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eHealth Delivers Sizzling Revenue Growth in Q1

Keith Speights, The Motley Fool

When eHealth (NASDAQ: EHTH) reported its quarterly results in February, investors were treated to revenue soaring 62% but earnings increasing only 2.5%. The question for investors heading into the first quarter was whether or not the leading online health insurance exchange company would be able to improve on its previous results. 

Investors learned how eHealth performed in the first quarter on Thursday with the company providing a quarterly update after the market closed. How did the company fare? Here's what you need to know about the eHealth's Q1 results.

Smart tablet with health insurance sign up

Image source: Getty Images

By the numbers

EHealth announced Q1 revenue of $68.8 million, a 60% increase from the $43.1 million reported in the same quarter of the previous year. The company's reported revenue was higher than the average analysts' revenue estimate of $51.1 million.

How did eHealth's bottom line look in the first quarter? The company reported a net loss of $5.2 million, or $0.24 per share, on a GAAP basis, compared to $4.8 million, or $0.26 per share, in the same period in 2018.

On a non-GAAP adjusted basis, eHealth's net income in the first quarter was $7.2 million, or $0.33 per share. This reflected an improvement from the prior-year period adjusted net loss of $1.3 million, or $0.07 per share. Wall Street analysts estimated that the company would post a net loss of $0.10 per share in the quarter. EHealth's adjusted EBITDA increased to $8.6 million compared to the prior-year period loss of $1.2 million.

Behind the numbers

CEO Scott Flanders believes that eHealth's Q1 performance was largely due to the strong performance of the company's Medicare business, noting that the results "exceeded our expectations." Medicare revenue rose 78% in the first quarter to $54.9 million in Q1 from $30.8 million in the prior-year period. 

The company's Medicare Advantage revenue jumped 82% year over year to $39.8 million. Medicare Supplement revenue increased 54% to $8.6 million. And Medicare Part D revenue skyrocketed 102% over the prior-year period to $2.3 million. 

EHealth's deteriorating bottom line performance stemmed from a couple of factors. First, the company spent a lot more in the first quarter, especially on marketing and advertising and on customer care and enrollment. Second, eHealth posted a big increase in the fair value of the earnout liability associated with its recent acquisition of GoMedigap. This increase resulted from eHealth stock achieving significant gains.

Looking ahead

EHealth now anticipates revenue between $315 million and $335 million in full-year 2019, up from its previous guidance between $290 million and $310 million. The company also projected 2019 adjusted diluted earnings per share (EPS) to be between $1.54 and $1.73, compared to non-GAAP income per diluted share between $1.11 to $1.25 per share provided in its previous outlook. EHealth also expects to generate adjusted EBITDA growth of over 70%.

Flanders mentioned several things that investors can look forward to in the coming months. He specifically stated that the company will "continue to see significant potential to scale customer acquisition in the Medicare market while maintaining attractive costs and achieving operating leverage with our fixed costs" for the rest of full-year 2019.

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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.