• Revenue: $481 million for the second quarter, up 19% year over year.
• Adjusted EBITDA: $88 million, up 30% year over year, with a margin of 18%.
• Senior Segment Revenue: $256 million for the second quarter.
• Senior Segment Adjusted EBITDA: $101 million, up 28% year over year, with a margin of 39%.
• Medicare Advantage Policy Volume: 248,000 policies, representing 6% growth.
• Medicare Advantage Lifetime Value: $907, a 3% decrease year over year.
• SelectRX Membership: 97,000 members, up 54% year over year.
• SelectRX Revenue: $183 million, up 64% year over year.
• Healthcare Services Adjusted EBITDA: $2 million.
• Life Business Revenue: $40 million.
• Life Business Adjusted EBITDA: $7 million, up 62% year over year, with a margin of 19%.
• Fiscal 2025 Revenue Guidance: Raised to $1.5 billion to $1.575 billion.
• Fiscal 2025 Adjusted EBITDA Guidance: Raised to $115 million to $140 million.
• Fiscal 2025 Net Income Guidance: Adjusted to a range of a loss of $24 million to income of $11 million.

• Warning! GuruFocus has detected 4 Warning Signs with SLQT.

Release Date: February 10, 2025

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

Positive Points

• SelectQuote Inc (NYSE:SLQT) reported a 19% increase in revenue year-over-year, driven by strong performance in both the Senior and Healthcare Services segments.
• The company achieved a 30% growth in consolidated adjusted EBITDA, with a margin of 18%, indicating strong operational efficiency.
• The Senior segment delivered robust results with a 39% EBITDA margin, surpassing last year's performance, due to high agent productivity and close rates.
• SelectRX, part of the Healthcare Services segment, showed significant growth with a 54% increase in membership and a 64% increase in revenue year-over-year.
• SelectQuote Inc (NYSE:SLQT) successfully raised its 2025 guidance for revenue, EBITDA, and net income, reflecting confidence in future performance.

Negative Points

• The company faced a challenging Medicare Advantage season with a higher-than-usual 6% termination rate of plans by carriers.
• Despite strong performance, the Senior segment's Medicare Advantage lifetime values decreased by 3% year-over-year due to carrier mix changes.
• SelectQuote Inc (NYSE:SLQT) had to operate with a 22% lower agent headcount compared to the previous year, which could have limited potential growth.
• The company is still in the process of optimizing its capital structure, indicating ongoing financial adjustments and potential instability.
• SelectQuote Inc (NYSE:SLQT) reported a net income range that includes a potential loss, highlighting ongoing financial challenges despite revenue growth.

Q & A Highlights

Q: Can you provide insights on the guidance for the fiscal year and the investments planned through the year-end? A: Timothy Danker, CEO, mentioned that the company is proud of the operating results and momentum, leading to raised guidance. Ryan Clement, CFO, added that investments are being made in the Healthcare Services space, including a facility in Kansas to improve efficiency. The focus will be on onboarding Healthcare Services members, with expected margins in the low to mid-20s for the Senior division and low single digits for Healthcare Services in fiscal 2025.

Q: How do you view the synergies between SelectRX and the Senior segment, and what is the market opportunity? A: Ryan Clement, CFO, explained that SelectQuote is improving its attachment rate with both sales and non-sales customers. The company is finding customers from other sources and improving market penetration. The space is massive, and SelectQuote is exploring creative ways to tackle it, with moderate growth in the Senior segment expected to drive further growth in SelectRX.

Q: How does the recent $350 million investment impact your securitization plans and capital structure? A: Timothy Danker, CEO, stated that the investment from Bain Capital and others strengthens the company's position for continued deleveraging and securitization. The preferred transaction provides stability, and the company will continue to explore securitization as a viable option for further deleveraging and creating an asset-light model.

Q: What are the plans for the $350 million proceeds, and how will it enhance operating flexibility? A: Ryan Clement, CFO, noted that $260 million will be used to retire term debt, with the remainder providing $100 million in liquidity. This reduces ongoing cash interest obligations by about $30 million, setting the organization up for growth, particularly in the Healthcare Services business, which is scaling and generating cash.

Q: How does the performance of tenured agents this quarter influence your strategy for the agent force? A: Ryan Clement, CFO, stated that the strategy remains unchanged. Investments in technology, process, and marketing have made tenured agents more productive. The company is confident that hiring additional agents would have resulted in similar outperformance, and it plans to responsibly grow the agent force with the new capital.

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