EHTH - Earnings call transcript Q1 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Q1 2019 eHealth, Inc. earnings call. [Operator Instructions].

As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Kate Sidorovich, Vice President of Investor Relations. begin. may you Ma'am,

Kate Sidorovich

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

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

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

business regarding structure our our our the environment headcount, share to We our political ability plans enrollment family capabilities, call our online will in statements future and our seasonality the growth of total our regarding segments, and assumptions of on expectations expectations views expansion regarding be agent relating making business; small forward-looking XXXX the our full-year changes to grow Medicare business including our Medicare conversion that events, enrollment on our investment of statements telesales our in capacity, guidance. the and and market, this Medicare individual including in profitability and expectations, the Medicare regarding regarding and family our and includes regarding our current strategy expectations all revised profitability, Medicare market; seasonal and guidance including Medicare opportunity acquisition the patterns, and statements rates, expectations costs; to ability business, including individual to growth, and our our Medicare beliefs, enrollment, our deliver enrollment

e-health represents this on statements views as call of Forward-looking today.

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

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

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

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

Scott Flanders

proposition Medicare Kate, value everyone. our both market quarter leading expectations of our welcome engagement of which and unique you. consumers performed drive in consumers and our ahead execution healthcare business, platform and ability to delivered strong demonstrating at Thank scale. another We our our those well for enrollment to

of quarter for customers first applications During traditionally activity, growth slow XX,XXX what Medicare seasonally new enrollment been submitted we XX% to XXXX. compared quarter health for representing has insurance a approximately the

the positive cash adjusted XXX% million. quarter of quarter grew the $XX.X a same million first operations profit segment revenue our period quarter XX% Our $XX.X time and and from commission grew year flow for first Total first grew $X.X over Medicare year-over-year, Medicare revenue was our was ago. XX% a our positive million, in the EBITDA

excess in large to the to we and grow Further was Medicare in which $X.X at GoMedigap component million see aggressively mark $XXX million. the to the net includes successful opportunity expense demonstrating to equity to market, earn-out business of continue our the the market's acquisition completed positions loss, rates our positioning Our a offering strength in execution, the January market that raising GAAP and growth. Medicare over is pursue us of stock we related of

and As deploy debt. result cash We balance quarter, in plan flow Medicare related stood cash as our no in capacity, our of capability. of of $XXX this our the plans, offering our primarily at to telesales organic strong finance this with over including platform enhancement capital and growth to equity technology million expansion a marketing investments March online initiatives, XX sales and of

outperformance increasing who We delivered our opportunities and annual In are later have EBITDA revenue unique eHealth growth growth our grateful to supported first XXXX the current on recognize business, Based the provide plans all actively we our for product investment and ranges the for categories. the are across our we quarter exceptional the Medicare will ahead and call. on updated our adjusted strategy. guidance. year, major investors Derek

Advantage quarter Prescription Medicare XX%, year Medicare and grew to quarter applications Supplement grew applications XXX% applications compared the First ago. DrugPlan XX%, a first

of revenue reintroduction driven annual growth from to First enrollees period as attributable strong to was Medicare which period. Advantage open of strong partially plan non-commission Advantage year-over-year an Medicare quarter Medicare outside the in first by enrollments XX% revenue enrollment This revenue. switch grew the enrollment to in one well the increase Medicare and the quarter, enrollment allowed as another

success period for Our advantage benefited of from enrollments an informed went our highlight, to purchasing unmatched demand. Medicare first confident in decision. customers beyond in an eHealth business customer want comparison related quarter driving enrollment new platform shopping this engagement the and to as OEP strong that the open well creates however, I experience make taking

in performance our engagements demonstrates that with Our both scale resonating [ph] are and fourth improvements marketing online customers. at greater customer telesales and efforts quarter Medicare

headcount XX, our large us focused enrollment the serving open period. Supplement of enrollees, for period, our and customer growing customer services. advantage channels demand beneficiaries customer across vast that advantage take decision and during agents first Asian acquisition Medicare the a on significant enabled included enrollment service Medicare As could be open enroll first our engagement the and Having demand in other the multiple marketing an also internal increased a in for turning result, we during the to majority regardless of quarter enrollment more a the retain this the of year seniors aggressive outreach our individuals made in center plans call place to of This quarter. of Medicare but taking platform number to

continue at customer attractive this acquisition to increasing We and demand costs. capture convert

customer from of acquisition as channels a given to application across the a channel, direct, including in major advertising to XXXX. these leads Our marketing channel; relatively strong paid steady. highlight much while a strategy of our solutions I such last the quarter important Based have advertising, online is marketing small key performance albeit partner channels to compared our keeping cost on base. for channels; and growth customer of grew acquisitions online scaling online larger to applications advertising the convert of higher off quarters delivered and propensity significant which tests, demand XXX% excess percentage specifically all our the Generating first want each an that see continue our X and component we customer to ongoing online. acquisition plan invest of in in search

three worth our experience and providing points on that marketing efficiently improving is In enrollment ensure addition our focused to online capacity while our we scaling further noting. support converted it are experience. generation key and demand our telesales optimal consumer There expanding to outreach, are

reduce increased driving total enhance enrollments In our over the Medicare the XX% while time an were online percentage we Medicare reliance our X% platform. Supplement call Advantage on and higher the Medicare major year and Medicare XXX% online quarter, of compared medical online First, are of scalability to with increasingly center enrollments of our applications first year-over-year. plan submitted last

into We unique margin invest source e-Health revenue our for Simply this making customers digital and put, market to driving key leading business. platform. continue leverage our our platform to a digital differentiator experience for of in and is is a both improvements and customer

taking changing Medicare of Secondly, of seasonality advantage are business. the we the

to critical seen A marketing licensed we agents the fourth Given platform we retain improves the the allows period our enrollment increased higher of agent customer generate, service seasoned current agent that us our season. customers increase not quarter, The the expectations throughout that selling business. in quarter increased investments will better first reoccur benefits in a agent more year. only in-house the both force number our to headcount open but demand proficiency tenure and and plan telesales have during that

a to significant market in to very attractive capability. The continues believe company returns as ability accommodate for represent plan the growth value is to seasonally unique for investors. that our to to effectively telesales our the we We deploy to quarter augment end demand. effective last continue Finally, and will fourth the outsourced consumers opportunity cost and in another model call significant to high create enrollment and platform value both capacity, we during the period of tool this invest demonstrated its center further generate for model this Medicare of annual

our each individual aggressively share serving will leadership and extend We market our on market work of grow important this maintaining while continue needs. to to specific a and focus their meeting customer

grew Our staying a to as regulatory individual favorable quarter. our year in performed plan changes the a major with estimated on of and time, commission revenue result of our than our plan a same members revenue family our policy. prioritizing compared applications line and first ago largely individual absence plans expectations business. XX% Submitted family XX% our Medicare investments our At during products the in in recognition as medical of under declined business the result for and longer

plan family increase related lifetime values significant better members policy We than are in also duration. to a individual and seeing expected of estimated

Similar to small our to revenue time applications business that first over small period. XXXX our submitted Turning enrollments business compared strategy grew the the with and to XX% the online. and quarter increase the growing of occur number number Medicare XX% of of market. applications business, commission same our to The group is

industry profitable plan the small declining and into are market. leading we the family segment individual glove. and the making and in quarter, states enrollments and the application during investments leading our brought group family small online business that carriers remained additional -- individual The quarter we During despite

this managing XXXX market We to for as to great momentum our business the year businesses setting growth. engagement continue entered in strong and first for the expectations our unique the execution optionality while of for to are the platform exceeded that We and quarter digital capabilities another with and profitability opportunities innovate and enrollment stage look grow each evolves. in and

our fixed potential growth to now we costs We expect acquisition scale operating Medicare XX% generate approximately costs. in midpoint revised At and leverage of XX%. achieving growth significant to EBITDA against customer maintaining guidance, market revenue annual while of the over attractive to the of our and see continue

register. our We many Please the of reach will to scheduled talk you questions like out I York. at in performance long-term forward driving seeing for look New dynamics depth any the Day to business meeting. in or have you would Investor Kate May to this and X of more about at both near-term if

to important over companies call untenable. radical the concepts market Derek, I turn as context experienced many is by I the volatility recent that viability financial believe We acknowledge around Medicare stock are different political political the the of Before the the price quote for believe of of it All. to healthcare to structure branded discourse changes Medicare the and in

our am of our will their ranges provides I the to in best in quarter consumers it's among detail results full clear, the We continue remain to market enroll to the call belief review solutions and such to need that, circumstances. for company engagement healthcare and operate education need will With I eHealth the enrollment now year. business the and eHealth provide results great over by insurance as that and lead environment. health the greater services and a mission of uniquely by will that financial our are in and political technology the valuable, regardless Derek, of who turn unique with help the consumers met high proud under proven guidance a for consumers first a product revised platform millions our economic

Derek Yung

afternoon, everyone. good and Scott, Thanks,

quarter approved XXX% by enrollment of a Medicare year quarter a results to generated Medicare agent Medicare high to the XXXX growth In execution reflect ago. by enrolling degree open investments million year-over-year our of our in more driven an increase sales revenue growth revenue. positive financial efforts, lesser of in non-commission and per approved marketing by first segment XX% increase Medicare fixed $XX.X continued our of The on period Medicare cost Medicare XX% strong million, compared leverage ago. year Advantage and quarter first strong the from primarily to compared members online profit and in of improvements was a compared our members grew driven $XX.X the and impact telesales our business, business. online First costs lower in a This to and a member activity,

first up revenue the of increase the XXXX approximately quarter, end Our at from $XXX,XXX estimated of Medicare end of was the of first generating the XX%. number of approximately members an at $XXX,XXX or quarter

our business year First to generated ago. small family million, growth quarter small sale compared by in This and and a increase non-commission business the $XX.X to driven individual commission revenue of revenues revenues and was XX% individual in increase from XXXX segment a related by was leads. primarily products growth

higher first or through revenue that some accounting cumulative enrolled As revenue at the we members Scott booked retention revenue seeing the initial when and in cohorts family recognize from are to we standard, of expected than plan XXX Pursuant members. time cash we eHealth. quarter mentioned, [indiscernible] the these revenue older the cohorts these our residual in any of when recognition individual the collected exceeds

segment profitable the quarter might segment individual family some the members and new individual on quarter profit number quarters of The by million in a grow generating first basis $X.X as and our declining. revenue driven XXXX. from small the result, a compared enrollments even of business family residual commission revenue plan remained to in As for is existing $X standalone million first of

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

members the products. million, XX% to of compared an the all for for at of total of quarter products approximately Our XXX,XXX increase $XX.X including XXX,XXX, total XXXX.Our the estimated membership first quarter the on was was end first combined quarter estimated ancillary revenue approximately

larger like -- compared the take marketing Marketing like our in cost customer grew capacity year-over-year profitability. In marketing would significantly member first which our related Medicare Medicare activities I especially includes telesales investments digital we Now costs made per quarter, operating in was profitability Including a approved slightly costs quarter to flex to as preserving enrollments XX% us This review approximately metrics. and and to the compared headcount first in of headcount our higher aggressively more first peak invest to care related capacity, ago. X% allowed marketing, XXXX. spend, demonstrating increase variable to quarter agent year approved that, approved while call growth enrollment Underneath in ability by The we marketing variable Medicare and to year-over-year declined member member center X% increased significant overall per per XX%. transacted remember, initiatives. more generate online. expenses

that approved For total remain expect full-year continue Medicare to compared for per we XXXX, flat variable acquisition member to XXXX. will costs relatively

fixed growth at lower G&A both reflecting to percentage significantly leverage content side, expenses business our model. operating grew and revenue cost compared tech rates, the On in single-digit our year-over-year and

$X.X fair million quarter were was costs, of the quarter by XXXX. negative GAAP revenue GAAP of change $X.X compensation, to non-GAAP charge, excludes EBITDA stock-based of earnout compensation, quarter for million million quarter compared first acquired quarter intangibles, quarter income, change amortization XXXX revenue GAAP costs, costs; XXXX. depreciation taxes and loss First a amortization, XXXX.We operating the $X.X for intangibles; the our of was net XXX% adding $X.X of calculate for fair million and compared of which acquisition first stock-based adjusted benefit restructuring first amortization the value value loss XXXX in restructuring income. a first EBITDA for of acquisition XX% for to of net and liability, earnout to compared of charges, income the Adjusted other net liability, first for to in of

of The by fair loss of to related a share with an includes connection assuming appreciation. quarter million in driven $XX.X of earnout liability was value non-cash acquisition increase eHealth's increase GAAP net GoMedigap. the charge First price eHealth's

a share XXXX.Our quarter of First was per quarter compared $XX.X from of compared quarter cash net flow net quarter diluted to Non-GAAP for million share a first per was XXXX. $XX.X first the per the net diluted million for was loss of to $X.XX first loss of income share to quarter share operations $X.XX GAAP compared $X.XX the for loss net XXXX. $X.XX per first of

trailing improvement operations ending XXst XX-month million, March XXXX. the the Our a flow XXst, million period for period cash compared significant for from months XX $X.X negative to ending March negative $XX.X was

seasonality at quarter for collections it with the helpful are Given enrollments QX. QX look are that and to our cash business, is fourth through of and related our the AEP -- flows using the our April incurred cash AEP cycle in which as between QX related spread cash March expenses,

through we to in accurately at the flow we business. the April the flow March we cash investors future, look will it reflects as dynamics annual cash As dynamics this annual more discuss true cycle believe of guide

guiding enrollment between the XXXX negative currently $XX to impact with are -- from to operations cash growth collection. cash related lag for of million the AEP $XX flow full spend million calendar XXXX in year and time the We cash Medicare strong amplifying

cycle, April for March flow quarter. include internally expenditures, for March this Capital capitalized million ending XXXX. we to were $X expect XXst, line the for months be positive correcting by using approximately XX cash software which developed However, to first cash costs, the

and of million we credit. Our outstanding balance March our was line $XXX.X had no of cash as under XXst debt

in million XX and sheet that significant $XXX.X expect reflects receivable collect that is commissions we of balance a the Our of $XXX.X over also balance commissions receivable. million to $XXX.X long-term comprised million next

rest Medicare outperformance investments We are to-date for our related for annual XXXX our reflect increasing and of year. the current guidance plans our to the

million. Guidance segment Business Small Medicare $XXX to be guidance $XXX million expected XXXX $XXX to in and range be prior XXXX range segment Individual, the $XXX $XXX Family to of guidance now compared of our to revenues to to $XXX million compared million are $XXX revenues revenue the forecasting prior million to million of is million. range now $XX in $XX are range unchanged million million to We at for a of to million. for $XXX

the $XX.X Assuming liability million. increase related in connection acquisition the impact at to of remains of the eHealth's with non-cash the earnout in fair value charge of GoMedigap

$XX.X GAAP net million $XX income to guidance of expect be We to prior $XX the for range to in million to million $XX.X compared XXXX of range million.

profit prior to adjusted to $XX compared million. million $XX in million range of to is $XX $XX XXXX and Small million unchanged We breakeven $X range million. expenses, guidance range Guidance $XX Business to $XX depreciation to of of $XX now for shared guidance be to XXXX Family service Medicare expected and at expense, to EBITDA million. of prior remains million. million $XX remains the at $XX corporate the the for million excluding to segment segment compensation Individual, to and amortization compared range unchanged million expect be in profit stock-based XXXX Guidance approximately

for guidance to the share. is per $XX XXXX which of Assuming ranges million XXXX to and related guidance these to in be XXXX $X.XX approximately revise terms our reflect at $X.XX prior $X.XX income increase with capital diluted of in of used $XX shares. to to in expected I million $X.XX unchanged. compared share revenue remains to the million, earnout the acquisition of of $XX impact to to used $X.XX for $XX net the value operations range $XX per the diluted compared the share, $X.XX, in of to out expected Well, per point which to liability addition charge prior be to million. range is to non-cash $XX net is is fair income of expected Cash $X.XX connection the share range of in Non-GAAP for to diluted million is per an updated expenditures is in unchanged. projections, GoMedigap be in to GAAP range to re-forecast expected in fully Cash earnings that for like million be range

of call that diluted fully million Our contemplated guidance on purpose per average earnings fourth and income calculating full-year quarter conservatively share. approximately the for provided XX shares we initial the outstanding XXXX XXXX

million. employee for price, recent number we shares hiring among approximately average well increase we be as in as compensation, finalized share things projections a have that which Now to eHealth expect equity of XX the our reflect diluted XXXX plans fully other for to XXXX

make respect Finally, seasonality with I expect to comments we like to year. that would this some the

XXXX full-time higher retaining of The second expected from the and are to that third Asian are year. this quarters benefit headcount we

Westford a revenue the -- for terms season. the we was revenue year investments continue QX base in when with fourth revenue The The At in period in reflects February our strong Medicare of to and at XXXX of the we will year in will be process XXXX. timing rate comparison driven fourth of XX% annual to Medicare have quarter center our quarter. the rationalizing same quarter the disproportionately guidance contribute enrollment which Second last growth the easy comparison are open call the enrollment time, full-year has selling after capacity period an of revised the approximately and particular our our view last midpoint by of and in revenue enrollment. of facility year, of still current of extremely dynamic this closing

our continue finalize months. to to marketing for the three those We fourth sales the and investment expect next in quarter plans plans and refine

throughout quarters. XXXX, -- a including number during Medicare second of the XXXX Turning to we third larger the agents In are in-house and compared to slower year third profitability. retaining seasonally

in make initiatives. group to mobile our technology online also We enrollment to support plan targeted and our hires

level We loss year last higher than expecting quarter our absolute least our largest second last same are and EBITDA the could in profitability. remain that at year's. be fourth will as seasonally revenue, currently terms loss at EBITDA enrollments, will terms The of and in quarter quarter third be

our driven and at expect leverage approximately guidance our in implied see of to enrollments revenue is expansion we EBITDA margin that base. by full XX% our the our The of For in grow generate the XXXX. primarily continuing we expand guidance XX% compared EBITDA expect we midpoint year, to margin to costs fixed by as

including marketing are and with costs XXXX flat full-year member to Medicare As be costs expected call per approved I earlier, XXXX. center relatively mentioned acquisition

lifetime or continue on the flat assumption base a to our year to We compared of guidance ago. LTVs values

seeing we at you information financial New look York an May Scott will including detailed to to where also our long addition information, many on Meeting additional to in X As operational -term of update in sharing we mentioned, more provide forward financial our Investor our outlook performance coming want on and indications current to years. you our are these change I of based at assumptions our strong for recent business plan, time. and estimates, the which our remind comments any judgments; that current and may reflects which and guidance

Our actual results And changes our update may assumptions, we undertake the to obligation Operator? comments differ our for of will as a estimates, no our questions. result or We now, judgments. in and guidance. call open

Operator

[Operator Instructions].

is Our RBC. Frank question Morgan from to from going first be

Frank Morgan

this IFP last on The mentioned duration, I'm but subject retention -- quarter. just up came you better curious segment no about the

part is the you then second are LTV? drive us Just give to And can improve better this those or a to update and there retention TRANZACT. discuss the of in the Watson that my dynamics curious Medicare transaction you Towers space question an obviously if business, on acquisition with really what big doing Willis

that to transaction, compare contrast competitive curious your Just think take business and the you that overall market? dynamics and on it do particular about it affects maybe how your in

Derek Yung

Starting current with that commented, take more we staying Dave the seeing anything coverage. cohorts referenced. and there. Scott around LTVs the reflects be as you doing not on on and our TRANZACT book they part me with to longer, the that we deal can Let IFP, first their we're actively happy are then There's appear comment staying in fact of largely business insurance which policies and their

that degree As our it's to a else XX% we given expect IFP we collections what reminder actual point. in at with our revenue booked estimated a changed, that LTVs initially a we unless so XX% we apply would lifetime to recognition some though, value exceed certain constraint when and to something

say we So, is the I largely see do you would although upwards. typically being revised that or staying -- the in around LTVs trend some cohorts there is what expect longer also would this IFP

you a growth saw that membership membership too, what things is to have our seen I of enrollments you lagged membership very you member huge couple come have is out -- in of One numbers, where side, normalized work that at through not if dynamic they become think approved are has to absolute members that Medicare in now the and relative see terms referencing late we relative growth QX to of numbers, fact such a and On did we that look count we're there our seems growth QX numbers. were membership related to Frank. you've the have that that in reported until that really if that number paying the normalized our would

and Medicare, On the that's LTVs for There's on in the noise Supplement you noisy. Advantage, QX. with trend D and that and a on continued consistent Medicare see increase quite the Medicare we've Medicare some Part seen in D Part is particular

to subject historically, around lot also maximum carriers. a bounce it and at it look you does If

there of to to terms what there see in if a -- do tend report tend nothing fluctuate. as I So, those trend to

retention early initiatives of of our initiatives. we are in though, terms on In some customer still

impact some not seeing are We significant.

that longer the of Advantage big in increase changes policy, Medicare As duration drove and is of along of increase LTVs, material nothing I you relative can tell the to of expectation of because on the the portion to. CMS a point that some retention with just but terms can that rate

Scott Flanders

and with are. TRANZACT demographic We will TRANZACT tailwinds as they color that Dave were we well, price impressed benefiting the team and secular the the -- from get paid many to respect of are that well for the With we know his and business.

comparison for of platform We provide. tools we our that would weren't surprisingly shopping and And think undervalued full trade surprised comparison, perhaps the so, primarily value. we not it because a that services and by we are

million comparison, on technology of per and point a year more almost as TRANZACT Just we spend content. than $XX

why still we have Dave, would builds we other a very business. add? Watson they more in behind rationale a against and center to the what believe models, bought marketplace Willis advantage us So, Towers the we for want think that call understood but good competitive you position substantial driven would that strategic a this

David Francis

add. to that The versus that first says new of I put A quarter to it. have add the the to thing back we just quarter enrollment. -- the it only think eHealth relative for signed on numbers, point X/X to the for business Frank, fourth would new I finer well. was business don't AEP anything membership a lot I in

those of tens show they XX/XX didn't the members were book. of of members, members So there show as definition in do by now as thousands up if up course that

mentioned, that enrollment show Derek with the been past. of the were we seen kind quarter number in as performed has business in right book to we've and able normalized numbers more our to the So first the with -- line how get the the relative expectations in churn -- were a has the

Operator

And question Craig-Hallum. from comes George our from Sutton next

George Sutton

this there? opportunity, see Scott, do any So share the it's market we if also handful taking clear but taking yourself think quarter? as And if you think Medicare opportunity forward sense market was this for kind have we Do what strong, past share. of you're is obviously your very just I'm you of curious share a very, of years, of a what

Scott Flanders

have to And market X%. we QX at George, we get in aside. that of we drive term suspect have don't we some we initiatives term we we to meat on We in X. ambition the get we that rate X% that near well and X%, on put the to But together the terms grew all We share, achieve the think closer those when May long bones can a modesty share. X% will intend to think X% than and believe we gained that under market did in

George Sutton

chatter if a some it. perspective Just should around a model? All on to as never it some side I just could on it concept. for provide there's be and question believing for see personally going for am lot of of what meaning Medicare wondered you. But Obviously happens. the ongoing I implementation, do you you your broader you this have that

Scott Flanders

the ecosystem instance Our off the a part existing one is satisfaction. Medicare of and healthcare of high would any It's built of belief that be expansion customer that has the in acceptance architecture Medicare. first broad the

political be there'll believe we and upsetting so, resistance that And to fierce model. industry

Medicare a to that in for is expansion more gradual our scenario you the younger into see So, Medicare. to most view permitting would age buy likely groups

system of there whatever is support payer will XXX health Medicare. and with well be by garnered industry It's insurance within support not transition Americans, XXX enough that to pass We existing political just it, realistic. the was group eliminating as time started saw moving ACA a to out bill for single some and Americans, ACA and million not it million that worked massive so, And and architecture. it system the

Democrats ran which table the the political in of even be XXXX the soundbite existing participate real we the Medicare to All, but actual understand well-positioned I think in for off a the if for built system, to So would in. appeal world implementation we're continue

George Sutton

supplemental be mean Just More quick. need would you, would more that beneficial correct? to Medicare on follow For directly to

Scott Flanders

million, would -- the first today move eligibility be in I easiest about $XX is million. about XX think of what eligibles XX to which look, Well, and instance on be to the expansion Medicare make expanding XX million will over,

attractive be what's to capture in e-commerce And fluent, more XX%. we'd probably younger, they're well of market they're and think desired our the they're demographic addressable carriers, be an is of share positioned add than they'd about enrollments segment. that would by highly we that healthier, it So,

a it's sentence, a Having positive $XXX cost word for government. see in we another billion the very that, plus development as would the -- federal said So for business. of that a

it magnitude modest of not a budget buster fiscal and on relying a upside. so of that expansion be even is we're would any our forecasts, in it an So but

Operator

comes Tobey question next from Our from SunTrust. Sommer

Tobey Sommer

market see It kind for like company for able by you does different you, of to any what are wondering the sale? it's was And of I looks share as if share your market types could there be a aging if XX? grow to maybe strides would turning the like optimal making at whole, in way seems those you you pick when Medicare poison. into look the

Scott Flanders

Yes. surprising what Was market agents, on impressed on we be. that just Well, question, tell switchers question. you is overindex on we it. a we it have of a first To of into will results. that for knowledge not I seeing the you is What were visibility that and front I is these that runner you challenge compliment strong underindex dearth why part our retention of can that and

pursued types with in carpet that the will just all agent. is them carriers most by is ours it they penetration effective bombing the at are marketing to is demographic say an important so, of increase I that targeted And and our of that outreach. the very focus

the like Dave that's add underindex in where you add to we would And so, overindex on? to we like you what and switching. Dave, Francis, that. I'd on to

David Francis

there couple have as have our maybe and years look us. way I overindex, market agents do realizing find by largely moving could business And NPS us. and new hit need, as of individual should arms to that they said, of that or they deal. enter I out Scott much found of for a their our we them healthcare think XX, platform, as and structurally, I by the brokers those at or transition it's through getting a And folks, guided they are buy over Medicare health experiences are market. consultants high and for sponsored into margin the they as people evidenced Medicare the in point out great the consistently what and is scores to get better have getting market find which am their when insurance they hey, very carriers is not a shopping do we folks large is They Medicare experience, good in those they Tobey, a retirees for who Where market around are marketplace. the that Scott that they had job the employee said, controlled a be very experience where attractive toward the and that for and getting and start of that

get we deeper of are market, as market to the side we see parts So got growth opportunity can that looking our can we've into of numbers, for continue strong. the you are from the agent that to but ways lots of penetrate

Tobey Sommer

the in them the in and plan X order place or are you describe fourth I you put as eHealth biggest X, months changes up those probably AEP? changes revolutionary? would to you And got for for quarter that What understand that evolutionary them running. to have

Scott Flanders

to what plan, at is sanction our see that's this beyond the there. of but evolving. Evolutionary increase agent We count in point our still upside

our the bur appoint that to opportunity could we that offering more we get would the strong could productively agents. successful we not think license do capital evolutionary, through aggressive revolutionary. see leads Tobey, so now train, have agents anything it if would -- hire those We drive be We and convert with

user we are aspirational a and planning so know -- very that's gap to not this where say want as buying and be. in there's easy aggressively mean we user We quite But the in but I we vacation, huge experience make as improve is that we to we continuing between achievable. and where can to are to we experience. product technology invest know Medicare a

course user to continued And peak to to today. with given going you're so, we see guidance the improved this improvement year of substantially that's serial over an an target and you year we've last compared and of AEP period the experience a the upside think

Tobey Sommer

into kind explore aging thread maybe your more alliances for you it challenging getting perhaps and those further drive XX? Okay. How help Last within affiliations Medicare turning opportunity question ecosystem in to an and growth you partners maintaining to between needle thoroughly is the and of channel for to me. your Is focus? consumer there the

David Francis

and question of single good at that to the center consumer fair it do market I'd from perspective answer it. has way. so this Every a go thing we It's a the

we it's that consumer within that at into; companies; possible. servicing carriers the with such folks growth with provide it's as the outsized in other can we hospitals, in the hospital ways toward do for wins work that create marketplace; with carrier, do a -- that and Medicare and to our get do or at we us. and both customer, been folks an as of it way our noticed with look win their are that them eye is we win access partner, win for by pharmacy for lot and in that you value-add we for much to and best entities in the So the to mind, and the say; related continue players services channels, the has With pharmacies, carriers, serve always ecosystem bases any we folks how kind enter customer Medicare whether of the as other relationship

lots there. those So, opportunities out of

are with We in how explore and lot May talk New hopefully those we we we folks continue together them approaching can when a more York to about of get on X.

Operator

Evercore. comes question next our And from Muken Ross from

Suzie Yoon

a Medicare I calc of just exchange Just to how on ex period? what color things. a to extended expected can the prior a impact? ex relative think do Ross. a CMS' the circumstances. on to you What Do and How are neutral unique years And the any more headwind follow-up. provide impact touch wanted have first business get of your there been your exchanges? you or the for enrollment final understanding quarter of be on wanted on subsidy two in it'll was about would then rule? Thanks. Is you growth any think fee the thoughts Suzie your premium the It's better user

Derek Yung

let on question on though comment me a first one that. and good It's your

on a Medicare the Advantage did the though as even prepared we level quarter. a we the from to we certain degree was in remarks, re-enacted see a So were had enrollment expecting which benefit period, growth mentioned open comprehensive for more

So we or in points this switch open numbers, period. but of XX that looked looking XX% percentage the -- enrollment -- the at XX% -- not third had year-over-year of was at because to the a related people or that they're Advantage perfectly likely growth to looking clean; Medicare growth, XX% of

Advantage growth. for also enrollment going expectation that had helped. this even that sizable continue to on open years news the for The is that, Medicare we good on. without on But is So,

in to satisfy and that I as and demand our as say more And ability just of would we kind investments. we continue terms help that drive to So, remarks ability to next prepared comment and lot agent QX more about we I isolation year. those the in plan carrying though QX mentioned, success anything consumers a that tenure to of find a terms the of expectation agents. and in QX in expect in of intend would our right talked again well, to we the sales actually as of in our is ability saw

David Francis

drug us. can that about of are I to or change, are the a to consistent we affected change a with that to to consumers side them meaningful coverage, the relative the in in particularly coming their best that they Dave, -- continue There's for regulatory from you creates of whether the hearing a turbulence Medicare take intelligent, that's make prescription and decision not, help to believe make What questions in lot And causes Things have waiting networks better, of it's informed market premiums advantage perspective. for up our a still as to rules is they the things more on the past, what change, we're and partners market, that's kind would on structure your things the about insurance that out take half That tell that I'll the carrier way should final from market to buying we for ask to what into good to more of be that commercial positioned in we there. second marketplace any that. a from premiums well. And said look consumers air resources cause question. a come of reason side the that

like that. of still looks into be of out what the put positioned carriers of to and that terms it ultimately which the lot there the our in business . for plans for for all movement shake from to however well So, they a a We're each perspective positive looks marketplace,

Operator

And our Jefferies. next from from comes question Styblo Dave

David Styblo

embedded bit I few what's little of the a metrics. understand for more a guidance wanted to in

of sense of earmarked I already you're towards there to certain that's ramped-up a call implicit reps a you you marketing year. staff, that the cash looking marketing sense give of the spend, for call you think and get cashaton forth be activities. Can sort maybe trying guidance? on to some excess that to some maybe flat have is any LTVs us that towards sitting guys for are But still of the sheet. the Obviously for if center the things additional deploy of the rest in give going and of is the balance so center can keeping sense and Just if you a

thinking might Sort are we upside? the be that be where there of what about levers should there

Derek Yung

the and of So, cash of we fiscal flow question deploy looking revised proceeds from we with as because use good the it's to year. does guidance cash the of from within use the a the the operations more offering as -- are reflect mentioned, greater we a guidance

So from if CapEx you offering. the the operations, the kind proceeds leveraging of and certainly between from do are we math cash

a of mentioned offering Your and on a have to couple did is as able comment And We things. of be is to very cash excess were view which finalizing offering is course of QX is -- upsize we exactly very line for successful the other right. so couple for thing the money. There's raise of I investments, of but able more the we and close current the guidance only a we're QX already months still QX. away, QX because have we're in a and reflects sight those QX our

commented what Scott bit a this exactly as view relative earlier the not to well. our So, deployment yet is of investments, little final

David Styblo

And cash guess -- into sheet how the run other -- I the I In mean earmarked implicitly of balance like be these on seem much of would for you doesn't for be using it through into words sort all of your that -- assessment? we much be as think Is might can that? cash it about a that but that activities. fair might a used metrics, there's that run

Derek Yung

that's fair to be a for the investment all for use this sheet we're not cash say lie. going that think it's That balance to I will on the year.

I a that's fair... think

Scott Flanders

is way what So, overperformed year here's increase in prior million in of a in at million look guidance the between which $XX it. and it's QX. and a already the It's revenue we Increase to $XX EBITDA, consensus delta

going going to flow So, for cash. than use not direct to is million even EBITDA use cash more we're of proxy though we're $XX -- a here, not not

David Francis

prepared March in here as is real rather the AEP that the And invest year year-end. cycle is an process than Dave, the In Derek comes the we the keep on to that after time in on to eye thing, that focus other said because cash the remarks to frame calendar in April money January-February his

and we to at AEP -- on So levels look positive to should as that operating the making be marginally sales XX-month investment what to comments an Derek's that relative you a gives the expect if about sense relative fact hand to process. on we March, on breakeven flow cash it get we basis back through that March new to you will in that cycle be cash April to

and ROI approach quickly a that So, expect work cash the it's making flow quarter. a to get to we a cash short-term the season selling putting work we make sure that put first very what in during significant on disciplined to to basis very on from that

David Styblo

a membership you then on up take and churn. lives, XXX,XXX of XXX,XXX takes XXX,XXX was had approved how account mechanics will, follow to if And That around quarter just first members. your flows a take in in got quarter. there. captured MA members, fourth know if of MA if how terms you quarter there's the look if this all it the enrollment, for at right membership about the those you and up I last on before question we -- a third kind through sort of quarter of But approved I I 'XX

compare XX,XXX. -- some know maybe that doesn't of churn, maybe seem XX,XXX reconcile like to XX% trying there's XQ in then than What delta books suspect of I'm talking to does for being guys the terms of is, to I up average that over that? has that. your of that that's I on do, and it that most where and be a go. So that to if you're churn looks longer I you what right. about if with hear take about duration I but it's accounts just membership, got understand you -- actual

Derek Yung

both a the off. and reasons. lag when a then and sent from and a approved members time off member, I we of an we X there's to mechanics is report The on walk and drop then lag then Let's The approved a X on there is time variety application drop have between and anywhere through someone when months they did. reported application a for to approved is sends mechanics sent applications can it also

that off because Advantage, is there's for or Sup, For drop Med it's X% underwriting step. then or more XX% smaller, so like around Medicare an and larger, it's it's

if you our part there if we of you will a it's from and kind there. and I of as becoming drop you mapping look those at about So approved from membership, a to basis And to rolling and see closer you then well across off X% see much numbers that the to members also be approved drop do some that's have members, paid on calculation applications of off the think XX-month smaller, to more board.

value. we So and that lifetime I member churn on again of definitely is built report our definition revenue -- basis consider part into that our approved by because churn

David Styblo

that of you sort -- is what right for is now? what guys at? that then And running Okay. metric What's

Derek Yung

In terms of duration?

David Styblo

Yes.

Derek Yung

So for about Sup and year MA, it's about PDP years it's and it's three then X years. for Med about for five

David Styblo

year-over-year it dictate low guys And [indiscernible] did the about have X% the digits. I think. you in because sounded an rate like underlying single LTVs increase Okay.

by So of is just duration the that...? explained rest that longer

Derek Yung

That's correct. That's exactly right.

then The LTV improved just for X% remainder so rate is increase more of know, you CMS as from specifically X%. yes, duration. Advantage, comment for just just is and around Medicare increase So to this that the quarter

Operator

questions. no turn call further to like showing CEO, back Flanders. I'm And you. to Thank the Scott I'd

Scott Flanders

closing excited first shared When quarters. been I call, team and remarks are the together And earnings would positioned. our notwithstanding prospects feel come about for enthusiasm again I third just you, the entering the seasonally up how I how and we Thank this that for had echo tremendous that after had closed slow everyone. quarter how that we never business of quarter of I'd my 'XX X more into we're the those fact the I

I have on we QX. to Thank important we riveted upside. investors all are but on deliver in QX, comparisons just the will and and we surprises guidance QX you, As that that all this that And easy the quarter against revised for do assure ensuring everyone. Derek want is be us mentioned,

Operator

This gentlemen, and program. thank in conference. you Ladies concludes for today's today's participating

great all may day. a Everyone, You have disconnect.

eHealth (EHTH) 26 Apr 192019 Q1 Earnings call transcript