NEW YORK, Jan. 18, 2022 /PRNewswire/ — Pomerantz LLP notifies traders of eHealth, Inc. (NASDAQ: EHTH) (“eHealth” or the “Corporation”) of a pending lawsuit versus eHealth and specified of its officers. The course action, In re eHealth Inc. Securities Litigation, No. 4:20-cv-02395-JST (the “Course Motion”), 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 in any other case obtained eHealth typical stock in between April 26, 2018 and July 23, 2020, inclusive (the “Class” and the “Class Period of time”). The Class Motion pursues claims versus the Defendants less than the Securities Exchange Act of 1934 (the “Trade Act”).
If you are a shareholder who procured eHealth stock in the course of the Class Interval, you have till March 18, 2022 to check with the Court docket to appoint you as Lead Plaintiff for the class. To talk about 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 people who inquire by e-mail are encouraged to include things like their mailing tackle, telephone quantity, and the amount of shares obtained.
eHealth is a wellness insurance plan broker that focuses on marketing Medicare-related insurance policies on behalf of personal insurers. Its most important resource of revenue is commissions from selling Medicare Edge, Medicare Complement, and Medicare Part D prescription drug insurance policies. On January 1, 2018, eHealth adopted and carried out a new accounting standard for recognizing revenue. This conventional, referred to herein as Accounting Standard Codification 606 or ASC 606, authorized eHealth to recognize quickly the entirety of the commissions it expected to get over the expected life of the procedures. Although eHealth marketed once-a-year guidelines that could be cancelled at any time by the client, it assumed that its procedures would be renewed for various yrs. Therefore, for a lot of of eHealth’s Medicare-relevant guidelines, it acknowledged amongst three and five decades of commissions immediately on the sale of the policy.
The Grievance in the Class Action alleges that the assumption that eHealth’s shoppers would renew its insurance policies was unrealistic and contrary to eHealth’s modern practical experience of the two cancellations and renewals. Commencing in 2017, eHealth started soliciting Medicare buyers with television advertising and marketing. Late-night commercials boasting $ every month approach premiums proficiently produced a surge in prospects in a brief period of time of time. Between 2017 and 2018, the range of Medicare-related insurance apps submitted to eHealth by applicants grew by 39%. These clients, nevertheless, were notorious for cancelling their insurance policies in short periods of time, causing eHealth to expertise sky-rocketing “member churn” ratios, i.e., the percentage of customers who terminate their guidelines inside of the initial calendar year. Notwithstanding, eHealth was capable to provide analysts and traders with file-setting earnings owing to the fact that it was able to acknowledge a few- to five-a long time of fee earnings for these guidelines upfront and straight away.
The Criticism further alleges that Course members were materially harmed by eHealth’s fake and misleading statements. As a immediate consequence of Defendants’ materially fake and misleading statements, eHealth’s stock cost artificially amplified from a relative continual cost of all around $15.32 per share of popular inventory on March 19, 2018 to $136.32 prior to April 8, 2020. It was on that day that Muddy Waters Cash, a perfectly-recognised and remarkably revered investigate business, revealed a report revealing eHealth’s accounting misconduct. The report disclosed, among the other points, that eHealth’s “remarkably aggressive accounting masks  a noticeably unprofitable enterprise,” “that the key driver of progress due to the fact 2018 has been EHTH’s reliance on Immediate Reaction tv promotion, which draws in an unprofitable, substantial churn enrollee,” “that EHTH’s persistence assumptions in its LTV model [under ASC 606] seem to be hugely aggressive when as opposed to reality.” Muddy Waters report also disclosed that eHealth’s financial statements for 2019: (a) overstated income 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 selling price of eHealth’s stock, plummeting to $103.20 per share.
Subsequently, on July 23, 2020, when eHealth introduced its earnings final results for the 2nd quarter of fiscal 2020, its inventory selling price fell once again as the information and facts contained in its announcement confirmed substantive facets of the “member churn” allegations formerly asserted in the Muddy Waters report. In reaction, eHealth’s inventory price declined from a closing cost of $114 per share on July 23, 2020 to $79.17 per share on July 24, 2020.
Pomerantz LLP, with places of work in New York, Chicago, Los Angeles, Paris, and Tel Aviv, is acknowledged as one of the leading corporations in the places of company, securities, and antitrust class litigation. Established by the late Abraham L. Pomerantz, recognised as the dean of the course action bar, Pomerantz pioneered the discipline of securities class steps. Right now, far more than 85 many years later on, Pomerantz continues in the custom he recognized, preventing for the rights of the victims of securities fraud, breaches of fiduciary responsibility, and corporate misconduct. The Agency has recovered various multimillion-greenback damages awards on behalf of course associates. See www.pomlaw.com.
Get in touch with:
Robert S. Willoughby
888-476-6529 ext. 7980
Source Pomerantz LLP