eHealth, Inc. Announces Third Quarter 2011 Results
MOUNTAIN VIEW, CA, Oct 25, 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 third quarter ended September 30, 2011.
Gary Lauer, chief executive officer of eHealth, stated, "Our third quarter financial results were in-line with our expectations and reflect our investment strategy in Medicare. We see a significant Medicare opportunity in front of us and are making the strategic investments necessary to make Medicare an important business over time. We've been adjusting to the individual business and market changes resulting from the Affordable Care Act, and we are pleased with our overall membership growth and continued cash generation."
Third Quarter Results
Revenue -- Revenue for the third quarter of 2011 totaled $34.8 million, a 7% decrease compared to revenue of $37.5 million for the third quarter of 2010.
Submitted Applications -- Submitted applications for individual and family products decreased 20% in the third quarter of 2011 to 114,800 applications, compared to 143,200 applications in the third quarter of 2010.
Membership -- Estimated membership at September 30, 2011 totaled 810,400 members, a 4% increase over estimated membership of 778,800 at September 30, 2010.
Operating Income -- Operating income for the third quarter of 2011 was $43,000, compared to operating income of $4.8 million for the third quarter of 2010. Operating margins were breakeven and 13% in the third quarters of 2011 and 2010, respectively. Operating income for the third quarter of 2011 reflected eHealth's strategic investment in the Medicare business. Third quarter Medicare-related operating expenses grew by approximately $2.5 million compared to the second quarter of 2011 and by approximately $4 million compared to the third quarter of 2010. Stuart Huizinga, chief financial officer of eHealth, said, "In the third quarter of 2011 our increased investment in Medicare aligned with seasonally low Medicare revenues outside of the Medicare Annual Enrollment Period. In the fourth quarter of 2011 we expect to generate sequential and year-over-year growth in Medicare revenues, which will allow us to better absorb the increased level of operating expenses and to increase operating income."
Non-GAAP operating income for the third quarter of 2011 was $2.3 million, compared to non-GAAP operating income of $6.8 million for the third quarter of 2010. Non-GAAP operating margins were 7% and 18% in the third quarters of 2011 and 2010, respectively. Non-GAAP operating income and margins in the third quarter of 2011 exclude $1.8 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 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.
EBITDA -- EBITDA for the third quarter of 2011 was $2.8 million, a 62% decrease compared to EBITDA of $7.4 million for the third quarter of 2010.
Pre-tax Income -- Pre-tax income for the third quarter of 2011 was $22,000, compared to pre-tax income of $4.8 million for the third quarter of 2010.
Net Income/Loss -- Net loss for the third quarter of 2011 was $0.2 million, or $0.01 per diluted share, compared to net income of $2.6 million, or $0.11 per diluted share for the third quarter of 2010. Non-GAAP net income for the third quarter of 2011 was $1.2 million, or $0.06 per diluted share, compared to non-GAAP net income of $3.8 million, or $0.16 per diluted share for the third quarter of 2010. Non-GAAP net income and non-GAAP net income per diluted share in the third quarter of 2011 exclude $1.8 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 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.
Stuart Huizinga, chief financial officer of eHealth, stated, "Our tax provision of $271,000 for the quarter significantly exceeded our pre-tax GAAP net income of $22,000. This was driven mainly by an increase in our estimated effective tax rate for 2011. Given that in the first half of the year we booked tax expense using the lower estimate, we recorded a one-time tax item this quarter to catch us up to the new estimated rate year-to-date. The main reason for the increase in our estimated 2011 tax rate relates to our decision to increase certain non-deductible operating expenses that we expect to incur this year including our costs related to government affairs. The one-time tax expenses had a one cent impact on earnings per share."
Cash Flow and Cash Balance -- Cash flow from operations for the third quarter of 2011 was $5.4 million, a 4% decrease compared to $5.6 million for the third quarter of 2010.
Cash and cash equivalents as of September 30, 2011 totaled $126.5 million, compared to $135.9 million as of June 30, 2011. The change in cash and cash equivalents reflects $14.2 million used to repurchase 1.1 million shares of our common stock related to our on-going stock repurchase program which went into effect during the third quarter of 2011.
Year-to-Date Results
Revenue -- Revenue totaled $108.5 million for the nine months ended September 30, 2011, a 1% decrease compared to revenue of $109.7 million for the nine months ended September 30, 2010.
Operating Income -- Operating income for the nine months ended September 30, 2011 was $8.9 million, a 46% decrease compared to operating income of $16.5 million for the nine months ended September 30, 2010. Operating margins were 8% and 15% in the nine-month periods ended September 30, 2011 and 2010, respectively.
EBITDA -- EBITDA for the nine months ended September 30, 2011 was $17.6 million, a 26% decrease compared to EBITDA of $23.6 million for the nine months ended September 30, 2010.
Pre-tax Income -- Pre-tax income for the nine months ended September 30, 2011 was $8.8 million, a 47% decrease compared to pre-tax income of $16.5 million for the nine months ended September 30, 2010.
Net Income -- Net income for the nine months ended September 30, 2011 was $4.5 million, or $0.20 per diluted share, compared to net income for the nine months ended September 30, 2010 of $8.9 million, or $0.37 per diluted share.
Cash Flow -- Cash flow from operations for the nine months ended September 30, 2011 was $20.0 million, a 19% increase compared to $16.9 million for the nine months ended September 30, 2010.
Cash and cash equivalents as of September 30, 2011 totaled $126.5 million, compared to $139.1 million as of September 30, 2010. The change in cash and cash equivalents reflects $35.5 million used to repurchase 2.7 million shares of our common stock related to our stock repurchase programs in effect since September 30, 2010.
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, October 25, 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 866-700-6979 for domestic callers and 617-213-8836 for international callers. The participant passcode is 25830541. 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 92492872. 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 anticipated opportunities and expected performance of our Medicare business in the fourth quarter and 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 success in marketing and selling Medicare-related health insurance plans and leads for such plans; eHealth's ability to hire, train and retain licensed health insurance agents for its Medicare business; the need for health insurance carrier and regulatory approvals in connection with the marketing of Medicare related insurance products; government disapproval of our use of marketing material, including call center scripts and our websites, to sell Medicare related health 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; 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; 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; success in the sale of sponsorship advertising; the licensing of the use of eHealth's technology or our performance of services pursuant to government contracts; 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; government approval of marketing material, including websites relating to PlanPrescriber partner Medicare product lead referrals; 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 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; 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 September 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 (loss).
-- Non-GAAP net income for the three months ended September 30, 2010 and
2011 consists of GAAP net income (loss) 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 (loss) and GAAP net income (loss) 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, September 30,
2010 2011
-------------- --------------
Assets (1)
Current assets:
Cash and cash equivalents $ 128,074 $ 126,501
Accounts receivable 10,810 3,877
Deferred income taxes 5,347 4,471
Prepaid expenses and other current assets 4,361 3,311
-------------- --------------
Total current assets 148,592 138,160
Property and equipment, net 4,528 4,713
Deferred income taxes 3,119 3,306
Other assets 3,248 5,695
Acquired intangible assets, net 12,262 10,981
Goodwill 14,096 14,096
-------------- --------------
Total assets $ 185,845 $ 176,951
============== ==============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 3,573 $ 1,920
Accrued compensation and benefits 7,523 7,993
Accrued marketing expenses 3,644 4,335
Deferred revenue 2,785 1,153
Other current liabilities 2,672 1,206
-------------- --------------
Total current liabilities 20,197 16,607
Other non-current liabilities 3,451 3,748
Stockholders' equity:
Common stock 26 26
Additional paid-in capital 203,231 211,223
Treasury stock, at cost (56,202) (74,235)
Retained earnings 14,937 19,401
Accumulated other comprehensive income 205 181
-------------- --------------
Total stockholders' equity 162,197 156,596
-------------- --------------
Total liabilities and stockholders' equity $ 185,845 $ 176,951
============== ==============
(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 (LOSS)
(In thousands, except per share amounts, unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- ------------------------
2010 2011 2010 2011
------------ ----------- ----------- -----------
Revenue:
Commission $ 32,040 $ 28,206 $ 95,685 $ 89,045
Other 5,411 6,581 14,011 19,483
------------ ----------- ----------- -----------
Total revenue 37,451 34,787 109,696 108,528
Operating costs and
expenses:
Cost of revenue 900 1,781 2,759 6,987
Marketing and
advertising (1) 16,094 13,826 44,795 38,403
Customer care and
enrollment (1) 4,691 6,245 12,539 16,265
Technology and
content (1) 4,619 5,548 14,199 16,433
General and
administrative (1) 5,879 6,917 18,200 20,299
Amortization of
acquired intangible
assets 426 427 711 1,281
------------ ----------- ----------- -----------
Total operating costs
and expenses 32,609 34,744 93,203 99,668
------------ ----------- ----------- -----------
Income from operations 4,842 43 16,493 8,860
Interest and other
income (expense), net (3) (21) 13 (61)
------------ ----------- ----------- -----------
Income before
provision for income
taxes 4,839 22 16,506 8,799
Provision for income
taxes 2,241 271 7,634 4,335
------------ ----------- ----------- -----------
Net income (loss) $ 2,598 $ (249) $ 8,872 $ 4,464
============ =========== =========== ===========
Net income (loss) per
share:
Basic $ 0.11 $ (0.01) $ 0.38 $ 0.21
Diluted $ 0.11 $ (0.01) $ 0.37 $ 0.20
Weighted-average
number of shares used
in per share amounts:
Basic 23,437 21,054 23,474 21,264
Diluted 24,079 21,054 24,227 21,974
__________
(1) Includes stock-
based compensation
expense as follows:
Marketing and
advertising $ 199 $ 252 $ 607 $ 774
Customer care
and enrollment 101 83 282 264
Technology and
content 383 411 1,239 1,336
General and
administrative 885 1,078 2,689 3,248
------------ ----------- ----------- -----------
Total $ 1,568 $ 1,824 $ 4,817 $ 5,622
============ =========== =========== ===========
EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2010 2011 2010 2011
----------- ----------- ----------- -----------
Operating activities
Net income (loss) $ 2,598 $ (249) $ 8,872 $ 4,464
Adjustments to
reconcile net income
(loss) to net cash
provided by operating
activities:
Deferred income taxes 1,874 32 6,810 3,696
Depreciation and
amortization 537 533 1,580 1,799
Amortization of
acquired intangible
assets 426 427 711 1,281
Amortization and
accretion on
marketable
securities, net -- -- 50 --
Stock-based
compensation expense 1,568 1,824 4,817 5,622
Excess tax benefits
from stock-based
compensation (2,123) (181) (7,360) (2,734)
Deferred rent (7) 27 (5) 7
Loss on disposal of
property and
equipment 3 35 9 38
Changes in operating
assets and
liabilities:
Accounts receivable (655) 1,121 (554) 7,698
Prepaid expenses
and other current
assets (2,532) 351 (1,845) 1,876
Other assets (66) (154) 25 (128)
Accounts payable 2,862 (485) 2,863 (1,654)
Accrued
compensation and
benefits 909 1,134 1,585 455
Accrued marketing
expenses 107 921 365 691
Deferred revenue 67 497 90 (1,632)
Other current
liabilities 43 (420) (1,145) (1,475)
----------- ----------- ----------- -----------
Net cash provided by
operating activities 5,611 5,413 16,868 20,004
----------- ----------- ----------- -----------
Investing activities
Purchases of property
and equipment (1,139) (693) (2,483) (1,932)
Acquisition of
PlanPrescriber, net of
cash acquired -- -- (27,203) --
Purchase of other
assets -- (137) -- (3,906)
Maturities of
marketable securities -- -- 22,100 --
----------- ----------- ----------- -----------
Net cash used in
investing activities (1,139) (830) (7,586) (5,838)
----------- ----------- ----------- -----------
Financing activities
Proceeds from exercise
of common stock
options 4 112 468 184
Cash used to net-share
settle equity awards (18) (4) (575) (548)
Excess tax benefits
from stock-based
compensation 2,123 181 7,360 2,734
Repurchases of common
stock (8,724) (14,237) (8,724) (18,033)
Principal payments in
connection with
capital lease (12) (16) (33) (46)
----------- ----------- ----------- -----------
Net cash provided by
(used in) financing
activities 6,627 (13,964) (1,504) (15,709)
----------- ----------- ----------- -----------
Effect of exchange rate
changes on cash and
cash equivalents (10) (11) (4) (30)
----------- ----------- ----------- -----------
Net increase (decrease)
in cash and cash
equivalents (2,165) (9,392) 7,774 (1,573)
Cash and cash
equivalents at
beginning of period 141,278 135,893 131,339 128,074
----------- ----------- ----------- -----------
Cash and cash
equivalents at end of
period $ 139,113 $ 126,501 $ 139,113 $ 126,501
=========== =========== =========== ===========
EHEALTH, INC.
SUMMARY OF SELECTED METRICS
(Unaudited)
Three Months Ended Three Months Ended
Key Metrics: September 30, 2010 September 30, 2011
------------------ ------------------
Operating cash flows (1) $ 5,611,000 $ 5,413,000
IFP submitted applications (2) 143,200 114,800
IFP approved members (3) 117,300 95,400
Total approved members (4) 152,800 140,300
Commission revenue (5) $ 32,040,000 $ 28,206,000
Commission revenue per estimated
member for the period (6) $ 41.78 $ 34,94
Total revenue (7) $ 37,451,000 $ 34,787,000
Total revenue per estimated member
for the period (8) $ 48.84 $ 43.09
As of As of
September 30, 2010 September 30, 2011
------------------ ------------------
IFP estimated membership (9) 679,500 683,400
Total estimated membership (10) 778,800 810,400
Three Months Ended Three Months Ended
September 30, 2010 September 30, 2011
------------------ ------------------
Marketing and advertising expenses
(11) $ 16,094,000 $ 13,826,000
Marketing and advertising expenses
as a percentage of total revenue
(12) 43% 40%
Other Metrics:
Source of IFP submitted
applications (as a percentage of
total IFP applications for the
period):
Direct (13) 43% 44%
Marketing partners (14) 30% 33%
Online advertising (15) 27% 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, student or Medicare-related health insurance plans.
(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 (loss).
(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 (loss).
(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 (loss).
(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 SEPTEMBER 30, 2011
(In thousands, except per share amounts, unaudited)
Statement of Income (Loss) Reconciliation
Three Months Ended September 30, 2011
-----------------------------------------------------
GAAP Non-GAAP
Percent Percent
GAAP of Total Non-GAAP of Total
Reported Revenue Adjustments Results Revenue
-------- --------- ----------- -------- --------
Revenue:
Commission $ 28,206 81% $ -- $ 28,206 81%
Other 6,581 19 -- 6,581 19
-------- --------- ----------- -------- --------
Total revenue 34,787 100 -- 34,787 100
Operating costs and
expenses:
Cost of revenue 1,781 5 -- 1,781 5
Marketing and
advertising (1) 13,826 40 (252) 13,574 39
Customer care and
enrollment (1) 6,245 18 (83) 6,162 18
Technology and
content (1) 5,548 16 (411) 5,137 15
General and
administrative (1) 6,917 20 (1,078) 5,839 17
Amortization of
acquired
intangible assets
(2) 427 1 (427) -- --
-------- --------- ----------- -------- --------
Total operating costs
and expenses 34,744 100 (2,251) 32,493 93
-------- --------- ----------- -------- --------
Income from
operations 43 0 2,251 2,294 7
Interest and other
income (expense),
net (21) (0) -- (21) (0)
-------- --------- ----------- -------- --------
Income before
provision for income
taxes 22 0 2,251 2,273 7
Provision for income
taxes (3) 271 1 781 1,052 3
-------- --------- ----------- -------- --------
Net income (loss) (4) $ (249) (1)% $ 1,470 $ 1,221 4%
======== ========= =========== ======== ========
Net income (loss) per
share: (4)
Basic $ (0.01) $ 0.07 $ 0.06
Diluted $ (0.01) $ 0.07 $ 0.06
Weighted-average
number of shares
used in per share
amounts:
Basic 21,054 21,054 21,054
Diluted 21,054 21,789 21,789
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 $0.8 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 SEPTEMBER 30, 2010
(In thousands, except per share amounts, unaudited)
Statement of Income Reconciliation
Three Months Ended September 30, 2010
---------------------------------------------------
GAAP Non-GAAP
Percent Percent
GAAP of Total Non-GAAP of Total
Reported Revenue Adjustments Results Revenue
-------- -------- ----------- -------- --------
Revenue:
Commission $ 32,040 86% $ -- $ 32,040 86%
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, net (3) (0) -- (3) (0)
-------- -------- ----------- -------- --------
Income before provision
for 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 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 $0.8 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 NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2011
(In thousands, unaudited)
EBITDA Reconciliation
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
2010 2011 2010 2011
--------- -------- -------- ---------
Net income (loss) $ 2,598 $ (249) $ 8,872 $ 4,464
Stock-based compensation expense (1) 1,568 1,824 4,817 5,622
Depreciation and amortization (2) 537 533 1,580 1,799
Amortization of acquired intangible
assets (2) 426 427 711 1,281
Interest and other (income) expense,
net (3) 3 21 (13) 61
Provision for income taxes (4) 2,241 271 7,634 4,335
--------- -------- -------- ---------
EBITDA $ 7,373 $ 2,827 $ 23,601 $ 17,562
========= ======== ======== =========
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: eHealthInsurance