ehealth 1st Quarter Results
- Thread starter moonlightandmargaritas
- Start date
True, only $24M and change was from commission, they didn't divide this up based on service and new business. Given their total 'membership' vs their annualized new apps, I think its safe to assume the bulk of the commission is new business.
You could probably have 20% of it as service. Even 50%, but the higher the service goes, then the attractiveness for them to write new business is really bad. If you remove part of the commission as service, then the cost of new business goes up, and it also means the taken rate has to be even lower.
Of course, we all think of the fact we need to make money on policies we write. It is likely that they are willing to spend a significant amount more to help get better deals on services. They are still a seriously growing company.
Still an interesting business model.
You could probably have 20% of it as service. Even 50%, but the higher the service goes, then the attractiveness for them to write new business is really bad. If you remove part of the commission as service, then the cost of new business goes up, and it also means the taken rate has to be even lower.
Of course, we all think of the fact we need to make money on policies we write. It is likely that they are willing to spend a significant amount more to help get better deals on services. They are still a seriously growing company.
Still an interesting business model.
- Thread starter
- #13
- 9,744
I think taking 18% to the bottom line would be considered very healthy by most business experts.
- 265
This is like my golf pro comparing his earnings to Phil Mickelson's -it's here nor there.
- 901
Just as I've suspected all along. Fuzzy math
Apparently, they are breaking down most of their number into "mouths." Example: One family application has mom, dad, two kids. That isn't "one" application to them -- it is four. As in 4 "individuals."
So if the average family is 2.6 people, their acquisition cost is something like $144 per application. And then on top of that, you figure in their "bounce" rate which is hideous. Like 3 out of 4. Although they had 114,000 applications for the QUARTER, they only had 115,000 new "members" for the YEAR. A placement ratio of 1:4, meaning that 3 out of every 4 applications submitted is declined, rejected, etc.
So if you multiply out their acquisition cost on placed business, not submitted which is what is reported, they may be spending something like $576 PER POLICY (144 x 4).
An efficient business model?
Hardly.
- 901
What the hell is that? How exactly does one become a "member" of ehealth?
Is ehealth some new fangled version of a Blue Cross association or something?
MEMBERS?
How freakin' misleading is that?
Somebody ought to sue these airheads.
- 901
More than 175 "of" the nation's leading health insurance companies?
There AREN'T 175 health insurance companies to start with!
How in the hell are those idiots coming up with that? This is something I have seriously contemplated bringing to the attention of Ins. Comm's in several states. This is underhanded unfair competition. They create the false impression that they have many "secret" plans or companies that other licensed agencies don't have or can't get for some reason.
Remember--health insurance is regulated on a state to state basis. When a resident of Nebraska logs onto ehealth, the impression is being created that ehealth offers health insurance plans from "more than 175" different insurance companies.
- 901
EHTH: Competitors for EHEALTH, INC. - Yahoo! Finance
That's the standard list of "competitors" for ehealth.
Competitors?
Allianz?
Nippon Life?
See anything in common?
They are being "compared" to insurance COMPANIES. Why has everyone been brainwashed into thinking ehealth is something other than what it is--an insurance AGENCY.
Competitors? You want a list of actual competitors? Try this:
Don Smith, insurance agent, Atlanta GA (pays norvax $350 month to operate an online quoting service)
Bubba Joe Watkins, insurance broker, Deerfield, IL (pays Quotit $175 for a quoting engine in 3 states).
Scheez, and you guys thought I had a burr in my saddle about G/R.
That's the standard list of "competitors" for ehealth.
Competitors?
Allianz?
Nippon Life?
See anything in common?
They are being "compared" to insurance COMPANIES. Why has everyone been brainwashed into thinking ehealth is something other than what it is--an insurance AGENCY.
Competitors? You want a list of actual competitors? Try this:
Don Smith, insurance agent, Atlanta GA (pays norvax $350 month to operate an online quoting service)
Bubba Joe Watkins, insurance broker, Deerfield, IL (pays Quotit $175 for a quoting engine in 3 states).
Scheez, and you guys thought I had a burr in my saddle about G/R.
No argument here. Of course it is all speculation but has some veracity. Carriers that work with eHealth (and similar entities) enjoy a love-hate relationship.
They love the premium.
Hate the not taken rates and low persistency. Also there is more service required by the HO vs. agent produced business.
True, if you are looking at profit margins.
Their cost of acquisition is quite high, much higher than any agent. A bit surprised they only wrote 114,500 new apps. Just a wag, but their not taken rate could be in the 20% range and 6 month persistency (on non STM biz) is probably low as well.
I think if you were to break it all down you would see a business model that really isn't all that impressive compared to a full service agent. It is good for what it is but nothing that is a threat to a good agent.
I haven't counted them in a while, but you probably have at least 60 Blue plans. Add in carriers that operate in one state by UHC another
as AMS and still another as GR. Coventry is in something like 18 different states, each one is a separate company. KP is a separate company in each state where they operate.
Don't confuse common ownership with operating as a separate company.
- Thread starter
- #20
- 9,744
Somehow I don't think that ehealth is all that concerned with Don and Bubba as competitors...
ehealth averages about $9,500,000 in commissions per month. Don and Bubba won't do $9.5 mil in commissions in their lifetime, combined.
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