What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-08-08 · 156 added, 111 removed, 657 unchanged (29% of the section changed)

3 unchanged sentences

(in thousands, unaudited)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Current assets:

30 unchanged sentences

Treasury stock, at cost ( 199,998 ) ( 199,998 )

Retained earnings 12,836 73,799

Retained earnings (accumulated deficit) ( 34,407 ) 73,799

Accumulated other comprehensive loss ( 133 ) ( 73 )

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

11 unchanged sentences

Loss from operations ( 39,396 ) ( 48,269 ) ( 88,442 ) ( 133,456 )

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

Other expense, net ( 138 ) ( 647 ) ( 622 ) ( 2,835 )

Loss before income taxes ( 39,534 ) ( 48,916 ) ( 89,064 ) ( 136,291 )

10 unchanged sentences

Net loss $ ( 37,025 ) $ ( 39,149 ) $ ( 80,404 ) $ ( 109,393 )

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

Unrealized gain (loss) for available-for-sale debt securities, net of tax ( 15 ) ( 4 ) 5 ( 6 )

Foreign currency translation adjustments 73 ( 245 ) ( 65 ) ( 483 )

5 unchanged sentences

Common Stock Additional Paid-in

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

Capital Treasury Stock Retained Earnings (Accumulated Deficit)

Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity

Shares Amount Shares Amount

15 unchanged sentences

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

Issuance of common stock in connection with equity incentive plans 343 — — — — — — —

Repurchase of shares to satisfy employee tax withholding obligations — — ( 884 ) 116 — — — ( 884 )

Dividends and accretion related to convertible preferred stock — — — — — ( 10,218 ) — ( 10,218 )

Stock-based compensation — — 6,797 — — — — 6,797

Other comprehensive income, net of tax

— — — — — — 58 58

Net loss — — — — — ( 37,025 ) — ( 37,025 )

Balance as of September 30, 2023 40,876 $ 40 $ 794,135 12,658 $ ( 199,998 ) $ ( 34,407 ) $ ( 133 ) $ 559,637

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

3 unchanged sentences

Common Stock Additional Paid-in

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

Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Income (Loss)

Total Stockholders’ Equity

Shares Amount Shares Amount

15 unchanged sentences

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

Issuance of common stock in connection with equity incentive plans 214 — — — — — — —

Repurchase of shares to satisfy employee tax withholding obligations — — ( 467 ) 71 — — — ( 467 )

Dividends and accretion related to convertible preferred stock — — — — — ( 7,849 ) — ( 7,849 )

Stock-based compensation — — 5,631 — — — — 5,631

Other comprehensive loss, net of tax — — — — — — ( 249 ) ( 249 )

Net loss — — — — — ( 39,149 ) — ( 39,149 )

Balance as of September 30, 2022 39,707 $ 40 $ 772,328 12,358 $ ( 199,998 ) $ 61,227 $ ( 99 ) $ 633,498

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

2 unchanged sentences

(in thousands, unaudited)

Six Months Ended

Nine Months Ended

September 30,

Operating activities:

Net loss $ ( 80,404 ) $ ( 109,393 )

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

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

Depreciation and amortization 1,908 2,971

2 unchanged sentences

Deferred income taxes ( 9,311 ) ( 27,207 )

Impairment charges — 3,734

Other non-cash items 5 1,333

8 unchanged sentences

Accrued expenses and other liabilities ( 1,410 ) ( 538 )

Net cash provided by operating activities 51,375 21,346

Net cash provided by (used in) operating activities 26,694 ( 8,290 )

Investing activities:

22 unchanged sentences

Our platform leverages technology to solve a critical problem in a large and growing market by aiding consumers in what has traditionally been a complex, confusing and opaque health insurance purchasing process.

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 50 states and the District of Columbia.

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 benefit advisor, or through a hybrid online assisted interaction that includes live agent chat and co-browsing capabilities.

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

This tool is supported by a unified data platform and is available to our ecommerce customers and our licensed agents.

This tool is supported by a unified data platform and is available to our ecommerce customers and our benefit advisors.

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

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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.

Basis of Presentation – The accompanying Condensed Consolidated Balance Sheet as of September 30, 2023 and other condensed consolidated financial statements for the three and nine months ended September 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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GAAP have been condensed or omitted in accordance with those rules and regulations.

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 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.

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 September 30, 2023 and December 31, 2022, and our results of operations for the periods presented.

The results for the three and nine months ended September 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 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.

There have been no material changes for the nine months ended September 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 six months ended June 30, 2023.

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

EHEALTH, INC.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

30 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

17 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 $ 0.67 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.

(2) The impacts of total net commission revenue from members approved in prior periods were $ 0.43 and $ 0.13 per basic and diluted share for the three months ended September 30, 2023 and 2022, respectively.

The impacts of total net commission revenue from members approved in prior periods were $ 1.17 and $( 0.17 ) per basic and diluted share for the nine months ended September 30, 2023 and 2022, respectively.

The total reductions to revenue from members approved in prior periods were $ 0.8 million and $ 2.1 million for the three months ended September 30, 2023 and 2022, respectively, and $ 3.7 million and $ 15.8 million for the nine months ended September 30, 2023 and 2022, respectively.

These reductions to revenue primarily relate to the Medicare segment.

8 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Cash $ 22,835 $ 17,776

3 unchanged sentences

Total cash, cash equivalents and restricted cash $ 155,208 $ 147,640

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.

As of September 30, 2023 and December 31, 2022, we had $ 3.1 million and $ 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.

6 unchanged sentences

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 six months ended June 30, 2023 or for the year ended December 31, 2022.

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

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Beginning balance $ 2,398 $ 2,198

9 unchanged sentences

Net change in credit loss allowance 396 37 433

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

Ending balance at September 30, 2023 $ 713,253 $ 67,323 $ 780,576

EHEALTH, INC.

5 unchanged sentences

federal government.

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

The deposits in China were $ 2.8 million as of September 30, 2023.

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

1 unchanged sentence

Carriers that represented 10% or more of our total contract assets – commissions receivable and accounts receivable balances are summarized as follows:

June 30, 2023 December 31, 2022

September 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):

June 30, 2023 December 31, 2022

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

September 30, 2023 December 31, 2022

Prepaid expenses $ 12,629 $ 2,858

Prepaid software and maintenance contracts 6,304 5,211

Prepaid licenses 3,289 1,116

14 unchanged sentences

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

June 30, 2023

September 30, 2023

Carrying Value Level 1 Level 2 Level 3 Total

5 unchanged sentences

Commercial paper 8,469 — 8,469 — 8,469

Agency bonds 15,900 — 15,900 — 15,900

Total assets measured at fair value $ 137,752 $ 502 $ 137,250 $ — $ 137,752

9 unchanged sentences

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.

There were no transfers between the hierarchy levels during the nine months ended September 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 June 30, 2023 As of December 31, 2022

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

Amortized Cost Fair Value Amortized Cost Fair Value

3 unchanged sentences

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

September 30, 2023

Amortized Cost Unrealized Gains Unrealized Losses Fair Value

5 unchanged sentences

Commercial paper 8,472 — ( 3 ) 8,469

Agency bonds 15,894 6 15,900

Total $ 137,796 $ 2 $ ( 46 ) $ 137,752

6 unchanged sentences

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

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.

As of September 30, 2023 and December 31, 2022, we had 28 and 26 securities, respectively, in a net unrealized loss position that were immaterial individually and in aggregate.

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

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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 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,

As of September 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 nine months ended September 30, 2023 or 2022.

As of September 30, 2023 and 2022, we had a total o f 12.7 million and 12.4 million shares, respectively, held in treasury.

As of September 30, 2023 and 2022, we had 2.0 million and 1.7 million shares, respectively, in treasury that were previously surrendered by employees to satisfy tax withholding due in

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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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,

Subsequent to the second anniversary of the Closing Date, dividends continue to accrue at 8 % per annum, with 6 % PIK and 2 % payable in cash in arrears beginning on June

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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”).

1 unchanged sentence

“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.

During the second quarter of 2023, we made the initial cash dividend payment in the aggregate amount of $ 0.9 million and as of September 30, 2023, w e have accrued $ 1.3 million for cash dividends.

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

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

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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.

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.

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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.

Investment Agreement) of at least 2.0 x (the “Minimum Asset Coverage Ratio”), which increased to 2.5 x in August of 2023.

The first measurement date of the 2.5 x Minimum Asset Coverage Ratio was September 30, 2023.

Additionally, the H.I.G.

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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.

Failure to maintain the Minimum Asset Coverage Ratio or the Minimum Liquidity Amount as of the date or for the time period required by the H.I.G.

Investment Agreement, for 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, entitles H.I.G., subject to conditions and restrictions specified therein, to additional rights, including the right to nominate one additional member to the Company’s 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 the incurrence of certain indebtedness.

As of September 30, 2023, we complied with the Minimum Liquidity Amount.

However, our Asset Coverage Ratio was 2.3 x as of September 30, 2023, and as a result, we did not meet the Minimum Asset Coverage Ratio.

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 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.

As of September 30, 2023, the estimated Series A Preferred Stock redemption value equals 135 % of the Accrued Value per share as of the redemption date, plus accrued PIK dividends that have not yet been added to the Accrued Value, which is significantly in excess of the fair value of the common stock into which the Series A Preferred Stock is convertible as of September 30, 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.

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

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

No shares of Series A Preferred Stock have been converted, and the Series A Preferred Stock was convertible into 3.4 million shares of common stock as of September 30, 2023.

EHEALTH, INC.

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Change in preferred stock redemption value 12,158

Balance as of June 30, 2023

Balance as of September 30, 2023

Note 7 – Net Loss Per Share Attributable to Common Stockholders

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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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.

For each of the three and nine months ended September 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

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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As the benefits of these agreements are experienced uniformly over the applicable contractual periods, we record the related service and licensing expenses on a straight-line basis, although actual cash payment obligations under certain of these agreements fluctuate over the terms of the agreements.

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

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

For the Years Ending December 31,

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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 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.

As of September 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 Sheet.

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

Contingencies

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

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

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

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

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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.

On September 28, 2023, the Court granted, with leave to amend, the Company’s motion for judgment on the pleadings as to all remaining claims, along with the similar motions of Mr.

Flanders and Mr.

The Court simultaneously dismissed, with prejudice and without leave to amend, all claims against Mr.

On October 23, 2023, plaintiff filed a stipulation of dismissal order and notice, indicating that lead plaintiff would not file an amended complaint or appeal (a) the order granting in part and denying in part the motion to dismiss or (b) the order granting the motion for judgment on the pleadings.

On October 25, 2023, the court entered the stipulated order, dismissing the case without leave to amend.

There has not been subsequent follow-up from the Alger Funds.

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

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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.

On July 28, 2023, the Lincolnshire matter was stayed pending

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the resolution of the securities class action, pursuant to the parties’ stipulation.

There has not been subsequent follow-up from the plaintiffs in these matters.

Note 9 – Segment and Geographic Information

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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With the exception of contract assets – commissions receivable, which is presented by segment in Note 3 – Supplemental Financial Statement Information , our CODM does not separately evaluate assets by segment, and therefore, assets by segment are not presented.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Geographic Information

Our long-lived assets primarily consist of property and equipment and internally developed software.

Our long-lived assets primarily consist of property and equipment, net and internally developed software.

Our long-lived assets are attributed to the geographic location in which they are located.

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

United States $ 32,254 $ 37,915

1 unchanged sentence

Total $ 32,503 $ 38,296

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Significant Customers

Substantially all revenue for the three and six months ended June 30, 2023 and 2022 was generated from customers located in the United States.

Substantially all revenue for the three and nine months ended September 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

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

12 unchanged sentences

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.

As of September 30, 2023, we expect to generate a total of $ 14.6 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.

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

2 unchanged sentences

Total operating lease cost $ 1,187 $ 1,518 $ 3,720 $ 5,257

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Six Months Ended

Nine Months Ended

September 30,

Cash paid for amounts included in the measurement of operating lease liabilities $ 6,533 $ 5,878

June 30, 2023 December 31, 2022

Non-cash investing activities relating to operating lease right-of-use assets $ 1,285 $ —

September 30, 2023 December 31, 2022

Weighted-average remaining lease term of operating leases 5.0 years 5.7 years

Weighted-average discount rate used to recognize operating lease right-of-use-assets 5.7 % 5.6 %

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

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

Year ending December 31,

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(1) Non-cancellable sublease income for the remainder of 2023 and the years ending December 31, 2024, 2025, 2026, 2027 and thereafter of $ 0.4 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.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 11 — Impairment, Restructuring and Other Charges

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Restructuring and reorganization charges $ — $ 764 $ — $ 6,956

Asset impairment charges — 3,734 — 3,734

Impairment, restructuring and other charges $ — $ 4,498 $ — $ 10,690

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Restructuring

4 unchanged sentences

Payments ( 366 )

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.

Balance at September 30, 2023 $ —

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

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

During the three months ended September 30, 2022, we incurred pre-tax restructuring charges of $ 0.8 million for additional eliminated positions, which resulted in a $ 7.0 million pre-tax restructuring charge for the nine months ended September 30, 2022 in the “Impairment, restructuring and other charges” line in our Condensed Consolidated Statements of Comprehensive Loss.

For the three and nine months ended September 30, 2022, we recognized a non-cash, pre-tax asset impairment charge of $ 3.4 million related to the sublease of our office space in Santa Clara, California in the “Impairment, restructuring and other charges” line in our Condensed Consolidated Statements of Comprehensive Loss.

This charge was comprised of $ 2.5 million of operating lease right-of-use assets impairment and $ 0.9 million of property and equipment impairment.

We also incurred $ 0.3 million of impairment charges related to abandoned in-process internally developed software during the quarter, which was also recognized in the “Impairment, restructuring and other charges” line in our Condensed Consolidated Statements of Comprehensive Loss.

Note 12 – Debt

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The Amendment replaced the LIBOR-based Adjusted Euro currency Rate (as defined in the Original Credit Agreement) with Adjusted Term SOFR (as defined in the Amendment) as a reference rate for loans under the Credit Agreement.

The proceeds of the loans under the Credit Agreement may be used for working capital and general corporate purposes, to refinance our credit agreement with Royal Bank of Canada (“RBC”) and to pay fees and expenses in connection with the entry into the Credit Agreement.

The proceeds of the loans under the Credit Agreement may be

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

used for working capital and general corporate purposes, to refinance our credit agreement with Royal Bank of Canada (“RBC”) and to pay fees and expenses in connection with the entry into the Credit Agreement.

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

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

There were $ 2.7 million of unamortized issuance costs as of September 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 $ 66.9 million as of June 30, 2023.

The carrying value of the loan was $ 67.3 million as of September 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.

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

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.

As of September 30, 2023, the interest rate was 13.18 %.

For the three and nine months ended September 30, 2023, we incurred interest expense of $ 2.4 million and $ 6.8 million , respectively.

For the three and nine months ended September 30, 2022, we incurred interest expense of $ 1.7 million and $ 3.9 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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

matures in February 2025.

The Credit Agreement 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.

2 unchanged sentences

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 June 30, 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 and as a result, wrote off our remaining related debt issuance cost of $ 0.4 million.

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

In the first quarter of 2022, in connection with entering into the Credit Agreement, we terminated our credit agreement with RBC, pursuant to which we had an up to $ 75 million revolving credit facility, and as a result, wrote off our remaining related debt issuance cost of $ 0.4 million.

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

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

2 unchanged sentences

Effective tax rate 6.3 % 20.0 % 9.7 % 19.7 %

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.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Our provision for income taxes during interim reporting periods has historically been calculated by applying an estimate of the annual effective tax rate to income (loss) before income taxes for the reporting period.

Although we believe the use of the annual effective tax rate method to be appropriate for prior interim reporting periods, for the three and nine months ended September 30, 2023, we applied the actual effective tax rate, which reflects the actual taxes attributable to year-to-date losses, as allowed by ASC 740-270 “Income taxes, Interim Reporting.” We determined that since minor changes in estimated income or loss for fiscal 2023 would result in significant changes in the estimated annual effective tax rate, the discrete method would provide a more reliable estimate for the three and nine months ended September 30, 2023.

For the three and nine months ended September 30, 2023, we recognized a benefit from income taxes of $ 2.5 million and $ 8.7 million, respectively, representing an effective tax rate of 6.3 % and 9.7 %, respectively, which was lower than the statutory federal tax rate primarily due to stock-based compensation adjustments, non-deductible lobbying expenses and changes in our valuation allowance, partially offset by research and development credits and state taxes.

For the three and nine months ended September 30, 2022, we recognized a benefit from income taxes of $ 9.8 million and $ 26.9 million, respectively, representing an effective tax rate of 20.0 % and 19.7 %, 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.

Assessing the realizability of our deferred tax assets is dependent upon several factors, including the likelihood and amount, if any, of future taxable income in relevant jurisdictions during the periods in which those temporary differences become deductible.

2 unchanged sentences

As a result, the amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income change.

We continue to recognize our deferred tax assets as of June 30, 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 September 30, 2023, as we believe it is more likely than not that such deferred tax assets will be realized, with the exception of certain net operating losses and credits for which there is increased uncertainty regarding our future taxable income and a lack of other sources of taxable income, 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