eHealth, Inc. Announces Fourth Quarter and Fiscal 2008 Results Stated income.

Non-GAAP operating income, non-GAAP operating margins, non-GAAP pre-tax income, non-GAAP webbing receipts and non-GAAP network proceeds per diluted parcel are not prepared in accordance with GAAP, and should be considered supplemental to, and not as a understudy for, or higher-ranking to, monetary measures purposeful in accordance with GAAP. Non-GAAP pecuniary measures occupied in this press unveil have limitations in that they do not reflect all of the costs associated with the operations of the company's vocation and do not echo all of the income tax as determined in accordance with GAAP. As a result, you should not think these measures in isolation or as a delegate for analysis of eHealth's results as reported under GAAP. The establishment expects to pursue to lay stock-based compensation costs described above, and prohibition of these costs, and their tied up income tax impact, from non-GAAP fiscal measures should not be construed as an conclusion that these costs are unusual or infrequent.

The attendance compensates for these limitations by prominently disclosing GAAP operating income, GAAP pre-tax income, GAAP gain takings and GAAP reticle revenue per diluted apportion and providing investors with reconciliations from the company's GAAP operating results to the non-GAAP economic measures for the appropriate periods. The accompanying tables provision more details on the GAAP financial measures that are most in a beeline comparable to the non-GAAP financial measures and the akin reconciliations between these financial measures. EHEALTH, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) December 31, December 31, 2007 2008 -------------- -------------- Assets (1) (unaudited) Current assets: Cash and hard cash equivalents $ 81,395 $ 94,136 Marketable securities 40,119 56,499 Accounts receivable 1,300 2,005 Deferred profit taxes 13,240 7,580 Prepaid expenses and other flow assets 2,098 1,874 -------------- -------------- Total going round assets 138,152 162,094 Property and equipment, take in 3,791 4,567 Deferred gain taxes 4,535 1,314 Other assets 975 780 -------------- -------------- Total assets $ 147,453 $ 168,755 ============== ============== Liabilities and stockholders' judiciousness Current liabilities: Accounts mature $ 1,495 $ 2,190 Accrued compensation and benefits 4,849 4,662 Accrued marketing expenses 2,454 3,162 Deferred proceeds 436 427 Other trendy liabilities 2,073 2,707 -------------- -------------- Total informed liabilities 11,307 13,148 Other non-current liabilities 252 628 Stockholders' equity: Common make available 25 25 Additional paid-in major 167,847 172,456 Deferred stock-based compensation (104) (22) Accumulated deficiency (32,060) (17,892) Accumulated other extensive return 186 412 -------------- -------------- Total stockholders' disinterest 135,894 154,979 -------------- -------------- Total liabilities and stockholders' neutrality $ 147,453 $ 168,755 ============== ============== (1) The condensed consolidated stability paper at December 31, 2007 has been derived from the audited consolidated financial statements at that date. EHEALTH, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, exclude per dispensation amounts) Three Months Ended Year Ended December 31, December 31, ----------------------- ----------------------- 2007 2008 2007 2008 ----------- ----------- ----------- ----------- (unaudited) (unaudited) (2) (unaudited) Revenue: Commission $ 22,016 $ 26,176 $ 81,502 $ 100,839 Sponsorship, licensing and other 2,217 3,279 6,289 10,872 ----------- ----------- ----------- ----------- Total return 24,233 29,455 87,791 111,711 Operating costs and expenses: Cost of revenue-sharing 457 408 1,702 1,746 Marketing and advertising (1) 8,476 11,528 29,497 42,161 Customer supervision and enrollment (1) 3,278 3,724 12,137 14,379 Technology and gratify (1) 3,368 3,634 12,393 14,182 General and administrative (1) 4,348 4,508 16,046 17,983 ----------- ----------- ----------- ----------- Total operating costs and expenses 19,927 23,802 71,775 90,451 ----------- ----------- ----------- ----------- Income from operations 4,306 5,653 16,016 21,260 Interest and other income, bring in 1,438 629 5,287 3,714 ----------- ----------- ----------- ----------- Income before income taxes 5,744 6,282 21,303 24,974 Provision (benefit) for income taxes (16,616) 2,633 (10,292) 10,806 ----------- ----------- ----------- ----------- Net income $ 22,360 $ 3,649 $ 31,595 $ 14,168 =========== =========== =========== =========== Net income per share: Basic $ 0.92 $ 0.15 $ 1.37 $ 0.57 Diluted $ 0.86 $ 0.14 $ 1.22 $ 0.55 Weighted-average gang of shares second-hand in per share in amounts: Basic 24,424 25,076 23,092 24,963 Diluted 25,929 25,826 25,797 25,954 __________ (1) Includes stock-based compensation detriment as follows: Marketing and advertising $ 105 $ 160 $ 218 $ 644 Customer charge and enrollment 52 66 138 266 Technology and tranquillity 195 245 611 898 General and administrative 192 414 539 1,686 ----------- ----------- ----------- ----------- Total $ 544 $ 885 $ 1,506 $ 3,494 =========== =========== =========== =========== (2) The condensed consolidated proclamation of operations for the year ended December 31, 2007 has been derived from the audited consolidated financial statements for that year. EHEALTH, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Three Months Ended Year Ended December 31, December 31, ---------------------- ---------------------- 2007 2008 2007 2008 ---------- ---------- ---------- ---------- (unaudited) (unaudited) (1) (unaudited) Operating activities Net income $ 22,360 $ 3,649 $ 31,595 $ 14,168 Adjustments to adjust ensnare income to entrap currency provided by operating activities: Deferred income taxes (16,412) 2,305 (10,303) 9,451 Depreciation and amortization 434 591 1,709 1,863 Stock-based compensation sacrifice 544 885 1,506 3,494 Excess contribution benefits from stock-based compensation (50) (82) (50) (298) Deferred tear (18) (8) (40) (51) Loss on disposal of trait and materiel 12 7 30 45 Changes in operating assets and liabilities: Accounts receivable (252) (445) (583) (705) Prepaid expenses and other drift assets (195) (392) (11) 64 Other assets (1) 175 (524) 196 Accounts owed 610 336 308 693 Accrued compensation and benefits 1,025 659 958 (41) Accrued marketing expenses 31 (780) 807 708 Deferred take 159 76 374 (9) Other present-day liabilities (337) 378 416 526 Other long-term liabilities -- 90 -- 90 ---------- ---------- ---------- ---------- Net scratch provided by operating activities 7,910 7,444 26,192 30,194 ---------- ---------- ---------- ---------- Investing activities Purchases of idiosyncrasy and apparatus (724) (240) (1,777) (2,482) Proceeds from the vending of gear and kit -- -- 14 -- Purchases of marketable securities (17,823) (24,088) (54,343) (85,653) Sales of marketable securities 6,796 -- 8,952 10,120 Maturities of marketable securities 4,895 20,930 5,483 59,309 ---------- ---------- ---------- ---------- Net gelt worn in investing activities (6,856) (3,398) (41,671) (18,706) ---------- ---------- ---------- ---------- Financing activities Net proceeds from execute of well-known funds options 1,525 121 6,868 1,547 Excess duty benefits from stock-based compensation 50 82 50 298 Repurchase of public old -- (639) -- (639) Principal payments in uniting with peerless leases (2) -- (214) -- Costs incurred in association with monogram unrestricted donation -- -- (252) -- ---------- ---------- ---------- ---------- Net mazuma provided by (used in) financing activities 1,573 (436) 6,452 1,206 ---------- ---------- ---------- ---------- Effect of transfer chew out changes on specie and legal tender equivalents 42 1 106 47 ---------- ---------- ---------- ---------- Net (decrease) extension in loot and moolah equivalents 2,669 3,611 (8,921) 12,741 Cash and ready equivalents at beginning of interval 78,726 90,525 90,316 81,395 ---------- ---------- ---------- ---------- Cash and change equivalents at end of years $ 81,395 $ 94,136 $ 81,395 $ 94,136 ========== ========== ========== ========== (1) The condensed consolidated account of dough flows for the year ended December 31, 2007 has been derived from the audited consolidated financial statements for that year. EHEALTH, INC. SUMMARY OF SELECTED METRICS (Unaudited) Three Months Ended Three Months Ended December 31, 2007 December 31, 2008 Key Metrics: ----------------- ----------------- Operating notes flows (1) $ 7,910,000 $ 7,444,000 IFP submitted applications (2) 97,900 115,600 IFP approved members (3) 83,800 97,700 Total approved members (4) 118,800 131,200 Total income (5) $ 24,233,000 $ 29,455,000 Total yield per estimated associate for the patch (6) $ 48.00 $ 48.16 As of As of December 31, 2007 December 31, 2008 ----------------- ----------------- IFP estimated membership (7) 432,700 528,500 Total estimated membership (8) 518,400 621,100 Three Months Ended Three Months Ended December 31, 2007 December 31, 2008 ----------------- ----------------- Marketing and advertising expenses (9) $ 8,476,000 $ 11,528,000 Marketing and advertising expenses as a proportion of add gate (10) 35% 39% Marketing and advertising expenses excluding stock-based compensation (11) $ 8,371,000 $ 11,368,000 Marketing and advertising expenses excluding stock-based compensation as a interest of tot up receipts (12) 35% 39% Other Metrics: Source of IFP submitted applications (as a part of compute IFP applications for the period): Direct (13) 38% 40% Marketing partners (14) 34% 32% Online advertising (15) 28% 28% ----------------- ----------------- Total 100% 100% ================= ================= Acquisition price per discrete on IFP submitted applications (16) $ 56.73 $ 65.35 Acquisition charge (excluding stock-based compensation) per sole on IFP submitted applications (17) $ 56.03 $ 64.44 Notes: (1) Net bills provided by operating activities for the duration from the condensed consolidated statements of bread flows. (2) IFP applications submitted on eHealth's website during the period.

Applications are counted as submitted when the applicant completes the application, provides a design for pay and clicks the present button on our website and submits the relevancy to us. The applicant typically has additional actions to decide before the germaneness will be reviewed by the bond carrier, such as providing additional dope and providing an electronic signature. In addition, an applicant may offer more than one application. We involve applications for IFP products for which we pull down commissions as well as other forms of payment.

We expatiate on our "IFP" offerings as significant medical unique and ancestry robustness indemnification plans, which does not count stinting business, short-term main medical, stand-alone dental, lifestyle or schoolchild vigorousness surety commodity offerings. (3) New IFP members reported to eHealth as approved during the period. Some members that are approved by a porter do not stand the mandate and therefore do not become paying members. (4) New members for all products reported to eHealth as approved during the period. Some members that are approved by a transporter do not up the imprimatur and therefore do not become paying members. (5) Total gain (from all sources) recognized during the days from the condensed consolidated statements of income. (6) Calculated as downright interest recognized during the era (see note (5) above) divided by norm estimated membership for the span (calculated as beginning and ending estimated membership for all products for the period, divided by two). (7) Estimated tot of members effectual on IFP security policies as of the engagement indicated.

See our 2007 Annual Report on Form 10-K - Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Summary of Selected Metrics for additional bumf in the matter of our estimate of estimated membership. (8) Estimated platoon of members nimble on all warranty policies as of the era indicated. See our 2007 Annual Report on Form 10-K - Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Summary of Selected Metrics for additional intelligence on our counting of estimated membership. (9) Marketing and advertising expenses for the time from the condensed consolidated statements of income. (10) Calculated as marketing and advertising expenses for the while (see note (9) above) divided by out-and-out net for the epoch (see note (5) above). (11) Non-GAAP marketing and advertising expenses excluding stock-based compensation for the period.

See Non-GAAP Financial Information above and the conformity of GAAP to Non-GAAP marketing and advertising expenses below. (12) Calculated as non-GAAP marketing and advertising expenses for the spell (see note (11) above) divided by come to profits for the stretch (see note (5) above). See Non-GAAP Financial Information above and the harmony of GAAP to Non-GAAP marketing and advertising expenses below. (13) Percentage of IFP submitted applications from applicants who came as soon as to the eHealth website through algorithmic scrutiny motor results or otherwise.

See note (2) above for further gen as to what constitutes a submitted application. (14) Percentage of IFP submitted applications from applicants sourced through eHealth's network of marketing partners. See note (2) above for further low-down as to what constitutes a submitted application. (15) Percentage of IFP submitted applications from applicants sourced through paid perusal and other online advertising activities.

See note (2) above for further data as to what constitutes a submitted application. (16) Calculated as marketing and advertising expenses for the age (see note (9) above) divided by the or slue of individuals on IFP applications submitted on eHealth's website during the period. This metric may not suggest the steadfast property cost. (17) Calculated as non-GAAP marketing and advertising expenses for the aeon (see note (11) above) divided by the compute of individuals on IFP applications submitted on eHealth's website during the period. This metric may not mirror the firm acquirement set trendy of the impression of stock-based compensation allocated to marketing and advertising expenses. EHEALTH, INC. GAAP TO NON-GAAP RECONCILIATION FOR THE THREE MONTHS ENDED DECEMBER 31, 2008 (In thousands, omit per equity amounts, unaudited) Statement of Income Reconciliation Three Months Ended December 31, 2008 ------------------------------------------------------ GAAP Non-GAAP Percent Percent GAAP of Total Non-GAAP of Total Reported Revenue Adjustments Results Revenue ---------- --------- ---------- ---------- --------- Revenue: Commission $ 26,176 89% $ -- $ 26,176 89% Sponsorship, licensing and other 3,279 11 -- 3,279 11 ---------- --------- ---------- ---------- --------- Total takings 29,455 100 -- 29,455 100 Operating costs and expenses: Cost of revenue-sharing 408 1 -- 408 1 Marketing and advertising (1) 11,528 39 (160) 11,368 39 Customer pains and enrollment (1) 3,724 13 (66) 3,658 12 Technology and please (1) 3,634 13 (245) 3,389 12 General and administrative (1) 4,508 15 (414) 4,094 14 ---------- --------- ---------- ---------- --------- Total operating costs and expenses 23,802 81 (885) 22,917 78 ---------- --------- ---------- ---------- --------- Income from operations 5,653 19 885 6,538 22 Interest and other income, closing 629 2 -- 629 2 ---------- --------- ---------- ---------- --------- Income before income taxes 6,282 21 885 7,167 24 Provision for income taxes (2) 2,633 9 355 2,988 10 ---------- --------- ---------- ---------- --------- Net income $ 3,649 12% $ 530 $ 4,179 14% ========== ========= ========== ========== ========= Net income per share: Basic $ 0.15 $ 0.02 $ 0.17 Diluted $ 0.14 $ 0.02 $ 0.16 Weighted-average covey of shares reach-me-down in per allocation amounts: Basic 25,076 25,076 25,076 Diluted 25,826 25,826 25,826 Explanation of adjustments (1) Non-GAAP results repudiate the sense of expensing stock-based compensation allied to wares options, restricted provide and restricted usual units in accordance with SFAS 123R beginning in 2006, in summation to the amortization of deferred stock-based compensation destruction in accordance with APB 25 for grants made late to 2006. (2) Non-GAAP earn income and non-GAAP catch income per allowance except stock- based compensation cost listed in note (1) above, adjusted for estimated income put a strain on forward interdependent to stock-based compensation expense. EHEALTH, INC. GAAP TO NON-GAAP RECONCILIATION FOR THE THREE MONTHS ENDED DECEMBER 31, 2007 (In thousands, leave out per quota amounts, unaudited) Statement of Income Reconciliation Three Months Ended December 31, 2007 ----------------------------------------------------------- GAAP Non-GAAP Percent Percent GAAP of Total Non-GAAP of Total Reported Revenue Adjustments Results Revenue ----------- ---------- ----------- ----------- ---------- Revenue: Commission $ 22,016 91% $ -- $ 22,016 91% Sponsorship, licensing and other 2,217 9 -- 2,217 9 ----------- ---------- ----------- ----------- ---------- Total revenue 24,233 100 -- 24,233 100 Operating costs and expenses: Cost of revenue-sharing 457 2 -- 457 2 Marketing and advertising (1) 8,476 35 (105) 8,371 35 Customer circumspection and enrollment (1) 3,278 13 (52) 3,226 13 Technology and purport (1) 3,368 14 (195) 3,173 13 General and administrative (1) 4,348 18 (192) 4,156 17 ----------- ---------- ----------- ----------- ---------- Total operating costs and expenses 19,927 82 (544) 19,383 80 ----------- ---------- ----------- ----------- ---------- Income from operations 4,306 18 544 4,850 20 Interest and other income, grille 1,438 6 -- 1,438 6 ----------- ---------- ----------- ----------- ---------- Income before income taxes 5,744 24 544 6,288 26 Provision for income taxes (2) (16,616) (68) 19,194 2,578 11 ----------- ---------- ----------- ----------- ---------- Net income $ 22,360 92% $ (18,650)$ 3,710 15% =========== ========== =========== =========== ========== Net income per share: Basic $ 0.92 $ (0.77)$ 0.15 Diluted $ 0.86 $ (0.72)$ 0.14 Weighted-average issue of shares utilized in per deal amounts: Basic 24,424 24,424 24,424 Diluted 25,929 25,929 25,929 Explanation of adjustments (1) Non-GAAP results omit the purport of expensing stock-based compensation kindred to beasts options, restricted investment and restricted set units in accordance with SFAS 123R beginning in 2006, in annex to the amortization of deferred stock-based compensation impairment in accordance with APB 25 for grants made erstwhile to 2006. (2) In the fourth board of 2007, supervision concluded that it was more right than not that eHealth would catch on adequate to be to come emolument to utilize its surviving deferred rate assets.

Accordingly, eHealth reduced the valuation sufferance by $18.9 million against deferred weigh down assets resulting in a tribute advance in the fourth compassion of 2007. Additionally, non-GAAP lace-work income and non-GAAP trap income per share out leave out the income impose collide with of $262,000 from the stock-based compensation loss listed in article (1) above. EHEALTH, INC. GAAP TO NON-GAAP RECONCILIATION FOR THE YEAR ENDED DECEMBER 31, 2008 (In thousands, excuse per apportionment amounts, unaudited) Statement of Income Reconciliation Year Ended December 31, 2008 ----------------------------------------------------------- GAAP Non-GAAP Percent Percent GAAP of Total Non-GAAP of Total Reported Revenue Adjustments Results Revenue ----------- ---------- ----------- ----------- ---------- Revenue: Commission $ 100,839 90% $ -- $ 100,839 90% Sponsorship, licensing and other 10,872 10 -- 10,872 10 ----------- ---------- ----------- ----------- ---------- Total revenue 111,711 100 -- 111,711 100 Operating costs and expenses: Cost of revenue- sharing 1,746 2 -- 1,746 2 Marketing and advertising (1) 42,161 38 (644) 41,517 37 Customer heedfulness and enrollment (1) 14,379 12 (266) 14,113 13 Technology and size (1) 14,182 13 (898) 13,284 12 General and administrative (1) 17,983 16 (1,686) 16,297 14 ----------- ---------- ----------- ----------- ---------- Total operating costs and expenses 90,451 81 (3,494) 86,957 78 ----------- ---------- ----------- ----------- ---------- Income from operations 21,260 19 3,494 24,754 22 Interest and other income, realize 3,714 3 -- 3,714 3 ----------- ---------- ----------- ----------- ---------- Income before income taxes 24,974 22 3,494 28,468 25 Provision for income taxes (2) 10,806 9 1,142 11,948 10 ----------- ---------- ----------- ----------- ---------- Net income $ 14,168 13% $ 2,352 $ 16,520 15% =========== ========== =========== =========== ========== Net income per share: Basic $ 0.57 $ 0.09 $ 0.66 Diluted $ 0.55 $ 0.09 $ 0.64 Weighted-average include of shares in use in per cut amounts: Basic 24,963 24,963 24,963 Diluted 25,954 25,954 25,954 Explanation of adjustments (1) Non-GAAP results reject the efficacy of expensing stock-based compensation coordinate to standard options, restricted begetter and restricted staple units in accordance with SFAS 123R beginning in 2006, in ell to the amortization of deferred stock-based compensation ruin in accordance with APB 25 for grants made one-time to 2006. (2) Non-GAAP snare income and non-GAAP web income per appropriation toss out stock- based compensation expense listed in note (1) above, adjusted for estimated income weight help consanguineous to stock-based compensation expense. EHEALTH, INC. GAAP TO NON-GAAP RECONCILIATION FOR THE YEAR ENDED DECEMBER 31, 2007 (In thousands, except per interest amounts, unaudited) Statement of Income Reconciliation Year Ended December 31, 2007 ----------------------------------------------------------- GAAP Non-GAAP Percent Percent GAAP of Total Non-GAAP of Total Reported Revenue Adjustments Results Revenue ----------- ---------- ----------- ----------- ---------- Revenue: Commission $ 81,502 93% $ -- $ 81,502 93% Sponsorship, licensing and other 6,289 7 -- 6,289 7 ----------- ---------- ----------- ----------- ---------- Total revenue 87,791 100 -- 87,791 100 Operating costs and expenses: Cost of revenue-sharing 1,702 2 -- 1,702 2 Marketing and advertising (1) 29,497 34 (218) 29,279 33 Customer guardianship and enrollment (1) 12,137 14 (138) 11,999 14 Technology and contentedness (1) 12,393 14 (611) 11,782 13 General and administrative (1) 16,046 18 (539) 15,507 18 ----------- ---------- ----------- ----------- ---------- Total operating costs and expenses 71,775 82 (1,506) 70,269 80 ----------- ---------- ----------- ----------- ---------- Income from operations 16,016 18 1,506 17,522 20 Interest and other income, take-home 5,287 6 -- 5,287 6 ----------- ---------- ----------- ----------- ---------- Income before income taxes 21,303 24 1,506 22,809 26 Provision for income taxes (2) (10,292) (12) 19,256 8,964 10 ----------- ---------- ----------- ----------- ---------- Net income $ 31,595 36% $ (17,750)$ 13,845 16% =========== ========== =========== =========== ========== Net income per share: Basic $ 1.37 $ (0.77)$ 0.60 Diluted $ 1.22 $ (0.68)$ 0.54 Weighted-average bevy of shares cast-off in per allocate amounts: Basic 23,092 23,092 23,092 Diluted 25,797 25,797 25,797 Explanation of adjustments (1) Non-GAAP results preclude the take place of expensing stock-based compensation affiliate to precursor options, restricted father and restricted cows units in accordance with SFAS 123R beginning in 2006, in counting up to the amortization of deferred stock-based compensation expense in accordance with APB 25 for grants made earlier to 2006. (2) In the fourth three-month period of 2007, guidance concluded that it was more like as not than not that eHealth would materialize enough later take to utilize its extant deferred toll assets.

Accordingly, eHealth reduced the valuation reimbursement by $18.9 million against deferred pressure assets resulting in a c scot aid for 2007. Additionally, non-GAAP after taxes income and non-GAAP take home income per allotment bounce the income tariff bump of $324,000 from the stock-based compensation expense listed in notice (1) above.

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