eHealth, Inc. Announces Second Quarter 2008 Results

MOUNTAIN VIEW, CA, Jul 31 (MARKET WIRE) --
eHealth, Inc. (NASDAQ: EHTH), the leading online source of health
insurance for individuals, families and small businesses, today announced
its financial results for the second quarter ended June 30, 2008.

"Our second quarter results, in the face of a challenging economic
environment, again demonstrate growth and increasing operating leverage in
eHealth's business model," said Gary Lauer, chief executive officer of
eHealth.

Second Quarter Results

Revenue -- Revenue totaled $27.5 million for the second quarter of 2008, a
31% increase compared to revenue of $21.1 million for the second quarter
of 2007.

Submitted Applications -- Submitted applications for individual and family
products increased 18% in the second quarter of 2008 to 103,800
applications, compared to 88,300 applications in the second quarter of
2007.

Membership -- Estimated membership at June 30, 2008 totaled 579,600
members, a 25% increase over estimated membership of 463,600 at June 30,
2007.

Operating Income -- Operating income increased 53% to $6.4 million for the
second quarter of 2008, compared to operating income of $4.2 million for
the second quarter of 2007. Operating margins were 23% in the second
quarter of 2008, up from 20% in the second quarter of 2007. Non-GAAP
operating income increased 64% to $7.4 million for the second quarter of
2008, compared to non-GAAP operating income of $4.5 million for the second
quarter of 2007. Non-GAAP operating margins were 27% in the second quarter
of 2008, up from 21% in the second quarter of 2007. Non-GAAP operating
income and margins in the second quarters of 2008 and 2007 exclude
$995,000 and $340,000 of stock-based compensation expense, respectively.

Pre-tax Income -- Pre-tax income for the second quarter of 2008 was $7.3
million, a 35% increase compared to pre-tax income of $5.5 million for the
second quarter of 2007. Non-GAAP pre-tax income was $8.3 million for the
second quarter of 2008, a 44% increase compared to non-GAAP pre-tax income
of $5.8 million for the second quarter of 2007. Non-GAAP pre-tax income in
the second quarters of 2008 and 2007 exclude $995,000 and $340,000 of
stock-based compensation expense, respectively.

Net Income -- Net income for the second quarter of 2008 was $4.2 million,
or $0.16 per diluted share, compared to net income for the second quarter
of 2007 of $3.2 million, or $0.13 per diluted share. Non-GAAP net income
for the second quarter of 2008 was $4.9 million, or $0.19 per diluted
share, compared to non-GAAP net income of $3.5 million, or $0.14 per
diluted share, for the second quarter of 2007. Non-GAAP net income and
non-GAAP net income per diluted share are computed excluding stock-based
compensation expense and estimated income tax benefit related to
stock-based compensation expense. Non-GAAP net income and non-GAAP net
income per diluted share in the second quarter of 2008 exclude $995,000 of
stock-based compensation expense, adjusted by $333,000 for estimated
income tax benefit related to stock-based compensation expense. Non-GAAP
net income and non-GAAP net income per diluted share in the second
quarter of 2007 exclude $340,000 of stock-based compensation expense,
adjusted by $21,000 for estimated income tax benefit related to
stock-based compensation expense.

Cash Flow and Cash Balance -- Cash flow from operations for the second
quarter of 2008 was $8.6 million, compared to $7.2 million for the second
quarter of 2007, representing an increase of 21%. Cash, cash equivalents
and short-term marketable securities as of June 30, 2008 totaled $136.0
million, compared to $121.5 million as of December 31, 2007.

Year-to-Date Results

Revenue -- Revenue totaled $53.8 million for the six months ended June 30,
2008, a 33% increase compared to revenue of $40.6 million for the six
months ended June 30, 2007.

Operating Income -- Operating income increased 62% to $11.1 million for
the six months ended June 30, 2008, compared to operating income of $6.9
million for the six months ended June 30, 2007. Operating margins were 21%
in the six months ended June 30, 2008, up from 17% in the six months ended
June 30, 2007.

Pre-tax Income -- Pre-tax income for the six months ended June 30, 2008
was $13.3 million, a 42% increase compared to pre-tax income of $9.3
million for the six months ended June 30, 2007.

Net Income -- Net income for the six months ended June 30, 2008 was $7.5
million, or $0.29 per diluted share, compared to net income for the six
months ended June 30, 2007 of $5.5 million, or $0.22 per diluted share.

Cash Flow and Cash Balance -- Cash flow from operations for the six months
ended June 30, 2008 was $14.5 million, compared to $10.6 million for the
six months ended June 30, 2007, representing an increase of 37%.

2008 Guidance

eHealth is providing updated guidance for the full year ending December
31, 2008 based on information currently available:

-- Total revenue is expected to be in the range of $111.5 million to
$113.5 million, compared to previous guidance of $114 million to $117
million
-- Stock-based compensation expense is expected to be in the range of
$3.8 million to $4.3 million, compared to previous guidance of $4.0 million
to $5.5 million
-- GAAP net earnings per diluted share is expected to be in the range of
$0.50 to $0.57 per share, compared to previous guidance of $0.58 to $0.63
per share
-- Cash flow from operations is expected to be in the range of $30.0
million to $32.5 million, compared to previous guidance of $33.5 million to
$36.0 million
-- GAAP income tax rate to range from approximately 43% to 44.5% for the
full year ending December 31, 2008, compared to previous guidance of 43% to
45%

Webcast and Conference Call Information

A Webcast and conference call will be held today, Thursday, July 31, 2008
at 5:00 p.m. EDT / 2:00 p.m. PDT. The Webcast will be available live on
the Investor Relations section on eHealth's website at
http://ir.ehealthinsurance.com. Individuals interested in listening to the
conference call may do so by dialing 866-770-7129 for domestic callers and
617-213-8067 for international callers. The participant passcode is
#39737269. A telephone replay will be available two hours following the
conclusion of the call for a period of 30 days and can be accessed by
dialing 888-286-8010 for domestic callers and 617-801-6888 for
international callers. The call ID for the replay is #15210395. The live
and archived webcast of the call will also be available on eHealth's
website at www.ehealthinsurance.com under the Investor Relations section.

About eHealth, Inc.

eHealth, Inc. is the parent company of eHealthInsurance, the leading
online source of health insurance for individuals, families and small
businesses. eHealthInsurance presents complex health insurance
information in an objective, user-friendly format, enabling the research,
analysis, comparison and purchase of health insurance products that best
meet consumers' needs. eHealth and eHealthInsurance are registered
trademarks of eHealthInsurance Services, Inc.

eHealth, Inc. was founded in 1997 and its technology was responsible for
the nation's first Internet-based sale of a health insurance policy.
eHealth is headquartered in Mountain View, California. Additional
information can be found on eHealth's website, www.ehealthinsurance.com.

Forward-Looking Statements

This press release contains statements that are forward-looking statements
as defined within the Private Securities Litigation Reform Act of 1995.
These include statements regarding estimated income tax benefit related to
stock-based compensation expense and eHealth's guidance for total revenue,
stock-based compensation expense, GAAP income tax rate, GAAP net earnings
per diluted share and cash flow from operations for the year ending
December 31, 2008. These forward-looking statements are inherently subject
to various risks and uncertainties that could cause actual results to
differ materially from the statements made, including risks associated
with continued acceptance of the Internet as a medium for the purchase of
health insurance, eHealth's ability to continue to increase its
membership base and expand its relationships with health insurance
carriers and marketing partners, negative publicity experienced by
eHealth's carrier partners, changes in products offered on eHealth's
ecommerce platform, changes in commission payments or carrier
underwriting practices, changes in member conversion rates and factors
affecting conversion, the effectiveness of marketing spending, timing of
receipt of commission reports and related impact on estimating
membership, payment practices of health insurance carriers, retention of
eHealth's members, increased rates of member turnover, changes in
eHealth's relationships with insurance carriers, success in the sale of
sponsorship advertising and the licensing of the use of eHealth's
ecommerce platform, success of the health savings account (HSA) platform,
system failures or capacity constraints, dependence upon Internet search
engines to attract consumers who visit eHealth's website, the
performance, reliability and availability of eHealth's ecommerce platform
and underlying network infrastructure, the effectiveness of eHealth's
marketing and public relations efforts, exposure to online commerce
security risks, reliance on marketing partners for the sale of health
insurance, competition, protection of intellectual property and
intellectual property rights claims, regulatory penalties and negative
publicity, changes in the economy and weak economic conditions, eHealth's
operations in China and any foreign expansion, ability to attract and
retain qualified personnel, management of future growth, seasonality,
impact of future acquisitions, impact of employee stock-based compensation
expense and provisions for income taxes, costs of obtaining insurance,
compliance with insurance and other laws and regulations, changes in laws
and regulations, and changes in the structure of the health insurance
system in the United States. 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 and available on the investor
relations page of eHealth's website at www.ehealthinsurance.com and on the
Securities and Exchange Commission's website at www.sec.gov. eHealth does
not undertake any obligation to update any forward-looking statement to
conform the statement to actual results or changes in expectations.

Non-GAAP Financial Information

This press release includes financial measures that are not in accordance
with generally accepted accounting principles in the United States
("GAAP"). To supplement eHealth's condensed consolidated financial
statements presented in accordance with GAAP, eHealth presents investors
with certain non-GAAP financial measures, including non-GAAP operating
income, non-GAAP operating margins, non-GAAP pre-tax income, non-GAAP net
income and non-GAAP net income per diluted share.

-- Non-GAAP operating income consists of GAAP operating income excluding
the effects of expensing stock-based compensation related to stock options,
restricted stock and restricted stock units in accordance with SFAS 123R
beginning in 2006 and amortization of deferred stock-based compensation
expense in accordance with APB 25 for grants made prior to 2006.

-- Non-GAAP operating margins are calculated by dividing non-GAAP
operating income by GAAP total revenue.

-- Non-GAAP pre-tax income consists of GAAP pre-tax income excluding the
effects of expensing stock-based compensation.

-- Non-GAAP net income consists of GAAP net income excluding the effects
of expensing stock-based compensation adjusted for estimated income tax
benefit related to stock-based compensation expense.

-- Non-GAAP net income per diluted share is calculated by dividing non-
GAAP net income by GAAP weighted average diluted shares outstanding.

eHealth believes that the presentation of these non-GAAP financial
measures provide important supplemental information to management and
investors regarding financial and business trends relating to the
company's financial condition and results of operations. Management
believes that the use of these non-GAAP financial measures provides
consistency and comparability with the company's past financial reports.
Management also believes that the exclusion of the items described above
provides an additional measure of the company's operating results and
facilitates comparisons of the company's core operating performance
against prior periods and business model objectives. This information is
provided to investors in order to facilitate additional analyses of past,
present and future operating performance and as a supplemental means to
evaluate the company's ongoing operations. Externally, the company
believes that these non-GAAP financial measures continue to be useful to
investors in their assessment of the company's operating performance.

Non-GAAP operating income, non-GAAP operating margins, non-GAAP pre-tax
income, non-GAAP net income and non-GAAP net income per diluted share are
not calculated in accordance with GAAP, and should be considered
supplemental to, and not as a substitute for, or superior to, financial
measures calculated in accordance with GAAP. Non-GAAP financial measures
used in this press release have limitations in that they do not reflect
all of the costs associated with the operations of the company's business
and do not reflect all of the income tax as determined in accordance with
GAAP. As a result, you should not consider these measures in isolation or
as a substitute for analysis of eHealth's results as reported under GAAP.
The company expects to continue to incur operating costs similar to the
non-GAAP adjustments described above, and exclusion of these costs, and
their related income tax impact, from non-GAAP financial measures should
not be construed as an inference that these costs are unusual or
infrequent. The company compensates for these limitations by prominently
disclosing GAAP operating income, GAAP pre-tax income, GAAP net income and
GAAP net income per diluted share and providing investors with
reconciliations from the company's GAAP operating results to the non-GAAP
financial measures for the relevant periods.

The accompanying tables provide more details on the GAAP financial
measures that are most directly comparable to the non-GAAP financial
measures and the related reconciliations between these financial measures.

(Tables to Follow)

EHEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

December 31, June 30,
2007 (1) 2008
------------- -------------
Assets (unaudited)

Current assets:
Cash and cash equivalents $ 81,395 $ 85,201
Marketable securities 40,119 50,846
Accounts receivable 1,300 1,245
Deferred income taxes 13,240 7,723
Prepaid expenses and other current assets 2,098 2,217
------------- -------------
Total current assets 138,152 147,232
Property and equipment, net 3,791 4,322
Deferred income taxes 4,535 4,535
Other assets 975 944
------------- -------------
Total assets $ 147,453 $ 157,033
============= =============

Liabilities and stockholders' equity

Current liabilities:
Accounts payable $ 1,495 $ 1,868
Accrued compensation and benefits 4,849 3,822
Accrued marketing expenses 2,454 2,774
Deferred revenue 436 277
Other current liabilities 2,073 1,687
------------- -------------
Total current liabilities 11,307 10,428
Other non-current liabilities 252 188

Stockholders' equity:
Common stock 25 25
Additional paid-in capital 167,847 170,795
Deferred stock-based compensation (104) (57)
Accumulated deficit (32,060) (24,562)
Accumulated other comprehensive income 186 216
------------- -------------
Total stockholders' equity 135,894 146,417
------------- -------------
Total liabilities and stockholders' equity $ 147,453 $ 157,033
============= =============

(1) The condensed consolidated balance sheet at December 31, 2007 has been
derived from the audited consolidated financial statements at that
date.

EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts, unaudited)

Three Months Six Months Ended
Ended June 30, June 30,
----------------- -----------------
2007 2008 2007 2008
-------- -------- -------- --------
Revenue:
Commission $ 19,799 $ 24,756 $ 38,173 $ 48,875
Sponsorship, licensing and other 1,273 2,745 2,388 4,906
-------- -------- -------- --------
Total revenue 21,072 27,501 40,561 53,781
Operating costs and expenses:
Cost of revenue-sharing 401 432 818 869
Marketing and advertising (1) 6,782 9,482 13,712 19,131
Customer care and enrollment (1) 2,858 3,308 5,857 6,933
Technology and content (1) 2,922 3,504 5,917 6,983
General and administrative (1) 3,935 4,379 7,390 8,744
-------- -------- -------- --------
Total operating costs and expenses 16,898 21,105 33,694 42,660
-------- -------- -------- --------
Income from operations 4,174 6,396 6,867 11,121
Interest and other income, net 1,279 941 2,446 2,150
-------- -------- -------- --------
Income before income taxes 5,453 7,337 9,313 13,271
Provision for income taxes 2,225 3,136 3,808 5,773
-------- -------- -------- --------
Net income $ 3,228 $ 4,201 $ 5,505 $ 7,498
======== ======== ======== ========

Net income per share:
Basic $ 0.14 $ 0.17 $ 0.25 $ 0.30
Diluted $ 0.13 $ 0.16 $ 0.22 $ 0.29

Weighted-average number of shares used
in per share amounts:
Basic 22,653 24,949 22,199 24,857
Diluted 25,526 26,065 25,479 26,029

(1) Includes stock-based compensation expense as follows:
Marketing and advertising $ 38 $ 186 $ 68 $ 333
Customer care and enrollment 37 85 56 151
Technology and content 139 275 273 450
General and administrative 126 449 215 720
-------- -------- -------- --------
Total $ 340 $ 995 $ 612 $ 1,654
======== ======== ======== ========

EHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2007 2008 2007 2008
-------- -------- -------- --------
Operating activities
Net income $ 3,228 $ 4,201 $ 5,505 $ 7,498
Adjustments to reconcile net income
to net cash provided by operating
activities:
Deferred income taxes 2,102 3,076 3,595 5,517
Depreciation and amortization 424 375 851 804
Stock-based compensation expense 340 995 612 1,654
Deferred rent (25) (14) 2 (35)
Loss on disposal of property and
equipment 18 10 18 11
Changes in operating assets and
liabilities:
Accounts receivable 157 395 (14) 55
Prepaid expenses and other
current assets 272 (204) (78) (278)
Other assets (184) (39) (227) 32
Accounts payable (224) 169 (116) 370
Accrued compensation and
benefits 768 580 (347) (881)
Accrued marketing expenses (32) (29) 454 320
Deferred revenue 6 (248) 145 (159)
Other current liabilities 313 (620) 171 (415)
-------- -------- -------- --------
Net cash provided by operating
activities 7,163 8,647 10,571 14,493
-------- -------- -------- --------

Investing activities
Purchases of property and equipment (528) (975) (753) (1,309)
Purchases of marketable securities (17,324) (31,107) (17,325) (50,422)
Sales of marketable securities -- 4,020 -- 8,067
Maturities of marketable securities 88 13,131 88 31,593
-------- -------- -------- --------
Net cash used in investing
activities (17,764) (14,931) (17,990) (12,071)
-------- -------- -------- --------

Financing activities
Net proceeds from exercise of
common stock options 2,796 595 2,897 1,341
Principal payments in connection
with capital leases (71) -- (175) --
Costs incurred in connection with
initial public offering (252) -- (252) --
-------- -------- -------- --------
Net cash provided by financing
activities 2,473 595 2,470 1,341
-------- -------- -------- --------
Effect of exchange rate changes on
cash and cash equivalents 26 10 42 43
-------- -------- -------- --------
Net (decrease) increase in cash
and cash equivalents (8,102) (5,679) (4,907) 3,806
Cash and cash equivalents at
beginning of period 93,511 90,880 90,316 81,395
-------- -------- -------- --------
Cash and cash equivalents at end of
period $ 85,409 $ 85,201 $ 85,409 $ 85,201
======== ======== ======== ========

EHEALTH, INC.
SUMMARY OF SELECTED METRICS
(Unaudited)

Three Months Three Months
Ended Ended
June June
Key Metrics: 30, 2007 30, 2008
------------ ------------
Operating cash flows (1) $ 7,163,000 $ 8,647,000

IFP submitted applications (2) 88,300 103,800

IFP approved members (3) 78,200 94,300
Total approved members (4) 114,600 132,600

Total revenue (5) $ 21,072,000 $ 27,501,000
Total revenue per estimated member for the
period (6) $ 46.48 $ 48.34

As of As of
June 30, June 30,
2007 2008
------------ ------------
IFP estimated membership (7) 383,400 488,300
Total estimated membership (8) 463,600 579,600

Three Months Three Months
Ended Ended
June 30, June 30,
2007 2008
------------ ------------
Marketing and advertising expenses (9) $ 6,782,000 $ 9,482,000
Marketing and advertising expenses as a
percentage of total revenue (10) 32% 34%

Marketing and advertising expenses excluding
stock-based compensation (11) $ 6,744,000 $ 9,296,000
Marketing and advertising expenses excluding
stock-based compensation as a percentage of
total revenue (12) 32% 34%

Other Metrics:

Source of IFP submitted applications (as a
percentage of total IFP applications for the
period):
Direct (13) 40% 40%
Marketing partners (14) 30% 32%
Online advertising (15) 30% 28%
------------ ------------
Total 100% 100%
============ ============

Acquisition cost per individual on IFP
submitted applications (16) $ 49.98 $ 60.39
Acquisition cost (excluding stock-based
compensation) per individual on IFP submitted
applications (17) $ 49.70 $ 59.21

Notes:

(1) Net cash provided by operating activities for the period from the
condensed consolidated statements of cash flows.
(2) IFP applications submitted on eHealth's website during the period.
Applications are counted as submitted when the applicant completes the
application, provides a method for payment and clicks the submit button
on our website and submits the application to us. The applicant
generally has additional actions to take before the application will be
reviewed by the insurance carrier, such as providing additional
information and providing an electronic signature. In addition, an
applicant may submit more than one application. We define our "IFP"
offerings as major medical individual and family health insurance
plans, which does not include small business, short-term major medical,
stand-alone dental, life or student health insurance product offerings.
(3) New IFP members reported to eHealth as approved during the period. Some
members that are approved by a carrier do not accept the approval and
therefore do not become paying members.
(4) New members for all products reported to eHealth as approved during the
period. Some members that are approved by a carrier do not accept the
approval and therefore do not become paying members.
(5) Total revenue (from all sources) recognized during the period from the
condensed consolidated statements of income.
(6) Calculated as total revenue recognized during the period (see note (5)
above) divided by average estimated membership for the period
(calculated as beginning and ending estimated membership for all
products for the period, divided by two).
(7) Estimated number of members active on IFP insurance policies as of the
date indicated. See our 2007 Annual Report on Form 10-K - Item 7 -
Management's Discussion and Analysis of Financial Condition and Results
of Operations - Summary of Selected Metrics for additional information
regarding our calculation of estimated membership.
(8) Estimated number of members active on all insurance policies as of the
date indicated. See our 2007 Annual Report on Form 10-K - Item 7 -
Management's Discussion and Analysis of Financial Condition and Results
of Operations - Summary of Selected Metrics for additional information
regarding our calculation of estimated membership.
(9) Marketing and advertising expenses for the period from the condensed
consolidated statements of income.
(10) Calculated as marketing and advertising expenses for the period (see
note (9) above) divided by total revenue for the period (see note
(5) above).
(11) Non-GAAP marketing and advertising expenses excluding stock-based
compensation for the period. See Non-GAAP Financial Information above
and the reconciliation of GAAP to Non-GAAP marketing and advertising
expenses below.
(12) Calculated as non-GAAP marketing and advertising expenses for the
period (see note (11) above) divided by total revenue for the period
(see note (5) above). See Non-GAAP Financial Information above and the
reconciliation of GAAP to Non-GAAP marketing and advertising expenses
below.
(13) Percentage of IFP submitted applications from applicants who came
directly to the eHealth website through algorithmic search engine
results or otherwise. See note (2) above for further information as to
what constitutes a submitted application.
(14) Percentage of IFP submitted applications from applicants sourced
through eHealth's network of marketing partners. See note (2) above
for further information as to what constitutes a submitted
application.
(15) Percentage of IFP submitted applications from applicants sourced
through paid search and other online advertising activities. See note
(2) above for further information as to what constitutes a submitted
application.
(16) Calculated as marketing and advertising expenses for the period (see
note (9) above) divided by the number of individuals on IFP
applications submitted on eHealth's website during the period. This
metric may not reflect the true acquisition cost.
(17) Calculated as non-GAAP marketing and advertising expenses for the
period (see note (11) above) divided by the number of individuals on
IFP applications submitted on eHealth's website during the period.
This metric may not reflect the true acquisition cost exclusive of the
impact of stock-based compensation allocated to marketing and
advertising expenses.

EHEALTH, INC.
GAAP TO NON-GAAP RECONCILIATION
FOR THE THREE MONTHS ENDED JUNE 30, 2008
(In thousands, except per share amounts, unaudited)

Statement of Income Reconciliation

Three Months Ended June 30, 2008
--------------------------------------------
GAAP Non-GAAP
Percent Percent
of of
GAAP Total Adjust- Non-GAAP Total
Reported Revenue ments Results Revenue
-------- ------- ------- -------- -------
Revenue:
Commission $ 24,756 90% $ -- $ 24,756 90%
Sponsorship, licensing and
other 2,745 10 -- 2,745 10
-------- ------- ------- -------- -------
Total revenue 27,501 100 -- 27,501 100
Operating costs and expenses:
Cost of revenue-sharing 432 2 -- 432 2
Marketing and advertising (1) 9,482 34 (186) 9,296 34
Customer care and
enrollment (1) 3,308 12 (85) 3,223 11
Technology and content (1) 3,504 13 (275) 3,229 12
General and administrative
(1) 4,379 16 (449) 3,930 14
-------- ------- ------- -------- -------
Total operating costs and
expenses 21,105 77 (995) 20,110 73
-------- ------- ------- -------- -------
Income from operations 6,396 23 995 7,391 27
Interest and other income, net 941 3 -- 941 3
-------- ------- ------- -------- -------
Income before income taxes 7,337 26 995 8,332 30
Provision for income taxes (2) 3,136 11 333 3,469 12
-------- ------- ------- -------- -------
Net income $ 4,201 15% $ 662 $ 4,863 18%
======== ======= ======= ======== =======

Net income per share:
Basic $ 0.17 $ 0.02 $ 0.19
Diluted $ 0.16 $ 0.03 $ 0.19

Weighted-average number of
shares used in per share
amounts:
Basic 24,949 24,949 24,949
Diluted 26,065 26,065 26,065

Explanation of adjustments
(1) Non-GAAP results exclude the effect of expensing stock-based
compensation related to stock options, restricted stock and restricted
stock units in accordance with SFAS 123R beginning in 2006, in addition
to the amortization of deferred stock-based compensation expense in
accordance with APB 25 for grants made prior to 2006.
(2) Non-GAAP net income and non-GAAP net income per share exclude
stock-based compensation expense listed in note (1) above, adjusted
for estimated income tax benefit related to stock-based compensation
expense.

EHEALTH, INC.
GAAP TO NON-GAAP RECONCILIATION
FOR THE THREE MONTHS ENDED JUNE 30, 2007
(In thousands, except per share amounts, unaudited)

Statement of Income Reconciliation

Three Months Ended June 30, 2007
--------------------------------------------
GAAP Non-GAAP
Percent Percent
of of
GAAP Total Adjust- Non-GAAP Total
Reported Revenue ments Results Revenue
-------- ------- ------- -------- -------

Revenue:
Commission $ 19,799 94% $ -- $ 19,799 94%
Sponsorship, licensing and
other 1,273 6 -- 1,273 6
-------- ------- ------- -------- -------
Total revenue 21,072 100 -- 21,072 100
Operating costs and expenses:
Cost of revenue-sharing 401 2 -- 401 2
Marketing and advertising (1) 6,782 32 (38) 6,744 32
Customer care and
enrollment (1) 2,858 13 (37) 2,821 14
Technology and content (1) 2,922 14 (139) 2,783 13
General and
administrative (1) 3,935 19 (126) 3,809 18
-------- ------- ------- -------- -------
Total operating costs and
expenses 16,898 80 (340) 16,558 79
-------- ------- ------- -------- -------
Income from operations 4,174 20 340 4,514 21
Interest and other income, net 1,279 6 -- 1,279 6
-------- ------- ------- -------- -------
Income before income taxes 5,453 26 340 5,793 27
Provision for income taxes (2) 2,225 11 21 2,246 10
-------- ------- ------- -------- -------
Net income $ 3,228 15% $ 319 $ 3,547 17%
======== ======= ======= ======== =======

Net income per share:
Basic $ 0.14 $ 0.02 $ 0.16
Diluted $ 0.13 $ 0.01 $ 0.14

Weighted-average number of
shares used in per share
amounts:
Basic 22,653 22,653 22,653
Diluted 25,526 25,526 25,526

Explanation of adjustments
(1) Non-GAAP results exclude the effect of expensing stock-based
compensation related to stock options, restricted stock and restricted
stock units in accordance with SFAS 123R beginning in 2006, in addition
to the amortization of deferred stock-based compensation expense in
accordance with APB 25 for grants made prior to 2006.
(2) Non-GAAP net income and non-GAAP net income per share exclude
stock-based compensation expense listed in note (1) above, adjusted
for estimated income tax benefit related to stock-based compensation
expense.

Investor Relations Contact:
Kate Sidorovich
Director, Investor Relations
440 East Middlefield Road
Mountain View, CA 94043
(650) 210-3111
Email Contact
http://ir.ehealthinsurance.com

Media Contact:
Brian Mast
Director, Public Relations
440 East Middlefield Road
Mountain View, CA 94043
(650) 210-3149
Email Contact
www.ehealthinsurance.com

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