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
|
☐
|
|
|
|
Emerging growth 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,
|
|
September 30,
|
||||
|
2017
|
|
2018
|
||||
|
(Note 1)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
40,293
|
|
|
$
|
20,348
|
|
Accounts receivable
|
1,475
|
|
|
2,140
|
|
||
Commissions receivable - current
|
109,666
|
|
|
101,214
|
|
||
Prepaid expenses and other current assets
|
4,305
|
|
|
12,751
|
|
||
Total current assets
|
155,739
|
|
|
136,453
|
|
||
Commissions receivable - non-current
|
169,751
|
|
|
164,521
|
|
||
Property and equipment, net
|
4,705
|
|
|
7,011
|
|
||
Other assets
|
7,287
|
|
|
10,995
|
|
||
Intangible assets, net
|
7,540
|
|
|
12,796
|
|
||
Goodwill
|
14,096
|
|
|
40,233
|
|
||
Total assets
|
$
|
359,118
|
|
|
$
|
372,009
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
3,246
|
|
|
$
|
4,909
|
|
Accrued compensation and benefits
|
15,498
|
|
|
13,549
|
|
||
Accrued marketing expenses
|
4,693
|
|
|
3,058
|
|
||
Earnout liability - current
|
—
|
|
|
17,673
|
|
||
Other current liabilities
|
2,008
|
|
|
7,303
|
|
||
Total current liabilities
|
25,445
|
|
|
46,492
|
|
||
Earnout liability - non-current
|
—
|
|
|
16,327
|
|
||
Deferred income taxes - non-current
|
45,089
|
|
|
32,410
|
|
||
Other non-current liabilities
|
1,920
|
|
|
2,316
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock
|
30
|
|
|
31
|
|
||
Additional paid-in capital
|
281,706
|
|
|
295,408
|
|
||
Treasury stock, at cost
|
(199,998
|
)
|
|
(199,998
|
)
|
||
Retained earnings
|
204,725
|
|
|
178,894
|
|
||
Accumulated other comprehensive income
|
201
|
|
|
129
|
|
||
Total stockholders’ equity
|
286,664
|
|
|
274,464
|
|
||
Total liabilities and stockholders’ equity
|
$
|
359,118
|
|
|
$
|
372,009
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||
|
(Note 1)
|
|
|
|
(Note 1)
|
|
|
||||||||
Revenue
|
|
|
|
|
|
|
|
||||||||
Commission
|
$
|
29,539
|
|
|
$
|
33,613
|
|
|
$
|
100,827
|
|
|
$
|
104,966
|
|
Other
|
1,927
|
|
|
7,138
|
|
|
6,761
|
|
|
11,512
|
|
||||
Total revenue
|
31,466
|
|
|
40,751
|
|
|
107,588
|
|
|
116,478
|
|
||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
(9
|
)
|
|
170
|
|
|
228
|
|
|
473
|
|
||||
Marketing and advertising
|
13,383
|
|
|
16,148
|
|
|
42,678
|
|
|
45,756
|
|
||||
Customer care and enrollment
|
15,798
|
|
|
17,272
|
|
|
39,919
|
|
|
43,730
|
|
||||
Technology and content
|
8,354
|
|
|
7,740
|
|
|
24,358
|
|
|
23,368
|
|
||||
General and administrative
|
9,353
|
|
|
10,528
|
|
|
29,879
|
|
|
32,459
|
|
||||
Change in fair value of earnout liability
|
—
|
|
|
3,800
|
|
|
—
|
|
|
6,300
|
|
||||
Restructuring charges
|
—
|
|
|
—
|
|
|
—
|
|
|
1,865
|
|
||||
Acquisition costs
|
—
|
|
|
—
|
|
|
—
|
|
|
76
|
|
||||
Amortization of intangible assets
|
260
|
|
|
547
|
|
|
780
|
|
|
1,545
|
|
||||
Total operating costs and expenses
|
47,139
|
|
|
56,205
|
|
|
137,842
|
|
|
155,572
|
|
||||
Loss from operations
|
(15,673
|
)
|
|
(15,454
|
)
|
|
(30,254
|
)
|
|
(39,094
|
)
|
||||
Other income, net
|
300
|
|
|
296
|
|
|
875
|
|
|
776
|
|
||||
Loss before benefit from income taxes
|
(15,373
|
)
|
|
(15,158
|
)
|
|
(29,379
|
)
|
|
(38,318
|
)
|
||||
Benefit from income taxes
|
(13,197
|
)
|
|
(6,186
|
)
|
|
(26,777
|
)
|
|
(12,487
|
)
|
||||
Net loss
|
$
|
(2,176
|
)
|
|
$
|
(8,972
|
)
|
|
$
|
(2,602
|
)
|
|
$
|
(25,831
|
)
|
Net loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.12
|
)
|
|
$
|
(0.47
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(1.36
|
)
|
Diluted
|
$
|
(0.12
|
)
|
|
$
|
(0.47
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(1.36
|
)
|
Weighted-average number of shares used in per share amounts:
|
|
|
|
|
|
|
|
||||||||
Basic
|
18,565
|
|
|
19,236
|
|
|
18,473
|
|
|
19,059
|
|
||||
Diluted
|
18,565
|
|
|
19,236
|
|
|
18,473
|
|
|
19,059
|
|
||||
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
||||||
Net loss
|
$
|
(2,176
|
)
|
|
$
|
(8,972
|
)
|
|
$
|
(2,602
|
)
|
|
$
|
(25,831
|
)
|
Foreign currency translation adjustment, net of taxes
|
(7
|
)
|
|
(67
|
)
|
|
11
|
|
|
(72
|
)
|
||||
Comprehensive loss
|
$
|
(2,183
|
)
|
|
$
|
(9,039
|
)
|
|
$
|
(2,591
|
)
|
|
$
|
(25,903
|
)
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2018
|
||||
|
(Note 1)
|
|
|
||||
Operating activities
|
|
|
|
||||
Net loss
|
$
|
(2,602
|
)
|
|
$
|
(25,831
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
||||
Deferred income taxes
|
(25,337
|
)
|
|
(12,679
|
)
|
||
Depreciation and amortization
|
2,212
|
|
|
1,870
|
|
||
Amortization of internally developed software
|
1,055
|
|
|
1,583
|
|
||
Amortization of intangible assets
|
780
|
|
|
1,545
|
|
||
Stock-based compensation expense
|
6,948
|
|
|
9,475
|
|
||
Change in fair value of earnout liability
|
—
|
|
|
6,300
|
|
||
Other non-cash items
|
(90
|
)
|
|
387
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(1,542
|
)
|
|
(665
|
)
|
||
Commissions receivable
|
22,584
|
|
|
29,156
|
|
||
Prepaid expenses and other assets
|
(3,004
|
)
|
|
(8,209
|
)
|
||
Accounts payable
|
(1,552
|
)
|
|
1,513
|
|
||
Accrued compensation and benefits
|
(41
|
)
|
|
(2,081
|
)
|
||
Accrued marketing expenses
|
(5,251
|
)
|
|
(1,635
|
)
|
||
Deferred revenue
|
2,220
|
|
|
5,354
|
|
||
Accrued expense and other liabilities
|
(1,793
|
)
|
|
(595
|
)
|
||
Net cash (used in) provided by operating activities
|
(5,413
|
)
|
|
5,488
|
|
||
Investing activities
|
|
|
|
||||
Capitalized internal-use software and website development costs
|
(2,505
|
)
|
|
(4,344
|
)
|
||
Purchases of property and equipment and other assets
|
(1,483
|
)
|
|
(3,471
|
)
|
||
Acquisition of business, net of cash acquired
|
—
|
|
|
(14,929
|
)
|
||
Net cash used in investing activities
|
(3,988
|
)
|
|
(22,744
|
)
|
||
Financing activities
|
|
|
|
||||
Proceeds from exercise of common stock options
|
179
|
|
|
2,030
|
|
||
Cash used to net-share settle equity awards
|
(1,101
|
)
|
|
(3,398
|
)
|
||
Debt issuance cost payments
|
—
|
|
|
(1,172
|
)
|
||
Principal payments in connection with capital leases
|
(80
|
)
|
|
(78
|
)
|
||
Net cash used in financing activities
|
(1,002
|
)
|
|
(2,618
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
(1
|
)
|
|
(71
|
)
|
||
Net decrease in cash, cash equivalents, and restricted cash
|
(10,404
|
)
|
|
(19,945
|
)
|
||
Cash, cash equivalents, and restricted cash at beginning of period
|
61,781
|
|
|
40,293
|
|
||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
51,377
|
|
|
$
|
20,348
|
|
•
|
Identification of the contract, or contracts, with a customer.
A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance, and (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration.
|
•
|
Identification of the performance obligations in the contract.
Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract.
|
•
|
Determination of the transaction price.
The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer.
|
•
|
Allocation of the transaction price to the performance obligations in the contract.
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis.
|
•
|
Recognition of revenue when, or as, we satisfy a performance obligation.
We satisfy performance obligations either over time or at a point in time, as discussed in further detail below. Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised good or service to the customer.
|
|
Three and Nine Months Ended
|
||||
|
September 30,
|
||||
|
2017
|
|
2018
|
||
Medicare
|
|
|
|
||
Medicare Advantage
|
7
|
%
|
|
7
|
%
|
Medicare Supplement
|
5
|
%
|
|
5
|
%
|
Medicare Part D
|
5
|
%
|
|
5
|
%
|
|
|
|
|
||
Individual and Family
|
|
|
|
||
Non-Qualified Health Plans
|
15
|
%
|
|
15
|
%
|
Qualified Health Plans
|
20
|
%
|
|
20
|
%
|
|
|
|
|
||
Ancillary
|
10
|
%
|
|
10
|
%
|
|
|
|
|
||
Small Business
|
—
|
|
|
—
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||
Commission Revenue:
|
|
|
|
|
|
|
|
||||||||
Medicare
|
|
|
|
|
|
|
|
||||||||
Medicare Advantage
|
$
|
17,544
|
|
|
$
|
17,976
|
|
|
$
|
55,426
|
|
|
$
|
57,649
|
|
Medicare Supplement
|
3,442
|
|
|
7,358
|
|
|
10,242
|
|
|
18,305
|
|
||||
Medicare Part D
|
977
|
|
|
1,005
|
|
|
3,558
|
|
|
2,879
|
|
||||
Total Medicare
|
21,963
|
|
|
26,339
|
|
|
69,226
|
|
|
78,833
|
|
||||
Individual and Family
(1)
|
|
|
|
|
|
|
|
||||||||
Non-Qualified Health Plans
|
1,665
|
|
|
876
|
|
|
7,426
|
|
|
3,386
|
|
||||
Qualified Health Plans
|
323
|
|
|
1,169
|
|
|
6,089
|
|
|
5,006
|
|
||||
Total Individual and Family
|
1,988
|
|
|
2,045
|
|
|
13,515
|
|
|
8,392
|
|
||||
Ancillary
|
|
|
|
|
|
|
|
||||||||
Short-term
|
1,405
|
|
|
1,699
|
|
|
4,280
|
|
|
4,242
|
|
||||
Dental
|
960
|
|
|
245
|
|
|
3,810
|
|
|
1,611
|
|
||||
Vision
|
285
|
|
|
126
|
|
|
1,137
|
|
|
857
|
|
||||
Other
|
1,040
|
|
|
1,006
|
|
|
2,567
|
|
|
3,659
|
|
||||
Total Ancillary
|
3,690
|
|
|
3,076
|
|
|
11,794
|
|
|
10,369
|
|
||||
Small Business
|
1,506
|
|
|
1,697
|
|
|
4,962
|
|
|
5,828
|
|
||||
Commission Bonus
|
392
|
|
|
456
|
|
|
1,330
|
|
|
1,544
|
|
||||
Total Commission Revenue
|
29,539
|
|
|
33,613
|
|
|
100,827
|
|
|
104,966
|
|
||||
Other Revenue
|
1,927
|
|
|
7,138
|
|
|
6,761
|
|
|
11,512
|
|
||||
Total Revenue
|
$
|
31,466
|
|
|
$
|
40,751
|
|
|
$
|
107,588
|
|
|
$
|
116,478
|
|
(1)
|
We define our Individual and Family Plan offerings as major medical individual and family health insurance plans, which does not include Medicare-related, small business or ancillary plans. Individual and family health insurance plans include both Qualified and Non-Qualified plans. Qualified health plans are individual and family health insurance plans that meet the requirements of the Affordable Care Act and are offered through the government-run health insurance exchange in the relevant jurisdiction. Non-Qualified health plans are individual and family health insurance plans that meet the requirements of the Affordable Care Act and are not offered through the exchange in the relevant jurisdiction. Individuals that purchase Non-Qualified health plans cannot receive a subsidy in connection with the purchase of Non-Qualified plans.
|
|
Three Months Ended September 30, 2017
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||||
Statements of Operations
|
As
Reported |
|
ASC 606 Adoption Adjustment
|
|
As
Adjusted |
|
As
Reported |
|
ASC 606 Adoption Adjustment
|
|
As
Adjusted |
||||||||||||
Revenue
|
$
|
26,619
|
|
|
$
|
4,847
|
|
|
$
|
31,466
|
|
|
$
|
133,515
|
|
|
$
|
(25,927
|
)
|
|
$
|
107,588
|
|
Cost of revenue
|
$
|
176
|
|
|
$
|
(185
|
)
|
|
$
|
(9
|
)
|
|
$
|
2,009
|
|
|
$
|
(1,781
|
)
|
|
$
|
228
|
|
Other income, net
|
$
|
98
|
|
|
$
|
202
|
|
|
$
|
300
|
|
|
$
|
214
|
|
|
$
|
661
|
|
|
$
|
875
|
|
Provision (benefit) from income taxes
|
$
|
9
|
|
|
$
|
(13,206
|
)
|
|
$
|
(13,197
|
)
|
|
$
|
(1,439
|
)
|
|
$
|
(25,338
|
)
|
|
$
|
(26,777
|
)
|
Net income (loss)
|
$
|
(20,616
|
)
|
|
$
|
18,440
|
|
|
$
|
(2,176
|
)
|
|
$
|
(4,455
|
)
|
|
$
|
1,853
|
|
|
$
|
(2,602
|
)
|
Net income (loss) per diluted share
|
$
|
(1.11
|
)
|
|
$
|
0.99
|
|
|
$
|
(0.12
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
0.10
|
|
|
$
|
(0.14
|
)
|
|
Three Months Ended September 30, 2017
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||||
Segment Information
|
As
Reported |
|
ASC 606 Adoption Adjustment
|
|
As
Adjusted |
|
As
Reported |
|
ASC 606 Adoption Adjustment
|
|
As
Adjusted |
||||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Medicare segment revenue
|
$
|
10,682
|
|
|
$
|
12,317
|
|
|
$
|
22,999
|
|
|
$
|
79,670
|
|
|
$
|
(7,099
|
)
|
|
$
|
72,571
|
|
Individual, Family and Small Business segment revenue
|
15,937
|
|
|
(7,470
|
)
|
|
8,467
|
|
|
53,845
|
|
|
(18,828
|
)
|
|
35,017
|
|
||||||
Total revenue
|
$
|
26,619
|
|
|
$
|
4,847
|
|
|
$
|
31,466
|
|
|
$
|
133,515
|
|
|
$
|
(25,927
|
)
|
|
$
|
107,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Segment profit (loss)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Medicare segment profit (loss)
|
$
|
(18,058
|
)
|
|
$
|
12,262
|
|
|
$
|
(5,796
|
)
|
|
$
|
(2,470
|
)
|
|
$
|
(6,268
|
)
|
|
$
|
(8,738
|
)
|
Individual, Family and Small Business segment profit (loss)
|
6,824
|
|
|
(7,228
|
)
|
|
(404
|
)
|
|
26,307
|
|
|
(17,876
|
)
|
|
8,431
|
|
||||||
Total segment profit (loss)
|
$
|
(11,234
|
)
|
|
$
|
5,034
|
|
|
$
|
(6,200
|
)
|
|
$
|
23,837
|
|
|
$
|
(24,144
|
)
|
|
$
|
(307
|
)
|
Acquisition Consideration
|
|
||
Cash paid
|
$
|
15,000
|
|
Fair value of equity awards issued to GoMedigap members
(1)
|
5,595
|
|
|
Estimated fair value of earnout liability
|
27,700
|
|
|
|
$
|
48,295
|
|
Allocation
|
|
||
Cash and cash equivalents
|
$
|
71
|
|
Commission receivable - current
|
4,371
|
|
|
Prepaid expenses and other current assets
|
11
|
|
|
Commission receivable - non-current
|
11,103
|
|
|
Property and equipment, net
|
174
|
|
|
Accounts payable
|
(110
|
)
|
|
Accrued compensation and benefits
|
(132
|
)
|
|
Other current liabilities
|
(130
|
)
|
|
Net tangible assets acquired
|
15,357
|
|
|
Intangible assets
|
6,800
|
|
|
Goodwill
|
26,137
|
|
|
Total intangible assets acquired
|
32,938
|
|
|
Total net assets acquired
|
$
|
48,295
|
|
Level 1
|
Unadjusted quoted prices in active markets for identical assets or liabilities.
|
Level 2
|
Unadjusted quoted prices in active markets for similar assets or liabilities; or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs other than quoted prices that are observable for the asset or liability.
|
Level 3
|
Unobservable inputs for the asset or liability.
|
Technology
|
$
|
2,000
|
|
Trade names, trademarks and website addresses
|
4,800
|
|
|
Total intangible assets
|
$
|
6,800
|
|
|
December 31, 2017
|
|
September 30, 2018
|
||||
Cash
|
$
|
5,098
|
|
|
$
|
2,881
|
|
Money market funds
|
35,195
|
|
|
17,467
|
|
||
Total cash and cash equivalents
|
$
|
40,293
|
|
|
$
|
20,348
|
|
|
December 31, 2017
|
|
September 30, 2018
|
||||
Prepaid maintenance contracts
|
$
|
1,945
|
|
|
$
|
2,511
|
|
Prepaid insurance
|
490
|
|
|
1,215
|
|
||
Prepaid rent
|
311
|
|
|
502
|
|
||
Prepaid marketing
|
24
|
|
|
6,772
|
|
||
Other prepaid expenses
|
1,535
|
|
|
1,751
|
|
||
Total prepaid expenses and other current assets
|
$
|
4,305
|
|
|
$
|
12,751
|
|
|
December 31, 2017
|
|
September 30, 2018
|
||||||||||||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted-Average Remaining Life
|
||||||||||||
Technology
|
$
|
1,700
|
|
|
$
|
(1,700
|
)
|
|
$
|
—
|
|
|
$
|
3,700
|
|
|
$
|
(2,144
|
)
|
|
$
|
1,556
|
|
|
2.3 years
|
Pharmacy and customer relationships
|
10,100
|
|
|
(7,884
|
)
|
|
2,216
|
|
|
10,100
|
|
|
(8,596
|
)
|
|
1,504
|
|
|
1.6 years
|
||||||
Trade names, trademarks and website addresses
|
900
|
|
|
(690
|
)
|
|
210
|
|
|
5,700
|
|
|
(1,078
|
)
|
|
4,622
|
|
|
9.1 years
|
||||||
Total intangible assets subject to amortization
|
$
|
12,700
|
|
|
$
|
(10,274
|
)
|
|
2,426
|
|
|
$
|
19,500
|
|
|
$
|
(11,818
|
)
|
|
7,682
|
|
|
|
||
Indefinite-lived trademarks and domain names
|
|
|
|
|
5,114
|
|
|
|
|
|
|
5,114
|
|
|
Indefinite
|
||||||||||
Total intangible assets
|
|
|
|
|
$
|
7,540
|
|
|
|
|
|
|
$
|
12,796
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ending December 31,
|
Technology
|
|
Pharmacy and Customer Relationships
|
|
Trade Names, Trademarks and Website Addresses
|
|
Total
|
||||||||
2018
|
$
|
166
|
|
|
$
|
237
|
|
|
$
|
142
|
|
|
$
|
545
|
|
2019
|
667
|
|
|
950
|
|
|
570
|
|
|
2,187
|
|
||||
2020
|
667
|
|
|
317
|
|
|
510
|
|
|
1,494
|
|
||||
2021
|
56
|
|
|
—
|
|
|
480
|
|
|
536
|
|
||||
2022
|
—
|
|
|
—
|
|
|
480
|
|
|
480
|
|
||||
Thereafter
|
—
|
|
|
—
|
|
|
2,440
|
|
|
2,440
|
|
||||
Total
|
$
|
1,556
|
|
|
$
|
1,504
|
|
|
$
|
4,622
|
|
|
$
|
7,682
|
|
Level 1
|
|
Unadjusted quoted prices in active markets for identical assets or liabilities.
|
Level 2
|
|
Unadjusted quoted prices in active markets for similar assets or liabilities; unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability.
|
Level 3
|
|
Unobservable inputs for the asset or liability.
|
|
December 31, 2017
|
|
September 30, 2018
|
||||||||||||||||||||||||
|
Carrying Value
|
|
Level 1
|
|
Total
|
|
Carrying Value
|
|
Level 1
|
|
Level 3
|
|
Total
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Money market funds
|
$
|
35,195
|
|
|
$
|
35,195
|
|
|
$
|
35,195
|
|
|
$
|
17,467
|
|
|
$
|
17,467
|
|
|
$
|
—
|
|
|
$
|
17,467
|
|
Total assets measured and recorded at fair value
|
$
|
35,195
|
|
|
$
|
35,195
|
|
|
$
|
35,195
|
|
|
$
|
17,467
|
|
|
$
|
17,467
|
|
|
$
|
—
|
|
|
$
|
17,467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Earnout liability - current
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17,673
|
|
|
$
|
—
|
|
|
$
|
17,673
|
|
|
$
|
17,673
|
|
Earnout liability - non-current
|
—
|
|
|
—
|
|
|
—
|
|
|
16,327
|
|
|
—
|
|
|
16,327
|
|
|
16,327
|
|
|||||||
Total liabilities measured and recorded at fair value
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
34,000
|
|
|
$
|
—
|
|
|
$
|
34,000
|
|
|
$
|
34,000
|
|
|
Shares Available for Grant
|
|
Shares available for grant December 31, 2017
|
1,409
|
|
Restricted stock units granted
1
|
(562
|
)
|
Options granted
2
|
(227
|
)
|
Restricted stock units cancelled
3
|
152
|
|
Options cancelled
|
48
|
|
Shares available for grant September 30, 2018
|
820
|
|
(1)
|
Includes grants of restricted stock units with service, performance-based or market-based vesting criteria.
|
(2)
|
Includes grants of stock options with service, performance-based or market-based vesting criteria.
|
(3)
|
Includes cancelled restricted stock units with service, performance-based or market-based vesting criteria.
|
|
Number of Stock Options
1
|
|
Weighted Average Exercise Price
|
|
Weighted-Average Remaining Contractual Life (years)
|
|
Aggregate Intrinsic Value
2
|
|||||
Balance outstanding at December 31, 2017
|
983
|
|
|
$
|
17.38
|
|
|
4.6
|
|
$
|
2,522
|
|
Granted
|
227
|
|
|
$
|
19.95
|
|
|
|
|
|
||
Exercised
|
(136
|
)
|
|
$
|
15.53
|
|
|
|
|
|
|
|
Cancelled
|
(125
|
)
|
|
$
|
24.13
|
|
|
|
|
|
||
Balance outstanding at September 30, 2018
|
949
|
|
|
$
|
17.21
|
|
|
5.0
|
|
$
|
11,002
|
|
Vested and expected to vest at September 30, 2018
|
904
|
|
|
$
|
17.14
|
|
|
4.9
|
|
$
|
10,569
|
|
Exercisable at September 30, 2018
|
457
|
|
|
$
|
16.95
|
|
|
4.0
|
|
$
|
5,679
|
|
(1)
|
Includes certain stock options with service, performance-based or market-based vesting criteria.
|
(2)
|
The aggregate intrinsic value is calculated as the difference between the closing price of our common stock as of
December 31, 2017
and
September 30, 2018
and the exercise price multiply by number of in-the-money options.
|
|
Number of Restricted Stock Units
1
|
|
Weighted-Average Grant Date Fair Value
|
|
Weighted-Average Remaining Service Period
|
|
Aggregate Intrinsic Value
2
|
|||||
Unvested as of December 31, 2017
|
1,745
|
|
|
$
|
14.24
|
|
|
2.3
|
|
$
|
30,313
|
|
Granted
|
562
|
|
|
$
|
15.06
|
|
|
|
|
|
|
|
Vested
|
(423
|
)
|
|
$
|
12.87
|
|
|
|
|
|
|
|
Cancelled
|
(134
|
)
|
|
$
|
16.85
|
|
|
|
|
|
|
|
Unvested as of September 30, 2018
|
1,750
|
|
|
$
|
15.42
|
|
|
5.6
|
|
$
|
48,920
|
|
(1)
|
Includes certain restricted stock units with service, performance-based or market-based vesting criteria.
|
(2)
|
The aggregate intrinsic value is calculated as the product of our closing stock price as of
December 31, 2017
and
September 30, 2018
and the number of restricted stock units outstanding as of December 31, 2017 and
September 30, 2018
, respectively.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||
Common stock options
|
$
|
439
|
|
|
$
|
639
|
|
|
$
|
1,340
|
|
|
$
|
1,573
|
|
Restricted stock units
|
1,807
|
|
|
2,904
|
|
|
5,608
|
|
|
7,902
|
|
||||
Total stock-based compensation expense
|
$
|
2,246
|
|
|
$
|
3,543
|
|
|
$
|
6,948
|
|
|
$
|
9,475
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||
Marketing and advertising
|
$
|
284
|
|
|
$
|
545
|
|
|
$
|
719
|
|
|
$
|
1,477
|
|
Customer care and enrollment
|
131
|
|
|
194
|
|
|
267
|
|
|
565
|
|
||||
Technology and content
|
310
|
|
|
388
|
|
|
978
|
|
|
1,115
|
|
||||
General and administrative
|
1,521
|
|
|
2,416
|
|
|
4,984
|
|
|
6,067
|
|
||||
Restructuring
|
—
|
|
|
—
|
|
|
—
|
|
|
251
|
|
||||
Total stock-based compensation expense
|
$
|
2,246
|
|
|
$
|
3,543
|
|
|
$
|
6,948
|
|
|
$
|
9,475
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||
Loss before benefit from income taxes
|
$
|
(15,373
|
)
|
|
$
|
(15,158
|
)
|
|
$
|
(29,379
|
)
|
|
$
|
(38,318
|
)
|
Benefit from income taxes
|
$
|
(13,197
|
)
|
|
$
|
(6,186
|
)
|
|
$
|
(26,777
|
)
|
|
$
|
(12,487
|
)
|
Effective tax rate
|
85.8
|
%
|
|
40.8
|
%
|
|
91.1
|
%
|
|
32.6
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||
Basic and diluted:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss
|
$
|
(2,176
|
)
|
|
$
|
(8,972
|
)
|
|
$
|
(2,602
|
)
|
|
$
|
(25,831
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of common stock shares outstanding
|
18,565
|
|
|
19,236
|
|
|
18,473
|
|
|
19,059
|
|
||||
Net loss per share:
|
$
|
(0.12
|
)
|
|
$
|
(0.47
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(1.36
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||
Common stock options
|
994
|
|
|
925
|
|
|
975
|
|
|
928
|
|
Restricted stock units
|
1,134
|
|
|
1,610
|
|
|
1,177
|
|
|
1,662
|
|
Total
|
2,128
|
|
|
2,535
|
|
|
2,152
|
|
|
2,590
|
|
For the Years Ending December 31,
|
Operating Lease Obligations
|
|
Service and Licensing Obligations
|
|
Total Obligations
|
||||||
2018
|
$
|
958
|
|
|
$
|
467
|
|
|
$
|
1,425
|
|
2019
|
4,820
|
|
|
2,900
|
|
|
7,720
|
|
|||
2020
|
5,209
|
|
|
1,531
|
|
|
6,740
|
|
|||
2021
|
3,766
|
|
|
—
|
|
|
3,766
|
|
|||
2022
|
3,878
|
|
|
—
|
|
|
3,878
|
|
|||
Thereafter
|
13,963
|
|
|
—
|
|
|
13,963
|
|
|||
Total
|
$
|
32,594
|
|
|
$
|
4,898
|
|
|
$
|
37,492
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||
Revenue
|
|
|
|
|
|
|
|
||||||||
Medicare
|
$
|
22,999
|
|
|
$
|
32,733
|
|
|
$
|
72,571
|
|
|
$
|
88,964
|
|
Individual, Family and Small Business
|
8,467
|
|
|
8,018
|
|
|
35,017
|
|
|
27,514
|
|
||||
Total revenue
|
$
|
31,466
|
|
|
$
|
40,751
|
|
|
$
|
107,588
|
|
|
$
|
116,478
|
|
|
|
|
|
|
|
|
|
||||||||
Segment profit (loss)
|
|
|
|
|
|
|
|
||||||||
Medicare segment profit (loss)
|
$
|
(5,796
|
)
|
|
$
|
467
|
|
|
$
|
(8,738
|
)
|
|
$
|
2,174
|
|
Individual, Family and Small Business segment profit (loss)
|
(404
|
)
|
|
(579
|
)
|
|
8,431
|
|
|
2,292
|
|
||||
Total segment profit (loss)
|
(6,200
|
)
|
|
(112
|
)
|
|
(307
|
)
|
|
4,466
|
|
||||
Corporate
|
(6,268
|
)
|
|
(6,832
|
)
|
|
(20,007
|
)
|
|
(22,680
|
)
|
||||
Stock-based compensation expense
|
(2,246
|
)
|
|
(3,543
|
)
|
|
(6,948
|
)
|
|
(9,224
|
)
|
||||
Depreciation and amortization
|
(699
|
)
|
|
(620
|
)
|
|
(2,212
|
)
|
|
(1,870
|
)
|
||||
Change in fair value of earnout liability
|
—
|
|
|
(3,800
|
)
|
|
—
|
|
|
(6,300
|
)
|
||||
Restructuring charges
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,865
|
)
|
||||
Acquisition costs
|
—
|
|
|
—
|
|
|
—
|
|
|
(76
|
)
|
||||
Amortization of intangible assets
|
(260
|
)
|
|
(547
|
)
|
|
(780
|
)
|
|
(1,545
|
)
|
||||
Other income, net
|
300
|
|
|
296
|
|
|
875
|
|
|
776
|
|
||||
Loss before benefit from income taxes
|
$
|
(15,373
|
)
|
|
$
|
(15,158
|
)
|
|
$
|
(29,379
|
)
|
|
$
|
(38,318
|
)
|
|
December 31,
|
|
September 30,
|
||||
|
2017
|
|
2018
|
||||
United States
|
$
|
11,211
|
|
|
$
|
17,270
|
|
China
|
550
|
|
|
502
|
|
||
Total
|
$
|
11,761
|
|
|
$
|
17,772
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 30,
|
|
September 30,
|
||||||||
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||
UnitedHealthcare
1
|
24
|
%
|
|
21
|
%
|
|
22
|
%
|
|
22
|
%
|
Humana
|
18
|
%
|
|
17
|
%
|
|
17
|
%
|
|
15
|
%
|
(1)
|
UnitedHealthcare also includes other carriers owned by UnitedHealthcare.
|
Employee termination costs
|
$
|
1,605
|
|
Non-cash employee termination costs - stock-based compensation
|
251
|
|
|
Other restructuring related costs
|
9
|
|
|
Total restructuring charges
|
$
|
1,865
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||
|
Beginning balance
|
|
Charges
|
|
Payments
|
|
Ending balance
|
||||||||
Employee termination costs
|
$
|
—
|
|
|
$
|
1,605
|
|
|
$
|
(1,575
|
)
|
|
$
|
30
|
|
Accrued restructuring charges - current
|
$
|
—
|
|
|
$
|
1,605
|
|
|
$
|
(1,575
|
)
|
|
$
|
30
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
the number of individuals on applications for Medicare-related, individual and family, small business and ancillary health insurance plans we submit to and are approved by the relevant health insurance carriers, and
|
•
|
the constrained lifetime value of approved members for Medicare-related, individual and family and ancillary health insurance plans we sell as well as the estimated annual value of approved members for small business plans we sell.
|
|
Submitted Applications
|
|
Submitted Applications
|
||||||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||
|
2017
|
|
2018
|
|
Percent Change
|
|
2017
|
|
2018
|
|
Percent Change
|
||||||
Medicare
(1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Medicare Advantage
|
21,010
|
|
|
21,115
|
|
|
—
|
%
|
|
65,880
|
|
|
69,060
|
|
|
5
|
%
|
Medicare Supplement
|
4,578
|
|
|
8,924
|
|
|
95
|
%
|
|
13,275
|
|
|
22,180
|
|
|
67
|
%
|
Medicare Part D
|
3,338
|
|
|
3,863
|
|
|
16
|
%
|
|
12,214
|
|
|
11,447
|
|
|
(6
|
)%
|
Total Medicare
|
28,926
|
|
|
33,902
|
|
|
17
|
%
|
|
91,369
|
|
|
102,687
|
|
|
12
|
%
|
Individual and Family
(2)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-Qualified Health Plans
|
4,041
|
|
|
1,224
|
|
|
(70
|
)%
|
|
22,403
|
|
|
6,419
|
|
|
(71
|
)%
|
Qualified Health Plans
|
1,086
|
|
|
438
|
|
|
(60
|
)%
|
|
10,160
|
|
|
4,159
|
|
|
(59
|
)%
|
Total Individual and Family
|
5,127
|
|
|
1,662
|
|
|
(68
|
)%
|
|
32,563
|
|
|
10,578
|
|
|
(68
|
)%
|
Ancillary
(3)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Short-term
|
26,527
|
|
|
30,365
|
|
|
14
|
%
|
|
73,226
|
|
|
75,639
|
|
|
3
|
%
|
Dental
|
14,523
|
|
|
9,111
|
|
|
(37
|
)%
|
|
54,635
|
|
|
31,428
|
|
|
(42
|
)%
|
Vision
|
5,937
|
|
|
4,318
|
|
|
(27
|
)%
|
|
21,998
|
|
|
14,111
|
|
|
(36
|
)%
|
Other
|
7,762
|
|
|
10,641
|
|
|
37
|
%
|
|
19,257
|
|
|
32,759
|
|
|
70
|
%
|
Total Ancillary
|
54,749
|
|
|
54,435
|
|
|
(1
|
)%
|
|
169,116
|
|
|
153,937
|
|
|
(9
|
)%
|
Small Business
(4)
|
1,239
|
|
|
1,843
|
|
|
49
|
%
|
|
3,681
|
|
|
5,235
|
|
|
42
|
%
|
Total
|
90,041
|
|
|
91,842
|
|
|
2
|
%
|
|
296,729
|
|
|
272,437
|
|
|
(8
|
)%
|
(1)
|
Medicare-related health insurance applications submitted on our website or through our customer care center during the period, including Medicare Advantage, Medicare Part D prescription drug and Medicare Supplement plans.
|
(2)
|
Major medical Individual and Family plan ("IFP") health insurance applications submitted on our website during the period. An applicant may submit more than one application. We define our IFP offerings as major medical individual and family health insurance plans, which does not include Medicare-related, small business or ancillary plans.
|
(3)
|
Ancillary Plans consists primarily of short-term, dental and vision insurance plans submitted on our website during the period.
|
(4)
|
Applications for small business health insurance applications are counted as submitted when the applicant completes the application, the employees complete their applications, the applicant submits the application to us and we submit the application to the carrier.
|
|
Approved Members
|
|
Approved Members
|
||||||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||
|
2017
|
|
2018
|
|
Percent Change
|
|
2017
|
|
2018
|
|
Percent Change
|
||||||
Medicare
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Medicare Advantage
|
19,572
|
|
|
19,664
|
|
|
—
|
%
|
|
62,930
|
|
|
65,102
|
|
|
3
|
%
|
Medicare Supplement
|
3,550
|
|
|
6,985
|
|
|
97
|
%
|
|
10,928
|
|
|
17,667
|
|
|
62
|
%
|
Medicare Part D
|
3,265
|
|
|
3,511
|
|
|
8
|
%
|
|
12,560
|
|
|
11,230
|
|
|
(11
|
)%
|
Total Medicare
|
26,387
|
|
|
30,160
|
|
|
14
|
%
|
|
86,418
|
|
|
93,999
|
|
|
9
|
%
|
Individual and Family
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-Qualified Health Plans
|
3,753
|
|
|
1,227
|
|
|
(67
|
)%
|
|
32,713
|
|
|
11,715
|
|
|
(64
|
)%
|
Qualified Health Plans
|
1,366
|
|
|
583
|
|
|
(57
|
)%
|
|
21,456
|
|
|
16,483
|
|
|
(23
|
)%
|
Total Individual and Family
|
5,119
|
|
|
1,810
|
|
|
(65
|
)%
|
|
54,169
|
|
|
28,198
|
|
|
(48
|
)%
|
Ancillary
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Short-term
|
24,116
|
|
|
32,723
|
|
|
36
|
%
|
|
63,837
|
|
|
79,683
|
|
|
25
|
%
|
Dental
|
13,640
|
|
|
9,256
|
|
|
(32
|
)%
|
|
54,053
|
|
|
32,720
|
|
|
(39
|
)%
|
Vision
|
6,194
|
|
|
4,539
|
|
|
(27
|
)%
|
|
23,540
|
|
|
15,578
|
|
|
(34
|
)%
|
Other
|
6,872
|
|
|
8,716
|
|
|
27
|
%
|
|
17,504
|
|
|
25,447
|
|
|
45
|
%
|
Total Ancillary
|
50,822
|
|
|
55,234
|
|
|
9
|
%
|
|
158,934
|
|
|
153,428
|
|
|
(3
|
)%
|
Small Business
|
2,861
|
|
|
3,255
|
|
|
14
|
%
|
|
8,800
|
|
|
12,013
|
|
|
37
|
%
|
Total
|
85,189
|
|
|
90,459
|
|
|
6
|
%
|
|
308,321
|
|
|
287,638
|
|
|
(7
|
)%
|
|
Three Months Ended September 30,
|
|||||||||
|
2017
|
|
2018
|
|
Percentage Change
|
|||||
Medicare
|
|
|
|
|
|
|||||
Medicare Advantage
(1)
|
$
|
892
|
|
|
$
|
914
|
|
|
3
|
%
|
Medicare Supplement
(1)
|
$
|
969
|
|
|
$
|
1,058
|
|
|
9
|
%
|
Medicare Part D
(1)
|
$
|
299
|
|
|
$
|
286
|
|
|
(4
|
)%
|
|
|
|
|
|
|
|||||
Individual and Family
|
|
|
|
|
|
|||||
Non-Qualified Health Plans
(1)
|
$
|
115
|
|
|
$
|
119
|
|
|
3
|
%
|
Qualified Health Plans
(1)
|
$
|
111
|
|
|
$
|
115
|
|
|
4
|
%
|
|
|
|
|
|
|
|||||
Ancillary
|
|
|
|
|
|
|||||
Short-term
(1)
|
$
|
58
|
|
|
$
|
55
|
|
|
(5
|
)%
|
Dental
(1)
|
$
|
62
|
|
|
$
|
62
|
|
|
—
|
%
|
Vision
(1)
|
$
|
46
|
|
|
$
|
47
|
|
|
2
|
%
|
|
|
|
|
|
|
|||||
Small Business
(2)
|
$
|
167
|
|
|
$
|
163
|
|
|
(2
|
)%
|
(1)
|
Constrained lifetime value of commissions per approved member represents commissions estimated to be collected over the estimated life of an approved member’s policy after applying constraints in accordance with our revenue recognition policy. The estimate is driven by multiple factors, including but not limited to, contracted commission rates, carrier mix, expected policy churn and applied constraints. These factors may result in varying values from period to period. For additional information on constraints see
Note 1 - Summary of Business and Significant Accounting Policies
in the
Notes to Condensed Consolidated Financial Statements
of this Quarterly Report on Form 10-Q.
|
(2)
|
For small business the amount represents the estimated commissions we expect to collect from the plan over the following 12-months. The estimate is driven by multiple factors, including but not limited to, contracted commission rates, carrier mix, expected policy churn and applied constraints. These factors may result in varying values from period to period.
|
|
As of September 30,
|
|||||||
|
2017
|
|
2018
|
|
Percent Change
|
|||
Medicare
(1)
|
|
|
|
|
|
|||
Medicare Advantage
|
195,970
|
|
|
235,269
|
|
|
20
|
%
|
Medicare Supplement
|
29,111
|
|
|
64,632
|
|
|
122
|
%
|
Medicare Part D
|
89,424
|
|
|
109,987
|
|
|
23
|
%
|
Total Medicare
|
314,505
|
|
|
409,888
|
|
|
30
|
%
|
Individual and Family
(2)
|
227,330
|
|
|
161,371
|
|
|
(29
|
)%
|
Ancillary
(3)
|
|
|
|
|
|
|||
Short-term
|
21,670
|
|
|
25,008
|
|
|
15
|
%
|
Dental
|
170,948
|
|
|
142,990
|
|
|
(16
|
)%
|
Vision
|
83,920
|
|
|
71,875
|
|
|
(14
|
)%
|
Other
|
22,701
|
|
|
38,380
|
|
|
69
|
%
|
Total Ancillary
|
299,239
|
|
|
278,253
|
|
|
(7
|
)%
|
Small Business
(4)
|
33,029
|
|
|
38,296
|
|
|
16
|
%
|
Total Estimated Membership
|
874,103
|
|
|
887,808
|
|
|
2
|
%
|
(1)
|
For Medicare-related health insurance plans, we take the sum of (i) the number of members for whom we have received or applied a commission payment for a month that is up to two months prior to the date of estimation (after reducing that number using historical experience for assumed member cancellations over the period being estimated); and (ii) the number of approved members over that period (after reducing that number using historical experience for an assumed number of members who do not accept their approved policy from the same month of the previous year and for estimated member cancellations through the date of the estimate). To the extent we determine we have received substantially all of the commission payments related to a given month during the period being estimated, we will take the number of members for whom we have received or applied a commission payment during the month of estimation. Estimated number of members active on Medicare-related health insurance as of the date indicated based on the number of members for whom we have received or applied a commission payment during the month of estimation.
|
(2)
|
To estimate the number of members on Individual and Family health insurance plans, we take the sum of (i) the number of IFP members for whom we have received or applied a commission payment for a month that is up to six months prior to the date of estimation after reducing that number using historical experience for assumed member cancellations over the period being estimated; and (ii) the number of approved members over that period (after reducing that number by the percentage of members who do not accept their approved policy from the same month of the previous year for estimated member cancellations through the date of the estimate). To the extent we determine we have received substantially all of the commission payments related to a given month during the period being estimated, we will take the number of members for whom we have received or applied a commission payment during the month of estimation. For IFP health insurance plans, a member who purchases and is active on multiple standalone insurance plans will be counted as a member more than once. For example, a member who is active on both an individual and family health insurance plan and a standalone dental plan will be counted as two continuing members.
|
(3)
|
For ancillary health insurance plans (such as short-term, dental and vision insurance), we take the sum of (i) the number of members for whom we have received or applied a commission payment for a month that is up to three months prior to the date of estimation (after reducing that number using historical experience for assumed member cancellations over the period being estimated); and (ii) the number of approved members over that period (after reducing that number using historical experience for an assumed number of members who do not accept their approved policy from the same month of the previous year and for estimated member cancellations through the date of the estimate). To the extent we determine we have received substantially all of the commission payments related to a given month during the period being estimated, we will take the number of members for whom we have received or applied a commission payment during the month of estimation. 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.
|
(4)
|
For small business health insurance plans, 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. Health insurance carriers often do not communicate policy cancellation information or group size changes to us. We often are made aware of policy cancellations and group size changes at the time of annual renewal and update our membership statistics accordingly in the period they are reported.
|
|
Three Months Ended September 30,
|
|||||||||
|
2017
|
|
2018
|
|
Percent Change
|
|||||
Variable marketing cost per approved member
|
|
|
|
|
|
|||||
Medicare variable marketing cost per approved Medicare Advantage ("MA")-equivalent member
(1)
|
$
|
396
|
|
|
$
|
356
|
|
|
(10
|
)%
|
Individual and Family Plan ("IFP") variable marketing cost per approved IFP-equivalent member
(2)
|
$
|
31
|
|
|
$
|
77
|
|
|
148
|
%
|
|
|
|
|
|
|
|||||
Customer care and enrollment ("CC&E") expense per approved member
|
|
|
|
|
|
|||||
Medicare CC&E expense per approved MA-equivalent member
(3)
|
$
|
535
|
|
|
$
|
538
|
|
|
1
|
%
|
IFP CC&E expense per approved IFP-equivalent member
(4)
|
$
|
147
|
|
|
$
|
97
|
|
|
(34
|
)%
|
|
|
|
|
|
|
(1)
|
Variable marketing cost per approved MA-equivalent member represents direct costs incurred in member acquisition for Medicare Advantage, Medicare Supplement and Medicare Part D plans from our direct, marketing partners and online advertising channels divided by MA-equivalent approved members in a given period. MA-equivalent members is a derived metric and is equal to the sum of (i) the number of Medicare Part D approved members divided by 4, (ii) the number of Medicare Advantage approved members and (iii) the number of Medicare Supplement approved members in the given period.
|
(2)
|
Variable marketing cost per approved IFP-equivalent member represents direct costs incurred in member acquisition for IFP plans from our direct, marketing partners and online advertising channels divided by IFP-equivalent approved members in a given period. IFP-equivalent approved members is a derived metric and is equal to the sum of (i) the number of short-term approved members divided by 3 and (ii) the IFP approved members in the given period.
|
(3)
|
Medicare CC&E expense per approved MA-equivalent member is equal to the CC&E expense of our Medicare business included in our operating costs and reported in our condensed consolidated statements of operations divided by MA-equivalent approved members in a given period. MA-equivalent approved members is a derived metric and is equal to the sum of (i) the number of Medicare Part D approved members divided by 4, (ii) the number of Medicare Advantage approved members and (iii) the number of Medicare Supplement approved members in the given period.
|
(4)
|
IFP CC&E expense per approved IFP-equivalent member is equal to the CC&E expense of our IFP business included in our operating costs and reported in our condensed consolidated statement of operations divided by IFP-equivalent approved members in a given period. IFP-equivalent approved members is a derived metric and is equal to the sum of (i) the number of short-term approved members divided by 3 and (ii) the IFP approved members in the given period.
|
•
|
Revenue Recognition;
|
•
|
Stock-Based Compensation;
|
•
|
Business Combinations;
|
•
|
Realizability of Long-Lived Assets and;
|
•
|
Accounting for Income Taxes.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||||||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commission
|
$
|
29,539
|
|
|
94
|
%
|
|
$
|
33,613
|
|
|
82
|
%
|
|
$
|
100,827
|
|
|
94
|
%
|
|
$
|
104,966
|
|
|
90
|
%
|
Other
|
1,927
|
|
|
6
|
%
|
|
7,138
|
|
|
18
|
%
|
|
6,761
|
|
|
6
|
%
|
|
11,512
|
|
|
10
|
%
|
||||
Total revenue
|
31,466
|
|
|
100
|
%
|
|
40,751
|
|
|
100
|
%
|
|
107,588
|
|
|
100
|
%
|
|
116,478
|
|
|
100
|
%
|
||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
(9
|
)
|
|
—
|
%
|
|
170
|
|
|
—
|
%
|
|
228
|
|
|
—
|
%
|
|
473
|
|
|
—
|
%
|
||||
Marketing and advertising
|
13,383
|
|
|
43
|
%
|
|
16,148
|
|
|
40
|
%
|
|
42,678
|
|
|
40
|
%
|
|
45,756
|
|
|
39
|
%
|
||||
Customer care and enrollment
|
15,798
|
|
|
50
|
%
|
|
17,272
|
|
|
42
|
%
|
|
39,919
|
|
|
37
|
%
|
|
43,730
|
|
|
38
|
%
|
||||
Technology and content
|
8,354
|
|
|
27
|
%
|
|
7,740
|
|
|
19
|
%
|
|
24,358
|
|
|
23
|
%
|
|
23,368
|
|
|
20
|
%
|
||||
General and administrative
|
9,353
|
|
|
30
|
%
|
|
10,528
|
|
|
26
|
%
|
|
29,879
|
|
|
28
|
%
|
|
32,459
|
|
|
28
|
%
|
||||
Change in fair value of earnout liability
|
—
|
|
|
—
|
%
|
|
3,800
|
|
|
9
|
%
|
|
—
|
|
|
—
|
%
|
|
6,300
|
|
|
5
|
%
|
||||
Restructuring charges
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
1,865
|
|
|
2
|
%
|
||||
Acquisition costs
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
76
|
|
|
—
|
%
|
||||
Amortization of intangible assets
|
260
|
|
|
1
|
%
|
|
547
|
|
|
1
|
%
|
|
780
|
|
|
1
|
%
|
|
1,545
|
|
|
1
|
%
|
||||
Total operating costs and expenses
|
47,139
|
|
|
150
|
%
|
|
56,205
|
|
|
138
|
%
|
|
137,842
|
|
|
128
|
%
|
|
155,572
|
|
|
134
|
%
|
||||
Loss from operations
|
(15,673
|
)
|
|
(50
|
)%
|
|
(15,454
|
)
|
|
(38
|
)%
|
|
(30,254
|
)
|
|
(28
|
)%
|
|
(39,094
|
)
|
|
(34
|
)%
|
||||
Other income, net
|
300
|
|
|
1
|
%
|
|
296
|
|
|
1
|
%
|
|
875
|
|
|
1
|
%
|
|
776
|
|
|
1
|
%
|
||||
Loss before benefit for income taxes
|
(15,373
|
)
|
|
(49
|
)%
|
|
(15,158
|
)
|
|
(37
|
)%
|
|
(29,379
|
)
|
|
(27
|
)%
|
|
(38,318
|
)
|
|
(33
|
)%
|
||||
Benefit for income taxes
|
(13,197
|
)
|
|
(42
|
)%
|
|
(6,186
|
)
|
|
(15
|
)%
|
|
(26,777
|
)
|
|
(25
|
)%
|
|
(12,487
|
)
|
|
(11
|
)%
|
||||
Net loss
|
$
|
(2,176
|
)
|
|
(7
|
)%
|
|
$
|
(8,972
|
)
|
|
(22
|
)%
|
|
$
|
(2,602
|
)
|
|
(2
|
)%
|
|
$
|
(25,831
|
)
|
|
(22
|
)%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||
Marketing and advertising
|
$
|
284
|
|
|
$
|
545
|
|
|
$
|
719
|
|
|
$
|
1,477
|
|
Customer care and enrollment
|
131
|
|
|
194
|
|
|
267
|
|
|
565
|
|
||||
Technology and content
|
310
|
|
|
388
|
|
|
978
|
|
|
1,115
|
|
||||
General and administrative
|
1,521
|
|
|
2,416
|
|
|
4,984
|
|
|
6,067
|
|
||||
Restructuring
|
—
|
|
|
—
|
|
|
—
|
|
|
251
|
|
||||
Total stock-based compensation expense
|
$
|
2,246
|
|
|
$
|
3,543
|
|
|
$
|
6,948
|
|
|
$
|
9,475
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
||||||||||||||
Commission
|
$
|
29,539
|
|
|
$
|
33,613
|
|
|
$
|
4,074
|
|
|
14
|
%
|
|
$
|
100,827
|
|
|
$
|
104,966
|
|
|
$
|
4,139
|
|
|
4
|
%
|
Percentage of total revenue
|
94
|
%
|
|
82
|
%
|
|
|
|
|
|
|
|
94
|
%
|
|
90
|
%
|
|
|
|
|
|
|
||||||
Other
|
1,927
|
|
|
7,138
|
|
|
5,211
|
|
|
270
|
%
|
|
6,761
|
|
|
11,512
|
|
|
4,751
|
|
|
70
|
%
|
||||||
Percentage of total revenue
|
6
|
%
|
|
18
|
%
|
|
|
|
|
|
|
6
|
%
|
|
10
|
%
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
31,466
|
|
|
$
|
40,751
|
|
|
$
|
9,285
|
|
|
30
|
%
|
|
$
|
107,588
|
|
|
$
|
116,478
|
|
|
$
|
8,890
|
|
|
8
|
%
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
||||||||||||||
Cost of revenue
|
$
|
(9
|
)
|
|
$
|
170
|
|
|
$
|
179
|
|
|
(1,989
|
)%
|
|
$
|
228
|
|
|
$
|
473
|
|
|
$
|
245
|
|
|
107
|
%
|
Percentage of total revenue
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|
|
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
||||||||||||||
Marketing and advertising
|
$
|
13,383
|
|
|
$
|
16,148
|
|
|
$
|
2,765
|
|
|
21
|
%
|
|
$
|
42,678
|
|
|
$
|
45,756
|
|
|
$
|
3,078
|
|
|
7
|
%
|
Percentage of total revenue
|
43
|
%
|
|
40
|
%
|
|
|
|
|
|
|
|
40
|
%
|
|
39
|
%
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
||||||||||||||
Customer care and enrollment
|
$
|
15,798
|
|
|
$
|
17,272
|
|
|
$
|
1,474
|
|
|
9
|
%
|
|
$
|
39,919
|
|
|
$
|
43,730
|
|
|
$
|
3,811
|
|
|
10
|
%
|
Percentage of total revenue
|
50
|
%
|
|
42
|
%
|
|
|
|
|
|
|
|
37
|
%
|
|
38
|
%
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
||||||||||||||
Technology and content
|
$
|
8,354
|
|
|
$
|
7,740
|
|
|
$
|
(614
|
)
|
|
(7
|
)%
|
|
$
|
24,358
|
|
|
$
|
23,368
|
|
|
$
|
(990
|
)
|
|
(4
|
)%
|
Percentage of total revenue
|
27
|
%
|
|
19
|
%
|
|
|
|
|
|
|
|
23
|
%
|
|
20
|
%
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
||||||||||||
General and administrative
|
9,353
|
|
|
10,528
|
|
|
$
|
1,175
|
|
|
13
|
%
|
|
$
|
29,879
|
|
|
$
|
32,459
|
|
|
$
|
2,580
|
|
|
9
|
%
|
Percentage of total revenue
|
30
|
%
|
|
26
|
%
|
|
|
|
|
|
|
|
28
|
%
|
|
28
|
%
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
||||||||||||||
Restructuring charges
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
100
|
%
|
|
$
|
—
|
|
|
$
|
1,865
|
|
|
$
|
1,865
|
|
|
100
|
%
|
Percentage of total revenue
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|
|
|
—
|
%
|
|
2
|
%
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
||||||||||||||
Amortization of intangible assets
|
$
|
260
|
|
|
$
|
547
|
|
|
$
|
287
|
|
|
110
|
%
|
|
$
|
780
|
|
|
$
|
1,545
|
|
|
$
|
765
|
|
|
98
|
%
|
Percentage of total revenue
|
1
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
1
|
%
|
|
1
|
%
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
||||||||||||||
Other income, net
|
$
|
300
|
|
|
$
|
296
|
|
|
$
|
(4
|
)
|
|
(1
|
)%
|
|
$
|
875
|
|
|
$
|
776
|
|
|
$
|
(99
|
)
|
|
(11
|
)%
|
Percentage of total revenue
|
1
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
1
|
%
|
|
1
|
%
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
||||||||||||||
Benefit from income taxes
|
$
|
(13,197
|
)
|
|
$
|
(6,186
|
)
|
|
$
|
7,011
|
|
|
(53
|
)%
|
|
$
|
(26,777
|
)
|
|
$
|
(12,487
|
)
|
|
$
|
14,290
|
|
|
(53
|
)%
|
Percentage of total revenue
|
(42
|
)%
|
|
(15
|
)%
|
|
|
|
|
|
|
|
(25
|
)%
|
|
(11
|
)%
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
Nine Months Ended September 30,
|
|
Change
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
|
2017
|
|
2018
|
|
Amount
|
|
Percent
|
||||||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Medicare
|
$
|
22,999
|
|
|
$
|
32,733
|
|
|
$
|
9,734
|
|
|
42
|
%
|
|
$
|
72,571
|
|
|
$
|
88,964
|
|
|
$
|
16,393
|
|
|
23
|
%
|
Individual, Family and Small Business
|
8,467
|
|
|
8,018
|
|
|
(449
|
)
|
|
(5
|
)%
|
|
35,017
|
|
|
27,514
|
|
|
(7,503
|
)
|
|
(21
|
)%
|
||||||
Total revenue
|
$
|
31,466
|
|
|
$
|
40,751
|
|
|
$
|
9,285
|
|
|
30
|
%
|
|
$
|
107,588
|
|
|
$
|
116,478
|
|
|
$
|
8,890
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Segment profit (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Medicare segment profit (loss)
|
$
|
(5,796
|
)
|
|
$
|
467
|
|
|
$
|
6,263
|
|
|
(108
|
)%
|
|
$
|
(8,738
|
)
|
|
$
|
2,174
|
|
|
$
|
10,912
|
|
|
(125
|
)%
|
Individual, Family and Small Business segment profit (loss)
|
(404
|
)
|
|
(579
|
)
|
|
(175
|
)
|
|
43
|
%
|
|
8,431
|
|
|
2,292
|
|
|
(6,139
|
)
|
|
(73
|
)%
|
||||||
Total segment profit (loss)
|
(6,200
|
)
|
|
(112
|
)
|
|
6,088
|
|
|
(98
|
)%
|
|
(307
|
)
|
|
4,466
|
|
|
4,773
|
|
|
(1,555
|
)%
|
||||||
Corporate
|
(6,268
|
)
|
|
(6,832
|
)
|
|
(564
|
)
|
|
9
|
%
|
|
(20,007
|
)
|
|
(22,680
|
)
|
|
(2,673
|
)
|
|
13
|
%
|
||||||
Stock-based compensation expense
|
(2,246
|
)
|
|
(3,543
|
)
|
|
(1,297
|
)
|
|
58
|
%
|
|
(6,948
|
)
|
|
(9,224
|
)
|
|
(2,276
|
)
|
|
33
|
%
|
||||||
Depreciation and amortization
|
(699
|
)
|
|
(620
|
)
|
|
79
|
|
|
(11
|
)%
|
|
(2,212
|
)
|
|
(1,870
|
)
|
|
342
|
|
|
(15
|
)%
|
||||||
Change in fair value of earnout liability
|
—
|
|
|
(3,800
|
)
|
|
(3,800
|
)
|
|
100
|
%
|
|
—
|
|
|
(6,300
|
)
|
|
(6,300
|
)
|
|
100
|
%
|
||||||
Restructuring charges
|
—
|
|
|
—
|
|
|
—
|
|
|
100
|
%
|
|
—
|
|
|
(1,865
|
)
|
|
(1,865
|
)
|
|
100
|
%
|
||||||
Acquisition costs
|
—
|
|
|
—
|
|
|
—
|
|
|
100
|
%
|
|
—
|
|
|
(76
|
)
|
|
(76
|
)
|
|
100
|
%
|
||||||
Amortization of intangible assets
|
(260
|
)
|
|
(547
|
)
|
|
(287
|
)
|
|
110
|
%
|
|
(780
|
)
|
|
(1,545
|
)
|
|
(765
|
)
|
|
98
|
%
|
||||||
Other income, net
|
300
|
|
|
296
|
|
|
(4
|
)
|
|
(1
|
)%
|
|
875
|
|
|
776
|
|
|
(99
|
)
|
|
(11
|
)%
|
||||||
Loss before benefit from income taxes
|
$
|
(15,373
|
)
|
|
$
|
(15,158
|
)
|
|
$
|
215
|
|
|
(1
|
)%
|
|
$
|
(29,379
|
)
|
|
$
|
(38,318
|
)
|
|
$
|
(8,939
|
)
|
|
30
|
%
|
|
Nine Months Ended September 30,
|
||||
|
2017
|
|
2018
|
||
Net cash (used in) provided by operating activities
|
(5,413
|
)
|
|
5,488
|
|
Net cash used in investing activities
|
(3,988
|
)
|
|
(22,744
|
)
|
Net cash used in financing activities
|
(1,002
|
)
|
|
(2,618
|
)
|
For the Years Ending December 31,
|
Operating Lease Obligations
|
|
Service and Licensing Obligations
|
|
Total Obligations
|
||||||
2018
|
$
|
958
|
|
|
$
|
467
|
|
|
$
|
1,425
|
|
2019
|
4,820
|
|
|
2,900
|
|
|
7,720
|
|
|||
2020
|
5,209
|
|
|
1,531
|
|
|
6,740
|
|
|||
2021
|
3,766
|
|
|
—
|
|
|
3,766
|
|
|||
2022
|
3,878
|
|
|
—
|
|
|
3,878
|
|
|||
Thereafter
|
13,963
|
|
|
—
|
|
|
13,963
|
|
|||
Total
|
$
|
32,594
|
|
|
$
|
4,898
|
|
|
$
|
37,492
|
|
|
December 31, 2017
|
|
September 30, 2018
|
||||
Cash
(1)
|
$
|
5,098
|
|
|
$
|
2,881
|
|
Money market funds
(2)
|
35,195
|
|
|
17,467
|
|
||
Total cash and cash equivalents
|
$
|
40,293
|
|
|
$
|
20,348
|
|
(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, 2017 and
September 30, 2018
money market funds consisted of investments in 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
|
|
Nine Months Ended
|
||||||||
|
September 30,
|
|
September 30,
|
||||||||
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||
UnitedHealthcare
1
|
24
|
%
|
|
21
|
%
|
|
22
|
%
|
|
22
|
%
|
Humana
|
18
|
%
|
|
17
|
%
|
|
17
|
%
|
|
15
|
%
|
(1)
|
UnitedHealthcare also includes other carriers owned by UnitedHealthcare.
|
•
|
our ability to continue to adapt our ecommerce platforms 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, including television advertising and direct mail marketing, and in entering into marketing partner relationships to drive Medicare-eligible individuals to our ecommerce platforms on a cost-effective basis;
|
•
|
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 platforms.
|
•
|
undertake more extensive marketing campaigns for their brands and services;
|
•
|
devote more resources to website and systems development and other aspects of their operations to comply with applicable laws, regulations and rules;
|
•
|
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; and
|
•
|
our ability to enroll subsidy-eligible individuals in qualified health plans through government-run health insurance exchanges and the efficacy of the process we are required to use to do so.
|
•
|
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 legal or 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.
|
ITEM 6.
|
EXHIBITS
|
|
|
|
|
Incorporation by Reference Herein
|
||
Exhibit
Number
|
|
Description of Exhibit
|
|
Form
|
|
Date
|
10.1
|
†
|
|
|
|
|
|
10.2
|
†
|
|
|
Current Report on Form 8-K (File No. 001-33071)
|
|
September 19, 2018
|
10.3
|
†
|
|
|
Current Report on Form 8-K (File No. 001-33071)
|
|
September 19, 2018
|
10.4
|
†
|
|
|
Current Report on Form 8-K (File No. 001-33071)
|
|
September 19, 2018
|
31.1
|
†
|
|
|
|
|
|
31.2
|
†
|
|
|
|
|
|
32.1
|
‡
|
|
|
|
|
|
32.2
|
‡
|
|
|
|
|
|
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/ SCOTT N. FLANDERS
|
|
/s/ DEREK N. YUNG
|
Scott N. Flanders
Chief Executive Officer
|
|
Derek N. Yung
Chief Financial Officer
|
|
|
|
|
Incorporation by Reference Herein
|
||
Exhibit
Number
|
|
Description of Exhibit
|
|
Form
|
|
Date
|
10.1
|
†
|
|
|
|
|
|
10.2
|
†
|
|
Current Report on Form 8-K (File No. 001-33071)
|
|
September 19, 2018
|
|
10.3
|
†
|
|
|
Current Report on Form 8-K (File No. 001-33071)
|
|
September 19, 2018
|
10.4
|
†
|
|
|
Current Report on Form 8-K (File No. 001-33071)
|
|
September 19, 2018
|
31.1
|
†
|
|
|
|
|
|
31.2
|
†
|
|
|
|
|
|
32.1
|
‡
|
|
|
|
|
|
32.2
|
‡
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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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:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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.
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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):
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a)
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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
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b)
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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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/s/ S
COTT
N. F
LANDERS
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Scott N. Flanders
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Chief Executive Officer
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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:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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.
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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):
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a)
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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
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b)
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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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/s/ DEREK N. YUNG
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Derek N. Yung
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Chief Financial Officer
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(1)
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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
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(2)
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The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of eHealth, Inc.
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/s/ SCOTT N. FLANDERS
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Scott N. Flanders
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Chief Executive Officer
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November 6, 2018
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(1)
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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
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(2)
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The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of eHealth, Inc.
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/s/ DEREK N. YUNG
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Derek N. Yung
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Chief Financial Officer
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November 6, 2018
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