Kate Sidorovich - VP of IR Gary Lauer - Chairman and CEO Stuart Huizinga - CFO.

George Sutton - Craig Hallum Dave Styblo - Jefferies Tobey Sommer - Suntrust Robinson Humphrey Steve Rubis - Stifel, Nicolaus & Company Kevin Kopelman - Cowen and Company.

Good day, ladies and gentlemen, and welcome to the eHealth Incorporated Fourth Quarter and Full Year 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time.

[Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Kate Sidorovich, Vice President and Investor Relations. Please go ahead..

Thank you. Good afternoon, and thank you all for joining us today, either by phone or by webcast, for a discussion about eHealth Inc.'s fourth quarter and full year 2014 financial results. On the call this afternoon, we'll have Gary Lauer, eHealth's Chief Executive Officer; and Stuart Huizinga, eHealth's Chief Financial Officer.

After management completes its remarks, we'll open the lines for questions. As a reminder, today's conference call is being recorded and webcast from the IR Section of our website. A replay of the call will be available on our website following the call.

We will be making forward-looking statements on this call, that includes statements regarding future events, beliefs and expectations, including Medicare revenue recognition expectations first quarter Medicare membership, the benefits of our Medicare membership and the timing of such benefits, Medicare advantage and Medicare supplement projected commission payment, our expectations that we'll generate attractive growth rates in our Medicare business, our plans to invest more heavily in our Medicare business, future timing of our guidance, our estimated number of members, our expectations regarding current or future cash impact of the valuation allowance, our estimates relating to cash received pushed into the first quarter of 2015, potential cost reduction and adjustments to our cost structure, our expectations relating to meaningful cost savings and associated impact on our financial results, the timing of future open enrollment period and its impact on our Individual & Family Plan applications volume; projected member profitability, our estimates of our operational metrics, our focus on returning our company to profitability and optimizing resource allocation and our plans to provide an update on these efforts in the next few weeks.

Forward-looking statements on this call represent eHealth's views as of today. You should not rely on these statements as representing our views in the future. We undertake no obligation nor duty to update information contained in these forward-looking statements whether as a result of new information, future events or otherwise.

Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in our forward-looking statements.

We describe these and other risks and uncertainties in our annual report on Form 10-K and quarterly report on Form 10-Q filed with the Securities and Exchange Commission, which you may access through the SEC website or from the Investor Relations section of our website.

We will be presenting certain financial measures on this call that will be considered non-GAAP under SEC Regulation G.

For reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure, please refer to the information included in our press release and in our SEC filings, which can be found in the About Us section of our corporate website, under the heading, Investor Relations.

And at this point, I will turn the call over to Gary Lauer..

Thanks, Kate and thank you all of you for joining us today to report our fourth quarter and full year 2014 results.

What I plan to do today is review important financial and membership metrics for the fourth quarter and the year, provide an update on our Individual & Family Plan and Medicare businesses and outline how we are now looking at these businesses. Then I'll turn the call over to Stuart Huizinga, who will discuss our financial results in greater detail.

As many of you know, on January 14, eHealth provided preliminary financial results for the fourth quarter and the full year of 2014. Our final results were within to slightly above the preliminary ranges that we provided on January 14.

Specifically, revenue for the fourth quarter was $45 million, non-GAAP loss per share was $0.44 and EBITDA was negative $12.9 million. For the full year 2014, eHealth generated revenue of $179.7 million, and a non-GAAP loss per share of $0.01 with EBITDA of $4.8 million. Our yearend cash balance was $51 million and we remained debt free.

Turning to our Individual & Family business, as previously reported during the fourth quarter of 2014 we generated 1000 Individual & Family Plan applications. This included application activity for the first half of the open enrollment period. As a reminder, this most recent open enrollment period started on November 15 of 2014.

We also now have the submitted application data to the last day of the open enrollment period which ended on February 15. During the second half of the open enrollment period, from January 1 to February 15, we generated 130,000 submitted Individual & Family Plan applications.

The number of total first quarter Individual & Family Plan applications will be higher than 130,000, given that on February 15 we are just half way through the quarter.

However, the daily application volume at our Individual business has declined substantially compared to the volume leading into February 15, the formal end of the 2015 open enrollment period. By the way, you probably have seen recent reports on open enrollment period sign ups from government exchanges.

It’s important to note that they report the number of individuals who have selected exchange plans or automatic renewed and not submitted applications like we report.

You can use a factor of 1.4 individuals on average per submitted application that we have reported to approximate the number of individuals who submitted applications through our platform.

Please also note, that government exchanges report their entire membership base of individuals, including automatic renewals when they report the number of individuals to selected exchange plans.

Unlike a year ago, this enrollment period, or during this open enrollment period, we're able to successfully enroll subsidy-eligible individuals in the qualified health plans or QHPs.

QHPs represented roughly 25% of total Individual & Family Plan applications submitted through our platform during the fourth quarter of 2014 and almost half of total Individual & Family Plan applications for the period January 1 through February 15 of 2015.

We grew the number of total QHP applications from approximately 10,000 during the first open enrollment period a year ago to close to 90,000 during this most recent open enrollment period.

Despite the strong growth in QHP sales, the total number of applications submitted through our platform during this open enrollment period fell short of our expectations. And we are taking a closer look at our initiatives and performance, as well as the latest open enrollment period market data to better understand why that happened.

Lower than expected Individual & Family Plan application volume during the open enrollment period will have implications for our Individual & Family Plan membership and commission revenues for 2015.

We were in the process of reviewing all of our business initiatives in and around our Individual business and plan to rebalance where necessary to ensure the optimal monetization of this business area.

In particular, we are taking a close look at our cost structure in an effort to make sure that it aligns with current estimated Individual & Family Plan membership and projected revenue. Our unit economics have always been and remain attracted in this business.

So we need to adjust our fixed cost structure to bring the overall business in line with a strong earnings generation inherent in our member economics. By the way, when we talk about unit economics, we refer to the expected life time revenue of our efforts individual member relative to variable cost that we spend to acquire and support that member.

So on an individual unit basis these members are very profitable and if you include ancillary products like dental or vision which are typically cross sold and attached to a major medical product, that profitability is substantial. Now turning to Medicare.

Our Medicare business continue to perform strongly with applications for major Medicare Advantage and Medicare Supplement plans, combined growing in excess of 45% year-over-year in the fourth quarter and 49% for the full year 2014.

At the end of December 2014, we had approximately 143,500 revenue generating Medicare members or 21% growth compared to the year of 2013. Please note, that this year end membership number does not reflect the full positive impact of the annual enrollment period which took place during the fourth quarter of 2014.

As we shared with you during the pre-announcement last month, several million dollars of Medicare commission revenues were pushed out into the first quarter of 2015, driven by recent regulatory changes that impacted how Medicare carriers compensate their broker channel.

These new members will not be included in the number of total revenue generating members until we booked first commission revenues associated with these policies. We expect to book the vast majority of this revenue by the end of March.

Based on this, we are currently expecting that first quarter membership – Medicare membership will benefit from approximately 10,000 members that we enroll during the Medicare annual enrollment period and have haven’t yet been reflected in the fourth quarter of membership metrics.

For the full year 2014, total Medicare revenues grew 15%, while Medicare commission revenues grew 29% versus the prior year.

Again, these growth rates were impacted by the timing of revenue recognition on some of the Medicare members that we enrolled during the Medicare annual enrollment period, which should have a positive impact on our first quarter 2015 Medicare revenues and Stuart will have further comments on this area.

I'd also like to highlight several positive trends that are seeing in our Medicare business. First of all, compared to a year ago, Medicare Advantage and Medicare Supplement products combined now represent a higher percentage of our total submitted Medicare applications.

And this is important because Medicare Advantage and Medicare Supplement products are characterized by significantly higher annual and life time projected commission payments relative to a standalone prescription drug plan product and we are successfully emphasizing Medicare Advantage and Medicare Supplement products in our sales and marketing efforts.

Second, the unit economics of our Medicare business are improving as we become more efficient in generating and converting demand. As a result, in the fourth quarter we saw the variable acquisition cost improved as a percentage of expected life time revenue of our Medicare members compared to the fourth quarter a year ago.

One of the important drivers is decreased reliance on paid search as a customer acquisition channel and a growing contribution from our partnership channel to our total Medicare related health insurance applications.

Finally, we're just over month left, in this first quarter we are seeing strong application activity for the Medicare products that we sell compared to what we saw at this time last year. As you can see, our Medicare business continues to perform well, with our Medicare Advantage membership growing in excess of the overall market.

We're also very encouraged by both the level of and the trend in projected unit profitability of individual Medicare members.

The market opportunity remain significant with an estimated 25 million individuals on Medicare Advantage and Medicare Supplement plans and for the next 15 years an average of over 10,000 people each day are projected to turn 65 years of age, which is the age of Medicare eligibility As a result we are looking to actually invest more heavily in our Medicare business.

Now I'd like to make some comments about guidance. We've always provided expected annual ranges for revenue, EBITDA, net income per diluted share and stock based compensation expense at the time we provided our fourth quarter financial results.

However, as we are taking steps to adjust our cost structure and considering all the changes in the marketplace, including another change to the 2016 open enrollment date and a introduction of the new special enrollment period this March, as well as other possible policy changes, such as the upcoming decision by the Supreme Court in the King versus Burwell case, we don’t feel that we are now in a position to provide our guidance.

We also like to obtain more data that would be helpful to us in forecasting 2015 Individual & Family Plan membership before we provide annual guidance.

As you know, key factors that drive membership growth in future commission revenues are, our conversion rates from a submitted application to a paying member and the retention rates in our adjusting Individual & Family Plan membership base.

Given significant recent changes in our market, we are going to take additional time to analyze the open enrollment data and get better visibility into these metrics. We plan to provide guidance in the future when we have reached better clarity on both internal and external factors.

We are also planning to give you an update in the next few weeks regarding the steps we intend to take to adjust our cost structure. And now I'd like to call – turn the call over to Stuart..

Thanks, Gary. And good afternoon, everyone. Today I plan to review our financial performance for the fourth quarter and fiscal year 2014 and comment on some of our expectations for 2015. Our fourth quarter 2014 revenue was $45 million, a 17% decline compared to the fourth quarter of 2013. Revenue for the full year 2014 was flat at $179.7 million.

Commission revenue for the fourth quarter was $38.4 million, representing a 13% year-over-year decline. Fourth quarter Individual & Family Plan and ancillary commission revenue was down 18% driven by a decline in the number of revenue generating Individual & Family Plan members compared to the fourth quarter a year ago.

In addition, due to timing of revenue recognition, fourth quarter Medicare commission revenue grew just 1% year-over-year despite strong annual growth in submitted Medicare applications during the fourth quarter.

We currently estimate that over $3 million of Medicare commission revenue associated with policy sold during the annual enrollment period got pushed out into 2015. We are still collecting our initial commission payments relating to annual enrollment period Medicare applications.

As a result, this estimate is based on a number of annual enrollment period applications that have been approved, the historical commission we receive for approved application, and the proportion of annual enrollment period applications and associated commissions that have historically been recognizable as revenue during the fourth quarter.

As Gary mentioned earlier, we expect to book the vast majority of these revenues by the end of the first quarter. Other revenue, which includes sponsorship, ecommerce and demand and non-commission Medicare revenue was $6.6 million in the fourth quarter, a 34% decline compared to Q4 of 2013.

Underneath that, sponsorship revenue in our Individual business declined, while ecommerce and demand revenue grew slightly year-over-year. Medicare advertising revenue, which represents discretionary spend by carriers and is inherently lumpy declined compared to Q4 2013.

Turning to membership metrics, our Individual & Family Plan submitted application volume declined 41% compared to the fourth quarter of 2013. The estimated number of revenue generating Individual & Family Plan members as of December 31, 2014 was 566,000 or a 29% year-over-year decline.

Our total estimated membership at the end of the quarter for all products combined was approximately 1.1 million members, which represent a 10% decline over estimated membership reported at the end of the fourth quarter of 2013.

The estimated number of revenue generating Medicare members was a 144,000, up from a 118,000 at the end of the fourth quarter of 2013 or an increase of 21%. I'd like to stress again, that 2014 end of year Medicare membership does not fully reflect enrollments during the annual enrollment period due to timing of revenue recognition.

The Medicare revenue they got pushed out from the fourth quarter of 2014 into the first quarter of 2015 of over $3 million represents roughly 10,000 additional Medicare members. We expect that the majority of these will flow through our membership numbers in the first quarter.

The estimated number of members on ancillary and small business products was over 400,000 at the end of the year, compared 330,000 at the end of 2013, reflecting 23% annual growth. Now I'd like to review our operating expenses.

Total operating cost for the fourth quarter and full year 2014 grew both in absolute terms and as a percentage revenues compared to a year ago, driven primarily by higher technology and content and customer care and enrollment expenses.

Marketing and advertising costs remain relatively flat in absolute terms in the fourth quarter of 2014 compared to the fourth quarter of 2013 and even declined slightly for the full year 2014 compared to 2013. Let me provide more detail on operating expenses for the quarter.

Fourth quarter 2014 non-GAAP marketing and advertising expense, which excludes stock-based compensation expense, was $28 million or 62% of revenue compared to $27.5 million or 51% in the fourth quarter of last year. Our marketing cost are largely variable and are directly tied to application volume each quarter.

Accordantly marketing cost in our Individual business declined driven lower submitted application volume compared to the fourth quarter of 2013. We did see an increase in the cost of acquisition on a per submitted Individual & Family Plan application basis compared to a year ago, primarily as a result of higher cost in the paid search channel.

So the overall Individual & Family Plan marketing cost did not decline to the same extent as the number of submitted Individual & Family Plan applications.

Medicare marketing costs increased in absolute dollars year-over-year, driven by strong consumer demand that we generated during the annual enrollment period and the resulting growth in submitted applications for Medicare products. At the same time, the unit cost of acquisition for Medicare products improved year-over-year.

Fourth quarter 2014 non-GAAP tech and content expense, which excludes stock base compensation expense, was $10 million or 22% of revenue, up from $8.5 million or 16% of revenue in Q4 2013.

This increase in technology expenses is driven primarily by planned investment to enhance our technology platform, including an investment in functionality to allow eHealth to connect to government insurance exchanges and assist subsidy eligible individuals in enrolling into qualified health plans.

As you know, during this open enrollment period we were successfully enrolling individuals in subsidy eligible health insurance, something we were unable to do at scale a year ago.

Fourth quarter 2014 non-GAAP customer care and enrollment expense, which excludes stock base compensation expense, was $14.3 million or 32% of revenues compared to a $11.1 million or 21% of revenue in Q4 2013.

In the fourth quarter, we saw an increase in customers care resources in the Individual and Medicare businesses as we staffed our customer care center in anticipation of strong application growth in both businesses.

Fourth quarter non-GAAP operating loss, excluding stock-based compensation and the amortization of acquired intangibles, was $14 million compared to operating income of $0.2 million in the fourth quarter a year ago. Full year 2014 non-GAAP operating income was $0.6 million.

EBITDA for the fourth quarter of 2014 was negative $12.9 million compared to EBITDA of $1.1 million in the fourth quarter of 2013. Full year 2014 EBITDA was $4.8 million. Fourth quarter 2014 non-GAAP net loss per share was $0.44 and full year 2014 non-GAAP net loss per share was a penny.

GAAP net loss per share was $1.08 for the fourth quarter and $0.88 for the full year 2014. GAAP net loss per share reflecting non-cash charge of $11.5 million or $0.65 per share related to eHealth recording evaluation allowance against its deferred tax assets.

The increase in the valuation allowance is not expected to result in any current or future cash expenditures. To the extent we're able to realize these assets and future tax returns, we will record the benefit to our P&L at that time. Our fourth quarter 2014 cash flow from operations was negative $4.1 million.

Fourth quarter cash flow was negatively impacted by the new CMS regulations which among other things prohibit carriers from making commission payments before January 1 for Medicare Advantage and prescription drug plans that are sold during the annual enrollment period.

We estimate that approximately $8 million in cash receipts were pushed out from the fourth quarter and into the first quarter of 2015.

The impact of this regulation on our cash flows is more pronounced compared to the revenue impact, given that we were able to book some of the revenues arising from the annual enrollment – period enrollments during the fourth quarter based on receipt of commission statements from carriers. For the year our cash flow was positive $1.8 million.

Capital expenditures for the fourth quarter of 2014 were approximately $300,000 and were approximately $3.6 million for the full year. Our cash balance was approximately $51 million at December 31, 2014. And now I would like to make some comments about 2015.

As Gary mentioned, we're in the process of reviewing the cost structure across our entire business. The lower than expected application growth that we saw during the open enrollment period will impact our 2015 forecast for Individual & Family Plan membership and commission revenues.

My near-term priority as CFO is to achieve a better alignment between Individual & Family Plan membership and forecasted commission revenues on one hand and expense levels in the company on the other. We've already identified several areas for potential cost reductions and are working through additional efficiencies.

I believe that we can achieve meaningful savings, which will have a positive impact on our future financial results.

In addition, two important drivers of our 2015 financial forecast are the rate at which the individuals on application submitted during the open enrollment period will convert into paying members and the attrition within our existing individual member base during the open enrollment period.

Given the significant changes in our in our industry as a result of the Affordable Care Act, we've seen pronounced deviations from historical averages in these previously stable metrics.

This year we'll be taking additional time to digest all the relevant data points around our open enrollment period performance and membership trends before we finalize our 2015 forecast. Furthermore, we just learned last Friday that the dates for the 2016 open enrollment period were changed were changed by the Federal Government.

The next open enrollment period was expected to take place between October 1 and December 15, of 2015. The end date has now been shifted to January 31 of 2016. This change will impact the expected timing of our Individual & Family Plan applications volumes.

I would also like to comment on the outlook for our Medicare business, which is more predictable and has not been impacted by the Affordable Care Act to the same degree as our individual and family plan business. Our projected return on investment on our Medicare member remains very attractive an in fact has been improving over time.

So we plan to continue investing for growth in Medicare and we expect to continue generating attractive growth rates in this business. In conclusion, we're currently focused on returning our company to profitability and optimizing resource allocations across our key business areas and projects.

We plan to update you on these efforts in the near future.

Operator?.

Thank you. [Operator Instructions] Our first question comes from the line of George Sutton with Craig Hallum. Your line is open..

Thank you. I wondered if you could explain, when you mentioned short of expectations relative to the second-half of the season and the season in total for IST, can you give us a sense of why you think that's the case? Is it stronger exchanges? Is it macro demand? Is it execution? That would be helpful. Thanks..

Yes George, its Gary. I think it's a combination of all those things. When we look at what's been reported by the exchanges recently, it looks like they've added some place between 4.5 and 4.7 million new enrollments, individuals that is. We had little over 300,000. So 6% plus, which frankly is the same share we had a year ago.

We had expected to see more share this time because we have the QHP capability and although we did well with QHPs, I would say that the volume on the QHP side of the business as well as the non-subsidy side was not as great as we wanted.

I think that some of that is probably internal execution and some of that is the market as well and we're looking very hard at that right now..

Now, just to be clear, as you are talking about rebalancing the spend, as you look at the cost to acquire in the IFP business, you've talked about it historically as multiples of your cost to acquire.

Can you give us a sense of -- is that not the case? And is therefore -- I'm trying to understand the variable versus fixed piece of this, and what you can do to return that to normal multiples..

Well George, this is Stuart, the cost acquisition piece has gone up some in this open enrollment period.

We're seeing some very early indications that we may be seeing higher commissions coming from those new members, but it's very early, we still need a lot of data as these convert into paying members, need a lot more data on that, but that's one piece that we feel may mitigate some of the increase from the cost of acquisition increasing..

But George and this is Gary, I would add to that. The comments I made earlier about the unit economics being highly favorable, for example an individual policy relative to the cost of acquisition yields us a margin in excess of 40%. When you attached to that ancillary product which we do in many of these cases you get a substantially higher margin.

So the margin profile is still very, very attractive in fact with the progress we've made with ancillary products actually are because it's improved, our issue is a fixed cost one right now. We've got too much fixed cost as base in this business and that's what we're looking at long and hard right now and we're getting back to you soon on this..

Okay. That helps clarify things guys..

Our next question comes from the line of Dave Styblo with Jefferies. Your line is open..

Sure, good afternoon. Thanks for the questions. So, maybe staying on the IFP book here.

How far are you guys into your assessment of looking at these fixed costs? And are you at a situation where you feel like you can take enough out, such that the business is sustainable? Or is this something where, over the next couple of years, it might be something where you just have to exit it, because the margins and the financial economics are just not sustainable the way that it's going?.

Well David, we're deep into this and we have been for several weeks. We again see the unit economics as being attractive and favorable. The aggregate volume isn’t as high as we had expected or and as we had planned for.

We're very, very confident and optimistic that we can align this so that it's a very profitable business given these volume levels that we see right now with the anticipation and the hope that we're going to see greater volumes moving forward..

Okay. And when you're looking at some of these reviews, you've talked about some of that might be -- as far as the shortfall in applications, some of it is market, some of it is perhaps internal execution.

Can you elaborate on that internal execution point? Is there certain folks that you just need to bring in at this point? Or is there just been maybe not a holding of accountability to some standards? Or are you guys just not maybe operating in the right veins in terms of paid search at the right times? What are you seeing as the shortfall right now internally?.

Well, we saw paid search be a bit more expensive. We saw our partner channel give us more of a contribution. We probably didn’t see as much and not probably we didn’t see as much direct as we would like. The data that we've collected across the market indicates that the market wasn’t as robust as certainly we had anticipated.

As you know, the Congressional Budget Office a few years ago had estimated there'll be about 30 million enrollees. CMS before the open enrollment period several months before took that estimate down from 9 to 9.9 million and it seems that they've fallen right inside of that.

So we think there wasn’t as much market, but I don’t want to use that as a reason why we did more, you could certainly question some of our approaches here being more aggressive against government exchanges generating more visibility about the fact and awareness about the fact that there is some really good choices out there.

So we're looking at all of those things and we probably could be more effective there quite frankly..

Okay. And if you just -- as I look at the fourth-quarter IFP, how it shook out, I guess -- is there still a big churn issue going on? I guess the way I -- when I plug this into my model here, it looks like there's the churn from the 3Q to the 4Q was about 25%.

Is that what you guys -- is that roughly consistent with what you guys are seeing?.

I think the thing that's impacting that number for you is, there is a change in the seasonality between years.

One thing that helped Q4 a year ago versus Q4 this year is that we hadn’t got into the new cycle of OEP and then the special enrollment period after that yet this time last year, this time last year we were still benefiting from a lot of members coming in from the prior Q3 application volumes.

And then also this time last year you may recall some of our comments that over 50% of our applications in the fourth quarter last year were for 2013 plan, many of which converted during the quarter and became revenue generating during the fourth quarter last year. This year very, very few of the new applicants in the fourth quarter converted.

So they show up in our approved member metric, but they don’t show up in our revenue generating and they won't until they become paying members in Q1..

Okay and the last….

So a lot of the fall off you may be seeing a few of those, there's seasonality factors..

Okay. And then lastly, just on the Medicare business. It seems if I add back the adjustments that are pushed out from 4Q to 1Q, bring them back into this year -- or into 2014, I should say -- the growth in terms of membership sequentially from 3Q to 4Q was about the same, about 32,000 to 33,000 lives.

Revenue actually looks like it declined for 2014 year-over-year a little bit. I guess, given that your share was small and it's something that you're working on, I would've expected that perhaps you could have performed a little bit better there.

Is there some sort of rebasing going on or churn going on that you could help elaborate on? I mean, certainly, 20%-plus revenue growth is solid, but I guess I would've expected that to accelerate a little bit..

Yes, when you add that back you would have seen very solid commission revenue growth. The other piece of Medicare revenue that we saw in Q4 was the other revenue declined year-over-year in the fourth quarter and that somewhat offset the strong condition revenue growth that we would see if you adjusted for the amount of revenue that got pushed out..

I guess that another way the application growth, the adjusted commission revenue growth we're very satisfied with. The other component is marketing fees and some sponsorship that we've been paid and there wasn’t as much of that in that quarter..

Got it, okay..

Our next question comes from the line of Tobey Sommer with Suntrust. Your line is open..

Thank you.

I just want to start by maybe asking -- what's the timeframe or specific elements of the variables you're looking at that you may need more clarity on, in order to provide guidance? Is this waiting for the expense situation to kind of be more solid? Or are there other elements?.

Well, I think we also pointed to the fact that there is metrics that we would like to wait to see how they have developed here after the open enrollment period ends to see the churn, to see the submitted application to pay conversions, something that changed significantly a year ago. We want to see those numbers this year.

And then as Gary indicated in his comments there's a lot of externalities going on right now. We've got a lot of changes coming down from the government which are changing things like the open enrollment period dates and the one they had done last Friday was very significant.

Moving the applications from what would have been all Q4 this year to now spread it out between Q4 and Q1 was fairly significant and they continue to make changes constantly. And so, it's an environment that's changing under our feet. It's very volatile and it's just continuous change..

Yes it's another example on Friday there was a special enrollment period announced for people who when they file their income taxes suddenly discover that they've got to pay a penalty because they haven’t bought Obamacare complaint health insurance. This could be six million to eight million people.

Frankly, it is not clear whether or brokers are going to be able to participate enrolling any of these people. So we've got a number of uncertainties like that that just make us want to be very, very careful and thoughtful about putting this together..

Right. Okay. That makes sense.

What is the best and worse outcome from the Supreme Court ruling from your perspective? So kind of in other words, what do you root for?.

That's a great question. Oh my gosh. Again you've got all these pundits weighing in and all the politics involved, the general wisdom seems to be that if the Supreme Courts rules in favor of the plaintiff's king and company then 36 states subsidies are no longer valid.

The question then is can the administration and HHS somehow maneuver around that with regulations to provide some kind of an exchange capability. Orders will have to be legislated. It has to be legislated. You've got Republicans versus Democrats, versus the President.

Probably the most I think the most interesting thing and I've been asked to weigh in on this is if you get Republicans of they have to legislative they maybe released the mandate and has changed for letting the subsidies flow and letting the private sector participate math, that's one outcome we just don’t know.

I think the one thing that only has probably preventable it is going to chaotic. Yet the Supreme Court moves in favor..

Okay. Just a couple more questions from me.

Do you have enough cash to address the range of outcomes that you are evaluating from a rightsizing perspective and an increased investments in Medicare?.

Yes, we're comfortable. We have plenty of cash to deal with that..

Okay.

Are you seeing or do you anticipate any changes in customer life in the IFP or Medicare businesses?.

Last year we didn’t have that may QHPs that we had brought in and this year we have substantially higher percentage of our applications from QHPs. We've hear from carriers that they are seeing better retention with QHP on our small sample from a year ago we saw indications that those may at least during the first year outside of open enrollment.

The churn is at a lower rate, so we were hopeful that we would see that trend now that we've got QHPs this year..

Our next question comes from the line of Steve Rubis with Stifel. Your line is open..

Hi guys. Thanks for taking my questions. I know -- I think I heard you discuss sort of your thoughts around the QHPs that you saw in the fourth quarter and the open enrollment period.

Can you get -- and I may have missed this -- did you give any color about the total number of submitted apps, or where you think you are going to fall, either above or below for the entire 2015 OEP?.

Well we gave a figure of 90,000, half million to 90,000 submitted applications for OEP for QHPs.

Yes, and did you say anything about the aggregate, not just QHPs but in total submitted apps for the….

Oh correct, yes so 130,000 to-date throughout February 15 for the first quarter and 100,000 applications roughly in the fourth quarter and 130,000 through the 15 of February in the first quarter..

And then we also said that to compare that to government because their report individuals who have applied you'd off lift our submitted application numbers conservatively by about 1.4..

Okay. Thank you.

And then given that you haven't provided guidance and there's a lot of moving parts, should investors be concerned that you could face another issue around commission conversion, like you did in the second quarter of last year? Or have you largely been able to fix whatever issue was driving that?.

Well I think, the main issue for us was the conversion from some middle applications who were paying member, we took a lot of steps to improve that. It is way too early for us to be able to see the impact of that, but I don’t want to steer you towards we've improved it at this point, but we definitely took steps to do that..

And I guess my last question will be -- have you given any thought to like going private or a transaction or being acquired or -- you know, is that even on the table?.

Well, you know I mean being realistic here, I think alternatives, no matter what the state of the business always on the table and possibilities.

And what we're doing right now is we're focused on business internal execution what's going right, what hasn’t, addressing those things, addressing the cost structure and doing everything we can to ensure that for our shareholders that we can maximize the value..

Thanks a lot, if I have any more I'll hop in the queue. Thank you..

Our next question comes from the line of Kevin Kopelman with Cowen and Company. Your line is open..

Hi, thanks a lot. Could you give us any more color on the dynamics around the non-subsidy eligible -- the decline in non-subsidy eligible that you saw in this open enrollment period? And I think you talked about direct traffic. How important was organic search rankings in that? And how are you ranking inorganic compared to where you were? Thanks..

Well, I thing several questions there, we were frankly disappointed that we didn’t see more nonsubsidized volume and that's all has been a sweet spot for us. My gosh, a year ago we did some place in excess of 450,000 non-subsidies at that time. But remember a year ago we had a lot these grandmother plans as well which we didn’t have this year.

But clearly we expected to see more contribution from our nonsubsidized population. We're still trying to understand why that's the case. I mean, clearly this is becoming more and more of a subsidized market. I mean if you look at the volume that goes to these government exchanges the vast majority of people who were there for subsidies.

And we got 90,000 of them. Frankly we should have gotten more in our view. Regarding search, with paid search, I think as Stuart had indicated we saw some of the cost go up, so we were a little bit more judicious and careful about where we were participating there.

And in organic or natural search we continued to index and rank very high and that's served us well..

Okay.

So, when you look at the non-subsidy eligible, is it really about -- are most of the type of customers that you were getting through non-subsidy, are they now migrating to subsidy?.

Well we don’t have enough data on that yet and that gets back to this whole this guidance and having the information and the data that we need. Well certainly some of them may have and through us and some may not have and they simply may not have been.

It appears though just weren’t as many non-subsidy were participating in the market this time around when you look at the government data and you look at ours as well at least those two data points..

Okay. Thank you..

And I'm not showing any further questions at this time. I'd like to turn the call back over to Gary Lauer or closing remarks..

Well, thank you all for you time today and I look forward to taking with many of you individually over the next coming days and weeks. Thanks again..

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a good day..