What changed in this filing

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Item 1. Financial Statements

2021-11-08 compared with 2021-08-09 · 188 added, 175 removed, 587 unchanged (38% of the section changed)

3 unchanged sentences

(in thousands, unaudited)

June 30, 2021 December 31, 2020 *

September 30, 2021 December 31, 2020 *

Current assets:

13 unchanged sentences

Total assets $ 1,159,603 $ 1,040,022

Liabilities, Series A preferred stock, and stockholders’ equity

Liabilities, convertible preferred stock, and stockholders’ equity

Current liabilities:

11 unchanged sentences

Commitments and contingencies

Series A convertible preferred stock 218,504 —

Convertible preferred stock 225,438 —

Stockholders’ equity:

5 unchanged sentences

Total stockholders’ equity 777,661 837,558

Total liabilities, Series A preferred stock, and stockholders’ equity $ 1,211,738 $ 1,040,022

Total liabilities, convertible preferred stock, and stockholders’ equity $ 1,159,603 $ 1,040,022

* See Note 1 – Summary of Business and Significant Accounting Policies

1 unchanged sentence

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,

2021 2020 2021 2020

9 unchanged sentences

Amortization of intangible assets 121 287 416 1,207

Restructuring charges — — 2,431 —

Restructuring and reorganization charges 573 — 3,004 —

Total operating costs and expenses 129,951 115,131 386,697 315,528

Loss from operations ( 66,037 ) ( 20,847 ) ( 92,012 ) ( 26,070 )

Other income, net 172 452 322 825

Other income (expense), net 189 ( 101 ) 511 724

Loss before benefit from income taxes ( 65,848 ) ( 20,948 ) ( 91,501 ) ( 25,346 )

Benefit from income taxes ( 12,834 ) ( 6,443 ) ( 19,278 ) ( 10,923 )

Net income (loss) ( 18,409 ) ( 3,370 ) ( 19,209 ) 82

Net loss ( 53,014 ) ( 14,505 ) ( 72,223 ) ( 14,423 )

Paid-in-kind dividends for preferred stock ( 4,561 ) — ( 7,643 ) —

Change in preferred stock redemption value ( 2,373 ) — ( 3,770 ) —

Net income (loss) attributable to common stockholders $ ( 22,888 ) $ ( 3,370 ) $ ( 23,688 ) $ 82

Net income (loss) per share attributable to common stockholders:

Net loss attributable to common stockholders $ ( 59,948 ) $ ( 14,505 ) $ ( 83,636 ) $ ( 14,423 )

Net loss per share attributable to common stockholders:

Basic $ ( 2.24 ) $ ( 0.55 ) $ ( 3.13 ) $ ( 0.56 )

1 unchanged sentence

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

Basic 26,677 26,358 26,639 25,539

Diluted 26,677 26,358 26,639 26,758

Comprehensive income (loss):

Net income (loss) $ ( 18,409 ) $ ( 3,370 ) $ ( 19,209 ) $ 82

Basic and diluted 26,786 26,487 26,688 25,838

Comprehensive loss:

Net loss $ ( 53,014 ) $ ( 14,505 ) $ ( 72,223 ) $ ( 14,423 )

Unrealized holding gain (loss) for available for sales debt securities, net of tax 3 ( 97 ) ( 48 ) 71

Foreign currency translation adjustment ( 26 ) 104 16 73

Comprehensive income (loss) $ ( 18,385 ) $ ( 3,227 ) $ ( 19,218 ) $ 219

Comprehensive loss $ ( 53,037 ) $ ( 14,498 ) $ ( 72,255 ) $ ( 14,279 )

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

2 unchanged sentences

(in thousands, unaudited)

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Common Stock Additional Paid-in

1 unchanged sentence

Shares Amount Shares Amount

Balance as of March 31, 2021 37,993 $ 38 $ 728,213 11,912 $ ( 199,998 ) $ 315,355 $ 317 $ 843,925

Balance as of June 30, 2021 38,094 $ 38 $ 738,906 11,925 $ ( 199,998 ) $ 292,467 $ 341 $ 831,754

Issuance of common stock in connection with equity incentive plans 231 — 1,933 — — — — 1,933

Repurchase of shares to satisfy employee tax withholding obligations — — ( 2,061 ) 51 — — — ( 2,061 )

Changes in convertible preferred stock — — — — — ( 4,479 ) — ( 4,479 )

Issuance of common stock for employee stock purchase program 38 — 2,248 — — — — 2,248

Paid-in-kind dividend and accretion related to convertible preferred stock — — — — — ( 6,934 ) — ( 6,934 )

Stock-based compensation — — 6,006 — — — — 6,006

1 unchanged sentence

Net loss — — — — — ( 53,014 ) — ( 53,014 )

Balance as of June 30, 2021 38,094 $ 38 $ 738,906 11,925 $ ( 199,998 ) $ 292,467 $ 341 $ 831,754

Three Months Ended June 30, 2020

Balance as of September 30, 2021 38,325 $ 38 $ 744,784 11,976 $ ( 199,998 ) $ 232,519 $ 318 $ 777,661

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

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

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

2 unchanged sentences

(in thousands, unaudited)

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Common Stock Additional Paid-in

4 unchanged sentences

Repurchase of shares to satisfy employee tax withholding obligations — — ( 7,968 ) 145 — — — ( 7,968 )

Changes in convertible preferred stock — — — — — ( 4,479 ) — ( 4,479 )

Paid-in-kind dividend and accretion related to convertible preferred stock — — — — — ( 11,413 ) — ( 11,413 )

Issuance of common stock for employee stock purchase program 38 — 2,248 — — — — 2,248

2 unchanged sentences

Net loss — — — — — ( 72,223 ) — ( 72,223 )

Balance as of June 30, 2021 38,094 $ 38 $ 738,906 11,925 $ ( 199,998 ) $ 292,467 $ 341 $ 831,754

Six Months Ended June 30, 2020

Balance as of September 30, 2021 38,325 $ 38 $ 744,784 11,976 $ ( 199,998 ) $ 232,519 $ 318 $ 777,661

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

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

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) $ ( 19,209 ) $ 82

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

Net loss $ ( 72,223 ) $ ( 14,423 )

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

Depreciation and amortization 3,700 2,604

13 unchanged sentences

Accrued expenses and other liabilities 1,360 3,059

Net cash provided by (used in) operating activities 10,726 ( 12,398 )

Net cash used in operating activities ( 60,321 ) ( 10,959 )

Investing activities:

12 unchanged sentences

Net cash provided by financing activities 210,914 203,555

211,093 212,344

Effect of exchange rate changes on cash, cash equivalents and restricted cash — 62

12 unchanged sentences

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 200 health insurance carriers across all fifty states and the District of Columbia.

Basis of Presentation – The accompanying condensed consolidated balance sheet as of June 30, 2021, the condensed consolidated statements of comprehensive income (loss) and stockholders’ equity for the three and six months ended June 30, 2021 and 2020, respectively, and the condensed consolidated statements of cash flows for the six months ended June 30, 2021 and 2020 are unaudited.

Basis of Presentation – The accompanying condensed consolidated balance sheet as of September 30, 2021, the condensed consolidated statements of comprehensive loss and stockholders’ equity for the three and nine months ended September 30, 2021 and 2020, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2021 and 2020 are unaudited.

The condensed consolidated balance sheet data as of December 31, 2020 was derived from the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the Securities and Exchange Commission on February 26, 2021 and amended on April 29, 2021.

4 unchanged sentences

The condensed consolidated financial statements include the accounts of eHealth, Inc.

and its wholly-owned subsidiaries.

and its direct and indirect wholly-owned subsidiaries.

All intercompany accounts and transactions have been eliminated in consolidation.

2 unchanged sentences

Certain prior period amounts have been reclassified to conform with our current period presentation.

However, we believe 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, 2020 and include all adjustments necessary for the fair presentation of our financial position as of June 30, 2021 and December 31, 2020, and our results of operations for the periods presented.

The results for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31, 2021 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, 2020 and include all adjustments necessary for the fair presentation of our financial position as of September 30, 2021 and December 31, 2020, and our results of operations for the periods presented.

The results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31, 2021 and therefore should not be relied upon as an indicator of future results.

Subsequent to the issuance of our consolidated financial statements for the year ended December 31, 2020, we identified certain errors, including a $ 3.0 million under-recognition of stock-based compensation expense and a $ 1.5 million over-recognition of licensing costs for the year ended December 31, 2020.

We adjusted for these items in the first quarter of 2021 and the adjustments reduced our net loss by approximately $ 1.5 million, or $ 0.06 per basic and diluted share in our Condensed Consolidated Statement of Comprehensive Income (Loss) for the three months ended March 31, 2021.

These items also reduced our net loss by approximately $ 1.5 million, or $ 0.06 per basic and diluted share, on our Condensed Consolidated Statement of Comprehensive Income (Loss) for the six months ended June 30, 2021.

These items also reduced our net loss by approximately $ 1.5 million, or $ 0.06 per basic and diluted share, on our Condensed Consolidated Statement of Comprehensive Loss for the nine months ended September 30, 2021.

We evaluated the effects of these out-of-period adjustments, both qualitatively and quantitatively, and concluded that the errors and the correction thereof were immaterial both individually and in the aggregate to the current reporting period and the periods in which they originated, including quarterly reporting.

10 unchanged sentences

As a result, our Medicare plan-related commission revenue is highest in our fourth quarter.

Our Medicare plan-related commission revenue is also elevated compared to the second and third quarters as a result of the reintroduction of the Medicare Advantage open enrollment period in the first quarter of 2019.

Any changes or additional enrollment periods may change the seasonality of our business.

The majority of our individual and family health insurance plans are sold in the fourth quarter during the annual open enrollment period as defined under the federal Patient Protection and Affordable Care Act and related amendments in the Health Care and Education Reconciliation Act.

Our Medicare plan-related commission revenue is also elevated in the first quarter compared to the second and third quarters as a result of the reintroduction of the Medicare Advantage open enrollment period in the first quarter of 2019.

Any changes to or adoption of open enrollment or special enrollment periods may change the seasonality of our business.

The majority of our individual and family health insurance plans is sold in the fourth quarter during the annual open enrollment period as defined under the federal Patient Protection and Affordable Care Act and related amendments in the Health Care and Education Reconciliation Act.

In the states where the Federally Facilitated marketplace operates as the state health insurance exchange, individuals and families generally are not able to purchase individual and family health insurance outside of the annual enrollment period, unless they qualify for a special enrollment period as a result of certain qualifying events, such as losing employer-sponsored health insurance or moving to another state.

Extended open enrollment or special enrollment periods may change the seasonality of our individual and family health insurance business.

For example, the COVID-related special enrollment period which ended on August 15, 2021 has caused increased commission revenue from the sale of individual and family health insurance plans outside of the open enrollment period.

In addition, we may experience changes in seasonality due to the extension of the 2022 open enrollment period to January 15, 2022 for most states.

Recently Adopted Accounting Pronouncements

11 unchanged sentences

2020-06 is effective for us in 2022, with early adoption permitted.

We have early adopted this guidance in the first quarter of 2021 and it did not have a material impact on our condensed consolidated financial statements.

We early adopted this guidance in the first quarter of 2021, and it did not have a material impact on our condensed consolidated financial statements.

EHEALTH, INC.

2 unchanged sentences

Disaggregation of Revenue – The table below depicts the disaggregation of revenue by product and is consistent with how we evaluate our financial performance (in thousands):

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

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

2021 2020 2021 2020

13 unchanged sentences

Small Business 2,190 1,723 7,703 6,975

Commission Bonus ( 545 ) 3,098 610 3,711

Commission Bonus and Other 922 1,354 1,532 5,065

Total Commission Revenue 59,191 73,544 276,066 253,986

8 unchanged sentences

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.

Individuals that purchase non-qualified health plans cannot receive a subsidy in connection with the purchase of non-qualified plans.

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

Individuals that purchase non-qualified health plans cannot receive a subsidy in connection with the purchase of those plans.

EHEALTH, INC.

1 unchanged sentence

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

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

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

2021 2020 2021 2020

25 unchanged sentences

However, beginning in the first quarter of 2021, we enhanced our reporting by separately disclosing commission revenue from renewals of small business members during the period in a separate line item.

(4) The impacts of total net commission revenue from members approved in prior periods were $ 0.16 and $ 0.10 per basic and diluted share for the three months ended June 30, 2021 and 2020, respectively.

The impacts of total net commission revenue from members approved in prior periods were $ 0.28 and $ 0.51 per basic share, or $ 0.28 and $ 0.49 per diluted share, for the six months ended June 30, 2021 and 2020, respectively.

The total reductions to revenue from members approved in prior periods were $ 18.5 million and $ 1.6 million for the three months ended June 30, 2021 and 2020, respectively, and $ 19.4 million and $ 1.6 million for the six months ended June 30, 2021 and 2020, respectively.

(4) The impacts of total net commission revenue from members approved in prior periods were $ 0.37 and $ 0.62 per basic and diluted share for the three months ended September 30, 2021 and 2020, respectively.

The impacts of total net commission revenue from members approved in prior periods were $ 0.65 and $ 1.14 per basic and diluted share, for the nine months ended September 30, 2021 and 2020, respectively.

The total reductions to revenue from members approved in prior periods were $ 3.2 million and $ 3.7 million for the three months ended September 30, 2021 and 2020, respectively, and $ 22.6 million and $ 5.3 million for the nine months ended September 30, 2021 and 2020, respectively.

These reductions to revenue primarily related to the Medicare segment.

8 unchanged sentences

Our cash, cash equivalent and restricted cash balances are summarized as follows (in thousands):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Cash $ 37,765 $ 39,552

3 unchanged sentences

Total cash, cash equivalents and restricted cash $ 160,884 $ 47,113

As of June 30, 2021 and December 31, 2020, we had $ 3.4 million of restricted cash which was classified as a non-current asset on our Condensed Consolidated Balance Sheets.

As of September 30, 2021 and December 31, 2020, 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, 2021.

We believe the potential for collection issues with any of our customers was minimal as of September 30, 2021.

We estimate an allowance for credit losses using relevant available information from internal and external sources, related to past events, current conditions, and reasonable and supportable forecasts.

3 unchanged sentences

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

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

There were no write-offs during either the three or six months ended June 30, 2021.

We considered the impact of recent events and global economic conditions when evaluating the appropriate adjustments to our allowance for credit losses as of June 30, 2021.

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

There were no write-offs during any of the three or nine month periods ended September 30, 2021 and 2020.

We considered the impact of recent events and global economic conditions when evaluating the appropriate adjustments to our allowance for credit losses as of September 30, 2021.

We also considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic.

The change in the allowance for credit losses for the six months ended June 30, 2021 is summarized as follows (in thousands):

The change in the allowance for credit losses for the nine months ended September 30, 2021 is summarized as follows (in thousands):

Beginning balance $ 2,026

4 unchanged sentences

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

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Medicare Segment IFP/SMB Segment Total

1 unchanged sentence

Commission revenue from members approved during the period 235,974 16,495 252,469

Commission revenue from renewals of small business members during the periods (1)

Commission revenue from renewals of small business members during the period (1)

— 6,154 6,154

Net commission revenue adjustments from members approved in prior periods ( 11,529 ) 19,115 7,586

Net commission revenue from members approved in prior periods ( 11,700 ) 29,143 17,443

Cash receipts ( 276,825 ) ( 34,485 ) ( 311,310 )

1 unchanged sentence

Ending balance $ 687,274 $ 70,094 $ 757,368

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Medicare Segment IFP/SMB Segment Total

1 unchanged sentence

Commission revenue from members approved during the period 205,330 14,170 219,500

Commission revenue from renewals of small business members during the periods (1)

Commission revenue from renewals of small business members during the period (1)

— 5,005 5,005

Net commission revenue adjustments from members approved in prior period 9,664 3,447 13,111

Net commission revenue from members approved in prior periods 8,966 20,515 29,481

Cash receipts ( 201,256 ) ( 35,957 ) ( 237,213 )

9 unchanged sentences

federal government.

The deposits in China were $ 0.4 million as of June 30, 2021.

The deposits in China were $ 3.8 million as of September 30, 2021.

See Note 4 – Fair Value Measurements for more information regarding our marketable securities.

3 unchanged sentences

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, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Humana 27 % 21 %

4 unchanged sentences

(2) Centene Corporation acquired WellCare Health Plans, Inc.

in 2020, and the contract assets and accounts receivable of WellCare are included in the percentage calculation for June 30, 2021 and December 31, 2020.

in 2020, and the contract assets and accounts receivable of WellCare are included in the percentage calculation for September 30, 2021 and December 31, 2020.

Prepaid Expenses and Other Current Assets – Our prepaid expenses and other current assets are summarized as of the periods presented as follows (in thousands):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Prepaid maintenance contracts $ 8,448 $ 7,715

16 unchanged sentences

Our financial assets measured at fair value on a recurring basis are summarized below by their classification within the fair value hierarchy as of the dates presented below (in thousands):

June 30, 2021

September 30, 2021

Carrying Value Level 1 Level 2 Level 3 Total

15 unchanged sentences

Total assets measured at fair value $ 53,827 $ 4,207 $ 49,620 $ — $ 53,827

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

As of September 30, 2021, o ur cash equivalents consisted of money market funds and commercial paper with original maturity of 90 days or less were classified as Level 1 and 2, respectively.

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 money market funds as Level 1.

As of June 30, 2021, our Level 2 assets included our available for sale marketable securities, which consisted of commercial paper, agency bonds, and a corporate bond with maturities of less than one year.

Our Level 2 assets consisted of available for sale marketable securities, which included commercial paper, agency bonds, and a corporate bond with maturities of less than one year.

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

There were no transfers between the hierarchy levels during either the six months ended June 30, 2021 or the year ended December 31, 2020.

There were no transfers between the hierarchy levels during either the nine months ended September 30, 2021 or the year ended December 31, 2020.

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

As of June 30, 2021

As of September 30, 2021

Amortized Cost Fair Value

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unrealized gains and losses on available-for-sale debt securities that are not credit related are included in accumulated other comprehensive income and summarized as follows as of June 30, 2021 (in thousands):

Amortized Cost Unrealized Gain Unrealized Loss Fair Value

7 unchanged sentences

Total $ 189,980 $ 4 $ ( 7 ) $ 189,977

As of June 30, 2021, there were thirty-five securities in net loss positions and their unrealized losses were immaterial individually and in aggregate.

We did not record any credit losses regarding our available-for-sales debt securities during the six months ended June 30, 2021.

As of September 30, 2021, we had forty-one securities in net loss positions and their unrealized losses were immaterial individually and in aggregate.

We did not record any credit losses regarding our available-for-sales debt securities during the nine months ended September 30, 2021.

We do not intend to sell these securities and it is more likely than not that we will not be required to sell these securities before the recovery of their amortized cost basis.

Note 5 – Equity

Stock Repurchase Programs – We had no stock repurchase activity during the three and six months ended June 30, 2021.

In addition to 10.7 million shares repurchased under our previous repurchase programs, we have in treasury 1.2 million shares as of June 30, 2021 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, 2021 and December 31, 2020, we had a total of 11.9 million shares and 11.8 million shares, respectively, held in treasury.

2021 Inducement Plan – On September 22, 2021, the Company adopted an inducement plan (the “2021 Inducement Plan”), pursuant to which the Company reserved 410,000 shares of its common stock (subject to customary adjustments in the event of a change in capital structure of the Company) to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company, other than following a bona fide period of non-employment, as an inducement material to the individual's entry into employment with the Company within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules (“Nasdaq Rules”).

The Inducement Plan was approved by the Company's board of directors (the “Board”) without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Rules, and the terms and conditions of the Inducement Plan and awards to be granted thereunder are substantially similar to the Company's stockholder-approved Amended and Restated 2014 Equity Incentive Plan.

As of September 30, 2021, no shares were issued under the 2021 Inducement Plan.

Subsequently, 390,584 shares were issued under the 2021 Inducement Plan in October 2021.

Stock Repurchase Programs – We had no stock repurchase activity during the three and nine months ended September 30, 2021.

In addition to 10.7 million shares repurchased under our previous repurchase programs, we have in treasury 1.3 million shares as of September 30, 2021 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, 2021 and December 31, 2020, we had a total of 12.0 million shares and 11.8 million 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.

Such repurchased shares are held in treasury and are presented using the cost method.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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,

2021 2020 2021 2020

3 unchanged sentences

Total stock-based compensation expense $ 5,234 $ 6,332 $ 24,881 $ 21,722

* Amounts include market-based and performance-based RSUs.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

* Amounts include market-based and performance-based restricted stock units.

The following table summarizes stock-based compensation expense by operating function for the periods presented below (in thousands):

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

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

2021 2020 2021 2020

6 unchanged sentences

Total stock-based compensation $ 6,006 $ 6,880 $ 26,756 $ 23,000

* Stock-based compensation expense for both three and nine months ended September 30, 2021 was impacted by a $ 4.1 million credit related to forfeited equity awards due to our chief executive officer's separation.

Note 6 — Convertible Preferred Stock

7 unchanged sentences

The Series A preferred stock participates, on an as-converted basis in all dividends paid to the holders of our common stock.

Conversion Rights – The Series A preferred stock is convertible, at any time after May 31, 2021, into common stock.

The Series A preferred stock is convertible at any time into common stock at a conversion rate equal to (i) the Accrued Value plus accrued PIK dividends that have not yet been added to the Accrued Value, (ii) divided by the conversion price as of the applicable conversion date (the “Conversion Price”).

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Conversion Rights – The Series A preferred stock is convertible at any time into common stock at a conversion rate equal to (i) the Accrued Value plus accrued PIK dividends that have not yet been added to the Accrued Value, (ii) divided by the conversion price as of the applicable conversion date (the “Conversion Price”).

As of the date of this report, the Conversion Price is equal to $ 79.5861 per share.

1 unchanged sentence

Redemption Put Right – At any time on or after the sixth anniversary of the Closing Date, holders of the Series A preferred stock will have the right to cause the Company to redeem all or any portion of the Series A preferred stock in cash at an amount equal to the greater of (i) 135 % of the Accrued Value per share as of the redemption date, plus accrued PIK dividends that have not yet been added to the Accrued Value and (ii) the amount per share that would be payable on an as-converted basis on such Series A preferred stock at the then-current Accrued Value, plus accrued PIK dividends that have not yet been added to the Accrued Value, and in either case of (i) or (ii) plus any unpaid cash dividends that would have otherwise been settled in cash in connection with such conversion (the greater of (i) and (ii), the “Redemption Price”).

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Redemption Call Right – At any time on or after the sixth anniversary of the Closing Date, the Company will have the right (but not the obligation) to redeem out of legally available funds and for cash consideration all (but not less than all) of the Series A preferred stock upon at least 30 days prior written notice at an amount equal to the Redemption Price.

Board Nomination Rights – H.I.G.

is entitled to nominate one individual for election to the Company’s board of directors (the “Board”) so long as it continues to own at least 30 % of the common stock issuable or issued upon conversion of the Series A preferred stock originally issued to it in the private placement.

is entitled to nominate one individual for election to the the Board so long as it continues to own at least 30 % of the common stock issuable or issued upon conversion of the Series A preferred stock originally issued to it in the private placement.

also has the right to nominate an additional individual to the Board if the Company fails to maintain certain levels of commissions receivable and liquidity.

As of the date of this report, H.I.G.

has conditionally waived its director nomination rights.

Voting Rights – The Series A preferred stock will vote together with the common stock as a single class on all matters submitted to a vote of the holders of the common stock (subject to certain voting limitations set forth in, and the terms and conditions of, the Certificate of Designations).

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If the Company fails to maintain the minimum asset coverage ratio or minimum liquidity amount as of a certain date or for a certain time period required by the Investment Agreement and H.I.G continues to own at least 30 % of the Series A preferred stock originally issued to it in the private placement, H.I.G will have the right to nominate an additional director to the Board, and the consent of H.I.G.

will be required to approve the Company's annual budget, hire or terminate certain key executives, and incur certain indebtedness as outlined in the Investment Agreement.

will be required to approve the Company's annual budget, hire or terminate certain key executives, and incur

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

certain indebtedness as outlined in the Investment Agreement.

will no longer have these additional board nomination and consent rights if the Company is able to satisfy the minimum liquidity amount requirements in the Investment Agreement for any subsequent 12 consecutive months.

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We recognized the Series A preferred stock at its stated amount less issuance costs of $ 11.0 million, or $ 214.0 million.

As of June 30, 2021, the estimated Series A preferred stock redemption value equals 135 % of the Accrued Value per share as of the redemption date, plus any accrued and unpaid dividends, which is significantly in excess of the fair value of the common stock into which the Series A preferred stock is convertible as of June 30, 2021.

As of September 30, 2021, the estimated Series A preferred stock redemption value equals 135 % of the Accrued Value per share as of the redemption date, plus any accrued and unpaid dividends, which is significantly in excess of the fair value of the common stock into which the Series A preferred stock is convertible as of September 30, 2021.

We have elected to apply the accretion method to adjust the carrying value of the Series A preferred stock to its redemption value at the earliest date of redemption, April 30, 2027.

Amounts recognized to accrete the Series A preferred stock to its estimated redemption value are treated as a deemed dividend and are recorded as a reduction to retained earnings.

The estimated redemption value will vary in

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

subsequent periods due to the redemption put right described above and we have elected to recognize such changes prospectively.

No shares of Series A preferred stock have been converted and the Series A preferred stock was convertible into 2.9 million shares of common stock as of June 30, 2021.

The estimated redemption value will vary in subsequent periods due to the redemption put right described above and we have elected to recognize such changes prospectively.

No shares of Series A preferred stock have been converted and the Series A preferred stock was convertible into 2.9 million shares of common stock as of September 30, 2021.

The following table summarizes the proceeds and changes to our Series A preferred stock (in thousands):

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Change in preferred stock redemption value 3,770

Balance as of June 30, 2021 $ 218,504

Note 7 – Net Income (Loss) Per Share Attributable to Common Stockholders

Balance as of September 30, 2021 $ 225,438

Note 7 – Net Loss Per Share Attributable to Common Stockholders

Our Series A preferred stock is considered a participating security which requires the use of two-class method for the computation of basic and diluted per share amounts.

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Net loss attributable to common stockholders is not allocated to the convertible preferred stock as the holder of the Series A preferred stock does not have a contractual obligation to share in losses.

Basic net income (loss) attributable to common stockholders per share is computed by dividing net income (loss) available to common stockholders by the weighted-average number of common stock outstanding for the period.

Diluted net income (loss) attributable to common stockholders per share is computed by dividing the net income (loss) available to common stockholders for the period by the weighted average number of common and common equivalent shares outstanding during the period.

Diluted net income (loss) attributable to common stockholders per share reflects all potential dilutive common stock equivalent shares, including conversion of preferred stock, stock options, restricted stock units and shares to be issued under our employee stock purchase program (“ESPP”).

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

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

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

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

Diluted net loss attributable to common stockholders per share reflects all potential dilutive common stock equivalent shares, including conversion of preferred stock, stock options, restricted stock units and shares to be issued under our employee stock purchase program (“ESPP”).

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

2021 2020 2021 2020

Net income (loss) attributable to common stockholders $ ( 22,888 ) $ ( 3,370 ) $ ( 23,688 ) $ 82

Net loss attributable to common stockholders $ ( 59,948 ) $ ( 14,505 ) $ ( 83,636 ) $ ( 14,423 )

Shares used in per share calculation – basic 26,786 26,487 26,688 25,838

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Shares used in diluted share calculation 26,786 26,487 26,688 25,838

Net income (loss) attributable to common stockholders per share – basic $ ( 0.86 ) $ ( 0.13 ) $ ( 0.89 ) $ 0.00

Net income (loss) attributable to common stockholders per share – diluted $ ( 0.86 ) $ ( 0.13 ) $ ( 0.89 ) $ 0.00

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For each of the three and six months ended June 30, 2021 and 2020, we had securities outstanding that could potentially dilute per share amounts, 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.

Net loss attributable to common stockholders per share – basic and diluted $ ( 2.24 ) $ ( 0.55 ) $ ( 3.13 ) $ ( 0.56 )

For each of the three and nine months ended September 30, 2021 and 2020, we had securities outstanding that could potentially dilute per share amounts, 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 income (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,

2021 2020 2021 2020

2 unchanged sentences

Common stock options 278 414 330 453

ESPP 7 — 12 —

Total 4,285 1,013 2,992 1,201

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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, 2021 (in thousands):

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Our future minimum payments under non-cancellable contractual service and licensing obligations as of September 30, 2021 (in thousands):

For the Years Ending December 31,

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An estimated loss contingency is accrued in the condensed consolidated financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

There was no material litigation-related accrual during the three and six months ended June 30, 2021.

There was no material litigation-related accrual during the three and nine months ended September 30, 2021.

Legal proceedings or other contingencies could result in material costs, even if we ultimately prevail.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Legal Proceedings

Securities Class Action – On April 8, 2020 and April 30, 2020, two purported class action lawsuits were filed against us, our chief executive officer, Scott N.

Securities Class Action – On April 8, 2020 and April 30, 2020, two purported class action lawsuits were filed against us, our then-chief executive officer, Scott N.

Flanders, our then-chief financial officer, Derek N.

Yung, and our then-chief operating officer, David K.

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

Francis (collectively, the “Defendants”), in the United States District Court for the Northern District of California.

The cases are captioned Patel v.

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

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

The motion to dismiss has been fully briefed.

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

The lead plaintiff filed an amended complaint on August 25, 2020, which the Defendants moved to dismiss on October 23, 2020.

The Defendants’ motion, which the plaintiff opposed, was granted in part and denied in part on August 12, 2021.

The court dismissed the plaintiff's claims to the extent premised upon alleged misrepresentations or omissions relating to churn, but denied the Defendants motion with respect to alleged misstatements regarding purported operating costs.

On October 1, 2021, the Company filed an answer denying in part and admitting in part the remaining allegations, and denying any wrongdoing.

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

Flanders, our then-chief financial officer, Mr.

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.

Francis, and the members of our Board at the time of filing of the complaints (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.

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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.

A third derivative lawsuit was filed against the same defendants on October 5, 2021 in the United States District Court for the Northern District of California, captioned Badwal v.

Flanders et al ., Case No.

4:21-cv-07795 (N.D.

The complaints allege, among

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

The Chernet and Lincolnshire 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 Chernet and Lincolnshire lawsuits have both been stayed pending the resolution of the motion to dismiss in the Securities Class Action, In re eHealth Securities Litig ., Master File No.

4:20-cv-02395-JST (N.D.

The Badwal complaint purports to assert a claim for breach of fiduciary duty, an insider trading claim, and violations of Section 14(a), 10(b) and 20D of the Securities Exchange Act of 1934.

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

The Badwal complaint seeks damages, declaratory relief, corporate governance measures, equitable and injunctive relief, restitution and disgorgement, and attorneys' fees and costs.

On August 10, 2020, the parties filed a Stipulation and Proposed Order in the Chernet matter to stay the action until and through the resolution of the Defendants' anticipated motion to dismiss the consolidated securities class action, and filed a similar stipulation in the Lincolnshire matter on December 11, 2020.

The Chernet stipulation was granted by the court on August 12, 2020 and the Lincolnshire stipulation on December 11, 2020.

The agreed-upon stays terminated with the filing of an answer in the securities class action and the parties are engaged in discussions regarding further proceedings.

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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Both complaints asserted claims under the California Private Attorney General Act on behalf of all current and former hourly-paid or non-exempt employees who work or have worked for us in California, based on alleged failures to comply with California wage and hour laws.

The parties have entered into a court-approved settlement agreement that resolves both matters related to the Gonzalez and Le'Vias Complaints, and Plaintiffs Michael Le’Vias and Ramona Meadows have sought dismissal with prejudice of the Le’Vias Complaint.

Upon the completion of the distribution of the settlement funds in accordance with the settlement agreement and the court order approving the settlement agreement, the parties will seek a dismissal with prejudice of the Gonzalez Complaint.

The parties have entered into a court-approved settlement agreement that resolves both matters related to the Gonzalez and Le'Vias Complaints, and both the Gonzalez and Le'Vias Complaints have been dismissed with prejudice.

Note 9 – Segment and Geographic Information

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The performance measures of our segments include total revenue and profit.

Our business structure is comprised

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of two operating segments:

Our business structure is comprised of two operating segments:

Medicare and Individual, Family and Small Business.

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, 2020 for our accounting policies relating to operating segments.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The results of our operating segments are summarized for the periods presented below (in thousands):

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

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

2021 2020 2021 2020

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Total revenue $ 63,914 $ 94,284 $ 294,685 $ 289,458

Segment profit:

Segment profit (loss):

Medicare segment profit (loss) (1)

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12,499 18,487 38,476 24,153

Total segment profit 121 17,734 32,718 43,798

Total segment profit (loss) ( 40,383 ) 4,348 ( 7,665 ) 48,146

Corporate ( 14,827 ) ( 15,581 ) ( 43,206 ) ( 43,376 )

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Amortization of intangible assets ( 121 ) ( 287 ) ( 416 ) ( 1,207 )

Restructuring charges — — ( 2,431 ) —

Other income, net 172 452 322 825

Restructuring and reorganization charges ( 573 ) — ( 3,004 ) —

Other income (expense), net 189 ( 101 ) 511 724

Loss before benefit from income taxes $ ( 65,848 ) $ ( 20,948 ) $ ( 91,501 ) $ ( 25,346 )

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(1) During the first quarter of 2021, we revised the calculation of segment profit by excluding amortization of capitalized software development costs to enhance comparability of our financial metrics with peer companies.

The amortization of capitalized software development costs were $ 2.9 million and $ 1.7 million for the three months ended June 30, 2021 and 2020, respectively, and $ 5.7 million and $ 3.2 million for the six months ended June 30, 2021 and 2020, respectively.

The amortization of capitalized software development costs were $ 3.4 million and $ 2.1 million for the three months ended September 30, 2021 and 2020, respectively, and $ 9.1 million and $ 5.3 million for the nine months ended September 30, 2021 and 2020, respectively.

(2) Depreciation and amortization has been adjusted to include amortization of software development costs.

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

United States $ 45,465 $ 40,500

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Significant Customers

Substantially all revenue for the three and six months ended June 30, 2021 and 2020 was generated from customers located in the United States.

Substantially all revenue for the three and nine months ended September 30, 2021 and 2020 was generated from customers located in the United States.

Carriers representing 10% or more of our total revenue are summarized as follows:

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

2021 2020 2021 2020

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

2021 2020 2021 2020

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21 % 17 % 21 % 21 %

15 % 12 % 20 % 14 %

Humana 20 % 26 % 18 % 21 %

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(2) Centene Corporation acquired WellCare Health Plans, Inc.

in 2020, and the revenue of WellCare is included in the percentage calculation for the three and six months ended June 30, 2021 and 2020.

in 2020, and the revenue of WellCare is included in the percentage calculation for the three and nine months ended September 30, 2021 and 2020.

Note 10 – Leases

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Most leases include options to renew, and the exercise of these options is at our discretion.

Total operating lease expenses were $ 1.9 million and $ 2.2 million for the three months ended June 30, 2021 and 2020, $ 3.8 million and $ 4.3 million for the six months ended June 30, 2021 and 2020, respectively and sublease income was immaterial for both periods.

The following table summarizes the lease-related assets and liabilities recorded on the Condensed Consolidated Balance Sheets as of the dates presented below (in thousands):

June 30, 2021 December 31, 2020

Operating lease right-of-use assets $ 39,996 $ 42,558

Lease liabilities – current $ 5,443 $ 5,192

Lease liabilities – non-current 38,577 41,369

Total operating lease liabilities $ 44,020 $ 46,561

Total operating lease expenses were $ 1.9 million and $ 2.1 million for the three months ended September 30, 2021 and 2020, and $ 5.7 million and $ 6.4 million for the nine months ended September 30, 2021 and 2020, respectively and sublease income was immaterial for both periods.

Supplemental information related to leases are as follows (dollars in thousands):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Weighted-average remaining lease term of operating leases 6.6 years 7.2 years

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

Six Months Ended June 30,

Nine Months Ended September 30,

Operating lease expense $ 5,738 $ 6,411

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2021, maturities of operating lease liabilities are as follows (in thousands):

As of September 30, 2021, maturities of operating lease liabilities are as follows (in thousands):

Year ending December 31,

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(1) Noncancellable sublease income for the remainder of 2021 and years ending December 31, 2022 and 2023 of $ 0.3 million, $ 0.4 million, and $ 0.4 million, respectively, is not included in the table above.

Note 11 — Restructuring

Note 11 — Restructuring and Reorganization

Our restructuring and reorganization costs and liabilities consist primarily of severance, transition and other related costs.

The following table summarizes the cash-based restructuring and reorganization related liabilities (in thousands):

Nine Months Ended September 30, 2021

Beginning balance $ —

Restructuring and reorganization charges 3,004

Payments ( 2,466 )

Ending balance $ 538

In February 2021, we eliminated approximately 89 full-time positions, primarily in the United States, representing approximately 5 % of our workforce, primarily within our customer care and enrollment group, and to a lesser extent, in our marketing and advertising, technology and content, and general and administrative groups.

Total pre-tax restructuring charges for the six months ended June 30, 2021 were $ 2.4 million, which primarily related to employee termination benefits.

Total pre-tax restructuring charges were $ 2.4 million for the nine months ended September 30, 2021, which primarily related to employee termination benefits.

Substantially all of the restructuring charges resulted in cash expenditures.

The restructuring activities were completed by March 31, 2021.

Accrued restructuring charges were $ 0.1 million as of June 30, 2021.

In September 2021, we announced the transition of our chief executive officer.

Scott Flanders resigned as a member of our Board and chief executive officer, effective October 31, 2021.

We recognized $ 0.5 million in severance costs related to his separation in September 2021 and we expect to recognize an additional $ 1.9 million in the fourth quarter of 2021.

Stock-based compensation expense for both three and nine months ended September 30, 2021 was impacted by a $ 4.1 million credit related to forfeited equity awards due to Mr.

Flanders' separation, which was included in general and administrative expenses on our Condensed Consolidated Statement of Comprehensive Loss.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 12 – Debt

1 unchanged sentence

The Credit Agreement provides for a $ 40.0 million secured asset-backed revolving credit facility with a $ 5.0 million letter of credit sub-facility.

On December 20, 2019, we amended our revolving credit facility agreement with RBC (the “Amendment”) and increased the borrowing amount from $ 40.0 to $ 75.0 million.

On December 20, 2019, we amended our revolving credit facility agreement with RBC (the “Amendment”) and increased the borrowing amount from $ 40.0 million to $ 75.0 million.

The maturity date has been extended to December 20, 2022.

5 unchanged sentences

At the closing of the Credit Agreement, we paid a one-time facility fee of 1.75 % of the total commitments of $ 40.0 million.

We also paid a

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

one-time closing fee of 0.5 % of the new commitment of $ 75.0 million in connection with the Amendment.

We also paid a one-time closing fee of 0.5 % of the new commitment of $ 75.0 million in connection with the Amendment.

The Company is also obligated to pay other customary administration fees for a credit facility of this size and type.

3 unchanged sentences

The Amendment also changed the financial covenants to require us to maintain at least $ 6.0 million of Excess Availability at all times or, if greater, up to $ 11.3 million depending on our Borrowing Base as determined by eligible past and future commissions receivable.

In addition, the Amendment also included changes in the payment conditions to, among other things, require us to have at least $ 10.0 million of liquidity or, if greater, up to $ 18.8 million depending on our borrowing base as determined by eligible past and future commissions receivable, in order for us to make certain permitted acquisitions, investments, distributions and payments of indebtedness.

In addition, the Amendment also included changes in the payment conditions to, among other things, require us to have at least $ 10.0 million of liquidity or, if greater, up to $ 18.8 million depending on the Borrowing Base as determined by eligible past and future commissions receivable, in order for us to make certain permitted acquisitions, investments, distributions and payments of indebtedness.

The Amendment also stated the seasonal amount thresholds used in connection with the cash dominion and field examination covenants in the Credit Agreement.

2 unchanged sentences

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 $ 0.6 million and $ 0.7 million as of June 30, 2021 and December 31, 2020, respectively.

As of June 30, 2021, we had no outstanding borrowings under our revolving credit facility.

The remaining balance of unamortized issuance costs was $ 0.5 million and $ 0.7 million as of September 30, 2021 and December 31, 2020, respectively.

As of September 30, 2021, we had no outstanding borrowings under our revolving credit facility.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 13 – Income Taxes

The following table summarizes our benefit from income taxes and our effective tax rates for the periods presented below (in thousands, except effective tax rate):

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

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

2021 2020 2021 2020

2 unchanged sentences

Effective tax rate 19.5 % 30.8 % 21.1 % 43.1 %

For the three and six months ended June 30, 2021, we recognized a benefit from income taxes of $ 6.8 million and $ 6.4 million, representing an effective tax rate of 26.8 % and 25.1 %, respectively.

For the three and nine months ended September 30, 2021, we recognized a benefit from income taxes of $ 12.8 million and $ 19.3 million, representing an effective tax rate of 19.5 % and 21.1 %, respectively.

These effective tax rates are 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 and six months ended June 30, 2020, we recognized benefits from income taxes of $ 2.4 million and $ 4.5 million, representing an effective tax rate of 41.9 % and 101.9 %, respectively, which were 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 and nine months ended September 30, 2020, we recognized benefits from income taxes of $ 6.4 million and $ 10.9 million, representing an effective tax rate of 30.8 % and 43.1 %, respectively, which were 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.

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, 2021, as we believe it is more likely than not that the net deferred tax assets will be realized,

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

We continue to recognize our deferred tax assets as of September 30, 2021, as we believe it is more likely than not that the net deferred tax assets will be realized, with the exception of certain net operating losses and credits that are expected to expire unutilized which have a valuation allowance.

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