Health Insurance Innovations (HIIQ) Q4 Earnings Beat Estimates

Health Insurance Innovations, Inc.’s (NASDAQ:HIIQ) fourth-quarter 2019 adjusted net income of $2.48 per share edged past the Zacks Consensus Estimate by 5.1%. Moreover, the bottom line soared 153.1% year over year.
The upside can be attributed to the solid performance of the company’s Medicare Advantage business.

Behind the Headlines

Total revenues of $160.9 million missed the Zacks Consensus Estimate by 0.1%. Nevertheless, the top line climbed nearly 22% on a year-over-year basis. The improvement came on the back of the re-entering of the Medicare Advantage business by the company in June 2019.

In the quarter under review, adjusted EBITDA surged 113.9% year over year to $46.2 million, primarily riding on revenue growth.

Total selling, general & administrative expenses were $31.8 million, up 82.8% year over year. The increase is primarily due to high payroll and professional fees.

Marketing and Advertising expenses increased 746.4% year over year to $23.7 million primarily due to cost of investments related to Medicare consumer engagement.

As of Dec 31, 2019, net contract asset (defined as contract asset receivable plus advanced commissions less commission payable) was $258.8 million.

Health Insurance Innovations, Inc. Price, Consensus and EPS Surprise

Health Insurance Innovations, Inc. Price, Consensus and EPS Surprise

Health Insurance Innovations, Inc. price-consensus-eps-surprise-chart | Health Insurance Innovations, Inc. Quote

Segmental Performance

Health Insurance Innovations reports revenues primarily under two segments — Medicare and IFP.

In the quarter, revenues in the Medicare segment were $55.9 million, which accounted for 34.7% of the company’s revenues. However, the IFP segment’s revenues (65.3% of total revenues) totaled $105 million, down 20.4% year over year.

Segmental profits were $29.7 million and $22.2 million at Medicare and IFP segments, respectively.

Financial Update

Health Insurance Innovations exited 2019 with total assets of $651.9 million, up 50.7% from the 2018 end level.

Net long-term debt was $167.9 million, up 1019.6% from the 2018 end level.

As of Dec 31, 2019, the company used $37.7 million of cash in operating activities, which compared unfavorably with net cash provided by operating activities of $21.8 million in the prior-year period.

Share Repurchase Update

The company did not buy back shares in the fourth quarter. Nevertheless, $75.4 million remains under its existing $200-million share repurchase authorization, which runs through October 2020.

Business Update

Concurrent with the earnings release, the company made another significant announcement. Its corporate name will change to Benefytt Technologies, Inc. Going forward, it will trade in NASDAQ with the ticker symbol “BYFT”. The change is going to be effective from Mar 6, 2020.

Yearly Update

For 2019, total revenues of $381.8 million improved 8.7% year over year. Adjusted net income per share was $4.24, up 63.1% year over year.

Adjusted EBITDA of $82.1 million improved 38.2% year over year.

2020 Guidance

Following the fourth-quarter results, the company provided an outlook for 2020.

Health Insurance Innovations anticipates total revenues of $290-$350 million. Also, Medicare and IFP segments’ revenues are estimated to be $190-$210 million and $100-$140 million, respectively.

Adjusted EBITDA is anticipated to be $65-$80 million. Moreover, adjusted net income per share for 2020 is projected to be $3.10-$4.15.

Corporate expenses are estimated to be $20 million for the year.

Zacks Rank & Stocks to Consider

Health Insurance Innovations currently carries a Zacks Rank #4 (Sell)

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other insurance industry players that reported fourth-quarter earnings results so far, the bottom lines of Brighthouse Financial, Inc. (NASDAQ:BHF) , FGL Holdings (NYSE:FG) and Primerica, Inc. (NYSE:PRI) surpassed the Zacks Consensus Estimate by 5.13%, 33.33% and 4.72%, respectively.

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