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eHealth, Inc. Announces Fourth Quarter and Fiscal 2012 Results

eHealth, Inc. Announces Fourth Quarter and Fiscal 2012 Results 
Fourth Quarter 2012 Overview 
-- Revenue of $45.3 Million, an Increase of 5% Compared to the Fourth
Quarter of 2011 
-- Submitted Applications for IFP Products Increased 10% From the
Fourth Quarter of 2011 
-- Total Estimated Members Increased 21% From the Fourth Quarter of
2011 
-- Operating Income of $4.3 Million, Compared to Operating Income of
$4.4 Million for the Fourth Quarter of 2011 
-- GAAP Net Income of $2.4 Million, or $0.11 per Diluted Share.
Fourth Quarter 2012 GAAP Net Income Includes a Negative Impact of
$0.3 Million or $0.01 per Diluted Share From an Asset Impairment
Charge 
-- Cash Flows From Operations Were $5.2 Million, an Increase of 106%
Compared to the Fourth Quarter of 2011 
MOUNTAIN VIEW, CA -- (Marketwire) -- 02/14/13 --  eHealth, Inc.
(NASDAQ: EHTH), America's first and largest private health insurance
exchange, announced today its financial results for the fourth
quarter and fiscal year ended December 31, 2012.  
Gary Lauer, chief executive officer of eHealth, stated, "In 2012 we
achieved good progress across the key areas of our business. We
returned to annual revenue and GAAP earnings growth after a
challenging 2011, completed the transition of our Medicare business
to a direct fulfillment model ahead of schedule, and saw a
significant improvement in our Individual and Family Plan business."  
Fourth Quarter 2012 Results 
Revenue - Revenue for the fourth quarter of 2012 totaled $45.3
million, a 5% increase compared to revenue of $43.1 million for the
fourth quarter of 2011. Commission revenue for the fourth quarter of
2012 totaled $37.3 million, a 19% increase compared to commission
revenue of $31.3 million for the fourth quarter of 2011. Medicare
revenue was $13.5 million for the fourth quarter of 2012, a 6%
increase compared to Medicare revenue of $12.7 million for the fourth
quarter of 2011. 
Submitted Applications - Submitted applications for individual and
family products increased 10% in the fourth quarter of 2012 to
113,600 applications, compared to 103,200 applications in the fourth
quarter of 2011. 
Membership - Total estimated membership at December 31, 2012 was
982,900 members, a 21% increase over estimated membership of 815,500
at December 31, 2011. Estimated individual and family plan membership
was 709,700, a 5% increase over estimated membership of 675,000 at
December 31, 2011. Estimated Medicare membership was 70,600, a 191%
increase over estimated membership of 24,300 at December 31, 2011.
Total approved members, including individual and family plan,
Medicare plan and other product members, increased 34% to 186,700
members in the fourth quarter of 2012, compared to 139,600 in the
fourth quarter of 2011. 
Income from Operations - Operating income for the fourth quarter of
2012 was $4.3 million, compared to operating income of $4.4 million
for the fourth quarter of 2011. Operating margins were 10% in both
the fourth quarters of 2012 and 2011. Non-GAAP operating income for
the fourth quarter of 2012 was $6.4 million, representing a decrease
of 3% compared to non-GAAP operating income of $6.6 million for the
fourth quarter of 2011. Non-GAAP operating margins were 14% and 15%
in the fourth quarters of 2012 and 2011, respectively. Non-GAAP
operating income and margins in the fourth quarter of 2012 exclude
$0.4 million for an asset impairment charge, $1.3 million of
stock-based compensation expense and $0.4 million of intangible asset
amortization expense. Non-GAAP operating income and margins in the
fourth quarter of 2011 exclude $1.5 million of stock-based
compensation expense and $0.8 million of intangible asset
amortization expense. 
EBITDA - EBITDA for the fourth quarter of 2012 was $6.6 million,
representing a decrease of 8% compared to EBITDA of $7.2 million for
the fourth quarter of 2011.  
Pre-tax Income - Pre-tax income for the fourth quarter of 2012 was
$4.3 million, compared to pre-tax income of $4.4 million for the
fourth quarter of 2011. 
Net Income - Net income for the fourth quarter of 2012 was $2.4
million, or $0.11 per diluted share, compared to net income of $2.3
million, or $0.11 per diluted share for the fourth quarter of 2011.
Non-GAAP net income for the fourth quarter of 2012 was $3.9 million,
or $0.18 per diluted share, compared to non-GAAP net income of $3.7
million, or $0.18 per diluted share for the fourth quarter of 2011.
Non-GAAP net income and non-GAAP net income per diluted share in the
fourth quarter of 2012 exclude $0.4 million for an asset impairment
charge, $1.3 million of stock-based compensation expense and $0.4
million of intangible asset amortization expense, less $0.7 million
for related income tax benefit. Non-GAAP net income and non-GAAP net
income per diluted share in the fourth quarter of 2011 exclude $1.5
million of stock-based compensation expense and $0.8 million of
intangible asset amortization expense, less $0.8 million for related
income tax benefit. 
Cash Flows - Cash flows from operations for the fourth quarter of
2012 were $5.2 million, representing a 106% increase compared to cash
flows from operations of $2.5 million for the fourth quarter of 2011. 
Fiscal 2012 Results  
Revenue - Revenue totaled $155.5 million for the year ended December
31, 2012, a 3% increase compared to revenue of $151.6 million for the
year ended December 31, 2011. Medicare revenue was approximately
$31.3 million for the year ended December 31, 2012, a 53% increase
compared to Medicare revenue of $20.4 million for the year ended
December 31, 2011. 
Income from Operations - Operating income for the year ended December
31, 2012 was $13.4 million, compared to operating income of $13.2
million for the year ended December 31, 2011. Operating margins were
9% for both years ended December 31, 2012 and 2011, respectively.
Non-GAAP operating income for the year ended December 31, 2012 was
$21.1 million, representing a decrease of 6% compared to non-GAAP
operating income of $22.4 million for the year ended December 31,
2011. Non-GAAP operating margins were 14% and 15% in the years ended
December 31, of 2012 and 2011, respectively. Non-GAAP operating
income and margins for the year ended December 31, 2012 exclude $0.4
million for an asset impairment charge, $5.6 million of stock-based
compensation expense and $1.6 million of intangible asset
amortization expense. Non-GAAP operating income and margins for the
year ended December 31, 2011 exclude $7.1 million of stock-based
compensation expense and $2.0 million of intangible asset
amortization expense. 
EBITDA - EBITDA for the year ended December 31, 2012 was $23.1
million, compared to EBITDA of $24.7 million for the year ended
December 31, 2011.  
Pre-tax Income - Pre-tax income for the year ended December 31, 2012
was $13.5 million, compared to pre-tax income of $13.2 million for
the year ended December 31, 2011. 
Net Income - Net income for the year ended December 31, 2012 was $7.1
million, or $0.34 per diluted share, compared to net income for the
year ended December 31, 2011 of $6.7 million, or $0.31 per diluted
share. Non-GAAP net income for the year ended December 31, 2012 was
$12.6 million, or $0.61 per diluted share, compared to non-GAAP net
income of $12.8 million, or $0.59 per diluted share for the year
ended December 31, 2011. Non-GAAP net income and non-GAAP net income
per diluted share for the year ended December 31, 2012 exclude $0.4
million for an asset impairment charge, $5.6 million of stock-based
compensation expense and
 $1.6 million of intangible asset
amortization expense, less $2.2 million for related income tax
benefit. Non-GAAP net income and non-GAAP net income per diluted
share for the year ended December 31, 2011 exclude $7.1 million of
stock-based compensation expense and $2.0 million of intangible asset
amortization expense, less $3.0 million for related income tax
benefit. 
Cash Flows and Cash Balance - Cash flows from operations for the year
ended December 31, 2012 were $24.9 million, representing a 10%
increase compared to $22.5 million for the year ended December 31,
2011. 
Cash and cash equivalents as of December 31, 2012 totaled $140.8
million, compared to $123.6 million as of December 31, 2011. The
increase in cash and cash equivalents reflects $24.9 million of cash
generated by operating activities in the year ended December 31,
2012. Partially offsetting this increase was $6.2 million of cash
consideration paid to a partner, whereby the partner transferred
certain of its existing Medicare plan members to us as the broker of
record on the underlying policies, and $9.4 million used to
repurchase 0.6 million shares of our common stock in 2012 as part of
our stock repurchase programs. In 2012, eHealth completed a $30
million share repurchase program at an average per share price of
$13.78 and announced and started an additional $30 million share
repurchase program. 
2013 Guidance 
eHealth is provi
ding guidance for the full year ending December 31,
2013 based on information available as of February 14, 2013. These
expectations are forward-looking statements and eHealth assumes no
obligation to update these statements. Results may be materially
different and are affected by the risk factors and uncertainties
identified in this release and in eHealth's annual and quarterly
filings with the Securities and Exchange Commission. 


 
--  Total revenue is expected to be in the range of $168 million to $174
    million
    
    
--  Stock-based compensation expense is expected to be in the range of
    $6.0 million to $7.5 million
    
    
--  EBITDA* is expected to be in the range of $23 million to $29 million
    
    
--  Non-GAAP net income per diluted share** is expected to be in the range
    of $0.61 to $0.71 per share

  
*EBITDA is calculated by adding stock-based compensation expense,
depreciation and amortization expense, including intangible asset
amortization expense, other (income) expense, net and provision for
income taxes to GAAP net income. 
** Non-GAAP net income per diluted share is calculated by excluding
stock-based compensation expense, intangible asset amortization
expense and the estimated tax benefit relating to these expenses. 
Webcast and Conference Call Information
 A Webcast and conference
call will be held today, Thursday, February 14, 2013 at 5:00 p.m.
Eastern Time / 2:00 p.m. Pacific Time. The Webcast will be available
live on the Investor Relations section on eHealth's website at
http://ir.ehealthinsurance.com. Individuals interested in listening
to the conference call may do so by dialing 866-783-2137 for domestic
callers and 857-350-1596 for international callers. The participant
passcode is 76455009. A telephone replay will be available two hours
following the conclusion of the call for a period of 30 days and can
be accessed by dialing 888-286-8010 for domestic callers and
617-801-6888 for international callers. The call ID for the replay is
52162037. The live and archived webcast of the call will also be
available on eHealth's website at http://www.ehealthinsurance.com
under the Investor Relations section. 
About eHealth, Inc.
 eHealth, Inc. (NASDAQ: EHTH) is the parent
company of eHealthInsurance, America's first and largest private
health insurance exchange where individuals, families and small
businesses can compare health insurance products from leading
insurers side by side and purchase and enroll in coverage online.
eHealthInsurance offers thousands of individual, family and small
business health plans underwritten by more than 180 of the nation's
leading health insurance companies. eHealthInsurance is licensed to
sell health insurance in all 50 states and the District of Columbia.
Through the company's eHealthTechnology solution
(w
ww.eHealthTechnology.com), eHealth is also a leading provider of
health insurance exchange technology. eHealthTechnology's exchange
platform provides a suite of hosted e-commerce solutions that enable
health plan providers, resellers and government entities to market
and distribute products online. eHealth, Inc. also provides powerful
online and pharmacy-based tools to help seniors navigate Medicare
health insurance options, choose the right plan and enroll in select
plans online through its wholly-owned subsidiary, PlanPrescriber.com
(www.planprescriber.com) and through its Medicare website
www.eHealthMedicare.com. 
Forward-Looking Statements
 This press release contains statements
that are forward-looking statements as defined within the Private
Securities Litigation Reform Act of 1995. These include statements
regarding future events, our future performance, guidance for total
revenue, stock-based compensation expense, EBITDA, non-GAAP net
income per diluted share for the year ending December 31, 2012, the
utility to our investors of the non-GAAP financial measures presented
is this release, our expectations regarding our future stock-based
compensation costs and purchased intangible asset amoritization
costs, and our estimates regarding income tax benefits. These
forward-looking statements are inherently subject to various risks
and uncertainties that could cause actual results to differ
materially from the statements made, including risks associated with
the impact of healthcare reform and medical loss ratio requirements;
eHealth's ability to maintain its relationship with health insurance
carriers; eHealth's success in marketing and selling Medicare-related
health insurance plans; eHealth's ability to hire, train and retain
licensed health insurance agents for its Medicare business; the need
for health insurance carrier and regulatory approvals in connection
with the marketing of Medicare-related insurance products; government
disapproval of our use of marketing material, including call center
scripts and our websites, to sell Medicare-related health insurance
products; costs of acquiring new members; weak economic conditions;
consumer awareness of the availability and accessibility of
affordable health insurance; changes in member conversion rates; lack
of membership growth and retention rates; changes in products offered
on eHealth's ecommerce platform; changes in commission rates or
carrier underwriting practices; maintaining and enhancing eHealth's
brand identity; system failures, capacity constraints, data loss or
online commerce security risks; dependence on acceptance of the
Internet as a marketplace for the purchase and sale of health
insurance; dependence upon Internet search engines; reliance on
marketing partners; timing of receipt and accuracy of commission
reports; payment practices of health insurance carriers; competition;
our operations in China; success of eHealth's sponsorship and
advertising business; the licensing of the use of eHealth's
technology or our performance of services pursuant to government
contracts; protection of intellectual property and defense of
intellectual property rights claims; legal liability, regulatory
penalties and negative publicity;changes in our management and key
employees; management of business expansion and diversification;
seasonality; impact of acquisitions, including risks associated with
not realizing anticipated synergies and opportunities with respect to
PlanPrescriber, Inc.; underperformance by PlanPrescriber, Inc.;
PlanPrescriber's maintenance of its relationships with its pharmacy
and other partners that serve as a source of Medicare-related leads;
government approval of marketing material, including websites
relating to PlanPrescriber partner Medicare product lead referrals;
maintenance of proper and effective internal controls; impact of
provisions for income taxes; changes in laws and regulations,
including with respect to the marketing and sale of Medicare plans;
compliance with insurance and other laws and regulations; exposure to
security risks; and the performance, reliability and availability of
eHealth's ecommerce platform and underlying network infrastructure.
Other factors that could cause operating, financial and other results
to differ are described in eHealth's most recent Quarterly Report on
Form 10-Q or Annual Report on Form 10-K filed with the Securities and
Exchange Commission and available on the investor relations page of
eHealth's website at http://www.ehealthinsurance.com and on the
Securities and Exchange Commission's website at www.sec.gov. eHealth
does not undertake any obligation to update any forward-looking
statement to conform the statement to actual results or changes in
expectations. 
Non-GAAP Financial Information 
 This press release includes
financial measures that are not in accordance with generally accepted
accounting principles in the United States (GAAP). To supplement
eHealth's condensed consolidated financial statements presented in
accordance with GAAP, eHealth presents investors with certain
non-GAAP financial measures, including non-GAAP operating income;
non-GAAP operating margins; earnings before interest, taxes,
depreciation and amortization (EBITDA); non-GAAP net income and
non-GAAP net income per diluted share. 


 
--  Non-GAAP operating income consists of GAAP operating income excluding
    the following items:
    --  an asset impairment charge recorded in the fourth quarter of 2012,
    --  the effects of expensing stock-based compensation related to stock
        options and restricted stock units in accordance with FASB ASC
        Topic 718, and
    --  intangible asset amortization expense.
        
        
--  Non-GAAP operating margins are calculated by dividing non-GAAP
    operating income by GAAP total revenue.
    
    
--  EBITDA is calculated by adding stock-based compensation, depreciation
    and amortization expense, including intangible asset amortization
    expense, other (income) expense, net and provision for income taxes to
    GAAP net income.
    
    
--  Non-GAAP net income consists of GAAP net income excluding the
    following items:
    --  an asset impairment charge recorded in the fourth quarter of 2012,
    --  the effects of expensing stock-based compensation related to stock
        options and restricted stock units in accordance with FASB ASC
        Topic 718,
    --  intangible asset amortization expense, and
    --  the related income tax benefits of these excluded expenses.
        
--  Non-GAAP net income per diluted share is calculated by dividing
    non-GAAP net income by GAAP weighted average diluted shares
    outstanding.

  
eHealth believes that the presentation of these non-GAAP financial
measures provide important supplemental information to management and
investors regarding financial and business trends relating to the
Company's financial condition and results of operations. Management
believes that the use of these non-GAAP financial measures provides
consistency and comparability with the Company's past financial
reports. Management also believes that the exclusion of the items
described above provides an additional measure of the Company's
operating results and facilitates comparisons of the Company's core
operating performance against prior periods and business model
objectives. This information is provided to investors in order to
facilitate additional analyses of past, present and future operating
performance and as a supplemental means to evaluate the Company's
ongoing operations. Externally, the Company believes that these
non-GAAP financial measures are useful to investors in their
assessment of the Company's operating performance.  
Non-GAAP operating income, non-GAAP operating margins, EBITDA,
non-GAAP net income and non-GAAP net income per diluted share are not
calculated in accordance with GAAP, and should be considered
supplemental to, and not as a substitute for, or superior to,
financial measures calculated in accordance with GAAP. Non-GAAP
financial measures used in this press release have limitations in
that they do not reflect all of the revenue and costs associated with
the operations of the Company's business and do not reflect income
tax as determined in accordance with GAAP. As a result, you should
not consider these measures in isolation or as a substitute for
analysis of eHealth's results as reported under GAAP. The Company
expects to continue to incur the stock-based compensation costs and
purchased intangible asset amortization costs described above, and
exclusion of these costs, and their related income tax benefits, from
non-GAAP financial measures should not be construed as an inference
that these costs are unusual or infrequent. The Company compensates
for these limitations by prominently disclosing GAAP operating
income, GAAP operating margins, GAAP net income and GAAP net income
per diluted share and providing investors with reconciliations from
the Company's GAAP operating results to the non-GAAP financial
measures for the relevant periods. 
The accompanying tables provide more details on the GAAP financial
measures that are most directly comparable to the non-GAAP financial
measures described above and the related reconciliations between
these financial measures. 


 
                                                                            
                                                                            
                               EHEALTH, INC.                                
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
                         (In thousands, unaudited)                          
                                                                            
                                              December 31,    December 31,  
                                                  2011            2012      
                                             --------------  -------------- 
                   Assets                          (1)         (unaudited)  
Current assets:                                                             
  Cash and cash equivalents                  $      123,607  $      140,849 
  Accounts receivable                                 8,055           4,468 
  Deferred income taxes                               4,622           4,098 
  Prepaid expenses and other current assets           3,377           6,643 
                                             --------------  -------------- 
Total current assets                                139,661         156,058 
Property and equipment, net                           4,631           6,185 
Deferred income taxes                                 3,390           2,928 
Other assets                                          5,641           8,123 
Intangible assets, net                               10,526           8,911 
Goodwill                                             14,096          14,096 
                                             --------------  -------------- 
Total assets                                 $      177,945  $      196,301 
                                             ==============  ============== 
                                                                            
                                                                            
    Liabilities and stockholders' equity                                    
Current liabilities:                                                        
  Accounts payable                           $        2,391  $        6,123 
  Accrued compensation and benefits                   7,904           8,244 
  Accrued marketing expenses                          6,195           3,941 
  Deferred revenue                                      314             926 
  Other current liabilities                           1,547           1,575 
                                             --------------  -------------- 
Total current liabilities                            18,351          20,809 
Non-current liabilities                               3,920           4,625 
                                                                            
Stockholders' equity:                                                       
  Common stock                                           26              27 
  Additional paid-in capital                        215,364         232,903 
  Treasury stock, at cost                           (81,557)        (90,991)
  Retained earnings                                  21,661          28,743 
  Accumulated other comprehensive income                180             185 
                                             --------------  -------------- 
Total stockholders' equity                          155,674         170,867 
                                             --------------  -------------- 
Total liabilities and stockholders' equity   $      177,945  $      196,301 
                                             ==============  ============== 
                                                                            
(1) The condensed consolidated balance sheet at December 31, 2011 has been  
    derived from the audited consolidated financial statements at that date.
                                                                            
                                                                            
                                                                            
                                EHEALTH, INC.                               
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME                
             (In thousands, except per share amounts, unaudited)            
                                                                            
                                  Three Months Ended     Fiscal Year Ended  
                                     December 31,           December 31,    
                                 --------------------  ---------------------
                                    2011       2012       2011       2012   
                                 ---------- ---------  ---------  ----------
                                                                            
Revenue                                                                     
  Commission                     $   31,276 $  37,305  $ 120,321  $  130,663
  Other                              11,844     8,000     31,327      24,810
                                 ---------- ---------  ---------  ----------
Total revenue                        43,120    45,305    151,648     155,473
Operating costs and expenses:                                               
  Cost of revenue                     1,353     1,245      8,340       4,783
  Marketing and advertising (1)      18,474    18,647     56,877      57,789
  Customer care and enrollment                                              
   (1)                                6,633     9,130     22,898      30,282
  Technology and content (1)          5,224     5,388     21,657      21,406
  General and administrative (1)      6,294     6,231     26,593      26,169
  Amortization of intangible                                                
   assets                               765       354      2,046       1,615
                                 ---------- ---------  ---------  ----------
Total operating costs and                                                   
 expenses                            38,743    40,995    138,411     142,044
                                 ---------- ---------  ---------  ----------
Income from operations                4,377     4,310     13,237      13,429
Other income (expense), net               8       (18)       (53)         23
                                 ---------- ---------  ---------  ----------
Income before provision for                                                 
 income taxes                         4,385     4,292     13,184      13,452
Provision for income taxes            2,125     1,845      6,460       6,370
                                 ---------- ---------  ---------  ----------
Net income                       $    2,260 $   2,447  $   6,724  $    7,082
                                 ========== =========  =========  ==========
                                                                            
Net income per share:                                                       
  Basic                          $     0.11 $    0.12  $    0.32  $     0.36
  Diluted                        $     0.11 $    0.11  $    0.31  $     0.34
                                                                            
Weighted-average number of                                                  
 shares used in per share                                                   
 amounts:                                                                   
  Basic                              20,006    20,331     20,947      19,867
  Diluted                            20,889    21,319     21,703      20,753
                                                                            
(1) Includes stock-based                                                    
 compensation as follows:                                                   
  Marketing and advertising      $      188 $     283  $     962  $    1,215
  Customer care and enrollment           80        78        344         321
  Technology and conent                 333       238      1,669       1,021
  General and administrative            873       697      4,121       3,065
                                 ---------- ---------  ---------  ----------
    Total                        $    1,474 $   1,296  $   7,096  $    5,622
                                 ========== =========  =========  ==========
                                                                            
                                                                            
                                                                            
                               EHEALTH, INC.                                
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS               
                         (In thousands, unaudited)                          
                                                                            
                                  Three Months Ended    Fiscal Year Ended   
                                     December 31,          December 31,     
                                 --------------------  -------------------- 
                                    2011       2012       2011       2012   
                                 ---------  ---------  ---------  --------- 
                                                                            
Operating activities                                                        
Net income                       $   2,260  $   2,447  $   6,724  $   7,082 
Adjustments to reconcile net                                                
 income to net cash provided by                                             
 operating activities:                                                      
  Deferred income taxes                (48)     1,056        914      1,071 
  Depreciation and amortization        559        671      2,358      2,411 
  Amortization of book-of-                                                  
   business consideration              477        734        843      2,724 
  Amortization of intangible                                                
   assets                              765        354      2,046      1,615 
  Stock-based compensation                                                  
   expense                           1,474      1,296      7,096      5,622 
  Deferred rent                        (10)       125         (3)       175 
  Loss on disposal of fixed                                                 
   assets                                -          -         38          1 
  Changes in operating assets                                               
   and liabilities:                                                         
    Accounts receivable             (4,315)    (1,212)     3,383      3,587 
    Prepaid expenses and other                                              
     assets                            387       (441)     1,769     (1,097)
    Accounts payable                  (294)     1,552     (1,948)     3,732 
    Accrued compensation and                                                
     benefits                          (92)      (577)       363        336 
    Accrued marketing expenses       1,860         78      2,551     (2,254)
    Deferred revenue                  (839)       589     (2,471)       979 
    Other current liabilities          353     (1,434)    (1,122)    (1,093)
                                 ---------  ---------  ---------  --------- 
Net cash provided by operating                                              
 activities                          2,537      5,238     22,541     24,891 
                                 ---------  ---------  ---------  --------- 
                                                                            
Investing activities                                                        
Purchases of property and                                                   
 equipment                            (475)      (725)    (2,407)    (3,853)
Book of business transfers            (284)         -     (4,190)    (6,243)
                                 ---------  ---------  ---------  --------- 
Net cash used in investing                                                  
 activities                           (759)      (725)    (6,597)   (10,096)
                                 ---------  ---------  ---------  --------- 
                                                                            
Financing activities                                                        
Net proceeds from exercise of                                               
 common stock options                  715      4,431        899      8,445 
Cash used to net-share settle                                               
 equity awards                          (4)        (2)      (552)      (993)
Excess tax benefits from stock-                                             
 based compensation                  1,956      2,108      4,690      4,466 
Repurchase of common stock          (7,322)      (993)   (25,355)    (9,434)
Principle payments in connection                                            
 with capital leases                   (17)       (13)       (63)       (44)
                                 ---------  ---------  ---------  --------- 
Net cash (used in) provided by                                              
 financing activities               (4,672)     5,531    (20,381)     2,440 
                                 ---------  ---------  ---------  --------- 
                                                                            
Effect of exchange rate changes                                             
 on cash and cash equivalents            -          5        (30)         7 
                                 ---------  ---------  ---------  --------- 
                                                                            
Net increase (decrease) in cash                                             
 and cash equivalents               (2,894)    10,049     (4,467)    17,242 
Cash and cash equivalents at                                                
 beginning of period               126,501    130,800    128,074    123,607 
                                 ---------  ---------  ---------  --------- 
Cash and cash equivalents at end                                            
 of period                       $ 123,607  $ 140,849  $ 123,607  $ 140,849 
                                 =========  =========  =========  ========= 
                                                                            
                                                                            
                                                                            

 
                               EHEALTH, INC.                                
                        SUMMARY OF SELECTED METRICS                         
                                (Unaudited)                                 
                                                                            
                                              Three Months    Three Months  
                                                  Ended           Ended     
                                              December 31,    December 31,  
Key Metrics:                                      2011            2012      
                                             --------------  -------------- 
                                                                            
Operating cash flows (1)                     $    2,537,000  $    5,238,000 
                                                                            
IFP submitted applications (2)                      103,200         113,600 
                                                                            
IFP approved members (3)                             85,500          93,600 
Total approved members (4)                          139,600         186,700 
                                                                            
Commission revenue (5)                       $   31,276,000  $   37,305,000 
Commission revenue per estimated member for                                 
 the period (6)                              $        38.47  $        39.07 
                                                                            
                                                                            
                                                 As of           As of      
                                              December 31,    December 31,  
                                                  2011            2012      
                                             --------------  -------------- 
                                                                            
IFP estimated membership (7)                        675,000         709,700 
Medicare estimated membership (8)                    24,300          70,600 
Other estimated membership (9)                      116,200         202,600 
                                             --------------  -------------- 
Total estimated membership (10)                     815,500         982,900 
                                             ==============  ============== 
                                                                            
                                                                            
                                              Three Months    Three Months  
                                                  Ended           Ended     
                                              December 31,    December 31,  
Other Metrics:                                    2011            2012      
                                             --------------  -------------- 
                                                                            
Source of IFP submitted applications (as a                                  
 percentage of total IFP applications for                                   
 the period):                                                               
  Direct (11)                                            43%             49%
  Marketing partners (12)                                33%             33%
  Online advertising (13)                                24%             18%
                                             --------------  -------------- 
    Total                                               100%            100%
                                             ==============  ============== 
                                                                            
Notes:                                                                      
                                                                            
(1)  Net cash provided by operating activities for the period from the      
     condensed consolidated statements of cash flows.                       
(2)  IFP applications submitted on eHealth's website during the period.     
     Applications are counted as submitted when the applicant completes the 
     application, provides a method for payment and clicks the submit button
     on our website and submits the application to us. The applicant        
     generally has additional actions to take before the application will be
     reviewed by the insurance carrier, such as providing additional        
     information and providing an electronic signature. In addition, an     
     applicant may submit more than one application. We include applications
     for IFP products for which we receive commissions as well as other     
     forms of payment. We define our "IFP" offerings as major medical       
     individual and family health insurance plans, which does not include   
     small business, short-term major medical, stand-alone dental, life,    
     student or Medicare-related health insurance plans.                    
(3)  New IFP members reported to eHealth as approved during the period. Some
     members that are approved by a carrier do not accept the approval and  
     therefore do not become paying members.                                
(4)  New members for all products reported to eHealth as approved during the
     period. Some members that are approved by a carrier do not accept the  
     approval and therefore do not become paying members.                   
(5)  Commission revenue (from all sources) recognized during the period from
     the condensed consolidated statements of income.                       
(6)  Calculated as commission revenue recognized during the period (see note
     (5) above) divided by average estimated membership for the period      
     (calculated as beginning and ending estimated membership for all       
     products for the period, divided by two). See our Form 10-K for the    
     year ended December 31, 2011 - Item 7 - Management's Discussion and    
     Analysis of Financial Condition and Results of Operations - Summary of 
     Selected Metrics for additional information regarding our calculation  
     of estimated membership.                                               
(7)  Estimated number of members active on IFP insurance policies as of the 
     date indicated. See our Form 10-K for the year ended December 31, 2011 
     - Item 7 - Management's Discussion and Analysis of Financial Condition 
     and Results of Operations - Summary of Selected Metrics for additional 
     information regarding our calculation of estimated membership.         
(8)  Estimated number of members active on Medicare insurance policies as of
     the date indicated. See our Form 10-K for the year ended December 31,  
     2011 - Item 7 - Management's Discussion and Analysis of Financial      
     Condition and Results of Operations - Summary of Selected Metrics for  
     additional information regarding our calculation of estimated          
     membership.                                                            
(9)  Estimated number of members active on insurance policies other than IFP
     and Medicare policies as of the date indicated. See our Form 10-K for  
     the year ended December 31, 2011 - Item 7 - Management's Discussion and
     Analysis of Financial Condition and Results of Operations - Summary of 
     Selected Metrics for additional information regarding our calculation  
     of estimated membership.                                               
(10) Estimated number of members active on all insurance policies as of the 
     date indicated. See our Form 10-K for the year ended December 31, 2011 
     - Item 7 - Management's Discussion and Analysis of Financial Condition 
     and Results of Operations - Summary of Selected Metrics for additional 
     information regarding our calculation of estimated membership.         
(11) Percentage of IFP submitted applications from applicants who came      
     directly to the eHealth website through algorithmic search engine      
     results or otherwise. See note (2) above for further information as to 
     what constitutes a submitted application.                              
(12) Percentage of IFP submitted applications from applicants sourced       
     through eHealth's network of marketing partners. See note (2) above for
     further information as to what constitutes a submitted application.    
(13) Percentage of IFP submitted applications from applicants sourced       
     through paid search and other online advertising activities. See note  
     (2) above for further information as to what constitutes a submitted   
     application.                                                           
                                                                            
                                                                            
                                                                            
                               EHEALTH, INC.                                
                      GAAP TO NON-GAAP RECONCILIATION                       
                FOR THE THREE MONTHS ENDED DECEMBER 31, 2012                
            (In thousands, except per share amounts, unaudited)             
                                                                            
Statement of Income Reconciliation                                          
                                                                            
                                Three Months Ended December 31, 2012        
                        --------------------------------------------------- 
                                    GAAP                           Non-GAAP 
                                   Percent                          Percent 
                          GAAP    of Total               Non-GAAP  of Total 
                        Reported   Revenue  Adjustments   Results   Revenue 
                        --------  --------  -----------  --------  -------- 
                                                                            
Revenue:                                                                    
  Commission            $ 37,305        82% $         -  $ 37,305        82%
  Sponsorship,                                                              
   licensing and other     8,000        18            -     8,000        18 
                        --------  --------  -----------  --------  -------- 
Total revenue             45,305       100            -    45,305       100 
  Operating costs and                                                       
   expenses:                                                                
  Cost of revenue-                                                          
   sharing (1)             1,245         3         (435)      810         2 
  Marketing and                                                             
   advertising (2)        18,647        41         (283)   18,364        41 
  Customer care and                                                         
   enrollment (2)          9,130        20          (78)    9,052        20 
  Technology and                                                            
   content (2)             5,388        12         (238)    5,150        11 
  General and                                                               
   administrative (2)      6,231        14         (697)    5,534        12 
  Amortization of                                                           
   intangible assets                                                        
   (3)                       354         1         (354)        -         - 
                        --------  --------  -----------  --------  -------- 
Total operating costs                                                       
 and expenses             40,995        90       (2,085)   38,910        86 
                        --------  --------  -----------  --------  -------- 
Income from operations     4,310        10        2,085     6,395        14 
Other income, net            (18)       (0)           -       (18)       (0)
                        --------  --------  -----------  --------  -------- 
Income before provision                                                     
 for income taxes          4,292         9        2,085     6,377        14 
Provision for income                                                        
 taxes (4)                 1,845         4          662     2,507         6 
                        --------  --------  -----------  --------  -------- 
Net income (5)          $  2,447         5% $     1,423  $  3,870         9%
                        ========  ========  ===========  ========  ======== 
                                                                            
Net income per share:                                                       
 (5)                                                                        
  Basic - common stock  $   0.12            $      0.07  $   0.19           
  Diluted - common                                                          
   stock                $   0.11            $      0.07  $   0.18           
                                                                            
Weighted-average number                                                     
 of shares used in per                                                      
 share amounts:                                                             
  Basic - common stock    20,331                 20,331    20,331           
  Diluted - common                                                          
   stock                  21,319                 21,319    21,319           
                                                                            
Explanation of adjustments                                                  
(1)  Non-GAAP results exclude an asset impairment charge.                   
(2)  Non-GAAP results exclude the effect of expensing stock-based           
     compensation related to stock options and restricted stock units in    
     accordance with FASB ASC Topic 718.                                    
(3)  Non-GAAP results exclude intangible asset amortization expense.        
(4)  Non-GAAP provision for income taxes excludes the estimated income tax  
     benefits related to the asset impairment charge listed in note (1)     
     above, stock-based compensation expense listed in note (2) above and   
     intangible asset amortization expense listed in note (3) above.        
(5)  Non-GAAP net income and non-GAAP net income per share exclude the asset
     impairment charge listed in note (1) above, stock-based compensation   
     expense listed in note (2) above, intangible asset amortization expense
     listed in note (3) above, less the estimated income tax benefit listed 
     in note (4) above.                                                     
                                                                            
                                                                            
                                                                            
                               EHEALTH, INC.                                
                      GAAP TO NON-GAAP RECONCILIATION                       
                FOR THE THREE MONTHS ENDED DECEMBER 31, 2011                
            (In thousands, except per share amounts, unaudited)             
                                                                            
Statement of Income Reconciliation                                          
                                                                            
                                Three Months Ended December 31, 2011        
                        --------------------------------------------------- 
                                    GAAP                           Non-GAAP 
                                   Percent                          Percent 
                           GAAP   of Total                Non-GAAP of Total 
                         Reported  Revenue  Adjustments   Results   Revenue 
                        --------- --------  -----------  --------- -------- 
                                                                            
Revenue:                                                                    
  Commission            $  31,276       73% $        --  $  31,276       73%
  Sponsorship,                                                              
   licensing and other     11,844       27           --     11,844       27 
                        --------- --------  -----------  --------- -------- 
Total revenue              43,120      100           --     43,120      100 
  Operating costs and                                                       
   expenses:                                                                
  Cost of revenue-                                                          
   sharing                  1,353        3           --      1,353        3 
  Marketing and                                                             
   advertising (1)         18,474       43         (188)    18,286       42 
  Customer care and                                                         
   enrollment (1)           6,633       15          (80)     6,553       15 
  Technology and                                                            
   content (1)              5,224       12         (333)     4,891       11 
  General and                                                               
   administrative (1)       6,294       15         (873)     5,421       13 
  Amortization of                                                           
   intangible assets                                                        
   (2)                        765        2         (765)        --       -- 
                        --------- --------  -----------  --------- -------- 
Total operating costs                                                       
 and expenses              38,743       90       (2,239)    36,504       85 
                        --------- --------  -----------  --------- -------- 
Income from operations      4,377       10        2,239      6,616       15 
Other income, net               8        0           --          8        0 
                        --------- --------  -----------  --------- -------- 
Income before provision                                                     
 for income taxes           4,385       10        2,239      6,624       15 
Provision for income                                                        
 taxes (3)                  2,125        5          773      2,898        7 
                        --------- --------  -----------  --------- -------- 
Net income (4)          $   2,260        5% $     1,466  $   3,726        9%
                        ========= ========  ===========  ========= ======== 
                                                                            
Net income per share:                                                       
 (4)                                                                        
  Basic - common stock  $    0.11           $      0.08  $    0.19          
  Diluted - common                                                          
   stock                $    0.11           $      0.07  $    0.18          
                                                                            
Weighted-average number                                                     
 of shares used in per                                                      
 share amounts:                                                             
  Basic - common stock     20,006                20,006     20,006          
  Diluted - common                                                          
   stock                   20,889                20,889     20,889          
                                                                            
Explanation of adjustments                                                  
(1)  Non-GAAP results exclude the effect of expensing stock-based           
     compensation related to stock options and restricted stock units in    
     accordance with FASB ASC Topic 718.                                    
(2)  Non-GAAP results exclude intangible asset amortization expense.        
(3)  Non-GAAP provision for income taxes excludes the estimated income tax  
     benefits related to stock-based compensation expense listed in note (1)
     above and intangible asset amortization expense listed in note (2)     
     above.                                                                 
(4)  Non-GAAP net income and non-GAAP net income per share exclude stock-   
     based compensation expense listed in note (1) above, intangible asset  
     amortization expense listed in note (2) above, less the estimated      
     income tax benefit listed in note (3) above.                           
                                                                            
                                                                            
                                                                            
                               EHEALTH, INC.                                
                      GAAP TO NON-GAAP RECONCILIATION                       
                FOR THE YEAR FISCAL ENDED DECEMBER 31, 2012                 
            (In thousands, except per share amounts, unaudited)             
                                                                            
Statement of Income Reconciliation                                          
                                                                            
                                Fiscal Year Ended December 31, 2012         
                        --------------------------------------------------- 
                                    GAAP                           Non-GAAP 
                                   Percent                          Percent 
                           GAAP   of Total                Non-GAAP of Total 
                         Reported  Revenue  Adjustments   Results   Revenue 
                        --------- --------  -----------  --------- -------- 
                                                                            
Revenue:                                                                    
  Commission            $ 130,663       84% $         -  $ 130,663       84%
  Sponsorship,                                                              
   licensing and other     24,810       16            -     24,810       16 
                        --------- --------  -----------  --------- -------- 
Total revenue             155,473      100            -    155,473      100 
  Operating costs and                                                       
   expenses:                                                                
  Cost of revenue-                                                          
   sharing (1)              4,783        3         (435)     4,348        3 
  Marketing and                                                             
   advertising (2)         57,789       37       (1,215)    56,574       36 
  Customer care and                                                         
   enrollment (2)          30,282       19         (321)    29,961       19 
  Technology and                                                            
   content (2)             21,406       14       (1,021)    20,385       13 
  General and                                                               
   administrative (2)      26,169       17       (3,065)    23,104       15 
  Amortization of                                                           
   intangible assets                                                        
   (3)                      1,615        1       (1,615)         -        - 
                        --------- --------  -----------  --------- -------- 
Total operating costs                                                       
 and expenses             142,044       91       (7,672)   134,372       86 
                        --------- --------  -----------  --------- -------- 
Income from operations     13,429        9        7,672     21,101       14 
Other income, net              23        0            -         23        0 
                        --------- --------  -----------  --------- -------- 
Income before provision                                                     
 for income taxes          13,452        9        7,672     21,124       14 
Provision for income                                                        
 taxes (4)                  6,370        4        2,161      8,531        5 
                        --------- --------  -----------  --------- -------- 
Net income (5)          $   7,082        5% $     5,511  $  12,593        8%
                        ========= ========  ===========  ========= ======== 
                                                                            
Net income per share:                                                       
 (5)                                                                        
  Basic - common stock  $    0.36           $      0.27  $    0.63          
  Diluted - common                                                          
   stock                $    0.34           $      0.27  $    0.61          
                                                                            
Weighted-average number                                                     
 of shares used in per                                                      
 share amounts:                                                             
  Basic - common stock     19,867                19,867     19,867          
  Diluted - common                                                          
   stock                   20,753                20,753     20,753          
                                                                            
                                                                            
                                                                            
Explanation of adjustments                                                  
                                                                            
(1)  Non-GAAP results exclude an asset impairment charge.                   
(2)  Non-GAAP results exclude the effect of expensing stock-based           
     compensation related to stock options and restricted stock units in    
     accordance with FASB ASC Topic 718.                                    
(3)  Non-GAAP results exclude intangible asset amortization expense.        
(4)  Non-GAAP provision for income taxes excludes the estimated income tax  
     benefits related to the asset impairment charge listed in note (1)     
     above, stock-based compensation expense listed in note (2) above and   
     intangible asset amortization expense listed in note (3) above.        
(5)  Non-GAAP net income and non-GAAP net income per share exclude the asset
     impairment charge listed in note (1) above, stock-based compensation   
     expense listed in note (2) above, intangible asset amortization expense
     listed in note (3) above, less the estimated income tax benefit listed 
     in note (4) above.                                                     
                                                                            
                                                                            
                                                                            
                               EHEALTH, INC.                                
                      GAAP TO NON-GAAP RECONCILIATION                       
                FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011                 
            (In thousands, except per share amounts, unaudited)             
                                                                            
Statement of Income Reconciliation                                          
                                                                            
                                Fiscal Year Ended December 31, 2011         
                        --------------------------------------------------- 
                                    GAAP                           Non-GAAP 
                                   Percent                          Percent 
                          GAAP    of Total               Non-GAAP  of Total 
                        Reported   Revenue  Adjustments   Results   Revenue 
                        --------  --------  -----------  --------  -------- 
                                                                            
Revenue:                                                                    
  Commission            $120,321        79% $        --  $120,321        79%
  Sponsorship,                                                              
   licensing and other    31,327        21           --    31,327        21 
                        --------  --------  -----------  --------  -------- 
Total revenue            151,648       100                151,648       100 
  Operating costs and                                                       
   expenses:                                                                
  Cost of revenue-                                                          
   sharing                 8,340         5           --     8,340         6 
  Marketing and                                                             
   advertising (1)        56,877        38         (962)   55,915        37 
  Customer care and                                                         
   enrollment (1)         22,898        15         (344)   22,554        15 
  Technology and                                                            
   content (1)            21,657        14       (1,669)   19,988        13 
  General and                                                               
   administrative (1)     26,593        18       (4,121)   22,472        15 
  Amortization of                                                           
   intangible assets                                                        
   (2)                     2,046         1       (2,046)       --        -- 
                        --------  --------  -----------  --------  -------- 
Total operating costs                                                       
 and expenses            138,411        91       (9,142)  129,269        85 
                        --------  --------  -----------  --------  -------- 
Income from operations    13,237         9        9,142    22,379        15 
Other income (expense),                                                     
 net                         (53)       (0)          --       (53)       (0)
                        --------  --------  -----------  --------  -------- 
Income before provision                                                     
 for income taxes         13,184         9        9,142    22,326        15 
Provision for income                                                        
 taxes (3)                 6,460         4        3,044     9,504         6 
                        --------  --------  -----------  --------  -------- 
Net income (4)          $  6,724         4% $     6,098  $ 12,822         8%
                        ========  ========  ===========  ========  ======== 
                                                                            
Net income per share:                                                       
 (4)                                                                        
  Basic - common stock  $   0.32            $      0.29  $   0.61           
  Diluted - common                                                          
   stock                $   0.31            $      0.28  $   0.59           
                                                                            
Weighted-average number                                                     
 of shares used in per                                                      
 share amounts:                                                             
  Basic - common stock    20,947                 20,947    20,947           
  Diluted - common                                                          
   stock                  21,703                 21,703    21,703           
                                                                            
Explanation of adjustments                                                  
                                                                            
(1)  Non-GAAP results exclude the effect of expensing stock-based           
     compensation related to stock options and restricted stock units in    
     accordance with FASB ASC Topic 718.                                    
(2)  Non-GAAP results exclude intangible asset amortization expense.        
(3)  Non-GAAP provision for income taxes excludes the estimated income tax  
     benefits related to stock-based compensation expense listed in note (1)
     above and intangible asset amortization expense listed in note (2)     
     above.                                                                 
(4)  Non-GAAP net income and non-GAAP net income per share exclude stock-   
     based compensation expense listed in note (1) above, intangible asset  
     amortization expense listed in note (2) above, less the estimated      
     income tax benefit listed in note (3) above.                           
                                                                            
                                                                            
                                                                            

 
                               EHEALTH, INC.                                
             GAAP NET INCOME TO NON-GAAP EBITDA RECONCILIATION              
   FOR THE THREE MONTHS AND FISCAL YEARS ENDED DECEMBER 31, 2011 AND 2012   
                         (In thousands, unaudited)                          
                                                                            
EBITDA Reconciliation                                                       
                                  Three Months Ended    Fiscal Year Ended   
                                      December 31,         December 31,     
                                 --------------------- -------------------- 
                                    2011       2012       2011       2012   
                                 ---------  ---------- ---------- --------- 
                                                                            
Net income                       $   2,260  $    2,447 $    6,724 $   7,082 
Stock-based compensation expense                                            
 (1)                                 1,474       1,296      7,096     5,622 
Depreciation and amortization                                               
 (2)                                   559         671      2,358     2,411 
Amortization of intangible                                                  
 assets (2)                            765         354      2,046     1,615 
Other (income) expense, net (3)         (8)         18         53       (23)
Provision for income taxes (4)       2,125       1,845      6,460     6,370 
                                 ---------  ---------- ---------- --------- 
EBITDA                           $   7,175  $    6,631 $   24,737 $  23,077 
                                 =========  ========== ========== ========= 
                                                                            
Explanation of adjustments                                                  
(1)  Non-GAAP EBITDA excludes the effect of expensing stock-based           
     compensation related to stock options and restricted stock units in    
     accordance with FASB ASC Topic 718.                                    
(2)  Non-GAAP EBITDA excludes depreciation and amortization expense,        
     including intangible asset amortization expense.                       
(3)  Non-GAAP EBITDA excludes other income (expense), net.                  
(4)  Non-GAAP EBITDA excludes income tax expense.                           

  
Investor Relations Contact: 
Kate Sidorovich CFA
Vice President, Investor Relations 
440 East Middlefield Road
Mountain View, CA 94043
(650) 210-3111 
kate.sidorovich@ehealth.com
http://ir.ehealthinsurance.com 
Media Contact:
Brian Mast
Vice President Communications
440 East Middlefield Road
Mountain View, CA 94043
(650) 210-3149
brian.mast@ehealth.com 
http://www.ehealthinsurance.com 
 
 
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