Good day ladies and gentlemen and welcome to the First Quarter 2014 eHealth Incorporated Earnings Conference Call. My name is Denise and I will be the operator for today. (Operator Instructions). I would now turn the conference over to Kate Sidorovich, Vice President, Investor Relations. Please proceed.

Good afternoon, and thank you, all, for joining us today either by phone or by webcast for a discussion about eHealth Inc's first quarter 2014 financial results. On the call this afternoon, we will have Gary Lauer, eHealth's Chief Executive Officer; and Stuart Huizinga, eHealth's Chief Financial Officer. After management completes its remarks, we will open the lines for questions. As a reminder, today's conference call is being recorded and webcast from the IR section of our website. A replay of the call will be available on our website following the call. We will be making forward-looking statements on this call. That includes statements regarding future events, beliefs and expectations, including those related to the lifetime economics and profitability estimates for all members. Opportunities that we see now for core Medicare and IFP markets. Our opportunity to scale our subsidy-eligible business, our expectations regarding the approval rates and applications submitted during the quarter. Our growth expectations and forecast for individual membership base, projected demographic trends and the impact on demand for Medicare products. eHealth’s value proposition for young to seniors, the estimated lifetime value for our Medicare supplement products, the intended benefits of our relationship with Aetna. Our plans to work with strategic partners, the future financial impact of member application submitted in the first quarter of 2014. Our estimate of the number of revenue generating our IFP members. Our belief regarding the impact of the Affordable Care Act to now a churn rate and current churn estimates for the first quarter for 2014. Our expectations regarding submitted applications, marketing and advertising expense and revenue growth rates. Our estimates of various components of our membership and our 2014 guidance with respect to revenue, EBITDA, stock based compensation expense and earnings per share. Forward-looking statements on this call represent eHealth's views as of today. You should not rely on these statements as representing our views in the future. We undertake no obligation or duty to update information contained in these forward-looking statements whether as a result of new information, future events or otherwise. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in our forward-looking statements. We describe these and other risks and uncertainties in our annual report on Form 10-K, and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission, which you may access through the SEC website or from the Investor Relations section of our website. We will be presenting certain financial measures on this call that will be considered non-GAAP under SEC Regulation G. For a conciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure, please refer to the information included in our press release and in our SEC filings, which can be found in the about us section of our corporate website under the heading, Investor Relations. And at this point, I will turn the call over to Gary Lauer.

Thanks Kate. Thanks everyone for joining us today as we report our first quarter 2014 results. The first quarter was another dynamic quarter for our Individual & Family Plan business but consumer demand on our eHealth platform fast escalating as we approach the end of the open enrollment period. As a reminder the first open enrollment period under the Affordable Care Act concluded on March 31 of this year. With the exception of limited state and carrier specific deadline extensions. Similar to the fourth quarter of 2013 the volume of the Individual & Family Plan application submitted in the first quarter of this year exceeded our expectations. We also observed strong demand for Medicare products offered on our platform which we believe was driven by favorable demographic trends and our successful execution in this important business area. Our first quarter margins reflect a meaningful year-over-year increase in marketing and advertising spend as a result of high submitted application volumes in both the individual and family plan and Medicare businesses. As we did in the fourth quarter last year we made the decision to spend in a strong consumer demand and pursued membership growth at the expense of quarterly earnings based on the favorable lifetime economics we estimate for these members. What I would like to do today is summarize our financial results for the first quarter, discuss our performance of the second half of the open enrollment period and provide some pertinent metric for Individual & Family Plan business. I will also make some comments about our Medicare business and what we’re seeing outside of the main Medicare selling season. First quarter revenues were $50.9 million and 18% increase as compared to the first quarter of 2013. GAAP loss per share was $0.08, EBITDA was $700,000 and cash flow from…

Thanks Gary. Good afternoon everyone. Our first quarter results reflect strong demand on eHealth platform across all major product areas including Medicare, Individual & Family Plan, and ancillary products as well as meaningful growth in operating expenses required to capture and convert this demand. Our first quarter 2014 revenue was $50.9 million, an 18% increase compared to the first quarter of 2013. Commission revenue for the first quarter was $45.6 million representing 19% year-over-year growth. Commissions from Individual & Family Plan and ancillary products grew by 11% compared to Q1, 2013 while our first quarter Medicare commission revenue grew by 49% year-over-year. Other revenue which include sponsorship, e-commerce on demand and non-commission Medicare revenue was $5.4 million in the first quarter, an increase of 8% compared to Q1, 2013. The increase was driven primarily by growth in technology licensing revenue. Turning to membership metrics, our Individual & Family major medical plan submitted application volume grew 34% compared to the first quarter of 2013. As Gary mentioned at the beginning of the call this growth was very backend loaded and came in above our earlier expectations. Based on our initial observation we’re seeing a significant increase in approval rates for Individual & Family Plan applications submitted during the quarter compared to historical levels reflecting the impact of the guaranteed issue provision of the Affordable Care Act. For example approval rates for application submitted in January were close to 8% compared to the high-50s to the low-60s percentage rates historically. At the same time due to the backend loaded nature of the first quarter of application volume many of the application submitted during the quarter have not flowed through the approved member and paying member metrics that we reported for Q1 and are instead expected to positively impact our Q2 membership once…

(Operator Instructions). Our first question comes from David Styblo with Jefferies. Please proceed. David Styblo – Jefferies: First one just a housekeeping is, is when can begin your share repurchase program?

We do under the auspices of 10b5-1 program which is going in the place currently and it is typically a cooling off period. So you’re 30 to 60 days out. David Styblo – Jefferies: From today?

Correct. David Styblo – Jefferies: Okay. Then more at the heart of the matter here, in terms of IFP and all the moving parts going on. I guess that would have -- I understand there is going to be a strong spillover into the second quarter, should we expect. Is there any sort of guidance you can provide us and where membership should actually fall out?

Well I think the only guidance to give there is just like to our annual guidance for revenue. We kept that consistent with what I gave last quarter which is at the midpoint 17% growth for our total revenue for the year and IFP makes up more than 70% of our revenue. So I think that would give you just a general sense of membership growth for the year but also know that we expect to see our commissions for member on new sales as well. That is also bolstering that growth.

It's also important to notice as we said that over 50% of these Individual & Family Plan applications transacted in the last two weeks of the quarter and as you know there is a lag between the application but we actually have a member so that would impact membership you saw in the first quarter and then new quarters after that. David Styblo – Jefferies: Okay so to think about those, that surge, those folks would be generally under the guaranteed issue. We would expect a higher conversion rate of something upwards of 80% on that base?

Yes that’s right, we saw in January the first kind of full month of conversion that we have in-house. David Styblo – Jefferies: Okay. And then kind of stepping back rolling forward from the fourth quarter to the first quarter I guess I would have thought that maybe all of the submitted apps that happened in December and late in the year would have benefited you perhaps but little bit more since your churn was more within your expectation. Can you help us reconcile the surge that happened at the end and perhaps why we didn’t see as much of that flow through to membership in this first quarter?

Sure. Yes, the Q4 applications were not as backend loaded as we saw in Q1. We saw a surge in applicants at the beginning of the open enrollment period October 15, and then another peak in December but it was more even throughout the quarter and so Q4 benefited to a greater extend from a timing standpoint than what we just saw in Q1. There is much more severe backend loading in Q1. So in another words I guess we got more of the benefit during Q4 to our membership and less of a spillover effect than we expect to see here in Q1 into Q2. David Styblo – Jefferies: Okay. And then lastly, I hope I didn’t miss this but could you get into why membership and Medicare declined sequentially?

I didn’t make a specific statement but if that’s the function of the annual enrollment period for Medicare, most of the volume happens in the annual enrollment period and members sign up for annual policy and so people that we lose from that pool of consumers that are in the renewal phase in annual enrollment period we will lose them, to the extent we do lose the member. It's going to be a January 1, that we lose those. So Q1 is the biggest quarter of the year for churn. David Styblo – Jefferies: Okay so that wasn’t a surprise, that’s what you expected.

No.

Yes.

Our next question comes from Tobey Sommer with SunTrust. Please proceed.

How is eHealth ranking in search for Medicare now and what would you expect the purchase of Medicare.com to do -- take advantage of those 3 million Medicare people becoming Medicare eligible? Thanks.

Well, I’m not looking currently but we are typically ranking well during the annual enrollment period. Medicare.com is a really important property which we were frankly delighted to be able to acquire. Obviously the government exchange is healthcare.gov and in fact if you go to Medicare.com you will see that it's operated by us and in fact we have been running it now for several weeks. Although we weren’t running it -- even with those strong application growth volumes that we have in the first quarter, most of that was without Medicare.com. That’s a very recent acquisition and something we just started. That certainly -- we think that’s going to have some really positive impact of this Medicare business throughout the year as well as during the annual enrollment period and I can’t tell you at the moment where we’re ranking in Medicare but we certainly source a growing volume of applications from search. As Medicare.com is going to help us significantly there as well.

Just a housekeeping detail, you mentioned the purchase price but I didn’t quite catch it, could you repeat that for me?

Yes it's 4.5 million in cash and $300,000 of forgiven [ph] receivable from them.

And then from a lifetime perspective of your customers, have you noticed any changes in the duration of how long the customer wise is -- I know that’s an integral part to the business model and the economics. Thanks.

I think it's too early to report anything on the lifetime. You said the lifetime of the member?

Yes, correct.

I think it's too early to see that. I think that we’re expecting to see somewhat of a slowdown in the initial churn that we normally would see in the early months just given the open enrollment periods that people would more readily hold their products from open enrollment period to open enrollment period. But then there would be larger churn after year one, when you hit that open enrollment period. So much moiré like Medicare. That’s our expectation.

With the open enrollment period dates for next year, are we going to see a shift in your seasonality where the higher marketing expense and application volume is likely to be kind of in the January, February period? I know it's a little bit far away and it's a change but just wondering what your updated thoughts might be on the change to seasonality as a result of those dates?

We think it will probably be both quarters. We think we will see a surge of people in fourth quarter who are looking for calendar year, no gap in coverage. We want to make sure they have a January 1st coverage date but then also we could see a surge in the first quarter as more people come in to meet the mandate. Some of the penalties get larger next year and we may see more people coming in for that.

So what we saw on this open enrollment period was interesting, really the first wave of enrollees in the first 90 days which was October 1 to December 31 where people who really had pent up demand to get in, had chronic conditions, couldn’t previously because of the guaranteed issue, were typically older and in many cases just were anxious to enroll. Then what we saw in the first calendar quarter which was the second half of the annual enrollment period, January 1st to March 31st was consumer behavior that we frankly thought was even more pronounced than we were expecting it to be but we thought it could be which was that consumers procrastinating and waiting right towards the end. :

And then my last question, I will get back in the queue, is kind of a broader one. You have had two quarters with significant growth opportunities and you have spent to take advantage of that growth. The market is dynamic and you could be confronted with several more quarters in that regard. Are you comfortable that you’re going to be able to respond to the changes in growth opportunities and still kind of preserve the EBITDA that you’ve conveyed to us here today?

That’s why we made some of the comments about the seasonality we expect in between open enrollment periods. We would expect our marketing to decline fairly significantly in Q2 and Q3 relative to Q1 and Q4. And so yes, we still need to see the seasonal patterns play their way out but our best estimates right now obviously trend towards the EBITDA numbers you put out there.

Our next question comes from George Sutton with Craig-Hallum. Please proceed.

I wondered if you could talk about your conversion rates during the quarter relative to your expectations. It would appear that the traffic was very good and that you didn’t bring all those folks in and I’m assuming part of that is or large part of that maybe the subsidy-eligible portion?

George, we’re pleased with the conversion that we saw especially with the non-subsidy-eligible. We have been disappointed right from the beginning and healthcare.gov’s ability to be able to allow us to connect in an online fashion. Frankly, we (indiscernible) rig some things and got creative which allowed us to enroll over 10,000 subsidy-eligibles. But we did most of that in kind of a sudo [ph] phone online way. We’re working with and pushing hard right now to connect so that we can have an online experience for subsidy-eligible consumers that’s like what non-subsidy-eligible people get. I think I’ve made the comment had we had that capability we think we could have seen a much higher conversion rate on a per unit basis so a much more favorable cost of acquisition. We had a very large volume of subsidy-eligible consumers coming to us and sadly we couldn’t address their needs and I say sadly for a couple of reasons, one they want to get coverage and we can do it expeditiously and secondly every time we do it, it doesn’t cost tax payers money. Every time it's done on a government site it cost tax payer money and it's just among other things. We just don’t think that’s the best way for the government to be spending money. We can be helping here and we’re pushing on it and we’re hearing the right things but they are still very challenged from a technology standpoint. So on the conversions to summarize it, we very much like what we saw with the non-subsidy-eligible population, especially the age demographic, 45% of these people are 18 to 34 years of age. What we’re seeing reported by government is some place around 25%. This is the most sought after demographic, this is the real sweet spot of what keeps everything in balance and we could have made a very significant contribution to that. We think with subsidy-eligible as well. But we like what we’re converting and we think there is a lot of headroom to have much better conversion here as well.

And I’m curious how you’re going to be running the ancillary part of the business during these off seasonal periods? It would seem like that may get more of a focus in those periods but I’m curious how that might change the way you run that part of the business.

It's a good question because the ancillary products dental, vision and accidents do not come under the auspices of the Affordable Care Act interestingly. So you can buy them at any time. And that’s become a very important business for us, it's a really good margin generator. It's one that we’re being very aggressive about and have been like the Medicare business as well. So there is a lot of business activity for us outside of the individual open enrollment period and that’s this ancillary products and the Medicare products.

I think I will also add that short term product seem to be attractive to people in the offseason. Short term products also fall outside of the ACA and I think some people have probably woken up and found out that they should have done something, didn’t do something when they could have during OEP and I think for many people that’s the solution at least kind of a stop gap solution. Typically we have seen people hold on to those plans for only 3 to 4 months but in the new environment they may hold on to it out through the open enrollment period for a longer lifetime that usual.

Lastly for me you mentioned that you were working with partners on the SMB opportunity that exchange, can you give us a sense of the types of partners you’re working with and how broad you’re working with them?

We think the private exchange business as we have commented previously is going to be a really I think interesting new business category in this industry and in this market place. Through Aetna and another partner we’re going after the transition of retirees. We’re doing it for few others, we’re working with Aon right on part-timers and contract employees. We have got several of their smaller partners where we are to be going to the small business environment which I think is going to be a really interesting one. The employer mandate for the Affordable Care Act which goes into effect January 1st of 2015 does not apply to businesses with less than 50 employees. We think many of these businesses may choose to just fund their employees to buy individual products. We like the idea a lot of being able to provide them an exchange to make this really efficient and quite simple for them. So we got a and I think we got, we got a multiple of initiatives underway in this area and there is a lot of interest in it and not just in the part of partners but potential business consumer and customers as well.

(Operator Instructions). Our next question comes from Steve Halper with FBR. Please proceed.

So I just want to clarify the statement around the second quarter and third quarter, you said that individual IFP applications, the growth would be negative year-over-year and sequentially? Is that accurate?

That’s correct.

If you look at Q2, it will be down year-over-year versus Q2 a year ago?

That’s correct. Steve Halper – FBR: And then Q3 will be down versus Q3 a year ago?

That’s correct. Steve Halper – FBR: And both of those Q2, Q3 will be lower than the Q1 submitted application number?

That’s right.

And Steve the reason for that is that you cannot buy a total care compliant plan outside of the open enrollment period.

But does that apply to non-subsidized individuals?

Yes.

And is that really the result of health plans, you’re pulling out of the market basically during that plan because of the risk pull that because is that the way to think about it?

No it's the law. What the Affordable Care Act requires very simply is that you can purchase these product whether your subsidy-eligible or not, the compliant products during the open enrollment period. Outside the open enrollment period it's called the special enrollment period, SEP and to qualify there you got to have a life changing event, divorce, birth of a child, moving from one state to another, so just a few exceptions. That’s why the vast majority of this business and the spend that we have been talking about is going to occur during this open enrollment periods.

So just driving down, so your spend on the marketing side will be lower in the two quarters, which is going to drive the bottom line and you will get that pick up in applications and beginning November 15, it will drive and obviously your operating expense will be higher. So even though you don’t get the full benefit of the revenue in Q4 and earnings will can just put the pieces together right? The fourth quarter earnings number will be -- should be lower than the second and third because of the high acquisition cost and then you get the benefit of the higher membership beginning in 2015? Am I thinking about that all right?

You’re thinking about that right.

Our next question comes from Kevin Kopelman with Cowen and Company. Please proceed.

I was wondering if you can give us any more color on trends in commission revenue per member and what you’re expecting going forward there and if you could help us think about that in terms of Medicare members and also IFP and other kind of separately? Thanks.

Yes, but we’re expecting but it's still early but we’re seeing a fairly significant increase in premiums as I think everyone expected year-over-year. We benefit from that to a certain extent, little bit over 50% of our carriers pay us a flat fee and a little less than 50% pay us on a percentage of premium. So as those premiums go up we do benefit from a portion of that. So we do expect our commission per member on new members that we’re selling to increase this year.

Okay and on Medicare?

On Medicare at this point I expect things to be fairly stable with what we have seen in the past.

And if you had to translate the new individual kind of how you expect that to play out as a percentage, what do you think you’re kind of effective commission rate would be?

I would say flat to up over the year, it's what we’re projecting. We’re talking about per approved and paying member. I also want to just for others sake mention that this close ratio is definitely making each submitted application more valuable to us than it's been in the past. As we move from what I described as mid-50s to 60% close ratio, it's upto a 80% on that we have seen roughly, a 30% to 35% increase in the value of a submit, just based on that close ratio change and then we’re attacking on a little bit of a premium increase as well.

: And so when you think about effectively what we’re spending on a per unit basis per cost of acquisition we’re getting a much more attractive conversion rate there and an improved cost of acquisition which frankly we had anticipated because of the guaranteed issue provision [ph] that’s in the Affordable Care Act.

I mean you say January that’s mostly reflective of the people who are submitting at the end of December and then--

No, actually when I say I’m lagging things back to January submits. So I’m talking about January submits and what percentage of the January submits we have seen close.

We like 80%, that’s a very healthy close ratio.

And then just a question on expenses on G&A, I’m not sure if you mentioned it but it kind of went up little bit quarter-over-quarter and I think last year there were some onetime things and was there anything onetime in there this year?

No. I can’t think of anything onetime. Q1 is a little bit elevated because that’s when the annual audit is done and that’s a fairly significant chunk of G&A. But that’s just year-over-year that doesn’t really change things a whole lot but sequentially it definitely does.

Our next question comes from Nat Schindler with Bank of America Merrill Lynch. Please proceed.

This is Jason Mitchell here for Nat Schindler. I was just curious as the Affordable Healthcare website kind of improved over the course of like last three months, did you see any change in your traffic applications coming to website and from the applications you got the last three months where a lot of those current customers switching to Affordable Healthcare or ACA complaint plans or mostly new customers?

Well I will just start with healthcare.gov, all I can tell you is we saw record volumes coming to us during the last three months compared to any other period like that in terms of consumers visiting the site, what we call quoted sessions when someone actually looks at a product applications I mean all the way through and I think most interestingly is that we saw very large volume of subsidy-eligible people coming to it there as well. The only place they can really get this subsidy was on healthcare.gov although as I indicated we engineered some ways to be able to help people and got over 10,000 of them enrolled or at least submit with their applications and presumably enrolled. So there is clearly and I’ve been saying this for several years, there is a new competitor in the marketplace and that’s government with government exchanges. We certainly haven't seen anything that has been in any way upsetting to our business, its just the opposite. We think the Affordable at work -- the beneficiary of the Affordable Care Act and that’s one out in the volumes that we see here and we just keep working every day to make the consumer experience the interface better.

And on your second question the submitted applications less than 10% of our submitted applications were from current members.

Just on the private exchanges, how did the economics workout for those exactly? Is it still the same where you’re getting a commission fee for the -- planning to go through those private exchanges?

I would characterize the partnerships we have today as commission based with, yes the commission rates that we enjoy with the products that we just sold them one on one. Typically the arrangement is that we will do some kind of a commission share with the partner but we will take the gross commission as revenue and then there is a cost of revenue which is the commission share. And I wouldn’t take them at -- everything we do in the future is going to be situated that way but that’s how they are currently and that’s what most of the discussions that we’re having.

Our next question comes from Adam Klauber with William Blair. Please proceed.

Couple of questions, I’m not sure if you said this but was there any traction on the TurboTax relationship and how much was that hindered by execution issues with the federal hub?

Yes we had some traction with Intuit and as you might imagine we have been working very closely with them right to April 15th and after as well. A number of the Intuit consumers that we would be introduced to like other partners maybe subsidy-eligible. So the impact there is on the subsidy-eligible portion of that segment and how we can help them and we focused a lot of our efforts on some of those partner subsidy-eligible people that are part of those 10,000 that we enrolled. I just want to be clear. We have got to get these better connection with these government exchanges. It's not us it's on the government exchanges that the technology there just doesn’t -- what it needs to be for us to be able to connect. We’re hopeful and optimistic with many of them including healthcare.gov that we’re going to have a connection before this next open enrollment period so we can do this the way people want to do it when they come to us which is online and that would certainly pertain to Intuit.

And just a follow-up on that, for the deadlines for (indiscernible) to be up and running is more like mid-summer. How are they doing on the intermediate deadlines? Are they doing better than the last contractor?

I’m just not qualified to talk about that I don’t know. We have got our own focus which is just to connect into them from a -- with the right plumbing so that this will all work but I just can’t speak to where they are within any of this. I don’t any more than what anybody else knows from what they read and so on.

As you mentioned that churn was elevated but within the range of what you expected for the first quarter. With the first quarter being so busy, can we expect an elevated level of churn in the second quarter also?

I expect that churn would likely slowdown in the second quarter on an ongoing basis until the next OEP. We could see a little bit of churn off of just the straggling completion of Q1 but all-in-all I would expect it to slowdown.

You know this is an important point that we have made here about churn and the way we calculate it. What we talk about here and what we look at is internally is product churn and product retention, not necessarily member churn or member retention. So we will give you an example, somebody who make churn off of a product and will actually look at that and will essentially report that in some of our metrics but they made churn off a product and by another one underneath this. So the product churns but we don’t lose the member. In theory and let me emphasis in theory, in theory over the next six months there shouldn’t be as much of that because you can’t churn off a product and then go by another one because the Affordable Care Act won't allow you to do that until the open enrollment period. So in theory we should have less churn in that category of retention and in theory we should have more demand coming November 15th, for those who do want to churn out of the product who are holding into a new one but don’t want to lose coverage. If you churn off a product today, if you’ve got a compliant product you start making payment you terminated, you’re going to go uninsured. You can’t go get another product unless you qualify for one of the special enrollment exceptions if you will which is divorce, birth of child or moving from one state to another. So we think theoretically that that’s going to have a positive impact on the kind of churn we have seen traditionally?

Our next question comes from Hesham Shaban with Hedgeye. Please proceed.

So I know it's a little early in the year to be asking this but the MCOs are expected to start submitting raise for 2015 and I’m wondering if you’ve had any conversations with them regarding rates for next year?

Are you talking about the actual premium prices? Hesham Shaban – Hedgeye: The MCOs are going to be submitting their premium prices but I’m wondering if you’ve had any conversations with them regarding rates, commission rates for 2015 on the IFP product?

Historically commission rates have not changed on an annual basis. The only significant change we have ever experienced was a result of the mandate in the Affordable Care Act in 2011 when the medical loss ratio was required to be 85% on these products and we had a roughly a 35% commission reduction as a result of that. There were some expectation that we may see commission rates change coming into this first open enrollment period and as we commented in our last earnings call and I think Stuart reaffirmed it today, our commissions are flat to up compared to a year ago. We have no indication of any commission rate changes coming up, we think this is already built in and assumed in the medical loss ratio that the carriers operate with. We have contracts with most of them. Many of them are month to month, some of them are longer term but we certainly don’t anticipate any significant changes and I can tell you that we’re not in discussions currently about any kind of changes on commission rates at all.

We have no further questions. I will now turn the call back over to Gary Lauer, CEO for closing remarks. Please proceed.

Sure. I would just like to thank everyone for the time today and look forward to talking with many of you over the next coming days and weeks.