Good morning, everyone and welcome to eHealth Inc's Conference Call to discuss the Company's third quarter 2021 financial results. At this time, all participants have been placed in a listen-only mode. The floor will be 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 morning and thank you all for joining us today, either by phone or by webcast for discussion about eHealth Inc's third quarter 2021 financial results. On the call this morning, we will have Francis Soistman, eHealth's Chief Executive Officer, and Christine Janofsky, 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 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 the health insurance distribution industry, including current trends. Our investments in our e-commerce and call center capabilities, quality initiatives and technology. And the expected impact of these investments on our business. Our expectations regarding our individual and family business and growth opportunities, 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 lifetime values, our expectations regarding our business strategy and financial performance, including the profitability of our business, cash flows, conversion rates, customer retention, seasonality, lifetime values, member estimates, and operating expenses, and our full-year 2021 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 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. At this point, I will turn the call over to Fran Soistman.

Thanks, Eli. Good morning to everyone joining us today as we report our third quarter 2021 financial results. As you know, I became CEO of eHealth just one week ago today. I've received a warm welcome from our very talented employees, and I look forward to working together in the years ahead. Before I review our financial and operating results for the quarter, I want to take a few minutes to introduce myself, and share why I'm excited and energized to be leading eHealth. As a bit of background on me, I've spent nearly 40 years in the healthcare industry including serving as President of Government Services for Aetna, pre and post-acquisition by CVS Health, where I was responsible for leading the strategic execution, and profitable growth plans for Aetna's Medicare, Medicaid, individual and public exchange, and federal employee health benefit businesses. While there, I built and led a team that achieved sustained accelerated revenue and earnings growth, coupled with strong star ratings in compliance performance, among many other accomplishments. Prior to my time at Aetna, I served in executive leadership positions across a number of healthcare and managed care companies, including Coventry Healthcare, Principal Healthcare, and CareFirst BlueCross BlueShield in Maryland. Before I share comments on our third quarter performance and fourth quarter outlook, I want to acknowledge my predecessor, Scott Flanders. Scott transformed eHealth during his tenure as CEO including important diversification of products by introducing and scaling Medicare Advantage and ancillary offerings to supplement our IFP capabilities. This sets the stage for the creation of a highly effective digital Medicare distribution strategy. Scott’s leadership and contributions throughout the past six years have given eHealth a steadfast, differentiated foundation. Importantly, Scott assembled a talented management team with whom I've begun building strong relationships. I look forward to working with this team to develop strategic goals, execute our plans, and conquer our challenges. I'd also like to note that having gone through similar leadership transitions before, this one has been a near textbook transition. As previously announced, Scott has agreed to stay on in a consulting role with the Company through the end of this year. I want to take this opportunity to introduce Christine Janofsky, our new Chief Financial Officer who joined eHealth in September. Christine brings more than 20 years of finance and insurance experience, most recently serving as Senior Vice President, Chief Accounting Officer at Lincoln Financial Group. Since joining the organization, Christine and I are already off and running and I look forward to partnering with her to shape our strategic and financial direction for 2022 and beyond. You'll hear from her a bit later on the call today. I joined eHealth based on my deep appreciation for the Company's unique customer-centric platform and a strong belief in the significant opportunities ahead of us. We're harnessing powerful secular trends that when combined with refreshed strategic thinking and planning, followed by disciplined execution, will drive the Company's growth and value creation. Among the positive secular trends are an expanding Medicare population that continues to enjoy a long runway, continued momentum and popularity of the Medicare Advantage program, and the increasing number and complexity of Medicare plans. Consumers across all demographic groups are increasingly favoring choice and the ability to comparison shop for impactful purchases. This increasingly applies to healthcare. In addition, our digital platform provides eHealth with a strong competitive advantage as seniors' adoption of the Internet for research, social interaction, shopping, and other daily needs is growing, and has been accelerated by the global COVID pandemic. In short, I see our consumer-centric, omnichannel marketplace as the health insurance distribution model of the future, aligned with the evolving needs and preferences of our customers. Another important development is the heightened awareness and focus on beneficiary enrollment quality among our key carrier partners. Let me take a moment to define what I mean by enrollment quality. Simply stated, it's ensuring that eHealth presents Medicare beneficiaries with choices that best align with their eligibility status, lifestyle, health conditions, and economic means, all with minimal disruption in existing provider relationships and prescription medications. In the end, eHealth wants to ensure that beneficiaries make an informed choice based on these criteria to establish the foundation for a healthy carrier-member relationship. And it furthers their satisfaction, trust, and experience with eHealth. As with many aspects of business and our personal lives that underwent significant changes due to the COVID-19 pandemic, the way Medicare Advantage products are marketed and distributed to seniors has also changed with more plans now being sold for telesales supported by licensed agents. When a new product is introduced or a large shift in distribution channels occurs, it is not uncommon for this change to be accompanied by compliance-related measures to guarantee that customers are receiving the same quality experience as with established distribution networks. CMS has always appropriately placed the best interest and safety of beneficiaries at the center of everything they do. They expect their contracted carriers and distribution partners to do the same. As a downstream delegated entity, eHealth has the same obligations as our carrier partners. We fully accept these responsibilities and believe broker performance will be increasingly evaluated on customer satisfaction, retention, and other quality metrics in addition to volumes. The sector-wide movement provides an opportunity for eHealth to take a leadership position, establishing our omnichannel distribution platform as the gold standard for customer experience within the sector. While there are upfront costs and a near-term impact on enrollment volumes that I will address shortly, we believe that this trend will change the competitive landscape in our space and creates significant competitive advantages for digital brokers that successfully work with carriers on attaining quality goals. I recognize that I'm transitioning into the CEO role here at eHealth at a critical point in the evolution of the Medicare distribution industry. I plan to leverage my decades-long experience in healthcare and managed care to further strengthen our relationships with carrier partners, improve data flow between parties, and maximize the lifetime value of enrollments we deliver. My initial focus as CEO is on our execution in the annual enrollment period. The 10 weeks of AEP are a critical time when we operate at our peak capacity in call center utilization and generate a large portion of our total annual Medicare enrollments and revenues. While much preparation occurs in the weeks and months prior to the enrollment season, the execution during AEP is critical. We are monitoring the effectiveness of our diversified marketing programs and the performance of our telesales organization daily. And we're making course corrections in real-time. We will use this insight to improve our go-forward AEP strategy and execution. This year, a number of important initiatives and changes were implemented ahead of AEP. One common thread among them is our enhanced focus on enrollment quality. Perhaps the most important change that took place operationally since last AEP involves our telesales organization. Earlier this year, we've made an aggressive pivot in our telesales channel to a model driven predominantly by in-house sales agents. We launched a major talent acquisition campaign, and we have the largest class of full-time agents in our history, successfully recruited and onboarded. We entered this AEP with more than 95% of our telesales capacity made up of internal agents, ahead of our initial goal of 90%. Second, we took a number of steps to further enhance consumer experience and enrollment quality on our platform. This includes the addition of an enrollment verification step for telephonic enrollments, as well as supplemental training for our agent force. Third, we migrated our call center technology to a cloud-based contact center, which provides robust new capabilities to train agents, support them in their interactions with customers, and monitor their performance in real-time. Finally, we continuously evolve our lead generation capabilities. And this year we upgraded lead scoring and routing tools across all call centers. Turning to our online capabilities, our digital platform, an important competitive differentiator for eHealth, continues to evolve and is attracting a growing number of Medicare customers. During the third quarter, the sum of online unassisted Medicare Advantage and Medicare Supplement submitted applications grew 58% compared to the same period in 2020. We expect it to remain an important growth driver during this AEP, delivering MA enrollments with LTVs that historically have been 30% to 40% higher compared to telephonic sign-ups. Ahead of the AEP, we launched the next release of our recommendation engine to further improve the accuracy of personalized plan matching based on machine learning and leveraging data from hundreds of thousands of online customer interactions. On the customer engagement side, our customer center tool continues to gain traction with more than 195,000 individuals creating accounts since its launch in October of 2020. We continue to see this as a meaningful differentiator, allowing members who use the customer center to connect more deeply with eHealth and ultimately retain at better rates. We expect the combination of optimized plan matching and engagement with the customer center to have a positive impact on customer satisfaction with their plan selection and to result in higher member retention and recapturing on our platform. Demand for Medicare Advantage plans remains strong and eHealth is well-positioned to help seniors navigate an increasingly broad and complex range of plans. This year, we prioritized our strategic partner and online channels as well as company-driven direct mail initiatives that have been associated with higher quality, higher margin enrollments. Now turning to our third quarter financial results. Our third quarter Medicare enrollment volume and revenue were negatively impacted by the enrollment quality efforts we introduced during the quarter. Specifically, we're seeing a reduction in our call center conversion rates in part due to the new quality measures that have been implemented. The decline in conversions was compounded by the impact of a large number of new sales agents trained and deployed during the third quarter, along with the recent migration to a new call center technology. I want to emphasize that after we absorbed the near-term costs in conversion rate deterioration from these efforts, we expect them to drive greater retention and LTVs out of our enrollments in the longer term. We also expect that they will establish eHealth as a top-tier quality distribution channel for our carrier partners, setting a high bar for other major brokers. We continue to collaborate with carriers to confirm that these new quality enhancements are working. I'm confident we've taken the right steps to put the customer experience and quality of enrollments at the center of what we do, and I believe we are establishing eHealth as the gold standard within the sector. Third quarter revenue was $63.9 million, a 32% year-over-year decline. Our third quarter GAAP net loss was $53 million and our adjusted EBITDA was negative $55.2 million. Total Medicare approved applications declined 22% compared to Q3 a year ago, impacted by lower telesales conversion rates, while top of the funnel demand exceeded what we saw in Q3 2020. Our online business continues to grow with unassisted online applications increasing more than 50% year-over-year for Medicare Advantage and Medicare Supplement plan enrollments combined. Conversion rates on our online platform increased compared to a year ago driven by improvements to the online user experience that we've implemented. Now I'd like to make some observations about our AEP execution to date. In the first 3 weeks of AEP we've seen solid consumer interest on our omnichannel platform. At the same time, our telephonic conversion rates, while showing a meaningful improvement compared to Q3, are behind our forecast. Given the extensive changes we've implemented to our telesales organization, our agents are taking time to adjust. However, we remain confident that the sales proficiency of most of our call center sales agents will increase with each beneficiary counter, every day, and every week. We expect this will result in our continuing to close the conversion gap and place eHealth in a stronger position throughout the balance of the annual enrollment period, and into the Medicare Advantage open enrollment period. While our online business continues to generate strong growth, it is not yet large enough to offset the underperformance of our call center operations. We are adjusting our 2021 financial outlook, including a revised revenue range of $535 million to $575 million, a revised GAAP net loss range of $63 million to $43 million, and a revised adjusted EBITDA range of negative $20 million to break-even. Christine will provide more color on our revised outlook in her comments later in the call. As I mentioned earlier, my focus as CEO has been first and foremost on AEP execution. Simultaneously, I'm conducting a deeper review of eHealth's operations, financial performance, including cash flow simulations, current operating model, organizational structure, and strategic imperatives. During the Q4 earnings call, I plan to share more about my assessment of the Company's foundation and direction, as well as highlights of our strategic plan for 2022. I've also observed that the mission-driven nature of this Company is very important to our employees. I intend to stay true to the Company's core mission of connecting eHealth customers with quality, affordable health insurance options, a mission that hasn't changed since eHealth's inception. Through recent initiatives, we've heightened our focus on enrollment quality, and customer retention, and this will remain a critical component of our execution going forward. I see opportunities to increase our sales effectiveness by dedicating our call center agents to more defined geographies so that they can be even more responsive to consumers and provide deeper insights into available plan options. I expect to be prepared to share more specifics with you during our Q4 2021 earnings call. Another opportunity area is to have our brand stand not only for carrier-agnostic choice, but also to be increasingly seen as a trusted source or clearinghouse of relevant healthcare-related material to help consumers navigate the complex healthcare system. I also believe there is an opportunity to broaden our platform beyond our current focus on sales and enrollment to encourage current prospective eHealth members to visit our website frequently. In my experience, this is critical to building loyalty and drawing consumers to our platform year-round rather than just during the enrollment periods. I also see the online business as a critically important component of eHealth's business model, characterized by superior unit economics and quality metrics, while also appealing to the growing segment of the senior population that's comfortable and actually prefers to transact online. I expect to continue our focus in driving accelerated growth in our online enrollments. Our focus goes well beyond maintaining strong enrollment and revenue growth. It's very clear to me that eHealth must demonstrate to our investors that we can generate strong EBITDA margins and produce positive cash flows in a shorter cycle. Though I've been in the CEO chair all of six days, I've been evaluating the business for the last few weeks and I believe there's a path to achieve all of these objectives. We will get there through a combination of managed growth by controlling our rate of growth on a product-specific basis through the most efficient distribution and marketing channels, and further diversification of products with particular emphasis on those that lend themselves to being sold online. At the same time, eHealth will be focusing on accelerating strategies aimed at increasing customer loyalty and reducing member churn. My initial review of the business also has revealed potential for enhancing our performance through tighter alignment with our key carrier partners, stronger execution in our telesales environment, and further operational improvements including deeper integration of data analytics across all of our key operational areas. Medicare remains our core market. However, with the resurgence and stabilization of the individual and family health insurance market, the time is right for eHealth to renew our focus on IFP to support the overarching objective of a balanced portfolio and positive EBITDA and cash flows. Christine and I will also be revisiting our 5-year financial plan and expect to share our long-term targets with investors next year. Before I turn the call over to Christine to review the quarter and our financial results in more detail, I want to emphasize how excited I am to be leading eHealth. Throughout my career, I've been guided by the goal of providing Americans with access to quality and affordable healthcare options while reducing the complexity of the healthcare system. It is a privilege to join and lead a Company whose mission and values are closely aligned with mine. I am committed to lead eHealth in a direction that provides our shareholders with compelling reasons to remain confident in our Company. I will now turn the call over to Christine.

Thank you Fran and good morning everybody. I am excited to be joining eHealth's leadership team at this critical juncture for the Company and the broader health insurance distribution industry. I share Fran's conviction that our core Medicare market presents a significant opportunity for generating sustainable, profitable growth and that eHealth's tech-enabled and customer-centric approach gives us an advantage in driving towards market leadership. I look forward to getting to know eHealth's investors and sell-side analysts over the coming months. And now, let me review our third quarter financial results beginning with our Medicare business. Third quarter financial performance of our Medicare segment reflects our investment in AEP preparedness and the impact of our enrollment quality initiatives. As Fran outlined, we believe these quality initiatives will have a significant positive impact on our competitive positioning and relationships with our carrier partners and will over time drive customer satisfaction, better retention, and higher LTVs on our platform. However, these quality initiatives did have a negative impact on our call center conversion rates in the third quarter. I will provide more color around our call center performance shortly, including our preliminary observations during the first weeks of the AEP. Third quarter Medicare revenue was $46.4 million, down 34% on a year-over-year basis. Medicare commission revenue was $42.5 million, or a decline of 17%, driven primarily by a 22% decline in our overall Medicare approved members. Within our main Medicare Advantage product, approved members declined 18% to approximately 37,000. At the same time, lifetime values of our Medicare Advantage members increased 9% year-over-year to $975 primarily as a result of higher commission rates. Medicare advertising revenue declined to $4 million from $19 million in Q3 of 2020. This was partially driven by timing with $7 million of total advertising revenue shifting from Q3 to Q4. In addition, we believe that the nature of our sponsorship arrangements with carriers is evolving and will increasingly be driven by the quality of broker enrollments. Medicare segment loss was $52.9 million, compared to a loss of $14.1 million in Q3 of 2020. We expected a larger Medicare segment loss this year in the third quarter, driven primarily by a large increase in customer care and enrollment costs as we had pivoted our telesales organization to a predominantly internal agent model and ramped up the hiring of our agent force approximately 8 to 10 weeks earlier than in 2020. However, third quarter segment loss was wider than expected due primarily to agent reorientation toward our quality initiatives which resulted in lower conversion rates in the quarter as well as a year-over-year decline in high-margin sponsorship revenue. While we don't disclose actual conversion rates for competitive reasons, I'd like to comment on the trend in this metric year-to-date. Our conversion rates improved during the first quarter of 2021 open enrollment period, growing 24% year-over-year. This reflected ramping down our vendor agents and focusing more on our tenured internal agent force that has historically performed at higher conversion rates compared to vendor agents. As we pivoted to a predominantly in-house agent model, we expected for the growth trend in conversions to carry into the second half of the year. However, during the third quarter, our telephonic conversions declined over 30% compared to last year, reflecting the impact of enrollment quality initiatives that we implemented. In addition, a larger percentage of our agent base was represented by new internal agents hired ahead of this AEP compared to a year ago, further depressing conversion. As we entered AEP on October 15, conversion rates have increased compared to the third quarter, reflecting the typical seasonality of this metric. At the same time, rates continue to lag forecasted levels. We see our quality initiatives as the primary driver of conversion shortfall that has impacted both our new and tenured agents. Our third quarter online conversion rates were well above last year's levels and our online Medicare business continues to deliver strong enrollment growth, both in Q3 and in the first month of Q4. Our estimated number of commission-generating Medicare members was approximately 875,000 at the end of the third quarter or an increase of 19% with estimated Medicare Advantage membership, increasing 33% compared to a year ago. Turning to our individual, family and small business segment. Third quarter revenue from this segment was $17.5 million, a 27% decline compared to a year ago driven primarily by lower IFP and ancillary net adjustment revenue of $10 million compared to $17.1 million in Q3 of 2020. Approved IFP members grew 88%, accompanied by another double-digit year-over-year increase in LTVs. Now, I'd like to review our third quarter operating expenses. Q3 non-GAAP customer care and enrollment cost was $48.2 million, up 13%, and reflective of our investment in the internal agent force as we onboarded agents earlier in the year. Third quarter non-GAAP marketing spend was $41 million, up 30% year-over-year, reflecting lower enrollment volumes that were offset by higher marketing costs per approved member. Third quarter non-GAAP G&A expense declined 4%, and non-GAAP tech and content expense grew 11% compared to Q3 of 2020, a significant deceleration in our fixed cost growth compared to the first half of the year. These non-GAAP operating expenses exclude the impact of stock-based compensation. Third quarter operating cash flow was negative $71 million, compared to $1.4 million in the year-ago quarter, reflecting wider net loss as well as working capital dynamics this quarter, including an increase of approximately $16.7 million in the use of cash, mostly related to prepaid expenses to fund certain AEP marketing campaigns earlier than last year, $19.8 million additional use of cash related to the timing of accounts payable, and a $17.2 million decline in the source of cash from deferred revenue as carriers moved away from pre-funding fourth-quarter advertising. Turning to our balance sheet, as of September 30, we had $227.7 million in cash, cash equivalents, and marketable securities. Our balance sheet also reflects significant commissions receivable, totaling $757.4 million that is comprised of $194.2 million that we expect to collect over the next 12 months, and $563.2 million in long-term commissions receivable. Within our earnings slide, I want to highlight a few pages. On slide 10, you will see that cash collections on our MA cohorts enrolled in 2019 and earlier have now exceeded upfront acquisition costs and are cash positive. This is consistent with our expectations for payback of acquisition costs in approximately two years for the MA product. These cohorts will continue to generate recurring commission streams as we collect renewal payments, with some members remaining on our platform for over 10 years based on historical observations. On Slide 11, we updated our analysis of trailing 12-month cash collections at our Medicare segment. Our Medicare cash collections grew 37% year-over-year outpacing our estimated membership growth. In Q3, trailing 12-month cash collections per Medicare member of $465 grew 11% year-over-year, reflecting the favorable Medicare Advantage plan commission rate trend and growing contribution from new to MA members. Cash flow will be a key focus for this management team. As Fran and I are taking a close look at our operations and work on the short-term and longer-term business plan and forecast, we will be emphasizing strategic and operational decisions that can accelerate our path to becoming cash flow positive. Turning to guidance. Given that our call center conversion rates are currently below our forecast, we feel that it is prudent to revise our 2021 annual guidance ranges despite the fact that the most important weeks of the AEP are still ahead of us. I will now provide the highlights of our revised guidance. Please consult our earnings press release for the complete 2021 guidance information. Total revenue is now expected to be in the range of $535 million to $575 million compared to the prior range of $660 million to $700 million. Revenue from the Medicare segment is expected to be in the range of $471 million to $509 million compared to the prior range of $601 million to $639 million. Revenue from the Individual, Family and Small Business segment is expected to be in the range of $64 million to $66 million compared to the prior range of $59 million to $61 million. We now expect GAAP net loss to be in the range of $63 million to $43 million compared to the prior range of GAAP net income of $42 million to $57 million. Adjusted EBITDA is now expected to be in the range of negative $20 million to break-even compared to the prior range of $110 million to $125 million. Looking forward, we are taking proactive steps to enhance the consumer experience and enrollment quality on our platform. And there are many opportunities for eHealth ahead. We remain committed to our mission of serving as a consumer advocate in the health insurance market and continue to believe that our tech-enabled customer-centric approach positions us well for growth and shareholder value creation. Fran and I are energized to be here to lead the Company into its next chapter. With that, I'd like to now open up the call for questions. Operator, please open the line.

Our first question comes from George Sutton with Craig-Hallum.

First, welcome to Fran and Christine. Challenging day to start, but I wanted to walk through the logic of the fact that the top of the funnel actually increased pretty significantly so clearly your marketing is working, bringing people in. It was all the challenges below that. I wondered if you could just bifurcate the call center technology issue, the impact of the enrollment verification step; just trying to better understand what was missing in that equation.

Good morning, George. Thank you for your welcome and for your question. I'll start answering that, and Tim is here with me to add to my response. You've asked a significant question, and it's both straightforward and complicated. You're correct that we have strong volume at the top of the funnel, something we can manage, but also something we can't entirely control. Our lead generation efforts, such as direct mail and TV streaming, create demand and ring the phones. However, we need the capacity to respond to those calls through our sales agents. The combination of these factors allows us to convert sales opportunities into actual sales. The cloud technology we implemented earlier this year is functioning well. We have not encountered any major issues or glitches. However, the quality enrollment activities we started in the second quarter, continuing into the third quarter, have posed challenges in confirming that beneficiaries are in their desired plans. This has lengthened talk times, which affects our capacity to handle all incoming calls at any given hour. Additionally, we have a newly hired workforce, which means there's a learning curve that we are managing, but I feel it's improving daily. I believe our ability to create demand through marketing and carrier relationships is evident, and we are capable of recruiting, retaining, and training agents. The changes that have taken place in a short time have put pressure on our results, contributing to the shortfall. It's important to note that we are ahead of the same period last year. We haven't failed compared to last year at this time for the AEP; our Medicare enrollments are nearly 50% higher than the same period last year, although we are below our forecast. Our forecast was ambitious, which has led us to revise our guidance. I’ve covered a lot, so I'll let Tim add any necessary details.

Sure. I agree with what you said, Fran. I think that's a reasonable evaluation. On the demand-generation front, one of the benefits of the new platform is that it enables us to control the source of demand in real-time. While there are some demand channels facing challenges, we can manage these issues much more flexibly than before, and we're actively doing that through Q3 and into the AEP. The main factor driving our performance was the quality initiatives. This included additional training for agents, taking them off the phones to reinforce key messages, ensuring greater adherence to our script, and applying that focus during sales. Additionally, we implemented a verification process where another agent reviews the call at the end to confirm that the beneficiary fully understands their plan. These changes were the primary reason behind the improvement in performance.

If I could just ask one more thing. Fran, you coming with your history from Aetna, understanding the push-pull of third-party relationships versus in-house distribution. I wondered if you could just give us a little picture into what you see uniquely as the opportunity here. And I'm sort of designing this for folks who we're taking a longer-term view on this opportunity. Thanks.

Thank you for your question, George. I've enjoyed my time with the carrier side, and the experience has already been interesting. In my first week, I reached out to some of my carrier relationships, including a recent call on Friday with one of our partners. These relationships are crucial, and I believe they are in good shape, with the goal of making them even better. This means ensuring we consistently meet their expectations and needs while working closely together. It's an important partnership, as they rely on organizations like eHealth to fulfill their requirements. Most major players are developing omnichannel distribution capabilities, but they seek flexibility to avoid the fixed costs associated with distribution like ours and that of our competitors. They also want to ensure compliance with CMS requirements regarding past challenges. Our focus is to navigate the compliance landscape, and I am confident we will succeed.

Thank you. Our next question comes from Jailendra Singh with Credit Suisse.

Thank you and good morning to everyone. So following up on these quality initiatives in factoring the conversion rate, extra training required, and brokers spending more time with the seniors. I'm trying to understand how much of this headwind is just temporary versus permanent? Are there some changes in the guideline from CMS or from insurers that these levels of conversion rates are here to stay? Just help us understand that.

Happy to do that. Good morning. It's Fran, and I'll ask Tim to add to this. I believe that the current situation is largely temporary. I expect that conversion rates will improve and we will close the existing gap. Organizations focused on ongoing quality improvement need to surpass previous benchmarks. My expectation is that we will continuously get better and that our conversion rates will keep improving. I won't commit to a specific timeline, but I want to emphasize that this relies on effective training and hiring the right people initially, as working with seniors requires a different kind of relationship. Some individuals excel in this area due to their listening skills and empathetic approach, while others do not. Additionally, our senior population is becoming increasingly diverse culturally. Therefore, as we build our future distribution, it's essential that our sales agents reflect the diversity of Medicare-eligible individuals in terms of cultural and language needs, and that we do this exceptionally well. I believe this will also enhance our conversion rates. Now, let me turn it over to Tim.

Sure. As Fran mentioned, we made significant changes within our organization, which initially caused a notable decline in conversion rates. However, we have since observed improvements. We are steadily making progress as individuals adapt to the new process and feel more comfortable with our sales approach. New agents are also becoming more familiar and gaining experience. This positive trend gives us confidence that these challenges are temporary and that we can enhance our performance. Additionally, we have been collaborating closely with our carrier partners and their call center operations. Some of them have undergone similar transformations and experienced improved conversion rates over time along with healthier customer relationships, although adjusting sales methods can be challenging. We will continue to look for opportunities to drive improvement through extra training and technological enhancements, which will help guide our efforts in 2022 and beyond.

Yes. Thanks. That makes sense. Quick follow-up around the comment Fran, you made about expanding eHealth's business beyond Medicare commission business. I was wondering if you could flush out on the areas you see most opportunities. Some of your peers have talked about publishing health, medication management, various soft dollar arrangements. eHealth has been historically less focused on those items, just wondering if we should expect any near-term changes there.

Well, I'm going to keep you in suspense a little longer. What I believe is necessary is to look for opportunities where eHealth can become a trusted source of information that is relevant for, not just the senior population, but consumers in general for healthcare. Where there's an opportunity for them to visit our website frequently and therein lies that loyalty brand opportunity. We have, I think, a great website and great online capabilities that I view as an engine that has tremendous horsepower that's not being utilized today as effectively as it could and should. And so my initial observations are how we put more of those horses to work. More to come on that.

Thank you. Our next question comes from Elizabeth Anderson with Evercore.

Hi, everyone. Thank you for the question this morning. I was hoping you could provide more insight into the variable Medicare marketing costs for the quarter. Clearly, those costs have increased, and it seems that the change in enrollment wasn't the primary factor driving this. I know you mentioned that carriers are shifting away from pre-funding some of the advertising expenses. Could you explain the components involved?

Good morning, Elizabeth. It's Fran. I'll let Tim take that. Before I pass it to Tim, I want to mention that one of my first observations when I got here was how impressed I was with the way our strategy was structured to allow for daily course corrections. We have flexibility in deploying our lead generation budget, so if something isn't working as planned, we can quickly stop it and reallocate funds or decide not to spend at all. Now, I'll let Tim elaborate on that.

Sure. Thanks, Fran. When it comes to Q3 marketing expense, it's important to remember that we do a lot of experimentation in Q3, so there are different things that we test out in advance of the AEP to evaluate how effective they'll be to inform what our AEP marketing spends will be by channel. And so there's a little bit of that that drives up costs in the quarter. But on a unit basis, the biggest driver of the cost is the conversion rate that we were seeing in the sales center. So for every dollar spent how many enrollments do we drive on the marketing side is in part driven by how effective the agents are that take the calls. So on a unit basis, it was driven more significantly by the conversion rates we were seeing in the call center. A little bit of it is a shift more towards online, where we have higher marketing costs, and that will probably continue to be something that we'll see going forward. And then a little bit was also that experimentation that we do in a quarter.

That's super helpful. I was wondering, are you going to just share any commentary about the relative LTVs in the quarter, or perhaps just more generally about the different channels whether assisted online, unassisted, telephonic and any there for the remainder of the year.

It's Fran; I'll let Christine make some comments on the relative LTVs, if we can get to your question. Christine?

Thank you, Fran. Thank you, Elizabeth, for the question. Regarding our Medicare Lifetime Value, in the third quarter, we observed an increase mainly due to higher commission rates and a rise in enrollments from new Medicare Advantage members. From a historical standpoint, we've seen this increase and anticipate it will continue. Does that answer your question, Elizabeth?

Actually I left the queue. Our next question comes from Steven Halper from Barclays.

Hi, thanks. Good morning, everybody. Just a couple of questions here. First, regarding the new telesales reps. You just kind of touched on this a little bit, but I'm curious if there's any metrics you can share. What eHealth's expectations were for placements per telephonic rep during the AEP? Why that metric is trending out now. Either about raw numbers or maybe just percent there. We could probably do the math just given the day it has been provided, but maybe you could just provide some color and save us some time if you got any additional numeric color around that. And then I have a follow-up. After the answer to that question. Thanks.

Good morning, Steven. It's Fran and Tim is going to give you a quick answer on that one.

Yes, we do not disclose the expected enrollments per representative by cohort or in general. However, we closely monitor their productivity based on the number of calls they take, how well they manage their time, and their conversion rates. We are evaluating how the newer classes compare to more experienced agents, and I'm happy to report that our new agents are progressing as anticipated compared to the seasoned agents. The broader challenge we are experiencing is that quality initiatives have generally affected performance across the board. Nonetheless, the development of our new agents is proceeding as we expected.

Okay. One quick follow-up here just on the line of questioning regarding how much of this pressure might be temporary versus something of a longer-term. Just to throw this question out there. Is there any dynamic where either the training or the current performance of the new reps is potentially less dynamic that's happening in a work-from-home environment or is this the majority of the reps all in one call center together where there's some synergy where they're learning from each other, etc. because we've seen some of your competitors leverage that dynamic. I'm curious if you have any color just on your setup around all that.

Steven, it's Fran. All of our sales agents are working from home, so we have not yet returned to an onsite work environment across the country. However, I can assure you that we have strong confidence in our ability to measure productivity metrics for each of our sales agents and most of our workforce. This assurance comes from both quantitative and qualitative data, as all calls are recorded. This allows us to ascertain whether a call was handled correctly. If an agent handles a call well, we can recognize their professionalism and grace, and if a call is not handled properly, we can provide immediate training support. Therefore, not being back in an onsite call center environment has not posed any challenges for us.

Our next question comes from Frank Morgan with RBC Capital Markets.

Good morning. I'd like to revisit your comments regarding expectations for changes, particularly about tighter alignment with your carrier partners. Could you elaborate on that? I'm also interested in understanding the relationship with the carriers. Are they feeling the same frustrations that CMS seems to be showing with their recent marketing directives? Thank you.

Good morning, Frank, and thank you for your question. The relationship is indeed aligned with how they're performing compared to the CTMs, acknowledging that these organizations distribute across multiple channels. CTMs emerge from various sources, not just one. It’s challenging to pinpoint what triggers CMS’s concerns, as they aren't solely driven by a single channel. It's evident that the pandemic has shifted sales methods, and the process has remained unchanged for about 15 years. It’s not flawless and doesn’t involve a formal review process; it simply allows beneficiaries to express their complaints without assessing their validity. The seriousness of complaints can vary significantly; for instance, a complaint about being misled is much more severe than a complaint regarding the agent’s tone, which is quite subjective. Serious allegations may lead to investigations and should be treated with the utmost seriousness. There’s no straightforward method for handling these complaints, as every CTM is treated equally regardless of its nature, and there’s no formal due process involved. This aspect is crucial in maintaining the relationship, alongside sales volume and the ability to meet expected sales activity. Relationships typically flourish when sales volume surpasses expectations while CTMs fall short, creating a beneficial dynamic. I'm currently in the process of engaging with all our carrier partners to establish a clear understanding. However, I cannot provide a detailed assessment of our relationships based solely on first-hand experience, as I’m still gathering insights directly from them. This is a critical process, as these relationships are dynamic and evolve throughout the year and over time. I want to ensure that eHealth aligns effectively with the needs of our carrier partners.

Our next question comes from Daniel Grosslight with Citi.

Thank you for taking my question. I'll continue on the topic of increased CMS scrutiny. Medicare Advantage digitizing declined by 15 million this year, with almost half of that amount shifting from Q3 to Q4. I'm wondering how much of the decline in advertising is a result of the increased CMS scrutiny on Medicare advertising. Do you expect another drop in totals for this Annual Enrollment Period? Additionally, it seems like your lead generation was quite strong, but did you experience any negative impact on lead generation because of this increased scrutiny from CMS? Thank you.

Good morning, Daniel, it's Fran. I'll begin and then ask Tim to add to it. I want to clarify that CMS has been very reasonable regarding the advertising situation. There has been a change, but their management of it over the past weeks has been sensible. In my opinion, it hasn't affected the AEP results. It has been somewhat disruptive since the industry had to submit additional filings with our carrier partners, which is putting pressure on them. However, I don't think it impacted the AEP, as it has been more of a compliance issue rather than affecting the overall process. That could change in the future, but for the current AEP, it hasn't had any effect. This is a topic for another discussion regarding the long-term viability of the current process. I want to emphasize that it hasn't influenced our performance. For eHealth, we adjust based on our capacity. If we lack capacity, meaning if all agents aren't available due to talk times and attendance, we reduce the amount of mail we send out. It's crucial that we don't send out more mail than we are able to handle in terms of call response. Let me pause there and invite Tim to speak as well.

Yeah, no, I think that's exactly right. It has not created any change in behavior on our part or on the part of anyone in the industry so far. There was an administrative headache for our compliance teams to provide all of that information to CMS as rapidly as they needed to, but in terms of what's actually out there, nothing has changed and the changes on our side are driven by individual channel performance, moving money to where it performs best and out of where it performs worse, and then ceasing to acquire calls when our agents are occupied. And so those are the bigger drivers for us.

Got it. And then just in terms of Medicare advertising revenue this AEP, should we expect a decline versus last year?

You mean the sponsorship revenue?

Yeah. The advertising revenue.

Yes, so we would expect a year-over-year decline in our advertising revenue for the year, from prior year.

What's driving the decline in advertising revenue?

As we talked about with all the quality initiatives and that becoming really increasingly more important to the carriers and certainly to us. The carriers are rethinking their sponsorship program, and as such are readjusting the advertising revenue. So we've certainly seen a decline in the third quarter. We anticipate a decline in the fourth quarter as well, until all of those arrangements are finalized with the carriers next year.

Thank you. Our next question comes from Tobey Sommer with Truist Securities.

Thanks. I wanted to ask a long-term question regarding the growth of Medicare Advantage, which has been increasing at a high single-digit to 10% rate, with commissions at 4% or even 5% in some years. Do you think this is a reasonable long-term growth rate that can be sustained? Additionally, do you believe your quality initiatives might hinder the Company’s ability to grow at that rate or higher? Thank you.

Good morning Tobey, it's Fran. Let me begin and I'll ask our team to add to my comments. Ideally, we would continue to grow at a very accelerated rate. However, what is truly needed is a more balanced approach within our portfolio. I believe that eHealth has experienced significant growth, often at the cost of other business areas. My early observations suggest that we need to achieve a better balance. We have Individual and Family Plans, ancillary lines, and potentially some new product lines in the future, which I can't specify at this moment. However, I want to create opportunities for other products that align with our portfolio and are suitable for online sales, which yield our best economics, highest customer lifetime values, and strongest cash flows. Therefore, it's not just about growing for growth's sake; it's about growing intentionally to achieve the best financial results and providing maximum value to our shareholders. That is my main focus.

Okay. What I am trying to understand is whether the quality initiatives and the ongoing overhaul in our market approach will require us to grow at a slower pace than the market for a certain period of time. If that is the case, how long might that take?

Well, I'm not sure it's going to be lower or about the same. It depends on what we can achieve from our other lines of business. Again, we're early in our process; one week. I've got the team doing some simulations right now. I wish I had a little more time before our first earnings call, I could be a little more specific in terms of answering your question, but what I can tell you is that the team's actually doing some simulations right now as we are working on our 2022 plans. Because I do want to have a very deliberate strategy to take to our Board and with very specific recommendations on it, some course corrections that I think would be in our Company's and our shareholders' best interest.

Thank you. Our next question comes from Greg Peters with Raymond James.

Hi, good morning. This is Alex Bolton calling in for Greg Peters. I’m looking at Page 12 of your presentation. I noticed the member turnover is possibly higher than we anticipated. While the approved members are lower, could you discuss your expectations for turnover and what they will be moving forward?

Good morning, Alex. Fran here. I’m going to ask Jonathan, who is also on the call, if he would like to address this question.

Yes, I can address that, Fran. Regarding turnover, Q3 aligned closely with our expectations. Most of the member turnover typically occurs in Q1, which follows the AEP and transitions into the OEP period. As a result, there isn't much turnover in Q3 or Q4. We anticipate a similar trend, with a small decline in Q3 and a slight decrease in Q4 as well.

The next question comes from George Hill with Deutsche Bank.

Yes. Good morning, guys. Thanks for taking the question, and Fran and Christine, welcome to the call. I guess this first one's for Fran and Christine. On conversion, we've talked a lot about your internal initiatives, but I guess can we talk about some of the externalities, particularly, I guess like we have to call it the in CMS's response. And a lot of the chatter around what benefits could be added to or taken away from the Medicare Advantage benefit design? I guess that Tim, I would ask, do you feel like you've seen the externalities impact conversion? And then my follow-up question would be, we've talked a little bit about churn in the last question, but we haven't had an update on the retention initiatives. I know there's been a lot of moving pieces over the last 3 to 4 months, but kind of any update on the retention initiatives will be great too. Thank you.

Good morning and thank you for the excellent questions. Regarding the benefits, having previously worked on the carrier side, I would say that the advantages of Medicare Advantage have likely peaked. They are extremely generous, which I believe is influencing some of the switching rates. We will see how that develops throughout the rest of the Annual Enrollment Period. Plans have received a substantial rate increase from CMS as the Trump administration was concluding. For instance, a $0 premium plan really contributes to stability. Typically, low-end plans need to adjust their designs to maintain that $0 premium, which is crucial for them. This leads to disruption and volatility, as seniors tend to dislike changes. I can say this with authority since I became a senior just 30 days ago. I have never seen Medicare Advantage plans as generous, which creates a significant gap between MAPD and original Medicare. This presents an incredible value proposition, making it a more attractive opportunity for those on original Medicare to choose MAPD or for those with original Medicare and MedSup to switch over. I believe the emphasis is more on these conversions rather than switching. Before I take the next question, let me turn it over to Tim.

It seemed like part of your question was about how the CMS is influencing behavior. As I mentioned earlier, it has created some administrative challenges in terms of uploading materials, but it hasn't significantly changed any behavior so far. We are fully committed to these quality initiatives because we believe it's crucial to be the highest quality broker in this space. We expect CMS to remain involved, which will be an important differentiator, and anticipate that some will not be able to meet their standards moving forward. Please go ahead with your next question.

Tim, I was considering the discussions around including dental and vision in Medicare benefits. Do you think this could slow down the enrollment process for those wanting to sign up for Medicare Advantage? Will there be any changes to the standard benefits? That's how I was approaching the question.

Yeah, it’s Fran again; I think that was in part of the president's larger piece of legislation that still hasn't been passed yet.

I appreciate your ability to convert. I'm sorry.

I think when the proposals indicated that people would have to pay for it, interest diminished. This became part of the discussion, and when the President spoke at a town hall meeting in Baltimore, he mentioned something to the effect that dental coverage would not be included in original Medicare. This was right at the start of the Annual Enrollment Period, so it hasn't significantly impacted us. Regarding your second question, I'll let Tim address it. However, I can share that one of the major changes was the creation of a dedicated team focused solely on retention within eHealth. I might have taken some of Tim's points, so I’ll allow him to discuss those initiatives in detail.

Yes, I believe the effects of the changes we've been implementing for over a year and a half are still unfolding. Our focus and commitment remain strong, as mentioned by Fran. We've established a membership team that consolidates various functions to enhance our retention efforts. The most exciting retention initiative from the third quarter was the quality improvements. We've ensured our agents effectively follow the scripts and that every enrollment undergoes a verification process. While these efforts have been challenging for conversion rates and have initially lowered those rates, early data and feedback from carriers indicate that the enrollments are of higher quality. Our post-sale initiatives continue, and the internal technology enhancements for better tracking are gaining momentum with the addition of the new team. However, the most significant impact came from the changes we implemented at the beginning of the quarter.

Okay. That's helpful. Thanks, Tim. And I'm not showing any further questions at this time. I'd like to turn the call back to management for any closing remarks.

I want to thank everyone for joining us this morning and on behalf of Christine and the management team, we look forward to working together over the next year. Thank you very much.

Ladies and gentlemen, that concludes today's presentation. You may now disconnect and have a wonderful day.