FORM 8-K |
Delaware | 001-33071 | 56-2357876 |
(State or other jurisdiction of | (Commission File Number) | (I.R.S. Employer |
incorporation) | Identification No.) |
Date: | February 21, 2019 | eHealth, Inc. | |
By: | /s/ Derek N. Yung | ||
Derek N. Yung | |||
Chief Financial Officer |
• | Revenue for the fourth quarter of 2018 was $134.9 million, an increase of 62% compared to $83.1 million for the fourth quarter of 2017. |
• | Net income for the fourth quarter of 2018 was $26.1 million compared to $28.0 million for the fourth quarter of 2017. |
• | Adjusted EBITDA for the fourth quarter of 2018 was $51.9 million, an increase of 107% compared to $25.1 million for the fourth quarter of 2017. |
• | Net cash used in operations for the fourth quarter of 2018 was $8.7 million compared to $10.1 million net cash used in operations for the fourth quarter of 2017. |
• | Total revenue is expected to be in the range of $290 million to $310 million. Revenue from the Medicare segment is expected to be in the range of $256 million to $272 million. Revenue from the Individual, Family and Small Business segment is expected to be in the range of $34 million to $38 million. |
• | GAAP net income per diluted share for 2019 is expected to be in the range of $0.60 to $0.79 per share. |
• | Non-GAAP net income per diluted share(a) is expected to be in the range of $1.22 to $1.33 per share. |
• | GAAP net income is expected to be in the range of $16.3 million to $21.3 million. |
• | Adjusted EBITDA(b) is expected to be in the range of $45 million to $50 million. |
• | 2019 Medicare segment profit(c) is expected to be in the range of $80 million to $84 million and Individual, Family and Small Business segment profit is expected to be breakeven to $1 million. |
• | Corporate(d) shared service expenses, excluding stock-based compensation and depreciation and amortization expense, is expected to be approximately $35 million. |
• | Cash used in operations is expected to be in the range of $17 million to $20 million and cash used for capital expenditures is expected to be $13 million to $14 million. |
(a) Non-GAAP net income per diluted share is calculated by adding stock-based compensation expense, change in fair value of earnout liability, acquisition costs, restructuring charges, intangible asset amortization expense and the income tax effect of these adjustments to GAAP net income. | |
(b) Adjusted EBITDA is calculated by adding stock-based compensation, depreciation and amortization expense, restructuring charges, acquisition costs, amortization of intangible assets, other income (expense), net and provision for income taxes to GAAP net income. | |
(c) 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. | |
(d) 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. |
December 31, 2018 | December 31, 2017 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 13,089 | $ | 40,293 | |||
Accounts receivable | 3,601 | 1,475 | |||||
Commissions receivable - current | 134,190 | 109,666 | |||||
Prepaid expenses and other current assets | 5,288 | 4,305 | |||||
Total current assets | 156,168 | 155,739 | |||||
Commissions receivable - non-current | 211,668 | 169,751 | |||||
Property and equipment, net | 7,684 | 4,705 | |||||
Other assets | 11,276 | 7,287 | |||||
Intangible assets, net | 12,249 | 7,540 | |||||
Goodwill | 40,233 | 14,096 | |||||
Total assets | $ | 439,278 | $ | 359,118 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 5,688 | $ | 3,246 | |||
Accrued compensation and benefits | 20,763 | 15,498 | |||||
Accrued marketing expenses | 11,013 | 4,693 | |||||
Earnout liability - current | 20,730 | — | |||||
Other current liabilities | 2,425 | 2,008 | |||||
Total current liabilities | 60,619 | 25,445 | |||||
Debt - non-current | 5,000 | — | |||||
Earnout liability - non-current | 19,270 | — | |||||
Deferred income taxes - non-current | 47,901 | 45,089 | |||||
Other non-current liabilities | 3,339 | 1,920 | |||||
Stockholders’ equity: | |||||||
Common stock | 31 | 30 | |||||
Additional paid-in capital | 298,024 | 281,706 | |||||
Treasury stock, at cost | (199,998 | ) | (199,998 | ) | |||
Retained earnings | 204,965 | 204,724 | |||||
Accumulated other comprehensive income | 127 | 202 | |||||
Total stockholders’ equity | 303,149 | 286,664 | |||||
Total liabilities and stockholders’ equity | $ | 439,278 | $ | 359,118 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenue: | |||||||||||||||
Commission | $ | 122,244 | $ | 76,056 | $ | 227,211 | $ | 176,883 | |||||||
Other | 12,673 | 7,062 | 24,184 | 13,823 | |||||||||||
Total revenue | 134,917 | 83,118 | 251,395 | 190,706 | |||||||||||
Operating costs and expenses: | |||||||||||||||
Cost of revenue | 755 | 354 | 1,228 | 582 | |||||||||||
Marketing and advertising | 37,184 | 23,196 | 82,939 | 65,874 | |||||||||||
Customer care and enrollment | 26,818 | 19,264 | 70,547 | 59,183 | |||||||||||
Technology and content | 8,600 | 8,531 | 31,970 | 32,889 | |||||||||||
General and administrative | 13,367 | 10,090 | 45,828 | 39,969 | |||||||||||
Acquisition costs | — | 621 | 76 | 621 | |||||||||||
Change in fair value of earnout liability | 6,000 | — | 12,300 | — | |||||||||||
Restructuring charge | — | — | 1,865 | — | |||||||||||
Amortization of intangible assets | 547 | 260 | 2,091 | 1,040 | |||||||||||
Total operating costs and expenses | 93,271 | 62,316 | 248,844 | 200,158 | |||||||||||
Income (loss) from operations | 41,646 | 20,802 | 2,551 | (9,452 | ) | ||||||||||
Other income (expense), net | (21 | ) | 307 | 755 | 1,182 | ||||||||||
Income (loss) before provision (benefit) for income taxes | 41,625 | 21,109 | 3,306 | (8,270 | ) | ||||||||||
Provision (benefit) for income taxes | 15,554 | (6,919 | ) | 3,065 | (33,696 | ) | |||||||||
Net income | $ | 26,071 | $ | 28,028 | $ | 241 | $ | 25,426 | |||||||
Net income per share: | |||||||||||||||
Basic | $ | 1.32 | $ | 1.50 | $ | 0.01 | $ | 1.37 | |||||||
Diluted | $ | 1.25 | $ | 1.47 | $ | 0.01 | $ | 1.33 | |||||||
Weighted-average number of shares used in per share amounts: | |||||||||||||||
Basic | 19,680 | 18,632 | 19,294 | 18,512 | |||||||||||
Diluted | 20,897 | 19,025 | 20,409 | 19,047 | |||||||||||
(1) Includes stock-based compensation as follows: | |||||||||||||||
Marketing and advertising | $ | 496 | $ | 314 | $ | 1,974 | $ | 1,033 | |||||||
Customer care and enrollment | 251 | 151 | 816 | 418 | |||||||||||
Technology and content | 560 | 432 | 1,675 | 1,410 | |||||||||||
General and administrative | 1,757 | 1,849 | 7,824 | 6,833 | |||||||||||
Restructuring | — | — | 251 | — | |||||||||||
Total stock-based compensation expense | $ | 3,064 | $ | 2,746 | $ | 12,540 | $ | 9,694 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Operating activities | |||||||||||||||
Net income | $ | 26,071 | $ | 28,028 | $ | 241 | $ | 25,426 | |||||||
Adjustments to reconcile net income to net cash used in operating activities: | |||||||||||||||
Depreciation and amortization | 609 | 625 | 2,479 | 2,837 | |||||||||||
Amortization of internally developed software | 618 | 409 | 2,201 | 1,464 | |||||||||||
Amortization of intangible assets | 547 | 260 | 2,091 | 1,040 | |||||||||||
Stock-based compensation expense | 3,064 | 2,746 | 12,540 | 9,694 | |||||||||||
Deferred income taxes | 15,491 | (5,004 | ) | 2,812 | (30,341 | ) | |||||||||
Change in fair value of earnout liability | 6,000 | — | 12,300 | — | |||||||||||
Other non-cash items | 289 | (12 | ) | 675 | (101 | ) | |||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable | (1,462 | ) | 2,015 | (2,127 | ) | 473 | |||||||||
Commissions receivable | (80,123 | ) | (44,224 | ) | (50,967 | ) | (21,640 | ) | |||||||
Prepaid expenses and other assets | 8,441 | 1,071 | 232 | (1,933 | ) | ||||||||||
Accounts payable | (99 | ) | (314 | ) | 1,414 | (1,866 | ) | ||||||||
Accrued compensation and benefits | 7,214 | 4,619 | 5,133 | 4,578 | |||||||||||
Accrued marketing expenses | 7,955 | 1,886 | 6,320 | (3,365 | ) | ||||||||||
Deferred revenue | (4,863 | ) | (2,686 | ) | 491 | (466 | ) | ||||||||
Other current liabilities | 1,530 | 453 | 935 | (1,341 | ) | ||||||||||
Net cash used in operating activities | (8,718 | ) | (10,128 | ) | (3,230 | ) | (15,541 | ) | |||||||
Investing activities | |||||||||||||||
Capitalized internal-use software and website development costs | (1,950 | ) | (705 | ) | (6,294 | ) | (3,210 | ) | |||||||
Purchases of property and equipment and other assets | (1,063 | ) | (385 | ) | (4,534 | ) | (1,868 | ) | |||||||
Acquisition of business, net of cash acquired | — | — | (14,929 | ) | — | ||||||||||
Net cash used in investing activities | (3,013 | ) | (1,090 | ) | (25,757 | ) | (5,078 | ) | |||||||
Financing activities | |||||||||||||||
Net proceeds from exercise of common stock options | 658 | 858 | 2,688 | 1,037 | |||||||||||
Cash used to net-share settle equity awards | (1,106 | ) | (701 | ) | (4,504 | ) | (1,802 | ) | |||||||
Proceeds from line of credit | 5,000 | — | 5,000 | — | |||||||||||
Debt issuance costs | (49 | ) | — | (1,221 | ) | — | |||||||||
Principal payments in connection with capital leases | (25 | ) | (25 | ) | (103 | ) | (105 | ) | |||||||
Net cash provided by (used in) financing activities | 4,478 | 132 | 1,860 | (870 | ) | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | (6 | ) | 2 | (77 | ) | 1 | |||||||||
Net decrease in cash and cash equivalents | (7,259 | ) | (11,084 | ) | (27,204 | ) | (21,488 | ) | |||||||
Cash and cash equivalents at beginning of period | 20,348 | 51,377 | 40,293 | 61,781 | |||||||||||
Cash and cash equivalents at end of period | $ | 13,089 | $ | 40,293 | $ | 13,089 | $ | 40,293 |
Three Months Ended December 31, | Year Ended December 31, 2018 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenue | |||||||||||||||
Medicare (1) | $ | 121,606 | $ | 69,877 | $ | 210,570 | $ | 142,448 | |||||||
Individual, Family and Small Business (2) | 13,311 | 13,241 | 40,825 | 48,258 | |||||||||||
Total revenue | $ | 134,917 | $ | 83,118 | $ | 251,395 | $ | 190,706 | |||||||
Segment profit | |||||||||||||||
Medicare segment profit (3) | $ | 58,671 | $ | 30,875 | $ | 60,844 | $ | 22,137 | |||||||
Individual, Family and Small Business segment profit (3) | 3,512 | 1,141 | 5,803 | 9,573 | |||||||||||
Total segment profit | 62,183 | 32,016 | 66,647 | 31,710 | |||||||||||
Corporate (4) | (10,317 | ) | (6,962 | ) | (32,996 | ) | (26,970 | ) | |||||||
Stock-based compensation expense | (3,064 | ) | (2,746 | ) | (12,289 | ) | (9,694 | ) | |||||||
Depreciation and amortization | (609 | ) | (625 | ) | (2,479 | ) | (2,837 | ) | |||||||
Change in fair value of earnout liability | (6,000 | ) | (12,300 | ) | |||||||||||
Restructuring charges | — | — | (1,865 | ) | — | ||||||||||
Acquisition costs | — | (621 | ) | (76 | ) | (621 | ) | ||||||||
Amortization of intangible assets | (547 | ) | (260 | ) | (2,091 | ) | (1,040 | ) | |||||||
Other income (expense), net | (21 | ) | 307 | 755 | 1,182 | ||||||||||
Income (loss) before provision (benefit) for income taxes | $ | 41,625 | $ | 21,109 | $ | 3,306 | $ | (8,270 | ) |
• | 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 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, restructuring charges, change in fair value of earnout liability, acquisition costs, 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, because they are not the responsibility of segment operating management, are not allocated to the reportable segments. |
Three Months Ended December 31, | |||||||||||
2018 | 2017 | ||||||||||
Amount | Percent of Total Revenue | Amount | Percent of Total Revenue | ||||||||
GAAP marketing and advertising expense | $ | 37,184 | 28% | $ | 23,196 | 28% | |||||
Stock-based compensation expense (1) | (496 | ) | —% | (314 | ) | —% | |||||
Non-GAAP marketing and advertising expense | $ | 36,688 | 27% | $ | 22,882 | 28% | |||||
GAAP customer care and enrollment expense | $ | 26,818 | 20% | $ | 19,264 | 23% | |||||
Stock-based compensation expense (1) | (251 | ) | —% | (151 | ) | —% | |||||
Non-GAAP customer care and enrollment expense | $ | 26,567 | 20% | $ | 19,113 | 23% | |||||
GAAP technology and content expense | $ | 8,600 | 6% | $ | 8,531 | 10% | |||||
Stock-based compensation expense (1) | (560 | ) | —% | (432 | ) | (1)% | |||||
Non-GAAP technology and content expense | $ | 8,040 | 6% | $ | 8,099 | 10% | |||||
GAAP general and administrative expense | $ | 13,367 | 10% | $ | 10,090 | 12% | |||||
Stock-based compensation expense (1) | (1,757 | ) | (1)% | (1,849 | ) | (2)% | |||||
Non-GAAP general and administrative expense | $ | 11,610 | 9% | $ | 8,241 | 10% | |||||
GAAP income from operations | $ | 41,646 | 31% | $ | 20,802 | 25% | |||||
Stock-based compensation expense (1) | 3,064 | 2% | 2,746 | 3% | |||||||
Acquisition costs (2) | — | —% | 621 | 1% | |||||||
Amortization of intangible assets (3) | 547 | —% | 260 | —% | |||||||
Change in fair value of earnout liability (4) | 6,000 | 4% | — | —% | |||||||
Non-GAAP income from operations | $ | 51,257 | 38% | $ | 24,429 | 29% |
(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. |
(2) | Non-GAAP income from operations excludes costs related to the acquisition of GoMedigap, which was completed in January 2018. |
(3) | Non-GAAP income from operations excludes amortization of intangible assets. |
(4) | Non-GAAP income from operations excludes the change in fair value of earnout liability related to the acquisition of GoMedigap, which was completed in January 2018. |
Year Ended December 31, | |||||||||||
2018 | 2017 | ||||||||||
Amount | Percent of Total Revenue | Amount | Percent of Total Revenue | ||||||||
GAAP marketing and advertising expense | $ | 82,939 | 33% | $ | 65,874 | 35% | |||||
Stock-based compensation expense (1) | (1,974 | ) | (1)% | (1,033 | ) | (1)% | |||||
Non-GAAP marketing and advertising expense | $ | 80,965 | 32% | $ | 64,841 | 34% | |||||
GAAP customer care and enrollment expense | $ | 70,547 | 28% | $ | 59,183 | 31% | |||||
Stock-based compensation expense (1) | (816 | ) | —% | (418 | ) | —% | |||||
Non-GAAP customer care and enrollment expense | $ | 69,731 | 28% | $ | 58,765 | 31% | |||||
GAAP technology and content expense | $ | 31,970 | 13% | $ | 32,889 | 17% | |||||
Stock-based compensation expense (1) | (1,675 | ) | (1)% | (1,410 | ) | (1)% | |||||
Non-GAAP technology and content expense | $ | 30,295 | 12% | $ | 31,479 | 17% | |||||
GAAP general and administrative expense | $ | 45,828 | 18% | $ | 39,969 | 21% | |||||
Stock-based compensation expense (1) | (7,824 | ) | (3)% | (6,833 | ) | (4)% | |||||
Non-GAAP general and administrative expense | $ | 38,004 | 15% | $ | 33,136 | 17% | |||||
GAAP income (loss) from operations | $ | 2,551 | 1% | $ | (9,452 | ) | (5)% | ||||
Stock-based compensation expense (1) | 12,289 | 5% | 9,694 | 5% | |||||||
Acquisition costs (2) | 76 | —% | 621 | —% | |||||||
Restructuring charge (3) | 1,865 | 1% | — | —% | |||||||
Amortization of intangible assets (4) | 2,091 | 1% | 1,040 | 1% | |||||||
Change in fair value of earnout liability (5) | 12,300 | 5% | — | —% | |||||||
Non-GAAP income from operations | $ | 31,172 | 12% | $ | 1,903 | 1% |
(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. |
(2) | Non-GAAP income from operations excludes costs related to the acquisition of GoMedigap, which was completed in January 2018. |
(3) | Non-GAAP income from operations excludes restructuring charge. |
(4) | Non-GAAP income from operations excludes amortization of intangible assets. |
(5) | Non-GAAP income from operations excludes the change in fair value of earnout liability related to the acquisition of GoMedigap, which was completed in January 2018. |
Three Months Ended December 31, | |||||||
2018 | 2017 | ||||||
GAAP net income | $ | 26,071 | $ | 28,028 | |||
Stock-based compensation expense (1) | 3,064 | 2,746 | |||||
Acquisition costs (2) | — | 621 | |||||
Restructuring charge (3) | — | — | |||||
Amortization of intangible assets (4) | 547 | 260 | |||||
Change in fair value of earnout liability (5) | 6,000 | — | |||||
Provision (benefit) for income taxes (6) | (2,089 | ) | (1,478 | ) | |||
Non-GAAP net income | $ | 33,593 | $ | 30,177 | |||
GAAP net income per diluted share | $ | 1.25 | $ | 1.47 | |||
Stock-based compensation expense (1) | 0.15 | 0.14 | |||||
Acquisition costs (2) | — | 0.03 | |||||
Restructuring charge (3) | — | — | |||||
Amortization of intangible assets (4) | 0.03 | 0.01 | |||||
Change in fair value of earnout liability (5) | 0.29 | — | |||||
Provision (benefit) for income taxes (6) | (0.11 | ) | (0.08 | ) | |||
Non-GAAP net income per diluted share | $ | 1.61 | $ | 1.57 | |||
GAAP net income | $ | 26,071 | $ | 28,028 | |||
Stock-based compensation expense (1) | 3,064 | 2,746 | |||||
Depreciation and amortization (8) | 609 | 625 | |||||
Acquisition costs (2) | — | 621 | |||||
Restructuring charge (3) | — | — | |||||
Amortization of intangible assets (4) | 547 | 260 | |||||
Change in fair value of earnout liability (5) | 6,000 | — | |||||
Other (income) expense, net (7) | 21 | (307 | ) | ||||
Provision (benefit) for income taxes (6) | 15,554 | (6,919 | ) | ||||
Adjusted EBITDA | $ | 51,866 | $ | 25,054 |
Year Ended December 31, | |||||||
2018 | 2017 | ||||||
GAAP net income | $ | 241 | $ | 25,426 | |||
Stock-based compensation expense (1) | 12,289 | 9,694 | |||||
Acquisition costs (2) | 76 | 621 | |||||
Restructuring charge (3) | 1,865 | — | |||||
Amortization of intangible assets (4) | 2,091 | 1,040 | |||||
Change in fair value of earnout liability (5) | 12,300 | — | |||||
Provision (benefit) for income taxes (6) | (6,220 | ) | (4,628 | ) | |||
Non-GAAP net income | $ | 22,642 | $ | 32,153 | |||
GAAP net income per diluted share | $ | 0.01 | $ | 1.33 | |||
Stock-based compensation expense (1) | 0.60 | 0.51 | |||||
Acquisition costs (2) | — | 0.03 | |||||
Restructuring benefit (3) | 0.09 | — | |||||
Amortization of intangible assets (4) | 0.10 | 0.05 | |||||
Change in fair value of earnout liability (5) | 0.60 | — | |||||
Provision for income taxes (6) | (0.29 | ) | (0.24 | ) | |||
Non-GAAP net income per diluted share | $ | 1.11 | $ | 1.69 | |||
GAAP net income | $ | 241 | $ | 25,426 | |||
Stock-based compensation expense (1) | 12,289 | 9,694 | |||||
Depreciation and amortization (8) | 2,479 | 2,837 | |||||
Acquisition costs (2) | 76 | 621 | |||||
Restructuring charge (3) | 1,865 | — | |||||
Amortization of intangible assets (4) | 2,091 | 1,040 | |||||
Change in fair value of earnout liability (5) | 12,300 | — | |||||
Other income, net (7) | (755 | ) | (1,182 | ) | |||
Provision (benefit) for income taxes (6) | 3,065 | (33,696 | ) | ||||
Adjusted EBITDA | $ | 33,651 | $ | 4,740 |
(1) | Non-GAAP net income, Non-GAAP net income per diluted share and Adjusted EBITDA exclude the effect of expensing stock-based compensation related to stock options and restricted stock units. |
(2) | Non-GAAP net income, Non-GAAP net income per diluted share and Adjusted EBITDA exclude costs related to the acquisition of GoMedigap, which was completed in January 2018. |
(3) | Non-GAAP net income, Non-GAAP net income per diluted share and Adjusted EBITDA exclude restructuring charge. |
(4) | Non-GAAP net income, Non-GAAP net income per diluted share and Adjusted EBITDA exclude amortization of intangible assets. |
(5) | Non-GAAP net income, Non-GAAP net income per diluted share and Adjusted EBITDA exclude the change in fair value of earnout liability related to the acquisition of GoMedigap, which was completed in January 2018. |
(6) | Non-GAAP net income, Non-GAAP net income per diluted share and Adjusted EBITDA exclude provision (benefit) for income taxes. |
(7) | Adjusted EBITDA excludes other income, net. |
(8) | Adjusted EBITDA excludes depreciation and amortization expense. |
Three Months Ended | Year Ended | ||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2018 | 2017 | Percent Change | 2018 | 2017 | Percent Change | ||||||||||||||||
Medicare | |||||||||||||||||||||
Medicare Advantage | $ | 85,797 | $ | 52,143 | 65 | % | $ | 143,445 | $ | 107,567 | 33 | % | |||||||||
Medicare Supplement | 12,860 | 5,193 | 148 | % | 31,166 | 15,436 | 102 | % | |||||||||||||
Medicare Part D | 11,730 | 7,527 | 56 | % | 14,609 | 11,085 | 32 | % | |||||||||||||
Total Medicare | 110,387 | 64,863 | 70 | % | 189,220 | 134,088 | 41 | % | |||||||||||||
Individual and Family (1) | |||||||||||||||||||||
Non-Qualified Health Plans | 3,084 | 2,598 | 19 | % | 6,470 | 10,024 | (35 | )% | |||||||||||||
Qualified Health Plans | 783 | 966 | (19 | )% | 5,789 | 7,055 | (18 | )% | |||||||||||||
Total Individual and Family | 3,867 | 3,564 | 9 | % | 12,259 | 17,079 | (28 | )% | |||||||||||||
Ancillary | |||||||||||||||||||||
Short-term | 1,340 | 1,223 | 10 | % | 5,583 | 5,503 | 1 | % | |||||||||||||
Dental | 1,106 | 1,254 | (12 | )% | 2,717 | 5,062 | (46 | )% | |||||||||||||
Vision | 610 | 470 | 30 | % | 1,467 | 1,607 | (9 | )% | |||||||||||||
Other | 1,282 | 1,307 | (2 | )% | 4,941 | 3,877 | 27 | % | |||||||||||||
Total Ancillary | 4,338 | 4,254 | 2 | % | 14,708 | 16,049 | (8 | )% | |||||||||||||
Small Business | 2,768 | 2,539 | 9 | % | 8,595 | 7,501 | 15 | % | |||||||||||||
Commission Bonus | 884 | 836 | 6 | % | 2,429 | 2,166 | 12 | % | |||||||||||||
Total Commission Revenue | $ | 122,244 | $ | 76,056 | 61 | % | $ | 227,211 | $ | 176,883 | 28 | % |
(1) | We define our Individual and Family Plan offerings as major medical individual and family health insurance plans, which does not include Medicare-related, small business or ancillary plans. Individual and family health insurance plans include both Qualified and Non-Qualified plans. Qualified health plans are individual and family health insurance plans that meet the requirements of the Affordable Care Act and are offered through the government-run health insurance exchange in the relevant jurisdiction. Non-Qualified health plans are individual and family health insurance plans that meet the requirements of the Affordable Care Act and are not offered through the exchange in the relevant jurisdiction. Individuals who purchase Non-Qualified health plans cannot receive a subsidy in connection with the purchase of those plans. |
Three Months Ended | Year Ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2018 | 2017 | Percent Change | 2018 | 2017 | Percent Change | ||||||||||||
Medicare (1) | |||||||||||||||||
Medicare Advantage | 90,693 | 60,109 | 51 | % | 159,753 | 125,989 | 27 | % | |||||||||
Medicare Supplement | 18,072 | 8,126 | 122 | % | 40,252 | 21,401 | 88 | % | |||||||||
Medicare Part D | 53,451 | 30,591 | 75 | % | 64,898 | 42,805 | 52 | % | |||||||||
Total Medicare | 162,216 | 98,826 | 64 | % | 264,903 | 190,195 | 39 | % | |||||||||
Individual and Family (2) | |||||||||||||||||
Non-Qualified Health Plans | 12,161 | 17,871 | (32 | )% | 18,580 | 40,274 | (54 | )% | |||||||||
Qualified Health Plans | 6,959 | 16,994 | (59 | )% | 11,118 | 27,154 | (59 | )% | |||||||||
Total Individual and Family | 19,120 | 34,865 | (45 | )% | 29,698 | 67,428 | (56 | )% | |||||||||
Ancillary (3) | |||||||||||||||||
Short-term | 26,969 | 20,219 | 33 | % | 102,608 | 93,445 | 10 | % | |||||||||
Dental | 14,645 | 15,817 | (7 | )% | 46,073 | 70,452 | (35 | )% | |||||||||
Vision | 8,288 | 7,470 | 11 | % | 22,399 | 29,468 | (24 | )% | |||||||||
Other | 9,656 | 15,531 | (38 | )% | 42,415 | 34,788 | 22 | % | |||||||||
Total Ancillary | 59,558 | 59,037 | 1 | % | 213,495 | 228,153 | (6 | )% | |||||||||
Small Business (4) | 3,458 | 2,777 | 25 | % | 8,693 | 6,458 | 35 | % | |||||||||
Total Submitted Applications | 244,352 | 195,505 | 25 | % | 516,789 | 492,234 | 5 | % |
(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. |
(2) | Major medical Individual and Family plan ("IFP") health insurance applications submitted on our website during the period. 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. |
(3) | Ancillary Plans consists primarily of short-term, dental and vision insurance plans submitted on our website during the period. |
(4) | Applications for small business health insurance applications 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. |
Three Months Ended | Year Ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2018 | 2017 | Percent Change | 2018 | 2017 | Percent Change | ||||||||||||
Medicare | |||||||||||||||||
Medicare Advantage | 83,376 | 55,125 | 51 | % | 148,478 | 118,055 | 26 | % | |||||||||
Medicare Supplement | 12,170 | 5,064 | 140 | % | 29,837 | 15,992 | 87 | % | |||||||||
Medicare Part D | 50,143 | 29,058 | 73 | % | 61,373 | 41,618 | 47 | % | |||||||||
Total Medicare | 145,689 | 89,247 | 63 | % | 239,688 | 175,665 | 36 | % | |||||||||
Individual and Family | |||||||||||||||||
Non-Qualified Health Plans | 11,360 | 17,398 | (35 | )% | 23,075 | 50,111 | (54 | )% | |||||||||
Qualified Health Plans | 3,092 | 6,986 | (56 | )% | 19,575 | 28,442 | (31 | )% | |||||||||
Total Individual and Family | 14,452 | 24,384 | (41 | )% | 42,650 | 78,553 | (46 | )% | |||||||||
Ancillary | |||||||||||||||||
Short-term | 28,163 | 21,269 | 32 | % | 107,846 | 85,106 | 27 | % | |||||||||
Dental | 14,623 | 13,871 | 5 | % | 47,343 | 67,924 | (30 | )% | |||||||||
Vision | 9,060 | 7,820 | 16 | % | 24,638 | 31,360 | (21 | )% | |||||||||
Other | 8,053 | 8,980 | (10 | )% | 33,500 | 26,485 | 26 | % | |||||||||
Total Ancillaries | 59,899 | 51,940 | 15 | % | 213,327 | 210,875 | 1 | % | |||||||||
Small Business | 7,537 | 6,502 | 16 | % | 19,550 | 15,302 | 28 | % | |||||||||
Total Approved Members | 227,577 | 172,073 | 32 | % | 515,215 | 480,395 | 7 | % |
As of | ||||||||
December 31, | ||||||||
2018 | 2017 | Percent Change | ||||||
Medicare (1) | ||||||||
Medicare Advantage | 276,357 | 236,857 | 17 | % | ||||
Medicare Supplement | 70,426 | 33,635 | 109 | % | ||||
Medicare Part D | 139,907 | 114,362 | 22 | % | ||||
Total Medicare | 486,690 | 384,854 | 26 | % | ||||
Individual and Family (2) | 151,904 | 224,396 | (32 | )% | ||||
Ancillary (3) | ||||||||
Short-term | 24,192 | 16,771 | 44 | % | ||||
Dental | 138,916 | 170,078 | (18 | )% | ||||
Vision | 73,987 | 80,738 | (8 | )% | ||||
Other | 38,136 | 28,356 | 34 | % | ||||
Total Ancillaries | 275,231 | 295,943 | (7 | )% | ||||
Small Business (4) | 39,101 | 31,702 | 23 | % | ||||
Total Estimated Membership | 952,926 | 936,895 | 2 | % |
(1) | For Medicare-related health insurance plans, 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 two 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 the 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. Estimated number of members active on Medicare-related health insurance as of the date indicated based on the number of members for whom we have received or applied a commission payment during the month of estimation. |
(2) | To estimate the number of members on Individual and Family 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 IFP health insurance plans, 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. |
(3) | For ancillary health insurance plans (such as short-term, dental and vision insurance), 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 the 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 payments and related reporting from the related carriers. |
(4) | 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. |
Three Months Ended | Year Ended | ||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2018 | 2017 | Percentage Change | 2018 | 2017 | Percentage Change | ||||||||||||||||
Medicare | |||||||||||||||||||||
Medicare Advantage (1) | $ | 1,029 | $ | 932 | 10 | % | $ | 964 | $ | 903 | 7 | % | |||||||||
Medicare Supplement (1) | $ | 1,058 | $ | 1,024 | 3 | % | $ | 1,047 | $ | 965 | 8 | % | |||||||||
Medicare Part D (1) | $ | 235 | $ | 259 | (9 | )% | $ | 243 | $ | 266 | (9 | )% | |||||||||
Individual and Family | |||||||||||||||||||||
Non-Qualified Health Plans (1) | $ | 167 | $ | 139 | 20 | % | $ | 151 | $ | 136 | 11 | % | |||||||||
Qualified Health Plans (1) | $ | 198 | $ | 133 | 49 | % | $ | 141 | $ | 131 | 8 | % | |||||||||
Ancillary | |||||||||||||||||||||
Short-term (1) | $ | 52 | $ | 58 | (10 | )% | $ | 56 | $ | 65 | (14 | )% | |||||||||
Dental (1) | $ | 72 | $ | 82 | (12 | )% | $ | 77 | $ | 68 | 13 | % | |||||||||
Vision (1) | $ | 66 | $ | 60 | 10 | % | $ | 55 | $ | 51 | 8 | % | |||||||||
Small Business (2) | $ | 165 | $ | 173 | (5 | )% | $ | 168 | $ | 169 | (1 | )% |
(1) | Constrained lifetime value (“LTV”) of commissions per approved member represents commissions estimated to be collected over the estimated life of an approved member’s policy after applying constraints in accordance with our revenue recognition policy. The estimate is driven by multiple factors, including but not limited to, contracted commission rates, carrier mix, expected policy churn and applied constraints. These factors may result in varying values from period to period. |
(2) | For Small Business, the amount represents the estimated commissions we expect to collect from the plan over the following 12-months. The estimate is driven by multiple factors, including but not limited to, contracted commission rates, carrier mix, expected policy churn and applied constraints. These factors may result in varying values from period to period. |
Three Months and Year Ended | |||||
December 31, | |||||
2018 | 2017 | ||||
Medicare | |||||
Medicare Advantage | 7 | % | 7 | % | |
Medicare Supplement | 5 | % | 5 | % | |
Medicare Part D | 5 | % | 5 | % | |
Individual and Family | |||||
Non-Qualified Health Plans | 15 | % | 15 | % | |
Qualified Health Plans | 20 | % | 20 | % | |
Ancillary | 10 | % | 10 | % | |
Small Business | — | % | — | % |
Three Months Ended | ||||||||||
December 31, | ||||||||||
2018 | 2017 | Percent Change | ||||||||
Variable marketing cost per approved member | ||||||||||
Medicare variable marketing cost per approved Medicare Advantage ("MA")-equivalent member (1) | $ | 275 | $ | 254 | 8 | % | ||||
Individual and Family Plan ("IFP") variable marketing cost per approved IFP-equivalent member (2) | $ | 77 | $ | 94 | (18 | )% | ||||
Customer care and enrollment ("CC&E") expense per approved member | ||||||||||
Medicare CC&E expense per approved MA-equivalent member (3) | $ | 226 | $ | 242 | (7 | )% | ||||
IFP CC&E expense per approved IFP-equivalent member (4) | $ | 46 | $ | 66 | (30 | )% |
(1) | Variable marketing cost per approved MA-equivalent member represents direct costs incurred in member acquisition for Medicare Advantage, Medicare Supplement and Medicare Part D plans from our direct, marketing partner and online advertising channels divided by MA-equivalent approved members in a given period. MA-equivalent members is a derived metric and is equal to the sum of Medicare Part D approved members divided by 4, the number of Medicare Advantage approved members and the number of Medicare Supplement approved members in the given period. |
(2) | Variable marketing cost per approved IFP-equivalent member represents direct costs incurred in member acquisition for IFP plans from our direct, marketing partner and online advertising channels divided by IFP-equivalent approved members in a given period. IFP-equivalent approved members is a derived metric and is equal to the sum of the number of short-term approved members divided by 3 and the IFP approved members in the given period. |
(3) | Medicare CC&E expense per approved MA-equivalent member is equal to the CC&E expense of our Medicare business included in our operating costs and reported in our condensed consolidated statements of operations divided by MA-equivalent approved members in a given period. MA-equivalent approved members is a derived metric and is equal to the sum of Medicare Part D approved members divided by 4, the number of Medicare Advantage approved members and the number of Medicare Supplement approved members in the given period. |
(4) | IFP CC&E expense per approved IFP-equivalent member is equal to the CC&E expense of our IFP business included in our operating costs and reported in our condensed consolidated statement of operations divided by IFP-equivalent approved members in a given period. IFP-equivalent approved members is a derived metric and is equal to the sum of the number of short-term approved members divided by 3 and the IFP approved members in the given period. |
Year Ended | ||||||||||
December 31, | ||||||||||
2018 | 2017 | Percent Change | ||||||||
Variable marketing cost per approved member | ||||||||||
Medicare variable marketing cost per approved Medicare Advantage ("MA")-equivalent member (1) | $ | 297 | $ | 337 | (12 | )% | ||||
Individual and Family Plan ("IFP") variable marketing cost per approved IFP-equivalent member (2) | $ | 59 | $ | 50 | 18 | % | ||||
Customer care and enrollment ("CC&E") expense per approved member | ||||||||||
Medicare CC&E expense per approved MA-equivalent member (3) | $ | 315 | $ | 330 | (5 | )% | ||||
IFP CC&E expense per approved IFP-equivalent member (4) | $ | 61 | $ | 74 | (18 | )% |
(1) | Variable marketing cost per approved MA-equivalent member represents direct costs incurred in member acquisition for Medicare Advantage, Medicare Supplement and Medicare Part D plans from our direct, marketing partner and online advertising channels divided by MA-equivalent approved members in a given period. MA-equivalent members is a derived metric and is equal to the sum of Medicare Part D approved members divided by 4, the number of Medicare Advantage approved members and the number of Medicare Supplement approved members in the given period. |
(2) | Variable marketing cost per approved IFP-equivalent member represents direct costs incurred in member acquisition for IFP plans from our direct, marketing partner and online advertising channels divided by IFP-equivalent approved members in a given period. IFP-equivalent approved members is a derived metric and is equal to the sum of the number of short-term approved members divided by 3 and the IFP approved members in the given period. |
(3) | Medicare CC&E expense per approved MA-equivalent member is equal to the CC&E expense of our Medicare business included in our operating costs and reported in our condensed consolidated statements of operations divided by MA-equivalent approved members in a given period. MA-equivalent approved members is a derived metric and is equal to the sum of Medicare Part D approved members divided by 4, the number of Medicare Advantage approved members and the number of Medicare Supplement approved members in the given period. |
(4) | IFP CC&E expense per approved IFP-equivalent member is equal to the CC&E expense of our IFP business included in our operating costs and reported in our condensed consolidated statement of operations divided by IFP-equivalent approved members in a given period. IFP-equivalent approved members is a derived metric and is equal to the sum of the number of short-term approved members divided by 3 and the IFP approved members in the given period. |
Year Ending December 31, 2019 | |||||||
Low | High | ||||||
GAAP net income | $ | 16.3 | $ | 21.3 | |||
Stock-based compensation expense | 14.9 | 13.4 | |||||
Depreciation and amortization | 3.5 | 3.0 | |||||
Restructuring charge | — | — | |||||
Amortization / impairment of intangible assets | 3.1 | 2.1 | |||||
Change in fair value of earnout liability | — | — | |||||
Provision (benefit) for income taxes | (4.7 | ) | (4.0 | ) | |||
Non-GAAP net income (1) | $ | 33.1 | $ | 35.8 | |||
GAAP net income per diluted share | $ | 0.60 | $ | 0.79 | |||
Stock-based compensation expense | 0.55 | 0.50 | |||||
Depreciation and amortization | 0.13 | 0.11 | |||||
Restructuring charge | — | — | |||||
Amortization / impairment of intangible assets | 0.11 | 0.08 | |||||
Change in fair value of earnout liability | — | — | |||||
Provision for income taxes | (0.17 | ) | (0.15 | ) | |||
Non-GAAP net income per diluted share (2) | $ | 1.22 | $ | 1.33 | |||
GAAP net income | $ | 16.3 | $ | 21.3 | |||
Stock-based compensation expense | 14.9 | 13.4 | |||||
Depreciation and amortization | 3.5 | 3.0 | |||||
Restructuring charge | — | — | |||||
Amortization / impairment of intangible assets | 3.1 | 2.1 | |||||
Change in fair value of earnout liability | — | — | |||||
Other income, net | 1.2 | 1.2 | |||||
Provision (benefit) for income taxes | 6.0 | 9.0 | |||||
Adjusted EBITDA (3) | $ | 45.0 | $ | 50.0 |
(1) | Non-GAAP net income per share is calculated by adding stock-based compensation, depreciation and amortization expense, restructuring charges, amortization of intangible assets, other income (expense) and provision for income taxes to GAAP net income. |
(2) | Non-GAAP net income per share is calculated by excluding stock-based compensation expense, restructuring charges and intangible asset amortization expense to GAAP net income. |
(3) | Adjusted EBITDA is calculated by adding stock-based compensation, depreciation and amortization expense, restructuring charges, amortization of intangible assets, change in fair value of earnout liability, other income (expense) and provision for income taxes to GAAP net income. |