EHTH

Overall Strategic Priorities for 2026

• Build and scale the lifetime advisory model to deepen member relationships, improve retention, and increase long-term member value
• Improve the company's cash flow profile, targeting break-even or better operating cash flow at the midpoint of 2026 guidance
• Advance diversification initiatives including ancillary insurance products and ICHRA for the under-65 market

Market Environment

• Long-term opportunity in Medicare Advantage (MA) remains compelling, with total enrollment now exceeding 35.5 million beneficiaries. Growth has moderated as carriers prioritize profitability, but underlying demographic demand remains strong, with CBO projecting MA penetration will rise from 55% to 63% by 2034.
• The industry is gradually stabilizing after two+ years of disruption, and early conversations with carrier partners ahead of the 2026 AEP support this view. CMS finalized a 4.5% maximum broker commission increase for plan year 2027, but carrier strategies will vary by geography, product, and strategic priority.
• The market is increasingly rewarding high-quality, attention-oriented distribution models, which aligns closely with eHealth's strategic direction.

Lifetime Advisory Model Launch

• The new model shifts eHealth's member relationship from one-time enrollment to ongoing year-round engagement, with advisors assisting members with plan evaluations, coverage gaps, healthcare navigation, and ancillary product needs. This creates cross-selling opportunities to increase member lifetime value.
• Consistent with the new model, the company concentrated Q2 marketing spend in high-return quarters (Q1 and especially Q4), and reallocated advisor time to member engagement in off-peak quarters (Q2 and Q3), leading to the expected YoY decline in Q2 enrollments and revenue.
• Early validation of core model assumptions: consumers have responded positively to relationship-based engagement, and cross-selling opportunities are significant. Q2 2026 ancillary cross-sell rates doubled YoY. The company is shifting KPIs to member-centric metrics including member retention, cross-sell rates, and member lifetime value, and expects unit margins to improve over time as referrals grow as an enrollment source.

Artificial Intelligence Progress

• AI is deployed to improve efficiency, scalability, and customer experience while retaining the core role of licensed insurance advisors. AI currently supports after-hours interactions, call screening, and basic customer service inquiries.
• For the upcoming 2026 AEP, AI-enabled call screening will replace most manual screening processes. AI is also used to accelerate back-office and product development work: it cut the development time for lifetime advisory model technology in half, and is automating the labor-intensive process of carrier plan content ingestion to reduce manual effort and improve accuracy.

ICHRA and Under-65 Growth

• ICHRA adoption continues to grow as employers seek flexible, cost-effective healthcare solutions, with industry forecasts projecting 5 million lives covered by 2029. eHealth is building a scalable platform connecting employers, employees, brokers, and benefit administrators.
• ICHRA is not expected to contribute meaningfully to 2026 revenue (projected to remain below $5 million), as the company focuses on building pipeline, strategic partnerships, broker relationships, and operational foundation for long-term growth.

• Management maintained all 2026 full-year guidance ranges for total revenue, GAAP net income, adjusted EBITDA, and operating cash flow, and remains on track to hit full-year cost savings targets (over $60 million in annual variable cost savings and ~$30 million in annual fixed cost savings) and significant full-year operating cash flow improvement over 2025.
• 2026 full-year net adjustment (tail) revenue guidance is updated to a $20 million range, reflecting Q2 2026 recognized net adjustment revenue.
• The company expects year-over-year operating cash flow improvement in both Q3 and Q4 2026. Q3 2026 marketing spend will see a larger YoY reduction than Q2's 45% reduction, leading to a larger YoY decline in Q3 enrollment and revenue. The majority of 2026 full-year marketing budget will be deployed in Q4 across the highest-performing direct channels.
• eHealth projects a return to sustainable revenue growth starting in 2027, driven by the shift from acquisition-based to recurring relationship economics, ICHRA growth, and expansion of the carrier-dedicated Amplify business. Management expects positive operating cash flow in 2027, with continued improvement driven by higher member retention, favorable cash flow timing for ancillary products and ICHRA, and AI-driven cost efficiencies.

1. Medicare Segment: Q2 2026 revenue was $31.8 million, down 45% year-over-year, accounting for 94.6% of total Q2 revenue. Gross profit was $6 million, down from $19.1 million in the prior year period. Medicare submissions declined 44% YoY, in line with company expectations. Variable marketing and advertising expense declined 58% YoY, while customer care and enrollment expense declined 21% YoY. On a per approved member basis, total acquisition cost per MA equivalent approved member increased 16%: customer care and enrollment costs per member rose 42%, while variable marketing costs per member declined 23%. LTV for Medicare Advantage declined 1% YoY, Medicare Supplement LTV increased 16% and Medicare Part D LTV increased 52% YoY. Retention trends for the most recent AEP cohort are in line with the prior year's cohort and ahead of the cohort from two years ago. 2. Employer and Individual (Under-65) Segment: Q2 2026 revenue was $1.8 million, down from $2.7 million in the prior year period, accounting for 5.4% of total Q2 revenue. The segment reported a gross loss of $0.8 million, compared to a $0.3 million loss in the prior year period. The revenue decline reflects ongoing reduction of investment in the traditional direct-to-consumer under-65 business, which the company expects will eventually be offset by growth of the ICHRA platform.

• Actual future results may differ materially from management's forward-looking statements due to a range of uncertainties and risks, which are detailed in the company's SEC filings including the most recent Form 10-K.
• Medicare Advantage industry disruption and carrier focus on margin recovery has led to lower sponsorship revenue, variable commission strategies across carriers, and ongoing risk of plan terminations that could increase churn above expectations.
• The lifetime advisory model is newly launched, and long-term metrics including mature cross-sell rates and member retention have not yet been fully validated, requiring a full annual cycle to measure success accurately.
• The timeline and magnitude of cost savings and efficiency gains from AI deployments depend on continued successful scaling and performance, and past performance does not guarantee future results.
• Ongoing strategic discussions with HIG regarding balance sheet resolution have not yet reached a final outcome, creating residual uncertainty for stakeholders.

Q: What are eHealth's expectations for 2027 MA broker commission strategy, and will there be a material increase in non-commissionable plans? / A: CMS set a 4.5% maximum commission increase, but management expects carriers to use varied strategies that differ by plan type and geography as they finalize growth plans. Management does not expect a material year-over-year change in the share of non-commissionable plans, and notes that eHealth's scale positions it well to navigate current market dynamics.

Q: What realistic long-term cross-sell attach rate do you expect for the new lifetime advisory model, and how long will it take to mature? / A: Early results are encouraging, with Q2 2026 cross-sell rates doubling YoY. Management expects a mature cross-sell attach rate of 0.5 (50%) to be realistic over time, but notes a full 4-quarter cycle is needed to properly measure model performance as it matures.

Q: How do you expect plan terminations to shape up this AEP, and can eHealth still target high-conversion areas with its smaller team and branded channel focus? / A: Early carrier conversations show mixed expectations: some carriers are seeing portfolio stability after margin improvement, while others expect plan termination levels similar to or slightly above last year's elevated levels. eHealth's broad carrier mix and strong branded channels perform well during periods of high plan disruption, and the company proactively reaches out to its own affected members via advisors to help them navigate plan changes, targeting at-risk members directly.

Q: How should investors think about 2027 cash flow after 2026's break-even target? / A: Multiple factors will drive improved 2027 cash flow: higher member retention from the lifetime advisory model boosts cash flow, ancillary products have much more favorable up-front cash flow timing than MA plans, and ICHRA business also has a more favorable cash flow profile than traditional MA. All of these elements will build on 2026's cash flow improvement progress.

Q: How is AI driving efficiency and operating leverage for eHealth? / A: Two high-impact AI uses are already delivering cost savings: AI will handle 100% of incoming call screening this AEP, eliminating the need for human screener FTEs, and past performance shows AI screening improves conversion rates and reduces call length. On the back end, AI automates the manual, labor-intensive process of ingesting annual carrier plan updates, reducing headcount costs, speeding up processing, and improving data quality.