Ehealth continues to lead the insurance enrollment market but in the wrong direction

Ehealth (EHTH) is in the news again since my last blog post on this company on January 5. The company announced losses  in the range of $(0.13) to $(0.04), per diluted share compared to earlier expectation of non-GAAP net income of $0.30 to $0.43 per diluted share. Even more telling is that the stock price fluctuated from $8.88-$63.32 over the past year.  The current price is $9.68 and at least one insider is buying shares (a common strategy by insider shareholders to stabilize share price in a collapsing market).

I follow Ehealth in order to try to better understand the health insurance enrollment market. At one time, may years ago, my company MedSave and Ehealth were competitors in the online health insurance exchange field. Then they went public and built the current $170 million company while I exited the business at relatively little value. In recent years the Freedom Benefits insurance exchange has found it difficult to find a solid niche to sustain growth and even my latest health insurance project OnlineNavigator has not attracted enrollment industry interest.

I conclude that this is a difficult field to earn a profit regardless of whether you have $170 million or less than $1 million. The best strategy may be to “tread water” and wait for the next round in health insurance reform laws. The latest news seems to indicate that the federal government is embracing the concept of privately sold supplemental insurance that will pay for the bulk of routine care excluded by Medicare, Medicaid and federally subsidized policies sold on the state insurance exchanges.