eHealth shares dip on disappointing 4th-quarter revenue results, application rate slowdown

Friday, February 12, 2010

eHealth shares fall on 4Q financial results

NEW YORK — Shares of eHealth Inc., a Web site that markets health insurance to consumers and small businesses, fell Friday after the company’s fourth-quarter revenue results missed Wall Street expectations and application growth slowed.

The stock fell $1.60, or 8.9 percent, to $16.29 in afternoon trading. Shares have traded between $11.59 and $19.60 over the last 52 weeks.

Late Thursday, the company said it earned $4.8 million, or 20 cents per share, marking a 30 percent boost from $3.6 million, or 14 cents per share, during the same period a year prior. Revenue rose 17 percent to $34.4 million from $29.5 million.

Analysts polled by Thomson Reuters expected profit of 16 cents per share on revenue of $35.4 million.

During the quarter, submitted applications for individual and family insurance rose 6 percent to 122,300 applications. The rate of growth has been slowing for several quarters.

For the full year, the Mountain View, Calif., company earned $15.3 million, or 61 cents per share, compared with profit of $14.2 million, or 55 cents per share, in 2008. Revenue rose to $134.9 million from $111.7 million.

Looking ahead, the company said it expects profit between 55 cents and 65 cents per share in 2010 on revenue between $148 million and $155 million. Analysts as of Thursday expect profit of 68 cents per share on revenue of $150.3 million.

Jefferies & Co. analyst Youssef H. Squali downgraded shares to “Hold” from “Buy” and lowered his price target to $19 from $21, citing the results and a slowdown in application growth. He said application growth will likely continue to slow in the first quarter because of a challenging economic environment. He also cited the unknown future of health care reform.

“We find it difficult to predict where the chips will ultimately fall on health care reform,” he said, in a note to investors. “The lack of visibility around the nature and timeline of the reforms should negatively affect application growth short-term. Moreover, while Medicare is an attractive opportunity for eHealth, it is too early to gauge the company’s success in this segment.”

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