153 0 Kommentare Notice of Lead Plaintiff Deadline for Shareholders in the eHealth, Inc. Securities Class Action Lawsuit - Seite 2

On April 8, 2020, Muddy Waters Research published a report stating that the Company and its management were using highly aggressive accounting practices designed to conceal the Company’s unprofitability and to make the Company’s prospects appear far more robust than they really were. Muddy Waters wrote that eHealth’s “highly aggressive accounting masks what we believe is a significantly unprofitable business.” The report also stated that eHealth’s “persistence assumptions in its [long-term value (‘LTV’)] model seem highly aggressive when compared to reality,” that “[a]fter [Accounting Standards Codification] 606 went into effect, member churn immediately skyrocketed,” and that eHealth “is pursuing low quality, lossmaking growth while its LTVs are based on lower churn, pre-growth cohorts.” Muddy Waters concluded that “the key driver of growth since 2018 has been [the Company’s] reliance on Direct Response television advertising, which attracts an unprofitable, high churn enrollee. To generate this unprofitable growth, [eHealth] has been incinerating cash, which we expect it to continue to do until this value destruction slows down or stops. [eHealth] management is, in our view, running a massive stock promotion.” On this news, the price of eHealth stock fell from an April 7, 2020 closing price of $116.02 per share to an April 8, 2020 closing price of $103.20 per share, a one-day drop of $12.82 per share, or approximately 12%.

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