eHealth, Inc. Announces Third Quarter 2009 Results
Gary Lauer, chief executive officer of eHealth stated, "We are pleased with our third quarter financial results that demonstrate the strength and scalability of eHealth's business model. This is our thirteenth consecutive quarter of revenue growth since becoming a public company. We also completed a $30 million share repurchase program, reducing our total shares outstanding by approximately 7%."
Third Quarter Results
Revenue - Revenue totaled $35.1 million for the third quarter of 2009, a 23% increase compared to revenue of $28.5 million for the third quarter of 2008.
Submitted Applications - Submitted applications for individual and family products increased 12% in the third quarter of 2009 to 131,200 applications, compared to 117,300 applications in the third quarter of 2008.
Membership - Estimated membership at September 30, 2009 totaled 726,600 members, a 21% increase over estimated membership of 602,100 at September 30, 2008.
Operating Income - Operating income increased 45% to $6.5 million for the third quarter of 2009, compared to operating income of $4.5 million for the third quarter of 2008. Operating margins were 18% and 16% in the third quarters of 2009 and 2008, respectively. Non-GAAP operating income increased 43% to $7.8 million for the third quarter of 2009, compared to non-GAAP operating income of $5.4 million for the third quarter of 2008. Non-GAAP operating margins were 22% and 19% in the third quarters of 2009 and 2008, respectively. Non-GAAP operating income and margins in the third quarters of 2009 and 2008 exclude $1.3 million and $1.0 million of stock-based compensation expense, respectively.
Pre-tax Income - Pre-tax income for the third quarter of 2009 was $6.6 million, a 22% increase compared to pre-tax income of $5.4 million for the third quarter of 2008. Pre-tax income was unfavorably impacted in the third quarter of 2009 by a decrease in interest income of $0.8 million compared to the third quarter of 2008.
Net Income - Net income for the third quarter of 2009 was $3.5 million, or $0.14 per diluted share. Net income for the third quarter of 2008 was $3.0 million, or $0.12 per diluted share. Non-GAAP net income for the third quarter of 2009 was $4.3 million, or $0.17 per diluted share, compared to non-GAAP net income for the third quarter of 2008 of $3.7 million, or $0.14 per diluted share. Non-GAAP net income and non-GAAP net income per diluted share in the third quarter of 2009 exclude $1.3 million of stock-based compensation expense, adjusted by $0.4 million for estimated net income tax benefit related to stock-based compensation expense. Non-GAAP net income and non-GAAP net income per diluted share in the third quarter of 2008 exclude $1.0 million of stock-based compensation expense, adjusted by $0.3 million for estimated income tax benefit related to stock-based compensation expense.
Cash Flow and Cash Balance - Cash flow from operations for the third quarter of 2009 was $7.6 million, compared to $8.3 million for the third quarter of 2008, representing a decrease of 7%.
The third quarter 2008 cash flow statement includes a $1.8 million cash flow benefit from taxes, of which $1.6 million of tax benefit, primarily from the utilization of net operating loss carryforwards, is included in cash flow from operations and $0.2 million of net operating loss carryforwards, from the utilization of excess tax benefits related to share-based payments, is included in cash flow from financing activities. The third quarter 2009 cash flow statement includes a $3.2 million cash flow benefit from taxes, of which $1.8 million of tax benefit, primarily from the utilization of net operating loss carryforwards, is included in cash flow from operations and $1.4 million of net operating loss carryforwards, from the utilization of excess tax benefits related to share-based payments, is included in cash flow from financing activities.
Cash, cash equivalents and short-term marketable securities as of September 30, 2009 totaled $143.4 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 September 2009. As of September 30, 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 the nine months ended September 30, 2009 for a total cost of $29.4 million.
Year-to-Date Results
Revenue - Revenue totaled $100.5 million for the nine months ended September 30, 2009, a 22% increase compared to revenue of $82.3 million for the nine months ended September 30, 2008.
Operating Income - Operating income increased 21% to $19.0 million for the nine months ended September 30, 2009, compared to operating income of $15.6 million for the nine months ended September 30, 2008. Operating margins were 19% in both nine-month periods ended September 30, 2009 and 2008.
Pre-tax Income - Pre-tax income for the nine months ended September 30, 2009 was $19.8 million, a 6% increase compared to pre-tax income of $18.7 million for the nine months ended September 30, 2008. Pre-tax income was unfavorably impacted in the nine months ended September 30, 2009 by a decrease in interest income of $2.3 million compared to the nine months ended September 30, 2008.
Net Income - Net income for the nine months ended September 30, 2009 was $10.6 million, or $0.41 per diluted share, compared to net income for the nine months ended September 30, 2008 of $10.5 million, or $0.40 per diluted share.
Cash Flow - Cash flow from operations for the nine months ended September 30, 2009 was $20.7 million, compared to $22.8 million for the nine months ended September 30, 2008, representing a decrease of 9%.
2009 Guidance
With respect to guidance and based on information currently available, eHealth is revising its revenue and GAAP net income per diluted share guidance for the full year ending December 31, 2009. eHealth is also revising the expected range for stock-based compensation and GAAP income tax rate for the full year ending December 31, 2009.
Total revenue is expected to be in the range of $134 million to $136 million, compared to previous guidance of $131 million to $136 million Stock-based compensation expense is expected to be in the range of $4.6 million to $5.0 million, compared to previous guidance of $5 million to $6 million GAAP income tax rate is expected to be in the range of 44% to 46%, compared to previous guidance of 43% to 45% GAAP net income per diluted share is expected to be in the range of $0.53 to $0.61 per share, compared to previous guidance of $0.51 to $0.61 per share
Webcast and Conference Call Information
A Webcast and conference call will be held today, Tuesday, October 27, 2009 at 5:00 p.m. EDT / 2:00 p.m. PDT. 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 866-271-0675 for domestic callers and 617-213-8892 for international callers. The participant passcode is #47841791. 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 #82254970. 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. is the parent company of eHealthInsurance, the leading online source of health insurance for individuals, families and small businesses. eHealthInsurance presents complex health insurance information in an objective, user-friendly format, enabling the research, analysis, comparison and purchase of health insurance products that best meet consumers' needs. eHealth and eHealthInsurance are registered trademarks of eHealthInsurance Services, Inc.
eHealth, Inc. was founded in 1997 and its technology was responsible for the nation's first Internet-based sale of a health insurance policy. eHealth is headquartered in Mountain View, California. Additional information can be found on eHealth's website, http://www.ehealthinsurance.com.
Forward-Looking Statements
This press release contains statements that are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995. These include statements regarding eHealth's 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, 2009. These forward-looking statements are inherently subject to various risks and uncertainties that could cause actual results to differ materially from the statements made, including risks associated with 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, 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, 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, success of the health savings account (HSA) 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 SFAS 123(R) 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 consists of GAAP net income excluding the effects of expensing stock-based compensation adjusted for estimated income tax benefit related to stock-based compensation expense as well as additional tax expense recorded during the period in accordance with SFAS 123(R).
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.
EHEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, September 30,
2008 2009
----------- -------------
Assets (1) (unaudited)
Current assets:
Cash and cash equivalents $ 94,136 $ 100,015
Marketable securities 56,499 43,434
Accounts receivable 2,005 2,204
Deferred income taxes 7,580 3,875
Prepaid expenses and other current assets 1,874 2,328
----------- -------------
Total current assets 162,094 151,856
Property and equipment, net 4,567 4,003
Deferred income taxes 1,314 2,271
Other assets 780 748
----------- -------------
Total assets $ 168,755 $ 158,878
=========== =============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 2,190 $ 1,563
Accrued compensation and benefits 4,662 4,982
Accrued marketing expenses 3,162 4,239
Deferred revenue 427 331
Other current liabilities 2,707 2,045
----------- -------------
Total current liabilities 13,148 13,160
Other non-current liabilities 628 1,591
Stockholders' equity:
Common stock 25 25
Additional paid-in capital 173,095 181,136
Treasury stock shares, at cost (639) (29,999)
Deferred stock-based compensation (22) (1)
Accumulated deficit (17,892) (7,303)
Accumulated other comprehensive income 412 269
----------- -------------
Total stockholders' equity 154,979 144,127
----------- -------------
Total liabilities and stockholders' equity $ 168,755 $ 158,878
=========== =============
(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, unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
----------------- -----------------
2008 2009 2008 2009
-------- -------- -------- --------
Revenue:
Commission $ 25,788 $ 31,086 $ 74,663 $ 89,229
Sponsorship, licensing and other 2,687 4,037 7,593 11,250
-------- -------- -------- --------
Total revenue 28,475 35,123 82,256 100,479
Operating costs and expenses:
Cost of revenue-sharing 469 1,470 1,338 3,588
Marketing and advertising (1) 11,502 14,266 30,633 40,631
Customer care and enrollment (1) 3,722 3,651 10,655 11,100
Technology and content (1) 3,565 4,126 10,548 11,539
General and administrative (1) 4,731 5,119 13,475 14,671
-------- -------- -------- --------
Total operating costs and expenses 23,989 28,632 66,649 81,529
-------- -------- -------- --------
Income from operations 4,486 6,491 15,607 18,950
Interest and other income, net 935 143 3,085 800
-------- -------- -------- --------
Income before income taxes 5,421 6,634 18,692 19,750
Provision for income taxes 2,400 3,182 8,173 9,161
-------- -------- -------- --------
Net income $ 3,021 $ 3,452 $ 10,519 $ 10,589
======== ======== ======== ========
Net income per share:
Basic $ 0.12 $ 0.14 $ 0.42 $ 0.43
Diluted $ 0.12 $ 0.14 $ 0.40 $ 0.41
Weighted-average number of shares used
in per share amounts:
Basic 25,060 24,240 24,925 24,627
Diluted 25,921 25,152 26,007 25,529
(1) Includes stock-based compensation
expense as follows:
Marketing and advertising $ 151 $ 184 $ 484 $ 580
Customer care and enrollment 49 92 200 240
Technology and content 203 312 653 814
General and administrative 552 702 1,272 1,794
-------- -------- -------- --------
Total $ 955 $ 1,290 $ 2,609 $ 3,428
======== ======== ======== ========
EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
--------------------- ---------------------
2008 2009 2008 2009
---------- ---------- ---------- ----------
Operating activities
Net income $ 3,021 $ 3,452 $ 10,519 $ 10,589
Adjustments to reconcile net
income to net cash provided by
operating activities:
Deferred income taxes 1,629 1,837 7,146 5,074
Depreciation and
amortization 467 554 1,271 1,673
Amortization and accretion
on marketable securities,
net -- 206 -- 607
Stock-based compensation
expense 955 1,290 2,609 3,428
Excess tax benefits from
stock-based compensation (216) (1,351) (216) (3,986)
Deferred rent (8) (7) (43) (57)
Loss on disposal of property
and equipment 28 4 39 16
Changes in operating assets
and liabilities:
Accounts receivable (315) (93) (260) (199)
Prepaid expenses and other
current assets 734 982 456 386
Other assets (11) 182 21 473
Accounts payable (13) (195) 357 (628)
Accrued compensation and
benefits 181 244 (700) 319
Accrued marketing expenses 1,168 267 1,488 1,077
Deferred revenue 74 (147) (85) (96)
Other current liabilities 563 424 148 1,985
Other non-current
liabilities -- -- -- 21
---------- ---------- ---------- ----------
Net cash provided by operating
activities 8,257 7,649 22,750 20,682
---------- ---------- ---------- ----------
Investing activities
Purchases of property and
equipment (933) (588) (2,242) (1,122)
Purchase of other assets -- -- -- (1,280)
Purchases of marketable
securities (11,143) (2,026) (61,565) (40,550)
Sales of marketable securities 2,053 3,000 10,120 4,006
Maturities of marketable
securities 6,786 13,500 38,379 48,900
---------- ---------- ---------- ----------
Net cash provided by (used in)
investing activities (3,237) 13,886 (15,308) 9,954
---------- ---------- ---------- ----------
Financing activities
Net proceeds from exercise of
common stock options 85 285 1,426 645
Excess tax benefits from
stock-based compensation 216 1,351 216 3,986
Repurchase of common stock -- (24,767) -- (29,360)
Principal payments in
connection with capital lease -- (11) -- (30)
---------- ---------- ---------- ----------
Net cash provided by (used in)
financing activities 301 (23,142) 1,642 (24,759)
---------- ---------- ---------- ----------
Effect of exchange rate changes
on cash and cash equivalents 3 1 46 2
---------- ---------- ---------- ----------
Net increase (decrease) in
cash and cash equivalents 5,324 (1,606) 9,130 5,879
Cash and cash equivalents at
beginning of period 85,201 101,621 81,395 94,136
---------- ---------- ---------- ----------
Cash and cash equivalents at
end of period $ 90,525 $ 100,015 $ 90,525 $ 100,015
========== ========== ========== ==========
EHEALTH, INC.
SUMMARY OF SELECTED METRICS
(Unaudited)
Three Months Three Months
Ended September Ended September
Key Metrics: 30, 2008 30, 2009
--------------- ---------------
Operating cash flows (1) $ 8,257,000 $ 7,649,000
IFP submitted applications (2) 117,300 131,200
IFP approved members (3) 100,800 111,100
Total approved members (4) 144,400 146,900
Total revenue (5) $ 28,475,000 $ 35,123,000
Total revenue per estimated member for
the period (6) $ 48.19 $ 49.00
As of As of
September 30, September 30,
2008 2009
--------------- ---------------
IFP estimated membership (7) 506,100 630,900
Total estimated membership (8) 602,100 726,600
Three Months Three Months
Ended Ended
September 30, September 30,
2008 2009
--------------- ---------------
Marketing and advertising expenses (9) $ 11,502,000 $ 14,266,000
Marketing and advertising expenses as a
percentage of total revenue (10) 40% 41%
Marketing and advertising expenses
excluding stock-based compensation (11) $ 11,351,000 $ 14,082,000
Marketing and advertising expenses
excluding stock based compensation as a
percentage of total revenue (12) 40% 40%
Other Metrics:
Source of IFP submitted applications (as
a percentage of total IFP applications
for the period):
Direct (13) 39% 43%
Marketing partners (14) 33% 31%
Online advertising (15) 28% 26%
--------------- ---------------
Total 100% 100%
=============== ===============
Acquisition cost per individual on IFP
submitted applications (16) $ 65.34 $ 74.73
Acquisition cost (excluding stock-based
compensation) per individual on IFP
submitted applications (17) $ 64.48 $ 73.77
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 number of members transferred from Health
Benefits Direct Corporation during 2009, net of estimated
cancelations since their transfer, of approximately 25,000
members. See our 2008 Annual Report on Form 10-K - Item 7 -
Management's Discussion and Analysis of Financial Condition and
Results of Operations - Summary of Selected Metrics for additional
information regarding our calculation of estimated membership.
(7) Estimated number of members active on IFP insurance policies as of
the date indicated. Amounts as of September 30, 2009 include the
estimated number of members transferred from Health Benefits Direct
Corporation during 2009, net of estimated cancelations since their
transfer, of approximately 25,000 members. See our 2008 Annual
Report on Form 10-K - Item 7 - Management's Discussion and Analysis
of Financial Condition and Results of Operations - Summary of
Selected Metrics for additional information regarding our
calculation of estimated membership.
(8) Estimated number of members active on all insurance policies as of
the date indicated. Amounts as of September 30, 2009 include the
estimated number of members transferred from Health Benefits Direct
Corporation during 2009, net of estimated cancelations since their
transfer, of approximately 25,000 members. See our 2008 Annual
Report on Form 10-K - Item 7 - Management's Discussion and Analysis
of Financial Condition and Results of Operations - Summary of
Selected Metrics for additional information regarding our
calculation of estimated membership.
(9) Marketing and advertising expenses for the period from the
condensed consolidated statements of income.
(10) Calculated as marketing and advertising expenses for the period
(see note (9) above) divided by total revenue for the period (see
note (5) above).
(11) Non-GAAP marketing and advertising expenses excluding stock-based
compensation for the period. See Non-GAAP Financial Information
above and the reconciliation of GAAP to Non-GAAP marketing and
advertising expenses below.
(12) Calculated as non-GAAP marketing and advertising expenses for the
period (see note (11) above) divided by total revenue for the
period (see note (5) above). See Non-GAAP Financial Information
above and the reconciliation of GAAP to Non-GAAP marketing and
advertising expenses below.
(13) Percentage of IFP submitted applications from applicants who came
directly to the eHealth website through algorithmic search engine
results or otherwise. See note (2) above for further information as
to what constitutes a submitted application.
(14) Percentage of IFP submitted applications from applicants sourced
through eHealth's network of marketing partners. See note (2) above
for further information as to what constitutes a submitted
application.
(15) Percentage of IFP submitted applications from applicants sourced
through paid search and other online advertising activities. See
note (2) above for further information as to what constitutes a
submitted application.
(16) Calculated as marketing and advertising expenses for the period
(see note (9) above) divided by the number of individuals on IFP
applications submitted on eHealth's website during the period. This
metric may not reflect the true acquisition cost.
(17) Calculated as non-GAAP marketing and advertising expenses for the
period (see note (11) above) divided by the number of individuals
on IFP applications submitted on eHealth's website during the
period. This metric may not reflect the true acquisition cost
exclusive of the impact of stock-based compensation allocated to
marketing and advertising expenses.
EHEALTH, INC.
GAAP TO NON-GAAP RECONCILIATION
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009
(In thousands, except per share amounts, unaudited)
Statement of Income Reconciliation
Three Months Ended September 30, 2009
-------------------------------------------------------
GAAP Non-GAAP
Percent Percent
GAAP of Total Non-GAAP of Total
Reported Revenue Adjustments Results Revenue
--------- -------- ----------- --------- ------------
Revenue:
Commission $ 31,086 89% $ -- $ 31,086 89%
Sponsorship,
licensing and
other 4,037 11 -- 4,037 11
--------- -------- ----------- --------- ------------
Total revenue 35,123 100 -- 35,123 100
Operating costs and
expenses:
Cost of
revenue-sharing 1,470 4 -- 1,470 4
Marketing and
advertising (1) 14,266 41 (184) 14,082 40
Customer care and
enrollment (1) 3,651 10 (92) 3,559 10
Technology and
content (1) 4,126 12 (312) 3,814 11
General and
administrative (1) 5,119 15 (702) 4,417 13
--------- -------- ----------- --------- ------------
Total operating
costs and expenses 28,632 82 (1,290) 27,342 78
--------- -------- ----------- --------- ------------
Income from
operations 6,491 18 1,290 7,781 22
Interest and other
income, net 143 0 -- 143 0
--------- -------- ----------- --------- ------------
Income before
income taxes 6,634 19 1,290 7,924 23
Provision for
income taxes (2) 3,182 9 398 3,580 10
--------- -------- ----------- --------- ------------
Net income $ 3,452 10% $ 892 $ 4,344 12%
========= ======== =========== ========= ============
Net income per
share:
Basic $ 0.14 $ 0.04 $ 0.18
Diluted $ 0.14 $ 0.03 $ 0.17
Weighted-average
number of shares
used in per share
amounts:
Basic 24,240 24,240 24,240
Diluted 25,152 25,152 25,152
Explanation of adjustments
(1) Non-GAAP results exclude the effect of expensing stock-based
compensation related to stock options, restricted stock and
restricted stock units in accordance with SFAS 123(R) beginning in
2006, in addition to the amortization of deferred stock-based
compensation expense in accordance with APB 25 for grants made
prior to 2006.
(2) Non-GAAP net income and non-GAAP net income per share exclude
stock-based compensation expense listed in note (1) above, adjusted
for estimated income tax benefit related to stock-based
compensation expense.
EHEALTH, INC.
GAAP TO NON-GAAP RECONCILIATION
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2008
(In thousands, except per share amounts, unaudited)
Statement of Income Reconciliation
Three Months Ended September 30, 2008
-----------------------------------------------------------
GAAP Non-GAAP
Percent Percent
GAAP of Total Non-GAAP of Total
Reported Revenue Adjustments Results Revenue
----------- ---------- ----------- ----------- ----------
Revenue:
Commission $ 25,788 91% $ -- $ 25,788 91%
Sponsorship,
licensing and
other 2,687 9 -- 2,687 9
----------- ---------- ----------- ----------- ----------
Total revenue 28,475 100 -- 28,475 100
Operating costs
and expenses:
Cost of
revenue-
sharing 469 2 -- 469 2
Marketing and
advertising (1) 11,502 40 (151) 11,351 40
Customer care
and
enrollment (1) 3,722 13 (49) 3,673 13
Technology and
content (1) 3,565 13 (203) 3,362 12
General and
administra-
tive (1) 4,731 17 (552) 4,179 15
----------- ---------- ----------- ----------- ----------
Total operating
costs and
expenses 23,989 84 (955) 23,034 81
----------- ---------- ----------- ----------- ----------
Income from
operations 4,486 16 955 5,441 19
Interest and
other income,
net 935 3 -- 935 3
----------- ---------- ----------- ----------- ----------
Income before
income taxes 5,421 19 955 6,376 22
Provision for
income
taxes (2) 2,400 8 300 2,700 9
----------- ---------- ----------- ----------- ----------
Net income $ 3,021 11% $ 655 $ 3,676 13%
=========== ========== =========== =========== ==========
Net income per
share:
Basic $ 0.12 $ 0.03 $ 0.15
Diluted $ 0.12 $ 0.02 $ 0.14
Weighted-
average number
of shares used
in per share
amounts:
Basic 25,060 25,060 25,060
Diluted 25,921 25,921 25,921
Explanation of adjustments
(1) Non-GAAP results exclude the effect of expensing stock-based
compensation related to stock options, restricted stock and
restricted stock units in accordance with SFAS 123(R) beginning in
2006, in addition to the amortization of deferred stock-based
compensation expense in accordance with APB 25 for grants made
prior to 2006.
(2) Non-GAAP net income and non-GAAP net income per share exclude
stock-based compensation expense listed in note (1) above, adjusted
for estimated income tax benefit related to stock-based
compensation expense.
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