GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

eHealth Inc. Reports Operating Results (10-Q)

November 09, 2009 | About:
10qk

10qk

18 followers
eHealth Inc. (EHTH) filed Quarterly Report for the period ended 2009-09-30.

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 $339.6 million; its shares were traded at around $13.71 with a P/E ratio of 23.24 and P/S ratio of 3.04.

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 89% of our total revenue for the three and nine months ended September 30, 2009, and 91% of our total revenue for the three and nine months ended September 30, 2008. 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 September 30, 2009 we had approximately 726,600 members compared to an estimated 602,100 members at September 30, 2008. During the three months ended September 30, 2009, we had 111,100 members approved for individual and family major medical health insurance products, representing 10% growth over the number of members that were approved in the three months ended September 30, 2008. We recently have experienced slower year-over-year 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 91% and 90% of our commission revenue in the three and nine months ended September 30, 2009, respectively, and represented approximately 88% and 87% of our commission revenue in the three and nine months ended September 30, 2008, respectively. 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 nine months ended September 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 nine months ended September 30, 2008, applications submitted through us for individual and family health insurance from our direct channel constituted 39% 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 nine months ended September 30, 2009, applications submitted through us for individual and family health insurance products for which we paid fees to our marketing partners constituted approximately 31% and 33%, respectively, of all individual and family health insurance applications submitted on our website. For the three and nine months ended September 30, 2008, applications submitted through us for individual and family health insurance products for which we paid fees to our marketing partners constituted approximately 33% 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, non-direct email marketing and an integrated partnership with MSN. For the three and nine months ended September 30, 2009, applications submitted through us for individual and family health insurance products from our online advertising channel constituted approximately 26% and 25%, respectively, of all individual and family health insurance applications submitted on our website. For the three and nine months ended September 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.

The number of applications submitted through us for individual and family health insurance increased 12% in the three months ended September 30, 2009 compared to the three months ended September 30, 2008. The 12% individual and family health insurance submitted application growth in the three months ended September 30, 2009 was comprised of 23% growth in our direct channel, 5% growth in our marketing partner channel and 4% growth in our online advertising channel. Our submitted application growth of 12% in the three months ended September 30, 2009 was less than we have experienced in prior periods, primarily as a result of slowing growth in our marketing partner and online advertising member acquisition channels. We believe that the decline in the individual and family health insurance submitted application growth that we experienced in the three months ended September 30, 2009 resulted from several external factors influencing consumer behavior, including continuing weak economic conditions and the ongoing health care reform efforts. We do not expect the submitted application growth to accelerate in the three months ending December 31, 2009 as compared to the year-over-year growth rate in the three months ended September 30, 2009, and it may decrease.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 4.0/5 (6 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide