eHealth, Inc.

Good morning, everyone, and welcome to eHealth, Inc.' 's conference call to discuss the company's fourth quarter and fiscal year 2024 financial results. At this time, all participants have been placed in listen-only mode. The floor will open for your questions following the prepared remarks. I will now turn the floor over to Eli Newbrun-Mintz, Senior Investor Relations Manager. Please go ahead.

Good morning and thank you all for joining us today. On the call today, Fran Soisman, eHealth Chief Executive Officer, and John Dolan, Chief Financial Officer, will discuss our fourth quarter and fiscal year 2024 financial results. Following these prepared remarks, we will open the line for a Q&A session with industry analysts. As a reminder, this 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 later today. Today's press release, our historical financial news releases, and our filings with the SEC are also available on our investor relations site. We will be making forward-looking statements on this call about certain matters that are based upon management's current beliefs and expectations relating to future events impacting the company and our future financial or operating performance. Forward-looking statements on this call represent eHealth's views as of today, and actual results could differ materially. We undertake no obligation to publicly address or update any forward-looking statements except as required by law. The forward-looking statements we will be making during this call are subject to a number of uncertainties and risks, including but not limited to those described in today's press release and in our most recent annual report on Form 10-K and our subsequent filings with the SEC. We will also be discussing certain non-GAAP financial measures on this call. Management's definitions of these non-GAAP measures and reconciliations to the most directly comparable GAAP financial measures are included in today's press release. With that, I'll turn the call over to Fran Soyson.

Thank you, Eli, and thank you to everyone joining us this morning. eHealth delivered outstanding AEP results, materially exceeding our expectations for enrollment volumes, revenue, and earnings. This is a testament to the success of the transformed eHealth. including the exceptional performance of our licensed agents or benefit advisors, our innovative omnichannel platform, and the growing prominence of our brand. In December, we increased our 2024 revenue and earnings guidance to reflect our early read into AAP execution. The results published earlier this morning significantly exceed the high end of our upwardly revised guidance for revenue, earnings, and adjusted EBITDA. Fourth quarter revenue grew 27% compared to a year ago. Medicare submissions across agency and Amplify fulfillment models grew 38%, with our agency model growing submissions by 49%, well above the overall Medicare market. We delivered this growth while substantially improving our enrollment margins. Importantly, we were profitable on a GAAP net income basis for the fourth quarter and the full year 2024. Our fourth quarter adjusted EBITDA grew in excess of 70% compared to a year ago, representing a meaningful margin expansion. In addition to the remarkable execution of our operating teams, these results reflect unique Medicare market dynamics. We believe these dynamics made the value proposition of our carrier agnostic choice platform much more relevant to beneficiaries. This AEP We observed unprecedented disruption to MA plan offerings as carriers faced higher medical cost trends, as well as regulatory pressure, causing them to make material changes to their strategies. This included benefit and premium changes, as well as outright plan cancellations and market exits. As a result, we saw elevated consumer demand as beneficiaries assessed their coverage and, in many cases, opted to shop for a plan that better suited their needs. At the same time, competitive capacity across the industry was reduced due to exits and downsizing over the past two years. This set the stage for an annual enrollment period where our Medicare matchmaker offerings was primed to stand out. Additionally, we observed an increase in commission suppression, a tactic carriers sometimes used to control enrollments across their plan offerings. This happens to some degree every year, but was particularly pronounced with certain carriers in 2024. eHealth was able to successfully navigate these suppressions given the broad selection of plans on our platform and our carrier agnostic strategy within our agency fulfillment model. It was a greater challenge for brokers supporting just a handful of carriers, and as a result, we may see more competitor exits over the next 12 months. During AEP, we made the strategic decision to lean in on the strong consumer demand environment and invest in scale and market share capture. The strength of our marketing and sales operations allowed us to generate an attractive return on this investment. 2024 adjusted EBITDA margins substantially exceeded margins implied by the high end of the guidance range we provided in August. Through our strong brand and standout service quality, we're building a membership base that we expect will continue generating commission streams for as long as members remain on our platform. even if their needs evolve and they return to select new coverage. While new members represented the vast majority of our enrollments in the fourth quarter, we also successfully engaged our existing members through a variety of touchpoints. For many of these beneficiaries, we aim to build confidence when they are still in a plan that best fits their needs. We also identified and reached out to members who were impacted by plan cancellations and carrier market exits, as well as those who experienced significant benefit or premium changes. Our goal with these beneficiaries was to help them find new plans while maintaining their eHealth membership, and we believe we were largely successful in these efforts. In addition to live benefit advisor support, we provided proprietary online tools, such as Match Monitor, so that members could better understand changes to their coverage and assess their options. While these proactive member retention strategies are critical during any enrollment period, they were especially important this AEP. Moving now to some of the operational achievements that drove our fourth quarter outperformance. Over the past two years, eHealth's marketing organization has been focused on building our direct channels through key areas, including brand building, fine-tuned audience targeting, and compelling messaging that communicates our differentiated offering as a trusted, remarkably transparent advisor. Our brand recognition metrics outperformed our competitors and showed a marked improvement compared to a year ago, with total aided awareness increasing 23%. Our branded direct marketing channels drove over 100% growth in fourth quarter enrollments compared to Q4 enrollments from direct channels the prior year. Enrollment growth in these channels outpaced the corresponding increase in marketing spend, resulting in highly attractive unit economics. On average, our direct channels over-index towards customers that are higher converting with greater persistency. This results in higher LTV enrollments. The standout performance of our direct digital channels also drove a significant increase in our online unassisted applications, our most scalable fulfillment methods. We also saw strong demand from new to MA customers, another higher LTV audience, which grew as a percentage of total application volume in 2024 compared to 23. Our Medicare Advantage LTV to CAC ratio grew from 1.5X in Q4 2023 to 2X in Q4 2024, and unit margins grew from 34% to 50% for the same periods. Moving to our telesales organization. Preparedness, licensed benefit advisors, enablement, and execution were key to our ability to take advantage of the large inbound call volume, this AEP. In addition to having a greater number of tenured benefit advisors compared to a year ago, we also narrowed the gap between the effectiveness of brand new and seasoned advisors, resulting in substantial conversion rate gains of 39% year over year. within our agency fulfillment model. We continue to empower our advisors with innovative tools that enhance their productivity and differentiate their services. For example, during Q4, we extended live advise, our one-way video chat capability, to a larger number of advisors, resulting in increased conversions for the enrollments that utilize this exciting new technology. Our digital capabilities were also essential to our AAP success. During the first three quarters of 2024, we invested in further streamlining and personalizing consumer experience on our platform. This included a more seamless flow from online ads into tailored landing pages within our shopping funnel, with the goal of matching our platform's experience with the customer's shopping intent. Another focus area was returning visitors. Through a coordinated cross-channel effort, we targeted consumers who visited our platform in the past It took action to remove friction points for these return users by allowing them to pick up where they left off. During the fourth quarter, we drove 37% more visitors to our online platform and converted them at a greater rate, resulting in a 58% increase in Q4 submitted online unassisted applications compared to a year ago. We also have several exciting AI-driven projects in the works for 2025. These will be led by our newly established AI Center of Excellence, which will help guide and prioritize our AI initiatives going forward. We believe that generative AI can help add efficiency across our organization, from automating manual processes, including plan data and content management on our digital platform, to increasing the productivity of our engineering teams, all the way to driving our call screening process and handing leads off to our licensed benefit advisors. which will help allow us to serve beneficiaries better, especially in the peak days of the enrollment season. Moving to Amplify, our carrier dedicated fulfillment model. During Q4, Amplify volume came in below expectations. We believe the market environment favored a choice platform with broad carrier selection. Additionally, our Amplify carriers were more focused on margin protection than enrollment growth with AEP. which limited the success fees we were paid under our BPO arrangements. At the same time, we continue to deliver enrollments at high conversion rates and quality metrics for our BPO partners. Amplify leverages our platform and core competencies, allowing us to drive enrollments with lower upfront cash investments compared to the agency model. We believe that an improving MA rate regulatory environment will benefit this model And we plan to continue scaling it with both new and existing customers. Our med sup business had a strong quarter with submissions up 9% year over year and a considerable increase in the estimated lifetime values reflecting favorable carry mix and retention. We also grew our ancillary product enrollments driven by dental and vision products. As you can see from our financial and operating results, eHealth successfully navigated the Medicare sector disruption. taking market share and scaling our business at Attractive Economics. Consumer demand represented a strong tailwind for us, and we were ready to lean into this trend given our nimble, scalable platform that can be leveraged for growth when the opportunity arises. We remain confident that we are in a strong competitive and financial position to continue building on this momentum. Looking ahead, we expect the Medicare market to remain fluid. More change is underway and are ready to be opportunistic in this environment. It is our belief that the regulatory environment in the Medicare Advantage sector will improve over the next four years relative to the prior administration. Importantly, early indicators will be the final MA rates as well as final MA and PDP marketing rules expected in the second quarter. Additionally, carriers continue to communicate margin pressure within their MA businesses. While many of them took action to improve profitability of their Medicare Advantage plans last year, it remains to be seen what dynamics will dominate as carriers decide on their plan offerings and geographic strategies ahead of Q4. Their decisions will have a direct impact on consumer behavior next enrollment season. The bottom line is that it's hard to predict the consumer demand environment for this AEP this early in the year, especially given the uniqueness of 2024. As a result, we're taking a balanced approach to our outlook. As a starting point, we're guiding to relatively flat revenues compared to a year ago. John will provide detailed guidance and the corresponding operational assumptions in his remarks, but I would like to point out that we are tracking nicely against the three-year revenue and adjusted EBITDA targets that we provided last year. These targets included our goal to grow at an 8 to 10% revenue CAGR between 2023 and 2026, and to reach 8 to 10% adjusted EBITDA margins by 2026. In 2024, we pulled forward some of the growth, leaning into the attractive demand environment. Based on the midpoints of the 2025 guidance ranges, our 23 to 25 revenue CAGR is expected to be 8%, with an implied 2025 adjusted EBITDA margin of 9%. It also implies an impressive adjusted EBITDA CAGR of 84%. Our 2025 strategic priorities align with our three-year strategy to build a sustainably profitable cash flow generative business through scale differentiation in Medicare Advantage agency services and targeted diversification. These priorities are as follows and can be found in our earnings presentation. First, we aim to expand our brand recognition across all direct marketing channels and extend our brand beyond our core Medicare Advantage products. Second, we plan to enhance our retention and customer loyalty strategies, recognizing that lasting relationships transcend individual interactions and specific products. Third, we'll focus on optimizing our telesales organization by providing our advisors with industry-leading brand support, training programs, career development opportunities, and technological tools. We plan to advance our AI and digital technology leadership to better serve all key eHealth stakeholders, including consumers, employees, and carriers. Fifth, we aim to strengthen and expand our carrier relationships, which are critical to our agency choice model. Sixth and finally, we plan to diversify our revenue base through targeted investments in Medicare Supplement under 65 individual and family, employer, ancillary products, and carrier dedicated services. It is truly an exciting time to be part of this organization, and I'm confident in this team's ability to continue delivering on our goals while improving the healthcare journey for millions of Americans. I also want to acknowledge our exceptional company culture and extend my gratitude to our employees and management teams for their invaluable contributions to our success in 2024. I'll now turn the call over to John Dolan, who will cover our financial performance in greater detail and discuss our guidance for fiscal 2025. John?