What changed in this filing

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Item 1. Financial Statements

2023-08-08 compared with 2023-05-09 · 190 added, 118 removed, 578 unchanged (35% of the section changed)

3 unchanged sentences

(in thousands, unaudited)

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Current assets:

31 unchanged sentences

Retained earnings 12,836 73,799

Accumulated other comprehensive income (loss) 50 ( 73 )

Accumulated other comprehensive loss ( 191 ) ( 73 )

Total stockholders’ equity 600,909 650,955

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Commission $ 60,186 $ 47,835 $ 128,189 $ 141,685

10 unchanged sentences

Loss from operations ( 26,152 ) ( 45,473 ) ( 49,046 ) ( 85,187 )

Other expense, net ( 592 ) ( 1,021 )

Other income (expense), net 108 ( 1,167 ) ( 484 ) ( 2,188 )

Loss before income taxes ( 26,044 ) ( 46,640 ) ( 49,530 ) ( 87,375 )

1 unchanged sentence

Net loss ( 23,501 ) ( 37,502 ) ( 43,379 ) ( 70,244 )

Paid-in-kind dividends for preferred stock ( 5,101 ) ( 4,717 )

Preferred stock dividends ( 5,223 ) ( 4,771 ) ( 10,324 ) ( 9,488 )

Change in preferred stock redemption value ( 4,191 ) ( 2,756 ) ( 7,260 ) ( 5,257 )

6 unchanged sentences

Net loss $ ( 23,501 ) $ ( 37,502 ) $ ( 43,379 ) $ ( 70,244 )

Unrealized holding gain for available-for-sale debt securities, net of tax 13 8

Unrealized holding gain (loss) for available-for-sale debt securities, net of tax 7 ( 10 ) 20 ( 2 )

Foreign currency translation adjustments ( 248 ) ( 261 ) ( 138 ) ( 238 )

4 unchanged sentences

(in thousands, unaudited)

Three Months Ended March 31, 2023

Common Stock Additional Paid-in

4 unchanged sentences

Repurchase of shares to satisfy employee tax withholding obligations — — ( 428 ) 57 — — — ( 428 )

Paid-in-kind dividend and accretion related to convertible preferred stock — — — — — ( 8,170 ) — ( 8,170 )

Dividends and accretion related to convertible preferred stock — — — — — ( 8,170 ) — ( 8,170 )

Stock-based compensation — — 5,306 — — — — 5,306

2 unchanged sentences

Balance as of March 31, 2023 40,137 $ 40 $ 782,065 12,472 $ ( 199,998 ) $ 45,751 $ 50 $ 627,908

Three Months Ended March 31, 2022

Issuance of common stock in connection with equity incentive plans 320 $ — $ — — $ — $ — $ — $ —

Repurchase of shares to satisfy employee tax withholding obligations — — ( 623 ) 70 — — — ( 623 )

Dividends and accretion related to convertible preferred stock — — — — — ( 9,414 ) — ( 9,414 )

Issuance of common stock for employee stock purchase program 76 — 262 — — — — 262

Stock-based compensation — — 6,518 — — — — 6,518

Other comprehensive loss, net of tax — — — — — — ( 241 ) ( 241 )

Net loss — — — — — ( 23,501 ) — ( 23,501 )

Balance as of June 30, 2023 40,533 $ 40 $ 788,222 12,542 $ ( 199,998 ) $ 12,836 $ ( 191 ) $ 600,909

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

EHEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, unaudited, continued)

Common Stock Additional Paid-in

4 unchanged sentences

Repurchase of shares to satisfy employee tax withholding obligations — — ( 508 ) 37 — — — ( 508 )

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

Dividends and accretion related to convertible preferred stock — — — — — ( 7,218 ) — ( 7,218 )

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

2 unchanged sentences

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

Issuance of common stock in connection with equity incentive plans 530 1 — — — — — 1

Repurchase of shares to satisfy employee tax withholding obligations — — ( 1,926 ) 234 — — — ( 1,926 )

Dividends and accretion related to convertible preferred stock — — — — — ( 7,526 ) — ( 7,526 )

Issuance of common stock for employee stock purchase program 83 — 873 — — — — 873

Stock-based compensation — — 6,005 — — — — 6,005

Other comprehensive loss, net of tax — — — — — — ( 271 ) ( 271 )

Net loss — — — — — ( 37,502 ) — ( 37,502 )

Balance as of June 30, 2022 39,493 $ 40 $ 767,164 12,287 $ ( 199,998 ) $ 108,225 $ 150 $ 675,581

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

2 unchanged sentences

(in thousands, unaudited)

Three Months Ended

Six Months Ended

Operating activities:

Net loss $ ( 43,379 ) $ ( 70,244 )

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 1,294 2,037

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Principal payments in connection with leases ( 25 ) ( 64 )

Payments of preferred stock dividends ( 873 ) —

Net cash provided by (used in) financing activities ( 1,687 ) 63,418

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Our omnichannel consumer engagement platform differentiates our offering from other brokers and enables consumers to use our services online, by telephone with a licensed insurance agent or through a hybrid online assisted interaction that includes live agent chat and co-browsing capabilities.

We have created a consumer-centric marketplace that offers consumers a broad choice of insurance products that includes thousands of Medicare Advantage, Medicare Supplement, Medicare Part D prescription drug, individual, family, small business and other ancillary health insurance products from approximately 200 health insurance carriers across all fifty states and the District of Columbia.

Our plan recommendation tool curates this broad plan selection by analyzing customer health-related information against plan data for insurance coverage fit.

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We strive to be the most trusted partner to the consumer in their life’s journey through the health insurance market.

Unless otherwise specified or required by the context, references in this Quarterly Report on Form 10-Q to "eHealth," "the Company,” “we,” “us” or "our" mean eHealth and its consolidated direct and indirect wholly-owned subsidiaries.

Basis of Presentation – The accompanying Condensed Consolidated Balance Sheet as of March 31, 2023 and other condensed consolidated financial statements for the three months ended March 31, 2023 and 2022 are unaudited.

Unless otherwise specified or required by the context, references in this Quarterly Report on Form 10-Q to “eHealth,” “the Company,” “we,” “us” or “our” mean eHealth, Inc.

and its consolidated direct and indirect wholly-owned subsidiaries.

Basis of Presentation – The accompanying Condensed Consolidated Balance Sheet as of June 30, 2023 and other condensed consolidated financial statements for the three and six months ended June 30, 2023 and 2022 are unaudited.

The Condensed Consolidated Balance Sheet data as of December 31, 2022 was derived from the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Securities and Exchange Commission on March 1, 2023.

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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, 2022 and include all adjustments necessary for the fair presentation of our financial position as of March 31, 2023 and December 31, 2022, and our results of operations for the periods presented.

The results for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31, 2023 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, 2022 and include all adjustments necessary for the fair presentation of our financial position as of June 30, 2023 and December 31, 2022, and our results of operations for the periods presented.

The results for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31, 2023 and therefore, should not be relied upon as an indicator of future results.

EHEALTH, INC.

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Actual results may differ from these estimates.

There have been no material changes to our significant accounting policies discussed in our Annual Report on Form 10-K for the year ended December 31, 2022.

There have been no material changes for the six months ended June 30, 2023 to our significant accounting policies discussed in our Annual Report on Form 10-K for the year ended December 31, 2022.

Recently Adopted Accounting Pronouncements

We did not adopt any new accounting pronouncements during the three months ended March 31, 2023.

We did not adopt any new accounting pronouncements during the six months ended June 30, 2023.

EHEALTH, INC.

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Medicare Advantage $ 45,389 $ 36,477 $ 99,510 $ 114,607

29 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Commission revenue from members approved during the period $ 36,006 $ 49,855 $ 92,623 $ 134,138

Net commission revenue from members approved in prior periods (1)

13,403 ( 10,788 ) 13,455 ( 10,737 )

Total Medicare segment commission revenue $ 49,409 $ 39,067 $ 106,078 $ 123,401

3 unchanged sentences

Net commission revenue from members approved in prior periods (1)

5,321 2,112 6,834 2,549

Total Individual, Family and Small Business segment commission revenue $ 10,777 $ 8,768 $ 22,111 $ 18,284

2 unchanged sentences

Total net commission revenue from members approved in prior periods (1)(2)

18,724 ( 8,676 ) 20,289 ( 8,188 )

Total commission revenue $ 60,186 $ 47,835 $ 128,189 $ 141,685

2 unchanged sentences

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.

(2) The impacts of total net commission revenue from members approved in prior periods were $ 0.06 and $ 0.02 per basic and diluted share, for the three months ended March 31, 2023 and 2022, respectively.

There were no reductions to revenue from members approved in prior periods for the three months ended March 31, 2023 and 2022.

(2) The impacts of total net commission revenue from members approved in prior periods were $ 0.67 and $( 0.32 ) per basic and diluted share for the three months ended June 30, 2023 and 2022, respectively.

The impacts of total net commission revenue from members approved in prior periods were $ 0.73 and $( 0.30 ) per basic and diluted share for the six months ended June 30, 2023 and 2022, respectively.

The total reductions to revenue from members approved in prior periods were $ 2.9 million for the three and six months ended June 30, 2023 and $ 13.7 million for the three and six months ended June 30, 2022.

These reductions to revenue primarily relate to the Medicare segment.

Note 3 – Supplemental Financial Statement Information

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Cash $ 14,286 $ 17,776

3 unchanged sentences

Total cash, cash equivalents and restricted cash $ 156,424 $ 147,640

As of March 31, 2023 and December 31, 2022, we had $ 3.2 million of restricted cash which was classified as a non-current asset on our Condensed Consolidated Balance Sheets.

As of June 30, 2023 and December 31, 2022, 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.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Contract Assets and Accounts Receivable

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 March 31, 2023.

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.

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Credit loss expenses are assessed quarterly and are included in the “General and administrative” line in our Condensed Consolidated Statements of Comprehensive Loss.

There were no write-offs during the three months ended March 31, 2023 or for the year ended December 31, 2022.

There were no write-offs during the six months ended June 30, 2023 or for the year ended December 31, 2022.

The change in the allowance for credit losses is summarized as follows (in thousands):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Beginning balance $ 2,398 $ 2,198

9 unchanged sentences

Net change in credit loss allowance 271 26 297

Ending balance at March 31, 2023 $ 734,157 $ 67,876 $ 802,033

Ending balance at June 30, 2023 $ 720,895 $ 68,694 $ 789,589

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 $ 5.4 million as of March 31, 2023.

The deposits in China were $ 2.0 million as of June 30, 2023.

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 – commissions receivable and accounts receivable balances are summarized as follows:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Humana 27 % 26 %

3 unchanged sentences

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Prepaid software and maintenance contracts $ 4,634 $ 5,211

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

March 31, 2023

June 30, 2023

Carrying Value Level 1 Level 2 Level 3 Total

5 unchanged sentences

Commercial paper 20,719 — 20,719 — 20,719

Agency bonds 15,900 — 15,900 — 15,900

Total assets measured at fair value $ 175,518 $ 17,912 $ 157,606 $ — $ 175,518

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Our money market funds are measured at fair value based on quoted prices in active markets and are classified as Level 1 within the fair value hierarchy.

Our available-for-sale marketable securities, which include commercial paper with maturities of less than one year, are measured at fair value using quoted market prices to the extent available or alternative pricing sources and models utilizing market observable inputs and are classified as Level 2 within the fair value hierarchy.

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

There were no transfers between the hierarchy levels during the three months ended March 31, 2023 or the year ended December 31, 2022.

Our available-for-sale marketable securities, which include commercial paper and agency bonds with maturities of less than one year, are measured at fair value using quoted market prices to the extent available or alternative pricing sources and models utilizing market observable inputs and are classified as Level 2 within the fair value hierarchy.

There were no transfers between the hierarchy levels during the six months ended June 30, 2023 or the year ended December 31, 2022.

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

As of March 31, 2023 As of December 31, 2022

As of June 30, 2023 As of December 31, 2022

Amortized Cost Fair Value 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 (in thousands):

March 31, 2023

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

June 30, 2023

Amortized Cost Unrealized Gains Unrealized Losses Fair Value

5 unchanged sentences

Commercial paper 20,730 — ( 11 ) 20,719

Agency bonds 15,894 6 15,900

Total $ 175,549 $ 8 $ ( 39 ) $ 175,518

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Total $ 126,664 $ — $ ( 39 ) $ 126,625

As of March 31, 2023 and December 31, 2022, we had 28 and 26 securities, respectively, 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, 2023 or the year ended December 31, 2022.

As of June 30, 2023 and December 31, 2022, we had 28 and 26 securities, respectively, 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 six months ended June 30, 2023 or the year ended December 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.

3 unchanged sentences

The 2021 Inducement Plan and its amendments were approved by the Company’s Board of Directors without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Rules, and the terms and conditions of the A&R 2021 Inducement Plan and awards to be granted thereunder are substantially similar to our stockholder-approved Amended and Restated 2014 Equity Incentive Plan.

As of March 31, 2023, 1.6 million shares were issued under the A&R 2021 Inducement Plan.

Stock Repurchase Programs – We had no stock repurchase activity during the three months ended March 31, 2023 or 2022.

As of March 31, 2023 and 2022, we had a total of 12.5 million shares and 12.1 million shares, respectively, held in treasury.

As of March 31, 2023 and 2022, we had 1.8 million and 1.4 million shares, respectively, in treasury that were previously surrendered by employees to satisfy tax withholding due in connection

As of June 30, 2023, 2.0 million shares were issued under the A&R 2021 Inducement Plan.

Stock Repurchase Programs – We had no stock repurchase activity during the three and six months ended June 30, 2023 or 2022.

As of June 30, 2023 and 2022, we had a total of 12.5 million shares and 12.3 million shares, respectively, held in treasury.

As of June 30, 2023 and 2022, we had 1.8 million and 1.6 million shares,

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

with the vesting of certain restricted stock units as well as 10.7 million shares previously repurchased under our past repurchase programs.

respectively, in treasury that were previously surrendered by employees to satisfy tax withholding due in connection with the vesting of certain restricted stock units as well as 10.7 million shares previously repurchased under our past repurchase programs.

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

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Restricted stock units (1)

$ 5,784 $ 5,232 $ 10,461 $ 9,938

Common stock options 312 294 566 551

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Marketing and advertising $ 538 $ 428 $ 993 $ 741

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Note 6 — Convertible Preferred Stock

On April 30, 2021 (the “Closing Date”), we issued and sold to Echelon Health SPV, LP (“H.I.G.”), an investment vehicle of H.I.G.

Capital, in a private placement, 2,250,000 shares of our newly designated Series A convertible preferred stock (the “Series A preferred stock”), par value $ 0.001 per share, at an aggregate purchase price of $ 225.0 million.

Pursuant to an investment agreement dated February 17, 2021 with Echelon Health SPV, LP (“H.I.G.”), an investment vehicle of H.I.G.

Capital (the “H.I.G.

Investment Agreement”), we issued and sold to H.I.G., in a private placement, 2,250,000 shares of our newly designated Series A convertible preferred stock (the “Series A Preferred Stock”), par value $ 0.001 per share, at an aggregate purchase price of $ 225.0 million on April 30, 2021 (the “Closing Date”).

We received $ 214.0 million in net proceeds from the private placement with H.I.G., net of sales commissions and certain transaction fees totaling $ 11.0 million.

The Series A Preferred Stock ranks senior to all other equity securities of the Company with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.

Dividends – Dividends initially accrue on the Series A preferred stock daily at 8 % per annum on the stated value of $ 100 per share (“Stated Value”) and compound semiannually, payable in kind (“PIK”) until the second anniversary of the Closing Date on June 30 and December 31 of each year (each, a “Dividend Payment Date”), beginning on June 30, 2021, and thereafter 6 % PIK and 2 % payable in cash in arrears on June 30 and December 31 of each year, beginning on June 30, 2023.

PIK dividends are cumulative and are added to the Accrued Value (as

Dividends – Dividends initially accrued on the Series A Preferred Stock daily at 8 % per annum on the stated value of $ 100 per share (the “Stated Value”), and were payable in kind (“PIK”) beginning on June 30, 2021 through the second anniversary of the Closing Date.

Subsequent to the second anniversary of the Closing Date,

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

defined below).

dividends continue to accrue at 8 % per annum, with 6 % PIK and 2 % payable in cash in arrears beginning on June 30, 2023.

Dividends compound semiannually and are PIK and payable in cash in arrears, as applicable, on June 30 and December 31 of each year (each a “Dividend Payment Date”).

PIK dividends are cumulative and are added to the Accrued Value (as defined below).

“Accrued Value” means, as of any date, with respect to any share of Series A Preferred Stock, the sum of the Stated Value per share plus, on each Dividend Payment Date, on a cumulative basis, all PIK dividends that have accrued on such share but that have not previously been added to the Accrued Value.

During the second quarter of 2023, we made the initial cash dividend payment in the aggregate amount of $ 0.9 million.

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

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is entitled to nominate one individual for election to our Board of Directors 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.

Under certain circumstances, H.I.G.

also has the right to nominate an additional individual to our Board of Directors if we fail to maintain certain levels of commissions receivable or liquidity as further discussed below.

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or (ii) the average Nasdaq Official Closing Price per share of common stock for the five trading days immediately prior to the Closing Date.

Holders of Series A preferred stock will have one vote per share on any matter on which the holders of the Series A preferred stock are entitled to vote separately as a class (subject to certain voting limitations set forth in, and the terms and conditions of, the Certificate of Designations).

Mandatory Conversion of the Series A Preferred Stock – At any time on or after the third anniversary of the Closing Date, if the volume-weighted average price per share of our common stock is greater than 167.5 % of the then-current Conversion Price for 20 consecutive trading days in a 30 -day trading day period, the Company will have the right to convert all, but not less than all, of the Series A preferred stock into common stock at a conversion rate with respect to each share of Series A preferred stock of (i) the Accrued Value plus accrued PIK dividends that have not yet been added to the Accrued Value, (ii) divided by the then applicable Conversion Price.

Holders of Series A Preferred Stock will have one vote per share on any matter on which the holders of the Series A Preferred Stock are entitled to vote separately as a class (subject to certain voting limitations set forth in the Certificate of Designations).

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Mandatory Conversion of the Series A Preferred Stock – At any time on or after the third anniversary of the Closing Date, if the volume-weighted average price per share of our common stock is greater than 167.5 % of the then-current Conversion Price for 20 consecutive trading days in a 30 -day trading day period, the Company will have the right to convert all, but not less than all, of the Series A Preferred Stock into common stock at a conversion rate with respect to each share of Series A Preferred Stock of (i) the Accrued Value plus accrued PIK dividends that have not yet been added to the Accrued Value, (ii) divided by the then applicable Conversion Price.

Covenants and Liquidity Requirements – As long as H.I.G.

continues to own at least 30 % of the Series A Preferred Stock originally issued to it in the private placement, the consent of H.I.G.

will be required for the Company to incur certain indebtedness and to take certain other corporate actions as set forth in the Company's investment agreement with H.I.G.

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 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 $ 65.0 million to $ 125.0 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 our Board of Directors, 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 specified in the Investment Agreement until the Company is able to satisfy the minimum liquidity amount requirements in the Investment Agreement for any subsequent 12 consecutive months.

As of March 31, 2023, we were in compliance with the asset coverage ratio and minimum liquidity amounts as required in the Investment Agreement.

will be required for the Company to incur certain indebtedness and to take certain other corporate actions as set forth in the H.I.G.

Investment Agreement.

In addition, the Company is required to maintain an Asset Coverage Ratio (as defined in the H.I.G.

Investment Agreement) of at least 2 x (the “Minimum Asset Coverage Ratio”), which increases to 2.5 x in August of 2023.

Additionally, the H.I.G.

Investment Agreement requires the Company to maintain a Minimum Liquidity Amount (as defined in the H.I.G.

Investment Agreement) for certain periods that ranges from $ 65.0 million to $ 125.0 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 H.I.G.

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, the H.I.G.

Investment Agreement under certain circumstances allows H.I.G.

to nominate an additional director to our Board of Directors.

would also have certain approval rights relating to the Company’s annual budget, the hiring or termination of certain key executives and certain indebtedness, in each case subject to certain conditions and restrictions specified in the H.I.G.

Investment Agreement.

As of June 30, 2023, we were in compliance with the Minimum Asset Coverage Ratio and Minimum Liquidity Amount requirements.

Our Series A Preferred Stock is considered temporary equity in our condensed consolidated financial statements.

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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 March 31, 2023, 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, 2023.

As of June 30, 2023, 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, 2023.

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.

1 unchanged sentence

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 3.3 million shares of common stock as of March 31, 2023.

No shares of Series A Preferred Stock have been converted, and the Series A Preferred Stock was convertible into 3.3 million shares of common stock as of June 30, 2023.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 7,260

Balance as of March 31, 2023 $ 271,454

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Balance as of June 30, 2023

Note 7 – Net Loss Per Share Attributable to Common Stockholders

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Net loss attributable to common stockholders $ ( 32,915 ) $ ( 45,029 ) $ ( 60,963 ) $ ( 84,989 )

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Net loss attributable to common stockholders per share – basic and diluted $ ( 1.18 ) $ ( 1.65 ) $ ( 2.20 ) $ ( 3.12 )

For each of the three months ended March 31, 2023 and 2022, 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.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For each of the three and six months ended June 30, 2023 and 2022, 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

June 30, Six Months Ended

2023 2022 2023 2022

Convertible preferred stock 3,318 3,071 3,288 3,041

Restricted stock units (1)

3,255 1,939 2,481 1,334

Common stock options 222 253 224 258

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(1) Amounts include market-based and performance-based restricted stock units.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 8 – Commitments and Contingencies

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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 March 31, 2023 were as follows (in thousands):

Our future minimum payments under non-cancellable contractual service and licensing obligations as of June 30, 2023 were as follows (in thousands):

For the Years Ending December 31,

1 unchanged sentence

Total $ 7,877

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Operating Leases

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As a result, we record a self-insurance liability based on claims filed and an estimate of claims incurred but not yet reported.

As of March 31, 2023, we had a self-insurance liability balance of $ 2.0 million in the "Accrued compensation and benefits" line on our Condensed Consolidated Balance Sheets.

As of June 30, 2023, we had a self-insurance liability balance of $ 2.0 million in the “Accrued compensation and benefits” line on our Condensed Consolidated Balance Sheets.

We had no liability as of December 31, 2022 as our employee health insurance coverage was not self-insured at the time.

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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 months ended March 31, 2023 or 2022.

There was no material litigation-related accrual during the three and six months ended June 30, 2023 or 2022.

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

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

Francis in the United States District Court for the Northern

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

District of California.

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

The cases are captioned Patel v.

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Flanders, and Mr.

The motions for judgment on the pleadings were fully briefed by February 9, 2023 and were scheduled for a hearing on April 13, 2023.

The motions for

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

judgment on the pleadings were fully briefed by February 9, 2023 and were scheduled for a hearing on April 13, 2023.

On April 5, 2023, the Court vacated the hearing on the motions and stated its intent to issue a decision based on the parties’ written briefing.

On April 25, 2023, a consortium of putative class members (the “Algers Funds”) filed a motion to intervene in the case, prior to the expiration of the applicable statute of repose, to preserve their individual rights.

On May 5, 2023, a defendants’ statement of non-opposition to Algers Funds limited motion to intervene and a stipulation with Algers Funds regarding same were filed.

On April 25, 2023, a consortium of putative class members (the “Alger Funds”) filed a motion to intervene in the case, prior to the expiration of the applicable statute of repose, to preserve their individual rights.

On May 5, 2023, a defendants’ statement of non-opposition to Alger Funds’ limited motion to intervene and a stipulation with Alger Funds regarding same were filed.

Derivative Actions – On July 7, 2020, a derivative lawsuit captioned Chernet v.

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Cal.) (the “ Badwal” matter) was filed in the United States District Court for the Northern District of California.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 Exchange Act.

6 unchanged sentences

On December 9, 2022, plaintiffs in the Federal Derivative Action filed a verified consolidated stockholder derivative complaint on behalf of the Company against certain current and former members of its Board of Directors and certain of its officers.

The complaint alleges breaches of fiduciary duties, insider trading, and violations of Sections 14(a), 10(b), 21D of the Exchange Act.

The complaint alleges breaches of fiduciary duties, insider trading, and violations of Sections 14(a), 10(b) and 21D of the Exchange Act.

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

On January 3, 2023, pursuant to a joint stipulation, the court ordered all proceedings in the Federal Derivative Action stayed pending the resolution of the securities class action.

On July 28, 2023, the Lincolnshire matter was stayed pending the resolution of the securities class action, pursuant to the parties’ stipulation.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 9 – Segment and Geographic Information

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Please refer to Note 1 – Summary of Business and Significant Accounting Policies of the Notes to Consolidated Financial Statements in Part II, Item 8 of the Annual Report on Form 10-K for the year ended December 31, 2022 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

2023 2022 2023 2022

Medicare $ 55,430 $ 41,062 $ 117,264 $ 136,129

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Impairment, restructuring and other charges — ( 1,369 ) — ( 6,192 )

Other expense, net ( 592 ) ( 1,021 )

Other income (expense), net 108 ( 1,167 ) ( 484 ) ( 2,188 )

Loss before income taxes $ ( 26,044 ) $ ( 46,640 ) $ ( 49,530 ) $ ( 87,375 )

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

United States $ 32,935 $ 37,915

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Significant Customers

Substantially all revenue for the three months ended March 31, 2023 and 2022 was generated from customers located in the United States.

Substantially all revenue for the three and six months ended June 30, 2023 and 2022 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

2023 2022 2023 2022

Humana 28 % 14 % 27 % 19 %

UnitedHealthCare (1)

23 % 23 % 22 % 21 %

8 % 11 % 7 % 11 %

3 % 13 % 3 % 14 %

(1) Percentages include the carriers’ subsidiaries.

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

In August 2022, we executed and commenced the sublease of our office space located in Santa Clara, California, which will run through the remaining term of the primary lease, March 31, 2029.

This sublease is expected to generate approximately $ 13.5 million in sublease income over the sublease term.

Subsequent to becoming a remote first workplace in the third quarter of 2022, we have executed several subleases of our office space in the United States.

The subleases run through the remaining term of the primary leases.

As of June 30, 2023, we expect to generate a total of $ 15.2 million in future sublease income through January 31, 2030.

Sublease income is recorded on a straight-line basis as a reduction of lease expense in our Condensed Consolidated Statements of Comprehensive Loss.

Total operating lease expenses were $ 1.9 million for the three months ended March 31, 2023 and 2022 and sublease income was immaterial for the three months ended March 31, 2023 and 2022.

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

The components of operating lease costs for the three and six months ended June 30, 2023 and 2022 were as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Operating lease expense $ 1,835 $ 1,912 $ 3,690 $ 3,824

Operating sublease income ( 577 ) ( 43 ) ( 1,153 ) ( 85 )

Total operating lease cost $ 1,258 $ 1,869 $ 2,537 $ 3,739

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Six Months Ended

Cash paid for amounts included in the measurement of operating lease liabilities $ 4,369 $ 3,909

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Weighted-average remaining lease term of operating leases 5.3 years 5.7 years

Weighted-average discount rate used to recognize operating lease right-of-use-assets 5.6 % 5.6 %

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2023, maturities of our operating lease liabilities are as follows (in thousands):

As of June 30, 2023, maturities of our operating lease liabilities are as follows (in thousands):

Year ending December 31,

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Total $ 37,405

(1) Noncancellable sublease income for the remainder of 2023 and the years ending December 31, 2024, 2025, 2026, 2027 and thereafter of $ 1.3 million, $ 2.1 million, $ 2.2 million, $ 2.2 million, $ 2.3 million, and $ 2.8 million, respectively, are not included in the table above.

(1) Non-cancellable sublease income for the remainder of 2023 and the years ending December 31, 2024, 2025, 2026, 2027 and thereafter of $ 0.9 million, $ 2.4 million, $ 2.6 million, $ 2.7 million, $ 2.8 million, and $ 3.8 million, respectively, are not included in the table above.

Note 11 — Impairment, Restructuring and Other Charges

The following table details impairment, restructuring and other charges for each of the periods presented:

The following table details impairment, restructuring and other charges for each of the periods presented (in thousands):

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Restructuring and reorganization charges $ — $ 1,369 $ — $ 6,192

Impairment, restructuring and other charges $ — $ 1,369 $ — $ 6,192

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Restructuring

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Payments ( 366 )

Balance at March 31, 2023 $ 5

During the three months ended March 31, 2023, we incurred no pre-tax restructuring charges.

As of March 31, 2023, the restructuring accrual was immaterial and is recorded in other current liabilities on our Condensed Consolidated Balance Sheets.

In the first half of 2022, we eliminated 339 full-time positions, which 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, and, as a result, recorded pre-tax restructuring charges of $ 4.8 million in the "Impairment, restructuring and other charges" line in our Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2022.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Balance at June 30, 2023 $ —

During the three and six months ended June 30, 2023, we incurred no pre-tax restructuring charges.

As of June 30, 2023, we had no restructuring accrual on our Condensed Consolidated Balance Sheet.

In the first half of 2022, we eliminated 339 full-time positions, which 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, and, as a result, recorded pre-tax restructuring charges of $ 6.2 million in the “Impairment, restructuring and other charges” line in our Condensed Consolidated Statements of Comprehensive Loss for the six months ended June 30, 2022.

Note 12 – Debt

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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 Sheets.

There was $ 3.5 million of unamortized issuance costs as of March 31, 2023.

There were $ 3.1 million of unamortized issuance costs as of June 30, 2023.

The carrying value of the term loan approximates the fair value, based on Level 2 inputs (observable market prices in less than active markets), as the interest rate is variable over the selected interest period and is similar to current rates at which we can borrow funds.

The carrying value of the loan was $ 66.5 million as of March 31, 2023.

The carrying value of the loan was $ 66.9 million as of June 30, 2023.

The Original Credit Agreement bore interest, at our option, at either a rate based on the LIBOR for the applicable interest period or a base rate, in each case plus a margin.

4 unchanged sentences

The margin is 7.50 % for Adjusted Term SOFR loans and 6.50 % for base rate loans.

As of March 31, 2023, the interest rate was 12.65 %.

For the three months ended March 31, 2023 and 2022, we incurred interest expense of $ 2.2 million and $ 0.6 million, respectively.

As of June 30, 2023, the interest rate was 13.03 %.

For the three and six months ended June 30, 2023, we incurred interest expense of $ 2.2 million and $ 4.4 million, respectively.

For the three and six months ended June 30, 2022, we incurred interest expense of $ 1.5 million and $ 2.2 million, respectively.

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

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

The Credit Agreement matures in February 2025.

The Credit Agreement

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

matures in February 2025.

We have the right to prepay the loans under the 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 Credit Agreement after February 28, 2023, to an exit fee, which right we did not exercise.

Our obligations under the 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 under the Credit Agreement.

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

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

As of March 31, 2023, we were in compliance with our loan covenants.

In the first quarter of 2022, we terminated our credit agreement with RBC, pursuant to which we had an up to $ 75 million revolving credit facility, in connection with entering into the Credit Agreement.

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.

As of June 30, 2023, we were in compliance with our loan covenants.

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 13 – Income Taxes

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Loss before income taxes $ ( 26,044 ) $ ( 46,640 ) $ ( 49,530 ) $ ( 87,375 )

1 unchanged sentence

Effective tax rate 9.8 % 19.6 % 12.4 % 19.6 %

For the three months ended March 31, 2023, we recognized a benefit from income taxes of $ 3.6 million representing an effective tax rate of 15.4 % which was lower than the statutory federal tax rate primarily due 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, 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 primarily due to stock-based compensation adjustments and non-deductible lobbying expenses, partially offset by research and development credits and state taxes.

For the three and six months ended June 30, 2023, we recognized a benefit from income taxes of $ 2.5 million and $ 6.2 million, respectively, representing an effective tax rate of 9.8 % and 12.4 %, respectively, which was lower than the statutory federal tax rate primarily due to stock-based compensation adjustments and non-deductible lobbying expenses, partially offset by research and development credits and state taxes.

For the three and six months ended June 30, 2022, we recognized a benefit from income taxes of $ 9.1 million and $ 17.1 million, respectively, representing an effective tax rate of 19.6 % for both periods which was lower than the statutory federal tax rate primarily due to stock-based compensation adjustments and non-deductible lobbying expenses, 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 March 31, 2023, 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 June 30, 2023, 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