EHTH - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2019 eHealth, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advice that today's conference is being recorded. Instructions] [Operator

like Please conference go now speaker, to hand Sidorovich. Kate ahead, to would over the your I ma'am.

Kate Sidorovich

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

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

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

We will enrollment in Medicare online Medicare our to enrollment and includes beliefs, expectations, growth which be including our performance stay market on growth, statements share, consumer business call including demand, our making competitive our statements this relating advantage, enrollment regarding regarding events, on statements our future to period. and forward-looking expectations

demand telesales the Our patients Medicare in retention online business, platform. profitability technology and regarding and investment sales seasonality, investments the The policy rates of of cost business and and rates, values, durations, our all acquisitions. marketing capacity, generation lifetime including conversion channels,

Medicare the regarding and year market political views also to current deliver for ability our their Our guidance, including and guidance. fourth environment full and assumptions quarter and XXXX our on all

of views today. Forward-looking from as represent call statements eHealth this

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

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

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

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

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

Scott Flanders

business Thank you, another quarter our Kate. our meaningful in everyone. outperformance of continued Welcome momentum Strong expectations. against with

recognized beyond driven approved quarter revenue Third tail originally year-over-year revenue revenue by XX.X represents members the collections conservative on cash during plans in we recognition practices. which Medicare grew revenue of increase our of recognized and million XX% quarter, that under as million, XX% we XX.X what

the sales EBITDA adjusted marketing significant Our quarter was enrollment net of capacity XX.X as greater loss our the as annual in quarter telesales during ahead financial reflecting investment will GAAP results made on period. call. million. the $XX negative third Derik million, our Medicare detail later investments well cover in

we quarter, period. the the for enrollment completed During preparation annual our

expanded for this a another our doubling more and revenue. in Indianapolis. agent sales headcount telesales last enrollment volumes commission set expect successful We successfully center for with including to for AEP sale Company We to AEP record total year's capacity a the compared Medicare than

tools new past including agent increase and agent-facing we further we our across conversion base now experience Over and in-house agent our agent and flexible few tested the to are enhance customers deployed both months, These our technology expect available force. that rates.

leads with of further of programs refined attractive four quarters strong with supply ahead have at emphasis results and data the cost designed been high Our marketing over to on acquisition. a agents AEP the greater past analytics, quality deliver our

on a year online who a ago. demand device, significantly in stronger emphasis mobile VA, to has we meaningful Medicare into improvements a compared for Combined seniors compared growth enrollment been for enhanced volumes channels, choose online to experience to generation online year expect to these website with Our translate enroll ago.

selection plans, greater platform improvements CMS combined forecast, have growth Advantage the of plan The and by MA online we've affordability backdrop comparison our to to make Medicare broader XX% complexity in with supplemental are eHealth's enrollments rate carriers decade. of market expected more XXXX, introduced than and grow on carriers ever than benefits with made choice Based new plan market-leading been in the a been environment. consumers. Increased a highest strong implemented annual more plans broad relevant of against

up at put, our and X. guide to of us conference strength, recent the we from of allowing entered position XXXX end on investor a high to our revenue Simply AEP forecast EBITDA October

remains Our the business our high. trajectory in of confidence

is Turning excess of to market. were carriers well and delivered Medicare year business, recognized insurers platform, the quarter to ago. XX% commissioned from engagement which XX% have total grew an revenue third growth in eHealth of revenue our grew advantages customer as increasingly overall enrollment performance compared a revenue Medicare XX%, the Sponsorship

We are digital to portfolio, portfolio are emphasizing continue our more enroll with call online advertising our limited a center demand we increasingly and market strategies, which approach initiatives, relay to within likely interaction. to on or diversify consumers no generation target

the quarter in submitted just ago. To with XX% quarter our this applications X% year of third online, in major medical end, third a were the compared

in believe a performance We in portion of year-over-year. increase online times delivering online are number our four activity. we applications eHealth's of enrollment quarter significantly regard to strategy Third the expand solidly this represented on

higher XX% strongly to Family compared volumes commission IFP the to and Our for business, grew revenue driven of years, retention. returned plan first IFP several member XXXX. new quarter and in the the third medical Individual grew and enrollment XX% members to Approved time in quarter which second increased by major growth continued perform

over to of revenue. XX% the increased resources portion to ahead small periods renewal Turning as sales the Small market, XXXX, our third we shifted time the XX% Medicare same AEP. the due commissioned quarter a compared defined number the business of submitted for to of applications business to revenue higher

same quarters Annual year, we important consecutive last Medicare growing year organically to period revenue a exceeding period three and this week confidence. of of position began single enrollment from a expectations XXth and In our we season selling this successful XX%, execution, delivered and October entered ago. the strength have every on year-to-date and quarter compared our conclusion,

majority the the recipients of front of a plan needs. best AEP, selection seniors their make choice to There's an ago. this have the and informed And ahead is suits enroll optimal platform an access to During a year that and political individual activity on year. lot Medicare compared to a a plans of destination been for broader our of election

that business the election. individual presidential The proving eHealth's a help to model remain marketplace be in program Advantage needs. for more of solution and more country. primaries access seniors insurance to and believe technology regardless best centric the So, cornerstone outcome of insurance focus the health the health platform Medicare we their seniors the and of this is to will administering consumer best

to now, And over the I will turn specifically speak call more Derek the numbers. to about

Derek Yung

Scott, everyone. and afternoon, good Thank you,

initiatives third the period. strong telesales Individual and revenue marketing enrollment growth our our of annual quarter significant results and capacity and Our and enrollment Family a in reflect in businesses ahead investment Medicare Medicare and

a grew million XX%, in greater our third approved and customer by members, will I detail in of XX.X carriers by growth to revenue, X.X sponsorship Medicare XX% in than driven fruition, non-commissioned describe primarily to revenue, compared year-over-year ago, business in due tele Medicare XX% In revenue increase million which driven revenue estimated year a quarter greater policy shortly.

another profitability. The year. XX be volumes what of Medicare million fourth record and segments generated million, we million season is for to selling our expected last have Year-to-date, for to Medicare a prepared profit in terms enrollment lot X.X compared period segments same of was as reflecting investments quarter X.X the revenue,

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

individual revenue and year XXXX small business XX a wasXX.X Third segments quarter million, increase a to family our compared ago. from

strong XX% members products, medical Similar saw approved for a grew of quarter, number in to the increase year-over-year. at major second ISP which we

of of are products, durations longer continue value. addition, resulting these in seeing In estimated higher we trend lifetime a

LTVs of as XX% year to Third and and duration. policy Family of quarter quarter compared constrained excess result rate ago third plan commission Individual an products a favorable grew for the

XX% in year million in a segment was of business revenue a small increased revenue our million profit by commission of business group compared to and XX% to business small compared ago, X.X Commissioned IP individual family the grew quarter X.X XXXX. The year-over-year. third loss

was at the estimated end third approximately end XXX,XXX we ago. XXX,XXX membership at Our a year of membership reported of the compared quarter of third down XX% estimated quarter to Family and Individual plan the

to a a members small business The with on increase estimated of XX% ago. compared year approximately number XX,XXX projects

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

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

Before I constrained each estimated I move ASC value seeing our that accounting, partners. XXX we the the lifetime we're LTVs discuss with values our business. revenue lifetime operating dynamics by recognized will on provide or Medicare more moment to Under carrier detail on approved expenses, in based the on that of is

expect estimation input member. to experience in an a policy of detailed rate paying duration that based including we the it's analysis past per of payments approved commission business for our and determined several of collect are LTV historical over base The on with life commission

factor constraints what discounting These are revenue LTV to effectively compared expect we reduced applying the collect. by we estimates of to book debate then

to revenue or factors. Just the duration of for due commissioned constraints policy fluctuations against active policy insurance other the rates external duration, overstaying in

demonstrated estimated cash we We for recognize revenue using constraint when the is in tele recognition are sold constraint excess revenue in collections of approach is Our how quarter appropriately and we're tail LTVs and of recognized previously conservative this revenue LTVs policy. XXXX. Medicare every

existing expected Advantage LTVs have consecutive year-over-year a five majority for better Medicare many on duration for policies. our of driven of existing higher plan, rates and grown quarters, policy constrained basis commission members Medicare our complement than which on The by

growth On Medicare our Advantage products, LTVs we to call for of noted quarter fourth several, that of that the the constrained by LTV of mid-single decline last digit application quarter XXXX in quarters fourth earnings several continuous and to July, we after XXXX. compared pre the expected for in

XXXX. period driven increased quarter XXXX. Medicare members the of Advantage that enrolled turnover that this observe during on We enrollment place that the that first this last time application fourth annual since driven of first in by was which the period higher-policy was open we year the approved the first for of group year during forecast quarter enrollment This by the quarter turnover in specific took we the believe in

turnover have Advantage Medicare our earnings lower Since in observed call the of cohort. July, a trend reversal the under we with

narrowed. has As a how to time cohort prior compared on a over on turnover Advantage result, the Medicare to this turn basis difference between by cohorts year cumulative date this

in we XXXX. Advantage this for circumstances light by the quarter LTVs will two Advantage quarter fourth LTV points of percentage Medicare At constrain the of be that point the constrained to these only compared fourth down expect Medicare one to

For flat year our full to Advantage average the to XXXX. are XXXX be expected compared slightly up to weighted LTVs Medicare

increase receivable to compared an to balance the and XXX increase end end million, of a balance at ending balance the second third quarter the the quarter was third at the of of year at Our the million quarter million the XX ago. commission compared an of end of XX

membership reflects that future balance described discounted I to expect existing collect our receivable commission factor by constraint commissions the earlier. on Our we

This based balances on recognized in commission quarter that enrollment our reoccurring for each in for quarter by is the any our lifetime amount periods. were that Our is on enrolled prior existing the estimates. enrollment, we members increased quarter revenue commission received net and of payment value commission upfront payments as which increase receivable

million commission XX.X During the collected third in we payments. quarter,

their well to would our to XXth in review on-boarding made quarter, sales like metrics. as training, of start and the investments Indianapolis expanding operating on telesales as and In new capacity and hiring, I Now, significant AEP. agents third ahead Medicare expenses October profitability we the including launch

expanding our Scott earlier time a of ago in on a As of same agent compared through the mentioned XXX% outsourced excess year house agent to our force. the count combination in call, grew hiring we

quarter third compensation a which million XX.X grew or stock-based customer Our compared enrollment exclude a third ago. XXX% non-GAAP year to care quarter expenses

a hired licensing with quarter kept Reflecting through as following throughout not fully completion agents of operating for agent year last majority this training. this were haven't fact of the third well nearly our are count The were they the AEP. on-board in-house the investment as the most agents productive and we that the of as larger going

in expect the As the year, a a fourth come we sequentially enrollment resources volume year-over-year result, per this much significantly enrollments increased member last to of more on agents our care customer become larger expense basis. and expanded Similar approved that to both averaged quarter metric down telesales a and across are when productive.

year-over-year. and grew demand the tend margin expense of in advertising higher on also as in XX% marketing marketing to XX% on members, generation marketing business non-GAAP expense million but have excludes Medicare the growth compensation stock-based that have XX% Our X.X higher Medicare Variable or acquisition, channels online comparison we more in which grew our direct conversions. costs online invested approved to

of X.X was which Shifting towards the increased third for quarter the your and strategy was which at higher than better of XXXX. growth scalability in negative our should million online in lower quarter translate for our Medicare agent the compared XXXX EBITDA Adjusted expectations penetration third overtime market. per negative enrollment the operations cost to million, into core of XX.X is

to acquisition of an net XXXX. net for depreciation GAAP adjusted amortization and in third earn X other for loss out taxes net value change stock-based income of loss quarter tangible, to fair from by the million calculate third costs, charges, compared of XXXX GAAP XX quarter amortization, the GAAP million, restructuring loss. income was compensation, our and of benefit We liability, adding of requiring EBITDA

million, Our include XXXX. internal quarter software compared from the third cash expenditures, XX.X third operations Capital quarter were flow third for which for million a X capitalized negative approximately negative was the million X quarter. costs to developed

cash outstanding balance was line had million XX.X no credit. we our XXth. September as of debt of Our under And

December eHealth guidance total his for is as this available a third to XXXX fair updating ending measures reduction for of XXXX. the the and EBITDA our of adjusted guidance GAAP on the rate. with earner reaffirming XXXX, non-GAAP and due information the for revenue XXXX, year and GoMedigap October And XX, certain XX, of for tax also full income assuming in full year in ending of acquisition connection December XX, liability quarter change value Based

earnings online enrollments ranges reference scalable the release and our place in observing. included the quarter Based of consumer third were guidance Our in of are our demand resources quality center XXXX on acceleration for your call and to strength

XXXX and ability and implies the confident This of members year-over-year at XX%. EBITDA Medicare are approved high guidance deliver our to revenue ranges. end the in We of a growth over

increase quarter, our fourth increase in On XXXX. Afterwards has fourth to return absolute the investment a growth dollar by basis, significant we in a been forecasting enrollment year-over-year meaningful those quarter in driven to quarterly and revenue. relative fourth a are EBITDA quarter forecast grow results to related on sequential profitability of and we our significantly a margin basis

business these of end XXXX of XX% and to and growth are change current based implies you current time. XXXX top want of estimates, that XXXX. EBITDA to The of guidance I QX may compared on EBITDA guidance which comments indications our remind our our our and fourth judgments, any at quarter assumptions

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

our a and the metrics of to past the order months. I top customer to the been keep mind topic compute retention analysts context turn important to over rate address in we want in to it's of operator retention, over the membership customer dynamic. In following investors call that's Before calls few

in number assessed not given we One, our more of a paying period, and accurately by members. in period the retention are that number add using members rates the approved

an Advantage average approved of into XX%. members Our have paying Medicare converted at

quarters. members that high In quarter, given addition, the during any some are of especially become the pronounced spillover don't a effect quarter members proved until following paying enrollment

decline year-over-year turnover policy us getting persistency and has year approximately of post years. average to three current for in one years of is Advantage. out particularly policy duration help Policy policy higher first Medicare to and been strong; our the approval is Second, in start

map and Three it are operating policy trailing and lastly, We of these as on now relations which retention more seasonality customer of summarize is provide metrics enrollments example basis. due accurate to posted also pronounced points churn to part our of at XX investor on an call look month slides, website. other and

will coming to we quarters to and metrics or changes revisiting investors Our further evaluate, additions goal to and to analysts our can and we our has be over goal. make be always if transparent fully that report

call And questions. open for the we'll up Operator? now,

Operator

you. Credit Singh Thank Jailendra from The comes with Suisse. instructions] [Operator question first

is line Your now open.

Daniel Aversano

my you calls. in Aversano Daniel a is Do had details call unanswered taking you more center Jailendra there filling year This for Singh. question. you for last in I approximately have Thank Indianapolis? any the new on know XXX,XXX

so leakage you lastly, And you efforts? and your can seen talk have investment less So, more far? engagement about marketing

Dave Francis

Dave The a for Francis. without Thanks hitch. is has question. really Indianapolis launched call center the This

staff previously we as first hit on and people our a better-than-expected. everybody as about we and in XX, that gone like I valve it's performing hiring, talked the office been and when think full taking a we've appointed; to call, without sales that office, trained, had that many XXX say, and they opened looking AEP were as had opened I October was

the we it constrained we to year to talked As of were that about unable last relates calls number because capacity. of answer that

So we telling We operating about able the way but to it's call exactly far centers good the AEP put what through less will did our how so we and we number got in last than the earlier touch. AEPs, feel all that meaningfully are very customers of we early are operationally full as year. leakage be,

everything to about through we good different relates mail direct pleased moment. across market the up of where said, everything's how things expected. with engine right going prepared say very is way we're the the and side too to as early it's length less than we from feel search stand at think to end, marketing AEP, at working that And marketing, investments the talked made We've channels we're significant the the way the With about that way I things, see but so all moment. we all it As way that's some from very at going. to AEP is to of XX% now

Derek Yung

The ability year did have given have less force the to only of year in more to as thing call year size that revenue we QX, our compared In productivity this last is. and the last year in I'd serve into calls that telesales to than we to that this compared selling add QX. QX,

Daniel Aversano

able of -- Okay, customer Do bringing and great big some on to more, your also be about resourcing initiatives lead a your question. and you, and for quick customer thank cost? opportunity you're talk lead resourcing just you focused one down acquisition Would and there? you the see

Derek Yung

I start with can Yes, that.

So, we the been to It's continue driven years, consumer you for down in member and on to scaling cost direct a and marketing. acquisition. seen marketing have multiyear we effort, per success customer have our many have

Our keep that really to growing enrollment. while now is focus scale continue

reduction So to and just is look to echo of that maintain to kind our economics here for we it point, scale. marketing desire while of not is

program at more acquire members was and and expand the continue that to outsize it component by online more compared increase channels for a through of other And rate Scott, the will our marketing discussed evolution here the we marketing online. to that analytically be channel the enroll to key more online continued driven reason to we is is is tend other our which highlight and to marketing

Operator

our of you, George comes question Thank with Bank. the and Hill next Deutsche from line

open. now is line Your

George Hill

Derek, frame history the talked statistic can members, other this late, you guess members on Hey, about little talk of XX, a we is good I approved here, apologize this. I this the of becoming can the to kind about you guess hopped or trying relative I'll call X% to I'm XX% read and new? paying I and you if afternoon bit covered minutes guys, time,

Derek Yung

prepared relations more in point to that's good that George, I in has commented and website. I'll people investor question on what details remarks, a slide we posted the which my our

disclosed has the this we the been been very even on the XX% steady that in in in and slide. that So, figures business have history we've Medicare

months that see when last XX% the You XX out XX to averaged four at on you to can look quarters.

am plan. what not and people unusual between where situation And a or drop qualify for happen are this then is I other providers unhappy but to a brokers paying is, don’t because they they just with not approved pay. see not the to tends other off if eHealth So either plan actually

George Hill

drive LTVs said little I of percent I you and said going to the to like is other visibility and LTV end we digits. there's the versus dialed component, have mid a one single I guess you calculations. moved guess puts two QX, going the the have LTV like a now to talk bit components for I be for couple in sounded guess late. which you be looking can apologize of Okay, can that It you, that QX my erosion when better communicated is I versus good is the of retention at about takes pretty factors cause

Derek Yung

there insight good that's Yes, George.

there're and consistent just inputs is on. those of enrolled. commented had we primary in duration, paid cohort LTV that ones are policy obviously approved to components rate a So two ration commission ladder fairly The has

able mentioned, the that So here, because it was, switch given as be And in I prepared of meaning we in that the OEP which People they period. give do to out saw enrolled more, I to ability the the the color policies. more had of AEP XXXX, who persistency around more is during what turning of OEP remarks period. coming really

is switch, Since seen trend historical of what not did where compared they're longer then, for reversal we've we what a that who staying on than people see patterns.

the basically narrowing. together So, a cumulative when on two seeing trend those come we're basis, things

So, the it's yet. cycle year not obviously four

seasonality heavens the to seen, this based we the people OEP. be shifting seen say, the But as seeing increase of the given far, reintroduction of least more are we at so opposed or a permanent introduction to maybe switching perhaps can in in is final AEP. we've a of the switching So, chapter of with still a on for obviously

George Sutton

neglect And I and Dave. to to want Scott don't

a switching, you guys to thinking people go-to-market but QX? I ask in how applicants anything the about applicants people I Given I who what the about is metal or people, who that of whether is I how in it's are get season? the what came you've a I marketing, a and want second to switching the versus I'd little of as almost on people and guess you are the QX? bite guys the year do and You switching are to want love aging attraction switching So, like keep can’t it in retained of about this like of from is know, you beneficiaries, of guess bit about the to thinking period apple kind have switching pedal you QX we relates spend, Do to marketing to guys care enrollees AEP. the how kind perspective. prevent around. second second time probably and know, it's season,

Dave Francis

George, is but have we I'll up. lack those Dave. as we've of signed go customers at Scott things a on QX. there's Number follow So one two and that first term is, on, for just playing this look I defense better

quarter this and we turnover that that limit year we saw cohort. the previous new for of customers QX, increased extent buying first that the to last in can So, the

outreach We've correctly questions and up do with don't their that If plans to we impedes to have for understand them they what they're got less so to make those there's that that they there want us, using folks using our make those that turnover sure specific them to bought, so in they it to end book a and they turnover. they're help exiting that properly. right to some understand folks that the sure to any have want better to then in If do them for they place book. keep we're products

And many change, we based Anytime have the then to and using breadth as have. significant to they capture doing our be given believe marketing and can we last into to platform secondly, relative opportunity growth expect that demonstrated be customers choice outsized so, growth for And the the so groups first those broad plowing of as as additional possible. quarter, tools rates that saw year we market. we talked to as through resources the in we fully of marketplace customer ought our they about of the with

increasing in in it's first new into persistency eHealth shopping. the the of quarter the added fourth platform including to an book, to plus in the the our So quarter their that of back are that the OEP all the folks encouraging we've market those coming come customers to ones do

Scott Flanders

What out have and that and plan I add those QX to a churned in fourth from shown year's last quarter is, churn. would in low that AEP new members

And is got the is and then. plan so, into consistency they what in probably got the strong then plan case have right non-optimal and the QX since into

this the flag to have Derek in -- we higher covered is a long because And why been dramatically. we abated lot, CFO So, churn script see might flag churn. we lost awfully an a we'd that but pleased

It's flat overall. we once So, churn it when us. was alleviating year-over-year it to trying ongoing concern from about implied we thought for And substantial issue. today's call, we're

Operator

question Thank comes with next SunTrust. Tobey our And from Sommer you.

open. is now Your line

Unidentified Analyst

Tobey This is for for [indiscernible] today. Joshua

now? take a you to would in invested to the experience. lot harmon long would follow, you It how You've the likely get right company are enrollment for technology platform appears, to there where another is in say

Dave Francis

I coming There perspective. where a a It's platform are for quoting about from both aspects the lot call able way. an the of frontend that customers are few we online markets customers that is platform of talk our and they of are answer of We will would experiences we've with plans people us sort they non-proprietary its the different show the and side online, and seen thing. There lot that important. to experience creating Dave. to the business. a and engage One where shopping this is telephonic and

our shopping customers is invest to The sure heavily to that the over believe the make all the frontend way our shop the of and continue country, we're regional on of backend with We them. XXX we small what national business across the available products the we experience large to of companies doing another have is and connect proprietary insurance that that one. best experience across

but platforms connections technology have difficult takes in growth oversimplification part that all that business is are payers, is and the but to entailed the kind another that the in is of across replicate back, given open we a year creating the linkage. replicate and the months, of insurers if That's business electronic of to of that. to very that all to maintaining that of it's for build you inconsistencies willing competitor logic to take, something what not up and your potential And end the different what it quarters believe or the all

that on customers for will people of the So, coming we in, the a we and engagement coming given believe the the side have it folks lot front more our experience end see shopping into full have market end, more competitor conduct better growth difficult place the we market that do. But to a to that we time believe end to friendly potential way to in we for extraordinarily put consuming a expend generally. customers place together customer's the is experience

Operator

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

now is open. line You're

George Sutton

any mentioned quarter your row. million the include QX in the five revenues? a does You tail assumption revenues have quarters tail in were increased and Curious, $XX.X

Dave Francis

questions. two are There

in quarter million a quarters Just I can that quarters specific comment clear, to a but XX row. we've seen for the we row, be is revenue correct. in five increased tail five don’t think

the our there -- revenue is been also guidance, So, exceeded actually tail What first our revenue case around expectation have and tail our is is that's included since in for true expectation. guidance.

in policies so better the driven the persistency, cash our than from of that's when collection, it we earlier see kind expected questions saying, longer to people George, results of mostly really better relative because case. And the is

the around have we fairly obviously, people. and large membership of analytics a So,

that this in there that can more, for see of life some they Medicare we is the around have been Investor have all data variability percentages on the churn of Relations materials. around yes, at included it's policy The longer least a almost and churn, less cycle we our Advantage

So, that come more on question see plays your on to QX obviously but answer hope George. we that based out, how

George Sutton

higher could combination of for AEP only capacity the Wondered, your if explain and increased you of your online versus plans the the assumption growth ads?

Dave Francis

about talking that? are Historically, you

George Sutton

a you're as more To would center define be of I clear, assuming assuming you're of call capacity, what capacity. doubling

quite are rates bit are online ads, You higher a assuming your but only different. growth obviously

make I to dichotomy. understood sure wanted just So, that I

Scott Flanders

I that would just guidance our conservative. say is

George Sutton

me looked That found relatively finding folks seeing, Medicare this Plan Are most you for people Last and far work and us Finder? Finder it this any impacts question, Industry was be to in my way. Plan you unlikely including ask Medicare let season thus assumption. from uncomfortable at to through. have are

Scott Flanders

No.

Operator

from you. Morgan RBC And the with Markets. the comes following Thank question line Frank Capital

line Your open. is now

Frank Morgan

the I'm be how you about Good anyway in and you're it's do presumably updates on some give AEP? of curious, so about going kind this getting of AEP. going but process, you so you're share you mean, it's quantify early to the any just able far, benchmark afternoon, kind specific just could still numbers might those numbers to real-time I far how have or understanding back that going in

Dave Francis

say numbers thus in time and right, very plan almost numbers the you're for real far. that with pleased that basis. we plan the see AEP that on in are I Frank, are coming the for would we the we way way

Scott Flanders

convergence. record and calls Record

Frank Morgan

mentioned Does in you just been potential any somewhat affect space. plan last in has lot strategic that the the third would in way my the your a given Or for the curious curious, in diluted AEP? does buyers plays then you Is a in know just fair you XQ landscape but finder, competitive about growth view competition, expect had get to the the that online XX% volume? that one out? of that quarter. that overall then number And see number, you know And with seeing growing of just how the was

Derek Yung

the So, to we have fourth applications question go expect we out. quarter second do answer historically let online me sequential and basis, share On a is.

competitive confident add. would So, and and driving success that you in preparation towards the with in then four heard our that We I'll Q&A, Scott play Dave earlier And happy in a large On been know, very on very and the as far. prepared thing of are side, expect a also you and very market, for can and same a in well. Frank. start happened execution AEP the had And XXXX we've we've our lot we quarters. as and last growth then the strategy as so in remarks we

Dave Francis

quarter got trend so that the the for and and I historically want online over the fact that. quarter, we've thus to in third this Yes, that say far fourth to seen zero the is just enrollments to we've into accelerate XX%, Again, do Frank. quarter

the and continue the driver the for a P&L for high meaningful both online perspective. to of side have transition from perspective a for positioning to We expectations business be us, a strategic

we're year. we XX% entire that pleased XX% to the with particularly really for for So, where only those are given numbers looking coming online were in

pleased customers. with to marketplace really to our again, acquire with competitively And, we're in we're ability that. what the pleased we're relative seeing So

Operator

David Our next with question from Jefferies. comes Styblo

line is open. currently Your

David Styblo

aftermarket XX% you investors think in The I few It's that as quick marketing variable that the think take need things have. be just to will released? the How I Or it dollars from longer those happen customer the be that guys add it is. first ask and can I would of all for how I'd How we questions that? about does a stocks How enrollment. to fourth do and to flattish? clarity XX period maybe help members up agents down seasoned? the obviously can raising that that something back to Is on care trading, couple are first a those That does some see quarter thought you costs to a beyond are that normalizing? since approved question get

Dave Francis

were going given to came capacity So, we or third quarter terms both large preparation exceed of of in that those looking expectations, AEP. in in metrics line place the in put our

many largely gain were sales which metrics quarter, the agents and at the So also half on is the of basis. AEP licensed. in of and period ranging those training, that the on to obviously because And side of will because it them way third the really we in they be year really were normalize getting productive, look back getting

On and as marketing pick-up marketing to that an propensity marketing the have a total we there spend prepared of online we're comment really higher acquired channels remarks, online was marketing as people because the side spend; online through percentage our in [indiscernible].

So, see expectations our and enrollment. as for online you heard, we QX did and in to

a result So, from corresponding positive you that effort. see

at a variable the the on flattish for stock. we So midpoint, guided a had to total year

online, always does make sense the to and investment. think investment come increase opportunities for sense will it marketing side look make still it market the additional in extent from online through They the case. more I that's that likely

Scott Flanders

appointment. specific, on through they CTE the on majority to as at third standard unproductive in the related the capacity here was cost, directly of be boarding vast to cost put training made To were more significant significantly are the going that fact quarter investment and that we benefit

anticipation So, possible blips capacity of the consistent the fourth in we in into cost third business absorb many prior as fourth the coming the quarter for to year. in a the help having customers and quarter the

David Styblo

Thanks color for there. the

just I second can element you the think the on is explain that LTV.

quarter was I the the pretty thought to new LTV and guys the first in MA like you would cohort. was sounded looking tailwind duration earlier X% I that again of because would of up So the better half the just this XX% been only X% a have up, strongly and that have versus have guess comments year. some on

X% LTV on sort then to side explain X% just also help see to up you the in that part the me got you XX% can to first LTV, on on versus half of what's the accelerating MA happen So can understand declines net the stuff on well? as the and

Dave Francis

with on we year to Let require kind half our a really just and to that, required And of as that. look the increase scale maintain side, then that we certain operation are business about so of degree we persistency MA aspect you pains GoMedigap a caught start through really, growing and going ago. me around we them

on you at LTVs. side, some on see fluctuation. One third is at when seasonality there On so the MA a aspect quarter lot look will look if you basis, LTV we is going of a sequential

use concluded back also out flowing the -- why we that so look basis, to year enrollments of because XXXX. quarters it the impact look that’s churn hasn’t QX. reversing that still normalizing the favorable behavior and to narrowing we're a comparable two in year-over-year been in have our see policy and rate so seeing were of you we increases duration, as durations get why average we we And prepared year On but new in LTVs we more that’s comment in that early either we remark, early a QX ROI and quarter, in are the at longer starting saw and flattish

David Styblo

of I Okay. overestimated. And not thought fourth the quarter XX quarter so just fourth that’s back sort was initially a the then, event. of of

three, really I which the in down the points. year like cash sounds it digit, the happen usual You're correcting was downward thought was for of guidance XX, doesn’t in them single but sort or that that of quarter naturally the it throughout actually up it X fourth happen two does event. quarter

Derek Yung

pay more does to. one the a quarter of it it Yes, relates dramatic that

on estimations our seasonal. it are look So, to but you back, is

that So the specific in quarter so build other to as as population not quarters in the and QX But new churn comment is one, is season nearly that cohort. that’s terms were to. in just more the call ADP both specifically LTV of the addressing much now into the we and to related

Operator

of And James. line comes Raymond Peters from Greg our with the following question

line open. Your is now

Greg Peters

then question a one have follow-up. and I

seems basis. be or almost into There market coming strategic the player conditions. a daily competitive on mentioned to You new a

and us color ever give online is was could in enrollment the So, the if we've of additional costs, process market your go your strategy I things lead the around been one the quarter? to you and rising since XX% hearing to third wondering some drive

Derek Yung

our have understand I how in pressure competitive if up initiative that's of question we So, shown our terms your additional is, and acquisition seen against marketing cost.

Greg Peters

strategic pressures? know new about market, you in your if of the with in that I'm just the has just context market wasn't rising We're hearing been clear. that And X% those how beyond I'm sorry reported your of you're it go the the players dealing third coming quarter. into and/or strategy, leads specifically curious you cost to

Derek Yung

online the increase mail in compared increase and other our And response the direct less market TV, QX, primarily to reported investments channels. across In channels broadly related direct so that direct are with channels we both principle direct sides. and traffic on pressure to

increase there was we QX in in point a saw that So, nothing competition. that to broader

growing reasons good as carriers. and very-very you for a and same Medicare interest obviously there probably because in a that around market, of [indiscernible] see of thing the we market see they said, Advantage With the opportunity that aspect lot obviously the right that attractive the is are

we our continue perspective. do scale. aware of we're a marketing allows to advantages manner continue acquisition feel And marketing to compete do in to lead allow have lot scale like partners. gen of a importantly lead course, we enrollment us that on direct is that intensively opposed So, and competition. our that we online relying go from as most to We perspective capabilities of to we consumer an And both to through in

Scott Flanders

the we all cost that we of Greg, still the while rate maintaining competitive competition. grow margin market despite impact incremental multiples that believe to of continue the have business in bringing place the we're at to opportunity very it's market a on that

Greg Peters

the in give follow growth question the is us the wondering cash or if just perspective down near-term cash give opportunities flow positive flow updated that? understand a past, update, or in that on is. Maybe us and or you My up might sacrificing operating neutral was you an the operations flow of dynamics can suggested just an I from free year you have slightly cash or could point But two I cash which I road. think that turn at some flow might

Derek Yung

to on the close Yes, XX be would at we this March had Day XXXX the our we breakeven based trailing Investor basis guidance month at back May, in point. on commented that

other obviously then break able upfront customer which guidance our upwards to in model to flow time for had expect we don't period be that acquisition. have that our same at heavier revised since operating business and commented settings investment We is at we cash even given be

there on we to at had growth. us to growth plus the day. we to view now our revolving be a of pursue facility to allow opportunities scenario $XXX our to additional cash more the pay capital that are pursue we the If discussed as able in for five give to access more access on strategy to to analyst tail balance So wind and sheet commission for scenario our us leverage that that receivable both to more expect our will look growth, also year million

and talents that We will year year to we pacing this are debates see our be available of years. we ahead after since one revisiting our our and plan discuss the cash that where in more five dynamics in be will obviously long-term growth plan flow both

Unidentified Company Representative

our competition just me with that, questions well tailwind our two for of sentence the market volumes is us to that cause add one cash case. Yes, do margin is. We answers in of expect what enrollment to decremented excess to defer gross just the not would let any by firm more

Operator

And our Evercore next Michael question comes ISI. with from Newshel

Your line is now open.

Michael Newshel

comment unchanged guidance your, you Medicare since level full though you guidance revenue just of third LTV even capacity. decided investment the and on Can in the actually conservatism the not better up plus the on quarter the year came to leave set outlook improved

decision also about the just season? frame drivers then thinking like how just can So, you're of for enrollment that kind you upside and

Dave Francis

Yes.

remain the board QX headed would once call QX. the into guiding decision be make we and not earnings to and we level that at the So, decision a made team up guide

a QX. that made this where of decision irrespective we is in So, was came

that. be So, read it's into should nothing

Michael Newshel

productivity there of a factors like a to demand and quality count the And then in Or too? quarter of seniors terms upside some factor? since Is for the key fourth for force leads the agent key also has doubled. drivers and is

Scott Flanders

while a side be positive just a that the margin the It's on board those marketing it's of on we've coming that and make the volume board that investment our we've basis agents more ability then to recently, to made those into It's that customer productive. for on a we've do And had perspective. to technology investment Scott. the platform on and from

increase conversion the throughout rates essence, fourth in So their quarter.

We aggressive, very achievable but build what potential an plan with is believe we leverage.

record very which Scott the to guidance record again, on has conversion commenting far. So, to said, with than Scott we way improvement so other for that coming And AEP pleased we been early further in and are the to be volumes season it's that us points, But business this in. that say beyond have.

Operator

line next question the And comes Springer Research. our Lisa Singular with of from

open. is line Your

Lisa Springer

agents is conversion between to capacity. groups? versus of a rates in there difference those telesales of wanted that the in flexible house just I ask And about much a expansion How agents? was two quick question

Scott Flanders

about The XX%. was in-house growth

firm. customer. playing the and XXX it batter the that better on using or balance agent. XXX the It with a the get conversion year, the less up call a as are agents, club the interacting they external baseball at has the last person newer rate So, they tools the and to is golf Much have, productive more then swings the to of There going is difference. they be

agent technology mentioned that process but we're for than side tenured I is than that benefits more before, we make is agents. for lot a goes agents tenured the efficient a a So, that there new more new and of to take seeing question AEP, of easier investment And make already no as the productive agent. to sales on

Operator

Thank questions back any at you. conference further would And not remarks. this Flanders to showing time. I’m for to like I Scott now any further

Scott Flanders

definitely ago of a year when we to of Thank were you appreciated May. headed to the into feels everyone for really me eHealth analyst the it caliber being question, matured paid since coverage this has and attention it the just that dramatically AEP

be change our [indiscernible] how in our is at optimistic we business not We differentiation. and think a The could is strategy our positioned. Xx more competitive about online, growth

forward when on Thank We a business the calendar of we’re you going the in uniquely I have you fourth we quarter. turns believe look remain as call. to and and confident So, said earlier, telling about the everyone it we trajectory being to our record XXXX.

Operator

and concludes you this for call. participating. conference Ladies Thank gentlemen, today's

You may all disconnect.

eHealth (EHTH) 24 Oct 192019 Q3 Earnings call transcript