eHealth, Inc. Announces Third Quarter 2012 Results
Third Quarter 2012 Overview -- Revenue of $37.6 Million, an Increase of 8% Compared to the Third Quarter of 2011 -- Submitted Applications for IFP Products Increased 5% From the Third Quarter of 2011 -- Total Approved Members Increased 24% From the Third Quarter of 2011 -- Operating Income of $1.1 Million, Compared to Operating Income of $43 Thousand for the Third Quarter of 2011 -- GAAP Net Income of $0.2 Million, or $0.01 per Diluted Share, and Non-Gaap Net Income of $1.8 Million, or $0.09 per Diluted Share, for the Third Quarter of 2012 -- Special Tax Expense Item of $0.6 Million, a Negative Impact of $0.03 per Diluted Share for the Third Quarter of 2012 -- Cash Flows From Operations Were $6.9 Million, an Increase of 28% Compared to the Third Quarter of 2011
(firmenpresse) - MOUNTAIN VIEW, CA -- (Marketwire) -- 10/25/12 -- eHealth, Inc. (NASDAQ: EHTH), 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, 2012.
Gary Lauer, chief executive officer of eHealth stated, "We are very pleased with our third quarter results. During the quarter we saw further improvement in our Individual & Family business highlighted by both membership and submitted application growth, we continued to generate strong growth in Medicare product sales and, importantly, we invested in and prepared for the Medicare Annual Enrollment Period which started on October 15th."
- Revenue for the third quarter of 2012 totaled $37.6 million, an 8% increase compared to revenue of $34.8 million for the third quarter of 2011. Commission revenue for the third quarter of 2012 totaled $31.3 million, an 11% increase compared to commission revenue of $28.2 million for the third quarter of 2011. Third quarter Medicare revenue was $6.3 million, a 93% increase compared to Medicare revenue of $3.2 million for the third quarter of 2011.
- Submitted applications for individual and family products increased 5% in the third quarter of 2012 to 120,100 applications, compared to 114,800 applications in the third quarter of 2011.
- Estimated membership at September 30, 2012 totaled 926,600 members, a 14% increase over estimated membership of 810,400 at September 30, 2011. Total approved members, including individual and family plan, Medicare plan and other product members, increased 24% to 174,500 in the third quarter of 2012, compared to 140,300 in the third quarter of 2011.
- Operating income for the third quarter of 2012 was $1.1 million, compared to operating income of $43 thousand for the third quarter of 2011. Operating margins were 3% and 0% in the third quarters of 2012 and 2011, respectively. Non-GAAP operating income for the third quarter of 2012 was $2.8 million, an increase of 21% compared to non-GAAP operating income of $2.3 million for the third quarter of 2011. Non-GAAP operating margins were 7% in both the third quarters of 2012 and 2011. Non-GAAP operating income and margins in the third quarter of 2012 exclude $1.3 million of stock-based compensation expense and $0.4 million of intangible asset amortization expense. Non-GAAP operating income and margins in the third quarter of 2011 exclude $1.8 million of stock-based compensation expense and $0.4 million of intangible asset amortization expense.
- EBITDA for the third quarter of 2012 was $3.4 million, an increase of 20% compared to EBITDA of $2.8 million for the third quarter of 2011.
- Pre-tax income for the third quarter of 2012 was $1.1 million, compared to pre-tax income of $22 thousand for the third quarter of 2011.
- Income taxes for the third quarter of 2012 included a special tax expense item of $0.6 million, or $(0.03) per diluted share, related to tax shortfalls resulting from the cancellation of stock options previously issued pursuant to our equity incentive plans. Income taxes for the third quarter of 2011 included a special tax expense item of $0.2 million, or $(0.01) per diluted share, related to additional tax expense we recorded as a result of an increase in our estimated effective tax rate for the full year 2011 and tax shortfalls resulting from the cancellation of stock options previously issued pursuant to our equity incentive plans.
- Net income for the third quarter of 2012 was $0.2 million, or $0.01 per diluted share, compared to net loss of $0.2 million, or ($0.01) per diluted share for the third quarter of 2011. Non-GAAP net income for the third quarter of 2012 was $1.8 million, or $0.09 per diluted share, compared to non-GAAP net income of $1.2 million, or $0.06 per diluted share for the third quarter of 2011. Non-GAAP net income and non-GAAP net income per diluted share in the third quarter of 2012 exclude $1.3 million of stock-based compensation expense and $0.4 million of intangible asset amortization expense, less $0.1 million for related income tax benefit. Non-GAAP net income and non-GAAP net income per diluted share in the third quarter of 2011 exclude $1.8 million of stock-based compensation expense and $0.4 million of intangible asset amortization expense, less $0.8 million for related income tax expense.
- Cash flows from operations for the third quarter of 2012 were $6.9 million, a 28% increase compared to cash flows from operations of $5.4 million for the third quarter of 2011.
- Revenue totaled $110.2 million for the nine months ended September 30, 2012, a 2% increase compared to revenue of $108.5 million for the nine months ended September 30, 2011. Medicare revenue was approximately $17.7 million in the nine months ended September 30, 2012, a 130% increase compared to Medicare revenue of $7.7 million for the nine months ended September 30, 2011.
- Operating income for the nine months ended September 30, 2012 was $9.1 million, compared to operating income of $8.9 million for the nine months ended September 30, 2011. Operating margins were 8% for both nine-month periods ended September 30, 2012 and 2011, respectively.
- EBITDA for the nine months ended September 30, 2012 was $16.4 million, compared to EBITDA of $17.6 million for the nine months ended September 30, 2011.
- Pre-tax income for the nine months ended September 30, 2012 was $9.2 million, compared to pre-tax income of $8.8 million for the nine months ended September 30, 2011.
- Net income for the nine months ended September 30, 2012 was $4.6 million, or $0.23 per diluted share, compared to net income for the nine months ended September 30, 2011 of $4.5 million, or $0.20 per diluted share.
- Cash flows from operations for the nine months ended September 30, 2012 were $19.7 million, a 2% decrease compared to $20.0 million for the nine months ended September 30, 2011.
Cash and cash equivalents as of September 30, 2012 totaled $130.8 million, compared to $123.6 million as of December 31, 2011. The increase in cash and cash equivalents reflects $19.7 million of cash generated by operating activities in the nine months ended September 30, 2012. Partially offsetting this increase was $6.2 million of cash consideration paid to a partner, whereby the partner transferred certain of its existing Medicare plan members to us as the broker of record on the underlying policies, and $8.4 million used to repurchase 0.6 million shares of our common stock in the first nine months of 2012 as a part of a stock repurchase program. In the first nine months of 2012, eHealth completed a $30 million share repurchase program at an average per share price of $13.78.
eHealth is reaffirming its guidance for the full year ending December 31, 2012 provided on its last earnings call as follows:
Total revenue is expected to be in the range of $152 million to $158 million
Stock-based compensation expense is expected to be in the range of $6.5 million to $8 million
EBITDA* is expected to be in the range of $21 million to $26 million
Non-GAAP net income per diluted share** is expected to be in the range of $0.56 to $0.66 per share
* 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.
A Webcast and conference call will be held today, Thursday, October 25, 2012 at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time. The Webcast will be available live on the Investor Relations section on eHealth's website at . Individuals interested in listening to the conference call may do so by dialing 866-804-6923 for domestic callers and 857-350-1669 for international callers. The participant passcode is 68964431. 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 37691601. The live and archived webcast of the call will also be available on eHealth's website at under the Investor Relations section.
eHealth, Inc. (NASDAQ: EHTH) is the parent company of eHealthInsurance, the nation's leading online source of for individuals, families and small businesses. Through the company's website, , consumers can get quotes from leading health insurance carriers, compare plans side by side, and apply for and purchase health insurance. eHealthInsurance offers thousands of individual, family and small business health plans underwritten by more than 180 of the nation's leading health insurance companies. eHealthInsurance is licensed to sell health insurance in all 50 states and the District of Columbia, making it the ideal model of a successful, high-functioning . Through the company's eHealth Technology solution (), eHealth is also a leading provider of health insurance exchange technology. eHealth Technology's exchange platform provides a suite of hosted e-commerce solutions that enable health plan providers, resellers and government entities to market and distribute products online. eHealth, Inc. also provides powerful online and pharmacy-based tools to help seniors navigate Medicare health insurance options, choose the right plan and enroll in select plans online through its wholly-owned subsidiary, PlanPrescriber.com () and through its Medicare website . For more health insurance news and information, visit the eHealthInsurance consumer blog: .
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 guidance for total revenue, stock-based compensation expense, EBITDA, and non-GAAP net income per diluted share for the year ending December 31, 2012. 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; eHealth's ability to maintain its relationship with health insurance carriers; eHealth's success in marketing and selling Medicare-related 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; government disapproval of our use of marketing material, including call center scripts and our websites, to sell Medicare-related health insurance products; costs of acquiring new members; weak economic conditions; consumer awareness of the availability and accessibility of affordable health insurance; 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 or carrier underwriting practices; maintaining and enhancing eHealth's brand identity; 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; our operations in China; success of eHealth's sponsorship and advertising business; the licensing of the use of eHealth's technology or our performance of services pursuant to government contracts; protection of intellectual property and defense of intellectual property rights claims; legal liability, regulatory penalties and negative publicity;changes in our management and key employees; management of business expansion and diversification; seasonality; impact of acquisitions, including risks associated with not realizing anticipated synergies and opportunities with respect to PlanPrescriber, Inc.; underperformance by PlanPrescriber, Inc.; PlanPrescriber's maintenance of its relationships with its pharmacy and other partners that serve as a source of Medicare-related leads; government approval of marketing material, including websites relating to PlanPrescriber partner Medicare product lead referrals; maintenance of proper and effective internal controls; impact of provisions for income taxes; changes in laws and regulations, including 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 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 and on the Securities and Exchange Commission's website at . eHealth does not undertake any obligation to update any forward-looking statement to conform the statement to actual results or changes in expectations.
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; non-GAAP operating margins; earnings before interest, taxes, depreciation and amortization ("EBITDA"); non-GAAP net income and non-GAAP net income per diluted share.
Non-GAAP operating income consists of GAAP operating income excluding the following items:
the effects of expensing stock-based compensation related to stock options and restricted stock units in accordance with FASB ASC Topic 718, and
intangible asset amortization expense.
Non-GAAP operating margins are calculated by dividing non-GAAP operating income by GAAP total revenue.
EBITDA is calculated by adding stock-based compensation, 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 consists of GAAP net income excluding the following items:
the effects of expensing stock-based compensation related to stock options and restricted stock units in accordance with FASB ASC Topic 718,
intangible asset amortization expense, and
the related income tax benefit of these excluded items.
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 are useful to investors in their assessment of the Company's operating performance.
Non-GAAP operating income, 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 the Company'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. The Company 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. The Company compensates for these limitations by prominently disclosing GAAP operating income, GAAP operating margins, 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 described above and the related reconciliations between these financial measures.
Kate Sidorovich
Vice President, Investor Relations
440 East Middlefield Road
Mountain View, CA 94043
(650) 210-3111
Brian Mast
Vice President, Communications
440 East Middlefield Road
Mountain View, CA 94043
(650) 210-3149
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