eHealth, Inc. (EHTH)

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eHealth (EHTH)

Q4 2012 Earnings Call

February 14, 2013 5:00 pm ET


Kate Sidorovich - Director of Investor Relations

Gary L. Lauer - Chairman of the Board, Chief Executive Officer and Member of Equity Incentive Committee

Stuart M. Huizinga - Chief Financial Officer, Principal Accounting Officer and Senior Vice President


Richard Fetyko - Janney Montgomery Scott LLC, Research Division

George F. Sutton - Craig-Hallum Capital Group LLC, Research Division

Steven P. Halper - Lazard Capital Markets LLC, Research Division

Kevin Kopelman - Cowen and Company, LLC, Research Division

Adam Klauber - William Blair & Company L.L.C., Research Division

Ned Davis - Wm Smith & Co.



Good day, ladies and gentlemen and welcome to the fourth quarter 2012 eHealth Incorporated earnings conference call. My name is Ayesha and I will be your coordinator for today's call. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Ms. Kate Sidorovich, eHealth's Vice President of Investor Relations. Please proceed, ma'am.

Kate Sidorovich

Good afternoon, and thank you, all, for joining us today either by phone or by webcast for a discussion about eHealth Inc.'s fourth quarter and full year 2012 financial results. On the call this afternoon, we will have Gary Lauer, eHealth Chief Executive Officer; and Stuart Huizinga, eHealth Chief Financial Officer. After management completes its remarks, we will open the line for questions.

As a reminder, today's conference 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 following the call.

We will be making forward-looking statements on this call that include statements regarding projections of operating results for 2013, such as our 2013 guidance for revenue, EBITDA non-GAAP dilutive earnings per share, stock-based compensation expense and amortization of intangibles.

Our ability to accelerate our revenue and earnings for growth, our expectation regarding 2013 growth in IFP applications, members and revenue, our ability to increase Medicare enrollment efficiency, our Medicare member estimates and our ability to generate recurring revenue.

Our expectation regarding the growth of our Medicare revenues and their exceeding cost in our Medicare business. The Medicare market is a substantial opportunity and our ability to further penetrate it. Our beliefs regarding market opportunities and dynamics created by the Affordable Care Act, expected quarterly revenue and earnings per share trends in 2013 and our planned increase in technology and content expense.

These forward-looking statements are based on management's current expectations and assumption that are inherently subject to various risks and uncertainties that could cause actual results to differ materially from those set forth in such forward-looking statements, including risks associated with the direct and indirect impact of healthcare reform in our business, our ability to maintain relationships with health insurance carriers, our success in marketing and selling Medicare-related health insurance plans and aiding recurring revenue streams.

Other factors that could cause operating, financial and other results to differ, are described in eHealth's most recent quarterly report on Form 10-Q and annual report on form 10K, filed with the SEC and available on the Investor Relations page of our website.

Forward-looking statements on this call, represent eHealth's views as of today. You should not rely on these statements as presenting our views in the future. We'll undertake no obligation or duty to update information contained in this forward looking statements, whether as a result of new information, future events or otherwise.

We will be presenting certain financial measures on this call that will be considered non-GAAP under SEC regular G. For reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure, please refer to the information included in our press release and in our SEC filings, which can be found in the About Us section of our corporate website under the heading, Investor Relations.

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

Gary L. Lauer

Thanks, Kate, and thanks, everyone for joining us today as we report our fourth quarter full year 2012 results. This past year was a pivotal one for eHealth. The return to revenue and GAAP earnings growth after a challenging 2011 completed the transition of our Medicare business to a direct fulfillment model ahead of schedule and saw a significant improvement at our individual and family plan business.

Revenue for the fourth quarter was $45.3 million, GAAP diluted earnings per share was $0.11 and cash flow from operations was $5.2 million.

For the full year 2012, eHealth generated revenue of $155.5 million and GAAP diluted earnings per share of $0.34 with total cash flows from operations for the year of $24.9 million.

Our year-end cash balance was $141 million, which reflects approximately $1 million in share repurchases completed during the fourth quarter. As a reminder, on September 10, 2012, we announced a $30 million share repurchase program, our fourth, in 4 years.

The 2012 annual revenue and earnings growth was achieved through a meaningful expansion of our Medicare business, where we saw strong growth in demand, enrollments and revenues throughout the year. And an effective cost management strategy, which allows us to remain profitable and cash flow positive as we continue to invest in Medicare and integrate the commission rate reductions we incurred in early 2011 in our Individual and Family Plan business.

We believe that we can build on this progress in 2013 and further accelerate our revenue and bottom-line growth, which is reflected in our guidance range for the year.

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