Fig. 1 eHealth stock falling like a rock.
eHealth Another Troubled Call Center
by Lewis Loflin
Update May 26, 2023: eHealth stock closed at $6.69.
Southwest Virginia exemplifies how capitalism should not work. This kind of business is not capitalism but goes under other names, such as corporatism or crony capitalism.
I understand business cycles go up and down. The level of government regulation and interference can make or break entire industries. Instead of protecting the public interest, they create problems and waste resources to fix the problems their meddling created.
In many cases, government economic development efforts directly lead to other workers losing their jobs by paying companies to relocate, then the company pays less in their new location.
These subsidies allow them to unfairly underbid or out-compete a legitimate private sector company. Then that company runs to the government for bailouts.
The system works like this. Multiple agencies will fund parts of the same "job creation" effort that they all claim to have "created" new jobs-the projected new jobs.
A good example is eHealth, another call center. Hundreds of new jobs are "projected," underwritten by unknown amounts of money from the Scott County IDA and who knows how many others. They get a shiny new office building and tons of other free stuff. They closed this deal around late 2020, according to press reports.
The only problem is their stock selling at $133 per share May 2020 has tanked to $3.27 November 2022. In 2018 eHealth closed its Massachusetts office, dumped 79 workers. To quote, "eHealth reported a loss of $25.4 million for 2017, compared with a loss of $4.9 million the year before."
Ref. Boston Business Journal Mar. 6, 2018. Note eHealth is also embroiled in a lawsuit I won't go into.
To quote https://ir.ehealthinsurance.com/ Oct. 22, 2020:
Loss from Operations - Loss from operations for the nine months ended September 30, 2020 was $26.1 million compared to loss from operations of $41.7 million for the nine months ended September 30, 2019.
Pre-Tax Loss - Pre-tax loss for the nine months ended September 30, 2020 was $25.3 million compared to pre-tax loss of $39.9 million for the nine months ended September 30, 2019.
Net Loss - Net loss for the nine months ended September 30, 2020 was $14.4 million, or $0.56 net loss per diluted share, compared to net loss of $21.9 million, or $0.96 net loss per diluted share, for the nine months ended September 30, 2019.
So eHealth was losing millions at the same time they got involved with Virginia. The Virginia Economic Development Partnership (another agency) December 10, 2020 states:
The Virginia Economic Development Partnership worked with Scott County, InvestSWVA, Mountain Empire Community College, and the Virginia Tobacco Region Revitalization Commission to secure the project for Virginia. Governor Northam approved a New Company Incentive Program grant of $626,500, which will be provided by the Commonwealth’s Opportunity Fund (COF). ... The Virginia Tobacco Region Revitalization Commission approved $94,000 in Tobacco Region Opportunity Funds for the project, and eHealth Technologies is eligible to receive state benefits from the Virginia Enterprise Zone Program, administered by the Department of Housing and Community Development.
So eHealth is putting in a whopping $375,000. This latest effort is "projected" to create 160 jobs. All of these government organizations will claim 160 jobs created. I hope it works this time.
Again, I will repeat the main marketing ploy this gaggle of government agencies uses to lure in business: "The average full-time worker in SWVA is paid $14,164/yr. Less than the average full-time worker in Virginia and $9,162/yr. less than the average full-time worker in the United States."
To further quote,
"Regional wages are not competitive with statewide and national wages. Turnover is high for low-wage jobs. SWVA residents disproportionately live in poverty; many workers cannot afford a basic standard of living."
I was asked to submit ideas and not just complaints. Fair enough. See Needed Political Reforms Ending Poverty Southwest Virginia
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