eHealth, Inc. Q1 FY2026 earnings call

• Pleased with first quarter results ahead of expectations, driven by stronger Medicare enrollment volume and favorable unit economics. - Made progress on strategic initiatives like cost reductions and preparations for initiatives launching in April, including lifetime advisory model and final expense insurance product. - Encouraged by CMS finalizing 2027 Medicare Advantage rate above initial proposal. - Evolving operating model to foster deeper member-advisor relationships with lifetime advisory model. - Prioritizing achieving breakeven or better operating cash flow and positioning for sustainable growth. - Updated three-year financial targets with 2027 return to revenue growth, adjusted EBITDA margin expansion, and 2027 achieving breakeven or better free cash flow. - Expanding services beyond core MA coverage with ancillary plans and final expense insurance launched last month.

First quarter revenue was $88 million. Medicare segment revenue was $81.3 million, a 22% decline, driven primarily by lower enrollment volume but offset in part by growth in lifetime values for Medicare Advantage, Medicare Supplement, and PDP products. Non-Medicare segment (employer and individual) revenue was $6.7 million, down 29%. Medicare segment accounted for approximately 92.3% of total revenue ($81.3 million / $88 million), while the non-Medicare segment accounted for about 7.7%.

• Maintained 2026 guidance ranges for revenue, gap net income, adjusted EBITDA, and operating cash flow. - Updated 2026 net adjustment revenue outlook to $8 million to $20 million. - Forecast mid-single-digit revenue growth in 2027, mid-teens in 2028 supported by core MA and ancillary sales. - Adjusted EBITDA margins expected to increase each year starting in 2027 to reach 20% by 2028. - Expect 2028 contribution from E&I segment via partner-driven ICRA offerings. - Revenue growth goals could accelerate if Medicare Advantage market stabilizes faster.

• Uncertainties in Medicare Advantage market including carriers' 2027 bids, plan benefits/service areas adjustments, consumer demand and carrier inventory dynamics. - Risks related to non-GAAP financial measures and their reconciliation to GAAP. - Operational uncertainties in evolving the lifetime advisory model and diversifying initiatives.

Q: Curious if there's tail revenue embedded in targets and if realizing tail above guidance alters growth rate.

A: Assumed flat tail revenue growth in long-range plan, if tail above guidance within range, growth rates not altered significantly as other revenue streams drive growth.

Q: About 2026 being bridge year and marketing delta.

A: 2026 focuses on generating positive operating cash flow, different from 2025 by prioritizing cash flow, secured Q4 refinancing, and implementing lifetime advisory model with pullback on less profitable channels.

Q: Shift toward higher margin branded marketing channels, update on Q1 enrollment from these channels.

A: Continue to lean into branded channels guided by LTV to CAC, focus on best performing channels and campaigns, with enrollment volume from branded channels optimized but specific percentage not detailed exactly