falsedesktopEHTH2020-09-30000133349320000183{"tbl_sim": "https://q10k.com/tbl-sim", "search": "https://q10k.com/search"}{"q10k_tbl_0": "Large accelerated filer\t☒\tAccelerated filer\t☐\nNon-accelerated filer\t☐\tSmaller reporting company\t☐\n\t\tEmerging growth Company\t☐\n", "q10k_tbl_1": "PART I\tFINANCIAL INFORMATION\tPAGE\nItem 1.\tFinancial Statements (unaudited)\t2\n\tCondensed Consolidated Balance Sheets as of September 30 2020 and December 31 2019\t2\n\tCondensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30 2020 and 2019\t3\n\tCondensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30 2020 and 2019\t5\n\tCondensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30 2020 and 2019\t6\n\tNotes to Condensed Consolidated Financial Statements\t7\nItem 2.\tManagement's Discussion and Analysis of Financial Condition and Results of Operations\t26\nItem 3.\tQuantitative and Qualitative Disclosures About Market Risk\t47\nItem 4.\tControls and Procedures\t48\nPART II\tOTHER INFORMATION\t\nItem 1.\tLegal Proceedings\t50\nItem 1A.\tRisk Factors\t50\nItem 6.\tExhibits\t72\n\tSignatures\t73\n", "q10k_tbl_2": "\tSeptember 30 2020*\tDecember 31 2019\nAssets\t(Unaudited)\t\nCurrent assets:\t\t\nCash and cash equivalents\t87833\t23466\nShort-term marketable securities\t108637\t0\nAccounts receivable\t3854\t2332\nContract assets - commissions receivable - current\t158773\t174526\nPrepaid expenses and other current assets\t19335\t7822\nTotal current assets\t378432\t208146\nContract assets - commissions receivable - non-current\t445572\t414696\nProperty and equipment net\t14488\t10518\nLong-term marketable securities\t1294\t0\nOperating lease right-of-use assets\t43886\t36621\nRestricted cash\t3354\t3354\nOther assets\t24790\t18004\nIntangible assets net\t8856\t10062\nGoodwill\t40233\t40233\nTotal assets\t960905\t741634\nLiabilities and stockholders' equity\t\t\nCurrent liabilities:\t\t\nAccounts payable\t21439\t24554\nAccrued compensation and benefits\t22140\t29578\nAccrued marketing expenses\t6592\t12041\nEarnout liability - current\t0\t37273\nLease liabilities - current\t5111\t4759\nDeferred revenue\t26471\t2570\nOther current liabilities\t4731\t2210\nTotal current liabilities\t86484\t112985\nDeferred income taxes - non-current\t52782\t64130\nLease liabilities - non-current\t42400\t34305\nOther non-current liabilities\t3553\t3050\nStockholders' equity:\t\t\nCommon stock\t38\t35\nAdditional paid-in capital\t719104\t455159\nTreasury stock at cost\t(199998)\t(199998)\nRetained earnings\t256282\t271852\nAccumulated other comprehensive income\t260\t116\nTotal stockholders' equity\t775686\t527164\nTotal liabilities and stockholders' equity\t960905\t741634\n", "q10k_tbl_3": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n\t2020\t2019\t2020\t2019\nRevenue:\t\t\t\t\nCommission\t73544\t59762\t253986\t184595\nOther\t20740\t10151\t35472\t19858\nTotal revenue\t94284\t69913\t289458\t204453\nOperating costs and expenses:\t\t\t\t\nCost of revenue\t482\t410\t2160\t782\nMarketing and advertising\t33405\t25812\t104042\t72857\nCustomer care and enrollment\t43342\t40144\t101025\t81567\nTechnology and content\t17673\t12033\t46786\t31487\nGeneral and administrative\t19942\t16608\t60308\t42748\nAmortization of intangible assets\t287\t547\t1207\t1641\nChange in fair value of earnout liability\t0\t(5400)\t0\t15106\nTotal operating costs and expenses\t115131\t90154\t315528\t246188\nLoss from operations\t(20847)\t(20241)\t(26070)\t(41735)\nOther income (expense) net\t(101)\t568\t724\t1824\nLoss before benefit from income taxes\t(20948)\t(19673)\t(25346)\t(39911)\nBenefit from income taxes\t(6443)\t(8649)\t(10923)\t(17974)\nNet loss\t(14505)\t(11024)\t(14423)\t(21937)\nNet loss per share:\t\t\t\t\nBasic and diluted\t(0.55)\t(0.47)\t(0.56)\t(0.96)\nWeighted-average number of shares used in per share amounts:\t\t\t\t\nBasic and diluted\t26487\t23493\t25838\t22840\nComprehensive loss:\t\t\t\t\nNet loss\t(14505)\t(11024)\t(14423)\t(21937)\nUnrealized holding gain (loss) for available for sales debt securities net of tax\t(97)\t0\t71\t0\nForeign currency translation adjustment\t104\t(34)\t73\t(30)\nComprehensive loss\t(14498)\t(11058)\t(14279)\t(21967)\n", "q10k_tbl_4": "Three Months Ended September 30 2020\t\t\t\t\t\t\t\t\t\t\n\tCommon Stock\t\tAdditional Paid-in Capital\t\tTreasury Stock\t\t\tRetained Earnings\tAccumulated Other Comprehensive Income\tTotal Stockholders' Equity\n\tShares\tAmount\t\tShares\t\tAmount\t\t\nBalance as of June 30 2020\t37373\t37\t720976\t\t11698\t\t(199998)\t270787\t253\t792055\nIssuance of common stock in connection with equity incentive plans\t275\t1\t262\t\t0\t\t0\t0\t0\t263\nRepurchase of shares to satisfy employee tax withholding obligations\t\t0\t(9014)\t\t112\t\t0\t0\t0\t(9014)\nStock-based compensation\t0\t0\t6880\t\t0\t\t0\t0\t0\t6880\nOther comprehensive income net of tax\t0\t0\t0\t\t0\t\t0\t0\t7\t7\nNet loss\t0\t0\t0\t\t0\t\t0\t(14505)\t0\t(14505)\nBalance as of September 30 2020\t37648\t38\t719104\t\t11810\t\t(199998)\t256282\t260\t775686\n", "q10k_tbl_5": "Three Months Ended September 30 2019\t\t\t\t\t\t\t\t\t\t\n\tCommon Stock\t\tAdditional Paid-in Capital\t\tTreasury Stock\t\t\tRetained Earnings\tAccumulated Other Comprehensive Income\tTotal Stockholders' Equity\n\tShares\tAmount\t\tShares\t\tAmount\t\t\nBalance as of June 30 2019\t34267\t34\t449046\t\t11482\t\t(199998)\t194052\t131\t443265\nIssuance of common stock in connection with equity incentive plans\t335\t1\t1912\t\t0\t\t0\t\t0\t1913\nRepurchase of shares to satisfy employee tax withholding obligations\t0\t0\t(8059)\t\t89\t\t0\t\t0\t(8059)\nStock-based compensation\t0\t0\t5510\t\t0\t\t0\t\t0\t5510\nForeign currency translation adjustment net of taxes\t0\t0\t0\t\t0\t\t0\t\t(34)\t(34)\nNet loss\t0\t0\t0\t\t0\t\t0\t(11024)\t0\t(11024)\nBalance as of September 30 2019\t34602\t35\t448409\t\t11571\t\t(199998)\t183028\t97\t431571\n", "q10k_tbl_6": "Nine Months Ended September 30 2020\t\t\t\t\t\t\t\t\t\t\n\tCommon Stock\t\tAdditional Paid-in Capital\t\tTreasury Stock\t\t\tRetained Earnings\tAccumulated Other Comprehensive Income\tTotal Stockholders' Equity\n\tShares\tAmount\t\tShares\t\tAmount\t\t\nBalance as of December 31 2019\t34752\t35\t455159\t\t11616\t\t(199998)\t271852\t116\t527164\nCumulative effect from the adoption of ASU 2016-13\t0\t0\t0\t\t0\t\t0\t(1147)\t0\t(1147)\nIssuance of common stock in connection with equity incentive plans\t531\t1\t1576\t\t0\t\t0\t0\t0\t1577\nRepurchase of shares to satisfy employee tax withholding obligations\t0\t0\t(17174)\t\t194\t\t0\t0\t0\t(17174)\nShares issued in equity offering\t2070\t2\t228022\t\t0\t\t0\t0\t0\t228024\nSettlement of earnout liability\t295\t0\t28521\t\t0\t\t0\t0\t0\t28521\nStock-based compensation\t0\t0\t23000\t\t0\t\t0\t0\t0\t23000\nOther comprehensive income net of tax\t0\t0\t0\t\t0\t\t0\t0\t144\t144\nNet loss\t0\t0\t0\t\t0\t\t0\t(14423)\t0\t(14423)\nBalance as of September 30 2020\t37648\t38\t719104\t\t11810\t\t(199998)\t256282\t260\t775686\n", "q10k_tbl_7": "Nine Months Ended September 30 2019\t\t\t\t\t\t\t\t\t\t\n\tCommon Stock\t\tAdditional Paid-in Capital\t\tTreasury Stock\t\t\tRetained Earnings\tAccumulated Other Comprehensive Income\tTotal Stockholders' Equity\n\tShares\tAmount\t\tShares\t\tAmount\t\t\nBalance as of December 31 2018\t30863\t31\t298024\t\t11426\t\t(199998)\t204965\t127\t303149\nIssuance of common stock in connection with equity incentive plans\t684\t1\t5167\t\t0\t\t0\t0\t0\t5168\nRepurchase of shares to satisfy employee tax withholding obligations\t0\t0\t(11511)\t\t145\t\t0\t0\t0\t(11511)\nShares issued in equity offering\t2760\t3\t126048\t\t0\t\t0\t0\t0\t126051\nSettlement of earnout liability\t295\t0\t17264\t\t0\t\t0\t0\t0\t17264\nStock-based compensation\t0\t0\t13417\t\t0\t\t0\t0\t0\t13417\nForeign currency translation adjustment net of taxes\t0\t0\t0\t\t0\t\t0\t0\t(30)\t(30)\nNet loss\t0\t0\t0\t\t0\t\t0\t(21937)\t0\t(21937)\nBalance as of September 30 2019\t34602\t35\t448409\t\t11571\t\t(199998)\t183028\t97\t431571\n", "q10k_tbl_8": "\tNine Months Ended September 30\t\n\t2020\t2019\nOperating activities:\t\t\nNet loss\t(14423)\t(21937)\nAdjustments to reconcile net loss to net cash used in operating activities:\t\t\nDepreciation and amortization\t2604\t2153\nAmortization of internally developed software\t5307\t2443\nAmortization of intangible assets\t1207\t1641\nStock-based compensation expense\t21722\t13417\nDeferred income taxes\t(10982)\t(18166)\nChange in fair value of earnout liability\t0\t15106\nOther non-cash items\t421\t(936)\nChanges in operating assets and liabilities:\t\t\nAccounts receivable\t(1522)\t2920\nContract assets - commissions receivable\t(16772)\t(11878)\nPrepaid expenses and other assets\t(9398)\t(9346)\nAccounts payable\t(3196)\t13155\nAccrued compensation and benefits\t(7438)\t(2624)\nAccrued marketing expenses\t(5449)\t(6927)\nDeferred revenue\t23901\t8207\nAccrued expenses and other liabilities\t3059\t(1942)\nNet cash used in operating activities\t(10959)\t(14714)\nInvesting activities:\t\t\nCapitalized internal-use software and website development costs\t(12082)\t(6356)\nPurchases of property and equipment and other assets\t(6454)\t(5616)\nPurchases of marketable securities\t(180505)\t0\nProceeds from redemption and maturities of marketable securities\t70750\t0\nPayments for security deposits\t0\t(72)\nNet cash used in investing activities\t(128291)\t(12044)\nFinancing activities:\t\t\nProceeds from issuance of common stock net of issuance costs\t228024\t126051\nNet proceeds from exercise of common stock options\t1577\t5168\nRepurchase of shares to satisfy employee tax withholding obligations\t(17174)\t(11511)\nRepayment of debt\t0\t(5000)\nAcquisition-related contingent payments\t(8751)\t(9542)\nPrincipal payments in connection with leases\t(121)\t(81)\nNet cash provided by financing activities\t203555\t105085\nEffect of exchange rate changes on cash cash equivalents and restricted cash\t62\t8\nNet increase in cash cash equivalents and restricted cash\t64367\t78335\nCash cash equivalents and restricted cash at beginning of period\t26820\t13089\nCash cash equivalents and restricted cash at end of period\t91187\t91424\n", "q10k_tbl_9": "Balance Sheet Impact:\tDecember 31 2019\tTransition Adjustments\tJanuary 1 2020\nContract assets - commissions receivable - current\t174526\t(71)\t174455\nContract assets - commissions receivable - non-current\t414696\t(1442)\t413254\nOther assets*\t18004\t366\t18370\nTotal assets\t741634\t(1147)\t740487\nRetained earnings\t271852\t(1147)\t270705\n", "q10k_tbl_10": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n\t2020\t2019\t2020\t2019\nMedicare\t\t\t\t\nMedicare Advantage\t41901\t36735\t168834\t113185\nMedicare Supplement\t7321\t8229\t32384\t25082\nMedicare Part D\t329\t1805\t7148\t5906\nTotal Medicare\t49551\t46769\t208366\t144173\nIndividual and Family (1)\t\t\t\t\nNon-Qualified Health Plans\t9915\t3146\t12585\t11592\nQualified Health Plans\t1466\t839\t3559\t4900\nTotal Individual and Family\t11381\t3985\t16144\t16492\nAncillary\t\t\t\t\nShort-term\t2438\t3151\t6724\t7162\nDental\t4452\t1420\t5791\t3138\nVision\t1798\t537\t2228\t1294\nOther\t847\t1104\t2693\t2778\nTotal Ancillary\t9535\t6212\t17436\t14372\nSmall Business\t1723\t1938\t6975\t6576\nCommission Bonus\t1354\t858\t5065\t2982\nTotal Commission Revenue\t73544\t59762\t253986\t184595\nOther Revenue\t20740\t10151\t35472\t19858\nTotal Revenue\t94284\t69913\t289458\t204453\n", "q10k_tbl_11": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n\t2020\t2019\t2020\t2019\nMedicare\t\t\t\t\nCommission Revenue from Members Approved During the Period (1)\t52040\t43888\t205330\t141898\nNet Commission Revenue from Members Approved in Prior Periods (2)\t(698)\t3813\t8966\t5226\nTotal Medicare Segment Commission Revenue\t51342\t47701\t214296\t147124\nIndividual Family and Small Business\t\t\t\t\nCommission Revenue from Members Approved During the Period (1)\t4012\t4392\t14170\t14403\nNet Commission Revenue from Members Approved in Prior Periods (2)\t18190\t7669\t25520\t23068\nTotal IFP/SMB Segment Commission Revenue\t22202\t12061\t39690\t37471\nTotal Commission Revenue from Members Approved During the Period (1)\t56052\t48280\t219500\t156301\nTotal Net Commission Revenue from Members Approved in Prior Periods (2) (3)\t17492\t11482\t34486\t28294\nTotal Commission Revenue\t73544\t59762\t253986\t184595\n", "q10k_tbl_12": "\tSeptember 30 2020\tDecember 31 2019\nCash\t41441\t16205\nCash equivalents\t46392\t7261\nRestricted cash\t3354\t3354\nTotal cash cash equivalents and restricted cash\t91187\t26820\n", "q10k_tbl_13": "\tSeptember 30 2020\tDecember 31 2019\nContract assets - commissions receivable - current\t158773\t174526\nContract assets - commissions receivable - non-current\t445572\t414696\nAccounts receivable\t3854\t2332\nTotal contract assets and accounts receivable\t608199\t591554\n", "q10k_tbl_14": "\tNine Months Ended September 30 2020\t\t\n\tMedicare Segment\tIFP/SMB Segment\tTotal\t\t\t\t\t\t\nBeginning balance\t550922\t38300\t589222\t\t\t\t\t\t\nCommission revenue from members approved during the period\t205330\t14170\t219500\t\t\t\t\t\t\nNet commission revenue adjustments from members approved in prior period\t8966\t25520\t34486\t\t\t\t\t\t\nCash receipts\t(201256)\t(35957)\t(237213)\t\t\t\t\t\t\nNet change in credit loss allowance*\t(1536)\t(114)\t(1650)\t\t\t\t\t\t\nEnding balance\t562426\t41919\t604345\t\t\t\t\t\t\n", "q10k_tbl_15": "\tNine Months Ended September 30 2019\t\t\n\tMedicare Segment\tIFP/SMB Segment\tTotal\nBeginning balance\t311977\t33881\t345858\nCommission revenue from members approved during the period\t141898\t14403\t156301\nNet commission revenue adjustments from members approved in prior period\t5226\t23068\t28294\nCash receipts\t(133425)\t(39292)\t(172717)\nEnding balance\t325676\t32060\t357736\n", "q10k_tbl_16": "\tSeptember 30 2020\tDecember 31 2019\nHumana\t21%\t22%\nAetna (1)\t21%\t20%\nUnitedHealthCare (2)\t20%\t20%\n", "q10k_tbl_17": "\tSeptember 30 2020\tDecember 31 2019\nPrepaid maintenance contracts\t7485\t3853\nPrepaid expenses\t9537\t2207\nPrepaid insurance\t680\t918\nIncome tax receivable\t1041\t584\nOther\t592\t260\nPrepaid expenses and other current assets\t19335\t7822\n", "q10k_tbl_18": "\tAs of September 30 2020\t\t\t\t\n\tCarrying Value\tLevel 1\tLevel 2\tLevel 3\tTotal\nAssets\t\t\t\t\t\nCash equivalents\t\t\t\t\t\nMoney market funds\t16205\t16205\t0\t0\t16205\nCommercial paper\t30187\t0\t30187\t0\t30187\nShort-term marketable securities\t\t\t\t\t\nCommercial paper\t47380\t0\t47380\t0\t47380\nAgency bonds\t56259\t0\t56259\t0\t56259\nTreasury bills\t4999\t0\t4999\t0\t4999\nLong-term marketable securities\t\t\t\t\t\nAgency bonds\t1294\t0\t1294\t0\t1294\nTotal assets measured and recorded at fair value\t156324\t16205\t140119\t0\t156324\n", "q10k_tbl_19": "\tAs of December 31 2019\t\t\t\t\n\tCarrying Value\tLevel 1\tLevel 2\tLevel 3\tTotal\nAssets\t\t\t\t\t\nCash equivalents\t\t\t\t\t\nMoney market funds\t7261\t7261\t0\t0\t7261\nLiabilities\t\t\t\t\t\nEarnout liability - current\t37273\t0\t0\t37273\t37273\n", "q10k_tbl_20": "\tAs of September 30 2020\t\n\tAmortized Cost\tFair Value\nDue in 1 year\t154940\t155030\nDue in 1 year through 5 years\t1288\t1294\nTotal\t156228\t156324\n", "q10k_tbl_21": "\tAmortized Cost\tUnrealized Gain\tUnrealized Loss\tFair Value\nCash equivalents\t\t\t\t\nMoney market funds\t16205\t0\t0\t16205\nCommercial paper\t30188\t0\t(1)\t30187\nShort-term marketable securities\t\t\t\t\nCommercial paper\t47348\t33\t(1)\t47380\nAgency bonds\t56201\t58\t0\t56259\nTreasury bills\t4998\t1\t0\t4999\nLong-term marketable securities\t\t\t\t\nAgency bonds\t1288\t6\t0\t1294\nTotal\t156228\t98\t(2)\t156324\n", "q10k_tbl_22": "Balance as of December 31 2019\t37273\nChange in fair value\t0\nSettlements\t(37273)\nBalance as of September 30 2020\t0\n", "q10k_tbl_23": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n\t2020\t2019\t2020\t2019\nCommon stock options\t254\t542\t867\t1745\nRestricted stock units\t6078\t4968\t20855\t11672\nTotal stock-based compensation expense\t6332\t5510\t21722\t13417\n", "q10k_tbl_24": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n\t2020\t2019\t2020\t2019\nMarketing and advertising\t1869\t872\t5138\t2212\nCustomer care and enrollment\t527\t369\t1762\t927\nTechnology and content\t1430\t729\t2965\t1946\nGeneral and administrative\t2506\t3540\t11857\t8332\nTotal stock-based compensation expense\t6332\t5510\t21722\t13417\nAmount capitalized internal-use software\t548\t0\t1278\t0\nTotal stock-based compensation\t6880\t5510\t23000\t13417\n", "q10k_tbl_25": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n\t2020\t2019\t2020\t2019\nBasic and Diluted:\t\t\t\t\nNet loss\t(14505)\t(11024)\t(14423)\t(21937)\nShares used in per share calculation - basic and diluted\t26487\t23493\t25838\t22840\nNet loss per share - basic and diluted\t(0.55)\t(0.47)\t(0.56)\t(0.96)\n", "q10k_tbl_26": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n\t2020\t2019\t2020\t2019\nCommon stock options\t414\t729\t453\t850\nRestricted stock units\t599\t1461\t748\t1537\nTotal\t1013\t2190\t1201\t2387\n", "q10k_tbl_27": "For the Years Ending December 31\tService and Licensing Obligations\nRemainder of 2020\t2593\n2021\t4538\n2022\t2484\n2023\t1797\n2024\t1582\nThereafter\t2706\nTotal\t15700\n", "q10k_tbl_28": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n\t2020\t2019\t2020\t2019\nRevenue:\t\t\t\t\nMedicare\t70361\t57189\t246891\t164357\nIndividual Family and Small Business\t23923\t12724\t42567\t40096\nTotal revenue\t94284\t69913\t289458\t204453\nSegment profit (loss):\t\t\t\t\nMedicare segment profit (loss)\t(16010)\t(11004)\t19380\t5917\nIndividual Family and Small Business segment profit\t18286\t3753\t23459\t15045\nTotal segment profit (loss)\t2276\t(7251)\t42839\t20962\nCorporate\t(15581)\t(11568)\t(43376)\t(30380)\nStock-based compensation expense\t(6332)\t(5510)\t(21722)\t(13417)\nChange in fair value of earnout liability\t0\t5400\t0\t(15106)\nDepreciation and amortization\t(923)\t(765)\t(2604)\t(2153)\nAmortization of intangible assets\t(287)\t(547)\t(1207)\t(1641)\nOther (income) expense net\t(101)\t568\t724\t1824\nLoss before benefit from income taxes\t(20948)\t(19673)\t(25346)\t(39911)\n", "q10k_tbl_29": "\tSeptember 30 2020\tDecember 31 2019\nUnited States\t38561\t64408\nChina\t452\t471\nTotal\t39013\t64879\n", "q10k_tbl_30": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n\t2020\t2019\t2020\t2019\nHumana\t26%\t26%\t21%\t24%\nUnitedHealthcare (1)\t17%\t18%\t21%\t18%\nAetna (2)\t12%\t17%\t14%\t17%\n", "q10k_tbl_31": "Year ending December 31\t\nReminder of 2020\t1915\n2021\t7644\n2022\t7701\n2023\t8033\n2024\t7832\nThereafter\t27416\nTotal lease payments\t60541\nLess imputed interest\t(13030)\nTotal\t47511\n", "q10k_tbl_32": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n\t2020\t2019\t2020\t2019\nLoss before benefit from income taxes\t(20948)\t(19673)\t(25346)\t(39911)\nBenefit from income taxes\t(6443)\t(8649)\t(10923)\t(17974)\nEffective tax rate\t30.8%\t44.0%\t43.1%\t45.0%\n", "q10k_tbl_33": "\tThree Months Ended September 30\t\t% Change\t\tNine Months Ended September 30\t\t\t% Change\n\t2020\t2019\t\t2020\t\t2019\t\nMedicare:\t\t\t\t\t\t\t\t\nMedicare Advantage\t44999\t35171\t28%\t\t170374\t\t112488\t51%\nMedicare Supplement\t7456\t9110\t(18)%\t\t27088\t\t26510\t2%\nMedicare Part D\t7485\t6933\t8%\t\t24054\t\t22684\t6%\nTotal Medicare\t59940\t51214\t17%\t\t221516\t\t161682\t37%\nIndividual and Family:\t\t\t\t\t\t\t\t\nNon-Qualified Health Plans\t2665\t2245\t19%\t\t10283\t\t10250\t-%\nQualified Health Plans\t1707\t942\t81%\t\t8764\t\t7389\t19%\nTotal Individual and Family\t4372\t3187\t37%\t\t19047\t\t17639\t8%\nAncillaries:\t\t\t\t\t\t\t\t\nShort-term\t9784\t15630\t(37)%\t\t31368\t\t44691\t(30)%\nDental\t10136\t9487\t7%\t\t27568\t\t32021\t(14)%\nVision\t3806\t4265\t(11)%\t\t12071\t\t15108\t(20)%\nOther\t2991\t6296\t(52)%\t\t11262\t\t17654\t(36)%\nTotal Ancillaries\t26717\t35678\t(25)%\t\t82269\t\t109474\t(25)%\nSmall Business\t3473\t2871\t21%\t\t10194\t\t10368\t(2)%\nTotal Approved Members\t94502\t92950\t2%\t\t333026\t\t299163\t11%\n", "q10k_tbl_34": "\tThree Months Ended September 30\t\t% Change\t\tNine Months Ended September 30\t\t\t% Change\n\t2020\t2019\t\t2020\t\t2019\t\nMedicare:\t\t\t\t\t\t\t\t\nMedicare Advantage\t44528\t33974\t31%\t\t188059\t\t119627\t57%\nMedicare Supplement\t6912\t7833\t(12)%\t\t26386\t\t25127\t5%\nMedicare Part D\t7378\t6874\t7%\t\t78588\t\t55770\t41%\nTotal Medicare\t58818\t48681\t21%\t\t293033\t\t200524\t46%\nIndividual and Family:\t\t\t\t\t\t\t\t\nNon-Qualified Health Plans\t2550\t2350\t9%\t\t15920\t\t18541\t(14)%\nQualified Health Plans\t1548\t1017\t52%\t\t10600\t\t9424\t12%\nTotal Individual and Family\t4098\t3367\t22%\t\t26520\t\t27965\t(5)%\nAncillaries:\t\t\t\t\t\t\t\t\nShort-term\t10461\t15632\t(33)%\t\t32293\t\t49446\t(35)%\nDental\t9500\t9217\t3%\t\t26848\t\t32751\t(18)%\nVision\t3953\t4009\t(1)%\t\t13170\t\t17458\t(25)%\nOther\t3502\t6265\t(44)%\t\t11289\t\t17457\t(35)%\nTotal Ancillaries\t27416\t35123\t(22)%\t\t83600\t\t117112\t(29)%\nSmall Business\t3518\t2946\t19%\t\t11812\t\t13606\t(13)%\nTotal New Paying Members\t93850\t90117\t4%\t\t414965\t\t359207\t16%\n", "q10k_tbl_35": "\tThree Months Ended September 30\t\t% Change\n\t2020\t2019\nMedicare\t\t\t\nMedicare Advantage (1)\t898\t923\t(3)%\nMedicare Supplement (1)\t1071\t951\t13%\nMedicare Part D (1)\t245\t265\t(8)%\nIndividual and Family\t\t\t\nNon-Qualified Health Plans (1)\t188\t173\t9%\nQualified Health Plans (1)\t244\t165\t48%\nAncillaries\t\t\t\nShort-term (1)\t149\t112\t33%\nDental (1)\t84\t65\t29%\nVision (1)\t54\t45\t20%\nSmall Business (2)\t142\t168\t(15)%\n", "q10k_tbl_36": "\tThree Months Ended September 30\t\n\t2020\t2019\nMedicare\t\t\nMedicare Advantage\t7%\t7%\nMedicare Supplement\t5%\t5%\nMedicare Part D\t5%\t5%\nIndividual and Family\t\t\nNon-Qualified Health Plans\t15%\t15%\nQualified Health Plans\t4%\t20%\nAncillaries\t\t\nShort-term\t20%\t-%\nDental\t7%\t10%\nVision\t5%\t10%\nOther\t10%\t10%\nSmall Business\t-%\t-%\n", "q10k_tbl_37": "\tAs of September 30\t\t% Change\n\t2020\t2019\nMedicare (1)\t\t\t\nMedicare Advantage\t421237\t309180\t36%\nMedicare Supplement\t96525\t85821\t12%\nMedicare Part D\t216641\t156067\t39%\nTotal Medicare\t734403\t551068\t33%\nIndividual and Family (2)\t112834\t131058\t(14)%\nAncillaries (3)\t\t\t\nShort-term\t24105\t24167\t-%\nDental\t116846\t131409\t(11)%\nVision\t67944\t72765\t(7)%\nOther\t36158\t36014\t-%\nTotal Ancillaries\t245053\t264355\t(7)%\nSmall Business (4)\t44424\t44723\t(1)%\nTotal Estimated Membership\t1136714\t991204\t15%\n", "q10k_tbl_38": "\tThree Months Ended September 30\t\t% Change\n\t2020\t2019\nMedicare:\t\t\t\nEstimated CC&E cost per approved MA-equivalent approved member (1)\t759\t819\t(7)%\nEstimated variable marketing cost per MA-equivalent approved member (1)\t422\t381\t11%\nTotal Medicare estimated cost per approved member\t1181\t1200\t(2)%\nIndividual and Family Plan:\t\t\t\nEstimated CC&E cost per IFP-equivalent approved member (2)\t137\t167\t(18)%\nEstimated variable marketing cost per IFP-equivalent approved member (2)\t79\t80\t(1)%\nTotal IFP estimated cost per approved member\t216\t247\t(13)%\n", "q10k_tbl_39": "\tThree Months Ended September 30\t\t\t\tNine Months Ended September 30\t\t\t\n\t2020\t\t2019\t\t2020\t\t2019\t\nRevenue:\t\t\t\t\t\t\t\t\nCommission\t73544\t78%\t59762\t85%\t253986\t88%\t184595\t90%\nOther\t20740\t22%\t10151\t15%\t35472\t12%\t19858\t10%\nTotal revenue\t94284\t100%\t69913\t100%\t289458\t100%\t204453\t100%\nOperating costs and expenses:\t\t\t\t\t\t\t\t\nCost of revenue\t482\t1%\t410\t1%\t2160\t1%\t782\t-%\nMarketing and advertising\t33405\t35%\t25812\t37%\t104042\t36%\t72857\t36%\nCustomer care and enrollment\t43342\t46%\t40144\t57%\t101025\t35%\t81567\t40%\nTechnology and content\t17673\t19%\t12033\t17%\t46786\t16%\t31487\t15%\nGeneral and administrative\t19942\t21%\t16608\t24%\t60308\t21%\t42748\t21%\nAmortization of intangible assets\t287\t-%\t547\t1%\t1207\t-%\t1641\t1%\nChange in fair value of earnout liability\t0\t-%\t(5400)\t(8)%\t0\t-%\t15106\t7%\nTotal operating costs and expenses\t115131\t122%\t90154\t129%\t315528\t109%\t246188\t120%\nLoss from operations\t(20847)\t(22)%\t(20241)\t(29)%\t(26070)\t(9)%\t(41735)\t(20)%\nOther income (expense) net\t(101)\t-%\t568\t1%\t724\t-%\t1824\t1%\nLoss before benefit from income taxes\t(20948)\t(22)%\t(19673)\t(28)%\t(25346)\t(9)%\t(39911)\t(20)%\nBenefit from income taxes\t(6443)\t(7)%\t(8649)\t(12)%\t(10923)\t(4)%\t(17974)\t(9)%\nNet loss\t(14505)\t(15)%\t(11024)\t(16)%\t(14423)\t(5)%\t(21937)\t(11)%\n", "q10k_tbl_40": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n\t2020\t2019\t2020\t2019\nMarketing and advertising\t1869\t872\t5138\t2212\nCustomer care and enrollment\t527\t369\t1762\t927\nTechnology and content\t1430\t729\t2965\t1946\nGeneral and administrative\t2506\t3540\t11857\t8332\nTotal stock-based compensation expense\t6332\t5510\t21722\t13417\n", "q10k_tbl_41": "\tThree Months Ended September 30\t\tChange\t\tNine Months Ended September 30\t\tChange\t\n\t2020\t2019\t$\t%\t2020\t2019\t$\t%\nCommission\t73544\t59762\t13782\t23%\t253986\t184595\t69391\t38%\n% of total revenue\t78%\t85%\t\t\t88%\t90%\t\t\nOther\t20740\t10151\t10589\t104%\t35472\t19858\t15614\t79%\n% of total revenue\t22%\t15%\t\t\t12%\t10%\t\t\nTotal revenue\t94284\t69913\t24371\t35%\t289458\t204453\t85005\t42%\n", "q10k_tbl_42": "\tThree Months Ended September 30\t\tChange\t\tNine Months Ended September 30\t\tChange\t\n\t2020\t2019\t$\t%\t2020\t2019\t$\t%\nCost of revenue\t482\t410\t72\t18%\t2160\t782\t1378\t176%\n% of total revenue\t1%\t-%\t\t\t1%\t-%\t\t\n", "q10k_tbl_43": "\tThree Months Ended September 30\t\tChange\t\tNine Months Ended September 30\t\tChange\t\n\t2020\t2019\t$\t%\t2020\t2019\t$\t%\nMarketing and advertising\t33405\t25812\t7593\t29%\t104042\t72857\t31185\t43%\n% of total revenue\t35%\t37%\t\t\t36%\t36%\t\t\n", "q10k_tbl_44": "\tThree Months Ended September 30\t\tChange\t\tNine Months Ended September 30\t\tChange\t\n\t2020\t2019\t$\t%\t2020\t2019\t$\t%\nCustomer care and enrollment\t43342\t40144\t3198\t8%\t101025\t81567\t19458\t24%\n% of total revenue\t46%\t57%\t\t\t35%\t40%\t\t\n", "q10k_tbl_45": "\tThree Months Ended September 30\t\tChange\t\tNine Months Ended September 30\t\tChange\t\n\t2020\t2019\t$\t%\t2020\t2019\t$\t%\nTechnology and content\t17673\t12033\t5640\t47%\t46786\t31487\t15299\t49%\n% of total revenue\t19%\t17%\t\t\t16%\t15%\t\t\n", "q10k_tbl_46": "\tThree Months Ended September 30\t\tChange\t\tNine Months Ended September 30\t\tChange\t\n\t2020\t2019\t$\t%\t2020\t2019\t$\t%\nGeneral and administrative\t19942\t16608\t3334\t20%\t60308\t42748\t17560\t41%\n% of total revenue\t21%\t24%\t\t\t21%\t21%\t\t\n", "q10k_tbl_47": "\tThree Months Ended September 30\t\tChange\t\tNine Months Ended September 30\t\tChange\t\n\t2020\t2019\t$\t%\t2020\t2019\t$\t%\nAmortization of intangible assets\t287\t547\t(260)\t(48)%\t1207\t1641\t(434)\t(26)%\n% of total revenue\t-%\t1%\t\t\t-%\t1%\t\t\n", "q10k_tbl_48": "\tThree Months Ended September 30\t\tChange\t\tNine Months Ended September 30\t\tChange\t\n\t2020\t2019\t$\t%\t2020\t2019\t$\t%\nOther income (expense) net\t(101)\t568\t(669)\t(118)%\t724\t1824\t(1100)\t(60)%\n% of total revenue\t-%\t1%\t\t\t-%\t1%\t\t\n", "q10k_tbl_49": "\tThree Months Ended September 30\t\tChange\t\tNine Months Ended September 30\t\tChange\t\n\t2020\t2019\t$\t%\t2020\t2019\t$\t%\nBenefit from income taxes\t(6443)\t(8649)\t2206\t(26)%\t(10923)\t(17974)\t7051\t(39)%\nEffective tax rate\t30.8%\t44.0%\t\t\t43.1%\t45.0%\t\t\n", "q10k_tbl_50": "\tThree Months Ended September 30\t\tChange\t\tNine Months Ended September 30\t\tChange\t\n\t2020\t2019\t$\t%\t2020\t2019\t$\t%\nRevenue:\t\t\t\t\t\t\t\t\nMedicare\t70361\t57189\t13172\t23%\t246891\t164357\t82534\t50%\nIndividual Family and Small Business\t23923\t12724\t11199\t88%\t42567\t40096\t2471\t6%\nTotal revenue\t94284\t69913\t24371\t35%\t289458\t204453\t85005\t42%\nSegment profit (loss):\t\t\t\t\t\t\t\t\nMedicare segment profit (loss)\t(16010)\t(11004)\t(5006)\t45%\t19380\t5917\t13463\t228%\nIndividual Family and Small Business segment profit\t18286\t3753\t14533\t387%\t23459\t15045\t8414\t56%\nTotal segment profit (loss)\t2276\t(7251)\t9527\t(131)%\t42839\t20962\t21877\t104%\nCorporate\t(15581)\t(11568)\t(4013)\t35%\t(43376)\t(30380)\t(12996)\t43%\nStock-based compensation expense\t(6332)\t(5510)\t(822)\t15%\t(21722)\t(13417)\t(8305)\t62%\nChange in fair value of earnout liability\t0\t5400\t(5400)\t(100)%\t0\t(15106)\t15106\t(100)%\nDepreciation and amortization\t(923)\t(765)\t(158)\t21%\t(2604)\t(2153)\t(451)\t21%\nAmortization of intangible assets\t(287)\t(547)\t260\t(48)%\t(1207)\t(1641)\t434\t(26)%\nAcquisition costs\t0\t0\t0\t*\t0\t0\t0\t*\nOther (income) expense net\t(101)\t568\t(669)\t(118)%\t724\t1824\t(1100)\t(60)%\nLoss before benefit from income taxes\t(20948)\t(19673)\t(1275)\t6%\t(25346)\t(39911)\t14565\t(36)%\n", "q10k_tbl_51": "\tNine Months Ended September 30\t\n\t2020\t2019\nNet cash used in operating activities\t(10959)\t(14714)\nNet cash used in investing activities\t(128291)\t(12044)\nNet cash provided by financing activities\t203555\t105085\n", "q10k_tbl_52": "For the Years Ending December 31\tOperating Lease Obligations\tService and Licensing Obligations\tTotal Obligations\nReminder of 2020\t1915\t2593\t4508\n2021\t7644\t4538\t12182\n2022\t7701\t2484\t10185\n2023\t8033\t1797\t9830\n2024\t7832\t1582\t9414\nThereafter\t27416\t2706\t30122\nTotal\t60541\t15700\t76241\n", "q10k_tbl_53": "\tSeptember 30 2020\tDecember 31 2019\nCash (1)\t41441\t16205\nCash equivalents (2)\t46392\t7261\nTotal cash and cash equivalents\t87833\t23466\nRestricted cash\t3354\t3354\nTotal cash cash equivalents and restricted cash\t91187\t26820\n", "q10k_tbl_54": "\tSeptember 30 2020\tDecember 31 2019\nContract assets - commissions receivable - current\t158773\t174526\nContract assets - commissions receivable - non-current\t445572\t414696\nAccounts receivable\t3854\t2332\nTotal contract assets and accounts receivable\t608199\t591554\n", "q10k_tbl_55": "Exhibit Number\t\t\t\tIncorporation by Reference Herein\t\n\tDescription of Exhibit\t\tForm\t\tDate\n10.1\t†\tTwelfth Amendment to Lease and Acknowledgment to Standard Lease Agreement (Office) dated August 28 2020 between Carlsen Investments LLC and eHealthInsurance Services Inc.\t\t\t\n31.1\t†\tCertification of Scott N. Flanders Chief Executive Officer of eHealth Inc. pursuant to Exchange Act Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.\t\t\t\n31.2\t†\tCertification of Derek N. Yung Chief Financial Officer of eHealth Inc. pursuant to Exchange Act Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.\t\t\t\n32.1\t‡\tCertification of Scott N. Flanders Chief Executive Officer of eHealth Inc. pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.\t\t\t\n32.2\t‡\tCertification of Derek N. Yung Chief Financial Officer of eHealth Inc. pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.\t\t\t\n101.INS\t†\tXBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document\t\t\t\n101.SCH\t†\tInline XBRL Taxonomy Extension Schema Document\t\t\t\n101.CAL\t†\tInline XBRL Taxonomy Extension Calculation Linkbase Document\t\t\t\n101.DEF\t†\tInline XBRL Taxonomy Extension Definition Linkbase Document\t\t\t\n101.LAB\t†\tInline XBRL Taxonomy Extension Label Linkbase Document\t\t\t\n101.PRE\t†\tInline XBRL Taxonomy Extension Presentation Linkbase Document\t\t\t\n104\t\tThe cover page from the Company's Quarterly Report on Form 10-Q for the three months ended September 30 2020 formatted in Inline XBRL and contained in Exhibit 101\t\t\t\n"}{"bs": "q10k_tbl_2", "is": "q10k_tbl_3", "cf": "q10k_tbl_8"}None
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-33071
_____________________________________________
EHEALTH, INC.
(Exact name of registrant as specified in its charter)
_____________________________________________
Delaware
56-2357876
(State or other jurisdiction of incorporation or organization)
(I.R.S Employer Identification No)
2625 AUGUSTINE DRIVE, SECOND FLOOR
SANTA CLARA, CA95054
(Address of principal executive offices)
(650) 584-2700
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, par value $0.001 per share
EHTH
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yesx No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth Company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares of the registrant’s common stock, par value $0.001 per share, outstanding as of October 31, 2020 was 25,897,314 shares.
* Reflects the impact from the adoption of ASC 326 on January 1, 2020. See Note 1 – Summary of Business and Significant Accounting Policies for details.
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands, except per share amounts, unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2020
2019
2020
2019
Revenue:
Commission
$
73,544
$
59,762
$
253,986
$
184,595
Other
20,740
10,151
35,472
19,858
Total revenue
94,284
69,913
289,458
204,453
Operating costs and expenses:
Cost of revenue
482
410
2,160
782
Marketing and advertising
33,405
25,812
104,042
72,857
Customer care and enrollment
43,342
40,144
101,025
81,567
Technology and content
17,673
12,033
46,786
31,487
General and administrative
19,942
16,608
60,308
42,748
Amortization of intangible assets
287
547
1,207
1,641
Change in fair value of earnout liability
—
(5,400)
—
15,106
Total operating costs and expenses
115,131
90,154
315,528
246,188
Loss from operations
(20,847)
(20,241)
(26,070)
(41,735)
Other income (expense), net
(101)
568
724
1,824
Loss before benefit from income taxes
(20,948)
(19,673)
(25,346)
(39,911)
Benefit from income taxes
(6,443)
(8,649)
(10,923)
(17,974)
Net loss
$
(14,505)
$
(11,024)
$
(14,423)
$
(21,937)
Net loss per share:
Basic and diluted
$
(0.55)
$
(0.47)
$
(0.56)
$
(0.96)
Weighted-average number of shares used in per share amounts:
Basic and diluted
26,487
23,493
25,838
22,840
Comprehensive loss:
Net loss
$
(14,505)
$
(11,024)
$
(14,423)
$
(21,937)
Unrealized holding gain (loss) for available for sales debt securities, net of tax
(97)
—
71
—
Foreign currency translation adjustment
104
(34)
73
(30)
Comprehensive loss
$
(14,498)
$
(11,058)
$
(14,279)
$
(21,967)
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, unaudited)
Three Months Ended September 30, 2020
Common Stock
Additional Paid-in Capital
Treasury Stock
Retained Earnings
Accumulated Other Comprehensive Income
Total Stockholders’ Equity
Shares
Amount
Shares
Amount
Balance as of June 30, 2020
37,373
$
37
$
720,976
11,698
$
(199,998)
$
270,787
$
253
$
792,055
Issuance of common stock in connection with equity incentive plans
275
1
262
—
—
—
—
263
Repurchase of shares to satisfy employee tax withholding obligations
—
(9,014)
112
—
—
—
(9,014)
Stock-based compensation
—
—
6,880
—
—
—
—
6,880
Other comprehensive income, net of tax
—
—
—
—
—
—
7
7
Net loss
—
—
—
—
—
(14,505)
—
(14,505)
Balance as of September 30, 2020
37,648
$
38
$
719,104
11,810
$
(199,998)
$
256,282
$
260
$
775,686
Three Months Ended September 30, 2019
Common Stock
Additional Paid-in Capital
Treasury Stock
Retained Earnings
Accumulated Other Comprehensive Income
Total Stockholders’ Equity
Shares
Amount
Shares
Amount
Balance as of June 30, 2019
34,267
$
34
$
449,046
11,482
$
(199,998)
$
194,052
$
131
$
443,265
Issuance of common stock in connection with equity incentive plans
335
1
1,912
—
—
—
1,913
Repurchase of shares to satisfy employee tax withholding obligations
—
—
(8,059)
89
—
—
(8,059)
Stock-based compensation
—
—
5,510
—
—
—
5,510
Foreign currency translation adjustment, net of taxes
—
—
—
—
—
(34)
(34)
Net loss
—
—
—
—
—
(11,024)
—
(11,024)
Balance as of September 30, 2019
34,602
$
35
$
448,409
11,571
$
(199,998)
$
183,028
$
97
$
431,571
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, unaudited)
Nine Months Ended September 30, 2020
Common Stock
Additional Paid-in Capital
Treasury Stock
Retained Earnings
Accumulated Other Comprehensive Income
Total Stockholders’ Equity
Shares
Amount
Shares
Amount
Balance as of December 31, 2019
34,752
$
35
$
455,159
11,616
$
(199,998)
$
271,852
$
116
$
527,164
Cumulative effect from the adoption of ASU 2016-13
—
—
—
—
—
(1,147)
—
(1,147)
Issuance of common stock in connection with equity incentive plans
531
1
1,576
—
—
—
—
1,577
Repurchase of shares to satisfy employee tax withholding obligations
—
—
(17,174)
194
—
—
—
(17,174)
Shares issued in equity offering
2,070
2
228,022
—
—
—
—
228,024
Settlement of earnout liability
295
—
28,521
—
—
—
—
28,521
Stock-based compensation
—
—
23,000
—
—
—
—
23,000
Other comprehensive income, net of tax
—
—
—
—
—
—
144
144
Net loss
—
—
—
—
—
(14,423)
—
(14,423)
Balance as of September 30, 2020
37,648
$
38
$
719,104
11,810
$
(199,998)
$
256,282
$
260
$
775,686
Nine Months Ended September 30, 2019
Common Stock
Additional Paid-in Capital
Treasury Stock
Retained Earnings
Accumulated Other Comprehensive Income
Total Stockholders’ Equity
Shares
Amount
Shares
Amount
Balance as of December 31, 2018
30,863
$
31
$
298,024
11,426
$
(199,998)
$
204,965
$
127
$
303,149
Issuance of common stock in connection with equity incentive plans
684
1
5,167
—
—
—
—
5,168
Repurchase of shares to satisfy employee tax withholding obligations
—
—
(11,511)
145
—
—
—
(11,511)
Shares issued in equity offering
2,760
3
126,048
—
—
—
—
126,051
Settlement of earnout liability
295
—
17,264
—
—
—
—
17,264
Stock-based compensation
—
—
13,417
—
—
—
—
13,417
Foreign currency translation adjustment, net of taxes
—
—
—
—
—
—
(30)
(30)
Net loss
—
—
—
—
—
(21,937)
—
(21,937)
Balance as of September 30, 2019
34,602
$
35
$
448,409
11,571
$
(199,998)
$
183,028
$
97
$
431,571
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
Nine Months Ended September 30,
2020
2019
Operating activities:
Net loss
$
(14,423)
$
(21,937)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
2,604
2,153
Amortization of internally developed software
5,307
2,443
Amortization of intangible assets
1,207
1,641
Stock-based compensation expense
21,722
13,417
Deferred income taxes
(10,982)
(18,166)
Change in fair value of earnout liability
—
15,106
Other non-cash items
421
(936)
Changes in operating assets and liabilities:
Accounts receivable
(1,522)
2,920
Contract assets – commissions receivable
(16,772)
(11,878)
Prepaid expenses and other assets
(9,398)
(9,346)
Accounts payable
(3,196)
13,155
Accrued compensation and benefits
(7,438)
(2,624)
Accrued marketing expenses
(5,449)
(6,927)
Deferred revenue
23,901
8,207
Accrued expenses and other liabilities
3,059
(1,942)
Net cash used in operating activities
(10,959)
(14,714)
Investing activities:
Capitalized internal-use software and website development costs
(12,082)
(6,356)
Purchases of property and equipment and other assets
(6,454)
(5,616)
Purchases of marketable securities
(180,505)
—
Proceeds from redemption and maturities of marketable securities
70,750
—
Payments for security deposits
—
(72)
Net cash used in investing activities
(128,291)
(12,044)
Financing activities:
Proceeds from issuance of common stock, net of issuance costs
228,024
126,051
Net proceeds from exercise of common stock options
1,577
5,168
Repurchase of shares to satisfy employee tax withholding obligations
(17,174)
(11,511)
Repayment of debt
—
(5,000)
Acquisition-related contingent payments
(8,751)
(9,542)
Principal payments in connection with leases
(121)
(81)
Net cash provided by financing activities
203,555
105,085
Effect of exchange rate changes on cash, cash equivalents and restricted cash
62
8
Net increase in cash, cash equivalents and restricted cash
64,367
78,335
Cash, cash equivalents and restricted cash at beginning of period
26,820
13,089
Cash, cash equivalents and restricted cash at end of period
$
91,187
$
91,424
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
EHEALTH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1 – Summary of Business and Significant Accounting Policies
Description of Business – eHealth, Inc. (the “Company,” “eHealth,” “we” or “us”) is a leading health insurance marketplace with a technology and service platform that provides consumer engagement, education and health insurance enrollment solutions. Our mission is to connect every person with the highest quality, most affordable health insurance and Medicare plans for their life circumstances. Our platform integrates proprietary and third-party developed educational content regarding health insurance plans with decision support tools to aid consumers in what has traditionally been a confusing and opaque health insurance purchasing process, and to help them obtain the health insurance products that meet their individual health and economic needs. Our omni-channel consumer engagement platform is designed to meet the consumer wherever they prefer to engage with us, and enables consumers to use our services online, through interactive chat, or by telephone with a licensed insurance agent. We have created a marketplace that offers consumers a broad choice of insurance products that includes thousands of Medicare Advantage, Medicare Supplement, Medicare Part D prescription drug, individual and family, small business and other ancillary health insurance products from over 180 health insurance carriers across all fifty states and the District of Columbia.
Basis of Presentation – The accompanying condensed consolidated balance sheets as of September 30, 2020 and December 31, 2019, the condensed consolidated statements of comprehensive loss and stockholders’ equity for the three and nine months ended September 30, 2020 and 2019, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2020 and 2019, respectively, are unaudited. The condensed consolidated balance sheet data as of December 31, 2019 was derived from the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the Securities and Exchange Commission on March 2, 2020. The accompanying financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K.
The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and reflect all normal recurring adjustments that are necessary to present fairly the results for the interim periods presented. The condensed consolidated financial statements include the accounts of eHealth, Inc. and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted in accordance with those rules and regulations. Certain reclassifications have been made to conform with the current presentation. However, the Company believes that the disclosures made are adequate to make the information not misleading.
The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019 and include all adjustments necessary for the fair presentation of our financial position as of September 30, 2020 and December 31, 2019, and our results of operations for the periods presented. Our financial position as of September 30, 2020, results of operations for the three and nine months ended September 30, 2020, and cash flows for the nine months ended September 30, 2020 were not materially impacted by the COVID-19 pandemic but the Company is continuously assessing the evolving situation related to the pandemic. The results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31, 2020 and therefore should not be relied upon as an indicator of future results.
Significant Accounting Polices, Estimates and Judgements – The preparation of condensed consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates, including those related to, but not limited to, the commissions we expect to collect for each approved member cohort, allowance for credit loss, the useful lives of intangible assets, fair value of investments, recoverability of intangible assets, valuation allowance for deferred income taxes, provision (benefit) for income taxes and the assumptions used in determining stock-based compensation. We base our estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that we believe to be reasonable. Actual results may differ from these estimates.
7
EHEALTH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
With the exception of the change for the accounting of credit losses as a result of the adoption of Accounting Standard Updates (“ASU”) No. 2016-13, Financial Instruments – Credit Losses discussed below, there have been no material changes to our significant accounting policies discussed in our Annual Report on Form 10-K for the year ended December 31, 2019.
Seasonality – Open enrollment periods drive the seasonality of our business. A greater number of our Medicare-related health insurance plans are sold in our fourth quarter during the Medicare annual enrollment period when Medicare-eligible individuals are permitted to change their Medicare Advantage, Medicare Supplement, and Medicare Part D prescription drug coverage for the following year. As a result, our Medicare plan-related commission revenue is highest in our fourth quarter. Any changes or additional enrollment periods may change the seasonality of our business. For instance, due to the recent reintroduction of the Medicare Advantage open enrollment period that takes place in the first quarter of the year, our first quarter is generally the second-highest revenue generating quarter.
The majority of our major medical individual and family health insurance plans are sold in the fourth quarter during the annual open enrollment period under the federal Patient Protection and Affordable Care Act and related amendments in the Health Care and Education Reconciliation Act. Individuals and families generally are not able to purchase major medical individual and family health insurance outside of the open enrollment period, unless they qualify for a special enrollment period as a result of certain qualifying events, such as losing employer-sponsored health insurance or moving to another state.
Recently Adopted Accounting Pronouncement
Financial Instruments – Credit Losses (Topic 326) – In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), that requires companies to present certain financial assets net of the amount expected to be collected. The guidance requires the measurement of expected credit losses to be based on relevant information from past events, including historical experiences, current conditions and reasonable and supportable forecasts that affect collectability. Contract assets – commissions receivable were the Company's only financial assets that were materially impacted by this guidance.
We adopted ASU 2016-13, including applicable amendments in other ASUs issued subsequent to ASU 2016-13, using a modified retrospective transition method on January 1, 2020 for all financial assets measured at amortized cost. Results for periods after January 1, 2020 are presented under ASU 2016-13 while prior period amounts continue to be reported under the previous accounting standards. We recorded a $1.1 million decrease, net of income taxes, to retained earnings as of January 1, 2020 for the cumulative effect of adopting ASU 2016-13. See Note 3 – Supplemental Financial Statement Information for further discussion on credit losses.
The impact from the adoption of ASU 2016-13 is summarized as follows (in thousands):
Balance Sheet Impact:
December 31, 2019
Transition Adjustments
January 1, 2020
Contract assets – commissions receivable – current
*Adjustment to Other assets is due to the increase in deferred tax assets resulting from the adoption of ASU 2016-13.
8
EHEALTH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Financial Instruments (Topic 820) – In 2018, the FASB issued ASU No. 2018-13, to change the disclosure requirements for fair value measurement with the objective of improving the effectiveness of the notes to financial statements. This new guidance removed and modified certain disclosure requirements under Topic 820. We adopted this guidance in the first quarter of 2020 with no material impact on our condensed consolidated financial statements.
Intangible – Goodwill and Other (Topic 350)– In 2017, the FASB issued ASU 2017-04 to simplify the subsequent measurement of goodwill by removing the requirement to perform a hypothetical purchase price allocation to compute the implied fair value of goodwill to measure impairment. Instead, any goodwill impairment will equal the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. In addition, the guidance eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. This standard is effective for annual or any interim goodwill impairment test in fiscal years beginning after December 15, 2019. We adopted this guidance in the first quarter of 2020 with no material impact on our condensed consolidated financial statements.
Accounting Pronouncements Not Yet Adopted
Income Taxes (Topic 740) – In December 2019, the FASB issued ASU No. 2019-12, Income Tax, Simplifying the Accounting for Income Taxes, which aims to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and improve consistent application of and simplify U.S. GAAP for other areas under this Topic by clarifying existing guidance. ASU 2019-12 will be effective for us beginning January 1, 2021. The amendments in this standard update have individually different adoption approaches. We do not anticipate a material impact on our consolidated financial statements and disclosures from the adoption of this standard update.
9
EHEALTH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 2 – Revenue
Disaggregation of Revenue – The table below disaggregates our revenue by product (in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2020
2019
2020
2019
Medicare
Medicare Advantage
$
41,901
$
36,735
$
168,834
$
113,185
Medicare Supplement
7,321
8,229
32,384
25,082
Medicare Part D
329
1,805
7,148
5,906
Total Medicare
49,551
46,769
208,366
144,173
Individual and Family (1)
Non-Qualified Health Plans
9,915
3,146
12,585
11,592
Qualified Health Plans
1,466
839
3,559
4,900
Total Individual and Family
11,381
3,985
16,144
16,492
Ancillary
Short-term
2,438
3,151
6,724
7,162
Dental
4,452
1,420
5,791
3,138
Vision
1,798
537
2,228
1,294
Other
847
1,104
2,693
2,778
Total Ancillary
9,535
6,212
17,436
14,372
Small Business
1,723
1,938
6,975
6,576
Commission Bonus
1,354
858
5,065
2,982
Total Commission Revenue
73,544
59,762
253,986
184,595
Other Revenue
20,740
10,151
35,472
19,858
Total Revenue
$
94,284
$
69,913
$
289,458
$
204,453
_____________
(1)We define our individual and family plan offerings as major medical individual and family health insurance plans, which does not include Medicare-related, small business or ancillary plans. Individual and family health insurance plans include both qualified and non-qualified plans. Qualified health plans are individual and family health insurance plans that meet the requirements of the Affordable Care Act and are offered through the government-run health insurance exchange in the relevant jurisdiction. Non-qualified health plans are individual and family health insurance plans that meet the requirements of the Affordable Care Act and are not offered through the exchange in the relevant jurisdiction. Individuals that purchase non-qualified health plans cannot receive a subsidy in connection with the purchase of non-qualified plans.
Revenue Recognition Based on Estimated Constrained LTV
Our revenue primarily consists of commission revenue generated from health insurance carriers, which we define as our customers under the Accounting Standards Codification 606 – Revenue from Contracts with Customers (“ASC 606”). We recognize revenue for plans approved during the period by applying the latest estimated constrained lifetime value (“LTV”) for that product. We recognize adjustment revenue for plans approved in prior periods when changes in assumptions for constrained LTV calculations are made and when there is sufficient evidence demonstrating a trend that is different from the estimated constrained LTV at the time of approval resulting in a change in estimate to expected cash collections. Net adjustment revenue consists of increases in revenue for certain prior period cohorts as well as reductions in revenue for certain prior period cohorts. We recognize positive adjustment revenue to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. We assess the risk of significant revenue reversal based on statistical and qualitative analysis given historical information and current market conditions.
10
EHEALTH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Our commission revenue for each product line is based on a number of assumptions, which include, but are not limited to, estimating conversion of an approved member to a paying member, forecasting average plan duration and forecasting the commission amounts likely to be received per member. These assumptions are based on our analysis of historical trends for different cohorts and incorporate management’s judgment in interpreting those trends and in applying the constraints discussed below. For our Medicare commission revenue, which represented 82% and 78% of our total commission revenue for the nine months ended September 30, 2020 and 2019, respectively, the estimated average plan duration, which is the average length of time paying members are active on their plans, used to calculate Medicare health insurance plan LTVs historically has been approximately 3 years for Medicare Advantage plans, approximately 5 years for Medicare Part D prescription drug plans, and approximately 5 years for Medicare Supplement plans. While the average plan duration has been approximately 3 years for Medicare Advantage plans, certain members may have a duration of up to 15 years. The estimated average plan duration used to calculate the LTV for major medical individual and family health insurance plans historically has been approximately