Health Insurance Innovations, Inc. (NASDAQ:HIIQ), a leading
cloud-based technology platform and distributor of affordable
individual and family health insurance and supplemental plans,
announced today the Company is introducing new guidance under
Accounting Standards Codification (ASC) 606. As required by
the Securities and Exchange Commission, this new accounting
standard will be adopted on December 31, 2018 and will be applied
retrospectively for the 2018 and prior fiscal years and will
replace the previous accounting standards for revenue recognition
under ASC 605. The Company’s full year 2018 guidance of expected
revenue now ranges from $315 million to $330 million, Adjusted
EBITDA from $67 million to $72 million, and Adjusted EPS from $2.95
to $3.15. Due to the market dynamics of
Agilehealthinsurance.com and a shift in its product focus, as
discussed below, the Company’s expected 2018 results are on the
lower end of its previously announced guidance under its legacy
accounting ASC 605.
During the fourth quarter to-date, the Company has achieved a
record open enrollment period for consumers purchasing health
insurance through the Company’s non-owned third-party distribution
partners and submitted individual and family plan (IFP)
applications have met the Company’s expectations despite the loss
of an 8% distributor.
The Department of Health and Human Services implemented a rule
change at the beginning of the fourth quarter 2018 allowing for
longer duration Short Term Medical (STM) products. During the
fourth quarter to-date, approximately 70% of the Company’s STM
submitted applications were 12 months or longer in duration,
including 30% which were three 12 month consecutive plans for a
total of 36 months of coverage. These longer durations result
in a greater lifetime values (LTV). The Company also experienced a
shift towards greater STM sales as a percentage of total submitted
IFP applications during the fourth quarter to-date in 2018 as
compared to the same prior-year period, with STM comprising
approximately 50% of fourth quarter to-date submitted IFP
applications.
Health Benefits One, LLC (“Simple Health”) and all downlines and
affiliates, which were terminated in early November 2018,
represented 8% of submitted policies year to-date through the date
of their termination. As of today, the outstanding balance of
advanced commissions to Simple Health was approximately $0.6
million.
In the Company’s eCommerce channel - AgileHealthInsurance.com -
the potential LTV of policies sold to-date, has increased by
approximately 250% in Q4 2018 compared to Q4 2017, even as the cost
of acquisition has increased, and the number of submitted policies
were lower 30% year over year for the fourth quarter to-date as
compared to the same period in 2017. ASC 606 recognizes a
majority of the revenue of the policies and the costs of
acquisition at the time of the enrollment, while ASC 605 recognizes
the acquisition costs but defers the revenue recognition over the
life of the policy. The Company continues to successfully
execute on distributing higher-value products for consumers
resulting in far greater LTV.
The Company looks forward to providing further updates around
present and future business opportunities, new strategic
initiatives, and compliance processes at the Analyst Day today in
New York City.
About Health Insurance Innovations, Inc. (HIIQ)
HIIQ is a market leading cloud-based technology platform and
distributor of innovative health insurance products that are
affordable and meet the needs of health insurance plan consumers.
HIIQ helps develop insurance products through our relationships
with best-in-class insurance companies and markets them via its
broad distribution network of third party licensed insurance agents
across the nation, its call center network and its unique online
capability. Additional information about HIIQ can be found
at HiiQuote.com. HIIQ’s Consumer Division
includes AgileHealthInsurance.com, a website for researching,
comparing and purchasing short-term health insurance products
online and HealthPocket.com, a free website that compares and
ranks all health insurance plans, and uses objective data to
publish unbiased health insurance market analyses and other
consumer advocacy research.
Forward-Looking Statements
This press release contains "forward-looking
statements" within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Forward-looking statements are
statements other than historical fact, and may include statements
relating to goals, plans and projections regarding new markets,
products, services, growth strategies, anticipated trends in our
business and anticipated changes and developments in the United
States health insurance system and laws. Forward-looking statements
are based on HIIQ’s current assumptions, expectations and beliefs
are generally identifiable by use of words “may,” “might,” “will,”
“should,” “expects,” “plans,” “anticipates,” “believes,”
“estimates,” “predicts,” “potential” or “continue,” or similar
expressions and involve significant risks and uncertainties that
could cause actual results, developments and business decisions to
differ materially from those contemplated by these statements.
These risks and uncertainties include, among other things, our
ability to maintain relationships and develop new relationships
with health insurance carriers and distributors, our ability to
retain our members, the demand for products offered through our
platform, state regulatory oversight and examinations of us and our
carriers and distributors, legal and regulatory compliance by our
carriers and distributors, the amount of commissions paid to us or
changes in health insurance plan pricing practices, competition,
changes and developments in the United States health insurance
system and laws, and HIIQ’s ability to adapt to them, the ability
to maintain and enhance our name recognition, difficulties arising
from acquisitions or other strategic transactions, and our ability
to build the necessary infrastructure and processes to maintain
effective controls over financial reporting. These and other risk
factors that could cause actual results to differ materially from
those expressed or implied in our forward-looking statements are
discussed in HIIQ's Annual Report on Form 10-K filed with the
Securities and Exchange Commission (SEC) as well as other documents
that may be filed by HIIQ from time to time with the Securities and
Exchange Commission, which are available at www.sec.gov. Any
forward-looking statement made by us in this press release is based
only on information currently available to us and speaks only as of
the date on which it is made. You should not rely on any
forward-looking statement as representing our views in the future.
We undertake no obligation to publicly update any forward-looking
statement, whether written or oral, that may be made from time to
time, whether as a result of new information, future developments
or otherwise.
Non-GAAP Financial Measures
Adjusted EBITDA (Adjusted Earnings Before Interest, Taxes,
Depreciation and Amortization) and Adjusted EPS (Adjusted Earnings
Per Share) are financial measures that are not prepared in
accordance with generally accepted accounting principles in the
United States of America, or GAAP. Adjusted EBIDTA is defined
as EBITDA, adjusted for items such as stock-based compensation and
related costs and items that are not part of regular operating
activities, including tax receivable adjustments, severance,
restructuring, indemnity and other related legal costs, and
acquisition costs. Adjusted net income per share (adjusted
EPS), is calculated by taking net income and then adding back
amortization (but not depreciation), interest, tax expense,
stock-based compensation and related costs, and other items that
are not part of regular operating activities, including, tax
receivable adjustments, severance, restructuring, indemnity and
other related legal costs, and acquisition costs, divided by the
total number of diluted Class A and Class B shares of our common
stock for each period. These forward non-GAAP financial
measures cannot be reconciled to the most directly comparable GAAP
measures without unreasonable effort because of the
unpredictability of the amounts and timing of events affecting the
items we exclude from these non-GAAP measures. For example,
the Company’s provision for income taxes is unpredictable based the
company’s complex corporate structure, and stock based compensation
is unpredictable. As such, the costs that are being excluded
from non-GAAP guidance are difficult to predict and a
reconciliation or a range of results could lead to disclosure that
would be imprecise or potentially misleading. Material changes to
any one of the exclusions could have a significant effect on our
guidance and future GAAP results.
Health Insurance Innovations,
Inc.:
Michael Hershberger
Chief
Financial Officer
(813)
397-1187
mhershberger@hiiquote.com
Investor Contact:
John Evans
PIR
Communications
(415)
309-0230
john@petrusir.com
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