eHealth, Inc. 10-Q

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Credit and Interest Rate Risk Our financial instruments that are exposed to concentrations of credit risk principally consist of cash and cash equivalents, accounts receivable, contract assets – commissions receivable, and marketable securities. As of September 30, 2020 and December 31, 2019, our cash, cash equivalents and restricted cash are summarized as follows (in thousands): September 30, 2020 December 31, 2019 Cash (1) $ 41,441 $ 16,205 Cash equivalents (2) 46,392 7,261 Total cash and cash equivalents $ 87,833 $ 23,466 Restricted cash 3,354 3,354 Total cash, cash equivalents and restricted cash $ 91,187 $ 26,820 _________________ (1) We deposit our cash and cash equivalents in accounts with major banks and financial institutions and such deposits are in excess of federally insured limits. We also have deposits with a major bank in China that are denominated in both U.S. dollars and Chinese Yuan Renminbi and are not insured by the U.S. federal government. (2) See Note 4 – Fair Value Measurements in our Notes to Condensed Consolidated Financial Statements for more information on our cash and cash equivalents. As of September 30, 2020, our net contract assets consisted of commissions receivable balance of $604.3 million. Our contracts with carriers expose us to credit risk that a financial loss could be incurred if the counterparty does not fulfill its financial obligation. While we are exposed to credit losses due to the non-performance of our counterparties, we consider the risk of this remote. We estimate our maximum credit risk in determining the commissions receivable amount recorded on the balance sheet. Upon the adoption of ASC 326, we recorded $1.5 million of allowance for credit losses for our commissions receivable balance as of December 31, 2019. During the nine months ended September 30, 2020, we recorded an additional $0.1 million for the allowance for credit losses. See Note 1 – Summary of Business and Significant Accounting Policies i n our 47 Notes to Condensed Consolidated Financial Statements for additional information regarding the accounting standard adoption. Our total contract assets and accounts receivable as of September 30, 2020 and December 31, 2019 are summarized as follows (in thousands): September 30, 2020 December 31, 2019 Contract assets – commissions receivable – current $ 158,773 $ 174,526 Contract assets – commissions receivable – non-current 445,572 414,696 Accounts receivable 3,854 2,332 Total contract assets and accounts receivable $ 608,199 $ 591,554 Our portfolio of available-for-sale debt securities is exposed to credit and interest rate risk. As of September 30, 2020, we invested $108.6 million and $1.3 million in short-term and long-term marketable securities, respectively. These marketable securities primarily consisted of commercial paper and agency bonds with credit rating of AA+ or equivalent by S&P Rating and Moody's Investor Services. The maturity of these securities were below two years. See Note 4 – Fair Value Measurements in our Notes to Condensed Consolidated Financial Statements for further discussion on our available-for-sale debt securities. Foreign Currency Exchange Risk To date, substantially all of our revenue has been derived from transactions denominated in United States Dollars. We have exposure to adverse changes in exchange rates associated with operating expenses of our foreign operations, which are denominated in Chinese Yuan Renminbi. Foreign currency fluctuations have not had a material impact historically on our results of operations; however, they may in the future. We have not engaged in any foreign currency hedging or other derivative transactions to date.