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eHealth, Inc. Announces First Quarter 2016 Results

MOUNTAIN VIEW, CA, Apr 28, 2016 (Marketwired via COMTEX) -- First Quarter 2016 Overview

--  Revenue for first quarter of $73.8 million, an increase of 20% compared
    to the first quarter of 2015.
--  GAAP net income for first quarter of $18.0 million compared to GAAP net
    loss of $2.1 million for the first quarter of 2015.
--  Adjusted EBITDA for first quarter of $26.8 million compared to adjusted
    EBITDA of $5.8 million for the first quarter of 2015.
--  Cash flow from operations for first quarter was an inflow of $4.7
    million compared to an outflow of $11.2 million in the first quarter of
    2015.



eHealth, Inc. EHTH, +23.01% the nation's first and largest private health insurance exchange, announced today its financial results for the first quarter ended March 31, 2016.

Gary Lauer, chief executive officer of eHealth, stated, "We are obviously very pleased with our first quarter financial results across all aspects of eHealth's business. Our Medicare business is very strong, our individual and family plan business exceeded our expectations, and we once again generated cash."

GAAP - First Quarter 2016 Results

Revenue-Revenue for the first quarter of 2016 totaled $73.8 million, a 20% increase compared to revenue of $61.3 million for the first quarter of 2015. Commission revenue for the first quarter of 2016 totaled $69.4 million, a 20% increase compared to commission revenue of $57.8 million for the first quarter of 2015. Medicare commission revenue was $42.7 million for the first quarter of 2016, a 46% increase compared to Medicare commission revenue of $29.2 million for the first quarter of 2015.

Commission revenue from renewals of Medicare Advantage and Prescription Drug Plan products were approximately $29 million in the first quarter of 2016, representing approximately 52% annual growth compared to the first quarter of 2015.

Income (Loss) from Operations-Operating income for the first quarter of 2016 was $23.7 million, compared to operating loss of $2.0 million for the first quarter of 2015. Operating margins were 32% and (3)% in the first quarters of 2016 and 2015, respectively.

Pre-tax Income (Loss)-Pre-tax income for the first quarter of 2016 was $23.7 million, compared to pre-tax loss of $2.0 million for the first quarter of 2015.

Provision (Benefit) for Income Taxes-Provision for income taxes was $5.6 million for the first quarter of 2016 compared to a provision for income taxes of $0.1 million for the first quarter of 2015.

Net Income (Loss)-Net income for the first quarter of 2016 was $18.0 million, or $0.99 per diluted share, compared to a net loss of $2.1 million, or $(0.12) per diluted share for the first quarter of 2015.

Non-GAAP - First Quarter 2016 Results

Non-GAAP Income from Operations & Non-GAAP Net Income-Non-GAAP operating income for the first quarter of 2016 was $25.8 million compared to non-GAAP operating income of $4.7 million for the first quarter of 2015. Non-GAAP operating margins were 35% and 8% in the first quarters of 2016 and 2015, respectively. Non-GAAP net income for the first quarter of 2016 was $20.1 million, or $1.10 per diluted share, compared to non-GAAP net income of $4.7 million, or $0.26 per diluted share for the first quarter of 2015.

Non-GAAP operating income, margins, net income and net income per diluted share in the first quarter of 2016 exclude $1.8 million of stock-based compensation expense, and $0.3 million of intangible asset amortization expense.

Non-GAAP operating income, margins, net income and net income per diluted share in the first quarter of 2015 exclude $1.9 million of stock-based compensation expense, $0.3 million of intangible asset amortization expense and $4.5 million of restructuring charges.

Adjusted EBITDA-Adjusted EBITDA for the first quarter of 2016 was $26.8 million compared to adjusted EBITDA of $5.8 million for the first quarter of 2015. Adjusted EBITDA is calculated by adding stock-based compensation, depreciation and amortization expense, including intangible asset amortization expense, restructuring expense, other expense, net and provision (benefit) for income taxes to GAAP net income (loss).

Membership & Submitted Applications - First Quarter 2016

Membership-Total estimated membership at March 31, 2016 was 1,152,900 members, a 1% decrease over estimated membership of 1,162,200 at March 31, 2015. Estimated Medicare membership was 220,300, a 42% increase over estimated membership of 155,600, at March 31, 2015. Estimated individual and family plan membership was 523,000, an 11% decrease over estimated membership of 584,900, at March 31, 2015.

Submitted Applications-Submitted applications for Medicare Advantage products increased 53% in the first quarter of 2016 to 23,100 applications, compared to 15,100 applications in the first quarter of 2015. Submitted applications for all Medicare products, which includes Medicare Advantage, Medicare Supplement and Prescription Drug Plans, increased 53% in the first quarter of 2016 to 30,900 applications, compared to 20,200 applications in the first quarter of 2015. Submitted applications for individual and family plan products decreased 47% in the first quarter of 2016 to 74,300 applications covering 97,100 individuals, compared to 140,000 applications covering 188,400 individuals in the first quarter of 2015.

Cash - First Quarter 2016

Cash Flows-Cash flows from operations was an inflow of $4.7 million for the first quarter of 2016 compared to an outflow of $11.2 million of cash flows from operations for the first quarter of 2015.

Cash Balance-Cash and cash equivalents as of March 31, 2016 totaled $66.7 million, compared to $62.7 million as of December 31, 2015. The increase in cash and cash equivalents reflects $4.7 million provided by operating activities, partially offset by $0.4 million used to purchase property and equipment and other assets and $0.3 million to net-share settle equity awards.

2016 Guidance

eHealth is reaffirming guidance for the full year ending December 31, 2016 based on information available as of April 28, 2016. These expectations are forward-looking statements and eHealth assumes no obligation to update these statements. Results may be materially different and are affected by the risk factors and uncertainties identified in this release and in eHealth's annual and quarterly filings with the Securities and Exchange Commission.

--  Total revenue is expected to be in the range of $195 million to $203
    million.



--  Adjusted EBITDA* is expected to be in the range of $11.5 million to
    $17.0 million.



--  Non-GAAP net income per diluted share** is expected to be in the range
    of $0.38 to $0.68 per share.



--  Stock-based compensation is expected to be in the range of $6.5 million
    to $8.0 million.



* Adjusted EBITDA is calculated by adding stock-based compensation expense, depreciation and amortization expense, including intangible asset amortization expense, restructuring expense, other (income) expense, net and provision (benefit) for income taxes to GAAP net income (loss).

** Non-GAAP net income per diluted share is calculated by excluding stock-based compensation expense, intangible asset amortization expense, restructuring expense and the estimated tax benefit relating to these expenses.

Webcast and Conference Call Information

A Webcast and conference call will be held today, Thursday, April 28, 2016 at 5:00 p.m. Eastern / 2:00 p.m. Pacific Time. The Webcast will be available live on the Investor Relations section on eHealth's website at http://ir.ehealthinsurance.com. Individuals interested in listening to the conference call may do so by dialing (877) 930-8066 for domestic callers and (253) 336-8042 for international callers. The participant passcode is 90699144. The live and archived webcast of the call will also be available on eHealth's website at http://www.ehealthinsurance.com under the Investor Relations section.

About eHealth, Inc.

eHealth, Inc. EHTH, +23.01% operates eHealth.com, the nation's first and largest private health insurance exchange where individuals, families and small businesses can compare health insurance products from leading insurers side by side and purchase and enroll in coverage online. eHealth offers thousands of individual, family and small business health plans underwritten by many of the nation's leading health insurance companies. eHealth (through its subsidiaries) is licensed to sell health insurance in all 50 states and the District of Columbia. eHealth also offers educational resources and powerful online and pharmacy-based tools to help Medicare beneficiaries navigate Medicare health insurance options, choose the right plan and enroll in select plans online through PlanPrescriber.com (www.PlanPrescriber.com), eHealthMedicare.com (www.eHealthMedicare.com) and Medicare.com (www.Medicare.com).

For more health insurance news and information, visit the eHealth consumer blog: Get Smart - Get Covered or visit eHealth's Consumer Resource Center.

Forward-Looking Statements

This press release contains statements that are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995. These include statements regarding membership estimates for the three months ended March 31, 2016; our Guidance for 2016, including our expectations with respect to our 2016 total revenue, adjusted EBITDA, Non-GAAP net income per diluted share and stock-based compensation; the strength of our Medicare business; and the utility to our investors of the non-GAAP financial measures presented in this release. These forward-looking statements are inherently subject to various risks and uncertainties that could cause actual results to differ materially from the statements made, including risks associated with the impact of healthcare reform; our ability to retain existing members and enroll a large number of new members during the annual healthcare reform open enrollment period and Medicare annual enrollment period; the impact of annual enrollment period for the purchase of individual and family health insurance and its timing on our recognition of revenue; our ability to sell qualified health insurance plans to subsidy-eligible individuals and to enroll subsidy eligible individuals through government-run health insurance exchanges; competition, including competition from government-run health insurance exchanges; reduction in commission rates; seasonality of our business and the fluctuation of our operating results; our ability to retain existing members and limit member turnover; changes in consumer behaviors and their selection of individual and family health insurance products, including the selection of products for which we receive lower commissions; product offerings among carriers and the resulting impact on our commission revenue; the impact of increased health insurance costs on demand; our ability to timely receive and accurately predict the amount of commission payments from health insurance carriers; timing of commission payments from health insurance carriers; medical loss ratio requirements; delays in our receipt of items required to recognize Medicare revenue; changes in member conversion rates; our ability to accurately estimate membership; our relationships with health insurance carriers; customer concentration and consolidation of the health insurance industry; our success in marketing and selling health insurance plans and our unit cost of acquisition; our ability to hire, train and retain licensed health insurance agents and other employees; the need for health insurance carrier and regulatory approvals in connection with the marketing of Medicare-related insurance products; costs of acquiring new members; scalability of the Medicare business; lack of membership growth and retention rates; consumers satisfaction of our service; changes in competitive landscape; our ability to attract and to convert online visitors into paying members; changes in products offered on our ecommerce platform; maintaining and enhancing our brand identity; our ability to derive desired benefits from investments in our business, including membership growth initiatives; dependence on acceptance of the Internet as a marketplace for the purchase and sale of health insurance; reliance on marketing partners; timing of receipt and accuracy of commission reports; payment practices of health insurance carriers; dependence on our operations in China; difficulties, delays, unexpected costs and changes in laws and regulations, including in connection with healthcare reform and/or with respect to the marketing and sale of Medicare plans; compliance with insurance and other laws and regulations; exposure to security risks; and the performance, reliability and availability of our ecommerce platform and underlying network infrastructure. Other factors that could cause operating, financial and other results to differ are described in eHealth's most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K filed with the Securities and Exchange Commission and available on the investor relations page of eHealth's website at www.ehealthinsurance.com and on the Securities and Exchange Commission's website at www.sec.gov. eHealth does not undertake any obligation to update any forward-looking statement to conform the statement to actual results or changes in expectations.

Non-GAAP Financial Information

This press release includes financial measures that are not in accordance with generally accepted accounting principles in the United States (GAAP). To supplement eHealth's condensed consolidated financial statements presented in accordance with GAAP, eHealth presents investors with certain non-GAAP financial measures, including non-GAAP operating income (loss); non-GAAP operating margins; earnings and adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA); non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share.

--  Non-GAAP operating income (loss) for the first quarter of 2016 consists
    of GAAP operating income (loss) excluding the following items:
    --  the effects of expensing stock-based compensation related to stock
        options and restricted stock units in accordance with FASB ASC Topic
        718, and
    --  intangible asset amortization expense.



--  Non-GAAP operating margins are calculated by dividing non-GAAP operating
    income (loss) by GAAP total revenue.



--  Adjusted EBITDA is calculated by adding stock-based compensation,
    depreciation and amortization expense, including intangible asset
    amortization expense, restructuring charges, other expense, net and
    provision (benefit) for income taxes to GAAP net income (loss). EBITDA
    is the same as Adjusted EBITDA other than it does not add restructuring
    charges to GAAP net income (loss) given that there were no restructuring
    charges in the applicable period.



eHealth believes that the presentation of these non-GAAP financial measures provide important supplemental information to management and investors regarding...


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