Market Overview

eHealth, Inc. Announces Fourth Quarter and Fiscal 2017 Results

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Fourth quarter 2017 Overview

  • Revenue for the fourth quarter of 2017 was $38.8 million, a decrease
    of 11% compared to $43.8 million for the fourth quarter of 2016.
  • Net loss for the fourth quarter of 2017 was $21.0 million compared to
    net loss of $16.7 million for the fourth quarter of 2016.
  • Adjusted EBITDA for the fourth quarter of 2017 was $(19.1) million
    compared to $(13.9) million for the fourth quarter of 2016.
  • Net cash used in operations for the fourth quarter of 2017 was $10.1
    million compared to $4.7 million net cash used in operations for the
    fourth quarter of 2016.

eHealth, Inc. (NASDAQ:EHTH), a leading private online health insurance
exchange, announced today its financial results for the fourth quarter
and fiscal year ended December 31, 2017.

Scott Flanders, chief executive officer of eHealth stated, "My priority
in 2017 was to return the company to financial and operating discipline
with a special emphasis on enhancing the efficiency and
cost-effectiveness of our Medicare sales and marketing activities. We
made significant progress in this area, and I believe we are now
well-positioned to expand our presence in the important Medicare market
on a more attractive cost basis. In the small business market, we made
solid progress last year. We more than doubled the number of approved
groups compared to 2016 and developed the infrastructure to scale our
online presence and profitably grow this business in the future. The
individual health insurance market remained challenged during the open
enrollment period with high premiums and a low number of insurers
offering individual and family health insurance products, which resulted
in declining new enrollments for us. Moving forward we plan to continue
to pursue the strategy of offering non-Affordable Care Act compliant
plans, including short-term and packaged products, while we await much
needed legislation to stabilize this market."

GAAP — Fourth Quarter of 2017 Results

Revenue — Revenue for the fourth quarter of 2017 totaled $38.8
million, an 11% decrease compared to $43.8 million for the fourth
quarter of 2016. Commission revenue for the fourth quarter of 2017
totaled $31.8 million, a 14% decrease compared to $36.9 million for the
fourth quarter of 2016. Other revenue for the fourth quarter of 2017 was
$7.1 million, a 3% increase compared to $6.9 million for the fourth
quarter of 2016.

Revenue from our Medicare segment was $22.9 million for the fourth
quarter of 2017, a 16% increase compared to $19.7 million for the fourth
quarter of 2016. Revenue from our Individual, Family and Small Business
segment was $15.9 million for the fourth quarter of 2017, a 34% decrease
compared to $24.0 million for the fourth quarter of 2016. Revenue from
our Medicare segment accounted for the majority of our revenue in the
fourth quarter of 2017, compared to the fourth quarter of 2016 when
revenue from our Individual, Family and Small Business segment accounted
for the majority of our revenue.

Loss from Operations — Loss from operations for the fourth
quarter of 2017 was $23.4 million compared to loss from operations of
$16.8 million for the fourth quarter of 2016. Operating margin was (60)%
for the fourth quarter of 2017 compared to (38)% for the fourth quarter
of 2016.

Pre-tax Loss — Pre-tax loss for the fourth quarter of 2017 was
$23.3 million compared to pre-tax loss of $16.7 million for the fourth
quarter of 2016.

Provision (Benefit) for Income Taxes — Benefit for income taxes
for the fourth quarter of 2017 was $2.3 million compared to provision
for income taxes of $18,000 for the fourth quarter of 2016.

Net Loss — Net loss for the fourth quarter of 2017 was $21.0
million, or $1.12 net loss per diluted share, compared to net loss of
$16.7 million, or $0.91 loss per diluted share, for the fourth quarter
of 2016.

Segment Profit (Loss) Loss from our Medicare segment was
$16.3 million for the fourth quarter of 2017, a 26% improvement compared
to loss of $22.0 million for the fourth quarter of 2016. Profit from our
Individual, Family and Small Business segment was $4.1 million for the
fourth quarter of 2017, a 71% decrease compared to $14.2 million for the
fourth quarter of 2016.

Non-GAAP — Fourth Quarter of 2017 Results

Non-GAAP Operating Loss & Non-GAAP Net Loss — Non-GAAP
operating loss for the fourth quarter of 2017 was $19.8 million compared
to non-GAAP operating loss of $14.6 million for the fourth quarter of
2016. Non-GAAP operating margin for the fourth quarter of 2017 was (51)%
compared to (33)% for the fourth quarter of 2016. Non-GAAP net loss for
the fourth quarter of 2017 was $17.3 million, or $0.93 loss per diluted
share, compared to non-GAAP net loss of $14.5 million, or $0.79 loss per
diluted share, for the fourth quarter of 2016.

Non-GAAP operating loss, non-GAAP net loss and non-GAAP net loss per
diluted share for the fourth quarter of 2017 exclude $2.7 million of
stock-based compensation expense, $0.6 million of acquisition costs
related to our recently completed acquisition of GoMedigap and $0.3
million of amortization of intangible assets. Non-GAAP operating loss,
non-GAAP net loss and non-GAAP net loss per diluted share for the fourth
quarter of 2016 exclude $1.9 million of stock-based compensation expense
and $0.3 million of amortization of intangible assets.

Adjusted EBITDA — Adjusted EBITDA for the fourth quarter
of 2017 was $(19.1) million compared to $(13.9) million for the fourth
quarter of 2016. Adjusted EBITDA is calculated by adding stock-based
compensation, depreciation and amortization expense, acquisition costs
related to our recently completed acquisition of GoMedigap,
restructuring benefit, amortization of intangible assets, other income
(expense), net and provision (benefit) for income taxes to GAAP net loss.

Membership & Submitted Applications

Membership — Total estimated membership as of December 31, 2017
was 936,900 members, an 8% decrease compared to 1,015,200 members we
reported as of December 31, 2016. Estimated Medicare membership as of
December 31, 2017 was 384,900, a 26% increase compared to 304,900 we
reported as of December 31, 2016. Estimated individual and family plan
membership as of December 31, 2017 was 224,400 members, a 38% decrease
compared to 360,600 we reported as of December 31, 2016.

Submitted Applications —Submitted applications for all Medicare
products, which includes Medicare Advantage, Medicare Supplement and
Prescription Drug Plans were 98,800 applications in the fourth quarter
of 2017, a 16% increase compared to 85,300 applications in the fourth
quarter of 2016. Submitted applications for individual and family plan
products decreased 23% in the fourth quarter of 2017 to 34,900
applications covering 50,400 individuals compared to 45,100 applications
covering 66,900 individuals in the fourth quarter of 2016.

Cash — Fourth Quarter of 2017

Cash Flows — Net cash used in operating activities was $10.1
million for the fourth quarter of 2017 compared to net cash used in
operating activities of $4.7 million for the fourth quarter of 2016.

GAAP — Full Year Results

Revenue — Revenue for the year ended December 31, 2017 totaled
$172.4 million, an 8% decrease compared to $187.0 million for the year
ended December 31, 2016. Commission revenue for the year ended
December 31, 2017 totaled $158.4 million, a 7% decrease compared to
$170.9 million for the year ended December 31, 2016. Other revenue for
the year ended December 31, 2017 was $13.9 million, a 14% decrease
compared to $16.1 million for the year ended December 31, 2016.

Revenue from our Medicare segment was $102.6 million for the year ended
December 31, 2017, a 28% increase compared to $80.3 million for the year
ended December 31, 2016. Revenue from our Individual, Family and Small
Business segment was $69.8 million for the year ended December 31, 2017,
a 35% decrease compared to $106.7 million for the year ended
December 31, 2016. Revenue from our Medicare segment accounted for the
majority of our revenue for the year ended December 31, 2017, compared
to the year ended December 31, 2016 when revenue from our Individual,
Family and Small Business segment accounted for the majority of our
revenue.

Loss from Operations — Loss from operations for the year ended
December 31, 2017 was $29.5 million compared to loss from operations of
$5.9 million for the year ended December 31, 2016. Operating margin was
(17)% for the year ended December 31, 2017 compared to (3)% for the year
ended December 31, 2016.

Pre-tax Loss — Pre-tax loss for the year ended December 31, 2017
was $29.2 million compared to pre-tax loss of $5.8 million for the year
ended December 31, 2016.

Benefit for Income Taxes — Benefit for income taxes for the year
ended December 31, 2017 was $3.8 million compared to $0.9 million
benefit for income taxes for the year ended December 31, 2016.

Net Loss — Net loss for the year ended December 31, 2017 was
$25.4 million, or $1.37 loss per diluted share, compared to net loss of
$4.9 million, or $0.27 loss per diluted share, for the year ended
December 31, 2016.

Segment Profit (Loss) Loss from our Medicare segment was
$18.8 million for the year ended December 31, 2017, a 43% improvement
compared to $33.1 million loss from Medicare segment for the year ended
December 31, 2016. Profit from our Individual, Family and Small Business
segment was $30.4 million for the year ended December 31, 2017, a 55%
decrease compared to $67.9 million for the year ended December 31, 2016.

Non-GAAP — Year-to-Date Results

Non-GAAP Operating Income (Loss) & Non-GAAP Net Income (Loss) — Non-GAAP
operating loss for the year ended December 31, 2017 was $18.1 million
compared to $2.2 million non-GAAP operating income for the year ended
December 31, 2016. Non-GAAP operating margin for the year ended
December 31, 2017 was (11)% compared to 1% for the year ended
December 31, 2016. Non-GAAP net loss for the year ended December 31,
2017 was $14.1 million, or $0.76 net loss per diluted share, compared to
$3.1 million non-GAAP net income, or $0.17 non-GAAP net income per
diluted share, for the year ended December 31, 2016.

Non-GAAP operating income (loss), non-GAAP net income (loss) and
non-GAAP net income (loss) per diluted share for the year ended
December 31, 2017 exclude $9.7 million of stock-based compensation
expense, $0.6 million of acquisition costs related to our recently
completed acquisition of GoMedigap and $1.0 million of amortization of
intangible assets. Non-GAAP operating income, non-GAAP net income and
non-GAAP net income per diluted share for the year ended December 31,
2016 exclude $7.3 million of stock-based compensation expense, $0.3
million of restructuring benefit and $1.0 million of amortization of
intangible assets.

Adjusted EBITDA — Adjusted EBITDA for the year ended
December 31, 2017 was $(15.3) million compared to $5.7 million for the
year ended December 31, 2016. Adjusted EBITDA is calculated by adding
stock-based compensation, acquisition costs related to our recently
completed acquisition of GoMedigap, depreciation and amortization
expense, restructuring benefit, amortization of intangible assets, other
income (expense), net and benefit for income taxes to GAAP net loss.

Membership & Submitted Applications

Submitted Applications — Submitted applications for all Medicare
products, which includes Medicare Advantage, Medicare Supplement and
Prescription Drug Plans was 190,200 applications in the year ended
December 31, 2017, a 10% increase compared to 173,000 applications in
the year ended December 31, 2016. Submitted applications for individual
and family plan products decreased 51% in the year ended December 31,
2017 to 67,400 applications covering 97,200 individuals compared to
138,100 applications covering 192,100 individuals in the year ended
December 31, 2016.

2018 Guidance

eHealth's guidance for the full year ending December 31, 2018 is based
on information available as of March 1, 2018. These expectations are
forward-looking statements, and eHealth assumes no obligation to update
these statements. Actual results may be materially different and are
affected by the risk factors and uncertainties identified in this
release and in eHealth's annual and quarterly filings with the
Securities and Exchange Commission.

In May 2014, the Financial Accounting Standard Board issued ASU 2014-09, Revenue
from Contracts with Customers (Topic 606)
, requiring an entity to
recognize revenue when it transfers promised goods or services to
customers in an amount that reflects the consideration to which the
entity expects to be entitled to in exchange for those goods or
services. We are required to adopt this new accounting standard in the
first quarter of 2018 and will use the full retrospective method to
restate each prior reporting period presented in our financial
statements.

Under the new standard, since our services associated with
Medicare-related, individual and family and ancillary health insurance
plans are complete once an application is approved by a carrier, we will
recognize Medicare-related, individual and family and ancillary health
insurance plan commission revenue at the time the plan is approved by
the carrier equal to the total estimated commissions we expect to
collect from the carrier relating to the plan. However, due to annual
services we provide in renewing small business health insurance plans,
we will recognize small business health insurance plan commission
revenue at the time the plan is approved by the carrier, and when it
renews each year thereafter, equal to the estimated commissions we
expect to collect from the carrier relating to the plan over the
following 12 months. Estimated commissions are based on a number of
assumptions including, but not limited to, estimating forfeitures from
plan cancellations, customer renewal rates and expected future
commission rates likely to be received per member based on renewal,
product type and carrier. These assumptions are based on historical
trends and incorporate management's judgment. Our actual results are
likely to fluctuate as a result of the assumptions we used to estimate
the commissions we expect to collect. We will update the assumptions
when we observe a sufficient level of evidence that would suggest that
the long term expectation of the assumptions has changed. To the extent
we make changes to the assumptions in the future, we will recognize any
material impact of the changes to estimated commission revenue in the
reporting period in which the change is made.

We are continuing to evaluate the impact of this new accounting standard
on our historical consolidated financial statements. Based on our
evaluation and to provide context to our 2018 guidance described below,
we preliminarily expect our total revenue, GAAP net loss and Adjusted
EBITDA will be in the ranges of $186.0 million to $191.0 million,
($10.9) million to ($5.9) million and ($0.9) million to $4.1 million,
respectively, for the year ended December 31, 2017. As we complete our
evaluation of this new standard, we may modify our assumptions and new
information may arise that could cause our retroactively restated
historical results to be materially different than these current
estimated ranges. We plan to finalize our accounting assessment and the
quantitative impact of the adoption of this new accounting standard
during the first quarter of 2018, and plan to present restated
historical condensed consolidated financial statements as part of our
first quarter of 2018 earnings release.

The following guidance for the full year ending December 31, 2018
reflects our adoption of the new revenue recognition standard.

  • Total revenue is expected to be in the range of $217.5 million to
    $227.5 million. Revenue from the Medicare segment is expected to be in
    the range of $178.5 million to $183.5 million. Revenue from the
    Individual, Family and Small Business segment is expected to be in the
    range of $39.0 million to $44.0 million.
  • GAAP net income is expected to be in the range of $1.6 million to $6.6
    million.
  • Adjusted EBITDA(a) is expected to be in the range of $21.9
    million to $26.9 million.
  • Medicare segment profit(b) for the year ending December 31,
    2018 is expected to be in the range of $45.5 million to $49.5 million.
    Individual, Family and Small Business segment profit(b) for
    the year ending December 31, 2018 is expected to be in the range of
    $6.0 million to $7.0 million. Corporate(c) shared service
    expenses, excluding stock-based compensation and depreciation and
    amortization expense, is expected to be approximately $29.5 million.
  • Non-GAAP net income per share(d) is expected to be in the
    range of $0.92 to $1.18 per share.
  • Adjusted EBITDA per share(e) is expected to be in the range
    of $1.13 to $1.39 per share.

(a) Adjusted EBITDA is calculated by adding stock-based compensation,
depreciation and amortization expense, restructuring charges,
amortization of intangible assets, other income (expense) and provision
for income taxes to GAAP net income.

(b) Segment profit is calculated as revenue for the applicable segment
less Marketing and Advertising, Customer Care and Enrollment, Technology
and Content and General and Administrative operating expenses, excluding
stock-based compensation, depreciation and amortization expense and
amortization of intangible assets, that are directly attributable to the
applicable segment and other indirect Marketing and Advertising,
Customer Care and Enrollment and Technology and Content operating
expenses, excluding stock-based compensation, depreciation and
amortization expense and amortization of intangible assets, allocated to
the applicable segment based on usage.

(c) Corporate consists of other indirect General and Administrative
operating expenses, excluding stock-based compensation and depreciation
and amortization expense, which are managed in a corporate shared
services environment and, since they are not the responsibility of
segment operating management, are not allocated to the reportable
segments.

(d) Non-GAAP net income per share is calculated by excluding stock-based
compensation expense, restructuring charges and intangible asset
amortization expense to GAAP net income.

(e) Adjusted EBITDA per share is calculated by adding stock-based
compensation, depreciation and amortization expense, restructuring
charges, amortization of intangible assets, other income (expense) and
provision for income taxes to GAAP net income per share.

Webcast and Conference Call Information

A Webcast and conference call will be held today, Thursday, March 1,
2018 at 5:00 p.m. Eastern / 2:00 p.m. Pacific Time. 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 (877) 930-8066 for domestic callers and (253) 336-8042 for
international callers. The participant passcode is 1988118. A telephone
replay will be available two hours following the conclusion of the call
for a period of seven days and can be accessed by dialing (855) 859-2056
for domestic callers and (404) 537-3406 for international callers. The
call ID for the replay is 1988118. The live and archived webcast of the
call will also be available on eHealth's website at http://www.ehealthinsurance.com
under the Investor Relations section.

About eHealth, Inc.

eHealth, Inc. (NASDAQ:EHTH) operates eHealth.com,
a leading private online health insurance exchange where individuals,
families and small businesses can compare health insurance products from
leading insurers side by side and purchase and enroll in coverage
online. eHealth offers thousands of individual, family and small
business health plans underwritten by many of the nation's leading
health insurance companies. eHealth (through its subsidiaries) is
licensed to sell health insurance in all 50 states and the District of
Columbia. eHealth also offers educational resources and powerful online
and pharmacy-based tools to help Medicare beneficiaries navigate
Medicare health insurance options, choose the right plan and enroll in
select plans online through PlanPrescriber.com (www.PlanPrescriber.com),
eHealthMedicare.com (www.eHealthMedicare.com)
and Medicare.com (www.Medicare.com)
and GoMedigap.com (www.GoMedigap.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 statement regarding our goals to expand our
presence in the Medicare market on a more attractive cost basis, our
plan to scale our online presence and profitably grow our small group
insurance business, our plans to offer non-Affordable Care Act compliant
plans including short-term and packaged products, our expectations
regarding legislation to stabilize the individual health insurance
market, our estimates regarding total memberships, Medicare memberships,
Individual and Family plan memberships and other memberships, the
expected impact of our adoption of new revenue recognition standard, our
estimates for 2017 total revenue, GAAP net loss and Adjusted EBITDA
under the new revenue recognition standard and our guidance for the full
year ending December 31, 2018, including our guidance for total revenue,
revenue from the Medicare segment, revenue from the Individual, Family
and Small Business segment, GAAP net income, Adjusted EBITDA, profit
from the Medicare segment, profit from the Individual, Family and Small
Business segment, Corporate shared service expense, GAAP net income per
share, Non-GAAP net income per share and Adjusted EBITDA per share.

These forward-looking statements are inherently subject to various risks
and uncertainties that could cause actual results to differ materially
from the statements made. In particular, as detailed above in the
Guidance section, we are required by the new revenue recognition
standard to make numerous assumptions that are based upon historical
trends and management judgment. These assumptions may change over time
and have a material impact on our revenue recognition, guidance, and
results of operations. Please review the assumptions stated in this
section carefully as well as the disclosures about our implementation of
the new revenue recognition standard in our Form 10-K for the fiscal
year ended December 31, 2017.

Our forward-looking statements are inherently subject to other risks and
uncertainties that could cause actual results to differ materially from
the statements made, including risks associated with the impact of
healthcare reform; our ability to retain existing members and enroll a
large number of new members during the annual healthcare reform open
enrollment period and Medicare annual enrollment period; the impact of
annual enrollment period for the purchase of individual and family
health insurance and its timing on our recognition of revenue; our
ability to sell qualified health insurance plans to subsidy-eligible
individuals and to enroll subsidy eligible individuals through
government-run health insurance exchanges without users leaving our
website for the upcoming open enrollment period; changes in laws and
regulations, including in connection with healthcare reform; our ability
to successfully make and integrate acquisitions; our health insurance
benefit packages' ability to meet individual customer's specific health
insurance and price needs; our ability to comply with CMS guidance and
impact on conversion rates as a result of the federal exchange changes
to enrollment; competition, including competition from government-run
health insurance exchanges; seasonality of our business and the
fluctuation of our operating results; our ability to retain existing
members and limit member turnover; changes in consumer behaviors and
their selection of individual and family health insurance products,
including the selection of products for which we receive lower
commissions; a reduction of product offerings among carriers and the
resulting impact on our commission revenue; carriers exiting the market
of selling individual and family health insurance and the resulting
impact on our supply and commission revenue; our ability to execute on
our growth strategy in the Medicare and small business health insurance
markets; the impact of increased health insurance costs on demand; our
ability to timely receive and accurately predict the amount of
commission payments from health insurance carriers; timing of commission
payments from health insurance carriers; medical loss ratio
requirements; delays in our receipt of items required to recognize
Medicare revenue; changes in member conversion rates; our ability to
accurately estimate membership; our relationships with health insurance
carriers; customer concentration and consolidation of the health
insurance industry; our success in marketing and selling health
insurance plans and our unit cost of acquisition; our ability to hire,
train and retain licensed health insurance agents and other employees;
the need for health insurance carrier and regulatory approvals in
connection with the marketing of Medicare-related insurance products;
costs of acquiring new members; scalability of the Medicare business;
lack of membership growth and retention rates; consumers satisfaction of
our service; changes in competitive landscape; our ability to attract
and to convert online visitors into paying members; changes in products
offered on our ecommerce platform; changes and reductions in commission
rates; maintaining and enhancing our brand identity; our ability to
derive desired benefits from investments in our business, including
membership growth initiatives; dependence on acceptance of the Internet
as a marketplace for the purchase and sale of health insurance; reliance
on marketing partners; the impact of our direct-to-consumer email,
telephone and television marketing efforts; timing of receipt and
accuracy of commission reports; payment practices of health insurance
carriers; dependence on our operations in China; compliance with
insurance and other laws and regulations; exposure to security risks;
and the performance, reliability and availability of our ecommerce
platform and underlying network infrastructure. 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 http://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 (loss); non-GAAP operating margins; adjusted earnings before
interest, taxes, depreciation and amortization (Adjusted EBITDA);
non-GAAP net income (loss), non-GAAP net income (loss) per diluted share
and Adjusted EBITDA per share.

  • Non-GAAP operating income (loss) consists of GAAP operating income
    (loss) excluding the following items:
    • the effects of expensing stock-based compensation related to stock
      options and restricted stock units,
    • acquisition costs,
    • restructuring charges (benefit), and
    • amortization of intangible assets.
  • Non-GAAP operating margins are calculated by dividing non-GAAP
    operating income (loss) by GAAP total revenue.
  • Adjusted EBITDA is calculated by adding stock-based compensation,
    depreciation and amortization expense, acquisition costs,
    restructuring charges (benefit), amortization of intangible assets,
    other income (expense) and provision (benefit) for income taxes to
    GAAP net income (loss).

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 eHealth's
financial condition and results of operations. Management believes that
the use of these non-GAAP financial measures provides consistency and
comparability with eHealth's past financial reports. Management also
believes that the items described above provides an additional measure
of eHealth's operating results and facilitates comparisons of eHealth'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 eHealth's ongoing
operations. eHealth believes that these non-GAAP financial measures are
useful to investors in their assessment of eHealth's operating
performance.

Non-GAAP operating income (loss), non-GAAP operating margins, Adjusted
EBITDA, non-GAAP net income (loss), non-GAAP net income (loss) per
diluted share and Adjusted EBITDA per 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 revenue
and costs associated with the operations of eHealth's business and do
not reflect 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.
eHealth expects to continue to incur the stock-based compensation costs
and purchased intangible asset amortization costs described above, and
exclusion of these costs, and their related income tax benefits, from
non-GAAP financial measures should not be construed as an inference that
these costs are unusual or infrequent. eHealth compensates for these
limitations by prominently disclosing GAAP operating income (loss), GAAP
operating margins, GAAP net income (loss) and GAAP net income (loss) per
diluted share and providing investors with reconciliations from
eHealth'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 described above and the related reconciliations between these
financial measures.

   

EHEALTH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, unaudited)

 

December 31,
2016

December 31,
2017

Assets
Current assets:
Cash and cash equivalents $ 61,781 $ 40,293
Accounts receivable 9,213 9,894
Prepaid expenses and other current assets 5,148   6,670  
Total current assets 76,142 56,857
Property and equipment, net 5,608 4,705
Other assets 4,473 5,492
Intangible assets, net 8,580 7,540
Goodwill 14,096   14,096  
Total assets $ 108,899   $ 88,690  

Liabilities and stockholders' equity

Current liabilities:
Accounts payable $ 5,112 $ 3,246
Accrued compensation and benefits 10,920 15,498
Accrued marketing expenses 7,158 4,088
Deferred revenue 959 385
Other current liabilities 3,775   3,430  
Total current liabilities 27,924 26,647
Non-current liabilities 3,374 900
Stockholders' equity:
Common stock 29 30
Additional paid-in capital 272,778 281,706
Treasury stock, at cost (199,998 ) (199,998 )
Retained earnings (accumulated deficit) 4,616 (20,796 )
Accumulated other comprehensive income 176   201  
Total stockholders' equity 77,601   61,143  
Total liabilities and stockholders' equity $ 108,899   $ 88,690  
 

EHEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts, unaudited)

   

Three Months Ended
December 31,

 

Year Ended
December 31,

2016   2017 2016   2017
Revenue
Commission $ 36,873 $ 31,777 $ 170,850 $ 158,424
Other 6,887   7,063   16,110   13,931  
Total revenue 43,760 38,840 186,960 172,355
Operating costs and expenses:
Cost of revenue 429 264 3,176 2,273
Marketing and advertising (1) 28,189 23,196 72,213 65,874
Customer care and enrollment (1) 16,251 19,264 48,718 59,183
Technology and content (1) 7,696 8,531 32,749 32,889
General and administrative (1) 7,748 10,090 35,216 39,969
Acquisition costs 621 621
Restructuring benefit (297 )
Amortization of intangible assets 260   260   1,040   1,040  
Total operating costs and expenses 60,573   62,226   192,815   201,849  
Loss from operations (16,813 ) (23,386 ) (5,855 ) (29,494 )
Other income (expense), net 127   113   102   327  
Loss before benefit for income taxes (16,686 ) (23,273 ) (5,753 ) (29,167 )
Provision (benefit) for income taxes 18   (2,315 ) (871 ) (3,755 )
Net loss $ (16,704 ) $ (20,958 ) $ (4,882 ) $ (25,412 )
 
Net loss per share:
Basic $ (0.91 ) $ (1.12 ) $ (0.27 ) $ (1.37 )
Diluted $ (0.91 ) $ (1.12 ) $ (0.27 ) $ (1.37 )
 
Weighted-average number of shares used in per share amounts:
Basic 18,345 18,632 18,272 18,512
Diluted 18,345 18,632 18,272 18,512
 
(1) Includes stock-based compensation as follows:
Marketing and advertising $ 246 $ 314 $ 1,237 $ 1,033
Customer care and enrollment 137 151 497 418
Technology and content 544 432 1,836 1,410
General and administrative 983   1,849   3,696   6,833  
Total stock-based compensation expense $ 1,910   $ 2,746   $ 7,266   $ 9,694  
 

EHEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

 
 

Three Months Ended
December 31,

 

Year Ended
December 31,

2016   2017 2016   2017
Operating activities
Net loss $ (16,704 ) $ (20,958 ) $ (4,882 ) $ (25,412 )
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 790 625 3,539 2,837
Amortization of internally developed software 277 409 936 1,464
Amortization of book-of-business consideration 41 1,649 1,167
Amortization of intangible assets 260 260 1,040 1,040
Stock-based compensation expense 1,910 2,746 7,266 9,694
Deferred income taxes 114 (675 ) 114 (675 )
Other non-cash items (141 ) (11 ) (233 ) (101 )
Changes in operating assets and liabilities:
Accounts receivable (1,600 ) 3,126 434 (681 )
Prepaid expenses and other assets 750 1,273 (486 ) (1,730 )
Accounts payable 2,683 (314 ) 2,227 (1,866 )
Accrued compensation and benefits 1,890 4,619 (3,466 ) 4,578
Accrued marketing expenses 5,502 1,875 (3,540 ) (3,070 )
Deferred revenue (457 ) (2,686 ) 567 (574 )
Other liabilities (13 ) (416 ) (1,082 ) (2,212 )
Net cash provided by (used in) operating activities (4,698 ) (10,127 ) 4,083   (15,541 )
Investing activities
Capitalized internal-use software and website development costs (377 )

 

(705 ) (1,837 ) (3,210 )
Purchases of property and equipment and other assets (186 ) (385 ) (1,889 ) (1,868 )
Net cash used in investing activities (563 ) (1,090 ) (3,726 ) (5,078 )
Financing activities
Net proceeds from exercise of common stock options 2 858 62 1,037
Cash used to net-share settle equity awards (204 ) (702 ) (1,248 ) (1,802 )
Principal payments in connection with capital leases (19 ) (25 ) (83 ) (105 )
Net cash provided by (used in) financing activities (221 ) 131   (1,269 ) (870 )
Effect of exchange rate changes on cash and cash equivalents (5 ) 2   (17 ) 1  
Net decrease in cash and cash equivalents (5,487 ) (11,084 ) (929 ) (21,488 )
Cash and cash equivalents at beginning of period 67,268   51,377   62,710   61,781  
Cash and cash equivalents at end of period $ 61,781   $ 40,293   $ 61,781   $ 40,293  
 

EHEALTH, INC.

SEGMENT INFORMATION

(In thousands, unaudited)

   

Three Months Ended
December 31, 2017

Year Ended
December 31, 2017

2016

  2017 2016   2017

Revenue

Medicare (1) $ 19,728 $ 22,914 $ 80,269 $ 102,584
Individual, Family and Small Business (2) 24,032   15,926   106,691   69,771  
Total revenue $ 43,760   $ 38,840   $ 186,960   $ 172,355  
 

Segment profit (loss)

Medicare segment loss (3) $ (22,005 ) $ (16,290 ) $ (33,141 ) $ (18,760 )
Individual, Family and Small Business segment profit (3) 14,215   4,120   67,905   30,427  
Total segment profit (loss) (7,790 ) (12,170 ) 34,764 11,667
Corporate (4) (6,063 ) (7,585 ) (29,071 ) (27,590 )
Stock-based compensation expense (1,910 ) (2,746 ) (7,266 ) (9,694 )
Depreciation and amortization (790 ) (625 ) (3,539 ) (2,837 )
Restructuring benefit 297
Amortization of intangible assets (260 ) (260 ) (1,040 ) (1,040 )
Other income (expense), net 127   113   102   327  
Loss before benefit for income taxes $ (16,686 ) $ (23,273 ) $ (5,753 ) $ (29,167 )
 

Note:

We evaluate our business performance and manage our operations as two
distinct reporting segments:

  • Medicare and
  • Individual, Family and Small Business.
 
(1) The Medicare segment consists primarily of amounts earned from our
sale of Medicare-related health insurance plans, including Medicare
Advantage, Medicare Supplement and Medicare Part D prescription drug
plans, and to a lesser extent, ancillary products sold to our
Medicare-eligible customers, including but not limited to, dental,
vision, life, short term disability and long term disability
insurance, our advertising program that allows Medicare-related
carriers to purchase advertising on a separate website developed,
hosted and maintained by us and our delivery and sale to third
parties of Medicare-related health insurance leads generated by our
ecommerce platforms and our marketing activities.
(2) The Individual, Family and Small Business segment consists primarily
of amounts earned from our sale of individual and family and small
business health insurance plans and ancillary products sold to our
non-Medicare-eligible customers, including but not limited to,
dental, vision, life, short term disability and long term disability
insurance. To a lesser extent, the Individual, Family and Small
Business segment consists of amounts earned from our online
sponsorship program that allows carriers to purchase advertising
space in specific markets in a sponsorship area on our website, our
licensing to third parties the use of our health insurance ecommerce
technology and our delivery and sale to third parties of individual
and family health insurance leads generated by our ecommerce
platforms and our marketing activities.
(3) Segment profit (loss) is calculated as revenue for the applicable
segment less Marketing and Advertising, Customer Care and
Enrollment, Technology and Content and General and Administrative
operating expenses, excluding stock-based compensation, depreciation
and amortization expense, restructuring benefit and amortization of
intangible assets, that are directly attributable to the applicable
segment and other indirect Marketing and Advertising, Customer Care
and Enrollment and Technology and Content operating expenses,
excluding stock-based compensation, depreciation and amortization
expense and amortization of intangible assets, allocated to the
applicable segment based on usage.
(4) Corporate consists of other indirect General and Administrative
operating expenses, excluding stock-based compensation, depreciation
and amortization expense, which are managed in a corporate shared
services environment and, because they are not the responsibility of
segment operating management, are not allocated to the reportable
segments.
 

EHEALTH, INC.

SUMMARY OF SELECTED METRICS

(Unaudited)

       

Key Metrics:

Three Months Ended
December 31, 2017

Year Ended
December 31, 2017

2016   2017

Percent
Change

2016   2017

Percent
Change

Submitted applications:
Medicare submitted applications (1) 85,300 98,800 16

 %

173,000 190,200 10

 %

IFP submitted applications (2) 45,100 34,900 (23 )% 138,100 67,400 (51 )%
Other submitted applications (3) 62,100   61,800  

 %

276,500   234,600   (15 )%
Total submitted applications (4) 192,500   195,500   2

 %

587,600   492,200   (16 )%
 
Medicare Advantage submitted applications (5) 56,000 60,000 7

 %

121,100 125,900 4

 %

 
 
As of December 31,

2016

2017

Percent
Change

Estimated membership:
Medicare products (6) 304,900 384,900 26

 %

IFP products (7) 360,600 224,400 (38 )%
Other products (8) 349,700   327,600   (6 )%
Total estimated membership (9) 1,015,200   936,900   (8 )%
 

Notes:

(1)   Medicare-related health insurance applications submitted on our
website or through our customer care center during the period,
including Medicare Advantage, Medicare Part D prescription drug and
Medicare Supplement plans. Applications are counted as submitted
when the applicant completes the application and either clicks the
submit button on our website or provides verbal authorization to
submit the application. The applicant may have additional actions to
take before the application will be reviewed by the insurance
carrier, such as providing additional information. In addition, an
applicant may submit more than one application.
(2) Major medical Individual and Family plan ("IFP") health insurance
applications submitted on our website during the period.
Applications are counted as submitted when the applicant completes
the application, clicks the submit button on our website and submits
the application to us. The applicant may have additional actions to
take before the application will be reviewed by the insurance
carrier, such as providing additional information. 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 Medicare-related, small business or
ancillary plans (primarily consisting of short-term, dental, life,
vision, and accident insurance plans).
(3) Applications for health insurance plans other than Medicare and IFP
submitted on our website during the period. Applications for
ancillary plans are counted as submitted when the applicant
completes the application, clicks the submit button on our website
and submits the application to us. Applications for small business
plans are counted as submitted when the applicant completes the
application, the employees complete their applications, the
applicant submits the application to us and we submit the
application to the carrier. The applicant may have additional
actions to take before the application will be reviewed by the
insurance carrier, such as providing additional information. In
addition, an applicant may submit more than one application.
(4) Applications for all health insurance plans submitted on our website
or through our customer care center during the period. See notes
(1), (2) and (3) above for more information as to what constitutes a
submitted application.
(5)

Medicare Advantage plan health insurance applications submitted on
our website or through our customer care center during the period.
Applications are counted as submitted when the applicant completes
the application and either clicks the submit button on our website
or provides verbal authorization to submit the application. The
applicant may have additional actions to take before the
application will be reviewed by the insurance carrier, such as
providing additional information. In addition, an applicant may
submit more than one application. Medicare Advantage submitted
applications are included in Medicare submitted applications - See
Note1 above for more detail.

(6) Estimated number of members active on Medicare-related health
insurance as of the date indicated based on the number of members
for whom we have received or applied a commission payment during the
month of estimation.
(7) Estimated number of members active on IFP health insurance plans as
of the date indicated. To determine the estimate, we take the sum of
(i) the number of IFP members for whom we have received or applied a
commission payment for a month that is up to six months prior to the
date of estimation after reducing that number using historical
experience for assumed member cancellations over the period being
estimated; and (ii) the number of approved members over that period
(after reducing that number by the percentage of members who do not
accept their approved policy from the same month of the previous
year for estimated member cancellations through the date of the
estimate). To the extent we determine we have received substantially
all of the commission payments related to a given month during the
period being estimated, we will take the number of members for whom
we have received or applied a commission payment during the month of
estimation. For IFP health insurance plans, a member who purchases
and is active on multiple standalone insurance plans will be counted
as a member more than once. For example, a member who is active on
both an individual and family health insurance plan and a standalone
dental plan will be counted as two continuing members.
(8) Estimated number of members active on insurance plans other than
Medicare-related health insurance and IFP health insurance plans as
of the date indicated. For ancillary health insurance plans (such as
short-term, dental, vision, accident and student), we take the sum
of (i) the number of members for whom we have received or applied a
commission payment for a month that is up to three months prior to
the date of estimation (after reducing that number using historical
experience for assumed member cancellations over the period being
estimated); and (ii) the number of approved members over that period
(after reducing that number using historical experience for an
assumed number of members who do not accept their approved policy
from the same month of the previous year and for estimated member
cancellations through the date of the estimate). To the extent we
determine we have received substantially all of the commission
payments related to a given month during the period being estimated,
we will take the number of members for whom we have received or
applied a commission payment during the month of estimation. The one
to three-month period varies by insurance product and is largely
dependent upon the timeliness of commission payment and related
reporting from the related carriers. For small business health
insurance plans, we estimate the number of members using the number
of initial members at the time the group is approved, and we update
this number for changes in membership if such changes are reported
to us by the group or carrier in the period it is reported. However,
groups generally notify the carrier directly of policy cancellations
and increases or decreases in group size without informing us.
Health insurance carriers often do not communicate policy
cancellation information or group size changes to us. We often are
made aware of policy cancellations and group size changes at the
time of annual renewal and update our membership statistics
accordingly in the period they are reported.
(9) Estimated number of members active on all insurance plans as of the
date indicated. See the notes (6), (7) and (8) above for additional
information regarding our calculation of total estimated membership.
 

EHEALTH, INC.
SUMMARY OF SELECTED METRICS (Continued)
(Unaudited)

Health insurance carrier's bill and collect insurance premiums paid by
our members. The carriers do not report to us the number of members that
we have as of a given date. The majority of our members who terminate
their policies do so by discontinuing their premium payments to the
carrier and do not inform us of the cancellation. Also, some members pay
their premiums less frequently than monthly. Given the number of months
required to observe non-payment of commissions in order to confirm
cancellations, we estimate the number of members who are active on
insurance policies as of a specified date.

After we have estimated membership for a period, we may receive
information from health insurance carriers that would have impacted the
estimate if we had received the information prior to the date of
estimation. We may receive commission payments or other information that
indicates that a member who was not included in our estimates for a
prior period was in fact an active member at that time, or that a member
who was included in our estimates was in fact not an active member of
ours. For instance, we reconcile information carriers provide to us and
may determine that we were not historically paid commissions owed to us,
which would cause us to have underestimated membership. Conversely,
carriers may require us to return commission payments paid in a prior
period due to policy cancellations for members we previously estimated
as being active. We do not update our estimated membership numbers
reported in previous periods. Instead, we reflect updated information
regarding our historical membership in the membership estimate for the
current period. As a result of the delay in our receipt of information
from insurance carriers, actual trends in our membership are most
discernible over periods longer than from one quarter to the next. As a
result of the delay we experience in receiving information about our
membership, it is difficult for us to determine with any certainty the
impact of current conditions on our membership retention. Health care
reform and its impacts as well as other factors could cause the
assumptions and estimates that we make in connection with estimating our
membership to be inaccurate, which would cause our membership estimates
to be inaccurate.

 

EHEALTH, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In thousands, except per share amounts, unaudited)

 
Three Months Ended December 31,
2016   2017
Amount  

Percent of
Total
Revenue

Amount  

Percent of
Total
Revenue

GAAP marketing and advertising expense $ 28,189 64% $ 23,196 60%
Stock-based compensation expense (1) (246 ) (1)% (314 ) (1)%
Non-GAAP marketing and advertising expense $ 27,943   64% $ 22,882   59%
 
GAAP customer care and enrollment expense $ 16,251 37% $ 19,264 50%
Stock-based compensation expense (1) (137 ) —% (151 ) —%
Non-GAAP customer care and enrollment expense $ 16,114   37% $ 19,113   49%
 
GAAP technology and content expense $ 7,696 18% $ 8,531 22%
Stock-based compensation expense (1) (544 ) (1)% (432 ) (1)%
Non-GAAP technology and content expense $ 7,152   16% $ 8,099   21%
 
GAAP general and administrative expense $ 7,748 18% $ 10,090 26%
Stock-based compensation expense (1) (983 ) (2)% (1,849 ) (5)%
Non-GAAP general and administrative expense $ 6,765   15% $ 8,241   21%
 
GAAP loss from operations $ (16,813 ) (38)% $ (23,386 ) (60)%
Stock-based compensation expense (1) 1,910 4% 2,746 7%
Acquisition costs (2) —% 621 2%
Amortization of intangible assets (3) 260   1% 260   1%
Non-GAAP loss from operations $ (14,643 ) (33)% $ (19,759 ) (51)%
 

Explanation of adjustments

(1)   Non-GAAP loss from operations and non-GAAP expenses exclude the
effect of expensing stock-based compensation related to stock
options and restricted stock units.
(2) Non-GAAP loss from operations excludes costs related to the
acquisition of GoMedigap, which was completed in January 2018.
(3) Non-GAAP loss from operations excludes amortization of intangible
assets.
 

EHEALTH, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In thousands, except per share amounts, unaudited)

 
Year Ended December 31,
2016   2017
Amount  

Percent of
Total
Revenue

Amount  

Percent of
Total
Revenue

GAAP marketing and advertising expense $ 72,213 39% $ 65,874 38%
Stock-based compensation expense (1) (1,237 ) (1)% (1,033 ) (1)%
Non-GAAP marketing and advertising expense $ 70,976   38% $ 64,841   38%
 
GAAP customer care and enrollment expense $ 48,718 26% $ 59,183 34%
Stock-based compensation expense (1) (497 ) —% (418 ) —%
Non-GAAP customer care and enrollment expense $ 48,221   26% $ 58,765   34%
 
GAAP technology and content expense $ 32,749 18% $ 32,889 19%
Stock-based compensation expense (1) (1,836 ) (1)% (1,410 ) (1)%
Non-GAAP technology and content expense $ 30,913   17% $ 31,479   18%
 
GAAP general and administrative expense $ 35,216 19% $ 39,969 23%
Stock-based compensation expense (1) (3,696 ) (2)% (6,833 ) (4)%
Non-GAAP general and administrative expense $ 31,520   17% $ 33,136   19%
 
GAAP loss from operations $ (5,855 ) (3)% $ (29,494 ) (17)%
Stock-based compensation expense (1) 7,266 4% 9,694 6%
Acquisition costs (2) —% 621 —%
Restructuring benefit (3) (297 ) —% —%
Amortization of intangible assets (4) 1,040   1% 1,040   1%
Non-GAAP income (loss) from operations $ 2,154   1% $ (18,139 ) (11)%
 

Explanation of adjustments

(1)   Non-GAAP income (loss) from operations and non-GAAP expenses exclude
the effect of expensing stock-based compensation related to stock
options and restricted stock units.
(2) Non-GAAP income (loss) from operations excludes costs related to the
acquisition of GoMedigap, which was completed in January 2018.
(3) Non-GAAP income (loss) from operations excludes restructuring
benefit.
(4) Non-GAAP income (loss) from operations excludes amortization of
intangible assets.
 

EHEALTH, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In thousands, except per share amounts, unaudited)

   

Three Months Ended
December 31,

Year Ended
December 31,

2016   2017 2016   2017
GAAP net loss $ (16,704 ) $ (20,958 ) $ (4,882 ) $ (25,412 )
Stock-based compensation expense (1) 1,910 2,746 7,266 9,694
Acquisition costs (2) 621 621
Restructuring benefit (3) (297 )
Amortization of intangible assets (4) 260   260     1,040   1,040  
Non-GAAP net income (loss) $ (14,534 ) $ (17,331 ) $ 3,127   $ (14,057 )
 
GAAP net income (loss) per diluted share $ (0.91 ) $ (1.12 ) $ (0.27 ) $ (1.37 )
Stock-based compensation expense (1) 0.10 0.14 0.40 0.51
Acquisition costs (2) 0.04 0.04
Restructuring benefit (3) (0.02 )
Amortization of intangible assets (4) 0.01   0.01   0.06   0.06  
Non-GAAP net income (loss) per diluted share $ (0.79 ) $ (0.93 ) $ 0.17   $ (0.76 )
 
GAAP net loss $ (16,704 ) $ (20,958 ) $ (4,882 ) $ (25,412 )
Stock-based compensation expense (1) 1,910 2,746 7,266 9,694
Depreciation and amortization (5) 790 625 3,539 2,837
Acquisition costs (2) 621 621
Restructuring benefit (3) (297 )
Amortization of intangible assets (4) 260 260 1,040 1,040
Other (income) expense, net (6) (127 ) (113 ) (102 ) (327 )
Provision (benefit) for income taxes (7) 18   (2,315 ) (871 ) (3,755 )
Adjusted EBITDA $ (13,853 ) $ (19,134 ) $ 5,693   $ (15,302 )
 

Explanation of adjustments

(1)   Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted
share and Adjusted EBITDA exclude the effect of expensing
stock-based compensation related to stock options and restricted
stock units.
(2) Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted
share and Adjusted EBITDA exclude costs related to the acquisition
of GoMedigap, which was completed in January 2018.
(3) Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted
share and Adjusted EBITDA exclude restructuring benefit.
(4) Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted
share and Adjusted EBITDA exclude amortization of intangible assets.
(5) Adjusted EBITDA excludes depreciation and amortization.
(6) Adjusted EBITDA excludes other income (expense), net.
(7) Adjusted EBITDA excludes provision (benefit) for income taxes.
 

EHEALTH, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GUIDANCE

(In millions, except per share amounts, unaudited)

 

Year Ending
December 31,
2018

Adjusted EBITDA:
GAAP net income $1.6 - $6.6
Stock-based compensation expense 12.5
Depreciation and amortization 3.4
Restructuring charges 2.9
Amortization of intangible assets 1.0
Provision for income taxes 0.5
Adjusted EBITDA (1) $21.9 - $26.9
 
Non-GAAP Net Income Per Diluted Share:
GAAP net income per diluted share $0.08 - $0.34
Stock-based compensation expense 0.64
Restructuring charges 0.15
Amortization of intangible assets 0.05
Non-GAAP net income per diluted share (2) $0.92 - $1.18
 
Adjusted EBITDA Per Diluted Share:
GAAP net income per diluted share $0.08 - $0.34
Stock-based compensation expense 0.64
Depreciation and amortization 0.18
Restructuring charges 0.15
Amortization of intangible assets 0.05
Provision for income taxes 0.03
Adjusted EBITDA per diluted share (3) $1.13 - $1.39
 

Explanation of adjustments

(1)   Adjusted EBITDA is calculated by adding stock-based compensation,
depreciation and amortization expense, restructuring charges,
amortization of intangible assets, other income (expense) and
provision for income taxes to GAAP net income.
(2) Non-GAAP net income per share is calculated by excluding stock-based
compensation expense, restructuring charges and intangible asset
amortization expense to GAAP net income.
(3) Adjusted EBITDA per diluted share is calculated by adding
stock-based compensation, depreciation and amortization expense,
restructuring charges, amortization of intangible assets, other
income (expense) and provision for income taxes to GAAP net income
per share.

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