SelectQuote, Inc. Q2 FY2024 Earnings Call

Welcome to SelectQuote's Second Quarter Earnings Conference Call. It is now my pleasure to introduce Matt Gunter, SelectQuote's Investor Relations. Mr. Gunter, you may now begin the conference.

Thank you and good morning, everyone, and welcome to SelectQuote's fiscal second quarter earnings call. Before we begin our call, I would like to mention that on our website, we have provided a slide presentation to help guide our discussion. After today's call, a replay will also be available on our website. Joining me from the company, I have our Chief Executive Officer, Tim Danker; and Chief Financial Officer, Ryan Clement. Following Tim and Ryan's comments today, we will have a question-and-answer session. As referenced on Slide 2, during this call, we will be discussing some non-GAAP financial measures. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available on our earnings release and investor presentation on our website. And finally, a reminder that certain statements made today may be forward-looking statements. These statements are made based upon management's current expectations and beliefs concerning future events impacting the company and therefore, involve a number of uncertainties and risks, including but not limited to, those described in our earnings release, annual report on Form 10-K for the period ended December 31, 2023, and other filings with the SEC. Therefore, the actual results of operations or financial condition of the company could differ materially from those expressed or implied in our forward-looking statements. And with that, I'd like to turn the call over to our Chief Executive Officer, Tim Danker. Tim?

Good morning and thank you all for joining. SelectQuote produced another very strong quarter in Q2, which marks our fourth consecutive quarter of performance ahead of expectations across both our core senior and healthcare services businesses. Before getting to the quarter, I'd like to begin by reiterating our conviction in the value creation strategy we have executed against since 2022. For those that are new to the story, SelectQuote seeks to generate stable and attractive EBITDA margins in a range of selling environments with an emphasis on returns to invested capital and growing cash flow. We've optimized our sales force of tenured agents to focus on the best leads to generate the highest possible unit economics for Medicare Advantage policy. Our rapidly growing healthcare service business led by Select Rx has significantly scaled the return and cash flow generation of our holistic marketing spend. And as a result, our revenue to CAC is now over 4x, more than double what it was two years ago. Additionally, we delivered a third consecutive quarter of positive profitability in our Healthcare Services division, which will accelerate the overall earnings power and cash flow of SelectQuote. Our strategic goal of building a truly unique and diversified platform, featuring information and service-driven insurance distribution as well as value-added healthcare services, is increasingly becoming a reality. With this quarter, we have now produced positive operating cash flow in two consecutive quarters on an LTM basis, which is noteworthy given the first half of the fiscal year is our highest seasonal use of cash with the ramp to AEP and OEP for Medicare Advantage. As a result of this progress, we now expect SelectQuote to approach breakeven free cash flow for fiscal 2024 and expect cash flow generation to expand as healthcare services continue to scale. From our vantage point, SelectQuote is not just healthier than it was two years ago, but it's thriving with a strong foundation to realize the significant intrinsic value for shareholders that we see in our unique model. With that confidence, we are pleased to say that we have increased the midpoints for both our revenue and adjusted EBITDA outlook for fiscal 2024, which we will detail later in the call. Now let me turn to Slide 3 to provide highlights of our Q2 results. Consolidated revenue grew by 27% year-over-year, driven by both policy and LTV growth in our Senior division and an increasing contribution from healthcare services, which more than doubled revenue year-over-year at $112 million for the quarter. Our consolidated adjusted EBITDA also beat expectations, growing by 6% compared to a year ago. As you will recall, our expectation for fiscal '24 was for EBITDA margins to moderate compared to a highly favorable Medicare Advantage season experienced by the industry in fiscal 2023. It is important to call out the significant mix shift we've experienced, given that EBITDA generation lags member growth in our Healthcare Services business. We'll speak to the drivers of each segment in a moment, but we want to emphasize the embedded EBITDA scale that exists across all of SelectQuote. In our Senior segment, we continued to achieve strong efficiency of our tenured agent force in Q2, even when comparing to a very favorable market backdrop in fiscal 2023. As a result, we generated strong EBITDA margins of 32% despite expected marketing cost increases, primarily due to the implementation of new CMS marketing rules, including the 48-hour rule. Lastly, observed persistency remains stable and healthy. In total, we take great pride in the tailored and unbiased service our highly trained agents provide to seniors every day, many of whom live in areas with limited access, and in many cases, suffer from multiple chronic conditions or are below national averages for income. Turning to our Healthcare Services segment. In Q2, we posted our third consecutive quarter of positive adjusted EBITDA, and despite elevated investment in new member growth that occurs concurrent with AEP, Select Rx has now nearly 63,000 members, which is well ahead of our original expectation for all of fiscal '24. In our view, the growth serves as an overwhelming endorsement of the value our service delivers to customers. With a much higher base of members and the continued growth in the operating leverage of the business, we are meaningfully increasing our outlook for revenue within healthcare services for fiscal '24 while maintaining our expectations for adjusted EBITDA margins as we make investments to capture increased market share at highly attractive economics. If we turn to Slide 4, let me briefly elaborate on what we have observed in our senior segment in the second quarter and more broadly what we saw in AEP this year compared to last. First, our refocused strategy has resulted in outsized efficiency gains for our tenured agent sales force. As you can see, our close rates and agent productivity have increased by 54% and 97%, respectively, compared to 2022. More impressive, though, is the resilience we've seen in these metrics compared to the fiscal 2023 season, which you will recall was very strong industry-wide. We credit this performance to our strategy to overweight tenured agents as well as the introduction of our latest agent desktop tools, which further enhance efficiency, plan fit, and the value to the policyholder and our carrier partners. Now, let me provide our high-level observations of this season's AEP compared to last — first, at the industry level. Competition from other distribution platforms continues to be much more rational than a few years ago. For our model specifically, we shifted certain processes to incorporate the new CMS marketing rules and are very pleased to have mitigated higher marketing costs per policy with stable agent efficiency. Lastly, the bigger impact to Cycle Senior segment was a 7% increase in LTV to $934 per policy. Ryan will expand on our LTV, but to summarize, we continue to see stable policyholder persistency in the business we write. If we turn to Slide 5, let me speak to the efficiency from a cost and return perspective. We have shown these KPIs in the past but wanted to highlight the power and operating leverage, like what has created both from an agent productivity and scaling perspective. First, our overall operating cost per policy for the past year remains highly attractive and is now over 30% lower compared to two years ago. Similarly, we have seen a 38% decrease in our marketing expense per policy compared to two years ago. We'll speak more about marketing costs for this AEP but the important takeaway here is the interplay between an efficient tenured agent workforce and how a focus on quality leads can drive unit profitability and cash flow. Finally, we would marry that concept with how powerful SECI is as a holistic healthcare information hub for more than just Medicare Advantage customers. As we've noted before, the customer acquisition spend we invest to drive returns and cash flow has synergy across more than just senior shopping for Medicare Advantage policies. As you can see in the last set of bars, our revenue to CAC has more than doubled from two years ago and is now at 4.2x, which is remarkable from a return on invested capital perspective, especially considering that the timing of these cash flows are becoming increasingly front-loaded as Select Rx continues to grow as a mix of our overall business. To summarize, we're very pleased with the foundation we have built to drive stable unit economics and operating leverage in our senior segment. More importantly, we're reaping the benefits of our unique ability to scale the same variable cost to create significant revenue streams within other large market needs in the healthcare ecosystem. As we've said before, our infrastructure and approach give Select both the unique opportunity to be the connective tissue for a very large population of Americans, carriers, and caregivers. Best of all, as we've done with Select Rx, we believe there are a range of ways to capture market share by leveraging our existing expense structure. If we turn to Slide 6, let's talk in more detail about Select Rx and healthcare services. As I noted up top, our growth in the segment year-to-date has significantly surpassed expectations. As you will recall, our original full year 2024 outlook anticipated SelectRx membership at the end of this year at just over 60,000 members. At the end of Q2, we are nearing 63,000 members. It's worth noting that the growth in members has been nearly all through our Medicare Advantage lead set. As we highlighted last quarter, we believe Select Rx's compelling value proposition has the opportunity to be more broadly adopted through targeted marketing outside of our core Medicare Advantage platform. To be very clear, we do not plan to grow members just for the sake of growth but rather see significant EBITDA opportunity, which is underpinned by what we are seeing in the attractive economics of our in-place membership. In fact, the increase that we are showing in our outlook for the business on the right side of this page now includes growth from selective lead targeting as well as through our existing Medicare Advantage funnel. This investment is the primary driver of the stable margin expectations we now forecast for the year. We now expect member growth in the range of 40% to 50% compared to our original expectation of 25%. We expect the larger base of maturing members to drive revenue growth of 80% to 100% year-over-year, which is nearly double our original expectation. We believe this rapid growth in members clearly demonstrates the significant value SelectRx provides to customers. We also remain excited about the embedded EBITDA we expect from these sticky revenue streams. As mentioned previously, SelectRx EBITDA generation lags member growth as members slow through the onboarding process. So with such rapid growth, we will be onboarding a large population of new members in 2024, which impacts the pace of our adjusted EBITDA margin progression. Given our strategic decision to lean into member growth, Healthcare Services EBITDA margins are now forecasted to exit Q4 in the low single-digit range but on a much higher base of revenue than previously expected. To take a step back, we'll exit 2024 with a business that will have annualized and growing run rate revenues in the $550 million to $600 million range with positive EBITDA margins that will continue to improve as the business matures. To be clear, we aren't guiding for 2025 or beyond but we do believe SelectQuote market valuation fails to recognize the embedded value being scaled in healthcare services and the strong improved fundamentals exhibited over the past two years in our distribution businesses. As we've said since 2022, only measure us based on what we accomplished, but it's clear we have accomplished quite a bit across the organization, most notably in healthcare services. With that, let me turn the call over to Ryan to detail our financial results and updated outlook for 2024. Ryan?

Thanks, Tim. I'll start with a quick overview of our consolidated financials for the quarter on Slide 7. SelectQuote outperformed internal expectations again with a strong AEP and senior coupled with continued outsized growth in SelectRx. Consolidated revenue of $405 million grew 27% year-over-year and adjusted EBITDA totaled $67 million compared to $64 million a year ago. As Tim noted, our adjusted EBITDA margin declined compared to a very strong year in fiscal 2023 but the largest driver of the margin difference was a higher mix of healthcare services revenue. Healthcare Services profitability will ramp as we lap the initial investment in new member onboarding and those members mature in the quarters ahead. As you will see with our updated outlook, we have a lot to be excited about as profitability scales in Select Rx. As you know, SelectRx is cash accretive and enhances SelectRx's overall return on invested capital and ultimately will drive higher free cash flow and incremental shareholder value. If we flip to Slides 8 and 9, let's turn to the senior segment results which were excellent when compared to the very strong fiscal 2023 AEP season. Senior revenue of $248 million grew 11% year-over-year and was principally driven by MA policy growth. LTV also improved to $934, which was 7% higher than a year ago. As you can see on Slide 9, our total policy sales beat expectations during the second quarter. This was driven by our continued strategy to match targeted quality leads with tenured agents. As noted in past quarters, our core focus is on Medicare Advantage versus other Medicare plan types which are represented in orange here. Looking at just approved MA policies in blue, we grew by more than 7% from our observations, which was broadly in line with industry growth. We are very pleased with the operating results from our Senior division as our strategy continues to deliver stable growth and attractive returns in a range of Medicare selling environments, including the changes associated with the new CMS marketing rules. As Tim noted, the new rule modestly impacted marketing costs per approved policy and dampened the outsized strength we had in senior EBITDA margins in 2023. In Q2 '24, our EBITDA of $79 million produced an attractive margin of 32%, which, as anticipated, moderated from the 37% produced a year ago. Tim highlighted the efficiency gains we have realized with a higher mix of tenured agents compared to years past, which drove stability and senior profitability. Also worth noting, we continue to see stabilization in policyholder persistency. As you'll recall, our LTV includes a 3-year look-back provision and has also incorporated a 15% constraint since 2022, which lowered our booked LTV. We feel really good about the durability of the LTVs we have been recognizing since adopting that 15% constraint and implementing our strategic redesign. I point this out as the vast majority of our receivables include this higher constraint. Additionally, we believe our strategy to focus on the highest quality lead sources and carrier partnerships has built significant resilience into our LTVs. There are multiple factors that drive our LTVs, including carrier mix, so we have made significant progress towards our goal of reducing volatility in our results with more focused growth and lead targeting. We believe the stability we are seeing in persistency indicators creates a solid foundation for more stable and improving LTVs in the long term. Turning to Slide 10, let me give additional context on the standout growth we have driven in our Healthcare Services segment year-to-date. As Tim noted, we surpassed our original full-year outlook for member growth during the second quarter. This was driven by continued demand from consumers for our convenience and tailored pharmacy service. To be clear, the AEP period is the seasonal peak for SelectRx member growth given the connectivity we have through our Medicare Advantage sales channel. This is highlighted by the 19% sequential growth in members compared to last quarter. For frame of reference, that 19% growth was nearly 10,000 members or more than 2x the total membership of the original pharmacy businesses we bought in 2021. This is an impressive statistic and is representative of how powerful this energy is in our overall model. The step function in growth for the quarter explains why we have increased our member and revenue outlook for 2024. But I also call out that the growth in concurrent onboarding muted the blended EBITDA margin for Q2, which we expect to continue in the back half of the year. However, this is a great problem to have given those margins will scale as new members mature. So while our full-year outlook for Healthcare Services margins remains in the low single digits, we'll be achieving profitability on a base of revenues that is significantly higher than what we anticipated when the fiscal year began. To echo Tim's point, the number of SelectRX is producing at a scaled base of members, and profitability gets very compelling very quickly. Even more exciting is the positive impact SelectQuote's experience in cash efficiency, which we believe is durable given the value we provide our members for their critical prescription drug needs month in and month out. To provide additional context on how members mature and margins for the business progress, we have created the views you see on Slide 11. Beginning at left, we highlight the number of prescriptions shipped per day, which equipped 17,000 this past quarter. The growth of 76% year-over-year is largely a function of new member additions, but we believe it also highlights the scale we are creating over the fixed cost of distribution within the business. Moving to the chart at right, we displayed the average prescription per member. Typically, it takes a new member several months to reach what we call a full box, including all of their various medications. You can see this maturation dynamic in the year-over-year growth rate of 12% despite the nearly 10,000 new members onboarded this quarter who are ramping to full boxes. These views of the SelectRx unit economics are compelling enough on their own, but to Tim's point, when combined with the pace of new member growth against a very large addressable market and the cash efficiency we realized in the model, we see significant unrecognized equity value in SelectRx. Next, I'll touch on our Life and Auto and Home division which also produced a strong quarter with combined revenue growth of 14% and EBITDA growth of 14%. As we mentioned last quarter, the P&C insurance market has been able to recognize increased premiums given replacement cost inflation for homes and cars. This was the primary driver of improved results in that division. Our term life business increased revenues more than 10% year-over-year, primarily due to improved conversion of policy sales to in-force premium as we continue to expand our accelerated underwriting product, Swift Term Select. Let me now turn to Slide 12 to review our revised financial guidance for fiscal 2024. On the strength of both healthcare services and senior, we are increasing our revenue and adjusted EBITDA ranges, which now represent growth of 26% and 31% year-over-year at the respective midpoint. As you can see, the overall model is driving operating leverage, given EBITDA growth is projected to outpace revenue growth. Our full year revenue expectation is now $1.23 billion to $1.3 billion, primarily driven by growth in healthcare services. This compares to our previous range of $1.05 billion to $1.2 billion. The bottom end of our adjusted EBITDA range increases from $80 million to $90 million, driven by strong EBITDA results in Senior. We are maintaining the top end of the range at $105 million as Healthcare Services margins continue to scale. Finally, on the balance sheet, our term loan has granted SelectQuote a short-term extension on the current credit agreement which you will see in our forthcoming 10-Q. On restructuring, after evaluating various refinancing options, we are confident that securitization presents the best opportunity for a more permanent capital structure. We remain in active negotiations are still working to resolve certain deal points, but we've made tangible progress and are optimistic we're approaching a deal. It is worth noting that SelectQuote's underlying business is set to produce roughly $100 million of unlevered operating cash flow in fiscal 2024. Restructuring the balance sheet to significantly improve our earnings profile and operating flexibility will drive meaningful additional value to shareholders. With that, let me turn the call back over to the operator to take your questions.

Our first question today comes from Ben Hendrix from RBC. Please go ahead.

I wanted to follow up on your outlook for LTV this year and MA growth, which has been quite dynamic this earnings season. We are seeing differing expectations in growth, with some expecting it to be much lower and CVS coming in significantly higher than the market. I would like to get your thoughts on how this variability is influencing your perspective, particularly regarding how carrier mix impacts LTV. I'm interested in understanding what gives you confidence in maintaining persistency amid the significant shifts in the company's growth profile this year.

Thanks again for joining. I'll make a few comments and then maybe turn it over to Bob Grant, our President, to talk about the carrier dynamics and then Ryan can talk about your questions about LTV. But again, we were really pleased with what we saw this last AEP. We think broadly, certainly, the MCOs delivered overall the plan design that kind of coupled with our continued focus on highly productive agents, a very high tenured agent force and a real focus on quality leads helped deliver the 32% margins. I'll turn it over to Bob to provide kind of the outlook on the carriers moving forward. Bob?

Thank you for the question, Ben. It's a great question. Looking at what happened this AEP, we believe similar trends will continue in the future. There was an expected pullback due to pressure on MLRs, as you mentioned, and the dynamic earnings season. However, what we are observing from the carriers is a focus on specific plan designs aimed at consumers who require more comprehensive plans. We've noticed significant investment in D-SNPs. While traditional MA plans experienced a slight decline, there’s been a notable investment in enhancing benefits and understanding the needs of more complex customers. This shift also altered the carrier mix, as CVS made substantial investments in this area, which proved to be very successful. We expect this trend to persist, as carriers will likely continue to explore ways to better collaborate with higher revenue customers who need enhanced benefits. This aligns well with our model, as we can effectively support savings for those who require assistance, particularly in rural areas and among individuals who have limited mobility. The carriers' new strategy is favorable for us because these are the customers we serve, and we are optimistic about our future in this space.

And then with respect to the lifetime values, we say really consistent with our initial expectations. You'll recall, we set our guide at the beginning of the year. We expect it to be up year-over-year. We are seeing stabilization more broadly and certainly, policy mix was additive. But ultimately, we think the stabilization we're seeing is a strong platform for continued growth and stability over the longer term.

It appears that with CVS' strong growth, the market is increasingly sensitive to price changes. Overall, the price elasticity in the MA market seems to be shifting towards greater sensitivity. How should we consider this in terms of long-term sustainability?

Yes. As far as what that does for persistency, we feel really good about where we are and our target and our results were very consistent year-over-year. While we did see a little bit of increased shopping, meaning that the folks that had a plan already with us, we saw a little bit of an increase in them, but we didn't see an increase in the switching which I do think as folks advertise towards different plan benefits and things like that, you'll see some shopping, but that doesn't ultimately mean that they'll make that decision to switch. So relative to our overall persistency and the strategy that we have, we feel really, really good about where we are. And again, are seeing stabilization as Tim put. I think that has a lot to do with our model, too, Ben. As you go through like the year-round business that we have now with very few what we would call flex agents and pretty much all core agents to understand the products in and out and can really work and assist our consumers even better than we could before. I think that's also causing a lot of that stabilization, which we anticipate to play out into the future.

Yes. I mean I think what I would add there is, obviously, on the back book, just in general, well, it's early. We definitely feel like it's trending slightly better than years past. So we feel very pleased. And then with respect to newer policy business, again, we continue to remain positive. We are seeing improvements in business quality and the leading indicators.

Our next question today comes from Pat McCann from Noble Capital Markets.

My first question has to do with the pharmacy business. Could you comment on the prospects for continued synergies between that business and the senior segment? And I guess what I'm thinking is if we look at the nearly 63,000 members of SelectRx, can we look at that as sort of a level of adoption by the Medicare Advantage customer base that you have? And if so, how do you view the unrealized opportunity that's still out there coming from your customer generation in the senior segment?

Pat, I want to thank you for joining. And again, before I hand it off to Bob, we're really thrilled with the growth I think Bob will walk through it. A lot of this has been our back of our Medicare Advantage platform. There is indeed a lot of synergy there. We also see potential beyond that. And with that, I'll go ahead and hand it off to Bob. Bob?

I appreciate the question, and it's something that often gets overlooked by the market. This is just our initial demonstration of the synergy between our two businesses and how we can assist clients who need support beyond Medicare Advantage. The 63,000 members we've reached are those who have chosen our services, as well as individuals who might not have purchased a policy from SelectQuote but found the best plans suited to their needs. Many have come to us seeking help with their pharmacy needs, which is a common issue when navigating the Medicare system. We are aware of other related services in the pharmacy sector and beyond that we are eager to explore and address other complaints that our consumers face. The complexity of our members, as shown by the 63,000 we currently serve, highlights the potential for further support, particularly for rural individuals lacking access to quality care. Traditional value-based care options might not be available to them, and we are confident in our ability to assist them, whether by connecting them to top-tier services or by offering those services ourselves, like Select Rx.

If I can, I want to mention one more thing briefly. First, I want to acknowledge Bob for being the architect and driving force behind our strategy. We are experiencing synergies, which is obvious. We noted our 4.2 metric, and we are utilizing our existing marketing budget on our Medicare Advantage platform to develop new significant revenue streams, which is highly synergistic. From a retention perspective, we have been monitoring this. We have always considered how to provide more value beyond the Medicare Advantage policy, which is crucial, but there's more we can achieve with SelectRx. We have been tracking retention for customers that are similar, and we are observing an improvement in retention rates among those Medicare Advantage customers who enroll in the SelectRx program. Therefore, it's not solely about the growth metrics we are discussing; we believe it enhances the overall platform by increasing the value we offer to consumers.

Can you elaborate on the factors affecting the high single-digit EBITDA margins for SelectRx? It seems that while they could potentially be higher, they are impacted by your focus on growth. What specific expense or growth investment levers can you adjust that relate to the pharmacy business and are influencing those margins?

Yes. So I think I'll add some clarity on that point. So obviously, on the quarter, low single digits, really, really pleased with the strong performance, the growth in all of that, right? We are onboarding customers. It does take our customer base several months to reach what we call full boxes, which is where boxes are going out that have kind of all of their drugs. And that's really whenever you reach maximum margin with respect to the broader margin profile. Our drug margins are in the mid-20% range. There is a cost of getting drugs outdoor. If you look at the variable margins on a per-customer basis, it's in the mid to upper teens. So there is a lot of margin once you've got customers to full scale and full boxes and you're shipping those out month in and month out. However, in this period, where we're onboarding such a large number of new customers that aren't at maturity, there's certainly costs associated with ramping. And so we're building a lot of embedded value that you may not be seeing in the current quarter's financial results but will be recognized in future quarters. Certainly, if the business wanted to pull back and slow the growth, margin rates would improve. But again, this is a cash accretive business that generates revenue month in, month out. It's highly synergistic with our existing senior distribution business. And right now, AEP and OEP are those peak seasons. So it's an investment worth making and we're really pleased with the growth.

Yes. And as far as to the future of that, our biggest investments will be in automation and improving our facilities and things like that. Well, we're not guiding to '25 to Ryan's point, we are hyper-focused on how we can better automate and better improve our system architecture, given how fast we've grown ultimately to get that cost to get the strips out the door down. So we think it can be simultaneous. While we're still growing, we can really focus on the efficiency of that engine beyond just full boxes and things like that to really improve our overall variable margin, I would say. So we're really bullish on that as well. So we're really, really excited about what we can do with that business over time.

And then my final question, I just wanted to touch on the balance sheet really quickly. You mentioned moving towards free cash flow generation, and I just wanted to kind of check in on how you view your debt levels as you progress towards free cash flow generation and possibly paying some of that down in the next fiscal year and so forth. Just wanted to get your take on that.

Absolutely. It's absolutely a priority. We recognize that we've got a meaningful debt balance. There is a maturity we shared that we've got a short-term extension. But we are actively working on the broader long-term solution, and we're making meaningful progress. We highlighted two quarters ago in our 10-K that we were exploring options, not limited to but including securitization. As time has lapsed, we've been exploring that further. It's clear that securitization is an attractive financing structure for SelectQuote and for the industry more broadly. We are in active negotiations and still working to resolve certain deal points. But we have made tangible progress. We're optimistic we're approaching a workable deal. And that structure, once implemented, does allow us to delever over the long term. So we're really pleased with the progress and the path forward. Obviously, with respect to more recent results, we did highlight that this past quarter on a trailing 12-month basis in the prior quarter, we have been operating cash flow positive. We do expect to be operating cash flow positive for the full fiscal year 2024. We do have adequate liquidity to execute on our plans for calendar year 2024 and beyond. But we are very focused on the broader capital structure and setting ourselves up for long-term success and operating flexibility, and we're making good progress on that front.

That concludes the Q&A portion of today's call. I will now hand back over to Tim Danker for closing remarks.

Yes. Thank you. I'll conclude by thanking all of you for joining us. We appreciate it. As I said earlier in my remarks, but I'll say it again, SelectQuote is thriving. We believe the value of our current businesses and our ability to leverage our unique information and connectivity advantages in healthcare provide us with a range of ways to drive repeatable profit and cash flow growth as we've shown in our distribution business. And as we're increasingly scaling in healthcare services, we see a lot of unrecognized shareholder value that we're going to continue to work diligently to capture. So, thank you again. We look forward to speaking with you next quarter. Have a good day.

That concludes today's SelectQuote fiscal second quarter 2024 earnings conference call. You may now disconnect your lines.