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 5.
|
|||||
Item 6.
|
|||||
|
|
December 31, 2014
|
|
September 30, 2015
|
||||
Assets
|
(Note 1)
|
|
(unaudited)
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
51,415
|
|
|
$
|
62,016
|
|
Accounts receivable
|
8,200
|
|
|
8,832
|
|
||
Deferred income taxes
|
386
|
|
|
386
|
|
||
Prepaid expenses and other current assets
|
6,474
|
|
|
7,265
|
|
||
Total current assets
|
66,475
|
|
|
78,499
|
|
||
Property and equipment, net
|
9,640
|
|
|
8,091
|
|
||
Other assets
|
5,679
|
|
|
4,419
|
|
||
Intangible assets, net
|
10,774
|
|
|
9,880
|
|
||
Goodwill
|
14,096
|
|
|
14,096
|
|
||
Total assets
|
$
|
106,664
|
|
|
$
|
114,985
|
|
|
|
|
|
||||
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
5,961
|
|
|
$
|
2,069
|
|
Accrued compensation and benefits
|
8,204
|
|
|
11,243
|
|
||
Accrued marketing expenses
|
8,707
|
|
|
1,296
|
|
||
Deferred revenue
|
869
|
|
|
3,684
|
|
||
Accrued restructuring charges
|
—
|
|
|
257
|
|
||
Other current liabilities
|
2,996
|
|
|
3,846
|
|
||
Total current liabilities
|
26,737
|
|
|
22,395
|
|
||
Non-current liabilities
|
6,449
|
|
|
5,817
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock
|
29
|
|
|
29
|
|
||
Additional paid-in capital
|
259,007
|
|
|
264,984
|
|
||
Treasury stock, at cost
|
(199,998
|
)
|
|
(199,998
|
)
|
||
Retained earnings
|
14,261
|
|
|
21,564
|
|
||
Accumulated other comprehensive income
|
179
|
|
|
194
|
|
||
Total stockholders’ equity
|
73,478
|
|
|
86,773
|
|
||
Total liabilities and stockholders’ equity
|
$
|
106,664
|
|
|
$
|
114,985
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2015
|
|
2014
|
|
2015
|
||||||||
Revenue
|
|
|
|
|
|
|
|
||||||||
Commission
|
$
|
36,164
|
|
|
$
|
34,942
|
|
|
$
|
120,267
|
|
|
$
|
130,157
|
|
Other
|
5,004
|
|
|
3,282
|
|
|
14,435
|
|
|
9,248
|
|
||||
Total revenue
|
41,168
|
|
|
38,224
|
|
|
134,702
|
|
|
139,405
|
|
||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
745
|
|
|
443
|
|
|
3,750
|
|
|
3,527
|
|
||||
Marketing and advertising
|
9,228
|
|
|
9,349
|
|
|
41,946
|
|
|
44,086
|
|
||||
Customer care and enrollment
|
9,695
|
|
|
9,462
|
|
|
28,392
|
|
|
28,981
|
|
||||
Technology and content
|
10,303
|
|
|
8,036
|
|
|
30,320
|
|
|
27,400
|
|
||||
General and administrative
|
7,077
|
|
|
7,749
|
|
|
22,228
|
|
|
23,237
|
|
||||
Restructuring charges
|
—
|
|
|
—
|
|
|
—
|
|
|
4,541
|
|
||||
Amortization of intangible assets
|
354
|
|
|
260
|
|
|
1,062
|
|
|
893
|
|
||||
Total operating costs and expenses
|
37,402
|
|
|
35,299
|
|
|
127,698
|
|
|
132,665
|
|
||||
Income from operations
|
3,766
|
|
|
2,925
|
|
|
7,004
|
|
|
6,740
|
|
||||
Other expense, net
|
(13
|
)
|
|
(27
|
)
|
|
(81
|
)
|
|
(50
|
)
|
||||
Income before provision for income taxes
|
3,753
|
|
|
2,898
|
|
|
6,923
|
|
|
6,690
|
|
||||
Provision (benefit) for income taxes
|
2,229
|
|
|
(737
|
)
|
|
3,929
|
|
|
(613
|
)
|
||||
Net income
|
$
|
1,524
|
|
|
$
|
3,635
|
|
|
$
|
2,994
|
|
|
$
|
7,303
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.09
|
|
|
$
|
0.20
|
|
|
$
|
0.16
|
|
|
$
|
0.41
|
|
Diluted
|
$
|
0.08
|
|
|
$
|
0.20
|
|
|
$
|
0.15
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of shares used in per share amounts:
|
|
|
|
|
|
|
|
||||||||
Basic
|
17,836
|
|
|
18,093
|
|
|
18,551
|
|
|
17,969
|
|
||||
Diluted
|
18,394
|
|
|
18,240
|
|
|
19,341
|
|
|
18,079
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
1,524
|
|
|
$
|
3,635
|
|
|
$
|
2,994
|
|
|
$
|
7,303
|
|
Foreign currency translation adjustment
|
1
|
|
|
10
|
|
|
18
|
|
|
15
|
|
||||
Comprehensive income
|
$
|
1,525
|
|
|
$
|
3,645
|
|
|
$
|
3,012
|
|
|
$
|
7,318
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2014
|
|
2015
|
||||
Operating activities
|
|
|
|
|
|
|
||
Net income
|
|
$
|
2,994
|
|
|
$
|
7,303
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||
Deferred income taxes
|
|
1,349
|
|
|
117
|
|
||
Depreciation and amortization
|
|
3,111
|
|
|
3,122
|
|
||
Amortization of internally-developed software
|
|
325
|
|
|
449
|
|
||
Amortization of book-of-business consideration
|
|
1,909
|
|
|
1,998
|
|
||
Amortization of intangible assets
|
|
1,062
|
|
|
893
|
|
||
Stock-based compensation expense
|
|
6,585
|
|
|
5,434
|
|
||
Deferred rent and other
|
|
69
|
|
|
63
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||
Accounts receivable
|
|
(1,292
|
)
|
|
(618
|
)
|
||
Prepaid expenses and other assets
|
|
(1,397
|
)
|
|
(1,150
|
)
|
||
Accounts payable
|
|
(1,612
|
)
|
|
(3,892
|
)
|
||
Accrued compensation and benefits
|
|
(2,155
|
)
|
|
3,037
|
|
||
Accrued marketing expenses
|
|
(5,763
|
)
|
|
(7,411
|
)
|
||
Deferred revenue
|
|
420
|
|
|
2,650
|
|
||
Accrued restructuring charges
|
|
—
|
|
|
489
|
|
||
Other liabilities
|
|
254
|
|
|
(12
|
)
|
||
Net cash provided by operating activities
|
|
5,859
|
|
|
12,472
|
|
||
Investing activities
|
|
|
|
|
||||
Purchases of property and equipment and other assets
|
|
(3,335
|
)
|
|
(2,335
|
)
|
||
Purchase of intangible assets
|
|
(4,500
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
|
(7,835
|
)
|
|
(2,335
|
)
|
||
Financing activities
|
|
|
|
|
||||
Net proceeds from exercise of common stock options
|
|
3,902
|
|
|
1,326
|
|
||
Cash used to net-share settle equity awards
|
|
(3,506
|
)
|
|
(824
|
)
|
||
Excess tax benefits from stock-based compensation
|
|
2,648
|
|
|
—
|
|
||
Repurchase of common stock
|
|
(50,000
|
)
|
|
—
|
|
||
Principal payments in connection with capital leases
|
|
(57
|
)
|
|
(57
|
)
|
||
Net cash (used in) provided by financing activities
|
|
(47,013
|
)
|
|
445
|
|
||
|
|
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
|
14
|
|
|
19
|
|
||
|
|
|
|
|
||||
Net (decrease) increase in cash and cash equivalents
|
|
(48,975
|
)
|
|
10,601
|
|
||
Cash and cash equivalents at beginning of period
|
|
107,055
|
|
|
51,415
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
58,080
|
|
|
$
|
62,016
|
|
|
December 31, 2014
|
|
September 30, 2015
|
||||
Cash
|
$
|
15,793
|
|
|
$
|
17,393
|
|
Money market funds
|
35,622
|
|
|
44,623
|
|
||
Total cash and cash equivalents
|
$
|
51,415
|
|
|
$
|
62,016
|
|
|
December 31, 2014
|
|
September 30, 2015
|
||||
Medicare renewal commission receivable
|
$
|
355
|
|
|
$
|
4,108
|
|
Accounts receivable - from other revenues
|
2,462
|
|
|
4,647
|
|
||
Other commissions receivable
|
5,383
|
|
|
77
|
|
||
Total accounts receivable
|
$
|
8,200
|
|
|
$
|
8,832
|
|
|
Shares Available for Grant
|
|
Shares available for grant December 31, 2014
|
4,164
|
|
Restricted stock units granted
|
(692
|
)
|
Options granted
|
(34
|
)
|
Restricted stock units cancelled (1)
|
122
|
|
Options cancelled (2)
|
15
|
|
Shares available for grant September 30, 2015
|
3,575
|
|
(1)
|
Restricted stock units cancelled does not include
66,000
restricted stock units cancelled under the 2006 Equity Incentive Plan, as our 2006 Equity Incentive Plan has been terminated with respect to the grant of additional awards.
|
(2)
|
Options cancelled does not include
272,000
stock options cancelled under the 2006 Equity Incentive Plan, as our 2006 Equity Incentive Plan has been terminated with respect to the grant of additional awards.
|
|
Number of Stock Options
(1)
|
|
Weighted Average Exercise Price
|
|
Weighted-Average Remaining Contractual Life (years)
|
|
Aggregate Intrinsic Value
(2)
|
|||||
Balance outstanding at December 31, 2014
|
1,724
|
|
|
$
|
18.50
|
|
|
3.31
|
|
$
|
12,884
|
|
Granted
|
34
|
|
|
$
|
11.37
|
|
|
|
|
|
|
|
Exercised
|
(136
|
)
|
|
$
|
9.72
|
|
|
|
|
|
||
Cancelled
|
(287
|
)
|
|
$
|
21.54
|
|
|
|
|
|
|
|
Balance outstanding at September 30, 2015
|
1,335
|
|
|
$
|
18.56
|
|
|
2.90
|
|
$
|
234
|
|
Vested and expected to vest at September 30, 2015
|
1,318
|
|
|
$
|
18.53
|
|
|
2.87
|
|
$
|
229
|
|
Exercisable at September 30, 2015
|
1,076
|
|
|
$
|
18.00
|
|
|
2.54
|
|
$
|
186
|
|
|
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, 2014
|
873
|
|
|
$
|
30.86
|
|
|
2.52
|
|
$
|
21,753
|
|
Granted
|
692
|
|
|
$
|
10.59
|
|
|
|
|
|
|
|
Vested
|
(211
|
)
|
|
$
|
24.20
|
|
|
|
|
|
|
|
Cancelled
|
(188
|
)
|
|
$
|
24.37
|
|
|
|
|
|
|
|
Balance outstanding as of September 30, 2015
|
1,166
|
|
|
$
|
21.08
|
|
|
2.71
|
|
$
|
14,940
|
|
(1)
|
Includes certain restricted stock units with both service and performance-based or market-based vesting criteria granted to our executive officers. There were no restricted stock units granted during the three months ended September 30, 2015.
|
(2)
|
The aggregate intrinsic value is calculated as eHealth’s closing stock price as of
December 31, 2014
and
September 30, 2015
multiplied by the number of restricted stock units outstanding as of
December 31, 2014
and
September 30, 2015
, respectively.
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2014
|
|
2015
|
||||
Expected term
|
|
4.2 years
|
|
|
4.3 years
|
|
||
Expected volatility
|
|
46.3
|
%
|
|
63.6
|
%
|
||
Expected dividend yield
|
|
—
|
%
|
|
—
|
%
|
||
Risk-free interest rate
|
|
1.40
|
%
|
|
1.15
|
%
|
||
Weighted-average fair value
|
|
$
|
15.50
|
|
|
$
|
5.70
|
|
Expected term
|
|
2.6 years
|
|
|
Expected volatility
|
|
64.7
|
%
|
|
Expected dividend yield
|
|
—
|
%
|
|
Risk-free interest rate
|
|
1.13
|
%
|
|
Weighted-average fair value
|
|
$
|
6.69
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2015
|
|
2014
|
|
2015
|
||||||||
Stock options
|
$
|
523
|
|
|
$
|
351
|
|
|
$
|
1,729
|
|
|
$
|
1,184
|
|
Restricted stock units
|
1,767
|
|
|
1,225
|
|
|
4,856
|
|
|
4,250
|
|
||||
Total stock-based compensation expense
|
$
|
2,290
|
|
|
$
|
1,576
|
|
|
$
|
6,585
|
|
|
$
|
5,434
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2015
|
|
2014
|
|
2015
|
||||||||
Marketing and advertising
|
$
|
721
|
|
|
$
|
461
|
|
|
$
|
1,957
|
|
|
$
|
1,498
|
|
Customer care and enrollment
|
116
|
|
|
110
|
|
|
283
|
|
|
366
|
|
||||
Technology and content
|
559
|
|
|
362
|
|
|
1,550
|
|
|
1,308
|
|
||||
General and administrative
|
894
|
|
|
643
|
|
|
2,795
|
|
|
2,149
|
|
||||
Restructuring charges
|
—
|
|
|
—
|
|
|
—
|
|
|
113
|
|
||||
Total stock-based compensation expense
|
$
|
2,290
|
|
|
$
|
1,576
|
|
|
$
|
6,585
|
|
|
$
|
5,434
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2015
|
|
2014
|
|
2015
|
||||||||
Income before provision for income taxes
|
$
|
3,753
|
|
|
$
|
2,898
|
|
|
$
|
6,923
|
|
|
$
|
6,690
|
|
Provision (benefit) for income taxes
|
$
|
2,229
|
|
|
$
|
(737
|
)
|
|
$
|
3,929
|
|
|
$
|
(613
|
)
|
Effective tax rate
|
59.4
|
%
|
|
(25.4
|
)%
|
|
56.8
|
%
|
|
(9.2
|
)%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2015
|
|
2014
|
|
2015
|
||||||||
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income allocated to common stock
|
$
|
1,524
|
|
|
$
|
3,635
|
|
|
$
|
2,994
|
|
|
$
|
7,303
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common stock shares outstanding
|
17,836
|
|
|
18,093
|
|
|
18,551
|
|
|
17,969
|
|
||||
Net income per share—basic:
|
$
|
0.09
|
|
|
$
|
0.20
|
|
|
$
|
0.16
|
|
|
$
|
0.41
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income allocated to common stock
|
$
|
1,524
|
|
|
$
|
3,635
|
|
|
$
|
2,994
|
|
|
$
|
7,303
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average number of common stock shares outstanding
|
17,836
|
|
|
18,093
|
|
|
18,551
|
|
|
17,969
|
|
||||
Weighted average number of options
|
445
|
|
|
42
|
|
|
616
|
|
|
29
|
|
||||
Weighted average number of restricted stock units
|
113
|
|
|
105
|
|
|
174
|
|
|
81
|
|
||||
Total common stock shares used in diluted per share calculation (1)
|
18,394
|
|
|
18,240
|
|
|
19,341
|
|
|
18,079
|
|
||||
Net income per share—diluted:
|
$
|
0.08
|
|
|
$
|
0.20
|
|
|
$
|
0.15
|
|
|
$
|
0.40
|
|
(1)
|
Total common stock shares used in the diluted per share calculation excludes market-based stock unit awards for which the related contingency had not been met as of September 30, 2015.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2014
|
|
2015
|
|
2014
|
|
2015
|
||||
Common stock options
|
219
|
|
|
1,205
|
|
|
127
|
|
|
1,313
|
|
Restricted stock units
|
669
|
|
|
218
|
|
|
352
|
|
|
339
|
|
Total
|
888
|
|
|
1,423
|
|
|
479
|
|
|
1,652
|
|
|
As of
|
|
As of
|
||||
|
December 31, 2014
|
|
September 30, 2015
|
||||
United States
|
$
|
39,752
|
|
|
$
|
36,051
|
|
China
|
437
|
|
|
435
|
|
||
Total
|
$
|
40,189
|
|
|
$
|
36,486
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2014
|
|
2015
|
|
2014
|
|
2015
|
||||
Humana
|
23
|
%
|
|
19
|
%
|
|
23
|
%
|
|
24
|
%
|
Anthem
(1)
|
11
|
%
|
|
10
|
%
|
|
11
|
%
|
|
10
|
%
|
UnitedHealthcare
(2)
|
10
|
%
|
|
11
|
%
|
|
10
|
%
|
|
10
|
%
|
Aetna
(3)
|
9
|
%
|
|
9
|
%
|
|
10
|
%
|
|
9
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2015
|
|
2014
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||
Employee termination costs
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,791
|
|
Non-cash employee termination costs - stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
113
|
|
||||
Facility and other termination costs
|
—
|
|
|
—
|
|
|
—
|
|
|
637
|
|
||||
Total restructuring charges
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,541
|
|
|
Nine Months Ended September 30, 2015
|
||||||||||||||
|
Beginning balance
|
|
Charges
|
|
Payments
|
|
Ending balance
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||
Employee termination costs
|
$
|
—
|
|
|
$
|
3,791
|
|
|
$
|
(3,779
|
)
|
|
$
|
12
|
|
Facility and other termination costs
|
—
|
|
|
637
|
|
|
(160
|
)
|
|
477
|
|
||||
Total restructuring liability
|
$
|
—
|
|
|
$
|
4,428
|
|
|
$
|
(3,939
|
)
|
|
$
|
489
|
|
Less: non-current restructuring charges associated with facilities
|
|
|
|
|
|
|
(232
|
)
|
|||||||
Restructuring charges liability - current
|
|
|
|
|
|
|
$
|
257
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
the number of applications for individual and family health insurance we submit to health insurance carriers;
|
•
|
the number of individuals applying for health insurance on submitted applications;
|
•
|
the rate at which the individuals and families on those applications turn into paying members;
|
•
|
the commission rates we receive for the plans that we sell; and
|
•
|
our membership retention.
|
|
Three Months Ended
|
|
Three Months Ended
|
||||
Key Metrics:
|
September 30, 2014
|
|
September 30, 2015
|
||||
Operating cash flows (1)
|
$
|
10,961,000
|
|
|
$
|
10,925,000
|
|
IFP submitted applications (2)
|
23,800
|
|
|
22,500
|
|
||
IFP approved members (3)
|
28,100
|
|
|
23,700
|
|
||
Total approved members (4)
|
130,000
|
|
|
111,400
|
|
||
Commission revenue (5)
|
$
|
36,164,000
|
|
|
$
|
34,942,000
|
|
Commission revenue per estimated member for the period (6)
|
$
|
30.05
|
|
|
$
|
31.15
|
|
|
As of
|
|
As of
|
||||
|
September 30, 2014
|
|
September 30, 2015
|
||||
IFP estimated membership (7)
|
653,700
|
|
|
518,000
|
|
||
Medicare estimated membership (8)
|
121,300
|
|
|
182,700
|
|
||
Other estimated membership (9)
|
383,100
|
|
|
397,400
|
|
||
Total estimated membership (10)
|
1,158,100
|
|
|
1,098,100
|
|
|
Three Months Ended
|
|
Three Months Ended
|
||
|
September 30, 2014
|
|
September 30, 2015
|
||
Source of IFP submitted applications (as a percentage of total IFP applications for the period):
|
|
|
|
|
|
Direct (11)
|
70
|
%
|
|
56
|
%
|
Marketing partners (12)
|
23
|
%
|
|
40
|
%
|
Online advertising (13)
|
7
|
%
|
|
4
|
%
|
Total
|
100
|
%
|
|
100
|
%
|
(1)
|
Net cash provided by operating activities for the period from the condensed consolidated statements of cash flows.
|
(2)
|
Individual and Family Plan ("IFP") health insurance 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 products 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 insurance policies as of the date indicated.
|
(9)
|
Estimated number of members active on insurance policies other than IFP and Medicare policies as of the date indicated.
|
(10)
|
Estimated number of members active on all insurance 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.
|
•
|
To calculate the estimated number of members active on individual and family plan insurance policies, we have taken the sum of (i) the number of IFP 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 which the experience for the period from April 1, 2014 to September 30, 2014 was used for the calculation of membership as of September 30, 2015) 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. For the purpose of estimating the number of members active on individual and family plan insurance policies as of September 30, 2015, we have applied the percentage of members who do not accept their approved policy from the same month of the previous year for each of the six months prior to the date of estimation.
|
•
|
For ancillary insurance policies (such as short-term, dental, vision, accident and student), 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 policy cancellation 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 September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2015
|
|
2014
|
|
2015
|
||||||||
Marketing and advertising
|
$
|
721
|
|
|
$
|
461
|
|
|
$
|
1,957
|
|
|
$
|
1,498
|
|
Customer care and enrollment
|
116
|
|
|
110
|
|
|
283
|
|
|
366
|
|
||||
Technology and content
|
559
|
|
|
362
|
|
|
1,550
|
|
|
1,308
|
|
||||
General and administrative
|
894
|
|
|
643
|
|
|
2,795
|
|
|
2,149
|
|
||||
Restructuring charges
|
—
|
|
|
—
|
|
|
—
|
|
|
113
|
|
||||
Total stock-based compensation expense
|
$
|
2,290
|
|
|
$
|
1,576
|
|
|
$
|
6,585
|
|
|
$
|
5,434
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2014
|
|
2015
|
|
$
|
|
%
|
|
2014
|
|
2015
|
|
$
|
|
%
|
||||||||||||||
Commission
|
$
|
36,164
|
|
|
$
|
34,942
|
|
|
$
|
(1,222
|
)
|
|
(3
|
)%
|
|
$
|
120,267
|
|
|
$
|
130,157
|
|
|
$
|
9,890
|
|
|
8
|
%
|
Percentage of total revenue
|
88
|
%
|
|
91
|
%
|
|
|
|
|
|
|
|
89
|
%
|
|
93
|
%
|
|
|
|
|
|
|
||||||
Other
|
$
|
5,004
|
|
|
$
|
3,282
|
|
|
$
|
(1,722
|
)
|
|
(34
|
)%
|
|
$
|
14,435
|
|
|
$
|
9,248
|
|
|
$
|
(5,187
|
)
|
|
(36
|
)%
|
Percentage of total revenue
|
12
|
%
|
|
9
|
%
|
|
|
|
|
|
|
11
|
%
|
|
7
|
%
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
41,168
|
|
|
$
|
38,224
|
|
|
$
|
(2,944
|
)
|
|
(7
|
)%
|
|
$
|
134,702
|
|
|
$
|
139,405
|
|
|
$
|
4,703
|
|
|
3
|
%
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2014
|
|
2015
|
|
$
|
|
%
|
|
2014
|
|
2015
|
|
$
|
|
%
|
||||||||||||||
Cost of revenue
|
$
|
745
|
|
|
$
|
443
|
|
|
$
|
(302
|
)
|
|
(41
|
)%
|
|
$
|
3,750
|
|
|
$
|
3,527
|
|
|
$
|
(223
|
)
|
|
(6
|
)%
|
Percentage of total revenue
|
2
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
2
|
%
|
|
3
|
%
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2014
|
|
2015
|
|
$
|
|
%
|
|
2014
|
|
2015
|
|
$
|
|
%
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Marketing and advertising
|
$
|
9,228
|
|
|
$
|
9,349
|
|
|
$
|
121
|
|
|
1
|
%
|
|
$
|
41,946
|
|
|
$
|
44,086
|
|
|
$
|
2,140
|
|
|
5
|
%
|
Percentage of total revenue
|
22
|
%
|
|
24
|
%
|
|
|
|
|
|
|
|
31
|
%
|
|
32
|
%
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2014
|
|
2015
|
|
$
|
|
%
|
|
2014
|
|
2015
|
|
$
|
|
%
|
||||||||||||||
Customer care and enrollment
|
$
|
9,695
|
|
|
$
|
9,462
|
|
|
$
|
(233
|
)
|
|
(2
|
)%
|
|
$
|
28,392
|
|
|
$
|
28,981
|
|
|
$
|
589
|
|
|
2
|
%
|
Percentage of total revenue
|
24
|
%
|
|
25
|
%
|
|
|
|
|
|
|
|
21
|
%
|
|
21
|
%
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2014
|
|
2015
|
|
$
|
|
%
|
|
2014
|
|
2015
|
|
$
|
|
%
|
||||||||||||||
Technology and content
|
$
|
10,303
|
|
|
$
|
8,036
|
|
|
$
|
(2,267
|
)
|
|
(22
|
)%
|
|
$
|
30,320
|
|
|
$
|
27,400
|
|
|
$
|
(2,920
|
)
|
|
(10
|
)%
|
Percentage of total revenue
|
25
|
%
|
|
21
|
%
|
|
|
|
|
|
|
|
23
|
%
|
|
20
|
%
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2014
|
|
2015
|
|
$
|
|
%
|
|
2014
|
|
2015
|
|
$
|
|
%
|
||||||||||||||
General and administrative
|
$
|
7,077
|
|
|
$
|
7,749
|
|
|
$
|
672
|
|
|
9
|
%
|
|
$
|
22,228
|
|
|
$
|
23,237
|
|
|
$
|
1,009
|
|
|
5
|
%
|
Percentage of total revenue
|
17
|
%
|
|
20
|
%
|
|
|
|
|
|
|
|
17
|
%
|
|
17
|
%
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2014
|
|
2015
|
|
$
|
|
%
|
|
2014
|
|
2015
|
|
$
|
|
%
|
||||||||||||||
Restructuring charges
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
$
|
4,541
|
|
|
$
|
4,541
|
|
|
100
|
%
|
Percentage of total revenue
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|
|
|
—
|
%
|
|
3
|
%
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2014
|
|
2015
|
|
$
|
|
%
|
|
2014
|
|
2015
|
|
$
|
|
%
|
||||||||||||||
Amortization of intangible assets
|
$
|
354
|
|
|
$
|
260
|
|
|
$
|
(94
|
)
|
|
(27
|
)%
|
|
$
|
1,062
|
|
|
$
|
893
|
|
|
$
|
(169
|
)
|
|
(16
|
)%
|
Percentage of total revenue
|
1
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
1
|
%
|
|
1
|
%
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2014
|
|
2015
|
|
$
|
|
%
|
|
2014
|
|
2015
|
|
$
|
|
%
|
||||||||||||||
Other expense, net
|
$
|
(13
|
)
|
|
$
|
(27
|
)
|
|
$
|
(14
|
)
|
|
108
|
%
|
|
$
|
(81
|
)
|
|
$
|
(50
|
)
|
|
$
|
31
|
|
|
(38
|
)%
|
Percentage of total revenue
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|
|
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2014
|
|
2015
|
|
$
|
|
%
|
|
2014
|
|
2015
|
|
$
|
|
%
|
||||||||||||||
Provision (benefit) for income taxes
|
$
|
2,229
|
|
|
$
|
(737
|
)
|
|
$
|
(2,966
|
)
|
|
(133
|
)%
|
|
$
|
3,929
|
|
|
$
|
(613
|
)
|
|
$
|
(4,542
|
)
|
|
(116
|
)%
|
Percentage of total revenue
|
5
|
%
|
|
(2
|
)%
|
|
|
|
|
|
|
|
3
|
%
|
|
—
|
%
|
|
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
2014
|
|
2015
|
||||
|
|
|
|
||||
Net cash provided by operating activities
|
$
|
5,859
|
|
|
$
|
12,472
|
|
Net cash used in investing activities
|
$
|
(7,835
|
)
|
|
$
|
(2,335
|
)
|
Net cash provided by (used in) financing activities
|
$
|
(47,013
|
)
|
|
$
|
445
|
|
Years Ending December 31,
|
Operating Lease Obligations
|
|
Service and Licensing Obligations
|
|
Total Obligations
|
||||||
|
|
|
|
|
|
||||||
2015 (three months)
|
$
|
1,268
|
|
|
$
|
288
|
|
|
$
|
1,556
|
|
2016
|
4,872
|
|
|
1,029
|
|
|
5,901
|
|
|||
2017
|
4,384
|
|
|
557
|
|
|
4,941
|
|
|||
2018
|
3,210
|
|
|
—
|
|
|
3,210
|
|
|||
2019
|
1,045
|
|
|
—
|
|
|
1,045
|
|
|||
Thereafter
|
3,520
|
|
|
—
|
|
|
3,520
|
|
|||
Total
|
$
|
18,299
|
|
|
$
|
1,874
|
|
|
$
|
20,173
|
|
|
December 31, 2014
|
|
September 30, 2015
|
||||
Cash
(1)
|
$
|
15,793
|
|
|
$
|
17,393
|
|
Money market funds
(2)
|
35,622
|
|
|
44,623
|
|
||
Total cash and cash equivalents
|
$
|
51,415
|
|
|
$
|
62,016
|
|
(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 Yuan Renminbi and are not insured by the U.S. federal government.
|
(2)
|
At December 31, 2014 and
September 30, 2015
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 September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2014
|
|
2015
|
|
2014
|
|
2015
|
||||
Humana
|
23
|
%
|
|
19
|
%
|
|
23
|
%
|
|
24
|
%
|
Anthem
(1)
|
11
|
%
|
|
10
|
%
|
|
11
|
%
|
|
10
|
%
|
UnitedHealthcare
(2)
|
10
|
%
|
|
11
|
%
|
|
10
|
%
|
|
10
|
%
|
Aetna
(3)
|
9
|
%
|
|
9
|
%
|
|
10
|
%
|
|
9
|
%
|
(1)
|
Anthem includes other carriers owned by Anthem.
|
(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 effective modification of our user experience;
|
•
|
our success in marketing 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 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 leverage technology in order to sell, and otherwise become more efficient at selling, Medicare-related plans over the telephone;
|
•
|
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.
|
•
|
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.
|
•
|
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 from 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 develop an effective process for purchasing health insurance over the Internet on smartphones, tablets and devices other than desktop or laptop computers;
|
•
|
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.
|
•
|
if we are unable to maintain successful relationships with our existing marketing partners, particularly marketing partners responsible for a significant number of our submitted applications;
|
•
|
if we fail to establish successful relationships with new marketing partners;
|
•
|
if we experience competition in our receipt of referrals from our high volume marketing partners; and
|
•
|
if we are required to pay increased amounts to our marketing partners.
|
•
|
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.
|
|
|
|
Incorporation by Reference Herein
|
|
Exhibit
Number
|
|
Description of Exhibit
|
Form
|
Date
|
10.1
|
†*
|
Form of Deferral Election for Newly Eligible Individual with Existing Awards
|
|
|
10.2
|
†*
|
Form of Deferral Election Form for Eligible Individual for Awards to be Granted in the Next Calendar Year
|
|
|
31.1
|
†
|
Certification of Gary L. Lauer, Chief Executive Officer of eHealth, Inc., pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.2
|
†
|
Certification of Stuart M. Huizinga, Chief Financial Officer of eHealth, Inc., pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.1
|
‡
|
Certification of Gary L. Lauer, Chief Executive Officer of eHealth, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.2
|
‡
|
Certification of Stuart M. Huizinga, Chief Financial Officer of eHealth, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
101.INS
|
**
|
XBRL Instance Document
|
|
|
101.SCH
|
**
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
**
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF
|
**
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB
|
**
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
**
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
/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)
|
|
|
|
|
Incorporation by Reference Herein
|
|
Exhibit
Number
|
|
Description of Exhibit
|
Form
|
Date
|
10.1
|
†*
|
Form of Deferral Election for Newly Eligible Individual with Existing Awards
|
|
|
10.2
|
†*
|
Form of Deferral Election Form for Eligible Individual for Awards to be Granted in the Next Calendar Year
|
|
|
31.1
|
†
|
Certification of Gary L. Lauer, Chief Executive Officer of eHealth, Inc., pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.2
|
†
|
Certification of Stuart M. Huizinga, Chief Financial Officer of eHealth, Inc., pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.1
|
‡
|
Certification of Gary L. Lauer, Chief Executive Officer of eHealth, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.2
|
‡
|
Certification of Stuart M. Huizinga, Chief Financial Officer of eHealth, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
101.INS
|
**
|
XBRL Instance Document
|
|
|
101.SCH
|
**
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
**
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF
|
**
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB
|
**
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
**
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
1.
|
Upon a Change of Control Event, your Separation Date, or your death, all Deferred Awards that have not yet been distributed to you will be automatically settled in full and immediately distributed in a single lump sum distribution.
|
2.
|
If a distribution hereunder is triggered because of your Separation Date and you are a “specified employee” within the meaning of Section 409A at the time of your Separation Date, then the distribution that you would otherwise be entitled to receive upon the Separation Date will not be
|
A.
|
I agree to all of the terms and conditions of this Election Form.
|
B.
|
I acknowledge that I have received and read a copy of each Plan’s prospectus and that I am familiar with the terms and provisions of each Plan.
|
C.
|
I agree to the right of the Administrator to amend or terminate this election at any time and for any reason, with or without notice; provided that such termination or amendment is performed in compliance with Section 409A (as determined by Company legal counsel in its sole and absolute discretion).
|
D.
|
I understand that the obligation of the Company to deliver any Deferred Awards is unfunded and that no assets of any kind have been segregated in a trust or otherwise set aside to satisfy any obligation under this Election Form. I also understand that any election to defer the settlement of any Eligible Awards pursuant to this Election Form will make me only a general, unsecured creditor of the Company.
|
E.
|
I understand that any amounts deferred will be taxable as ordinary income in the year settled, but may be subject to certain employment taxes in the year vested. Notwithstanding, I agree and understand that the Company does not guarantee in any way whatsoever the tax treatment of any deferrals or payments made under the Plans or this Election Form. I am solely will be responsible for all taxes and any other costs owed with respect to any deferrals or payments made with respect to my Eligible Awards.
|
F.
|
I agree that the Company has the right (but not the obligation) to withhold taxes from my Deferred Awards (including pursuant to net share withholding) as is necessary to satisfy any income tax withholding obligations upon settlement.
|
G.
|
I understand and agree that the Company will not be able to withhold employment taxes from my Deferred Awards (i.e., through net share withholding), and I will be obligated to pay the required amount in cash at the time they become due from my own personal funds. I hereby consent to having the Company withhold from other wages due to me if I do not make other arrangements (
e.g.
, writing a personal check) that are satisfactory to the Company to satisfy any employment tax withholding obligations upon vesting, but the Company will not be obligated to do so.
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H.
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I understand that the Company will be under no obligation to deliver any Deferred Awards subject to such award until any income and employment tax withholding obligations are satisfied and that if I fail to satisfy any such tax withholding obligations I may forfeit my right to receive the Shares subject to my Deferred Award.
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I.
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I understand that, upon receipt of any Deferred Awards, in addition to federal taxes, I may owe taxes to the state where I resided at the time of vesting in the Eligible Award and/or to the state where I reside when I receive the Deferred Awards, if different.
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J.
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I understand, acknowledge and agree that the Administrator has the discretion to make all determinations and decisions regarding any elections set forth on this Election Form.
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K.
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I understand that this Election Form and the elections made hereunder are intended to comply with the requirements of Section 409A so that none of the Deferred Awards issuable will be subject to the tax acceleration and additional penalty taxes imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. If applicable, I understand that I am solely responsible for any accelerated income taxes and additional taxes and tax penalties imposed by Section 409A.
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L.
|
I also understand that this Election Form and the elections made hereunder will in all respects be subject to the terms and conditions of the Plans, as applicable. Should any inconsistency exist between this Election Form, the Plan under which an Eligible Award was granted, the Award Agreement under
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Grant Number
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Total Shares Subject to Grant
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Unvested Shares Eligible for Deferral
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Participant’s Election to Defer
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RSU Grant Number: ______
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Yes [_]
No [_]
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PSU Grant Number: ______
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|
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Yes [_]
No [_]
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A.
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I agree to all of the terms and conditions of this Election Form.
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B.
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I acknowledge that I have received and read a copy of each Plan’s prospectus and that I am familiar with the terms and provisions of each Plan.
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C.
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I agree to the right of the Administrator to amend or terminate this election at any time and for any reason, with or without notice; provided that such termination or amendment is performed in compliance with Section 409A (as determined by Company legal counsel in its sole and absolute discretion).
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D.
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I understand that the obligation of the Company to deliver any Deferred Awards is unfunded and that no assets of any kind have been segregated in a trust or otherwise set aside to satisfy any obligation under this Election Form. I also understand that any election to defer the settlement of any Awards pursuant to this Election Form will make me only a general, unsecured creditor of the Company.
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E.
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I understand that any amounts deferred will be taxable as ordinary income in the year settled, but may be subject to certain employment taxes in the year vested. Notwithstanding, I agree and understand that the Company does not guarantee in any way whatsoever the tax treatment of any deferrals or payments made under the Plans or this Election Form. I am solely will be responsible for all taxes and any other costs owed with respect to any deferrals or payments made with respect to my Awards.
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F.
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I agree that the Company has the right (but not the obligation) to withhold taxes from my Deferred Awards (including pursuant to net share withholding) as is necessary to satisfy any income tax withholding obligations upon settlement.
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G.
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I understand and agree that the Company may not be able to, or may not elect to, withhold applicable employment taxes from my Deferred Awards (i.e., through net share withholding), and, if the Company does not withhold applicable employment taxes, I will be obligated to pay the required amount in cash at the time they become due from my own personal funds. I hereby consent to having the Company withhold from other wages due to me if I do not make other arrangements (
e.g.
, writing a personal check) that are satisfactory to the Company to satisfy any employment tax withholding obligations upon vesting, but the Company will not be obligated to do so.
|
H.
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I understand that the Company will be under no obligation to deliver any Deferred Awards subject to such award until any income and employment tax withholding obligations are satisfied and that if I fail to satisfy any such tax withholding obligations I may forfeit my right to receive the Shares subject to my Deferred Award.
|
I.
|
I understand that, upon receipt of any Deferred Awards, in addition to federal taxes, I may owe taxes to the state where I resided at the time of vesting in the Award and/or to the state where I reside when I receive the Deferred Awards, if different.
|
J.
|
I understand, acknowledge and agree that the Administrator has the discretion to make all determinations and decisions regarding any elections set forth on this Election Form.
|
K.
|
I understand that this Election Form and the elections made hereunder are intended to comply with the requirements of Section 409A so that none of the Deferred Awards issuable will be subject to the tax acceleration and additional penalty taxes imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. If applicable, I understand that I am solely responsible for any accelerated income taxes and additional taxes and tax penalties imposed by Section 409A.
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L.
|
I also understand that this Election Form and the elections made hereunder will in all respects be subject to the terms and conditions of the Plans, as applicable. Should any inconsistency exist between this Election Form, the Plan under which an Award was granted, the Award Agreement under which an Award was granted, and/or any applicable law, then the provisions of either the applicable law (including, but not limited to, Section 409A) or the applicable Plan will control, with the applicable Plan subordinated to the applicable law and the Award Agreement subordinated to this Election Form.
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1.
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I have reviewed this Quarterly Report on Form 10-Q of eHealth, Inc.;
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2.
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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;
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3.
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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;
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4.
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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
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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.
|
|
|
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|
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/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
|
November 6, 2015
|
(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
|
November 6, 2015
|