8-K
SelectQuote, Inc. (SLQT)
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, 2023
_____________________________________
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 class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value | SLQT | New 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, 2023, the Company reported its financial results for the second quarter ended December 31, 2022. A copy of the related press release is attached hereto as Exhibit 99.1.
The press release attached hereto as Exhibit 99.1 is 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 7.01 Regulation FD Disclosure.
A copy of the investor presentation being provided in connection with the Company’s earnings conference call for the second quarter ended December 31, 2022 is attached hereto as Exhibit 99.2. The investor presentation is also available on the Investor Relations section of the Company’s website, www.selectquote.com. The investor presentation attached hereto as Exhibit 99.2 is being furnished pursuant to Item 7.01, 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 |
|---|---|
| 99.1 | Press Release |
| 99.2 | Investor Presentation |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
Forward Looking Statements
This Current Report on Form 8-K includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect the Company’s current views with respect to, among other things, future events, including the Company’s notification of the NYSE of its intent to cure the stock price deficiency and any potential plans for doing so. Forward-looking 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 our current expectations and assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, and expected future developments, as well as other factors we believe are appropriate under the circumstances. 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 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 in these forward-looking statements due to a number of factors, many of which are beyond our control, including our ability to regain compliance with the continued listing standards of the NYSE within the applicable cure period, our ability to continue to comply with applicable NYSE listing standards, and other factors under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2022 and in other filings that the Company has made and may make with the Securities and
Exchange Commission in the future. All of the forward-looking statements made in this Current Report on Form 8-K are qualified by these cautionary statements. You should not place undue reliance on these forward-looking statements, which are made only as of the date of this Current Report on Form 8-K. 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.
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, 2023 | By: /s/ Ryan Clement |
|---|---|
| Name: Ryan Clement | |
| Title: Interim Chief Financial Officer |
Document
Exhibit 99.1
SelectQuote, Inc. Reports Second Quarter of Fiscal Year 2023 Results
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
OVERLAND PARK, Kan., February 7, 2023--(BUSINESS WIRE)--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.”
*See “Non-GAAP Financial Measures” below.
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.
Investor Relations:
Sloan Bohlen
877-678-4083
investorrelations@selectquote.com
Media:
Matt Gunter
913-286-4931
matt.gunter@selectquote.com
Source: SelectQuote, Inc.
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 |
14
selectquoteincdecember31
| We shop. You save. 2nd Quarter Fiscal 2023 Earnings Conference Call Presentation February 7, 2023 Exhibit 99.2
| 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: the ultimate duration and impact of the ongoing 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; 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. 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, cash 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 transaction costs and non-cash or non-recurring expenses, including restructuring and share-based compensation expenses. We define cash EBITDA as Adjusted EBITDA excluding the impacts from the estimates of future renewal commission revenue. The most directly comparable GAAP measure for both Adjusted EBITDA and cash EBITDA 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, cash 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 impacts of certain transactions in calculating Adjusted EBITDA and cash 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. Reconciliations of net income (loss) to Adjusted EBITDA are presented below on slides 15 and 16. Disclaimer 2
| We shop. You save. 2QFY23 Earnings Highlights 3 *See "Non-GAAP Financial Measures" above on slide 2. SelectQuote delivered strong 2Q results fueled by a strong Senior Medicare AEP season • 2Q Consolidated Revenue totaled $319.2 million, compared to $194.2 million last year • 2Q Consolidated Net Income totaled $23 million or $0.14 per diluted share • 2Q Consolidated Adjusted EBITDA* totaled $63.6 million, compared to $(164.0) million last year 2Q results reflect a fourth consecutive quarter of stronger year-over-year operational results • Agent close rates up 54% year-over-year • Marketing cost per approved policy down 50% year-over-year Continued positive trends on the Senior customer retention front • New policy approval rates improved significantly year-over-year • Continued confidence in the improved quality of new business • Annual renewal event roughly in line with last year’s performance • MA LTVs including 15% constraint seem appropriately conservative at this time Another quarter of significant consumer demand for and membership growth of SelectRx and Healthcare Services Increasing full year FY2023 Revenue, Adjusted EBITDA, and Net Loss guidance Cashflow ahead of forecast year-to-date and growing conviction we will end FY2023 Cash EBITDA* positive for the full year
| We shop. You save. Strategic Redesign Progress and Leverage in AEP Yo Y % Agent Close Rates 54% 2Q22 3Q22 4Q22 1Q23 2Q23 Yo Y % Marketing Expense Per Policy* 2Q22 3Q22 4Q22 1Q23 2Q23 0 0 Tenured Agent Mix 70%+ Approval Rates (YoY) 11% MA Policies (YoY) (18)% Senior Revenue (YoY) 52% Senior Adj. EBITDA Margin** 37% AEP BY THE NUMBERS 4 (50)% *Represents Senior marketing costs divided by approved MA/MS policies. **See "Non-GAAP Financial Measures" above on slide 2.
| We shop. You save. New MA Growth Philosophy Mitigate Operational Risk Factors MA Lifetime Value (LTV) Healthcare Services Planned pullback in Medicare Advantage policies to improve cashflow and profitability Given strong close rates, 2Q MA volumes exceeded internal forecasts at lower cost per policy Ahead of original cash projections and forecasting Cash EBITDA* positive FY23 Full AEP team hired, trained and onboarded in advance of AEP Tenured agent mix over 70% in 2Q Improved cost structure driven by lower marketing cost per policy and by ~$40 million in fixed cost reduction in FY22 New business written since 2Q FY22 performing in line with expectations Expanded carrier relationships focused on both insurance and healthcare services, enabling improved cash flow Constraint increased from 6% to 15% during 2Q FY22 and increased provision SelectRx members exceeded 39K as of 2Q Managing 2H growth to accelerate the cash dynamics with anticipated FY23 Healthcare Services revenue of $225-250 million Expect the Healthcare Services division to approach Adj. EBITDA* positive by end of FY23 Four Pillar Strategy 5 *See "Non-GAAP Financial Measures" above on slide 2.
| We shop. You save. Senior Efficiency Metrics $1,076 $637 2Q22 2Q23 $1,134 $799 LTM 12/31/21 LTM 12/31/22 *Represents Senior operating costs divided by approved MA/MS policies. 6 OPERATING EXPENSES PER APPROVED POLICY* 54% 64% 2Q22 2Q23 47% 56% LTM 12/31/21 LTM 12/31/22 % OF TOTAL REVENUE RECEIVED IN FIRST YEAR
| We shop. You save. REVENUE $MM ADJUSTED EBITDA* $MM $148 $224 2Q22 2Q23 $(140) $84 2Q22 2Q23 7 Senior Financial Summary *See "Non-GAAP Financial Measures" above on slide 2.
| We shop. You save. 41% 53% 49% 43% (48)% 37% 2Q18 2Q19 2Q20 2Q21 2Q22 2Q23 TOTAL POLICIES APPROVED 000s MA LTV 8 ADJUSTED EBITDA MARGIN* 318 241 266 219 52 22 MA Other 2Q22 2Q23 $922 $870 2Q22 2Q23 SelectQuote Senior KPI’s (95)% *See "Non-GAAP Financial Measures" above on slide 2.
| We shop. You save. MA LTV Bridge $922 $(41) $(12) $6 $3 $(8) $870 2Q22 Carrier Mix Carrier Direct Mix Industry Commissions Improved Persistency Provision Adjustment 2Q23 Strategic Decision Making 9 • Strategic Decision Making ◦ Carrier Mix: lower LTVs but shift toward historically higher retention carriers ◦ Carrier Direct Mix: lower LTV policies that are more cash efficient with better CAC • Market Dynamics ◦ Industry Commissions: year-over- year increase a tailwind to LTV ◦ Improved Persistency: trends continue to stabilize and show signs of improvement ◦ Provision Adjustment: elevated lapse rates in 3QFY22 reversed 4QFY22–2QFY23 but did necessitate higher provision Strategic decisions prioritize performance stability and cash returns Market Dynamics
| We shop. You save. Senior Policy Payback Period Timing Cost Revenue LTM Ending 12/31/2022 Cost Revenue LTM Ending 12/31/2021 First Year Cash 1st Renewal Variable Marketing Direct Variable Fixed Fixed Direct Variable Variable Marketing First Year Cash 2nd Renewal Remaining Renewals 1st Renewal 2nd Renewal Remaining Renewals 10
| We shop. You save. Healthcare Services REVENUE & ADJUSTED EBITDA* $MM 11 $(8) $(8) $(12) $(12) $(9) SELECTRX MEMBERS 2Q22 3Q22 4Q22 1Q23 2Q23 — 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 $11 $23 $30 $43 $55 2Q22 3Q22 4Q22 1Q23 2Q23 *See "Non-GAAP Financial Measures" above on slide 2.
| We shop. You save. Life and Auto & Home REVENUE $MM ADJUSTED EBITDA* 12 $32 $34 $6 $8 Life Auto & Home 2Q22 2Q23 $1 $6 $1 $2 Life Auto & Home 2Q22 2Q23 $MM *See "Non-GAAP Financial Measures" above on slide 2.
| We shop. You save. Fiscal Full Year 2023 Guidance ($'s in millions) Range Implied YoY Growth Revenue $910 - $960 19% - 26% Net Loss $94 - $78 NM - NM Adjusted EBITDA* $5 - $25 NM - NM 13 *See "Non-GAAP Financial Measures" above on slide 2.
| We shop. You save. Supplemental Information 14
| We shop. You save. Net Income (Loss) to Adjusted EBITDA Reconciliation 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 15 2Q FY 2022 (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) (1) (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)
| We shop. You save. (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 Net Loss to Adjusted EBITDA Reconciliation (FY23 Guidance) 16 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