• Revenue Growth: 26% year-over-year increase to $292 million.
• Adjusted EBITDA Improvement: Improved by nearly $10 million year-over-year.
• Revenue to CAC Ratio: 4.6x.
• SelectRx Membership: Over 86,000, up 64% year-over-year.
• Medicare Advantage LTV: $812 million, a 7% improvement year-over-year.
• Senior Distribution Revenue: $93 million.
• Senior Distribution Adjusted EBITDA: Improved to $8 million.
• Healthcare Services Revenue: $156 million.
• Healthcare Services Adjusted EBITDA: $5 million.
• Life Insurance Revenue: $39 million.
• Life Insurance Adjusted EBITDA Growth: Almost 14% increase.
• Fiscal 2025 Revenue Guidance: Increased to $1.425 billion to $1.525 billion.
• Fiscal 2025 Adjusted EBITDA Guidance: Increased to $100 million to $130 million.
• Securitization Proceeds: $100 million raised.
• Cost of Capital Reduction: Over 500 basis points lower than term debt rate.

• Warning! GuruFocus has detected 3 Warning Signs with SLQT.

Release Date: November 04, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• SelectQuote Inc (NYSE:SLQT) reported a strong start to fiscal 2025 with a 26% year-over-year revenue growth.
• The company improved its adjusted EBITDA by nearly $10 million, driven by efficiency in marketing spend and a strong revenue to CAC ratio of 4.6x.
• SelectQuote Inc (NYSE:SLQT) achieved high agent retention, which reduced recruitment and training expenses, aiding profitability.
• The company successfully raised $100 million through an investment-grade securitization, extending debt maturities and reducing the cost of capital.
• SelectRx membership grew by 64% year-over-year, contributing to the sixth consecutive quarter of profitability in the Healthcare Services segment.

Negative Points

• SelectQuote Inc (NYSE:SLQT) faced challenges due to shifts in Medicare Advantage plan benefits, requiring adaptation to changing policy features.
• The company had a reduced agent count, which limited its ability to fully capitalize on potential growth opportunities during the AEP season.
• Despite strong performance, SelectQuote Inc (NYSE:SLQT) acknowledged the need for further balance sheet improvements to unlock growth potential.
• The company experienced modest growth in SelectRx membership sequentially, indicating potential seasonal limitations.
• SelectQuote Inc (NYSE:SLQT) noted that its leverage profile currently limits its ability to achieve its true growth potential.

Q & A Highlights

Q: How is SelectQuote balancing the need for policy education with agent productivity during the dynamic AEP season? A: Timothy Danker, CEO, explained that SelectQuote is seeing high consumer engagement and strong call volumes, leading to good close rates and agent productivity. Robert Grant, President, added that they are not seeing agents spend more time per call, as close rates are higher. The company has improved technology to increase occupancy and efficiency, allowing agents to handle complex environments effectively.

Q: How does the sale of SelectRx fit into the sales process, and does it require additional time from agents? A: Robert Grant, President, stated that SelectRx is set up as a completely separate operation, requiring no extra time from sales agents. The company has increased staffing on the Healthcare Select side, leading to good results without impacting agent efficiency.

Q: How is SelectQuote leveraging technology to assist agents in the complex Medicare Advantage marketplace? A: Robert Grant, President, highlighted that SelectQuote has enhanced agent-led technology, bringing in more data to help agents efficiently assess customer needs and make recommendations. AI-based call monitoring is used for effective coaching, leading to higher agent efficiency and close rates.

Q: How flexible is SelectQuote's marketing strategy during the AEP period, and how do they optimize ROI? A: Timothy Danker, CEO, explained that SelectQuote has set up a wide funnel for maximum flexibility, allowing them to focus on areas with positive results. They adjust marketing strategies in real-time based on pre-AEP insights and ongoing performance, leading to high close rates and efficient spending.

Q: What are SelectQuote's plans for acquisitions in the Healthcare Services segment, given the focus on balance sheet improvement? A: Timothy Danker, CEO, stated that while the current focus is on improving the balance sheet, SelectQuote is open to future opportunities to expand its healthcare ecosystem. The company aims to build on its strong consumer connectivity and data to capture additional opportunities in the healthcare market.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.