ehealthinsurance.com Financial Results

moonlightandmargaritas · 02-15-2008, 01:02 AM

Ehealthinsurance.com went public at the end of '06, so '07 was the their first year as a public company. Fourth quarter and full year results were announced yesterday. Some of the highlights:

84 million in revenue, a 43% increase over previous year
A projection of 114-117 million in revenue for '08
31.6 million net income
They spend 35-39% of revenue on marketing & advertising
Policies stay on the books an average of two years (excluding STM)
They have no debt

You can view the entire article [COLOR=blue]here[/COLOR].

Say what you want about these guys, but here's the reality: they're making a major impact in IFP, growin' like crazy, and making a TON of money doin' it!

TXINSURANCE · 02-15-2008, 01:11 AM

Funny some of those numbers are exactly the same as mine on an obvious smaller scale.

IFP Internet retention two years average - yep that's about right, maybe even a little high - varies by carrier, the "blues" will stay longer in any market due to the name recognition.

Ehealth has a solid business, little agents might not like their style but their model is obviously effective.

healthagent · 02-15-2008, 06:42 AM

And once Ehealth decides to go "Geico" on us with 24/7 ads on TV, radio, print, etc...they will absolutely own the health insurance market. Doesn't mean I won't get my 5 deals a week.

TXINSURANCE · 02-15-2008, 06:56 AM

They won't or they would have already.

They know that is not profitable since they are a broker not a carrier.

Radio tv costs are high and conversions are low.

No worries they know the model that works.

healthagent · 02-15-2008, 07:27 AM

The stats I'd like to know is how many people hit the site vs how many apps submitted.

somarco · 02-15-2008, 08:02 AM

84 million in revenue

That is new + renewal income with (most likely) the bulk being new business in light of their low retention.

That's less than $2M per state.

Despite their high profile that really isn't much. I know agents who generate $250+ in gross revenues. I could probably name a dozen or so agents in GA alone who (combined) generate $2M.

35-39% of revenue on marketing

That's a 3:1 return.

I get 8:1.

policies stay on the books an average of two years

That's not very long. Most of the folks I have written (individual major med) are still on the books after 3.5 years. The majority who have left re-entered the employer market.

how many people hit the site vs how many apps

A few years ago there was a report on their site that, if you worked thru the numbers, you discovered their conversion rate was quite low. As I recall, 1 -2%, maybe even less.

A lot of folks are just tire kickers. Before I got my own quote engine I used them to generate quotes and even sent some out to clients.

From information shared with me by carriers, I know that the not-taken rate is quite high for these type of operations. They have a love-hate relationship with carriers.

They carriers love them for their premium volume, but hate them because the service work is much higher than with brokers. Their not-taken rate and early cancellation rate is much higher.

In short, the business model is marginally profitable for the carrier compared to business written by agents.

One carrier that is also a direct writer told me that 4% of their new business is direct. They would not divulge the percent that comes from eHealth and other phone room shops but it wasn't significant.

They also told me there is a lot of discussion about how to effectively deal with the eHealth model. You can bet that once the block is no longer profitable the worm will turn and carriers will be reluctant to maintain relationships.

The only way they (eHealth) can grow is to keep writing new business, which means spending more & more on advertising and affiliates.

I look at them like Amazon.

As big as Amazon is it seems to me that Borders, Barnes & Noble and a lot of smaller, local bookstores are still in business.

Those models work, but only up to a point.

Along the same lines, I know some folks with a national, online presence in the individual health market. They are also an eHealth affiliate. The revenue earned from eHealth is miniscule compared to their primary source. The conversion rate on folks who hit the eHealth button is less than .5% and revenue (as a percent of the gross) even smaller.

Personally, I do not consider eHealth a threat . . . but it is good to know some agents do. That means more business for me.

dmiller90 · 02-15-2008, 08:03 AM

Does it really matter? They drive traffic in Huge numbers every day thru organic search, which they have very high listing in the organic information. More customers you have in your door, the more sales you make. Not everyone needs help purchasing their individual or Family Health Insurance, another note on that, we have page after page of Norvax vs Quotit,, Guess who drives EHealth? I think they are smarter than all of us.

healthagent · 02-15-2008, 08:19 AM

All I know is most new agents can't navigate online apps - especially GR and Aetna. I imagine there's a significant number of people who abandon the process mid-app due to frustration.

dmiller90 · 02-15-2008, 08:31 AM

Most not all "New Agents" are Stupid and Broke, just from my experience.

healthagent · 02-15-2008, 08:33 AM

Well I'm not sure about stupid, but certainly broke. I'd say out of all the agent's I've hired literally 95%+ did not have $100 a week for marketing.

somarco · 02-15-2008, 08:35 AM

They drive traffic in Huge numbers

A rising tide lifts all boats . . .

I think they are smarter than all of us.

Not necessarily smarter, just better financed.

There will always be those who want to do it themselves. That is why Home Depot exists.

But even HD has not put the professional plumber, carpenter, painter, etc. out of business.

Don't overlook the fact that the DIY kind of guy (or gal) often creates problems only a pro can fix.

healthagent · 02-15-2008, 08:39 AM

Yet Walmart has put a ton of local shops out of business. Sometimes smaller cannot compete with bigger. Starbucks has also put a lot of indie coffee shops out of business when they move into town.

*STIBROKER@AUSTIN.RR.COM* · 02-15-2008, 08:54 AM

Originally Posted by healthagent

And once Ehealth decides to go "Geico" on us with 24/7 ads on TV, radio, print, etc...they will absolutely own the health insurance market. Doesn't mean I won't get my 5 deals a week.

Four words......agent of record letters......

moonlightandmargaritas · 02-15-2008, 08:58 AM

Originally Posted by healthagent

Yet Walmart has put a ton of local shops out of business. Sometimes smaller cannot compete with bigger. Starbucks has also put a lot of indie coffee shops out of business when they move into town.

Yes, I believe this is the crux of the matter. Anybody that tries to "compete" with them will be squashed. Of course it did take them 10 years and 90 million to get where they are.

There are always people concerned about service that would rather shop in a specialty store or boutique as opposed to Wal-Mart. Nice thing in our situation is that the price is exactly the same...

I still firmly believe you've got to carve out a "niche".

moonlightandmargaritas · 02-15-2008, 08:59 AM

Originally Posted by healthagent

And once Ehealth decides to go "Geico" on us with 24/7 ads on TV, radio, print, etc...they will absolutely own the health insurance market. Doesn't mean I won't get my 5 deals a week.

If you read the article, you'll find that this is NOT their plan.

healthagent · 02-15-2008, 09:07 AM

True. The dot com bust proved that not everyone wants to shop online. 20 years from now will everyone do their Christmas shopping online? No - it will reach a maximum market penetration since many people still enjoy running around the malls.

I remember everyone was gonna buy groceries online and have them delivered yet my wife's loves to hit the grocery stores.

20 years from now will everyone be buying insurance online? If so that would mean we'd no longer see Nationwides, Allstates or State Farms - doubtful. There will always be a good percentage of people who want to walk into their local State Farm office.

I personally do not go after the market of people currently shopping for insurance. Although it's fun to be told "that doesn't work" my checking account says it does.

bluemarlin08 · 02-15-2008, 09:54 AM

I am not concerned with them as competitors, plenty of folks want to talk with an agent. My interest is if this would be a good investment. M&M are you an investor?

CHUMPS FROM OXFORD · 02-15-2008, 10:01 AM

"I remember everyone was gonna buy groceries online and have them delivered"

Many years ago (And I mean MANY!) I bought a stock called PEAPOD. They were going to revolutionize that market. Pretty good marketing plan and some solid financial backing. Oh well. It worked well in Florida, but the stock fell sharply and I bailed. I don't even know if they're still around.

By the way...a few other stocks that I bought and bailed on (again...MANY years ago):

BulbMiser. They came out with a chip the size of a dime that you inserted in light-bulb sockets. It extended the life of the bulb by about 500% (I have no idea how. Something having to do with changing from AC to DC or vice versa). A packet of about 20 cost about 7 bucks. The company went belly up.

ChemiTech. Patented a TREATMENT (not cure) for Herpes. Approved in Mexico. The FDA would not approve its use in the USA. Stock plummeted. I bailed.

Apple Computer. Just another upstart computer company. I bought it as a new issue and it jumped quite a bit the first few days. I quickly sold my shares. All of them. I wonder if they are still around...

moonlightandmargaritas · 02-15-2008, 10:03 AM

Originally Posted by bluemarlin08

I am not concerned with them as competitors, plenty of folks want to talk with an agent. My interest is if this would be a good investment. M&M are you an investor?

No, I am not an investor in ehealth.

Some recent focus group stats suggest that about 85-90% of folks say they would like to consult with an agent.

Anybody who tries to "compete" with ehealth in the same model had better have some very deep pockets. I like to stay on top of industry trends in order to tweak my own model for maximum efficiency.

Health Benefits Direct has a little different model (agent assisted vs. pure self-service), but they are still losing their ass...

Delta76 · 02-15-2008, 11:35 AM

I agree that I wouldn't try and compete with their business model. As competition, I'm not worried at all. An individual agent has many advantages over an ehealthinsurance:

-People like doing business with people local, everything else equal
-Like John said, we often times plant the seed to even look at options
-We can give a personal touch to differentiate ourselves (if we choose)
-Most people want someone to tell them what to do or help them narrow down to a few choices.

Ehealth will always have a certain percentage of the market, but I think the vast majority of the market is more inclined to do business with a traditional agent.