What changed in this filing

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Item 1A. Risk Factors

2023-08-08 compared with 2023-05-09 · 109 added, 113 removed, 612 unchanged (27% of the section changed)

9 unchanged sentences

We will also need to market our services effectively and drive a substantial number of consumers interested in purchasing health insurance to our website and customer care centers during the relevant enrollment periods in a cost-effective manner.

We compete with government-run health insurance exchanges, among others, with respect to our sale of Medicare-related and individual and family health insurance.

We compete with government-run health insurance exchanges, among others, with respect to our sale of Medicare-related and individual and family health insurance plans.

The federal government operates a website where Medicare beneficiaries can purchase Medicare Advantage and Medicare Part D prescription drug plans or be referred to carriers to purchase Medicare Supplement plans.

15 unchanged sentences

Carriers may also amend our agreements with them for a variety of reasons, including for competitive or regulatory reasons, dissatisfaction with the economics of the members that we place with them or because they do not want to be associated with our brand.

In particular, the laws and regulations applicable to the business of selling Medicare-related health insurance are complex and frequently change.

If we or our health insurance agents violate any of the requirements imposed by CMS, or applicable federal or state laws or regulations, health insurance carriers may terminate their relationship with us or require us to take corrective action if our Medicare product sales or marketing give rise to too many complaints.

In particular, the laws and regulations applicable to the business of selling Medicare-related plans are complex and frequently change.

If we or our health insurance agents violate any of the requirements imposed by the U.S.

Centers for Medicare & Medicaid Services (“CMS”), or applicable federal or state laws or regulations, health insurance carriers may terminate their relationship with us or require us to take corrective action if our Medicare product sales or marketing give rise to too many complaints.

The termination of our relationship with a health insurance carrier, the reduction of commission rates, or the amendment of or change in our relationship with a carrier has in the past reduced, and may in the future reduce, the variety, quality and affordability of health insurance plans we offer, cause a loss of commission payments, including commissions for past and/or future sales, cause a reduction in the estimated constrained lifetime values (“LTVs”) we use for revenue recognition purposes, result in a loss of existing and potential members, adversely impact our profitability or have other adverse impacts, which could harm our business, operating results and financial condition.

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Our revenue has been concentrated in a small number of health insurance carriers and we expect that a small number of health insurance carriers will continue to account for a significant portion of our revenue for the foreseeable future.

For example, Humana, UnitedHealthcare, Aetna and Centene accounted for 24%, 22%, 6% and 2%, respectively, of our total revenue for the three months ended March 31, 2023, and accounted for 27%, 15%, 11% and 14%, respectively, of our total revenue for the three months ended March 31, 2022.

For example, Humana, UnitedHealthcare, Aetna and Centene accounted for 27%, 22%, 7% and 3%, respectively, of our total revenue for the six months ended June 30, 2023, and accounted for 19%, 21%, 11% and 14%, respectively, of our total revenue for the six months ended June 30, 2022.

As discussed elsewhere in this Risk Factors section, our contractual relationships with health insurance carriers are typically non-exclusive and terminable on short notice by either party for any reason.

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If more consumers decide to delay enrollment or decrease or discontinue coverage under plans sold through us, our business, operating results and financial condition would be adversely affected.

We have taken and may take additional actions to improve the customer experience, enhance accuracy of plan recommendations, reduce rapid disenrollment and beneficiary complaints, and improve the quality of our enrollments.

Although we have in the past invested, and may from time to time invest, in various areas of our business, including technology and content, customer care and enrollment, and marketing and advertising to improve the quantity and quality of our membership enrollment in advance of enrollment periods, such investment may not result in a significant number of approved and paying members or may not be as cost-effective as we anticipated.

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Our ability to grow and retain our membership depends on various factors, including agent productivity, the ability of enrollees to change their health plan outside of the Medicare annual enrollment period, the source of referrals and their enrollment experience.

If agent productivity and member retention rates decline, our business, operating results and financial condition could be harmed.

In addition, extended enrollment periods could lead to increased termination rates in the future, which could adversely impact our business, operating results and financial condition.

1 unchanged sentence

If we experience higher health insurance plan termination rates than we estimated when we recognized commission revenue, we may not collect all of the related commissions receivable, which could result in a reduction in LTV and a write-off of contract assets - commissions receivable, which would harm our business, operating results and financial condition.

In addition, if agent productivity and member retention rates decline, our business, operating results and financial condition could be harmed.

Our business is seasonal in nature, and if we are not successful in responding to changes in the seasonality of our business, our business, operating results and financial condition could be harmed.

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However, because commissions from approved customers are paid to us over time, our operating cash flows could be adversely impacted by a substantial increase in marketing and advertising expense.

Changes in timing of the Medicare or individual and family health plan enrollment periods, adoption of new or special enrollment periods, changes in eligibility and subsidies applicable to the purchase of health insurance, and changes in the laws and regulations that govern the sale of health insurance may occur from time to time and we may not be able to timely adjust to changes in the seasonality of our business, and our business, operating results and financial condition could be harmed.

Changes in timing of the Medicare or individual and family health plan enrollment periods, adoption of new or special enrollment periods, changes in eligibility and subsidies applicable to the purchase of health insurance, and changes in the laws and regulations that govern the sale of health insurance may occur from time to time, and we may not be able to timely adjust to changes in the seasonality of our business, which could harm our business, operating results and financial condition.

Changes in our management or key employees could affect our business and financial results.

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We also appointed a new chief accounting officer, a new chief marketing officer and a new chief people officer.

In the first quarter of 2023, we also appointed a new chief digital officer.

In 2023, we also appointed a new chief digital officer.

The transition and the departure of members of our senior management could result in additional attrition in our senior management and key personnel, and any significant change in leadership over a short period of time could harm our business, operating results and financial condition.

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For example, we are required to appoint a single designated writing agent with each insurance carrier.

A small number of our employees act as writing agent and

each employee that acts as writing agent does so for a number of carriers.

When an employee that acts as writing agent terminates their employment with us, we need to replace such writing agent with another employee who has health insurance licenses.

A small number of our employees act as writing agent and each employee that acts as writing agent does so for a number of carriers.

When an employee that acts as writing agent terminates their employment with us, we need to replace such writing agent with another employee who has

health insurance licenses.

Due to our national reach and the large number of carriers whose plans are purchased by our members, the process of changing writing agents has in the past taken and could take a significant period of time to complete.

If the transition is not successful, our ability to sell health insurance plans may be interrupted, our agency relationship with particular insurance carriers may be terminated, our commission payments could be discontinued or delayed and, as a result, our business, operating results and financial condition would be harmed.

Our business success depends on our ability to timely hire, train and retain qualified licensed health insurance agents to provide superior customer service and support our strategic initiatives while also controlling our labor costs.

Our business success depends on our ability to timely hire, train and retain qualified licensed health insurance agents and other employees to provide superior customer service and support our strategic initiatives while also controlling our labor costs.

Our omnichannel consumer engagement platform enables customers to discover, compare and purchase a health insurance plan using our proprietary online search engine as well as receive assistance of a licensed insurance agent, by telephone, online chat or through a hybrid online assisted interaction such as co-browsing.

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If we are not successful in these regards, our ability to sell Medicare-related health insurance plans will be impaired during the Medicare annual enrollment period, which would harm our business, operating results and financial condition.

Even if we are successful in hiring licensed health insurance agents, our success depends on the productivity of these health insurance agents.

Failure to retain, train and ensure the productivity of our health insurance agents could result in lower-than-expected sold plans, conversion rates and revenue, higher costs of acquisition per member and higher plan termination rates, any of which could harm our business, operating results and financial condition.

Even if we are successful in hiring licensed health insurance agents, our success depends on the productivity of these health insurance agents and other employees that operate the customer care center.

Failure to retain, train and ensure the productivity of our health insurance agents and other employees could result in lower-than-expected sold plans, conversion rates and revenue, higher costs of acquisition per member and higher plan termination rates, any of which could harm our business, operating results and financial condition.

If our health insurance agents do not perform to the standards we expect of them or if we do not generate sufficient call volumes for our health insurance agents to remain productive, our sold plan volume, conversion and retention rates could be negatively impacted, and our business, operating results and financial condition would be harmed.

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If we do not successfully maintain and enhance our brand, our business may not grow and we could lose our relationships with health insurance carriers, marketing partners and/or members, which would harm our business, operating results and financial condition.

Negative incidents can erode trust and

confidence quickly, and adverse publicity about us could damage our brand and reputation, undermine our customers’ confidence, affect our ability to recruit, engage, motivate and retain qualified staffs, attract regulatory scrutiny, and impact our relationships with current and potential partners.

Negative incidents can erode trust and confidence quickly, and adverse publicity about us could damage our brand and reputation, undermine our

customers’ confidence, affect our ability to recruit, engage, motivate and retain qualified staffs, attract regulatory scrutiny, and impact our relationships with current and potential partners.

We depend upon Internet search engines and social media platforms to attract a significant portion of the consumers who visit our website, and if we are unable to effectively advertise on search engines or social media platforms on a cost-effective basis, our business and operating results would be harmed.

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We frequently enter into contractual marketing relationships with partners that drive consumers to our ecommerce platform and call centers.

These marketing partners include financial and online services companies, affiliate organizations, online advertisers and content providers, and other marketing vendors.

These marketing partners include financial and online services companies,

affiliate organizations, online advertisers and content providers, and other marketing vendors.

We also have relationships with strategic marketing partners, including hospitals and pharmacy chains that promote our Medicare platforms to their customers as well as other provider groups, wellness, and other digital and affinity groups.

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We develop, host and maintain carrier dedicated Medicare plan websites and may undertake other marketing and advertising initiatives or perform other services through our Medicare plan advertising program.

We also allow health insurance carriers to purchase advertising space for non-Medicare products on our website through our sponsorship program.

We also allow health insurance carriers to purchase advertising space for non-Medicare products on our website

through our sponsorship program.

To the extent that economic conditions, health care reform or other factors impact the amount health insurance carriers are willing to pay for advertising, our advertising and sponsorship program will be adversely impacted.

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We have entered into an agreement to outsource certain aspects of the enrollment process for qualified health plans to a third-party vendor in light of the expense and burden associated with the additional requirements.

If we are unsuccessful in maintaining a relationship with our third-party vendor who is approved to use the process, we may not be able to enroll individuals into qualified health plans through the FFM or could be required to use an inferior process to do so, which could cause a reduction in our individual and family health insurance plan

membership and commission revenue.

In addition, if we are not able to maintain solutions to integrate with government-run health insurance exchanges or if the health insurance exchange websites and other processes are unstable or not consumer friendly, efficient and compatible with the process we have adopted for enrolling individuals and families into qualified health plans through the exchanges, we would not be successful in retaining and acquiring members, and our business, operating results and financial condition would be harmed.

The FFM may at any time cease allowing us or our third-party vendor to enroll individuals in qualified health plans or change the requirements for doing so, or relevant government regulations or agencies may prevent us from efficiently working with our third-party vendor, including timely receiving and using data from our third-party vendor.

The FFM may at any time cease allowing us or our third-party vendor to enroll individuals in qualified health plans or change

the requirements for doing so, or relevant government regulations or agencies may prevent us from efficiently working with our third-party vendor, including timely receiving and using data from our third-party vendor.

If the FFM ceases allowing us or our third-party vendor to enroll individuals, if the FFM platform does not function properly or if we are prevented from efficiently working with our third-party vendor, our ability to retain existing members and add new members could be negatively impacted, which would harm our business, operating results and financial condition.

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We have made and may in the future, make changes to our ecommerce platforms, telephonic operations, marketing material or enrollment process in response to regulatory or health insurance carrier requirements or undertake other initiatives in an attempt to improve consumer experience, increase retention, or for other reasons.

These changes have in the past, and may have in the future, the unintended consequence of adversely impacting our conversion rates.

These changes have had in the past, and may have in the future, the unintended consequence of adversely impacting our conversion rates.

For example, in response to the increased plan termination rate in our Medicare membership in 2020 and 2021, which negatively impacted the LTVs of our Medicare plan-related products, we introduced mandatory additional training for our agents and added a new customer care role to verify certain Medicare enrollments prior to submission in the third quarter of 2021.

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We depend on health insurance carriers and others for data related to our membership.

For instance, with respect to health insurance plans other than small business health insurance, health insurance carriers do not directly report member cancellations to us, resulting in the need for us to determine cancellations using payment

data that carriers provide.

We infer cancellations from this payment data by analyzing whether payments from members have ceased for a period of time, and we may not learn of a cancellation for several months.

For instance, with respect to health insurance plans, health insurance carriers do not directly report member cancellations to us.

Other than small business health insurance, we infer cancellations from payment data that carriers provide by analyzing whether payments from members have ceased for a period of time, and we may not learn of a cancellation for several months.

The majority of our members who terminate their plans do so by discontinuing their insurance premium payments to the health insurance carrier and do not inform us of the cancellation.

With respect to our small business membership, many groups notify the carrier directly with respect to increases or decreases in group size and policy cancellations.

Our insurance carrier partners often do not communicate this information to us, and it often takes a significant amount of time for us to learn about small business group cancellations and changes in our membership within the group itself.

Our insurance carrier partners often do not communicate this information to us, and it often

takes a significant amount of time for us to learn about small business group cancellations and changes in our membership within the group itself.

We often are not made aware of policy cancellations until the time of the group’s annual renewal.

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In recent years, China has adopted laws regulating cybersecurity and data protection.

For example, a data security

law in China that became effective on September 1, 2021 applies to the usage, collection and protection of data within China and imposes data security obligations and restrictions on transfers of certain data outside of China, including prohibition on providing any data stored in China to law enforcement authorities or judicial bodies outside of China without prior Chinese government approval.

For example, a data security law in China that became effective on September 1, 2021 applies to the usage, collection and protection of data within China and imposes data security obligations and restrictions on transfers of certain data outside of China, including prohibition on providing any data stored in China to law enforcement authorities or judicial bodies outside of China without prior Chinese government approval.

There remains considerable uncertainty as to how the data security law is applied, and the regulatory environment continues to evolve.

Such laws, regulations and standards are complex, ambiguous and subject to change or interpretation, which create uncertainty regarding compliance.

Such laws, regulations and standards

are complex, ambiguous and subject to change or interpretation, which create uncertainty regarding compliance.

Compliance with these laws and regulations could cause us to incur substantial costs or require us to change our business operations in China.

Violation of applicable laws and regulations could adversely affect our brand, affect our relationship with our health insurance carriers, and could result in regulatory enforcement actions and the imposition of civil or criminal penalties and fines, which would harm our business, operating results and financial condition.

Violation of applicable laws and regulations could adversely affect our brand, affect our relationship with our health insurance carriers, and could result in regulatory enforcement actions and the imposition of civil or criminal penalties and fines, any of which could harm our business, operating results and financial condition.

Our business may be adversely impacted by changes in China’s economic or political condition, the relationship between China and the United States or other countries, and our ability to continue to conduct our current operations in China.

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We employ a large number of our technology and content employees in China, and we have other employees in China that support our business.

Any disruption of our operations in China, including any disruption as a result of the Chinese government's COVID-19 related policies, would adversely impact our business.

Any disruption of our operations in China would adversely impact our business.

If we are required to move aspects of our operations out of China as a result of political or geopolitical issues, changes in laws, inquiries from health insurance carriers or for other reasons, we could incur increased expenses, and our business, operating results and financial condition could be harmed.

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The marketing and sale of Medicare Supplement plans are principally regulated on a state-by-state basis by state departments of insurance.

The laws and regulations applicable to the marketing and sale of Medicare plans are numerous, ambiguous and complex, and, particularly with respect to regulations and guidance issued by CMS for Medicare Advantage and Medicare Part D prescription drug plans, change frequently.

Part D prescription drug plans, change frequently.

We have altered, and likely will have to continue to alter, our marketing and sales process to comply with these laws, regulations and guidelines.

Health insurance carriers whose Medicare plans we sell approve our websites, our call center scripts and a large portion of our marketing material.

Health insurance carriers whose Medicare plans we sell approve our websites, our call center scripts and a large portion of our marketing materials.

We must receive these approvals in order for us to market and sell Medicare plans to Medicare-eligible individuals as a health insurance agent.

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We may not be able to use certain marketing materials and implement our marketing programs effectively if CMS or a health insurance carrier has comments or disapproves of our marketing materials.

If we do not timely file the additional marketing materials with CMS or if health insurance carriers do not adapt to the new CMS requirements or increase the efficiency with which

they review our marketing material, it could harm our sales and also harm our ability to efficiently change and implement new or existing marketing material, including call center scripts and our websites, which could harm our business, operating results and financial condition.

If we do not timely file the additional marketing materials with CMS or if health insurance carriers do not adapt to the new CMS requirements or increase the efficiency with which they review our marketing material, it could harm our sales and also harm our ability to efficiently change and implement new or existing marketing material, including call center scripts and our websites, which could harm our business, operating results and financial condition.

If we or our marketing partners are not successful in timely receiving health insurance carrier or CMS approval of our marketing materials, or if a health insurance carrier refuses to accept enrollments relating to specific materials or marketing endeavors, we could be prevented from implementing our Medicare marketing and sales initiatives, which could harm our business, operating results and financial condition, particularly if such delay or non-compliance occurs during the Medicare annual enrollment period or the Medicare Advantage open enrollment period.

In June 2022, CMS released final versions of the rules initially proposed in January 2022, which included several new provisions aimed at Third Party Marketing Organizations.

The final rules require us and our marketing partners to implement additional verbal and written disclaimers and require us to implement further oversight measures over our marketing partners, beginning with the Medicare annual enrollment period in 2022.

The final rules require us and our marketing partners to implement additional verbal and written disclaimers and require us to implement further oversight

measures over our marketing partners, beginning with the Medicare annual enrollment period in 2022.

Given the adoption of these rules, we may incur additional costs to generate and convert leads from our marketing partners, as well as additional administrative costs, which could adversely affect our business, operating results and financial condition.

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Non-compliance could also result in fines, damages, prohibitions on the conduct of our business and damage to our reputation.

In December 2022, CMS announced proposed rules which were finalized in April 2023.

The finalized rules may impose additional burdens on our business and otherwise harm our business results.

For example, such rules, among other things, require us and our partners to provide to consumers additional disclaimers that may direct them away from our enrollment platform and towards government owned or operated enrollment channels or other platforms, add complications to the Medicare marketing material filing and review process, increase CMS and insurance carrier monitoring of agents and brokers such as us, add requirements on agents enrolling beneficiaries in Medicare plans, limit marketing of plan benefits and cost savings, require lengthy new disclosures that make certain forms of marketing infeasible, potentially require a 48-hour waiting period between initial contact with a beneficiary and enrolling that beneficiary, and limit the time we may contact beneficiaries about Medicare plan options to six months after the beneficiary gives us permission for such contact.

In April 2023, CMS released final versions of the rules initially proposed in December 2022.

The finalized rules, among other things, require us and our partners to provide to consumers additional disclaimers that may direct them away from our enrollment platform and towards government owned or operated enrollment channels or other platforms, add complications to the Medicare marketing material filing and review process, increase CMS and insurance carrier monitoring of agents and brokers such as us, add requirements on agents enrolling beneficiaries in Medicare plans, limit marketing of plan benefits and cost savings, require lengthy new disclosures that make certain forms of marketing infeasible, potentially require a 48-hour waiting period between initial contact with a beneficiary and enrolling that beneficiary in certain circumstances, and limit the time we may contact beneficiaries about Medicare plan options to 12 months after the beneficiary gives us permission for such contact.

These additional requirements could impede or otherwise harm our business, operating results or financial condition.

In May 2023, CMS released a memo providing that, effective July 10 2023, the definition of “marketing” would be changed to further restrict the ability to mention widely available benefits in materials without first obtaining carrier review and approval and submitting such materials to CMS.

As a result, our ability to disseminate meaningful content to Medicare beneficiaries may become more limited or require additional costs and time, which could have adverse impact on our business, operating results and financial condition.

Changes and developments in the health insurance industry or system, including changes in laws and regulations, could harm our business, operating results and financial condition.

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Ongoing health care reform efforts and measures may expand the role of government-sponsored coverage, including proposals for single payer or so called “Medicare-for-All” or other proposals that may have the effect of reducing or eliminating the market for our current range of health insurance products, which could have far-reaching implications for the health insurance industry if enacted.

Some proposals would seek to eliminate the private marketplace while others would expand a government-sponsored option to a larger population or otherwise increase government oversight or competition in the sector.

Some proposals would seek to eliminate the private marketplace while others would expand a

government-sponsored option to a larger population or otherwise increase government oversight or competition in the sector.

We are unable to predict the full impact of health care reform initiatives or other regulatory changes on our operations in light of the uncertainty of whether initiatives will be successful and the uncertainty regarding the terms and timing of any provisions enacted and the impact of any of those provisions on various healthcare and insurance industry participants.

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In the event that additional data privacy or data security laws are implemented, or our health insurance carrier or other partners determine to impose requirements on us relating to data privacy security, we may not be able to timely comply with such requirements or such requirements may not be compatible with our current processes.

Changing our processes could be time-consuming and expensive, and failure to timely implement required changes could result in our inability to sell health insurance plans in a particular jurisdiction or for a particular health insurance carrier or subject us to liability for non-compliance, any of which would damage our business, operating results and financial condition.

Changing our processes could be time-consuming and expensive, and failure to timely implement

required changes could result in our inability to sell health insurance plans in a particular jurisdiction or for a particular health insurance carrier or subject us to liability for non-compliance, any of which would damage our business, operating results and financial condition.

Health insurance carriers that we work with may also require us to comply with additional privacy and data security standards to do business with us at all.

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If new laws or regulations are adopted, or existing laws and regulations are interpreted or enforced, to impose additional restrictions on our ability to send email or telephone messages to our members or potential members, we may not be able to communicate with them in a cost-effective manner.

In addition to legal restrictions on the use of email, Internet service providers, email service providers and others attempt to block the

transmission of unsolicited email, commonly known as “spam.” Many Internet and email service providers have relationships with organizations whose purpose it is to detect and notify the Internet and email service providers of entities that the organization believes is sending unsolicited email.

In addition to legal restrictions on the use of email, Internet service providers, email service providers and others attempt to block the transmission of unsolicited email, commonly known as “spam.” Many Internet and email service providers have relationships with organizations whose purpose it is to detect and notify the Internet and email service providers of entities that the organization believes is sending unsolicited email.

If an Internet or email service provider identifies email from us as “spam” as a result of reports from these organizations or otherwise, we can be placed on a restricted list that will block our email to members or potential members.

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In the event that we were found to have violated the TCPA, our business, operating results and financial condition could be harmed.

The TCPA and other laws and regulations relating to telemarketing are subject to periodic updates and changes in enforcement and litigation risks.

In addition, telephone carriers may block or put consumer warnings on calls originating from call centers.

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The commission rates we receive are impacted by a variety of factors, including the particular health insurance plans chosen by our members, the carriers offering those plans, our members’ states of residence, the laws and regulations in those jurisdictions, the average premiums of plans purchased through us and health care reform.

Our commission revenue per member has in the past decreased, and could in the future decrease, as a result of reductions in contractual commission rates, a change in the mix of carriers whose products we sell during a given period, and increased health insurance plan termination rates, all of which are beyond our control and may occur on short notice.

Our commission revenue per member has in the past decreased, and could in the future decrease, as a result of reductions in

contractual commission rates, a change in the mix of carriers whose products we sell during a given period and increased health insurance plan termination rates, all of which are beyond our control and may occur on short notice.

To the extent these and other factors cause our commission revenue per member to decline, our revenue may decline, and our business, operating results and financial condition would be harmed.

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The Credit Agreement also contains restrictions that limit our ability to, among other things, incur debt, grant liens, make certain restricted payments, make fundamental changes, sell assets, transact with affiliates, enter into burdensome agreements, prepay certain indebtedness or modify our organizational documents, in each case, subject to certain exceptions.

Further, the Credit Agreement contains financial covenants requiring us to (x) maintain a minimum level of liquidity as of the end of each month and (y) maintain a ratio such that the outstanding amount of obligations under the Term Loan Credit Agreement at the end of any month does not exceed 50% of the value of certain commissions receivable as of the end of such month.

subsidiaries, a restriction on all or a material portion of our business and the indictment of us or any subsidiary (or any senior officer thereof), or criminal proceedings against the same, which could result in a forfeiture of a material portion of our and our subsidiaries properties.

Further, the Credit Agreement contains financial covenants requiring us to (x) maintain a minimum level of liquidity as of the end of each month and (y) maintain a ratio such that the outstanding amount of obligations under the Credit Agreement at the end of any month does not exceed 50% of the value of certain commissions receivable as of the end of such month.

The events of default under the Credit Agreement include, among other things and subject to grace periods in certain instances, payment defaults, cross defaults with certain other material indebtedness, breaches of covenants or representations and warranties, changes in control of our company, certain bankruptcy and insolvency events with respect to us and our subsidiaries, a restriction on all or a material portion of our business and the indictment of us or any subsidiary (or any senior officer thereof), or criminal proceedings against the same, which could result in a forfeiture of a material portion of our and our subsidiaries properties.

If we experience a decline in cash flow due to any of the factors described in this Risk Factors section or otherwise, we could have difficulty paying interest and principal amounts due on our indebtedness and meeting the financial covenants set forth in our Credit Agreement.

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On February 17, 2021, we entered into an investment agreement with Echelon Health SPV, LP (“H.I.G.”), pursuant to which H.I.G.

purchased 2.25 million of Series A preferred stock for an aggregate price of $225 million.

The investment agreement with H.I.G.

could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition.

As of the date of this report, pursuant to the terms of our investment agreement with H.I.G., we must obtain the consent of H.I.G.

in order to incur any indebtedness, which could limit our ability to obtain additional financing, until our adjusted EBITDA for the trailing four quarters increases.

purchased 2.25 million of Series A convertible preferred stock (“Series A Preferred Stock”) for an aggregate price of $225 million (the “H.I.G.

Investment Agreement”).

Investment Agreement could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition.

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

Investment Agreement, we are required to obtain the consent of H.I.G.

in order to incur any indebtedness until our adjusted EBITDA for the trailing four quarters increases, which could limit our ability to obtain additional financing.

Even if we comply with all of the applicable covenants, the restrictions on the conduct of our business imposed by our lender or H.I.G.

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If we seek to raise funds through debt or equity financing, those funds may prove to be unavailable, may only be available on terms that are not acceptable to us or may result in significant dilution to our stockholders or higher levels of leverage.

Our Credit Agreement and our investment agreement with H.I.G.

contain restrictions that limit our ability to incur additional indebtedness, issue certain types of equity securities with rights and preferences senior to or pari passu with our Series A preferred stock, make certain types of investments or obtain additional financing.

Pursuant to the terms of our investment agreement with H.I.G., we must obtain the consent of H.I.G.

in order to incur any indebtedness, which could limit our ability to obtain additional financing until our adjusted EBITDA for the trailing four quarters increases.

Our Credit Agreement and the H.I.G.

Investment Agreement contain restrictions that limit our ability to incur additional indebtedness, issue certain types of equity securities with rights and preferences senior to or pari passu with our Series A Preferred Stock, make certain types of investments or obtain additional financing.

Pursuant to the terms of the H.I.G.

Investment Agreement, we are currently required to obtain the consent of H.I.G.

in order to incur any indebtedness until our adjusted EBITDA for the trailing four quarters increases, which could limit our ability to obtain additional financing.

If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to pursue our business objectives and to respond to business opportunities or challenges could be harmed, and our business, operating results and financial condition could be materially and adversely affected.

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We have a complex business organization.

Ensuring that we have adequate internal financial and accounting controls and procedures in place to help ensure that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently and is complicated by the

expansion of our business operations and changing accounting requirements.

Our management, including our chief executive officer and chief financial officer, does not expect that our internal control over financial reporting will prevent all errors or all fraud.

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Further, the design of a control

system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.

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If we fail to properly maintain existing or implement new information systems, our business may be materially adversely affected.

The performance, reliability and availability of our ecommerce platform, cloud contact center and underlying network infrastructures are critical to our financial results, brand and relationship with members, marketing partners and health insurance carriers.

and health insurance carriers.

Although we regularly attempt to enhance our platforms and system infrastructure, system failures and interruptions may occur if we are unable to accurately project the rate or timing of increases in our website or call center traffic or for other reasons, some of which are completely outside our control.

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We may be required to expend significant amounts and other resources to protect against security breaches or to mitigate and remediate problems caused by security breaches.

Techniques used to obtain unauthorized

access or to sabotage systems change frequently.

Techniques used to obtain unauthorized access or to sabotage systems change frequently.

For example, attackers have used artificial intelligence and machine learning to launch more automated, targeted and coordinated attacks against targets.

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Additionally, our third-party service providers may cause security breaches for which we are responsible.

Any compromise or perceived compromise of our security or the security of one of our vendors could damage our reputation, cause the termination of relationships with government-run health insurance exchanges and our members, marketing partners and health insurance carriers, reduce demand for our services and subject us to significant liability and expense as well as regulatory action and lawsuits, any of which would harm our business, operating results and financial condition.

our members, marketing partners and health insurance carriers, reduce demand for our services and subject us to significant liability and expense as well as regulatory action and lawsuits, any of which would harm our business, operating results and financial condition.

The attack surface available to criminals is increasing as more companies and individuals work remotely and otherwise work online.

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This guidance, which includes forward-looking statements, has been, and will be, based on projections prepared by our management.

Guidance is necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the guidance furnished by us will not materialize or will vary significantly from actual results.

Guidance is necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the guidance furnished by us will not materialize or will vary

significantly from actual results.

Accordingly, our guidance is only an estimate of what management believes is realizable as of the date of release.

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The Series A Preferred Stock is convertible at the option of the holders at any time into shares of common stock based on the then applicable conversion rate as determined in the certificate of designations for the Series A Preferred Stock, which conversion would dilute the ownership interest of existing holders of our common stock.

In addition, because holders of our Series A preferred stock are entitled to vote, on an as-converted basis (subject to certain voting limitations and conversion calculations set forth in the certificate of designations for the Series A preferred stock), together with holders of our common stock on all matters submitted to a vote of the holders of our common stock, the issuance of the Series A preferred stock effectively reduces the relative voting power of the holders of our common stock.

In addition, because holders of our Series A Preferred Stock are entitled to vote, on an as-converted basis (subject to

certain voting limitations and conversion calculations set forth in the certificate of designations for the Series A Preferred Stock), together with holders of our common stock on all matters submitted to a vote of the holders of our common stock, the issuance of the Series A Preferred Stock effectively reduces the relative voting power of the holders of our common stock.

Any sales in the public market of the common stock issuable upon conversion of the Series A Preferred Stock could adversely affect prevailing market prices of our common stock.

Pursuant to the investment agreement, holders of our Series A preferred stock have customary resale registration rights for common stock issued upon conversion of the Series A preferred stock upon closing.

Any resale of our common stock would increase the number of shares of our common stock available for public trading.

Sales by our Series A preferred stockholder of a substantial number of shares of our common stock in the public market, or the perception that such sales might occur, could have a material adverse effect on the price of our common stock.

Pursuant to the H.I.G.

Investment Agreement, holders of our Series A Preferred Stock have customary resale registration rights for common stock issued upon conversion of the Series A Preferred Stock upon closing.

Any resale of our common stock would increase the number of shares of our common stock available for public trading, and resales of a substantial number of shares of our common stock in the public market, or the perception that such sales might occur, could have a material adverse effect on the price of our common stock.

Our convertible preferred stock investors have rights, preferences and privileges that are not held by, and are preferential to, the rights of our common stockholders, which could adversely affect our liquidity and financial condition, result in the interests of our convertible preferred stock investors differing from those of our common stockholders and make an acquisition of us more difficult.

Holders of our Series A preferred stock have (i) a liquidation preference (ii) rights to dividends, which are senior to all of our other equity securities, (iii) redemption rights beginning on April 30, 2027, (iv) the right to require us to repurchase any or all of their Series A preferred stock in connection with certain change of control events, and (v) conversion price adjustments in connection with certain corporate transactions, each subject to the terms, conditions and exceptions contained in the certificate of designations for the Series A preferred stock.

H.I.G., the initial purchaser and the current holder of our Series A Preferred Stock, has (i) a liquidation preference, (ii) rights to dividends, which are senior to all of our other equity securities, (iii) redemption rights beginning on April 30, 2027, (iv) the right to require us to repurchase any or all of their Series A Preferred Stock in connection with certain change of control events and (v) conversion price adjustments in connection with certain corporate transactions, each subject to the terms, conditions and exceptions contained in the certificate of designations for the Series A Preferred Stock.

These dividend and share repurchase and redemption obligations could impact our liquidity and reduce the amount of cash flows available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes.

The terms of our investment agreement with H.I.G., the initial purchaser of our Series A preferred stock, could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition.

As of the date of this report, pursuant to the terms of our investment agreement with H.I.G., we must obtain the consent of H.I.G.

The terms of H.I.G.

Investment Agreement could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition.

As of the date of this report, pursuant to the terms of the H.I.G.

Investment Agreement, we must obtain the consent of H.I.G.

in order to incur any indebtedness, which could limit our ability to obtain additional financing until our adjusted EBITDA for the trailing four quarters increases.

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Furthermore, a sale of our company, as a change of control event, may require us to repurchase Series A Preferred Stock, which could have the effect of making an acquisition of our company more expensive and potentially deterring proposed transactions that may otherwise be beneficial to our stockholders.

Our convertible preferred stock investors may exercise influence over us, including through its ability to designate up to two directors on our Board of Directors.

Our investment agreement with H.I.G.

contains certain negative operating covenants that will remain in effect for so long as H.I.G.

Our convertible preferred stock investor may exercise influence over us, including through its ability to designate up to two directors on our Board of Directors.

Investment Agreement contains certain negative operating covenants that will remain in effect for so long as H.I.G.

continues to own at least 30% of the shares of Series A Preferred Stock originally issued to it.

Further, the investment agreement entitles H.I.G.

Further, the H.I.G.

Investment Agreement entitles H.I.G.

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

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will also be entitled to serve on committees of our Board of Directors, subject to applicable law and stock exchange rules.

Notwithstanding the fact

that all directors will be subject to fiduciary duties to us and to applicable law, the interests of the director designated by H.I.G.

of our Series A preferred stock may differ from the interests of our security holders as a whole or of our other directors.

nominated Aaron C.

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Tolson was appointed to our Board of Directors as a Class I director on August 30, 2021, and as of the date of this report serves as the chairperson of the compensation committee and as a member of the equity incentive committee, nominating and corporate governance committee and government and regulatory affairs committee of the Board of Directors.

In addition, if we fail to maintain certain levels of commissions receivable and liquidity, H.I.G.

will be entitled to nominate one additional director, and the consent of H.I.G.

will be required to approve our annual budget, hire or terminate certain key executives and incur certain indebtedness as outlined in the 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 2.0x (the “Minimum Asset Coverage Ratio”), calculated on a quarterly basis, which increases to 2.5x 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.

As of June 30, 2023, we were in compliance with the Minimum Asset

Coverage Ratio and Minimum Liquidity Amount requirements included in the H.I.G.

Investment Agreement.

However, based on the current projection of our financial performance, we anticipate that we will not meet the increased Minimum Asset Coverage Ratio of 2.5x as of the initial compliance date at the end of the third quarter of 2023.

In the event of a default, the H.I.G.

Investment Agreement entitles H.I.G.

to additional rights including, under certain circumstances, the right to nominate one additional member to our Board of Directors, the right to approve the Company’s annual budget, the right to approve hiring or termination of certain key executives and the right to approve certain indebtedness.

The interests of any director designated by H.I.G.

may differ from the interests of our security holders as a whole or of our other directors.

If the additional rights are used by H.I.G., it could be distracting to our management and disruptive to our operations or hinder our ability to execute our operational and strategic plans.

Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

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Any provision of our certificate of incorporation, bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.

Our bylaws designate a state or federal court located within the State of Delaware as the exclusive forum for substantially all disputes between us and our stockholders and also provide that the federal district courts will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, each of which could limit our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers, stockholders or employees.

Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, stockholders, officers or other employees to us or our stockholders, (3) any action arising pursuant to any provision of the Delaware General Corporation Law, our

certificate of incorporation or our bylaws or (4) any other action asserting a claim that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another State court in Delaware or the federal district court for the District of Delaware), except for any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than such court or for which such court does not have subject matter jurisdiction.

This provision would not apply to any action brought to enforce a duty or liability created by the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

Our bylaws designate a state or federal court located within the State of Delaware as the exclusive forum for substantially all disputes between us and our stockholders and also provide that the federal district courts will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, each of which could limit our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers, stockholders or employees.

stockholders, (3) any action arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws or (4) any other action asserting a claim that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another State court in Delaware or the federal district court for the District of Delaware), except for any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than such court or for which such court does not have subject matter jurisdiction.

This provision would not apply to any action brought to enforce a duty or liability created by the Exchange Act and the rules and regulations thereunder.

Section 22 of the Securities Act establishes concurrent jurisdiction for federal and state courts over Securities Act claims.

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An economic or credit crisis could occur and impair credit availability and our ability to raise capital when needed.

Except as so indicated in Exhibits 32.1 and 32.2, the following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

Number Incorporation by Reference Herein

Description of Exhibit Form Date

31.1 † Certification of Francis Soistman, Chief Executive Officer of eHealth, Inc., pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 † Certification of John Stelben , Chief Financial Officer of eHealth, Inc., pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 ‡ Certification of Francis Soistman, Chief Executive Officer of eHealth, Inc., pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 ‡ Certification of John Stelben , Chief Financial Officer of eHealth, Inc., pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS † XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH † Inline XBRL Taxonomy Extension Schema Document

101.CAL † Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF † Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB † Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE † Inline XBRL Taxonomy Extension Presentation Linkbase Document

104 The cover page from the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2023, formatted in Inline XBRL and contained in Exhibit 101

† Filed herewith.

‡ Furnished herewith.

* Indicates a management contract or compensatory plan or arrangement.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

EHEALTH, INC.

May 9, 2023 /s/ Francis Soistman

Francis Soistman

Chief Executive Officer

(Principal Executive Officer)

May 9, 2023 /s/ John Stelben

Chief Financial Officer

(Principal Financial Officer)

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 1A. Risk Factors