Fourth Quarter of Fiscal Year 2023 – Consolidated Earnings
Highlights
- Revenue of $221.8 million
- Net loss of $(47.8) million
- Adjusted EBITDA* of $(5.8) million
Fiscal Year 2024 Guidance Ranges:
- Revenue expected in a range of $1.05 billion to $1.2
billion
- Net loss expected in a range of $50 million to $22 million
- Adjusted EBITDA* expected in a range of $80 million to $105
million
Fourth Quarter Fiscal Year 2023 – Segment Highlights
Senior
- Revenue of $103.6 million
- Adjusted EBITDA* of $16.1 million
- Approved Medicare Advantage policies of 110,027
Healthcare Services
- Revenue of $82.8 million
- Adjusted EBITDA* of $1.7 million
- Approximately 49,000 SelectRx members
Life
- Revenue of $38.1 million
- Adjusted EBITDA* of $6.7 million
Auto & Home
- Revenue of $(1.3) million
- Adjusted EBITDA* of $(7.2) million
- Excluding the $10.4 million(1) change in estimate, Revenue of
$9.2 million
- Excluding the $10.4 million(1) change in estimate, Adjusted
EBITDA* of $3.2 million
SelectQuote, Inc. (NYSE: SLQT) reported consolidated revenue for
the fourth quarter of fiscal year 2023 of $221.8 million compared
to consolidated revenue for the fourth quarter of fiscal year 2022
of $139.4 million. Consolidated net loss for the fourth quarter of
fiscal year 2023 was $47.8 million compared to consolidated net
loss for the fourth quarter of fiscal year 2022 of $104.7 million.
Finally, consolidated Adjusted EBITDA* for the fourth quarter of
fiscal year 2023 was $(5.8) million compared to consolidated
Adjusted EBITDA* for the fourth quarter of fiscal year 2022 of
$(60.8) million.
Consolidated revenue for the fiscal year ended June 30, 2023,
was $1.0 billion compared to consolidated revenue for the fiscal
year ended June 30, 2022, of $764.0 million. Consolidated net loss
for the fiscal year ended June 30, 2023, was $58.5 million compared
to consolidated net loss for the fiscal year ended June 30, 2022,
of $297.5 million. Finally, consolidated Adjusted EBITDA* for the
fiscal year ended June 30, 2023, was $74.3 million compared to
consolidated Adjusted EBITDA* of $(260.5) million for the fiscal
year ended June 30, 2022.
*See “Non-GAAP Financial Measures” below. 1) $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.
SelectQuote Chief Executive Officer, Tim Danker, remarked,
“SelectQuote completed a highly successful fiscal 2023 with another
strong quarter of results across each of our businesses. In total,
our full year results significantly surpassed our initial forecasts
driven by both higher growth, but most importantly, with
outstanding operational execution against our paramount goal to
optimize profitability and cash flow. The most stark example is
nearly $80 million of outperformance in full-year Adjusted EBITDA
versus our initial guidance. Similarly, excluding our investment in
the growth of SelectRx, the SelectQuote model would have produced
positive operating cash flow for the year, which we plan to scale
in the quarters and years ahead.”
Mr. Danker continued, “Looking toward the future, our teams are
excited to leverage our strategic redesign across each of our
businesses, and we believe there is significant opportunity in our
Healthcare Services segment. We can, and will, reproduce the
success we have achieved in SelectRx with additional value-add
services needed by seniors, healthcare providers, and our insurance
carrier partners. We believe strongly that SelectQuote is unique in
our ability to provide and optimize these services given the
information and the leverage we can create via our role as the
connective tissue between those in need and the providers of care
and coverage. To say it more directly, SelectQuote is not just a
Medicare Advantage distribution company, and we plan to decisively
demonstrate that through our results in the coming years.”
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 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 calculated as total revenue for the
applicable segment less direct and allocated costs of revenue, cost
of goods sold, marketing and advertising, technical development,
and selling, general, and administrative operating costs and
expenses, excluding depreciation and amortization expense; gain or
loss on disposal of property, equipment, and software; share-based
compensation expense; and non-recurring expenses such as severance
payments and transaction costs. 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 2023
4Q 2022
% Change
FY 2023
FY 2022
% Change
Revenue
$
103,592
$
68,452
51
%
$
590,131
$
527,907
12
%
Adjusted EBITDA*
16,147
(32,574
)
150
%
155,077
(161,702
)
196
%
Adjusted EBITDA Margin*
16
%
(48
)%
26
%
(31
)%
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.
*See “Non-GAAP Financial Measures” below.
The following table shows the number of submitted policies for
the periods presented:
4Q 2023
4Q 2022
% Change
FY 2023
FY 2022
% Change
Medicare Advantage
114,383
129,289
(12
)%
652,630
808,116
(19
)%
Medicare Supplement
539
890
(39
)%
3,444
7,208
(52
)%
Dental, Vision and Hearing
14,668
23,502
(38
)%
74,181
145,716
(49
)%
Prescription Drug Plan
351
649
(46
)%
2,433
6,842
(64
)%
Other
2,099
3,340
(37
)%
7,501
14,776
(49
)%
Total
132,040
157,670
(16
)%
740,189
982,658
(25
)%
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 2023
4Q 2022
% Change
FY 2023
FY 2022
% Change
Medicare Advantage
110,027
115,707
(5
)%
577,567
661,738
(13
)%
Medicare Supplement
435
807
(46
)%
2,619
5,461
(52
)%
Dental, Vision and Hearing
12,884
23,738
(46
)%
60,824
124,989
(51
)%
Prescription Drug Plan
350
809
(57
)%
2,144
6,124
(65
)%
Other
1,356
3,208
(58
)%
5,288
12,407
(57
)%
Total
125,052
144,269
(13
)%
648,442
810,719
(20
)%
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 2023
4Q 2022
% Change
FY 2023
FY 2022
% Change
Medicare Advantage
$
830
$
877
(5
)%
$
877
$
925
(5
)%
Medicare Supplement
1,207
1,236
(2
)%
1,030
1,270
(19
)%
Dental, Vision and Hearing
121
122
(1
)%
100
123
(19
)%
Prescription Drug Plan
185
225
(18
)%
207
234
(12
)%
Other
105
64
64
%
101
73
38
%
Healthcare Services
Financial Results
The following table provides the financial results for the
Healthcare Services segment for the periods presented:
(in thousands)
4Q 2023
4Q 2022
% Change
FY 2023
FY 2022
% Change
Revenue
$
82,803
$
30,036
176
%
$
252,075
$
70,035
260
%
Adjusted EBITDA*
1,685
(11,800
)
114
%
(22,769
)
(32,097
)
29
%
Adjusted EBITDA Margin*
2
%
(39
)%
(9
)%
(46
)%
Operating Metrics
Members
The total number of SelectRx members represents the amount of
active customers to which an order has been shipped, as this is the
primary key driver of revenue for Healthcare Services.
The following table shows the total number of SelectRx members
as of the periods presented:
June 30, 2023
June 30, 2022
Total SelectRx Members
49,044
25,503
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.
*See “Non-GAAP Financial Measures” below.
Twelve Months Ended June
30,
(dollars per approved policy):
2023
2022
MA and MS approved policies
580,186
667,199
MA and MS commission per MA / MS
policy
$
877
$
928
Other commission per MA/MS policy
12
27
Pharmacy revenue per MA/MS policy
413
89
Other revenue per MA/MS policy
149
(147
)
Total revenue per MA / MS policy
1,451
897
Total operating expenses per MA / MS
policy
(1,224
)
(1,187
)
Adjusted EBITDA per MA/MS policy *
$
227
$
(290
)
Adjusted EBITDA Margin per MA/MS policy
*
16
%
(32
)%
Revenue / CAC multiple
4.1X
1.7X
Total revenue per MA/MS policy increased 62% for the twelve
months ended June 30, 2023 compared to the twelve months ended June
30, 2022, primarily due to the increase in pharmacy revenue. Total
operating expenses per MA/MS policy increased 3% for the twelve
months ended June 30, 2023 compared to the twelve months ended June
30, 2022, 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 2023
4Q 2022
% Change
FY 2023
FY 2022
% Change
Revenue
$
38,052
$
37,331
2
%
$
145,832
$
153,973
(5
)%
Adjusted EBITDA*
6,702
576
1064
%
23,073
(129
)
NM
Adjusted EBITDA Margin*
18
%
2
%
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.
*See “Non-GAAP Financial Measures” below.
The following table shows term and final expense premiums for
the periods presented:
(in thousands)
4Q 2023
4Q 2022
% Change
FY 2023
FY 2022
% Change
Term Premiums
$
20,507
$
16,374
25
%
$
68,941
$
62,364
11
%
Final Expense Premiums
18,960
25,500
(26
)%
77,725
109,218
(29
)%
Total
$
39,467
$
41,874
(6
)%
$
146,666
$
171,582
(15
)%
Auto & Home
Financial Results
The following table provides the financial results for the Auto
& Home segment for the periods presented:
(in thousands)
4Q 2023
4Q 2022
% Change
FY 2023
FY 2022
% Change
Revenue
$
(1,266
)
(1
)
$
7,126
(118
)%
$
21,862
(1
)
$
27,881
(22
)%
Adjusted EBITDA*
(7,235
)
(1
)
1,476
(590
)%
81
(1
)
5,433
(99
)%
Adjusted EBITDA Margin*
NM
21
%
—
%
19
%
(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 2023
4Q 2022
% Change
FY 2023
FY 2022
% Change
Premiums
$
14,460
$
13,756
5
%
$
50,917
$
50,114
2
%
*See “Non-GAAP Financial Measures” below.
Earnings Conference Call
SelectQuote, Inc. will host a conference call with the
investment community on September 13, 2023, beginning at 8:30 a.m.
ET. To register for this conference call, please use this link:
https://www.netroadshow.com/events/login?show=c37e5fba&confId=54604Avoid.
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 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: the ultimate duration and impact of the ongoing COVID-19
pandemic and any other 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,
including 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; and failure to market and sell
Medicare plans effectively or in compliance with laws. 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) provides solutions
that help consumers protect their most valuable assets: their
families, health, and property. The company 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.
With an ecosystem offering high touchpoints for consumers across
Insurance, Medicare, Pharmacy, and Value-Based Care, the company
now has four core business lines: SelectQuote Senior, SelectQuote
Healthcare Services, SelectQuote Life, and SelectQuote Auto and
Home. 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 specialized
medication management pharmacy, and Population Health which
proactively connects its members with best-in-class healthcare
services that fit each member's unique healthcare needs. The
platform improves health outcomes and lowers healthcare costs
through proactive engagement and access to high-value healthcare
solutions.
SELECTQUOTE, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In thousands)
June 30, 2023
June 30, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
83,156
$
140,997
Accounts receivable, net of allowances of
$2.7 million and $0.6 million, respectively
154,565
129,748
Commissions receivable-current
111,148
116,277
Other current assets
14,355
15,751
Total current assets
363,224
402,773
COMMISSIONS RECEIVABLE—Net
729,350
722,349
PROPERTY AND EQUIPMENT—Net
27,452
41,804
SOFTWARE—Net
14,740
16,301
OPERATING LEASE RIGHT-OF-USE ASSETS
23,563
28,016
INTANGIBLE ASSETS—Net
10,200
31,255
GOODWILL
29,136
29,136
OTHER ASSETS
21,586
18,418
TOTAL ASSETS
$
1,219,251
$
1,290,052
LIABILITIES AND SHAREHOLDERS’
EQUITY
CURRENT LIABILITIES:
Accounts payable
$
27,577
$
24,766
Accrued expenses
16,993
26,002
Accrued compensation and benefits
49,966
42,150
Operating lease liabilities—current
5,175
5,261
Current portion of long-term debt
33,883
7,169
Contract liabilities
1,691
3,404
Other current liabilities
1,972
4,761
Total current liabilities
137,257
113,513
LONG-TERM DEBT, NET—less current
portion
664,625
698,423
DEFERRED INCOME TAXES
39,581
50,080
OPERATING LEASE LIABILITIES
27,892
33,946
OTHER LIABILITIES
2,926
2,985
Total liabilities
872,281
898,947
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Common stock, $0.01 par value
1,669
1,644
Additional paid-in capital
567,266
554,845
Accumulated deficit
(235,644)
(177,100)
Accumulated other comprehensive income
13,679
11,716
Total shareholders’ equity
346,970
391,105
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
$
1,219,251
$
1,290,052
SELECTQUOTE, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS
(Unaudited)
(In thousands)
Three Months Ended June
30,
Year Ended June 30,
2023
2022
2023
2022
REVENUE:
Commission
$
119,844
$
94,809
$
653,470
$
587,518
Pharmacy
79,905
27,929
239,547
59,460
Other
22,029
16,656
109,831
117,067
Total revenue
221,778
139,394
1,002,848
764,045
OPERATING COSTS AND EXPENSES:
Cost of revenue
65,697
37,722
301,524
391,528
Cost of goods sold—pharmacy revenue
71,211
64,172
225,963
64,172
Marketing and advertising
63,521
75,080
301,245
484,084
Selling, general, and administrative
49,856
30,449
136,518
100,945
Technical development
7,154
6,054
26,015
24,729
Goodwill impairment
—
44,596
—
44,596
Total operating costs and expenses
257,439
258,073
991,265
1,110,054
INCOME (LOSS) FROM OPERATIONS
(35,661)
(118,679)
11,583
(346,009)
INTEREST EXPENSE, NET
(21,721)
(12,295)
(80,606)
(43,595)
OTHER EXPENSE, NET
(3)
(26)
(121)
(202)
LOSS BEFORE INCOME TAX BENEFIT
(57,385)
(131,000)
(69,144)
(389,806)
INCOME TAX BENEFIT
(9,547)
(26,318)
(10,600)
(92,302)
NET LOSS
$
(47,838)
$
(104,682)
$
(58,544)
$
(297,504)
NET LOSS PER SHARE:
Basic
$
(0.29)
$
(0.64)
$
(0.35)
$
(1.81)
Diluted
$
(0.29)
$
(0.64)
$
(0.35)
$
(1.81)
WEIGHTED-AVERAGE COMMON STOCK OUTSTANDING
USED IN PER SHARE AMOUNTS:
Basic
166,709
164,427
166,140
164,042
Diluted
166,709
164,427
166,140
164,042
OTHER COMPREHENSIVE INCOME NET OF TAX:
Gain on cash flow hedge
605
2,129
1,963
11,487
OTHER COMPREHENSIVE INCOME
605
2,129
1,963
11,487
COMPREHENSIVE LOSS
$
(47,233)
$
(102,553)
$
(56,581)
$
(286,017)
SELECTQUOTE, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended June
30,
Year Ended June 30,
2023
2022
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(47,838)
(104,682)
$
(58,544)
(297,504)
Adjustments to reconcile net loss to net
cash and cash equivalents used in operating activities:
Depreciation and amortization
6,794
6,768
27,881
24,724
Goodwill impairment
—
44,596
—
44,596
Loss on disposal of property, equipment,
and software
364
717
754
1,458
Impairment of long-lived assets
17,332
3,147
17,332
3,147
Share-based compensation expense
2,785
800
11,310
7,052
Deferred income taxes
(9,760)
(26,338)
(11,176)
(92,716)
Amortization of debt issuance costs and
debt discount
2,426
1,243
8,676
5,461
Write-off of debt issuance costs
—
—
710
—
Accrued interest payable in kind
3,565
—
12,015
—
Non-cash lease expense
1,070
1,002
4,185
4,067
Changes in operating assets and
liabilities:
Accounts receivable, net
37,921
34,085
(24,817)
(25,749)
Commissions receivable
(18,964)
(329)
(1,872)
7,271
Other assets
(2,997)
(2,641)
169
(10,915)
Accounts payable and accrued expenses
(10,089)
(12,559)
(3,649)
(4,464)
Operating lease liabilities
(1,312)
(1,274)
(5,643)
(5,143)
Other liabilities
12,161
1,513
3,292
401
Net cash used in operating activities
(6,542)
(53,952)
(19,377)
(338,314)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
(391)
(283)
(1,447)
(24,798)
Purchases of software and capitalized
software development costs
(1,874)
(2,280)
(7,678)
(9,851)
Acquisition of business
—
—
—
(6,927)
Investment in equity securities
—
—
—
(1,000)
Net cash used in investing activities
(2,265)
(2,563)
(9,125)
(42,576)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Revolving Credit
Facility
—
—
—
50,000
Payments on Revolving Credit Facility
—
—
—
(50,000)
Proceeds from Term Loans
—
—
—
242,000
Payments on Term Loans
—
(1,793)
(17,833)
(3,585)
Payments on other debt
(35)
(54)
(158)
(184)
Proceeds from common stock options
exercised and employee stock purchase plan
—
—
1,187
3,179
Payments of tax withholdings related to
net share settlement of equity awards
—
—
(40)
(148)
Payments of debt issuance costs
—
—
(10,110)
(328)
Payment of acquisition holdback
(50)
—
(2,385)
(5,501)
Net cash (used in) provided by financing
activities
(85)
(1,847)
(29,339)
235,433
NET DECREASE IN CASH AND CASH
EQUIVALENTS
(8,892)
(58,362)
(57,841)
(145,457)
CASH AND CASH EQUIVALENTS—Beginning of
period
92,048
199,359
140,997
286,454
CASH AND CASH EQUIVALENTS—End of
period
$
83,156
$
140,997
$
83,156
$
140,997
SELECTQUOTE, INC. AND
SUBSIDIARIES
Net Loss to Adjusted EBITDA
Reconciliation
(Unaudited)
Three Months Ended June 30,
2023
(in thousands)
Senior
Healthcare Services
Life
Auto & Home
Corp & Elims
Consolidated
Revenue
$
103,592
$
82,803
$
38,052
$
(1,266)
$
(1,403)
$
221,778
Operating expenses
(87,445)
(81,118)
(31,350)
(5,970)
(21,715)
(227,598)
Other income (expense), net
—
—
—
1
(4)
(3)
Adjusted EBITDA
$
16,147
$
1,685
$
6,702
$
(7,235)
$
(23,122)
(5,823)
Share-based compensation expense
(2,785)
Transactions costs
(2,568)
Depreciation and amortization
(6,793)
Loss on disposal of property, equipment,
and software
(363)
Impairment of long-lived assets
(17,332)
Interest expense, net
(21,721)
Income tax benefit
9,547
Net loss
$
(47,838)
Change in estimate from structured book of
business migration for Auto & Home
$
10,427
Adjusted consolidated net loss
$
(37,411)
Three Months Ended June 30,
2022
(in thousands)
Senior
Healthcare Services
Life
Auto & Home
Corp & Elims
Consolidated
Revenue
$
68,452
$
30,036
$
37,331
$
7,126
$
(3,551)
$
139,394
Operating expenses
(101,026)
(41,836)
(36,755)
(5,650)
(14,905)
(200,172)
Other expenses, net
—
—
—
—
(26)
(26)
Adjusted EBITDA
$
(32,574)
$
(11,800)
$
576
$
1,476
$
(18,482)
(60,804)
Share-based compensation expense
(800)
Non-recurring expenses
(1,873)
Depreciation and amortization
(6,768)
Loss on disposal of property, equipment,
and software
(717)
Goodwill impairment
(44,596)
Impairment of long-lived assets
(3,147)
Interest expense, net
(12,295)
Income tax benefit
26,318
Net loss
$
(104,682)
Year Ended June 30,
2023
(in thousands)
Senior
Healthcare Services
Life
Auto & Home
Corp & Elims
Consolidated
Revenue
$
590,131
$
252,075
$
145,832
$
21,862
$
(7,052)
$
1,002,848
Operating expenses
(435,054)
(274,844)
(122,759)
(21,782)
(73,985)
(928,424)
Other expenses, net
—
—
—
1
(122)
(121)
Adjusted EBITDA
$
155,077
$
(22,769)
$
23,073
$
81
$
(81,159)
74,303
Share-based compensation expense
(11,310)
Transaction costs
(5,569)
Depreciation and amortization
(27,881)
Loss on disposal of property, equipment,
and software
(749)
Impairment of long-lived assets
(17,332)
Interest expense, net
(80,606)
Income tax benefit
10,600
Net loss
$
(58,544)
Change in estimate from structured book of
business migration for Auto & Home
$
10,427
Adjusted consolidated net loss
$
(48,117)
Year Ended June 30,
2022
(in thousands)
Senior
Healthcare Services
Life
Auto & Home
Corp & Elims
Consolidated
Revenue
$
527,907
$
70,035
$
153,973
$
27,881
$
(15,751)
$
764,045
Operating expenses
(689,609)
(102,132)
(154,102)
(22,448)
(56,058)
(1,024,349)
Other expenses, net
—
—
—
—
(202)
(202)
Adjusted EBITDA
$
(161,702)
$
(32,097)
$
(129)
$
5,433
$
(72,011)
(260,506)
Share-based compensation expense
(7,052)
Non-recurring expenses
(4,730)
Depreciation and amortization
(24,724)
Loss on disposal of property, equipment,
and software
(1,456)
Goodwill impairment
(44,596)
Impairment of long-lived assets
(3,147)
Interest expense, net
(43,595)
Income tax benefit
92,302
Net loss
$
(297,504)
SELECTQUOTE, INC. AND
SUBSIDIARIES
Revenue to Adjusted EBITDA -
Revenue Adjustments
(Unaudited)
Three Months Ended June 30,
2023
(in thousands)
Senior
Healthcare Services
Life
Auto & Home
Corp & Elims
Consolidated
Revenue
$
103,592
$
82,803
$
38,052
$
(1,266)
$
(1,403)
$
221,778
Change in estimate from structured book of
business migration for Auto & Home
—
—
—
10,427
—
10,427
Revenue, excluding change in estimate from
structured book of business migration for Auto & Home
103,592
82,803
38,052
9,161
(1,403)
232,205
Operating expenses
(87,445)
(81,118)
(31,350)
(5,970)
(21,715)
(227,598)
Other expenses, net
—
—
—
1
(4)
(3)
Adjusted EBITDA
$
16,147
$
1,685
$
6,702
$
3,192
$
(23,122)
$
4,604
Year Ended June 30,
2023
(in thousands)
Senior
Healthcare Services
Life
Auto & Home
Corp & Elims
Consolidated
Revenue
$
590,131
$
252,075
$
145,832
$
21,862
$
(7,052)
$
1,002,848
Change in estimate from structured book of
business migration for Auto & Home
—
—
—
10,427
—
10,427
Revenue, excluding change in estimate from
structured book of business migration for Auto & Home
590,131
252,075
145,832
32,289
(7,052)
1,013,275
Operating expenses
(435,054)
(274,844)
(122,759)
(21,782)
(73,985)
(928,424)
Other expenses, net
—
—
—
1
(122)
(121)
Adjusted EBITDA
$
155,077
$
(22,769)
$
23,073
$
10,508
$
(81,159)
$
84,730
SELECTQUOTE, INC. AND
SUBSIDIARIES
Net Loss to Adjusted EBITDA
Reconciliation
(Unaudited)
Guidance net loss to Adjusted EBITDA
reconciliation, year ending June 30, 2024:
(in thousands)
Range
Net loss
$
(50,000)
$
(22,000)
Income tax benefit
(18,000)
(8,000)
Interest expense, net
102,000
97,000
Depreciation and amortization
24,000
22,000
Share-based compensation expense
14,000
12,000
Transaction costs
8,000
4,000
Adjusted EBITDA
$
80,000
$
105,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230913075508/en/
Investor Relations: Sloan Bohlen 877-678-4083
investorrelations@selectquote.com
Media: Matt Gunter 913-286-4931 matt.gunter@selectquote.com
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