eHealth Inc.

11/06/2025 | Press release | Distributed by Public on 11/06/2025 05:01

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Please read the following discussion and analysis together with our condensed consolidated financial statements and accompanying notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the "Annual Report"). This discussion and analysis contains forward-looking statements, which involve risks and uncertainties. As a result of many factors, such as those described under "Cautionary Note Regarding Forward-Looking Statements," "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report, our actual results may differ materially from those anticipated in these forward-looking statements.
Overview
We are a leading private health insurance marketplace with a technology and service platform that provides consumer engagement, education and health insurance enrollment solutions. Our mission is to expertly guide consumers through their health insurance enrollment and related options, when, where, and how they prefer. Our platform leverages technology to solve a critical problem in a large and growing market by aiding consumers in what has traditionally been a complex, confusing and opaque health insurance purchasing process. Our omnichannel consumer engagement platform differentiates our offering from competitors and enables consumers to use our services online, by telephone with a licensed insurance agent, or benefit advisor, or through a hybrid online assisted interaction that includes live agent chat and co-browsing capabilities. We have created a consumer-centric marketplace that offers consumers a broad choice of insurance products that includes thousands of Medicare Advantage, Medicare Supplement, Medicare Part D prescription drug, individual, family, small business and other ancillary health insurance products from over 180 health insurance carriers nationwide. Our plan recommendation tool curates this broad plan selection by analyzing consumer health-related information against plan data for insurance coverage fit. This tool is supported by a unified data platform and is available to our ecommerce consumers and our benefit advisors. We strive to be the most trusted, unbiased, transparent partner to consumers in their journeys through the health insurance market.
Business Update
Our 2025 growth strategy is focused on the scaling of our core Medicare Advantage business and pursuing revenue diversification initiatives, evolving our brand awareness across all products and enrollment channels, and improving member retention on our platform while continuing to evolve our telesales organization, advancing our digital technology leadership, and strengthening and expanding health insurance carrier partnerships.
During the first quarter of 2025, we generated strong Medicare Advantage enrollment growth during the Medicare Advantage Open Enrollment Period ("OEP"), maintaining the momentum we built during the most recent Annual Enrollment Period ("AEP"), which was characterized by elevated consumer demand driven by recent Medicare Advantage plan benefit and premium changes, plan cancellations and market exits due primarily to carriers facing higher medical costs and regulatory pressures.
During the second and third quarters of 2025, Medicare enrollment volume was lower compared to the same periods in 2024, which was consistent with our expectations. Our typical Medicare enrollment seasonality is heightened this year primarily as a result of the recent regulatory changes to enrollment rules for dual-eligible beneficiaries and those that receive Medicare Part D Low Income Subsidies ("LIS"). Beginning in 2025, the U.S. Centers for Medicare & Medicaid Services removed the special enrollment period that allowed dual-eligible and LIS beneficiaries to enroll in Medicare Advantage plans on a quarterly basis. As these regulatory changes limit eligibility to enroll in or between Medicare Advantage plans outside of the AEP for this large portion of Medicare beneficiaries, we experienced a decline in Medicare Advantage plan submissions during the second and third quarters of 2025. We successfully adjusted to this regulatory change by implementing a more flexible structure in our telesales organization, making it more agile and easier to flex advisor capacity up and down in alignment with anticipated enrollment volumes.
We expect to experience another dynamic AEP which will present an opportunity to drive strong consumer demand to our platform as beneficiaries face significant plan changes from Medicare Advantage insurance carriers. At the same time, we plan to focus on preserving our existing book of business through our continued retention efforts. During the third quarter of 2025, we largely completed our preparations for the 2026 AEP. We have achieved our benefit advisor hiring and training goals with a benefit advisor mix that is more tenured relative to last year and have continued to strengthen and expand our brand-driven marketing strategy, including integrating our brand message throughout our omni-channel platform. We have also integrated artificial intelligence ("AI") across several components of our telephonic enrollment platform, enabling us to utilize AI in assisting beneficiaries during the AEP. Additionally, we are focusing on facilitating seamless transitions between our online and telephonic environments and have continued to expand our customer service and retention team to further improve the overall consumer experience.
Additionally, enrollment volume in our Employer and Individual ("E&I") segment continued to decline during the third quarter of 2025 due to shifts in our marketing channel mix and market conditions. We have experienced a significant decline in volume from certain marketing platforms, such as organic search engine optimization, and have intentionally reduced marketing spend for the E&I segment as a result of declining eligibility and rising premiums in response to the One Big Beautiful Bill Act ("OBBBA"), which was signed into law on July 4, 2025. As part of our diversification efforts, we continue to focus on supporting growth and enhancements for Individual Coverage Health Reimbursement Arrangement ("ICHRA") opportunities. ICHRA involves business-to-business arrangements that entail building a growth pipeline with brokers and employers, which is expected to result in a longer execution lead time compared to our traditional direct-to-consumer arrangements.
Executive Leadership Transition
On July 28, 2025, we announced the planned appointment of Derrick Duke as our next chief executive officer. Mr. Duke joined the Company on August 4, 2025 to begin the transition process prior to officially stepping into the chief executive officer role effective September 18, 2025. Fran Soistman served as chief executive officer until September 18, 2025 and remains with the Company as an executive advisor until December 31, 2025 to assist with the transition. Mr. Soistman also continues to serve as a member of the Company's Board of Directors. On September 18, 2025, the Board of Directors approved the appointment of Mr. Duke as a member of the Board, effective immediately. This leadership change is part of the Company's long-term succession planning and is intended to ensure continuity in strategic direction and operational execution.
Summary of Selected Metrics
We rely upon certain metrics to estimate and recognize commission revenue, evaluate our business performance and facilitate strategic planning. Our commission revenue is influenced by a number of factors including but not limited to:
•the number of individuals on applications for Medicare-related, individual and family, small business and ancillary health insurance plans that are approved by the relevant health insurance carriers;
•the number of approved members for Medicare-related, individual and family, small business and ancillary health insurance plans from whom we have received an initial commission payment; and
•the constrained lifetime value ("LTV") of approved members for Medicare-related, individual and family and ancillary health insurance plans we sell, as well as the estimated annual value of approved members for small business plans we sell.
Approved Members
Approved members represent the number of individuals on submitted applications, or submissions, which were approved by the relevant insurance carrier for the identified product during the current period for which we are the broker of record. The applications may be submitted in either the current period or prior periods. Not all approved members ultimately become paying members.
The following table shows approved members by product for the periods presented:
Three Months Ended
September 30, 		% Change Nine Months Ended
September 30, 		% Change
2025 2024 2025 2024
Medicare
Medicare Advantage 28,645 40,141 (29) % 141,884 143,529 (1) %
Medicare Supplement 1,393 1,438 (3) % 5,688 9,574 (41) %
Medicare Part D 1,129 1,292 (13) % 5,149 6,335 (19) %
Total Medicare 31,167 42,871 (27) % 152,721 159,438 (4) %
Individual and Family 1,872 2,872 (35) % 9,751 13,540 (28) %
Ancillary 12,003 11,382 5 % 41,288 36,410 13 %
Small Business 1,228 1,141 8 % 3,256 3,705 (12) %
Total Approved Members 46,270 58,266 (21) % 207,016 213,093 (3) %
Three Months Ended September 30, 2025 and 2024- Total approved members declined 21% during the three months ended September 30, 2025 compared to the same period in 2024, driven by:
•a 27% decline in Medicare approved members, primarily resulting from:
◦a 29% decline in Medicare Advantage approved members due to a 29% decrease in Medicare Advantage broker of record submissions as a result of intentionally decreased variable marketing spend in response to the 2025 regulatory changes that reduced the special enrollment period options for dual-eligible beneficiaries, which previously represented a meaningful share of our second and third quarter Medicare Advantage enrollments;
◦a 3% decline in Medicare Supplement approved members primarily driven by an intentional decrease in variable marketing spend, partially offset by a 6% increase in Medicare Supplement broker of record submissions compared to the same period last year; and
◦a 13% decline in Medicare Part D approved members due to the continued shift away from standalone Medicare Part D plans.
•a 35% decline in individual and family plan approved members primarily due to a decline in volume from shifts in our marketing channel mix and current market conditions;
•a 5% increase in ancillary approved members primarily driven by targeted growth in hospital indemnity plans, partially offset by declines in short-term and dental plan approved members; and
•an 8% increase in small business health insurance approved members primarily due to an increase in average group size for existing plans.
Nine Months Ended September 30, 2025 and 2024- Total approved members declined 3% during the nine months ended September 30, 2025 compared to the same period in 2024, driven by:
•a 4% decline in Medicare approved members, primarily as a result of:
◦a 1% decline in Medicare Advantage approved members due to a 5% decrease in Medicare Advantage broker of record submissions primarily due to decreased volume in the second and third quarters as the result of the 2025 regulations impacting dual-eligible enrollment rules, partially offset by increased consumer demand during the Medicare Advantage OEP in the first quarter of 2025 as well as improved online unassisted conversion rates year-over-year;
◦a 41% decline in Medicare Supplement approved members, primarily caused by the shift-beginning in the second quarter of 2024-of some Medicare Supplement broker of record arrangements to fee-based arrangements within our Amplify platform, which are not reflected as approved members; and
◦a 19% decline in Medicare Part D approved members due to the continued shift away from standalone Medicare Part D plans.
•a 28% and 12% decline in individual and family plan and small business health insurance plan approved members, respectively, primarily due to a decline in volume from shifts in our marketing channel mix and current market conditions; and
•a 13% increase in ancillary approved members primarily due to a targeted increase in hospital indemnity plan members and an increase in vision plan approved members, partially offset by declines in short-term and dental plan approved members.
Estimated Constrained Lifetime Value of Commissions Per Approved Member
The following table shows our estimated constrained LTV of commissions per approved member by product for the periods presented:
Three Months Ended
September 30, 		% Change
2025 2024
Medicare (1) (2)
Medicare Advantage $ 975 $ 990 (2) %
Medicare Supplement 1,467 1,105 33 %
Medicare Part D 168 222 (24) %
Individual and Family (1)
Non-Qualified Health Plans 300 314 (4) %
Qualified Health Plans 268 311 (14) %
Ancillary (1)
Short-term 110 144 (24) %
Dental 125 118 6 %
Vision 78 78 - %
Small Business (1)
254 249 2 %
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(1)Constrained LTV of commissions per approved member for Medicare, individual and family and ancillary plans represents commissions estimated to be collected over the estimated life of an approved member's plan after applying constraints in accordance with our revenue recognition policy. Constrained LTV of commissions per approved member for small business represents the estimated commissions we expect to collect from the plan over the following twelve months. The estimate is driven by multiple factors, including but not limited to, contracted commission rates, carrier mix, estimated average plan duration, the regulatory environment, cancellations of insurance plans offered by health insurance carriers with which we have a relationship and applied constraints. The constraints are applied to help ensure that commissions estimated to be collected over the estimated life of an approved member's plan are recognized as revenue only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with future commissions receivable from the plan is subsequently resolved. These factors may result in varying values from period to period. For additional information on constrained LTV, see "Critical Accounting Estimates"in our Annual Report on Form 10-K for the year ended December 31, 2024.
(2)The constraints applied to the total estimated lifetime value of commissions we expect to receive for selling the plan after the carrier approves an application in order to derive the constrained LTV of commissions for approved members recognized for Medicare Advantage, Medicare Supplement and Medicare Part D were 5.5%, 4% and 7%, respectively, for the three months ended September 30, 2025 and 5.5%, 9% and 7%, respectively, for the three months ended September 30, 2024.
Three Months Ended September 30, 2025 and 2024 - The changes in constrained LTV of commissions per approved member primarily consisted of:
•a 2% decrease in Medicare Advantage plans, primarily due to a decline in the ratio of approved members who became paying members, partially offset by favorable carrier and contract mix;
•a 33% increase in Medicare Supplement plans, primarily due to favorable carrier and contract mix, favorable retention assumptions for the third quarter 2025 cohorts compared to the third quarter 2024 cohorts and a decrease in the constraint from 9% to 4% due to observed LTV trends;
•a 24% decrease in Medicare Part D plans, primarily driven by unfavorable carrier and contract mix;
•a 4% decrease in non-qualified health plans, primarily due to unfavorable retention trends for the third quarter 2025 cohorts compared to the third quarter 2024 cohorts;
•a 14% decrease in qualified health plans, primarily due to an increase in the constraint from 4% to 10% due to observed unfavorable retention trends as well as unfavorable carrier and contract mix;
•a 24% decrease in short-term plans, primarily driven by unfavorable retention assumptions year-over-year as a result of the regulatory change that decreased term limits for short-term health plans;
•a 6% increase in dental plans due to favorable retention assumptions for third quarter 2025 cohorts compared to the third quarter 2024 cohorts; and
•a 2% increase in small business plans due to favorable carrier and contract mix.
Estimated Membership
Estimated membership represents the estimated number of members active as of the date indicated based on the number of members for whom we have received or applied a commission payment during the period of estimation as well as the number of approved members during the period of estimation from whom we expect to receive commission payments. There is generally up to a few months lag between newly approved plans and the receipt of commission payments from the health insurance carrier and is most pronounced in the fourth and first quarters of our fiscal year due to the annual and open enrollment periods. A member who purchases and is active on multiple standalone insurance plans will be counted as a member more than once. For example, a member who is active on both an individual and family health insurance plan and a standalone dental plan will be counted as two continuing members.
Health insurance carriers bill and collect insurance premiums paid by our members. The carriers do not report to us the number of members that we have as of a given date. The majority of our members who terminate their policies do so by discontinuing their premium payments to the carrier or notifying the carrier directly and do not inform us of the cancellation. Also, some of our members pay their premiums less frequently than monthly. Given the number of months required to observe non-payment of commissions in order to confirm cancellations, we estimate the number of members who are active on insurance policies as of a specified date.
After we have estimated membership as of a specified date, we may receive information from health insurance carriers that would have impacted the estimate if we had received the information prior to the date of estimation. We may receive commission payments or other information that indicates that a member who was not included in our estimates for a prior period was in fact an active member at that time, or that a member who was included in our estimates was in fact not an active member of ours. For instance, we reconcile information carriers provide to us and may determine that we were not historically paid commissions owed to us, which would cause us to have underestimated membership. Conversely, carriers may require us to return commission payments paid in a prior period due to policy cancellations for members we previously estimated as being active. We do not update our estimated membership numbers reported in previous periods. Instead, we reflect updated information regarding our historical membership in the membership estimate for the current period. If we experience a significant variance in historical membership as compared to our initial estimates, while we keep the prior period data consistent with previously reported amounts, we may provide the updated information in other communications or disclosures. As a result of the delay in our receipt of information from insurance carriers, actual trends in our membership are most discernible over periods longer than from one quarter to the next, making it difficult for us to determine with any certainty the impact of current conditions on our membership retention. Various circumstances could cause the assumptions and estimates that we make in connection with estimating our membership to be inaccurate, which would cause our membership estimates to be inaccurate.
The following table shows estimated membership by product as of the dates presented below:
As of September 30, % Change
2025 2024
Medicare (1)
Medicare Advantage 579,914 583,970 (1) %
Medicare Supplement 90,596 95,153 (5) %
Medicare Part D 174,970 194,303 (10) %
Total Medicare 845,480 873,426 (3) %
Individual and Family (1)
62,678 75,871 (17) %
Ancillary (1)
173,835 168,953 3 %
Small Business (2)
36,528 41,172 (11) %
Total Estimated Membership 1,118,521 1,159,422 (4) %
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(1)To estimate the number of members on Medicare-related, individual and family, and ancillary health insurance plans, we take the respective sum of: (i) the number of members for whom we have received or applied a commission payment for a month that may be up to three months prior to the date of estimation (after reducing that number using historical experience for assumed member cancellations over the period being estimated); and (ii) the number of approved members over that period (after reducing that number using historical experience for an assumed number of members who do not accept their approved policy and for estimated member cancellations). To the extent we determine through confirmations from a health insurance carrier that a commission payment is delayed or is inaccurate as of the date of estimation, we adjust the estimated membership to also reflect the number of members for whom we expect to receive or to refund a commission payment. Further, to the extent we have received substantially all of the commission payments related to a given month during the period being estimated, we will take the number of members for whom we have received or applied a commission payment during the month of estimation. For ancillary health insurance plans, the one-to-three-month period varies by insurance product and is largely dependent upon the timeliness of commission payment and related reporting from the related carriers.
(2)To estimate the number of members on small business health insurance plans, we use the number of initial members at the time the group was approved, and we update this number for changes in membership if such changes are reported to us by the group or carrier. However, groups generally notify the carrier directly of policy cancellations and increases or decreases in group size without informing us. Health insurance carriers often do not communicate policy cancellation information or group size changes to us. We often are made aware of policy cancellations and group size changes at the time of annual renewal and update our membership statistics accordingly in the period they are reported.
September 30, 2025 compared to September 30, 2024- Total estimated membership declined 4% as of September 30, 2025 compared to September 30, 2024 due to:
•a 3% decline year-over-year in Medicare estimated membership, primarily due to a decrease in approved applications for all Medicare products, and
•a 17% and 11% decline year-over-year in individual and family plan and small business plan estimated membership, respectively, primarily due to a decrease in approved applications and unfavorable retention trends in individual and family plans.
Member Acquisition
We calculate and evaluate the customer care and enrollment ("CC&E") cost per approved member and the variable marketing cost per approved member. We incur CC&E expenses in assisting applicants during the enrollment process. Marketing initiatives are an important component of our strategy to increase revenue and are primarily designed to encourage consumers to complete an application for health insurance. Variable marketing costs represent costs incurred in member acquisition from our direct marketing and marketing partner channels. Variable marketing costs exclude fixed overhead costs, such as personnel related costs, consulting expenses and other operating costs allocated to the marketing and advertising department.
The numerator used to calculate each member acquisition metric discussed above is the portion of the respective operating expenses for CC&E and marketing and advertising that is directly related to member
acquisition for our sale of Medicare Advantage, Medicare Supplement and Medicare Part D prescription drug plans (collectively, "Medicare Plans") and for all individual and family major medical plans and short-term health insurance plans (collectively, "IFP Plans"), respectively, for which we are the broker of record. The denominator used to calculate each metric is based on a derived metric that represents the relative value of the new members acquired. For Medicare Plans, we call this derived metric Medicare Advantage ("MA")-equivalent approved members, and for IFP Plans, we call this derived metric IFP-equivalent approved members. The calculations for MA-equivalent approved members and for IFP-equivalent approved members are based on the weighted number of approved members for Medicare Plans and IFP Plans during the period, with the number of approved members adjusted based on the relative LTV of the product they are purchasing. Since the LTV for any product fluctuates from period to period, the weight given to each product was determined based on their relative LTVs at the time of our adoption of Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers.
The following table shows the CC&E cost per approved member and the variable marketing cost per approved member for the periods presented:
Three Months Ended
September 30, 		% Change
2025 2024
Medicare
CC&E cost per MA-equivalent approved member (1)
$ 930 $ 719 29 %
Variable marketing cost per MA-equivalent approved member(1)
559 537 4 %
Total acquisition cost per MA-equivalent approved member $ 1,489 $ 1,256 19 %
Individual and Family Plan
CC&E cost per IFP-equivalent approved member(2)
$ 433 $ 359 21 %
Variable marketing cost per IFP-equivalent approved member(2)
104 118 (12) %
Total acquisition cost per IFP-equivalent approved member $ 537 $ 477 13 %
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(1)We calculate the number of MA-equivalent approved members by adding the total number of approved Medicare Advantage and Medicare Supplement members and 25% of the total number of approved Medicare Part D members during the periods presented.
(2)We calculate the number of IFP-equivalent approved members by adding the total number of approved qualified and non-qualified health plan members and 33% of the total number of short-term approved members during the periods presented.
Medicare
Three Months Ended September 30, 2025 and 2024- Total acquisition cost per MA-equivalent approved member increased $233, or 19%, during the three months ended September 30, 2025 compared to the same period in 2024, driven by:
•a $211, or 29%, increase in CC&E cost per MA-equivalent approved member primarily due to:
◦the decline in the number of Medicare Advantage approved members driven by the dual-eligible regulations that became effective in 2025;
◦slightly offset by lower overall personnel and compensation costs, including cost savings as a result of our more flexible telesales organization structure which allows us to adjust capacity more efficiently to match the Medicare business seasonality.
•a $22, or 4%, increase in variable marketing cost per MA-equivalent approved member primarily due to:
◦the decline in the number of Medicare Advantage approved members driven by the dual-eligible regulations that became effective in 2025;
◦partially offset by an intentional reduction in spend during a lower volume quarter as a result of the dual-eligible regulations that became effective in 2025, a more favorable marketing channel mix and continued marketing efficiencies as our brand continues to scale, enabling enhanced lead quality, and improved conversion rates in our online unassisted channel.
Individual and Family
Three Months Ended September 30, 2025 and 2024- Total acquisition cost per IFP-equivalent approved member increased $60, or 13%, during the three months ended September 30, 2025 compared to the same period in 2024, driven by:
•a $74, or 21%, increase in CC&E cost per IFP-equivalent approved member due to the overall decline in individual and family plan and short-term plan approved members; and
•a $14, or 12%, decrease in variable marketing cost per IFP-equivalent approved member, primarily driven by lower variable marketing spend year-over-year.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles requires us to make judgments, assumptions, and estimates that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. These estimates and assumptions are based on current facts, historical experience, and various other factors that we believe are reasonable under the circumstances to determine reported amounts of assets, liabilities, revenue and expenses that are not readily apparent from other sources. To the extent there are material differences between our estimates and the actual results, our future consolidated results of comprehensive income (loss) may be affected.
An accounting policy is considered to be critical if the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and the effect of the estimates and assumptions on financial condition or operating performance. The accounting policies we believe to reflect our more significant estimates, judgments and assumptions and are most critical to understanding and evaluating our reported financial results are as follows:
•Revenue recognition and contract assets - commissions receivable;
•Stock-based compensation; and
•Accounting for income taxes.
There have been no changes to our critical accounting policies and estimates described in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission on February 27, 2025, that have had a significant impact on our condensed consolidated financial statements and related notes. Please refer to Management's Discussion and Analysis of Financial Condition and Results of Operationscontained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, for a complete discussion of our other critical accounting policies and estimates.
Results of Operations
The following table sets forth our operating results and related percentage of total revenue for the periods presented (dollars in thousands):
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2025 2024 2025 2024
Revenue
Commission $ 47,223 88 % $ 48,222 83 % $ 200,900 88 % $ 185,996 86 %
Other 6,646 12 % 10,187 17 % 26,870 12 % 31,233 14 %
Total revenue 53,869 100 % 58,409 100 % 227,770 100 % 217,229 100 %
Operating costs and expenses (1)
Marketing and advertising 24,395 45 % 29,665 51 % 87,009 38 % 95,185 44 %
Customer care and enrollment 36,814 68 % 39,321 67 % 101,945 45 % 100,773 46 %
Technology and content 11,805 22 % 12,264 21 % 35,760 16 % 38,613 18 %
General and administrative 21,925 41 % 20,297 35 % 60,817 27 % 62,318 29 %
Impairment, restructuring and other charges 455 1 % 61 - % 2,010 1 % 9,409 4 %
Total operating costs and expenses 95,394 177 % 101,608 174 % 287,541 126 % 306,298 141 %
Loss from operations (41,525) (77) % (43,199) (74) % (59,771) (26) % (89,069) (41) %
Interest expense (2,384) (4) % (2,859) (5) % (7,380) (3) % (8,517) (4) %
Other income, net 978 2 % 1,699 3 % 3,894 2 % 6,425 3 %
Loss before income taxes (42,931) (80) % (44,359) (76) % (63,257) (28) % (91,161) (42) %
Benefit from income taxes (11,240) (21) % (1,886) (3) % (16,118) (7) % (3,736) (2) %
Net loss $ (31,691) (59) % $ (42,473) (73) % $ (47,139) (21) % $ (87,425) (40) %
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(1)Operating costs and expenses include the following amounts of stock-based compensation expense (in thousands):
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2025 2024 2025 2024
Marketing and advertising $ 609 $ 437 $ 1,691 $ 1,792
Customer care and enrollment 339 452 935 1,487
Technology and content 666 845 2,034 2,598
General and administrative 2,308 2,745 6,927 9,248
Total stock-based compensation expense $ 3,922 $ 4,479 $ 11,587 $ 15,125
Revenue
Our commission revenue, other revenue and total revenue are summarized as follows (dollars in thousands):
Three Months Ended
September 30, 		Change Nine Months Ended
September 30, 		Change
2025 2024 $ % 2025 2024 $ %
Commission $ 47,223 $ 48,222 $ (999) (2) % $ 200,900 $ 185,996 $ 14,904 8 %
% of total revenue 88 % 83 % 88 % 86 %
Other 6,646 10,187 (3,541) (35) % 26,870 31,233 (4,363) (14) %
% of total revenue 12 % 17 % 12 % 14 %
Total revenue $ 53,869 $ 58,409 $ (4,540) (8) % $ 227,770 $ 217,229 $ 10,541 5 %
Three Months Ended September 30, 2025 and 2024- Commission revenue decreased $1.0 million, or 2%, during the three months ended September 30, 2025 compared to the same period in 2024 due to:
•a $1.1 million, or 22%, decrease in our E&I segment commission revenue driven by:
◦lower constrained LTV of commissions per approved member for qualified health plans, non-qualified health plans and short-term health plans, slightly offset by higher constrained LTV of commissions per approved member for dental and small business plans; and
◦a 35% decline in individual and family plan approved members, partially offset by a 5% and 8% increase in ancillary and small business insurance plan approved members, respectively.
•a $0.1 million increase in our Medicare segment commission revenue driven by:
◦higher net adjustment revenue from prior periods enrollments, which was $12.1 million during the three months ended September 30, 2025 compared to $1.1 million during the same period in 2024; and
◦improved constrained LTV of commissions per approved member for Medicare Supplement plans;
◦partially offset by an overall 27% decrease in Medicare plan approved members, as well as a decrease in constrained LTV of commissions per approved member for Medicare Advantage and Medicare Part D prescription plan approved members.
Other revenue decreased $3.5 million, or 35%, during the three months ended September 30, 2025 compared to the same period in 2024 primarily due to a $2.7 million decrease in sponsorship and advertising revenue.
Nine Months Ended September 30, 2025 and 2024- Commission revenue increased $14.9 million, or 8%, during the nine months ended September 30, 2025 compared to the same period in 2024 due to:
•a $20.6 million, or 13%, increase in our Medicare segment commission revenue driven by:
◦higher net adjustment revenue from prior periods, which was $39.1 million during the nine months ended September 30, 2025 compared to $12.8 million during the same period in 2024; and
◦improved constrained LTV of commissions per approved member for Medicare Supplement plans;
◦partially offset by an overall 4% decrease in Medicare plan approved members, specifically driven by 41% decline in Medicare Supplement plan approved members.
•a $5.7 million, or 27%, decrease in our E&I segment commission revenue driven by:
◦a 28% and 12% decline in individual and family plan and small business plan approved members, respectively;
◦lower constrained LTV of commissions per approved member for qualified health plans, non-qualified health plans and short-term health plans; and
◦lower net adjustment revenue from prior periods enrollments, which was $1.3 million during the nine months ended September 30, 2025 compared to $2.4 million in the same period in 2024;
◦partially offset by an increase in ancillary approved members and higher constrained LTV of commissions per approved member for dental and small business plans.
Other revenue decreased $4.4 million, or 14%, during the nine months ended September 30, 2025 compared to the same period in 2024 due to a $7.4 million decrease in sponsorship and advertising revenue, partially offset by a $3.4 million increase in fee-based revenue driven by the expansion of our fee-based business process outsourcing services ("BPO") arrangements.
SeeSummary of Selected Metricsabove and Segment Informationbelow for further discussion.
Marketing and Advertising
Marketing and advertising expenses consist primarily of member acquisition expenses associated with our direct marketing and marketing partner member acquisition channels, in addition to compensation and other expenses related to marketing, business development, partner management, public relations and carrier relations personnel who support our offerings. Marketing and advertising expenses also include cost of revenue, which consists of payments related to health insurance plans sold to members who were referred to our website by marketing partners with whom we have revenue-sharing arrangements. We recognize direct marketing expenses in our direct marketing acquisition channel in the period in which they are incurred, including in the period in which the consumer clicks on the advertisement for direct online channels. We generally compensate our marketing partners for referrals based on the consumer submitting a health insurance application on our platform, regardless of whether the consumer's application is approved by the health insurance carrier, or for the referral of a Medicare-related lead to us by the marketing partner.
Some of our marketing partners have tiered arrangements where the amount we pay the marketing partner per submitted application increases as the volume of submitted applications we receive from the marketing partner increases. We recognize these expenditures in the period when a marketing partner's referral results in the submission of a health insurance application. Advertising costs for our marketing partner channels are expensed as incurred. Increases in submitted applications resulting from marketing partner referrals or visitors to our website from our direct marketing channel have in the past, and could in the future, result in marketing and advertising expenses being significantly higher than our expectations.
Our marketing and advertising expenses are summarized as follows (dollars in thousands):
Three Months Ended
September 30, 		Change Nine Months Ended
September 30, 		Change
2025 2024 $ % 2025 2024 $ %
Marketing and advertising $ 24,395 $ 29,665 $ (5,270) (18) % $ 87,009 $ 95,185 $ (8,176) (9) %
% of total revenue 45 % 51 % 38 % 44 %
Three Months Ended September 30, 2025 and 2024- Marketing and advertising expenses decreased $5.3 million, or 18%, during the three months ended September 30, 2025 compared to the same period in 2024, primarily driven by a $5.8 million decrease in variable advertising costs, partly offset by an increase of $0.4 million in personnel and compensation costs. The decrease in variable advertising costs was primarily due to an intentional decrease in affiliate partner channel spend due to the dual-eligible regulations that became effective in 2025, which contributed to decreased Medicare Advantage submissions.
Nine Months Ended September 30, 2025 and 2024- Marketing and advertising expenses decreased $8.2 million, or 9%, during the nine months ended September 30, 2025 compared to the same period in 2024, driven by a $6.3 million decrease in variable advertising costs, a $0.8 million decrease in fixed marketing costs, a $0.7 million decrease in operating costs due to lower consulting and software expenses and a $0.5 million decrease in cost of revenue. The decrease in variable advertising costs was primarily due to decreased spend in our affiliate partner channels partially offset by increased investment in direct marketing channels.
Customer Care and Enrollment
Customer care and enrollment expenses primarily consist of compensation, benefits and licensing costs for personnel engaged in assistance to applicants who call our advisor enrollment center and for benefit advisors who assist applicants during the enrollment process.
Our customer care and enrollment expenses are summarized as follows (dollars in thousands):
Three Months Ended
September 30, 		Change Nine Months Ended
September 30, 		Change
2025 2024 $ % 2025 2024 $ %
Customer care and enrollment $ 36,814 $ 39,321 $ (2,507) (6) % $ 101,945 $ 100,773 $ 1,172 1 %
% of total revenue 68 % 67 % 45 % 46 %
Three Months Ended September 30, 2025 and 2024- Customer care and enrollment expenses decreased $2.5 million, or 6%, during the three months ended September 30, 2025 compared to the same period in 2024, primarily due to a $3.3 million decrease in personnel and compensation costs, partly offset by a $1.0 million increase in other operating expenses due to higher consulting costs. The decline in personnel and compensation costs was due to the implementation of a more flexible structure in our telesales organization to adjust for anticipated enrollment volumes, partially offset by costs associated with a more tenured benefit advisor group and an increased number of retention advisors ahead of the 2026 AEP.
Nine Months Ended September 30, 2025 and 2024- Customer care and enrollment expenses increased $1.2 million, or 1%, during the nine months ended September 30, 2025 compared to the same period in 2024, primarily due to a $1.7 million increase in personnel and compensation costs partly offset by a $0.6 million decrease in stock based compensation expense. The higher personnel and compensation costs were associated with a higher number of screeners, licensed benefit advisors and retention advisors to support the increased consumer demand during the first quarter of 2025 Medicare Advantage OEP and in preparation for the 2026 AEP, partially offset by the implementation of a more flexible structure in our telesales organization to adjust for anticipated enrollment volumes as needed.
Technology and Content
Technology and content expenses consist primarily of compensation and benefits costs for personnel associated with developing and enhancing our website technology as well as maintaining our website. A portion of our technology and content group is located at our wholly-owned subsidiary in China, where technology development costs are generally lower than in the United States.
Our technology and content expenses are summarized as follows (dollars in thousands):
Three Months Ended
September 30, 		Change Nine Months Ended
September 30, 		Change
2025 2024 $ % 2025 2024 $ %
Technology and content $ 11,805 $ 12,264 $ (459) (4) % $ 35,760 $ 38,613 $ (2,853) (7) %
% of total revenue 22 % 21 % 16 % 18 %
Three Months Ended September 30, 2025 and 2024- Technology and content expenses decreased $0.5 million, or 4%, during the three months ended September 30, 2025 compared to the same period in 2024, primarily driven by a $0.7 million decrease in amortization of internally developed software.
Nine Months Ended September 30, 2025 and 2024- Technology and content expenses decreased $2.9 million, or 7%, during the nine months ended September 30, 2025 compared to the same period in 2024, primarily driven by a $1.9 million decrease in amortization of internally developed software, a $1.6 million decrease in personnel and compensation costs and a $0.6 million decrease in stock-based compensation expense, partially offset by an increase of $1.2 million in other operating costs, particularly consulting expenses.
General and Administrative
General and administrative expenses include compensation and benefits costs for personnel working in our executive, finance, investor relations, government affairs, legal, compliance, human resources, facilities and internal
information technology departments. These expenses also include fees paid for outside professional services, including audit, tax, legal, government affairs and information technology fees.
Our general and administrative expenses are summarized as follows (dollars in thousands):
Three Months Ended
September 30, 		Change Nine Months Ended
September 30, 		Change
2025 2024 $ % 2025 2024 $ %
General and administrative $ 21,925 $ 20,297 $ 1,628 8 % $ 60,817 $ 62,318 $ (1,501) (2) %
% of total revenue 41 % 35 % 27 % 29 %
Three Months Ended September 30, 2025 and 2024- General and administrative expenses increased $1.6 million, or 8%, during the three months ended September 30, 2025 compared to the same period in 2024, primarily driven by a $1.9 million increase in personnel and compensation costs and a $0.7 million increase in professional fees, partly offset by a $0.4 million decrease in stock based compensation expense and a $0.4 million decrease in other expenses.
Nine Months Ended September 30, 2025 and 2024- General and administrative expenses decreased $1.5 million, or 2%, during the nine months ended September 30, 2025 compared to the same period in 2024, primarily driven by a $2.3 million decrease in stock based compensation expense, a $0.9 million decrease in facilities and other operating expenses, a $0.6 million decrease in professional fees and a $0.5 million decrease in other expenses, partly offset by an increase of $3.0 million in personnel and compensation costs.
Impairment, Restructuring and Other Charges
Our impairment, restructuring and other charges consist primarily of severance, transition and other related costs and impairment charges. Our impairment, restructuring and other charges are summarized as follows (dollars in thousands):
Three Months Ended
September 30, 		Change Nine Months Ended
September 30, 		Change
2025 2024 $ % 2025 2024 $ %
Impairment, restructuring and other charges $ 455 $ 61 $ 394 646 % $ 2,010 $ 9,409 $ (7,399) (79) %
% of total revenue 1 % - % 1 % 4 %
Three Months Ended September 30, 2025 and 2024- We incurred $0.5 million in impairment, restructuring and other charges for the three months ended September 30, 2025 compared to $0.1 million for the same period in 2024. The charges in 2025 consisted of $0.5 million of pre-tax operating lease right-of-use asset impairment charges related to certain vacated leased office spaces. The charges in 2024 consisted of $0.1 million of restructuring charges which were primarily related to employee termination benefits as a result of continued cost reduction efforts since the beginning of 2024.
Nine Months Ended September 30, 2025 and 2024- We incurred $2.0 million impairment, restructuring and other charges for the nine months ended September 30, 2025 compared to $9.4 million for the same period in 2024. The charges in 2025 consisted of $0.9 million of impairment charges related to our operating lease right-of-use assets. We also incurred $1.1 million of restructuring charges which were primarily related to employee termination benefits as a result of macroeconomic changes and internal restructuring initiatives. The charges in 2024 consisted of $7.4 million of impairment related to several of our leased office spaces, specifically consisting of $6.9 million of operating lease right-of-use asset impairments and $0.5 million of property and equipment impairments. We also incurred $2.0 million of restructuring charges which were primarily related to employee termination benefits as a result of cost-reduction efforts during the first quarter of 2024.
Interest Expense
Interest expense primarily consists of interest expense and amortization of debt issuance costs related to our Credit Agreement. See Note 12 - Debtin our Notes to Condensed Consolidated Financial Statementsfor additional information. Our interest expense is summarized as follows (dollars in thousands):
Three Months Ended
September 30, 		Change Nine Months Ended
September 30, 		Change
2025 2024 $ % 2025 2024 $ %
Interest expense $ (2,384) $ (2,859) $ 475 17 % $ (7,380) $ (8,517) $ 1,137 13 %
% of total revenue (4) % (5) % (3) % (4) %
Three Months Ended September 30, 2025 and 2024 - Interest expense decreased by $0.5 million, or 17%, during the three months ended September 30, 2025 compared to the same period in 2024, primarily driven by a $0.3 million decrease in debt interest expense as a result of lower interest rates.
Nine Months Ended September 30, 2025 and 2024 - Interest expense decreased by $1.1 million, or 13%, during the nine months ended September 30, 2025 compared to the same period in 2024, primarily driven by a $0.8 million decrease in debt interest expense as a result of lower interest rates.
Other Income, Net
Other income, net, primarily consisted of interest income and margin earned on commissions received from Medicare plan members transferred to us in 2010 through 2012 by a broker partner.
Our other income, net, is summarized as follows (dollars in thousands):
Three Months Ended
September 30, 		Change Nine Months Ended
September 30, 		Change
2025 2024 $ % 2025 2024 $ %
Other income, net $ 978 $ 1,699 $ (721) (42) % $ 3,894 $ 6,425 $ (2,531) (39) %
% of total revenue 2 % 3 % 2 % 3 %
Three Months Ended September 30, 2025 and 2024- Other income, net, was $1.0 million during the three months ended September 30, 2025, compared to other income, net, of $1.7 million during the three months ended September 30, 2024. The change was primarily due to a $0.8 million decrease in interest income as a result of less favorable short-term investment returns and a decline in average short-term investment balances during the three months ended September 30, 2025.
Nine Months Ended September 30, 2025 and 2024- Other income, net, was $3.9 million during the nine months ended September 30, 2025, compared to $6.4 million during the nine months ended September 30, 2024. The change was primarily due to a $2.5 million decrease in interest income as a result of less favorable short-term investment returns and a decline in average short-term investment balances during the nine months ended September 30, 2025.
Benefit from Income Taxes
Our benefit from income taxes is summarized as follows (dollars in thousands):
Three Months Ended
September 30, 		Change Nine Months Ended
September 30, 		Change
2025 2024 $ % 2025 2024 $ %
Benefit from income taxes $ (11,240) $ (1,886) $ (9,354) 496 % $ (16,118) $ (3,736) $ (12,382) 331 %
Effective tax rate 26.2 % 4.3 % 25.5 % 4.1 %
Three Months Ended September 30, 2025 and 2024- Our effective tax rate of 26.2% for the three months ended September 30, 2025 was higher than our 4.3% effective tax rate for the three months ended September 30, 2024 primarily due to a change from using the actual effective tax rate method to calculate our provision for income taxes for the period ended September 30, 2024 to using an annualized effective tax rate method for the period ended September 30, 2025 along with changes in valuation allowance during the period ended September 30, 2024. Our effective tax rate for the three months ended September 30, 2025 was higher than the statutory federal tax rate primarily due to state taxes, nondeductible stock-based compensation, lobbying expenses and discrete adjustments, partially offset by research and development credits.
Nine Months Ended September 30, 2025 and 2024- Our effective tax rate of 25.5% for the nine months ended September 30, 2025 was higher than our 4.1% effective tax rate for the nine months ended September 30, 2024 primarily due to a change from using the actual effective tax rate method to calculate our provision for income taxes for the period ended September 30, 2024 to using an annualized effective tax rate method for the period ended September 30, 2025 along with changes in valuation allowance during the period ended September 30, 2024. Our effective tax rate for the nine months ended September 30, 2025 was higher than the statutory federal tax rate primarily due to state taxes, nondeductible stock-based compensation, lobbying expenses and discrete adjustments, partially offset by research and development credits.
On July 4, 2025, President Trump signed into law the OBBBA. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. ASC 740, "Income Taxes", requires the effects of changes in tax rates and laws to be recognized in the period in which the legislation is enacted, which is the date the legislation is signed into law. The OBBBA was enacted during the quarter ended September 30, 2025 and did not have a material impact on our financial statements.
Segment Information
We report segment information based on how our chief executive officer, who is our chief operating decision maker ("CODM"), regularly reviews our operating results, allocates resources and makes decisions regarding our business operations in the annual budget and forecasting process along with evaluation of actual performance. Our CODM considers budget-to-actual variances on a monthly basis for our segment performance measures when making decisions about allocating capital and personnel to our segments. These performance measures include total segment revenue and segment gross profit (loss). Prior to the fourth quarter of 2024, we reported our measure of segment profitability as segment profit (loss). Accordingly, prior period amounts have been reclassified to conform to the current period presentation, in all material respects.
Our business structure is comprised of two operating segments:
•Medicare; and
•Employer and Individual.
Our CODM does not separately evaluate assets by segment, with the exception of commissions receivable, and therefore assets by segment are not presented.
The Medicare segment consists primarily of commissions earned as the broker of record from our sale of Medicare-related health insurance plans, including Medicare Advantage, Medicare Supplement and Medicare Part D prescription drug plans, and to a lesser extent, ancillary products sold to our Medicare-eligible beneficiaries, including but not limited to, dental and vision insurance and hospital indemnity plans. Our commissions may include certain bonus payments, which are generally based on attaining predetermined target sales levels or other objectives, as determined by the health insurance carriers. The Medicare segment also consists of amounts earned in connection with our advertising program that allows Medicare-related carriers to purchase advertising on a separate website developed, hosted and maintained by us or pursuant to which we perform other services as marketing and our delivery and sale to third parties of Medicare-related health insurance leads generated by our
ecommerce platforms and our marketing activities. The Medicare segment also generates revenue from our fee-based BPO services where we are not the broker of record and cash is collected in advance or in close proximity to when revenue is recognized.
The E&I segment consists primarily of commissions earned from our sale of individual and family plans, including qualified and non-qualified plans, small business health insurance plans and ancillary products sold to our non-Medicare-eligible consumers, including but not limited to, dental, vision and short-term insurance. To a lesser extent, the E&I segment includes amounts earned from our online sponsorship program that allows carriers to purchase advertising space in specific markets on our website as well as our technology licensing activities.
Segment gross profit (loss) is calculated as total revenue for the applicable segment less variable marketing and advertising expenses, segment CC&E expenses and cost of revenue for the applicable segment. Variable marketing and advertising expenses represent costs incurred in member acquisition from our direct marketing and marketing partner channels and exclude fixed overhead costs, such as personnel related costs, consulting expenses and other operating costs allocated to the marketing and advertising department. Segment CC&E expenses include expenses we incur in assisting applicants during the enrollment process and exclude operating costs allocated to the CC&E department.
Our operating segment revenue and segment gross profit (loss) are summarized as follows (in thousands):
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2025 2024 % Change 2025 2024 % Change
Medicare:
Total revenue
$ 49,932 $ 53,221 (6) % $ 211,660 $ 194,857 9 %
Variable marketing and advertising
(16,930) (22,512) 25 % (64,483) (71,030) 9 %
Medicare CC&E (34,049) (36,320) 6 % (93,596) (91,954) (2) %
Cost of revenue
(106) (13) * 158 (245) 164 %
Medicare segment gross profit (loss) $ (1,153) $ (5,624) 79 % $ 53,739 $ 31,628 70 %
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2025 2024 % Change 2025 2024 % Change
Employer and Individual:
Total revenue
$ 3,937 $ 5,188 (24) % $ 16,110 $ 22,372 (28) %
Variable marketing and advertising
(723) (936) 23 % (2,630) (2,410) (9) %
E&I CC&E (2,154) (2,320) 7 % (6,535) (6,732) 3 %
Cost of revenue
(87) (89) 2 % (241) (300) 20 %
E&I segment gross profit $ 973 $ 1,843 (47) % $ 6,704 $ 12,930 (48) %
__________
* Percentage calculated is not meaningful.
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2025 2024 % Change 2025 2024 % Change
Consolidated:
Total revenue
$ 53,869 $ 58,409 (8) % $ 227,770 $ 217,229 5 %
Variable marketing and advertising
(17,653) (23,448) 25 % (67,113) (73,440) 9 %
Segment CC&E
(36,203) (38,640) 6 % (100,131) (98,686) (1) %
Cost of revenue
(193) (102) (89) % (83) (545) 85 %
Total segment gross profit (loss) $ (180) $ (3,781) 95 % $ 60,443 $ 44,558 36 %
A reconciliation of our segment gross profit (loss) to the Condensed Consolidated Statements of Comprehensive Loss for the periods presented is as follows (in thousands):
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2025 2024 2025 2024
Total segment gross profit (loss) $ (180) $ (3,781) $ 60,443 $ 44,558
Other marketing and advertising (1)
(6,549) (6,115) (19,813) (21,200)
Other CC&E (2)
(611) (681) (1,814) (2,087)
Technology and content (11,805) (12,264) (35,760) (38,613)
General and administrative (21,925) (20,297) (60,817) (62,318)
Impairment, restructuring and other charges (455) (61) (2,010) (9,409)
Interest expense (2,384) (2,859) (7,380) (8,517)
Other income, net 978 1,699 3,894 6,425
Loss before income taxes $ (42,931) $ (44,359) $ (63,257) $ (91,161)
__________
(1)Other marketing and advertising costs consist of fixed marketing and advertising, previously capitalized labor, depreciation and share-based compensation costs.
(2)Other CC&E costs consist of previously capitalized labor, depreciation and share-based compensation costs.
Medicare Segment
Three Months Ended September 30, 2025 and 2024 - Revenue from our Medicare segment decreased $3.3 million, or 6%, during the three months ended September 30, 2025 compared to the same period in 2024, primarily driven by:
•a $3.4 million decrease in Medicare segment other revenue primarily driven by a $2.6 million decline in sponsorship and advertising revenue;
•partially offset by a $0.1 million increase in Medicare segment commission revenue primarily due to:
◦higher net adjustment revenue from prior periods enrollments, which was $12.1 million during the three months ended September 30, 2025 compared to $1.1 million during the same period in 2024; and
◦improved constrained LTV of commissions per approved member for Medicare Supplement plans;
◦partially offset by a decrease in approved members across all Medicare products and a decrease in constrained LTV of commissions per approved member for Medicare Advantage and Medicare Part D prescription plans.
Our Medicare segment gross loss was $1.2 million for the three months ended September 30, 2025, an improvement of $4.5 million, or 79%, compared to the same period in 2024 primarily driven by:
•a $5.6 million and $2.3 million decrease in variable marketing and advertising and segment CC&E expenses, respectively, primarily due to targeted cost reduction efforts as a result of the dual-eligible regulations that became effective in 2025;
•partially offset by a $3.3 million decrease in Medicare segment revenue.
Nine Months Ended September 30, 2025 and 2024 - Revenue from our Medicare segment increased $16.8 million, or 9%, during the nine months ended September 30, 2025 compared to the same period in 2024, primarily driven by:
•a $20.6 million increase in Medicare segment commission revenue primarily due to:
◦higher net adjustment revenue, which was $39.1 million for the nine months ended September 30, 2025 compared to $12.8 million during the same period in 2024, and
◦improved constrained LTV of commissions per approved member for Medicare Supplement plans;
◦partially offset by an overall 4% decrease in Medicare plan approved members and a decline in constrained LTV of commissions per approved member for Medicare Advantage and Medicare Part D prescription plans.
•a $3.8 million decrease in Medicare segment other revenue driven by a $7.4 million decrease in sponsorship and advertising revenue, partly offset by a $3.4 million increase in fee-based revenue due to growth in BPO arrangements.
Our Medicare segment gross profit was $53.7 million for the nine months ended September 30, 2025, an increase of $22.1 million, or 70%, compared to the same period in 2024 primarily driven by:
•a $16.8 million increase in Medicare segment revenue; and
•a $6.5 million decrease in variable marketing and advertising expenses;
•partially offset by an increase of $1.6 million in segment CC&E expenses primarily due to
◦the continued execution of our initiatives to attract and retain beneficiaries which resulted in a larger number of screeners and licensed benefit and retention advisors to support the consumer demand during the first quarter of 2025 Medicare Advantage OEP; and
◦an increased number of licensed benefit and retention advisors in preparation for the 2026 AEP;
◦partially offset by cost reduction efforts supported by our more flexible telesales organization structure during the second and third quarters of 2025.
Employer and Individual Segment
Three Months Ended September 30, 2025 and 2024 - Revenue from our E&I segment decreased $1.3 million, or 24%, during the three months ended September 30, 2025 compared to the same period in 2024, primarily driven by a $1.1 million decrease in commission revenue due to a 35% decline in individual and family plan approved members compared to the same period in 2024.
Our E&I segment gross profit was $1.0 million for the three months ended September 30, 2025, a decrease of $0.9 million, compared to the same period in 2024 primarily driven by:
•a $1.3 million decrease in E&I segment revenue;
•partially offset by a $0.2 million decrease in variable marketing expense and a $0.2 million decrease in segment CC&E expense.
Nine Months Ended September 30, 2025 and 2024 - Revenue from our E&I segment decreased $6.3 million, or 28%, during the nine months ended September 30, 2025 compared to the same period in 2024, primarily driven by a $5.7 million decrease in commission revenue as a result of:
•lower constrained LTV of commissions per approved member for qualified health plans, non-qualified health plans and short-term health plans, partially offset by higher constrained LTV of commissions per approved member for dental and small business plans.
•a 28% and 12% decline in individual and family plan and small business plan approved members, respectively, compared to the same period in 2024, partially offset by a 13% increase in ancillary plan approved members; and
•lower net adjustment revenue year-over-year, which was $1.3 million for the nine months ended September 30, 2025 compared to $2.4 million in nine months ended September 30, 2024.
Our E&I segment gross profit was $6.7 million for the nine months ended September 30, 2025, a decrease of $6.2 million, or 48%, compared to the same period in 2024 primarily driven by a $6.3 million decrease in E&I segment revenue.
Liquidity and Capital Resources
As of September 30, 2025, we had cash, cash equivalents and short-term marketable securities of $75.3 million. During the nine months ended September 30, 2025, we generated operating cash flow of $10.6 million as summarized below. We have historically financed our operations primarily through cash generated from our operations, equity issuances and debt financing. Our principal uses of cash in recent periods have been funding working capital, purchases of short-term investments, the satisfaction of tax withholding obligations in connection with the settlement of restricted stock units, making payments on our operating lease obligations and service and licensing obligations, and complying with our debt servicing requirements and preferred stock dividend payment obligations.
Cash and Cash Equivalents
Our cash, cash equivalents and short-term marketable securities are summarized as follows (in thousands):
September 30, 2025 December 31, 2024
Cash and cash equivalents $ 63,089 $ 39,197
Short-term marketable securities 12,212 43,043
Total cash, cash equivalents and short-term marketable securities $ 75,301 $ 82,240
Cash equivalents, which are comprised of financial instruments with an original maturity of 90 days or less from the date of purchase, primarily consist of money market funds, commercial paper and government securities. We also maintained $3.1 million in restricted cash as of September 30, 2025 and December 31, 2024.
Material Cash Requirements
Our material cash requirements include our operating leases and service and licensing obligations. See Note 10 - Leasesin our Notes to Condensed Consolidated Financial Statementsfor details of our operating lease obligations. We have entered into service and licensing agreements with third party vendors to provide various services, including network access, equipment maintenance and software licensing. The terms of these services and licensing agreements are generally up to three years. We record the related service and licensing expenses on a straight-line basis, although actual cash payment obligations under certain of these agreements fluctuate over the terms of the agreements. See Note 8 - Commitments and Contingencies in ourNotes to Condensed Consolidated Financial Statements.
Short-term obligations were $8.8 million for leases and $12.7 million for service and licensing as of September 30, 2025. Long-term obligations were $17.0 million for leases and $2.4 million for service and licensing as of September 30, 2025. We expect to fund these obligations through our existing cash and cash equivalents and cash generated from operations.
Convertible Preferred Stock
Pursuant to an investment agreement dated February 17, 2021 with Echelon Health SPV, LP ("H.I.G.") (the "H.I.G. Investment Agreement"), we issued and sold 2,250,000 shares of Series A convertible preferred stock ("Series A Preferred Stock") at an aggregate purchase price of $225.0 million to H.I.G. in a private placement and received $214.0 million net proceeds on April 30, 2021. During the second quarter of 2025, we made a cash dividend payment of $2.9 million. As of September 30, 2025, we have accrued $1.5 million for cash dividends. The H.I.G. Investment Agreement also provides certain redemption rights on or after April 2027. In addition, the Company is required to maintain an Asset Coverage Ratio (as defined in the H.I.G. Investment Agreement) of at least 2.5x (the "Minimum Asset Coverage Ratio") and a Minimum Liquidity Amount (as defined in the H.I.G. Investment Agreement). Failure to maintain the Minimum Asset Coverage Ratio or the Minimum Liquidity Amount as of the date or the time period required by the H.I.G. Investment Agreement, for as long as H.I.G. continues to own at least 30% of the Series A Preferred Stock originally issued to it in the private placement, entitles H.I.G., subject to the conditions and restrictions specified therein, to additional rights including the right to nominate one additional member to the Company's Board of Directors, the right to approve the Company's annual budget, the right to approve hiring or termination of certain key executives and the right to approve the incurrence of certain indebtedness. See Note 6- Convertible Preferred Stock in our Notes to Condensed Consolidated Financial Statementsincluded in this Quarterly Report on Form 10-Q for more information.
As of September 30, 2023, we failed to maintain the Minimum Asset Coverage Ratio, which entitles H.I.G. to the additional rights set forth above. On March 13, 2024, the Nominating and Corporate Governance Committee of our Board of Directors approved the appointment of a board observer designated by H.I.G. As of November 30, 2024, we were no longer in compliance with the Minimum Liquidity Amount. The non-compliance with the Minimum Asset Coverage Ratio or the Minimum Liquidity Amount does not entitle H.I.G. to accelerate the redemption of the Series A Preferred Stock nor is it expected to materially impact our ability to generate and obtain adequate amounts of cash to meet our short-term or long-term requirements. On September 17, 2025, Aaron Tolson who was previously nominated by H.I.G. to serve on our Board of Directors resigned. Following Mr. Tolson's resignation, H.I.G. nominated Todd Arden to our Board of Directors and nominated Mr. Tolson to replace the existing board observer.
Term Loan Credit Agreement
On February 28, 2022, we entered into a term loan credit agreement providing for a $70.0 million secured term loan credit facility with Blue Torch Finance LLC, as administrative agent and collateral agent, and other lenders party thereto (the "Original Credit Agreement), which agreement was subsequently amended on August 16, 2022 (the "First Amendment") to update our borrowing benchmark from LIBOR to SOFR (as amended by the First Amendment, the "First Amended Credit Agreement"). On November 1, 2024, we entered into a second amendment (the "Second Amendment") to the First Amended Credit Agreement (as amended by the Second Amendment, the "Second Amended Credit Agreement") which extended the maturity date of the Second Amended Credit Agreement from February 2025 to February 2026 and, among other things, reduced the overall interest rate of the term loan beginning on the effective date of the Second Amendment. On October 6, 2025, we entered into a third amendment (the "Third Amendment") to the Second Amended Credit Agreement (as amended by the First Amendment, the Second Amendment and the Third Amendment, the "Credit Agreement"), which, among other things, extended the maturity date of the Credit Agreement from February 2026 to January 2027. The other material terms of the Second Amended Credit Agreement, including the outstanding principal amount of the term loan, remain unchanged. The outstanding obligations under the Credit Agreement are payable in full on the maturity date.
As part of the Credit Agreement, we incur a $0.3 million fee per annum, payable annually. The loans under the Credit Agreement bear interest, at our option, at either a rate based on the Adjusted Term SOFR or a base rate, in each case plus a margin. The base rate is the highest of the prime rate, the federal funds rate plus 0.50% and the
three-month Adjusted Term SOFR plus 1.00%. The Second Amendment reduced the margin from 7.50% to 7.00% for Adjusted Term SOFR loans and from 6.50% to 6.00% for base rate loans. As of September 30, 2025, the interest rate was 11.46%. For the three and nine months ended September 30, 2025 we incurred interest expense of $2.0 million and $6.1 million, respectively. For the three and nine months ended September 30, 2024 we incurred $2.3 million and $6.9 million, respectively. As of September 30, 2025, the carrying value of the loan under the Credit Agreement was $69.4 millionand we were in compliance with our loan covenants. See Note 12- Debt in ourNotes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional information regarding the Credit Agreement.
Availability and Use of Cash
We believe our current cash, cash equivalents and short-term marketable securities, including the proceeds from the equity financing we obtained on April 30, 2021 under the H.I.G. Investment Agreement and the term loan we obtained on February 28, 2022 under the Credit Agreement, and expected cash collections will be sufficient to fund our operations for at least 12 months after the filing date of this Quarterly Report on Form 10-Q.
Our future capital requirements will depend on many factors, including our enrollment volume, membership, retention rates, telesales conversion rates, and our level of investment in technology and content, marketing and advertising, customer care and enrollment and other initiatives. In addition, our cash position could be impacted by the level of investments we make to pursue our strategy. To the extent that available funds are insufficient to fund our future activities or to execute our financial strategy, we may raise additional capital through bank debt, or public or private capital financing to the extent such funding sources are available. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.
Cash Activities
Our cash flows for the nine months ended September 30, 2025 and 2024 are summarized as follows (in thousands):
Nine Months Ended
September 30,
2025 2024
Net cash provided by operating activities $ 10,604 $ 9,296
Net cash provided by (used in) investing activities 19,048 (56,413)
Net cash used in financing activities (5,819) (4,691)
Operating Activities
Net cash provided by operating activities primarily consists of net loss, adjusted for certain non-cash items, including, deferred income taxes, stock-based compensation expense, depreciation and amortization, amortization of internally developed software, other non-cash items, and the effect of changes in working capital and other activities.
Collection of commissions receivable depends upon the timing of our receipt of commission payments and associated commission reports from health insurance carriers. If we were to experience a delay in receiving a commission payment from a significant health insurance carrier within a quarter, our operating cash flows for that quarter could be adversely impacted.
While we recognize constrained LTV as revenue at the time applications are approved, our collection of the cash commissions resulting from approved applications generally occurs over a number of years. The expense associated with approved applications, however, is generally incurred at the time of enrollment and generally paid as incurred. As a result, the net cash flow resulting from approved applications is generally negative in the period of revenue recognition and becomes positive over the lifetime of the member. In periods of membership growth, cash
receipts associated with new and continuing members may be less than the cash outlays to acquire new members and could adversely impact our operating cash flows.
Our fee-based BPO arrangements generate fee-based revenue, which is recorded in other revenue, and cash is collected in advance or in close proximity to when revenue is recognized.
Nine Months Ended September 30, 2025 -Net cash provided by operating activities was $10.6 million during the nine months ended September 30, 2025 driven by changes in net operating assets and liabilities of $52.3 million and adjustments for non-cash items of $5.4 million, partially offset by net loss of $47.1 million. Cash provided by changes in net operating assets and liabilities during the nine months ended September 30, 2025 primarily consisted of decreases of $92.8 million in contract assets - commissions receivable and $15.0 million in accounts receivable, partially offset by decreases of $19.6 million in accrued compensation and related expenses, $17.1 million in accounts payable and $11.1 million in accrued marketing expenses, as well as an increase of $7.7 million in prepaid expenses and other assets. Adjustments for non-cash items primarily consisted of $11.6 million of stock-based compensation expense and $9.2 million of amortization of internally developed software, partially offset by a $17.0 million decrease due to the change in deferred income taxes.
Nine Months Ended September 30, 2024 -Net cash provided by operating activities was $9.3 million during the nine months ended September 30, 2024, primarily driven by changes in net operating assets and liabilities of $66.1 million and adjustments for non-cash items of $30.7 million, partially offset by a net loss of $87.4 million. Cash provided by changes in net operating assets and liabilities during the nine months ended September 30, 2024 primarily consisted of a decrease of $104.6 million in contract assets - commissions receivable, partially offset by decreases of $14.6 million in accrued compensation and benefits and $11.1 million in accrued marketing expenses as well as an increase of $9.9 million in prepaid expenses and other assets and an increase of $1.9 million in accounts receivable. Adjustments for non-cash items primarily consisted of $15.1 million of stock-based compensation expense, $11.0 million of amortization of internally developed software and $7.4 million of impairment charges, partially offset by a $4.3 million decrease due to the change in deferred income taxes.
Investing Activities
Our investing activities primarily consist of purchases and redemption of marketable securities, purchases of computer hardware and software to enhance our website and advisor enrollment center operations and capitalized internal-use software.
Nine Months Ended September 30, 2025 -Net cash provided by investing activities of $19.0 million for the nine months ended September 30, 2025 mainly consisted of $106.0 million in proceeds from the maturities and redemptions of marketable securities, partially offset by $74.0 million used to purchase marketable securities and $10.8 million in capitalized internal-use software and website development costs.
Nine Months Ended September 30, 2024 -Net cash used in investing activities of $56.4 million for the nine months ended September 30, 2024 mainly consisted of $85.9 million used to purchase marketable securities and $8.1 million in capitalized internal-use software and website development costs, partially offset by $39.0 million in proceeds from the maturities and redemptions of marketable securities.
Financing Activities
Nine Months Ended September 30, 2025 -Net cash used in financing activities of $5.8 million for the nine months ended September 30, 2025 was primarily due to a $2.9 million preferred stock dividend payment, $2.1 million in repurchases of shares to satisfy employee tax withholding obligations and $1.0 million in payments for debt issuance costs.
Nine Months Ended September 30, 2024 -Net cash used in financing activities of $4.7 million for the nine months ended September 30, 2024 was primarily due to a $2.7 million payment of preferred stock dividends and $2.3 million in repurchases of shares to satisfy employee tax withholding obligations.
Seasonality
Open enrollment periods drive the seasonality of our business. The majority of our commission revenue is typically recognized in the fourth quarter of each calendar year under ASC 606, Revenue from Contracts with Customers. We have historically sold a significant portion of Medicare plans for the year in the fourth quarter during the Medicare AEP, which occurs from October 15thto December 7th, when Medicare-eligible individuals are permitted to change their Medicare Advantage and Medicare Part D prescription drug coverage for the following year. As a result, we generate a significant portion of our commission revenue related to new Medicare plan-related enrollments in the fourth quarter. Additionally, our Medicare Advantage plan-related commission revenue is also elevated in the first quarter compared to the second and third quarters as a result of the Medicare Advantage open enrollment period that occurs from January 1stto March 31st, when Medicare Advantage plan enrollees may enroll in another Medicare Advantage plan or disenroll from their Medicare Advantage plan and return to the Original Medicare program.
The annual open enrollment period for IFP plans takes place in the fourth quarter of the calendar year, as prescribed under the federal Patient Protection and Affordable Care Act and related amendments in the Health Care and Education Reconciliation Act. As a result, we generate a significant portion of our commission revenue related to IFP plan-related enrollments in the fourth quarter. In the states where the Federally Facilitated marketplace operates as the state health insurance exchange, individuals and families generally are not able to purchase individual and family health insurance outside of the annual enrollment period, unless they qualify for a special enrollment period as a result of certain qualifying events, such as losing employer-sponsored health insurance or moving to another state.
Changes in timing of the Medicare or individual and family health plan enrollment periods, adoption of new or special enrollment periods, changes in eligibility and subsidies applicable to the purchase of health insurance, and changes in the laws and regulations that govern the sale of health insurance may occur from time to time, and any such change may change the seasonality of our business.
We incur a significant portion of our marketing and advertising expenses in the fourth quarter as a result of the Medicare AEP and the open enrollment period under the Affordable Care Act. We expect this seasonal trend in marketing and advertising expenses to continue in the foreseeable future.
Full-time internal benefit advisors represent the majority of our telesales capacity. We plan to maintain our internal telesales benefit advisors year-round, net of natural attrition, and expect to increase our internal benefit advisors' utilization outside of the enrollment periods by expanding our offerings of ancillary products and carrier call center outsourcing programs. We began increasing the use of career seasonal advisors as a percentage of our total telesales capacity beginning in 2025 to increase the flexibility of our telesales organization. We also engage seasonal advisors who are not full-time employees to support our seasonally high volume. The magnitude of new agent hiring is driven by our enrollment growth goals for that year. Our customer care and enrollment expenses are typically highest in the fourth quarter and lowest in the second quarter.
Recent Accounting Pronouncements
See Note 1- Summary of Business and Significant Accounting Policies in our Notes to Condensed Consolidated Financial Statementsof this Quarterly Report on Form 10-Q for the recently issued accounting standards that could have an effect on us.
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