eHealth Inc.EHTH

Morningstar Rating

Stock Research and Analysis

by Patrick Dunn

EHealth is the leading online marketer of health insurance, but its attractive growth story has been curtailed by slower-than-expected revenue growth and the uncertainty surrounding proposed health-care reform.

EHealth simplifies the purchasing of Read more

Bulls Say

EHealth is the largest online health insurance vendor of its kind, providing more insurance options to its customers than its competitors.

Of the roughly 50 million people in the U.S. with no insurance, around 17 million (43%) earn $50,000 or more, which points to a large untapped market of uninsured individuals with the financial wherewithal to obtain health insurance using sources like eHealth.

Barriers to entry should help mitigate the threat of competition.

EHealth's attempts to diversify its revenue base by selling advertising space on its Web site has shown initial success, with advertising revenue increasing 24% in 2008. Read more

Bears Say

If a national health insurance exchange similar to that of Massachusetts' Connector is created, eHealth could lose a substantial amount of business.

Current revenue is highly concentrated among three of eHealth's insurance carriers. If eHealth loses a couple of these larger carriers, the company could suffer from a loss in consumer confidence.

Health insurance is a highly regulated industry, and eHealth must contend with state-specific regulatory changes.

The perception that health insurance requires a human touch still pervades much of eHealth's potential market. Read more

Strategy

EHealth's strategy is to increase its brand awareness and Web site traffic through direct marketing and advertising initiatives. In doing so, it hopes to attract more insurance carriers, thus enhancing Read more

Management

EHealth has earned good marks for its corporate-governance profile. We were pleased to see the percentage of CEO Gary Lauer's salary that is incentive-based has increased in the two years since the company went public. However, we would prefer if the Read more

Profile

Founded in 1997, eHealth is a leader in the online marketing of health insurance. EHealth's Web platforms allow individuals, families, and small businesses to search, compare, Read more

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