What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-07 compared with 2024-11-06 · 223 added, 263 removed, 283 unchanged (63% of the section changed)

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As a result of many factors, such as those described under “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report, our actual results may differ materially from those anticipated in these forward-looking statements.

We are a leading private online health insurance marketplace with a technology and service platform that provides consumer engagement, education and health insurance enrollment solutions.

We are a leading private health insurance marketplace with a technology and service platform that provides consumer engagement, education and health insurance enrollment solutions.

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

Our platform leverages technology to solve a critical problem in a large and growing market by aiding consumers in what has traditionally been a complex, confusing and opaque health insurance purchasing process.

Our omnichannel consumer engagement platform differentiates our offering from other brokers and enables consumers to use our services online, by telephone with a licensed insurance agent, or benefit advisor, or through a hybrid online assisted interaction that includes live agent chat and co-browsing capabilities.

Our omnichannel consumer engagement platform differentiates our offering from competitors and enables consumers to use our services online, by telephone with a licensed insurance agent, or benefit advisor, or through a hybrid online assisted interaction that includes live agent chat and co-browsing capabilities.

We have created a consumer-centric marketplace that offers consumers a broad choice of insurance products that includes thousands of Medicare Advantage, Medicare Supplement, Medicare Part D prescription drug, individual, family, small business and other ancillary health insurance products from over 180 health insurance carriers nationwide.

Our plan recommendation tool curates this broad plan selection by analyzing customer health-related information against plan data for insurance coverage fit.

This tool is supported by a unified data platform and is available to our ecommerce customers and our benefit advisors.

We strive to be the most trusted partner to consumers in their journeys through the health insurance market.

Our plan recommendation tool curates this broad plan selection by analyzing consumer health-related information against plan data for insurance coverage fit.

This tool is supported by a unified data platform and is available to our ecommerce consumers and our benefit advisors.

We strive to be the most trusted, unbiased, transparent partner to consumers in their journeys through the health insurance market.

Business Update

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

Agency performance 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.

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 while we recognize constrained lifetime value (“LTV”) of commissions for approved members as revenue at the time applications are approved, our collection of the cash commissions resulting from approved applications generally occurs over a number of years.

Our fee-based BPO arrangements generate fee-based revenue, which is recorded in other revenue, and cash is collected in advance or in close proximity to when revenue is recognized.

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

growth in our other revenue.

Even with this shift, during the three and nine months ended September 30, 2024, we observed a 6% increase 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 22% and 17% during the three and nine months ended September 30, 2024, respectively, compared to the same period in 2023.

Our fiscal 2025 growth strategy is focused on pursuing deliberate revenue diversification and scaling of our business, evolving our brand awareness for all products and channels, improving member retention and conversions on our platform while continuing to evolve our telesales organization, advancing our digital technology leadership, and strengthening and expanding health insurance carrier partnerships.

During the first quarter of 2025, we maintained the momentum we built during the most recent Annual Enrollment Period (“AEP”), which observed strong consumer demand driven by recent Medicare Advantage plan benefit and premium changes, plan cancellations and market exits due primarily to carriers facing higher medical costs and regulatory pressures.

As a result, we delivered strong Medicare Advantage enrollment growth in Q1 2025, with 25% growth in total Medicare Advantage submissions, inclusive of our broker of record and fee-based business process outsourcing (“BPO”) arrangements, compared to the same period in 2024.

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.

During the third quarter of 2024, we largely completed our 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 the advancement of our brand-driven marketing strategy, development of AEP marketing materials, including new television ads, enhancements to consumer experience on our omni-channel platform with its differentiated tech-enabled features and the achievement of our benefit advisor hiring and training goals with a benefit advisor mix that is more tenured relative to last year.

We have also launched the next phase of our retention strategy including the introduction of 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.

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

Change in Expense Allocation Methodology

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

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

We have recast the Condensed 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.

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

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

Additionally, we observed improvements in our cash flow from operations for the three months ended March 31, 2025, compared to the same period in 2024, reflecting strong cash collections from new enrollments.

During the first quarter of 2025, we invested in our post-enrollment retention strategy and nearly doubled the size of our retention and customer service team.

Despite this investment, Medicare unit margins experienced meaningful expansion in Q1 2025, compared to the same period in 2024.

Additionally, we began piloting the

integration of artificial intelligence across several components of our telephonic enrollment platform during the second quarter of 2025.

Summary of Selected Metrics

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• the number of approved members for Medicare-related, individual and family, small business and ancillary health insurance plans from whom we have received an initial commission payment;

• the constrained LTV of approved members for Medicare-related, individual and family and ancillary health insurance plans we sell, as well as the estimated annual value of approved members for small business plans we sell.

• the constrained lifetime value (“LTV”) of approved members for Medicare-related, individual and family and ancillary health insurance plans we sell, as well as the estimated annual value of approved members for small business plans we sell.

Approved Members

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

Approved members represent the number of individuals on submitted applications, or submissions, which 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

September 30, % Change Nine Months Ended

September 30, % Change

2024 2023 2024 2023

March 31, % Change

Medicare Advantage 82,671 65,750 26 %

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Total Approved Members 111,810 98,259 14 %

Three Months Ended September 30, 2024 and 2023 – Total approved members was flat during the three months ended September 30, 2024 compared to the same period in 2023, driven by:

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

◦ a 14% increase in Medicare Advantage approved members due to a 21% increase in Medicare Advantage broker of record submissions as a result of increased variable marketing spend year-over-year and an increased number of benefit advisors year-over-year along with improved telesales conversion rates, partially offset by the shift of some broker of record arrangements to fee-based arrangements within our Amplify platform which are not included in the approved member metrics, and

◦ a 52% and 48% decline in Medicare Supplement and Medicare Part D approved members, respectively, due to the shift of some Medicare Supplement broker of record arrangements to fee-based arrangements within our Amplify platform and a shift away from standalone Medicare Part D plans.

• a 12% 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 23% and 13% decline in individual and family plan and small business health insurance plan approved members, respectively, primarily due to a decrease in volume as we focus on implementing operational enhancements within our Employer and Individual (“E&I”) segment.

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

• a 14% 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 25% and 29% decline in individual and family plan and small business health insurance plan approved members, respectively, primarily due to a decrease in volume as we focused on implementing operational enhancements in our E&I segment;

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

◦ increased variable marketing spend and an increased number of benefit advisors year-over-year along with improved telesales conversion rates, driving a 14% increase in Medicare Advantage broker of record submissions, which contributed to a 9% growth in Medicare Advantage approvals,

◦ partially offset by a 32% and 9% decline in Medicare Part D and Medicare Supplement approved members, respectively, primarily caused by the shift of some broker of record arrangements to fee-based arrangements within our Amplify platform.

Three Months Ended March 31, 2025 and 2024 – Total approved members grew 14% during the three months ended March 31, 2025 compared to the same period in 2024, driven by:

• 16% growth in Medicare approved members, as a result of:

◦ a 26% increase in Medicare Advantage approved members due to a 21% increase in Medicare Advantage broker of record submissions primarily as a result of the continued increase in consumer demand due to recent market disruptions, increased variable marketing spend and an increased number of benefit advisors with improved telesales conversion rates year-over-year,

◦ partially offset by a 59% and 26% decline in Medicare Supplement and Medicare Part D approved members, respectively, primarily caused by the shift of some Medicare Supplement

broker of record arrangements to fee-based arrangements within our Amplify platform and a shift away from standalone Medicare Part D plans.

• 21% growth in ancillary approved members primarily due to a targeted increase in hospital indemnity plan members and an increase in vision plan approved members, partially offset by declines in dental and short-term approved members;

• a 19% and 28% decline in individual and family plan and small business health insurance plan approved members, respectively, primarily due to a decrease in volume as we continued to focus on implementing operational enhancements in our E&I segment.

Estimated Constrained Lifetime Value of Commissions Per Approved Member

The following table shows our estimated constrained LTV of commissions per approved member by product for the periods presented below:

The following table shows our estimated constrained LTV of commissions per approved member by product for the periods presented:

Three Months Ended

September 30, % Change

March 31, % Change

Medicare (1) (2)

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Constrained LTV of commissions per approved member for small business represents the estimated commissions we expect to collect from the plan over the following twelve months.

The estimate is driven by multiple factors, including but not limited to, contracted commission rates, carrier mix, estimated average plan duration, the regulatory environment, and cancellations of insurance plans offered by health insurance carriers with which we have a relationship and applied constraints.

The estimate is driven by multiple factors, including but not limited to, contracted commission rates, carrier mix, estimated average plan duration, the regulatory environment, cancellations of insurance plans offered by health insurance carriers with which we have a relationship and applied constraints.

The constraints are applied to help ensure that commissions estimated to be collected over the estimated life of an approved member’s plan are recognized as revenue only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with future commissions receivable from the plan is subsequently resolved.

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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, 2024.

(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 September 30, 2024 and 7%, 9% and 7%, respectively, for the three months ended September 30, 2023.

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

• a 1% decrease in Medicare Advantage plans, reflecting less favorable retention trends for Q3 2024 cohorts compared to Q3 2023 cohorts, partly offset by favorable carrier and contract mix and a decrease in constraint due to a decline in volatility and the observed increases in LTV trends;

• a 33% increase in Medicare Supplement plans, primarily due to favorable carrier and contract mix and favorable retention;

• a 6% decrease in Medicare Part D plans, primarily driven by unfavorable carrier and contract mix, partially offset by improved retention;

• a 3% decrease in non-qualified and qualified health plans and a 5% decrease in short-term plans, primarily driven by unfavorable retention;

• a 9% and 8% increase in dental and vision and plans, respectively, primarily driven by favorable carrier and contract mix;

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

(2) The constraints applied to the total estimated lifetime value of 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 March 31, 2025 and 7%, 9% and 7%, respectively, for the three months ended March 31, 2024.

Three Months Ended March 31, 2025 and 2024 – The changes in constrained LTV of commissions per approved member primarily consisted of:

• a 5% decrease in Medicare Advantage plans, reflecting less favorable retention assumptions for the Q1 2025 cohorts compared to Q1 2024 cohorts, partly offset by lower constraint due to a decline in volatility and observed LTV trends;

• a 31% increase in Medicare Supplement plans, primarily due to favorable carrier and contract mix and favorable retention assumptions for the Q1 2025 cohorts compared to Q1 2024 cohorts;

• a 30% decrease in Medicare Part D plans, primarily driven by unfavorable carrier and contract mix, partially offset by improved retention assumptions for the Q1 2025 cohorts compared to Q1 2024 cohorts;

• a 3% increase in qualified health plans, primarily due to improved enrollment quality;

• a 36% decrease in short-term plans, primarily driven by unfavorable retention assumptions year-over-year as a result of the regulatory change that decreased term limits for short-term health plans;

• an 8%, 5% and 16% increase in dental, vision and small business plans, respectively, primarily driven by favorable carrier and contract mix.

Estimated Membership

Estimated membership only includes estimated active members for arrangements where we are the broker of record.

There is generally up to a few months lag between newly approved plans and the receipt of commission payments from the health insurance carrier.

Estimated membership represents the estimated number of members active as of the date indicated based on the number of members for whom we have received or applied a commission payment during the period of estimation as well as the number of approved members during the period of estimation from whom we expect to receive commission payments.

There is generally up to a few months lag between newly approved plans and the receipt of commission payments from the health insurance carrier and is most pronounced in the fourth and first quarters of our fiscal year due to the annual and open enrollment periods.

A member who purchases and is active on multiple standalone insurance plans will be counted as a member more than once.

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Given the number of months required to observe non-payment of commissions in order to confirm cancellations, we estimate the number of members who are active on insurance policies as of a specified date.

After we have estimated membership for a period, we may receive information from health insurance carriers that would have impacted the estimate if we had received the information prior to the date of estimation.

After we have estimated membership as of a specified date, we may receive information from health insurance carriers that would have impacted the estimate if we had received the information prior to the date of estimation.

We may receive commission payments or other information that indicates that a member who was not included in our estimates for a prior period was in fact an active member at that time, or that a member who was included in our estimates was in fact not an active member of ours.

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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 September 30, % Change

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

As of March 31, % Change

Medicare Advantage 601,431 594,457 1 %

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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.

September 30, 2024 compared to September 30, 2023 – Total estimated membership declined 2% as of September 30, 2024 compared to September 30, 2023 due to:

• an 11%, 8% and 11% 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 in our E&I segment;

• a 1% increase in Medicare estimated membership year over year, due to:

◦ a 3% and 2% increase in Medicare Advantage and Medicare Supplement plans, respectively, as a result of increased approved applications,

◦ partially offset by the shift of some broker of record arrangements to fee-based arrangements within our Amplify platform, which are not included in estimated membership, as well as a decline in Medicare Part D plan approved applications due to the shift away from standalone Medicare Part D plans.

March 31, 2025 compared to March 31, 2024 – Total estimated membership declined 2% as of March 31, 2025 compared to March 31, 2024 due to:

• a 14%, 2% and 8% 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 in our E&I segment;

• Medicare estimated membership remained flat year-over-year primarily due to:

◦ a 1% increase in Medicare Advantage estimated membership as a result of increased approved applications,

◦ partially offset by a 2% and 4% decrease in Medicare Supplement and Medicare Part D plans, respectively, as a result of decreased approved applications due to the shift of some broker of record arrangements to fee-based arrangements within our Amplify platform, which are not included in estimated membership, as well as a decline in Medicare Part D plan approved applications due to the shift away from standalone Medicare Part D plans.

Member Acquisition

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The calculations for MA-equivalent approved members and for IFP-equivalent approved members are based on the weighted number of approved members for Medicare Plans and IFP Plans during the period, with the number of approved members adjusted based on the relative LTV of the product they are purchasing.

Since the LTV for any product fluctuates from period to period, the weight given to each product was determined based on their relative LTVs at the time of our adoption of ASC 606.

The following table shows the CC&E expense per approved member and the variable marketing cost per approved member for the periods presented below:

Since the LTV for any product fluctuates from period to period, the weight given to each product was determined based on their relative LTVs at the time of our adoption of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers .

The following table shows the CC&E cost per approved member and the variable marketing cost per approved member for the periods presented:

Three Months Ended

September 30, % Change

March 31, % 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 September 30, 2024 and 2023 – Total acquisition cost per MA-equivalent approved member decreased $247, or 16%, during the three months ended September 30, 2024 compared to the same period in 2023, driven by:

• a $227, or 24%, decrease in CC&E cost per MA-equivalent approved member driven by:

◦ efficiencies resulting from a benefit advisor mix that is more tenured when compared to the same period in 2023, and

Three Months Ended March 31, 2025 and 2024 – Total acquisition cost per MA-equivalent approved member decreased $80, or 10%, during the three months ended March 31, 2025 compared to the same period in 2024, driven by:

• a $58, or 14%, decrease in CC&E cost per MA-equivalent approved member due to:

◦ efficiencies resulting from a benefit advisor mix that is more tenured when compared to the same period in 2024 as well as the increased use of screeners to answer calls from beneficiaries, and

◦ continued optimization of our sales force operations driven by enhanced training protocols and new agent-facing sales tools.

• a $20, or 4%, decrease in variable marketing cost per MA-equivalent approved member, primarily due to continued efficiencies within our marketing operations.

• a $22, or 5%, decrease in variable marketing cost per MA-equivalent approved member, primarily due to continued marketing efficiencies as our brand continues to scale, enabling improvement in our marketing channel mix.

Individual and Family

Three Months Ended September 30, 2024 and 2023 – Total acquisition cost per IFP-equivalent approved member increased $153, or 47%, during the three months ended September 30, 2024 compared to the same period in 2023, driven by:

Three Months Ended March 31, 2025 and 2024 – Total acquisition cost per IFP-equivalent approved member increased $89, or 41%, during the three months ended March 31, 2025 compared to the same period in 2024, driven by:

• a $28, or 17%, increase in CC&E cost per IFP-equivalent approved member due to the overall decline in individual and family plan and short-term plan approved members;

• a $50, or 74%, increase in variable marketing cost per IFP-equivalent approved member, primarily driven by the decline in individual and family plan and short-term plan approved members.

• a $61, or 105%, increase in variable marketing cost per IFP-equivalent approved member, primarily driven by an increase in marketing spend as we pursue growth in the E&I segment as well as the decline in individual and family plan and short-term plan approved members.

Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with U.S.

generally accepted accounting principles requires us to make judgments, assumptions, and estimates that affect the amounts reported in the consolidated financial statements and the accompanying notes.

generally accepted accounting principles requires us to make judgments, assumptions, and estimates that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes.

These estimates and assumptions are based on current facts, historical experience, and various other factors that we believe are reasonable under the circumstances to determine reported amounts of assets, liabilities, revenue and expenses that are not readily apparent from other sources.

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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, 2024, filed with the Securities and Exchange Commission on February 27, 2025, 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, 2024, for a complete discussion of our other critical accounting policies and estimates.

Results of Operations

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Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Commission $ 98,946 87 % $ 80,927 87 %

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Total operating costs and expenses 108,321 96 % 110,875 119 %

Loss from operations (43,199) (74) % (39,396) (61) % (89,069) (41) % (88,442) (43) %

Income (loss) from operations 4,798 4 % (17,911) (19) %

Interest expense (2,648) (2) % (2,809) (3) %

Other income, net 1,576 1 % 2,391 3 %

Loss before income taxes (44,359) (76) % (39,534) (61) % (91,161) (42) % (89,064) (43) %

Benefit from income taxes (1,886) (3) % (2,509) (4) % (3,736) (2) % (8,660) (4) %

Net loss $ (42,473) (73) % $ (37,025) (57) % $ (87,425) (40) % $ (80,404) (39) %

Income (loss) before income taxes 3,726 3 % (18,329) (20) %

Provision for (benefit from) income taxes 1,776 2 % (1,345) (1) %

Net income (loss) $ 1,950 2 % $ (16,984) (18) %

(1) Operating costs and expenses include the following amounts of stock-based compensation expense (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Marketing and advertising $ 497 $ 644

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Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

March 31, Change

2025 2024 $ %

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Total revenue $ 113,119 $ 92,964 $ 20,155 22 %

Three Months Ended September 30, 2024 and 2023 – Commission revenue decreased $9.0 million, or 16%, during the three months ended September 30, 2024 compared to the same period in 2023 due to:

• a $5.0 million, or 10%, decrease in commission revenue from our Medicare segment driven by:

◦ lower net adjustment revenue from prior periods enrollments, which was $1.1 million during the three months ended September 30, 2024 compared to $9.3 million in the same period in 2023,

◦ a slight decline in constrained LTV of commissions per approved member for Medicare Advantage and Medicare Part D products,

◦ partially offset by a 14% increase in Medicare Advantage plan approved members.

• a $4.0 million, or 45%, decrease in commission revenue from our E&I segment driven by:

◦ lower net adjustment revenue from prior periods enrollments, which was $0.1 million during the three months ended September 30, 2024 compared to $2.9 million in the same period in 2023,

◦ a 23%, 12% and 13% 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 dental, vision and small business products in our E&I segment.

Other revenue increased $2.7 million, or 36%, during the three months ended September 30, 2024 compared to the same period in 2023 due to an increase in fee-based revenue driven by the shift in some of our Amplify broker of record arrangements to fee-based BPO arrangements, partly offset by a decline in sponsorship revenue.

Nine Months Ended September 30, 2024 and 2023 – Commission revenue increased $0.6 million, during the nine months ended September 30, 2024 compared to the same period in 2023 due to:

Three Months Ended March 31, 2025 and 2024 – Commission revenue increased $18.0 million, or 22%, during the three months ended March 31, 2025 compared to the same period in 2024 due to:

• a $19.0 million, or 27%, increase in commission revenue from our Medicare segment driven by:

◦ a 6% increase in overall Medicare plan approved members, specifically driven by a 9% growth in Medicare Advantage approved members,

◦ partially offset by lower net adjustment revenue from prior periods enrollments, which was $12.8 million during the nine months ended September 30, 2024 compared to $22.7 million in the same period in 2023.

◦ a 16% increase in overall Medicare plan approved members, specifically driven by 26% growth in Medicare Advantage approved members, and

◦ net adjustment revenue from prior periods of $8.0 million during the three months ended March 31, 2025 compared to $1.0 million in the same period in 2024.

• a $0.9 million, or 9%, decrease in commission revenue from our E&I segment driven by:

◦ lower net adjustment revenue from prior periods enrollments, which was $2.4 million during the nine months ended September 30, 2024 compared to $9.8 million in the same period in 2023,

◦ a 25%, 14% and 29% 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 dental, vision and small business products in our E&I segment.

Other revenue increased $11.5 million, or 58%, during the nine months ended September 30, 2024 compared to the same period in 2023 due to an increase in sponsorship revenue as well as fee-based revenue driven by the expansion of our fee-based BPO arrangements.

◦ a 19% and 28% decline in individual and family plan and small business plan approved members, respectively,

◦ partially offset by higher net adjustment revenue from prior periods enrollments, which was $2.5 million during the three months ended March 31, 2025 compared to $1.5 million in the same period in 2024 along with improved constrained LTV of commissions per approved member for most products in our E&I segment.

Other revenue increased $2.1 million, or 18%, during the three months ended March 31, 2025 compared to the same period in 2024 due to a $4.2 million increase in fee-based revenue driven by the expansion of our fee-based BPO arrangements, partially offset by a $2.0 million decline in sponsorship and advertising revenue.

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

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

Marketing and advertising expenses also include cost of revenue, which

consists of payments related to health insurance plans sold to members who were referred to our website by marketing partners with whom we have revenue-sharing arrangements.

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

Marketing and advertising expenses also include cost of revenue, which consists of payments related to health insurance plans sold to members who were referred to our website by marketing partners with whom we have revenue-sharing arrangements.

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

We generally compensate our marketing partners for referrals based on the consumer submitting a health insurance application on our platform, regardless of whether the consumer’s application is approved by the health insurance carrier, or for the referral of a Medicare-related lead to us by the marketing partner.

Some of our marketing partners have tiered arrangements where the amount we pay the marketing partner per submitted application increases as the volume of submitted applications we receive from the marketing partner increases.

We recognize these expenditures in the period when a marketing partner’s referral results in the submission of a health insurance application.

Increases in submitted applications resulting from marketing partner referrals or visitors to our website from our direct marketing channel has in the past, and could in the future, result in marketing and advertising expenses significantly higher than our expectations.

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

Increases in submitted applications resulting from marketing partner referrals or visitors to our website from our direct marketing channel have in the past, and could in the future, result in marketing and advertising expenses being significantly higher than our expectations.

Our marketing and advertising expenses are summarized as follows (dollars in thousands):

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

March 31, Change

2025 2024 $ %

1 unchanged sentence

% of total revenue 36 % 42 %

Three Months Ended September 30, 2024 and 2023 – Marketing and advertising expenses increased $0.6 million, or 2%, during the three months ended September 30, 2024 compared to the same period in 2023, primarily driven by a $1.3 million and $0.7 million increase in variable advertising costs and personnel costs, respectively, partly offset by a $1.0 million and $0.2 million decrease in fixed marketing costs and stock-based compensation expense, respectively.

The increase in variable advertising costs was primarily related to our investment in direct mail and affiliate partner channels in fiscal 2024.

Nine Months Ended September 30, 2024 and 2023 – Marketing and advertising expenses increased $9.8 million, or 12%, during the nine months ended September 30, 2024 compared to the same period in 2023, primarily driven by an $8.1 million increase in variable advertising costs, a $1.7 million increase in personnel costs and a $0.6 million increase in other operating costs, particularly software costs.

These increases were partly offset by a $0.6 million decrease in fixed marketing costs.

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

Three Months Ended March 31, 2025 and 2024 – Marketing and advertising expenses increased $2.5 million, or 6%, during the three months ended March 31, 2025 compared to the same period in 2024, primarily driven by a $3.9 million increase in variable advertising costs, partly offset by a $1.0 million decrease in fixed marketing costs.

The increase in variable advertising costs was due to an increased investment in our direct marketing channels and an increase in affiliate partner channels.

Customer Care and Enrollment

2 unchanged sentences

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

March 31, Change

2025 2024 $ %

1 unchanged sentence

% of total revenue 33 % 35 %

Three Months Ended September 30, 2024 and 2023 – Customer care and enrollment expenses increased $0.4 million, or 1%, during the three months ended September 30, 2024 compared to the same period in 2023, primarily due to a $3.2 million increase in personnel and compensation costs, partly offset by a $2.4 million decrease in other operating expenses, particularly consulting expenses, and a $0.4 million decrease in stock-based compensation expense.

Nine Months Ended September 30, 2024 and 2023 – Customer care and enrollment expenses increased $6.8 million, or 7%, during the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to increases of $9.0 million in personnel and compensation costs and $1.1 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.

These increases were offset by a $2.7 million decrease in other operating expenses, particularly consulting expenses, and a $0.7 million decrease in stock-based compensation expense.

Three Months Ended March 31, 2025 and 2024 – Customer care and enrollment expenses increased $4.3 million, or 13%, during the three months ended March 31, 2025 compared to the same period in 2024.

This increase was primarily due to a $5.8 million increase in personnel and compensation costs associated with a higher number of screeners, licensed benefit advisors and retention advisors, partially offset by a $1.3 million decrease in other operating expenses due to lower consulting and licensing costs.

Technology and Content

3 unchanged sentences

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

March 31, Change

2025 2024 $ %

1 unchanged sentence

% of total revenue 11 % 14 %

Three Months Ended September 30, 2024 and 2023 – Technology and content expenses decreased $1.0 million, or 7%, during the three months ended September 30, 2024 compared to the same period in 2023, primarily driven by a $0.8 million decrease in amortization of internally developed software and a $0.5 million decrease in stock-based compensation expense, partly offset by an increase of $0.4 million in other operating expenses.

Nine Months Ended September 30, 2024 and 2023 – Technology and content expenses decreased $3.4 million, or 8%, during the nine months ended September 30, 2024 compared to the same period in 2023, primarily driven by a $2.3 million decrease in amortization of internally developed software, a $0.8 million decrease in stock-based compensation expense and a $0.7 million decrease in personnel and compensation costs, partly offset by an increase of $0.6 million in other operating expenses.

Three Months Ended March 31, 2025 and 2024 – Technology and content expenses decreased $0.7 million, or 5%, during the three months ended March 31, 2025 compared to the same period in 2024, primarily driven by a $0.4 million decrease in amortization of internally developed software, a $0.3 million decrease in personnel and compensation costs and a $0.3 million decrease in stock-based compensation expense, partly offset by an increase of $0.4 million in other operating costs, particularly consulting expenses.

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.

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

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

Our general and administrative expenses are summarized as follows (dollars in thousands):

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

March 31, Change

2025 2024 $ %

1 unchanged sentence

% of total revenue 15 % 21 %

Three Months Ended September 30, 2024 and 2023 – General and administrative expenses decreased $2.6 million, or 12%, during the three months ended September 30, 2024 compared to the same period in 2023, primarily driven by a $1.4 million decrease in other operating expenses, a $1.1 million decrease in stock-based compensation expense and a $0.5 million decrease in professional fees, partly offset by a $0.3 million increase in personnel and compensation costs.

Nine Months Ended September 30, 2024 and 2023 – General and administrative expenses decreased $10.0 million, or 14%, during the nine months ended September 30, 2024 compared to the same period in 2023, primarily driven by a $3.4 million decrease in other operating expenses, a $2.9 million decrease in personnel and compensation costs, a $1.9 million decrease in professional fees, a $1.3 million decrease in stock-based compensation expense and a $0.6 million decrease in depreciation expense.

Three Months Ended March 31, 2025 and 2024 – General and administrative expenses decreased $2.3 million, or 12%, during the three months ended March 31, 2025 compared to the same period in 2024, primarily driven by a $1.1 million decrease in professional fees and a $1.1 million decrease in stock-based compensation expense.

Impairment, Restructuring and Other Charges

2 unchanged sentences

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

March 31, Change

2025 2024 $ %

1 unchanged sentence

% of total revenue — % 7 %

* Percentage calculated is not meaningful.

Three Months Ended September 30, 2024 and 2023 – We incurred $0.1 million in impairment, restructuring and other charges for the three months ended September 30, 2024 compared to no impairment, restructuring and other charges for the same period in 2023.

These charges consisted 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.

Nine Months Ended September 30, 2024 and 2023 – We incurred $9.4 million in impairment, restructuring and other charges for the nine months ended September 30, 2024 compared to no impairment, restructuring and other charges for the same period in 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 $2.0 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.

Three Months Ended March 31, 2025 and 2024 – We incurred no impairment, restructuring and other charges for the three months ended March 31, 2025 compared to $6.3 million of impairment, restructuring and other charges for the same period in 2024.

These charges in 2024 consisted of $5.5 million of impairment related to several of our leased office spaces, which comprised of $5.1 million of operating lease right-of-use asset impairments and $0.4 million of property and equipment impairments.

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

Interest Expense

Interest expense primarily consists of interest expense and amortization of debt issuance costs related to our Credit Agreement.

See Note 12 – Debt for additional information.

See Note 12 – Debt in our Notes to Condensed Consolidated Financial Statements for additional information.

Our interest expense is summarized as follows (dollars in thousands):

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

March 31, Change

2025 2024 $ %

1 unchanged sentence

% of total revenue (2) % (3) %

Three Months Ended September 30, 2024 and 2023 – Interest expense increased by 1% for the three months ended September 30, 2024 compared to for the three months ended September 30, 2023.

Nine Months Ended September 30, 2024 and 2023 – Interest expense increased by $0.4 million, or 5%, during the nine months ended September 30, 2024 compared to the same period in 2023, primarily driven by a $0.2 million increase in debt interest expense as a result of higher interest rates.

Three Months Ended March 31, 2025 and 2024 – Interest expense decreased by $0.2 million, or 6%, during the three months ended March 31, 2025 compared to the same period in 2024, primarily driven by lower interest rates.

Other Income, Net

2 unchanged sentences

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

March 31, Change

2025 2024 $ %

1 unchanged sentence

% of total revenue 1 % 3 %

Three Months Ended September 30, 2024 and 2023 – Other income, net, was $1.7 million during the three months ended September 30, 2024, compared to other income, net, of $2.7 million during the three months ended September 30, 2023.

The change was primarily due to a $0.6 million decrease in interest income as a result of less favorable short-term investment returns during the three months ended September 30, 2024.

Nine Months Ended September 30, 2024 and 2023 – Other income, net, was $6.4 million during the nine months ended September 30, 2024, compared to other income, net, of $7.5 million during the nine months ended September 30, 2023.

The change was primarily due to a $0.5 million decrease in interest income as a result of less favorable short-term investment returns during the nine months ended September 30, 2024.

Benefit from Income Taxes

Our benefit from income taxes is summarized as follows (dollars in thousands):

Three Months Ended March 31, 2025 and 2024 – Other income, net, was $1.6 million during the three months ended March 31, 2025, compared to $2.4 million during the three months ended March 31, 2024.

The change was primarily due to a $0.8 million decrease in interest income as a result of less favorable short-term investment returns and a decline in average short-term investment balances during the three months ended March 31, 2025.

Provision for (Benefit from) Income Taxes

Our provision for (benefit from) income taxes is summarized as follows (dollars in thousands):

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

March 31, Change

2025 2024 $ %

Benefit from income taxes $ (1,886) $ (2,509) $ 623 (25) % $ (3,736) $ (8,660) $ 4,924 (57) %

Provision for (benefit from) income taxes $ 1,776 $ (1,345) $ 3,121 (232) %

Effective tax rate 47.7 % 7.3 %

Three Months Ended September 30, 2024 and 2023 – Our effective tax rate of 4.3% for the three months ended September 30, 2024 was lower than our 6.3% effective tax rate for the three months ended September 30, 2023, primarily due to fluctuations in stock-based compensation adjustments.

Our effective tax rate for the three months ended September 30, 2024 was lower than the statutory federal tax rate due primarily to changes in our valuation allowance on certain U.S.

deferred tax assets, stock-based compensation adjustments and non-deductible lobbying expenses, partially offset by research and development credits and state and local taxes.

Nine Months Ended September 30, 2024 and 2023 – Our effective tax rate of 4.1% for the nine months ended September 30, 2024 was lower than our 9.7% effective tax rate for the nine months ended September 30, 2023 primarily due to fluctuations in stock-based compensation adjustments.

Our effective tax rate for the nine months ended September 30, 2024 was lower than the statutory federal tax rate due primarily to changes in our valuation allowance on certain U.S.

deferred tax assets, stock-based compensation adjustments and non-deductible lobbying expenses, partially offset by research and development credits and state and local taxes.

Three Months Ended March 31, 2025 and 2024 – Our effective tax rate of 47.7% for the three months ended March 31, 2025 was higher than our 7.3% effective tax rate for the three months ended March 31, 2024 primarily due to fluctuations in stock-based compensation adjustments, research and developments credits and state taxes.

Our effective tax rate for the three months ended March 31, 2025 was higher than the statutory federal tax rate due primarily to state taxes, nondeductible stock-based compensation, lobbying expenses and prior year discrete adjustments, partially offset by research and development credits.

Segment Information

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

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

Our CODM considers budget-to-actual variances on a monthly basis for our segment performance measures when making decisions about allocating capital and personnel to our segments.

These performance measures include total segment revenue and segment gross profit (loss).

Prior to the fourth quarter of 2024, we reported our measure of segment profitability as segment profit (loss).

Accordingly, prior period amounts have been reclassified to conform to the current period presentation, in all material respects.

Our business structure is comprised of two operating segments:

1 unchanged sentence

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, or fee-based BPO, 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.

To a lesser extent, the E&I segment consists of amounts earned from our online sponsorship and advertising program that allows carriers to purchase advertising space in specific markets in a sponsorship area on our website, and our technology licensing and lead referral activities.

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

Indirect marketing and advertising, customer care and enrollment, and technology and content operating expenses are allocated to each segment based on usage.

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.

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.

Our operating segment revenue and segment profit (loss) are summarized as follows (dollars in thousands):

The Medicare segment consists primarily of commissions earned as the broker of record from our sale of Medicare-related health insurance plans, including Medicare Advantage, Medicare Supplement and Medicare Part D prescription drug plans, and to a lesser extent, ancillary products sold to our Medicare-eligible beneficiaries, including but not limited to, dental and vision insurance and hospital indemnity plans.

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

The Medicare segment also consists of amounts earned in connection with our advertising program that allows Medicare-related carriers to purchase advertising on a separate website developed, hosted and maintained by us or pursuant to which we perform other services as marketing and our delivery and sale to third parties of Medicare-related health insurance leads generated by our ecommerce platforms and our marketing activities.

The Medicare segment also generates revenue from our fee-based BPO services where we are not the broker of record and cash is collected in advance or in close proximity to when revenue is recognized.

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

To a lesser extent, the E&I segment includes amounts earned from our online sponsorship program that allows carriers to purchase advertising space in specific markets on our website as well as our technology licensing activities.

Segment gross profit (loss) is calculated as total revenue for the applicable segment less variable marketing and advertising expenses, segment CC&E expenses and cost of revenue for the applicable segment.

Variable marketing and advertising expenses represent costs incurred in member acquisition from our direct marketing and marketing partner channels and exclude fixed overhead costs, such as personnel related costs, consulting expenses and other operating costs allocated to the marketing and advertising department.

Segment CC&E expenses include expenses we incur in assisting applicants during the enrollment process and exclude operating costs allocated to the CC&E department.

Our operating segment revenue and segment gross profit are summarized as follows (in thousands):

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

2025 2024 % Change

Total revenue

$ 103,669 $ 82,388 26 %

Medicare $ 53,221 $ 55,523 $ (2,302) (4) % $ 194,857 $ 172,787 $ 22,070 13 %

Variable marketing and advertising

(33,753) (30,248) (12) %

Medicare CC&E (34,469) (29,949) (15) %

Cost of revenue

300 (143) 310 %

Medicare segment gross profit

$ 35,747 $ 22,048 62 %

Three Months Ended

2025 2024 % Change

Employer and Individual:

Total revenue

Segment profit (loss):

Medicare $ (17,933) $ (15,331) $ (2,602) (17) % $ (8,350) $ (17,979) $ 9,629 54 %

Employer and Individual (799) 4,810 (5,609) (117) % 4,743 19,372 (14,629) (76) %

Segment profit (loss) (18,732) (10,521) (8,211) (78) % (3,607) 1,393 (5,000) (359) %

Corporate (16,100) (17,576) 1,476 8 % (48,417) (56,953) 8,536 15 %

Stock-based compensation expense (4,479) (6,554) 2,075 32 % (15,125) (17,741) 2,616 15 %

Depreciation and amortization (3,827) (4,745) 918 19 % (12,511) (15,141) 2,630 17 %

$ 9,450 $ 10,576 (11) %

Variable marketing and advertising

(1,190) (776) (53) %

E&I CC&E (2,180) (2,277) 4 %

Cost of revenue

(92) (118) 22 %

E&I segment gross profit

$ 5,988 $ 7,405 (19) %

Three Months Ended

2025 2024 % Change

Consolidated:

Total revenue

$ 113,119 $ 92,964 22 %

Variable marketing and advertising

(34,943) (31,024) (13) %

(36,649) (32,226) (14) %

Cost of revenue

208 (261) 180 %

Total segment gross profit

$ 41,735 $ 29,453 42 %

A reconciliation of our segment gross profit to the Condensed Consolidated Statements of Comprehensive Income (Loss) for the periods presented is as follows (in thousands):

Three Months Ended

Total segment gross profit

$ 41,735 $ 29,453

Other marketing and advertising (1)

(6,454) (7,452)

Other CC&E (2)

Technology and content (12,601) (13,305)

General and administrative (17,310) (19,619)

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

1 unchanged sentence

Other income, net 1,576 2,391

Loss before income taxes $ (44,359) $ (39,534) $ (4,825) (12) % $ (91,161) $ (89,064) $ (2,097) (2) %

* Percentage calculated is not meaningful.

Income (loss) before income taxes $ 3,726 $ (18,329)

(1) Other marketing and advertising costs consist of fixed marketing and advertising, previously capitalized labor, depreciation and share-based compensation costs.

(2) Other CC&E costs consist of previously capitalized labor, depreciation and share-based compensation costs.

Medicare Segment

Three Months Ended September 30, 2024 and 2023 – Revenue from our Medicare segment decreased $2.3 million, or 4%, during the three months ended September 30, 2024 compared to the same period in 2023 primarily due to a $5.0 million decrease in commission revenue and a $1.2 million decline in sponsorship revenue, partly offset by a $4.0 million increase in fee-based revenue.

The decrease in Medicare segment commission revenue is primarily driven by $8.2 million less in net adjustment revenue from prior period enrollments year-over-year, partly offset by a 14% increase in Medicare Advantage plan approved members and increased constrained LTV of commissions per approved member for Medicare Supplement products.

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

Our Medicare segment loss increased $2.6 million during the three months ended September 30, 2024 compared to the same period in 2023.

This increase was primarily driven by a $2.3 million decrease in revenue from our Medicare segment.

Nine Months Ended September 30, 2024 and 2023 – Revenue from our Medicare segment increased $22.1 million, or 13%, during the nine months ended September 30, 2024 compared to the same period in 2023, attributable to an $11.8 million increase in other revenue and a $10.3 million increase in commission revenue.

The increase in other revenue was primarily driven by a $7.1 million increase in fee-based revenue, which was driven by growth in our fee-based BPO arrangements, and a $5.0 million increase in sponsorship revenue.

The increase in Medicare segment commission revenue was primarily due to a 9% growth in Medicare Advantage plan approved

members and improved constrained LTV of commissions per approved member for Medicare Supplement plans compared to the same period in the prior year, partially offset by $10.0 million less in net adjustment revenue from prior period enrollments year-over-year.

Our Medicare segment loss improved $9.6 million during the nine months ended September 30, 2024 compared to the same period in 2023.

This improvement was primarily driven by a $22.1 million increase in revenue from our Medicare segment, partially offset by a $12.4 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 the continued implementation of our initiatives to attract and retain beneficiaries in fiscal 2024, including having a larger group of benefit advisors this period compared to the same period last year.

Three Months Ended March 31, 2025 and 2024 – Revenue from our Medicare segment increased $21.3 million, or 26%, during the three months ended March 31, 2025 compared to the same period in 2024, primarily driven by:

• a $19.0 million increase in Medicare segment commission revenue due to:

◦ a $13.0 million increase in Medicare Advantage plan commission revenue, driven by 26% growth in Medicare Advantage plan approved members, and

◦ higher net adjustment revenue which was $8.0 million for the three months ended March 31, 2025 compared to $1.0 million for the three months ended March 31, 2024.

• a $2.3 million increase in Medicare segment other revenue driven by a $4.2 million increase from growth in our fee-based BPO arrangements, partially offset by a $2.0 million decline in sponsorship and advertising revenue.

Our Medicare segment gross profit was $35.7 million for the three months ended March 31, 2025, an increase of $13.7 million or 62%, compared to the same period in 2024 primarily driven by:

• a $21.3 million increase in Medicare segment revenue,

• partially offset by increases of $3.5 million in variable marketing and advertising expenses and $4.5 million in segment CC&E expenses primarily due to the continued execution of our initiatives to attract and retain beneficiaries, including having a larger group of screeners and benefit advisors compared to 2024.

Employer and Individual Segment

Three Months Ended September 30, 2024 and 2023 – Revenue from our E&I segment decreased $4.0 million, or 44%, during the three months ended September 30, 2024 compared to the same period in 2023, primarily attributable to a $4.0 million decrease in commission revenue driven $2.8 million less in net adjustment revenue from prior period enrollments year-over-year.

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 certain products in our E&I segment.

The reduced volumes are a result of our focus on implementing operational enhancements in the E&I segment.

Our E&I segment loss was $0.8 million during the three months ended September 30, 2024, compared to segment profit of $4.8 million for the same period in 2023.

The change was primarily driven by a $4.0 million decrease in our E&I segment revenue and a $1.6 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.

Nine Months Ended September 30, 2024 and 2023 – Revenue from our E&I segment decreased $10.1 million, or 31%, during the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to a $9.7 million decrease in commission revenue driven by $7.3 million less in net adjustment revenue from prior period enrollments year-over-year.

The reduced volumes are a result of our focus on implementing operational enhancements in the E&I segment.

Our E&I segment profit was $4.7 million during the nine months ended September 30, 2024, a decrease of $14.6 million, or 76%, compared to segment profit of $19.4 million for the same period in 2023.

The decrease was primarily driven by a $10.1 million decrease in our E&I segment revenue and a $4.6 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.

Three Months Ended March 31, 2025 and 2024 – Revenue from our E&I segment decreased $1.1 million, or 11%, during the three months ended March 31, 2025 compared to the same period in 2024, primarily driven by a $0.9 million decrease in commission revenue as a result of:

• a 19% and 28% decline in individual and family plan and small business plan approved members, respectively, compared to the same period in 2024;

• partially offset by higher net adjustment revenue year-over-year, which was $2.5 million for the three months ended March 31, 2025 compared to $1.5 million in three months ended March 31, 2024;

Our E&I segment gross profit was $6.0 million for the three months ended March 31, 2025, a decrease of $1.4 million, or 19%, compared to the same period in 2024 primarily driven by:

• a $1.1 million decrease in E&I segment revenue;

• an increase of $0.4 million in variable marketing and advertising expenses mostly due to investments in our operational enhancements for our E&I segment that are underway.

Liquidity and Capital Resources

As of September 30, 2024, we had cash, cash equivalents and short-term marketable securities of $117.8 million.

During the nine months ended September 30, 2024, we generated operating cash flow of $9.3 million as summarized below.

As of March 31, 2025, we had cash, cash equivalents and short-term marketable securities of $155.6 million.

During the three months ended March 31, 2025, we generated operating cash flow of $77.1 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):

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Cash and cash equivalents $ 121,092 $ 39,197

1 unchanged sentence

Total cash, cash equivalents and short-term marketable securities $ 155,587 $ 82,240

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 September 30, 2024 and December 31, 2023.

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 money market funds, commercial paper and government securities.

We also maintained $3.1 million in restricted cash as of March 31, 2025 and December 31, 2024.

Material Cash Requirements

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

Short-term obligations were $8.9 million for leases and $8.6 million for service and licensing as of September 30, 2024.

Long-term obligations were $24.8 million for leases and $4.1 million for service and licensing as of September 30, 2024.

Short-term obligations were $8.4 million for leases and $7.6 million for service and licensing as of March 31, 2025.

Long-term obligations were $21.3 million for leases and $2.9 million for service and licensing as of March 31, 2025.

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

3 unchanged sentences

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 .

During the second quarter of 2024 we made a cash dividend payment of $2.7 million and as of September 30, 2024, we have accrued $1.4 million for cash dividends.

A s of March 31, 2025, we have accrued $1.4 million for cash dividends.

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

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

Investment Agreement) of at least 2.5x, which increased from 2.0x in August 2023 (the “Minimum Asset Coverage Ratio”) and a Minimum Liquidity Amount (as defined in the H.I.G.

Investment Agreement) of at least 2.5x (the “Minimum Asset Coverage Ratio”) and a Minimum Liquidity Amount (as defined in the H.I.G.

Investment Agreement).

Failure to maintain the Minimum Asset Coverage Ratio or the Minimum Liquidity Amount as of the date or the time period as required by the H.I.G.

Failure to maintain the Minimum Asset Coverage Ratio or the Minimum Liquidity Amount as of the date or the time period required by the H.I.G.

Investment Agreement, for as long as H.I.G.

one additional member to the Company’s Board of Directors, the right to approve the Company’s annual budget, the right to approve hiring or termination of certain key executives and the right to approve the incurrence of certain indebtedness.

See Note 6 — Convertible Preferred Stock in our Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional information.

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

See Note 6 — Convertible Preferred Stock in our Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for more information.

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

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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.

Our failure to maintain the Minimum Asset Coverage Ratio does not entitle H.I.G.

As of November 30, 2024, we were no longer in compliance with the Minimum Liquidity Amount.

The non-compliance with the Minimum Asset Coverage Ratio or the Minimum Liquidity Amount does not entitle H.I.G.

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 September 30, 2024, we were in compliance with the Minimum Liquidity Amount.

Term Loan Credit Agreement

On February 28, 2022, we entered into a term loan credit agreement providing for a $70.0 million secured term loan credit facility with Blue Torch Finance LLC, as administrative agent and collateral agent, and other lenders party thereto, which agreement was subsequently amended on August 16, 2022 (as so amended, the “Credit Agreement”) to update our borrowing benchmark from LIBOR to SOFR.

On February 28, 2022, we entered into a term loan credit agreement providing for a $70.0 million secured term loan credit facility with Blue Torch Finance LLC, as administrative agent and collateral agent, and other lenders party thereto (the “Original Credit Agreement), which agreement was subsequently amended on August 16, 2022 (the “First Amendment”) to update our borrowing benchmark from LIBOR to SOFR (as amended by the First Amendment, the “First Amended Credit Agreement”).

On November 1, 2024, we entered into a second amendment (the "Second Amendment") to the First Amended Credit Agreement (as amended by the Second Amendment, the “Credit Agreement”) which extends the maturity date of the Credit Agreement from February 2025 to February 2026 and, among other things, reduces the overall interest rate of the term loan beginning on the effective date of the Second Amendment.

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

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

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The base rate is the highest of the prime rate, the federal funds rate plus 0.50% and the three-month Adjusted Term SOFR plus 1.00%.

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

As of September 30, 2024, the interest rate was 12.82%.

For the three and nine months ended September 30, 2024 we incurred interest expense on the credit facility of $2.3 million and $6.9 million, respectively.

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

As of September 30, 2024, the carrying value of the loan under the Credit Agreement was $69.2 million and we were in compliance with our loan covenants.

On November 1, 2024, we entered into a second amendment (the "Second Amendment") to the Credit Agreement which extends the maturity date of the Credit Agreement from February 2025 to February 2026 and, among other things, reduces the overall interest rate of the term loan beginning on the effective date of the Second Amendment.

The Second Amendment reduced the margin from 7.50% to 7.00% for Adjusted Term SOFR loans and from 6.50% to 6.00% for base rate loans.

As of March 31, 2025, the interest rate was 11.57%.

For the three months ended March 31, 2025 and 2024 we incurred interest expense of $2.0 million and $2.3 million, respectively.

As of March 31, 2025, the carrying value of the loan under the Credit Agreement was $68.8 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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We believe our current cash, cash equivalents and short-term marketable securities, including the proceeds from the equity financing we obtained on April 30, 2021 under the H.I.G.

Investment Agreement and the term loan we obtained on February 28, 2022 under the Credit Agreement, and expected cash collections will be sufficient to fund our operations for at least 12 months after the filing date of this Quarterly Report on Form 10-Q, including to refinance or select other alternative arrangements based on market conditions for our term loan under our Credit Agreement that matures in February 2026.

Our future capital requirements will depend on many factors, including our enrollment volume, membership, retention rates, telesales conversion rates, and our level of investment in technology and content, marketing and advertising, customer care and enrollment and other initiatives.

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Cash Activities

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

Nine Months Ended

September 30,

Our cash flows for the three months ended March 31, 2025 and 2024 are summarized as follows (in thousands):

Three Months Ended

Net cash provided by operating activities $ 77,121 $ 70,761

Net cash used in investing activities (56,413) (16,489)

Net cash provided by (used in) investing activities 5,472 (10,287)

Net cash used in financing activities (699) (1,259)

Operating Activities

Net cash provided by operating activities primarily consists of net loss, adjusted for certain non-cash items, including, deferred income taxes, stock-based compensation expense, depreciation and amortization, amortization of internally developed software, impairment charges, other non-cash items, and the effect of changes in working capital and other activities.

Net cash provided by operating activities primarily consists of net income (loss), adjusted for certain non-cash items, including, deferred income taxes, stock-based compensation expense, depreciation and amortization, amortization of internally developed software, other non-cash items, and the effect of changes in working capital and other activities.

Collection of commissions receivable depends upon the timing of our receipt of commission payments and associated commission reports from health insurance carriers.

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While we recognize constrained LTV as revenue at the time applications are approved, our collection of the cash commissions resulting from approved applications generally occurs over a number of years.

The expense associated with approved applications, however, is generally incurred at the time of enrollment.

The expense associated with approved applications, however, is generally incurred at the time of enrollment and generally paid as incurred.

As a result, the net cash flow resulting from approved applications is generally negative in the period of revenue recognition and becomes positive over the lifetime of the member.

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

In periods of membership growth, cash receipts associated with new and continuing members may be less than the cash outlays to acquire new members and could adversely impact our operating cash flows.

Our fee-based BPO arrangements generate fee-based revenue, which is recorded in other revenue, and cash is collected in advance or in close proximity to when revenue is recognized.

Nine Months Ended September 30, 2024 – Net cash provided by operating activities was $9.3 million during the nine months ended September 30, 2024, primarily driven by changes in net operating assets and liabilities of $66.1 million and adjustments for non-cash items of $30.7 million, partially offset by a net loss of $87.4 million.

Cash provided by changes in net operating assets and liabilities during the nine months ended September 30, 2024 primarily consisted of a decrease of $104.6 million in contract assets – commissions receivable, partially offset by decreases of $14.6 million in accrued compensation and benefits and $11.1 million in accrued marketing expenses as well as an increase of $9.9 million in prepaid expenses and other assets and an increase of $1.9 million in accounts receivable.

Adjustments for non-cash items primarily consisted of $15.1 million of stock-based compensation expense, $11.0 million of amortization of internally developed software and $7.4 million of impairment charges, partially offset by a $4.3 million decrease due to the change in deferred income taxes.

Nine Months Ended September 30, 2023 – Net cash provided by operating activities was $26.7 million during the nine months ended September 30, 2023, primarily driven by changes in net operating assets and liabilities of $83.5 million and adjustments for non-cash items of $23.6 million, partially offset by a net loss of $80.4 million.

Cash provided by changes in net operating assets and liabilities during the nine months ended September 30, 2023 primarily consisted of a decrease of $104.2 million in contract assets – commissions receivable and an increase of $6.1 million in accrued compensation and benefits, partly offset by a decrease of $16.3 million in accrued marketing expenses and an increase of $12.6 million in prepaid expenses and other assets.

Adjustments for non-cash items primarily consisted of $17.7 million of stock-based compensation expense and $13.2 million of

amortization of internally developed software, partially offset by a $9.3 million decrease due to the change in deferred income taxes.

Three Months Ended March 31, 2025 – Net cash provided by operating activities was $77.1 million during the three months ended March 31, 2025 driven by changes in net operating assets and liabilities of $66.2 million, adjustments for non-cash items of $8.9 million and net income of $2.0 million.

Cash provided by changes in net

operating assets and liabilities during the three months ended March 31, 2025 primarily consisted of decreases of $77.0 million in contract assets – commissions receivable and $13.4 million in accounts receivable, partially offset by decreases of $16.0 million in accounts payable and $7.5 million in accrued marketing expenses.

Adjustments for non-cash items primarily consisted of $3.8 million of stock-based compensation expense, $3.5 million of amortization of internally developed software and a $1.5 million increase due to the change in deferred income taxes.

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.

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

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.

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.

Nine Months Ended September 30, 2024 – Net cash used in investing activities of $56.4 million for the nine months ended September 30, 2024 mainly consisted of $85.9 million used to purchase marketable securities and $8.1 million in capitalized internal-use software and website development costs, partially offset by $39.0 million in proceeds from the maturities and redemptions of marketable securities.

Nine Months Ended September 30, 2023 – Net cash used in investing activities of $16.5 million for the nine months ended September 30, 2023 mainly consisted of $48.6 million used to purchase marketable securities and $7.0 million in capitalized internal-use software and website development costs, partially offset by $40.9 million in proceeds from the maturities and redemptions of marketable securities.

Three Months Ended March 31, 2025 – Net cash provided by investing activities of $5.5 million for the three months ended March 31, 2025 mainly consisted of $36.3 million in proceeds from the maturities and redemptions of marketable securities, partially offset by $27.4 million used to purchase marketable securities and $3.1 million in capitalized internal-use software and website development costs.

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.

Financing Activities

Nine Months Ended September 30, 2024 – Net cash used in financing activities of $4.7 million for the nine months ended September 30, 2024 was primarily due to a $2.7 million payment of preferred stock dividends and $2.3 million in repurchases of shares to satisfy employee tax withholding obligations.

Nine Months Ended September 30, 2023 – Net cash used in financing activities of $2.6 million for the nine months ended September 30, 2023 was primarily due to $1.9 million in repurchases of shares to satisfy employee tax withholding obligations and $0.9 million in payments of preferred stock dividends.

Three Months Ended March 31, 2025 – Net cash used in financing activities of $0.7 million for the three months ended March 31, 2025 was due to $0.7 million in repurchases of shares to satisfy employee tax withholding obligations.

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.

Open enrollment periods drive the seasonality of our business.

A greater number of our Medicare plans are sold in the fourth quarter of each calendar year during the Medicare AEP, which occurs from October 15 th to December 7 th , when Medicare-eligible individuals are permitted to change their Medicare Advantage and Medicare Part D prescription drug coverage for the following year.

As a result, we experience an increase in the number of approved applications during the fourth quarter and our Medicare plan-related commission revenue is highest in our fourth quarter.

Additionally, our Medicare plan-related commission revenue is also elevated in the first quarter compared to the second and third quarters as a result of the Medicare Advantage open enrollment period that occurs from January 1 st to March 31 st .

The majority of our commission revenue is typically recognized in the fourth quarter of each calendar year under ASC 606, Revenue from Contracts with Customers .

We have historically sold a significant portion of Medicare plans for the year in the fourth quarter during the Medicare AEP, which occurs from October 15 th to December 7 th , when Medicare-eligible individuals are permitted to change their Medicare Advantage and Medicare Part D prescription drug coverage for the following year.

As a result, we generate a significant portion of our commission revenue related to new Medicare plan-related enrollments in the fourth quarter.

Additionally, our Medicare Advantage plan-related commission revenue is also elevated in the first quarter compared to the second and third quarters as a result of the Medicare Advantage open enrollment period that occurs from January 1 st to March 31 st , when Medicare Advantage plan enrollees may enroll in

another Medicare Advantage plan or disenroll from their Medicare Advantage plan and return to the Original Medicare program.

Any changes to or additional enrollment periods may change the seasonality of our business.

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.

The annual open enrollment period for IFP plans takes place in the fourth quarter of the calendar year, as prescribed under the federal Patient Protection and Affordable Care Act and related amendments in the Health Care and Education Reconciliation Act.

As a result, we generate a significant portion of our commission revenue related to IFP plan-related enrollments in the fourth quarter.

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.

We incur a significant portion of our marketing and advertising expense, which is directly correlated with the number of health insurance applications submitted on our ecommerce platforms, in the fourth quarter as a result of the Medicare AEP and the open enrollment period under the Affordable Care Act.

Since our marketing and advertising costs are expensed and generally paid as incurred, and since commission revenue is recognized upon approval of a member but commission payments are paid to us over time, with a fixed, annual commission payment

for new approved applications generally occurring after the plan becomes effective, our operating cash flows could be adversely impacted by a substantial increase in the volume of applications submitted during a quarter or positively impacted by a substantial decline in the volume of applications submitted during a quarter.

We incur a significant portion of our marketing and advertising expenses in the fourth quarter as a result of the Medicare AEP and the open enrollment period under the Affordable Care Act.

We expect this seasonal trend in marketing and advertising expenses to continue in the foreseeable future.

Full-time internal benefit advisors represent the majority of our telesales capacity.

We plan to maintain our internal telesales benefit advisors year-round, net of natural attrition, and expect to increase our internal benefit advisors’ utilization outside of the enrollment periods by expanding our offerings of ancillary products and carrier call center outsourcing programs.

We typically begin ramping our telesales capacity during the second quarter, in preparation for the fourth quarter AEP.

We also engage seasonal advisors who are not full-time employees to support our seasonally high volume.

The magnitude of new agent hiring is driven by our enrollment growth goals for that year.

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Recent Accounting Pronouncements

See Note 1 – Summary of Business and Significant Accounting Policies in our Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q for recently issued accounting standards that could have an effect on us.

See Note 1 – Summary of Business and Significant Accounting Policies in our Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q for the recently issued accounting standards that could have an effect on us.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company”, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.

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