NEW YORK, NY / ACCESSWIRE / February 26, 2022 / Pomerantz LLP notifies traders of eHealth, Inc. (NASDAQ:EHTH) (“eHealth” or the “Enterprise”) of a pending lawsuit versus eHealth and particular of its officers. The class action, In re eHealth Inc. Securities Litigation, No. 4:20-cv-02395-JST (the “Class Motion”), is pending in the United States District Court for the Northern District of California on behalf of a class consisting of all persons and entities other than Defendants that obtained or usually acquired eHealth widespread inventory involving April 26, 2018 and July 23, 2020, inclusive (the “Course” and the “Class Interval”). The Class Action pursues claims from the Defendants below the Securities Exchange Act of 1934 (the “Exchange Act”).
If you are a shareholder who purchased eHealth inventory throughout the Course Period of time, you have right until March 18, 2022 to request the Court docket to appoint you as Direct Plaintiff for the course. To talk about this motion, call Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll-cost-free, Ext. 7980. All those who inquire by e-mail are inspired to involve their mailing handle, telephone amount, and the number of shares obtained.
eHealth is a health and fitness insurance coverage broker that focuses on selling Medicare-relevant insurance policies on behalf of private insurers. Its primary resource of income is commissions from promoting Medicare Edge, Medicare Dietary supplement, and Medicare Aspect D prescription drug guidelines. On January 1, 2018, eHealth adopted and implemented a new accounting common for recognizing revenue. This normal, referred to herein as Accounting Normal Codification 606 or ASC 606, allowed eHealth to understand instantly the entirety of the commissions it anticipated to obtain more than the predicted everyday living of the procedures. Even though eHealth sold yearly policies that could be cancelled at any time by the buyer, it assumed that its procedures would be renewed for many many years. As a result, for a lot of of eHealth’s Medicare-linked guidelines, it identified involving 3 and five yrs of commissions quickly upon the sale of the plan.
The Criticism in the Course Action alleges that the assumption that eHealth’s buyers would renew its insurance policies was unrealistic and opposite to eHealth’s new encounter of the two cancellations and renewals. Beginning in 2017, eHealth started out soliciting Medicare shoppers with television advertising and marketing. Late-evening commercials boasting $ regular monthly program premiums properly produced a surge in customers in a shorter interval of time. Concerning 2017 and 2018, the number of Medicare-associated coverage programs submitted to eHealth by candidates grew by 39%. These buyers, however, were being notorious for cancelling their insurance policies in quick durations of time, leading to eHealth to encounter sky-rocketing “member churn” ratios, i.e., the share of clients who cancel their policies within just the to start with yr. Notwithstanding, eHealth was capable to deliver analysts and investors with history-setting earnings owing to the simple fact that it was in a position to acknowledge a few- to 5-years of commission profits for these guidelines upfront and instantly.
The Complaint more alleges that Course users had been materially harmed by eHealth’s untrue and misleading statements. As a immediate final result of Defendants’ materially fake and misleading statements, eHealth’s stock value artificially greater from a relative continuous price tag of all 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 Money, a perfectly-known and hugely respected investigate organization, published a report revealing eHealth’s accounting misconduct. The report disclosed, amongst other matters, that eHealth’s “really intense accounting masks  a significantly unprofitable business,” “that the crucial driver of progress given that 2018 has been EHTH’s reliance on Immediate Reaction tv promoting, which attracts an unprofitable, higher churn enrollee,” “that EHTH’s persistence assumptions in its LTV product [under ASC 606] look extremely aggressive when as opposed to reality.” Muddy Waters report also disclosed that eHealth’s monetary statements for 2019: (a) overstated revenue by $128 million (b) overstated functioning revenue by $263 million and (c) understated an operating reduction of -$181 million. The Muddy Waters report resulted in a sharp decline in the price of eHealth’s inventory, plummeting to $103.20 per share.
Subsequently, on July 23, 2020, when eHealth introduced its earnings results for the next quarter of fiscal 2020, its inventory rate fell yet again as the information contained in its announcement verified substantive facets of the “member churn” allegations earlier asserted in the Muddy Waters report. In response, eHealth’s inventory price tag declined from a closing rate of $114 for each share on July 23, 2020 to $79.17 for each share on July 24, 2020.
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, Paris, and Tel Aviv, is acknowledged as a person of the premier companies in the spots of corporate, securities, and antitrust class litigation. Started by the late Abraham L. Pomerantz, acknowledged as the dean of the course motion bar, Pomerantz pioneered the discipline of securities course actions. Nowadays, more than 85 years later, Pomerantz carries on in the tradition he set up, battling for the legal rights of the victims of securities fraud, breaches of fiduciary obligation, and company misconduct. The Company has recovered numerous multimillion-dollar damages awards on behalf of course users. See www.pomlaw.com.
Source: Pomerantz LLP
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