HIIQ - Health Insurance Innovations Inc. Reports First Quarter 2019 Results
Revenue of $87.3 million, up 15% YoY
Reaffirms 2019 Revenue and Adjusted EBITDA Guidance
Raises 2019 Adjusted EPS Guidance - $3.50 to $3.75
TAMPA, Fla., May 06, 2019 (GLOBE NEWSWIRE) -- Health Insurance Innovations, Inc. (NASDAQ:HIIQ), a leading cloud-based technology platform and distributor of affordable health insurance, life insurance and supplemental plans, today announced financial results for the first quarter ended March 31, 2019. The Company will host a live conference call on Monday, May 6, 2019, at 5:00 P.M. ET.
"We met our internal expectations for the quarter and continued to execute on several key initiatives, including enhancements to our industry leading regulatory compliance protocols, setting the foundation for diversification of our insurance product portfolio and improved revenue contribution from our ecommerce channels, all while focusing on maintaining an outstanding consumer experience,” said Gavin Southwell, HIIQ's Chief Executive Officer and President.
First Quarter 2019 Consolidated Financial Highlights
All comparisons are to the three months ended March 31, 2018
- Revenue was $87.3 million, compared to revenue of $75.9 million, an increase of 15.0%.
- Net income of $2.2 million, compared to net income of $6.7 million, a decrease of 67.2% partly due to a higher effective tax rate.
- Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $9.3 million, compared to adjusted EBITDA of $15.8 million, a decrease of 41.1%.
- GAAP diluted net income per share was $0.11, compared to GAAP diluted net income per share of $0.36, a decrease of 69.4%.
- Adjusted net income per share was $0.43 compared to adjusted net income per share of $0.70, a decrease of 38.6%.
- Expected duration units of submitted IFPs (excluding fulfillment) of 680,000 compared to 567,900, an increase of 19.7%.
Adjusted EBITDA and adjusted net income per share are non-GAAP financial measures. See the reconciliations of these measures to their respective most directly comparable GAAP measure below in this press release.
2019 Full Year Guidance
The Company raises 2019 adjusted net income per share guidance to a range of $3.50 to $3.75 and reaffirms 2019 annual revenue guidance in the range of $430 million to $440 million and adjusted EBITDA guidance in the range of $72.0 million to $77.0 million. The increase in projected 2019 net income per share is due to a lower diluted average share count resulting from additional repurchases of the company’s common stock in the first quarter.
2019 First Quarter Financial Discussion
First quarter revenues of $87.3 million increased 15.0%, compared to revenue of $75.9 million in 2018. The increase was primarily due to a sales mix shift to longer duration products with greater lifetime value per submitted application.
Third-party commission expense was $60.7 million in the first quarter of 2019, compared to $45.5 million in the same period in 2018. The increase in third-party commissions was primarily due to a sales mix shift to products sold with longer expected policy durations and a shift to higher cost distributors with greater potential to drive market share gains across multiple product lines within our portfolio.
Total selling, general & administrative expense (“SG&A”) was $18.7 million in the first quarter, compared to $16.2 million in the same period in 2018. Adjusted SG&A, defined as total SG&A adjusted for stock-based compensation, transaction costs, indemnity and other related legal costs, severance and restructuring and other charges, for the first quarter of 2019 was $15.8 million, compared to $13.2 million in the same period in 2018. The increase is primarily attributable to increased advertising and marketing investment in our ecommerce channels. Adjusted SG&A is a non-GAAP financial measure, and a reconciliation of total SG&A to adjusted SG&A is included below in this press release.
Net income was $2.2 million in the first quarter of 2019, compared to net income of $6.7 million in the same period in 2018. EBITDA was $6.5 million in the first quarter of 2019, compared to $12.8 million in the same period in 2018. The effective tax rate (ETR) of 56.2% was due to the adoption of ASC 606 creating an opening balance sheet tax liability adjustment. The impact of this opening balance sheet tax liability adjustment in the first quarter of 2019 increased the provision from income taxes by an additional $1.4 million resulting in a total tax expense of $2.8 million, thus increasing our ETR from 28% to 56.2%. This adjustment will continue to inflate the ETR for the remainder of 2019.
Adjusted EBITDA was $9.3 million in the first quarter of 2019, compared to $15.8 million in the same period in 2018. Adjusted EBITDA is calculated by taking EBITDA and adjusting for items that are not part of regular operating activities including stock-based compensation and related costs, and items that are not part of regular operating activities, including tax receivable adjustments, indemnity and other related legal costs, and severance, restructuring, and acquisition costs. A reconciliation of net income to EBITDA and adjusted EBITDA for the first quarter of 2019 and 2018 is included within this press release.
GAAP diluted net income per share for the first quarter in 2019 was $0.11, compared to GAAP diluted net income per share of $0.36 in the same period in 2018.
Adjusted net income per share for the first quarter in 2019 was $0.43, compared to adjusted net income per share of $0.70 in the same period in 2018. A reconciliation of net income to adjusted net income per share is included within this press release.
Cash and cash equivalents totaled $6.5 million as of March 31, 2019, a decrease of $2.8 million from December 31, 2018. The decrease in cash included the $3.4 million payment for closing the market conduct examination and $3.1 million increase in advance commissions. The Company repurchased 1,351,241 shares of our common stock during the first quarter of 2019, for $45.3 million, as part of its previously announced share repurchase program. The Company has $94.0 million remaining under its $200 million share repurchase authorization. The Company borrowed $50.0 million on its bank line of credit in the first quarter.
Conference Call and Webcast
The Company will host an earnings conference call on May 6, 2019 at 5:00 P.M. Eastern time. All interested parties can join the call by dialing (877) 451-6152 or (201) 389-0879; the conference ID is 13690292. An archive of the call will be available on Health Insurance Innovations’ website, HIIQ.com, on Monday, May 6, 2019, 8:00 PM ET until Thursday, June 6, 2019, 11:59 PM ET.
About Health Insurance Innovations, Inc. (HIIQ)
HIIQ is a market leading cloud-based technology platform and distributor of innovative health and life insurance products that are affordable and meet the needs of 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 HIIQ.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, 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 will be 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 Information
To supplement HIIQ’s financial information presented in accordance with generally accepted accounting principles in the United States of America, or GAAP, HIIQ presents certain financial measures that are not prepared in accordance with GAAP, including premium equivalents, adjusted EBITDA, adjusted EPS, and adjusted SG&A. These non-GAAP financial measures, which are defined below, should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly-titled measures presented by other companies.
HIIQ is presenting these non-GAAP financial measures to assist investors in seeing HIIQ’s operating results through the eyes of management and because HIIQ’s believes that these measures provide a useful tool for investors to use in assessing HIIQ’s operating performance against prior period operating results and against business objectives. HIIQ uses the non-GAAP financial measures in evaluating its operating results and for financial and operational decision-making purposes.
The accompanying tables provide more detail on the GAAP financial measures that are most directly comparable to the non-GAAP financial measures described above and the related reconciliations between these financial measures. HIIQ has not reconciled adjusted EBITDA guidance or adjusted EPS guidance to GAAP net income or GAAP net income per diluted share, respectively, because HIIQ does not provide guidance for the reconciling items between these measures and GAAP net income or GAAP net income per diluted share, respectively. As certain of the items that impact GAAP net income and/or GAAP net income per diluted share cannot be reasonably predicted at this time, HIIQ is unable to provide such guidance. Accordingly, a reconciliation to GAAP net income or GAAP net income per diluted share is not available without unreasonable effort.
HEALTH INSURANCE INNOVATIONS, INC.
Consolidated Balance Sheets (unaudited)
($ in thousands, except share and per share data)
| March 31, 2019 |
| December 31, 2018 |
| (unaudited) |
| Assets |
| Current assets: |
| Cash and cash equivalents |
| $ |
| 6,483 |
| $ |
| 9,321 |
| Restricted cash |
| 16,481 |
| 16,678 |
| Accounts receivable, net, prepaid expenses and other current assets |
| 1,727 |
| 2,108 |
| Advanced commissions, net |
| 30,063 |
| 29,867 |
| Contract asset, net |
| 166,858 |
| 165,494 |
| Total current assets |
| 221,612 |
| 223,468 |
| Long-term contract asset, net |
| 144,529 |
| 132,566 |
| Property and equipment, net |
| 4,859 |
| 5,134 |
| Goodwill |
| 41,076 |
| 41,076 |
| Intangible assets, net |
| 3,882 |
| 4,217 |
| Deferred tax assets |
| 26,385 |
| 25,967 |
| Other assets |
| 793 |
| 61 |
| Total assets |
| $ |
| 443,136 |
| $ |
| 432,489 |
| Liabilities and stockholders’ equity |
| Current liabilities: |
| Accounts payable and accrued expenses |
| $ |
| 26,643 |
| $ |
| 32,397 |
| Commissions payable, net |
| 102,817 |
| 106,608 |
| Deferred revenue |
| 227 |
| 409 |
| Income taxes payable |
| 18,038 |
| 15,586 |
| Due to member |
| 9,543 |
| 7,978 |
| Other current liabilities |
| 405 |
| 13 |
| Total current liabilities |
| 157,673 |
| 162,991 |
| Long-term commissions payable, net |
| 94,894 |
| 84,716 |
| Revolving line of credit |
| 65,000 |
| 15,000 |
| Due to member |
| 26,210 |
| 25,693 |
| Other liabilities |
| 135 |
| 621 |
| Total liabilities |
| 343,912 |
| 289,021 |
| Commitments and contingencies |
| Stockholders’ equity: |
| Class A common stock (par value $0.001 per share, 100,000,000 shares authorized; 14,800,824 and 14,425,824 shares issued as of March 31, 2019 and December 31, 2018, respectively; 11,512,687 and 12,387,349 shares outstanding as of March 31, 2019 and December 31, 2018, respectively) |
| 15 |
| 14 |
| Class B common stock (par value $0.001 per share, 20,000,000 shares authorized; 2,416,667 and 2,541,667 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively) |
| 2 |
| 3 |
| Preferred stock (par value $0.001 per share, 5,000,000 shares authorized; no shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively) |
| — |
| — |
| Additional paid-in capital |
| 93,340 |
| 94,194 |
| Treasury stock, at cost (3,288,137 and 2,038,475 shares as of March 31, 2019 and December 31, 2018, respectively) |
| (108,758 |
| ) |
| (67,185 |
| ) |
| Retained earnings |
| 82,135 |
| 80,804 |
| Total Health Insurance Innovations, Inc. stockholders’ equity |
| 66,734 |
| 107,830 |
| Noncontrolling interests |
| 32,490 |
| 35,638 |
| Total stockholders’ equity |
| 99,224 |
| 143,468 |
| Total liabilities and stockholders' equity |
| $ |
| 443,136 |
| $ |
| 432,489 |
HEALTH INSURANCE INNOVATIONS, INC.
Condensed Consolidated Statements of Income (unaudited)
($ in thousands, except share and per share data)
| Three Months Ended March 31, |
| 2019 |
| 2018 |
| Revenues |
| $ |
| 87,326 |
| $ |
| 75,931 |
| Operating expenses: |
| Third-party commissions |
| 60,671 |
| 45,505 |
| Credit card and ACH fees |
| 1,523 |
| 1,377 |
| Selling, general and administrative |
| 18,659 |
| 16,213 |
| Depreciation and amortization |
| 1,132 |
| 1,165 |
| Total operating expenses |
| 81,985 |
| 64,260 |
| Income from operations |
| 5,341 |
| 11,671 |
| Other expense (income): |
| Interest expense (income) |
| 345 |
| (26 |
| ) |
| Other expense |
| 17 |
| 28 |
| Net income before income taxes |
| 4,979 |
| 11,669 |
| Provision for income taxes |
| 2,797 |
| 5,017 |
| Net income |
| 2,182 |
| 6,652 |
| Net income attributable to noncontrolling interests |
| 851 |
| 2,044 |
| Net income attributable to Health Insurance Innovations, Inc. |
| $ |
| 1,331 |
| $ |
| 4,608 |
| Per share data: |
| Net income per share attributable to Health Insurance Innovations, Inc. |
| Basic |
| $ |
| 0.12 |
| $ |
| 0.40 |
| Diluted |
| $ |
| 0.11 |
| $ |
| 0.36 |
| Weighted average Class A common shares outstanding |
| Basic |
| 11,388,490 |
| 11,589,777 |
| Diluted |
| 12,472,731 |
| 12,658,277 |
HEALTH INSURANCE INNOVATIONS, INC.
Condensed Consolidated Statements of Cash Flows (unaudited)
($ in thousands)
| Three Months Ended March 31, |
| 2019 |
| 2018 |
| Operating activities: |
| Net income |
| $ |
| 2,182 |
| $ |
| 6,652 |
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
| Stock-based compensation |
| 1,816 |
| 2,633 |
| Depreciation and amortization |
| 1,132 |
| 1,165 |
| Deferred income taxes |
| 191 |
| 262 |
| Changes in operating assets and liabilities: |
| Decrease in accounts receivable, prepaid expenses and other assets |
| (351 |
| ) |
| 261 |
| (Increase) decrease in advanced commissions |
| (196 |
| ) |
| 8,383 |
| Increase in income taxes receivable |
| — |
| (633 |
| ) |
| Increase in contract asset, net |
| (13,327 |
| ) |
| (8,181 |
| ) |
| Increase in income taxes payable |
| 2,452 |
| 2,434 |
| Decrease in accounts payable, accrued expenses and other liabilities |
| (5,848 |
| ) |
| (6,575 |
| ) |
| Increase (decrease) in commissions payable |
| 6,387 |
| (2,945 |
| ) |
| Decrease in deferred revenue |
| (182 |
| ) |
| (394 |
| ) |
| Net cash (used in) provided by operating activities |
| (5,744 |
| ) |
| 3,062 |
| Investing activities: |
| Capitalized internal-use software |
| (315 |
| ) |
| (570 |
| ) |
| Purchases of property and equipment |
| (109 |
| ) |
| (113 |
| ) |
| Net cash used in investing activities |
| (424 |
| ) |
| (683 |
| ) |
| Financing activities: |
| Proceeds from borrowing under revolving line of credit |
| 50,000 |
| — |
| Payments related to tax withholding for share-based compensation |
| (918 |
| ) |
| (36 |
| ) |
| Issuances of Class A common stock under equity compensation plans |
| — |
| 3 |
| Purchases of Class A common stock pursuant to share repurchase plan |
| (45,272 |
| ) |
| — |
| Distributions to member |
| (677 |
| ) |
| (862 |
| ) |
| Net cash provided by (used in) financing activities |
| 3,133 |
| (895 |
| ) |
| Net (decrease) increase in cash and cash equivalents, and restricted cash |
| (3,035 |
| ) |
| 1,484 |
| Cash and cash equivalents, and restricted cash at beginning of period |
| 25,999 |
| 55,827 |
| Cash and cash equivalents, and restricted cash at end of period |
| $ |
| 22,964 |
| $ |
| 57,311 |
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(unaudited)
($ in thousands)
| Three Months Ended March 31, |
| 2019 |
| 2018 |
| Net income |
| $ |
| 2,182 |
| $ |
| 6,652 |
| Interest expense (income) |
| 345 |
| (26 |
| ) |
| Depreciation and amortization |
| 1,132 |
| 1,165 |
| Provision for income taxes |
| 2,797 |
| 5,017 |
| EBITDA |
| 6,456 |
| 12,808 |
| Stock-based compensation and related costs(1) |
| 1,861 |
| 2,665 |
| Transaction costs |
| 273 |
| 56 |
| Indemnity and other related legal costs |
| 672 |
| 287 |
| Severance, restructuring and other charges |
| 3 |
| — |
| Adjusted EBITDA |
| $ |
| 9,265 |
| $ |
| 15,816 |
| (1) |
| During the second quarter of 2018, the Company began including payments related to employer taxes for vesting and exercises of stock-based compensation within the stock-based compensation and related costs adjustment line item. For period-over-period comparability, the Company has included these amounts in the three months ended March 31, 2018. For the three months ended March 31, 2019 and 2018, the impact on adjusted EBITDA was immaterial and resulted in no change to adjusted net income per share for either period. |
Reconciliation of Net Income to Adjusted Net Income per Share
(unaudited)
($ in thousands except per share data)
| Three Months Ended March 31, |
| 2019 |
| 2018 |
| Net income |
| $ |
| 2,182 |
| $ |
| 6,652 |
| Interest (income) expense |
| 345 |
| (26 |
| ) |
| Amortization |
| 335 |
| 464 |
| Provision for income taxes |
| 2,797 |
| 5,017 |
| Stock-based compensation and related costs |
| 1,861 |
| 2,665 |
| Transaction costs |
| 273 |
| 56 |
| Indemnity and other related legal costs |
| 672 |
| 287 |
| Severance, restructuring and other charges |
| 3 |
| — |
| Adjusted pre-tax income |
| 8,468 |
| 15,115 |
| Pro forma income taxes |
| (2,032 |
| ) |
| (3,628 |
| ) |
| Adjusted net income |
| $ |
| 6,436 |
| $ |
| 11,487 |
| Total weighted average diluted share count |
| 15,000 |
| 16,500 |
| Adjusted net income per share |
| $ |
| 0.43 |
| $ |
| 0.70 |
| (1) |
| EBITDA is defined as net income before interest, income taxes and depreciation and amortization. We have included EBITDA in this report because it is a key measure used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating EBITDA can provide a useful measure for period-to-period comparisons of our business. However, EBITDA does not represent, and should not be considered as, an alternative to net income or cash flows from operations, each as determined in accordance with GAAP. Other companies may calculate EBITDA differently than we do. EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. |
| (2) |
| To calculate adjusted EBITDA, we calculate EBITDA, which is then further adjusted for items such as stock-based compensation and related costs, and items that are not generally a part of regular operating activities, including tax receivable adjustments, indemnity and other related legal costs, and severance, restructuring, and acquisition costs. Adjusted EBITDA does not represent, and should not be considered as, an alternative to net income or cash flows from operations, each as determined in accordance with GAAP. We have presented adjusted EBITDA because we consider it an important supplemental measure of our performance and believe that it is frequently used by analysts, investors and other interested parties in the evaluation of companies. Other companies may calculate adjusted EBITDA differently than we do. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. |
| (3) |
| To calculate adjusted net income, we calculate net income then add back amortization (but not depreciation), interest, tax expense, items such as stock-based compensation and related costs, and other items that are not generally a part of regular operating activities, including, tax receivable adjustments, indemnity and other related legal costs, severance, restructuring, and acquisition costs. From adjusted pre-tax net income we apply a pro forma tax expense calculated at an assumed rate of 24%, which consists of the maximum federal corporate rate of 21%, with an assumed 3% state tax rate. We believe that when measuring Company and executive performance against the adjusted net income measure, applying a pro forma tax rate better reflects the performance of the Company without regard to the Company’s organizational tax structure. We have included adjusted net income in this report because it is a key performance measure used by our management to understand and evaluate our core operating performance and trends and because we believe it is frequently used by analysts, investors, and other interested parties in their evaluation of the Company. Other companies may calculate this measure differently than we do. Adjusted net income has limitations as an analytical tool, and you should not consider it in isolation or substitution for earnings per share as reported under GAAP. |
| (4) |
| Adjusted net income per share is computed by dividing adjusted net income by the total number of weighted-average diluted Class A and weighted-average Class B shares of our common stock for each period. We have included adjusted net income per share in this report because it is a key measure used by our management to understand and evaluate our core operating performance and trends and because we believe it is frequently used by analysts, investors and other interested parties in the evaluation of companies. Other companies may calculate this measure differently than we do. Adjusted net income per share has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for earnings per share as reported under GAAP. |
Disaggregated Revenue
The following table presents our revenue, disaggregated by major product type and timing of revenue recognition, for the three months ended March 31, 2019 ($ in thousands):
| Sales and marketing services |
| Member management |
| Total |
| Revenue by Source |
| Commission revenue(1) |
| STM |
| $ |
| 32,043 |
| $ |
| 884 |
| $ |
| 32,927 |
| HBIP |
| 28,329 |
| 1,797 |
| 30,126 |
| Supplemental |
| 21,119 |
| 1,112 |
| 22,231 |
| Other |
| — |
| — |
| — |
| Services revenue |
| — |
| 1,168 |
| 1,168 |
| Brokerage revenue |
| 551 |
| — |
| 551 |
| Other revenues |
| 323 |
| — |
| 323 |
| Total revenue |
| $ |
| 82,365 |
| $ |
| 4,961 |
| $ |
| 87,326 |
| Timing of Revenue Recognition |
| Transferred at a point in time |
| $ |
| 82,365 |
| $ |
| — |
| $ |
| 82,365 |
| Transferred over time |
| — |
| 4,961 |
| 4,961 |
| Total revenue |
| $ |
| 82,365 |
| $ |
| 4,961 |
| $ |
| 87,326 |
| (1) |
| For the purposes of disaggregated revenue presentation, when additional Discount Benefit products are sold with an STM, HBIP, or supplemental product, the associated revenue for the Discount Benefit products are reported within the STM, HBIP, or supplemental product category depicted within the table. |
Reconciliation of Premium Equivalents to Revenues
(unaudited)
($ in thousands)
| Three Months Ended March 31, |
| 2019 |
| 2018 |
| Premium equivalents (1) |
| $ |
| 147,674 |
| $ |
| 115,582 |
| Less risk premium |
| 58,428 |
| 37,971 |
| Less amounts earned by third party obligors |
| 1,920 |
| 1,680 |
| Revenues |
| $ |
| 87,326 |
| $ |
| 75,931 |
| (1) |
| Premium equivalents is defined as our total collections, including the combination of premiums, fees for discount benefit plans, enrollment fees, and third-party commissions and referral fees. We have included premium equivalents in this report because, while diminishing in importance since the adoption of ASC 606, it has historically been a key measure used by our management to understand and evaluate our core operating performance and trends. This financial measurement is considered a non-GAAP financial measure and is not recognized under generally accepted accounting principles in the United States of America (“GAAP”) and should not be used as, and is not an alternative to, revenues as a measure of our operating performance. |
Summary of Selected Metrics
(unaudited)
($ in thousands, except duration units and revenue per submitted applications)
| Expected Duration IFP Units during the Three Months Ended March 31, |
| 2019 |
| 2018 |
| Change (%) |
| Third-party distribution |
| 589,800 |
| 494,300 |
| 19 |
| % |
| Owned distribution |
| 90,200 |
| 73,600 |
| 23 |
| % |
| Total (excl. Fulfillment only) |
| 680,000 |
| 567,900 |
| 20 |
| % |
| Fulfillment only (1) |
| 12,100 |
| 132,000 |
| (91 |
| )% |
| Total |
| 692,100 |
| 699,900 |
| (1 |
| )% |
| (1) |
| Represents de-emphasized products where the Company outsourced all sales and marketing obligations and some member management services. |
| Expected Duration IFP Units during the Three Months Ended March 31, |
| 2019 |
| 2018 |
| Change (%) |
| Owned eCommerce |
| 63,900 |
| 52,300 |
| 22 |
| % |
| Third-party eCommerce |
| 43,700 |
| 23,400 |
| 87 |
| % |
| Total eCommerce |
| 107,600 |
| 75,700 |
| 42 |
| % |
| All Other |
| 572,400 |
| 492,200 |
| 16 |
| % |
| Total (excl. Fulfillment only) |
| 680,000 |
| 567,900 |
| 20 |
| % |
| Fulfillment only (1) |
| 12,100 |
| 132,000 |
| (91 |
| )% |
| Total |
| 692,100 |
| 699,900 |
| (1 |
| % |
| (1) |
| Represents de-emphasized products where the Company outsourced all sales and marketing obligations and some member management services. |
| Submitted IFP Applications during the Three Months Ended March 31, |
| 2019 |
| 2018 |
| Change (%) |
| Third-party distribution |
| 63,000 |
| 59,700 |
| 6 |
| % |
| Owned distribution |
| 12,700 |
| 19,100 |
| (34 |
| ) |
| % |
| Total (excl. Fulfillment only) |
| 75,700 |
| 78,800 |
| (4 |
| ) |
| % |
| Fulfillment only (1) |
| 1,100 |
| 13,200 |
| (92 |
| ) |
| % |
| Total |
| 76,800 |
| 92,000 |
| (17 |
| ) |
| % |
| (1) |
| Represents de-emphasized products where the Company outsourced all sales and marketing obligations and some member management services. |
| Submitted IFP Applications during the Three Months Ended March 31, |
| 2019 |
| 2018 |
| Change (%) |
| Owned eCommerce |
| 9,600 |
| 16,400 |
| (41 |
| ) |
| % |
| Third-party eCommerce |
| 4,600 |
| 2,400 |
| 92 |
| % |
| Total eCommerce |
| 14,200 |
| 18,800 |
| (24 |
| ) |
| % |
| All Other |
| 61,500 |
| 60,000 |
| 3 |
| % |
| Total (excl. Fulfillment only) |
| 75,700 |
| 78,800 |
| (4 |
| ) |
| % |
| Fulfillment only (1) |
| 1,100 |
| 13,200 |
| (92 |
| ) |
| % |
| Total |
| 76,800 |
| 92,000 |
| (17 |
| ) |
| % |
| (1) |
| Represents de-emphasized products where the Company outsourced all sales and marketing obligations and some member management services. |
Constrained Lifetime Value of Revenue per Submitted Application
| Three Months Ended March 31, 2019 |
| Three Months Ended March 31, 2018 |
| Revenue per Submitted Application |
| # of Submitted Applications |
| Revenue per Submitted Application |
| # of Submitted Applications |
| Short Term Medical <12 months |
| $ |
| 367 |
| 10,700 |
| $ |
| 393 |
| 35,000 |
| Short Term Medical ?12 months |
| 993 |
| 29,700 |
| 585 |
| 300 |
| Total STM |
| 827 |
| 40,400 |
| 394 |
| 35,300 |
| Health Benefit Plans |
| 889 |
| 35,300 |
| 878 |
| 43,500 |
| Supplemental |
| 335 |
| 67,700 |
| 351 |
| 64,700 |
| Total (excl. Fulfillment only) |
| 610 |
| 143,400 |
| 521 |
| 143,500 |
| Policies in Force As of March 31, |
| 2019 |
| 2018 |
| Change (%) |
| IFP |
| 194,100 |
| 192,300 |
| 0.9 |
| % |
| Supplemental products |
| 178,800 |
| 190,900 |
| (6.3 |
| )% |
| Total |
| 372,900 |
| 383,200 |
| (2.7 |
| )% |
Adjusted SG&A
| Three Months Ended March 31, |
| 2019 |
| 2018 |
| Total SG&A |
| $ |
| 18,659 |
| $ |
| 16,213 |
| Less Stock-based compensation and related costs |
| 1,861 |
| 2,665 |
| Less Transaction costs |
| 273 |
| 56 |
| Less Indemnity and other related legal costs |
| 672 |
| 287 |
| Less Severance, restructuring and other charges |
| 3 |
| — |
| Adjusted SG&A |
| $ |
| 15,850 |
| $ |
| 13,205 |
| (1) |
| Adjusted SG&A is defined as total SG&A adjusted for stock-based compensation and related costs, transaction costs, indemnity and other related legal costs, severance, restructuring and other charges. |
Contacts:
Health Insurance Innovations, Inc.:
Michael Hershberger
Chief Financial Officer
(813) 397-1187
mhershberger@hiiq.com
Investor Contact:
Westwicke
Bob East
Jordan Kohnstam
Asher Dewhurst
(443) 213-0500
hiiq@westwicke.com