On Tuesday, Deutsche Bank adjusted its price target for eHealth (NASDAQ: EHTH), a digital health insurance marketplace, reducing it to $2.00 from the previous $5.00. The firm maintained a Hold rating on the company's stock. The adjustment follows eHealth's recently reported second-quarter results, which surpassed expectations largely due to robust revenue growth in the Medicare segment and ongoing cost-saving measures.
eHealth's total revenue for the quarter was $65.9 million, a slight year-over-year decrease of 1.4%, but still above the consensus forecast of $55.0 million and Deutsche Bank's estimate of $52.8 million. The company's performance was bolstered by a positive adjustment in net revenue, reporting an $11.5 million increase in the second quarter of 2024 compared to an $18.7 million increase in the same period of the previous year. Excluding these adjustments, the revenue reflects a year-over-year improvement of 13.1%.
The company experienced a 16% year-over-year increase in total Medicare submissions through its core agency and carrier-dedicated Amplify platform. This led to a 17% growth in Medicare Advantage (MA) and a 25% increase in Medicare Supplement enrollments. However, the Part D segment saw a decline, with approved members decreasing by approximately 9% compared to the previous year. Despite this, the lifetime value (LTV) of MA increased by 4% year-over-year to $927, indicative of a favorable mix of carrier contracts and reduced constraints.
Medicare revenue, which reached $59.2 million, grew by 6.9% year-over-year, driven by the rise in MA enrollment and LTV, along with higher non-commission revenue and improved membership retention. These factors, combined with effective cost management, resulted in an adjusted EBITDA loss of $15.5 million. This figure is notably better than the anticipated loss of $24.3 million by analysts and the $22.1 million loss previously estimated by Deutsche Bank.
In other recent news, eHealth Inc. reported its Q2 2024 results, indicating a slight decline in total revenue year-over-year. However, the company highlighted growth in Medicare submissions and non-commission revenue. CEO Fran Soistman announced his retirement plans, set to occur by or before Q2 2025, and John Dolan was named as the successor to the current CFO, John Stelben, effective August 31.
eHealth aims to achieve positive free cash flow by March 2025 and has raised its revenue guidance for Fiscal Year 2024 to between $470 million and $495 million. Despite reporting a GAAP net loss of $28 million and negative adjusted EBITDA of $15.5 million, the company showed improvement in the Medicare segment profit and anticipates recognizing $14 million to $20 million of tail revenue in 2024.
InvestingPro Insights
As eHealth (NASDAQ: EHTH) navigates the competitive digital health insurance market, InvestingPro data provides valuable insights into the company's financial health and stock performance. With a market capitalization of $119.83 million, eHealth trades at a low Price / Book multiple of 0.22, highlighting potential undervaluation relative to its book value. However, the company's P/E ratio stands at -1.62, reflecting concerns about its profitability, as analysts do not anticipate eHealth will be profitable this year. This is further underscored by the company's significant cash burn, which is a critical consideration for investors.
Despite a strong revenue growth of 20.76% over the last twelve months as of Q2 2024, eHealth's stock has experienced considerable volatility and has taken a substantial hit, with a one-year price total return of -51.52%. The InvestingPro Tips suggest that while eHealth's liquid assets exceed short-term obligations, providing some financial cushion, the stock has generally traded with high price volatility and has performed poorly over the last decade. For investors looking for more detailed analysis and additional tips, there are 12 more InvestingPro Tips available, offering a deeper dive into eHealth's financial and stock performance.
These metrics and tips from InvestingPro are particularly relevant for investors considering Deutsche Bank's recent price target adjustment and eHealth's quarterly performance. They provide a broader context for understanding the risks and potential of eHealth's stock in the current market environment.
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