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): May 11, 2021
SELECTQUOTE, INC.
(Exact name of registrant as specified in its charter)
_____________
Commission file number: 001-39295
| Delaware | 94-3339273 |
|---|---|
| (State of incorporation) | (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)
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: Common Stock | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| $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 May 11, 2021, SelectQuote, Inc. reported its financial results for the third quarter ended March 31, 2021. A copy of the related press release and earnings presentation are attached hereto as Exhibits 99.1 and 99.2, respectively.
These exhibits are being furnished pursuant to Item 2.02, and the information contained therein shall not be deemed “filed” for the 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 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SELECTQUOTE, INC.
| Date: May 11, 2021 | By: /s/ Raffaele Sadun |
|---|---|
| Name: Raffaele Sadun | |
| Title: Chief Financial Officer |
Document
Exhibit 99.1
SelectQuote, Inc. Reports Third Quarter and Fiscal Year to Date 2021 Results
Third Quarter of Fiscal Year 2021 - Consolidated Earnings Highlights
•Revenue of $266.9 million, Up 80% Year-Over-Year
•Net Income of $36.5 million, improvement of $12.8 million Year-Over-Year
•Adjusted EBITDA of $65.2 million, Up 48% Year-Over-Year*
•Updating Full-Year 2021 Revenue, Net Income and Adjusted EBITDA Guidance:
◦Revenue still expected in a range of $920 million to $940 million
◦Net Income expected in a range of $130 million to $138 million
◦Adjusted EBITDA expected in a range of $225 million to $235 million*
Third Quarter of Fiscal Year 2021 - Segment Highlights
Senior
•Revenue of $215.6 million, Up 101% Year-Over-Year
•Adjusted EBITDA of $75.5 million, Up 63% Year-Over-Year*
•Approved Medicare Advantage policies grew 112% Year-Over-Year
Life
•Revenue of $46.4 million, Up 50% Year-Over-Year
•Final expense premiums grew 176% Year-Over-Year
Auto & Home
•Revenue of $7.0 million, Down 33% Year-Over-Year
•Total Auto & Home premiums declined 29% Year-Over-Year
OVERLAND PARK, Kan., May 11, 2021--(BUSINESS WIRE)--SelectQuote, Inc. (NYSE: SLQT), reported consolidated revenue for the third quarter of fiscal year 2021 of $266.9 million, which was an 80% increase over consolidated revenue for the third quarter of fiscal year 2020 of $148.6 million. Consolidated net income for the third quarter of fiscal year 2021 was $36.5 million, which was a $12.8 million increase over consolidated net income for the third quarter of fiscal year 2020 of $23.7 million. Finally, consolidated Adjusted EBITDA for the third quarter of fiscal year 2021 was $65.2 million, which was a 48% increase over consolidated Adjusted EBITDA for the third quarter of fiscal year 2020 of $44.1 million.
Consolidated revenue for the nine months ended March 31, 2021, was $749.4 million, a 92% increase over consolidated revenue for the nine months ended March 31, 2020, of $390.1 million. Consolidated net income for the nine months ended March 31, 2021, was $127.7 million, an increase of $66.6 million over consolidated net income for the nine months ended March 31, 2020, of $61.1 million. Finally, consolidated Adjusted EBITDA for the nine months ended March 31, 2021, was $206.8 million compared to consolidated Adjusted EBITDA of $113.9 million for the nine months ended March 31, 2020, an 82% increase.
Chief Executive Officer Tim Danker commented, “Our Third Quarter results again demonstrated our strong growth potential. The quarter was led by a robust OEP, where our Medicare Advantage approved policies grew by 112% year-over-year driven by a 17% increase in average agent productivity while adding 75% more agents. We are also very excited about the huge opportunity with value-based care and our Population Health platform which we announced last week along with the acquisition of Express Med, which will be rebranded SelectRx. We continue to build our conviction that SelectQuote is designed to execute high quality growth for years to come and with Population Health, our addressable market is now bigger, and our ability to address that market has never been stronger.”
Chief Financial Officer Raffaele Sadun added, “With Senior revenue growth of 101% year-over-year, this was the fifth consecutive quarter of Senior revenue growth in excess of 100%. During the quarter, we also refinanced our credit agreement and secured an additional $292 million of committed capital, $147 million immediately and another $145 million in a committed delayed draw term loan. Lastly, we are reiterating our fiscal year revenue
*See reconciliation from non-GAAP measure, Adjusted EBITDA, to net income on pages 11-13.
guidance but adjusting our guidance for Adjusted EBITDA due to the incremental dollars we are investing in Population Health and SelectRx.”
Segment Results
We currently report on three segments: 1) Senior, 2) Life and 3) Auto & Home. The performance measures of the segments include total revenue and Adjusted EBITDA. Costs of revenue, marketing and advertising, and technical development operating costs and expenses that are directly attributable to a segment are reported within the applicable segment. Indirect costs of revenue, marketing and advertising, and technical development operating costs and 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, marketing and advertising, technical development, and 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; restructuring expenses; and non-recurring expenses such as severance payments and transaction costs.
Senior
Financial Results
The following table provides the financial results for the Senior segment for the periods presented:
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | 2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||||
| Revenue | $ | 215,600 | $ | 107,351 | 101 | % | $ | 604,309 | $ | 273,808 | 121 | % | ||||
| Adjusted EBITDA* | 75,489 | 46,182 | 63 | % | 218,946 | 112,352 | 95 | % | ||||||||
| Adjusted EBITDA Margin* | 35 | % | 43 | % | 36 | % | 41 | % |
Operating Metrics
Submitted Policies
Submitted policies are counted when an individual completes an application with our licensed agent and provides authorization to them to submit it to the insurance carrier partner. The applicant may have additional actions to take before the application will be reviewed by the insurance carrier, such as providing additional information.
The following table shows the number of submitted policies for the periods presented:
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||
| Medicare Advantage | 160,233 | 76,196 | 110 | % | 454,772 | 205,270 | 122 | % |
| Medicare Supplement | 3,738 | 3,703 | 1 | % | 24,287 | 16,383 | 48 | % |
| Dental, Vision and Hearing | 38,757 | 18,935 | 105 | % | 101,819 | 52,806 | 93 | % |
| Prescription Drug Plan | 1,568 | 1,234 | 27 | % | 10,243 | 11,135 | (8) | % |
| Other | 6,781 | 1,922 | 253 | % | 12,603 | 3,612 | 249 | % |
| Total | 211,077 | 101,990 | 107 | % | 603,724 | 289,206 | 109 | % |
*See reconciliation from non-GAAP measure, Adjusted EBITDA, to net income on pages 11-13.
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 March 31, | Nine Months Ended March 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||
| Medicare Advantage | 132,950 | 62,700 | 112 | % | 384,137 | 171,099 | 125 | % |
| Medicare Supplement | 3,073 | 2,702 | 14 | % | 19,849 | 11,740 | 69 | % |
| Dental, Vision and Hearing | 34,517 | 16,068 | 115 | % | 84,370 | 38,992 | 116 | % |
| Prescription Drug Plan | 2,109 | 1,647 | 28 | % | 9,556 | 10,528 | (9) | % |
| Other | 5,129 | 1,399 | 267 | % | 10,209 | 2,596 | 293 | % |
| Total | 177,778 | 84,516 | 110 | % | 508,121 | 234,955 | 116 | % |
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 March 31, | Nine Months Ended March 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars per policy): | 2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||
| Medicare Advantage | $ | 1,362 | $ | 1,377 | (1) | % | $ | 1,290 | $ | 1,297 | (1) | % |
| Medicare Supplement | 1,345 | 1,478 | (9) | % | 1,263 | 1,372 | (8) | % | ||||
| Dental, Vision and Hearing | 129 | 155 | (17) | % | 140 | 146 | (4) | % | ||||
| Prescription Drug Plan | 213 | 214 | — | % | 230 | 229 | — | % | ||||
| Other | 60 | 93 | (35) | % | 95 | 99 | (4) | % |
Per Unit Economics
Per unit economics represents total Medicare Advantage and Medicare Supplement commissions, other product commissions, other revenues, and costs associated with the Senior segment, each shown as per number of approved Medicare Advantage and Medicare Supplement approved 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 Medicare Advantage and Medicare Supplement commission per MA/MS policy represents the lifetime value of commissions for policies sold in the period. Other commission per MA/MS policy represents the lifetime value of commissions for other products sold in the period, including dental, vision and hearing, prescription drug plan, and other products, which management views as additional commission revenue on our agents’ core function of MA/MS policy sales. Other per MA/MS policy represents the production bonuses, lead sales revenue from InsideResponse, and updated estimates of prior period variable consideration based on actual policy renewals in the current period. Total operating expenses per MA/MS policy represent all of the operating expenses within the Senior segment. 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 which is included in marketing and advertising expense within the total operating expenses per MA/MS policy.
The following table shows per unit economics for the periods presented. Based on the seasonality of the Senior segment 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. These metrics are the basis on which management assesses the business:
| Twelve Months Ended March 31, | ||||||||
|---|---|---|---|---|---|---|---|---|
| (dollars per approved policy): | 2021 | 2020 | % Change | |||||
| Medicare Advantage and Medicare Supplement approved policies | 464,653 | 204,519 | 127 | % | ||||
| Medicare Advantage and Medicare Supplement commission per MA / MS policy | $ | 1,286 | $ | 1,300 | (1) | % | ||
| Other commission per MA/MS policy | 38 | 51 | (25) | % | ||||
| Other per MA / MS policy | 166 | 154 | 8 | % | ||||
| Total revenue per MA / MS policy | 1,490 | 1,505 | (1) | % | ||||
| Total operating expenses per MA / MS policy | (947) | (891) | 6 | % | ||||
| Adjusted EBITDA per MA / MS policy* | $ | 543 | $ | 614 | (12) | % | ||
| Adjusted EBITDA Margin per MA / MS policy* | 36 | % | 41 | % | ||||
| Revenue / CAC multiple | 3.1X | 3.6X |
Life
Financial Results
The following table provides the financial results for the Life segment for the periods presented:
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | 2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||||
| Revenue | $ | 46,400 | $ | 30,956 | 50 | % | $ | 125,598 | $ | 87,543 | 43 | % | ||||
| Adjusted EBITDA* | 3,175 | 3,494 | (9) | % | 20,066 | 15,552 | 29 | % | ||||||||
| Adjusted EBITDA Margin* | 7 | % | 11 | % | 16 | % | 18 | % |
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. Core premiums include term life and permanent life insurance policies while ancillary premiums include various smaller products. 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 reconciliation from non-GAAP measure, Adjusted EBITDA, to net income on pages 11-13.
The following table shows core, final expense, and ancillary premiums for the periods presented:
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | 2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||
| Core Premiums | $ | 18,951 | $ | 18,637 | 2 | % | $ | 56,268 | $ | 56,486 | — | % |
| Final Expense Premiums | 23,881 | 8,639 | 176 | % | 54,595 | 15,979 | 242 | % | ||||
| Ancillary Premiums | 1,028 | 525 | 96 | % | 2,190 | 1,775 | 23 | % |
Auto & Home
Financial Results
The following table provides the financial results for the Auto & Home segment for the periods presented:
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | 2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||||
| Revenue | $ | 6,973 | $ | 10,442 | (33) | % | $ | 23,752 | $ | 29,061 | (18) | % | ||||
| Adjusted EBITDA* | 1,096 | 1,586 | (31) | % | 6,863 | 5,594 | 23 | % | ||||||||
| Adjusted EBITDA Margin* | 16 | % | 15 | % | 29 | % | 19 | % |
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 March 31, | Nine Months Ended March 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands): | 2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||
| Premiums | $ | 12,010 | $ | 16,923 | (29) | % | $ | 42,165 | $ | 48,925 | (14) | % |
Update on Fiscal Year 2021 Guidance
SelectQuote is updating the guidance provided for the full-year ending June 30, 2021. As a reminder, these expectations are forward-looking statements and actual results may be materially different and are affected by the risk factors and uncertainties identified in this press release and in our annual and quarterly filings with the Securities and Exchange Commission.
SelectQuote is updating guidance for the full-year ending June 30, 2021 as follows:
•Consolidated Revenue is expected to be in the range of $920 million to $940 million
•Consolidated Net Income is expected to be in the range of $130 million to $138 million
•Consolidated Adjusted EBITDA is expected to be in the range of $225 million to $235 million*
*See reconciliation from non-GAAP measure, Adjusted EBITDA, to net income on pages 11-13.
Earnings Conference Call
SelectQuote, Inc. will host a conference call with the investment community today, Tuesday, May 11, 2021, beginning at 5 p.m. ET. To register for this conference call, please use this link: http://www.directeventreg.com/registration/event/4967839. 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 a day in advance or at minimum 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 income before interest expense, income tax expense, 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. We monitor and have presented in this release Adjusted EBITDA because it is a key measure 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 this non-GAAP financial measure helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in the calculations of this non-GAAP financial measure. Accordingly, we believe that this financial measure provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects.
Forward Looking Statement
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, 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; 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 claims, including IP litigation; our existing and future indebtedness; developments with respect to LIBOR; 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”) filed by us with the Securities 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 direct-to-consumer 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, scores, and routes high-quality sales leads. The company has three core business lines: SelectQuote Senior, SelectQuote Life and SelectQuote Auto and Home. SelectQuote Senior, the largest and fastest-growing business, serves the needs of a demographic that sees 10,000 people turn 65 each day with a range of Medicare Advantage and Medicare Supplement plans from leading, nationally-recognized carriers, as well as prescription drug plans, dental, vision and hearing plans.
Investor Relations:
Sloan Bohlen
877-678-4083
investorrelations@selectquote.com
Media:
Matt Gunter
913-286-4931
matt.gunter@selectquote.com
Kelly Hale
913-653-4375
kelly.hale@selectquote.com
Source: SelectQuote, Inc.
SELECTQUOTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
| March 31, 2021 | June 30, 2020 | |||
|---|---|---|---|---|
| ASSETS | ||||
| CURRENT ASSETS: | ||||
| Cash and cash equivalents | $ | 369,048 | $ | 321,065 |
| Restricted cash | — | 47,805 | ||
| Accounts receivable | 137,839 | 83,634 | ||
| Commissions receivable-current | 79,579 | 51,209 | ||
| Other current assets | 4,958 | 10,121 | ||
| Total current assets | 591,424 | 513,834 | ||
| COMMISSIONS RECEIVABLE—Net | 684,570 | 461,752 | ||
| PROPERTY AND EQUIPMENT—Net | 23,311 | 22,150 | ||
| SOFTWARE—Net | 11,513 | 8,399 | ||
| OPERATING LEASE RIGHT-OF-USE ASSETS | 30,381 | — | ||
| INTANGIBLE ASSETS—Net | 41,438 | 19,673 | ||
| GOODWILL | 49,955 | 46,577 | ||
| OTHER ASSETS | 1,522 | 1,408 | ||
| TOTAL ASSETS | $ | 1,434,114 | $ | 1,073,793 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
| CURRENT LIABILITIES: | ||||
| Accounts payable | $ | 35,467 | $ | 22,891 |
| Accrued expenses | 23,090 | 14,936 | ||
| Accrued compensation and benefits | 41,693 | 22,228 | ||
| Earnout liability | — | 30,812 | ||
| Operating lease liabilities—current | 5,130 | — | ||
| Other current liabilities | 9,869 | 4,944 | ||
| Total current liabilities | 115,249 | 95,811 | ||
| DEBT | 460,615 | 311,814 | ||
| DEFERRED INCOME TAXES | 138,870 | 105,844 | ||
| OPERATING LEASE LIABILITIES | 37,716 | — | ||
| OTHER LIABILITIES | 11,149 | 14,635 | ||
| Total liabilities | 763,599 | 528,104 | ||
| COMMITMENTS AND CONTINGENCIES | ||||
| SHAREHOLDERS’ EQUITY: | ||||
| Common stock, $0.01 par value | 1,634 | 1,622 | ||
| Additional paid-in capital | 543,524 | 548,113 | ||
| Retained earnings (accumulated deficit) | 124,942 | (2,792) | ||
| Accumulated other comprehensive income (loss) | 415 | (1,254) | ||
| Total shareholders’ equity | 670,515 | 545,689 | ||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,434,114 | $ | 1,073,793 |
SELECTQUOTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| REVENUE: | ||||||||
| Commission | $ | 236,793 | $ | 137,455 | $ | 664,312 | $ | 353,926 |
| Production bonus and other | 30,130 | 11,149 | 85,054 | 36,142 | ||||
| Total revenue | 266,923 | 148,604 | 749,366 | 390,068 | ||||
| OPERATING COSTS AND EXPENSES: | ||||||||
| Cost of revenue | 71,439 | 43,367 | 206,605 | 126,488 | ||||
| Marketing and advertising | 116,690 | 55,274 | 298,696 | 132,246 | ||||
| General and administrative | 19,251 | 6,656 | 44,496 | 25,779 | ||||
| Technical development | 4,860 | 2,865 | 13,458 | 9,088 | ||||
| Total operating costs and expenses | 212,240 | 108,162 | 563,255 | 293,601 | ||||
| INCOME FROM OPERATIONS | 54,683 | 40,442 | 186,111 | 96,467 | ||||
| INTEREST EXPENSE, NET | (7,355) | (9,356) | (20,898) | (16,239) | ||||
| LOSS ON EXTINGUISHMENT OF DEBT | (3,315) | — | (3,315) | — | ||||
| OTHER EXPENSES, NET | (349) | (4) | (1,545) | (20) | ||||
| INCOME BEFORE INCOME TAX EXPENSE | 43,664 | 31,082 | 160,353 | 80,208 | ||||
| INCOME TAX EXPENSE | 7,183 | 7,366 | 32,619 | 19,110 | ||||
| NET INCOME | $ | 36,481 | $ | 23,716 | $ | 127,734 | $ | 61,098 |
| NET INCOME (LOSS) PER SHARE: | ||||||||
| Basic | $ | 0.22 | $ | 0.23 | $ | 0.79 | $ | (0.38) |
| Diluted | $ | 0.22 | $ | 0.17 | $ | 0.77 | $ | (0.38) |
| WEIGHTED-AVERAGE COMMON STOCK OUTSTANDING USED IN PER SHARE AMOUNTS: | ||||||||
| Basic | 163,023 | 92,077 | 162,705 | 89,989 | ||||
| Diluted | 165,731 | 138,754 | 165,495 | 89,989 | ||||
| OTHER COMPREHENSIVE INCOME NET OF TAX: | ||||||||
| Gain on cash flow hedge | 1,810 | — | 1,669 | — | ||||
| OTHER COMPREHENSIVE INCOME | 1,810 | — | 1,669 | — | ||||
| COMPREHENSIVE INCOME | $ | 38,291 | $ | 23,716 | $ | 129,403 | $ | 61,098 |
SELECTQUOTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| Nine Months Ended March 31, | ||||
|---|---|---|---|---|
| 2021 | 2020 | |||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
| Net income | $ | 127,734 | $ | 61,098 |
| Adjustments to reconcile net income to net cash, cash equivalents, and restricted cash used in operating activities: | ||||
| Depreciation and amortization | 11,260 | 5,273 | ||
| Loss on disposal of property, equipment, and software | 261 | 235 | ||
| Share-based compensation expense | 3,689 | 9,283 | ||
| Deferred income taxes | 32,475 | 19,117 | ||
| Amortization of debt issuance costs and debt discount | 2,482 | 1,431 | ||
| Write-off of debt issuance costs | 2,570 | — | ||
| Fair value adjustments to contingent earnout obligations | 1,487 | — | ||
| Non-cash lease expense | 2,869 | — | ||
| Changes in operating assets and liabilities: | ||||
| Accounts receivable | (52,905) | (17,057) | ||
| Commissions receivable | (251,188) | (142,454) | ||
| Other assets | 4,349 | 1,420 | ||
| Accounts payable and accrued expenses | 26,223 | 12,896 | ||
| Operating lease liabilities | (2,631) | — | ||
| Other liabilities | 30,378 | 6,726 | ||
| Net cash used in operating activities | (60,947) | (42,032) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
| Purchases of property and equipment | (6,520) | (6,185) | ||
| Proceeds from sales of property and equipment | — | 3 | ||
| Purchases of software and capitalized software development costs | (5,807) | (4,443) | ||
| Acquisition of business | (23,879) | — | ||
| Net cash used in investing activities | (36,206) | (10,625) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
| Proceeds from revolving line of credit | — | 85,975 | ||
| Payments on revolving line of credit | — | (97,007) | ||
| Net proceeds from Term Loans | 228,753 | 416,500 | ||
| Payments on Term Loans | (84,118) | — | ||
| Proceeds from other debt | — | 12,125 | ||
| Payments on other debt | (189) | (2,432) | ||
| Proceeds from common stock options exercised and employee stock purchase plan | 1,778 | 5,364 | ||
| Cash dividends paid | — | (275,000) | ||
| Payments of tax withholdings related to net share settlement of equity awards | (10,026) | — | ||
| Payments of debt issuance costs | (885) | (7,694) | ||
| Payments of costs incurred in connection with private placement | (1,771) | — | ||
| Payments of costs incurred in connection with initial public offering | (3,911) | (2,117) | ||
| Payment of contingent earnout liability | (32,300) | — | ||
| Net cash provided by financing activities | 97,331 | 135,714 | ||
| NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | 178 | 83,057 | ||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of period | 368,870 | 570 | ||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of period | $ | 369,048 | $ | 83,627 |
SELECTQUOTE, INC. AND SUBSIDIARIES
Adjusted EBITDA to Net Income Reconciliation
(Unaudited)
| Three Months Ended March 31, 2021 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Senior | Life | Auto & Home | Corp & Elims | Consolidated | |||||
| Revenue | $ | 215,600 | $ | 46,400 | $ | 6,973 | $ | (2,050) | $ | 266,923 |
| Operating expenses | (140,111) | (43,225) | (5,877) | (12,507) | (201,720) | |||||
| Other expenses, net | — | — | — | (15) | (15) | |||||
| Adjusted EBITDA | 75,489 | 3,175 | 1,096 | (14,572) | 65,188 | |||||
| Share-based compensation expense | (1,429) | |||||||||
| Non-recurring expenses | (4,667) | |||||||||
| Fair value adjustments to contingent earnout obligations | (334) | |||||||||
| Depreciation and amortization | (4,323) | |||||||||
| Loss on disposal of property, equipment, and software | (101) | |||||||||
| Interest expense, net | (7,355) | |||||||||
| Loss on extinguishment of debt | (3,315) | |||||||||
| Income tax expense | (7,183) | |||||||||
| Net income | $ | 36,481 | ||||||||
| Three Months Ended March 31, 2020 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in thousands) | Senior | Life | Auto & Home | Corp & Elims | Consolidated | |||||
| Revenue | $ | 107,351 | $ | 30,956 | $ | 10,442 | $ | (145) | $ | 148,604 |
| Operating expenses | (61,169) | (27,462) | (8,856) | (7,059) | (104,546) | |||||
| Other expenses, net | — | — | — | (4) | (4) | |||||
| Adjusted EBITDA | 46,182 | 3,494 | 1,586 | (7,208) | 44,054 | |||||
| Share-based compensation expense | (19) | |||||||||
| Non-recurring expenses | (1,256) | |||||||||
| Depreciation and amortization | (2,105) | |||||||||
| Loss on disposal of property, equipment, and software | (236) | |||||||||
| Interest expense, net | (9,356) | |||||||||
| Income tax expense | (7,366) | |||||||||
| Net income | $ | 23,716 |
SELECTQUOTE, INC. AND SUBSIDIARIES
Adjusted EBITDA to Net Income Reconciliation
(Unaudited)
| Nine Months Ended March 31, 2021 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Senior | Life | Auto & Home | Corp & Elims | Consolidated | |||||
| Revenue | $ | 604,309 | $ | 125,598 | $ | 23,752 | $ | (4,293) | $ | 749,366 |
| Operating expenses | (385,363) | (105,532) | (16,889) | (34,771) | (542,555) | |||||
| Other expenses, net | — | — | — | (58) | (58) | |||||
| Adjusted EBITDA | 218,946 | 20,066 | 6,863 | (39,122) | 206,753 | |||||
| Share-based compensation expense | (3,689) | |||||||||
| Non-recurring expenses | (5,490) | |||||||||
| Fair value adjustments to contingent earnout obligations | (1,487) | |||||||||
| Depreciation and amortization | (11,260) | |||||||||
| Loss on disposal of property, equipment, and software | (261) | |||||||||
| Interest expense, net | (20,898) | |||||||||
| Loss on extinguishment of debt | (3,315) | |||||||||
| Income tax expense | (32,619) | |||||||||
| Net income | $ | 127,734 | ||||||||
| Nine Months Ended March 31, 2020 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in thousands) | Senior | Life | Auto & Home | Corp & Elims | Consolidated | |||||
| Revenue | $ | 273,808 | $ | 87,543 | $ | 29,061 | $ | (344) | $ | 390,068 |
| Operating expenses | (161,456) | (71,991) | (23,467) | (19,248) | (276,162) | |||||
| Other expenses, net | — | — | — | (20) | (20) | |||||
| Adjusted EBITDA | $ | 112,352 | $ | 15,552 | $ | 5,594 | $ | (19,612) | 113,886 | |
| Share-based compensation expense | (9,283) | |||||||||
| Non-recurring expenses | (2,648) | |||||||||
| Depreciation and amortization | (5,273) | |||||||||
| Loss on disposal of property, equipment, and software | (235) | |||||||||
| Interest expense, net | (16,239) | |||||||||
| Income tax expense | (19,110) | |||||||||
| Net income | $ | 61,098 |
SELECTQUOTE, INC. AND SUBSIDIARIES
Adjusted EBITDA to Net Income Reconciliation
(Unaudited)
Guidance Adjusted EBITDA to net income reconciliation, year ending June 30, 2021:
| (in thousands) | Range | |||
|---|---|---|---|---|
| Net Income | $ | 130,000 | $ | 138,000 |
| Income tax expense | 34,000 | 36,000 | ||
| Loss on extinguishment of debt | 3,000 | 3,000 | ||
| Interest expense, net | 29,000 | 29,000 | ||
| Depreciation and amortization | 16,000 | 16,000 | ||
| Fair value adjustments to contingent earnout obligations | 1,000 | 1,000 | ||
| Non-recurring expenses | 7,000 | 7,000 | ||
| Share-based compensation expense | 5,000 | 5,000 | ||
| Adjusted EBITDA | $ | 225,000 | $ | 235,000 |
13
selectquoteincmarch31202
3rd Quarter and Fiscal Year to Date 2021 Earnings Conference Call Presentation May 12, 2021 Exhibit 99.2
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, 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; 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 claims, including IP litigation; our existing and future indebtedness; developments with respect to LIBOR; 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”) filed by us with the Securities 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 relates 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 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 income before interest expense, income tax expense, 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. We monitor and have presented in this presentation Adjusted EBITDA because it is a key measure 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. For further discussion regarding this non-GAAP measure, please see today’s press release. Disclaimer
SelectQuote drove significant top-line and profit results for the 3rd quarter primarily driven by a strong OEP period in our Senior division and growth in Final Expense policies Consolidated revenue totaled $267 million, up 80% year-over-year Consolidated Adjusted EBITDA* totaled $65 million, up 48% year-over-year Consolidated net income totaled $36 million or $0.22 per diluted share 3rd Quarter Highlights: • Senior revenue totaled $216 million, up 101% year-over-year, and Adjusted EBITDA* totaled $75 million, up 63% year-over-year • 17% increase in Senior agent productivity with 75% increase in avg. productive agents • Final Expense premium growth of 176% • Secured $292 million of committed capital through refinancing of term loan ◦ $147 million immediately and $145 million in committed delayed draw term loan Recently launched Population Health platform and announced acquisition of Express Med Pharmaceuticals, now branded SelectRx 3rd Quarter Earnings Summary 3 *See reconciliations from non-GAAP measure, Adjusted EBITDA, to net income on slides 17-19.
3rd Quarter Review – OEP Summarized 4 Growth 112% YoY Approved MA Policies 110% YoY Total Approved Policies Efficiency 75% Increase in Productive Agents 17% Increase in Agent Productivity Stability $1,362 MA LTV Customer Focus +63% YoY Adj. EBITDA* *Senior division. See reconciliations from non-GAAP measure, Adjusted EBITDA, to net income on slides 17-19. 600k+ CCA Customer Contacts
5 Home-Based Care Meal Delivery Medical Transportation Behavioral Health Diagnostics Value-Based Care (Primary Care) Medicare Advantage Specialized Medication Management Pharmacy Express Med Pharmaceuticals now Healthcare Literacy & Wellness Population Health’s Ecosystem of Leading Providers Leading Medicare insurers, Value-Based Primary Care providers, and a specialized medication management pharmacy serve as the foundational pillars to achieving improved patient outcomes. • Medicare plan sales • Benefits education • Patient education • Patient introductions • Post-visit surveys • Drug adherence • Chronic disease poly-pharmacy
6 Accelerating the alignment of patients with value-based care providers to deliver significant benefits to all parties. SelectQuote New revenue streams and improved retention Patients Better health outcomes and lower cost Service Providers Accelerated customer acquisition Carriers Lower medical loss ratios and improved patient satisfaction Population Health Tremendous value to all stakeholders Population Health Delivers Tremendous Value to All Stakeholders
◦ Population Health not only reinforces our core business but also creates new revenue streams at low incremental CAC and with attractive cash profile ◦ Our market-leading and stable LTVs serve as a strong proof point to the sustainability and strategic advantages of our model ◦ Our differentiated approach to agents and technology delivers high quality growth at rapid scale and increasing agent productivity, which was up 17% Key Takeaways from 3rd Quarter and OEP 7 ◦ This was the most successful OEP in SelectQuote's history with Senior revenue and Adj. EBITDA* growth of 101% and 63%, respectively ◦ We are growing the business faster than expected and using less cash than expected to do it *See reconciliations from non-GAAP measure, Adjusted EBITDA, to net income on slides 17-19.
44 65 114 207 Q3 FY20 Q3 FY21 FYTD 20 FYTD 21 149 267 390 749 Q3 FY 20 Q3 FY 21 FYTD 20 FYTD 21 24% Adj. EBITDA Margin 30% 80 % *See reconciliations from non-GAAP measure, Adjusted EBITDA, to net income on slides 17-19. SelectQuote – Consolidated Financial Summary Revenue ($MM) Adj. EBITDA* ($MM) 92 % 28%29% 48 % 82 % 8
46 75 112 219 3Q 2020 3Q 2021 FYTD 20 FYTD 21 107 216 274 604 3Q 2020 3Q 2021 FYTD 20 FYTD 21 35% Adj. EBITDA Margin 43% 10 1% SelectQuote Senior – Financial Summary Revenue ($MM) Adj. EBITDA* ($MM) 12 1% 36%41% 63 % 95 % *See reconciliations from non-GAAP measure, Adjusted EBITDA, to net income on slides 17-19. 9
84,516 177,778 234,955 508,121 62,700 132,950 171,099 384,137 2,702 3,073 11,740 19,849 19,114 41,755 52,116 104,135 MA MS Other Q3 2020 Q3 2021 FYTD 20 FYTD 21 101,990 211,077 289,206 603,724 76,196 160,233 205,270 454,772 3,703 3,738 16,383 24,287 22,091 47,106 67,553 124,665 MA MS Other Q3 2020 Q3 2021 FYTD 20 FYTD 21 113% 107% 110% CAGR 1% 118% 110% 112% CAGR 14% Total Policies Submitted Total Policies Approved SelectQuote Senior – Policies 85% 109% 122% CAGR 48% 100% 116% 125% CAGR 69% 10
28 44 74 113 19 19 56 56 9 24 16 55 1 1 2 2 Core Premium Final Expense Ancillary Premium Q3 FY2020 Q3 FY2021 FYTD 20 FYTD 21 3 3 16 20 Q3 FY2020 Q3 FY2021 FYTD 20 FYTD 21 31 46 88 126 Q3 FY2020 Q3 FY2021 FYTD 20 FYTD 21 Adj. EBITDA Margin 7%11% 176% 58% 2% CAGR (9)% 50% Life Premium ($MM) Revenue ($MM) Adj. EBITDA* ($MM) SelectQuote Life – Financial Summary 96% 242% 52% —% CAGR 23% 43% 29% 16%18% *See reconciliations from non-GAAP measure, Adjusted EBITDA, to net income on slides 17-19. 11
2 1 6 7 Q3 FY2020 Q3 FY2021 FYTD 20 FYTD 21 10 7 29 24 Q3 2020 Q3 2021 FYTD 20 FYTD 21 17 12 49 42 Q3 2020 Q3 2021 FYTD 20 FYTD 21 Adj. EBITDA Margin 16%15% (33)% (31)% (29)% Net New Effective Premium ($MM) Revenue ($MM) Adj. EBITDA* ($MM) *See reconciliations from non-GAAP measure, Adjusted EBITDA, to net income on slides 17-19. SelectQuote Auto & Home – Financial Summary (14)% (18)% 23% 29%19% 12
Growing Faster While Using Less Cash *See reconciliations from non-GAAP measure, Adjusted EBITDA, to net income on slides 17-19. ◦ IPO provided growth capital for the next several years ◦ Post IPO results have exceeded forecasts for revenue and EBITDA ◦ Accelerated growth would typically drive greater cash consumption ◦ Used less Cash Flow from Operations despite faster growth 4QFY20 - 3QFY21 ($MM) 13 704 168 (123) 891 247 (81) Expectation at IPO Actual + 27 % + 4 7% $43m Favo rable Revenue Adj. EBITDA* Cash Flow From Operations
• Net debt position of $103 million ◦ $369 million of cash and cash equivalents ◦ $472 million of term debt • Available borrowing capacity of $75 million on undrawn revolver • Accounts receivable, short and long term commissions receivable balance of $902 million • Refinanced Term Loan, lowered interest rate 20% to 5.75% and secured an additional $292 million of capital ◦ $147 million immediately ◦ $145 million in committed delayed draw term loan • Funded acquisition of asset deal and paid full Inside Response earnout in cash 14 Note: As of March 31, 2021 Capitalization Summary
($'s in millions) Range Implied YoY Growth Revenue $920 - $940 73% - 77% Net Income $130 - $138 60% - 70% Adjusted EBITDA* $225 - $235 46% - 53% *See reconciliations from non-GAAP measure, Adjusted EBITDA, to net income on slides 17-19. SelectQuote – FY2021 Consolidated Guidance 15
Supplemental information 16
3Q FY 2021 (in thousands) Senior Life Auto & Home Corp & Elims Consolidated Revenue $ 215,600 $ 46,400 $ 6,973 $ (2,050) $ 266,923 Operating expenses (140,111) (43,225) (5,877) (12,507) (201,720) Other expenses, net — — — (15) (15) Adjusted EBITDA 75,489 3,175 1,096 (14,572) 65,188 Share-based compensation expense (1,429) Non-recurring expenses (4,667) Fair value adjustments to contingent earnout obligations (334) Depreciation and amortization (4,323) Loss on disposal of property, equipment, and software (101) Interest expense, net (7,355) Loss on extinguishment of debt (3,315) Income tax expense (7,183) Net income $ 36,481 FYTD 2021 (in thousands) Senior Life Auto & Home Corp & Elims Consolidated Revenue $ 604,309 $ 125,598 $ 23,752 $ (4,293) $ 749,366 Operating expenses (385,363) (105,532) (16,889) (34,771) (542,555) Other expenses, net — — — (58) (58) Adjusted EBITDA 218,946 20,066 6,863 (39,122) 206,753 Share-based compensation expense (3,689) Non-recurring expenses (5,490) Fair value adjustments to contingent earnout obligations (1,487) Depreciation and amortization (11,260) Loss on disposal of property, equipment, and software (261) Interest expense, net (20,898) Loss on extinguishment of debt (3,315) Income tax expense (32,619) Net income $ 127,734 3Q FY 2021 and FYTD 2021 Adjusted EBITDA to Net Income Reconciliation 17
3Q FY 2020 (in thousands) Senior Life Auto & Home Corp & Elims Consolidated Revenue $ 107,351 $ 30,956 $ 10,442 $ (145) $ 148,604 Operating expenses (61,169) (27,462) (8,856) (7,059) (104,546) Other expenses, net — — — (4) (4) Adjusted EBITDA 46,182 3,494 1,586 (7,208) 44,054 Share-based compensation expense (19) Non-recurring expenses (1,256) Depreciation and amortization (2,105) Loss on disposal of property, equipment, and software (236) Interest expense, net (9,356) Income tax expense (7,366) Net income $ 23,716 FYTD 2020 (in thousands) Senior Life Auto & Home Corp & Elims Consolidated Revenue $ 273,808 $ 87,543 $ 29,061 $ (344) $ 390,068 Operating expenses (161,456) (71,991) (23,467) (19,248) (276,162) Other expenses, net — — — (20) (20) Adjusted EBITDA 112,352 15,552 5,594 (19,612) 113,886 Share-based compensation expense (9,283) Non-recurring expenses (2,648) Depreciation and amortization (5,273) Loss on disposal of property, equipment, and software (235) Interest expense, net (16,239) Income tax expense (19,110) Net income $ 61,098 3Q FY 2020 and FYTD 2020 Adjusted EBITDA to Net Income Reconciliation 18
(in thousands) Range Net Income $ 130,000 $ 138,000 Income tax expense 34,000 36,000 Loss on extinguishment of debt 3,000 3,000 Interest expense, net 29,000 29,000 Depreciation and amortization 16,000 16,000 Fair value adjustments to contingent earnout obligations 1,000 1,000 Non-recurring expenses 7,000 7,000 Share-based compensation expense 5,000 5,000 Adjusted EBITDA $ 225,000 $ 235,000 FY21 Guidance Adjusted EBITDA to Net Income Reconciliation 19