Good afternoon, everyone, and welcome to the eHealth Inc. conference call to discuss the company's third quarter 2025 financial results. At this time, all participants have been placed in listen-only mode. The floor will open for questions following the prepared mark. I will now turn the floor over to Mr. Eli Newbred Mintz, Senior Investor Relations Manager. Please go ahead.

Good afternoon, and thank you all for joining us. On the call today, Derek Duke, eHealth's Chief Executive Officer, and John Dolan, Chief Financial Officer, will discuss our third quarter 2025 financial results. Following these prepared remarks, we will open 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 10k and our subsequent filings with the sec we will also be discussing certain non-gap financial measures on this call management's definitions of these non-gap 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 Derek Duke.

Thank you, Eli, and welcome everyone. It's been six weeks since I stepped into the CEO role, and I couldn't be more excited to be part of this organization. With years of experience in health insurance distribution, I've long admired eHealth, especially the technological innovation it has brought and continues to bring to the industry. I joined because I see a massive opportunity in our core Medicare Advantage and adjacent markets. eHealth is uniquely positioned to capture this opportunity through our strong carrier relationships, trusted brand, high-performing sales organization, and differentiated omni-channel enrollment platform. Before diving into our performance, I want to take a moment to thank Fran Soysman for his leadership through eHealth's business transformation and for assembling a strong, mission-driven team. Over the past six weeks, I've spent time meeting employees across all levels and functions. What I've found is a deeply customer-centric culture and a team that's passionate about helping beneficiaries navigate their healthcare choices. Right now, my top priority is executing on AEP. This is a critical period for our business, and I believe we've entered well-prepared and better positioned than other distribution organizations to succeed in this dynamic environment. After AEP, I'll turn my attention to reviewing our longer-term strategy and refreshing our three-year financial targets. I also remain committed to enhancing our capital structure. Last month, we extended the maturity of our term loan with Blue Torch to January of 2027, with other key items of the agreement remaining unchanged. This provides us with additional financial flexibility as we continue to work towards achieving greater liquidity by leveraging our receivable asset and addressing the convertible preferred instrument. Let me now pivot to where my focus is today, AEP execution. This year's AEP is once again marked by disruption. Carriers have made broad plan changes, focusing growth on their best-performing products and geographies while pulling back elsewhere. Healthcare is local, and the impact of these changes varies significantly by region, carrier, and plan type. In this environment, e-health is playing a critical role. Our Medicare matchmaker brand and carrier agnostic model continue to resonate strongly with consumers. As we enter the second year of plan disruption, seniors note that they can come to eHealth for unbiased advice and continuity. Carriers continue to view eHealth as a valuable partner in executing their targeted growth strategies. We maintain broad inventory across large national carriers, blue plans, and regional insurers, allowing us to offer consumers an attractive variety of coverage options. Just as carriers have taken varied approaches to plan design this year, we've seen similar diversity in how they've adjusted compensation structures across distribution channels. Overall, we're seeing a solid year-over-year increase in our commission rates, underscoring the strength of our relationships and the confidence carriers place in our model. Through the first three weeks of AEP, our Medicare performance is tracking in line with internal expectations, supported by strong consumer demand on our platform. We are seeing early signs of a more favorable competitive environment as well as increased efficiency within our branded marketing channels. The most critical weeks of the enrollment period are still ahead of us. As we progress through AEP, we're prepared to be opportunistic, leaning in where we see the potential to drive incremental growth at attractive LTV to CAC ratios, with flexibility afforded to us by online and hybrid fulfillment that can be more easily flexed compared to traditional call centers and feet-on-the-street models. Now, let's take a step back and look at our performance in Q3. In the third quarter, total revenue was roughly in line with internal expectations. Medicare Advantage volume came in below our expectations due to a more pronounced impact from new dual eligible enrollment rules compared to what we saw in Q2. We responded by pulling back marketing spin, preserving budget for AEP, where it can be deployed at significantly higher ROI. At the same time, we continued to recognize positive net adjustment or tail revenue from our existing book, driven primarily by our Medicare Advantage cohorts. Third quarter gap net loss and adjusted EBITDA exceeded internal expectations, driven by tail revenue, which has a positive impact on profitability. Disciplined cost management was also a key contributor to our Q3 profitability performance. During the quarter, we finalized our preparations for AEP, and I'm encouraged by the momentum we built heading into this critical period. We entered the season with a more tenured and experienced advisor force than last year, a direct result of our continued investment and long-term career paths for top performers. Our consumer brand continues to gain strength. Direct branded channels are expected to drive the majority of application volume this AEP with a higher contribution than last year. These channels are not only generating better lead quality, but also driving stronger retention, evidence that our message is resonating. Technology remains a cornerstone of our strategy. Our digital team is focused on delivering a seamless, omni-channel journey, whether a consumer starts online or with a licensed advisor. New features like click-to-call from Advisor Chat are helping bridge these environments, allowing for fluid transitions and more personalized support. Our AI screener, originally piloted in Q2, is now deployed at scale. We expect this powerful tool to enable us to unlock meaningful operational efficiencies and improve consumer experience. And while acquisition is essential, retention is equally critical, especially in a disruptive AEP. Our goal is to preserve the continuity of the member relationship, whether that means advising someone to stay on their current plan or guiding them to new coverage within our ecosystem. We've proactively reached out to members most impacted by plan changes, initiating advisor conversations early in the season. We are also equipping members with a robust suite of self-service tools to help them evaluate their options and make informed decisions with confidence our tool match monitor delivers a personalized automated shopping experience for our members at the start of the aep with a side-by-side comparison of their current plan to the top plan recommended for them by our proprietary multi-factor algorithm While AEP is our primary focus, I want to briefly touch on our diversification efforts. We continue to see solid performance in products that can be sold year-round and have favorable cash flow profile, including hospital indemnity plans, or HIP, and MedSup. Third quarter HIP enrollments more than doubled, and MedSup agency enrollments grew 10% year-over-year. Six weeks into my tenure, I've gained a deep appreciation for the strength of this organization, its people, its platform, and its purpose. We are executing in a highly dynamic environment, and I believe eHealth is uniquely positioned to lead through this disruption. Our value proposition remains clear and differentiated. We offer among the broadest selection of plans in the private sector, enabling consumers to find the right coverage even as the market shifts. Our growing brand identity is driving higher engagement, more efficient member acquisition, and better retention. Our online and AI capabilities allow us to flex capacity and scale intelligently, supporting both consumer experience and enrollment margins. And finally, our carrier value proposition is differentiated through our ability to tailor distribution strategies in support of carrier geographic and product focus. We are raising our 2025 gap net income and adjusted EBITDA guidance ranges, reflecting our performance through the end of Q3. John will provide updated guidance in his prepared remarks. I look forward to engaging with many of you after the call. Thank you for your continued support, and now I will turn the call over to our CFO, John Dolan.

Thank you, Derek, and good afternoon, everyone. Third quarter results reflect a typical seasonal dip in Medicare enrollment volume, further intensified by this year's dual eligible regulatory changes, accompanied by a corresponding reduction in our Q3 marketing spend. At the same time, we made a deliberate investment in scaling and training our licensed advisor force, an annual initiative that prepares our organization to meet consumer demand during AEP. Through the early weeks of the annual enrollment period, consumer demand on the eHealth platform has been strong, and the effectiveness of our marketing spend is up, not only sequentially, but also year-over-year. These early indicators reinforce our confidence in the strategic decisions we made this year to prepare us for the elevated consumer activity. As I review our results, please note that all comparisons are year-over-year unless otherwise specified. Total revenue for the third quarter was $53.9 million, down 8%. Gap net loss improved to $31.7 million from $42.5 million, and adjusted EBITDA was a loss of $34 million, also an improvement from a loss of $34.8 million last year. Third quarter Medicare segment revenue was $49.9 million compared to $53.2 million, reflecting lower enrollment volume, which was partially offset by $12.1 million in positive net adjustment revenue or tail revenue. This compares to $1.1 million in Medicare segment tail revenue last year. Q3 segment loss narrowed significantly to $1.2 million compared to segment loss of $5.6 million. Total Medicare applications across our fulfillment models declined 26%. As Derek mentioned earlier, enrollment volume was below expectations, with the removal of the quarterly dual eligible enrollment period having a larger impact on our results in Q3 versus Q2. We believe that many dual eligible consumers who could transact outside of the main enrollment periods likely did so earlier in the year. MA-related marketing spend declined to 25%, roughly in line with volume. Customer care enrollment expense was down 6%. While we used flexible staffing arrangements like voluntary time off to accommodate lower inbound call volume, we also ramped new advisor cohorts. This process includes onboarding, licensing, and training in preparation for AEP. These dynamics are reflected in our Q3 Medicare unit economics. Member retention remains a cornerstone of our strategy. Last year, we introduced initiatives aimed at further strengthening member engagement in protecting our book of business impacted by Medicare plan changes. These initiatives delivered strong results as evidenced by the improved retention data we are seeing from the MA cohort we enrolled last AEP compared to the same cohort work from 2023. This year, we're building on that success. During the third quarter, we expanded our dedicated customer service and retention team. We're applying key learnings from last year to optimize our retention initiatives, focusing on what delivered the highest ROI and resonated most with our members. We recognized another quarter of positive tail revenue, bringing our year-to-date cumulative positive tail revenue across all segments to $40.5 million. Medicare Advantage LTV declined slightly by 1.5%. Their quarter employer and individual segment revenue was $3.9 million with segment gross profit of $1 million. This compares to $5.2 million in revenue and $1.8 million in gross profit last year. The year-over-year decline was due to shifts in market dynamics and our marketing budget allocations. We limited marketing and sales spend in the individual ACA market amid declining eligibility and rising premiums that were impacted by the one big, beautiful bill. In this segment, we are focused on building ICRA capabilities that advance eHealth's market-leading technology platform to support diversification. Combined technology and content and general and administrative costs grew 3.6%. Beneath that, technology and content expense decreased to 4%, while general administrative expenses increased 8%, primarily due to compensation and benefits tied to leadership transitions. Total operating expenses declined 6%, driven by reductions in variable marketing spend. Cost management remains a key focus. We're proactively adjusting variable spend to drive growth at attractive unit acquisition costs, while pulling back from areas with lower return on investment. We'll continue evaluating fixed costs as a source of leverage. Operating cash flow was negative $25.3 million, an improvement from negative $29.3 million last year. We ended the quarter with $75.3 million in cash, cash equivalents, and short-term marketable securities, compared to $105.2 million last year. Our commission receivable balance as of September 30th was 907.7 million we continue to work towards leveraging our sizable receivable asset to increase access to capital in support of our strategic initiatives including developing and integrating ai through our distribution platform business diversification and other high roi opportunities the final tenant of our capital structure enhancement is addressing the convertible preferred instrument. As we stand today, we believe we have sufficient liquidity to execute on our operational plan and continue to enhance and scale our Medicare business in in-flight diversification areas. We are raising our net income and adjusted EBITDA guidance ranges to reflect execution through the end of Q3. AEP has started strongly, but it's important to remember the final weeks have a significant impact on our fourth quarter performance. Our new guidance ranges are as follows. We continue to expect total revenue for 2025 to be in the range of 525 to 565 million. Gap net income for 2025 is now expected to be in the range of 9 to 30 million compared to our prior guidance range of 5 to 26 million. Adjusted EBITDA for 2025 is now expected to be in the range of 60 to 80 million compared to our prior guidance range of 55 to 75 million. We will continue to expect operating cash flow to be in the range of negative $25 to positive $10 million. These ranges include estimated positive net adjustment revenue in the range of $40 to $43 million compared to the prior range of $29 to $32 million. Operationally and strategically, we believe we are well positioned to take share and continue building lasting brand and consumer relationships to this AEP and beyond. With that, I'll turn the call over for questions.

Operator, you can open the line for Q&A now, please.

My apologies. Ladies and gentlemen, we'll now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. And your first question comes from George Sudden from Craig Hallam. please go ahead.

Thank you. I wondered if you could talk about the disruption that you speak of relative to AEP. What that means to us is more shoppers. You've got more folks turning 65 than ever, and you've got all the plan changes and terminations that are creating the need for movement or shopping. Are we reading that disruption as being favorable for you correctly?

Yeah, George, it's great to hear from you and speak to you again. I think I would start by just saying that, you know, from a disruption perspective, we're seeing similar levels of demand year over year that's tied to that carrier disruption. And the way I would encourage you to think about that is that similar levels, different reasons, and different carriers from the prior year. So sometimes we talk about that internally, that it's sort of one event that is occurring over a multi-year period as carriers address their own issues related to margin and portfolio productivity. Early stage, again, you know, in AEP, so we want to make sure we emphasize that the last few weeks are the important time period of the AEP enrollment period. But so far, our results are in line with our expectations, and we're happy with the results that we're seeing. So, again, similar levels of demand that we saw year over year and a high number of shoppers on our platform.

You mentioned a plan to prepare to be opportunistic as you see the evolution of the AEP period. Can you talk about what that might look like?

Yeah, I'll start and maybe I'll ask Michelle to add. George, we're trying to be really thoughtful about which marketing channels that we invest into based on the economics of those channels. As you recall, I think we mentioned in our last quarterly call that we're investing more in our branded channels that have better economics, higher LTV to CAC ratios for us. In the prepared remarks, we talked about the fact that we reduced spend in Q3 in order to be ready to increase spend in Q4 when and where we saw those opportunities. Michelle, what would you add?

Sure. Thank you. I think you captured it really well. but it is exactly that. It is regularly looking at performance across all channels and how to continuously optimize to improve. As you well know, our North Star is always LTV to cap. And we look at that continuously across our mix. What is performing best? What do you need to dial back? What do you need to lean into? As we've talked about, we are continuing to grow branded channels as part of our mix and are really pleased with how they are continuing to perform. And as part of that, we actually look at the branded channels across several channels because they work cohesively together. For example, when TV is on, we also see a great list in search and our search traffic is up substantially year over year as a result. So there's also sort of that holistic view that we give in addition.

Gotcha. Lastly, you have really focused the discussion around stronger retention. That was not necessarily historically a knee health strength. Can you talk about sort of what you're seeing there? Is this really driven by more the brand message, meaning someone leaves or has a plan changed and comes back to you to solve their needs?

That's a great question, George. Let me start maybe with a bit of a philosophical statement on my part. You know, as I've started reacquainting myself and reestablishing long relationships I've had in this industry with carriers, as well as building new ones, part of the conversation I'm having with our carrier partners is around, you know, my expectation of what type of distribution company eHealth is going to be going forward. Sometimes I hear from carriers that we are, you know, best in class for telebrokers, whether it's retention, quality, which I appreciate the compliment. But my response to them so far has been, I don't want to just be the best telebroker. I want to be the best broker. And I believe that eHealth has all of the capabilities and competencies to allow us to do that, regardless of who we compete with on the other side, whether that's another telebroker or whether that's a feet on the street brokerage or an FMO. And so often we hear in this industry that FMOs have better retention because of relationships. And again, my perspective is we have the ability, especially because of the decision the company made a few years ago to begin investing in our brand to replicate those types of relationships. And so it's on the strength of the brand investment that the company's made that we believe we're seeing incremental growth and retention. Again, in John's prepared remarks, he talked about the improved retention on our most recent cohort during AEP last year and our continued investment in our retention and loyalty team. You know, one metric to give you related to that is that we increased our outbound calls this year by approximately 20 percent into our membership base to ensure that they were prepared for the disruption that we believed they were going to experience during this open enrollment period. So, based on all of those things, we believe we've yet to see the full benefit of increased retention because of the investments that we've made. And personally, I'm excited to see what we can do around, you know, not having a transactional relationship with our membership, but having a relationship that leads to transactions, if that makes sense. Michelle or John, would you guys add anything?

I can be good.

I think you covered it. All right. Super, guys. Good luck with AEP.

Thank you. And your next question comes from Jonathan Young from UBS. Please go ahead.

Thanks for taking the question. I guess you mentioned that you're seeing similar levels of demand. I assume that's similar to last year. But the carriers in CMS have pointed to flat to down type of growth expectations for next year, and some carriers have removed some brokers from their network. But I guess within the context of that, similar levels of demand, would you characterize this as share gains from competitors or underlying enrollment growth, if you could provide additional color there, understanding it's early in the AEP?

Yes. Hi, Janice. So if you look at how we performed in last AEP when we exceeded our expectations, we actually took market share, both as a percentage of new enrollment and the ending member base now as you progress through this year it's a highly disruptive period it remains to to be seen where we end up as a percentage of total membership for the industry but to your point cms does expect that the overall membership and medicare advantage will decline a little bit by about three percent it is a temporary bump because by 2030 they still expect the medicare

advantage to represent a much larger percentage of total medicare relief around 60 percent okay um and then uh the enrollment i think you said is tracking to internal expectations so far um it sounds like you're seeing an increase in commission rates i just want to make sure is it those enrolled lives the higher commission rates or just generally speaking through because of the rate of the commission increase you're just seeing that and then of those lots you are enrolling are they actually commissionable or are they the zero commission lives and you just happen to be getting them thanks yeah Jonathan great question I'll start and then maybe I'll ask John

to add on. So around the rate portion of your question, as you know, CMS rate decision led to carriers having the opportunity for a rate increase of a little north of 10%. What we've seen as we prepared for this AEP is that carriers took sort of a different strategy, if you will, on how they would deploy that increased rate. Some carriers gave us that increased rate across all products that we're selling. Others distinguished it between their product portfolio where they wanted to see growth. I would say in general, what we're seeing and now expecting is that we'll sort of be in the mid single digit percentage rate increase year over year during the AEP period. So that's that's number one. The second thing is the demand that we're seeing and the enrollments that we're seeing are in plans that are commissionable. And we fully expect to receive commissions on the production that we're producing.

Yeah. Yeah. The one thing I just make sure you understand is when we think about our LTV, it's comprised of both the commission rates, which they're focused on in those increases. also includes a component of administrative fees. So some of the increase may not go all the way through to the LTV. So just want to make sure people wear that. Thank you.

Thank you. And just as a reminder, if you do have a question, please press star one. And your next question comes from Ben Hendricks from RBC Capital Markets. Please go ahead.

Hi, this is Michael Murray on for Ben. Just a quick follow-up on the commission rates. So how should we think about LTV growth for 2026, given the higher commissions? Should we think about it in the low single-digit range?

Yeah, I think, as Derek pointed out, we're expecting to see the commission in our forecast to be in the mid-single digits. A little bit of that will be muted by the administrative fees. So it's probably expected to be low to middle single digits increase.

Okay. And then I just had a question on your tail revenue expectations for the year. So you increased your tail revenue guidance by $11 million at the midpoint while you raised adjusted EBITDA guidance by $5 million.

Is there anything to call out in the delta between the two? no i think the um if you're looking at the q3 results um you know our revenue was kind of in line with expectations uh we had um as derek explained in this prepared remarks i think our volume was lower so our commissions were lower but we had net adjustment revenue that all said so as as we flow through that into our guidance for the full year um you know you got to take that into consideration so the tail guidance you know we we think there's you know between the 40 million that is about the low end of our range for a four-year basis which is what we booked

year to date and we think there might maybe potentially some upside in q4 all right thank you thank you and there are no further questions at this time mr derek duke you can proceed thank you thank you all for joining us today and for your continued interest in e-health we look forward to updating you on our AEP results in our next quarterly call. Have a great evening.

Ladies and gentlemen, this does conclude your conference call for today. We thank you very much for your participation. You may now disconnect. Have a great day. Goodbye.