eHealth, Inc. EHTH has announced preliminary results for the fourth quarter and 2018. Following optimistic guidance, shares of the company gained about 12.9% in the trading session on Jan 23.
eHealth projects net income between $24.3 million and $27.3 million for the fourth quarter on revenues of $133.5 million to $135.5 million. Adjusted EBITDA is estimated to be in the range of $51.7 million to $52.7 million. The Zacks Consensus Estimate of earnings is pegged at $1.83 per share on revenues of $111.5 million for fourth quarter of 2018. Both the bottom and top line reflect year-over-year increase of 297% and 187%, respectively. Revenues fell shy of the company’s expectations.
For the full year, eHealth raised revenue guidance to a range of $250-$252 million from previous guidance of $217.5-$227.5 million. Net income is expected to be in the range of $(1.5) million to $1.5 million compared with prior guidance of income of $1.6 million to $6.6 million. Adjusted EBITDA is projected to be in the range of $33.5 million to $34.5 million, up from prior guidance of $21.9 million to $26.9 million.
Fourth quarter is considered a primary selling season for the company. In fact, eHealth noted that submitted Medicare applications increased 64% year over year in the fourth quarter while the same increased 39% year over year for 2018.
Shares of eHealth have outperformed the industry in a year. While the stock has surged 174.6%, the industry has grown 4.8%. The company has witnessed its estimates for 2019 move up 5.4% in the last 60 days.
eHealth is scheduled to report fourth-quarter earnings on Feb 24. Our proven model does not conclusively show that the company is likely to beat estimates. This is because a Zacks Rank #3 (Hold), which lowers the predictive power of ESP, combined with an Earnings ESP of 0.00% makes surprise prediction difficult. Note that we always need a positive ESP and a favorable Zacks Rank to be confident about an earnings surprise.
eHealth delivered a positive earnings surprise in two of the last three reported quarters.
Concurrently, eHealth unveiled 2019 guidance. The company projects net income between $16.3 million and $21.3 million on revenues of $290 million to $310 million. Adjusted EBITDA is estimated to be negative, in the range of $45 million to $50 million.
eHealth focuses on shifting business mix toward a higher percentage of long-term value. Revamped digital marking capabilities are likely to aid performance. The company’s Medicare customers will ensure a better future cash-flow generation and position it well for long-term growth.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Brown & Brown Inc. BRO, MGIC Investment Corporation MTG and NMI Holdings Inc NMIH.
Brown & Brown markets and sells insurance products and services, primarily in the United States, England, Bermuda and the Cayman Islands. The company delivered positive surprises in the last four quarters with average beat of 8.44%. The stock sports a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
MGIC Investment provides private mortgage insurance and ancillary services to lenders and government sponsored entities in the United States. The company pulled off positive surprises in three of the last four quarters with average beat of 22.88%. The stock sports a Zacks Rank #1.
NMI Holdings provides private mortgage guaranty insurance services in the United States. The company came up with positive surprises in the last four quarters with average beat of 22.19%. The stock flaunts a Zacks Rank of 1.
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