Good morning everyone and welcome to eHealth Inc.'s Conference Call to discuss the Company's Second Quarter Financial -- excuse me, Second Quarter 2024 Financial Results. At this time, all participants have been placed in a listen-only mode. The floor will be opened for your questions following the prepared remarks.

I will now turn the floor over to Eli Newbrun-Mintz, Senior Investor Relations Manager. Please go ahead..

Good morning and thank you all for joining us today. On the call today, Fran Soistman, eHealth's Chief Executive Officer and John Stelben, Chief Financial Officer, will discuss our second quarter 2024 financial results. Following these prepared remarks, we will open up the line for a Q&A session with industry analysts.

As a reminder, this call is being recorded and webcast from the Investor Relations section of our website. A replay of the call will be available on our website later today. Today's press release, our historical financial news releases and our filings with the SEC are also available on our Investor Relations site.

We will be making forward-looking statements on this call about certain matters that are based upon management's current beliefs and expectations relating to future events impacting the company and our future financial or operating performance.

Forward-looking statements on this call represent eHealth's views as of today and actual results could differ materially. We undertake no obligation to publicly address or update any forward-looking statements except as required by law.

The forward-looking statements we will be making during this call are subject to a number of uncertainties and risks, including but not limited to, those described in today's press release and in our most recent annual report on Form 10-K and our subsequent filings with the SEC.

We will also be discussing certain non-GAAP financial measures on this call. Management's definitions of these non-GAAP measures and reconciliations to the most directly comparable GAAP financial measures are included in today's press release. With that, I'll turn the call over to Fran Zisman..

Thank you, Eli. Good morning and thank you to everyone joining us today. Before we dive deeper into the discussion of the second quarter, I wanted to address the news we announced last night. I will be retiring from my role as CEO by or before the second quarter of 2025 once a successor is on board.

As you may recall, I came out of retirement three years ago to take on the CEO role in November of 2021. It has been a privilege to lead this company during this time.

Since then, I am proud of the leadership team we've assembled during my tenure and the progress we have made transforming eHealth by creating a healthy and vibrant culture, evolving carrier relationships, enhancing focus on member retention and deploying new technologies to name a few.

Over the past two years, we've achieved tremendous progress across key profitability metrics, including GAAP net income, adjusted EBITDA and operating cash flow. With the business on solid footing and advancing steadily towards our three-year growth and profitability goals, now is the right time to announce my intention to retire as CEO in 2025.

There are a few reasons that I made the decision to inform the Board of my plans to retire. First, it was important for me to disclose this ahead of the start of the annual enrollment period on October 15.

I will continue to oversee the AEP and OEP as I have always done in the past and intend to stay close to our consumers and carrier partners during this time. Importantly, I'm focused on continuing our work to position the business to achieve our long-term financial and operating goals, including enhancing eHealth's capital structure.

Further, making this decision now provides the Board the time it needs to cast a broad net and thoughtfully evaluate both internal and external candidates. I have full confidence in the eHealth team and I look forward to continuing to serve on the eHealth Board and helping guide our accomplishments in the years to come.

With that, I'll now cover some of the recent industry developments, our second quarter performance highlights as well as the important work we are doing in preparation for the upcoming annual enrollment period. John Stelben will follow my remarks and walk you through our quarterly results and discuss annual guidance.

eHealth delivered another quarter of strong execution and performance, including significant growth in application volume across our core agency model and carrier dedicated Amplify platform. Our existing book of business continued to generate positive tail revenue driven by favorable retention and cash collection trends.

On the expense side, we continue to find savings within our fixed cost base and improved per member acquisition costs in our Medicare Agency business compared to Q2 a year ago.

Excluding tail revenue in both periods, second quarter revenue grew 13% year-over-year, accompanied by a significant improvement in adjusted EBITDA and earnings on the same basis. As we move into the second half of 2024, preparations for the AEP are now in full swing.

We have begun training our new adviser classes, are adding innovative features to our consumer-facing online platform and are rolling out new customer retention strategies and capabilities. We also continue to fine-tune our brand-driven messaging and marketing materials, including new TV ads featuring eHealth spokesperson, Eve.

As we approach this AEP, we continue to hear commentary from large carriers about their focus on Medicare margins amid regulatory and medical cost pressures. We expect for this trend to result in substantial changes to benefit packages, premiums, geographic coverage and other key planned strategies.

It is also important to note that there remains several important meetings with our large carrier partners to learn more details about their 2025 planned strategies. In this fluid environment, I want to emphasize that eHealth's value proposition as a trusted adviser to beneficiaries and our omnichannel choice model are more relevant than ever.

Combined with the continuing reduction in fulfillment capacity with two new competitor exits in the past few months, we believe this creates an opportunity to drive strong consumer demand to our platform during the enrollment season. The anticipated Medicare plan changes that I just described could have a substantial impact on beneficiaries.

Considering this, I have personally sent a letter to CMS advocating for proactive steps to ensure seniors have adequate time to review their options, understanding the modifications to their coverage and provider networks and find plans that best fit their needs.

Combined with the distracting election season and the late Thanksgiving holiday this year, we believe CMS should consider extending the AEP or establishing an incremental special enrollment period.

With respect to recent regulatory activity in our space, earlier this year, eHealth joined a lawsuit filed by the counsel for Medicare Choice, that resulted in a temporary stay on key broker compensation provisions of the CMS 2025 Medicare rule.

While we believe that these provisions do not apply to our business, we view this as a positive outcome as it signals to CMS that it has overstepped its authority and potentially discourages them from doing so in the future.

We believe the stay also helps avoid a wide range of interpretations of the rule by our carrier partners as they oversee compliance of their distribution channels based on their own interpretation of CMS regulations. Moving now to our second quarter operational overview.

In our Medicare segment, hiring and training of our new license benefit advisor classes is progressing well. This year's hiring ramp is not as steep compared to last year. As we enter 2024 with a greater number of tenured advisers who will be staying on year round.

We are targeting closer to a 50-50 mix of tenured versus newly hired benefit advisers for this AEP. This compares to approximately 30% tenured and 70% new advisers last year. This mix shift has positive implications for our conversion rates.

Further, this year, we are supplementing our advisory capacity through the introduction of 1099 contracted licensed agents. As we prepare our organization for AEP, we continue to build on our brand initiatives and audience targeting strategies, leveraging important learnings from last year.

This includes further emphasis on the channels and audiences that work best for us as well as the introduction of new partners and audiences such as the growing chronic special need plans or C-SNPs population. Brand initiatives will again be front and center for our marketing organization.

We believe our newly launched brand was a key differentiator last AEP, helping us gain immediate traction with beneficiaries who are typically inundated by repetitive, generic messages and saw our ads as a breath of fresh air.

In year two of deployment, we expect our branded messaging to grow even more impactful across our direct channels as we reinforce our consumer-centric image as a remarkably transparent shop, educate, buy and enroll platform. On the product side, we continue to enhance user experience across our omnichannel platform.

We are updating our planned comparison tools to include a more extensive needs analysis upfront and a simplified recommendation output aligned to customer-specific needs. We are also adding features that simplify saving application progress online, so the beneficiaries can return at their convenience to finish their enrollment.

Our platform updates also have a particular focus on improving our mobile experience as we are observing an increased number of seniors engaging with our site using their smartphones and tablets. Further, in Q2, we expanded the pilot of our video enrollment tool, Live Advise, to additional benefit advisers.

We have had encouraging anecdotal feedback on the product from both advisers and beneficiaries as a way to combine the convenience of a telephone enrollment with a personal touch of video interaction that helps build rapport and trust.

We also expect this new capability to support our retention objectives by creating a more memorable experience and first impressions. Turning to execution highlights, our Medicare agency model delivered an outstanding second quarter, generating 9% year-over-year Medicare Advantage submission growth.

This was driven by strong performance within our direct and affiliate marketing channels combined with an increase in telephonic conversion rates. Our agency choice model remains a core offering for eHealth as we strive to be the gold standard in health insurance distribution.

Our ability to serve customers nationwide, supported by unbiased carrier-agnostic recommendations sets eHealth apart. We believe this differentiation will be especially valuable in this upcoming enrollment cycle. Moving now to Amplify; our carrier-dedicated model continues to scale.

The second quarter saw strong enrollment volumes and conversion rates for our Amplify partners. We onboarded a new customer during the second quarter and have a robust pipeline of new partnerships, some of which we expect to launch ahead of this year's AEP.

This is a small industry and the high level of service we provide to our partners and their customers is resonating with carriers, creating additional opportunities for us to grow. Amplify generated $4.1 million in total revenue in Q2 and was the largest driver behind the 37% year-over-year growth in our non-commission or other revenue.

This serves as a strong testament to the success of our business diversification strategy. Putting a bow on the discussion of our agency and Amplify models, the two offerings provide a breadth of distribution services for our carrier partners.

Our agency platform drives high volume, high-quality enrollments from beneficiaries who value choice, comparison shopping and omnichannel tools. This is a target market that carriers cannot reach through their internal direct-to-consumer sales.

On the other side, Amplify augments carrier fulfillment organizations in an efficient and compliant manner which is critical in this highly regulated and seasonal industry.

Both models offer carriers real-time insight into shopping and demand trends, what is important to consumers and planned selections and how their offerings track against competition by local market. Now I will turn to retention, including our key initiatives in this area.

Across our book of MA business, we are seeing stable to slightly improved member retention which represents our ability to retain members on the eHealth platform regardless of whether they stay on the same plan or switch to a new one.

Member level retention represents an increasingly important operational focus as we anticipate greater levels of planned shopping and switching this AEP. This year, we are rolling out several new retention initiatives. First, we introduced a new tool called Match monitor.

This allows members to easily understand the implications of the annual notice of changes which carriers send out ahead of the AEP, check if any of their critical benefits are impacted and compare their current plans to other options in the area. Second, we continue to expand our loyalty program, ePerks, by adding new partners to the platform.

This program is designed to provide value to our members beyond their health insurance coverage while building a stronger relationship with eHealth. Third, we recognize that the waiting period between an application and when a policy becomes effective, can frequently be a source of anxiety.

To address this, we're introducing eHealth application tracker, a tracking tool that displays to beneficiaries for real-time status of their applications as they progress from the initial sent phase to approval by carrier.

Finally, we continue to support a dedicated retention team that serves our existing members and offers tailored programs for dual special need plans, or D-SNPs [ph] and other customer audiences identified as having elevated churn risk. Moving to our balance sheet; we continue to make progress with our advisers towards improving our capital structure.

This continues to be one of our most important priorities this year and we recognize that our investors have great interest in seeing us achieve this objective.

We believe we have more than sufficient liquidity to execute on our three-year plan and continue to target positive free cash flow generation for the trailing 12-month period ending March 2025. We also believe we are well positioned to refinance or replace our Blue Torch term loan at equal or favorable rates before it becomes due early next year.

Based on our strong performance year-to-date, we are raising our guidance ranges for Fiscal Year 2024, as John will discuss shortly. ORC [ph] is now underway to prepare our sales and marketing organization for what is expected to be a highly dynamic fourth quarter with significant consumer shopping.

We expect to be in a strong position to take advantage of this opportunity. Before I turn the floor over to John Stelben to provide his remarks, I would like to comment on the CFO transition process underway. This is John Stelben's last earnings call and I want to publicly acknowledge his important contributions to this organization.

John came out of retirement two years ago to help implement our business transformation plan. It brought new and important financial rigor and discipline that has greatly contributed to the operational and financial progress we've achieved over the past two years.

It's been a pleasure and a privilege to have worked with John for more than 25 years and I wish him all the best of the re-enters retirement. As we previously shared with you, John Dolan, who is currently eHealth's Chief Accounting Officer, will be succeeding John Stelben as our CFO effective August 31.

The transition is going beautifully as anticipated and I have great confidence that John Dolan's leadership will be instrumental in sustaining the momentum of our financial performance. With that, I will turn the call over to John Stelben for financial remarks.

John?.

Total revenue for 2024 is now expected to be in the range of $470 million to $495 million compared to our prior guidance range of $450 million to $475 million. GAAP net loss for 2024 is now expected to be in the range of negative $36.5 million to negative $22 million compared to our prior guidance of negative $40 million to negative $20 million.

Adjusted EBITDA for 2024 is now expected to be in the range of $7.5 million to $25 million compared to our prior guidance range of negative $5 million to positive $20 million.

Operating cash flow for 2024 is now expected to be in the range of negative $10 million to break even compared to our prior guidance range of negative $15 million to negative $5 million. With respect to tail revenue, initial guidance for 2024 included a range of $0 million to $15 million.

As of June 30, 2024, we have recognized $14 million of tail which is near the high end of our range. While we cannot predict future tail with certainty, it is fair to project we could see another $0 million to $6 million of tail recognized in the back half of the year.

As such, we are updating the range for total 2024 positive net adjustment revenue to be between $14 million and $20 million.

Looking ahead to Q3, excluding tail revenue, we expect revenue to grow in the mid-single-digit percentage range and for adjusted EBITDA to also improve in the mid-single-digit percentage range as we continue to ramp up our adviser force and make other preparations for the AEP.

As eHealth moves into the critical second half of the year, we are doing so from a position of strength and preparedness. I am proud of the tremendous progress this company achieved in the past two years and the management team Fran brought together.

As this will be my final earnings call with eHealth, I will add that I'm also completely confident in our incoming CFO, John Dolan's ability to continue to lead our finance organization and support the strategic plan.

He brings a wealth of financial expertise and leadership ability that sets him up well to be a successful CFO through this transition and beyond. He is on the call this morning and will be participating in Q&A. I would also like to thank all my finance colleagues for their support and results during my tenure at eHealth.

Operator, please open up the line for Q&A..

Gentlemen, thank you for your remarks. [Operator Instructions] We'll hear first from George Sutton at Craig-Hallum..

Fran and John, congrats on your moves. They say AEP seasons are like dog years. So I think we've all proven that. So, I wanted to talk, Fran, if we could, about the political spend within the context of how you're going to go to market this AEP. Obviously, there typically will be a bit of a crowding out of marketing dollars.

How do you shift your budgets to try to deal with that? And have you gotten any feedback from your letters to CMS to really encourage a longer shopping season?.

Thank you. Let me start with the first question regarding the national election. We've experienced this before, even went back and looked at how this played out four years ago. And because of our omnichannel capabilities, we use multiple channels for each beneficiary.

EV is problematic in those first three weeks of AEP because of the national election and then it opens up. So, we'll shift more of our dollars to direct mail and SEO and SEM and paid search and other channels that generally aren't as affected by the national election as TV is.

And I'm -- as far as CMS's reaction; I've had two communications with CMS on this topic. They've not -- they've acknowledged what I outlined as sort of the proverbial perfect storm with more shopping likely to occur this year and the national election and Thanksgiving coming late in November and AEP ending on a Saturday.

I mean it's all those factors, I think, are going to make it a little more challenging for beneficiaries to get through. So, adding five or six days on the back end, just sort of makes sense. We know we can't go too much beyond that because carriers need to get ID cards out in advance of January 1.

So, there's a natural cut-off in order to avoid unintended consequences. They've listened, they've acknowledged, unclear whether they're going to act. So, I will continue to encourage that and there'll be a byline coming out in the next few weeks from me encouraging action sooner rather than later..

Good luck with that. And I'm just curious, John, you had mentioned you reserve the right to reinvest some upside that you could see from this AEP. Is that a -- are you effectively saying that we see a lot of shopping that will occur and we want to be prepared with potentially more marketing dollars to take advantage of that.

Is that effectively what you're saying?.

George, yes, I would say that plus depending on how this AEP unfolds, you could potentially see acquisition costs rise due to some of the factors that you mentioned in your first question of Fran. So we're going to be -- as a company, we're going to be nimble as we see opportunities where we can lean into channels, we will.

And we look at this and Michelle can expand on this but we really look at how we spend the money in the channels based on LTV to tax or POAs [ph]. And so it's possible we could see profitable growth coming up in channels with potentially a slightly lower but still very positive LTV to cash.

So it's -- fourth quarter is -- the earnings in fourth quarter are multiples of what our annual earnings are. And so we're just going to be nimble and be prepared and -- we're trying to give guidance out there that provides for a range of opportunity, profitable growth opportunity..

Understand. Okay. John, it's been good to work with you..

[Operator Instructions] Next, we'll hear from George Hill with Deutsche Bank..

Fran, I just wanted to wish you well. I appreciate you guys taking the question and I'll confess during a blistering earnings morning, I missed a good portion of the prepared commentary.

I just was wondering if you guys would be willing to comment on kind of the expected churn that you guys think you're going to see for the 2025 AEP, like all the Medicare plans are clearly talking about a lot of disruption in the market with a lot of the plans talking about high single digit, maybe even low double-digit member attrition.

And just kind of like thinking about how do you -- and then my follow-up on that would be like how do you guys think about gaining share and looks to be a volatile market coming up in October?.

Thanks for the good wishes and thanks for the question. We have made retention one of our key strategic priorities and work was underway 18 months ago to start that journey. We're making good progress. The introduction of a loyalty program.

We've got special initiatives around the annual notice of change in being proactive and helping beneficiaries navigate that. We have new tools that I think are going to be very helpful to address what will likely be a large demand for shopping this year. So protecting the book is critically important. No one is confused about that here at eHealth.

So proactivity is the key. We do think there's an opportunity to grow share. A combination of capacity lowering in our industry and we think we're going to see significantly more shopping this year.

There will be market exits which are typically disruptive but opportunistic for us to make sure that beneficiaries have a soft landing with an alternative plan. So we're all over it. I don't want to understate the importance, you're absolutely right, retention is critical.

But I also feel confident in the strategies and the tools that we develop to prepare for this event..

[Operator Instructions] It appears we have no signals from our phone audience. I am pleased to turn the floor back to Mr. Soistman for any additional or closing remarks..

Thank you, operator. Thank you, again, everyone. I know it's a busy morning for you all. Appreciate your participation. I appreciate the continued interest in eHealth. You've heard today, evidence of strong momentum that started multiple quarters ago and continues to this day.

The energy level and the intensity of our focus for a successful AEP is great; and I remain confident that we'll be prepared for the opportunities that lie ahead. So, thank you once again..

Ladies and gentlemen, this does conclude today's teleconference and we thank you all for your participation. You may now disconnect your lines..