EHTH - Earnings call transcript Q2 2019

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Operator

Good day, ladies and gentlemen. And welcome to the Second Quarter 2019 eHealth, Incorporated Earnings Conference Call.

As a reminder, this call is being recorded. [Operator Instructions] I would now like to introduce your host for today's conference, Kate Sidorovich, Vice President of Investor Relations. Please go ahead.

Kate Sidorovich

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

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

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

in will making forward-looking statements including We statements our enrollment expectations including the this growth, regarding to opportunity market; and strategy regarding online investment expectations, and Medicare for business; business telesales Medicare small regarding our expectations relating on our our in our capacity, and business competitive expansion Medicare includes be and advantage, the call individual growth opportunity our Medicare future that and expectations growth. events, share, enrollment regarding our including family statements in our segments, beliefs, our market

expectations in regarding individual and Our and The seasonality and of and performance. profitability growth retention life cost; and investment sales technology. value strategy Medicare rate acquisition our long-term seasonal and through plans all and agent business, family headcount, our patterns, regarding marketing views

quarter Our guidance. our on revised XXXX outlook assumptions and XXXX ability third for deliver to full-year and the our of guidance our including our

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

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

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

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

each and of financial comparable can found reconciliation SEC section release to measure, in press in to Relations. Us most in directly For the Investor the which the the our under our financial information please our be of filings, corporate About GAAP non-GAAP included refer heading measure website

turn And the Scott point, call to will Flanders. at I over this

Scott Flanders

expectation by you, welcome Thank Kate. We continue and momentum once expansion. delivered And our business to XX% and of million in increase EBITDA driving strong our grew margin again company another year-over-year, the rapidly, everyone. $X.X in quarter million, to Medicare exceeding Medicare building up $X.X negative in XXX% members a in increase from revenue last year. Medicare QX Medicare profit Approved the segment significant of grow

increase. was for year-over-year a the revenue second XXX% million, Total $XX.X quarter

health EBITDA million leadership and that a out organic our from demonstrate include related adjusted Our the for million. for enroll products And clear us set and consumers a eHealth and staff the slower quarter established earn insurance competitors to health GAAP tools them. is by $X.X in was acquisition that excess individual The that the them choice, growth, to formula enable consumer us easy with to continues XXX%. in traditionally being suited engagement despite and continue the to loss we in has insurance of leadership apart our component access which to expense QX revenue the $X.X offering position was eHealth GoMedigap the of growth mark-to-market that the net market. simplicity shop

to performing dial in marketing test of opportunistically Medicare strongly factors. marketing depending strategies. consumer to refine enrollment on down continued as our and portfolio the demand business Our for on performance demand investment, The on up to findings other us Medicare depth Online of the our enrollment key growth our investment strategic marketing or relative allowing lean team. throughout for is and exceptionally past returns was broad-based our all over approach quarter well, key the channels performed initiative with XX-months is a we working generation

total and supplement by to number applications increased XXXX. second XXX% submitted The online of compared Advantage Medicare the of quarter Medicare

enrollment We being our submitted customer be quarter volumes. continue medical the for the XX% services demand of that to enrollment we've of Sacramento, fourth Center strongest at Salt applications is major rapidly, Technology track new growing sales so and in including Lake physical to least Eastern historically Indianapolis, The will our have expectation online. to XXXX our terms on Sales Medicare and online our Medicare and Austin. City expanded engagement in presence and platform we extended in our Because centers

enrollment period. annual enrollment utilize year, for last successfully our new the this have center are we in expanding in complement we to our the companies also annual sales meet enrollment To outsourced relationships call to that the insurance forecast period business vendors include with capacity expertise

family during for Our medical business the XXXX applications off small first since growth a submitted base. generating individual in and quarter, albeit rebounded plan time major the

not We business development. a based year an the quarter, on as enrollment for changing this single our outlook but view encouraging for are the remainder this of

commissioned grew X% with Turning same the of the to growing quarter number the business over submitted small market. compared to of The revenue XX% period. second time XXXX applications

with states new [Indiscernible] to applications into continue integrated platform. also and online add carriers currently XX our carriers our We with

family quarter. and during the business segments profitable individual remain The small

again presence the to can financial diversified benefit product the on market in in plan offering strategic providing We guidance long full as business, Based are operational of insurance a for a do increasing variety the it the segment for ending year in XX XXXX. the we of our strength maintain and for cost a effectively. health reasons, and continue see to we as our under

higher provide expectations ranges million for XX% year. mean than midpoint and guidance specifics the revenue million new are but our These further are original EBITDA provided XX% Our of that revised the CFO, of February Yung XXXX in we We guidance and our value we our this already Derek higher we to the will delivering of in by $XXX case at $XX.X adjusted share our Investor scenarios Day experience long-term base our shareholders. continue expand strategy in market in of exceptional point tracking ahead touch our thus and the both at intend build growth May. pursuing customer tailwind and to aggressive presented for every growth that

Now I to the to numbers. the over about Derek will more turn call speak specifically

Derek Yung

growth everyone. year, Medicare of of We business. strong and of quarter excess our driven financial with the in Thanks over delivered results the outperformance XXX% revenue second Scott last quarter good by afternoon primarily second

to more Medicare aggressively in we of generation. XXXX growth Advantage, investing our the two During Medicare approved the Similar including expanded we by quarter leveraged saw capacity quarter, second that the offer, Medicare members we last all and products plans. demand Medicare year-over-year to supplement prescription in for strong telesales relative drug quarters

quarter grew growth year Medicare XXXX. The revenue $X.X a XXX% a non compared revenue of to business, million segment a commissioned revenue. due quarter second in in significant of $X.X to our the increase our of $XX.X profit carrier increase particular million, a generated Medicare primarily in members second ago in sponsorship year-over-year Medicare and XX% to million loss In compared approved of

million to year, the $XX.X first XXXX. our first half of in the to million the $X.X almost of Medicare half profit compared For XXX% grew segmented

growth revenues as to fixed This our at we technology scale continue far associated exceed G&A that margin volumes expenses. leverage and expansion rate in is driven enrollment by cost and

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

XX% Second quarter our family from business year compared million a XXXX and small and was revenue ago. increase $XX.X individual to segment

Scott first years, major plans in drove in time in in several members saw As which an and submitted increase individual the we medical and revenues. an applications approved for mentioned, commission QX increase family

older retention In standard, in these addition, residual the of that when cumulative in accounting same at the quarter. to through initial we in we ISP reminder, cohort as this when residual higher the during some exceeds collected eHealth. we resulted significant the revenue expected revenue recognition tail first members than the recognize recognition dynamic time enrolls members of revenue from booked cohorts a of where or our saw quarter revenues these the pursuant the cash XXX on QX the as

revenue compared XXXX. to million $X.X individual to family family million small commission of individual the was in loss segment. profit contributed our business revenues million In $X.X The quarter segment a and in of QX, and second tail $X.X small business the

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

an million, quarter $XX.X second XXXX. the Our of total XXX% was for revenue compared the of to second quarter increase

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

I past constrain by to quarter Before retention XX% our expenses, for LTVs Advantage majority improved I enrollments estimated our enrollment our on Advantage the want have member second to which with grew some basis, dynamics or LTVs we year-over-year rate, account on In Medicare a QX, seeing higher a for favorable the move LTVs business. year new for that are driven several The quarters values ago. the and been product discuss cohorts. our increasing on mix existing the over Medicare a Medicare lifetime of to plan and Medicare in operating plans Medicare of members commission compared

this through any on retention observed commission members, of enrollment Advantage seeing be we older higher cohorts While their have the in the of on impact we reimbursement to that than changes during flows last XXXX. in churn members continues enroll annual period typically to average of higher QX we're which terms broker favorable of not the Medicare and rates significant year rates

higher profoundly and only also driving MA well Medicare in took Medicare impact the business We allowing productivity seniors the volumes, by the headcount us time of to QX QX year months to our their which them the still on implications which year, selling QX throughout during this as as program. keep for since net period cancel favorable allowing the agent quarter place in The XXXX, is to not for implications but enrollment the volumes agent fourth of period first and believe in the plans driven three QX or original open significant return enrollment season. switch is this open higher enrollment has positive

LTVs implies in an we we the forward. going rates revised fourth into This in This dynamic assumption that XXXX. generate the been thus fourth at Our that lower our quarter constrain reflects our a churn, retention single-digit guidance. rate expect Advantage impact on see decline mid expect product, percentage reported QX to membership metrics to increase for we the Medicare slightly year-over-year which MA has have quarter incorporated of during members XXXX will

significant would I Telesales to profitability offering a in we the efficiencies compared review and Now member initiatives year-over-year second quarter compared Medicare business In resulting of large in to a per costs Medicare like Growing the of year. enrollment slightly XXXX, in Medicare Medicare metrics. increased scale quarter, related investment growth. second reduce QX made variable expenses and last our to allow approved our us to significantly marketing capacity and

percentage acquisition Our us traditionally compensation, restructuring to earnout and quarter. EBITDA non-GAAP period of time grew based XX% allowing of been intangible positive revenue of second quarter same a XXXX. declined value has liability negative of the a meaningfully fair change second operating to amortization But stock compared low what quarter swing EBITDA volume charges, and to in over excluded assets cost which costs,

was taxes EBITDA compared negative $X.X our of year-over-year net amortization, the other XXX% was slower and XXXX to growing require million in leverage of a earnout to the revenue in the and adjusted combined for from profitability Significantly model. charges, EBITDA second of expenses the for benefit cost G&A XXXX. tech XXXX. GAAP to intangibles, a fair depreciation the second based stock second compared acquisition growth costs, business over Fixed quarter calculate With quarter second of operating the quarter quarter of content Adjusted and to driver XX%, our XXXX. in key $XX.X liability, our value adding million income line. income We income leverage and reflecting of restructuring EBITDA by amortization change compared compensation,

a net million of second of loss was the XXXX. loss for $X.X of for quarter a net compared XXXX quarter GAAP $XX GAAP second million

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

of share GAAP net was quarter second loss per Second XXXX. to for compared quarter per the net loss share a of negative-- diluted $X.XX $X.XX

Non-GAAP quarter share for XXXX. per net comparative non-GAAP diluted income per share of was second $X.XX net $X.XX loss the of

has million from a enrollment operations the second quarter internally developed outflows in negative cash cash volume $XX.X the XXXX. to low quarter quarter related $X.X strong what and capitalized software which increase million were This compared reflects a for second investments $X.X of in was in call second negative historically approximately quarter. year-over-year include operations. million flow Our Medicare Capital volumes center a been marketing expenditures for costs

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

of annual Our commission's XXXX. time increased to balance to for date XXXX and now million $XXX sheet also million to expected the $XXX receivable be $XXX increasing to for million reflects $XXX million, million. second $XXX be We're outperformance compared in our to prior guidance to this the are range second $XXX to a million, revenues revenues forecasting guidance million to segment guidance of our significant prior of range range to $XXX of the in of half $XXX reflect for million. of $XXX balance expectations compared year We're Medicare million. to our

family be the previously. to million in to expected Individual guidance of segments $XX compared to to revenues the million $XX million are of million $XX business small $XX and range

range to to Assuming $XX.X eHealth charge for at in compared million value in acquisition the $XX related impact guidance of with earnout million, prior to of expect income connection of remains $XX.X to GAAP million. range liability net to of $XX GoMedigap we net the million, XXXX in of increase be a million non-cash $XX.X fair

of now is $XX million, adjusted expected $XX compared to compared be profit $XX to to business to to prior million. expect in in small compared to segment XXXX million $XX to range be million segments of range prior XXXX expected range range $XX guidance $XX million family and prior million EBITDA $XX We range breakeven guidance is to of $XX a in a be million $XX now Medicare range $XX guidance to million the million to million. million. $X to of of Individual profit to of

Guidance for to depreciation million, approximately expected be of services expenses corporate compensation million. is guidance stock-based share amortization $XX now prior to excluding compared and $XX the

GAAP to charge $X.XX Assuming then to at $X.XX increase net related connection XXXX per per the a diluted impact of to non-cash to share $X.XX a to range fair income liability in an earnout compared of of GoMedigap $X.XX. a in for diluted approximately in remains with value acquisition prior be share, range guidance expected $X.XX is of

expected range net for share, Non-GAAP share. is be to prior in to $X.XX share income to per $X.XX range of the $X.XX of XXXX guidance per diluted $X.XXper to compared

periods decline million $XX operations from range member resulting $XX Cash of $XX million, expenses enrollments to collections cash in high time and expected to flows is compared used our to million in be in commission guidance from the million operations cash-based XXXX $XX to between range of for prior the due lag to of acquisition growth.

is prior to of of to million to to guidance be $XX expenditures capital for $XX range $XX million used million compared million. Cash $XX expected

to and I Based the like we respect marketing would the facilities account, to in quarters, to are technology QX on past over and the telesales and in make successful Eastern remainder expect seasonality investments consumer execution agent in continued our platform. a for with comments sales Finally, in of several our the access year. including sign we accelerating expanded new some demand, head lease strength our US

expect early stronger our relative in accompanied higher As enrollment revised as by expectations guidance. a in revenue growth Medicare result, a to generate we to our growth significantly XXXX, reflected

due to perspective, sequential year-over-year revenue to close midpoint are in our small growth. compared business guidance, XX% in expected third a of This family we now a quarterly grow of expectations revenue. expect our to a primarily quarter From dynamics annual we XX% to cadence prior At a our individual segments. decline to is

second limit seasonal order significant was collections. total enrollments to of cash likely the timing revenue the and of the Specifically, positive in business our IP IP based on impact

to revenue quarter. with quarter Medicare Third be XXXX roughly expected second is flat

quarter On primarily in the our period. quarter ahead enrollment significant the driven we expect expense enrollment agents start increase as to sequential fourth of customer third a by operating our onboard costs, expense side, we care annual

invest digital experience, volume tech and new and to be improve compressive, third to our drop drive agents seasonally in deploying quarter year-over-year and expected sequentially and that it weeks and increase customer productive a The consumer technology our as Given content anticipate we more low for takes QX care approved expenses sequential enrollments member, call because our make costs by quarter several in large significant enhanced we in EBITDA. per agents a solutions more centers. also online increase

currently a to expect base, costs EBITDA the the we XXXX member and expected our much XXXX quarter, at see cost increase expect XXXX. full at a to XXXX XXXX. profitability reported the dollars full prior significant significant in to midpoint acquisition up to resulting relative call fourth for be expect around EBITDA larger In approved with EBITDA our marketing We will that year Xx expectations. loss compared around swing revenue We guidance EBITDA the in including in year on center to of flat loss to Medicare slightly per QX we remaining of XX%

despite our to business a We our our you LTVs time. remind these to our want full and assumptions I current relative for indications change estimates, guidance to year described judgments business in Medicare on earlier. that LTV as expect that any at may fourth based forecast decline are in and flat XXXX continue Advantage current which comments and year-over-year levels, quarter

and to our assumptions estimates, We changes or guidance. result judgments. may obligations Our actual comments our no results update differ a as of in undertake

reflected financial about is results excited our and our in as Looking revised, annual our forward, guidance. to our growing in the team Medicare date, momentum business our entire

We deliver positioned are enrollment annual another well period. strong to

Operator? And we call the for now will open questions.

Operator

[Operator Instructions]

Suisse. Singh Our comes from of with Credit Jailendra first question the the line

Your open. now line is

Jailendra Singh

solid on congrats a and quarter. Thanks

question family my So first and actually to on I individual focus small business. want

you You $X.X what that in on in in your guys on they to the and want from million. business terms duration business tail compared your court ruling the did origin some or was trends of of is can color benefit term a short plans. quarters? limited the not? say I revenue to confirm driving recent else good impact had also guidance that of Any pretty that insurance And provide

Derek Yung

in the play through forecast outs on the Scott then members comment not ins this we're those and the as have tail our longer and them we and others original when because dynamics of seeing address business I'll guidance IFP. we our expect question see was time as how the that's at did The and they're not revenue today. enrolling also and were can seeing, in estimate to we lifetimes

we So in therefore is additional retention the remarks churn originally i.e. the the to that revenue. see better tail therefore as when better. are book revenues actually our commented able I booked we anticipated has more and collecting are prepared been And

Dave Francis

The And the a to and time past. one, significant better years has traction within historical leadership that rate. we're expected not Number churn significantly business in with Jailendra, and the lower that has And IFP that ago. better group revenue. conservative of Part than and at LTV booking a to the focus have changed the that do out improving been indicate that selling of operating getting as we're also fact of very a higher with in things. the about Francis. two that half sure revenues the the the tail of the significant business a we've it's given been revenue there. impact we do in group a might But rates sale Dave making it business dynamics changes IFP year that new to mix of tax is

more positive seeing on getting having of products extended we we churn rate on as impact expected liking we're those and and extend than folks P&L pleased those to and are customers it staying the the products last result. So longer But three IFP as has suffice churn been a business we're in into, past with the that the booking that them a where tail to is the really two today lot revenue years. say the it

Jailendra Singh

business. business, by this, cost. actually associated then to higher were understand in same on approved on color quarter. Any this in with Okay pickup the I customer want cost and driven new this cost seems enrollment the It member the in care it's members business the second and

Derek Yung

Yes.

in of we invest IFP the because showing So had end we QX at trends of now that business performance. more the did anticipated in in more area business positive small the largely are than

to and in training. up particularly spiked agent more with so agent invested for take because and to costs be does Whenever we typically familiar So, that to, people time we and our in do trained it on. see tools get

that's So you what seen there.

Jailendra Singh

the generally last on biggest thanks quarter on should QX saying and mean you're from the revenue. takes, pick Okay can like should sequentially. on you segments I But know color And those why agents. me keep color question some Medicare around give all you're -- are can seasonality fourth some with should flat the puts to the, is just you revenue quarterly the agents on and your Medicare if I in doing we QX investments But some portion see mean should I QX? mean all QX. up and flat in I of in give to for had be see revenue telesales I mind. QX that not other you

Derek Yung

absolutely. sure, Yes,

right. that heard you So

season. well, productive to concerned to to those And be the board and we ramping think we selling to annual capacity investment expecting third as difference going time AEP expanded be telesales QX assumptions maintaining to from revenues does for as before prior AEP, take are ability versus in in up remark quickly that Medicare commented We flat second in XXXX to the taking as be during the of as enrollment can on And the is are to XXXX the prepared productive. we're the And we agents be period. agents big it how we are quarter. come through and terms our trained

Dave Francis

the benefit mean the of our in driving thing year. I more into than remember I the is business are that the concentrating in other would add cost they on efforts other QX Jailendra of that, parts substantially greater marketing platform

are kind impact putting to have capacity the them sales meaningful side we any organization the and actively of third that and quarter. investing on the expecting So revenue on telesales in not

We October are getting them a and earnest. the start around ready AEP running once have starts so XXth rolls they period or in

we investment to So doing from perspective to again it's pickup Derek's right going QX. everything that than we're from rather include is putting relative point at to our be an that are think that we We some this point aimed to in that but the toward production on, there's QX QX hope certainly production. that don't guidance capacity additional

Derek Yung

into one a get where the recognize in flowed QX revenue that approval for because perspective were QX is there numbers from a we comments approved Maybe that approved and of were of we did from submitted other members lack in just benefit members. application QX

in as because QX because we we QX. compared had that So won't see from much QX to enrollments larger

Operator

with next Our of comes Evercore. Muken line from question Ross the

is open. Your line now

Suzie Yoon

called half It's my I expectations guess Thank Suzy the second have the the the touch out the changes you to first job Day? you quarter optimistic guys and any guys. want to half thought Analyst pretty for about on and Ross. at outperformance I on Hey, taking guys for in the again. question on targets you that long-term given amazing

Derek Yung

That's Suzie. a question. Hey, good

the pacing Investor working through of able case base Obviously, closer we at until in say terms to both working. get period and think really XXXX. the period that on assess is even for Day. settled commented case we the enrollment and biggest tailwind not have ahead that been budgets are were obviously the out what not to the point is plans not or I'll and our we period what our we obvious, that what's we So of still discussed annual

Investor So I of think look at was ahead Day. are to right we discussed you're what that at the but that it's pacing premature

Suzie Yoon

quarters sort then the And you great. To that's within business? on go one you maybe business drive the many re-estimate sustained it, how business. to and some of of targets would extent for Got another back could IFP IFP growth sort consecutive detail, that the provide that sort of of

Dave Francis

a over optimistic market year has it I'll the spikes and relative makes taken us cautious and flux that is opportunities to marketplace. there. and So the still way changed continue else model you the of this ACA business have answer and year-over-year it perspective. from impact market everything way That It's some in that where way. for -- in The on but back the we that to be operating sit us to track know on us get time the as premium

it's we, So volatile where where with we're we at it basis marketplace. pleased that a be on that say would monthly a I looking leaning should understanding opportunities still we and are sits into the in marketplace, this

the with pleased say I So results. would we're

be of that long-term Medicare to business team has current But that continue with the we approach very sustainability be given focused there. the the continue and market growth in revenues lean into the business very relative growth today. the the it, continue over right still the to to where the optimistic cautiously with makes We to leadership over of focus on pleased Medicare XX% on Very but now. focused which performance is IFP of the up

Operator

Our of with Frank Markets. from RBC question comes Morgan the Capital next line

Your line now is open.

Frank Morgan

new part and around that growth. things mean to I'm you to in Medicare the outsourced more arrangement. color will Advantage focusing the the glad curious directed of in then sales talked I Indianapolis, regard With attribution the a this business guidance, of get Dave, the lot the area. of about I'm on be said questions I'm you

like revenue. that think any you other curious have is assumptions non-commissioned in am change things up just I set I there and any around

of that in another little the a to And drive that see think you'll they're there have biggest that the of the just bit going year. quarter on I opportunities the growth that fourth ask So volume you then color where one, one.

Derek Yung

Okay.

pretty me any growth Let The fairly broad includes is to have revenue seen It's and of has more growth contributed Those Q continue in been terms thing to says revenue. commission noncommissioned in to that that we QX. any largely that to year-over-year. and invest period, been more can point hasn't are we that on than other we've there single have things so rate the grown and do and similarly your our into that AEP base that commented of like one capacity start, and benefits of both outside sales thing ones. doing our

And round anticipating now because going year we're that we will of that are agents into more AEP keeping be productive. benefits the more

key who online from make of the obviously which And sure of major the a good commented is our on growing all and well from fastest that a We perspective. and are channel least growing on channel perspective in participating we're growth application are well. growing continue ours, online. been And advertising XX% marketing also online a from to fact application that relative submissions for online to we sense would strategy expectation very broad-based; The faster channels to is then it's also make be relative progress the perspective. at tracking rates

Frank Morgan

biz it they with and talking this should in in the that terms of with terms outsourced anything costs economics? associated we about, salesforce is your that revenue about the you're normal generate? In Or of line new economics that of be thinking

Dave Francis

AEP Day last year. the of our we capacity learnings with we the but from in outsourced With had we It's I levering we you selling had year the that that of the business AEP we believe Frank. May truly line, we generally beyond up Analyst sales a talked had organization to when lever of in which had that also telesales about success success component can in learned, great take that we that in such in that this last That significantly XXXX and season. up capacity back lot back

And significantly so that the that pocket a what look third out cash if Derek you're some at part quarter. lever fourth that in quarter in expect outsource capability to of to you QX the performance of we EBITDA investments the seeing is mentioned the investment of for relative lot in

gains outside that we're of and believe So market can the of that sort getting gains that get thing. to we we relative share capable

Frank Morgan

force, been that obviously, basis? sales some there those the force. ramp of and any a salesforce basic a of you to productivity and that permanent efficiency and the tenured have the just newer assumptions with have into force of terms Are up overall around converting come productivity a of in new more And

Dave Francis

sales fact a productively who's talked meaningfully on We've to and tenured more been XX% at coming new a least as the more Yes. as someone platform year. for than agent from effectively agents that any performs more productivity about the XX% much

they as internal So that we or rate component growing folks. means very we perform we expect people, new whether as those large outsourced likely sales as productive to are than are less are, rapidly relatively a of be do what tenured that

But that are customers. drive the side said those into enrollments. interact they online behalf to efficient telesales we're so those investments that the and driving consumer not With get with on on ability technology focused transacted in making experience, business only position as are many hands, tool of that sets it's on that on focused effective the the the online the of more agent and to more a they more

that rate So and our which perform point newer allow ago. than key technology leverage have of a us the newer year productive will we a is competitors, more those apart platform for at the expect from agents might to been a sets business agents our

Operator

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

is open. now Your line

Tobey Sommer

propensity know, your wanted better you're given viewed the viewed forecast of not an relationships only pricing. could to Is and carriers? your how recent a I there how rapid ask about channel the to pricing change important opportunity you. carrier by advertising growth a the driving, be I and quarters is in for spend and Thank but don't

Dave Francis

Tobey, are space Medicare in the remember regulated Advantage a the driven commission that commissions basis. on side largely things on of this So, the

can demand So as by we not it's higher rate. competitors growth some than a though of our virtue commission our rate of

we of of marketplace, boats. rising see we the what better and do the our with programs is Now carriers having marketing luck more much working knowledge a all of carriers and in able lifts directly all be for access points the synergize create efficiently tide their emphasis are that to to terms customers with happening to

areas us accrues But customer some their customer regional where are we ultimately growth with way in interact the to to our position certain benefit. working invest they dollars ones platform, carriers, rate such to more into to are in of which and major a and a target marketing our given the drive with flow

of growth over we're of pricing, that of get any kind commission we're been from that's years. doing. up demonstrate able picking that So the to level we've next benefit benefit volumes But not couple of of the the that we by rates the last actual virtue in terms

Tobey Sommer

your as year internal the mix now? it the would how out of change at look capacity in this the see over As you but in also time opinion future, you external versus agent business

Dave Francis

the allocation learning apply capacity outsource really could rather could, the how of can take eligible out size, the I so more a we be down That's It's demand given we -- the not. and perspective when those there from current to the argue of proportion management there, marketplace. can we customer or to nine able if more that put as the the in we At back to do what is a programs SEP more we leverage. capital if we year that marketplace at we're the refine great of off issue and do capacity our and to infinite on we that we and business and would the could day question It manage, a transact still in is AEP there. that size the of customers in gets of onboard outsourced the an than satisfy do the first the end much months period smaller economically then question. much our to way continue business after has over, can of are with carriers enough

are capacity I math of can the around first year. a So that the of how can in last business from our outsource on it's But economically doing side end put the we much the do planning and to and a we quarter we of perspective relative up management an you levering the efficiently how business and at basis will year. year where the outsourced from tell much we perspective months in were fourth this nine

Tobey Sommer

to hitting as area is like tight your early and it for job there market it be could how kind Asian is seems going? indications that growth? onboarding targeted of a the an Because Are risk of execution goals any

Dave Francis

Yes. It's we ahead good twice are We and weekly monitor of question. targets.

Tobey Sommer

carriers visibility And you're relative have seeing last cost question fourth quarter? for we me do color is that could how acquisition of good long the us out how competitiveness the towards in to into aim anything of terms how and your offer you as as you far

Derek Yung

Got it. acquisition question we how If is I comfortable and of understand cost are AEP. our in expectations

for service we variable have as seen customer and And unique we center economic. we've cost that's that in mix I going think marketing then is as design as per could to the scale variable QX approved our of cost call Within flat. up. well, our that's for keep there cost so total member in the as diminishing expected between Medicare cost in not in what's you've terms year, settings And and other and returns goal we, our to be flat by then seen more going is our commented on down side QX, a but total relative guidance. and were

cost to we So of year-over-year. that variable we continuous are anticipating for flat, goal your tractable

Operator

next Jefferies. question with comes the from Styblo of our And line Dave

is line open. now Your

Dave Styblo

the quarter, on for questions guys. congrats Thanks Hi. the and

and fourth maybe there, of about so to upside a or guidance it thinking would looks how like million maybe to there QX and are million, for least the or the that then XQ revenue street of On that list the million million so is half related $XX it $XX be another like there's remaining $XX $XX at quarter. outperformance $XX was some about looks million

of of offsets any And for things you outperformance being the thought on looking of you make as have lifting the a be yourselves other that's I are you want some maybe Do there and that to would in just the you a bit conservative? don't numbers even the to the earnings be XQ it of. sure at And quarter. ahead want XQ think little well? there in AEP the Are we benefit strong maybe on and greater given about for are guess Just talk that as or cycle I get how you have? would guys that mindful need want to about assumptions to annual, sort just fourth

Derek Yung

good That's a Yes. question.

relative QX we like. to were to did guess everyone there look first reaction that day when I is not we or much how quarterly give the out was going expectations revised what guidance my street about think specific we my they're more the first So on guidance too develop could knowing our split

commented we Medicare flat. So from as in revenue revenue sequential are with we expecting perspective remarks, revenue a prepared decline

QX, derive think if I of neighborhood the works so that expected our obviously year-over-year. what of revenue given XX% XX%. you growth range is the take you XX% range So growth to or out from that in And could the in and which can revenues

The main discussed guidance. important of we're anything loss coming to your out churn are LTVs increased thing that, in single is for the watch should second digits call for? of question you LTVs in recognize going. that's in part that anticipating also then where that comfortable is is out the and To we the range there because there QX Medicare of to well our topic are QX So really down as be that the It's is we with which AEP. Advantage

Dave Styblo

a helpful. into That was segue second Okay, going the to that's good question.

and like? the on is forward. to So recurring to want case it If duration that that that the just new on what happen And new a basis on book like churn those MA is you're specifically that's sounds going is that cohorts. look book, your something expecting the confirm on that

Derek Yung

all good questions. Yes, are they

think. three that parts there's So see let's question I of

again down it articulate able on both XXXX. a related to our now is have we may That's obviously lag you of guidance. they have switching baked out to be is period enrollments So see switch pay coming period to ask the is why and members. become whether they it people heavy there because paying QX, where well AEP or And ticking to also time till to to OE it observe we with wait when the

visibility have out fully, of really around churn middle that we that wasn't the results in we AEP. until of So QX coming it

coming because things. other disparate know one coming is to in year. that it increase of way cohort we AEP well don't anticipate and this And that the we two And for and that's thing then churn

we don't the annual there choice a enrollment is because going to open a know a change first likely able different again plan The change their is that to whether they're of have that in plan, less this better period. customers to presumably since thing were period enrollment possibility

We haven't no this, through looked has. one

that But because is happens. question? which Does the to here we your it have changed. that could what and possible relatively seasonality just So see wimpy trend it closely answer revert monitor this has

Dave Styblo

to adjusting that last one guys That's you're impact revenue comment as the your know trending guidance premature long feel about, MA because lives, and The you reason or of margin I real fast margins terms is that you is would is asking but so the more term long-term I'm of case. upside Is talk the if perfect, well? about talked like yes. in sounds ahead that on with how that does shortening assumptions? comfortable The duration even

Derek Yung

question. Yes, another good

to business if goal is to any and scale we, margins. because without the where the you we compared to been our greater margin percentage that really do And for [Indiscernible] EBITDA at right to there now our guidance. intended was prior revised guidance, is are really our role what that for a were So we've looking the increase is look at guidance relative to

in recall with us EBITDA we like And they'll there may the but EBITDA same And likely margin and the percentage. if to what is obviously ended XX%. of was build keep current give we to last do like most opportunity year, XX.X% EBITDA there, business margin up our arises. You more are it guidance but also scale we

case percentage base margin and tracking our tailing long-term ahead the against are margin and of case. We dollars

Operator

the of next Sutton George line Our comes question from Craig-Hallum. with

Your now open. line is

George Sutton

you angle to about use talked had of not provided your potential. that you when your But Thank upside the additional at you. I some wanted capital, reflect think additional from assumptions raise that estimates capital. did time this through

agents the are new fully and of we platform marketing investments assumptions, curious, availability I'm in and and these baking et in With capital cetera.

Derek Yung

yes. question, The is answer George. good That's

to now a business. cash expectations $XX revised being by view see and can flow of sales proceeds growth our you organic the to our that deployed from the drive given offering million. in in from marketing of operations the $XX Medicare is negative is use this And So for equity investing million cash

George Sutton

Okay.

one other it of Just and business. the gets really the seasonality question to

opportunity customers shocking quarter well because how Does purview QX did in the suggest market is people the who audience. challenging of is are even in that your it's in. that in limiting full you to when So you only therefore which you that have a potential very aging the much open have And period? bigger enrollment

Dave Francis

quarters down for of things, them events essentially from mean reconstituted in the case to in portion work and dual of marketing newly our remember customers beyond that that and are population would has we population that do those rebuild So, moving to population those potential is get the and organization significant they expect and George, goes be to a relatively time us on Medicaid spent he's a our date believe which into customers a has they to the that transactionable whatever that are tell Hanna's scratch folks eligible an a divorce, get also focusing to Medicare deal component. to you anybody we done them is that get aging their What with transacted. lives, us identifying we is the special performance platform our meaningful of in of to fact good though capable I the organization, change. the too to couple continue I may are the who a organization, eligible these they have eligible event Day Tim Medicare during Analyst

every organization possible. aligned the that the them virtually showing that are sales from organization comes perspective, organization, and essentially to customer marketing we sales best and success our extent getting so that We're them helping rebuilding of into with capacity the a touching

there that up range. Our Net in continue XX to Promoter scores be

job fact of the we've in of that non and everything that good coming just that So management customers very to identifying those a these The course. capable new capabilities we're it those in. do transacting with are of team doing has rebuilt AEP all

Operator

from And Sparacino. line the our comes of last Frank question

line now is open. Your

Frank Sparacino

been Hi, guys. you. My they've answered. Thank questions

End of Q&A

Operator

Thank question-and-answer back call you. turn any And the I now that for does remarks. Scott like to further Flanders would conclude today's to session.

Scott Flanders

commentary very not victory results. Well, realize everyone is from fourth taking lap your that in we're on you And thank our business our results. the for We excited. half these quarter. a a of We're kind than more executed

you earnings tightly Thank forward to We quarter focused on updating And third call. on are we you. look our execution.

Operator

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

all a great Everyone have may You disconnect. day.

eHealth (EHTH) 25 Jul 192019 Q2 Earnings call transcript