eHealth, Inc. Announces Third Quarter 2010 Results
MOUNTAIN VIEW, CA, Oct 26, 2010 (MARKETWIRE via COMTEX) -- eHealth, Inc. (NASDAQ: EHTH), the leading online source of health insurance for individuals and families, today announced its financial results for the third quarter ended September 30, 2010.
Gary Lauer, chief executive officer of eHealth, stated, "We are pleased with our third quarter performance. Submitted individual and family application volume growth exceeded 9% year-over-year reflecting growth across all member acquisition channels. We also continued to make progress in our emerging businesses -- Medicare and government systems -- including an important launch of the enhanced Health Insurance Web Portal for the Department of Health and Human Services. We believe that the changing landscape of the health insurance industry makes our technology and platform more relevant and needed than ever."
Third Quarter Results
Revenue -- Revenue totaled $37.5 million for the third quarter of 2010, a 7% increase compared to revenue of $35.1 million for the third quarter of 2009.
Submitted Applications -- Submitted applications for individual and family products increased 9% in the third quarter of 2010 to 143,200 applications, compared to 131,200 applications in the third quarter of 2009.
Membership -- Estimated membership at September 30, 2010 totaled 778,800 members, a 7% increase over estimated membership of 726,600 at September 30, 2009.
Operating Income -- Operating income decreased 25% to $4.8 million for the third quarter of 2010, compared to operating income of $6.5 million for the third quarter of 2009. Operating margins were 13% and 18% in the third quarters of 2010 and 2009, respectively. Non-GAAP operating income decreased 12% to $6.8 million for the third quarter of 2010, compared to non-GAAP operating income of $7.8 million for the third quarter of 2009. Non-GAAP operating margins were 18% and 22% in the third quarters of 2010 and 2009, respectively. Non-GAAP operating income and margins in the third quarter of 2010 excludes $1.6 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 third quarter of 2009 excludes $1.3 million of stock-based compensation expense.
Stuart Huizinga, chief financial officer of eHealth, stated, "In the third quarter we generated the largest individual and family health insurance submitted application volume in the history of eHealth. At the same time, third quarter operating margin declined both sequentially and on a year-over-year basis, which was significantly impacted by our record submitted application volume. The vast majority of marketing and advertising spend to generate individual and family plan applications is expensed when it is incurred, while the revenue stream resulting from that spend comes in over future periods, resulting in lower margins in high application volume quarters. Third quarter operating margin also reflected continued investment in our Medicare business."
Pre-tax Income -- Pre-tax income for the third quarter of 2010 was $4.8 million, a 27% decrease compared to pre-tax income of $6.6 million for the third quarter of 2009.
Net Income -- Net income for the third quarter of 2010 was $2.6 million, or $0.11 per diluted share. Net income for the third quarter of 2009 was $3.5 million, or $0.14 per diluted share. Non-GAAP net income for the third quarter of 2010 was $3.8 million, or $0.16 per diluted share, compared to non-GAAP net income for the third quarter of 2009 of $4.3 million, or $0.17 per diluted share. Non-GAAP net income and non-GAAP net income per diluted share in the third quarter of 2010 exclude $1.6 million of stock-based compensation expense and $0.4 million of intangible asset amortization expense associated with the acquisition of PlanPrescriber, Inc., less $0.8 million for related income tax benefit. 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, less $0.4 million for related income tax benefit.
Cash Flow and Cash Balance -- Cash flow from operations for the third quarter of 2010 was $5.6 million, compared to $7.6 million for the third quarter of 2009, representing a decrease of 27%. During the third quarters of 2010 and 2009, we utilized $2.1 million and $1.4 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.
Cash, cash equivalents and short-term marketable securities as of September 30, 2010 totaled $139.1 million, compared to $153.5 million as of December 31, 2009. The change in cash, cash equivalents and short-term marketable securities for the nine months ended September 30, 2010 reflects $27.2 million of net cash used for the acquisition of PlanPrescriber, Inc. in April 2010 and $8.7 million used to repurchase 751,238 shares of the Company's common stock during September 2010.
Year-to-Date Results
Revenue -- Revenue totaled $109.7 million for the nine months ended September 30, 2010, a 9% increase compared to revenue of $100.5 million for the nine months ended September 30, 2009.
Operating Income -- Operating income decreased 13% to $16.5 million for the nine months ended September 30, 2010, compared to operating income of $19.0 million for the nine months ended September 30, 2009. Operating margins were 15% and 19% in the nine-month periods ended September 30, 2010 and 2009, respectively.
Pre-tax Income -- Pre-tax income for the nine months ended September 30, 2010 was $16.5 million, a 16% decrease compared to pre-tax income of $19.8 million for the nine months ended September 30, 2009.
Net Income -- Net income for the nine months ended September 30, 2010 was $8.9 million, or $0.37 per diluted share, compared to net income for the nine months ended September 30, 2009 of $10.6 million, or $0.41 per diluted share.
Cash Flow -- Cash flow from operations for the nine months ended September 30, 2010 was $16.9 million, compared to $20.7 million for the nine months ended September 30, 2009, representing a decrease of 18%.
2010 Guidance
eHealth is reaffirming its guidance for the full year ending December 31, 2010:
-- Total revenue is expected to be in the range of $152 million to $157
million
-- Stock-based compensation expense is expected to be in the range of
$6.0 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
Webcast and Conference Call Information A Webcast and conference call will be held today, Tuesday, October 26, 2010 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 866-700-7441 for domestic callers and 617-213-8839 for international callers. The participant passcode is 53498897. 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 29039667. 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, 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 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 its eCommerce On-Demand solution (www.eHealth.com/eOD), eHealth is also a leading provider of on-demand e-commerce software. eHealth's eOD platform provides a suite of hosted solutions that enable health plan providers and resellers to market and distribute products online. eHealth, Inc. also provides powerful online and pharmacy-based tools to help seniors navigate Medicare health insurance options and choose the right plan through its wholly-owned subsidiary, PlanPrescriber.com (http://www.planprescriber.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 the increased relevance and importance of eHealth's technology platform as a result of changes in the health insurance industry 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 the impact of healthcare reform and medical loss ratio requirements; eHealth's rate of growth; eHealth's success in marketing and selling Medicare-related health insurance products and leads for such products; 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 and legislative reaction to 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; negative publicity experienced by eHealth's carrier partners; 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; reliance on marketing partners; timing of receipt and accuracy of commission reports; payment practices of health insurance carriers; competition; eHealth's operations in China; 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 and diversification; seasonality; impact of future acquisitions; the PlanPrescriber, Inc. acquisition disrupting plans and operations; not realizing anticipated synergies and opportunities with respect to PlanPrescriber, Inc.; difficulty or unanticipated expenses in connection with integrating 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; reliance upon a small number of purchasers for our sale of Medicare related insurance 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; 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; and stock market conditions and the trading price of shares of eHealth's common stock. 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 for the third quarter of 2010 consists of
GAAP operating income excluding purchased intangible asset
amortization expense and 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.
Non-GAAP operating income for the third quarter of 2009 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 third quarter of 2010 consists of GAAP net
income excluding purchased intangible asset amortization expense and
stock-based compensation expense recorded during the quarter (less
related income tax benefit). Non-GAAP net income for the third quarter
of 2009 consists of GAAP net income excluding stock-based compensation
expense recorded during the quarter (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 are 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 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 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 described above and the related reconciliations between these financial measures.
(Tables to Follow)
EHEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, September 30,
2009 2010
------------ ------------
Assets (1) (unaudited)
Current assets:
Cash and cash equivalents $ 131,339 $ 139,113
Marketable securities 22,184 -
Accounts receivable 2,295 3,218
Deferred income taxes 6,009 6,956
Prepaid expenses and other current assets 2,324 4,255
------------ ------------
Total current assets 164,151 153,542
Property and equipment, net 3,775 4,684
Deferred income taxes 919 261
Other assets 863 839
Goodwill - 14,546
Purchased intangible assets, net - 12,689
------------ ------------
Total assets $ 169,708 $ 186,561
============ ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 3,252 $ 6,129
Accrued compensation and benefits 5,051 6,790
Accrued marketing expenses 3,879 4,244
Deferred revenue 401 519
Other current liabilities 2,677 1,926
------------ ------------
Total current liabilities 15,260 19,608
Other non-current liabilities 2,997 3,291
Stockholders' equity:
Common stock 25 25
Additional paid-in capital 183,747 195,826
Treasury stock, at cost (29,999) (38,723)
Retained earnings (accumulated deficit) (2,545) 6,327
Accumulated other comprehensive income 223 207
------------ ------------
Total stockholders' equity 151,451 163,662
------------ ------------
Total liabilities and stockholders' equity $ 169,708 $ 186,561
============ ============
(1) The condensed consolidated balance sheet at December 31, 2009 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 Nine Months Ended
September 30, September 30,
----------------- -----------------
2009 2010 2009 2010
-------- -------- -------- --------
Revenue:
Commission $ 31,086 $ 32,040 $ 89,229 $ 95,685
Sponsorship, licensing and other 4,037 5,411 11,250 14,011
-------- -------- -------- --------
Total revenue 35,123 37,451 100,479 109,696
Operating costs and expenses:
Cost of revenue 1,470 900 3,588 2,759
Marketing and advertising (1) 14,266 16,094 40,631 44,795
Customer care and enrollment (1) 3,651 4,691 11,100 12,539
Technology and content (1) 4,126 4,619 11,539 14,199
General and administrative (1) 5,119 5,879 14,671 18,200
Amortization of acquired intangible
assets -- 426 -- 711
-------- -------- -------- --------
Total operating costs and expenses 28,632 32,609 81,529 93,203
-------- -------- -------- --------
Income from operations 6,491 4,842 18,950 16,493
Interest and other income (loss), net 143 (3) 800 13
-------- -------- -------- --------
Income before income taxes 6,634 4,839 19,750 16,506
Provision for income taxes 3,182 2,241 9,161 7,634
-------- -------- -------- --------
Net income $ 3,452 $ 2,598 $ 10,589 $ 8,872
======== ======== ======== ========
Net income per share:
Basic $ 0.14 $ 0.11 $ 0.43 $ 0.38
Diluted $ 0.14 $ 0.11 $ 0.41 $ 0.37
Weighted-average number of shares
used in per share amounts:
Basic 24,240 23,437 24,627 23,474
Diluted 25,152 24,079 25,529 24,227
(1) Includes stock-based compensation
expense as follows:
Marketing and advertising $ 184 $ 199 $ 580 $ 607
Customer care and enrollment 92 101 240 282
Technology and content 312 383 814 1,239
General and administrative 702 885 1,794 2,689
-------- -------- -------- --------
Total $ 1,290 $ 1,568 $ 3,428 $ 4,817
======== ======== ======== ========
EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2009 2010 2009 2010
--------- --------- --------- ---------
Operating activities
Net income $ 3,452 $ 2,598 $ 10,589 $ 8,872
Adjustments to reconcile net
income to net cash provided by
operating activities:
Deferred income taxes 1,837 1,874 5,074 6,810
Depreciation and amortization 554 963 1,673 2,291
Amortization and accretion on
marketable securities, net 206 - 607 50
Stock-based compensation
expense 1,290 1,568 3,428 4,817
Excess tax benefits from
stock-based compensation (1,351) (2,123) (3,986) (7,360)
Deferred rent (7) (7) (57) (5)
Loss on disposal of property
and equipment 4 3 16 9
Changes in operating assets
and liabilities:
Accounts receivable (93) (655) (199) (554)
Prepaid expenses and other
current assets 982 (2,532) 386 (1,845)
Other assets 182 (66) 473 25
Accounts payable (195) 2,862 (628) 2,863
Accrued compensation and
benefits 244 909 319 1,585
Accrued marketing expenses 267 107 1,077 365
Deferred revenue (147) 67 (96) 90
Other current liabilities 424 43 2,006 (1,145)
--------- --------- --------- ---------
Net cash provided by operating
activities 7,649 5,611 20,682 16,868
--------- --------- --------- ---------
Investing activities
Purchases of property and
equipment (588) (1,139) (1,122) (2,483)
Acquisition of PlanPrescriber,
net of cash acquired - - - (27,203)
Purchase of other assets - - (1,280) -
Purchases of marketable
securities (2,026) - (40,550) -
Sales of marketable securities 3,000 - 4,006 -
Maturities of marketable
securities 13,500 - 48,900 22,100
--------- --------- --------- ---------
Net cash provided by (used in)
investing activities 13,886 (1,139) 9,954 (7,586)
--------- --------- --------- ---------
Financing activities
Net proceeds from exercise of
common stock options 308 4 775 468
Cash used to net share settle
equity awards (23) (18) (130) (575)
Excess tax benefits from
stock-based compensation 1,351 2,123 3,986 7,360
Repurchase of common stock (24,767) (8,724) (29,360) (8,724)
Principal payments in
connection with capital lease (11) (12) (30) (33)
--------- --------- --------- ---------
Net cash used in financing
activities (23,142) (6,627) (24,759) (1,504)
--------- --------- --------- ---------
Effect of exchange rate changes
on cash and cash equivalents 1 (10) 2 (4)
--------- --------- --------- ---------
Net increase (decrease) in cash
and cash equivalents (1,606) (2,165) 5,879 7,774
Cash and cash equivalents at
beginning of period 101,621 141,278 94,136 131,339
--------- --------- --------- ---------
Cash and cash equivalents at
end of period $ 100,015 $ 139,113 $ 100,015 $ 139,113
========= ========= ========= =========
EHEALTH, INC.
SUMMARY OF SELECTED METRICS
(Unaudited)
Three Months Ended Three Months Ended
Key Metrics: September 30, 2009 September 30, 2010
------------------ ------------------
Operating cash flows (1) $ 7,649,000 $ 5,611,000
IFP submitted applications (2) 131,200 143,200
IFP approved members (3) 111,100 117,300
Total approved members (4) 146,900 152,800
Total revenue (5) $ 35,123,000 $ 37,451,000
Total revenue per estimated member
for the period (6) $ 49.00 $ 48.84
As of As of
September 30, 2009 September 30, 2010
------------------ ------------------
IFP estimated membership (7) 630,900 679,500
Total estimated membership (8) 726,600 778,800
Three Months Ended Three Months Ended
September 30, 2009 September 30, 2010
------------------ ------------------
Marketing and advertising
expenses (9) $ 14,266,000 $ 16,094,000
Marketing and advertising expenses
as a percentage of total
revenue (10) 41% 43%
Marketing and advertising expenses
excluding stock-based
compensation (11) $ 14,082,000 $ 15,895,000
Marketing and advertising expenses
excluding stock based compensation
as a percentage of total
revenue (12) 40% 42%
Other Metrics:
Source of IFP submitted applications
(as a percentage of total IFP
applications for the period):
Direct (13) 43% 43%
Marketing partners (14) 31% 30%
Online advertising (15) 26% 27%
------------------ ------------------
Total 100% 100%
================== ==================
Acquisition cost per individual on
IFP submitted applications (16) $ 74.73 $ 75.38
Acquisition cost (excluding
stock-based compensation) per
individual on IFP submitted
applications (17) $ 73.77 $ 74.45
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 during 2009.
(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
during 2009.
(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 as of
September 30, 2009 and 2010 include an estimated 25,000 and 15,000
members, respectively, transferred from Health Benefits Direct
Corporation as of each date, net of estimated cancelations since their
transfer. See our Form 10-K for the year ended December 31, 2009 -
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 and 2010 include an
estimated 25,000 and 15,000 members, respectively, transferred from
Health Benefits Direct Corporation as of each date, net of estimated
cancelations since their transfer. See our Form 10-K for the year
ended December 31, 2009 - 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 and 2010 include an
estimated 25,000 and 15,000 members, respectively, transferred from
Health Benefits Direct Corporation as of each date, net of estimated
cancelations since their transfer. See our Form 10-K for the year
ended December 31, 2009 - 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, 2010
(In thousands, except per share amounts, unaudited)
Statement of Income Reconciliation
Three Months Ended September 30, 2010
----------------------------------------------------
GAAP Non-GAAP
Percent of Percent of
GAAP Total Non-GAAP Total
Reported Revenue Adjustments Results Revenue
--------- --------- --------- --------- --------
Revenue:
Commission $ 32,040 86% $ -- $ 32,040 86%
Sponsorship,
licensing and
other 5,411 14 -- 5,411 14
--------- --------- --------- --------- --------
Total revenue 37,451 100 -- 37,451 100
Operating costs and
expenses:
Cost of revenue 900 2 -- 900 2
Marketing and
advertising (1) 16,094 43 (199) 15,895 42
Customer care and
enrollment (1) 4,691 13 (101) 4,590 12
Technology and
content (1) 4,619 12 (383) 4,236 11
General and
administrative (1) 5,879 16 (885) 4,994 13
Amortization of
acquired
intangible assets
(2) 426 1 (426) -- --
--------- --------- --------- --------- --------
Total operating costs
and expenses 32,609 87 (1,994) 30,615 82
--------- --------- --------- --------- --------
Income from
operations 4,842 13 1,994 6,836 18
Interest and other
income (loss), net (3) (0) -- (3) (0)
--------- --------- --------- --------- --------
Income before income
taxes 4,839 13 1,994 6,833 18
Provision for income
taxes (3) 2,241 6 757 2,998 8
--------- --------- --------- --------- --------
Net income (4) $ 2,598 7% $ 1,237 $ 3,835 10%
========= ========= ========= ========= ========
Net income per share:
(4)
Basic $ 0.11 $ 0.05 $ 0.16
Diluted $ 0.11 $ 0.05 $ 0.16
Weighted-average
number of shares
used in per share
amounts:
Basic 23,437 23,437 23,437
Diluted 24,079 24,079 24,079
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.
(2) Non-GAAP results exclude amortization expense related to acquired
intangible assets.
(3) Non-GAAP provision for income taxes excludes estimated income
tax benefit related to stock-based compensation expense and
amortization of purchased intangible assets listed in notes
(1) and (2) above.
(4) Non-GAAP net income and non-GAAP net income per share exclude
stock-based compensation expense and amortization of purchased
intangible assets listed in notes (1) and (2) above, adjusted
for estimated income tax benefit related to stock-based compensation
expense and amortization of purchased intangible assets.
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 of Percent of
GAAP Total Non-GAAP 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 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) $ 3,452 10% $ 892 $ 4,344 12%
========= ========= ========= ========= =========
Net income per
share: (3)
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 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) Non-GAAP provision for income taxes excludes estimated income tax
benefit 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
Vice President, Communications
440 East Middlefield Road
Mountain View, CA 94043
(650) 210-3149
brian.mast@ehealth.com
http://www.ehealthinsurance.com
mailto:kate.sidorovich@ehealth.com
http://ir.ehealthinsurance.com
mailto:brian.mast@ehealth.com
http://www.ehealthinsurance.com