eHealth, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Q1 2020 eHealth, Inc. Earnings Conference Call. At this time, all participants are on a listening mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1 on your telephone. Please be advised that today's conference call is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference up to your speaker for today, Kate Sidorovich, Vice President of Investor Relations. Now you may begin.

Thank you. Good afternoon, and thank you all for joining us today, either by phone or by webcast, for a discussion about eHealth, Inc., first quarter 2020 financial results. On the call this afternoon, we will have Scott Flanders, eHealth Chief Executive Officer, and Derek Jung, Chief Financial Officer. After management completes its remarks, we'll open the lines for questions. As a reminder, today's conference call is being recorded in webcast from the IR section of our website. A replay of the call will be available on our website following the call. We will be making forward-looking statements on this call that include statements regarding future events, beliefs, and expectations, including statements relating to our expectations regarding our Medicare business, including Medicare enrollment growth, consumer demand, our competitive advantage, and our expectations regarding online enrollment. Our plans to use our equity offering proceeds to invest in the Medicare business, including marketing initiatives, Expansion of our telesales capacity and enhancements to our technology platform. Our Medicare growth strategy, including our customer acquisition and demand generation strategy, customer retention efforts, online engagement, agent productivity, and talent acquisition strategy. Our expectations regarding our direct-to-consumer model, the benefits of our customer care agent remote model, the profitability of our business, seasonality, churn, lifetime values, operating expenses, including fixed and variable costs. and the impact of COVID-19 on our business. Our member estimates revised 2020 full-year guidance, our outlook for the second and third quarters of this year, and our plans to provide further updates to our 2020 guidance and five-year growth plan and the contents of such guidance and growth plans. Forward-looking statements on this call represent e-health views as of today. You should not rely on these statements as representing our views in the future. want to take no obligation or duty to update information contained in this forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in our forward-looking statements. We describe these and other risks and uncertainties in our annual report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission, which you may access through the SEC website or from the Investor Relations section of our website. We will be presenting certain financial measures on this call that are considered non-GAAP under SEC Regulation G. For reconciliation of which non-GAAP financial measure to the most directly comparable GAAP financial measure, please refer to the information included in our press release and in our SEC filings, which can be found on our Investor Relations website. And at this point, I will turn the call over to Scott Sanders.

Thank you, Kate, and welcome, everyone. We finished the first quarter in an unprecedented environment shaped by significant disruptions to the global economy and our daily lives as a result of the coronavirus. In this environment, our mission to connect every person with the highest quality, most affordable health insurance for their life circumstances is more relevant and important than ever. Being enrolled in the right plan is especially important to our main customer segment, seniors. as they are being disproportionately impacted by this pandemic. Our omnichannel consumer engagement platform allows seniors to research and enroll in Medicare plans in a safe environment, online or by speaking to a licensed insurance agent on the phone without having to leave their house and allowing them to avoid the face-to-face interactions that traditional agents depend on to sell plans. In addition to delivering outstanding service to our customers, the safety of our employees is a top priority in this challenging environment. In March, we shifted our entire U.S. workforce to a remote model, including all of our customer care agents. This was a major undertaking accomplished in a matter of days and seamlessly, with the transition having no impact on our operations. The average productivity of our agents in the first quarter increased compared to a year ago despite this major change to their work environment and routine. I want to acknowledge our team's resilience and tenacity over the past several weeks and express my gratitude for their unrelenting focus on our mission. Turning to our performance for the quarter, the fundamentals of our business are strong and we are continuing to drive meaningful Medicare revenue and enrollment growth. Building on our momentum of the past two years, especially our record performance in 2019, we are pleased to deliver another quarter of outperformance. First quarter approved Medicare members grew 46% compared to a year ago, with Medicare Advantage approved members growing 59%. First quarter Medicare revenue grew 75% year over year, driven by strong enrollment volumes and a favorable trend in the estimated lifetime values of our Medicare members, which Derrick will describe in greater detail. We continue to drive rapidly growing customer acquisition success through our diversified portfolio approach to our demand generation strategy. Our direct-to-consumer channels provide balanced customer traffic through digital advertising, direct response TV, direct mail, email, and organic search initiatives while our strategic partnerships with large retail pharmacies, hospitals, and other affinity groups remain a substantial and unique driver of new business. In the first quarter, we achieved another meaningful year-over-year increase in the number of Medicare applications submitted online, including unassisted and partially assisted agent online enrollments. Twenty-four percent of our first quarter applications for Medicare major medical products were submitted Thank you for joining us. The Medicare market remains very strong, with a large selection of high-quality and affordable plans available to seniors. Our enrollment growth continues to significantly outpace the overall market, driven by our omnichannel engagement model that emphasizes customer choice and provides individualized comparison tools that are unique to eHealth. In the wake of social distancing, and the lingering health concerns related to COVID-19, we believe seniors will find our platform to be an even more important and valuable resource. Turning to our first quarter financial results, total revenue for the first quarter of $106.4 million grew 55% year-over-year. Our adjusted EBITDA was $11.1 million, a 30% year-over-year increase. Gap net income was $3.2 million, Cash flow from operations in the first quarter was positive $8.9 million. During the quarter, we raised approximately $227 million through an equity offering to support continued strong organic growth in our core Medicare market. Despite the significant growth achieved in each of the last two years, which was well ahead of overall market growth rates, our Medicare membership still represents just 1% of the total Medicare population in the country. We see tremendous opportunity to build additional scale and capture market share. As of March 31st, we had $246 million in cash, cash equivalents, and marketable securities, and no debt on our balance sheet. We plan to deploy this capital in our Medicare business, including to finance marketing initiatives, fund further expansion of our tele-fails capacity, and underwrite continued enhancements to our technology platform, such as projects aimed at increasing customer retention and boosting online engagement and conversion rates. We are in the process of developing our operational strategy for this year's annual enrollment period, which takes into account the growth capital now available to us post-offering, as well as some of the important learnings from the last AEP. One of the interesting implications of successfully shifting our customer care agents to a remote model is the flexibility this model can potentially offer us in staffing for the high volume fourth quarter. Deploying home-based agents opens up new geographies for our talent acquisition, reduces office space as a constraint on the growth of our employed agent population, and could, over time, boost our overall agent productivity by decreasing our reliance on outsourced call center agents. While we have had recent success in increasing productivity of our employed agents and outsourced call center agents, our internal employed agents continue to convert demand into applications at consistently higher rates. Optimization of our sales and marketing efforts remains a central focus of our long-term growth strategy. Our individual and family plan approved members declined 19% compared to the first quarter of 2019. We saw an uptick in IFP enrollments in March, which has carried through to the second quarter and was likely driven by consumers losing employer coverage and turning to the individual market. However, this did not sufficiently offset slower activity in the first two months of the quarter. We continue observing increased retention of existing IFP plans Resulting in higher estimated LTVs in this business. Approved members for small business group products declined 15% compared to the same quarter a year ago. We entered this year with great momentum and have once again started the year strong, generating significant Medicare enrollment growth and exceeding our expectations for the quarter. eHealth is proving to be an increasingly important destination for consumers in this challenging environment. A testament to a significant value that we provide to consumers by bringing choice, transparency, and convenience to the selection of health insurance. We are updating our 2020 annual guidance to reflect our first quarter outperformance. And I want to specifically note that our revised guidance does not reflect the deployment of cash raised in the equity financing. Similar to last year, We're working to lock down our operational plan for the annual enrollment period by the end of June and intend to share our revised projections with you at the time we report second quarter earnings. We continue to see significant growth potential that can be captured by further expansion of our telesales capacity, combined with driving an increased percentage of Medicare enrollments through our online platform. The new work-from-home model for our agents provides an additional avenue for revenue and profit leverage during AEP that has not been available to the business in prior years. In short, I remain excited and confident about our growth opportunities for 2020 as the eHealth model continues to perform well and we demonstrate the company's differentiated value proposition in the market. And now I'll turn the call over to Derrick Young, who will review our first quarter financial results in greater detail. and provide our revised guidance ranges.