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eHealth, Inc. (NASDAQ: EHTH) Investor Securities Class Action Lawsuit 04/09/2020

  • If you purchased shares of eHealth, Inc. (NASDAQ: EHTH), you may have certain options. Please contact the Shareholders Foundation, Inc.

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Lawsuit Overview

Company
eHealth, Inc.
Security
NASDAQ: EHTH

Case Name
eHealth Shareholder Class Action Lawsuit 04/09/2020
Type of Lawsuit
Shareholder Class Action
Court of Filing
U.S. District Court for the Northern District of California

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Summary

August 25 2020 - An amended complaint was filed.

April 8, 2020 - An investor in shares of eHealth, Inc. (NASDAQ: EHTH) filed a lawsuit in the U.S. District Court for the Northern District of California over alleged violations of Federal Securities Laws by eHealth, Inc. in connection with certain allegedly false and misleading statements made between March 19, 2018 and April 7, 2020.

Santa Clara, CA based eHealth, Inc. provides private health insurance exchange services to individuals, families, and small businesses in the United States and China. eHealth, Inc. reported that its annual Total Revenue rose from $251.39 million in 2018 to $506.2 million in 2019, and that its Net Income increased from $0.241 million in 2018 to $66.88 million in 2019.

On April 8, 2020, a report was published wherein a series of allegedly alarming red flags about eHealth were detailed. Specifically, the report stated that EHTH management is, in our view, running a massive stock promotion. In addition to using aggressive modeling assumptions, they misleadingly downplay the need for ongoing service and retention. This is the crux of how they justify booking multiple years of revenue at one time. Management also manipulates its presentation of churn to be misleadingly low. EHTH appears to be booking multi-year tail revenue at the end of each cohort's estimated life, which is extremely aggressive in light of the significantly elevated churn.
Shares of eHealth, Inc. (NASDAQ: EHTH) declined to as low as $93.06 per share on April 8, 2020.

According to the complaint the plaintiff alleges on behalf of purchasers of eHealth, Inc. (NASDAQ: EHTH) common shares between March 19, 2018 and April 7, 2020, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that between March 19, 2018 and April 7, 2020, the defendants misrepresented and/or failed to disclose to investors that it had highly aggressive accounting and modeling assumptions, that it suffered from skyrocketing rate of member churn, resulting from eHealth's pursuit of low quality, lossmaking growth, that it relied on direct response television advertising, which attracts an unprofitable, high churn enrollee, and that as a result of the foregoing, defendants' public statements were materially false and misleading at all relevant times.