All right. Good afternoon, everyone, and thank you for joining the eHealth Fireside Chat. My name is Daniel Grosslight. I'm the Citi Healthcare Technology Analyst. I'm very pleased to welcome Fran Soistman, the CEO, and John Stelben, the CFO of eHealth with us this afternoon. It's been a bit of a rollercoaster for the e-brokers, I think it's fair to say. I'm glad we have a chance to kind of dig into the sector and how eHealth has fared and changed a bit to deal with some of these some headwinds in this space. Let's start with that kind of broader question to begin with.
If I look back the past few years, the 2021 AEP season for you guys and the sector broadly was pretty difficult. I think everyone was kind of chasing growth because growth had been so good in 2020 and in 2019, and the unit economics kind of broke down for a lot of folks. This AEP, I think it's been pretty apparent that things have changed and become a little more rational in the market, and hopefully that's durable. From a broad industry standpoint, can you give us a little color on kind of what happened over kind of the past couple AEP periods, what's changed, and how durable some of the changes might be?
First, thank you for having us, Daniel. It's good to see you. You're right. It has been, I think an important change from 2021 to 2022 AEP. I'm hopeful that this is more indicative of a future trend in terms of being rational. Back in 2021, I mean, you have to understand that the... You know, I joined in November of 2021. AEP was pretty well baked by the time I took over. Companies had been rewarded for top-line growth. Their stock prices reflected that because of ASC 606. When it changed, it changed dramatically, and it changed quickly.
Our competitors, if you look at their balance sheets, they have a lot of debt, and I'm sure those debts have covenants that certainly limit their ability to spend at the rates that they may have spent in the previous years. The reality is that I think between a combination of stock price pressure, capital limitations, and maybe even covenant requirements, that at least our public company competitors are. We have definitely seen a behavior change, more rational. Everyone communicated well in advance of AEP that growth would be lower than previous years. I think the private companies, they too face some challenges because the attractiveness of the sector has changed because of the competitive dynamics, and I don't think they're necessarily in a position to renew their capital requirements going forward.
Yeah, it's, we're at an inflection point. There's no doubt about it. In my mind, we're at an inflection point.
Yeah.
It bodes well for the industry, and it bodes well for consumers, getting us really focused on quality, focused on retention, and obviously top line, bottom line growth have to be aligned.
Yeah. Yeah. Is there a bit of a prisoner's dilemma type of problem in this, in this industry? Meaning of, you know, this year, everyone kind of stepped back and took a breath. Is there an issue where maybe if one of your competitors really pushes on the gas next year, you have to do the same? Or are you willing to and able to take a step back and say, "You do what you do. I'm gonna focus on my quality.
Well, it reminds me of the old expression that our parents used to say to us that, you know, "If Johnny's gonna jump off the cliff, are you gonna jump off with him?" Of course, there's only one right answer to that. I think that applies to the business world as well, that, you know, we're at eHealth, we're disciplined. It's a very different company today than it was, you know, 16 months ago. Disciplined, focused on profitable growth, not growth at the expense of the bottom line, that's gonna serve our shareholders well. It's gonna serve our carrier partners well too because they also know that we are focused on the customer experience and very much aligned with how they see the world.
It's all about making sure that beneficiaries are sold the product that best addresses their needs and preferences. That's going to begin to affect in a positive way the rapid dis-enrollment rates, reducing CTMs, which we at eHealth have experienced a rather dramatic reduction in CTMs thus far. It's, it's gonna, I think, be a more rational, more stable environment. Growth will come. Growth will come through just pure demographics. I mean, you know, the realities of 11,000 people aging into Medicare eligibility every day haven't changed. The, the runway is still long in terms of, you know, reaching 82 million-83 million Medicare eligibles over the next decade. That, that bodes well. You know, we don't focus exclusively on Medicare. We've got individual, we've got MedSup, ancillary products.
Our new focus on dedicated carrier arrangements further diversifies our portfolio and allows us to manage our cash more effectively than we previously did. I'm as encouraged as ever about eHealth's future in this space.
Yeah. Yeah. We'll definitely touch on some of those newer-.
Sure.
areas as well. Sticking with Medicare Advantage, and just more broadly, you know, from the space in general, it's come under a little bit of pressure, Medicare Advantage, more recently. You've got the RADV audits, you've got an advance notice that wasn't generous, let's put it mildly. How do you think about the macro slowdown in Medicare Advantage and some of these headwinds facing the space in general?
You're right. I mean, the storm clouds have been gathering, you know, sequentially, it really started with the Star Ratings resetting. That impacts the industry's ability to buy down the benefits, as they say, through the rebate process. The RADV ruling, I think, you know, shook the industry. I think in terms of the retroactive component and the prospective, I think they probably have accrued for that exposure. That's more of a prospective issue in terms of, you know, how error rates are extrapolated. And it's real. I mean, it's not to be taken lightly. Then, of course, the advance notice could see, you know, maybe a modest improvement over that. That remains to be seen. Historically, that's been the case.
I, you know, I've asked this question a lot, Daniel, and there isn't an answer that I think can be applied uniformly across the industry. I think there are some carriers that are in a much better place to navigate, you know, the challenges that lie ahead. I think there's the large carriers, in particular, have great sensitivity to avoiding a volatile book of business. They wanna protect their block. Having, you know, been on the carrier side for most of my career, I can say that there is far more sophistication today in understanding the implications of benefit changes to preserve that zero dollar premium, which is all important in the Medicare Advantage space. I think that they're gonna have to thread the needle carefully.
It will be challenging, but I think, you know, everything is on a contract by contract basis, with the exception of the advance notice, right, the rate adjustment. You may see some volatility in certain geographies and less in others and none in others. I think it's gonna be a mix.
Safe to say, though, that, In geographies that are affected, we will likely see, like, benefit, supplemental benefits come down a bit.
I think it's the most logical place to start. Yeah.
Yeah. How do you think that's gonna impact your business in those areas?
Well, you know, again, we are the mechanism to make sure that beneficiaries are getting the best value for either the dollar spent in premium or the zero-dollar premium. Nevertheless, our challenge will be understanding where the volatility is most likely to occur and to be proactive with our existing book of business to make sure we avoid a switching scenario where they choose not to shop with us.
Yeah.
to make that switch. There's no reason for us to lose customer other than through mortality.
Yeah.
I mean.
Yeah.
I've said that since I've joined the organization. It's really a call to action to be proactive, anticipate where the disruption could be the greatest, and make sure that we're out in front of it. There likely will be more shopping in certain areas because to the extent that carriers were not able to mitigate these changes in a way that either preserved the zero-dollar premium or didn't result in a lot of benefit changes, people are gonna shop.
Yeah. Remind me what your recapture rate is these days?
Historically, it's been about 10%.
10%. Where do you...
I see that improving.
Where do you think that can go to?
Well, you know, as we continue to enhance the eHealth brand, which is one of our, you know, key strategies from this point forward, I think that number should go up, and I'd like to say it should move up on an accelerated basis once we really gain the traction with the branding initiatives. I'll share a quick story with you. We did focus groups back in December with consumers, beneficiaries. They didn't know it was eHealth. The moderator shared the eHealth experience, the shop, the educate, the advise, the enroll experience. And the reaction from people were, "Does this exist?
Mm-hmm.
I mean, they were excited about it because it was described as, you know, a company that could provide multiple choices that best align with your needs and preferences, and it doesn't cost anything.
Was unbiased.
Unbiased, yes. The reaction was, I mean, and it's all on camera, right? You, you can actually see it, and you can hear it. Amazing. When eHealth's name was introduced, people were writing it down. They wanted to know more, they wanted to go onto our website right away. I think by telling our story in terms of what we do, how we do it, and the value to beneficiaries, I see a lot of good things coming out of it.
Yeah. Yeah.
I really do.
Let's now dig into some of the shifts at eHealth, specifically more recently. Fran, you mentioned you came in at, I don't know, probably the most difficult AEP period of eHealth's kinda tenure in Medicare. I don't know if that's fair. But you kind of That was already baked when you had arrived, but you got a high level view of what was going on. What surprised you the most when you first joined eHealth, and what were your kinda first calls to action?
Well, you know, I knew eHealth. I mean, I was familiar with eHealth because of relationships that I had on the carrier side, but I didn't have that, you know, more up close and intimate understanding. I think once I got much more familiar with our online platform and saw its true capabilities and knew that there was still opportunities to evolve it further to make that customer experience even more effective, I got pretty excited about that. I mean, we're an omni-channel distribution organization. You know, we have a telephonic capability that didn't perform great in 2021, but performed incredibly well in 2022. Again, with upside potential there that we wanna help realize.
The online experience, you know, we introduced chat last year, that really made a I think it's fair to say, a profound difference in our AEP and the other tools that we introduced to help our agents improve their effectiveness, more training. I got pretty excited about, you know, just being able to make a few changes in the limited time I've been there. That was, you know, something to get excited about. To see it tested and now produce and know that there's still a lot of upside opportunities.
You just introduced 2023 guidance a couple days ago, which calls for around 6% top line growth and around $37 million of EBITDA improvement. Let's first dig into the drivers of that growth. It seems like at least for 2023, much more of that growth is gonna be driven by areas outside of the core commissioned MA line item. You mentioned IFP is big for you. Your BPO offering is really big for you. MedSup and ancillary products. Curious, what's driving that shift away from what I would, you know, consider your historic core strength in Medicare?
Well, I wouldn't say it's driving in a way. I think it's complementing. You know, the dedicated carrier arrangements, broker record arrangements are really, very comparable to what we do as eHealth. The only difference is in those arrangements we're dedicated to a specific carrier. Different dedicated teams, different legal entity, so that we preserve sort of the purity of eHealth being unbiased, you know, offering up a broad range of choices. When we're dedicated, we're representing the ABC carrier. That is complementary, and it also is a more effective use of our cash 'cause we don't have to spend the money on lead gen.
Yeah.
That's lead gen investments are the responsibility of the carrier. We're converting that. Of course, they have high expectations, appropriately high expectations that, you know, we're prepared to deliver on. We did in the past AEP. The IFP, small group, you know, with the ICHRA opportunity, that's gonna continue to gain momentum. We wanna make sure that, you know, we're in lockstep with that opportunity. We're not trailing it, and I think it will continue to play an important part for years to come. Medicaid redetermination, you know, difficult to quantify how that will play out 'cause it's a state-by-state situation.
Yeah.
In some states, you know, we don't even play, or not an option to provide an shop, buy, enroll experiences, but in many we are. I look at that as just being opportunistic. John, you wanna?
Yeah, I would say a couple things, Fran. You know, at the midpoint it looks like six, but when you take tail out, it's closer to eight.
Good point.
Underneath that, Medicare Advantage is growing right around the mid-single digits, so that business is still continuing to move forward. We touched on a little bit on the new BPO business, which that's a couple points plus at the midpoint when you think about it. Even underneath the IFP business, while it had very positive tail in 2022, when you adjust that out, it's still growing on an absolute sort of apples to apples basis. We feel very good about the revenue growth, and we're doing it on a basis of virtually flattish year-over-year variable cost.
Mm-hmm.
Through improvement of more efficient marketing, through better conversion rates, and just, I mean, it's execution every day. If you talk to Roman Rariy, who leads our call center and the sales mastery he's put in place, our sales leader there, Bob Reese, the stuff they do every day is amazing. I came in during AEP. I've been here three and a half months. I went to the we had daily AEP meetings, and these guys were talking about how they did things hour by hour. It was incredible.
Yeah.
From a CFO perspective, it gives you great confidence in our ability to execute going forward.
Yep. Thanks.
I'd add one more point, Daniel, and that is MedSup. you know, eHealth had acquired MedSup company a few years ago and really didn't do much with it. Bringing that back into focus and putting resources an emphasis on growing it is one of our priorities. You can sell that year-round. There are markets that are clearly MedSup markets, not MedAdvantage markets. It might not even be available in certain counties, of course. That keeps our sales advisors busy during the slower periods for MA. It's still a very valuable and marketable product.
Better from a cash flow perspective as well?
I would say yes. It's better from a... The LTVs are a little lower than the MA. The cash flow dynamics generally are better.
Okay. On the dedicated business, are you able to size how big that is currently and where you think that can grow to eventually? There's two parts to that business, right? The fee-based part and the commission-based part. Is one growing faster than the other in terms of model?
Mm-hmm.
What does that mean for cash flow?
Sure. I'll start and ask John to keep the CEO honest. Prior to our win, you know, which we announced on the earnings call, we didn't disclose the company, and we can't out of respect for their wishes. Suffice to say, that is a transactional-based arrangement, so it's not broker of record, it's really fee-based. It is significant in that we are the primary vendor for their call center needs. We essentially become their call center. There's still an opportunity to be secondary as well, so that we would do overflow in addition to primary, but that's still being worked through. The economics are good. I'll let John comment further on that, but the economics are favorable.
As I said earlier, we don't need to have the cash outlay to generate the leads. I like the business as, you know, supporting our goals to have a more balanced portfolio of businesses and sources of revenue and EBITDA. It, you know, From a percentage of the business, it's small right now, but it has so much opportunity. I think winning this, even though we're not disclosing who it is, as we position ourselves for new additional RFPs, it's gonna bring further credibility, because it's a meaningful relationship.
Yep. Oh, sorry. Did you wanna go?
No, I was just gonna say, I mean, underneath it's, it's good margin business for us, because you're getting your costs covered, plus you can get a success fee on your conversions. Given the quality of the leads that are coming in, we should get a high success fee off that. In addition, as in any call center, there's gonna be overflow. You know, our goal is to capture that overflow as well in our traditional BOR business.
Mm-hmm. Makes sense.
I think it's interesting. It's a springboard to doing more of these types of arrangements going forward.
Was this a competitive take away or were they handling it themselves and just outsourcing?
I think it's fair to say it was a competitive take hold.
is this a trend? Oh, a bigger trend at the carriers shopping these around? Or is this just a, is it more of a focus for you that's driving this?
Well, I don't know if I'd go as far as saying it's a current trend. I hope it's an emerging trend in that, when you demonstrate to a carrier that you not only understand their compliance responsibilities with respect to the customer experience, but can deliver results that are consistent with what they did or better, that is going to, I think, increase confidence that outsourcing is a viable alternative to having it insourced. We are, you know, we just are focused on delivering the performance at all levels, you know, from a volume perspective, conversion, the customer experience satisfaction, and certainly compliance. I think it will take care of itself.
Yep. Let's turn to costs. You mentioned that variable costs are gonna be pretty stable this year. You've had some very good results cutting fixed costs. If I look at what you were expecting to cut in fixed costs versus what you actually did in 2022, I think you cut around $114 million. Sticking with the fixed costs for a second, is there more wood to chop there? It would seem that most of your business is variable in nature, pay agents, pay leads. How much more on the fixed costs can you cut?
Yeah. I just want to say of the 114 year-over-year, the vast majority of that was variable costs, so.
Got you.
If you look at our fixed costs, you know, in the neighborhood of last year was in the high $140s, I think. The things that we are doing there, we went virtual first earlier this year, and so reduced the real estate footprint. There'll be additional savings from the run-in on that this year. We're looking at all our vendor costs for improvements there, not just from the standpoint of actually reducing costs, but also getting better working capital management terms out of that. We're looking at redundancies. For example.
We have Zoom and we have Microsoft Teams, these cost something. It's not a huge amount of dollars, but when you start going around an organization and you find five or six, seven, eight of these things, they add up over time. We did a lot of work around headcount, we'll always continue to look at that. You can think about implicit in our guidance is further fixed cost reduction actually year-over-year. What's important about that is as we get back to top-line growth, it's gaining leverage on those fixed costs. To the extent you control that rate of growth at a rate of growth lower than your revenue, you're obviously going to generate earnings on the leverage.
Yep. Yeah. Makes sense. Let's talk about some of those variable costs. This AEP, you saw around a 23% reduction in ad costs per approved member. Have you changed your marketing strategy at all? If so, what channels are you seeing the best ROI from right now?
I'll start that and invite John to supplement. First off, I brought on a new chief marketing officer in September, so she wasn't there in time to, I would say, make a dramatic impact on AEP, but she made important contributions to refining the strategy for this past AEP. We're gonna be modifying that more dramatically in 2023. Part of that is there's so much generic messaging out there, it creates, I think, fatigue on the part of beneficiaries. They're inundated with direct mail and emails and TV commercials that are basically saying the same thing.
Mm-hmm.
You know, cutting through that clutter, so to speak, has to be done with a different message. It has to be about the value proposition, why you should want to respond to eHealth's outreach, because here's what we do for you. It's not just focusing on the benefits that the carriers offer. That's important. Come in, let us help you. We will handheld... Or you can come online and self-serve or get some assistance online. It's telling that story, the eHealth brand, will be much more emphasis on that. The channels, they perform differently, sometimes campaign by campaign.
Mm-hmm.
You know, in this past AEP, our affiliate channel performed well, the carrier channel performed well, and the strategic partners channel performed well. We didn't do any DRTV in 2022. We'll likely do some in 2023, but it'll be very targeted by markets. You know, healthcare is local, and if you've seen one market, you've seen one market.
Yep.
To do things on a national basis is, I think, it loses its effectiveness. In fact, I think it oftentimes leads to confusion when you communicate something that might only be available in certain markets and not, you know, widespread. The rebate was, the Part B rebate is what got one company in trouble because it's so limited in terms of its availability. To do national commercials was a disservice to beneficiaries.
Yeah. Yeah. And, you know, speaking of going national to local, you've also kind of shifted how you're managing your agent force, and you've seen some good reductions and increase in productivity in your agent force. Just curious how you've changed your strategy around managing your agents, and if there's been any issues with agent hiring or capacity recently?
Sure. Well, I'm gonna start with the transformation activities that we launched last April, that entailed, among many things, rightsizing the sales organization. We focused on our top performers. That became the core group. It wasn't just what they were doing in the past AEP. It's are they willing to embrace change because that was, you know, in the cards. We're going to be making a lot of changes to our sales training, we call it sales mastery, initiatives. They have to be I mean, even though they may be effective, they may not be as effective as they could be if they embrace new techniques. Part of that is listening, just, you know, being better at listening to what the beneficiary is saying on the other side of the phone.
The work, John intimated this earlier, the work on the sales mastery side has been remarkable, and I'm really pleased with its impact, and improving sales agent satisfaction. They now have career pathing, that's new. That helps with retention. It's a very healthy, energetic environment, and that's a, you know, a testament to the leadership and the sales organization under Bob Reese and Roman Rariy. They've done a, I think, an excellent job, along with their teams to create a culture that camaraderie, you know, rah-rah, but compliance-focused. You know, it's one of the keys, performance-driven. Attrition has been below our original forecast, so we're retaining agents. That's a good sign. That helps us, you know, in terms of future recruiting, which we'll be starting shortly.
People talk, and if it's a good environment, creating an environment where people can be successful, why should they leave?
Yep. Yeah.
I would add too to that. Our tenured agents perform at a much higher level. As we have put renewed focus on MedSup, and it's something that we look to improve our sales in call it the off quarters Q2, Q3, Q1, it's also giving agents more tools in the toolbox to sell and to make themselves money, obviously.
Yep.
That helps.
Apart from giving them more opportunity to make money, has the compensation structure changed at all? Are you incentivizing agents now to just like for persistency? Are you incentivizing them to follow up with someone who is likely to churn?
The agents, we sort of draw a line between our sales advisors and what they should be focusing on versus our retention team.
Mm-hmm.
We have dedicated resources on the retention side. But to your first question, our sales compensation, it gets modified pretty much every year, and it's a refinement, and it's always intended to reward the right behavior. You know, they're not paid for rapid disenrollments, for example.
Mm-hmm.
There's a reconciliation on that. CTMs can be ultimately, there's a lag period, of course, but they're traced back to agents. There's recognition of their performance from a quality perspective. It's not just entirely production, it's a combination of factors. Again, with the intention of rewarding the right behavior. The oversight, I don't wanna lose an opportunity to share that because that's just as important in terms of the producing agents. It's the supervisors and managers who oversee their teams. One thing we did differently last year that I think helped with managing the attrit rate, was the managers hired their sales folks as opposed to previous years where we had recruiters out there determining who was going to join the organization. Now, recruiters identify the candidates, but the managers hire them.
That has created, I think, a much more effective, sales team process than previously. Subtle, but important.
Yep. Yep. Let's talk about your online capabilities, because I do view this as kind of your, I guess, main differentiator as I look at the space. You can do kind of soup to nuts on eHealth from getting information about Medicare to actual enrollment all online. How are you thinking about that piece of the Medicare business? What percent of online or what percent of enrolled members can come in online eventually? What percent are you at right now?
Well, probably best to measure it year-over-year in terms of the growth. It, it's up, in 2022 over 2021. It was running, you know, just below 50% in 2021, and now it's running just below 60%. That, tells me that, beneficiaries, are comfortable navigating it.
Mm-hmm.
That said, I'll tell you, Daniel, the conversion rate opportunity, improvement opportunities, I believe are pretty significant. You know, we have over 11 million visitors to our website, and we move, you know, we get a 100 basis point improvement on conversion. It's meaningful. It's very meaningful. We're constantly looking at how do we make the experience better. Chat, you know, introducing chat was an important addition last year. There are people who can go self-serve and are very comfortable navigating it, and others may get stuck some point along the way, and they can hit that help button, or they can just call the number. Either way, we just want the experience to be good based on that individual's needs.
Yep. As you see, more tech-savvy seniors aging into Medicare, do you expect to see that accelerate, or is just some portion of, you know, 15%, 20% of the population just always gonna want to talk to an agent when dealing with Medicare?
Well, I can't size it, but I would say that your hypothesis is fair in that there's always gonna be either two barriers, one, access to the technology.
Mm-hmm.
Not everyone has access. Two, just there could be language barriers, you know, in terms of experiencing online versus telephonic. We can deal with multiple languages. Online, it's all English right now.
Yeah.
That, you know, will be something we explore in the future. We wanna reflect, the changing demographics of America. Having those capabilities in the future will be important.
Yep. Let's talk about IFP. It's been, you know, very good for eHealth recently, I think is expected to do quite well this year, given the redeterminations. Can you talk a little bit about how not just the redeterminations might impact IFP this year, but also the extended SEP, and how that might kind of change some of your seasonality this year, if at all?
Well, back to my earlier point. I believe it does represent an opportunity. The timing is still a little uncertain. I mean, we think it's gonna happen in May, June timeframe, and but it's gonna vary from state to state in terms of the opportunity, the implications, the disruption, what part of that population will be sort of recaptured by the existing carriers directly. That, I think that will, that will occur, and we're fine with that. That's the right outcome. We're there to help those who may not have been happy in the plans they were in or in the benefits that they had, and now it's an opportunity to have a fresh start. It's hard to really size.
I mean, we know that there are obviously millions and millions of people that are affected by the redetermination. I would imagine the carriers will capture at least 25% of that or more. John, anything you wanna add to that?
I would just say that, this past year, you know, we said that the ICHRA opportunity wasn't, it didn't work for us as well as we'd hoped. We're prepared for that. We think that that's gonna be a large opportunity going forward as well.
Yeah. That was my next question, actually, on ICHRA. What happened? Why didn't it perform to your expectations in 2022? What's gonna change in 2023 to make this a larger opportunity?
I think the expectations we had with some of our partners were, What's the word I'd use? They were larger than they really turned out to be.
Mm-hmm.
I think, but again, the important thing I'd say is that just having to do the work to be ready for it and to know what to do will serve us well in the future as we do believe that that's gonna be a pretty attractive market and it's continue to grow over time. While it didn't work for as well as for us as we'd like it to in 2022, it just meant we're prepared for it as it continues to grow.
Okay.
You know, if you look back in history, anytime new alternatives were introduced, whether it was, you know, PPOs, point of service, high-deductible health plans, there usually isn't there's always some first movers. I think it's fair to say that it's an evolution, and I think that's what's gonna happen with the individual coverage Health Reimbursement Arrangements. It's, I think it will gain traction because it's a great solution for employers who perhaps, aren't I mean, it's an alternative to just dropping coverage, providing-
Yeah.
employees with a stipend that they can then go onto the individual market, provides greater portability for consumers. I like it. I mean, I like it for a lot of reasons, and I do think it will pick up receptivity over the next couple of years.
Yeah. Makes sense. Yeah, go ahead.
Yeah. Yeah. I just wanted to add that Fran and John as you look out into the next couple of years, how do you think investors should be allocating capital and together?
Well, thanks for the question. You know, I think it's fair to say that we're grossly undervalued today, right? Based on the net book value of the company and its rating at, you know, a little over $8 a share. It's, I think it's maintaining the discipline, the innovation, the customer-centric commitment, winning carriers' confidence. You know, clearly we gotta demonstrate, I would say, attractive top-line growth, but even more attractive bottom-line growth, including generating positive cash flow from operations. That's, that's our North Star. We are all in. The management team is all aligned. No one's confused about, you know, what we have to do, and we have to do it on a sustainable basis. No one-trick wonder.
We wanna create greater predictability of what you can expect with eHealth in terms of its performance.
I would just add to that, Fran, profitable growth. Again, I just wanna stress something, which is we have sufficient liquidity to meet our 2023 operating plan and guidance. As we move forward and as we improve the profitability of this company, we're gonna be able to deal with future capital needs from a position of strength.
That brings me to my closing question here on cash. It's good to hear that you have that liquidity. You know, is it fair to say that you'll have enough liquidity to reach free cash flow breakeven as well, or do you anticipate you'll need to, at some point, come back to the markets, whether it's the debt or equity markets?
I would say, you know, what we said about in our guidance was because of the timing of our fiscal year versus how we get paid, that we would approach breakeven cash flow from operations in the first quarter of 2024. When I think about the free cash flow and our CapEx, most of our CapEx is internally developed software. It's improvements to our website. That probably adds another, you know, CapEx in total is probably $15 million-$20 million. I think that is gonna take us a little longer.
Yeah.
on the free side, but, you know, my focus is the first thing we have to do, generate earnings.
Yeah.
We generate earnings, manage our cash well, eventually get cheaper capital, it'll all work.
Just one point. That's why it's so important to utilize the assets we have today that have been underutilized over the last several years in terms of the portfolio. There are products that already exist today in our portfolio that produce better cash flow dynamics. It's not like we have to build them. They're there. We just have to execute on them.
Mm-hmm.
Great. Well, we'll leave you on that. Thank you everyone for joining us. Thank you, Fran and John, for.
Thank you.
joining us today. It's great to see you.
Thanks.
Thanks, everyone.