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Item 8. Financial Statements and Supplementary Data

2024-02-29 compared with 2023-03-01 · 392 added, 350 removed, 916 unchanged (45% of the section changed)

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Consolidated Balance Sheets

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Stockholders’ Equity

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Notes to Consolidated Financial Statements

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of eHealth, Inc.

To the Stockholders and the Board of Directors of eHealth, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of eHealth, Inc.

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2023 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 29, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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Revenue recognition:

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We have served as the Company's auditor since 2000.

San Mateo, California

March 1, 2023

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San Francisco, California

February 29, 2024

EHEALTH, INC.

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Retained earnings 7,284 73,799

Accumulated other comprehensive income (loss) ( 73 ) 390

Accumulated other comprehensive loss ( 82 ) ( 73 )

Total stockholders’ equity 606,031 650,955

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

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EHEALTH, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands, except per share amounts)

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Total operating costs and expenses 481,945 508,069 663,844

Income (loss) from operations ( 102,713 ) ( 125,645 ) 53,323

Other income (expense), net ( 3,676 ) 755 666

Income (loss) before income taxes ( 106,389 ) ( 124,890 ) 53,989

Provision for (benefit from) income taxes ( 17,667 ) ( 20,515 ) 8,539

Net income (loss) ( 88,722 ) ( 104,375 ) 45,450

Paid-in-kind dividends for preferred stock ( 19,357 ) ( 12,206 ) —

Loss from operations

( 29,074 ) ( 102,713 ) ( 125,645 )

Interest expense ( 10,974 ) ( 7,627 ) ( 845 )

Other income, net

9,453 3,951 1,600

Loss before income taxes

( 30,595 ) ( 106,389 ) ( 124,890 )

Benefit from income taxes

( 2,381 ) ( 17,667 ) ( 20,515 )

( 28,214 ) ( 88,722 ) ( 104,375 )

Preferred stock dividends ( 20,965 ) ( 19,357 ) ( 12,206 )

Change in preferred stock redemption value ( 17,336 ) ( 11,335 ) ( 6,361 )

Net income (loss) attributable to common stockholders $ ( 119,414 ) $ ( 122,942 ) $ 45,450

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

Basic $ ( 4.36 ) $ ( 4.59 ) $ 1.75

Diluted $ ( 4.36 ) $ ( 4.59 ) $ 1.68

Loss attributable to common stockholders

$ ( 66,515 ) $ ( 119,414 ) $ ( 122,942 )

Loss per share attributable to common stockholders:

Basic and diluted

$ ( 2.37 ) $ ( 4.36 ) $ ( 4.59 )

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

Basic 27,359 26,781 26,025

Diluted 27,359 26,781 27,014

Comprehensive income (loss):

Net income (loss) $ ( 88,722 ) $ ( 104,375 ) $ 45,450

Basic and diluted

28,016 27,359 26,781

Comprehensive loss:

$ ( 28,214 ) $ ( 88,722 ) $ ( 104,375 )

Unrealized holding gain (loss) on available-for-sale debt securities, net of tax 10 ( 29 ) ( 49 )

Foreign currency translation adjustments ( 19 ) ( 434 ) 89

Comprehensive income (loss) $ ( 89,185 ) $ ( 104,335 ) $ 45,684

Comprehensive loss

$ ( 28,223 ) $ ( 89,185 ) $ ( 104,335 )

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

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EHEALTH, INC.

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

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

Issuance of common stock in connection with equity incentive plans 849 1 4,904 — — — — 4,905

Repurchase of shares to satisfy employee tax withholding obligations — — ( 9,333 ) 185 — — — ( 9,333 )

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

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

Dividends and accretion related to convertible preferred stock — — — — — ( 18,567 ) — ( 18,567 )

Issuance of common stock for employee stock purchase program 100 — 3,813 — — — — 3,813

Stock-based compensation — — 35,478 — — — — 35,478

Other comprehensive income, net of tax — — — — — — 40 40

Net Income — — — — — 45,450 — 45,450

Net loss — — — — — ( 104,375 ) — ( 104,375 )

Balance as of December 31, 2021 38,704 39 755,875 12,016 ( 199,998 ) 193,213 390 749,519

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Repurchase of shares to satisfy employee tax withholding obligations — — ( 3,102 ) 399 — — — ( 3,102 )

Paid-in-kind dividend and accretion related to convertible preferred stock — — — — — ( 18,567 ) — ( 18,567 )

Dividends and accretion related to convertible preferred stock — — — — — ( 30,692 ) — ( 30,692 )

Issuance of common stock for employee stock purchase program 178 — 1,159 — — — — 1,159

Stock-based compensation — — 22,201 — — — — 22,201

Other comprehensive income, net of tax — — — — — — 40 40

Other comprehensive loss, net of tax — — — — — — ( 463 ) ( 463 )

Net loss — — — — — ( 88,722 ) — ( 88,722 )

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Repurchase of shares to satisfy employee tax withholding obligations — — ( 3,331 ) 413 — — — ( 3,331 )

Paid-in-kind dividend and accretion related to convertible preferred stock — — — — — ( 30,692 ) — ( 30,692 )

Dividends and accretion related to convertible preferred stock — — — — — ( 38,301 ) — ( 38,301 )

Issuance of common stock for employee stock purchase program 142 — 677 — — — — 677

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

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EHEALTH, INC.

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Operating activities:

Net income (loss) $ ( 88,722 ) $ ( 104,375 ) $ 45,450

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

$ ( 28,214 ) $ ( 88,722 ) $ ( 104,375 )

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

Depreciation and amortization 2,540 3,845 5,430

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

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

Net proceeds from debt financing — 64,862 —

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Repurchase of shares to satisfy employee tax withholding obligations ( 3,330 ) ( 3,102 ) ( 9,333 )

Acquisition-related contingent payments — — ( 8,751 )

Principal payments in connection with leases ( 38 ) ( 136 ) ( 150 )

Net cash provided by financing activities 63,838 213,241 201,249

Payments of preferred stock dividends ( 3,533 ) — —

Net cash provided by (used in) financing activities ( 6,224 ) 63,838 213,241

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 19 ) ( 355 ) 64

Net increase in cash, cash equivalents and restricted cash 62,475 38,052 20,293

Net increase (decrease) in cash, cash equivalents and restricted cash ( 28,828 ) 62,475 38,052

Cash, cash equivalents and restricted cash at beginning of period 147,640 85,165 47,113

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Note 1 – Summary of Business and Significant Accounting Policies

Description of Business – eHealth, Inc.

(the “Company,” “eHealth,” “we” or “us”) is a leading private online health insurance marketplace with a technology and service platform that provides consumer engagement, education and health insurance enrollment solutions.

Description of Business – eHealth, Inc., a Delaware corporation, and its consolidated subsidiaries (collectively, “eHealth”) is a leading private online health insurance marketplace with a technology and service platform that provides consumer engagement, education and health insurance enrollment solutions.

Our mission is to expertly guide consumers through their health insurance enrollment and related options, when, where and how they prefer.

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 and family, small business and other ancillary health insurance products from approximately 200 health insurance carriers across all fifty states and the District of Columbia.

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.

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 over 180 health insurance carriers nationwide.

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.

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

and its consolidated direct and indirect wholly-owned subsidiaries.

Basis of Presentation – Our consolidated financial statements include the accounts of eHealth, Inc.

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

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

These items also increased our net loss by approximately $ 1.5 million, or $ 0.05 per basic and diluted share, on our Consolidated Statement of Comprehensive Loss for the year ended December 31, 2021.

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

These items also increased our net loss by approximately $ 1.5 million, or $ 0.05 per basic and diluted share, on our Consolidated Statements of Comprehensive Loss for the year ended December 31, 2021.

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

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Our business structure is comprised of two operating segments:

• Individual, Family and Small Business

The Medicare segment consists primarily of commissions earned from our sale of Medicare-related health insurance plans, including Medicare Advantage, Medicare Supplement and Medicare Part D prescription drug plans, and to a lesser extent, ancillary products sold to our Medicare-eligible customers, including but not limited to, dental and vision insurance, as well as our advertising program that allows Medicare-related carriers to purchase advertising on a separate website developed, hosted and maintained by us or pursuant to which we perform other services as marketing and our delivery and sale to third parties of Medicare-related health insurance leads generated by our ecommerce platforms and our marketing activities.

The Individual, Family and Small Business segment consists primarily of commissions earned from our sale of individual and family and small business health insurance plans and ancillary products sold to our non-Medicare-eligible customers, including but not limited to, dental, vision, short term disability and long term disability insurance.

• Employer and Individual

In the fourth quarter of 2023, the Individual, Family and Small Business segment was renamed “Employer and Individual” (“E&I”).

The Employer and Individual segment name change was to the name only and had no impact on our historical financial position, results of operations, cash flow or segment level results previously reported.

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

To a lesser extent, the Individual, Family and Small Business segment includes amounts earned from our online sponsorship program that allows carriers to purchase advertising space in specific markets in a sponsorship area on our website, our licensing to third parties the use of our health insurance ecommerce technology and our delivery and sale to third parties of individual and family health insurance leads generated by our ecommerce platforms and our marketing activities.

and to a lesser extent, ancillary products sold to our Medicare-eligible customers, including but not limited to, dental and vision insurance, as well as our advertising program that allows Medicare-related carriers to purchase advertising on a separate website developed, hosted and maintained by us or pursuant to which we perform other services as marketing and our delivery and sale to third parties of Medicare-related health insurance leads generated by our ecommerce platforms and our marketing activities.

The E&I segment consists primarily of commissions earned from our sale of individual and family and small business health insurance plans and ancillary products sold to our non-Medicare-eligible customers, including but not limited to, dental, vision, short term disability and long-term disability insurance.

To a lesser extent, the E&I segment includes amounts earned from our online sponsorship program that allows carriers to purchase advertising space in specific markets in a sponsorship area on our website, our licensing to third parties the use of our health insurance ecommerce technology and our delivery and sale to third parties of individual and family health insurance leads generated by our ecommerce platforms and our marketing activities.

Marketing and advertising, customer care and enrollment, technology and content and general and administrative operating expenses that are directly attributable to a segment are reported within the applicable segment.

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Other indirect general and administrative operating expenses are managed in a corporate shared services environment and, since they are not the responsibility of segment operating management, are not allocated to the two operating segments and are presented as a reconciling item to our consolidated financial results.

Segment profit is calculated as total revenue for the applicable segment less direct and allocated marketing and advertising, customer care and enrollment, technology and content and general and administrative operating expenses, excluding stock-based compensation expense, depreciation and amortization expense, amortization of intangible assets and impairment, restructuring and other charges.

Use of Estimates – The preparation of consolidated financial statements and related disclosures in conformity with U.S.

Segment profit (loss) is calculated as total revenue for the applicable segment less direct and allocated marketing and advertising, customer care and enrollment, technology and content and general and administrative operating expenses, excluding stock-based compensation expense, depreciation and amortization expense, amortization of intangible assets and impairment, restructuring and other charges.

Estimates and Judgments – The preparation of consolidated financial statements and related disclosures in conformity with U.S.

GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes.

On an ongoing basis, we evaluate our estimates, including those related to, but not limited to, the useful lives of intangible assets, fair value of investments, recoverability of intangible assets, the commissions we expect to collect for each approved member cohort, valuation allowance for deferred income taxes, provision for income taxes and the assumptions used in determining stock-based compensation.

On an ongoing basis, we evaluate our estimates, including those related to, but not limited to, the fair value of investments, recoverability of intangible assets, the commissions we expect to collect for each approved member cohort, valuation allowance for deferred income taxes, provision for (benefit from) income taxes and the assumptions used in determining stock-based compensation.

We base our estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that we believe to be reasonable.

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Cash and cash equivalents are stated at fair value.

The Company's restricted cash balances are not material and are primarily used to collateralize letters of credit related to certain lease commitments.

Our restricted cash balances are not material and are primarily used to collateralize letters of credit related to certain lease commitments.

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property and Equipment – Property and equipment are stated at cost, less accumulated depreciation and amortization.

Finance lease amortization expenses are included in depreciation expense in our Consolidated Statements of Comprehensive Income (Loss).

Finance lease amortization expenses are included in depreciation expense in our Consolidated Statements of Comprehensive Loss.

Maintenance and minor replacements are expensed as incurred.

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See Note 3 – Supplemental Financial Statement Information of the Notes to Consolidated Financial Statements for additional information regarding our property and equipment.

Leases – We account for leases in accordance with Accounting Standards Codification Topic 842, Leases.

We determine if an arrangement is a lease at inception.

Our lease portfolio is primarily composed of operating leases for corporate offices and are included in operating lease right-of-use (“ROU”) assets and lease liabilities on our Consolidated Balance Sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

As the Company's leases generally do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date.

In determining the present value of lease payments, we utilized the assistance of third-party specialists to assist us in determining our yield curve based upon our credit rating, lease term and adjustment for security.

The operating lease ROU asset also includes any lease payments made and excludes lease incentives.

Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Goodwill and Intangible Assets – Goodwill represents the excess of the consideration paid over the estimated fair value of assets acquired and liabilities assumed in a business combination.

We test our goodwill for impairment on an annual basis in the fourth quarter of each year or whenever events or changes in circumstances

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

indicate that the asset may be impaired.

Factors that we consider in deciding when to perform an impairment test include significant negative industry or economic trends or significant changes or planned changes in our use of the intangible assets.

Our goodwill is allocated among our two segments, (1) Medicare and (2) Individual, Family and Small Business.

Our goodwill is allocated among our two segments, (1) Medicare and (2) E&I.

All of our goodwill resulting from our prior business combinations was allocated to the Medicare segment.

Goodwill and intangible assets are considered non-financial assets and therefore, subsequent to their initial recognition are not revalued at fair value each reporting period unless an impairment charge is recognized.

We test our goodwill for impairment on an annual basis in the fourth quarter of each year or whenever events or changes in circumstances indicate that the asset may be impaired.

As of December 31, 2021, we performed a goodwill impairment assessment, which included both qualitative and quantitative assessments.

Our assessment included a comparison of carrying value to an estimated fair value using a market approach based on our market capitalization.

Based on this assessment, we concluded the fair value of our Medicare segment was below the carrying value primarily due to the change in our market valuation at the time and financial performance and recorded a $ 40.2 million impairment of our goodwill, which was recognized in the "Impairment, restructuring and other charges" line in the Consolidated Statements of Comprehensive Income (Loss).

As a result of this impairment, we had no goodwill balance on our Consolidated Balance Sheets at either December 31, 2021 and 2022.

There was no goodwill impairment identified for the year ended December 31, 2020.

Based on this assessment, we concluded the fair value of our Medicare segment was below the carrying value primarily due to the change in our market valuation and financial performance at the time and recorded a $ 40.2 million impairment of our goodwill, which was recognized in the “Impairment, restructuring and other charges” line in our Consolidated Statements of Comprehensive Loss.

As a result of this impairment, we had no goodwill balance on our Consolidated Balance Sheets as of December 31, 2023 and 2022.

We must make subjective judgments in determining the independent cash flows that can be related to specific asset groupings.

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When we determine that the useful life of an asset is shorter than we had originally estimated, we accelerate the rate of amortization over the assets’ new, remaining useful life.

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate a potential reduction in their fair values below their respective carrying amounts.

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Our commission revenue is primarily comprised of commissions from health insurance carriers which is computed using the estimated constrained lifetime value of commission payments that we expect to receive.

Included in commissions are regular administrative payments we receive with respect to administrative services.

We estimate commission revenue for each insurance product by using a portfolio approach to a group of approved members by plan type and the

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

effective month of the relevant plan, which we refer to as “cohorts”.

We recognize revenue for plans approved during the period by applying the latest estimated constrained lifetime value (“LTV”) for that product.

We estimate commission revenue for each insurance product by using a portfolio approach to a group of approved members by plan type and the effective month of the relevant plan, which we refer to as “cohorts.” We recognize revenue for plans approved during the period by applying the latest estimated constrained lifetime value (“LTV”) for that product.

We recognize adjustment revenue for plans approved in prior periods when changes in assumptions for constrained LTV calculations are made and when there is sufficient evidence demonstrating a trend that is different from the estimated constrained LTV at the time of approval resulting in a change in estimate to expected cash collections.

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These assumptions are based on our analysis of historical trends for the different cohorts and incorporate management’s judgment in interpreting those trends and applying the constraints discussed below.

For our Medicare commission revenue, which represented 88 %, 86 % and 86 % of our total commission revenue for the years ended December 31, 2022, 2021 and 2020, respectively, the estimated average plan duration, which is the average length of time paying members are active on their plans, used to calculate Medicare health insurance plan LTVs historically has been approximately 3 years for Medicare Advantage plans, and approximately 4 to 5 years for both Medicare Supplement and Medicare Part D prescription drug plans.

While the average plan duration has been approximately 3 years for Medicare Advantage plans, certain members may have a duration of up to approximately 14 years.

The estimated average plan duration used to calculate the LTV for major medical individual and family health insurance plans historically has been approximately 1.5 to 2 years.

For short term health insurance plan LTVs, the estimated average plan duration has been approximately six months .

For our Medicare commission revenue, which represented 89 %, 88 % and 86 % of our total commission revenue for the years ended December 31, 2023, 2022 and 2021, respectively, the estimated average plan duration, which is the average length of time paying members are active on their plans, used to calculate Medicare health insurance plan LTVs has been approximately 2 to 3 years for Medicare Advantage plans, and approximately 4 to 5 years for both Medicare Supplement and Medicare Part D prescription drug plans.

While the average plan duration has been approximately 2 to 3 years for Medicare Advantage plans, certain members can have a duration of up to approximately 14 years.

The estimated average plan duration used to calculate the LTV for major medical individual and family health insurance plans has been approximately 1.5 to 2 years.

For short term health insurance plan LTVs, the estimated average plan duration has

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

been approximately six months .

For all other ancillary health insurance plan LTVs, the estimated average plan duration has historically varied from 1 to 6 years.

Constraints are applied to LTV for revenue recognition purposes to help ensure that the total estimated lifetime commissions expected to be collected for an approved member’s plan are recognized as revenue only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with future commissions receivable from the plan is subsequently resolved.

Significant judgment can be involved in determining the constraint.

To determine the constraints to be applied to LTV, we compare prior calculations of LTV to actual cash received and review the reasons for any variations.

We then apply judgment in assessing whether the difference between historical cash collections and LTV is representative of differences that can be expected in future periods.

To determine the constraints to be applied to LTV, we compare cash collection patterns to our assumptions and analyze the drivers for variations.

We then apply judgment in assessing whether the variation between historical cash collections and LTV is representative of variations that can be expected in future periods.

We also analyze whether circumstances have changed and consider any known or potential modifications to the inputs into LTV in light of the factors that can impact the amount of cash expected to be collected in future periods, including but not limited to commission rates, carrier mix, plan duration, cancellations of insurance plans offered by health insurance carriers with which we have a relationship, changes in laws and regulations, and changes in the economic environment.

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As we accumulate more historical data, we continue to enhance our LTV estimation models using statistical tools to increase the accuracy of LTV estimates with an emphasis on improving member attrition forecasting.

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

enhancements to the LTV estimation model provide greater statistical certainty on expected cash collections, particularly for earlier period cohorts where there is more historical data available.

For both Medicare Advantage and Medicare Part D prescription drug plans, we receive a fixed, annual commission payment from insurance carriers generally once the plan is approved by the carrier and either a fixed, monthly, or annual commission payment beginning with and subsequent to the second plan year.

In the first plan year of a Medicare Advantage and Medicare Part D prescription drug plan, after the health insurance carrier approves the application but during the effective year of the plan, we are paid a fixed commission that is prorated for the number of months remaining in the calendar year.

The enhancements to the LTV estimation model provide greater statistical certainty on expected cash collections, particularly for earlier period cohorts where there is more historical data available.

In the first effective plan year of a Medicare Advantage and Medicare Part D prescription drug plan, for which we are the broker of record, we receive a fixed, annual commission payment from insurance carriers generally after the plan is approved by the carrier and becomes effective.

If applicable, after the health insurance carrier approves the application but during the effective year of the plan, we are paid a fixed commission that is prorated for the number of months remaining in the calendar year.

Additionally, if the plan is the first Medicare Advantage or Medicare Part D prescription drug plan issued to the member, we may receive a higher commission rate that covers a full 12-month period, regardless of the month the plan was effective.

We receive commissions for Medicare Advantage and Medicare Part D prescription drug plans for which we are the broker of record, typically until either the policy is cancelled or we otherwise do not remain the agent on the policy.

Beginning with the second plan year and for as long as the member remains on that plan, we typically receive fixed, monthly commissions for Medicare Advantage and Medicare Part D prescription drug plans and generally continue to receive commissions until either the plan is cancelled or we otherwise do not remain the agent on the plan.

Our commissions also include regular administrative payments related to administrative services we perform.

For individual and family, Medicare Supplement, small business and ancillary plans, our commissions generally represent a flat amount per member per month or a percentage of the premium amount collected by the carrier during the period that a member maintains coverage under a plan.

Premium-based commissions are reported to us after the premiums are collected by the carrier, generally on a monthly basis.

We generally continue to receive the commission payment from the relevant insurance carrier until the health insurance plan is cancelled or we otherwise do not remain the agent on the policy.

We generally continue to receive the commission payment from the relevant insurance carrier until the health insurance plan is cancelled or we otherwise do not remain the agent on the plan.

For Medicare-related, individual and family and ancillary health insurance plans, our services are complete once a submitted application is approved by the relevant health insurance carrier.

Accordingly, we recognize commission revenue based upon the total estimated lifetime commissions we expect to receive for selling the plan after the carrier approves an application, net of an estimated constraint.

We refer to these as estimated and constrained LTVs for the plan.

We refer to these as estimated and

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

constrained LTVs for the plan.

We provide annual services in selling and renewing small business health insurance plans;

therefore, we recognize small business health insurance plan commission revenue at the time the plan is approved by the carrier, and when it renews each year thereafter, equal to the estimated commissions we expect to collect from the plan over the following 12 months.

For our Medicare segment, our commissions may also include certain bonus payments, which are generally based on attaining predetermined target sales levels or other objectives, as determined by the health insurance carriers.

See Note 2 – Revenue of the Notes to Consolidated Financial Statements for additional information regarding our commission revenue.

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In these instances, we are typically paid a fixed, up-front fee, which we recognize as revenue ratably over the service period as service is performed.

In certain arrangements, we facilitate beneficiary enrollment in Medicare-related health insurance plans with health insurance carriers without remaining the agent of record.

Under these arrangements, we receive one-time fees determined by contract terms and our services are complete once a submitted application is approved by the relevant health insurance carrier.

Accordingly, we recognize fee income based upon the fee we expect to receive for selling the plan after the carrier approves an application.

We also generate revenue from agreements with carriers to perform post enrollment services for members in Medicare-related health insurance plans.

We typically are paid a fixed fee upon completion of the specific service and the revenue is recognized in the period the service was completed.

Our commercial technology licensing business allows carriers the use of our ecommerce platform to offer their own health insurance policies on their websites and agents to utilize our technology to power their online quoting, content and application submission processes.

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In instances where the performance criteria data is tracked by us, we recognize revenue in the period of performance and when all other revenue recognition criteria has been met.

In instances where the performance criteria data is tracked by the third party, we recognize revenue when reversal of such amounts is not likely to occur.

In instances where the performance criteria data is tracked by the third party, we recognize revenue when reversal of such amounts is probable to not occur.

Incremental Costs to Obtain a Contract.

Our sales compensation plans, which are directed at converting leads into approved members, represent fulfillment costs and not costs to obtain a contract with a customer.

Additionally, we reviewed compensation plans related to personnel responsible for identifying new health insurance

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

carriers and entering into contracts with new health insurance carriers and concluded that no incremental costs are incurred to obtain such contracts.

Additionally, we reviewed compensation plans related to personnel responsible for identifying new health insurance carriers and entering into contracts with new health insurance carriers and concluded that no incremental costs are incurred to obtain such contracts.

Therefore, costs related these compensation plans are expensed as incurred.

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It also includes the amount by which both unbilled and billed services provided under our technology licensing arrangements exceed the revenue recognized to date.

Cost of Revenue – Included in cost of revenue are payments related to health insurance policies sold to members who were referred to our website by marketing partners with whom we have revenue-sharing arrangements.

In order to enter into a revenue-sharing arrangement, marketing partners must be licensed to sell health insurance in the state where the policy is sold.

Cost of Revenue – Included in cost of revenue are payments related to health insurance plans sold to members who were referred to our website by marketing partners with whom we have revenue-sharing arrangements.

In order to enter into a revenue-sharing arrangement, marketing partners must be licensed to sell

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

health insurance in the state where the policy is sold.

Costs related to revenue-sharing arrangements are expensed as the related revenue is recognized.

Marketing and Advertising Expenses – Marketing and advertising expenses consist primarily of member acquisition expenses associated with our direct, marketing partner and online advertising member acquisition channels, in addition to compensation and other expenses related to marketing, business development, partner management, public relations and carrier relations personnel who support our offerings.

We recognize direct marketing expenses in our direct member acquisition channel in the period in which they are incurred.

We recognize online marketing expenses associated with search advertising in the period in which the consumer clicks on the advertisement.

Marketing and Advertising Expenses – Marketing and advertising expenses consist primarily of member acquisition expenses associated with our direct marketing and marketing partner channels, in addition to compensation and other expenses related to marketing, business development, partner management, public relations and carrier relations personnel who support our offerings.

We recognize direct marketing expenses in our direct member acquisition channel in the period in which they are incurred, including in the period in which the consumer clicks on the advertisement for direct online channels.

Advertising costs incurred in the years ended December 31, 2023, 2022 and 2021 totaled $ 148.7 million, $ 169.1 million, and $ 240.4 million, respectively.

Our direct channel expenses primarily consist of costs for direct mail, email marketing, online marketing and television and radio advertising.

Advertising costs for our direct channel are expensed the first time the related advertising takes place.

Our direct channel expenses primarily consist of costs for direct mail, email marketing, paid keyword search advertising on search engines and paid social platforms, search engine optimization and television and radio advertising.

Advertising costs for our direct channel are expensed the first time the related advertising takes place and in the period in which the consumer clicks on the advertisement for direct online channels.

Our marketing partner channel expenses primarily consist of fees paid to marketing partners with which we have a relationship.

Our online advertising channel expenses primarily consist of paid keyword search advertising on search engines and retargeting campaigns.

Advertising costs for our marketing partner channel and our online advertising channel are expensed as incurred.

Advertising costs for our marketing partner channel are expensed as incurred.

Research and Development Expenses – Research and development expenses consist primarily of compensation and related expenses incurred for employees on our engineering and technical teams, which are expensed as incurred.

Research and development costs, which totaled $ 12.1 million, $ 10.4 million and $ 9.1 million for the years ended December 31, 2022, 2021 and 2020, respectively, are included in technology and content expense in the accompanying Consolidated Statements of Comprehensive Income (Loss).

Research and development costs, which totaled $ 13.7 million, $ 12.1 million and $ 10.4 million for the years ended December 31, 2023, 2022 and 2021, respectively, are primarily included in the “Technology and content expense” line in the accompanying Consolidated Statements of Comprehensive Loss.

Internal-Use Software and Website Development Costs – We capitalize costs of materials, consultants and compensation and benefits costs of employees who devote time to the development of internal-use software and websites during the application development stage.

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For the years ended December 31, 2023, 2022 and 2021, we capitalized internal-use software and website development costs of $ 9.7 million, $ 17.2 million and $ 19.6 million respectively, and recorded amortization expense of $ 17.4 million, $ 17.3 million, and $ 12.9 million, respectively.

Capitalized internal-use software and website development costs are included in Other Assets on our Consolidated Balance Sheets and were $ 31.3 million as of December 31, 2022 and 2021.

Capitalized internal-use software and website development costs are included in other assets on our Consolidated Balance Sheets and were $ 23.6 million and $ 31.3 million as of December 31, 2023 and 2022, respectively.

See Note 5 - Equity of the Notes to Consolidated Financial Statements for the amount of stock-based compensation capitalized for internal-use software.

Stock-Based Compensation – We grant stock-based awards to officers and certain other employees of the Company and non-employee directors of the Company.

The stock-based awards have consisted of stock options and restricted stock units.

We recognize stock-based compensation expense in the accompanying Consolidated Statements of Comprehensive Income (Loss) based on the fair value of our stock-based awards over their respective requisite service periods, typically the vesting period, which is generally four years for service-based awards or the one-year anniversary of achieving performance criteria for performance and market-based awards.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock-Based Compensation – We grant stock-based awards to officers, certain other employees of the Company and non-employee directors of the Company.

The stock-based awards have consisted of stock options, restricted stock units and performance-based stock units.

We recognize stock-based compensation expense in the accompanying Consolidated Statements of Comprehensive Loss based on the fair value of our stock-based awards over their respective requisite service periods, typically the vesting period, which is generally four years for service-based awards for employees and one year for non-employee directors or the one-year anniversary of achieving performance criteria for performance-based awards.

Stock Options .

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Expected volatility is determined using a combination of the implied volatility of publicly traded options in our stock and historical volatility of our stock price.

Restricted Stock Units.

Our restricted stock units have consisted of service, performance and market-based awards and each represents a contingent right to receive a share of our common stock upon predetermined criteria.

The fair value for service and performance based restricted stock units is estimated on the date of grant based on the current market price of our common shares.

Our market-based restricted stock units are contingent upon the attainment of certain stock prices generally over a four-year performance period.

These awards generally vest on the one-year anniversary of the date of achievement, subject to the employee’s continued service through the vesting date.

The grant date fair value of market-based restricted stock awards is determined using the Monte-Carlo simulation model and requires the input of subjective assumptions.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restricted and Performance-Based Stock Units.

Our restricted stock units consist of service-based awards.

Our performance-based stock units are subject to certain performance metrics, which may be market-based or non-market-based financial metrics.

Our market-based performance stock units are contingent upon the attainment of certain stock prices generally over a four-year performance period while non-market-based performance metrics are contingent upon attainment of certain financial performance metrics generally over a one -year performance period.

Performance-based stock units vest on the one-year anniversary of the date of achievement, subject to the employee’s continued service through the vesting date.

Each restricted and performance-based stock unit represents a contingent right to receive a share of our common stock upon predetermined criteria.

The fair value for restricted and non-market-based performance stock units is estimated on the date of grant based on the current market price of our common shares.

The grant date fair value of market-based performance stock awards is determined using the Monte-Carlo simulation model and requires the input of subjective assumptions.

The weighted-average expected term is based on the likelihood of achievement using historical behavior.

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Expected volatility is determined using a combination of the implied volatility of publicly traded options in our stock and historical volatility of our stock price.

The estimated attainment of performance-based awards and related expense is based on the achievement of certain financial targets over a predetermined performance period, subject to continued service through the vesting date and ultimately are subject to the discretion of the Company’s compensation committee.

The estimated attainment of performance-based awards and related expense are based on the achievement of certain financial targets over a predetermined performance period, subject to continued service through the vesting date and ultimately are subject to the discretion of the Company’s compensation committee.

The assumptions used in calculating the fair value of stock-based payment awards and expected attainment of performance-based awards represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment.

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

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

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

401(k) Plan – Our Board of Directors adopted a defined contribution retirement plan (“401(k) Plan”) in 1998, which qualifies under Section 401(k) of the Internal Revenue Code of 1986.

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Our matching contributions to the 401(k) Plan are discretionary and are expensed as incurred.

We recognized expense of $ 3.8 million, $ 4.2 million and $ 3.5 million for the years ended December 31, 2022, 2021 and 2020, respectively, related to 401(k) matching contributions.

We recognized expense of $ 3.6

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

million, $ 3.8 million and $ 4.2 million for the years ended December 31, 2023, 2022 and 2021, respectively, related to 401(k) matching contributions.

Income Taxes – We account for income taxes using the liability method.

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Recently Adopted Accounting Pronouncements

Reference Rate Reform (Topic 848) — In March 2020, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S.

GAAP to contract modifications and other transactions affected by reference rate reform if certain criteria are met in order to ease the financial reporting burden as the market transitions from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates expected to be discontinued to alternative reference rates.

The FASB further issued ASU 2021-01 in January 2021 to refine and clarify the scope of Topic 848.

The election allows relief from remeasuring the contracts at modification or from reassessing a previous accounting determination.

The guidance was effective upon issuance and may be applied through December 31, 2022.

We elected the optional expedient under ASU 2020-04 and 2021-01 in the third quarter of 2022 upon the amendment to our term loan credit agreement, which transitions the use of LIBOR to the Secured Overnight Financing Rate ("SOFR").

The adoption of the standard allows entities to account for such modification as if the modification was not substantial and as a result, the implementation of this standard did not have a material impact on our consolidated financial statements.

See Note 12 - Debt for additional information regarding the amendment to our term loan credit agreement.

We did not adopt any new accounting pronouncements during the year ended December 31, 2023.

Recently Issued Accounting Pronouncements Not Yet Adopted

Segment Reporting (Topic 280) — In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the CODM and included within each reported measure of a segment’s profit or loss.

The ASU is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024.

Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements and early adoption is permitted.

We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.

Income Taxes (Topic 740) — In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as additional disclosure on income taxes paid.

The ASU is effective on a prospective basis for fiscal years beginning after December 15, 2024 for public entities and early adoption is permitted.

We are currently evaluating the impact of adopting of this ASU on our consolidated financial statements and related disclosures.

EHEALTH, INC.

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Total Revenue $ 452,871 $ 405,356 $ 538,199

(1) We define our Individual and Family plan offerings as major medical individual and family health insurance plans, which does not include Medicare-related, small business or ancillary plans.

(1) We define our individual and family plan offerings as major medical individual and family health insurance plans, which do not include Medicare-related, small business or ancillary plans.

Individual and family health insurance plans include both qualified and non-qualified plans.

Qualified health plans are individual and family health insurance plans that meet the requirements of the Affordable Care Act and are offered through the government-run health insurance exchange in the relevant jurisdiction.

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

Qualified health plans meet the requirements of the Affordable Care Act and are offered through the government-run health insurance exchange in the relevant jurisdiction.

Non-qualified health plans do not meet the requirements of the Affordable Care Act and are not offered through the government-run health insurance exchange in the relevant jurisdiction.

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

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

Years Ended December 31,

Year Ended December 31,

2023 2022 2021

Commission revenue from members approved during the period

$ 326,087 $ 322,506 $ 437,738

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

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Total Medicare segment commission revenue

Individual, Family and Small Business

$ 359,631 $ 320,180 $ 429,324

Employer and Individual

Commission revenue from members approved during the period

$ 19,789 $ 22,358 $ 25,078

Commission revenue from renewals of small business members during the period

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14,531 8,727 30,153

Total Individual, Family and Small Business Segment Commission Revenue $ 41,066 $ 63,795 $ 61,802

Total Employer and Individual segment commission revenue

$ 44,293 $ 41,066 $ 63,795

Total commission revenue from members approved during the period $ 345,876 $ 344,864 $ 462,816

Commission revenue from renewals of small business members during the period 9,973 9,981 8,564

9,981 8,564 6,727

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

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

The net adjustment revenue includes both increases in revenue for certain prior period cohorts as well as reductions in revenue for certain prior period cohorts.

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

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

(3) The impact of total net commission revenue from members approved in prior periods for the years ended December 31, 2022, 2021 and 2020 was $ 0.23 , $ 0.81 and $ 1.49 per basic share, respectively, or $ 0.23 , $ 0.81 and $ 1.44 per diluted share, respectively.

The net adjustment revenue includes both increases as well as reductions in revenue for certain prior period cohorts.

(2) The impact of total net commission revenue from members approved in prior periods for the years ended December 31, 2023, 2022 and 2021 was $ 1.72 , $ 0.23 and $ 0.81 per basic and per diluted share, respectively.

The total reductions to revenue from members approved in prior periods were $ 4.3 million, $ 16.5 million and $ 28.8 million for the years ended December 31, 2023, 2022 and 2021, respectively.

These reductions to revenue primarily related to the Medicare segment.

Enhancement to LTV Estimation Model and Impacts Related to COVID-19

During 2022, we continued to observe stronger member retention rates in our LTV assessments for the majority of the earlier period cohorts of certain products in our Individual, Family and Small Business segment.

Based on our evaluation of the updated LTV models and retention trends, we recognized $ 8.7 million of net adjustment revenue for the Individual, Family and Small Business segment for the year ended December 31, 2022.

In addition, we evaluated various market factors related to our Medicare segment and recorded a net adjustment of $( 2.3 ) million for the year ended December 31, 2022, primarily due to declines in LTV in all Medicare products.

These reductions to revenue primarily relate to the Medicare segment.

Enhancement to LTV Estimation Model

During 2023, we observed stronger member retention rates and commission rate increases for our Medicare segment.

Based on our evaluation of the updated LTV models and retention and commission rate trends, we recorded $ 33.5 million of net adjustment revenue for the year ended December 31, 2023.

In addition, we continued to observe stronger member retention rates in our LTV assessments for the majority of the earlier period cohorts of certain products in our E&I segment and as a result, we recognized $ 14.5 million of net adjustment revenue for the year ended December 31, 2023.

We will continue to monitor our member retention rates as compared to our forecasts and other market factors and evaluate whether any addition or reduction of adjustment revenue shall be recorded as we continue to assess our LTV models in future periods.

During 2021, despite the extension of the COVID-related special enrollment period through August 15, 2021 and an increase in subsidies to certain individuals who purchase qualified health plans, we continued to observe stronger member retention rates in our LTV assessments for the majority of the earlier period cohorts of certain products in our Individual, Family and Small Business segment.

We recognized $ 30.2 million of net adjustment revenue for the Individual, Family and Small Business segment for the year ended December 31, 2021.

In addition, we evaluated various market factors related to our Medicare segment and recorded a net adjustment of $( 8.4 ) million for the year ended December 31, 2021, primarily due to decline in LTV of Medicare Supplement and Medicare Part D prescription drug plans.

During 2022, we continued to observe stronger member retention rates in our LTV assessments for the majority of the earlier period cohorts of certain products in our E&I segment.

Based on our evaluation of the updated LTV models and retention trends, we recognized $ 8.7 million of net adjustment revenue for the E&I segment for the year ended December 31, 2022.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During 2020, despite the impact of COVID-19 in 2020 and uncertainties regarding the Presidential election and the U.S.

economy, we continued to observe stronger member retention rates in our LTV assessments for the majority of the earlier period cohorts of certain products in our Individual, Family and Small Business segment.

Based on our evaluation of the updated LTV models and retention trends, we recognized a $ 33.1 million net adjustment for the Individual, Family and Small Business segment and a net adjustment of $ 5.7 million related to our Medicare segment for the year ended December 31, 2020.

During 2021, despite the extension of the COVID-19 related special enrollment period through August 15, 2021 and an increase in subsidies to certain individuals who purchase qualified health plans, we continued to observe stronger member retention rates in our LTV assessments for the majority of the earlier period cohorts of certain products in our E&I segment.

We recognized $ 30.2 million of net adjustment revenue for the E&I segment for the year ended December 31, 2021.

Note 3 – Supplemental Financial Statement Information

Cash, Cash Equivalents and Restricted Cash

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

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

December 31, 2023 December 31, 2022

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Total cash, cash equivalents and restricted cash $ 118,812 $ 147,640

As of December 31, 2022 and 2021, we had $ 3.2 million of restricted cash which was classified as a non-current asset on our Consolidated Balance Sheets.

As of December 31, 2023 and 2022, we had $ 3.1 million and $ 3.2 million of restricted cash which was classified as a non-current asset on our Consolidated Balance Sheets.

This amount collateralizes letters of credit related to certain lease commitments.

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Our estimates of loss given default are determined by using our historical collections data as well as historical information obtained through our research and review of other insurance related companies.

Our estimated exposure at default is determined by applying these internal and external data sources to our commission receivable balances.

Our estimated exposure at default is determined by applying these internal and external data sources to our commissions receivable balances.

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

Credit loss expenses are assessed quarterly and included in the "General and administrative" line in our Consolidated Statements of Comprehensive Income (Loss).

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

There were no write-offs during the years ended December 31, 2023, 2022 and 2021.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

Year Ended December 31, 2023

Medicare Segment IFP/SMB Segment Total

Medicare Segment E&I Segment

Beginning balance $ 817,043 $ 67,261 $ 884,304

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Year Ended December 31, 2022

Medicare Segment IFP/SMB Segment Total

Medicare Segment E&I Segment

Beginning balance $ 837,474 $ 70,788 $ 908,262

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We do not require collateral or other security for either our contract assets or accounts receivable.

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

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

December 31, 2023 December 31, 2022

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

December 31, 2023 December 31, 2022

Prepaid maintenance contracts $ 5,211 $ 6,246

Prepaid software and maintenance contracts $ 5,328 $ 5,211

Prepaid licenses 2,739 1,116

Prepaid expenses 1,808 2,858

Prepaid insurance 1,436 1,893

Prepaid licenses 1,116 3,076

Other current assets 733 223

Prepaid expenses and other current assets $ 12,044 $ 11,301

Property and Equipment – Our property and equipment are summarized as of the periods presented below (in thousands):

Property and Equipment – Our property and equipment are summarized as follows (in thousands):

December 31, 2023 December 31, 2022

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Property and equipment, gross 16,007 18,275

Less accumulated depreciation and amortization ( 12,774 ) ( 15,450 )

accumulated depreciation and amortization ( 11,143 ) ( 12,774 )

Property and equipment, net $ 4,864 $ 5,501

Depreciation and amortization expense related to property and equipment for the years ended December 31, 2023, 2022 and 2021 was $ 2.5 million, $ 3.8 million and $ 5.4 million, respectively.

Additionally, during 2022, we recognized impairment charges of $ 2.2 million related to computer equipment, office equipment and furniture and leasehold improvements as a result of our sublease and vacating of certain leased office spaces in the "Impairment, restructuring and other charges" line in our Consolidated Statements of Comprehensive Income (Loss).

During 2022, we recognized impairment charges of $ 2.2 million related to computer equipment, office equipment and furniture and leasehold improvements as a result of our sublease and vacating of certain leased office spaces in the “Impairment, restructuring and other charges” line in our Consolidated Statements of Comprehensive Loss.

Intangible Assets – As of December 31, 2023 and 2022, our intangible assets subject to amortization had a gross carrying value of $ 17.2 million and life-to-date accumulated amortization and impairment charges of $ 17.2 million.

As of December 31, 2023 and 2022, our indefinite-lived intangible assets had a gross carrying value of $ 5.1 million and life-to-date impairment charges of $ 3.2 million.

We had no amortization expense related to intangible assets for the year ended December 31, 2022 and amortization expense related to intangible assets for the years ended December 31, 2021 and 2020 was $ 0.5 million and $ 1.5 million, respectively.

We recorded $ 6.1 million of impairment charges related to our intangible assets in the "Impairment, restructuring and other charges" line in our Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2021.

We had no amortization expense related to intangible assets for the years ended December 31, 2023 and 2022.

Amortization expense related to intangible assets for the year ended December 31, 2021 was $ 0.5 million.

We recorded $ 6.1 million of impairment charges related to our intangible assets in the “ Impairment, restructuring and other charges ” line in our Consolidated Statements of Comprehensive Loss for the year ended December 31, 2021.

See Note 11 - Impairment, Restructuring and Other Charges for further discussion on our impairment charge in 2021.

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Level 3 Unobservable inputs for the asset or liability.

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

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

December 31, 2023

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Agency bonds 10,942 — 10,942 — 10,942

Short-term marketable securities

Agency bonds 5,930 — 5,930 — 5,930

Total assets measured at fair value $ 114,538 $ 11,576 $ 102,962 $ — $ 114,538

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Commercial paper 112,268 — 112,268 — 112,268

Short-term marketable securities

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

Corporate bond 2,505 — 2,505 — 2,505

Agency bonds 1,342 — 1,342 — 1,342

Total assets measured at fair value $ 126,625 $ 13,015 $ 113,610 $ — $ 126,625

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

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

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

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 either of the years ended December 31, 2023 or 2022.

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Due in 1 year $ 114,577 $ 114,538 $ 126,664 $ 126,625

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:

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

December 31, 2023

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Agency bonds 10,940 2 — 10,942

Short-term marketable securities

Agency bonds 5,929 1 — 5,930

Total $ 114,577 $ 3 $ ( 42 ) $ 114,538

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Commercial paper 112,307 — ( 39 ) 112,268

Short-term marketable securities

Commercial paper 38,808 — ( 7 ) 38,801

Corporate bond 2,505 — — 2,505

Agency bonds 1,342 — — 1,342

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

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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.

We incurred interest income of $ 8.4 million, $ 2.8 million and $ 0.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Note 5 – Equity

Public Offering of Common Stock – Pursuant to an effective registration statement which was filed on December 17, 2018, and amended on January 22, 2019 and March 2, 2020, we entered into an underwriting agreement in March 2020 to issue a total of 2.1 million shares of common stock, which included the exercise in full of the underwriters’ option to purchase 0.3 million additional shares of common stock, at a price to the public of $ 115.00 per share in March 2020.

Net proceeds from the offering were approximately $ 228.0 million after deducting underwriting discounts, commissions and expenses of the offering.

We intend to use the net proceeds of the offering for general corporate purposes, including working capital.

Common Stock – On all matters submitted to our stockholders for vote, our common stockholders are entitled to one vote per share, voting together as a single class, and do not have cumulative voting rights.

Accordingly, the holders of a majority of the shares of common stock entitled to vote in any election of directors can elect all of the directors standing for election, if they so choose.

Subject to preferences that may apply to any shares

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of preferred stock outstanding, the holders of common stock are entitled to share equally in any dividends, when and if declared by our board of directors.

Subject to preferences that may apply to any shares of preferred stock outstanding, the holders of common stock are entitled to share equally in any dividends, when and if declared by our Board of Directors.

Upon the occurrence of a liquidation, dissolution or winding-up, the holders of common stock are entitled to share equally in all assets remaining after the payment of any liabilities and the liquidation preferences on any outstanding preferred stock.

Holders of common stock have no preemptive or conversion rights or other subscription rights and there are no redemption or sinking funds provisions applicable to the common stock.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock Repurchase Programs – We had no stock repurchase activity during the years ending December 31, 2023, 2022 or 2021.

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The purchase price per share is equal to the lower of 85 % of the fair market value of our common stock on the offering date or the purchase date.

Employees purchased 0.2 million and 0.1 million shares of common stock under our ESPP during the years ended December 31, 2022 and 2021, respectively.

No shares of common stock were purchased under our ESPP in 2020.

Employees purchased 0.1 million, 0.2 million and 0.1 million shares of common stock under our ESPP during the years ended December 31, 2023, 2022 and 2021, respectively.

There were 0.1 million shares remaining for purchase under our ESPP as of December 31, 2023.

As of December 31, 2023, there was $ 0.2 million of unrecognized compensation cost related to our employee stock purchase program, expected to be recognized over a weighted average period of 0.4 years.

Equity Plans – On June 12, 2014, upon approval at the Annual Meeting of Stockholders, we adopted the 2014 Equity Incentive Plan (the “2014 Plan”) with 4.5 million shares authorized for issuance.

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In March 2022 and September 2022, the Company amended and restated its 2021 Inducement Plan to reserve an additional 0.5 million and 1.5 million shares of its common stock, respectively (as amended and restated, the “A&R 2021 Inducement Plan”).

The 2021 Inducement Plan and its amendments were approved by our board of directors (the "Board") without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Rules, and the terms and conditions of the A&R 2021 Inducement Plan and awards to be granted thereunder are substantially similar to our stockholder-approved A&R 2014 Plan.

The 2021 Inducement Plan and its amendments were approved by our 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 A&R 2014 Plan.

As of December 31, 2023, 2.0 million shares were issued under the A&R 2021 Inducement Plan.

Shares Reserved – We generally issue previously unissued common stock upon the exercise of stock options, the vesting of restricted and performance-based stock units and upon granting of restricted common stock awards;

however, we may reissue previously acquired treasury shares to satisfy these future issuances.

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Shares Reserved – We generally issue previously unissued common stock upon the exercise of stock options, the vesting of restricted stock units and upon granting of restricted common stock awards;

however, we may reissue previously acquired treasury shares to satisfy these future issuances.

Shares of authorized but unissued common stock reserved for future issuance were as follows (in thousands):

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Restricted stock units issued and outstanding 3,105 2,238

Performance-based stock units issued and outstanding 400 242

Shares available for grant 2,810 5,165

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Balance at December 31, 2022 (1)

Additional shares authorized 5,000

Restricted stock units granted ( 2,413 )

Performance-based stock units granted ( 337 )

Restricted stock units cancelled 283

Performance-based stock units cancelled 104

Options cancelled 8

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(1) Shares available for grant do not include treasury stock shares that could be granted if we determined to do so.

(2) Includes grants of restricted stock units with service, performance-based or market-based vesting criteria .

(3) Includes cancelled restricted stock units with service, performance-based or market-based vesting criteria .

Stock-Based Compensation Expense – The following table summarizes stock-based compensation expense recognized for the years presented below (in thousands):

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Restricted stock units $ 19,151 $ 17,837 $ 23,645

Performance-based stock units 2,422 876 6,867

Common stock options 1,254 1,154 707

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Related tax benefit recognized $ 5,488 $ 4,747 $ 7,746

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

EHEALTH, INC.

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For the years ended December 31, 2023, 2022 or 2021, there was a total of $ 1.0 million, $ 1.9 million and $ 2.6 million, respectively, of stock-based compensation expense capitalized in the internal-use software and website development costs classified under Other assets, which represents a noncash investing activity.

As of December 31, 2022, there was $ 2.0 million of total unamortized compensation cost, net of estimated forfeitures, related to stock options, expected to be recognized over a weighted average period of 2.2 years.

As of December 31, 2022, there was $ 28.4 million of total unamortized compensation cost, net of estimated forfeitures, related to restricted stock units, expected to be recognized over a weighted average period of 2.5 years.

As of December 31, 2022, there was $ 0.1 million of unrecognized compensation cost related to our employee stock purchase program, expected to be recognized over a weighted average period of 0.4 years.

During the three months ended December 31, 2020, we made an adjustment to reduce stock-based compensation expense by $ 5.9 million related to our performance-based restricted stock awards due to attainment of certain performance goals deemed not probable based on our latest estimates.

The impact of this adjustment was $ 0.23 and $ 0.22 per basic and diluted share, respectively, for the year ended December 31, 2020.

Stock Options – The following table summarizes stock option activity (in thousands, except weighted-average exercise price and weighted-average remaining contractual life data):

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Granted — $ —

Exercised ( 77 ) $ 13.60

Forfeited ( 8 ) $ 23.34

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(2) The aggregate intrinsic value is calculated as the product between eHealth’s closing stock price as of December 31, 2023 and 2022 and the exercise price of in-the-money options as of those dates.

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table provides information pertaining to our stock options for the years presented below (in thousands, except weighted-average fair values):

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Total fair value of options vested $ 534 $ 835 $ 797

Intrinsic value of options exercised $ 694 $ 5,182 $ 8,127

Intrinsic value of options exercised n/a $ 694 $ 5,182

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

There were no options granted during the years ended December 31, 2023 and 2022.

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Risk-free interest rate 1.3 %

Restricted Stock Units – The following table summarizes restricted stock unit activity (in thousands, except weighted-average grant date fair value and weighted-average remaining contractual life data):

As of December 31, 2023, there was $ 1.2 million of total unamortized compensation cost, net of estimated forfeitures, related to stock options, expected to be recognized over a weighted average period of 1.1 years.

Number of Restricted Stock Units

Weighted-Average Grant Date Fair Value Weighted-Average Remaining Service Period Aggregate Intrinsic Value (2)

Weighted-Average Grant Date Fair Value Weighted-Average Remaining Service Period (years)

Aggregate Intrinsic Value (1)

Outstanding as of December 31, 2022 2,238 $ 19.13 1.4 $ 10,832

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Outstanding as of December 31, 2023 3,105 $ 11.31 1.3 $ 27,083

(1) Includes certain restricted stock units with service, performance-based or market-based vesting criteria.

(2) The aggregate intrinsic value is calculated as the difference of our closing stock price as of December 31, 2022 and 2021 multiplied by the number of restricted stock units outstanding as of December 31, 2022 and 2021, respectively.

(1) The aggregate intrinsic value is calculated as the difference of the grant date price and our closing stock price as of December 31, 2023 and 2022 multiplied by the number of restricted stock units outstanding as of December 31, 2023 and 2022, respectively.

As of December 31, 2023, there was $ 22.8 million of total unamortized compensation cost, net of estimated forfeitures, related to restricted stock units, expected to be recognized over a weighted average period of 2.6 years.

Performance-based Stock Units – The following table summarizes performance-based stock unit activity (in thousands, except weighted-average grant date fair value and weighted-average remaining service period data):

Number of Performance-based Stock Units

Weighted-Average Grant Date Fair Value Weighted-Average Remaining Service Period (years)

Aggregate Intrinsic Value (1)

Outstanding as of December 31, 2022 242 $ 20.55 1.1 $ 1,172

Granted 337 $ 7.56

Vested ( 75 ) $ 4.42

Forfeited ( 104 ) $ 14.08

Outstanding as of December 31, 2023 400 $ 14.32 0.6 $ 3,486

(1) The aggregate intrinsic value is calculated as the difference of the grant date price and our closing stock price as of December 31, 2023 and 2022 multiplied by the number of performance stock units outstanding as of December 31, 2023 and 2022, respectively.

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The weighted-average fair value of the market-based restricted stock units was determined using the Monte Carlo simulation model using the following weighted average assumptions:

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Weighted-average grant date fair value $ 4.79 $ 9.66 $ 46.36

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Achievement of performance-based awards granted not achieved prior to 2022 was not probable as of December 31, 2022, and no expense has been recognized for these awards.

During 2022, a performance-based award was granted and was contingent upon the attainment of certain financial targets through December 31, 2022, subject to continued service through December 31, 2023.

As of December 31, 2022, the achievement of is award is considered probable at 100 % of target and as a result, we have begun recognizing expense for this award.

As of December 31, 2023, there was $ 0.9 million of total unamortized compensation cost, net of estimated forfeitures, related to performance-based stock units, expected to be recognized over a weighted average period of 0.6 years.

Note 6 – Convertible Preferred Stock

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

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

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

Capital (the “H.I.G.

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

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

Our Series A Preferred Stock is considered temporary equity in our Consolidated Balance Sheets and we have determined there are no material embedded features that require recognition as a derivative asset or liability.

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

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

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

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

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

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

PIK dividends are cumulative and are added to the Accrued Value.

“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 accrued PIK dividends that have accrued on such share but that have not previously been added to the Accrued Value.

During the year ended December 31, 2023, we made cash dividend payments in the aggregate amount of $ 3.5 million.

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

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

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

As of December 31, 2023, the Conversion Price is equal to $ 79.5861 per share.

This Conversion Price is subject to further adjustment and the number of shares of common stock issuable upon conversion of the Series A Preferred Stock is subject to certain limitations, each as set forth in the Certificate of Designations of Series A Preferred Stock, as filed with the Secretary of State of the State of Delaware on April 30, 2021 (the “Certificate of Designations”).

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

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

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accrued Value, plus accrued PIK dividends that have not yet been added to the Accrued Value, and in either case of (i) or (ii) plus any unpaid cash dividends that would have otherwise been settled in cash in connection with such conversion (the greater of (i) and (ii), the “Redemption Price”).

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

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

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

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Under certain circumstances, H.I.G.

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

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

Each holder of Series A preferred stock shall be entitled to the number of votes, rounded down to the nearest whole number, equal to the product of (i) the aggregate Accrued Value of the issued and outstanding shares of Series A preferred stock divided by the Minimum Price (as defined below), multiplied by (ii) a fraction, the numerator of which is the number of shares of Series A preferred stock held by such holder and the denominator of which is the aggregate number of issued and outstanding shares of Series A preferred stock.

Each holder of Series A Preferred Stock shall be entitled to the number of votes, rounded down to the nearest whole number, equal to the product of (i) the aggregate Accrued Value of the issued and outstanding shares of Series A Preferred Stock divided by $ 69.684 , which is the “Minimum Price” computed in accordance with the Certificate of Designations (as further described below), multiplied by (ii) a fraction, the numerator of which is the number of shares of Series A Preferred Stock held by such holder and the denominator of which is the aggregate number of issued and outstanding shares of Series A Preferred Stock.

“Minimum Price” means the lower of:

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

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

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).

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.

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

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

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

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

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

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

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

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

As of December 31, 2022, we were in compliance with the asset coverage ratio and minimum liquidity amounts as required in the Investment Agreement.

Our Series A preferred stock is considered temporary equity in our consolidated financial statements.

We have determined there are no material embedded features that require recognition as a derivative asset or liability.

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

As of December 31, 2022, the estimated Series A preferred stock redemption value equals 135 % of the Accrued Value per share as of the redemption date, plus any accrued and unpaid dividends, which is significantly in excess of the fair value of the common stock into which the Series A preferred stock is convertible as of December 31, 2022.

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

Investment Agreement.

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

Investment Agreement) of at least 2.0 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.

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.

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 December 31, 2023, we complied with the Minimum Liquidity Amount.

As of September 30, 2023, we failed to maintain the Minimum Asset Coverage Ratio, which entitles H.I.G.

to the additional rights set forth above.

As of December 31, 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 December 31, 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,

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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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 December 31, 2023.

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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Net proceeds $ 214,025

Balance as of Closing Date $ 214,025

Balance as of December 31, 2021 $ 232,592

Accrued paid-in-kind dividends 19,357

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Balance as of December 31, 2023

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

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

Note 7 – Net Loss Per Share Attributable to Common Stockholders

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

Year Ended December 31,

2023 2022 2021

Net income (loss) attributable to common stockholders $ ( 119,414 ) $ ( 122,942 ) $ 45,450

Net loss attributable to common stockholders

$ ( 66,515 ) $ ( 119,414 ) $ ( 122,942 )

Shares used in per share calculation – basic 28,016 27,359 26,781

Net income (loss) attributable to common stockholders per share – basic $ ( 4.36 ) $ ( 4.59 ) $ 1.75

Net income (loss) attributable to common stockholders $ ( 119,414 ) $ ( 122,942 ) $ 45,450

Net loss attributable to common stockholders per share – basic

$ ( 2.37 ) $ ( 4.36 ) $ ( 4.59 )

Net loss attributable to common stockholders

$ ( 66,515 ) $ ( 119,414 ) $ ( 122,942 )

Shares used in per share calculation – basic 28,016 27,359 26,781

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Shares used in per share calculation – diluted 28,016 27,359 26,781

Net income (loss) attributable to common stockholders per share – diluted $ ( 4.36 ) $ ( 4.59 ) $ 1.68

Net loss attributable to common stockholders per share – diluted

$ ( 2.37 ) $ ( 4.36 ) $ ( 4.59 )

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For each of the years ended December 31, 2022, 2021 and 2020, we had securities outstanding that could potentially dilute net income (loss) per share, but the shares from the assumed conversion or exercise of these securities were excluded in the computation of diluted net income (loss) per share as their effect would have been anti-dilutive.

The number of weighted-average outstanding anti-dilutive shares that were excluded from the computation of diluted net income (loss) per share consisted of the following (in thousands):

For each of the years ended December 31, 2023, 2022 and 2021, we had securities outstanding that could potentially dilute net loss per share, 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 weighted-average outstanding anti-dilutive shares that were excluded from the computation of diluted net loss per share consisted of the following (in thousands):

Year Ended December 31,

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Restricted stock units

2,255 1,551 1,075

Performance-based stock units 154 — 3

Common stock options 221 271 333

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Total 6,021 4,989 3,345

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

Note 8 – Commitments and Contingencies

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Total $ 7,321

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Operating Leases

Refer to Note 10 – Leases for commitments related to our operating leases.

Self-Insurance

We provide comprehensive major medical benefits to our employees.

Effective January 1, 2023, we began maintaining a substantial portion of our U.S.

employee health insurance benefits on a self-insured basis with up to $ 0.3 million per individual per year and a maximum claim liability of $ 13.6 million.

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 December 31, 2023, we had a self-insurance liability balance of $ 2.5 million in the “Accrued compensation and benefits” line on our Consolidated Balance Sheet.

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

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Contingencies

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Legal costs incurred in connection with the resolution of claims, lawsuits and other contingencies generally are expensed as incurred.

We accrued approximately $ 1.2 million as of December 31, 2020 for amounts we believed to be payable for certain legal proceedings.

The accrued amount was settled and paid in January 2021.

There were no material additional litigation-related accruals recorded during the years ended or as of December 31, 2022 and 2021.

There were no material litigation-related accruals recorded during the years ended or as of December 31, 2023, 2022 and 2021.

The following discussion is limited to the Company's material on-going legal proceedings:

Legal Proceedings

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

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

The complaints allege that the specified defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.

The complaints allege that the specified defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”) and Rule 10b-5 promulgated thereunder.

The complaints seek compensatory and (in the Patel lawsuit) punitive damages, attorneys’ fees and costs, and such other relief as the court deems proper.

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

The Court dismissed Plaintiff’s claims to the extent premised upon alleged misrepresentations or omissions relating to churn, but denied Defendant’s motion with respect to alleged misstatements regarding purported operating costs.

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

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

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Flanders, and Mr.

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

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

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

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

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

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

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

entered the stipulated order, dismissing the case without leave to amend, and on November 29, 2023, the Court entered judgment in the Company’s favor.

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

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Yung, its then-chief operating officer, Mr.

Francis, and the then-current members of the Board (collectively, the “Individual Defendants”), and name the Company as a nominal

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Francis, and the then-current members of the Board of Directors (collectively, the “Individual Defendants”), and name the Company as a nominal defendant.

The complaints allege, among other things, that the Individual Defendants made or caused the Company to make materially false and misleading statements and/or failed to disclose material information regarding the Company’s accounting and modeling assumptions, rate of member churn, profitability and internal controls for the period of March 2018 through the present.

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In December 2021, the parties entered into a stipulation to further stay the Federal Derivative Action pending the appointment of a new lead plaintiff in the securities class action, which was so ordered by the court on December 14, 2021.

As discussed above, November 9, 2022, the court appointed a new lead plaintiff in the securities class action.

As discussed above, on November 9, 2022, the court appointed a new lead plaintiff in the securities class action.

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

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

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

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

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

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

On January 10, 2024, the Court entered the parties’ stipulated order voluntarily dismissing the Federal Derivative Action.

EHEALTH, INC.

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Medicare $ 406,467 $ 361,687 $ 471,217

Individual, Family and Small Business 43,669 66,982 66,012

Employer and Individual 46,404 43,669 66,982

Total revenue $ 452,871 $ 405,356 $ 538,199

Segment profit (loss):

$ ( 9,873 ) $ ( 12,079 ) $ 108,787

Individual, Family and Small Business (1)

21,438 45,705 40,315

Medicare $ 54,748 $ ( 9,873 ) $ ( 12,079 )

Employer and Individual 25,841 21,438 45,705

Segment profit 80,589 11,565 33,626

2 unchanged sentences

Depreciation and amortization ( 19,916 ) ( 21,108 ) ( 18,331 )

( 21,108 ) ( 18,331 ) ( 11,450 )

Impairment, restructuring and other charges — ( 19,616 ) ( 51,222 )

Amortization of intangible assets — — ( 536 )

Other income (expense), net ( 3,676 ) 755 666

Income (loss) before income taxes $ ( 106,389 ) $ ( 124,890 ) $ 53,989

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

The amortization of capitalized software was $ 17.3 million, $ 12.9 million, and $ 7.8 million for the years ended December 31, 2022, 2021 and 2020, respectively.

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

Interest expense ( 10,974 ) ( 7,627 ) ( 845 )

Other income, net 9,453 3,951 1,600

Loss before income taxes $ ( 30,595 ) $ ( 106,389 ) $ ( 124,890 )

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

1 unchanged sentence

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.

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15 % 12 % 18 %

8 % 12 % 10 %

(1) Percentages include the carriers' subsidiaries.

Note 10 – Leases

We account for leases in accordance with Accounting Standards Codification Topic 842, Leases.

We determine if an arrangement is a lease at inception.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

As the Company's leases generally do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date.

The operating lease ROU asset also includes any lease payments made and excludes lease incentives.

Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Our leases have remaining lease terms of 1 to 7 years.

Our lease portfolio primarily consists of operating leases for office space and our leases have remaining lease terms of less than 1 to 6 years.

Certain of these leases have free or escalating rent payment provisions.

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

In August 2022, we executed and commenced the sublease of our office space located in Santa Clara, California, which will run through the remaining term of the primary lease, March 19, 2029.

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

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

Additionally, we have a sublease agreement for our office space in Mountain View, California to sublease to a third party, which commenced in December 2018 and will expire in July 2023.

We recorded $ 1.0 million, $ 1.2 million and $ 1.2 million of sublease income during the years ended December 31, 2022, 2021 and 2020, respectively.

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

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

As of December 31, 2023, we expect to generate a total of $ 14.2 million in future sublease income through January 31, 2030.

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

We test right-of-use assets when impairment indicators are present in accordance with the asset impairment provisions of Accounting Standards Codification 360, Property, Plant and Equipment (“ASC 360”).

The sublease of our Santa Clara, California office space triggered impairment testing for the underlying right-of-use asset as the expected sublease income is less than the remaining head lease obligation.

Furthermore, we became a virtual-first workplace in the third quarter of 2022 and as a result, we vacated a number of our leased office spaces during the fourth quarter of 2022.

Our decision to sublease or to vacate a number of our leased office space triggered impairment testing for the underlying right-of-use assets.

We evaluated these right-of-use assets, including leasehold improvements, furniture and fixtures and computer equipment for impairment under ASC 360.

For our impairment tests, we utilized an income approach to value the asset group by performing a discounted cash flow analysis and

For our impairment tests, we utilized an income approach to value the asset group by performing a discounted cash flow analysis and determined that the net carrying value exceeded the estimated discounted future cash flows based on current market conditions.

As a result, we recorded an $ 11.8 million impairment charge related to operating lease right-of-use assets and property, plant and equipment, which was reflected in the “Impairment, restructuring and other charges” line in our Consolidated Statements of Comprehensive Loss for the year ended December 31, 2022.

See Note 11 — Impairment, Restructuring and Other Charges for further discussion about our asset impairment charges.

We recorded no impairment charge related to operating lease right-of-use assets and property, plant and equipment during the years ended December 31, 2023 and 2021.

The components of operating lease costs were as follows (in thousands):

Year Ended December 31,

2023 2022 2021

Operating lease expense

$ 7,912 $ 7,782 $ 7,650

Operating sublease income ( 2,210 ) ( 1,048 ) ( 1,222 )

Total operating lease cost $ 5,702 $ 6,734 $ 6,428

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

determined that the net carrying value exceeded the estimated discounted future cash flows based on current market conditions.

As a result, we recorded an $ 11.8 million impairment charge related to operating lease right-of-use assets and property, plant and equipment, which was reflected in the "Impairment, restructuring and other charges" line in our Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2022.

See Note 11 — Impairment, Restructuring and Other Charges for further discussion about our asset impairment charges.

Total operating lease expenses were $ 7.8 million, $ 7.7 million, and $ 7.8 million for the years ended December 31, 2022, 2021 and 2020, respectively.

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

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

Year Ended December 31,

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

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

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

Year ending December 31,

3 unchanged sentences

Total $ 35,403

(1) Noncancellable sublease rent payments for the years ending December 31, 2023, 2024, 2025, 2026, 2027, and thereafter of $ 1.6 million, $ 2.1 million, $ 2.2 million, $ 2.2 million, $ 2.3 million, and $ 2.8 million, respectively, are not included in the table above.

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Non-cancellable sublease rent payments for the years ending December 31, 2024, 2025, 2026, 2027, 2028 and thereafter of $ 2.4 million, $ 2.6 million, $ 2.7 million, $ 2.8 million, $ 2.8 million, and $ 1.0 million, respectively, are not included in the table above.

Note 11 – Impairment, Restructuring and Other Charges

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

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

Year Ended December 31,

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Impairment, restructuring and other charges $ — $ 19,616 $ 51,222

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

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

December 31, 2022

Beginning balance $ 146

Balance at December 31, 2022 $ 366

Restructuring and reorganization charges —

Payments ( 366 )

Ending balance $ 366

Balance at December 31, 2023 $ —

Asset Impairments

For the year ended December 31, 2022, we recognized a non-cash, pre-tax asset impairment charge of $ 12.1 million related to the subleasing and vacating of several of our office spaces in the "Impairment, restructuring and other charges" line in our Consolidated Statements of Comprehensive Income (Loss).

In the third quarter of 2022, we recorded a $ 3.4 million of pre-tax asset impairment charge related to our office space in Santa Clara, California.

The charge consisted of $ 2.5 million of operating lease right-of-use assets impairment and $ 0.9 million of property, plant and equipment impairment.

In the fourth quarter of 2022, we recorded an additional $ 8.4 million of impairment charges due to vacating a number of our leased office spaces as a result of becoming a remote first workplace.

The fourth quarter impairment charge consisted of $ 7.1 million of operating lease right-of-use assets impairment and $ 1.3 million of property, plant and equipment impairment.

For the year ended December 31, 2022, we recognized a non-cash, pre-tax asset impairment charge of $ 12.1 million related to the subleasing and vacating of several of our office spaces in the “Impairment, restructuring and other charges” line in our Consolidated Statements of Comprehensive Loss.

The charge primarily consisted of $ 9.6 million of operating lease right-of-use assets impairment and $ 2.2 million of property, plant and equipment impairment.

Restructuring

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 Consolidated Statements of Comprehensive Income (Loss).

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 Consolidated Statements of Comprehensive Loss.

In the second half of 2022, we incurred pre-tax restructuring charges of $ 1.3 million for additional eliminated positions.

Substantially all of the restructuring charges have been settled in cash and no equity awards were modified.

As of December 31, 2022, the restructuring accrual of $ 0.4 million is recorded in other current liabilities on our Consolidated Balance Sheets.

As of December 31, 2022, the restructuring accrual of $ 0.4 million was recorded in the “Other current liabilities” line in our Consolidated Balance Sheets.

During the year ended December 31, 2023, we incurred no pre-tax restructuring charges.

As of December 31, 2023, we had no restructuring accrual on our Consolidated Balance Sheets.

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

2 unchanged sentences

Stock-based compensation expense for the year ended December 31, 2021 was impacted by a $ 4.1 million credit related to forfeited equity awards due to Mr.

Flanders' separation, which was included in the "General and administrative" line in our Consolidated Statement of Comprehensive Income (Loss).

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Flanders' separation, which was included in the “General and administrative” line in our Consolidated Statements of Comprehensive Loss.

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

6 unchanged sentences

No goodwill impairment was recorded in 2020.

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2021, we performed an impairment analysis over our intangible assets.

Our impairment of intangible assets assessment included a recoverability test for definite-lived intangible assets and a comparison of carrying value to the estimated fair value.

Our analysis included a recoverability test for definite-lived intangible assets and a comparison of carrying value to the estimated fair value.

The fair value of our intangible assets as of December 31, 2021 was estimated using a market approach for certain indefinite-lived intangible assets as well as using the expected future cash flow approach for our definite-lived intangible assets.

Based our assessment, we determined that the fair value of our Medicare segment was below the carrying value as of December 31, 2021 primarily due to the recent change in our market valuation and financial performance.

Therefore, we recorded a $ 6.1 million impairment charge on our Consolidated Statements of Comprehensive Income (Loss) related to our intangible assets.

Therefore, we recorded a $ 6.1 million impairment charge on our Consolidated Statements of Comprehensive Loss related to our intangible assets.

No intangible asset impairment was identified during the years ended December 31, 2023 or 2022.

3 unchanged sentences

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

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 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 amount of the loan on our Consolidated Balance Sheets.

Total amortization of closing costs, or debt issuance costs, was $ 1.6 million and $ 1.3 million for the years ended December 31, 2023 and 2022, respectively, and is recorded in the “Interest expense” line in our Consolidated Statements of Comprehensive Loss.

There were $ 2.2 million of unamortized issuance costs as of December 31, 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 $ 67.8 million as of December 31, 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.

5 unchanged sentences

As of December 31, 2023, the interest rate was 13.15 %.

For the year ended December 31, 2022, we incurred interest expense of $ 5.9 million.

We incurred no interest expense for the years ended December 31, 2021 or 2020.

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

For the years ended December 31, 2023 and 2022, we incurred interest expense of $ 9.1 million and $ 5.9 million, respectively.

We incurred no interest expense in relation to the Credit Agreement for the year ended December 31, 2021.

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

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

The Credit Agreement matures in February 2025.

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.

Our obligations under the Credit Agreement are guaranteed by certain of our material domestic subsidiaries and substantially all of our assets and the assets of

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

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

The Credit Agreement also requires that the outstanding amount as of the last calendar day of any month be less than 50 % of our total contract assets -

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

such guarantors, in each case, subject to customary exclusion.

We are obligated to pay administration fees under the Credit Agreement.

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

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

commissions receivable (i.e., both current and non-current commissions receivable).

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

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

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

There was $ 3.9 million of unamortized issuance costs as of December 31, 2022.

The carrying value of the loan was $ 66.1 million as of December 31, 2022.

On September 17, 2018, we entered into a $ 40.0 million credit agreement with RBC as administrative agent and collateral agent and incurred $ 1.2 million of issuance costs which were capitalized as part of other assets on our Consolidated Balance Sheets.

On December 20, 2019, we amended our revolving credit facility agreement with RBC which increased the borrowing amount from $ 40.0 million to $ 75.0 million and incurred $ 0.5 million of issuance costs which were capitalized as part of other assets on our Consolidated Balance Sheets.

On December 20, 2019, we amended our revolving credit facility agreement with RBC which increased the borrowing amount from $ 40.0 million to $ 75.0 million and incurred $ 0.5 million of issuance costs which were capitalized in “Other assets” on our Consolidated Balance Sheets.

The maturity date was extended to December 20, 2022.

Total amortization of debt issuance costs for the year ended December 31, 2021 was $ 0.4 million, which was recorded in the “Interest expense” line in our Consolidated Statements of Comprehensive Loss.

As of December 31, 2021, the remaining balance of unamortized issuance costs was $ 0.4 million and we had no outstanding borrowings under our agreement with RBC.

During the first quarter of 2022, we terminated our credit agreement with RBC and wrote off our remaining related debt issuance cost of $ 0.4 million.

In the first quarter of 2022, in connection with entering into the Credit Agreement, we terminated our credit agreement with RBC and 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.

Note 13 – Income Taxes

The components of our income (loss) before provision for (benefit from) income taxes were as follows (in thousands):

The components of our loss before income taxes were as follows (in thousands):

Year Ended December 31,

2 unchanged sentences

Foreign 1,377 1,617 986

Income (loss) before income taxes $ ( 106,389 ) $ ( 124,890 ) $ 53,989

The federal and state income tax provision (benefit) is summarized as follows (in thousands):

Loss before income taxes $ ( 30,595 ) $ ( 106,389 ) $ ( 124,890 )

The federal, state and foreign income tax benefit is summarized as follows (in thousands):

Year Ended December 31,

8 unchanged sentences

Total deferred ( 2,670 ) ( 18,437 ) ( 21,521 )

Provision for (benefit from) income taxes $ ( 17,667 ) $ ( 20,515 ) $ 8,539

Benefit from income taxes $ ( 2,381 ) $ ( 17,667 ) $ ( 20,515 )

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The effective tax rate of our provision for (benefit from) income taxes differs from the federal statutory rate as follows:

The effective tax rate of our benefit from income taxes differs from the federal statutory rate as follows:

Year Ended December 31,

2 unchanged sentences

State income taxes, net of federal benefit 2.8 2.1 0.4

Stock-based compensation windfalls, net ( 4.5 ) ( 1.5 ) ( 7.9 )

Stock-based compensation shortfalls, net ( 6.8 ) ( 4.5 ) ( 1.5 )

Non-deductible stock-based compensation ( 4.7 ) ( 0.7 ) ( 0.8 )

26 unchanged sentences

Net deferred tax liabilities $ ( 29,687 ) $ ( 32,359 )

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

1 unchanged sentence

These assumptions require significant judgment about future taxable income.

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

During the year ended December 31, 2022, a valuation allowance of $ 4.3 million was recorded against California net deferred tax assets.

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.

As of December 31, 2023, a valuation allowance of $ 4.9 million was recorded against California net deferred tax assets.

The valuation allowance was recorded as a result of increased uncertainty regarding our future taxable income and a lack of sources of other taxable income to realize our net deferred tax assets in California.

24 unchanged sentences

$ 10,639 $ 9,875 $ 8,551

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2023, the total amount of gross unrecognized tax benefits was $ 10.6 million, of which $ 9.4 million, if recognized, would affect our effective tax rate.

As of December 31, 2022, the total amount of gross unrecognized tax benefits was $ 9.9 million, of which $ 8.7 million, if recognized, would affect our effective tax rate.

We record interest and penalties related to unrecognized tax benefits in provision for (benefit from) income taxes.

We record interest and penalties related to unrecognized tax benefits in benefit from income taxes.

As of December 31, 2023, the amount accrued for estimated interest related to uncertain tax positions was immaterial.

We did not record an accrual for penalties.

EHEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2023, we had an immaterial amount related to tax positions for which it is reasonably possible that the statute of limitations will expire in various jurisdictions and income tax exams will close within the next 12 months.

3 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data