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eHealth, Inc. Announces Second Quarter 2008 Results

Second Quarter 2008 Highlights

MOUNTAIN VIEW, CA -- (Marketwire) -- 07/31/08 -- eHealth, Inc. (NASDAQ: EHTH), the leading online source of health insurance for individuals, families and small businesses, today announced its financial results for the second quarter ended June 30, 2008.

"Our second quarter results, in the face of a challenging economic environment, again demonstrate growth and increasing operating leverage in eHealth's business model," said Gary Lauer, chief executive officer of eHealth.

Second Quarter Results

Revenue -- Revenue totaled $27.5 million for the second quarter of 2008, a 31% increase compared to revenue of $21.1 million for the second quarter of 2007.

Submitted Applications -- Submitted applications for individual and family products increased 18% in the second quarter of 2008 to 103,800 applications, compared to 88,300 applications in the second quarter of 2007.

Membership -- Estimated membership at June 30, 2008 totaled 579,600 members, a 25% increase over estimated membership of 463,600 at June 30, 2007.

Operating Income -- Operating income increased 53% to $6.4 million for the second quarter of 2008, compared to operating income of $4.2 million for the second quarter of 2007. Operating margins were 23% in the second quarter of 2008, up from 20% in the second quarter of 2007. Non-GAAP operating income increased 64% to $7.4 million for the second quarter of 2008, compared to non-GAAP operating income of $4.5 million for the second quarter of 2007. Non-GAAP operating margins were 27% in the second quarter of 2008, up from 21% in the second quarter of 2007. Non-GAAP operating income and margins in the second quarters of 2008 and 2007 exclude $995,000 and $340,000 of stock-based compensation expense, respectively.

Pre-tax Income -- Pre-tax income for the second quarter of 2008 was $7.3 million, a 35% increase compared to pre-tax income of $5.5 million for the second quarter of 2007. Non-GAAP pre-tax income was $8.3 million for the second quarter of 2008, a 44% increase compared to non-GAAP pre-tax income of $5.8 million for the second quarter of 2007. Non-GAAP pre-tax income in the second quarters of 2008 and 2007 exclude $995,000 and $340,000 of stock-based compensation expense, respectively.

Net Income -- Net income for the second quarter of 2008 was $4.2 million, or $0.16 per diluted share, compared to net income for the second quarter of 2007 of $3.2 million, or $0.13 per diluted share. Non-GAAP net income for the second quarter of 2008 was $4.9 million, or $0.19 per diluted share, compared to non-GAAP net income of $3.5 million, or $0.14 per diluted share, for the second quarter of 2007. Non-GAAP net income and non-GAAP net income per diluted share are computed excluding stock-based compensation expense and estimated income tax benefit related to stock-based compensation expense. Non-GAAP net income and non-GAAP net income per diluted share in the second quarter of 2008 exclude $995,000 of stock-based compensation expense, adjusted by $333,000 for estimated income tax benefit related to stock-based compensation expense. Non-GAAP net income and non-GAAP net income per diluted share in the second quarter of 2007 exclude $340,000 of stock-based compensation expense, adjusted by $21,000 for estimated income tax benefit related to stock-based compensation expense.

Cash Flow and Cash Balance -- Cash flow from operations for the second quarter of 2008 was $8.6 million, compared to $7.2 million for the second quarter of 2007, representing an increase of 21%. Cash, cash equivalents and short-term marketable securities as of June 30, 2008 totaled $136.0 million, compared to $121.5 million as of December 31, 2007.

Year-to-Date Results

Revenue -- Revenue totaled $53.8 million for the six months ended June 30, 2008, a 33% increase compared to revenue of $40.6 million for the six months ended June 30, 2007.

Operating Income -- Operating income increased 62% to $11.1 million for the six months ended June 30, 2008, compared to operating income of $6.9 million for the six months ended June 30, 2007. Operating margins were 21% in the six months ended June 30, 2008, up from 17% in the six months ended June 30, 2007.

Pre-tax Income -- Pre-tax income for the six months ended June 30, 2008 was $13.3 million, a 42% increase compared to pre-tax income of $9.3 million for the six months ended June 30, 2007.

Net Income -- Net income for the six months ended June 30, 2008 was $7.5 million, or $0.29 per diluted share, compared to net income for the six months ended June 30, 2007 of $5.5 million, or $0.22 per diluted share.

Cash Flow and Cash Balance -- Cash flow from operations for the six months ended June 30, 2008 was $14.5 million, compared to $10.6 million for the six months ended June 30, 2007, representing an increase of 37%.

2008 Guidance

eHealth is providing updated guidance for the full year ending December 31, 2008 based on information currently available:

--  Total revenue is expected to be in the range of $111.5 million to    $113.5 million, compared to previous guidance of $114 million to $117    million--  Stock-based compensation expense is expected to be in the range of    $3.8 million to $4.3 million, compared to previous guidance of $4.0 million    to $5.5 million--  GAAP net earnings per diluted share is expected to be in the range of    $0.50 to $0.57 per share, compared to previous guidance of $0.58 to $0.63    per share--  Cash flow from operations is expected to be in the range of $30.0    million to $32.5 million, compared to previous guidance of $33.5 million to    $36.0 million--  GAAP income tax rate to range from approximately 43% to 44.5% for the    full year ending December 31, 2008, compared to previous guidance of 43% to    45%    

Webcast and Conference Call Information

A Webcast and conference call will be held today, Thursday, July 31, 2008 at 5:00 p.m. EDT / 2:00 p.m. PDT. The Webcast will be available live on the Investor Relations section on eHealth's website at http://ir.ehealthinsurance.com. Individuals interested in listening to the conference call may do so by dialing 866-770-7129 for domestic callers and 617-213-8067 for international callers. The participant passcode is #39737269. A telephone replay will be available two hours following the conclusion of the call for a period of 30 days and can be accessed by dialing 888-286-8010 for domestic callers and 617-801-6888 for international callers. The call ID for the replay is #15210395. The live and archived webcast of the call will also be available on eHealth's website at www.ehealthinsurance.com under the Investor Relations section.

About eHealth, Inc.

eHealth, Inc. is the parent company of eHealthInsurance, the leading online source of health insurance for individuals, families and small businesses. eHealthInsurance presents complex health insurance information in an objective, user-friendly format, enabling the research, analysis, comparison and purchase of health insurance products that best meet consumers' needs. eHealth and eHealthInsurance are registered trademarks of eHealthInsurance Services, Inc.

eHealth, Inc. was founded in 1997 and its technology was responsible for the nation's first Internet-based sale of a health insurance policy. eHealth is headquartered in Mountain View, California. Additional information can be found on eHealth's website, www.ehealthinsurance.com.

Forward-Looking Statements

This press release contains statements that are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995. These include statements regarding estimated income tax benefit related to stock-based compensation expense and eHealth's guidance for total revenue, stock-based compensation expense, GAAP income tax rate, GAAP net earnings per diluted share and cash flow from operations for the year ending December 31, 2008. These forward-looking statements are inherently subject to various risks and uncertainties that could cause actual results to differ materially from the statements made, including risks associated with continued acceptance of the Internet as a medium for the purchase of health insurance, eHealth's ability to continue to increase its membership base and expand its relationships with health insurance carriers and marketing partners, negative publicity experienced by eHealth's carrier partners, changes in products offered on eHealth's ecommerce platform, changes in commission payments or carrier underwriting practices, changes in member conversion rates and factors affecting conversion, the effectiveness of marketing spending, timing of receipt of commission reports and related impact on estimating membership, payment practices of health insurance carriers, retention of eHealth's members, increased rates of member turnover, changes in eHealth's relationships with insurance carriers, success in the sale of sponsorship advertising and the licensing of the use of eHealth's ecommerce platform, success of the health savings account (HSA) platform, system failures or capacity constraints, dependence upon Internet search engines to attract consumers who visit eHealth's website, the performance, reliability and availability of eHealth's ecommerce platform and underlying network infrastructure, the effectiveness of eHealth's marketing and public relations efforts, exposure to online commerce security risks, reliance on marketing partners for the sale of health insurance, competition, protection of intellectual property and intellectual property rights claims, regulatory penalties and negative publicity, changes in the economy and weak economic conditions, eHealth's operations in China and any foreign expansion, ability to attract and retain qualified personnel, management of future growth, seasonality, impact of future acquisitions, impact of employee stock-based compensation expense and provisions for income taxes, costs of obtaining insurance, compliance with insurance and other laws and regulations, changes in laws and regulations, and changes in the structure of the health insurance system in the United States. Other factors that could cause operating, financial and other results to differ are described in eHealth's most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K filed with the Securities and Exchange Commission and available on the investor relations page of eHealth's website at www.ehealthinsurance.com and on the Securities and Exchange Commission's website at www.sec.gov. eHealth does not undertake any obligation to update any forward-looking statement to conform the statement to actual results or changes in expectations.

Non-GAAP Financial Information

This press release includes financial measures that are not in accordance with generally accepted accounting principles in the United States ("GAAP"). To supplement eHealth's condensed consolidated financial statements presented in accordance with GAAP, eHealth presents investors with certain non-GAAP financial measures, including non-GAAP operating income, non-GAAP operating margins, non-GAAP pre-tax income, non-GAAP net income and non-GAAP net income per diluted share.

--  Non-GAAP operating income consists of GAAP operating income excluding    the effects of expensing stock-based compensation related to stock options,    restricted stock and restricted stock units in accordance with SFAS 123R    beginning in 2006 and amortization of deferred stock-based compensation    expense in accordance with APB 25 for grants made prior to 2006.    --  Non-GAAP operating margins are calculated by dividing non-GAAP    operating income by GAAP total revenue.    --  Non-GAAP pre-tax income consists of GAAP pre-tax income excluding the    effects of expensing stock-based compensation.    --  Non-GAAP net income consists of GAAP net income excluding the effects    of expensing stock-based compensation adjusted for estimated income tax    benefit related to stock-based compensation expense.    --  Non-GAAP net income per diluted share is calculated by dividing non-    GAAP net income by GAAP weighted average diluted shares outstanding.    

eHealth believes that the presentation of these non-GAAP financial measures provide important supplemental information to management and investors regarding financial and business trends relating to the company's financial condition and results of operations. Management believes that the use of these non-GAAP financial measures provides consistency and comparability with the company's past financial reports. Management also believes that the exclusion of the items described above provides an additional measure of the company's operating results and facilitates comparisons of the company's core operating performance against prior periods and business model objectives. This information is provided to investors in order to facilitate additional analyses of past, present and future operating performance and as a supplemental means to evaluate the company's ongoing operations. Externally, the company believes that these non-GAAP financial measures continue to be useful to investors in their assessment of the company's operating performance.

Non-GAAP operating income, non-GAAP operating margins, non-GAAP pre-tax income, non-GAAP net income and non-GAAP net income per diluted share are not calculated in accordance with GAAP, and should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Non-GAAP financial measures used in this press release have limitations in that they do not reflect all of the costs associated with the operations of the company's business and do not reflect all of the income tax as determined in accordance with GAAP. As a result, you should not consider these measures in isolation or as a substitute for analysis of eHealth's results as reported under GAAP. The company expects to continue to incur operating costs similar to the non-GAAP adjustments described above, and exclusion of these costs, and their related income tax impact, from non-GAAP financial measures should not be construed as an inference that these costs are unusual or infrequent. The company compensates for these limitations by prominently disclosing GAAP operating income, GAAP pre-tax income, GAAP net income and GAAP net income per diluted share and providing investors with reconciliations from the company's GAAP operating results to the non-GAAP financial measures for the relevant periods.

The accompanying tables provide more details on the GAAP financial measures that are most directly comparable to the non-GAAP financial measures and the related reconciliations between these financial measures.

(Tables to Follow)

                              EHEALTH, INC.                  CONDENSED CONSOLIDATED BALANCE SHEETS                              (In thousands)                                               December 31,    June 30,                                                2007 (1)         2008                                              -------------  -------------                     Assets                                   (unaudited)Current assets:  Cash and cash equivalents                   $      81,395  $      85,201  Marketable securities                              40,119         50,846  Accounts receivable                                 1,300          1,245  Deferred income taxes                              13,240          7,723  Prepaid expenses and other current assets           2,098          2,217                                              -------------  -------------Total current assets                                138,152        147,232Property and equipment, net                           3,791          4,322Deferred income taxes                                 4,535          4,535Other assets                                            975            944                                              -------------  -------------Total assets                                  $     147,453  $     157,033                                              =============  =============       Liabilities and stockholders' equityCurrent liabilities:  Accounts payable                            $       1,495  $       1,868  Accrued compensation and benefits                   4,849          3,822  Accrued marketing expenses                          2,454          2,774  Deferred revenue                                      436            277  Other current liabilities                           2,073          1,687                                              -------------  -------------Total current liabilities                            11,307         10,428Other non-current liabilities                           252            188Stockholders' equity:  Common stock                                           25             25  Additional paid-in capital                        167,847        170,795  Deferred stock-based compensation                    (104)           (57)  Accumulated deficit                               (32,060)       (24,562)  Accumulated other comprehensive income                186            216                                              -------------  -------------Total stockholders' equity                          135,894        146,417                                              -------------  -------------Total liabilities and stockholders' equity    $     147,453  $     157,033                                              =============  =============(1) The condensed consolidated balance sheet at December 31, 2007 has been    derived from the audited consolidated financial statements at that    date.                               EHEALTH, INC.                CONDENSED CONSOLIDATED STATEMENTS OF INCOME           (In thousands, except per share amounts, unaudited)                                          Three Months    Six Months Ended                                         Ended June 30,       June 30,                                        ----------------- -----------------                                          2007     2008     2007     2008                                        -------- -------- -------- --------Revenue:  Commission                            $ 19,799 $ 24,756 $ 38,173 $ 48,875  Sponsorship, licensing and other         1,273    2,745    2,388    4,906                                        -------- -------- -------- --------Total revenue                             21,072   27,501   40,561   53,781Operating costs and expenses:  Cost of revenue-sharing                    401      432      818      869  Marketing and advertising (1)            6,782    9,482   13,712   19,131  Customer care and enrollment (1)         2,858    3,308    5,857    6,933  Technology and content (1)               2,922    3,504    5,917    6,983  General and administrative (1)           3,935    4,379    7,390    8,744                                        -------- -------- -------- --------Total operating costs and expenses        16,898   21,105   33,694   42,660                                        -------- -------- -------- --------Income from operations                     4,174    6,396    6,867   11,121Interest and other income, net             1,279      941    2,446    2,150                                        -------- -------- -------- --------Income before income taxes                 5,453    7,337    9,313   13,271Provision for income taxes                 2,225    3,136    3,808    5,773                                        -------- -------- -------- --------Net income                              $  3,228 $  4,201 $  5,505 $  7,498                                        ======== ======== ======== ========Net income per share:  Basic                                 $   0.14 $   0.17 $   0.25 $   0.30  Diluted                               $   0.13 $   0.16 $   0.22 $   0.29Weighted-average number of shares used in per share amounts:  Basic                                   22,653   24,949   22,199   24,857  Diluted                                 25,526   26,065   25,479   26,029(1) Includes stock-based compensation expense as follows:      Marketing and advertising         $     38 $    186 $     68 $    333      Customer care and enrollment            37       85       56      151      Technology and content                 139      275      273      450      General and administrative             126      449      215      720                                        -------- -------- -------- --------        Total                           $    340 $    995 $    612 $  1,654                                        ======== ======== ======== ========                              EHEALTH, INC.              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                        (In thousands, unaudited)                                    Three Months Ended   Six Months Ended                                         June 30,            June 30,                                    ------------------  ------------------                                      2007      2008      2007      2008                                    --------  --------  --------  --------Operating activitiesNet income                          $  3,228  $  4,201  $  5,505  $  7,498Adjustments to reconcile net income to net cash provided by operating activities:  Deferred income taxes                2,102     3,076     3,595     5,517  Depreciation and amortization          424       375       851       804  Stock-based compensation expense       340       995       612     1,654  Deferred rent                          (25)      (14)        2       (35)  Loss on disposal of property and   equipment                              18        10        18        11  Changes in operating assets and   liabilities:    Accounts receivable                  157       395       (14)       55    Prepaid expenses and other     current assets                      272      (204)      (78)     (278)    Other assets                        (184)      (39)     (227)       32    Accounts payable                    (224)      169      (116)      370    Accrued compensation and     benefits                            768       580      (347)     (881)    Accrued marketing expenses           (32)      (29)      454       320    Deferred revenue                       6      (248)      145      (159)    Other current liabilities            313      (620)      171      (415)                                    --------  --------  --------  --------Net cash provided by operating activities                            7,163     8,647    10,571    14,493                                    --------  --------  --------  --------Investing activitiesPurchases of property and equipment     (528)     (975)     (753)   (1,309)Purchases of marketable securities   (17,324)  (31,107)  (17,325)  (50,422)Sales of marketable securities            --     4,020        --     8,067Maturities of marketable securities       88    13,131        88    31,593                                    --------  --------  --------  --------Net cash used in investing activities                          (17,764)  (14,931)  (17,990)  (12,071)                                    --------  --------  --------  --------Financing activitiesNet proceeds from exercise of common stock options                  2,796       595     2,897     1,341Principal payments in connection with capital leases                     (71)       --      (175)       --Costs incurred in connection with initial public offering                (252)       --      (252)       --                                    --------  --------  --------  --------Net cash provided by financing activities                            2,473       595     2,470     1,341                                    --------  --------  --------  --------Effect of exchange rate changes on cash and cash equivalents                26        10        42        43                                    --------  --------  --------  --------Net (decrease) increase in cash and cash equivalents                 (8,102)   (5,679)   (4,907)    3,806Cash and cash equivalents at beginning of period                  93,511    90,880    90,316    81,395                                    --------  --------  --------  --------Cash and cash equivalents at end of period                             $ 85,409  $ 85,201  $ 85,409  $ 85,201                                    ========  ========  ========  ========                              EHEALTH, INC.                       SUMMARY OF SELECTED METRICS                               (Unaudited)                                                Three Months  Three Months                                                    Ended        Ended                                                    June          JuneKey Metrics:                                      30, 2007      30, 2008                                                ------------  ------------Operating cash flows (1)                        $  7,163,000  $  8,647,000IFP submitted applications (2)                        88,300       103,800IFP approved members (3)                              78,200        94,300Total approved members (4)                           114,600       132,600Total revenue (5)                               $ 21,072,000  $ 27,501,000Total revenue per estimated member for the period (6)                                     $      46.48  $      48.34                                                   As of         As of                                                  June 30,      June 30,                                                    2007          2008                                                ------------  ------------IFP estimated membership (7)                         383,400       488,300Total estimated membership (8)                       463,600       579,600                                                Three Months  Three Months                                                   Ended         Ended                                                  June 30,      June 30,                                                    2007          2008                                                ------------  ------------Marketing and advertising expenses (9)          $  6,782,000  $  9,482,000Marketing and advertising expenses as a percentage of total revenue (10)                         32%           34%Marketing and advertising expenses excluding stock-based compensation (11)                  $  6,744,000  $  9,296,000Marketing and advertising expenses excluding stock-based compensation as a percentage of total revenue (12)                                       32%           34%Other Metrics:Source of IFP submitted applications (as a percentage of total IFP applications for the period):   Direct (13)                                            40%           40%   Marketing partners (14)                                30%           32%   Online advertising (15)                                30%           28%                                                ------------  ------------     Total                                               100%          100%                                                ============  ============Acquisition cost per individual on IFP submitted applications (16)                    $      49.98  $      60.39Acquisition cost (excluding stock-based compensation) per individual on IFP submitted applications (17)                              $      49.70  $      59.21Notes:(1) Net cash provided by operating activities for the period from the    condensed consolidated statements of cash flows.(2) IFP applications submitted on eHealth's website during the period.    Applications are counted as submitted when the applicant completes the    application, provides a method for payment and clicks the submit button    on our website and submits the application to us. The applicant    generally has additional actions to take before the application will be    reviewed by the insurance carrier, such as providing additional    information and providing an electronic signature. In addition, an    applicant may submit more than one application. We define our "IFP"    offerings as major medical individual and family health insurance    plans, which does not include small business, short-term major medical,    stand-alone dental, life or student health insurance product offerings.(3) New IFP members reported to eHealth as approved during the period. Some    members that are approved by a carrier do not accept the approval and    therefore do not become paying members.(4) New members for all products reported to eHealth as approved during the    period. Some members that are approved by a carrier do not accept the    approval and therefore do not become paying members.(5) Total revenue (from all sources) recognized during the period from the    condensed consolidated statements of income.(6) Calculated as total revenue recognized during the period (see note (5)    above) divided by average estimated membership for the period    (calculated as beginning and ending estimated membership for all    products for the period, divided by two).(7) Estimated number of members active on IFP insurance policies as of the    date indicated. See our  2007 Annual Report on Form 10-K - Item 7 -    Management's Discussion and Analysis of Financial Condition and Results    of Operations - Summary of Selected Metrics for additional information    regarding our calculation of estimated membership.(8) Estimated number of members active on all insurance policies as of the    date indicated. See our  2007 Annual Report on Form 10-K - Item 7 -    Management's Discussion and Analysis of Financial Condition and Results    of Operations - Summary of Selected Metrics for additional information    regarding our calculation of estimated membership.(9) Marketing and advertising expenses for the period from the condensed    consolidated statements of income.(10) Calculated as marketing and advertising expenses for the period (see     note (9) above) divided by total revenue for the period (see note     (5) above).(11) Non-GAAP marketing and advertising expenses excluding stock-based     compensation for the period. See Non-GAAP Financial Information above     and the reconciliation of GAAP to Non-GAAP marketing and advertising     expenses below.(12) Calculated as non-GAAP marketing and advertising expenses for the     period (see note (11) above) divided by total revenue for the period     (see note (5) above). See Non-GAAP Financial Information above and the     reconciliation of GAAP to Non-GAAP marketing and advertising expenses     below.(13) Percentage of IFP submitted applications from applicants who came     directly to the eHealth website through algorithmic search engine     results or otherwise. See note (2) above for further information as to     what constitutes a submitted application.(14) Percentage of IFP submitted applications from applicants sourced     through eHealth's network of marketing partners. See note (2) above     for further information as to what constitutes a submitted     application.(15) Percentage of IFP submitted applications from applicants sourced     through paid search and other online advertising activities. See note     (2) above for further information as to what constitutes a submitted     application.(16) Calculated as marketing and advertising expenses for the period (see     note (9) above) divided by the number of individuals on IFP     applications submitted on eHealth's website during the period. This     metric may not reflect the true acquisition cost.(17) Calculated as non-GAAP marketing and advertising expenses for the     period (see note (11) above) divided by the number of individuals on     IFP applications submitted on eHealth's website during the period.     This metric may not reflect the true acquisition cost exclusive of the     impact of stock-based compensation allocated to marketing and     advertising expenses.                              EHEALTH, INC.                      GAAP TO NON-GAAP RECONCILIATION                 FOR THE THREE MONTHS ENDED JUNE 30, 2008            (In thousands, except per share amounts, unaudited)Statement of Income Reconciliation                                     Three Months Ended June 30, 2008                               --------------------------------------------                                          GAAP                     Non-GAAP                                        Percent                    Percent                                          of                         of                                 GAAP    Total   Adjust-  Non-GAAP  Total                               Reported Revenue   ments   Results  Revenue                               -------- -------  -------  -------- -------Revenue: Commission                    $ 24,756      90% $    --  $ 24,756      90% Sponsorship, licensing and  other                           2,745      10       --     2,745      10                               -------- -------  -------  -------- -------Total revenue                    27,501     100       --    27,501     100Operating costs and expenses:  Cost of revenue-sharing           432       2       --       432       2  Marketing and advertising (1)   9,482      34     (186)    9,296      34  Customer care and   enrollment (1)                 3,308      12      (85)    3,223      11  Technology and content (1)      3,504      13     (275)    3,229      12  General and administrative   (1)                            4,379      16     (449)    3,930      14                               -------- -------  -------  -------- -------Total operating costs and expenses                        21,105      77     (995)   20,110      73                               -------- -------  -------  -------- -------Income from operations            6,396      23      995     7,391      27Interest and other income, net      941       3       --       941       3                               -------- -------  -------  -------- -------Income before income taxes        7,337      26      995     8,332      30Provision for income taxes (2)    3,136      11      333     3,469      12                               -------- -------  -------  -------- -------Net income                     $  4,201      15% $   662  $  4,863      18%                               ======== =======  =======  ======== =======Net income per share:  Basic                        $   0.17          $  0.02  $   0.19  Diluted                      $   0.16          $  0.03  $   0.19Weighted-average number of shares used in per share amounts:  Basic                          24,949           24,949    24,949  Diluted                        26,065           26,065    26,065Explanation of adjustments(1) Non-GAAP results exclude the effect of expensing stock-based    compensation related to stock options, restricted stock and restricted    stock units in accordance with SFAS 123R beginning in 2006, in addition    to the amortization of deferred stock-based compensation expense in    accordance with APB 25 for grants made prior to 2006.(2) Non-GAAP net income and non-GAAP net income per share exclude    stock-based compensation expense listed in note (1) above, adjusted    for estimated income tax benefit related to stock-based compensation    expense.                               EHEALTH, INC.                      GAAP TO NON-GAAP RECONCILIATION                 FOR THE THREE MONTHS ENDED JUNE 30, 2007            (In thousands, except per share amounts, unaudited)Statement of Income Reconciliation                                     Three Months Ended June 30, 2007                               --------------------------------------------                                          GAAP                     Non-GAAP                                        Percent                    Percent                                          of                         of                                 GAAP    Total   Adjust-  Non-GAAP  Total                               Reported Revenue   ments   Results  Revenue                               -------- -------  -------  -------- -------Revenue:  Commission                   $ 19,799      94% $    --  $ 19,799      94%  Sponsorship, licensing and   other                          1,273       6       --     1,273       6                               -------- -------  -------  -------- -------Total revenue                    21,072     100       --    21,072     100Operating costs and expenses:  Cost of revenue-sharing           401       2       --       401       2  Marketing and advertising (1)   6,782      32      (38)    6,744      32  Customer care and   enrollment (1)                 2,858      13      (37)    2,821      14  Technology and content (1)      2,922      14     (139)    2,783      13  General and   administrative (1)             3,935      19     (126)    3,809      18                               -------- -------  -------  -------- -------Total operating costs and expenses                        16,898      80     (340)   16,558      79                               -------- -------  -------  -------- -------Income from operations            4,174      20      340     4,514      21Interest and other income, net    1,279       6       --     1,279       6                               -------- -------  -------  -------- -------Income before income taxes        5,453      26      340     5,793      27Provision for income taxes (2)    2,225      11       21     2,246      10                               -------- -------  -------  -------- -------Net income                     $  3,228      15% $   319  $  3,547      17%                               ======== =======  =======  ======== =======Net income per share:   Basic                       $   0.14          $  0.02  $   0.16   Diluted                     $   0.13          $  0.01  $   0.14Weighted-average number of shares used in per share amounts:   Basic                         22,653           22,653    22,653   Diluted                       25,526           25,526    25,526Explanation of adjustments(1) Non-GAAP results exclude the effect of expensing stock-based    compensation related to stock options, restricted stock and restricted    stock units in accordance with SFAS 123R beginning in 2006, in addition    to the amortization of deferred stock-based compensation expense in    accordance with APB 25 for grants made prior to 2006.(2) Non-GAAP net income and non-GAAP net income per share exclude    stock-based compensation expense listed in note (1) above, adjusted    for estimated income tax benefit related to stock-based compensation    expense.

Investor Relations Contact:
Kate Sidorovich
Director, Investor Relations
440 East Middlefield Road
Mountain View, CA 94043
(650) 210-3111
Email Contact
http://ir.ehealthinsurance.com

Media Contact:
Brian Mast
Director, Public Relations
440 East Middlefield Road
Mountain View, CA 94043
(650) 210-3149
Email Contact
www.ehealthinsurance.com