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) -- a provider of private market online health insurance services for individuals, families, and small businesses -- jumped as much as 17% after the company reported third-quarter earnings results.
So what: For the quarter, eHealth reported a 12% increase in year-over-year revenue to $42 million as adjusted earnings per share fell slightly to $0.08 from $0.09 from the previous year. By comparison, Wall Street had been looking for EPS of $0.08 on revenue of $40.5 million. Membership figures, however, saw a large spike to 1,147,100 participants at the end of the quarter, a 24% increase from last year. Medicare membership increased by 76% while estimated individual and family plan membership -- which accounts for the lion's share of its 1.15 million members -- rose 10%. The company also reaffirmed its full-year EPS forecast of $0.61-$0.71 which fell in line with expectations.
Now what: If you're scratching your head and looking for a reason why eHealth would be up so strongly after what looks like a rather ho-hum report, there are two. One is made clear in the report: its membership growth figures. Although I'm a bit disappointed with the year-on-year drop in EPS, the 24% boost in membership certainly bodes well for strong earnings growth in the future. The second factor is more of an intangible: the innumerable glitches thus far of Obamacare's federal health insurance exchange, Healthcare.gov. eHealth has been running a private online platform for years, so it could benefit from displaced insurance seekers in a big way as long as these glitches continue. I'd certainly say eHealth is worth adding to your watchlist.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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