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eHealth Inc. Reports Operating Results (10-Q)

August 07, 2009 | About:
10qk

eHealth Inc. (EHTH) filed Quarterly Report for the period ended 2009-06-30.

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.com are registered trademarks of eHealthInsurance Services Inc. eHealth Inc. and its technology was responsible for the nation\'s first Internet-based sale of a health insurance policy. The Company is headquartered in Mountain View California. eHealth Inc. has a market cap of $394.6 million; its shares were traded at around $15.95 with a P/E ratio of 27.9 and P/S ratio of 3.6.

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 90% and 89% of our total revenue for the three and six months ended June 30, 2009, respectively, and 90% and 91% of our total revenue for the three and six months ended June 30, 2008, respectively. The remainder of our revenue is primarily attributable to carrier sponsorship advertising on our website and licensing arrangements related to our technology. We also refer to the licensing arrangements as eCommerce On Demand, or eOD, arrangements. Our commission revenue has grown principally as a result of our penetration of the individual and family health insurance markets and corresponding growth in our membership. We estimate that as of June 30, 2009 we had approximately 707,100 members compared to an estimated 579,600 members at June 30, 2008. During the three months ended June 30, 2009, we had 103,400 members approved for individual and family products, representing 10% growth over the number of members that were approved in the three months ended June 30, 2008. We recently have experienced slower approved member growth, which we believe is primarily a result of more stringent underwriting by our health insurance carrier partners with respect to individual and family health insurance applications, a decline in the average number of individuals per submitted application that were approved for individual and family health insurance and a decrease in the number of submitted applications for small business and short-term health insurance products. We define a member as an individual covered by an insurance product for which we are entitled to receive compensation.

Revenue attributable to individual and family product offerings represented approximately 90% of our commission revenue in the three and six months ended June 30, 2009, and represented approximately 87% of our commission revenue in the three and six months ended June 30, 2008. We define individual and family product offerings as major medical individual and family health insurance plans, which does not include small business, short-term major medical, stand-alone dental, life and student health insurance product offerings.

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, 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. For the three and six months ended June 30, 2008, applications submitted through us for individual and family health insurance from our direct channel constituted 40% and 39%, 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, 2009, applications submitted through us for individual and family health insurance products for which we paid fees to our marketing partners constituted approximately 33% and 34%, respectively, of all individual and family health insurance applications submitted on our website. For the three and six months ended June 30, 2008, applications submitted through us for individual and family health insurance products for which we paid fees to our marketing partners constituted approximately 32% and 33%, respectively, of all individual and family health insurance applications submitted on our website.

Online Advertising. Our online advertising 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, non-direct email marketing and an integrated partnership with MSN. 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. For the three and six months ended June 30, 2008, applications submitted through us for individual and family health insurance products from our online advertising channel constituted approximately 28% of all individual and family health insurance applications submitted on our website. Although submitted applications for individual and family health insurance from all channels increased 17% in the three months ended June 30, 2009 compared to the three months ended June 30, 2008, our online advertising channel did not contribute to our submitted application growth, which we believe to have resulted from several factors, including a decline in contribution from secondary search engines and a decline in the conversion rate from all of our online advertising sources.

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Rating: 4.0/5 (6 votes)

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