Good afternoon, everyone and welcome to eHealth, Inc's Conference Call to discuss the company's First Quarter 2022 financial results. At this time, all participants have been placed in a listen-only mode. The floor will open for your questions following the presentation. It is now my pleasure to turn the floor over to Eli Newbrun-Mintz, Investor Relations Manager. Please go ahead.

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 2022 Financial Results. On the call this afternoon, we have Fran Soistman, eHealth's Chief Executive Officer, and Christine Janofsky. eHealth's Chief Financial Officer. After management completes it's remarks, we will open the line for questions. As a reminder, today's conference call is being recorded in webcast from the Investor Relations 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 statements relating to our expectations regarding our Medicare business, including Medicare enrollments, consumer demand, our competitive advantage, and market opportunities. Our expectations regarding trends in the Medicare distribution market, our ability to increase agent productivity and improve customer satisfaction retention, and other quality metrics. Our expectations regarding our online enrollments, member acquisition costs, and demand generation strategy. Our expectations regarding our individual and family business, including growth opportunities and our competitive advantage. Our expectations regarding our financial performance, including the profitability of our business, cash flows, conversion rates, customer retention, seasonality, lifetime values, member estimates, and fixed and operating expenses and our full year 2022 financial guidance. 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 are considered non-GAAP under SEC Regulation G. For reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure, please refer to the information included on 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. At this point, I will turn the call over to Fran Soistman.

Thank you Eli, and good afternoon, everyone joining us today for our first quarter 2022 earnings call. During my prepared remarks, I will discuss our first quarter financial results, update you on our progress on the execution of the strategic plan that we laid out on last quarter's earnings call and describe the early impact we are seeing from our enrollment quality initiatives. Our first quarter '22 revenue was in line with an adjusted EBITDA was ahead of our expectations. While the enrollment quality initiatives that we introduced in July of last year are still impacting telephonic conversion rates, we've also seen encouraging quality and retention metrics from the most recent Annual Enrollment Period cohort, members that we enroll during the fourth quarter with the policy effective date of January 1st, '22. The initial traction we're seeing through the early part of 2022 combined with positive carrier feedback, reinforces our belief that eHealth can establish itself as a leader in Medicare distribution as this market moves away from volume at all costs and towards growth built on a foundation of enrollment quality, enhance consumer experience, and cash flow generation. One of the key priorities for me and the leadership team is to leverage this trend and to enhance member economics and return the company to profitable growth. As an increasing number of Americans age in the Medicare eligibility every day, we believe we are well-positioned to connect them efficiently and appropriately for the best plans to serve their needs based on our broad plan selection, consumer - centric approach, and data-driven recommendation algorithms. Our omni -channel shopping and enrollment capabilities give eHealth an advantage in attracting a broad range of customers, including younger Medicare eligible and new to M&A enrollees. eHealth online platform is also a differentiator for our Individual…

Thank you, Fran. And good afternoon, everybody. We delivered first quarter top-line results that were in line with, and profitability results slightly ahead of our expectations, driven mostly by the positive impact of increased carrier advertising revenue. At the same time, revenue and profitability metrics declined on a year-over-year basis, reflecting primarily lower telephonic conversion rates, compared to Q1 of 2021. First quarter 2022, total revenue was $105.3 million down 22% on a year-over-year basis. GAAP net loss for the first quarter was $32.7 million compared to a net loss of $0.8 million in the first quarter of 2021. Adjusted EBITDA was negative $24.8 million down from positive $17.3 million in Q1 2021. First quarter, Medicare revenue of $95.1 million declined 21% compared to a year ago, driven primarily by a 22% decrease in approved Medicare members. Total Medicare approved applications were 95,800, including 82,400 Medicare Advantage approved applications, which decreased year-over-year by 23%. The enrollment quality initiatives that we implemented in July of last year continued to impact the rate at which our customer care agents convert telephonic leads into submitted Medicare applications. First-quarter telephonic conversions were down approximately 30% compared to Q1 of 2021, our first-quarter following an aggressive pivot to an internal agent force and before the enrollment quality initiatives were implemented. In addition to having an impact on our enrollment volume, lower telephonic conversions also drove up our per member acquisition costs as the year-over-year increased and marketing and call center spend resulted in fewer applications compared to a year ago. We also saw an increase in lead costs in some of our demand generation channels. Our current LTV to CAC spread is not acceptable to us and improving member profitability is at the core of our strategic plans. We expect to lower our per member…

[Operator Instructions] Our first question comes from the line of Elizabeth Anderson from Evercore ISI. Your question, please.

Hi, guys. Thanks so much for the question. I have -- one question I had on the quarter was improving the unassisted online sign-ups. What was the driver in that? How did you push people more towards that or maybe you didn't push them, they went themselves? Can you talk about some of the dynamics that happened in that market or was it purely like a mechanical thing because the assisted sign-ups declined? Thank you.

Hi, Elizabeth. It's Fran. Nice to hear your voice and thanks for the question. Our digital platform continues to be one of the best stories at eHealth both un -assisted and assisted. And I would say that we continue to refine our SEO SEM and all of our marketing strategies to support that digital asset. And it continues to contribute in a very meaningful way to eHealth's growth in a much more financially viable way. So I wouldn't say there's any single contributor. It's a combination of our marketing optimization strategy with that asset.

Got it. And one thing I know across the broader healthcare and DTC healthcare spaces, there has been a concern about marketing channels and spend in that. Obviously you pointed to improving [Indiscernible] in better ROI on the marketing channels. Can you help us think through what's an example of one of those channels and how you expect to pivot to those different channels over the course of the year.

Yeah. I'll start. Morelock is here and I'll ask him to share a little more detail. You're right. The cost of acquisition continues to be a challenge, not just for us, but I think everyone in the sector, as well as carriers. I've talked to some carrier partners and they too are experiencing some challenges with respect to lead gen cost. I would say there is no one particular channel that I would say is a darling right now, I think they're all under some degree of pressure, some under more pressure than others. Probably a number of different theories that I could point to in terms of what may be contributing to that. Competition certainly plays into it, and supply/demand certainly, is a big component of the competition. I would say that as we have continued to try to meet consumers where they want to be met, even with our digital platform, we are learning that there are some elements in terms of the technology that we bring to bear, whether it's a differentiation between someone who is utilizing a personal computer versus a mobile phone. It produces some different outcomes. And even how we buy the leads for those different pieces of technology can alter the performance, both on the sales side and the retention side. So the more you drill down into the detail, both on the sales and the persistency, you learn more and more about how dynamic this business is. Let me ask Phillip to expand on that.

That was well said and the only thing I would really add to that is, that's [Indiscernible] in our data platform, cumulative in nature. We have added to our data capabilities pretty robustly over the past 2, 3 years. And so our knowledge of this market and the different marketing channels and the data that we've collected over time allows us to be pretty nimble in response to the signal that Fran was talking about, that we get from consumers from the market. So we can [Indiscernible] channel if necessary. We can optimize our experience for the segments of visitors that we get to our platform.

Got it. One last one for me. I know you said the churn for the new cohort is about 10 percentage points better than we were previously expecting. It did look like the overall churn went up about 300 basis points year-over-year. Is it just that it's going to take us another year until we have enough new people that have been signed up with us, higher quality metrics that will come, overcome some of those maybe older cohorts that have been churning at higher rates? I guess my question is, would you expect -- what timeline that you now expect churn numbers to start improving?

This is Fran again. I'll start, and I'll ask Christine to share her perspective as well. Again, as we continue to drill down on the churn, we uncovered something that was truly interesting with respect to churn this year. In our prepared remarks we mentioned that we did have some positives with respect to the first year and that indicated that our quality initiatives are indeed working. Some of the older cohorts did churn at a higher rate than we had seen in the past. But when we drill down further, we identified a particular carrier that historically had been performing well above the average in a favorable manner. In other words, their persistency was greater than the average, this time, progressed to the mean, so to speak, and performed consistent with the average. And that one carrier really drove largely the change in the persistency for our book of business, this one carrier. So it's not a systemic issue. One large carrier can early move the needle, good or bad.

Got it.

And that's after the [Indiscernible] Elizabeth, is also important, the fact that the most recent AP Corkwood is smaller in size compared to some of the historical AP Corkwood. So as we see more of those members coming in, post enrollment, quality improvements, they'll start impacting, which overall will churn numbers more significantly.

Got it. That makes sense. Thank you, guys, very much.

Thank you. Our next question comes from the line of Jonathan Young from Credit Suisse. Your question, please.

Thanks for taking my question. I guess, some of the MCOs has talked about reducing their dependence on third-party brokers on a go-forward basis. I guess, has this manifested in your conversations with your carrier partners? And how does this affect your thinking about the go-forward plans for this year and future AEPs?

Hi, Jonathan, thanks for the question. I would characterize our relationships with our carrier partners as very good. We have regular conversations. I know everyone uses the term partnership loosely, but I really do believe we have a partnership relationship with most, if not nearly all of our key carriers. Those keys described as having a significant volume. They're collaborative. We try to solve a common challenge and that is retention. We're very aligned. We follow 606 accounting. Carriers don't, but they think like 606. They're all about lifetime value. We just happen to reflect that, with respect to the way we book revenue. So we're very aligned. And while there may be talk about this and maybe some will follow through. I don't know whether they would do it across the board, but we're having more collaborative conversations about how we work together to improve the retention. And always focused on improving the beneficiary experience. That's really what's paramount for us and for the carrier partners that we've worked with.

Okay. And then you mentioned cutting marketing and advertising spend in 2H '22. I guess -- to what extent is there of flexibility within the guidance that by reducing this advertising spend that there won't be share loss greater than you expect or do you expect to effectively offset that by higher persistency, etc, or how are you thinking about the dynamic of cutting that advertising along with membership growth?

Sure. I'm going to let Christine to share her thoughts on this as well. We baked that into our plan and we've reflected that in improved conversion rates which we're working on now and ramping up towards a higher expectation as we get into the fourth quarter, AEP season. And a lot of things will make that happen. It's not just marketing optimization, it's our operating model. Training of our -- further training of our agents to lead changes, improving the quality of our lead generation. I mean, there's a whole host of things that have to occur to improve the conversion rates. So that's all baked into our assumptions. So it's not all the way in a [Indiscernible] by any means. Christine, do you want to?

Sure. Thank you, Fran. And thank you, Jonathan, for the question. I would absolutely agree with Fran, and also what you said. It's a combination of different factors. And as we think about those variable costs related to marketing and CC&E, we'll start to realize some of those optimization savings in Q2 with the majority of that more being realized in the back half of the year, largely concentrated in Q4. As a reminder, when we head into the AEP in Q4, that's where our largest spend is from marketing perspective. So it's a combination of factors around the operating model, optimizing marketing, focusing on those rate channels to provide the right ROI as we head into the AEP season. Jonathan, just to quickly mention, we obviously cannot speak on behalf of the entire market, but it seems like our peers will also be moving to a more rational approach to spending. This growth, accelerated growth, came at a marketing cost, that probably moving forward, will not be sustainable. So that will mitigate some of the market share impact as well.

Okay, great. Thanks.

Thank you. Our next question comes from the line of George Sutton from Craig-Hallum. Your question, please.

Thank you. Fran, you mentioned the positive carrier feedback you've had to your new quality initiatives, and I'm curious if you can go into any more detail there. Certainly, Eman in particular has been somewhat open about their concerns about the third-party broker channel. And I sense that you are getting some different feedback from them given some of these initiatives. Could you walk through that?

Sure, George. Thanks for the question. We're very pleased with the progress we're making, but we keep the Champaign on ice. The CTMs -- it really does take I would say a joint effort between in our case, eHealth and our carrier partners because we have to be in lock step working together. It's not something that -- there are certainly many things we can control ourselves, but we get a much better outcome when we are working together with our carrier partners to make sure that there's a -- what are the real friction points? It's -- and how can we resolve those or eliminate those friction points. The feedback we're getting from, I would say, all of the major carrier partners when we do regular check-ins, this isn't qualitative, this is quantitative as well, there's demonstrated reductions in CTMs on a per thousand basis, not minimal. It's pretty significant and we're getting the pats on the backs as well. But like I said, you never declare success. You've got to keep working it every day. So I don't want to call out any one carrier. I think that it's fair to say that we work at this with all of our carrier partners because every beneficiary should have the same experience.

Right. By the way, I certainly congratulate you on your reduction in investment in telephonic and increase investment focused on online. I think that's the way to go. I'm curious because under the training side, which affects the telephonic side, again, it seems the carriers are talking about some how influencing some of that training. And I'm just curious how much do you feel is in your control versus out of your control as we go into this next season?

I would say we feel very much in control. We own it, we're accountable, we -- even though there is an oversight responsibility to that, that the carriers have because they have the contractual relationship with CMS, but there is no doubt that we are responsible and accountable and we -- I'd say we work in a very collaborative manner to keep our carrier partners in touch and always up to speed with what we're doing. So, there's no surprises. I don't know if I'm really answering the question. I -- but I'm kind of surprised that I didn't know there was something going on. I have Bob here and -- Bob I don't think there's anywhere we've been told it's changing on that respect. I think it's -

It's very collaborative process with carriers. We definitely show it in our training programs. They do offer their input to the training programs and best practices as well. So they do offer some good input. We try to incorporate that into our training practices, but we absolutely do control the outcome of that experience in the call center.

All of our calls are recorded. So, Dave, I can audit.

Nothing eHealth specific. This is more what carriers have talked about, But last question, if I could, and really off of Kate's point that there is a reduced amount of spend likely to be seen across the board from a lot of different players. It really suggests, again, to those of us watching that there's just too many players and I'm just curious if you've given any thoughts on consolidation in the spaces as you see it likely or not.

Well, it remains to be seen what's going to happen in the sector. I think the sector is in an inflection point. We're focused on eHealth. We are working on our cost structure, working on our marketing optimization, working on our carrier partner relationships and taking care of our beneficiaries every day, and that's plenty to keep us busy. We'll see how things shake out.

I understand. Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Daniel Grosslight from Citi. Your question, please.

Hi, guys. Thanks for taking the question. You've now had an AEP and OEP under your belt with some of your new quality initiatives that initially weighed on productivity during AEP, and will continue to weigh on productivity. But I'm wondering if you can comment specifically on the trends in productivity you've seen from this OEP from agents hired during AEP. And what I'm really looking for is quantification of productivity, whether it's conversion rates and talk times, this OEP. And again from those agents hired during AEP versus perhaps some new agents hired during OEP. Any uplift in productivity you are seeing, this OEP.

Daniel. We maybe be unique. We have reduced our agent force towards the end of OEP. Perhaps we're somewhat unique. We were frankly, overstaffed for OEP, given the volume of calls that we had. And I'm not happy about that situation. We had I think a little too much idle capacity. Truth be known, and that will not happen again. We took action in early part of Q2. So I can't give you a good answer to that, for us, because we've [Indiscernible] hired any.

Got it. Okay. So it sounds like you were a little overstaffed during AEP, kept some unproductive agents on board, which have since been cut? Can you disclose how many agents you currently have?

We don't provide that information. We did speak about cutting, or at least not hiring any additional agents into the AEP. So the current plan that's underlying the guidance, really relies on the current [Indiscernible] called, being more productive in terms of conversion rates, and also online, continuing to grow at pretty significant double digit growth rates. Yeah, we don't disclose specific numbers.

Got it. And then just turning to the IFP segment, we have Medicaid re-determination likely coming back in the second half of this year. I'm curious if there's -- how you're factoring in the potential to recapture some of those folks who are rolling off of Medicaid and into the exchanges. Is that factored into your guidance at all?

Good question, Daniel. It really isn't. We don't focus too much on the QHP side as much as -- we work with the state exchanges, of course, where we can, but we're focused more on the small group and the individual consumer HRAs. That's where there's more growth opportunities. So if it does materialize, we'll be ready but we didn't bake it into our forecast.

Got it.

And as you know, ebbs and flows with the economy, when the economy is under pressure, you generally see the enrollment growth. We didn't make any crazy assumptions about -- there will be a big recession and enrollment would take off so we played it pretty conservative.

Make sense. Thank you.

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Fran Soistman for any further remarks.

Thank you, Operator. And I just want to thank everyone for joining us this afternoon and we'll be talking soon.

Thank you, ladies and gentlemen, for participation in today's conference. This does conclude the program. You may now disconnect. Good day.