Exhibit 99.1

eHealth, Inc. Announces First Quarter 2014 Results

First Quarter 2014 Overview

 

MOUNTAIN VIEW, Calif.—May 1, 2014—eHealth, Inc. (NASDAQ: EHTH), the nation’s first and largest private health insurance exchange, announced today its financial results for the first quarter ended March 31, 2014.

 

Gary Lauer, chief executive officer of eHealth stated, “We are pleased with our execution during the quarter. Our first quarter results reflect strong demand on the eHealth platform across all major product areas including Medicare, individual and family and ancillary products as well as strong revenue growth.”

 

First Quarter 2014 Results

 

Revenue—Revenue for the first quarter of 2014 totaled $50.9 million, an 18% increase compared to revenue of $43.2 million for the first quarter of 2013. Commission revenue for the first quarter of 2014 totaled $45.6 million, a 19% increase compared to commission revenue of $38.3 million for the first quarter of 2013. Medicare revenue was $14.3 million for the first quarter of 2014, a 41% increase compared to Medicare revenue of $10.1 million for the first quarter of 2013.

 

Submitted Applications—Submitted applications for individual and family plan products increased 34% in the first quarter of 2014 to 169,500 applications, compared to 126,900 applications in the first quarter of 2013. Submitted applications for Medicare products increased 102% in the first quarter of 2014 to 15,300 applications, compared to 7,600 applications in the first quarter of 2013.  Submitted applications for Medicare Advantage products increased 84% in the first quarter of 2014 to 8,400 applications, compared to 4,600 applications in the first quarter of 2013. Approved members for individual and family plan products increased 27% in the first quarter of 2014 to 145,100 members, compared to 114,400 members in the first quarter of 2013. Total approved members, including individual and family plan, Medicare plan and other product members, increased 37% to 283,700 members in the first quarter of 2014, compared to 206,600 in the first quarter of 2013.

 

Membership—Total estimated membership at March 31, 2014 was 1,286,200 members, a 22% increase over estimated membership of 1,053,800 at March 31, 2013. Estimated individual and family plan membership was 800,200, an 8% increase over estimated membership of 738,900 at March 31, 2013. Estimated Medicare membership was 111,700, a 48% increase over estimated membership of 75,300 at March 31, 2013.

 

Income (Loss) from Operations—Operating loss for the first quarter of 2014 was $3.1 million, compared to operating income of $3.9 million for the first quarter of 2013. Operating margins were (6)% and 9% in the first

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quarters of 2014 and 2013, respectively. Non-GAAP operating loss for the first quarter of 2014 was $0.3 million compared to non-GAAP operating income of $5.9 million for the first quarter of 2013. Non-GAAP operating margins were (1)% and 14% in the first quarters of 2014 and 2013, respectively. Non-GAAP operating income and margins in the first quarter of 2014 exclude $2.4 million of stock-based compensation expense and $0.4 million of intangible asset amortization expense. Non-GAAP operating income and margins in the first quarter of 2013 exclude $1.6 million of stock-based compensation expense and $0.4 million of intangible asset amortization expense.

 

EBITDA—EBITDA for the first quarter of 2014 was $0.7 million compared to EBITDA of $6.6 million for the first quarter of 2013. EBITDA is calculated by adding stock-based compensation, depreciation and amortization expense, including intangible asset amortization expense, other expense, net and provision (benefit) for income taxes to GAAP net income.

 

Pre-tax Income (Loss)—Pre-tax loss for the first quarter of 2014 was $3.1 million, compared to pre-tax income of $3.9 million for the first quarter of 2013.

 

Net Income (Loss)—Net loss for the first quarter of 2014 was $1.6 million, or $(0.08) per diluted share, compared to net income of $2.4 million, or $0.11 per diluted share for the first quarter of 2013. Non-GAAP net income for the first quarter of 2014 was $0.1 million, or $0.01 per diluted share, compared to non-GAAP net income of $3.6 million, or $0.17 per diluted share for the first quarter of 2013. Non-GAAP net income and non-GAAP net income per diluted share in the first quarter of 2014 exclude $2.4 million of stock-based compensation expense and $0.4 million of intangible asset amortization expense, less $1.1 million for related income tax benefit. Non-GAAP net income and non-GAAP net income per diluted share in the first quarter of 2013 exclude $1.6 million of stock-based compensation expense and $0.4 million of intangible asset amortization expense, less $0.8 million for related income tax benefit.

 

Cash Flows—Cash flows from operations was an outflow of $5.4 million for the first quarter of 2014 compared to an outflow of $0.5 million for the first quarter of 2013. 

 

Cash and cash equivalents as of March 31, 2014 totaled $98.2 million, compared to $107.1 million as of December 31, 2013. The decrease in cash and cash equivalents reflects $1.1 million used to purchase property and equipment, $4.5 million to purchase intangible assets and $5.4 million used in operating activities, partially offset by cash flows provided by financing activities from the exercise of common stock options. The intangible asset purchased during the first quarter was the Internet domain name www.Medicare.com. 

 

2014 Guidance

 

eHealth is reaffirming guidance for the full year ending December 31, 2014 based on information available as of May 1, 2014. These expectations are forward-looking statements and eHealth assumes no obligation to update these statements. Results may be materially different and are affected by the risk factors and uncertainties identified in this release and in eHealth’s annual and quarterly filings with the Securities and Exchange Commission.

 

 

 

 

 

 

 

*  EBITDA is calculated by adding stock-based compensation expense, depreciation and amortization expense, including intangible asset amortization expense, other (income) expense, net and provision for income taxes to GAAP net income.

 

** Non-GAAP net income per diluted share is calculated by excluding stock-based compensation expense, intangible asset amortization expense and the estimated tax benefit relating to these expenses.

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Webcast and Conference Call Information

A Webcast and conference call will be held today, Thursday, May 1, 2014 at 5:00 p.m. Eastern / 2:00 p.m. Pacific Time.  The Webcast will be available live on the Investor Relations section on eHealth’s website at http://ir.ehealthinsurance.com. Individuals interested in listening to the conference call may do so by dialing 877 280.4956 for domestic callers and 857 244.7313 for international callers. The participant passcode is 51647093. A telephone replay will be available two hours following the conclusion of the call for a period of 30 days and can be accessed by dialing 888 286.8010 for domestic callers and 617 801.6888 for international callers. The call ID for the replay is 31296617. 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 eHealthInsurance.com,  the nation's first and largest private health insurance exchange where individuals, families and small businesses can compare health insurance products from leading insurers side by side and purchase and enroll in coverage online. eHealthInsurance offers thousands of individual, family and small business health plans underwritten by more than 200 of the nation's leading health insurance companies. eHealthInsurance is licensed to sell health insurance in all 50 states and the District of Columbia. eHealth, Inc. also provides powerful online and pharmacy-based tools to help Medicare beneficiaries navigate Medicare health insurance options, choose the right plan and enroll in select plans online through PlanPrescriber.com (www.PlanPrescriber.com), eHealthMedicare.com (www.eHealthMedicare.com) and Medicare.com (www.Medicare.com).

 

For more health insurance news and information, visit the eHealthInsurance consumer blog: Get Smart - Get Covered or visit eHealth's Affordable Care Act Resource Center at www.eHealth.com/affordable-care-act.

 

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 future events; future performance; the utility to our investors of the non-GAAP financial measures presented in this release; and our guidance for total revenue, stock-based compensation expense, EBITDA and non-GAAP net income per diluted share for the year-ending December 31, 2014.  These forward-looking statements are inherently subject to various risks and uncertainties that could cause actual results to differ materially from the statements made, including risks associated with the impact of healthcare reform and medical loss ratio requirements; the impact of increased health insurance costs on demand;  eHealth’s ability to retain existing members and limit member turnover; eHealth’s ability to attract new members and to convert online visitors into members; eHealth’s ability to sell qualified health insurance plans to subsidy-eligible individuals; the impact of annual enrollment periods for the purchase of individual and family health insurance and its timing on eHealth’s recognition of revenue; eHealth’s ability to accurately estimate membership; the evolving nature of Affordable Care Act implementation and associated deadlines; eHealth's ability to enter into and maintain relationships with health insurance carriers; eHealth's success in marketing and selling health insurance plans; eHealth's ability to hire, train and retain licensed health insurance agents for its Medicare business; the need for health insurance carrier and regulatory approvals in connection with the marketing of Medicare-related insurance products; proposed regulations impacting Medicare product agent compensation; costs of acquiring new members; changes in member conversion rates; lack of membership growth and retention rates; changes in products offered on eHealth's ecommerce platform; changes in commission rates; maintaining and enhancing eHealth's brand identity; eHealth’s ability to derive desired benefits from its investments in its business, including its membership growth initiatives and development of private exchange capabilities; system failures, capacity constraints, data loss or online commerce security risks; dependence on acceptance of the Internet as a marketplace for the purchase and sale of health insurance; dependence upon Internet search engines; reliance on marketing partners; timing of receipt and accuracy of commission reports; payment practices of health insurance carriers; competition; dependence on our operations in China; success of eHealth's sponsorship and advertising business; protection of intellectual property and defense against intellectual property rights claims; legal liability and regulatory penalties; changes in our management and key employees; seasonality; maintenance of relationships with business development partners; maintenance of proper and effective internal controls; impact of provisions for income taxes; changes in laws and regulations, including in connection with healthcare reform and/or with respect to the marketing and sale of Medicare plans; compliance with insurance and other laws and regulations; exposure to security risks; and the performance, reliability and availability of eHealth's 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

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Form 10-Q or Annual Report on Form 10-K filed with the Securities and Exchange Commission and available on the investor relations page of eHealth's website at http://www.ehealthinsurance.com and on the Securities and Exchange Commission's website at www.sec.gov. eHealth does not undertake any obligation to update any forward-looking statement to conform the statement to actual results or changes in expectations.

 

Non-GAAP Financial Information

This press release includes financial measures that are not in accordance with generally accepted accounting principles in the United States (GAAP). To supplement eHealth’s condensed consolidated financial statements presented in accordance with GAAP, eHealth presents investors with certain non-GAAP financial measures, including non-GAAP operating income (loss); non-GAAP operating margins; earnings before interest, taxes, depreciation and amortization (EBITDA); non-GAAP net income and non-GAAP net income per diluted share.

 

 

 

 

 

eHealth believes that the presentation of these non-GAAP financial measures provide important supplemental information to management and investors regarding financial and business trends relating to eHealth’s financial condition and results of operations. Management believes that the use of these non-GAAP financial measures provides consistency and comparability with eHealth’s past financial reports. Management also believes that the exclusion of 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. Externally, eHealth believes that these non-GAAP financial measures are useful to investors in their assessment of eHealth’s operating performance.

 

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

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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

440 East Middlefield Road

Mountain View, CA 94043

(650) 210-3111

kate.sidorovich@ehealth.com

http://ir.ehealthinsurance.com

 

Media Contact:

Brian Mast

Vice President Communications

440 East Middlefield Road

Mountain View, CA 94043

(650) 210-3149

brian.mast@ehealth.com 

http://www.ehealthinsurance.com 

(Tables to Follow)

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EHEALTH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, unaudited)

 

 

 

 

 

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EHEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In thousands, except per share amounts, unaudited)

 

 

 

 

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EHEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

 

 

 

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EHEALTH, INC.

SUMMARY OF SELECTED METRICS

(Unaudited)

 

 

 

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Notes:

 

Note: Historically, to calculate the estimated number of members active on individual and family plan insurance policies, we have taken the sum of (i) the number of IFP members for whom we have received or applied a commission payment for the month that is six months prior to the date of estimation after reducing that number using historical experience for assumed member cancellations over the six-month period and (ii) the number of approved members over the six-month period prior to the date of estimation 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.  However, for the purpose of estimating the number of members active on individual and family plan insurance policies as of March 31, 2014 we have taken an additional step to bring our estimate of member cancellation more current compared to the historical methodology.  Specifically, we looked at the percentage of members for whom we had

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a commission payment in December of 2013 but no payment in January of 2014, compared that to our historical sequential membership change between these two months in the prior year and increased the estimated member cancellation rate by the resulting difference to account for potentially higher churn on January 1, 2014 as a result of the Affordable Care Act. We, however, assumed member cancellations consistent with our historical experience for the months of October through December of 2013 and February and March of 2014.

 

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 reflect updated information regarding our membership in the membership estimate for the period when we receive such updated information, if applicable. As a result of the delay in our receipt of information from insurance carriers, actual trends in our membership are most discernible over periods longer than from one quarter to the next. In addition, and as a result of the delay we experience in receiving information about our membership, it is difficult for us to determine with any certainty the impact of current conditions such as health care reform implementation on our membership retention. Health care reform could cause the assumptison and estimates that we make in connection with estimating our membership to be inaccurate, which would cause our membership estimates to be inaccurate.  

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EHEALTH, INC.

GAAP TO NON-GAAP RECONCILIATION

FOR THE THREE MONTHS ENDED MARCH 31, 2014

(In thousands, except per share amounts, unaudited)

 

Statement of Income Reconciliation

 

 

Explanation of adjustments

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EHEALTH, INC.

GAAP TO NON-GAAP RECONCILIATION

FOR THE THREE MONTHS ENDED MARCH 31, 2013

(In thousands, except per share amounts, unaudited)

 

Statement of Income Reconciliation

 

 

Explanation of adjustments

 

 

 

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EHEALTH, INC.

GAAP NET INCOME (LOSS) TO NON-GAAP EBITDA RECONCILIATION

FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2014

 (In thousands, unaudited)

 

 

 

 

Explanation of adjustments

 

 

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