0001794783false00017947832024-02-072024-02-07




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________

FORM 8-K
_______________________________________

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 7, 2024
_____________________________________

SELECTQUOTE, INC.
(Exact name of registrant as specified in its charter)
_____________________________________
Delaware
 001-39295
94-3339273
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)
6800 West 115th Street, Suite 2511
Overland Park, Kansas 66211
(Address of principal executive offices) (Zip code)
(913) 599-9225
(Registrant’s telephone number, including area code)
No change since last report
(Former Name or Address, If Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par valueSLQTNew York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02    Results of Operations and Financial Condition.

On February 7, 2024, the Company reported its financial results for the second quarter ended December 31, 2023. A copy of the related press release and investor presentation are attached hereto as Exhibits 99.1 and 99.2, respectively.

These exhibits are being furnished pursuant to Item 2.02, and the information contained therein shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall either of them be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits
Exhibit No.
Description of Exhibit
Press Release
Investor Presentation
104Cover Page Interactive Data File (embedded within the Inline XBRL document)



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

SELECTQUOTE, INC.

Date: February 7, 2024
By: /s/ Ryan Clement         
Name: Ryan Clement
Title: Chief Financial Officer











Exhibit 99.1
SelectQuote, Inc. Reports Second Quarter 2024 Results

Second Quarter of Fiscal Year 2024 – Consolidated Earnings Highlights

•Revenue of $405.4 million
•Net income of $19.4 million
•Adjusted EBITDA* of $67.4 million

Raising Fiscal Year 2024 Guidance Ranges:

•Revenue expected in a range of $1.23 billion to $1.3 billion vs prior range of $1.05 billion to $1.2 billion
•Net loss expected in a range of $45 million to $22 million vs prior range of $50 million to $22 million
•Adjusted EBITDA* expected in a range of $90 million to $105 million vs prior range of $80 million to
$105 million

Second Quarter of Fiscal Year 2024 – Segment Highlights

Senior
•Revenue of $247.5 million
•Adjusted EBITDA* of $78.7 million
•Approved Medicare Advantage policies of 234,576

Healthcare Services
•Revenue of $111.7 million
•Adjusted EBITDA* of $3.0 million
•Over 62,000 SelectRx members

Life
•Revenue of $37.4 million
•Adjusted EBITDA* of $4.6 million

Auto & Home
•Revenue of $10.5 million
•Adjusted EBITDA* of $4.7 million

OVERLAND PARK, Kan., February 7, 2024--(BUSINESS WIRE)--SelectQuote, Inc. (NYSE: SLQT) reported consolidated revenue for the second quarter of fiscal year 2024 of $405.4 million, compared to consolidated revenue for the second quarter of fiscal year 2023 of $319.2 million. Consolidated net income for the second quarter of fiscal year 2024 was $19.4 million, compared to consolidated net income for the second quarter of fiscal year 2023 of $22.5 million. Finally, consolidated Adjusted EBITDA* for the second quarter of fiscal year 2024 was $67.4 million, compared to consolidated Adjusted EBITDA* for the second quarter of fiscal year 2023 of $63.6 million.

Chief Executive Officer Tim Danker stated, “The second quarter marked SelectQuote’s eighth consecutive quarter of performance ahead of expectations, and we remain confident that our strategy to prioritize predictable and cash efficient growth will continue to generate value for both our customers and shareholders. We are also pleased with our progress on operating cash flow and now anticipate that SelectQuote will approach positive free cash flow in fiscal 2024.”

“SelectQuote drove strong results throughout the annual enrollment period for Medicare Advantage where our Senior business grew revenues by double digits, and our second quarter Adjusted EBITDA margin of 32% remains attractive. These strong Senior operating results were a function of higher tenured agent productivity and solid policyholder persistency, which we expect to benefit SelectQuote in the open enrollment period as well.”

“Additionally, Healthcare Services, and our SelectRx business specifically, drove substantial growth in excess of our original forecast. As of the end of the second quarter, SelectRx members have surpassed 62,000, which is in excess of our original expectation for the full year. More importantly, the business was again Adjusted EBITDA profitable.”
*See “Non-GAAP Financial Measures” below.



Mr. Danker continued, “We are pleased to increase our fiscal year 2024 outlook based on the strength of both businesses year-to-date.”

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, Adjusted EBITDA,* and Adjusted EBITDA Margin.* 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.

Senior

Financial Results

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

Three Months Ended December 31,Six Months Ended December 31,
(in thousands)20232022% Change20232022% Change
Revenue$247,529 $223,826 11 %$337,445 $301,340 12 %
Adjusted EBITDA*78,713 83,617 (6)%77,376 79,766 (3)%
Adjusted EBITDA Margin*32 %37 %23 %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:

Three Months Ended December 31,Six Months Ended December 31,
20232022% Change20232022% Change
Medicare Advantage271,712 251,847 8 %376,244 341,875 10 %
Medicare Supplement1,203 1,565 (23)%1,684 2,230 (24)%
Dental, Vision and Hearing19,808 22,004 (10)%32,304 38,338 (16)%
Prescription Drug Plan1,720 1,302 32 %2,031 1,666 22 %
Other1,318 1,512 (13)%2,950 3,538 (17)%
Total295,761 278,230 6 %415,213 387,647 7 %




*See “Non-GAAP Financial Measures” below.
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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:

Three Months Ended December 31,Six Months Ended December 31,
20232022% Change20232022% Change
Medicare Advantage234,576 218,837 7 %332,257 302,010 10 %
Medicare Supplement773 1,127 (31)%1,133 1,627 (30)%
Dental, Vision and Hearing16,903 18,697 (10)%27,432 30,972 (11)%
Prescription Drug Plan1,316 883 49 %1,570 1,273 23 %
Other993 1,241 (20)%2,045 2,903 (30)%
Total254,561 240,785 6 %364,437 338,785 8 %

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:

Three Months Ended December 31,Six Months Ended December 31,
(dollars per policy):20232022% Change20232022% Change
Medicare Advantage$934 $870 7 %$883 $845 4 %
Medicare Supplement1,045 994 5 %1,044 1,037 1 %
Dental, Vision and Hearing69 116 (41)%99 97 2 %
Prescription Drug Plan230 212 8 %237 219 8 %
Other(50)115 (143)%(18)91 (120)%

Healthcare Services

Financial Results

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

Three Months Ended December 31,Six Months Ended December 31,
(in thousands)20232022% Change20232022% Change
Revenue$111,710 $55,480 101 %$209,078 $98,546 112 %
Adjusted EBITDA*2,981 (9,301)132 %5,304 (21,089)125 %
Adjusted EBITDA Margin*3 %(17)%3%(21)%




*See “Non-GAAP Financial Measures” below.
3

Operating Metrics

Total Members

The total number of SelectRx members represents the amount of 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 for the date presented:

December 31, 2023December 31, 2022
Total SelectRx Members62,62339,308

Prescriptions Per Day

Prescriptions per day represents the total prescriptions shipped per business day, as this is a primary key driver of revenue for Healthcare Services.

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

Three Months Ended December 31,Six Months Ended December 31,
2023202220232022
Prescriptions Per Day
17,0109,65216,2448,754

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 costs, 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.
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Twelve Months Ended December 31,
(dollars per approved policy):20232022
Medicare Advantage and Medicare Supplement approved policies609,939617,687
Medicare Advantage and Medicare Supplement commission per MA/MS policy$896 $880 
Other commission per MA/MS policy11 19 
Pharmacy revenue per MA/MS policy575 225 
Other revenue per MA/MS policy140 62 
Total revenue per MA/MS policy1,622 1,186 
Total operating expenses per MA/MS policy(1,365)(1,111)
Adjusted EBITDA per MA/MS policy (1)
257 75 
Adjusted EBITDA Margin per MA/MS policy (1)
16 %6 %
Revenue/CAC multiple 4.2X  3.0X
(1) These financial measures are not calculated in accordance with GAAP. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for information regarding our use of these non-GAAP financial measures and a reconciliation of such measures to their nearest comparable financial measures calculated and presented in accordance with GAAP.

Total revenue per MA/MS policy increased 37% for the twelve months ended December 31, 2023, compared to the twelve months ended December 31, 2022, primarily due to the increase in pharmacy revenue. Total operating expenses per MA/MS policy increased 23% for the twelve months ended December 31, 2023, compared to the twelve months ended December 31, 2022, driven by a 100% increase in operating expenses related to SelectRx due to the growth of the business, offset by a 3% decrease in other operating expenses driven by a decrease in marketing and advertising costs for the second half of fiscal year 2023 compared to the second half of fiscal year 2022.

Life

Financial Results

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

Three Months Ended December 31,Six Months Ended December 31,
(in thousands)20232022% Change20232022% Change
Revenue$37,367 $33,995 10 %$75,170 $70,830 6 %
Adjusted EBITDA*4,569 5,843 (22)%9,808 11,068 (11)%
Adjusted EBITDA Margin*12 %17 %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.







*See “Non-GAAP Financial Measures” below.
5

The following table shows term and final expense premiums for the periods presented:

Three Months Ended December 31,Six Months Ended December 31,
(in thousands)20232022% Change20232022% Change
Term Premiums$17,398 $15,824 10 %$35,588 $30,922 15 %
Final Expense Premiums19,388 17,093 13 %39,087 39,457 (1)%
Total$36,786 $32,917 12 %74,675 70,379 6 %

Auto & Home

Financial Results

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

Three Months Ended December 31,Six Months Ended December 31,
(in thousands)20232022% Change20232022% Change
Revenue$10,487 $7,808 34 %$19,515 $14,890 31 %
Adjusted EBITDA*4,725 2,284 107 %8,045 4,725 70 %
Adjusted EBITDA Margin*45 %29 %41 %32 %

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:

Three Months Ended December 31,Six Months Ended December 31,
(in thousands):20232022% Change20232022% Change
Premiums$14,689 $12,080 22 %$28,566 $23,628 21 %



















*See “Non-GAAP Financial Measures” below.
6

Earnings Conference Call

SelectQuote, Inc. will host a conference call with the investment community today, Wednesday, February 7, 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=3bad4d79&confId=59966. 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 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 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 the differences between the non-GAAP financial measures included herein and their most directly comparable GAAP financial measures are set forth 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 impacts of the 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;
7

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 and meet our scheduled repayment obligations under out debt arrangement; our ability to access to additional capital on acceptable terms; 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. 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 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 Patient-Centered Pharmacy Home™ (PCPH) accredited pharmacy, and Population Health which proactively connects consumers with a wide breadth of healthcare services supporting their needs.

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

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

8

Source: SelectQuote, Inc.
9


SELECTQUOTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)

December 31, 2023June 30, 2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$10,849 $83,156 
Accounts receivable, net of allowances of $4.7 million and $2.7 million, respectively142,590 154,565 
Commissions receivable-current207,279 111,148 
Other current assets27,100 14,355 
Total current assets387,818 363,224 
COMMISSIONS RECEIVABLE—Net747,079 729,350 
PROPERTY AND EQUIPMENT—Net23,389 27,452 
SOFTWARE—Net14,428 14,740 
OPERATING LEASE RIGHT-OF-USE ASSETS22,035 23,563 
INTANGIBLE ASSETS—Net8,684 10,200 
GOODWILL29,136 29,136 
OTHER ASSETS3,350 21,586 
TOTAL ASSETS$1,235,919 $1,219,251 
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable$57,392 $27,577 
Accrued expenses16,698 16,993 
Accrued compensation and benefits48,680 49,966 
Operating lease liabilities—current5,133 5,175 
Current portion of long-term debt42,766 33,883 
Contract liabilities9,092 1,691 
Other current liabilities4,211 1,972 
Total current liabilities183,972 137,257 
LONG-TERM DEBT, NET—less current portion650,772 664,625 
DEFERRED INCOME TAXES36,668 39,581 
OPERATING LEASE LIABILITIES25,245 27,892 
OTHER LIABILITIES2,745 2,926 
Total liabilities899,402 872,281 
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Common stock, $0.01 par value1,690 1,669 
Additional paid-in capital573,883 567,266 
Accumulated deficit(247,303)(235,644)
Accumulated other comprehensive income8,247 13,679 
Total shareholders’ equity336,517 346,970 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,235,919 $1,219,251 
10

SELECTQUOTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
(In thousands)

Three Months Ended December 31,Six Months Ended December 31,
2023202220232022
REVENUE:
Commission$263,225 $230,033 $380,981 $336,368 
Pharmacy108,795 51,601 203,583 92,694 
Other33,418 37,554 53,603 52,610 
Total revenue405,438 319,188 638,167 481,672 
OPERATING COSTS AND EXPENSES:
Cost of revenue97,424 91,477 169,935 156,641 
Cost of goods sold—pharmacy revenue94,180 50,096 178,188 92,450 
Marketing and advertising117,078 89,925 179,400 147,519 
Selling, general, and administrative33,412 28,412 62,078 59,118 
Technical development8,050 6,245 15,687 12,427 
Total operating costs and expenses350,144 266,155 605,288 468,155 
INCOME FROM OPERATIONS
55,294 53,033 32,879 13,517 
INTEREST EXPENSE, NET(24,415)(21,044)(45,811)(37,780)
OTHER INCOME (EXPENSE), NET— (70)(39)88 
INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT)
30,879 31,919 (12,971)(24,175)
INCOME TAX EXPENSE (BENEFIT)
11,487 9,405 (1,312)(4,205)
NET INCOME (LOSS)
$19,392 $22,514 $(11,659)$(19,970)
NET INCOME (LOSS) PER SHARE:
Basic$0.12 $0.14 $(0.07)$(0.12)
Diluted$0.11 $0.14 $(0.07)$(0.12)
WEIGHTED-AVERAGE COMMON STOCK OUTSTANDING USED IN PER SHARE AMOUNTS:
Basic168,349 166,486 167,901 165,655 
Diluted169,737 166,548 167,901 165,655 
OTHER COMPREHENSIVE INCOME (LOSS) NET OF TAX:
Gain (loss) on cash flow hedge(3,422)(381)(5,432)4,019 
OTHER COMPREHENSIVE INCOME (LOSS)(3,422)(381)(5,432)4,019 
COMPREHENSIVE INCOME (LOSS)
$15,970 $22,133 $(17,091)$(15,951)
11

SELECTQUOTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)

Six Months Ended December 31,
20232022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss$(11,659)$(19,970)
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities:
Depreciation and amortization11,887 13,990 
Loss on disposal of property, equipment, and software9 376 
Share-based compensation expense6,997 5,566 
Deferred income taxes(1,182)(4,572)
Amortization of debt issuance costs and debt discount3,356 3,919 
Write-off of debt issuance costs— 710 
Accrued interest payable in kind9,020 4,920 
Non-cash lease expense1,528 2,082 
Changes in operating assets and liabilities:
Accounts receivable, net11,975 14,036 
Commissions receivable(113,860)(114,701)
Other assets(2,075)1,578 
Accounts payable and accrued expenses29,206 950 
Operating lease liabilities(2,689)(2,460)
Other liabilities8,248 18,002 
Net cash used in operating activities(49,239)(75,574)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment(2,062)(598)
Proceeds from sales of property and equipment253 — 
Purchases of software and capitalized software development costs(3,883)(3,870)
Net cash used in investing activities(5,692)(4,468)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on Term Loans(16,942)(13,375)
Payments on other debt(75)(83)
Proceeds from common stock options exercised and employee stock purchase plan— 1,078 
Payments of tax withholdings related to net share settlement of equity awards(359)(33)
Payments of debt issuance costs— (10,110)
Payment of acquisition holdback— (2,335)
Net cash used in financing activities
(17,376)(24,858)
NET DECREASE IN CASH AND CASH EQUIVALENTS(72,307)(104,900)
CASH AND CASH EQUIVALENTS—Beginning of period83,156 140,997 
CASH AND CASH EQUIVALENTS—End of period$10,849 $36,097 

12

SELECTQUOTE, INC. AND SUBSIDIARIES
Net Income (Loss) to Adjusted EBITDA Reconciliation
(Unaudited)

Three Months Ended December 31, 2023
(in thousands)SeniorHealthcare ServicesLifeAuto & HomeCorp & ElimsConsolidated
Revenue$247,529 $111,710 $37,367 $10,487 $(1,655)$405,438 
Operating expenses(168,816)(108,729)(32,798)(5,762)(21,919)(338,024)
Other income (expense), net— — — — — — 
Adjusted EBITDA$78,713 $2,981 $4,569 $4,725 $(23,574)$67,414 
Share-based compensation expense(3,822)
Transaction costs(2,400)
Depreciation and amortization(5,898)
Interest expense, net(24,415)
Income tax expense
(11,487)
Net income
$19,392 

Three Months Ended December 31, 2022
(in thousands)SeniorHealthcare ServicesLifeAuto & HomeCorp & ElimsConsolidated
Revenue$223,826 $55,480 $33,995 $7,808 $(1,921)$319,188 
Operating expenses(140,209)(64,781)(28,152)(5,524)(16,877)(255,543)
Other income (expense), net— — — — (70)(70)
Adjusted EBITDA$83,617 $(9,301)$5,843 $2,284 $(18,868)$63,575 
Share-based compensation expense(2,936)
Transaction costs(442)
Depreciation and amortization(7,188)
Loss on disposal of property, equipment, and software(46)
Interest expense, net(21,044)
Income tax expense
(9,405)
Net income
$22,514 




13

Six Months Ended December 31, 2023
(in thousands)SeniorHealthcare ServicesLifeAuto & HomeCorp & ElimsConsolidated
Revenue$337,445 $209,078 $75,170 $19,515 $(3,041)$638,167 
Operating expenses(260,069)(203,774)(65,362)(11,470)(41,415)(582,090)
Other income (expense), net————(39)(39)
Adjusted EBITDA$77,376 $5,304 $9,808 $8,045 $(44,495)$56,038 
Share-based compensation expense(6,997)
Transaction costs(4,305)
Depreciation and amortization(11,887)
Loss on disposal of property, equipment, and software(9)
Interest expense, net(45,811)
Income tax benefit
1,312
Net loss
$(11,659)

Six Months Ended December 31, 2022
(in thousands)SeniorHealthcare ServicesLifeAuto & HomeCorp & ElimsConsolidated
Revenue$301,340 $98,546 $70,830 $14,890 $(3,934)$481,672 
Operating expenses(221,574)(119,635)(59,963)(10,164)(34,322)(445,658)
Other income (expense), net——201(1)(112)88
Adjusted EBITDA$79,766 $(21,089)$11,068 $4,725 $(38,368)$36,102 
Share-based compensation expense(5,566)
Transaction costs(2,570)
Depreciation and amortization(13,990)
Loss on disposal of property, equipment, and software(371)
Interest expense, net(37,780)
Income tax benefit
4,205
Net loss
$(19,970)





14

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$(45,000)$(22,000)
Income tax benefit(8,000)(4,000)
Interest expense, net97,000 92,000 
Depreciation and amortization24,000 22,000 
Share-based compensation expense15,000 12,000 
Non-recurring expenses7,000 5,000 
Adjusted EBITDA$90,000 $105,000 



15
| We shop. You save. 2nd Quarter Fiscal 2024 Earnings Conference Call Presentation February 7, 2024

 
| We shop. You save. Forward-Looking Statements This presentation 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 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. Certain information contained in this presentation and statements made orally during this presentation relate to or are based on publications and other data obtained from third-party sources. While we believe these third-party sources to be reliable as of the date of this presentation, we have not independently verified, and make no representation as to the adequacy, fairness, accuracy or completeness of, any information obtained from such third-party sources. No Offer or Solicitation; Further Information This presentation is for informational purposes only and is not an offer to sell with respect to any securities. This presentation should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes thereto included in the Annual Report and subsequent quarterly reports. Non-GAAP Financial Measures This presentation 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 presentation 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 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 presentation 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, establish budgets, and 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. For further discussion regarding these non-GAAP measures, please see today’s press release. Disclaimer 2

 
| We shop. You save. • Senior ◦ Two full years of strong, stable operating performance since executing strategic redesign ◦ Efficiency metrics in line with 2Q fiscal 2023 ◦ Indicators point to continued stability in customer retention metrics • Healthcare Services ◦ Positive Adjusted EBITDA* for a third consecutive quarter despite significant investments ◦ SelectRx nearing 63,000 members, far exceeding original forecast ◦ Increasing member and revenue growth outlook for full fiscal year 2024 2Q FY2024 Earnings 3 *See "Non-GAAP Financial Measures" above on slide 2 $ in millions 2Q24 2Q23 % Revenue $405.4 $319.2 +27% Adjusted EBITDA* $67.4 $63.6 +6% • Consolidated Company Highlights ◦ Increasing FY24 financial guidance midpoint for all metrics ◦ Two consecutive quarters of positive operating cash flow on an LTM basis ◦ On pace to deliver positive operating cash flow and approach free cash flow breakeven for fiscal year 2024

 
| We shop. You save. MA Policies (YoY) 7% Senior Revenue (YoY) 11% Senior Adjusted EBITDA Margin* 32% Tenured Agent Mix ~70% 4 *See "Non-GAAP Financial Measures" above on slide 2. 2Q22 2Q23 2Q24 2Q22 2Q23 2Q24 +54% +97% Close Rates Agent Productivity AEP by the Numbers 8th Consecutive Quarter Delivering Strong Results

 
| We shop. You save. Revenue/CAC*** 1.8 3.0 4.2 LTM 12/31/21 LTM 12/31/22 LTM 12/31/23 Operating Expense Per Policy* $1,134 $799 $776 LTM 12/31/21 LTM 12/31/22 LTM 12/31/23 *Represents Senior operating costs divided by approved MA/MS policies. **Represents Senior marketing costs divided by approved MA/MS policies. 5 Senior Efficiency Metrics Marketing Expense Per Policy** $661 $420 $411 LTM 12/31/21 LTM 12/31/22 LTM 12/31/23 ***The revenue to customer acquisition cost (“CAC”) multiple represents total revenue as a multiple of total marketing acquisition costs for the Senior and Healthcare Services divisions, which represents the direct costs of acquiring leads.

 
| We shop. You save. Members 6 FY24 Healthcare Services Outlook *Original FY24 Guidance provided on September 13, 2023 **See "Non-GAAP Financial Measures" above on slide 2. 2H Outlook Original Guidance* Revised Guidance Member Growth 25% 40 - 50% Total Revenue ~$375m (+50%) $450m - $500m (+80 - 100%) Adjusted EBITDA** Margins Low Single Digits Low Single Digits 49 61 63 FY23 Original FY24 Guidance* Revised FY24 Guidance Revised Guidance Range 69-74 YTD Actuals 000s

 
| We shop. You save. Revenue $MM Adjusted EBITDA* $MM $319 $405 2Q23 2Q24 $64 $67 2Q23 2Q24 7 Consolidated Financial Summary *See "Non-GAAP Financial Measures" above on slide 2.

 
| We shop. You save. Revenue $MM Adjusted EBITDA* $MM $224 $248 2Q23 2Q24 $84 $79 2Q23 2Q24 8 Senior Financial Summary *See "Non-GAAP Financial Measures" above on slide 2.

 
| We shop. You save. 9 SelectQuote Senior KPIs 241 255 219 235 22 20 MA Other 2Q23 2Q24 Total Policies Approved 000s MA LTV $870 $934 2Q23 2Q24

 
| We shop. You save. SELECTRX Members 2Q23 3Q23 4Q23 1Q24 2Q24 — 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000 70,000 Revenue & Adjusted EBITDA* $MM 10 $(9) $(3) $2 $2 $3 $55 $71 $83 $97 $112 2Q23 3Q23 4Q23 1Q24 2Q24 Healthcare Services KPIs Revenue Adjusted EBITDA* *See "Non-GAAP Financial Measures" above on slide 2.

 
| We shop. You save. 2Q23 2Q24 — 3 6 9 12 15 18 2Q23 2Q24 5.0 5.3 5.5 5.8 6.0 6.3 6.5 6.8 7.0 Rx per Day* 000s Monthly Rx per Member 11 Rapid SelectRx Prescription Growth +76% +12% *Represents the total number of prescriptions shipped during the quarter divided by the number of business days in the quarter.

 
| We shop. You save. Revenue $MM Adjusted EBITDA* 12 $34 $37 $8 $10 Life Auto & Home 2Q23 2Q24 $6 $5 $2 $5 Life Auto & Home 2Q23 2Q24 $MM *See "Non-GAAP Financial Measures" above on slide 2. Life and Auto & Home

 
| We shop. You save. Revised FY24 Financial Guidance REVENUE 13 +26% YoY At the Midpoint $1.23B ADJUSTED EBITDA** NET LOSS to $1.30B $90m to $105m ($45)m to ($22)m +31% YoY At the Midpoint +43% YoY At the Midpoint from $1.05 billion to $1.20 billion* from $80 million to $105 million* from $(50) million to $(22) million* *Original FY24 Guidance provided on September 13, 2023 **See "Non-GAAP Financial Measures" above on slide 2.

 
| We shop. You save. Supplemental Information 14

 
| We shop. You save. Net Loss to Adjusted EBITDA Reconciliation 2Q FY 2024 (in thousands) Senior Healthcare Services Life Auto & Home Corp & Elims Consolidated Revenue $ 247,529 $ 111,710 $ 37,367 $ 10,487 $ (1,655) $ 405,438 Operating expenses (168,816) (108,729) (32,798) (5,762) (21,919) (1) (338,024) Other income (expense), net — — — — — — Adjusted EBITDA 78,713 2,981 4,569 4,725 (23,574) 67,414 Share-based compensation expense (3,822) Transaction costs (2,400) Depreciation and amortization (5,898) Loss on disposal of property, equipment, and software — Interest expense, net (24,415) Income tax expense (11,487) Net income $ 19,392 15 2Q FY 2023 (in thousands) Senior Healthcare Services Life Auto & Home Corp & Elims Consolidated Revenue $ 223,826 $ 55,480 $ 33,995 $ 7,808 $ (1,921) $ 319,188 Operating expenses (140,209) (64,781) (28,152) (5,524) (16,877) (1) (255,543) Other income (expense), net — — — — (70) (70) Adjusted EBITDA 83,617 (9,301) 5,843 2,284 (18,868) 63,575 Share-based compensation expense (2,936) Transaction costs (442) Depreciation and amortization (7,188) Loss on disposal of property, equipment, and software (46) Interest expense, net (21,044) Income tax expense (9,405) Net income $ 22,514

 
| We shop. You save. (in thousands) Range Net loss $ (45,000) $ (22,000) Income tax benefit (8,000) (4,000) Interest expense, net 97,000 92,000 Depreciation and amortization 24,000 22,000 Share-based compensation expense 15,000 12,000 Non-recurring expenses 7,000 5,000 Adjusted EBITDA $ 90,000 $ 105,000 Net Loss to Adjusted EBITDA Reconciliation (FY24 Guidance) 16

 
| We shop. You save. 17 SelectQuote Inc. 6800 West 115th Street Suite 2511 Overland Park, Kansas 66211 Phone: (913) 599-9225 Investor Relations investorrelations@selectquote.com

 
v3.24.0.1
Cover
Feb. 07, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Feb. 07, 2024
Entity Registrant Name SELECTQUOTE, INC.
Entity Incorporation, State or Country Code DE
Entity File Number 001-39295
Entity Tax Identification Number 94-3339273
Entity Address, Address Line Two Suite 2511
Entity Address, Address Line One 6800 West 115th Street
Entity Address, City or Town Overland Park
Entity Address, State or Province KS
Entity Address, Postal Zip Code 66211
City Area Code 913
Local Phone Number 599-9225
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, $0.01 par value
Trading Symbol SLQT
Security Exchange Name NYSE
Entity Emerging Growth Company false
Entity Central Index Key 0001794783
Amendment Flag false
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