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Analyst Blog

eHealth Inc. (EHTH - Snapshot Report) reported second-quarter 2014 net income of 16 cents per share, which outperformed the Zacks Consensus Estimate of 8 cents.  Results also improved significantly from 6 cents per share earned in the prior-year quarter.

Increase in revenues and lower expense aided the improvement. Moreover, the company witnessed growth in membership and a strong demand for Medicare and ancillary products.

 

 

Including intangible asset amortization expense, net income of eHealth came in at 15 cents per share, up from 6 cents earned in the year ago quarter.  

Operational Updates

eHealth’s total revenue grossed $42.6 million, missing the Zacks Consensus Estimate by 9.3%. However, results improved 7% year over year driven by increase in commissions.

Total operating costs and expenses also declined 4.5% year over year to $34 million owing to a decrease in marketing and advertising expense as well as general and administrative expense.

Operating margin increased 1000 basis points (bps), as revenue growth more than offset the increase in expenses.

Earnings before interest, tax, depreciation and amortization (EBITDA) improved 96% year over year in the reported quarter.

eHealth exited the quarter with total membership of nearly 1.2 million, which soared 14% from the figure recorded as of Jun 30, 2013. Total approved members including Medicare plan, individual and family plan, and other product members also improved 9.2% year over year to 0.2 million.

Financial Updates

eHealth exited the quarter with cash and cash equivalents of $70.4 million, down 34.3% from the 2013 year-end level. The decrease resulted from stock repurchase and the purchase of property, equipment and intangible assets.
The company’s total assets as of Jun 30, 2014 were approximately $137.5 million, declining 17.4% from the 2013 year-end level.

As of Jun 30, 2014, total stockholders’ equity of eHealth was $114.1 million, down 14.2% from $133 million as of Dec 31, 2013.

Cash flow from operations was $0.3 million in the reported quarter, compared with $6.6 million in the year-ago quarter. This decline was due to accrued marketing expense incurred in the first-quarter healthcare reform Open Enrollment Period, which was paid in the reported quarter.

2014 Guidance Lowered

eHealth expects full-year 2014 net earnings of 30–43 cents per share (lowered from previous guidance of 43–51 cents) on revenues of $185–$194 million, (down from prior projection of $206-$213 million).

EBITDA is expected in the range of $13.5–$18.5 million compared with the previous guidance of $18.0–$22.5 million.  

Performances by Other Insurance Brokers

Validus Holdings, Ltd. (VR - Snapshot Report) reported second-quarter 2014 net operating income of $1.39 per share, missing the Zacks Consensus Estimate by 4.1%. However, earnings increased 35% year over year.

Willis Group Holdings plc (WSH - Analyst Report) posted second-quarter 2014 adjusted net income of 49 cents per share, lagging the Zacks Consensus Estimate by nearly 17% and lower than the prior-year quarter figure by 16.9%, due to higher expenses.

Aon plc’s (AON - Analyst Report) second-quarter 2014 operating earnings of $1.25 per share exceeded the Zacks Consensus Estimate of $1.20 and increased 13% year over year.

Zacks Rank

eHealth Inc. presently carries a Zacks Rank #4 (Sell).

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