eHealth Inc (EHTH) 2013 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q3 2013 eHealth, Inc. earnings conference call. My name is Ridley and I'll be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this call is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Ms. Kate Sidorovich, Vice President of Investor Relations. Please proceed.

Thank you. Good afternoon, and thank you all for joining us today either by phone or by webcast for a discussion [about eHealth, Inc.'s] third quarter 2013 financial results. On the call this afternoon, we will have Gary Lauer, eHealth's Chief Executive Officer; and Stuart Huizinga, eHealth's Chief Financial Officer. After management completes its remarks, we will open the line for questions. As a reminder, today's conference call is being recorded and webcast from the IR section of our website. A replay of the call will be available on our website following the call.

We will be making forward-looking statements on this call that includes statements regarding future events, beliefs and expectations, including those related to future conversion rates, our belief that user activity on our side is a good validation of our daily proposition, our ability to provide access to subsidy-eligible plans and the timing thereof, the number of uninsured entering the individual market and the timing of entry, future commission from commission rates, Medicare product sales in the fourth quarter, our ability to help employers and benefit administrators to take advantage of trends we believe to be occurring in the marketplace, our provision of solutions to corporate retiree program beneficiaries; our planned integration of TurboTax and availability of our platform to TurboTax users, and the number of anticipated TurboTax users; CVS offering our platform to its customers, our expectations regarding our relationships with Intuit and CVS, trends in health insurance market moving towards a more consumer-centric digital model and the pace of those trends; projected expansion of the individual insurance market and then increase in online sales; our belief that Medicare will be [key role] driver, expectations regarding IP applications growth and the timing of such growth and the anticipated impact on the expenses; and finally, our guidance for the full-year 2013.

These forward-looking statements are based on management's current expectations and assumptions that are subject to various risks and uncertainties, that could cause actual results to differ materially from those set forth in such forward-looking statements, including risks associated with the direct and indirect impact of healthcare reform in our business, political opposition to the Affordable Care Act, our ability to manage and maintain our strategic relationships, our ability to maintain our relationships with and to expand our product selection from health insurance carriers, our preparation for and ability to manage operational demands from our Medicare business, and our participation and ability to sell individual health insurance products through government exchanges.

Other factors that could cause operating, financial, and other results to differ are described in eHealth's most recent quarterly report on Form 10-Q or annual report on Form 10-K filed with the Securities and Exchange Commission.

Forward-looking statements on this call represent eHealth's views as of today. You should not rely on these statements as representing our views in the future. We undertake no obligation or duty to update information contained in these forward-looking statements, whether as a result of new information, future events, or otherwise.

We will be presenting certain financial measures on this call that will be considered non-GAAP under SEC Regulation G. For reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure, please refer to the information included in our press release and in our SEC filings, which can be found in the About Us section of our corporate website, under the heading Investor Relations.

And at this point, I will turn the call over to Gary Lauer.

Thanks, Kate; and good afternoon, everyone; and thank you for joining us as we review our third quarter 2013 results. During the quarter, we made preparations for the historic launch of the Affordable Care Act, which began enrollment implementation on October 1 and is scheduled to run through the end of March 2014. In addition, we are prepping for this year's Medicare annual enrollment period which kicks off just last week on October 15 and ends on December 7.

What I plan to do today is summarize our financial results for the third quarter; talk about our Individual and Family Plan business, including our initial observations from the open enrollment period; discuss our Medicare business and how we are positioned for this year's selling season; and finally, review some of our new strategic initiatives, including our private exchange activities and recent partnerships.

Third quarter revenues were $42 million, a 12% increase as compared to the third quarter of 2012. GAAP earnings per share was $0.01. EBITDA was $3.6 million and cash flow from operations was $8.7 million. At the end of the quarter, we had $98 million in cash on the balance sheet, and no debt.

Third quarter Individual & Family Plan submitted applications grew 3%, compared to the third quarter of 2012, reflecting a slowdown in consumer purchasing towards the end of the quarter in anticipation of the Affordable Care Act launch. At the same time, our conversion rates continue to improve, with new Individual & Family Plan members growing at a 13% year-over-year growth rate, well ahead of submitted application growth. We believe that this trend with conversion rates is likely to continue, as the guaranteed issue provision of the Affordable Care Act comes into effect for policies effective January 1, 2014.

As the open enrollment period began on October 1, eHealth was opened for business with a large inventory of mandate-qualifying plans. While many of the government exchanges reported technology difficulties, eHealth continues to offer a high-quality consumer experience. On the first day of the open enrollment period or the OEP, we observed a significant increase in traffic to our site and submitted applications, and application growth continues to be strong quarter-to-date. While it is premature to extrapolate the rest of the quarter from these first weeks of the OEP, we do believe that our early experience is a good validation of eHealth's value proposition in this new market environment.

We continue to work with the Federal Government to launch enrollment capabilities for subsidy-eligible individuals in 36 states where the federal government is operating an exchange. eHealth has received necessary information for the implementation of this capability from the Centers for Medicaid and Medicare Services, which is the federal agency responsible for operating the federal exchange, but we received this later than anticipated, and we are currently in the process of integrating and testing. Assuming the federal exchange is operable, we hope to be able to provide eHealth consumers access to subsidy-eligible plans during this open enrollment period in time for the January 1, 2014 effective date of coverage.

The net impact of the changes that we've seen so far with our broker commission rates in the Individual and Family Plan market is neutral to positive. It also appears that carriers are willing to pay similar commissions on their exchange-listed, subsidy-eligible products, as they do on plans offered outside of the exchanges. Stuart will provide you with more detailed information on our commission rates later during the call, but we definitely view this as a positive development. It makes the incremental opportunity with millions of uninsured who are expected to enter the individual market over the next two years to three years even more compelling.

Now, I'd like to make some comments about our Medicare business. The number of total Medicare products sold during the quarter grew 14%, while the number of estimated total revenue-generating Medicare members that we had at the end of the quarter grew 76% year-over-year. Third quarter 2013 Medicare revenue was $6.7 million, representing a 7% year-over-year growth rate, while Medicare commission revenues grew 33% on the same basis. The midpoint of our 2013 revenue guidance implies meaningfully higher annual growth in Medicare revenues than what we reported during the third quarter.

And as a reminder, I'd like to note that second and third quarters are typically or seasonally typically low in terms of Medicare enrollments and recognized revenues. With the majority of product sales taking place during the annual enrollment period in the fourth quarter, which we're in the middle of or just begun.

eHealth entered this year's annual enrollment period with a significantly broader inventory plans compared to 2012. Currently, we are offering Medicare plans from Humana, Aetna, WellPoint, Cigna HealthSpring, Coventry, HealthNet, Fallon, Blue Cross/Blue Shield Carriers in Illinois, Michigan, New Mexico, Texas, Oklahoma, and others. Most notably, just in time for this annual enrollment period, we added to our platform products from UnitedHealthcare, one of the leading Medicare carriers in the marketplace. We believe that the expanded selection of quality, well-recognized brands could have a positive impact on our conversion rates during this selling season, which typically translates into stronger revenues and more attractive member economics. It is early in the annual enrollment period, but we are pleased with the activity that we're seeing thus far.

Finally, I'd like to highlight a number of significant strategic partnerships and initiatives that we have underway. First, over the past year, we've been making investments to build our eCommerce platform to support private exchanges. We're very enthused about this opportunity, as there is strong interest from a variety of partners and corporate employers to work with us. What we've seen in the past few months is more employers beginning to move toward a defined-contribution, multi-carrier model of providing health coverage to their workforce, and away from the traditional defined benefit model of a single-carrier environment.

We believe that eHealth's online marketplace technology along with our consumer e-commerce expertise position us well to support employers and benefit administrators taking advantage of this trend while offering a robust, user-friendly experience to employees. And our partnership with Aon recently announced is an example of our entry into the private exchange market. Just two days ago, we announced that eHealth will begin providing solutions for corporate retiree program beneficiaries, offering them access to a broad selection of Medicare and pre-Medicare health insurance choices through an e-commerce platform and a world-class telephonic support from licensed agents.

Our first partnership in this space is with Empyrean, an HR technology and services company administering employee benefits for over 100 companies and a million individuals. As a result of this partnership, Empyrean's client, Sabre Holdings, a well-known global travel technology company, will begin referring retirees to a co-branded eHealth website where they can purchase individual Medicare insurance plans. We are also expanding our platform functionality to offer full-time employee platforms for medium and large-size employers.

We're very excited about our partnership with Intuit, the maker of TurboTax. Through a planned integration, eHealth's platform is expected to be made available to many of the 25 million people projected to use TurboTax in 2014. TurboTax users will be able to enroll in major medical health insurance as well as Medicare plans on our platform. And a significant development in our Pharmacy partner network in the Medicare business, eHealth signed an important agreement with CVS, pursuant to which CVS plans to offer our Medicare plan comparison platform to its customers. Individuals will be able access our plan comparison service online at cvs.com or through a consultation with their CVS pharmacist. This partnership combines the trusted CVS brand with our powerful plan comparison technology which can save seniors hundreds of dollars annually and out-of-pockets prescription drug costs. We believe that the CVS relationship could be a meaningful demand generator during this Medicare Annual Enrollment Period.

We also provide our Medicare plan comparison platform to customers of Rite Aid, Costco, and Kroger. So as you can see, we're in the midst of a very important time for eHealth and really the health insurance industry in general. We've been talking for a while now about the health insurance market moving toward a more consumer-centric digital model. I believe that this trend is now accelerating, with the introduction of online government exchanges and several high-profile announcements from large employers that are deploying private exchanges for their workers.

The individual market is projected to expand by billions of lives over the next few years and we believe that more and more sales will originate online. We see ourselves well-positioned to take advantage of these trends facing an opportunity to capture a large share of these new individuals coming into our market. We also continue to be very excited about the Medicare opportunity and see it is one of the key growth drivers for the Company's revenues and earnings over the next several years. We started this Medicare selling season with what we believe is a better-staffed customer care center, a much-enhanced product selection, and a new partnership with one of the largest pharmacy chains in the country.

And with that, I'd like to turn the call over to Stuart Huizinga who will provide more detail on our financial performance. Stuart?

Thanks, Gary; and good afternoon, everyone. Our third quarter results reflected continued membership and revenue growth, combined with the seasonal increase in Medicare related spend ahead of this year's Medicare Annual Enrollment Period. And our ongoing technology investment in preparation for the first ever Open Enrollment Period under the Affordable Care Act. As you know, both enrollment periods are taking place in the fourth quarter this year, which are quite significant preparatory work on our part in Q2 and Q3.

Our third quarter 2013 revenue was $42 million, representing 12% annual growth. Commission revenue for the quarter was $36 million or 15% annual growth. Our Individual and Family Plan commission revenue grew by 8% or $1.9 million compared to Q3 2012 and our Medicare commission revenue grew by 33% year-over-year. Commission revenue from ancillary products increased over 70% on the same basis. Other revenue, which includes sponsorship, eCommerce On-Demand and non-commissioned Medicare revenue was $6 million, or a 5% decline compared to the third quarter a year ago. The year-over-year decline was driven primarily by the timing of the advertising component of our Medicare revenues.

Our total estimated membership at the end of the quarter was approximately 1,147,000, which represents 24% growth over estimated membership reported at the end of the third quarter of 2012. The estimated number of revenue-generating Individual & Family Plan members was up 10%, another sequential step-up in this metric. While the estimated number of other members increased 67%, driven by the increase in our Medicare and ancillary product customer bases over the past 12 months.

As Gary mentioned, we saw some softening in the purchasing of our Individual and Family major medical products towards the end of the third quarter. IFP-submitted application volume was up 3% for the quarter year-over-year. Similar to the prior two quarters, our IFP-approved member growth was much stronger than our submitted application growth. Approved IP members grew 13%, compared to Q3 2012, reflecting continued improvement in conversion rates from submitted to approved applications on our platform.

Now, I'd like to review our operating expenses for the quarter. Excluding stock-based compensation and the amortization of acquired intangibles, our non-GAAP operating expenses increased in absolute terms but remained flat as a percentage of revenues, relative to the comparable period a year ago. A significant year-over-year increase in our technology and content spend during the third quarter was offset by lower marketing and advertising, and customer and care enrollment expenses as a percentage of revenues.

Third quarter 2013 non-GAAP marketing and advertising expense, which excludes stock-based compensation expense was 34% of revenue, compared to 36% in the third quarter of last year. This year-over-year decline was due primarily to a significantly the growth rate in our Individual & Family Plan submitted applications, compared to our revenue growth during the quarter. As a reminder, our marketing costs are largely variable, and are directly tied to the application volume each quarter.

We also saw positive shift in our customer acquisition channel mix in the IFP business. Our direct channel, which is characterized by more favorable cost of acquisition per submitted member compared to paid search and marketing partner channels, generated 51% of all IP applications submitted during the quarter. This is the highest historical percentage contribution by this channel. Finally, we continue to benefit from better conversion rates from submitted to approve applications on our platform.

As we entered the fourth quarter, we saw strong spike in submitted -- Individual & Family Plan application coinciding with the beginning of the open enrollment period under the Affordable Care Act. Based on our experience with Medicare annual enrollment period, we might experience another significant pickup in Individual & Family Plan application towards the end of Q4. The deadline to apply for a planned effective January 1, 2014, which would impact marketing and advertising expense for the fourth quarter.

Non-GAAP customer care and enrollment expense, which excludes stock-based compensation expense, was 21% of revenue, down from 23% of revenue in Q3 2012. This year-over-year decrease is partially due to our decision to start hiring Medicare agents earlier in the year, compared to 2012. As a result, there was a timing shift of costs related to hiring agents and getting them licensed from Q3 to Q2 this year.

Third quarter 2013 non-GAAP tech and content expenses, which exclude stock-based compensation expense was 21% of revenue, up from 14% of revenue in Q3 2012. As we shared in our prior earnings calls, this meaningful increase in technology expense was part of a planned investment in making necessary updates to our platform in preparation for the first open enrollment period under the Affordable Care Act, enhancing our user experience, building out our private exchange capabilities, and complying with security and technology requirements in connection with our entering into agreement with the federal government to act as a web-based entity under the Affordable Care Act.

Non-GAAP general and administrative expense, excluding stock-based compensation and the amortization of acquired intangibles, remained flat as a percentage of revenue at 16%. Third quarter non-GAAP operating income, excluding stock-based compensation and the amortization of acquired intangibles, was 6% of revenue or $2.7 million in Q3 of 2013, compared to $2.8 million or 7% of revenue in Q3 last year. EBITDA for the third quarter of 2013 increased to $3.6 million, up from $3.4 million for the third quarter of 2012. Third quarter 2013 GAAP earnings per share were $0.01, same as in Q3 of 2012. Third quarter non-GAAP EPS, which excludes the impact of the amortization of acquired intangibles, stock-based compensation, and related income tax benefit, was $0.08. Our cash flow from operations was $8.7 million compared to $6.9 million in the third quarter of 2012.

Capital expenditures for the third quarter were approximately $2.9 million. As of September 30, 2013, our cash and marketable securities balance was $98 million compared to $90 million at the end of the second quarter of 2013. Finally, I'd like to comment on what we have seen with our broker commission rates for next year. In our Individual and Family Plan business, we've received rate schedules applicable to plans for 2014 coverage from approximately 60% of our carrier partners based on commission revenue volumes.

We project that the new commission rates, which have been communicated to us so far, imply flat to slightly higher commission dollars per average policy, regardless of whether such policies are subsidy eligible or not. Importantly, this projection represents the impact assuming average policy premiums remain constant. We arrived at this estimated impact by applying the changes in both the first year and renewal year commissions to a subset of our IFP numbers. And comparing commission revenues that were actually generated by these numbers to what these commission revenues would have been under the new rates.

We used a subset of our numbers approved after the medical loss ratio requirements went into effect and if honor books long enough to generate first year and renewal commissions. Of the carriers that provided us with the rate schedules for next year, many have changed to a fixed fee commission payment. But some will continue to base their commissions on a percentage of premium values. We view what we've seen so far as potentially favorable since we anticipated lower rates on exchange-listed, subsidized products. Again, this is based on the information that we currently have and we expect to receive 2014 commission rates from additional carriers during the fourth quarter.

In Medicare, we're seeing stable commission rates from carriers for plans effective in 2014. We've seen some of the carriers expand the number of years after enrollment for which they're paying commissions and in some cases paying commissions for as long as the policy we sold remains active, which obviously increases the lifetime value of our Medicare members.

With respect to guidance and based on information currently available, we are reaffirming the revenue, EBITDA, stock-based compensation expense, and earnings per share guidance for the full-year 2013 that we provided on our fourth quarter 2012 earnings call. I want to remind you that these comments as well as our annual guidance are based on current indications for our business, which are subject to change at any time. We undertake no obligation to further update our guidance.

And now, we would like to open up the call for questions. Operator?

(Operator Instructions). George Sutton, Craig Hallam.

Thank you. Gary, you had mentioned that you have received the CMS data and that was good to hear. Can you be a little more specific as to when you might be able to handle that part of the volume?

Well, George, as soon as we can. We needed several weeks to integrate all of this to test it and so on. We don't -- I'm not taking a shot at the federal government; we just don't launch things that don't work, we launch things that do work and have to work well. And that's part of the problem right now is the major new stories, the instability and lack of performance of the federal exchange and we're somewhat dependent on that to be able to process subsidies. So we're hoping there's a little bit of stabilization there and that we can get this going soon.

We are also having some discussions with CMS about some ways to expedite all of this as well, because frankly, I think they're starting to realize that they need help off-loading an awful lot of the volume that they're not able to satisfy and deal with right now. I guess if there's any good news in this situation, it's that, it's not like we're losing these subsidy-eligible individuals to the federal exchange because there is, it's like as we've seen very little transacting there. So look, we're optimistic and hopeful that we can have this up and available to consumers within the next several weeks, George.

Your point relative to the government site not working is obviously key. They're bringing in a number of new technologies to try to figure that site out and anytime you bring in a new technologist, one of the things they look at is sort of a buy versus build decision, and I'm wondering is it naive for me to assume that you could private label much of what you do and make their site much more effective more quickly?

Well, I have to say, theoretically, yes. In fact, there is a theory that's been moving around outside of herein as well that we could essentially take over the front-end enrollment and let the government focus on the back end, i.e., the subsidy verification and validation. But I don't -- everything I know and what I read, and I was just reading earlier about the hearing. So they and Capitol Hill indicate that they're going to stay the course and try to repair what they've got and get it working. So we shall see.

What we are right now is we're just -- we're obviously getting a lot of media interest as well and attention here, but we're just not interested at this point in talking about what's wrong with the federal exchange from a media standpoint [the other place], we're just looking forward and try do everything we possibly can to get as many people individuals enrolled as we possibly can, and I made the comment earlier that we are off to a good start, we're seeing strong growth. As (inaudible) was reported by a lot of these government agencies, this isn't about people who were talking to our call center or starting applications, we're talking about applications that are completed and already in the hands of carriers for people who are ready to be enrolled. That's a big difference.

Perfect. Last question from me and nice to hear about the CVS partnership. Can you give us a little bit more of a sense of what kind of impact that might have in this open enrollment season?

Well, we're hoping that it's going to have some very significant impact. CVS is one of the largest pharmacies in the country. They're very focused on others on having prescriptions filled there. They get an extraordinary number of seniors that use them as a pharmacy. It seemed to be very committed to this partnership. They're taking an active marketing role in this with outreach and so on, much more than us just being on the side or a pharmacist answering the question. They're doing outreach to consumers as well. So we think this could be a very good acquisition partner for us.

Okay, great to hear. Thank you, Gary.

Thanks, George.

Our next question comes from the line of Adam Klauber of William Blair. Please proceed.

Thanks. Couple of different questions, and some of the partnerships that TurboTax, the SoloHealth, will those be up and running for this enrollment period or is that more for next year?

Well, TurboTax, we're in the process of implementing right now, and most of that will be starting in January, but we're enthused about that, because that's when the tax seasons start, and the Open Enrollment period of course goes through March 31. With SoloHealth, we're in the process right now of implementing, and the great thing about SoloHealth is that they are present in a lot of retail locations. They are all over Wal-Mart, for example, and others as well. And just so everyone knows, SoloHealth of these kiosks that you see when you go into a CBS or a Wal-Mart, where you can sit down and take your blood pressure and do a number of different things as well and it turns out, they become very informational for people as well. So we think it's kind of a unique way to get to people.

Going back to the federal exchange, could you give us an idea technically? I mean what is the aspect that isn't working with you right now? Is that the eligibility or which -- what's the technical aspect that needs to change?

Well, we need some of their engineering assistance to do some of the testing that we want to do, and as you might imagine, they are very busy there right now. We've got to be able to at least move through the exchange into what's called the federal data hub to be able to do the verification for subsidies and so on. [We're not even so sure] that federal exchange is doing that yet. So those are some of the things that we're working with right now. We're working closely with them, I'll say this much. I really appreciate the fact that the Fed's recognized that we can really help when they regulated the ability for someone like us to be able to help subsidy-eligible individuals, and they sign the agreement with us. Now, we just got these technical issues that we've got to get through. And again, I'm hopeful that we can get this going in the next several weeks. I wish I could give you something more definitive than that, but much of this as you know and reading here on television is out of our hands.

Right, right. Another question, I mean I realize it's very early in this whole process, but do you have a sense that it sounds like you're having a lot of applicants. In general, are you seeing a much bigger share of the market shopping online than you had previously?

Oh, there's no question about that. We're seeing a lot more demand online. In fact, interestingly, really in September, we saw visits to eHealth and demand really starting to kick up in a pretty substantial way, and that has not abated. That has continued right into where we are right now. The other point I would make is that we're -- as you said, we're very early in this open enrollment period, and consumer behavior is such that typically, purchasing, transacting, and so on happens through the ends of these periods. So it's certainly possible that we're just seeing the beginning here of something here that could continue to grow in terms of the demand curve.

Great, thank you very much.

Thank you.

Nat Schindler, Bank of America Merrill Lynch. Nat?

Sorry, mute. We all know that the federal exchange is having challenges, but there are federal -- there are state exchanges up and running, which you're not connected into. Have you noticed any change in existing customers in those states who are looking -- who are subsidy-eligible and would not be able to get them through your system? And have they changed their behavior or started looking to -- or started canceling at a higher rate than normal? Additionally, if we think about past October 1 and the implementation of the guaranteed coverage, how does that affect your conversion rate from application to member? I'm sure it doesn't make it 100%, but how much of the gap does it close?

Yes, Nat, this is Stuart. I'll take the first question. It's really too early to tell on your question of different shopping patterns or customers falling off of the books. We wouldn't get visibility on that until we get commission statements down the road that would indicate that there's any change and that's -- we're probably a few months from having any visibility on any of that type of behavior.

But we've also got very active programs as you might imagine in campaigns of outreach to get to every single one of our current members who may be subsidy-eligible. In several of these states like California, we're able to get them a subsidy-eligible plan. Believe it or not, we have to do it by hand with an agent because we haven't gotten California yet to embrace this idea of using us online, which I'll just say I'm very critical of and going to continue to be in the media, because this will -- us hosting subsidy-eligible individuals in the state cost the state nothing and actually expands the enrollment ranks. But we're very aggressively approaching each and every one of those members we have that we think are subsidy-eligible or maybe and helping them through with their choices and so on. But as Stuart said, that's all yet to be determined. But the other point I would make is even for the number of those that we have, we think that there's so much volume in terms of opportunity in front of us here, of new entrants into the market, new enrollments, and so on, that it could very well be a net plus game.

Great. (multiple speakers).

And you asked about a guaranteed issue in conversion rates. We think that's only going to help. As we noted, our conversion rates of new members had increased quite substantially, and we think that's the carriers anticipating the fact that they can't deny anyone any longer. So that's -- as we thought for some time, we're just beginning to see it. That should have a positive impact on our conversion rates at the end of the sales and purchasing process.

Just a follow-up on that, of the difference between applications and members, how much of that gap is because they're being denied coverage and how much of that gap is for any other reason? And can carriers deny coverage on certain types of plans that you will continue to issue and not deny overall coverage and so would still be allowed to say no to certain applications?

Well, Nat, historically, across the industry, 15% to 20% of applicants have been denied for existing chronic medical conditions and so on. In fact, we theorize that a lot of the early enrolling that you're seeing and the reports you're getting from government exchanges and so on are likely people who have had pent-up demand or interest to enrollment products, because they weren't able to previously, i.e., those that couldn't be for medical reasons. So there is a 15% to 20% of the market that's wanted to buy, was able to buy, but wasn't allowed to and now can. So again, that's an uplift and positive from a conversion standpoint.

Great, thank you.

(Operator Instructions) Your next question comes from the line of Kevin Kopelman with Cowen and Company. Please proceed.

Hi. Thanks a lot. Can you talk a little bit more about what you're seeing in the Medicare enrollment period that just started? I know it's early. Especially, any comments you can give us on how conversion rates have been from the call centers and how that compared to your expectations in last year? Thanks.

Yes, I don't want to get into our current yields and so forth, but we -- throughout this year, we've seen an improvement in our yields from lead to sold members, as we've had our agents in their seats longer with more tenure and more experience than we did a year ago. Feel very good about how we are set up for this enrollment period on an agent -- the number of agents and the experience of those agents. And just as importantly and possibly more importantly, just the inventory, as we mentioned, the number of plans we've added, and the brands that we brought to bear, we feel very good about what's in front of us with those added to the platform, and just, I'd say, lot more visibility this time around than where we were a year ago based on those two factors.

And, as I think I commented, we're off to a good start, it's been a week.

Yes, absolutely. It's still early. And one other question, could you just talk a little bit more about the corporate retiree initiative that you mentioned and give how big an opportunity is that?

Well, we think it's very large. It's an area we've been looking at for some time. It's an area where we -- we really didn't have -- how would I describe it? We really didn't have the right kind of access to these largely employer-based retiree opportunities, but now with the announcement we've made with Empyrean, and frankly with several other interested benefits administrators, who have these large employer clients, we've got now with the product inventory, with our online capabilities and certainly our call center capabilities, we think that this is a very interesting one. It's an area we've been looking at for some time. It's lucrative, it scales, and we are really pleased with this first step we've taken to it. It's an area we're going to be doing a fair amount of work to accelerate.

Hey, great. Thank you very much.

(Operator Instructions).

Look, thanks, everyone. We appreciate the time and the interest, and look forward to talking with many of you individually and seeing you over the next several months.

Thanks, operator.

Ladies and gentlemen that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.