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eHealth, Inc. EHTH is poised for growth attributable to Medicare and Individual, Family and Small Business performance. Return on equity, a measure to identify how efficiently the company is utilizing its shareholders’ fund, was 11.1% in the third quarter of 2020, up from 4.7% in the year-ago period
The company has seen estimates for 2020 move up 1.4% in the past 30 days, reflecting investor optimism.
The company delivered earnings surprise in each of the last seven reported quarters with the average beat being 127.45%. The last reported quarter’s performance reflects sustained momentum in the online Medicare enrollments, significant growth in Medicare carrier advertising revenues and investment in telesales capacity and technology initiatives ahead of the Medicare Annual Enrollment Period or AEP.
This Zacks Rank #2 (Buy) private health insurance exchange service provider expects 2020 revenues in the range of $630 million to $670 million. Adjusted EBITDA is estimated between $140 million and $155 million. The company plans to increase its revenues at a five-year CAGR of 27% by 2024 and an adjusted EBITDA margin of 38%.
Net income is expected between $79 million and $94 million or $2.91 to $3.47 per share. Adjusted net income per share is estimated between $3.83 and $4.32. The midpoint of the range is lower than the Zacks Consensus Estimate of $4.22. The expected long-term earnings growth is pegged at 21%, way above the industry average of 12.3%.
eHealth’s Medicare business continues to deliver. The company’s investments in Medicare-related marketing initiatives and expansion of telesales capacity and online sales capability continue to drive growth. The company estimates 45% to 50% of fourth quarter of 2020 Medicare major medical applications to be submitted online, up from 36% in year-ago quarter. The company remains on track to achieve 37%-40% online penetration in 2020 and plans 53% online penetration by 2024.
Medicare segment revenues are expected between $583 million and $619 million in 2020. Profit is estimated to be in the range of $176 million to $193 million.
The company’s Individual, Family and Small Business segment too continues to perform well. eHealth expects substantial increase in estimated lifetime values of individual and family plan members going forward. Revenues from the business are likely to be between $47 million and $51 million in 2020 while profit is estimated to be in the range of $17 million to $18 million.
The company boasts a debt free balance sheet with $197.8 million in cash, cash equivalents and marketable securities as of Sep 30, 2020.
Shares of the company have lost 0.5% year to date compared with the industry’s decline of 6%.
Other Stocks to Consider
Some other top-ranked companies in the same space are Arthur J Gallagher AJG, Brown and Brown BRO and Alleghany Y.
Arthur J Gallagher delivered earnings surprise of 11.10% in the last reported quarter. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Brown and Brown delivered earnings surprise of 7.95% in the last reported quarter. The stock carries a Zacks Rank #2.
Alleghany delivered earnings surprise of 195.85% in the last reported quarter. The stock sports a Zacks Rank #1.
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Arthur J. Gallagher & Co. (AJG) : Free Stock Analysis Report
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