eHealth, Inc. (NASDAQ:EHTH)

CAPS downgrade to 1 star.

This stock was clobbered hard over concern about the "Medical Loss Ratio"(MLR) requirement in the health care reform bill in section 2718. Well, the worst has happened and eHealth still remains cash generating.

The MLR requirement requires health insurance carriers to spend 80% of all individual health plan premiums on clinical services or activities improving health care, excluding taxes. In other words, only 20% of premium revenue was left for administrative costs like paying commissions to brokers like eHealth.

Everyone knew that health insurers would have to reduce premiums starting 2011. Only recently has the CEO, Gary Lauer, discussed this. Now, investers have been told that eHealth's cut of premium revenue has gone from 10% to ~7%. The other shoe has dropped. The "worst" requirement of Health Care Reform has hit, dropping eHealth's primary source of revenue by 30+%. ~7% is still a good share.

However, eHealth guidance still forcast generation of over $20+ million profit for 2011. eHealth's balance sheet still has over $100 million in cash, despite buy back stock purchases in 2010. More buy backs might occur in 2011.

eHealth has moved agressively into other revenue producing areas, sales of Medicare plans, and hosting government health exchanges.

eHealth won the HHS service contract to power insurance quotes for the national health insurance exchange (links below). eHealth has won state exchange contracts for Florida, Utah, and Massachusetts. For years, eHealth has hosted carrier quote & apply web sites. In other words, commissions are not eHealth's only source of revenue.
https://www.fbo.gov/index?s=opportunity&mode=form&id=b2e0193cd8b04c1c17e5b70ce1e87976&tab=core&_cview=0

http://www.kaiserhealthnews.org/Stories/2010/July/30/ehealth-gets-web-portal-contract.aspx

Also, eHealth should not be compared to all the other web sites that just quote rates for health insurance. Unlike these other companies, eHealth doesn't just gather leads.

eHealth is a top broker for most health insurance carriers, across 50 states. It takes years to become licensed and appointed to sell health insurance for hundreds of carriers across 50 states. For many carriers, eHealth has been a top broker for 10 years or more. eHealth technology has eliminated the need for backend paper application processing for many carriers. eHealth will do better than most brokers.

A little late on this longshot. Will have to catch him next go around,as he he will still be here regardless of opinions. Eats reform for a snack.

Health reform will kill this company. Not enough commissions in post-reform era to justify massive marketing costs in gaining new customers. Average customer leaves eHealth to change plans or finds a broker with personal service instead of a call center.

Growing revenues nicely. Up to $154 million for this years top line estimates, from $87 million in 2007. Trading at 18 times earnings it seems reasonably valued, until you look at their balance sheet. The market cap of this company is $270 million, but they are sitting on $158 million in cash, thus making the enterprise value just over $110 million, and the company quite a bargain now that the stock has pulled back from over $19 to the $11 range. At some point they are going to have to do something with their cash, so either a dividend or a stock buyback will treat investors well.

Due to the health reform act, doctors are in need to upgrade their medical software and this company is in a good position to do just that.

Peakstocks 25%

Undervalued. Good Fundamentals.

The healthcare profession is always booming. So, i think this stock will do exceptionally well.

This will be the wave of the future generation. Even someone as old as me has purchased health care coverage via the net

This company is growing at 35 plus percent in a sector of our economy that is growing from 16% of GNP to 18% of GNP in 5 years. Premiums continue to increase at high single digits -- which lifts the revenue of this company.

Insurance choices on the web. Easy Peezy.

eHealth, Inc., formerly known as eHealthInsurance Services, is an online source of health insurance for individuals, families and small businesses. Its ecommerce platform enables individuals, families and small businesses to research, analyze, compare and purchase health insurance products that meet their needs. It has licenses to sell health insurance in all 50 states and the District of Columbia. It has established relationships with over 150 health insurance carriers, enabling it to offer more than 5,000 health insurance products online.

For year 2006, revenues enhanced by 47% to $61.3millions reflecting an increased membership, higher commission earned and increased licensing income due to additional carrier sponsorships on websites. Net income recorded $16.5millions against a loss of $414 thousand as it was benefited from better efficiencies in online marketing programs and an increase in interest income due to higher cash balances.

Over the period of five years revenue has grown at rate of 48.7% outperforming industry growth rate of 7.2% by a huge margin. Company provides pricing transparency, convenience in comparison of different products and easy-to-use information on product design just a click away. Its selection of products and plans is very broad with highest of 98 products in Chicago. Members acquisition cost is no more a worrying factor as it’s on reducing trend as evident by 6% reduction in previous quarter.

As of now for a medium period, stock is expected to outperform. But from a long term point of view, in order sustain growth, company needs to address many problems like easily adoptable business plan, non-recurring revenue model and state regulation’s prevention from selling health insurance for a lower price than it can be obtained elsewhere.

eHealth is ahead of the current completion in online healthcare plans. The management team has had a great reputation in the industry and they will continue to build shareholder equity. I have faith that the company will continue to show profit and capitalize on chaining medium (internet) in this sector of business.

Industry shift underway. Carriers are opening quoting systems to direct web service calls - no need for consolidators. EHTH uses outdated model of getting data tables from carriers that new entrants will bypass. No barriers to entry. See healthplanone.com for what two guys and a programmer can do and you'll understand the quicksand ehth is on. Plus, they spend too much getting leads and still are really just a call center with web window dressing. This is a screaming short. They will never grow into this PE and in one year there will be ten more just like them.

I disagree with the analysts on this one. Hot stock in a new market

While this stock will be volatile for some time, not atypical for an IPO, I believe it is a stock to watch. Management believes in the product and has a unique niche that, at least initially, appears to be underserved.