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SelectQuote, Inc. Reports Fourth Quarter of Fiscal Year 2023 Results

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OVERLAND PARK, Kan.--(BUSINESS WIRE)--Sep 13, 2023--

SelectQuote, Inc. (NYSE: SLQT) reported consolidated revenue for the fourth quarter of fiscal year 2023 of $221.8 million compared to consolidated revenue for the fourth quarter of fiscal year 2022 of $139.4 million. Consolidated net loss for the fourth quarter of fiscal year 2023 was $47.8 million compared to consolidated net loss for the fourth quarter of fiscal year 2022 of $104.7 million. Finally, consolidated Adjusted EBITDA* for the fourth quarter of fiscal year 2023 was $(5.8) million compared to consolidated Adjusted EBITDA* for the fourth quarter of fiscal year 2022 of $(60.8) million.

Consolidated revenue for the fiscal year ended June 30, 2023, was $1.0 billion compared to consolidated revenue for the fiscal year ended June 30, 2022, of $764.0 million. Consolidated net loss for the fiscal year ended June 30, 2023, was $58.5 million compared to consolidated net loss for the fiscal year ended June 30, 2022, of $297.5 million. Finally, consolidated Adjusted EBITDA* for the fiscal year ended June 30, 2023, was $74.3 million compared to consolidated Adjusted EBITDA* of $(260.5) million for the fiscal year ended June 30, 2022.

*See “Non-GAAP Financial Measures” below.
1) $10.4 million change in estimate related to the mutual termination of a contract with a certain Auto & Home carrier to provide for the ability to migrate the book of business to other carriers.

SelectQuote Chief Executive Officer, Tim Danker, remarked, “SelectQuote completed a highly successful fiscal 2023 with another strong quarter of results across each of our businesses. In total, our full year results significantly surpassed our initial forecasts driven by both higher growth, but most importantly, with outstanding operational execution against our paramount goal to optimize profitability and cash flow. The most stark example is nearly $80 million of outperformance in full-year Adjusted EBITDA versus our initial guidance. Similarly, excluding our investment in the growth of SelectRx, the SelectQuote model would have produced positive operating cash flow for the year, which we plan to scale in the quarters and years ahead.”

Mr. Danker continued, “Looking toward the future, our teams are excited to leverage our strategic redesign across each of our businesses, and we believe there is significant opportunity in our Healthcare Services segment. We can, and will, reproduce the success we have achieved in SelectRx with additional value-add services needed by seniors, healthcare providers, and our insurance carrier partners. We believe strongly that SelectQuote is unique in our ability to provide and optimize these services given the information and the leverage we can create via our role as the connective tissue between those in need and the providers of care and coverage. To say it more directly, SelectQuote is not just a Medicare Advantage distribution company, and we plan to decisively demonstrate that through our results in the coming years.”

Segment Results

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

Senior

Financial Results

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

(in thousands)

4Q 2023

 

4Q 2022

 

% Change

 

FY 2023

 

FY 2022

 

% Change

Revenue

$

103,592

 

 

$

68,452

 

 

51

%

 

$

590,131

 

 

$

527,907

 

 

12

%

Adjusted EBITDA*

 

16,147

 

 

 

(32,574

)

 

150

%

 

 

155,077

 

 

 

(161,702

)

 

196

%

Adjusted EBITDA Margin*

 

16

%

 

 

(48

)%

 

 

 

 

26

%

 

 

(31

)%

 

 

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.

*See “Non-GAAP Financial Measures” below.

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

 

4Q 2023

 

4Q 2022

 

% Change

 

FY 2023

 

FY 2022

 

% Change

Medicare Advantage

114,383

 

129,289

 

(12

)%

 

652,630

 

808,116

 

(19

)%

Medicare Supplement

539

 

890

 

(39

)%

 

3,444

 

7,208

 

(52

)%

Dental, Vision and Hearing

14,668

 

23,502

 

(38

)%

 

74,181

 

145,716

 

(49

)%

Prescription Drug Plan

351

 

649

 

(46

)%

 

2,433

 

6,842

 

(64

)%

Other

2,099

 

3,340

 

(37

)%

 

7,501

 

14,776

 

(49

)%

Total

132,040

 

157,670

 

(16

)%

 

740,189

 

982,658

 

(25

)%

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:

 

4Q 2023

 

4Q 2022

 

% Change

 

FY 2023

 

FY 2022

 

% Change

Medicare Advantage

110,027

 

115,707

 

(5

)%

 

577,567

 

661,738

 

(13

)%

Medicare Supplement

435

 

807

 

(46

)%

 

2,619

 

5,461

 

(52

)%

Dental, Vision and Hearing

12,884

 

23,738

 

(46

)%

 

60,824

 

124,989

 

(51

)%

Prescription Drug Plan

350

 

809

 

(57

)%

 

2,144

 

6,124

 

(65

)%

Other

1,356

 

3,208

 

(58

)%

 

5,288

 

12,407

 

(57

)%

Total

125,052

 

144,269

 

(13

)%

 

648,442

 

810,719

 

(20

)%

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:

(dollars per policy):

4Q 2023

 

4Q 2022

 

% Change

 

FY 2023

 

FY 2022

 

% Change

Medicare Advantage

$

830

 

$

877

 

(5

)%

 

$

877

 

$

925

 

(5

)%

Medicare Supplement

 

1,207

 

 

1,236

 

(2

)%

 

 

1,030

 

 

1,270

 

(19

)%

Dental, Vision and Hearing

 

121

 

 

122

 

(1

)%

 

 

100

 

 

123

 

(19

)%

Prescription Drug Plan

 

185

 

 

225

 

(18

)%

 

 

207

 

 

234

 

(12

)%

Other

 

105

 

 

64

 

64

%

 

 

101

 

 

73

 

38

%

Healthcare Services

Financial Results

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

(in thousands)

4Q 2023

 

4Q 2022

 

% Change

 

FY 2023

 

FY 2022

 

% Change

Revenue

$

82,803

 

 

$

30,036

 

 

176

%

 

$

252,075

 

 

$

70,035

 

 

260

%

Adjusted EBITDA*

 

1,685

 

 

 

(11,800

)

 

114

%

 

 

(22,769

)

 

 

(32,097

)

 

29

%

Adjusted EBITDA Margin*

 

2

%

 

 

(39

)%

 

 

 

 

(9

)%

 

 

(46

)%

 

 

Operating Metrics

Members

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

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

 

 

June 30, 2023

 

June 30, 2022

Total SelectRx Members

 

49,044

 

25,503

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 cost, which represents the direct costs of acquiring leads. These costs are included in marketing and advertising expense within the total operating expenses per MA/MS policy.

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

*See “Non-GAAP Financial Measures” below.

 

Twelve Months Ended June 30,

(dollars per approved policy):

2023

 

 

2022

 

MA and MS approved policies

 

580,186

 

 

 

667,199

 

MA and MS commission per MA / MS policy

$

877

 

 

$

928

 

Other commission per MA/MS policy

 

12

 

 

 

27

 

Pharmacy revenue per MA/MS policy

 

413

 

 

 

89

 

Other revenue per MA/MS policy

 

149

 

 

 

(147

)

Total revenue per MA / MS policy

 

1,451

 

 

 

897

 

Total operating expenses per MA / MS policy

 

(1,224

)

 

 

(1,187

)

Adjusted EBITDA per MA/MS policy *

$

227

 

 

$

(290

)

Adjusted EBITDA Margin per MA/MS policy *

 

16

%

 

 

(32

)%

Revenue / CAC multiple

4.1X

 

1.7X

Total revenue per MA/MS policy increased 62% for the twelve months ended June 30, 2023 compared to the twelve months ended June 30, 2022, primarily due to the increase in pharmacy revenue. Total operating expenses per MA/MS policy increased 3% for the twelve months ended June 30, 2023 compared to the twelve months ended June 30, 2022, driven by an increase in cost of goods sold-pharmacy revenue for Healthcare Services 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:

(in thousands)

4Q 2023

 

 

4Q 2022

 

 

% Change

 

FY 2023

 

FY 2022

 

% Change

Revenue

$

38,052

 

 

$

37,331

 

 

2

%

 

$

145,832

 

 

$

153,973

 

 

(5

)%

Adjusted EBITDA*

 

6,702

 

 

 

576

 

 

1064

%

 

 

23,073

 

 

 

(129

)

 

NM

 

Adjusted EBITDA Margin*

 

18

%

 

 

2

%

 

 

 

 

16

%

 

 

%

 

 

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:

(in thousands)

4Q 2023

 

4Q 2022

 

% Change

 

FY 2023

 

FY 2022

 

% Change

Term Premiums

$

20,507

 

$

16,374

 

25

%

 

$

68,941

 

$

62,364

 

11

%

Final Expense Premiums

 

18,960

 

 

25,500

 

(26

)%

 

 

77,725

 

 

109,218

 

(29

)%

Total

$

39,467

 

$

41,874

 

(6

)%

 

$

146,666

 

$

171,582

 

(15

)%

Auto & Home

Financial Results

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

(in thousands)

4Q 2023

 

 

4Q 2022

 

 

% Change

 

FY 2023

 

FY 2022

 

% Change

Revenue

$

(1,266

)

(1

)

$

7,126

 

 

(118

)%

 

$

21,862

 

(1

)

$

27,881

 

 

(22

)%

Adjusted EBITDA*

 

(7,235

)

(1

)

 

1,476

 

 

(590

)%

 

 

81

 

(1

)

 

5,433

 

 

(99

)%

Adjusted EBITDA Margin*

 

NM

 

 

 

21

%

 

 

 

 

%

 

 

19

%

 

 

(1) Decrease is due to the impact of the $10.4 million change in estimate related to the mutual termination of a contract with a certain Auto & Home carrier to provide for the ability to migrate the book of business to other carriers.

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:

(in thousands):

4Q 2023

 

4Q 2022

 

% Change

 

FY 2023

 

FY 2022

 

% Change

Premiums

$

14,460

 

$

13,756

 

5

%

 

$

50,917

 

$

50,114

 

2

%

*See “Non-GAAP Financial Measures” below.

Earnings Conference Call

SelectQuote, Inc. will host a conference call with the investment community on September 13, 2023, beginning at 8:30 a.m. ET. To register for this conference call, please use this link: https://www.netroadshow.com/events/login?show=c37e5fba&confId=54604Avoid. After registering, a confirmation will be sent via email, including dial-in details and unique conference call codes for entry. Registration is open through the live call, but to ensure you are connected for the full call we suggest registering at least 10 minutes before the start of the call. The event will also be webcasted live via our investor relations website https://ir.selectquote.com/investor-home/default.aspx.

Non-GAAP Financial Measures

This release includes certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. To supplement our financial statements presented in accordance with GAAP and to provide investors with additional information regarding our GAAP financial results, we have presented in this release Adjusted EBITDA and Adjusted EBITDA Margin, which are non-GAAP financial measures. These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly titled measures presented by other companies. We define Adjusted EBITDA as net income (loss) before interest expense, income tax expense (benefit), depreciation and amortization, and certain add-backs for non-cash or non-recurring expenses, including restructuring and share-based compensation expenses. The most directly comparable GAAP measure is net income (loss). We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. The most directly comparable GAAP measure is net income margin. We monitor and have presented in this release Adjusted EBITDA and Adjusted EBITDA Margin because they are key measures used by our management and Board of Directors to understand and evaluate our operating performance, to establish budgets, and to develop operational goals for managing our business. In particular, we believe that excluding the impact of these expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core operating performance.

We believe that these non-GAAP financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in the calculations of these non-GAAP financial measures. Accordingly, we believe that these financial measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects.

Reconciliations of net income (loss) to Adjusted EBITDA are presented below beginning on page 12.

Forward Looking Statements

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

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

About SelectQuote:

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

With an ecosystem offering high touchpoints for consumers across Insurance, Medicare, Pharmacy, and Value-Based Care, the company now has four core business lines: SelectQuote Senior, SelectQuote Healthcare Services, SelectQuote Life, and SelectQuote Auto and Home. SelectQuote Senior serves the needs of a demographic that sees around 10,000 people turn 65 each day with a range of Medicare Advantage and Medicare Supplement plans. SelectQuote Healthcare Services is comprised of the SelectRx Pharmacy, a specialized medication management pharmacy, and Population Health which proactively connects its members with best-in-class healthcare services that fit each member's unique healthcare needs. The platform improves health outcomes and lowers healthcare costs through proactive engagement and access to high-value healthcare solutions.

SELECTQUOTE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

 

 

June 30, 2023

 

June 30, 2022

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

83,156

 

$

140,997

Accounts receivable, net of allowances of $2.7 million and $0.6 million, respectively

 

154,565

 

 

129,748

Commissions receivable-current

 

111,148

 

 

116,277

Other current assets

 

14,355

 

 

15,751

Total current assets

 

363,224

 

 

402,773

COMMISSIONS RECEIVABLE—Net

 

729,350

 

 

722,349

PROPERTY AND EQUIPMENT—Net

 

27,452

 

 

41,804

SOFTWARE—Net

 

14,740

 

 

16,301

OPERATING LEASE RIGHT-OF-USE ASSETS

 

23,563

 

 

28,016

INTANGIBLE ASSETS—Net

 

10,200

 

 

31,255

GOODWILL

 

29,136

 

 

29,136

OTHER ASSETS

 

21,586

 

 

18,418

TOTAL ASSETS

$

1,219,251

 

$

1,290,052

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable

$

27,577

 

$

24,766

Accrued expenses

 

16,993

 

 

26,002

Accrued compensation and benefits

 

49,966

 

 

42,150

Operating lease liabilities—current

 

5,175

 

 

5,261

Current portion of long-term debt

 

33,883

 

 

7,169

Contract liabilities

 

1,691

 

 

3,404

Other current liabilities

 

1,972

 

 

4,761

Total current liabilities

 

137,257

 

 

113,513

LONG-TERM DEBT, NET—less current portion

 

664,625

 

 

698,423

DEFERRED INCOME TAXES

 

39,581

 

 

50,080

OPERATING LEASE LIABILITIES

 

27,892

 

 

33,946

OTHER LIABILITIES

 

2,926

 

 

2,985

Total liabilities

 

872,281

 

 

898,947

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

Common stock, $0.01 par value

 

1,669

 

 

1,644

Additional paid-in capital

 

567,266

 

 

554,845

Accumulated deficit

 

(235,644)

 

 

(177,100)

Accumulated other comprehensive income

 

13,679

 

 

11,716

Total shareholders’ equity

 

346,970

 

 

391,105

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

1,219,251

 

$

1,290,052

SELECTQUOTE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands)

 

 

Three Months Ended June 30,

 

Year Ended June 30,

 

2023

 

2022

 

2023

 

2022

REVENUE:

 

 

 

 

 

 

 

Commission

$

119,844

 

$

94,809

 

$

653,470

 

$

587,518

Pharmacy

 

79,905

 

 

27,929

 

 

239,547

 

 

59,460

Other

 

22,029

 

 

16,656

 

 

109,831

 

 

117,067

Total revenue

 

221,778

 

 

139,394

 

 

1,002,848

 

 

764,045

 

 

 

 

 

 

 

 

OPERATING COSTS AND EXPENSES:

 

 

 

 

 

 

 

Cost of revenue

 

65,697

 

 

37,722

 

 

301,524

 

 

391,528

Cost of goods sold—pharmacy revenue

 

71,211

 

 

64,172

 

 

225,963

 

 

64,172

Marketing and advertising

 

63,521

 

 

75,080

 

 

301,245

 

 

484,084

Selling, general, and administrative

 

49,856

 

 

30,449

 

 

136,518

 

 

100,945

Technical development

 

7,154

 

 

6,054

 

 

26,015

 

 

24,729

Goodwill impairment

 

 

 

44,596

 

 

 

 

44,596

Total operating costs and expenses

 

257,439

 

 

258,073

 

 

991,265

 

 

1,110,054

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM OPERATIONS

 

(35,661)

 

 

(118,679)

 

 

11,583

 

 

(346,009)

 

 

 

 

 

 

 

 

INTEREST EXPENSE, NET

 

(21,721)

 

 

(12,295)

 

 

(80,606)

 

 

(43,595)

OTHER EXPENSE, NET

 

(3)

 

 

(26)

 

 

(121)

 

 

(202)

LOSS BEFORE INCOME TAX BENEFIT

 

(57,385)

 

 

(131,000)

 

 

(69,144)

 

 

(389,806)

INCOME TAX BENEFIT

 

(9,547)

 

 

(26,318)

 

 

(10,600)

 

 

(92,302)

 

 

 

 

 

 

 

 

NET LOSS

$

(47,838)

 

$

(104,682)

 

$

(58,544)

 

$

(297,504)

 

 

 

 

 

 

 

 

NET LOSS PER SHARE:

 

 

 

 

 

 

 

Basic

$

(0.29)

 

$

(0.64)

 

$

(0.35)

 

$

(1.81)

Diluted

$

(0.29)

 

$

(0.64)

 

$

(0.35)

 

$

(1.81)

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Basic

 

166,709

 

 

164,427

 

 

166,140

 

 

164,042

Diluted

 

166,709

 

 

164,427

 

 

166,140

 

 

164,042

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE INCOME NET OF TAX:

 

 

 

 

 

 

 

Gain on cash flow hedge

 

605

 

 

2,129

 

 

1,963

 

 

11,487

OTHER COMPREHENSIVE INCOME

 

605

 

 

2,129

 

 

1,963

 

 

11,487

COMPREHENSIVE LOSS

$

(47,233)

 

$

(102,553)

 

$

(56,581)

 

$

(286,017)

SELECTQUOTE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

Three Months Ended June 30,

 

Year Ended June 30,

 

 

2023

 

2022

 

2023

 

2022

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss

 

$

(47,838)

 

 

(104,682)

 

$

(58,544)

 

 

(297,504)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

6,794

 

 

6,768

 

 

27,881

 

 

24,724

Goodwill impairment

 

 

 

 

44,596

 

 

 

 

44,596

Loss on disposal of property, equipment, and software

 

 

364

 

 

717

 

 

754

 

 

1,458

Impairment of long-lived assets

 

 

17,332

 

 

3,147

 

 

17,332

 

 

3,147

Share-based compensation expense

 

 

2,785

 

 

800

 

 

11,310

 

 

7,052

Deferred income taxes

 

 

(9,760)

 

 

(26,338)

 

 

(11,176)

 

 

(92,716)

Amortization of debt issuance costs and debt discount

 

 

2,426

 

 

1,243

 

 

8,676

 

 

5,461

Write-off of debt issuance costs

 

 

 

 

 

 

710

 

 

Accrued interest payable in kind

 

 

3,565

 

 

 

 

12,015

 

 

Non-cash lease expense

 

 

1,070

 

 

1,002

 

 

4,185

 

 

4,067

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

37,921

 

 

34,085

 

 

(24,817)

 

 

(25,749)

Commissions receivable

 

 

(18,964)

 

 

(329)

 

 

(1,872)

 

 

7,271

Other assets

 

 

(2,997)

 

 

(2,641)

 

 

169

 

 

(10,915)

Accounts payable and accrued expenses

 

 

(10,089)

 

 

(12,559)

 

 

(3,649)

 

 

(4,464)

Operating lease liabilities

 

 

(1,312)

 

 

(1,274)

 

 

(5,643)

 

 

(5,143)

Other liabilities

 

 

12,161

 

 

1,513

 

 

3,292

 

 

401

Net cash used in operating activities

 

 

(6,542)

 

 

(53,952)

 

 

(19,377)

 

 

(338,314)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(391)

 

 

(283)

 

 

(1,447)

 

 

(24,798)

Purchases of software and capitalized software development costs

 

 

(1,874)

 

 

(2,280)

 

 

(7,678)

 

 

(9,851)

Acquisition of business

 

 

 

 

 

 

 

 

(6,927)

Investment in equity securities

 

 

 

 

 

 

 

 

(1,000)

Net cash used in investing activities

 

 

(2,265)

 

 

(2,563)

 

 

(9,125)

 

 

(42,576)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from Revolving Credit Facility

 

 

 

 

 

 

 

 

50,000

Payments on Revolving Credit Facility

 

 

 

 

 

 

 

 

(50,000)

Proceeds from Term Loans

 

 

 

 

 

 

 

 

242,000

Payments on Term Loans

 

 

 

 

(1,793)

 

 

(17,833)

 

 

(3,585)

Payments on other debt

 

 

(35)

 

 

(54)

 

 

(158)

 

 

(184)

Proceeds from common stock options exercised and employee stock purchase plan

 

 

 

 

 

 

1,187

 

 

3,179

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

 

 

 

 

 

 

(40)

 

 

(148)

Payments of debt issuance costs

 

 

 

 

 

 

(10,110)

 

 

(328)

Payment of acquisition holdback

 

 

(50)

 

 

 

 

(2,385)

 

 

(5,501)

Net cash (used in) provided by financing activities

 

 

(85)

 

 

(1,847)

 

 

(29,339)

 

 

235,433

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

 

(8,892)

 

 

(58,362)

 

 

(57,841)

 

 

(145,457)

CASH AND CASH EQUIVALENTS—Beginning of period

 

 

92,048

 

 

199,359

 

 

140,997

 

 

286,454

CASH AND CASH EQUIVALENTS—End of period

 

$

83,156

 

$

140,997

 

$

83,156

 

$

140,997

SELECTQUOTE, INC. AND SUBSIDIARIES

Net Loss to Adjusted EBITDA Reconciliation

(Unaudited)

 

 

Three Months Ended June 30, 2023

(in thousands)

Senior

 

Healthcare Services

 

Life

 

Auto &
Home

 

Corp &
Elims

 

Consolidated

Revenue

$

103,592

 

$

82,803

 

$

38,052

 

$

(1,266)

 

$

(1,403)

 

$

221,778

Operating expenses

 

(87,445)

 

 

(81,118)

 

 

(31,350)

 

 

(5,970)

 

 

(21,715)

 

 

(227,598)

Other income (expense), net

 

 

 

 

 

 

 

1

 

 

(4)

 

 

(3)

Adjusted EBITDA

$

16,147

 

$

1,685

 

$

6,702

 

$

(7,235)

 

$

(23,122)

 

 

(5,823)

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

(2,785)

Transactions costs

 

 

 

 

 

 

 

 

 

 

 

(2,568)

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

(6,793)

Loss on disposal of property, equipment, and software

 

 

 

 

 

 

 

 

 

 

 

(363)

Impairment of long-lived assets

 

 

 

 

 

 

 

 

 

 

 

(17,332)

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

(21,721)

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

9,547

Net loss

 

 

 

 

 

 

 

 

 

 

$

(47,838)

Change in estimate from structured book of business migration for Auto & Home

 

 

 

 

 

 

 

 

 

 

$

10,427

Adjusted consolidated net loss

 

 

 

 

 

 

 

 

 

 

$

(37,411)

 

Three Months Ended June 30, 2022

(in thousands)

Senior

 

Healthcare Services

 

Life

 

Auto &
Home

 

Corp &
Elims

 

Consolidated

Revenue

$

68,452

 

$

30,036

 

$

37,331

 

$

7,126

 

$

(3,551)

 

$

139,394

Operating expenses

 

(101,026)

 

 

(41,836)

 

 

(36,755)

 

 

(5,650)

 

 

(14,905)

 

 

(200,172)

Other expenses, net

 

 

 

 

 

 

 

 

 

(26)

 

 

(26)

Adjusted EBITDA

$

(32,574)

 

$

(11,800)

 

$

576

 

$

1,476

 

$

(18,482)

 

 

(60,804)

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

(800)

Non-recurring expenses

 

 

 

 

 

 

 

 

 

 

 

(1,873)

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

(6,768)

Loss on disposal of property, equipment, and software

 

 

 

 

 

 

 

 

 

 

 

(717)

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

 

(44,596)

Impairment of long-lived assets

 

 

 

 

 

 

 

 

 

 

 

(3,147)

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

(12,295)

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

26,318

Net loss

 

 

 

 

 

 

 

 

 

 

$

(104,682)

 

Year Ended June 30, 2023

(in thousands)

Senior

 

Healthcare Services

 

Life

 

Auto &
Home

 

Corp &
Elims

 

Consolidated

Revenue

$

590,131

 

$

252,075

 

$

145,832

 

$

21,862

 

$

(7,052)

 

$

1,002,848

Operating expenses

 

(435,054)

 

 

(274,844)

 

 

(122,759)

 

 

(21,782)

 

 

(73,985)

 

 

(928,424)

Other expenses, net

 

 

 

 

 

 

 

1

 

 

(122)

 

 

(121)

Adjusted EBITDA

$

155,077

 

$

(22,769)

 

$

23,073

 

$

81

 

$

(81,159)

 

 

74,303

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

(11,310)

Transaction costs

 

 

 

 

 

 

 

 

 

 

 

(5,569)

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

(27,881)

Loss on disposal of property, equipment, and software

 

 

 

 

 

 

 

 

 

 

 

(749)

Impairment of long-lived assets

 

 

 

 

 

 

 

 

 

 

 

(17,332)

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

(80,606)

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

10,600

Net loss

 

 

 

 

 

 

 

 

 

 

$

(58,544)

Change in estimate from structured book of business migration for Auto & Home

 

 

 

 

 

 

 

 

 

 

$

10,427

Adjusted consolidated net loss

 

 

 

 

 

 

 

 

 

 

$

(48,117)

 

Year Ended June 30, 2022

(in thousands)

Senior

 

Healthcare Services

 

Life

 

Auto &
Home

 

Corp &
Elims

 

Consolidated

Revenue

$

527,907

 

$

70,035

 

$

153,973

 

$

27,881

 

$

(15,751)

 

$

764,045

Operating expenses

 

(689,609)

 

 

(102,132)

 

 

(154,102)

 

 

(22,448)

 

 

(56,058)

 

 

(1,024,349)

Other expenses, net

 

 

 

 

 

 

 

 

 

(202)

 

 

(202)

Adjusted EBITDA

$

(161,702)

 

$

(32,097)

 

$

(129)

 

$

5,433

 

$

(72,011)

 

 

(260,506)

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

(7,052)

Non-recurring expenses

 

 

 

 

 

 

 

 

 

 

 

(4,730)

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

(24,724)

Loss on disposal of property, equipment, and software

 

 

 

 

 

 

 

 

 

 

 

(1,456)

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

 

(44,596)

Impairment of long-lived assets

 

 

 

 

 

 

 

 

 

 

 

(3,147)

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

(43,595)

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

92,302

Net loss

 

 

 

 

 

 

 

 

 

 

$

(297,504)

SELECTQUOTE, INC. AND SUBSIDIARIES

Revenue to Adjusted EBITDA - Revenue Adjustments

(Unaudited)

 

 

Three Months Ended June 30, 2023

(in thousands)

Senior

 

Healthcare Services

 

Life

 

Auto &
Home

 

Corp &
Elims

 

Consolidated

Revenue

$

103,592

 

$

82,803

 

$

38,052

 

$

(1,266)

 

$

(1,403)

 

$

221,778

Change in estimate from structured book of business migration for Auto & Home

 

 

 

 

 

 

 

10,427

 

 

 

 

10,427

Revenue, excluding change in estimate from structured book of business migration for Auto & Home

 

103,592

 

 

82,803

 

 

38,052

 

 

9,161

 

 

(1,403)

 

 

232,205

Operating expenses

 

(87,445)

 

 

(81,118)

 

 

(31,350)

 

 

(5,970)

 

 

(21,715)

 

 

(227,598)

Other expenses, net

 

 

 

 

 

 

 

1

 

 

(4)

 

 

(3)

Adjusted EBITDA

$

16,147

 

$

1,685

 

$

6,702

 

$

3,192

 

$

(23,122)

 

$

4,604

 

Year Ended June 30, 2023

(in thousands)

Senior

 

Healthcare Services

 

Life

 

Auto &
Home

 

Corp &
Elims

 

Consolidated

Revenue

$

590,131

 

$

252,075

 

$

145,832

 

$

21,862

 

$

(7,052)

 

$

1,002,848

Change in estimate from structured book of business migration for Auto & Home

 

 

 

 

 

 

 

10,427

 

 

 

 

10,427

Revenue, excluding change in estimate from structured book of business migration for Auto & Home

 

590,131

 

 

252,075

 

 

145,832

 

 

32,289

 

 

(7,052)

 

 

1,013,275

Operating expenses

 

(435,054)

 

 

(274,844)

 

 

(122,759)

 

 

(21,782)

 

 

(73,985)

 

 

(928,424)

Other expenses, net

 

 

 

 

 

 

 

1

 

 

(122)

 

 

(121)

Adjusted EBITDA

$

155,077

 

$

(22,769)

 

$

23,073

 

$

10,508

 

$

(81,159)

 

$

84,730

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

Transaction costs

 

8,000

 

 

4,000

Adjusted EBITDA

$

80,000

 

$

105,000

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20230913075508/en/

CONTACT: Investor Relations:

Sloan Bohlen

877-678-4083

[email protected]:

Matt Gunter

913-286-4931

[email protected]

KEYWORD: KANSAS UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: GENERAL HEALTH HEALTH PROFESSIONAL SERVICES INSURANCE HEALTH INSURANCE

SOURCE: SelectQuote, Inc.

Copyright Business Wire 2023.

PUB: 09/13/2023 07:30 AM/DISC: 09/13/2023 07:30 AM

http://www.businesswire.com/news/home/20230913075508/en