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  "documentTitle": "eHealth Inc. (EHTH)",
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  "authorName": "Carson Block",
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      "text": "Combining our estimates of cash collections per paying member per year with estimated member churn yields a nine-year payback period for EHTH’s booked revenues.",
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      "text": "churn rate: 33.4%",
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      "text": "subject to full commission claw backs, which we also account for. Commissions relating to Years Two, Three, and beyond of a member's plan life are equal to each other, so we split the remainder of the $1,089 unconstrained LTV evenly between Years Two and Three of the average customer life. This yields $327 in cash collections per remaining member for each year after Year One.",
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      "text": "Combining our estimates of cash collections per paying member per year with estimated member churn yields a nine-year payback period for EHTH's booked revenues. Such a repayment horizon stretches significantly beyond what the company's three-year average life estimate suggests to investors, which, in our view, highlights the aggressive assumptions of EHTH's revenue recognition.",
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      "text": "Per the company's disclosures, only a fraction of members remains by the end of Year Three, which slows the pace of gross cash inflows relative to the three-year average MA life. To arrive at a company-favorable churn estimate, we use EHTH figures. First, we suppose 7% of approved applicants do not ever become paying members. Then, we use EHTH's stated yearly churns to derive the proportion of MA members leaving the platform each month. Although we believe both the numerator and denominator of the company's churn calculation are aggressive (see our April 8, 2020 report), we use these numbers in the absence of more accurate disclosures from the company. Translating our month-over-month churn assumptions into annual churn along the lines of the company's presentation, our estimates remain comparable.",
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      "text": "EHTH generates cash corresponding to its tail revenue only from members who still remain in Year Ten onward. We forecast 24 years of total life for the cohort, which is company-favorable, given the average 65-year-old American can expect to live an additional 19.2 years. Even under these generous assumptions, tail revenue cash collections only amount to $227 per member, or 22.4% of the initial receivable booked. To the extent that actual churn is higher than what EHTH forecasts, cash collections will struggle to match booked tail revenues.",
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      "text": "2 EHTH Investor Relations representative, March 2020\n3 EHTH computes churn as a percentage of the company-defined metric Initial Paying Members, and it bases its calculations on its own estimates in addition to historical data. Source: EHTH Q4 2019 Earnings Call Presentation, p. 14\n4 https://www.ssa.gov/oact/STATS/table4c6.html",
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      "text": "Modeled EHTH Member Churn table showing Month-Over-Month, Annual, and EHTH Stated Churn across 6 time periods.",
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