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SelectQuote, Inc. Reports First Quarter 2024 Results

First Quarter of Fiscal Year 2024 – Consolidated Earnings Highlights

  • Revenue of $232.7 million
  • Net loss of $31.1 million
  • Adjusted EBITDA* of $(11.4) million

Reaffirming Fiscal Year 2024 Guidance Ranges:

  • Revenue expected in a range of $1.05 billion to $1.2 billion
  • Net loss expected in a range of $50 million to $22 million
  • Adjusted EBITDA* expected in a range of $80 million to $105 million

First Quarter of Fiscal Year 2024 – Segment Highlights

Senior

  • Revenue of $89.9 million
  • Adjusted EBITDA* of $(1.3) million
  • Approved Medicare Advantage policies of 97,681

Healthcare Services

  • Revenue of $97.4 million
  • Adjusted EBITDA* of $2.3 million
  • Over 52,000 SelectRx members

Life

  • Revenue of $37.8 million
  • Adjusted EBITDA* of $5.2 million

Auto & Home

  • Revenue of $9.0 million
  • Adjusted EBITDA* of $3.3 million

SelectQuote, Inc. (NYSE: SLQT) reported consolidated revenue for the first quarter of fiscal year 2024 of $232.7 million compared to consolidated revenue for the first quarter of fiscal year 2023 of $162.5 million. Consolidated net loss for the first quarter of fiscal year 2024 was $31.1 million compared to consolidated net loss for the first quarter of fiscal year 2023 of $42.5 million. Finally, consolidated Adjusted EBITDA* for the first quarter of fiscal year 2024 was $(11.4) million compared to consolidated Adjusted EBITDA* for the first quarter of fiscal year 2023 of $(27.5) million.

Chief Executive Officer Tim Danker commented, “SelectQuote generated strong results across each segment of the company. Financial results were ahead of our expectations for the seventh straight quarter, and our platform is exceptionally well prepared for this year’s Medicare Advantage selling season. Agent onboarding was ahead of plan, and similar to fiscal 2023, our sales force has a higher mix of tenured agents, which drove significant efficiency gains compared to flex agents in past seasons. In the early days of the annual enrollment period for Medicare Advantage, plan features are similar to last year, and our engagement with customers has been inline with expectations.”

“Our growing SelectRx and Healthcare Services platform continues to increasingly contribute to our financial results and out performance. SelectRx generated record revenue approaching $100 million in the quarter, which was higher than revenue from our Senior segment for the first time in company history. We see the rapid success of Healthcare Services as a definitive proof point of the value that SelectQuote’s agent and information-enabled model can create for our customers, carrier partners and healthcare service providers.”

Mr. Danker continued, “With a strong beginning to our fiscal year, we reaffirm our full-year 2024 financial guidance.”

Segment Results

We currently report on four segments: 1) Senior, 2) Healthcare Services, 3) Life, and 4) Auto & Home. The performance measures of the segments include total revenue and Adjusted EBITDA*. Costs of revenue, cost of goods sold-pharmacy revenue, marketing and advertising, selling, general, and administrative, and technical development operating expenses that are directly attributable to a segment are reported within the applicable segment. Indirect costs of revenue, marketing and advertising, selling, general, and administrative, and technical development operating expenses are allocated to each segment based on varying metrics such as headcount. Adjusted EBITDA is calculated as total revenue for the applicable segment less direct and allocated costs of revenue, cost of goods sold, marketing and advertising, technical development, and selling, general, and administrative operating costs and expenses, excluding depreciation and amortization expense; gain or loss on disposal of property, equipment, and software; share-based compensation expense; and non-recurring expenses such as severance payments and transaction costs.

Senior

Financial Results

The following table provides the financial results for the Senior segment for the periods presented:

 

Three Months Ended September 30,

 

 

(in thousands)

2023

 

2022

 

% Change

Revenue

$

89,918

 

 

$

77,513

 

 

16

%

Adjusted EBITDA*

 

(1,335

)

 

 

(3,853

)

 

65

%

Adjusted EBITDA Margin*

 

(1

)%

 

 

(5

)%

 

 

Operating Metrics

Submitted Policies

Submitted policies are counted when an individual completes an application with our licensed agent and provides authorization to the agent to submit the application to the insurance carrier partner. The applicant may have additional actions to take before the application will be reviewed by the insurance carrier.

The following table shows the number of submitted policies for the periods presented:

 

Three Months Ended September 30,

 

 

 

2023

 

2022

 

% Change

Medicare Advantage

104,532

 

90,028

 

16 %

Medicare Supplement

481

 

665

 

(28) %

Dental, Vision and Hearing

12,496

 

16,334

 

(24) %

Prescription Drug Plan

311

 

364

 

(15) %

Other

1,632

 

2,026

 

(19) %

Total

119,452

 

109,417

 

9 %

*See “Non-GAAP Financial Measures” below.

Approved Policies

Approved policies represents the number of submitted policies that were approved by our insurance carrier partners for the identified product during the indicated period. Not all approved policies will go in force.

The following table shows the number of approved policies for the periods presented:

 

Three Months Ended September 30,

 

 

 

2023

 

2022

 

% Change

Medicare Advantage

97,681

 

83,173

 

17 %

Medicare Supplement

360

 

500

 

(28) %

Dental, Vision and Hearing

10,529

 

12,275

 

(14) %

Prescription Drug Plan

254

 

390

 

(35) %

Other

1,052

 

1,662

 

(37) %

Total

109,876

 

98,000

 

12 %

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 September 30,

 

 

(dollars per policy):

2023

 

2022

 

% Change

Medicare Advantage

$

761

 

$

780

 

(2) %

Medicare Supplement

 

1,041

 

 

1,132

 

(8) %

Dental, Vision and Hearing

 

147

 

 

68

 

116 %

Prescription Drug Plan

 

278

 

 

233

 

19 %

Other

 

11

 

 

74

 

(85) %

Healthcare Services

Financial Results

The following table provides the financial results for the Healthcare Services segment for the periods presented:

 

Three Months Ended September 30,

 

 

(in thousands)

2023

 

2022

 

% Change

Revenue

$

97,368

 

$

43,067

 

126 %

Adjusted EBITDA*

 

2,322

 

 

(11,787)

 

NM

Adjusted EBITDA Margin*

 

2 %

 

 

(27) %

 

 

*See “Non-GAAP Financial Measures” below.

Operating Metrics

Members

The total number of SelectRx members represents the amount of customers to which an order has been shipped, as this is the primary key driver of revenue for Healthcare Services.

The following table shows the total number of SelectRx members for the periods presented:

 

 

Three Months Ended September 30,

 

 

2023

 

2022

Total SelectRx Members

 

52,750

 

32,596

Combined Senior and Healthcare Services - Consumer Per Unit Economics

The opportunity to leverage our existing database and distribution model to improve access to healthcare services for our consumers has created a need for us to review our key metrics related to our per unit economics. As we think about the revenue and expenses for Healthcare Services, we note that they are derived from the marketing acquisition costs associated with the sale of an MA or MS policy, some of which costs are allocated directly to Healthcare Services, and therefore determined that our per unit economics measure should include components from both Senior and Healthcare Services. See details of revenue and expense items included in the calculation below.

Combined Senior and Healthcare Services consumer per unit economics represents total MA and MS commissions; other product commissions; other revenues, including revenues from Healthcare Services; and operating expenses associated with Senior and Healthcare Services, each shown per number of approved MA and MS policies over a given time period. Management assesses the business on a per-unit basis to help ensure that the revenue opportunity associated with a successful policy sale is attractive relative to the marketing acquisition cost. Because not all acquired leads result in a successful policy sale, all per-policy metrics are based on approved policies, which is the measure that triggers revenue recognition.

The MA and MS commission per MA/MS policy represents the LTV for policies sold in the period. Other commission per MA/MS policy represents the LTV for other products sold in the period, including DVH prescription drug plan, and other products, which management views as additional commission revenue on our agents’ core function of MA/MS policy sales. Pharmacy revenue per MA/MS policy represents revenue from SelectRx, and other revenue per MA/MS policy represents revenue from Population Health, production bonuses, marketing development funds, lead generation revenue, and adjustments from the Company’s reassessment of its cohorts’ transaction prices. Total operating expenses per MA/MS policy represents all of the operating expenses within Senior and Healthcare Services. The revenue to customer acquisition cost (“CAC”) multiple represents total revenue as a multiple of total marketing acquisition costs, which represents the direct costs of acquiring leads. These costs are included in marketing and advertising expense within the total operating expenses per MA/MS policy.

The following table shows combined Senior and Healthcare Services consumer per unit economics for the periods presented. Based on the seasonality of Senior and the fluctuations between quarters, we believe that the most relevant view of per unit economics is on a rolling 12-month basis. All per MA/MS policy metrics below are based on the sum of approved MA/MS policies, as both products have similar commission profiles.

*See “Non-GAAP Financial Measures” below.

 

Twelve Months Ended September 30,

(dollars per approved policy):

2023

 

2022

Medicare Advantage and Medicare Supplement approved policies

 

594,554

 

 

665,358

Medicare Advantage and Medicare Supplement commission per MA/MS policy

$

872

 

$

902

Other commission per MA/MS policy

 

13

 

 

22

Pharmacy revenue per MA/MS policy

 

493

 

 

144

Other revenue per MA/MS policy

 

151

 

 

(148)

Total revenue per MA/MS policy

 

1,529

 

 

920

Total operating expenses per MA/MS policy

 

(1,278)

 

 

(1,185)

Adjusted EBITDA per MA/MS policy (1)

 

251

 

 

(265)

Adjusted EBITDA Margin per MA/MS policy (1)

 

16 %

 

 

(29) %

Revenue/CAC multiple

4.3X

 

1.8X

(1) These financial measures are not calculated in accordance with GAAP. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for information regarding our use of these non-GAAP financial measures and a reconciliation of such measures to their nearest comparable financial measures calculated and presented in accordance with GAAP.

Total revenue per MA/MS policy increased 66% for the twelve months ended September 30, 2023, compared to the twelve months ended September 30, 2022, primarily due to the increase in pharmacy revenue. Total operating expenses per MA/MS policy increased 8% for the twelve months ended September 30, 2023, compared to the twelve months ended September 30, 2022, driven by an increase in cost of goods sold-pharmacy revenue for SelectRx due to the growth of the business, offset by a decrease in our marketing and advertising costs.

Life

Financial Results

The following table provides the financial results for the Life segment for the periods presented:

 

Three Months Ended September 30,

 

 

(in thousands)

2023

 

2022

 

% Change

Revenue

$

37,803

 

 

$

36,835

 

 

3

%

Adjusted EBITDA*

 

5,240

 

 

 

5,225

 

 

%

Adjusted EBITDA Margin*

 

14

%

 

 

14

%

 

 

Operating Metrics

Life premium represents the total premium value for all policies that were approved by the relevant insurance carrier partner and for which the policy document was sent to the policyholder and payment information was received by the relevant insurance carrier partner during the indicated period. Because our commissions are earned based on a percentage of total premium, total premium volume for a given period is the key driver of revenue for our Life segment.

*See “Non-GAAP Financial Measures” below.

The following table shows term and final expense premiums for the periods presented:

 

Three Months Ended September 30,

 

 

(in thousands)

2023

 

2022

 

% Change

Term Premiums

$

18,190

 

$

15,098

 

20

%

Final Expense Premiums

 

19,699

 

 

22,364

 

(12

)%

Total

$

37,889

 

$

37,462

 

1

%

Auto & Home

Financial Results

The following table provides the financial results for the Auto & Home segment for the periods presented:

 

Three Months Ended September 30,

 

 

(in thousands)

 

2023

 

 

 

2022

 

 

% Change

Revenue

$

9,027

 

 

$

7,082

 

 

27

%

Adjusted EBITDA*

 

3,319

 

 

 

2,441

 

 

36

%

Adjusted EBITDA Margin*

 

37

%

 

 

34

%

 

 

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 September 30,

 

 

(in thousands):

2023

 

2022

 

% Change

Premiums

$

13,877

 

$

11,549

 

20

%

*See “Non-GAAP Financial Measures” below.

Earnings Conference Call

SelectQuote, Inc. will host a conference call with the investment community today, Thursday, November 2, 2023, beginning at 4:30 p.m. ET. To register for this conference call, please use this link: https://www.netroadshow.com/events/login?show=98c46003&confId=56957. After registering, a confirmation will be sent via email, including dial-in details and unique conference call codes for entry. Registration is open through the live call, but to ensure you are connected for the full call we suggest registering at least 10 minutes before the start of the call. The event will also be webcasted live via our investor relations website https://ir.selectquote.com/investor-home/default.aspx.

Non-GAAP Financial Measures

This release includes certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. To supplement our financial statements presented in accordance with GAAP and to provide investors with additional information regarding our GAAP financial results, we have presented in this release Adjusted EBITDA and Adjusted EBITDA Margin, which are non-GAAP financial measures. These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly titled measures presented by other companies. We define Adjusted EBITDA as income (loss) before interest expense, income tax expense (benefit), depreciation and amortization, and certain add-backs for non-cash or non-recurring expenses, including restructuring and share-based compensation expenses. The most directly comparable GAAP measure is net income (loss). We 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 these non-GAAP financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in the calculations of these non-GAAP financial measures. Accordingly, we believe that these financial measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects. Reconciliations of the differences between the non-GAAP financial measures included herein and their most directly comparable GAAP financial measures are set forth below beginning on page 12.

Forward Looking Statements

This release contains forward-looking statements. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: the impacts of the COVID-19 pandemic and any other public health events, our reliance on a limited number of insurance carrier partners and any potential termination of those relationships or failure to develop new relationships; existing and future laws and regulations affecting the health insurance market; changes in health insurance products offered by our insurance carrier partners and the health insurance market generally; insurance carriers offering products and services directly to consumers; changes to commissions paid by insurance carriers and underwriting practices; competition with brokers, including exclusively online brokers and carriers who opt to sell policies directly to consumers; competition from government-run health insurance exchanges; developments in the U.S. health insurance system; our dependence on revenue from carriers in our senior segment and downturns in the senior health as well as life, automotive and home insurance industries; our ability to develop new offerings and penetrate new vertical markets; risks from third-party products; failure to enroll individuals during the Medicare annual enrollment period; our ability to attract, integrate and retain qualified personnel; our dependence on lead providers and ability to compete for leads; failure to obtain and/or convert sales leads to actual sales of insurance policies; access to data from consumers and insurance carriers; accuracy of information provided from and to consumers during the insurance shopping process; cost-effective advertisement through internet search engines; ability to contact consumers and market products by telephone; global economic conditions, including inflation; disruption to operations as a result of future acquisitions; significant estimates and assumptions in the preparation of our financial statements; impairment of goodwill; potential litigation and other legal proceedings or inquiries; our existing and future indebtedness; our ability to maintain compliance with our debt covenants; access to additional capital; failure to protect our intellectual property and our brand; fluctuations in our financial results caused by seasonality; accuracy and timeliness of commissions reports from insurance carriers; timing of insurance carriers’ approval and payment practices; factors that impact our estimate of the constrained lifetime value of commissions per policyholder; changes in accounting rules, tax legislation and other legislation; disruptions or failures of our technological infrastructure and platform; failure to maintain relationships with third-party service providers; cybersecurity breaches or other attacks involving our systems or those of our insurance carrier partners or third-party service providers; our ability to protect consumer information and other data; failure to market and sell Medicare plans effectively or in compliance with laws;and other factors related to our pharmacy business, including manufacturing or supply chain disruptions, access to and demand for prescription drugs, and regulatory changes or other industry developments that may affect our pharmacy operations. For a further discussion of these and other risk factors that could impact our future results and performance, see the section entitled “Risk Factors” in the most recent Annual Report on Form 10-K (the “Annual Report”) and subsequent periodic reports filed by us with the Securities and Exchange Commission. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as otherwise required by law, we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

About SelectQuote:

Founded in 1985, SelectQuote (NYSE: SLQT) provides solutions that help consumers protect their most valuable assets: their families, health, and property. The company pioneered the model of providing unbiased comparisons from multiple, highly-rated insurance companies allowing consumers to choose the policy and terms that best meet their unique needs. Two foundational pillars underpin SelectQuote’s success: a strong force of highly-trained and skilled agents who provide a consultative needs analysis for every consumer, and proprietary technology that sources and routes high-quality leads.

With an ecosystem offering high touchpoints for consumers across insurance, medicare, pharmacy, and value-based care, the company now has four core business lines: SelectQuote Senior, SelectQuote Healthcare Services, SelectQuote Life, and SelectQuote Auto and Home. SelectQuote Senior serves the needs of a demographic that sees around 10,000 people turn 65 each day with a range of Medicare Advantage and Medicare Supplement plans. SelectQuote Healthcare Services is comprised of the SelectRx Pharmacy, a Patient-Centered Pharmacy Home™ (PCPH) accredited pharmacy, and Population Health which proactively connects consumers with a wide breadth of healthcare services supporting their needs.

Source: SelectQuote, Inc.

SELECTQUOTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

 

 

September 30, 2023

 

June 30, 2023

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

48,486

 

 

$

83,156

 

Accounts receivable, net of allowances of $3.9 million and $2.7 million, respectively

 

115,872

 

 

 

154,565

 

Commissions receivable-current

 

160,370

 

 

 

111,148

 

Other current assets

 

16,361

 

 

 

14,355

 

Total current assets

 

341,089

 

 

 

363,224

 

COMMISSIONS RECEIVABLE—Net

 

709,277

 

 

 

729,350

 

PROPERTY AND EQUIPMENT—Net

 

24,840

 

 

 

27,452

 

SOFTWARE—Net

 

14,677

 

 

 

14,740

 

OPERATING LEASE RIGHT-OF-USE ASSETS

 

22,779

 

 

 

23,563

 

INTANGIBLE ASSETS—Net

 

9,442

 

 

 

10,200

 

GOODWILL

 

29,136

 

 

 

29,136

 

OTHER ASSETS

 

18,904

 

 

 

21,586

 

TOTAL ASSETS

$

1,170,144

 

 

$

1,219,251

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable

$

31,964

 

 

$

27,577

 

Accrued expenses

 

18,284

 

 

 

16,993

 

Accrued compensation and benefits

 

37,953

 

 

 

49,966

 

Operating lease liabilities—current

 

4,980

 

 

 

5,175

 

Current portion of long-term debt

 

33,883

 

 

 

33,883

 

Contract liabilities

 

5,757

 

 

 

1,691

 

Other current liabilities

 

3,925

 

 

 

1,972

 

Total current liabilities

 

136,746

 

 

 

137,257

 

LONG-TERM DEBT, NET—less current portion

 

661,185

 

 

 

664,625

 

DEFERRED INCOME TAXES

 

26,041

 

 

 

39,581

 

OPERATING LEASE LIABILITIES

 

26,590

 

 

 

27,892

 

OTHER LIABILITIES

 

2,844

 

 

 

2,926

 

Total liabilities

 

853,406

 

 

 

872,281

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

Common stock, $0.01 par value

 

1,677

 

 

 

1,669

 

Additional paid-in capital

 

570,087

 

 

 

567,266

 

Accumulated deficit

 

(266,695

)

 

 

(235,644

)

Accumulated other comprehensive income

 

11,669

 

 

 

13,679

 

Total shareholders’ equity

 

316,738

 

 

 

346,970

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

1,170,144

 

 

$

1,219,251

 

SELECTQUOTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands)

 

 

Three Months Ended September 30,

 

2023

 

2022

REVENUE:

 

 

 

Commission

$

117,756

 

$

106,335

Pharmacy

 

94,788

 

 

41,093

Other

 

20,186

 

 

15,056

Total revenue

 

232,730

 

 

162,484

 

 

 

 

OPERATING COSTS AND EXPENSES:

 

 

 

Cost of revenue

 

72,511

 

 

65,164

Cost of goods sold—pharmacy revenue

 

84,008

 

 

42,354

Marketing and advertising

 

62,323

 

 

57,594

Selling, general, and administrative

 

28,666

 

 

30,706

Technical development

 

7,637

 

 

6,182

Total operating costs and expenses

 

255,145

 

 

202,000

 

 

 

 

LOSS FROM OPERATIONS

 

(22,415)

 

 

(39,516)

 

 

 

 

INTEREST EXPENSE, NET

 

(21,397)

 

 

(16,736)

OTHER INCOME (EXPENSE), NET

 

(38)

 

 

158

LOSS BEFORE INCOME TAX BENEFIT

 

(43,850)

 

 

(56,094)

INCOME TAX BENEFIT

 

(12,799)

 

 

(13,610)

 

 

 

 

NET LOSS

$

(31,051)

 

$

(42,484)

 

 

 

 

NET LOSS PER SHARE:

 

 

 

Basic

$

(0.19)

 

$

(0.26)

Diluted

$

(0.19)

 

$

(0.26)

 

 

 

 

WEIGHTED-AVERAGE COMMON STOCK OUTSTANDING USED IN PER SHARE AMOUNTS:

 

 

 

Basic

 

167,453

 

 

164,824

Diluted

 

167,453

 

 

164,824

 

 

 

 

OTHER COMPREHENSIVE INCOME (LOSS) NET OF TAX:

 

 

 

Gain (loss) on cash flow hedge

 

(2,010)

 

 

4,400

OTHER COMPREHENSIVE INCOME (LOSS)

 

(2,010)

 

 

4,400

COMPREHENSIVE LOSS

$

(33,061)

 

$

(38,084)

SELECTQUOTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

Three Months Ended September 30,

 

2023

 

2022

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net loss

$

(31,051)

 

$

(42,484)

Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities:

 

 

 

Depreciation and amortization

 

5,989

 

 

6,802

Loss on disposal of property, equipment, and software

 

9

 

 

325

Share-based compensation expense

 

3,175

 

 

2,630

Deferred income taxes

 

(13,049)

 

 

(13,931)

Amortization of debt issuance costs and debt discount

 

1,612

 

 

1,612

Write-off of debt issuance costs

 

 

 

710

Accrued interest payable in kind

 

3,622

 

 

1,307

Non-cash lease expense

 

784

 

 

1,103

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, net

 

38,693

 

 

34,770

Commissions receivable

 

(29,148)

 

 

(36,012)

Other assets

 

(2,027)

 

 

1,271

Accounts payable and accrued expenses

 

5,257

 

 

(10,496)

Operating lease liabilities

 

(1,498)

 

 

(1,256)

Other liabilities

 

(6,039)

 

 

6,479

Net cash used in operating activities

 

(23,671)

 

 

(47,170)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Purchases of property and equipment

 

(616)

 

 

(298)

Proceeds from sales of property and equipment

 

253

 

 

Purchases of software and capitalized software development costs

 

(1,782)

 

 

(2,087)

Net cash used in investing activities

 

(2,145)

 

 

(2,385)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Payments on Term Loans

 

(8,471)

 

 

(8,917)

Payments on other debt

 

(37)

 

 

(44)

Proceeds from common stock options exercised and employee stock purchase plan

 

 

 

1,079

Payments of tax withholdings related to net share settlement of equity awards

 

(346)

 

 

(32)

Payments of debt issuance costs

 

 

 

(10,110)

Payment of acquisition holdback

 

 

 

(2,335)

Net cash used in financing activities

 

(8,854)

 

 

(20,359)

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

(34,670)

 

 

(69,914)

CASH AND CASH EQUIVALENTS—Beginning of period

 

83,156

 

 

140,997

CASH AND CASH EQUIVALENTS—End of period

$

48,486

 

$

71,083

SELECTQUOTE, INC. AND SUBSIDIARIES

Net Loss to Adjusted EBITDA Reconciliation

(Unaudited)

 

 

Three Months Ended September 30, 2023

(in thousands)

Senior

 

Healthcare Services

 

Life

 

Auto & Home

 

Corp & Elims

 

Consolidated

Revenue

$

89,918

 

$

97,368

 

$

37,803

 

$

9,027

 

$

(1,386)

 

$

232,730

Operating expenses

 

(91,253)

 

 

(95,046)

 

 

(32,563)

 

 

(5,708)

 

 

(19,498)

 

 

(244,068)

Other income (expense), net

 

 

 

 

 

 

 

 

 

(38)

 

 

(38)

Adjusted EBITDA

 

(1,335)

 

 

2,322

 

 

5,240

 

 

3,319

 

 

(20,922)

 

 

(11,376)

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

(3,175)

Transaction costs

 

 

 

 

 

 

 

 

 

 

 

(1,904)

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

(5,989)

Loss on disposal of property, equipment, and software

 

 

 

 

 

 

 

 

 

 

 

(9)

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

(21,397)

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

12,799

Net loss

 

 

 

 

 

 

 

 

 

 

$

(31,051)

 

Three Months Ended September 30, 2022

(in thousands)

Senior

 

Healthcare Services

 

Life

 

Auto & Home

 

Corp & Elims

 

Consolidated

Revenue

$

77,513

 

$

43,067

 

$

36,835

 

$

7,082

 

$

(2,013)

 

$

162,484

Operating expenses

 

(81,366)

 

 

(54,854)

 

 

(31,811)

 

 

(4,640)

 

 

(17,446)

 

 

(190,117)

Other income (expense), net

 

 

 

 

 

201

 

 

(1)

 

 

(42)

 

 

158

Adjusted EBITDA

 

(3,853)

 

 

(11,787)

 

 

5,225

 

 

2,441

 

 

(19,501)

 

 

(27,475)

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

(2,630)

Transaction costs

 

 

 

 

 

 

 

 

 

 

 

(2,126)

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

(6,802)

Loss on disposal of property, equipment, and software

 

 

 

 

 

 

 

 

 

 

 

(325)

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

(16,736)

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

13,610

Net loss

 

 

 

 

 

 

 

 

 

 

$

(42,484)

SELECTQUOTE, INC. AND SUBSIDIARIES

Net Loss to Adjusted EBITDA Reconciliation

(Unaudited)

 

Guidance net loss to Adjusted EBITDA reconciliation, year ending June 30, 2024:

 

(in thousands)

Range

Net loss

$

(50,000)

 

$

(22,000)

Income tax benefit

 

(18,000)

 

 

(8,000)

Interest expense, net

 

102,000

 

 

97,000

Depreciation and amortization

 

24,000

 

 

22,000

Share-based compensation expense

 

14,000

 

 

12,000

Non-recurring expenses

 

8,000

 

 

4,000

Adjusted EBITDA

$

80,000

 

$

105,000

 

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