Newsroom > Press Releases > eHealth, Inc. Announces Third Quarter 2008 Results

eHealth, Inc. Announces Third Quarter 2008 Results

Third Quarter 2008 Overview

MOUNTAIN VIEW, CA -- (Marketwire) -- 10/30/08 -- eHealth, Inc. (NASDAQ: EHTH), the leadingonline source of health insurance for individuals, families and smallbusinesses, today announced its financial results for the third quarterended September 30, 2008.

Gary Lauer, chief executive officer of eHealth, stated, "Our financialperformance, posted during a very challenging and uncertain economicenvironment, further illustrates eHealth's sound business model andcompany-wide commitment to execution of our plans. Through our marketingefforts during the quarter, we stressed that health insurance is not adiscretionary item, but rather something people need and can afford througheHealth."

Third Quarter Results

Revenue -- Revenue totaled $28.5 million for the third quarter of 2008, a24% increase compared to revenue of $23.0 million for the third quarter of2007.

Submitted Applications -- Submitted applications for individual and familyproducts increased 20% in the third quarter of 2008 to 117,300applications, compared to 97,900 applications in the third quarter of 2007.

Membership -- Estimated membership at September 30, 2008 totaled 602,100members, a 23% increase over estimated membership of 491,300 at September30, 2007.

Operating Income -- Operating income decreased 7% to $4.5 million for thethird quarter of 2008, compared to operating income of $4.8 million for thethird quarter of 2007. Operating margins were 16% in the third quarter of2008, compared to 21% in the third quarter of 2007. Non-GAAP operatingincome increased 5% to $5.4 million for the third quarter of 2008, comparedto non-GAAP operating income of $5.2 million for the third quarter of 2007.Non-GAAP operating margins were 19% in the third quarter of 2008, comparedto 23% in the third quarter of 2007. Non-GAAP operating income and marginsin the third quarters of 2008 and 2007 exclude $955,000 and $350,000 ofstock-based compensation expense, respectively.

Pre-tax Income -- Pre-tax income for the third quarter of 2008 was $5.4million, a 13% decrease compared to pre-tax income of $6.2 million for thethird quarter of 2007. Non-GAAP pre-tax income was $6.4 million for thethird quarter of 2008, a 3% decrease compared to non-GAAP pre-tax income of$6.6 million for the third quarter of 2007. Non-GAAP pre-tax income in thethird quarters of 2008 and 2007 exclude $955,000 and $350,000 ofstock-based compensation expense, respectively.

Net Income -- Net income for the third quarter of 2008 was $3.0 million, or$0.12 per diluted share, compared to net income for the third quarter of2007 of $3.7 million, or $0.14 per diluted share. Non-GAAP net income forthe third quarter of 2008 was $3.7 million, or $0.14 per diluted share,compared to non-GAAP net income of $4.1 million, or $0.15 per dilutedshare, for the third quarter of 2007. Non-GAAP net income and non-GAAP netincome per diluted share are computed excluding stock-based compensationexpense and estimated income tax benefit related to stock-basedcompensation expense. Non-GAAP net income andnon-GAAP net income per diluted share in the third quarter of 2008 exclude$955,000 of stock-based compensation expense, adjusted by $300,000 forestimated income tax benefit related to stock-based compensation expense.Non-GAAP net income and non-GAAP net income per diluted share in the thirdquarter of 2007 exclude $350,000 of stock-based compensation expense,adjusted by $20,000 for estimated income tax benefit related to stock-basedcompensation expense.

Cash Flow and Cash Balance -- Cash flow from operations for the thirdquarter of 2008 was $8.3 million, compared to $7.7 million for the thirdquarter of 2007, representing an increase of 7%. Cash, cash equivalents andshort-term marketable securities as of September 30, 2008 totaled $143.3million, compared to $121.5 million as of December 31, 2007.

Year-to-Date Results

Revenue -- Revenue totaled $82.3 million for the nine months endedSeptember 30, 2008, a 29% increase compared to revenue of $63.6 million forthe nine months ended September 30, 2007.

Operating Income -- Operating income increased 33% to $15.6 million for thenine months ended September 30, 2008, compared to operating income of $11.7million for the nine months ended September 30, 2007. Operating marginswere 19% in the nine months ended September 30, 2008, up from 18% in thenine months ended September 30, 2007.

Pre-tax Income -- Pre-tax income for the nine months ended September 30,2008 was $18.7 million, a 20% increase compared to pre-tax income of $15.6million for the nine months ended September 30, 2007.

Net Income -- Net income for the nine months ended September 30, 2008 was$10.5 million, or $0.40 per diluted share, compared to net income for thenine months ended September 30, 2007 of $9.2 million, or $0.36 per dilutedshare.

Cash Flow and Cash Balance -- Cash flow from operations for the nine monthsended September 30, 2008 was $22.8 million, compared to $18.3 million forthe nine months ended September 30, 2007, representing an increase of 24%.

2008 GuidanceWe are reaffirming the guidance we updated in our last earnings call withthe exception of our guidance relating to stock based compensation expense,which we project will be slightly less than the range of $3.8 million to$4.3 million we previously provided.

Webcast and Conference Call Information

A Webcast and conference call will be held today, Thursday, October 30,2008 at 5:00 p.m. EDT / 2:00 p.m. PDT. The Webcast will be available liveon the Investor Relations section on eHealth's website athttp://ir.ehealthinsurance.com. Individuals interested in listening to theconference call may do so by dialing 866-314-4483 for domestic callers and617-213-8049 for international callers. The participant passcode is#41896248. A telephone replay will be available two hours following theconclusion of the call for a period of 30 days and can be accessed bydialing 888-286-8010 for domestic callers and 617-801-6888 forinternational callers. The call ID for the replay is #27048357. The liveand archived webcast of the call will also be available on eHealth'swebsite at www.ehealthinsurance.com under the Investor Relations section.

About eHealth, Inc.

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

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

Forward-Looking Statements

This press release contains statements that are forward-looking statementsas defined within the Private Securities Litigation Reform Act of 1995.These include statements regarding estimated income tax benefit related tostock-based compensation expense, eHealth's reaffirmation of guidance fortotal revenue, GAAP income tax rate, GAAP net earnings per diluted shareand cash flow from operations for the year ending December 31, 2008 andprojected stock-based compensation for the year ending December 31, 2008being slightly less than the range previously provided. Theseforward-looking statements are inherently subject to various risks anduncertainties that could cause actual results to differ materially from thestatements made, including risks associated with eHealth's rate of growth,continued acceptance of the Internet as a medium for the purchase of healthinsurance, consumer awareness of the availability and accessibility ofaffordable health insurance, eHealth's ability to continue to increase itsmembership base and maintain or expand its relationships with healthinsurance carriers and marketing partners, negative publicity experiencedby eHealth's carrier partners, changes in products offered on eHealth'secommerce platform, changes in commission payments or carrier underwritingpractices, maintaining and enhancing eHealth's brand identity, changes inmember conversion rates and factors affecting conversion, the effectivenessof marketing spending, timing of receipt of commission reports and relatedimpact on estimating membership, payment practices of health insurancecarriers, retention of eHealth's members, increased rates of memberturnover, success in the sale of sponsorship advertising and the licensingof the use of eHealth's ecommerce platform, success of the health savingsaccount (HSA) platform, system failures, capacity constraints or data loss,dependence upon Internet search engines to attract consumers who visiteHealth's website, the performance, reliability and availability ofeHealth's ecommerce platform and underlying network infrastructure, theeffectiveness of eHealth's marketing and public relations efforts, exposureto online commerce security risks, reliance on marketing partners for thesale of health insurance, competition, protection of intellectual propertyand intellectual property rights claims, regulatory penalties and negativepublicity, changes in the economy and weak economic conditions, eHealth'soperations in China and any foreign expansion, ability to attract andretain qualified personnel, management of future growth, seasonality,impact of future acquisitions, impact of employee stock-based compensationexpense and provisions for income taxes, costs of obtaining insurance,compliance with insurance and other laws and regulations, changes in lawsand regulations, and changes in the structure of the health insurancesystem in the United States. Other factors that could cause operating,financial and other results to differ are described in eHealth's mostrecent Quarterly Report on Form 10-Q or Annual Report on Form 10-K filedwith the Securities and Exchange Commission and available on the investorrelations page of eHealth's website at www.ehealthinsurance.com and on theSecurities and Exchange Commission's website at www.sec.gov. eHealth doesnot undertake any obligation to update any forward-looking statement toconform the statement to actual results or changes in expectations.

Non-GAAP Financial Information

This press release includes financial measures that are not in accordancewith generally accepted accounting principles in the United States("GAAP"). To supplement eHealth's condensed consolidated financialstatements presented in accordance with GAAP, eHealth presents investorswith certain non-GAAP financial measures, including non-GAAP operatingincome, non-GAAP operating margins, non-GAAP pre-tax income, non-GAAP netincome 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 measuresprovide important supplemental information to management and investorsregarding financial and business trends relating to the company's financialcondition and results of operations. Management believes that the use ofthese non-GAAP financial measures provides consistency and comparabilitywith the company's past financial reports. Management also believes thatthe exclusion of the items described above provides an additional measureof the company's operating results and facilitates comparisons of thecompany's core operating performance against prior periods and businessmodel objectives. This information is provided to investors in order tofacilitate additional analyses of past, present and future operatingperformance and as a supplemental means to evaluate the company's ongoingoperations. Externally, the company believes that these non-GAAP financialmeasures continue to be useful to investors in their assessment of thecompany's operating performance.

Non-GAAP operating income, non-GAAP operating margins, non-GAAP pre-taxincome, non-GAAP net income and non-GAAP net income per diluted share arenot calculated in accordance with GAAP, and should be consideredsupplemental to, and not as a substitute for, or superior to, financialmeasures calculated in accordance with GAAP. Non-GAAP financial measuresused in this press release have limitations in that they do not reflect allof the costs associated with the operations of the company's business anddo 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 asubstitute for analysis of eHealth's results as reported under GAAP. Thecompany expects to continue to incur operating costs similar to thenon-GAAP adjustments described above, and exclusion of these costs, andtheir related income tax impact, from non-GAAP financial measures shouldnot be construed as an inference that these costs are unusual orinfrequent. The company compensates for these limitations by prominentlydisclosing GAAP operating income, GAAP pre-tax income, GAAP net income andGAAP net income per diluted share and providing investors withreconciliations from the company's GAAP operating results to the non-GAAPfinancial measures for the relevant periods.

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

                              EHEALTH, INC.                  CONDENSED CONSOLIDATED BALANCE SHEETS                              (In thousands)                                                December 31,  September 30,                                                  2007 (1)        2008                                                ------------  ------------                Assets                                         (unaudited)Current assets:   Cash and cash equivalents                    $     81,395  $     90,525   Marketable securities                              40,119        52,731   Accounts receivable                                 1,300         1,560   Deferred income taxes                              13,240         6,582   Prepaid expenses and other current assets           2,098         1,482                                                ------------  ------------Total current assets                                 138,152       152,880Property and equipment, net                            3,791         4,762Deferred income taxes                                  4,535         4,535Other assets                                             975           955                                                ------------  ------------Total assets                                    $    147,453  $    163,132                                                ============  ============      Liabilities and stockholders' equityCurrent liabilities:      Accounts payable                          $      1,495  $      1,855      Accrued compensation and benefits                4,849         4,003      Accrued marketing expenses                       2,454         3,942      Deferred revenue                                   436           351      Other current liabilities                        2,073         2,272                                                ------------  ------------Total current liabilities                             11,307        12,423Other non-current liabilities                            252           432Stockholders' equity:   Common stock                                           25            25   Additional paid-in capital                        167,847       172,032   Deferred stock-based compensation                    (104)          (40)   Accumulated deficit                               (32,060)      (21,541)   Accumulated other comprehensive income                186          (199)                                                ------------  ------------Total stockholders' equity                           135,894       150,277                                                ------------  ------------Total liabilities and stockholders' equity      $    147,453  $    163,132                                                ============  ============(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 Ended  Nine Months Ended                                          September 30,     September 30,                                        ----------------- -----------------                                          2007     2008     2007     2008                                        -------- -------- -------- --------Revenue:   Commission                           $ 21,313 $ 25,788 $ 59,486 $ 74,663   Sponsorship, licensing and other        1,684    2,687    4,072    7,593                                        -------- -------- -------- --------Total revenue                             22,997   28,475   63,558   82,256Operating costs and expenses:   Cost of revenue-sharing                   427      469    1,245    1,338   Marketing and advertising (1)           7,309   11,502   21,021   30,633   Customer care and enrollment (1)        3,002    3,722    8,859   10,655   Technology and content (1)              3,108    3,565    9,025   10,548   General and administrative (1)          4,308    4,731   11,698   13,475                                        -------- -------- -------- --------Total operating costs and expenses        18,154   23,989   51,848   66,649                                        -------- -------- -------- --------Income from operations                     4,843    4,486   11,710   15,607Interest and other income, net             1,403      935    3,849    3,085                                        -------- -------- -------- --------Income before income taxes                 6,246    5,421   15,559   18,692Provision for income taxes                 2,516    2,400    6,324    8,173                                        -------- -------- -------- --------Net income                              $  3,730 $  3,021 $  9,235 $ 10,519                                        ======== ======== ======== ========Net income per share:   Basic                                $   0.16 $   0.12 $   0.41 $   0.42   Diluted                              $   0.14 $   0.12 $   0.36 $   0.40Weighted-average number of shares used in per share amounts:   Basic                                  23,517   25,060   22,643   24,925   Diluted                                26,263   25,921   25,746   26,007(1) Includes stock-based compensation expense as follows:      Marketing and advertising         $     45 $    151 $    113 $    484      Customer care and enrollment            30       49       86      200      Technology and content                 143      203      416      653      General and administrative             132      552      347    1,272                                        -------- -------- -------- --------         Total                          $    350 $    955 $    962 $  2,609                                        ======== ======== ======== ========                              EHEALTH, INC.              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                        (In thousands, unaudited)                                    Three Months Ended  Nine Months Ended                                      September 30,       September 30,                                    ------------------  ------------------                                      2007      2008      2007      2008                                    --------  --------  --------  --------Operating activitiesNet income                          $  3,730  $  3,021  $  9,235  $ 10,519Adjustments to reconcile net income to net cash provided by operating activities:   Deferred income taxes               2,514     1,629     6,109     7,146   Depreciation and amortization         424       467     1,275     1,271   Stock-based compensation expense      350       955       962     2,609   Excess tax benefits from    stock-based compensation              --      (216)       --      (216)   Deferred rent                         (24)       (8)      (22)      (43)   Loss on disposal of property and    equipment                             --        28        18        39   Changes in operating assets and    liabilities:      Accounts receivable               (317)     (315)     (331)     (260)      Prepaid expenses and other       current assets                    262       734       184       456      Other assets                      (296)      (11)     (523)       21      Accounts payable                  (186)      (13)     (302)      357      Accrued compensation and       benefits                          280       181       (67)     (700)      Accrued marketing expenses         322     1,168       776     1,488      Deferred revenue                    70        74       215       (85)      Other current liabilities          582       563       753       148                                    --------  --------  --------  --------Net cash provided by operating activities                            7,711     8,257    18,282    22,750                                    --------  --------  --------  --------Investing activitiesPurchases of property and equipment     (300)     (933)   (1,053)   (2,242)Proceeds from the sale of property and equipment                            14        --        14        --Purchases of marketable securities   (19,195)  (11,143)  (36,520)  (61,565)Sales of marketable securities         2,156     2,053     2,156    10,120Maturities of marketable securities      500     6,786       588    38,379                                    --------  --------  --------  --------Net cash used in investing activities                          (16,825)   (3,237)  (34,815)  (15,308)                                    --------  --------  --------  --------Financing activitiesNet proceeds from exercise of common stock options                  2,446        85     5,343     1,426Excess tax benefits from stock-based compensation                 --       216        --       216Principal payments in connection with capital leases                     (37)       --      (212)       --Costs incurred in connection with initial public offering                  --        --      (252)       --                                    --------  --------  --------  --------Net cash provided by financing activities                            2,409       301     4,879     1,642                                    --------  --------  --------  --------Effect of exchange rate changes on cash and cash equivalents                22         3        64        46                                    --------  --------  --------  --------Net (decrease) increase in cash and cash equivalents                 (6,683)    5,324   (11,590)    9,130Cash and cash equivalents at beginning of period                  85,409    85,201    90,316    81,395                                    --------  --------  --------  --------Cash and cash equivalents at end of period                             $ 78,726  $ 90,525  $ 78,726  $ 90,525                                    ========  ========  ========  ========                              EHEALTH, INC.                        SUMMARY OF SELECTED METRICS                                (Unaudited)                                                Three Months  Three Months                                                    Ended         Ended                                                  September     SeptemberKey Metrics:                                      30, 2007      30, 2008                                                ------------  ------------Operating cash flows (1)                        $  7,711,000  $  8,257,000IFP submitted applications (2)                        97,900       117,300IFP approved members (3)                              83,600       100,800Total approved members (4)                           125,300       144,400Total revenue (5)                               $ 22,997,000  $ 28,475,000Total revenue per estimated member for the period (6)                                     $      48.16  $      48.19                                                    As of        As of                                                  September     September                                                  30, 2007      30, 2008                                                ------------  ------------IFP estimated membership (7)                         408,100       506,100Total estimated membership (8)                       491,300       602,100                                                Three Months  Three Months                                                    Ended         Ended                                                  September     September                                                  30, 2007      30, 2008                                                ------------  ------------Marketing and advertising expenses (9)          $  7,309,000  $ 11,502,000Marketing and advertising expenses as a percentage of total revenue (10)                         32%           40%Marketing and advertising expenses excluding stock-based compensation (11)                  $  7,264,000  $ 11,351,000Marketing and advertising expenses excluding stock-based compensation as a percentage of total revenue (12)                                       32%           40%Other Metrics:Source of IFP submitted applications (as a percentage of total IFP applications for the period):   Direct (13)                                            40%           39%   Marketing partners (14)                                31%           33%   Online advertising (15)                                29%           28%                                                ------------  ------------      Total                                              100%          100%                                                ============  ============Acquisition cost per individual on IFP submitted applications (16)                    $      49.07  $      65.34Acquisition cost (excluding stock-based compensation) per individual on IFP submitted applications (17)                              $      48.76  $      64.48Notes:(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 include     applications for IFP products for which we receive commissions as well     as other forms of payment. 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 SEPTEMBER 30, 2008            (In thousands, except per share amounts, unaudited)Statement of Income Reconciliation                                  Three Months Ended September 30, 2008                              ---------------------------------------------                                         GAAP                      Non-GAAP                                       Percent                     Percent                                GAAP   of Total Adjust-  Non-GAAP  of Total                              Reported Revenue   ments   Results   Revenue                              -------- -------  -------  --------- -------Revenue: Commission                   $ 25,788      91% $    --  $  25,788      91% Sponsorship, licensing and  other                          2,687       9       --      2,687       9                              -------- -------  -------  --------- -------Total revenue                   28,475     100       --     28,475     100Operating costs and expenses: Cost of revenue-sharing           469       2       --        469       2 Marketing and advertising (1)  11,502      40     (151)    11,351      40 Customer care and enrollment  (1)                            3,722      13      (49)     3,673      13 Technology and content (1)      3,565      12     (203)     3,362      12 General and administrative  (1)                            4,731      17     (552)     4,179      14                              -------- -------  -------  --------- -------Total operating costs and expenses                       23,989      84     (955)    23,034      81                              -------- -------  -------  --------- -------Income from operations           4,486      16      955      5,441      19Interest and other income, net     935       3       --        935       3                              -------- -------  -------  --------- -------Income before income taxes       5,421      19      955      6,376      22Provision for income taxes (2)   2,400       8      300      2,700       9                              -------- -------  -------  --------- -------Net income                    $  3,021      11% $   655  $   3,676      13%                              ======== =======  =======  ========= =======Net income per share:   Basic                      $   0.12          $  0.03  $    0.15   Diluted                    $   0.12          $  0.02  $    0.14Weighted-average number of shares used in per share amounts:   Basic                        25,060           25,060     25,060   Diluted                      25,921           25,921     25,921Explanation 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 SEPTEMBER 30, 2007            (In thousands, except per share amounts, unaudited)Statement of Income Reconciliation                                  Three Months Ended September 30, 2007                              ---------------------------------------------                                         GAAP                      Non-GAAP                                       Percent                     Percent                                GAAP   of Total Adjust-  Non-GAAP  of Total                              Reported Revenue   ments   Results   Revenue                              -------- -------  -------  --------- -------Revenue: Commission                   $ 21,313      93% $    --  $  21,313      93% Sponsorship, licensing and  other                          1,684       7       --      1,684       7                              -------- -------  -------  --------- -------Total revenue                   22,997     100       --     22,997     100Operating costs and expenses: Cost of revenue-sharing           427       2       --        427       2 Marketing and advertising (1)   7,309      32      (45)     7,264      32 Customer care and enrollment  (1)                            3,002      13      (30)     2,972      13 Technology and content (1)      3,108      13     (143)     2,965      13 General and administrative  (1)                            4,308      19     (132)     4,176      18                              -------- -------  -------  --------- -------Total operating costs and expenses                       18,154      79     (350)    17,804      77                              -------- -------  -------  --------- -------Income from operations           4,843      21      350      5,193      23Interest and other income, net   1,403       6       --      1,403       6                              -------- -------  -------  --------- -------Income before income taxes       6,246      27      350      6,596      29Provision for income taxes (2)   2,516      11       20      2,536      11                              -------- -------  -------  --------- -------Net income                    $  3,730      16% $   330  $   4,060      18%                              ======== =======  =======  ========= =======Net income per share:   Basic                      $   0.16          $  0.01  $    0.17   Diluted                    $   0.14          $  0.01  $    0.15Weighted-average number of shares used in per share amounts:   Basic                        23,517           23,517     23,517   Diluted                      26,263           26,263     26,263Explanation 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
kate.sidorovich@ehealth.com
http://ir.ehealthinsurance.com

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