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Health Insurance Innovations, Inc. Reports Third Quarter 2018 Financial and Operating Results

Oct 29, 2018

Health Insurance Innovations, Inc. Reports Third Quarter 2018 Financial and Operating Results

Raises Annual Guidance
Record Revenues of $74.0 million, up 16.9% YOY
Policies in Force totaled approximately 378,000, up 8.7% YOY
GAAP Diluted Earnings per Share of $0.22, down 26.7% YOY
Adjusted Earnings per Share of $0.61, up 32.6% YOY

TAMPA, Fla., Oct. 29, 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, today announced financial results for the third quarter ended September 30, 2018. The Company will host a live conference call on Tuesday, October 30, 2018, at 8:30 A.M. EST.

Third Quarter 2018 Financial Highlights

  • Record revenue of $74.0 million, compared to $63.3 million in the third quarter of 2017, an increase of 16.9%.
  • Record total collections from members (premium equivalents) of $114.5 million, compared to $99.4 million in the third quarter of 2017, an increase of 15.2%.
  • Net income was $4.0 million, compared to $6.0 million in the third quarter of 2017, a decrease of 33.3%.
  • Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $14.0 million, compared to $12.9 million in the third quarter of 2017, an increase of 8.5%.
  • GAAP diluted earnings per share was $0.22, compared to $0.30 in the third quarter of 2017, down 26.7% YOY.
  • Adjusted earnings per share, also referred to as adjusted net income per share, or adjusted EPS, was $0.61 compared to $0.46 in the third quarter of 2017, an increase of 32.6%.
  • Policies in force as of September 30, 2018, totaled approximately 378,000, compared to 347,900 in the third quarter of 2017, an increase of 8.7%.

Premium equivalents, adjusted EBITDA, and adjusted EPS are non-GAAP financial measures. See the reconciliations of these measures to their respective most directly comparable GAAP measure included within this press release.

2018 Full Year Guidance

The Company raises its annual guidance of revenue for 2018 to be between $294 million and $304 million, or grow approximately 17% to 21%, year-over-year, adjusted EBITDA to be between $56 million and $59 million, or grow approximately 24% to 30% year-over-year, and reaffirms adjusted EPS to be between $2.47 and $2.57, or grow approximately 50% to 56% year-over-year. These guidance numbers are based on the Company’s current method of accounting for revenue. As an emerging growth company, the Company will be adopting the revised revenue recognition standard, known as ASC 606, in the fourth quarter of 2018 for the full year ended December 31, 2018.

"HIIQ continues to be uniquely positioned to take advantage of the growing demand for affordable health insurance solutions and we will continue to provide a safety net to consumers and their families who otherwise would be unable to find an affordable solution. We are focused to continue to be a leader in our market and to reach as many consumers as possible. I am even more excited about our future than I have been in the past,” said Gavin Southwell, HIIQ's Chief Executive Officer and President.

Third Quarter 2018 Financial Discussion

Third quarter revenues of $74.0 million increased 16.9%, compared to the third quarter in 2017, driven by an increase in policies in force resulting from lower lapse rates, higher average premium, favorable commission margins, and improved discount benefit plan offerings.

Third-party commissions in the third quarter of 2018 were $46.7 million, an increase of $10.1 million, or 27.6%, compared to the third quarter of 2017. The increases in third-party commissions were primarily due to an increase in the number of policies in force sold through third-party licensed distributors.

Total selling, general & administrative expense ("SG&A") was $18.3 million (24.7% of revenues) in the third quarter of 2018, compared to $15.5 million (24.5% of revenues) in the same period in 2017. Q3 SG&A included cash severance expense of $0.7 million and $2.4 million of non-cash based severance expense, primarily related to the termination of HealthPocket's two founders, and higher professional fees. Core SG&A, defined as total SG&A adjusted for stock-based compensation, transaction costs, indemnity and other related legal costs, severance, restructuring and other costs, and marketing leads and advertising expense, was $9.9 million (13.3% of revenues) in the third quarter of 2018, compared to $10.2 million (16.2% of revenues) in the same period in 2017. A reconciliation of Core SG&A to SG&A is included within this press release.

Net income was $4.0 million in the third quarter of 2018, compared to $6.0 million in the same period in 2017, a decrease of 33.3%. Third quarter 2018 included a cash severance expense of $0.7 million. Additionally, stock-based compensation and related costs was $1.7 million higher in the third quarter of 2018, compared to the third quarter of 2017. EBITDA was $6.7 million in the third quarter of 2018, compared to $9.9 million in the same period in 2017, a decrease of 32.3%.

Adjusted EBITDA was $14.0 million in the third quarter of 2018, an increase of 8.5%, compared to $12.9 million in the same period in 2017. Adjusted EBITDA as a percentage of revenue was 18.9%, in the third quarter of 2018, compared to 20.4% in the same period in 2017. Adjusted EBITDA is calculated by taking EBITDA and adjusting for items such as stock-based compensation and related costs and items that are not part of regular operating activities, including indemnity and other related legal costs, severance, restructuring, and acquisition costs. A reconciliation of net income to EBITDA and adjusted EBITDA for the three and nine months ended September 30, 2018 and 2017 is included within this press release.

GAAP diluted EPS for the third quarter of 2018 was $0.22, compared to $0.30 in the same period in 2017. Third quarter 2018 GAAP diluted EPS was unfavorably impacted by the above-described severance expense and higher stock-based compensation.

Adjusted EPS for the third quarter of 2018 was $0.61, compared to $0.46 in 2017. The increase in Adjusted EPS was driven by higher revenue from greater policies in force, continued scalability as well as a lower pro-forma statutory tax rate of 24%, compared to 38% used in the prior period. A reconciliation of net income to adjusted net income per share is included within this press release.

The Company makes advances to distributors based on actual sales. These advanced commissions assist distributors with working capital. The Company recovers advances on an ongoing basis from future commissions on premiums, which are collected over the period in which policies renew. At September 30, 2018, the short- and long-term advanced commission balance was $42.7 million, a $3.2 million increase from the December 31, 2017 year-end balance of $39.5 million.

Cash and cash equivalents as of September 30, 2018 totaled $33.1 million, a decrease of $7.8 million from the December 31, 2017 year-end balance. The Company repurchased 310,890 shares of its common stock in the third quarter of 2018 for $15.7 million as part of its previously announced share repurchase program.

Regulatory Update

As previously disclosed, the Company is the subject of a multistate market conduct examination (MCE). On October 3, 2018 the Company met with the MCE examiners for confidential settlement discussions. These discussions included updated feedback on the results of the examination, and discussion aimed toward potential resolution of the examination. The Company has made what it believes to be an appropriate accrual based on the nature and stage of current discussions with the MCE examiners. Under the rules of the MCE, the negotiations remain confidential.

Revenue Recognition Update

The Company will be adopting the revised revenue recognition standard, known as ASC 606, in the fourth quarter of 2018 for the full year ended December 31, 2018.

Under the standard, we have determined that we have two groups of performance obligations, which we define as: Sales and Enrollment, and Billing and Collecting / Member Support. While our adoption of ASC 606 will not change how our business operates, we believe that our adoption of this standard will have a material impact on our consolidated financial statements by bringing forward how we recognize revenue.  We will now recognize the sales and enrollment component of our revenue at a point in time, or upfront, based on the amount of the total estimated lifetime duration for each insurance product or discount benefit plan that we sell.  We will continue to recognize the billing, collection and customer service component of our revenue over time as we continue to perform these services.  The sales and enrollment component of our revenue in any given quarter will be driven almost exclusively by new enrollments that we generate during the quarter.  We plan to restate the 2018 year-to-date financial statements with our fourth quarter 2018 earnings release. 

Conference Call and Webcast

The Company will host an earnings conference call on October 30, 2018 at 8:30 A.M. Eastern time. All interested parties can join the call by dialing (877) 451-6152 or (201) 389-0879; the conference ID is 13684258. A webcast of the call may be accessed in the Investor Relations section of Health Insurance Innovations’ website at http://investor.hiiquote.com/. An archive of the call will be available for 30 days through the same website.

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 consumer's needs. 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 HIIQ.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 will be 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 Information

To supplement HIIQ’s financial information presented in accordance with generally accepted accounting principles in the United States of America, or GAAP, HIIQ presents certain financial measures that are not prepared in accordance with GAAP, including premium equivalents, adjusted EBITDA, adjusted EPS, and Core SG&A. These non-GAAP financial measures, which are defined below, should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly-titled measures presented by other companies.

HIIQ is presenting these non-GAAP financial measures to assist investors in seeing HIIQ’s operating results through the eyes of management and because HIIQ believes that these measures provide a useful tool for investors to use in assessing HIIQ’s operating performance against prior period operating results and against business objectives. HIIQ uses the non-GAAP financial measures in evaluating its operating results and for financial and operational decision-making purposes.

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

       
HEALTH INSURANCE INNOVATIONS, INC.
Condensed Consolidated Balance Sheets
($ in thousands, except share and per share data)
       
  September 30, 2018   December 31, 2017
  (unaudited)    
Assets      
Current assets:      
Cash and cash equivalents $ 33,135     $ 40,907  
Restricted cash 15,140     14,920  
Accounts receivable, net, prepaid expenses and other current assets 2,661     2,227  
Advanced commissions, net 38,270     39,549  
Income taxes receivable 2,542      
Total current assets 91,748     97,603  
Long-term advanced commissions 4,380      
Property and equipment, net 5,400     5,408  
Goodwill 41,076     41,076  
Intangible assets, net 4,551     5,942  
Deferred tax assets 26,160     14,960  
Other assets 77     96  
Total assets $ 173,392     $ 165,085  
       
Liabilities and stockholders’ equity      
Current liabilities:      
Accounts payable and accrued expenses $ 37,741     $ 39,725  
Deferred revenue 221     662  
Income taxes payable     787  
Due to member 1,137     1,775  
Other current liabilities 11     5  
Total current liabilities 39,110     42,954  
Due to member 26,293     15,096  
Other liabilities 18     34  
Total liabilities 65,421     58,084  
Commitments and contingencies      
Stockholders’ equity:      
Class A common stock (par value $0.001 per share, 100,000,000 shares authorized; 14,405,824 and 12,731,758 shares issued as of September 30, 2018 and December 31, 2017, respectively; 13,515,203 and 12,350,981 shares outstanding as of September 30, 2018 and December 31, 2017, respectively) 14     13  
Class B common stock (par value $0.001 per share, 20,000,000 shares authorized; 2,541,667 and 3,841,667 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively) 3     4  
Preferred stock (par value $0.001 per share, 5,000,000 shares authorized; no shares issued and outstanding as of September 30, 2018 and December 31, 2017)      
Additional paid-in capital 91,960     71,770  
Treasury stock, at cost (890,621 and 380,777 shares as of September 30, 2018 and December 31, 2017, respectively) (29,859 )   (6,887 )
Retained earnings 29,361     19,305  
Total Health Insurance Innovations, Inc. stockholders’ equity 91,479     84,205  
Noncontrolling interests 16,492     22,796  
Total stockholders’ equity 107,971     107,001  
Total liabilities and stockholders' equity $ 173,392     $ 165,085  
               


HEALTH INSURANCE INNOVATIONS, INC.
Condensed Consolidated Statements of Income (unaudited)
($ in thousands, except share and per share data)
       
  Three Months Ended September 30,   Nine Months Ended September 30,
  2018   2017   2018   2017
Revenues (premium equivalents of $114,498 and $99,407 for the three months ended September 30, 2018 and 2017, respectively and $330,633 and $289,243 for the nine months ended September 30, 2018 and 2017, respectively) $ 74,013     $ 63,335     $ 213,487     $ 180,986  
Operating expenses:              
Third-party commissions 46,695     36,603     131,792     103,146  
Credit card and ACH fees 1,570     1,289     4,318     3,704  
Selling, general and administrative 18,260     15,503     54,197     45,457  
Depreciation and amortization 1,270     1,028     3,655     2,958  
Total operating expenses 67,795     54,423     193,962     155,265  
Income from operations 6,218     8,912     19,525     25,721  
               
Other (income) expense:              
Interest (income) expense 15     (2 )   (39 )   (2 )
TRA expense 721         721      
Other expense 29     23     88     27  
Net income before income taxes 5,453     8,891     18,755     25,696  
Provision for income taxes 1,466     2,889     4,757     4,220  
Net income 3,987     6,002     13,998     21,476  
Net income attributable to noncontrolling interests 943     2,117     3,942     7,374  
Net income attributable to Health Insurance Innovations, Inc. $ 3,044     $ 3,885     $ 10,056     $ 14,102  
               
Per share data:              
Net income per share attributable to Health Insurance Innovations, Inc.              
Basic $ 0.24     $ 0.33     $ 0.83     $ 1.31  
Diluted $ 0.22     $ 0.30     $ 0.76     $ 1.21  
Weighted average Class A common shares outstanding              
Basic 12,853,739     11,700,941     12,130,722     10,724,750  
Diluted 14,060,453     12,742,952     13,302,811     11,692,755  
                       


HEALTH INSURANCE INNOVATIONS, INC.
Condensed Consolidated Statements of Cash Flows (unaudited)
($ in thousands, except share and per share data)
   
  Nine Months Ended September 30,
  2018   2017
Operating activities:      
Net income $ 13,998     $ 21,476  
Adjustments to reconcile net income to net cash provided by operating activities:      
Stock-based compensation 10,503     4,437  
Depreciation and amortization 3,655     2,958  
Loss on disposal of assets 1      
Deferred income taxes 460     1,079  
Changes in operating assets and liabilities:      
(Increase) decrease in accounts receivable, prepaid expenses and other assets (398 )   96  
(Increase) decrease in advanced commissions (3,101 )   9,991  
Increase in income taxes receivable (2,542 )    
Decrease in income taxes payable (787 )   (935 )
(Decrease) increase in accounts payable, accrued expenses and other liabilities (1,994 )   1,682  
Decrease in deferred revenue (441 )   (173 )
Increase in due to member pursuant to tax receivable agreement 721      
Net cash provided by operating activities 20,075     40,611  
Investing activities:      
Capitalized internal-use software (1,290 )   (2,104 )
Purchases of property and equipment (534 )   (239 )
Net cash used in investing activities (1,824 )   (2,343 )
Financing activities:      
Payments for noncompete obligation     (96 )
Payments related to tax withholding for share-based compensation (3,470 )   (448 )
Issuances of Class A common stock under equity compensation plans 6     32  
Purchases of Class A common stock pursuant to share repurchase plan (19,502 )    
Distributions to member (2,837 )   (5,318 )
Net cash used in financing activities (25,803 )   (5,830 )
Net (decrease) increase in cash and cash equivalents, and restricted cash (7,552 )   32,438  
Cash and cash equivalents, and restricted cash at beginning of period 55,827     25,370  
Cash and cash equivalents, and restricted cash at end of period $ 48,275     $ 57,808  
       
Supplemental cash flow information:      
Cash paid during the period for:      
Income taxes, net $ 7,651     $ 4,113  
Interest 6     10  
Non-cash investing activities:      
Capitalized stock-based compensation $ 433     $  
Loss on disposal of assets 1     $  
Non-cash financing activities:      
Change in due to member related to Exchange Agreement $ 10,476     $ 18,619  
Change in deferred tax asset related to Exchange Agreement (11,661 )   (20,732 )
Issuance of Class A common stock in a private offering related to Exchange Agreement 9,232     16,487  
Exchange of Class B membership interests related to Exchange Agreement (8,048 )   (14,374 )
           


Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(unaudited)
($ in thousands)
       
  Three Months Ended
September 30,
  Nine Months Ended 
September 30,
  2018   2017   2018   2017
Net income $ 3,987     $ 6,002     $ 13,998     $ 21,476  
Interest (income) expense 15     (2 )   (39 )   (2 )
Depreciation and amortization 1,270     1,028     3,655     2,958  
Provision for income taxes 1,466     2,889     4,757     4,220  
EBITDA (1) 6,738     9,917     22,371     28,652  
Stock-based compensation and related costs 4,500     2,782     10,766     4,897  
Transaction costs 64     5     283     761  
Tax receivable agreement liability adjustment 721         721      
Indemnity and other related legal costs 1,301     238     2,334     886  
Severance, restructuring and other charges 706         3,658     247  
Adjusted EBITDA (2) $ 14,030     $ 12,942     $ 40,133     $ 35,443  
                               


Reconciliation of Net Income to Adjusted Net Income per Share
(unaudited)
 ($ in thousands except per share data)
       
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2018   2017   2018   2017
Net income $ 3,987     $ 6,002     $ 13,998     $ 21,476  
Interest (income) expense 15     (2 )   (39 )   (2 )
Amortization 464     479     1,391     1,502  
Provision for income taxes 1,466     2,889     4,757     4,220  
Stock-based compensation and related costs 4,500     2,782     10,766     4,897  
Transaction costs 64     5     283     761  
Tax receivable agreement liability adjustment 721         721      
Indemnity and other related legal costs 1,301     238     2,334     886  
Severance, restructuring and other charges 706         3,658     247  
Adjusted pre-tax income 13,224     12,393     37,869     33,987  
Pro forma income taxes (3,174 )   (4,709 )   (9,089 )   (12,915 )
Adjusted net income (3) $ 10,050     $ 7,684     $ 28,780     $ 21,072  
Total weighted average diluted share count 16,602     16,585     16,592     16,260  
Adjusted net income per share (4) $ 0.61     $ 0.46     $ 1.73     $ 1.30  
  1. EBITDA is defined as net income before interest expense, income taxes and depreciation and amortization. We have included EBITDA in this report because it is a key measure used by our management and Board of Directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating EBITDA can provide a useful measure for period-to-period comparisons of our business. However, EBITDA does not represent, and should not be considered as, an alternative to net income or cash flows from operations, each as determined in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Other companies may calculate EBITDA differently than we do. EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.
     
  2. To calculate adjusted EBITDA, we calculate EBITDA, which is then further 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 EBITDA does not represent, and should not be considered as, an alternative to net income or cash flows from operations, each as determined in accordance with GAAP. We have presented adjusted EBITDA because we consider it an important supplemental measure of our performance and believe that it is frequently used by analysts, investors and other interested parties in the evaluation of companies. Other companies may calculate adjusted EBITDA differently than we do. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.
     
  3. To calculate adjusted net income, we calculate net income then add 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. From adjusted pre-tax net income we apply a pro-forma tax expense calculated at an assumed rate of 24% for the three and nine months ended September 30, 2018 and 38% for the three and nine months ended September 30, 2017. We believe that when measuring Company and executive performance against the adjusted net income measure, applying a pro forma tax rate better reflects the performance of the Company without regard to the Company’s organizational tax structure. We have included adjusted net income in this report because it is a key performance measure used by our management to understand and evaluate our core operating performance and trends and because we believe it is frequently used by analysts, investors and other interested parties in their evaluation of our company. Other companies may calculate this measure differently than we do. Adjusted net income has limitations as an analytical tool, and you should not consider it in isolation or substitution for earnings per share as reported under GAAP.
     
  4. Adjusted net income per share is computed by dividing adjusted net income by the total number of diluted Class A and Class B shares of our common stock for each period. We have included adjusted net income per share in this report because it is a key measure used by our management to understand and evaluate our core operating performance and trends and because we believe it is frequently used by analysts, investors and other interested parties in the evaluation of companies. Other companies may calculate this measure differently than we do. Adjusted net income per share has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for earnings per share as reported under GAAP.
       
Reconciliation of Premium Equivalents to Revenues
(unaudited)
($ in thousands)
       
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2018   2017   2018   2017
Premium equivalents (1) $ 114,498     $ 99,407     $ 330,633     $ 289,243  
Less risk premium 38,569     34,502     111,685     103,545  
Less amounts earned by third party obligors 1,916     1,570     5,461     4,712  
Revenues $ 74,013     $ 63,335     $ 213,487     $ 180,986  
  1. Premium equivalents is defined as our total collections, including the combination of premiums, fees for discount benefit plans, third-party commissions and referral fees. All amounts not paid out as risk premium to carriers or paid out to other third-party obligors are considered to be revenues for financial reporting purposes. We have included premium equivalents in this report because it is a key measure used by our management to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short- and long-term operational plans. In particular, the inclusion of premium equivalents can provide a useful measure for period-to-period comparisons of our business. This financial measurement is considered a non-GAAP financial measure and is not recognized under generally accepted accounting principles in the United States of America (“GAAP”) and should not be used as, and is not an alternative to, revenues as a measure of our operating performance.
       
Summary of Selected Metrics
(unaudited)
($ in thousands)
       
  Submitted Applications during the Three Months Ended September 30,    
  2018   2017   Change
IFP 80,500   93,100   (13.5 )%
Supplemental products 57,000   60,800   (6.3 )%
Total 137,500   153,900   (10.7 )%


  Policies in Force as of September 30,    
  2018   2017   Change
IFP 192,700     176,100     9.4 %
Supplemental products 185,300     171,800     7.9 %
Total 378,000     347,900     8.7 %


  Submitted IFP Applications by Channel
  Q3’17   Q4’17   Q1’18   Q2’18   Q3’18
eCommerce 20,600   27,200   18,900   18,700   17,700
All Others 72,500   98,600   73,100   73,400   62,800
Total 93,100   125,800   92,000   92,100   80,500


  Core SG&A as a Percentage
of Revenue
  Q3’17   Q4’17   Q1’18   Q2’18   Q3'18
Total SG&A 15,503   18,989     16,213   19,724   18,260
Less: Stock-based compensation and related costs 2,782   2,993     2,633   3,601   4,500
Less (add): Transaction costs 5   (16 )   56   163   64
Less: Indemnity and other related legal costs 238   672     287   745   1,301
Less: Severance, restructuring and other charges             2,952   706
Less: Marketing and Advertising 2,249   3,657     2,232   2,071   1,839
Core SG&A (1) 10,229   11,683     11,005   10,192   9,850
% of Revenue 16.2 %   16.8 %   16.2 %   14.2 %   13.3 %
  1. Core SG&A is defined as total SG&A adjusted for stock-based compensation and related costs, transaction costs, indemnity and other related legal costs, severance, restructuring and other charges, and marketing leads and advertising expense.


Contacts:

Health Insurance Innovations, Inc.:
Michael Hershberger
Chief Financial Officer
(813) 397-1187
mhershberger@hiiq.com

Investor Contact:
John Evans
PIR Communications
(415) 309-0230
IR@hiiquote.com

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Source: Health Insurance Innovations, Inc.