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eHealth(EHTH) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fourth quarter GAAP net income was $52.2 million, compared to $20.7 million in Q4 a year ago, reflecting significant improvement [21] - Fourth quarter adjusted EBITDA was $69.6 million, an increase of 41% from $49.5 million in Q4 of 2022 [21] - Total revenue for the full year 2023 was $452.9 million, a 12% increase year-over-year [21] - Fourth quarter operating cash flow was negative $33.4 million versus a negative $18.6 million in Q4 of 2022, reflecting investment in AEP-related enrollment growth [22] Business Line Data and Key Metrics Changes - Fourth quarter Medicare Advantage approved members were approximately 160,000, an increase of 22% year-over-year [16] - Total Medicare approved members grew 16% year-over-year to approximately 187,000, reflecting growth in Medicare Advantage and Medicare Supplement enrollments [16] - Fourth quarter Medicare segment profit was $80.3 million, compared to $53.2 million in Q4 of 2022, marking a $27.1 million year-over-year increase [20] Market Data and Key Metrics Changes - The individual MA market grew 2.3% sequentially and 9.4% year-over-year as of January 2024, indicating a slight acceleration from the previous year [73] - The average beneficiary had access to 43 Medicare Advantage plans, the largest number of options ever [4] Company Strategy and Development Direction - The company plans to advance its local market-focused omnichannel enrollment engine to drive higher conversions and greater LTV to CAC ratio in its Medicare Choice model [11] - A focus on building a distinctive consumer brand is seen as a major competitive advantage in a sector lacking strong brand awareness [11] - The company aims to diversify its marketing channel mix and scale its direct branded channels and best-performing strategic partnerships [11] Management's Comments on Operating Environment and Future Outlook - Management noted that several national carriers are emphasizing profit over enrollment growth, which may lead to market exits and increased shopping opportunities for eHealth [5] - The company expects to grow in 2024 by gaining market share in a more rational marketplace [74] - Management expressed confidence in the organization's ability to navigate the dynamic industry and seize new opportunities throughout the year [102] Other Important Information - The company recognized total tail revenue of $48.1 million in 2023, including $15.6 million in the fourth quarter, compared to $6.4 million in fiscal year 2022 [18] - The ending position of combined short- and long-term contract asset receivable was $918 million, up from $884 million a year ago [91] Q&A Session Summary Question: Response to open letter to CMS - Management did not receive a response from CMS but noted that carriers largely supported the letter due to shared challenges [94] Question: Anticipated changes in agent headcount - The company expects to grow agent resources for the Amplify business while keeping agency side headcount relatively flat, with a larger proportion of tenured advisors expected to improve conversion performance [111] Question: Cost expectations for 2024 - Year-over-year absolute increase in CC&E is expected to be less than in 2023, with growth predominantly in the Amplify business [113]