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eHealth (EHTH) Targets 8-10% Adjusted EBITDA Margin by 2025

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eHealth, Inc. (EHTH - Free Report) recently hosted an Investor & Analyst Day event in New York, where it revealed its three-year financial targets. While the company expects revenues to grow on the back of its diversification efforts, adjusted EBITDA is likely to witness a $37 million improvement in 2023.

In the revenues front, eHealth expects the metric to grow 6% in 2023 from $405.4 million reported in 2022. Last year, 89% of its revenues came from commissions and in the first quarter of 2023, the figure further increased to 92.2%. The company intends to focus on generating more non-commission revenues, which can lead to higher margins.

Its first quarter revenues declined 30% year over year to $73.7 million. Hence, the company expects a significant turnaround in the coming quarters to achieve the 6% ($420-$440 million range) growth target this year. Further, in the 2024-25 period, it expects to witness 8-10% growth in the top line, per annum.

EBITDA Improvement

For 2023, EHTH expects adjusted EBITDA within a loss of $15 million to a profit of $5 million, the midpoint of which predicts significant improvement from a loss of $42 million in 2022. The company anticipates its cost transformation program to play a major role in returning profits.

By 2025, it intends to achieve 8-10% adjusted EBITDA margin from -10% in 2022. In the first quarter of 2023, it recorded an adjusted EBITDA margin of -17%.

Operating Cash Flow

From operating cash outflow of $13.2 million in the trailing 12-month ended March 2023, it expects to reach the break-even point in the trailing 12-month ending March 2024, backed by a cash collections cycle on MA enrollments. By the trailing 12-month period ending March 2025, the company expects to enter the positive operating cash flow region.

Price Performance

eHealth shares have gained 54.8% in the year-to-date period compared with the 7.6% rise of the industryit belongs to.

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Zacks Rank & Key Picks

eHealth currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader finance space are Allianz SE (ALIZY - Free Report) , Lemonade, Inc. (LMND - Free Report) and Argo Blockchain plc (ARBK - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Allianz’s 2023 earnings is pegged at $2.53 per share, indicating 48% year-over-year growth. Over the past 60 days, ALIZY has witnessed one upward estimate revision against none in the opposite direction.

The Zacks Consensus Estimate for Lemonade’s 2023 earnings suggests 15.9% year-over-year growth. Also, the consensus mark for LMND’s revenues in 2023 suggests a 53.6% year-over-year rise.

The Zacks Consensus Estimate for Argo Blockchain’s 2023 bottom line has improved 47.9% over the past month. During this time, ARBK witnessed two upward estimate revisions against none in the opposite direction.

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