Why eHealth Inc. Shares Are Hurting Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of eHealth  (NASDAQ: EHTH  ) have lost roughly 13% of their value today after the company reported underwhelming earnings for the first quarter.

So what: eHealth recorded an 18% year-over-year rise in quarterly revenue to $50.9 million, which narrowly missed Wall Street's expectation of $51.2 million. The online health-insurance marketplace's adjusted earnings of $0.01 per share also missed the Street's $0.06 consensus estimate. Its Medicare-related business was the best performer in the quarter, as its $14.3 million in segment revenue represented year-over-year growth of 41%.

Looking ahead, eHealth expects to generate between $206 million and $213 million in full-year revenue, with earnings per share projected to range from $0.43 to $0.51. Wall Street had expected $211.3 million on the top line and $0.46 in EPS.

Now what: This isn't necessarily a bad report, but eHealth has been struggling to reverse its earnings woes for a while -- last year's first-quarter report showed $0.17 in adjusted EPS, and the company at the time provided a full-year EPS guidance range of $0.61 to $0.71 per share. Free cash flow has also fallen fallen by half on a trailing 12-month basis over the past five years. eHealth's huge surge in 2013 seems more like speculation than investing in a successful turnaround, and speculative stocks often end ugly, as eHealth shareholders have learned since the start of the year. There seems to be little reason to invest in this stock today.

Invest in the next wave of health care innovation
The Economist compares this disruptive invention to the steam engine and the printing press. Business Insider says it's "the next trillion dollar industry." And the technology behind is poised to set off one of the most remarkable health care revolutions in decades. The Motley Fool's exclusive research presentation dives into this technology's true potential, and its ability to make life-changing medical solutions never thought possible. To learn how you can invest in this unbelievable new technology, click here now to see our free report.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2941789, ~/Articles/ArticleHandler.aspx, 8/22/2014 2:04:41 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement