eHealth, Inc.

Good afternoon, everyone, and welcome to e-Help, Inc.' 's conference call to discuss the company's second quarter 2021 financial results. At this time, all participants have been placed in a listen-only mode. The floor will open for your questions following the presentation. It is now my pleasure to turn the floor over to Casey Darvish, the company's Senior Vice President of Investor Relations and Strategy. Please go ahead.

Thank you. Good afternoon, and thank you all for joining us today, either by phone or by webcast, for a discussion about eHealth, Inc.' 's second quarter 2021 financial results. On the call this afternoon, we'll have Scott Flanders, eHealth Chief Executive Officer, John Pierantoni, our Chief Accounting Officer and Principal Financial Officer, and John Wang, Vice President of Finance. After management completes its remarks, we'll open the line for questions. As a reminder, today's conference call is being recorded and webcast from the investor relations 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 market opportunities. Our investments in our e-commerce and call center capabilities, agent training, quality assurance efforts, and the expected impact on our business. Our ability to grow our internal agent force, increase agent productivity, and improve customer experience and the quality of enrollments. Our expectations regarding our individual and family plan business and growth opportunities there. Our expectations regarding our online enrollments, member acquisition costs, and retention rates. Our expectations regarding our financial performance, the profitability of our business, seasonality, churn, lifetime values, member estimates, and operating expenses. And finally, our outlook for the third quarter of 2021 and our full year 2021 financial guidance. Forward-looking statements on this call represent eHealth's views as of today. You should not rely on these statements as representing our views in the future. We want to take no obligation or duty to update information contained in these forward-looking statements, whether it's 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 reports 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 each 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 in the About Us section of our corporate website under the heading Investor Relations. And at this point, I'll turn the call over to our CEO, Scott Flanders.

Thanks, Kate, and good afternoon to everyone joining us today. Second quarter results were strong with revenue, profitability, and Medicare Advantage enrollments exceeding our expectations. During the quarter, we made significant progress towards expanding and enhancing our telesales organization, continued to scale our digital business, and saw positive trends in our under 65 business. Following our first quarter outperformance, strong momentum in our Medicare Advantage enrollment growth continued in April and early May, before slowing down as we compared against the COVID-related special enrollment period that was available to seniors last year. For the full quarter, our approved Medicare Advantage members grew 30% compared to the second quarter of 2020. I am pleased to report that we successfully achieved our Medicare agent recruiting targets for the second quarter and are on track to meet the goal of our telesales capacity being made up of 90% full-time agents. by the start of the AEP. We achieved this significant pivot in our sales organization in a short amount of time and expect for it to benefit our customer experience and the quality of our enrollments. The Medicare market continues to evolve. The ongoing trend towards increased popularity and penetration of Medicare Advantage plans is accompanied by broadening of plan selection and expansion of covered services. MA is an important growth area for health insurance companies. And while carriers continue to pursue enrollment growth and market share gains, we are also seeing a shift towards heightened awareness and focus on enrollment quality among our key carrier partners. Based on our recent conversations with carriers, we expect that insurance companies will be increasingly evaluating broker performance on quality of their enrollments, including retention rates and customer satisfaction, in addition to volumes. This sector-wide movement provides an opportunity for eHealth to take a leadership position, establishing our platform as the gold standard for customer experience within the sector. Our customer-centric choice model and longtime mission of serving as a consumer advocate positions us well to partner with carriers on their efforts. This also builds on the initiatives that we launched last year aimed at customer engagement and retention and lifetime value enhancements. We are now looking for additional ways to improve customer experience, enhance accuracy of plan recommendations, and reduce rapid disenrollment. Starting in Q3, we introduced mandatory additional training for our agents, added a new customer care role to verify Medicare enrollments prior to submission, and are expanding other QA efforts. The recent migration of our call center technology to a cloud-based contact center will also provide new robust capabilities to train agents and monitor their performance in real time. Enhancing our e-commerce experience and growing the contribution from our online enrollments is another critical initiative for e-health. In fact, Medicare members who have enrolled through a fully unassisted online process on our platform represent our highest quality enrollments with highly favorable retention rates. fully unassisted online major medical Medicare applications through 80% year over year and continue to outpace our overall Medicare enrollment growth. Our internal goal continues to be for our unassisted online enrollments to represent $100 million in commission revenue in 2021 at superior member economics with higher than average LTVs driven primarily by lower churn and a higher contribution from new to Medicare Advantage enrollees that generate significantly higher first-year commissions compared to plan switchers. We believe that years of investment in building out our industry-leading digital platform have given eHealth a meaningful advantage in targeting enrollees from younger demographics who are increasingly interested in using online platforms to research and enroll in healthcare plans. We have seen our highest retention among those enrollees who also created a customer center account with eHealth. As a reminder, our customer center is an online customer account tool that allows for data-driven customer engagement and helps us maintain our relationship with our members after the initial enrollment. We see this as a meaningful differentiator, allowing members who use customer center to enact more deeply with eHealth and ultimately retain at better rates. We are now at 143,000 customer center accounts with additional enhancements coming to this tool and our overall e-commerce experience. Our total online applications, including unassisted and partially agent-assisted submissions, represented 38% of our second quarter applications for Medicare major medical products, up from 30% a year ago. We believe that our ongoing investments in our telesales operations, technology, and QA will present a significant barrier to entry into the Medicare distribution market as carriers place an increasing value on enrollment quality. On the demand generation side, we continue to invest in our online and strategic partnership channels. Although legacy channels such as DirecTV and Direct Mail remain a part of our marketing mix, their contribution has been reduced as eHealth leans into demand generation channels that offer us more favorable unit economics and better competitive differentiation. In the strategic partner channel, we are leveraging the relationships that pharmacies, healthcare providers, and patient engagement companies have with Medicare beneficiaries. Partners put their faith in eHealth because of our technology, breadth of plan choice, and our dedication to putting customers first. Ahead of this year's AEP, we've expanded our relationship with Walgreens, Costco, and SilverSneakers. We also added exciting new partnerships with Cardinal Health, Adherence Health, Cypher Health, and several others. In our IFP business, we are seeing an encouraging combination of strong enrollments as well as continuing increase in persistency of our existing book of business. Approved IFP members grew 78% during the quarter compared to the second quarter of last year, and along with $16 million in tail revenue from prior period IFP enrollments, generated a 178% increase in IFP segment revenue compared to Q2 of 2020. The IFP market is benefiting from secular type events driven by the passage of the American Rescue Plan Act in March of this year. This legislation expanded access to premium credits, making IFP plans more affordable, which will allow a larger percentage of the population to get the quality coverage that major medical plans offer. The Biden administration is now proposing a permanent expansion of exchange subsidies. It is estimated that these changes increase the total number of people eligible for subsidized marketplace coverage by more than 20%. As a result, we are seeing renewed interest in this market from insurance carriers as well as our strategic partners such as pharmacies, healthcare networks, and other industry players that want to help their patients take advantage of these new opportunities to access care. The majority of our IFP enrollments are done online with no agent assistance providing for attractive unit economics in this business. Combined with a favorable market environment, This should create interesting growth opportunities for us in our IFP business going forward. Second quarter revenue was $96.6 million, a 9% year-over-year increase. Our second quarter gap net loss was $18.4 million, and our adjusted EBITDA was negative $13 million, reflective of a significant investment we made in our in-house telesales operations. Our Chief Accounting Officer, John Peary and Tony, will provide more details on our second quarter financial results. Since our last earnings call, we walked from Cesar Soriano to our Board of Directors, where he will serve as member of the Compensation Committee. Mr. Soriano is the Chief Executive Officer of Convy Corporation, a leading National Personal Lines Insurance District. He brings to our Board more than 20 years of leadership in the financial, insurance, and business services industries, including significant experience in direct-to-consumer sales of insurance products. We also announced last week that we have appointed Erin Russell to our Board of Directors. Ms. Russell has deep healthcare industry experience, including serving on the boards of Tiviti Health, DeVilbiss Healthcare, and 21st Century Oncology. She will sit on the Audit and Strategy Committees as we look forward to her contributions. As we close the first half of fiscal 2021, I am encouraged by the early success we've seen in scaling our call center operations around the internal agent model and implementing a number of important initiatives to position our agents for success. Our online business continues to gain traction, significantly outpacing our overall Medicare enrollment growth, generating higher quality enrollments characterized by better retention and higher contribution from younger or tech-savvy demographics, including those who are new to Medicare. Our mission to serve as a consumer advocate in the health insurance market has not changed since the inception of the company and is reinforced now by our heightened dedication to customer service, member engagement and retention, and quality of our enrollment. We believe that our differentiated, customer-centric choice model positions us well for continuing growth and shareholder value creation. Finally, a quick update on our CFO succession plans. As we conduct our search for a permanent CFO, John Pierantoni, our Chief Accounting Officer and Principal Financial Officer, and John Wang, Vice President of Finance, are co-leading the finance function reporting to me. Both Johns were leaders on our finance team when Derek was still with eHealth, and we are confident in them as leaders of our interim finance team. I'll now turn the call over to John Pirantoni, who will go over our second quarter financial results in greater detail.