What changed in this filing

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Item 1A. Risk Factors

2025-08-07 compared with 2025-05-07 · 60 added, 66 removed, 614 unchanged (17% of the section changed)

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foreseeable future.

For example, Humana, Aetna and UnitedHealthcare accounted for 24%, 14%, and 24%, respectively, of our total revenue for the three months ended March 31, 2025, and accounted for 26%, 23%, and 15%, respectively, of our total revenue for the three months ended March 31, 2024.

For example, Humana, Aetna and UnitedHealthcare accounted for 23%, 13%, and 25%, respectively, of our total revenue for the six months ended June 30, 2025, and accounted for 27%, 21%, and 16%, respectively, of our total revenue for the six months ended June 30, 2024.

As discussed elsewhere in this Risk Factors section, our contractual relationships with health insurance carriers are typically non-exclusive and terminable on short notice by either party for any reason.

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Our operations in China involve many risks that could increase expenses, expose us to increased liability and adversely affect our business, operating results and financial condition.

Our subsidiary in China conducts a portion of our operations, including the maintenance and update of our ecommerce platform and performance of specific tasks within our finance, customer care and enrollment functions.

We rely on third-party vendors to communicate with our subsidiary in China.

Our business would be harmed if our ability to communicate via these vendors with these employees failed, and we were prevented from promptly updating our software or implementing other changes to our database and systems, among other things.

Our subsidiary in China conducts a portion of our operations, including the maintenance and update of our ecommerce platform.

If we are required to move aspects of our operations out of China because of political or geopolitical issues, changes in laws, inquiries from health insurance carriers or for other reasons, we could incur increased expenses, and our business, operating results and financial condition could be harmed.

From time to time, we receive inquiries from health insurance carriers relating to our operations in China and the security measures we have implemented to protect data that our employees in China may be able to access.

As a part of these inquiries, we have implemented additional security measures relating to our operations in China.

Still, we may be required to implement further security measures to continue aspects of our operations in China.

We may also be

required to bring aspects of our operations in China back to the United States, which could be time-consuming and expensive and harm our operating results and financial condition.

Health insurance carriers may also terminate our relationship due to concerns surrounding our China operations, which would harm our business, operating results and financial condition.

In recent years, we have implemented additional security and operational measures relating to our operations in China and have brought certain aspects of our operations in China back to the United States.

of our efforts, health insurance carriers may still terminate our relationship due to concerns surrounding our China operations, which would harm our business, operating results and financial condition.

Our operations in China also expose us to different laws, rules and regulations, including different intellectual property laws, which are not as protective of our intellectual property as the laws in the United States.

United States and Chinese trade laws may also impose restrictions on the importation of programming or technology to or from the United States.

We are also subject to certain laws, rules and regulations in China and the United States, including those related to anti-bribery and anti-corruption, privacy, data transfer, data security, labor, tax, foreign exchange controls and cash repatriation.

In recent years, both China the United States have adopted and proposed laws regulating these areas.

In recent years, both China the United States have adopted and proposed laws regulating these areas and may impose additional regulations that may impact aspects of our business activities in China.

For example, the U.S.

government has recently expanded restrictions on providing certain “covered persons” and “countries of concern” with access to broadly defined categories of U.S.

sensitive personal data and U.S.

government-related data, which took effect on April 8, 2025.

We have brought certain aspects of our operations in China back to the United States to comply with these restrictions but the U.S.

government may impose further restrictions in the future, which may further impact our business activities in China.

The United States and Chinese trade laws may also impose additional restrictions on the importation of programming or technology to or from the United States.

For example, we rely on third-party vendors to communicate with our subsidiary in China.

Our business would be harmed if our ability to communicate via these vendors with these employees failed.

Such laws, regulations and standards are complex, ambiguous and subject to change or interpretation, which create uncertainty regarding compliance and enforcement.

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Our business may be adversely impacted by changes in China’s economic or political condition, the relationship between China and the United States or other countries, and our ability to continue to conduct our current operations in China.

Any such changes may be caused by geopolitical issues, natural disasters, war or other events or circumstances.

For example, President Trump has indicated that his administration would potentially impose greater restrictions on trade with China through significant increases in tariffs on goods imported into the United States.

Any deterioration in U.S.-China relations could increase tensions and create greater uncertainty in our business dealings in China and with Chinese companies and could require us to bring aspects of our operations in China back to the United States, which could be time-consuming, expensive and disruptive.

These risks could cause us to incur increased expenses and could harm our ability to manage our operations effectively and successfully in China.

Moreover, any significant or prolonged deterioration in the relationship between the United States and China could adversely affect our operations in China.

Certain risks and uncertainties of doing business in China are solely within the control of the Chinese government, and Chinese law regulates the scope of our foreign investments and business conducted within China.

The escalation of international tensions has increased the risk associated with our operations in China.

Either the U.S.

or the Chinese government may limit or sever our ability to communicate with our China operations or may take actions that force us to close our operations in China.

We employ many of our technology and content employees in China, and we have other employees in China that support our business.

Any disruption of our operations in China would adversely impact our business.

Any such changes may be caused by geopolitical issues, natural disasters, armed conflict or other events or circumstances.

For example, there is great uncertainty regarding restrictions on trade with China under the current administration.

Any material deterioration in U.S.-China relations could require us to bring additional aspects of our operations in China back to the United States or force us to close our operations in China, which could be time-consuming, expensive and disruptive, and our business, operating results and financial condition could be harmed.

Our business is seasonal in nature, and if we are not successful in responding to changes in the seasonality of our business, our business, operating results and financial condition could be harmed.

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As a result, we have traditionally experienced an increase in the number of submitted Medicare-related applications and approved members during the fourth quarter and, to a lesser extent, in the first quarter, and an increase in Medicare plan-related expense, including marketing and advertising expenses, during the third and fourth quarters in connection with the open enrollment periods.

However, because commissions from approved consumers are paid to us over

time, our operating results, and in particular, our operating cash flows, could be adversely impacted by a substantial increase in marketing and advertising expense.

However, because commissions from approved consumers are paid to us over time, our operating results, and in particular, our operating cash flows, could be adversely impacted by a substantial increase in marketing and advertising expense.

Changes in timing of the Medicare or individual and family health plan enrollment periods, adoption of new or special enrollment periods, changes in eligibility and subsidies applicable to the purchase of health insurance, and changes in the laws and regulations that govern the sale of health insurance may occur from time to time, and we may not be able to timely adjust to changes in the seasonality of our business, which could harm our business, operating results and financial condition.

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Our success is dependent upon the performance of our senior management and other key employees, as well as our ability to attract and retain qualified personnel for all areas of our organization.

Replacing senior management and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully execute our business objectives.

We may not be successful in attracting and retaining personnel on a timely basis, on competitive terms or at all.

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For example, in 2024, we appointed a new chief revenue officer and a new chief financial officer.

In addition, in August 2024, our Chief Executive Officer notified the Company of his decision to retire from his position as the Company’s chief executive officer upon appointment of a successor, and we are currently engaged in a search process to identify his successor.

The transition and the departure of members of our senior management or other key employees could result in additional attrition.

In addition, on September 18, 2025, Derrick Duke will succeed our current chief executive officer, Fran Soistman, who has agreed to serve as an executive advisor through December 31, 2025 to facilitate the transition.

The departure of our current or new chief executive officer, or other members of our senior management or other key employees, could result in additional employee attrition.

Any significant change in leadership could be detrimental to our business, operating results and financial condition.

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We may experience difficulties recruiting and retaining a sufficient number of benefit advisors and support staff during the year and especially for the Medicare annual enrollment period.

Even if we are successful in recruiting licensed benefit advisors and support staff, failure to retain, train and ensure the productivity of our benefit advisors and other individuals that operate our advisor enrollment centers could result in lower-than-expected sold plans, conversion rates and revenue, higher costs of acquisition per

member and higher plan termination rates, any of which could harm our business, operating results and financial condition.

If our benefit advisors do not perform to the standards we expect of them or if we do not generate sufficient call volumes for our benefit advisors to remain productive, our sold plan volume, conversion and retention rates could be negatively impacted, and our business, operating results and financial condition would be harmed.

If investments we make in our advisor enrollment center operations do not result in the returns we expected when making those investments, we could acquire fewer members, suffer a reduction in our membership, and our business, operating results and financial condition could be harmed.

If investments we make in our advisor enrollment center operations do not result in the returns we expected when

making those investments, we could acquire fewer members, suffer a reduction in our membership, and our business, operating results and financial condition could be harmed.

Given that our business is seasonal in nature, if we are not successful in recruiting, training and retaining qualified benefit advisors and other workers, our benefit advisors or other workers do not perform to high standards or our investments in our advisor enrollment center operations do not result in expected returns, among other factors discussed in this risk factor, our ability to sell Medicare-related health insurance plans will be impaired during the Medicare annual enrollment period, which would harm our business, operating results and financial condition.

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claims incurred but unpaid as of each balance sheet date.

Our estimated liability is based on assumptions we believe to be reasonable

under the current circumstances and will be adjusted as warranted based on changing circumstances.

Our estimated liability is based on assumptions we believe to be reasonable under the current circumstances and will be adjusted as warranted based on changing circumstances.

It is possible, however, that our actual liabilities may exceed our estimates of losses.

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Our self-insurance reserves could prove to be inadequate, resulting in liabilities in excess of our available insurance and self-insurance.

If a successful claim is made against us and is not covered by our insurance or exceeds our policy limits, our business may be negatively and materially impacted.

If a successful claim is made against us and is not covered by our

insurance or exceeds our policy limits, our business may be negatively and materially impacted.

These fluctuations could have a material adverse effect on our business, operating results and financial condition.

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We expect the Medicare market to remain fluid for the foreseeable future.

The election of President Trump and Republican control of both houses of Congress may result in significant changes in, and have resulted in uncertainty with respect to, legislation, regulation, implementation and/or repeal of laws and rules related to government health programs, including Medicare, Medicaid and Affordable Care Act.

The election of President Trump and Republican control of both houses of Congress has resulted in significant changes in, and may continue to result in, uncertainty with respect to legislation, regulation, implementation and/or repeal of laws and rules related to government health programs, including Medicare, Medicaid and the Affordable Care Act.

For example, President Trump has issued various executive orders reversing several Biden administration healthcare policies, and additional executive orders may be forthcoming.

Members of the U.S.

House of Representatives have also began considering a series of legislative proposals targeting Medicaid, Medicare and other entitlement programs, and we expect there will be continued proposals targeting reimbursement methodologies and the number of individuals eligible for government healthcare programs.

In addition, the staff of the Department of Government Efficiency (the "DOGE")

have been provided access to key payment and contracting systems at CMS in connection with DOGE’s efforts to identify opportunities for improving efficiency and identifying fraud and ineffective use of government resources.

While we cannot predict the actions of the DOGE, there is a possibility that changes will be made to CMS spending, which could ultimately affect our financial condition and results of operation.

President Trump and other policymakers could consider legislative proposals impacting Medicaid, Medicare, the Affordable Care Act and other entitlement programs, and we expect there will be continued proposals targeting reimbursement methodologies and the number of individuals eligible for government healthcare programs.

In addition, initiatives launched by the Department of Government Efficiency (“DOGE”) continue to identify opportunities for improving efficiency and reducing waste, fraud and abuse of government resources.

While we cannot predict the full impacts of these initiatives, changes are being made to

CMS spending, which could potentially impact beneficiary experience and could ultimately affect our financial condition and results of operation.

The marketing and sale of health insurance plans, including Medicare plans, are subject to numerous, complex and frequently changing laws, regulations and guidelines.

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CMS scrutinizes health insurance carriers whose Medicare plans we sell, and those health insurance carriers may be held responsible for actions that we, our agents and our partners take, including our marketing materials and actions that lead to complaints or disenrollment.

Health insurance carriers are increasingly evaluating broker performance based on the quality of their enrollments, including complaints, retention rates, consumer satisfaction and volumes.

Health insurance carriers are increasingly evaluating broker performance based on the quality of their enrollments, including increased complaint rates, retention rates, consumer satisfaction and volumes.

As a result, health insurance carriers may terminate their relationships with us, or they may require us to take other corrective action if our Medicare product sales, marketing and operations are not in compliance or give rise to too many complaints.

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Each year, CMS releases new rules relating to Medicare plans, which can have a material effect on our operations, our business, operating results and financial condition.

agents to make additional statements or disclosures on calls that will increase the time required to assist beneficiaries and may limit the ability of eHealth to timely assist all beneficiaries.

CMS subsequently announced that it is deferring taking actions on certain marketing provisions but may evaluate them for future rule making.

For example, CMS has proposed new rules scheduled to become effective in late 2025 (“CY 2026 Proposed Rules”) which, among other things, would increase the scope and complexity for required reviews and filing of marketing and communications, and require brokers and agents to make additional statements or disclosures on calls that will increase the time required to assist beneficiaries and may limit the ability of eHealth to timely assist all beneficiaries.

CMS subsequently announced that

it is deferring taking actions on certain marketing provisions but may evaluate them for future rule making.

These additional requirements, if enacted, may impact the viability of partnerships that we use for marketing efforts, may increase the chance of related litigation, and could impede or otherwise harm our business, operating results and financial condition.

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If additional data privacy or data security laws are implemented, or our health insurance carrier or other partners determine to impose requirements on us relating to data privacy security, we may not be able to timely comply with such requirements or such requirements may not be compatible with our current processes.

Changing our processes could be time-consuming and expensive, and failure to timely implement required changes could result in our inability to sell health insurance plans in a particular jurisdiction or for a particular health insurance carrier or subject us to liability for non-compliance, any of which would damage our business, operating results and financial condition.

results and financial condition.

Health insurance carriers that we work with may also require us to comply with additional privacy and data security standards to do business with us at all.

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If the information we provide on our website, through our advisor enrollment centers, in our marketing materials or otherwise is not accurate or is construed as misleading, or if we do not properly assist individuals and businesses in purchasing health insurance, members, health insurance carriers and others could attempt to hold us liable for damages or require us to take corrective actions.

In addition, our relationships with health insurance carriers could be terminated or impaired and

regulators could attempt to subject us to penalties, force us to stop using our websites, marketing material or certain aspects of them, revoke our licenses to transact health insurance business in a particular jurisdiction, and/or compromise the status of our licenses to transact health insurance business in other jurisdictions.

Any of these occurrences could result in our loss of our commission revenue and harm our business, operating results and financial condition.

In addition, our relationships with health insurance carriers could be terminated or impaired and regulators could attempt to subject us to penalties, force us to stop using our websites, marketing material or certain aspects of them, revoke our licenses to transact health insurance business in a particular jurisdiction, and/or compromise the status of our licenses to transact health insurance business in other jurisdictions.

occurrences could result in our loss of our commission revenue and harm our business, operating results and financial condition.

In the ordinary course of operating our business, we and our health insurance carrier partners have received complaints that the information we provided was not accurate or was misleading.

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The commission rates we receive are impacted by a variety of factors, including the particular health insurance plans chosen by our members, the carriers offering those plans, our members’ states of residence, the laws and regulations in those jurisdictions, the average premiums of plans purchased through us and health care reform.

Our commission revenue per member has in the past decreased, and could in the future decrease, as a result of reductions in contractual commission rates, a change in the mix of carriers whose products we sell during a given period and increased health insurance plan termination rates, all of which are beyond our control and may occur on short

To the extent these and other factors cause our commission revenue per member to decline, our revenue may decline, and our business, operating results and financial condition would be harmed.

Given that Medicare-related and individual and family health insurance purchasing is concentrated during enrollment periods, we may experience a shift in the mix of Medicare-related and individual and family health insurance products selected by our members over a short period of time.

Given that Medicare-

related and individual and family health insurance purchasing is concentrated during enrollment periods, we may experience a shift in the mix of Medicare-related and individual and family health insurance products selected by our members over a short period of time.

Any reduction in our average commission revenue per member caused by such a shift or otherwise would harm our business, operating results and financial condition.

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For instance, with respect to health insurance plans, health insurance carriers do not directly report member cancellations to us.

than small business health insurance, we infer cancellations from payment data that carriers provide by analyzing whether payments from members have ceased for a period of time, and we may not learn of a cancellation for several months.

Other than small business health insurance, we infer cancellations from payment data that carriers provide by analyzing whether payments from members have ceased for a period of time, and we may not learn of a cancellation for

several months.

The majority of our members who terminate their plans do so by discontinuing their insurance premium payments to the carrier or notifying the carrier, and do not inform us of the cancellation.

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Further, the Credit Agreement contains financial covenants requiring us to (x) maintain a minimum level of liquidity as of the end of each month and (y) maintain a ratio such that the outstanding amount of obligations under the Credit Agreement at the end of any month does not exceed 50% of the value of certain commissions receivable as of the end of such month.

our business and the indictment of us or any subsidiary (or any senior officer thereof), or criminal proceedings against the same, which could result in a forfeiture of a material portion of our and our subsidiaries properties.

The events of default under the Credit Agreement include, among other things and subject to grace periods in certain instances, payment defaults, cross defaults with certain other material indebtedness, breaches of covenants or representations and warranties, changes in control of our company, certain bankruptcy and insolvency events with respect to us and our subsidiaries, a restriction on all or a material portion of our business and the indictment of us or any subsidiary (or any senior officer thereof), or criminal proceedings against the same, which could result in a forfeiture of a material portion of our and our subsidiaries properties.

If we experience a decline in cash flow due to any of the factors described in this Risk Factors section or otherwise, we could have difficulty paying interest and principal amounts due on our indebtedness and meeting the financial covenants set forth in our Credit Agreement.

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We have not met the Minimum Asset Coverage Ratio since the September 30, 2023 measurement date and as of November 30, 2024, we were no longer in compliance with the Minimum Liquidity Amount.

As of March 31, 2025, H.I.G.

As of June 30, 2025, H.I.G.

continued to own at least 30% of the shares.

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in order to incur certain indebtedness, which could limit our ability to obtain additional financing.

If we are unable to refinance our existing or future indebtedness, obtain adequate financing or obtain

financing on terms satisfactory to us when we require it, we may default on our existing or future indebtedness, and our ability to continue to pursue our business objectives and to respond to business opportunities or challenges could be harmed, and our business, operating results and financial condition could be materially and adversely affected.

If we are unable to refinance our existing or future indebtedness, obtain adequate financing or obtain financing on terms satisfactory to us when we require it, we may default on our existing or future indebtedness, and our ability to continue to pursue our business objectives and to respond to business opportunities or challenges

could be harmed, and our business, operating results and financial condition could be materially and adversely affected.

If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements could be impaired, which could adversely affect our operating results, our ability to operate our business and our stock price.

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A lack of future taxable income would adversely affect our ability to utilize these net operating loss carryforwards.

In addition, utilization of the net operating loss carryforwards may be subject to a substantial annual

limitation due to ownership changes that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and similar state provisions.

These ownership change limitations may limit the amount of net operating loss carryforwards and other tax attributes that can be utilized annually to offset future taxable income and tax, respectively.

In addition, utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to ownership changes that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and similar state provisions.

These ownership

change limitations may limit the amount of net operating loss carryforwards and other tax attributes that can be utilized annually to offset future taxable income and tax, respectively.

In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points (by value) of the outstanding stock of a company by certain stockholders.

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Issues relating to the use of new and evolving technologies, such as AI, in our business operations could result in liability, reputational harm and an adverse impact on our operating results and financial condition.

We plan to utilize our artificial intelligence (“AI”) Center of Excellence to help guide and prioritize our AI and technology initiatives for 2025.

We have begun to utilize our artificial intelligence (“AI”) Center of Excellence to help guide and prioritize our AI and technology initiatives for 2025 and have started implementing AI-based voice, non-licensed agents to help streamline the health insurance selection process by initiating the customer intake process, gathering personal information, checking initial eligibility and communicating necessary disclosure.

Utilizing AI-based voice agents has so far contributed to a reduction in the wait time for consumers and enhanced customer experience.

However, social, ethical and operational issues relating to the use of AI in our business operations could result in liability, reputational harm and additional costs.

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We may not be able to adequately protect our intellectual property, which could harm our business, operating results and financial condition.

Our intellectual property is an essential asset of our business, and we believe that our technology currently gives us a competitive advantage in the distribution of Medicare-related, individual, family and small business health insurance.

We rely on a combination of patent, copyright, trademark and trade secret laws, confidentiality procedures and contractual provisions to establish and protect our intellectual property rights in the United States.

Our efforts to protect our intellectual property may need to be revised or more effective, and our trademarks or patents may be held invalid or unenforceable.

Moreover, the law relating to intellectual property is not as developed

in China, and our intellectual property rights may not be as respected in China as they are in the United States.

Moreover, the law relating to intellectual property is not as developed in China, and our intellectual property rights may not be as respected in China as they are in the United States.

We may not be effective in policing unauthorized use of our intellectual property, trade secrets and other confidential information, and even if we do detect violations, litigation may be necessary to enforce our intellectual property rights.

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Such conversion would dilute the ownership interest of existing holders of our common stock.

In addition, because holders of our Series A Preferred Stock are entitled to vote, on an as-converted basis (subject to certain voting limitations and conversion calculations set forth in the certificate of designations for the Series A Preferred Stock), together with holders of our common stock on all matters submitted to a vote of the holders of our

common stock, the issuance of the Series A Preferred Stock effectively reduces the relative voting power of the holders of our common stock.

addition, because holders of our Series A Preferred Stock are entitled to vote, on an as-converted basis (subject to certain voting limitations and conversion calculations set forth in the certificate of designations for the Series A Preferred Stock), together with holders of our common stock on all matters submitted to a vote of the holders of our common stock, the issuance of the Series A Preferred Stock effectively reduces the relative voting power of the holders of our common stock.

Any sales in the public market of the common stock issuable upon conversion of the Series A Preferred Stock could adversely affect prevailing market prices of our common stock.

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These developments, or the perception that any of them could occur, could result in the worsening of current global economic conditions and the stability of global financial markets, and may significantly escalate trade tensions and reduce global trade and, in particular, trade between the impacted nations and the U.S.

As discussed elsewhere in this Risk Factors section, our subsidiary in China provides supports for certain aspects of our operations and face risk related to trade and other international disputes and geopolitical tensions.

Any new or changes in restrictions can be announced with little or no advance notice, which can create uncertainty.

As discussed elsewhere in this Risk Factors section, our subsidiary in China provides support for certain aspects of our operations and face risk related to international disputes and geopolitical tensions.

Any new or changes to restrictions can be announced with little or no advance notice, which can create uncertainty.

Any of these factors could depress economic activity, restrict our access to our operations in China, and have a material adverse effect on our business, operating results and financial condition.

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

What changed 10-Q

Item 1A. Risk Factors