{
  "docId": "019dd923-622c-750b-8b97-0bf66d39ad6e",
  "docSlug": "b4cdf04ed0fb",
  "documentTitle": "eHealth Inc. (EHTH)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson Block",
  "documentKindSlug": "research-note",
  "documentKindLabel": "Research note",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2020-04-08 00:00:00",
  "orientation": "portrait",
  "aspectRatio": 0.77272725,
  "pageNumber": 9,
  "pageCount": 15,
  "prevPage": 8,
  "nextPage": 10,
  "slideType": "expose_contradiction",
  "function": "expose_contradiction",
  "density": "dense",
  "nDataPoints": 48,
  "notes": "Includes a detailed table of membership metrics and a critique of the churn formula.",
  "elementsJson": [
    "headline_text",
    "data_table",
    "paragraph",
    "footnote"
  ],
  "metadataConfidence": 1,
  "imagePath": null,
  "slideHref": "/slides/019dd923-622c-750b-8b97-0bf66d39ad6e/9",
  "deckHref": "/decks/019dd923-622c-750b-8b97-0bf66d39ad6e",
  "deckJsonHref": "/decks/019dd923-622c-750b-8b97-0bf66d39ad6e.json",
  "deckAnchorHref": "/decks/019dd923-622c-750b-8b97-0bf66d39ad6e#slide-9",
  "components": [
    {
      "bbox": null,
      "kind": "callout",
      "text": "EHTH uses a misleading large customer pool as the denominator. The company adds New Paying Members to Estimated Members, which does not make sense, as it ignores the customers dropping out over the course of the quarter.",
      "attrs": null,
      "subkind": null,
      "toolName": "Visual emphasis",
      "toolSlug": "visual-emphasis",
      "confidence": null,
      "componentId": "019dd953-25b7-709e-b8bc-aa854cd14330",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "metric",
      "text": "Trailing Twelve Month Member Turnover Rate: 34%",
      "attrs": null,
      "subkind": "primary",
      "toolName": "Quantification",
      "toolSlug": "quantification",
      "confidence": null,
      "componentId": "019dd953-25b7-709e-b8bc-afe7b14a4cb2",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.05,
        "w": 0.75,
        "x": 0.12,
        "y": 0.86
      },
      "kind": "paragraph",
      "text": "Against a constrained MA LTV of $728, we apply total costs of $863 to arrive at a 2019 per member loss of -$135.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "134a149c-9656-417a-a247-eaf45501a5a6",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.1,
        "w": 0.75,
        "x": 0.12,
        "y": 0.35
      },
      "kind": "paragraph",
      "text": "EHTH also aggressively states the numerator. EHTH defines churn as follows: Initial Estimated Members + New Paying Members (Est.) - Final Estimated Members / Average TTM Estimated Members + New Paying Members (Est.)",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "1f31499c-b171-4c3a-b580-f81608798e69",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.15,
        "w": 0.75,
        "x": 0.12,
        "y": 0.58
      },
      "kind": "paragraph",
      "text": "EHTH uses a misleadingly large customer pool as the denominator. The company adds New Paying Members to Estimated Members, which does not make sense, as it ignores the customers dropping out over the course of the quarter.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "491d7a49-c5b1-4c1c-bac9-3825449311e0",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.1,
        "w": 0.75,
        "x": 0.12,
        "y": 0.45
      },
      "kind": "paragraph",
      "text": "The numerator EHTH uses to calculate churn, in our view, is aggressive. EHTH is double-dipping by constraining the model for applicants who it estimates do not turn into paying members.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "f555bfad-1476-4b9b-a76f-fbd41baec380",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.15,
        "w": 0.65,
        "x": 0.12,
        "y": 0.16
      },
      "kind": "table",
      "text": "Table showing membership metrics from Q4 18 to Q3 19",
      "attrs": null,
      "subkind": "data",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "ecf5e27a-32b5-4e74-ba91-685fa7506a97",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.03,
        "w": 0.4,
        "x": 0.12,
        "y": 0.82
      },
      "kind": "title",
      "text": "Costs That Make MA Members Unprofitable",
      "attrs": null,
      "subkind": "headline",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "2c94b0b6-d510-487a-856b-375df27369bc",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.04,
        "w": 0.45,
        "x": 0.12,
        "y": 0.09
      },
      "kind": "title",
      "text": "Medicare Advantage Plan Member Turnover Trend Since Q4 2018",
      "attrs": null,
      "subkind": "headline",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "ddcd439b-ee49-449e-ac11-866ac28b5662",
      "frameworkName": null,
      "frameworkSlug": null
    }
  ],
  "metrics": [],
  "tools": [],
  "frameworks": [
    {
      "name": "fraud-exposure",
      "slug": null,
      "matchId": "7c84452b-ebeb-45e6-bc79-9d959d8a1aa5",
      "evidence": "Critique of accounting methodology and churn calculation",
      "confidence": 0.9
    }
  ],
  "arcBeats": [
    {
      "to": 11,
      "from": 8,
      "beatId": "28e1c45d-1e7d-4f4d-9e61-ac306c4fa834",
      "arcName": "Overcoming the Monster",
      "arcSlug": "overcoming-monster",
      "beatName": "Exposure of EHTH's Contradictions",
      "beatSlug": null,
      "evidence": "The report exposes contradictions in EHTH's business practices, including its deliberate obscuring of increasing churn rates",
      "position": 2,
      "confidence": 0.8,
      "parentBeatName": null,
      "parentBeatSlug": null
    },
    {
      "to": 12,
      "from": 5,
      "beatId": "5ed51a1a-9643-40ed-92f6-32d4381549ae",
      "arcName": "Overcoming the Monster",
      "arcSlug": "overcoming-monster",
      "beatName": "Appendix with Data",
      "beatSlug": null,
      "evidence": "The report includes tables and data to support its claims, including churn rates and financial data",
      "position": 3,
      "confidence": 0.8,
      "parentBeatName": null,
      "parentBeatSlug": null
    }
  ],
  "loops": [
    {
      "to": 11,
      "from": 8,
      "name": "Iceberg",
      "slug": "10-iceberg",
      "bestFor": "Consulting, complex problem solving, organizational change",
      "matchId": "38a6f789-a22a-4dbe-9534-a7c98a2ea885",
      "evidence": "The report exposes contradictions in EHTH's business practices, revealing the iceberg beneath the surface",
      "position": 1,
      "objective": "What are the implications of EHTH's contradictions?",
      "structure": "The Symptom (Visible) -> The System (Hidden) -> The Root Cause",
      "confidence": 0.7,
      "description": "Reveal that the visible problem is merely a symptom of a deeper root cause"
    }
  ],
  "imagePathAlt": null,
  "thumbSrc": null,
  "thumbSrcAlt": null,
  "locked": true
}