TAMPA, Fla., Dec. 20, 2018 (GLOBE NEWSWIRE) — 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