eHealth, Inc. Announces Fourth Quarter and Fiscal 2009 Results
-- Operating income of $6.9 million, up 22% over the fourth quarter of 2008
-- Growth in IFP submitted applications of 6% over the fourth quarter of 2008
-- GAAP operating margins of 20% and non-GAAP operating margins of 24% for the fourth quarter of 2009
-- GAAP net income of $4.8 million, or $0.20 per diluted share, and non-GAAP net income of $5.1 million, or $0.21 per diluted share, for the fourth quarter of 2009
-- Cash flow from operations of $9.4 million, up 26% from the fourth quarter of 2008
MOUNTAIN VIEW, CA, Feb 11, 2010 (MARKETWIRE 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 ended December 31, 2009.
Gary Lauer, chief executive officer of eHealth, stated, "Fourth quarter results represented a nice ending to a year in which we grew our revenues by 21%, operating income by 22%, generated over $30 million in operating cash flow and completed a $30 million share repurchase program. That was all accomplished in the face of an uncertain economic environment and an unpredictable healthcare reform legislative process. During the fourth quarter, we grew revenue at a healthy rate, expanded operating margins, further diversified our business and announced our plans to launch into the seniors market."
Fourth Quarter Results
Revenue -- Revenue totaled $34.4 million for the fourth quarter of 2009, a 17% increase compared to revenue of $29.5 million for the fourth quarter of 2008.
Submitted Applications -- Submitted applications for individual and family products increased 6% in the fourth quarter of 2009 to 122,300 applications, compared to 115,600 applications in the fourth quarter of 2008.
Membership -- Estimated membership at December 31, 2009 totaled 728,000 members, a 17% increase over estimated membership of 621,100 at December 31, 2008.
Operating Income -- Operating income increased 22% to $6.9 million for the fourth quarter of 2009, compared to operating income of $5.7 million for the fourth quarter of 2008. Operating margins were 20% and 19% in the fourth quarters of 2009 and 2008, respectively. Non-GAAP operating income increased 27% to $8.3 million for the fourth quarter of 2009, compared to non-GAAP operating income of $6.5 million for the fourth quarter of 2008. Non-GAAP operating margins were 24% and 22% in the fourth quarters of 2009 and 2008, respectively. Non-GAAP operating income and margins in the fourth quarters of 2009 and 2008 exclude $1.4 million and $0.9 million of stock-based compensation expense, respectively.
Pre-tax Income -- Pre-tax income for the fourth quarter of 2009 was $7.0 million, a 12% increase compared to pre-tax income of $6.3 million for the fourth quarter of 2008. Pre-tax income was unfavorably impacted in the fourth quarter of 2009 by a decrease in interest income of $0.5 million compared to the fourth quarter of 2008.
Net Income -- Net income for the fourth quarter of 2009 was $4.8 million, or $0.20 per diluted share. Net income for the fourth quarter of 2008 was $3.6 million, or $0.14 per diluted share. Non-GAAP net income for the fourth quarter of 2009 was $5.1 million, or $0.21 per diluted share, compared to non-GAAP net income for the fourth quarter of 2008 of $4.2 million, or $0.16 per diluted share. Non-GAAP net income and non-GAAP net income per diluted share in the fourth quarter of 2009 exclude $1.4 million of stock-based compensation expense, less $0.5 million for related income tax benefit and $0.6 million of discrete income tax benefit related to an increase in deferred income tax assets resulting from a reduction in estimated limitations on both federal and California net operating loss carryforwards. Non-GAAP net income and non-GAAP net income per diluted share in the fourth quarter of 2008 exclude $0.9 million of stock-based compensation expense, less $0.4 million for related income tax benefit.
Cash Flow and Cash Balance -- Cash flow from operations for the fourth quarter of 2009 was $9.4 million, compared to $7.4 million for the fourth quarter of 2008, representing an increase of 26%.
The fourth quarter 2009 cash flow statement includes a $4.3 million cash flow benefit from deferred income taxes, of which $3.3 million primarily relates to the utilization of net operating loss carryforwards and $1.0 million relates to the utilization of excess tax benefits related to share-based payments. The fourth quarter 2008 cash flow statement included a $2.3 million cash flow benefit from deferred income taxes, of which $2.2 million primarily relates to the utilization of net operating loss carryforwards and $0.1 million relates to the utilization of excess tax benefits related to share-based payments. The utilization of excess tax benefits related to share-based payments is also shown in the cash flow statement for the fourth quarters of 2008 and 2009 as a decrease in cash flow from operating activities and an increase in cash flow from financing activities.
Cash, cash equivalents and short-term marketable securities as of December 31, 2009 totaled $153.5 million, compared to $150.6 million as of December 31, 2008.
During the fourth quarter of 2008, eHealth's board of directors authorized a stock repurchase program of up to $30 million, or ten percent of eHealth's outstanding common stock, whichever is less. Repurchases pursuant to the program began in December 2008 and were completed in the third quarter of 2009. As of December 31, 2009, 1.9 million shares of common stock had been repurchased in connection with the stock repurchase program at an average price of $15.97 per share, including commissions, for a total cost of $30 million, of which approximately 1.8 million shares were repurchased during 2009 for a total cost of $29.4 million.
Fiscal 2009 Results
Revenue -- Revenue totaled $134.9 million for the year ended December 31, 2009, a 21% increase compared to revenue of $111.7 million for the year ended December 31, 2008.
Operating Income -- Operating income increased 22% to $25.8 million for the year ended December 31, 2009, compared to operating income of $21.3 million for the year ended December 31, 2008. Operating margins were 19% in both years ended December 31, 2009 and 2008.
Pre-tax Income -- Pre-tax income for the year ended December 31, 2009 was $26.8 million, a 7% increase compared to pre-tax income of $25.0 million for the year ended December 31, 2008. Pre-tax income was unfavorably impacted in the year ended December 31, 2009 by a decrease in interest income of $2.8 million compared to the year ended December 31, 2008.
Net Income -- Net income for the year ended December 31, 2009 was $15.3 million, or $0.61 per diluted share, compared to net income for the year ended December 31, 2008 of $14.2 million, or $0.55 per diluted share.
Cash Flow -- Cash flow from operations for the year ended December 31, 2009 was $30.1 million, compared to $30.2 million for the year ended December 31, 2008.
2010 Guidance
eHealth is providing guidance for the full year ending December 31, 2010 based on information currently available:
-- Total revenue is expected to be in the range of $148 million to $155 million -- Stock-based compensation expense is expected to be in the range of $6 million to $7.5 million -- GAAP income tax rate is expected to be in the range of 43% to 45% -- GAAP net income per diluted share is expected to be in the range of $0.55 to $0.65 per share
"I would like to provide some additional comments on our 2010 guidance," said Stuart Huizinga, chief financial officer of eHealth. "We expect to invest just over $3 million to support our Medicare initiative in 2010, which we expect will impact our GAAP net income per diluted share for 2010 by approximately $0.08."
Webcast and Conference Call Information A Webcast and conference call will be held today, Thursday, February 11, 2010 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 866-730-5764 for domestic callers and 857-350-1588 for international callers. The participant passcode is #68051978. 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 #16823489. The live and archived webcast of the call will also be available on eHealth's website at http://www.ehealthinsurance.com under the Investor Relations section.
About eHealth eHealth, Inc. (NASDAQ: EHTH) is the parent company of eHealthInsurance, the nation's leading online source of health insurance for individuals, families and small businesses. Through the company's website, http://www.eHealthInsurance.com, consumers can get quotes from leading health insurance carriers, compare plans side by side, and apply for and purchase health insurance. eHealthInsurance offers thousands of health plans underwritten by more than 180 of the nation's leading health insurance companies. eHealthInsurance is an online marketplace that is licensed to sell health insurance in all 50 states and the District of Columbia, making it an excellent model for successful, high-functioning health insurance exchanges. Through its eCommerce On-Demand solution (eOD), www.ehealth.com/eOD, eHealth is also a leading provider of on-demand e-commerce software services. eHealth's eOD platform provides a suite of hosted solutions that enable health plan providers and resellers to market and distribute products online. eHealth's eCommerce On-Demand solution is currently available to health plan providers in all 50 states and the District of Columbia. eHealthInsurance and eHealth are registered trademarks of eHealthInsurance Services, Inc.
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 plans with respect to Medicare and the seniors market; investment in eHealth's Medicare initiative in 2010 and related net income per diluted share impact; and eHealth's guidance for total revenue, stock-based compensation expense, GAAP income tax rate, and GAAP net income per diluted share for the year ending December 31, 2010. 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 changes and developments in the structure of the health insurance system in the United States and healthcare system reform, eHealth's rate of growth, changes in the economy, weak economic conditions, consumer awareness of the availability and accessibility of affordable health insurance, eHealth's success in marketing Medicare-related health insurance products, changes in member conversion rates and factors affecting conversion, eHealth's ability to continue to increase its membership base and retain its members, eHealth's ability to 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 and the effectiveness of eHealth's marketing and public relations efforts, system failures, capacity constraints, data loss or online commerce security risks, continued acceptance of the Internet as a medium for the purchase and sale of health insurance, dependence upon Internet search engines, reliance on marketing partners and factors affecting submitted applications from the marketing partner channel, the pursuit of new strategies and opportunities in the health insurance market, timing of receipt and accuracy of commission reports and related impact on estimating membership, payment practices of health insurance carriers, competition, eHealth's operations in China and any expansion into foreign countries, success in the sale of sponsorship advertising and the licensing of the use of eHealth's ecommerce platform, protection of intellectual property and defense of intellectual property rights claims, legal liability, regulatory penalties and negative publicity, 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 provisions for income taxes, changes in laws and regulations, compliance with insurance and other laws and regulations, exposure to online commerce security risks, and the performance, reliability and availability of eHealth's ecommerce platform and underlying network infrastructure. Other factors that could cause operating, financial and other results to differ are described in eHealth's most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K filed with the Securities and Exchange Commission and available on the investor relations page of eHealth's website at http://www.ehealthinsurance.com and on the Securities and Exchange Commission's website at www.sec.gov. eHealth does not undertake any obligation to update any forward-looking statement to conform the statement to actual results or changes in expectations.
Non-GAAP Financial Information This press release includes financial measures that are not in accordance with 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 FASB ASC Topic 718 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 net income for the three months and year ended December 31, 2009 consists of GAAP net income excluding stock-based compensation expense recorded during the period (less related income tax benefit) and discrete income tax benefit recorded during the period related to an increase in our deferred income tax assets resulting from a reduction in estimated limitations on both our federal and California net operating loss carryforwards. Non-GAAP net income for the three months and year ended December 31, 2008 consists of GAAP net income excluding stock-based compensation expense recorded during the period (less related income tax benefit). -- 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 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 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.
(Tables to Follow)
EHEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December December
31, 2008 31,2009
----------- -----------
Assets (1) (unaudited)
Current assets:
Cash and cash equivalents $ 94,136 $ 131,339
Marketable securities 56,499 22,184
Accounts receivable 2,005 2,295
Deferred income taxes 7,580 6,009
Prepaid expenses and other current assets 1,874 2,324
----------- -----------
Total current assets 162,094 164,151
Property and equipment, net 4,567 3,775
Deferred income taxes 1,314 919
Other assets 780 863
----------- -----------
Total assets $ 168,755 $ 169,708
=========== ===========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 2,190 $ 3,252
Accrued compensation and benefits 4,662 5,051
Accrued marketing expenses 3,162 3,879
Deferred revenue 427 401
Other current liabilities 2,707 2,677
----------- -----------
Total current liabilities 13,148 15,260
Other non-current liabilities 628 2,997
Stockholders' equity:
Common stock 25 25
Additional paid-in capital 173,095 183,747
Treasury stock shares, at cost (639) (29,999)
Deferred stock-based compensation (22) --
Accumulated deficit (17,892) (2,545)
Accumulated other comprehensive income 412 223
----------- -----------
Total stockholders' equity 154,979 151,451
----------- -----------
Total liabilities and stockholders' equity $ 168,755 $ 169,708
=========== ===========
(1) The condensed consolidated balance sheet at December 31, 2008
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,
----------------------- -----------------------
2008 2009 2008 2009
----------- ----------- ----------- -----------
(unaudited) (unaudited) (2) (unaudited)
Revenue:
Commission $ 26,176 $ 30,030 $ 100,839 $ 119,259
Sponsorship, licensing
and other 3,279 4,381 10,872 15,631
----------- ----------- ----------- -----------
Total revenue 29,455 34,411 111,711 134,890
Operating costs and
expenses:
Cost of revenue-sharing 408 993 1,746 4,581
Marketing and advertising
(1) 11,528 13,356 42,161 53,987
Customer care and
enrollment (1) 3,724 3,669 14,379 14,769
Technology and content (1) 3,634 4,146 14,182 15,685
General and administrative
(1) 4,508 5,357 17,983 20,028
----------- ----------- ----------- -----------
Total operating costs and
expenses 23,802 27,521 90,451 109,050
----------- ----------- ----------- -----------
Income from operations 5,653 6,890 21,260 25,840
Interest and other income,
net 629 138 3,714 938
----------- ----------- ----------- -----------
Income before income taxes 6,282 7,028 24,974 26,778
Provision for income taxes 2,633 2,270 10,806 11,431
----------- ----------- ----------- -----------
Net income $ 3,649 $ 4,758 $ 14,168 $ 15,347
=========== =========== =========== ===========
Net income per share:
Basic $ 0.15 $ 0.20 $ 0.57 $ 0.63
Diluted $ 0.14 $ 0.20 $ 0.55 $ 0.61
Weighted-average number of
shares used in per share
amounts:
Basic 25,076 23,380 24,963 24,309
Diluted 25,826 24,196 25,954 25,201
(1)Includes stock-based
compensation expense as
follows:
Marketing and
advertising $ 160 $ 223 $ 644 $ 803
Customer care and
enrollment 66 85 266 325
Technology and content 245 380 898 1,194
General and
administrative 414 719 1,686 2,513
----------- ----------- ----------- -----------
Total $ 885 $ 1,407 $ 3,494 $ 4,835
=========== =========== =========== ===========
(2) The condensed consolidated statement of operations for the year ended
December 31, 2008 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,
------------------------ ------------------------
2008 2009 2008 2009
----------- ----------- ----------- -----------
(unaudited) (unaudited) (1) (unaudited)
Operating activities
Net income $ 3,649 $ 4,758 $ 14,168 $ 15,347
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Deferred income
taxes 2,305 4,278 9,451 9,352
Depreciation and
amortization 591 538 1,863 2,211
Amortization and
accretion on
marketable
securities, net -- 142 -- 749
Stock-based
compensation
expense 885 1,407 3,494 4,835
Excess tax benefits
from stock-based
compensation (82) (993) (298) (4,979)
Deferred rent (8) 12 (51) (45)
Loss on disposal of
property and
equipment 7 -- 45 16
Changes in operating
assets and
liabilities:
Accounts receivable (445) (91) (705) (290)
Prepaid expenses
and other current
assets (392) 3 64 389
Other assets 175 (115) 196 358
Accounts payable 336 1,688 693 1,060
Accrued compensation
and benefits 659 69 (41) 388
Accrued marketing
expenses (780) (360) 708 717
Deferred revenue 76 70 (9) (26)
Other current
liabilities 468 (2,002) 616 4
----------- ----------- ----------- -----------
Net cash provided by
operating activities 7,444 9,404 30,194 30,086
----------- ----------- ----------- -----------
Investing activities
Purchases of property
and equipment (240) (311) (2,482) (1,433)
Purchase of other
assets -- -- -- (1,280)
Purchases of marketable
securities (24,088) -- (85,653) (40,550)
Sales of marketable
securities -- 1,000 10,120 5,006
Maturities of
marketable securities 20,930 20,032 59,309 68,932
----------- ----------- ----------- -----------
Net cash provided by
(used in) investing
activities (3,398) 20,721 (18,706) 30,675
----------- ----------- ----------- -----------
Financing activities
Net proceeds from
exercise of common
stock options 121 215 1,547 860
Excess tax benefits
from stock-based
compensation 82 993 298 4,979
Repurchase of common
stock (639) -- (639) (29,360)
Principal payments in
connection with
capital lease -- (11) -- (41)
----------- ----------- ----------- -----------
Net cash provided by
(used in) financing
activities (436) 1,197 1,206 (23,562)
----------- ----------- ----------- -----------
Effect of exchange rate
changes on cash and
cash equivalents 1 2 47 4
----------- ----------- ----------- -----------
Net increase in cash
and cash equivalents 3,611 31,324 12,741 37,203
Cash and cash
equivalents at
beginning of period 90,525 100,015 81,395 94,136
----------- ----------- ----------- -----------
Cash and cash
equivalents at end of
period $ 94,136 $ 131,339 $ 94,136 $ 131,339
=========== =========== =========== ===========
(1) The condensed consolidated statement of cash flows for the year ended
December 31, 2008 has been derived from the audited consolidated
financial statements for that year.
EHEALTH, INC.
SUMMARY OF SELECTED METRICS
(Unaudited)
Three Months Three Months
Ended Ended
December 31, December 31,
Key Metrics: 2008 2009
------------ ------------
Operating cash flows (1) $ 7,444,000 $ 9,404,000
IFP submitted applications (2) 115,600 122,300
IFP approved members (3) 97,700 96,100
Total approved members (4) 131,200 124,400
Total revenue (5) $ 29,455,000 $ 34,411,000
Total revenue per estimated member for the
period (6) $ 48.16 $ 47.31
As of As of
December 31, December 31,
2008 2009
------------ ------------
IFP estimated membership (7) 528,500 636,200
Total estimated membership (8) 621,100 728,000
Three Months Three Months
Ended Ended
December 31, December 31,
2008 2009
------------ ------------
Marketing and advertising expenses (9) $ 11,528,000 $ 13,356,000
Marketing and advertising expenses as a
percentage of total revenue (10) 39% 39%
Marketing and advertising expenses excluding
stock-based compensation (11) $ 11,368,000 $ 13,133,000
Marketing and advertising expenses excluding
stock based compensation as a percentage of
total revenue (12) 39% 38%
Other Metrics:
Source of IFP submitted applications (as a
percentage of total IFP applications for the
period):
Direct (13) 40% 44%
Marketing partners (14) 32% 29%
Online advertising (15) 28% 27%
------------ ------------
Total 100% 100%
============ ============
Acquisition cost per individual on IFP
submitted applications (16) $ 65.35 $ 73.38
Acquisition cost (excluding stock-based
compensation) per individual on IFP submitted
applications (17) $ 64.44 $ 72.16
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. Does not include members
transferred from Health Benefits Direct Corporation.
(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. Does not
include members transferred from Health Benefits Direct Corporation.
(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). Ending membership includes
an estimated 20,000 of members transferred from Health Benefits Direct
Corporation during 2009, net of estimated cancelations since their
transfer. See our Form 10-Q for the quarterly period ended
September 30, 2009 - Item 2 - 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.
(7) Estimated number of members active on IFP insurance policies as of the
date indicated. Amounts as of December 31, 2009 include an estimated
20,000 members transferred from Health Benefits Direct Corporation
during 2009, net of estimated cancelations since their transfer. See
our Form 10-Q for the quarterly period ended September 30, 2009 -
Item 2 - 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. Amounts as of December 31, 2009 include an estimated
20,000 of members transferred from Health Benefits Direct Corporation
during 2009, net of estimated cancelations since their transfer. See
our Form 10-Q for the quarterly period ended September 30, 2009 -
Item 2 - 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, 2009
(In thousands, except per share amounts, unaudited)
Statement of Income Reconciliation
Three Months Ended December 31, 2009
----------------------------------------------
GAAP Non-GAAP
Percent Percent
of of
GAAP Total Non-GAAP Total
Reported Revenue Adjustments Results Revenue
-------- ------- ---------- -------- -------
Revenue:
Commission $ 30,030 87% $ -- $ 30,030 87%
Sponsorship, licensing
and other 4,381 13 -- 4,381 13
-------- ------- ---------- -------- -------
Total revenue 34,411 100 -- 34,411 100
Operating costs and
expenses:
Cost of revenue-sharing 993 3 -- 993 3
Marketing and advertising
(1) 13,356 39 (223) 13,133 38
Customer care and
enrollment (1) 3,669 11 (85) 3,584 10
Technology and content
(1) 4,146 12 (380) 3,766 11
General and
administrative (1) 5,357 16 (719) 4,638 13
-------- ------- ---------- -------- -------
Total operating costs and
expenses 27,521 80 (1,407) 26,114 76
-------- ------- ---------- -------- -------
Income from operations 6,890 20 1,407 8,297 24
Interest and other income,
net 138 0 -- 138 0
-------- ------- ---------- -------- -------
Income before income taxes 7,028 20 1,407 8,435 25
Provision for income taxes
(2) 2,270 7 1,064 3,334 10
-------- ------- ---------- -------- -------
Net income (3) $ 4,758 14% $ 343 $ 5,101 15%
======== ======= ========== ======== =======
Net income per share: (3)
Basic $ 0.20 $ 0.02 $ 0.22
Diluted $ 0.20 $ 0.01 $ 0.21
Weighted-average number of
shares used in per share
amounts:
Basic 23,380 23,380 23,380
Diluted 24,196 24,196 24,196
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 FASB ASC Topic 718 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) Provision for income taxes excludes estimated income tax benefit of
$479,000 related to stock-based compensation expense listed in note
(1) above, as well as income tax benefit of $585,000 related to an
increase in deferred income tax assets resulting from a reduction in
estimated limitations on both federal and California net operating
loss carryforwards.
(3) Non-GAAP net income and non-GAAP net income per share exclude
stock-based compensation expense listed in note (1) above and
estimated income tax benefits listed in note (2) above.
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
of of
GAAP Total Non-GAAP 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 12 (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) $ 3,649 12% $ 530 $ 4,179 14%
======== ======= ========== ======== =======
Net income per share: (3)
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 FASB ASC Topic 718 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) Provision for income taxes excludes estimated income tax benefit of
$355,000 related to stock-based compensation expense listed in
note (1) above.
(3) Non-GAAP net income and non-GAAP net income per share exclude
stock-based compensation expense listed in note (1) above and
estimated income tax benefit listed in note (2) above.
EHEALTH, INC.
GAAP TO NON-GAAP RECONCILIATION
FOR THE YEAR ENDED DECEMBER 31, 2009
(In thousands, except per share amounts, unaudited)
Statement of Income Reconciliation
Year Ended December 31, 2009
--------------------------------------------------
GAAP Non-GAAP
Percent Percent
GAAP of Total Non-GAAP of Total
Reported Revenue Adjustments Results Revenue
--------- -------- ---------- --------- --------
Revenue:
Commission $ 119,259 88% $ -- $ 119,259 88%
Sponsorship,
licensing and other 15,631 12 -- 15,631 12
--------- -------- ---------- --------- --------
Total revenue 134,890 100 -- 134,890 100
Operating costs and
expenses:
Cost of
revenue-sharing 4,581 3 -- 4,581 2
Marketing and
advertising (1) 53,987 40 (803) 53,184 39
Customer care and
enrollment (1) 14,769 11 (325) 14,444 11
Technology and
content (1) 15,685 12 (1,194) 14,491 11
General and
administrative (1) 20,028 15 (2,513) 17,515 13
--------- -------- ---------- --------- --------
Total operating costs
and expenses 109,050 81 (4,835) 104,215 77
--------- -------- ---------- --------- --------
Income from operations 25,840 19 4,835 30,675 23
Interest and other
income, net 938 1 -- 938 1
--------- -------- ---------- --------- --------
Income before income
taxes 26,778 20 4,835 31,613 23
Provision for income
taxes (2) 11,431 8 2,017 13,448 10
--------- -------- ---------- --------- --------
Net income (3) $ 15,347 11% $ 2,818 $ 18,165 13%
========= ======== ========== ========= ========
Net income per share:
(3)
Basic $ 0.63 $ 0.12 $ 0.75
Diluted $ 0.61 $ 0.11 $ 0.72
Weighted-average number
of shares used in per
share amounts:
Basic 24,309 24,309 24,309
Diluted 25,201 25,201 25,201
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 FASB ASC Topic 718 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) Provision for income taxes excludes estimated income tax benefit of
$1,432,000 related to stock-based compensation expense listed in note
(1) above, as well as income tax benefit of $585,000 related to an
increase in deferred income tax assets resulting from a reduction in
estimated limitations on both federal and California net operating
loss carryforwards.
(3) Non-GAAP net income and non-GAAP net income per share exclude
stock-based compensation expense listed in note (1) above and
estimated income tax benefits listed in note (2) 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 13 (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 15
--------- -------- ---------- --------- --------
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 (3) $ 14,168 13% $ 2,352 $ 16,520 15%
========= ======== ========== ========= ========
Net income per share:
(3)
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 FASB ASC Topic 718 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) Provision for income taxes excludes estimated income tax benefit of
$1,142,000 related to stock-based compensation expense listed in
note (1) above.
(3) Non-GAAP net income and non-GAAP net income per share exclude
stock-based compensation expense listed in note (1) above and estimated
income tax benefit listed in note (2) 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
http://www.ehealthinsurance.com
SOURCE: eHealth, Inc.
mailto:kate.sidorovich@ehealth.com
http://ir.ehealthinsurance.com
mailto:brian.mast@ehealth.com
http://www.ehealthinsurance.com