What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-07 compared with 2023-11-09 · 193 added, 281 removed, 532 unchanged (47% of the section changed)

3 unchanged sentences

(in thousands, unaudited)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Current assets:

16 unchanged sentences

Accrued marketing expenses 9,404 20,340

Short term debt 68,196 —

Lease liabilities – current 7,206 7,070

21 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Commission $ 80,927 $ 68,003

2 unchanged sentences

Operating costs and expenses:

Cost of revenue 194 494 662 790

Marketing and advertising 38,737 32,869

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Loss from operations

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

( 17,911 ) ( 22,894 )

Interest expense ( 2,809 ) ( 2,580 )

Other income, net 2,391 1,988

Loss before income taxes

( 18,329 ) ( 23,486 )

Benefit from income taxes ( 1,345 ) ( 3,608 )

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

( 16,984 ) ( 19,878 )

Preferred stock dividends ( 5,480 ) ( 5,101 )

1 unchanged sentence

Net loss attributable to common stockholders

$ ( 27,711 ) $ ( 28,048 )

Net loss per share attributable to common stockholders:

2 unchanged sentences

Basic and diluted 28,912 27,648

Comprehensive income (loss):

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

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

Comprehensive loss:

$ ( 16,984 ) $ ( 19,878 )

Unrealized holding gain (loss) on available for sale debt securities, net of tax ( 23 ) 13

Foreign currency translation adjustments 45 110

Comprehensive loss

$ ( 16,962 ) $ ( 19,755 )

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

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(in thousands, unaudited)

Three Months Ended March 31, 2024

Common Stock Additional Paid-in

Capital Treasury Stock Retained Earnings (Accumulated Deficit)

Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity

Accumulated Other Comprehensive Loss

Total Stockholders’ Equity

Shares Amount Shares Amount

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Balance as of March 31, 2024 42,002 $ 42 $ 803,248 13,000 $ ( 199,998 ) $ ( 20,427 ) $ ( 60 ) $ 582,805

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

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

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

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

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

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

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

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

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

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

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

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

Other comprehensive income, net of tax

— — — — — — 58 58

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

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

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

EHEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, unaudited, continued)

Three Months Ended March 31, 2023

Common Stock Additional Paid-in

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

Total Stockholders’ Equity

Capital Treasury Stock Retained Earnings

Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity

Shares Amount Shares Amount

7 unchanged sentences

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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(in thousands, unaudited)

Nine Months Ended

September 30,

Three Months Ended

Operating activities:

Net loss $ ( 16,984 ) $ ( 19,878 )

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

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

Depreciation and amortization 533 656

13 unchanged sentences

Accrued expenses and other liabilities 1,284 ( 304 )

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

Net cash provided by operating activities 70,761 60,803

Investing activities:

3 unchanged sentences

Proceeds from redemption and maturities of marketable securities 6,000 —

Net cash provided by (used in) investing activities ( 16,489 ) 24,135

Net cash used in investing activities ( 10,287 ) ( 24,240 )

Financing activities:

Net proceeds from debt financing — 64,862

Net proceeds from exercise of common stock options and employee stock purchases 262 1,054

Repurchase of shares to satisfy employee tax withholding obligations ( 1,255 ) ( 428 )

Principal payments in connection with leases ( 4 ) ( 11 )

Payments of preferred stock dividends ( 873 ) —

Net cash provided by (used in) financing activities ( 2,579 ) 62,925

Net cash used in financing activities ( 1,259 ) ( 439 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash 49 108

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and its consolidated direct and indirect wholly-owned subsidiaries.

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

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

Basis of Presentation – The accompanying Condensed Consolidated Balance Sheet as of March 31, 2024 and other condensed consolidated financial statements for the three months ended March 31, 2024 and 2023 are unaudited.

The Condensed Consolidated Balance Sheet as of December 31, 2023 was derived from the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the Securities and Exchange Commission on February 29, 2024.

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

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GAAP have been condensed or omitted in accordance with those rules and regulations.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022 and include all adjustments necessary for the fair presentation of our financial position as of September 30, 2023 and December 31, 2022, and our results of operations for the periods presented.

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

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

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023 and include all adjustments necessary for the fair presentation of our financial position as of March 31, 2024 and December 31, 2023 and our results of operations for the periods presented.

The results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31, 2024 and therefore, should not be relied upon as an indicator of future results.

Beginning in the first quarter of 2024, primarily as a result of vacating excess office space, we modified our methodology used in allocating certain expenses for the purpose of evaluating financial and segment performance and resource allocation.

Specifically, we no longer allocate our facilities-related expenses, and as a result, these costs are now reported within the “General and administrative” line in our Condensed Consolidated Statements of Comprehensive Loss and within Corporate for our segment profit (loss).

We have recast the Condensed

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Comprehensive Loss and our segment profit (loss) for the prior period presented to conform to our current methodology.

This resulted in a classification change of expenses from marketing and advertising, customer care and enrollment, and technology and content into general and administrative.

Additionally, our segment profit (loss) no longer includes our facilities allocation to each of our segments and instead, these costs are included within Corporate.

There was no impact to total operating costs and expenses, loss from operations, net loss or net loss per share attributable to common stockholders on our Condensed Consolidated Statements of Comprehensive Loss.

Significant Accounting Policies, Estimates and Judgments – The preparation of condensed 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 condensed consolidated financial statements and accompanying notes.

On an ongoing basis, we evaluate our estimates, including those related to, but not limited to, the fair value of investments, the commissions we expect to collect for each approved member cohort, valuation allowance for deferred income taxes, provision (benefit) 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, 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.

Actual results may differ from these estimates.

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

There have been no material changes for the three months ended March 31, 2024 to our significant accounting policies discussed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Recently Adopted Accounting Pronouncements

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

We did not adopt any new accounting pronouncements during the three months ended March 31, 2024.

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 chief operating decision maker (“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.

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Medicare Advantage $ 61,996 $ 54,121

21 unchanged sentences

(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 plans include both qualified and non-qualified plans.

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

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.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Commission revenue from members approved during the period $ 69,752 $ 56,617

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

9,291 1,685 22,746 ( 9,052 )

Total Medicare segment commission revenue $ 70,754 $ 56,669

Individual, Family and Small Business

Employer and Individual

Commission revenue from members approved during the period $ 5,677 $ 6,708

1 unchanged sentence

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

2,922 1,840 9,756 4,389

Total Individual, Family and Small Business segment commission revenue $ 8,779 $ 7,640 $ 30,890 $ 25,924

Total Employer and Individual segment commission revenue $ 10,173 $ 11,334

Total commission revenue from members approved during the period $ 75,429 $ 63,325

1 unchanged sentence

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

12,213 3,525 32,502 ( 4,663 )

Total commission revenue $ 80,927 $ 68,003

1 unchanged sentence

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

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

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

These reductions to revenue primarily relate to the Medicare segment.

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

(2) The after-tax impact of total net commission revenue from members approved in prior periods for the three months ended March 31, 2024 and 2023 was $ 0.06 and $ 0.04 per basic and diluted share, respectively.

The total reductions to revenue from members approved in prior periods were $ 0.5 million for the three months ended March 31, 2024.

These reductions to revenue primarily relate to the Employer and Individual segment.

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

Note 3 – Supplemental Financial Statement Information

4 unchanged sentences

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Cash $ 19,865 $ 7,114

3 unchanged sentences

Total cash, cash equivalents and restricted cash $ 178,076 $ 118,812

As of September 30, 2023 and December 31, 2022, we had $ 3.1 million and $ 3.2 million of restricted cash which was classified as a non-current asset on our Condensed Consolidated Balance Sheets.

As of March 31, 2024 and December 31, 2023, we had $ 3.1 million of restricted cash which was classified as a non-current asset on our Condensed Consolidated Balance Sheets.

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Contract Assets and Accounts Receivable

4 unchanged sentences

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 are included in the “General and administrative” line in our Condensed Consolidated Statements of Comprehensive Loss.

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

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

There were no write-offs during the three months ended March 31, 2024 or for the year ended December 31, 2023.

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Beginning balance $ 2,118 $ 2,398

2 unchanged sentences

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

Medicare Segment IFP/SMB Segment Total

Medicare Segment E&I Segment

Beginning balance at December 31, 2023

$ 847,332 $ 70,845 $ 918,177

Commission revenue from members approved during the period 69,752 5,677 75,429

3 unchanged sentences

Net change in credit loss allowance 230 21 251

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Ending balance at March 31, 2024

$ 774,594 $ 70,739 $ 845,333

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

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federal government.

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

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

The deposits in China were $ 3.9 million as of March 31, 2024.

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Humana 28 % 27 %

3 unchanged sentences

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

September 30, 2023 December 31, 2022

Prepaid expenses $ 12,629 $ 2,858

March 31, 2024 December 31, 2023

Prepaid software and maintenance contracts $ 5,876 $ 5,328

Prepaid licenses 2,007 2,739

Prepaid expenses 1,287 1,808

Prepaid insurance 849 1,436

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

September 30, 2023

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):

March 31, 2024

Carrying Value Level 1 Level 2 Level 3 Total

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

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

There were no transfers between the hierarchy levels during either of the three months ended March 31, 2024 or the year ended December 31, 2023.

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

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

As of March 31, 2024 As of December 31, 2023

Amortized Cost Fair Value Amortized Cost Fair Value

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

September 30, 2023

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):

March 31, 2024

Amortized Cost Unrealized Gains Unrealized Losses Fair Value

12 unchanged sentences

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

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

We did not record any credit losses regarding our available-for-sale debt securities during the nine months ended September 30, 2023 or the year ended December 31, 2022.

As of March 31, 2024 and December 31, 2023, we had 41 and 20 securities, respectively, in a net unrealized loss position that were immaterial individually and in aggregate.

We did not record any credit losses regarding our available for sale debt securities during the three months ended March 31, 2024 or the year ended December 31, 2023.

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 recognized interest income of $ 2.2 million and $ 1.9 million for the three months ended March 31, 2024 and 2023, respectively.

Note 5 – Equity

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

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

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

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

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

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 Amended and Restated 2014 Equity Incentive Plan.

As of March 31, 2024, 2.0 million shares were issued under the A&R 2021 Inducement Plan.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Stock Repurchase Programs – We had no stock repurchase activity during the three months ended March 31, 2024 or 2023 except for the repurchase of shares to satisfy employee tax withholding obligations.

As of March 31, 2024 and 2023, we had a total o f 13.0 million and 12.5 million shares, respectively, held in treasury.

As of March 31, 2024 and 2023, we had 2.3 million and 1.8 million shares, respectively, in treasury that were previously surrendered by employees to satisfy tax withholding due in connection with the vesting of certain restricted stock units as well as 10.7 million shares previously repurchased under our past repurchase programs.

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

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Restricted stock units

$ 4,636 $ 4,073

Performance-based stock units 407 604

Common stock options 400 254

2 unchanged sentences

Related tax benefit recognized $ 1,312 $ 1,170

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

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Marketing and advertising $ 644 $ 455

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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”).

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

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

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

Dividends – Dividends initially 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

Our Series A Preferred Stock is considered temporary equity in our Condensed 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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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 (as defined below).

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

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

A s of March 31, 2024 w e have accrued $ 1.4 million f or cash dividends as of March 31, 2024.

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

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

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

As of March 31, 2024, 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”).

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(i) the Nasdaq Official Closing Price per share of common stock on the Closing Date;

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 the Certificate of Designations).

or (ii) the average Nasdaq Official Closing Price per share of common stock for the five

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

trading days immediately prior to the Closing Date.

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

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

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continues to own at least 30 % of the Series A Preferred Stock originally issued to it in the private placement, entitles H.I.G., subject to conditions and restrictions specified therein, to additional rights, including the right to nominate one additional member to the Company’s Board of Directors, the right to approve the Company’s annual budget, the right to approve hiring or termination of certain key executives and the right to approve the incurrence of certain indebtedness.

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

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

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

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

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.

On March 13, 2024, the Nominating and Corporate Governance Committee of our Board of Directors approved the appointment of a board observer designated by H.I.G.

As of March 31, 2024, we were in compliance with the Minimum Liquidity Amount.

As of March 31, 2024, 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 March 31, 2024.

We have elected to apply the accretion method to adjust the carrying value of the Series A Preferred Stock to its redemption value at the earliest date of redemption, April 30, 2027.

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

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

No shares of Series A Preferred Stock have been converted, and the Series A Preferred Stock was convertible into 3.5 million shares of common stock as of March 31, 2024.

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

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Change in preferred stock redemption value 5,247

Balance as of December 31, 2022 $ 263,284

Accrued paid-in-kind dividends 13,441

Change in preferred stock redemption value 12,158

Balance as of September 30, 2023

Balance as of March 31, 2024

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 7 – Net Loss Per Share Attributable to Common Stockholders

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net loss attributable to common stockholders

$ ( 27,711 ) $ ( 28,048 )

Shares used in per share calculation – basic 28,912 27,648

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Net loss attributable to common stockholders per share – basic and diluted

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For each of the three and nine months ended September 30, 2023 and 2022, we had securities outstanding that could potentially dilute per share amounts, but the shares from the assumed conversion or exercise of these securities were excluded in the computation of diluted net loss per share as their effect would have been anti-dilutive.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

$ ( 0.96 ) $ ( 1.01 )

For each of the three months ended March 31, 2024 and 2023, 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):

Three Months Ended

Convertible preferred stock 3,469 3,256

Restricted stock units

2,901 1,999 2,574 1,299

Performance-based stock units 97 98

Common stock options 218 226

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Total 5,996 5,395

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 8 – Commitments and Contingencies

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

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

Our future minimum payments under non-cancellable contractual service and licensing obligations as of March 31, 2024 were as follows (in thousands):

For the Years Ending December 31,

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Total $ 4,925

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Operating Leases

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We provide comprehensive major medical benefits to our employees.

Effective January 1, 2023, in the United States, we are self-insured for employee health insurance benefits up to $ 0.3 million per individual per year and a maximum claim liability of $ 13.6 million.

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 $ 22.5 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 September 30, 2023, we had a self-insurance liability balance of $ 2.0 million in the “Accrued compensation and benefits” line on our Condensed Consolidated Balance Sheet.

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

As of March 31, 2024 and December 31, 2023, we had a self-insurance liability balance of $ 2.0 million and $ 2.5 million, respectively, in the “Accrued compensation and benefits” line on our Condensed Consolidated Balance Sheet.

Contingencies

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

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

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

Legal proceedings or other contingencies could result in material costs, even if we ultimately prevail, and we may from time to time enter into settlements to resolve such litigation.

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

There were no material litigation-related accruals recorded during the three months ended March 31, 2024 or 2023.

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.

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

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

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

The cases are captioned Patel v.

eHealth, Inc., et al ., Case No.

5:20-cv-02395 (N.D.

Cal.) and Bertrand v.

eHealth, Inc.

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

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

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

The complaints allege that we and Messrs.

Flanders, Yung and Francis 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.

On June 24, 2020, the Court consolidated the above-referenced matters under the caption In re eHealth Securities Litig.

, Master File No.

4:20-cv-02395-JST (N.D.

The Court also appointed a lead plaintiff and lead counsel for the consolidated matter.

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

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

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

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

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

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

On November 9, 2022, the Court appointed Chicago & Vicinity Laborers’ District Council Pension Fund as the new lead plaintiff and approved plaintiff’s selection of counsel.

On November 29, 2022, the new lead plaintiff and lead plaintiff’s counsel filed a supplement to the amended complaint, replacing the names of the prior lead plaintiff and counsel and incorporating new lead plaintiff’s previously filed certification.

On December 22, 2022, the Company, Mr.

Flanders, and Mr.

Yung moved for judgment on the pleadings as to the remaining claims.

Francis also moved for judgment on the pleadings the same day, and joined the motion by the Company, Mr.

Flanders, and Mr.

The motions for

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

On April 25, 2023, a consortium of putative class members (the “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 entered the stipulated order, dismissing the case without leave to amend.

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

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

Flanders et al.

Flanders et al., Case No.

3:20-cv-04477-SK (N.D.

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

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

District of California.

On October 13, 2020, a derivative lawsuit captioned Lincolnshire Police Pension Fund v.

Flanders et al.

Flanders et al., Case No.

20CV371555 (Cal.

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On October 5, 2021, a third derivative lawsuit, captioned Badwal v.

Flanders et al.

Flanders et al., Case No.

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

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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.

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

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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.

On February 29, 2024, the parties stipulated to the voluntary dismissal of the Lincolnshire matter, and on March 4, 2024, the Santa Clara County Court entered an order dismissing the matter without prejudice pursuant to the stipulation.

Note 9 – Segment and Geographic Information

Operating Segments

We report segment information based on how our chief executive officer, who is our chief operating decision maker (“CODM”), regularly reviews our operating results, allocates resources and makes decisions regarding our business operations.

We report segment information based on how our chief executive officer, who is our CODM, regularly reviews our operating results, allocates resources and makes decisions regarding our business operations.

We evaluate our business performance and manage our operations as two distinct operating segments:

Medicare and Individual, Family and Small Business.

Medicare, and Employer and Individual.

The performance measures of our segments include revenue and segment profit (loss).

Please refer to Note 1 – Summary of Business and Significant Accounting Policies of the Notes to Consolidated Financial Statements in Part II, Item 8 of the Annual Report on Form 10-K for the year ended December 31, 2023 for our accounting policies relating to operating segments.

Additionally, as indicated in Note 1 of this report, our

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

results below reflect our updated methodology used in allocating certain expenses beginning in the first quarter of fiscal 2024, and results from the prior period presented have been recast to conform with the current period presentation.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Medicare $ 82,388 $ 61,834

Individual, Family and Small Business 9,195 8,239 32,422 27,769

Employer and Individual 10,576 11,889

Total revenue $ 92,964 $ 73,723

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Medicare $ 8,309 $ ( 586 )

Individual, Family and Small Business 4,631 2,688 18,737 12,285

Segment profit (loss) ( 12,840 ) ( 20,274 ) ( 6,802 ) ( 50,765 )

Employer and Individual 4,652 7,674

Segment profit 12,961 7,088

Corporate ( 14,613 ) ( 19,743 )

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Impairment, restructuring and other charges ( 6,313 ) —

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

Interest expense ( 2,809 ) ( 2,580 )

Other income, net 2,391 1,988

Loss before income taxes $ ( 18,329 ) $ ( 23,486 )

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Geographic Information

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

United States $ 27,432 $ 29,419

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Total $ 27,679 $ 29,700

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Significant Customers

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

Substantially all revenue for the three months ended March 31, 2024 and 2023 was generated from customers located in the United States.

Carriers representing 10% or more of our total revenue are summarized as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Humana 26 % 24 %

UnitedHealthcare (1)

22 % 27 % 22 % 22 %

8 % 12 % 7 % 12 %

3 % 10 % 3 % 13 %

(1) Percentages include the carriers’ subsidiaries.

Note 10 – Leases

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

Our lease portfolio primarily consists of operating leases for office space and our leases have remaining lease terms of less than 2 years 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.

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

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 September 30, 2023, we expect to generate a total of $ 14.6 million in future sublease income through January 31, 2030.

As of March 31, 2024, we expect to generate a total of $ 13.1 million in future sublease income through January 31, 2030.

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

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.

As part of our fiscal 2024 cost savings initiatives, we reassessed our occupied leased office space to identify excess space to vacate and potentially sublease.

We also reassessed current market conditions in our previously vacated leased office spaces which have not yet been subleased.

As a result, we determined impairment indicators were present and we performed impairment testing of our right-of-use assets.

We utilized an income approach to value the asset groups by performing a discounted cash flow analysis and determined that the net carrying values exceeded the estimated discounted future cash flows expected to be derived from the properties based on Level 3 inputs, including current sublease market rent, future sublease market conditions and the discount rate.

This resulted in a $ 5.5 million impairment charge related to our operating lease right-of-use assets and property, plant and equipment, which was reflected in the “Impairment, restructuring and other charges” line in our Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2024.

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The components of operating lease costs for the three months ended March 31, 2024 and 2023 were as follows (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Operating lease expense $ 1,737 $ 1,855

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

Nine Months Ended

September 30,

Three Months Ended

Cash paid for amounts included in the measurement of operating lease liabilities $ 2,231 $ 2,102

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

September 30, 2023 December 31, 2022

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

March 31, 2024 December 31, 2023

Weighted-average remaining lease term (in years) of operating leases 4.6 4.8

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

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

As of March 31, 2024, maturities of our operating lease liabilities are as follows (in thousands):

Year ending December 31,

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Total $ 33,491

(1) Non-cancellable sublease income for the remainder of 2023 and the years ending December 31, 2024, 2025, 2026, 2027 and thereafter of $ 0.4 million, $ 2.4 million, $ 2.6 million, $ 2.7 million, $ 2.8 million, and $ 3.8 million, respectively, are not included in the table above.

(1) Non-cancellable sublease proceeds for the remainder of 2024 and the years ending December 31, 2025, 2026, 2027, 2028 and thereafter of $ 1.8 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.

EHEALTH, INC.

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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

Asset impairment charges $ 5,492 $ —

Restructuring and reorganization charges

Impairment, restructuring and other charges $ 6,313 $ —

Asset Impairment

For the three months ended March 31, 2024, we recognized a non-cash, pre-tax asset impairment charge of $ 5.5 million related to several of our leased office spaces in the “Impairment, restructuring and other charges” line in our Condensed Consolidated Statements of Comprehensive Loss.

This charge was comprised of $ 5.1 million of operating lease right-of-use asset impairments and $ 0.4 million of property and equipment impairment.

Refer to Note 10 – Leases for additional information related to our lease impairment charges.

Restructuring

4 unchanged sentences

Payments ( 180 )

Balance at September 30, 2023 $ —

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

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

In the first half of 2022, we eliminated 339 full-time positions, which represented approximately 14 % of our workforce, primarily within our customer care and enrollment group, and to a lesser extent, in our marketing and advertising, technology and content, and general and administrative groups, and, as a result, recorded pre-tax restructuring charges of $ 6.2 million in the “Impairment, restructuring and other charges” line in our Condensed Consolidated Statements of Comprehensive Loss.

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

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

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

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

Balance at March 31, 2024 $ 641

During the three months ended March 31, 2024, we recognized $ 0.8 million of pre-tax restructuring charges in the “Impairment, restructuring and other charges” line in our Condensed Consolidated Statements of Comprehensive Loss, primarily related to employee termination benefits as a result of our cost-reduction efforts.

Substantially all of the restructuring charges are expected to be settled in cash and no equity awards were modified.

As of March 31, 2024, we had a $ 0.6 million restructuring accrual on our Condensed Consolidated Balance Sheet.

Note 12 – Debt

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

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

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

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

Total amortization of closing costs, or debt issuance costs, was $ 0.4 million for the three months ended March 31, 2024 and 2023, and is recorded in the “Interest expense” line in our Condensed Consolidated Statements of Comprehensive Loss.

There were $ 1.8 million of unamortized issuance costs as of March 31, 2024.

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 $ 67.3 million as of September 30, 2023.

The carrying value of the loan was $ 68.2 million as of March 31, 2024.

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

4 unchanged sentences

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

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

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

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

As of March 31, 2024, the interest rate was 13.10 %.

For the three months ended March 31, 2024 and 2023 we incurred interest expense of $ 2.3 million and $ 2.2 million , respectively.

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

4 unchanged sentences

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

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

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

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

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

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

As of March 31, 2024, we were in compliance with our loan covenants.

Note 13 – Income Taxes

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Loss before income taxes $ ( 18,329 ) $ ( 23,486 )

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

For the three and nine months ended September 30, 2022, we recognized a benefit from income taxes of $ 9.8 million and $ 26.9 million, respectively, representing an effective tax rate of 20.0 % and 19.7 %, respectively, which was lower than the statutory federal tax rate primarily due to stock-based compensation adjustments and non-deductible lobbying expenses, partially offset by research and development credits and state taxes.

For the three months ended March 31, 2024, we recognized a benefit from income taxes of $ 1.3 million, representing an effective tax rate of 7.3 %, which was lower than the statutory federal tax rate primarily due to stock-based compensation adjustments, non-deductible lobbying expenses and an increase in global intangible low-taxed income, partially offset by research and development credits and state taxes.

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

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.

We forecast taxable income by considering all available positive and negative evidence, including our history of operating income and losses and our financial plans and estimates that we use to manage the business.

We forecast taxable income by considering available positive and negative evidence, including our history of operating income and losses and our financial plans and estimates that we use to manage the business.

These assumptions require significant judgment about future taxable income.

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

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

We continue to recognize our deferred tax assets as of March 31, 2024, as we believe it is more likely than not that such deferred tax assets will be realized, with the exception of certain net operating losses and credits for which there is increased uncertainty regarding our future taxable income and a lack of other sources of taxable income, which have a valuation allowance.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements