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The market for selling health insurance plans is characterized by intense competition, and we face challenges associated with evolving distribution models, industry and regulatory standards, customer price sensitivity and macro-economic conditions.
−Removed: To remain competitive against our current and future competitors, we need to continue to enhance the online health insurance shopping experience and functionalities of our website and customer care operations that our current and future customers may use to purchase health insurance products from us.
+Added: To remain competitive against our current and future competitors, we need to continue to enhance the online health insurance shopping experience and functionalities of our website and advisor enrollment operations that our current and future customers may use to purchase health insurance products from us.
We also need to work with the health insurance carriers to be able to offer a variety of quality health insurance plans on our platform from which our customers may choose.
−Removed: We will also need to market our services effectively and drive a substantial number of consumers interested in purchasing health insurance to our website and customer care centers during the relevant enrollment periods in a cost-effective manner.
−Removed: We compete with government-run health insurance exchanges, among others, with respect to our sale of Medicare-related and individual and family health insurance plans.
+Added: We will also need to market our services effectively and drive a substantial number of consumers interested in purchasing health insurance to our website and advisor enrollment centers during the relevant enrollment periods in a cost-effective manner.
+Added: We compete with government-run health insurance exchanges, among others, with respect to our sale of Medicare-related and employer and individual health insurance plans.
The federal government operates a website where Medicare beneficiaries can purchase Medicare Advantage and Medicare Part D prescription drug plans or be referred to carriers to purchase Medicare Supplement plans.
We also compete with the original Medicare program.
−Removed: The Affordable Care Act exchanges have websites where individuals and small businesses can purchase health insurance, and they also have offline customer support and enrollment capabilities.
−Removed: Our competitors also include local insurance agents across the United States who sell health insurance plans in their communities, companies
−Removed: that advertise primarily through television, and companies that operate call centers or websites that provide quote information or the opportunity to purchase health insurance telephonically or online, including lead aggregator services.
+Added: The federal government also operates websites where individuals and small businesses can purchase health insurance, and they also have offline customer support and enrollment capabilities.
+Added: Our competitors also include local insurance agents across the United States who sell health insurance plans in their communities, companies that advertise primarily through television, and companies that operate call centers or websites that provide quote
+Added: information or the opportunity to purchase health insurance telephonically or online, including lead aggregator services.
Although we work with many health insurance carriers on marketing and selling their insurance plans on their behalf, many of them also compete with us by directly marketing and selling their plans to consumers through call centers, Internet advertising and their own websites.
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In particular, the laws and regulations applicable to the business of selling Medicare-related plans are complex and frequently change.
−Removed: If we or our health insurance agents violate any of the requirements imposed by the U.S.
+Added: If we or our benefit advisors violate any of the requirements imposed by the U.S.
Centers for Medicare & Medicaid Services (“CMS”), or applicable federal or state laws or regulations, health insurance carriers may terminate their relationship with us or require us to take corrective action if our Medicare product sales or marketing give rise to too many complaints.
The termination of our relationship with a health insurance carrier, the reduction of commission rates, or the amendment of or change in our relationship with a carrier has in the past reduced, and may in the future reduce, the variety, quality and affordability of health insurance plans we offer, cause a loss of commission payments, including commissions for past and/or future sales, cause a reduction in the estimated constrained lifetime values (“LTVs”) we use for revenue recognition purposes, result in a loss of existing and potential members, adversely impact our profitability or have other adverse impacts, which could harm our business, operating results and financial condition.
−Removed: Health insurance carriers may also determine to exit certain states or markets, or increase premiums to a significant degree, which could cause our members’ health insurance plans to be terminated or our members to purchase new health insurance plans or determine not to pay for health insurance at all.
+Added: Health insurance carriers may also determine to exit certain states or markets, change benefit offerings, or increase premiums to a significant degree, which could cause our members’ health insurance plans to be terminated or our members to purchase new health insurance plans or determine not to pay for health insurance at all.
If we lose these members, our business, operating results and financial condition could be harmed.
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Our revenue has been concentrated in a small number of health insurance carriers and we expect that a small number of health insurance carriers will continue to account for a significant portion of our revenue for the foreseeable future.
−Removed: For example, Humana, UnitedHealthcare, Aetna and Centene accounted for 28%, 22%, 7% and 3%, respectively, of our total revenue for the nine months ended September 30, 2023, and accounted for 18%, 22%, 12% and 13%, respectively, of our total revenue for the nine months ended September 30, 2022.
+Added: For example, Humana, Aetna and UnitedHealthcare accounted for 26%, 23%, and 15%, respectively, of our total revenue for the three months ended March 31, 2024, and accounted for 24%, 6%, and 22%, respectively, of our total revenue for the three months ended March 31, 2023.
As discussed elsewhere in this Risk Factors section, our contractual relationships with health insurance carriers are typically non-exclusive and terminable on short notice by either party for any reason.
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Our business success depends in large part on our ability to attract qualified prospects into our enrollment platform and provide a relevant and reliable experience in a cost-effective manner to convert such prospects into paying members for whom we receive commissions.
−Removed: We employ different marketing channels and may from time to time adjust our member acquisition strategy to attract visitors to our website and communicate with customers who contact our customer care centers.
−Removed: If our ability to market and sell Medicare-related health insurance and individual and family health insurance is constrained during the Medicare or individual and family health insurance enrollment periods for any reason, such as technology failures, interruptions in the operation of our ecommerce or telephony platforms, reduced allocation of resources, or any inability to timely employ, license, train, certify and retain our employees to sell health insurance, we could acquire fewer members, suffer a reduction in our membership, and our business, operating results and financial condition could be harmed.
−Removed: Our business may also be adversely affected by changes in the mix of products and services that we offer on our platform, changes in the mix of consumers who are referred to us through our direct, marketing partner and online advertising member acquisition channels, including the quality of sales leads, and by seasonal influences.
−Removed: In addition, adverse market events or economic conditions, such as inflation and rising unemployment levels, could impact consumer behavior and demand for health insurance.
+Added: We employ different marketing channels and may from time to time adjust our member acquisition strategy to attract visitors to our website and communicate with customers who contact our advisor enrollment centers.
+Added: If our ability to market and sell Medicare-related health insurance and individual and family health insurance is constrained during the Medicare or individual and family health insurance enrollment periods for any reason, such as technology failures, interruptions in the operation of our ecommerce or telephony platforms, reduced allocation of resources, delayed, reduced, or ineffective delivery of marketing, or any inability to timely employ, license, train, certify and retain our employees to sell health insurance, we could acquire fewer members, suffer a reduction in our membership, and our business, operating results and financial condition could be harmed.
+Added: Our business may also be adversely affected by changes in the mix of products and services that we offer on our platform, changes in the mix of consumers who are referred to us through our direct marketing, marketing partners and strategic partner marketing member acquisition channels, including the quality of sales leads, and by seasonal influences.
+Added: In addition, adverse market events or economic conditions, such as changes in inflation or unemployment levels, or political events such as elections, could impact consumer behavior and demand for health insurance.
If more consumers decide to delay enrollment or decrease or discontinue coverage under plans sold through us, our business, operating results and financial condition would be adversely affected.
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Although we have in the past invested, and may from time to time invest, in various areas of our business, including technology and content, customer care and enrollment, and marketing and advertising to improve the quantity and quality of our membership enrollment in advance of enrollment periods, such investment may not result in a significantly improved number of approved and paying members or may not be as cost-effective as we anticipated.
−Removed: Our financial results will be adversely impacted if we are unable to retain our existing members.
+Added: Our business may be harmed if we do not enroll subsidy-eligible individuals through government-run health insurance exchanges efficiently.
+Added: In order to offer the qualified health plans that individuals and families must purchase to receive Affordable Care Act subsidies, we must meet certain conditions, such as receiving permission to do so from the applicable government health insurance exchange, entering into or maintaining an agreement with the health insurance exchange or a partner of the exchange, ensuring that the enrollment and subsidy application is completed through the health insurance exchange and complying with privacy, security and other standards.
+Added: In the event Internet-
+Added: based agents and brokers such as us use the Internet for completion of qualified health plan selection purposes, their websites may be required to meet certain additional requirements.
+Added: To help manage additional expenses and regulatory burdens associated with enrolling individuals and families into qualified health plans, we rely on a third-party vendor to help comply certain aspects of the relevant requirements, and our qualified plan enrollments are made predominantly through the Federally Facilitated Marketplace (“FFM”), which currently runs all or part of the health insurance exchange in 32 states.
+Added: We may experience difficulty in satisfying the conditions and requirements to offer qualified health plans to our existing members and new potential members and in getting them enrolled through the FFM or any similar state-based exchange.
+Added: The FFM may at any time cease allowing us or our third-party vendor to enroll individuals in qualified health plans or change the requirements for doing so, or relevant government regulations or agencies may prevent us from efficiently working with our third-party vendor, including timely receiving and using data from our third-party vendor.
+Added: In addition, we may be unsuccessful in maintaining a relationship with our third-party vendor who is approved to use the process, and we may not be able to enroll individuals into qualified health plans through the FFM or could be required to use an inferior process to do so.
+Added: The number of states using the FFM may also decrease in the future, reducing our ability to enroll members through the FFM.
+Added: In addition, if we are not able to maintain solutions to integrate with government-run health insurance exchanges or if the health insurance exchange websites and other processes are unstable or not consumer friendly, efficient and compatible with the process we have adopted for enrolling individuals and families into qualified health plans through the exchanges, we would not be successful in retaining and acquiring members, and our business, operating results and financial condition would be harmed.
+Added: Similarly for states that use state-based exchanges instead of the FFM, we may not be able to establish or maintain stable, consumer friendly, efficient or compatible legal arrangements or technical processes to enroll members in qualified health plans through such state-based exchanges, either directly with the governmental entities running such state-based exchanges or through appropriate third parties that allow us to access such state-based exchanges.
+Added: If we are not able to satisfy these conditions and requirements, or if we are not able to successfully adopt and maintain solutions in a timely, efficient and cost-effective manner to respond to changing circumstances to allow us to continue to effectively enroll large numbers of members through the FFM and state-based exchanges, we could lose existing members and fail to attract new members and may incur additional expense, which would harm our business, operating results and financial condition.
+Added: Our business, operating results and financial condition will be adversely impacted if we are unable to retain our existing members.
We receive commissions from health insurance carriers for health insurance plans sold through us.
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Health insurance carriers may choose to discontinue their health insurance plans for a variety of reasons, and when members update their health insurance plan, they may also select a different plan that is not sold through us, or we are otherwise no longer the agent on the plan.
−Removed: Consumers may also purchase
−Removed: individual and family and Medicare-related health insurance plans directly from other sources, such as our competitors, and we would not remain the agent on the policy and receive the related commission.
+Added: Consumers may also purchase individual and family and Medicare-related health insurance plans directly from other sources, such as our competitors, and we would not remain the agent on the policy and receive the related commission.
Our ability to grow and retain our membership depends on various factors, including agent productivity, the ability of enrollees to change their health plan outside of the Medicare annual enrollment period, the source of referrals and their enrollment experience.
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Any decrease in the amount of time we retain our members on the health insurance plans that they purchased through us could adversely impact the estimated constrained LTVs we use for purposes of recognizing revenue, which would harm our business, operating results and financial condition.
−Removed: If we experience higher insurance plan termination rates than we estimated when we recognized commission revenue, we may not collect all of the related commissions receivable, which could result in a reduction in LTV and a write-off of contract assets - commissions receivable, which would harm our business, operating results and financial condition.
+Added: If we experience higher health insurance plan termination rates than we estimated when we recognized commission revenue, we may not collect
+Added: all of the related commissions receivable, which could result in a reduction in LTV and a write-off of contract assets - commissions receivable, which would harm our business, operating results and financial condition.
+Added: Our marketing efforts may not be successful or may become more expensive, either of which could adversely affect our business, operating results and financial condition.
+Added: We spend significant resources on our marketing efforts, which may not be successful or may become more expensive, either of which could adversely affect our business, financial condition, results of operations, and cash flows.
+Added: Any decrease in the amount or effectiveness of our marketing efforts could lead to lower revenue or growth and profitability of this business.
+Added: We depend on our marketing partners for referring potential consumers to our ecommerce platform and advisor enrollment centers.
+Added: The success of our relationship with a marketing partner is dependent on a number of factors, including but not limited to the continued positive market presence, reputation and growth of the marketing partner, the effectiveness of the marketing partner in marketing our website and services, the compliance of each marketing partner with applicable laws, regulations and guidelines, the contractual terms we negotiate with our marketing partners, including the marketing fees we agree to pay, and our ability to accurately and timely track, pay and manage marketing partners.
+Added: These marketing partners include financial and online services companies, affiliate organizations, online advertisers and content providers, and other marketing vendors.
+Added: We also have relationships with strategic marketing partners, including hospitals and pharmacy chains that promote our Medicare platforms to their customers as well as other provider groups, wellness, and other digital and affinity groups.
+Added: We compensate many of our marketing partners for their referrals on either a submitted health insurance application basis or a per-referral basis or, if they are licensed to sell health insurance, we may share a percentage of the commission we earn from the health insurance carrier for each member referred by the marketing partner.
+Added: We also have relationships with marketing partners that utilize aspects of our platform and tools.
+Added: Given our reliance on our marketing partners, our business, operating results and financial condition would be harmed if we are unable to maintain successful relationships with high volume marketing partners as a result of increased competition for referrals or less commercially favorable terms.
+Added: As discussed elsewhere in this Risk Factors section, the marketing and sale of Medicare plans are subject to numerous laws, regulations and guidelines at the federal and state level, and recent changes to the CMS marketing guidelines have resulted in a more complicated and time-consuming process for marketing material filing and the need to file a significantly greater number of our and our marketing partners’ marketing materials with CMS.
+Added: If our marketing partners’ marketing materials do not comply with the CMS marketing guidelines or other Medicare program related laws, rules and regulations, such non-compliance could result in our losing the ability to receive referrals of individuals interested in purchasing Medicare-related plans from that marketing material or being delayed in doing so.
+Added: In the event that CMS or a health insurance carrier requires changes to, disapproves or delays approval of these materials, we could lose a significant source of Medicare plan demand and the operations of our Medicare business could be adversely affected.
+Added: If we lose marketing partner referrals during the Medicare or individual and family health insurance enrollment periods, the adverse impact on our business would be significant.
+Added: We depend upon Internet search engines and social media platforms to attract a significant portion of the consumers who visit our website.
+Added: If we are unable to effectively advertise on search engines or social media platforms on a cost-effective basis, our business, operating results and financial condition could be harmed.
+Added: We derive a significant portion of our website traffic from consumers who search for health insurance through Internet search engines, such as Google, and through social media platforms, such as Facebook.
+Added: A critical factor in attracting consumers to our website is whether we are prominently displayed in response to an Internet search relating to health insurance or on a social media platform.
+Added: Search engines typically provide two types of search results:
+Added: algorithmic listings and paid advertisements.
+Added: We rely on both to attract consumers to our websites and otherwise generate demand for our services.
+Added: If we are listed less prominently in, or removed altogether from, search result listings or if internet search engines become unavailable, the traffic to our websites would decline and we may not be able to replace this traffic, which would harm our business, operating results and financial condition.
+Added: The use of alternative marketing channels could cause us to increase our marketing expenditures, which would also increase our cost of member acquisition and harm our business, operating results and financial condition.
+Added: We have recently refreshed our brand identity and expect to continue to invest in maintaining our brand identity.
+Added: We believe our brand identity will strengthen our relationships with existing, and help attract new, members, marketing partners and health insurance carriers.
+Added: Some of our current and potential competitors have greater brand recognition and significantly greater financial, technical, marketing and other resources than we do, and they may try to replicate our efforts, competitively bid against our branded search terms to redirect traffic seeking our brand, or undertake more extensive marketing campaigns for their brands and services.
+Added: Our brand promotion activities may not be successful in maintaining or attracting new members, marketing partners or health insurance carriers, and as a result, may not yield increased revenue.
+Added: To the extent that these activities yield increased revenue, the increased revenue may not offset the expenses we incur, which could harm our business, operating results and financial condition.
+Added: If our carrier advertising and sponsorship program is not successful, our business, operating results and financial condition could be harmed.
+Added: We develop, host and maintain carrier dedicated Medicare plan websites and may undertake other marketing and advertising initiatives or perform other services through our Medicare plan advertising program.
+Added: We also allow health insurance carriers to purchase advertising space for non-Medicare products on our website through our sponsorship program.
+Added: The success of our sponsorship and advertising program depends on a number of factors, including the amount that health insurance carriers are willing to pay for advertising services, the effectiveness of the sponsorship and advertising program as a cost-effective method for carriers to obtain additional members, consumer demand for the health insurance carrier’s product, our ability to attract consumers to our ecommerce platform or our advisor enrollment centers and convert those consumers into members, and the cost, benefit and brand recognition of the health insurance plan that is the subject of the advertising, among others.
+Added: To the extent that economic conditions, health care reform or other factors impact the amount health insurance carriers are willing to pay for advertising, our advertising and sponsorship program will be adversely impacted.
+Added: In addition, increased carrier focus on the quality of enrollments and reduction in member complaints could adversely impact our ability to successfully negotiate and operate our sponsorship and advertising programs.
+Added: Moreover, in light of the regulations applicable to the marketing and sale of Medicare plans, and given that these regulations are often complex, change frequently and are subject to changing interpretations or enforcement actions, we may in the future not be permitted to sell Medicare plan-related advertising services.
+Added: If we are not successful in these areas or these factors are unfavorable to us, our business, operating results and financial condition could be harmed.
+Added: In addition, since we maintain relationships with a limited number of health insurance carriers to sell their Medicare plans, our Medicare plan-related advertising revenue is concentrated in a small number of health insurance carriers, and our ability to generate Medicare plan-related advertising revenue would be harmed by the termination or non-renewal of any of these relationships as well as by a reduction in the amount a health insurance carrier is willing to pay for these services.
Our business is seasonal in nature, and if we are not successful in responding to changes in the seasonality of our business, our business, operating results and financial condition could be harmed.
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However, because commissions from approved customers are paid to us over time, our operating cash flows could be adversely impacted by a substantial increase in marketing and advertising expense.
−Removed: Changes in timing of the Medicare or individual and family health plan enrollment periods, adoption of new or special enrollment periods, changes in eligibility and subsidies applicable to the purchase of health insurance, and changes in the laws and regulations that govern the sale of health insurance may occur from time to time, and we may not be able to timely adjust to changes in the seasonality of our business, which could harm our business, operating results and financial condition.
−Removed: Changes in our management or key employees could affect our business and financial results.
+Added: Changes in timing of the Medicare or individual and family health plan enrollment periods, adoption of new or special enrollment periods, changes in eligibility and subsidies applicable to the purchase of health insurance,
+Added: and changes in the laws and regulations that govern the sale of health insurance may occur from time to time, and we may not be able to timely adjust to changes in the seasonality of our business, which could harm our business, operating results and financial condition.
+Added: Changes in our management or key employees could affect our business, operating results and financial condition.
Our success is dependent upon the performance of our senior management and our ability to attract and retain qualified personnel for all areas of our organization.
We may not be successful in attracting and retaining personnel on a timely basis, on competitive terms or at all.
−Removed: If we are unable to attract and retain the necessary personnel, our business would be harmed.
Our executive officers and employees can terminate their employment at any time, and the loss of these individuals could harm our business, especially if we are not successful in developing adequate succession plans.
In recent years, we have appointed several new executive officers and other senior leaders across multiple functions, and we may have additional changes in the future.
−Removed: For example, in 2022, we appointed a new chief operating officer and chief transformation officer, a new chief financial officer and a new general counsel.
−Removed: We also appointed a new chief accounting officer, a new chief marketing officer and a new chief people officer.
−Removed: In 2023, we also appointed a new chief digital officer.
The transition and the departure of members of our senior management could result in additional attrition in our senior management and key personnel, and any significant change in leadership over a short period of time could harm our business, operating results and financial condition.
−Removed: We also depend on a relatively small number of licensed health insurance agents for certain key roles, and the loss of such key employees could harm our business.
−Removed: For example, we are required to appoint a single
−Removed: designated writing agent with each insurance carrier.
+Added: We also depend on a relatively small number of employees for certain key roles, and the loss of such key employees could harm our business.
+Added: For example, we are required to appoint a single designated writing agent with each insurance carrier.
A small number of our employees act as writing agent and each employee that acts as writing agent does so for a number of carriers.
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Due to our national reach and the large number of carriers whose plans are purchased by our members, the process of changing writing agents has in the past taken and could take a significant period of time to complete.
−Removed: If the transition is not successful, our ability to sell health insurance plans may be interrupted, our agency relationship with particular insurance carriers may be terminated, our commission payments could be discontinued or delayed and, as a result, our business, operating results and financial condition would be harmed.
−Removed: Our business success depends on our ability to timely hire, train and retain qualified licensed insurance agents and other employees to provide superior customer service and support our strategic initiatives while also controlling our labor costs.
−Removed: Our omnichannel consumer engagement platform enables customers to discover, compare and purchase an insurance plan using our proprietary online search engine as well as receive assistance of a licensed insurance agent, or benefit advisor, by telephone, online chat or through a hybrid online assisted interaction such as co-browsing.
−Removed: Our customer care center operations are critical to our success and dependent on our ability to recruit, hire, train and effectively manage our licensed benefit advisors and other employees.
−Removed: In order to sell Medicare-related health insurance products, our benefit advisors must be licensed by the states in which they are selling plans and certified and appointed with the health insurance carrier that offers the plans in each applicable state.
+Added: If the transition is not successful, our ability to sell health insurance plans may be interrupted, our agency relationship with particular insurance carriers may be terminated, our commission payments could be discontinued or delayed and, as a result, our business, operating results and financial condition could be harmed.
+Added: Our business success depends on our ability to timely hire, train and retain qualified licensed insurance agents, or benefit advisors, and other personnel to provide superior customer service and support our strategic initiatives while also controlling our labor costs.
+Added: Our omnichannel consumer engagement platform enables customers to discover, compare and purchase a health insurance plan using our proprietary online search engine as well as receive assistance of a licensed insurance agent, or benefit advisor, by telephone, online chat or through a hybrid online assisted interaction such as co-browsing.
+Added: Our advisor enrollment center operations are critical to our success and dependent on our ability to recruit, hire, train and effectively manage our licensed benefit advisors and other employees.
+Added: To sell Medicare-related health insurance products, our benefit advisors must be licensed by the states in which they are selling plans and certified and appointed with the health insurance carrier that offers the plans in each applicable state.
We depend upon our employees, state departments of insurance, government exchanges and health insurance carriers for the licensing, certification and appointment of our benefit advisors.
−Removed: We may experience difficulties hiring a sufficient number of licensed insurance agents and retaining existing licensed agents during the year and especially for the Medicare annual enrollment period.
−Removed: If we are not successful in these regards, our ability to sell Medicare-related health insurance plans will be impaired during the Medicare annual enrollment period, which would harm our business, operating results and financial condition.
−Removed: Even if we are successful in hiring licensed insurance agents, our success depends on the productivity of these licensed insurance agents and other employees that operate the customer care center.
−Removed: Failure to retain, train and ensure the productivity of our licensed insurance agents and other employees could result in lower-than-expected sold plans, conversion rates and revenue, higher costs of acquisition per member and higher plan termination rates, any of which could harm our business, operating results and financial condition.
−Removed: If our licensed insurance agents do not perform to the standards we expect of them or if we do not generate sufficient call volumes for our licensed insurance agents to remain productive, our sold plan volume, conversion and retention rates could be negatively impacted, and our business, operating results and financial condition would be harmed.
−Removed: If investments we make in our customer care center operations do not result in the returns we expected when making those investments, we could acquire fewer members, suffer a reduction in our membership, and our business, operating results and financial condition would be harmed.
+Added: We may experience difficulties hiring and retaining a sufficient number of benefit advisors and support staff during the year and especially for the Medicare annual enrollment period.
+Added: Even if we are successful in hiring and retaining licensed benefit advisors and support staff, our success depends on the productivity of these individuals that operate our advisor enrollment centers.
+Added: Failure to retain, train and ensure the productivity of our benefit advisors and other employees could result in lower-than-expected sold plans, conversion rates and revenue, higher costs of acquisition per member and higher plan termination rates, any of which could harm our business, operating results and financial condition.
+Added: If our benefit advisors do not perform to the standards we expect of them or if we do not generate sufficient call volumes for our benefit advisors to remain productive, our sold plan volume, conversion and retention rates could be negatively impacted, and our business, operating results and financial condition would be harmed.
+Added: If investments we make in our advisor enrollment center operations do not result in the returns we expected when making those investments, we could acquire fewer members, suffer a reduction in our membership, and our business, operating results and financial condition could be harmed.
+Added: Given that our business is seasonal in nature, if we are not successful in hiring, training and retaining qualified benefit advisors and support staff, our benefit advisors do not perform to high standards or our investments in our advisor enrollment center operations do not result in expected returns, among other factors discussed in this risk factor, our ability to sell Medicare-related health insurance plans will be impaired during the Medicare annual enrollment period, which would harm our business, operating results and financial condition.
Our business may be harmed if we are not successful in executing on our operational and strategic plans, including our growth strategies, cost-saving and enrollment quality initiatives.
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We have in the past invested and may make significant investments in marketing and advertising, technology and content, customer care and enrollment.
−Removed: Our growth strategy also involves investment in the development of new offerings and initiatives that differentiate us from our competitors, and accordingly, we may also enter into strategic partnerships aligned with our business and growth objectives.
−Removed: Pursuing and investing in these initiatives may increase our expenses and our organizational complexity, divert management’s attention from other business concerns and also involve risks and uncertainties described elsewhere in this Risk Factors section, including the initiatives not achieving our retention, cost-savings, growth or profitability targets, inadequate return of capital on our investments, legal and regulatory compliance risks, potential changes in laws and regulations and other issues that could cause us to fail to realize the anticipated benefits of our investments and incur unanticipated liabilities.
−Removed: If we are not successful in executing
−Removed: on our operational and strategic plans or if we do not realize the expected benefits of our investments, our business, operating results and financial condition would be harmed.
−Removed: In addition, from time to time, we may initiate restructuring plans to implement cost savings initiatives or programs including, among other things, reductions in workforce and other fixed and variable expenses.
−Removed: While such initiatives are intended to improve our operations through re-engineering, reorganizing and better deployment of marketing and other operating expenses, we may not successfully realize the expected benefits of the actions that we have or may in the future take in connection therewith.
+Added: Our growth strategy also involves investment in the development of new offerings and initiatives that differentiate us from our competitors, including those aimed at increasing the effectiveness of our sales and marketing organizations.
+Added: We may also enter into strategic partnerships aligned with our business and growth objectives.
+Added: Pursuing and investing in these initiatives may increase our expenses and our organizational complexity, divert management’s attention from other business concerns and also involve risks and uncertainties described elsewhere in this Risk Factors section, including the failure of our initiatives to achieve our retention, cost-savings, growth or profitability targets, inadequate return of capital on our investments, legal and regulatory compliance risks, potential changes in laws and regulations and other issues that could cause us to fail to realize the anticipated benefits of our investments and incur unanticipated liabilities.
+Added: If we are not successful in executing on our operational and strategic plans or if we do not realize the expected benefits of our investments, our business, operating results and financial condition would be harmed.
+Added: In addition, from time to time, we may initiate restructuring plans to implement cost savings initiatives or programs including, among other things, reductions in workforce, rationalizing our cost structure and other fixed and variable expenses.
+Added: While such initiatives are intended to improve our operations through re-engineering, reorganizing, and better deployment of marketing expenses and other operating expenses, we may not successfully realize the expected benefits of the actions that we have or may in the future take in connection therewith.
A variety of risks could cause us not to realize some or all of the expected benefits of these or any other restructuring plans that we may undertake, including, among others, higher than anticipated costs in implementing such restructuring plans, management distraction from ongoing business activities, damage to our reputation and brand image, including negative publicity, workforce attrition beyond planned reductions and risks and uncertainties described elsewhere in this Risk Factors section.
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While we believe allowing employees to work remotely will help us attract and retain talent, transitioning to and operating as a remote first company could negatively impact employee productivity and morale, sales and marketing efforts, customer success efforts, and revenue growth rates or other financial metrics, or create operational or other challenges, any of which could adversely impact our business, financial condition and operating results in any given period, especially if such disruption occurs during or in our preparation for the Medicare annual enrollment period or individual and family health insurance enrollment periods.
−Removed: An increased number of employees in a remote work environment may also exacerbate certain risks to our business, including an increased demand for information technology resources, increased risk of phishing and other cybersecurity attacks and increased risk of unauthorized dissemination of sensitive personal information or proprietary or confidential information about us, our customers or other third parties.
−Removed: Our product development initiatives could also be negatively impacted by the prevalence of remote work.
Technologies in our employees’ homes may also be more limited or less reliable than those provided in our offices.
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It may also be difficult for us to preserve our corporate culture, and our employees may have less opportunities to collaborate in meaningful ways, which could harm our ability to retain and recruit employees, innovate and operate our business effectively.
−Removed: If we are not able to maintain and enhance our brand, our business and operating results could be harmed.
−Removed: Our brand identity is critical to our relationships with existing members, marketing partners and health insurance carriers and to our ability to attract new members, marketing partners and health insurance carriers.
−Removed: The promotion of our brand in these and other ways may require us to make substantial investments and we anticipate that, as our market becomes increasingly competitive, these branding initiatives may become increasingly difficult and expensive.
−Removed: Our brand promotion activities may not be successful or yield increased revenue, and to the extent that these activities yield increased revenue, the increased revenue may not offset the expenses we incur, and our operating results could be harmed as a result.
−Removed: If we do not successfully maintain and enhance our brand, our
−Removed: business may not grow and we could lose our relationships with health insurance carriers, marketing partners and/or members, which would harm our business, operating results and financial condition.
−Removed: Negative incidents can erode trust and confidence quickly, and adverse publicity about us could damage our brand and reputation, undermine our customers’ confidence, affect our ability to recruit, engage, motivate and retain qualified personnel, attract regulatory scrutiny, and impact our relationships with current and potential partners.
−Removed: We depend upon Internet search engines and social media platforms to attract a significant portion of the consumers who visit our website, and if we are unable to effectively advertise on search engines or social media platforms on a cost-effective basis, our business and operating results would be harmed.
−Removed: We derive a significant portion of our website traffic from consumers who search for health insurance through Internet search engines, such as Google and Bing, and through social media platforms, such as Facebook.
−Removed: A critical factor in attracting consumers to our website is whether we are prominently displayed in response to an Internet search relating to health insurance or on a social media platform.
−Removed: Search engines typically provide two types of search results, algorithmic listings and paid advertisements.
−Removed: We rely on both to attract consumers to our websites and otherwise generate demand for our services.
−Removed: Algorithmic search result listings are determined and displayed in accordance with a set of formulas or algorithms developed by the particular Internet search engine.
−Removed: The algorithms determine the order of the listing of results in response to the consumer’s Internet search.
−Removed: From time to time, search engines revise these algorithms.
−Removed: In some instances, these modifications have caused our website to be listed less prominently in algorithmic search results, which has resulted in decreased traffic to our website.
−Removed: We may also be listed less prominently as a result of other factors, such as new websites, changes we make to our website or technical issues with the search engine itself.
−Removed: For example, government health insurance exchange websites appear prominently in algorithmic search results and may reduce the prominence of our website.
−Removed: In addition, search engines have deemed the practices of some companies to be inconsistent with search engine guidelines and decided not to list their website in search result listings at all.
−Removed: If we are listed less prominently in, or removed altogether from, search result listings for any reason, the traffic to our websites would decline and we may not be able to replace this traffic, which would harm our business, operating results and financial condition.
−Removed: If we decide to attempt to replace this traffic, we may be required to increase our marketing expenditures, which would also increase our cost of member acquisition and harm our business, operating results and financial condition.
−Removed: We purchase paid advertisements on search engines and social media platforms in order to attract consumers to our platforms.
−Removed: We typically pay a search engine for prominent placement of our website when particular health insurance-related terms are searched for on the search engine, regardless of the algorithmic search result listings.
−Removed: The prominence of the placement of our advertisement is determined by a combination of factors, including the amount we are willing to pay and algorithms designed to determine the relevance of our paid advertisement to a particular search term.
−Removed: As with algorithmic search result listings, search engines may revise the algorithms relevant to paid advertisements, and websites other than our ecommerce platform may become more optimized for the algorithms.
−Removed: These changes may result in our having to pay increased amounts to maintain our paid advertisement placement in response to a particular search term.
−Removed: We could also have to pay increased amounts should the market share of major search engines continue to become more concentrated with a single search engine.
−Removed: Additionally, we bid against our competitors, insurance carriers, government health insurance exchanges and others for the display of these paid search engine or social media platform advertisements.
−Removed: We have experienced increased competition for both algorithmic search result listings and for paid advertisements, and that competition increases substantially during the enrollment periods for Medicare-related health insurance and for individual and family health insurance.
−Removed: The competition has increased the cost of paid Internet search advertising and has increased our marketing and advertising expenses.
−Removed: If paid search advertising costs increase or become cost prohibitive, whether as a result of competition, algorithm changes or otherwise, our advertising expenses could rise significantly or we could reduce or discontinue our paid search advertisements, either of which would harm our business, operating results and financial condition.
−Removed: We rely significantly on marketing partners, and our business and operating results would be harmed if we are unable to maintain effective relationships with our existing marketing partners or if we do not establish successful relationships with new marketing partners.
−Removed: We frequently enter into contractual marketing relationships with partners that drive consumers to our ecommerce platform and customer care centers.
−Removed: These marketing partners include financial and online services companies, affiliate organizations, online advertisers and content providers, and other marketing vendors.
−Removed: We also have relationships with strategic marketing partners, including hospitals and pharmacy chains that promote our Medicare platforms to their customers as well as other provider groups, wellness, and other digital and affinity groups.
−Removed: We compensate many of our marketing partners for their referrals on either a submitted health insurance application basis or a per-referral basis or, if they are licensed to sell health insurance, we may share a percentage of the commission we earn from the health insurance carrier for each member referred by the marketing partner.
−Removed: The success of our relationship is dependent on a number of factors, including but not limited to the continued positive market presence, reputation and growth of the marketing partner, the effectiveness of the marketing partner in marketing our website and services, the compliance of each marketing partner with applicable laws, regulations and guidelines, the contractual terms we negotiate with our marketing partners, including the marketing fees we agree to pay, and our ability to accurately and timely track, pay and manage marketing partners.
−Removed: We depend on our marketing partners for a large number of quality referrals to keep our health insurance agents productive.
−Removed: If our marketing partners fail to deliver effective and/or timely marketing campaigns, especially during the Medicare annual enrollment period, our business and financial condition could be harmed.
−Removed: While we have relationships with a large number of marketing partners, we depend upon referrals from a limited number of marketing partners for a significant portion of the submitted applications we receive from our marketing partner customer acquisition channel.
−Removed: Given our reliance on our marketing partners, our business, operating results and financial condition would be harmed if we are unable to maintain successful relationships with these companies, if we fail to establish successful relationships with new marketing partners, if we experience competition in our receipt of referrals from high volume marketing partners, or if we are required to pay increased amounts to our marketing partners.
−Removed: Competition for referrals from our marketing partners has increased particularly during the enrollment periods for Medicare-related health insurance and individual and family health insurance.
−Removed: We may lose marketing partner referrals if our competitors pay marketing partners more than we do or may be forced to pay increased fees to our marketing partners, any of which could harm our business, operating results and financial condition.
−Removed: If we lose marketing partner referrals during the Medicare or individual and family health insurance enrollment periods, the adverse impact on our business would be particularly pronounced.
−Removed: In addition, the promulgation of laws, regulations or guidelines, or the interpretation of existing laws, regulations and guidelines, by state departments of insurance or by CMS, could cause our relationships with our marketing partners to change or be in non-compliance with those laws, regulations and guidelines.
−Removed: As discussed elsewhere in this Risk Factors section, the marketing and sale of Medicare plans are subject to numerous laws, regulations and guidelines at the federal and state level, and recent changes to the CMS marketing guidelines have resulted in a more complicated and time-consuming process for marketing material filing and the need to file a significantly greater number of our and our marketing partners’ marketing materials with CMS.
−Removed: If our marketing partners’ marketing materials do not comply with the CMS marketing guidelines or other Medicare program related laws, rules and regulations, such non-compliance could result in our losing the ability to receive referrals of individuals interested in purchasing Medicare-related plans from that marketing material or being delayed in doing so.
−Removed: In the event that CMS or a health insurance carrier requires changes to, disapproves or delays approval of these materials, we could lose a significant source of Medicare plan demand and the operations of our Medicare business could be adversely affected.
−Removed: We also have relationships with marketing partners that utilize aspects of our platform and tools.
−Removed: Our relationships with these marketing partners result in the referral of a significant number of individuals to us who are interested in purchasing Medicare-related health insurance plans.
−Removed: If federal or state authorities were to change existing laws, regulations or guidelines, or interpret existing laws, regulations or guidelines, to prohibit these arrangements, or if marketing partners otherwise decided to no longer utilize aspects of our platform and tools, we could experience a significant decline in the number of Medicare-eligible individuals who are referred to our platforms and customer care centers, which would harm our business, operating results and financial condition.
−Removed: If our carrier advertising and sponsorship program is not successful, our business, operating results and financial condition could be harmed.
−Removed: We develop, host and maintain carrier dedicated Medicare plan websites and may undertake other marketing and advertising initiatives or perform other services through our Medicare plan advertising program.
−Removed: We also allow health insurance carriers to purchase advertising space for non-Medicare products on our website through our sponsorship program.
−Removed: To the extent that economic conditions, health care reform or other factors impact the amount health insurance carriers are willing to pay for advertising, our advertising and sponsorship program will be adversely impacted.
−Removed: In addition, since we maintain relationships with a limited number of health insurance carriers to sell their Medicare plans, our Medicare plan-related advertising revenue is concentrated in a small number of health insurance carriers, and our ability to generate Medicare plan-related advertising revenue would be harmed by the termination or non-renewal of any of these relationships as well as by a reduction in the amount a health insurance carrier is willing to pay for these services.
−Removed: Moreover, in light of the regulations applicable to the marketing and sale of Medicare plans, and given that these regulations are often complex, change frequently and are subject to changing interpretations or enforcement actions, we may in the future not be permitted to sell Medicare plan-related advertising services.
−Removed: If we are not successful in these areas or these factors are unfavorable to us, our business, operating results and financial condition could be harmed.
−Removed: The success of our sponsorship and advertising program depends on a number of factors, including the amount health insurance carriers are willing to pay for advertising services, the effectiveness of the sponsorship and advertising program as a cost-effective method for carriers to obtain additional members, consumer demand for the health insurance carrier’s product, our ability to attract consumers to our ecommerce platform, our customer care centers or the dedicated Medicare plan websites and convert those consumers into members, and the cost, benefit and brand recognition of the health insurance plan that is the subject of the advertising, among others.
−Removed: In addition, increased carrier focus on the quality of enrollments and reduction in member complaints could adversely impact our ability to successfully negotiate and operate our sponsorship and advertising programs.
−Removed: If we are not successful in these areas or these factors are unfavorable to us, our business, operating results and financial condition could be harmed.
−Removed: Our business may be harmed if we do not enroll subsidy-eligible individuals through government-run health insurance exchanges efficiently.
−Removed: In order to offer the qualified health plans that individuals and families must purchase to receive Affordable Care Act subsidies, agents and brokers must meet certain conditions, such as receiving permission to do so from the applicable government health insurance exchange, entering into or maintaining an agreement with the health insurance exchange or a partner of the exchange, ensuring that the enrollment and subsidy application is completed through the health insurance exchange and complying with privacy, security and other standards.
−Removed: In the event Internet-based agents and brokers such as us use the Internet for completion of qualified health plan selection purposes, their websites may be required to meet certain additional requirements.
−Removed: To the extent we enroll individuals and families into qualified health plans, we do so predominantly through the Federally Facilitated Marketplace (“FFM”), which currently runs all or part of the health insurance exchange in 33 states, using a third-party partnership.
−Removed: The number of states using the FFM may decrease in the future, reducing our ability to enroll members through the FFM.
−Removed: We may experience difficulty in satisfying the conditions and requirements to offer qualified health plans to our existing members and new potential members and in getting them enrolled through the FFM or any similar state-based exchange.
−Removed: If we are not able to satisfy these conditions and requirements, or if we are not able to successfully adopt and maintain solutions that allow us to enroll large numbers of individuals and families in qualified plans over the Internet both during and outside of open enrollment periods, we will lose existing members and new members and may incur additional expense, which would harm our business, operating results and financial condition.
−Removed: We have entered into an agreement to outsource certain aspects of the enrollment process for qualified health plans to a third-party vendor in light of the expense and burden associated with the additional requirements.
−Removed: If we are unsuccessful in maintaining a relationship with our third-party vendor who is approved to use the process, we may not be able to enroll individuals into qualified health plans through the FFM or could be required to use an inferior process to do so, which could cause a reduction in our individual and family health insurance plan
−Removed: membership and commission revenue.
−Removed: In addition, if we are not able to maintain solutions to integrate with government-run health insurance exchanges or if the health insurance exchange websites and other processes are unstable or not consumer friendly, efficient and compatible with the process we have adopted for enrolling individuals and families into qualified health plans through the exchanges, we would not be successful in retaining and acquiring members, and our business, operating results and financial condition would be harmed.
−Removed: The FFM may at any time cease allowing us or our third-party vendor to enroll individuals in qualified health plans or change the requirements for doing so, or relevant government regulations or agencies may prevent us from efficiently working with our third-party vendor, including timely receiving and using data from our third-party vendor.
−Removed: If the FFM ceases allowing us or our third-party vendor to enroll individuals, if the FFM platform does not function properly or if we are prevented from efficiently working with our third-party vendor, our ability to retain existing members and add new members could be negatively impacted, which would harm our business, operating results and financial condition.
−Removed: Similarly for states that use state-based exchanges instead of the FFM, we may not be able to establish or maintain stable, consumer friendly, efficient or compatible legal arrangements or technical processes to enroll members in qualified health plans through such state-based exchanges, either directly with the governmental entities running such state-based exchanges or through appropriate third parties that allow us to access such state-based exchanges.
−Removed: If we are unable to adapt our operations in a timely, efficient and cost-effective manner to respond to changing circumstances to allow us to continue to effectively enroll members through the FFM and state-based exchanges, our business may be adversely affected.
−Removed: Our commission revenue could be negatively impacted by changes in our estimated conversion rate of an approved member to a paying member, our forecast of average plan duration or our forecast of likely commission amounts.
−Removed: Our commission revenue, which is primarily comprised of commissions from health insurance carriers, is computed using the estimated LTVs of commission payments that we expect to receive, and we re-compute LTVs for all outstanding cohorts on a quarterly basis.
−Removed: As a result, the rate at which consumers visiting our ecommerce platforms and customer care centers seeking to purchase health insurance are converted into approved members directly impacts our revenue.
−Removed: In addition, the rate at which consumers who are approved become paying members impacts the constrained LTV of our approved members, which impacts the revenue that we are able to recognize.
−Removed: A number of factors have influenced, and could in the future influence, these conversion rates for any given period, some of which are outside of our control.
−Removed: These factors include, but are not limited to:
−Removed: • changes in consumer shopping behavior due to circumstances outside of our control, such as economic conditions, inflation, public health crises or illnesses, consumers’ ability or willingness to pay for health insurance, adverse events or perceptions affecting the U.S.
−Removed: or international financial systems, adverse weather conditions or natural disasters, unemployment rates, availability of unemployment benefits or proposed or enacted legislative or regulatory changes impacting our business, including health care reform;
−Removed: • the quality of and changes to the consumer experience on our ecommerce platforms and/or with our customer care centers;
−Removed: • regulatory requirements, including those that make the experience on our ecommerce platforms cumbersome or difficult to navigate or reduce the ability of consumers to purchase plans outside of enrollment periods;
−Removed: • the variety, competitiveness, quality and affordability of the health insurance plans that we offer;
−Removed: • system failures or interruptions in the operation of our ecommerce platform or customer care center operations;
−Removed: • changes in the mix of consumers who are referred to us through our direct, marketing partner and online advertising member acquisition channels, including the quality of sales leads;
−Removed: • health insurance carrier guidelines applicable to applications submitted by consumers, the degree to which our technology is integrated with health insurance carriers, the amount of time a carrier takes to make a decision on that application and the percentage of submitted applications approved by health insurance carriers;
−Removed: • the effectiveness of health insurance agents in assisting consumers, including the tenure of the health insurance agent;
−Removed: • our ability to enroll subsidy-eligible individuals in qualified health plans through government-run health insurance exchanges and the efficacy of the process we are required to use to do so.
−Removed: Our conversion rates can be impacted by changes in the mix of consumers referred to us through our member acquisition channels and whether they interact with a more seasoned health insurance agent.
−Removed: We have made and may in the future, make changes to our ecommerce platforms, telephonic operations, marketing material or enrollment process in response to regulatory or health insurance carrier requirements or undertake other initiatives in an attempt to improve consumer experience, increase retention, or for other reasons.
−Removed: These changes have had in the past, and may have in the future, the unintended consequence of adversely impacting our conversion rates.
−Removed: For example, in response to the increased plan termination rate in our Medicare membership in 2020 and 2021, which negatively impacted the LTVs of our Medicare plan-related products, we introduced mandatory additional training for our agents and added a new customer care role to verify certain Medicare enrollments prior to submission in the third quarter of 2021.
−Removed: While our focus on enrollment quality improved retention rates and increased LTVs of our Medicare products in the second half of 2022, it temporarily led to lower call conversion rates and longer average talk times for telephonic enrollments, resulting in a reduction in enrollments and increased cost of acquisition that has negatively impacted our business, operating results and financial condition.
−Removed: A decline in the percentage of consumers who submit health insurance applications on our ecommerce platforms or telephonically via our customer care centers and are converted into approved and paying members could cause an increase in our cost of acquiring members on a per member basis and impact our revenue in any given period.
−Removed: To the extent the rate at which we convert consumers visiting our ecommerce platforms or telephonically via our customer care centers into members suffers, our membership may decline, which would harm our business, operating results and financial condition.
−Removed: If commission reports we receive from carriers are inaccurate or not sent to us in a timely manner, our business and operating results could be harmed, and we may not recognize trends in our membership.
−Removed: We rely on health insurance carriers to timely and accurately report the amount of commissions earned by us, and we calculate our commission revenue, prepare our financial reports, projections and budgets and direct our marketing and other operating efforts based on the reports we receive from health insurance carriers.
−Removed: There have been instances where we have determined that plan cancellation data reported to us by a health insurance carrier has not been accurate.
−Removed: The extent to which health insurance carriers are inaccurate in their reporting of plan cancellations could cause us to change our cancellation estimates, which could adversely impact our revenue.
−Removed: We have designed controls to assess the completeness and accuracy of the data received, whereby we apply judgment and make estimates based on historical data and current trends to independently determine whether or not carriers are accurately reporting commissions due to us.
−Removed: We also operate procedures with carriers on an ongoing basis whereby potential under or over reporting is reconciled and discrepancies are resolved.
−Removed: For instance, we reconcile information health insurance carriers provide to us and may determine that we were not historically paid commissions owed to us, which would cause us to have underestimated our membership.
−Removed: Conversely, health insurance carriers may require us to return commission payments paid in a prior period due to plan cancellations for members we previously estimated as being active.
−Removed: To the extent that health insurance carriers understate or fail to accurately report the amount of commissions due to us in a timely manner or at all, our estimates of constrained LTV may be adversely impacted, which would harm our business, operating results and financial condition.
−Removed: In addition, any inaccuracies in the reporting from and reconciliations with insurance carriers may also impact our estimates of constrained LTV or our estimates of commission revenue for future periods which is based on historical trends, including trends relating to contracted commission rates and expected health insurance plan cancellation.
−Removed: We do not receive information about membership cancellations from our health insurance carriers directly, which makes it difficult for us to determine the impact of current conditions on our membership retention and to accurately estimate membership as of a specific date.
−Removed: We depend on health insurance carriers and others for data related to our membership.
−Removed: For instance, with respect to health insurance plans, health insurance carriers do not directly report member cancellations to us.
−Removed: Other than small business health insurance, we infer cancellations from payment data that carriers provide by analyzing
−Removed: whether payments from members have ceased for a period of time, and we may not learn of a cancellation for several months.
−Removed: The majority of our members who terminate their plans do so by discontinuing their insurance premium payments to the health insurance carrier and do not inform us of the cancellation.
−Removed: With respect to our small business membership, many groups notify the carrier directly with respect to increases or decreases in group size and policy cancellations.
−Removed: Our insurance carrier partners often do not communicate this information to us, and it often takes a significant amount of time for us to learn about small business group cancellations and changes in our membership within the group itself.
−Removed: We often are not made aware of policy cancellations until the time of the group’s annual renewal.
−Removed: Given the number of months required to observe non-payment of commissions in order to confirm cancellations, we estimate the number of members who are active on health insurance plans as of a specified date.
−Removed: After we have estimated membership for a period, we may receive information from health insurance carriers that would have impacted the estimate if we had received the information prior to the date of estimation.
−Removed: We may receive commission payments or other information that indicates that a member who was not included in our estimates for a prior period was in fact an active member at that time, or that a member who was included in our estimates was in fact not an active member of ours.
−Removed: As a result of the Medicare annual enrollment and other open enrollment periods, we may not receive information from our carriers on as timely a basis due to the significant increase in health insurance transaction volume and for other reasons, which could impair the accuracy of our membership estimates.
−Removed: For these and other reasons, including if current trends in membership cancellation are inconsistent with past cancellation trends that we use to estimate our membership or if carriers subsequently report changes to the commission payments that they previously reported to us, our actual membership could be different from our estimates, perhaps materially.
−Removed: If our actual membership is different from our estimates, the constrained LTV component of our revenue recognition could also be inaccurate, including as a result of an inaccurate estimate of the average amount of time our members maintain their health insurance plans.
−Removed: As a result of the delay we experience in receiving information about our membership, it is difficult for us to determine with any certainty the impact of current conditions on our membership retention.
−Removed: Various circumstances, including market-related factors such as changes in timing of enrollment periods, the ability of enrollees to change their health plan outside of the Medicare annual enrollment period, the source of referrals, their enrollment experience and other factors specific to our business, could cause the assumptions and estimates that we make in connection with estimating our membership and constrained LTV to be inaccurate, which would harm our business, operating results and financial condition.
Our operations in China involve many risks that could increase expenses, expose us to increased liability and adversely affect our business, operating results and financial condition.
−Removed: A portion of our operations is conducted by our subsidiary in China.
−Removed: Among other things, we use employees in China to maintain and update our ecommerce platform and perform certain tasks within our finance and customer care and enrollment functions.
+Added: Our subsidiary in China conducts a portion of our operations, including the maintenance and update of our ecommerce platform and performance of specific tasks within our finance, customer care and enrollment functions.
We rely on third-party vendors to communicate with our subsidiary in China.
1 unchanged sentence
From time to time, we receive inquiries from health insurance carriers relating to our operations in China and the security measures we have implemented to protect data that our employees in China may be able to access.
−Removed: As a part of these inquiries, we have implemented additional security measures relating to our operations in China but may be required to implement further security measures to continue aspects of our operations in China.
+Added: As a part of these inquiries, we have implemented additional security measures relating to our operations in China.
+Added: Still, we may be required to implement further security measures to continue aspects of our operations in China.
We may also be required to bring aspects of our operations in China back to the United States, which could be time-consuming and expensive and harm our operating results and financial condition.
−Removed: Health insurance carriers may also terminate our relationship due to concerns surrounding protection of data that our employees in China are able to access, which would harm our business, operating results and financial condition.
−Removed: Our operations in China also expose us to different and unfamiliar laws, rules and regulations, including different intellectual property laws, which are not as protective of our intellectual property as the laws in the United States.
+Added: Health insurance carriers may also terminate our relationship due to concerns surrounding our China operations, which would harm our business, operating results and financial condition.
+Added: Our operations in China also expose us to different laws, rules and regulations, including different intellectual property laws, which are not as protective of our intellectual property as the laws in the United States.
United States and Chinese trade laws may also impose restrictions on the importation of programming or technology to or from the United States.
1 unchanged sentence
In recent years, China has adopted laws regulating cybersecurity and data protection.
−Removed: For example, a data security
−Removed: law in China that became effective on September 1, 2021 applies to the usage, collection and protection of data within China and imposes data security obligations and restrictions on transfers of certain data outside of China, including prohibition on providing any data stored in China to law enforcement authorities or judicial bodies outside of China without prior Chinese government approval.
+Added: For example, a data security law in China that became effective on September 1, 2021 applies to the usage, collection and protection of data within China and imposes data security obligations and restrictions on transfers of certain data outside of China, including prohibition on providing any data stored in China to law enforcement authorities or judicial bodies outside of China without prior Chinese government approval.
There remains considerable uncertainty as to how the data security law is applied, and the regulatory environment continues to evolve.
6 unchanged sentences
If competition for personnel increases further, our compensation expenses could rise considerably or, if we determine to not increase compensation levels, our ability to attract and retain qualified personnel in China may be impaired, which could harm our business, operating results and financial condition.
−Removed: These risks could cause us to incur increased expenses and could harm our ability to effectively and successfully manage our operations in China.
+Added: These risks could cause us to incur increased expenses and could harm our ability to manage our operations effectively and successfully in China.
Moreover, any significant or prolonged deterioration in the relationship between the United States and China could adversely affect our operations in China.
−Removed: Certain risks and uncertainties of doing business in China are solely within the control of the Chinese government, and Chinese law regulates the scope of our foreign investments and business conducted within China.
+Added: Certain risks and uncertainties of doing business in China are solely within the control of
+Added: the Chinese government, and Chinese law regulates the scope of our foreign investments and business conducted within China.
The escalation of international tensions has increased the risk associated with our operations in China.
1 unchanged sentence
or the Chinese government may limit or sever our ability to communicate with our China operations or may take actions that force us to close our operations in China.
−Removed: We employ a large number of our technology and content employees in China, and we have other employees in China that support our business.
+Added: We employ many of our technology and content employees in China, and we have other employees in China that support our business.
Any disruption of our operations in China would adversely impact our business.
−Removed: If we are required to move aspects of our operations out of China as a result of political or geopolitical issues, changes in laws, inquiries from health insurance carriers or for other reasons, we could incur increased expenses, and our business, operating results and financial condition could be harmed.
+Added: If we are required to move aspects of our operations out of China because of political or geopolitical issues, changes in laws, inquiries from health insurance carriers or for other reasons, we could incur increased expenses, and our business, operating results and financial condition could be harmed.
Our self-insurance programs may expose us to significant and unexpected costs and losses.
−Removed: To help control our overall long-term costs associated with employee health benefits, we began maintaining U.S.
−Removed: employee health insurance coverage on a self-insured basis in the first quarter of 2023.
+Added: To help control our overall long-term costs associated with employee health benefits, we began maintaining a substantial portion of our U.S.
+Added: employee health insurance benefits on a self-insured basis effective January 1, 2023.
To limit our exposure, we have third party stop-loss insurance coverage which sets a limit on our liability for both individual and aggregate claim costs.
We record a liability for our estimated cost of U.S.
−Removed: claims incurred and unpaid as of each balance sheet date.
+Added: claims incurred but unpaid as of each balance sheet date.
Our estimated liability is based on assumptions we believe to be reasonable under the current circumstances and will be adjusted as warranted based on changing circumstances.
5 unchanged sentences
Risks Related to Laws and Regulations
−Removed: The marketing and sale of Medicare plans are subject to numerous, complex and frequently changing laws, regulations and guidelines, and non-compliance with or changes in laws, regulations and guidelines could harm our business, operating results and financial condition.
−Removed: The marketing and sale of Medicare plans are subject to numerous laws, regulations and guidelines at the federal and state level.
−Removed: The marketing and sale of Medicare Advantage and Medicare Part D prescription drug plans are principally regulated by CMS but are also subject to state laws.
+Added: The marketing and sale of health insurance plans, including Medicare plans, are subject to numerous, complex and frequently changing laws, regulations and guidelines, and non-compliance with or changes in laws, regulations and guidelines could harm our business, operating results and financial condition.
+Added: The marketing and sale of health insurance plans, including Medicare plans, are subject to numerous, complex, and frequently changing laws, regulations and guidelines at the federal and state level.
+Added: Compliance with these evolving laws and regulations may involve significant costs, cause significant delays in our ability to go to market with new marketing and product initiatives and strategies or require changes in our business practices, which could have an adverse impact on our business, operating results and financial condition .
+Added: Non-compliance could also harm our business, operating results and financial condition.
+Added: It also may result in fines, damages, prohibitions on the conduct of our business, and damage to our reputation.
+Added: In particular, the marketing and sale of Medicare Advantage and Medicare Part D prescription drug plans are principally regulated by CMS but are also subject to state laws.
The marketing and sale of Medicare Supplement plans are principally regulated on a state-by-state basis by state departments of insurance.
1 unchanged sentence
We have altered, and likely will have to continue to alter, our marketing and sales process to comply with these laws, regulations and guidelines.
−Removed: Health insurance carriers whose Medicare plans we sell approve our websites, our customer care center call scripts and a large portion of our marketing materials.
+Added: Health insurance carriers whose Medicare plans we sell approve our websites, our advisor enrollment center call scripts and a large portion of our marketing materials.
We must receive these approvals in order for us to market and sell Medicare plans to Medicare-eligible individuals as an insurance agent.
2 unchanged sentences
CMS, state departments of insurance or health insurance carriers may decide to object to or not to approve aspects of our online platforms, sales function or marketing material and processes and may determine that certain existing aspects of our Medicare-related business are not in compliance with legal requirements.
−Removed: CMS scrutinizes health insurance carriers whose Medicare plans we sell, and those health insurance carriers may be held responsible for actions that we, our agents and our partners take, including our marketing materials and actions that lead to complaints or disenrollment.
+Added: CMS scrutinizes
+Added: health insurance carriers whose Medicare plans we sell, and those health insurance carriers may be held responsible for actions that we, our agents and our partners take, including our marketing materials and actions that lead to complaints or disenrollment.
We expect that health insurance carriers will be increasingly evaluating broker performance based on quality of their enrollments, including complaints, retention rates, customer satisfaction and volumes.
−Removed: As a result, health insurance carriers may terminate their relationship with us or require us to take other corrective action if our Medicare product sales, marketing and operations are not in compliance or give rise to too many complaints.
−Removed: The termination of or change in our relationship with health insurance carriers for this reason could reduce the products we are able to offer, could result in the loss of commissions for past and future sales and could otherwise harm our business, operating results and financial condition.
−Removed: Changes to the laws, regulations and guidelines relating to the sale of Medicare plans, their interpretation or the manner in which they are enforced could impact the manner in which we conduct our Medicare business, our ecommerce platforms or our sale of Medicare plans, or we could be prevented from operating certain aspects of our Medicare revenue-generating activities altogether, which would harm our business, operating results and financial condition.
+Added: As a result, health insurance carriers may terminate their relationship with us, or they may require us to take other corrective action if our Medicare product sales, marketing and operations are not in compliance or give rise to too many complaints.
+Added: The termination of or change in our relationship with health insurance carriers could reduce the products we are able to offer, could result in the loss of commissions for past and future sales and could otherwise harm our business, operating results and financial condition.
+Added: Changes to the laws, regulations and guidelines relating to the sale of health insurance plans and related products and services, their interpretation or the manner in which they are enforced could impact the manner in which we conduct our business, our ecommerce platforms or our sale of Medicare plans and other products, or we could be prevented from operating certain aspects of our revenue-generating activities altogether, which would harm our business, operating results and financial condition.
We have received, and may in the future receive, inquiries from CMS or state departments of insurance regarding our marketing and business practices and compliance with laws and regulations.
−Removed: Inquiries and proceedings initiated by the government could adversely impact our health insurance licenses, require us to pay fines, require us to modify marketing and business practices, result in litigation and otherwise harm our business, operating results or financial condition.
−Removed: In May 2021, CMS changed its process for the submission and approval of marketing materials related to Medicare Advantage and Medicare Part D prescription drug plans.
−Removed: The practical application of the previous process allowed for a lead carrier to handle most of the review and filing of Medicare plan marketing materials with CMS.
−Removed: The new process requires each carrier to approve of each filed marketing material and has resulted in a more complicated and time-consuming process to get our marketing material filed with CMS and through the process with carriers.
−Removed: In October 2021, CMS issued new guidance that significantly broadens the types of marketing materials that we are required to file with CMS, including the requirement to file certain generic marketing materials that refer to the benefits or costs of Medicare Advantage or Medicare Part D prescription drug plans but that do not specifically mention a health insurance carrier’s name or a specific plan.
−Removed: As a result, we now submit to each Medicare Advantage and Medicare Part D prescription drug plan carrier with which we have a relationship a significantly larger number of marketing materials than we have in the past.
−Removed: We may not be able to use certain marketing materials and implement our marketing programs effectively if CMS or a health insurance carrier has comments or disapproves of our marketing materials.
−Removed: If we do not timely file the additional marketing materials with CMS or if health insurance carriers do not adapt to the new CMS requirements or increase the efficiency with which
−Removed: they review our marketing material, it could harm our sales and also harm our ability to efficiently change and implement new or existing marketing material, including our customer care center call scripts and our websites, which could harm our business, operating results and financial condition.
−Removed: If we or our marketing partners are not successful in timely receiving health insurance carrier or CMS approval of our marketing materials, or if a health insurance carrier refuses to accept enrollments relating to specific materials or marketing endeavors, we could be prevented from implementing our Medicare marketing and sales initiatives, which could harm our business, operating results and financial condition, particularly if such delay or non-compliance occurs during the Medicare annual enrollment period or the Medicare Advantage open enrollment period.
−Removed: In June 2022, CMS released final versions of the rules initially proposed in January 2022, which included several new provisions aimed at Third Party Marketing Organizations.
−Removed: The final rules require us and our marketing partners to implement additional verbal and written disclaimers and require us to implement further oversight measures over our marketing partners, beginning with the Medicare annual enrollment period in 2022.
−Removed: Given the adoption of these rules, we may incur additional costs to generate and convert leads from our marketing partners, as well as additional administrative costs, which could adversely affect our business, operating results and financial condition.
−Removed: In addition, we are required to file marketing partner marketing materials relating to Medicare Advantage and Medicare Part D prescription drug plans with CMS, and health insurance carriers must review and approve the marketing materials.
−Removed: In October 2022, CMS announced that in response to concerns about certain marketing practices in the Medicare marketplace, it would, among other things, be increasing review of certain marketing materials and practices and, beginning January 1, 2023, television advertisements would no longer be eligible for the CMS file and use process and instead would be subject to a more time-consuming review process.
−Removed: Compliance with these evolving laws and regulations may involve significant costs or require changes in our business practices that could have adverse impact on our business, operating results, financial condition and prospects .
−Removed: Non-compliance could also result in fines, damages, prohibitions on the conduct of our business and damage to our reputation.
+Added: Inquiries and proceedings initiated by the government could adversely impact our health insurance licenses, require us to pay fines, require us to modify marketing and business practices, result in litigation and otherwise harm our business, operating results and financial condition.
In April 2023, CMS released final versions of the rules initially proposed in December 2022.
−Removed: The finalized rules, among other things, require us and our partners to provide to consumers additional disclaimers that may direct them away from our enrollment platform and towards government owned or operated enrollment channels or other platforms, add complications to the Medicare marketing material filing and review process, increase CMS and insurance carrier monitoring of agents and brokers such as us, add requirements on agents enrolling beneficiaries in Medicare plans, limit marketing of plan benefits and cost savings, require lengthy new disclosures that make certain forms of marketing infeasible, potentially require a 48-hour waiting period between initial contact with a beneficiary and enrolling that beneficiary in certain circumstances, and limit the time we may contact beneficiaries about Medicare plan options to 12 months after the beneficiary gives us permission for such contact.
−Removed: These additional requirements could impede or otherwise harm our business, operating results or financial condition.
−Removed: T here may be further potential impact on the business upon the release of any new guidance and sub-regulatory guidance.
−Removed: In May 2023, CMS released a memo providing that, effective July 10 2023, the definition of “marketing” would be changed to further restrict the ability to mention widely available benefits in materials without first obtaining carrier review and approval and submitting such materials to CMS.
−Removed: As a result, our ability to disseminate meaningful content to Medicare beneficiaries may become more limited or require additional costs and time, which could have adverse impact on our business, operating results and financial condition.
+Added: The finalized rules, among other things, require us and our partners to provide to consumers additional disclaimers that may direct them away from our enrollment platform and towards government owned or operated enrollment channels or other platforms, add complications to the Medicare marketing material filing and review process, increase CMS and insurance carrier monitoring of third party marketing organizations (“TPMOs”) such as us, add requirements on agents enrolling beneficiaries in Medicare plans, limit marketing of plan benefits and cost savings, require lengthy new disclosures that make certain forms of marketing infeasible, potentially require a 48-hour waiting period between initial contact with a beneficiary and enrolling that beneficiary in certain circumstances, and limit the time we may contact beneficiaries about Medicare plan options to six months after the beneficiary gives us permission for such contact.
+Added: These additional requirements could impede or otherwise harm our business, operating results and financial condition.
+Added: There may be further potential impact on the business upon the release of any new guidance and sub-regulatory guidance or changes in their interpretation.
+Added: In April 2024, CMS released final versions of the rules (“CY 2025 Final Rules”) proposed in December 2023 related to, among other things, reducing agent and broker payment amounts and regulating contractual terms with Medicare Advantage and Medicare Part D prescription drug plans and dual eligible special needs plans enrollments.
+Added: The CY 2025 Final Rules also finalized provisions requiring certain documentation and consent regarding the collection and sharing of personal data with other TPMOs, concepts which initially had been proposed in April 2023.
+Added: If, and to the extent that, the CY 2025 Final Rules are determined to apply to our operations, or we receive further guidance that is adverse to our operations, our business, operating results and financial condition could be impeded or otherwise harmed.
+Added: Also in December 2023, the FCC released a new ruling, likely to become effective around March 2025, which would require “one-to-one” consent under the Telephone Consumer Protection Act (“TCPA”), allow blocking of “red flagged” robotexting numbers, codify do-not-call rules for texting, and encourage an opt-in approach for delivering email-to-text messages.
+Added: These additional requirements may impact the viability of partnerships that we use for marketing efforts and could impede or otherwise harm our business, operating results and financial condition.
Changes and developments in the health insurance industry or system, including changes in laws and regulations, could harm our business, operating results and financial condition.
−Removed: health insurance system, including the Medicare program, is subject to a changing regulatory environment at both the federal and state level.
−Removed: The future financial performance of our business will depend in part on our ability to adapt to regulatory developments.
−Removed: For example, the Affordable Care Act and related regulatory reforms have and will continue to change the industry in which we operate in substantial ways, including by increasing competition and limiting the ways in which we can operate.
−Removed: Legislative or regulatory changes to the Medicare program have and may continue to have similar impacts on our Medicare business.
−Removed: In addition, each state regulates its insurance market, including by regulating the ability of insurance companies to set premiums and
−Removed: prohibiting brokers and agents such as eHealth from competing in certain ways such as offering price reductions and rebates or marketing in certain ways.
−Removed: All these state regulations are also subject to periodic change.
−Removed: Such regulatory changes at either the federal or state level may negatively impact our business.
−Removed: Our business, operating results, financial condition and prospects may be materially and adversely affected if we are unable to adapt to regulatory changes.
Our business depends upon the private sector of the U.S.
−Removed: health insurance system, which is subject to a changing environment.
+Added: health insurance system, including the Medicare program, which is subject to a changing regulatory environment at both the federal and state level.
Changes and developments in the health insurance system and Medicare program in the United States could reduce demand for our services and harm our business.
−Removed: Ongoing health care reform efforts and measures may expand the role of government-sponsored coverage, including proposals for single payer or so called “Medicare-for-All” or other proposals that may have the effect of reducing or eliminating the market for our current range of health insurance products, which could have far-reaching implications for the health insurance industry if enacted.
+Added: Ongoing health care reform efforts and measures may expand the role of
+Added: government-sponsored coverage, including proposals for single payer or so called “Medicare-for-All” or other proposals that may have the effect of reducing or eliminating the market for our current range of health insurance products, which could have far-reaching implications for the health insurance industry if enacted.
Some proposals would seek to eliminate the private marketplace while others would expand a government-sponsored option to a larger population or otherwise increase government oversight or competition in the sector or reduce the fees or commissions payable to brokers under the Medicare program.
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In the event that laws, regulations or rules that eliminate or reduce private sources of health insurance or Medicare are adopted, the demand for our products could be adversely impacted, and our business, operating results and financial condition would be harmed.
+Added: In addition, each state regulates its insurance market, including by regulating the ability of insurance companies to set premiums and prohibiting brokers and agents such as eHealth from competing in certain ways, such as offering price reductions and rebates or marketing in certain ways.
The laws and regulations governing the offer, sale and purchase of health insurance are complex and subject to change, and future changes may be adverse to our business.
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Changes in, or enforcement of, or compliance with, such regulations could impact consumers’ demand for our services or cause health insurance carriers to lower our commission rates, which could reduce our revenue.
+Added: Our business, operating results, financial condition and prospects may be materially and adversely affected if we are unable to adapt to regulatory changes.
From time to time, we are subject to various legal proceedings which could adversely affect our business.
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Our insurance and indemnities may not cover all claims that may be asserted against us.
−Removed: If we are unsuccessful in our defense in these legal proceedings, we may be forced to pay damages or fines, enter into consent decrees, stop offering our services or change our business practices, any of which would harm our business, operating results or financial condition.
+Added: If we are unsuccessful in our defense in these legal proceedings, we may be forced to pay damages or fines, enter into consent decrees, stop offering our services or change our business practices, any of which would harm our business, operating results and financial condition.
We may be unable to operate our business if we fail to maintain our health insurance licenses and otherwise comply with the numerous laws and regulations applicable to the sale of health insurance.
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In addition, each employee who transacts health insurance business on our behalf must maintain a valid license in one or more states.
−Removed: Because we do business in all 50 states and the District of Columbia, compliance with health insurance-related laws, rules and regulations is difficult and imposes significant costs on our business.
+Added: Because we maintain health insurance licenses to do business in all 50 states and the District of Columbia, compliance with health insurance-related laws, rules and regulations is difficult and
+Added: imposes significant costs on our business.
Each jurisdiction’s insurance department typically has the power, among other things, to:
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As a result, we are subject to various state and federal laws and contractual requirements regarding the access, use and disclosure of personal information.
−Removed: Compliance with state and federal privacy-related laws, particularly new state legislation such as the
−Removed: California Consumer Privacy Act and recent amendments thereto, and increasingly robust industry standard security frameworks will result in cost increases due to an increased need for privacy compliance, oversight and monitoring, and the development of new processes to effectuate and demonstrate compliance.
+Added: Compliance with state and federal privacy-related laws, particularly new state legislation such as the California Consumer Privacy Act and recent amendments thereto, and increasingly robust industry standard security frameworks will result in cost increases due to an increased need for privacy compliance, oversight and monitoring, and the development of new processes to effectuate and demonstrate compliance.
The effects of potential non-compliance by us or third-party service providers, and enforcement actions, may result in increased costs to our business and reputational harm.
The privacy and cybersecurity legislative landscape is rapidly evolving on the state and federal level.
−Removed: Such changes create challenges for businesses to comply with the new legal obligations in a systematic fashion.
+Added: Such changes create challenges for businesses to comply with the new legal obligations in a
+Added: systematic fashion.
These new legal operations may change the way we conduct our business and may harm our results of operations and financial condition.
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If we are not in compliance, we may not be able to accept information from consumers, and our relationship with health insurance carriers could be adversely impacted or terminated, which would harm our business, operating results and financial condition.
−Removed: Any legal liability, regulatory penalties, complaints or negative publicity related to the information on our website or that we otherwise provide could harm our business, operating results and financial condition.
−Removed: We provide information on our website, through our customer care centers, in our marketing materials and in other ways regarding health insurance in general and the health insurance plans we market and sell, including information relating to insurance premiums, coverage, benefits, provider networks, exclusions, limitations, availability, plan comparisons and insurance company ratings.
−Removed: A significant amount of both automated and manual effort is required to maintain the considerable amount of insurance plan information on our website.
+Added: Any legal liability, regulatory penalties, complaints or negative publicity related to us or our services could harm our business, operating results and financial condition.
+Added: We provide information on our website, through our advisor enrollment centers, in our marketing materials and in other ways regarding health insurance in general and the health insurance plans we market and sell, including information relating to insurance premiums, coverage, benefits, provider networks, exclusions, limitations, availability, plan comparisons and insurance company ratings.
+Added: A significant amount of both automated and manual effort is required to maintain the considerable amount of health insurance plan information on our website.
We also use the information provided on our website and otherwise collected by us to publish reports designed to educate consumers, facilitate public debate, and facilitate reform at the state and federal level.
−Removed: If the information we provide on our website, through our customer care centers, in our marketing materials or otherwise is not accurate or is construed as misleading, or if we do not properly assist individuals and businesses in purchasing health insurance, members, health insurance carriers and others could attempt to hold us liable for damages or require us to take corrective actions, our relationships with health insurance carriers could be terminated or impaired and regulators could attempt to subject us to penalties, force us to stop using our websites, marketing material or certain aspects of them, revoke our licenses to transact health insurance business in a particular jurisdiction, and/or compromise the status of our licenses to transact health insurance business in other jurisdictions, which could result in our loss of our commission revenue and harm our business, operating results and financial condition.
+Added: If the information we provide on our website, through our advisor enrollment centers, in our marketing materials or otherwise is not accurate or is construed as misleading, or if we do not properly assist individuals and businesses in purchasing health insurance, members, health insurance carriers and others could attempt to hold us liable for damages or require us to take corrective actions, our relationships with health insurance carriers could be terminated or impaired and regulators could attempt to subject us to penalties, force us to stop using our websites, marketing material or certain aspects of them, revoke our licenses to transact health insurance business in a particular jurisdiction, and/or compromise the status of our licenses to transact health insurance business in other jurisdictions, which could result in our loss of our commission revenue and harm our business, operating results and financial condition.
In the ordinary course of operating our business, we and our health insurance carrier partners have received complaints that the information we provided was not accurate or was misleading.
−Removed: We have received, and may in the future receive, inquiries from health insurance carriers, CMS or state departments of insurance regarding our marketing and business practices and compliance with laws and regulations.
−Removed: For example, some inquiries have focused on whether we provide sufficient disclosure for certain product types, such as short-term health insurance.
−Removed: These types of inquiries and associated claims could be time-consuming and expensive to defend, could divert our management’s attention and other resources, could impact our relationships with health insurance carriers and could cause a loss of confidence in our services.
+Added: We have received, and may in the future receive, inquiries from health insurance carriers, CMS, state departments of insurance, regulators or other legislative bodies regarding our marketing and business practices and compliance with laws and regulations.
+Added: We typically respond to these inquiries by explaining how we believe we are in compliance with relevant regulations, or we may modify our practices in connection with the inquiry.
+Added: For example, we received a letter from the Committee on Finance of the United States Senate in January 2024 requesting information relating to our business practices related to lead generation, marketing and enrollment in Medicare Advantage health plans.
+Added: These types of inquiries and associated claims could be time-consuming and expensive to address, could divert our management’s attention and other resources, could impact our relationships with health insurance carriers and could cause a loss of confidence in our services.
As a result, whether or not we are able to successfully resolve these claims, they could harm our business, operating results and financial condition.
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If new laws or regulations are adopted, or existing laws and regulations are interpreted or enforced, to impose additional restrictions on our ability to send email or telephone messages to our members or potential members, we may not be able to communicate with them in a cost-effective manner.
−Removed: In addition to legal restrictions on the use of email, Internet service providers, email service providers and others attempt to block the transmission of unsolicited email, commonly known as “spam.” Many Internet and email service providers have relationships with organizations whose purpose it is to detect and notify the Internet and email service providers of entities that the organization believes is sending unsolicited email.
−Removed: If an Internet or email service provider identifies email from us as “spam” as a result of reports from these organizations or otherwise, we can be placed on a restricted list that will block our email to members or potential members.
−Removed: We use telephones to communicate with customers and prospective customers, and some of these communications may be subject to the Telephone Consumer Protection Act (“TCPA”) and other telemarketing laws.
−Removed: The TCPA and other laws, including state laws, relating to telemarketing restrict our ability to market using the telephone in certain respects.
−Removed: For instance, the TCPA prohibits us from using an automatic telephone dialing system or prerecorded or artificial voices to make certain telephone calls to consumers without prior express written consent.
−Removed: We have policies in place to comply with the TCPA and other telemarketing laws.
−Removed: However, we have been in the past, and may in the future become, subject to claims that we have violated the TCPA.
−Removed: The TCPA provides for statutory damages of $500 for each violation and $1,500 for each willful violation.
+Added: For example, we use telephones to communicate with customers and prospective customers, and some of these communications may be subject to the TCPA and other telemarketing laws, including state laws, that restrict our ability to market using the telephone in certain respects.
+Added: The TCPA prohibits us from using an automatic telephone dialing system or prerecorded or artificial voices to make certain telephone calls to consumers without prior express written consent and provides for statutory damages of $500 for each violation and $1,500 for each willful violation.
+Added: While we have policies in place to comply with the TCPA and other telemarketing laws, we have been in the past, and may in the future become, subject to claims that we have violated the TCPA.
In the event that we were found to have violated the TCPA, our business, operating results and financial condition could be harmed.
−Removed: The TCPA and other laws and regulations relating to telemarketing are subject to periodic updates and changes in enforcement and litigation risks.
−Removed: In addition, telephone carriers may block or put consumer warnings on calls originating from call centers.
+Added: The TCPA and other laws and regulations relating to telemarketing are also subject to periodic updates and changes in enforcement and litigation risks.
+Added: In addition to legal restrictions on the use of email, Internet service providers, email service providers and others attempt to block the transmission of unsolicited email, commonly known as “spam.” Many Internet and email service providers have relationships with organizations whose purpose is to detect and notify the Internet and email service providers of entities that the organization believes is sending unsolicited email.
+Added: If an Internet or email service provider identifies email from us as “spam” as a result of reports from these organizations or otherwise, we can be placed on a restricted list that will block our email to members or potential members.
+Added: Similarly, telephone carriers may block or put consumer warnings on calls originating from call centers.
Consumers increasingly screen their incoming emails and telephone calls, including by using screening tools and warnings, and therefore our members or potential members may not reliably receive our emails or telephone messages, whether or not such messages constitute marketing.
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Risks Related to Finance, Accounting and Tax Matters
+Added: Our commission revenue could be negatively impacted by changes in our estimated conversion rate of an approved member to a paying member, our forecast of average plan duration or our forecast of likely commission amounts.
+Added: Our commission revenue, which is primarily comprised of commissions from health insurance carriers, is computed using the estimated LTVs of commission payments that we expect to receive, and we re-compute LTVs for all outstanding cohorts on a quarterly basis.
+Added: As a result, the rate at which consumers visiting our ecommerce platforms and advisor enrollment centers seeking to purchase health insurance are converted into approved members directly impacts our revenue.
+Added: In addition, the rate at which consumers who are approved become paying members impacts the constrained LTV of our approved members, which impacts the revenue that we are able to recognize.
+Added: A number of factors have influenced, and could in the future influence, these conversion rates for any given period, some of which are outside of our control.
+Added: These factors include, but are not limited to:
+Added: • changes in consumer shopping behavior due to circumstances outside of our control, such as economic conditions, inflation, public health crises or illnesses, consumers’ ability or willingness to pay for health insurance, adverse events or perceptions affecting the U.S.
+Added: or international financial systems, adverse weather conditions or natural disasters, unemployment rates, availability of unemployment benefits or proposed or enacted legislative or regulatory changes impacting our business, including health care reform;
+Added: • the quality of and changes to the consumer experience on our ecommerce platforms and/or with our advisor enrollment centers;
+Added: • regulatory requirements, including those that make the experience on our ecommerce platforms cumbersome or difficult to navigate or reduce the ability of consumers to purchase plans outside of enrollment periods;
+Added: • the variety, competitiveness, quality and affordability of the health insurance plans that we offer;
+Added: • system failures or interruptions in the operation of our ecommerce platform or advisor enrollment center operations;
+Added: • changes in the mix of consumers who are referred to us through our direct, marketing partner and strategic partner marketing member acquisition channels, including the quality of sales leads;
+Added: • health insurance carrier guidelines applicable to applications submitted by consumers, the degree to which our technology is integrated with health insurance carriers, the amount of time a carrier takes to make a decision on that application and the percentage of submitted applications approved by health insurance carriers;
+Added: • the effectiveness of our benefit advisors in assisting consumers, including the tenure of the health insurance agent;
+Added: • our ability to enroll subsidy-eligible individuals in qualified health plans through government-run health insurance exchanges and the efficacy of the process we are required to use to do so.
+Added: Our conversion rates can be impacted by changes in the mix of consumers referred to us through our member acquisition channels and whether they interact with a more seasoned health insurance agent.
+Added: We have made and may in the future, make changes to our ecommerce platforms, telephonic operations, marketing material or enrollment process in response to regulatory or health insurance carrier requirements or undertake other initiatives in an attempt to improve consumer experience, increase retention, or for other reasons.
+Added: These changes have had in the past, and may have in the future, the unintended consequence of adversely impacting our conversion rates.
+Added: A decline in the percentage of consumers who submit health insurance applications on our ecommerce platforms or telephonically via our advisor enrollment centers and are converted into approved and paying members could cause an increase in our cost of acquiring members on a per member basis and impact our revenue in any given period.
+Added: To the extent the rate at which we convert consumers visiting our ecommerce platforms or telephonically via our advisor enrollment centers into members suffers, our membership may decline, which would harm our business, operating results and financial condition.
Our operating results will be impacted by factors that impact our estimate of the constrained LTV of commissions per approved member.
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As a result, negative changes in the factors upon which we estimate constrained LTVs, such as reduced conversion of approved members to paying members, increased health insurance plan terminations or a reduction in the lifetime commission amounts we expect to receive for selling the plan to a member or other changes could harm our business, operating results and financial condition.
−Removed: Changes in LTV may result in an increase or a decrease to revenue and a corresponding increase or decrease to commission receivables.
−Removed: In addition, if we ultimately receive commission payments that are less than the amount we estimated when we recognized commission revenue, we would need to write off the remaining commission receivable balance, which would adversely impact our business, operating results and financial condition.
+Added: Changes in LTV may result in an increase or a decrease to revenue and a corresponding increase or decrease to commissions receivable.
+Added: In addition, if we ultimately receive commission payments that are less than the amount we estimated when we recognized commission revenue, we would need to write off the remaining commissions receivable balance, which would adversely impact our business, operating results and financial condition.
The rate at which approved members become paying members is a significant factor in our estimation of constrained LTVs.
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Constraints are applied to LTVs for revenue recognition purposes and help ensure that the total estimated lifetime commissions expected to be collected from an approved member’s plan are recognized as revenue only to the extent that 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.
−Removed: We determine the constraint for each product by comparing prior calculations of LTV to actual cash received and review the reasons for any variations.
+Added: We determine the constraint for each product by comparing cash collection patterns to our assumptions and analyze the drivers for 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.
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We evaluate the appropriateness of our constraints on an ongoing basis, and we update our assumptions when we observe a sufficient amount of evidence that would suggest that the long-term expectation underlying the assumptions has changed.
+Added: While we have recognized positive net adjustment revenue in the recent past, there can be no assurance that we will continue to recognize positive net adjustment revenue.
If we underestimate the initial constraint applied to LTVs, we might be required to increase the constraint or record an impairment in a future period, which would harm our business, operating results and financial condition.
−Removed: Our agreements with our lender and convertible preferred stock investors contain restrictions that impact our business and expose us to risks that could materially adversely affect our liquidity and financial condition.
+Added: If commission reports we receive from carriers are inaccurate or not sent to us in a timely manner, our business and operating results could be harmed, and we may not recognize trends in our membership.
+Added: We rely on health insurance carriers to timely and accurately report the amount of commissions earned by us, and we calculate our commission revenue, prepare our financial reports, projections and budgets and direct our marketing and other operating efforts based on the reports we receive from health insurance carriers.
+Added: There have been instances where we have determined that plan cancellation data reported to us by a health insurance carrier has not been accurate.
+Added: The extent to which health insurance carriers are inaccurate in their reporting of plan cancellations could cause us to change our cancellation estimates, which could adversely impact our revenue.
+Added: We have designed controls to assess the completeness and accuracy of the data received, whereby we apply judgment and make estimates based on historical data and current trends to independently determine whether or not carriers
+Added: are accurately reporting commissions due to us.
+Added: We also operate procedures with carriers on an ongoing basis whereby potential under or over reporting is reconciled and discrepancies are resolved.
+Added: For instance, we reconcile information health insurance carriers provide to us and may determine that we were not historically paid commissions owed to us, which would cause us to have underestimated our membership.
+Added: Conversely, health insurance carriers may require us to return commission payments paid in a prior period due to plan cancellations for members we previously estimated as being active.
+Added: To the extent that health insurance carriers understate or fail to accurately report the amount of commissions due to us in a timely manner or at all, our estimates of constrained LTV may be adversely impacted, which would harm our business, operating results and financial condition.
+Added: In addition, any inaccuracies in the reporting from and reconciliations with insurance carriers may also impact our estimates of constrained LTV or our estimates of commission revenue for future periods which is based on historical trends, including trends relating to contracted commission rates and expected health insurance plan cancellation.
+Added: We do not receive information about membership cancellations from our health insurance carriers directly, which makes it difficult for us to determine the impact of current conditions on our membership retention and to accurately estimate membership as of a specific date.
+Added: We depend on health insurance carriers and others for data related to our membership.
+Added: For instance, with respect to health insurance plans, health insurance carriers do not directly report member cancellations to us.
+Added: Other than small business health insurance, we infer cancellations from payment data that carriers provide by analyzing whether payments from members have ceased for a period of time, and we may not learn of a cancellation for several months.
+Added: The majority of our members who terminate their plans do so by discontinuing their insurance premium payments to the carrier or notifying the carrier, and do not inform us of the cancellation.
+Added: With respect to our small business membership, groups generally notify the carrier directly of policy cancellations and increases or decreases in group size.
+Added: Our insurance carrier partners often do not communicate this information to us, and it often takes a significant amount of time for us to learn about small business group cancellations and changes in our membership within the group itself.
+Added: We often are not made aware of policy cancellations until the time of the group’s annual renewal.
+Added: Given the number of months required to observe non-payment of commissions in order to confirm cancellations, we estimate the number of members who are active on health insurance plans as of a specified date.
+Added: After we have estimated membership for a period, we may receive information from health insurance carriers that would have impacted the estimate if we had received the information prior to the date of estimation.
+Added: We may receive commission payments or other information that indicates that a member who was not included in our estimates for a prior period was in fact an active member at that time, or that a member who was included in our estimates was in fact not an active member of ours.
+Added: As a result of the Medicare annual enrollment and other open enrollment periods, we may not receive information from our carriers on as timely a basis due to the significant increase in health insurance transaction volume and for other reasons, which could impair the accuracy of our membership estimates.
+Added: For these and other reasons, including if current trends in membership cancellation are inconsistent with past cancellation trends that we use to estimate our membership or if carriers subsequently report changes to the commission payments that they previously reported to us, our actual membership could be different from our estimates, perhaps materially.
+Added: If our actual membership is different from our estimates, the constrained LTV component of our revenue recognition could also be inaccurate, including as a result of an inaccurate estimate of the average amount of time our members maintain their health insurance plans.
+Added: As a result of the delay that we experience in receiving information about our membership, it is difficult for us to determine with any certainty the impact of current conditions on our membership retention.
+Added: Various circumstances, including market-related factors such as changes in timing of enrollment periods, the ability of enrollees to change their health plan outside of the Medicare annual enrollment period, the source of referrals, their enrollment experience and other factors specific to our business, could cause the assumptions and estimates that we make in connection with estimating our membership to be inaccurate, which would cause our membership estimates to be inaccurate.
+Added: Our agreements with our lender and our convertible preferred stock investor contain restrictions that impact our business and expose us to risks that could materially adversely affect our liquidity and financial condition.
On February 28, 2022, we entered into a term loan credit agreement with Blue Torch Finance LLC, as administrative agent and collateral agent, and other lenders party thereto, which was amended on August 16, 2022 (as amended, the “Credit Agreement”).
−Removed: The Credit Agreement provides us with $70 million in term loans.
−Removed: In connection with entering into the Credit Agreement, we terminated our credit agreement with Royal Bank of Canada and other lenders that provided us with an up to $75 million revolving credit facility.
+Added: The Credit Agreement provides us with $70 million in term loans, the proceeds from which transaction were used to terminate our then-existing $75 million revolving credit facility with Royal Bank of Canada.
The Credit Agreement contains certain mandatory prepayment triggers and imposes certain covenants and restrictions on our business and our ability to obtain additional financing.
8 unchanged sentences
On February 17, 2021, we entered into an investment agreement with Echelon Health SPV, LP (“H.I.G.”), pursuant to which H.I.G.
−Removed: purchased 2.25 million of Series A convertible preferred stock (“Series A Preferred Stock”) for an aggregate price of $225 million (the “H.I.G.
+Added: purchased 2.25 million shares of Series A convertible preferred stock (“Series A Preferred Stock”) for an aggregate price of $225 million (the “H.I.G.
Investment Agreement”).
−Removed: Investment Agreement could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition.
−Removed: As of the date of this report, under the H.I.G.
−Removed: Investment Agreement, we are required to obtain the consent of H.I.G.
−Removed: in order to incur certain indebtedness, which could limit our ability to obtain additional financing.
−Removed: Even if we comply with all of the applicable covenants, the restrictions on the conduct of our business imposed by our lender or H.I.G.
+Added: Investment Agreement contains certain negative operating covenants that will remain in effect for so long as H.I.G.
+Added: continues to own at least 30% of the shares of Series A Preferred Stock originally issued to it.
+Added: the Company is required to maintain an Asset Coverage Ratio (as defined in the H.I.G.
+Added: Investment Agreement) of at least 2.0x, calculated on a quarterly basis, which increased to 2.5x in August of 2023 (the “Minimum Asset Coverage Ratio”).
+Added: The first measurement date of the 2.5x Minimum Asset Coverage Ratio was September 30, 2023.
+Added: Additionally, the H.I.G.
+Added: Investment Agreement requires the Company to maintain a Minimum Liquidity Amount (as defined in the H.I.G.
+Added: Investment Agreement) for certain periods that ranges from $65.0 million to $125.0 million.
+Added: As of December 31, 2023, we were in compliance with the Minimum Liquidity Amount.
+Added: However, we have not met the Minimum Asset Coverage Ratio since the September 30, 2023 measurement date.
+Added: Failure to maintain the Minimum Asset Coverage Ratio or the Minimum Liquidity Amount as of the date or the time period required by the H.I.G.
+Added: Investment Agreement, for as long as H.I.G.
+Added: 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 our Board of Directors, the right to approve our annual budget, the right to approve the hiring or termination of certain key executives and the right to approve the incurrence of certain indebtedness.
+Added: 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.
+Added: These restrictions on the conduct of our business imposed by our lender or H.I.G.
could materially adversely affect our business by, among other things, limiting our ability to take advantage of financings, mergers, acquisitions and other corporate opportunities that may be beneficial to the business.
6 unchanged sentences
If we seek to raise funds through debt or equity financing, those funds may prove to be unavailable, may only be available on terms that are not acceptable to us or may result in significant dilution to our stockholders or higher levels of leverage.
−Removed: Our Credit Agreement and the H.I.G.
+Added: Our term loan under the Credit Agreement matures in February 2025.
+Added: Our ability to refinance our existing or future indebtedness will depend on the capital markets, including prevailing interest rates, and our financial condition and performance, which, among other things, is subject to economic, financial, competitive and other factors beyond our control.
+Added: In addition, our Credit Agreement and the H.I.G.
Investment Agreement contain restrictions that limit our ability to incur additional indebtedness, issue certain types of equity securities with rights and preferences senior to or pari passu with our Series A Preferred Stock, make certain types of investments or obtain additional financing.
1 unchanged sentence
Investment Agreement, we are currently required to obtain the consent of H.I.G.
−Removed: in order to incur certain indebtedness, which
−Removed: could limit our ability to obtain additional financing.
−Removed: If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to pursue our business objectives and to respond to business opportunities or challenges could be harmed, and our business, operating results and financial condition could be materially and adversely affected.
+Added: in order to incur certain indebtedness, which could limit our ability to obtain additional financing.
+Added: If we are unable to refinance our existing or future indebtedness, we cannot obtain adequate financing or we cannot obtain financing on terms satisfactory to us when we require it, we may default on our existing or future indebtedness, and our ability to continue to pursue our business objectives and to respond to business opportunities or challenges could be harmed, and our business, operating results and financial condition could be materially and adversely affected.
If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements could be impaired, which could adversely affect our operating results, our ability to operate our business and our stock price.
9 unchanged sentences
Any failure to maintain or implement required new or improved controls, or any difficulties we encounter in their implementation, could result in significant deficiencies or material weaknesses, cause us to fail to timely meet our periodic reporting obligations or result in material misstatements in our financial statements.
−Removed: Any such failure could also adversely affect the results of periodic management evaluations and annual auditor attestation reports regarding disclosure controls and the effectiveness of our internal control over financial reporting required under Section 404 of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder.
+Added: Any such failure could also adversely affect the results of periodic management evaluations and annual auditor attestation reports regarding disclosure controls and the effectiveness of our internal control over financial reporting required under Section 404 of the Sarbanes-Oxley Act of 2002 and the rules
+Added: promulgated thereunder.
The existence of a material weakness could result in errors in our financial statements that could result in a restatement of financial statements, cause us to fail to timely meet our reporting obligations and cause investors to lose confidence in our reported financial information, leading to a decline in our stock price and potential lawsuits against us.
9 unchanged sentences
We have net operating loss carryforwards for federal and state income tax purposes to offset future taxable income.
−Removed: Our federal and state net operating loss carryforwards begin expiring in 2034 and 2023, respectively.
A lack of future taxable income would adversely affect our ability to utilize these net operating loss carryforwards.
−Removed: In addition, utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to
−Removed: ownership changes that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and similar state provisions.
+Added: In addition, utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to ownership changes that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and similar state provisions.
These ownership change limitations may limit the amount of net operating loss carryforwards and other tax attributes that can be utilized annually to offset future taxable income and tax, respectively.
7 unchanged sentences
If these failures or interruptions occurred during the Medicare annual enrollment period, the Medicare Advantage open enrollment period or during the open enrollment period under health care reform, the negative impact on us would be particularly pronounced.
−Removed: We rely in part upon third-party vendors, including cloud infrastructure and bandwidth providers, to operate our ecommerce platform and customer care center.
+Added: We rely in part upon third-party vendors, including cloud infrastructure and bandwidth providers, to operate our ecommerce platform and advisor enrollment centers.
Consumers using our website and accessing our services depend upon Internet, online and other service providers for access to our website and services.
Our remote employees rely on third-party service providers to access our systems and other agent productivity tools.
−Removed: We cannot predict whether additional network capacity will be available from these vendors as we need it, and our network or our suppliers’ networks might be unable to achieve or maintain a sufficiently high capacity of data transmission.
−Removed: Any significant interruption in access to our customer care centers or our website or increase in our website’s response time as a result of these difficulties could impair our revenue-generating capabilities, damage our reputation and our relationship with insurance carriers, marketing partners and existing and potential members, and harm our business, operating results and financial condition.
+Added: We cannot predict whether additional network capacity will be available from these vendors as we need it, and our network or
+Added: our suppliers’ networks might be unable to achieve or maintain a sufficiently high capacity of data transmission.
+Added: Any significant interruption in access to our advisor enrollment centers or our website or increase in our website’s response time as a result of these difficulties could impair our revenue-generating capabilities, damage our reputation and our relationship with insurance carriers, marketing partners and existing and potential members, and harm our business, operating results and financial condition.
In addition, any loss of data could result in loss of customers and subject us to potential liability.
3 unchanged sentences
Our and our vendors’ facilities, database and systems are vulnerable to damage or interruption from human error, fire, floods, earthquakes and other natural disasters, power loss, telecommunications failures, physical or electronic break-ins, computer viruses, cyberattacks, acts of terrorism, other attempts to harm our systems and similar events.
−Removed: In particular, our customer care center operations’ success depends on maintenance of functioning information technology systems.
+Added: In particular, our advisor enrollment center operations’ success depends on maintenance of functioning information technology systems.
CMS rules require that our health insurance agent employees utilize CMS-approved scripts in connection with the sale of Medicare plans and that we record and maintain the recording of telephonic interactions relating to the sale of Medicare plans.
−Removed: We rely on telephone, call recording, customer relationship management and other systems and technology in our customer care center operations, and we are dependent upon third parties for some of them, including our telephone and call recording systems.
+Added: We rely on telephone, call recording, customer relationship management and other systems and technology in our advisor enrollment center operations, and we are dependent upon third parties for some of them, including our telephone and call recording systems.
These systems have failed temporarily in the past and may experience additional disruption due to systems upgrades, power outages, an increase in remote work or other events.
−Removed: The effectiveness and stability of our customer care center systems and technology are critical to our ability to sell health insurance plans, particularly during key times, such
−Removed: as the Medicare enrollment periods, and the failure or interruption of any of these systems and technology or any inability to handle increased volume would harm our business, operating results and financial condition.
−Removed: Our business is subject to security risks, and if we experience a successful cyberattack, a security breach or are otherwise unable to safeguard the confidentiality and integrity of the data we hold, including sensitive personal information, our business will be harmed.
−Removed: Maintaining the security of our products and services is a critical issue for us, our consumers and health insurance carriers that we work with.
+Added: The effectiveness and stability of our advisor enrollment center systems and technology are critical to our ability to sell health insurance plans, particularly during key times, such as the Medicare enrollment periods, and the failure or interruption of any of these systems and technology or any inability to handle increased volume would harm our business, operating results and financial condition.
+Added: Our business is subject to security risks, and if we experience a successful cyberattack or a security breach or are otherwise unable to safeguard the confidentiality and integrity of the data we hold, including sensitive personal information, our business will be harmed.
+Added: Maintaining the security of our products and services is critical for us, our consumers, and the health insurance carriers we work with.
Despite our taking precautions, we cannot guarantee that our facilities and systems and those of our third-party service providers, will be free of security breaches, cyberattacks, acts of vandalism, computer viruses, malware, misplaced or lost data, programming and/or human errors or other similar events.
2 unchanged sentences
For example, attackers have used artificial intelligence and machine learning to launch more automated, targeted and coordinated attacks against targets.
−Removed: As a result, we may be unable to anticipate these techniques or to implement adequate preventative measures preemptively.
+Added: As a result, we may be unable to anticipate emerging techniques or to implement adequate preventative measures preemptively.
Additionally, our third-party service providers may cause security breaches for which we are responsible.
2 unchanged sentences
Consequently, the risk of a cybersecurity incident has increased.
−Removed: We cannot provide assurances that our preventative efforts, or those of our vendors or service providers, will be successful.
+Added: We cannot assure that our preventative efforts, or those of our vendors or service providers, will be successful.
These actual and potential breaches of our security measures and the accidental loss, inadvertent disclosure, or unauthorized dissemination of proprietary information or sensitive, personal, or confidential data about us, our employees, our customers, or their end users, including the potential loss or disclosure of such information or data as a result of hacking, fraud, trickery or other forms of deception, could expose us, our employees, our customers or the individuals affected to a risk of loss or misuse of this information.
−Removed: This may result in litigation and liability or fines, our compliance with costly and time-intensive notice requirements, governmental inquiry or oversight or a loss of customer confidence, any of which could harm our business or damage our brand and reputation, thereby requiring time and resources to mitigate these impacts.
+Added: This may result in litigation and liability or fines, our compliance with costly and time-intensive notice requirements, governmental inquiry or
+Added: oversight, or a loss of customer confidence, any of which could harm our business or damage our brand and reputation, thereby requiring time and resources to mitigate these impacts.
We may not be able to adequately protect our intellectual property, which could harm our business and operating results.
−Removed: We believe that our intellectual property is an essential asset of our business and that our technology currently gives us a competitive advantage in the distribution of Medicare-related, individual and family and small business health insurance.
−Removed: We rely on a combination of patent, copyright, trademark and trade secret laws as well as confidentiality procedures and contractual provisions to establish and protect our intellectual property rights in the United States.
−Removed: The efforts we have taken to protect our intellectual property may not be sufficient or effective, and our trademarks or patents may be held invalid or unenforceable.
+Added: Our intellectual property is an essential asset of our business, and we believe that our technology currently gives us a competitive advantage in the distribution of Medicare-related, individual, family and small business health insurance.
+Added: We rely on a combination of patent, copyright, trademark and trade secret laws, confidentiality procedures and contractual provisions to establish and protect our intellectual property rights in the United States.
+Added: Our efforts to protect our intellectual property may need to be revised or more effective, and our trademarks or patents may be held invalid or unenforceable.
Moreover, the law relating to intellectual property is not as developed in China, and our intellectual property rights may not be as respected in China as they are in the United States.
20 unchanged sentences
Any range we provide is not intended to imply that actual results could not fall outside of the suggested ranges.
−Removed: Any failure to successfully implement our operating strategy or the occurrence of any of the events or circumstances set forth in this Risk Factors section could result in the actual operating results being different from our guidance, and the differences may be adverse and material.
+Added: Any failure to successfully implement our operating strategy or the occurrence of any of the
+Added: events or circumstances set forth in this Risk Factors section could result in the actual operating results being different from our guidance, and the differences may be adverse and material.
The principal reason that we release guidance is to provide a basis for our management to discuss our business outlook with analysts and investors and we may decide to suspend guidance at any time.
35 unchanged sentences
Our financial condition and operating results are affected by the performance of our investment portfolio.
−Removed: Our excess cash is invested by an external investment management service provider, under the direction of our management in accordance with our investment policy.
−Removed: The investment policy defines constraints and guidelines that restrict the asset classes that we may invest in by type, duration, quality and value.
+Added: Our excess cash is invested by an external investment management service provider, under the direction of our management in accordance with our corporate cash management and investment policy.
+Added: The policy defines constraints and guidelines that restrict the asset classes that we may invest in by type, duration, quality and value.
Our investments are subject to market-wide risks, and fluctuations, as well as to risks inherent in particular securities.
−Removed: The failure of any of the
−Removed: investment risk strategies that we employ could have a material adverse effect on our business, financial condition, and results of operations.
−Removed: The value of our investments is exposed to capital market risks, and our results of operations, liquidity, financial condition or cash flows could be adversely affected by realized losses, impairments and changes in unrealized positions as a result of:
+Added: The failure of any of the investment risk strategies that we employ could have a material adverse effect on our business, financial condition, and results of operations.
+Added: The value of our investments is exposed to capital markets risks, and our results of operations, liquidity, financial condition or cash flows could be adversely affected by realized losses, impairments and changes in unrealized positions as a result of:
significant market volatility, changes in interest rates, changes in credit spreads and defaults, a lack of pricing transparency, a reduction in market liquidity, declines in equity prices, changes in national, state/provincial or local laws and the strengthening or weakening of foreign currencies against the U.S.
9 unchanged sentences
Any resale of our common stock would increase the number of shares of our common stock available for public trading, and resales of a substantial number of shares of our common stock in the public market, or the perception that such sales might occur, could have a material adverse effect on the price of our common stock.
−Removed: Our convertible preferred stock investors have rights, preferences and privileges that are not held by, and are preferential to, the rights of our common stockholders, which could adversely affect our liquidity and financial condition, result in the interests of our convertible preferred stock investors differing from those of our common stockholders and make an acquisition of us more difficult.
+Added: Our convertible preferred stock investor has rights, preferences and privileges that are not held by, and are preferential to, the rights of our common stockholders, which could adversely affect our liquidity and financial condition, result in the interests of our convertible preferred stock investor differing from those of our common stockholders and make an acquisition of us more difficult.
H.I.G., the initial purchaser and the current holder of our Series A Preferred Stock, has (i) a liquidation preference, (ii) rights to dividends, which are senior to all of our other equity securities, (iii) redemption rights beginning on April 30, 2027, (iv) the right to require us to repurchase any or all of their Series A Preferred Stock in connection with certain change of control events and (v) conversion price adjustments in connection with certain corporate transactions, each subject to the terms, conditions and exceptions contained in the certificate of designations for the Series A Preferred Stock.
These dividend and share repurchase and redemption obligations could impact our liquidity and reduce the amount of cash flows available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes.
−Removed: The terms of H.I.G.
+Added: The terms of the H.I.G.
Investment Agreement could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition.
4 unchanged sentences
and holders of our common stock.
−Removed: Furthermore, a sale of our company, as a change of control event, may require us to repurchase Series A Preferred Stock, which could have the effect of
−Removed: making an acquisition of our company more expensive and potentially deterring proposed transactions that may otherwise be beneficial to our stockholders.
+Added: Furthermore, a sale of our company, as a change of control event, may require us to repurchase Series A Preferred Stock, which could have the effect of making an acquisition of our company more expensive and potentially deterring proposed transactions that may otherwise be beneficial to our stockholders.
Our convertible preferred stock investor may exercise influence over us, including through its ability to designate up to two directors on our Board of Directors.
−Removed: Investment Agreement contains certain negative operating covenants that will remain in effect for so long as H.I.G.
−Removed: continues to own at least 30% of the shares of Series A Preferred Stock originally issued to it.
−Removed: Further, the H.I.G.
Investment Agreement entitles H.I.G.
1 unchanged sentence
The director designated by H.I.G.
−Removed: will also be entitled to serve on committees of our Board of Directors, subject to applicable law and stock exchange rules.
+Added: is also entitled to serve on committees of our Board of Directors, subject to applicable law and stock exchange rules.
nominated Aaron C.
Tolson to our Board of Directors.
−Removed: Tolson was appointed to our Board of Directors as a Class I director on August 30, 2021, and as of the date of this report serves as the chairperson of the compensation committee and as a member of the equity incentive committee, nominating and corporate governance committee and government and regulatory affairs committee of the Board of Directors.
−Removed: In addition, the Company is required to maintain an Asset Coverage Ratio (as defined in the H.I.G.
−Removed: Investment Agreement) of at least 2.0x, calculated on a quarterly basis, which increased to 2.5x in August of 2023 (the “Minimum Asset Coverage Ratio”).
−Removed: The first measurement date of the 2.5x Minimum Asset Coverage Ratio was September 30, 2023.
−Removed: Additionally, the H.I.G.
−Removed: Investment Agreement requires the Company to maintain a Minimum Liquidity Amount (as defined in the H.I.G.
−Removed: Investment Agreement) for certain periods that ranges from $65.0 million to $125.0 million.
−Removed: As of September 30, 2023, we were in compliance with the Minimum Liquidity Amount.
−Removed: However, we did not meet the Minimum Asset Coverage Ratio as of September 30, 2023.
−Removed: Failure to maintain the Minimum Asset Coverage Ratio or the Minimum Liquidity Amount as of the date or the time period required by the H.I.G.
+Added: Tolson was appointed to our Board of Directors as a Class I director on August 30, 2021, and as of the date of this report serves as a member of the compensation committee, nominating and corporate governance committee and government and regulatory affairs committee of the Board of Directors.
+Added: In addition, as discussed elsewhere in this Risk Factors section, failure to maintain the Minimum Asset Coverage Ratio or the Minimum Liquidity Amount as of the date or the time period required by the H.I.G.
Investment Agreement, for as long as H.I.G.
−Removed: 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 our Board of Directors, the right to approve our annual budget, the right to approve hiring or termination of certain key executives and the right to approve the incurrence of certain indebtedness.
+Added: 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 our Board of Directors.
The interests of any director designated by H.I.G.
21 unchanged sentences
Any person or entity purchasing or otherwise acquiring or holding or owning (or continuing to hold or own) any interest in any of our securities shall be deemed to have notice of and consented to the foregoing bylaw provisions.
−Removed: Although we believe these exclusive forum provisions benefit us by providing increased consistency in the application of Delaware law and federal securities laws in the types of lawsuits to which each applies, the exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or our current or former directors, officers, stockholders or other employees, which may discourage such lawsuits against us and our current and former directors, officers, stockholders and other employees.
+Added: Although we believe these exclusive forum provisions benefit us by providing increased consistency in the application of Delaware law and federal securities laws in the types of lawsuits to which each applies, the exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for
+Added: disputes with us or our current or former directors, officers, stockholders or other employees, which may discourage such lawsuits against us and our current and former directors, officers, stockholders and other employees.
Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder as a result of our exclusive forum provisions.
Further, the enforceability of similar exclusive forum provisions in other companies’ organizational documents have been challenged in legal proceedings, and it is possible that a court of law could rule that these types of provisions are inapplicable or unenforceable if they are challenged in a proceeding or otherwise.
−Removed: were to find either exclusive forum provision contained in our bylaws to be inapplicable or unenforceable in an action, we may incur significant additional costs associated with resolving such action in other jurisdictions, all of which could harm our results of operations.
+Added: If a court were to find either exclusive forum provision contained in our bylaws to be inapplicable or unenforceable in an action, we may incur significant additional costs associated with resolving such action in other jurisdictions, all of which could harm our results of operations.
General Risk Factors
1 unchanged sentence
Large-scale medical emergencies, pandemics (such as COVID-19) and other extreme events could result in public health crises or otherwise have a material adverse effect on our business operations, cash flows, financial condition and results of operations.
−Removed: For example, disruptions in public and private infrastructure resulting from such events could increase our operating costs and ability to provide services to our clients and customers.
−Removed: Additionally, we had to adjust our operations in response to the COVID-19 pandemic.
+Added: For example, we had to adjust our operations in response to the COVID-19 pandemic and resulting disruptions in public and private infrastructure.
Global climate change has added, and will continue to add, to the unpredictability, frequency and severity of natural disasters, including but not limited to hurricanes, tornadoes, freezes, droughts, other storms and fires in certain parts of the world.
In response, a number of legal and regulatory measures and social initiatives have been introduced in an effort to reduce greenhouse gas and other carbon emissions that are chief contributors to global climate change.
−Removed: We cannot predict the impact that changing climate conditions will have on our business, though extreme weather events could impact our facilities, technological assets, business continuity and reputation.
+Added: We cannot predict the impact that changing climate conditions will have on our business;
+Added: however, we recognize that there are inherent climate-related risks wherever business is conducted.
+Added: Climate-related events, including extreme weather events could impact our critical infrastructure, technological assets, business continuity and reputation.
+Added: The increasing frequency of extreme weather events also has the potential to disrupt the business of our third-party vendors, partners and our customers.
The legal, regulatory and social responses to climate change could also adversely affect our results of business, operating results and financial condition.
5 unchanged sentences
These macroeconomic factors could materially and adversely affect our business, operating results and financial condition.
−Removed: For example, the recent closures of Silicon Valley Bank (“SVB”), Signature Bank and First Republic Bank have resulted in broader financial institution liquidity risk and concerns.
+Added: For example, the closures of Silicon Valley Bank (“SVB”), Signature Bank and First Republic Bank resulted in broader financial institution liquidity risk and concerns.
Although we were able to access all of the funds we had on deposit with SVB, the failure of any bank in which we deposit our funds could reduce the amount of cash we have available for our operations or delay our ability to access such funds.
We continue to assess our banking relationships as we believe necessary or appropriate;
−Removed: however, disruptions in financial institutions, credit markets and/or the broader financial services industry may lead to market-wide liquidity shortages, may limit our access to preferred sources of liquidity when needed or on terms we find acceptable, and our borrowing costs could increase.
+Added: however, disruptions in financial institutions, credit markets and/or the broader financial services industry may lead to market-wide liquidity shortages, may limit our access to preferred sources of liquidity when needed or on terms we find
+Added: acceptable, and our borrowing costs could increase.
An economic or credit crisis could occur and impair credit availability and our ability to raise capital when needed.
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.