Good day ladies and gentleman and welcome to the Fourth Quarter 2007 eHealth, Inc Earnings Call. My name is Cary and I would be your coordinator for today. At this time all participants are in listen-only mode. We'll be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Ms. Dede Sheel. Please proceed.

Thank you. Good afternoon and thank you all for joining us today, either by phone or by webcast for a discussion about eHealth Inc.'s fourth quarter of fiscal year 2007 financial results. On the call this afternoon we will have Gary Lauer, eHealth's President and Chief Executive Officer; and Stuart Huizinga, eHealth's Chief Financial Officer. After management completes its remarks, we will open up the lines for questions. As a reminder, today's conference call is being recorded and webcast from the Investor Relations section of the company's website. A replay of the call will be available from the Investor Relations section of the company's website following the call. The company will make forward-looking statements on this call. All statements other than statements of historical facts are forward-looking statements. Forward-looking statements made on this call will include statements regarding growth strategy and execution as a cost effective source and barrier to competitors, plans to continue to test traditional media advertising, expansion of the HSA platform offering into additional states, the launch of the HSA platform with strategic partners during the first half of this year, expansion of the use of our platform in China, the launch of EPI III in the first half of 2008, EPI III as a compelling reason to purchase from eHealth and as a competitive advantage, the growth in the number of carriers licensing our eCommerce technology, the licensing of our technology platform allowing us to participate in traditional agent business, the potential for legislation impacting the individual health insurance market in the next two or three years, the economic environment encouraging the use of the Internet, reduced employment, resulting in more people searching for individual health insurance, the future potential of our licensing and sponsorship business, growth in marketing and advertising costs, the period of time…

Good afternoon. eHealth's performance for the fourth quarter of 2007 and the entire year in total, illustrate progress, execution and momentum across all important areas of our business. Revenue grew 39% compared to the fourth quarter a year ago and cash flow from operations in the fourth quarter increased by 61% to $7.9 million. Notably our largest cash flow quarter ever, giving us a quarter and cash balance in excess of $121 million. During the fourth quarter, we also initiated a strategic increase in our cost of marketing and advertising spending, which successfully resulted in 28% year-over-year individual and family plan submitted application growth. We are also enthused about progress we made during the quarter in three important initiative areas, Ubao.com in China and our beta version HSA platform, and our emerging technology licensing and sponsorship business. I will make additional comments on each of these, but first, I want to expand on our marketing and advertising initiatives. During the fourth quarter, we made significant progress accelerating demand for eHealth products and reinforcing our position as the leading online source of health insurance for individuals, families, and small businesses. Our progress was demonstrated by the 28% individual and family plan submitted application growth rate we achieved, which was our highest quarterly growth rate during 2007, surpassing 23% growth rates in the first two quarters and 25% application growth in the third quarter. Importantly our fourth quarter submitted application volume exceeded our third quarter volume, an exception to the seasonality and demand that we typically experience. Significant individual and family plan submitted application growth occurred in all three of our channels, direct, online advertising, and marketing partner channels, all grew in excess of 20% over the fourth quarter of 2006. Our marketing partner channels results are particularly noteworthy with a 32%…

Thanks Gary. Good afternoon everyone. I am pleased to announce our financial results for the fourth quarter and full year of 2007. This was a year of continued companywide execution in penetrating our market and showing the significant scalability and cash flow potential of our business model. Starting at the top line, our revenue for the fourth quarter was $24.2 million, an increase of 39% over the fourth quarter a year ago. For the full year our revenue was $87.8 million, a 43% increase over 2006. Our year-over-year revenue growth is primarily due to continued growth in our membership base. Out total estimated membership at the end of Q4 2007 grew by 32% over our estimated membership at the end of Q4 a year ago. More importantly, our individual and family plan estimated membership, which generates the majority of our revenue, grew by 36% during the same time period. Our product retention, which includes all of the products in our portfolio on a weighted averages basis, continues to be consistent with out historical range and exceeds two years. A significant highlight this quarter, was an acceleration in our year-over-year growth in sponsorship, licensing, and other revenue, which grew by 147% over the fourth quarter of 2006 following 112% year-over-year growth in the third quarter. These revenues increased from $896, 000 in the fourth quarter o f 2006 to $2.2 million in the fourth quarter of 2007, and represented 9% of our overall revenue this quarter. We continue to be very enthusiastic about the future revenue potential of these emerging areas. We are very pleased with the results of our marketing programs in the fourth quarter. We achieved 28% year-over-year growth in individual and family plan submitted applications in the fourth quarter, compared to 25% year-over-year growth in Q3, and 23%…

(Operator Instructions). And your first question comes from the line of Youssef Squali from Jefferies & Company. Please proceed. Youssef Squali from Jefferies & Company: Thank you very much, Youssef Squali. Hi, Gary and Stuart. Couple of questions first maybe Stuart, if I look at the non-IFP business, it looks like the net adds, they were pretty small. The churn on the year-on-year basis went up pretty dramatically, when at least by our math to 9.2% up from 6.9%. I was wondering if you could and gross assets were okay, I was wondering if you could maybe comment on that? And Gary, I think you said something earlier about the EPI III to the effect that you're now working with several carriers and launched schedule at least one of them in the first half. Can you just expand on that a little bit, will it be a for a handful of products and plans will be for the whole product confluence that you're offering from that carrier, and how is that actually -- is there a difference in pricing to you from the carrier?

Yeah. I'll tackle the first one there on the non-IFP products. One of the significant products within that category is short term product and by definition people buy that for a very short period of time, they hold it two to three months on average. And, so it is a high turnover product for us. But it is a valuable product basically to our consumers who need it. But that tends to run fairly high from a turnover standpoint. The growth rate isn't a big net add this quarter, we actually have that from the recent quarters where there were similar or even flatter growth in that. It really mainly is a function of the short term products that are in that category.

And Youssef, it’s Gary. On EPI III, today's comments or update on EPI progress, I think I said, we now are working with several carriers to roll-out EPI III and plan to have at least one of them rolled out in this quarter. And I believe that you will see the majority of that carrier's products offered having instant underwriting capability. Youssef Squali from Jefferies & Company: Okay, great. And just a quick question here. What is the organic traffic number versus paid this quarter?

We don't differentiate or disclose that. But I will tell you that in the fourth quarter, we grew we think quite nicely both with paid and organic traffic search, both at Yahoo!, MSN and especially Google. Youssef Squali from Jefferies & Company: Great. Nice quarter. Thanks.

Thank you

And your next question comes from the line of George Sutton with Craig-Hallum. Please proceed.

Hi guys. Three questions. First, Gary, with respect to the policymakers and I know you have been speaking with a number of them. Can you just discuss what they are discussing with respect to tax subsidies? I am sorry, subsidies for people who can't afford insurance otherwise, and then any sorts of tax changes that you are hearing about. Number two, if you could talk about how much the carriers are influencing your increased spending. In other words, they are suggesting you should spend more money. And then lastly, I am curious with respect to this Kaiser Mid-Atlantic deal. You have always suggested that if you were able to put this technology in the hands of the actual brokers, that's what is really most important for your platform. And I am curious of that, that's what I should be reading from that deal. Thanks.

You bet. George, I will take those in order. First on policy. As you hear in the news and on television as you read, all the candidates especially, the Democrats are talking about healthcare reform. Of the three leading candidates, there are four, you can count Mike Huckabee as one. McCain for the most part is focused on choice for individuals and families, and tax in senates. I will talk about tax in senates in a moment. Both, Barack Obama and Hillary Clinton are talking about universal coverage, which doesn't mean by the way that it's government managed, it simply means that people in the universe of the US all have access to healthcare and health insurance products. Hillary Clinton's platform is more defined than Barack Obama's. Hers includes a number tax in senates for a people to be buying individual products. Barack Obama is talksome about that, but not quite as developed. The really interesting point to be made here is that many people don't know that health insurance products that are purchased by businesses, all of that expenses, the tax that is deductible from businesses, revenue and expenses and taxes for individuals, is not. And both Democrats I've spoken to, including some very liberal members of the House as well as the senate and Republicans all agree that it's an equity and needs to be addressed, that these individual products should have tax treatment with deductibility. Hillary Clinton takes it to the point of actually suggesting that there will be a tax credit. So that if someone is having income level, who are not paying income tax, they will essentially get a refund back that would cover the cost of health insurance i.e. the way to help many of these millions of people who are part of the…

Thanks, Gary.

Your next question comes from the line or Peter Costa with FTN Midwest Securities. Please proceed.

Hi guys, good quarter. Couple of questions for you. Can you characterize the increased marketing spend in terms of what that produced for the better leadership or the better draw that you had on search? And also second question after that, little bit lower guidance on share-based compensation, then I thought you said third quarter, what's the reason for that in 2008. And then, what are your plans for the cash that you're generating?

I'm sorry Peter, why don't I take at the first and the third questions, and I'll let Stuart handle the stock based comp. On search we've always maintained a very-very strong, if not dominant position, both in paid and organic or natural search. In some of the comments I made, we continue to do that. We've increased our costs a bit there obviously, because some keywords don't convert as well as others in the paid area. We're going after a number of those, but we are finding ways to convert on those. And frankly some are just the, front and center keywords like health insurance and medical insurance and some of the others that I noted. We have experienced very-very good growth with those and we are quite pleased about that.

Can you quantify that?

We don't quantify. But I can tell you that that channel grew in excess of 20% like the others did as well, and you can see the contribution, I believe it is in our press release as well, you can see what we have from search. One of the comments I will make about search I have always been pleased about for our company is that you are not significantly dependant on search directly. Lots of e-commerce companies are, we are not. I think certainly our sourcing base is much more diverse than that. Stuart Huizinga On the second question with the stock-based compensation. Last quarter, we talked about it, specifically about the fourth quarter, made some very general comments with respect to 2008, but really very broad. They hadn't really given out full guidance on that. This is the first point in which we really sat down and mapped out the 2008 timing and amount of options for the year, and built a range with a lot of science behind that and that's what's behind our guidance.

And I would also add to that, when it comes to stock-based comp that has always been an important incentive for employees and our company will continue to be. It's something we look at every quarter and something we take action on every quarter as well. Peter, I apologize, the third point, the question that you had asked. I didn't write down. I should have.

Just what you were going to do with the cash that you --

Thank you, yes. The cash. Well you know, obviously we are in a good cash position and it continues to increase quite nicely for us as a result of operating cash flow, which is one of the one of the metrics that I continue to try to point people toward as they look at our business and evaluate it as well. We have said this before and I will say it again, if there was an acquisition that looked to us to be accretive and strategic, it could make a difference in our business. We would give it serious consideration. Obviously, the more cash we have the better leveraged we are to able to explore something like that. But finding something frankly that is strategic and accretive, given the uniqueness of our businesses is not an easy thing. The history of acquisitions and mergers in the technology world is not a good one, more fail than succeed. I've been through some of those. We would be very thoughtful and very careful about this as well, but it's something we think about, we continue to think about and look out as well. And the other question that sometimes is presented to us, especially given the current environment right now and the stock market is where we buy back stock, and it's something I can't tell you that we are actively pursuing right now. But I think it is something that we would look at and give consideration to as well.

Okay, thank you.

Thank you.

Your next question comes from the line of Justin Post with Merrill Lynch. Please proceed.

Hi. Looking at the number of applications submitted versus new members, it looks like conversion rates are down little bit year-over-year. Do you see any way of improving that, is that really could be EPI III? Is there anything else that you can do to get those moving in the right direction, as you look out to next year.

Sure Justin. A year ago we made an awful lot of progress on the backend conversion rates, and through a number of things including the rollout of EPI. And EPI had found some pretty remarkable impact for us. There is not as much low hanging opportunity there for us today as there was a year ago, with where we are. However, we think that EPI III certainly has the potential to have some very favorable impact on those backend close ratios or conversion ratios, as we roll that out. That of course is yet to be seen. But if it's anything like what we experienced with EPI I, I think we'll all see impact that's quite favorable there. The other thing I think we noted last quarter, we're seeing a little bit of it -- we noted in Q3 and we saw a little bit of it in the fourth quarter as well. Is that the carriers do go through underwriting cycles and we've got some carriers that frankly are little bit more rigid and probably a little bit more conservative in their underwriting now, than they may have been 12 months ago. We've seen this over the history of our company, the ebbs and flows and so we see a little bit of impact from that right now as well. But we're not seeing anything unusual there.

Is the mix of traffic affecting that at all, or are they all pretty good channels as far as conversion rates?

Well they are all pretty good channels, but they don't all convert to equivalently as you might expect, and there can be a little bit of mix impact there as well. I've always said that our mix is generally 30%, 30%, 40%. 30% online advertising, 30% marketing, partners and 40% direct. But, it can go up and down several percentage points in any set of quarters, and you've seen that over the last several quarters, although if you compare Q4 mix of 2007 to Q4 mix of 2006, there's very little differentiation in there over a year. But that would have a little bit impact as well.

All right. And then as you go more aggressive marketing next year, do you see the mix changing as we look out to 2008 on the marketing side?

Yeah. That's a good question. We've already seen a little bit of the mix impact and that obviously we've stimulated some things in search and in the marketing partner channel, and you see that some of the contribution. You saw direct come down little bit and so overall, although it grew nicely for us. Once again it grew in excess of 20%. Direct is the one that's a little bit more amorphous in terms of how you can impact it. Some of the TV work that we're doing, we think may have some impact there, and we saw some results in the December quarter that encouraged us to try it again as we're out testing and taking a look at that. Certainly, things in the PR area can have impact on direct. But again, it's a little bit more difficult to control all of that, the way that you came with the direct spending and searching the partner channel. So yes, there is a little bit of that there. Having said that however, we are finding there is more media attention coming to us right now. Given these presidential election activities, the way that they are heating up and so on, we have had several national networks, TV networks, we participated with analysis of some of the platforms and so on. That's all good, as it influences direct.

All right. And then last thing, you might have prepared this in your prepared remarks. I didn't get it. But did you say anything about the HSA platform and when you think that could actually have an impact on your applications or total new member adds?

Yeah, the comments I made about the HSA platform is that we continue to make progress. I referenced an article in the Wall Street Journal on January 29th about businesses looking for alternatives to the high cost of group health insurance and the individual products being one. And actually one of our executives and one of our small business customers who has used the HSA platform successfully recorded in there. We would expect in this first half with some of our marketing partners and so on that we would be more formally rolling that out. But I think I should make a comment here that's important for everyone to know, and that's in our guidance, we've assumed essentially very-very little contribution from the HSA platform, very little contribution from EPI III as well. We wouldn't have invested in these if we didn't think we could get contribution. We are enthused about them. But we are blazing a trail here that nobody has been down before. We don't have any signpost behind us that we can look at and we are taking a rather conservative approach in terms of what we expect for impact from those. But we are pursuing both of those very aggressively.

All right. And last question. How will you internally measure the increased marketing spend, the results of that? Is it based on just making sure you get the right number of adds per dollar as you look at -- because you move off of online channels, it would be tougher to measure how are you going to do that internally?

Yeah, we're going to measure it the way we always have, which is, we look at the ROI calculation on it. We look at the submitted applications that come from the spend. We look at how those are converting into approved members and any of the whole chain of yields between there, and measure that against our lifetime value of the members that we expect to come from that. We look at every channel in extreme detail there.

We've always been really hawkish about this and I would also like to add to what Stuart commented on, which is television advertising. We have got some very strict ROI guidelines that we've set for ourselves with TV advertising and that's the standard by which we measure the results of TV and it’s a standard by which we'll make decision to go forward with television as well. And those ROI parameters we apply to television or print media are not any different to the parameters that we're applying to search, to direct and to marketing partners as well.

Okay. And last question, obviously, with marketing spend about six month payback and a two year life, a profitable model for ad. Are you seeing new competition emerging, people looking at your model and trying to do an actual e-commerce platform as opposed to being a lever for all the competition ?

Again, we really don't see anything significant out there that way. No. We continued to have competition for page search with lead aggregators and that's not exclusive to us, but it's a phenomenon in an industry that grew up around search and it pertains to all the e-commerce. But, no, nothing significant from a direct standpoint or an e-commerce standpoint.

Great, thank you.

Thanks Justin.

And your next question comes from the line of Carl McDonald with Oppenheimer. Please proceed.

Great. Thank you. Just wanted to spend a minute on the commission growth. As I look back to '05, commissions are up about 39%, '06, 41%, '07, there is another 40% year. This year it looks like the guidance for commission growth to slow to less than 30%. Just wondering, should we read that just as the revenue base has gotten big enough, that you're not going to be able to sustain the historical growth rate, or is there that you're seeing in the '08 outlook that's causing that growth rate to fall, but may not be a recurring thing?

Yeah. We're not seeing any thing, any change in the model, if that's what you're asking. Nothing different than what we've seen before in the basic model itself. Every year year-on-year-year the loss of large numbers come in to play. And again I guess going back to Gary's earlier comments on the guidance. We're looking at what we see today in front of us in terms of setting our guidance for next year.

I think Carl for the last several years, we've every year planned for growth in the 30% kind of ranges. We've funded that way. This year is no exception. One of the things about out model is its very predictable. We know we see in front of us. We're funding it that way, but we also know that there are opportunities that could allow us to do more than that as we did in 2007. And as we see those, we will invest in those and pursue them like the EPI III, like the HSA platform, like some of this additional spend that we're doing for example.

Okay. And then putting together your comments on the marketing spend, do you expect the cost of acquisition to be directionally up or down in the first quarter, relative to the 56 in the fourth quarter?

The primary way that we look at cost of acquisition is really, as marketing and advertising as a percentage of revenue. And we look at a range that we would like to stay within. And the range that we look at as we sit here today is 35% to 39% of revenue. It's a reasonable band for us, works for us from a return on investment standpoint based on our current programs. And that is what we are looking form for this year. As I noted in my script, there is seasonality. So when thinking about those percentages of marketing costs to revenue, they are going to be heavier in Q1 and Q3 and then later relatively speaking in Q2 and Q4.

I think it is also important to add here. Stuart did make a comment that as we are increasing and have increased very deliberately, what we are spending on marketing and advertising as a percentage of revenue. We still expect our margins in 2008 to be at least the same as our margins in 2007.

Okay. And then the final question. I appreciate the comment around not being in the business, while at the time there is a real recession and I am sure you have done some work around that. The data that I have looked at tends to show that individual enrollment hasn't really changed all that much in bad economies. I don't know if that is a fact of more people being eligible for insurance, but those with individual insurance not being able to afford it any more or something along those lines. Does the data that you have looked at contradict that or look different than that?

Well yes and no. I guess, first of all if that data is correct, I would say that a recession would be neutral for us, because there is really no change. The only thing we can point to Carl, right now is our experience in 2001 and 2002, when unemployment was much higher than it is now. And we pursued COBRA at that time of credit recession, that is individual products as an alternative to the COBRA and we were very successful and saw some pretty significant growth and acceptance of these individual products as a result of that. I think the other point I would make here is that the individual market today is a much more mature market than it was several years ago. If you back 10 or 15 years for example, we have got to reach further than that for a real recession. The portfolio of products is much greater, the visibility is higher. I think the awareness, the affordability is better, and you've got some of these very large carriers participating here, because it's the one place that they see growth. So, could be that the market is different now as well. That's speculative on my part, let me say. But again, our experience had been that people who are losing jobs were looking for alternatives to COBRA. But if in fact the market doesn't change at all, then I would conclude that is probably a net neutral to us.

I appreciate it, and thank you,

Thank you.

Your next question comes from the line of William Morrison with ThinkEquity. Please proceed.

Thanks, hi. That range is helpful, but I want to push you little bit, Stuart, on the example you used on the incremental margin. You said you've got a payback of six months or so and your churn has been very steady in both the IFP segment and non-IFP year-over-year for a while now. And so, I guess what I would ask is where is your pinpoint and how far are you willing to go before getting the payback. Will you go to eight months, ten months, over the longer term not necessarily this year? And then I guess that's first question, and I have a follow-up.

Hi Bill, it's Gary. You are asking a really important question and it's one that I think we are just going to need to watch. It's five or six, or seven, or eight months compared to the life of these products and the kind of margin we realize from them. It's very profitable if you apply those ranges, and as Stuart talked about a 35% to 39% range, the percentage that market and advertising we would spend as a percentage of revenue, that will give you a flavor for this year. We are thinking really about it in terms of percentage of revenue and not number of months. We have used a number of months, as an example to thoroughly illustrate the profitability of the ads running at this kind of level. And surely we could be seven or eight months and as you can do math. We would still be very, very profitable. But I have to say we don't think about it in terms of months, we're thinking about it right now in terms of percentage of revenue and all of the discipline all of the process we apply to our marketing and advertising spend is predicated on that.

Maybe let me just have a follow on that point Gary, then, are you saying that your goal is just 35% to 39% this year. Would you say that that's a longer term goals to keep sales and marketing costs as percent of revenue? In other words should we expect that that range to shift up in '09 to 36% to 40% or higher?

Actually overtime, I'm not sure what timeframe we're talking about, because if you go out into '09 and into 2010 the low end of that range actually could be lower than the 35%. Not all of our costs are variable in that line item, there are some fixed costs there. So we very well could see lower than the 35% and I don't know 39% -- 40% depending upon how fast we're growing I guess it's reasonable.

Bill, I think the question would be is that -- take the high number 39% or 40%, for us to operate at that level we'd have to see growth rates that could justify spending that much. You can see, at a 35% of revenue, the marketing and advertising we grew at 28%. One would think that to grow at a higher rate would be -- we'll be willing to spend more. You're probably in these numbers that are 39% and 40% getting to thresholds where we're looking really long and hard at it. I think it's fair to say that we are not planning for those year or two out at this point.

Great. That's really helpful. One more Stuart, what was the share count you assumed for your EPS guidance?

The share count that we used was roughly 26.5 million.

Okay. And then lastly on China, I know you're not counting on anything in your guidance there. But just curious if you could give us maybe a range of maybe members that you might expect by the end of the year in China and maybe if you could talk a little bit more about the similarities or differences in the business model or do you think and I know it's early, but just based on the research you did to start the beta program. Do you think that the churn rates are going to be similar or the revenue per member the customer acquisition costs, just kind of a basic drivers of your model? How similar or different is it in China? Thanks.

Yeah. Well, Bill on China, first part of that is how big it can be, we just don't know. There is no market there, we're really in some ways helping to establish the market. We had some consumers buy from us in the fourth quarter. So we know that something does work here and it has got to appeal to some people. We need a lot more than we had. Frankly it was a handful, but that's what we are hoping for. The part of the strategy here is that we have it working affectively and efficiently in Xiamen, would be to go to other parts of the province and perhaps probably other cities and other provinces and we are looking at that right now as well. We are applying to this business many of the processes and the approaches and practices that we've here in the business in the U.S in terms of watching cost of acquisition. We are finding some success right now with search online in China to bring consumers to us. We're really pleased about that, not unlike the U.S. But there is still an awful lot yet to be determined. I can tell you the Asia people is younger on average entities in the U.S. Most of the Internet users in China, it's a matter of fact of less than 30 years of age, we think a lot of the potential consumers for us were less than 30 years of age. It's a big percentage of the population anyway. But we need another quarter or two to get the better flavor for this and probably need to be in another city or to another part of the province. I think it to really start to have more of a calibration on what the market looks like and then what it could do, what it could be for us. I'll make one last point, you asked about revenue, just in terms of the differences in currency and so on and the cost of things, one of the reasons we went to China years ago is that frankly its less costly than the U.S and I'm talking about, a very large factor, even factors. Well, the same is the case of products you buy in China, health insurance in China is a lot less costly in U.S dollars or it yields a lot less than health insurance in the U.S. So, its just a -- there is a big difference there. We're working though all of that as well so, but we're -- and look, if so far, so good, we've got it up, we're running and we're selling products to people.

Thank you very much.

Thanks, Bill

Your next question comes from the line of Willis Taylor with Gagman Securities. Please proceed

Hi. Could you talk about your market share goals, did you gain market share this year, where do you stand and what do you think your fair share is, three to five years from now?

Well, we clearly gained market share. And depending upon what you believe the size of the market is, the Census Bureau thinks it's about 18 million people holding individual products today. We think it's larger than that. But if you use census as a basis, we've got more than 3% of the market today and that's significantly more than we had a year ago. We're by far away the largest in this area by a lot but I think that 3% is small. And I think double-digit market share is clearly within reach, and I don't think it necessarily has to be years away as well. Truly about a awareness visibility and ask continue to execute here. So that is one of our priorities I can tell you, in this kind of a strategic goals in the company is a market share, one. And I think double-digit market share is as I said nationally is very, very achievable for us.

Okay. On to your licensing business is this recent success you're having, make you rethink how big that could be as a percentage of your total business?

That's a great question. We're fast approaching double digits there. In terms of percentage of revenue, we are delighted with the adoption and the acceptance by carriers and the interest in what we're doing. We're especially pleased with the results of the carriers are having using your technology. That's probably the most important thing of all. I said in the past it could be 10% or 15% of overall revenues. Let's see how this track continues, but I think we could approach those numbers sooner or rather than later and maybe a bit beyond that. But the primary business here and the reason that eHealth exists is the market sell health insurance directly to individual's families and small businesses. And that's where our emphasis is there. And I think that that's always going to be the core majority of the business that we generate. But we sure like this licensing and sponsorship business a lot and we like the margins. We're starting to like the revenue contribution. But I want to emphasize again most importantly the strategic implications of being there in terms of increasing out footprint in the industry.

Okay. And does your current version contain EPI III and is that something that you are planning on including in the future?

Well, no one is using EPI III today including us. But the idea with EPI III, once again is a prompt to the internet. We'd like it to be -- as everyone who buys a product online to be able to be underwritten online, and you know here with the carriers and with agents and brokers as well. Yet another compelling reason to use our platform and the technology. So clearly, that would be part of the strategy going forward, yes.

Okay. Thank you.

Thanks, Willis.

And your next question comes from the line of Christine Arnold with Morgan Stanley. Please, please proceed.

Just a couple of questions here. You said that the marketing in advertising spending today produces applications tomorrow. How do I think about the fourth quarter spend and the timing and volume of applications from this quarterly spend. Just so I can think about it the way you do.

Well, there is a little bit of a shift there in terms of when applications get approved and then when those approvals get communicated to us, typically, you're looking at a few months, could be one to up to three months before we get the whole chain of all the information communicated to us. And then the revenue stream coming from submitted application follows the same pattern. It could be several months before we see revenue coming from a new application.

So we spent this quarter, is it safe to say, it's five to six months before we see the revenue?

No, it's safe to say, I'd say a couple of months, two to three months.

Okay.

Yeah.

So?

But one thing I should add there is that some people expect that when they start to see the revenue that they would see some sort of spike in revenue and that's not typically how it works for us given our recognition policy. As we receive cash each month on these month-to-month policies, we had layers of revenue on top of our current basis of members. So you don't typically see a spike-up all of a sudden. What you see is a gradual increase over time as you add bigger layers on.

Okay. So if we spend -- for how much of the benefit we're spending this quarter, did we see this quarter because you bunked your seasonality? What was the spending in the prior quarters that produced the applications volume this quarter?

Yeah. Most of it would have come from prior quarters.

Okay. So we haven’t seen the benefit of spending yet.

Hi, Christine its Gary. What you saw in terms of the benefit of spending -- marketing and advertising spending in the fourth quarter was the applications that we got in the fourth quarter, 28% application growth. What Stuart is referring to is converting those into revenue generating members, which as you know there is a lag and that’s going to happen several months after that. So the money that we spent in the fourth quarter increased our application growth which theoretically -- and we expect in practice as well, allows us to have another layer of recurring revenue we wouldn’t have if we haven’t spent that money. As we spend in Q1 to increase the application growth, as similar things occur and so on and so on. That’s one of the reasons to do this. We think the market is allowing us now to spend more profitably, bringing more applications, and generate more recurring revenue overtime.

Okay. So the commission per member should rise next year, is that the right way to think about it?

No necessarily.

I am still listening, it will take about.

Commission per member is a combination of things. It’s the premium value of what consumer's chose to purchase. It’s the commission rate of the carrier for the products that they do purchase and those vary between carriers. I mean, I think the best guide for commissions per member is really to look at a trial of quarters going back and kind of look at the year-over-year increases that you see on our commissions per member and kind of use that as a rough guide.

Yeah, Christine, the money we're spending is not going to increase any unit of commission that we get, but it's going to increase the number of units that generate commission for us.

Right. But we've already seen the application. I'm just confused as to how the revenue flows through because it's application…

Well, the numbers will roughly -- as they come into our membership, they will roughly line up with the cash flow coming in. The new members should come in with new cash flow.

Okay.

Yeah.

And then next question is, EPI III how many markets you said you're launching with all the products? How many are markets are carriers looking at using EPI III for, is this in community rated states, is it a broader than that? How do I think about kind of the momentum you have on that product?

Yeah, let me be really specific about this. So in our third quarter earnings call, we announced that we had a carrier that agreed with us to launch EPI III. We'll do it some time in 2008. Our update today is that we have several carriers now that we're working with to launch EPI III and at least one of them we'll launch in the first half of this year. Some of them are multi-states carriers, some are not. And frankly, with the request of the carriers and for some more reason we haven't yet released who the carriers are and what states we're going to be in. But as soon as we go to market you'll know.

Are they're multiples or they are non-guaranteed issue states that you're going to be entering with this?

Yes.

Great. And then final question is, a lot of your growth which I should have anticipated but didn't was carriers were running headlong into the individual markets. So we're seeing Atena entering 13 markets last year and 5 this year, and [Signa] is discovering the individual markets and on and on and on. How many at this time last year kind of entering '07 how many new carrier markets, so for example Atena and I don't know, Californian be one market, Atena and Arizona would be another. How many new carrier markets are you looking at today entering '08 versus a year ago entering '07?

Yeah, it is a really good question. I don’t have it at hand. But there is a good number of new markets that will launching in '08 as we did in '07. Most of them very recognizable carrier names like Aetan, like Signa and like several others as well. We are in one stage with Signa right now. They are coming in to the market. And like Aetna that's a well known trusted brand name and we think that portends really good things for us and for them. But you will see as the year goes on, a number of new state markets that we bring on under these names?

So can I ask, kind of [refine] this again and you can refuse to answer or whatever, but I am curious. Is the number of new carrier markets today looking into '08 bigger or smaller or the same as entering '07?

I am not going to refuse to answer. I am going to differ because I don’t have the number in front of me. But we will get that because I think it is a really good question.

Okay. Cool. Thanks.

You bet.

Our last question comes from the line of Alan Fishman with Thomas Weisel Partners. Please proceed.

Hi. I just have one quick question. So the 58 million in NOL tax assets added to the tax assets on the balance sheet, I mean when do you expect to pay really material cash taxes. I mean can (inaudible) maybe two or three years right?

Yeah, we are looking at several years. You could see us to be a partial tax payer by our calculation in 2011 and a full tax payer in 2012, it's probably my best estimate right now.

Great. Thank you.

There are no additional questions at this time. I would now like to turn the call over to your host for closing remarks.

Well, we thank you all for your time this afternoon and look forward to talking with many of you in the future.

Thank you for your participation in today's conference. This concluded the presentation. You may disconnect. Good day.