NEW YORK, March 12, 2022 (Globe NEWSWIRE) — Pomerantz LLP notifies buyers of eHealth, Inc. EHTH (“eHealth” or the “Firm”) of a pending lawsuit in opposition to eHealth and certain of its officers. The class action, In re eHealth Inc. Securities Litigation, No. 4:20-cv-02395-JST (the “Course Motion”), is pending in the United States District Court for the Northern District of California on behalf of a class consisting of all folks and entities other than Defendants that purchased or or else acquired eHealth typical inventory in between April 26, 2018 and July 23, 2020, inclusive (the “Course” and the “Class Period of time”). The Course Action pursues promises in opposition to the Defendants beneath the Securities Exchange Act of 1934 (the “Exchange Act”).
If you are a shareholder who bought eHealth stock for the duration of the Class Interval, you have until eventually March 18, 2022 to ask the Court to appoint you as Direct Plaintiff for the class. To go over this motion, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll-free of charge, Ext. 7980. These who inquire by e-mail are inspired to include things like their mailing deal with, telephone number, and the amount of shares obtained.
eHealth is a health and fitness insurance plan broker that focuses on offering Medicare-associated insurance policies on behalf of personal insurers. Its key source of profits is commissions from selling Medicare Gain, Medicare Nutritional supplement, and Medicare Part D prescription drug insurance policies. On January 1, 2018, eHealth adopted and applied a new accounting conventional for recognizing revenue. This common, referred to herein as Accounting Standard Codification 606 or ASC 606, allowed eHealth to recognize promptly the entirety of the commissions it predicted to receive over the envisioned daily life of the guidelines. Although eHealth bought annual policies that could be cancelled at any time by the customer, it assumed that its insurance policies would be renewed for many a long time. Consequently, for many of eHealth’s Medicare-related policies, it acknowledged between a few and 5 yrs of commissions straight away upon the sale of the policy.
The Criticism in the Class Motion alleges that the assumption that eHealth’s customers would renew its insurance policies was unrealistic and opposite to eHealth’s the latest practical experience of each cancellations and renewals. Beginning in 2017, eHealth started out soliciting Medicare consumers with tv promoting. Late-evening commercials boasting $ month-to-month approach rates correctly created a surge in clients in a brief period of time. Between 2017 and 2018, the selection of Medicare-connected insurance policy programs submitted to eHealth by applicants grew by 39%. These clients, however, have been infamous for cancelling their insurance policies in limited durations of time, leading to eHealth to expertise sky-rocketing “member churn” ratios, i.e., the percentage of prospects who terminate their policies in just the 1st year. Notwithstanding, eHealth was ready to deliver analysts and investors with document-environment earnings because of to the simple fact that it was in a position to understand 3- to 5-many years of fee income for these procedures upfront and quickly.
The Grievance further alleges that Course associates were materially harmed by eHealth’s untrue and misleading statements. As a immediate consequence of Defendants’ materially false and deceptive statements, eHealth’s stock cost artificially elevated from a relative regular price tag of around $15.32 for each share of frequent inventory on March 19, 2018 to $136.32 prior to April 8, 2020. It was on that day that Muddy Waters Funds, a well-regarded and very highly regarded analysis organization, revealed a report revealing eHealth’s accounting misconduct. The report disclosed, between other matters, that eHealth’s “highly aggressive accounting masks  a considerably unprofitable small business,” “that the crucial driver of expansion considering the fact that 2018 has been EHTH’s reliance on Immediate Response tv promoting, which draws in an unprofitable, high churn enrollee,” “that EHTH’s persistence assumptions in its LTV product [under ASC 606] appear to be highly aggressive when in comparison to fact.” Muddy Waters report also disclosed that eHealth’s economical statements for 2019: (a) overstated earnings by $128 million (b) overstated functioning income by $263 million and (c) understated an working reduction of -$181 million. The Muddy Waters report resulted in a sharp decrease in the price tag of eHealth’s stock, plummeting to $103.20 for each share.
Subsequently, on July 23, 2020, when eHealth declared its earnings effects for the 2nd quarter of fiscal 2020, its inventory cost fell all over again as the facts contained in its announcement verified substantive aspects of the “member churn” allegations previously asserted in the Muddy Waters report. In reaction, eHealth’s stock selling price declined from a closing selling price of $114 for every share on July 23, 2020 to $79.17 for each share on July 24, 2020.
Pomerantz LLP, with workplaces in New York, Chicago, Los Angeles, Paris, and Tel Aviv, is acknowledged as one of the premier corporations in the spots of corporate, securities, and antitrust course litigation. Founded by the late Abraham L. Pomerantz, recognized as the dean of the course motion bar, Pomerantz pioneered the industry of securities course actions. Now, more than 85 many years later, Pomerantz proceeds in the custom he recognized, preventing for the legal rights of the victims of securities fraud, breaches of fiduciary obligation, and company misconduct. The Business has recovered numerous multimillion-greenback damages awards on behalf of course associates. See www.pomlaw.com.
Robert S. Willoughby
888-476-6529 ext. 7980