Please stand by. Your program is about to begin. Good morning, everyone and welcome to eHealth Inc.'s Conference Call to discuss the company's Third Quarter 2024 Financial Results. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the prepared remarks. I will now turn the floor over to Eli Newbrun-Mintz, Senior Investor Relations Manager. Please go ahead.

Good morning and thank you all for joining us today. On the call today, Fran Soistman, eHealth's Chief Executive Officer, and John Stelben, Chief Financial Officer, will discuss our third quarter 2024 financial results. Following these prepared remarks, we will open up the line for a Q&A session with industry analysts. As a reminder, this call is being recorded and webcast from the Investor Relations section of our website. A replay of the call will be available on our website later today. Today's press release, our historical financial news releases and our filings with the SEC are also available on our investor relations website. We will be making forward-looking statements on this call about certain matters that are based upon management's current beliefs and expectations relating to future events impacting the company and our future financial or operating performance. Forward-looking statements on this call represent eHealth's views as of today and actual results could differ materially. We undertake no obligation to publicly address or update any forward-looking statements except as required by law. The forward-looking statements we will be making during this call are subject to a number of uncertainties and risks, including but not limited to those described in today's press release and in our most recent annual report on Form 10-K and our subsequent filings with the SEC. We will also be discussing certain non-GAAP financial measures on this call. Management's definitions of these non-GAAP measures and reconciliations to the most directly comparable GAAP financial measures are included in today's press release. With that, I'll turn the call over to Fran Soistman.

Thank you, Eli. Good morning, and thank you all for joining us today. In the third quarter, eHealth achieved our revenue and profitability targets, delivered significant growth in Medicare application volume, and completed final preparations for the annual enrollment period. We successfully scaled and trained our agent force, finalized our brand driven marketing materials and made further enhancements to the online consumer experience. We also entered this critical selling season with a pipeline of appointments for new and existing members that was materially larger than it was at the same time last year. We maintained this strong momentum in the first weeks of the AP with call volume and online visits to our platform up meaningfully year-over-year. The early indicators also point to increased effectiveness of our telesales organization as we are converting demand at greater rates compared to a year ago. We stand ready to assist our existing members to ensure they continue to be enrolled in plans that best fit their needs. We are pleased with these early results while recognizing that much of our AEP performance rides in the final weeks and even days of AEP. Before I review our third quarter operational highlights, it is worth reemphasizing the differentiated value proposition that eHealth brings to our carrier partners and beneficiaries. On the carrier side, eHealth delivers quality enrollment volume at scale across our agency and amplify fulfillment models. We supplement these standout capabilities with local market focus and access to actionable data on how carrier plans perform against their peers and which plan features are especially important to beneficiaries as they select coverage. For beneficiaries, we offer among the broadest selection of plans relative to our peers while remaining truly carrier agnostic. We are also differentiated in our delivery of exceptional customer experience. eHealth's expert teams…

thank you, Fran, and good morning, everyone. I'm excited to have my first earnings call be one where we discuss our continued strong momentum which is reflected in our third quarter results. Our third quarter financial results were driven by strong execution in our Medicare business and continued improvements in our cost structure. They also reflect our investments in AEP preparedness, a major part of our third quarter operations. Third quarter revenue excluding net adjustment revenue or tail was $57.2 million, an increase of 9% year-over-year driven primarily by strong Medicare enrollments and partially offset by a decline in our employer and individual revenue. Third quarter tail revenue was $1.2 million as compared to $12.2 million in Q3 of 2023. Including tail revenue, third quarter revenue was $58.4 million or a 10% decrease year-over-year. Medicare segment revenue excluding tail revenue grew 13% year-over-year. Including tail revenue, our Medicare segment generated $53.2 million in revenue compared to $55.5 million in Q3 of 2023. During the quarter we recognized $1.1 million in positive tail revenue from our Medicare segment compared to $9.3 million a year ago. We also saw a year-over-year improvement of $5.6 million in Medicare segment profitability excluding tail revenue driven primarily by increased application volume and favorable member acquisition costs. Including tail revenue, Medicare Segment loss was $17.9 million reflecting our investment in hiring and training Medicare advisors for our agency and carrier dedicated platforms ahead of the significant shopping volume, we anticipate this AEP. As a reminder, within our Medicare segment we generate two different types of enrollments between agency and amplified fulfillment models. For virtually all of our agency enrollments, eHealth is the broker record, resulting in commission revenue that is booked based on constrained lifetime value estimates at the time of approval and cash collected over…

Certainly. [Operator Instructions] And we will take our first question from George Sutton with Craig Hallum. Please go ahead.

Thank you. John welcome to your first call and your first AP. So, I'm curious Fran, if you could quantify a little bit what you're referencing in terms of the larger pipeline early in the AEP and also your ability or what you're seeing in terms of converting that demand at what you're saying is a greater rate than a year ago. Just curious if we can get a little more detail on those.

Good morning, George. Thanks for the question. The pipeline, we built a pipeline in 2023, but we put it on steroids this year. And we had greater visibility. Obviously, with the degree of changes that are occurring where either beneficiaries were losing their current Medicare Advantage organization because of a market exit or service area reduction or their plan was withdrawn. We saw a number of PPO plans that have been withdrawn in different parts of the country. So, we know those folks have to make change. They don't have an option. And we certainly don't want them to enter January without having health insurance coverage. So, we went on offense. We, you know, to the extent that we had email addresses, phone numbers, we started a very, a very robust outreach program and we didn't give up on the first call, the second call, the third call, we continued to dial and make other efforts to outreach. That has provided us with an opportunity to hit the ground running come October 15. So, we were able to begin taking care of those needs right out of the gate. So, I applaud the team for outstanding execution. As far as more specifics on I'm not going to provide you a metric. Will have to, you'll have to bear with us. And so, we complete the AEP and prepare to announce Q4 earnings. But you know, we had very significant growth last year. And in the first three weeks of the AEP, we have not only surpassed our internal forecast in a meaningful way, but certainly also the very high base. So again, we're looking at this holistically in terms of our retention and new opportunities. You know, millions of people, current Medicare Advantage members, were affected by plan withdrawals and service area reductions. So, I think there is a greater sense of urgency, higher motivation for Medicare Advantage beneficiaries to shop this year. So, we're being opportunistic in meeting those needs, both with retention and with new opportunities.

So, it's particularly encouraging given what I would have thought early in the season was going to be limited ability to get in front of people given all the political advertising. I'm just curious the rest of the season relative to changes in advertising that you might be doing. Curious if I'll see a lot more of Eve for the rest of the season and would you expect that the AEP could get extended?

Okay, let me break those down. You have three very good questions there. As far as the concerns with the national election that we, you know, the industry would have difficulty getting that message through. We've not experienced that, particularly with our DRTV. People have been glued to their TVs over the last few weeks and leading up to last night's conclusions, or I guess early this morning's conclusions. We buy our DRTV on a national basis and a lot of the political messaging advertisements are done on a local market basis. So, we were able to get our message across. If you tuned into, you know, CNN box, you know, we make sure we represent both sides of the aisle in our outreaches. You would have seen us. Those messages, we all get calls from our family members when they see us on TV. So, we know people are watching. All of our channels right now are performing above our expectations, leading to lower cos, higher conversion rate. So, we're generating quality leads. That's really, you know, it's success against success and it invokes more confidence with particularly our less tenured agents. You know, they're, they're enjoying success in closing customers, which I think is going to serve us well through the balance of AEP and into January's OEP. I can't tell you anything new as far as whether, you know, CMS will grant an extension or offer a special enrollment period. I stay reasonably close contact with key people at CMS. I'll be outreaching to them in a follow up to a meeting we had in person a few weeks back, just giving them some, some metrics in terms of what we're observing. We have a very transparent relationship with CMS and it's not uncommon for them to either confirm that they're seeing similar kinds of higher volumes with their call centers. So, my guess, though, George and I don't have any inside information, but my prediction would be if there is to be a special enrollment period, CMS would not likely communicate that until after Thanksgiving as we get closer to the end of the AEP December 7.

Gotcha. Just one other thing for John, if I could. We saw you had reduced the constraint recently and you saw your tail revenues come in much more limited than in the past. Is this, do we feel really good about the constraint change we made? Are we going to see relatively small tail revenues ahead?

Thanks, George. You know, I think we continue to analyze our performance volatility and the LTV trends that we've seen over time, and we remain confident the change that we made was the right change. Yeah, when we analyzed it, we did have a range of various outcomes and we actually, we chose the conservative route and booked more at the lower end. So, there was opportunity to actually take the constraint down lower. You know, we considered the current environment how we chose our constraint and we maintained the appropriate level of conservatism in our process. You know, when we look at our tail, you know we have over $200 million accumulative cumulative positive tail over the since the adoption of 606. And we've seen 26 out of the last 27 quarters since the adoption that we said positive tail adjustments. Again, we do feel very confident we make sure that we're staying compliant with our 606 guidance.

Beautiful. Thanks guys. Appreciate it.

Thank you. [Operator Instructions] And there appear to be no further questions at this time. I'll turn the call to Fran for any closing remarks.

Thank you, operator. Well, I imagine many on the call this morning had a very late night, so thank you for joining. I really appreciate that. As we close out this third quarter, I'd like to reiterate our commitment to delivering long-term value and navigating this dynamic environment with resilience and focus. eHealth's transformation journey and business performance progress has been nothing short of remarkable and I remain optimistic about our ability to sustain this momentum through the end of this year and throughout 2025. None of this would be possible without the strong management team and our employees who have contributed to achieving a healthy and vibrant workplace. We're laser focused on achieving a successful AEP, further enhancing the capital structure and unlocking shareholder value. The stage is set for continued success in 2025 through core MA strength and our exciting diversification initiatives. So, we appreciate the continued support of our shareholders, partners, our employees as we drive forward on our strategic priorities and we're confident in our path and remain committed to executing on our goals for sustained, profitable growth. So, thank you once again. We look forward to updating you on our progress in the quarters ahead.