ITEM 1A. RISK FACTORS
In addition to other information in this Annual Report on Form 10-K and in other filings we make with the Securities and Exchange Commission, the following risk factors should be carefully considered in evaluating our business as they may have a significant impact on our business, operating results and financial condition. If any of the following risks actually occurs, our business, operating results, and financial condition could be materially and adversely affected. Because of the following factors, as well as other variables affecting our operating results, past financial performance should not be considered as a reliable indicator of future performance and investors should not use historical trends to anticipate results or trends in future periods. Our Risk Factors are not guarantees that no such conditions exist as of the date of this report and should not be interpreted as an affirmative statement that such risks or conditions have not materialized, in whole or in part.
Risks Related to Our Business
The markets in which we participate are intensely competitive. If we cannot compete effectively against current and future competitors, including government-run health insurance exchanges and marketplaces, our business, operating results and financial condition could suffer.
The market for selling health insurance plans is characterized by intense competition, and we face challenges associated with evolving distribution models, industry and regulatory standards, consumer price sensitivity, AI automation and search aggregation, and macro-economic conditions. We compete with government-run Medicare and ACA exchanges and marketplaces, direct-to-consumer channels, national telesales brokers, online and telephonic lead generators and local insurance agents. Although we work with many health insurance carriers to market and sell insurance plans on their behalf, many of them also compete with us by directly marketing and selling their plans to consumers through call centers, internet advertising and their own websites. These competitors increasingly invest in digital tools, call center capacity and marketing. Some of our current and potential competitors may also have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, technical, marketing and other resources than we do. As compared to us, our current and future competitors may be able to undertake more extensive marketing campaigns for their brands and services, devote more resources to website and systems development, negotiate more favorable commission rates and commission override payments and make more attractive offers to potential employees, marketing partners and third-party service providers.
To remain competitive, we need to continue to enhance our online and mobile health insurance shopping experience, maintain access to a broad selection of quality health insurance plans from carriers on our platform and attract consumers interested in purchasing health insurance to our website and advisor enrollment centers during the relevant enrollment periods in a cost-effective manner. Competitive pressures from government-run health insurance exchanges and marketplaces, and other competitors may increase our marketing and customer-acquisition costs, reduce traffic and conversions and harm our business, operating results and financial condition.
Our business may be harmed if we lose our relationship with health insurance carriers or our relationships with health insurance carriers are modified.
The success of our business depends upon our ability to enter into and maintain relationships with health insurance carriers on favorable economic terms. Our platform offers a broad selection of insurance products from over 180 health insurance carriers nationwide, including approximately 50 Medicare carriers. In the ordinary course of business, the carriers represented on our platform naturally fluctuate, as we and our carrier partners reassess distribution strategies and business objectives in response to consumer preferences, market conditions, carrier performance and the cost of supporting particular carriers. Carriers that are removed from our platform may also be added back in the future.
Our contractual relationships with health insurance carriers are typically non-exclusive and terminable by either party on short notice for any reason. Carrier terminations or modifications can impact the variety of plans that we can offer on our platform, increase our costs or liabilities and harm our profitability. Health insurance carriers may also reduce our commissions, rely more heavily on their own internal distribution channels, modify benefit
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designs, significantly increase premiums, limit or prohibit us from selling their plans, or exit certain states or markets. In addition, carriers may amend our agreements for competitive, regulatory, economic or other reasons, including dissatisfaction with the cost or performance of the members that we enroll or concerns about association with our brand.
The laws and regulations applicable to the sale of Medicare-related plans are complex and frequently change. If we or our benefit advisors violate any of the requirements imposed by the U.S. Centers for Medicare & Medicaid Services (“CMS”) or applicable federal or state laws or regulations, health insurance carriers may terminate their relationship with us or require corrective actions, particularly if our Medicare product sales or marketing give rise to a high volume of complaints.
The termination or modification of our carrier relationships, reductions in commission rates, changes in benefit offerings or premiums or carrier exits from certain states or markets have in the past reduced, and may in the future reduce, the variety, quality or affordability of health insurance plans we offer, lower our commissions, including commissions for past and/or future sales, cause a reduction in the estimated constrained lifetime value (“LTV”) of commissions used for revenue recognition purposes, result in a loss of existing or potential members, adversely impact our profitability or otherwise adversely impact our business. Any of these events could harm our business, operating results and financial condition.
If we are unable to successfully attract and convert qualified prospects into members for whom we receive commissions or fees, our business, operating results and financial condition would be harmed.
Our success depends on our ability to attract qualified prospects to our enrollment platform and provide a relevant and reliable experience in a cost-effective manner that converts those prospects into paying members during key enrollment periods. Many factors impact our conversion rate, including the volume, mix and quality of those qualified prospects, the effectiveness of our benefit advisors and our enrollment platform. Volume and quality of leads that convert may be impacted by competition in the marketplace, the effectiveness of our marketing efforts, our brand strength, the competitiveness, mix, quality and affordability of products and services offered on our platform, changes and mix of consumers referred to us through our direct marketing, marketing partners and strategic partner channels, fluctuations in lead quality, changes in consumer shopping behavior, current market and economic conditions, and changes in laws and regulations. Our conversion rates are also impacted by the quality of our benefit advisors, turnover rates and our ability to timely recruit, license, train, certify and retain qualified benefit advisors, and may also be affected by technology failures, including interruptions in our ecommerce platform or advisor enrollment center operations. In addition, market events or economic conditions, such as changes in inflation or levels, or political events such as elections, could impact consumer behavior and demand for health insurance. Any such constraints could impact our conversion rates and could result in fewer member acquisitions and a reduction in membership, which would our business, operating results and financial condition.
Our marketing, brand promotion and consumer outreach efforts may be unsuccessful, increasingly costly, or limited by evolving technology, regulatory requirements or partner practices, which could adversely affect our business, operating results and financial condition.
We use a variety of marketing channels and may from time to time adjust our member acquisition strategy to attract visitors to our website and engage consumers who contact our advisor enrollment centers. Any decrease in the amount or effectiveness of our marketing efforts could lower our revenue, growth and the profitability of our business and harm our business, operating results and financial condition.
We invest significant resources in brand promotion, including a recent refresh of our brand identity. These efforts may not be successful or may become more expensive over time. Some of our current and potential competitors may have greater brand recognition and significantly greater financial, technical and marketing resources than we do, and they may replicate our strategies, bid against our branded search terms to redirect consumer traffic, or undertake more extensive marketing campaigns. Our brand promotion activities may not be successful in attracting or retaining members, marketing partners or health insurance carriers, and as a result, may not yield increased revenue. Even if these activities do yield increased revenue, such revenue may not offset the associated expenses we incur, which could harm our business, operating results and financial condition.
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Our business also depends on reaching our target consumer audience through direct marketing channels, including direct mail, television, internet search, social media and email, in a cost-effective manner. As our market becomes increasingly competitive, our marketing efforts may not be successful or may be increasingly expensive, and any increase in revenue generated by our direct marketing efforts may not offset the higher marketing expenses we incur. Our consumer traffic also depends on internet search engines and social media platforms. Consumer online search behavior is rapidly evolving due to the accelerating adoption of artificial intelligence (“AI”), including generative search tools, AI-driven recommendation engines and conversational assistants. These technologies are increasingly influencing how consumers discover, evaluate and access information, products and services. As AI platforms generate results based on predictive models rather than traditional keyword search, our ability to reach consumers through established search‑engine optimization, paid search, and other digital marketing channels may be adversely impacted. Increased advertising costs or reduced consumer engagement on these platforms could hinder our ability to reach prospective and existing members. If we are less prominently displayed in search results–whether in algorithmic listings, AI-generated responses and paid advertisements–removed from search listings or otherwise unable to advertise effectively on these platforms, our website traffic could , and it may be or to replace this traffic, Increased reliance on alternative marketing channels could further increase our marketing expenditures, which would also increase the cost of member acquisition and our business, operating results and financial condition.
We also rely on marketing partners, including financial and online services companies, affiliate organizations, online advertisers and content providers, and other marketing vendors, for referring consumers to our ecommerce platform and advisor enrollment centers. We also have relationships with strategic marketing partners, including hospitals, pharmacy chains, provider groups, wellness organizations, and other digital and affinity groups, as well as with marketing partners that utilize aspects of our platform and tools. The success of these relationships depends on a number of factors, including partner reputation, partnership growth, the effectiveness of their marketing efforts, commercial terms, including the marketing fees we agree to pay, and our ability to accurately and timely track, pay and manage marketing partner performance. In addition, as discussed elsewhere in this Risk Factors section, the marketing and sale of Medicare plans are subject to numerous laws, regulations and guidelines at the federal and state level. If our marketing partners’ marketing materials do not comply with the CMS marketing guidelines or other Medicare program-related laws, rules and regulations, such non-compliance could cause a delay in, or prevent us from, receiving referrals of individuals interested in purchasing Medicare-related plans from that marketing material. If CMS or a health insurance carrier requires changes to, disapproves or delays approval of these materials, we could a significant source of Medicare plan demand, and the operations of our Medicare business could be affected. Given our reliance on our marketing partners, our business, operating results and financial condition would be if we are to maintain relationships with high volume partners. If we marketing partner referrals during the Medicare or individual and family health insurance enrollment periods, the impact on our business would be significant.
We communicate with members and prospective members through email, telephone calls, SMS text messages and other channels, some of which may be subject to federal and state laws, such as the Telephone Consumer Protection Act (the “TCPA”) and the CAN-SPAM Act, intended to protect consumers from unwanted telemarketing calls and messages. While we maintain policies and procedures designed to comply with the TCPA and other telemarketing laws, we have been in the past, and may in the future become, subject to claims alleging violations of these laws. Any finding that we violated the TCPA could result in significant liability, and our business, operating results and financial condition could be harmed. The TCPA and other telemarketing laws and regulations continue to evolve, and changes in technology, market practices or consumer preferences may lead to the adoption of additional laws or regulations or changes in regulatory interpretation or enforcement of existing requirements, which could increase enforcement and litigation risks, or further limit our ability to communicate with members or potential members in a cost- and timely manner.
In addition, internet and email service providers may block unsolicited email, commonly known as “spam,” and may place senders on restricted lists, which could block our email from reaching members or potential members. Similarly, telephone carriers may block or put consumer warnings on calls or SMS text messages. Consumers also increasingly screen their incoming emails, telephone calls and SMS text messages, including by using screening technologies; therefore, our members or potential members may not reliably receive our messages, regardless of whether such messages constitute marketing. If we are unable to communicate effectively by email, telephone or SMS text with our members and potential members as a result of legal or regulatory restrictions,
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telephone carrier blockage, screening technologies or otherwise, our business, operating results and financial condition would be harmed.
Our business success depends on our ability to timely recruit, train and retain qualified licensed insurance agents, or benefit advisors, and other personnel to provide superior customer service and support our strategic initiatives while also managing our labor costs.
Our omnichannel consumer engagement platform enables consumers to discover, compare and purchase health insurance plans through our proprietary online tools as well as with the assistance of licensed insurance agents, or benefit advisors, via telephone, online chat or hybrid online assisted interactions such as co-browsing. Our advisor enrollment center operations are critical to our success and dependent on our ability to recruit, train and effectively manage our licensed benefit advisors and other personnel who support the operation of our advisor enrollment centers.
To sell Medicare-related plans, benefit advisors must be licensed by the states in which they sell plans and certified and appointed with the health insurance carrier that offers the plans in each applicable state. We rely on our staff, state departments of insurance, government exchanges and health insurance carriers for the licensing, certification and appointment of our benefit advisors. We may experience difficulties recruiting and retaining a sufficient number of benefit advisors and support staff during the year and especially for the Medicare annual enrollment period when the volume of consumer interactions and plan shopping activity increases significantly.
Because the Medicare and individual and family health plan annual enrollment periods, are heavily concentrated in the fourth quarter, our staffing needs are highly seasonal. Consumer engagement, call volumes and plan selection activity typically peak during this period, placing substantial pressure on our advisor enrollment center operations and increasing the risk that we may be unable to scale staffing rapidly enough to meet demand. Our year-round staffing levels may be insufficient to meet this fourth quarter demand, and we may need to recruit and train a significant number of temporary or seasonal benefit advisors within a compressed timeframe. This seasonality also increases the risk that new benefit advisors may be less experienced or less productive, and any delays or shortfalls in licensing, certification, training or onboarding during this period could materially impact our sales and service levels. As part of our strategic initiatives, we have in the past, and may in the future, implement plans designed to reduce our operational exposure to fourth quarter seasonality, including investing in our recruiting and training programs, improving year around utilization of our telesales organization and product diversification. These efforts may not be , may take longer than expected to implement, and they may not fully offset the operational pressures during key enrollment periods. Even if we recruit qualified advisors and support staff, to retain, train and ensure their productivity could result in lower-than-expected plan sales, reduced conversion rates and revenue, higher costs of acquisition per member and higher plan rates, any of which could our business, operating results and financial condition.
Our business is seasonal in nature, and if we are not successful in responding to changes in the seasonality of our business, our business, operating results and financial condition could be harmed.
Due to the timing of Medicare and individual and family health plan annual enrollment periods, which may change from time to time, our financial results fluctuate and are not comparable from quarter to quarter. The Medicare annual enrollment period occurs from October 15 to December 7 each year, the individual and family health insurance open enrollment period typically occurs from November 1 through December or January 15 each year for most states, and the Medicare Advantage open enrollment period, during which Medicare-eligible individuals enrolled in a Medicare Advantage plan can switch to the Original Medicare program or to a different Medicare Advantage plan, runs from January 1 through March 31 of each year.
As a result, we have historically experienced an increase in the number of submitted Medicare-related applications and approved members during the fourth quarter and, to a lesser extent, during the first quarter. We also experience an increase in Medicare-related expense, including marketing and advertising expenses, during the third and fourth quarters in connection with the open enrollment periods. However, because commissions from approved members are paid to us over time, our operating results, and in particular, our operating cash flows, may be adversely impacted by a substantial increase in marketing and advertising expense.
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Our typical Medicare enrollment seasonality was recently heightened primarily as a result of the regulatory changes to enrollment rules for dual-eligible beneficiaries and those that receive Medicare Part D Low Income Subsidies (“LIS”). In 2025 CMS removed the special enrollment period that allowed dual-eligible and LIS beneficiaries to enroll in Medicare Advantage plans on a quarterly basis. As a result, we experienced a decline in Medicare plan submissions during the second and third quarters of 2025 compared to the same periods in 2024. In response to this anticipated volume decline, we implemented a more flexible structure in our telesales organization to enable more efficient scaling of advisor capacity.
We may experience similar or additional changes in the timing of the Medicare or individual and family health plan enrollment periods, the adoption of new or special enrollment periods, changes in eligibility rules and subsidies for health insurance, or changes in the laws and regulations governing the sale of health insurance. Such changes may be more difficult or costly to address, and we may not be able to timely adjust to these changes in seasonality, which could harm our business, operating results and financial condition.
Our business, operating results and financial condition will be adversely impacted if we are unable to retain our existing members.
When a member cancels a plan, or we otherwise cease being the broker of record on that plan, we no longer receive the related commission. Health insurance carriers may discontinue certain plans for various reasons, and when members change their coverage, they may select plans not offered through us or choose plans for which we are not the broker of record. Consumers may also purchase Medicare-related or individual and family health insurance plans directly from other sources, such as our competitors, in which case we would not remain the broker of record and would lose the related commission.
Our ability to retain membership depends on various factors, including enrollment experience, the attractiveness of the plans carriers offer, the ability and propensity of members to switch plans, the frequency and timing of switches, both inside and outside of the Medicare annual enrollment period, and brand loyalty. If member retention rates decline, our business, operating results and financial condition could be harmed.
Any decrease in the historical member retention period could also adversely impact the forecasted average plan duration utilized in our estimated constrained LTVs we use for revenue recognition, which would adversely impact our business, operating results and financial condition.
Our business, operating results and financial condition may be impacted by factors that impact our constrained estimated LTV of commissions per approved member.
We account for commission revenue in accordance with ASC 606, which is based on the expected value approach using the estimated constrained LTV of commission payments we expect to receive over the life of an approved policy for which we are the broker of record. LTVs are based on several assumptions that require significant judgment, which include, but are not limited to, estimating the conversion rate of an approved member to a paying member, forecasting average plan duration and forecasting the commission amounts likely to be received per member. These assumptions are based on our analysis of historical trends for the different cohorts and incorporate management’s judgment in interpreting those trends and then applying the constraints. Constraints are determined through an analysis of actual cash collection patterns against our existing assumptions to determine whether any drivers for variations can be expected in future periods. We also analyze whether any changes in circumstances, including, but not limited to, plan offering changes, plan duration, commission rates, changes in laws and regulations and changes in the economic environment, have occurred and consider any known or potential modifications that could impact our estimated inputs to LTV. As a result, negative changes in the factors upon which we estimate constrained LTVs, such as reduced conversion of approved members to paying members, a decline in the forecasted average plan duration, a reduction in the commission amounts we expect to receive for selling the plan to a member, the initial constraint applied to LTVs or other changes, could our business, operating results and financial condition.
Additionally, if we experience a significant negative trend in estimated constrained LTV assumptions subsequent to recognizing the revenue on approved members, we may need to recognize negative net adjustment revenue in the period those trends impact the LTV along with a corresponding decrease in contract assets – commissions receivable.
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We derive a significant portion of our revenue from a small number of health insurance carriers. Our business may be harmed by any impairment of our relationships with them or impairment of their businesses.
Our revenue has been concentrated in a small number of health insurance carriers and we expect that a small number of health insurance carriers will continue to account for a significant portion of our revenue for the foreseeable future. For example, Humana, UnitedHealthcare and Aetna collectively accounted for a majority of our total revenue in 2025 and in 2024, and in the past, our revenue from certain of our top carriers have declined and we have ceased to do business with certain carriers.
As discussed elsewhere in this Risk Factors section, our contractual relationships with health insurance carriers are typically non-exclusive and terminable by either party on short notice for any reason. Changes in carrier relationships occur regularly as both we and our carrier partners continuously reassess partnerships and business objectives, and carriers that are removed from our platform may be added back in the future. However, given the concentration of our Medicare plan sales in a small number of carriers, the loss of a significant carrier relationship, a health insurance carrier’s loss of Medicare product membership or any impairment of a carrier’s ability to conduct business could adversely impact our business, operating results and financial condition. These impacts may be exacerbated if any of our existing contract assets are impacted as a result.
If our carrier advertising and sponsorship program is not successful, our business, operating results and financial condition could be harmed.
We generate revenue from developing and hosting carrier-dedicated Medicare plan websites and from carrier advertising and sponsorship programs. The success of these programs depends on a number of factors, including carrier advertising services, consumer demand for the advertised product, our ability to attract consumers to our platform and convert them into members, and the overall cost, benefits and brand strength of the advertised plans. Economic conditions, health care reform and increased carrier focus on enrollment quality and reduction in member complaints could adversely impact carrier spending or limit our ability to negotiate or operate our sponsorship and advertising programs on favorable terms.
Because the marketing and sale of Medicare plans are subject to often complex and frequently changing regulations, regulatory interpretations and enforcement actions, our ability to offer Medicare plan-related advertising services could become restricted. In addition, since we maintain relationships with a limited number of health insurance carriers to sell their Medicare plans, our Medicare plan-related advertising revenue is concentrated in a small number of carriers. The termination or non-renewal of any of these relationships, or any reduction in the amount a health insurance carrier is willing to pay for these services, could harm our ability to generate Medicare plan-related advertising revenue, and our business, operating results and financial condition could be harmed.
Our business may be harmed if we do not enroll subsidy-eligible individuals through government-run health insurance exchanges efficiently.
In order to offer the qualified health plans (“QHPs”) through which individuals and families may receive Affordable Care Act subsidies, we must meet certain conditions, such as obtaining permission from the applicable government health insurance exchange, entering into or maintaining required agreements, ensuring that enrollment and subsidy applications are completed through the exchange and complying with relevant privacy, security and other standards. Internet-based agents and brokers such as us may also be required to meet certain additional website requirements. To help manage the operational, regulatory and cost burdens associated with QHP enrollments, we currently rely on a third-party vendor, and our QHP enrollments are made predominantly through the Federally Facilitated Marketplace (“FFM”), which currently operates all or part of the health insurance exchange in most states. The remaining states operate their own state-based exchanges (“SBEs”).
We may experience difficulty in satisfying the conditions and requirements necessary to offer QHPs to existing and prospective members and to enroll them through the FFM or any SBEs. The FFM or SBEs may at any time cease allowing us or our third-party vendor to enroll individuals in QHPs or change the applicable requirements. Government agencies or regulations may also prevent or limit our ability to work efficiently with our third-party vendor approved to support the enrollment process. As a result, we may not be able to enroll individuals
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into QHPs through the FFM or SBEs, or may be required to use a less efficient process. The number of states using the FFM may also decrease over time, reducing our ability to enroll members through the FFM.
If we are not able to satisfy the requirements for offering QHPs and enrolling members through the FFM or SBEs, or if we are not able to successfully adopt and maintain solutions in a timely, efficient and cost-effective manner to respond to changing regulatory, technical or operational conditions, or if the exchange websites and processes are unstable, not consumer friendly, inefficient or incompatible with our enrollment process, we could lose existing members, fail to attract new members or incur additional expense, any of which could harm our business, operating results and financial condition.
Our business could be harmed if we are not successful in executing on our operational and strategic plans.
Our performance depends upon our ability to execute our operational and strategic plans. Our success depends on our ability to diversify our revenue and scale our business. We have made and may continue to make significant investments in marketing and advertising, technology and content, customer care and enrollment and member retention. Our growth strategy also involves continued investment to expand brand awareness across all products and channels and to improve member retention and conversion rates and the effectiveness of our telesales organization. We may also enter into strategic transactions or partnerships aligned with our business and growth objectives.
Our strategic plans also include diversifying our products, services and overall revenue base. These efforts may require investments in developing new or enhanced products and services, integrating new technologies, strengthening carrier and partner relationships, expanding distribution capabilities and increasing member engagement. New or expanded offerings may fail to achieve market acceptance, may take longer than expected to develop or deploy, may not function as intended, or may not deliver anticipated revenue, margin or member‑engagement benefits. In addition, these diversification efforts may introduce operational complexity, require specialized capabilities we do not currently possess, or expose us to new or evolving regulatory or compliance requirements. If such initiatives are not executed effectively, they may divert management attention and financial resources from our core business, reduce the profitability of existing offerings or impair our ability to execute other key strategic objectives. As a result, our product and service diversification efforts may fail to expand our addressable market, our financial performance or contribute to sustainable growth.
We have in the past, and may in the future, initiate restructuring plans to implement cost savings initiatives or programs including, among other things, reductions in workforce and other fixed and variable expenses. For example, in January 2026, we implemented a reduction in force in which we eliminated approximately 14% of our workforce and targeted reductions in vendor spend. These actions and other additional measures we might take to reduce costs could strain our workforce, yield attrition beyond our intended reduction in force, reduce employee morale, cause us to delay, limit, reduce or eliminate certain development plans or otherwise impair our ability to operate and grow our business effectively, each of which could have an adverse impact on our business, operating results and financial condition. We may not complete the current or any cost reduction plan and reorganization on the anticipated timetable, and even if successfully completed, we may not achieve the anticipated cost savings, operating or other benefits of such activities due to a number of factors, including, among others, higher than anticipated costs in implementing such plans, management from ongoing business activities, to our reputation and brand image, including publicity, workforce beyond planned reductions and risks and uncertainties described elsewhere in this Risk Factors section. Even if we do implement and administer these plans and initiatives in the manner contemplated, our estimated cost savings resulting from them are based on several assumptions that may prove to be and, as a result, we may to realize these cost savings.
The execution of our operational and strategic plans may increase our expenses and our organizational complexity, divert management’s attention from other business concerns and involve other risks and uncertainties described in this Risk Factors section, including the failure of our initiatives to achieve our revenue diversification, member retention, growth or profitability targets, inadequate conversion and telesales organization improvements, failure to evolve our brand, our inability to strengthen and expand our health insurance carrier partnerships, our inadequate return of capital on our investments, legal and regulatory compliance risks and potential changes in laws and regulations. If we do not successfully execute on our operational and strategic plans or if we do not realize the
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expected benefits of our investments or cost savings measures, our business, operating results and financial condition would be harmed.
Changes in our senior management or other key employees could affect our business, operating results and financial condition.
Our success depends on the performance of our senior management and other key employees, as well as our ability to attract and retain qualified personnel across our organization. Replacing senior management and key employees may be difficult and time-consuming due to the limited number of individuals in our industry with the breadth of skills and experience required to successfully execute our business objectives. We may not be successful in attracting or retaining personnel in a timely manner, on competitive terms, or at all. Because our senior officers and other employees may terminate their employment at any time, the loss of these individuals could harm our business, operating results and financial condition, especially if we are not successful in developing adequate succession plans.
In recent years, we have appointed several new executive officers and other senior leaders across multiple functions, and we may experience additional changes in the future. For example, in 2024 and 2025, we appointed a new chief executive officer, a new chief financial officer and a new chief revenue officer. The departure of current or new executive officers, other members of our senior management or other key employees could lead to increased employee attrition, loss of institutional knowledge and other operational disruptions, any of which could harm our business, operating results and financial condition.
We also depend on a relatively small number of employees for certain key roles. For example, we are required to appoint a single designated writing agent for each insurance carrier. A small number of our employees act as writing agents, and each writing agent is responsible for multiple carriers. When a writing agent leaves the company, we need to replace them with another employee who has the necessary health insurance licenses. Due to our national reach and the large number of carriers whose plans are purchased by our members, the process of transitioning writing agents has in the past taken, and may take in the future, a significant period of time. If the transition is not successful, our ability to sell health insurance plans may be interrupted, our agency relationship with particular insurance carriers may be terminated, our commission payments could be discontinued or delayed and, as a result, our business, operating results and financial condition could be harmed.
Our operations in China involve risks that could increase expenses and expose us to increased liability.
Our subsidiary in China supports certain operational functions, including the maintenance and updates of our ecommerce platform. As a result, we are subject to different and evolving laws, rules and regulations, including intellectual property, privacy, data transfer, data security, anti-bribery and anti-corruption, labor, tax, and foreign exchange rules in both China and the United States. For example, U.S. restrictions on providing certain “covered persons” and “countries of concern” with access to broadly defined categories of U.S. sensitive personal data and U.S. government-related data took effect on April 8, 2025. We have relocated certain China-based functions back to the United States to comply with these restrictions, but additional restrictions could further impact our business activities in China. U.S. and Chinese trade laws may also impose additional restrictions on the transfer of programming or technology. Any significant disruptions involving third-party communications that we use with our employees in China could also impair our operations. These laws, regulations and standards are complex, ambiguous and subject to change or interpretation, creating uncertainty and increasing enforcement risks and compliance costs. Violation of applicable laws and regulations could our brand and our relationship with our health insurance carriers and could result in regulatory enforcement actions or the imposition of civil or and . If health insurance carriers with which we partner develop about our China operations, they could limit or their relationships with us, additional security and operational measures and we have taken.
Our business may also be adversely impacted by changes in China’s economic or political environment, the relationship between China and the United States or other countries, or other events or circumstances such as geopolitical issues, natural disasters or armed conflict. Any material deterioration in U.S.-China relations could require us to relocate additional aspects of our operations in China or close our operations in China entirely, which
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could be time-consuming, expensive, disruptive and harmful to our business, operating results and financial condition.
Our self-insurance programs may expose us to significant and unexpected costs and losses.
To help control our long-term employee health benefit costs, we began self-insuring a substantial portion of our U.S. employee health insurance benefits in 2023. To limit our exposure, we have third-party stop-loss insurance coverage which sets a limit on our liability for claim costs. We record a liability for our estimated cost of U.S. claims incurred but not yet paid as of each balance sheet date. Our estimated liability is based on assumptions we believe to be reasonable under the current circumstances and is adjusted as circumstances change. It is possible, however, that our actual liabilities exceed our estimates of losses. We may also experience an unexpectedly large number of claims that result in costs or liabilities in excess of our projections, which could cause us to record additional expenses. Our self-insurance reserves could prove to be inadequate, resulting in liabilities in excess of our available insurance and self-insurance. If a successful claim is made against us and is not covered by our insurance or exceeds our policy limits, our business may be and materially impacted. Our exposure to these costs and could have a material effect on our business, operating results and financial condition.
Risks Related to Laws and Regulations
Changes and developments in the health care industry or system, including changes in laws and regulations, could harm our business, operating results and financial condition.
The success of our business depends upon the private sector of the U.S. health insurance system, including the Medicare program, which is subject to a continuously evolving regulatory environment at both the federal and state levels. Changes and developments in the U.S. health insurance system or Medicare program could reduce demand for our services and harm our business. Ongoing health care reform efforts may expand the role of government-sponsored coverage, including proposals for single payer or so called “Medicare-for-All” or other proposals that could reduce or eliminate the market for the health insurance products we currently offer. Some proposals would seek to eliminate the private marketplace while others would expand government-sponsored options, increase government oversight or competition, or reduce the fees or commissions payable to brokers under the Medicare program. Other proposals could increase the role of the private sector in health care but may be implemented in ways that reduce our role in helping consumers select and enroll in insurance plans.
We cannot predict the full impact of health care reform initiatives or other regulatory changes on our operations due to uncertainty around if, when and how any proposals may be enacted or implemented. If laws, regulations or rules are adopted to eliminate or reduce private sources of health insurance or Medicare plans are adopted, or otherwise reduce our role in connecting consumers with insurance plans, demand for our services could be adversely impacted, and our business, operating results and financial condition could be harmed.
In recent years, the Medicare sector has also experienced industry-driven changes, including a gradual shift towards market consolidation and rationalization, a heightened focus on enrollment quality and profitability, and a greater emphasis on longer-term member relationships. These trends were prompted in part by regulatory changes, rising health care costs and other industry developments such as Medicare STAR rating methodology changes. Each year, CMS publishes reimbursement rates for the Medicare Advantage program, and even if such rates are deemed more favorable, there remains significant uncertainty as to whether such rates would be sufficient for carriers to cover margins or maintain their plan strategies without further disruptions in their benefit offerings, premiums, geographic coverage or business goals.
We expect the Medicare market to remain fluid for the foreseeable future. The election of President Trump and Republican control of both houses of Congress have resulted in significant changes and may continue to create uncertainty with respect to legislation, regulation, implementation and potential repeal of laws and rules related to government health programs, including Medicare, Medicaid and the Affordable Care Act. For example, President Trump has issued various executive orders reversing several Biden administration health care policies, and additional executive orders may be forthcoming. Congress has also passed the One Big Beautiful Bill Act (OBBBA) in July 2025, which makes considerable changes to federal Medicaid financing. President Trump and other
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policymakers may consider additional legislative proposals impacting Medicaid, Medicare, the Affordable Care Act and other entitlement programs, such as reducing, eliminating or allowing certain subsidies to expire. We also expect continued proposals targeting reimbursement methodologies and individual eligibility criteria for government health care programs. In addition, initiatives launched by the Trump administration and legislative bodies continue to focus on improving efficiency and reducing waste, fraud and abuse of government resources. While we cannot predict the full impact of these initiatives, changes to CMS spending could impact beneficiary experiences and could ultimately adversely impact our business, operating results and financial condition.
The marketing and sale of health insurance plans, including Medicare plans, are subject to numerous, complex and frequently changing laws, regulations and guidelines. Non-compliance with or changes in such requirements, or changes in their interpretation or enforcement, could harm our business, operating results and financial condition.
The U.S. healthcare industry is highly regulated and subject to numerous, complex, and frequently changing laws, regulations and guidelines both at the federal and state levels. Compliance with these evolving requirements may involve significant costs, delays our ability to go to market with new marketing and product initiatives and strategies or require us to change our business practices, which could adversely impact our business, operating results and financial condition. Non-compliance could also result in fines, damages, restrictions on our business, damage to our reputation and other adverse consequences. In particular, the marketing and sale of Medicare Advantage and Medicare Part D prescription drug plans are primarily regulated by CMS while Medicare Supplement plans are primarily regulated by state departments of insurance. The laws and regulations governing the marketing and sale of Medicare plans are numerous, ambiguous, complex and updated frequently, particularly with respect to regulations and guidance issued by CMS for Medicare Advantage and Medicare Part D prescription drug plans. We have altered, and likely will have to continue to alter, our marketing and sales processes to comply with these requirements.
Health insurance carriers whose Medicare plans we sell must approve our websites, advisor enrollment center call scripts and a large portion of our marketing materials before we may use them to market and sell Medicare plans to Medicare-eligible individuals as an insurance agent. We are also required to file many of these materials on a regular basis with CMS. Certain aspects of our Medicare plan marketing partner relationships have been and will continue to be subject to review by CMS, state departments of insurance and health insurance carrier review, who may object to, or decline to approve or later determine that certain aspects of our online platforms, sales function or marketing materials and processes relating to our Medicare-related business are not in compliance with legal requirements. CMS also scrutinizes health insurance carriers whose Medicare plans we sell, and carriers may be held responsible for actions that we, our agents and our partners take, including marketing materials and actions that lead to complaints or disenrollment.
Health insurance carriers are increasingly evaluating broker performance based on enrollment quality, including complaint rates, retention, consumer satisfaction and volumes. As a result, health insurance carriers may terminate their relationship with us or require us to take corrective actions if our Medicare product sales, marketing and operations are not in compliance with legal requirements or give rise to excessive complaints. The termination of or change in our relationships with health insurance carriers could reduce the products we are able to offer, result in reduced commissions for past or future sales and otherwise harm our business, operating results and financial condition. Changes to the laws, regulations and guidelines, or enforcement practices relating to the sale of health insurance plans or related products and services could impact the manner in which we conduct our business, our ecommerce platforms or our sale of Medicare plans and other products, or restrict certain aspects of our revenue-generating activities, any of which could harm our business, operating results and financial condition.
We have received, and may in the future receive, inquiries from CMS or state departments of insurance regarding our marketing and business practices and compliance with laws and regulations. Government inquiries and proceedings could adversely impact our licenses, require payment of fines, require us to modify our practices, result in litigation and otherwise harm our business, operating results and financial condition.
Each year, CMS issues new rules relating to Medicare plans that may materially impact our operations. For example, for calendar year 2026, CMS announced that it is deferring taking actions on certain marketing provisions but the rule requiring the incorporation of the provider directory data was adopted in the second issuance of the calendar year 2026 final rules. CMS may evaluate these deferred provisions for future rulemaking. These additional
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requirements, if enacted, may improve the efficiency and competitiveness of government-led exchanges and marketplaces, may impact the viability of marketing partnerships that we use, may increase the chance of related litigation, and could impede or otherwise harm our business, operating results and financial condition.
In addition, each state regulates its insurance market, including by regulating the ability of insurance companies to set premiums and restrictions on how brokers and agents such as eHealth may compete, such as prohibitions on offering price reductions and rebates or certain marketing practices. The laws and regulations governing the offer, sale and purchase of health insurance are complex and subject to change, and future changes may be adverse to our business. For example, a long-standing provision in most applicable state laws that we believe benefits our business is that, once health insurance premiums are set by the carrier and approved by state regulators, they are fixed and not generally subject to negotiation or discounting by insurance carriers or agents. Additionally, state regulations generally prohibit carriers, agents and brokers from providing financial incentives, such as rebates, to their members in connection with the sale of health insurance. As a result, we do not currently compete with carriers or other agents and brokers on the price of the health insurance plans offered on our website. Changes in, or enforcement of, or compliance with, these regulations could impact consumers’ demand for our services or cause health insurance carriers to lower our commission rates, which could reduce our revenue. Our business, operating results and financial condition may be materially and adversely affected if we are unable to adapt to regulatory changes.
We have been and may in the future be subject to various legal proceedings, including litigation, government enforcement actions or regulatory inquiries, which could adversely affect our business, operating results and financial condition.
We are, and may in the future become, involved in various legal proceedings, litigation, governmental inquiries and enforcement actions, including labor and employment-related claims, claims relating to our marketing or sale of health insurance, intellectual property claims and claims relating to our compliance with securities laws. For example, in January 2022, we received a subpoena from the U.S. Attorney’s Office for the District of Massachusetts, seeking, among other things, information regarding our arrangements with insurance carriers, and on May 1, 2025, a qui tam action previously filed against us alleging the violation of the Federal False Claims Act in connection with our marketing activities was unsealed and the U.S. Attorney’s Office for the District of Massachusetts filed a complaint intervening in part in the qui tam action. We may receive similar inquiries or be subject to similar enforcement actions in the future. Such inquiries, enforcement actions, , and any other asserted us, with or without merit, may be time-consuming, may be expensive to address and may management’s attention and other resources. These also could subject us to significant liability for , our licenses to operate and our reputation. Our insurance and indemnities may not cover all that have been or that may be asserted us. If we are in our defense in these legal proceedings, we may be to pay or , enter into consent decrees, stop offering our services or change our business practices, any of which would our business, operating results and financial condition.
We may be unable to operate our business if we fail to maintain our health insurance licenses and otherwise comply with the numerous laws and regulations applicable to the sale of health insurance.
We are required to maintain a valid license in each state in which we transact health insurance business and to adhere to sales, documentation and administration practices specific to that state. We must maintain our health insurance licenses to continue selling plans and to continue to receive commissions from health insurance carriers. In addition, each employee who transacts health insurance business on our behalf must hold a valid license in one or more states. Because we maintain licenses in all 50 states and the District of Columbia, compliance with health insurance-related laws, rules and regulations is complex and costly.
State insurance departments generally have broad authority to, among other things:
• grant, limit, suspend and revoke licenses to transact insurance business;
• conduct inquiries into the insurance-related activities and conduct of agents and agencies;
• require and regulate disclosure in connection with the sale and solicitation of health insurance;
• regulate how, by whom and under what circumstances insurance premiums can be quoted and published and policies sold;
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• approve which entities may receive commissions from carriers and the circumstances under which they may be paid;
• regulate the content of insurance-related advertisements, including websites and other marketing practices;
• approve policy forms, require specific benefits and benefit levels, and regulate premium rates;
• impose fines and other penalties; and
• impose continuing education requirements.
Given the complexity, periodic modification and differing interpretations of insurance laws and regulations, we may not always have been, and may not always be, in full compliance. New laws, regulations and guidelines also may not be compatible with the sale of health insurance over the internet, the use of modern technologies such as artificial intelligence, or certain aspects of our platform or marketing or sale practices. Any failure to comply with applicable insurance laws, regulations or guidelines, or other laws and regulations relevant to our business, could result in significant liability, additional department of insurance licensing requirements, required modification of our advertising or business practices, changes to our technology or platforms, suspension or revocation of our licenses to sell health insurance, termination of carrier relationships, loss of commissions and/or our inability to sell health insurance plans. Any such consequences could harm our business, operating results and financial condition.
Moreover, an adverse regulatory action in one jurisdiction could result in penalties and negatively affect our license status, business or reputation in other jurisdictions, due to the requirement that adverse regulatory actions in one jurisdiction be reported to other jurisdictions. Even if allegations in any regulatory or other action are ultimately found to be false, any surrounding negative publicity could undermine confidence among consumers, marketing partners or health insurance carriers and significantly damage our brand. In addition, as we expand our product offerings, we may become subject to additional laws and regulations.
Any legal liability, regulatory penalties, complaints or negative publicity related to us or our services could harm our business, operating results and financial condition.
We provide information on our website, through our advisor enrollment centers, in our marketing materials and in other ways regarding health insurance in general and the health insurance plans we market and sell, including information relating to insurance premiums, coverage, benefits, provider networks, exclusions, limitations, availability, plan comparisons and insurance company ratings. In the ordinary course of operating our business, we and our health insurance carrier partners have received complaints that the information we provided was not accurate or was misleading. We have received, and may in the future receive, inquiries from health insurance carriers, CMS, state departments of insurance, regulators or other legislative bodies regarding our marketing and business practices and compliance with laws and regulations. We typically respond to these inquiries by explaining how we believe we are in compliance with relevant regulations, or we may modify our practices in connection with the inquiry. These types of inquiries and associated claims can be time-consuming and expensive to address, can divert our management’s attention and other resources, can impact our relationships with health insurance carriers and can cause a loss of confidence in our services. As a result, whether or not we are to these , they could our business, operating results and financial condition.
Risks Related to Technology, Cybersecurity and Data Privacy
Our business depends on our ability to maintain and improve functioning information technology systems that support our ecommerce platform and advisor enrollment center operations, particularly during key health care enrollment periods.
Our ability to service consumers depends on the performance and stability of our ecommerce platform and advisor enrollment center operations, including telephony, call recording, customer relationship management and other systems and technologies, some of which are provided by third parties. These systems have experienced temporary failures in the past and may experience disruptions due to systems upgrades, outages, increased remote work or other events. If we experience operational failure or prolonged interruption of these systems and technology or if we are unable to handle increased volume, our business, operating results and financial condition would be harmed.
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The performance, reliability and availability of our ecommerce platform, cloud contact center and underlying network infrastructures are critical to our financial results, brand and relationship with members, marketing partners and health insurance carriers. Although we regularly enhance our platforms and system infrastructure, system failures and interruptions may occur. If these failures or interruptions occur during the Medicare annual enrollment period, the Medicare Advantage open enrollment period or during the open enrollment periods, the negative impact would be particularly pronounced.
We rely in part upon third-party vendors, including cloud infrastructure and bandwidth providers and our telephone and call recording systems providers, to operate our ecommerce platform and advisor enrollment centers. Consumers using our website and accessing our services depend upon online, mobile and other service providers, and our remote employees rely on third-party vendors to access our systems and tools. We cannot predict whether additional network capacity will be available from these vendors as we need it, and our network or our suppliers’ networks might be unable to achieve or maintain a sufficiently high capacity of data transmission. Any significant interruption in access to our advisor enrollment centers or our website could impair our business, damage our reputation and our relationships with insurance carriers, marketing partners and existing and potential consumers. Our business operations may also be disrupted if our employees are unable to work from home effectively as a result of technical difficulties experienced by these service providers. Many of these service providers have experienced significant outages, and other in the past and could experience them in the future.
Our and our vendors’ facilities, databases and systems are also vulnerable to damage or interruption from human error, fire, floods, earthquakes and other natural disasters, power loss, telecommunications failures, physical or electronic break-ins, computer viruses, cyberattacks, acts of terrorism, other attempts to harm our systems and similar events. Any of these factors could harm our business, operating results and financial condition. In addition, any loss of data could result in loss of customers and subject us to potential liability.
Our business is subject to security risks. Any successful cyberattack or security breach, or our inability to safeguard the confidentiality and integrity of the data we hold could harm our business, operating results and financial condition.
Maintaining the security of our products and services is critical for us, our consumers, and the health insurance carriers we work with. Although we take precautions, we cannot guarantee that our facilities and systems, or those of our third-party service providers, will be free from security breaches, cyberattacks, acts of vandalism, computer viruses, malware, misplaced or lost data, programming or human errors, or other similar events. Any security breach may require us to expend significant resources to detect, protect, mitigate and remediate problems caused by such security breach.
Techniques used to obtain unauthorized access or to sabotage systems evolve rapidly. For example, attackers increasingly use artificial intelligence and machine learning to launch more automated, targeted and coordinated attacks. As a result, we may be unable to anticipate emerging techniques or implement adequate preventative measures in advance. As more companies and individuals work remotely and otherwise conduct business online, the likelihood and potential severity of cybersecurity incidents have increased.
Any actual or perceived compromise of our security or that of any of our third-party service providers could compromise our systems or data, damage our reputation, disrupt relationships with government-run health insurance exchanges and marketplaces, members, marketing partners or health insurance carriers, reduce demand for our services, and subject us to significant liability, costs, regulatory actions or lawsuits. These actual or perceived breaches of our security measures, or the accidental loss, inadvertent disclosure, or unauthorized dissemination of proprietary, sensitive, personal, or confidential information about us, our employees, our customers, or their end users, could expose us to a risk of loss or misuse of information, our employees, our customers or other individuals and could result in litigation, liability or fines, costly and time-intensive notification requirements, governmental inquiries or oversight, of customer or consumer confidence and other . Any of these events could our business, our brand and reputation, and require substantial time and resources to mitigate and remediate these impacts.
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Increasing regulatory focus on privacy and data security issues and expanding laws could impact our business and expose us to increased liability.
Our business is subject to emerging privacy laws at both the state and federal levels that create compliance challenges. Our services involve the collection, storage and transmission of confidential and certain sensitive information, including personally identifiable information of our consumers. We also hold a significant amount of personal information relating to our current and former employees. As a result, we are subject to various state and federal laws and contractual requirements regarding the access, use and disclosure of personal information.
Compliance with state and federal privacy-related laws, particularly state legislation such as the California Consumer Privacy Act and its amendments, and increasingly robust industry standard security frameworks may result in cost increases due to increased needs for privacy compliance, oversight and monitoring, and the development of new processes to effectuate and demonstrate compliance. Potential non-compliance by us or third-party service providers, and enforcement actions, may result in increased costs to our business and reputational harm. The privacy and cybersecurity legislative landscape is rapidly evolving at both the state and federal levels, creating challenges for businesses seeking to comply with the new requirements. These changes may impact the way we conduct our business and may harm our business, operating results and financial condition.
Any perception that our practices, products or services violate individual privacy or data protection rights may subject us to public criticism, class action lawsuits, reputational harm, or investigations or claims by regulators, industry groups or other third parties. If additional data privacy or data security laws are implemented, or if our health insurance carriers or other partners impose additional privacy or data security requirements, we may not be able to comply with such requirements in a timely and cost-effective manner. Failure to timely implement required changes could result in our inability to sell health insurance plans in a particular jurisdiction or for a particular health insurance carrier or could subject us to liability for non-compliance. Any of these factors could damage our business, operating results and financial condition. Health insurance carriers may also require us to comply with additional privacy and data security standards in order to market and sell insurance plans on their behalf. Compliance with privacy and data security standards is regularly assessed, and we may not always be compliant with their standards. If we are not in compliance, we may not be to accept information from consumers, and our relationship with carriers could be impacted or , which could our business, operating results and financial condition.
Issues relating to the use of new and evolving technologies, such as AI, in our business operations could result in liability, reputational harm and an adverse impact on our business, operating results and financial condition.
We have begun utilizing our AI Center of Excellence to help guide and prioritize our AI and technology initiatives and have started implementing AI-based voice, non-licensed agents to help streamline the health insurance selection process. These AI-based voice agents initiate the customer intake process, gather personal information, check initial eligibility and communicate necessary disclosures. Utilizing AI-based voice agents has so far contributed to a reduction in the wait time for consumers and enhanced customer experience. However, social, ethical and operational issues relating to the use of AI in our business operations could expose us to liability, reputational harm and additional costs. If our AI implementation, deployment or governance is ineffective or inadequate, incidents may occur that impair the public acceptance of AI use, cause harm to individuals, customers or society, or cause our operations to not function as intended or produce unintended outcomes. Also, the use of third party models may pose security and privacy risks. Jurisdictions around the world are developing and enacting new laws and regulations that apply specifically to the use of AI. These regulations and the evolving AI regulatory environment could, among other impacts, result in among AI regulations and frameworks across jurisdictions, increase our compliance, governance and research and development costs and increase our exposure to related to our use of AI.
We may not be able to adequately protect our intellectual property, which could harm our business, operating results and financial condition.
Our intellectual property is an essential asset of our business, and we believe that our technology provides a competitive advantage in the distribution of Medicare-related, individual, family and small business health insurance. We rely on a combination of patent, copyright, trademark and trade secret laws in the United States and
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other jurisdictions, as well as confidentiality procedures and contractual provisions, to establish and protect our intellectual property rights. Our efforts to protect our intellectual property may need to be revised or may ultimately prove insufficient, and our trademarks or patents may be invalid or unenforceable. Moreover, the law relating to intellectual property is not as developed in China, and our intellectual property rights may not be as respected or enforceable in China as they are in the United States. We may not be effective in policing unauthorized use of our intellectual property, trade secrets and other confidential information. Even if we do detect violations, litigation may be necessary to enforce our intellectual property rights. Any such enforcement efforts we undertake, including litigation, could be time-consuming and expensive, could divert our management’s attention and may result in a court determining that our intellectual property or other rights are unenforceable. If we are not successful in cost-effectively protecting our intellectual property rights, trade secrets and confidential information, our business, operating results and financial condition could be .
Risks Related to Finance, Accounting and Tax Matters
If commission or other member data reports we receive from carriers are inaccurate or not sent to us in a timely manner, our business and operating results could be harmed, and we may not recognize trends in our membership and accurately estimate membership as of a specific date.
We rely on health insurance carriers to timely and accurately report the commissions we earn, and we calculate our commission revenue, prepare our financial reports, projections and budgets, and direct our marketing and other operating efforts based on the reports we receive from health insurance carriers.
We have implemented controls to assess the completeness and accuracy of the data received, whereby we apply judgment and make estimates based on historical data and current trends to evaluate whether commissions due to us are being reported accurately. We also conduct reconciliation procedures with carriers on an ongoing basis to identify and resolve potential discrepancies. For instance, during the reconciliation process, we may determine that we did not receive commissions owed to us. Conversely, carriers may require us to return commissions paid in a prior period due to plan cancellations for members we previously estimated as being active. If carriers inaccurately or belatedly report the amount of commissions due to us, we may not be able to collect and recognize revenue to which we are entitled, which could harm our business, operating results and financial condition. Inaccuracies in the reporting from and reconciliations with carriers may also impact our estimates of constrained LTV or our estimates of commission revenue for future periods, which are based on historical trends, including trends in contracted commission rates and expected plan cancellations.
We also depend on carriers and others for membership data. Many carriers do not directly report member cancellations to us, which makes it difficult for us to determine the impact of current conditions on our membership retention and to accurately estimate membership as of a specific date. The majority of our members who terminate their plans stop making their insurance premium payments or notify the carrier directly, rather than notifying us. As a result, we must infer cancellations from commission reports that carriers provide by analyzing whether member premium payments to the carrier have ceased for a period of time, and we may not learn of cancellations for several months. For our small business membership, groups typically notify the carriers of policy cancellations and changes in group size, but carriers often do not provide us this information. As a result, it can take a significant time for us to learn of group cancellations or changes in group membership, sometimes as long as until the time of the group’s annual renewal.
Given the number of months required to observe non-payment of commissions in order to confirm cancellations, we estimate the number of active members as of a specified date. After we have estimated membership for a period, we may later receive information from carriers that would have changed those estimates had we received it earlier. For example, we may receive commission payments or other information indicating that a member who was excluded in our estimates for a prior period was in fact active, or that a member who was included in our estimates was not. In particular, during Medicare annual enrollment and other open enrollment periods, carriers often face a significant increase in transaction volume and may be delayed in providing information as a result, further impairing the accuracy of our membership estimates. As a result, our actual membership could be materially different from our estimates, particularly if current trends in membership cancellation are inconsistent with past cancellation trends that we use to estimate our membership or if carriers subsequently report changes to the commission payments that they previously provided to us. If our actual membership is different from our estimates,
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the constrained LTV component of our revenue recognition model could also be inaccurate, including inaccurate plan duration assumptions. Additionally, this may result in delayed or inaccurate information regarding member retention trends.
In addition to member cancellation information, various circumstances, such as changes in timing of enrollment periods, the ability of enrollees to change plans outside of the Medicare annual enrollment period, referral sources, member enrollment experience and other factors specific to our business, could cause the assumptions and estimates that we make in connection with estimating our membership to be inaccurate, which could negatively affect our business, operating results and financial condition.
Our agreements with our lender and our convertible preferred stock investor contain restrictions that impact our business and expose us to risks that could materially adversely affect our liquidity and financial condition.
On December 31, 2025, we entered into a revolving credit agreement with CCP Agency, LLC, as agent and other lenders party thereto (the “Revolving Credit Agreement”). The Revolving Credit Agreement provides for a new asset-based revolving credit facility (the “Revolving Credit Facility”) with aggregate commitments of up to $125.0 million. The Revolving Credit Agreement contains certain mandatory prepayment triggers and imposes certain covenants and restrictions on our business and our ability to obtain additional financing.
The Revolving Credit Agreement contains customary affirmative covenants, including covenants regarding the payment of taxes and other obligations, maintenance of insurance, reporting requirements and compliance with applicable laws and regulations. It also contains customary negative covenants that limit our ability to, among other things: (i) incur additional debt or issue certain preferred stock; (ii) pay dividends, redeem stock, or make other distributions; (iii) make other restricted payments or investments; (iv) grant liens or security interests on assets; (v) transfer or sell assets; (vi) create restrictions on payment of dividends or other amounts; (vii) engage in mergers or consolidations; or (viii) engage in certain transactions with affiliates, in each case, subject to certain carveouts and exceptions.
Further, the Revolving Credit Agreement requires that we maintain a maximum total leverage ratio, a minimum unrestricted cash balance and a minimum lifetime value to acquisition cost ratio, each as defined in the Revolving Credit Agreement. The events of default under the Revolving Credit Agreement include, among other things and subject to grace periods in certain instances, payment defaults, cross defaults with certain other material indebtedness, breaches of covenants, material inaccuracies of representations and warranties, changes in control of our company, certain bankruptcy and insolvency events with respect to us and our subsidiaries, a restriction on all or a material portion of our business and the indictment of us or any subsidiary (or any senior officer thereof), or criminal or civil proceedings against the same, which could result in a forfeiture of a material portion of our and our subsidiaries’ properties.
If we experience a decline in cash flow due to any of the factors described in this Risk Factors section or otherwise, we could have difficulty paying interest and principal amounts due on our indebtedness and meeting the financial covenants set forth in our Revolving Credit Agreement. If we are unable to generate sufficient cash flow or otherwise obtain the funds necessary to make required payments, or if we fail to comply with the covenants in the Revolving Credit Agreement, we could be in default. Any default that is not waived by the lender could result in the acceleration of the obligations under the Revolving Credit Agreement and an increase in the applicable interest rate under the credit facility. It would also permit our lender to exercise rights and remedies with respect to all of the collateral that is securing the Revolving Credit Agreement, which includes substantially all of our assets. Any such default could materially adversely affect our liquidity and financial condition.
On February 17, 2021, we entered into an investment agreement with Echelon Health SPV, LP (“H.I.G.”), pursuant to which H.I.G. purchased 2.25 million shares of Series A convertible preferred stock (“Series A Preferred Stock”) for an aggregate price of $225.0 million (the “H.I.G. Investment Agreement”). The H.I.G. Investment Agreement contains certain negative operating covenants that will remain in effect for so long as H.I.G. continues to own at least 30% of the shares of Series A Preferred Stock originally issued to it. The Company is required to maintain an Asset Coverage Ratio and a Minimum Liquidity Amount (in each case, as defined in the H.I.G. Investment Agreement). Failure to maintain the Minimum Asset Coverage Ratio or the Minimum Liquidity Amount as of the date or the time period required by the H.I.G. Investment Agreement, for as long as H.I.G. continues to own at least 30% of the Series A Preferred Stock originally issued to it in the private placement, entitles H.I.G., subject to
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conditions and restrictions specified therein, to additional rights, including the right to nominate one additional member to our Board of Directors, the right to approve our annual budget, the right to approve the hiring or termination of certain key executives and the right to approve the incurrence of certain indebtedness. On December 31, 2025, in connection with our entry into Revolving Credit Agreement, we entered into a first amendment to the H.I.G. Investment Agreement (the “H.I.G. Investment Agreement Amendment”), which amends the H.I.G. Investment Agreement to, among other things, explicitly permit entry into, borrowings under, and refinancing of the Revolving Credit Facility up to the initial $125.0 million in Aggregate Revolving Loan Commitments, as defined in the Investment Agreement Amendment, plus in the case of refinancings, certain additional amounts, and add a liquidity covenant substantially similar to the covenant provided for in the Revolving Credit Agreement (the “Liquidity Covenant”), with the sole remedy for breach of the liquidity covenant being a 2.00% increase in the paid-in-kind dividend rate. We have not met the Minimum Asset Coverage Ratio since the September 30, 2023 measurement date and as of November 30, 2024, we were no longer in compliance with the Minimum Liquidity Amount. As of December 31, 2025, H.I.G. continued to own at least 30% of the shares, and we were in compliance with the Liquidity Covenant.
These restrictions could materially adversely affect our business by, among other things, limiting our ability to take advantage of financings, mergers, acquisitions and other corporate opportunities that may be beneficial to the business and other stockholders. Even if the Revolving Credit Agreement were terminated, any additional debt we may incur in the future may subject us to similar or additional covenants, and any future investment or financing arrangement may likewise impose similar or additional covenants on our operations.
Operating and growing our business is likely to require additional capital. If capital is not available to us, our business, operating results and financial condition may suffer.
Operating and growing our business is expected to require further investments in our business. We have generated negative cash from operating activities and may continue to generate negative cash from operating activities in the future. We may from time to time seek to raise additional capital through debt and/or equity financing to pursue strategic initiatives or make investments in our business. If we seek to raise funds through debt or equity financing, those funds may prove to be unavailable, may only be available on terms that are not acceptable to us or may result in significant dilution to our stockholders or higher levels of leverage.
Our revolving credit facility under the Comvest Agreement matures in December 2028. Our ability to refinance our existing or future indebtedness will depend on the capital markets, including prevailing interest rates, and our financial condition and performance, which, among other things, is subject to economic, financial, competitive and other factors beyond our control. In addition, our Revolving Credit Agreement and the H.I.G. Investment Agreement contain restrictions that limit our ability to incur additional indebtedness, issue certain types of equity securities with rights and preferences senior to or pari passu with our Series A Preferred Stock, make certain types of investments or obtain additional financing. Pursuant to the terms of the H.I.G. Investment Agreement, we are currently required to obtain the consent of H.I.G. in order to incur certain indebtedness, which could limit our ability to obtain additional financing. If we are unable to refinance our existing or future indebtedness, obtain adequate financing or obtain financing on terms satisfactory to us when we require it, we may default on our existing or future indebtedness, and our ability to continue to pursue our business objectives and to respond to business opportunities or challenges could be harmed, and our business, operating results and financial condition could be materially and affected.
If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements could be impaired, which could adversely affect our operating results, our ability to operate our business and our stock price.
We operate a complex business, and ensuring that we have adequate internal control over financial reporting and adequate accounting controls and procedures in place to help ensure that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. This process is complicated by the expansion of our business operations and changing accounting requirements. Our management, including our chief executive officer and chief financial officer, does not expect that our internal control over financial reporting will prevent all errors or all fraud. No matter how well designed and operated, any control system can provide only reasonable, not absolute, assurance that its objectives will be met. The design of a control system is subject to inherent limitations, including resource constraints and cost-benefits considerations.
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Furthermore, controls can be circumvented by individuals or through collusion, or by management override of the controls. Over time, controls may become inadequate due to changes in our operations or deterioration in compliance with policies or procedures. As a result, misstatements due to error or fraud may occur and not be detected.
We cannot assure that significant deficiencies or material weaknesses in our internal control over financial reporting will not be identified in the future. Any failure to maintain or implement required new or improved controls, or any difficulties we encounter in their implementation, could result in significant deficiencies or material weaknesses, impact our ability to timely meet our periodic reporting obligations or result in material misstatements in our financial statements. Any such failure could also adversely affect management’s periodic evaluations and annual auditor attestation reports regarding disclosure controls and the effectiveness of our internal control over financial reporting required under Section 404 of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder. The existence of a material weakness could result in errors in our financial statements that may require a of financial statements, our reporting obligations and investor confidence in our reported financial information, which could lead to a in our stock price and us to potential .
Changes in our provision for income taxes or adverse outcomes resulting from examination of our income or other tax returns or changes in tax legislation could adversely affect our results.
Our provision for income taxes is subject to volatility and could be adversely affected by earnings differing materially from our projections, changes in the valuation of our deferred tax assets and liabilities, tax effects of stock-based compensation, outcomes as a result of tax examinations or by changes in tax laws, regulations, accounting principles, including accounting for uncertain tax positions, or interpretations thereof. To the extent that our provision for income taxes is subject to volatility or adverse outcomes as a result of tax examinations, our operating results could be harmed. Significant judgment is required to determine the recognition and measurement attributes prescribed in U.S. generally accepted accounting principles relating to accounting for income taxes. In addition, we are subject to examinations of our income tax returns by the Internal Revenue Service and other tax authorities. We assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There may be exposure that the outcomes from these examinations will have an adverse effect on our operating results and financial condition.
Our ability to use net operating losses to offset future taxable income may be subject to certain limitations.
We have net operating loss carryforwards for federal and state income tax purposes to offset future taxable income. Certain of our federal and state net operating loss carryforwards begin expiring in 2034 and 2026, respectively. A lack of future taxable income would adversely affect our ability to utilize these net operating loss carryforwards. In addition, utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to ownership changes that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and similar state provisions. These ownership change limitations may limit the amount of net operating loss carryforwards and other tax attributes that can be utilized annually to offset future taxable income and tax, respectively. In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points (by value) of the outstanding stock of a company by certain stockholders. Our ability to use the remaining net operating carryforwards may be further limited if we experience a Section 382 ownership change as a result of future changes in our stock ownership.
The value of our investments is subject to significant capital markets risk related to changes in interest rates and credit spreads as well as other investment risks.
Our financial condition and operating results are affected by the performance of our investment portfolio. The value of our investments is exposed to capital markets risks, and our operating results, liquidity, financial condition or cash flows could be adversely affected by realized losses, impairments and changes in unrealized positions as a result of: significant market volatility, changes in interest rates, changes in credit spreads and defaults, a lack of pricing transparency, a reduction in market liquidity, declines in equity prices, changes in national, state/provincial or local laws and the strengthening or weakening of foreign currencies against the U.S. dollar. Levels of write-down or impairment are impacted by our assessment of the intent to sell securities that have
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declined in value as well as actual losses as a result of defaults or deterioration in estimates of cash flows. If we reposition or realign portions of the investment portfolio and sell securities in an unrealized loss position, we will incur an other-than-temporary impairment charge or realized losses. Any such charge may have a material adverse effect on our business, operating results and financial condition.
Risks Related to Ownership of Our Common Stock
Our future operating results are likely to fluctuate and could fall short of our guidance and other expectations, which could negatively affect the value of our common stock.
Our operating results are likely to fluctuate as a result of a variety of factors, including the factors described elsewhere in this Risk Factors section, many of which are outside of our control. For example, and among these factors, the assumptions underlying our estimates of commission revenue as required by Accounting Standards Codification (“ASC”) 606 may vary significantly over time. As a result, comparing our operating results on a period-to-period basis may not be meaningful and you should not rely on our past results as an indication of our future performance, particularly in light of the fact that our business and industry are undergoing substantial change as a result of health care reform, competition, shifts in carrier and regulator priorities and initiatives we determine to pursue. The guidance that we release from time to time contains forward-looking statements and is based on projections prepared by our management. These projections are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the guidance furnished by us will not materialize or will vary significantly from actual results. Our actual results have, and may in the future, vary from our guidance and the variations may be material. If our revenue or operating results differ from our guidance or fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially. In the past, when our revenue and operating results differed from our guidance and the expectations of investors or securities analysts, the price of our common stock was impacted.
The price of our common stock has been and may continue to be volatile, and the value of your investment could decline.
The trading price of our common stock has, and may continue to, fluctuate or decline significantly in response to numerous factors, including those described in this Risk Factors section, many of which are beyond our control and may not directly relate to our operating performance. As a result, investors may lose all or part of their investment.
Factors that could cause fluctuations in the trading price of our common stock include, among other things:
• price and volume fluctuations in the overall stock markets, including as a result of inflation, political or geopolitical instability, or public or market reactions thereto, including any prolonged government shutdown;
• volatility in the market prices and trading volumes of shares of companies in our industry, including our competitors, or the broader technology sector;
• new debt and/or equity financings that we undertake to raise additional capital;
• strategic transactions or partnerships that we may enter into;
• new or changes in laws, regulations or regulatory interpretations applicable to our business, including those relating to the health care industry or the marketing and sale of Medicare plans;
• actual or anticipated changes in our operating results or business growth;
• changes in operating performance and stock market valuations of technology or insurance brokerage companies generally and of our competitors, as well as general market trends affecting these sectors;
• changes or discontinuation of coverage by securities analysts, changes in financial estimates by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors;
• sales of shares of our common stock by us or our stockholders, or the perception that such sales may occur;
• announcements by us or our competitors regarding new products or services or other material developments;
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• public reactions to our press releases, other public announcements or our filings with the SEC;
• rumors, market speculation or third-party commentary or reports involving us or other companies in our industry, whether accurate or inaccurate;
• actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally;
• our ability to control costs, including our operating expenses;
• litigation, regulatory proceedings or government investigations involving us or others in our industry;
• developments or disputes concerning our intellectual property or other proprietary rights;
• announced or completed acquisitions of businesses or technologies by us or our competitors;
• changes in accounting standards, policies, guidelines, interpretations, or principles;
• significant change in our management;
• adverse events or perceptions affecting the U.S. or international financial systems;
• the imposition of tariffs or other significant changes in relations between the United States and other countries in which we operate our business; and
• general economic conditions, political instability and slow or negative growth of our markets.
In addition, the stock market in general, and the market for technology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those affected companies. Broad market and industry factors may materially affect the market price of our common stock, regardless of our actual results of operations or financial condition. Additionally, as a public company, we face the risk of shareholder lawsuits, particularly if we experience declines in the price of our common stock. In the past, following periods of volatility in the overall market and the market prices of a particular company’s securities, securities class action lawsuits have often been instituted against affected companies. We have been, and may in the future be, subject to such litigation. Any such claims, whether or not successful, could result in substantial costs and divert management’s attention and other resources.
Our convertible preferred stock investor has rights, preferences and privileges that are not held by, and are preferential to, the rights of our common stockholders and may exercise influence over us. This could adversely affect our liquidity and financial condition, result in the interests of our convertible preferred stock investor differing from those of our common stockholders and make an acquisition of us more difficult.
H.I.G., the initial purchaser and the current holder of our Series A Preferred Stock, has (i) a liquidation preference, (ii) rights to dividends, which are senior to all of our other equity securities, (iii) redemption rights beginning on April 30, 2027, (iv) the right to require us to repurchase any or all of their Series A Preferred Stock in connection with certain change of control events and (v) conversion price adjustments in connection with certain corporate transactions, each subject to the terms, conditions and exceptions contained in the certificate of designations for the Series A Preferred Stock. These dividend and share repurchase and redemption obligations could adversely impact our liquidity and reduce cash available for working capital, capital expenditures, growth opportunities, acquisitions, and other corporate purposes.
The H.I.G. Investment Agreement entitles H.I.G. to nominate one board member so long as it owns at least 30% of the common stock issuable or issued upon conversion of the Series A Preferred Stock originally issued to it. The director designated by H.I.G. is also entitled to serve on committees of our Board of Directors, subject to applicable law and stock exchange requirements.
The H.I.G. Investment Agreement also contains certain negative operating covenants that remain in effect for so long as H.I.G. continues to own at least 30% of the shares of Series A Preferred Stock originally issued to it. We are required to maintain an Asset Coverage Ratio and a Minimum Liquidity Amount (in each case, as defined in the H.I.G. Investment Agreement). Failure to maintain the Minimum Asset Coverage Ratio or the Minimum Liquidity Amount covenants may entitle H.I.G., subject to conditions and restrictions specified therein, to additional rights, including the right to nominate one additional member to our Board of Directors. The interests of any director designated by H.I.G. may differ from the interests of our security holders as a whole or of our other directors. If the additional rights are used by H.I.G., it could be distracting to our management and disruptive to our operations or
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hinder our ability to execute our operational and strategic plans. The terms of the H.I.G. Investment Agreement could also limit our ability to obtain additional financing or increase our borrowing costs.
In connection with the Revolving Credit Agreement, we entered into a First Amendment to the H.I.G. Investment Agreement (the “Investment Agreement Amendment”), which amends the H.I.G. Investment Agreement to, among other things, (i) explicitly permit entry into, borrowings under, and refinancing of the Revolving Credit Facility up to the initial $125.0 million in aggregate revolving loan commitments, plus in the case of refinancings, certain additional amounts, (ii) add a liquidity covenant substantially similar to the covenant provided for in the Revolving Credit Facility, with the sole remedy for breach of the liquidity covenant being a 2.00% increase in the paid-in-kind dividend rate for the Series A Preferred Stock in the event that the Company breaches the liquidity covenant, (iii) establish H.I.G.’s rights with respect to a new strategy committee of the Company’s board of directors, including the right to designate one member and an observer to the committee, and (iv) provide certain additional governance and covenant protections to H.I.G., including with respect to additional debt incurrence and information rights related to the Company’s annual budget. These restrictions could further limit our ability to obtain additional financing or increase our borrowing costs.
The preferential rights held by H.I.G. may result in interests that differ from those of our common stockholders. Furthermore, a sale of our company, as a change of control event, may require us to repurchase Series A Preferred Stock, which could have the effect of making an acquisition of our company more expensive and could deter transactions that might otherwise benefit our stockholders.
The issuance of shares of common stock underlying our convertible preferred stock would dilute the ownership and relative voting power of holders of our common stock and may adversely affect the market price of our common stock.
The Series A Preferred Stock is convertible at the option of the holders at any time into shares of common stock based on the then-applicable conversion rate as determined in the certificate of designations for the Series A Preferred Stock. Such conversion would dilute the ownership interest of existing holders of our common stock. In addition, because holders of our Series A Preferred Stock are entitled to vote, on an as-converted basis (subject to certain voting limitations and conversion calculations set forth in the certificate of designations for the Series A Preferred Stock), together with holders of our common stock on all matters submitted to a vote of the holders of our common stock, the issuance of the Series A Preferred Stock effectively reduces the relative voting power of the holders of our common stock.
Any sales in the public market of the common stock issuable upon conversion of the Series A Preferred Stock could adversely affect prevailing market prices of our common stock. Pursuant to the H.I.G. Investment Agreement, holders of our Series A Preferred Stock have customary resale registration rights for common stock issued upon conversion of the Series A Preferred Stock upon closing. Any resale of our common stock would increase the number of shares of our common stock available for public trading. Resales of a substantial number of shares of our common stock in the public market, or the perception that such sales might occur, could have a material adverse effect on the price of our common stock.
Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.
Our certificate of incorporation, bylaws, and Delaware law contain provisions that could have the effect of rendering more difficult, delaying or preventing an acquisition deemed undesirable by our Board of Directors. Our corporate governance documents include provisions:
• creating a classified Board of Directors whose members serve staggered three-year terms;
• authorizing undesignated preferred stock, which could be issued by our Board of Directors without stockholder approval and may contain voting, liquidation, dividend, and other rights superior to our common stock;
• limiting the liability of, and providing indemnification to, our directors and officers;
• limiting the ability of our stockholders to call and bring business before special meetings;
• requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our Board of Directors;
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• controlling the procedures for the conduct and scheduling of Board of Directors and stockholder meetings; and
• providing our Board of Directors with the express power to postpone previously scheduled annual meetings and to cancel previously scheduled special meetings.
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.
As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation law, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock.
Any provision of our certificate of incorporation, bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.
Our bylaws designate a state or federal court located within the State of Delaware and the federal district courts for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, stockholders, officers or other employees to us or our stockholders, (3) any action arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws or (4) any other action asserting a claim that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another State court in Delaware or the federal district court for the District of Delaware), except for any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than such court or for which such court does not have subject matter jurisdiction. This provision would not apply to any action brought to enforce a duty or liability created by the Securities Act or the Exchange Act, as amended, and the rules and regulations thereunder. Unless we consent in writing to the selection of an alternate forum, the U.S. federal district courts shall be the sole and forum for resolving any asserting a cause of action arising under the Securities Act.
The exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or our current or former directors, officers, stockholders or other employees, which may discourage such lawsuits against us and our current and former directors, officers, stockholders and other employees. Alternatively, if a court were to find either exclusive forum provision contained in our bylaws to be inapplicable or unenforceable in an action, we may incur significant additional costs associated with resolving such action in other jurisdictions, all of which could harm our business, operating results and financial condition.
We are a “smaller reporting company,” and the scaled disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors.
We are a “smaller reporting company,” or SRC. For so long as we remain an SRC, we are permitted and intend to rely on certain scaled disclosure requirements that are applicable to other public companies that are not SRCs. These scaled disclosure requirements include, but are not limited to, reduced disclosure obligations regarding executive compensation; and being required to provide two years of audited financial statements in our periodic reports, in contrast to other reporting companies, which must provide audited financial statements for three years.
We may choose to take advantage of some or all of the available exemptions. We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. If some investors find our
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common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
Macroeconomic and Industry Risks
Our business, operating results and financial condition can be impacted by political events, political instability, trade and other international disputes, geopolitical tensions or natural disasters.
Political events, political instability, trade and other international disputes, geopolitical tensions, conflict, natural disasters, public health issues and other extreme events can have a material adverse effect on the Company and its customers, consumers and other channel partners. For example, the United States has recently enacted and proposed to enact significant new tariffs. Additionally, President Trump has directed various federal agencies to further evaluate key aspects of U.S. trade policy and there have been and may continue to be significant changes to U.S. trade policies, treaties and tariffs. The Trump administration also announced “Trump Rx” and a related website for the direct purchase of certain pharmaceutical products directly from manufacturers on a cash price, non-reimbursed basis in exchange for reduced tariffs. There continues to exist significant uncertainty about the future relationship between the United States and other countries with respect to such trade policies, treaties and tariffs, and the tariff situation remains volatile. For example, a February 20, 2026 ruling from the U.S. Supreme Court invalidated the President’s recent invocation of the International Emergency Economic Powers Act (“IEEPA”) to authorize certain recent tariff actions, and these tariffs were rescinded on February 24, 2026. Details regarding the availability, timing and amount of any refunds remains uncertain and subject to further and legal, regulatory and administrative actions. The U.S. government subsequently announced plans to implement a new global “temporary import surcharge” of 15% on many of the same imported products beginning February 24, 2026, under authorities provided for in Section 122 of the Trade Action of 1974, supplementing non-IEEPA tariff measures. Further tariffs may also be forthcoming following the initiation and completion of additional Section 301 tariff . These developments, or the perception that any of them could occur, could result in the of current global economic conditions and the of global financial markets, and may significantly trade tensions and reduce global trade and, in particular, trade between the impacted nations and the United States. As discussed elsewhere in this Risk Factors section, our subsidiary in China provides support for certain aspects of our operations and faces risk related to international and geopolitical tensions. Any new or changes to restrictions can be announced with little or no advance notice, which can create uncertainty. The occurrence of any of these types of events or factors, including, for example, a government , could economic activity, restrict our access to our operations in China, and have a material effect on our business, operating results and financial condition.
Adverse macroeconomic conditions including slow growth, recession, high unemployment, inflation, financial and credit market disruptions, could materially adversely affect our business, operating results and financial condition.
Customer and consumer demand for our health insurance plan offerings may be impacted by adverse macroeconomic conditions, including slow growth or recession, high unemployment, inflation, market volatility or other negative economic factors. Weak economic conditions can adversely impact consumer confidence and spending and materially adversely affect demand for our products and services. In addition, consumer confidence and spending can be materially adversely affected in response to changes in fiscal and monetary policy, financial market volatility, declines in income or asset values, and other economic factors. In addition, limited liquidity, defaults, non-performance or other adverse developments affecting financial institutions, or perceptions regarding these or similar risks, have in the past and may in the future lead to market-wide liquidity . Such developments may impact parties with which we do business and their liquidity. These macroeconomic factors could materially and affect our business, operating results and financial condition. Any in financial institutions, credit markets and/or the broader financial services industry may lead to market-wide liquidity , may limit our access to preferred sources of liquidity when needed or on terms we find acceptable, and our borrowing costs could increase. An economic or credit could occur and credit availability and our ability to raise capital when needed. Changing our business practices in accordance with new or changed restrictions and could be expensive, time-consuming and to the Company’s operations, and the Company may not be to effectively mitigate all impacts from such events.
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