FORM 8-K |
EHEALTH, INC. (Exact Name of Registrant as Specified in its Charter) |
Delaware | 001-33071 | 56-2357876 |
(State or other jurisdiction of | (Commission File Number) | (I.R.S. Employer |
incorporation) | Identification No.) |
Exhibit No. | Description |
99.1 |
Date: | July 25, 2019 | /s/ Derek N. Yung Derek N. Yung Chief Financial Officer (Principal Financial Officer) |
Exhibit No. | Description |
99.1 |
• | Revenue for the second quarter of 2019 was $65.8 million, a 101% increase compared to $32.7 million for the second quarter of 2018. |
• | GAAP net loss for the second quarter of 2019 was $5.8 million compared to net loss of $12.0 million for the second quarter of 2018. |
• | Adjusted EBITDA was $0.8 million for the second quarter of 2019 compared to $(10.1) million for the second quarter of 2018. |
• | Net cash used in operating activities for the second quarter of 2019 was $11.5 million compared to $0.3 million for the second quarter of 2018. |
• | Total revenue is expected to be in the range of $365 million to $385 million, compared with previous guidance of $315 million to $335 million. Revenue from the Medicare segment is expected to be in the range of $318 million to $333 million, compared with previous guidance of $281 million to $297 million. Revenue from the Individual, Family and Small Business segment is expected to be in the range of $47 million to $52 million, compared with previous guidance of $34 million to $38 million. |
• | Assuming the impact of the non-cash charge related to an increase in fair value of the earnout liability in connection with eHealth’s acquisition of GoMedigap remains at $0.82 per diluted share, GAAP net income per diluted share for 2019 is expected to be in the range of $0.62 to $0.82 per share, compared with previous guidance of $0.60 to $0.79 per share. |
• | Non-GAAP net income per diluted share(a) is expected to be in the range of $1.77 to $1.97 per share, compared with previous guidance of $1.54 to $1.73 per share. |
• | Assuming the impact of the non-cash charge related to an increase in fair value of the earnout liability in connection with eHealth’s acquisition of GoMedigap remains at $20.5 million, we expect GAAP net income for 2019 to be in the range of $15.5 million to $20.5 million, compared with previous guidance of $15.0 million to $20.0 million. |
• | Adjusted EBITDA(b) is expected to be in the range of $65 million to $70 million, compared with previous guidance of $55 million to $60 million. |
• | 2019 Medicare segment profit(c) is expected to be in the range of $96 million to $99 million, compared with previous guidance of $90 million to $94 million, and Individual, Family and Small Business segment profit is expected to be in the range of $10 million to $12 million, compared with previous guidance of breakeven to $1 million. |
• | Corporate(d) shared service expenses, excluding stock-based compensation and depreciation and amortization expense, is expected to be approximately $41 million, compared with previous guidance of $35 million. |
• | Cash used in operations is expected to be in the range of $50 million to $55 million, compared with previous guidance of $20 million to $25 million, and cash used for capital expenditures is expected to be $15 million to $17 million, compared with previous guidance of $13 million to $14 million. |
(a) Non-GAAP net income per diluted share is calculated by adding stock-based compensation expense per diluted share, change in fair value of earnout liability per diluted share, intangible asset amortization expense per diluted share and the income tax effect of these non-GAAP adjustments to GAAP net income per diluted share. | |
(b) Adjusted EBITDA is calculated by adding stock-based compensation, change in fair value of earnout liability, depreciation and amortization expense, amortization of intangible assets, other income, 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, change in fair value of earnout liability, 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. |
• | 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, |
• | change in fair value of earnout liability, |
• | acquisition costs, |
• | restructuring charges, and |
• | amortization of intangible assets. |
• | Non-GAAP operating margins are calculated by dividing non-GAAP operating income (loss) by GAAP total revenue. |
• | Non-GAAP net income (loss) consists of GAAP net income (loss) excluding the following items: |
• | the effects of expensing stock-based compensation related to stock options and restricted stock units, |
• | change in fair value of earnout liability, |
• | acquisition costs, |
• | restructuring charges, |
• | amortization of intangible assets, and |
• | the income tax impact of non-GAAP adjustments. |
• | Non-GAAP net income (loss) per diluted share consists of GAAP net income (loss) per diluted share excluding the following items: |
• | the effects of expensing stock-based compensation related to stock options and restricted stock units per diluted share, |
• | change in fair value of earnout liability per diluted share, |
• | acquisition costs per diluted share, |
• | restructuring charges per diluted share, |
• | amortization of intangible assets per diluted share, and |
• | the income tax impact of non-GAAP adjustments per diluted share. |
• | Adjusted EBITDA is calculated by adding stock-based compensation, change in fair value of earnout liability, depreciation and amortization expense, acquisition costs, restructuring charges, amortization of intangible assets, other income (expense), net and provision (benefit) for income taxes to GAAP net income (loss). |
June 30, 2019 | December 31, 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 115,883 | $ | 13,089 | |||
Accounts receivable | 1,059 | 3,601 | |||||
Commissions receivable—current | 117,573 | 134,190 | |||||
Prepaid expenses and other current assets | 12,180 | 5,288 | |||||
Total current assets | 246,695 | 156,168 | |||||
Commissions receivable—non-current | 223,842 | 211,668 | |||||
Property and equipment, net | 9,708 | 7,684 | |||||
Operating lease right-of-use assets | 37,744 | — | |||||
Other assets | 14,116 | 11,276 | |||||
Intangible assets, net | 11,156 | 12,249 | |||||
Goodwill | 40,233 | 40,233 | |||||
Total assets | $ | 583,494 | $ | 439,278 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 5,523 | $ | 5,688 | |||
Accrued compensation and benefits | 15,265 | 20,763 | |||||
Accrued marketing expenses | 3,671 | 11,013 | |||||
Earnout liability—current | 33,700 | 20,730 | |||||
Lease liabilities—current | 3,896 | — | |||||
Other current liabilities | 2,400 | 2,425 | |||||
Total current liabilities | 64,455 | 60,619 | |||||
Debt | — | 5,000 | |||||
Earnout liability—non-current | — | 19,270 | |||||
Deferred income taxes—non-current | 38,366 | 47,901 | |||||
Lease liabilities—non-current | 35,386 | — | |||||
Other non-current liabilities | 2,022 | 3,339 | |||||
Stockholders’ equity: | |||||||
Common stock | 34 | 31 | |||||
Additional paid-in capital | 449,046 | 298,024 | |||||
Treasury stock, at cost | (199,998 | ) | (199,998 | ) | |||
Retained earnings | 194,052 | 204,965 | |||||
Accumulated other comprehensive income | 131 | 127 | |||||
Total stockholders’ equity | 443,265 | 303,149 | |||||
Total liabilities and stockholders’ equity | $ | 583,494 | $ | 439,278 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenue | |||||||||||||||
Commission | $ | 60,606 | $ | 30,646 | $ | 124,833 | $ | 71,353 | |||||||
Other | 5,161 | 2,011 | 9,707 | 4,374 | |||||||||||
Total revenue | 65,767 | 32,657 | 134,540 | 75,727 | |||||||||||
Operating costs and expenses: | |||||||||||||||
Cost of revenue | 449 | 151 | 372 | 303 | |||||||||||
Marketing and advertising | 23,104 | 14,606 | 47,045 | 29,608 | |||||||||||
Customer care and enrollment | 21,479 | 13,219 | 41,423 | 26,458 | |||||||||||
Technology and content | 10,437 | 7,287 | 19,454 | 15,628 | |||||||||||
General and administrative | 14,862 | 11,240 | 26,140 | 21,931 | |||||||||||
Acquisition costs | — | 18 | — | 76 | |||||||||||
Change in fair value of earnout liability | 7,200 | 2,500 | 20,506 | 2,500 | |||||||||||
Restructuring charges | — | 9 | — | 1,865 | |||||||||||
Amortization of intangible assets | 547 | 547 | 1,094 | 998 | |||||||||||
Total operating costs and expenses | 78,078 | 49,577 | 156,034 | 99,367 | |||||||||||
Loss from operations | (12,311 | ) | (16,920 | ) | (21,494 | ) | (23,640 | ) | |||||||
Other income, net | 699 | 296 | 1,256 | 480 | |||||||||||
Loss before benefit from income taxes | (11,612 | ) | (16,624 | ) | (20,238 | ) | (23,160 | ) | |||||||
Benefit from income taxes | (5,858 | ) | (4,610 | ) | (9,325 | ) | (6,301 | ) | |||||||
Net loss | $ | (5,754 | ) | $ | (12,014 | ) | $ | (10,913 | ) | $ | (16,859 | ) | |||
Net loss per share: | |||||||||||||||
Basic and diluted | $ | (0.25 | ) | $ | (0.63 | ) | $ | (0.48 | ) | $ | (0.89 | ) | |||
Weighted-average number of shares used in per share amounts: | |||||||||||||||
Basic and diluted | 23,091 | 19,063 | 22,508 | 18,968 | |||||||||||
(1) Includes stock-based compensation as follows: | |||||||||||||||
Marketing and advertising | $ | 711 | $ | 553 | $ | 1,340 | $ | 923 | |||||||
Customer care and enrollment | 285 | 206 | 558 | 371 | |||||||||||
Technology and content | 668 | 383 | 1,217 | 726 | |||||||||||
General and administrative | 3,014 | 1,989 | 4,792 | 3,661 | |||||||||||
Restructuring charges | — | — | — | 251 | |||||||||||
Total stock-based compensation expense | $ | 4,678 | $ | 3,131 | $ | 7,907 | $ | 5,932 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Operating activities | |||||||||||||||
Net loss | $ | (5,754 | ) | $ | (12,014 | ) | $ | (10,913 | ) | $ | (16,859 | ) | |||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||||||||||
Deferred income taxes | (5,992 | ) | (4,746 | ) | (9,535 | ) | (6,482 | ) | |||||||
Depreciation and amortization | 733 | 631 | 1,388 | 1,250 | |||||||||||
Amortization of internally developed software | 794 | 534 | 1,513 | 1,011 | |||||||||||
Amortization of intangible assets | 547 | 547 | 1,094 | 998 | |||||||||||
Stock-based compensation expense | 4,678 | 3,131 | 7,907 | 5,932 | |||||||||||
Change in fair value of earnout liability | 7,200 | 2,500 | 20,506 | 2,500 | |||||||||||
Change in deferred rent | — | (65 | ) | (1,272 | ) | 314 | |||||||||
Other non-cash items | 146 | 52 | 224 | 62 | |||||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable | 2,322 | (178 | ) | 2,543 | 629 | ||||||||||
Commissions receivable | (13,205 | ) | 5,086 | 4,443 | 27,495 | ||||||||||
Prepaid expenses and other assets | (3,807 | ) | 673 | (2,696 | ) | (1,120 | ) | ||||||||
Accounts payable | 915 | (635 | ) | 147 | (1,202 | ) | |||||||||
Accrued compensation and benefits | 3,892 | 3,314 | (5,498 | ) | (3,598 | ) | |||||||||
Accrued marketing expenses | (195 | ) | (60 | ) | (7,342 | ) | (1,951 | ) | |||||||
Deferred revenue | (3,015 | ) | 665 | (118 | ) | 376 | |||||||||
Accrued expense and other liabilities | (783 | ) | 264 | (1,166 | ) | 1,081 | |||||||||
Net cash (used in) provided by operating activities | (11,524 | ) | (301 | ) | 1,225 | 10,436 | |||||||||
Investing activities | |||||||||||||||
Capitalized internal-use software and website development costs | (1,946 | ) | (1,774 | ) | (3,433 | ) | (2,763 | ) | |||||||
Purchases of property and equipment and other assets | (2,277 | ) | (905 | ) | (3,786 | ) | (1,122 | ) | |||||||
Payments for security deposits | (896 | ) | — | (896 | ) | — | |||||||||
Acquisition of business, net of cash acquired | — | — | — | (14,929 | ) | ||||||||||
Net cash used in investing activities | (5,119 | ) | (2,679 | ) | (8,115 | ) | (18,814 | ) | |||||||
Financing activities | |||||||||||||||
Proceeds from issuance of common stock, net of issuance costs | — | — | 126,051 | — | |||||||||||
Net proceeds from exercise of common stock options | 888 | 559 | 3,255 | 668 | |||||||||||
Cash used to net-share settle equity awards | (2,172 | ) | (1,456 | ) | (3,452 | ) | (1,742 | ) | |||||||
Repayment of debt | — | — | (5,000 | ) | — | ||||||||||
Acquisition-related contingent payments | — | — | (9,542 | ) | — | ||||||||||
Principal payments in connection with finance leases | (25 | ) | (26 | ) | (50 | ) | (52 | ) | |||||||
Net cash (used in) provided by financing activities | (1,309 | ) | (923 | ) | 111,262 | (1,126 | ) | ||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (33 | ) | (65 | ) | 29 | (15 | ) | ||||||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (17,985 | ) | (3,968 | ) | 104,401 | (9,519 | ) | ||||||||
Cash, cash equivalents and restricted cash at beginning of period | 135,475 | 34,742 | 13,089 | 40,293 | |||||||||||
Cash, cash equivalents and restricted cash at end of period (1) | $ | 117,490 | $ | 30,774 | $ | 117,490 | $ | 30,774 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||
2019 | 2018 | Percent Change | 2019 | 2018 | Percent Change | ||||||||||||||||
Revenue | |||||||||||||||||||||
Medicare (1) | $ | 52,267 | $ | 25,468 | 105 | % | $ | 107,168 | $ | 56,231 | 91 | % | |||||||||
Individual, Family and Small Business (2) | 13,500 | 7,189 | 88 | % | 27,372 | 19,496 | 40 | % | |||||||||||||
Total revenue | $ | 65,767 | $ | 32,657 | 101 | % | $ | 134,540 | $ | 75,727 | 78 | % | |||||||||
Segment profit (loss) | |||||||||||||||||||||
Medicare segment profit (loss) (3) | $ | 6,095 | $ | (1,473 | ) | 514 | % | $ | 16,921 | $ | 1,707 | 891 | % | ||||||||
Individual, Family and Small Business segment profit (loss) (3) | 5,268 | (617 | ) | 954 | % | 11,292 | 2,871 | 293 | % | ||||||||||||
Total segment profit (loss) | 11,363 | (2,090 | ) | 644 | % | 28,213 | 4,578 | 516 | % | ||||||||||||
Corporate (4) | (10,516 | ) | (7,994 | ) | 32 | % | (18,812 | ) | (15,848 | ) | 19 | % | |||||||||
Stock-based compensation expense | (4,678 | ) | (3,131 | ) | 49 | % | (7,907 | ) | (5,681 | ) | 39 | % | |||||||||
Depreciation and amortization | (733 | ) | (631 | ) | 16 | % | (1,388 | ) | (1,250 | ) | 11 | % | |||||||||
Acquisition costs | — | (18 | ) | (100 | )% | — | (76 | ) | (100 | )% | |||||||||||
Change in fair value of earnout liability | (7,200 | ) | (2,500 | ) | 188 | % | (20,506 | ) | (2,500 | ) | 720 | % | |||||||||
Restructuring charges | — | (9 | ) | (100 | )% | — | (1,865 | ) | (100 | )% | |||||||||||
Amortization of intangible assets | (547 | ) | (547 | ) | — | % | (1,094 | ) | (998 | ) | 10 | % | |||||||||
Other income, net | 699 | 296 | 136 | % | 1,256 | 480 | 162 | % | |||||||||||||
Loss before benefit from income taxes | $ | (11,612 | ) | $ | (16,624 | ) | (30 | )% | $ | (20,238 | ) | $ | (23,160 | ) | (13 | )% |
• | 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 and vision, 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, family and small business health insurance plans and ancillary products sold to our non-Medicare-eligible customers, including but not limited to dental, vision, and short-term 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, acquisition costs, change in fair value of earnout liability, restructuring charges 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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||
2019 | 2018 | Percent Change | 2019 | 2018 | Percent Change | ||||||||||||||||
Medicare | |||||||||||||||||||||
Medicare Advantage | $ | 36,607 | $ | 17,738 | 106 | % | $ | 76,450 | $ | 39,673 | 93 | % | |||||||||
Medicare Supplement | 8,256 | 5,355 | 54 | % | 16,853 | 10,947 | 54 | % | |||||||||||||
Medicare Part D | 1,765 | 715 | 147 | % | 4,101 | 1,874 | 119 | % | |||||||||||||
Total Medicare | 46,628 | 23,808 | 96 | % | 97,404 | 52,494 | 86 | % | |||||||||||||
Individual and Family (1) | |||||||||||||||||||||
Non-Qualified Health Plans | 5,817 | 1,069 | 444 | % | 8,446 | 2,510 | 236 | % | |||||||||||||
Qualified Health Plans | 553 | 1,675 | (67 | )% | 4,061 | 3,837 | 6 | % | |||||||||||||
Total Individual and Family | 6,370 | 2,744 | 132 | % | 12,507 | 6,347 | 97 | % | |||||||||||||
Ancillaries | |||||||||||||||||||||
Short-term | 2,695 | 1,293 | 108 | % | 4,011 | 2,543 | 58 | % | |||||||||||||
Dental | 928 | 147 | 531 | % | 1,718 | 1,366 | 26 | % | |||||||||||||
Vision | 295 | 391 | (25 | )% | 757 | 731 | 4 | % | |||||||||||||
Other | 723 | (118 | ) | 713 | % | 1,674 | 2,653 | (37 | )% | ||||||||||||
Total Ancillaries | 4,641 | 1,713 | 171 | % | 8,160 | 7,293 | 12 | % | |||||||||||||
Small Business | 1,998 | 1,772 | 13 | % | 4,638 | 4,131 | 12 | % | |||||||||||||
Commission Bonus | 969 | 609 | 59 | % | 2,124 | 1,088 | 95 | % | |||||||||||||
Total Commission Revenue | $ | 60,606 | $ | 30,646 | 98 | % | $ | 124,833 | $ | 71,353 | 75 | % |
(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 that purchase Non-Qualified health plans cannot receive a subsidy in connection with the purchase of those plans. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2019 | 2018 | Percent Change | 2019 | 2018 | Percent Change | ||||||||||||
Medicare (1) | |||||||||||||||||
Medicare Advantage (2) | 38,449 | 23,149 | 66 | % | 82,940 | 47,945 | 73 | % | |||||||||
Medicare Supplement (2) | 10,534 | 6,868 | 53 | % | 20,837 | 13,256 | 57 | % | |||||||||
Medicare Part D | 7,505 | 3,739 | 101 | % | 16,557 | 7,584 | 118 | % | |||||||||
Total Medicare | 56,488 | 33,756 | 67 | % | 120,334 | 68,785 | 75 | % | |||||||||
Individual and Family (3) | |||||||||||||||||
Non-Qualified Health Plans | 2,840 | 1,309 | 117 | % | 5,212 | 5,195 | — | % | |||||||||
Qualified Health Plans | 1,431 | 1,037 | 38 | % | 2,286 | 3,721 | (39 | )% | |||||||||
Total Individual and Family | 4,271 | 2,346 | 82 | % | 7,498 | 8,916 | (16 | )% | |||||||||
Ancillaries (4) | |||||||||||||||||
Short-term | 12,856 | 25,779 | (50 | )% | 28,465 | 45,274 | (37 | )% | |||||||||
Dental | 9,200 | 9,324 | (1 | )% | 20,363 | 22,317 | (9 | )% | |||||||||
Vision | 4,060 | 4,209 | (4 | )% | 9,591 | 9,793 | (2 | )% | |||||||||
Other | 6,528 | 8,777 | (26 | )% | 12,741 | 22,118 | (42 | )% | |||||||||
Total Ancillaries | 32,644 | 48,089 | (32 | )% | 71,160 | 99,502 | (28 | )% | |||||||||
Small Business (5) | 1,813 | 1,672 | 8 | % | 3,782 | 3,392 | 11 | % | |||||||||
Total Submitted Applications | 95,216 | 85,863 | 11 | % | 202,774 | 180,595 | 12 | % |
(1) | Medicare-related health insurance applications submitted on our website or through our customer care center during the period, including Medicare Advantage, Medicare Supplement and Medicare Part D prescription drug plans. |
(2) | The percentage of applications for Medicare Advantage and Medicare Supplement products submitted online through our platform increased from 9% for the three months ended June 30, 2018 to 11% for the three months ended June 30, 2019. The percentage of applications for Medicare Advantage and Medicare Supplement products submitted online through our platform increased from 8% for the six months ended June 30, 2018 to 12% for the six months ended June 30, 2019. |
(3) | 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. |
(4) | Ancillaries consists primarily of Short-term, Dental and Vision insurance plans submitted on our website during the period. |
(5) | Applications for Small Business health insurance 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 June 30, | Six Months Ended June 30, | |||||||||||||||||
2019 | 2018 | Percent Change | 2019 | 2018 | Percent Change | |||||||||||||
Medicare | ||||||||||||||||||
Medicare Advantage | 36,576 | 20,818 | 76 | % | 77,317 | 45,438 | 70 | % | ||||||||||
Medicare Supplement | 8,769 | 5,267 | 66 | % | 17,400 | 10,683 | 63 | % | ||||||||||
Medicare Part D | 7,224 | 3,417 | 111 | % | 15,751 | 7,719 | 104 | % | ||||||||||
Total Medicare | 52,569 | 29,502 | 78 | % | 110,468 | 63,840 | 73 | % | ||||||||||
Individual and Family | ||||||||||||||||||
Non-Qualified Health Plans | 1,934 | 1,275 | 52 | % | 8,005 | 10,488 | (24 | )% | ||||||||||
Qualified Health Plans | 920 | 1,214 | (24 | )% | 6,447 | 15,900 | (59 | )% | ||||||||||
Total Individual and Family | 2,854 | 2,489 | 15 | % | 14,452 | 26,388 | (45 | )% | ||||||||||
Ancillaries | ||||||||||||||||||
Short-term | 14,129 | 25,964 | (46 | )% | 29,061 | 46,960 | (38 | )% | ||||||||||
Dental | 9,478 | 9,302 | 2 | % | 22,534 | 23,464 | (4 | )% | ||||||||||
Vision | 4,428 | 4,444 | — | % | 10,843 | 11,039 | (2 | )% | ||||||||||
Other | 6,146 | 7,485 | (18 | )% | 11,358 | 16,731 | (32 | )% | ||||||||||
Total Ancillaries | 34,181 | 47,195 | (28 | )% | 73,796 | 98,194 | (25 | )% | ||||||||||
Small Business | 3,245 | 3,464 | (6 | )% | 7,497 | 8,758 | (14 | )% | ||||||||||
Total Approved Members | 92,849 | 82,650 | 12 | % | 206,213 | 197,180 | 5 | % |
As of June 30, | ||||||||
2019 | 2018 | Percent Change | ||||||
Medicare (1) | ||||||||
Medicare Advantage | 291,171 | 226,048 | 29 | % | ||||
Medicare Supplement | 80,779 | 61,316 | 32 | % | ||||
Medicare Part D | 149,312 | 106,573 | 40 | % | ||||
Total Medicare | 521,262 | 393,937 | 32 | % | ||||
Individual and Family (2) | 133,543 | 168,278 | (21 | )% | ||||
Ancillaries (3) | ||||||||
Short-term | 21,513 | 17,008 | 26 | % | ||||
Dental | 134,044 | 150,823 | (11 | )% | ||||
Vision | 74,157 | 75,696 | (2 | )% | ||||
Other | 37,102 | 34,964 | 6 | % | ||||
Total Ancillaries | 266,816 | 278,491 | (4 | )% | ||||
Small Business (4) | 46,076 | 37,010 | 24 | % | ||||
Total Estimated Membership | 967,697 | 877,716 | 10 | % |
(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. The estimated number of members active on Medicare-related health insurance as of the date indicated is 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 payment 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 June 30, | ||||||||||
2019 | 2018 | Percent Change | ||||||||
Medicare | ||||||||||
Medicare Advantage (1) | $ | 983 | $ | 851 | 15 | % | ||||
Medicare Supplement (1) | $ | 967 | $ | 1,026 | (6 | )% | ||||
Medicare Part D (1) | $ | 257 | $ | 294 | (12 | )% | ||||
Individual and Family | ||||||||||
Non-Qualified Health Plans (1) | $ | 167 | $ | 125 | 34 | % | ||||
Qualified Health Plans (1) | $ | 160 | $ | 100 | 60 | % | ||||
Ancillaries | ||||||||||
Short-term (1) | $ | 95 | $ | 57 | 67 | % | ||||
Dental (1) | $ | 65 | $ | 64 | 2 | % | ||||
Vision (1) | $ | 45 | $ | 46 | (3 | )% | ||||
Small Business (2) | $ | 160 | $ | 164 | (2 | )% |
(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 and Six Months Ended June 30, | |||||
2019 | 2018 | ||||
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 | % | |
Ancillaries | 10 | % | 10 | % | |
Small Business | — | % | — | % |
Three Months Ended June 30, | ||||||||||
2019 | 2018 | Percent Change | ||||||||
Medicare variable cost per approved member | ||||||||||
Medicare variable marketing cost per approved Medicare Advantage ("MA")-equivalent member (1) | $ | 335 | $ | 337 | (1 | )% | ||||
Medicare customer care and enrollment ("CC&E") cost per approved MA-equivalent member (2) | $ | 407 | $ | 410 | (1 | )% | ||||
Total Medicare cost per approved member | $ | 742 | $ | 747 | (1 | )% | ||||
Individual and Family Plan ("IFP") variable cost per approved member | ||||||||||
IFP variable marketing cost per approved IFP-equivalent member (3) | $ | 57 | $ | 48 | 18 | % | ||||
IFP CC&E cost per approved IFP-equivalent member (4) | $ | 160 | $ | 106 | 52 | % | ||||
Total IFP cost per approved member | $ | 217 | $ | 154 | 41 | % |
(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 partners 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) | Medicare CC&E cost per approved MA-equivalent member is equal to the CC&E expense of our Medicare business included in our operating costs 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. |
(3) | Variable marketing cost per approved IFP-equivalent member represents direct costs incurred in member acquisition for IFP plans from our direct, marketing partners 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. |
(4) | IFP CC&E cost per approved IFP-equivalent member is equal to the CC&E expense of our IFP business included in our operating costs 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. |
Three Months Ended June 30, | |||||||||||
2019 | 2018 | ||||||||||
Amount | Percent of Total Revenue | Amount | Percent of Total Revenue | ||||||||
GAAP marketing and advertising expense | $ | 23,104 | 35% | 14,606 | 45% | ||||||
Stock-based compensation expense (1) | (711 | ) | (1)% | (553 | ) | (2)% | |||||
Non-GAAP marketing and advertising expense | $ | 22,393 | 34% | 14,053 | 43% | ||||||
GAAP customer care and enrollment expense | $ | 21,479 | 33% | $ | 13,219 | 40% | |||||
Stock-based compensation expense (1) | (285 | ) | —% | (206 | ) | (1)% | |||||
Non-GAAP customer care and enrollment expense | $ | 21,194 | 32% | 13,013 | 40% | ||||||
GAAP technology and content expense | $ | 10,437 | 16% | $ | 7,287 | 22% | |||||
Stock-based compensation expense (1) | (668 | ) | (1)% | (383 | ) | (1)% | |||||
Non-GAAP technology and content expense | $ | 9,769 | 15% | 6,904 | 21% | ||||||
GAAP general and administrative expense | $ | 14,862 | 23% | $ | 11,240 | 34% | |||||
Stock-based compensation expense (1) | (3,014 | ) | (5)% | (1,989 | ) | (6)% | |||||
Non-GAAP general and administrative expense | $ | 11,848 | 18% | 9,251 | 28% | ||||||
GAAP operating costs and expenses | $ | 78,078 | 119% | $ | 49,577 | 152% | |||||
Stock-based compensation expense (1) | (4,678 | ) | (7)% | (3,131 | ) | (10)% | |||||
Change in fair value of earnout liability (2) | (7,200 | ) | (11)% | (2,500 | ) | (8)% | |||||
Acquisition costs (3) | — | —% | (18 | ) | —% | ||||||
Restructuring charges (4) | — | —% | (9 | ) | —% | ||||||
Amortization of intangible assets (5) | (547 | ) | (1)% | (547 | ) | (2)% | |||||
Non-GAAP operating costs and expenses | $ | 65,653 | 100% | $ | 43,372 | 133% | |||||
GAAP loss from operations | $ | (12,311 | ) | (19)% | $ | (16,920 | ) | (52)% | |||
Stock-based compensation expense (1) | 4,678 | 7% | 3,131 | 10% | |||||||
Change in fair value of earnout liability (2) | 7,200 | 11% | 2,500 | 8% | |||||||
Acquisition costs (3) | — | —% | 18 | —% | |||||||
Restructuring charges (4) | — | —% | 9 | —% | |||||||
Amortization of intangible assets (5) | 547 | 1% | 547 | 2% | |||||||
Non-GAAP income (loss) from operations | $ | 114 | —% | $ | (10,715 | ) | (33)% |
(1) | Non-GAAP income (loss) 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 net income (loss), Non-GAAP net income (loss) per 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. |
(3) | Non-GAAP income (loss) from operations excludes costs related to the acquisition of GoMedigap, which was completed in January 2018. |
(4) | Non-GAAP income (loss) from operations excludes restructuring charges. |
(5) | Non-GAAP income (loss) from operations excludes amortization of intangible assets. |
Six Months Ended June 30, | |||||||||||
2019 | 2018 | ||||||||||
Amount | Percent of Total Revenue | Amount | Percent of Total Revenue | ||||||||
GAAP marketing and advertising expense | $ | 47,045 | 35% | 29,608 | 39% | ||||||
Stock-based compensation expense (1) | (1,340 | ) | (1)% | (923 | ) | (1)% | |||||
Non-GAAP marketing and advertising expense | $ | 45,705 | 34% | 28,685 | 38% | ||||||
GAAP customer care and enrollment expense | $ | 41,423 | 31% | $ | 26,458 | 35% | |||||
Stock-based compensation expense (1) | (558 | ) | —% | (371 | ) | —% | |||||
Non-GAAP customer care and enrollment expense | $ | 40,865 | 30% | 26,087 | 34% | ||||||
GAAP technology and content expense | $ | 19,454 | 14% | $ | 15,628 | 21% | |||||
Stock-based compensation expense (1) | (1,217 | ) | (1)% | (726 | ) | (1)% | |||||
Non-GAAP technology and content expense | $ | 18,237 | 14% | 14,902 | 20% | ||||||
GAAP general and administrative expense | $ | 26,140 | 19% | $ | 21,931 | 29% | |||||
Stock-based compensation expense (1) | (4,792 | ) | (4)% | (3,661 | ) | (5)% | |||||
Non-GAAP general and administrative expense | $ | 21,348 | 16% | 18,270 | 24% | ||||||
GAAP operating costs and expenses | $ | 156,034 | 116% | $ | 99,367 | 131% | |||||
Stock-based compensation expense (1) | (7,907 | ) | (6)% | (5,681 | ) | (8)% | |||||
Change in fair value of earnout liability (2) | (20,506 | ) | (15)% | (2,500 | ) | (3)% | |||||
Acquisition costs (3) | — | —% | (76 | ) | —% | ||||||
Restructuring charges (4) | — | —% | (1,865 | ) | (2)% | ||||||
Amortization of intangible assets (5) | (1,094 | ) | (1)% | (998 | ) | (1)% | |||||
Non-GAAP operating costs and expenses | $ | 126,527 | 94% | $ | 88,247 | 117% | |||||
GAAP loss from operations | $ | (21,494 | ) | (16)% | $ | (23,640 | ) | (31)% | |||
Stock-based compensation expense (1) | 7,907 | 6% | 5,681 | 8% | |||||||
Change in fair value of earnout liability (2) | 20,506 | 15% | 2,500 | 3% | |||||||
Acquisition costs (3) | — | —% | 76 | —% | |||||||
Restructuring charges (4) | — | —% | 1,865 | 2% | |||||||
Amortization of intangible assets (5) | 1,094 | 1% | 998 | 1% | |||||||
Non-GAAP income (loss) from operations | $ | 8,013 | 6% | $ | (12,520 | ) | (17)% |
(1) | Non-GAAP income (loss) 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 net income (loss), Non-GAAP net income (loss) per 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. |
(3) | Non-GAAP income (loss) from operations excludes costs related to the acquisition of GoMedigap, which was completed in January 2018. |
(4) | Non-GAAP income (loss) from operations excludes restructuring charges. |
(5) | Non-GAAP income (loss) from operations excludes amortization of intangible assets. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
GAAP net loss | $ | (5,754 | ) | $ | (12,014 | ) | $ | (10,913 | ) | $ | (16,859 | ) | |||
Stock-based compensation expense (1) | 4,678 | 3,131 | 7,907 | 5,681 | |||||||||||
Change in fair value of earnout liability (2) | 7,200 | 2,500 | 20,506 | 2,500 | |||||||||||
Acquisition costs (3) | — | 18 | — | 76 | |||||||||||
Restructuring charges (4) | — | 9 | — | 1,865 | |||||||||||
Amortization of intangible assets (5) | 547 | 547 | 1,094 | 998 | |||||||||||
Tax effect of non-GAAP adjustments (6) | (4,407 | ) | (1,739 | ) | (9,094 | ) | (3,114 | ) | |||||||
Non-GAAP net income (loss) | $ | 2,264 | $ | (7,548 | ) | $ | 9,500 | $ | (8,853 | ) | |||||
GAAP net loss per diluted share | $ | (0.25 | ) | $ | (0.63 | ) | $ | (0.48 | ) | $ | (0.89 | ) | |||
Stock-based compensation expense (1) | 0.20 | 0.16 | 0.35 | 0.30 | |||||||||||
Change in fair value of earnout liability (2) | 0.31 | 0.13 | 0.91 | 0.13 | |||||||||||
Acquisition costs (3) | — | — | — | — | |||||||||||
Restructuring charges (4) | — | — | — | 0.10 | |||||||||||
Amortization of intangible assets (5) | 0.02 | 0.03 | 0.05 | 0.05 | |||||||||||
Tax effect of non-GAAP adjustments (6) | (0.18 | ) | (0.09 | ) | (0.41 | ) | (0.16 | ) | |||||||
Non-GAAP net income (loss) per diluted share | $ | 0.10 | $ | (0.40 | ) | $ | 0.42 | $ | (0.47 | ) | |||||
GAAP net loss | $ | (5,754 | ) | $ | (12,014 | ) | $ | (10,913 | ) | $ | (16,859 | ) | |||
Stock-based compensation expense (1) | 4,678 | 3,131 | 7,907 | 5,681 | |||||||||||
Change in fair value of earnout liability (2) | 7,200 | 2,500 | 20,506 | 2,500 | |||||||||||
Depreciation and amortization (7) | 733 | 631 | 1,388 | 1,250 | |||||||||||
Acquisition costs (3) | — | 18 | — | 76 | |||||||||||
Restructuring charges (4) | — | 9 | — | 1,865 | |||||||||||
Amortization of intangible assets (5) | 547 | 547 | 1,094 | 998 | |||||||||||
Other income, net (8) | (699 | ) | (296 | ) | (1,256 | ) | (480 | ) | |||||||
Benefit from income taxes (9) | (5,858 | ) | (4,610 | ) | (9,325 | ) | (6,301 | ) | |||||||
Adjusted EBITDA | $ | 847 | $ | (10,084 | ) | $ | 9,401 | $ | (11,270 | ) |
(1) | Non-GAAP net income (loss), Non-GAAP net income (loss) 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 (loss), Non-GAAP net income (loss) 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. |
(3) | Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share and Adjusted EBITDA exclude costs related to the acquisition of GoMedigap, which was completed in January 2018. |
(4) | Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share and Adjusted EBITDA exclude restructuring charges. |
(5) | Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share and Adjusted EBITDA exclude amortization of intangible assets. |
(6) | Non-GAAP net income (loss) and Non-GAAP net income (loss) per diluted share exclude the tax effect of non-GAAP adjustments. |
(7) | Adjusted EBITDA excludes depreciation and amortization. |
(8) | Adjusted EBITDA excludes other income, net. |
(9) | Adjusted EBITDA excludes benefit from income taxes. |
Year Ending December 31, 2019 | |||||||
Low | High | ||||||
GAAP net income | $ | 15.5 | $ | 20.5 | |||
Stock-based compensation expense | 19.0 | 19.0 | |||||
Amortization of intangible assets | 2.2 | 2.2 | |||||
Change in fair value of earnout liability | 20.5 | 20.5 | |||||
Tax effect of non-GAAP adjustments | (12.9 | ) | (12.9 | ) | |||
Non-GAAP net income (1) | $ | 44.3 | $ | 49.3 | |||
GAAP net income per diluted share | $ | 0.62 | $ | 0.82 | |||
Stock-based compensation expense | 0.76 | 0.76 | |||||
Amortization of intangible assets | 0.09 | 0.09 | |||||
Change in fair value of earnout liability | 0.82 | 0.82 | |||||
Tax effect of non-GAAP adjustments | (0.52 | ) | (0.52 | ) | |||
Non-GAAP net income per diluted share (2) | $ | 1.77 | $ | 1.97 | |||
GAAP net income | $ | 15.5 | $ | 20.5 | |||
Stock-based compensation expense | 19.0 | 19.0 | |||||
Depreciation and amortization | 3.5 | 3.5 | |||||
Amortization of intangible assets | 2.2 | 2.2 | |||||
Change in fair value of earnout liability | 20.5 | 20.5 | |||||
Other income, net | (1.2 | ) | (3.2 | ) | |||
Provision for income taxes | 5.5 | 7.5 | |||||
Adjusted EBITDA (3) | $ | 65.0 | $ | 70.0 |
(1) | Non-GAAP net income is calculated by adding stock-based compensation, amortization of intangible assets, change in fair value of earnout liability and the income tax effect of non-GAAP adjustments to GAAP net income. |
(2) | Non-GAAP net income per diluted share is calculated by adding stock-based compensation expense per diluted share, amortization of intangible assets per diluted share, change in fair value of earnout liability per diluted share and the income tax effect of non-GAAP adjustments to GAAP net income per diluted share. |
(3) | Adjusted EBITDA is calculated by adding stock-based compensation, depreciation and amortization expense, amortization of intangible assets, change in fair value of earnout liability, other income, net and provision for income taxes to GAAP net income. |