-
Fourth quarter 2018 submitted Medicare applications grew 64% compared
to the fourth quarter of 2017
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Fourth quarter 2018 revenue is expected to be in the range of $133.5
million to $135.5 million compared to revenue of $83.1 million for the
fourth quarter 2017
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Jan. 22, 2019--
eHealth, Inc. (Nasdaq: EHTH), a leading private online health insurance
exchange in the United States, today announced preliminary financial
results and select operating metrics for the fourth quarter and fiscal
year ended December 31, 2018 and provided 2019 annual guidance.
“We are very pleased with our operational achievements and financial
results for the fourth quarter and the full year 2018,” commented Scott
Flanders, chief executive officer of eHealth. “Our strong execution
during the critical Medicare Annual Enrollment Period validated
eHealth’s value proposition for this important market and has allowed us
to exceed our revenue and EBITDA expectations for 2018. We expect to
maintain this momentum as reflected in our 2019 annual guidance.”
Fourth Quarter and Fiscal Year 2018 Preliminary Results
Revenue for the fourth quarter of 2018 is expected to be in the range of
$133.5 million to $135.5 million with expected fourth quarter revenue
from the Medicare segment in the range of $121.0 million to $122.0
million. GAAP net income for the fourth quarter of 2018 is expected to
be in the range of $24.3 million to $27.3 million. Adjusted EBITDA(a)
for the fourth quarter of 2018 is expected to be in the range of $51.7
million to $52.7 million.
For the year ended December 31, 2018, eHealth anticipates revenue to be
in the range of $250 million to $252 million as compared to the
company’s guidance of $217.5 million to $227.5 million. Revenue from the
Medicare segment for the full year 2018 is expected to be in the range
of $210 million to $211 million. eHealth anticipates GAAP net income
(loss) for the year ended December 31, 2018 to be in the range of $(1.5)
million to $1.5 million as compared to the company’s guidance of $1.6
million to $6.6 million. eHealth anticipates Adjusted EBITDA(a) for
the year ended December 31, 2018 to be in the range of $33.5 million to
$34.5 million as compared to the company’s guidance of $21.9 million to
$26.9 million.
2018 GAAP Net Income includes a non-cash charge of approximately $12
million related to an increase in fair value of the earnout liability
assumed in connection with eHealth’s acquisition of GoMedigap. The
increase is driven primarily by eHealth’s share price appreciation since
the transaction closed in January of 2018. The share price appreciation
has increased the value of the equity-based portion of the earnout
consideration owed to the former holders of GoMedigap equity interests.
Submitted applications for all Medicare products grew 64% during the
fourth quarter of 2018 compared to the fourth quarter a year ago. For
the full year 2018, submitted Medicare applications grew 39% compared to
the full year 2017. Approximately 22% and 16% of Medicare major medical
applications (b) submitted during the fourth quarter and the
full year 2018 respectively were submitted online.
Submitted applications for individual and family plan (IFP) products
declined 45% during the fourth quarter of 2018 compared to the fourth
quarter a year ago. For the full year 2018, submitted IFP applications
declined 56% compared to 2017. The decline in IFP applications reflects
continuing volatility in the Individual market as well as our decision
to shift our marketing spend towards Medicare.
These preliminary, unaudited results are based on information available
as of January 22, 2019 and management's initial review of operations for
the quarter ended December 31, 2018. They remain subject to change based
on management's ongoing review of the company's fourth-quarter results
and are forward-looking statements. eHealth assumes no obligation to
update these statements. The actual results may be materially different
and are affected by the risk factors and uncertainties identified in
this release and in eHealth’s annual and quarterly filings with the
Securities and Exchange Commission. eHealth anticipates providing its
full financial and operating results for 2018 on or about February 24,
2019.
2019 Guidance
The company is providing the following guidance for the full year ending
December 31, 2019 based on information available as of January 22, 2019.
These expectations are forward-looking statements, and eHealth assumes
no obligation to update these statements. Actual results may be
materially different and are affected by the risk factors and
uncertainties identified in this release and in eHealth’s annual and
quarterly filings with the Securities and Exchange Commission:
-
Total revenue is expected to be in the range of $290 million to $310
million. Revenue from the Medicare segment is expected to be in the
range of $256 million to $272 million.
-
GAAP net income is expected to be in the range of $16.3 million to
$21.3 million.
-
Adjusted EBITDA(a) is expected to be in the range of $45
million to $50 million.
(a)
|
|
Adjusted EBITDA is calculated by adding stock-based compensation
expense, depreciation and amortization expense, acquisition costs,
amortization/impairment of intangible assets, other income
(expense), net and provision (benefit) for income taxes to GAAP net
income (loss). See “Non-GAAP Financial Information and
Reconciliations.”
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|
|
|
(b)
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|
Major Medicare plans include Medicare Advantage and Medicare
Supplement plans.
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|
About eHealth, Inc.
eHealth, Inc. (NASDAQ: EHTH) operates eHealth.com, a leading private
online health insurance exchange where individuals, families and small
businesses can compare health insurance products from leading insurers
side by side and purchase and enroll in coverage online and over the
phone. eHealth offers thousands of individual, family and small business
health plans underwritten by many of the nation's leading health
insurance companies. eHealth (through its subsidiaries) is licensed to
sell health insurance in all 50 states and the District of Columbia.
eHealth also offers educational resources, exceptional telephonic
support, and powerful online and pharmacy-based tools to help Medicare
beneficiaries navigate Medicare health insurance options, choose the
right plan and enroll in select plans online through PlanPrescriber.com (www.PlanPrescriber.com),
eHealthMedicare.com (www.eHealthMedicare.com)
and Medicare.com (www.Medicare.com).
|
|
Q4 2018 |
|
Fiscal year 2018 |
In millions
|
|
Low |
|
High |
|
Low |
|
High |
GAAP income (loss)
|
|
$
|
24.3
|
|
$
|
27.3
|
|
$
|
(1.5
|
)
|
|
$
|
1.5
|
|
Stock-based compensation
|
|
3.1
|
|
3.1
|
|
12.4
|
|
|
12.4
|
|
Depreciation and amortization expense
|
|
0.6
|
|
0.6
|
|
2.5
|
|
|
2.5
|
|
Acquisition and restructuring costs
|
|
—
|
|
—
|
|
1.9
|
|
|
1.9
|
|
Amortization/Impairment of intangibles
|
|
3.2
|
|
0.2
|
|
4.7
|
|
|
1.7
|
|
Change in fair value of earnout liability
|
|
6.0
|
|
6.0
|
|
12.3
|
|
|
12.3
|
|
Other income (expense), net
|
|
—
|
|
—
|
|
(0.8
|
)
|
|
(0.8
|
)
|
Provision (benefit) for income taxes
|
|
14.5
|
|
15.5
|
|
2.0
|
|
|
3.0
|
|
Adjusted EBITDA
|
|
$
|
51.7
|
|
$
|
52.7
|
|
$
|
33.5
|
|
|
$
|
34.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year 2019 |
In millions
|
|
Low |
|
High |
GAAP income (loss)
|
|
$
|
16.3
|
|
$
|
21.3
|
Stock-based compensation
|
|
14.9
|
|
13.4
|
Depreciation and amortization expense
|
|
3.5
|
|
3.0
|
Acquisition and restructuring costs
|
|
—
|
|
—
|
Amortization/Impairment of intangibles
|
|
3.1
|
|
2.1
|
Change in fair value of earnout liability
|
|
—
|
|
—
|
Other income (expense), net
|
|
1.2
|
|
1.2
|
Provision (benefit) for income taxes
|
|
6.0
|
|
9.0
|
Adjusted EBITDA
|
|
$
|
45.0
|
|
$
|
50.0
|
|
|
|
|
|
|
|
This press release includes financial measures that are not in
accordance with generally accepted accounting principles in the United
States (GAAP), including Adjusted EBITDA. Adjusted EBITDA is calculated
by adding stock-based compensation expense, depreciation and
amortization expense, acquisition costs, amortization/impairment of
intangible assets, other income (expense), net and provision (benefit)
for income taxes to GAAP net income (loss).
eHealth believes that the presentation of these non-GAAP financial
measures provide important supplemental information to management and
investors regarding financial and business trends relating to eHealth’s
financial condition and results of operations. Management believes that
the use of these non-GAAP financial measures provides consistency and
comparability with eHealth’s past financial reports. Management also
believes that the items described above provides an additional measure
of eHealth’s operating results and facilitates comparisons of eHealth’s
core operating performance against prior periods and business model
objectives. This information is provided to investors in order to
facilitate additional analyses of past, present and future operating
performance and as a supplemental means to evaluate eHealth’s ongoing
operations. eHealth believes that these non-GAAP financial measures are
useful to investors in their assessment of eHealth’s operating
performance.
Adjusted EBITDA is not calculated in accordance with GAAP, and should be
considered supplemental to, and not as a substitute for, or superior to,
financial measures calculated in accordance with GAAP. Non-GAAP
financial measures used in this press release have limitations in that
they do not reflect all of the revenue and costs associated with the
operations of eHealth’s business and do not reflect income tax as
determined in accordance with GAAP. As a result, you should not consider
these measures in isolation or as a substitute for analysis of eHealth’s
results as reported under GAAP. eHealth expects to continue to incur the
stock-based compensation costs and purchased intangible asset
amortization costs described above, and exclusion of these costs, and
their related income tax benefits, from non-GAAP financial measures
should not be construed as an inference that these costs are unusual or
infrequent. Finance to confirm this sentence. eHealth compensates for
these limitations by prominently disclosing GAAP net income (loss) and
providing investors with reconciliations from eHealth’s GAAP operating
results to the related non-GAAP financial measures for the relevant
periods.
Forward-Looking Statements
This press release contains statements that are forward-looking
statements as defined within the Private Securities Litigation Reform
Act of 1995. These include statements regarding our execution during the
Medicare annual enrollment period, our momentum in 2019, our anticipated
revenue, revenue from the Medicare segment, GAAP net income and Adjusted
EBITDA for the fourth quarter of 2018 and the year ended December 31,
2018, submitted applications for Medicare products and IFP products for
the fourth quarter and year ended December 31, 2018, our stock-based
compensation costs and purchased intangible asset amortization costs,
the timing of our full financial and operating results for 2018, and our
guidance for the full year ending December 31, 2019, including our
guidance for total revenue, revenue from the Medicare segment, GAAP net
income and Adjusted EBITDA.
These forward-looking statements are inherently subject to various risks
and uncertainties that could cause actual results to differ materially
from the statements made. In particular, we are required by the new
revenue recognition standard to make numerous assumptions that are based
upon historical trends and management judgment. These assumptions may
change over time and have a material impact on our revenue recognition,
guidance, and results of operations. Please review the assumptions
stated in this section carefully as well as the disclosures about our
implementation of the new revenue recognition standard in our Form 10-Q
for the fiscal quarters ended March 31, 2018, June 30, 2018 and
September 30, 2018, as well as the recast consolidated financial
statements for each of the three years in the period ended December 31,
2017 reflecting the adoption of the new revenue recognition standard in
our Form 8-K filed on December 17, 2018.
The risks and uncertainties that could cause our results to differ
materially from those expressed or implied by such forward-looking
statements include risks associated with the impact of healthcare
reform; our ability to retain existing members and enroll a large number
of new members during the annual healthcare reform open enrollment
period and Medicare annual enrollment period; the impact of annual
enrollment period for the purchase of individual and family health
insurance and its timing on our recognition of revenue; our ability to
sell qualified health insurance plans to subsidy-eligible individuals
and to enroll subsidy eligible individuals through government-run health
insurance exchanges; changes in laws and regulations, including in
connection with healthcare reform; our ability to successfully make and
integrate acquisitions; our health insurance benefit packages' ability
to meet individual customer's specific health insurance and price needs;
our ability to comply with CMS guidance and impact on conversion rates
as a result of the federal exchange changes to enrollment; competition,
including competition from government-run health insurance exchanges;
seasonality of our business and the fluctuation of our operating
results; our ability to retain existing members and limit member
turnover; changes in consumer behaviors and their selection of
individual and family health insurance products, including the selection
of products for which we receive lower commissions; a reduction of
product offerings among carriers and the resulting impact on our
commission revenue; carriers exiting the market of selling individual
and family health insurance and the resulting impact on our supply and
commission revenue; our ability to execute on our growth strategy in the
Medicare and small business health insurance markets; the impact of
increased health insurance costs on demand; our ability to timely
receive and accurately predict the amount of commission payments from
health insurance carriers; timing of commission payments from health
insurance carriers; medical loss ratio requirements; delays in our
receipt of items required to recognize Medicare revenue; changes in
member conversion rates; our ability to accurately estimate membership;
our relationships with health insurance carriers; customer concentration
and consolidation of the health insurance industry; our success in
marketing and selling health insurance plans and our unit cost of
acquisition; our ability to hire, train and retain licensed health
insurance agents and other employees; the need for health insurance
carrier and regulatory approvals in connection with the marketing of
Medicare-related insurance products; costs of acquiring new members;
scalability of the Medicare business; lack of membership growth and
retention rates; consumers satisfaction of our service; changes in
competitive landscape; our ability to attract and to convert online
visitors into paying members; changes in products offered on our
ecommerce platform; changes and reductions in commission rates;
maintaining and enhancing our brand identity; our ability to derive
desired benefits from investments in our business, including membership
growth initiatives; dependence on acceptance of the Internet as a
marketplace for the purchase and sale of health insurance; reliance on
marketing partners; the impact of our digital marketing efforts; timing
of receipt and accuracy of commission reports; payment practices of
health insurance carriers; dependence on our operations in China; the
restrictions in our debt obligations; compliance with insurance and
other laws and regulations; exposure to security risks; and the
performance, reliability and availability of our ecommerce platform and
underlying network infrastructure. Other factors that could cause
operating, financial and other results to differ are described in
eHealth’s most recent Quarterly Report on Form 10-Q or Annual Report on
Form 10-K filed with the Securities and Exchange Commission and
available on the investor relations page of eHealth’s website at http://www.ehealthinsurance.com
and on the Securities and Exchange Commission’s website at www.sec.gov.
All forward-looking statements in this press release are based on
information available to eHealth as of the date hereof, and eHealth does
not assume any obligation to update the forward-looking statements
provided to reflect events that occur or circumstances that exist after
the date on which they were made, except as required by law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190122005918/en/
Source: eHealth, Inc.
Investor Relations Contact:
Kate Sidorovich, CFA
Vice
President Investor Relations
(650) 210-3111
kate.sidorovich@ehealth.com
http://ir.ehealthinsurance.com