Good day, ladies and gentlemen. And welcome to the eHealth’s Second Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will follow at that time [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to hand the floor over to Kate Sidorovich, Vice President of Investor Relations. Please begin.

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 second quarter 2017 financial results. On the call this afternoon, we have Scott Flanders, eHealth's Chief Executive Officer and Dave Francis, eHealth's Chief Financial Officer and Operations Officer. After management completes its remarks, we’ll open the lines for questions. As a reminder, today's conference call is being recorded and webcast from the IR section of our Web site. A replay of the call will be available on our Web site following the call. We will be making forward-looking statements on this call that includes statements regarding future events, beliefs, and expectations, including statements regarding our efforts to return to strong growth and profitability, our progress on executing on our strategic plans, our Medicare demand generation strategy, our partnership and hospital system with hospital systems and pharmacy networks, effectiveness of our Medicare sales organization, our marketing program, the impacts of our direct-to-consumer television marketing efforts, our expectations for loyal customer acquisitions cost, our projected Medicare submitted application growth rate in the second half of 2017, our plans to offer alternatives to major medical ISP products, our expectations for higher commissioner revenue per member from eHealth branded insurance and ancillary product bundles, our ability to comply with CMS guidance and enroll subsidy eligible consumers into qualified health plans through the federal exchange including our Web site, during that coming open enrollment periods, our expectations regarding our key business, progress that we’ve made in the small shift business insurance markets, our adoption of new revenue recognition guidance continue refers 2018, and its expected to impact on revenues, earnings and balance sheet and reaffirmation of our guidance for the full-year 2017, including revenue, adjusted EBITDA, segment revenue and profitability and…

Thank you, Kate. And welcome everyone. It is now been four year since the Board asked me to take over as CEO of eHealth. And I'm pleased to talk with you today about several areas of tangible progress we’ve made in our efforts to return the business to strong growth and profitability, while enhancing our position in the consumer health engagement market. We still have significant work ahead, but I'm pleased with our progress and excited by our current trajectory. 2017 is a transition year for eHealth and our second financial performance reflects this dynamic. Second quarter revenue was $28 million. Our adjusted EBITDA was negative $13.6 million. GAAP net loss per share was $0.93 and non-GAAP net loss per share was $0.78. Cash flow from operations was negative $1 million, bringing our cash balance as of June 30th to $66.1 million. These results were in line with our expectations for the quarter. For the first half of the year, consolidated revenues and non-GAAP operating income were $106.9 million and $19.8 million compared with $111.1 million and $22.2 million respectively for the first half of 2016. We are making significant headway in executing on our strategic plan including early success and developing high value strategic partnerships in Medicare, enhancing effectiveness of our Medicare sales organization and achieving strong enrollment growth in the small business and Medicare supplement segments of the health insurance market. We're also preparing our individual and family plan business for improved performance in a turbulent market that we believe continues to hold significant opportunity for eHealth. In Medicare, our focus this year has been on reshaping our demand generation strategy away from higher cost lead aggregator and paid search sources, and towards more profitable channels where our differentiated value proposition for Medicare beneficiaries seeking the optimal Medicare…

Thanks Scott, and good afternoon, everyone. Our second quarter revenue was $28 million, a decrease of 25% compared to $37.3 million for the second quarter of 2016. Second quarter commission revenue was $25.8 million, a 26% decline compared to the second quarter a year ago. As Scott described earlier in the call, our financial performance continues to be negatively impacted by the challenging environment in the individual and family plan market. Second quarter individual and family plan commission revenue was $9.9 million, a decline of 49% compared to the second quarter a year ago. Second quarter Medicare commission revenue was also $9.9 million, an increase of 10% compared to the second quarter of 2016, driven primarily by new Medicare enrollments during the quarter and renewal commissions on existing Medicare supplement plan members, which have been increasing and which are booked throughout the year. Our estimated individual and family plan membership at the second quarter was 244,900 members, down 49% compared to the estimated membership we reported for the second quarter a year ago. The estimated number of revenue generating Medicare members was 300,000 to 400,000 at the end of the second quarter, an increase of 26% compared to the second quarter of 2016. During the first quarter of 2017, strong renewal revenues on our Medicare business more than offset declining individual and family plan commissions, resulting in overall year-over-year revenue growth. However, our second and third quarters are seasonally and structurally lower in terms of Medicare revenue with no renewal commissions from our existing Medicare advantage members, all of which are book3ed in the first quarter, and limited commissions on new Medicare enrollments outside of the annual enrollment period takes place in the fourth quarter. Our Medicare enrollment growth slowed in the first half of the year, driven primarily by…

Thank you [Operator Instructions]. Our first question comes from the line of George Sutton with Craig Hallum. Please go ahead, sir.

So relative to the Medicare strength that you started to see in the latter part of the quarter, and you mentioned has sustained in the Q3. Can you just give us a sense of what is driving that? And along with that, I'm curious when Union Plus started to move forward?

The sales activity, as you're aware, we made some significant changes in terms of the leadership of that group late in the first quarter. And as we dug in and look to implement a management transition there under new leaders with Dave Nicolas taking over in early June; candidly, there were two things that happen; one was identifying some low hanging fruit relative to taking friction out of the process that had worked its way in under the previous management organization; and combining that with a tighter integration of sales with the Medicare marketing team, particularly as we’ve been moving into some of these direct TV initiatives that we’ve been looking to move away from the external third party source and into a more controlled environment for us; being able to get better alignment between marketing and sales and taking that friction out of the process; as the quarter we're on started to show very meaningful results for us as the second quarter got into the back half; and as we said, it's sustained into and through the month of July. So we're very encouraged by the tangible trend that we been able to see in that marketplace and that what gives us confidence that the growth rate from a Medicare enrollment prospective is going to be higher than we’d originally anticipated. Do you want to talk about Union Plus, or you want me to take it?

Just with respect to Union Plus, it is their 55 unions that comprise that association and we’ve a director level leader that is out working with each of these unions to on board them. And so this is something that we forecast conservatively for the balance of 2017 that we expect to bring meaningful enrollments into ‘18. But it's not a significant part of our increase in guidance for mid-teens to high-teens in terms of Medicare enrollments for the balance for the year.

And you mentioned that you were encouraged by the early progress you're seeing in the small business segment. And I'm curious if you’ve made any changes to your spending plan. You had told us before we're going to spend a lot of money trying this and we're going to report back to you as to what we're thinking. And I thought spending may be some indication.

We are not quite spending at the level that we build into our plan. So it's -- we were conservative with respect to the budgeting of small business and though it did fully but we’re encouraged with what we're seeing. But we haven’t had to spend as much money as we got.

And George the additional color I would throw out there are two things; number one, we are very encouraged by the development work that our engineering team has accomplished there, the UnitedHealthcare digital integration being the most prominent. But there is a lot of additional work with other carriers that’s going on to digitize that business that as we talked about is still stuck in 1975 mode for most of the marketplace. And the second piece is that we have been very diligent in managing expenses across the organization that diligence has gone through into the small business side on the tech and content side too. So we’ve been efficient in how we've been bringing some of those new technologies into the marketplace and have done so, as Scott said, on a cost basis that was below what we were looking to spend when we originally budgeted for the first of the year. The last thing I would throw your way is to -- again we’re very comfortable with the numbers in reaffirming our guidance from both the top line and bottom line perspective, so all plans are continuing to move forward as we had started the year.

Your 1975 reference forced me to Google. What was the top single in 1975 and was captain into level previously together. So that's an interesting perspective. So lastly on the healthcare.gov spending, the fact they are going to be force the spend less. Where is that spending going to be less? Is it going to be on the things that are competitive to you relative to advertising?

We found health CMS and with healthcare.gov was spending into all channels and search engine marketing, as well as print and also TV. So I mean it's a small piece, the smaller piece of what we think is the upside going into Q4 reversing the double redirect is more material than CMS moving out of the advertising. And as is the opportunity for us to sell short term and these custom tailored eHealth branded bundles. So we would rank those two as more material for Q4 than the CMS dialing back on the healthcare.gov funding.

Thank you. And our next question comes from the line of Tobey Sommer with SunTrust. Please go ahead.

What kind of changes in the markets might prompt you to invest more heavily in open enrollment today than as contemplated today? Thank you.

Yes, so we’re launching these bundles later this quarter. And if the take-up rate is high then we could afford to spend more money in search engine marketing to try to drive more enrollments to the bundle. And these bundles are substantially more profitable than either short-term or a standard ISP product. So if we see early success in our launch, which is contemplated for September, we could decide no plans yet to do so. But we’ll be transparent to your question. We could decide to be more aggressive spending against those bundles.

The other point that I would make is that we've directed in our constructing the marketing organization to be as nimble and provide us much optionality as possible as we test the number of initiatives in the third quarter, preparing for the fourth quarter OEP and then monitoring the performance of our different product segments throughout OEP on a real-time basis. So as Scott said, if we see an area of the marketplace that is performing exceptionally well, we’ll be positioned to move in that direction immediately rather than having to step back regroup and perhaps lose some opportunity. So we're looking forward to this OEP and believe that we're well positioned at the moment to take advantage of it.

Thank you [Operator Instructions]. And that concludes our question-and-answer session for today. I would like to turn the conference back over to Scott Flanders for any closing comments.

Thank you everyone. As is our custom, we are available for calls and follow up at your convenience. Thank you everyone.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may now disconnect. Everyone, have a great day.