EHTH

Image source: The Motley Fool. Tuesday, Aug. 4, 2026 at 5:00 p.m. ET Senior Manager of Investor Relations - Eli Newbrun-Mintz Chief Executive Officer - Derrick Duke Chief Financial Officer - John Dolan Operator: Hello, everyone. Thank you for joining us, and welcome to the Q2 2026 eHealth, Inc. Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Eli Newbrun-Mintz, Senior Manager of Investor Relations. Eli, please go ahead. Eli Newbrun-Mintz: Good afternoon. Thank you all for joining us. On the call today, Derrick Duke, eHealth's Chief Executive Officer, and John Dolan, Chief Financial Officer, will discuss our second quarter 2026 financial results. Following these prepared remarks, we will open 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. 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 reconciliation to the most directly comparable GAAP financial measures are included in today's press release. With that, I will turn the call over to Derrick Duke. Derrick Duke: Good afternoon. Thank you for joining us today. Our second quarter results reflect the deliberate choices we made going into 2026. We entered the year with a strategy-centered on 3 priorities: building our lifetime advisory model, materially improving our cash flow profile, and making targeted investments in long-term growth opportunities such as ICHRA. Second quarter revenue was $33.6 million. GAAP net loss was $23.6 million. Adjusted EBITDA was a negative $21.8 million. Operating cash flow for the first 6 months was $30.8 million. Overall, these results were in line to slightly above our expectations. More importantly, we remain on track to achieve our key financial objectives for the year, including our cost savings targets and significant operating cash flow improvement compared to 2025. For the first 6 months of the year, non-GAAP operating expenses declined by $42 million compared to the prior year. We are creating a leaner operating model while preserving our key strategic capabilities and pursuing initiatives that we believe will drive long-term shareholder value. We continue to project annual variable cost savings of more than $60 million and fixed cost savings of approximately $30 million. Before discussing our operational progress, I'd like to spend a few minutes on the broader market environment. Despite recent disruption, the long-term opportunity in Medicare Advantage remains compelling. Medicare Advantage enrollment has now reached more than 35.5 million beneficiaries. While growth has moderated compared to prior years as carriers focus more heavily on profitability, the underlying demographic drivers supporting the market remain firmly intact. We continue to see strong demand from seniors with beneficiaries who are just turning 65, selecting Medicare Advantage at disproportionately high rates. Longer term, the Congressional Budget Office projects MA penetration to increase from approximately 55% today to 63% by 2034. After more than 2 years of disruption, we believe the industry is now gradually moving towards greater stability. We have begun discussions with our carrier partners ahead of the upcoming annual enrollment period. Several of those conversations corroborate this view. In June, CMS finalized the maximum broker commission increase at 4.5% for plan year 2027. However, carrier approaches are likely to vary by geography, product type, and specific strategic priorities. We expect to gain greater visibility into carrier plans during the third quarter as AEP preparations accelerate. One thing has become increasingly clear throughout this period of industry change. The market is rewarding high quality, retention-oriented distribution models. That trend aligns exceptionally well with our strategy. Within the tele broker channel, we continue to see consolidation and rationalization as participants adjust to a new operating environment. Against that backdrop, we believe the value eHealth provides to both consumers and carriers is as important as it has ever been. For beneficiaries, we serve as a trusted adviser with access to extensive plan inventory, which is especially critical during periods of elevated change. For carriers, we help deliver highly targeted member acquisition strategies and what we believe are among the highest quality enrollments within our distribution channel, supporting both member experience and carrier margin objectives. One of the most important milestones of the second quarter was the launch of our lifetime advisory model. The lifetime advisory approach shifts our relationship with members beyond a one-time enrollment interaction to a model of ongoing engagement throughout the year. Our advisers are equipped to help beneficiaries evaluate plan changes, address gaps in coverage, navigate healthcare decisions, and identify additional products that may improve financial security. Beyond elevating consumer experience, we believe this creates significant opportunities to increase member value through ancillary product cross-selling. As expected, second quarter enrollments and revenue declined year-over-year. Under the new model, we are concentrating our marketing spend in the first and especially fourth quarters when we see the greatest return on our investment. In the second and third quarters, we are focusing our advisers on engaging with their existing members. We have made meaningful progress in the initial months following the lifetime advisory model launch. Operationally, we have deployed adviser training programs, coaching initiatives, and new adviser tools that provide a centralized view of a member, enable personalized communications, and generate data-driven recommendations for effective member engagement. On the product side, we launched final expense in Q2 and laid the foundation for additional ancillary product offerings. Importantly, we have seen early validation of the core assumptions underpinning the strategy. First, consumers are responding positively to relationship-based engagement. Second, cross-selling opportunities appear significant. We are shifting the KPIs for measuring the success of this model in the same direction towards more holistic member-driven metrics. It starts with member retention. The core objective of the model is to deepen our relationship with members and remain engaged throughout the year. We believe improving retention over time will be one of our most important measures of success. We also plan to track ancillary product cross-sell rates and member-based lifetime value across multiple products. Early indicators have been encouraging, with second-quarter ancillary cross-sell rates doubling compared to a year ago. This represents the number of advisor-assisted ancillary product applications submitted by customers aged 65 and older in relation to the number of advisor-assisted applications for major medical Medicare products, including Medicare Advantage and Medicare Supplement plans. While we will continue to measure and report policy-based lifetime value under ASC 606, our internal focus is increasingly shifting towards member-driven metrics that better reflect the broader value of long-term relationships. As the lifetime advisory model matures, we also expect unit margins to improve, driven in part by referrals becoming a larger contributor to total enrollments. Because advisers are central to the success of this strategy, adviser retention and productivity will be important indicators that we track closely. Another area where we continue to make progress is artificial intelligence. Our approach to AI is straightforward. We believe technology can improve efficiency, scalability, and customer experience while still recognizing the critical role licensed insurance professionals play in providing personalized guidance and peace of mind for consumers. Today, AI is already supporting several of our customer-facing functions, including after-hours interactions, call screening, and certain customer service inquiries. For the upcoming AEP, we plan for AI-enabled call screening to replace the majority of manual screening processes. We are also exploring opportunities to expand our AI deployments into more complex customer service inquiries. Beyond consumer engagement, AI plays an important role across our back-office functions. We have expanded its use within product management, software development, and UX design. These capabilities helped us accelerate development of technology supporting the lifetime advisory model in about half the time we would have needed in the past. Another important application involves carrier plan content ingestion, historically one of our most data and labor-intensive activities. Through AI-enabled automation, we believe we can reduce manual effort substantially while improving accuracy. Looking ahead, we see numerous opportunities across customer-facing workflows, adviser enablement, and internal operations. Collectively, we believe our AI initiatives have the potential to enhance scalability, improve service levels, and reduce costs over time. In addition to Medicare, the second pillar of our 3-year strategy is achieving measured, profitable growth within the under 65 consumer market. ICHRA is a key component of that effort. The long-term trend toward ICHRA adoption continues to strengthen as employers seek more flexible and cost-effective healthcare solutions. Industry forecasts suggest ICHRA could cover approximately 5 million lives by 2029. Our strategy is to build a scalable platform that connects employers, employees, brokers, and benefit administrators through a seamless experience. While ICHRA is not expected to be a significant contributor to our 2026 financial results, with revenue forecasted to remain below $5 million this year, our focus today is on establishing the foundation for future growth. That means developing our pipeline, expanding strategic partnerships, strengthening broker relationships, and continuing to refine our operating model. We believe the market opportunity is attractive, and we are pursuing it with the same disciplined, capital-efficient approach that we are applying across the broader organization. To conclude, our priorities for 2026 remain unchanged. First, build and scale the lifetime advisory model to deepen member relationships, improve retention, and increase long-term member value. Second, continue improving our cash flow profile with a goal of achieving break even or better operating cash flow at the midpoint of our guidance. Third, advance diversification initiatives, including ancillary products and ICHRA. Looking ahead, we continue to expect a return to sustainable revenue growth on a streamlined cost foundation beginning in 2027. We believe that growth will be driven by 3 primary factors. The transition from acquisition-based economics or recurring relationship economics, growth within ICHRA, and selective expansion of our carrier-dedicated business Amplify. We are encouraged by signs of improving stability across the Medicare Advantage ecosystem. While work remains, carrier sentiment and industry fundamentals appear increasingly constructive compared to where they stood a year ago. As we enter the second half of the year, preparations for AEP are underway. We plan to meet with carrier partners, scale our demand generation engine, and begin the operational work necessary to support another successful enrollment season. We believe we are well-positioned to execute against our goals. Thank you for your continued support. I'll now turn the call over to our CFO, John Dolan. John Dolan: Thank you, Derrick, good afternoon, everyone. Our second quarter results reflect the launch of our lifetime advisory operating model and the benefit of the cost reduction initiatives we implemented earlier this year. Consistent with our strategic priorities, we reduced lead generation spending outside of the key enrollment periods and focused our advisers on member engagement. We also continued making targeted investments in the under 65 opportunity, particularly within ICHRA. These actions result in lower Medicare enrollment volume during the second and third quarters. They are aligned with our longer-term objectives of improving return on marketing spend and increasing member lifetime value through stronger retention and ancillary product cross-selling. Importantly, we believe we are still on track to achieve our financial objectives for the year, including significant improvement in operating cash flow compared to 2025. Turning now to our second quarter results, please note that unless otherwise specified, all comparisons are on a year-over-year basis. Second quarter revenue was $33.6 million, down 45%. Total commission revenue was $29.8 million, including $7.6 million of net adjustment or tail revenue, which represents the ongoing value generated from previously acquired members. This compares to $17.8 million in tail revenue a year ago. Non-commission revenue was $3.8 million, down 38% from the prior year period. The decline was primarily driven by lower sponsorship revenue as carriers continued to prioritize margin recovery over enrollment growth. This was consistent with our expectations and reflects a broader trend we see across the Medicare landscape. As industry growth normalizes over time, sponsorship revenue could become a meaningful source of upside. Medicare segment revenue was $31.8 million, down 45%, primarily reflecting lower Medicare Advantage approved member volume and lower tail revenue. Medicare submissions declined 44% during the quarter, in line with our expectations. Moving to Medicare profitability and operating metrics. Within our Medicare segment, variable marketing and advertising expense declined 58%, reflecting our lower enrollment volume targets. The Medicare customer care and enrollment expense declined 21%. On a per approved member basis, total acquisition cost per MA equivalent approved member increased 16% during the quarter. Underneath that figure, customer care and enrollment cost per MA equivalent approved member increased 42%, while variable marketing cost per MA equivalent approved member declined 23%. We have significantly reduced marketing spend outside of the primary enrollment seasons while retaining our core adviser workforce. During the second and third quarters, those advisers are increasingly focused on member engagement activities and can rapidly pivot to inbound calls once AEP begins. Variable marketing costs and customer care and enrollment costs per member have moved in opposite directions, in line with expectations. Second quarter lifetime value, or LTV, for Medicare Advantage declined 1%. Medicare Supplement LTV increased 16%, and Medicare Part D LTV increased 52% compared to a year ago. It's important to remember that our unit economics remain largely policy-level metrics. They do not yet fully capture the value being created through higher ancillary product penetration, referrals, and broader member engagement. The increased ancillary product cross-sell rates are expected to become especially impactful as we return to growth and scale. In addition to increasing overall lifetime value, ancillary products generally produce a more favorable cash flow profile because a significant portion of the ancillary commission revenue is received earlier in the member life cycle relative to a Medicare Advantage sale. Medicare segment gross profit was $6 million, compared to $19.1 million in the prior year period, reflecting primarily lower enrollment volume and tail revenue. The second quarter is also an important quarter from an actuarial perspective because it provides greater visibility into the retention performance of their Medicare cohort enrolled during the most recent AEP. Based on our latest review, retention trends are in line with the AEP cohort enrolled in the prior year and ahead of the cohort enrolled 2 years ago. We continue to monitor retention closely, given the significant benefit changes and product adjustments implemented by carriers across the industry over the last 2 years. Our prudent approach to booking initial revenue allowed us to continue recognizing positive adjustment revenue again this quarter for a cumulative tail revenue of $284 million since 2018. Turning to the employer and individual segment. Revenue in this segment was $1.8 million, compared to $2.7 million. As we continue reducing investment in our traditional direct-to-consumer under 65 business, we expect that decline to eventually be offset and over time exceeded by growth in our emerging ICHRA platform. As Derrick highlighted earlier, our focus this year remains on building the employer relationships, partner ecosystem, and operational capabilities necessary to support scalable growth in the years ahead. Segment gross loss was $0.8 million, compared to a loss of approximately $0.3 million. Turning to overall profitability metrics. Second quarter GAAP net loss was $23.6 million, compared to $17.4 million, while adjusted EBITDA loss was $21.8 million compared to $14.1 million. Non-GAAP operating expenses declined 25% to $58.6 million, reflecting broad-based reductions across both fixed and variable cost categories. Non-GAAP marketing and advertising expense declined 45%, including a 56% reduction in variable marketing costs. Non-GAAP customer care and enrollment expense declined 20%. On the fixed cost side, non-GAAP general and administrative expense declined 26%, while non-GAAP technology and content expense remained relatively stable as we continued to support key strategic initiatives. Second quarter operating cash flow was negative $5 million, compared to negative $41.2 million, representing a substantial year-over-year improvement. We currently expect year-over-year operating cash flow improvement in each of the remaining 2 quarters of the year. We ended the quarter with $101 million of cash equivalents, and short-term marketable securities and remain comfortable with our liquidity position to support both operating requirements and strategic investments. We ended the quarter with $1 billion of commission receivables, including both current and long-term balances. That compares to $917 million as of June 30, 2025, representing an increase of 10%. As we look ahead, we are encouraged by the progress we have made under our new strategy. We have successfully launched the lifetime advisory model and are seeing encouraging early indicators around member engagement and ancillary product adoption. We remain on track to achieve our financial objectives for 2026, including meaningful cash flow improvement and our fixed and variable cost savings targets. Based on our execution year to date, and with the annual enrollment period still ahead of us, we are maintaining our 2026 guidance ranges for revenue, GAAP net income, adjusted EBITDA, and operating cash flow. We are updating our outlook for 2026 net adjustment revenue, which is now expected to be in the range of $16 million to $20 million to reflect the second quarter 2026 net adjustment revenue we recognized. Perhaps most importantly, we believe we are building the operating and financial foundation necessary to return the business to sustainable growth beginning in 2027. In the third quarter, we plan to reduce our marketing spend to an even greater degree year-over-year compared to the 45% reduction in the second quarter. As a result, we also expect a greater year-over-year decline in third quarter enrollment volume and revenue. We plan to deploy the majority of our marketing budget for the year in the fourth quarter across our highest performing direct channels. With that, operator, please open the line for Q&A. Operator: [Operator Instructions] Your first question comes from the line of George Hill with Deutsche Bank. Maxi Ma: Hi. This is Maxi on for George. Could you talk about your expectations for the MA broker commission environment for 2027? Are you anticipating any meaningful changes in carrier commission strategies and potentially a further increase in non-commissionable plans? Thank you. Derrick Duke: Thanks, Maxi. It's good to hear from you. Thanks for joining the call. Let me make sure I heard the question appropriately. As it relates to agent commissions from carriers in the upcoming AEP, as you know, CMS printed the maximum rate, which was roughly 4.5%. Not unlike a year ago, our expectation is that each carrier will deploy a different strategy, and that likely commission rates will differ by plan type, geography type, as carriers finalize their plans for when, where, and how they want to grow their Medicare Advantage book. As it relates to non-commissionable revenue, that was the second part of your question. As we discussed, in Q1, we still don't see any material change in non-commissionable revenue opportunities as we prepare for AEP. Clearly our conversations with carriers are ongoing and we're evaluating those opportunities. I think maybe another question that you asked was about non-commissionable plans. Again, we don't expect a material change year-over-year. We certainly still think carriers will potentially deploy that as a way to manage growth, again, specifically in plan type and geography type. As we've said in prior calls, size and scale matter as we navigate this market, both for our carrier partners as well as for our members. We're comfortable with our plan supply that we'll be able to navigate that well. Maxi Ma: Got it. You just talked about deeper cuts in marketing spend in Q3. As you prepare for the upcoming AEP, could you talk about how you're thinking about the level and mix of marketing spend relative to last year? Derrick Duke: Yes. Thanks. I'll start, and then I'll let John and or Michelle add. Again, we've been very deliberate in our marketing demand generation spend over the last few years as we have navigated away from affiliate spend in those channels, more into our branded marketing channels. There's an important reason why we've done that, and it's linked directly to the quality of Medicare Advantage enrollments, the retention of members that are acquired through those branded channels. We continue to see positive outcomes. As John mentioned, our most recent cohort, in the first quarter of this year, the retention looks very similar to last year where we had similar mixes of branded and affiliate marketing spend. Again, we're continuing to see improvement over years where there was a higher percentage of spend into the affiliate channels. That's how we're continuing to think about the marketing mix heading into Q4. Again, we're deploying those dollars in the highest LTV to CAC ratio periods. John Dolan: Hi, Maxi. This is John Dolan. I just want to add one thing. Obviously in the third quarter, we'll be in the second quarter of our new lifetime advisory model. In order to create space for our advisers, obviously we're going to bring down marketing spend, which will give them the capacity to work under that advisory model. With that lower spend, we'll see some lower commission revenue in third and fourth. Operator: Your next question comes from the line of George Sutton with Craig-Hallum. Logan W Lillehaug: Logan on for George. Derrick, as you guys launched the lifetime advisory model here, I'm curious what you think is realistic in terms of attach rates over time, and when do you really start to measure your success on that front? I mean, how long do you think it should take for the motion to mature? Derrick Duke: Yes. Logan, great to hear from you, and it's a really good question. Again, as we reported in the script, we're really pleased with sort of this first quarter and the cross-sell rate that we've experienced in Q2 of this year versus Q2 of a year ago. I do think it's realistic to expect that cross-sell rates will vary by quarter. As it relates to how we think about measuring it as it relates to maybe declaring victory, if that's the right way to think about it, I'd personally like to get through a full cycle, sort of through a full year, sort of through four full quarters, just to see and understand how members respond, how our advisers engage in those types of conversations. Over time, I don't think it's unrealistic to expect a cross-sell rate in a mature model, and it's hard to, at least at this point, just one quarter in, to define how long that we think it takes to get to full maturity. I don't think it's unrealistic in the Medicare space to assume a cross-sell rate of 0.5 That's the way I personally think about sort of a mature model in the Medicare Advantage space. We're excited to continue deploying the model and learning both how our advisers and how our members respond. Logan W Lillehaug: Understood. One other for me. Last year, plan terminations were quite high, especially relative to previous years. I'm curious how you see plan terminations shaping up this year, and on top of that, with the smaller team, the focus on branded channels, how targeted are you able to be in terms of knowing those areas where you're going to have shoppers and conversion might be pretty good? Derrick Duke: Again, really good questions. I'll take the first part, and then I'll let Michelle take the second part of that question. As it relates to plan terminations versus a year ago, I would say, again, it's really early in the cycle. I think we have more to learn as we continuing having conversations with our carrier partners. I am encouraged by some of the early conversations with carriers. Again, it's not the same across the board, so to speak. In some of our conversations, we're hearing our carrier partners seeing stability in their portfolios, and I think that's being reflected as we see our carrier partners that are public at least report their Q1 and Q2 earnings. We're seeing margin improvement inside of their Medicare Advantage space. We're encouraged that there are places and pockets where it appears as though some stability is returning to the market. We also know that with some carriers, that there's some expectations that have been set that plan terminations will be similar year-over-year to slightly higher. I think that's really more of a reflection maybe of just market share gain in any one AEP, again, as the market sort of settles down and carriers navigate and manage their full portfolio. Michelle? Michelle Barbeau: Sure. Hi, Logan, it's Michelle. Nice to chat with you. I'll answer a bit of the marketing piece, as well as just termed members in general. I might think about it in 2 different components. You know very well we've now had multiple years of success with our brand and our marketing channel performance, it does perform very well in these years of high plan disruption. We know that we have this very broad carrier mix, we can assist consumers, right, in a very unbiased way in helping them navigate through those changes. We know the strength of that branded messaging and the channels that we leverage to deploy that, always guided by our LTV to CAC and strong return. That will help in sort of the broad marketplace channel and broad consumers that are switching, shopping, and needing help. Though, right, we even are very acutely aware and surgically keyed in on our own members that are impacted, especially by term plans, right? We really need to make sure that we are reaching them, we do that through our advisers will help through that, right? That email, calls, making sure that we are proactively reaching out, making sure that they are aware that they are on a plan that no longer, and how can we help them navigate through that change. Operator: Your next question comes from the line of Jonathan Yong with UBS. Jonathan Yong: Just kind of building on the term plan commentary. I guess at least one of the larger public carriers has talked about retaining a fair amount of their term plan members. I guess how much of that retention that they're aiming for falls to you directly? Is there a way to kind of parse that in terms of how that would fall to you in terms of additional commission over and above what you would normally get within the bands of the CMS commissions, obviously? Do they give you additional advertising spend? Just any color around that. Derrick Duke: Jonathan, thanks for the question. I'm clearly not sure exactly which carrier or partner that you're referring to. Clearly in our own book, we have member retention data. We understand what our membership balance looks like walking into AEP, and we have a concerted effort to reach out specifically to members where we believe either we know the plans are going to terminate or where we believe they're at risk of terminating. We have an effort within our sales organization to retain as many of those members possible. I don't think we have, at least at this point, an indication of what that opportunity looks like yet for us. We'll learn more as we lean into carrier conversations in Q3 as it relates to AEP preparation. Jonathan Yong: Just given this is kind of a midterm election period, is there any consideration for how advertising spend may kind of spike up or what have you in the fourth quarter, and how you may be planning around that? Derrick Duke: Jonathan, thanks. I'll let Michelle take that question. Michelle Barbeau: Thanks, Jonathan. Appreciate the question. I could go back to even 2 years ago when we had the full election. I wouldn't say that you see a huge spike in rates, or at least the way that we buy media, we are able to mitigate that. What you see is maybe different performance on types of content in media. Think news stations may have higher levels of engagement, and we will make sure that we lean in as we're seeing the strong performance there. Operator: Your next question comes from the line of Ben Hendrix with RBC Capital Markets. Michael Murray: This is Michael Murray on for Ben. Thanks for taking my question. I just wanted to discuss cash flow. I appreciate that you're expecting operating cash flow breakeven at the midpoint of your guidance in 2026. If you expect to return to growth next year, how should we be thinking about the puts and takes of cash flow in 2027? Derrick Duke: Yes. Thanks, Michael. I'll let John take that. John Dolan: Hi, Michael. How are you? Thanks for the question. Our midpoint of our guidance for 2026 does have our operating cash flow at basically slightly positive. Last quarter, we put out our long-range plan and some guidance there on where we think our cash flow will wind up, and we continue to look for opportunities to improve on our cash flow. We think after the successful launch of our Lifetime Advisory model and our expense reductions in 2026, as we enter into 2026, we'll be operating off a different operating base. With our plans for AEP, we're tracking to generate positive operating cash flow in 2027. Derrick Duke: Michael, maybe I'll just add a little bit. If you think about the core tenets of the Lifetime Advisory model and what we believe it will help us achieve, it really starts with member engagement that leads to higher retention. Higher retention inside of a portfolio of MA business leads to higher cash flow. On top of that, increasing ancillary product offerings that meet needs of consumers. Again, what we're endeavoring to do here is to broaden the product portfolio so that we give our advisers the opportunity to meet whatever need potentially that a Medicare Advantage member may have based on the plans that they choose. Higher ancillary cross-sell rates lead to higher cash flow as well. On top of that, the timing of the cash flow related to ancillary products is much more favorable than MA plans. We get more of the cash up front, that leads to a higher cash flow profile in future years. The last thing I would just say is we, again, endeavor on the ICHRA expansion. That product profile and that cash flow profile of that type of business is also favorable relative to Medicare Advantage business. It's really all of those things in the future as we continue to expand our capabilities and our product offerings that will allow us to continue to build on the meaningful progress that we're making this year in our operating cash flow profile. Michael Murray: Okay, that's helpful. Just a follow-up on AI. Wanted to see how these initiatives are helping you increase your efficiency, reduce costs, and how you're thinking about potential operating leverage driven by AI. Thanks. Derrick Duke: Great question. I'll just point to 2 things. I think we mentioned it in the script. Number one, on the front end, our AI screener. Just as a reminder, I think about roughly this time a year ago, the company had piloted AI screeners, and the initial feedback that we got from our members and our consumers was really positive. It was deployed at scale during AEP a year ago, to where I think by the end of AEP, our AI screeners were answering roughly 80% to 85% of the incoming phone calls. Our plan this year is that those screeners will answer 100% of the calls. Where in prior periods we've employed human FTEs to be screeners of calls, we've been able to reduce that expense and use our AI screeners to achieve that outcome. Again, I would say what we observed in our past AEP is that for calls that were answered by our AI screeners, that once they were transferred to an advisor, that the call times were lower than a human screener call that had been transferred, and our conversion rates were higher. Now, I feel compelled to say, almost like an investment manager, past performance doesn't indicate future performance. We are optimistic that what we've learned in that process, that we'll continue to see the benefits of the AI screener capabilities that we have. That's an example on the front end of engaging with consumers. In the back end, again, we mentioned this in the script, that one of the very time-consuming and high-cost initiatives we have on an annual basis is when we're receiving updates from our carrier partners on plans. Plans, plan designs, benefit changes, networks, all the things that just go into maintaining that information across our ecosystem. It historically has been a very manual process, a very time-consuming process. The fact that it was manual by humans potentially led to the opportunity for there to be mistakes or errors. As we walk into this AEP, specifically around our Medicare Advantage book of business, we're transitioning that and using AI and an AI tool to ingest all of that material from our carrier partners. Again, reduced fixed cost savings from a headcount perspective. We'll be able to ingest the material much quicker, and we believe at a much higher rate of quality. That's reflected in our full year fixed cost reduction in our plan. Operator: Your next question comes from the line of George Hill with Deutsche Bank. George Hill: I think you got the actual George this time. Me and Maxi didn't coordinate well on which of us was going to get on the call, so I apologize for that. My quick question, I kind of have 2.5 quick questions. Number one, is it too early to talk about or have thoughts on whether we should expect an elevated churn year in MA this year like we saw last year, or will we need to see Plan Finder come out to see that? Number 2, which I think is my more important question, is can you talk about thoughts and any progress or discussions that might be being had as it relates to the converts from the balance sheet and the ability to clean up the balance sheet? Thanks. Derrick Duke: Great. George, thanks. It's great to hear from you and great to get your questions. As it relates to elevated churn, again, I would just remind you and others that the way we've described sort of the disruption in the marketplace is we've described it as one event that we thought and believed a year plus ago that would occur over multi years, and that's exactly what we've seen play out. Again, we know from some of our carrier partners that have publicly stated that they expect a similar to slightly elevated plan terms than they experienced in the prior year. We've heard from other carrier partners that they don't expect the same level of churn. I would just say, I think it's too early for us to sort of make a call on sort of the totality of the market. Again, we're encouraged at least that we're hearing from some of our carrier partners that they believe that stability is returning. Again, as I mentioned earlier in a question, I think that's reflected in Q1, Q2 earnings announcements from our carrier partners and how they're reporting improved margin as it relates to their MA book of business. As it relates to HIG, again, we're continuing to have conversations with our preferred partner. As a reminder, the April of 2027 date that is getting closer is not a debt maturity date. Again, I would remind you and others that at the end of the year when we announced our Comvest financing, the board announced the formation of a strategy committee, which HIG is actively participating in. We're continuing, again, to have those conversations, and the goal of the conversations is to get finally, optimally to a resolution that benefits all stakeholders. Nothing new material to report on that other than to just say that we're continuing in that effort with HIG. Operator: There are no further questions at this time. I will now turn the call back to Derrick Duke for closing remarks. Derrick Duke: Thank you all for joining us today, and thank you for your questions. Before we wrap up, I just want to reinforce how we're thinking about 2026. This is a bridge year for eHealth as we transition to our new lifetime advisory operating model. A model that starts with deepening member relationships and leads to improved retention and increased member lifetime value that we create across the full range of products and services that we deliver. As that model matures and as we continue expanding in the under 65 market, particularly through ICHRA, we believe that we're building a business with a stronger cash flow profile and a more durable earnings power over time. That's the foundation behind the 3-year targets we shared last quarter, including a return to revenue growth in 2027 and meaningful expansion in EBITDA margin. I also want to thank our employees for their hard work and for continuing to bring our one team mindset to life every day. We appreciate your continued interest in eHealth, and we look forward to updating you on our progress next quarter. Thank you. Operator: This concludes today's call. Thank you for attending. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. eHealth (EHTH) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Launched the lifetime advisory model to shift from one-time enrollment interactions to year-round member engagement, aiming to improve long-term retention and member value. Attributed second-quarter revenue declines to a deliberate strategy of concentrating marketing spend in high-ROI periods (Q1 and Q4) while focusing advisors on existing member engagement during Q2 and Q3. Observed early validation of the advisory strategy with ancillary product cross-sell rates doubling year-over-year, driven by the introduction of final expense products. Implemented a leaner operating model that achieved $42 million in non-GAAP operating expense reductions for the first half of 2026, targeting $90 million in total annual savings. Noted that while Medicare Advantage growth has moderated as carriers prioritize profitability, underlying demographic drivers remain strong with penetration projected to reach 63% by 2034. Positioned the company as a high-quality, retention-oriented distributor, which management believes is increasingly rewarded by carriers during periods of industry consolidation and regulatory change. Maintained full-year 2026 guidance, expecting a return to sustainable revenue growth in 2027 driven by recurring relationship economics and ICHRA expansion. Anticipates significant operating cash flow improvement for the remainder of the year, targeting breakeven or better operating cash flow at the midpoint of guidance. Plans to replace the majority of manual call screening with AI-enabled processes for the upcoming Annual Enrollment Period (AEP) to enhance scalability and conversion. Forecasts ICHRA revenue to remain below $5 million in 2026 as the company focuses on building the platform foundation for a projected 5 million life market by 2029. Expects third-quarter marketing spend to decline more sharply year-over-year than the 45% reduction seen in Q2, resulting in further near-term enrollment and revenue declines. Recognized $7.6 million in net adjustment (tail) revenue, reflecting the ongoing value of previously acquired members, though down from $17.8 million in the prior year. Leveraged AI to accelerate technology development for the advisory model in approximately half the time previously required and automated carrier plan data ingestion to reduce manual errors. Reported a 16% increase in total acquisition cost per Medicare Advantage equivalent member, primarily due to retaining the core advisor workforce despite lower seasonal enrollment volumes. Acknowledged ongoing discussions with preferred partner HIG regarding the balance sheet and 2027 obligations, aiming for a resolution that benefits all stakeholders. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management expects carrier strategies to vary by geography and product type following the CMS-finalized 4.5% maximum commission increase. Stated they do not anticipate a material change in the prevalence of non-commissionable plans, viewing them as a surgical tool for carriers to manage specific growth targets. Management believes a cross-sell rate of 0.5 is a realistic target for a mature model in the Medicare space. Indicated that a full four-quarter cycle is necessary to fully evaluate member response and advisor engagement before declaring the model mature. Reported mixed signals from carriers, with some seeing portfolio stability and margin improvement while others expect plan terminations to remain similar to last year's elevated levels. Emphasized that eHealth's branded marketing channels perform best during high-disruption periods because they offer unbiased navigation across a broad carrier mix. Confirmed AI screeners handled 80% to 85% of calls in the last AEP and are expected to handle 100% this year, reducing human FTE costs. Noted that AI-screened calls resulted in lower advisor handle times and higher conversion rates in previous periods.

This article first appeared on GuruFocus. Release Date: August 04, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. eHealth Inc (NASDAQ:EHTH) is on track to achieve its 2026 financial objectives, including significant operating cash flow improvement and cost savings targets. The launch of the Lifetime Advisory model is showing early positive results, with ancillary product cross-sell rates doubling year-over-year in Q2. The company is making substantial progress in AI integration, which is expected to reduce costs and improve efficiency, particularly in call screening and plan content ingestion. Medicare Supplement and Part D lifetime value (LTV) increased by 16% and 52% respectively, indicating strong performance in these product lines. The company maintains a strong liquidity position with $101 million in cash and marketable securities, and commission receivables increased 10% year-over-year. eHealth Inc (NASDAQ:EHTH) reported a significant decline in Q2 revenue, down 45% year-over-year, and a GAAP net loss of $23.6 million. Medicare Advantage enrollment and submissions declined 44% in Q2, reflecting the deliberate reduction in marketing spend and the transition to the Lifetime Advisory model. The company expects further year-over-year declines in Q3 revenue and enrollment due to even greater marketing spend reductions. Carrier commission strategies for 2027 remain uncertain, with potential variations by geography and product type, and the possibility of continued non-commissionable plans. The under-65 segment, including ICHRA, continues to generate losses, with revenue declining and gross loss widening, and ICHRA is not expected to be a significant contributor in 2026. Warning! GuruFocus has detected 4 Warning Signs with EHTH. Is EHTH fairly valued? Test your thesis with our free DCF calculator. Q: Could you talk about your expectations for the MA broker commission environment for 2027? Are you anticipating any meaningful changes in carrier commission strategies and potentially a further increase in non-commissionable plans?A: Derek Duke (CEO): As CMS printed the maximum rate at roughly 4.5%, our expectation is that each carrier will deploy a different strategy, with commission rates likely differing by plan type and geography as carriers finalize their growth plans. We still don't see any material change in non-commissionable revenue opportunities as we prepare for AEP, though conversations with carriers are ongoing. We don't expect a material change year-over-year, but carriers may still deploy that as a way to manage growth in specific plan types and geographies. Q: As you prepare for the upcoming AEP, could you talk about how you're thinking about the level and mix of marketing spend relative to last year?A: Derek Duke (CEO) and John Dolan (CFO): We've been deliberate in shifting away from affiliate spend into branded marketing channels, which directly links to higher quality enrollments and better retention. We're deploying dollars in the highest LTV-to-CAC ratio periods. In Q3, we'll reduce marketing spend even more year-over-year to create space for advisors to work under the new Lifetime Advisory model, which will result in lower commission revenue during that quarter. Q: As you launched the Lifetime Advisory Model, what do you think is realistic in terms of attach rates over time, and when do you really start to measure success on that front?A: Derek Duke (CEO): We're pleased with the first quarter results, with Q2 cross-sell rates doubling year-over-year. Cross-sell rates will vary by quarter, and I'd like to get through a full cycle of four quarters to understand how members and advisors respond. In a mature model, it's not unrealistic to assume a cross-sell rate of 0.5 in the Medicare Advantage space. Q: Last year, plan terminations were quite high. How do you see plan terminations shaping up this year, and with the smaller team and focus on branded channels, how targeted can you be?A: Derek Duke (CEO) and Michelle (likely CMO): It's early in the cycle, but we're encouraged by early conversations with carriers, with some seeing stability in their portfolios and reporting margin improvement. However, some carriers expect similar to slightly higher plan terminations year-over-year. Our branded channels perform well in years of high disruption, and we're surgically focused on reaching our own termed members through proactive advisor outreach to help them navigate changes. Q: At least one of the larger public carriers has talked about retaining a fair amount of their term plan members. How much of that retention falls to you directly, and is there a way to parse additional commission or ad spend?A: Derek Duke (CEO): We have member retention data and understand our membership balance walking into AEP. We have a concerted effort to reach out to members where plans are terminating or at risk of terminating. However, we don't have an indication yet of what that opportunity looks like for us, and we'll learn more as we lean into carrier conversations in Q3. Q: Given this is a midterm election period, is there any consideration for how advertising spend may spike in Q4 and how you're planning around that?A: Michelle (likely CMO): Going back to the full election two years ago, we didn't see a huge spike in rates, and the way we buy media allows us to mitigate that. We may see different performance on types of content, such as news stations having higher engagement, so we'll lean in where we see strong performance. Q: You're expecting operating cash flow breakeven at the midpoint of guidance in 2026. If you return to growth next year, how should we think about the puts and takes for cash flow in 2027?A: John Dolan (CFO) and Derek Duke (CEO): Our midpoint guidance for 2026 has operating cash flow slightly positive. After the successful launch of the Lifetime Advisory model and expense reductions, we'll be operating on a different base in 2027, tracking to generate positive operating cash flow. The model drives higher retention, higher ancillary cross-sell rates, and more favorable cash flow timing from ancillary products, all contributing to a stronger cash flow profile. Q: How are AI initiatives helping you increase efficiency, reduce costs, and how are you thinking about potential operating leverage driven by AI?A: Derek Duke (CEO): On the front end, our AI screeners answered roughly 80-85% of incoming calls during last AEP, and we plan for them to answer 100% this year, reducing human FTE costs. Calls transferred from AI screeners had lower call times and higher conversion rates. On the back end, we're using AI to ingest carrier plan content, which was historically manual and labor-intensive, reducing fixed costs and improving accuracy. These initiatives are reflected in our full-year fixed cost reduction plan. Q: Is it too early to have thoughts on whether we should expect an elevated churn year in MA this year, and can you talk about progress on the convert from the balance sheet?A: Derek Duke (CEO): We've described the market disruption as one event occurring over multiple years, and that's what we've seen. Some carriers expect similar to slightly elevated plan terms, while others don't expect the same level of churn. It's too early to make a call on the totality of the market, but we're encouraged by signs of stability. Regarding HIG, we're continuing conversations with our preferred partner, and the board's strategy committee, which HIG participates in, is working toward a resolution that benefits all stakeholders. Nothing new material to report. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Image source: The Motley Fool. Wednesday, May 6, 2026 at 5 p.m. ET Chief Executive Officer — Derrick Duke Chief Financial Officer — John Dolan Chief Operating Officer — Michelle Barbeau Derrick Duke, eHealth's Chief Executive Officer; and John Dolan, Chief Financial Officer, will discuss our first quarter 2026 financial results. Following these prepared remarks, we will open 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 website. 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, except where such reconciliation has been admitted in reliance on this unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. With that, I will turn the call over to Derrick Duke. Derrick Duke: Thank you, Eli. Good afternoon, and thank you for joining us today. We're pleased with our first quarter results, which came in ahead of expectations. driven by stronger-than-anticipated Medicare enrollment volume at favorable unit economics. During the quarter, we made meaningful progress towards the strategic initiatives we outlined on our last earnings call, including implementing targeted cost reductions and completing critical build and readiness work for initiatives that launched in April. Most notably, we prepared for the rollout of our lifetime advisory model and the introduction of our new final expense insurance product. We are also encouraged by recent industry developments. Last month, CMS finalized the 2027 Medicare Advantage rate, which came in above the initial proposal. While this is just one variable in the system, we believe it is an important signal that CMS leadership is responsive to industry feedback and focused on long-term program sustainability. That said, we are early in the planning cycle for the upcoming annual enrollment period. Carriers are currently developing their 2027 bids, including benefit structures and geographic market strategies. We anticipate gaining a more comprehensive understanding of the upcoming AEP cycle and individual carrier approaches once bids are submitted. While some carriers may prioritize market share capture this AEP, we believe margin will remain the primary focus for most and the Medicare Advantage reset cycle will continue. This means further adjustments to planned benefits and service areas as well as additional plan eliminations. As a result, we expect consumer demand to remain strong and carrier inventory dynamics to remain complex, similar to last year. We believe this environment underscores eHealth's value proposition as we help consumers navigate the evolving Medicare landscape. Against this backdrop, we are intentionally evolving eHealth's operating model to foster deeper, longer-lasting relationships between members and advisers. Our goal is to ensure consumers see eHealth not as a onetime enrollment platform, but as a trusted ally throughout their health care journey. Central to this evolution is our lifetime advisory model, which I will discuss shortly. From a financial standpoint, our priorities this year are achieving breakeven or better operating cash flow and positioning the company for sustainable, profitable growth once the Medicare Advantage reset cycle is complete. Our revised 3-year outlook, which we published today in our earnings slides, reflects a return to revenue growth in 2027 alongside adjusted EBITDA margin expansion, positive operating cash flow and breakeven or better free cash flow. First quarter revenue was $88 million, ahead of our expectations. GAAP net loss was $4.7 million and adjusted EBITDA was $9 million, exceeding our internal plan. Revenue performance was driven by Medicare enrollment volume as well as better-than-expected revenue outside of core MA agency sales, reflecting progress in our diversification efforts. This includes providing ancillary and post-enrollment services. During the quarter, we implemented headcount reductions and vendor consolidation initiatives. These actions are expected to reduce our fixed operating cost base by approximately $30 million in 2026 compared to 2025, representing roughly a 20% reduction. While we realized some savings in the first quarter, the full impact is expected to become more apparent as we move through the year. Quarter 1 results also reflect our strategic decision to reduce variable marketing and agent-related spend, focusing investment on our best-performing channels. First quarter MA LTV increased 3%, while total acquisition cost per MA equivalent approved member declined 10% compared to a year ago. In the first quarter, we moved with urgency to execute on our strategic plan and make the necessary preparations for the launch of our lifetime advisory model. This key initiative is supported by a set of newly released agent-facing technology tools designed to enhance the beneficiary experience. These tools leverage the data and institutional knowledge that we have built up over decades of working with a wide array of beneficiaries. Core components include a customer dashboard that provides a holistic view of the member relationship with eHealth, system-generated recommendations that prompt advisers to engage at the right moments and dynamic insight-driven scripts embedded directly into the sales and service workflow. Together, these tools are intended to ensure more personalized, proactive conversations while also driving consistency, scalability and quality across the adviser experience as the model matures. As part of this strategy, we are expanding the scope of services we provide beyond core MA coverage. eHealth already offers ancillary plan options such as dental, vision, hearing and hospital indemnity plans. Last month, we launched final expense insurance offerings. These products enrich our health-based inventory by providing beneficiaries with additional financial protection and ultimately, peace of mind. Final expense sales also offer attractive unit economics and a compelling cash flow profile. Over time, we plan to add more products and services that will benefit our members based on findings from consumer focus groups and industry research. The lifetime advisory model is expected to support consistent year-round engagement and enables more effective cross-selling. Through this strategy, we believe we will increase member lifetime value, improve retention, strengthen unit economics and build durable brand equity rooted in trust and loyalty. As part of today's earnings release, we're updating our 3-year financial targets. I would first like to stress that our decision to pull back on growth in 2026 was intentional and strategic. In this environment, we have the ability to drive higher Medicare enrollment volume but chose instead to prioritize operating cash flow by focusing on our most profitable marketing channels, building our lifetime advisory model and taking a focused and disciplined approach to our diversification initiatives. We believe this strategy positions us well to return to growth next year on a stronger foundation. Our 3-year forecast reflects mid-single-digit revenue growth on a percentage basis for 2027 as we selectively dial up member acquisition spend. We expect our revenue growth rate to increase to the mid-teens in 2028, supported by our core MA business and a greater contribution from ancillary sales driven by our new operating model. Beginning in 2028, we also expect our E&I segment to contribute to growth with a focus on expanding employer coverage through partner-driven ICHRA offerings. Adjusted EBITDA margins are expected to increase each year starting in 2027 to reach 20% by 2028. This translates to double-digit percentage adjusted EBITDA growth in '27 and '28, reflecting the benefits of our fixed cost reductions and favorable Medicare unit economics. We forecast achieving breakeven or better free cash flow in 2027. Our revenue growth goals could be accelerated should we observe a more rapid stabilization of the Medicare Advantage market relative to our current outlook. We're pleased with our first quarter results and the progress we've made executing against the initiatives outlined on our fourth quarter earnings call. We believe eHealth is well positioned to continue delivering superior service and value for our customers and carrier partners, and we look forward to updating you on further milestones along our path towards sustainable, profitable growth. I will now turn the call over to our CFO, John Dolan, for his remarks. John? John Dolan: Thank you, Derrick, and good afternoon, everyone. We delivered a strong start to the year, meeting our revenue, earnings and operating cash flow expectations and achieving a greater Medicare enrollment profitability compared to a year ago. Our results were driven by disciplined demand generation, strong sales execution and a favorable year-over-year trend in lifetime values of Medicare products. We also saw early benefits from the fixed cost reductions implemented earlier this year. As I walk through our first quarter financial results, you will see a consistent theme, higher quality enrollments, greater operating efficiency and a foundation that we believe will support enhanced cash flow generation over time. Please note, all comparisons will be made on a year-over-year basis unless otherwise specified. First quarter 2026 total revenue was $88 million, representing a 22% decline. Medicare segment revenue also declined 22% to $81.3 million, driven primarily by lower enrollment volume as we reduced variable marketing spend to focus on our best-performing channels. Medicare submissions declined 24%, with the revenue impact partially offset by growth in lifetime values for Medicare Advantage, Medicare Supplement and PDP products. In the first quarter, we recognized $8 million of positive net adjustment revenue or tail revenue compared to $10.5 million in the prior year. Tail revenue was driven by our Medicare and ancillary products and represents cash collections in excess of our original lifetime value estimates. Importantly, we continue to hold significant unrecognized positive adjustments related to our existing book of business. First quarter non-commission revenue was $8.2 million, which was ahead of our internal expectations and reflects lower carrier sponsorship revenue compared to a year ago. Turning to Medicare enrollment profitability. The first quarter Medicare LTV to CAC ratio was 1.4x, representing a 17% improvement from 1.2x. First quarter total acquisition cost per MA equivalent approved member declined 10%, driven by a 28% reduction in variable marketing cost per MA equivalent approved member, partially offset by a 9% increase in customer care and enrollment cost per MA equivalent approved member. The reduction in variable marketing cost per MA equivalent approved member reflects our more disciplined marketing spend, improved channel mix and the continued impact of branding initiatives, which have a proven record of enhancing enrollment quality. The year-over-year increase in customer care and enrollment cost per MA equivalent approved member reflects lower application volume and our decision to retain sufficient agent capacity to support the launch of our lifetime advisory model. This model requires agents to dedicate a portion of their time to member engagement and cross-selling activities. We also plan to have a telesales organization with a higher mix of tenured advisers, which we expect to benefit conversions and enrollment quality. First quarter lifetime values increased 3% for Medicare Advantage, 19% for Medicare Supplement and 78% for PDP products compared to a year ago. First quarter Medicare segment gross profit was $33 million, down 8%. At the same time, Medicare segment gross profit margin increased significantly from 34% to 41%, reflecting improvements in the first quarter Medicare LTV to CAC ratio. Turning to retention. Our most recent AEP cohorts, those enrolled in the fourth quarter of 2024 and the fourth quarter of 2025, continue to outperform each of their respective predecessor cohorts. This progress reflects targeted improvements across our sales and marketing organizations, along with continuing innovation in our customer online experience, resulting in stickier enrollments. Our overall commission receivable value continued to grow on a year-over-year basis, ending just over $1 billion compared to $923 million as of March 31, 2025, or a 12% increase. Looking ahead, the launch of our lifetime advisory model is expected to both improve retention at a client level and foster longer-term relationships with our members across multiple products. First quarter revenue in our Employer and Individual segment was $6.7 million, down 29% from $9.5 million a year ago. Segment gross profit was $3.7 million compared to $6 million last year. From a consolidated profitability perspective, first quarter GAAP net loss was $4.7 million compared to GAAP net income of $2 million. The decline was primarily driven by restructuring charges related to our headcount reduction this quarter. First quarter adjusted EBITDA was $9 million, down from $12.5 million, and the adjusted EBITDA margin was 10% compared to 11% in the prior year. First quarter non-GAAP total operating expenses, which excludes stock-based compensation and restructuring charges, declined 21% to $82.3 million, reflecting organization-wide expense reductions. Non-GAAP marketing and advertising expense declined 38%, including a 44% reduction in variable marketing costs, consistent with our lower enrollment volume targets. Non-GAAP customer care and enrollment expense declined 13%, reflecting lower adviser headcount. On the fixed cost side, non-GAAP technology and content expense declined 8% and non-GAAP general and administrative expense declined 6% compared to a year ago. We expect to see the full benefit of recent fixed cost initiatives as we progress through 2026. First quarter operating cash flow was $35.8 million compared to $77.1 million and ahead of internal expectations. We remain on track to achieve our full year operating cash flow goals as reflected in our 2026 guidance. The year-over-year decline in first quarter operating cash flow primarily reflects the timing of several working capital items as well as severance and other onetime costs associated with our fixed cost reduction actions. In addition, carrier sponsorship revenue was lower year-over-year as the prior year quarter benefited from AEP-related sponsorship dollars that shifted into the first quarter. At the end of March 2026, eHealth had $110.8 million in cash, cash equivalents and short-term marketable securities. Based on our execution year-to-date and with the annual enrollment period still ahead of us, we are maintaining our 2026 guidance ranges for revenue, GAAP net income, adjusted EBITDA and operating cash flow. We are updating our outlook for 2026 net adjustment revenue, which is now expected to be in the range of $8 million to $20 million. We believe we are well positioned to achieve our financial objectives for the year. Consistent with the framework Derrick outlined, we view 2026 as an intentional bridge year, one focused on improving the quality of our revenue, enhancing the efficiency of our operating model and achieving cash flow generation rather than maximizing volume. Our actions this year, including disciplined demand generation, launching our lifetime advisory model and rationalizing our cost structure are designed to position eHealth to achieve the 3-year financial targets we published today. You can reference these targets on Slide 10 of our earnings slides posted on eHealth's Investor Relations site. Our 3-year forecast assumes a modest increase in Medicare marketing spending in our best-performing channels starting in the fourth quarter of 2027. We expect to amplify the impact of this increased marketing investment through our lifetime advisory model as growth in our core Medicare commission revenue is complemented by higher cross-sell rates of ancillary products, including hospital indemnity plans and final expense insurance. In addition, we expect to start seeing positive contributions from our ICHRA business in 2028. Given our planned revenue growth, we believe we will realize significant operating leverage from the recently implemented fixed cost reductions. Cash flow profitability remains the central objective of our long-term financial strategy, and we believe the progress we're making in 2026 establishes a strong foundation for a return to growth while delivering on our cash flow goals. Macro assumptions behind our 3-year forecast are relatively conservative. There could be upside if the Medicare Advantage market recovers faster than we currently anticipate. And with that, we would like to open the call for questions. Operator: [Operator Instructions] Your first question comes from the line of Ben Hendrix of RBC Capital Markets. Benjamin Hendrix: Michael Murray, on for Ben. I appreciate your commentary on your revenue growth expectations for the next few years. I'm curious if you have any tail revenue embedded in these targets? And if you do realize tail revenue this year, would that alter your targeted growth rate? Derrick Duke: John, do you want to take that? John Dolan: Yes, sure. Let me take that question. I appreciate the question. Yes, in our long-range plan, we have assumed effectively flat tail revenue growth. So similar to what we've put in the 2026 guidance, similar assumptions into the outer years. Benjamin Hendrix: Okay. So if you did realize tail revenue this year, that would lower your growth rate targets for 2027, for instance? John Dolan: Not necessarily. If you're looking at -- the growth will be flat on the tail, but it would obviously be offset by other growth. Benjamin Hendrix: Okay. Derrick Duke: Yes. So let's try again. The assumed tail revenue in our 2026 plan is consistent in the 3-year LRP. So the revenue growth in the out years is not coming from increased tail, if that's what you're asking. Michelle Barbeau: Yes. So we're already expecting this year, correct? So it's -- we are expecting to recognize tail this year. You can look at our guidance of $8 million to $20 million. So if you can think about somewhere at the midpoint of that guidance, you can assume that a tail for '25, and we are assuming flattish tail revenue for the forecast periods in the outer years as well. So are you saying if we were to recognize tail above and beyond current guidance in '26? Benjamin Hendrix: Yes. Say, if you recognized it at the high end of your guidance range, would that lower your expected EBITDA growth in 2027? Michelle Barbeau: I think if we were within the guidance range, no. If we were -- if we saw a significant positive development above and beyond our current guidance, yes, obviously, because you would look at '27 off a higher base in '26. But if we are somewhere within our guidance range, no, that would that would imply a similar growth rate and similar EBITDA growth rate. John Dolan: Yes. So if you look at our 3-year financial targets -- the 3-year financial targets that we provided, we're assuming zero growth on tail, but other revenue streams will be generating that growth. As we said in '27, it's single-digit percentage growth rate and '28 is mid-teens. So tail is not contributing to that. Benjamin Hendrix: Okay. I got you. That's helpful. Just shifting gears to cash flow. First quarter is typically pretty strong cash collection quarter for you guys. It came in a little bit below last year's number. Obviously, you maintained your cash flow guidance. I wanted to see if there's any timing-related items in there and why you have conviction just hitting that full year guidance? Derrick Duke: Yes, sure. So the -- I'd say about 80% of the decline year-over-year is really driven by a couple of things, lower carrier sponsorship timing. We had some timing and onetime items in the quarter, such as we had severance related to our fixed cost reductions. And then there was some lower commission collections because of our lower volume. So those are the main drivers in the decline. It's -- I'd say it's the cash flow did exceed our expectations, and we are definitely on track for achieving our 2026 guidance ranges. Michelle Barbeau: Just to reiterate, the bulk of it is timing and the onetime costs related to severance. That accounts for about 80% of that. Operator: Your next question comes from the line of George Sutton from Craig-Hallum. George Sutton: You mentioned 2026 would be a bridge year and you were not going to necessarily chase growth. It sounded very similar to how 2025 came out for you. So I just want to make sure I understood the deltas year-over-year in terms of how you're going to market? Derrick Duke: The deltas in revenue expectations and marketing spend, like just maybe give me a little bit more, George. George Sutton: Actually, both. You sort of characterized it as we didn't chase growth in '25, try to be responsible about going after the right customers and using the right channels. It sounds like you're doing the same thing in 2026. I'm just trying to understand what's different. Derrick Duke: Yes. Well, the difference is the commitment that we've made and the focus that we have on generating positive operating cash flow. And so that we did not achieve that in 2025, and we believe it was important for us to focus on that in 2026 as we strengthen, again, as we've characterized, strengthening the foundation of the company. There's multiple ways that we've gone about that, George, including the Q4 refinancing that we were able to secure to help strengthen the balance sheet. And so the next evolution of that is to be disciplined again in our approach in '26 and again, not chase growth at all costs. We think that's the responsible thing to do in light of the continued market disruption. Again, I think we've been pretty clear in our communicating our view that what's happening in the market is sort of one event that's occurring over multiple years as carriers make the important decisions that they're making to improve their own financial statements and their margin. And we're respective of that. And we want to position eHealth to be ready to take advantage of a return to growth in the future once the market stabilizes. Michelle Barbeau: And just very quickly, George, I think that it is correct that a lot of what you are seeing in '26 is continuation of what we started doing in '25. So for example, the marketing channels and the focus on brand and direct channels, you will see it being even more pronounced in the fourth quarter AEP as we're pulling back from the less profitable channels. And that will continue for the 3-year outlook as well. And that's why you see that pretty significant EBITDA growth that we're projecting. But what is also different this year is the lifetime advisory model that we're implementing, and that will mean that in Q2 and Q3, we're really pulling back on what we're spending into the market. Those enrollments are not very high profit enrollments in the first place. So we're going to use the time of agents to engage with our existing members, and that will have downstream implications for retention and for ancillary sales. The ancillary sales this year will start contributing, but you will really start seeing much bigger impact in '27 and '28 in terms of the cross-sell rate impact. So that's layering on what you started seeing in '25 layering on top of that in '26. George Sutton: Could you just help me understand what the Lifetime Advisory model will look like from an engagement perspective? Obviously, we've had ancillary offerings before, and those were available to customers. Is it just simply more proactively marketing those to them? Or how does the engagement change? Derrick Duke: That's a great question, [ Greg ]. I'm going to start, and then I'll ask Michelle to contribute as well. So it's important to understand that historically, inside of the eHealth operating model that as new products were put into the platform, the expectation from an operating model perspective was that, that would need its own set of advisers. It would need its own demand generation of budget effectively in order to drive growth. The lifetime advisory model doesn't rely on additional marketing spend, doesn't rely on additional agents to sell the product. It's really encouraging and supporting our current advisers to develop a holistic relationship with the member once they engage with a member. So it's not about more product versus what we've had in the past, although our future expectation is that we'll continue to add products and services as we see needs that beneficiaries have. But the real change here is that we're supporting the adviser to engage with their member and to effectively be a one-stop shop that, that adviser is equipped to engage and meet the holistic needs of the member. Michelle? Michelle Barbeau: Sure. I'll add on. I mean we really think about this -- it is about putting the consumer first. And so it's not just about, yes, we've done a lot to improve our brand, our marketing, that will continue, but it's really focused on that over 65 segment. And so as we bring that member in, how do we continue to cultivate that relationship, not just to drive sort of the immediate enrollment, which is absolutely also really needed in this environment and what's going on in Medicare, but it's also just doing right by the consumer, ensuring that we can use the time and the capacity that we have. So we really link that beneficiary to that adviser. And through that relationship, we cultivate what you asked about, right, what are those activities, the engagement, it follow-up on planned check-in is going on right now. Do they have their PCP? Can we help with an annual wellness visit? Cross-sell, right, will come in as well. Are there referrals? Are there other people that are really satisfied with our service that we can also sell. So it's not just relying on marketing, but really kind of setting this up for a long-term relationship. Operator: [Operator Instructions] Your next question comes from the line of George Hill of Deutsche Bank. Unknown Analyst: This is [ Maxi ] on for George. I want to ask about the shift toward higher-margin branded marketing channels. Could you give us an update on how much of your Medicare enrollment mix in Q1 came from these branded channels? And how does it compare to last year? Derrick Duke: Yes. Michelle, do you want to take that? So I think the question is what percentage of our enrollment volume is coming from our branded channels? And how does that compare to a year ago? Michelle Barbeau: Yes, yes. I will tell you that we continue -- so first off, when we look at sort of how do we maximize marketing spend, it is really guided on quality, on the return, like LTV to CAC, right, as you saw in sort of the slide is really the North Star. So you then focus on what are the best performing channels. Also even within the channels, you're looking at what are the top-performing campaigns and how do you continue to optimize. So we continue to lean into our branded channels with the right mix throughout Q1, Q2, Q3. And kind of similar to what we said earlier, you're going to see that even continue to improve into Q4. Unknown Analyst: Got it. Just a quick follow-up. Could you give us some color on the unit economics of cross-selling ancillary products through the lifetime advisory model and ICHRA versus MA? How should we think about the company's overall margin profile as these products scale? And how much of the mid-teens revenue growth in 2028 is expected to be driven by ICHRA and ancillary products through this model? Derrick Duke: Yes. So the way -- again, I'll start and then John and/or Michelle or others can chime in. So the way we think about the ancillary opportunity, again, it's really important to understand that in the lifetime advisory model, there's no additional marketing demand dollars that the company is spending in order to generate the revenue that we are expecting in the ancillary business. The ancillary bucket is a wide array of products. So each product has its own sort of LTV profile based on the unit economics of each. But the way I would just generally encourage you to think about this is that for each cross-sell opportunity that we have the opportunity to add somewhere between maybe 15% to 20% of LTV to the MA sale when we sell an ancillary plan. So that's how we think about the economics on ancillary. On ICHRA, we would just say it's -- certainly, we have it modeled, but it's a little -- probably a little early for us to share how we think about each of the unit economics of that. And it's a small amount of the revenue growth that's in our 3-year LRP at the moment. So it's certainly not material in the plan at this point as it relates to the 28 revenue growth that's in the plan. John Dolan: One of the other things I'd probably add to it is some of the ancillary products have a much more favorable cash flow profile, which is something that we've built into our plan. Operator: There are no further questions at this time. We have reached the end of the Q&A session. This also concludes today's call. Thank you for attending. You may now disconnect. 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Q1 results: eHealth reported $88 million of revenue, a GAAP net loss of $4.7 million and adjusted EBITDA of $9 million, beating internal expectations despite a 22% YoY revenue decline driven by reduced marketing; Medicare LTVs rose and the Medicare LTV-to-CAC improved to 1.4x. Cost reductions: Management cut headcount and consolidated vendors to target roughly $30 million of fixed cost savings in 2026, with first-quarter non-GAAP operating expenses down 21% and marketing spend down 38%. Strategy and outlook: eHealth is launching a "lifetime advisory" model and new ancillary products (including final expense insurance) to increase cross-sell and cash flow, calling 2026 an "intentional bridge year" and forecasting a return to revenue growth in 2027 while maintaining 2026 guidance. Interested in eHealth, Inc.? Here are five stocks we like better. eHealth Stock Rises from the Ashes. Time to Get In? eHealth (NASDAQ:EHTH) reported first-quarter 2026 results that management said came in ahead of internal expectations, citing stronger-than-anticipated Medicare enrollment volume and improved unit economics. On the company’s earnings call, Chief Executive Officer Derrick Duke said the quarter also reflected progress on strategic initiatives including targeted cost reductions and launch preparations for a new “lifetime advisory model” and a final expense insurance product introduced in April. For the first quarter, eHealth reported total revenue of $88 million. GAAP net loss was $4.7 million and adjusted EBITDA was $9 million, which Duke said exceeded the company’s internal plan. Chief Financial Officer John Dolan added that the company “beat our revenue, earnings, and operating cash flow expectations and achieve[d] a greater Medicare enrollment profitability compared to a year ago.” → The Real SpaceX Play: 5 Chip Stocks Powering the IPO Before It Launches eHealth Stock May Be Cheap Here Despite the beat versus internal expectations, Dolan said year-over-year comparisons reflected a deliberate reduction in marketing volume. Total revenue declined 22% year over year, while Medicare segment revenue fell 22% to $81.3 million. Dolan attributed the decline primarily to lower enrollment volume after eHealth “reduced variable marketing spend to focus on our best performing channels.” Medicare submissions declined 24%, which was partially offset by higher lifetime values across Medicare products. Medicare Advantage (MA) lifetime value (LTV): up 3% year over year Medicare Supplement LTV: up 19% Prescription Drug Plan (PDP) LTV: up 78% Dolan said Medicare enrollment profitability improved, with the Medicare LTV-to-CAC ratio at 1.4x versus 1.2x a year ago, a 17% improvement. Total acquisition costs per MA equivalent approved member declined 10%, driven by a 28% reduction in variable marketing costs per MA equivalent approved member, partially offset by a 9% increase in customer care and enrollment costs per MA equivalent approved member. → Tyson Foods' Total Returns: Tasty Treats for Income Investors? The higher customer care and enrollment costs reflected lower application volume and “our decision to retain sufficient agent capacity to support the launch of our lifetime advisory model,” Dolan said. He also noted the company plans for a telesales organization with a higher mix of tenured advisors, which management expects will benefit conversions and enrollment quality. Medicare segment gross profit was $33 million, down 8% year over year, but gross margin increased to 41% from 34%, reflecting the improved LTV-to-CAC ratio. In the Employer and Individual segment, revenue was $6.7 million versus $9.5 million a year ago, and gross profit was $3.7 million compared with $6.0 million last year. → Berkshire Hathaway’s Record Cash Hoard: Why and What's Next? eHealth recognized $8 million of positive net adjustment revenue, or “tail revenue,” compared with $10.5 million in the prior-year quarter. Dolan said tail revenue represents cash collections above original lifetime value estimates and was driven by Medicare and ancillary products. He also said the company “continue[s] to hold significant unrecognized positive adjustments related to our existing book of business.” During Q&A, Dolan said eHealth’s long-range plan assumes “effectively flat tail revenue growth,” consistent with assumptions in 2026 guidance and the out years. He emphasized that projected revenue growth in 2027 and 2028 is “not coming from increased tail,” but instead from other revenue streams. Non-commission revenue in the quarter was $8.2 million, which Dolan said was ahead of internal expectations and reflected lower carrier sponsorship revenue compared with a year ago. Management highlighted actions to reduce fixed costs and focus spending on higher-performing channels. Duke said eHealth implemented headcount reductions and vendor consolidation initiatives expected to reduce fixed operating costs by approximately $30 million in 2026 compared with 2025, representing roughly a 20% reduction. He said the company began to realize some savings in the first quarter, with the full impact expected to become more evident later in the year. Dolan said first-quarter non-GAAP total operating expenses (excluding stock-based compensation and restructuring) declined 21% to $82.3 million. He detailed reductions across key expense lines, including non-GAAP marketing and advertising expense down 38% (including a 44% reduction in variable marketing), non-GAAP customer care and enrollment expense down 13%, non-GAAP technology and content expense down 8%, and non-GAAP general and administrative expense down 6%. GAAP net results were also affected by restructuring. Dolan said the year-over-year decline from GAAP net income of $2.0 million to a GAAP net loss of $4.7 million was “primarily driven by restructuring charges related to our headcount reduction this quarter.” Duke described the lifetime advisory model as a strategic shift aimed at fostering “deeper, longer-lasting relationships between members and advisors,” positioning eHealth as “a trusted ally throughout their healthcare journey” rather than a one-time enrollment platform. He said the model is supported by new agent-facing technology tools, including a customer dashboard, system-generated engagement prompts, and “dynamic insight-driven scripts embedded directly into the sales and service workflow.” As part of broader diversification efforts, Duke said eHealth is expanding services beyond core Medicare Advantage, noting existing ancillary offerings such as dental, vision, hearing, and hospital indemnity plans. He said the company launched final expense insurance last month, describing it as offering “attractive unit economics and a compelling cash flow profile.” In response to analyst questions about how the model changes engagement, Duke said the new approach differs from prior efforts where new products required separate advisors and incremental marketing budgets. Under the lifetime advisory model, he said, cross-selling does not rely on “additional marketing spend” or “additional agents,” but instead equips existing advisors to develop a “holistic relationship” with members. Michelle (who joined management’s response during Q&A) said the model is designed to “put the consumer first” and increase ongoing engagement through activities such as plan check-ins, helping members connect with a primary care physician, supporting annual wellness visits, generating referrals, and incorporating cross-sell opportunities into the relationship. Asked about unit economics for ancillary cross-sell, Duke said management views each ancillary product as having its own LTV profile, but suggested that “for each cross-sell opportunity…we have the opportunity to add somewhere between maybe 15%-20% of LTV to the MA sale when we sell an ancillary plan.” On ICHRA-related economics, Duke said it was “a little early” to share unit economics and that ICHRA is “certainly not material” to the 2028 revenue growth plan at this point, though some ancillary products carry “a much more favorable cash flow profile.” First-quarter operating cash flow was $35.8 million compared with $77.1 million in the prior-year quarter, but Dolan said it was ahead of internal expectations and that the company remains on track for its full-year operating cash flow goals. He attributed most of the year-over-year decline to timing and one-time items, including severance related to fixed cost reductions, lower commission collections due to reduced volume, and lower carrier sponsorship revenue that benefited the prior-year quarter. At the end of March 2026, eHealth reported $110.8 million in cash equivalents and short-term marketable securities. Dolan said the company is maintaining its 2026 guidance ranges for revenue, GAAP net income, adjusted EBITDA, and operating cash flow, while updating its outlook for 2026 net adjustment revenue to a range of $8 million to $20 million. Looking beyond 2026, Duke said the company’s revised three-year outlook reflects a return to revenue growth in 2027 alongside adjusted EBITDA margin expansion and improving cash flow. He characterized 2026 as an “intentional bridge year,” where eHealth is prioritizing operating cash flow over volume by focusing on the most profitable channels, building the lifetime advisory model, and pursuing diversification initiatives with discipline. Dolan added that the company’s three-year forecast assumes a modest increase in Medicare marketing spending in best-performing channels beginning in the fourth quarter of 2027, with growth supported by cross-selling ancillary products and an expected contribution from ICHRA beginning in 2028. Management also discussed the external Medicare environment. Duke noted that CMS finalized a 2027 Medicare Advantage rate “above the initial proposal,” which he called an encouraging signal, while adding that the company remains early in the annual enrollment period planning cycle and expects carrier inventory dynamics to remain complex amid continued Medicare Advantage “reset cycle” adjustments. eHealth, Inc operates one of the largest online private health insurance exchanges in the United States. The company's platform enables consumers to compare, select and enroll in individual, family and small-group health insurance plans offered by a broad network of licensed insurance carriers. In addition to Affordable Care Act–compliant offerings, eHealth provides dedicated services for Medicare Advantage, Medicare Supplement and Medicare Part D prescription drug plans, helping seniors navigate the complexities of Medicare coverage. Through its digital marketplace, eHealth delivers real-time quotes, detailed plan comparisons and enrollment processing. The article "eHealth Q1 Earnings Call Highlights" was originally published by MarketBeat.

Management intentionally reduced variable marketing spend to focus on high-performing branded channels, prioritizing operating cash flow over enrollment volume. The company is transitioning to a 'lifetime advisory model' designed to shift the business from a one-time enrollment platform to a long-term member relationship model. Performance was driven by stronger-than-anticipated Medicare enrollment volume at favorable unit economics and progress in non-core agency revenue diversification. Management views the current Medicare Advantage market as being in a multi-year 'reset cycle' where carriers prioritize margin over market share via benefit adjustments. Fixed cost reductions, including headcount and vendor consolidation, are expected to reduce the operating cost base by approximately $30 million in 2026. The strategy involves retaining tenured agent capacity during off-peak periods to focus on member engagement and cross-selling rather than just new acquisitions. The 3-year plan forecasts a return to mid-single-digit revenue growth in 2027, accelerating to mid-teens in 2028 as the Medicare market stabilizes. Management expects to achieve breakeven or better free cash flow in 2027, supported by improved retention and higher-margin ancillary sales. Adjusted EBITDA margins are projected to reach 20% by 2028, driven by operating leverage from fixed cost reductions and favorable unit economics. Growth targets assume a modest increase in marketing spend starting in Q4 2027, complemented by increased cross-selling of dental, vision, and final expense products. The forecast includes a conservative assumption of flattish 'tail revenue' (net adjustment revenue) in outer years to ensure growth is driven by core operations. Implemented restructuring and headcount reductions in Q1 2026 that are expected to reduce the fixed operating cost base by approximately 20% for the full year. Launched a new final expense insurance product in April to diversify revenue and improve the company's cash flow profile. Noted that CMS finalized 2027 Medicare Advantage rates above initial proposals, signaling a focus on long-term program sustainability. Recognized $8 million in positive net adjustment revenue (tail revenue) in Q1, representing cash collections exceeding original lifetime value estimates. Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management confirmed that the 3-year financial targets assume zero growth from tail revenue, with growth instead coming from core Medicare and ancillary streams. If tail revenue significantly exceeds the $8 million to $20 million guidance in 2026, it could mathematically lower the 2027 growth percentage due to a higher base. The model does not rely on additional marketing spend; instead, it leverages existing advisers to provide holistic, year-round support to members. Activities include plan check-ins, helping with annual wellness visits, and cross-selling ancillary products to increase total member lifetime value. Cross-selling ancillary products can add approximately 15% to 20% to the lifetime value (LTV) of a core Medicare Advantage sale. Management noted that ancillary products often have a more favorable cash flow profile than traditional Medicare commissions. ICHRA (Individual Coverage Health Reimbursement Arrangement) is expected to contribute to growth starting in 2028 but is currently a small portion of the long-term plan. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here.