eHealth, Inc. Q4 FY2024 earnings call

• eHealth delivered outstanding AEP results, exceeding expectations for enrollment volumes, revenue, and earnings.
• The transformed eHealth, including licensed agents, omnichannel platform, and brand growth, contributed to success.
• In December 2024, revenue and earnings guidance was increased, and Q4 results exceeded the high end of revised guidance.
• Medicare submissions grew significantly, with Agency model submissions up 49% above the overall Medicare market.
• Substantially improved enrollment margins, and the company was profitable on a GAAP net income basis for Q4 and full-year 2024.
• Adjusted EBITDA for Q4 grew over 70% year-over-year with margin expansion.
• Market dynamics like carrier changes, higher medical costs, and regulatory pressure increased consumer demand, benefiting eHealth's carrier-agnostic choice platform.
• Strategic investment in scale and market share capture during AEP, with strong marketing and sales operations generating attractive returns.
• Proactive member retention strategies, including live adviser support and proprietary tools, engaged existing members.
• Operational achievements in direct channels with over 100% growth in Q4 enrollments, higher LTV enrollments, and improved unit economics.
• Telesales organization saw conversion rate gains, with innovative tools like LiveAdvise enhancing productivity.
• Digital capabilities improved consumer experience, with 37% more visitors to the online platform and 58% increase in submitted online unassisted applications.
• Amplify volume was below expectations due to market favoring broad carrier selection and carriers focused on margin protection.
• Med Supp business had strong quarter with submissions up 9% and growth in ancillary products.

Medicare Segment: Fourth quarter revenue was $305.8 million, growing 31% year-over-year. Total Medicare submissions increased 38% across Agency and Amplify enrollments, with Agency submissions up 49%. Acquisition cost per approved Medicare member improved 23%. Medicare Advantage lifetime value was $1,174, and the LTV to CAC ratio was 2x. Segment gross profit increased 56% to $159.9 million. E&I Segment: Fourth quarter revenue was $9.4 million, down 33% year-over-year excluding tail revenue. Tail revenue for 2024 was $22.7 million, compared to $48.1 million the prior year.

• 2025 revenue expected in the range of $510 million to $550 million.
• GAAP net income expected in the range of a net loss of $10 million to a net income of $15 million.
• Adjusted EBITDA expected in the range of $35 million to $60 million.
• Operating cash flow expected in the range of negative $25 million to positive $10 million, contemplating positive net adjustment revenue of $0 to $20 million.
• Q1 expected to be primary enrollment growth quarter, with Q2-Q3 declines and Q4 flat compared to prior year.
• Focus on unit economics in MA Agency business, increasing contribution from branded marketing channels, reducing investment in third-party leads, and incremental investments in diversification initiatives.
• Dedicated carrier business expected to grow as a percentage of total revenue in 2025, with margin expected to improve as it matures.
• Plan to increase retention team headcount in 2025 to positively impact cash collections through member retention.

• Regulatory changes in Medicare Advantage rates, with uncertainty around Trump administration's stance.
• Carrier behavior such as commission suppression, which can impact enrollments.
• Market disruptions from carrier exits and downsizing, which can affect competitive capacity.
• Changes in D-SNP rules reducing Q2-Q3 volumes, requiring adjustments in marketing spend.

Q: George Sutton from Craig-Hallum asked about 2025 expectations given better regulatory environment and competitive scenario, why the more somber thought process.

A: Francis Soistman responded that it's pragmatic given change in administration, with wait for evidence on Trump administration's stance on Medicare Advantage, and Kate Sidorovich added on switching activity.

Q: Benjamin Hendrix from RBC Capital Markets asked about Amplify platform weakness and reasons to believe it improves.

A: Francis Soistman said Amplify is new, evolving nicely, with emphasis on building pipeline and delivering on carrier partners' expectations.

Q: Jonathan Yong from UBS asked about OEP activity and impact on churn, and resource allocation to E&I.

A: Francis Soistman talked about OEP activity and retention initiatives, and Kate Sidorovich added on retention, and Francis Soistman reaffirmed bullishness on E&I with focus on ICRA opportunities.

Q: George Hill from Deutsche Bank asked about carriers not paying commissions and rate environment impact.

A: Francis Soistman discussed rate environment impact on shopping experience, carrier behavior and eHealth's agnostic choice model navigating commission suppression, and checks and balances on carrier behavior.