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eHealth Inc. Reports Operating Results (10-Q)

August 09, 2010 | About:
10qk

10qk

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eHealth Inc. (EHTH) filed Quarterly Report for the period ended 2010-06-30.

Ehealth Inc. has a market cap of $257.59 million; its shares were traded at around $10.95 with a P/E ratio of 17.95 and P/S ratio of 1.91. EHTH is in the portfolios of RS Investment Management.
This is the annual revenues and earnings per share of EHTH over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of EHTH.


Highlight of Business Operations:

We generate most of our revenue from commissions paid to us by health insurance carriers whose health insurance policies we have sold. Commission revenue represented 88% of our total revenue for the three and six months ended June 30, 2010 and represented 90% and 89% of our total revenue for the three and six months ended June 30, 2009, respectively.

Our commission revenue has grown principally as a result of our penetration of the individual and family health insurance market and corresponding growth in our membership. We estimate that as of June 30, 2010 we had approximately 754,900 members compared to an estimated 728,000 members and 707,100 members at December 31, 2009 and June 30, 2009, respectively. We define a member as an individual covered by an insurance product for which we are entitled to receive compensation. During the three and six months ended June 30, 2010 we experienced 3% and 4% declines, respectively, in the in number of applications submitted through us for individual and family health insurance, as well as a decline in the number of individuals approved for health insurance by our carriers, compared to the three and six months ended June 30, 2009. During the three and six months ended June 30, 2010, the number of individuals approved for individual and family major medical health insurance products declined 10% and 7%, respectively, over the number of individuals that were approved during the three and six months ended June 30, 2009. Our approved member growth has been impacted by the reduced number of submitted applications for individual and family health insurance, more stringent underwriting by our health insurance carrier partners with respect to individual and family health insurance applications and a decrease in the number of submitted applications for small business and short-term health insurance products. We believe that the decline in individual and family health insurance submitted applications in the three and six months ended June 30, 2010 was the result of several factors, including consumer confusion related to the timing and impact of potential federal health care reform

Direct. Our direct member acquisition channel consists of consumers who access our website addresses (www.ehealth.com and www.ehealthinsurance.com) either directly or through algorithmic natural search listings on Internet search engines and directories. For the three and six months ended June 30, 2010, applications submitted through us for individual and family health insurance from our direct channel constituted 44% and 43%, respectively, of all individual and family health insurance applications submitted on our website. For the three and six months ended June 30, 2009, applications submitted through us for individual and family health insurance from our direct channel constituted 43% and 42%, respectively, of all individual and family health insurance applications submitted on our website.

Marketing Partners. Our marketing partner member acquisition channel consists of consumers who access our website through a network of affiliate partners and financial services and other companies. Growth in our marketing partner channel depends upon our expanding marketing programs with existing partners and adding new partners to our network. For the three and six months ended June 30, 2010, applications submitted through us for individual and family health insurance products from our marketing partner member acquisition channel constituted approximately 28% of all individual and family health insurance applications submitted on our website. For the three and six months ended June 30, 2009, applications submitted through us for individual and family health insurance products from our marketing partner member acquisition channel constituted approximately 33% and 34%, respectively, of all individual and family health insurance applications submitted on our website.

Online Advertising. Our online advertising member acquisition channel consists of consumers who access our website through paid keyword search advertising from search engines such as Google, MSN and Yahoo!, as well as various Internet marketing programs such as banner advertising and email marketing. For the three and six months ended June 30, 2010, applications submitted through us for individual and family health insurance products from our online advertising channel constituted approximately 28% and 29%, respectively, of all individual and family health insurance applications submitted on our website. For the three and six months ended June 30, 2009, applications submitted through us for individual and family health insurance products from our online advertising channel constituted approximately 24% of all individual and family health insurance applications submitted on our website.

We experienced 3% and 4% declines, respectively, in the number of applications submitted through us for individual and family health insurance in the three and six months ended June 30, 2010 compared to the three and six months ended June 30, 2009. The 3% decline in the number of applications submitted through us for individual and family health insurance in the three months ended June 30, 2010 compared to the three months ended June 30, 2009 was comprised of a 16% decline in the number of applications submitted through our marketing partner channel and a 2% decline in the number of applications submitted through our direct channel, partially offset by 12% growth in the number of applications submitted through our online advertising channel. The 4% decline in the number of applications submitted through us for individual and family health insurance in the six months ended June 30, 2010 compared to the six months ended June 30, 2009 was comprised of a 21% decline in the number of applications submitted through our marketing partner channel, partially offset by 13% growth in the number of applications submitted through our online advertising channel and 1% growth in the number of applications submitted through our direct channel. We believe that our individual and family health insurance submitted application growth rate has been adversely impacted by several factors, including consumer confusion relating to the timing and impact of potential federal health care reform legislation, weak macro-economic conditions and the 65% federal subsidy for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA. The subsidy was implemented pursuant to the American Recovery and Reinvestment Act of 2009 and allows workers who are involuntarily terminated from employment between September 2008 and May 31, 2010 and otherwise eligible for COBRA health benefits to receive a 65% federal subsidy for COBRA health benefits. Congress has not extended or amended the eligibility period for the COBRA subsidy. As a result, workers who are involuntarily terminated after May 31, 2010 are not currently eligible to receive the subsidy, although workers who were involuntarily terminated during the eligibility period and otherwise eligible for COBRA health benefits will continue to receive the subsidy until they have exhausted their fifteen months of assistance.

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