Good morning, everyone, and welcome to eHealth Inc. conference call to discuss the company's first quarter 2024 financial results. [Operator Instructions] I will turn the floor over to Eli Newbrun-Mintz, Senior Investor Relations Manager. Please go ahead.

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

Thank you, Eli, and good morning, everyone. Today, we plan to review key operational and financial highlights of the quarter and address important recent developments in our industry and how they may impact our company's strategic positioning and outlook for the year. eHealth delivered another quarter of strong execution in our Medicare business. In Q1, eHealth maintained the momentum we gained during the annual enrollment period, generating double-digit growth in approved Medicare members. This was driven primarily by our enhanced marketing strategies and strong execution in both our fulfillment models, agency, our choice model and Amplify, our carrier dedicated model. Importantly, our Q1 Medicare Advantage enrollment growth of 9% year-over-year was accompanied by another year-over-year increase in lifetime values. Combined with our fixed cost reduction efforts, this allowed us to post a significant year-over-year improvement in first quarter adjusted EBITDA. I'm also pleased to report that eHealth achieved positive operating cash flow of $3.3 million for the trailing 12 months ended March 31, 2024, exceeding our target of breakeven operating cash flow for this period. This is an important achievement for our organization and a true testament to the early success of the business transformation plan that we completed in 2023. In comparison, our operating cash outflow was in excess of $150 million for the trailing 12 months ended 3/31/22 at the onset of our business transformation. We believe we can continue to build on these accomplishments and towards a sustainable, profitable growth and cash flow generation. I will review our Q1 operational highlights momentarily, but first, let me share my thoughts about some important industry developments. Throughout the past 2 years, there have been many changes in our sector, and we shared our views last year that the sector was rapidly approaching an inflection point. Specifically, we expected to…

Thank you, Fran. Our first quarter results were driven by strong revenue growth in our Medicare business, coupled with fixed cost savings across our organization, resulting in significantly improved adjusted EBITDA and operating cash flow compared to a year ago. Revenue of $93 million grew 26% year-over-year, driven primarily by our Medicare segment. First quarter Medicare segment revenue was $82.4 million, up 33% year-over-year with growth in approved members, increased MA LTVs and higher non-commission revenue as compared to Q1 of '23. First quarter Medicare Advantage Broker of Record, or BOR, approved members grew 9%, Medicare Supplement BLR approved members grew 35%, and total Medicare BOR approved members grew 10% compared to Q1 a year ago. These results include enrollments from our core agency choice model as well as our carrier dedicated Amplify enrollment model that we launched in 2023 and are scaling this year. Since the Amplify launch last year and through the end of Q1 of '24, virtually all our sales on that platform have been BOR enrollments, where eHealth collects ongoing commissions in the same manner as our core agency business. Starting with Q2, we are transitioning our largest Amplify deals to BPO arrangements where eHealth has paid a onetime enrollment fee as well as payments to cover certain call center costs as opposed to receiving recurring commission payments. New enrollments generated under these BPO payment models will not flow through our reported approved member or estimated membership metrics. Slide 12 and 13 in our Q1 24 earnings deck outlined the key operating and financial differences between our agency and Amplify models. In the first quarter of '24, Amplify generated approximately $7.2 million in Medicare revenue and approximately 13% of the approved Medicare BOR members in the quarter. To be clear, the large detail arrangement we announced…

[Operator Instructions] And we'll take our first question from George Sutton with Craig-Hallum.

This is James on for George. Nice results this morning. Can you talk about the scenarios you see potentially playing out this AEP given the CMS final rule and the challenges we're hearing from payers? Sort of how are you managing or positioning the business to isolate yourself from those challenges?

James, it's Fran. Yes, we're -- we've been working on strategies really for the past several months now, and we'll continue to refine those strategies, but we expect this upcoming AEP to be one of those situations where it best demonstrates the value proposition of eHealth in respect to what we anticipate to be a fair amount of disruption because of the pressures that Medicare Advantage health plans and carriers are experiencing through all the items that I mentioned in my prepared remarks. Part of this is offense, of course, right? There's going to be -- we anticipate a lot more beneficiaries who are accustomed to a certain level of supplemental benefits and other benefits that they value that may see changes, and potentially significant changes. I think the pressures on the Part D side both on the MAPD and the stand-alone Part D are also going to be a source of shopping. And then, of course, we expect, as some of the national carriers have already said publicly, basically, everything is on the table for them, including geographic market exits and some of the other pressures are going to feel through the limitations imposed by CMS through the total beneficiary cost of TBC where they may end up having to phase out of products and introduce a new product in that market, which doesn't allow them to convert those beneficiaries automatically. They have to resell them, and that's where we come in to place to help with that process. So I think it's going to be one of the more challenging AEPs for the industry, meaning the carrier industry, than they've experienced in many years, but it's an opportunity for our industry to demonstrate the value that we bring to beneficiaries through our services.

Got you. And then with sort of higher switching or higher shopping activity expected, I guess, what strategy do you have in place to sort of improve your capture rate of those shoppers?

Yes. Sure. We continue to put tremendous effort and emphasis on the importance of retention, persistency in our book of business, our customer relationships, which is why we've done so much already in terms of increasing the value proposition through ePerks as an example. We know that there's going to be a lot of activity further complicated by the fact that this is an election year cycle. And oftentimes, we've seen in the past, beneficiaries won't get the message as clearly as they do in off years because the election advertising consumes so much airtime, so that results in pent-up demand following the election. So we're preparing for that. We're preparing for everything we can to alert our customers where they will likely experience the greatest disruption. I'd say the areas that you can focus on more intently is where there's going to be geographic exits and knowing that you're going to need to intervene and move those beneficiaries into an alternative product if that carrier has exited the current carrier. So as I said, it's a combination of defending the book, and you do that proactively and through our analytics, we'll do it with great precision. And then we'll also need to go on offense in terms of taking advantage of perhaps the volatility in the greater marketplace to capture more share.

Got you. Within the full year revenue guide, what contribution are you assuming from direct to carrier relationships versus the BOR side of the business? And what do you think that mix could look like in the next few years?

James, it's John. I think that when you think about the amplifying business, it will be, call it, the high single digits to 10%-ish of the revenue based on what we have in the hopper today and we continue to look for new opportunities. I think over the next several years we expect to expand that Amplify business, especially as carriers are looking to -- looking for different distribution models going forward. But over time, we would adjust Amplify to become a larger percentage of the overall revenue. I really can't sort of -- I don't want to guess at what it could be, but if you were able to add similar-sized BPO deals to -- as our recent ones, you could over the next several years approach 20%, 25% of the total revenues.

[Operator Instructions] And it appears that we have no further questions at this time. I will now turn the program back over to our presenters for any additional or closing remarks.

Thank you, operator, and thank you to everyone that dialed in for this morning's call. eHealth continues to make important progress towards our goal of steady, profitable growth. Our results this quarter are a key indicator of eHealth's strong strategic, operational and financial foundation made possible by the important work of our management team and all of our employees. We appreciate your continued support and we look forward to meeting with our investors in the coming weeks. Thank you.

That concludes today's teleconference. Thank you for your participation. You may now disconnect. Goodbye.