eHealth (NASDAQ:EHTH) reported a third-quarter net loss of $35.9 million as Medicare revenue and application volumes fell, while management said cost cuts and a shift in marketing spending helped improve cash flow.
The health insurance marketplace reported revenue of $21.3 million and an adjusted EBITDA loss of $39.9 million for the third quarter of 2026. CEO Derrick Duke said the results were in line with expectations and reflected the company’s focus on its lifetime advisory model, cash flow improvement and preparation for a return to growth in 2027.
Operating cash flow for the first nine months rose to $19.6 million from $10.6 million a year earlier. Duke said eHealth expects a meaningful year-over-year improvement in fourth-quarter operating cash flow and remains on track for break-even or better operating cash flow for the full year.
Medicare Revenue and Applications Decline
Medicare segment revenue fell 64% year over year to $18.1 million, primarily because of lower enrollment volume and lower net adjustment, or tail, revenue, CFO John Dolan said. Medicare tail revenue declined to $1.5 million from $12.1 million, while the segment’s gross loss widened to $12.7 million from $1.2 million.
Total Medicare applications submitted fell 55%, including a 58% decline in Medicare Advantage applications and a 23% decline in Medicare Supplement applications. Medicare Advantage lifetime value declined 2%.
Management said it deliberately reduced Medicare marketing outside the primary enrollment periods to concentrate spending when expected returns are highest. Medicare variable marketing and advertising expense fell 73%, while Medicare customer care and enrollment expense declined 24%.
Dolan said customer care costs did not fall as quickly as application volume because eHealth retained its core career advisors to engage existing members and invested in hiring and training ahead of the annual enrollment period, or AEP.
Early Enrollment and Retention Indicators
Duke said consumer demand was strong and lead costs were attractive in the first three weeks of the selling season, although he cautioned that the most important weeks of AEP remained ahead. He said plan changes and terminations were contributing to consumer shopping.
The company’s lifetime advisory model calls for advisors to support members beyond initial enrollment. Duke said the ancillary cross-sell rate exceeded 40% in the third quarter, nearly doubling from a year earlier. He also cited improved retention in the first 90 days for policies enrolled by advisors under the model, while noting that the early results were based on a small sample.
Dolan said policies enrolled by career advisors in the second quarter had lower churn during their first 90 days than comparable policies a year earlier. He also said retention for policies effective in January 2026 was outperforming the comparable prior-year group despite significant Medicare Advantage plan changes.
In response to an analyst’s question, Duke said the reported Medicare Advantage lifetime value excluded ancillary products. He estimated lifetime value at approximately $200 for senior dental offerings and $300 for hospital indemnity plans, compared with just under $1,000 for third-quarter Medicare Advantage lifetime value.
Costs, Cash and Capital Structure
Combined technology and content and general and administrative expenses fell 17% year over year. Total operating costs and expenses declined 29%, Dolan said. Duke said the company’s cost-reduction program remains on target to reduce 2026 variable and fixed operating costs and expenses by approximately $90 million compared with 2025.
Third-quarter operating cash flow was negative $11.2 million, an improvement from negative $25.3 million a year earlier. eHealth ended the quarter with $88.1 million in cash, cash equivalents and short-term marketable securities, down from $101 million at the end of the second quarter. Commissions receivable stood at $978.6 million as of September 30, up from $907.7 million at the prior quarter’s end.
Management has renewed discussions with preferred equity partner H.I.G. about options to improve eHealth’s capital structure, Duke said. The earliest redemption date for the preferred equity is at the end of April 2027. Duke said redemption obligations are subject to limitations that safeguard liquidity, and Dolan said eHealth had engaged external financial advisors to support the discussions.
Guidance and Growth Initiatives
eHealth reaffirmed its full-year 2026 guidance ranges and raised the lower end of its expected net adjustment revenue range to $17 million from $16 million, leaving the upper end at $20 million. Dolan reiterated the company’s goal of mid-single-digit revenue growth in 2027, alongside expanded adjusted EBITDA margins and positive operating cash flow.
Duke said sponsorship revenue was gradually returning during AEP and that eHealth had signed a business process outsourcing agreement with a top-three Medicare carrier for carrier-branded enrollment support. Both are expected to begin contributing revenue in the fourth quarter.
Outside Medicare, eHealth is developing its offering for Individual Coverage Health Reimbursement Arrangements, also known by the consumer-facing name CHOICE. A partnership with benefits administration platform BerniePortal is expected to give more than 5,000 employers and 1,000 insurance brokers access to eHealth for needs analysis and help evaluating those arrangements, Duke said.
About eHealth (NASDAQ:EHTH)
eHealth, Inc operates an online health insurance marketplace that helps consumers compare and enroll in health insurance plans from a range of insurance carriers. Through its digital platforms, the company provides information about plan benefits, costs and eligibility, and supports consumers throughout the selection and enrollment process.
The company offers products that include Medicare Advantage, Medicare Supplement and Medicare Part D plans, as well as individual and family health insurance and related coverage options.
