FORM 10-Q
|
Delaware
(State or other jurisdiction of
incorporation or organization)
|
|
56-2357876
(I.R.S Employer
Identification No)
|
Large accelerated filer
☐
|
|
Accelerated filer
☒
|
Non-accelerated filer
☐
|
|
Smaller reporting company
☐
|
|
PART I FINANCIAL INFORMATION
|
PAGE
|
|||
Item 1.
|
|||||
|
|||||
|
|||||
|
|||||
|
|||||
Item 2.
|
|||||
Item 3.
|
|||||
Item 4.
|
|||||
|
PART II OTHER
INFORMATION
|
|
|||
Item 1.
|
|||||
Item 1A.
|
|||||
Item 6.
|
|||||
|
|
December 31, 2013
|
|
June 30, 2014
|
||||
Assets
|
(Note 1)
|
|
(unaudited)
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
107,055
|
|
|
$
|
70,382
|
|
Accounts receivable
|
4,586
|
|
|
6,863
|
|
||
Deferred income taxes
|
4,459
|
|
|
4,962
|
|
||
Prepaid expenses and other current assets
|
8,364
|
|
|
7,647
|
|
||
Total current assets
|
124,464
|
|
|
89,854
|
|
||
Property and equipment, net
|
10,283
|
|
|
10,594
|
|
||
Deferred income taxes
|
4,569
|
|
|
6,141
|
|
||
Other assets
|
5,518
|
|
|
5,195
|
|
||
Intangible assets, net
|
7,496
|
|
|
11,595
|
|
||
Goodwill
|
14,096
|
|
|
14,096
|
|
||
Total assets
|
$
|
166,426
|
|
|
$
|
137,475
|
|
|
|
|
|
||||
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
4,381
|
|
|
$
|
4,153
|
|
Accrued compensation and benefits
|
10,291
|
|
|
7,235
|
|
||
Accrued marketing expenses
|
8,227
|
|
|
2,141
|
|
||
Deferred revenue
|
1,784
|
|
|
1,512
|
|
||
Other current liabilities
|
2,561
|
|
|
2,466
|
|
||
Total current liabilities
|
27,244
|
|
|
17,507
|
|
||
Non-current liabilities
|
6,165
|
|
|
5,873
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock
|
28
|
|
|
29
|
|
||
Additional paid-in capital
|
252,361
|
|
|
260,207
|
|
||
Treasury stock, at cost
|
(149,998
|
)
|
|
(178,254
|
)
|
||
Retained earnings
|
30,466
|
|
|
31,936
|
|
||
Accumulated other comprehensive income
|
160
|
|
|
177
|
|
||
Total stockholders’ equity
|
133,017
|
|
|
114,095
|
|
||
Total liabilities and stockholders’ equity
|
$
|
166,426
|
|
|
$
|
137,475
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2014
|
|
2013
|
|
2014
|
||||||||
Revenue
|
|
|
|
|
|
|
|
||||||||
Commission
|
$
|
34,942
|
|
|
$
|
38,526
|
|
|
$
|
73,193
|
|
|
$
|
84,103
|
|
Other
|
4,858
|
|
|
4,068
|
|
|
9,814
|
|
|
9,431
|
|
||||
Total revenue
|
39,800
|
|
|
42,594
|
|
|
83,007
|
|
|
93,534
|
|
||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
984
|
|
|
892
|
|
|
3,635
|
|
|
3,005
|
|
||||
Marketing and advertising
|
13,761
|
|
|
9,609
|
|
|
28,596
|
|
|
32,718
|
|
||||
Customer care and enrollment
|
7,812
|
|
|
8,984
|
|
|
14,978
|
|
|
18,697
|
|
||||
Technology and content
|
7,727
|
|
|
9,550
|
|
|
14,468
|
|
|
20,017
|
|
||||
General and administrative
|
7,132
|
|
|
6,857
|
|
|
14,651
|
|
|
15,151
|
|
||||
Amortization of intangible assets
|
353
|
|
|
354
|
|
|
707
|
|
|
708
|
|
||||
Total operating costs and expenses
|
37,769
|
|
|
36,246
|
|
|
77,035
|
|
|
90,296
|
|
||||
Income from operations
|
2,031
|
|
|
6,348
|
|
|
5,972
|
|
|
3,238
|
|
||||
Other expense, net
|
(21
|
)
|
|
(29
|
)
|
|
(46
|
)
|
|
(68
|
)
|
||||
Income before provision for income taxes
|
2,010
|
|
|
6,319
|
|
|
5,926
|
|
|
3,170
|
|
||||
Provision for income taxes
|
864
|
|
|
3,296
|
|
|
2,419
|
|
|
1,700
|
|
||||
Net income
|
$
|
1,146
|
|
|
$
|
3,023
|
|
|
$
|
3,507
|
|
|
$
|
1,470
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.06
|
|
|
$
|
0.16
|
|
|
$
|
0.18
|
|
|
$
|
0.08
|
|
Diluted
|
$
|
0.06
|
|
|
$
|
0.15
|
|
|
$
|
0.17
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of shares used in per share amounts:
|
|
|
|
|
|
|
|
||||||||
Basic
|
18,946
|
|
|
18,978
|
|
|
19,754
|
|
|
18,914
|
|
||||
Diluted
|
19,496
|
|
|
19,775
|
|
|
20,324
|
|
|
19,821
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
1,146
|
|
|
$
|
3,023
|
|
|
$
|
3,507
|
|
|
$
|
1,470
|
|
Foreign currency translation adjustment
|
(15
|
)
|
|
1
|
|
|
(18
|
)
|
|
17
|
|
||||
Comprehensive income
|
$
|
1,131
|
|
|
$
|
3,024
|
|
|
$
|
3,489
|
|
|
$
|
1,487
|
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2013
|
|
2014
|
||||
Operating activities
|
|
|
|
|
|
|
||
Net income
|
|
$
|
3,507
|
|
|
$
|
1,470
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||
Deferred income taxes
|
|
(3,449
|
)
|
|
(2,035
|
)
|
||
Depreciation and amortization
|
|
1,390
|
|
|
2,061
|
|
||
Amortization of book-of-business consideration
|
|
2,548
|
|
|
1,805
|
|
||
Amortization of intangible assets
|
|
707
|
|
|
708
|
|
||
Stock-based compensation expense
|
|
3,416
|
|
|
4,295
|
|
||
Deferred rent
|
|
827
|
|
|
34
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||
Accounts receivable
|
|
(866
|
)
|
|
(2,277
|
)
|
||
Prepaid expenses and other assets
|
|
(1,176
|
)
|
|
(1,073
|
)
|
||
Accounts payable
|
|
(1,541
|
)
|
|
(227
|
)
|
||
Accrued compensation and benefits
|
|
(530
|
)
|
|
(3,051
|
)
|
||
Accrued marketing expenses
|
|
(575
|
)
|
|
(6,086
|
)
|
||
Deferred revenue
|
|
887
|
|
|
(603
|
)
|
||
Other current liabilities
|
|
952
|
|
|
(123
|
)
|
||
Net cash provided by (used in) operating activities
|
|
6,097
|
|
|
(5,102
|
)
|
||
Investing activities
|
|
|
|
|
||||
Purchases of property and equipment
|
|
(3,821
|
)
|
|
(2,340
|
)
|
||
Purchase of intangible assets
|
|
—
|
|
|
(4,500
|
)
|
||
Net cash used in investing activities
|
|
(3,821
|
)
|
|
(6,840
|
)
|
||
Financing activities
|
|
|
|
|
||||
Net proceeds from exercise of common stock options
|
|
2,549
|
|
|
3,244
|
|
||
Cash used to net-share settle equity awards
|
|
(842
|
)
|
|
(3,355
|
)
|
||
Excess tax benefits from stock-based compensation
|
|
3,926
|
|
|
3,663
|
|
||
Repurchase of common stock
|
|
(59,007
|
)
|
|
(28,256
|
)
|
||
Principal payments in connection with capital leases
|
|
(26
|
)
|
|
(40
|
)
|
||
Net cash used in financing activities
|
|
(53,400
|
)
|
|
(24,744
|
)
|
||
|
|
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
|
(12
|
)
|
|
13
|
|
||
|
|
|
|
|
||||
Net decrease in cash and cash equivalents
|
|
(51,136
|
)
|
|
(36,673
|
)
|
||
Cash and cash equivalents at beginning of period
|
|
140,849
|
|
|
107,055
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
89,713
|
|
|
$
|
70,382
|
|
|
December 31, 2013
|
|
June 30, 2014
|
||||
Cash
|
$
|
16,935
|
|
|
$
|
33,761
|
|
Money market funds
|
90,120
|
|
|
36,621
|
|
||
Total cash and cash equivalents
|
$
|
107,055
|
|
|
$
|
70,382
|
|
|
December 31, 2013
|
|
June 30, 2014
|
||||
Accounts receivable - from other revenues
|
$
|
2,322
|
|
|
$
|
1,105
|
|
Commissions receivable
|
2,264
|
|
|
5,758
|
|
||
Total accounts receivable
|
$
|
4,586
|
|
|
$
|
6,863
|
|
|
December 31, 2013
|
|
June 30, 2014
|
|
Weighted Average Remaining Life
|
||||||||||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
June 30, 2014
|
||||||||||||
Technology
|
$
|
1,752
|
|
|
$
|
(1,277
|
)
|
|
$
|
475
|
|
|
$
|
1,752
|
|
|
$
|
(1,450
|
)
|
|
$
|
302
|
|
|
0.9 years
|
Pharmacy and customer relationships
|
10,410
|
|
|
(4,267
|
)
|
|
6,143
|
|
|
10,410
|
|
|
(4,757
|
)
|
|
5,653
|
|
|
5.8 years
|
||||||
Trade names, trademarks and website addresses
|
907
|
|
|
(336
|
)
|
|
571
|
|
|
907
|
|
|
(381
|
)
|
|
526
|
|
|
5.8 years
|
||||||
Total intangible
assets subject
to amortization
|
$
|
13,069
|
|
|
$
|
(5,880
|
)
|
|
7,189
|
|
|
$
|
13,069
|
|
|
$
|
(6,588
|
)
|
|
6,481
|
|
|
|
||
Indefinite-lived trademarks and domain names
|
|
|
|
|
307
|
|
|
|
|
|
|
5,114
|
|
|
Indefinite
|
||||||||||
Intangible
assets
|
|
|
|
|
$
|
7,496
|
|
|
|
|
|
|
$
|
11,595
|
|
|
|
Years Ending December 31,
|
Technology
|
|
Pharmacy and Customer Relationships
|
|
Trade Names, Trademarks and Website Address
|
|
Total
|
||||||||
2014 (six months)
|
172
|
|
|
489
|
|
|
46
|
|
|
707
|
|
||||
2015
|
118
|
|
|
979
|
|
|
91
|
|
|
1,188
|
|
||||
2016
|
5
|
|
|
979
|
|
|
91
|
|
|
1,075
|
|
||||
2017
|
5
|
|
|
979
|
|
|
91
|
|
|
1,075
|
|
||||
2018
|
2
|
|
|
959
|
|
|
91
|
|
|
1,052
|
|
||||
Thereafter
|
-
|
|
|
1,268
|
|
|
116
|
|
|
1,384
|
|
||||
Total
|
$
|
302
|
|
|
$
|
5,653
|
|
|
$
|
526
|
|
|
$
|
6,481
|
|
|
Shares Available for Grant
|
|
Shares available for grant December 31, 2013
|
4,085
|
|
Additional shares authorized (1)
|
751
|
|
Restricted stock units granted
|
(458
|
)
|
Options granted
|
(25
|
)
|
Restricted stock units cancelled
|
7
|
|
Options cancelled
|
15
|
|
2014 Equity Incentive Plan adjustment (2)
|
(98
|
)
|
Shares available for grant June 30, 2014
|
4,277
|
|
(1)
|
On January 1, 2014, the number of shares authorized for issuance under the 2006 Equity Incentive Plan was automatically increased pursuant to the terms of the 2006 Equity Incentive Plan.
|
(2)
|
On June 12, 2014, shares available for grant were adjusted to
4,500,000
pursuant to the terms of the 2014 Plan.
|
|
Number of Stock Options
|
|
Weighted Average Exercise Price
|
|
Weighted-Average Remaining Contractual Life (years)
|
|
Aggregate Intrinsic Value
(1)
|
|||||
Balance outstanding at December 31, 2013
|
1,979
|
|
|
$
|
17.91
|
|
|
4.20
|
|
$
|
56,569
|
|
Granted
|
25
|
|
|
$
|
44.43
|
|
|
|
|
|
|
|
Exercised
|
(198
|
)
|
|
$
|
16.32
|
|
|
|
|
$
|
5,946
|
|
Cancelled
|
(16
|
)
|
|
$
|
21.18
|
|
|
|
|
|
|
|
Balance outstanding at June 30, 2014
|
1,790
|
|
|
$
|
18.43
|
|
|
3.74
|
|
$
|
35,214
|
|
Vested and expected to vest at June 30, 2014
|
1,730
|
|
|
$
|
18.27
|
|
|
3.68
|
|
$
|
34,288
|
|
Exercisable at June 30, 2014
|
1,175
|
|
|
$
|
16.45
|
|
|
2.94
|
|
$
|
25,272
|
|
(1)
|
The aggregate intrinsic value is calculated as the difference between eHealth’s closing stock price as of December 31, 2013 and June 30, 2014 and the exercise price of in-the-money options as of those dates.
|
|
Number of Restricted Stock Units
(1)
|
|
Weighted-Average Grant Date Fair Value
|
|
Weighted-Average Remaining Contractual Life (years)
|
|
Aggregate Intrinsic Value
(2)
|
|||||
Balance outstanding as of December 31, 2013
|
779
|
|
|
$
|
19.57
|
|
|
2.30
|
|
$
|
36,220
|
|
Granted
|
458
|
|
|
40.78
|
|
|
|
|
|
|
||
Vested
|
(203
|
)
|
|
$
|
18.96
|
|
|
|
|
|
|
|
Cancelled
|
(7
|
)
|
|
$
|
19.33
|
|
|
|
|
|
|
|
Balance outstanding as of June 30, 2014
|
1,027
|
|
|
$
|
29.16
|
|
|
2.54
|
|
$
|
39,010
|
|
(1)
|
Includes restricted stock units with both service and performance-based vesting criteria granted to our executive officers.
|
(2)
|
The aggregate intrinsic value is calculated as eHealth’s closing stock price as of December 31, 2013 and June 30, 2014 multiplied by the number of restricted stock units outstanding as of December 31, 2013 and June 30, 2014, respectively.
|
|
Total Number of Shares Repurchased
|
|
Average Price Paid Per Share (3)
|
|
Amount of Repurchase
|
|||||
Cumulative balance at December 31, 2013 (1)
|
9,309,269
|
|
|
$
|
16.11
|
|
|
$
|
149,998
|
|
Repurchases of common stock during 2014
|
769,332
|
|
|
$
|
36.73
|
|
|
$
|
28,256
|
|
Cumulative balance at June 30, 2014 (2)
|
10,078,601
|
|
|
$
|
17.69
|
|
|
$
|
178,254
|
|
(1)
|
Cumulative balances at December 31, 2013 consist of shares repurchased in connection with our previous stock repurchase plans announced in 2013, 2012, 2011, 2010 and 2008.
|
(2)
|
Cumulative balances at June 30, 2014 consist of shares repurchased in connection with our stock repurchase program announced on March 31, 2014, as well as previous stock repurchase plans announced in 2013, 2012, 2011, 2010 and 2008.
|
(3)
|
Average price paid per share includes commissions.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2014
|
|
2013
|
|
2014
|
||||||||
Expected term
|
4.3 years
|
|
|
4.2 years
|
|
|
4.3 years
|
|
|
4.2 years
|
|
||||
Expected volatility
|
39.7
|
%
|
|
45.9
|
%
|
|
39.7
|
%
|
|
45.9
|
%
|
||||
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||||
Risk-free interest rate
|
0.62
|
%
|
|
1.42
|
%
|
|
0.62
|
%
|
|
1.42
|
%
|
||||
Weighted-average fair value
|
$
|
6.32
|
|
|
$
|
17.01
|
|
|
$
|
6.32
|
|
|
$
|
17.01
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2014
|
|
2013
|
|
2014
|
||||||||
Common stock options
|
$
|
656
|
|
|
$
|
564
|
|
|
$
|
1,448
|
|
|
$
|
1,206
|
|
Restricted stock units
|
1,126
|
|
|
1,286
|
|
|
1,968
|
|
|
3,089
|
|
||||
Total stock-based compensation expense
|
$
|
1,782
|
|
|
$
|
1,850
|
|
|
$
|
3,416
|
|
|
$
|
4,295
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2014
|
|
2013
|
|
2014
|
||||||||
Marketing and advertising
|
$
|
470
|
|
|
$
|
579
|
|
|
$
|
929
|
|
|
$
|
1,236
|
|
Customer care and enrollment
|
81
|
|
|
71
|
|
|
169
|
|
|
167
|
|
||||
Technology and content
|
385
|
|
|
429
|
|
|
704
|
|
|
991
|
|
||||
General and administrative
|
846
|
|
|
771
|
|
|
1,614
|
|
|
1,901
|
|
||||
Total stock-based compensation expense
|
$
|
1,782
|
|
|
$
|
1,850
|
|
|
$
|
3,416
|
|
|
$
|
4,295
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2014
|
|
2013
|
|
2014
|
||||||||
Income before provision for income taxes
|
$
|
2,010
|
|
|
$
|
6,319
|
|
|
$
|
5,926
|
|
|
$
|
3,170
|
|
Provision for income taxes
|
$
|
864
|
|
|
$
|
3,296
|
|
|
$
|
2,419
|
|
|
$
|
1,700
|
|
Effective tax rate
|
43.0
|
%
|
|
52.2
|
%
|
|
40.8
|
%
|
|
53.6
|
%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2013
|
|
2014
|
|
2013
|
|
2014
|
||||||||
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income allocated to common stock
|
$
|
1,146
|
|
|
$
|
3,023
|
|
|
$
|
3,507
|
|
|
$
|
1,470
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Net weighted average number of common stock shares outstanding
|
18,946
|
|
|
18,978
|
|
|
19,754
|
|
|
18,914
|
|
||||
Net income per share—basic:
|
$
|
0.06
|
|
|
$
|
0.16
|
|
|
$
|
0.18
|
|
|
$
|
0.08
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income allocated to common stock
|
$
|
1,146
|
|
|
$
|
3,023
|
|
|
$
|
3,507
|
|
|
$
|
1,470
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net weighted average number of common stock shares outstanding
|
18,946
|
|
|
18,978
|
|
|
19,754
|
|
|
18,914
|
|
||||
Weighted average number of options
|
445
|
|
|
623
|
|
|
453
|
|
|
702
|
|
||||
Weighted average number of restricted stock units
|
105
|
|
|
174
|
|
|
117
|
|
|
205
|
|
||||
Total common stock shares used in diluted per share calculation
|
19,496
|
|
|
19,775
|
|
|
20,324
|
|
|
19,821
|
|
||||
Net income per share—diluted:
|
$
|
0.06
|
|
|
$
|
0.15
|
|
|
$
|
0.17
|
|
|
$
|
0.07
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2013
|
|
2014
|
|
2013
|
|
2014
|
||||
Common stock options
|
290
|
|
|
130
|
|
|
312
|
|
|
27
|
|
Restricted share units
|
12
|
|
|
65
|
|
|
6
|
|
|
—
|
|
Total
|
302
|
|
|
195
|
|
|
318
|
|
|
27
|
|
|
As of
|
|
As of
|
||||
|
December 31, 2013
|
|
June 30, 2014
|
||||
United States
|
$
|
37,046
|
|
|
$
|
41,136
|
|
China
|
347
|
|
|
344
|
|
||
Total
|
$
|
37,393
|
|
|
$
|
41,480
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2013
|
|
2014
|
|
2013
|
|
2014
|
||||
Humana
|
17
|
%
|
|
21
|
%
|
|
20
|
%
|
|
24
|
%
|
WellPoint
(1)
|
13
|
%
|
|
11
|
%
|
|
12
|
%
|
|
11
|
%
|
UnitedHealthcare
(2)
|
11
|
%
|
|
9
|
%
|
|
11
|
%
|
|
10
|
%
|
Aetna
(3)
|
8
|
%
|
|
10
|
%
|
|
8
|
%
|
|
10
|
%
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended
|
|
Three Months Ended
|
||||
Key Metrics:
|
June 30, 2013
|
|
June 30, 2014
|
||||
Operating cash flows (1)
|
$
|
6,635,000
|
|
|
$
|
308,000
|
|
IFP submitted applications (2)
|
110,600
|
|
|
24,800
|
|
||
IFP approved members (3)
|
100,700
|
|
|
95,100
|
|
||
Total approved members (4)
|
190,400
|
|
|
208,000
|
|
||
Commission revenue (5)
|
$
|
34,942,000
|
|
|
$
|
38,526,000
|
|
Commission revenue per estimated member for the period (6)
|
$
|
32.58
|
|
|
$
|
30.40
|
|
|
As of
|
|
As of
|
||||
|
June 30, 2013
|
|
June 30, 2014
|
||||
IFP estimated membership (7)
|
748,000
|
|
|
751,000
|
|
||
Medicare estimated membership (8)
|
80,400
|
|
|
113,200
|
|
||
Other estimated membership (9)
|
263,000
|
|
|
384,600
|
|
||
Total estimated membership (10)
|
1,091,400
|
|
|
1,248,800
|
|
|
Three Months Ended
|
|
Three Months Ended
|
||
|
June 30, 2013
|
|
June 30, 2014
|
||
Source of IFP submitted applications (as a percentage of total IFP applications for the period):
|
|
|
|
|
|
Direct (11)
|
49
|
%
|
|
61
|
%
|
Marketing partners (12)
|
32
|
%
|
|
27
|
%
|
Online advertising (13)
|
19
|
%
|
|
12
|
%
|
Total
|
100
|
%
|
|
100
|
%
|
(1)
|
Net cash provided by operating activities for the period from the condensed consolidated statements of cash flows.
|
(2)
|
IFP applications submitted on eHealth’s website during the period. Applications are counted as submitted when the applicant completes the application, provides a method for payment and clicks the submit button on our website and submits the application to us. The applicant generally has additional actions to take before the application will be reviewed by the insurance carrier, such as providing additional information and providing an electronic signature. In addition, an applicant may submit more than one application. We include applications for IFP plans for which we receive commissions as well as other forms of payment. We define our “IFP” offerings as major medical individual and family health insurance plans, which does not include small business, short-term, stand-alone dental, life, accident or Medicare-related health insurance plans.
|
(3)
|
New IFP members reported to eHealth as approved during the period. Some members that are approved by a carrier do not accept the approval and therefore do not become paying members.
|
(4)
|
New members for all products reported to eHealth as approved during the period. Some members that are approved by a carrier do not accept the approval and therefore do not become paying members.
|
(5)
|
Commission revenue (from all sources) recognized during the period from the condensed consolidated statements of comprehensive income.
|
(6)
|
Calculated as commission revenue recognized during the period (see note (5) above) divided by average estimated membership for the period (calculated as beginning and ending estimated membership for all plans for the period, divided by two).
|
(7)
|
Estimated number of members active on IFP insurance policies as of the date indicated.
|
(8)
|
Estimated number of members active on Medicare-related insurance policies as of the date indicated.
|
(9)
|
Estimated number of members active on insurance policies other than IFP and Medicare-related policies as of the date indicated.
|
(10)
|
Estimated number of members active on all insurance policies, including Medicare-related policies, as of the date indicated.
|
(11)
|
Percentage of IFP submitted applications from applicants who came directly to the eHealth website through algorithmic search engine results or otherwise. See note (2) above for further information as to what constitutes a submitted application.
|
(12)
|
Percentage of IFP submitted applications from applicants sourced through eHealth’s network of marketing partners. See note (2) above for further information as to what constitutes a submitted application.
|
(13)
|
Percentage of IFP submitted applications from applicants sourced through paid search and other online advertising activities. See note (2) above for further information as to what constitutes a submitted application.
|
•
|
Historically, to calculate the estimated number of members active on individual and family health insurance policies, we take the sum of (i) the number of individual and family health insurance members for whom we have received or applied a commission payment for the month that is six months prior to the date of estimation (after reducing that number using historical experience for assumed member cancellations over the six-month period); and (ii) the number of approved members over the six-month period prior to the date of estimation (after reducing that number using historical experience for an assumed number of members who do not accept their approved policy and for estimated member cancellations through the date of the estimate). Historically, the percentage of our members who did not accept their approved policy remained relatively constant. However, for policies that were submitted in the quarter ended March 31, 2014, we have observed an increase in the number of members who ultimately did not accept their approved policies, compared to our historical experience. This lower acceptance rate was used to estimate the assumed number of members who did not accept their approved policy for the six months ended June 30, 2014. As a result, for the purpose of estimating the number of members active on individual and family plan insurance policies as of June 30, 2014, we have assumed and applied a higher percentage of members who do not accept their approved policy as compared to the assumption we used in prior periods. We also estimated a potentially higher membership churn as compared to historical levels on January 1, 2014 due to policy terminations on December 31, 2013 as a result of the Affordable Care Act. As a result, consistent with our estimation process for the quarter ended March 31, 2014, we have used January 1, 2014 (rather than December 31, 2013) as the beginning of our six-month period for purpose of estimating the number of members active on individual and family plan insurance policies as of June 30, 2014.
|
•
|
For ancillary insurance policies (such as short-term, dental, vision, and accident), we take the sum of (i) the number of members for whom we have received or applied a commission payment for the month that is one to three months prior to the date of estimation (after reducing that number using historical experience for assumed member cancellations over the one to three-month period); and (ii) the number of approved members over the one to three-month period prior to the date of estimation (after reducing that number using historical experience for an assumed number of members who do not accept their approved policy and for estimated member cancellations through the date of the estimate). The one to three-month period varies by insurance product and is largely dependent upon the timeliness of commission payment and related reporting from the related carriers.
|
•
|
For Medicare-related insurance policies, we take the number of members for whom we have received or applied a commission payment prior to the date of estimation (after reducing that number using historical experience for assumed member cancellations, including rapid disenrollment).
|
•
|
For small business health insurance policies, we estimate the number of members using the number of initial members at the time the group is approved, and we update this number for changes in membership if such changes are reported to us by the group or carrier in the period it is reported. However, groups generally notify the carrier directly of policy cancellations and increases or decreases in group size without informing us. Additionally, our carrier partners often do not communicate this information to us. We often are made aware of policy cancellations at the time of annual renewal and update our membership statistics accordingly in the period they are reported.
|
•
|
Revenue Recognition;
|
•
|
Stock-Based Compensation;
|
•
|
Realizability of Long-Lived Assets; and
|
•
|
Accounting for Income Taxes.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||
|
2013
|
|
2014
|
|
2013
|
|
2014
|
||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commission
|
$
|
34,942
|
|
|
88
|
%
|
|
$
|
38,526
|
|
|
90
|
%
|
|
$
|
73,193
|
|
|
88
|
%
|
|
$
|
84,103
|
|
|
90
|
%
|
Other
|
4,858
|
|
|
12
|
|
|
4,068
|
|
|
10
|
|
|
9,814
|
|
|
12
|
|
|
9,431
|
|
|
10
|
|
||||
Total revenue
|
39,800
|
|
|
100
|
|
|
42,594
|
|
|
100
|
|
|
83,007
|
|
|
100
|
|
|
93,534
|
|
|
100
|
|
||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenue
|
984
|
|
|
2
|
|
|
892
|
|
|
2
|
|
|
3,635
|
|
|
4
|
|
|
3,005
|
|
|
3
|
|
||||
Marketing and advertising
|
13,761
|
|
|
35
|
|
|
9,609
|
|
|
23
|
|
|
28,596
|
|
|
34
|
|
|
32,718
|
|
|
35
|
|
||||
Customer care and enrollment
|
7,812
|
|
|
20
|
|
|
8,984
|
|
|
21
|
|
|
14,978
|
|
|
18
|
|
|
18,697
|
|
|
20
|
|
||||
Technology and content
|
7,727
|
|
|
19
|
|
|
9,550
|
|
|
22
|
|
|
14,468
|
|
|
17
|
|
|
20,017
|
|
|
21
|
|
||||
General and administrative
|
7,132
|
|
|
18
|
|
|
6,857
|
|
|
16
|
|
|
14,651
|
|
|
18
|
|
|
15,151
|
|
|
16
|
|
||||
Amortization of intangible assets
|
353
|
|
|
1
|
|
|
354
|
|
|
1
|
|
|
707
|
|
|
1
|
|
|
708
|
|
|
1
|
|
||||
Total operating costs and expenses
|
37,769
|
|
|
95
|
|
|
36,246
|
|
|
85
|
|
|
77,035
|
|
|
93
|
|
|
90,296
|
|
|
97
|
|
||||
Income from operations
|
2,031
|
|
|
5
|
|
|
6,348
|
|
|
15
|
|
|
5,972
|
|
|
7
|
|
|
3,238
|
|
|
3
|
|
||||
Other expense, net
|
(21
|
)
|
|
—
|
|
|
(29
|
)
|
|
—
|
|
|
(46
|
)
|
|
—
|
|
|
(68
|
)
|
|
—
|
|
||||
Income before provision for income taxes
|
2,010
|
|
|
5
|
|
|
6,319
|
|
|
15
|
|
|
5,926
|
|
|
7
|
|
|
3,170
|
|
|
3
|
|
||||
Provision for income taxes
|
864
|
|
|
2
|
|
|
3,296
|
|
|
8
|
|
|
2,419
|
|
|
3
|
|
|
1,700
|
|
|
2
|
|
||||
Net income
|
$
|
1,146
|
|
|
3
|
%
|
|
$
|
3,023
|
|
|
7
|
%
|
|
$
|
3,507
|
|
|
4
|
%
|
|
$
|
1,470
|
|
|
2
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2014
|
|
2013
|
|
2014
|
||||||||
Marketing and advertising
|
$
|
470
|
|
|
$
|
579
|
|
|
$
|
929
|
|
|
$
|
1,236
|
|
Customer care and enrollment
|
81
|
|
|
71
|
|
|
169
|
|
|
167
|
|
||||
Technology and content
|
385
|
|
|
429
|
|
|
704
|
|
|
991
|
|
||||
General and administrative
|
846
|
|
|
771
|
|
|
1,614
|
|
|
1,901
|
|
||||
Total stock-based compensation expense
|
$
|
1,782
|
|
|
$
|
1,850
|
|
|
$
|
3,416
|
|
|
$
|
4,295
|
|
|
Three Months Ended June 30,
|
|
Change
|
|
Six Months Ended June 30,
|
|
Change
|
||||||||||||||||||||||
|
2013
|
|
2014
|
|
$
|
|
%
|
|
2013
|
|
2014
|
|
$
|
|
%
|
||||||||||||||
Commission
|
$
|
34,942
|
|
|
$
|
38,526
|
|
|
$
|
3,584
|
|
|
10
|
%
|
|
$
|
73,193
|
|
|
$
|
84,103
|
|
|
$
|
10,910
|
|
|
15
|
%
|
Percentage of total revenue
|
88
|
%
|
|
90
|
%
|
|
|
|
|
|
|
|
88
|
%
|
|
90
|
%
|
|
|
|
|
|
|
||||||
Other
|
$
|
4,858
|
|
|
$
|
4,068
|
|
|
$
|
(790
|
)
|
|
(16
|
)%
|
|
$
|
9,814
|
|
|
$
|
9,431
|
|
|
$
|
(383
|
)
|
|
(4
|
)%
|
Percentage of total revenue
|
12
|
%
|
|
10
|
%
|
|
|
|
|
|
|
12
|
%
|
|
10
|
%
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
39,800
|
|
|
$
|
42,594
|
|
|
$
|
2,794
|
|
|
7
|
%
|
|
$
|
83,007
|
|
|
$
|
93,534
|
|
|
$
|
10,527
|
|
|
13
|
%
|
|
Three Months Ended June 30,
|
|
Change
|
|
Six Months Ended June 30,
|
|
Change
|
||||||||||||||||||||||
|
2013
|
|
2014
|
|
$
|
|
%
|
|
2013
|
|
2014
|
|
$
|
|
%
|
||||||||||||||
Cost of revenue
|
$
|
984
|
|
|
$
|
892
|
|
|
$
|
(92
|
)
|
|
(9
|
)%
|
|
$
|
3,635
|
|
|
$
|
3,005
|
|
|
$
|
(630
|
)
|
|
(17
|
)%
|
Percentage of total revenue
|
2
|
%
|
|
2
|
%
|
|
|
|
|
|
|
|
4
|
%
|
|
3
|
%
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Change
|
|
Six Months Ended June 30,
|
|
Change
|
||||||||||||||||||||||
|
2013
|
|
2014
|
|
$
|
|
%
|
|
2013
|
|
2014
|
|
$
|
|
%
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Marketing and advertising
|
$
|
13,761
|
|
|
$
|
9,609
|
|
|
$
|
(4,152
|
)
|
|
(30
|
)%
|
|
$
|
28,596
|
|
|
$
|
32,718
|
|
|
$
|
4,122
|
|
|
14
|
%
|
Percentage of total revenue
|
35
|
%
|
|
23
|
%
|
|
|
|
|
|
|
|
34
|
%
|
|
35
|
%
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Change
|
|
Six Months Ended June 30,
|
|
Change
|
||||||||||||||||||||||
|
2013
|
|
2014
|
|
$
|
|
%
|
|
2013
|
|
2014
|
|
$
|
|
%
|
||||||||||||||
Customer care and enrollment
|
$
|
7,812
|
|
|
$
|
8,984
|
|
|
$
|
1,172
|
|
|
15
|
%
|
|
$
|
14,978
|
|
|
$
|
18,697
|
|
|
$
|
3,719
|
|
|
25
|
%
|
Percentage of total revenue
|
20
|
%
|
|
21
|
%
|
|
|
|
|
|
|
|
18
|
%
|
|
20
|
%
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Change
|
|
Six Months Ended June 30,
|
|
Change
|
||||||||||||||||||||||
|
2013
|
|
2014
|
|
$
|
|
%
|
|
2013
|
|
2014
|
|
$
|
|
%
|
||||||||||||||
Technology and content
|
$
|
7,727
|
|
|
$
|
9,550
|
|
|
$
|
1,823
|
|
|
24
|
%
|
|
$
|
14,468
|
|
|
$
|
20,017
|
|
|
$
|
5,549
|
|
|
38
|
%
|
Percentage of total revenue
|
19
|
%
|
|
22
|
%
|
|
|
|
|
|
|
|
17
|
%
|
|
21
|
%
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Change
|
|
Six Months Ended June 30,
|
|
Change
|
||||||||||||||||||||||
|
2013
|
|
2014
|
|
$
|
|
%
|
|
2013
|
|
2014
|
|
$
|
|
%
|
||||||||||||||
General and administrative
|
$
|
7,132
|
|
|
$
|
6,857
|
|
|
$
|
(275
|
)
|
|
(4
|
)%
|
|
$
|
14,651
|
|
|
$
|
15,151
|
|
|
$
|
500
|
|
|
3
|
%
|
Percentage of total revenue
|
18
|
%
|
|
16
|
%
|
|
|
|
|
|
|
|
18
|
%
|
|
16
|
%
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Change
|
|
Six Months Ended June 30,
|
|
Change
|
||||||||||||||||||||||
|
2013
|
|
2014
|
|
$
|
|
%
|
|
2013
|
|
2014
|
|
$
|
|
%
|
||||||||||||||
Amortization of intangible assets
|
$
|
353
|
|
|
$
|
354
|
|
|
$
|
1
|
|
|
—
|
%
|
|
$
|
707
|
|
|
$
|
708
|
|
|
$
|
1
|
|
|
—
|
%
|
Percentage of total revenue
|
1
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
1
|
%
|
|
1
|
%
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Change
|
|
Six Months Ended June 30,
|
|
Change
|
||||||||||||||||||||||
|
2013
|
|
2014
|
|
$
|
|
%
|
|
2013
|
|
2014
|
|
$
|
|
%
|
||||||||||||||
Other expense, net
|
$
|
(21
|
)
|
|
$
|
(29
|
)
|
|
$
|
(8
|
)
|
|
38
|
%
|
|
$
|
(46
|
)
|
|
$
|
(68
|
)
|
|
$
|
(22
|
)
|
|
48
|
%
|
Percentage of total revenue
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|
|
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Change
|
|
Six Months Ended June 30,
|
|
Change
|
||||||||||||||||||||||
|
2013
|
|
2014
|
|
$
|
|
%
|
|
2013
|
|
2014
|
|
$
|
|
%
|
||||||||||||||
Provision for income taxes
|
$
|
864
|
|
|
$
|
3,296
|
|
|
$
|
2,432
|
|
|
281
|
%
|
|
$
|
2,419
|
|
|
$
|
1,700
|
|
|
$
|
(719
|
)
|
|
(30
|
)%
|
Percentage of total revenue
|
2
|
%
|
|
8
|
%
|
|
|
|
|
|
|
|
3
|
%
|
|
2
|
%
|
|
|
|
|
|
Total Number of Shares Repurchased
|
|
Average Price Paid Per Share (3)
|
|
Amount of Repurchase
|
|||||
Cumulative balance at December 31, 2013 (1)
|
9,309,269
|
|
|
$
|
16.11
|
|
|
$
|
149,998
|
|
Repurchases of common stock during 2014
|
769,332
|
|
|
$
|
36.73
|
|
|
$
|
28,256
|
|
Cumulative balance at June 30, 2014 (2)
|
10,078,601
|
|
|
$
|
17.69
|
|
|
$
|
178,254
|
|
(1)
|
Cumulative balances at December 31, 2013 consist of shares repurchased in connection with our previous stock repurchase plans announced in 2013, 2012, 2011, 2010 and 2008.
|
(2)
|
Cumulative balances at June 30, 2014 consist of shares repurchased in connection with our stock repurchase program announced on March 31, 2014, as well as previous stock repurchase plans announced in 2013, 2012, 2011, 2010 and 2008.
|
(3)
|
Average price paid per share includes commissions.
|
|
Six Months Ended June 30,
|
||||||
|
2013
|
|
2014
|
||||
|
|
|
|
||||
Net cash provided by (used in) operating activities
|
$
|
6,097
|
|
|
$
|
(5,102
|
)
|
Net cash used in investing activities
|
$
|
(3,821
|
)
|
|
$
|
(6,840
|
)
|
Net cash used in financing activities
|
$
|
(53,400
|
)
|
|
$
|
(24,744
|
)
|
Years Ending December 31,
|
Operating Lease Obligations
|
|
Service and Licensing Obligations
|
|
Total Obligations
|
||||||
|
|
|
|
|
|
||||||
2014 (six months)
|
$
|
1,908
|
|
|
$
|
1,202
|
|
|
$
|
3,110
|
|
2015
|
2,752
|
|
|
605
|
|
|
3,357
|
|
|||
2016
|
2,798
|
|
|
417
|
|
|
3,215
|
|
|||
2017
|
2,777
|
|
|
209
|
|
|
2,986
|
|
|||
2018
|
1,938
|
|
|
—
|
|
|
1,938
|
|
|||
Thereafter
|
4,564
|
|
|
—
|
|
|
4,564
|
|
|||
Total
|
$
|
16,737
|
|
|
$
|
2,433
|
|
|
$
|
19,170
|
|
|
December 31, 2013
|
|
June 30, 2014
|
||||
|
|
|
|
||||
Cash
(1)
|
$
|
16,935
|
|
|
$
|
33,761
|
|
Money market funds
(2)
|
90,120
|
|
|
36,621
|
|
||
Total cash and cash equivalents
|
$
|
107,055
|
|
|
$
|
70,382
|
|
(1)
|
We deposit our cash and cash equivalents in accounts with major banks and financial institutions and such deposits are in excess of federally insured limits. We also have deposits with major banks in China that are denominated in both U.S. dollars and Chinese Renminbi and are not insured by the U.S. federal government.
|
(2)
|
At December 31, 2013 and June 30, 2014 money market funds consisted of U.S. government-sponsored enterprise bonds and discount notes, U.S. government treasury bills and notes and repurchase agreements collateralized by U.S. government obligations.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2013
|
|
2014
|
|
2013
|
|
2014
|
||||
|
|
|
|
|
|
|
|
||||
Humana
|
17
|
%
|
|
21
|
%
|
|
20
|
%
|
|
24
|
%
|
WellPoint
(1)
|
13
|
%
|
|
11
|
%
|
|
12
|
%
|
|
11
|
%
|
UnitedHealthcare
(2)
|
11
|
%
|
|
9
|
%
|
|
11
|
%
|
|
10
|
%
|
Aetna
(3)
|
8
|
%
|
|
10
|
%
|
|
8
|
%
|
|
10
|
%
|
(1)
|
Wellpoint includes other carriers owned by Wellpoint.
|
(2)
|
UnitedHealthcare includes other carriers owned by UnitedHealthcare.
|
(3)
|
Aetna also includes other carriers owned by Aetna.
|
•
|
our ability to continue to adapt our ecommerce platform to market Medicare plans, including our development or acquisition of marketing tools and features important in the sale of Medicare plans online and the modification of our existing user experience for new plans targeted at a different demographic;
|
•
|
our success in marketing our ecommerce platform to Medicare-eligible individuals and in entering into business development relationships to drive Medicare-eligible individuals to our ecommerce platform;
|
•
|
our effectiveness in entering into and maintaining relationships with marketing partners, including existing pharmacy chain partners that refer Medicare-eligible individuals to us;
|
•
|
our ability to hire and retain additional employees with experience in Medicare, including our ability to timely implement Medicare sales expertise into our customer care centers;
|
•
|
our ability to implement and maintain an effective information technology infrastructure for the sale of Medicare plans, including the infrastructure and systems that support our websites, call centers and call recording;
|
•
|
our ability to comply with the numerous, complex and changing laws and regulations and CMS guidelines relating to the marketing and sale of Medicare plans, including continuing to conform our online and offline sales processes to those laws and regulations; and
|
•
|
the effectiveness with which our competitors market the availability of Medicare plans from sources other than our ecommerce platform.
|
•
|
changes in consumer shopping behavior due to circumstances outside of our control, such as economic conditions, consumers’ ability or willingness to pay for health insurance, availability of unemployment benefits or proposed or enacted legislative or regulatory changes impacting our business, including health care reform;
|
•
|
the quality of and changes to the consumer experience on our ecommerce platform or with our customer care center;
|
•
|
regulatory requirements, including those that make the experience on our online platforms cumbersome or difficult to navigate;
|
•
|
the variety, competitiveness and affordability of the health insurance plans that we offer;
|
•
|
system failures or interruptions in the operation of our ecommerce platform or call center operations;
|
•
|
changes in the mix of consumers who are referred to us through our direct, marketing partner and online advertising member acquisition channels;
|
•
|
health insurance carriers offering the health insurance plans for which consumers have expressed interest, and the degree to which our technology is integrated with those carriers;
|
•
|
health insurance carrier guidelines applicable to applications submitted by consumers, the amount of time a carrier takes to make a decision on that application and the percentage of submitted applications approved by health insurance carriers;
|
•
|
the percentage of our members who did not accept their approved policies and whom we do not receive commission payments; and
|
•
|
our ability to enroll subsidy-eligible individuals in qualified health plans through government-run health insurance exchanges.
|
•
|
the growth of the Internet as a commerce medium generally, and as a market for consumer financial plans and services specifically;
|
•
|
consumers’ willingness to conduct their own health insurance research;
|
•
|
our ability to make the process of purchasing health insurance online an attractive alternative to traditional and new means of purchasing health insurance;
|
•
|
our ability to successfully and cost-effectively market our services as superior to traditional or alternative sources for health insurance to a sufficiently large number of consumers; and
|
•
|
health insurance carriers’ willingness to use us and the Internet as a distribution channel for health insurance plans.
|
•
|
the continued positive market presence, reputation and growth of the marketing partner;
|
•
|
the effectiveness of the marketing partner in marketing our website and services, including whether the marketing partner is successful in maintaining the prominence of its website in algorithmic search result listings and paid Internet advertisements;
|
•
|
the compliance of our marketing partners, and of the manner marketing partners refer consumers to our platforms, with applicable laws, regulations and guidelines;
|
•
|
the interest of the marketing partner’s customers in the health insurance plans that we offer on our ecommerce platform;
|
•
|
the contractual terms we negotiate with the marketing partner, including the marketing fees we agree to pay a marketing partner;
|
•
|
the percentage of the marketing partner’s customers that submit applications or purchase health insurance policies through our ecommerce platform;
|
•
|
the ability of a marketing partner to maintain efficient and uninterrupted operation of its website; and
|
•
|
our ability to work with the marketing partner to implement website changes, launch marketing campaigns and pursue other initiatives necessary to maintain positive consumer experiences and acceptable traffic volumes.
|
•
|
undertake more extensive marketing campaigns for their brands and services;
|
•
|
devote more resources to website and systems development;
|
•
|
negotiate more favorable commission rates and commission override payments; and
|
•
|
make more attractive offers to potential employees, marketing partners and third-party service providers.
|
•
|
an acquisition may negatively impact our results of operations because it will require us to incur transaction expenses, and after the transaction, may require us to incur charges and substantial debt or liabilities, may require the amortization, write down or impairment of amounts related to deferred compensation, goodwill and other intangible assets, or may cause adverse tax consequences, substantial depreciation or deferred compensation charges;
|
•
|
an acquisition undertaken for strategic business purposes may negatively impact our results of operations;
|
•
|
we may encounter difficulties in assimilating and integrating the business, technologies, products, personnel or operations of companies that we acquire, particularly if key personnel of the acquired company decide not to work for us;
|
•
|
an acquisition may disrupt our ongoing business, divert resources, increase our expenses and distract our management;
|
•
|
we may be required to implement or improve internal controls, procedures and policies appropriate for a public company at a business that prior to the acquisition lacked these controls, procedures and policies;
|
•
|
the acquired businesses, products or technologies may not generate sufficient revenue to offset acquisition costs or to maintain our financial results;
|
•
|
we may have to issue equity securities to complete an acquisition, which would dilute our stockholders’ ownership and could adversely affect the market price of our common stock; and
|
•
|
acquisitions may involve the entry into geographic or business markets in which we have little or no prior experience.
|
•
|
grant and revoke licenses to transact insurance business;
|
•
|
conduct inquiries into the insurance-related activities and conduct of agents and agencies;
|
•
|
require and regulate disclosure in connection with the sale and solicitation of health insurance;
|
•
|
authorize how, by which personnel and under what circumstances insurance premiums can be quoted and published and an insurance policy sold;
|
•
|
approve which entities can be paid commissions from carriers and the circumstances under which they may be paid;
|
•
|
regulate the content of insurance-related advertisements, including web pages, and other marketing practices;
|
•
|
approve policy forms, require specific benefits and benefit levels and regulate premium rates;
|
•
|
impose fines and other penalties; and
|
•
|
impose continuing education requirements.
|
•
|
price and volume fluctuations in the overall stock market from time to time;
|
•
|
significant volatility in the market price and trading volume of technology companies in general, and companies in our industry;
|
•
|
actual or anticipated changes in our results of operations or fluctuations in our operating results;
|
•
|
actual or anticipated changes in the expectations of investors or securities analysts, including changes in financial estimates or investment recommendations by securities analysts who follow our business and changes in perceptions relating to the economy;
|
•
|
speculation in the press or investment community;
|
•
|
technological advances or introduction of new products by us or our competitors;
|
•
|
actual or anticipated developments in our competitors’ businesses or the competitive landscape generally;
|
•
|
litigation involving us, our industry or both;
|
•
|
actual or anticipated regulatory developments in the United States or foreign countries, including health care reform legislation in the United States;
|
•
|
major catastrophic events;
|
•
|
announcements or developments relating to the economy;
|
•
|
our sale of common stock or other securities in the future;
|
•
|
the trading volume of our common stock, as well as sales of large blocks of our stock; or
|
•
|
departures of key personnel.
|
•
|
a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors;
|
•
|
cumulative voting in the election of directors is prohibited, which limits the ability of minority stockholders to elect director candidates;
|
•
|
the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;
|
•
|
the ability of our board of directors to determine to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror;
|
•
|
a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
|
•
|
the requirement that a special meeting of stockholders may be called only by the chairman of the board of directors, the chief executive officer or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and
|
•
|
advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us.
|
Period
|
Total Number of Shares Repurchased
|
|
Average Price Paid Per Share (1)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
|
|
Approximate Dollar Value of Shares that May Yet be Purchased under the Program
|
||||||
|
|
|
|
|
|
|
(in thousands)
|
||||||
Beginning repurchase authority
|
|
|
|
|
|
|
$
|
50,000
|
|
||||
April 1-30, 2014
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
50,000
|
|
May 1-31, 2014
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
50,000
|
|
June 1-30, 2014
|
769,332
|
|
|
$
|
36.73
|
|
|
769,332
|
|
|
$
|
21,744
|
|
Total as of June 30, 2014
|
769,332
|
|
|
$
|
36.73
|
|
|
769,332
|
|
|
$
|
21,744
|
|
(1)
|
Average price paid per share includes commissions.
|
Dates
|
|
Monthly Base Rent Per Square Foot
|
|
Monthly Base Rent
|
||||
January 15, 2015 to December 31, 2015
|
|
$
|
1.92
|
|
|
$
|
96,330
|
|
January 1, 2016 to December 31, 2016
|
|
$
|
1.97
|
|
|
$
|
98,839
|
|
January 1, 2017 to December 31, 2017
|
|
$
|
2.02
|
|
|
$
|
101,348
|
|
January 1, 2018 to December 31, 2018
|
|
$
|
2.07
|
|
|
$
|
103,856
|
|
|
/s/ Gary L. Lauer
|
|
|
Gary L. Lauer
|
|
|
Chief Executive Officer
|
|
|
(
Duly Authorized Officer on
Behalf of the
Registrant
)
|
|
|
/s/ Stuart M. Huizinga
|
|
|
Stuart M. Huizinga
|
|
|
Chief Financial Officer
|
|
|
(Principal
Financial Officer)
|
|
1.
|
Premises
.
The existing Premises is hereby confirmed to consist of approximately thirty-eight thousand, eight hundred ninety seven (38,897) rentable square feet on the first and second floors of the Building (“
Existing Premises
”). The Tenant has elected to expand the existing Premises to include Suite 180 on the first floor (“
Suite 180
”) which is approximately 5,841 rentable square feet and Suite 290 on the second floor (“
Suite 290
”) which is approximately 5,434 rentable square feet for a total of an additional approximately 11,275 rentable square feet (collectively Suite 180 and Suite 290 are the “
Expansion Premises
”). The new premises will consist of the Existing Premises of 38,897 rentable square feet and the Expansion Premises of 11,275 rentable square feet for a total of 50,172 rentable square feet (collectively the “
New Premises
”).
|
2.
|
Lease Expiration Date and Extension of Term
.
The term of the Lease, is currently scheduled to expire on December 31, 2014. The Term of the Lease is hereby extended for four years, to begin on January 1, 2015 and to expire on December 31, 2018. (“
Extended Term
”). Suite 180 will be completed and available for occupancy by Tenant on October 1, 2014. Suite 290 and the improvements to the Existing Premises will be completed by January 15, 2015 and available for occupancy by Tenant.
|
3.
|
Monthly Base Rent
.
The Base Rent for August 1, 2014 to September 30, 2014 will remain at $75,849.00 The Base Rent for October 1, 2014 to January 14, 2015 shall be $87,064 per month and will include the rent for the Existing Premises and Suite 180. The Base Rent during the Extended Term (pro-rating January rent) shall be as follows:
|
MONTHS
|
DATES
|
MONTHLY BASE RENT PER SQUARE FOOT
|
MONTHLY BASE RENT
|
1-12
|
1/15/15 to 12/31/15
|
$1.92
|
$96,330.00
|
13-24
|
1/1/16 to 12/31/16
|
$1.97
|
$98,839.00
|
25-36
|
1/1/17 to 12/31/17
|
$2.02
|
$101,348.00
|
37-48
|
1/1/18 to 12/31/18
|
2.07
|
$103,856.00
|
4.
|
Base Year
.
Effective as of the Lease Commencement Date for the Extended Term, the “Base Year” as defined in the Lease shall mean the calendar year 2014.
|
5.
|
Parking
.
The Tenant currently has access to 229 parking spaces of which 182 are provided free of charge and 52 require a monthly payment of $25.00 per space. The parking to be provided under the Lease during the Extended Term to Tenant at no charge will be 200 spaces at the Building (“
Base Parking
”). Additionally, Landlord will provide an additional 200 spaces (“
Extra Spaces
”) at either 12009 Foundation Place (“
Building B
”) in the same park and/or at a new parking lot to be built at the tributary point site as shown on Exhibit C attached hereto (“
Tributary Point Site
”) at no charge. The specific allocation of the Extra Spaces between Building B and the Tributary Point Site will be at Landlord’s sole discretion. In the event Landlord is unable to provide all 200 Extra Spaces at either 12009 Foundation Place or the Tributary Point Site upon the Lease Commencement Date for the Extended Term, then Landlord shall secure an alternate location for the remaining parking spaces (“
Alternate Location
”) for Tenant at no charge. In the event the Alternate Location is located further than a five-minute walking distance from the Building, then Landlord shall provide transportation to and from the Alternative Location to the Building at regular intervals at no charge. Effective on October 1, 2014, upon commencement of occupancy of Suite 180, Landlord shall provide an additional 40 spaces at no charge to Tenant. The specific location of said spaces shall be at Landlords sole discretion. The total parking effective January 1, 2015, shall be 400 spaces at no charge to Tenant as provided herein.
|
6.
|
Option(s) to Renew
.
Tenant is hereby granted an option to extend the Lease one time for a three (3) year term at the end of the Extended Term under the same terms and conditions as set forth in Section 40(d) of the Lease, i.e. Base Rent at 95% of fair market value. However, during the extended term the allotted Parking provided to the Tenant will be on a ratio of 4/1000 rentable square feet of space leased at the time of the renewal of the Lease. Landlord shall have no obligation to provide additional parking.
|
7.
|
Tenant Improvements
. Landlord, at Landlord’s sole cost and expense shall be responsible for all design and construction of the Tenant Improvements (as that term is used on the Lease) to be constructed in the Expansion Premises and improvements to the Existing Premises. The Parties hereto have approved the space plan for Suites 180 and 290 and the Existing Premises attached hereto as Exhibit A and incorporated herein, as well as the standard specifications for the Tenant Improvements as set forth on Exhibit B attached hereto and incorporated herein. The Tenant Improvements for Suite 180 shall be completed by October 1, 2014. The Tenant Improvements for the Existing Premises and Suite 290 shall be completed by January 15, 2015. Any additional costs for the Tenant Improvements caused by changes requested by Tenant after the Effective Date hereof or delays caused by Tenant will be paid for by Tenant.
|
1.
|
Right of First Refusal
. The Tenant will maintain its ongoing right of first refusal, per the terms of the Lease, to have the right to lease any space that becomes available in the Building.
|
2.
|
Force Majeure
. In the event Landlord, is delayed, interrupted or prevented from performing any of its obligations under this Lease, and such delay, interruption or prevention is due to fire, act of God, failure of utility service provider to provide utility service, government regulation or restriction, governmental delay in issuing permits, approvals and inspections, weather which
|
3.
|
Capitalized Terms
. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Lease and its amendments.
|
11.
|
Defenses
. There are no existing defenses which Tenant has against the enforcement of the Lease by Landlord, and no offsets or credits against any amounts owned by Tenant pursuant to the Lease.
|
12.
|
Inconsistencies
. This Seventh Amendment is intended to modify the Lease and shall be deemed to amend any language in the Lease or its amendments which is contrary to the provisions set forth herein. Any covenant or provision of the Lease which is not inconsistent with this Seventh Amendment shall remain in full force and effect.
|
13.
|
Counterparts.
This Seventh Amendment may be executed in any number of counterparts all of which taken together shall constitute one and the same instrument. A facsimile signature on this Seventh Amendment shall be binding as an original.
|
14
|
Assignment
. Tenant has not made any prior assignment, hypothecation or pledge of the Lease or the rents due thereunder.
|
Legal Address:
|
1F Area A, Huaxun Building, Xiamen Software Park, Torch Hi-tech Zone
|
||||
Zip Code:
|
361005
|
Tel:
|
3929999
|
Fax:
|
3929888
|
Legal Representative:
|
|
Title:
|
Chairman of the Board
|
|
|
Bank Account:
|
Torch Sub-branch of China Merchants Bank
|
Account No:
|
[Account Number]
|
|
|
Legal Address:
|
9F Area A, Huaxun Building, Xiamen Software Park, Torch Hi-tech Zone
|
|
||||
Zip Code:
|
361000
|
Tel:
|
2517000
|
Fax: 02513555
|
|
|
Legal Representative:
|
|
Title:
|
|
|
|
|
Bank Account:
|
|
Account No:
|
|
|
|
1.
|
This agreement is an amendment to the Office Lease Contract executed on September 23, 2009 (and all appendices that both parties have been involved, including all renewal agreements and the Agreement of Assignment and Transfer) (collectively referred hereinafter as the “Original Contract”) and shall supplement the Original Contract.
|
2.
|
Effective September 15, 2013, Item 4 of the Original Contract shall be changed so that the rental price for the space provided by Party A shall be adjusted to RMB 47/㎡O per month. Item 5 of the Original Contract shall be changed so that the total rent will be RMB 58,792 per month. Item 6 of the Original Contract regarding the amount of deposit shall be changed to RMB 176,376. All other Items in the Original Contract shall remain unchanged.
|
3.
|
If Party A decides not to continue the lease with Party B, it needs to provide written notice to Party B 120 days in advance so that Party B will have sufficient time to search for appropriate office space. If Party B decides not to continue the lease with Party A, it also needs to provide 120 advance written notice to Party A.
|
4.
|
Any conflicts between this agreement and the Original Contract, this agreement shall prevail.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of eHealth, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
|
/s/ G
ARY
L. L
AUER
|
|
Gary L. Lauer
|
|
Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of eHealth, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
|
|
|
/s/ S
TUART
M. H
UIZINGA
|
|
Stuart M. Huizinga
|
|
Chief Financial Officer
|
(1)
|
The Form 10-Q, to which this certification is attached as Exhibit 32.1, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of eHealth, Inc.
|
/s/ G
ARY
L. L
AUER
|
Gary L. Lauer
|
Chief Executive Officer
|
August 8, 2014
|
(1)
|
The Form 10-Q, to which this certification is attached as Exhibit 32.2, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of eHealth, Inc.
|
/s/ S
TUART
M. H
UIZINGA
|
Stuart M. Huizinga
|
Chief Financial Officer
|
August 8, 2014
|