||
| Qualified Health Plans (1) | $ | 134 | $ | 134 |
— % |
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| Ancillaries | ||||||||||
| Short-term (1) | $ | 87 | $ | 60 | (31)% | |||||
| Dental (1) | $ | 71 | $ | 74 |
4 % |
|||||
| Vision (1) | $ | 53 | $ | 51 | (4)% | |||||
| Small Business (2) | $ | 168 | $ | 178 |
6 % |
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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. | |
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EHEALTH, INC. SUMMARY OF SELECTED METRICS CONSTRAINTS ON LIFETIME VALUE OF COMMISSIONS PER APPROVED MEMBER (Unaudited) |
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| Three Months Ended March 31, |
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| 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.
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EHEALTH, INC. SUMMARY OF SELECTED METRICS EXPENSE METRICS PER APPROVED MEMBER (Unaudited) |
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| Three Months Ended March 31, | ||||||||||
| 2017 | 2018 |
Percent |
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| 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 % |
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| 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 % |
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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. | |
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EHEALTH, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In thousands, except per share amounts, unaudited) |
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| Three Months Ended March 31, | ||||||||||||
| 2017 | 2018 | |||||||||||
| Amount |
Percent of |
Amount |
Percent of |
|||||||||
| 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. | |
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EHEALTH, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In thousands, except per share amounts, unaudited) |
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| Three Months Ended March 31, |
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| 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. | |
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EHEALTH, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GUIDANCE (In millions, except per share amounts, unaudited) |
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|
Year Ending |
||
| 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. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20180426006682/en/
Source:
Investor Relations Contact:
eHealth, Inc.
Kate
Sidorovich, CFA, 650-210-3111
Vice President Investor Relations
kate.sidorovich@ehealth.com
http://ir.ehealthinsurance.com