How a health insurance seller run by the former CEO of Playboy became the hottest stocks on Wall Street (EHTH)

retirement couple elderly senior

eHealth, a company that helps people buy health insurance plans, is one of the most successful stocks on the S&P 1500.
As of September, the company had the second-highest 12-month return on the index, at 162%.
Over the last few years, the 22-year-old company turned its attention toward the booming business of Medicare Advantage, the private part of the federally funded government health program for Americans 65 and up.
eHealth is aiming to have between $365 and $385 million in revenue by the end of 2019, about a 50% increase over 2018. The company is expecting to hit $1 billion in revenue by 2023.
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One of the most successful stocks on the market is eHealth, a company that helps connect people — especially seniors — with health insurance plans.

As of September 10, eHealth was up 162% over the past 12 months, the 2nd biggest gain among all the stocks in the S&P 1500 index, which includes most of the US stock market. The stock trades at $72.14.

Driving the growth over the last few years has been CEO Scott Flanders’ decision to focus the company on the booming market for private health insurance plans for seniors, known as Medicare Advantage, after stumbles selling individual health insurance plans to younger people. EHealth makes a commission over the lifetime of $983 for a Medicare Advantage member the company signs up through its platform as of the second quarter of 2019. That’s roughly six times the $167 the company makes over the lifetime of selling a individual health plan to a member.

“They saw the opportunity there, and they started focusing more on Medicare Advantage,” Credit Suisse analyst Jailendra Singh told Business Insider. Singh has an outperform rating on eHealth.

The company’s been growing its revenue quickly. This year, eHealth expects its total revenue to be between $365 million and $385 million. That’s up 50% at the midway point from the $251 million in revenue the company made in 2018. The company has plans to hit $1 billion in revenues by 2023, as the US population ages and more seniors sign up for private Medicare Advantage plans.

A changing online insurance business

The company got its start more than two decades ago in 1997, founded by a Stanford graduate with the idea of bringing health insurance online.

The business had been chugging along, getting a sizeable chunk of the individual market. eHealth went public in 2006, and at its peak in 2014 had about 800,000 members signed on, Flanders said.

But in 2010, the Affordable Care Act threw a wrench in eHealth plans. The health law created new federal and state-run markets for health insurance plans, taking away much of eHealth’s business. Health insurance sales under the ACA began in 2013.

Just 29,698 people used eHealth to buy individual health insurance plans by the end of 2018.

In 2016, eHealth’s board hired on Scott Flanders to start turning things around. Flanders had served as a board member since 2008, and prior to joining …read more

Source:: Businessinsider – Finance


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