What changed in this filing

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Item 1. Financial Statements

2022-05-06 compared with 2021-11-08 · 172 added, 260 removed, 515 unchanged (46% of the section changed)

3 unchanged sentences

(in thousands, unaudited)

September 30, 2021 December 31, 2020 *

March 31, 2022 December 31, 2021

Current assets:

9 unchanged sentences

Restricted cash 3,239 3,239

Intangible assets, net 8,153 8,569

Goodwill 40,233 40,233

Other assets 35,936 35,547

6 unchanged sentences

Lease liabilities – current 5,655 5,543

Deferred revenue 10,547 308

Other current liabilities 8,500 3,330

Total current liabilities 60,389 75,465

Long-term debt 64,989 —

Deferred income taxes – non-current 42,763 50,796

12 unchanged sentences

Total liabilities, convertible preferred stock, and stockholders’ equity $ 1,162,862 $ 1,149,292

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

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

2 unchanged sentences

(in thousands, except per share amounts, unaudited)

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

2021 2020 2021 2020

Three Months Ended March 31,

Commission $ 93,850 $ 127,052

12 unchanged sentences

Other income (expense), net ( 1,021 ) 150

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 )

Loss before income taxes ( 40,735 ) ( 492 )

Provision for (benefit from) income taxes ( 7,993 ) 308

Net loss ( 32,742 ) ( 800 )

2 unchanged sentences

Net loss attributable to common stockholders:

$ ( 39,960 ) $ ( 800 )

Net loss per share attributable to common stockholders:

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

Diluted $ ( 2.24 ) $ ( 0.55 ) $ ( 3.13 ) $ ( 0.56 )

Basic and diluted $ ( 1.46 ) $ ( 0.03 )

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

Basic and diluted 27,278 26,620

Comprehensive loss:

Comprehensive income (loss):

Net loss $ ( 32,742 ) $ ( 800 )

6 unchanged sentences

(in thousands, unaudited)

Three Months Ended September 30, 2021

Common Stock Additional Paid-in

Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Income Total Stockholders’ Equity

Shares Amount Shares Amount

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 )

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

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

Other comprehensive income, net of tax — — — — — — ( 23 ) ( 23 )

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

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

Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Income Total Stockholders’ Equity

Shares Amount Shares Amount

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

Repurchase of shares to satisfy employee tax withholding obligations — — ( 9,014 ) 112 — — — ( 9,014 )

Stock-based compensation — — 6,880 — — — — 6,880

Other comprehensive income, net of tax — — — — — — 7 7

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

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.

EHEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, unaudited)

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Common Stock Additional Paid-in

5 unchanged sentences

Paid-in-kind dividend and accretion related to convertible preferred stock — — — — — ( 7,218 ) — ( 7,218 )

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

Stock-based compensation — — 5,791 — — — — 5,791

1 unchanged sentence

Net loss — — — — — ( 32,742 ) — ( 32,742 )

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

Balance as of March 31, 2022 38,880 $ 39 $ 762,212 12,053 $ ( 199,998 ) $ 153,253 $ 421 $ 715,927

Three Months Ended March 31, 2021

Common Stock Additional Paid-in

2 unchanged sentences

Balance as of December 31, 2020 37,755 $ 38 $ 721,013 11,831 $ ( 199,998 ) $ 316,155 $ 350 $ 837,558

Cumulative effect from the adoption of ASU 2016-13 — — — — — ( 1,147 ) — ( 1,147 )

Issuance of common stock in connection with equity incentive plans 238 — 285 — — — — 285

Repurchase of shares to satisfy employee tax withholding obligations — — ( 5,037 ) 81 — — — ( 5,037 )

Shares issued in equity offering 2,070 2 228,022 — — — — 228,024

Settlement of earnout liability 295 — 28,521 — — — — 28,521

Stock-based compensation — — 11,952 — — — — 11,952

1 unchanged sentence

Net loss — — — — — ( 800 ) — ( 800 )

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

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

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

2 unchanged sentences

(in thousands, unaudited)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating activities:

Net loss $ ( 32,742 ) $ ( 800 )

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

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 946 1,138

13 unchanged sentences

Accrued expenses and other liabilities 4,829 1,305

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

Net cash provided by operating activities 47,112 42,809

Investing activities:

3 unchanged sentences

Proceeds from redemption and maturities of marketable securities 34,319 23,409

Net cash used in investing activities ( 36,822 ) ( 128,291 )

Net cash provided by investing activities 26,121 10,497

Financing activities:

Proceeds from issuance of preferred stock, net of issuance costs 214,025 —

Proceeds from issuance of common stock, net of issuance costs — 228,024

Net proceeds from debt financing 64,862 —

Net proceeds from exercise of common stock options and employee stock purchases 1,054 285

Repurchase of shares to satisfy employee tax withholding obligations ( 508 ) ( 5,037 )

Acquisition-related contingent payments — ( 8,751 )

Principal payments in connection with leases ( 35 ) ( 38 )

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

Net cash provided by (used in) financing activities 65,373 ( 4,790 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash 31 ( 25 )

11 unchanged sentences

Our omnichannel consumer engagement platform enables consumers to use our services online, through interactive chat, or by telephone with a licensed insurance agent.

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 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.

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

Basis of Presentation – The accompanying condensed consolidated balance sheet as of March 31, 2022, the condensed consolidated statements of comprehensive loss and stockholders’ equity for the three months ended March 31, 2022 and 2021, and the condensed consolidated statements of cash flows for the three months ended March 31, 2022 and 2021 are unaudited.

The condensed consolidated balance sheet data as of December 31, 2021 was derived from the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the Securities and Exchange Commission on March 1, 2022.

The accompanying financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K.

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

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.

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, 2021 and include all adjustments necessary for the fair presentation of our financial position as of March 31, 2022 and December 31, 2021, and our results of operations for the periods presented.

The results for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31, 2022 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 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 Loss for the nine months ended September 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 three months ended March 31, 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.

11 unchanged sentences

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.

Any changes to 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.

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.

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

Recently Adopted Accounting Pronouncements

Income Taxes (Topic 740) – In December 2019, the Financial Accounting Standard Board (“FASB”) issued ASU No.

2019-12, Income Tax, Simplifying the Accounting for Income Taxes , which aims to simplify the accounting for income taxes.

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

Codification Improvements – In October 2020, the FASB issued ASU No.

2020-10, Codification Improvements .

ASU 2020-10 is intended to facilitate codification updates for technical corrections, such as conforming amendments, clarifications to guidance, simplifications to wording or structure of guidance, and other minor improvements.

It contains amendments that improve the consistency of the codification by including all disclosure guidance in the appropriate disclosure section and other updates that vary in nature.

We adopted this guidance in the first quarter of 2021 with no material impact on our condensed consolidated financial statements and disclosures.

Debt with Conversion and Other Options (Topic 470) and Contracts in Entity's Own Equity (Topic 815) – In June 2020, the FASB issued ASU No.

2020-06 to simplify the accounting for convertible instruments and improve the usefulness and relevance of information regarding convertible instruments.

This ASU reduces the number of accounting models for converting debt instruments and convertible preferred stock.

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

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.

We did not adopt any new accounting pronouncements during the three months ended March 31, 2022.

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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Medicare Advantage $ 78,130 $ 103,525

9 unchanged sentences

Vision 243 205

Other 845 847 1,901 2,693

Total Ancillary 2,831 3,724

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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.

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

EHEALTH, INC.

1 unchanged sentence

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

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

2021 2020 2021 2020

Three Months Ended March 31,

Commission Revenue from Members Approved During the Period $ 84,283 $ 114,678

$ 42,698 $ 52,040 $ 235,974 $ 205,330

Net Commission Revenue from Members Approved in Prior Periods (1)

( 171 ) ( 698 ) ( 11,700 ) 8,966

Total Medicare Segment Commission Revenue $ 84,334 $ 114,692

1 unchanged sentence

Commission Revenue from Members Approved During the Period $ 6,042 $ 6,395

$ 4,892 $ 4,012 $ 16,495 $ 14,170

Commission Revenue from Renewals of Small Business Members During the Period (2)

1,744 1,122 6,154 5,005

Net Commission Revenue from Members Approved in Prior Periods (1)

10,028 17,068 29,143 20,515

Total IFP/SMB Segment Commission Revenue $ 9,516 $ 12,360

2 unchanged sentences

Commission Revenue from Renewals of Small Business Members During the Period 3,037 2,687

1,744 1,122 6,154 5,005

Total Net Commission Revenue from Members Approved in Prior Periods (1)(2)

9,857 16,370 17,443 29,481

Total Commission Revenue $ 93,850 $ 127,052

_____________

(1) These amounts include commission bonus revenue.

(1) These amounts reflect our revised estimates of cash collections for certain members approved prior to the relevant reporting period that are recognized as adjustments to revenue within the relevant reporting period.

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.

(3) Commission revenue from renewals of small business members during the period was previously included in net commission revenue from members approved in prior periods.

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 $ 0.37 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.

(2) The impacts of total net commission revenue from members approved in prior periods were $ 0.02 and $ 0.12 per basic and diluted share, for the three months ended March 31, 2022 and 2021, respectively.

There were no reductions to revenue from members approved in prior periods for the three months ended March 31, 2022 and $ 0.9 million for the three months ended March 31, 2021.

These reductions to revenue primarily related to the Individual, Family and Small Business segment.

Note 3 – Supplemental Financial Statement Information

4 unchanged sentences

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Cash $ 91,414 $ 33,253

3 unchanged sentences

Total cash, cash equivalents and restricted cash $ 223,802 $ 85,165

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.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2022 and December 31, 2021, we had $ 3.2 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 September 30, 2021.

We believe the potential for collection issues with any of our customers was minimal as of March 31, 2022.

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.

4 unchanged sentences

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.

There were no write-offs during the three month periods ended March 31, 2022 and 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 March 31, 2022.

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 nine months ended September 30, 2021 is summarized as follows (in thousands):

The change in the allowance for credit losses for the three months ended March 31, 2022 is summarized as follows (in thousands):

Beginning balance $ 2,198

4 unchanged sentences

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

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Medicare Segment IFP/SMB Segment Total

2 unchanged sentences

Commission revenue from renewals of small business members during the period — 3,037 3,037

— 6,154 6,154

Net commission revenue from members approved in prior periods 51 437 488

2 unchanged sentences

Ending balance $ 762,419 $ 68,759 $ 831,178

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Medicare Segment IFP/SMB Segment Total

2 unchanged sentences

Commission revenue from renewals of small business members during the period — 2,687 2,687

— 5,005 5,005

Net commission revenue from members approved in prior periods 14 3,278 3,292

2 unchanged sentences

Ending balance $ 688,737 $ 53,110 $ 741,847

_____________

(1) Commission revenue from renewals of small business members during the period was previously included in net commission revenue from members approved in prior periods.

However, starting 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.

Our financial instruments that are exposed to concentrations of credit risk principally consist of cash, cash equivalents, marketable securities, contract assets – commissions receivable, and accounts receivable.

3 unchanged sentences

federal government.

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

The deposits in China were $ 4.2 million as of March 31, 2022.

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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:

September 30, 2021 December 31, 2020

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

March 31, 2022 December 31, 2021

Humana 26 % 25 %

UnitedHealthCare (1)

Centene (1)(2)

_____________

(1) Percentages include the carriers' subsidiaries.

(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 September 30, 2021 and December 31, 2020.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Prepaid maintenance contracts $ 6,052 $ 6,246

13 unchanged sentences

Level 3 Unobservable inputs for the asset or liability.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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):

September 30, 2021

March 31, 2022

Carrying Value Level 1 Level 2 Level 3 Total

3 unchanged sentences

Short-term marketable securities

Agency bonds 1,276 — 1,276 — 1,276

Commercial paper 10,938 — 10,938 — 10,938

Corporate bond 2,522 — 2,522 — 2,522

Total assets measured at fair value $ 140,088 $ 17,186 $ 122,902 $ — $ 140,088

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

2 unchanged sentences

Money market funds $ 9,217 $ 9,217 $ — $ — $ 9,217

Commercial paper 39,456 — 39,456 — 39,456

Short-term marketable securities

Agency bonds 35,423 — 35,423 — 35,423

Commercial paper 38,801 — 38,801 — 38,801

Corporate bond 2,505 — 2,505 — 2,505

Total assets measured at fair value $ 89,979 $ 9,217 $ 80,762 $ — $ 89,979

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.

As of March 31, 2022, our 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.

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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 nine months ended September 30, 2021 or the year ended December 31, 2020.

There were no transfers between the hierarchy levels during either the three months ended March 31, 2022 or the year ended December 31, 2021.

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

As of September 30, 2021

As of March 31, 2022

Amortized Cost Fair Value

Due in 1 year $ 140,089 $ 140,088

EHEALTH, INC.

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 September 30, 2021 (in thousands):

Amortized Cost Unrealized Gain Unrealized Loss Fair Value

3 unchanged sentences

Short-term marketable securities

Agency bonds 1,276 — — 1,276

Commercial paper 10,939 1 ( 2 ) 10,938

Corporate bond 2,522 — — 2,522

Total $ 140,089 $ 6 $ ( 7 ) $ 140,088

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.

As of March 31, 2022, we had 31 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-sale debt securities during the three months ended March 31, 2022.

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.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 5 – Equity

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.

In March 2022, the Company amended and restated the 2021 Inducement Plan to reserve an additional 500,000 shares of its common stock.

The 2021 Inducement Plan and its amendment were 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 2021 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 March 31, 2022, 390,584 shares were issued under the 2021 Inducement Plan.

Stock Repurchase Programs – We had no stock repurchase activity during the three months ended March 31, 2022.

In addition to 10.7 million shares repurchased under our previous repurchase programs, we have in treasury 1.4 million shares as of March 31, 2022 that were previously surrendered by employees to satisfy tax withholding due in connection with the vesting of certain restricted stock units.

As of March 31, 2022 and December 31, 2021, we had a total of 12.1 million shares and 12.0 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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Restricted stock units* $ 4,706 $ 10,719

3 unchanged sentences

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

2021 2020 2021 2020

Three Months Ended March 31,

Marketing and advertising $ 313 $ 2,485

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Total stock-based compensation expense $ 5,285 $ 11,402

Amount capitalized in internal-use software 772 548 1,875 1,278

Amount capitalized for internal-use software 506 550

Total stock-based compensation $ 5,791 $ 11,952

* 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

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

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”).

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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 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 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.

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entered into on February 17, 2021 (the “Investment Agreement”).

In addition, the Company is required to maintain an asset coverage ratio (as defined in the Investment Agreement) of at least 2 x, which increases to 2.5 x thirty months after the date of the Investment Agreement.

In addition, the Company is required to maintain an asset coverage ratio (as defined in the Investment Agreement) of at least 2 x, which increases to 2.5 x 30 months after the date of the Investment Agreement.

Additionally, the Investment Agreement requires the Company to maintain a minimum liquidity amount (as defined in the Investment Agreement) for certain periods that ranges from $ 65 million to $ 125 million.

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 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 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.

As of March 31, 2022, 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 March 31, 2022.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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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.

No shares of Series A preferred stock have been converted and the Series A preferred stock was convertible into approximately 3.0 million shares of common stock as of March 31, 2022.

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 6,361

Balance as of September 30, 2021 $ 225,438

Balance as of December 31, 2021 $ 232,592

Accrued paid-in-kind dividends 4,717

Change in preferred stock redemption value 2,501

Balance as of March 31, 2022 $ 239,810

Note 7 – Net Loss Per Share Attributable to Common Stockholders

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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

Three Months Ended March 31,

Net loss attributable to common stockholders:

$ ( 39,960 ) $ ( 800 )

Shares used in per share calculation – basic 27,278 26,620

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Net loss attributable to common stockholders per share – basic and diluted $ ( 1.46 ) $ ( 0.03 )

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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

For each of the three months ended March 31, 2022 and 2021, 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 loss per share consisted of the following (in thousands):

Three Months Ended March 31,

Convertible preferred stock 2,981 —

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Common stock options 279 363

ESPP 7 — 12 —

Total 4,861 1,460

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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):

Our future minimum payments under non-cancellable contractual service and licensing obligations as of March 31, 2022 (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 nine months ended September 30, 2021.

There was no material litigation-related accrual during the three months ended March 31, 2022.

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

Legal Proceedings

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

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

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

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

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

The cases are captioned Patel v.

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4:20-cv-02967 (N.D.

The complaints allege, among other things, that we and Messrs.

Flanders, Yung and Francis made materially false and misleading statements and/or failed to disclose material information regarding our accounting and modeling assumptions, rate of member churn and our profitability during the alleged class period of March 19, 2018 to April 7, 2020.

The complaints allege, among other things, that the Company and Messrs.

Flanders, Yung and Francis made materially false and misleading statements and/or failed to disclose material information regarding the Company's accounting and modeling assumptions, rate of member churn and the Company's profitability during the alleged class period of March 19, 2018 to April 7, 2020.

The complaints allege that we and Messrs.

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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 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.

An Amended Complaint was filed on August 25, 2020, which Defendants moved to dismiss on October 23, 2020.

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

The Court dismissed Plaintiff's claims to the extent premised upon alleged misrepresentations or omissions relating to churn, but denied 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 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.

On November 11, 2021, Plaintiff’s counsel filed a suggestion of death with respect to the lead plaintiff Billy White.

The parties stipulated to a schedule for the lead plaintiff process to be re-opened, which was so-ordered by the Court on January 10, 2022.

Plaintiff’s counsel published notice regarding the appointment of a new lead plaintiff on January 17, 2022.

On March 18, 2022, several motions were filed by class members seeking appointment as lead plaintiff.

The lead plaintiff motions are presently set to be heard on May 12, 2022.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Flanders, its then-chief financial officer, Mr.

Yung, its then-chief operating officer, Mr.

Francis, and the then-current members of the Board (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.

8 unchanged sentences

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

The complaints allege, among

EHEALTH, INC.

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 complaints allege, 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 2018 through the present.

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

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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 21D 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 Chernet and Lincolnshire 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 Badwal complaint seeks damages, declaratory relief, corporate governance measures, equitable and injunctive relief, restitution and disgorgement, and attorneys' fees and costs.

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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”).

On July 1, 2019, two other current or former employees, Michael Le’Vias and Ramona Meadows, filed a related complaint against us and eHealth Ins.

Co., in the Superior Court of the State of California for the County of Santa Clara (the “Le’Vias Complaint”).

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 both the Gonzalez and Le'Vias Complaints have been dismissed with prejudice.

In December 2021, the parties entered into a stipulation to further stay the Badwal and Chernet actions pending the appointment of a lead plaintiff in the consolidated action, which was so ordered by the Court on December 14, 2021.

Note 9 – Segment and Geographic Information

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

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

2021 2020 2021 2020

Three Months Ended March 31,

Medicare $ 95,067 $ 121,021

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Medicare segment profit (loss) $ ( 14,817 ) $ 24,545

$ ( 52,882 ) $ ( 14,139 ) $ ( 46,141 ) $ 23,993

Individual, Family and Small Business segment profit 5,254 8,052

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

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

Segment profit (loss) ( 9,563 ) 32,597

Corporate ( 15,265 ) ( 15,286 )

1 unchanged sentence

Depreciation and amortization ( 4,778 ) ( 3,944 )

( 4,899 ) ( 2,995 ) ( 12,840 ) ( 7,911 )

Amortization of intangible assets — ( 176 )

1 unchanged sentence

Other income (expense), net ( 1,021 ) 150

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

_____________

(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 $ 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.

Loss before income taxes $ ( 40,735 ) $ ( 492 )

There were no inter-segment revenue transactions for the periods presented.

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

United States $ 44,573 $ 45,134

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Significant Customers

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

Substantially all revenue for the three months ended March 31, 2022 and 2021 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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

UnitedHealthCare (1)

21 % 17 % 21 % 21 %

15 % 12 % 20 % 14 %

Three Months Ended March 31,

Humana 27 % 17 %

11 % 8 % 12 % 10 %

UnitedHealthCare (1)

(1) Percentages include the carriers' subsidiaries.

(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 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 $ 2.1 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.

Total operating lease expenses were $ 1.9 million and $ 2.0 million for the three months ended March 31, 2022 and 2021, respectively and sublease income was immaterial for both periods.

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Weighted-average remaining lease term of operating leases 6.1 years 6.3 years

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

Nine Months Ended September 30,

Three Months Ended March 31,

Operating lease expense $ 1,912 $ 1,986

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

As of March 31, 2022, maturities of operating lease liabilities are as follows (in thousands):

Year ending December 31,

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Total $ 40,065

(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.

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

Note 11 — Restructuring and Reorganization

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

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Beginning balance $ 146

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Ending balance $ 3,404

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 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.

In the first quarter of 2022, we recorded pre-tax restructuring charges of $ 4.8 million related to the elimination of 339 full-time positions that was completed in April 2022.

The reduction represented approximately 14 % 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.

The expense was primarily related to employee termination benefits.

Substantially all of the restructuring charges will be settled in cash.

No equity awards were modified.

As of March 31, 2022, we recorded a restructuring accrual of $ 3.4 million in other current liabilities on our Condensed Consolidated Balance Sheet.

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.

We recognized $ 2.4 million in severance costs related to his separation for the year ended December 31, 2021.

Stock-based compensation expense for the year ended December 31, 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.

Total pre-tax restructuring charges were $ 2.4 million for the year ended December 31, 2021, which primarily related

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

to employee termination benefits.

Substantially all of the restructuring charges resulted in cash expenditures.

The restructuring activities were completed by March 31, 2021.

Note 12 – Debt

On September 17, 2018, we entered into a Credit Agreement with Royal Bank of Canada (“RBC”), as administrative agent and collateral agent (the “Credit Agreement”).

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 million to $ 75.0 million.

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

The borrowing base under the Credit Agreement is comprised of an amount equal to (a) the lesser of (i) eighty percent ( 80 %) of Eligible Commissions Receivables (as defined in the Credit Agreement) we actually collected during the immediately preceding period of three months or (ii) eighty percent ( 80 %) of our Eligible Commission Receivables for the immediately succeeding period of three months, plus (b) fifty percent ( 50 %) of our Eligible Commission Receivables for the immediately succeeding period of six months (excluding the immediately succeeding period of three months), in each case subject to reserves established by RBC (the “Borrowing Base”).

The proceeds of the loans under the Credit Agreement may be used for working capital and general corporate purposes.

The borrowers have the right to prepay the loans under the Credit Agreement in whole or in part at any time without penalty.

Subject to availability under the Borrowing Base, amounts repaid may be reborrowed.

Amounts not borrowed under the Credit Agreement will be subject to a commitment fee of 0.5 % per annum on the daily unused portion of the credit facility, to be paid in arrears on the first business day of each calendar quarter.

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 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.

The availability under the credit facility was up to the lesser of $ 40.0 million or the Borrowing Base in the original credit agreement.

The Amendment increased the availability up to the lesser of $ 75.0 million or the Borrowing Base, which may be reduced from time to time pursuant to the Credit Agreement.

Financial covenants in the original Credit Agreement required that we maintain Excess Availability (as defined in the Credit Agreement) at or above $ 6.0 million at any time.

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 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.

We incurred $ 1.2 million of issuance costs in connection with the Credit Agreement, which were capitalized as part of other assets on our Consolidated Balance Sheet in the period we entered into the Credit Agreement.

The Amendment did not change the interest rate.

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 $ 0.5 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.

We entered into a term loan credit agreement (the "Term Loan Credit Agreement") with Blue Torch Finance LLC, as administrative agent and collateral agent, and other lenders party thereto on February 28, 2022.

The Term Loan Credit Agreement provides for a $ 70.0 million secured term loan credit facility.

We terminated our credit agreement with Royal Bank of Canada ("RBC"), pursuant to which we had an up to $ 75 million revolving credit facility, in connection with entering into the Term Loan Credit Agreement.

As of December 31, 2021, there was $ 0.4 million of unamortized issuance costs related to the RBC credit agreement recorded in other assets in our Condensed Consolidated Balance Sheet.

As a result of the termination of our credit agreement with RBC, we wrote-off our remaining related debt issuance cost of $ 0.4 million in the first quarter of 2022.

We had no outstanding borrowings under our agreement with RBC at the time of termination.

The proceeds of the loans under the Term Loan Credit Agreement may be used for working capital and general corporate purposes, to refinance our credit agreement with RBC and to pay fees and expenses in connection with the entry into the Term Loan Credit Agreement.

The term loan bears interest, upon our option, at either a rate based on the London Interbank Offered Rate ("LIBOR") for the applicable interest period or a base rate, in each case plus a margin.

The base rate is the highest of the prime rate, the federal funds rates plus 0.50 % and one month adjusted LIBOR plus 1.0 %.

The margin is 7.50 % for LIBOR loans and 6.50 % for base rate loans and the Term Loan Credit Agreement includes customary "fallback" provisions with respect to potential transition from the LIBOR.

Furthermore, as part of the agreement, we will incur a $ 0.3 million fee per annum, payable annually.

The outstanding obligations under the Term Loan Credit Agreement are payable in full on the maturity date.

The Term Loan Credit Agreement matures in February 2025.

We have the right to prepay the loans under the Term Loan Credit Agreement in whole or in part at any time, subject, in the case of certain mandatory prepayments or any voluntary prepayment of the loans under the Term Loan Credit Agreement after February 28, 2023, to an exit fee.

Our obligations under the Term Loan Credit Agreement are guaranteed by certain of our material domestic subsidiaries and substantially all of our assets and the assets of such guarantors, in each case, subject to customary exclusion.

We are obligated to pay administration fees with the Term Loan Credit Agreement.

Financial covenants in the Term Loan Credit Agreement require that we maintain Liquidity (as defined in the Term Loan Credit Agreement) at or above $ 25.0 million as of the last calendar day of any month.

The Term Loan Credit Agreement also requires that the outstanding amount as of any day be less than 50 % of our total contract assets - commissions receivables (i.e., both current and non-current commissions receivables).

As of March 31, 2022, we were in compliance with our loan covenants.

In the first quarter of 2022, we obtained a $ 70.0 million secured term loan under our Term Loan Credit Agreement.

We incurred closing costs totaling $ 5.1 million, which were recorded as a direct deduction from the face of the loan on our Condensed Consolidated Balance Sheet.

There was $ 5.0 million of unamortized issuance costs as of March 31, 2022.

The carrying value of the loan was $ 65.0 million as of March 31, 2022.

EHEALTH, INC.

2 unchanged sentences

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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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 )

Three Months Ended March 31,

Loss before income taxes $ ( 40,735 ) $ ( 492 )

Provision for (benefit from) income taxes ( 7,993 ) 308

Effective tax rate 19.6 % ( 62.6 ) %

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 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.

For the three months ended March 31, 2022, we recognized a benefit from income taxes of $ 8.0 million, representing an effective tax rate of 19.6 % which was lower than the statutory federal tax rate due primarily to stock-based compensation adjustments and non-deductible lobbying expenses, partially offset by research and development credits and state taxes.

For the three months ended March 31, 2021, we recognized provision for income taxes of $ 0.3 million, representing an effective tax rate of ( 62.6 )%, respectively, which was lower than the statutory federal tax rate due primarily to one-time state tax adjustments.

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 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.

We continue to recognize our deferred tax assets as of March 31, 2022, 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