eHealth Inc (EHTH)’s Preliminary Fourth Quarter and Full Year 2014 Results Conference Call Transcript

If this trend holds, combine with our ability to process subsidies this year, we are optimistic about our potential individual family plan application volume during the weeks leading up to the last day of the open enrollment period which is February 15. This could also translate into strong first quarter application volumes considering that the final weeks of the last open enrollment period that ended on March 31, 2014 accounted for a very significant portion of our total individual family plan application volume in the first quarter last year. I’d also like to point out that, unlike Medicare in our family plan business, we did see an increase in the cost of acquisition per member compared to a year ago. To give a little more sight into our Medicare business, submitted applications for Medicare advantage and Medicare supplement products combined were 46 % in the fourth quarter compared to the fourth quarter of 2013 with applications for Medicare Supplement Plans going in excess of 80% and Medicare Advantage Plans going in excess of 40 %.

It’s important to note here that we project Medicare Supplement products that approximately the same lifetime value to us as Medicare Advantage products, and we are starting to see greater contributions for Medicare supplement products to our revenues and to our total Medicare membership. In addition, Medicare Supplement products are not subject to the Medicare annual enrollment period and can be sold throughout the year to anyone who qualifies, which makes this products even more attractive to us.

And now I turn the call over to Stuart to review our guidance ranges and talk about the key revenue and profitability drivers for the fourth quarter.


Stuart Huizinga, Chief Financial Officer

Thank you Gary. I will now review our preliminary results for the fourth quarter in fiscal year 2014. Please note that these results are based on our initial review of operations for the quarter ended December 31, 2014 and remain subject to change. We wanted to show a preliminary view on certain of our fourth quarter and 2014 annual financial results and over final results for this recording periods, and our regularly scheduled fourth quarter 2014 earnings conference call.

As detailed in our press release, we expect our 2014 revenues EBITDA and non-GAAP EPS to fall below the annual guidance ranges we provided previously. Specifically, we now expect that our revenue for 2014 will be in the range of $178 million to $ 180 million compared to guidance of $185 million to $194 million. And for the fourth quarter 2014, we expect our revenue to be in the range of $43 million to $45 million. We expect EBITDA for 2014 to be in the range of $1.5 million to $4 million compared to the guidance of $13.5 million to $18.5 million we provided previously.

For the fourth quarter 2014 we expect our EBITDA to be in the range of -$16.3 million to -$13.8 million. We expect non-GAAP net loss per diluted share for the full year 2014 to be in the range of -13 cents to -4 cents compared to guidance of 30 cents to 43 cents earnings per diluted share. And for the fourth quarter 2014, we expect non-GAAP net loss per diluted share be in the range of -56 cents to -47 cents. EBITDA is calculated by adding stock based compensation expense, depreciation and amortization expense, including intangible asset amortization expense, other income expense net and provision for income taxes to GAAP net income. Non-GAAP net income per diluted share is calculated by excluding intangible asset amortization expense, stock based compensation expense and the estimated tax benefit related to these items.