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eHealth, Inc. Announces Third Quarter 2013 Results

eHealth, Inc. Announces Third Quarter 2013 Results 
Third Quarter 2013 Overview 
-- Revenue of $42.0 million, an increase of 12% compared to the third
quarter of 2012 
-- Submitted applications for IFP products increased 3% from the
third quarter of 2012 
-- Total estimated members increased 24% from the third quarter of
2012 
-- Operating income of $0.4 million compared to operating income of
$1.1 million for the third quarter of 2012, or a 63% decrease 
-- GAAP net income of $0.2 million, or $0.01 per diluted share for
both the third quarter of 2013 and the third quarter of 2012 
-- Non-GAAP net income of $1.6 million, or $0.08 per diluted share,
compared to non-GAAP net income of $1.8 million, or $0.09 per diluted
share for the third quarter of 2012 
MOUNTAIN VIEW, CA -- (Marketwired) -- 10/24/13 --  eHealth, Inc.
(NASDAQ: EHTH), America's first and largest private health insurance
exchange, announced today its financial results for the third quarter
ended September 30, 2013.  
Gary Lauer, chief executive officer of eHealth, stated, "We are
pleased with our third quarter results that point to continued strong
growth in our revenues and membership base. During the quarter, we
made preparations for the first ever Open Enrollment Period under the
Affordable Care Act as well as this year's Medicare Annual Enrollment
Period. We believe that eHealth is well positioned to generate strong
consumer demand in these fast growing markets." 
Third Quarter 2013 Results 
Revenue - Revenue for the third quarter of 2013 totaled $42.0
million, a 12% increase compared to $37.6 million for the third
quarter of 2012. Commission revenue for the third quarter of 2013
totaled $36.0 million, a 15% increase compared to $31.3 million for
the third quarter of 2012. Medicare revenue was $6.7 million for the
third quarter of 2013, a 7% increase compared to $6.3 million for the
third quarter of 2012. Medicare commission revenue grew 33% compared
to the third quarter of 2012. 
Submitted Applications - Submitted applications for individual and
family products increased 3% in the third quarter of 2013 to 123,300
applications, compared to 120,100 applications in the third quarter
of 2012. Approved members for individual and family products
increased 13% in the third quarter of 2
013 compared to the third
quarter of 2012. 
Membership - Total estimated membership at September 30, 2013 was
1,147,100 members, a 24% increase over estimated membership of
926,600 at September 30, 2012. Estimated individual and family plan
membership was 765,500, representing a 10% increase over estimated
membership of 698,600 at September 30, 2012. Estimated Medicare
membership was 85,300, a 76% increase over estimated membership of
48,400 at September 30, 2012. Total approved members, including
individual and family plan, Medicare plan and other product members,
increased 21% to 210,700 members in the third quarter of 2013,
compared to 174,500 in the third quarter of 2012. 
Income from Operations - Operating income was $0.4 million for the
third quarter of 2013, compared to $1.1 million for the third quarter
of 2012. Operating margins were 1% and 3% in the third quarters of
2013 and 2012, respectively. Non-GAAP operating income for the third
quarter of 2013 was $2.7 million, compared to $2.8 million for the
third quarter of 2012. Non-GAAP operating margins were 6% and 7% in
the third quarters of 2013 and 2012, respectively. Non-GAAP operating
income and margins in the third quarter of 2013 exclude $1.9 million
of stock-based compensation expense and $0.4 million of intangible
asset amortization expense. Non-GAAP operating income and margins in
the third quarter of 2012 exclude $1.3 million of stock
-based
compensation expense and $0.4 million of intangible asset
amortization expense. 
EBITDA - EBITDA was $3.6 million for the third quarter of 2013,
compared to $3.4 million for the third quarter of 2012. 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. 
Pre-tax Income - Pre-tax income was $0.4 million for the third
quarter of 2013, compared to $1.1 million for the third quarter of
2012. 
Net Income - Net income for the third quarter of 2013 and the third
quarter of 2012 was $0.2 million, or $0.01 per diluted share.
Non-GAAP net income for the third quarter of 2013 was $1.6 million,
or $0.08 per diluted share, compared to non-GAAP net income of $1.8
million, or $0.09 per diluted share for the third quarter of 2012.
Non-GAAP net income and non-GAAP net income per diluted share in the
third quarter of 2013 exclude $1.9 million of stock-based
compensation expense and $0.4 million of intangible asset
amortization expense, less $0.9 million for related income tax
benefit. Non-GAAP net income and non-GAAP net income per diluted
share in the third quarter of 2012 exclude $1.3 million of
stock-based compensation expense and $0.4 million of intangible asset
amortization expense, less $0.1 million for related income tax
benefit. 
Cash Flows and Cash Balance - Cash flow from operations for the third
quarter of 2013 was $8.7 million, compared to $6.9 million in the
third quarter of 2012. 
Year-to-Date Results 
Revenue - Revenue totaled $125.0 million for the nine months ended
September 30, 2013, a 13% increase compared to revenue of $110.2
million for the nine months ended September 30, 2012. Medicare
revenue was approximately $22.7 million in the nine months ended
September 30, 2013, a 28% increase compared to Medicare revenue of
$17.7 million for the nine months ended September 30, 2012. 
Income from Operations - Operating income for the nine months ended
September 30, 2013 was $6.4 million, compared to operating income of
$9.1 million for the nine months ended September 30, 2012. Operating
margins were 5% for the nine-month period ended September 30, 2013,
compared to 8% for the nine-month period ended September 30, 2012. 
EBITDA - EBITDA for the nine months ended September 30, 2013 was
$15.1 million, compared to EBITDA of $16.4 million for the nine
months ended September 30, 2012.  
Pre-tax Income - Pre-tax income for the nine months ended September
30, 2013 was $6.3 million, compared to pre-tax income of $9.2 million
for the nine months ended September 30, 2012. 
Net Income - Net income for the nine months ended September 30, 2013
was $3.7 million, or $0.18 per diluted share, compared to net income
for the nine months 
ended September 30, 2012 of $4.6 million, or
$0.23 per diluted share. 
Cash Flows - Cash flows from operations for the nine months ended
September 30, 2013 were $14.8 million, a 25% decrease, compared to
$19.7 million for the nine months ended September 30, 2012. 
Cash Balance - Cash and cash equivalents as of September 30, 2013
totaled $97.8 million, compared to $140.8 million as of December 31,
2012. The decrease in cash and cash equivalents reflects $59.0
million of cash used to repurchase 2.9 million shares of our common
stock in the nine months ended September 30, 2013 as part of stock
repurchase programs. 
2013 Guidance 
eHealth is reaffirming guidance for the full year ending December 31,
2013 based on information available as of October 24, 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
from GAAP net income 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, October 24, 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 866-953-6859 for domestic
callers and 617-399-3483 for international callers. The participant
passcode is 93769221. 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
75194049. 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, the nation'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
(www.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 positioning to generate strong consumer
demand in future periods, 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, 2013, the
estimated tax benefits relating to stock-based compensation and
intangible asset amortization expenses, the utility to our investors
of the non-GAAP financial measures presented is this release and the
impact of a tax benefit on our future operating cash flows. 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 ability to enter into relationships with new
health insurance carriers, particularly with respect to the sale of
Medicare-related products; 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 relationships that serve as a source of Medicare-related
leads; maintenance of proper and effective internal controls; impact
of provisions for income taxes; changes in laws and regulations,
including in connection with healthcare reform and/or 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:
    --  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:
    --  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)                               
                                                                            
                                                December 31,  September 30, 
                                                    2012           2013     
                                               -------------  ------------- 
                    Assets                          (1)        (unaudited)  
Current assets:                                                             
  Cash and cash equivalents                    $     140,849  $      97,751 
  Accounts receivable                                  4,468          6,599 
  Deferred income taxes                                4,098          7,115 
  Prepaid expenses and other current assets            6,643          6,720 
                                               -------------  ------------- 
Total current assets                                 156,058        118,185 
Property and equipment, net                            6,185         10,677 
Deferred income taxes                                  2,928          4,198 
Other assets                                           8,123          6,082 
Intangible assets, net                                 8,911          7,850 
Goodwill                                              14,096         14,096 
                                               -------------  ------------- 
Total assets                                   $     196,301  $     161,088 
                                               =============  ============= 
                                                                            
                                                                            
     Liabilities and stockholders' equity                                   
Current liabilities:                                                        
  Accounts payable                             $       6,123  $       4,230 
  Accrued compensation and benefits                    8,244         10,764 
  Accrued marketing expenses                           3,941          3,746 
  Deferred revenue                                       926          4,353 
  Other current liabilities                            1,575          2,969 
                                               -------------  ------------- 
Total current liabilities                             20,809         26,062 
Non-current liabilities                                4,625          6,222 
                                                                            
Stockholders' equity:                                                       
  Common stock                                            27             28 
  Additional paid-in capital                         232,903        246,190 
  Treasury stock, at cost                            (90,991)      (149,998)
  Retained earnings                                   28,743         32,424 
  Accumulated other comprehensive income                 185            160 
                                               -------------  ------------- 
Total stockholders' equity                           170,867        128,804 
                                               -------------  ------------- 
Total liabilities and stockholders' equity     $     196,301  $     161,088 
                                               =============  ============= 
                                                                            
(1)   The condensed consolidated balance sheet at December 31, 2012 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   Nine Months Ended  
                                      September 30,        September 30,    
                                   -------------------  ------------------- 
                                      2012      2013       2012      2013   
                                   --------- ---------  --------- --------- 
                                                                            
Revenue                                                                     
  Commission                       $  31,291 $  36,000  $  93,358 $ 109,193 
  Other                                6,295     6,008     16,810    15,822 
                                   --------- ---------  --------- --------- 
Total revenue                         37,586    42,008    110,168   125,015 
Operating costs and expenses:                                               
  Cost of revenue                      1,099       806      3,538     4,441 
  Marketing and advertising (1)       13,988    14,852     39,142    43,448 
  Customer care and enrollment (1)     8,823     8,936     21,152    23,914 
  Technology and content (1)           5,503     9,117     16,018    23,585 
  General and administrative (1)       6,744     7,540     19,938    22,191 
  Amortization of intangible                                                
   assets                                354       354      1,261     1,061 
                                   --------- ---------  --------- --------- 
Total operating costs and expenses    36,511    41,605    101,049   118,640 
                                   --------- ---------  --------- --------- 
Income from operations                 1,075       403      9,119     6,375 
Other income (expense), net                4       (22)        41       (68)
                                   --------- ---------  --------- --------- 
Income before provision for income                                          
 taxes                                 1,079
       381      9,160     6,307 
Provision for income taxes               874       207      4,525     2,626 
                                   --------- ---------  --------- --------- 
Net income                         $     205 $     174  $   4,635 $   3,681 
                                   ========= =========  ========= ========= 
                                                                            
Net income per share:                                                       
  Basic                            $    0.01 $    0.01  $    0.24 $    0.19 
  Diluted                          $    0.01 $    0.01  $    0.23 $    0.18 
                                                                            
Weighted-average number of shares                                           
 used in per share amounts:                                                 
  Basic                               19,970    18,436     19,711    19,310 
  Diluted                             20,750    19,096     20,563    19,912 
                                                                            
(1) Includes stock-based                                                    
 compensation as follows:                                                   
  Marketing and advertising        $     330 $     517  $     932 $   1,446 
  Customer care and enrollment            90        92        243       261 
  Technology and conent                  233       425        784     1,129 
  General and administrative             686       911      2,367     2,525 
                                   --------- ---------  --------- --------- 
    Total                          $   1,339 $   1,945  $   4,326 $   5,361 
                                   ========= =========  ========= ========= 
                                                                            
                                                                            

 
                                                                            
                               EHEALTH, INC.                                
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS               
                         (In thousands, unaudited)                          
                                                                            
                                  Three Months Ended     Nine Months Ended  
                                     September 30,         September 30,    
                                 --------------------  -------------------- 
                                    2012       2013       2012       2013   
                                 ---------  ---------  ---------  --------- 
                                                                            
Operating activities                                                        
Net income                       $     205  $     174  $   4,635  $   3,681 
Adjustments to reconcile net                                                
 income to net cash provided by                                             
 operating activities:                                                      
  Deferred income taxes                157       (502)     15 15     (3,951)
  Depreciation and amortization        626        900      1,740      2,290 
  Amortization of book-of-                                                  
   business consideration              572        274      1,990      2,822 
  Amortization of intangible                                                
   assets                              354        354      1,261      1,061 
  Stock-based compensation                                                  
   expense                           1,339      1,945      4,326      5,361 
  Deferred rent and other               68         90         51        917 
  Changes in operating assets                                               
   and liabilities:                                                         
    Accounts receivable                405     (1,265)     4,799     (2,131)
    Prepaid expenses and other                                              
     assets                            486        324       (656)      (852)
    Accounts payable                   824       (354)     2,180     (1,895)
    Accrued compensation and                                                
     benefits                        2,485      3,034        913      2,504 
    Accrued marketing expenses         707        379     (2,332)      (196)
    Deferred revenue                   302      2,907        390      3,794 
    Other current liabilities       (1,602)       418        341      1,370 
                                 ---------  ---------  ---------  --------- 
Net cash provided by operating                                              
 activities                          6,928      8,678     19,653     14,775 
                                 ---------  ---------  ---------  --------- 
                                                                            
Investing activities                                                        
Purchases of property and                                                   
 equipment                            (982)    (2,914)    (3,128)    (6,735)
Book of business transfers               -          -     (6,243)         - 
                                 ---------  ---------  ---------  --------- 
Net cash used in investing                                                  
 activities                           (982)    (2,914)    (9,371)    (6,735)
                                 ---------  ---------  ---------  --------- 
                                                                            
Financing activities                                                        
Net proceeds from exercise of                                               
 common stock options                1,644      2,101      4,014      4,650 
Cash used to net-share settle                                               
 equity awards                          (5)       (98)      (991)      (940)
Excess tax benefits from stock-                                             
 based compensation                  1,171        291      2,358      4,217 
Repurchase of common stock               -          -     (8,441)   (59,007)
Principle payments in connection                                            
 with capital leases                   (13)       (15)       (31)       (41)
                                 ---------  ---------  ---------  --------- 
Net cash (used in) provided by                                              
 financing activities                2,797      2,279     (3,091)   (51,121)
                                 ---------  ---------  ---------  --------- 
                                                                            
Effect of exchange rate changes                                             
 on cash and cash equivalents            2         (5)         2        (17)
                                 ---------  ---------  ---------  --------- 
                                                                            
Net increase (decrease) in cash                                             
 and cash equivalents                8,745      8,038      7,193    (43,098)
Cash and cash equivalents at                                                
 beginning of period               122,055     89,713    123,607    140,849 
                                 ---------  ---------  ---------  --------- 
Cash and cash equivalents at end                                            
 of period                       $ 130,800  $  97,751  $ 130,800  $  97,751 
                                 =========  =========  =========  ========= 
                                                                            
                                                                            
                                                                            
                               EHEALTH, INC.                                
                        SUMMARY OF SELECTED METRICS                         
                                (Unaudited)                                 
                                                                            
                                              Three Months    Three Months  
                                                  Ended           Ended     
                                              September 30,   September 30, 
Key Metrics:                                      2012            2013      
                                             --------------  -------------- 
                                                                            
Operating cash flows (1)                     $    6,928,000  $    8,678,000 
                                                                            
IFP submitted applications (2)              
        120,100         123,300 
                                                                            
IFP approved members (3)                             99,500         112,300 
Total approved members (4)                          174,500         210,700 
                                                                            
Commission revenue (5)                       $   31,291,000  $   36,000,000 
Commission revenue per estimated member for                                 
 the period (6)                              $        34.70  $        32.39 
                                                                            
                                                  As of           As of     
                                              September 30,   September 30, 
                                                  2012            2013      
                                             --------------  -------------- 
                                                                            
IFP estimated membership (7)                        698,600         765,500 
Medicare estimated membership (8)                    48,400          85,300 
Other estimated membership (9)                      179,600         296,300 
                                             --------------  -------------- 
Total estimated membership (10)                     926,600       1,147,100 
                                             ==============  ============== 
                                                                            
                                              Three Months    Three Months  
                                                  Ended           Ended     
                                              September 30,   September 30, 
Other Metrics:                                    2012            2013      
                                             --------------  -------------- 
                                                                            
Source of IFP submitted applications (as a                                  
 percentage of total IFP applications for                                   
 the period):                                                               
  Direct (13)                                            48%             51%
  Marketing partners (14)                                32%             33%
  Online advertising (15)                                20%             16%
                                             --------------  -------------- 
    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, 2012 - 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, 2012
      - 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, 2012 - 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, 2012 - 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, 2012
      - 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 SEPTEMBER 30, 2013                
            (In thousands, except per share amounts, unaudited)             
                                                                            
Statement of Income Reconciliation                                          
                              Three Months Ended September 30, 2013         
                      ----------------------------------------------------- 
                                   GAAP                            Non-GAAP 
                                  Percent                           Percent 
                         GAAP    of Total                Non-GAAP  of Total 
                       Reported   Revenue  Adjustments   Results    Revenue 
                      ---------  --------  -----------  ---------  -------- 
                                                                            
Revenue:                                                                    
  Commission          $  36,000        86% $         -  $  36,000        86%
  Sponsorship,                                                              
   licensing and                                                            
   other                  6,008        14            -      6,008        14 
                      ---------  --------  -----------  ---------  -------- 
Total revenue            42,008       100            -     42,008       100 
  Operating costs and                                                       
   expenses:                                                                
  Cost of revenue-                                                          
   sharing                  806         2            -        806         2 
  Marketing and                                                             
   advertising (1)       14,852        35         (517)    14,335        34 
  Customer care and                                                         
   enrollment (1)         8,936        21          (92)     8,844        21 
  Technology and                                                            
   content (1)            9,117        22         (425)     8,692        21 
  General and                                                               
   administrative (1)     7,540        18         (911)     6,629        16 
  Amortization of                                                           
   intangible assets                                                        
   (2)                      354         1         (354)         -         - 
                      ---------  --------  -----------  ---------  -------- 
Total operating costs                                                       
 and expenses            41,605        99       (2,299)    39,306        94 
                      ---------  --------  -----------  ---------  -------- 
Income from                                                                 
 operations                 403         1        2,299      2,702         6 
Other income                                                                
 (expense), net             (22)       (0)           -        (22)       (0)
                      ---------  --------  -----------  ---------  -------- 
Income before                                                               
 provision for income                                                       
 taxes                      381         1        2,299      2,680         6 
Provision for income                                                        
 taxes (3)                  207         0          922      1,129         3 
                      ---------  --------  -----------  ---------  -------- 
Net income (4)        $     174         0% $     1,377  $   1,551         4%
                      =========  ========  ===========  =========  ======== 
                                                                            
Net income per share:                                                       
 (4)                                                                        
  Basic - common                                                            
   stock              $    0.01            $      0.07  $    0.08           
  Diluted - common                                                          
   stock              $    0.01            $      0.07  $    0.08           
                                                                            
Weighted-average                                                            
 number of shares                                                           
 used in per share                                                          
 amounts:                                                                   
  Basic - common                                                            
   stock                 18,436                 18,436     18,436           
  Diluted - common                                                          
   stock                 19,096                 19,096     19,096           
                                                                            
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 THREE MONTHS ENDED SEPTEMBER 30, 2012                
            (In thousands, except per share amounts, unaudited)             
                                                                            
Statement of Income Reconciliation                                          
                               Three Months Ended September 30, 2012        
                        --------------------------------------------------- 
                                    GAAP                           Non-GAAP 
                                   Percent                          Percent 
                           GAAP   of Total                Non-GAAP of Total 
                         Reported  Revenue  Adjustments   Results   Revenue 
                        --------- --------  -----------  --------- -------- 
                                                                            
Revenue:                                                                    
  Commission            $  31,291       83% $         -  $  31,291       83%
  Sponsorship,                                                              
   licensing and other      6,295       17            -      6,295       17 
                        --------- --------  -----------  --------- -------- 
Total revenue              37,586      100            -     37,586      100 
  Operating costs and                                                       
   expenses:                                                                
  Cost of revenue-                                                          
   sharing                  1,099        3            -      1,099        3 
  Marketing and                                                             
   advertising (1)         13,988       37         (330)    13,658       36 
  Customer care and                                                         
   enrollment (1)           8,823       23          (90)     8,733       23 
  Technology and                                                            
   content (1)              5,503       15         (233)     5,270       14 
  General and                                                               
   administrative (1)       6,744       18         (686)     6,058       16 
  Amortization of                                                           
   intangible assets                                                        
   (2)                        354        1         (354)         -        - 
                        --------- --------  -----------  --------- -------- 
Total operating costs                                                       
 and expenses              36,511       97       (1,693)    34,818       93 
                        --------- --------  -----------  --------- -------- 
Income from operations      1,075        3        1,693      2,768        7 
Other income, net               4        0            -          4        0 
                        --------- --------  -----------  --------- -------- 
Income before provision                                                     
 for income taxes           1,079        3        1,693      2,772        7 
Provision for income                                                        
 taxes (3)                    874        2          109        983        3 
                        --------- --------  -----------  --------- -------- 
Net income (4)          $     205        1% $     1,584  $   1,789        5%
                        ========= ========  ===========  ========= ======== 
                                                                            
Net income per share:                                                       
 (4)                                                                        
  Basic - common stock  $    0.01           $      0.08  $    0.09          
  Diluted - common                                                          
   stock                $    0.01           $      0.08  $    0.09          
                                                                            
Weighted-average number                                                     
 of shares used in per                                                      
 share amounts:                                                             
  Basic - common stock     19,970                19,970     19,970          
  Diluted - common                                                          
   stock                   20,750                20,750     20,750          
                                                                            
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 NINE MONTHS ENDED SEPTEMBER 30, 2013                
            (In thousands, except per share amounts, unaudited)             
                                                                            
Statement of Income Reconciliation                                          
                               Nine Months Ended September 30, 2013         
                      ----------------------------------------------------- 
                                   GAAP                            Non-GAAP 
                                  Percent                           Percent 
                         GAAP    of Total                Non-GAAP  of Total 
                       Reported   Revenue  Adjustments   Results    Revenue 
                      ---------  --------  -----------  ---------  -------- 
                                                                            
Revenue:                                                                    
  Commission          $ 109,193        87% $         -  $ 109,193        87%
  Sponsorship,                                                              
   licensing and                                                            
   other                 15,822        13            -     15,822        13 
                      ---------  --------  -----------  ---------  -------- 
Total revenue           125,015       100            -    125,015       100 
  Operating costs and                                                       
   expenses:                                                                
  Cost of revenue-                                                          
   sharing                4,441         4            -      4,441         4 
  Marketing and                                                             
   advertising (1)       43,448        35       (1,446)    42,002        34 
  Customer care and                                                         
   enrollment (1)        23,914        19         (261)    23,653        19 
  Technology and                                                            
   content (1)           23,585        19       (1,129)    22,456        18 
  General and                                                               
   administrative (1)    22,191        18       (2,525)    19,666        16 
  Amortization of                                                           
   intangible assets                                                        
   (2)                    1,061         1       (1,061)         -         - 
                      ---------  --------  -----------  ---------  -------- 
Total operating costs                                                       
 and expenses           118,640        95       (6,422)   112,218        90 
                      ---------  --------  -----------  ---------  -------- 
Income from                                                                 
 operations               6,375         5        6,422     12,797        10 
Other income                                                                
 (expense), net             (68)       (0)           -        (68)       (0)
                      ---------  --------  -----------  ---------  -------- 
Income before                                                               
 provision for income                                                       
 taxes                    6,307         5        6,422     12,729        10 
Provision for income                                                        
 taxes (3)                2,626         2        2,577      5,203         4 
                      ---------  --------  -----------  ---------  -------- 
Net income (4)        $   3,681         3% $     3,845  $   7,526         6%
                      =========  ========  ===========  =========  ======== 
                                                                            
Net income per share:                                                       
 (4)                                                                        
  Basic - common                                                            
   stock              $    0.19            $      0.20  $    0.39           
  Diluted - common                                                          
   stock              $    0.18            $      0.19  $    0.38           
                                                                            
Weighted-average                                                            
 number of shares                                                           
 used in per share                                                          
 amounts:                                                                   
  Basic - common                                                            
   stock                 19,310                 19,310     19,310           
  Diluted - common                                                          
   stock                 19,912                 19,912     19,912           
                                                                            
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 NINE MONTHS ENDED SEPTEMBER 30, 2012                
            (In thousands, except per share amounts, unaudited)             
                                                                            
Statement of Income Reconciliation                                          
                                Nine Months Ended September 30, 2012        
                        --------------------------------------------------- 
                                    GAAP                           Non-GAAP 
                                   Percent                          Percent 
                           GAAP   of Total                Non-GAAP of Total 
                         Reported  Revenue  Adjustments   Results   Revenue 
                        --------- --------  -----------  --------- -------- 
                                                                            
Revenue:                                                                    
  Commission            $  93,358       85% $         -  $  93,358       85%
  Sponsorship,                                                              
   licensing and other     16,810       15            -     16,810       15 
                        --------- --------  -----------  --------- -------- 
Total revenue             110,168      100            -    110,168      100 
  Operating costs and                                                       
   expenses:                                                                
  Cost of revenue-                                                          
   sharing                  3,538        3            -      3,538        3 
  Marketing and                                                             
   advertising (1)         39,142       36         (932)    38,210       35 
  Customer care and                                                         
   enrollment (1)          21,152       19         (243)    20,909       19 
  Technology and                                                            
   content (1)             16,018       15         (784)    15,234       14 
  General and                                                               
   administrative (1)      19,938       18       (2,367)    17,571       16 
  Amortization of                                                           
   intangible assets                                                        
   (2)                      1,261        1       (1,261)         -        - 
                        --------- --------  -----------  --------- -------- 
Total operating costs                                                       
 and expenses             101,049       92       (5,587)    95,462       87 
                        --------- --------  -----------  --------- -------- 
Income from operations      9,119        8        5,587     14,706       13 
Other income (expense),                                                     
 net                           41        0            -         41        0 
                        --------- --------  -----------  --------- -------- 
Income before provision                                                     
 for income taxes           9,160        8        5,587     14,747       13 
Provision for income                                                        
 taxes (3)                  4,525        4        1,499      6,024        5 
                        --------- --------  -----------  --------- -------- 
Net income (4)          $   4,635        4% $     4,088  $   8,723        8%
                        ========= ========  ===========  ========= ======== 
                                                                            
Net income per share:                                                       
 (4)                                                                        
  Basic - common stock  $    0.24           $      0.20  $    0.44          
  Diluted - common                                                          
   stock                $    0.23           $      0.19  $    0.42          
                                                                            
Weighted-average number                                                     
 of shares used in per                                                      
 share amounts:                                                             
  Basic - common stock     19,711                19,711     19,711          
  Diluted - common                                                          
   stock                   20,563                20,563     20,563          
                                                                            
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 AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2013      
                          (In thousands, unaudited)                         
                                                                            
EBITDA Reconciliation                                                       
                                    Three Months Ended    Nine Months Ended 
                                       September 30,        September 30,   
                                   -------------------- --------------------
                                      2012       2013      2012       2013  
                                   ---------  --------- ---------  ---------
                                                                            
Net income                         $     205  $     174 $   4,635  $   3,681
Stock-based compensation expense                                            
 (1)                                   1,339      1,945     4,326      5,361
Depreciation and amortization (2)        626        900     1,740      2,290
Amortization of intangible assets                                           
 (2)                                     354        354     1,261      1,061
Other (income) expense, net (3)           (4)        22       (41)        68
Provision for income taxes (4)           874        207     4,525      2,626
                                   ---------  --------- ---------  ---------
EBITDA                             $   3,394  $   3,602 $  16,446  $  15,087
                                   =========  ========= =========  =========
                                                                            
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