/eHealth, Inc. Announces Third Quarter 2020 Results – Yahoo Finance

eHealth, Inc. Announces Third Quarter 2020 Results – Yahoo Finance


Third Quarter 2020 Overview

– Revenue for the third quarter of 2020 was $94.3 million , a 35% increase compared to $69.9 million for the third quarter of 2019.

– GAAP net loss for the third quarter of 2020 was $14.5 million compared to net loss of $11.0 million for the third quarter of 2019.

– Adjusted EBITDA was $(13.3) million for the third quarter of 2020 compared to $(18.8) million for the third quarter of 2019.

– Net cash provided by operating activities for the third quarter of 2020 was $1.4 million compared to $15.9 million net cash used in operating activities for the third quarter of 2019.

SANTA CLARA, Calif. , Oct. 22, 2020 /PRNewswire/ — eHealth, Inc. (NASDAQ: EHTH), a leading private online health insurance marketplace, announces today its financial results for the third quarter ended September 30, 2020 .

Scott Flanders , chief executive officer of eHealth stated, “Our third quarter results reflect strong momentum in our Medicare online enrollments, significant growth in Medicare carrier advertising revenue and an investment in our telesales capacity and technology initiatives ahead of the Medicare Annual Enrollment Period or AEP. We entered the AEP on October 15 from a position of strength and are expecting to generate significant Medicare enrollment growth while reducing our per member acquisition costs a powerful combination.  We are also focused on enrollment quality through our comprehensive member retention program.”

GAAP Third Quarter of 2020 Results

Revenue Revenue for the third quarter of 2020 totaled $94.3 million , a 35% increase compared to $69.9 million for the third quarter of 2019. Commission revenue for the third quarter of 2020 totaled $73.5 million , a 23% increase compared to $59.8 million for the third quarter of 2019. Other revenue for the third quarter of 2020 was $20.7 million , a 104% increase compared to $10.2 million for the third quarter of 2019.

Revenue from our Medicare segment was $70.4 million for the third quarter of 2020, a 23% increase compared to $57.2 million for the third quarter of 2019. Revenue from our Individual, Family and Small Business segment was $23.9 million for the third quarter of 2020, an 88% increase compared to $12.7 million for the third quarter of 2019.

Loss from Operations Loss from operations for the third quarter of 2020 was $20.8 million compared to loss from operations of $20.2 million for the third quarter of 2019.

Pre-Tax Loss Pre-tax loss for the third quarter of 2020 was $20.9 million compared to pre-tax loss of $19.7 million for the third quarter of 2019.

Benefit from Income Taxes Benefit from income taxes for the third quarter of 2020 was $6.4 million compared to $8.6 million for the third quarter of 2019.

Net Loss Net loss for the third quarter of 2020 was $14.5 million , or $0.55 net loss per diluted share, compared to net loss of $11.0 million , or $0.47 net loss per diluted share, for the third quarter of 2019.

Segment Profit (Loss) Medicare segment loss was $16.0 million for the third quarter of 2020 compared to $11.0 million for the third quarter of 2019. Individual, Family and Small Business segment profit was $18.3 million for the third quarter of 2020, a 387% increase compared to $3.8 million for the third quarter of 2019.

Non-GAAP Third Quarter of 2020 Results

Non-GAAP Net Loss Non-GAAP net loss for the third quarter of 2020 was $9.5 million , or $0.36 non-GAAP net loss per diluted share, compared to non-GAAP net loss of $10.1 million , or $0.43 non-GAAP net loss per diluted share, for the third quarter of 2019.

Non-GAAP net loss and non-GAAP net loss per diluted share for the third quarter of 2020 are calculated by excluding $6.3 million of stock-based compensation expense, $0.3 million of amortization of intangible assets and $1.6 million of the income tax effect of these non-GAAP adjustments from GAAP net loss and GAAP net loss per diluted share.

Non-GAAP net loss and non-GAAP net loss per diluted share for the third quarter of 2019 are calculated by excluding $5.5 million of stock-based compensation expense, $5.4 million gain related to the change in fair value of earnout liability related to our acquisition of GoMedigap, $0.5 million of amortization of intangible assets, and $0.3 million of the income tax effect of these non-GAAP adjustments from GAAP net loss and GAAP net loss per diluted share.

Adjusted EBITDA Adjusted EBITDA was $(13.3) million for the third quarter of 2020 compared to $(18.8) million for the third quarter of 2019. Adjusted EBITDA is calculated by adding stock-based compensation expense, change in fair value of earnout liability related to our acquisition of GoMedigap, depreciation and amortization, amortization of intangible assets, other income, net, and benefit from income taxes to GAAP net loss.

Approved Members, New Paying Members and Estimated Membership

Approved Members The number of approved members for all Medicare products, which includes Medicare Advantage, Medicare Supplement and Medicare Part D Prescription Drug Plans, was 59,940 in the third quarter of 2020, a 17% increase compared to 51,214 in the third quarter of 2019. The number of approved members for major medical individual and family plan products was 4,372 in the third quarter of 2020, a 37% increase compared to 3,187 in the third quarter of 2019.

New Paying Members  The number of new paying members for all Medicare products was 58,818 in the third quarter of 2020, a 21% increase compared to 48,681 in the third quarter of 2019. The number of new paying members for major medical individual and family plan products was 4,098, a 22% increase compared to 3,367 in the third quarter of 2019. New paying members consist of approved members from the period presented and any periods prior to the period presented from whom we have received an initial commission payment during the period presented.

Estimated Membership Total estimated membership as of September 30, 2020 was 1,136,714, a 15% increase compared to 991,204 estimated members we reported as of September 30, 2019 . Estimated Medicare membership as of September 30, 2020 was 734,403, a 33% increase compared to 551,068 estimated members reported as of September 30, 2019 . Estimated major medical individual and family plan membership as of September 30, 2020 was 112,834, a 14% decrease compared to 131,058 estimated members reported as of September 30, 2019 .

Cash Third Quarter of 2020

Cash Flows Net cash provided by operating activities was $1.4 million for the third quarter of 2020, compared to net cash used in operating activities of $15.9 million for the third quarter of 2019.

GAAP Year-to-Date Results

Revenue Revenue for the nine months ended September 30, 2020 totaled $289.5 million , a 42% increase compared to $204.5 million for the nine months ended September 30, 2019 . Commission revenue for the nine months ended September 30, 2020 totaled $254.0 million , a 38% increase compared to $184.6 million for the nine months ended September 30, 2019 . Other revenue for the nine months ended September 30, 2020 was $35.5 million , a 79% increase compared to $19.9 million for the nine months ended September 30, 2019 .

Revenue from our Medicare segment was $246.9 million for the nine months ended September 30, 2020 , a 50% increase compared to $164.4 million for the nine months ended September 30, 2019 . Revenue from our Individual, Family and Small Business segment was $42.6 million for the nine months ended September 30, 2020 , a 6% increase compared to $40.1 million for the nine months ended September 30, 2019 .

Loss from Operations Loss from operations for the nine months ended September 30, 2020 was $26.1 million compared to loss from operations of $41.7 million for the nine months ended September 30, 2019 .

Pre-Tax Loss Pre-tax loss for the nine months ended September 30, 2020 was $25.3 million compared to pre-tax loss of $39.9 million for the nine months ended September 30, 2019 .

Benefit from Income Taxes   Benefit from income taxes for the nine months ended September 30, 2020 was $10.9 million compared to $18.0 million for the nine months ended September 30, 2019 .

Net Loss Net loss for the nine months ended September 30, 2020 was $14.4 million , or $0.56 net loss per diluted share, compared to net loss of $21.9 million , or $0.96 net loss per diluted share, for the nine months ended September 30, 2019 .

Segment Profit Medicare segment profit was $19.4 million for the nine months ended September 30, 2020 , a 228% increase compared to $5.9 million for the nine months ended September 30, 2019 . Individual, Family and Small Business segment profit was $23.5 million for the nine months ended September 30, 2020 , a 56% increase, compared to $15.0 million for the nine months ended September 30, 2019 .

Non-GAAP Year-to-Date Results

Non-GAAP Net Income (Loss) Non-GAAP net income for the nine months ended September 30, 2020 was $2.5 million , or $0.10 non-GAAP net income per diluted share, compared to non-GAAP net loss of $0.6 million , or $0.02 non-GAAP net loss per diluted share, for the nine months ended September 30, 2019 .

Non-GAAP net income and non-GAAP net income per diluted share for the nine months ended September 30, 2020 are calculated by excluding $21.7 million of stock-based compensation expense, $1.2 million of amortization of intangible assets and $6.0 million of the income tax effect of these non-GAAP adjustments from GAAP net loss and GAAP net loss per diluted share.

Non-GAAP net loss and non-GAAP net loss per diluted share for the nine months ended September 30, 2019 are calculated by excluding $13.4 million of stock-based compensation expense, $15.1 million of expense for the change in fair value of earnout liability related to our acquisition of GoMedigap, $1.6 million of amortization of intangible assets, and $8.8 million of the income tax effect of these non-GAAP adjustments from GAAP net loss and GAAP net loss per diluted share.

Adjusted EBITDA Adjusted EBITDA was $(0.5) million for the nine months ended September 30, 2020 compared to $(9.4) million for the nine months ended September 30, 2019 . Adjusted EBITDA is calculated by adding stock-based compensation expense, change in fair value of earnout liability related to our acquisition of GoMedigap, depreciation and amortization, amortization of intangible assets, other income, net, and benefit from income taxes to GAAP net loss.

Approved Members and New Paying Members

Approved Members The number of approved members for all Medicare products, which includes Medicare Advantage, Medicare Supplement and Medicare Part D Prescription Drug Plans, was 221,516 in the nine months ended September 30, 2020 , a 37% increase compared to 161,682 in the nine months ended September 30, 2019 . The number of approved members for major medical individual and family plan products was 19,047 in the nine months ended September 30, 2020 , an 8% increase compared to 17,639 in the nine months ended September 30, 2019 .

New Paying Members  The number of new paying members for all Medicare products was 293,033 in the nine months ended September 30, 2020 , a 46% increase compared to 200,524 in the nine months ended September 30, 2019 . The number of new paying members for major medical individual and family plan products was 26,520 in the nine months ended September 30, 2020 , a 5% decrease compared to 27,965 in the nine months ended September 30, 2019 . New paying members consist of approved members from the period presented and any periods prior to the period presented from whom we have received an initial commission payment during the period presented.

Cash Year-to-Date Results

Cash Flows Net cash used in operating activities was $11.0 million for the nine months ended September 30, 2020 , compared to net cash used in operating activities of $14.7 million for the nine months ended September 30, 2019 .

2020 Guidance

Based on information available as of October 22, 2020, eHealth is reaffirming its guidance for the full year ending December 31, 2020 previously provided on July 23, 2020 . These expectations are forward-looking statements and eHealth assumes no obligation to update these statements. Actual results may be materially different and are affected by the risk factors and uncertainties identified in this press release and in eHealth’s annual and quarterly filings with the Securities and Exchange Commission.

The following is the guidance for the full year ending December 31, 2020 :

  • Total revenue is expected to be in the range of $630.0 million to $670.0 million . Revenue from the Medicare segment is expected to be in the range of $583.0 million to $619.0 million . Revenue from the Individual, Family and Small Business segment is expected to be in the range of $47.0 million to $51.0 million .

  • GAAP net income is expected to be in the range of $79.0 million to $94.0 million .

  • Adjusted EBITDA (a) is expected to be in the range of $140.0 million to $155.0 million .

  • Medicare segment profit (b) is expected to be in the range of $176.0 million to $193.0 million . Individual, Family and Small Business segment profit is expected to be in the range of $17.0 million to $18.0 million .

  • Corporate (c) shared service expenses, excluding stock-based compensation and depreciation and amortization, is expected to be in the range of $53.0 million to $56.0 million.

  • Cash used in operations is expected to be in the range of $85.0 million to $95.0 million, and cash used for capital expenditures is expected to be in the range of $23.0 million to $25.0 million.

  • GAAP net income per diluted share is expected to be in the range of $2.91 to $3.47.

  • Non-GAAP net income per diluted share (d) is expected to be in the range of $3.83 to $4.32.

 

(a)

Adjusted EBITDA is calculated by adding stock-based compensation expense, depreciation and amortization, amortization of intangible assets, other income, net, and provision (benefit) for income taxes to GAAP net income (loss).

(b)

Segment profit (loss) is calculated as revenue for the applicable segment less marketing and advertising, customer care and enrollment, technology and content and general and administrative operating expenses, excluding stock-based compensation expense, change in fair value of earnout liability, depreciation and amortization, 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 expense, depreciation and amortization, and amortization of intangible assets, allocated to the applicable segment based on usage.

(c)

Corporate consists of other indirect general and administrative operating expenses, excluding stock-based compensation expense and depreciation and amortization, which are managed in a corporate shared services environment and, since they are not the responsibility of segment operating management, are not allocated to the reportable segments.

(d)

Non-GAAP net income per diluted share is calculated by adding stock-based compensation expense per diluted share, amortization of intangible assets per diluted share and the income tax effect of non-GAAP adjustments to GAAP net income per diluted share.

 

Webcast and Conference Call Information

A Webcast and conference call will be held today, Thursday, October 22, 2020 at 5:00 p.m. Eastern / 2:00 p.m. Pacific Time . The live Webcast and supporting presentation slides will be available on the Investor Relations section of eHealth’s website at http://ir.ehealthinsurance.com . Individuals interested in listening to the conference call may do so by dialing (877) 930-8066 for domestic callers and (253) 336-8042 for international callers. The participant passcode is 8351208. A telephone replay will be available two hours following the conclusion of the call for a period of seven days and can be accessed by dialing (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. The call ID for the replay is 8351208. The live and archived webcast of the call will also be available on eHealth’s website at http://www.ehealthinsurance.com under the Investor Relations section.

About eHealth, Inc.

eHealth, Inc. (NASDAQ: EHTH) operates a leading health insurance marketplace at eHealth.com and eHealthMedicare.com with technology that provides consumers with health insurance enrollment solutions. Since 1997, we have connected more than 8 million members with quality, affordable health insurance, Medicare options, and ancillary plans. Our proprietary marketplace offers Medicare Advantage, Medicare Supplement, Medicare Part D prescription drug, individual, family, small business and other plans from over 180 health insurance carriers across fifty states and the District of Columbia .

Forward-Looking Statements

This press release contains statements that are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995. These include statements regarding our expected Medicare enrollment growth, cost of acquisition per member, our member retention program, our estimates regarding total membership, Medicare membership, Individual and Family plan membership and ancillary and small business membership, our estimates regarding constrained lifetime values of commissions per member and constraints on lifetime value by product category, and our guidance for the full year ending December 31, 2020 , including our guidance for total revenue and revenue from our Medicare segment and our Individual, Family and Small Business segment, GAAP net income, Adjusted EBITDA, profit from our Medicare segment and our Individual, Family and Small Business segment, Corporate shared service expense, cash used in operations and cash used for capital expenditures, and GAAP net income per diluted share and non-GAAP net income per diluted share.

These forward-looking statements are inherently subject to various risks and uncertainties that could cause actual results to differ materially from the statements made. In particular, we are required by the Accounting Standards Codification 606 Revenue from Contracts with Customers to make numerous assumptions that are based on historical trends and our management’s judgment. These assumptions may change over time and have a material impact on our revenue recognition, guidance, and results of operations. Please review the assumptions stated in this press release carefully.

The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include our ability to retain existing members and enroll new members during the annual healthcare open enrollment period, the Medicare annual enrollment period and a COVID-19 related or other special enrollment period; 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; the seasonality of our business and the fluctuation of our operating results; our ability to accurately estimate membership and lifetime value of commissions; changes in product offerings among carriers on our ecommerce platform and the resulting impact on our commission revenue; our ability to execute on our growth strategy in the Medicare market; the continued impact of the COVID-19 pandemic on our operations, business, financial condition and growth prospects, as well as on the general economy; changes in our management and key employees; exposure to security risks and our ability to safeguard the security and privacy of confidential data; our relationships with health insurance carriers; customer concentration and consolidation of the health insurance industry; our success in marketing and selling health insurance plans and our unit cost of acquisition; our ability to hire, train and retain licensed health insurance agents and other employees; the need for health insurance carrier and regulatory approvals in connection with the marketing of Medicare-related insurance products; changes in the market for private health insurance; consumer satisfaction of our service; 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 email, telephone and television marketing efforts; timing of receipt and accuracy of commission reports; payment practices of health insurance carriers; our ability to successfully make and integrate acquisitions; dependence on our operations in China ; the restrictions in our debt obligations; compliance with insurance and other laws and regulations; the outcome of litigation in which we are involved; and the performance, reliability and availability of our information technology systems, ecommerce platform and underlying network infrastructure. Other factors that could cause operating, financial and other results to differ are described in eHealth’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K filed with the Securities and Exchange Commission and available on the investor relations page of eHealth’s website at http://www.ehealthinsurance.com and on the Securities and Exchange Commission’s website at www.sec.gov .

All forward-looking statements in this press release are based on information available to eHealth as of the date hereof, and eHealth does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.

Non-GAAP Financial Information

This press release includes financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). To supplement eHealth’s condensed consolidated financial statements presented in accordance with GAAP, eHealth presents investors with non-GAAP financial measures, including non-GAAP net income (loss); non-GAAP net income (loss) per diluted share; and adjusted EBITDA.

  • Non-GAAP net income (loss) consists of GAAP net income (loss) excluding the following items:

  • Non-GAAP net income (loss) per diluted share consists of GAAP net income (loss) per diluted share excluding the following items:

  • Adjusted EBITDA is calculated by adding stock-based compensation expense, change in fair value of earnout liability, depreciation and amortization, amortization of intangible assets, other income, net and provision (benefit) for income taxes to GAAP net income (loss).

eHealth believes that the presentation of these non-GAAP financial measures provides important supplemental information to management and investors regarding financial and business trends relating to eHealth’s financial condition and results of operations. Management believes that the use of these non-GAAP financial measures provides consistency and comparability with eHealth’s past financial reports. Management also believes that the items described above provides an additional measure of eHealth’s operating results and facilitates comparisons of eHealth’s core operating performance against prior periods and business model objectives. This information is provided to investors in order to facilitate additional analyses of past, present and future operating performance and as a supplemental means to evaluate eHealth’s ongoing operations. eHealth believes that these non-GAAP financial measures are useful to investors in their assessment of eHealth’s operating performance.

Non-GAAP net income (loss), non-GAAP net income (loss) per diluted share and Adjusted EBITDA are not calculated in accordance with GAAP, and should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Non-GAAP financial measures used in this press release have limitations in that they do not reflect all of the revenue and costs associated with the operations of eHealth’s business and do not reflect income tax as determined in accordance with GAAP. As a result, you should not consider these measures in isolation or as a substitute for analysis of eHealth’s results as reported under GAAP. eHealth expects to continue to incur the stock-based compensation costs and purchased intangible asset amortization costs described above, and exclusion of these costs, and their related income tax benefits, from non-GAAP financial measures should not be construed as an inference that these costs are unusual or infrequent. eHealth compensates for these limitations by prominently disclosing GAAP net income (loss) and GAAP net income (loss) per diluted share and providing investors with reconciliations from eHealth’s GAAP operating results to the non-GAAP financial measures for the relevant periods.

The accompanying tables provide more details on the GAAP financial measures that are most directly comparable to the non-GAAP financial measures described above and the related reconciliations between these financial measures.

Investor Relations Contact

Kate Sidorovich , CFA
Vice President, Investor Relations
2625 Augustine Drive, Second Floor
Santa Clara, CA , 95054
650-210-3111
kate.sidorovich@ehealth.com
http://ir.ehealthinsurance.com

 

EHEALTH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

September 30, 2020

December 31, 2019

Assets

Current assets:

Cash and cash equivalents

$

87,833

$

23,466

Short-term marketable securities

108,637

Accounts receivable

3,854

2,332

Contract assets commissions receivable current

158,773

174,526

Prepaid expenses and other current assets

19,335

7,822

Total current assets

378,432

208,146

Contract assets commissions receivable non-current

445,572

414,696

Property and equipment, net

14,488

10,518

Long-term marketable securities

1,294

Operating lease right-of-use assets

43,886

36,621

Restricted cash

3,354

3,354

Other assets

24,790

18,004

Intangible assets, net

8,856

10,062

Goodwill

40,233

40,233

Total assets

$

960,905

$

741,634

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

21,439

$

24,554

Accrued compensation and benefits

22,140

29,578

Accrued marketing expenses

6,592

12,041

Earnout liability current

37,273

Lease liabilities current

5,111

4,759

Deferred revenue

26,471

2,570

Other current liabilities

4,731

2,210

Total current liabilities

86,484

112,985

Deferred income taxes non-current

52,782

64,130

Lease liabilities non-current

42,400

34,305

Other non-current liabilities

3,553

3,050

Stockholders’ equity:

Common stock

38

35

Additional paid-in capital

719,104

455,159

Treasury stock, at cost

(199,998)

(199,998)

Retained earnings

256,282

271,852

Accumulated other comprehensive income

260

116

Total stockholders’ equity

775,686

527,164

Total liabilities and stockholders’ equity

$

960,905

$

741,634

 

 

EHEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts, unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Revenue:

Commission

$

73,544

$

59,762

$

253,986

$

184,595

Other

20,740

10,151

35,472

19,858

Total revenue

94,284

69,913

289,458

204,453

Operating costs and expenses:

Cost of revenue

482

410

2,160

782

Marketing and advertising

33,405

25,812

104,042

72,857

Customer care and enrollment

43,342

40,144

101,025

81,567

Technology and content

17,673

12,033

46,786

31,487

General and administrative

19,942

16,608

60,308

42,748

Amortization of intangible assets

287

547

1,207

1,641

Change in fair value of earnout liability

(5,400)

15,106

Total operating costs and expenses

115,131

90,154

315,528

246,188

Loss from operations

(20,847)

(20,241)

(26,070)

(41,735)

Other income, net

(101)

568

724

1,824

Loss before benefit from income taxes

(20,948)

(19,673)

(25,346)

(39,911)

Benefit from income taxes

(6,443)

(8,649)

(10,923)

(17,974)

Net loss

$

(14,505)

$

(11,024)

$

(14,423)

$

(21,937)

Net loss per share:

Basic and diluted

$

(0.55)

$

(0.47)

$

(0.56)

$

(0.96)

Weighted-average number of shares used in per share amounts:

Basic and diluted

26,487

23,493

25,838

22,840

(1)  Includes stock-based compensation as follows:

Marketing and advertising

$

1,869

$

872

$

5,138

$

2,212

Customer care and enrollment

527

369

1,762

927

Technology and content

1,430

729

2,965

1,946

General and administrative

2,506

3,540

11,857

8,332

Total stock-based compensation expense

$

6,332

$

5,510

$

21,722

$

13,417

 

               

EHEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Operating activities:

Net loss

$

(14,505)

$

(11,024)

$

(14,423)

$

(21,937)

Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:

Depreciation and amortization

923

765

2,604

2,153

Amortization of internally developed software

2,072

930

5,307

2,443

Amortization of intangible assets

287

547

1,207

1,641

Stock-based compensation expense

6,332

5,510

21,722

13,417

Deferred income taxes

(6,462)

(8,631)

(10,982)

(18,166)

Change in fair value of earnout liability

(5,400)

15,106

Other non-cash items

175

112

421

(936)

Changes in operating assets and liabilities:

Accounts receivable

(1,130)

377

(1,522)

2,920

Contract assets commissions receivable

(21,614)

(16,321)

(16,772)

(11,878)

Prepaid expenses and other assets

(8,367)

(6,650)

(9,398)

(9,346)

Accounts payable

14,286

13,008

(3,196)

13,155

Accrued compensation and benefits

344

2,874

(7,438)

(2,624)

Accrued marketing expenses

1,879

415

(5,449)

(6,927)

Deferred revenue

26,374

8,325

23,901

8,207

Accrued expenses and other liabilities

845

(776)

3,059

(1,942)

Net cash provided by (used in) operating activities

1,439

(15,939)

(10,959)

(14,714)

Investing activities:

Capitalized internal-use software and website development costs

(4,473)

(2,923)

(12,082)

(6,356)

Purchases of property and equipment and other assets

(1,790)

(1,830)

(6,454)

(5,616)

Purchases of marketable securities

(32,959)

(180,505)

Proceeds from redemption and maturities of marketable securities

57,500

70,750

Payments for security deposits

824

(72)

Net cash provided by (used in) investing activities

18,278

(3,929)

(128,291)

(12,044)

Financing activities:

Proceeds from issuance of common stock, net of issuance costs

228,024

126,051

Net proceeds from exercise of common stock options

263

1,913

1,577

5,168

Repurchase of shares to satisfy employee tax withholding obligations

(9,014)

(8,059)

(17,174)

(11,511)

Repayment of debt

(5,000)

Acquisition-related contingent payments

(8,751)

(9,542)

Principal payments in connection with leases

(38)

(31)

(121)

(81)

Net cash provided by (used in) financing activities

(8,789)

(6,177)

203,555

105,085

Effect of exchange rate changes on cash, cash equivalents and restricted cash

63

(21)

62

8

Net increase (decrease) in cash, cash equivalents and restricted cash

10,991

(26,066)

64,367

78,335

Cash, cash equivalents and restricted cash at beginning of period

80,196

117,490

26,820

13,089

Cash, cash equivalents and restricted cash at end of period

$

91,187

$

91,424

$

91,187

$

91,424

EHEALTH, INC.

SEGMENT INFORMATION

(In thousands, unaudited)

Three Months Ended
September 30,

%
Change

Nine Months Ended
September 30,

%
Change

2020

2019

2020

2019

Revenue:

Medicare (1)

$

70,361

$

57,189

23

%

$

246,891

$

164,357

50

%

Individual, Family and Small Business (2)

23,923

12,724

88

%

42,567

40,096

6

%

Total revenue

$

94,284

$

69,913

35

%

$

289,458

$

204,453

42

%

Segment profit (loss):

Medicare segment profit (loss) (3)

$

(16,010)

$

(11,004)

45

%

$

19,380

$

5,917

228

%

Individual, Family and Small Business segment profit (3)

18,286

3,753

387

%

23,459

15,045

56

%

Total segment profit (loss)

2,276

(7,251)

(131)

%

42,839

20,962

104

%

Corporate (4)

(15,581)

(11,568)

35

%

(43,376)

(30,380)

43

%

Stock-based compensation expense

(6,332)

(5,510)

15

%

(21,722)

(13,417)

62

%

Change in fair value of earnout liability

5,400

(100)

%

(15,106)

(100)

%

Depreciation and amortization

(923)

(765)

21

%

(2,604)

(2,153)

21

%

Amortization of intangible assets

(287)

(547)

(48)

%

(1,207)

(1,641)

(26)

%

Other income, net

(101)

568

(118)

%

724

1,824

(60)

%

Loss before benefit from income taxes

$

(20,948)

$

(19,673)

6

%

$

(25,346)

$

(39,911)

(36)

%

Segment Information

We evaluate our business performance and manage our operations as two distinct reporting segments:

(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 plans, as well as 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 expense, change in fair value of earnout liability, depreciation and amortization, 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 expense, depreciation and amortization, 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 expense, depreciation and amortization, 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.

EHEALTH, INC.

SUMMARY OF SELECTED METRICS

COMMISSION REVENUE BY PRODUCT

(In thousands, unaudited)

Three Months Ended
September 30,

% Change

Nine Months Ended
September 30,

% Change

2020

2019

2020

2019

Medicare:

Medicare Advantage

$

41,901

$

36,735

14

%

$

168,834

$

113,185

49

%

Medicare Supplement

7,321

8,229

(11)

%

32,384

25,082

29

%

Medicare Part D

329

1,805

(82)

%

7,148

5,906

21

%

Total Medicare

49,551

46,769

6

%

208,366

144,173

45

%

Individual and Family: (1)

Non-Qualified Health Plans

9,915

3,146

215

%

12,585

11,592

9

%

Qualified Health Plans

1,466

839

75

%

3,559

4,900

(27)

%

Total Individual and Family

11,381

3,985

186

%

16,144

16,492

(2)

%

Ancillaries:

Short-term

2,438

3,151

(23)

%

6,724

7,162

(6)

%

Dental

4,452

1,420

214

%

5,791

3,138

85

%

Vision

1,798

537

235

%

2,228

1,294

72

%

Other

847

1,104

(23)

%

2,693

2,778

(3)

%

Total Ancillaries

9,535

6,212

53

%

17,436

14,372

21

%

Small Business

1,723

1,938

(11)

%

6,975

6,576

6

%

Commission Bonus

1,354

858

58

%

5,065

2,982

70

%

Total Commission Revenue

$

73,544

$

59,762

23

%

$

253,986

$

184,595

38

%

(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.

EHEALTH, INC.

SUMMARY OF SELECTED METRICS

COMMISSION REVENUE SUMMARY

(In thousands, unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2020

2019

2020

2019

Medicare:

Commission Revenue from Members Approved During the Period (1)

$

52,040

$

43,888

$

205,330

$

141,898

Net Commission Revenue from Members Approved in Prior
Periods (2)

(698)

3,813

8,966

5,226

Total Medicare Segment Commission Revenue

$

51,342

$

47,701

$

214,296

$

147,124

Individual, Family and Small Business:

Commission Revenue from Members Approved During the Period (1)

$

4,012

$

4,392

$

14,170

$

14,403

Net Commission Revenue from Members Approved in Prior Periods (2)

18,190

7,669

25,520

23,068

Total Individual, Family and Small Business Segment Commission Revenue

$

22,202

$

12,061

$

39,690

$

37,471

Total Commission Revenue

$

73,544

$

59,762

$

253,986

$

184,595

________

(1)

These amounts include commission bonus revenue.

(2)

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. These amounts include revenue associated with renewing small business health insurance members.

EHEALTH, INC.

SUMMARY OF SELECTED METRICS

APPROVED MEMBERS

(Unaudited)

Three Months Ended
September 30,

% Change

Nine Months Ended
September 30,

% Change

2020

2019

2020

2019

Medicare:

Medicare Advantage

44,999

35,171

28

%

170,374

112,488

51

%

Medicare Supplement

7,456

9,110

(18)

%

27,088

26,510

2

%

Medicare Part D

7,485

6,933

8

%

24,054

22,684

6

%

Total Medicare

59,940

51,214

17

%

221,516

161,682

37

%

Individual and Family:

Non-Qualified Health Plans

2,665

2,245

19

%

10,283

10,250

%

Qualified Health Plans

1,707

942

81

%

8,764

7,389

19

%

Total Individual and Family

4,372

3,187

37

%

19,047

17,639

8

%

Ancillaries:

Short-term

9,784

15,630

(37)

%

31,368

44,691

(30)

%

Dental

10,136

9,487

7

%

27,568

32,021

(14)

%

Vision

3,806

4,265

(11)

%

12,071

15,108

(20)

%

Other

2,991

6,296

(52)

%

11,262

17,654

(36)

%

Total Ancillaries

26,717

35,678

(25)

%

82,269

109,474

(25)

%

Small Business

3,473

2,871

21

%

10,194

10,368

(2)

%

Total Approved Members

94,502

92,950

2

%

333,026

299,163

11

%

Approved Members

Approved members consist of the number of individuals on submitted applications that were approved by the relevant insurance carrier for the identified product during the period presented. Approved members may not pay for their plan and become paying members.

EHEALTH, INC.

SUMMARY OF SELECTED METRICS

NEW PAYING MEMBERS

(Unaudited)

Three Months Ended
September 30,

% Change

Nine Months Ended
September 30,

% Change

2020

2019

2020

2019

Medicare:

Medicare Advantage

44,528

33,974

31

%

188,059

119,627

57

%

Medicare Supplement

6,912

7,833

(12)

%

26,386

25,127

5

%

Medicare Part D

7,378

6,874

7

%

78,588

55,770

41

%

Total Medicare

58,818

48,681

21

%

293,033

200,524

46

%

Individual and Family:

Non-Qualified Health Plans

2,550

2,350

9

%

15,920

18,541

(14)

%

Qualified Health Plans

1,548

1,017

52

%

10,600

9,424

12

%

Total Individual and Family

4,098

3,367

22

%

26,520

27,965

(5)

%

Ancillaries:

Short-term

10,461

15,632

(33)

%

32,293

49,446

(35)

%

Dental

9,500

9,217

3

%

26,848

32,751

(18)

%

Vision

3,953

4,009

(1)

%

13,170

17,458

(25)

%

Other

3,502

6,265

(44)

%

11,289

17,457

(35)

%

Total Ancillaries

27,416

35,123

(22)

%

83,600

117,112

(29)

%

Small Business

3,518

2,946

19

%

11,812

13,606

(13)

%

Total New Paying Members

93,850

90,117

4

%

414,965

359,207

16

%

New Paying Members

New paying members consist of approved members from the period presented and any periods prior to the period presented from whom we have received an initial commission payment during the period presented.

EHEALTH, INC.

SUMMARY OF SELECTED METRICS

ESTIMATED MEMBERSHIP

(Unaudited)

As of September 30,

% Change

2020

2019

Medicare: (1)

Medicare Advantage

421,237

309,180

36

%

Medicare Supplement

96,525

85,821

12

%

Medicare Part D

216,641

156,067

39

%

Total Medicare

734,403

551,068

33

%

Individual and Family (2)

112,834

131,058

(14)

%

Ancillaries: (3)

Short-term

24,105

24,167

%

Dental

116,846

131,409

(11)

%

Vision

67,944

72,765

(7)

%

Other

36,158

36,014

%

Total Ancillaries

245,053

264,355

(7)

%

Small Business (4)

44,424

44,723

(1)

%

Total Estimated Membership

1,136,714

991,204

15

%

_________

(1)

To estimate the number of members on 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 may be 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 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.

(2)

To estimate the number of members on Individual and Family health insurance plans (“IFP”), 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 may be 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 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.

(3)

To estimate the number of members on 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 may be 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 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)

To estimate the number of members on small business health insurance plans, we use the number of initial members at the time the group was approved, and we update this number for changes in membership if such changes are reported to us by the group or carrier. 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.

Estimated Membership

Estimated membership represents the estimated number of members active as of the date indicated based on the number of members for whom we have received or applied a commission payment during the month of estimation.

Health insurance carriers bill and collect insurance premiums paid by our members. The carriers do not report to us the number of members that we have as of a given date. The majority of our members who terminate their policies do so by discontinuing their premium payments to the carrier and do not inform us of the cancellation. Also, some of our members pay their premiums less frequently than monthly. Given the number of months required to observe non-payment of commissions in order to confirm cancellations, we estimate the number of members who are active on insurance policies as of a specified date.

After we have estimated membership for a period, we may receive information from health insurance carriers that would have impacted the estimate if we had received the information prior to the date of estimation. We may receive commission payments or other information that indicates that a member who was not included in our estimates for a prior period was in fact an active member at that time, or that a member who was included in our estimates was in fact not an active member of ours. For instance, we reconcile information carriers provide to us and may determine that we were not historically paid commissions owed to us, which would cause us to have underestimated membership. Conversely, carriers may require us to return commission payments paid in a prior period due to policy cancellations for members we previously estimated as being active. We do not update our estimated membership numbers reported in previous periods. Instead, we reflect updated information regarding our historical membership in the membership estimate for the current period. As a result of the delay in our receipt of information from insurance carriers, actual trends in our membership are most discernible over periods longer than from one quarter to the next. As a result of the delay we experience in receiving information about our membership, it is difficult for us to determine with any certainty the impact of current conditions on our membership retention. Healthcare reform and its impacts as well as other factors could cause the assumptions and estimates that we make in connection with estimating our membership to be inaccurate, which would cause our membership estimates to be inaccurate.

EHEALTH, INC.

SUMMARY OF SELECTED METRICS

CONSTRAINED LIFETIME VALUE OF

COMMISSIONS PER APPROVED MEMBER

(Unaudited)

Three Months Ended September 30,

% Change

2020

2019

Medicare:

Medicare Advantage (1)

$

898

$

923

(3)

%

Medicare Supplement (1)

$

1,071

$

951

13

%

Medicare Part D (1)

$

245

$

265

(8)

%

Individual and Family:

Non-Qualified Health Plans (1)

$

188

$

173

9

%

Qualified Health Plans (1)

$

244

$

165

48

%

Ancillaries:

Short-term (1)

$

149

$

112

33

%

Dental (1)

$

84

$

65

29

%

Vision (1)

$

54

$

45

20

%

Small Business (2)

$

142

$

168

(15)

%

Constrained Lifetime Value of Commissions Per Approved Member

(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, estimated average plan duration, the regulatory environment, and cancellations of insurance plans offered by health insurance carriers with which we have a relationship. 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 twelve months. The estimate is driven by multiple factors, including but not limited to, contracted commission rates, carrier mix, estimated average plan duration, the regulatory environment, and cancellations of insurance plans offered by health insurance carriers with which we have a relationship and applied constraints. These factors may result in varying values from period to period.

EHEALTH, INC.

SUMMARY OF SELECTED METRICS

CONSTRAINTS ON LIFETIME VALUE

OF COMMISSIONS PER APPROVED MEMBER

(Unaudited)

Three Months Ended September 30,

2020

2019

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

4

%

20

%

Ancillaries

Short-term

20

%

%

Dental

7

%

10

%

Vision

5

%

10

%

Other

10

%

10

%

Small Business

%

%

Constraints on Lifetime Value of Commissions Per Approved Member

Constraints are applied to derive LTV of commissions per approved member for revenue recognition in accordance with our revenue recognition policy. The constraints are applied to help ensure that commissions estimated to be collected over the estimated life of an approved member’s plan are recognized as revenue only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with future commissions receivable from the plan is subsequently resolved. We evaluate constraints on a quarterly basis for factors affecting our estimate of LTV of commissions per approved member and apply management judgment to determine the constraints based on current trends impacting our business.

EHEALTH, INC.

SUMMARY OF SELECTED METRICS

EXPENSE METRICS PER APPROVED MEMBER

(Unaudited)

Three Months Ended September 30,

% Change

2020

2019

Medicare:

Estimated customer care and enrollment (“CC&E”) cost per approved Medicare Advantage (“MA”)-equivalent approved member (1)

$

759

$

819

(7)

%

Estimated variable marketing cost per MA-equivalent approved member (1)

422

381

11

%

Total Medicare estimated cost per approved member

$

1,181

$

1,200

(2)

%

Individual and Family Plan (“IFP”):

Estimated CC&E cost per IFP-equivalent approved member (2)

$

137

$

167

(18)

%

Estimated variable marketing cost per IFP-equivalent approved member (2)

79

80

(1)

%

Total IFP estimated cost per approved member

$

216

$

247

(13)

%

_____________

(1)

MA-equivalent approved members is a derived metric with a Medicare Part D approved member being weighted at 25% of a Medicare Advantage member and a Medicare Supplement member based on their relative LTVs at the time of our adoption of Accounting Standards Codification 606 – Revenue from Contracts with Customers (“ASC 606”). We calculate the number of approved MA-equivalent members by adding the total number of approved Medicare Advantage and Medicare Supplement members and 25% of the total number of approved Medicare Part D members during the period presented.

(2)

IFP-equivalent approved members is a derived metric with a short-term approved member being weighted at 33% of a major medical individual and family health insurance plan member based on their relative LTVs at the time of our adoption of ASC 606. We calculate the number of approved IFP-equivalent members by adding the total number of approved qualified and non-qualified health plan members and 33% of the total number of short-term approved members during the period presented.

Expense Metrics Per Approved Member

Marketing initiatives are an important component of our strategy to increase revenue and are primarily designed to encourage consumers to complete an application for health insurance. Variable marketing cost represents direct costs incurred in member acquisition from our direct, marketing partners and online advertising channels. In addition, we incur customer care and enrollment expenses in assisting applicants during the enrollment process.

The numerator used to calculate each metric is the portion of the respective operating expenses for marketing and advertising and customer care and enrollment that is directly related to member acquisition for our sale of Medicare Advantage, Medicare Supplement and Medicare Part D prescription drug plans (collectively, the “Medicare Plans”) and for all IFP plans including individual and family plans and short-term health insurance (collectively, the “IFP Plans”), respectively. The denominator used to calculate each metric is based on a derived metric that represents the relative value of the new members acquired. For Medicare Plans, we call this derived metric Medicare Advantage (“MA”)-equivalent members, and for IFP Plans, we call this derived metric IFP-equivalent members. The calculations for MA-equivalent members and for IFP-equivalent members are based on the weighted number of approved members for Medicare Plans and IFP Plans during the period, with the number of approved members adjusted based on the relative LTV of the product they are purchasing. Since the LTV for any product fluctuates from period to period, the weight given to each product was determined based on their relative LTVs at the time of our adoption of ASC 606.

EHEALTH, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In thousands, except per share amounts, unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

GAAP net loss

$

(14,505)

$

(11,024)

$

(14,423)

$

(21,937)

Stock-based compensation expense (1)

6,332

5,510

21,722

13,417

Change in fair value of earnout liability (2)

(5,400)

15,106

Amortization of intangible assets (3)

287

547

1,207

1,641

Tax effect of non-GAAP adjustments (4)

(1,628)

312

(5,966)

(8,782)

Non-GAAP net income (loss)

$

(9,514)

$

(10,055)

$

2,540

$

(555)

GAAP net loss per diluted share

$

(0.55)

$

(0.47)

$

(0.56)

$

(0.96)

Stock-based compensation expense (1)

0.24

0.23

0.84

0.59

Change in fair value of earnout liability (2)

(0.23)

0.66

Amortization of intangible assets (3)

0.01

0.02

0.05

0.07

Tax effect of non-GAAP adjustments (4)

(0.06)

0.02

(0.23)

(0.38)

Non-GAAP net income (loss) per diluted share

$

(0.36)

$

(0.43)

$

0.10

$

(0.02)

GAAP net loss

$

(14,505)

$

(11,024)

$

(14,423)

$

(21,937)

Stock-based compensation expense (1)

6,332

5,510

21,722

13,417

Change in fair value of earnout liability (2)

(5,400)

15,106

Depreciation and amortization (5)

923

765

2,604

2,153

Amortization of intangible assets (3)

287

547

1,207

1,641

Other income, net (6)

101

(568)

(724)

(1,824)

Benefit from income taxes (7)

(6,443)

(8,649)

(10,923)

(17,974)

Adjusted EBITDA

$

(13,305)

$

(18,819)

$

(537)

$

(9,418)

Explanation of Adjustments

(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 amortization of intangible assets.

(4)

Non-GAAP net income (loss), non-GAAP net income (loss) per diluted share exclude the tax effect of non-GAAP adjustments.

(5)

Adjusted EBITDA excludes depreciation and amortization.

(6)

Adjusted EBITDA excludes other income, net.

(7)

Adjusted EBITDA excludes benefit from income taxes.

EHEALTH, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GUIDANCE

(In millions, except per share amounts, unaudited)

Year Ending December 31, 2020

Low

High

GAAP net income

$

79.0

$

94.0

Stock-based compensation expense

31.0

29.0

Amortization of intangible assets

1.5

1.5

Tax effect of non-GAAP adjustments

(7.8)

(7.3)

Non-GAAP net income (1)

$

103.7

$

117.2

GAAP net income per diluted share

$

2.91

$

3.47

Stock-based compensation expense

1.14

1.07

Amortization of intangible assets

0.06

0.06

Tax effect of non-GAAP adjustments

(0.28)

(0.28)

Non-GAAP net income per diluted share (2)

$

3.83

$

4.32

GAAP net income

$

79.0

$

94.0

Stock-based compensation expense

31.0

29.0

Depreciation and amortization

5.0

4.0

Amortization of intangible assets

1.5

1.5

Other income, net

(1.5)

(2.5)

Provision for income taxes

25.0

29.0

Adjusted EBITDA (3)

$

140.0

$

155.0

Explanation of Adjustments

(1)

Non-GAAP net income is calculated by adding stock-based compensation expense, amortization of intangible assets, 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, and the income tax effect of non-GAAP adjustments per diluted share to GAAP net income per diluted share.

(3)

Adjusted EBITDA is calculated by adding stock-based compensation expense, depreciation and amortization, amortization of intangible assets, other income, net, and provision for income taxes to GAAP net income.

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SOURCE eHealth, Inc.

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