Q2 2020 eHealth Inc Earnings Call
[music], ladies and gentlemen, thank you for standing by welcome to the Q2 2020 E Health incorporated earnings Conference call. At this time, all participants are going to listen only mode. After the speaker presentation, there will be a questionnaire.
<unk> session to ask a question during the session you want to use their press Star then one on your telephone. Please be advised that today's conference is being recorded if you're acquiring any further assistance. Please press Star then zero are now like to hand, the conference over to your speaker today, Ms., Kate Sidorovich, Vice President of the Health Investor Relations. Thank you. Please go ahead.
Thank you.
I have to know and then thank you all for joining us today, either by phone or by webcast for a discussion about eat healthy Inc. second quarter 2020 financial result, wonderful. This afternoon, well, how Scott lenders Ehealths Chief Executive Officer came Hannon, Chief revenue Officer, and Derek Young Chief Financial Officer After management completes its review.
Mark we'll open the lines for questions. As a reminder, today's conference call is being recorded webcast from the IR section of our website an audio replay of this call will be available on our website holding the cool well, we'll be making forward looking statements on this call that include statements regarding future events beliefs and expectations, including statements relating to.
Our expectations, you're betting on Medicare business, including Medicare enrollment growth consumer demand, our competitive advantage our carrier relationships and asked the patients regarding what line enrollment uplift invest in the Medicare business, including marketing initiative and enhancements to our technology platform on Medicare growth strategies, including all costs.
Requisition on demand generation strategy and customer retention efforts on Liveengage from an agent productivity and tells acquisition strategy opposite stations regarding all direct to consumer platform. The benefits of all customer care, each and promote model the profitability of all business seasonality churn lifetime value operating expenses, including six.
Some variable cost and the impact of cotton 19 analogous enough.
And finally I'll member estimates revised 2024 your guidance outlook for the third and fourth quarters of 2020, and now with myself here financial plan and the contents of such guidance can girls Glenn.
Forward looking statements on the school represent the health views as of today, you said maquiladora statements as representing all views in the future went to take an obligation or do you any update information contained in the forward looking statement. What is the result of new information future. That's the other way forward looking statements a subject to risks and uncertainty.
With that could cause actual results could differ materially from those projected to now forward looking statement. We describe these and other risks and uncertainties and now you know report on form 10-K, and quarterly reports on form 10-Q filed with the Securities Exchange Commission, which you may access through the FCC website or from the Investor Relations.
Section of our website.
Well, we'll be presenting certain financial measures on this cool that's instead of non gap on the FCC regulation G. for reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure. Please refer to the information included in our press release, and the now and SEC filings, which can be found in the about a section of <unk>.
Corporate website under the heading Investor Relations. However, we have not reconciled opera <unk> EBITDA in 2024 top or do you have to the GAAP net income because of what cannot reasonably predicts certain items in there was conciliation such as stock based compensation expense and provision for income taxes.
Never conciliation is not available without unreasonable effort and at this point I will turn to go over to our CEO Scott Blenders.
Thank you Kate and welcome everyone.
We continue to operate in unprecedented in challenging times.
Access to the proper health care is critical and our mission to connect every person with the highest quality most affordable health insurance for their life circumstances is more relevant and important that out or.
This is especially difficult time for almost customers, who are mostly seniors a group that is disproportionately impacted by the ongoing pandemic.
I'd like to thank our team for their hard work and dedication to helping those customers and continuing to fulfill our mission.
We're going to use this call to discuss our second quarter results.
Provide you with our updated 2020 annual guidance and the key points of our revised five year financial plan.
We will also discuss the strategies, we're implementing to position the business for continued profitable growth.
And the second quarter eat all delivered strong revenue and Medicare enrollment growth.
Tumor demand on our platform remain robust and our agent productivity increased compared to a year ago, driven by internal initiatives and favorable market dynamics.
The number of second quarter Medicare approved members grew ahead of our expectations.
This includes a 65% year over year growth and approved Medicare advantage membership.
We achieved this enrollment growth while also reducing our total acquisition cost per approved Medicare member, allowing us to once again exceed our internal forecast for revenue and earnings.
It's also worth highlighting that 30% of our second quarter applications for Medicare major medical products were submitted by our customers online compared to just 11% a year ago.
It includes unassisted and partially agent assisted online enrollment.
On an absolute basis, the total number of applications for Medicare major medical products admitted online group over 300% compared to the second quarter 2019.
Later I'll talk about somebody initiatives, we have underway to continue exploiting our online opportunities.
Total revenue for the second quarter was $88.8 million.
35% year over year increase our adjusted EBITDA was $1.7 million and our GAAP net loss was $3.4 million.
Medicare revenue of $80.4 million grew 54% compared to a year ago.
During the quarter, we completed our operational planning for the upcoming annual enrollment period and updated our financial forecast for the year.
We are anticipating a strong fast paced ATP with robust Medicare advantage plan selection and an acceleration in market share gains by tech enabled direct to consumer platforms.
This year, we're building on our success and knowledge gained over the last two babies with significant enhancements planned across all key functions.
First our Medicare agent productivity is expected to increase significantly this ATP by 10% compared to a year ago.
It will be driven by new technology deployment enhance lead ranking allocation systems, and a larger Senate and house agents, including our remote agent force.
Second.
We plan to further increase our online enrollment penetration.
With online Medicare enrollment is coming in substantially ahead of our forecast in the second quarter, we're increasing our full year 2020 targets for online enrollments from 34% to 37% of total applications for Medicare major medical products.
This includes for unassisted and partially agent assisted online enrollment.
And in combination with higher agent productivity. It is expected to drive a significant year over year reduction and our customer care and enrollment cost per approved member.
Third we will continue our strong multi channel demand generation strategy with increased reliance on data analytics and a growing contribution from our strategic partner channel, including a number of important new partners.
We believe our partner channel is a major differentiator for yourself it will be one of the drivers to improve our marketing cost of acquisition forecasted for this ATP.
Fourth we plan to enter ATP with deeper carrier relationships any better than previously expected contribution for Medicare advertising revenue.
Finally going forward, we plan to place a stronger operational focus on member retention and recapture.
Ahead of the P. We're launching an important new technology platform the customer center.
It is built around our customer and their data in order to personalized customer experience across all points of interaction with email to enhance post enrollment interaction and deepen our relationships with our members while increasing brand awareness.
Based on the strength of our business stronger expected growth in our online Medicare enrollment and the capital raise we completed in March we are increasing our financial guidance for full year ending 2020.
Derek will show the details of our updated guidance later on the call.
Turning now to our longer term strategic plans.
A Medicare market environment is highly favorable with significant demographic and regulatory tailwinds.
We expect for all major direct to consumer comparison platforms in our space to do well in the near term continuing to gain market share away from the traditional broker channel.
Of these platforms, we believe that E health is best positioned for market leadership, because of our differentiated and personalized consumer oriented technology platform.
Let me expand on that some more.
Technology and E Commerce had been in the DNA the health since inception.
Our focus and investments in technology and innovation have established a best in class E Commerce platform in our industry.
Our technology provides consumers with a superior user experience.
Broader product choice and advanced plan selection tools.
A critical aspect of this platform is our software and data driven analytics that support both the license agent force and customer shopping on their own online, providing a unified and flexible approach to selecting and purchasing a Medicare plan.
These technology investments contrasts with those of our peers, which have been predominantly focused on call center technology and not on the complex issues to optimize the consumer experience in relationship.
But we believe these investments <unk> provide us with durable competitive advantages. They do have a dampening effect on near term margins. This is deliberate.
Derek will expand upon the financial dimension more in his remarks.
The last month and accelerated the shift to digital which was already underway.
This shift has been evident across many industries in the recent months, particularly among seniors who are looking for a safe consumer environment.
We're clearly seeing this trend on our platform and given our longstanding focus on E. Commerce, we are in a strong position to take advantage of it.
In addition to providing omni channel flexibility convenience to our customers online enrollments are more profitable provide superior operation scalability and are characterized by high per member persistency.
By growing online penetration, we're not only enhancing consumer value relative to other market participants.
We are also creating a foundation for a more profitable more scalable model.
[noise] driven by the strength of our execution.
We're currently tracking significantly ahead of the five year financial plan that we provided at our analyst day in May of 2019.
Given our significant outperforms today, and our revised outlook, we're updating our five year financial plan.
Under the revised five year financial plan, we forecasted generate $1.5 billion in revenue by 2024 with an adjusted EBITDA margin of 38%.
The high case of the revised plan cost for $2.1 billion in revenue with a 41% adjusted EBITDA margin in 2024.
Importantly, we now plan to start generating positive cash flows from operations and fiscal year 2022 under both scenarios.
Our enrollment growth has been exceptionally strong in the past 12 months and is expected to remain strong throughout our five year financial plan.
In addition, our remember profitability is expected to be unchanged or even favorable this year compared to 2019, driven by greater acquisition cost efficiencies.
That said in the first half of this year, we saw increased levels of Medicare advantage plan churn.
Compared to our historic observations.
We took action as soon as we identified this dynamic and move retention initiatives that were already in the works the top of our strategic and operational priorities.
Let me provide some more color on this.
Over the last four years, we've been executing a transaction driven strategy, which was aimed at optimizing consumers enrollment experience and driving scale and market share.
This was a deliberate strategic focus and it delivered significant result.
However, as we look ahead to the next five years, we're making a strategic decision to increase our focus on member retention and recapture.
We've assembled a dedicated team led by Timanus. He helps chief revenue officer to identify the key drivers of elevated churn and to develop coppermine Kenseth action plan to address it.
The team determined that the recent increase in churn has been driven by a combination of macro factors and some factors that are specific to our business model that we should be able to effectively control.
On the macro site consumers are faced with broader plan choice and multiple enrollment opportunities throughout the year, which is benefiting the broader in a market increasing the market share I didn't they plans.
Same time these dynamics. It also led to more shopping and more switching by it may members in this environment, we need to have a robust member retention and recapture strategy in place and are implementing a number of critical initiatives in time for ATP, which Tim will describe in detail.
One thing that I'd like to emphasize the importance of our online strategy to these retention efforts.
Increasing online enrollments, both in absolute numbers and as a percent of total Medicare enrollment is a critical element of our business.
Our out online users have persistency that is significantly higher compared to those that engage with us and telephonically.
This spread further widened in the last two quarters in which most of the elevated churn was driven by telephonic enrollments as a result online users have higher ltvs, while also requiring lower acquisition costs, both providing for superior member economics.
In closing we are pleased with our results for the quarter, we have a robust outlook for the remainder of 2020 and beyond which we are reflecting in our revised 2020 guidance and the five year financial plan.
In the near term, we are working with urgency to address churn and we're confident that we're taking the right actions to build on our strengths and market leading position.
Finally, let me conclude by saying that four years ago I shared our strategy for growing our business and building market share of our consumer centric platform simply put we have delivered on those plans. Our recent results reflect the underlying strength of our business model and the strategic actions, we have made to grow our omni channel.
Right.
I am confident that we have many years of growth ahead.
And with this I'd like to turn the call over 10, Hannon, our chief revenue Officer.
Thank you Scott and good afternoon, everyone.
As Scott shared our goal is to create the most compelling omnichannel shopping experience for Medicare consumers and deliver expanding margins in the process.
At the beginning of 2020, we saw that we could improve upon the extraordinary performance. We saw in 2018 in 2019 by bringing our marketing and sales teams together in one organization under the revenue function.
During Q1, we conducted a thorough review of our sales and marketing practices with the help of external consultants and identified a number of critical initiatives that would allow us to reduce our variable cost per member.
These included a smarter way to plan each enforce expansion and improved process from managing agent licensing and appointments and a marginal investment model for future marketing investments to name a few.
We recently expanded on those improvements with the launch of a new age you performance management model.
And then upgrade to our call routing system that better accounts for both agent skill and call quality.
We also rapidly expanded our work from home capabilities, given the Colgate 19 crisis.
Some of these initiatives have already yielding meaningful results in the second quarter with an increase in agent productivity, maybe 7% decline in total cost per crude and Medicare member compared to a year ago.
But the full impact of these changes will be felt in the fourth quarter.
Regarding our retention initiatives and Scott outlined we mobilized our leadership team to address the elevated churn levels. When he became apparent after the Medicare advantage open enrollment period that run through the first quarter.
While there are a number of environmental factors that contribute to churn, which Scott shared we believe there are factors that are within our control in which we are already working to remedy for this easy.
Our primary opportunity is to improve the quality of our telephonics sales process.
We have a number of levers to achieve better performance.
The recent increasing churn levels occurred most significantly in our telephonic and mold.
Our analysis is shown that we experienced deteriorating retention on the telephonic enrollment completed by less tenured agents, particularly those from our vendor partners.
For this years, a b, we're shifting to a healthier balance of internal and vendor.
Our remote staffing model that was launched in March affords us greater flexibility in cost effectiveness and expanding our full time agent force.
We're also changing the performance management model, including the compensation structure of our agents to better align it with our member retention goals.
Additionally, we are bringing our data science and technology to improve the telephonic experience with enhanced call, scoring and plan recommendation algorithms to better position our agents for success.
On the customer relations side, our focus historically has been on enrollment growth and providing a best in class shopping experience to consumers rather than on retention and post transaction experience.
We're now planning to place a much stronger emphasis on retention and the post transaction experience going forward.
I had to the P., we're expanding our retention sales team and launching a new technology platform to enhance the quality of our communications with new customers. After the initial enrollment.
Given the seasonal cycle of enrollments in churn the positive impact these initiatives on our Ltvs will not be reflected in our financial results until Q1 next year. Therefore is not assumed in our 2020 guarding.
The positive impact is incorporated into the long range plan that Scott discussed.
In addition, as we continue to grow contribution of our online enrollments.
It should also have a positive impact on overall churn rates given that our Medicare advantage members, who enrolled online during ATP tend to retain the product longer with first your retention rates higher by approximately 25% to 30% compared to members who enroll telephonically.
We're now in the midst of our 80 preparations and I expect it to be another success building on her experience and achievements of the last few years.
We have substantial enhancements planned across all of our T. functions I had this important selling season.
With these improvements we plan to deliver a better experience to our customers lower our variable costs and leverage our technology investments.
And now I'd like to turn the call over to Derek Young our Chief Financial Officer.
Thanks, Tim and good afternoon, everyone.
Second quarter financial results exceeded our expectations driven by strong consumer demand due in part to the cobot related special enrollment period for Medicare beneficiaries introduced during the quarter.
Trawl online enrollment growth and continuing productivity gains bar agent workforce.
Growth in Medicare revenue and enrollment was accompanied by a year over year reduction in total acquisition costs per approved Medicare member, reflecting the initial impact or measures underway aimed at achieving enhanced cost effectiveness of our demand generation and fulfillment.
In our Medicare business, our second quarter revenue of 80.4 million grew 54% compared to a year ago due primarily to a 65% year over year increase in approved never Medicare advantage members and 69% growth in Medicare carrier advertising revenue.
The Medicare segment generated a profit of 13.4 million, 120% growth compared to second quarter of 2019.
Second quarter 2020 revenue from our individual family and small business segment was 8.4 million declined to 38% compared to a year ago.
The positive impact from an 86% increase and approved members on major medical I.P. policies was offset by lower new enrollment and ancillary products, including short term plans.
And a decline in IP tell revenue compared to a year ago.
The individual family and small business segment remained profitable with a 2.6 million profit for the second quarter.
Our total revenue for the second quarter was 88.8 million, an increase of 35% compared to second quarter of 2019.
As we continue to generate significant top line growth. Our goal is to maintain attractive member economics with an emphasis on the ratio of lifetime value to total acquisition costs, including marketing and agent related expenses.
Our technology, driven and online strategies have multiple levers to drive our acquisition costs to match, our growth and profitability targets.
In the last two years lifetime values and on Medicare advantage business have been increasing driven by growth in broker commissions and favorable commission collections relative to our estimates.
This allowed us to aggressively pursue enrollment in market share growth by investing in marketing and customer care.
However in the first half of the year, we have observed churn levels in our Medicare advantage business, there were elevated relative to historical level.
Just had a negative impact on our second quarter, M- Ltvs and our estimate for the full year 2020 LTV.
Attend discussed the increase in churn had a more pronounced impact on on newer member cohorts and all telefonica enrollment while online enrollments continue churn at lower levels.
Although we don't yet have full visibility into the second quarter churn given the significant amount of time after the end of quarter before we observe it.
We expect that it was also elevated compared to historical Q2 levels, especially because of the cobot related special enrollment period that was in effect for a large part of the quarter.
We currently project for M.A. Ltvs to decline up to 10% in the fourth quarter 2020 by mid single digits for the four year, which has been reflected in our revised 2020 annual guidance.
At the same time, our acquisition cost per approved Medicare member is forecasted to decline.
By approximately 13% in the fourth quarter of 2020, and 10% for the full year 2020 compared to 2019.
As a result, a Medicare member profitability as reflected by the LTV to total acquisition cost per member ratio is expected to remain favorable and could actually improved for the full year 2020, compared a year ago, which will have a positive impact on overall profitability.
In addition, as Tim described we're in the process of implementing a number of high priority initiatives aimed at enhancing our member retention and eventually lifetime values of our members.
Due to specifics of our enrollment and accounting cycles, the impact from our new retention programs will take longer to flow through our member economics compared to a cost related initiatives.
We currently expect to get back to 2019 LTV level from M.A. product for the full year 2021.
Outside of Medicare advantage, we're also seeing higher levels of churn in the PDP product driven primarily by growing popularity of M.A.P.D. plan versus Standalone PDP plans.
At the same time, we observed favorable persistency trends Medicare supplement book of business with a significant year over year increase and a lifetime values in the second quarter.
The estimate at number of new of our revenue generating Medicare members was approximately 716000 at the end of second quarter, when increase of 37% compared to a year ago.
Turning to profitability metrics.
GAAP net loss for the second quarter of 2020 was 3.4 million compared to GAAP net loss of 5.8 million for the second quarter of 29 team.
Adjusted EBITDA for the second quarter of 2020 was 1.7 million compared to 0.8 annoying for the second quarter of 29 team.
We calculate adjusted EBITDA by adding stock based compensation compensation expense change in fair value earn out liability depreciation amortization amortization of intangible assets other income.
Benefit from income taxes to our GAAP net loss.
Our second quarter cash flow from operations was negative 21.39 compared to negative 11.5 million for the second quarter 2019.
As of June Thirtyth, we had 211 million in cash cash equivalents and marketable securities and we had no debt outstanding under our line of credit.
Our balance sheet also reflected significant commissions receivable down 583 million [noise].
We are increasing our annual guidance for the second time this year to reflect our second quarter outperformance and growth opportunities provided by our capital raised through our equity offering in March of this year.
I will now provide guidance highlights you can find their full revised guidance ranges in our earnings release issued earlier today.
We're now forecasting revenues for 2000 22 billion range of 632 670 million compared to prior guidance range of 600 to 640 million.
We expect GAAP net income for 2020 to be in a range of 79 to 94 million compared to prior guidance range of 70 to 85 million.
We expect 2020 adjusted EBITDA to be in a range of 140 255 million compared to prior guidance range of 125 to 140 million.
Within these numbers there are some dynamics related seasonality to be mindful of when thinking about Corey outlook for the remainder of the year.
Specifically in the third quarter, we expect a sequential decline our revenue driven primarily by seasonally low Medicare enrollment volumes.
On the operating side, we expect a significant sequential increase in our third quarter call.
That's expected increase in costs will be driven primarily by our customer care enrollment expense as we ramp up agent hiring and training ahead of the fourth quarter annual enrollment period.
Given that Q3 is a seasonally low volume quarter and because it takes several weeks, where new agents become productive we anticipate a significant increase in third quarter customer care cost per approved member and a large sequential drop in EBITDA.
The fourth quarter is expected to be the largest quarter in terms of enrollment volume revenue and profitability driven by HP.
For the full year 2020, we expect to deliver another increase in EBITDA margins with 23% margin at the midpoint of our annual guidance compared to a 20% margin a year ago. After excluding the impact of the 42.3 million tell revenue adjustment in the fourth quarter 2019 from 2019 EBITDA.
In addition to the seasonality dynamic there is some important context when thinking about our EBITDA margins.
The 23% EBITDA margin at the midpoint of our guidance is attractive but is deliberately below the margins of our peers due to investments, we're making technology to further differentiate our platform.
During 2020, our operating expenses are expected to include technology investments of approximately 64 million or 10% of revenue at the midpoint of our guidance range.
Over the next several years these investments will become less significant as a percentage of revenue, which we expect to drive meaningful margin expansion starting in 2021.
This provides a nice segue for me to review the highlights of our update at five year financial plan reflects our significant outperformance today and our strategic and financial plan for the next several years.
As you recall, we previously expected to generate 425 million in 2020 revenue under the base scenario and 448 million revenue funded a tailwind scenario.
The midpoint of our revised 2020 guidance of 650 million.
Represents a 53% upside and a 45% upside respectively to the base case until we tailwind scenarios of the old plan.
We are tracking well ahead of our EBITDA target.
Stronger than previously expected enrollment growth combined with better agent productivity and higher contribution from online enrollments have all contributed to our outperformance today.
Going forward, we expect to continue to drive strong enrollment growth, while significantly increasing the contribution from online enrollments.
The update at five year financial plan also reflected more disciplined approach to growth with an emphasis on high ROI marketing channel.
And stronger operational offence as a member retention.
The forecast period in the five year financial plan has 2019 at the base year. After excluding the impact of the 42.3 million tell revenue adjustment in the fourth quarter 2019.
And projects our performance through 2024.
Under the revised base case scenario, we expect revenue CAGR of 27% getting us to 1.5 billion in 2024, and EBITDA CAGR of 45% with approximately 570 million EBITDA by 2024 or 30% margin.
I know that base case scenario. We also expect that by 2024 online enrollments will represent 53% of total major Medicare Medicaid Medicare major medical applications.
Under the revised high case scenario, we expect revenue CAGR of 35% getting us to 2.1 billion in 2024, and EBITDA CAGR of 57% with approximately 850 million EBITDA by 2024 of 41% margin.
On a different area, we expect that by 2024 online enrollment will represent 57% of total Medicare major Medicaid medical applications.
As Scott mentioned under both scenarios, we expect to generate.
Positive cash flows from operations in fiscal year 2022.
And finally, both scenarios assumed that by 2021, we get back in 2019 levels of Medicare advantage Ltvs and stay roughly at these levels for the duration of the forecast period. After one month mid single digit decline, we expect to see this year.
I want to remind you that these comments and our guidance are based on current indications of our business and our current estimates assumptions engines, which may change at anytime our actual results may differ as a result of changes to know estimates assumptions and judgments.
We undertake no obligation to update our comments our guidance.
Let me turn to call back to Scott for closing remarks, before we open the call for questions.
Thank you Derek before we open for questions I want to emphasize three key takeaways from our conversation today.
First the health is differentiated by our unique consumer centric platform that provides a strong foundation to drive key online enrollment growth and to win in the market as health insurance distribution continues to evolve second.
We have had a strong second quarter and are increasing guidance to reflect the investments we are making any opportunities we expect to capture in the upcoming HPP.
Third we are taking decisive actions to address our churn levels, we have resources dedicated to it in a plan in place to tackle the issue.
Finally, we're very excited about the future the health.
Building on our success over the last four years, we're moving forward with a five year plan that will enable us to capture organic growth opportunity and the Medicare market increased profitability and deliver enhanced value to our shareholders, but that let's open the floor to queuing day operator.
Thank you as a reminder to ask a question you'll need to press Star then one on your touched on telephone to withdraw your question from the Q. Please press the pound key and the answer is time, we ask that you keep your questions to one question and one follow up question before rejoining the queue.
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Please stand by Bill we can power the culinary roster.
Our first question comes from dry lenders Singh with credit Suisse. Your line is now open.
Hi, Thanks, how does one quick follow up in your long term outlook comments. So are you expect online enrollment person based almost like doubled from what you did in 2019 and.
Also said that.
That attention date on online sign up as gross spending much higher than all the investments that dream, though should benefit attention to it as well just wondering why you guys don't expect you may have TV to improve from what you did in 2000 19050, I mean compared to some couple other competitors I look more 1200, just trying to understand like a word for it does the offset.
I'd be assumption.
Well, we think are.
Our ltvs are very conservative and we have.
Built into the long range plan is just a 1% CAGR and both the base case and the high case.
Off of that 19 level. So this year, we dipped down will stabilize back to 19 levels in 2021, and then grow modestly above.
Single digit rate above.
2021, so it is an element of conservatism in the plan.
And with its likely to Overperform.
Okay and then my follow up is it on the Sean data I'm, sorry, if I missed this comment but can you comment on did you see Sean invade.
Google or not improve sequentially from Q1 Q2 part of Q4 to 2019 cohort.
And if you can pass out, but you saw fighting John ones Sep was put in place or even before.
He was acknowledged that John was trending higher just give us some perspective in Japan, Florida, and especially clip coupons Dentek, Tony 19 cohort.
Derek I'd ask you to take that.
Yeah. So July Andrew we saw a churn tick up.
In the OE period.
And it's combination obviously from a more senior ticket opportunity to switch plans.
Not just our platform, but generally what we serve observed an industry.
And also with.
The full visibility of the data coming in through the OE PNM period, we did see that there was a slightly higher elevated churn than our initial estimate for the 2019.
Enrollment.
Is it just trying to understand is Q1, even Q2 churn was higher than Q1 John.
We have not do we haven't had full visibility into Q2 already churn yet but quarter to today wed have not seen churn to be higher which season seasonally it makes sense, obviously, because we don't have OE in Q2, even though we had a special enrollment period, where it has not seen the uptick.
In terms of member switching at the levels, we saw in Q1 with though ERP.
With that either way I was I know I'm sorry, it's a third question about leaving out as best So if you look at your LTV assumption for second house.
I mean, you do expect like as do the absolute dollar similar to Q2, but in Seattle, what it implies decline, but technically I mean do we generally improves at Johns 18 boost in fact year rights from Q2, Q2 Q4, just trying to understand like what are you I mean, why it wise LTV.
What are we thinking about idea for second half versus what you have seen plus house.
Joe lender to specific to your question was from Q1 2019 to Q2 2019 did we see churns sequentially increase and the answer is yes.
So they went up about the same percentage amount.
She wanted to Q2 19 Q1 to Q2 20.
Okay.
Thanks.
Thank you. Our next question comes from George Sutton with Craig Hallum. Your line is now open.
Thank you you asked specifically referenced the telephonic enrollment as being one of the items that you thought were it was having an impact on our new churn rate I'm wondering if you've done some diagnosis and couldn't explain what why is the case in your view.
That's definitely correct charge, Tim why don't you take that.
Sure. Yes. So we spent a long time diagnosing the telephonic sales process and really identify opportunities to improve that at every stage.
So we can do what I thought the front end, we will have a healthier mix of internal versus vendor agent. So we can see that newer agents are not as effective as older agents and vendor agents are not as effective internal agents and so we've been scaling up our workforce rapidly. This has led to probably definitely to an increase.
Recent churn.
Then once somebody is in the shopping process, we saw that we could provide better tools. So as Scott mentioned Theres a broadening a plan selection, we are bringing better algorithms. This year for our regions to I'm used to make better recommendations to the telephonic customers, whereas an online.
Is that research themselves.
We're also better aligning our compensation with our agents.
To to pay the apps. So a couple of years ago, we paid on submitted that we move to approved now we're moving to a framework, where we'll pay on approved but keep basically a draw and pay it out later to our agents that they put people in the right planned busy they get paid when he helped gets paid so there were a number of these sorts of steps that.
We think we're.
[noise] George.
Yeah, I I'm here I wasn't hearing Tim.
One follow up if I could obviously, we're very focused on churn, but you are meaningfully guiding higher so.
It sounded like stronger partner relationships and stronger position was carriers was a a reason behind that and I wondered if you can go in a little bit more detail.
In terms of what you meant there.
Well you had a strategic partner channel, we launched three years ago and is just a second half of last year started to really gain momentum has been a bright spot for us through the first half of the year and start is off to a very good start already through the first three so four weeks of July.
And that we expect that to be a real differentiator for us long term lot of those relationships are with hospitals and our three year exclusive deals a lot of pharmacy relationships to that or are.
There were soft in the first half not surprisingly given Kobe then.
Being overwhelmed with the issues they face.
But again, starting just about a month ago in mid June the pharmacy channel started to gain momentum as well so sort of the partner channel very poor and what was the other part of your question George.
And Scott on bond away.
Thanks, Eric related to the position with the carriers.
Yeah, so yeah, what could the carriers are increasingly dedicating resources and focus and attention to.
The Telefonica distribution channel of which we are part we think we're a differentiated model slightly but we're part of that broad sector, which includes go health and select quote and transacted others and the carriers are realizing that this channel is very efficient for them in many cases in most cases, it's cheap.
Her even fully loaded with commissions and other advertising revenues that they support the channel wet then their own fully loaded.
Captive sales forces. In addition, the captive sales forces are facing challenges this year with respect to securing face to face.
Ointments with seniors because of their concerns over personal safety understandably.
And so I had my discussions with the carriers would suggest that there are investing heavily in the third party distribution channel as a hedge against their captive channels underperforming. So we think this is a real positive for us and it's reflected in a us increasing.
In our guidance, our expectation for advertising revenue coming from the carriers.
Perfect. Thank you.
Thank you and our next question comes to Tobey Sommer with Suntrust. Your line is now open.
Thank you so with respect to your revised long term forecast.
Can you talk about the from a growth perspective does that reflect what you think the market.
Could offer you in terms of gross or are you.
Cleaning or feeling to constrain it somehow.
For other reasons. Thanks.
Well, let me take it in two parts I mean, we we have.
We thought it was incumbent upon us Toby to revise our five year plan.
Given the we just.
First presented a five year plan in May of last year, we have so out run the tailwind case that we felt that it was meaningless to sell side analysts as well as investors and so that's what is driving.
The five year plan revision.
At the pace case in our mind is a worst case.
And the high case, it's not the highest case.
Management seeks to deliver it's the high case that we wish to commit to and so we do believe that the market could present greater opportunity than even the high case, just as Mitch market for you.
In terms of the macro environment.
We the base case is predicated upon an assumption that.
They would be 49%.
The total Medicare eligible market and 2024, and that's assuming no expansion at age eligibility, which is in the Biden health plan to take Medicare down to age 60, that's in no.
None of our projections the high case assumes what I believe is still conservative what Humana would regard as conservative is a 57% and they penetration by 2024 in terms of the deal you know the deltas between the two it's 600 million dollar differ.
Since between base case and high case, a lot of this is improved online.
Well, we've got tremendous met and momentum and online.
And we it's a fairly narrow range. The we assume that between assisted in unassisted, we de at 53%.
And 2024 in the base case, and 57% combined in the high case embedded in that however is the unassisted, which has very high margins and very high persistency and the base case is 17% of total enrollments online versus 21.
Percent total online in the high case, so we think that had been at least achievable. We have 19 million unique visitors to our site.
And we enrolled fewer than 100000 online in the last 12 months. So it's a very low conversion rate and whats significant that we didnt highlight significantly today as we wanted to spend a lot of time on the financial metrics and the and the persistency initiatives we had.
Is this is this rapid momentum that we're experiencing and online and the fact that the customer center is really the tip of the iceberg in terms of the functionality and improved user experience that we're launching this year and even further improvements that are right now being.
Engineer that will launch next year and so we think that they the most conservative piece of this plan is the financial leverage we're going to receive.
From our online consumer platform.
Thank you very much if I could just a follow up.
What does in in ranges are rough terms, the LTV look like for fully independent.
On enrollment.
Versus online assist.
Thank you.
All punt that to dare.
Yeah, Toby we commented on that in our prepared remarks that the persistency is.
We saw a from a enrollments in a peak in 2019 for online enrollments was about 25 to surface on doing a better Dan.
Telephony enrollments and that has a direct correlation to LTV differences.
Thank you.
Thank you. Our next question comes from Dave Styblo with Jefferies. Your line is now open.
Sure that good afternoon, and thanks for the questions I just wanted to explore a little bit more about the churn within the telephonic channel and better understand as you guys look back through a pea and Oh EAP.
What was.
New and why did this suddenly happen do you think maybe it was a function of just the rapid growth and having to add so many new agents as as you.
Approved.
Were approved count doubled in the fourth quarter or was there also some noise from the special enrollment period, just curious the as you look back or their learnings of pay you don't need that growth with two two it rather than we had too many new folks in the door and how to use an outside vendor versus we need to change how that is next time and then and then just maybe from a guidance perspective, or what we should be thinking.
How should we be thinking about.
The churn numbers in the third and fourth quarter or are they going to stay elevated do you think or should they start to improve now that things are starting to quiet down.
Yes.
Taking your last question first so definitely expense.
Turn to abate, Dave add but speaking to your first I think you said it well.
Got you know our growth goal was.
Number one goal of the company.
I watch word was let's be effective first and we will be efficient later.
And we grew well ahead of our expectations and well ahead of our internal staffing and we.
Opened Indianapolis as a physical call center and the just a year ago was very successful for us last year in the ATP, but we still had more calls to answer and that causes to expand our third party vendor agents and watt Ken what we've seen and this is.
With the benefit of lag and a bit of hindsight, which I know you're not being critical you're just asking is that all that marginal vendor agent, we had elevated churn and so what you're seeing as we guide to the balance of the year as we are so.
Following our growth rate down almost to almost half of what it was last year, you'll see that were significantly increasing that mix of enrollments that will be closed and converted by our in house agent. Another way to think about it we have about 50% Medicare.
Their enrollment growth built into this guidance, which I know, we believed to be conservative at on only a 37% total agent count increase so that's just another way to do the math on the increase productivity that we're seeing and further expecting through the balance.
At the year.
Okay got it and no real noise from the special enrollment period, Oh, I'm, a little Derrick what would you say about that.
Yes, I mean, Dave we did see enrollment volumes picked up a bit due to the special moment period.
But certainly nowhere near.
What we saw it with the open enrollment period. So there are some.
Largely impact relative to revenue growth that we got from it but not significant which also meant that we put in what we observed in the market perspective. There are just fewer people looking to switch during that period.
Okay, and then just to follow would be on the longer term outlook. If we're looking out to that end year thing in the past youve given us some sense of what commissions receivable with look like at a specific.
Level curious if you guys are.
Are willing to talk little bit about that or or the kind of though the bars, there and operating cash flow, obviously, you're talking to getting to that profitability, but again sort of what that looks like from a numeric standpoint.
Out here.
Yeah, Dave it's about two.
Hi, two and half billion into base case, and about 3 billion into high case.
[noise] [noise], that's what the conservative LTV assumptions.
Sure and a half billion and well I'll talk about commissions receivable.
That would be our balance yeah.
The ended 2024.
Expect about a two and a half a million dollar.
Commission receivable balance on our balance sheet on the base case and.
Good Eric will correct me I'm right about 3 billion on the high case.
Thank you and our next question comes from Jonathan Young with Barclays. Your line is now open.
Hi, Thanks, guys I, just going back to the LTV for a minute.
I understand you guys are putting in all these.
Michigan's to try to help improve the LTV, but traditionally used <unk> kind of pulled us so let us down the path of snow I assume flat LTV kind of moving forward. So I guess, how much competence do you have an improving LTV to get to get back to 2019 levels in 2021, given the elevated levels.
I have turned that youre kind of experience in miles because my understanding is more media churn levels, how bigger impact on LTB. So just want gets better understanding on that.
You're absolutely right that the churn has been driven by recent cohorts and there is virtually no impairment to our commission receivable balance on.
Prior to three year enrollments, but we have extremely high level of confidence that we minimally get back to 2019 levels in 2021, the opportunity is much greater than that at 10, perhaps you should express your level of confidence and the reason for that.
Buttons.
Yeah, I think I think that's right Scott we have very high confidence I think as you described before.
US slowing down our growth rate. So we can handle our telefonica enrollments with our own internal agents that is a big step into right direction. Then you layer on all of the additional initiatives that we're putting in place and grow the online component of enrollments, we feel very confident that there's upside beyond what we have bear.
But as a goal getting back to the 2019 levels was what was appropriate for 2021.
Okay and on your.
Your comment about that the external telephonic agents, where we're leading to higher churn I mean, I guess, given what you're doing with your internal agents would it make more sense you guys too as even more internal agent onto the your new compensation structure and.
Not rely on the external agent structure, just your thoughts on that thanks.
Tim I'll, let you take it.
Sure. So I think that's where we will that's where we're heading I mean, we're already shifting this year, we had never had any sizable remote workforce before March of this year and we moved to everyone to work from home in a matter of seven days and seeing how successful that was it led us to be much more agree.
Yes, it in recruiting our own were more remote workforce and gives us a lot more flexibility in where we recruit from.
That said our vendor partners are an important part of our mix. There are many of those agents who perform on par with our internal agents and as we get better it giving them tools training.
<unk> they tend to do better.
They were just to larger part of our mix and we do like the flexibility they provide us in ramping up in Q4. So I think going forward, we will have a more internally focused workforce, but that our vendor partners will remain a part of that mix going forward.
Thanks.
Thank you and our next question comes from Elizabeth Anderson with Evercore. Your line is now open.
Hi, Thanks, So the question guys.
Help me bridge the change in that cash flow guidance for the year incident I talk about why you have increased confidence in the 2020 to breakeven number.
Eric.
Yeah on the change in the operating cash flow number guidance over guidance.
There is a large portion of it the majority Super majority of it is due to higher investments in sales and marketing to drive the initial revenue and increase.
Cadence of and just as a reminder, for our enrollment we incurred ourselves marketing expenses within the quarter and typically we do not.
Receive any the commissions related to those enrollments to Q1 the following year.
<unk>.
There's also an increase in fixed cost guidance or does that also.
It's built into operating cash flow and then between those two items that make up the.
The difference.
Got it okay. Thank you thats helpful.
And then just on the second part of the question in terms of our.
Expectation that turn cash flow breakeven in 2022 under both the base case and tailwind.
Hi scenario and no revised long range plan.
Given our unit economics.
When growth rates.
Stay flat or declining year over year, we do expect to turn cash flow positive by the third year. So.
Based on the you know why we're seeing where we end up this year that tracks to that timing.
Okay, great. Thank you.
Okay.
Thank you. Our next question comes from Greg Peters with Raymond James Your line is now open.
Good afternoon. Thanks for squeezing me in a first question.
The movements in Ltvs I'm, just curious why there wasn't any movement in your constraints assumptions.
Derek.
Yeah. So Greg good question as a reminder, we apply a constraint that the lifetime values as a matter kind of conservatism to handle the volatility that we have seen in estimates you know from quarter to quarter as we move through the life of the cohorts of our Medicare members and.
What you are seeing Greg is.
The constraint.
At work given that we have higher churn and expectations. The LTV at the decline is still within our constraint.
So now that could the constraint, though is something that does get evaluate periodically to see whether the volatility has increased in a matter of I wish we need to updated and this quarter that has not been necessary for Medicare has not been necessary for Medicare.
Okay I'll pick my follow up on that.
Offline. The second question I had Scott in your prepared comments you mentioned.
The outlook for better better Medicare revenue.
In the balance the year and I you know with the recent ipos of some of your competitors and transact out there I'm just curious.
If you feel like E health is getting as much financial support from the carrier partners as some of these competitors are.
Well the answer is we are not and the reason is that we have a consumer centric model Greg that.
As not direct seniors to specific carriers.
The way that some of our competitors constrain their carrier choice.
And both models are viable we still received substantial support from most of the major carriers a majority of them.
But we could receive greater advertising support if we were to constrain the consumer offerings, but thats not our model I mean, if we're just we're consumer centric and we want to put the seniors and the very best plan for them.
Right and then so just trying to reconcile that with your comment about better better Medicare revenue.
The back half of your low work, Greg I understand what we're expecting our advertising revenue to nearly doubled this year, while our enrollments and commissions are not doubling so it's growing as is growing faster than the carrier support Uh huh.
As evidenced by the advertising dollars is growing at a much faster rate than the underlying business. This year.
Got it thanks for answers.
Thank you. Our next question comes in Georgia with Deutsche Bank. Your line is now open.
Hey, good afternoon, guys and thanks for taking the questions I guess got I'm going ask the turn question a different way, which is can you talk about any initiatives around brand building and such that when members churn. If they continue to come back to E health to make sure that they're making there.
There are carrier selection and then I have a quick follow up for dark yes. So.
We under index other ecommerce businesses with recapturing the churning member right now, we recapture only 10% of the seniors that churn out of our block, which is very low, especially considering that the seniors and low.
They pass away are enrolling in a number of Medicare advantage plan, almost certainly well over 95% at part of the customer Center technology that we're launching in September will enable us to have a continual online engagement being able to submit updates.
As different plans change and so yeah, we do know that we have to make this a bigger priority. It hasn't been we have been transaction oriented we've not been retention oriented and we've not been recapture oriented and just as we achieved our plans that we saw.
I'll now to grow faster over the last two years, we will achieve our plans now that we set to improve recapture and retention.
Okay. Thanks, and then maybe the quick fall for dark and there is a follow up on Elizabeth question is what I'm trying to understand as you guys have kind of raise the revenue guide to EBITDA guide the GAAP income guide, but the cash flow guide is going the wrong way.
I guess, just though a little bit more the cross walk there because I would've expected that if the GAAP net income guide was going up the cash flow guide would go positive or you guys capitalizing some of the S. DNA expenses. This just the timing between kind of receivables and payables I'm just trying to like probably maybe it's better kicking off line, but I just kind of one of the almost.
Killed walk through if you're willing to do it.
Yeah, Let me walk it gives us a bit more precision to expand on that since you're asking as well. So I think for guidance over guidance to the operating cash flow breakeven Spano 27 million.
Loss right and then of that about 19, a half none of it is related to higher sales and marketing expenses to drive a pea enrollments.
And then there is in about four and five four to five knowing of increased fixed costs. So that gets you almost all the way there in terms of guns over guns difference.
Oh, Okay, I think I've, a couple more questions, but I'm happy to pop offline.
Thank you. Thank you. Our next question comes from Frank Morgan, well with RBC capital markets. Your line is now.
Thank you I guess first a clarification I wanted to go back to Dave's earlier question about.
Your eight your answer to make sure I understood. You said you thought that churn would moderate both in the third and fourth quarter. So if we're looking at this 42% number in the second quarter.
You are saying that that number on the third or fourth quarter will go down. So that's my clarification first.
That's my belief Frank Derrick.
Yeah, what Frank the the.
Increase in that particular metric is a combination of what we have commented on in terms of increase in churn and or.
Cohorts at the newly enrolled and also adding.
A larger number of members into our of our membership base and.
Older members trend at much lower rates. So when you are out a larger share of new members and member base. It will drive the number up <unk> and since our Q3 enrollments are typically lower it will bring that percentage down if that would be our expectation.
Got you up and then I know in the very opening remember remarks, you commented that it was really.
No industry slash macro factors.
Along with company specific factors, but it really sounds like it's more of a just to clarify.
More company specific would would you would you care to attribute awaiting to how much do you think that this is company specific and what within your control versus how much of this as an industry issue.
Likewise, we can't be precise about it but as Tim said your Frank did bring a third party consultants and and it's their view that the macro factor is only about 100 basis points you know my my.
Got tells me that it's more than that but they believe that well over 90% of the elevated churn is addressable by specific operating initiatives that we've already launched that will add impact. This fall Tim what's your reaction yet I would just raising a little bit different.
I think the macro environments, meaning we paid more significant price for our deficiencies.
So where customers have more plans to choose from and more opportunities to switch if we don't do a good job in the sales process and we don't follow up effectively then they will switch at higher rates in the way. They may not have in previous years. So I do believe it is exacerbated exacerbated by the macro factors, but that it is primarily.
The driven by element that we control.
Thank you and then in terms of up the the mix of internal versus vendor agents going into this.
AGP, obviously it sounds like that's a big part of the problem. So what will that mix look like in how has that changed between internal and vendor.
Right. It we were about 70% at peak last year third party external agents and this year that number will be well under 60%.
And that really understated as well because that's just raw numbers.
We will be allocated more calls to internal agents, because we've grown our internal sales force faster than our external sales force.
Okay. Thank you.
Thank you. Our next question comes from Stephen It's now with SVB rank. Your line is now open.
Hey, good afternoon, guys. Thanks for taking my questions I just wanted to follow up on two areas that we've been talking about here today may LTV and online persistency as long as cash needs. So I appreciate that one of the drivers of getting LTV back to 2019 levels is the higher persistency and online enrollees, but do you feel you have enough of a sample size of those numbers.
At this point that have sort of been with you for more than let's say three years or so built into the overall and they LTV to know for sure that their duration as longer maybe like what percent or maybe a number that's passed that mark would be helpful. Kinda like related to this you mentioned in the 2900 80, the online enrollees are 25% to 30% higher than telephone.
Monica on persistency, and I guess I, just want to better understand that as well like how do you measure that one here a few quarters after may be just to help understand.
Okay.
Yeah, the big difference among these enrollees and where we're focusing our attention is in basically short term retention. So those that go approved that either don't go paid or only go paid for a short amount of time and then switch.
So we do have a great deal visibility into how that is.
Playing out in terms of long term history on online enrollments I do think we havent sufficient.
Sample size I turn to Derek for that one for any additional commentary.
We do <unk>, yes, so we have observed.
Hey spread a difference.
Between online persistency versus how far through sort of see.
The last four years.
What we have also notice is that spread has increased significantly this year.
On the Telephonics I getting worse.
So.
Yeah, so and.
While it's still a small percentage overall enrollment we are tracking to a number of hundreds of thousands of.
Bill easier so from a statistics and Africans perspective, it's meaningful and maybe one more thing to add to is.
The reason why we can confidently.
Articulate the trend for the cohort that doesn't roll and HCP is the first 9100 days of churn for first enrollment mix up for almost the entirety of churn for the home was a whole year. So that's the dynamic that's.
With every new enrollments not just with the health of we have been looking at that on a post 100 databases and we've seen this front and able to describe and identify it.
Great. That's super helpful. Maybe just a follow up on the cash side. The midpoint of 22 any guidance suggest operating cash in Capex will the use of about $114 million at the midpoint and looking at that number for the first half its about 17, so the implied cash needs for the back half or something in the order 97 began to Twoq you around 77.
So am I missing anything major there and if not how do you guys plant. That's on the difference and I guess thinking about your preferred cash cycle kind of Q1 to Q1 do you expect it is you have to be positive for the 12 months through Q1 21.
In any any any thoughts there.
Yeah, So I do not expect us to be cash flow positive in Q1 21, although that is the better cash cycle.
But to look at fiscal year one.
So you're correct in that because we got so much of a cash collections in Q1 from and enrollees.
Fluids, we typically get all the annual commissions in Q1.
The in terms of funding obviously, we have access to capital from the equity raise in March and does the intention from doing that rates will have to drive more growth in Q4, and that's where you're seeing here. The other thing is as good as Scott commented on is we are seeing a disproportionately higher.
Growth in carrier optimizing revenue.
Which is cash that we get in year, which we will look to redeployed to sales and marketing investments, which will help a back half a year terms cash flow.
Okay. Thank you.
Thank you. Our next question comes as Daniel Grossly with Citi. Your line is now open.
Hey, guys. Thanks for taking the question I want to go back to that 10% recapture rate.
How high do you think you can drive that in the next three to four years and when folks are turning off of a V health.
Do you have any data on on where they're going are they going into other DTC platforms are they going directly to the.
The carrier, how does that kind of flow through the system.
Yes, so last first.
It's both and we're losing to both the other direct to consumer brokers as well as some seniors convert to plans on a carrier platform and then we're no longer broker of record we have a conservative forecast here in both the base case and the high case.
We are only assuming we reach at 20% recapture rate that is very likely to prove low with the customer center that we're launching increase retention team et cetera, we think that that is the bare minimum to achieve over.
The next we probably have to double in the next two years, but for the conservatism at the plan, we just assume that it could double.
Tim would you add more to that.
Sure well I think the main point I would make is our 10% recapture rate now is essentially driven by us requiring a customer. So we are we don't have a significant retention efforts, which is why we think there's so much opportunity here. So we're recapturing these people will be.
'cause they.
Call back in we might have an email they see a TV AD. It's a it's a function of our transaction growth not a function of any designated.
Retention efforts, so as we get better at communicating with them following up with them, making better recommendations because I'm, just having a better sales process.
We can do significantly better than 10% and I think the 20%.
That's got mentioned is is conservative.
Got it thanks, and maybe just one follow up as you as you look to recruit and hire more internal agents. Obviously, there's a there's a finite cool productive agents out there now you have a bunch of folks competing foreign both from the well capitalized peers and the carrier sure moving more towards the telephonic channel.
No.
Do you see recruitment.
As a.
The increase in challenge because of the increasingly competitive environment and do you think you'll have to you.
Like boost up salaries to compete here.
No I don't think so we're highly competitive on both base salaries as well as commission bonus opportunity as and we are the industry leading in terms of.
Medical and other benefits. The look this is a very big country and there are a lot of eligible.
Candidates for these roles were also quite nicely geographically distributed in our physical call centers and now with work from home.
Capability, we're not even limited to our geographic footprint and so anecdotally as I talk to our our peer competitors and we're all friendly competitors.
None of us or having a hard time admittedly, we've we've benefited unfortunate from the unfortunate.
Unemployment levels.
That have probably caused this year to be any easier year for recruiting that than what hopefully next year will be but we think the pool.
Have a college graduates people with sales experience that are attracted to these jobs that offer a great deal of independent the opportunity to help seniors a lot theres lot of personal satisfaction and there's a real opportunity double digit percentage of our agents make into the six figures. So.
We think we can continue to increase the share of enrollments that we derive from internal agents.
While we are also even more significantly increasing the share that we enroll online.
Thank you and I'm showing no further questions in the queue at this time I'd like to turn the call back to speakers for any closing remarks.
Well I know we've gone over I. Thank you all for your well considered questions. We look very forward to the balance of this year and delivering very exciting results for our consumers and our shareholders. Thank you.
Ladies and gentlemen, thank you for your participation on today's conference. This does conclude your programming you may now disconnect.
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