NEW YORK, Feb. 20, 2022 /PRNewswire/ — Pomerantz LLP notifies traders of eHealth, Inc. (NASDAQ: EHTH) (“eHealth” or the “Business”) of a pending lawsuit in opposition to eHealth and sure of its officers. The class action, In re eHealth Inc. Securities Litigation, No. 4:20-cv-02395-JST (the “Class Action”), is pending in the United States District Court docket for the Northern District of California on behalf of a class consisting of all individuals and entities other than Defendants that obtained or or else obtained eHealth common stock between April 26, 2018 and July 23, 2020, inclusive (the “Class” and the “Course Period of time”). The Class Action pursues statements in opposition to the Defendants less than the Securities Trade Act of 1934 (the “Exchange Act”).
If you are a shareholder who obtained eHealth inventory through the Class Period of time, you have until eventually March 18, 2022 to request the Court to appoint you as Lead Plaintiff for the class. To explore this motion, get hold of Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll-cost-free, Ext. 7980. Those who inquire by e-mail are encouraged to include things like their mailing deal with, telephone range, and the number of shares purchased.
eHealth is a wellbeing insurance policies broker that focuses on offering Medicare-relevant insurance policies on behalf of personal insurers. Its primary supply of earnings is commissions from selling Medicare Gain, Medicare Supplement, and Medicare Element D prescription drug insurance policies. On January 1, 2018, eHealth adopted and applied a new accounting typical for recognizing revenue. This conventional, referred to herein as Accounting Conventional Codification 606 or ASC 606, permitted eHealth to realize immediately the entirety of the commissions it expected to obtain in excess of the anticipated everyday living of the procedures. Although eHealth bought once-a-year policies that could be cancelled at any time by the purchaser, it assumed that its guidelines would be renewed for quite a few years. Therefore, for quite a few of eHealth’s Medicare-associated insurance policies, it identified amongst three and 5 several years of commissions right away on the sale of the plan.
The Grievance in the Course Action alleges that the assumption that eHealth’s customers would renew its procedures was unrealistic and contrary to eHealth’s modern encounter of both cancellations and renewals. Beginning in 2017, eHealth begun soliciting Medicare buyers with television promoting. Late-evening commercials boasting $ monthly prepare premiums correctly produced a surge in buyers in a quick period of time. Between 2017 and 2018, the selection of Medicare-similar insurance purposes submitted to eHealth by candidates grew by 39%. These buyers, on the other hand, ended up notorious for cancelling their procedures in brief periods of time, producing eHealth to practical experience sky-rocketing “member churn” ratios, i.e., the share of clients who terminate their procedures within just the 1st yr. Notwithstanding, eHealth was ready to give analysts and traders with history-placing earnings owing to the fact that it was ready to identify 3- to five-yrs of fee earnings for these insurance policies upfront and quickly.
The Criticism further more alleges that Class users have been materially harmed by eHealth’s fake and deceptive statements. As a immediate outcome of Defendants’ materially false and misleading statements, eHealth’s stock price tag artificially greater from a relative continual cost of around $15.32 for every share of common stock on March 19, 2018 to $136.32 prior to April 8, 2020. It was on that working day that Muddy Waters Funds, a properly-acknowledged and very respected research business, revealed a report revealing eHealth’s accounting misconduct. The report disclosed, amongst other things, that eHealth’s “remarkably aggressive accounting masks  a drastically unprofitable business,” “that the important driver of development considering that 2018 has been EHTH’s reliance on Immediate Reaction tv advertising, which appeals to an unprofitable, superior churn enrollee,” “that EHTH’s persistence assumptions in its LTV model [under ASC 606] appear extremely aggressive when when compared to fact.” Muddy Waters report also disclosed that eHealth’s fiscal statements for 2019: (a) overstated earnings by $128 million (b) overstated working income by $263 million and (c) understated an functioning decline of -$181 million. The Muddy Waters report resulted in a sharp drop in the value of eHealth’s inventory, plummeting to $103.20 for each share.
Subsequently, on July 23, 2020, when eHealth announced its earnings outcomes for the next quarter of fiscal 2020, its stock price fell once more as the info contained in its announcement verified substantive elements of the “member churn” allegations formerly asserted in the Muddy Waters report. In reaction, eHealth’s stock price tag declined from a closing price of $114 per share on July 23, 2020 to $79.17 for every share on July 24, 2020.
Pomerantz LLP, with workplaces in New York, Chicago, Los Angeles, Paris, and Tel Aviv, is acknowledged as a person of the premier corporations in the spots of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, regarded as the dean of the course action bar, Pomerantz pioneered the field of securities course actions. Right now, more than 85 years later, Pomerantz carries on in the tradition he set up, battling for the rights of the victims of securities fraud, breaches of fiduciary responsibility, and company misconduct. The Agency has recovered many multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com.
Get hold of:
Robert S. Willoughby
888-476-6529 ext. 7980
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