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Why eHealth Stock Rose 24% in February

By Demitri Kalogeropoulos - Mar 8, 2021 at 9:15AM

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Investors were happy with the insurance provider's latest earnings update.

What happened

eHealth (EHTH -6.26%) shares outperformed a rising market last month. The stock jumped 24% in February compared to a 2.6% gain in the S&P 500, according to data provided by S&P Global Market Intelligence.

The gain reversed some of the prior month's losses, but shares are still down significantly so far in 2021.

A woman consults with a doctor using a tablet computer.

Image source: Getty Images.

So what

The online insurance provider said in mid-February that fourth-quarter sales landed at $293 million, which was at the high end of the disappointing outlook that management issued in late January. That figure represented a 3% drop and powered an even larger decline in adjusted earnings. However, investors chose to focus instead on management's optimistic guidance for the new year.

Now what

"We believe the issues that impacted our [Q4] performance were isolated and can be corrected in the near term," CEO Scott Flanders said in a press release last month. Executives backed up those claims with an aggressive outlook that calls for sales to rise to between $660 million and $700 million in 2021, translating into growth of between 13% and 20%.

The profit outlook was similarly bullish. Achieving those results will have to start with a return to robust growth in the current quarter, with Wall Street forecasting a 26% spike through late March.

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