eHealth, Inc. Announces Second Quarter 2011 Results
MOUNTAIN VIEW, CA, Jul 26, 2011 (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 second quarter ended June 30, 2011.
Gary Lauer, chief executive officer of eHealth, stated, "We are pleased with our second quarter financial performance in the changing individual market and we are enthused about our emerging Medicare business in the senior market."
Second Quarter Results
Revenue -- Revenue for the second quarter of 2011 totaled $36.2 million, compared to revenue of $36.3 million for the second quarter of 2010.
Submitted Applications -- Submitted applications for individual and family products decreased 13% in the second quarter of 2011 to 101,600 applications, compared to 117,200 applications in the second quarter of 2010.
Membership -- Estimated membership at June 30, 2011 totaled 804,100 members, a 7% increase over estimated membership of 754,900 at June 30, 2010.
Operating Income -- Operating income for the second quarter of 2011 was $4.9 million, a 16% decrease compared to operating income of $5.8 million for the second quarter of 2010. Operating margins were 13% and 16% in the second quarters of 2011 and 2010, respectively. Non-GAAP operating income for the second quarter of 2011 was $7.2 million, a 5% decrease compared to non-GAAP operating income of $7.6 million for the second quarter of 2010. Non-GAAP operating margins were 20% and 21% in the second quarters of 2011 and 2010, respectively. Non-GAAP operating income and margins in the second quarter of 2011 exclude $1.9 million of stock-based compensation expense and $0.4 million of intangible asset amortization expense associated with the acquisition of PlanPrescriber, Inc. Non-GAAP operating income and margins in the second quarter of 2010 exclude $1.6 million of stock-based compensation expense and $0.3 million of intangible asset amortization expense associated with the acquisition of PlanPrescriber, Inc.
EBITDA -- EBITDA for the second quarter of 2011 was $7.8 million, a 4% decrease compared to EBITDA of $8.2 million for the second quarter of 2010.
Pre-tax Income -- Pre-tax income for the second quarter of 2011 was $4.8 million, a 16% decrease compared to pre-tax income of $5.7 million for the second quarter of 2010.
Net Income -- Net income for the second quarter of 2011 was $2.7 million, or $0.12 per diluted share, compared to net income of $3.0 million, or $0.13 per diluted share for the second quarter of 2010. Non-GAAP net income for the second quarter of 2011 was $4.2 million, or $0.19 per diluted share, compared to non-GAAP net income of $4.2 million, or $0.17 per diluted share for the second quarter of 2010. Non-GAAP net income and non-GAAP net income per diluted share in the second quarter of 2011 exclude $1.9 million of stock-based compensation expense and $0.4 million of intangible asset amortization expense associated with the acquisition of PlanPrescriber, Inc., less $0.9 million for related income tax benefit. Non-GAAP net income and non-GAAP net income per diluted share in the second quarter of 2010 exclude $1.6 million of stock-based compensation expense and $0.3 million of intangible asset amortization expense associated with the acquisition of PlanPrescriber, Inc., less $0.7 million for related income tax benefit.
Cash Flow and Cash Balance -- Cash flow from operations for the second quarter of 2011 was $7.8 million, compared to $8.2 million for the second quarter of 2010, representing a decrease of 4%. During the second quarters of 2011 and 2010, we utilized $1.5 million and $2.6 million, respectively, of previously unrecognized excess tax benefits related to share-based payments to reduce our federal and state income taxes payable. These excess tax benefits are shown in the cash flow statement as an increase in cash flow from financing activities and a decrease in cash flow from operating activities. Adjusting cash flow in both periods to reflect the full benefit from deferred income taxes, including the portion that is reported in cash flows from financing activities, second quarter 2011 cash flow from operations would have been $9.3 million as compared to $10.8 million in the second quarter of 2010.
Cash and cash equivalents as of June 30, 2011 totaled $135.9 million, compared to $141.3 million as of June 30, 2010. The change in cash and cash equivalents reflects $30.0 million used to repurchase shares of our common stock during the second half of 2010 and in January 2011 when we completed our stock repurchase program, having repurchased in the aggregate 2,297,705 shares at an average price of $13.06 per share.
Year-to-Date Results
Revenue -- Revenue totaled $73.7 million for the six months ended June 30, 2011, a 2% increase compared to revenue of $72.2 million for the six months ended June 30, 2010.
Operating Income -- Operating income for the six months ended June 30, 2011 was $8.8 million, a 24% decrease compared to operating income of $11.7 million for the six months ended June 30, 2010. Operating margins were 12% and 16% in the six-month periods ended June 30, 2011 and 2010, respectively.
EBITDA -- EBITDA for the six months ended June 30, 2011 was $14.7 million, a 9% decrease compared to EBITDA of $16.2 million for the six months ended June 30, 2010.
Pre-tax Income -- Pre-tax income for the six months ended June 30, 2011 was $8.8 million, a 25% decrease compared to pre-tax income of $11.7 million for the six months ended June 30, 2010.
Net Income -- Net income for the six months ended June 30, 2011 was $4.7 million, or $0.21 per diluted share, compared to net income for the six months ended June 30, 2010 of $6.3 million, or $0.26 per diluted share.
Cash Flow -- Cash flow from operations for the six months ended June 30, 2011 was $14.6 million, compared to $11.3 million for the six months ended June 30, 2010, representing an increase of 30%.
2011 Guidance
eHealth is reaffirming its guidance for the full year ending December 31, 2011 based on information currently available:
-- Total revenue is expected to be in the range of $141 million to $149
million
-- Stock-based compensation expense is expected to be in the range of $7
million to $8 million
-- EBITDA* is expected to be in the range of $23 million to $28 million
-- GAAP net income per diluted share is expected to be in the range of
$0.31 to $0.40 per share
*EBITDA is calculated by adding stock-based compensation, depreciation and amortization expense, including the amortization of acquired intangible assets, interest and other (income) expense, net and provision for income taxes to GAAP net income.
Webcast and Conference Call Information A Webcast and conference call will be held today, Tuesday, July 26, 2011 at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time. 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 866-383-7989 for domestic callers and 617-597-5328 for international callers. The participant passcode is 80260137. 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 33382768. 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, Inc. 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 individual, family and small business health plans underwritten by more than 180 of the nation's leading health insurance companies. eHealthInsurance is licensed to sell health insurance in all 50 states and the District of Columbia, making it the ideal model of a successful, high-functioning health insurance exchange. Through the company's eHealth Technology solution (www.eHealthTechnology.com), eHealth is also a leading provider of health insurance exchange technology. eHealth Technology's exchange platform provides a suite of hosted e-commerce solutions that enable health plan providers, resellers and government entities to market and distribute products online. eHealth, Inc. also provides powerful online and pharmacy-based tools to help seniors navigate Medicare health insurance options, choose the right plan and enroll in select plans online through its wholly-owned subsidiary, PlanPrescriber.com (www.planprescriber.com) and through its Medicare website www.eHealthMedicare.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 guidance for total revenue, stock-based compensation expense, EBITDA, and GAAP net income per diluted share for the year ending December 31, 2011. 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 the impact of healthcare reform and medical loss ratio requirements; eHealth's ability to maintain its relationship with health insurance carriers; eHealth's rate of growth; eHealth's success in marketing and selling Medicare-related health insurance plans and leads for such plans and factors affecting such success; the need for health insurance carrier and regulatory approvals in connection with the marketing of Medicare related insurance products; costs of acquiring new members; weak economic conditions; consumer awareness of the availability and accessibility of affordable health insurance; changes in member conversion rates and factors affecting conversion; eHealth's membership growth and retention rates; changes in products offered on eHealth's ecommerce platform; changes in commission rates 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; dependence on acceptance of the Internet as a marketplace for the purchase and sale of health insurance; dependence upon Internet search engines; changes in paid search advertising costs as a result of medical loss ratio requirements; reliance on marketing partners; timing of receipt and accuracy of commission reports; payment practices of health insurance carriers; competition; eHealth's operations in China and any future foreign expansion; success in the sale of sponsorship advertising, the licensing of the use of eHealth's technology or the performance of services pursuant to government contracts 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 business expansion and diversification; seasonality; impact of acquisitions, including risks associated with not realizing anticipated synergies and opportunities with respect to PlanPrescriber, Inc.; underperformance by PlanPrescriber, Inc.; PlanPrescriber's maintenance of its relationships with its pharmacy and other partners that serve as a source of Medicare related leads; implementation of internal enterprise systems and maintenance of proper and effective internal controls; impact of provisions for income taxes; changes in laws and regulations, including with respect to the marketing and sale of Medicare plans; compliance with insurance and other laws and regulations; exposure to online commerce security risks; the performance, reliability and availability of eHealth's ecommerce platform and underlying network infrastructure; stock market conditions and the trading price of shares of eHealth's common stock; and the concentration of eHealth stock in a small number of stockholders. 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; earnings before interest, taxes, depreciation and amortization ("EBITDA"); non-GAAP net income and non-GAAP net income per diluted share.
-- Non-GAAP operating income for the three months ended June 30, 2010 and
2011 consists of GAAP operating income excluding the following items:
-- the effects of expensing stock-based compensation related to stock
options, restricted stock and restricted stock units in accordance
with FASB ASC Topic 718 and
-- acquired intangible asset amortization expense.
-- Non-GAAP operating margins are calculated by dividing non-GAAP
operating income by GAAP total revenue.
-- EBITDA is calculated by adding stock-based compensation, depreciation
and amortization expense, including the amortization of acquired
intangible assets, interest and other (income) expense, net and
provision for income taxes to GAAP net income.
-- Non-GAAP net income for the three months ended June 30, 2010 and 2011
consists of GAAP net income excluding the following items:
-- stock-based compensation expense recorded during the quarter,
-- acquired intangible asset amortization expense and
-- the related income tax benefit of these excluded items.
-- 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 are useful to investors in their assessment of the Company's operating performance.
Non-GAAP operating income, non-GAAP operating margins, EBITDA, 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 revenue and costs associated with the operations of the Company'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. The Company 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. The Company compensates for these limitations by prominently disclosing GAAP operating income, GAAP operating margins, 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 described above and the related reconciliations between these financial measures.
EHEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
December 31, June 30,
2010 2011
----------- -----------
Assets (1)
Current assets:
Cash and cash equivalents $ 128,074 $ 135,893
Accounts receivable 10,810 4,998
Deferred income taxes 5,347 4,227
Prepaid expenses and other current assets 4,361 3,582
----------- -----------
Total current assets 148,592 148,700
Property and equipment, net 4,528 4,582
Deferred income taxes 3,119 3,311
Other assets 3,248 5,482
Acquired intangible assets, net 12,262 11,408
Goodwill 14,096 14,096
----------- -----------
Total assets $ 185,845 $ 187,579
=========== ===========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 3,573 $ 2,405
Accrued compensation and benefits 7,523 6,854
Accrued marketing expenses 3,644 3,414
Deferred revenue 2,785 656
Other current liabilities 2,672 1,636
----------- -----------
Total current liabilities 20,197 14,965
Other non-current liabilities 3,451 3,636
Stockholders' equity:
Common stock 26 26
Additional paid-in capital 203,231 209,110
Treasury stock, at cost (56,202) (59,998)
Retained earnings 14,937 19,650
Accumulated other comprehensive income 205 190
----------- -----------
Total stockholders' equity 162,197 168,978
----------- -----------
Total liabilities and stockholders' equity $ 185,845 $ 187,579
=========== ===========
(1) The condensed consolidated balance sheet at December 31, 2010 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, unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2010 2011 2010 2011
-------- -------- --------- --------
Revenue:
Commission $ 31,872 $ 30,079 $ 63,645 $ 60,839
Other 4,384 6,107 8,600 12,902
-------- -------- --------- --------
Total revenue 36,256 36,186 72,245 73,741
Operating costs and expenses:
Cost of revenue 881 2,555 1,859 5,206
Marketing and advertising (1) 13,883 11,668 28,701 24,577
Customer care and enrollment (1) 3,902 4,610 7,848 10,020
Technology and content (1) 4,999 5,415 9,580 10,885
General and administrative (1) 6,554 6,661 12,321 13,382
Amortization of acquired
intangible assets 285 427 285 854
-------- -------- --------- --------
Total operating costs and expenses 30,504 31,336 60,594 64,924
-------- -------- --------- --------
Income from operations 5,752 4,850 11,651 8,817
Interest and other income
(expense), net (12) (21) 16 (40)
-------- -------- --------- --------
Income before provision for income
taxes 5,740 4,829 11,667 8,777
Provision for income taxes 2,699 2,097 5,393 4,064
-------- -------- --------- --------
Net income $ 3,041 $ 2,732 $ 6,274 $ 4,713
======== ======== ========= ========
Net income per share:
Basic $ 0.13 $ 0.13 $ 0.27 $ 0.22
Diluted $ 0.13 $ 0.12 $ 0.26 $ 0.21
Weighted-average number of shares
used in per share amounts:
Basic 23,529 21,390 23,493 21,371
Diluted 24,266 22,119 24,306 22,079
(1) Includes stock-based compensation expense as follows:
Marketing and advertising $ 201 $ 276 $ 408 $ 522
Customer care and enrollment 88 74 181 181
Technology and content 413 470 856 925
General and administrative 894 1,117 1,804 2,170
-------- -------- --------- --------
Total $ 1,596 $ 1,937 $ 3,249 $ 3,798
======== ======== ========= ========
EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2010 2011 2010 2011
--------- --------- --------- ---------
Operating activities
Net income $ 3,041 $ 2,732 $ 6,274 $ 4,713
Adjustments to reconcile net
income to net cash provided by
operating activities:
Deferred income taxes 2,529 1,887 4,936 3,664
Depreciation and
amortization 529 597 1,043 1,266
Amortization of acquired
intangible assets 285 427 285 854
Amortization and accretion
on marketable securities,
net 7 -- 50 --
Stock-based compensation
expense 1,596 1,937 3,249 3,798
Excess tax benefits from
stock-based compensation (2,602) (1,464) (5,237) (2,553)
Deferred rent (5) (11) 2 (20)
Loss on disposal of property
and equipment -- -- 6 3
Changes in operating assets
and liabilities:
Accounts receivable 43 1,100 101 6,577
Prepaid expenses and other
current assets 644 1,218 687 1,525
Other assets 57 56 91 26
Accounts payable 1,380 211 1 (1,169)
Accrued compensation and
benefits 1,701 1,504 676 (679)
Accrued marketing expenses (377) (335) 258 (230)
Deferred revenue (19) (1,245) 23 (2,129)
Other current liabilities (645) (798) (1,188) (1,055)
--------- --------- --------- ---------
Net cash provided by operating
activities 8,164 7,816 11,257 14,591
--------- --------- --------- ---------
Investing activities
Purchases of property and
equipment (880) (734) (1,344) (1,239)
Acquisition of PlanPrescriber,
net of cash acquired (27,203) -- (27,203) --
Purchase of other assets -- (3,004) -- (3,769)
Maturities of marketable
securities 4,200 -- 22,100 --
--------- --------- --------- ---------
Net cash used in investing
activities (23,883) (3,738) (6,447) (5,008)
--------- --------- --------- ---------
Financing activities
Proceeds from exercise of
common stock options 38 46 464 72
Cash used to net-share settle
equity awards -- (2) (557) (544)
Excess tax benefits from
stock-based compensation 2,602 1,464 5,237 2,553
Repurchases of common stock -- -- -- (3,796)
Principal payments in
connection with capital lease (11) (16) (21) (30)
--------- --------- --------- ---------
Net cash provided by (used in)
financing activities 2,629 1,492 5,123 (1,745)
--------- --------- --------- ---------
Effect of exchange rate changes
on cash and cash equivalents 6 (11) 6 (19)
--------- --------- --------- ---------
Net increase (decrease) in
cash and cash equivalents (13,084) 5,559 9,939 7,819
Cash and cash equivalents at
beginning of period 154,362 130,334 131,339 128,074
--------- --------- --------- ---------
Cash and cash equivalents at
end of period $ 141,278 $ 135,893 $ 141,278 $ 135,893
========= ========= ========= =========
EHEALTH, INC.
SUMMARY OF SELECTED METRICS
(Unaudited)
Three Months Three Months
Ended Ended
Key Metrics: June 30, 2010 June 30, 2011
------------ ------------
Operating cash flows (1) $ 8,164,000 $ 7,816,000
IFP submitted applications (2) 117,200 101,600
IFP approved members (3) 93,400 87,600
Total approved members (4) 122,700 124,400
Commission revenue (5) $ 31,872,000 $ 30,079,000
Commission revenue per estimated member for the
period (6) $ 42.21 $ 37.47
Total revenue (7) $ 36,256,000 $ 36,186,000
Total revenue per estimated member for the
period (8) $ 48.02 $ 45.08
As of June As of June
30, 2010 30, 2011
------------ ------------
IFP estimated membership (9) 660,500 688,100
Total estimated membership (10) 754,900 804,100
Three Months Three Months
Ended June Ended June
30, 2010 30, 2011
------------ ------------
Marketing and advertising expenses (11) $ 13,883,000 $ 11,668,000
Marketing and advertising expenses as a
percentage of total revenue (12) 38% 32%
Other Metrics:
Source of IFP submitted applications (as a
percentage of total IFP applications for the
period):
Direct (13) 44% 45%
Marketing partners (14) 28% 32%
Online advertising (15) 28% 23%
------------ ------------
Total 100% 100%
============ ============
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) Commission revenue (from all sources) recognized during the period
from the condensed consolidated statements of income.
(6) Calculated as commission 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). See our Form 10-K for
the year ended December 31, 2010 - 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.
(7) Total revenue (from all sources) recognized during the period from the
condensed consolidated statements of income.
(8) Calculated as total revenue recognized during the period (see note (7)
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). See our Form 10-K for the
year ended December 31, 2010 - 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) Estimated number of members active on IFP insurance policies as of the
date indicated. See our Form 10-K for the year ended December 31, 2010
- 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.
(10) Estimated number of members active on all insurance policies as of the
date indicated. See our Form 10-K for the year ended December 31, 2010
- 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.
(11) Marketing and advertising expenses for the period from the condensed
consolidated statements of income.
(12) Calculated as marketing and advertising expenses for the period (see
note (11) above) divided by total revenue for the period (see note (7)
above).
(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.
EHEALTH, INC.
GAAP TO NON-GAAP RECONCILIATION
FOR THE THREE MONTHS ENDED JUNE 30, 2011
(In thousands, except per share amounts, unaudited)
Statement of Income Reconciliation
Three Months Ended June 30, 2011
----------------------------------------------
GAAP
Percent Non-GAAP
of Percent
GAAP Total Adjustm- Non-GAAP of Total
Reported Revenue ents Results Revenue
-------- ------- -------- -------- -------
Revenue:
Commission $ 30,079 83% $ -- $ 30,079 83%
Other 6,107 17 -- 6,107 17
-------- ------- -------- -------- -------
Total revenue 36,186 100 -- 36,186 100
Operating costs and
expenses:
Cost of revenue 2,555 7 -- 2,555 7
Marketing and advertising
(1) 11,668 32 (276) 11,392 31
Customer care and
enrollment (1) 4,610 13 (74) 4,536 13
Technology and content
(1) 5,415 15 (470) 4,945 14
General and
administrative (1) 6,661 18 (1,117) 5,544 15
Amortization of acquired
intangible assets (2) 427 1 (427) -- --
-------- ------- -------- -------- -------
Total operating costs and
expenses 31,336 87 (2,364) 28,972 80
-------- ------- -------- -------- -------
Income from operations 4,850 13 2,364 7,214 20
Interest and other income
(expense), net (21) (0) -- (21) (0)
-------- ------- -------- -------- -------
Income before provision for
income taxes 4,829 13 2,364 7,193 20
Provision for income taxes
(3) 2,097 6 895 2,992 8
-------- ------- -------- -------- -------
Net income (4) $ 2,732 8% $ 1,469 $ 4,201 12%
======== ======= ======== ======== =======
Net income per share: (4)
Basic $ 0.13 $ 0.07 $ 0.20
Diluted $ 0.12 $ 0.07 $ 0.19
Weighted-average number of
shares used in per share
amounts:
Basic 21,390 21,390 21,390
Diluted 22,119 22,119 22,119
Explanation of adjustments
(1) Non-GAAP results exclude the effect of expensing stock-based
compensation related to stock options and restricted stock units in
accordance with FASB ASC Topic 718.
(2) Non-GAAP results exclude amortization expense related to acquired
intangible assets.
(3) Non-GAAP provision for income taxes excludes estimated income tax
benefit of $0.9 million related to stock-based compensation expense
listed in note (1) above and amortization of acquired intangible
assets listed in note (3) above.
(4) Non-GAAP net income and non-GAAP net income per share exclude
stock-based compensation expense listed in note (1) above and
amortization of acquired intangible assets listed in note (2) above,
less the estimated income tax benefit listed in note (3) above.
EHEALTH, INC.
GAAP TO NON-GAAP RECONCILIATION
FOR THE THREE MONTHS ENDED JUNE 30, 2010
(In thousands, except per share amounts, unaudited)
Statement of Income Reconciliation
Three Months Ended June 30, 2010
------------------------------------------------
GAAP
Percent Non-GAAP
of Percent
GAAP Total Adjustm- Non-GAAP of Total
Reported Revenue ents Results Revenue
-------- -------- -------- -------- --------
Revenue:
Commission $ 31,872 88% $ -- $ 31,872 88%
Other 4,384 12 -- 4,384 12
-------- -------- -------- -------- --------
Total revenue 36,256 100 -- 36,256 100
Operating costs and
expenses:
Cost of revenue 881 2 -- 881 2
Marketing and
advertising (1) 13,883 38 (201) 13,682 38
Customer care and
enrollment (1) 3,902 11 (88) 3,814 11
Technology and content
(1) 4,999 14 (413) 4,586 13
General and
administrative (1) 6,554 18 (894) 5,660 16
Amortization of
acquired intangible
assets (2) 285 1 (285) -- --
-------- -------- -------- -------- --------
Total operating costs and
expenses 30,504 84 (1,881) 28,623 79
-------- -------- -------- -------- --------
Income from operations 5,752 16 1,881 7,633 21
Interest and other
income, net (12) (0 ) -- (12) (0 )
-------- -------- -------- -------- --------
Income before provision
for income taxes 5,740 16 1,881 7,621 21
Provision for income
taxes (3) 2,699 7 701 3,400 9
-------- -------- -------- -------- --------
Net income (4) $ 3,041 8% $ 1,180 $ 4,221 12%
======== ======== ======== ======== ========
Net income per share: (4)
Basic $ 0.13 $ 0.05 $ 0.18
Diluted $ 0.13 $ 0.04 $ 0.17
Weighted-average number
of shares used in per
share amounts:
Basic 23,529 23,529 23,529
Diluted 24,266 24,266 24,266
Explanation of adjustments
(1) Non-GAAP results exclude the effect of expensing stock-based
compensation related to stock options and restricted stock units in
accordance with FASB ASC Topic 718.
(2) Non-GAAP results exclude amortization expense related to acquired
intangible assets.
(3) Non-GAAP provision for income taxes excludes estimated income tax
benefit of $0.7 million related to stock-based compensation expense
listed in note (1) above and amortization of acquired intangible assets
listed in note (3) above.
(4) Non-GAAP net income and non-GAAP net income per share exclude
stock-based compensation expense listed in note (1) above and
amortization of acquired intangible assets listed in note (2) above,
less the estimated income tax benefit listed in note (3) above.
EHEALTH, INC.
GAAP NET INCOME TO NON-GAAP EBITDA RECONCILIATION
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2011
(In thousands, unaudited)
EBITDA Reconciliation
Three Months Six Months
Ended June 30, Ended June 30,
------------------- ------------------
2010 2011 2010 2011
--------- --------- -------- ---------
Net income $ 3,041 $ 2,732 $ 6,274 $ 4,713
Stock-based compensation expense
(1) 1,596 1,937 3,249 3,798
Depreciation and amortization (2) 529 597 1,043 1,266
Amortization of acquired intangible
assets (2) 285 427 285 854
Interest and other (income)
expense, net (3) 12 21 (16) 40
Provision for income taxes (4) 2,699 2,097 5,393 4,064
--------- --------- -------- ---------
EBITDA $ 8,162 $ 7,811 $ 16,228 $ 14,735
========= ========= ======== =========
Explanation of adjustments
(1) Non-GAAP EBITDA excludes the effect of expensing stock-based
compensation related to stock options, restricted stock and restricted
stock units in accordance with FASB ASC Topic 718.
(2) Non-GAAP EBITDA excludes the effect of depreciation and amortization
expense, including amortization of acquired intangible assets from the
acquisition of PlanPrescriber, Inc. in April 2010.
(3) Non-GAAP EBITDA excludes the net effect of interest income and other
income and expenses.
(4) Non-GAAP EBITDA excludes the effect of income tax expense.
Investor Relations Contact: Kate Sidorovich, CFA 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 Vice President, Communications 440 East Middlefield Road Mountain View, CA 94043 (650) 210-3149 brian.mast@ehealth.com http://www.ehealthinsurance.com
SOURCE: eHealth, Inc.