eHealth (NASDAQ:EHTH) reported lower second-quarter revenue and enrollment volume as it shifted resources toward a new lifetime advisory model, reduced spending outside major enrollment periods and continued cost-cutting efforts intended to improve cash flow.
Second-quarter revenue totaled $33.6 million, down 45% from a year earlier. The company reported a GAAP net loss of $23.6 million, compared with a $17.4 million loss in the prior-year period, while adjusted EBITDA was a loss of $21.8 million, versus a $14.1 million loss a year earlier.
Cost reductions and Medicare trends
eHealth said non-GAAP operating expenses declined 25% year over year to $58.6 million during the quarter. For the first six months of 2026, non-GAAP operating expenses fell by $42 million from the prior-year period.
The company continues to target more than $60 million in annual variable-cost savings and about $30 million in fixed-cost savings. Non-GAAP marketing and advertising expense declined 45% in the quarter, including a 56% reduction in variable marketing costs. Customer care and enrollment expense fell 20%, while general and administrative expense declined 26%.
Medicare segment revenue was $31.8 million, down 45%, reflecting lower Medicare Advantage approved-member volume and lower tail revenue. Medicare submissions declined 44%, which Chief Financial Officer John Dolan said was consistent with the company’s planned reduction in lead generation spending during the second and third quarters.
Total commission revenue was $29.8 million, including $7.6 million in net adjustment, or tail, revenue from previously acquired members. That compared with $17.8 million in tail revenue a year earlier. Medicare segment gross profit declined to $6 million from $19.1 million.
Dolan said Medicare Advantage lifetime value declined 1% from a year ago, while Medicare Supplement lifetime value rose 16% and Medicare Part D lifetime value increased 52%. He added that policy-level measures do not fully capture potential value from ancillary product sales, referrals and broader member engagement.
Lifetime advisory model and ancillary products
The company launched its lifetime advisory model during the quarter, shifting from a one-time enrollment interaction toward year-round engagement with members. Under the approach, advisors are intended to help members evaluate plan changes, address coverage gaps and identify ancillary products.
Duke said early results supported the model’s core assumptions, including consumer response to relationship-based engagement and potential cross-selling opportunities. Second-quarter ancillary cross-sell rates doubled from a year earlier, according to the company.
eHealth launched a final-expense product during the quarter and said it is laying the groundwork for additional ancillary offerings. The company expects to track retention, ancillary cross-sell rates, advisor productivity and member-based lifetime value as key measures of the model’s development.
During the question-and-answer session, Duke said he would prefer to evaluate the initiative over a full four-quarter cycle. He said a mature Medicare Advantage model could potentially reach a cross-sell rate of 0.5, though he said it was too early to determine how long the model would take to mature.
Medicare Advantage outlook and AEP preparation
Duke said the Medicare Advantage market remains supported by demographic trends despite recent disruption. He cited Medicare Advantage enrollment of more than 35.5 million beneficiaries and noted that the Congressional Budget Office projects penetration to rise from about 55% currently to 63% by 2034.
The Centers for Medicare & Medicaid Services finalized a maximum broker commission increase of 4.5% for plan year 2027, Duke said. However, he expects individual carriers to take differing approaches based on geography, product type and strategic priorities.
Management said it does not expect a material year-over-year change in non-commissionable plans heading into the annual enrollment period, or AEP. Duke said some carriers have indicated that plan terminations could be similar to or modestly above last year’s levels, while others are seeing more stability in their portfolios.
Chief Revenue Officer Michelle Barbeau said eHealth expects its branded marketing channels and broad carrier inventory to help it assist consumers navigating plan changes. The company is also undertaking targeted outreach to existing members whose plans may terminate or be at risk of termination.
eHealth expects to reduce marketing spending even more sharply year over year in the third quarter than it did in the second quarter. Dolan said that decision will result in a greater year-over-year decline in third-quarter enrollment volume and revenue. The company plans to deploy most of its annual marketing budget during the fourth quarter through its highest-performing direct channels.
AI, ICHRA and financial outlook
The company said artificial intelligence is being used in after-hours interactions, call screening, customer-service inquiries and internal functions including product management, software development and plan-content ingestion. Duke said AI-enabled screening is expected to replace most manual call-screening processes for the upcoming AEP.
He also said the company plans for AI screeners to answer all incoming calls during the enrollment season, compared with roughly 80% to 85% by the end of the previous AEP. eHealth believes AI can reduce costs, improve speed and accuracy in processing carrier plan information, and support customer-service efficiency.
In the under-65 market, eHealth is investing in its individual coverage health reimbursement arrangement, or ICHRA, platform. The company expects ICHRA revenue to remain below $5 million in 2026, with current efforts focused on employer relationships, partnerships, broker relationships and operating capabilities.
eHealth maintained its 2026 guidance ranges for revenue, GAAP net income, adjusted EBITDA and operating cash flow. It updated expected 2026 net adjustment revenue to a range of $16 million to $20 million. The company ended the quarter with $101 million in cash equivalents and short-term marketable securities, as well as $1 billion in commission receivables.
Management said it expects operating cash flow to improve year over year in each of the final two quarters of 2026 and expects positive operating cash flow in 2027. Duke reiterated the company’s expectation for sustainable revenue growth beginning in 2027, driven by recurring member relationships, ICHRA expansion and selective growth in its carrier-dedicated Amplify business.
About eHealth (NASDAQ:EHTH)
eHealth, Inc operates one of the largest online private health insurance exchanges in the United States. The company’s platform enables consumers to compare, select and enroll in individual, family and small-group health insurance plans offered by a broad network of licensed insurance carriers. In addition to Affordable Care Act–compliant offerings, eHealth provides dedicated services for Medicare Advantage, Medicare Supplement and Medicare Part D prescription drug plans, helping seniors navigate the complexities of Medicare coverage.
Through its digital marketplace, eHealth delivers real-time quotes, detailed plan comparisons and enrollment processing.
