EHTH - Earnings call transcript Q4 2017

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Operator

Good day, ladies and gentlemen. And welcome to the Q4 2017 and Full Year 2017 eHealth Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode.

Following management's prepared remarks, we will host a question-and-answer session and our instructions will be given at that time [Operator Instructions].

conference being this purposes. for reminder, a call recorded is replay As is hand to my conference It pleasure Ms. the now over to Vice Relations. Investor President Sidorovich, Kate of Ma'am, you may begin.

Kate Sidorovich

today, you Good a for financial eHealth and for and results. you. quarter about phone thank fourth year Thank joining by afternoon, discussion us full either Inc's webcast by or all XXXX

After remarks, Chief On Officer and Executive open Flanders, eHealth's Financial Chief for the and Chief questions. call its this afternoon, we'll management Operations lines the Officer. Francis, we’ll Scott eHealth's completes have Dave

As a available call replay is our and following recorded of IR being our A on the section reminder, today's call. Website. be conference webcast the from will Website the call of

of constrained value average for small product commissions lifetime annual group our policies, cost impact improved of our margins and adoption small balance for each future growth events, relating packages for guidance, reallocation, including closure, plans including making IFP statements plan revenue legislation new and planned of to of our Medicare the for applications expected our for a profit our in as and expectations, in partnerships; for and recent expansion beliefs, and will Medicare our call estimate our on our IFP result and We categories. member the and of growth; investments, of investment be respect with and regarding forward-looking average and revenues, earnings proposed to our office continued expectations recognition the business and statements for expectations submitted business, statements as in for plans our Medicare application impact products, members this sheet for of an Supplement that marketing includes for

per corporate for our our Our new EBITDA and guidance revenue, XXXX EBITDA, per operating segment revenue revenue cash used expenditures XXXX and recognition guidance including under and cash estimates and and capital service for guidance. share, and expense non-GAAP profit, adjusted income share, profit flows adjusted for shared net segment for total total revenue

views call this on today. of represent statements Forward-looking eHealth's

statements in a our contained future duty views not should of forward-looking future. otherwise. as events whether new to rely undertake on the or obligation You information, We as or statement, update result information in no representing this the

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Scott Flanders

a tenure on afternoon, sustainable XXXX in eHealth deliver with and strong Thank as of objectives year busy year us more growth my Medicare full a goal with the for allows the years business for health within and for deficiencies task profile of Medicare several first to the on took basis to individual large our on It business of our insurance repositioning that marked sales a and was on key business attractive the cost disciplined and and to good calendar larger we as to entered in eHealth. margins, core specifically in XXXX to everyone. predictable headwinds. Kate CEO you, after health year, and reflect a markets a market our business shareholders. financially several our we establishing market, To for briefly, growth results correct for regulatory to in our supplement Medicare build grow organization, tele basis a reestablish sustainable for focus growth foundation our growth and family aggressive small at insurance

I results accomplish these for to our Our company tangible can we've and strong in necessary that returning year. and the our four EBITDA the the also for I discipline aim while of with was revenue progress also listed, XXXX that the to goals. were delivering five to achieve each of report on objectives made and objectives guidance operating financial financial while line

company's further Our business resumed cost basis the any at substantially and growth is history. more acceleration now year the Medicare second than is submitted of positioned double-digit half in that on growth application in the point attractive for a

for Our segments of acquisition expansion foundation Medicare provides Medicare the a of GoMedigap strong the our in market. supplement recent

year and of converting organization rates than ago more at in-house peak call Our network a time cost-effectively. on reliable center now is partners to handle are higher demand building we demand tele-sales a

business in growth in build by leveraging group meaningful the market are continues be to this plan small in challenging. disappointment, XXXX a Only our failures resume a and technology individual market to and was platform. Our its in family solid approved solid presence a we well-positioned that growth members given experienced business to

we of expectations we our that the financial XXXX as the front, On guidance. performed set annual within part

net non-GAAP net adjusted non-GAAP $XX.X of million, million, for net the per share loss GAAP Revenue million, was of generated GAAP fourth quarter loss per EBITDA revenue was adjusted $X.XX. per $XXX.X share negative of and For $X.XX was year share EBITDA net and a million, full was negative loss $XX.X $X.XX. the $X.XX of XXXX, eHealth $XX.X loss

lasting fourth us quarter. advantage generation sustainable relationships. that business, took business XXXX discuss variable enhancing per Medicare of first, member Our with million Medicare have scale shift major was demand the was result recording implement adopting to based converting We impact In to year, of our fourth on period our cost the initiatives the a we adoption the on positive business, in the in profitable In approved ASC last new XXX the sales of significant on a a our compared saw significant our changes new $XX.X channels towards year guidance impact accounting more that provide will first this and no a our place our standard. of XXX strategy a emphasis financial and and XX% during our improvement standard, Medicare enrollment and cash building quarter foundation. declined financial organization more of marketing in our are Starting as revenue debt. a demand and balance this will ASC these the allow quarter QX second, XXXX, annual GAAP will customer yearend effectiveness accounting to which on cost-effective results. Dave recognition

effective members we more to retention our first-year in XX% targeted declining core see saw business with We through churn and that average significant enrollment process Medicare in in improvement Medicare for member enrolled an post-sale. a we reduce XXXX XXXX. the potential in activities to also enrolled and further We advantage compared churn retention personalized

demand have our marketing made XXXX. that pivot time, Medicare channels direct these of lead contributors progress slower resulted and we enrollment be the mail over same search process newer management several expect organic We and make the next and than campaign. to expected. generation slowdown a years. in of from our paid search expensive signed partnership originally television cost efficient our towards in At We strategic aggregator high-profile in and growth of in-house a efforts Our advertising growth several significant scaled more Medicare partnerships important number and in partnerships, we away to the areas

generated but at half teens our XX% year. second applications a high application for growth the Medicare XXXX, grow in we fell to full target the of products As for short of we result, all

we we scale of existing to to in XX% continue grow partnerships, enrollments and than Medicare a supplement our Medicare greater enabled As supplemented organic expect provider acquisition submitted technology relationships applications primarily new services. growth recent develop through solid of GoMedigap pipeline by driven of a XXXX,

supplement Our acquisition of position partners meaningfully almost accelerate us put strategic existing in in Medicare plan of and a book growth business, Medicare carriers to and Medicare doubled beyond. us stronger and our enrollment XXXX much positioned with supplement GoMedigap

with the our philosophy market care engagement senior from operate the members customers. cost-effective customer of business. member acquisition advantage agents, our and Richard nature which to retention track CEO, to complements us positive, well consumer repeat and Medicare our growth. profitable business. GoMedigap's on of our business, as Medicare down cash Founder XX GoMedigap's of GoMedigap's insurance with CEO, Medicare combined with have few on The to has achieved supplement Walbrick, allowed its the be enjoyed by focus our as achievement about and fast-growing the education, marketing excited an business These our Medicare in consumer words of consumer-centric to impressive engagement very practices growing in XX,XXX call-center and expertise scores record profitable satisfaction acquisition high remarkably Kevin GoMedigap close attributes and market mission, on allowing diverse superior and driven extends organization. better health team needs of customer supplement model, over GoMedigap aligned GoMedigap, strategies join is serve also have are and for and Medicare plan founders a focused significant January and Medicare and GoMedigap rates prescription the A supplement platform We drug Cantu co- and executives a flow

confusion call-center to is space changes coverage repeal market our absence to impacted repeal of and period. in technology. licensed eHealth's Consumer year GoMedigap's lack the and favorable potential changes quality administration. news around enrollment the consumer contributed enrollment individual throughout agent the of continuing capabilities back-office other plan a the and by plan adversely of appoint and Care expand family under open this Our and products were the demand premium new policy regulatory The market the in challenged mandate broadly last that the advanced aggressively period, shortened and of fulfilment headcount expected remained the Affordable inflation, during growing Act,

customers by the increase qualified quarter which the period, new enrollment applications a premium was did time, exchange in characteristic family the fourth is impact as demand the eligible health market. allowed leave for our subsidies qualified plans driven the those website. us first the XXXX. health to framework fourth inflation shorter extend of quarter, eligible having enrollment we to plan as the the of with not being quarter government not through submitted from hit customers open XXXX to drop-in compared into CMS that saw from consumers This saw subsidy During for consumers consumers enroll individual plans a federal we without that of were same an as full by the and of well into At

generated individual XXXX, segment family growth flow we market. line year the of As and for remained standalone XX% our and contributing business, to profit business and new fourth in small declined $XX.X a profitable in family Despite plan profit plan submitted of small while our million the positive on decline our all the in business cash ago. individual a for family invested and result, recent enrollments, product quarter a products the individual all applications with compared In IFP basis. the

the near-term of awaiting to the pockets to flow Our and family objective legislation is generation overall identifying and consumer cash market. of much-needed demand plan stabilize business individual potential individual by preserve pursuing the while

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plan well accident, and such as the we packages, characterized dental, an family typically sale we just our a generated critical from combination attractive even generate applications X,XXX mandate a product. indemnity, be to This what on illness, of a pricing that individual product and financial rates less-expensive, fourth the expand often this to medical expect our consumers XXXX, and commission for maintain finetune by and insurance vision configuration medical face coverage. year the will short-term quarter, we Starting health that compliant carriers products include generation these and become for enhance major over with Packages are above attractive or on strategy, of removed During demand standpoint. packaged are plan might and efforts. more individuals are we tax with products requiring penalties ACA which

the Trump proposal limit price. go to protection a expect also affordable rule are become reverse provide on of insurance to have sale measure consumers a short-term pleased an plans. This should proposed otherwise products the We and Obama-era with these an administration's final, at the positive with I impact valuable uninsured duration to which of who might of

Turning doubled more to than approved of our XXXX. groups the small business number market, in the

Our with X% the yearend same XX% period. grew revenue membership over full-year commission for the growing time

resulting market. in we with in carriers online the largest in During year, building platform an achieved end end the progress enrollment our to significant one the process out technology of

a We of initiatives also search expanded our area impactful with marketing number partnerships the new and small new campaigns. business in

across three to will strategy and value in Drug Prescription of fourth combined commercial costs growth focus channel of submitted Plans. major Moving as with We've Supplement on all our partner Medicare by decline Advantage, into applications. the shown a Medicare proven Medicare growth a in significant market the our strategic acquisition XX% the our XXXX, Medicare products, continue quarter

We the of recognize and value who are other fulfilment potential platform partners technology capabilities. from seeing interest our

our can a Following also fulfillment in competitively. dedicated a of to Medicare us supplement acquisition we offer position which strong GoMedigap, puts platform stronger the partners,

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to further develop special our our enrollment We plan initiative capabilities platform. plan in carriers. also business focus online to We specifically on additional with investing end-to-end continue technology small a with enhancing

meaningful enrollment compared goal ultimate and change year that by technology online. benefit assume We is currently market selection Our this not process market and a is brokers the consultants to large to migrate into any retail bring labor-intensive to environment and will underserved that family other in the XXXX. individual plan way plan

targeted will where take that currently the place expected into eligible of our health individuals to marketing plans year, quarters of open ended We qualified open for confined in most did beginning OEP a three XX year, the this period, single initiatives quarter. marketing on first limited. is ACA is the XXXX quarter. be of the plan enrollment the market not enrollment to resume recent During December the be compliant aimed that year fourth the which the to will the during Because continue period to first

market, individual submitted approximately the for by products XX%, in we will uncertainty continued XXXX. that compared the decline Given currently to expect applications

supply We insurance products. our short-term behalf also to continue products of plan packages, to innovate on non-ACA benefit of other ancillary customers by and expanding our including

the quarter Our price levels fourth a major there wider compared for offer tangible to is show plans these that products. of experience and range that available points medical benefit demand consumer

targeted sell see to compared significant enhanced of expect a this XXXX driven year to that increase the we offering in by product and We number outreach. packages marketing

growth opportunities. a key with them to operations cost Finally, align the to of expense of as remains our area reallocate focus work better we side

of stable earnings be reported commissions same in Dave cost I'll to legacy sale new As maximize to a will margins. revenue way. of call the with just lifetime expected our is turn products highest the the need align with structure The the Francis primarily emphasizing our revenue result standard business, now over the the values of and goal at And enrollments, review the by new few attractive minutes, to driven book revenue on recognition

Dave Francis

Thanks Scott. Good everyone. afternoon,

ASC first will cover are and I'll the our recognition accounting statements quarter for XXX starting metrics impact in financial and to today. standard, discuss me. our how year fourth quarter which going lot will and year we financial a then the adopting have the this performance it of I revenue excuse We forward. XXXX, by reviewing fiscal begin new

XXXX Finally, I guidance new accounting on will provide basis. the our

and quarterly Our results dynamics. annual financial reflect key three

environment revenue our that base In efforts expansion revenues of quarter Medicare and variable churn this million position a membership, an structure over the time were Medicare per of new for business members fourth growth and estimated ago. of continuing of existing Medicare continuing to Medicare our same of year the individual increase or of sustainable while a of year. of challenging XX% past and while approved family significant continuation the the acquisition significantly during XX%. able in grew in the member quarter to third, up cost our The the resulted of fourth member, of grew in to the reducing the rationalize drive acceleration cost full-year number several market our reversing fourth $XXX.X margins individual XXX,XXX million our second the First, and successful it end from inflation was years. at We the compared lower trend Medicare marketing the growth the revenue-generating cost business, XX% $XX.X in XXX,XXX XXXX quarter, end to at the at at plan of enrollments

For from declined the segment $XX.X full Medicare our year in XXXX. XXXX, a of $XX.X the loss million loss XX% from to million

small business to fourth generated quarter, of revenue our ago. of was to XX% segment revenue and year million, compared $XX.X a $XX.X loss of a XXXX individual compared million Full family $XX quarter with a million fourth a Fourth segment compared XX% of $XX.X decline the ago. Medicare year. year last decline the of in a from million quarter year was loss or the For a

to compared the was Our a estimated plan approximately was compared the at XX% and year end a we a the end the the the The ago. quarter of estimated membership members down individual business the of products estimated at at XX,XXX to family end year X% on ago. small XXX,XXX approximately fourth of membership quarter of fourth increase reported number year,

$X.X small XXXX of despite profit of million $XX.X quarter the on for the standalone basis, the fourth and segment in and a segment individual profitable remained reductions full for revenue. year generating million Our family business

Our compared full million outlines X% in an revenue full decline XX% compared year the allocation earnings quarter Total the the segment $XX.X year was for of to the $XXX.X fourth fourth for representing costs of was detail. million to of release by the Revenue greater down of quarter XXXX XXXX. XXXX.

total estimated approximately products. members Our was XXX,XXX the on ancillary XXX,XXX at quarter membership members products all approximately the for including end of combined

the acquisition of Now $XX.X which our costs GAAP expenses, costs million. review approximately $X.X operating operating and Fourth compensation non-GAAP year $XXX,XXX Fourth by operating excludes Medicare I stock-based and marketing declined which impact to amortization with were ago. of would quarter million non-GAAP costs, advertising business. new quarter fourth fourth $X a by million, the compared increase compensation an quarter reflecting like intangibles, grew our exclude expense, over XXXX in positive of quarter the channel strategy stock-based expense primarily year-over-year

non-GAAP driven small to quarter compared year. Our stock-based million compensation excludes a quarter expense, quarter $X Medicare by new XXXX to in we well headcount and the compensation approximately which XX% made primarily Fourth Fourth a submitted excludes by executive our non-GAAP by year which by additional our XXXX the expense a and while year-over-year, non-GAAP to quarter hires ago that enrollment by increase am an still customer costs expense G&A compared grew over achieving in initiative. driven Medicare fourth XX% compensation declined as applications related content grew care $X.X same sorry, in stock-based marketing I year approximately excludes throughout grew new hires variable business expense, time tech stock-based agent support $XXX,XXX increase the compared period. agent to million as Medicare Fourth compensation approximately which cost, ago.

adjusted the acquisition quarter dynamics This and amortization observed a which non-GAAP in stock-based of for absolute the $X.XX to was charges, fourth adjusted per EBITDA and per For $X.XX the costs compared $X.XX GAAP operating in restructuring to the a administrative compensation net being loss an year net share $X.X loss the costs, EBITDA acquired for million for EBITDA positive Non-GAAP was XXXX compared was XXXX. fourth and $X.XX compared per of loss loss net by customer year amortization increase operating compared terms net XXXX quarter revenues a share $XX.X for stock-based XXXX quarter in of net and lower of to per the by compared We for to in both and of calculate million negative negative depreciation year income. fourth driven per marketing similar to per care was full offset XXXX, loss diluted amortization of general a by $X.XX increased we of a XXXX. XXXX. loss and was adding compared and of net share quarter $X.XX million GAAP XXXX loss the increase our $XX.X Fourth per partially compensation, per enrollment $X.XX million intangibles with intangibles, to those share expenses. costs, to share ago. compared a the advertising GAAP fourth was Full-year of acquisition as to share net $XX.X quarter XXXX. diluted percentage Full-year $X.XX of full net was of XXXX in XXXX. our Full-year XXXX. quarter income non-GAAP fourth costs negative including share to excludes share and Adjusted

operations to Our compared XXXX flow of a cash XXXX. million $XX.X million fourth fourth was the for $X.X quarter negative negative quarter from

approximately $XX.X compared million XXXX. and million in developed million XXXX, capitalized For from for were positive fourth was XXXX include the million negative full cash internally software year. operations Capital $X.X quarter the costs to flow full $X approximately of the year which for $X expenditures,

any company sustainable December as for remain marketing to of this of align do strategy Today changes have to engineered with and more increase conversion the at announcing Having Medicare of are business. sales the meaningfully highly customer growth. on impact cash cost costs mix seasonal our sales XXXX. XX, Massachusetts expect and sales long-term new with growth operating center of processes Westford needs rates, our resource not was focused we staffing to Medicare million an team Our Medicare acquisition our $XX.X balance closure optimized costs all on variable fixed we demand. and positioning personnel the according in closure executive our managing to and a major customer We permanent the reduce outsourced

in we acquired to areas ROI GoMedigap managing technology the investments Medicare the development business. including of within while In investments are focusing addition, our and high experience customers for engagement targeted business, highest supplement closely recently resources value on maintain the our

driving efficiency further focus the of parts areas all remain of across the process automation Finally, through business, improvement, and team. management for key

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here We historical information fully judgments provide complete may And the that accounting historical different comparison these revenue with ranges now, for to purposes. estimated or restaged new provide new and be guidance plan XXXX presenting and results modify we arise first retrospectively the XXXX earnings our release. quarter under to our will I may restated materially we could cause we annual As evaluation assumptions our standard. financials our are that

revenue to million range revenues and be the $XXX.X the of $XXX.X segment We of million to and $XXX.X million. small compares for With the entire the business of million to $XXX.X million are forecasting and to family $XXX.X $XX in family to $XXX company. business an million $XXX XXX for revenues revenues $XX $XXX.X for million segment. ASC Medicare individual, segment $XX.X Medicare range for small to million. million the This XXXX XXXX and and individual estimated $XX.Xmillion in to under of million segment

expect range $X.X XXXX million million $XX.X positive to negative of ASC $X.X adjusted of be the million EBITDA as We adjusted compared estimated XXXX million XXX. $XX.X in to under EBITDA to to

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- the Medicare to range average Advantage small financial $XXX approved constrained LTV XXXX, category In assumptions we an $XXX XXXX $XXXX $XXX Our approved expect member for for by is fully an XXXX, to approved constrained and be $XXX fully be average for for approved guidance member, we for of to We approved commissions in supplement prescription and $XXX $XXX of to member. $XX an estimate estimate we on to an in of based following LTVs. LTV Medicare IFP $XXX member plan $XXX estimate average drug an for to also range annual the to member. the business

note guidance our effects the on for ASC under is business important to as Finally, quarterly XXX, XXXX of seasonal financial performance. relates it to it

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fourth the of fourth judgments current will of countered XXX our As and under you in based on I positive earnings and assumptions year Accepted are earnings year. Accounting estimates, concentrated and remind resulting that guidance negative want parts likely ASC result, for the may to be under the of our quarter by a the Generally earnings Principles time. accounting in which quarter in earlier in revenues these our indications business any change the comments at current year,

turn actual remarks update comments to may and in results final as obligation over judgments. estimates, now result our taking questions. And of our assumptions no a differ call We Scott guidance. to undertake or I'll the changes back for Our our before

Scott Flanders

never our I've about excited growth been for the business. Dave. Thanks, opportunities more

product XX% a show to basis. in Medicare for considerably substantial that and broader and embedded cost able We offering. expands significantly of we acquisition growth us ASC business attractive are with poised provides market XXX. on it's business capabilities Medicare opportunities have more clearly Medicare And now the our GoMedigap significantly more supplement The across a sustainable applications the balance of profitability and our under

technology Expanding plan continues small our base to opportunities growth technologies entire customer unique for of the and fashion delivering and and as and services customers. in toward family company. the providing of and individual in valuable Fyfe Our that revenue a work our we suite future disciplined services were group profits being a and market are to be businesses for focus my disruptive managed

it to over turn are to achieve these I questions. We objectives. Operator well positioned

Operator

with And Tobey first of lot Sommer will SunTrust. Instruction] a question come our [Operator from

now Your is open. line

Kwan Kim

this questions. is my Kim for Hi, for you on Thank taking Tobey.

embedded First EBITDA your in of and what you. in guidance of is the XXXX EPS? of revenue, terms Thank GoMedigap contribution

Dave Francis

the Hi question. Kwan, thanks for

not that the Medicare about to out be We’re from talking membership about growth a X% perspective X% GoMedigap for is reflected our expect the growth will me contribution. in Scott was only business, breaking What that we I you will XX% of tell contribution really that previously. in that,

growth So the strong not line. a supplement organic top GoMedigap large to from and bottom my contributor folks, but or

Kwan Kim

expect become the when to you positive? cash business Got do Medicare it. flow And

Dave Francis

that flow year Certainly goes year. and we this year, depending chance cash how it so is to expecting by it certainly but XXXX there this perform on a next positive do

Kwan Kim

do Okay. side, or lastly assume commission associated on compression the ASC stable with XXX? rates And you commission

Dave Francis

talked commissions. it progression We've and Medicare been across regression kind the years compression done all commissions of parts sold about for to last as two extensive of and meaningful different pretty we analysis the There of on a what hasn't three that over found any of CMPM the the business we've outside mid-year. business extensively

So, for it to as remain been couple years. everything the last of has we're expecting

Kwan Kim

helpful. Thank much. you That's very

Operator

from Sutton And our come of George question line Thank you. will Craig-Hallum. next with

Your line is now open.

George Sutton

of I'm as confidence of Scott, you were what that increased gives wondering your new did look this you at in learn partnerships you Medicare I some many versus break growing versus you. season, which the groups? relatively opportunities with Thank pharmacy past like the XXXX partners hospital of down relative folks groups you partnerships? wonder some affinity between if And the those could to

Scott Flanders

Okay.

our developed slowly a we acknowledged we learn we So, while, and script expected. we than - that the as did in lot partnerships more

virtually deminimus. of penetration Our the total opportunity been has

a orders ‘XX don't in magnitude growth of over better of to get have have lot ‘XX. to And so, we substantial

at hospitals. it board year. the enrolments onboard we did a XXXX under to start build was on nine seven-figure human net the in out brought channel, that to me the investment Let We and that last capital systems

the double expect and year we penetration. expect We to this much number deeper partners of

But We've little we're beneficiaries XXX,XXX massively a XX,XXX numbers, that we think. expect should we than we percentage should more do ready. approach in So, of budgeted all these that. them. guess aren’t close five to I those had we of X.X% a We the in to figures. but reach place to over material it and conservatively neighborhood point Well, market systems the we opportunity

as - is. has And And was Union do and other Medicare see so, longer hospital integrate their they for what what encouraging. very and we just marketplace. see aligned enrolling And our the us is they of that strategy I with we and to sense opportunity. demonstrate give you are patients Advantage what mission to is of as us a And systems those the the with had opportunity excited was how there off February of fully It every represented day taken two senior partners with Plus just was aligned site. in Than what late our brands. executives it a our significant plots of the some very brand their and with January trying partnerships like about it still we held person was and earlier we one so in others, just business we're

fully more more us just so, it's full - of to meetings, alignment longer, bring penetrate taken these education, marketing been individual plans opportunity. to - it's more And it and the

Dave Francis

when last had at and of on we year. in channel I that this We one terms of channel that of we we pharmacy it's is of in particular, lot fully in about ramp holding relationships the our larger them in those that if are been had size our George our is third us the could we the now. a some add, talked still of against preannouncement, for executing several there that partner fact partnerships of to in the the And that one more quintupled have years talked in bargain scale. That's we've relationships capable end up channel the we previous in that, ability while about those were we with relative for of we doing involved eyes have that perform business the And the reality have these. And shown that been years. of than some to disappointed

as for and into speak existing partner confident we of very well perform negotiations going channel we're channel as new us deeper robust going is get and a have that XXXX. we to So, that we on very

George Sutton

Dave relatively assumptions. or fully constrained

it's using and to as so, actually advantage to to that's constrained understand seeing than example. you Just X% XXX means me is X% that say When what X% XXX X% helped if Medicare you're you're I'm the clear an higher constraint? the that,

Dave Francis

That's right.

guard that use that sorts think the to so the taking think then of as an accounting it. Think further that's good insurance external to in LTVs of to used policy necessary where terms to speak a to developing numbers And to of of those those constraint believe other assumptions revenue. we against I and and layman's out constrained things get way the events we in derive applied very that LTV. will proper we have conservative it recognized

George Sutton

you're Okay lastly comments the there on in prepared your to obviously high ROI of going business mentioned you sense. parts make Scott focus which

walk of low on know would higher be. I those are thoughts can and that? where But the your I where you places think, ROI kind through

Scott Flanders

search channels organic know being marketing expensive, inexpensive. search acquisition marketing all Well Medicare being a DR-TV of variability as but being business you engine our cost we very report those expensive, across with of wide there's blended

sort part marketing the particularly channels of the just paying answer and very and from our precluded of any is, that of channel acquisition. our pharmacy Rev cost managing so, regulatory hospitals where partner low were share And by scheme

then to managing previewed online. about really mix. five-year announced it's strategic when our we is objective our Medicare plan so, that migrate we And of an And more enrolments

individual market whereas percent Medicare in the percent, we're agent-enabled XX% So, phone. the XX by in market where

to be add of an it's our to with Dave been priority to assist. to the our you online higher agent objective role but, migrate enrolments it's going what Operating Chief Dave so, is assuming is ours And as would that? more an of even Officer

Dave Francis

to laid different here, other wherever costs segments I customer George is, all thing we accurate. as individual we a they're long-term to the where us. about quickly just areas little the of Scott of some the focus back out the reduce operating just values described that talk keeping not areas each area the identify And Yeah, mind can to that's marketplace. of plough those And driving that a into higher ROI key and in for of bit

see how built that serve continued turn last perform marketplace take the opportunities in XX that advantage years fixed over full While, has we business to things we're we've that of the to around marketplace. do in that and to infrastructure disappointed

So, scale while well. and investment those acquire LTV return can the as are we for them as at through that high drive customers customers if the on lower, engine

So, focus problems in solve business we continue to for. have that a meaningful getting on the

as well. So, can more we ROI drive there meaningful

George Sutton

Thanks guys. you. Got

Operator

Thank you. And our next question from of Dave Jefferies. will with come lot the Styblo

Your is open. now line

Dave Styblo

the for thanks questions. there, Hey

I the talking be that teens that’s ‘XX. I half out think about just a assumptions of would underlying have in about the but starting side. And Maybe think XX% app on your I in a maybe think dozen will application I the up confine Medicare back couple. myself and – plus on they high are to growth the

it just but rest you it can what I operational due the of better think So, largely part is acquisition is help improvement is? to the improvement. to the

Now AGIA? Union that that things partnerships is out, the driven and Plus partially you some of also or straighten guys by

Dave Francis

of year these and more half being year the this Well, all that you'll blush. is, then number seem rates than be in first relatively center And their call of and of to which our going of all second partnerships might have of first easy make conversion that laughing at we're achievable in it benefit operation.

expecting just a - lot penetration. speed And so, we're greater

Scott Flanders

and our sales improved The leadership from rates. of several a year to the the learning in exited our optimize of third after channels the had the year in now insourced all half of last we growth our the our in significantly as the second others acquisition the got is, the year that of belts strategy. learnings Dave achieved and I TV that traction lot changed year that keep first we part party experience machine better. Medicare completely Recall would a Scott the of a well. business to described full half of we mind that, all we year under did first The with add with of partner good tractions the in that conversion thing were outsourcing that essentially advertising overhauling year, as was we in broken we customer just

together So, efficient terms you benefits throw subchannel about that having with in the a confident sit mid and very more business. the ahead addition the better also the much will we're with for growth position where in GoMedigap all opportunities that we were of and of get we

Dave Styblo

average. and of haircuts to the you're in going delta for approved the because it application, then that way metrics I the now a your grow time submitted is under and example becoming there's right there little outlook have revenue And member. I is Okay. application to the is for just What's take apps it some bit had revenue your I getting which submit you've when think to member on a and Medicare thousand then the and apply an modelling a that hard understand year. works for a there restrained

somebody that quite walk So fall could us through maybe off but to from to just they're a is? estimate I'm folks assuming on approved. you what app rate submits application conversion What that from that you're when are an an few when prove member, going maybe being assumptions

Scott Flanders

– that's the part why And predictable look is given past when are at the of very different very, all and applications approve however is to application, around and working determination the that reason an approved the Delta history. to we're a the rate use submit that to to depending approved off are sales they LTVs smaller recognition and XX% midpoint is believe. going we're specific But we the there you again, talking you and the business fall inside the give at on organization. around in the because continue Medicare make the application what kind revenue falloff which calculations improve approved from where year of submitted of the time from is But bounces of a not I paid that approvals of other I'm it to revenue are on that that to one much support there a level growth numbers is of just about that for we the improvements of we're looking at range that. the the of kind to shy the

Kate Sidorovich

by will is get which there that well you commission products just that the into some goes And approved also Medicare multiplying range Medicare end and taking by revenue Medicare. as as of not members sale

Dave Styblo

a the you risk administration's short defections of a you term the obviously about of the as the there, for duration attacking. to think that the plans, do rest have and you're how individual on subsidized Is of to the plan guys positive possible decision that And for helpful. Okay insurance the and just guidance you terms term how going on to of you've curious that side, segment market have started think your individual book. I'm about a short it extend from that going that that established? some taking that's

Scott Flanders

buys people medical Anyone Yeah. a short one plan, afford drives major really into is insurance. that who can issue affordability term

not and volumes QHP So, in we we the don't on have had substantial segment. cannibalization very

cannibalization. entirely almost as see versus upside this So, any point from our view, of we

Dave Styblo

Okay. operating end was. on your that - you there, so GoMedigap there. of the and And a understanding cash of I then about at $XX here, cash million lastly guys you're just year, million? for the comments of think the $XX cash think from million flow the the that of on cash From what have $XX I and I flow cash paying about stock in drag flow missed free Was

Scott Flanders

$X.X of We that between it new were supercharging cash $X.X several burn related to acquisition GoMedigap. as growth million million range million gave and our of the with

Dave Styblo

Okay.

gives So, think sort of $XX of you is about about exiting million million of XX, XX XXXX? so of that $XX you about kind cash cash - sorry how

Scott Flanders

have also in there We almost CapEx $XX million... some

Dave Francis

$XX no end than will million we spending said, We in up more CapEx.

Dave Styblo

No more.

Okay.

you the that to Is year. gets right of it? way or the about think $XX cash million that maybe million closer exiting $X to So

Dave Francis

is. That

Dave Styblo

Okay.

way And generate or you your that one other? of from to the need so what tap just given still of and the do since markets bit has, like volatility book, of you do it to back that quite case in continues fall and the if book a IFP decline earnings sort

Dave Francis

I QX the the a liquidity receivable highly at it what as mind that you to see when numbers we different we’re that looking report as we've sheet could suffice of large funding. that's very visible We've at we will debt been a case, in But securitized source it a of free not balance that concerned got mean several the in with a keep moment say, on tap business. worst options. about

Dave Styblo

it. appreciate guys Thanks Okay.

Operator

Thank you. at queue And I'm showing time. this no further questions in

conference remarks. my it’s closing hand Executive Flanders, some for over Officer to back So, Scott pleasure and the Mr. comments Chief

Scott Flanders

you, for Thank everyone your support.

available convenience. discussion We calls are for at your and

Operator

conclude gentlemen, thank and participation your you you for Everybody, disconnect. does our and have all today's a on This program wonderful may Ladies conference. day.

eHealth (EHTH) 1 Mar 182017 Q4 Earnings call transcript