Please ensure Javascript is enabled for purposes of website accessibility

Why eHealth Stock Surged 22% Today

By Joe Tenebruso - Mar 4, 2020 at 7:49PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A new Democratic frontrunner is helping to allay fears of an industry shakeup.

What happened

Shares of eHealth (EHTH 5.42%) climbed by more than 20% on Wednesday, following the results of the Super Tuesday primary elections.

So what

Many health insurance stocks saw their prices sink in recent weeks after Democratic presidential candidate Bernie Sanders emerged as a frontrunner in the primaries. Sanders wants to institute a "Medicare For All" program, which would provide everyone in the U.S. with comprehensive healthcare coverage. Sanders' policies could potentially wipe out a huge portion of private insurers' businesses, as well as those of health insurance exchanges, such as eHealth.

However, investors appeared to breathe a sigh of relief after former Vice President Joe Biden's strong performance on Super Tuesday. Biden now leads in delegates after winning in states such as Texas, Virginia, and Massachusetts. A Biden victory would be much less frightening for health insurance-related companies, as his policies are far less threatening to the industry.

A person in a business suit pointing to an upwardly sloping line chart

eHealth's shares climbed sharply on Wednesday. Image source: Getty Images.

Now what

If investors can eventually turn their attention away from politics and toward eHealth's fundamental business performance, they'll probably like what they see. eHealth delivered strong fourth-quarter results in late February, including a 124% year over year surge in revenue, to $301.7 million, and an increase in net income to $88.8 million. "We ended the year on a strong note, delivering the best annual enrollment period in the company's history and generating financial results that significantly exceeded our 2019 annual guidance across multiple metrics," CEO Scott Flanders said in eHealth's earnings release. 

Moreover, Flanders expects eHealth's growth to remain robust in the coming year. "[W]e anticipate the momentum we have built over the past two years to continue into 2020," Flanders said.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

eHealth, Inc. Stock Quote
eHealth, Inc.
EHTH
$10.69 (5.42%) $0.55

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
321%
 
S&P 500 Returns
111%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.