Q3 2022 eHealth Inc Earnings Call
Okay.
Good afternoon, everyone and welcome to Ehealth, Inc Conference call to discuss the company's third quarter 2022 financial results. At this time, all participants have been placed in listen only mode. The.
The floor will open up for your questions following the presentation.
It is now my pleasure to turn the floor over to Ely, Dupont Mint Senior Investor Relations manager. Please.
Please go ahead.
Good afternoon, and thank you all for joining Ehealth Inc's third quarter 2022 financial results call.
Turning me today, our friends right, Ben Chief Executive Officer, and Christine Janovsky, Chief Financial Officer.
After managements prepared remarks, we will open the lines for questions.
As a reminder, today's conference call is being recorded and webcast from the Investor Relations section of our website.
Replay of the call will be available on our website following the call.
We will be making forward looking statements on this call that includes statements regarding future events beliefs and expectations, including statements relating to our expectations regarding the Medicare market and individual and family plan market, including current market and enrollment trends consumer demand, our competitive advantage and market opportunities.
Our investment in enrollment quality initiatives, our omnichannel capabilities and call center operations and expected impact of these investments on customer conversion.
Customer retention and other quality metrics.
Our expectations regarding our marketing and member acquisition strategies and sales channels, our expectations regarding our business strategy operating plan and financial performance, including the profitability of our business cost savings cash flows conversion rates customer retention lifetime values acquisition costs.
<unk> estimates and fixed and operating expenses and our full year 2022 financial guidance forward looking statements on this call represent <unk> views as of today.
Should not rely on these statements as representing our views in the future.
We undertake no obligation or duty to update information contained in these forward looking statements, whether as a result of new information future events or otherwise.
<unk> looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in our forward looking statements. We describe these and other risks and uncertainties in our earnings release annual report on Form 10-K, and quarterly reports on Form 10-Q filed with the SEC.
Which you may access.
<unk> web site or from the Investor Relations section of our website.
We will also be presenting certain non-GAAP financial measures on this call for a 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 in our SEC filings, which you may access from the Investor Relations section of our website I.
I will now turn the call over to France.
Thanks, Eli good afternoon, and thank you to everyone joining us for our third quarter 'twenty two earnings call.
Today, I will review, our third quarter results and provide an update on our execution as we prepare for the important enrollment season, which started on October 15th in the Medicare market and November one and the individual and family plan market.
I began my tenure at just about one year ago. This month.
We've assembled a new leadership team and developed a comprehensive long range strategic plan or returning the company to sustainable profitable growth.
While delivering a differentiated value proposition to carrier partners and customers.
Significant operational changes were implemented across all critical areas of the organization to share as we started to execute against the plan with additional initiatives roadmap for 2023 and beyond.
Our initial achievements will be tested and leverage for success. During this important time with millions of customers shop for individual and Medicare plan.
During this enrollment period, our company well fifth tens of thousands of Americans to shop and enroll into plan.
Present, an optimal match for their personal preferences health needs and budget.
Our sales agents and product teams are performing the critical work of assisting customers and navigating a complex landscape of health plan options.
Regarding beneficiaries through planned feature some key selection criteria.
As well as providing the enrollment methods that are most convenient for the beneficiary or their caregivers.
This important service provided in a multi carrier choice environment.
Beneficiaries, when where and how they want to be served.
We give consumers the ability to shop and enroll through a host of different methods, including Telefonica Lee.
Online using their personal computers laptops tablets for mobile devices to live chat or fully unassisted using our digital tools.
Our omnichannel shop educate buy and hold capabilities are also critically important for our carrier partners that depends on health insurance advisors like ehealth to generate quality enrollments at scale.
Ehealth in particular provides carriers with access the beneficiary to value comparison shopping and a more technologically savvy.
We continue to place the utmost emphasis on our relationships with carrier partners as we work together to provide customers with exceptional and memorable experiences with the intention of establishing lifelong relationships.
Ehealth relationships with our carrier partners have been strengthened throughout last year and I believe our partnerships have never been healthier.
During the quarter Ehealth continued to execute against the six point operating plan that we've outlined on our prior earnings calls and which can be found on slide 11 of our earnings presentation.
Improving our cost structure is an important element of the plan.
And we are now on track to deliver more than 90 million year over year cost savings in 2022.
These savings are coming from.
Variable cost reduction with the largest impact expected in Q4 as well as rationalizing our fixed cost base.
In addition to improving our profitability and cash flow profile this year.
Cost reduction program underway will also allow us to enter 2023 on a much stronger foundation.
As you recall the cost transformation execution began in April .
The full annualized impact will be realized in 2023 supplemented by additional cost elimination and reduction that we expect to execute on in the early part of the new year.
While enhancing cash flow and profitability is an important part of the operating plan. Our transformation is clearly not limited to cost eliminations and cost reductions.
Over the past year, we've made significant changes to our leadership team. Most recently announcing the appointment of our new Chief Marketing Officer, Michel Barbell, and our Chief people Officer Jana Brown.
Internally, we promoted bill billings to senior Vice President of Engineering and information security.
The entire leadership team is aligned around our operating plan and broader strategic goals.
And is fully dedicated to the success of this company and our mission of connecting customers with quality affordable health insurance coverage.
The work on reconstituting the leadership team is near completion and I believe we are assembling a truly special group of executives that have the experience passion and determination to lead ehealth towards our important mission of helping Americans find affordable health insurance coverage, while exceeding our board and shareholders expectations.
Yeah.
Last month <unk>.
<unk> leadership team signed a pledge outlining our commitment to Medicare beneficiaries and caregivers and the experience. They can expect when they work with Ehealth.
It is comprised of six statements covering everything from our offering of a wide range of high quality plant.
Making customer satisfaction, the top criteria behind our plan recommendations to providing expert guidance and a friendly easy to use shopping and enrollment process as well always acting with the highest degree of ethics and integrity.
This is yet another example of the new Ehealth and organization that strives to provide customers with exceptional and memorable experiences as they shop for health insurance plans.
The plants with shared with our carrier partners.
CMS and is proudly displayed on all of our web site.
Operationally one of the most important third quarter achievement within a year over year increase in conversion rate for Medicare sales and enrollment costs.
This is a critical metric that determines the effectiveness of our Medicare Telesales organization, an impact not only the enrollment volumes, but also the per enrollment acquisition cost one of the key drivers of member profitability.
This year over year step up in conversion rate and continued through the first weeks of the AEP.
Permits to conversion or even more consequential given the significantly larger number of incoming calls compared to the rest of the year.
We are seeing this year over year productivity improvement for our tenured agents as well as the agents newly hired through this AEP.
As a reminder, the introduction of our enrollment quality initiatives about a year ago.
Which included call Verifications.
It resulted in a significant reduction of our telephonic conversion rates.
And impacted our financial performance.
While over the past 12 months, we have had to sacrifice enrollment volume as a result of these quality initiatives. It was the right decision.
It allowed us to achieve significantly better Cts scores and improved our standing with major carriers, some of which now referred to as the gold standard in enrollment quality.
We are excited to see a year over year increase in conversions in Q3 that was accomplished while maintaining enhanced enrollment quality standards.
Q3 revenue of $53 4 million decreased 16% year over year, reflecting a 37% reduction in Medicare variable acquisition costs compared to last year.
Which contributed to reduced lead volume, partially offset by enhanced marketing effectiveness and improved conversion rates.
Adjusted EBITDA loss was $33 1 million.
<unk> to a loss of $55 2 million in Q3 of 2021.
Both revenue and adjusted EBITDA were in line with our internal plan.
Third quarter marketing and agent cost per acquired Medicare member improved year over year, and we expect this trend to continue and be even more pronounced in the AEP driving meaningful expansion in LTV to CAC spread.
Based on Q3 results and initial AEP observations, we are reaffirming the full year of 2022 guidance ranges, we provided on last quarter's call.
In preparation for the AEP, we made changes to sales and marketing strategy and implemented new processes based on learnings from prior enrollment periods.
Top of the funnel.
Focused on marketing budgets on channel and customer segments that drive higher ROI of enrollments that are specific days and times associated with stronger consumer response.
Based on our data analytics.
We are prepared to be opportunistic with portions of our budget that can be shifted on shorter notice.
Leaning into the top performing initiatives and campaigns as we progressed through the AEP.
As I shared with you on the last call. We did pull back from some of our historic channels, including Directv and some of the lead aggregator partners as we reevaluate our programs in these areas for 'twenty three.
A recognition of the dynamic nature of our end markets, we plan to test new channels for the small percentage of marketing budget allocated to test every quarter.
One of the channels, we are starting to lean into this year as our dedicated carrier rankings to drive volume to our enrollment platform without the associated marketing spend allowing us to preserve valuable member acquisition budget.
This is becoming an important supplement to our core lead generation strategy.
Ehealth Omnichannel shopping and enrollment capabilities remain a key differentiator of our business model.
We aim to provide a fluid consistent experience as customers move across online and in person interactions with our platform with an overarching goal to increase the total conversion rate from top of the funnel.
In the past quarter, we made a number of investments to further augment enrollment options available to our customers.
The introduction of live agent chat and co browsing has made it easier for beneficiaries to progress through the shopping and enrollment process in a way that fits their specific preferences, including the degree of agents.
One.
For example, beneficiaries can begin their enrollment process online.
Their progress as they talk to their family and Sinter plant options and then calling for a co browsing sessions with a licensed agent to answer any remaining questions they might have.
And to complete enrollment.
Again, the key goal is to increase the overall demand conversion.
All of our platforms, regardless of how the final submission is made.
As a result.
See a mix shift towards new enrollments into the hybrid online assisted category.
Over the past year, we made significant enhancements to our call center operations, which are already driving a meaningful year over year increase in telephonic conversion rates.
This included reengineering of our agent hiring and training processes increased agent specialization by region and planned site.
Spansion, a dedicated carrier and partner arrangements.
And the introduction of the new agent facing technology tools.
Our telesales model is composed predominantly of full time in house agents, who we plan to retain year round with the goal of increasing average age and tenure and creating attractive career path for our best performing sales professionals.
Outside of the AEP, we expect the optimization of portion of utilization through sales of ancillary products.
And providing value added services to our members and carrier partners.
In summary, we took the following steps over the past year to prepare for this AEP.
We reduced our staff.
Count compared to a year ago, while meaningfully improving agent productivity.
We've re engineered agent recruiting and training processes.
When launched dedicated carrier and local market telesales.
We made changes to marketing strategy is focused on optimizing channel mix, increasing return on our acquisition costs and fostering customer loyalty.
And we introduced new Omnichannel pools, including co browsing and agent chat to increase overall the conversion rates on our platform.
These improvements to our Omnichannel shopping and enrollment engine.
Marketing strategies are having a positive impact on our performance in the first week of the AEP.
Compared to last year, we entered the selling season with a stronger pipeline of pre set appointments with Medicare beneficiary.
Represents high intent leads.
Our targeted demand generation campaigns combined with stronger telephonic conversion are driving enrollments that are being made at significantly lower per member acquisition cost.
To the same time a year ago.
While we are still in the early stages of the AAP. We're pleased with our performance to date and believe it's a reflection of significant operational improvements put in place over the past year.
In the individual and family plan segment, we remain cautiously optimistic about the growing opportunity.
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In preparation for the fourth quarter open enrollment period, we have launched a number of new partnerships, including some of the leading benefit administrators in the equity market.
Looking back at my first year and I am satisfied with the progress we've made.
I believe this organization underwent a tremendous amount of positive change.
The improvements we've made to our sales and marketing organizations are already making a significant positive impact.
Our important step on our path towards sustainable profitable growth.
Ehealth and the broader sector performance with AEP will inform our operational decisions for 2023.
We will be finalizing next years plans shortly after the conclusion and plan to provide 23 guidance as part of our fourth quarter earnings release.
We also plan to hold an investor day in early 2023, and we'll be sharing more details when we report Q4 earnings.
Above all.
I'd like to stress my conviction in Ehealth mission and the Medicare advantage opportunity we are pursuing.
Medicare advantage continues to be a large and growing market with favorable demographic trends.
And I believe <unk> provides unique value to beneficiaries by offering a broad selection of plans nationwide along with tools and advisory. This short term plans and the ability to enroll through a license.
Online.
Anywhere in between.
With that I will turn the call to our CFO Christine Janovsky for some additional color on our financials Christine.
Thank you Frank and good afternoon, everyone.
Third quarter results reflect the reduction in member acquisition cost pursuant to our cost transformation plan combined with a significant improvement in Medicare agent productivity.
During the quarter, we generated similar Medicare enrollment volume.
The third quarter, a year ago, while reducing variable acquisition spend in that segment.
37%.
Third quarter Medicare revenue was $45 1 million down 3% from Q3 2021.
Medicare Commission revenue was $41 3 million down 3% year over year.
During the quarter, we recognized $1 7 million of positive adjustments or tail revenue in our Medicare business reflective of positive cash collection trends on some of our older Member Award.
Third quarter, Medicare Noncommissioned revenue of $3 8 million was flat year over year.
This comprised predominantly of carrier advertising revenue.
Medicare segment loss was $23 million in the third quarter compared to a loss of $52 9 million a year ago, reflecting the impact of our cost transformation program.
Increased conversion rates and our telesales organization.
Medicare advantage approved enrollments were approximately 37800.
Year over year increase of 3%.
Total Medicare enrollment, including Medicare supplement and Medicare part D approved members.
Proximately 44900 <unk>.
Or a 4% decline relative to Q3 of 'twenty one.
The year over year decline in med sup and part D enrollment are driven by secular shift in consumer demand.
During MAA MAA TV products as well as our more targeted deployment of marketing spend.
Lee.
We ended the third quarter with an estimated total Medicare advantage membership of 582001.
This represents year over year growth up 4%.
Total estimated Medicare membership was 905000 or an increase of 3% compared to a year ago.
And Mei LTV for third quarter was $953 down 2% on a year over year basis.
Reflecting stable churn observation.
Our historic third quarter cohort.
And a product mix impact.
The third quarter is typically characterized.
<unk> seasonally elevated per member acquisition cost as we hire and train agents, who are not yet fully productive during the quarter.
And also invest in early marketing campaigns in preparation for the AEP.
At the same time.
Our transformation program the improvements to our sales and marketing operations resulted in a year over year decline of 35%.
Per member acquisition cost.
As we enter the AEP.
But to see a meaningful drop in our acquisition cost per approved Medicare member and a favorable LTV to CAC spread.
Q3 of this year as demand and conversion rate pick up.
Third quarter Medicare advantage online unassisted submitted applications grew 18% on a year.
Year over year basis, and partially assisted applications grew 39% as we continue to invest in.
Any channel tools on our platform.
Individual family and small business segment revenue was $8 2 million with segment profit of $2 7 million.
Compared to $17 5 million and $12 5 million, respectively in Q3 2021.
The year over year decline in segment revenue and profitability is attributable mostly to lower <unk> revenue.
In Q3 of this year positive tail revenue in this segment was $1 8 million compared to $10 million in Q3 2021.
We continue to observe favorable retention trends in our ISP business.
Lifetime value of our <unk> product grew 20% year over year.
LTV for Q H P plan were down 2% after growing in double digits in 2021.
Q2 of this year.
Total Q3 revenue was $53 4 million a decline of 16% year over year.
GAAP net loss for Q3 was $39 1 million compared to a loss of $53 million in Q3 2021.
Adjusted EBITDA loss was $33 1 million compared to negative $55 2 million in Q3 of 2021.
Moving now to our expenses.
In the third quarter total GAAP operating expense was $101 6 million.
22% from $130 million in Q3 2021.
The decrease in total operating expense was driven by a decrease of 40% or $20 million and <unk> expense.
A decrease of 29% or $12 8 million and total GAAP marketing and advertising spend from Q3 of 2021.
On the fixed cost side, GAAP tech and content.
<unk> declined 5% year over year, while G&A increased 4% compared to Q3 a year ago.
The year over year increase in GAAP G&A cost is primarily related to higher stock based compensation expense.
Last year stock based comp was positively impacted by a $4 1 million credit due to a reversal of a prior stock grant to our former CEO , who departed a year ago.
Third quarter operating costs also include a $3 7 million non cash charge primarily related to the sub leasing agreements, we signed on our Santa Clara offer.
Leading to the recognition of a lease impairment.
The sublease of our Santa Clara property as part of the remote first strategy, we announced earlier this year and is expected to have a positive impact on our fixed cost structure over time.
For the full year, we are now targeting total cost savings in excess of $90 million.
Relative to 2021.
These savings will be weighted towards variable spend as you saw in Q3, and we will have the highest impact in terms of absolute dollar amounts in the fourth quarter.
We ended the quarter with approximately $165 million in cash cash equivalents and marketable securities and $66 million in debt.
Our balance sheet also reflects a commissions receivable balance of approximately 786 million that is comprised of $208 million that we expect to collect over the next 12 months and 578 million in long term commissions receivable.
Operating cash flow for the second quarter was negative $29 6 million compared to negative $71 million a year ago.
This represents a year over year improvement of more than $41 million.
On a year to date basis for the nine months ended September 32022.
Net cash used in operating activities was $8 3 million, which compares to cash used of $16 3 million for the first nine months of 2021 or an improvement of $52 million.
These improvements in cash you represent the initial results of our cost transformation program and significant operational improvements implemented over the past year and we believe we can make further improvements in the coming quarters.
Trailing 12 month Medicare Commission cash collections were $331 1 million.
Increase of 1% compared to a year ago.
Turning to our full year 2022 guidance, we are reaffirming the ranges we gave last quarter.
I am encouraged by our execution in the first weeks of the AEP.
The progress we have made towards increasing the efficiency of our telesales and marketing organizations over the last year can be clearly seen in the initial enrollment metrics and is a positive sign for the trajectory of the business in both the near and longer term.
In summary, we are well positioned to execute against our 2022 player while continuing to drive toward the cost and operations related transformational commitment we have made to our investors.
With that I'll turn it back over to the operator to open up the line for questions.
Thank you.
To ask a question you will need to press star one one on your phone. Please standby as we compile the Q&A roster.
One moment please for our first question.
Okay.
And our first question will come from Tobey Sommer of tooth Securities. Your line is open.
Thank you.
I was wondering if you could.
Give us a perspective.
Both from your own.
Business can appetite for marketing spend in sort of pricing.
Out in the market as well as the market perspective.
From.
Some other players.
Everything seems to be a bit more rational with.
Competition down somewhat.
Okay. Thank.
Thank you.
Alright, so it'll be nice to hear from you. Thanks.
Thanks for the question of course.
I would.
Describe the environment continues to be competitive.
It.
At least through the first three.
Our suites of the AEP, it's hard to predict what will happen in the remaining four five weeks.
That said I would say that.
Sure.
Looking at things from the Ehealth perspective, the team has done a really good job in managing our.
Our Tac.
And again.
Every day is a new adventure.
But.
I attribute that to the good leadership that we brought on board here.
Managing our channels.
Effectively as possible.
So rationale is all relative.
So let's start there.
And I think it all depends on.
How each marketing organization or is performing relative to their own goals and objectives.
And they are performing consistent with their goals and objectives, probably does remain rational if theyre not they may do irrational things so.
Let's see how it all plays out through December seven.
Sure so maybe to kind of dig into that from a from a pricing perspective for.
Out in the market for selling leads have those prices changed and I know thats not the preponderance of the business nor the focal point of growth.
Yes.
Okay.
So the expectations were out in the market.
You broke up at the end can you say the last part of your question again please.
If we talk about pricing specifically that it made.
Still in kind of.
Get around that need for understanding any particular competitors expectations, and plans and whether or not they're living up to them or not.
It's let's just say that we obviously keep a very close eye on what our competitors are doing to the extent that we have that visibility.
<unk>.
Our channels are a little different we have a very robust online capability our competitors do.
Not necessarily have that same capability so.
Our online channel.
We do more.
Search engine optimization search engine marketing, we do more.
Of our paid search activity, so ours is a little different strategy.
On the direct mail, it's hard to really get visibility as to what they may be spending there than what we're spending.
But I would say that.
We're satisfied where we are to date.
We're satisfied with what we're spending.
Relative to where we were this time last year.
But again, it's a point in time.
And.
So we can't we don't get too up we don't get too downwards.
No.
November seven.
And we've got another 30 days left in the AEP. So.
It could be a different answer tomorrow.
That's where we are today.
You referenced scheduling an investor day.
Early 'twenty three could you talk and you also have quite excited.
Harvestable receivables over the next.
12 months or so to speak to.
The cash.
Cash flow position of the company as we get into next year I know AEP is a big variable in that equation and so the extent to which you can.
Comment.
That would be helpful.
Sure I'll, let Christine talk a little bit more about the cash flow.
Say.
In a very general level.
Pleased with where we are from a cash flow perspective.
From from <unk>.
Investor Day.
So there are courses.
Drilling multi dimensional in that we want to present this leadership team to our investors to analysts.
Share much more about the longer range strategic objectives for the organization.
Provide more insight as to how.
We continue to see this business unfold and where we're going to take the company.
And it's a very different company today than it was a year ago.
That will continue to evolve between now and even at the time, but we schedule our investors our investor day in late first quarter early second quarter cash flow.
As Christine if you want to share a little bit more sure. Thank you Fran and nice to talk to you again Toby.
We've talked about certainly being cash flow positive is critical to this management team.
That's been one of our goal as we revised our operating plan for 2022 is to really reduce our cash burn and as part of our revised <unk> guidance that we talked about on the Q2 earnings call. We increased our cash flow ranges by $30 million.
And then also as you think about.
Results for Q3.
Seeing that initial impact from our efforts through those operating cash flow and the outflows improving by 52 million on a year to date basis as compared to the first three quarters of 2021.
And then we think about heading into 2023 in Q1, we will be at a significantly lower cost basis on both the fixed and variable cost side.
Okay. Thank you very much.
Thank you.
One moment please for our next question.
Our next question will come from George Hill of Deutsche Bank. Your line is open.
Hey, good evening, guys and thanks for taking the questions I kind of just have two topics I wanted to touch on so first as you have CMS implementing the advanced marketing rules I'm, sorry, the bps market recording rules for.
This year's AEP I guess can you talk about what changes that creates for you guys. If any I mean I know from the call Center business you guys have always been recording calls, but I don't know if that changes that CMS has implemented its created any changes in your workflow.
Hi, George Thanks for the question.
It really hasnt changed anything for us I mean, we've always recorded calls.
Quality is critically important to us it's really for beneficiary protection.
And it's actually.
Certainly a great tool for us to continue to advance the proficiency of our sales agents.
The one nuance I would say this year is that there was a requirement.
Disclaimer requirement that we.
Third party marketing organizations, we're required to.
Within the first 60 seconds of our call.
Sure with beneficiaries that we don't offer all plans within their geographic area.
But it hasn't resulted in any any.
Issues for us as far as.
Directing call to CMS. So we are.
Conversion rates are higher than they were last year.
Our telesales is robust so.
We're doing just fine and our coal qualities are very high as well so.
Nothing.
On the CMS side.
Okay, and then I guess my follow up would be is there's been a bunch of little bit of concern at the margin I guess that that combined with the changes in the TV marketing ads is likely to drive down churn for this selling season, which I would assume is good for you guys, but could also slow market growth as the margins. So I guess I would just ask I know, we're only a couple of weeks and what they may be.
Kind of do you see anything that could impact the market from a macro level as opposed to anything Thats ehealth specific.
Well I think what you're referring to the 45 day.
Yes.
The approval process for television advertising that CMS.
And post the new filing use but they have 45 days to review TV commercial that carriers or or any marketing organization wants to utilize them.
We're not utilizing.
Directv this year, so it doesn't impact us.
As much as it might impact others.
Churn is one of our top priorities, meaning reducing churn and increasing persistency.
And I think with <unk>.
<unk> been concerned about.
The commercials that.
Featured some celebrities.
Not really.
Is aimed at beneficiaries, who might be eligible for a part D rebate.
They promote that.
<unk>.
What are those down quite a bit.
Because they are only available in a very limited number of geographic areas in the country and I think they were probably over promoted in the past BMS.
To their credit.
Really got after the organization too.
Change the way they were promote it and I think thats been a good thing.
It's not good for the industry to Cray.
Any kind of messaging that can be easily misinterpreted.
So we're we're very supportive of CMS efforts there to make sure that all communications are done in a way that is a good reflection on the industry.
Okay I appreciate the color. Thank you.
Thank you.
One moment for our next question.
Our next question will come from Ben Hendrix of RBC capital market. Your line is open.
Thank you very much I just wanted a quick question.
Just a quick question on the $90 million of cost savings in this year.
Variable costs were mostly accrue to <unk>, but I was wondering if you can give us some more color on how that manifesting here in the early weeks of AEP Foreseeing that for example in increased online penetration both in unassisted and assisted.
Mix there in terms of enrollment and kind of just a little bit more color on how thats.
On how that's accruing thanks.
Hi, Dan Thanks for the question.
The cost savings the constant transformation activity.
Have been across a wide area.
Activities I'm going to ask Christine.
Kristina joined me in this part of our conversation, but we've been added since April .
That's when we first launched our <unk>.
Cost transformation initiatives.
And there is still more opportunities that we've already identified for the balance of this year and certainly into 2023.
So these are efficiency.
They are both fixed and variable opportunities.
They are intended to be executed in ways that.
Are really aimed at efficiencies in minimally disruptive in terms of.
What they mean for the organization and what they mean for certainly our customers as well as our carrier partners. So.
As far as assisted and unassisted online.
We look at all our channels.
Equal opportunities to support our growth objectives.
We don't favor one over the other.
It's.
The objective here is to meet customers, where they want to be met.
And in fact, we've even been taken it to new levels by introducing live agent chat.
What perhaps was in the past the bias towards.
<unk> assistant.
We can actually improve the throughput on our top of the funnel by having the live agent chat capability where heretofore.
Those were in completed sale and now by having the live chat capability, there now converted to and has to fit.
And that was unproductive before right because people werent completing the transaction.
They didn't have the.
The ability to click on for.
And now that changes so.
Yes.
Just a different philosophy now.
If a decrease as the acquisition cost incrementally so be it.
It results in a customer and a customer that we intend to keep.
For the lifetime.
That's the goal.
So.
It's a different philosophy at Ehealth correct.
Platforms, there's other ways to create efficiency we want.
That top of the funnel to be.
Got it.
A source for lifetime value as far as much of the throughput as possible and.
And by introducing live agent chat, we think that there is.
Greater opportunity for throughput.
Kristy anything you would add on the cost efficiency side.
I think I think you covered a lot of it for and I think there's a couple of things that I'll mention is as we think about.
The call transformation.
Looking at all costs, both variable and fixed on the variable side, certainly that will be the largest portion of our cost reduction for the year, mainly certainly from lower marketing spend and really focusing on the right channels that are going to provide that right ROI.
And then having that corresponding reduction in the agent head count to match that on a year over year basis, and then on the fixed side.
Really looking at all of our fixed expenses and making sure that we have that right right cost.
Cost structure in place.
And.
Starting 2023 at a better cost basis than we did entering into 2022, and we're continuing to look at additional opportunities.
On the variable as we continue to hone in on what are the right areas of focus.
And then on the fixed side as well one of the things that we mentioned was the Santa Clara lease so we.
Did a sublease on one of our.
Office spaces and that is something as we have that remote first strategy from our people side that is an area that we'll continue to look at opportunities as well as other fixed cost expenses.
Yes.
Thanks for the color guys.
Thank you.
And one moment for our next question.
Our next question will come from Daniel gross rate of Citi. Your line is open.
Hi, Thanks for taking the question.
What if your competitors noted that there is more MA plan differential this AEP, which is leading to more shopping im curious if youre seeing the same thing off of your platform and what that May mean for one it approved policy. This AEP and then to churn than older cohorts and your ability to recapture those seniors.
Yes.
Hi, Daniel Thanks for the question.
I don't know if I would refer to it as more planned differential or just greater value proposition.
Whether it's in the core or in the supplemental plans, but I'd also say, there's greater economic pressure.
In general just because inflation in America is being felt by those with fixed income.
So.
And I Wouldnt focus entirely on those too.
MAA plans today right because there is.
Think about the 60% of Americans, who are an original Medicare.
Or are the original Medicare and have supplemental.
Medicare supplemental.
That.
Our.
Shopping for Medicare advantage, because it does provide a much greater value proposition.
And can reduce the financial exposure that theyre subjected to an original Medicare with co insurance deductibles.
Deductibles, where they have that protection on a Medicare advantage plan in large part with a zero dollar monthly premium.
So alright, I know theyre concerned about people switching and there could be could be people switching but they could also be switching staying with the same carrier.
Right because carriers offer.
Multiple client options in the same geography.
That.
It doesn't necessarily result in care.
And beneficiaries, having to switch the relationship with the carriers as well.
So.
I just want to provide some perspective there that.
First and foremost those than original Medicare.
Again, a lot of protection by considering your Medicare advantage alternative.
Even those with Medicare supplemental oftentimes because you are paying them.
Frequently are pretty high monthly premium.
And it's around the fixed income that can be.
Challenging, particularly now.
Our inflation.
So.
But back to your original point about differential I think it's just the value proposition is really.
Very very attractive for American beneficiary.
Your beneficiaries today.
Yeah makes sense, Okay, and then on the ISP.
Segment.
Yes.
Inflation reduction act extended subsidies.
Subsidies through 'twenty 'twenty four I'm, just curious I know youre not overly index too to the qualified plans, but I'm curious if you think that.
That will translate into faster ISP growth this year and next.
Okay.
I don't necessarily think it's going to be accelerated growth I would call it more.
Modest growth.
That's our thinking right now.
Okay.
Got it thank you.
Thank you.
And this will end the Q&A portion of the conference I would now like to turn the conference back to fan Saltzman for closing remarks.
Well. Thank you operator, and thank you all very much for joining us this afternoon and thanks for your continued interest in Ehealth.
This will conclude today's conference call. Thank you all for participating you may now disconnect and have a pleasant day.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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Okay.
Yes.
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Okay.