eHealth, Inc. Announces First Quarter 2009 Results

First Quarter 2009 Overview

MOUNTAIN VIEW, CA -- (Marketwire) -- 04/28/09 -- eHealth, Inc. (NASDAQ: EHTH), the leadingonline source of health insurance for individuals, families and smallbusinesses, today announced its financial results for the first quarterended March 31, 2009.

Gary Lauer, chief executive officer of eHealth, stated, "We are pleasedwith our first quarter performance and, especially, our submittedapplication growth. The economic environment during the first quartercontinued to be challenging, yet we saw more individuals, families andbusinesses coming to eHealth to find affordable, quality health insurance."

First Quarter Results

Revenue -- Revenue totaled $31.9 million for the first quarter of 2009, a21% increase compared to revenue of $26.3 million for the first quarter of2008.

Submitted Applications -- Submitted applications for individual and familyproducts increased 23% in the first quarter of 2009 to 141,200applications, compared to 114,500 applications in the first quarter of2008.

Membership -- Estimated membership at March 31, 2009 totaled 680,100members, a 22% increase over estimated membership of 558,200 at March 31,2008.

Operating Income -- Operating income increased 18% to $5.6 million for thefirst quarter of 2009, compared to operating income of $4.7 million for thefirst quarter of 2008. Operating margins were 18% in both the firstquarters of 2009 and 2008. Non-GAAP operating income increased 21% to $6.5million for the first quarter of 2009, compared to non-GAAP operatingincome of $5.4 million for the first quarter of 2008. Non-GAAP operatingmargins were 20% in both the first quarters of 2009 and 2008. Non-GAAPoperating income and margins in the first quarters of 2009 and 2008 exclude$941,000 and $659,000 of stock-based compensation expense, respectively.

Pre-tax Income -- Pre-tax income for the first quarter of 2009 was $6.0million, a 1% increase compared to pre-tax income of $5.9 million for thefirst quarter of 2008. Pre-tax income was unfavorably impacted in the firstquarter of 2009 from a decrease in interest income of $0.8 million comparedto the first quarter of 2008. Non-GAAP pre-tax income was $6.9 million forthe first quarter of 2009, a 5% increase compared to non-GAAP pre-taxincome of $6.6 million for the first quarter of 2008. Non-GAAP pre-taxincome in the first quarters of 2009 and 2008 exclude $941,000 and $659,000of stock-based compensation expense, respectively.

Net Income -- Net income for the first quarter of 2009 was $3.1 million, or$0.12 per diluted share. Net income for the first quarter of 2008 was $3.3million, or $0.13 per diluted share. Non-GAAP net income for the firstquarter of 2009 was $4.0 million, or $0.15 per diluted share, compared tonon-GAAP net income for the first quarter of 2008 of $3.8 million, or $0.15per diluted share. Non-GAAP net income and non-GAAP net income per dilutedshare in the first quarter of 2009 exclude $941,000 of stock-basedcompensation expense, adjusted by $131,000 for a net estimated income taxbenefit related to stock-based compensation expense as well as additionaltax expense recorded during the period in accordance with SFAS No. 123(R).Non-GAAP net income and non-GAAP net income per diluted share in the firstquarter of 2008 exclude $659,000 ofstock-based compensation expense, adjusted by $154,000 for estimated incometax benefit related to stock-based compensation expense.

Cash Flow and Cash Balance -- Cash flow from operations for the firstquarter of 2009 was $4.7 million, compared to $5.8 million for the firstquarter of 2008, representing a decrease of 19%. In the first quarter of2008, a tax benefit of $2.4 million, primarily from the utilization of netoperating loss carryforwards, was included in cash flow from operations. Inthe first quarter of 2009, $1.7 million of tax benefit, primarily from theutilization of net operating loss carryforwards, is included in cash flowfrom operations and $1.2 million of net operating loss carryforwards, fromthe utilization of excess tax benefits related to share-based payments, isincluded in cash flows from financing activities. Cash, cash equivalentsand short-term marketable securities as of March 31, 2009 totaled $150.3million, compared to $150.6 million as of December 31, 2008. During thefourth quarter of 2008, our board of directors authorized a stockrepurchase program of up to $30 million, or ten percent of our outstandingcommon stock, whichever is less. We established a 10b5-1 trading plan andbegan repurchasing our outstanding common stock in late December 2008.During the quarter ended March 31, 2009, we repurchased in connection withthe stock repurchase program approximately 361,800 shares of our commonstock at an average cost of $12.70 per share including commissions, for atotal cost of $4.6 million.

2009 Guidance

eHealth is reiterating the following guidance for the full year endingDecember 31, 2009 based on information currently available:

--  Total revenue is expected to be in the range of $131 million to $136    million    --  Stock-based compensation expense is expected to be in the range of $5    million to $6 million    --  GAAP income tax rate expected to be in the range of 43% to 45%    --  GAAP net income per diluted share is expected to be in the range of    $0.51 to $0.61 per share    

Webcast and Conference Call Information

A Webcast and conference call will be held today, Tuesday, April 28, 2009at 5:00 p.m. EDT / 2:00 p.m. PDT. The Webcast will be available live on theInvestor Relations section on eHealth's website athttp://ir.ehealthinsurance.com. Individuals interested in listening to theconference call may do so by dialing 866-730-5764 for domestic callers and857-350-1588 for international callers. The participant passcode is#22249058. 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 #62038405. 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 eHealth's guidance for total revenue,stock-based compensation expense, GAAP income tax rate, and GAAP net incomeper diluted share for the year ending December 31, 2009. 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 retain its members, and maintain or expand itsrelationships with health insurance carriers and marketing partners,negative publicity experienced by eHealth's carrier partners, changes inproducts offered on eHealth's ecommerce platform, changes in commissionpayments or carrier underwriting practices, maintaining and enhancingeHealth's brand identity, changes in member conversion rates and factorsaffecting conversion, system failures, capacity constraints or data loss,the performance, reliability and availability of eHealth's ecommerceplatform and underlying network infrastructure, exposure to online commercesecurity risks, dependence upon Internet search engines to attractconsumers who visit eHealth's website, the effectiveness of eHealth'smarketing and public relations efforts, reliance on marketing partners forthe sale of health insurance, changes in the economy and weak economicconditions, pursuing new strategies and opportunities in new segments ofthe health insurance market, timing of receipt of commission reports andrelated impact on estimating membership, payment practices of healthinsurance carriers, competition, eHealth's operations in China and anyforeign expansion, success in the sale of sponsorship advertising and thelicensing of the use of eHealth's ecommerce platform, success of the healthsavings account (HSA) platform, protection of intellectual property andintellectual property rights claims, regulatory penalties and negativepublicity, costs of obtaining insurance and the health of companiesproviding such insurance, ability to attract and retain qualifiedpersonnel, management of future growth, seasonality, impact of futureacquisitions, implementation of internal enterprise systems and maintenanceof proper and effective internal controls, impact of employee stock-basedcompensation expense and provisions for income taxes, compliance withinsurance and other laws and regulations, changes in laws and regulations,changes in the structure of the health insurance system in the UnitedStates and healthcare system reform. Other factors that could causeoperating, financial and other results to differ are described in eHealth'smost recent Quarterly Report on Form 10-Q or Annual Report on Form 10-Kfiled with the Securities and Exchange Commission and available on theinvestor relations page of eHealth's website at www.ehealthinsurance.comand on the Securities and Exchange Commission's website at www.sec.gov.eHealth does not undertake any obligation to update any forward-lookingstatement to conform the statement to actual results or changes inexpectations.

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 as well as additional    tax expense recorded during the period in accordance with SFAS No. 123(R).    --  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 stock-based compensation costsdescribed above, and exclusion of these costs, and their related income taximpact, from non-GAAP financial measures should not be construed as aninference that these costs are unusual or infrequent. The companycompensates for these limitations by prominently disclosing GAAP operatingincome, GAAP pre-tax income, GAAP net income and GAAP net income perdiluted share and providing investors with reconciliations from thecompany's GAAP operating results to the non-GAAP financial measures for therelevant 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, March 31,                                                       2008       2009                                                   ----------- -----------                  Assets                               (1)     (unaudited)Current assets: Cash and cash equivalents                         $    94,136 $    94,321 Marketable securities                                  56,499      55,944 Accounts receivable                                     2,005       3,024 Deferred income taxes                                   7,580       6,251 Prepaid expenses and other current assets               1,874       3,048                                                   ----------- -----------Total current assets                                   162,094     162,588Property and equipment, net                              4,567       4,253Deferred income taxes                                    1,314       1,616Other assets                                               780       1,125                                                   ----------- -----------Total assets                                       $   168,755 $   169,582                                                   =========== ===========        Liabilities and stockholders' equityCurrent liabilities:  Accounts payable                                 $     2,190 $     2,694  Accrued compensation and benefits                      4,662       3,737  Accrued marketing expenses                             3,162       3,958  Deferred revenue                                         427         517  Other current liabilities                              2,707       2,053                                                   ----------- -----------Total current liabilities                               13,148      12,959Other non-current liabilities                              628         953Stockholders' equity:  Common stock                                              25          25  Additional paid-in capital                           173,095     175,346  Treasury stock shares, at cost                          (639)     (5,232)  Deferred stock-based compensation                        (22)        (13)  Accumulated deficit                                  (17,892)    (14,749)  Accumulated other comprehensive income                   412         293                                                   ----------- -----------Total stockholders' equity                             154,979     155,670                                                   ----------- -----------Total liabilities and stockholders' equity         $   168,755 $   169,582                                                   =========== ===========(1) The condensed consolidated balance sheet at December 31, 2008 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                                                             March 31,                                                      ---------------------                                                         2008       2009                                                      ---------- ----------Revenue:  Commission                                          $   24,119 $   28,204  Sponsorship, licensing and other                         2,161      3,713                                                      ---------- ----------Total revenue                                             26,280     31,917Operating costs and expenses:  Cost of revenue-sharing                                    437        800  Marketing and advertising (1)                            9,649     13,420  Customer care and enrollment (1)                         3,625      3,822  Technology and content (1)                               3,479      3,585  General and administrative (1)                           4,365      4,701                                                      ---------- ----------Total operating costs and expenses                        21,555     26,328                                                      ---------- ----------Income from operations                                     4,725      5,589Interest and other income, net                             1,209        399                                                      ---------- ----------Income before income taxes                                 5,934      5,988Provision for income taxes                                 2,637      2,845                                                      ---------- ----------Net income                                            $    3,297 $    3,143                                                      ========== ==========Net income per share:  Basic                                               $     0.13 $     0.13  Diluted                                             $     0.13 $     0.12Weighted-average number of shares used in per share amounts:  Basic                                                   24,766     24,892  Diluted                                                 25,974     25,720(1) Includes stock-based compensation expense as    follows:     Marketing and advertising                        $      147 $      142     Customer care and enrollment                             66         59     Technology and content                                  175        198     General and administrative                              271        542                                                      ---------- ----------       Total                                          $      659 $      941                                                      ========== ==========                              EHEALTH, INC.              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                        (In thousands, unaudited)                                                     Three Months Ended                                                          March 31,                                                   -----------------------                                                      2008        2009                                                   ----------- -----------Operating activitiesNet income                                         $     3,297 $     3,143Adjustments to reconcile net income to net cash provided by operating activities:  Deferred income taxes                                  2,441       1,672  Depreciation and amortization                            430         547  Amortization and accretion on marketable   securities, net                                          --         169  Stock-based compensation expense                         659         941  Excess tax benefits from stock-based compensation         --      (1,173)  Deferred rent                                            (21)        (25)  Loss on disposal of property and equipment                --          10  Changes in operating assets and liabilities:   Accounts receivable                                    (340)     (1,019)   Prepaid expenses and other current assets               (74)       (335)   Other assets                                             71          96   Accounts payable                                        201         503   Accrued compensation and benefits                    (1,461)       (926)   Accrued marketing expenses                              349         796   Deferred revenue                                         89          90   Other current liabilities                               205         233                                                   ----------- -----------Net cash provided by operating activities                5,846       4,722                                                   ----------- -----------Investing activitiesPurchases of property and equipment                       (334)       (241)Purchase of other assets                                    --      (1,280)Purchases of marketable securities                     (19,315)    (14,439)Sales of marketable securities                           4,047       1,006Maturities of marketable securities                     18,462      13,700                                                   ----------- -----------Net cash provided by (used in) investing activities                                              2,860      (1,254)                                                   ----------- -----------Financing activitiesNet proceeds from exercise of common stock options         746         146Excess tax benefits from stock-based compensation           --       1,173Repurchase of common stock                                  --      (4,593)Principal payments in connection with capital lease                                                      --          (9)                                                   ----------- -----------Net cash provided by (used in) financing activities                                                746      (3,283)                                                   ----------- -----------Effect of exchange rate changes on cash and cash equivalents                                                33          --                                                   ----------- -----------Net increase in cash and cash equivalents                9,485         185Cash and cash equivalents at beginning of period        81,395      94,136                                                   ----------- -----------Cash and cash equivalents at end of period         $    90,880 $    94,321                                                   =========== ===========                              EHEALTH, INC.                        SUMMARY OF SELECTED METRICS                                (Unaudited)                                                Three Months  Three Months                                                    Ended        EndedKey Metrics:                                      March 31,    March 31,                                                    2008         2009                                                ------------  ------------Operating cash flows (1)                        $  5,846,000  $  4,722,000IFP submitted applications (2)                       114,500       141,200IFP approved members (3)                             102,500       120,900Total approved members (4)                           143,400       157,700Total revenue (5)                               $ 26,280,000  $ 31,917,000Total revenue per estimated member for the period (6)                                     $      48.82  $      49.24                                                    As of         As of                                                  March 31,     March 31,                                                    2008          2009                                                ------------  ------------IFP estimated membership (7)                         471,200       585,100Total estimated membership (8)                       558,200       680,100                                                Three Months  Three Months                                                    Ended        Ended                                                  March 31,    March 31,                                                    2008         2009                                                ------------  ------------Marketing and advertising expenses (9)          $  9,649,000  $ 13,420,000Marketing and advertising expenses as a percentage of total revenue (10)                         37%           42%Marketing and advertising expenses excluding stock-based compensation (11)                  $  9,502,000  $ 13,278,000Marketing and advertising expenses excluding stock based compensation as a percentage of total revenue (12)                                       36%           42%Other Metrics:Source of IFP submitted applications (as a percentage of total IFP applications for the period):  Direct (13)                                             38%           41%  Marketing partners (14)                                 34%           34%  Online advertising (15)                                 28%           25%                                                ------------  ------------    Total                                                100%          100%                                                ============  ============Acquisition cost per individual on IFP submitted applications (16)                    $      55.41  $      62.95Acquisition cost (excluding stock-based compensation) per individual on IFP submitted applications (17)                              $      54.57  $      62.28Notes:(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). Ending membership includes     an estimated number of members transferred from Health Benefits     Direct in March of 2009 of approximately 20,000 members for whom     commission had been reported to eHealth and the criteria for revenue     recognition had been satisfied with respect to the quarter ended     March 31, 2009. See our  2008 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.(7)  Estimated number of members active on IFP insurance policies as of     the date indicated. Amounts as of March 31, 2009 include the     estimated number of members transferred from Health Benefits Direct     in March 2009 of approximately 20,000 members for whom commission     had been reported to eHealth and the criteria for revenue     recognition had been satisfied with respect to the quarter ended     March 31, 2009. See our  2008 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. Amounts as of March 31, 2009 include the     estimated number of members transferred from Health Benefits     Direct in March 2009 of approximately 20,000 members for whom     commission had been reported to eHealth and the criteria for     revenue recognition had been satisfied with respect to the     quarter ended March 31, 2009. See our  2008 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 MARCH 31, 2009            (In thousands, except per share amounts, unaudited)Statement of Income Reconciliation                                  Three Months Ended March 31, 2009                            ----------------------------------------------                                      GAAP                         Non-GAAP                                     Percent                       Percent                                       of                            of                              GAAP    Total               Non-GAAP  Total                            Reported Revenue  Adjustments Results  Revenue                            -------- -------  ----------- -------- -------Revenue: Commission                 $ 28,204      88% $        -- $ 28,204      88% Sponsorship, licensing and  other                        3,713      12           --    3,713      12                            -------- -------  ----------- -------- -------Total revenue                 31,917     100           --   31,917     100Operating costs and expenses:  Cost of revenue-sharing        800       2           --      800       2  Marketing and advertising   (1)                        13,420      42         (142)  13,278      42  Customer care and   enrollment (1)              3,822      12          (59)    3,763     12  Technology and content (1)   3,585      11         (198)    3,387     11  General and administrative  (1)                          4,701      15         (542)    4,159     13                            -------- -------  ----------- -------- -------Total operating costs and expenses                     26,328      82         (941)   25,387     80                            -------- -------  ----------- -------- -------Income from operations         5,589      18          941    6,530      20Interest and other income, net                             399       1           --      399       1                            -------- -------  ----------- -------- -------Income before income taxes     5,988      19          941    6,929      21Provision for income taxes (2)                     2,845       9          131    2,976       9                            -------- -------  ----------- -------- -------Net income                  $  3,143      10% $       810 $  3,953      12%                            ======== =======  =========== ======== =======Net income per share:  Basic                     $   0.13          $      0.03 $   0.16  Diluted                   $   0.12          $      0.03 $   0.15Weighted-average number of shares used in per share amounts:   Basic                      24,892               24,892   24,892   Diluted                    25,720               25,720   25,720Explanation 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 as well as additional tax expense recorded    during the period in accordance with SFAS No. 123(R).                              EHEALTH, INC.                      GAAP TO NON-GAAP RECONCILIATION                FOR THE THREE MONTHS ENDED MARCH 31, 2008            (In thousands, except per share amounts, unaudited)Statement of Income Reconciliation                                  Three Months Ended March 31, 2008                            ----------------------------------------------                                      GAAP                         Non-GAAP                                     Percent                       Percent                                       of                            of                              GAAP    Total               Non-GAAP  Total                            Reported Revenue  Adjustments Results  Revenue                            -------- -------  ----------- -------- -------Revenue:  Commission                $ 24,119      92% $        -- $ 24,119      92%  Sponsorship, licensing and   other                       2,161       8           --    2,161       8                            -------- -------  ----------- -------- -------Total revenue                 26,280     100           --   26,280     100Operating costs and expenses:  Cost of revenue-sharing        437       2           --      437       2  Marketing and advertising   (1)                         9,649      37         (147)    9,502     36  Customer care and   enrollment (1)              3,625      14          (66)    3,559     13  Technology and content (1)   3,479      13         (175)    3,304     13  General and administrative   (1)                         4,365      16         (271)    4,094     16                            -------- -------  ----------- -------- -------Total operating costs and expenses                     21,555      82         (659)   20,896     80                            -------- -------  ----------- -------- -------Income from operations         4,725      18          659    5,384      20Interest and other income, net                           1,209       5           --    1,209       5                            -------- -------  ----------- -------- -------Income before income taxes     5,934      23          659    6,593      25Provision for income taxes (2)                     2,637      10          154    2,791      11                            -------- -------  ----------- -------- -------Net income                  $  3,297      13% $       505 $  3,802      14%                            ======== =======  =========== ======== =======Net income per share:   Basic                    $   0.13          $      0.02 $   0.15   Diluted                  $   0.13          $      0.02 $   0.15Weighted-average number of shares used in per share amounts:   Basic                      24,766               24,766   24,766   Diluted                    25,974               25,974   25,974Explanation 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.