Good morning and thank you all for joining us today. On the call this morning, Fran Soistman, eHealth’s Chief Executive Officer; and John Stelben, Chief Financial Officer will discuss our second quarter 2023 financial results.

Following these prepared remarks, we will open up the line for a Q&A session with industry analysts. As a reminder, this call is being recorded and webcast from the Investor Relations section of our website.

A replay of the call will be available on our website later today. Today’s press release, our historical financial news releases, and our filings with the SEC are also available on our Investor Relations site.

We will be making forward-looking statements on this call about certain matters that are based upon management’s current beliefs and expectations relating to future events impacting the company and our future financial operating performance. Forward-looking statements on this call represent eHealth’s views as of today and actual results could differ materially.

We undertake no obligation to publicly address or update any forward-looking statements in future filings or communications regarding our business or results. The forward-looking statements, we will be making during this call are subject to a number of uncertainties and risks, including, but not limited to those described in today’s press release, and in our most recent Annual Report on Form 10-K and our subsequent filings with the SEC.

We will also be discussing certain non-GAAP financial measures on this call. Management’s definitions of these non-GAAP measures and reconciliations to the most directly comparable GAAP financial measures are included in today’s press release.

With that, I’ll turn the call over to Fran Soistman.

Thank you, Eli and thank you all for joining us this morning for eHealth’s second quarter 2023 earnings call. eHealth delivered strong Q2 results with revenue and profitability ahead of our expectations, driven in part by positive tail revenue, which reflects favorable commissions and persistency trends in our book of business.

We are well on track in our preparations for the annual enrollment period, and I’m confident in eHealth’s ability to execute against our goal returning to Medicare enrollment growth on a significantly improved operational and cost foundation in the fourth quarter. Based on our strong performance year-to-date, we are raising our 2023 annual guidance ranges for total revenue, GAAP earnings, and adjusted EBITDA.

The Medicare market represents an attractive growth opportunity for eHealth. As we continue to successfully execute on our transformation plan, we believe we are in a strong position to effectively grow our share of a Medicare opportunity at favorable economics.

Importantly, we believe that distinguishing eHealth as a trusted advisor for beneficiaries and as a reliable source of high quality enrollment volume for carriers is key to our success over the coming quarters and years. Carriers continue to offer a significant choice of Medicare Advantage plans with a wide range of coverage features, premium points and supplemental benefits.

Recent public commentary from major carriers reinforces their ongoing commitment to the Medicare Advantage business and delivering superior value in health outcomes to seniors. We believe that recent developments including changes in star ratings, risk adjustment models and CMS reimbursement rates may lead to shifts in the carrier’s competitive landscape during the upcoming AEP and create additional need for trusted advisors like eHealth to help beneficiaries understand the implications, the plan changes, and evaluate their coverage options.

eHealth is actively engaged in planning sessions with our carrier partners to support them in this AEP with both customer acquisition and retention. We believe that similar to last year, changes to plan offerings and benefit structure will differ by carrier and geography underscoring the importance of our broad carrier selection and local market focus.

Our carrier and channel agnostic enrollment platform uniquely serves the diverse preferences and needs of beneficiaries as they engage in the critically important process of finding the optimal coverage. This unique and proprietary platform is critical to our ability to deliver on our mission to expertly guide consumers for their health insurance options, when, where, and how they prefer.

If our platform deems that a beneficiary is already in the right plan when they contact us, we see it equally critical to keep that person enrolled in their coverage and instill confidence that it offers the best value for their needs. As part of our mission-driven strategy, we’re also investing to expand our Medicare supplement expertise as this product can deliver significant value to select geographic and socioeconomic segment of the Medicare eligible population.

Our mission-driven value proposition and beneficiary pledge create the foundation for our collaborative relationships with our carrier partners. The telebroker channel is an important element of carrier’s broader distribution strategy in the direct-to-consumer markets, including MA, MedSup, and IFP.

However, we believe that carriers will be increasingly consolidating their broker relationships, narrowing them down to best-in-class channel partners that are most aligned on quality standards and deliver superior customer experience. eHealth continues to receive positive feedback from carriers with respect to the significant progress we’ve achieved over the past two years in driving in our enrollment quality and CTM scores.

Second quarter results show another material improvement in CTM performance year-over-year and recently one of our three largest carriers awarded eHealth a quality award for having the lowest CTMs within their broker channel. We also continue to expand our carrier services, adding new beneficiary engagement services, ancillary products, and supporting our carrier direct channel for BPO and overflow arrangements.

We were excited to showcase the strength of our carrier relations through Aetna’s participation in our Investor and Analyst Day in May of this year. eHealth is also committed to maintaining our strong record of regulatory compliance.

During the last quarter’s earning call and at Investor Day, we discussed the new rules that CMS had announced earlier this year related to marketing materials and sales practices for Medicare products. We shared that we believed our company was prepared to effectively navigate the new rules and our confidence has only increased since our previous comments.

eHealth continues its support of CMS and their goal of improving transparency and customer experience as beneficiary shop for Medicare plans. We believe that the rules represent a step towards further rationalization within the demand generation portion of our industry.

Last, AEP marked an inflection point in our sector as key players began to shift towards a more rational approach to marketing spend and a greater emphasis on profitability. This trend is carried into 2023 and has combined with an ongoing reduction in telebroker capacity due to downsizing and exits by some of our competitors.

We expect for this trend to continue, especially with smaller and funding constrained players and believe this creates opportunity for eHealth to capture a larger share of total customer calls and online visits over time and solidify our position as a gold standard in health insurance distribution. Additionally, during the second quarter, CMS announced a moderate increase of just under 2% in maximum broker commission rates.

The increase will be implemented for the 2024 plan year and represents the continuation of the favorable commission in its environment in the MA space. The new rates are in line with our expectations and are one of the positive drivers of lifetime values within our MA product.

Moving now to our second quarter financial results. Our enrollment volume, LTVs and cost performance were largely in line with our expectations.

The outperformance in the quarter was driven primarily by positive tail or adjustment revenue of $18.7 million, which reflects the favorable commissions environment of the past two years, as well as positive retention dynamics, particularly pertaining to Medicare Advantage members we enrolled during the annual enrollment periods in 2020 and 2021. The adjustment revenue underscores the high quality and reliability of our commission’s receivable balance, cumulative positive adjustment revenue to date amounting to more than $170 million since the ASC 606 was initially implemented in 2018.

Based on our observations through June, the most recent AEP cohort enrolled in Q4 of last year continues to perform better in terms of retention compared to the AEP cohort from the prior two years. We are pleased with the traction we are seeing in our retention and customer loyalty building initiative while acknowledging there is still work to be done to improve our retention and that significant upside remains to improving our persistency and LTVs.

Second quarter total revenue was $66.8 million, an increase of 32% year-over-year. This included a 30% decline in our Medicare enrollment volume offset by increase in MA and PDP, LTVs as well as tail revenue as described earlier.

GAAP net loss and adjusted EBITDA improved substantially on a year-over-year basis also, as a result of the tail revenue. eHealth ended the second quarter with $190 million in cash, cash equivalents and short-term marketable securities.

Operating cash outflow for the quarter was $9.4 million a significant improvement compared to operating cash outflow of $25.8 million in Q2 of 2022 reflecting our continued focus on financial discipline and strong commission collections. During the quarter, we made important progress in preparing key operational areas of eHealth for a successful annual enrollment period.

This AEP represents an important milestone in our transformation program. After dialing back our member acquisition spend last year to focus on rebuilding our sales and marketing organizations and substantially enhancing our cost structure, we are preparing to return to profitable growth in Q4.

Our telesales organization has largely finalized advisor hiring and our comprehensive Medicare and sales mastery training program is now well underway for these incoming advisors. We’re also making final preparations for the launch of our first large carrier dedicated deal, which represents a significant expansion from limited overflow services we provided to the carriers for the past years.

We believe this deal validates eHealth’s capabilities in this area and serves as a jumping off point for other at scale dedicated carrier arrangements. Several smaller deals have already launched or are in the works ahead of Q4.

We’re also working to find additional efficiencies in our staffing strategy. As a pilot program this cycle, we’re introducing a small number of seasonal eHealth advisors into our call center operations, which we expect to afford us additional flexibility to meet the capacity requirements of peak AEP demand.

Within our marketing organization, we are working to implement the branding and demand generation strategies that were outlined at our Investor Day in May. We’re preparing to roll out new lead generation channel and are in the process of finalizing the review and regulatory approval of new marketing messaging plan for launch this AEP.

New materials are intended to build eHealth brand recognition as we breakout of generic redundant messaging that has defined our industry for far too long. The new marketing materials are customized to communicate our differentiated value proposition and are tailored to our key Medicare audiences, including agents, due to Medicare Advantage, switchers within Medicare Advantage, and local markets.

We’re also increasingly focused on enhancing our targeted messaging and outreach for retention to individuals that fall under the categorization of dual-special needs eligible known as D-SNP and chronic special need plans eligible known as C-SNPs. Our online platform is also being updated close coordination with marketing to deploy personalized landing pages that are aligned with our audience targeting strategy.

We have introduced new tools and provide a more seamless shopping and enrollment experience to our customers, including online appointment setting and enhanced mobile site, a streamlined plan selection flow, and expanded educational content. As I mentioned, we are seeing incremental positive impact from a range of retention initiatives introduced last year and are now moving forward with the next phase of our retention program ahead of the critical annual enrollment period.

We believe the retention journey begins with helping beneficiaries find the right plan when they first enroll and have found this to be a foundational factor in creating lasting enrollment. We supplement this with our ongoing retention plan, which is centered around post-enrollment engagement with special focus on members with higher propensity to churn based on our data-driven predictive model and deeper integration of member engagement activities with our customer center, which now has over 450,000 accounts.

While Q4 disproportionately contributes to annual revenue and earnings, we are increasing our annual guidance ranges for total revenue GAAP earnings and adjusted EBITDA by the amount of the positive adjustment revenue recognized in the quarter, net of incremental performance bonus that we accrued for in Q2 reflecting an increase in 2023 projections against our original plan. With these changes, we are now expecting to be profitable on an adjusted EBITDA basis at the midpoint of our updated guidance range, an increase from our prior adjusted EBITDA guidance midpoint, which was originally negative $5 million.

This is a testament to the traction of our transformation plan and the strong retention performance we are achieving within our historical cohorts none of this would be possible though without the critical work of eHealth’s leadership team and employees. Their engagement and dedication to this company and the goal of achieving sustainable profitable growth is truly inspiring.

I also would like to provide an update with respect to our relationship with H.I.G. Capital, our convertible preferred stock investor.

The relationship between H.I.G. and eHealth is the strongest it’s been in my tenure as CEO.

Our recent conversations with H.I.G. leadership have garnered new insight into how they view eHealth, more specifically, it’s clear that the progress eHealth has achieved on its business transformation, reconstituting its leadership team and positioning itself for longer term success has resulted in greater confidence with respect to their investment.

That said, over the past year, we’ve attempted to engage constructively with H.I.G. on various provisions of the investment agreement, and more recently with respect to the minimum asset coverage ratio, preferred stock covenant that contractually changes from 2x to 2.5x or a 25% increase effective later this month.

Our decision to reduce our marketing spend as we embarked on a company-wide transformation program allowed us to drive stronger earnings and cash flow, but also resulted in a temporary decline in our revenue and enrollment growth last year. A decline in enrollment volumes typically translates into lower commission’s receivable balance, which is the numerator in the minimum asset coverage ratio.

While our operational decisions were encouraged and supported by H.I.G.’ s representative on eHealth’s Board of Directors, they also put us at risk for tripping the preferred stock covenant related to this ratio.

Despite our best efforts to amend the financial preferred stock covenants and corresponding remedies, we were unable to find common ground. After careful analysis and consideration of various options supported by our Board of Directors, we made the decision to focus on making prudent investments to drive profitable growth irrespective of the impact on the asset coverage ratio preferred stock covenant.

The outcome of this decision has been the strong operating and financial performance through the first half of the year that we shared with you today, and we believe will support our ability to drive profitable growth as we enter the very important second half of the year. It is important to note that tripping this preferred stock covenant does not create any issues from an acceleration of principle perspective.

The key practical implications are not financial, but rather governance related, and they include; one, under certain circumstances, H.I.G. could be entitled to an additional board fee; two, H.I.G.

would have certain approval rights relating to the hiring and firing of four C-level roles including CEO and CFO; and three, certain budget approval rights. Looking ahead, our Board of Directors and management team remain committed to acting in the best interest of the company and all of our shareholders.

We are pleased with our results for this quarter and confident that the steps we’re taking will enable us to drive significant shareholder value creation as we work towards achieving sustainable profitability and cash flow generation. I’ll now turn the floor to John Stelben, who will walk you through our second quarter financial performance in greater detail.

John?

Thank you, Fran. Second quarter results came in ahead of our expectations driven primarily by the positive adjustment revenue we recognized in the quarter and important validation are commission’s receivable asset.

Q2 results also reflect the work in preparation for the upcoming AEP, including hiring and training of new benefit advisors. Total revenue for the second quarter was $66.8 million, an increase of 32% compared to the second quarter of 2022.

This includes Medicare segment revenue of $55.4 million, an increase of 35% year-over-year and revenue from our Individual, Family and Small Business Group segment of $11.3 million, an increase of 21% over the same time period. Positive net tail or adjustment revenue was $18.7 million, including $13.4 million in the Medicare segment and $5.3 million from the IFP and SMB segment.

Excluding the impact of the tail, second quarter revenue was within our expectations. As Fran mentioned in his remarks, we have over $170 million of cumulative tail revenue produced since we implemented ASC 606.

The tail recognizes quarter in our Medicare segment is in large part related to the two most recent complete January cohorts. We see this as further proof of the stability of our LTVs and believe it should give investors confidence in our contract asset receivable.

GAAP net loss of $23.5 million, improved from $37.5 million in Q2 2022. Adjusted EBITDA loss of $14.8 million improved from a loss of $33.3 million a year ago.

These improvements in our earnings were driven by stronger revenue as well as operational enhancements and impact from our 2022 transformation efforts. Turning to the Medicare segment, second quarter enrollments across all Medicare products declined 30% year-over-year in line with our expectations.

Similar to the first quarter, this enrollment decline reflects a reduction in our marketing spend and productive agent headcount compared to the same quarter a year ago. As a reminder, we temporarily reduced our investment in new member acquisition as we focused on increasing our enrollment quality and making changes to our sales and marketing organizations as part of the transformation program.

During the second quarter, we began ramping our Medicare benefit advisor forth as we march toward our goal of returning to Medicare enrollment growth this AEP. Another reason for our earlier ramp is to fulfill the staffing needs in support of our carrier dedicated services, which will play a larger role in our overall operations this year.

Our customer care and enrollment expense, which increased 12% on a non-GAAP basis, includes costs associated with the compensation, training and licensing of the new advisors we hired this quarter. Our second quarter CC&E expense per approved member increased at a higher rate year-over-year compared to total CC&E spend, given that incoming agents have been in training and many of them were not yet producing enrollments for most of the second quarter.

In total, we estimate roughly $6 million of our CC&E costs in the quarter were allocated to non-producing agents. Despite these costs, telephonic conversions for our active agents increased again on a year-over-year basis by a small percentage.

We expect to deliver another annual increase in call center conversions during the critical fourth quarter, reflecting additional enhancements to our hiring, training and overall telesales management processes. Our variable marketing cost per approved Medicare member decreased by 3% year-over-year as a result of improved conversions from our incumbent agents, as well as our ongoing commitment to efficient deployment of marketing spend.

We expect to see a more meaningful reduction in variable marketing costs for approved Medicare member in Q4. Second quarter, Medicare Advantage LTV was $891 a year-over-year increase of 1%.

This increase reflects favorable persistency and commission rate trends partially offset by product and carrier mix. The tail, we recognize this quarter was driven by several historical cohorts with a large portion coming from January 1, enrollment cohorts in 2021 and 2022 enrolled in the 2020 and 2021 AEPs respectively.

Some of the underlying factors include the conservative LTVs at which these cohorts were initially booked and the early impact of some of the retention measures we have put into place over the last 18 months. Favorable developments in these recent AEP cohorts underscore the strength of our commission’s receivable assets.

Second quarter non-commission revenue is $6.6 million consisting primarily of Medicare advertising or sponsorship revenue. This represented an increase of $4 million compared to a year ago, driven primarily by timing, specifically in 2022 most of the sponsorship revenue generated in the first half of the year came during the first quarter.

Medicare segment loss was $4.7 million, a significant improvement compared to the segment loss of $25.3 million in 2Q 2022. Within our Individual, Family and Small Business Group segment, which also includes our ancillary products revenue of $11.3 million, increase 21% year-over-year, driven by higher tail revenue, as well as another increase in estimated lifetime value of our IFP products.

Approved enrollments decrease for both IFP and ancillary products, while SMB approvals increased moderately compared to Q2 2022. Our combined check-in content and general and administrative costs increased 4% compared to a year ago.

Underneath that non-GAAP check-in content expense declined $2.6 million or 16% reflecting our cost reduction efforts and non-GAAP G&A increased by $3.9 million or 27%, driven primarily by higher bonus accrual due to increased annual outlook, which is now above our internal financial performance targets. Non-GAAP marketing and advertising costs decreased 23% year-over-year.

Beneath that variable marketing decreased 33% in line with the 30% decline we saw in Medicare approved enrollments. Non-GAAP CC&E costs increased 12% year-over-year.

As I mentioned earlier, this reflects our agent ramp during the quarter in preparation for AEP. Our total non-GAAP operating expenses declined 3% compared to Q2 of 2022.

Total operating cash outflow for the second quarter improved over $16 million to $9.4 million from $25.8 million in Q2 2022. This was driven by our enhanced cost structure, stronger profitability, and better than expected commission collections.

Additionally, for the 12-month period ending June 30, 2023, operating cash flows was a positive $3.2 million ahead of our original goal to become operating cash flow positive on a trailing 12-month basis in March of next year. We expect for operating cash flow to be negative for the calendar year 2023 as reflected in guidance as we invest for AEP execution.

We expect to return to breakeven to slightly positive operating cash flow for the trailing 12-months ended March 2024 and plan to build on that foundation going forward. We ended the second quarter with $189.8 million in cash, cash equivalents and short-term marketable securities ahead of our expectations.

Our balance sheet also reflects $188.7 million in short-term commission receivables expected to be collected over the next 12 months and $600.9 million in long-term commission receivables. We continue to believe we have sufficient liquidity to execute on our operating plan this year and bridge us to positive cash flow.

Moving on to our 2023 outlook. We are improving our guidance ranges for total revenue, GAAP net loss and adjusted EBITDA to reflect the impact of the positive tail revenue we recognize in the second quarter net of the incremental bonus accrual of $7 million for the full year.

While cash collections year-to-date are ahead of our expectations, we are reiterating our operating cash flow guidance ranges given that tail revenue and bonus accrual have a neutral impact on cash flow and due to the importance of fourth quarter on our overall operating cash flow for the year. Our new guidance ranges are as follows.

Total revenue for 2023 is now expected to be in the range of $439 million to $459 million compared to our prior guidance of $420 million to $440 million. GAAP net loss for 2023 is now expected to be in the range of $46 million to $26 million compared to our prior guidance range of $55 million to $35 million.

Adjusted EBITDA for 2023 is now expected to be in the range of negative $3 million due positive $17 million compared to our prior guidance of negative $15 million to positive $5 million. We continue to expect operating cash flow for 2023 to be in the range of negative $30 million to negative $15 million.

Looking ahead to the third quarter, we expect to come in roughly flat with Q3 of 2022 on revenue. We also expect a sequential increase in CC&E costs, which reflect a full quarter of compensation to our new advisors higher during Q2 and in July.

It also reflects our initial planned investment in our marketing campaigns ahead of the AEP as described by Fran. As a result, we expect our Q3 2023 adjusted EBITDA loss to be wider than it was in Q2 2023, excluding tail.

In closing, eHealth financial results reflect strong execution in the first half of the year as well as significant progress in our preparation for the upcoming Medicare enrollment season. We’re also encouraged by the positive signs we are seeing in retention data for our recent AEP cohorts, including members we enrolled in the fourth quarter of 2022.

Overall, we believe the company is in a strong position to achieve our goal of sustainable profitability driven by continued improvement in our enrollment margins, financial discipline, revenue, diversification, and positive cash flow generation. Operator, please open the line for questions.

Thank you. John, I wondered if you could address the thoughts on LTVs going forward, given the tail revenues are suggestive obviously of you’ve been under betting on the LTVs here to four, and you also mentioned the most recent cohort was performing better than expected, which also would technically influence LTVs, so can you walk through that for us?

Sure George, thank you for the question. I think on the LTVs in our guidance, we had a view of what LTVs, where they’d be headed.

I think that as you think about the January 2024 cohort and the recent CMS commission increases that was a little bit lower than probably we expected, but that’s going to be offset by the more positive retention we’ve seen and underneath that some carrier mix. So we feel good about the LTVs being sort of flat to maybe slightly above where we were running last year, but those are the main reasons.

Fran, you mentioned that you had some incremental thoughts on the CMS rules as they were laid out from what you had discussed on the last quarterly call, could you just share what those incremental thoughts are?

Good morning, George. Thanks for the question.

Our views have not changed much in the quarter. There still remains the CMS marketing guidelines to be published, and I think it really comes down to one component of the 48-hour rule, and that specifically is with respect to whether appointments are necessary when a beneficiary is responding to, say a postcard or some other direct mail or other marketing communications.

Most of our volume is really inbound that does not require the 48-hour scope of appointment. So we still feel very good about that situation.

That said, we’ve increased our appointment setting capabilities because we think that it’s a value-add for customers, prospective customers to, we’re a society that likes instant gratification. We – our patience is warned if we’re waiting on call by scheduling they can focus on, what’s on their mind, what they need, insurance on or whether they’re in a shopping mode, and we can be very efficient about that.

So, but back to your the main point of your question, I don’t think there’s going to be anything or shattering when the guidelines come out. We think this, that’s the very manageable situation.

Got it. If I could just sneak one more in, you mentioned your large carrier deal was beginning but, I believe you had a program with them last year.

Can you just talk about the year-over-year expectations relative to that situation?

Happy to George. Again, the customer in question, we hate to be so sort of cryptic about it, but we’ve been asked not to disclose the relationship by that particular customer.

We currently support them in a call overflow capacity today. That changes to a dedicated carrier arrangement.

So essentially we become their primary source for closing their leads. That’s, something, we’re really excited about, number one, it plays to our strengths and while the structure of the arrangement will be changing after the first year into more of a fee based, we’ll be in a broker of record relationship with them during the AEP.

Is that helpful?

Perfect. That is.

Thank you very much.

Sure.

Hey, thanks for taking my question. I’m just curious if you received the first early look at the carrier benefit design and changes for the upcoming AEP season, and how does it track relative to your expectations prior years, and any thoughts on what it may mean for the overall market based on what you see so far?

Good morning, Jonathan. It’s Fran.

Let me start this off. Thanks for the question.

We’re still in the process of meeting with our robust carrier options. The team is still having meetings with both some of our largest carrier partners as well as some of the regional and local carriers.

So it’s pretty fluid at this point. That said, early indications are, if you’ve seen one, you’ve seen one, meaning one carrier in one market.

I think it’s oftentimes lost in the conversation that we tend to describe like star scores and on averages, when in fact they vary on a contract by contract basis, which is usually the notes are a defined geography. So, as I’ve said in my earlier remarks, I think it’s going to play out that, they’re going to be markets where certain carriers are very strong and markets where they may not be as strong as they were this year.

So it’s, I wouldn’t draw any final conclusions other than it’ll be an opportunity for customers to do a market check and make sure those existing MA customers are getting the best value either for zero premium or for the out-of-pocket cost that they’ll incur.

Okay, great. And then just going into, just seeing a question on those conversations so far, are the carriers looking to provide additional resources via ad dollars or perhaps increasing the commission rates closer to the maximum?

Just any color on how they’re discussing, the environment, give it some of their changes, et cetera?

I would say this, Jonathan, it’s very clear to us that the, there’s a much valued relationship that we have with our carrier partners. They value us, they need us to support their growth objectives, particularly when situations where there’s a bit of a, reset in some, among some carriers and in some markets.

So it’s not just the growth, its retention. And our view is that if the beneficiary is in the right plan, then we want to encourage them to stay in that plan with that particular carrier.

If there’s better opportunities that meets all their other requirements and needs, then of course we’ll help them through that process. But in terms of specifics, ad dollars, it’s still very early in the process.

I’d say over the next 45 days, a lot of that will be locked down. We’re about 68 days out from the start of AEP or about 57 days out from the start of the marketing period October 1st.

So, we’re progressing on track and I think that carriers certainly are going to do what they think is right for their companies to make sure that they’re in the best possible position for AEP in our relationship.

Great, thanks.

Hi guys. Thanks for taking the question.

I want to stick with that line of questioning really on shopping behavior, and I think you’ve been pretty consistent about this since the star scores changes were enacted and the ANOC [ph] rate notes came out. But just given the greater differential and benefit design, I think it’s pretty clear that we’ll likely see some increase shopping this AEP, which is a double-edged sword, right?

You’ve got more people coming to your platform and potentially buying, but potentially more churn as well, that’s going to be offset by some of your retention efforts. So I’m just curious, net-net you’re thinking about churn for this AEP, how that may impact LTVs just for the 4Q.

And then if you can give any metrics around your recapture rates historically and what you’re expecting for this AEP, that would be very helpful as well.

Good morning, Daniel. Thanks for the question.

I feel more confident despite the fact that, as you’ve characterized, and I think your characterization is fair. The key is knowing, which geographies could be most disruptive among the carriers.

So, and it’s not something you wait until the annual notice of change, the ANOC comes out this month and beneficiaries start getting notifications of how their current plan will be impacted by changes that carriers are making for next year. We’ve been focusing, as I’ve shared in earlier calls, we’ve been focusing on new retention strategies so that we are touching our customers with greater regularity.

And we know that that’s sometimes is more challenging than others because people don’t like to answer the phone. So we have to use email text and other marketing communications to remind them that we’re here for them.

So we’re on offense and defense, and I think that will be our strategy throughout AEP. As far as the recapture, historically companies been around 10%, I think that there is great upside to that, and just as we are demonstrating our ability to improve persistency, I think the recapture rate will not retreat, I think it’s every opportunity for us to go on offense and make sure that we recapture much more than what we’ve done historically.

Got it. Okay.

And then just a quick one on the increase in CC&E per MA equivalent member this quarter. You mentioned kind of you’re hiring earlier this year, you have less productive agents this quarter on your platform, and historically, can you just remind us how the hiring changed this year versus last year?

Because last year you were hiring earlier as well, and if there were any changes in compensation or talent pool makeup that drove that increase? Thanks.

Sure. Going back to last year, we right sized the organization largely in the CC&E, the sales organization.

So that began in April of last year. So throughout the second quarter, we were removing agents.

So the ramp was, I’d say smaller than this year. We are largely completed in terms of all of the incoming classes.

We had a very successful sales recruitment effort. Our HR team really came through in a big, big way as well as our sales supervisors who do the interviewing and the ultimate determination of who they want on their teams.

So I’m pleased with our progress. The – our training activities and initiatives are so much more developed this year.

We continue to build on success from last year, but taking its new levels. So, I think we’re going to have kind of a better training camp, if you will, as we prepare for the selling season.

And we should see, start to see some of that in the third quarter, because we want to give our new benefit advisors as many opportunities to sell as possible leading up to October 15.

Got it. And were there any changes in overall compensation structure or levels as well?

Look largely, no. And the reason for that is as I know you, you recall, I believe we are remote first, and I believe that that remote first operating model for the sales organization allows us to manage where there may be some cost pressures in certain markets we can work around that.

We want to make sure we’ve got quality benefit advisors representing all the time zones in the United States, so we can meet our prospective customers and current customer’s needs. So I’m not concerned about any cost pressures on the CC&E side.

Yep. Makes sense.

Thanks for the color.

Sure.

Yes, good morning guys, and thanks for taking the question. I have kind of another question that’s LTV related.

Given that it looks like that we’re moving into a year with higher market share shifts due to some of the issues the plans are having with stars ratings, I guess my first question would be is, how do you guys think that that has a meaningful impact on LTVs in 2024? And do you guys feel like you’re kind of over-indexed to any of the plans that are having star’s issues?

John, why don’t you take that question?

Sure. Let me start with the last part of your question first.

We, for the most part, the majority of our commission arrangements are at the CMS Max [ph]. So to the extent that there’s some mix shift between carriers, we think that that could be somewhat muted.

The, as we think about projecting our LTVs, and obviously a big piece of that is churn, I like to say persistency instead of churn. But all we can really do is look at our historical data, and as we understand the changes our carriers are making, we try to factor that in as best we can.

But again, as I stated earlier, we think that the CMS commission increase, which average was about 1.6% that’s certainly lower than expected. However, as we project LTVs, we do look at our persistency, and how that’s improving then that has a positive impact.

So again, overall, I think the LTVs we see to flat to slightly up year-over-year. I’ll stop there.

I’m not sure how to expand on that anymore.

No, I think that’s helpful. And Fran, I’d probably ask you a big picture question about industry structure.

As there are a couple of publicly traded companies in this space, there’s kind of a fragmented private market. I know that you guys have a little bit of, constrained a little bit around the cap structure and what your investors look like.

I guess kind of, do you see any opportunities kind of for industry consolidation where the company could kind of generate excess operating leverage? Or kind of like my big picture question’s kind of about how do you think about industry structure and where we are in industry lifecycle?

Sure. George, I’ll take you back to fourth quarter of last year.

I made certain remarks about where the industry is, and where I think it’s going. And I used the phrase, the term inflection point.

We reiterated that at our Investor and Analyst Day back in mid-May. We’ve seen it’s almost prophetic because it was that same week we saw some news of financial stress with certain organizations, one declaring Chapter 11 bankruptcy.

We know of companies that are looking to exit or have exited others that are looking to divest, but having difficulty. So I think it, if there’s a consolidation, at least the first phase of consolidation is already in motion.

And I think there’s every reason to believe that that will continue. Maybe not at the same pace and maybe sometimes where there’s a lot more activity than others.

But I do think that this sector is right for some consolidation and I think it will further the rationalization of how these businesses operate. And I think that bodes well for the industry.

Okay. Thank you.

I appreciate the color.

Well, thank you operator. I want to thank everyone for joining us again today.

Appreciate the continued support of eHealth and your interest. We demonstrated in this quarter that the transformation initiatives that were launched more than 16 months ago have really paved the way for a new organizational strategy, and cost structure and approach to this business.

We are – I have every reason to conclude that our transformation, our enterprise transformation will largely be wrapped up by the end of this year. There’ll still be some areas where that word may still be used to describe what’s going on.

For example, in our old marketing strategy, because we started a little later. But I’m very pleased with the progress the organization has made the health of the company, the organizational health is very, very high, very strong.

And that is something we don’t talk about much nor many people talk about in business. But when you look at the ability to navigate difficult, challenging times or opportunistic times the organization of health plays a big role and I’m very pleased with where eHealth is in that process.

So again thank you all very much. Have a great day.