eHealth(US:EHTH)2025-11-05 22:56Membership Trends - Medicare Advantage approved members decreased by 29% to 28,645 in Q3 2025 from 40,141 in Q3 2024, with total Medicare approved members declining by 27% to 31,167[140]. - Total approved members fell by 21% to 46,270 in Q3 2025 compared to 58,266 in Q3 2024, driven by a 35% decline in individual and family plan approved members[141]. - Total estimated membership declined by 4% from 1,159,422 as of September 30, 2024, to 1,118,521 as of September 30, 2025[150]. - Medicare estimated membership decreased by 3% year-over-year, primarily due to a decline in approved applications for all Medicare products[153]. - Individual and family plan estimated membership saw a 17% decline year-over-year, attributed to decreased approved applications and unfavorable retention trends[153]. - The company experienced a 27% decrease in Medicare plan approved members during the three months ended September 30, 2025[166]. Financial Performance - Total revenue for the three months ended September 30, 2025, was $53,869,000, a decrease from $58,409,000 in the same period of 2024[161]. - Operating costs and expenses totaled $95,394,000 for the three months ended September 30, 2025, compared to $101,608,000 in the same period of 2024[161]. - Net loss for the three months ended September 30, 2025, was $31,691,000, a decrease from a net loss of $42,473,000 in the same period of 2024[161]. - Commission revenue for the three months ended September 30, 2025, decreased by $1.0 million, or 2%, compared to the same period in 2024, while total revenue decreased by $4.5 million, or 8%[164]. - Other revenue for the three months ended September 30, 2025, decreased by $3.5 million, or 35%, primarily due to a $2.7 million decrease in sponsorship and advertising revenue[164]. - For the nine months ended September 30, 2025, commission revenue increased by $14.9 million, or 8%, while total revenue increased by $10.5 million, or 5%[165]. - Total revenue for the three months ended September 30, 2025, was $53.9 million, a decrease of 8% compared to $58.4 million in 2024, while revenue for the nine months increased by 5% to $227.8 million from $217.2 million[202]. Cost and Expenses - Total acquisition cost per MA-equivalent approved member increased by 19% to $1,489 for the three months ended September 30, 2025, compared to $1,256 in the same period of 2024[156]. - CC&E cost per MA-equivalent approved member rose by 29% to $930, driven by a decline in the number of approved members due to regulatory changes[156]. - Variable marketing cost per IFP-equivalent approved member increased by 13% to $537, influenced by a decline in individual and family plan approved members[157]. - Marketing and advertising expenses accounted for 45% of total revenue for the three months ended September 30, 2025, down from 51% in the same period of 2024[161]. - Marketing and advertising expenses for the three months ended September 30, 2025, decreased by $5.3 million, or 18%, primarily due to a $5.8 million decrease in variable advertising costs[170]. - Customer care and enrollment expenses for the three months ended September 30, 2025, decreased by $2.5 million, or 6%, mainly due to a $3.3 million decrease in personnel and compensation costs[173]. - Technology and content expenses for the three months ended September 30, 2025, decreased by $0.5 million, or 4%, primarily driven by a $0.7 million decrease in amortization of internally developed software[176]. - General and administrative expenses for the three months ended September 30, 2025, increased by $1.6 million, or 8%, primarily due to a $1.9 million increase in personnel and compensation costs[180]. Revenue Segmentation - Medicare segment total revenue for Q3 2025 was $49.9 million, a 6% decrease from $53.2 million in Q3 2024[200]. - Employer and Individual segment total revenue for Q3 2025 was $3.9 million, a 24% decrease from $5.2 million in Q3 2024[200]. - Medicare segment gross profit for Q3 2025 was a loss of $1.2 million, an improvement of 79% from a loss of $5.6 million in Q3 2024[200]. - Employer and Individual segment gross profit for Q3 2025 was $0.97 million, a 47% decrease from $1.84 million in Q3 2024[200]. - Medicare segment revenue decreased by $3.3 million, or 6%, for the three months ended September 30, 2025, primarily due to a $3.4 million decline in other revenue, partially offset by a $0.1 million increase in commission revenue[203]. - Medicare segment gross profit improved by $4.5 million, or 79%, to a loss of $1.2 million for the three months ended September 30, 2025, while gross profit for the nine months increased by $22.1 million, or 70%, to $53.7 million[204]. - E&I segment revenue decreased by $1.3 million, or 24%, for the three months ended September 30, 2025, primarily due to a 35% decline in approved members[205]. - E&I segment gross profit was $1.0 million for the three months ended September 30, 2025, a decrease of $0.9 million compared to the same period in 2024[206]. Cash Flow and Financing - Cash, cash equivalents, and short-term marketable securities totaled $75.3 million as of September 30, 2025, down from $82.2 million at the end of 2024[210]. - The company generated operating cash flow of $10.6 million during the nine months ended September 30, 2025[209]. - For the nine months ended September 30, 2025, net cash provided by operating activities was $10.6 million, compared to $9.3 million for the same period in 2024[221][227]. - The company incurred interest expenses of $2.0 million and $6.1 million for the three and nine months ended September 30, 2025, respectively, down from $2.3 million and $6.9 million in the same periods of 2024[218]. - As of September 30, 2025, the carrying value of the loan under the Credit Agreement was $69.4 million, with an interest rate of 11.46%[218]. - Net cash provided by investing activities was $19.0 million for the nine months ended September 30, 2025, primarily from $106.0 million in proceeds from marketable securities[229]. - The company used $5.8 million in financing activities for the nine months ended September 30, 2025, mainly due to preferred stock dividend payments of $2.9 million[231]. - Changes in net operating assets and liabilities contributed $52.3 million to cash flow for the nine months ended September 30, 2025, driven by a decrease of $92.8 million in commissions receivable[226]. - The company expects its current cash and equivalents to be sufficient to fund operations for at least 12 months following the filing date of the Quarterly Report[219]. Strategic Initiatives - The company expects a dynamic Annual Enrollment Period (AEP) in 2025, focusing on strong consumer demand and retention efforts[135]. - The company has integrated artificial intelligence across its telephonic enrollment platform to enhance beneficiary assistance during the AEP[135]. - The company plans to diversify revenue streams by focusing on Individual Coverage Health Reimbursement Arrangement (ICHRA) opportunities[136]. - The transition of leadership to Derrick Duke as CEO is part of the company's long-term succession planning[137]. - The company has achieved its benefit advisor hiring and training goals, with a more tenured advisor mix compared to the previous year[135]. - The majority of commission revenue is recognized in the fourth quarter, driven by the Medicare Annual Enrollment Period (AEP) from October 15 to December 7[233]. - The company plans to maintain its internal telesales benefit advisors year-round and increase utilization outside of enrollment periods by expanding ancillary product offerings[236]. - Future capital requirements will depend on factors such as enrollment volume and retention rates, with potential needs for additional capital if available funds are insufficient[220]. Impairment and Charges - Impairment, restructuring, and other charges for Q3 2025 were $0.5 million, a 546% increase from $0.1 million in Q3 2024[182]. - For the nine months ended September 30, 2025, impairment, restructuring, and other charges totaled $2.0 million, a 79% decrease from $9.4 million in the same period of 2024[183]. Tax and Interest - Interest expense decreased by $0.5 million, or 17%, in Q3 2025 compared to Q3 2024, primarily due to lower interest rates[184]. - Other income, net, for Q3 2025 was $1.0 million, a 42% decrease from $1.7 million in Q3 2024, mainly due to a decline in interest income[187]. - The effective tax rate for Q3 2025 was 26.2%, significantly higher than 4.3% in Q3 2024, due to changes in tax calculation methods[190].