EHTH - Earnings call transcript Q1 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Q1 2018 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].

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

Kate Sidorovich

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

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

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

the individual Family integration efforts the We marketing will for the our ACA our the our our targets, our strategic to growth GoMedigap the of business, applications, the of marketing the including new respect our for and margins, expectation generation, and and includes beliefs, our expectations, the affecting from of and our financial per that flow EBITDA our approved EBITDA net be including and expense, tax guidance and profitability profit, regarding in GAAP consumer expected demand Medicare XXXX expected statements cash our contributions efforts products, and EBITDA, consumer-facing new plan expiration Drug net acquisition, and the service our our enhancement outlook digital in flow [indiscernible] business, call performance XXXX profitability Individual our Company trend segment and mandate priorities per income, Individual our revenue, XXXX, of our the in growth members guidance including expectations significant compliant rate Medicare business, and with execution and sales for platform, making of Plan Family technology growth initiative, business, statements share, revenue, this relating from small in total approved Plan of partner regarding our our receivable events, of and and on of statements regarding non-GAAP quarterly expectations Prescription expected metrics revenue including commissions business, expectations future adjusted share. earnings, for to non-ACA channel, performance operations adjusted Medicare forward-looking longer-term regarding sequential total group shared our our for through and balance, against potential revenue of operating and penalty, cash our corporate for Plans, income eligible consumers, [indiscernible]

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

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

of cause those that and other and to from materially in Forward-looking could our actual We report differ uncertainties you section XX-K on and SEC to from our uncertainties annual statements our XX-Q projected Web-site. with and subject risks these forward-looking which risks Securities in quarterly and through Exchange statements. are Commission, Web-site filed the Investor results describe or the on Form may reports the access Form Relations

We Regulation will SEC G. under measures on certain that will considered be this be presenting call financial non-GAAP

at our in found this directly Flanders. comparable Us non-GAAP in can measure, I to our reconciliation SEC section Relations'. the included And About a the For over turn which measure of corporate financial under the the to the release be heading refer filings, press to point, each will our most information please call of 'Investor GAAP in Scott Web-site, financial and

Scott N. Flanders

significant overall XX% enrollment reduced We of is to quarter. Medicare the Growth year as our at Medicare above generated great growth continued target. throughout and well a improve we segment. segment variable approved eHealth early with welcome rate Thank growth and are and performance conversion you, growth the start approach the meaningfully strengthened Kate, profit customer everyone. revenue the marketing GoMedigap, our to double-digit per had whose integration in market. rate We This and with Supplement compared expanded acquisition market ago on and member year to a cost the to Medicare

our also will targets first singularly Our quarter Company we business recognition new growth on expect traction we established small This which in XX% us business remained individual the generating approved is though to allow we achieving results with for leadership quarter in gain in members performance of market Only objectives. group family ASC those more focused against that performed changes reporting the well the in and year-end year. I the are towards our by call the according challenged strong plan revenue as the the to year-over-year. on us standard. is earnings than go-to-market number executing first The and our view approach better individual later increasing recent and XXX momentum

$XX.X was revenue quarter First million.

EBITDA time represents $XX.X our balance estimated million. of submitted commissions statements operations sheet while expect the as of last receivable accounting XX% declined applications balance flow adjusted $X.XX. in loss will the we share member convention cost the marketing $X.X revenues constrained of all from Our to to XX note, our million, as commission grow. net a reflected been this value Of of of $XXX result this balance XXXX approved our per over time from with existing receivable bringing share shows million. first was that continue policies. as as net was and quarter amount This XX% non-GAAP million Company's March GAAP the to XX, $XX.X of collect compared has that Medicare and new is over of year. that commissions was per $X.XX a financial the negative per was Cash our increase first variable our In grew March loss balance cash business,

GoMedigap. positive that a to of XX% and we as combined attractive well year to acquisition improved on impact $X.X a compared ago medical resulted toward approved revenue business in to the demonstrate improved as started major first more of post basis. acquisition Revenue ago. year member in with of the First a implement profit more million growth a strategy grew These with profitability our new of quarter the compared $XXX,XXX quarter Medicare product insurance mix quarter of effectiveness ASC channel XXXX loss results Medicare cost our commission of segment adoption an products substantially XXX of first per our

grew expensive ago, and channels, reduced lead of aggregators. volume search the channel the direct submitted our to over compared coming applications from paid than more offsetting quarter During more year the we from a Medicare XXX% applications

to are investments of Specifically, now made management meaningful growth attractive TV our Medicare response recent the direct acquisition bring costs. campaigns at driving in-house application

our traction good their direct have mail campaigns experiencing use. also and expanded are We from

market is search share. lead new historically our a channel. on marketing addition, which and improved aggregator the to increase These search efforts paid our growth us team high have traffic end combination and engine I in am to delivered strong also our impact In optimization gain direct encouraged been channels, of having by enable costs. acquisition Medicare.com by that and characterized brand profitability equity

the results plan channel to from paid new acquisition beginning initiative as the digital customer for cost-effective marketing encouraging. levers year team investment search We leading that our program search more year to the this are a the at onboard of increase a new paid assets. Our that Early progresses. in is talent channel efficient, build core the

all, with team am across that efforts we taken direction new pleased partnership from Our reducing relationship for receive better the our I marketing to our Medicare that manage In our channel. has steps existing the lead expense and with business. production the aggregators, leads of

performance the GoMedigap last in Medicare in are by driven the GoMedigap the first an investments quarter of making XX% platform. market Our that year, in growth segment. part important to Supplement our applications acquisition we was Submitted increased compared in our Medicare the of also and driver

acquisition integration well and with tracking Our their scaling acquisition respect favorable the on costs. activities are focused demand to generation at efforts are

We partner in have like expected place budgets channel moderate also performance from the main I typically first our the described. the deploy takes Partners selling be is that year. contribution initiatives season around note their fourth tailwind the to from of to the Medicare a expect the to strategic our half I that see quarter. would to in continuing marketing

application contribution growth increases, channel result, an see in to As of expect partner second the acceleration quarter volumes the the product and Medicare in half our fourth we growth submitted with being Medicare a year rates. in as application the terms quarter of strongest

revenues reflecting period was an on by each first Despite to ago year our largely Submitted Our Approved in the shift same medical in XX% family expectations remain during which rates. and business of continuing plan applications enrollment timing XX% individual family members quarter. quarter, to plan and enrollment compared time a with products and individual declined prior XX% improvement period major a so first the conversion compared is period. headwinds, in extended basis the reflect commission segment business over declined turmoil open open declined expected of the profitable to market in Individual the and these the into line the only in a family the the years. quarter XXXX. for and performed when

trend. the appropriately those individual our number that approach believe engagement We provide Care to disruption direction consumer XXXX market. first what platform created been we the includes priced advantages population continues plans. on these market and This deductible that for to plans. brought our in goes the and believe products making market. in effected penalty most the doctor such plan opportunity portfolio short-term that including product to the to continue will to products diverse The high-priced demand high have family current identifying to adjustments visit the of individual grow offering and more meet needs health enrollment and the to as the as particularly protection seeking the is of eHealth group have and and our We management opportunities, Act growing marketing and of cost sizable the the quarter opportunities coverage, digital in our are individual hospital including buying Act pursue to not large capitalize compliant products individual of in away and alternatives business customers, significant fully insurance with and into satisfied demand has increasingly we for to Affordable deductible ease we these this market with for we in lever Care Affordable of to environment, changes and mandate insurance, performance The the has non-ACA the intend better expense health a

further simpler is make buying much confusing enhancing our are We a process platform a in still what market. insurance consumer-facing to

to position We also that range our good for we we subsidy-eligible customers needs the meet plans and we be of broad plan plan enter to health enrollment a believe qualified medical as consumer and period. continue offering in will through major open platform a

Our remain financial goals and in year maximizing the flow. focused individual on this for market cash profitability

we approved XX% over same Turning seeing compared with to in are growth growing to The commission growth. the of XX% application number members robust demand quarter business revenue grew and of market, first approved XXXX the the period. small

partners, strategic the conversion team management marketing on channels additional with changes dedicated customer group extending group to enrollment for Following increasing goal our for capabilities efficiency carriers, now key our online The leadership include time. including enhancement priorities boost small an to have we emphasis with January, new care in of the technology a retention. first and and adding team and implemented the enrollment expansion of

execution our In business, plan with direct scale half in partner to products. acquisition first strategic application and in Medicare, our non-ACA at already we second to attractive we expect with with year progress. than growth from networks, year we to growing pleased compliant contribution expected. affiliate groups, year are pharmacies, channel. accelerate carriers, insurance of we several costs individual existing continues This the relationships continue intend to quarter our and drive channel the focus hospital In on signed application and financial in results growth partnerships increased have enrollments earlier to and We our the the

major our are better exacerbated move expect change first year-over-year period submitted with declines in to by past see also we quarter timing. when application product as the We open medical enrollment year-over-year performance the

convention. the accounting currently have financial business previous a our compound the with guidance, growth to long-term revised we We at plan revenues XXXX our of rate Medicare in annual new growth business. and between our slower Company revenue through to reflect the at total XXXX, expect grow we over in Consistent individual same high plan XXXX expect grow impact CAGR XX% our over to a reflecting while and period, teens family of

the change higher a a previously expected, due generate XXXX, revenue recognition. by to EBITDA in margin expect level We XX% to than

quarter to We results now With the the over also for operations our first in Dave expect cash to will be turn I review Francis, detail. call who flow XXXX. positive from that, greater full-year financial

Dave Francis

Good afternoon reporting revenue based our ASC that accounting are the This is Scot. time Thanks we XXX the standard. results first everyone. recognition financial on

growth Our progress its comparisons. that results will into of both targets. financial make view our metrics release When part the presented new as Company business facilitate of easier out by our include, to historical investors revenue. like rates and making adjusted categories, a trends, number financial the I the on to reflect the in and accounting commission my we note statements These earnings is for providing of remarks this earnings product with year-over-year increase release period I this approved against evaluate quarter to quarter, be I constrained using the address the end approved goal to it historical operating includes that the results to starting also today membership financial new to the basis would prior-year with metrics estimated broken during as and treatment. granular to other more lifetime value new members key and refer member quarter an are of sales transparency growth

with We business care plan equivalent approved and per this metrics provides customer driver. performance the we submitted following key information of a we as believe XXX, aligns diminished variable also a and and of while of taken ASC using team of historically Company. cost of are becomes which the providing the costs to level under number of our together enrollment a our product, manage that the Medicare individual Also, and management family equivalent have sense We revenue and respectively. clearer member that are of relevance by approved now members provided adoption the metric key the applications has number this marketing

number for for metric provide the that We of submitted and product continuity will applications XXXX. by phase in starting continue to purposes another year out

revenue compared X% First an quarter million XXXX. to quarter of increase of was $XX.X $XX.X the first million, for

previously. Approved in Prescription XX%, members first first grew XX% channel compared grew members Supplement XX%, members reduced XXXX. was to members. resulted approved Advantage approved books our and important we quarter a longer in of to a mix non-commission plan have accelerated generate. commission time, Medicare that the of increase search At our increase reflected million, existing Medicare our which Medicare declined accounting approved acquisition revenue shift family quarter Medicare by commission growth higher-value to on that described receive Supplement January primarily by First family $XX.X million the closed the first Supplement The income given Medicare statement. XX% during the $XX.X first the the individual of business driven the a Medicare and growth revenues. It In the Advantage standard, Medicare no in approved payments Medicare the revenue compared this ago. new while in Scott is our quarter XX% enrollments commission to members in quarter the individual compared Medicare approved members are on the members paid and from year our quarter Under X% quarter same of of we on year, in Drug renewal note was newly and the is in the segment, Plans quarter XXXX, driven year toward spending the in of the decline enrollments PDP in revenues and GoMedigap, first Medicare and of grew plan approved that by and of plan quarter

end continues marketing reverse progress channel. a second the paid model, The more from of search the reduction customer in Medicare at expecting our of number revenue-generating search we and partner digital new in to of spend year, end XXX,XXX more the productive As quarter to intend and make activities strategic efficient the at of first up marketing rebuilding was to volumes in first team PDP the XX%. an In acquisition of increase the the this through of half XXXX, we the are in both XXX,XXX paid the members estimated quarter, channel channel.

from Medicare profit million. quarter $X.X was segment our First

partially and our small despite of first XXXX decline the revenue. ago, profit segment $XX.X million by a business profitable XX% individual revenue quarter standalone million, XXXX small First in decline which XX% business family quarter revenue XX% to family commission generating $X.X from basis offset and was in IFP in a individual members, year by The generated the on approved for a our of segment was compared small group. segment plan and business a growth by reductions driven remained

estimated end estimated XX% approximately estimated XXX,XXX, down at a of year was reported quarter first Our IFP membership membership first products members of the small of to business of The at the a was first end number increase ago. quarter, the approximately compared XX,XXX quarter to end we the the ago. year quarter on XX% the the a at the compared

intangibles, to provision income million compensation, EBITDA net adjusted amortization acquired taxes, operating or restructuring GAAP million First roughly operating for to and cost Adjusted the intangibles, of quarter grew quarter million compared charges, XXXX. stock-based $XX.X acquisition our other or of was excludes income. first charges, ago. quarter EBITDA for the the negative adding $X the acquisition of quarter restructuring for year by compensation, and a million, expense, non-GAAP first and XXXX including which amortization compared depreciation first costs, amortization $X.X costs, calculate to X% negative of stock-based $X.X income We of

loss $X.XX income first $X.XX GAAP to compared diluted share net first of First of per for quarter quarter net $X.XX for to of of share diluted $X.XX share per diluted income share the net net XXXX. XXXX. diluted was Non-GAAP XXXX quarter the per loss was compared per

Our expenditures first XXXX million. approximately first XXXX cash the quarter quarter for $XX.X of were operations million. was flow from Capital $X.X

also cash of Our statement acquisition a GoMedigap. first reflects our cash in quarter payment with $XX flow connection million of

end cash million. Our quarter was balance $XX.X

would $XX.X sheet our next earlier, comprised And also balance and ASC balance I like As million it we $XXX.X that our commissions expect to reflects over Scott commissions booked XXX address mentioned collect that to we significant the a of months million and is pursuant XX receivable. receivable guidance. financial $XXX.X to of long-term XXXX now in million

Our adjusted EBITDA, are and our auditors income year and and We revenue At for consultants on recently. ASC and under net operational our to revenue, against provided segment year. we and GAAP of the remain fourth reaffirming highly profitability relating tax the reporting for for we remains guidance XXXX our our guidance the initially earnings obligations unchanged time, growth on call. received have the outlook quarter the focused from XXXX profitability, executing the purposes GAAP that XXX targets we same changed for full-year tax

While does expectations taxes affect expect effective full minimum this had this approximately to has to tax anticipated tax obligation we our nature previously. not an changed, tax net XXXX of year, with report XX.X% for change opposed the that being effect for our the reporting cash as rate of we

XXXX non-GAAP operating as share. adjusting guidance financial net for result, it share. we Non-GAAP in a $X.XX per share rest emphasize, to expectations net guidance expected As unchanged. $X.XX to income of be compares for of our remains range to are per prior is income our This XXXX. our to XXXX $X.XX only To for $X.XX reported per the to of the relates

of $XX revenues $XXX.X Medicare individual, of of in for expect to in small in and segment to consolidated $XXX.X with million range million to $XX revenues revenue $XXX.X range to million million, continue be range million We million. segment family the $XXX.X and business the to XXXX the

$X.X continue of to income GAAP in to XXXX for We be million $X.X expect to net million. the range

We the $XX.X expect be million continue to to in XXXX $XX.X EBITDA adjusted million. of to range

the EBITDA of $X.XX to per to expect range be share in continue also $X.XX. We to adjusted XXXX

range business the We in continue Medicare to million. family million of $X be of to to segment profit the in small and XXXX be profit $X million to million, and expect individual $XX.X segment to range and $XX.X

to shared expense, and continue We stock-based for and to expenses, excluding expect $XX.X amortization million the services year. compensation be corporate depreciation approximately

trends, to volume. in to our important respect note third it and is with sequential terms are second quarterly weakest enrollment of quarters Finally, seasonally new that

decline quarter. result, the as and of at expect margin second quarter a the the As we our in first revenue compared the to to year earnings

time. quarter expect increase We third similar to the second quarter for further which to questions. you in are undertake open for current want to expected on and revenues obligation the our will call that no any quarter. fourth the before remind to at now, We update Operator? our these be based to are subject indications significant guidance. comments And I change earnings business a we

Operator

come the will from of question Craig-Hallum. first with Our Instructions] line George [Operator Sutton

Your line open. is now

George Sutton

guys. quarter, Nice

wanted I commission through the walk receivables. So, to

of even if equivalent. at look receivables So, I combination to basically relative your enterprise your short and the your long-term value, it's

associated So, you will for other against costs will receiving represents that there be constrained effectively that assumption. real Are be that? under ultimately cash receivables that any you

Dave Francis

the essentially the No, we absorbed balances in particular to revenue each attached generate any have receivable as quarter. costs the been of

either. So, as there that attached reason to component cash additional them those because comes that. the no And there no cost is are the service there's meaningful to receivables is attached in,

long-term. all to in these are So, carriers, collection the contracts short-term and according have with both the the cash that our we expectations

George Sutton

you performed at partnerships partnerships? actually results, in some how And your to you QX. signed you sense those Interesting. looks Great. date, I And were of year believe look expectations ahead XXXX there? that that partnerships, that you us larger you the in It were you QX signed then some a also, new the see these already just those as somewhat partnerships the have of from give significant then new like can opportunity behind of to were we relative Medicare

shifted. that how curious Just

Dave Francis

perspective. year this going to under-achieve We about me. but specific there, we that really relative partner I'll tell this our where conversations to with I last contracted pleased the partner very, do are for year and expectations way, with partner very need well. more, that answer coming talked it if sit a right did We're from now

those where are We with encouraged by sit we folks.

than our us business of activity more a the volume for year significant that we the ahead and last mentioned, But expectations our of rather relying had doing partner of quarter. just in back are be able of to lion's way, has be you the were what things portfolio-driven of single Did have sales Scott part sign a approach up the quarter, fourth in performance either partner for expectations Our set contracts by a to on expectation the where up to encouraged in share business. couple relative in relative year, moment, first for this stand It's partners year year the as of at partners against to as also to particularly we're asking? set half fourth answer the be the our well. what we this going to

George Sutton

the normal level Again, I in a us relative these just of of of who you middle, Are view? looked just signed you significance at your type down give can year-to-date, if kind partnerships?

Dave Francis

So, the we had continue in year. this partnerships place year last into that

this the think year. reality existing is agent scope comments, either partner on where is. activity season those partnerships these that just quarter those but half typically in partnerships activity and work Medicare. in half that do second then how into largest Scott have We of for that, we volume we is the expanded you year, up mentioned programs part outside late talked with ramps are his that those folks for prepared activity this these and the on getting other about AEP selling of the the working As and the AEP as determining we as are of are year period, of first signed go That's for the I the do fourth to of of going implementing or the new, last those the

our talking the are we about, say expectation now are partnerships at QX right QX it's to into mean it's be of reporting the early moment. other a to and some those nature to say the activity more fourth the those we get relative a as if can't way too but that we information So, to by encouraged we'll who, give more lot to the certainly of quarter just period, more the lot relative what than going very

George Sutton

grew Okay. in last business your what that 'other' XXX%. I'm on your the other, A I simple question is was ancillary if could, that? there of curious an line side

Dave Francis

primarily would product benefit turnaround what that disappointing to, finding strategies are as and on Scott said, the the for dental we products construct price we characterize area. the The we right that as now at are and the right as selling IFP that are right results continue continuing right of other in to business customers engagement mix working find but in are being work of the business, individual the mix in and right we product of products That's to we to that sold with. change engaging

George Sutton

Okay. you. Thank

Operator

with come will from question the Dave Jefferies. of next Our line Styblo

Your line is open. now

Dave Styblo

felt we get been just conversion that rate, improvement steps acquisition XX further for good lead it months process are improving in into better point? all a get we've of doing you're a just of far to have to I and referral kind terms generation to at change, basis like go inning, sense you how a this the Want about the of but from on to do a and the hearing third that of sixth inning, we are much in move of cost things there? efforts and sense in-house how these side

Scott N. Flanders

year-over-year was of cost highlight the of improvement QX I acquisition a say XX% in Medicare. would

feel and good mail. been direct response expensive reliant that lead aggregators TV So, we've source Where direct We've able been search. less third-party on most efficiency. lead and we to very paid is in the upon about be reliant had improvement which is the less we've

those say that, should that, our fruit quarter we easy where the to efforts. opportunity improve to market Dave. share I'd huge would see continue digital said second we I as but the through also So, marketing us for But trends pick having efficiency from both capture continue improve

just, they human from from And talent. that marketing noted just improved are to in so, we just the capital January, their team, the experience digital us joined contributions I literally, beginning which

we marketing. also So substantially can member per strong how by bullish Dave? profitability we but really are digital outgrow on the improve market the

Dave Francis

is The part. build in know, the very important new capabilities right. to on very time that talent, reemphasize quite absolutely it's and rebuild, bench investment badly we as two it's, that causing of to some the We That's back dial areas last particularly and in for digital Dave, there had would as time, to the talented year, that company the it you there. taken Chief you I strength Officer doing Marketing some there all and us onboard brought pile a a things been marketing on marketing him spending side, a June digital piece for as this is

reenergize we better, muscles be we will and there. investing As more that aggressively do those

year to we fourth pronounced and And grow while comes acquisition in going in, partnerships implementing each a that other keep The quarters we had that it's then partner to executing quarter to more the results on the Medicare to first go looking and when those strategy essentially channel. early I a those lot partner them, volume are areas, more turned incremental there partner to to that impact all some in-sourcing and where generate is have year comes the fourth volume. and quarter the and broken is but of the and more took And good opportunities three head, first business would is to of work periods, really in candidly the acquisition us it in market in the reducing of and you're of continue That place of results for and getting in channel the the in at mind still basis of the believe our aggressively much coming here. through volume those year cost new this generally customer relationships seeing very kick the its quarter into on this out last more where more in we those scale. of two say paid in then be acquisition that lower-cost against implement

want say could and this in doubleheader we you day inning, into go night I'd fifth right an fourth but one the too. now, if a are So, or

are we about So, we where sit. excited

Dave Styblo

Right, okay.

the the clients strategy demands does how what [indiscernible] us goes go a what for quarter as seasonal about of into of kind or and to market to up are and your when ready like of about paid more internal are within leaning having quarter growth low-hanging since needs look on guys now Plus or talk into go guess workflow that here, and that your see [indiscernible] different perhaps through you now with what AGIA, do to sounds to guys you folks. channels. you with so search Union want I you hitting those build application there from that the you and numbers, what fourth agencies are? you the get how fourth to walk just important Sort to actually to to still and questions multiple those like, is the partners guys right So and you more from growth the prepare that's fruit so it doing

Scott N. Flanders

Great.

on the strength operational year's developed we have that of last competencies. our a retrospective a outpaced AEP, in business Just bit development

And that to the signed. so, process we all well-positioned partnerships we not were

third-party volumes and year recruited What lead we are driven and aggregators. recently doing now unique. in in our has of by support actually good a was which last so, at better high-volume calls, to way prioritization lead position were inbound reorganized Sales each Operations and is SVP of of TV partnerships, direct these structured conversion of are segmentation we large response and where And much

as and those building and the tools, on may directly perspective. in the the processes ops. but answer reliant created more of ourselves made of channels, we Dave my that us in our were So, sales we systems, high-cost ahead terms less complexity that's

Dave Francis

I some levels, agent traffic going think those that's both their of correct for with now. what existing they it, able are partnerships of better belt partnerships that and are with we volume we year an more each drive intention to right to a performance your kind Scott right all different, they some for more how Again, transact with to at working folks that working of engagement point, how different us, understanding and are and get of, expect and and mentioned hard of out to engage is under these we on and being with more interface understanding is our that work effectively Dave, engage to campaigns that now. customers, those point has able we lever also to

but of when each are a volume We work make points get to taking volume that but also are working be lot of needs they quarter, we we use partners to able advantage bring that of them. we with engagement as are to fourth there to and and to with testing sure the what both achieve the unique into that take optimize advantage that touch to trying those of

Dave Styblo

compliant? your to where [for down in compliant what the losses us And biggest much here. every a stabilize been help business, lot XX ACA non-ACA curious one, pleased in guess and quarter it's know helpful. complexities time That's just you quarters numbers guess past are it's of just that still aren't I and [ph] how I it and of is the the has a one. kind that's that the guys you and strategy last sequentially do with just market and with seems I reflected challenges maybe the the else down in step XXX,XXX a versus IFP XX I'm forward, the ACA business lives first to profitable Obviously XX% just that growth can that's helping stem business was and out like business the just Okay, of we another then and like of] work, understand tough challenge there a market.

Scott N. Flanders

enrollments in signed XX,XXX in terms subsidy-eligible plan, We period XXXX. enrollment the only in open up of ACA

and and our now can a Web-site much flow our double what much direct though proxy is broader And to my short-term the market and our was compliant, Dave, so, constraint singularly at we go focused we are non-ACA that underperformed rate, had I eliminated audience. insurance. even that for prepared converts redirect The a the in It you and affordable opportunity we remarks, in the expectation, is reality that's to signalling us far it's more bigger more enabled. enrollment directing to see that higher are we

of do we've too assurance that these early And we to stabilize can moves we are the believe that. through give we you so, Dave? made. membership But

Dave Francis

Yes, of and day that benefits we where more can customers point of products doesn't with for very of want take engine have compliant that the doing right more in is, because right an to the as meeting we maximum. portion the more thing, side is We set can, economic where to price essentially and business market a or they point position finding have the just the out plan and the we the short-term at Dave, believe meet. regulatory cultural and on of and help compliant the of add the are needs where people our engaging ability out, XXX match a lack that other market are remains would a focused things, subsidy way of I that themselves the realizing of do we of that we'll the getting company attractive the of are the that it, creating and bifurcation compliant price all marketplace side but non-ACA focused opportunities of have well-positioned patients includes and that of fact an with wide ACA to the combined and to expected we extension that too that ACA been large cleared the hurdle ACA on them, environment business more to and sell the

Dave Styblo

many shorter-term is are members go And assumption is are seeing, that if there? of your them going you to those really [indiscernible], what those plans,

Dave Francis

the among consumers is there Yes, still a lot marketplace. in confusion of

helping as what's them. for best educated to are get we them to So

buying them short-term. packages of been which from include us, have Some

Some than with hit significantly their in products more now we where going volume think positioned in middle but where exist this said, Scott be to of of be all products, fourth been of it's right starts and opportunity see the lifetimes own where the last those them the of today the again capture advantage putting when market we better of of taking as of together have and portfolio each part years. to the we year is volume in two much the have to extended prepared quarter short-term

Dave Styblo

Sure. guys. Thanks

Operator

come Cantor Our Steve next question Fitzgerald. from the Halper with of line will

now is Your open. line

Steven Halper

loss should benefit tax that assuming third quarter, the the in as that's assume are a a about housekeeping of XX.X%, we the position? item, rate know Dave, Just second and I'm I to non-cash assuming What going you talked year. in for a you be full

Dave Francis

is the going to reporting line a GAAP rate. XX.X% with perspective, hit that From income net be Steve, effective

Steven Halper

position? you loss a be Even will though in

Dave Francis

Correct.

Steven Halper

Okay.

it it won't benefit, an expense. will So, be be a

Dave Francis

will as benefit, No, it a will a benefit. be report it

Steven Halper

Okay, got it.

Okay, that's fine. Thank you.

Operator

line the will Sommer SunTrust. Our next question Tobey come from with of

Your line is now open.

Tobey Sommer

it talk the the for seen long-term you've Is the seems growth you any could seeing Could improvements is profitability, us you speak the are to to the variable cost? of where Medicare Company? the business driver getting path prospect and quantify and there marketing those you in how about for to way the that the principal be

Dave Francis

do and want we'll how you see go Tobey. to, Sure. I then can I'll wherever

being came essentially outsourced of three fourth fixed because have customers marketing down, we we essentially see execute our season fact is, out and non-selling resulted rates impact that variable customer sales When first getting a year. non-AEP, therefore as blended direct decline quarter fourth opportunity the control very the in-house in over in in for when leverage mix because marketing we that and overall had that quarter, enroll cost appropriately, in this any business inside taking our marketing described volume from term of the the the for the marketing becomes coming basis done in simply it center into bring the both channels, can new on apparent. you expense improving kind if able lower-cost we were to look we the whom every relative the to our were back all at positive is the that So, we bounty fact and paying our Scott has variable not to channel, of third of engine, parties a of on that in part fourth profitability sales business, earlier, quarter all of enrollment opportunities we you have the of the of where partner re-taken to infrastructure significantly the the business a of for impact, the the the of conversion

to So, costs efforts said marketing I of reduce the three in you, we opportunities we year our would an as to at retail on the as earlier, continue refine continue the more first direct the tell relative and incremental to margin quarters us. the and comes real volume meaningful to a But in come of has for basis when the comes volume significantly mix business the channels. with quarter attractive there still upside fourth profits is the

Tobey Sommer

environment? hinges Okay. to kind With the forecast assumed of changes to that respect action on as to strategy current in how opposed in future ACA of and government selling the IFP new processes are business, your operating much internally the or controlled

Scott N. Flanders

indicated to revenues we growth range. perspective a we updated IFP the all conservative XX% rate the at that will business, taking little that our that segment. reason plan continue on that is XXXX very a are guidance provided we very XX% in in at for on So the be grow And long-range where overall would Medicare our but

we assessibility fix So of discounting are any legislative to expand insurance. ACA

be will there personally fix. that a Now, believe I legislative

purposes [indiscernible] So I period in love we as exit making, we a reasons we taking But do that's are of our are the come plan one and it the of will for back. the the outlook. sale believe completely guidance to commitments cautious of

Tobey Sommer

headed you and of kind you into into from this conversations of well year any enrollment you're both pricing, as the Okay. end having headed How selling would the this characterize year? as as season

Dave Francis

say you mean do commission pricing, rates? you When

Tobey Sommer

I do.

Dave Francis

beneficial the the a and Advantage Medicare And see Med fees as for no well. and business, Medicare the margin out we in published is the relative to you the at to change, what know, regulated enabled have CMS Supp that administrative market, you space to be attractive rates that degree. to The us other in CMPM relative to LTVs as continued commissions. meaningful large were coming some rules were carriers of So, there pay

We negative. are not seeing any meaningful change to or those positive trends,

business, on any right trend we encouraged a working are by In get stand are with the now, in to we carriers and of commission business, the work space commissions non-ACA whom IFP on very to side where possible. strong paid us business things the it's with We subsidy-eligible ACA get things. difficult as Medicare as the

into the We products products short-term value up, a particularly expect short-term that year. half you come those as on lifetime trends will the go get higher-priced of the again as in products to continue on of based they the longer-term the market back

trends generally at there. now. We to to But improvements improving are margin. the not see Things speaking, for are stable a commission expect concern us right

Tobey Sommer

Thanks. is with this One cash associated the year's last question me, or for what flow burn CAGR?

Dave Francis

mentioned in said I you we range. the perspective. were So, million we think to the negative million CapEx XX from X.X QX under that flow X.X have cash exact, to operating one negative the we a have Do that expect we just call

Scott N. Flanders

little a the from anticipated cash quarter a And than was we better standpoint. first

Tobey Sommer

Thank Okay. you.

Operator

you in the no I am and Thank questions further queue. showing

at over this Mr. closing now for back time I'd Flanders, Scott to Chief some comments the like or remarks. Officer, hand So, Executive to conference

Scott N. Flanders

available for we are and you. follow-up calls to for K. through Thank participating schedule you Thank everyone

Operator

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

eHealth (EHTH) 26 Apr 182018 Q1 Earnings call transcript