EHTH

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http://stockcharts.com/h-sc/ui?s=EHTH&p=D&b=5&g=0&id=p59191861522


eHealth, Inc
440 East Middlefield Road
Mountain View, CA 94043
United States - Map
Phone: 650-584-2700
Web Site: http://www.ehealthinsurance.com

DETAILS  
Index Membership: N/A
Sector: Financial
Industry: Insurance Brokers
Full Time Employees: 357


BUSINESS SUMMARY  
eHealth, Inc. and its subsidiaries provide an Internet-based insurance agency services for individuals, families, and small businesses primarily in the United States. The company's services enable individuals, families, and small businesses to research, analyze, compare, and purchase health insurance products from health insurance carriers across the nation. Its proprietary ecommerce platform, which can be accessed directly through Website addresses www.ehealth.com and www.ehealthinsurance.com, offers approximately 7,000 health insurance products. The product offerings include medical health insurance coverage, such as preferred provider organization; health maintenance organization and indemnity plans; short-term medical insurance; student health insurance; and ancillary products, such as dental, vision, and life insurance. The company is licensed to market and sell health insurance products in the United States and the District of Columbia. eHealth, Inc., formerly known as eHealthInsurance Services, Inc., was founded in 1997. The company is headquartered in Mountain View, California.
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Source: eHealth, Inc.


eHealth, Inc. Announces Third Quarter 2007 Results
Thursday November 1, 4:30 pm ET  
Third Quarter Highlights
-- Revenue of $23.0 million, up 38% on a GAAP basis and 44% on a non-GAAP basis year-over-year
-- Growth in estimated membership of 35% year-over-year
-- Operating margins increased to 21%
-- Pre-tax income of $6.2 million, up 121% year-over-year
-- Net income of $3.7 million, or $0.14 per diluted share
-- Cash flow from operations of $7.7 million, up 175% year-over-year
-- Company revises annual guidance; expects 2007 revenue range to increase to $87.2 to $88.0 million and operating cash flow range to increase to $22.5 to $24.5 million


MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--eHealth, Inc. (NASDAQ:EHTH - News), the leading online source of health insurance for individuals, families and small businesses, today announced its financial results for the third quarter ended September 30, 2007.
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"The results from the third quarter of 2007 demonstrate momentum across all major facets of our business. We see our market opportunity continuing to expand, an increasing inventory of quality health insurance products on our site, and growing recognition by consumers of the Internet as the best way to evaluate and purchase health insurance," said Gary Lauer, chief executive officer of eHealth.

Third Quarter Results

Revenue—Revenue totaled $23.0 million on a GAAP basis for the third quarter of 2007, a 38% increase compared to GAAP revenue of $16.7 million for the third quarter of 2006, and a 44% increase compared to non-GAAP revenue of $15.9 million for the third quarter of 2006. Non-GAAP revenue for the third quarter of 2006 excludes the recognition of $720,000 of previously deferred revenue that had accumulated during 2005 and the first six months of 2006.

Membership—Estimated membership at September 30, 2007 grew 35% over estimated membership at September 30, 2006. Total approved members during the quarter grew by 22% compared to the third quarter of 2006.

Operating Income—Operating income increased to $4.8 million for the third quarter of 2007, compared to operating income of $2.7 million for the third quarter of 2006. Operating margins were 21% in the third quarter of 2007, up from 16% in the third quarter of 2006. Non-GAAP operating income increased to $5.2 million for the third quarter of 2007, compared to non-GAAP operating income of $2.1 million for the third quarter of 2006. Non-GAAP operating margins were 23% in the third quarter of 2007, up from 13% in the third quarter of 2006. Non-GAAP operating income and margins in the third quarter of 2007 exclude $349,000 of stock-based compensation expense. Non-GAAP operating income and margins in the third quarter of 2006 exclude the recognition of $720,000 of previously deferred revenue, that had accumulated during 2005 and the first six months of 2006, and $144,000 of stock-based compensation expense.

Pre-tax Income—Pre-tax income for the third quarter of 2007 was $6.2 million, a 121% increase compared to pre-tax income of $2.8 million for the third quarter of 2006. The provision for income taxes for the third quarter of 2007 was $2.5 million, representing an effective tax rate of 40%, compared to the provision for income taxes in the third quarter of 2006 of $82,000, representing an effective tax rate of 3%. Non-GAAP pre-tax income increased to $6.6 million for the third quarter of 2007, compared to non-GAAP pre-tax income of $2.2 million for the third quarter of 2006, an increase of 194%. Non-GAAP pre-tax income in the third quarter of 2006 excludes the recognition of $720,000 of previously deferred revenue, that had accumulated during 2005 and the first six months of 2006, and $144,000 of stock-based compensation expense.

Net Income—Net income for the third quarter of 2007 was $3.7 million, or $0.14 per diluted share, compared to net income of $2.7 million, or $0.14 per diluted share, for the third quarter of 2006. Non-GAAP net income for the third quarter of 2007 was $4.1 million, or $0.15 per diluted share, compared to non-GAAP net income of $2.2 million, or $0.11 per diluted share, for the third quarter of 2006, an increase of 86%. Non-GAAP net income and non-GAAP net income per diluted share in the third quarter of 2007 exclude $349,000 of stock-based compensation expense, net of income tax effect. Non-GAAP net income and non-GAAP net income per diluted share in the third quarter of 2006 exclude the recognition of $720,000 of previously deferred revenue, that had accumulated during 2005 and the first six months of 2006, and $144,000 of stock-based compensation expense, net of income tax effect.

Cash Flow and Cash Balance—Cash flow from operations for the third quarter of 2007 was $7.7 million, compared to $2.8 million for the third quarter of 2006, representing an increase of 175%. Cash, cash equivalents and short-term marketable securities as of September 30, 2007 totaled $112.7 million, compared to $90.5 million as of December 31, 2006.

Year-to-Date Results

Revenue—Revenue totaled $63.6 million for the nine months ended September 30, 2007, a 45% increase compared to revenue of $43.9 million for the nine months ended September 30, 2006.

Operating Income—Operating income increased to $11.7 million for the nine months ended September 30, 2007, compared to operating income of $5.2 million for the nine months ended September 30, 2006. Operating margins were 18% in the nine months ended September 30, 2007, up from 12% in the nine months ended September 30, 2006.

Pre-tax Income—Pre-tax income for the nine months ended September 30, 2007 was $15.6 million, a 179% increase compared to pre-tax income of $5.6 million for the nine months ended September 30, 2006. The provision for income taxes for the nine months ended September 30, 2007 was $6.3 million, representing an effective tax rate of 41%, compared to the provision for income taxes in the nine months ended September 30, 2006 of $154,000, representing an effective tax rate of 3%.

Net Income—Net income for the nine months ended September 30, 2007 was $9.2 million, or $0.36 per diluted share, compared to net income of $5.4 million, or $0.28 per diluted share, for the nine months ended September 30, 2006.

Cash Flow—Cash flow from operations increased to $18.3 million for the nine months ended September 30, 2007, compared to $6.5 million in the nine months ended September 30, 2006.

Updated Guidance

eHealth is providing updated guidance for its full year ending December 31, 2007, based on information currently available:


Total revenue is expected to be in the range of $87.2 million to $88.0 million, up from the company's previously forecasted range of $85 million to $87 million.
Non-GAAP net income, excluding stock-based compensation expense, is expected to be in the range of $13.0 million to $14.0 million, up from the company's previously forecasted range of $12.0 million to $13.5 million.
Non-GAAP earnings per diluted share, excluding stock-based compensation expense, is expected to be in the range of $0.51 to $0.55 per share, up from the company's previously forecasted range of $0.47 to $0.52 per share.
Cash flow from operations is expected to be in the range of $22.5 million to $24.5 million, up from the company's previously forecasted range of $21 million to $23 million.
Webcast and Conference Call Information

A Webcast and conference call will be held today, Thursday, November 1, 2007 at 5:00 p.m. EDT / 2:00 p.m. PDT. 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 866-713-8395 for domestic callers and 617-597-5309 for international callers. The participant passcode is 99673917. 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 14581602. The archived Webcast will also be available on the company's website.

About eHealth, Inc.

eHealth, Inc. is the parent company of eHealthInsurance, the leading online source of health insurance for individuals, families and small businesses. eHealthInsurance presents complex health insurance information in an objective, user-friendly format, enabling the research, analysis, comparison and purchase of health insurance products that best meet consumers' needs. eHealth and eHealthInsurance are registered trademarks of eHealthInsurance Services, Inc.

eHealth, Inc. was founded in 1997 and its technology was responsible for the nation's first Internet-based sale of a health insurance policy. eHealth is headquartered in Mountain View, California. Additional information can be found on eHealth's website, www.ehealthinsurance.com.

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 the momentum of eHealth's business, the expansion of eHealth's market opportunity, the increasing inventory of quality health insurance products on eHealth's website, the growing recognition by consumers of the Internet as the best way to evaluate and purchase health insurance, and eHealth's guidance for total revenue, net income, net income per diluted share and cash flow from operations for the year ended 2007. 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 continued acceptance of the Internet as a medium for the purchase of health insurance, eHealth's ability to continue to increase its membership base and expand its relationships with health insurance carriers and marketing partners, retention of eHealth's members, increased rates of member turnover, changes in eHealth's relationships with insurance carriers, system failures or capacity constraints, dependence upon Internet search engines to attract consumers who visit eHealth's website, the performance, reliability and availability of eHealth's ecommerce platform and underlying network infrastructure, the effectiveness of eHealth's marketing and public relations efforts, exposure to online commerce security risks, reliance on marketing partners for the sale of health insurance, competition, protection of intellectual property and intellectual property rights claims, regulatory penalties and negative publicity, compliance with insurance and other laws and regulations, and changes in laws and regulations. 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 as filed with the Securities and Exchange Commission and available on the investor relations page of eHealth's website at www.ehealthinsurance.com and on the Securities and Exchange Commission's website at www.sec.gov. Other risks may be detailed from time to time in reports to be filed with the Securities and Exchange Commission. 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 consolidated financial statements presented in accordance with GAAP, eHealth presents investors with certain non-GAAP financial measures, including non-GAAP revenue, non-GAAP operating income, non-GAAP operating margins, non-GAAP pre-tax income, non-GAAP net income and non-GAAP net income per diluted share.


Non-GAAP revenue for the three months ended September 30, 2006, consists of GAAP revenue excluding the recognition of previously deferred revenue related a single health insurance carrier that, effective January 2005, changed its basis for calculating and reporting commission amounts from a percentage of the premium it collected to a percentage of the premium it billed. Since this was the first carrier to calculate and report commission amounts on this basis, eHealth initially did not have sufficient historical forfeiture experience to estimate and record an appropriate allowance for forfeitures as commission amounts were reported by the carrier. Accordingly, all commission amounts reported by the carrier in 2005 and the first six months of 2006 were deferred until the third quarter of 2006.
Non-GAAP operating income consists of GAAP operating income excluding the recognition of the previously deferred revenue described above in the third quarter of 2006 and the effects of expensing stock-based compensation related to stock options, restricted stock and restricted stock units in accordance with SFAS 123R beginning in 2006 and amortization of deferred stock-based compensation expense in accordance with APB 25 for grants made prior to 2006.
Non-GAAP operating margins are calculated by dividing non-GAAP operating income by non-GAAP total revenue.
Non-GAAP pre-tax income consists of GAAP pre-tax income excluding the recognition of the previously deferred revenue described above in the third quarter of 2006 and the effects of expensing stock-based compensation including the related income tax impact.
Non-GAAP net income consists of GAAP net income excluding the recognition of the previously deferred revenue described above in the third quarter of 2006 and the effects of expensing stock-based compensation including the related income tax impact.
Non-GAAP net income per diluted share is calculated by dividing non-GAAP net income by GAAP weighted average diluted shares outstanding.
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 the company's financial condition and results of operations. Management believes that the use of these non-GAAP financial measures provides consistency and comparability with the company's past financial reports. Management also believes that the exclusion of the items described above provides an additional measure of the company's operating results and facilitates comparisons of the company'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 the company's ongoing operations. Externally, the company believes that these non-GAAP financial measures continue to be useful to investors in their assessment of the company's operating performance and valuation.

Non-GAAP revenue, non-GAAP operating income, non-GAAP operating margins, non-GAAP pre-tax income, 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 have limitations in that they do not reflect all of the revenue and costs associated with the operations of the company's business 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. The company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from non-GAAP financial measures should not be construed as an inference that these costs are unusual or infrequent. The company compensates for these limitations by prominently disclosing GAAP operating income, GAAP net income and GAAP net income per diluted share and providing investors with reconciliations from the company'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 and the related reconciliations between these financial measures.

EHEALTH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 
December 31,
2006
 September 30,
2007
 
Assets  (1)   (unaudited)  
Current assets:        
Cash and cash equivalents  $  90,316   $  78,726  
Short-term marketable securities   158    33,974  
Accounts receivable   717    1,048  
Deferred income taxes   2,257    358  
Prepaid expenses and other current assets     1,926      2,659  
Total current assets   95,374    116,765  
Property and equipment, net   3,936    3,537  
Deferred income taxes   5,165    744  
Other assets     453      975  
Total assets  $  104,928   $  122,021  
       
       
Liabilities and stockholders' equity        
       
Current liabilities:        
Accounts payable  $  1,440   $  885  
Accrued compensation and benefits   3,743    4,377  
Accrued marketing expenses   1,647    2,423  
Deferred revenue   62    277  
Other current liabilities     1,979      2,435  
Total current liabilities   8,871    10,397  
Other non-current liabilities   317    255  
       
Stockholders' equity:        
Common stock   22    24  
Additional paid-in capital   159,576    165,763  
Deferred stock-based compensation   (254  )   (139  )  
Accumulated deficit   (63,655  )   (54,420  )  
Accumulated other comprehensive income     51      141  
Total stockholders' equity     95,740      111,369  
Total liabilities and stockholders' equity  $  104,928   $  122,021  
 
(1) The condensed consolidated balance sheet at December 31, 2006 has been derived from the audited consolidated financial statements at that date.

EHEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts, unaudited)

 
   Three Months Ended
September 30,
   Nine Months Ended
September 30,

 2006     2007   2006     2007  
Revenue:              
Commission   $  15,867   $  21,313   $  42,423   $  59,486  
Sponsorship, licensing and other      795      1,684      1,471      4,072  
Total revenue    16,662    22,997    43,894    63,558  
Operating costs and expenses:              
Cost of revenue-sharing    411    427    894    1,245  
Marketing and advertising (1)    5,798    7,309    15,804    21,021  
Customer care and enrollment (1)    2,740    3,002    8,044    8,859  
Technology and content (1)    2,668    3,108    7,321    9,025  
General and administrative (1)      2,370      4,308      6,602      11,698  
Total operating costs and expenses      13,987      18,154      38,665      51,848  
Income from operations    2,675    4,843    5,229    11,710  
Other income, net      145      1,403      357      3,849  
Income before income taxes    2,820    6,246    5,586    15,559  
Provision for income taxes      82      2,516      154      6,324  
Net income   $  2,738   $  3,730   $  5,432   $  9,235  
           
Net income per share:              
Basic – common stock   $  0.54   $  0.16   $  1.10   $  0.41  
Basic – Class A nonvoting common stock   $  0.54    —   $  1.10    —  
Diluted – common stock   $  0.14   $  0.14   $  0.28   $  0.36  
Diluted – Class A nonvoting common stock   $  0.14    —   $  0.28    —  
             
Net income:              
Allocated to common stock   $  2,705   $  3,730   $  5,376   $  9,235  
Allocated to Class A nonvoting common stock      33      —      56      —  
Net income   $  2,738   $  3,730   $  5,432   $  9,235  
             
Weighted-average number of shares used in per share amounts:              
Basic – common stock    4,974    23,517    4,903    22,643  
Basic – Class A nonvoting common stock    61    —    51    —  
Diluted – common stock    19,334    26,263    19,158    25,746  
Diluted – Class A nonvoting common stock    61    —    51    —  
 
           
             
(1) Includes stock-based compensation as follows:              
Marketing and advertising   $  21   $  45   $  32   $  112  
Customer care and enrollment    13    29    27    86  
Technology and content    60    143    148    416  
General and administrative      50      132      89      347  
Total
 $  144   $  349   $  296   $  961  
EHEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

 
   Three Months Ended
September 30,
 Nine Months Ended
September 30,
 
 2006   2007   2006   2007  
Operating activities              
Net income   $  2,738   $  3,730   $  5,432   $  9,235  
Adjustments to reconcile net income to net cash provided by operating activities:    
   
 
   
     
Deferred income taxes    —    2,514    —    6,109  
Depreciation and amortization    422    424    1,116    1,275  
Stock-based compensation expense    144    350    296    962  
Deferred rent    46    (24  )   40    (22  )  
Loss on disposal of property and equipment    —    —    —    18  
Changes in operating assets and liabilities:              
Accounts receivable    (496  )   (317  )   (673  )   (331  )  
Prepaid expenses and other current assets    90    262    (224  )   184  
Other assets    (27  )   (296  )   (29  )   (523  )  
Accounts payable    291    (186  )   198    (302  )  
Accrued compensation and benefits    170    280    (192  )   (67  )  
Accrued marketing expenses    124    322    701    776  
Deferred revenue    (747  )   70    (464  )   215  
Other current liabilities      47      582      292      753  
Net cash provided by operating activities      2,802      7,711      6,493      18,282  
             
Investing activities              
Purchases of property and equipment    (1,321  )   (300  )   (1,738  )   (1,053  )  
Proceeds from the sale of property and equipment    —    14    —    14  
Changes in restricted investments    (1  )   —    (3  )   —  
Purchases of short-term marketable securities    —    (19,195  )   —    (36,520  )  
Sales of short-term marketable securities    —    2,156    —    2,156  
Maturities of short-term marketable securities      —      500      —      588  
Net cash used in investing activities      (1,322  )     (16,825  )     (1,741  )     (34,815  )  
             
Financing activities              
Costs incurred in connection with initial public offering    (538  )   —    (1,909  )   (252  )  
Net proceeds from exercise of common stock options    61    2,446    439    5,343  
Principal payments in connection with capital leases      (68  )     (37  )     (72  )     (212  )  
Net cash provided by (used in) financing activities      (545  )     2,409      (1,542  )     4,879  
               
Effect of exchange rate changes on cash and cash equivalents      13      22      16      64  
             
Net increase (decrease) in cash and cash equivalents    948    (6,683  )   3,226    (11,590  )  
Cash and cash equivalents at beginning of period      11,693      85,409      9,415      90,316  
Cash and cash equivalents at end of period   $  12,641   $  78,726   $  12,641   $  78,726  
EHEALTH, INC.

SUMMARY OF SELECTED METRICS

(Unaudited)

 
Key Metrics:     Three Months Ended September 30, 2006   Three Months Ended September 30, 2007  
       
Operating cash flows (1)   $  2,802,000   $  7,711,000  
         
IFP submitted applications (2)    78,200    97,900  
         
IFP approved members (3)    68,000    83,600  
Total approved members (4)    102,400    125,300  
         
Total revenue (5)   $  16,662,000   $  22,997,000  
Total revenue per estimated member for the period (6)   $  46.14   $  48.16  
         
 As of
September 30, 2006   As of
September 30, 2007  
         
IFP estimated membership (7)    297,400    408,100  
Total estimated membership (    363,000    491,300  
         
 Three Months Ended September 30, 2006   Three Months Ended September 30, 2007  
         
Marketing and advertising expenses (9)   $  5,798,000   $  7,309,000  
Marketing and advertising as a percentage of total revenue (10)    35  %   32  %  
         
         
Other Metrics:        
         
Source of IFP submitted applications (as a percentage of total IFP applications for the period):        
Direct (11)    39  %   40  %  
Marketing partners (12)    34  %   31  %  
Online advertising (13)      27  %     29  %  
Total      100  %     100  %  
         
Acquisition cost per individual on IFP submitted applications (14)   $  48.67   $  49.07  


Notes:

(1)     Net cash provided by operating activities for the period from the condensed consolidated statements of cash flows.  
(2)   Individual and Family Product ("IFP") applications submitted on eHealth's website during the period.  
(3)   New IFP members reported to eHealth as approved during the period. Some members that are approved by a carrier do not accept the approval and therefore do not become paying members.  
(4)   New members for all products reported to eHealth as approved during the period. Some members that are approved by a carrier do not accept the approval and therefore do not become paying members.  
(5)   Total revenue recognized during the period (all sources) from the condensed consolidated statements of operations.  
(6)   Calculated as total revenue recognized during the period (see note (5)) divided by average estimated membership for the period (calculated as beginning and ending estimated membership for all products for the period, divided by two).  
(7)   Estimated number of members active on IFP insurance policies as of the date indicated.  
(   Estimated number of members active on all insurance policies as of the date indicated.  
(9)   Marketing and advertising expenses for the period from the condensed consolidated statements of operations.  
(10)   Calculated as marketing and advertising expenses for the period (see note (9)) divided by total revenue for the period (see note (5)).  
(11)   Percentage of IFP submitted applications from applicants who came directly to the eHealth website through algorithm search engine results or otherwise.  
(12)   Percentage of IFP submitted applications from applicants sourced through eHealth's network of marketing partners.  
(13)   Percentage of IFP submitted applications from applicants sourced through paid search and other online advertising activities.  
(14)   Calculated as marketing and advertising expenses for the period (see note (9)) divided by the number of individuals on IFP applications completed on eHealth's website during the period.  
EHEALTH, INC.

GAAP TO NON-GAAP RECONCILIATION

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007

(In thousands, except per share amounts, unaudited)

 
Statement of Operations Reconciliation
     
 Three Months Ended September 30, 2007  
 GAAP Reported     Adjustments   Non-GAAP Results     Percent of Total Revenue  
           
Revenue:              
Commission   $  21,313   $  —   $  21,313   93  %  
Sponsorship, licensing and other      1,684      —      1,684   7  
Total revenue    22,997    —    22,997   100  
Operating costs and expenses:              
Cost of revenue-sharing    427    —    427   2  
Marketing and advertising (1)    7,309    (45  )   7,264   31  
Customer care and enrollment (1)    3,002    (29  )   2,973   13  
Technology and content (1)    3,108    (143  )   2,965   13  
General and administrative (1)      4,308      (132  )     4,176   18  
Total operating costs and expenses      18,154      (349  )     17,805   77  
Income from operations    4,843    349    5,192   23  
Other income, net      1,403      —      1,403   6  
Income before income taxes    6,246    349    6,595   29  
Provision for income taxes (2)      2,516      20      2,536   11  
Net income   $  3,730   $  329   $  4,059   18  %  
           
Net income per share:              
Basic – common stock   $  0.16   $  0.01   $  0.17    
Diluted – common stock   $  0.14   $  0.01   $  0.15    
             
Weighted-average number of shares used in per share amounts:              
Basic – common stock    23,517    23,517    23,517    
Diluted – common stock    26,263    26,263    26,263    


Explanation of adjustments

(1)     Non-GAAP results exclude the effect of expensing stock-based compensation related to stock options, restricted stock and restricted stock units in accordance with SFAS 123R beginning in 2006, in addition to the amortization of deferred stock-based compensation expense in accordance with APB 25 for grants made prior to 2006.  
(2)   Non-GAAP results exclude the income tax impact of the stock-based compensation expense listed in item (1) above.  
EHEALTH, INC.

GAAP TO NON-GAAP RECONCILIATION

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006

(In thousands, except per share amounts, unaudited)

 

 
Statement of Operations Reconciliation
     
 Three Months Ended September 30, 2006  
 GAAP Reported     Adjustments   Non-GAAP Results     Percent of Total Revenue  
           
Revenue:              
Commission (1)   $  15,867   $  (720  )  $  15,147   95  %  
Sponsorship, licensing and other      795      —      795   5  
Total revenue    16,662    (720  )   15,942   100  
Operating costs and expenses:              
Cost of revenue-sharing    411    —    411   3  
Marketing and advertising (2)    5,798    (21  )   5,777   36  
Customer care and enrollment (2)    2,740    (13  )   2,727   17  
Technology and content (2)    2,668    (60  )   2,608   16  
General and administrative (2)      2,370      (50  )     2,320   15  
Total operating costs and expenses      13,987      (144  )     13,843   87  
Income from operations    2,675    (576  )   2,099   13  
Other income, net      145      —      145   1  
Income before income taxes    2,820    (576  )   2,244   14  
Provision for income taxes (3)      82      (17  )     65   0  
Net income   $  2,738   $  (559  )  $  2,179   14  %  
           
Net income per share:              
Basic – common stock   $  0.54   $  (0.11  )  $  0.43    
Basic – Class A nonvoting common stock   $  0.54   $  (0.11  )  $  0.43    
Diluted – common stock   $  0.14   $  (0.03  )  $  0.11    
Diluted – Class A nonvoting common stock   $  0.14   $  (0.03  )  $  0.11    
             
Net income:              
Allocated to common stock   $  2,705   $  (552  )  $  2,153    
Allocated to Class A nonvoting common stock      33      (7  )     26    
Net income   $  2,738   $  (559  )  $  2,179    
             
Weighted-average number of shares used in per share amounts:              
Basic – common stock    4,974    4,974    4,974    
Basic – Class A nonvoting common stock    61    61    61    
Diluted – common stock    19,334    19,334    19,334    
Diluted – Class A nonvoting common stock    61    61    61    


Explanation of adjustments

(1)
   Included in deferred revenue at June 30, 2006 were commission amounts reported and paid by a single health insurance carrier that, effective January 2005, changed its basis for calculating and reporting commission amounts from a percentage of the premium it collected to a percentage of the premium it billed. Since this was the first carrier to calculate and report commission amounts on this basis, eHealth initially did not have sufficient historical forfeiture experience to estimate and record an appropriate allowance for forfeitures as commission amounts were reported by the carrier. Accordingly, all commission amounts reported by the carrier in 2005 and the first six months of 2006, which totaled $720,000, were deferred.
 

During the three months ended September 30, 2006, eHealth determined that it had sufficient experience to estimate an allowance for forfeitures for this health insurance carrier. Accordingly, during the three months ended September 30, 2006, eHealth recognized $720,000 of commission revenue, which had been previously deferred.

(2)   Non-GAAP results exclude the effect of expensing stock-based compensation related to stock options, restricted stock and restricted stock units in accordance with SFAS 123R beginning in 2006, in addition to the amortization of deferred stock-based compensation expense in accordance with APB 25 for grants made prior to 2006.  
(3)   Non-GAAP results exclude the income tax impact of the commission revenue in item (1) above and the stock-based compensation expense listed in item (2) above.  
EHEALTH, INC.

GAAP TO NON-GAAP RECONCILIATION

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007

(In thousands, except per share amounts, unaudited)

 
Statement of Operations Reconciliation
     
 Nine Months Ended September 30, 2007  
 GAAP Reported     Adjustments   Non-GAAP Results     Percent of Total Revenue  
           
Revenue:              
Commission   $  59,486   $  —   $  59,486   94  %  
Sponsorship, licensing and other      4,072      —      4,072   6  
Total revenue    63,558    —    63,558   100  
Operating costs and expenses:              
Cost of revenue-sharing    1,245    —    1,245   2  
Marketing and advertising (1)    21,021    (112  )   20,909   33  
Customer care and enrollment (1)    8,859    (86  )   8,773   14  
Technology and content (1)    9,025    (416  )   8,609   13  
General and administrative (1)      11,698      (347  )     11,351   18  
Total operating costs and expenses      51,848      (961  )     50,887   80  
Income from operations    11,710    961    12,671   20  
Other income, net      3,849      —      3,849   6  
Income before income taxes    15,559    961    16,520   26  
Provision for income taxes (2)      6,324      62      6,386   10  
Net income   $  9,235   $  899   $  10,134   16  %  
           
Net income per share:              
Basic – common stock   $  0.41   $  0.04   $  0.45    
Diluted – common stock   $  0.36   $  0.03   $  0.39    
             
Weighted-average number of shares used in per share amounts:              
Basic – common stock    22,643    22,643    22,643    
Diluted – common stock    25,746    25,746    25,746    


Explanation of adjustments

(1)     Non-GAAP results exclude the effect of expensing stock-based compensation related to stock options, restricted stock and restricted stock units in accordance with SFAS 123R beginning in 2006, in addition to the amortization of deferred stock-based compensation expense in accordance with APB 25 for grants made prior to 2006.  
(2)   Non-GAAP results exclude the income tax impact of the stock-based compensation expense listed in item (1) above.  




Contact:
eHealth, Inc.
Stuart Huizinga, 650-210-3180 (Media)
Senior Vice President and Chief Financial Officer
[email protected]
www.ehealthinsurance.com
or
Ashton Partners
Dede Sheel, 415-869-5765 (Investor Relations)
[email protected]
www.ashtonpartners.com


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Investor's Business Daily
EHealth's Web Site Tries To Take The Stress Out Of Health Insurance
Wednesday November 14, 6:05 pm ET
Amy Reeves


If you want to give most Americans a scare, sneak up behind them and say, "health insurance!"
Expensive, complicated and hard to get -- that's all a lot of people know about health plans. But one company is trying to make getting health coverage nearly as simple as booking plane tickets on Travelocity.

ADVERTISEMENT


EHealth (NasdaqGM:EHTH - News) is an online-only health insurance broker. Unlike travel agents, it is nearly alone on the Internet.

"It's kind of amazing that we've been able to get where we are without a major competitor," said Chief Financial Officer Stuart Huizinga. "But we've found that it's a tough business. It takes a long time to build it."

EHealth started building it in 1997, as yet another Silicon Valley company in the tech boom trying to bring a traditional business online. The task was made more difficult by the infamously arcane world of health insurance.

Every state has a different set of regulations and a different insurance market. EHealth's platform has to crunch all this to give users some way to comparison-shop.

Winning Trust

The firm also had to win the trust of the health plans so they'd be willing to use eHealth as a conduit. By now it is partnered with some 200 insurers, led by UnitedHealth (NYSE:UNH - News) and WellPoint (NYSE:WLP - News). It serves all 50 states and the District of Columbia.

Even so, it took insurers a while to get up to the speed of the Internet Age. At first, Huizinga says, once a customer chose a plan and applied online, the underwriting process would take as long as ever -- a month or two.

EHealth has long been trying to persuade carriers to let it integrate their underwriting rules into its software, so as to automate the process. Huizinga says insurers lagged because underwriting "is as much art as science," and they weren't sure if a machine should do the job.

Even so, a few years ago eHealth rolled out a platform that compressed the time to a few days. Then on Nov. 1, when the firm released its third-quarter results, it announced that an unidentified carrier had agreed to roll out "instant underwriting" starting next year.

The news excited some analysts.

"I don't think there is anything you and I could buy where we don't want immediate gratification," said George Sutton, analyst with Craig Hallum Capital Group. "If you turn (buying health insurance) into an immediate experience, it should change the dynamics of the market quite a bit."

Analyst Carl McDonald of CIBC World Markets, however, isn't sure how much impact it will have.

"Instantaneous underwriting is a nice feature, but one that only relatively healthy individuals can take advantage of, since health plans probably won't be all that interested in instantaneous underwriting for individuals with a lot of pre-existing conditions," he wrote in an Aug. 1 note.

Huizinga acknowledges that even the "instant" platform won't be completely instant for everyone. Some will be instantly accepted, some instantly rejected, and some will get requests for more information while the underwriters figure them out.

Still, everybody liked the quarterly results that came out with the announcement. Profit jumped 40% over the prior year to 14 cents a share. Revenue rose 38% to $23 million.

EHealth also is expanding its business on several other fronts. On Sept. 27, it launched a Chinese version of its Web site called ubao.com. Ubao is Chinese for "good insurance."

It may sound strange for a small U.S. company that's not even in Canada to launch in China. In the Nov.1 conference call, one analyst asked why eHealth chose the second-tier city of Xiamen for its launch rather than Beijing or Shanghai.

Huizinga says the firm is simply seizing an opportunity. Like many U.S. software firms, it already had a branch in Xiamen for coding and development. The local Chinese employees thought that the idea might work in China.

EHealth's leaders admit that no one really knows what's going to happen in the Chinese market. Huizinga says that the concept of insurance in general is still pretty new to that country.

But companies such as China Life Insurance (NYSE:LFC - News) have hit it big. The local government has been friendly to eHealth's arrival.

"It's possible there could be a market there for the emerging middle class," said Huizinga. "We're just doing a pilot right now to prove up the market."

Another pilot program from the third quarter offers health savings accounts, or HSAs. These programs offer high-deductible insurance plans along with individual private savings accounts reserved for health expenses. The HSA plan is specifically targeted to the 50% of small businesses that don't cover their employees, usually because they can't afford it.

Expansion

Meanwhile, the firm is also aggressively expanding its core business. Universal health plans, like those recently brought to Massachusetts and under consideration in California, are music to eHealth's ears since it will bring so many new buyers searching for a good deal.

On Oct. 30, eHealth partnered with Blue Cross Blue Shield of Massachusetts to power online sales there.

All this will cost money. In the Nov. 1 conference call, eHealth's leaders warned that marketing expenses will rise as a percentage of revenue, after some quarters of decline.

This pinched forecasts for the fourth quarter: Analysts polled by Thomson Financial expect profit to slide 7% vs. the prior year.

Analyst Sutton approves.

"They see the market expanding more rapidly and they see the opportunity to attack that market more aggressively," he said. "They've been encouraged by carriers to do so, which we think is the right move."

Indeed, most analysts expect the profit decline to last only a quarter. Next year, they see earnings rising 32% to 66 cents a share.

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IBD "New America" video, give it time to load

http://www.investors.com/MediaCenter/MediaCenter.aspx?MediaID=706&t=V

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That link is bringing up the wrong video, but you might be able to get to it from the link, look for the New America reports.

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eHealth, Inc. Announces Fourth Quarter and Fiscal 2007 Results
Thursday February 14, 4:05 pm ET 
Fourth Quarter Highlights
-- Revenue of $24.2 million, up 39% on a year-over-year basis
-- Growth in submitted applications of 28% year-over-year
-- Operating income of $4.3 million, up 56% year-over-year
-- Net income of $22.4 million, or $0.86 per diluted share, including a $18.9 million income tax benefit due to the reversal of the valuation allowance against deferred tax assets
-- Cash flow from operations of $7.9 million, up 61% year-over-year


MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--eHealth, Inc. (NASDAQ:EHTH - News), the leading online source of health insurance for individuals, families and small businesses, today announced its financial results for the fourth quarter and fiscal year ended December 31, 2007.
ADVERTISEMENT


"eHealth's performance during the fourth quarter of 2007 illustrates progress, execution, and momentum across all important areas of our business. Among many highlights of the quarter are increased application growth and the highest operating cash flow in our company's history," said Gary Lauer, chief executive officer of eHealth.

Fourth Quarter Results

Revenue—Revenue totaled $24.2 million for the fourth quarter of 2007, a 39% increase compared to revenue of $17.4 million for the fourth quarter of 2006.

Membership—Estimated membership at December 31, 2007 totaled 518,400 members, a 32% increase over estimated membership at December 31, 2006.

Submitted Applications—Submitted applications for individual and family products increased 28% in the fourth quarter of 2007 to 97,900 applications, compared to 76,300 applications in the fourth quarter of 2006.

Operating Income—Operating income increased 56% to $4.3 million for the fourth quarter of 2007, compared to operating income of $2.8 million for the fourth quarter of 2006. Operating margins were 18% in the fourth quarter of 2007, up from 16% in the fourth quarter of 2006. Non-GAAP operating income increased 66% to $4.9 million for the fourth quarter of 2007, compared to non-GAAP operating income of $2.9 million for the fourth quarter of 2006. Non-GAAP operating margins were 20% in the fourth quarter of 2007, up from 17% in the fourth quarter of 2006. Non-GAAP operating income and margins in the fourth quarter of 2007 exclude $544,000 of stock-based compensation expense and non-GAAP operating income and margins in the fourth quarter of 2006 exclude $158,000 of stock-based compensation expense.

Pre-tax Income—Pre-tax income for the fourth quarter of 2007 was $5.7 million, a 54% increase compared to pre-tax income of $3.7 million for the fourth quarter of 2006. Non-GAAP pre-tax income increased to $6.3 million for the fourth quarter of 2007, compared to non-GAAP pre-tax income of $3.9 million for the fourth quarter of 2006, an increase of 62%. Non-GAAP pre-tax income in the fourth quarters of 2007 and 2006 exclude $544,000 and $158,000 of stock-based compensation expense, respectively.

Net Income—Net income for the fourth quarter of 2007, which included a benefit for income taxes of $18.9 million due to the reduction of the valuation allowance against deferred tax assets, was $22.4 million, or $0.86 per diluted share. Net income for the fourth quarter of 2006, which included a benefit for income taxes of $7.4 million due to the partial reduction of the valuation allowance against deferred tax assets, was $11.0 million, or $0.45 per share on a diluted basis. Non-GAAP net income for the fourth quarter of 2007 was $3.7 million, or $0.14 per diluted share, compared to non-GAAP net income of $3.8 million, or $0.15 per diluted share, for the fourth quarter of 2006. Non-GAAP net income and non-GAAP net income per diluted share in the fourth quarter of 2007 exclude $544,000 of stock-based compensation expense, net of income tax effect of $262,000, and an $18.9 million income tax benefit from the reduction of the valuation allowance against deferred tax assets. Non-GAAP net income and non-GAAP net income per diluted share in the fourth quarter of 2006 exclude $158,000 of stock-based compensation expense, net of income tax effect of $2,000, and $7.4 million of income tax benefit from the reduction of the valuation allowance against deferred tax assets.

Cash Flow and Cash Balance—Cash flow from operations for the fourth quarter of 2007 was $7.9 million, compared to $4.9 million for the fourth quarter of 2006, representing an increase of 61%. Cash, cash equivalents and short-term marketable securities as of December 31, 2007 totaled $121.5 million, compared to $90.5 million as of December 31, 2006.

Fiscal 2007 Results

Revenue—Revenue totaled $87.8 million for the year ended December 31, 2007, a 43% increase compared to revenue of $61.3 million for the year ended December 31, 2006.

Operating Income—Operating income increased to $16.0 million for the year ended December 31, 2007, compared to operating income of $8.0 million for the year ended December 31, 2006. Operating margins were 18% for the year ended December 31, 2007, up from 13% for the year ended December 31, 2006.

Pre-tax Income—Pre-tax income for the year ended December 31, 2007 was $21.3 million, a 129% increase compared to pre-tax income of $9.3 million for the year ended December 31, 2006. The benefit for income taxes for the year ended December 31, 2007 was $10.3 million and the benefit for income taxes for the year ended December 31, 2006 was $7.2 million primarily due to reductions of the valuation allowance against deferred tax assets of $7.4 million and $18.9 million in the fourth quarters of 2006 and 2007, respectively.

Net Income—Net income for the year ended December 31, 2007, which included $18.9 million of income tax benefit recorded in the fourth quarter of 2007, was $31.6 million, or $1.22 per diluted share. Net income for the year ended December 31, 2006, which included $7.4 million of income tax benefit recorded in the fourth quarter of 2006, was $16.5 million, or $0.80 per share on a diluted basis.

Cash Flow—Cash flow from operations increased to $26.2 million for the year ended December 31, 2007, compared to $11.4 million for the year ended December 31, 2006, representing an increase of 130%.

Guidance

eHealth is providing guidance for the full year ending December 31, 2008 based on information currently available:


Total revenue is expected to be in the range of $114 million to $117 million
Stock-based compensation expense is expected to be in the range of $4.0 million to $5.5 million
GAAP income tax rate expected to be approximately 42%
GAAP net earnings per diluted share is expected to be in the range of $0.58 to $0.63 per share
Cash flow from operations is expected to be in the range of $33.5 million to $36.0 million
Webcast and Conference Call Information

A Webcast and conference call will be held today, Thursday, February 14, 2008 at 5:00 p.m. EST / 2:00 p.m. PST. 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 888-396-2298 for domestic callers and 617-847-8708 for international callers. The participant passcode is 95522387. 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 15882627. The archived Webcast will also be available on the company's website.

About eHealth, Inc.

eHealth, Inc. is the parent company of eHealthInsurance, the leading online source of health insurance for individuals, families and small businesses. eHealthInsurance presents complex health insurance information in an objective, user-friendly format, enabling the research, analysis, comparison and purchase of health insurance products that best meet consumers' needs. eHealth and eHealthInsurance are registered trademarks of eHealthInsurance Services, Inc.

eHealth, Inc. was founded in 1997 and its technology was responsible for the nation's first Internet-based sale of a health insurance policy. eHealth is headquartered in Mountain View, California. Additional information can be found on eHealth's website, www.ehealthinsurance.com.
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eHealth Announces Expansion of Operations in China
Tuesday April 8, 8:00 am ET


eHealth's Ubao.com Website Now Offers Insurance Products Online to Consumers in the Shanghai Area