What changed in this filing

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Item 1. Financial Statements

2020-11-05 compared with 2020-08-06 · 181 added, 172 removed, 579 unchanged (38% of the section changed)

3 unchanged sentences

(in thousands)

June 30, 2020* December 31, 2019

September 30, 2020* December 31, 2019

Assets (Unaudited)

41 unchanged sentences

EHEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands, except per share amounts, unaudited)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

12 unchanged sentences

Loss from operations ( 20,847 ) ( 20,241 ) ( 26,070 ) ( 41,735 )

Other income, net 452 699 825 1,256

Other income (expense), net ( 101 ) 568 724 1,824

Loss before benefit from income taxes ( 20,948 ) ( 19,673 ) ( 25,346 ) ( 39,911 )

Benefit from income taxes ( 6,443 ) ( 8,649 ) ( 10,923 ) ( 17,974 )

Net income (loss) $ ( 3,370 ) $ ( 5,754 ) $ 82 $ ( 10,913 )

Net income (loss) per share:

Net loss $ ( 14,505 ) $ ( 11,024 ) $ ( 14,423 ) $ ( 21,937 )

Net loss per share:

Basic and diluted $ ( 0.55 ) $ ( 0.47 ) $ ( 0.56 ) $ ( 0.96 )

Weighted-average number of shares used in per share amounts:

Basic 26,358 23,091 25,539 22,508

Diluted 26,358 23,091 26,758 22,508

Comprehensive income:

Net income (loss) $ ( 3,370 ) $ ( 5,754 ) $ 82 $ ( 10,913 )

Unrealized holding gain for available for sales debt securities, net of tax 143 — 168 —

Basic and diluted 26,487 23,493 25,838 22,840

Comprehensive loss:

Net loss $ ( 14,505 ) $ ( 11,024 ) $ ( 14,423 ) $ ( 21,937 )

Unrealized holding gain (loss) for available for sales debt securities, net of tax ( 97 ) — 71 —

Foreign currency translation adjustment 104 ( 34 ) 73 ( 30 )

Comprehensive income (loss) $ ( 3,227 ) $ ( 5,779 ) $ 219 $ ( 10,909 )

Comprehensive loss $ ( 14,498 ) $ ( 11,058 ) $ ( 14,279 ) $ ( 21,967 )

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(in thousands, unaudited)

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Common Stock Additional Paid-in

1 unchanged sentence

Shares Amount Shares Amount

Balance as of March 31, 2020 37,258 $ 37 $ 717,380 ( 11,649 ) $ ( 199,998 ) $ 274,157 $ 110 $ 791,686

Balance as of June 30, 2020 37,373 $ 37 $ 720,976 11,698 $ ( 199,998 ) $ 270,787 $ 253 $ 792,055

Issuance of common stock in connection with equity incentive plans 275 1 262 — — — — 263

3 unchanged sentences

Net loss — — — — — ( 14,505 ) — ( 14,505 )

Balance as of June 30, 2020 37,373 $ 37 $ 720,976 ( 11,698 ) $ ( 199,998 ) $ 270,787 $ 253 $ 792,055

Three Months Ended June 30, 2019

Balance as of September 30, 2020 37,648 $ 38 $ 719,104 11,810 $ ( 199,998 ) $ 256,282 $ 260 $ 775,686

Three Months Ended September 30, 2019

Common Stock Additional Paid-in

1 unchanged sentence

Shares Amount Shares Amount

Balance as of March 31, 2019 34,090 $ 34 $ 445,652 ( 11,450 ) $ ( 199,998 ) $ 199,806 $ 156 $ 445,650

Balance as of June 30, 2019 34,267 $ 34 $ 449,046 11,482 $ ( 199,998 ) $ 194,052 $ 131 $ 443,265

Issuance of common stock in connection with equity incentive plans 335 1 1,912 — — — 1,913

3 unchanged sentences

Net loss — — — — — ( 11,024 ) — ( 11,024 )

Balance as of June 30, 2019 34,267 $ 34 $ 449,046 ( 11,482 ) $ ( 199,998 ) $ 194,052 $ 131 $ 443,265

Balance as of September 30, 2019 34,602 $ 35 $ 448,409 11,571 $ ( 199,998 ) $ 183,028 $ 97 $ 431,571

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(in thousands, unaudited)

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Common Stock Additional Paid-in

9 unchanged sentences

Other comprehensive income, net of tax — — — — — — 144 144

Net income — — — — — 82 — 82

Balance as of June 30, 2020 37,373 $ 37 $ 720,976 ( 11,698 ) $ ( 199,998 ) $ 270,787 $ 253 $ 792,055

Six Months Ended June 30, 2019

Net loss — — — — — ( 14,423 ) — ( 14,423 )

Balance as of September 30, 2020 37,648 $ 38 $ 719,104 11,810 $ ( 199,998 ) $ 256,282 $ 260 $ 775,686

Nine Months Ended September 30, 2019

Common Stock Additional Paid-in

9 unchanged sentences

Net loss — — — — — ( 21,937 ) — ( 21,937 )

Balance as of June 30, 2019 34,267 $ 34 $ 449,046 ( 11,482 ) $ ( 199,998 ) $ 194,052 $ 131 $ 443,265

Balance as of September 30, 2019 34,602 $ 35 $ 448,409 11,571 $ ( 199,998 ) $ 183,028 $ 97 $ 431,571

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(in thousands, unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating activities:

Net income (loss) $ 82 $ ( 10,913 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Net loss $ ( 14,423 ) $ ( 21,937 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 2,604 2,153

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Accrued expenses and other liabilities 3,059 ( 1,942 )

Net cash provided by (used in) operating activities ( 12,398 ) 1,225

Net cash used in operating activities ( 10,959 ) ( 14,714 )

Investing activities:

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We have created a marketplace that offers consumers a broad choice of insurance products that includes thousands of Medicare Advantage, Medicare Supplement, Medicare Part D prescription drug, individual and family, small business and other ancillary health insurance products from over 180 health insurance carriers across all fifty states and the District of Columbia.

Basis of Presentation – The accompanying condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019, the condensed consolidated statements of comprehensive income (loss) and stockholders’ equity for the three and six months ended June 30, 2020 and 2019, and the condensed consolidated statements of cash flows for the six months ended June 30, 2020 and 2019, respectively, are unaudited.

Basis of Presentation – The accompanying condensed consolidated balance sheets as of September 30, 2020 and December 31, 2019, the condensed consolidated statements of comprehensive loss and stockholders’ equity for the three and nine months ended September 30, 2020 and 2019, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2020 and 2019, respectively, are unaudited.

The condensed consolidated balance sheet data as of December 31, 2019 was derived from the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the Securities and Exchange Commission on March 2, 2020.

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GAAP have been condensed or omitted in accordance with those rules and regulations.

Certain reclassifications might be made to conform with the current presentation.

Certain reclassifications have been made to conform with the current presentation.

However, the Company believes that the disclosures made are adequate to make the information not misleading.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019 and include all adjustments necessary for the fair presentation of our financial position as of June 30, 2020 and December 31, 2019, and our results of operations for the periods presented.

Our financial position as of June 30, 2020, results of operations for the three and six months ended June 30, 2020, and cash flows for the six months ended June 30, 2020 were not materially impacted by the COVID-19 pandemic but the Company is continuously assessing the evolving situation related to the pandemic.

The results for the three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31, 2020 and therefore should not be relied upon as an indicator of future results.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019 and include all adjustments necessary for the fair presentation of our financial position as of September 30, 2020 and December 31, 2019, and our results of operations for the periods presented.

Our financial position as of September 30, 2020, results of operations for the three and nine months ended September 30, 2020, and cash flows for the nine months ended September 30, 2020 were not materially impacted by the COVID-19 pandemic but the Company is continuously assessing the evolving situation related to the pandemic.

The results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31, 2020 and therefore should not be relied upon as an indicator of future results.

Significant Accounting Polices, Estimates and Judgements – The preparation of condensed consolidated financial statements and related disclosures in conformity with U.S.

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Contract assets – commissions receivable were the Company's only financial assets that were materially impacted by this guidance.

We adopted ASU 2016-13 using a modified retrospective transition method on January 1, 2020 for all financial assets measured at amortized cost.

We adopted ASU 2016-13, including applicable amendments in other ASUs issued subsequent to ASU 2016-13, using a modified retrospective transition method on January 1, 2020 for all financial assets measured at amortized cost.

Results for periods after January 1, 2020 are presented under ASU 2016-13 while prior period amounts continue to be reported under the previous accounting standards.

We recorded a $ 1.1 million decrease, net of income taxes, to the retained earnings as of January 1, 2020 for the cumulative effect of adopting ASU 2016-13.

We recorded a $ 1.1 million decrease, net of income taxes, to retained earnings as of January 1, 2020 for the cumulative effect of adopting ASU 2016-13.

See Note 3 – Supplemental Financial Statement Information for further discussion on credit losses.

T he impacts from the adoption are summarized as follows (in thousands):

T he impact from the adoption of ASU 2016-13 is summarized as follows (in thousands):

Balance Sheet Impact:

5 unchanged sentences

Retained earnings 271,852 ( 1,147 ) 270,705

* Adjustment to Other assets is due to the increase in deferred tax assets resulting from the adoption of the accounting guidance.

* Adjustment to Other assets is due to the increase in deferred tax assets resulting from the adoption of ASU 2016-13.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Financial Instruments (Topic 820) – In 2018, the FASB issued ASU No.

2 unchanged sentences

We adopted this guidance in the first quarter of 2020 with no material impact on our condensed consolidated financial statements.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Intangible – Goodwill and Other (Topic 350) – In 2017, the FASB issued ASU 2017-04 to simplify the subsequent measurement of goodwill by removing the requirement to perform a hypothetical purchase price allocation to compute the implied fair value of goodwill to measure impairment.

9 unchanged sentences

The amendments in this standard update have individually different adoption approaches.

We do not anticipate a material impact on our consolidated financial statements and disclosure from the adoption of this standard update.

We do not anticipate a material impact on our consolidated financial statements and disclosures from the adoption of this standard update.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 2 – Revenue

Disaggregation of Revenue – The table below disaggregates our revenue by product (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

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Individual and family health insurance plans include both qualified and non-qualified plans.

Qualified health plans are individual and family health insurance plans that meet the requirements of the Affordable Care Act and are offered through the

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

government-run health insurance exchange in the relevant jurisdiction.

Qualified health plans are individual and family health insurance plans that meet the requirements of the Affordable Care Act and are offered through the government-run health insurance exchange in the relevant jurisdiction.

Non-qualified health plans are individual and family health insurance plans that meet the requirements of the Affordable Care Act and are not offered through the exchange in the relevant jurisdiction.

2 unchanged sentences

Our revenue primarily consists of commission revenue generated from health insurance carriers, which we define as our customers under the Accounting Standards Codification 606 – Revenue from Contracts with Customers (“ASC 606”).

We recognize revenue for plans approved during the period by applying the latest estimated constrained life time value (“LTV”) for that product.

We recognize revenue for plans approved during the period by applying the latest estimated constrained lifetime value (“LTV”) for that product.

We recognize adjustment revenue for plans approved in prior periods when changes in assumptions for constrained LTV calculations are made and when there is sufficient evidence demonstrating a trend that is different from the estimated constrained LTV at the time of approval resulting in a change in estimate to expected cash collections.

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We assess the risk of significant revenue reversal based on statistical and qualitative analysis given historical information and current market conditions.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Our commission revenue for each product line is based on a number of assumptions, which include, but are not limited to, estimating conversion of an approved member to a paying member, forecasting average plan duration and forecasting the commission amounts likely to be received per member.

These assumptions are based on our analysis of historical trends for different cohorts and incorporate management’s judgment in interpreting those trends and in applying the constraints discussed below.

For our Medicare commission revenue, which represented 88 % and 78 % of our total commission revenue for the six months ended June 30, 2020 and 2019, respectively, the estimated average plan duration, which is the average length of time paying members are active on their plans, used to calculate Medicare health insurance plan LTVs historically has been approximately 3 years for Medicare Advantage plans, approximately 5 years for Medicare Part D prescription drug plans, and approximately 5 years for Medicare Supplement plans.

For our Medicare commission revenue, which represented 82 % and 78 % of our total commission revenue for the nine months ended September 30, 2020 and 2019, respectively, the estimated average plan duration, which is the average length of time paying members are active on their plans, used to calculate Medicare health insurance plan LTVs historically has been approximately 3 years for Medicare Advantage plans, approximately 5 years for Medicare Part D prescription drug plans, and approximately 5 years for Medicare Supplement plans.

While the average plan duration has been approximately 3 years for Medicare Advantage plans, certain members may have a duration of up to 15 years.

6 unchanged sentences

We then apply judgment in assessing whether the difference between historical cash collections and LTV is representative of differences that can be expected in future periods.

We also analyze whether circumstances have changed and consider any known or potential modifications to the inputs into LTV in light of the factors that can impact the amount of cash expected to be collected in future periods, including but not limited to commission rates, carrier mix, plan duration, changes in laws and regulations, and cancellations of insurance plans offered by health insurance carriers with which we have a relationship.

We also analyze whether circumstances have changed and consider any known or potential modifications to the inputs into LTV in light of the factors that can impact the amount of cash expected to be collected in future periods, including but not limited to commission rates, carrier mix, plan duration, cancellations of insurance plans offered by health insurance carriers with which we have a relationship, changes in laws and regulations, and changes in the economic environment.

We evaluate the appropriateness of our constraints on a quarterly basis, and we update our assumptions when we observe a sufficient amount of evidence that would suggest that the long-term expectation underlying the assumptions has changed.

1 unchanged sentence

We continually review and monitor changes in the data used to estimate LTV and compare the cash received for each cohort to our original estimates at the time of approval.

The fluctuations of cash received for each cohort and LTV can be significant and may or may not be indicative of the need to adjust revenue for prior period cohorts.

The fluctuations of cash received for each cohort as compared to our estimates and the fluctuations in LTV can be significant and may or may not be indicative of the need to adjust revenue for prior period cohorts.

Changes in LTV may result in an increase or a decrease to revenue and a corresponding increase or decrease to contract assets – commissions receivable.

We analyze these fluctuations and, to the extent we see changes in our estimates of the cash commission collections that we believe are indicative of an increase or decrease to prior period LTVs, we adjust revenue for the affected cohorts at the time such determination is made and when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

accumulate more historical data, we continue to enhance our LTV estimation models using statistical tools to increase the accuracy of LTV estimates with an emphasis on improving member attrition forecasting.

As we accumulate more historical data, we continue to enhance our LTV estimation models using statistical tools to increase the accuracy of LTV estimates with an emphasis on improving member attrition forecasting.

The enhancements to the LTV estimation model provide greater statistical certainty on expected cash collections, particularly for earlier period cohorts where there is more historical data available.

Our LTV estimation models for the three and six months ended June 30, 2020 indicated increases in LTVs and estimates of future cash collections for earlier period cohorts of certain products within our Individual, Family and Small Business segment.

During the first half of 2020, our LTV estimation models indicated increases in LTVs and estimates of future cash collections for earlier period cohorts of certain products within our Individual, Family and Small Business segment.

However, after considering various market factors and recent changes due to the impact of COVID-19 on the U.S.

economy, such as increases in unemployment rate, potential delays in insurance premium payments and/or health insurance carrier commission payments, potential changes to enrollment periods, and potential changes to qualified health plan subsidies, we limited the adjustment revenue recognized during the six months ended June 30, 2020 to actual cash collected in excess of previously recognized revenue for certain individual and family and ancillary plan cohorts.

These prevailing market conditions did not have an impact on the amount of adjustment revenue recognized for any other products we sell.

We recorded net adjustment revenue of $ 4.2 million and $ 9.4 million, or $ 0.16 and $ 0.41 per basic and diluted share for the three months ended June 30, 2020 and 2019, respectively.

Net adjustment revenue was $ 17.0 million and $ 16.8 million, or $ 0.67 and $ 0.75 per basic share, or $ 0.64 and $ 0.75 per diluted share, respectively, for the six months ended June 30, 2020 and 2019, respectively.

Commission revenue by segment is presented in the table below (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

During the three months ended September 30, 2020, despite the impact of COVID-19 and uncertainties regarding the Presidential election and the U.S.

economy, we continued to observe stronger member retention rates in our latest LTV assessment for the majority of the earlier period cohorts of certain products in our Individual, Family and Small Business segment.

Based on our evaluation of the updated LTV models and current retention trends, we recognized $ 18.2 million of net adjustment revenue for the Individual, Family and Small Business segment during the three months ended September 30, 2020.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

We will continue to monitor our member retention rates as compared to our forecasts and other market factors and evaluate whether any addition or reduction of adjustment revenue shall be recorded as we continue to assess our LTV models in future periods.

Commission revenue by segment is summarized as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

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Total IFP/SMB Segment Commission Revenue $ 22,202 $ 12,061 $ 39,690 $ 37,471

Total Commission Revenue from Members Approved During the Period (1)

$ 56,052 $ 48,280 $ 219,500 $ 156,301

Total Net Commission Revenue from Members Approved in Prior Periods (2) (3)

17,492 11,482 34,486 28,294

Total Commission Revenue $ 73,544 $ 59,762 $ 253,986 $ 184,595

_____________

(1) These amounts include commission bonus revenue.

1 unchanged sentence

The net adjustment revenue includes both increases in revenue for certain prior period cohorts as well as reductions in revenue for certain prior period cohorts.

The reductions to revenue for certain prior periods cohorts were $ 1.6 million and $ 1.5 million for the six months ended June 30, 2020 and 2019, respectively, and $ 1.6 million and $ 0.8 million for the three months ended June 30, 2020 and 2019, respectively.

(3) The impacts of total net commission revenue from members approved in prior periods were $ 0.66 and $ 0.49 per basic and diluted share for the three months ended September 30, 2020 and 2019, respectively;

and $ 1.33 and $ 1.24 per basic and diluted share for the nine months ended September 30, 2020 and 2019, respectively.

The total reductions to revenue from members approved in prior periods were $ 5.3 million and $ 2.1 million for the nine months ended September 30, 2020 and 2019, respectively, and $ 3.7 million and $ 0.6 million for the three months ended September 30, 2020 and 2019, respectively.

These reductions to revenue primarily related to the Medicare segment.

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Cash and cash equivalents are stated at fair value.

We also invested in marketable securities that are measured and

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

recorded at fair value.

We also invested in marketable securities that are measured and recorded at fair value.

See Note 4 – Fair Value Measurements for further discussion about our marketable securities.

As of June 30, 2020 and December 31, 2019, our cash, cash equivalent and restricted cash balances were invested as follows (in thousands):

June 30, 2020 December 31, 2019

As of September 30, 2020 and December 31, 2019, our cash, cash equivalent and restricted cash balances were invested as follows (in thousands):

September 30, 2020 December 31, 2019

Cash $ 41,441 $ 16,205

2 unchanged sentences

Total cash, cash equivalents and restricted cash $ 91,187 $ 26,820

As of June 30, 2020 and December 31, 2019, we had $ 3.4 million of restricted cash which was classified as a non-current asset on our Condensed Consolidated Balance Sheets.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2020 and December 31, 2019, we had $ 3.4 million of restricted cash which was classified as a non-current asset on our Condensed Consolidated Balance Sheets.

This amount collateralizes letters of credit related to certain lease commitments.

1 unchanged sentence

We do not require collateral or other security for our contract assets and accounts receivable.

We believe the potential for collection issues with any of our customers was minimal as of June 30, 2020.

We believe the potential for collection issues with any of our customers was minimal as of September 30, 2020.

Our contract assets and accounts receivable consisted of the following for the periods presented (in thousands):

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Contract assets – commissions receivable – current $ 158,773 $ 174,526

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As such, we apply an immediate reversion method and revert to historical loss information when computing our credit loss exposure.

Subsequent to the adoption of ASC 326, we considered the impact of recent events and global economic condition when evaluating the appropriate adjustments to our allowance as of June 30, 2020.

Determining the extent of these adjustments in the three and six months ended June 30, 2020 was especially challenging because we do not have any historical loss information for a period of similar economic decline.

We considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic and determined that the estimate of credit losses was not materially impacted as of June 30, 2020.

After our management's evaluation, we recorded credit loss expenses of $ 0.1 million during the six months ended June 30, 2020 which is included in general and administrative expense on our Condensed Consolidated Statement of Comprehensive Income.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Credit loss expenses are assessed quarterly and included in general and administrative expense on our Condensed Consolidated Statement of Comprehensive Loss.

Subsequent to the adoption of ASC 326, we considered the impact of recent events and global economic condition when evaluating the appropriate adjustments to our allowance as of September 30, 2020.

Determining the extent of these adjustments in the three and nine months ended September 30, 2020 was especially challenging because we do not have any historical loss information for a period of similar economic decline.

Credit loss expenses recorded during the three and nine months ended September 30, 2020 were immaterial.

Our contract assets – commission receivable activities, net of credit loss allowance are summarized as follows (in thousands):

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Medicare Segment IFP/SMB Segment Total

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Ending balance $ 562,426 $ 41,919 $ 604,345

Six Months Ended June 30, 2019

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended September 30, 2019

Medicare Segment IFP/SMB Segment Total

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Cash receipts ( 133,425 ) ( 39,292 ) ( 172,717 )

Change in credit loss allowance — — —

Ending balance $ 325,676 $ 32,060 $ 357,736

_____________

* Amount consists of transition adjustment of $ 1.5 million related to the adoption of ASC 326 as of January 1, 2020 and the subsequent credit loss adjustment of $ 0.1 million during the six months ended June 30, 2020.

See Note 1 – Summary of Business and Significant Accounting Policies for details regarding the adoption impact.

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federal government.

The deposits in China were $ 3.1 million as of June 30, 2020.

The deposits in China were $ 3.4 million as of September 30, 2020.

We do not require collateral or other security for either our contract assets or accounts receivable.

Carriers that represented 10% or more of our total contract assets and accounts receivable balance are summarized as of the dates presented below:

June 30, 2020 December 31, 2019

UnitedHealthCare (1)

September 30, 2020 December 31, 2019

Humana 21 % 22 %

UnitedHealthCare (2)

_____________

(1) UnitedHealthcare also includes other carriers owned by UnitedHealthcare.

(1) Aetna also includes other carriers owned by Aetna.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(2) UnitedHealthcare also includes other carriers owned by UnitedHealthcare .

Prepaid Expenses and Other Current Assets – Prepaid expenses and other current assets are summarized as follows (in thousands):

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Prepaid maintenance contracts $ 7,485 $ 3,853

4 unchanged sentences

Prepaid expenses and other current assets $ 19,335 $ 7,822

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 4 – Fair Value Measurements

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Our financial assets and liabilities measured at fair value on a recurring basis are summarized below by their classification within the fair value hierarchy for the period presented below (in thousands):

As of June 30, 2020

As of September 30, 2020

Carrying Value Level 1 Level 2 Level 3 Total

2 unchanged sentences

Commercial paper 30,187 — 30,187 — 30,187

Agency bonds 6,000 — 6,000 — 6,000

Short-term marketable securities

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Agency bonds 56,259 — 56,259 — 56,259

Treasury bills 4,999 — 4,999 — 4,999

Long-term marketable securities

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Total assets measured and recorded at fair value $ 156,324 $ 16,205 $ 140,119 $ — $ 156,324

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019

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$ 37,273 $ — $ — $ 37,273 $ 37,273

Our cash equivalents were invested in money market funds, commercial paper, and agency bonds with original maturity of 90 days or less were classified as Level 1.

Our cash equivalents invested in money market funds and commercial paper with original maturity of 90 days or less were classified as Level 1.

We endeavor to utilize the best available information in measuring fair value.

We used observable prices in active markets in determining the classification of our investments as Level 1.

As of June 30, 2020, our Level 2 assets included our available for sale marketable securities, which consisted of commercial paper and agency bonds with maturity less than two years.

As of September 30, 2020, our Level 2 assets included our available for sale marketable securities, which consisted of commercial paper, agency bonds and treasury bills with maturity less than two years.

We classify our marketable debt securities within Level 2 in the fair value hierarchy, because we use quoted market prices to the extent available or alternative pricing sources and models utilizing market observable inputs to determine fair value.

Our portfolio primarily consisted of financial instruments with credit rating of AA+ or equivalent by S&P Rating and Moody's Investor Services.

There were no transfers between the hierarchy levels during the six months ended June 30, 2020.

Our portfolio primarily consisted of financial

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

instruments with credit rating of AA+ or equivalent by S&P Rating and Moody's Investor Services.

There were no transfers between the hierarchy levels during the nine months ended September 30, 2020.

The following table summarizes our cash equivalents and available-for-sale debt securities by contractual maturity (in thousands):

As of June 30, 2020

As of September 30, 2020

Amortized Cost Fair Value

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Total $ 156,228 $ 156,324

Unrealized gains and losses on available-for-sale debt securities are included in accumulated other comprehensive income and summarized as follows as of June 30, 2020:

Unrealized gains and losses on available-for-sale debt securities are included in accumulated other comprehensive income and summarized as follows as of September 30, 2020:

Amortized Cost Unrealized Gain Unrealized Loss Fair Value

2 unchanged sentences

Commercial paper 30,188 — ( 1 ) 30,187

Agency bonds 6,001 — ( 1 ) 6,000

Short-term marketable securities

1 unchanged sentence

Agency bonds 56,201 58 — 56,259

Treasury bills 4,998 1 — 4,999

Long-term marketable securities

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Total $ 156,228 $ 98 $ ( 2 ) $ 156,324

As of June 30, 2020, there were eleven securities in net loss positions and their unrealized losses were immaterial.

We did not record any credit losses regarding our available-for-sales debt securities during the six months ended June 30, 2020.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2020, there were twenty securities in net loss positions and their unrealized losses were immaterial.

We did not record any credit losses regarding our available-for-sales debt securities during the nine months ended September 30, 2020.

Earnout Liabilities

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Settlements ( 37,273 )

Balance as of June 30, 2020 $ —

Balance as of September 30, 2020 $ —

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In February 2019, we made the first earnout payment to GoMedigap consisting of $ 9.5 million in cash and 294,608 shares of our common stock with a value of $ 17.3 million.

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We intend to use the net proceeds of the offering for general corporate purposes, including working capital.

Stock Repurchase Programs – We had no stock repurchase activity during the three and six months ended June 30, 2020.

In addition to 10,663,888 shares repurchased under our previous repurchase programs, we have in treasury 1,034,424 shares as of June 30, 2020 that were previously surrendered by employees to satisfy tax withholding due in connection with the vesting of certain restricted stock units.

As of June 30, 2020 and December 31, 2019, we had a total of 11,698,312 shares and 11,615,558 shares, respectively, held in treasury.

Stock Repurchase Programs – We had no stock repurchase activity during the three and nine months ended September 30, 2020.

In addition to 10,663,888 shares repurchased under our previous repurchase programs, we have in treasury 1,146,720 shares as of September 30, 2020 that were previously surrendered by employees to satisfy tax withholding due in connection with the vesting of certain restricted stock units.

As of September 30, 2020 and December 31, 2019, we had a total of 11,810,608 shares and 11,615,558 shares, respectively, held in treasury.

For accounting purposes, common stock repurchased under our stock repurchase programs is recorded based upon the settlement date of the applicable trade.

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Stock-Based Compensation Expense – Our stock-based compensation expense is summarized as follows by award types (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

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Total stock-based compensation expense $ 6,332 $ 5,510 $ 21,722 $ 13,417

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Our stock-based compensation expense is summarized as follows by operating functions (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

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Technology and content 1,430 729 2,965 1,946

( 82 ) 668 1,535 1,217

General and administrative 2,506 3,540 11,857 8,332

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Total stock-based compensation $ 6,880 $ 5,510 $ 23,000 $ 13,417

(1) Stock-based compensation expense for technology and content during the three months ended June 30, 2020 was negative due to the forfeiture of unvested equity awards for employees departed during the quarter.

Note 6 — Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income by the weighted-average number of common shares outstanding for the period.

Diluted net income per share is computed by dividing the net income for the period by the weighted average number of common and common equivalent shares outstanding during the period.

Diluted net income per share is computed giving effect to all potential dilutive common stock equivalent shares, including options and restricted stock units.

The dilutive effect of outstanding awards is reflected in diluted net income per share by application of the treasury stock method.

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share amounts):

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Net income (loss) $ ( 3,370 ) $ ( 5,754 ) $ 82 $ ( 10,913 )

Shares used in per share calculation – basic 26,358 23,091 25,539 22,508

Net income (loss) per share – basic:

$ ( 0.13 ) $ ( 0.25 ) $ 0.00 $ ( 0.48 )

Net income (loss) $ ( 3,370 ) $ ( 5,754 ) $ 82 $ ( 10,913 )

Shares used in per share calculation – basic 26,358 23,091 25,539 22,508

Dilutive effect of common stock — — 1,219 —

Total common stock shares used in diluted share calculation 26,358 23,091 26,758 22,508

Net income (loss) per share – diluted $ ( 0.13 ) $ ( 0.25 ) $ 0.00 $ ( 0.48 )

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2020 and 2019, we had securities outstanding that could potentially dilute earnings per share, but the shares from the assumed conversion or exercise of these securities were excluded in the computation of diluted net income (loss) per share as their effect would have been anti-dilutive.

Note 6 — Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding for the period.

Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of common and common equivalent shares outstanding during the period.

Diluted net loss per share is computed giving effect to all potential dilutive common stock equivalent shares, including options and restricted stock units.

The dilutive effect of outstanding awards is reflected in diluted net loss per share by application of the treasury stock method.

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Basic and Diluted:

Net loss $ ( 14,505 ) $ ( 11,024 ) $ ( 14,423 ) $ ( 21,937 )

Shares used in per share calculation – basic and diluted 26,487 23,493 25,838 22,840

Net loss per share – basic and diluted $ ( 0.55 ) $ ( 0.47 ) $ ( 0.56 ) $ ( 0.96 )

For the three and nine months ended September 30, 2020 and 2019, we had securities outstanding that could potentially dilute earnings per share, but the shares from the assumed conversion or exercise of these securities were excluded in the computation of diluted net loss per share as their effect would have been anti-dilutive.

The number of outstanding anti-dilutive shares that were excluded from the computation of diluted net loss per share consisted of the following (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

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Flanders, our chief financial officer, Derek N.

Yung, and our chief operating officer, David K.

Yung, and our then-chief operating

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

officer, David K.

Francis, in the United States District Court for the Northern District of California.

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The Court also appointed a lead plaintiff and lead counsel for the consolidated matter.

Under the current schedule, the lead plaintiff will file an Amended Complaint by August 25, 2020.

Derivative Action – On July 7, 2020, a derivative lawsuit was filed against our chief executive officer, Mr.

The lead plaintiff filed an amended complaint on August 25, 2020, which Defendants moved to dismiss.

The motion to dismiss is set to be heard by the court on February 17, 2021.

Derivative Actions – On July 7, 2020 and October 13, 2020, two derivative lawsuits were filed against our chief executive officer, Mr.

Flanders, our chief financial officer, Mr.

Yung, our chief operating officer, Mr.

Francis, and the members of our Board of Directors (collectively, the “Individual Defendants”), in the United States District Court for the Northern District of California.

The case is captioned Chernet v.

Yung, our then-chief operating officer, Mr.

Francis, and the members of our Board of Directors (collectively, the “Individual Defendants”), in the United States District Court for the Northern District of California and the Superior Court of California, County of Santa Clara.

The cases are captioned Chernet v.

Flanders et al ., Case No.

3:20-cv-04477-SK (N.D.

Cal.), and also names the Company as a nominal defendant.

The complaint alleges, among other things, that the Individual Defendants made or caused the Company to make materially false and misleading statements and/or failed to disclose material information regarding our accounting and modeling assumptions, rate of member churn, profitability, and internal controls, for the period of March 19, 2018 through the present.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The complaint alleges that the Individual Defendants violated Sections 14(a), 10(b), and 20(a) of the Securities Exchange Act of 1934, and also asserts claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets.

The complaint seeks damages, restitution, attorneys’ fees and costs, and certain measures with respect to the Company’s corporate governance and internal procedures.

Cal.), and Lincolnshire Police Pension Fund v.

Flanders et al.

20CV371555 (Cal.

Ct.), and also name the Company as a nominal defendant.

The complaints allege, among other things, that beginning on March 19, 2018, the Individual Defendants made or caused the Company to make materially false and misleading statements and/or failed to disclose material information regarding our accounting and modeling assumptions, rate of member churn, profitability, and internal controls.

Both complaints purport to assert claims for breach of fiduciary duty, unjust enrichment and waste of corporate assets.

The Chernet lawsuit also alleges that the Individual Defendants violated Sections 14(a), 10(b), and 20(a) of the Securities Exchange Act of 1934, and asserts claims for abuse of control and gross mismanagement.

The complaints seek damages, restitution, attorneys’ fees and costs, and certain measures with respect to the Company’s corporate governance and internal procedures, and (in the Lincolnshire lawsuit) equitable and/or injunctive relief.

The Gonzalez and Le ’ Vias Complaints – On April 6, 2018, a former employee, Lupita Gonzalez, filed a complaint against us in the Superior Court of the State of California for the County of Sacramento (the “Gonzalez Complaint”).

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In the interim, the parties have filed notices of conditional settlement in both matters, and the April 13, 2020 trial date for the Gonzalez matter was vacated.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Service and Licensing Obligations

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As the benefits of these agreements are experienced uniformly over the applicable contractual periods, we record the related service and licensing expenses on a straight-line basis, although actual cash payment obligations under certain of these agreements fluctuate over the terms of the agreements.

Our future minimum payments under non-cancellable contractual service and licensing obligations as of June 30, 2020 are summarized as follows (in thousands):

Our future minimum payments under non-cancellable contractual service and licensing obligations as of September 30, 2020 are summarized as follows (in thousands):

For the Years Ending December 31, Service and Licensing Obligations

Remainder of 2020 $ 2,593

Thereafter 2,706

Total $ 15,700

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 8 – Segment and Geographic Information

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Please refer to Note 1 – Summary of Business and Significant Accounting Policies of the Notes to Consolidated Financial Statements in Part II, Item 8 of the Annual Report on Form 10-K for the year ended December 31, 2019 for our accounting policies relating to operating segments.

The following table presents summary results of our operating segments for the three and six months ended June 30, 2020 and 2019 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents summary results of our operating segments for the three and nine months ended September 30, 2020 and 2019 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

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Total revenue $ 94,284 $ 69,913 $ 289,458 $ 204,453

Segment profit:

Medicare segment profit $ 13,430 $ 6,095 $ 35,390 $ 16,921

Segment profit (loss):

Medicare segment profit (loss) $ ( 16,010 ) $ ( 11,004 ) $ 19,380 $ 5,917

Individual, Family and Small Business segment profit 18,286 3,753 23,459 15,045

Total segment profit 16,000 11,363 40,563 28,213

Total segment profit (loss) 2,276 ( 7,251 ) 42,839 20,962

Corporate ( 15,581 ) ( 11,568 ) ( 43,376 ) ( 30,380 )

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Amortization of intangible assets ( 287 ) ( 547 ) ( 1,207 ) ( 1,641 )

Other income, net 452 699 825 1,256

Other (income) expense, net ( 101 ) 568 724 1,824

Loss before benefit from income taxes $ ( 20,948 ) $ ( 19,673 ) $ ( 25,346 ) $ ( 39,911 )

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Long-lived assets by geographical area are summarized as follows (in thousands):

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

United States $ 38,561 $ 64,408

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Significant Customers

Substantially all revenue for the three and six months ended June 30, 2020 and 2019 was generated from customers located in the United States.

Carriers representing 10% or more of our total revenue for the three and six months ended June 30, 2020 and 2019 are presented in the table below:

Three Months Ended June 30, Six Months Ended June 30,

Substantially all revenue for the three and nine months ended September 30, 2020 and 2019 was generated from customers located in the United States.

Carriers representing 10% or more of our total revenue for the three and nine months ended September 30, 2020 and 2019 are presented in the table below:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Humana 26 % 26 % 21 % 24 %

UnitedHealthcare (1)

17 % 18 % 21 % 18 %

Humana 18 % 22 % 19 % 22 %

12 % 17 % 14 % 17 %

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We have operating and finance leases for our corporate offices and certain equipment.

Our leases have remaining lease terms of four months to 10 years.

Our operating lease expense recognized under ASC 842 was $ 2.2 million and $ 1.6 million for the three months ended June 30, 2020 and 2019, respectively, and $ 4.3 million and $ 2.9 million for the six months ended June 30, 2020 and 2019, respectively.

Our cash outflows related to operating leases were $ 1.6 million and $ 1.2 million for the three months ended June 30, 2020 and 2019, respectively, and $ 3.2 million and $ 2.1 million for the six months ended June 30, 2020 and 2019, respectively.

During the six months ended June 30, 2020 and 2019, we had non-cash investing activities of $ 13.4 million and $ 40.5 million, respectively, related to right-of-use assets on the Condensed Consolidated Statements of Cash Flows, of which $ 23.3 million related to the adoption of ASC 842 as of January 1, 2019.

Supplemental information as of June 30, 2020 related to leases is as follows (in thousands):

Our leases have remaining lease terms of one month to nine years .

Our operating lease expense recognized under ASC 842 was $ 2.1 million and $ 2.0 million for the three months ended September 30, 2020 and 2019, respectively, and $ 6.4 million and $ 4.9 million for the nine months ended September 30, 2020 and 2019, respectively.

Our cash outflows related to operating leases were $ 5.2 million and $ 3.5 million for the nine months ended September 30, 2020 and 2019, respectively.

During the nine months ended September 30, 2020 and 2019, we had non-cash investing activities of $ 10.9 million and $ 39.2 million, respectively, related to right-of-use assets on the Condensed Consolidated Statements of Cash Flows, of which $ 23.3 million related to the adoption of ASC 842 as of January 1, 2019.

Supplemental information as of September 30, 2020 related to leases is as follows (in thousands):

Operating lease right-of-use assets $ 43,886

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Weighted-average discount rate used to recognize operating lease right-of-use-assets 5.4 %

As of June 30, 2020, maturities of operating lease liabilities are as follows (in thousands):

As of September 30, 2020, maturities of operating lease liabilities are as follows (in thousands):

Year ending December 31,

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The amended lease term commenced on January 1, 2020 and has been extended to December 31, 2027.

As of June 30, 2020, the total expected future minimum payments were $ 13.4 million over the remaining term of the lease plus our proportionate share of certain operating expenses, insurance costs and taxes for each calendar year during the lease.

As of September 30, 2020, the total expected future minimum payments were $ 13.0 million over the remaining term of the lease plus our proportionate share of certain operating expenses, insurance costs and taxes for each calendar year during the lease.

In addition, we have an option to extend the lease for one additional period of five years at the end of the lease term and will receive a one-time refurbishment allowance from the landlord if the option to renew is exercised.

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The term of the lease for the expanded office space was coterminous with the term of the lease for the existing space, which is scheduled to expire on March 31, 2029.

As of June 30, 2020, the expected future minimum payments related to our Santa Clara office totaled $ 21.6 million, including $ 6.2 million from this amendment, over the remaining term of the lease plus our proportionate share of certain operating expenses, insurance costs and taxes for each calendar year during the lease.

As of September 30, 2020, the expected future minimum payments related to our Santa Clara office totaled $ 21.0 million, including $ 6.1 million from this amendment, over the remaining term of the lease plus our proportionate share of certain operating expenses, insurance costs and taxes for each calendar year during the lease.

Note 10 – Debt

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In connection with the Amendment, we incurred closing costs totaling $ 0.5 million, which were capitalized and recorded as Other assets on our Consolidated Balance Sheet as of December 31, 2019.

The remaining balance of unamortized issuance costs was $ 1.0 million and $ 1.1 million as of June 30, 2020 and December 31, 2019.

As of June 30, 2020, we had no outstanding borrowings under our revolving credit facility.

The remaining balance of unamortized issuance costs was $ 0.8 million and $ 1.1 million as of September 30, 2020 and December 31, 2019.

As of September 30, 2020, we had no outstanding borrowings under our revolving credit facility.

Note 11 – Income Taxes

The following table summarizes our benefit from income taxes and our effective tax rates for the three and six months ended June 30, 2020 and 2019 (in thousands, except effective tax rate):

Three Months Ended June 30, Six Months Ended June 30,

The following table summarizes our benefit from income taxes and our effective tax rates for the three and nine months ended September 30, 2020 and 2019 (in thousands, except effective tax rate):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

2 unchanged sentences

Effective tax rate 30.8 % 44.0 % 43.1 % 45.0 %

For the three months ended June 30, 2020, we recognized a benefit from income taxes of $ 2.4 million, representing an effective tax rate of 41.9 % which was higher than the statutory federal tax rate due primarily to stock-based compensation adjustments, non-deductible lobbying expenses and state taxes, partially offset by research and development credits.

For the three months ended June 30, 2019, we recognized a benefit from income taxes of $ 5.9 million, representing an effective tax rate of 50.4 %, which was higher than the statutory federal tax rate due primarily to stock-based compensation adjustments, non-deductible lobbying expenses, and other non-deductible expenses, partially offset by research and development credits.

For the six months ended June 30, 2020, we recognized a benefit from income taxes of $ 4.5 million, representing an effective tax rate of 101.9 %, which was higher than the statutory federal tax rate due primarily to stock-based compensation adjustments, non-deductible lobbying expenses and state taxes, partially offset by research and development credits.

For the six months ended June 30, 2019, we recognized a benefit from income taxes of $ 9.3 million, representing an effective tax rate of 46.1 %, which was higher than the statutory federal tax rate due primarily to stock-based compensation adjustments, non-deductible lobbying expenses and foreign income inclusions, partially offset by research and development credits.

For the three months ended September 30, 2020, we recognized a benefit from income taxes of $ 6.4 million, representing an effective tax rate of 30.8 % which was higher than the statutory federal tax rate due primarily to stock-based compensation adjustments, lobbying expenses and state taxes, partially offset by research and development credits.

For the three months ended September 30, 2019, we recognized a benefit from income taxes of $ 8.6 million, representing an effective tax rate of 44.0 %, which was higher than the statutory federal tax rate due primarily to stock-based compensation adjustments, lobbying expenses, and state taxes, partially offset by research and development credits.

For the nine months ended September 30, 2020, we recognized a benefit from income taxes of $ 10.9 million, representing an effective tax rate of 43.1 %, which was higher than the statutory federal tax rate due primarily to stock-based compensation adjustments, lobbying expenses and state taxes, partially offset by research and development credits.

For the nine months ended September 30, 2019, we recognized a benefit from income taxes of $ 18.0 million, representing an effective tax rate of 45.0 %, which was higher than the statutory federal tax rate due primarily to stock-based compensation adjustments, lobbying expenses and state taxes, partially offset by research and development credits.

Assessing the realizability of our deferred tax assets is dependent upon several factors, including the likelihood and amount, if any, of future taxable income in relevant jurisdictions during the periods in which those temporary differences become deductible.

2 unchanged sentences

As a result, the amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income change.

We continue to recognize our deferred tax assets as of June 30, 2020, as we believe it is more likely than not that the net deferred tax assets will be realized, with the exception of certain state net operating losses that are expected to expire unutilized which have a valuation allowance.

We continue to recognize our deferred tax assets as of September 30, 2020, as we believe it is more likely than not that the net deferred tax assets will be

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

realized, with the exception of certain state net operating losses that are expected to expire unutilized which have a valuation allowance.

The Coronavirus Aid, Relief and Economic Security ("CARES") Act was signed into law on March 27, 2020.

The business tax provisions of the CARES Act include temporary changes to income based tax laws, including the ability to utilize net operating losses, interest expense deductions, alternative minimum tax credit refunds, charitable contributions, and depreciation of qualified improvement property.

The income tax provisions of the CARES Act did not have a material impact on our Condensed Consolidated Financial Statements for the three and six months ended June 30, 2020.

The income tax provisions of the CARES Act did not have a material impact on our Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2020.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements