eHealth(EHTH) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fourth quarter revenue was $196.3 million, down 19% year-over-year, reflecting an intentional decision to focus on profitable growth [17][72] - Fourth quarter GAAP net income was$ 20.7 million compared to a net loss of $32.2 million in Q4 a year ago [58] - Adjusted EBITDA for the fourth quarter increased by 76% year-over-year to$ 49.5 million from $28.2 million [40][72] - Full year 2022 GAAP net loss was$ 88.7 million, with adjusted EBITDA of negative $41.7 million [58] Business Line Data and Key Metrics Changes - Medicare segment revenue for Q4 was$ 180.4 million, down 22% year-over-year, while segment profit increased by 56% to $53.2 million [55] - Fourth quarter Medicare Advantage lifetime values (LTV) grew 2% year-over-year, while total variable acquisition costs per approved member declined by 18% [54][71] - Individual, family, and small business (IFP) segment revenue was$ 15.9 million, an increase of 23% year-over-year, driven by tail revenue [112] Market Data and Key Metrics Changes - Estimated Medicare Advantage paying membership at year-end was approximately 646,000 lives, up 2% from 2021 [56] - Total estimated Medicare membership, including Med Sup and prescription drug plans, was 976,000 lives, also up 2% year-over-year [56] Company Strategy and Development Direction - The company aims to diversify revenue streams beyond Medicare Advantage, focusing on sustainable profitability and improved liquidity [4][44] - Strategic initiatives include enhancing consumer experience, improving conversion rates, and expanding dedicated carrier arrangements [76][80] - The company plans to hold its first Investor Day since 2019 to discuss long-term strategic and financial goals [16] Management's Comments on Operating Environment and Future Outlook - Management noted a shift in the industry towards prioritizing sustainable profitability over growth at all costs, indicating a potential inflection point in the Medicare distribution market [14] - The company expects to achieve approximately 6% revenue growth in 2023, with significant improvements in profitability driven by cost reduction programs [18][92] - Management expressed confidence in maintaining sufficient liquidity to execute 2023 operating plans [62] Other Important Information - The company implemented a cost reduction program in April 2022, which resulted in a significant reduction in operating expenses [57][113] - The cash benefit from investments made to resume enrollment growth will not be felt until Q1 of 2024, with expectations of breakeven on an operating cash flow basis by March 31, 2024 [7] Q&A Session Summary Question: What is the approach to retaining agents outside the busy AEP and OEP season? - Management emphasized a more prudent approach to variable costs for marketing activities while maintaining agent productivity through improved lead quality [100][124] Question: How does the company view the diversification of revenue streams with dedicated carrier segments? - Management clarified that dedicated carrier arrangements will not compete with traditional Medicare Advantage business and will enhance the company's role as a neutral distribution channel [104][105] Question: What are the expectations regarding cash flow and potential capital raises? - Management indicated confidence in cash flow projections and the sufficiency of liquidity to meet operational needs without immediate capital raises [106][122]