eHealth (NASDAQ:EHTH) executives said the company delivered improved profitability in fiscal 2025 and is entering 2026 with a strategy focused on cash flow and higher-quality Medicare Advantage enrollments, even as it expects revenue and enrollment volumes to decline from last year’s levels.
Management frames 2025 as a year of earnings growth amid a “structural reset”
Chief Executive Officer Derrick Duke said the Medicare Advantage market remains in a “structural reset,” citing elevated medical cost trends and regulatory pressure that have led to benefit changes, plan eliminations, and carrier market exits. Duke said these shifts have also changed distribution economics, including “pockets of commission suppression” and modifications to carriers’ marketing sponsorship programs.
Operationally, Duke highlighted several drivers he said helped position the company for AEP performance, including a more tenured advisor force, stronger branded channels, and an expanded member retention program. He also pointed to the scaling of an AI screener during AEP, saying it improved efficiency and reduced customer wait times, with performance “on par or better than human screeners” on transfer rates and conversions.
Fiscal 2025 results: record Q4 revenue, higher profitability, and growing commissions receivable
Chief Financial Officer John Dolan reported that fourth-quarter revenue was a company record of $326.2 million, up 4% year over year, while full-year revenue totaled $554 million, also up 4%.
Within the Medicare segment, Dolan said Q4 revenue increased 5% to $319.6 million, and full-year Medicare segment revenue grew 6% to $531.2 million. He said Q4 Medicare Advantage submissions in the agency model declined 3%, which he attributed to a strategic decision to focus demand generation on direct branded channels and reduce marketing in lower-margin channels. That decline, he said, was more than offset by higher lifetime value (LTV) assumptions across Medicare products, including an 11% increase in Medicare Advantage LTV driven by favorable retention.
Dolan also pointed to retention trends, saying the January 2026 Medicare Advantage cohort was performing “significantly better” in year-to-date retention compared with the prior year cohort. Over the past two years, he said early-January cohort retention has improved by a cumulative 700 basis points.
On profitability, Dolan said the Medicare LTV-to-CAC ratio was 2.2x in Q4, improving from 2.0x a year earlier. Q4 Medicare gross profit was $178.3 million, up 12%, and full-year Medicare gross profit grew 21%.
The company also discussed “tail revenue,” which Dolan described as positive net adjustment revenue recognized when cash collections exceed original LTV estimates. Q4 tail revenue was $3.9 million versus $7.6 million in the prior-year quarter. For the full year, tail revenue totaled $44.4 million, compared with $22.7 million a year earlier. Dolan said there remains a “significant unrecognized” amount of positive adjustments related to the Medicare book beyond initial constraints.
On the bottom line, Q4 GAAP net income was $87.2 million, down from $97.5 million a year earlier, which Dolan said was primarily due to a higher effective tax rate, partially offset by higher revenue. Full-year GAAP net income rose to $40.0 million from $10.1 million in 2024. Q4 adjusted EBITDA increased 10% to $132.9 million, and full-year adjusted EBITDA rose 40% to $97.3 million.
eHealth ended 2025 with $77.2 million in cash, cash equivalents, and marketable securities, compared with $82.2 million at the end of 2024. Dolan said the balance reflects the net impact of a $125 million credit facility announced in January, transaction costs, and $70.7 million used to repay an existing term loan. Commissions receivable totaled $1.1 billion as of Dec. 31, 2025, up 12% year over year.
Ancillary products grow while sponsorship revenue declines
Duke and Dolan both highlighted efforts to diversify beyond Medicare Advantage. Duke said hospital indemnity plan (HIP) sales saw “exceptional growth,” with Q4 approved application volume up more than 400% year over year. Medicare Supplement also grew during AEP, with Q4 approved applications up 39%.
Duke noted that carrier-dedicated revenue and sponsorships declined year over year in Q4 due to broader market pressures, but said the core agency platform offset the impact through operational execution. Dolan later said 2026 guidance assumes further declines in BPO and sponsorship revenue.
Dolan added that HIP growth was significant in Q4 and the full year, with 2025 annual approved members exceeding 30,000 and increasing more than fivefold compared with 2024.
2026 outlook: lower revenue, focus on margin and cash flow, and major cost reductions
Management characterized 2026 as a “bridge year” in which the company will prioritize operating cash flow and quality over enrollment volume. Duke said the company expects Medicare enrollment volumes and non-commission revenues to decline relative to 2025, but expects earnings (excluding tail revenue) to remain roughly flat and EBITDA margin (excluding tail revenue) to improve year over year.
As part of that plan, eHealth implemented headcount and vendor consolidation in January. Duke and Dolan said the actions are expected to reduce fixed operating costs by approximately $30 million in 2026 versus 2025—about a 20% decrease—and reduce variable spend by more than $60 million, for a total spending reduction of more than $90 million.
During Q&A, Dolan said the fixed-cost savings are coming from “all areas” of the fixed-cost organization, including fixed marketing, advertising, technology, content, and general and administrative functions. He said variable spend reductions prioritized lower-margin areas, with the aim of emphasizing channels with the best persistency and LTV-to-CAC profiles.
Duke said the reduced 2026 outlook is primarily driven by the company’s decision to pull back from lower-margin third-party marketing channels and focus on higher-margin branded channels, while also acknowledging the challenging environment and carrier margin pressures.
For 2026, Dolan provided the following guidance ranges:
- Total revenue: $405 million to $445 million
- GAAP net income: $8 million to $25 million
- Adjusted EBITDA: $55 million to $75 million
- Operating cash flow: -$10 million to +$12 million
The guidance includes an assumption of positive net adjustment (tail) revenue of $0 to $20 million. Duke said the company is targeting break-even operating cash flow in 2026, which management described as a roughly $25 million year-over-year improvement, and positive operating cash flow in 2027.
Strategy highlights: lifetime advisory model, ICHRA, and ongoing industry discussions
Duke said eHealth’s 2026 strategy centers on a “lifetime advisory engagement model” designed to deepen year-round relationships with members and improve retention and lifetime value. He said the company plans to expand ancillary offerings in 2026 to include products such as critical illness and final expense, while increasing attach rates for existing ancillary products like dental, vision, and hearing.
On the employer side, Duke said eHealth is prioritizing ICHRA growth, including a partner-driven SaaS model intended to extend the platform to brokers with employer relationships. He described the approach as capital efficient and aligned with employer interest in controlling benefit expenses and providing more personalized coverage selection.
Duke also said the company expects commissions receivable to remain around current levels at the beginning of 2027, driven by retention trends and a relationship-driven approach to managing its book. Separately, he noted that the company has held discussions with others in the industry and expects to continue doing so, while cautioning that such talks “may not result in any meaningful developments.”
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.
