Financial Results


5000 Post Club went public at the end of '06, so '07 was the their first year as a public company. Fourth quarter and full year results were announced yesterday. Some of the highlights:
  • 84 million in revenue, a 43% increase over previous year
  • a projection of 114-117 million in revenue for '08
  • 31.6 million net income
  • they spend 35-39% of revenue on marketing & advertising
  • policies stay on the books an average of two years (excluding STM)
  • they have no debt
You can view the entire article here.

Say what you want about these guys, but here's the reality: they're making a major impact in IFP, growin' like crazy, and making a TON of money doin' it!
Funny some of those numbers are exactly the same as mine on an obvious smaller scale.

IFP Internet retention two years average - yep that's about right, maybe even a little high - varies by carrier, the "blues" will stay longer in any market due to the name recognition.

Ehealth has a solid business, little agents might not like their style but their model is obviously effective.
And once Ehealth decides to go "Geico" on us with 24/7 ads on TV, radio, print, etc...they will absolutely own the health insurance market. Doesn't mean I won't get my 5 deals a week.
They won't or they would have already.

They know that is not profitable since they are a broker not a carrier.

Radio tv costs are high and conversions are low.

No worries they know the model that works.
84 million in revenue

That is new + renewal income with (most likely) the bulk being new business in light of their low retention.

That's less than $2M per state.

Despite their high profile that really isn't much. I know agents who generate $250+ in gross revenues. I could probably name a dozen or so agents in GA alone who (combined) generate $2M.

35-39% of revenue on marketing

That's a 3:1 return.

I get 8:1.

policies stay on the books an average of two years

That's not very long. Most of the folks I have written (individual major med) are still on the books after 3.5 years. The majority who have left re-entered the employer market.

how many people hit the site vs how many apps

A few years ago there was a report on their site that, if you worked thru the numbers, you discovered their conversion rate was quite low. As I recall, 1 -2%, maybe even less.

A lot of folks are just tire kickers. Before I got my own quote engine I used them to generate quotes and even sent some out to clients.

From information shared with me by carriers, I know that the not-taken rate is quite high for these type of operations. They have a love-hate relationship with carriers.

They carriers love them for their premium volume, but hate them because the service work is much higher than with brokers. Their not-taken rate and early cancellation rate is much higher.

In short, the business model is marginally profitable for the carrier compared to business written by agents.

One carrier that is also a direct writer told me that 4% of their new business is direct. They would not divulge the percent that comes from eHealth and other phone room shops but it wasn't significant.

They also told me there is a lot of discussion about how to effectively deal with the eHealth model. You can bet that once the block is no longer profitable the worm will turn and carriers will be reluctant to maintain relationships.

The only way they (eHealth) can grow is to keep writing new business, which means spending more & more on advertising and affiliates.

I look at them like Amazon.

As big as Amazon is it seems to me that Borders, Barnes & Noble and a lot of smaller, local bookstores are still in business.

Those models work, but only up to a point.

Along the same lines, I know some folks with a national, online presence in the individual health market. They are also an eHealth affiliate. The revenue earned from eHealth is miniscule compared to their primary source. The conversion rate on folks who hit the eHealth button is less than .5% and revenue (as a percent of the gross) even smaller.

Personally, I do not consider eHealth a threat . . . but it is good to know some agents do. That means more business for me.
Does it really matter? They drive traffic in Huge numbers every day thru organic search, which they have very high listing in the organic information. More customers you have in your door, the more sales you make. Not everyone needs help purchasing their individual or Family Health Insurance, another note on that, we have page after page of Norvax vs Quotit,, Guess who drives EHealth? I think they are smarter than all of us.
All I know is most new agents can't navigate online apps - especially GR and Aetna. I imagine there's a significant number of people who abandon the process mid-app due to frustration.