EHTH
#<UNK>, could you repeat that question.
The only thing that we've revamped is Medicare.com, which is a property that we purchased, gosh, I don't know, year-and-a-half, two years ago.
But our traffic, our volumes everything continued to increase.
I mean, my gosh, if you look at Medicare advantage applications growth of 140% there is evidence of it right there.
So we're seeing it increase because of our own efforts, both internally as well as through partners, and probably most importantly you've just got organic growth happening in the marketplaces as more and more Americans are turning 65 years of age so the demographics are very favorable there as well.
Well it's a mix.
Certainly having United back into the business ---+ in the first open enrollment period United essentially didn't participate.
Then they came into more stakes last year and more this year, that's good.
United has got good products.
We've always been a big seller of United products, so that's good for us.
Right across the market premiums continue to increase.
We see it in the survey, work that we do with our own member base and the applications that we get.
We see it in an independent study work that's done outside and that's published.
And it's good and it's not good.
I mean you could ---+ the economics maybe are good for us because what we are paid is a percentage of premiums.
As those premiums go up, the absolute dollars we earn are more.
But that's very much offset by the fact that if these premiums continue to go up, these products become less and less affordable to people and we don't like that.
We want these products to be affordable and attainable for people to be able to get to them and to want them to enroll in them.
And there has been a lot written about this recently that even with subsidies this is getting to be very expensive for people.
Eye for one hope that the pricing inflation stabilizes.
Well, it's an interesting question.
If fact there was an article about this in the Wall Street Journal yesterday on the ---+ actual just on the inside of the cover of the second page.
I can't say we've had a lot of experience with that at this point.
We're certainly very focused on retention with all of the individuals and members that we have on our base.
That's one of the things that we're looking at.
Because we didn't have a lot of good connectivity early on, we still don't have a large portion of our member base being subsidy eligible although that portion is certainly growing.
But we're going to have to see what it looks like in this open enrollment period with retention and different reasons why people may be switching plans or reaffirming their subsidy eligibility and so on and these are all questions that remain to be addressed and answered.
We think we've got a pretty good handle on all of this, but we'll see once we get into this.
So, yes, I think you do raise an interesting point there, which is many people who may have the subsidy eligible but for various reasons can't keep the subsidy.
<UNK>, do you have that handy.
Let's see.
I don't have it right at my finger tips.
Give me just one sec.
You may just dump this on this one.
I think it was close to 50% growth in Q2, if I remember correctly, yes.
Yes, Q1 was about 35% and then it stepped up to about 50% last quarter.
So, yes, we have seen some acceleration there.
Well, we think that we're just a blip in the market right now in terms of what's available.
You've got about 47 million Medicare beneficiaries across the country today.
As to me, that's going to grow to 65 million to 70 million over the next several years as people ageing and life expectancies are longer.
You've got some place around 20% of these beneficiaries are Medicare advantaged, but that number is growing.
So we feel really optimistic about what we can do here.
We think that the market opportunity is very, very large.
We're a small piece of it right now, very small, but growing very fast into it.
We're just 4% or 5% of this market, which we have been in the individual business.
This Medicare business is a very, very significant business for us, multi ---+ hundreds of million dollars of revenue and really good EBITDA at some point if all of that continues and that's what we're focused on.
So it's one of the reasons why we are investing in this ---+ the way we have been over the last several years.
We've seen what the market demographics look like.
We've seen ---+ we see what the retention is on these products, what the unit economics are, it's just very, very compelling to us.
Go ahead please.
Yes, actually I want to clarify that, about a third of our applications in the third quarter were QHPs and they don't all necessarily matriculate into being members, about a third of the applications.
And <UNK> ---+ certainly a year ago it was less, I don't have that handy.
Yes, I mean, if you go back to ---+ I mean, Q3 a year ago was just a trace.
I think it was just a very small percentage.
We really didn't step up to these higher percentages until about last OEP.
Yes, we really didn't have connectivity that worked effectively till the end of this last open enrollment period.
So when you look back a year, two years ago there wasn't much opportunity to enroll subsidy-eligible individuals unfortunately.
We were very vocal about that but here we are today now at least to this moment we are able to.
<UNK> <UNK>, Jefferies.
You've really asked the $64,000 question which none of us have the answer to.
We like the others were surprised to see the projections from the Federal Government being as well as they are for enrollment in this upcoming open enrollment period.
What they are projecting is having a year for now about 1 million more lives than that exist today through the government exchanges.
If you would have asked us a year ago, we will be thinking a lot more than that.
So sure that influences us.
No, this is not a run-down or a run-out business at all.
What we've decided to do because of the competitive nature of all the government spending, at least what we've seen, that the economics didn't make a whole lot of sense for us to chase that market the way that we have.
It's a very profitable business for us.
We want to do everything we can to maintain that profitability.
You've just seen that in this quarter right here.
And the final point which this is a really good stable business, but I think it's probably very clear at this point, the growth driver in our Company is we're moving right now is Medicare, and that's a very exciting place for us to be.
The individual business is a great business for us, it's just a much different dynamic in this market today than it was a few years ago before the Affordable Care Act really kicked in the gear.
What it looks like a year or two from now, your guess is probably as good as ours.
So we're just trying to be very, very careful and thoughtful about how we go about business in that part of the market.
And we are all in on Medicare.
I mean, we are pushing Medicare as fast and as hard as we can.
I think I'd just add a little color on that.
You mentioned churn at the outset.
These are always estimates because we're always looking back on a lag on these numbers, but they have been so far this year in line with what we were expecting and we had been expecting basically what we saw a year ago.
So we're not seeing acceleration of churn, we're seeing things kind of in line with what we saw a year ago.
No, I think it's hard to predict.
As we're talking about here on this call there's a lot of uncertainty about how many shoppers are going to be out into the marketplace in this upcoming season.
So, I think it would be tougher for me to tell you exactly what we're thinking.
We certainly scale back our customer care center year over year versus a year ago where we were and so far we've been spending a little less from a budget standpoint.
And so we're kind of commenting based on sort of our initial view coming into it in terms of marketing budgets and customer care resources.
But as you know in that business we can scale up very rapidly if the cost of acquisition is favorable.
We can ---+ more than 80% of customers come through the website without assistance and so that's something we can rapidly shift if we need to.
And let me give you a little more insight into how we're looking at this part of the business.
We're looking at ---+ we're really looking at the Company holistically and we're thinking about revenue in total and EBITDA and cash flow generation and so on.
And today the Medicare business is not a profitable business because we're investing so heavily and so aggressively on it, and we are really good with that because we've still got a lot of really good profit coming out of the individual business that allows us to do that and we think it still delivers some pretty good financial results as we saw in this quarter.
One of the things that's happening in this individual business and we've noted this is that our estimates of the commissions that we're earning are up and they went up fairly significantly.
And so what we look at here is not so much even applications in the member base but the revenue and the profit that falls out of that.
So you've got the commissions up fairly significantly.
You can afford to have the applications and the membership down and you can absorb a lot of that.
And frankly that's what we've been doing and that's what we're looking at in this open enrollment period into the next year as well and that's allowing us to just really go in the way we are at Medicare And also just to further comment on the churn, as <UNK> said, those churn numbers or the attrition are pretty much in line with what we expected.
Remember because we're outside of the open enrollment period, you're going to have natural attrition.
It's happening on the government exchanges, it happens with us.
And there's really no means to replace them because you can't go out and get the kind of application flow that we used to be able to do historically before you had these open enrollment periods.
Yes, absolutely.
We're finding that search engine marketing which we pay for is working for us.
And when I say working, the economics are favorable.
We've a cost of acquisition that's acceptable.
We've got a number of partnerships.
CVS, the retail pharmacy chain for example and others that generate demand for us and those are a bit more mature than they were previously.
We've got a full slate of products now from all the major brand name carriers.
So that makes it a more attractive place for a consumer to come and help through improved conversions.
We're doing some work in broadcast media that's been very interesting for us and we're really enthused about what we're seeing there.
There is word of mouth, we know that, because we hear about it anecdotally.
Our property Medicare.com is a place that people just ---+ individuals naturally just key in and come to us.
So it's a combination of all of those things.
And this is not unlike how we grew our individual business several years ago, except the growth rates we're seeing here are ---+ frankly are bigger than we had during that individual business.
We know a lot about online marketing to do this and we've got some really good technology assets that help with conversion.
I think the other thing we should point out is, one of the reasons that our cost of acquisition continues to be so favorable is that we're converting at a really good rate.
So we've done a lot of work there as well.
So it's all of those things.
I'll take a crack at it and <UNK> maybe wants to comment as well.
Historically we've been, I think, fairly aggressive about returning some of this to shareholders through share repurchase.
In fact we've repurchased $250 million worth of our stock over the last several years.
We don't have a stock repurchase program in place today but that's one thing that we could do.
As we look at the Medicare business, frankly we'd like to be acquisitive at places where it would really make sense where we could generate even more demand and have more conversion and fulfillment.
So we think about all of those things.
We like the cash position we're in.
Frankly it's a better cash position than we thought we'd be in at this point and we'll be reviewing and thinking about all those things.
Hey, <UNK>, let me qualify ---+ so thank you for the questions.
Let me qualify my blip comment.
I should have been more specific.
We are a blip in terms of market share right now.
I don't think we're a blip in terms of our presence in the market.
And I think that our growth rates are telling us that, especially what we're seeing coming to us organically word of mouth.
And I like the fact that we're a blip from a market share standpoint because that indicates we have so much runway that we think in front of us right now that is so attractive to us.
And you're right, there aren't a whole lot out there doing what we do.
It's highly regulated by CMS.
You've got to gain the trust and the confidence of the carriers.
There's a lot of compliance all of it should be because it's a very important market and a lot of money is spent on it by government.
So we understand all of that.
We're very attentive to it.
But we think that the limitations for us are probably more execution oriented than anything else.
How much can we spend, how can we continue to spend effectively, how can we ensure that we've got the right resources in place to convert the demand as we bring it in and so far so good on that.
But you can probably sense we are really excited about this marketplace and what we see here is one of the better-looking market opportunities I have ever seen.
It's hard for me to comment on their marketing strategy and so on.
They've always sold directly into the markets, in both the individual market and the Medicare market.
I'm sure they will continue to do that.
It's not unusual to see some of the brand name carriers with the television commercials and so on and that's all fine.
That may work for them.
We've got activities and strategies and we think some really good knowledge inside the Company that works really well for us in terms of very efficient marketing that can scale.
And this business at this point for us is all about scale, it's about volume and getting as much of leverage on that as we possibly can and we think we've got some pretty efficient ways to go about that.
Well, we would hope so.
I think we've made that comment in the last earnings call if my memory is right.
And again we want to get through this annual enrollment period and the open enrollment period.
We need to have some stability, we want to ---+ we provide guidance it's been always done historically, we've done it the way that we understood the market projections and we would like to think our guidance was pretty accurate and we need to have kind of a basis from which we can do that and that's what we're ---+ we'll see if we have that after these enrollment periods that we're in.
Thank you.
I'd just like to thank everybody for your time and look forward to talking with many of you as well.
Thanks again.
