eHealth, Inc. Announces Fourth Quarter and Fiscal 2007 Results
Fourth Quarter Highlights
-- Revenue of $24.2 million, up 39% on a year-over-year basis
-- Growth in submitted applications of 28% year-over-year
-- Operating income of $4.3 million, up 56% year-over-year
-- Net income of $22.4 million, or $0.86 per diluted share,
including a $18.9 million income tax benefit due to the
reversal of the valuation allowance against deferred tax
assets
-- Cash flow from operations of $7.9 million, up 61%
year-over-year
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Feb. 14, 2008--eHealth, Inc. (NASDAQ:EHTH), the leading online source of health insurance for individuals, families and small businesses, today announced its financial results for the fourth quarter and fiscal year ended December 31, 2007.
"eHealth's performance during the fourth quarter of 2007 illustrates progress, execution, and momentum across all important areas of our business. Among many highlights of the quarter are increased application growth and the highest operating cash flow in our company's history," said Gary Lauer, chief executive officer of eHealth.
Fourth Quarter Results
Revenue--Revenue totaled $24.2 million for the fourth quarter of 2007, a 39% increase compared to revenue of $17.4 million for the fourth quarter of 2006.
Membership--Estimated membership at December 31, 2007 totaled 518,400 members, a 32% increase over estimated membership at December 31, 2006.
Submitted Applications--Submitted applications for individual and family products increased 28% in the fourth quarter of 2007 to 97,900 applications, compared to 76,300 applications in the fourth quarter of 2006.
Operating Income--Operating income increased 56% to $4.3 million for the fourth quarter of 2007, compared to operating income of $2.8 million for the fourth quarter of 2006. Operating margins were 18% in the fourth quarter of 2007, up from 16% in the fourth quarter of 2006. Non-GAAP operating income increased 66% to $4.9 million for the fourth quarter of 2007, compared to non-GAAP operating income of $2.9 million for the fourth quarter of 2006. Non-GAAP operating margins were 20% in the fourth quarter of 2007, up from 17% in the fourth quarter of 2006. Non-GAAP operating income and margins in the fourth quarter of 2007 exclude $544,000 of stock-based compensation expense and non-GAAP operating income and margins in the fourth quarter of 2006 exclude $158,000 of stock-based compensation expense.
Pre-tax Income--Pre-tax income for the fourth quarter of 2007 was $5.7 million, a 54% increase compared to pre-tax income of $3.7 million for the fourth quarter of 2006. Non-GAAP pre-tax income increased to $6.3 million for the fourth quarter of 2007, compared to non-GAAP pre-tax income of $3.9 million for the fourth quarter of 2006, an increase of 62%. Non-GAAP pre-tax income in the fourth quarters of 2007 and 2006 exclude $544,000 and $158,000 of stock-based compensation expense, respectively.
Net Income--Net income for the fourth quarter of 2007, which included a benefit for income taxes of $18.9 million due to the reduction of the valuation allowance against deferred tax assets, was $22.4 million, or $0.86 per diluted share. Net income for the fourth quarter of 2006, which included a benefit for income taxes of $7.4 million due to the partial reduction of the valuation allowance against deferred tax assets, was $11.0 million, or $0.45 per share on a diluted basis. Non-GAAP net income for the fourth quarter of 2007 was $3.7 million, or $0.14 per diluted share, compared to non-GAAP net income of $3.8 million, or $0.15 per diluted share, for the fourth quarter of 2006. Non-GAAP net income and non-GAAP net income per diluted share in the fourth quarter of 2007 exclude $544,000 of stock-based compensation expense, net of income tax effect of $262,000, and an $18.9 million income tax benefit from the reduction of the valuation allowance against deferred tax assets. Non-GAAP net income and non-GAAP net income per diluted share in the fourth quarter of 2006 exclude $158,000 of stock-based compensation expense, net of income tax effect of $2,000, and $7.4 million of income tax benefit from the reduction of the valuation allowance against deferred tax assets.
Cash Flow and Cash Balance--Cash flow from operations for the fourth quarter of 2007 was $7.9 million, compared to $4.9 million for the fourth quarter of 2006, representing an increase of 61%. Cash, cash equivalents and short-term marketable securities as of December 31, 2007 totaled $121.5 million, compared to $90.5 million as of December 31, 2006.
Fiscal 2007 Results
Revenue--Revenue totaled $87.8 million for the year ended December 31, 2007, a 43% increase compared to revenue of $61.3 million for the year ended December 31, 2006.
Operating Income--Operating income increased to $16.0 million for the year ended December 31, 2007, compared to operating income of $8.0 million for the year ended December 31, 2006. Operating margins were 18% for the year ended December 31, 2007, up from 13% for the year ended December 31, 2006.
Pre-tax Income--Pre-tax income for the year ended December 31, 2007 was $21.3 million, a 129% increase compared to pre-tax income of $9.3 million for the year ended December 31, 2006. The benefit for income taxes for the year ended December 31, 2007 was $10.3 million and the benefit for income taxes for the year ended December 31, 2006 was $7.2 million primarily due to reductions of the valuation allowance against deferred tax assets of $7.4 million and $18.9 million in the fourth quarters of 2006 and 2007, respectively.
Net Income--Net income for the year ended December 31, 2007, which included $18.9 million of income tax benefit recorded in the fourth quarter of 2007, was $31.6 million, or $1.22 per diluted share. Net income for the year ended December 31, 2006, which included $7.4 million of income tax benefit recorded in the fourth quarter of 2006, was $16.5 million, or $0.80 per share on a diluted basis.
Cash Flow--Cash flow from operations increased to $26.2 million for the year ended December 31, 2007, compared to $11.4 million for the year ended December 31, 2006, representing an increase of 130%.
Guidance
eHealth is providing guidance for the full year ending December 31, 2008 based on information currently available:
-- Total revenue is expected to be in the range of $114 million
to $117 million
-- Stock-based compensation expense is expected to be in the
range of $4.0 million to $5.5 million
-- GAAP income tax rate expected to be approximately 42%
-- GAAP net earnings per diluted share is expected to be in the
range of $0.58 to $0.63 per share
-- Cash flow from operations is expected to be in the range of
$33.5 million to $36.0 million
Webcast and Conference Call Information
A Webcast and conference call will be held today, Thursday, February 14, 2008 at 5:00 p.m. EST / 2:00 p.m. PST. 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 888-396-2298 for domestic callers and 617-847-8708 for international callers. The participant passcode is 95522387. A telephone replay will be available two hours following the conclusion of the call for a period of 30 days and can be accessed by dialing 888-286-8010 for domestic callers and 617-801-6888 for international callers. The call ID for the replay is 15882627. The archived Webcast will also be available on the company's website.
About eHealth, Inc.
eHealth, Inc. is the parent company of eHealthInsurance, the leading online source of health insurance for individuals, families and small businesses. eHealthInsurance presents complex health insurance information in an objective, user-friendly format, enabling the research, analysis, comparison and purchase of health insurance products that best meet consumers' needs. eHealth and eHealthInsurance are registered trademarks of eHealthInsurance Services, Inc.
eHealth, Inc. was founded in 1997 and its technology was responsible for the nation's first Internet-based sale of a health insurance policy. eHealth is headquartered in Mountain View, California. Additional information can be found on eHealth's website, www.ehealthinsurance.com.
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 estimated membership and eHealth's guidance for total revenue, stock-based compensation expense, GAAP income tax rate, GAAP net earnings per diluted share and cash flow from operations for the year ending December 31, 2008. These forward-looking statements are inherently subject to various risks and uncertainties that could cause actual results to differ materially from the statements made, including risks associated with continued acceptance of the Internet as a medium for the purchase of health insurance, eHealth's ability to continue to increase its membership base and expand its relationships with health insurance carriers and marketing partners, the effectiveness of increased marketing spending, retention of eHealth's members, increased rates of member turnover, changes in eHealth's relationships with insurance carriers, system failures or capacity constraints, dependence upon Internet search engines to attract consumers who visit eHealth's website, the performance, reliability and availability of eHealth's ecommerce platform and underlying network infrastructure, the effectiveness of eHealth's marketing and public relations efforts, exposure to online commerce security risks, reliance on marketing partners for the sale of health insurance, competition, protection of intellectual property and intellectual property rights claims, regulatory penalties and negative publicity, changes in the economy, compliance with insurance and other laws and regulations, and changes in laws and regulations. Other factors that could cause operating, financial and other results to differ are described in eHealth's most recent Periodic 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 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 generally accepted accounting principles in the United States ("GAAP"). To supplement eHealth's consolidated financial statements presented in accordance with GAAP, eHealth presents investors with certain non-GAAP financial measures, including non-GAAP operating income, non-GAAP operating margins, non-GAAP pre-tax income, non-GAAP net income and non-GAAP net income per diluted share.
-- Non-GAAP operating income consists of GAAP operating income excluding the effects of expensing stock-based compensation related to stock options, restricted stock and restricted stock units in accordance with SFAS 123R beginning in 2006 and amortization of deferred stock-based compensation expense in accordance with APB 25 for grants made prior to 2006.
-- Non-GAAP operating margins are calculated by dividing non-GAAP operating income by GAAP total revenue.
-- Non-GAAP pre-tax income consists of GAAP pre-tax income excluding the effects of expensing stock-based compensation.
-- Non-GAAP net income consists of GAAP net income excluding the effects of expensing stock-based compensation including the related income tax impact and excluding non-cash benefits for income taxes.
-- Non-GAAP net income per diluted share is calculated by dividing non-GAAP net income by GAAP weighted average diluted shares outstanding.
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 the company's financial condition and results of operations. Management believes that the use of these non-GAAP financial measures provides consistency and comparability with the company's past financial reports. Management also believes that the exclusion of the items described above provides an additional measure of the company's operating results and facilitates comparisons of the company'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 the company's ongoing operations. Externally, the company believes that these non-GAAP financial measures continue to be useful to investors in their assessment of the company's operating performance and valuation.
Non-GAAP operating income, non-GAAP operating margins, non-GAAP pre-tax income, non-GAAP net income and non-GAAP net income per diluted 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 costs associated with the operations of the company's business and do not reflect all of the 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. The company expects to continue to incur operating costs similar to the non-GAAP adjustments described above, and exclusion of these costs, and their related income tax impact, from non-GAAP financial measures should not be construed as an inference that these costs are unusual or infrequent. The company compensates for these limitations by prominently disclosing GAAP operating income, GAAP pre-tax income, GAAP net income and GAAP net income per diluted share and providing investors with reconciliations from the company'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 and the related reconciliations between these financial measures.
EHEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December December
31, 31,
2006 2007
-------- -----------
Assets (1) (unaudited)
Current assets:
Cash and cash equivalents $ 90,316 $ 81,395
Short-term marketable securities 158 40,119
Accounts receivable 717 1,300
Deferred income taxes 2,257 13,240
Prepaid expenses and other current assets 1,926 2,098
-------- -----------
Total current assets 95,374 138,152
Property and equipment, net 3,936 3,791
Deferred income taxes 5,165 4,535
Other assets 453 975
-------- -----------
Total assets $104,928 $147,453
======== ===========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 1,440 $ 1,495
Accrued compensation and benefits 3,743 4,849
Accrued marketing expenses 1,647 2,454
Deferred revenue 62 436
Other current liabilities 1,979 2,073
-------- -----------
Total current liabilities 8,871 11,307
Other non-current liabilities 317 252
Stockholders' equity:
Common stock 22 25
Additional paid-in capital 159,576 167,847
Deferred stock-based compensation (254) (104)
Accumulated deficit (63,655) (32,060)
Accumulated other comprehensive income 51 186
-------- -----------
Total stockholders' equity 95,740 135,894
-------- -----------
Total liabilities and stockholders' equity $104,928 $147,453
======== ===========
(1) The condensed consolidated balance sheet at December 31, 2006 has
been derived from the audited consolidated financial statements at
that date.
EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
----------------------- -------------------
2006 2007 2006 2007
----------- ----------- ------- -----------
(unaudited) (unaudited) (2) (unaudited)
Revenue:
Commission $16,520 $ 22,016 $58,943 $ 81,502
Sponsorship, licensing
and other 896 2,217 2,367 6,289
----------- ----------- ------- -----------
Total revenue 17,416 24,233 61,310 87,791
Operating costs and
expenses:
Cost of revenue-sharing 411 457 1,305 1,702
Marketing and
advertising (1) 5,601 8,476 21,405 29,497
Customer care and
enrollment (1) 2,947 3,278 10,991 12,137
Technology and content
(1) 2,816 3,368 10,137 12,393
General and
administrative (1) 2,880 4,348 9,482 16,046
----------- ----------- ------- -----------
Total operating costs and
expenses 14,655 19,927 53,320 71,775
----------- ----------- ------- -----------
Income from operations 2,761 4,306 7,990 16,016
Other income, net 969 1,438 1,326 5,287
----------- ----------- ------- -----------
Income before income
taxes 3,730 5,744 9,316 21,303
Benefit for income taxes (7,315) (16,616) (7,161) (10,292)
----------- ----------- ------- -----------
Net income $11,045 $ 22,360 $16,477 $ 31,595
=========== =========== ======= ===========
Net income per share:
Basic - common stock $ 0.57 $ 0.92 $ 1.91 $ 1.37
Basic - Class A
nonvoting common stock $ 0.57 -- $ 1.91 --
Diluted - common stock $ 0.45 $ 0.86 $ 0.80 $ 1.22
Diluted - Class A
nonvoting common stock $ 0.45 -- $ 0.80 --
Net income:
Allocated to common
stock $11,039 $ 22,360 $16,391 $ 31,595
Allocated to Class A
nonvoting common stock 6 -- 86 --
----------- ----------- ------- -----------
Net income $11,045 $ 22,360 $16,477 $ 31,595
=========== =========== ======= ===========
Weighted-average number
of shares used in per
share amounts:
Basic - common stock 19,535 24,424 8,590 23,092
Basic - Class A
nonvoting common
stock 10 -- 45 --
Diluted - common stock 24,771 25,929 20,572 25,797
Diluted - Class A
nonvoting common
stock 10 -- 45 --
__________
(1) Includes stock-based
compensation as follows:
Marketing and
advertising $ 15 $ 105 $ 47 $ 218
Customer care and
enrollment 16 52 42 138
Technology and
content 77 195 226 611
General and
administrative 50 192 139 539
----------- ----------- ------- -----------
Total $ 158 $ 544 $ 454 $ 1,506
=========== =========== ======= ===========
(2) The condensed consolidated statement of operations for the year
ended December 31, 2006 has been derived from the audited
consolidated financial statements for that year.
EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Three Months Ended Year Ended
December 31, December 31,
----------------------- -------------------
2006 2007 2006 2007
----------- ----------- ------- -----------
(unaudited) (unaudited) (1) (unaudited)
Operating activities
Net income $11,045 $ 22,360 $16,477 $ 31,595
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Deferred income taxes (7,422) (16,412) (7,422) (10,303)
Depreciation and
amortization 409 434 1,526 1,709
Stock-based
compensation expense 158 544 454 1,506
Excess tax benefits
from stock-based
compensation expense -- (50) -- (50)
Deferred rent 82 (18) 122 (40)
Loss on disposal of
property and
equipment -- 12 -- 30
Changes in operating
assets and
liabilities:
Accounts receivable 84 (252) (589) (583)
Prepaid expenses and
other current
assets (730) (195) (954) (11)
Other assets (15) (1) (44) (524)
Accounts payable 11 610 209 308
Accrued compensation
and benefits 932 1,025 740 958
Accrued marketing
expenses (81) 31 620 807
Deferred revenue 3 159 (461) 374
Other current
liabilities 442 (337) 734 416
----------- ----------- ------- -----------
Net cash provided by
operating activities 4,918 7,910 11,412 26,192
----------- ----------- ------- -----------
Investing activities
Purchases of property and
equipment (509) (724) (2,248) (1,777)
Proceeds from the sale of
property and equipment -- -- -- 14
Changes in restricted
investments (2) -- (5) --
Purchases of short-term
marketable securities -- (17,823) -- (54,343)
Sales of short-term
marketable securities -- 6,796 -- 8,952
Maturities of short-term
marketable securities -- 4,895 -- 5,483
----------- ----------- ------- -----------
Net cash used in
investing activities (511) (6,856) (2,253) (41,671)
----------- ----------- ------- -----------
Financing activities
Proceeds from initial
public offering 74,752 -- 74,752 --
Costs incurred in
connection with initial
public offering (1,400) -- (3,309) (252)
Net proceeds from
exercise of common stock
options 37 1,525 476 6,868
Excess tax benefits from
stock-based compensation
expense -- 50 -- 50
Principal payments in
connection with capital
leases (134) (2) (206) (214)
----------- ----------- ------- -----------
Net cash provided by
financing activities 73,255 1,573 71,713 6,452
----------- ----------- ------- -----------
Effect of exchange rate
changes on cash and cash
equivalents 13 42 29 106
----------- ----------- ------- -----------
Net increase (decrease)
in cash and cash
equivalents 77,675 2,669 80,901 (8,921)
Cash and cash equivalents
at beginning of period 12,641 78,726 9,415 90,316
----------- ----------- ------- -----------
Cash and cash equivalents
at end of period $90,316 $ 81,395 $90,316 $ 81,395
=========== =========== ======= ===========
(1) The condensed consolidated statement of cash flows for the year
ended December 31, 2006 has been derived from the audited
consolidated financial statements for that year.
EHEALTH, INC.
SUMMARY OF SELECTED METRICS
(Unaudited)
Three Three
Months Months
Ended Ended
December December
Key Metrics: 31, 2006 31, 2007
--------------------------------------------------------- -----------
Operating cash flows (1) $ 4,918,000 $ 7,910,000
IFP submitted applications (2) 76,300 97,900
IFP approved members (3) 68,300 83,800
Total approved members (4) 97,200 118,800
Total revenue (5) $17,416,000 $24,233,000
Total revenue per estimated member for the
period (6) $ 46.02 $ 48.00
As of As of
December December
31, 2006 31, 2007
----------- -----------
IFP estimated membership (7) 319,000 432,700
Total estimated membership (8) 393,900 518,400
Three Three
Months Months
Ended Ended
December December
31, 2006 31, 2007
----------- -----------
Marketing and advertising expenses (9) $ 5,601,000 $ 8,476,000
Marketing and advertising expenses as a
percentage of total revenue (10) 32% 35%
Marketing and advertising expenses excluding
stock-based compensation (11) 5,586,000 8,371,000
Other Metrics:
----------------------------------------------
Source of IFP submitted applications (as a
percentage of total IFP applications for the
period):
Direct (12) 40% 38%
Marketing partners (13) 33% 34%
Online advertising (14) 27% 28%
----------- -----------
Total 100% 100%
=========== ===========
Acquisition cost per individual on IFP
submitted applications (15) $ 47.48 $ 56.73
Acquisition cost (excluding stock-based
compensation) per individual on IFP submitted
applications (16) $ 47.36 $ 56.03
Notes:
---------------------------------------------------------------------
(1)Net cash provided by operating activities for the period from the
condensed consolidated statements of cash flows.
(2)Individual and Family Product ("IFP") applications submitted on
eHealth's website during the period.
(3)New IFP members reported to eHealth as approved during the period.
Some members that are approved by a carrier do not accept the
approval and therefore do not become paying members.
(4)New members for all products reported to eHealth as approved during
the period. Some members that are approved by a carrier do not accept
the approval and therefore do not become paying members.
(5)Total revenue recognized during the period (all sources) from the
condensed consolidated statements of operations.
(6)Calculated as total revenue recognized during the period (see note
(5)) divided by average estimated membership for the period
(calculated as beginning and ending estimated membership for all
products for the period, divided by two).
(7)Estimated number of members active on IFP insurance policies as of
the date indicated.
(8)Estimated number of members active on all insurance policies as of
the date indicated.
(9)Marketing and advertising expenses for the period from the
condensed consolidated statements of operations.
(10)Calculated as marketing and advertising expenses for the period
(see note (9)) divided by total revenue for the period (see note
(5)).
(11)Marketing and advertising expenses excluding stock-based
compensation for the period.
(12)Percentage of IFP submitted applications from applicants who came
directly to the eHealth website through algorithmic search engine
results or otherwise.
(13)Percentage of IFP submitted applications from applicants sourced
through eHealth's network of marketing partners.
(14)Percentage of IFP submitted applications from applicants sourced
through paid search and other online advertising activities.
(15)Calculated as marketing and advertising expenses for the period
(see note (9)) divided by the number of individuals on IFP
applications completed on eHealth's website during the period.
(16)Calculated as marketing and advertising expenses excluding stock-
based compensation for the period (see note (11)) divided by the
number of individuals on IFP applications completed on eHealth's
website during the period.
EHEALTH, INC.
GAAP TO NON-GAAP RECONCILIATION
FOR THE THREE MONTHS ENDED DECEMBER 31, 2007
(In thousands, except per share amounts, unaudited)
Statement of Operations
Reconciliation
------------------------------
Three Months Ended December 31, 2007
---------------------------------------
Percent
of
GAAP Non-GAAP Total
Reported Adjustments Results Revenue
--------- ----------- -------- --------
Revenue:
Commission $ 22,016 $ -- $22,016 91%
Sponsorship, licensing and
other 2,217 -- 2,217 9
--------- ----------- -------- --------
Total revenue 24,233 -- 24,233 100
Operating costs and expenses:
Cost of revenue-sharing 457 -- 457 2
Marketing and advertising (1) 8,476 (105) 8,371 35
Customer care and enrollment
(1) 3,278 (52) 3,226 13
Technology and content (1) 3,368 (195) 3,173 13
General and administrative
(1) 4,348 (192) 4,156 17
--------- ----------- -------- --------
Total operating costs and
expenses 19,927 (544) 19,383 80
--------- ----------- -------- --------
Income from operations 4,306 544 4,850 20
Other income, net 1,438 -- 1,438 6
--------- ----------- -------- --------
Income before income taxes 5,744 544 6,288 26
Provision (benefit) for income
taxes (2) (16,616) 19,194 2,578 11
--------- ----------- -------- --------
Net income $ 22,360 $(18,650) $ 3,710 15%
========= =========== ======== ========
Net income per share:
Basic - common stock $ 0.92 $ (0.77) $ 0.15
Diluted - common stock $ 0.86 $ (0.72) $ 0.14
Weighted-average number of
shares used in per share
amounts:
Basic - common stock 24,424 24,424 24,424
Diluted - common stock 25,929 25,929 25,929
Explanation of adjustments
---------------------------------------------------------------------
(1)Non-GAAP results exclude the effect of expensing stock-based
compensation related to stock options, restricted stock and
restricted stock units in accordance with SFAS 123R beginning in
2006, in addition to the amortization of deferred stock-based
compensation expense in accordance with APB 25 for grants made prior
to 2006.
(2)In the fourth quarter of 2007, management concluded that it is more
likely than not that eHealth will realize sufficient future earnings
to utilize its remaining deferred tax assets. Accordingly, eHealth
reduced the valuation allowance by $18.9 million against deferred tax
assets resulting in a tax benefit in the fourth quarter of 2007.
Additionally, non-GAAP results exclude the income tax impact of
$262,000 from the stock-based compensation expense listed in item (1)
above.
EHEALTH, INC.
GAAP TO NON-GAAP RECONCILIATION
FOR THE THREE MONTHS ENDED DECEMBER 31, 2006
(In thousands, except per share amounts, unaudited)
Statement of Operations
Reconciliation
------------------------------
Three Months Ended December 31, 2006
---------------------------------------
Percent
of
GAAP Non-GAAP Total
Reported Adjustments Results Revenue
--------- ----------- -------- --------
Revenue:
Commission $16,520 $ -- $16,520 95%
Sponsorship, licensing and
other 896 -- 896 5
--------- ----------- -------- --------
Total revenue 17,416 -- 17,416 100
Operating costs and expenses:
Cost of revenue-sharing 411 -- 411 2
Marketing and advertising (1) 5,601 (15) 5,586 32
Customer care and enrollment
(1) 2,947 (16) 2,931 17
Technology and content (1) 2,816 (77) 2,739 16
General and administrative
(1) 2,880 (50) 2,830 16
--------- ----------- -------- --------
Total operating costs and
expenses 14,655 (158) 14,497 83
--------- ----------- -------- --------
Income from operations 2,761 158 2,919 17
Other income, net 969 -- 969 5
--------- ----------- -------- --------
Income before income taxes 3,730 158 3,888 22
Provision (benefit) for income
taxes (2) (7,315) 7,424 109 0
--------- ----------- -------- --------
Net income $11,045 $(7,266) $ 3,779 22%
========= =========== ======== ========
Net income per share:
Basic - common stock $ 0.57 $ (0.38) $ 0.19
Basic - Class A nonvoting
common stock $ 0.57 $ (0.38) $ 0.19
Diluted - common stock $ 0.45 $ (0.30) $ 0.15
Diluted - Class A nonvoting
common stock $ 0.45 $ (0.30) $ 0.15
Net income:
Allocated to common stock $11,039 $(7,262) $ 3,777
Allocated to Class A
nonvoting common stock 6 (4) 2
--------- ----------- --------
Net income $11,045 $(7,266) $ 3,779
========= =========== ========
Weighted-average number of
shares used in per share
amounts:
Basic - common stock 19,535 19,535 19,535
Basic - Class A nonvoting
common stock 10 10 10
Diluted - common stock 24,771 24,771 24,771
Diluted - Class A nonvoting
common stock 10 10 10
Explanation of adjustments
---------------------------------------------------------------------
(1)Non-GAAP results exclude the effect of expensing stock-based
compensation related to stock options, restricted stock and
restricted stock units in accordance with SFAS 123R beginning in
2006, in addition to the amortization of deferred stock-based
compensation expense in accordance with APB 25 for grants made prior
to 2006.
(2)In the fourth quarter of 2006, management concluded that it was
more likely than not that eHealth would realize sufficient future
earnings to utilize a portion of its deferred tax assets.
Accordingly, eHealth reduced the valuation allowance by $7.4 million
against deferred tax assets resulting in a tax benefit in the fourth
quarter of 2006. Additionally, non-GAAP results exclude the income
tax impact of $2,000 from the stock-based compensation expense listed
in item (1) above.
EHEALTH, INC.
GAAP TO NON-GAAP RECONCILIATION
FOR THE YEAR ENDED DECEMBER 31, 2007
(In thousands, except per share amounts, unaudited)
Statement of Operations
Reconciliation
------------------------------
Year Ended December 31, 2007
---------------------------------------
Percent
of
GAAP Non-GAAP Total
Reported Adjustments Results Revenue
--------- ----------- -------- --------
Revenue:
Commission $ 81,502 $ -- $81,502 93%
Sponsorship, licensing and
other 6,289 -- 6,289 7
--------- ----------- -------- --------
Total revenue 87,791 -- 87,791 100
Operating costs and expenses:
Cost of revenue-sharing 1,702 -- 1,702 2
Marketing and advertising (1) 29,497 (218) 29,279 33
Customer care and enrollment
(1) 12,137 (138) 11,999 14
Technology and content (1) 12,393 (611) 11,782 13
General and administrative
(1) 16,046 (539) 15,507 18
--------- ----------- -------- --------
Total operating costs and
expenses 71,775 (1,506) 70,269 80
--------- ----------- -------- --------
Income from operations 16,016 1,506 17,522 20
Other income, net 5,287 -- 5,287 6
--------- ----------- -------- --------
Income before income taxes 21,303 1,506 22,809 26
Provision (benefit) for income
taxes (2) (10,292) 19,256 8,964 10
--------- ----------- -------- --------
Net income $ 31,595 $(17,750) $13,845 16%
========= =========== ======== ========
Net income per share:
Basic - common stock $ 1.37 $ (0.77) $ 0.60
Diluted - common stock $ 1.22 $ (0.68) $ 0.54
Weighted-average number of
shares used in per share
amounts:
Basic - common stock 23,092 23,092 23,092
Diluted - common stock 25,797 25,797 25,797
Explanation of adjustments
---------------------------------------------------------------------
(1)Non-GAAP results exclude the effect of expensing stock-based
compensation related to stock options, restricted stock and
restricted stock units in accordance with SFAS 123R beginning in
2006, in addition to the amortization of deferred stock-based
compensation expense in accordance with APB 25 for grants made prior
to 2006.
(2)In the fourth quarter of 2007, management concluded that it is more
likely than not that eHealth will realize sufficient future earnings
to utilize its remaining deferred tax assets. Accordingly, eHealth
reduced the valuation allowance by $18.9 million against deferred tax
assets resulting in a tax benefit for 2007. Additionally, non-GAAP
results exclude the income tax impact of $324,000 from the stock-
based compensation expense listed in item (1) above.
EHEALTH, INC.
GAAP TO NON-GAAP RECONCILIATION
FOR THE YEAR ENDED DECEMBER 31, 2006
(In thousands, except per share amounts, unaudited)
Statement of Operations
Reconciliation
------------------------------
Year Ended December 31, 2006
---------------------------------------
Percent
of
GAAP Non-GAAP Total
Reported Adjustments Results Revenue
--------- ----------- -------- --------
Revenue:
Commission $58,943 $ -- $58,943 96%
Sponsorship, licensing and
other 2,367 -- 2,367 4
--------- ----------- -------- --------
Total revenue 61,310 -- 61,310 100
Operating costs and expenses:
Cost of revenue-sharing 1,305 -- 1,305 2
Marketing and advertising (1) 21,405 (47) 21,357 35
Customer care and enrollment
(1) 10,991 (42) 10,949 18
Technology and content (1) 10,137 (226) 9,912 16
General and administrative
(1) 9,482 (139) 9,343 15
--------- ----------- -------- --------
Total operating costs and
expenses 53,320 (454) 52,866 86
--------- ----------- -------- --------
Income from operations 7,990 454 8,444 14
Other income, net 1,326 -- 1,326 2
--------- ----------- -------- --------
Income before income taxes 9,316 454 9,770 16
Provision (benefit) for income
taxes (2) (7,161) 7,432 271 1
--------- ----------- -------- --------
Net income $16,477 $(6,978) $ 9,499 15%
========= =========== ======== ========
Net income per share:
Basic - common stock $ 1.91 $ (0.81) $ 1.10
Basic - Class A nonvoting
common stock $ 1.91 $ (0.81) $ 1.10
Diluted - common stock $ 0.80 $ (0.34) $ 0.46
Diluted - Class A nonvoting
common stock $ 0.80 $ (0.34) $ 0.46
Net income:
Allocated to common stock $16,391 $(6,942) $ 9,449
Allocated to Class A
nonvoting common stock 86 (36) 50
--------- ----------- --------
Net income $16,477 $(6,978) $ 9,499
========= =========== ========
Weighted-average number of
shares used in per share
amounts:
Basic - common stock 8,590 8,590 8,590
Basic - Class A nonvoting
common stock 45 45 45
Diluted - common stock 20,572 20,572 20,572
Diluted - Class A nonvoting
common stock 45 45 45
Explanation of adjustments
---------------------------------------------------------------------
(1)Non-GAAP results exclude the effect of expensing stock-based
compensation related to stock options, restricted stock and
restricted stock units in accordance with SFAS 123R beginning in
2006, in addition to the amortization of deferred stock-based
compensation expense in accordance with APB 25 for grants made prior
to 2006.
(2)In the fourth quarter of 2006, management concluded that it was
more likely than not that eHealth would realize sufficient future
earnings to utilize a portion of its deferred tax assets.
Accordingly, eHealth reduced the valuation allowance by $7.4 million
against deferred tax assets resulting in a tax benefit for 2006.
Additionally, non-GAAP results exclude the income tax impact of
$10,000 from the stock-based compensation expense listed in item (1)
above.
CONTACT: FD Ashton Partners
Investor Relations:
Dede Sheel, 415-293-4412
dede.sheel@fdashtonpartners.com
www.fdashtonpartners.com
or
eHealth, Inc.
Media:
Stuart Huizinga, 650-210-3180
Senior Vice President and Chief Financial Officer
stuart.huizinga@ehealth.com
www.ehealthinsurance.com
SOURCE: eHealth, Inc.