First Quarter 2017 Overview
-
Revenue for the first quarter of 2017 was $78.9 million, an increase
of 7% compared to $73.8 million for the first quarter of 2016.
-
Net income for the first quarter of 2017 was $33.4 million, an
increase of 85% compared to $18.0 million for the first quarter of
2016.
-
Adjusted EBITDA for the first quarter of 2017 was $35.0 million, an
increase of 31% compared to $26.8 million for the first quarter of
2016.
-
Cash provided by operations for the first quarter of 2017 was $8.4
million compared to cash provided by operations of $4.7 million for
the first quarter of 2016.
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Apr. 27, 2017--
eHealth, Inc. (NASDAQ: EHTH), the nation’s first and largest private
health insurance exchange, announced today its financial results for the
first quarter of 2017.
Scott Flanders, chief executive officer of eHealth stated, "Our first
quarter results demonstrate the significant revenue and earnings
generation potential of our Medicare business as well the operating and
financial leverage inherent in our individual and family plan business,
which continues to be solidly profitable despite the challenging market
environment and declining member base. At the same time, first quarter
results reflect the ongoing regulatory challenges in the individual and
family market as well as a number of strategic changes we are making,
including a shift in our Medicare marketing strategy and a stronger
emphasis on Medicare member profitability, each of which impacted our
Medicare application volumes during the quarter."
GAAP — First Quarter of 2017 Results
Revenue — Revenue for the first quarter of 2017 totaled $78.9
million, a 7% increase compared to $73.8 million for the first quarter
of 2016. Commission revenue for the first quarter of 2017 totaled $76.2
million, a 10% increase compared to $69.4 million for the first quarter
of 2016. Other revenue for the first quarter of 2017 was $2.8 million, a
38% decrease compared to $4.5 million for the first quarter of 2016.
Revenue from our Medicare segment was $58.0 million for the first
quarter of 2017, a 33% increase compared to $43.5 million in the first
quarter of 2016. Revenue from our Individual, Family and Small Business
segment was $21.0 million for the first quarter of 2017, a 31% decrease
compared to $30.4 million for the first quarter of 2016.
Income from Operations — Income from operations for the first
quarter of 2017 was $31.8 million compared to $23.7 million for the
first quarter of 2016. Operating margin was 40% for the first quarter of
2017 compared to 32% for the first quarter of 2016.
Pre-tax Income — Pre-tax income for the first quarter of 2017 was
$31.8 million compared to $23.7 million for the first quarter of 2016.
Provision (Benefit) for Income Taxes — Benefit for income taxes
for the first quarter of 2017 was $1.6 million compared to provision for
income taxes of $5.6 million for the first quarter of 2016.
Net Income — Net income for the first quarter of 2017 was $33.4
million, or $1.80 per diluted share, compared to net income of $18.0
million, or $0.99 per diluted share, for the first quarter of 2016.
Segment Profit — Profit from our Medicare segment was
$30.7 million for the first quarter of 2017, a 71% increase compared to
a profit of $17.9 million for the first quarter of 2016. Profit from our
Individual, Family and Small Business segment was $11.1 million for the
first quarter of 2017, a 29% decrease compared to a profit of $15.6
million for the first quarter of 2016. Segment profit is calculated as
revenue for the applicable segment less Marketing and Advertising,
Customer Care and Enrollment, Technology and Content and General and
Administrative operating expenses, excluding stock-based compensation,
depreciation and amortization expense and amortization of intangible
assets, that are directly attributable to the applicable segment and
other indirect Marketing and Advertising, Customer Care and Enrollment
and Technology and Content operating expenses, excluding stock-based
compensation, depreciation and amortization expense and amortization of
intangible assets, allocated to the applicable segment based on usage.
Other indirect general and administrative operating expenses are managed
in a corporate shared services environment and, since they are not the
responsibility of segment operating management, are not allocated to the
operating segments and instead reported within Corporate.
Non-GAAP — First Quarter of 2017 Results
Non-GAAP Operating Income & Non-GAAP Net Income — Non-GAAP
operating income for the first quarter of 2017 was $34.2 million
compared to $25.8 million for the first quarter of 2016. Non-GAAP
operating margin for the first quarter of 2017 was 43% compared to 35%
for the first quarter of 2016. Non-GAAP net income for the first quarter
of 2017 was $35.8 million, or $1.93 per diluted share, compared to $20.1
million, or $1.10 per diluted share, for the first quarter of 2016.
Non-GAAP operating income, non-GAAP net income and non-GAAP net income
per diluted share for the first quarter of 2017 exclude $2.1 million of
stock-based compensation expense and $0.3 million of amortization of
intangible assets. Non-GAAP operating income, non-GAAP net income and
non-GAAP net income per diluted share for the first quarter of 2016
excludes $1.8 million of stock-based compensation expense and $0.3
million of amortization of intangible assets.
Adjusted EBITDA — Adjusted EBITDA for the first quarter of
2017 was $35.0 million compared to $26.8 million for the first quarter
of 2016. Adjusted EBITDA is calculated by adding stock-based
compensation, depreciation and amortization expense, amortization of
intangible assets, other income (expense), net and provision (benefit)
for income taxes to GAAP net income.
Membership & Submitted Applications
Membership — Total estimated membership as of March 31, 2017 was
892,700 members, a 23% decrease compared to 1,152,900 we reported as of
March 31, 2016. Estimated Medicare membership as of March 31, 2017 was
284,900, a 29% increase compared to 220,300 we reported as of March 31,
2016. Estimated individual and family plan membership as of March 31,
2017 was 265,200 members, a 49% decrease compared to 523,000 we reported
as of March 31, 2016.
Submitted Applications — Submitted applications for all Medicare
products, which includes Medicare Advantage, Medicare Supplement and
Prescription Drug Plans was 31,300 applications in first quarter of
2017, a 1% increase compared to 30,900 applications in the first quarter
of 2016. Submitted applications for individual and family plan products
decreased 70% in the first quarter of 2017 to 22,000 applications
covering 30,600 individuals compared to 74,300 applications covering
97,100 individuals in the first quarter of 2016.
Cash — First Quarter 2017
Cash Flows — Net cash provided by operating activities was $8.4
million for the first quarter of 2017 compared to net cash provided by
operating activities of $4.7 million for the first quarter of 2016.
2017 Guidance
eHealth is reaffirming revenue, Adjusted EBITDA and GAAP net loss per
share guidance and providing updated segment revenue and profitability
and Non-GAAP net loss per share guidance for the full year ending
December 31, 2017 based on information available as of April 27, 2017.
These expectations are forward-looking statements and eHealth assumes no
obligation to update these statements. Results may be materially
different and are affected by the risk factors and uncertainties
identified in this release and in eHealth’s annual and quarterly filings
with the Securities and Exchange Commission.
-
Total revenue is expected to be in the range of $165 million to $175
million. Revenue from the Medicare segment is expected to be in the
range of $96.5 million to $101.5 million. Revenue from the Individual,
Family and Small Business segment is expected to be in the range of
$68.5 million to $73.5 million.
-
Adjusted EBITDA(a) is expected to be in the range of
$(14.1) million to $(16.1) million.
|
|
|
In millions
|
|
|
|
|
|
GAAP net loss
|
|
$
|
(27.8
|
)
|
|
$
|
(29.8
|
)
|
|
Stock-based compensation expense
|
|
10.6
|
|
|
10.6
|
|
|
Depreciation and amortization
|
|
3.4
|
|
|
3.4
|
|
|
Amortization of intangible assets
|
|
1.0
|
|
|
1.0
|
|
|
Other income (expense), net
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
Benefit for income taxes
|
|
(1.2
|
)
|
|
(1.2
|
)
|
|
Adjusted EBITDA(a)
|
|
$
|
(14.1
|
)
|
|
$
|
(16.1
|
)
|
|
|
-
Medicare segment loss(b) is expected to be in the range of
$(11.5) million to $(12.5) million. Individual, Family and Small
Business segment profit(c) is expected to be in the range
of $23.5 million to $24.5 million. Corporate(d) shared
service expenses, excluding stock-based compensation and depreciation
and amortization expense, is expected to be approximately $26.8
million.
-
GAAP net loss per share is expected to be in the range of $(1.49) to
$(1.59) per share and
-
Non-GAAP net loss per share(d) is expected to be in the
range of $(0.86) to $(0.96) per share.
|
|
|
GAAP net loss per diluted share
|
|
$
|
(1.49
|
)
|
|
$
|
(1.59
|
)
|
|
Stock-based compensation expense
|
|
0.57
|
|
|
0.57
|
|
|
Amortization of intangible assets
|
|
0.06
|
|
|
0.06
|
|
|
Non-GAAP net loss per diluted share(d)
|
|
$
|
(0.86
|
)
|
|
$
|
(0.96
|
)
|
|
|
|
|
|
|
(a)
|
Adjusted EBITDA is calculated by adding stock-based compensation,
depreciation and amortization expense, amortization of intangible
assets, other income (expense) and provision (benefit) for income
taxes to GAAP net income (loss).
|
|
|
|
|
|
|
(b)
|
Segment profit (loss) is calculated as revenue for the applicable
segment less Marketing and Advertising, Customer Care and
Enrollment, Technology and Content and General and Administrative
operating expenses, excluding stock-based compensation, depreciation
and amortization expense and amortization of intangible assets, that
are directly attributable to the applicable segment and other
indirect Marketing and Advertising, Customer Care and Enrollment and
Technology and Content operating expenses, excluding stock-based
compensation, depreciation and amortization expense and amortization
of intangible assets, allocated to the applicable segment based on
usage.
|
|
|
|
|
|
|
(c)
|
Corporate consists of other indirect General and Administrative
operating expenses, excluding stock-based compensation and
depreciation and amortization expense, which are managed in a
corporate shared services environment and, since they are not the
responsibility of segment operating management, are not allocated to
the reportable segments.
|
|
|
|
|
|
|
(d)
|
Non-GAAP net loss per share is calculated by excluding stock-based
compensation expense and intangible asset amortization expense to
GAAP net income (loss).
|
|
|
|
|
Webcast and Conference Call Information
A Webcast and conference call will be held today, Thursday, April 27,
2017 at 5:00 p.m. Eastern / 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 877 930.8066 for domestic callers and 253 336.8042 for
international callers. The participant passcode is 10113436. A telephone
replay will be available two hours following the conclusion of the call
for a period of seven days and can be accessed by dialing 855 859.2056
for domestic callers and 404 537.3406 for international callers. The
call ID for the replay is 10113436. 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) operates eHealth.com,
the nation's first and largest private health insurance exchange where
individuals, families and small businesses can compare health insurance
products from leading insurers side by side and purchase and enroll in
coverage online. eHealth offers thousands of individual, family and
small business health plans underwritten by many of the nation's leading
health insurance companies. eHealth (through its subsidiaries) is
licensed to sell health insurance in all 50 states and the District of
Columbia. eHealth also offers educational resources and powerful online
and pharmacy-based tools to help Medicare beneficiaries navigate
Medicare health insurance options, choose the right plan and enroll in
select plans online through PlanPrescriber.com (www.PlanPrescriber.com),
eHealthMedicare.com (www.eHealthMedicare.com)
and Medicare.com (www.Medicare.com).
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 statement regarding the significant revenue
and earnings generation potential of our Medicare business, operating
and financial leverage inherent in our individual and family plan
business, profitability of our individual and family plan business
despite challenging market environment and declining member base,
strategic changes we are making, shift in our Medicare marketing
strategy and a stronger emphasis on Medicare member profitability,
future events and our guidance for the full year ending December 31,
2017, including our guidance for total revenue, revenue from the
Medicare segment, revenue from the Individual, Family and Small Business
segment, Adjusted EBITDA, profit (loss) from the Medicare segment,
profit (loss) from the Individual, Family and Small Business segment,
Corporate shared service expense, GAAP net loss per share and Non-GAAP
net loss per share. 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; our ability to retain
existing members and enroll a large number of new members during the
annual healthcare reform open enrollment period and Medicare annual
enrollment period; the impact of annual enrollment period for the
purchase of individual and family health insurance and its timing on our
recognition of revenue; our ability to sell qualified health insurance
plans to subsidy-eligible individuals and to enroll subsidy eligible
individuals through government-run health insurance exchanges; decreased
conversion rates for health insurance exchange enrollments as a result
of the federal exchange changes to enrollment; competition, including
competition from government-run health insurance exchanges; seasonality
of our business and the fluctuation of our operating results; our
ability to retain existing members and limit member turnover; changes in
consumer behaviors and their selection of individual and family health
insurance products, including the selection of products for which we
receive lower commissions; a reduction of product offerings among
carriers and the resulting impact on our commission revenue; carriers
exiting the market of selling individual and family health insurance and
the resulting impact on our supply and commission revenue; our ability
to execute on our growth strategy in the Medicare and small business
health insurance markets; the impact of increased health insurance costs
on demand; our ability to timely receive and accurately predict the
amount of commission payments from health insurance carriers; timing of
commission payments from health insurance carriers; medical loss ratio
requirements; delays in our receipt of items required to recognize
Medicare revenue; changes in member conversion rates; our ability to
accurately estimate membership; our relationships with health insurance
carriers; customer concentration and consolidation of the health
insurance industry; our success in marketing and selling health
insurance plans and our unit cost of acquisition; our ability to hire,
train and retain licensed health insurance agents and other employees;
the need for health insurance carrier and regulatory approvals in
connection with the marketing of Medicare-related insurance products;
costs of acquiring new members; scalability of the Medicare business;
lack of membership growth and retention rates; consumers satisfaction of
our service; changes in competitive landscape; our ability to attract
and to convert online visitors into paying members; changes in products
offered on our ecommerce platform; changes and reductions in commission
rates; maintaining and enhancing our brand identity; our ability to
derive desired benefits from investments in our business, including
membership growth initiatives; dependence on acceptance of the Internet
as a marketplace for the purchase and sale of health insurance; reliance
on marketing partners; timing of receipt and accuracy of commission
reports; payment practices of health insurance carriers; dependence on
our operations in China; changes in laws and regulations, including in
connection with healthcare reform and/or 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 our ecommerce platform and underlying
network infrastructure. Other factors that could cause operating,
financial and other results to differ are described in eHealth’s most
recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K filed
with the Securities and Exchange Commission and available on the
investor relations page of eHealth’s website at http://www.ehealthinsurance.com
and on the Securities and Exchange Commission’s website at www.sec.gov.
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 (loss); non-GAAP operating margins; adjusted earnings before
interest, taxes, depreciation and amortization (Adjusted EBITDA);
non-GAAP net income (loss) and non-GAAP net income (loss) per diluted
share.
-
Non-GAAP operating income (loss) consists of GAAP operating income
(loss) excluding the following items:
-
the effects of expensing stock-based compensation related to stock
options and restricted stock units in accordance with FASB ASC
Topic 718, and
-
amortization of intangible assets.
-
Non-GAAP operating margins are calculated by dividing non-GAAP
operating income (loss) by GAAP total revenue.
-
Adjusted EBITDA is calculated by adding stock-based compensation,
depreciation and amortization expense, amortization of intangible
assets, other income (expense) and provision (benefit) for income
taxes to GAAP net income (loss).
eHealth believes that the presentation of these non-GAAP financial
measures provide important supplemental information to management and
investors regarding financial and business trends relating to eHealth’s
financial condition and results of operations. Management believes that
the use of these non-GAAP financial measures provides consistency and
comparability with eHealth’s past financial reports. Management also
believes that the items described above provides an additional measure
of eHealth’s operating results and facilitates comparisons of eHealth’s
core operating performance against prior periods and business model
objectives. This information is provided to investors in order to
facilitate additional analyses of past, present and future operating
performance and as a supplemental means to evaluate eHealth’s ongoing
operations. eHealth believes that these non-GAAP financial measures are
useful to investors in their assessment of eHealth’s operating
performance.
Non-GAAP operating income (loss), non-GAAP operating margins, Adjusted
EBITDA, non-GAAP net income (loss) and non-GAAP net income (loss) 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 eHealth’s business and do not reflect income tax as
determined in accordance with GAAP. As a result, you should not consider
these measures in isolation or as a substitute for analysis of eHealth’s
results as reported under GAAP. eHealth expects to continue to incur the
stock-based compensation costs and purchased intangible asset
amortization costs described above, and exclusion of these costs, and
their related income tax benefits, from non-GAAP financial measures
should not be construed as an inference that these costs are unusual or
infrequent. eHealth compensates for these limitations by prominently
disclosing GAAP operating income (loss), GAAP operating margins, GAAP
net income (loss) and GAAP net income (loss) per diluted share and
providing investors with reconciliations from eHealth’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,
|
|
March 31,
|
|
|
|
2016
|
|
2017
|
|
|
|
(1)
|
|
|
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
61,781
|
|
|
$
|
68,228
|
|
|
Accounts receivable
|
|
9,213
|
|
|
27,902
|
|
|
Prepaid expenses and other current assets
|
|
5,148
|
|
|
4,452
|
|
|
Total current assets
|
|
76,142
|
|
|
100,582
|
|
|
Property and equipment, net
|
|
5,608
|
|
|
5,703
|
|
|
Other assets
|
|
4,473
|
|
|
4,416
|
|
|
Intangible assets, net
|
|
8,580
|
|
|
8,320
|
|
|
Goodwill
|
|
14,096
|
|
|
14,096
|
|
|
Total assets
|
|
$
|
108,899
|
|
|
$
|
133,117
|
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
5,112
|
|
|
$
|
1,699
|
|
|
Accrued compensation and benefits
|
|
10,920
|
|
|
7,897
|
|
|
Accrued marketing expenses
|
|
7,158
|
|
|
3,246
|
|
|
Deferred revenue
|
|
959
|
|
|
730
|
|
|
Other current liabilities
|
|
3,775
|
|
|
5,259
|
|
|
Total current liabilities
|
|
27,924
|
|
|
18,831
|
|
|
Non-current liabilities
|
|
3,374
|
|
|
1,425
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
Common stock
|
|
29
|
|
|
29
|
|
|
Additional paid-in capital
|
|
272,778
|
|
|
274,611
|
|
|
Treasury stock, at cost
|
|
(199,998
|
)
|
|
(199,998
|
)
|
|
Retained earnings
|
|
4,616
|
|
|
38,037
|
|
|
Accumulated other comprehensive income
|
|
176
|
|
|
182
|
|
|
Total stockholders’ equity
|
|
77,601
|
|
|
112,861
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
108,899
|
|
|
$
|
133,117
|
|
|
|
|
(1)
|
The condensed consolidated balance sheet at December 31, 2016 has
been derived from the audited consolidated financial statements at
that date.
|
|
|
|
EHEALTH, INC.
|
|
CONDENSED CONSOLIDATED INCOME STATEMENTS
|
|
(In thousands, except per share amounts, unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2016
|
|
2017
|
|
Revenue
|
|
|
|
|
|
Commission
|
|
$
|
69,387
|
|
|
$
|
76,182
|
|
|
Other
|
|
4,457
|
|
|
2,757
|
|
|
Total revenue
|
|
73,844
|
|
|
78,939
|
|
|
Operating costs and expenses:
|
|
|
|
|
|
Cost of revenue
|
|
2,184
|
|
|
1,629
|
|
|
Marketing and advertising
|
|
20,882
|
|
|
15,055
|
|
|
Customer care and enrollment
|
|
10,400
|
|
|
12,109
|
|
|
Technology and content
|
|
8,507
|
|
|
8,072
|
|
|
General and administrative
|
|
7,928
|
|
|
9,992
|
|
|
Amortization of intangible assets
|
|
260
|
|
|
260
|
|
|
Total operating costs and expenses
|
|
50,161
|
|
|
47,117
|
|
|
Income from operations
|
|
23,683
|
|
|
31,822
|
|
|
Other income (expense), net
|
|
(11
|
)
|
|
26
|
|
|
Income before provision (benefit) for income taxes
|
|
23,672
|
|
|
31,848
|
|
|
Provision (benefit) for income taxes
|
|
5,638
|
|
|
(1,573
|
)
|
|
Net income
|
|
$
|
18,034
|
|
|
$
|
33,421
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
Basic
|
|
$
|
0.99
|
|
|
$
|
1.82
|
|
|
Diluted
|
|
$
|
0.99
|
|
|
$
|
1.80
|
|
|
|
|
|
|
|
|
Weighted-average number of shares used in per share amounts:
|
|
|
|
|
|
Basic
|
|
18,153
|
|
|
18,370
|
|
|
Diluted
|
|
18,217
|
|
|
18,561
|
|
|
|
|
|
|
|
|
(1) Includes stock-based compensation as follows:
|
|
|
|
|
|
Marketing and advertising
|
|
$
|
555
|
|
|
$
|
215
|
|
|
Customer care and enrollment
|
|
123
|
|
|
12
|
|
|
Technology and content
|
|
435
|
|
|
394
|
|
|
General and administrative
|
|
719
|
|
|
1,512
|
|
|
Total stock-based compensation expense
|
|
$
|
1,832
|
|
|
$
|
2,133
|
|
|
|
|
EHEALTH, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(In thousands, unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2016
|
|
2017
|
|
Operating activities
|
|
|
|
|
|
Net income
|
|
$
|
18,034
|
|
|
$
|
33,421
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
1,005
|
|
|
762
|
|
|
Amortization of internally developed software
|
|
214
|
|
|
291
|
|
|
Amortization of book-of-business consideration
|
|
1,597
|
|
|
1,157
|
|
|
Amortization of intangible assets
|
|
260
|
|
|
260
|
|
|
Stock-based compensation expense
|
|
1,832
|
|
|
2,133
|
|
|
Other non-cash items
|
|
(31
|
)
|
|
(59
|
)
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable
|
|
(9,978
|
)
|
|
(18,689
|
)
|
|
Prepaid expenses and other assets
|
|
(153
|
)
|
|
107
|
|
|
Accounts payable
|
|
(1,265
|
)
|
|
(3,417
|
)
|
|
Accrued compensation and benefits
|
|
(5,835
|
)
|
|
(3,023
|
)
|
|
Accrued marketing expenses
|
|
(7,732
|
)
|
|
(3,912
|
)
|
|
Deferred revenue
|
|
(60
|
)
|
|
(229
|
)
|
|
Other liabilities
|
|
6,809
|
|
|
(374
|
)
|
|
Net cash provided by operating activities
|
|
4,697
|
|
|
8,428
|
|
|
Investing activities
|
|
|
|
|
|
Purchases of property and equipment and other assets
|
|
(411
|
)
|
|
(1,664
|
)
|
|
Net cash used in investing activities
|
|
(411
|
)
|
|
(1,664
|
)
|
|
Financing activities
|
|
|
|
|
|
Cash used to net-share settle equity awards
|
|
(276
|
)
|
|
(300
|
)
|
|
Principal payments in connection with capital leases
|
|
(20
|
)
|
|
(32
|
)
|
|
Net cash used in financing activities
|
|
(296
|
)
|
|
(332
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
(11
|
)
|
|
15
|
|
|
Net increase in cash and cash equivalents
|
|
3,979
|
|
|
6,447
|
|
|
Cash and cash equivalents at beginning of period
|
|
62,710
|
|
|
61,781
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
66,689
|
|
|
$
|
68,228
|
|
|
|
|
EHEALTH, INC.
|
|
SEGMENT INFORMATION
|
|
(In thousands, unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2016
|
|
2017
|
|
Revenue
|
|
|
|
|
|
Medicare (1)
|
|
$
|
43,467
|
|
|
$
|
57,974
|
|
|
Individual, Family and Small Business (2)
|
|
30,377
|
|
|
20,965
|
|
|
Total revenue
|
|
$
|
73,844
|
|
|
$
|
78,939
|
|
|
|
|
|
|
|
|
Segment profit
|
|
|
|
|
|
Medicare segment profit (3)
|
|
$
|
17,891
|
|
|
$
|
30,695
|
|
|
Individual, Family and Small Business segment profit (3)
|
|
15,555
|
|
|
11,079
|
|
|
Total segment profit
|
|
33,446
|
|
|
41,774
|
|
|
Corporate (4)
|
|
(6,666
|
)
|
|
(6,797
|
)
|
|
Stock-based compensation expense
|
|
(1,832
|
)
|
|
(2,133
|
)
|
|
Depreciation and amortization
|
|
(1,005
|
)
|
|
(762
|
)
|
|
Amortization of intangible assets
|
|
(260
|
)
|
|
(260
|
)
|
|
Other income (expense), net
|
|
(11
|
)
|
|
26
|
|
|
Income before provision (benefit) for income taxes
|
|
$
|
23,672
|
|
|
$
|
31,848
|
|
|
|
|
Note:
|
|
We evaluate our business performance and managing our operations as
two distinct reporting segments - Medicare and Individual, Family
and Small Business.
|
|
|
|
(1)
|
The Medicare segment consists primarily of amounts earned from our
sale of Medicare-related health insurance plans, including Medicare
Advantage, Medicare Supplement and Medicare Part D prescription drug
plans, and to a lesser extent, ancillary products sold to our
Medicare-eligible customers, including but not limited to, dental,
vision, life, short term disability and long term disability
insurance, our advertising program that allows Medicare-related
carriers to purchase advertising on a separate website developed,
hosted and maintained by us and our delivery and sale to third
parties of Medicare-related health insurance leads generated by our
ecommerce platforms and our marketing activities.
|
|
(2)
|
The Individual, Family and Small Business segment consists primarily
of amounts earned from our sale of individual and family and small
business health insurance plans and ancillary products sold to our
non-Medicare-eligible customers, including but not limited to,
dental, vision, life, short term disability and long term disability
insurance. To a lesser extent, the Individual, Family and Small
Business segment consists of amounts earned from our online
sponsorship program that allows carriers to purchase advertising
space in specific markets in a sponsorship area on our website, our
licensing to third parties the use of our health insurance ecommerce
technology and our delivery and sale to third parties of individual
and family health insurance leads generated by our ecommerce
platforms and our marketing activities.
|
|
(3)
|
Segment profit (loss) is calculated as revenue for the applicable
segment less Marketing and Advertising, Customer Care and
Enrollment, Technology and Content and General and Administrative
operating expenses, excluding stock-based compensation, depreciation
and amortization expense and amortization of intangible assets, that
are directly attributable to the applicable segment and other
indirect Marketing and Advertising, Customer Care and Enrollment and
Technology and Content operating expenses, excluding stock-based
compensation, depreciation and amortization expense and amortization
of intangible assets, allocated to the applicable segment based on
usage.
|
|
(4)
|
Corporate consists of other indirect General and Administrative
operating expenses, excluding stock-based compensation, depreciation
and amortization expense, which are managed in a corporate shared
services environment and, since they are not the responsibility of
segment operating management, are not allocated to the reportable
segments.
|
|
|
|
EHEALTH, INC.
|
|
SUMMARY OF SELECTED METRICS
|
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Key Metrics:
|
|
March 31,
|
|
|
|
|
|
|
|
|
|
Percent
|
|
|
|
2016
|
|
2017
|
|
Change
|
|
Submitted applications:
|
|
|
|
|
|
|
|
Medicare submitted applications (1)
|
|
30,900
|
|
31,300
|
|
1
|
%
|
|
IFP submitted applications (2)
|
|
74,300
|
|
22,000
|
|
(70
|
)%
|
|
Other submitted applications (3)
|
|
97,400
|
|
63,400
|
|
(35
|
)%
|
|
Total submitted applications (4)
|
|
202,600
|
|
116,700
|
|
(42
|
)%
|
|
|
|
|
|
|
|
|
|
Medicare Advantage submitted applications (5)
|
|
23,100
|
|
21,800
|
|
(6
|
)%
|
|
|
|
|
|
|
|
As of March 31,
|
|
|
|
|
|
|
|
|
|
Percent
|
|
|
|
2016
|
|
2017
|
|
Change
|
|
Estimated membership:
|
|
|
|
|
|
|
|
Medicare products (6)
|
|
220,300
|
|
284,900
|
|
29
|
%
|
|
IFP products (7)
|
|
523,000
|
|
265,200
|
|
(49
|
)%
|
|
Other products (8)
|
|
409,600
|
|
342,600
|
|
(16
|
)%
|
|
Total estimated membership (9)
|
|
1,152,900
|
|
892,700
|
|
(23
|
)%
|
|
|
|
|
(1)
|
Medicare-related health insurance applications submitted on our
website or through our customer care center during the period,
including Medicare Advantage, Medicare Part D prescription drug and
Medicare Supplement plans. Applications are counted as submitted
when the applicant completes the application and either clicks the
submit button on our website or provides verbal authorization to
submit the application. The applicant may have additional actions to
take before the application will be reviewed by the insurance
carrier, such as providing additional information. In addition, an
applicant may submit more than one application.
|
|
(2)
|
Major medical Individual and Family plan ("IFP") health insurance
applications submitted on our website during the period.
Applications are counted as submitted when the applicant completes
the application, clicks the submit button on our website and submits
the application to us. The applicant may have additional actions to
take before the application will be reviewed by the insurance
carrier, such as providing additional information. In addition, an
applicant may submit more than one application. We define our IFP
offerings as major medical individual and family health insurance
plans, which does not include Medicare-related, small business or
ancillary plans (primarily consisting of short-term, dental, life,
vision, and accident insurance plans).
|
|
(3)
|
Applications for health insurance plans other than Medicare and IFP
submitted on our website during the period. Applications for
ancillary plans are counted as submitted when the applicant
completes the application, clicks the submit button on our website
and submits the application to us. Applications for small business
plans are counted as submitted when the applicant completes the
application, the employees complete their applications, the
applicant submits the application to us and we submit the
application to the carrier. The applicant may have additional
actions to take before the application will be reviewed by the
insurance carrier, such as providing additional information. In
addition, an applicant may submit more than one application.
|
|
(4)
|
Applications for all health insurance plans submitted on our website
or through our customer care center during the period. See notes
(1), (2) and (3) above for more information as to what constitutes a
submitted application.
|
|
|
|
EHEALTH, INC.
|
|
SUMMARY OF SELECTED METRICS (Continued)
|
|
(Unaudited)
|
|
|
|
(5)
|
Medicare Advantage plan health insurance applications submitted on
our website or through our customer care center during the period.
Applications are counted as submitted when the applicant completes
the application and either clicks the submit button on our website
or provides verbal authorization to submit the application. The
applicant may have additional actions to take before the
application will be reviewed by the insurance carrier, such as
providing additional information. In addition, an applicant may
submit more than one application. Medicare Advantage submitted
applications are included in Medicare submitted applications - See
Note 1 above for more detail.
|
|
(6)
|
Estimated number of members active on Medicare-related health
insurance as of the date indicated. See the note below for
additional information regarding our calculation of Medicare
estimated membership.
|
|
(7)
|
Estimated number of members active on IFP health insurance plans as
of the date indicated. See the note below for additional information
regarding our calculation of IFP estimated membership.
|
|
(8)
|
Estimated number of members active on insurance plans other than
Medicare-related health insurance and IFP health insurance plans as
of the date indicated. See the note below for additional information
regarding our calculation of other estimated membership.
|
|
(9)
|
Estimated number of members active on all insurance plans as of the
date indicated. See the note below for additional information
regarding our calculation of total estimated membership.
|
Note:
Health insurance carriers bill and collect insurance premiums paid by
our members. Health insurance carriers do not report to us the number of
members that we have as of a given date. The majority of our members who
terminate their policies do so by discontinuing their premium payments
to the carrier and do not inform us of the cancellation. Also, some of
members pay their premiums less frequently than monthly. Given the
number of months required to observe non-payment of commissions in order
to confirm cancellations, we estimate the number of members who are
active on insurance policies as of a specified date. We estimate the
number of continuing members on all policies as of a specific date as
follows:
-
For Medicare-related health insurance plans, we take the number of
members for whom we have received or applied a commission payment
during the month of estimation.
-
For IFP health insurance plans, we take the sum of (i) the number of
IFP members for whom we have received or applied a commission payment
for a month that is up to six months prior to the date of estimation
after reducing that number using historical experience for assumed
member cancellations over the period being estimated; and (ii) the
number of approved members over that period (after reducing that
number by the percentage of members who do not accept their approved
policy from the same month of the previous year for estimated member
cancellations through the date of the estimate). To the extent we
determine we have received substantially all of the commission
payments related to a given month during the period being estimated,
we will take the number of members for whom we have received or
applied a commission payment during the month of estimation.
-
For ancillary health insurance plans (such as short-term, dental,
vision, accident and student), we take the sum of (i) the number of
members for whom we have received or applied a commission payment for
a month that is up to three months prior to the date of estimation
(after reducing that number using historical experience for assumed
member cancellations over the period being estimated); and (ii) the
number of approved members over that period (after reducing that
number using historical experience for an assumed number of members
who do not accept their approved policy from same month of the
previous year and for estimated member cancellations through the date
of the estimate). To the extent we determine we have received
substantially all of the commission payments related to a given month
during the period being estimated, we will take the number of members
for whom we have received or applied a commission payment during the
month of estimation. The one to three-month period varies by insurance
product and is largely dependent upon the timeliness of commission
payment and related reporting from the related carriers. For small
business health insurance plans, we estimate the number of members
using the number of initial members at the time the group is approved,
and we update this number for changes in membership if such changes
are reported to us by the group or carrier in the period it is
reported. However, groups generally notify the carrier directly of
policy cancellations and increases or decreases in group size without
informing us. Health insurance carriers often do not communicate
policy cancellation information or group size changes to us. We often
are made aware of policy cancellations and group size changes at the
time of annual renewal and update our membership statistics
accordingly in the period they are reported.
EHEALTH, INC.
SUMMARY OF SELECTED METRICS (Continued)
(Unaudited)
A member who purchases and is active on multiple standalone insurance
plans will be counted as a member more than once. For example, a member
who is active on both an individual and family health insurance plan and
a standalone dental plan will be counted as two continuing members.
After we have estimated membership for a period, we may receive
information from health insurance carriers that would have impacted the
estimate if we had received the information prior to the date of
estimation. We may receive commission payments or other information that
indicates that a member who was not included in our estimates for a
prior period was in fact an active member at that time, or that a member
who was included in our estimates was in fact not an active member of
ours. For instance, we reconcile information carriers provide to us and
may determine that we were not historically paid commissions owed to us,
which would cause us to have underestimated membership. Conversely,
carriers may require us to return commission payments paid in a prior
period due to policy cancellations for members we previously estimated
as being active. We do not update our estimated membership numbers
reported in previous periods. Instead, we reflect updated information
regarding our historical membership in the membership estimate for the
current period. As a result of the delay in our receipt of information
from insurance carriers, actual trends in our membership are most
discernible over periods longer than from one quarter to the next. In
addition, and as a result of the delay we experience in receiving
information about our membership, it is difficult for us to determine
with any certainty the impact of current conditions on our membership
retention. Health care reform and its impacts as well as other factors
could cause the assumptions and estimates that we make in connection
with estimating our membership to be inaccurate, which would cause our
membership estimates to be inaccurate.
|
|
|
EHEALTH, INC.
|
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
|
|
(In thousands, except per share amounts, unaudited)
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2016
|
|
2017
|
|
|
|
Amount
|
|
Percent of
Total
Revenue
|
|
Amount
|
|
Percent of
Total
Revenue
|
|
GAAP marketing and advertising expense
|
|
$
|
20,882
|
|
|
28
|
%
|
|
$
|
15,055
|
|
|
19
|
%
|
|
Stock-based compensation expense (1)
|
|
|
(555
|
)
|
|
—
|
%
|
|
|
(215
|
)
|
|
—
|
%
|
|
Non-GAAP marketing and advertising expense
|
|
$
|
20,327
|
|
|
28
|
%
|
|
$
|
14,840
|
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
GAAP customer care and enrollment expense
|
|
$
|
10,400
|
|
|
14
|
%
|
|
$
|
12,109
|
|
|
15
|
%
|
|
Stock-based compensation expense (1)
|
|
|
(123
|
)
|
|
—
|
%
|
|
|
(12
|
)
|
|
—
|
%
|
|
Non-GAAP customer care and enrollment expense
|
|
$
|
10,277
|
|
|
14
|
%
|
|
$
|
12,097
|
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
GAAP technology and content expense
|
|
$
|
8,507
|
|
|
12
|
%
|
|
$
|
8,072
|
|
|
10
|
%
|
|
Stock-based compensation expense (1)
|
|
|
(435
|
)
|
|
(1
|
)%
|
|
|
(394
|
)
|
|
—
|
%
|
|
Non-GAAP technology and content expense
|
|
$
|
8,072
|
|
|
11
|
%
|
|
$
|
7,678
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
GAAP general and administrative expense
|
|
$
|
7,928
|
|
|
11
|
%
|
|
$
|
9,992
|
|
|
13
|
%
|
|
Stock-based compensation expense (1)
|
|
|
(719
|
)
|
|
(1
|
)%
|
|
|
(1,512
|
)
|
|
(2
|
)%
|
|
Non-GAAP general and administrative expense
|
|
$
|
7,209
|
|
|
10
|
%
|
|
$
|
8,480
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income from operations
|
|
$
|
23,683
|
|
|
32
|
%
|
|
$
|
31,822
|
|
|
40
|
%
|
|
Stock-based compensation expense (1)
|
|
|
1,832
|
|
|
2
|
%
|
|
|
2,133
|
|
|
3
|
%
|
|
Amortization of intangible assets (2)
|
|
|
260
|
|
|
—
|
%
|
|
|
260
|
|
|
—
|
%
|
|
Non-GAAP income from operations
|
|
$
|
25,775
|
|
|
35
|
%
|
|
$
|
34,215
|
|
|
43
|
%
|
|
|
|
Explanation of adjustments
|
|
|
|
(1)
|
Non-GAAP income from operations and non-GAAP expenses 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 income from operations excludes amortization of intangible
assets.
|
|
|
|
EHEALTH, INC.
|
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
|
|
(In thousands, except per share amounts, unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2016
|
|
2017
|
|
GAAP net income
|
|
$
|
18,034
|
|
|
$
|
33,421
|
|
|
Stock-based compensation expense (1)
|
|
1,832
|
|
|
2,133
|
|
|
Amortization of intangible assets (3)
|
|
260
|
|
|
260
|
|
|
Non-GAAP net income
|
|
$
|
20,126
|
|
|
$
|
35,814
|
|
|
|
|
|
|
|
|
GAAP net income per diluted share
|
|
$
|
0.99
|
|
|
$
|
1.80
|
|
|
Stock-based compensation expense (1)
|
|
0.10
|
|
|
0.12
|
|
|
Amortization of intangible assets (3)
|
|
0.01
|
|
|
0.01
|
|
|
Non-GAAP net income per diluted share
|
|
$
|
1.10
|
|
|
$
|
1.93
|
|
|
|
|
|
|
|
|
GAAP net income
|
|
$
|
18,034
|
|
|
$
|
33,421
|
|
|
Stock-based compensation expense (1)
|
|
1,832
|
|
|
2,133
|
|
|
Depreciation and amortization (2)
|
|
1,005
|
|
|
762
|
|
|
Amortization of intangible assets (3)
|
|
260
|
|
|
260
|
|
|
Other income (expense), net (4)
|
|
11
|
|
|
(26
|
)
|
|
Provision (benefit) for income taxes (5)
|
|
5,638
|
|
|
(1,573
|
)
|
|
Adjusted EBITDA
|
|
$
|
26,780
|
|
|
$
|
34,977
|
|
|
|
|
Explanation of adjustments
|
|
|
|
(1)
|
Non-GAAP net income, Non-GAAP income per share and Adjusted EBITDA
exclude the effect of expensing stock-based compensation related to
stock options and restricted stock units in accordance with FASB ASC
Topic 718.
|
|
(2)
|
Adjusted EBITDA excludes depreciation and amortization.
|
|
(3)
|
Non-GAAP net income, Non-GAAP income per share and Adjusted EBITDA
exclude amortization of intangible assets.
|
|
(4)
|
Adjusted EBITDA excludes other income (expense), net.
|
|
(5)
|
Adjusted EBITDA excludes provision (benefit) for income taxes.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170427006498/en/
Source: eHealth, Inc.
Investor Relations Contact:
eHealth, Inc.
Kate
Sidorovich, CFA, 650-210-3111
Vice President Investor Relations
kate.sidorovich@ehealth.com
http://ir.ehealthinsurance.com