eHealth Stock May Be Cheap Here

Health insurance exchange platform eHealth NASDAQ: EHTH stock has been crushed falling over (-80%) off its highs heading into year-end. The insurance marketplace received a new CEO just six days prior to its Q3 2021 earnings release. The new CEO comes with a strong background in the healthcare industry as the Company enters the year-end open enrollment period. Shares collapsed on a massive top and bottom-line miss and on drastically lowered guidance moving forward, the worst may be behind it. The new CEO is focusing on bolstering engagement among its over 195,000 individuals since October 2020 as more consumers seek health insurance driven by COVID-19 fears. While the online business continues to grow increasing growing by over 50%, the call center conversion rates have seen a drastic reduction causing the shortfall. Conversion rates with unassisted online applications increased with strong interest in the omnichannel platform. The online business is not large enough to offset the call center shortfalls, but the CEO is attempting to change that. Prudent investors seeking a cheap entry on a leading health insurance marketplace can watch for opportunistic pullbacks in shares of eHealth.

Q3 Fiscal 2021 Earnings Release

On Nov. 8, 2021, eHealth reported its fiscal Q3 2021 results for the quarter ending September 2021. The Company reported earnings-per-share (EPS) loss of (-$1.78) versus consensus analyst estimates for a loss of (-$1.13), a (-$0.65) miss. Revenues fell (-32.2%) year-over-year (YoY) to $63.9 million, missing analyst estimates for $94.2 million.  

Lowered Guidance

The Company lowered its full-year 2021 EPS to a range of (-$1.13) to (-$0.43) versus $2.91 consensus analyst estimates. Full-year 2021 revenues were lowered to $535 million to $575 million versus $690.84 million consensus analyst estimates.

Conference Call Takeaways

Newly appointed CEO Frank Soistman introduced himself, As you know, I became CEO of eHealth just one week ago today. I've received a warm welcome from our very talented employees, and I look forward to working together in the years ahead. Before I review our financial and operating results for the quarter, I want to take a few minutes to introduce myself, and share why I'm excited and energized to be leading eHealth. As a bit of background on me, I've spent nearly 40 years in the healthcare industry including serving as President of Government Services for Aetna, pre and post-acquisition by CVS Health, where I was responsible for leading the strategic execution, and profitable growth plans for Aetna 's Medicare, Medicaid, individual and public exchange, and federal employee's health benefit businesses. While there, I built and led a team that achieved sustained accelerated revenue and earnings growth, coupled with strong stars rating in compliance performance, among many other accomplishments. Prior to my time at Aetna, I served in executive leadership positions across a number of healthcare and managed care companies, including Coventry Healthcare, Principal Healthcare, and CareFirst BlueCross BlueShield in Maryland.”

He continued, I recognize that I'm transitioning into the CEO role here at eHealth at a critical point, the evolution of the Medicare distribution industry. I plan to leverage my multi-decades-long experience in healthcare and managed care to further strengthen our relationships with carrier partners, improve data flow between parties, and maximize the lifetime value of enrollments we deliver. My initial focus as CEO is on our execution in the annual enrollment period.

The 10 weeks of AEP are a critical time when we operate at our peak capacity in call center utilization and generate a large portion of our total annual Medicare enrollments and revenues. While a lot of preparation occurs in the weeks and months prior to the enrollment season, the execution during AEP is critical. We are monitoring the effectiveness of our diversified marketing programs and the performance of our telesales organization daily. And we're making course corrections in real-time. And we'll use this insight to improve our go-forward AEP strategy and execution. This year, a number of important initiatives and changes were implemented ahead of AEP. One common thread among them is our enhanced focus on enrollment quality. Perhaps the most important change that took place operationally since last AEP involves our telesales organization. Earlier this year, we've made an aggressive pivot in our telesales channel to a model-driven predominantly by in-house sales agents. We launched a major talent acquisition campaign and have the largest class of full-time agents in our history, successfully recruited and onboarded. We entered this AEP with more than 95% of our telesales capacity made up of internal agents, ahead of our initial goal of 90%. Second, we took a number of steps to further enhance consumer experience and enrollment quality on our platform. This includes the addition of an enrollment verification step for telephonic enrollments, as well as supplemental training for our agent force.”

Recent Initiatives

CEO Soistman concluded, “During the Q4 earnings call, I plan to share more about my assessment with the Company's foundation and direction, as well as highlights of our strategic plan for 2022. I've also observed that the mission-driven nature of this Company is very important to our employees. And I intend to stay true to the Company's core mission of connecting eHealth customers with quality, affordable health insurance options, and a mission that hasn't changed since eHealth's inception. Through recent initiatives, we've heightened our focus on enrollment quality, and customer retention, and this will remain a critical component of our execution going forward. I see opportunities to increase the effectiveness of our sales by dedicating our call center agents to more defined geographies so that they can be even more responsive to consumers and provide deeper insights until available plan options. I expect to be prepared to share more specifics with you during our Q4 '21 earnings call. Another opportunity area is to have our brand stand not only for carrier agnostic choice, but also to be increasingly seen as a trusted source or clearinghouse of relevant healthcare-related material to help consumers navigate the complex healthcare system. I also believe there is an opportunity to broaden our platform beyond our current focus on sales and enrollment to encourage current prospective eHealth members to visit our website frequently. In my experience, this is critical to building loyalty and drawing consumers to our platform year-round rather than just during the enrollment periods. I also see the online business as a critically important component of eHealth's business model.”

EHTH Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provide a precision view of the landscape for EHTH stock. The weekly rifle chart coiled to peak near the $47.95 Fibonacci (fib) level. Shares tanked on earnings results and continues to sell-off on the falling 5-period moving average (MA) at $27.92 followed by the 15-period MA at $36.93. The weekly stochastic crossed down below the 20-band with weekly lower Bollinger Bands (BBs) at $15.95. The daily rifle chart downtrend is starting to stall as the 5-period MA starts to slope back up at $22.73 towards the flattening 15-period MA at $24.33. The daily stochastic formed a mini pup as it reaches towards the 20-band to trigger the daily market structure low (MSL) buy signal on breakout through $24.49. The daily lower BBs are starting to compress at the $14.90 fib. Prudent investors can watch for opportunistic pullback levels at the $22.34 fib. $21.07 fib, $19.43 fib, $17.49 fib, $15.93 fib, and the $14.90 fib. Upside trajectories range from the $31.33 fib up towards the $45.16 fib level.