Second Quarter of Fiscal Year 2023 – Consolidated Earnings
Highlights
- Revenue of $319.2 million
- Net income of $22.5 million
- Adjusted EBITDA* of $63.6 million
Updating Fiscal Year 2023 Guidance Ranges:
- Revenue now expected in a range of $910 million to $960
million
- Net loss now expected in a range of $94 million to $78
million
- Adjusted EBITDA* now expected in a range of $5 million to $25
million
Second Quarter of Fiscal Year 2023 – Segment
Highlights
Senior
- Revenue of $223.8 million
- Adjusted EBITDA* of $83.6 million
- Approved Medicare Advantage policies of 218,837
Healthcare Services
- Revenue of $55.5 million
- Adjusted EBITDA* of $(9.3) million
- Over 39,000 SelectRx members
Life
- Revenue of $34.0 million
- Adjusted EBITDA* of $5.8 million
Auto & Home
- Revenue of $7.8 million
- Adjusted EBITDA* of $2.3 million
SelectQuote, Inc. (NYSE: SLQT) reported consolidated revenue for
the second quarter of fiscal year 2023 of $319.2 million compared
to consolidated revenue for the second quarter of fiscal year 2022
of $194.2 million. Consolidated net income for the second quarter
of fiscal year 2023 was $22.5 million compared to consolidated net
loss for the second quarter of fiscal year 2022 of $137.6 million.
Finally, consolidated Adjusted EBITDA* for the second quarter of
fiscal year 2023 was $63.6 million compared to consolidated
Adjusted EBITDA* for the second quarter of fiscal year 2022 of
$(164.0) million.
Chief Executive Officer Tim Danker remarked, “SelectQuote
delivered outstanding results for the fiscal second quarter across
the entire organization. We are proud of the team’s execution and
the continued validation of our strategic redesign to prioritize
profitability and cash efficiency. This is the fourth consecutive
quarter of improving results, and best of all, we believe our
strategy and right-sized platform is built for continued
improvement in a range of market environments.”
Mr. Danker continued, “The annual enrollment period was strong
across the industry with improved policy features and customer
engagement. What pleases us most though is that the out performance
in our Senior business was driven predominately by our own
strategic decisions and the resulting cost efficiency and operating
leverage.”
“SelectQuote is a stronger company compared to a year ago, and
given the strong results to date in fiscal 2023, we raised the low
end of the guided ranges introduced with our pre-announcement in
January. From our original guidance given with the year-end call in
August of last year, our Adjusted EBITDA range has now increased
$20 million at the mid-point. With a cash balance of $96 million as
of January 31st and zero drawn on our revolving credit line,
SelectQuote is very well positioned to drive continued improvement
in fiscal 2023 and beyond.”
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:
Three Months Ended December
31,
Six Months Ended December
31,
(in thousands)
2022
2021
% Change
2022
2021
% Change
Revenue
$
223,826
$
147,694
52
%
$
301,340
$
248,299
21
%
Adjusted EBITDA*
83,617
(140,220
)
160
%
79,766
(169,261
)
147
%
Adjusted EBITDA Margin*
37
%
(95
) %
26
%
(68
) %
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,
2022
2021
% Change
2022
2021
% Change
Medicare Advantage
251,847
340,317
(26
) %
341,875
436,106
(22
) %
Medicare Supplement
1,565
3,117
(50
) %
2,230
4,929
(55
) %
Dental, Vision and Hearing
22,004
53,432
(59
) %
38,338
82,036
(53
) %
Prescription Drug Plan
1,302
4,241
(69
) %
1,666
5,114
(67
) %
Other
1,512
2,967
(49
) %
3,538
6,529
(46
) %
Total
278,230
404,074
(31
) %
387,647
534,714
(28
) %
*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:
Three Months Ended December
31,
Six Months Ended December
31,
2022
2021
% Change
2022
2021
% Change
Medicare Advantage
218,837
265,538
(18
) %
302,010
349,654
(14
) %
Medicare Supplement
1,127
2,097
(46
) %
1,627
3,495
(53
) %
Dental, Vision and Hearing
18,697
44,542
(58
) %
30,972
66,765
(54
) %
Prescription Drug Plan
883
3,352
(74
) %
1,273
4,220
(70
) %
Other
1,241
2,483
(50
) %
2,903
5,363
(46
) %
Total
240,785
318,012
(24
) %
338,785
429,497
(21
) %
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):
2022
2021
% Change
2022
2021
% Change
Medicare Advantage
$
870
$
922
(6
) %
$
845
$
936
(10
) %
Medicare Supplement
994
1,347
(26
) %
1,037
1,384
(25
) %
Dental, Vision and Hearing
116
112
4
%
97
125
(22
) %
Prescription Drug Plan
212
218
(3
) %
219
237
(8
) %
Other
115
9
1178
%
91
64
42
%
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)
2022
2021
% Change
2022
2021
% Change
Revenue
$
55,480
$
11,077
401
%
$
98,546
$
17,060
478
%
Adjusted EBITDA*
(9,301
)
(8,415
)
(11
) %
(21,089
)
(12,345
)
(71
) %
Adjusted EBITDA Margin*
(17
) %
(76
) %
(21
) %
(72
) %
*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, 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:
December 31, 2022
December 31, 2021
Total SelectRx Members
39,308
7,700
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 per MA/MS policy 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 December
31,
(dollars per approved policy):
2022
2021
Medicare Advantage and Medicare Supplement
approved policies
617,687
574,682
Medicare Advantage and Medicare Supplement
commission per MA/MS policy
$
880
$
1,067
Other commission per MA/MS policy
19
33
Pharmacy revenue per MA/MS policy
225
26
Other revenue per MA/MS policy
62
(73
)
Total revenue per MA/MS policy
1,186
1,053
Total operating expenses per MA/MS
policy
(1,111
)
(1,195
)
Adjusted EBITDA per MA/MS policy (1)
$
75
$
(142
)
Adjusted EBITDA Margin per MA/MS policy
(1)
6
%
(13
) %
Revenue/CAC multiple
3.0X
1.8X
(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 13% for the twelve
months ended December 31, 2022, compared to the twelve months ended
December 31, 2021, due to the increase in pharmacy revenue and the
downward Senior revenue adjustments from a change in estimate of MA
cohort transaction prices that were made during the three months
ended December 31, 2021. Total cost per policy decreased 7% for the
twelve months ended December 31, 2022, compared to the twelve
months ended December 31, 2021, driven by a decrease in our
marketing and advertising costs, partially offset by an increase in
cost of goods sold-pharmacy revenue for Healthcare Services due to
the growth of the business.
Life
Financial Results
The following table provides the financial results for the Life
segment for the periods presented:
Three Months Ended December
31,
Six Months Ended December
31,
(in thousands)
2022
2021
% Change
2022
2021
% Change
Revenue
$
33,995
$
32,036
6
%
$
70,830
$
78,019
(9
) %
Adjusted EBITDA*
5,843
1,106
428
%
11,068
1,961
464
%
Adjusted EBITDA Margin*
17
%
3
%
16
%
3
%
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:
Three Months Ended December
31,
Six Months Ended December
31,
(in thousands)
2022
2021
% Change
2022
2021
% Change
Term Premiums
$
15,824
$
15,548
2
%
$
30,922
$
31,057
—
%
Final Expense Premiums
17,093
21,134
(19
) %
39,457
55,186
(29
) %
Total
$
32,917
$
36,682
(10
) %
70,379
86,243
(18
) %
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)
2022
2021
% Change
2022
2021
% Change
Revenue
$
7,808
$
6,135
27
%
$
14,890
$
13,604
9
%
Adjusted EBITDA*
2,284
1,435
59
%
4,725
2,808
68
%
Adjusted EBITDA Margin*
29
%
23
%
32
%
21
%
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):
2022
2021
% Change
2022
2021
% Change
Premiums
$
12,080
$
10,585
14
%
$
23,628
$
23,843
(1
) %
*See “Non-GAAP Financial Measures” below.
Earnings Conference Call
SelectQuote, Inc. will host a conference call with the
investment community today, Tuesday, February 7, 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=dbc951d9&confId=46446.
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 CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands)
December 31, 2022
June 30, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
36,097
$
140,997
Accounts receivable, net of allowances of
$1.8 million and $0.6 million, respectively
134,912
129,748
Commissions receivable-current
219,990
116,277
Other current assets
13,384
15,751
Total current assets
404,383
402,773
COMMISSIONS RECEIVABLE—Net
733,337
722,349
PROPERTY AND EQUIPMENT—Net
34,786
41,804
SOFTWARE—Net
16,099
16,301
OPERATING LEASE RIGHT-OF-USE ASSETS
27,285
28,016
INTANGIBLE ASSETS—Net
28,411
31,255
GOODWILL
29,136
29,136
OTHER ASSETS
24,476
18,418
TOTAL ASSETS
$
1,297,913
$
1,290,052
LIABILITIES AND SHAREHOLDERS’
EQUITY
CURRENT LIABILITIES:
Accounts payable
$
27,356
$
24,766
Accrued expenses
21,859
26,002
Accrued compensation and benefits
46,065
42,150
Operating lease liabilities—current
6,349
5,261
Current portion of long-term debt
21,400
7,169
Contract liabilities
38,752
3,404
Other current liabilities
2,374
4,761
Total current liabilities
164,155
113,513
LONG-TERM DEBT, NET—less current
portion
670,119
698,423
DEFERRED INCOME TAXES
46,896
50,080
OPERATING LEASE LIABILITIES
31,749
33,946
OTHER LIABILITIES
3,229
2,985
Total liabilities
916,148
898,947
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Common stock, $0.01 par value
1,665
1,644
Additional paid-in capital
561,435
554,845
Accumulated deficit
(197,070
)
(177,100
)
Accumulated other comprehensive income
15,735
11,716
Total shareholders’ equity
381,765
391,105
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
$
1,297,913
$
1,290,052
SELECTQUOTE, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS) (Unaudited) (In
thousands)
Three Months Ended December
31,
Six Months Ended December
31,
2022
2021
2022
2021
REVENUE:
Commission
$
230,033
$
139,957
$
336,368
$
270,764
Pharmacy
51,601
8,770
92,694
13,237
Other
37,554
45,510
52,610
66,315
Total revenue
319,188
194,237
481,672
350,316
OPERATING COSTS AND EXPENSES:
Cost of revenue
91,477
136,189
156,641
222,980
Cost of goods sold—pharmacy revenue
50,096
10,172
92,450
15,043
Marketing and advertising
89,925
193,246
147,519
283,923
Selling, general, and administrative
28,412
21,894
59,118
45,789
Technical development
6,245
6,386
12,427
12,239
Total operating costs and expenses
266,155
367,887
468,155
579,974
INCOME (LOSS) FROM OPERATIONS
53,033
(173,650
)
13,517
(229,658
)
INTEREST EXPENSE, NET
(21,044
)
(10,587
)
(37,780
)
(19,122
)
OTHER INCOME (EXPENSE), NET
(70
)
(51
)
88
(153
)
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
(BENEFIT)
31,919
(184,288
)
(24,175
)
(248,933
)
INCOME TAX EXPENSE (BENEFIT)
9,405
(46,725
)
(4,205
)
(63,138
)
NET INCOME (LOSS)
$
22,514
$
(137,563
)
$
(19,970
)
$
(185,795
)
NET INCOME (LOSS) PER SHARE:
Basic
$
0.14
$
(0.84
)
$
(0.12
)
$
(1.13
)
Diluted
$
0.14
$
(0.84
)
$
(0.12
)
$
(1.13
)
WEIGHTED-AVERAGE COMMON STOCK OUTSTANDING
USED IN PER SHARE AMOUNTS:
Basic
166,486
163,966
165,655
163,829
Diluted
166,548
163,966
165,655
163,829
OTHER COMPREHENSIVE INCOME (LOSS) NET OF
TAX:
Gain (loss) on cash flow hedge
(381
)
1,775
4,019
1,769
OTHER COMPREHENSIVE INCOME (LOSS)
(381
)
1,775
4,019
1,769
COMPREHENSIVE INCOME (LOSS)
$
22,133
$
(135,788
)
$
(15,951
)
$
(184,026
)
SELECTQUOTE, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited) (In thousands)
Six Months Ended December
31,
2022
2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(19,970
)
$
(185,795
)
Adjustments to reconcile net loss to net
cash and cash equivalents used in operating activities:
Depreciation and amortization
13,990
11,278
Loss on disposal of property, equipment,
and software
376
355
Share-based compensation expense
5,566
4,109
Deferred income taxes
(4,572
)
(63,498
)
Amortization of debt issuance costs and
debt discount
3,919
2,974
Write-off of debt issuance costs
710
—
Accrued interest payable in kind
4,920
—
Non-cash lease expense
2,082
2,040
Changes in operating assets and
liabilities:
Accounts receivable, net
14,036
(41,237
)
Commissions receivable
(114,701
)
(39,908
)
Other assets
1,578
(5,555
)
Accounts payable and accrued expenses
950
15,135
Operating lease liabilities
(2,460
)
(2,676
)
Other liabilities
18,002
(2,963
)
Net cash used in operating activities
(75,574
)
(305,741
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
(598
)
(17,904
)
Purchases of software and capitalized
software development costs
(3,870
)
(5,231
)
Acquisition of business
—
(6,927
)
Investment in equity securities
—
(1,000
)
Net cash used in investing activities
(4,468
)
(31,062
)
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
(13,375
)
—
Payments on other debt
(83
)
(93
)
Proceeds from common stock options
exercised and employee stock purchase plan
1,078
2,271
Payments of tax withholdings related to
net share settlement of equity awards
(33
)
(144
)
Payments of debt issuance costs
(10,110
)
(328
)
Payment of acquisition holdback
(2,335
)
—
Net cash (used in) provided by financing
activities
(24,858
)
243,706
NET DECREASE IN CASH AND CASH
EQUIVALENTS
(104,900
)
(93,097
)
CASH AND CASH EQUIVALENTS—Beginning of
period
140,997
286,454
CASH AND CASH EQUIVALENTS—End of
period
$
36,097
$
193,357
SELECTQUOTE, INC. AND
SUBSIDIARIES Net Income (Loss) to Adjusted EBITDA
Reconciliation (Unaudited)
Three Months Ended December
31, 2022
(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
)
(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
Three Months Ended December
31, 2021
(in thousands)
Senior
Healthcare Services
Life
Auto & Home
Corp & Elims
Consolidated
Revenue
$
147,694
$
11,077
$
32,036
$
6,135
$
(2,705
)
$
194,237
Operating expenses
(287,914
)
(19,492
)
(30,930
)
(4,700
)
(15,175
)
(358,211
)
Other expenses, net
—
—
—
—
(51
)
(51
)
Adjusted EBITDA
(140,220
)
(8,415
)
1,106
1,435
(17,931
)
(164,025
)
Share-based compensation expense
(1,894
)
Non-recurring expenses
(1,602
)
Depreciation and amortization
(6,175
)
Loss on disposal of property, equipment,
and software
(5
)
Interest expense, net
(10,587
)
Income tax benefit
46,725
Net loss
$
(137,563
)
Six Months Ended December 31,
2022
(in thousands)
Senior
Healthcare Services
Life
Auto & Home
Corp & Elims
Consolidated
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
)
Six Months Ended December 31,
2021
(in thousands)
Senior
Healthcare Services
Life
Auto & Home
Corp & Elims
Consolidated
Revenue
$
248,299
$
17,060
$
78,019
$
13,604
$
(6,666
)
$
350,316
Operating expenses
(417,560
)
(29,405
)
(76,058
)
(10,796
)
(28,258
)
(562,077
)
Other expenses, net
—
—
—
—
(153
)
(153
)
Adjusted EBITDA
(169,261
)
(12,345
)
1,961
2,808
(35,077
)
(211,914
)
Share-based compensation expense
(4,109
)
Non-recurring expenses
(2,155
)
Depreciation and amortization
(11,278
)
Loss on disposal of property, equipment,
and software
(355
)
Interest expense, net
(19,122
)
Income tax benefit
63,138
Net loss
$
(185,795
)
SELECTQUOTE, INC. AND
SUBSIDIARIES Net Loss to Adjusted EBITDA Reconciliation
(Unaudited)
Guidance net loss to Adjusted EBITDA
reconciliation, year ending June 30, 2023:
(in thousands)
Range
Net loss
$
(94,000
)
$
(78,000
)
Income tax benefit
(27,000
)
(25,000
)
Interest expense, net
74,000
74,000
Depreciation and amortization
24,000
24,000
Share-based compensation expense
12,000
12,000
Transaction costs
16,000
18,000
Adjusted EBITDA
$
5,000
$
25,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230207005336/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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