Full Press Release Details
eHealth, Inc. Announces Third Quarter 2020 Results
Third Quarter 2020 Overview
Revenue for the third quarter of 2020 was $94.3 million, a 35% increase compared to $69.9 million for the third quarter of 2019.
GAAP net loss for the third quarter of 2020 was $14.5 million compared to net loss of $11.0 million for the third quarter of 2019.
Adjusted EBITDA was $(13.3) million for the third quarter of 2020 compared to $(18.8) million for the third quarter of 2019.
Net cash provided by operating activities for the third quarter of 2020 was $1.4 million compared to $15.9 million net cash used in operating activities for the third quarter of 2019.
SANTA CLARA, California - October 22, 2020 - eHealth, Inc. (NASDAQ EHTH), a leading private online health insurance marketplace, announces today its financial results for the third quarter ended September 30, 2020.
Scott Flanders, chief executive officer of eHealth stated, "Our third quarter results reflect strong momentum in our Medicare online enrollments, significant growth in Medicare carrier advertising revenue and an investment in our telesales capacity and technology initiatives ahead of the Medicare Annual Enrollment Period or AEP. We entered the AEP on October 15 from a position of strength and are expecting to generate significant Medicare enrollment growth while reducing our per member acquisition costs - a powerful combination. We are also focused on enrollment quality through our comprehensive member retention program."
GAAP - Third Quarter of 2020 Results
Revenue - Revenue for the third quarter of 2020 totaled $94.3 million, a 35% increase compared to $69.9 million for the third quarter of 2019. Commission revenue for the third quarter of 2020 totaled $73.5 million, a 23% increase compared to $59.8 million for the third quarter of 2019. Other revenue for the third quarter of 2020 was $20.7 million, a 104% increase compared to $10.2 million for the third quarter of 2019.
Revenue from our Medicare segment was $70.4 million for the third quarter of 2020, a 23% increase compared to $57.2 million for the third quarter of 2019. Revenue from our Individual, Family and Small Business segment was $23.9 million for the third quarter of 2020, an 88% increase compared to $12.7 million for the third quarter of 2019.
Loss from Operations - Loss from operations for the third quarter of 2020 was $20.8 million compared to loss from operations of $20.2 million for the third quarter of 2019.
Pre-Tax Loss - Pre-tax loss for the third quarter of 2020 was $20.9 million compared to pre-tax loss of $19.7 million for the third quarter of 2019.
Benefit from Income Taxes - Benefit from income taxes for the third quarter of 2020 was $6.4 million compared to $8.6 million for the third quarter of 2019.
Net Loss - Net loss for the third quarter of 2020 was $14.5 million, or $0.55 net loss per diluted share, compared to net loss of $11.0 million, or $0.47 net loss per diluted share, for the third quarter of 2019.
Segment Profit (Loss) - Medicare segment loss was $16.0 million for the third quarter of 2020 compared to $11.0 million for the third quarter of 2019. Individual, Family and Small Business segment profit was $18.3 million for the third quarter of 2020, a 387% increase compared to $3.8 million for the third quarter of 2019.
Non-GAAP - Third Quarter of 2020 Results
Non-GAAP Net Loss - Non-GAAP net loss for the third quarter of 2020 was $9.5 million, or $0.36 non-GAAP net loss per diluted share, compared to non-GAAP net loss of $10.1 million, or $0.43 non-GAAP net loss per diluted share, for the third quarter of 2019.
Non-GAAP net loss and non-GAAP net loss per diluted share for the third quarter of 2020 are calculated by excluding $6.3 million of stock-based compensation expense, $0.3 million of amortization of intangible assets and $1.6 million of the income tax effect of these non-GAAP adjustments from GAAP net loss and GAAP net loss per diluted share.
Non-GAAP net loss and non-GAAP net loss per diluted share for the third quarter of 2019 are calculated by excluding $5.5 million of stock-based compensation expense, $5.4 million gain related to the change in fair value of earnout liability related to our acquisition of GoMedigap, $0.5 million of amortization of intangible assets, and $0.3 million of the income tax effect of these non-GAAP adjustments from GAAP net loss and GAAP net loss per diluted share.
Adjusted EBITDA - Adjusted EBITDA was $(13.3) million for the third quarter of 2020 compared to $(18.8) million for the third quarter of 2019. Adjusted EBITDA is calculated by adding stock-based compensation expense, change in fair value of earnout liability related to our acquisition of GoMedigap, depreciation and amortization, amortization of intangible assets, other income, net, and benefit from income taxes to GAAP net loss.
Approved Members, New Paying Members and Estimated Membership
Approved Members - The number of approved members for all Medicare products, which includes Medicare Advantage, Medicare Supplement and Medicare Part D Prescription Drug Plans, was 59,940 in the third quarter of 2020, a 17% increase compared to 51,214 in the third quarter of 2019. The number of approved members for major medical individual and family plan products was 4,372 in the third quarter of 2020, a 37% increase compared to 3,187 in the third quarter of 2019.
New Paying Members - The number of new paying members for all Medicare products was 58,818 in the third quarter of 2020, a 21% increase compared to 48,681 in the third quarter of 2019. The number of new paying members for major medical individual and family plan products was 4,098, a 22% increase compared to 3,367 in the third quarter of 2019. New paying members consist of approved members from the period presented and any periods prior to the period presented from whom we have received an initial commission payment during the period presented.
Estimated Membership - Total estimated membership as of September 30, 2020 was 1,136,714, a 15% increase compared to 991,204 estimated members we reported as of September 30, 2019. Estimated Medicare membership as of September 30, 2020 was 734,403, a 33% increase compared to 551,068 estimated members reported as of September 30, 2019. Estimated major medical individual and family plan membership as of September 30, 2020 was 112,834, a 14% decrease compared to 131,058 estimated members reported as of September 30, 2019.
Cash - Third Quarter of 2020
Cash Flows - Net cash provided by operating activities was $1.4 million for the third quarter of 2020, compared to net cash used in operating activities of $15.9 million for the third quarter of 2019.
GAAP - Year-to-Date Results
Revenue - Revenue for the nine months ended September 30, 2020 totaled $289.5 million, a 42% increase compared to $204.5 million for the nine months ended September 30, 2019. Commission revenue for the nine months ended September 30, 2020 totaled $254.0 million, a 38% increase compared to $184.6 million for the nine months ended September 30, 2019. Other revenue for the nine months ended September 30, 2020 was $35.5 million, a 79% increase compared to $19.9 million for the nine months ended September 30, 2019.
Revenue from our Medicare segment was $246.9 million for the nine months ended September 30, 2020, a 50% increase compared to $164.4 million for the nine months ended September 30, 2019. Revenue from our Individual, Family and Small Business segment was $42.6 million for the nine months ended September 30, 2020, a 6% increase compared to $40.1 million for the nine months ended September 30, 2019.
Loss from Operations - Loss from operations for the nine months ended September 30, 2020 was $26.1 million compared to loss from operations of $41.7 million for the nine months ended September 30, 2019.
Pre-Tax Loss - Pre-tax loss for the nine months ended September 30, 2020 was $25.3 million compared to pre-tax loss of $39.9 million for the nine months ended September 30, 2019.
Benefit from Income Taxes - Benefit from income taxes for the nine months ended September 30, 2020 was $10.9 million compared to $18.0 million for the nine months ended September 30, 2019.
Net Loss - Net loss for the nine months ended September 30, 2020 was $14.4 million, or $0.56 net loss per diluted share, compared to net loss of $21.9 million, or $0.96 net loss per diluted share, for the nine months ended September 30, 2019.
Segment Profit - Medicare segment profit was $19.4 million for the nine months ended September 30, 2020, a 228% increase compared to $5.9 million for the nine months ended September 30, 2019. Individual, Family and Small Business segment profit was $23.5 million for the nine months ended September 30, 2020, a 56% increase, compared to $15.0 million for the nine months ended September 30, 2019.
Non-GAAP - Year-to-Date Results
Non-GAAP Net Income (Loss) - Non-GAAP net income for the nine months ended September 30, 2020 was $2.5 million, or $0.10 non-GAAP net income per diluted share, compared to non-GAAP net loss of $0.6 million, or $0.02 non-GAAP net loss per diluted share, for the nine months ended September 30, 2019.
Non-GAAP net income and non-GAAP net income per diluted share for the nine months ended September 30, 2020 are calculated by excluding $21.7 million of stock-based compensation expense, $1.2 million of amortization of intangible assets and $6.0 million of the income tax effect of these non-GAAP adjustments from GAAP net loss and GAAP net loss per diluted share.
Non-GAAP net loss and non-GAAP net loss per diluted share for the nine months ended September 30, 2019 are calculated by excluding $13.4 million of stock-based compensation expense, $15.1 million of expense for the change in fair value of earnout liability related to our acquisition of GoMedigap, $1.6 million of amortization of intangible assets, and $8.8 million of the income tax effect of these non-GAAP adjustments from GAAP net loss and GAAP net loss per diluted share.
Adjusted EBITDA - Adjusted EBITDA was $(0.5) million for the nine months ended September 30, 2020 compared to $(9.4) million for the nine months ended September 30, 2019. Adjusted EBITDA is calculated by adding stock-based compensation expense, change in fair value of earnout liability related to our acquisition of GoMedigap, depreciation and amortization, amortization of intangible assets, other income, net, and benefit from income taxes to GAAP net loss.
Approved Members and New Paying Members
Approved Members - The number of approved members for all Medicare products, which includes Medicare Advantage, Medicare Supplement and Medicare Part D Prescription Drug Plans, was 221,516 in the nine months ended September 30, 2020, a 37% increase compared to 161,682 in the nine months ended September 30, 2019. The number of approved members for major medical individual and family plan products was 19,047 in the nine months ended September 30, 2020, an 8% increase compared to 17,639 in the nine months ended September 30, 2019.
New Paying Members - The number of new paying members for all Medicare products was 293,033 in the nine months ended September 30, 2020, a 46% increase compared to 200,524 in the nine months ended September 30, 2019. The number of new paying members for major medical individual and family plan products was 26,520 in the nine months ended September 30, 2020, a 5% decrease compared to 27,965 in the nine months ended September 30, 2019. New paying members consist of approved members from the period presented and any periods prior to the period presented from whom we have received an initial commission payment during the period presented.
Cash - Year-to-Date Results
Cash Flows - Net cash used in operating activities was $11.0 million for the nine months ended September 30, 2020, compared to net cash used in operating activities of $14.7 million for the nine months ended September 30, 2019.
Based on information available as of October 22, 2020, eHealth is reaffirming its guidance for the full year ending December 31, 2020 previously provided on July 23, 2020. These expectations are forward-looking statements and eHealth assumes no obligation to update these statements. Actual results may be materially different and are affected by the risk factors and uncertainties identified in this press release and in eHealth's annual and quarterly filings with the Securities and Exchange Commission.
The following is the guidance for the full year ending December 31, 2020
Total revenue is expected to be in the range of $630.0 million to $670.0 million. Revenue from the Medicare segment is expected to be in the range of $583.0 million to $619.0 million. Revenue from the Individual, Family and Small Business segment is expected to be in the range of $47.0 million to $51.0 million.
GAAP net income is expected to be in the range of $79.0 million to $94.0 million.
Adjusted EBITDA(a) is expected to be in the range of $140.0 million to $155.0 million.
Medicare segment profit(b) is expected to be in the range of $176.0 million to $193.0 million. Individual, Family and Small Business segment profit is expected to be in the range of $17.0 million to $18.0 million.
Corporate(c) shared service expenses, excluding stock-based compensation and depreciation and amortization, is expected to be in the range of $53.0 million to $56.0 million.
Cash used in operations is expected to be in the range of $85.0 million to $95.0 million, and cash used for capital expenditures is expected to be in the range of $23.0 million to $25.0 million.
GAAP net income per diluted share is expected to be in the range of $2.91 to $3.47.
Non-GAAP net income per diluted share(d) is expected to be in the range of $3.83 to $4.32.
| (a) | Adjusted EBITDA is calculated by adding stock-based compensation expense, depreciation and amortization, amortization of intangible assets, other income, net, and provision (benefit) for income taxes to GAAP net income (loss). |
| (b) | Segment profit (loss) is calculated as revenue for the applicable segment less marketing and advertising, customer care and enrollment, technology and content and general and administrative operating expenses, excluding stock-based compensation expense, change in fair value of earnout liability, depreciation and amortization, and amortization of intangible assets, that are directly attributable to the applicable segment and other indirect marketing and advertising, customer care and enrollment and technology and content operating expenses, excluding stock-based compensation expense, depreciation and amortization, and amortization of intangible assets, allocated to the applicable segment based on usage. |
| (c) | Corporate consists of other indirect general and administrative operating expenses, excluding stock-based compensation expense and depreciation and amortization, which are managed in a corporate shared services environment and, since they are not the responsibility of segment operating management, are not allocated to the reportable segments. |
| (d) | Non-GAAP net income per diluted share is calculated by adding stock-based compensation expense per diluted share, amortization of intangible assets per diluted share and the income tax effect of non-GAAP adjustments to GAAP net income per diluted share. |
Webcast and Conference Call Information
A Webcast and conference call will be held today, Thursday, October 22, 2020 at 5 00 p.m. Eastern 2 00 p.m. Pacific Time. The live Webcast and supporting presentation slides will be available on the Investor Relations section of eHealth's website at http ir.ehealthinsurance.com. Individuals interested in listening to the conference call may do so by dialing (877) 930-8066 for domestic callers and (253) 336-8042 for international callers. The participant passcode is 8351208. A telephone replay will be available two hours following the conclusion of the call for a period of seven days and can be accessed by dialing (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. The call ID for the replay is 8351208. The live and archived webcast of the call will also be available on eHealth's website at http www.ehealthinsurance.com under the Investor Relations section.
eHealth, Inc. (NASDAQ EHTH) operates a leading health insurance marketplace at eHealth.com and eHealthMedicare.com with technology that provides consumers with health insurance enrollment solutions. Since 1997, we have connected more than 8 million members with quality, affordable health insurance, Medicare options, and ancillary plans. Our proprietary marketplace offers Medicare Advantage, Medicare Supplement, Medicare Part D prescription drug, individual, family, small business and other plans from over 180 health insurance carriers across fifty states and the District of Columbia.
Forward-Looking Statements
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 our expected Medicare enrollment growth, cost of acquisition per member, our member retention program, our estimates regarding total membership, Medicare membership, Individual and Family plan membership and ancillary and small business membership, our estimates regarding constrained lifetime values of commissions per member and constraints on lifetime value by product category, and our guidance for the full year ending December 31, 2020, including our guidance for total revenue and revenue from our Medicare segment and our Individual, Family and Small Business segment, GAAP net income, Adjusted EBITDA, profit from our Medicare segment and our Individual, Family and Small Business segment, Corporate shared service expense, cash used in operations and cash used for capital expenditures, and GAAP net income per diluted share and non-GAAP net income per diluted share.
These forward-looking statements are inherently subject to various risks and uncertainties that could cause actual results to differ materially from the statements made. In particular, we are required by the Accounting Standards Codification 606 - Revenue from Contracts with Customers to make numerous assumptions that are based on historical trends and our management's judgment. These assumptions may change over time and have a material impact on our revenue recognition, guidance, and results of operations. Please review the assumptions stated in this press release carefully.
The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include our ability to retain existing members and enroll new members during the annual healthcare open enrollment period, the Medicare annual enrollment period and a COVID-19 related or other special enrollment period changes in laws, regulations and guidelines, including in connection with healthcare reform or with respect to the marketing and sale of Medicare plans competition, including competition from government-run health insurance exchanges the seasonality of our business and the fluctuation of our operating results our ability to accurately estimate membership and lifetime value of commissions changes in product offerings among carriers on our ecommerce platform and the resulting impact on our commission revenue our ability to execute on our growth strategy in the Medicare market the continued impact of the COVID-19 pandemic on our operations, business, financial condition and growth prospects, as well as on the general economy changes in our management and key employees exposure to security risks and our ability to safeguard the security and privacy of confidential data our relationships with health insurance carriers customer concentration and consolidation of the health insurance industry our success in marketing and selling health insurance plans and our unit cost of acquisition our ability to hire, train and retain licensed health insurance agents and other employees the need for health insurance carrier and regulatory approvals in connection with the marketing of Medicare-related insurance products changes in the market for private health insurance consumer satisfaction of our service changes in member conversion rates changes in commission rates our ability to sell qualified health insurance plans to subsidy-eligible individuals and to enroll subsidy-eligible individuals through government-run health insurance exchanges our ability to maintain and enhance our brand identity our ability to derive desired benefits from investments in our business, including membership growth and retention initiatives reliance on marketing partners the impact of our direct-to-consumer email, telephone and television marketing efforts timing of receipt and accuracy of commission reports payment practices of health insurance carriers our ability to successfully make and integrate acquisitions dependence on our operations in China the restrictions in our debt obligations compliance with insurance and other laws and regulations the outcome of litigation in which we are involved and the performance, reliability and availability of our information technology systems, 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 http www.ehealthinsurance.com and on the Securities and Exchange Commission's website at www.sec.gov.
All forward-looking statements in this press release are based on information available to eHealth as of the date hereof, and eHealth does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.
Non-GAAP Financial Information
This press release includes financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). To supplement eHealth's condensed consolidated financial statements presented in accordance with GAAP, eHealth presents investors with non-GAAP financial measures, including non-GAAP net income (loss) non-GAAP net income (loss) per diluted share and adjusted EBITDA.
Non-GAAP net income (loss) consists of GAAP net income (loss) excluding the following items
the effects of expensing stock-based compensation related to stock options and restricted stock units,
change in fair value of earnout liability,
amortization of intangible assets, and
the income tax impact of non-GAAP adjustments.
Non-GAAP net income (loss) per diluted share consists of GAAP net income (loss) per diluted share excluding the following items
the effects of expensing stock-based compensation related to stock options and restricted stock units per diluted share,
change in fair value of earnout liability per diluted share,
amortization of intangible assets per diluted share, and
the income tax impact of non-GAAP adjustments per diluted share.
Adjusted EBITDA is calculated by adding stock-based compensation expense, change in fair value of earnout liability, depreciation and amortization, amortization of intangible assets, other income, net and provision (benefit) for income taxes to GAAP net income (loss).
eHealth believes that the presentation of these non-GAAP financial measures provides important supplemental information to management and investors regarding financial and business trends relating to eHealth's financial condition and results of operations. Management believes that the use of these non-GAAP financial measures provides consistency and comparability with eHealth's past financial reports. Management also believes that the items described above provides an additional measure of eHealth's operating results and facilitates comparisons of eHealth'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 eHealth's ongoing operations. eHealth believes that these non-GAAP financial measures are useful to investors in their assessment of eHealth's operating performance.
Non-GAAP net income (loss), non-GAAP net income (loss) per diluted share and Adjusted EBITDA 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 eHealth'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. eHealth 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. eHealth compensates for these limitations by prominently disclosing GAAP net income (loss) and GAAP net income (loss) per diluted share and providing investors with reconciliations from eHealth'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.
Investor Relations Contact
Kate Sidorovich, CFA
Vice President, Investor Relations
2625 Augustine Drive, Second Floor
Santa Clara, CA, 95054
kate.sidorovich ehealth.com
http ir.ehealthinsurance.com
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2020 | December 31, 2019 | ||||||
| Assets | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 87,833 | $ | 23,466 | |||
| Short-term marketable securities | 108,637 | - | |||||
| Accounts receivable | 3,854 | 2,332 | |||||
| Contract assets - commissions receivable - current | 158,773 | 174,526 | |||||
| Prepaid expenses and other current assets | 19,335 | 7,822 | |||||
| Total current assets | 378,432 | 208,146 | |||||
| Contract assets - commissions receivable - non-current | 445,572 | 414,696 | |||||
| Property and equipment, net | 14,488 | 10,518 | |||||
| Long-term marketable securities | 1,294 | - | |||||
| Operating lease right-of-use assets | 43,886 | 36,621 | |||||
| Restricted cash | 3,354 | 3,354 | |||||
| Other assets | 24,790 | 18,004 | |||||
| Intangible assets, net | 8,856 | 10,062 | |||||
| Goodwill | 40,233 | 40,233 | |||||
| Total assets | $ | 960,905 | $ | 741,634 | |||
| Liabilities and stockholders' equity | |||||||
| Current liabilities | |||||||
| Accounts payable | $ | 21,439 | $ | 24,554 | |||
| Accrued compensation and benefits | 22,140 | 29,578 | |||||
| Accrued marketing expenses | 6,592 | 12,041 | |||||
| Earnout liability - current | - | 37,273 | |||||
| Lease liabilities - current | 5,111 | 4,759 | |||||
| Deferred revenue | 26,471 | 2,570 | |||||
| Other current liabilities | 4,731 | 2,210 | |||||
| Total current liabilities | 86,484 | 112,985 | |||||
| Deferred income taxes - non-current | 52,782 | 64,130 | |||||
| Lease liabilities - non-current | 42,400 | 34,305 | |||||
| Other non-current liabilities | 3,553 | 3,050 | |||||
| Stockholders' equity | |||||||
| Common stock | 38 | 35 | |||||
| Additional paid-in capital | 719,104 | 455,159 | |||||
| Treasury stock, at cost | (199,998) | (199,998) | |||||
| Retained earnings | 256,282 | 271,852 | |||||
| Accumulated other comprehensive income | 260 | 116 | |||||
| Total stockholders' equity | 775,686 | 527,164 | |||||
| Total liabilities and stockholders' equity | $ | 960,905 | $ | 741,634 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| Revenue | |||||||||||||||||||
| Commission | $ | 73,544 | $ | 59,762 | $ | 253,986 | $ | 184,595 | |||||||||||
| Other | 20,740 | 10,151 | 35,472 | 19,858 | |||||||||||||||
| Total revenue | 94,284 | 69,913 | 289,458 | 204,453 | |||||||||||||||
| Operating costs and expenses | |||||||||||||||||||
| Cost of revenue | 482 | 410 | 2,160 | 782 | |||||||||||||||
| Marketing and advertising | 33,405 | 25,812 | 104,042 | 72,857 | |||||||||||||||
| Customer care and enrollment | 43,342 | 40,144 | 101,025 | 81,567 | |||||||||||||||
| Technology and content | 17,673 | 12,033 | 46,786 | 31,487 | |||||||||||||||
| General and administrative | 19,942 | 16,608 | 60,308 | 42,748 | |||||||||||||||
| Amortization of intangible assets | 287 | 547 | 1,207 | 1,641 | |||||||||||||||
| Change in fair value of earnout liability | - | (5,400) | - | 15,106 | |||||||||||||||
| Total operating costs and expenses | 115,131 | 90,154 | 315,528 | 246,188 | |||||||||||||||
| Loss from operations | (20,847) | (20,241) | (26,070) | (41,735) | |||||||||||||||
| Other income, net | (101) | 568 | 724 | 1,824 | |||||||||||||||
| Loss before benefit from income taxes | (20,948) | (19,673) | (25,346) | (39,911) | |||||||||||||||
| Benefit from income taxes | (6,443) | (8,649) | (10,923) | (17,974) | |||||||||||||||
| Net loss | $ | (14,505) | $ | (11,024) | $ | (14,423) | $ | (21,937) | |||||||||||
| Net loss per share | |||||||||||||||||||
| Basic and diluted | $ | (0.55) | $ | (0.47) | $ | (0.56) | $ | (0.96) | |||||||||||
| Weighted-average number of shares used in per share amounts | |||||||||||||||||||
| Basic and diluted | 26,487 | 23,493 | 25,838 | 22,840 | |||||||||||||||
| (1) Includes stock-based compensation as follows | |||||||||||||||||||
| Marketing and advertising | $ | 1,869 | $ | 872 | $ | 5,138 | $ | 2,212 | |||||||||||
| Customer care and enrollment | 527 | 369 | 1,762 | 927 | |||||||||||||||
| Technology and content | 1,430 | 729 | 2,965 | 1,946 | |||||||||||||||
| General and administrative | 2,506 | 3,540 | 11,857 | 8,332 | |||||||||||||||
| Total stock-based compensation expense | $ | 6,332 | $ | 5,510 | $ | 21,722 | $ | 13,417 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Operating activities | |||||||||||||||
| Net loss | $ | (14,505) | $ | (11,024) | $ | (14,423) | $ | (21,937) | |||||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities | |||||||||||||||
| Depreciation and amortization | 923 | 765 | 2,604 | 2,153 | |||||||||||
| Amortization of internally developed software | 2,072 | 930 | 5,307 | 2,443 | |||||||||||
| Amortization of intangible assets | 287 | 547 | 1,207 | 1,641 | |||||||||||
| Stock-based compensation expense | 6,332 | 5,510 | 21,722 | 13,417 | |||||||||||
| Deferred income taxes | (6,462) | (8,631) | (10,982) | (18,166) | |||||||||||
| Change in fair value of earnout liability | - | (5,400) | - | 15,106 | |||||||||||
| Other non-cash items | 175 | 112 | 421 | (936) | |||||||||||
| Changes in operating assets and liabilities | |||||||||||||||
| Accounts receivable | (1,130) | 377 | (1,522) | 2,920 | |||||||||||
| Contract assets - commissions receivable | (21,614) | (16,321) | (16,772) | (11,878) | |||||||||||
| Prepaid expenses and other assets | (8,367) | (6,650) | (9,398) | (9,346) | |||||||||||
| Accounts payable | 14,286 | 13,008 | (3,196) | 13,155 | |||||||||||
| Accrued compensation and benefits | 344 | 2,874 | (7,438) | (2,624) | |||||||||||
| Accrued marketing expenses | 1,879 | 415 | (5,449) | (6,927) | |||||||||||
| Deferred revenue | 26,374 | 8,325 | 23,901 | 8,207 | |||||||||||
| Accrued expenses and other liabilities | 845 | (776) | 3,059 | (1,942) | |||||||||||
| Net cash provided by (used in) operating activities | 1,439 | (15,939) | (10,959) | (14,714) | |||||||||||
| Investing activities | |||||||||||||||
| Capitalized internal-use software and website development costs | (4,473) | (2,923) | (12,082) | (6,356) | |||||||||||
| Purchases of property and equipment and other assets | (1,790) | (1,830) | (6,454) | (5,616) | |||||||||||
| Purchases of marketable securities | (32,959) | - | (180,505) | - | |||||||||||
| Proceeds from redemption and maturities of marketable securities | 57,500 | - | 70,750 | - | |||||||||||
| Payments for security deposits | - | 824 | - | (72) | |||||||||||
| Net cash provided by (used in) investing activities | 18,278 | (3,929) | (128,291) | (12,044) | |||||||||||
| Financing activities | |||||||||||||||
| Proceeds from issuance of common stock, net of issuance costs | - | - | 228,024 | 126,051 | |||||||||||
| Net proceeds from exercise of common stock options | 263 | 1,913 | 1,577 | 5,168 | |||||||||||
| Repurchase of shares to satisfy employee tax withholding obligations | (9,014) | (8,059) | (17,174) | (11,511) | |||||||||||
| Repayment of debt | - | - | - | (5,000) | |||||||||||
| Acquisition-related contingent payments | - | - | (8,751) | (9,542) | |||||||||||
| Principal payments in connection with leases | (38) | (31) | (121) | (81) | |||||||||||
| Net cash provided by (used in) financing activities | (8,789) | (6,177) | 203,555 | 105,085 | |||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 63 | (21) | 62 | 8 | |||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 10,991 | (26,066) | 64,367 | 78,335 | |||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 80,196 | 117,490 | 26,820 | 13,089 | |||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 91,187 | $ | 91,424 | $ | 91,187 | $ | 91,424 |
(In thousands, unaudited)
| Three Months Ended September 30, | % Change | Nine Months Ended September 30, | % Change | ||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||
| Revenue | |||||||||||||||||||||
| Medicare (1) | $ | 70,361 | $ | 57,189 | 23 | % | $ | 246,891 | $ | 164,357 | 50 | % | |||||||||
| Individual, Family and Small Business (2) | 23,923 | 12,724 | 88 | % | 42,567 | 40,096 | 6 | % | |||||||||||||
| Total revenue | $ | 94,284 | $ | 69,913 | 35 | % | $ | 289,458 | $ | 204,453 | 42 | % | |||||||||
| Segment profit (loss) | |||||||||||||||||||||
| Medicare segment profit (loss) (3) | $ | (16,010) | $ | (11,004) | 45 | % | $ | 19,380 | $ | 5,917 | 228 | % | |||||||||
| Individual, Family and Small Business segment profit (3) | 18,286 | 3,753 | 387 | % | 23,459 | 15,045 | 56 | % | |||||||||||||
| Total segment profit (loss) | 2,276 | (7,251) | (131) | % | 42,839 | 20,962 | 104 | % | |||||||||||||
| Corporate (4) | (15,581) | (11,568) | 35 | % | (43,376) | (30,380) | 43 | % | |||||||||||||
| Stock-based compensation expense | (6,332) | (5,510) | 15 | % | (21,722) | (13,417) | 62 | % | |||||||||||||
| Change in fair value of earnout liability | - | 5,400 | (100) | % | - | (15,106) | (100) | % | |||||||||||||
| Depreciation and amortization | (923) | (765) | 21 | % | (2,604) | (2,153) | 21 | % | |||||||||||||
| Amortization of intangible assets | (287) | (547) | (48) | % | (1,207) | (1,641) | (26) | % | |||||||||||||
| Other income, net | (101) | 568 | (118) | % | 724 | 1,824 | (60) | % | |||||||||||||
| Loss before benefit from income taxes | $ | (20,948) | $ | (19,673) | 6 | % | $ | (25,346) | $ | (39,911) | (36) | % |
We evaluate our business performance and manage our operations as two distinct reporting segments
Individual, Family and Small Business.
| (1) | The Medicare segment consists primarily of amounts earned from our sale of Medicare-related health insurance plans, including Medicare Advantage, Medicare Supplement and Medicare Part D prescription drug plans, and to a lesser extent, ancillary products sold to our Medicare-eligible customers, including but not limited to, dental and vision plans, as well as our advertising program that allows Medicare-related carriers to purchase advertising on a separate website developed, hosted and maintained by us and our delivery and sale to third parties of Medicare-related health insurance leads generated by our ecommerce platforms and our marketing activities. |
| (2) | The Individual, Family and Small Business segment consists primarily of amounts earned from our sale of individual, family and small business health insurance plans and ancillary products sold to our non-Medicare-eligible customers, including but not limited to, dental, vision, and short-term insurance. To a lesser extent, the Individual, Family and Small Business segment consists of amounts earned from our online sponsorship program that allows carriers to purchase advertising space in specific markets in a sponsorship area on our website, our licensing to third parties the use of our health insurance ecommerce technology, and our delivery and sale to third parties of individual and family health insurance leads generated by our ecommerce platforms and our marketing activities. |
| (3) | Segment profit (loss) is calculated as revenue for the applicable segment less marketing and advertising, customer care and enrollment, technology and content and general and administrative operating expenses, excluding stock-based compensation expense, change in fair value of earnout liability, depreciation and amortization, and amortization of intangible assets, that are directly attributable to the applicable segment and other indirect marketing and advertising, customer care and enrollment and technology and content operating expenses, excluding stock-based compensation expense, depreciation and amortization, and amortization of intangible assets, allocated to the applicable segment based on usage. |
| (4) | Corporate consists of other indirect general and administrative operating expenses, excluding stock-based compensation expense, depreciation and amortization, which are managed in a corporate shared services environment and, because they are not the responsibility of segment operating management, are not allocated to the reportable segments. |