Health Insurance Innovations, Inc. (HIIQ - Free Report) shares have soared 32.8% year to date against the industry's decrease of 23.2% and the Zacks S&P 500 composite’s decline of 1.5%. With a market capitalization of nearly $532 million, average volume of shares traded in the last three months were 0.6 million.
Reasons Behind the Rally
The company delivered a positive earnings surprise in all the three reported quarters of 2018 with the average beat being 2.93%.
Higher revenues helped the company deliver solid results. Revenues improved 18% through the first nine months. Policies in force improved 8.6% over the same time frame. The bottom line increased 35% year over year in the first three quarters of 2018.
Return on equity is a profitability measure, identifying how the company can effectively utilize its shareholders’ money. The company’s ROE of 31.1% is much higher than industry average of 9%. Health Insurance Innovations boasts a solid debt free balance sheet.
Banking on operational strength, management estimates 2018 revenues in the range of $294-$304 million, indicating 17-21% growth year over year. Adjusted EBITDA is expected between $56 million and $59 million, indicating 24-30% increase over 2017. Adjusted earnings per share are projected between $2.47 and $2.57, up 50-56% over 2017.
Other Noteworthy Factors
The Zacks Consensus Estimate for earnings and revenues indicates year-over-year improvement of 53.9% and 1.7% respectively for 2018. For 2019, earnings and revenues are estimated to increase 19.4% and 17.7% respectively, year over year.
Health Insurance Innovations’ operating leverage from technology platform is likely to boost its revenues. The company has successfully launched MyBenefitsKeeper, a next generation platform to help customers find policies easily.
It is also developing a mobile application that we will be launched in December.
The Department of Health and Human Services of the U.S. government implemented a rule on Oct 2, 2018 that changed maximum duration of short-term medical policies to less than one year from the present duration of less than three months. Also, the suggested rule allows more affordable health insurance options. The company expects to gain from favorable regulatory outcomes.
The company remains optimistic about opportunities in the small group market with respect to the association health plan rule. Association health plan enrollment is expected to reach more than 3 million people by 2022.
Health Insurance Innovations currently carries a Zacks Rank #3 (Hold). With optimism surrounding the stock’s healthy performance, the Zacks Consensus Estimate for 2018 and 2019 has been revised about 1.2% and 2% upward, respectively, in the past 30 days.
Health Insurance Innovation belongs to the Zacks Life Insurance industry, which is currently in the top 14% of the Zacks Industry Rank.
The stock carries a favorable VGM Score of A. This helps to identify stocks with the most attractive value, best growth rate and solid momentum.
Stocks to Consider
Some better-ranked life insurers are Athene Holding Ltd. (ATH - Free Report) , Reinsurance Group of America, Incorporated (RGA - Free Report) and Torchmark Corporation .
Athene Holding, a retirement services company, issues, reinsures and acquires retirement savings products in the United States, the District of Columbia and Germany. The company delivered a 14.71% positive surprise in the last reported quarter and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Reinsurance Group of America offers individual and group life and health insurance products. The company delivered a 25.55% positive surprise in the earlier reported quarter. It carries a Zacks Rank #2.
Torchmark provides various life and health insurance products and annuities in the United States, Canada and New Zealand. It came up with a 4.61% positive surprise in the last reported quarter. It carries a Zacks Rank #2.
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