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eHealth Inc (NAS:EHTH)
Gross Margin
95.85% (As of Mar. 2014)

Gross Margin is calculated as gross profit divided by its revenue. eHealth Inc's gross profit for the three months ended in Mar. 2014 was $48.8 Mil. eHealth Inc's revenue for the three months ended in Mar. 2014 was $50.9 Mil. Therefore, eHealth Inc's Gross Margin for the quarter that ended in Mar. 2014 was 95.85%.

EHTH' s 10-Year Gross Margin Range
Min: 69.49   Max: 98.53
Current: 96.95

69.49
98.53

During the past 13 years, the highest Gross Margin of eHealth Inc was 98.53%. The lowest was 69.49%. And the median was 96.95%.

EHTH's Gross Marginis ranked lower than
100% of the Companies
in the Global Insurance Brokers industry.

( Industry Median: vs. EHTH: 96.95 )

eHealth Inc had a gross margin of 95.85% for the quarter that ended in Mar. 2014 => Durable competitive advantage

The 3-Year average Growth Rate of Gross Margin for eHealth Inc was -0.30% per year.


Definition

Gross Margin is the percentage of Gross Profit out of sales or Revenue.

eHealth Inc's Gross Margin for the fiscal year that ended in Dec. 2013 is calculated as

Gross Margin (A: Dec. 2013 )=Gross Profit (A: Dec. 2013 ) / Revenue (A: Dec. 2013 )
=173.7 / 179.18
=(Revenue - Cost of Goods Sold) / Revenue
=(179.18 - 5.461) / 179.18
=96.95 %

eHealth Inc's Gross Margin for the quarter that ended in Mar. 2014 is calculated as

Gross Margin (Q: Mar. 2014 )=Gross Profit (Q: Mar. 2014 ) / Revenue (Q: Mar. 2014 )
=48.8 / 50.94
=(Revenue - Cost of Goods Sold) / Revenue
=(50.94 - 2.113) / 50.94
=95.85 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

eHealth Inc had a gross margin of 95.85% for the quarter that ended in Mar. 2014 => Durable competitive advantage


Be Aware

If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin and Operating Margin closely helps avoid value trap situations.


Related Terms

Operating Margin, Cost of Goods Sold, Gross Profit, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

eHealth Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross Margin 98.5298.5397.8798.0698.4496.6096.5794.5096.9296.95

eHealth Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Gross Margin 96.8695.4897.8597.0897.2593.8697.5398.0898.1295.85
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