What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-07 compared with 2024-05-07 · 134 added, 119 removed, 606 unchanged (29% of the section changed)

3 unchanged sentences

(in thousands, unaudited)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Current assets:

40 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Commission $ 56,847 $ 60,186 $ 137,774 $ 128,189

34 unchanged sentences

(in thousands, unaudited)

Three Months Ended March 31, 2024

Common Stock Additional Paid-in

11 unchanged sentences

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

Three Months Ended March 31, 2023

Issuance of common stock in connection with equity incentive plans 333 — — — — — — —

Repurchase of shares to satisfy employee tax withholding obligations — — ( 596 ) 115 — — — ( 596 )

Dividends and accretion related to convertible preferred stock — — — — — ( 11,020 ) — ( 11,020 )

Issuance of common stock for employee stock purchase program 80 — 354 — — — — 354

Stock-based compensation — — 5,308 — — — — 5,308

Other comprehensive loss, net of tax — — — — — — ( 31 ) ( 31 )

Net loss — — — — — ( 27,968 ) — ( 27,968 )

Balance as of June 30, 2024 42,415 $ 42 $ 808,314 13,115 $ ( 199,998 ) $ ( 59,415 ) $ ( 91 ) $ 548,852

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

EHEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, unaudited)

Common Stock Additional Paid-in

10 unchanged sentences

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

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

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

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

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

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

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

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

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

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

2 unchanged sentences

(in thousands, unaudited)

Three Months Ended

Six Months Ended

Operating activities:

24 unchanged sentences

Financing activities:

Net proceeds from exercise of common stock options and employee stock purchases 354 262

Repurchase of shares to satisfy employee tax withholding obligations ( 1,851 ) ( 1,051 )

Principal payments in connection with leases ( 4 ) ( 25 )

Payments of preferred stock dividends ( 2,740 ) ( 873 )

Net cash used in financing activities ( 4,241 ) ( 1,687 )

17 unchanged sentences

and its consolidated direct and indirect wholly-owned subsidiaries.

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

Basis of Presentation – The accompanying Condensed Consolidated Balance Sheet as of June 30, 2024 and other condensed consolidated financial statements for the three and six months ended June 30, 2024 and 2023 are unaudited.

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

9 unchanged sentences

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

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

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

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023 and include all adjustments necessary for the fair presentation of our financial position as of June 30, 2024 and December 31, 2023 and our results of operations for the periods presented.

The results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31, 2024 and therefore, should not be relied upon as an indicator of future results.

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

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

6 unchanged sentences

Actual results may differ from these estimates.

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

There have been no material changes for the six months ended June 30, 2024 to our significant accounting policies discussed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Recently Adopted Accounting Pronouncements

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

We did not adopt any new accounting pronouncements during the six months ended June 30, 2024.

Recently Issued Accounting Pronouncements Not Yet Adopted

14 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Medicare Advantage $ 42,168 $ 45,389 $ 104,164 $ 99,510

29 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Commission revenue from members approved during the period $ 39,941 $ 36,006 $ 109,693 $ 92,623

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

10,681 13,403 11,683 13,455

Total Medicare segment commission revenue $ 50,622 $ 49,409 $ 121,376 $ 106,078

3 unchanged sentences

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

818 5,321 2,286 6,834

Total Employer and Individual segment commission revenue $ 6,225 $ 10,777 $ 16,398 $ 22,111

2 unchanged sentences

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

11,499 18,724 13,969 20,289

Total commission revenue $ 56,847 $ 60,186 $ 137,774 $ 128,189

1 unchanged sentence

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

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

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

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

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

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

The net commission revenue from members approved in prior periods, or the net adjustment revenue, includes both increases as well as reductions in revenue for certain prior period cohorts.

(2) The after-tax impact of total net commission revenue from members approved in prior periods for the three months ended June 30, 2024 and 2023 was $ 0.30 and $ 0.51 per basic and diluted share, respectively.

The after-tax impact of total net commission revenue from members approved in prior periods for the six months ended June 30, 2024 and 2023 was $ 0.36 and $ 0.56 per basic and diluted share, respectively.

The total reductions to revenue from members approved in prior periods were $ 3.1 million and $ 2.9 million for the three months ended June 30, 2024 and 2023, respectively, and $ 3.6 million and $ 2.9 million for the six months ended June 30, 2024 and 2023, respectively.

These reductions to revenue primarily relate to the Medicare segment.

Note 3 – Supplemental Financial Statement Information

4 unchanged sentences

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Cash $ 9,994 $ 7,114

3 unchanged sentences

Total cash, cash equivalents and restricted cash $ 129,434 $ 118,812

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

As of June 30, 2024 and December 31, 2023, we had $ 3.1 million of restricted cash which was classified as a non-current asset on our Condensed Consolidated Balance Sheets.

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Contract Assets and Accounts Receivable

5 unchanged sentences

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

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

There wer e no write-offs during the six months ended June 30, 2024 or for the year ended December 31, 2023.

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Beginning balance $ 2,118 $ 2,398

10 unchanged sentences

Net change in credit loss allowance 361 32 393

Ending balance at March 31, 2024

Ending balance at June 30, 2024

$ 764,536 $ 67,338 $ 831,874

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

3 unchanged sentences

federal government.

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

The deposits in China were $ 2.8 million as of June 30, 2024.

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Humana 29 % 27 %

3 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Prepaid software and maintenance contracts $ 4,251 $ 5,328

Prepaid licenses 2,007 2,739

Prepaid expenses 2,230 1,808

Prepaid licenses 1,609 2,739

Prepaid insurance 415 1,436

13 unchanged sentences

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

March 31, 2024

June 30, 2024

Carrying Value Level 1 Level 2 Level 3 Total

5 unchanged sentences

Commercial paper 12,822 — 12,822 — 12,822

Agency bonds 11,899 — 11,899 — 11,899

Total assets measured at fair value $ 141,071 $ 10,656 $ 130,415 $ — $ 141,071

11 unchanged sentences

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

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

There were no transfers between the hierarchy levels during either of the six months ended June 30, 2024 or the year ended December 31, 2023.

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

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

As of June 30, 2024 As of December 31, 2023

Amortized Cost Fair Value Amortized Cost Fair Value

3 unchanged sentences

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

March 31, 2024

June 30, 2024

Amortized Cost Unrealized Gains Unrealized Losses Fair Value

5 unchanged sentences

Commercial paper 12,834 — ( 12 ) 12,822

Agency bonds 11,899 — — 11,899

Total $ 141,132 $ — $ ( 61 ) $ 141,071

8 unchanged sentences

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

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

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

As of June 30, 2024 and December 31, 2023, we had 28 and 20 securities, respectively, in a net unrealized loss position that were immaterial individually and in aggregate.

We did not record any credit losses regarding our available for sale debt securities during the six months ended June 30, 2024 or the year ended December 31, 2023.

We do not intend to sell these securities, and it is more likely than not that we will not be required to sell these securities before the recovery of their amortized cost basis.

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

We recognized interest income of $ 2.1 million and $ 2.3 million for the three months ended June 30, 2024 and 2023, respectively, and $ 4.3 million and $ 4.2 million for the six months ended June 30, 2024 and 2023, respectively.

Note 5 – Equity

2 unchanged sentences

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

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

As of June 30, 2024, 2.0 million shares were issued under the A&R 2021 Inducement Plan.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

Stock Repurchase Programs – We had no stock repurchase activity during the three and six months ended June 30, 2024 or 2023 except for the repurchase of shares to satisfy employee tax withholding obligations.

As of June 30, 2024 and 2023, we had a total o f 13.1 million and 12.5 million shares, respectively, held in treasury.

As of June 30, 2024 and 2023, we had 2.4 million and 1.8 million shares, respectively, in treasury that were previously surrendered by employees to satisfy tax withholding due in connection with the vesting of certain restricted stock units as well as 10.7 million shares previously repurchased under our past repurchase programs.

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

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Restricted stock units

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Marketing and advertising $ 711 $ 538 $ 1,355 $ 993

20 unchanged sentences

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

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

During the second quarter of 2024 we made a cash dividend payment of $ 2.7 million.

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

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

As of March 31, 2024, the Conversion Price is equal to $ 79.5861 per share.

As of June 30, 2024, the Conversion Price is equal to $ 79.5861 per share.

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

30 unchanged sentences

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

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

As of March 31, 2024, the estimated Series A Preferred Stock redemption value equals 135 % of the Accrued Value per share as of the redemption date, plus accrued PIK dividends that have not yet been added to the Accrued Value, which is significantly in excess of the fair value of the common stock into which the Series A Preferred Stock is convertible as of March 31, 2024.

As of June 30, 2024, we were in compliance with the Minimum Liquidity Amount.

As of June 30, 2024, the estimated Series A Preferred Stock redemption value equals 135 % of the Accrued Value per share as of the redemption date, plus accrued PIK dividends that have not yet been added to the Accrued Value, which is significantly in excess of the fair value of the common stock into which the Series A Preferred Stock is convertible as of June 30, 2024.

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

1 unchanged sentence

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

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

No shares of Series A Preferred Stock have been converted, and the Series A Preferred Stock was convertible into 3.5 million shares of common stock as of June 30, 2024.

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

5 unchanged sentences

Change in preferred stock redemption value 10,787

Balance as of March 31, 2024

Balance as of June 30, 2024

EHEALTH, INC.

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net loss attributable to common stockholders

5 unchanged sentences

$ ( 1.33 ) $ ( 1.18 ) $ ( 2.29 ) $ ( 2.20 )

For each of the three months ended March 31, 2024 and 2023, we had securities outstanding that could potentially dilute net loss per share, but the shares from the assumed conversion or exercise of these securities were excluded in the computation of diluted net loss per share as their effect would have been anti-dilutive.

For each of the three and six months ended June 30, 2024 and 2023, we had securities outstanding that could potentially dilute net loss per share, but the shares from the assumed conversion or exercise of these securities were excluded in the computation of diluted net loss per share as their effect would have been anti-dilutive.

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

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Convertible preferred stock 3,521 3,318 3,495 3,288

Restricted stock units

1,910 3,129 2,138 2,369

Performance-based stock units 74 126 106 112

8 unchanged sentences

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

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

For the Years Ending December 31,

Our future minimum payments under non-cancellable contractual service and licensing obligations as of June 30, 2024 were as follows (in thousands):

Year ending December 31,

2024 (remainder) $ 1,999

5 unchanged sentences

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

employee health insurance benefits on a self-insured basis with up to $ 0.3 million per individual per year and a maximum claim liability of $ 22.5 million.

employee health insurance benefits on a self-insured basis with up to $ 0.3 million per individual per year and the current maximum claim liability as of June 30, 2024 is $ 22.5 million.

As a result, we record a self-insurance liability based on claims filed and an estimate of claims incurred but not yet reported.

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

As of June 30, 2024 and December 31, 2023, we had a self-insurance liability balance of $ 2.0 million and $ 2.5 million, respectively, in the “Accrued compensation and benefits” line on our Condensed Consolidated Balance Sheets.

Contingencies

4 unchanged sentences

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

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

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

Legal Proceedings

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

Flanders et al., Case No.

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

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

There were no material litigation-related accruals recorded during the three and six months ended June 30, 2024 or 2023.

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

District of California.

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

Flanders et al., Case No.

20CV371555 (Cal.

Ct.) (the “Lincolnshire” matter) was filed in the Superior Court of California, County of Santa Clara.

The complaints were brought against the Company’s then-chief executive officer, Mr.

Flanders, its then-chief financial officer, Mr.

Yung, its then-chief operating officer, Mr.

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

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

The Chernet and Lincolnshire complaints purport to assert claims for breach of fiduciary duty, unjust enrichment and waste of corporate assets.

The Chernet lawsuit also alleges that the Individual Defendants violated Sections 14(a), 10(b), and 20(a) of the Exchange Act and asserts claims for abuse of control and gross mismanagement.

The Chernet and Lincolnshire complaints seek damages, restitution, attorneys’ fees and costs, and certain measures with respect to the Company’s corporate governance and internal procedures, and (in the Lincolnshire lawsuit) equitable and/or injunctive relief.

On August 12, 2020, the court stayed the Chernet matter pending the resolution of the then-anticipated motion to dismiss the consolidated securities class action.

On December 11, 2020, the court stayed the Lincolnshire matter, also pending the resolution of the motion to dismiss in the consolidated securities class action.

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

Flanders et al., Case No.

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

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

The Badwal complaint purports to assert a claim for breach of fiduciary duty, an insider trading claim, and violations of Section 14(a), 10(b) and 21D of the Exchange Act.

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

On November 29, 2021, the federal court consolidated the Chernet and Badwal matters under the caption In re eHealth, Inc.

Stockholder Derivative Litigation (the “Federal Derivative Action”).

On August 12, 2021, the court granted-in-part and denied-in-part defendants’ motion to dismiss the securities class action.

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

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

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

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

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

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

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

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

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

Note 9 – Segment and Geographic Information

5 unchanged sentences

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

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Additionally, as indicated in Note 1 of this report, our results below reflect our updated methodology used in allocating certain expenses beginning in the first quarter of fiscal 2024, and results from the prior period presented have been recast to conform with the current period presentation.

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

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Medicare $ 59,248 $ 55,430 $ 141,636 $ 117,264

14 unchanged sentences

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

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Geographic Information

2 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

United States $ 26,515 $ 29,419

1 unchanged sentence

Total $ 26,748 $ 29,700

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Significant Customers

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

Substantially all revenue for the three and six months ended June 30, 2024 and 2023 was generated from customers located in the United States.

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

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Humana 29 % 28 % 27 % 27 %

18 % 8 % 21 % 7 %

UnitedHealthcare (1)

18 % 23 % 16 % 22 %

(1) Percentages include the carriers’ subsidiaries.

6 unchanged sentences

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

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

As of June 30, 2024, we expect to generate a total of $ 12.4 million in future sublease income through January 31, 2030.

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

4 unchanged sentences

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

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

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

This resulted in

EHEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

$ 1.9 million and $ 7.4 million of impairment charges related to our operating lease right-of-use assets and property, plant and equipment, which was reflected in the “Impairment, restructuring and other charges” line in our Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2024, respectively.

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

The components of operating lease costs for the three and six months ended June 30, 2024 and 2023 were as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Operating lease expense $ 1,434 $ 1,835 $ 3,170 $ 3,690

2 unchanged sentences

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

Three Months Ended

Six Months Ended

Cash paid for amounts included in the measurement of operating lease liabilities $ 4,444 $ 4,369

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Weighted-average remaining lease term (in years) of operating leases 4.4 4.8

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

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

As of June 30, 2024, maturities of our operating lease liabilities are as follows (in thousands):

Year ending December 31,

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Asset impairment charges $ 1,921 $ — $ 7,413 $ —

Restructuring and reorganization charges

1,114 — 1,935 —

Impairment, restructuring and other charges $ 3,035 $ — $ 9,348 $ —

Asset Impairment

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

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

For the three and six months ended June 30, 2024, we recognized non-cash, pre-tax asset impairment charges of $ 1.9 million and $ 7.4 million, respectively, related to several of our leased office spaces in the “Impairment, restructuring and other charges” line in our Condensed Consolidated Statements of Comprehensive Loss.

These charges were comprised of $ 1.8 million and $ 6.9 million of operating lease right-of-use asset impairments and $ 0.1 million and $ 0.5 million of property and equipment impairment for the three and six months ended June 30, 2024, respectively.

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

5 unchanged sentences

Payments ( 1,785 )

Balance at March 31, 2024 $ 641

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

Balance at June 30, 2024 $ 150

During the three and six months ended June 30, 2024, we recognized $ 1.1 million and $ 1.9 million of pre-tax restructuring charges in the “Impairment, restructuring and other charges” line in our Condensed Consolidated Statements of Comprehensive Loss, primarily related to employee termination benefits as a result of our cost-reduction efforts.

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

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

As of June 30, 2024, we had a $ 0.2 million restructuring accrual on our Condensed Consolidated Balance Sheet.

Note 12 – Debt

8 unchanged sentences

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

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

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

Total amortization of closing costs, or debt issuance costs, was $ 0.5 million and $ 0.9 million for the three and six months ended June 30, 2024, respectively, and $ 0.4 million and $ 0.8 million for the three and six months ended June 30, 2023, respectively, and is recorded in the “Interest expense” line in our Condensed Consolidated Statements of Comprehensive Loss.

There were $ 1.3 million of unamortized issuance costs as of June 30, 2024.

The carrying value of the term loan approximates the fair value, based on Level 2 inputs (observable market prices in less than active markets), as the interest rate is variable over the selected interest period and is similar to current rates at which we can borrow funds.

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

The carrying value of the loan was $ 68.7 million as of June 30, 2024.

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

4 unchanged sentences

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

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

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

As of June 30, 2024, the interest rate was 13.11 % .

For the three and six months ended June 30, 2024 we incurred interest expense of $ 2.3 million and $ 4.6 million, respectively.

For the three and six months ended June 30, 2023 we incurred interest expense of $ 2.2 million and $ 4.4 million , respectively.

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

5 unchanged sentences

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

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

As of June 30, 2024, we were in compliance with our loan covenants.

Note 13 – Income Taxes

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Loss before income taxes $ ( 28,473 ) $ ( 26,044 ) $ ( 46,802 ) $ ( 49,530 )

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

Although we believe the use of the annual effective tax rate method to be appropriate for prior interim reporting periods, for the three and six months ended June 30, 2024, we applied the actual effective tax rate, which reflects the actual taxes attributable to year-to-date losses, as allowed by ASC 740-270 “Income Taxes, Interim Reporting.” We determined that since minor changes in estimated income or loss for fiscal 2024 would result in significant changes in the estimated annual effective tax rate, the actual effective tax rate method would provide a more reliable estimate for the three and six months ended June 30, 2024.

For the three and six months ended June 30, 2024, we recognized a benefit from income taxes of $ 0.5 million and $ 1.9 million, respectively, representing an effective tax rate of 1.8 % and 4.0 %, respectively, which was lower than the statutory federal tax rate primarily due to stock-based compensation adjustments, non-deductible lobbying expenses, and changes in our valuation allowance, partially offset by research and development credits and state taxes.

For the three and six months ended June 30, 2023, we recognized a benefit from income taxes of $ 2.5 million and $ 6.2 million, respectively, representing an effective tax rate of 9.8 % and 12.4 %, respectively, which was lower than the statutory federal tax rate primarily due to stock-based compensation adjustments and non-deductible lobbying expenses, partially offset by research and development credits and state taxes.

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

2 unchanged sentences

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

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

We continue to recognize our deferred tax assets as of June 30, 2024, as we believe it is more likely than not that such deferred tax assets will be realized, with the exception of certain net operating losses and credits for which there is increased uncertainty regarding our future taxable income and a lack of other sources of taxable income, which have a valuation allowance.

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

What changed 10-Q

Item 1. Financial Statements