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): September 9, 2020
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 September 9, 2020, SelectQuote, Inc. (the “Company”) reported its financial results for the fourth quarter and full fiscal year ended June 30, 2020. 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 it 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 dated September 9, 2020 |
| 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: September 9, 2020 | By: /s/ Raffaele Sadun |
|---|---|
| Name: Raffaele Sadun | |
| Title: Chief Financial Officer |
Document
Exhibit 99.1
SelectQuote, Inc. Reports Fourth Quarter 2020 and Fiscal Year 2020 Results
Fourth Quarter 2020 - Consolidated Earnings Highlights
•Revenue of $141 million, Up 90% Year-Over-Year
•Net Income of $20 million, Up 56% Year-Over-Year
•Adjusted EBITDA of $40 million, Up 106% Year-Over-Year*
•Full-Year 2021 Revenue, Net Income and Adjusted EBITDA Expected to be in the Following Ranges:
◦Revenue Expected in a Range of $775 million to $815 million
◦Net Income Expected in a Range of $115 million to $127 million
◦Adjusted EBITDA Expected in a Range of $200 million to $215 million*
Fourth Quarter 2020 - Segment Highlights
Senior Division
•Revenue of $88 million, Up 160% Year-Over-Year
•Adjusted EBITDA of $33 million, Up 157% Year-Over-Year*
•Approved Medicare Advantage Plans grew 184% Year-Over-Year
Life Division
•Revenue of $42 million, Up 37% Year-Over-Year
•Adjusted EBITDA of $12 million, Up 35%Year-Over-Year*
•Ancillary premiums grew 288% Year-Over-Year
Auto & Home Division
•Revenue of $12 million, Up 24% Year-Over-Year
•Adjusted EBITDA of $3 million, Up 36% Year-Over-Year*
•Total Auto & Home premiums grew 27% Year-Over-Year
OVERLAND PARK, Kan., September 9, 2020--(BUSINESS WIRE)--SelectQuote, Inc. (NYSE: SLQT), reported consolidated revenue for fourth quarter 2020 of $141.4 million, which was a 90% increase over consolidated revenue for fourth quarter 2019 of $74.4 million. Consolidated net income for fourth quarter 2020 was $20.0 million, which was a 56% increase over consolidated net income for fourth quarter 2019 of $12.9 million. Finally, consolidated Adjusted EBITDA for fourth quarter 2020 was $40.1 million, which was a 106% increase over consolidated Adjusted EBITDA for fourth quarter 2019 of $19.5 million.
Consolidated revenue for the fiscal year ended June 30, 2020, was $531.5 million, an increase of $194.0 million over consolidated revenue for the fiscal year ended June 30, 2019, of $337.5 million. Consolidated net income for the 2020 fiscal year was $81.1 million, an increase of $8.5 million over consolidated net income for the 2019 fiscal year of $72.6 million. Finally, consolidated Adjusted EBITDA for the 2020 fiscal year was $154.0 million compared to consolidated Adjusted EBITDA of $105.3 million for the fiscal year 2019, an increase of $48.7 million.
Chief Executive Officer Tim Danker commented, “Our Fourth Quarter demonstrates SelectQuote’s significant growth potential and we are excited to share our results following the company’s successful initial public offering this past May. The power of our leading technology-enabled direct-to-consumer model paired with our 100% in-house agent-led customer service approach positions SelectQuote well to take advantage of demographic tailwinds and a large market opportunity for years to come.”
Chief Financial Officer Raffaele Sadun added “Based on our strong full-year 2020 performance, today we establish our full-year 2021 guidance with an initial forecast range of $775 million to $815 million for consolidated revenue and $200 million to $215 million for consolidated Adjusted EBITDA. We expect full-year consolidated net income to range from $115 million to $127 million for 2021.”
*See reconciliation from non-GAAP measure, Adjusted EBITDA, to net income on pages 11-12
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; 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 Division
Financial Results
The following table provides the financial results for the Senior division for fourth quarter and fiscal years ended June 30:
| (in thousands) | 4Q 2020 | 4Q 2019 | % Change | FY 2020 | FY 2019 | % Change | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $ | 87,865 | $ | 33,799 | 160 | % | $ | 361,673 | $ | 192,257 | 88 | % | ||||
| Adjusted EBITDA* | 33,387 | 12,996 | 157 | % | 145,738 | 90,174 | 62 | % | ||||||||
| Adjusted EBITDA Margin | 38 | % | 38 | % | 40 | % | 47 | % |
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 fourth quarter and fiscal years ended June 30:
| 4Q 2020 | 4Q 2019 | % Change | FY 2020 | FY 2019 | % Change | |||
|---|---|---|---|---|---|---|---|---|
| Medicare Advantage | 59,276 | 20,746 | 186 | % | 264,546 | 119,562 | 121 | % |
| Medicare Supplement | 7,702 | 3,541 | 118 | % | 24,085 | 23,593 | 2 | % |
| Dental, Vision and Hearing | 17,212 | 11,678 | 47 | % | 70,018 | 36,619 | 91 | % |
| Prescription Drug Plan | 2,378 | 1,326 | 79 | % | 13,513 | 12,691 | 6 | % |
| Other | 2,278 | 292 | 680 | % | 5,890 | 5,746 | 3 | % |
| Total | 88,846 | 37,583 | 136 | % | 378,052 | 198,211 | 91 | % |
*See reconciliation from non-GAAP measure, Adjusted EBITDA, to net income on pages 11-12
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 fourth quarter and fiscal years ended June 30:
| 4Q 2020 | 4Q 2019 | % Change | FY 2020 | FY 2019 | % Change | |||
|---|---|---|---|---|---|---|---|---|
| Medicare Advantage | 54,305 | 19,142 | 184 | % | 225,404 | 107,665 | 109 | % |
| Medicare Supplement | 6,362 | 2,538 | 151 | % | 18,102 | 16,593 | 9 | % |
| Dental, Vision and Hearing | 16,564 | 9,076 | 83 | % | 55,556 | 28,643 | 94 | % |
| Prescription Drug Plan | 2,481 | 1,172 | 112 | % | 13,009 | 11,739 | 11 | % |
| Other | 2,058 | 178 | 1056 | % | 4,654 | 4,102 | 13 | % |
| Total | 81,770 | 32,106 | 155 | % | 316,725 | 168,742 | 88 | % |
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 fourth quarter and fiscal years ended June 30:
| (dollars per policy): | 4Q 2020 | 4Q 2019 | % Change | FY 2020 | FY 2019 | % Change | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Medicare Advantage | $ | 1,256 | $ | 1,263 | (1) | % | $ | 1,287 | $ | 1,279 | 1 | % |
| Medicare Supplement | 1,382 | 1,451 | (5) | % | 1,376 | 1,312 | 5 | % | ||||
| Dental, Vision and Hearing | 125 | 169 | (26) | % | 140 | 152 | (8) | % | ||||
| Prescription Drug Plan | 226 | 285 | (21) | % | 229 | 267 | (15) | % | ||||
| Other | (48) | 573 | (108) | % | 34 | 621 | (95) | % |
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, renewals from policies originally sold in a prior period with insurance carrier partners whose contracts preclude us from recognizing variable consideration for estimated renewal commissions 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 June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| (dollars per approved policy): | 2020 | 2019 | % Change | |||||
| Medicare Advantage and Medicare Supplement approved policies | 243,506 | 124,258 | 96 | % | ||||
| Medicare Advantage and Medicare Supplement commission per MA / MS policy | $ | 1,293 | $ | 1,283 | 1 | % | ||
| Other commission per MA/MS policy | 45 | 81 | (44) | % | ||||
| Other per MA / MS policy | 147 | 183 | (20) | % | ||||
| Total revenue per MA / MS policy | 1,485 | 1,547 | (4) | % | ||||
| Total operating expenses per MA / MS policy | (887) | (822) | 8 | % | ||||
| Adjusted EBITDA per MA / MS policy | $ | 598 | $ | 725 | (18) | % | ||
| Adjusted EBITDA Margin per MA / MS policy | 40 | % | 47 | % | ||||
| Revenue / CAC multiple | 3.5X | 4.0X |
Life Division
Financial Results
The following table provides the financial results for the Life division for the fourth quarter and fiscal years ended June 30:
| (in thousands) | 4Q 2020 | 4Q 2019 | % Change | FY 2020 | FY 2019 | % Change | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $ | 42,423 | $ | 30,908 | 37 | % | $ | 129,967 | $ | 110,493 | 18 | % | ||||
| Adjusted EBITDA* | 12,258 | 9,100 | 35 | % | 27,812 | 25,821 | 8 | % | ||||||||
| Adjusted EBITDA Margin | 29 | % | 29 | % | 21 | % | 23 | % |
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 are for term life and permanent life insurance policies, while ancillary premiums are for other 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.
The following table shows core premiums and ancillary premiums for fourth quarter and fiscal years ended June 30:
| (in thousands) | 4Q 2020 | 4Q 2019 | % Change | FY 2020 | FY 2019 | % Change | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Core Premiums | $ | 18,965 | $ | 20,256 | (6) | % | $ | 75,451 | $ | 75,681 | — | % |
| Ancillary Premiums | 19,592 | 5,047 | 288 | % | 37,346 | 14,286 | 161 | % |
*See reconciliation from non-GAAP measure, Adjusted EBITDA, to net income on pages 11-12
Auto & Home Division
Financial Results
The following table provides the financial results for the Auto & Home division for the fourth quarter and fiscal years ended June 30:
| (in thousands) | 4Q 2020 | 4Q 2019 | % Change | FY 2020 | FY 2019 | % Change | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $ | 12,127 | $ | 9,818 | 24 | % | $ | 41,189 | $ | 35,054 | 18 | % | ||||
| Adjusted EBITDA* | 3,104 | 2,276 | 36 | % | 8,699 | 7,817 | 11 | % | ||||||||
| Adjusted EBITDA Margin | 26 | % | 23 | % | 21 | % | 22 | % |
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 fourth quarter and fiscal years ended June 30:
| (in thousands): | 4Q 2020 | 4Q 2019 | % Change | FY 2020 | FY 2019 | % Change | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Premiums | $ | 21,162 | $ | 16,603 | 27 | % | $ | 70,087 | $ | 56,719 | 24 | % |
Fiscal Year 2021 Guidance
Based on information available as of September 09, 2020, SelectQuote is providing its guidance for the full-year ending June 30, 2021. 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.
The following guidance is for the full-year ending June 30, 2021:
•Consolidated Revenue is expected to be in the range of $775 million to $815 million
•Consolidated Net Income is expected to be in the range of $115 million to $127 million
•Consolidated Adjusted EBITDA is expected to be in the range of $200 million to $215 million*
Review of Financial Results
SelectQuote, Inc. will host a conference call with the investment community today, Wednesday, September 9, 2020, beginning at 5 p.m. ET. Interested parties may access the conference call live over the phone by dialing (833) 350-1343 (domestic) or (236) 389-2431 (international) and using conference ID: 2669864. The event will be webcasted live via our investor relations website https://ir.selectquote.com/investor-home/default.aspx. Interested parties should register at least 10-15 minutes prior to the start of the event.
*See reconciliation from non-GAAP measure, Adjusted EBITDA, to net income on pages 11-12
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.
Adjusted EBITDA is not prepared in accordance with GAAP and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of this non-GAAP financial measure rather than net income, which is the most directly comparable financial measure calculated and presented in accordance with GAAP. These limitations include the fact that Adjusted EBITDA excludes interest expense, depreciation and amortization expense, share-based compensation expense, income tax expense, and other non-recurring expenses that are one-time in nature. In addition, other companies may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.
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 registration statement on Form S-1 (the “Prospectus”) 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 force of more than 1,000 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 15 leading, nationally-recognized carriers, as well as prescription drug plan, dental, vision and hearing plans.
Investor Relations:
Sloan Bohlen / Helen O’Donnell
877-678-4083
investorrelations@selectquote.com
Media:
Lisa Wolford
917-846-0881
lwolford@soleburytrout.com
Source: SelectQuote, Inc.
SELECTQUOTE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
| June 30, | ||||
|---|---|---|---|---|
| 2020 | 2019 | |||
| ASSETS | (Unaudited) | |||
| CURRENT ASSETS: | ||||
| Cash and cash equivalents | $ | 321,065 | $ | 570 |
| Restricted cash | 47,805 | — | ||
| Accounts receivable | 83,634 | 59,829 | ||
| Commissions receivable-current | 51,209 | 36,108 | ||
| Other current assets | 10,121 | 6,450 | ||
| Total current assets | 513,834 | 102,957 | ||
| COMMISSIONS RECEIVABLE—Net | 461,752 | 279,489 | ||
| PROPERTY AND EQUIPMENT—Net | 22,150 | 13,759 | ||
| SOFTWARE—Net | 8,399 | 4,895 | ||
| INTANGIBLE ASSETS—NET | 19,673 | 218 | ||
| GOODWILL | 46,577 | 5,364 | ||
| OTHER ASSETS | 1,408 | 258 | ||
| TOTAL ASSETS | $ | 1,073,793 | $ | 406,940 |
| LIABILITIES, TEMPORARY EQUITY, AND SHAREHOLDERS’ EQUITY | ||||
| CURRENT LIABILITIES: | ||||
| Accounts payable | $ | 22,891 | $ | 7,634 |
| Accrued expenses | 14,936 | 6,015 | ||
| Accrued compensation and benefits | 22,228 | 12,566 | ||
| Non-recourse debt—current | — | 3,920 | ||
| Earnout liability | 30,812 | — | ||
| Other current liabilities | 4,944 | 3,087 | ||
| Total current liabilities | 95,811 | 33,222 | ||
| DEBT | 311,814 | 11,032 | ||
| NON-RECOURSE DEBT—Net | — | 10,615 | ||
| DEFERRED INCOME TAXES | 105,844 | 81,252 | ||
| OTHER LIABILITIES | 14,635 | 7,567 | ||
| Total liabilities | 528,104 | 143,688 | ||
| COMMITMENTS AND CONTINGENCIES | ||||
| TEMPORARY EQUITY: | ||||
| Series A redeemable convertible preferred stock | — | 171 | ||
| Series B convertible preferred stock | — | 501 | ||
| Series C convertible preferred stock | — | 85 | ||
| Series D convertible preferred stock | — | 40 | ||
| Total temporary equity | — | 797 | ||
| SHAREHOLDERS’ EQUITY: | ||||
| Common stock | 1,622 | 906 | ||
| Additional paid-in capital | 548,113 | 138,378 | ||
| Treasury stock | — | (77,275) | ||
| Retained earnings | (2,792) | 200,446 | ||
| Accumulated other comprehensive loss | (1,254) | — | ||
| Total shareholders’ equity | 545,689 | 262,455 | ||
| TOTAL LIABILITIES, TEMPORARY EQUITY, AND SHAREHOLDERS’ EQUITY | $ | 1,073,793 | $ | 406,940 |
SELECTQUOTE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, except per share amounts)
| Three months ended June 30, | Year Ended June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||
| (unaudited) | (unaudited) | (unaudited) | ||||||
| REVENUE: | ||||||||
| Commission | $ | 122,679 | $ | 64,998 | $ | 476,606 | $ | 296,000 |
| Production bonus and other | 18,768 | 9,401 | 54,909 | 41,469 | ||||
| Total revenue | 141,447 | 74,399 | 531,515 | 337,469 | ||||
| OPERATING COSTS AND EXPENSES: | ||||||||
| Cost of revenue | 40,911 | 24,128 | 167,399 | 104,421 | ||||
| Marketing and advertising | 51,911 | 25,838 | 184,157 | 110,265 | ||||
| General and administrative | 9,504 | 5,074 | 35,283 | 18,169 | ||||
| Technical development | 3,259 | 2,094 | 12,347 | 8,326 | ||||
| Total operating costs and expenses | 105,585 | 57,134 | 399,186 | 241,181 | ||||
| INCOME FROM OPERATIONS | 35,862 | 17,265 | 132,329 | 96,288 | ||||
| INTEREST EXPENSE, NET | (9,522) | (538) | (25,761) | (1,660) | ||||
| OTHER EXPENSES, NET | (385) | (7) | (405) | (15) | ||||
| INCOME BEFORE INCOME TAX EXPENSE | 25,955 | 16,720 | 106,163 | 94,613 | ||||
| INCOME TAX EXPENSE | 5,906 | 3,834 | 25,016 | 22,034 | ||||
| NET INCOME | $ | 20,049 | $ | 12,886 | $ | 81,147 | $ | 72,579 |
| NET INCOME (LOSS) PER SHARE: | ||||||||
| Basic | $ | 0.15 | $ | 0.11 | $ | (0.16) | $ | 0.70 |
| Diluted | $ | 0.13 | $ | 0.09 | $ | (0.16) | $ | 0.55 |
| WEIGHTED-AVERAGE COMMON STOCK OUTSTANDING USED IN PER SHARE AMOUNTS: | ||||||||
| Basic | 120,018 | 86,581 | 97,496 | 85,378 | ||||
| Diluted | 152,404 | 101,781 | 97,496 | 132,491 | ||||
| OTHER COMPREHENSIVE LOSS NET OF TAX: | ||||||||
| Net unrealized losses on cash flow hedges | (1,254) | — | (1,254) | — | ||||
| OTHER COMPREHENSIVE LOSS | (1,254) | — | (1,254) | — | ||||
| COMPREHENSIVE INCOME | $ | 18,795 | $ | 12,886 | $ | 79,893 | $ | 72,579 |
SELECTQUOTE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Three months ended June 30, | Year Ended June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||
| (unaudited) | (unaudited) | (unaudited) | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 20,049 | $ | 12,886 | $ | 81,147 | $ | 72,579 |
| Adjustments to reconcile net income to net cash, cash equivalents, and restricted cash used in operating activities: | ||||||||
| Depreciation and amortization | 2,720 | 1,256 | 7,993 | 4,702 | ||||
| Loss on disposal of property, equipment, and software | 125 | 170 | 360 | 221 | ||||
| Stock compensation expense | 216 | 20 | 9,498 | 86 | ||||
| Deferred income taxes | 5,889 | 3,813 | 25,007 | 21,991 | ||||
| Amortization of debt issuance costs and debt discount | 835 | 24 | 2,266 | 123 | ||||
| Write-off of debt issuance costs | 237 | — | 237 | — | ||||
| Fair value adjustments to contingent earnout obligations | 375 | — | 375 | — | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 1,472 | 2,633 | (15,585) | (8,676) | ||||
| Commissions receivable | (54,910) | (22,233) | (197,364) | (91,639) | ||||
| Other assets | (4,772) | (2,143) | (3,352) | (3,031) | ||||
| Accounts payable and accrued expenses | 2,776 | (258) | 15,672 | 2,810 | ||||
| Other liabilities | 5,243 | 108 | 11,970 | 947 | ||||
| Net cash (used in) provided by operating activities | (19,745) | (3,724) | (61,776) | 113 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property and equipment | (3,260) | (385) | (9,446) | (3,921) | ||||
| Proceeds from sales of property and equipment | — | — | 3 | — | ||||
| Purchases of software and capitalized software development costs | (1,663) | (1,275) | (6,106) | (4,715) | ||||
| Acquisition of business, net of cash acquired | (35,821) | — | (35,821) | — | ||||
| Net cash used in investing activities | (40,744) | (1,660) | (51,370) | (8,636) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from revolving line of credit | 2,014 | 36,042 | 87,989 | 135,621 | ||||
| Payments on revolving line of credit | (2,014) | (34,025) | (99,021) | (144,341) | ||||
| Net proceeds from Term Loan | — | — | 416,500 | — | ||||
| Payments on Term Loan | (100,000) | — | (100,000) | — | ||||
| Proceeds from non-recourse debt | 4,450 | 4,150 | 16,575 | 16,200 | ||||
| Payments on other debt | (29,015) | (761) | (31,447) | (1,395) | ||||
| Proceeds from common stock option exercises | 141 | 773 | 5,506 | 4,300 | ||||
| Purchase of treasury stock | — | — | — | (34) | ||||
| Cash dividends paid | — | (979) | (275,000) | (1,958) | ||||
| Issuance of preferred stock | 135,000 | — | 135,000 | — | ||||
| Debt issuance costs | (160) | — | (7,854) | (258) | ||||
| Payments of costs incurred in connection with private placement | (3,784) | — | (3,784) | — | ||||
| Payments of costs incurred in connection with initial public offering | (1,100) | — | (3,218) | — | ||||
| Proceeds from initial public offering, net of underwriters’ discounts and commissions | 340,200 | — | 340,200 | — | ||||
| Net cash provided by financing activities | 345,732 | 5,200 | 481,446 | 8,135 | ||||
| NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | 285,243 | (184) | 368,300 | (388) | ||||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of year | 83,627 | 754 | 570 | 958 | ||||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of year | $ | 368,870 | $ | 570 | $ | 368,870 | $ | 570 |
SELECTQUOTE, INC. AND SUBSIDIARIES
Adjusted EBITDA to Net Income Reconciliation
(Unaudited)
| 4Q 2020 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Senior | Life | Auto & Home | Corp & Elims | Consolidated | |||||
| Revenue | $ | 87,865 | $ | 42,423 | $ | 12,127 | $ | (968) | $ | 141,447 |
| Operating expenses | (54,478) | (30,165) | (9,023) | (7,633) | (101,299) | |||||
| Other expenses, net | — | — | — | (10) | (10) | |||||
| Adjusted EBITDA | 33,387 | 12,258 | 3,104 | (8,611) | 40,138 | |||||
| Interest expense, net | (9,522) | |||||||||
| Income tax expense | (5,906) | |||||||||
| Depreciation and amortization | (2,720) | |||||||||
| Non-recurring expenses | (1,053) | |||||||||
| Contingent consideration | (375) | |||||||||
| Share-based compensation expense | (216) | |||||||||
| Loss on disposal of property, equipment, and software | (125) | |||||||||
| Restructuring expenses | (172) | |||||||||
| Net income | $ | 20,049 | ||||||||
| 4Q 2019 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in thousands) | Senior | Life | Auto & Home | Corp & Elims | Consolidated | |||||
| Revenue | $ | 33,799 | $ | 30,908 | $ | 9,818 | $ | (126) | $ | 74,399 |
| Operating expenses | (20,803) | (21,808) | (7,542) | (4,719) | (54,872) | |||||
| Other expenses, net | — | — | — | (7) | (7) | |||||
| Adjusted EBITDA | 12,996 | 9,100 | 2,276 | (4,852) | 19,520 | |||||
| Income tax expense | (3,834) | |||||||||
| Depreciation and amortization | (1,256) | |||||||||
| Non-recurring expenses | (871) | |||||||||
| Interest expense, net | (538) | |||||||||
| Loss on disposal of property, equipment, and software | (170) | |||||||||
| Share-based compensation expense | (20) | |||||||||
| Restructuring expenses | 55 | |||||||||
| Net income | $ | 12,886 |
SELECTQUOTE, INC. AND SUBSIDIARIES
Adjusted EBITDA to Net Income Reconciliation
(Unaudited)
| FY 2020 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Senior | Life | Auto & Home | Corp & Elims | Consolidated | |||||
| Revenue | $ | 361,673 | $ | 129,967 | $ | 41,189 | $ | (1,314) | $ | 531,515 |
| Operating expenses | (215,935) | (102,155) | (32,490) | (26,881) | (377,461) | |||||
| Other expenses, net | — | — | — | (30) | (30) | |||||
| Adjusted EBITDA | 145,738 | 27,812 | 8,699 | (28,225) | 154,024 | |||||
| Interest expense, net | (25,761) | |||||||||
| Income tax expense | (25,016) | |||||||||
| Share-based compensation expense | (9,498) | |||||||||
| Depreciation and amortization | (7,993) | |||||||||
| Non-recurring expenses | (3,721) | |||||||||
| Contingent consideration | (375) | |||||||||
| Loss on disposal of property, equipment, and software | (360) | |||||||||
| Restructuring expenses | (153) | |||||||||
| Net income | $ | 81,147 | ||||||||
| FY 2019 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in thousands) | Senior | Life | Auto & Home | Corp & Elims | Consolidated | |||||
| Revenue | $ | 192,257 | $ | 110,493 | $ | 35,054 | $ | (335) | $ | 337,469 |
| Operating expenses | (102,083) | (84,672) | (27,237) | (18,184) | (232,176) | |||||
| Other expenses, net | — | — | — | (15) | (15) | |||||
| Adjusted EBITDA | 90,174 | 25,821 | 7,817 | (18,534) | 105,278 | |||||
| Income tax expense | (22,034) | |||||||||
| Depreciation and amortization | (4,702) | |||||||||
| Restructuring expenses | (2,305) | |||||||||
| Non-recurring expenses | (1,691) | |||||||||
| Interest expense, net | (1,660) | |||||||||
| Loss on disposal of property, equipment, and software | (221) | |||||||||
| Share-based compensation expense | (86) | |||||||||
| Net income | $ | 72,579 |
Guidance net income to Adjusted EBITDA reconciliation, year ending June 30, 2021:
| (in thousands) | Range | |||
|---|---|---|---|---|
| Net Income | $ | 115,000 | $ | 127,000 |
| Income tax expense | 42,000 | 45,000 | ||
| Interest expense | 26,000 | 26,000 | ||
| Depreciation and amortization | 10,000 | 10,000 | ||
| Share-based compensation expense | 4,000 | 4,000 | ||
| Non-recurring expenses | 2,000 | 2,000 | ||
| Contingent consideration | 1,000 | 1,000 | ||
| Adjusted EBITDA | $ | 200,000 | $ | 215,000 |
12
selectquoteincjune302020
Exhibit 99.2 4th Quarter and Fiscal Year 2020 Earnings Conference Call Presentation September 9, 2020
Disclaimer 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 registration statement on Form S-1 (the “Prospectus”) 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 is 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 Prospectus. 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. 2
4th Quarter Earnings Summary SelectQuote drove top line and profit results for 4th quarter and full-year 2020 that were ahead of internal expectations. Results were primarily driven by continued strength in the Senior and Life divisions. Consolidated revenue totaled $141 million, up 90% year-over-year. Consolidated Adjusted EBITDA* totaled $40 million, up 106% year-over-year. Consolidated net income totaled $20 million or $0.13 per diluted share. Senior revenue and Adjusted EBITDA* totaled $88 million and $33 million, up 160% and 157% year-over-year, respectively. 4th Quarter Highlights: • Successful private placement and IPO raised net proceeds of $475 million • Closed acquisition of InsideResponse on May 1st • Strategic healthcare partnerships announced to integrate value-based care into our offering as well as the addition of Kaiser Permanente to our Senior choice platform *See reconciliations from non-GAAP measure, Adjusted EBITDA, to net income on slides 21-24 3
SelectQuote at a Glance 35+ 1 Billion+ Years in Data Points Operation Collected 100% 2MM+ Internal Policyholders Agents Served 1,000+ $180Bn+ Licensed Total Addressable Agents(1) Market Notes: 1. As of June 30, 2020 4
Demographics High Degree of Visibility to Accelerating Growth of Senior Population MA / MS Enrollment and Penetration Are Growing ($MM) 76.7 68.4 23.3 59.9 23.7 52.5 24.2 70% 45.5 26.4 65% 25.5 60% 44% 50% 53.4 44.7 35.7 20.0 26.1 2008A 2013A 2018A 2023E 2028E MA / MS Other Medicare MA / MS Enrollment as % of Total Enrollment Enrollment Medicare Enrollment • The $30+ billion market for Senior is large, long-tailed, and under penetrated • Enrollment in Medicare Advantage / Supplement and other plans continues to expand and approximately 10,000 new Americans will turn 65 and become eligible each day over the next decade 5
Market Demands Have Evolved Dramatically Consumers Desire Expertise, Simplicity, Specialized Service for Complex Purchasing Decisions Industry Norm What the Market Wants Face-to-face and time-intensive Over the phone, convenient and efficient Limited coverage options and agent expertise Knowledgeable and experienced agents Limited transparency Fully transparent and unbiased Few alternatives Broad product offering “One size fits all” advice based on unknown factors Advice tailored to meet individual needs / clients’ (i.e. sales commissions) best interests Cumbersome Easy The Challenge: Address evolving purchasing behavior of the consumer in a market for very complex products 6
Our Differentiated Approach Our Foundational Pillars Our Technology Our Agents Technology optimizes our lead acquisition, intelligently matches leads Agents enhance lead conversion to agents and maximizes our return on and maximize revenue opportunity marketing spend Proprietary, data-driven Highly trained, 100% internal agents and purpose-built solutions Conduct personalized, Intelligent lead acquisition needs-based analysis Real time lead-to-agent matching Incented to place customer in the best and routing policy Pre-hire assessment through Post-sale client engagement seasonal Flex program Our Purpose-Built Technology Empowers Our Agents with Tools to Maximize Customer Satisfaction, and Optimize Policyholder Lifetime Value 7
Submitted Policies Illustrative SeniorMonthlyProduction Agents AreAbletoFlexfromOneSegmentAnotherinaHighlySeasonal Business Our ProductDiversificationandFlexModelImpact Retention Jul AEP/OEP creates seasonal upswing in business volumes with Aug ~70% of MA and MS policies written in this window Sep Medicare Advantage Oct AEP Nov Dec Jan Medicare Supplement OEP Feb Mar Apr May Jun Agent LifecycleManagement AEP & OEP Non-AEP / OEP SelectQuote is able to dynamically manage the allocation of Auto & Home Auto & Home its agents across seasons +Flex Agents Senior Senior Life Life 8
Strategic Focus and Competitive Differentiators • Our strategy is to maximize absolute profitability at attractive returns on invested capital divisions • Our choice model paired with highly trained, in- house agents and dedicated customer care teams was purpose-built to ensure customers buy the right plan for their specific needs which leads to high retention rates • Our market-leading Lifetime Value and Adjusted EBITDA per policy are a function of the way we have built and refined our business over 35 years • Predictable cash flows are driven by high quality of policies written • We have a strong record of attractive returns on invested capital and have a long runway to replicate those returns at scale 9
We Have a High-Growth, Scalable Business Model(1) Revenue(2) Adj. EBITDA(2)(3) ($MM) ($MM) Adj. EBITDA 21% 31% 29% Margin(3) 51% 532 CAGR: 41 154 9 130 28 76% 337 CAGR: 105 35 8 26 234 110 33 50 362 146 9 98 23 90 192 102 37 (19) (19) FY 2018 FY 2019 FY 2020 (28) Senior Life Auto & Home Corp FY 2018 FY 2019 FY 2020 Senior Life Notes: Auto & Home Corporate 1. SelectQuote’s fiscal year ends 6/30. 2. The sum of the segments may not equal the total due to rounding. 3. See reconciliations from Adjusted EBITDA to net income on slides 21-24. 10
SelectQuote – Consolidated Financial Summary Revenue Adj. EBITDA* ($MM) ($MM) 532 8% 5 46% 154 337 105 90% 106% 141 40 74 20 FY 2019 FY 2020 4Q FY19 4Q FY20 FY 2019 FY 2020 4Q FY19 4Q FY20 Adj. EBITDA 29% 26% 28% Margin 31% *See reconciliations from non-GAAP measure, Adjusted EBITDA, to net income on slides 21-24 11
SelectQuote Senior – Financial Summary Revenue Adj. EBITDA* ($MM) ($MM) 362 8% 8 146 2% 6 192 90 60% 1 57% 88 1 33 34 13 FY 2019 FY 2020 4Q 2019 4Q 2020 FY 2019 FY 2020 4Q 2019 4Q 2020 Adj. EBITDA Margin 47% 40% 38% 38% *See reconciliations from non-GAAP measure, Adjusted EBITDA, to net income on slides 21-24 12
SelectQuote Senior – Policies Total Policies Submitted Total Policies Approved 378,052 CAGR CAGR 91% 88% 89,421 62% 65% CAGR CAGR 2% 24,085 9% 136% 316,725 155% 121% 109% 64% 102% 198,211 73,219 118% 151% 18,102 55,056 186% 184% 168,742 23,593 264,546 44,484 88,846 16,593 225,404 21,868 81,770 119,562 7,702 37,583 21,103 107,665 32,106 6,362 13,296 59,276 3,541 10,4262,538 54,305 20,746 19,142 FY 2019 FY 2020 4Q 2019 4Q 2020 FY 2019 FY 2020 4Q 2019 4Q 2020 MA MS Other MA MS Other 13
Industry Leading Unit Economics FY June 30, 2020 $1,485 Total Revenue / SLQT Peer A Peer B Total Cost (6) 1.7x 1.7x 1.4x $887 $598 Revenue per approved MA/MS policy(1) Cost per approved MA/MS policy(2) Adj. EBITDA per approved MA/MS policy(3)(7) (4) (5) SelectQuote Peer A Peer B Notes: Source: Analysis based on publicly filed documents, Financials based on Medicare / Senior Operating Segment 1. Segment Revenue divided by approved MA and MS policies 2. Cost represents Segment Revenue minus Segment Adj. EBITDA divided by approved MA and MS policies 3. Segment Adj. EBITDA divided by approved MA and MS policies 4. Medicare Segment policies and financials include both Internal and External segments 5. Excludes $42.3m one time tail adjustment in 4Q 2019 6. Represents Medicare/Senior segment revenue and costs only 7. See reconciliations from Adjusted EBITDA to net income on slides 21-24 14
SelectQuote Life – Key Operating Metrics and Financial Summary Life Core and Ancillary Premium Revenue ($MM) ($MM) CAGR 25% 18% 161% 130 37% 110 —% 31 42 FY 2019 FY 2020 4Q 2019 4Q 2020 CAGR 113 52% Adj. EBITDA* ($MM) 288% 90 37 14 (6)% 8% 39 76 28 76 25 26 35% 20 5 9 12 20 19 FY 2019 FY 2020 4Q 2019 4Q 2020 FY 2019 FY 2020 4Q 2019 4Q 2020 Adj. Core Premium Ancillary Premium EBITDA 23% 21% 29% 29% Margin *See reconciliations from non-GAAP measure, Adjusted EBITDA, to net income on slides 21-24 15
SelectQuote Auto & Home – Key Operating Metrics and Financial Summary Net New Effective Premium Revenue ($MM) ($MM) 18% 41 35 24% 24% 70 12 10 57 FY 2019 FY 2020 4Q 2019 4Q 2020 Adj. EBITDA* ($MM) 27% 21 11% 9 17 8 36% 2 3 FY 2019 FY 2020 4Q 2019 4Q 2020 FY 2019 FY 2020 4Q 2019 4Q 2020 Adj. EBITDA 22% 21% 23% 26% Margin *See reconciliations from non-GAAP measure, Adjusted EBITDA, to net income on slides 21-24 16
Predictable Cash Flow & Attractive Returns Annual Customer Cohorts Added as Recently as 2018 Are Already Cash Flow Positive • All costs incurred in year 1 of customer life • Per ASC 606, anticipated lifetime revenue recognized in year 1 • On a cash basis, cohorts typically breakeven in year 2-3 • Significant cash returns generated thereafter 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020 Cost Revenue Cost Revenue Cost Revenue Cost Revenue Cost Revenue Cost Revenue Upfront Cost First Year Cash Received Renewal Cash Received to Date Cash to be received from polices that have already renewed Future Expected Cash from Renewals Note: As of June 30, 2020 17
SelectQuote – FY2021 Consolidated Guidance ($'s in millions) Range Implied YoY Growth Revenue $775 - $815 46% - 53% Net Income $115 - $127 43% - 56% Adjusted EBITDA* $200 - $215 30% - 40% *See reconciliations from non-GAAP measure, Adjusted EBITDA, to net income on slides 21-24 18
Key Investment Takeaways Large and Growing End Markets Shifting to Meet Evolving Consumer Preferences Purpose-Built Technology Empowering Our Highly Skilled Internal Agent Network Self-Reinforcing Feedback Loop from Strong Carrier Relationships and Favorable Consumer Outcomes Simple and Attractive Business Model Driving Profitable Growth and Industry Leading LTV Unique Company Culture Developed by Experienced Management Team 19
Supplemental information 20
FY 2020 and 4Q 2020 Adjusted EBITDA to Net Income Reconciliation FY 2020 (in thousands) Senior Life Auto & Home Corp & Elims Consolidated Revenue $ 361,673 $ 129,967 $ 41,189 $ (1,314) $ 531,515 Operating expenses (215,935) (102,155) (32,490) (26,881) (377,461) Other expenses, net — — — (30) (30) Adjusted EBITDA 145,738 27,812 8,699 (28,225) 154,024 Interest expense, net (25,761) Income tax expense (25,016) Share-based compensation expense (9,498) Depreciation and amortization (7,993) Non-recurring expenses (3,721) Contingent consideration (375) Loss on disposal of property, equipment, and software (360) Restructuring expenses (153) Net income $ 81,147 4Q 2020 (in thousands) Senior Life Auto & Home Corp & Elims Consolidated Revenue $ 87,865 $ 42,423 $ 12,127 $ (968) $ 141,447 Operating expenses (54,478) (30,165) (9,023) (7,633) (101,299) Other expenses, net — — — (10) (10) Adjusted EBITDA 33,387 12,258 3,104 (8,611) 40,138 Interest expense, net (9,522) Income tax expense (5,906) Depreciation and amortization (2,720) Non-recurring expenses (1,053) Contingent consideration (375) Share-based compensation expense (216) Restructuring expenses (172) Loss on disposal of property, equipment, and software (125) Net income $ 20,049 21
FY 2019 and 4Q 2019 Adjusted EBITDA to Net Income Reconciliation FY 2019 (in thousands) Senior Life Auto & Home Corp & Elims Consolidated Revenue $ 192,257 $ 110,493 $ 35,054 $ (335) $ 337,469 Operating expenses (102,083) (84,672) (27,237) (18,184) (232,176) Other expenses, net — — — (15) (15) Adjusted EBITDA 90,174 25,821 7,817 (18,534) 105,278 Income tax expense (22,034) Depreciation and amortization (4,702) Restructuring expenses (2,305) Non-recurring expenses (1,691) Interest expense, net (1,660) Loss on disposal of property, equipment, and software (221) Share-based compensation expense (86) Net income $ 72,579 4Q 2019 (in thousands) Senior Life Auto & Home Corp & Elims Consolidated Revenue $ 33,799 $ 30,908 $ 9,818 $ (126) $ 74,399 Operating expenses (20,803) (21,808) (7,542) (4,719) (54,872) Other expenses, net — — — (7) (7) Adjusted EBITDA 12,996 9,100 2,276 (4,852) 19,520 Income tax expense (3,834) Depreciation and amortization (1,256) Non-recurring expenses (871) Interest expense, net (538) Loss on disposal of property, equipment, and software (170) Share-based compensation expense (20) Restructuring expenses 55 Net income $ 12,886 22
FY 2018 Adjusted EBITDA to Net Income Reconciliation (in thousands) Senior Life Auto & Home Corp & Elims Consolidated Revenue $ 102,408 $ 98,218 $ 33,348 $ (286) $ 233,688 Operating expenses (65,720) (75,249) (24,127) (18,657) (183,753) Other expenses, net — — — (9) (9) Adjusted EBITDA 36,688 22,969 9,221 (18,952) 49,926 Income tax expense (6,619) Depreciation and amortization (3,468) Restructuring expenses (2,808) Interest expense, net (929) Loss on disposal of property, equipment, and software (700) Non-recurring expenses (436) Share-based compensation expense (67) Net income $ 34,899 23
FY 2021 Guidance Adjusted EBITDA to Net Income Reconciliation (in thousands) Range Net Income $ 115,000 $ 127,000 Income tax expense 42,000 45,000 Interest expense 26,000 26,000 Depreciation and amortization 10,000 10,000 Share-based compensation expense 4,000 4,000 Non-recurring expenses 2,000 2,000 Contingent consideration 1,000 1,000 Adjusted EBITDA $ 200,000 $ 215,000 24