Stock Story -
Online health insurance comparison site eHealth (NASDAQ:EHTH) beat analysts' expectations in Q2 CY2024, with revenue down 1.4% year on year to $65.86 million. The company's full-year revenue guidance of $482.5 million at the midpoint also came in 3% above analysts' estimates. It made a GAAP loss of $1.33 per share, down from its loss of $0.84 per share in the same quarter last year.
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eHealth (EHTH) Q2 CY2024 Highlights:
- Revenue: $65.86 million vs analyst estimates of $54.47 million (20.9% beat)
- EPS: -$1.33 vs analyst estimates of -$1.43 (6.7% beat)
- The company lifted its revenue guidance for the full year from $462.5 million to $482.5 million at the midpoint, a 4.3% increase
- EBITDA Margin: -23.6%, down from -22.2% in the same quarter last year
- Free Cash Flow was -$35.04 million, down from $68.27 million in the previous quarter
- Estimated Membership: 1.18 billion, down 34.36 million year on year
- Market Capitalization: $136 million
Online MarketplaceMarketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission-paying sellers, generating flywheel scale effects that feed back into further customer acquisition.
Sales GrowtheHealth's revenue has been declining over the last three years, dropping on average by 6.6% annually. This quarter, eHealth beat analysts' estimates but reported a year on year revenue decline of 1.4%.
Before the earnings results were announced, analysts were projecting revenue to decline -4% over the next 12 months.
Usage Growth As an online marketplace, eHealth generates revenue growth by increasing both the number of users on its platform and the average order size in dollars.
eHealth has been struggling to grow its users, a key performance metric for the company. Over the last two years, its users have declined 3.9% annually to 1.18 billion. This is one of the lowest rates of growth in the consumer internet sector.
In Q2, eHealth's users decreased by 34.36 million, a 2.8% drop since last year.
Revenue Per UserAverage revenue per user (ARPU) is a critical metric to track for consumer internet businesses like eHealth because it measures how much the company earns in transaction fees from each user. Furthermore, ARPU gives us unique insights as it's a function of a user's average order size and eHealth's take rate, or "cut", on each order.
eHealth's ARPU growth has been strong over the last two years, averaging 9.6%. Although its users have shrunk during this time, the company's ability to successfully increase prices demonstrates its platform's enduring value for existing users. This quarter, ARPU grew 1.5% year on year to $0.06 per user.
Key Takeaways from eHealth's Q2 Results We were impressed by how significantly eHealth blew past analysts' revenue and EPS expectations this quarter. We were also glad it raised its full-year revenue guidance, which came in higher than Wall Street's estimates. Zooming out, we think this was a solid quarter, showing the company is staying on track. The stock traded up 6.4% to $4.99 immediately after reporting.
