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eHealth (EHTH) Shares Rise on Q1 Earnings Beat, Revenues Up Y/Y

Shares of eHealth, Inc. EHTH gained 0.8% on Apr 30 following first-quarter 2021 results wherein the bottom line beat estimates.

Adjusted net earnings of 36 cents per share surpassed the Zacks Consensus Estimate by 200%. However, the bottom line declined 8% year over year.

The company’s results highlighted growing revenues and robust performances at its Medicare and, Individual, Family and Small Business segments. However, the upside was partly offset by elevated operating costs in the reported quarter.

Operational Update

Total revenues improved 26% year over year to $134.2 million in the first quarter. This can be primarily attributed to 27% rise in commission revenues, which were driven by commission revenue growth of 27% and 29% from the Medicare, and Individual, Family and Small Business segments, respectively. Further, the top line outpaced the Zacks Consensus Estimate by 21.2%.

Revenues from the Medicare segment advanced 26% year over year to $121 million. Meanwhile, revenues at Individual, Family and Small Business segment amounted to $13.2 million, reflecting a rise of 29% year over year.  While the Medicare segment received a boost from uptick in Medicare plan approved members, the Individual, Family and Small Business segment gained momentum on the back of higher approved individual and family plan members, approved dental plan members and vision plan members.

Total operating costs and expenses increased 28% year over year to $134.9 million due to higher marketing and advertising, customer care and enrolment, technology and content, general and administration, and restructuring charges.

Adjusted EBITDA climbed 37% year over year to $17.3 million in the quarter under review.

While Medicare segment profit grew 6% year over year to $24.5 million in the quarter, profit at Individual, Family and Small Business segment increased to nearly three-fold from the prior-year quarter to $8.1 million.

Medicare approved members of 122,677 improved 45% year over year in the quarter, courtesy of growing Medicare Advantage approved members, partly offset by drop in Medicare Supplement approved members and Medicare Part D Prescription Drug Plan approved members.

Approved members for Medicare Advantage products were 106,884, which surged 65% year over year. Also, approved members for individual and family plan products of 11,314 improved 21% year over year, courtesy of growth in qualified health plans and non-qualified plans.

During the quarter, total estimated membership was 1,263,507, up 11% year over year.

eHealth, Inc. Price, Consensus and EPS Surprise

eHealth, Inc. price-consensus-eps-surprise-chart | eHealth, Inc. Quote

Financial Update

The company exited the first quarter with cash and cash equivalents of $92.3 million, which more than doubled from the 2020-end level.

As of Mar 31, 2021, shareholders’ equity inched up 0.8% from the level at 2020 end to $843.9 million.

During the quarter, net cash provided by operating activities increased to nearly five-fold year over year to $42.8 million.

2021 Guidance Revised

Concurrent with first-quarter results, the company raised its 2021 outlook for adjusted EBITDA and segment profits following change in calculation for excluding amortization of capitalized software development costs.

This year, adjusted EBITDA is anticipated to be $110-$125 million, higher than the previous guidance of $100-$115 million.

Per the updated guidance, Medicare segment profit is forecast between $147 million and $164 million, indicating a rise from the prior guidance of $138-$155 million. For Individual, Family and Small Business segment, profit is expected between $19 million and $20 million, up from the previous guidance of $18-$19 million.

However, the guidance for this year’s adjusted earnings per share, total revenues, segmental revenues and cash used in operations remain unchanged from the prior outlook.

Zacks Rank

eHealth currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurance Brokers

Of the insurance brokers that have reported first-quarter results so far, the bottom line of Brown & Brown, Inc. BRO, Marsh & McLennan Companies, Inc. MMC and Willis Towers Watson Public Limited Company WLTW beat the Zacks Consensus Estimate.

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