eHealth, Inc. Announces Fourth Quarter and Fiscal 2008 Results
- Revenue of $29.5 million, up 22% over the fourth quarter of 2007
- Growth in IFP submitted applications of 18% over the fourth quarter of 2007
- Operating income of $5.7 million, up 31% over the fourth quarter of 2007 -- GAAP operating margins of 19% and non-GAAP operating margins of 22% for the fourth quarter of 2008
- GAAP net income of $3.6 million, or $0.14 per diluted share, and non-GAAP net income of $4.2 million, or $0.16 per diluted share, for the fourth quarter of 2008
- Cash flow from operations of $7.4 million, down 6% from the fourth quarter of 2007
MOUNTAIN VIEW, CA, Feb 12, 2009 (MARKET WIRE via COMTEX) -- 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, 2008.
Gary Lauer, chief executive officer of eHealth, stated, "Our financial results illustrate that we continue to execute on our operating plans and grow our business in the midst of an extraordinary macroeconomic environment. Fourth quarter performance is reflective of our disciplined approach to managing our company and growing our membership base profitably. In this economy we are focused on continued operating efficiency and aggressive marketing, and most importantly helping people find quality health insurance options online."
Fourth Quarter Results
Revenue - Revenue totaled $29.5 million for the fourth quarter of 2008, a 22% increase compared to revenue of $24.2 million for the fourth quarter of 2007.
Submitted Applications - Submitted applications for individual and family products increased 18% in the fourth quarter of 2008 to 115,600 applications, compared to 97,900 applications in the fourth quarter of 2007.
Membership - Estimated membership at December 31, 2008 totaled 621,100 members, a 20% increase over estimated membership of 518,400 at December 31, 2007.
Operating Income - Operating income increased 31% to $5.7 million for the fourth quarter of 2008, compared to operating income of $4.3 million for the fourth quarter of 2007. Operating margins were 19% in the fourth quarter of 2008, compared to 18% in the fourth quarter of 2007. Non-GAAP operating income increased 35% to $6.5 million for the fourth quarter of 2008, compared to non-GAAP operating income of $4.9 million for the fourth quarter of 2007. Non-GAAP operating margins were 22% in the fourth quarter of 2008, compared to 20% in the fourth quarter of 2007. Non-GAAP operating income and margins in the fourth quarters of 2008 and 2007 exclude $885,000 and $544,000 of stock-based compensation expense, respectively.
Pre-tax Income - Pre-tax income for the fourth quarter of 2008 was $6.3 million, a 9% increase compared to pre-tax income of $5.7 million for the fourth quarter of 2007. Non-GAAP pre-tax income was $7.2 million for the fourth quarter of 2008, a 14% increase compared to non-GAAP pre-tax income of $6.3 million for the fourth quarter of 2007. Non-GAAP pre-tax income in the fourth quarters of 2008 and 2007 exclude $885,000 and $544,000 of stock-based compensation expense, respectively.
Net Income - Net income for the fourth quarter of 2008 was $3.6 million, or $0.14 per diluted share. 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. Non-GAAP net income for the fourth quarter of 2008 was $4.2 million, or $0.16 per diluted share compared to non-GAAP net income for the fourth quarter of 2007 of $3.7 million, or $0.14 per diluted share. Non-GAAP net income and non-GAAP net income per diluted share in the fourth quarter of 2008 exclude $885,000 of stock-based compensation expense, adjusted by $355,000 for estimated income tax benefit related to stock-based compensation expense. 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, adjusted by $262,000 for estimated income tax benefit related to stock-based compensation expense, and an $18.9 million 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 2008 was $7.4 million, compared to $7.9 million for the fourth quarter of 2007, representing a decrease of 6%. Cash, cash equivalents and short-term marketable securities as of December 31, 2008 totaled $150.6 million, compared to $121.5 million as of December 31, 2007. During the fourth quarter of 2008, our Board of Directors authorized a stock repurchase program of up to $30 million, or ten percent of our outstanding common stock, whichever is less. We established a 10b5-1 trading plan and began repurchasing our outstanding common stock in late December 2008. As of December 31, 2008, we had repurchased approximately 51,000 shares at an average price of $12.59 per share for a total cost of $0.6 million.
Fiscal 2008 Results
Revenue - Revenue totaled $111.7 million for the year ended December 31, 2008, a 27% increase compared to revenue of $87.8 million for the year ended December 31, 2007.
Operating Income - Operating income increased 33% to $21.3 million for the year ended December 31, 2008, compared to operating income of $16.0 million for the year ended December 31, 2007. Operating margins were 19% in the year ended December 31, 2008, up from 18% in the year ended December 31, 2007.
Pre-tax Income - Pre-tax income for the year ended December 31, 2008 was $25.0 million, a 17% increase compared to pre-tax income of $21.3 million for the year ended December 31, 2007.
Net Income - Net income for the year ended December 31, 2008 was $14.2 million, or $0.55 per diluted share. 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.
Cash Flow and Cash Balance - Cash flow from operations for the year ended December 31, 2008 was $30.2 million, a 15% increase compared to $26.2 million for the year ended December 31, 2007.
2009 Guidance
eHealth is providing guidance for the full year ending December 31, 2009 based on information currently available:
- Total revenue is expected to be in the range of $131 million to $136
million
Stock-based compensation expense is expected to be in the range of $5
million to $6 million
GAAP income tax rate expected to be in the range of 43% to 45%
GAAP net income per diluted share is expected to be in the range of
$0.51 to $0.61 per share
"I would like to provide some additional comments on our 2009 guidance," said Stuart Huizinga, chief financial officer of eHealth. "We expect our 2009 non-GAAP operating margin percentage, which excludes stock-based compensation, to be at least equal to what we reported for 2008, and our 2009 operating income to increase as compared to the 2008 operating income. At the same time, we expect our 2009 net income to be impacted by a decline in interest income, a non-operating item. Our 2009 interest income is expected to decline from the run-rate we observed in the fourth quarter of 2008 as a result of current interest rates and our plan to continue to manage our cash conservatively."
Webcast and Conference Call Information
A Webcast and conference call will be held today, Thursday, February 12, 2009 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 800-597-1967 for domestic callers and 617-597-5526 for international callers. The participant passcode is #95786385. 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 #20135984. The live and archived webcast of the call will also be available on eHealth's website at www.ehealthinsurance.com under the Investor Relations section.
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 eHealth's cash management and eHealth's guidance for total revenue, stock-based compensation expense, GAAP income tax rate, GAAP net income per diluted share, non-GAAP operating margins, interest income, operating income and net income for the year ending December 31, 2009. 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 eHealth's rate of growth, continued acceptance of the Internet as a medium for the purchase of health insurance, consumer awareness of the availability and accessibility of affordable health insurance, eHealth's ability to continue to increase its membership base and retain its members, and maintain or expand its relationships with health insurance carriers and marketing partners, negative publicity experienced by eHealth's carrier partners, changes in products offered on eHealth's ecommerce platform, changes in commission payments or carrier underwriting practices, maintaining and enhancing eHealth's brand identity, changes in member conversion rates and factors affecting conversion, system failures, capacity constraints or data loss, the performance, reliability and availability of eHealth's ecommerce platform and underlying network infrastructure, exposure to online commerce security risks, dependence upon Internet search engines to attract consumers who visit eHealth's website, the effectiveness of eHealth's marketing and public relations efforts, reliance on marketing partners for the sale of health insurance, changes in the economy and weak economic conditions, pursuing new strategies and opportunities in new segments of the health insurance market, timing of receipt of commission reports and related impact on estimating membership, payment practices of health insurance carriers, competition, eHealth's operations in China and any foreign expansion, success in the sale of sponsorship advertising and the licensing of the use of eHealth's ecommerce platform, success of the health savings account (HSA) platform, protection of intellectual property and intellectual property rights claims, regulatory penalties and negative publicity, costs of obtaining insurance and the health of companies providing such insurance, ability to attract and retain qualified personnel, management of future growth, seasonality, impact of future acquisitions, implementation of internal enterprise systems and maintenance of proper and effective internal controls, impact of employee stock-based compensation expense and provisions for income taxes, compliance with insurance and other laws and regulations, changes in laws and regulations, and changes in the structure of the health insurance system in the United States. 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 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 condensed 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 adjusted for estimated income tax
benefit related to stock-based compensation expense. Additionally, non-GAAP
net income for the three months and fiscal year ended December 31, 2007
excludes $18.9 million of non-cash benefits for income taxes related to the
reduction of the valuation allowance against deferred tax assets.
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.
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 stock-based compensation costs 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 31, December 31,
2007 2008
-------------- --------------
Assets (1) (unaudited)
Current assets:
Cash and cash equivalents $ 81,395 $ 94,136
Marketable securities 40,119 56,499
Accounts receivable 1,300 2,005
Deferred income taxes 13,240 7,580
Prepaid expenses and other current assets 2,098 1,874
-------------- --------------
Total current assets 138,152 162,094
Property and equipment, net 3,791 4,567
Deferred income taxes 4,535 1,314
Other assets 975 780
-------------- --------------
Total assets $ 147,453 $ 168,755
============== ==============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 1,495 $ 2,190
Accrued compensation and benefits 4,849 4,662
Accrued marketing expenses 2,454 3,162
Deferred revenue 436 427
Other current liabilities 2,073 2,707
-------------- --------------
Total current liabilities 11,307 13,148
Other non-current liabilities 252 628
Stockholders' equity:
Common stock 25 25
Additional paid-in capital 167,847 172,456
Deferred stock-based compensation (104) (22)
Accumulated deficit (32,060) (17,892)
Accumulated other comprehensive income 186 412
-------------- --------------
Total stockholders' equity 135,894 154,979
-------------- --------------
Total liabilities and stockholders' equity $ 147,453 $ 168,755
============== ==============
(1) The condensed consolidated balance sheet at December 31, 2007 has been
derived from the audited consolidated financial statements at that
date.
EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
----------------------- -----------------------
2007 2008 2007 2008
----------- ----------- ----------- -----------
(unaudited) (unaudited) (2) (unaudited)
Revenue:
Commission $ 22,016 $ 26,176 $ 81,502 $ 100,839
Sponsorship, licensing
and other 2,217 3,279 6,289 10,872
----------- ----------- ----------- -----------
Total revenue 24,233 29,455 87,791 111,711
Operating costs and
expenses:
Cost of revenue-sharing 457 408 1,702 1,746
Marketing and
advertising (1) 8,476 11,528 29,497 42,161
Customer care and
enrollment (1) 3,278 3,724 12,137 14,379
Technology and content (1) 3,368 3,634 12,393 14,182
General and
administrative (1) 4,348 4,508 16,046 17,983
----------- ----------- ----------- -----------
Total operating costs and
expenses 19,927 23,802 71,775 90,451
----------- ----------- ----------- -----------
Income from operations 4,306 5,653 16,016 21,260
Interest and other income,
net 1,438 629 5,287 3,714
----------- ----------- ----------- -----------
Income before income taxes 5,744 6,282 21,303 24,974
Provision (benefit) for
income taxes (16,616) 2,633 (10,292) 10,806
----------- ----------- ----------- -----------
Net income $ 22,360 $ 3,649 $ 31,595 $ 14,168
=========== =========== =========== ===========
Net income per share:
Basic $ 0.92 $ 0.15 $ 1.37 $ 0.57
Diluted $ 0.86 $ 0.14 $ 1.22 $ 0.55
Weighted-average number of
shares used in per share
amounts:
Basic 24,424 25,076 23,092 24,963
Diluted 25,929 25,826 25,797 25,954
__________
(1) Includes stock-based
compensation expense
as follows:
Marketing and
advertising $ 105 $ 160 $ 218 $ 644
Customer care and
enrollment 52 66 138 266
Technology and
content 195 245 611 898
General and
administrative 192 414 539 1,686
----------- ----------- ----------- -----------
Total $ 544 $ 885 $ 1,506 $ 3,494
=========== =========== =========== ===========
(2) The condensed consolidated statement of operations for the
year ended December 31, 2007 has been derived from the audited
consolidated financial statements for that year.
EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2007 2008 2007 2008
---------- ---------- ---------- ----------
(unaudited) (unaudited) (1) (unaudited)
Operating activities
Net income $ 22,360 $ 3,649 $ 31,595 $ 14,168
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Deferred income taxes (16,412) 2,305 (10,303) 9,451
Depreciation and
amortization 434 591 1,709 1,863
Stock-based compensation
expense 544 885 1,506 3,494
Excess tax benefits from
stock-based compensation (50) (82) (50) (298)
Deferred rent (18) (8) (40) (51)
Loss on disposal of
property and equipment 12 7 30 45
Changes in operating
assets and liabilities:
Accounts receivable (252) (445) (583) (705)
Prepaid expenses and
other current assets (195) (392) (11) 64
Other assets (1) 175 (524) 196
Accounts payable 610 336 308 693
Accrued compensation
and benefits 1,025 659 958 (41)
Accrued marketing
expenses 31 (780) 807 708
Deferred revenue 159 76 374 (9)
Other current
liabilities (337) 378 416 526
Other long-term
liabilities -- 90 -- 90
---------- ---------- ---------- ----------
Net cash provided by
operating activities 7,910 7,444 26,192 30,194
---------- ---------- ---------- ----------
Investing activities
Purchases of property and
equipment (724) (240) (1,777) (2,482)
Proceeds from the sale of
property and equipment -- -- 14 --
Purchases of marketable
securities (17,823) (24,088) (54,343) (85,653)
Sales of marketable
securities 6,796 -- 8,952 10,120
Maturities of marketable
securities 4,895 20,930 5,483 59,309
---------- ---------- ---------- ----------
Net cash used in investing
activities (6,856) (3,398) (41,671) (18,706)
---------- ---------- ---------- ----------
Financing activities
Net proceeds from exercise
of common stock options 1,525 121 6,868 1,547
Excess tax benefits from
stock-based compensation 50 82 50 298
Repurchase of common stock -- (639) -- (639)
Principal payments in
connection with capital
leases (2) -- (214) --
Costs incurred in
connection with initial
public offering -- -- (252) --
---------- ---------- ---------- ----------
Net cash provided by (used
in) financing activities 1,573 (436) 6,452 1,206
---------- ---------- ---------- ----------
Effect of exchange rate
changes on cash and cash
equivalents 42 1 106 47
---------- ---------- ---------- ----------
Net (decrease) increase in
cash and cash equivalents 2,669 3,611 (8,921) 12,741
Cash and cash equivalents
at beginning of period 78,726 90,525 90,316 81,395
---------- ---------- ---------- ----------
Cash and cash equivalents
at end of period $ 81,395 $ 94,136 $ 81,395 $ 94,136
========== ========== ========== ==========
(1) The condensed consolidated statement of cash flows for the year
ended December 31, 2007 has been derived from the audited
consolidated financial statements for that year.
EHEALTH, INC.
SUMMARY OF SELECTED METRICS
(Unaudited)
Three Months Ended Three Months Ended
December 31, 2007 December 31, 2008
Key Metrics: ----------------- -----------------
Operating cash flows (1) $ 7,910,000 $ 7,444,000
IFP submitted applications (2) 97,900 115,600
IFP approved members (3) 83,800 97,700
Total approved members (4) 118,800 131,200
Total revenue (5) $ 24,233,000 $ 29,455,000
Total revenue per estimated member
for the period (6) $ 48.00 $ 48.16
As of As of
December 31, 2007 December 31, 2008
----------------- -----------------
IFP estimated membership (7) 432,700 528,500
Total estimated membership (8) 518,400 621,100
Three Months Ended Three Months Ended
December 31, 2007 December 31, 2008
----------------- -----------------
Marketing and advertising expenses
(9) $ 8,476,000 $ 11,528,000
Marketing and advertising expenses as
a percentage of total revenue (10) 35% 39%
Marketing and advertising expenses
excluding stock-based compensation
(11) $ 8,371,000 $ 11,368,000
Marketing and advertising expenses
excluding stock-based compensation
as a percentage of total revenue
(12) 35% 39%
Other Metrics:
Source of IFP submitted applications
(as a percentage of total IFP
applications for the period):
Direct (13) 38% 40%
Marketing partners (14) 34% 32%
Online advertising (15) 28% 28%
----------------- -----------------
Total 100% 100%
================= =================
Acquisition cost per individual on
IFP submitted applications (16) $ 56.73 $ 65.35
Acquisition cost (excluding
stock-based compensation) per
individual on IFP submitted
applications (17) $ 56.03 $ 64.44
Notes:
(1) Net cash provided by operating activities for the period from the
condensed consolidated statements of cash flows.
(2) IFP applications submitted on eHealth's website during the period.
Applications are counted as submitted when the applicant completes
the application, provides a method for payment and clicks the submit
button on our website and submits the application to us. The
applicant generally has additional actions to take before the
application will be reviewed by the insurance carrier, such as
providing additional information and providing an electronic
signature. In addition, an applicant may submit more than one
application. We include applications for IFP products for which we
receive commissions as well as other forms of payment. We define
our "IFP" offerings as major medical individual and family health
insurance plans, which does not include small business, short-term
major medical, stand-alone dental, life or student health insurance
product offerings.
(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 (from all sources) recognized during the period from
the condensed consolidated statements of income.
(6) Calculated as total revenue recognized during the period (see note
(5) above) 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. See our 2007 Annual Report on Form 10-K -
Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations - Summary of Selected Metrics for
additional information regarding our calculation of estimated
membership.
(8) Estimated number of members active on all insurance policies as of
the date indicated. See our 2007 Annual Report on Form 10-K - Item
7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations - Summary of Selected Metrics for additional
information regarding our calculation of estimated membership.
(9) Marketing and advertising expenses for the period from the condensed
consolidated statements of income.
(10) Calculated as marketing and advertising expenses for the period (see
note (9) above) divided by total revenue for the period (see note (5)
above).
(11) Non-GAAP marketing and advertising expenses excluding stock-based
compensation for the period. See Non-GAAP Financial Information above
and the reconciliation of GAAP to Non-GAAP marketing and advertising
expenses below.
(12) Calculated as non-GAAP marketing and advertising expenses for the
period (see note (11) above) divided by total revenue for the period
(see note (5) above). See Non-GAAP Financial Information above and
the reconciliation of GAAP to Non-GAAP marketing and advertising
expenses below.
(13) Percentage of IFP submitted applications from applicants who came
directly to the eHealth website through algorithmic search engine
results or otherwise. See note (2) above for further information as
to what constitutes a submitted application.
(14) Percentage of IFP submitted applications from applicants sourced
through eHealth's network of marketing partners. See note (2) above
for further information as to what constitutes a submitted
application.
(15) Percentage of IFP submitted applications from applicants sourced
through paid search and other online advertising activities. See
note (2) above for further information as to what constitutes a
submitted application.
(16) Calculated as marketing and advertising expenses for the period
(see note (9) above) divided by the number of individuals on IFP
applications submitted on eHealth's website during the period.
This metric may not reflect the true acquisition cost.
(17) Calculated as non-GAAP marketing and advertising expenses for
the period (see note (11) above) divided by the number of
individuals on IFP applications submitted on eHealth's website
during the period. This metric may not reflect the true acquisition
cost exclusive of the impact of stock-based compensation allocated
to marketing and advertising expenses.
EHEALTH, INC.
GAAP TO NON-GAAP RECONCILIATION
FOR THE THREE MONTHS ENDED DECEMBER 31, 2008
(In thousands, except per share amounts, unaudited)
Statement of Income Reconciliation
Three Months Ended December 31, 2008
------------------------------------------------------
GAAP Non-GAAP
Percent Percent
GAAP of Total Non-GAAP of Total
Reported Revenue Adjustments Results Revenue
---------- --------- ---------- ---------- ---------
Revenue:
Commission $ 26,176 89% $ -- $ 26,176 89%
Sponsorship,
licensing and
other 3,279 11 -- 3,279 11
---------- --------- ---------- ---------- ---------
Total revenue 29,455 100 -- 29,455 100
Operating costs and
expenses:
Cost of
revenue-sharing 408 1 -- 408 1
Marketing and
advertising (1) 11,528 39 (160) 11,368 39
Customer care and
enrollment (1) 3,724 13 (66) 3,658 12
Technology and
content (1) 3,634 13 (245) 3,389 12
General and
administrative (1) 4,508 15 (414) 4,094 14
---------- --------- ---------- ---------- ---------
Total operating
costs and expenses 23,802 81 (885) 22,917 78
---------- --------- ---------- ---------- ---------
Income from
operations 5,653 19 885 6,538 22
Interest and other
income, net 629 2 -- 629 2
---------- --------- ---------- ---------- ---------
Income before income
taxes 6,282 21 885 7,167 24
Provision for income
taxes (2) 2,633 9 355 2,988 10
---------- --------- ---------- ---------- ---------
Net income $ 3,649 12% $ 530 $ 4,179 14%
========== ========= ========== ========== =========
Net income per
share:
Basic $ 0.15 $ 0.02 $ 0.17
Diluted $ 0.14 $ 0.02 $ 0.16
Weighted-average
number of shares
used in per share
amounts:
Basic 25,076 25,076 25,076
Diluted 25,826 25,826 25,826
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) Non-GAAP net income and non-GAAP net income per share exclude stock-
based compensation expense listed in note (1) above, adjusted for
estimated income tax benefit related to stock-based compensation
expense.
EHEALTH, INC.
GAAP TO NON-GAAP RECONCILIATION
FOR THE THREE MONTHS ENDED DECEMBER 31, 2007
(In thousands, except per share amounts, unaudited)
Statement of Income Reconciliation
Three Months Ended December 31, 2007
-----------------------------------------------------------
GAAP Non-GAAP
Percent Percent
GAAP of Total Non-GAAP of Total
Reported Revenue Adjustments Results Revenue
----------- ---------- ----------- ----------- ----------
Revenue:
Commission $ 22,016 91% $ -- $ 22,016 91%
Sponsorship,
licensing and
other 2,217 9 -- 2,217 9
----------- ---------- ----------- ----------- ----------
Total revenue 24,233 100 -- 24,233 100
Operating costs
and expenses:
Cost of
revenue-sharing 457 2 -- 457 2
Marketing and
advertising
(1) 8,476 35 (105) 8,371 35
Customer care
and enrollment
(1) 3,278 13 (52) 3,226 13
Technology and
content (1) 3,368 14 (195) 3,173 13
General and
administrative
(1) 4,348 18 (192) 4,156 17
----------- ---------- ----------- ----------- ----------
Total operating
costs and
expenses 19,927 82 (544) 19,383 80
----------- ---------- ----------- ----------- ----------
Income from
operations 4,306 18 544 4,850 20
Interest and
other income,
net 1,438 6 -- 1,438 6
----------- ---------- ----------- ----------- ----------
Income before
income taxes 5,744 24 544 6,288 26
Provision for
income taxes
(2) (16,616) (68) 19,194 2,578 11
----------- ---------- ----------- ----------- ----------
Net income $ 22,360 92% $ (18,650)$ 3,710 15%
=========== ========== =========== =========== ==========
Net income per
share:
Basic $ 0.92 $ (0.77)$ 0.15
Diluted $ 0.86 $ (0.72)$ 0.14
Weighted-average
number of
shares used in
per share
amounts:
Basic 24,424 24,424 24,424
Diluted 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 was more
likely than not that eHealth would 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 net income and non-GAAP net income per share
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 YEAR ENDED DECEMBER 31, 2008
(In thousands, except per share amounts, unaudited)
Statement of Income Reconciliation
Year Ended December 31, 2008
-----------------------------------------------------------
GAAP Non-GAAP
Percent Percent
GAAP of Total Non-GAAP of Total
Reported Revenue Adjustments Results Revenue
----------- ---------- ----------- ----------- ----------
Revenue:
Commission $ 100,839 90% $ -- $ 100,839 90%
Sponsorship,
licensing and
other 10,872 10 -- 10,872 10
----------- ---------- ----------- ----------- ----------
Total revenue 111,711 100 -- 111,711 100
Operating costs
and expenses:
Cost of
revenue-
sharing 1,746 2 -- 1,746 2
Marketing and
advertising (1) 42,161 38 (644) 41,517 37
Customer care
and enrollment
(1) 14,379 12 (266) 14,113 13
Technology and
content (1) 14,182 13 (898) 13,284 12
General and
administrative
(1) 17,983 16 (1,686) 16,297 14
----------- ---------- ----------- ----------- ----------
Total operating
costs and
expenses 90,451 81 (3,494) 86,957 78
----------- ---------- ----------- ----------- ----------
Income from
operations 21,260 19 3,494 24,754 22
Interest and
other income,
net 3,714 3 -- 3,714 3
----------- ---------- ----------- ----------- ----------
Income before
income taxes 24,974 22 3,494 28,468 25
Provision for
income taxes
(2) 10,806 9 1,142 11,948 10
----------- ---------- ----------- ----------- ----------
Net income $ 14,168 13% $ 2,352 $ 16,520 15%
=========== ========== =========== =========== ==========
Net income per
share:
Basic $ 0.57 $ 0.09 $ 0.66
Diluted $ 0.55 $ 0.09 $ 0.64
Weighted-average
number of
shares used in
per share
amounts:
Basic 24,963 24,963 24,963
Diluted 25,954 25,954 25,954
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) Non-GAAP net income and non-GAAP net income per share exclude stock-
based compensation expense listed in note (1) above, adjusted for
estimated income tax benefit related to stock-based compensation
expense.
EHEALTH, INC.
GAAP TO NON-GAAP RECONCILIATION
FOR THE YEAR ENDED DECEMBER 31, 2007
(In thousands, except per share amounts, unaudited)
Statement of Income Reconciliation
Year Ended December 31, 2007
-----------------------------------------------------------
GAAP Non-GAAP
Percent Percent
GAAP of Total Non-GAAP of Total
Reported Revenue Adjustments Results Revenue
----------- ---------- ----------- ----------- ----------
Revenue:
Commission $ 81,502 93% $ -- $ 81,502 93%
Sponsorship,
licensing and
other 6,289 7 -- 6,289 7
----------- ---------- ----------- ----------- ----------
Total revenue 87,791 100 -- 87,791 100
Operating costs
and expenses:
Cost of
revenue-sharing 1,702 2 -- 1,702 2
Marketing and
advertising
(1) 29,497 34 (218) 29,279 33
Customer care
and enrollment
(1) 12,137 14 (138) 11,999 14
Technology and
content (1) 12,393 14 (611) 11,782 13
General and
administrative
(1) 16,046 18 (539) 15,507 18
----------- ---------- ----------- ----------- ----------
Total operating
costs and
expenses 71,775 82 (1,506) 70,269 80
----------- ---------- ----------- ----------- ----------
Income from
operations 16,016 18 1,506 17,522 20
Interest and
other income,
net 5,287 6 -- 5,287 6
----------- ---------- ----------- ----------- ----------
Income before
income taxes 21,303 24 1,506 22,809 26
Provision for
income taxes
(2) (10,292) (12) 19,256 8,964 10
----------- ---------- ----------- ----------- ----------
Net income $ 31,595 36% $ (17,750)$ 13,845 16%
=========== ========== =========== =========== ==========
Net income per
share:
Basic $ 1.37 $ (0.77)$ 0.60
Diluted $ 1.22 $ (0.68)$ 0.54
Weighted-average
number of
shares used in
per share
amounts:
Basic 23,092 23,092 23,092
Diluted 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 was more
likely than not that eHealth would 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
net income and non-GAAP net income per share exclude the income tax
impact of $324,000 from the stock-based compensation expense listed
in item (1) above.
Investor Relations Contact:
Kate Sidorovich
Director, Investor Relations
440 East Middlefield Road
Mountain View, CA 94043
(650) 210-3111
kate.sidorovich@ehealth.com
http://ir.ehealthinsurance.com
Media Contact:
Brian Mast
Director, Public Relations
440 East Middlefield Road
Mountain View, CA 94043
(650) 210-3149
brian.mast@ehealth.com
www.ehealthinsurance.com
SOURCE: eHealth, Inc.