Latest news with #TimDanker
Yahoo
14-05-2025
- Business
- Yahoo
Why SelectQuote Stock Got Slammed Today
The company unveiled its latest set of quarterly earnings. It showed robust growth, but a Department of Justice complaint is dogging its stock. 10 stocks we like better than SelectQuote › Veteran health insurance broker SelectQuote (NYSE: SLQT) wasn't quite looking like the wave of the future on Monday. The company's shares took a 12% hit on the day, following management's release of the latest set of quarterly figures. That was in rather sharp contrast to the overall stock market, where the benchmark S&P 500 index rose by a relatively steep 3.3%. For its fiscal third quarter of 2025, SelectQuote reaped just over $408 million in total revenue, up from the more than $376 million it earned in the same period of fiscal 2024. Generally accepted accounting principles (GAAP) net income came in at over $26 million ($0.03 per share), more than triple the under-$8.6 million profit of the year-ago period. Although those increases were nothing to sneeze at, the company missed on the bottom line, if only slightly. On average, analysts tracking SelectQuote stock were modeling $0.04 per share net income. The company did beat on revenue, however, as the average pundit estimate was a bit over $402 million. In its earnings release, SelectQuote quoted CEO Tim Danker as saying that "SelectQuote's agent-led model paired with our technology-enabled information advantage made our platform more valuable than ever to participants in the healthcare ecosystem." However, investors might have been more concerned with what SelectQuote and its management team didn't say. In the earnings release, it didn't further address allegations brought by the government's Department of Justice (DoJ) in a complaint that the company -- along with peer health insurance brokers -- accepted illegal "kickback" payments by top insurers. That, despite the fact that SelectQuote issued a press release Friday saying that it "strongly disagrees" with the allegations. It also vowed to defend itself against the DoJ's accusations, predicting a positive outcome for it in the case. Before you buy stock in SelectQuote, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and SelectQuote wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $614,911!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $714,958!* Now, it's worth noting Stock Advisor's total average return is 907% — a market-crushing outperformance compared to 163% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 12, 2025 Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Why SelectQuote Stock Got Slammed Today was originally published by The Motley Fool
Yahoo
13-05-2025
- Business
- Yahoo
Q3 2025 SelectQuote Inc Earnings Call
Matthew Gunter; Chief Experience Officer; SelectQuote Inc Timothy Danker; Chief Executive Officer, Director; SelectQuote Inc Ryan Clement; Chief Financial Officer; SelectQuote Inc Bob Grant; President; SelectQuote Inc George Sutton; Analyst; Craig-Hallum Capital Group Patrick McCann; Analyst; NOBLE Capital Markets, Inc Operator Welcome to SelectQuote's third quarter earnings conference call. (Operator Instructions) It is now my pleasure to introduce Matt Gunter, SelectQuote Investor Relations. Mr. Gunter, you may begin the conference. Matthew Gunter Thank you, and good morning, everyone. Welcome to SelectQuote's fiscal third quarter earnings call. Before we begin our call, I would like to mention that on our website, we have provided a slide presentation to help guide our discussion. After today's call, a replay will also be available on our website. Joining me from the company, I have our Chief Executive Officer, Tim Danker; and Chief Financial Officer, Ryan Clement. Following Tim and Ryan's comments today, we will have a question-and-answer session. As referenced on Slide 2, during this call, we will be discussing some non-GAAP financial measures. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available in our earnings release and investor presentation on our website. And finally, a reminder that certain statements made today may be forward-looking statements. These statements are made based upon management's current expectations and beliefs concerning future events impacting the company, and therefore, involve a number of uncertainties and risks, including, but not limited to, those described in our earnings release, quarterly report on Form 10-Q for the period ended March 31, 2025, and other filings with the SEC. Therefore, the actual results of operations or financial condition of the company could differ materially from those expressed or implied in our forward-looking statements. And with that, I'd like to turn the call over to our Chief Executive Officer, Tim Danker. Tim? Timothy Danker Thank you, Matt, and thanks to everyone joining us today. SelectQuote continued to drive strong results in fiscal 2025 and had another successful quarter across each of our three segments: Senior, Healthcare Services and Life Insurance. On a consolidated basis, our fiscal third quarter revenues of $408 million grew by 8% compared to a year ago. The growth was again driven by very strong member onboarding in our SelectRx business, which now has nearly 106,000 members, representing a 41% increase compared to a year ago. It's remarkable to us that the business has nearly $675 million in trailing 12-month revenues that only started four years ago with two small pharmacies that had approximately $20 million in revenues and fewer than 5,000 members at the time of acquisition. The business' rapid success remains a touchstone example of how SelectQuote can drive value for customers through personalized coordination of information and service delivery. Our consolidated EBITDA of $38 million in the quarter demonstrates strong execution across our segments as we maintain healthy overall margins despite a large shift in our mix between Senior and Healthcare Services. Mix shift was again a factor in the pace of our consolidated EBITDA growth relative to revenue, given lower relative margins in Healthcare Services compared to Senior. We're proud of the result and believe there remains significant EBITDA opportunity in both our Senior and our Healthcare Services segments. I'll speak more to our strategic focus on Healthcare Services as a source of profit and cash flow later in my remarks. As mentioned, third quarter operating highlights were strong across each of our three segments. Senior delivered healthy 27% margins for the third quarter, which is very strong considering such a unique and tumultuous Medicare Advantage season. As we indicated on prior calls, given a more restricted capital structure last summer, we did not hire as large of a class as we normally would have in this environment. So we're especially proud of our execution given we operated an agent force that was 26% smaller this season, which dampened volumes. I'll touch on Senior and the Medicare Advantage environment as a whole in just a minute. Along with others in the industry, we were pleased to see the higher-than-anticipated final rate notice that came through in April for the 2026 plan year. We believe the increase will progressively help carriers with the Medicare Advantage pressures they faced in the most recent season. For SelectQuote, we expect these higher carrier reimbursement levels to create a less disruptive market backdrop for our customer base and seniors more broadly as we prepare for the next AEP. Turning to Healthcare Services. We delivered strong profitability despite rapid growth. As I alluded to earlier, we believe the scale of our membership now provides SelectQuote with a great foundation, and we see an opportunity to drive more consistent margins and cash flows going forward. In our Life Insurance business, we drove another impressive quarter on both the top and bottom line. Life revenues grew 13% and profits more than doubled compared to a year ago. The business continues to drive a stable and strong source of EBITDA margin profitability and a highly visible source of cash flow. Across our entire platform, SelectQuote continues to generate highly attractive revenue compared to the cost to acquire customers. For the third quarter, our trailing 12-month revenue to CAC was 5.8 times, which compares to 4.2 times a year ago. We take a lot of pride in this metric as the financial barometer of SelectQuote's overall marketing efficiency and as an indicator of the value we provide to our customer base. When we leverage our superior data and agent-led capabilities, our customers receive better service and care. Clearly, the economic outcome is good for our business, but the metric is especially rewarding given the tangible benefit to Americans, particularly in what has been a volatile and confusing year for health care policy. SelectQuote continues to solidify our reputation in the health care ecosystem as a trusted and valuable partner, which is more important now than ever. Now on Slide 4. Let me focus on Medicare Advantage and SelectQuote's performance through the OEP period. As noted, we're very pleased with our execution through such a unique and challenging Medicare Advantage season. While our agent force was smaller compared to a year ago, the team drove impressive volume and efficiency results. Third quarter policies totaled 168,000, down less than 10% compared to an agent force that was 26% smaller. As we noted last quarter, carrier plan terminations and significant changes to policy features created noise and decision stress for seniors this Medicare Advantage season. That backdrop made our agent-led model all the more important. We're very proud that we were able to help so many people. Even more impressive are the efficiency and profitability improvements in Senior during 3Q. As you can see at the right of this page, our strong close rates year-to-date serve as a testament to how our technology arms our agents with new data and tools in each unique season. Looking forward to fourth quarter, as we exit the OEP season, we're refining our approach due to the introduction of changes to beneficiary eligibility during the special election period. Although we're pleased with the continued performance of our agents, these industry changes present a headwind to close rates and volume relative to prior years. In addition to throughput, our Senior segment also drove efficiency across both marketing and operating expenses. Marketing expenses per approved policy was down 9% and overall operating expenses per policy were down 4%. We focus each season on optimal profitability, but are especially proud of our operating expense performance given a lower year for policy volume. Again, SelectQuote's technology and information advantages continue to benefit our overall business, not just through incremental revenue opportunity, but also through operating efficiency. The combination of each of these factors contributed to the strong 27% adjusted EBITDA margins despite lower year-over-year policy volume. Over a year where Medicare Advantage posed challenges for many industry participants, we're proud that our platform not only succeeded, but improved on a very strong fiscal 2024. Specifically, our year-to-date Senior margins are currently at 30%, which compares to 26% at this point last year. The past three years' results across a wide range of selling seasons gives us a great deal of conviction and our ability to consistently drive profit margins above our long-term target of 20%. On Slide 5, I'd like to expand on our plan to drive higher profitability in our Healthcare Services segment. As I noted, we believe 106,000 members in our SelectRx business represents critical mass. Having created a revenue base of nearly $675 million over the past year, we see an opportunity to focus on generating more consistent margins and cash flows to drive shareholder value. As we've discussed, SelectRx profitability has lagged membership and revenue given growth investment and the seasoning of our member base. We're proud of the progress we've made to date, but believe there is an opportunity to better identify the customers who will benefit from the SelectRx offering the most. You have heard us speak to the ramp of SelectRx members to full box shipments. While that continues to be a focus for new members, we've also observed a wide range of customer use cases. We'll share more when we speak to our 2026 outlook, but we believe there's an opportunity to align SelectRx's best service attributes with those Americans that need us the most. Over the remainder of fiscal 2025 and into fiscal 2026, we plan to increase the mix of members that benefit most from SelectRx who typically also have the most attractive unit economics. Now that we've achieved meaningful scale, our primary goal will be to increase efficiency and build a more consistent margin profile for the business. In the near term, this will likely translate to slower membership growth. As we've announced last September, membership and volume growth required additional investment in facility expansion with the opening of our Olathe facility here in Kansas, which shipped its first box on April 7. In the medium and long term, we believe the scale and efficiency gains of this new facility will be accretive, but we expect a near-term headwind to profitability, which will dampen our fourth quarter results. Ryan will share more about the pacing of this dynamic in our outlook, but I'll close this topic by emphasizing three unchanged attributes about SelectRx and our Healthcare Services capabilities. First, our SelectRx members drive visible revenue and cash flow. It has been clear to us that the value of our medication management adherence solution is widely proven. Our job now is to improve efficiency and drive a more consistent margin profile for the business. Second, regardless of the membership mix, there remains significant operating leverage potential in Healthcare Services, which should continue to grow as we broaden our value-added service offering. Third, while less visible, we know from our policyholders and agents that there's a halo effect to the differentiated value we deliver. Policyholders that are also SelectRx members become further attached to SelectQuote. As a result, insurance providers and caregivers increasingly seek us out for partnership. In the past, we've called this concept a health care information hub or flywheel, whatever we call it, we know that it is a reality with our customers and partners. Finally, before I turn the call over to Ryan, I'd like to briefly comment on the Department of Justice complaint that was recently filed against many participants in the Medicare Advantage system. We've been cooperating fully with the Department of Justice's inquiries since we first received the previously disclosed subpoena in 2022. However, we firmly reject these allegations, which we believe represent a misunderstanding of our industry and our business. We planned amount of vigorous defense as this case moves forward. SelectQuote has a 40-year history as a high-integrity organization that has helped millions of Americans find the right coverage for their health needs. Additionally, we've invested significant capital into compliance across our whole organization from our agents to our management and take significant measures to fully comply with all federal laws and regulations. I assure you that the culture at SelectQuote is one where the customers' needs are prioritized. We look forward to detailing this history as the matter develops. We have always been and we will continue to be the compliant and fair dealing standard bearer in the Medicare Advantage industry. We will continue to deliver high-quality advice to the customers we help to navigate the complicated array of Medicare health plan options. This is obviously an active legal matter, so we won't be commenting further on any particulars at this point. And with that, I'd like to hand the call over to Ryan. Ryan? Ryan Clement Thanks, Tim. Starting on Slide 6. SelectQuote generated $408 million in revenue for the third quarter, up 8% compared to a year ago. Similar to last quarter, our top line growth was driven by our SelectRx business. But as Tim mentioned, operating performance across each of our businesses was very strong. For Senior specifically, the OEP period was similar to AEP, where agents delivered higher Medicare Advantage volumes than originally forecasted, driven by impressive productivity and close rates. Consolidated adjusted EBITDA totaled $38 million for an overall margin of 9%. We are pleased to have maintained healthy consolidated margins despite a significant mix shift from the growth in SelectRx, which is still a lower-margin business. As Tim noted, we see Healthcare Services as a strategic opportunity, not just for our new revenue streams, but for scaled profitability in the coming years. Moving to Slide 7. Our Senior results were quite strong despite operating with a smaller agent population for the season. Revenue totaled $169 million in Q3, driven by the strong agent efficiency we mentioned. Similar to last quarter's AEP, we continue to see seniors seek our tenured agents for much needed answers in such a confusing and volatile Medicare Advantage backdrop. The end result was high-value service to our customers, but also significant operating efficiency in both marketing and agent throughput. Put more plainly, more seniors came to us when they needed us most and our aligned model drove very strong margins. Our adjusted EBITDA in Q3 was $46 million, which declined by 26%, in line with the 26% reduction in agent headcount compared to last year. Despite a smaller agent population, the senior business drove attractive EBITDA margins of 27%. The performance since our strategic redesign has exceeded our expectations in three distinctly different Medicare Advantage environments. As originally intended, our strategic redesign was undertaken to build a SelectQuote for all seasons. We firmly believe that goal has been achieved, and we see a highly durable value creation engine for customers and shareholders as a result. On Slide 8, I'll briefly review our Senior operating performance. As mentioned, with a 26% reduction in our agent workforce compared to last year, we're very pleased with the increased agent level efficiency, which led to only a 10% decline in our Medicare Advantage approved policy generation. The difference again was a combination of seniors proactively seeking us out and our tenured agents' ever-improving ability to leverage SelectQuote's data and tools to provide the most effective and valuable service possible. We are proud of the division's strong results. It is worth noting on the heels of meaningful progress on the capital structure, we've already begun planning for the next AEP and OEP seasons. Next, let me speak to LTV, which was $915 for Q3, down 8% compared to a year ago. The key driver was a shift in our commission structure. For a select few carrier partners, you will recall that we had shifted to a higher mix of upfront commissions compared to what was historically been a ratable time line. The changes in our modeled LTVs is the result of those upfront structures largely reverting back to ratable structures. On Slide 9, as Tim noted, our SelectRx membership continued to grow substantially in Q3. We ended the quarter with 106,000 members, up 41% compared to a year ago. As a result, Healthcare Services revenue of $190 million grew 53% year-over-year and has a trailing full year revenue base of $674 million. Healthcare Services produced $6 million of adjusted EBITDA, which we are very pleased with. We will provide more detail on our outlook for Healthcare Services in fiscal 2026 in our next earnings call. But as Tim noted, our goal is to drive improvements in both profitability and cash flow in the future. We have confidence in our economics and believe the medium-term results will drive value for shareholders. On Slide 10, I'll end the segment review with our Life business, where we continue to be pleased with results. The business performed well on both the top line and from a cash flow perspective. Revenue during the quarter was $46 million and adjusted EBITDA was $6 million, which was up 103% year-over-year. EBITDA margins of 14% nearly doubled compared to 8% last year. Both our final expense and term life business contributed to the highly successful quarter with term life premiums up 13% and final expense premium up 17% year-over-year. These results were fueled by strong agent retention and a highly tenured agent force that drove both strong productivity and customer retention. Turning to Slide 11. I will conclude my remarks with an update to our fiscal 2025 outlook. We maintain our full year ranges for revenue and adjusted EBITDA. That said, we do expect to finish the year in or towards the lower half of the ranges based on the following. First, as Tim noted, new beneficiary eligibility parameters during the special election period could drive additional friction for policy volumes and close rates compared to previous seasons. Second, as we ramp our Kansas distribution facility and focus less on member growth and more on achieving consistent margins and cash flow, we could encounter near-term headwinds to our Healthcare Services EBITDA. While accretive in the long term, we expect fiscal fourth quarter EBITDA to potentially take a modest step back. In addition, fourth quarter growth will taper due to seasonal trends as we exit AEP and OEP season. Lastly, we are adjusting our net income expectations to a range of negative $1 million to $28 million to reflect the impact of the change in our stock prices had on the fair market value of the warrants issued as part of the transactions announced during this fiscal year. I'll conclude by echoing Tim's comments about the strength and potential of our overall model. Fiscal 2025 has been a year of significant progress and transition for our company. In addition to the strong growth and results in all three business lines, we have made meaningful progress on our capital structure, including the $100 million securitization in October and the $350 million strategic investment in February. These deals have lowered our interest expense, extended our maturities and increased our available liquidity. We produced $71 million in operating cash flow during the quarter and ended the quarter with an $86 million cash balance. Our commissions receivable balance of over $1 billion remains a significant asset and source of future cash flows as we continue to evaluate additional alternatives to further optimize our capital structure. We are proud of the results we delivered this Medicare Advantage season and look forward to sharing updates on the planned scale of our sizable Healthcare Services opportunity. With that, we will open the call up for questions. Operator Thank you, ladies and gentlemen. We will now begin the question and answer session. (Operator Instructions) George Sutton from Craig-Hallum. George Sutton Thank you. I wondered if you could walk through the separation of the growth or the decline you saw in Medicare Advantage and obviously, the significant growth of SelectRx. And I'm asking from the concept of the feeder of customer opportunities into SelectRx and any adjustments that you might be making there going forward? Timothy Danker Yeah, I'd be happy to. George, thanks for the call. I think on this two part question, I might ask our President, Bob Grant, to talk about our Medicare dynamics. I'm happy to touch on health care as well. Bob? Bob Grant Yeah, so on the Medicare side, George, SEP was or sorry, OEP was a really strong quarter for us from an overall close rate perspective and cost. But to Ryan's point earlier, we were down 26% on our agent count, which is why we ended up seeing a little bit lower volume and lower overall EBITDA there. However, one of the reasons for such a strong quarter, which Tim will get into Healthcare Services from a growth perspective in the SRx space is we did have a lot more tenured agents. And we've been very open in the past that they are better at understanding how to deal with customers' needs, both on sales and folks that don't buy a policy where they end up transferring them over to Healthcare Services. So we did see a little stronger, what I would say, attachment rate or just overall efficiency in that number, which is why you saw one kind of outpace the other. So that also helps our attachment rates in a good way on the customers that really, really need SelectRx, and we see that as a positive. So that's why you saw what you saw there. Tim can broadly speak about Healthcare Services. But from direct to your question, the reason we didn't see kind of the reduction in both on the growth side with that. Timothy Danker Yeah, just to add to Bob's good comments there. Overall, we're really pleased with the ability of the model to leverage our strong MA growth and have that translate into opportunities for our Healthcare Services platform. I think you've seen that through the growth of critical mass now over 100,000 members. We will anticipate though that Senior Healthcare Services will lag our Senior just a bit and just in terms of timing, and there is some seasonality that we called out as well. But overall, really pleased with the synergy between both sides of the platform. George Sutton So I wondered if you can give us thoughts on agent growth going into this next season. Are the plans to take advantage of improvements in that market, particularly from a regulatory perspective? Bob Grant Yeah, great question. Hiring is underway right now. It's not going to be the same as last year per se, but we will talk way more about that in our upcoming guide on the next call. So we feel good about where we are with hiring though. Timothy Danker And then highlighted. Yeah, George, real quick, certainly as you highlighted yes, George, real quick. Certainly, as we highlighted on the last call, I think the improved capital position that we're in gives us an opportunity. We're very focused and feel good about where we're at in the early stages of hiring and do look forward to sharing more on our fiscal '26 guide in August. George Sutton And then just finishing up on your better financials. Can you talk about receivable securitization? My anticipation has been that we might see additional receivable securitization. Ryan Clement Yeah, great question, George. Obviously, we've made great progress on the capital structure more broadly with the first securitization. We've been obviously focused on getting the pref across the finish line, which we're happy to share with our last earnings call. And we've hired Jefferies to explore a variety of options. We do see securitization as a potential path. It's not the only path. We look forward to sharing additional updates when the time is right, but we do have several irons in the fire. Operator Ben Hendrix from RBC Capital Markets. Hi, this is Michael Murray on for Ben. I appreciate your commentary on MA LTV and the impact of the shift in commission structure. Just wanted to see how should we think about MA LTV moving forward? Do you anticipate an ongoing headwind as the shift continues? Ryan Clement Thanks. Yeah, so we I mean, as you noted, we did see a shift from upfront to ratable, which did lead to a decline. That's simply a continuation of changes we had announced in prior quarters. All that said, we do expect in the fourth quarter, it will be down year-over-year. We'll look forward to sharing additional details on our longer-term outlook on our next earnings call. But in fourth quarter, we do expect it to be down year-over-year. Okay. And then just shifting to SelectRx. Obviously, another great quarter. It's exciting to hear about the new facility opening in Kansas. Obviously, we heard your commentary on fourth quarter margin expectations. But just longer term, bigger picture, how should investors think about the growth and margin targets for this business? Thanks. Timothy Danker Yeah Michael, I'll comment on that and Ryan, maybe have you add to it here. But yes, I do think just stepping back, we're really pleased with the progress. We've got critical mass and scale here with over 100,000 patients. And so I think we would ask investors to also think that part of our job now is to further prioritize efficiency and consistency of margins. So we are spending a lot of time focused on that and analyzing that. And I think we are finding that those members that generally benefit the most from our adherence solution also have the best unit economics. Again, customers with multiple chronics, they're juggling a lot of prescription drugs. And so we're seeing some opportunities to refine that so that we can drive even improved margins and cash flow profile. We had mentioned on the call some investment in the Kansas facility. We think longer term, that is certainly going to drive these efficiency gains, but there is some near-term cost there in the fourth quarter as we scale that up. Ryan? Ryan Clement Now I think you said it well. I think for the fiscal 2025, we still expect single-digit EBITDA margins for the year. And as we refine our membership parameters and scale the Kansas facility, we do see a path to margin enhancement and expansion in future quarters. All right, thank you. Operator Pat McCann from NOBLE Capital Markets. Patrick McCann Hey guys, thanks for taking my questions. I wanted to ask about the final rate notice. Could you I know it's early, but could you give your kind of your view on how you think the upcoming AEP, how the environment should look relative to the one that we just came out of as far as market dynamics. What would be your early read given the final rate notice and how that changes? Timothy Danker Thanks. Good morning, Pat, great question. We definitely believe the final rate notice was a positive development as the carrier reimbursement rates were substantially higher than the preliminary rates as we've been in discussions with carriers, they definitely have felt like this is a step in the right direction. This helps improve revenues, and you've heard many carriers commented on higher medical cost trends and elevated plan utilization. So we certainly view that as a positive development. We would say that the carriers some carriers are still focused on increasing margins. They're in the middle innings of a multiyear plan to get to their target profitability, but we certainly believe that this is a positive development. Bob, anything you'd like to add? Bob Grant No. I mean I think that, to Tim's point, was a little bit, I think, up in the air as far as what CMS was going to do, right, just coming in early and then also the rate, frankly, being a little bit higher too in December, I think, than people anticipated, but it was great that they took into account this year versus a lagging year like they had in the past with where inflation is going and other things. So I think shows that CMS has support for the private side of Medicare. Now do they want to clean some things up that we're very supportive of, frankly, as far as making sure that everyone has access to quality health care, especially a lot of the focus that we have, which we've talked about in the past on rural areas, things like that, yes. But as far as just the advanced rate notice and the rate notice, very positive from all kind of sides. Patrick McCann Thanks, and then I just wanted to briefly touch on the healthcare services segment. First of all, congrats on opening the new facility and with that I'm wondering, maybe if you could reiterate, the. The benefits you expect to realize the incremental incremental benefits from that facility, as well as maybe if you could touch on the profitability drag that you mentioned for fiscal Q4 and you know would would that go beyond Q4 or, what's sort of the time frame for the initial drag on profitability before you sort of get through that. Thanks. Bob Grant Yeah, so with respect to the Kansas facility, we're obviously really excited about having it open. And longer term, see benefits in operating efficiency, throughput and even customer experience. With that all being said, there is a short-term lag in terms of profitability or drag on profitability as a result of simply investments into the facility as we scale up, we will outgrow and we'll see margin expansion. But in the near term, I think on a quarterly basis, you can think of it as low-single digit million dollar investment. And again, that we'll scale into it over the next couple of quarters. Timothy Danker Great, thanks guys. That's. Patrick McCann All I had. I'll jump back in the queue. Operator I will now turn the call back over to Tim for closing remarks. Timothy Danker Thank you, everyone, and we appreciate your time and support this morning. Most of all, thank you to our incredible teams at SelectQuote for another season of world-class service and execution. Our customers needed you more than ever this year. And because of our high-touch and information-driven approach, they received the help they needed and our business benefited as well. Looking ahead, we're energized and have conviction that our overall business can generate additional operating leverage and resulting value to our shareholders. We'll share more on our view for fiscal 2026 on the next call and hope to see and speak to many of you between now and then. Thank you again for your time this morning. Have a good day. Operator Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect. Sign in to access your portfolio
Associated Press
12-05-2025
- Business
- Associated Press
SelectQuote, Inc. Reports Third Quarter of Fiscal Year 2025 Results
OVERLAND PARK, Kan.--(BUSINESS WIRE)--May 12, 2025-- SelectQuote, Inc. (NYSE: SLQT) reported consolidated revenue for the third quarter of fiscal year 2025 of $408.2 million compared to consolidated revenue for the third quarter of fiscal year 2024 of $376.4 million. Consolidated net income for the third quarter of fiscal year 2025 was $26.0 million compared to consolidated net income for the third quarter of fiscal year 2024 of $8.6 million. Finally, consolidated Adjusted EBITDA* for the third quarter of fiscal year 2025 was $37.7 million compared to consolidated Adjusted EBITDA* for the third quarter of fiscal year 2024 of $46.6 million. SelectQuote Chief Executive Officer, Tim Danker, remarked, 'We are very proud of the service and value we delivered to America's seniors over this past year's highly unique Medicare Advantage season. SelectQuote's agent-led model paired with our technology-enabled information advantage made our platform more valuable than ever to participants in the healthcare ecosystem. Policy features changed materially and plan termination activity from carriers was significantly higher than historical averages. Through that volatility and confusion, SelectQuote's agents again delivered remarkable and efficient service, highlighted by a 15% increase in year-over-year policy close rates. SelectQuote is organized to help each and every customer as an individual and despite significant change, our agents were able to help a higher percentage of them this year than last. Strong execution in our Senior business paired with continued performance in Healthcare Services and our Life division all contributed to successful consolidated results for our fiscal 3rd quarter.' * See 'Non-GAAP Financial Measures' below. Segment Results We currently have three reportable segments: 1) Senior, 2) Healthcare Services and 3) Life. The performance measures of the segments include total revenue and Adjusted EBITDA.* Costs of commissions and other services revenue, cost of goods sold-pharmacy revenue, marketing and advertising, selling, general, and administrative, and technical development operating expenses that are directly attributable to a segment are reported within the applicable segment. Indirect costs of revenue, marketing and advertising, selling, general, and administrative, and technical development operating expenses are allocated to each segment based on varying metrics such as headcount. Adjusted EBITDA is our segment profit measure to evaluate the operating performance of our business. We define Adjusted EBITDA as income (loss) before income tax expense (benefit) plus: (i) interest expense, net; (ii) depreciation and amortization; (iii) share-based compensation; (iv) goodwill, long-lived asset, and intangible assets impairments; (v) transaction costs; (vi) loss on disposal of property, equipment and software, net; (vii) other non-recurring expenses and income; (viii) changes in fair value of warrant liabilities. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by revenue. Senior Financial Results The following table provides the financial results for the Senior segment for the periods presented: Operating Metrics Submitted Policies Submitted policies are counted when an individual completes an application with our licensed agent and provides authorization to the agent to submit the application to the insurance carrier partner. The applicant may have additional actions to take before the application will be reviewed by the insurance carrier. The following table shows the number of submitted policies for the periods presented: Approved Policies Approved policies represents the number of submitted policies that were approved by our insurance carrier partners for the identified product during the indicated period. Not all approved policies will go in force. * See 'Non-GAAP Financial Measures' below. The following table shows the number of approved policies for the periods presented: Lifetime Value of Commissions per Approved Policy Lifetime value of commissions per approved policy represents commissions estimated to be collected over the estimated life of an approved policy based on multiple factors, including but not limited to, contracted commission rates, carrier mix and expected policy persistency with applied constraints. The lifetime value of commissions per approved policy is equal to the sum of the commission revenue due upon the initial sale of a policy, and when applicable, an estimate of future renewal commissions. The following table shows the lifetime value of commissions per approved policy for the periods presented: Healthcare Services Financial Results The following table provides the financial results for the Healthcare Services segment for the periods presented: Operating Metrics Members The total number of SelectRx members represents the amount of active customers to which an order has been shipped and the prescriptions per day represents the total average prescriptions shipped per business day. These two metrics are the primary drivers of revenue for Healthcare Services. * See 'Non-GAAP Financial Measures' below. The following table shows the total number of SelectRx members as of the periods presented: The total number of SelectRx members increased by 41% as of March 31, 2025, compared to March 31, 2024, due to our strategy to grow SelectRx membership. The following table shows the average prescriptions shipped per day for the periods presented: Combined Senior and Healthcare Services - Consumer Per Unit Economics The opportunity to leverage our existing database and distribution model to improve access to healthcare services for our consumers has created a need for us to review our key metrics related to our per unit economics. As we think about the revenue and expenses for Healthcare Services, we note that they are primarily driven by the marketing acquisition costs associated with the sale of an MA or MS policy, some of which costs are allocated directly to Healthcare Services, and therefore determined that our per unit economics measure should include components from both Senior and Healthcare Services. See details of revenue and expense items included in the calculation below. Combined Senior and Healthcare Services consumer per unit economics represents total MA and MS commissions; other product commissions; other revenues, including revenues from Healthcare Services; and operating expenses associated with Senior and Healthcare Services, each shown per number of approved MA and MS policies over a given time period. Management assesses the business on a per-unit basis to help ensure that the revenue opportunity associated with a successful policy sale is attractive relative to the marketing acquisition cost. Because not all acquired leads result in a successful policy sale, all per-policy metrics are based on approved policies, which is the measure that triggers revenue recognition. The MA and MS commission per MA/MS policy represents the LTV for policies sold in the period. Other commission per MA/MS policy represents the LTV for other products sold in the period, including DVH prescription drug plan, and other products, which management views as additional commission revenue on our agents' core function of MA/MS policy sales. Pharmacy revenue per MA/MS policy represents revenue from SelectRx, and other revenue per MA/MS policy represents revenue from Population Health, production bonuses, marketing development funds, lead generation revenue, and adjustments from the Company's reassessment of its cohorts' transaction prices. Total operating expenses per MA/MS policy represents all of the operating expenses within Senior and Healthcare Services. The revenue to customer acquisition cost ('CAC') multiple represents total revenue as a multiple of total marketing acquisition cost, which represents the direct costs of acquiring leads. These costs are included in marketing and advertising expense within the total operating expenses per MA/MS policy. The following table shows combined Senior and Healthcare Services consumer per unit economics for the periods presented. Based on the seasonality of Senior and the fluctuations between quarters, we believe that the most relevant view of per unit economics is on a rolling 12-month basis. All per MA/MS policy metrics below are based on the sum of approved MA/MS policies, as both products have similar commission profiles. Total revenue per MA/MS policy increased 23% for the twelve months ended March 31, 2025, compared to the twelve months ended March 31, 2024, primarily due to the increase in pharmacy revenue. Total operating expenses per MA/MS policy increased 26% for the twelve months ended March 31, 2025, compared to the twelve months ended March 31, 2024, driven by an increase in cost of goods sold-pharmacy revenue for Healthcare Services due to the growth of the business. Life Financial Results The following table provides the financial results for the Life segment for the periods presented: Operating Metrics Life premium represents the total premium value for all policies that were approved by the relevant insurance carrier partner and for which the policy document was sent to the policyholder and payment information was received by the relevant insurance carrier partner during the indicated period. Because our commissions are earned based on a percentage of total premium, total premium volume for a given period is the key driver of revenue for our Life segment. The following table shows term and final expense premiums for the periods presented: * See 'Non-GAAP Financial Measures' below. Earnings Conference Call SelectQuote, Inc. will host a conference call with the investment community on May 12, 2025, beginning at 8:30 a.m. ET. To register for this conference call, please use this link: After registering, a confirmation will be sent via email, including dial-in details and unique conference call codes for entry. Registration is open through the live call, but to ensure you are connected for the full call we suggest registering at least 10 minutes before the start of the call. The event will also be webcasted live via our investor relations website Non-GAAP Financial Measures This release includes certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. To supplement our financial statements presented in accordance with GAAP and to provide investors with additional information regarding our GAAP financial results, we have presented in this release Adjusted EBITDA and Adjusted EBITDA Margin, which are non-GAAP financial measures. These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly titled measures presented by other companies. We define Adjusted EBITDA as net income (loss) before income tax expense (benefit), plus interest expense, depreciation and amortization, changes in fair value of warrant liabilities, and certain add-backs for non-cash or non-recurring expenses, including restructuring and share-based compensation expenses. The most directly comparable GAAP measure is income (loss) before tax expense (benefit). We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. The most directly comparable GAAP measure is net income margin. We monitor and have presented in this release Adjusted EBITDA and Adjusted EBITDA Margin because they are key measures used by our management and Board of Directors to understand and evaluate our operating performance, to establish budgets, and to develop operational goals for managing our business. In particular, we believe that excluding the impact of these expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core operating performance. We believe that these non-GAAP financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in the calculations of these non-GAAP financial measures. Accordingly, we believe that these financial measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects. Reconciliations of net income (loss) before income tax expense (benefit) to Adjusted EBITDA are presented below beginning on page 12. Forward Looking Statements This release contains forward-looking statements. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as 'may,' 'should,' 'could,' 'predict,' 'potential,' 'believe,' 'will likely result,' 'expect,' 'continue,' 'will,' 'anticipate,' 'seek,' 'estimate,' 'intend,' 'plan,' 'projection,' 'would' and 'outlook,' or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: our reliance on a limited number of insurance carrier partners and any potential termination of those relationships or failure to develop new relationships; existing and future laws and regulations affecting the health insurance market; changes in health insurance products offered by our insurance carrier partners and the health insurance market generally; insurance carriers offering products and services directly to consumers; changes to commissions paid by insurance carriers and underwriting practices; competition with brokers, exclusively online brokers and carriers who opt to sell policies directly to consumers; competition from government-run health insurance exchanges; developments in the U.S. health insurance system; our dependence on revenue from carriers in our senior segment and downturns in the senior health as well as life, automotive and home insurance industries; our ability to develop new offerings and penetrate new vertical markets; risks from third-party products; failure to enroll individuals during the Medicare annual enrollment period; our ability to attract, integrate and retain qualified personnel; our dependence on lead providers and ability to compete for leads; failure to obtain and/or convert sales leads to actual sales of insurance policies; access to data from consumers and insurance carriers; accuracy of information provided from and to consumers during the insurance shopping process; cost-effective advertisement through internet search engines; ability to contact consumers and market products by telephone; global economic conditions, including inflation; disruption to operations as a result of future acquisitions; significant estimates and assumptions in the preparation of our financial statements; impairment of goodwill; potential litigation and other legal proceedings or inquiries; our existing and future indebtedness; our ability to maintain compliance with our debt covenants; access to additional capital; failure to protect our intellectual property and our brand; fluctuations in our financial results caused by seasonality; accuracy and timeliness of commissions reports from insurance carriers; timing of insurance carriers' approval and payment practices; factors that impact our estimate of the constrained lifetime value of commissions per policyholder; changes in accounting rules, tax legislation and other legislation; disruptions or failures of our technological infrastructure and platform; failure to maintain relationships with third-party service providers; cybersecurity breaches or other attacks involving our systems or those of our insurance carrier partners or third-party service providers; our ability to protect consumer information and other data; failure to market and sell Medicare plans effectively or in compliance with laws; and and other factors related to our pharmacy business, including manufacturing or supply chain disruptions, access to and demand for prescription drugs, and regulatory changes or other industry developments that may affect our pharmacy operations. For a further discussion of these and other risk factors that could impact our future results and performance, see the section entitled 'Risk Factors' in the most recent Annual Report on Form 10-K (the 'Annual Report') and subsequent periodic reports filed by us with the Securities and Exchange Commission. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as otherwise required by law, we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. About SelectQuote: Founded in 1985, SelectQuote (NYSE: SLQT) pioneered the model of providing unbiased comparisons from multiple, highly-rated insurance companies, allowing consumers to choose the policy and terms that best meet their unique needs. Two foundational pillars underpin SelectQuote's success: a strong force of highly-trained and skilled agents who provide a consultative needs analysis for every consumer, and proprietary technology that sources and routes high-quality leads. Today, the Company operates an ecosystem offering high touchpoints for consumers across insurance, pharmacy, and virtual care. With an ecosystem offering engagement points for consumers across insurance, Medicare, pharmacy, and value-based care, the company now has three core business lines: SelectQuote Senior, SelectQuote Healthcare Services, and SelectQuote Life. SelectQuote Senior serves the needs of a demographic that sees around 10,000 people turn 65 each day with a range of Medicare Advantage and Medicare Supplement plans. SelectQuote Healthcare Services is comprised of the SelectRx Pharmacy, a Patient-Centered Pharmacy Home™ (PCPH) accredited pharmacy, SelectPatient Management, a provider of chronic care management services, and Healthcare Select which proactively connects consumers with a wide breadth of healthcare services supporting their needs. Source: SelectQuote, Inc. View source version on CONTACT: Investor Relations: Sloan Bohlen 877-678-4083 [email protected]: Matt Gunter 913-286-4931 [email protected] KEYWORD: UNITED STATES NORTH AMERICA KANSAS INDUSTRY KEYWORD: SENIORS INSURANCE PHARMACEUTICAL MANAGED CARE HEALTH PROFESSIONAL SERVICES HEALTH INSURANCE CONSUMER SOURCE: SelectQuote, Inc. Copyright Business Wire 2025. PUB: 05/12/2025 07:30 AM/DISC: 05/12/2025 07:29 AM
Business Wire
12-05-2025
- Business
- Business Wire
SelectQuote, Inc. Reports Third Quarter of Fiscal Year 2025 Results
OVERLAND PARK, Kan.--(BUSINESS WIRE)--SelectQuote, Inc. (NYSE: SLQT) reported consolidated revenue for the third quarter of fiscal year 2025 of $408.2 million compared to consolidated revenue for the third quarter of fiscal year 2024 of $376.4 million. Consolidated net income for the third quarter of fiscal year 2025 was $26.0 million compared to consolidated net income for the third quarter of fiscal year 2024 of $8.6 million. Finally, consolidated Adjusted EBITDA* for the third quarter of fiscal year 2025 was $37.7 million compared to consolidated Adjusted EBITDA* for the third quarter of fiscal year 2024 of $46.6 million. SelectQuote Chief Executive Officer, Tim Danker, remarked, 'We are very proud of the service and value we delivered to America's seniors over this past year's highly unique Medicare Advantage season. SelectQuote's agent-led model paired with our technology-enabled information advantage made our platform more valuable than ever to participants in the healthcare ecosystem. Policy features changed materially and plan termination activity from carriers was significantly higher than historical averages. Through that volatility and confusion, SelectQuote's agents again delivered remarkable and efficient service, highlighted by a 15% increase in year-over-year policy close rates. SelectQuote is organized to help each and every customer as an individual and despite significant change, our agents were able to help a higher percentage of them this year than last. Strong execution in our Senior business paired with continued performance in Healthcare Services and our Life division all contributed to successful consolidated results for our fiscal 3rd quarter.' * See 'Non-GAAP Financial Measures' below. Segment Results We currently have three reportable segments: 1) Senior, 2) Healthcare Services and 3) Life. The performance measures of the segments include total revenue and Adjusted EBITDA.* Costs of commissions and other services revenue, cost of goods sold-pharmacy revenue, marketing and advertising, selling, general, and administrative, and technical development operating expenses that are directly attributable to a segment are reported within the applicable segment. Indirect costs of revenue, marketing and advertising, selling, general, and administrative, and technical development operating expenses are allocated to each segment based on varying metrics such as headcount. Adjusted EBITDA is our segment profit measure to evaluate the operating performance of our business. We define Adjusted EBITDA as income (loss) before income tax expense (benefit) plus: (i) interest expense, net; (ii) depreciation and amortization; (iii) share-based compensation; (iv) goodwill, long-lived asset, and intangible assets impairments; (v) transaction costs; (vi) loss on disposal of property, equipment and software, net; (vii) other non-recurring expenses and income; (viii) changes in fair value of warrant liabilities. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by revenue. Senior Financial Results The following table provides the financial results for the Senior segment for the periods presented: Operating Metrics Submitted Policies Submitted policies are counted when an individual completes an application with our licensed agent and provides authorization to the agent to submit the application to the insurance carrier partner. The applicant may have additional actions to take before the application will be reviewed by the insurance carrier. The following table shows the number of submitted policies for the periods presented: Approved Policies Approved policies represents the number of submitted policies that were approved by our insurance carrier partners for the identified product during the indicated period. Not all approved policies will go in force. * See 'Non-GAAP Financial Measures' below. The following table shows the number of approved policies for the periods presented: Three Months Ended March 31, Nine Months Ended March 31, 2025 2024 % Change 2025 2024 % Change Medicare Advantage 168,001 185,716 (10)% 507,530 517,973 (2)% All other (1) 17,623 16,390 8 % 50,316 48,570 4 % Total 185,624 202,106 (8)% 557,846 566,543 (2)% (1) Represents the approved policies for medicare supplement, dental, vision and hearing, prescription drug plan and other. Expand Lifetime Value of Commissions per Approved Policy Lifetime value of commissions per approved policy represents commissions estimated to be collected over the estimated life of an approved policy based on multiple factors, including but not limited to, contracted commission rates, carrier mix and expected policy persistency with applied constraints. The lifetime value of commissions per approved policy is equal to the sum of the commission revenue due upon the initial sale of a policy, and when applicable, an estimate of future renewal commissions. The following table shows the lifetime value of commissions per approved policy for the periods presented: Healthcare Services Financial Results The following table provides the financial results for the Healthcare Services segment for the periods presented: Operating Metrics Members The total number of SelectRx members represents the amount of active customers to which an order has been shipped and the prescriptions per day represents the total average prescriptions shipped per business day. These two metrics are the primary drivers of revenue for Healthcare Services. * See 'Non-GAAP Financial Measures' below. The following table shows the total number of SelectRx members as of the periods presented: March 31, 2025 March 31, 2024 Total SelectRx Members 105,523 75,074 Expand The total number of SelectRx members increased by 41% as of March 31, 2025, compared to March 31, 2024, due to our strategy to grow SelectRx membership. The following table shows the average prescriptions shipped per day for the periods presented: Combined Senior and Healthcare Services - Consumer Per Unit Economics The opportunity to leverage our existing database and distribution model to improve access to healthcare services for our consumers has created a need for us to review our key metrics related to our per unit economics. As we think about the revenue and expenses for Healthcare Services, we note that they are primarily driven by the marketing acquisition costs associated with the sale of an MA or MS policy, some of which costs are allocated directly to Healthcare Services, and therefore determined that our per unit economics measure should include components from both Senior and Healthcare Services. See details of revenue and expense items included in the calculation below. Combined Senior and Healthcare Services consumer per unit economics represents total MA and MS commissions; other product commissions; other revenues, including revenues from Healthcare Services; and operating expenses associated with Senior and Healthcare Services, each shown per number of approved MA and MS policies over a given time period. Management assesses the business on a per-unit basis to help ensure that the revenue opportunity associated with a successful policy sale is attractive relative to the marketing acquisition cost. Because not all acquired leads result in a successful policy sale, all per-policy metrics are based on approved policies, which is the measure that triggers revenue recognition. The MA and MS commission per MA/MS policy represents the LTV for policies sold in the period. Other commission per MA/MS policy represents the LTV for other products sold in the period, including DVH prescription drug plan, and other products, which management views as additional commission revenue on our agents' core function of MA/MS policy sales. Pharmacy revenue per MA/MS policy represents revenue from SelectRx, and other revenue per MA/MS policy represents revenue from Population Health, production bonuses, marketing development funds, lead generation revenue, and adjustments from the Company's reassessment of its cohorts' transaction prices. Total operating expenses per MA/MS policy represents all of the operating expenses within Senior and Healthcare Services. The revenue to customer acquisition cost ('CAC') multiple represents total revenue as a multiple of total marketing acquisition cost, which represents the direct costs of acquiring leads. These costs are included in marketing and advertising expense within the total operating expenses per MA/MS policy. The following table shows combined Senior and Healthcare Services consumer per unit economics for the periods presented. Based on the seasonality of Senior and the fluctuations between quarters, we believe that the most relevant view of per unit economics is on a rolling 12-month basis. All per MA/MS policy metrics below are based on the sum of approved MA/MS policies, as both products have similar commission profiles. Total revenue per MA/MS policy increased 23% for the twelve months ended March 31, 2025, compared to the twelve months ended March 31, 2024, primarily due to the increase in pharmacy revenue. Total operating expenses per MA/MS policy increased 26% for the twelve months ended March 31, 2025, compared to the twelve months ended March 31, 2024, driven by an increase in cost of goods sold-pharmacy revenue for Healthcare Services due to the growth of the business. Life Financial Results The following table provides the financial results for the Life segment for the periods presented: Operating Metrics Life premium represents the total premium value for all policies that were approved by the relevant insurance carrier partner and for which the policy document was sent to the policyholder and payment information was received by the relevant insurance carrier partner during the indicated period. Because our commissions are earned based on a percentage of total premium, total premium volume for a given period is the key driver of revenue for our Life segment. The following table shows term and final expense premiums for the periods presented: * See 'Non-GAAP Financial Measures' below. Earnings Conference Call SelectQuote, Inc. will host a conference call with the investment community on May 12, 2025, beginning at 8:30 a.m. ET. To register for this conference call, please use this link: After registering, a confirmation will be sent via email, including dial-in details and unique conference call codes for entry. Registration is open through the live call, but to ensure you are connected for the full call we suggest registering at least 10 minutes before the start of the call. The event will also be webcasted live via our investor relations website Non-GAAP Financial Measures This release includes certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. To supplement our financial statements presented in accordance with GAAP and to provide investors with additional information regarding our GAAP financial results, we have presented in this release Adjusted EBITDA and Adjusted EBITDA Margin, which are non-GAAP financial measures. These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly titled measures presented by other companies. We define Adjusted EBITDA as net income (loss) before income tax expense (benefit), plus interest expense, depreciation and amortization, changes in fair value of warrant liabilities, and certain add-backs for non-cash or non-recurring expenses, including restructuring and share-based compensation expenses. The most directly comparable GAAP measure is income (loss) before tax expense (benefit). We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. The most directly comparable GAAP measure is net income margin. We monitor and have presented in this release Adjusted EBITDA and Adjusted EBITDA Margin because they are key measures used by our management and Board of Directors to understand and evaluate our operating performance, to establish budgets, and to develop operational goals for managing our business. In particular, we believe that excluding the impact of these expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core operating performance. We believe that these non-GAAP financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in the calculations of these non-GAAP financial measures. Accordingly, we believe that these financial measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects. Reconciliations of net income (loss) before income tax expense (benefit) to Adjusted EBITDA are presented below beginning on page 12. Forward Looking Statements This release contains forward-looking statements. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as 'may,' 'should,' 'could,' 'predict,' 'potential,' 'believe,' 'will likely result,' 'expect,' 'continue,' 'will,' 'anticipate,' 'seek,' 'estimate,' 'intend,' 'plan,' 'projection,' 'would' and 'outlook,' or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: our reliance on a limited number of insurance carrier partners and any potential termination of those relationships or failure to develop new relationships; existing and future laws and regulations affecting the health insurance market; changes in health insurance products offered by our insurance carrier partners and the health insurance market generally; insurance carriers offering products and services directly to consumers; changes to commissions paid by insurance carriers and underwriting practices; competition with brokers, exclusively online brokers and carriers who opt to sell policies directly to consumers; competition from government-run health insurance exchanges; developments in the U.S. health insurance system; our dependence on revenue from carriers in our senior segment and downturns in the senior health as well as life, automotive and home insurance industries; our ability to develop new offerings and penetrate new vertical markets; risks from third-party products; failure to enroll individuals during the Medicare annual enrollment period; our ability to attract, integrate and retain qualified personnel; our dependence on lead providers and ability to compete for leads; failure to obtain and/or convert sales leads to actual sales of insurance policies; access to data from consumers and insurance carriers; accuracy of information provided from and to consumers during the insurance shopping process; cost-effective advertisement through internet search engines; ability to contact consumers and market products by telephone; global economic conditions, including inflation; disruption to operations as a result of future acquisitions; significant estimates and assumptions in the preparation of our financial statements; impairment of goodwill; potential litigation and other legal proceedings or inquiries; our existing and future indebtedness; our ability to maintain compliance with our debt covenants; access to additional capital; failure to protect our intellectual property and our brand; fluctuations in our financial results caused by seasonality; accuracy and timeliness of commissions reports from insurance carriers; timing of insurance carriers' approval and payment practices; factors that impact our estimate of the constrained lifetime value of commissions per policyholder; changes in accounting rules, tax legislation and other legislation; disruptions or failures of our technological infrastructure and platform; failure to maintain relationships with third-party service providers; cybersecurity breaches or other attacks involving our systems or those of our insurance carrier partners or third-party service providers; our ability to protect consumer information and other data; failure to market and sell Medicare plans effectively or in compliance with laws; and and other factors related to our pharmacy business, including manufacturing or supply chain disruptions, access to and demand for prescription drugs, and regulatory changes or other industry developments that may affect our pharmacy operations. For a further discussion of these and other risk factors that could impact our future results and performance, see the section entitled 'Risk Factors' in the most recent Annual Report on Form 10-K (the 'Annual Report') and subsequent periodic reports filed by us with the Securities and Exchange Commission. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as otherwise required by law, we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. About SelectQuote: Founded in 1985, SelectQuote (NYSE: SLQT) pioneered the model of providing unbiased comparisons from multiple, highly-rated insurance companies, allowing consumers to choose the policy and terms that best meet their unique needs. Two foundational pillars underpin SelectQuote's success: a strong force of highly-trained and skilled agents who provide a consultative needs analysis for every consumer, and proprietary technology that sources and routes high-quality leads. Today, the Company operates an ecosystem offering high touchpoints for consumers across insurance, pharmacy, and virtual care. With an ecosystem offering engagement points for consumers across insurance, Medicare, pharmacy, and value-based care, the company now has three core business lines: SelectQuote Senior, SelectQuote Healthcare Services, and SelectQuote Life. SelectQuote Senior serves the needs of a demographic that sees around 10,000 people turn 65 each day with a range of Medicare Advantage and Medicare Supplement plans. SelectQuote Healthcare Services is comprised of the SelectRx Pharmacy, a Patient-Centered Pharmacy Home™ (PCPH) accredited pharmacy, SelectPatient Management, a provider of chronic care management services, and Healthcare Select which proactively connects consumers with a wide breadth of healthcare services supporting their needs. Source: SelectQuote, Inc. (Unaudited) (In thousands) March 31, 2025 ASSETS CURRENT ASSETS: Cash, cash equivalents, and restricted cash $ 84,795 $ 42,690 Accounts receivable, net of allowances of $12.0 million and $8.2 million, respectively 184,879 150,035 Commissions receivable-current 75,326 119,871 Other current assets 15,216 20,327 Total current assets 360,216 332,923 COMMISSIONS RECEIVABLE—Net 839,757 761,446 PROPERTY AND EQUIPMENT—Net 15,411 18,973 SOFTWARE—Net 14,425 13,978 OPERATING LEASE RIGHT-OF-USE ASSETS 24,799 23,437 INTANGIBLE ASSETS—Net 7,098 10,194 GOODWILL 29,438 29,438 OTHER ASSETS 4,689 3,519 TOTAL ASSETS $ 1,295,833 $ 1,193,908 LIABILITIES, PREFERRED STOCK, AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 77,713 $ 36,587 Accrued expenses 17,481 16,904 Accrued compensation and benefits 59,257 57,594 Operating lease liabilities—current 4,847 4,709 Current portion of long-term debt 28,991 45,854 Contract liabilities 945 8,066 Other current liabilities 4,469 4,873 Total current liabilities 193,703 174,587 LONG-TERM DEBT, NET—less current portion 362,493 637,480 DEFERRED INCOME TAXES 39,980 37,478 OPERATING LEASE LIABILITIES 26,183 25,685 OTHER LIABILITIES 115,649 1,877 Total liabilities 738,008 877,107 COMMITMENTS AND CONTINGENCIES PREFERRED STOCK: Senior Non-Convertible Preferred Stock, $0.01 par value, 350,000 shares and no shares issued and outstanding as of March 31, 2025 and June 30, 2024, respectively, current liquidation preference of $354.4 million and $0.0 million as of March 31, 2025 and June 30, 2024, respectively 207,613 — SHAREHOLDERS' EQUITY: Common stock, $0.01 par value 1,727 1,694 Additional paid-in capital 583,542 580,764 Accumulated deficit (235,057 ) (269,769 ) Accumulated other comprehensive income — 4,112 Total shareholders' equity 350,212 316,801 TOTAL LIABILITIES, PREFERRED STOCK, AND SHAREHOLDERS' EQUITY $ 1,295,833 $ 1,193,908 Expand SELECTQUOTE, INC. AND SUBSIDIARIES (Unaudited) (In thousands) Three Months Ended March 31, Nine Months Ended March 31, 2025 2024 2025 2024 REVENUE: Commissions and other services $ 222,889 $ 256,118 $ 663,338 $ 690,702 Pharmacy 185,271 120,282 518,154 323,865 Total revenue 408,160 376,400 1,181,492 1,014,567 OPERATING COSTS AND EXPENSES: Cost of commissions and other services revenue 79,412 84,315 246,283 254,250 Cost of goods sold—pharmacy revenue 162,304 106,172 448,029 284,360 Marketing and advertising 92,733 109,276 254,222 288,676 Selling, general, and administrative 41,685 34,971 122,850 97,049 Technical development 9,967 8,604 29,086 24,291 Total operating costs and expenses 386,101 343,338 1,100,470 948,626 INCOME FROM OPERATIONS 22,059 33,062 81,022 65,941 INTEREST EXPENSE, NET (20,407 ) (24,330 ) (67,160 ) (70,141 ) CHANGE IN FAIR VALUE OF WARRANTS 32,986 — 25,344 — OTHER EXPENSE, NET (37 ) (12 ) (70 ) (51 ) INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT) 34,601 8,720 39,136 (4,251 ) INCOME TAX EXPENSE (BENEFIT) 8,579 169 4,424 (1,143 ) NET INCOME (LOSS) $ 26,022 $ 8,551 $ 34,712 $ (3,108 ) Senior Non-Convertible Preferred Stock accumulated dividends and accretion $ (5,787 ) $ — $ (5,787 ) $ — NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 20,235 $ 8,551 $ 28,925 $ (3,108 ) Basic $ 0.11 $ 0.05 $ 0.17 $ (0.02 ) Diluted $ 0.03 $ 0.05 $ 0.13 $ (0.02 ) WEIGHTED-AVERAGE COMMON STOCK OUTSTANDING USED IN PER SHARE AMOUNTS: Basic 178,156 169,070 173,462 168,291 Diluted 186,639 170,956 178,895 168,291 OTHER COMPREHENSIVE LOSS NET OF TAX: Change in cash flow hedge — (1,771 ) (4,112 ) (7,203 ) OTHER COMPREHENSIVE LOSS — (1,771 ) (4,112 ) (7,203 ) COMPREHENSIVE INCOME (LOSS) $ 26,022 $ 6,780 $ 30,600 $ (10,311 ) Expand SELECTQUOTE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Nine months ended March 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 34,712 $ (3,108 ) Adjustments to reconcile net income (loss) to net cash, cash equivalents, and restricted cash used in operating activities: Depreciation and amortization 15,584 18,591 Loss on disposal of property, equipment, and software 160 13 Share-based compensation expense 13,505 10,512 Deferred income taxes 4,424 (2,151 ) Amortization of debt issuance costs and debt discount 3,880 4,863 Write-off of debt issuance costs 93 293 Accrued interest payable in kind 13,301 14,323 Change in fair value of warrants (25,344 ) — Non-cash lease expense 2,849 1,945 Bad debt expense 4,203 4,602 Changes in operating assets and liabilities: Accounts receivable, net (39,047 ) (103,121 ) Commissions receivable (33,765 ) 7,375 Other assets (343 ) (2,620 ) Accounts payable and accrued expenses 41,163 36,073 Operating lease liabilities (3,574 ) (3,802 ) Other liabilities (5,985 ) 11,453 Net cash provided by (used in) operating activities 25,816 (4,759 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (1,690 ) (3,114 ) Proceeds from sales of property and equipment — 253 Purchases of software and capitalized software development costs (6,513 ) (6,065 ) Net cash used in investing activities (8,203 ) (8,926 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from revolving line of credit 166,900 — Payments on revolving line of credit (166,900 ) — Payments on Term Loans (384,644 ) (30,412 ) Proceeds on ABS Notes 99,095 — Payments on ABS Notes (11,723 ) — Payments on other debt (202 ) (112 ) Proceeds from common stock options exercised and employee stock purchase plan 112 8 Proceeds from issuance of Senior Non-Convertible Preferred Stock 337,855 — Senior Non-Convertible Preferred Stock issuance costs (7,076 ) — Payments of tax withholdings related to net share settlement of equity awards (5,019 ) (374 ) Payments of debt issuance costs (2,479 ) (773 ) Net cash provided by (used in) financing activities 25,919 (31,663 ) 43,532 (45,348 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH —Beginning of period 42,690 83,156 $ 86,222 $ 37,808 Expand SELECTQUOTE, INC. AND SUBSIDIARIES (Unaudited) Three Months Ended March 31, 2025 (in thousands) Senior Healthcare Services Life Total Adjusted Segment EBITDA $ 45,701 $ 6,445 $ 6,364 $ 58,510 All other Adjusted EBITDA 3,549 Corporate & elimination of intersegment profits (24,336 ) Adjusted EBITDA $ 37,723 Share-based compensation expense (4,960 ) Transaction costs (5,813 ) Depreciation and amortization (4,925 ) Loss on disposal of property, equipment, and software, net (3 ) Change in fair value of warrants 32,986 Interest expense, net (20,407 ) Income before income tax expense (benefit) $ 34,601 Three Months Ended March 31, 2024 (in thousands) Senior Healthcare Services Life Total Adjusted Segment EBITDA $ 61,494 $ 1,609 $ 3,138 $ 66,241 All other Adjusted EBITDA 3,609 Corporate & elimination of intersegment profits (23,252 ) Adjusted EBITDA $ 46,598 Share-based compensation expense (3,515 ) Transaction costs (3,325 ) Depreciation and amortization (6,704 ) Loss on disposal of property, equipment, and software, net (4 ) Interest expense, net (24,330 ) Income before income tax expense (benefit) $ 8,720 Expand SELECTQUOTE, INC. AND SUBSIDIARIES Adjusted EBITDA to Income (Loss) before income tax expense (benefit) Reconciliation (Unaudited) Nine Months Ended March 31, 2025 (in thousands) Senior Healthcare Services Life Total Adjusted Segment EBITDA $ 153,949 $ 13,534 $ 19,747 $ 187,230 All other Adjusted EBITDA 9,645 Corporate & elimination of intersegment profits (73,316 ) Adjusted EBITDA $ 123,559 Share-based compensation expense (13,505 ) Transaction costs (13,358 ) Depreciation and amortization (15,584 ) Loss on disposal of property, equipment, and software, net (160 ) Change in fair value of warrants 25,344 Interest expense, net (67,160 ) Income before income tax expense (benefit) $ 39,136 Expand Nine Months Ended March 31, 2024 (in thousands) Senior Healthcare Services Life Total Adjusted Segment EBITDA $ 138,871 $ 6,911 $ 12,945 $ 158,727 All other Adjusted EBITDA 11,654 Corporate & elimination of intersegment profits (67,746 ) Adjusted EBITDA $ 102,635 Share-based compensation expense (10,512 ) Transaction costs (7,629 ) Depreciation and amortization (18,591 ) Loss on disposal of property, equipment, and software, net (13 ) Interest expense, net (70,141 ) Loss before income tax expense (benefit) $ (4,251 ) Expand SELECTQUOTE, INC. AND SUBSIDIARIES Net Income (Loss) to Adjusted EBITDA Reconciliation (Unaudited) Guidance Net income (loss) to Adjusted EBITDA reconciliation, year ending June 30, 2025: (in thousands) Range Net income (loss) $ (1,000 ) $ 28,000 Income tax expense (benefit) — 10,000 Interest expense, net 82,000 75,000 Depreciation and amortization 22,000 20,000 Share-based compensation expense 19,000 16,000 Change in FV of warrant liability (25,000 ) (25,000 ) Transaction costs 18,000 16,000 Adjusted EBITDA $ 115,000 $ 140,000 Expand
Business Wire
05-05-2025
- Business
- Business Wire
SelectQuote to Release Fiscal Third Quarter 2025 Earnings on May 12
OVERLAND PARK, Kan.--(BUSINESS WIRE)--SelectQuote, Inc. (NYSE: SLQT), a leading distributor of Medicare insurance policies and owner of a rapidly growing Healthcare Services platform, today announced it will release its third quarter 2025 financial results before market open on Monday, May 12, 2025. Chief Executive Officer, Tim Danker, and Chief Financial Officer, Ryan Clement, will host a conference call on the day of the release (May 12, 2025) at 8:30 am ET to discuss the results. To register for this conference call, please use this link: After registering, a confirmation will be sent via email, including dial in details and unique conference call codes for entry. Registration is open through the live call, but to ensure you are connected for the full call, we suggest registering a day in advance or at minimum 10 minutes before the start of the call. The event will also be webcasted live via our investor relations website or via this link. About SelectQuote: Founded in 1985, SelectQuote (NYSE: SLQT) pioneered the model of providing unbiased comparisons from multiple, highly-rated insurance companies, allowing consumers to choose the policy and terms that best meet their unique needs. Two foundational pillars underpin SelectQuote's success: a strong force of highly-trained and skilled agents who provide a consultative needs analysis for every consumer, and proprietary technology that sources and routes high-quality leads. Today, the Company operates an ecosystem offering high touchpoints for consumers across insurance, pharmacy, and virtual care. With an ecosystem offering engagement points for consumers across insurance, Medicare, pharmacy, and value-based care, the company now has three core business lines: SelectQuote Senior, SelectQuote Healthcare Services, and SelectQuote Life. SelectQuote Senior serves the needs of a demographic that sees around 10,000 people turn 65 each day with a range of Medicare Advantage and Medicare Supplement plans. SelectQuote Healthcare Services is comprised of the SelectRx Pharmacy, a Patient-Centered Pharmacy Home™ (PCPH) accredited pharmacy, SelectPatient Management, a provider of chronic care management services, and Healthcare Select which proactively connects consumers with a wide breadth of healthcare services supporting their needs.
