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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 001-33071
_____________________________________________
EHEALTH, INC.
(Exact name of registrant as specified in its charter)
_____________________________________________
Delaware
56-2357876
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

2625 AUGUSTINE DRIVE, SUITE 150
SANTA CLARA, CA 95054
 (Address of principal executive offices)

(650) 210-3150
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.001 per shareEHTHThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
The number of shares of the registrant’s common stock, par value $0.001 per share, outstanding as of November 3, 2023 was 28,364,821 shares.




CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The words “expect,” “anticipate,” “believe,” “estimate,” “target,” “goal,” “project,” “hope,” “intend,” “plan,” “seek,” “continue,” “may,” “could,” “should,” “might,” “forecast,” “depends,” “predict” and variations or the negative of such words and similar expressions are intended to identify such forward-looking statements. These statements include, among other things, statements regarding the following:

our expectations relating to estimated membership and approved members;
our estimates regarding the constrained lifetime value of commissions and commissions receivable;
our expectations relating to revenue, operating costs, cash flows and profitability;
our expectations regarding our strategy and investments;
our expectations regarding our business and market trends, including market opportunity, consumer demand and our competitive advantage;
our expectations regarding our individual and family business, Medicare Supplement and other ancillary products, including anticipated trends and our ability to enroll individuals and families into qualified health plans;
our expectations regarding our growth strategies and cost-saving initiatives;
the impact of future and existing laws and regulations on our business;
the impact of public health crises, pandemics, natural disasters, changing climate conditions and other extreme events;
the impact of macroeconomic conditions, including adverse events or perceptions affecting the U.S. or international financial systems, inflationary pressures and the political climate on our business;
our expectations regarding commission rates, conversion rates, plan termination rates and duration, membership retention rates and membership acquisition costs;
our expectations regarding insurance agent licensing and productivity;
our expectations regarding beneficiary complaints, customer experience and enrollment quality;
our expectations relating to the seasonality of our business;
expected competition, including from government-run health insurance exchanges and other sources;
our expectations relating to marketing and advertising investments and expected contributions from our marketing and strategic partnership channels;
the timing of our receipt of commission and other payments;
our critical accounting policies and related estimates;
liquidity and capital needs;
political, legislative, regulatory and legal challenges;
the merits or potential impact of any lawsuits filed against us; and
other statements regarding our future operations, financial condition, prospects and business strategies.

We have based these forward-looking statements on our current expectations about future events. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Our actual results may differ materially from those suggested by these forward-looking statements for various reasons, including our ability to retain existing members and enroll new members during the annual healthcare open enrollment period, the Medicare annual enrollment period, the Medicare Advantage open enrollment period and other special enrollment periods; changes in laws, regulations and guidelines, including in connection with healthcare reform or with respect to the marketing and sale of Medicare plans; competition, including competition from government-run health insurance exchanges and other sources; the seasonality of our business and the fluctuation of our operating results; our ability to accurately estimate membership, lifetime value of commissions and commissions receivable; changes in product offerings among carriers on our ecommerce platform and changes in our estimated conversion rate of an approved member to a paying member and the resulting impact of each on our commission revenue; the concentration of our revenue with a small number of health insurance carriers; our ability to execute on our growth strategy and other business initiatives; changes in our management and key employees; our ability to hire, train, retain and ensure the productivity of licensed insurance agents, or benefit advisors, and other employees; exposure to security risks and our ability to safeguard the security and privacy of confidential data; our relationships with health insurance carriers; the success of our carrier advertising



and sponsorship program; our success in marketing and selling health insurance plans and our unit cost of acquisition; our ability to effectively manage our operations as our business evolves and execute on our transformation plan and other strategic initiatives; the need for health insurance carrier and regulatory approvals in connection with the marketing of Medicare-related insurance products; changes in the market for private health insurance; consumer satisfaction of our service and actions we take to improve the quality of enrollments; changes in member conversion rates; changes in commission rates; our ability to sell qualified health insurance plans to subsidy-eligible individuals and to enroll subsidy-eligible individuals through government-run health insurance exchanges; our ability to maintain and enhance our brand identity; our ability to derive desired benefits from investments in our business, including membership growth and retention initiatives; reliance on marketing partners; the impact of our direct-to-consumer mail, email, social media, telephone and television marketing efforts; timing of receipt and accuracy of commission reports; payment practices of health insurance carriers; dependence on our operations in China; the restrictions in our debt obligations; the restrictions in our investment agreement with convertible preferred stock investors; our ability to raise additional capital; compliance with insurance, privacy, cybersecurity and other laws and regulations; the outcome of litigation in which we may from time to time be involved; the performance, reliability and availability of our information technology systems, ecommerce platform and underlying network infrastructure, including any new systems we may implement; public health crises, pandemics, natural disasters, changing climate conditions and other extreme events; general economic conditions, including inflation, recession, financial, banking and credit market disruptions; our ability to affectively administer our self-insurance program; and those identified under the heading “Risk Factors” in Part II, Item 1A of this report and those discussed in our other Securities and Exchange Commission filings. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this report are made only as of the date hereof. Except as required by applicable law, we do not undertake, and specifically decline, any obligation to update any of these statements or to publicly announce the results of any revisions to any forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.

Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause our actual results to differ materially from those in the forward-looking statements.




SUMMARY OF RISK FACTORS

The following is a summary of the principal risks we face, any of which could adversely affect our business, operating results, financial condition or prospects:

The markets in which we participate are intensely competitive, and if we cannot compete effectively against current and future competitors, including government-run health insurance exchanges, our business, operating results and financial condition could suffer.
Our business may be harmed if we lose our relationship with health insurance carriers or our relationship with health insurance carriers is modified.
We derive a significant portion of our revenue from a small number of health insurance carriers, and any impairment of our relationship with them or impairment of their business could adversely affect our business, operating results and financial condition.
If we are unable to successfully attract and convert qualified prospects into members for whom we receive commissions, our business, operating results and financial condition would be harmed.
Our financial results will be adversely impacted if we are unable to retain our existing members.
Our business is seasonal in nature, and if we are not successful in responding to changes in the seasonality of our business, our business, operating results and financial condition could be harmed.
Changes in our management or key employees could affect our business and financial results.
Our business success depends on our ability to timely hire, train and retain qualified licensed insurance agents and other employees to provide superior customer service and support our strategic initiatives while also controlling our labor costs.
Our business may be harmed if we are not successful in executing on our operational and strategic plans, including our growth strategies, cost-saving and enrollment quality initiatives.
Our failure to effectively manage our operations and maintain our company culture as our business evolves and our work practices change could harm us.
If we are not able to maintain and enhance our brand, our business and operating results could be harmed.
We depend upon Internet search engines and social media platforms to attract a significant portion of the consumers who visit our website, and if we are unable to effectively advertise on search engines or social media platforms on a cost-effective basis, our business and operating results would be harmed.
We rely significantly on marketing partners, and our business and operating results would be harmed if we are unable to maintain effective relationships with our existing marketing partners or if we do not establish successful relationships with new marketing partners.
If our carrier advertising and sponsorship program is not successful, our business, operating results and financial condition could be harmed.
Our commission revenue could be negatively impacted by changes in our estimated conversion rate of an approved member to a paying member, our forecast of average plan duration or our forecast of likely commission amounts.
If commission reports we receive from carriers are inaccurate or not sent to us in a timely manner, our business and operating results could be harmed, and we may not recognize trends in our membership.
We do not receive information about membership cancellations from our health insurance carriers directly, which makes it difficult for us to determine the impact of current conditions on our membership retention and to accurately estimate membership as of a specific date.
Our operations in China involve many risks that could increase expenses, expose us to increased liability and adversely affect our business, operating results and financial condition.
Our self-insurance programs may expose us to significant and unexpected costs and losses.
The marketing and sale of Medicare plans are subject to numerous, complex and frequently changing laws, regulations and guidelines, and non-compliance with or changes in laws, regulations and guidelines could harm our business, operating results and financial condition.
Changes and developments in the health insurance industry or system, including changes in laws and regulations, could harm our business, operating results and financial condition.
From time to time we are subject to various legal proceedings which could adversely affect our business.
We may be unable to operate our business if we fail to maintain our health insurance licenses and otherwise comply with the numerous laws and regulations applicable to the sale of health insurance.
Increasing regulatory focus on privacy and data security issues and expanding laws could impact our business and expose us to increased liability.



Any legal liability, regulatory penalties, complaints or negative publicity related to the information on our website or that we otherwise provide could harm our business, operating results and financial condition.
Our operating results will be impacted by factors that impact our estimate of the constrained lifetime value of commissions per approved member.
Our agreements with our lender and convertible preferred stock investors contain restrictions that impact our business and expose us to risks that could materially adversely affect our liquidity and financial condition.
Operating and growing our business is likely to require additional capital, and if capital is not available to us, our business, operating results and financial condition may suffer.
If we fail to properly maintain existing or implement new information systems, our business may be materially adversely affected.
Our business is subject to security risks, and if we experience a successful cyberattack, a security breach or are otherwise unable to safeguard the confidentiality and integrity of the data we hold, including sensitive personal information, our business will be harmed.
We may not be able to adequately protect our intellectual property, which could harm our business and operating results.
Our future operating results are likely to fluctuate and could fall short of expectations, which could negatively affect the value of our common stock.
Our actual operating results may differ significantly from our guidance.
The price of our common stock has been and may continue to be volatile, and the value of your investment could decline.
Our convertible preferred stock investors have rights, preferences and privileges that are not held by, and are preferential to, the rights of our common stockholders, which could adversely affect our liquidity and financial condition, result in the interests of our convertible preferred stock investors differing from those of our common stockholders and make an acquisition of us more difficult.
We are subject to risks associated with public health crises, pandemics, natural disasters, changing climate conditions and other extreme events, including legal, regulatory and social responses thereto, which have and could have an adverse effect on our business.
We face risks related to heightened inflation, recession, financial and credit market disruptions and other economic conditions.

Our Risk Factors are not guarantees that no such conditions exist as of the date of this report and should not be interpreted as an affirmative statement that such risks or conditions have not materialized, in whole or in part.



EHEALTH, INC.
FORM 10-Q

TABLE OF CONTENTS
PART I FINANCIAL INFORMATIONPAGE
Item 1.
Item 2.
Item 3.
Item 4.
PART II 
OTHER INFORMATION
Item 1.
Item 1A.
Item 5.
Item 6.





















1



PART I.    FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS

EHEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
 September 30, 2023December 31, 2022
Assets
Current assets:
Cash and cash equivalents$152,118 $144,401 
Short-term marketable securities8,469  
Accounts receivable522 2,633 
Contract assets – commissions receivable – current212,399 242,749 
Prepaid expenses and other current assets23,233 11,301 
Total current assets396,741 401,084 
Contract assets – commissions receivable – non-current568,177 641,555 
Property and equipment, net5,427 5,501 
Operating lease right-of-use assets23,943 26,516 
Restricted cash3,090 3,239 
Other assets28,998 34,716 
Total assets$1,026,376 $1,112,611 
Liabilities, convertible preferred stock and stockholders’ equity
Current liabilities:
Accounts payable$7,004 $6,732 
Accrued compensation and benefits26,793 20,690 
Accrued marketing expenses7,423 23,770 
Lease liabilities – current6,902 6,486 
Other current liabilities5,126 2,887 
Total current liabilities53,248 60,565 
Long-term debt67,321 66,129 
Deferred income taxes – non-current23,048 32,359 
Lease liabilities – non-current30,138 34,187 
Other non-current liabilities4,101 5,132 
Total liabilities177,856 198,372 
Commitments and contingencies (Note 8)
Convertible preferred stock288,883 263,284 
Stockholders’ equity:
Common stock40 40 
Additional paid-in capital794,135 777,187 
Treasury stock, at cost(199,998)(199,998)
Retained earnings (accumulated deficit)(34,407)73,799 
Accumulated other comprehensive loss(133)(73)
Total stockholders’ equity559,637 650,955 
Total liabilities, convertible preferred stock and stockholders’ equity$1,026,376 $1,112,611 

The accompanying notes are an integral part of these condensed consolidated financial statements.
2



EHEALTH, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands, except per share amounts, unaudited)
Three Months Ended
 September 30,
Nine Months Ended
 September 30,
2023202220232022
Revenue:  
Commission$57,239 $48,977 $185,428 $190,662 
Other7,479 4,399 19,781 18,373 
Total revenue64,718 53,376 205,209 209,035 
Operating costs and expenses:
Cost of revenue194 494 662 790 
Marketing and advertising28,988 30,556 85,171 118,973 
Customer care and enrollment40,682 29,398 100,501 100,711 
Technology and content13,828 19,399 43,872 56,842 
General and administrative20,422 17,300 63,445 54,485 
Impairment, restructuring and other charges 4,498  10,690 
Total operating costs and expenses104,114 101,645 293,651 342,491 
Loss from operations(39,396)(48,269)(88,442)(133,456)
Other expense, net(138)(647)(622)(2,835)
Loss before income taxes(39,534)(48,916)(89,064)(136,291)
Benefit from income taxes(2,509)(9,767)(8,660)(26,898)
Net loss(37,025)(39,149)(80,404)(109,393)
Preferred stock dividends(5,320)(4,933)(15,644)(14,420)
Change in preferred stock redemption value(4,898)(2,916)(12,158)(8,173)
Net loss attributable to common stockholders$(47,243)$(46,998)$(108,206)$(131,986)
 
Net loss per share attributable to common stockholders:
Basic and diluted$(1.68)$(1.72)$(3.88)$(4.83)
Weighted-average number of shares used in per share amounts:
Basic and diluted28,114 27,346 27,863 27,329 
Comprehensive income (loss):
Net loss$(37,025)$(39,149)$(80,404)$(109,393)
Unrealized gain (loss) for available-for-sale debt securities, net of tax(15)(4)5 (6)
Foreign currency translation adjustments73 (245)(65)(483)
Comprehensive loss$(36,967)$(39,398)$(80,464)$(109,882)

The accompanying notes are an integral part of these condensed consolidated financial statements.
3



EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, unaudited)

 Common StockAdditional Paid-in
Capital
Treasury Stock
Retained Earnings (Accumulated Deficit)
Accumulated Other Comprehensive Income (Loss)Total Stockholders’ Equity
 SharesAmountSharesAmount
Balance as of December 31, 202239,977 $40 $777,187 12,415 $(199,998)$73,799 $(73)$650,955 
Issuance of common stock in connection with equity incentive plans160 — — — — — — — 
Repurchase of shares to satisfy employee tax withholding obligations— — (428)57 — — — (428)
Dividends and accretion related to convertible preferred stock— — — — — (8,170)— (8,170)
Stock-based compensation— — 5,306 — — — — 5,306 
Other comprehensive income, net of tax— — — — — — 123 123 
Net loss— — — — — (19,878)— (19,878)
Balance as of March 31, 202340,137 $40 $782,065 12,472 $(199,998)$45,751 $50 $627,908 
Issuance of common stock in connection with equity incentive plans320 — — — — — — — 
Repurchase of shares to satisfy employee tax withholding obligations— — (623)70 — — — (623)
Dividends and accretion related to convertible preferred stock— — — — — (9,414)— (9,414)
Issuance of common stock for employee stock purchase program76 — 262 — — — — 262 
Stock-based compensation— — 6,518 — — — — 6,518 
Other comprehensive loss, net of tax— — — — — — (241)(241)
Net loss— — — — — (23,501)— (23,501)
Balance as of June 30, 202340,533 $40 $788,222 12,542 $(199,998)$12,836 $(191)$600,909 
Issuance of common stock in connection with equity incentive plans343 — — — — — — — 
Repurchase of shares to satisfy employee tax withholding obligations— — (884)116 — — — (884)
Dividends and accretion related to convertible preferred stock— — — — — (10,218)— (10,218)
Stock-based compensation— — 6,797 — — — — 6,797 
Other comprehensive income, net of tax
— — — — — — 58 58 
Net loss— — — — — (37,025)— (37,025)
Balance as of September 30, 202340,876 $40 $794,135 12,658 $(199,998)$(34,407)$(133)$559,637 

The accompanying notes are an integral part of these condensed consolidated financial statements.
4



EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, unaudited, continued)

 Common StockAdditional Paid-in
Capital
Treasury StockRetained Earnings
Accumulated Other Comprehensive Income (Loss)
Total Stockholders’ Equity
 SharesAmountSharesAmount
Balance as of December 31, 202138,704 $39 $755,875 12,016 $(199,998)$193,213 $390 $749,519 
Issuance of common stock in connection with equity incentive plans176 — 1,054 — — — — 1,054 
Repurchase of shares to satisfy employee tax withholding obligations— — (508)37 — — — (508)
Dividends and accretion related to convertible preferred stock— — — — — (7,218)— (7,218)
Stock-based compensation— — 5,791 — — — — 5,791 
Other comprehensive income, net of tax— — — — — — 31 31 
Net loss— — — — — (32,742)— (32,742)
Balance as of March 31, 202238,880 $39 $762,212 12,053 $(199,998)$153,253 $421 $715,927 
Issuance of common stock in connection with equity incentive plans530 1 — — — — — 1 
Repurchase of shares to satisfy employee tax withholding obligations— — (1,926)234 — — — (1,926)
Dividends and accretion related to convertible preferred stock— — — — — (7,526)— (7,526)
Issuance of common stock for employee stock purchase program83 — 873 — — — — 873 
Stock-based compensation— — 6,005 — — — — 6,005 
Other comprehensive loss, net of tax— — — — — — (271)(271)
Net loss— — — — — (37,502)— (37,502)
Balance as of June 30, 202239,493 $40 $767,164 12,287 $(199,998)$108,225 $150 $675,581 
Issuance of common stock in connection with equity incentive plans214 — — — — — — — 
Repurchase of shares to satisfy employee tax withholding obligations— — (467)71 — — — (467)
Dividends and accretion related to convertible preferred stock— — — — — (7,849)— (7,849)
Stock-based compensation— — 5,631 — — — — 5,631 
Other comprehensive loss, net of tax— — — — — — (249)(249)
Net loss— — — — — (39,149)— (39,149)
Balance as of September 30, 202239,707 $40 $772,328 12,358 $(199,998)$61,227 $(99)$633,498 

The accompanying notes are an integral part of these condensed consolidated financial statements.
5



EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(in thousands, unaudited)

Nine Months Ended
 September 30,
 20232022
Operating activities:
Net loss$(80,404)$(109,393)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization1,908 2,971 
Amortization of internally developed software13,233 12,714 
Stock-based compensation expense17,741 15,934 
Deferred income taxes(9,311)(27,207)
Impairment charges 3,734 
Other non-cash items5 1,333 
Changes in operating assets and liabilities:
Accounts receivable2,110 3,946 
Contract assets – commissions receivable104,160 122,410 
Prepaid expenses and other assets(12,597)2,728 
Accounts payable181 (7,118)
Accrued compensation and benefits6,102 (1,345)
Accrued marketing expenses(16,347)(28,175)
Deferred revenue1,323 (284)
Accrued expenses and other liabilities(1,410)(538)
Net cash provided by (used in) operating activities26,694 (8,290)
Investing activities:
Capitalized internal-use software and website development costs(7,028)(12,540)
Purchases of property and equipment and other assets(1,759)(192)
Purchases of marketable securities(48,602)(8,402)
Proceeds from redemption and maturities of marketable securities40,900 45,269 
Net cash provided by (used in) investing activities(16,489)24,135 
Financing activities:
Net proceeds from debt financing 64,862 
Net proceeds from exercise of common stock options and employee stock purchases262 1,054 
Repurchase of shares to satisfy employee tax withholding obligations(1,935)(2,901)
Principal payments in connection with leases(33)(90)
Payments of preferred stock dividends(873) 
Net cash provided by (used in) financing activities(2,579)62,925 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(58)(438)
Net increase in cash, cash equivalents and restricted cash7,568 78,332 
Cash, cash equivalents and restricted cash at beginning of period147,640 85,165 
Cash, cash equivalents and restricted cash at end of period$155,208 $163,497 


 The accompanying notes are an integral part of these condensed consolidated financial statements.
6




EHEALTH, INC. 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Note 1Summary of Business and Significant Accounting Policies

Description of Business – eHealth, Inc., a Delaware corporation, and its consolidated subsidiaries (collectively, “eHealth”) is a leading private online health insurance marketplace with a technology and service platform that provides consumer engagement, education and health insurance enrollment solutions. Our mission is to expertly guide consumers through their health insurance enrollment and related options, when, where and how they prefer. Our platform leverages technology to solve a critical problem in a large and growing market by aiding consumers in what has traditionally been a complex, confusing and opaque health insurance purchasing process. Our omnichannel consumer engagement platform differentiates our offering from other brokers and enables consumers to use our services online, by telephone with a licensed insurance agent, or benefit advisor, or through a hybrid online assisted interaction that includes live agent chat and co-browsing capabilities. We have created a consumer-centric marketplace that offers consumers a broad choice of insurance products that includes thousands of Medicare Advantage, Medicare Supplement, Medicare Part D prescription drug, individual, family, small business and other ancillary health insurance products from over 180 health insurance carriers nationwide. Our plan recommendation tool curates this broad plan selection by analyzing customer health-related information against plan data for insurance coverage fit. This tool is supported by a unified data platform and is available to our ecommerce customers and our benefit advisors. We strive to be the most trusted partner to the consumer in their life’s journey through the health insurance market.

Unless otherwise specified or required by the context, references in this Quarterly Report on Form 10-Q to “eHealth,” “the Company,” “we,” “us” or “our” mean eHealth, Inc. and its consolidated direct and indirect wholly-owned subsidiaries.

Basis of Presentation – The accompanying Condensed Consolidated Balance Sheet as of September 30, 2023 and other condensed consolidated financial statements for the three and nine months ended September 30, 2023 and 2022 are unaudited. The Condensed Consolidated Balance Sheet data as of December 31, 2022 was derived from the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Securities and Exchange Commission on March 1, 2023. The accompanying financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K.

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and reflect all normal recurring adjustments that are necessary to present fairly the results for the interim periods presented. The condensed consolidated financial statements include the accounts of eHealth, Inc. and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted in accordance with those rules and regulations.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022 and include all adjustments necessary for the fair presentation of our financial position as of September 30, 2023 and December 31, 2022, and our results of operations for the periods presented. The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31, 2023 and therefore, should not be relied upon as an indicator of future results.

7




EHEALTH, INC. 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Significant Accounting Policies, Estimates and Judgments – The preparation of condensed consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates, including those related to, but not limited to, the fair value of investments, the commissions we expect to collect for each approved member cohort, valuation allowance for deferred income taxes, provision (benefit) for income taxes and the assumptions used in determining stock-based compensation. We base our estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that we believe to be reasonable. Actual results may differ from these estimates. There have been no material changes for the nine months ended September 30, 2023 to our significant accounting policies discussed in our Annual Report on Form 10-K for the year ended December 31, 2022.

Recently Adopted Accounting Pronouncements

We did not adopt any new accounting pronouncements during the nine months ended September 30, 2023.

8




EHEALTH, INC. 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 2Revenue

Disaggregation of Revenue – The table below depicts the disaggregation of revenue by product and is consistent with how we evaluate our financial performance (in thousands):

Three Months Ended
 September 30,
Nine Months Ended
 September 30,
2023202220232022
Medicare
Medicare Advantage$43,721 $37,454 $143,231 $152,061 
Medicare Supplement2,630 2,534 7,786 11,291 
Medicare Part D2,046 1,167 4,686 2,165 
Total Medicare48,397 41,155 155,703 165,517 
Individual and Family (1)
Non-Qualified Health Plans1,560 1,991 6,904 5,970 
Qualified Health Plans681 714 4,084 2,975 
Total Individual and Family2,241 2,705 10,988 8,945 
Ancillary
Short-term870 967 2,426 3,287 
Dental649 715 2,317 2,249 
Vision486 245 972 741 
Other555 674 1,788 1,803 
Total Ancillary2,560 2,601 7,503 8,080 
Small Business3,884 2,640 12,557 8,546 
Commission Bonus and Other157 (124)(1,323)(426)
Total Commission Revenue57,239 48,977 185,428 190,662 
Other Revenue
Sponsorship and Advertising Revenue7,135 3,805 18,195 16,540 
Other344 594 1,586 1,833 
Total Other Revenue7,479 4,399 19,781 18,373 
Total Revenue$64,718 $53,376 $205,209 $209,035 
_____________

(1)We define our individual and family plan offerings as major medical individual and family health insurance plans, which do not include Medicare-related, small business or ancillary plans. Individual and family plans include both qualified and non-qualified plans. Qualified health plans 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 do not meet the requirements of the Affordable Care Act and are not offered through the government-run health insurance exchange in the relevant jurisdiction. Individuals that purchase non-qualified health plans cannot receive a subsidy in connection with the purchase of non-qualified plans.



9




EHEALTH, INC. 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Commission revenue by segment is presented in the table below (in thousands):
Three Months Ended
 September 30,
Nine Months Ended
 September 30,
2023202220232022
Medicare
Commission revenue from members approved during the period$39,169 $39,652 $131,792 $173,790 
Net commission revenue from members approved in prior periods (1)
9,291 1,685 22,746 (9,052)
Total Medicare segment commission revenue$48,460 $41,337 $154,538 $164,738 
Individual, Family and Small Business
Commission revenue from members approved during the period$3,829 $3,600 $13,835 $14,254 
Commission revenue from renewals of small business members during the period2,028 2,200 7,299 7,281 
Net commission revenue from members approved in prior periods (1)
2,922 1,840 9,756 4,389 
Total Individual, Family and Small Business segment commission revenue$8,779 $7,640 $30,890 $25,924 
Total commission revenue from members approved during the period$42,998 $43,252 $145,627 $188,044 
Commission revenue from renewals of small business members during the period 2,028 2,200 7,299 7,281 
Total net commission revenue from members approved in prior periods (1)(2)
12,213 3,525 32,502 (4,663)
Total commission revenue$57,239 $48,977 $185,428 $190,662 
_____________

(1)These amounts reflect our revised estimates of cash collections for certain members approved prior to the relevant reporting period that are recognized as adjustments to revenue within the relevant reporting period. The net adjustment revenue includes both increases in revenue for certain prior period cohorts as well as reductions in revenue for certain prior period cohorts.
(2)The impacts of total net commission revenue from members approved in prior periods were $0.43 and $0.13 per basic and diluted share for the three months ended September 30, 2023 and 2022, respectively. The impacts of total net commission revenue from members approved in prior periods were $1.17 and $(0.17) per basic and diluted share for the nine months ended September 30, 2023 and 2022, respectively.
The total reductions to revenue from members approved in prior periods were $0.8 million and $2.1 million for the three months ended September 30, 2023 and 2022, respectively, and $3.7 million and $15.8 million for the nine months ended September 30, 2023 and 2022, respectively. These reductions to revenue primarily relate to the Medicare segment.


Note 3Supplemental Financial Statement Information

Cash, Cash Equivalents and Restricted Cash

We consider all investments with an original maturity of 90 days or less from the date of purchase to be cash equivalents. Cash and cash equivalents are stated at fair value. We also invest in marketable securities that are measured and recorded at fair value. See Note 4Fair Value Measurements for further discussion about our marketable securities.

10




EHEALTH, INC. 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Our cash, cash equivalents and restricted cash balances are summarized as follows (in thousands):
September 30, 2023December 31, 2022
Cash$22,835 $17,776 
Cash equivalents129,283 126,625 
Cash and cash equivalents152,118 144,401 
Restricted cash3,090 3,239 
Total cash, cash equivalents and restricted cash$155,208 $147,640 

As of September 30, 2023 and December 31, 2022, we had $3.1 million and $3.2 million of restricted cash which was classified as a non-current asset on our Condensed Consolidated Balance Sheets. This amount collateralizes letters of credit related to certain lease commitments.

Contract Assets and Accounts Receivable

We estimate an allowance for credit losses using relevant available information from internal and external sources, related to past events, current conditions and reasonable and supportable forecasts. Specifically, for the purpose of measuring the probability of default parameters, we utilize Capital IQ’s, Standard & Poor’s and Moody’s analytics. Our estimates of loss given default are determined by using our historical collections data as well as historical information obtained through our research and review of other insurance related companies. Our estimated exposure at default is determined by applying these internal and external data sources to our commissions receivable balances. As such, we apply an immediate reversion method and revert to historical loss information when computing our credit loss exposure. Credit loss expenses are assessed quarterly and are included in the “General and administrative” line in our Condensed Consolidated Statements of Comprehensive Loss. There were no write-offs during the nine months ended September 30, 2023 or for the year ended December 31, 2022.

The change in the allowance for credit losses is summarized as follows (in thousands): 

September 30, 2023December 31, 2022
Beginning balance$2,398 $2,198 
Change in allowance(433)200 
Ending balance$1,965 $2,398 


Our contract assets – commissions receivable activities, net of credit loss allowances, are summarized as follows (in thousands):

Medicare SegmentIFP/SMB SegmentTotal
Beginning balance at December 31, 2022$817,043 $67,261 $884,304 
Commission revenue from members approved during the period131,792 13,835 145,627 
Commission revenue from renewals of small business members during the period 7,299 7,299 
Net commission revenue from members approved in prior periods22,746 9,756 32,502 
Cash receipts(258,724)(30,865)(289,589)
Net change in credit loss allowance396 37 433 
Ending balance at September 30, 2023$713,253 $67,323 $780,576 


11




EHEALTH, INC. 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Credit Risk

Our financial instruments that are exposed to concentrations of credit risk principally consist of cash, cash equivalents, marketable securities, contract assets – commissions receivable and accounts receivable. We invest our cash and cash equivalents with major banks and financial institutions and, at times, such investments are in excess of federally insured limits. We also have deposits with major banks in China that are denominated in both U.S. dollars and Chinese Yuan Renminbi and are not insured by the U.S. federal government. The deposits in China were $2.8 million as of September 30, 2023. See Note 4Fair Value Measurements for more information regarding our marketable securities.

We do not require collateral or other security for either our contract assets or accounts receivable. Carriers that represented 10% or more of our total contract assets – commissions receivable and accounts receivable balances are summarized as follows:

 September 30, 2023December 31, 2022
Humana27 %26 %
UnitedHealthCare (1)
25 %24 %
Aetna (1)
15 %16 %
_____________

(1)Percentages include the carriers’ subsidiaries.

Prepaid Expenses and Other Current Assets – Our prepaid expenses and other current assets are summarized as follows (in thousands):
 September 30, 2023December 31, 2022
Prepaid expenses$12,629 $2,858 
Prepaid software and maintenance contracts6,304 5,211 
Prepaid licenses3,289 1,116 
Prepaid insurance775 1,893 
Other current assets236 223 
Prepaid expenses and other current assets$23,233 $11,301 


Note 4Fair Value Measurements

We define fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques we use to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. We classify the inputs used to measure fair value into the following hierarchy:

Level 1Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2Unadjusted quoted prices in active markets for similar assets or liabilities; unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability.
Level 3Unobservable inputs for the asset or liability.

12




EHEALTH, INC. 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Our financial assets measured at fair value on a recurring basis are summarized below by their classification within the fair value hierarchy (in thousands):
September 30, 2023
Carrying ValueLevel 1Level 2Level 3Total
Assets
Cash equivalents
Money market funds$502 $502 $ $ $502 
Commercial paper113,884  113,884  113,884 
Agency bonds14,897  14,897  14,897 
Short-term marketable securities
Commercial paper8,469  8,469  8,469 
Total assets measured at fair value$137,752 $502 $137,250 $ $137,752 

 December 31, 2022
 Carrying ValueLevel 1Level 2Level 3Total
Assets
Cash equivalents
Money market funds$13,015 $13,015 $ $ $13,015 
Commercial paper112,268  112,268  112,268 
Agency bonds1,342  1,342  1,342 
Total assets measured at fair value$126,625 $13,015 $113,610 $ $126,625 

We endeavor to utilize the best available information in measuring fair value. Our money market funds are measured at fair value based on quoted prices in active markets and are classified as Level 1 within the fair value hierarchy. Our available-for-sale marketable securities, which include commercial paper and agency bonds with maturities of less than one year, are measured at fair value using quoted market prices to the extent available or alternative pricing sources and models utilizing market observable inputs and are classified as Level 2 within the fair value hierarchy. There were no transfers between the hierarchy levels during the nine months ended September 30, 2023 or the year ended December 31, 2022.

The following table summarizes our cash equivalents and available-for-sale debt securities by contractual maturity (in thousands):
As of September 30, 2023As of December 31, 2022
Amortized CostFair ValueAmortized CostFair Value
Due in 1 year$137,796 $137,752 $126,664 $126,625 

13




EHEALTH, INC. 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Unrealized gains and losses on available-for-sale debt securities that are not credit related are included in accumulated other comprehensive income (loss) and summarized as follows (in thousands):
September 30, 2023
Amortized CostUnrealized GainsUnrealized LossesFair Value
Cash equivalents
Money market funds$502 $ $ $502 
Commercial paper113,927  (43)113,884 
Agency bonds14,895 2  14,897 
Short-term marketable securities
Commercial paper8,472  (3)8,469 
Total$137,796 $2 $(46)$137,752 

December 31, 2022
Amortized CostUnrealized GainsUnrealized LossesFair Value
Cash equivalents
Money market funds$13,015 $ $ $13,015 
Commercial paper112,307  (39)112,268 
Agency bonds1,342   1,342 
Total$126,664 $ $(39)$126,625 

As of September 30, 2023 and December 31, 2022, we had 28 and 26 securities, respectively, in a net unrealized loss position that were immaterial individually and in aggregate. We did not record any credit losses regarding our available-for-sale debt securities during the nine months ended September 30, 2023 or the year ended December 31, 2022. We do not intend to sell these securities, and it is more likely than not that we will not be required to sell these securities before the recovery of their amortized cost basis.


Note 5Equity

2021 Inducement Plan – On September 22, 2021, the Company adopted an inducement plan (the “2021 Inducement Plan”), pursuant to which the Company reserved 0.4 million shares of its common stock (subject to customary adjustments in the event of a change in capital structure of the Company) to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company, other than following a bona fide period of non-employment, as an inducement material to the individual’s entry into employment with the Company within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules (“Nasdaq Rules”). In March 2022 and September 2022, the Company amended and restated its 2021 Inducement Plan to reserve an additional 0.5 million and 1.5 million shares of its common stock, respectively (as amended and restated, the “A&R 2021 Inducement Plan”). The 2021 Inducement Plan and its amendments were approved by the Company’s Board of Directors without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Rules, and the terms and conditions of the A&R 2021 Inducement Plan and awards to be granted thereunder are substantially similar to our stockholder-approved Amended and Restated 2014 Equity Incentive Plan. As of September 30, 2023, 2.0 million shares were issued under the A&R 2021 Inducement Plan.

Stock Repurchase Programs – We had no stock repurchase activity during the three and nine months ended September 30, 2023 or 2022. As of September 30, 2023 and 2022, we had a total of 12.7 million and 12.4 million shares, respectively, held in treasury. As of September 30, 2023 and 2022, we had 2.0 million and 1.7 million shares, respectively, in treasury that were previously surrendered by employees to satisfy tax withholding due in
14




EHEALTH, INC. 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
connection with the vesting of certain restricted stock units as well as 10.7 million shares previously repurchased under our past repurchase programs.

For accounting purposes, common stock repurchased under our stock repurchase programs is recorded based upon the settlement date of the applicable trade. Such repurchased shares are held in treasury and are presented using the cost method.

Stock-Based Compensation Expense – Our stock-based compensation expense is summarized as follows by award types for the periods presented below (in thousands):
Three Months Ended
 September 30,
Nine Months Ended
 September 30,
2023202220232022
Restricted stock units (1)
$6,098 $4,687 $16,559 $14,625 
Common stock options333 313 899 864 
Employee stock purchase program123 144 283 445 
Total stock-based compensation expense$6,554 $5,144 $17,741 $15,934 
Related tax benefit recognized$1,543 $1,194 $4,162 $3,702 
_________

(1)    Amounts include market-based and performance-based restricted stock units.

The following table summarizes stock-based compensation expense by operating function for the periods presented below (in thousands): 
 Three Months Ended
 September 30,
Nine Months Ended
 September 30,
 2023202220232022
Marketing and advertising$605 $570 $1,598 $1,311 
Customer care and enrollment836 610 2,229 1,576 
Technology and content1,306 1,341 3,384 5,012 
General and administrative3,807 2,623 10,530 8,035 
Total stock-based compensation expense$6,554 $5,144 $17,741 $15,934 
Amount capitalized for internal-use software243 487 880 1,493 
Total stock-based compensation$6,797 $5,631 $18,621 $17,427 


Note 6 — Convertible Preferred Stock

Pursuant to an investment agreement dated February 17, 2021 with Echelon Health SPV, LP (“H.I.G.”), an investment vehicle of H.I.G. Capital (the “H.I.G. Investment Agreement”), we issued and sold to H.I.G., in a private placement, 2,250,000 shares of our newly designated Series A convertible preferred stock (the “Series A Preferred Stock”), par value $0.001 per share, at an aggregate purchase price of $225.0 million on April 30, 2021 (the “Closing Date”). We received $214.0 million in net proceeds from the private placement with H.I.G., net of sales commissions and certain transaction fees totaling $11.0 million. The Series A Preferred Stock ranks senior to all other equity securities of the Company with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.

Dividends – Dividends initially accrued on the Series A Preferred Stock daily at 8% per annum on the stated value of $100 per share (the “Stated Value”), and were payable in kind (“PIK”) beginning on June 30, 2021 through the second anniversary of the Closing Date. Subsequent to the second anniversary of the Closing Date, dividends continue to accrue at 8% per annum, with 6% PIK and 2% payable in cash in arrears beginning on June
15




EHEALTH, INC. 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
30, 2023. Dividends compound semiannually and are PIK and payable in cash in arrears, as applicable, on June 30 and December 31 of each year (each a “Dividend Payment Date”). PIK dividends are cumulative and are added to the Accrued Value (as defined below). “Accrued Value” means, as of any date, with respect to any share of Series A Preferred Stock, the sum of the Stated Value per share plus, on each Dividend Payment Date, on a cumulative basis, all PIK dividends that have accrued on such share but that have not previously been added to the Accrued Value. During the second quarter of 2023, we made the initial cash dividend payment in the aggregate amount of $0.9 million and as of September 30, 2023, we have accrued $1.3 million for cash dividends. The Series A Preferred Stock participates, on an as-converted basis, in all dividends paid to the holders of our common stock.

Conversion Rights – The Series A Preferred Stock is convertible at any time into common stock at a conversion rate equal to (i) the Accrued Value plus accrued PIK dividends that have not yet been added to the Accrued Value, (ii) divided by the conversion price as of the applicable conversion date (the “Conversion Price”). As of the date of this report, the Conversion Price is equal to $79.5861 per share. This Conversion Price is subject to further adjustment and the number of shares of common stock issuable upon conversion of the Series A Preferred Stock is subject to certain limitations, each as set forth in the Certificate of Designations of Series A Preferred Stock, as filed with the Secretary of State of the State of Delaware on April 30, 2021 (the “Certificate of Designations”).

Redemption Put Right – At any time on or after the sixth anniversary of the Closing Date, holders of the Series A Preferred Stock will have the right to cause the Company to redeem all or any portion of the Series A Preferred Stock in cash at an amount equal to the greater of (i) 135% of the Accrued Value per share as of the redemption date, plus accrued PIK dividends that have not yet been added to the Accrued Value and (ii) the amount per share that would be payable on an as-converted basis on such Series A Preferred Stock at the then-current Accrued Value, plus accrued PIK dividends that have not yet been added to the Accrued Value, and in either case of (i) or (ii) plus any unpaid cash dividends that would have otherwise been settled in cash in connection with such conversion (the greater of (i) and (ii), the “Redemption Price”).

Redemption Call Right – At any time on or after the sixth anniversary of the Closing Date, the Company will have the right (but not the obligation) to redeem out of legally available funds and for cash consideration all (but not less than all) of the Series A Preferred Stock upon at least 30 days prior written notice at an amount equal to the Redemption Price.

Board Nomination Rights – H.I.G. is entitled to nominate one individual for election to our Board of Directors so long as it continues to own at least 30% of the common stock issuable or issued upon conversion of the Series A Preferred Stock originally issued to it in the private placement. Under certain circumstances, H.I.G. also has the right to nominate an additional individual to our Board of Directors if we fail to maintain certain levels of commissions receivable or liquidity as further discussed below.

Voting Rights – The Series A Preferred Stock will vote together with the common stock as a single class on all matters submitted to a vote of the holders of the common stock (subject to certain voting limitations set forth in, and the terms and conditions of, the Certificate of Designations). Each holder of Series A Preferred Stock shall be entitled to the number of votes, rounded down to the nearest whole number, equal to the product of (i) the aggregate Accrued Value of the issued and outstanding shares of Series A Preferred Stock divided by $69.684, which is the “Minimum Price” computed in accordance with the Certificate of Designations (as further described below), multiplied by (ii) a fraction, the numerator of which is the number of shares of Series A Preferred Stock held by such holder and the denominator of which is the aggregate number of issued and outstanding shares of Series A Preferred Stock. “Minimum Price” means the lower of: (i) the Nasdaq Official Closing Price per share of common stock on the Closing Date; or (ii) the average Nasdaq Official Closing Price per share of common stock for the five trading days immediately prior to the Closing Date. Holders of Series A Preferred Stock will have one vote per share on any matter on which the holders of the Series A Preferred Stock are entitled to vote separately as a class (subject to certain voting limitations set forth in the Certificate of Designations).

Mandatory Conversion of the Series A Preferred Stock – At any time on or after the third anniversary of the Closing Date, if the volume-weighted average price per share of our common stock is greater than 167.5% of
16




EHEALTH, INC. 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
the then-current Conversion Price for 20 consecutive trading days in a 30-day trading day period, the Company will have the right to convert all, but not less than all, of the Series A Preferred Stock into common stock at a conversion rate with respect to ea