What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-07 compared with 2024-05-07 · 186 added, 107 removed, 359 unchanged (45% of the section changed)

13 unchanged sentences

Our fiscal 2024 growth strategy focuses on pursuing deliberate enrollment and revenue growth, while diversifying our revenue streams, continuing to build out our unified omnichannel marketing engine, driving higher conversion rates on our platform and enhancing enrollment quality and member retention.

During the first quarter of 2024, we maintained the momentum we built during the most recent Annual Enrollment Period (“AEP”), and we delivered strong enrollment growth in both our core agency choice model (“Agency”) and dedicated carrier model (“Amplify”).

This has been driven by our enhanced marketing strategies and the retention of our tenured benefit advisors.

We have also continued to observe improvements in our constrained lifetime values (“LTV”) of approved members across all of our Medicare-related plans and have been executing on our fixed cost reduction efforts initiative to drive further profitability.

During the first half of 2024, we maintained momentum in our Medicare business delivering strong enrollment growth across our core agency (“Agency”) and carrier-dedicated (“Amplify”) models.

Our Agency model consists of arrangements where we are the broker of record while our Amplify model consists of both broker of record arrangements as well as non-broker of record arrangements where we provide business process outsourcing services (“BPO”) Broker of record arrangements generate commission revenue, and fee-based BPO arrangements generate fee-based revenue which is recorded in other revenue.

Agency performance during the second quarter was driven by our enhanced marketing strategies, greater lead conversion rates and the retention of our tenured benefit advisors.

We also observed significant traction in our Amplify initiatives which is an important element of our business diversification strategy.

This year, we added new carriers to the Amplify platform and are expanding relationships with our existing customers.

During the second quarter of 2024, a portion of our Amplify broker of record arrangements converted to fee-based BPO arrangements, resulting in a reduction of our Medicare approved members and a decrease in the corresponding commission revenue, while our fee-based BPO arrangements have increased, contributing to substantial growth in our other revenue.

While we have observed declines in Medicare plan approved members, which only reflect our broker-of-record arrangements, our total Medicare submissions, inclusive of our broker of record and fee-based BPO arrangements, increased 16% during the second quarter of 2024 compared to the same

period in 2023.

Submissions describe applications that are submitted by individuals online through our eHealth platform or completed with the assistance of our benefit advisors where the individual provides authorization to the benefit advisor to submit the application to the insurance carrier partner.

The individual may have additional actions to take before the application will be reviewed by the insurance carrier and not all submissions ultimately become approved members.

Additionally, during the second quarter of 2024, our existing book of business continued to generate positive adjustment revenue driven by favorable retention and cash collection trends and we continued to execute on our fixed cost reduction initiative while improving our member acquisition costs for our Medicare Agency model.

In our Employer and Individual segment (“E&I”) we have been focused on implementing operational enhancements with a plan to resume enrollment growth in the fourth quarter.

We have progressed into the next phase of our retention strategy where we introduced additional initiatives, including updating our member onboarding experience, launching our loyalty program and personalized communications with our new and existing customers over a variety of channels meant to foster year-round awareness of eHealth and the services we provide.

We have also developed targeted retention programs for audiences with higher propensity for attrition, which include coordinated marketing outreach and specialized training for our benefit advisors to cater to specific member needs.

Additionally, we have built on our co-browsing technology to improve the interaction between our advisors and beneficiaries and began piloting this updated technology in the second quarter of 2024.

We expect this feature to impact enrollment quality and sales efficiency.

For the three months ended March 31, 2024, we observed improvements in our operating cash flow as compared to the same period in the prior year.

Additionally, we achieved positive trailing twelve-month operating cash flow of $3.3 million as of March 31, 2024, which exceeded our target of break-even cash flow for this period and was reflective of our enrollment growth from the most recent AEP as well as our business transformation plan that we completed in fiscal 2023.

We also began preparations for the 2025 Annual Enrollment Period (“AEP”).

We expect to see significant consumer demand this upcoming AEP, presenting a growth opportunity for us that is driven by anticipated changes in many Medicare Advantage plans as well as a reduction in tele-broker capacity as several of our competitors have exited the market over the past twelve months.

Our AEP preparedness efforts include development of and continued enhancements of our marketing materials, enhancements to our omni-channel consumer platform and hiring and training of the new benefit advisor classes.

We have also launched the next phase of our retention strategy including Match Monitor, a tool that allows members to easily understand the implications of annual notice changes, check if any of their critical benefits are impacted and compare their current plan to other options.

We also expanded our loyalty program, ePerks, by adding new partners to the platform and we have developed a plan tracker tool called eHealth Application Tracker, which is designed to allow beneficiaries to monitor the status of their Medicare plan application in real-time.

Member retention is especially important in the upcoming annual enrollment cycle given the anticipated increase in consumer shopping.

Change in Expense Allocation Methodology

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

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

We have recast the Condensed 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.

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Approved Members

Approved members represent the number of individuals on submitted applications that were approved by the relevant insurance carrier for the identified product during the current period.

Approved members represent the number of individuals on submitted applications that were approved by the relevant insurance carrier for the identified product during the current period for which we are the broker of record.

The applications may be submitted in either the current period or prior periods.

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Three Months Ended

March 31, % Change

June 30, % Change Six Months Ended

June 30, % Change

2024 2023 2024 2023

Medicare Advantage 37,638 35,597 6 % 103,388 96,048 8 %

6 unchanged sentences

Total Approved Members 56,568 60,768 (7) % 154,827 158,344 (2) %

Three Months Ended March 31, 2024 and 2023 – Total approved members grew 1% during the three months ended March 31, 2024 compared to the same period in 2023, driven by:

• a 10% growth in Medicare approved members, primarily due to an increased number of benefit advisors and increased variable marketing spend year-over-year, specifically contributing to a 9% increase in Medicare Advantage approved members;

• partially offset by a 29% and 15% decline in individual and family plan and small business health insurance approved members, respectively, primarily due to a decrease in volume as we focus on implementing operational enhancements with a plan to resume enrollment growth in our E&I segment in the fourth quarter;

Three Months Ended June 30, 2024 and 2023 – Total approved members declined 7% during the three months ended June 30, 2024 compared to the same period in 2023, driven by:

• a 1% decline in Medicare approved members, primarily resulting from:

◦ a 50% decline in Medicare Part D approved members due to carrier mix as well as the shift from some broker of record arrangements to fee-based arrangements within our Amplify platform,

◦ a 33% decline in Medicare Supplement approved members due to the shift from some broker of record arrangements to fee-based arrangements within our Amplify platform, and

◦ a 6% increase in Medicare Advantage approved members due to an increased number of benefit advisors and increased variable marketing spend year-over-year, partially offset by the shift from some broker of record arrangements to fee-based arrangements within our Amplify platform.

• a 15% decline in ancillary approved members due to declines in approved members across all ancillary insurance products that are typically cross-sold with new individual and family plan enrollments;

• a 53% and 18% decline in small business health insurance and individual and family plan approved members, respectively, primarily due to a decrease in volume as we focus on implementing operational enhancements with a plan to resume enrollment growth in our E&I segment in the fourth quarter of 2024.

Six Months Ended June 30, 2024 and 2023 – Total approved members declined 2% during the six months ended June 30, 2024 compared to the same period in 2023, driven by:

• a 16% decline in ancillary approved members due to declines in approved members across most ancillary insurance products that are typically cross-sold with new individual and family plan enrollments;

• a 26% and 34% decline in individual and family plan and small business health insurance approved members, respectively, primarily due to a decrease in volume as we focus on implementing operational enhancements with a plan to resume enrollment growth in our E&I segment in the fourth quarter of 2024;

• partially offset by a 6% increase in Medicare approved members, primarily resulting from:

◦ an increased number of benefit advisors and increased variable marketing spend year-over-year, specifically contributing to an 8% increase in both Medicare Advantage and Medicare Supplement approved members,

◦ slightly offset by the shift from some broker of record arrangements to fee-based arrangements within our Amplify platform, which impacted all Medicare products, along with an additional decline in Medicare Part D approved members due to carrier mix.

Estimated Constrained Lifetime Value of Commissions Per Approved Member

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Three Months Ended

March 31, % Change

June 30, % Change

Medicare (1) (2)

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Small Business (1)

215 233 (8) %

(1) Constrained LTV of commissions per approved member for Medicare, individual and family and ancillary plans represents commissions estimated to be collected over the estimated life of an approved member’s plan after applying constraints in accordance with our revenue recognition policy.

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For additional information on constrained LTV, see “ Critical Accounting Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2023.

(2) The constraints applied to the total estimated lifetime commissions we expect to receive for selling the plan after the carrier approves an application in order to derive the constrained LTV of commissions for approved members recognized were 7%, 9% and 7% for Medicare Advantage, Medicare Supplement and Medicare Part D, respectively, for the three months ended March 31, 2024 and 2023.

Three Months Ended March 31, 2024 and 2023 - The changes in constrained LTV of commissions per approved member consisted of:

• a 6% increase in Medicare Advantage plans, reflecting favorable carrier and contract mix;

• a 9% increase in Medicare Supplement plans, primarily due to an improved ratio of approved members who became paying members and favorable retention, partially offset by unfavorable carrier and contract mix;

• a 17% increase in Medicare Part D plans, primarily driven by favorable commission rates and improved retention;

• a 4% decrease in non-qualified plans, primarily driven by unfavorable retention trends in older cohorts, partially offset by favorable carrier and contract mix;

• a 4% increase in qualified plans, primarily driven by favorable carrier and contract mix, partially offset by unfavorable retention trends;

• a 13% and 20% increase in dental and vision plans, respectively, primarily driven by favorable carrier and contract mix;

• an 8% decrease in small business plans, primarily due to unfavorable contract rates.

(2) The constraints applied to the total estimated lifetime commissions we expect to receive for selling the plan after the carrier approves an application in order to derive the constrained LTV of commissions for approved members recognized for Medicare Advantage, Medicare Supplement and Medicare Part D were 5.5%, 9% and 7%, respectively, for the three months ended June 30, 2024 and 7%, 9% and 7%, respectively, for the three months ended June 30, 2023.

Three Months Ended June 30, 2024 and 2023 - The changes in constrained LTV of commissions per approved member primarily consisted of:

• a 4% increase in Medicare Advantage plans, reflecting positive trends in commissions collected as a result of more favorable carrier and contract mix and a decrease in constraint due to a decline in

volatility and the observed increases in LTV trends, partially offset by less favorable retention for Q2 2024 cohorts compared to Q2 2023 cohorts;

• a 27% increase in Medicare Supplement plans, primarily due to favorable carrier and contract mix and favorable retention;

• a 3% decrease in Medicare Part D plans, primarily driven by unfavorable carrier and contract mix, partially offset by improved retention;

• a 7% increase in non-qualified health plans, primarily driven by favorable carrier and contract mix, partially offset by unfavorable retention;

• a 24%, 15% and 7% increase in dental, vision and short-term plans, respectively, primarily driven by favorable carrier and contract mix;

• a 10% increase in small business plans, primarily due to favorable contract rates.

Estimated Membership

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As a result of the delay in our receipt of information from insurance carriers, actual trends in our membership are most discernible over periods longer than from one quarter to the next, making it difficult for us to determine with any certainty the impact of current conditions on our membership retention.

Various circumstances 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.

Various circumstances 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.

The following table shows estimated membership by product as of the periods presented below:

As of March 31, % Change

As of June 30, % Change

Medicare Advantage 584,649 572,799 2 %

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(1) To estimate the number of members on Medicare-related, individual and family, and ancillary health insurance plans, we take the respective sum of:

(i) the number of members for whom we have received or applied a commission payment for a month that may be up to three months prior to the date of estimation (after reducing that number using historical experience for assumed member

cancellations over the period being estimated);

and (ii) the number of approved members over that period (after reducing that number using historical experience for an assumed number of members who do not accept their approved policy and for estimated member cancellations through the date of the estimate).

To the extent we determine through confirmations from a health insurance carrier that a commission payment is delayed or is inaccurate as of the date of estimation, we adjust the estimated membership to also reflect the number of members for whom we expect to receive or to refund a commission payment.

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We often are made aware of policy cancellations and group size changes at the time of annual renewal and update our membership statistics accordingly in the period they are reported.

March 31, 2024 compared to March 31, 2023 - Total estimated membership declined 5% as of March 31, 2024 compared to March 31, 2023 due to:

• a 1% decline in Medicare estimated membership year over year, driven by:

◦ a 2% and 12% decline in Medicare Supplement and Medicare Part D plans, respectively;

◦ partially offset by a 3% increase in Medicare Advantage plans, primarily due to an increase in Medicare Advantage approved applications year-over-year, and

• an 18%, 13% and 5% decline year-over-year in individual and family plan, ancillary plan and small business plan estimated membership, respectively, due to a decrease in approved applications as we focus on implementing operational enhancements with a plan to resume enrollment growth in our E&I segment in the fourth quarter.

June 30, 2024 compared to June 30, 2023 - Total estimated membership declined 3% as of June 30, 2024 compared to June 30, 2023 due to:

• an 11%, 11% and 3% decline year-over-year in individual and family plan, ancillary plan and small business plan estimated membership, respectively, primarily due to a decrease in approved applications as we focus on implementing operational enhancements with a plan to resume enrollment growth in our E&I segment in the fourth quarter of 2024;

• overall flat Medicare estimated membership year over year, due to a 2% and 3% increase in Medicare Advantage and Medicare Supplement plans, respectively, as a result of increased approved applications, partially offset by the shift from some broker of record arrangements to fee-based arrangements within our Amplify platform, which impacted all Medicare products.

Member Acquisition

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Variable marketing costs exclude fixed overhead costs, such as personnel related costs, consulting expenses and other operating costs allocated to the marketing and advertising department.

The numerator used to calculate each member acquisition metric discussed above is the portion of the respective operating expenses for CC&E and marketing and advertising that is directly related to member acquisition for our sale of Medicare Advantage, Medicare Supplement and Medicare Part D prescription drug plans (collectively, “Medicare Plans”) and for all individual and family major medical plans and short-term health insurance plans (collectively, “IFP Plans”), respectively.

The denominator used to calculate each metric is based on a derived metric that represents the relative value of the new members acquired.

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Three Months Ended

March 31, % Change

June 30, % Change

CC&E cost per MA-equivalent approved member (1)

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(2) We calculate the number of IFP-equivalent approved members by adding the total number of approved qualified and non-qualified health plan members and 33% of the total number of short-term approved members during the periods presented.

Three Months Ended March 31, 2024 and 2023 - Total acquisition cost per MA-equivalent approved member increased $89, or 12%, during the three months ended March 31, 2024 compared to the same period in 2023, driven by:

• a $70, or 20%, increase in CC&E cost per MA-equivalent approved member due to increased costs associated with a higher number of benefit advisors, including tenured advisors we retained subsequent to our most recent AEP, advisors who support our dedicated Amplify fulfillment model and retention staff to support our member engagement strategies, during the three months ended March 31, 2024 compared to the same period in 2023;

• a $19, or 5%, increase in variable marketing cost per MA-equivalent approved member, primarily due to channel mix.

Three Months Ended June 30, 2024 and 2023 - Total acquisition cost per MA-equivalent approved member decreased $46, or 4%, during the three months ended June 30, 2024 compared to the same period in 2023, driven by:

• a $107, or 15%, decrease in CC&E cost per MA-equivalent approved member driven by:

◦ a reduced new benefit advisor ramp during the three months ended June 30, 2024 compared to the same period in 2023 as we retained a larger number of tenured benefit advisors subsequent to our 2024 AEP,

◦ continued optimization of our sales force operations, and

◦ reductions in third party agent costs which were utilized to support volume during the three months ended June 30th 2023.

• a $61, or 15%, increase in variable marketing cost per MA-equivalent approved member, primarily reflecting acquisition costs to drive Medicare enrollment growth on our Agency platform.

Individual and Family

Three Months Ended March 31, 2024 and 2023 - Total acquisition cost per IFP-equivalent approved member increased $66, or 43%, during the three months ended March 31, 2024 compared to the same period in 2023, driven by:

• a $49, or 44%, increase in CC&E cost per IFP-equivalent approved member due the overall decline in individual and family plan, ancillary and small business approved members;

• an $18, or 45%, increase in variable marketing cost per IFP-equivalent approved member, primarily driven by the decline in approved members.

Three Months Ended June 30, 2024 and 2023 - Total acquisition cost per IFP-equivalent approved member increased $57, or 20%, during the three months ended June 30, 2024 compared to the same period in 2023, driven by:

• a $54, or 23%, increase in CC&E cost per IFP-equivalent approved member due the overall decline in individual and family plan, ancillary and small business approved members as a result of a decline in our conversion rates;

• a $3, or 5%, increase in variable marketing cost per IFP-equivalent approved member, primarily driven by the decline in approved members as a result of a decline in our conversion rates.

Critical Accounting Policies and Estimates

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There have been no changes to our critical accounting policies and estimates described in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 29, 2024, that have had a significant impact on our condensed consolidated financial statements and related notes.

Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, for a complete discussion of our other critical accounting policies and estimates.

Please refer to Management’s Discussion and Analysis of Financial Condition and Results of

Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, for a complete discussion of our other critical accounting policies and estimates.

Results of Operations

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Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Commission $ 56,847 86 % $ 60,186 90 % $ 137,774 87 % $ 128,189 91 %

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Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

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

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Three Months Ended

March 31, Change

June 30, Change Six Months Ended

June 30, Change

2024 2023 $ % 2024 2023 $ %

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Total revenue $ 65,856 $ 66,768 $ (912) (1) % $ 158,820 $ 140,491 $ 18,329 13 %

Three Months Ended March 31, 2024 and 2023 – Commission revenue increased $12.9 million, or 19%, during the three months ended March 31, 2024 compared to the same period in 2023 due to:

• a $14.1 million, or 25%, increase in commission revenue from the Medicare segment driven by:

Three Months Ended June 30, 2024 and 2023 – Commission revenue decreased $3.3 million, or 6%, during the three months ended June 30, 2024 compared to the same period in 2023 due to:

• a $4.6 million, or 42%, decrease in commission revenue from our E&I segment driven by:

◦ net adjustment revenue from prior periods enrollments of $0.8 million during the three months ended June 30, 2024 compared to $5.3 million in the same period in 2023;

◦ an 18%, 15% and 53% decline in individual and family plan, ancillary product and small business approved members, respectively;

◦ partially offset by improved constrained LTV of commissions per approved member for most products in our E&I segment.

• a $1.2 million, or 2%, increase in commission revenue from our Medicare segment driven by:

◦ a 6% increase in Medicare Advantage plan approved members, partially offset by decreases in Medicare Supplement and Medicare Part D plan approved members;

◦ improved constrained LTV of commissions per approved member for Medicare Advantage and Medicare Supplement products;

◦ partially offset by a net adjustment revenue from prior periods enrollments of $10.7 million during the three months ended June 30, 2024 compared to $13.4 million in the same period in 2023.

Other revenue increased $2.4 million, or 37%, during the three months ended June 30, 2024 compared to the same period in 2023 due to an increase in fee-based revenue due to a shift in some of our Amplify broker of record arrangements to fee-based arrangements.

Six Months Ended June 30, 2024 and 2023 – Commission revenue increased $9.6 million, or 7%, during the six months ended June 30, 2024 compared to the same period in 2023 due to:

• a $15.3 million, or 14%, increase in commission revenue from our Medicare segment driven by:

◦ a 6% increase in overall Medicare plan approved members, specifically driven by increases in Medicare Advantage and Medicare Supplement plan approved members;

◦ improved constrained LTV of commissions per approved member for all Medicare products;

◦ a net adjustment revenue from prior periods enrollments of $1.0 million during the three months ended March 31, 2024 compared to $0.1 million in the same period in 2023.

• a $1.2 million, or 10%, decrease in commission revenue from the E&I segment driven by:

◦ improved constrained LTV of commissions per approved member for Medicare Advantage and Medicare Supplement products;

◦ partially offset by a net adjustment revenue from prior periods enrollments of $11.7 million during the six months ended June 30, 2024 compared to $13.5 million in the same period in 2023.

• a $5.7 million, or 26%, decrease in commission revenue from our E&I segment driven by:

◦ a net adjustment revenue from prior periods enrollments of $2.3 million during the six months ended June 30, 2024 compared to $6.8 million in the same period in 2023;

◦ a 26%, 16% and 34% decline in individual and family plan, ancillary product and small business approved members, respectively;

◦ a 4% decrease in constrained LTV of commissions per approved member for non-qualified plans;

◦ partially offset by a 4%, 13% and 20% increase in constrained LTV of commissions per approved member for qualified, dental and vision plans, respectively.

Other revenue increased $6.3 million, or 110%, during the three months ended March 31, 2024 compared to the same period in 2023 due to an increase in sponsorship revenue.

◦ partially offset by improved constrained LTV of commissions per approved member for most products in our E&I segment.

Other revenue increased $8.7 million, or 71%, during the six months ended June 30, 2024 compared to the same period in 2023 due to an increase in sponsorship revenue as well as fee-based revenue due to a shift in some of our Amplify broker of record arrangements to fee-based arrangements.

See Summary of Selected Metrics above and Segment Information below for further discussion.

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Three Months Ended

March 31, Change

June 30, Change Six Months Ended

June 30, Change

2024 2023 $ % 2024 2023 $ %

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% of total revenue 41 % 35 % 41 % 40 %

Three Months Ended March 31, 2024 and 2023 – Marketing and advertising expenses increased $5.9 million, or 18%, during the three months ended March 31, 2024 compared to the same period in 2023, primarily driven by a $4.0 million increase in variable advertising costs and a $1.1 million increase in fixed marketing costs as we returned to growth in our Medicare segment after completing our business transformation plan in fiscal 2023.

The increase in variable advertising costs was primarily related to our direct marketing channels and reflects our plan to attract and retain beneficiaries in fiscal 2024.

Three Months Ended June 30, 2024 and 2023 – Marketing and advertising expenses increased $3.3 million, or 14%, during the three months ended June 30, 2024 compared to the same period in 2023, primarily driven by a $2.7 million increase in variable advertising costs, a $0.7 million increase in personnel costs and a $0.4 million increase in software costs, partly offset by a $0.6 million decrease in fixed marketing costs.

The increase in variable advertising costs was primarily related to our investment in direct marketing channels and reflects our plan to increasingly attract and retain beneficiaries through brand-driven materials and communications in fiscal 2024.

Six Months Ended June 30, 2024 and 2023 – Marketing and advertising expenses increased $9.2 million, or 16%, during the six months ended June 30, 2024 compared to the same period in 2023, primarily driven by a $6.8 million increase in variable advertising costs, a $0.9 million increase in personnel costs, a $0.8 million increase in software costs and a $0.4 million increase in fixed marketing costs as we returned to growth in our Medicare segment after completing our business transformation plan in fiscal 2023.

The increase in variable advertising costs was primarily related to our direct marketing channels and brand investment.

Customer Care and Enrollment

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Three Months Ended

March 31, Change

June 30, Change Six Months Ended

June 30, Change

2024 2023 $ % 2024 2023 $ %

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% of total revenue 43 % 45 % 39 % 39 %

Three Months Ended March 31, 2024 and 2023 – Customer care and enrollment expenses increased $7.8 million, or 31%, during the three months ended March 31, 2024 compared to the same period in 2023, primarily due to increases of $5.8 million in personnel costs, $0.9 million in higher licensing costs and $0.7 million in software subscription costs.

Three Months Ended June 30, 2024 and 2023 – Customer care and enrollment expenses decreased $1.4 million, or 5%, during the three months ended June 30, 2024 compared to the same period in 2023, primarily due to a $0.8 million decrease in personnel and compensation costs and a $0.3 million decrease in consulting expenses.

Six Months Ended June 30, 2024 and 2023 – Customer care and enrollment expenses increased $6.4 million, or 12%, during the six months ended June 30, 2024 compared to the same period in 2023, primarily due to increases of $4.9 million in personnel and compensation costs and $1.2 million in licensing costs.

The increase in personnel costs reflect the scaling of our agent force supporting our dedicated carrier efforts, retention of a greater number of licensed advisors subsequent to our most recent AEP to support enrollment growth planned for fiscal 2024 and expansion of our member retention efforts.

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March 31, Change

June 30, Change Six Months Ended

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% of total revenue 20 % 22 % 17 % 21 %

Three Months Ended March 31, 2024 and 2023 – Technology and content expenses decreased $1.0 million, or 7%, during the three months ended March 31, 2024 compared to the same period in 2023, primarily driven by a $0.7 million decrease in amortization of internally developed software and a $0.3 million decrease in other expenses.

Three Months Ended June 30, 2024 and 2023 – Technology and content expenses decreased $1.4 million, or 10%, during the three months ended June 30, 2024 compared to the same period in 2023, primarily driven by a $0.7 million decrease in amortization of internally developed software and a $0.5 million decrease in personnel and compensation costs due to lower headcount as a result of our continued cost reduction initiative.

Six Months Ended June 30, 2024 and 2023 – Technology and content expenses decreased $2.5 million, or 9%, during the six months ended June 30, 2024 compared to the same period in 2023, primarily driven by a $1.5 million decrease in amortization of internally developed software and a $0.5 million decrease in personnel and compensation costs due to lower headcount as a result of our continued cost reduction initiative.

General and Administrative

General and administrative expenses include compensation and benefits costs for personnel working in our executive, finance, investor relations, government affairs, legal, compliance, human resources, facilities and internal information technology departments.

information technology departments.

These expenses also include fees paid for outside professional services, tax, legal, government affairs and information technology fees.

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Three Months Ended

March 31, Change

June 30, Change Six Months Ended

June 30, Change

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% of total revenue 34 % 38 % 26 % 35 %

Three Months Ended March 31, 2024 and 2023 – General and administrative expenses decreased $4.7 million, or 19%, during the three months ended March 31, 2024 compared to the same period in 2023, primarily driven by a $2.8 million decrease in personnel and compensation costs, a $0.8 million decrease in consulting expenses and a $0.7 million decrease in software subscriptions and other expenses.

Three Months Ended June 30, 2024 and 2023 – General and administrative expenses decreased $2.6 million, or 11%, during the three months ended June 30, 2024 compared to the same period in 2023, primarily driven by a $0.6 million decrease in professional fees, a $0.6 million decrease in stock based compensation expense, a $0.6 million decrease in facilities and other operating expenses and a $0.5 million decrease in personnel and compensation costs.

Six Months Ended June 30, 2024 and 2023 – General and administrative expenses decreased $7.4 million, or 15%, during the six months ended June 30, 2024 compared to the same period in 2023, primarily driven by a $3.3 million decrease in personnel and compensation costs, a $1.4 million decrease in professional fees, a $1.2 million decrease in facilities and other operating expenses and a $0.6 million decrease in consulting expenses.

Impairment, Restructuring and Other Charges

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* Percentage calculated is not meaningful.

Three Months Ended March 31, 2024 and 2023 – We incurred $6.3 million in impairment, restructuring and other charges for the three months ended March 31, 2024 compared to no impairment, restructuring and other charges for the three months ended March 31, 2023.

Three Months Ended June 30, 2024 and 2023 – We incurred $3.0 million in impairment, restructuring and other charges for the three months ended June 30, 2024 compared to no impairment, restructuring and other charges for the three months ended June 30, 2023.

These charges consisted of $1.9 million of impairment charges related to our leased office spaces, primarily related to our operating lease right-of-use assets.

We also incurred $1.1 million of restructuring charges which were primarily related to employee termination benefits as a result of our continued cost reduction efforts since the beginning of fiscal 2024.

Six Months Ended June 30, 2024 and 2023 – We incurred $9.3 million in impairment, restructuring and other charges for the six months ended June 30, 2024 compared to no impairment, restructuring and other charges for the six months ended June 30, 2023.

These charges consisted of $7.4 million of impairment related to several of our leased office spaces, which was comprised of $6.9 million of operating lease right-of-use asset impairments and $0.5 million of property and equipment impairments.

We also incurred $0.8 million of restructuring charges which primarily related to employee termination benefits as a result of our cost-reduction efforts during the first quarter of fiscal 2024.

We also incurred $1.9 million of restructuring charges which primarily related to employee termination benefits as a result of our cost-reduction efforts during the first half of fiscal 2024.

Interest Expense

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% of total revenue (4) % (4) % (4) % (4) %

Three Months Ended March 31, 2024 and 2023 – Interest expense increased by $0.2 million, or 9%, primarily driven by a $0.2 million increase in debt interest expense as a result of higher interest rates.

Three Months Ended June 30, 2024 and 2023 – Interest expense increased by $0.1 million, or 5%, primarily driven by a $0.1 million increase in debt interest expense as a result of higher interest rates.

Six Months Ended June 30, 2024 and 2023 – Interest expense increased by $0.4 million, or 7%, primarily driven by a $0.2 million increase in debt interest expense as a result of higher interest rates.

Other Income, Net

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% of total revenue 4 % 4 % 3 % 3 %

Three Months Ended March 31, 2024 and 2023 – Other income, net, was $2.4 million during the three months ended March 31, 2024, compared to other income, net, of $2.0 million during the three months ended March 31, 2023.

The change was primarily due to a $0.2 million increase in interest income as a result of more favorable short-term investment rates.

Three Months Ended June 30, 2024 and 2023 – Other income, net, was $2.3 million during the three months ended June 30, 2024, compared to other income, net, of $2.8 million during the three months ended June 30, 2023.

The change was primarily due to a $0.2 million increase in interest income as a result of more favorable short-term investment returns.

Six Months Ended June 30, 2024 and 2023 – Other income, net, was $4.7 million during the six months ended June 30, 2024, compared to other income, net, of $4.8 million during the six months ended June 30, 2023.

Benefit from Income Taxes

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Effective tax rate 1.8 % 9.8 % 4.0 % 12.4 %

Three Months Ended March 31, 2024 and 2023 – Our effective tax rate of 7.3% for the three months ended March 31, 2024 was lower than our 15.4% effective tax rate for the three months ended March 31, 2023 primarily due to fluctuations in 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.

Our effective tax rate for the three months ended March 31, 2024 was lower than the statutory federal tax rate due primarily to stock-based compensation adjustments and non-deductible lobbying expenses, partially offset by research and development credits and state taxes.

Three Months Ended June 30, 2024 and 2023 – Our effective tax rate of 1.8% for the three months ended June 30, 2024 was lower than our 9.8% effective tax rate for the three months ended June 30, 2023 primarily due to fluctuations in stock-based compensation adjustments and the change from using an annualized effective tax rate method to using the actual effective tax rate to calculate our provision for income taxes.

Our effective tax rate for the three months ended June 30, 2024 was lower than the statutory federal tax rate due primarily 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.

Six Months Ended June 30, 2024 and 2023 – Our effective tax rate of 4.0% for the six months ended June 30, 2024 was lower than our 12.4% effective tax rate for the six months ended June 30, 2023 primarily due to fluctuations in stock-based compensation adjustments and the change from using an annualized effective tax rate method to using the actual effective tax rate to calculate our provision for income taxes.

Our effective tax rate for the six months ended June 30, 2024 was lower than the statutory federal tax rate due primarily 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.

Segment Information

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Our CODM does not separately evaluate assets by segment, with the exception of commissions receivable, and therefore assets by segment are not presented.

The Medicare segment consists primarily of amounts earned from our sale of Medicare-related health insurance plans, including Medicare Advantage, Medicare Supplement and Medicare Part D prescription drug plans, fees earned for the performance of administrative services, amounts earned from our non-broker of record arrangements, our performance of various post-enrollment services for members and to a lesser extent, amounts earned from our sale of ancillary products sold to our Medicare-eligible customers, including but not limited to, dental and vision plans, as well as amounts we are paid in connection with our advertising program for marketing and other services.

The Medicare segment consists primarily of amounts earned from our sale of Medicare-related health insurance plans, including Medicare Advantage, Medicare Supplement and Medicare Part D prescription drug plans, fees earned for the performance of administrative services, amounts earned from our non-broker-of-record, or fee-based, arrangements, our performance of various post-enrollment services for members and to a lesser extent, amounts earned from our sale of ancillary products sold to our Medicare-eligible customers, including but not limited to, dental and vision plans, as well as amounts we are paid in connection with our advertising program for marketing and other services.

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

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Corporate consists of other indirect general and administrative operating expenses, excluding stock-based compensation expense, depreciation and amortization, which are managed in a corporate shared services environment and, since they are not the responsibility of segment operating management, are not allocated to the reportable segments and are instead reported within Corporate.

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.

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 performance of each reportable segment is evaluated based on several factors, including revenue and segment profit (loss), which is calculated as total revenue for the applicable segment less direct and indirect allocated marketing and advertising, customer care and enrollment, technology and content and general and administrative operating expenses, excluding stock-based compensation expense, depreciation and amortization, impairment, restructuring and other charges, interest expense and other income (expense), net.

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Medicare Segment

Three Months Ended March 31, 2024 and 2023 – Revenue from our Medicare segment increased $20.6 million, or 33%, during the three months ended March 31, 2024 compared to the same period in 2023, primarily attributable to a $14.1 million increase in commission revenue.

The increase in Medicare segment commission revenue is primarily due to a $7.9 million increase in Medicare Advantage plan related commission revenue driven by 9% growth in Medicare Advantage plan approved members and improved constrained LTV of commissions per approved member for all Medicare products compared to the same period in the prior year as we executed on our transformation initiatives to optimize customer acquisition spend and ultimately grow profitability.

Additionally, the Medicare segment had $1.0 million in net adjustment revenue from prior period enrollments for the three months ended March 31, 2024, compared to $0.1 million in net adjustment revenue for the same period in 2023.

Our Medicare segment profit was $8.3 million during the three months ended March 31, 2024, an improvement of $8.9 million, compared to a segment loss of $0.6 million for the same period in 2023.

Three Months Ended June 30, 2024 and 2023 – Revenue from our Medicare segment increased $3.8 million, or 7%, during the three months ended June 30, 2024 compared to the same period in 2023 due to a $2.6 million increase in fee-based revenue and a $1.2 million increase in commission revenue.

The increase in fee-based revenue was driven by a shift in some of our Amplify broker-of-record arrangements to fee-based arrangements.

The increase in Medicare segment commission revenue is due primarily to a 6% increase in Medicare Advantage plan approved members, increased constrained LTV of commissions per approved member for Medicare Advantage and Medicare Supplement products, as well as an increase of $0.6 million in Medicare segment bonus revenue.

These increases were partially offset by lower net adjustment revenue from prior period enrollments, which was $10.7 million for the three months ended June 30, 2024, compared to $13.4 million for the same period in 2023.

Our Medicare segment profit was $1.3 million during the three months ended June 30, 2024, an improvement of $3.3 million, compared to a segment loss of $2.1 million for the same period in 2023.

This increase was primarily driven by a $3.8 million increase in revenue from our Medicare segment, partially offset by a $0.5 million increase in operating expenses from our Medicare segment, excluding stock-based compensation expense, depreciation and amortization, impairment, restructuring and other charges, interest expense and other income, net.

The increase in operating expenses was mostly attributable to continued implementation of our initiatives to attract and retain beneficiaries in fiscal 2024.

Six Months Ended June 30, 2024 and 2023 – Revenue from our Medicare segment increased $24.4 million, or 21%, during the six months ended June 30, 2024 compared to the same period in 2023, primarily attributable to a $15.3 million increase in commission revenue.

The increase in Medicare segment commission revenue is primarily due to a $4.7 million and $4.4 million increase in Medicare Advantage plan and Medicare Supplement plan related commission revenue, respectively, driven by an 8% growth in both Medicare Advantage plan and Medicare Supplement plan approved members.

Additionally, the increase in Medicare segment commission was due to improved constrained LTV of commissions per approved member for Medicare Advantage plans and Medicare Supplement plans compared to the same period in the prior year.

These increases were partially offset by $11.7 million in net adjustment revenue from prior period enrollments for the six months ended June 30, 2024, compared to $13.5 million in net adjustment revenue for the same period in 2023 in our Medicare segment.

Our Medicare segment profit was $9.6 million during the six months ended June 30, 2024, an improvement of $12.2 million, compared to a segment loss of $2.6 million for the same period in 2023.

This increase was primarily driven by a $24.4 million increase in revenue from our Medicare segment, partially offset by an $12.1 million increase in operating expenses from our Medicare segment, excluding stock-based compensation expense, depreciation and amortization, impairment, restructuring and other charges, interest expense and other income, net.

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Employer and Individual Segment

Three Months Ended March 31, 2024 and 2023 – Revenue from our E&I segment decreased $1.3 million, or 11%, during the three months ended March 31, 2024 compared to the same period in 2023, primarily attributable to a $1.2 million decrease in commission revenue due to declines in individual and family plan, ancillary product and small business approved members as well as a decrease in constrained LTV of commissions per approved member for non-qualified plans, partially offset by an increase in LTV of commissions per approved member for qualified, dental and vision plans.

Three Months Ended June 30, 2024 and 2023 – Revenue from our E&I segment decreased $4.7 million, or 42%, during the three months ended June 30, 2024 compared to the same period in 2023, primarily attributable to a $4.6 million decrease in commission revenue driven by lower net adjustment revenue from prior period enrollments.

Net adjustment revenue from prior period enrollments for the three months ended June 30, 2024 was $0.8 million, compared to $5.3 million for the same period in 2023.

Revenue also decreased due to declines in individual and family plan, ancillary product and small business approved members, partially offset by an increase in LTV of commissions per approved member for most products in our E&I segment.

The reduced volumes are a result of our focus on implementing operational enhancements in the E&I segment and we plan to return to enrollment growth in the fourth quarter of fiscal 2024.

Our E&I segment profit was $4.7 million during the three months ended March 31, 2024, a decrease of $3.0 million, or 39%, compared to segment profit of $7.7 million for the same period in 2023.

Our E&I segment profit was $0.9 million during the three months ended June 30, 2024, a decrease of $6.0 million, or 87%, compared to segment profit of $6.9 million for the same period in 2023.

The decrease was primarily driven by a $4.7 million decrease in our E&I segment revenue and a $1.3 million increase in our E&I segment operating expenses, excluding stock-based compensation expense, depreciation and amortization, impairment, restructuring and other charges, interest expense and other income, net.

The increase in operating expenses was mostly attributable to investments in operational enhancements for our E&I segment that are underway in fiscal 2024.

Six Months Ended June 30, 2024 and 2023 – Revenue from our E&I segment decreased $6.0 million, or 26%, during the six months ended June 30, 2024 compared to the same period in 2023, primarily attributable to a $5.7 million decrease in commission revenue driven by lower net adjustment revenue from prior period enrollments.

Net adjustment revenue from prior period enrollments for the six months ended June 30, 2024 was $2.3 million, compared to $6.8 million in the same period in 2023.

The reduced volumes are a result of our focus on implementing operational enhancements in the E&I segment, and we plan to return to enrollment growth in the fourth quarter of fiscal 2024.

Our E&I segment profit was $5.5 million during the six months ended June 30, 2024, a decrease of $9.0 million, or 62%, compared to segment profit of $14.6 million for the same period in 2023.

The decrease was primarily driven by a $6.0 million decrease in our E&I segment revenue and a $3.0 million increase in our E&I segment operating expenses, excluding stock-based compensation expense, depreciation and amortization, impairment, restructuring and other charges, interest expense and other income, net.

The increase in operating expenses was mostly attributable to investments in our operational enhancements for our E&I segment that are underway in fiscal 2024.

Liquidity and Capital Resources

As of March 31, 2024, we had cash, cash equivalents and short-term marketable securities of $188.9 million.

During the three months ended March 31, 2024, we generated operating cash flow of $70.8 million as summarized below.

As of June 30, 2024, we had cash, cash equivalents and short-term marketable securities of $151.1 million.

During the six months ended June 30, 2024, we generated operating cash flow of $38.6 million as summarized below.

We have historically financed our operations primarily through cash generated from our operations, equity issuances and debt financing.

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Our cash, cash equivalents and short-term marketable securities are summarized as follows (in thousands):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Cash and cash equivalents $ 126,344 $ 115,722

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Cash equivalents, which are comprised of financial instruments with an original maturity of 90 days or less from the date of purchase, primarily consist of commercial paper, money market funds and agency bonds.

We also maintained $3.1 million in restricted cash as of March 31, 2024 and December 31, 2023.

We also maintained $3.1 million in restricted cash as of June 30, 2024 and December 31, 2023.

Material Cash Requirements

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See Note 8 – Commitments and Contingencies in ou r Notes to Condensed Consolidated Financial Statements.

Short-term obligations were $8.5 million for leases and $4.3 million for service and licensing as of March 31, 2024.

Long-term obligations were $29.8 million for leases and $0.6 million for service and licensing as of March 31, 2024.

Short-term obligations were $9.0 million for leases and $3.0 million for service and licensing as of June 30, 2024.

Long-term obligations were $27.1 million for leases and $0.1 million for service and licensing as of June 30,

We expect to fund these obligations through our existing cash and cash equivalents and cash generated from operations.

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in a private placement and received $214.0 million net proceeds on April 30, 2021 .

During 2023, we made cash dividend payments in the aggregate amount of $3.5 million and as of March 31, 2024, we have accrued $1.3 million for cash dividends.

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

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

Investment Agreement also provides certain redemption rights on or after April 2027.

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to accelerate the redemption of the Series A Preferred Stock nor is it expected to materially impact our ability to generate and obtain adequate amounts of cash to meet our short-term or long-term requirements.

As of March 31, 2024, we complied with the Minimum Liquidity Amount.

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

Term Loan Credit Agreement

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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 March 31, 2024, the carrying value of the loan under the Credit Agreement was $68.2 million and we were in compliance with our loan covenants.

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 on the credit facility 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.

As of June 30, 2024, the carrying value of the loan under the Credit Agreement was $68.7 million and we were in compliance with our loan covenants.

See Note 12 – Debt in our Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional information regarding the Credit Agreement.

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Cash Activities

Our cash flows for the three months ended March 31, 2024 and 2023 are summarized as follows (in thousands):

Three Months Ended

Our cash flows for the six months ended June 30, 2024 and 2023 are summarized as follows (in thousands):

Six Months Ended

Net cash provided by operating activities $ 38,579 $ 51,375

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In periods of membership growth, cash receipts associated with new and continuing members may be less than the cash outlays to acquire new members.

Three Months Ended March 31, 2024 – Net cash provided by operating activities was $70.8 million during the three months ended March 31, 2024, primarily driven by changes in net operating assets and liabilities of $73.8 million and adjustments for non-cash items of $14.0 million, partially offset by a net loss of $17.0 million.

Adjustments for non-cash items primarily consisted of $5.5 million of impairment charges, $5.5 million of stock-based compensation expense and $3.9 million of amortization of internally developed software, partially offset by a $1.4 million decrease due to the change in deferred income taxes.

Cash provided by changes in net operating assets and liabilities during the three months ended March 31, 2024 primarily consisted of a decrease of $73.1 million in contract assets – commissions receivable and $2.6 million in accounts receivable and a $8.1 million increase in deferred revenue, partly offset by a decrease of $10.9 million in accrued marketing expenses.

Three Months Ended March 31, 2023 – Net cash provided by operating activities was $60.8 million during the three months ended March 31, 2023, primarily driven by changes in net operating assets and liabilities of $74.0 million and adjustments for non-cash items of $6.7 million, partially offset by a net loss of $19.9 million.

Six Months Ended June 30, 2024 – Net cash provided by operating activities was $38.6 million during the six months ended June 30, 2024, primarily driven by changes in net operating assets and liabilities of $59.5 million and adjustments for non-cash items of $24.0 million, partially offset by a net loss of $45.0 million.

Adjustments for non-cash items primarily consisted of $10.6 million of stock-based compensation expense, $7.7 million of amortization of internally developed software and $7.4 million of impairment charges, partially offset by a $2.6 million decrease due to the change in deferred income taxes.

Cash provided by changes in net operating assets and liabilities during the six months ended June 30, 2024 primarily consisted of a decrease of $86.7 million in

contract assets – commissions receivable and $2.8 million in accounts receivable, a $2.3 million increase in accrued expenses and other liabilities and a $2.0 million increase in deferred revenue, partly offset by decreases of $20.8 million in accrued compensation and related expenses and $12.5 million in accrued marketing expenses.

Six Months Ended June 30, 2023 – Net cash provided by operating activities was $51.4 million during the six months ended June 30, 2023, primarily driven by changes in net operating assets and liabilities of $80.0 million and adjustments for non-cash items of $14.8 million, partially offset by a net loss of $43.4 million.

Adjustments for non-cash items primarily consisted of $11.2 million of stock-based compensation expense and $9.1 million of amortization of internally developed software, partially offset by a $6.7 million decrease due to the change in deferred income taxes.

Cash provided by changes in net operating assets and liabilities during the three months ended March 31, 2023 primarily consisted of decreases of $82.5 million in contract assets – commissions receivable and $1.6 million in accounts receivable and increases of $7.2 million in accrued compensation and related expenses, partly offset by decreases of $15.0 million in accrued marketing expenses and $1.5 million in accounts payable.

Cash provided by changes in net operating assets and liabilities during the six months ended June 30, 2023 primarily consisted of decreases of $95.0 million in contract assets – commissions receivable and $2.0 million in accounts receivable, partly offset by decreases of $17.3 million in accrued marketing expenses.

Investing Activities

Our investing activities primarily consist of purchases and redemption of marketable securities, purchases of computer hardware and software to enhance our website and advisor enrollment center operations and capitalized internal-use software.

Three Months Ended March 31, 2024 – Net cash used in investing activities of $10.3 million for the three months ended March 31, 2024 mainly consisted of $13.8 million used to purchase marketable securities and $2.3 million in capitalized internal-use software and website development costs, partially offset by $6.0 million in proceeds from the maturities and redemptions of marketable securities.

Three Months Ended March 31, 2023 – Net cash used in investing activities of $24.2 million for the three months ended March 31, 2023 mainly consisted of $22.0 million used to purchase marketable securities and $2.2 million in capitalized internal-use software and website development costs.

Six Months Ended June 30, 2024 – Net cash used in investing activities of $23.7 million for the six months ended June 30, 2024 mainly consisted of $37.4 million used to purchase marketable securities and $4.9 million in capitalized internal-use software and website development costs, partially offset by $19.0 million in proceeds from the maturities and redemptions of marketable securities.

Six Months Ended June 30, 2023 – Net cash used in investing activities of $40.8 million for the six months ended June 30, 2023 mainly consisted of $48.6 million used to purchase marketable securities and $4.2 million in capitalized internal-use software and website development costs, partially offset by $12.4 million in proceeds from the maturities and redemptions of marketable securities.

Financing Activities

Three Months Ended March 31, 2024 – Net cash used in financing activities of $1.3 million for the three months ended March 31, 2024 was primarily due to $1.3 million in repurchases of shares to satisfy employee tax withholding obligations.

Three Months Ended March 31, 2023 – Net cash used in financing activities of $0.4 million for the three months ended March 31, 2023 was primarily due to $0.4 million in repurchases of shares to satisfy employee tax withholding obligations.

Six Months Ended June 30, 2024 – Net cash used in financing activities of $4.2 million for the six months ended June 30, 2024 was primarily due to a $2.7 million payment of preferred stock dividends and $1.9 million in repurchases of shares to satisfy employee tax withholding obligations.

Six Months Ended June 30, 2023 – Net cash used in financing activities of $1.7 million for the six months ended June 30, 2023 was primarily due to $1.1 million in repurchases of shares to satisfy employee tax withholding obligations and $0.9 million in payments of preferred stock dividends.

Open enrollment periods drive the seasonality of our business.

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The majority of our individual and family health insurance plans are sold in the fourth quarter during the annual open enrollment period as prescribed under the federal Patient Protection and Affordable Care Act and related amendments in the Health Care and Education Reconciliation Act.

In the states where the Federally Facilitated marketplace operates as the state health insurance exchange, individuals and families generally are not able to purchase individual and family health insurance outside of the annual enrollment period, unless they qualify for a special enrollment period as a result of certain qualifying events, such as losing employer-sponsored health insurance or moving to another state.

In the states where the Federally Facilitated marketplace operates as the state health insurance exchange, individuals and families generally are not

able to purchase individual and family health insurance outside of the annual enrollment period, unless they qualify for a special enrollment period as a result of certain qualifying events, such as losing employer-sponsored health insurance or moving to another state.

Extended open enrollment or special enrollment periods may change the seasonality of our individual and family health insurance business.

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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 2. Management’s Discussion and Analysis