Selectquote, Inc. Reports Fourth Quarter Of Fiscal Year 2024 Results

Fourth Quarter of Fiscal Year 2024 – Consolidated Earnings Highlights

Revenue of $307.2 million
Net loss of $31.0 million
Adjusted EBITDA* of $14.4 million

Fiscal Year 2025 Guidance Ranges:

Revenue expected in a range of $1.4 billion to $1.5 billion
Net loss expected in a range of $42 million to $6 million
Adjusted EBITDA* expected in a range of $90 million to $120 million

Fourth Quarter Fiscal Year 2024 – Segment Highlights

Senior

Revenue of $114.1 million
Adjusted EBITDA* of $27.9 million
Approved Medicare Advantage policies of 107,272

Healthcare Services

Revenue of $145.2 million
Adjusted EBITDA* of $0.9 million
Approximately 82,000 SelectRx members

Life

Revenue of $42.1 million
Adjusted EBITDA* of $7.2 million

Auto & Home

Revenue of $7.6 million
Adjusted EBITDA* of $2.5 million

OVERLAND PARK, Kan.--(BUSINESS WIRE)--SelectQuote, Inc. (NYSE: SLQT) reported consolidated revenue for the fourth quarter of fiscal year 2024 of $307.2 million compared to consolidated revenue for the fourth quarter of fiscal year 2023 of $221.8 million. Consolidated net loss for the fourth quarter of fiscal year 2024 was $31.0 million compared to consolidated net loss for the fourth quarter of fiscal year 2023 of $47.8 million. Finally, consolidated Adjusted EBITDA* for the fourth quarter of fiscal year 2024 was $14.4 million compared to consolidated Adjusted EBITDA* for the fourth quarter of fiscal year 2023 of $(5.8) million.

Consolidated revenue for the fiscal year ended June 30, 2024, was $1.3 billion compared to consolidated revenue for the fiscal year ended June 30, 2023, of $1.0 billion. Consolidated net loss for the fiscal year ended June 30, 2024, was $34.1 million compared to consolidated net loss for the fiscal year ended June 30, 2023, of $58.5 million. Finally, consolidated Adjusted EBITDA* for the fiscal year ended June 30, 2024, was $117.0 million compared to consolidated Adjusted EBITDA* of $74.3 million for the fiscal year ended June 30, 2023.

SelectQuote Chief Executive Officer, Tim Danker, commented, “2024 was another successful and strong year for SelectQuote across both Senior Medicare Advantage distribution and our Healthcare Services business, driven by SelectRx. On a consolidated basis our fiscal year revenue and Adjusted EBITDA outperformed the midpoint of our original forecast by 17% and 26%, respectively. This marks the 10th consecutive quarter of outperformance versus our internal expectations, reaffirming our strategy to prioritize profitability and cash efficiency over volume growth. Revenue growth was driven primarily by 68% growth in SelectRx members and increasing utilization. Our profitability was driven by another strong year of execution in Senior, which achieved a 25% Adjusted EBITDA margin, similar to a very strong fiscal 2023. Additionally, our Healthcare Services segment achieved its 5th straight quarter of profitability ending the year with Adjusted EBITDA of $7.8 million, which compares to an Adjusted EBITDA loss of $22.8 million in fiscal 2023. Lastly, SelectQuote has signed a non-binding letter of intent to complete an initial commissions receivable securitization of approximately $100 million with certain of our term lenders. Provided this deal closes in the coming weeks, we believe this will be an important first step in our strategic imperative to optimizing our balance sheet capacity, lowering our funding costs, and extending our debt maturities.”

Mr. Danker continued, “SelectQuote’s unique healthcare information platform remains best positioned as a value creation conduit, efficiently connecting a large and growing population of Americans in need of coverage and care with the best providers, based on each of their distinct personal needs.”

Segment Results

We currently report on four segments: 1) Senior, 2) Healthcare Services, 3) Life, and 4) Auto & Home. 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 net loss plus: (i) interest expense, net; (ii) benefit for income taxes; (iii) depreciation and amortization; (iv) share-based compensation; (v) goodwill, long-lived asset, and intangible assets impairments; (vi) transaction costs; (vii) loss on disposal of property, equipment and software, net; and (viii) other non-recurring expenses and income. 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:

(in thousands)	4Q 2024			4Q 2023			% Change		FY 2024			FY 2023			% Change
Revenue	$	114,143		$	103,592		10	%	$	655,849		$	590,131		11	%
Adjusted EBITDA*		27,872			16,147		73	%		166,744			155,077		8	%
Adjusted EBITDA Margin*		24	%		16	%				25	%		26	%

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:

	4Q 2024	4Q 2023	% Change		FY 2024	FY 2023	% Change
Medicare Advantage	117,091	114,383	2	%	720,027	652,630	10	%
Medicare Supplement	456	539	(15	)%	2,790	3,444	(19	)%
Dental, Vision and Hearing	12,821	14,668	(13	)%	61,713	74,181	(17	)%
Prescription Drug Plan	404	351	15	%	3,100	2,433	27	%
Other	1,579	2,099	(25	)%	5,303	7,501	(29	)%
Total	132,351	132,040	—	%	792,933	740,189	7	%

*See “Non-GAAP Financial Measures” below.

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.

The following table shows the number of approved policies for the periods presented:

	4Q 2024	4Q 2023	% Change		FY 2024	FY 2023	% Change
Medicare Advantage	107,272	110,027	(3	)%	625,245	577,567	8	%
Medicare Supplement	307	435	(29	)%	1,885	2,619	(28	)%
Dental, Vision and Hearing	10,995	12,884	(15	)%	52,469	60,824	(14	)%
Prescription Drug Plan	545	350	56	%	3,229	2,144	51	%
Other	2,002	1,356	48	%	4,836	5,288	(9	)%
Total	121,121	125,052	(3	)%	687,664	648,442	6	%

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:

(dollars per policy):	4Q 2024		4Q 2023		% Change		FY 2024		FY 2023		% Change
Medicare Advantage	$	847	$	830	2	%	$	910	$	877	4	%
Medicare Supplement		245		1,207	(80	)%		967		1,030	(6	)%
Dental, Vision and Hearing		168		121	39	%		114		100	14	%
Prescription Drug Plan		181		185	(2	)%		228		207	10	%
Other		282		105	169	%		115		101	14	%

Healthcare Services

Financial Results

The following table provides the financial results for the Healthcare Services segment for the periods presented:

(in thousands)	4Q 2024			4Q 2023			% Change		FY 2024			FY 2023			% Change
Revenue	$	145,223		$	82,803		75	%	$	478,508		$	252,075		90	%
Adjusted EBITDA*		909			1,685		(46	)%		7,821			(22,769	)	NM
Adjusted EBITDA Margin*		1	%		2	%				2	%		(9	)%

*See “Non-GAAP Financial Measures” below.

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.

The following table shows the total number of SelectRx members as of the periods presented:

		June 30, 2024		June 30, 2023
Total SelectRx Members		82,385		49,044

The total number of SelectRx members increased by 68% as of June 30, 2024, compared to June 30, 2023, due to our operating strategy to grow SelectRx.

The following table shows the average prescriptions shipped per day for the periods presented:

		FY 2024		FY 2023
Prescriptions Per Day		18,935		10,657

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 derived from 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.

	Twelve Months Ended June 30,
(dollars per approved policy):	2024			2023
MA and MS approved policies		627,130			580,186
MA and MS commission per MA / MS policy	$	910		$	877
Other commission per MA/MS policy		12			12
Pharmacy revenue per MA/MS policy		741			412
Other revenue per MA/MS policy		146			150
Total revenue per MA / MS policy		1,809			1,451
Total operating expenses per MA / MS policy		(1,530	)		(1,224	)
Adjusted EBITDA per MA/MS policy *	$	279		$	227
Adjusted EBITDA Margin per MA/MS policy *		15	%		16	%
Revenue / CAC multiple	4.5X			4.1X

Total revenue per MA/MS policy increased 25% for the twelve months ended June 30, 2024, compared to the twelve months ended June 30, 2023, primarily due to the increase in pharmacy revenue. Total operating expenses per MA/MS policy increased 25% for the twelve months ended June 30, 2024, compared to the twelve months ended June 30, 2023, driven by an increase in cost of goods sold-pharmacy revenue for Healthcare Services due to the growth of the business, offset by a decrease in our marketing and advertising costs.

Life

Financial Results

The following table provides the financial results for the Life segment for the periods presented:

(in thousands)	4Q 2024			4Q 2023			% Change		FY 2024			FY 2023			% Change
Revenue	$	42,074		$	38,052		11	%	$	157,930		$	145,832		8	%
Adjusted EBITDA*		7,217			6,702		8	%		20,164			23,073		(13	)%
Adjusted EBITDA Margin*		17	%		18	%				13	%		16	%

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:

(in thousands)	4Q 2024		4Q 2023		% Change		FY 2024		FY 2023		% Change
Term Premiums	$	18,074	$	20,507	(12	)%	$	70,450	$	68,941	2	%
Final Expense Premiums		23,789		18,960	25	%		86,600		77,725	11	%
Total	$	41,863	$	39,467	6	%	$	157,050	$	146,666	7	%

*See “Non-GAAP Financial Measures” below.

Auto & Home

Financial Results

The following table provides the financial results for the Auto & Home segment for the periods presented:

(in thousands)	4Q 2024			4Q 2023				% Change		FY 2024			FY 2023				% Change
Revenue	$	7,580		$	(1,266	)	(1)	699	%	$	36,228		$	21,862		(1)	66	%
Adjusted EBITDA*		2,474			(7,235	)	(1)	NM			14,127			81		(1)	NM
Adjusted EBITDA Margin*		33	%		NM						39	%		—	%

⁽¹⁾ Decrease is due to the impact of the $10.4 million change in estimate related to the mutual termination of a contract with a certain Auto & Home carrier to provide for the ability to migrate the book of business to other carriers.

Operating Metrics

Auto & Home premium represents the total premium value of all new policies that were approved by our insurance carrier partners 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 Auto & Home segment.

The following table shows premiums for the periods presented:

(in thousands):	4Q 2024			4Q 2023			% Change			FY 2024			FY 2023			% Change
Premiums	$	13,891		$	14,460		(4	)%		$	56,637		$	50,917		11	%

*See “Non-GAAP Financial Measures” below.

Earnings Conference Call

SelectQuote, Inc. will host a conference call with the investment community on September 13, 2024, beginning at 8:30 a.m. ET. To register for this conference call, please use this link: https://www.netroadshow.com/events/login?show=7297aa9f&confId=70516. 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 https://ir.selectquote.com/investor-home/default.aspx.

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 interest expense, income tax expense (benefit), depreciation and amortization, 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 net income (loss). 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) to Adjusted EBITDA are presented below beginning on page 13.

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: impacts of the COVID-19 pandemic and any other significant public health events; 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; our ability to regain and maintain compliance with NYSE listing standards; 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 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.

Contacts

Investor Relations:
Sloan Bohlen
877-678-4083
investorrelations@selectquote.com

Media:
Matt Gunter
913-286-4931
matt.gunter@selectquote.com

Read full story here

First published on Mon, Sep 16, 2024

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Selectquote, Inc. Reports Fourth Quarter Of Fiscal Year 2024 Results

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