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Investigations  /  05.27.2020

Investigation of eHealth, Inc.

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eHealth, Inc. (EHTH) Accused of Concealing its Highly Unprofitable Business

On January 22, 2019, eHealth issued a press release announcing its full year 2018 results, touting the Company’s “operational achievements” and its ability “to exceed [its] revenue and EBITDA expectations for 2018.” Contrary to eHealth’s representations, on April 8, 2020, Muddy Waters Research published a report disclosing “eHealth’s highly aggressive accounting masks what we believe is a highly unprofitable business” and that “the key driver of growth since 2018 has been [eHealth’s] reliance on Direct Response television advertising, which attracts an unprofitable, high churn enrollee.” As a result of its findings, Muddy Waters concluded that “[eHealth] management is, in our view, running a massive stock promotion.” On this news, eHealth’s stock price fell $12.82, or 12%, to close at $103.20 per share.

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