eHealth preannouncement details ‘not so good,’ says Craig-Hallum

Craig-Hallum analyst George Sutton says that “on the surface,” eHealth’s preannounced Q4 results “look pretty good,” suggesting in-line revenue and a “healthy” EBITDA beat. However, the numbers included a meaningful “tail revenue” impact of $12M-$17M to achieve both the revenue and EBITDA results, the analyst tells investors in a research note. The firm says the tail revenues are a function of how the business gets accounted for under 606 accounting and is non-recurring. Hallum adds that actual Medicare Advantage approved members came in under 160,000, or a clear miss relative to expectations. That group is what we need to model the future from. The firm says the details of the preannouncement are “not so good” and keeps a Hold rating on the shares with a $7 price target.