The founders of H.I.G. Capital came from The Blackstone Group and Bain. (Image: iStock)
EHealth Inc., a web broker, says it had a hard time getting Medicare plans sales from outside agents and direct response TV campaigns in the latest Medicare plan annual election period (AEP).
The Santa Clara, Clara-based company told investors Friday that it's responding by cutting costs, raising capital, and tightening its focus on sales through the web, its own agents and relationships with major distribution partners.
Resources
"We are acting with a sense of urgency, executing a plan for 2021 that addresses head-on the issues that impacted our AEP results," Scott Flanders, eHealth's chief executive officer, said in comments about the company's recent performance, which were included in an earnings preview announcement for the fourth quarter of 2020. "Our initiatives are already gaining traction, and we are seeing positive enrollment trends in the first weeks of 2021."
The Background
EHealth was one of the pioneers in efforts to ell financial services to retail customers through the internet. It's been selling health insurance online since 1997.
The company reported a net loss of $15 million for the third quarter of 2020 on $94 million in revenue.
Executives were hoping to gain significant ground in the fourth quarter.
Health insurance operations that court individual consumers tend to get a large share of their business in the fourth quarter.
One major source of individual sales is the Medicare Advantage plan annual election period. The annual sales period for Medicare Advantage plans runs and Medicare Part D prescription drug plans runs from Oct. 15 through Dec. 7 each year.
Another major source of individual sales is the Affordable Care Act public individual major medical insurance open enrollment period, which affects sales of all individual major medical coverage. In the 36 states where the federal government's HealthCare.gov program provides ACA exchange services, and in some states with locally run ACA public exchange plans, the individual major medical coverage open enrollment periods run from Nov. 1 through Dec. 15.
At the end of the third quarter, eHealth executives said the company was getting ready for the fourth quarter by building up its own in-house agent force and by adding a new customer retention team, in an effort to keep customers happy and to hold on to their business longer.
The Sales
Executives at eHealth still expect the company to report a profit for the fourth quarter of 2020.
The company probably will report about $57 million to $59 million in net income for the quarter, on $291 million to $293 million in revenue, executives said.
Net income for the full year will probably be about $43.5 million to $45.5 million, compared to a company forecast of $79 million to $94 million, executives said.
The number of approved members for Medicare Advantage products increased 30% in the fourth quarter, but the fourth-quarter increase was down from an average increase of 39% for all of 2020.
The number of approved members in individual and family major medical insurance products fell 2% in the fourth quarter. The fourth-quarter individual major medical policy decrease compared with a 4% increase for all of 2020.
