eHealth Inc. (EHTH)

Business Description

FEHealth offers a private health insurance exchange where individuals and small businesses can compare health insurance products from leading insurers. Users can purchase the insurance online. The exchange includes Medicare options, and seniors can enroll in those plans online or via phone. The company primarily generates revenue through commissions it receives from health insurance carriers. EHealth has relationships with the leading health insurance carriers in the United States and offers thousands of plans online. All of the company’s revenue is from the United States.

Recommendation (Nov 2020)

A poor business, EHTH is riddled with extremely aggressive revenue recognition and consistently negative FCFs.

This is not the case of fraud, but of a huge stock promotion. Managers are counting low-quality customer revenue – chances of revenue realization as well as retention are in question.

A health insurance platform is a good idea and there’s a need – but eHealth has built no real moat. Consumers see HI plans as commodities and will compare on price. There are several competitors and substitutes that keep improving.

By some estimates, the revenues recently booked will take twenty years to collect! They are highly speculative.

For the full report, see link below

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