Looking ahead to the second quarter, we expect revenue growth of about 10% year-over-year on an ex tail basis. For context, we recognized just under $19 million in tail revenue across our business in Q2 last year. We expect our profitability to be roughly in line with Q2 of last year, excluding tail revenue. This reflects greater revenue and greater CC&E year-over-year, largely driven by an increase in agent head count as we strive for higher contribution from tenured advisers this AEP. With that, I will turn the call over to the operator to open up Q&A.
Operator: [Operator Instructions] And we’ll take our first from George Sutton with Craig-Hallum.
Unidentified Analyst: Hi, guys. This is James on for George. Thanks for taking my questions and nice results this morning. Can you talk about the scenarios you see potentially playing out this AEP given the CMS final rule and the challenges we’re hearing from payers? Sort of how are you managing or positioning the business to isolate yourself from those challenges?
Fran Soistman: James, it’s Fran. Yes, we’re been working on strategies really for the past several months now, and we’ll continue to refine those strategies, but we expect this upcoming AEP to be one of those situations where it best demonstrates the value proposition of eHealth in respect to what we anticipate to be a fair amount of disruption because of the pressures that Medicare Advantage health plans and carriers are experiencing through all the items that I mentioned in my prepared remarks. Part of this is offense, of course, right? There’s going to be — we anticipate a lot more beneficiaries who are accustomed to a certain level of supplemental benefits and other benefits that they value that may see changes, and potentially significant changes.
I think the pressures on the Part D side both on the MAPD and the stand-alone Part D are also going to be a source of shopping. And then, of course, we expect, as some of the national carriers have already said publicly, basically, everything is on the table for them, including geographic market exits and some of the other pressures are going to feel through the limitations imposed by CMS through the total beneficiary cost of TBC where they may end up having to phase out of products and introduce a new product in that market, which doesn’t allow them to convert those beneficiaries automatically. They have to resell them, and that’s where we come in to place to help with that process. So I think it’s going to be one of the more challenging AEPs for the industry, meaning the carrier industry, than they’ve experienced in many years, but it’s an opportunity for our industry to demonstrate the value that we bring to beneficiaries through our services.
Unidentified Analyst: Got you. And then with sort of higher switching or higher shopping activity expected, I guess, what strategy do you have in place to sort of improve your capture rate of those shoppers?
Fran Soistman: Yes. Sure. We continue to put tremendous effort and emphasis on the importance of retention, persistency in our book of business, our customer relationships, which is why we’ve done so much already in terms of increasing the value proposition through ePerks as an example. We know that there’s going to be a lot of activity further complicated by the fact that this is an election year cycle. And oftentimes, we’ve seen in the past, beneficiaries won’t get the message as clearly as they do in off years because the election advertising consumes so much airtime, so that results in pent-up demand following the election. So we’re preparing for that. We’re preparing for everything we can to alert our customers where they will likely experience the greatest disruption.
I’d say the areas that you can focus on more intently is where there’s going to be geographic exits and knowing that you’re going to need to intervene and move those beneficiaries into an alternative product if that carrier has exited the current carrier. So as I said, it’s a combination of defending the book, and you do that proactively and through our analytics, we’ll do it with great precision. And then we’ll also need to go on offense in terms of taking advantage of perhaps the volatility in the greater marketplace to capture more share.
Unidentified Analyst: Got you. Last one from me and I’ll hop back in the queue, but within the full year revenue guide, what contribution are you assuming from direct to carrier relationships versus the BOR side of the business? And what do you think that mix could look like in the next few years? Thanks, guys.
John Stelben: Hi, James, it’s John. I think that when you think about the amplifying business, it will be, call it, the high single digits to 10%-ish of the revenue based on what we have in the hopper today and we continue to look for new opportunities. I think over the next several years we expect to expand that Amplify business, especially as carriers are looking to — looking for different distribution models going forward. But over time, we would adjust Amplify to become a larger percentage of the overall revenue. I really can’t sort of — I don’t want to guess at what it could be, but if you were able to add similar-sized BPO deals to — as our recent ones, you could over the next several years approach 20%, 25% of the total revenues.
Operator: Thank you. [Operator Instructions] And it appears that we have no further questions at this time. I will now turn the program back over to our presenters for any additional or closing remarks.
Fran Soistman: Thank you, operator, and thank you to everyone that dialed in for this morning’s call. eHealth continues to make important progress towards our goal of steady, profitable growth. Our results this quarter are a key indicator of eHealth’s strong strategic, operational and financial foundation made possible by the important work of our management team and all of our employees. We appreciate your continued support and we look forward to meeting with our investors in the coming weeks. Thank you.
Operator: That concludes today’s teleconference. Thank you for your participation. You may now disconnect. Goodbye.
