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eHealth Trounces Wall Street Estimates in Q2

By Keith Speights - Jul 26, 2019 at 6:00AM

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The online health insurance exchange operator wowed investors again in the second quarter with growth fueled by its Medicare business.

The last time eHealth ( EHTH -2.66% ) announced its quarterly results, investors had a lot to like. The company announced that its Q1 revenue soared 60% year over year and beat the consensus Wall Street analysts' earning estimates.

eHealth announced its Q2 results after the market closed on Thursday. The online health insurance exchange operator again delivered good news to investors. Here are the highlights from eHealth's second-quarter update.

Tablet with medical symbols being projected out

Image source: Getty Images

By the numbers

eHealth's revenue jumped 101% year over year, to $65.8 million. This performance blew past the average analyst estimate that the company's revenue for Q2 would come in at $41.65 million.

The company reported a Q2 net loss of $5.8 million, or $0.25 per share, on a generally accepted accounting principles (GAAP) basis. This reflected an improvement from the $12 million, or $0.63 per share, net loss posted in the same period in 2018. 

eHealth's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the second quarter was $800,000. This also was an improvement of eHealth's result in the prior-year period when the company announced an EBITDA loss of $10.1 million.

The online health insurance exchange operator reported non-GAAP adjusted net income of $2.3 million, or $0.10 per share. This was a marked improvement over the non-GAAP net loss of $7.5 million, or $0.40 per share, from the prior-year period. It also topped the consensus analysts' projection that eHealth would post a non-GAAP loss of $0.36 per share.

Behind the numbers

eHealth's tremendous revenue growth in the second quarter stemmed from good news across the board. Medicare segment revenue soared 105% year over year, to $52.3 million. Individual, family, and small business segment revenue jumped 88%, to $13.5 million.

There was even a silver lining to eHealth's GAAP net loss in Q2. The loss resulted from a non-cash charge of $7.2 million that was due to an increase in the fair value of the earnout liability assumed with the company's acquisition of GoMedigap. But this charge was necessary because eHealth's stock has jumped so much since the deal closed. That's a good problem to have.

The company's non-GAAP net income excluded that non-cash charge, as well as $4.7 million in stock-based compensation expense, $0.5 million in amortization of intangible assets, and $4.4 million of the income tax resulting from these adjustments. Of course, the main reason for eHealth's improving non-GAAP earnings was its strong top-line performance.

Looking ahead

For the second time this year, eHealth boosted its full-year guidance. The company now anticipates revenue of $365 million and $385 million in full-year 2019, up from its previous guidance of $315 million and $335 million. eHealth also projects 2019 earnings per share (EPS) of between $0.62 and $0.82, compared to the range of $0.60 to $0.79 provided in its previous outlook. The company thinks that adjusted EPS will come in between $1.77 and $1.97, up from its previous guidance of $1.54 and $1.73.

CEO Scott Flanders said that the reason the company raised its guidance was due to its "performance to-date, access to expanded telesales capacity and continued progress in gaining greater effectiveness across our operations." With especially strong growth in its Medicare business, eHealth appears to be on track to continue making investors happy in the second half of the year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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