eHealth, Inc (EHTH)

[VortMax]

I just wrote one of the 2 analysts on this ticker....CRAZY bad they need to let people know!

Mr. Sommer,



Quick note on EHTH as of Q4 2017. I'm in the IFP and Medicare space and my book mirrors P and L like EHTH. This 606 Accounting change coming now will have EHTH with over a $70M profit for Q4 as they will now be recognizing all revenue and profit when enrolling. So 100,000 new Medicare new enrollees and upward of 100,000 new IFP enrollees may show over $70M. 2018 will likely be $100M+ for all 4 quarters. Of course the catch is this is rev/profit over about an average enrollee lifetime of about 4 years. Nevertheless, I keep reading about how Q4 analysts have EHTH in the old accounting system with a loss in Q4.



Market is going to be WAY off guard when they report unless ahead of this. EHTH has already talked of this on the Q3 call so I'm not sure whey analyst estimates are not out yet for this new Standard.



Bottom line is as a Medicare enrollee signs up, on average they last about 4.5 years and bring about $660 in profit over the 4.5 years with cost of acquisition up front. In the IFP its more like 1.5 lifespan and less profit I think $100 or so per enrollee.



Either way, EHTH on track to "book" $100M or more in profit in 2018, and $125M+ in 2019 and not too hard to see them doing $200M+ annually not far after that.



On top of all of this, Medicare commission has been expanding by CMS at about 3% annually for several years now. It may be more like $700 profit per Medicare enrollee soon if not already as EHTH drives down cost.



We feel like the market is way out of touch with what the reality is at EHTH.



Regards,