Exhibit 99.1
eHealth, Inc. Announces Fourth Quarter and Full Year 2006 Results
Fourth Quarter Highlights
| | • | | Revenue of $17.4 million, up 49% year-over-year |
| | • | | Operating income of $2.8 million, or 16% of revenue |
| | • | | Net income of $11.0 million, including a $7.4 million tax benefit, or $0.45 per share on a diluted basis |
| | • | | Cash flow from operations of $4.9 million, up 344% year-over-year |
| | • | | Completed initial public offering during October 2006, resulting in net proceeds of approximately $70.2 million |
MOUNTAIN VIEW, Calif.—February 15, 2007— eHealth, Inc. (NASDAQ: EHTH), the leading online source of health insurance for individuals, families and small businesses, today announced its financial results for the fourth quarter and full year ended December 31, 2006.
“Our fourth quarter results show the significant market and financial progress we are making as a company,” said Gary Lauer, chief executive officer of eHealth. “In particular, our fourth quarter revenue growth, operating margin and cash flow illustrate the power and leverage of our financial model.”
Fourth Quarter Results
For the fourth quarter ended December 31, 2006, revenue totaled $17.4 million, representing a 49% increase over revenue of $11.7 million for the fourth quarter of 2005. The increase in revenue was driven primarily by growth in commission revenue received from health insurance carriers.
Operating income increased to $2.8 million for the fourth quarter of 2006, compared to operating income of $0.1 million for the fourth quarter of 2005. Operating margins improved to 16% in the fourth quarter of 2006, up from 12% in the third quarter of 2006 computed on a non-GAAP basis by excluding from the third quarter a $0.7 million revenue item that had previously been deferred and was recognized in a lump-sum in the third quarter. This was also up from 1% in the fourth quarter of 2005.
Net income for the fourth quarter of 2006, which included a $7.4 million income tax benefit from a partial reduction of the valuation allowance against deferred tax assets, was $11.0 million, or $0.45 per share on a diluted basis. Excluding the $7.4 million income tax benefit, non-GAAP net income for the fourth quarter of 2006 was $3.6 million, or $0.15 per diluted share, compared to net income of $0.2 million, or $0.01 per diluted share, for the fourth quarter of 2005.
During the fourth quarter of 2006, cash flow from operations increased to $4.9 million, compared to $1.1 million for the same period in 2005. The Company ended the fourth quarter of 2006 with $90.3 million of cash and cash equivalents, compared with $9.4 million as of December 31, 2005.
Full Year Results
For the year ended December 31, 2006, revenue totaled $61.3 million, representing a 47% increase over revenue of $41.8 million for the year ended December 31, 2005.
Operating income increased to $8.0 million during the year ended December 31, 2006, compared to an operating loss of $0.6 million during the year ended December 31, 2005. Operating margins improved to 13% for the year ended December 31, 2006, up from an operating deficit of 2% for the year ended December 31, 2005.
Net income for the year ended December 31, 2006, which included the income tax benefit of $7.4 million, was $16.5 million, or $0.80 per share on a diluted basis. Excluding the $7.4 million income tax benefit, non-GAAP net income for the year ended December 31, 2006 was $9.0 million, or $0.44 per diluted share, compared with a net loss of $0.4 million, or $(0.09) per diluted share, for the year ended December 31, 2005.
During the year ended December 31, 2006, cash flow from operations totaled $11.4 million, representing a 336% increase compared to cash flow from operations of $2.6 million for the year ended December 31, 2005.
Initial Public Offering
In October 2006, the Company completed the initial public offering of 5,750,000 shares of common stock at a price of $14 per share, resulting in cash proceeds of approximately $70.2 million, net of offering expenses and underwriters’ discounts and commissions.
Guidance
eHealth is providing guidance for its full year ending December 31, 2007 based on information available as of February 15, 2007:
| | • | | Total revenue expected to be in the range of $81 million to $84 million |
| | • | | Non-GAAP net income, excluding stock-based compensation expense, expected to be in the range of $10.5 million to $12.0 million. The effective tax rate, if it were computed based on pre-tax earnings before stock-based compensation, is expected to range from approximately 39% to 40%. |
| | • | | Non-GAAP earnings per diluted share, excluding stock-based compensation expense, expected to be in the range of $0.40 to $0.45 per share |
| | • | | Cash flow from operations expected to be in the range of $19 million to $21 million |
Webcast and Conference Call Information
A Webcast and conference call will be held today, Thursday, February 15, 2007 at 5:00 p.m. (EST) / 2:00 p.m. (PST). The Webcast will be available live on the Investor Relations section on our website athttp://ir.ehealthinsurance.com. Individuals interested in listening to the conference call may do so by dialing 866-202-0886 for domestic callers and 617-213-8841 for international callers. The participant passcode is 54330533. A telephone replay will be available two hours following the conclusion of the call for a period of 30 days and can be accessed by dialing 888-286-8010 for domestic callers and 617-801-6888 for international callers. The call ID for the replay is 19493974. The archived Webcast will also be available on our website.
About eHealth, Inc.
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 are registered trademarks of eHealthInsurance Services, Inc.
eHealth, Inc. was founded in 1997 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. Additional information can be found at the Company's website,www.ehealthinsurance.com.
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 the Company’s market and financial progress, the power and leverage of the Company’s financial model, total revenue, net income, effective tax rate, earnings per diluted share and cash flow from operations for 2007. These forward-looking statements are inherently subject to various risks and uncertainties that could cause actual results to differ materially from the statements made, including risks associated with acceptance of the internet as a medium for the purchase of health insurance, the Company’s ability to increase its membership base and expand its relationships with health insurance carriers and marketing partners, retention of the Company’s members, increased rates of member turnover, changes in the Company’s relationships with insurance carriers, system failures or capacity constraints, dependence upon Internet search engines to attract consumers who
visit the Company’s website, the performance, reliability and availability of the Company’s ecommerce platform and underlying network infrastructure, the effectiveness of the Company’s marketing and public relations efforts, exposure to online commerce security risks, reliance on marketing partners for the sale of health insurance, competition, protection of intellectual property and intellectual property rights claims, regulatory penalties and negative publicity, compliance with insurance and other laws and regulations, and changes in laws and regulations. Other factors that could cause operating, financial and other results to differ are described in the Company’s most recent Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission and available on the investor relations page of the Company’s website atwww.ehealthinsurance.com and on the Securities and Exchange Commission’s website atwww.sec.gov. Other risks may be detailed from time to time in reports to be filed with the Securities and Exchange Commission. eHealth does not undertake any obligation to update any forward-looking statement to conform the statement to actual results or changes in expectations.
Non-GAAP Financial Information
This press release includes non-GAAP financial measures, including non-GAAP net income, non-GAAP diluted earnings per share and non-GAAP operating margins, to supplement the consolidated financial statements, which are presented in accordance with accounting principals generally accepted in the United States (“GAAP”). These non-GAAP measures are not in accordance with, or an alternative for, U.S. generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. eHealth believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with eHealth’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate eHealth’s results of operations in conjunction with the corresponding GAAP measures.
For internal budgeting and resource allocation, eHealth’s management uses non-GAAP financial information that excludes a $7.4 million income tax benefit in the three and twelve month periods ended December 31, 2006 and excludes $0.7 million of revenue, along with the related income tax impact, in the three months ended September 30, 2006. eHealth’s management uses these non-GAAP financial measures in making operating decisions, because it believes the measures provide meaningful supplemental information regarding eHealth’s operational performance and useful insight into how its business should be managed. Management also uses these non-GAAP financial measures to facilitate internal comparisons to historical operating results.
The accompanying tables provide more details on the GAAP financial measures that are most directly comparable to the non-GAAP financial measures and the related reconciliations between these financial measures.
Investor Relations Contact:
Trisha Dill
Aston Partners
1-415-869-5757
tdill@ashtonpartners.com
www.ashtonpartners.com
Media Contact:
Robert Hurley
VP Corporate Communications
1-916-608-6101
robert.hurley@ehealth.com
www.ehealthinsurance.com
(Tables to Follow)
# # #
EHEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| | | | | | | | |
| | | December 31,
2005 | | | December 31,
2006 | |
| | | (1) | | | (unaudited) | |
Assets | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 9,415 | | | $ | 90,316 | |
Short-term investments | | | — | | | | 158 | |
Accounts receivable | | | 128 | | | | 717 | |
Deferred income taxes | | | — | | | | 2,303 | |
Prepaid expenses and other current assets | | | 908 | | | | 1,926 | |
| | | | | | | | |
Total current assets | | | 10,451 | | | | 95,420 | |
Restricted investments | | | 153 | | | | — | |
Property and equipment, net | | | 2,761 | | | | 3,936 | |
Deferred initial public offering costs | | | 1,391 | | | | — | |
Deferred income taxes | | | — | | | | 5,119 | |
Other assets | | | 409 | | | | 453 | |
| | | | | | | | |
Total assets | | $ | 15,165 | | | $ | 104,928 | |
| | | | | | | | |
Liabilities, convertible preferred stock and stockholders’ equity (deficit) | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 1,077 | | | $ | 1,440 | |
Accrued compensation and benefits | | | 3,009 | | | | 3,743 | |
Accrued marketing expenses | | | 1,027 | | | | 1,647 | |
Deferred revenue | | | 523 | | | | 62 | |
Other current liabilities | | | 1,179 | | | | 1,979 | |
| | | | | | | | |
Total current liabilities | | | 6,815 | | | | 8,871 | |
Other non-current liabilities | | | 212 | | | | 317 | |
| | |
Convertible preferred stock | | | 86,319 | | | | — | |
| | |
Stockholders’ equity (deficit): | | | | | | | | |
Common stock | | | 5 | | | | 22 | |
Additional paid-in capital | | | 1,983 | | | | 159,576 | |
Deferred stock-based compensation | | | (62 | ) | | | (254 | ) |
Accumulated deficit | | | (80,132 | ) | | | (63,655 | ) |
Accumulated other comprehensive income | | | 25 | | | | 51 | |
| | | | | | | | |
Total stockholders’ equity (deficit) | | | (78,181 | ) | | | 95,740 | |
| | | | | | | | |
Total liabilities, convertible preferred stock and stockholders’ equity (deficit) | | $ | 15,165 | | | $ | 104,928 | |
| | | | | | | | |
| (1) | The condensed consolidated balance sheet at December 31, 2005 has been derived from the audited consolidated financial statements at that date. |
EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
| | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Year Ended
December 31, | |
| | | 2005 | | 2006 | | | 2005 | | | 2006 | |
| | | (unaudited) | | (unaudited) | | | (2) | | | (unaudited) | |
Revenue: | | | | | | | | | | | | | | | |
Commission | | $ | 11,471 | | $ | 16,520 | | | $ | 41,237 | | | $ | 58,943 | |
Sponsorship, licensing and other | | | 236 | | | 896 | | | | 515 | | | | 2,367 | |
| | | | | | | | | | | | | | | |
Total revenue | | | 11,707 | | | 17,416 | | | | 41,752 | | | | 61,310 | |
Operating costs and expenses: | | | | | | | | | | | | | | | |
Cost of revenue-sharing | | | 173 | | | 411 | | | | 614 | | | | 1,305 | |
Marketing and advertising (1) | | | 4,808 | | | 5,601 | | | | 17,786 | | | | 21,405 | |
Customer care and enrollment (1) | | | 2,421 | | | 2,947 | | | | 8,822 | | | | 10,991 | |
Technology and content (1) | | | 2,138 | | | 2,816 | | | | 8,054 | | | | 10,137 | |
General and administrative (1) | | | 2,020 | | | 2,880 | | | | 7,108 | | | | 9,482 | |
| | | | | | | | | | | | | | | |
Total operating costs and expenses | | | 11,560 | | | 14,655 | | | | 42,384 | | | | 53,320 | |
| | | | | | | | | | | | | | | |
Income (loss) from operations | | | 147 | | | 2,761 | | | | (632 | ) | | | 7,990 | |
Other income, net | | | 97 | | | 969 | | | | 239 | | | | 1,326 | |
| | | | | | | | | | | | | | | |
Income (loss) before income taxes | | | 244 | | | 3,730 | | | | (393 | ) | | | 9,316 | |
Provision (benefit) for income taxes | | | 21 | | | (7,315 | ) | | | 21 | | | | (7,161 | ) |
| | | | | | | | | | | | | | | |
Net income (loss) | | $ | 223 | | $ | 11,045 | | | $ | (414 | ) | | $ | 16,477 | |
| | | | | | | | | | | | | | | |
Net income (loss) per share: | | | | | | | | | | | | | | | |
Basic – common stock | | $ | 0.05 | | $ | 0.57 | | | $ | (0.09 | ) | | $ | 1.91 | |
Basic – Class A nonvoting common stock | | $ | 0.05 | | $ | 0.57 | | | $ | (0.09 | ) | | $ | 1.91 | |
Diluted – common stock | | $ | 0.01 | | $ | 0.45 | | | $ | (0.09 | ) | | $ | 0.80 | |
Diluted – Class A nonvoting common stock | | $ | 0.01 | | $ | 0.45 | | | $ | (0.09 | ) | | $ | 0.80 | |
| | | | |
Net income (loss): | | | | | | | | | | | | | | | |
Allocated to common stock | | $ | 222 | | $ | 11,039 | | | $ | (414 | ) | | $ | 16,391 | |
Allocated to Class A nonvoting common stock | | | 1 | | | 6 | | | | — | | | | 86 | |
| | | | | | | | | | | | | | | |
Net income (loss) | | $ | 223 | | $ | 11,045 | | | $ | (414 | ) | | $ | 16,477 | |
| | | | | | | | | | | | | | | |
Weighted-average number of shares used in per share amounts: | | | | | | | | | | | | | | | |
Basic – common stock | | | 4,781 | | | 19,535 | | | | 4,661 | | | | 8,590 | |
Basic – Class A nonvoting common stock | | | 12 | | | 10 | | | | 3 | | | | 45 | |
Diluted – common stock | | | 18,797 | | | 24,771 | | | | 4,661 | | | | 20,572 | |
Diluted – Class A nonvoting common stock | | | 12 | | | 10 | | | | 3 | | | | 45 | |
| (1) | Includes stock-based compensation as follows: |
| | | | | | | | | | | | |
Marketing and advertising | | $ | 1 | | $ | 15 | | $ | 97 | | $ | 47 |
Customer care and enrollment | | | 1 | | | 16 | | | 6 | | | 42 |
Technology and content | | | 18 | | | 77 | | | 62 | | | 226 |
General and administrative | | | 8 | | | 50 | | | 26 | | | 139 |
| | | | | | | | | | | | |
Total | | $ | 28 | | $ | 158 | | $ | 191 | | $ | 454 |
| | | | | | | | | | | | |
| (2) | The condensed consolidated statement of operations for the year ended December 31, 2005 has been derived from the audited consolidated financial statements for that year. |
EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Year Ended
December 31, | |
| | | 2005 | | | 2006 | | | 2005 | | | 2006 | |
| | | (unaudited) | | | (unaudited) | | | (1) | | | (unaudited) | |
Operating activities | | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 223 | | | $ | 11,045 | | | $ | (414 | ) | | $ | 16,477 | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | | | | | | | | | | | |
Deferred income taxes | | | — | | | | (7,422 | ) | | | — | | | | (7,422 | ) |
Depreciation and amortization | | | 259 | | | | 429 | | | | 1,136 | | | | 1,546 | |
Stock-based compensation expense | | | 28 | | | | 158 | | | | 191 | | | | 454 | |
Deferred rent | | | (3 | ) | | | 82 | | | | 168 | | | | 122 | |
Loss on disposal of property and equipment | | | 17 | | | | — | | | | 17 | | | | — | |
Changes in operating assets and liabilities: | | | | | | | | | | | | | | | | |
Accounts receivable | | | (56 | ) | | | 84 | | | | (96 | ) | | | (589 | ) |
Prepaid expenses and other current assets | | | 96 | | | | (730 | ) | | | 15 | | | | (954 | ) |
Other assets | | | (2 | ) | | | (15 | ) | | | 13 | | | | (44 | ) |
Accounts payable | | | 215 | | | | 11 | | | | 163 | | | | 209 | |
Accrued compensation and benefits | | | 646 | | | | 932 | | | | 649 | | | | 740 | |
Accrued marketing expenses | | | (594 | ) | | | (81 | ) | | | 104 | | | | 620 | |
Deferred revenue | | | 302 | | | | 3 | | | | 520 | | | | (461 | ) |
Other current liabilities | | | (26 | ) | | | 408 | | | | 151 | | | | 700 | |
| | | | | | | | | | | | | | | | |
Net cash provided by operating activities | | | 1,105 | | | | 4,904 | | | | 2,617 | | | | 11,398 | |
| | | | | | | | | | | | | | | | |
Investing activities | | | | | | | | | | | | | | | | |
Purchases of property and equipment | | | (259 | ) | | | (529 | ) | | | (1,337 | ) | | | (2,268 | ) |
Changes in restricted cash | | | — | | | | — | | | | 101 | | | | — | |
Changes in restricted investments | | | (1 | ) | | | (2 | ) | | | (3 | ) | | | (5 | ) |
| | | | | | | | | | | | | | | | |
Net cash used in investing activities | | | (260 | ) | | | (531 | ) | | | (1,239 | ) | | | (2,273 | ) |
| | | | | | | | | | | | | | | | |
Financing activities | | | | | | | | | | | | | | | | |
Proceeds from initial public offering | | | — | | | | 74,752 | | | | — | | | | 74,752 | |
Costs incurred in connection with initial public offering | | | (656 | ) | | | (1,400 | ) | | | (1,022 | ) | | | (3,309 | ) |
Net proceeds from exercise of common stock options | | | 25 | | | | 37 | | | | 362 | | | | 476 | |
Principal payments in connection with capital leases | | | (5 | ) | | | (100 | ) | | | (22 | ) | | | (172 | ) |
| | | | | | | | | | | | | | | | |
Net cash provided by (used in) financing activities | | | (636 | ) | | | 73,289 | | | | (682 | ) | | | 71,747 | |
| | | | | | | | | | | | | | | | |
Effect of exchange rate changes on cash and cash equivalents | | | (5 | ) | | | 13 | | | | 12 | | | | 29 | |
| | | | | | | | | | | | | | | | |
Net increase in cash and cash equivalents | | | 204 | | | | 77,675 | | | | 708 | | | | 80,901 | |
Cash and cash equivalents at beginning of period | | | 9,211 | | | | 12,641 | | | | 8,707 | | | | 9,415 | |
| | | | | | | | | | | | | | | | |
Cash and cash equivalents at end of period | | $ | 9,415 | | | $ | 90,316 | | | $ | 9,415 | | | $ | 90,316 | |
| | | | | | | | | | | | | | | | |
| (1) | The condensed consolidated statement of cash flows for the year ended December 31, 2005 has been derived from the audited consolidated financial statements for that year. |
EHEALTH, INC.
SUMMARY OF KEY METRICS
(Unaudited)
| | | | | | | | |
Metric | | Three Months Ended
December 31, 2005 | | | Three Months Ended
December 31, 2006 | |
IFP submitted applications (1) | | | 61,000 | | | | 76,300 | |
Source of IFP submitted applications (as a percentage of total IFP applications for the period): | | | | | | | | |
Direct (2) | | | 39 | % | | | 40 | % |
Marketing partners (3) | | | 36 | % | | | 33 | % |
Online advertising (4) | | | 25 | % | | | 27 | % |
| | | | | | | | |
Total | | | 100 | % | | | 100 | % |
| | | | | | | | |
| | |
IFP new members (5) | | | 48,300 | | | | 68,300 | |
Total new members (6) | | | 68,000 | | | | 97,200 | |
| | |
Total revenue (7) | | $ | 11,707,000 | | | $ | 17,416,000 | |
Total revenue per estimated member for the period (8) | | $ | 44 | | | $ | 46 | |
| | |
Marketing and advertising expenses (9) | | $ | 4,808,000 | | | $ | 5,601,000 | |
Acquisition cost per individual on IFP submitted applications (10) | | $ | 50 | | | $ | 47 | |
| | |
| | | As of December 31, 2005 | | | As of December 31, 2006 | |
IFP estimated membership (11) | | | 225,000 | | | | 319,000 | |
Total estimated membership (12) | | | 277,600 | | | | 393,900 | |
| (1) | Individual and Family Product (“IFP”) applications completed on eHealth’s website during the period. |
| (2) | Percentage of submitted applications from applicants who came directly to the eHealth website through unpaid search engine results or otherwise. |
| (3) | Percentage of submitted applications from applicants sourced through eHealth’s network of marketing partners. |
| (4) | Percentage of submitted applications from applicants sourced through paid search, portals and related sites. |
| (5) | New IFP members reported to eHealth as approved during the period. Some members that are approved by a carrier do not accept the approval and therefore do not become paying members. |
| (6) | New members for all products reported to eHealth as approved during the period. Some members that are approved by a carrier do not accept the approval and therefore do not become paying members. |
| (7) | Total revenue recognized during the period (all sources) from the condensed consolidated statements of operations. |
| (8) | Calculated as total revenue recognized during the period (see note (7)) divided by average estimated membership for the period (calculated as beginning and ending estimated membership for all products for the period, divided by two). |
| (9) | Marketing and advertising expenses for the period from the condensed consolidated statements of operations. |
| (10) | Calculated as marketing and advertising expenses for the period (see note (9)) divided by the number of individuals on IFP applications completed on eHealth’s website during the period. |
| (11) | Estimated number of members active on IFP insurance policies as of the date indicated. |
| (12) | Estimated number of members active on all insurance policies as of the date indicated. |
EHEALTH, INC.
GAAP TO NON-GAAP RECONCILIATION
FOR THE THREE MONTHS ENDED DECEMBER 31, 2006
(In thousands, except per share amounts, unaudited)
Statement of Operations Reconciliation
| | | | | | | | | | | |
| | | Three Months Ended December 31, 2006 |
| | | GAAP Reported | | | Adjustments | | | Non-GAAP Results |
Revenue: | | | | | | | | | | | |
Commission | | $ | 16,520 | | | $ | — | | | $ | 16,520 |
Sponsorship, licensing and other | | | 896 | | | | — | | | | 896 |
| | | | | | | | | | | |
Total revenue | | | 17,416 | | | | — | | | | 17,416 |
Operating costs and expenses: | | | | | | | | | | | |
Cost of revenue-sharing | | | 411 | | | | — | | | | 411 |
Marketing and advertising | | | 5,601 | | | | — | | | | 5,601 |
Customer care and enrollment | | | 2,947 | | | | — | | | | 2,947 |
Technology and content | | | 2,816 | | | | — | | | | 2,816 |
General and administrative | | | 2,880 | | | | — | | | | 2,880 |
| | | | | | | | | | | |
Total operating costs and expenses | | | 14,655 | | | | — | | | | 14,655 |
| | | | | | | | | | | |
Income from operations | | | 2,761 | | | | — | | | | 2,761 |
Other income, net | | | 969 | | | | — | | | | 969 |
| | | | | | | | | | | |
Income before income taxes | | | 3,730 | | | | — | | | | 3,730 |
Provision (benefit) for income taxes (1) | | | (7,315 | ) | | | 7,422 | | | | 107 |
| | | | | | | | | | | |
Net income (loss) | | $ | 11,045 | | | $ | (7,422 | ) | | $ | 3,623 |
| | | | | | | | | | | |
Net income (loss) per share: | | | | | | | | | | | |
Basic – common stock | | $ | 0.57 | | | $ | (0.38 | ) | | $ | 0.19 |
Basic – Class A nonvoting common stock | | $ | 0.57 | | | $ | (0.38 | ) | | $ | 0.19 |
Diluted – common stock | | $ | 0.45 | | | $ | (0.30 | ) | | $ | 0.15 |
Diluted – Class A nonvoting common stock | | $ | 0.45 | | | $ | (0.30 | ) | | $ | 0.15 |
Net income (loss): | | | | | | | | | | | |
Allocated to common stock | | $ | 11,039 | | | $ | (7,418 | ) | | $ | 3,621 |
Allocated to Class A nonvoting common stock | | | 6 | | | | (4 | ) | | | 2 |
| | | | | | | | | | | |
Net income (loss) | | $ | 11,045 | | | $ | (7,422 | ) | | $ | 3,623 |
| | | | | | | | | | | |
Weighted-average number of shares used in per share amounts: | | | | | | | | | | | |
Basic – common stock | | | 19,535 | | | | 19,535 | | | | 19,535 |
Basic – Class A nonvoting common stock | | | 10 | | | | 10 | | | | 10 |
Diluted – common stock | | | 24,771 | | | | 24,771 | | | | 24,771 |
Diluted – Class A nonvoting common stock | | | 10 | | | | 10 | | | | 10 |
EHEALTH, INC.
GAAP TO NON-GAAP RECONCILIATION
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006
(In thousands, except per share amounts, unaudited)
Statement of Operations Reconciliation
| | | | | | | | | | | | | | | | |
| | | Three Months Ended September 30, 2006 | |
| | | GAAP
Reported | | Percent of
Total
Revenue | | | Adjustments | | | Non-GAAP
Results | | Percent of
Total
Revenue | |
Revenue: | | | | | | | | | | | | | | | | |
Commission (2) | | $ | 15,867 | | 95 | % | | $ | (720 | ) | | $ | 15,147 | | 95 | % |
Sponsorship, licensing and other | | | 795 | | 5 | | | | — | | | | 795 | | 5 | |
| | | | | | | | | | | | | | | | |
Total revenue | | | 16,662 | | 100 | | | | (720 | ) | | | 15,942 | | 100 | |
Operating costs and expenses: | | | | | | | | | | | | | | | | |
Cost of revenue-sharing | | | 411 | | 3 | | | | — | | | | 411 | | 3 | |
Marketing and advertising | | | 5,798 | | 35 | | | | — | | | | 5,798 | | 36 | |
Customer care and enrollment | | | 2,740 | | 16 | | | | — | | | | 2,740 | | 17 | |
Technology and content | | | 2,668 | | 16 | | | | — | | | | 2,668 | | 17 | |
General and administrative | | | 2,370 | | 14 | | | | — | | | | 2,370 | | 15 | |
| | | | | | | | | | | | | | | | |
Total operating costs and expenses | | | 13,987 | | 84 | | | | — | | | | 13,987 | | 88 | |
| | | | | | | | | | | | | | | | |
Income (loss) from operations | | | 2,675 | | 16 | | | | (720 | ) | | | 1,955 | | 12 | |
Other income, net | | | 145 | | 1 | | | | — | | | | 145 | | 1 | |
| | | | | | | | | | | | | | | | |
Income (loss) before income taxes | | | 2,820 | | 17 | | | | (720 | ) | | | 2,100 | | 13 | |
Provision (benefit) for income taxes (3) | | | 82 | | 1 | | | | (19 | ) | | | 63 | | — | |
| | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 2,738 | | 16 | % | | $ | (701 | ) | | $ | 2,037 | | 13 | % |
| | | | | | | | | | | | | | | | |
Net income (loss) per share: | | | | | | | | | | | | | | | | |
Basic – common stock | | $ | 0.54 | | | | | $ | (0.14 | ) | | $ | 0.40 | | | |
Basic – Class A nonvoting common stock | | $ | 0.54 | | | | | $ | (0.14 | ) | | $ | 0.40 | | | |
Diluted – common stock | | $ | 0.14 | | | | | $ | (0.03 | ) | | $ | 0.11 | | | |
Diluted – Class A nonvoting common stock | | $ | 0.14 | | | | | $ | (0.03 | ) | | $ | 0.11 | | | |
Net income (loss): | | | | | | | | | | | | | | | | |
Allocated to common stock | | $ | 2,705 | | | | | $ | (693 | ) | | $ | 2,012 | | | |
Allocated to Class A nonvoting common stock | | | 33 | | | | | | (8 | ) | | | 25 | | | |
| | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 2,738 | | | | | $ | (701 | ) | | $ | 2,037 | | | |
| | | | | | | | | | | | | | | | |
Weighted-average number of shares used in per share amounts: | | | | | | | | | | | | | | | | |
Basic – common stock | | | 4,974 | | | | | | 4,974 | | | | 4,974 | | | |
Basic – Class A nonvoting common stock | | | 61 | | | | | | 61 | | | | 61 | | | |
Diluted – common stock | | | 19,334 | | | | | | 19,334 | | | | 19,334 | | | |
Diluted – Class A nonvoting common stock | | | 61 | | | | | | 61 | | | | 61 | | | |
EHEALTH, INC.
GAAP TO NON-GAAP RECONCILIATION
FOR THE YEAR ENDED DECEMBER 31, 2006
(In thousands, except per share amounts, unaudited)
Statement of Operations Reconciliation
| | | | | | | | | | | |
| | | Year Ended December 31, 2006 |
| | | GAAP Reported | | | Adjustments | | | Non-GAAP Results |
Revenue: | | | | | | | | | | | |
Commission | | $ | 58,943 | | | $ | — | | | $ | 58,943 |
Sponsorship, licensing and other | | | 2,367 | | | | — | | | | 2,367 |
| | | | | | | | | | | |
Total revenue | | | 61,310 | | | | — | | | | 61,310 |
Operating costs and expenses: | | | | | | | | | | | |
Cost of revenue-sharing | | | 1,305 | | | | — | | | | 1,305 |
Marketing and advertising | | | 21,405 | | | | — | | | | 21,405 |
Customer care and enrollment | | | 10,991 | | | | — | | | | 10,991 |
Technology and content | | | 10,137 | | | | — | | | | 10,137 |
General and administrative | | | 9,482 | | | | — | | | | 9,482 |
| | | | | | | | | | | |
Total operating costs and expenses | | | 53,320 | | | | — | | | | 53,320 |
| | | | | | | | | | | |
Income from operations | | | 7,990 | | | | — | | | | 7,990 |
Other income, net | | | 1,326 | | | | — | | | | 1,326 |
| | | | | | | | | | | |
Income before income taxes | | | 9,316 | | | | — | | | | 9,316 |
Provision (benefit) for income taxes (1) | | | (7,161 | ) | | | 7,422 | | | | 261 |
| | | | | | | | | | | |
Net income (loss) | | $ | 16,477 | | | $ | (7,422 | ) | | $ | 9,055 |
| | | | | | | | | | | |
Net income (loss) per share: | | | | | | | | | | | |
Basic – common stock | | $ | 1.91 | | | $ | (0.86 | ) | | $ | 1.05 |
Basic – Class A nonvoting common stock | | $ | 1.91 | | | $ | (0.86 | ) | | $ | 1.05 |
Diluted – common stock | | $ | 0.80 | | | $ | (0.36 | ) | | $ | 0.44 |
Diluted – Class A nonvoting common stock | | $ | 0.80 | | | $ | (0.36 | ) | | $ | 0.44 |
Net income (loss): | | | | | | | | | | | |
Allocated to common stock | | $ | 16,391 | | | $ | (7,383 | ) | | $ | 9,008 |
Allocated to Class A nonvoting common stock | | | 86 | | | | (39 | ) | | | 47 |
| | | | | | | | | | | |
Net income | | $ | 16,477 | | | $ | (7,422 | ) | | $ | 9,055 |
| | | | | | | | | | | |
Weighted-average number of shares used in per share amounts: | | | | | | | | | | | |
Basic – common stock | | | 8,590 | | | | 8,590 | | | | 8,590 |
Basic – Class A nonvoting common stock | | | 45 | | | | 45 | | | | 45 |
Diluted – common stock | | | 20,572 | | | | 20,572 | | | | 20,572 |
Diluted – Class A nonvoting common stock | | | 45 | | | | 45 | | | | 45 |
Explanation of adjustments
| (1) | In the fourth quarter of 2006, management concluded that it is more likely than not that eHealth will realize sufficient earnings to utilize a portion of its deferred tax assets. Accordingly, eHealth reduced the valuation allowance against deferred tax assets and recorded a tax benefit of $7.4 million in the fourth quarter of 2006. |
| (2) | Deferred revenue at June 30, 2006 included commission amounts reported and paid by a single health insurance carrier that, effective January 2005, changed its basis for calculating and reporting commission amounts from a percentage of the premium it collected to a percentage of the premium it billed. Since this was the first carrier to calculate and report commission amounts on this basis, eHealth initially did not have sufficient historical forfeiture experience to estimate and record an appropriate allowance for forfeitures as commission amounts were reported by the carrier. Accordingly, all commission amounts reported by the carrier in 2005 and through the first six months of 2006 were deferred. |
During the three months ended September 30, 2006, eHealth determined that it had sufficient experience to estimate an allowance for forfeitures for this health insurance carrier. Accordingly, during the three and nine months ended September 30, 2006, eHealth recognized $720,000 of commission revenue, which had been previously deferred.
| (3) | Includes a $19,000 income tax expense reduction due to the $720,000 reduction of income (loss) before income taxes. |
