Second Quarter of Fiscal Year 2022 - Consolidated Earnings
Highlights
- Revenue of $195.0 million
- Net Loss of $137.0 million
- Adjusted EBITDA* of $(163.3) million
- Excluding the $(145) million cohort/tail adjustment, Revenue of
$340 million*
- Excluding the $(145) million cohort/tail adjustment, Adjusted
EBITDA* of $(18.3) million
- Updating Full-Year Fiscal 2022 Revenue, Net Loss and Adjusted
EBITDA Guidance:
- Revenue expected in a range of $810 million to $850
million
- Net Loss expected in a range of $255 million to $236
million
- Adjusted EBITDA* expected in a range of $(260) million to
$(235) million
Second Quarter of Fiscal Year 2022 - Segment
Highlights
Senior
- Revenue of $158.0 million
- Adjusted EBITDA* of $(148.6) million
- Approved Medicare Advantage policies grew 27%
Year-Over-Year
- Excluding the $(145) million cohort/tail adjustment, Revenue of
$303.0 million*
- Excluding the $(145) million cohort/tail adjustment, Adjusted
EBITDA* of $(3.6) million
Life
- Revenue of $32.8 million
- Final expense premiums grew 82% Year-Over-Year
Auto & Home
- Revenue of $6.1 million
- Total Auto & Home premiums declined 20% Year-Over-Year
SelectQuote, Inc. (NYSE: SLQT) reported consolidated revenue for
the second quarter of fiscal year 2022 of $195.0 million compared
to consolidated revenue for the second quarter of fiscal year 2021
of $357.6 million. Consolidated net loss for the second quarter of
fiscal year 2022 was $137.0 million compared to consolidated net
income for the second quarter of fiscal year 2021 of $89.9 million.
Finally, consolidated Adjusted EBITDA* for the second quarter of
fiscal year 2022 was $(163.3) million, compared to consolidated
Adjusted EBITDA* for the second quarter of fiscal year 2021 of
$128.8 million.
Chief Executive Officer Tim Danker commented, “SelectQuote faced
a series of unexpected challenges in our core Senior segment this
Medicare Advantage season. Overall parity in Medicare Advantage
plan features along with delayed hiring drove considerably lower
close rates, which negatively impacted profitability. In addition,
we recognized a $145 million downward cohort/tail adjustment based
primarily on higher intra-year lapse rates and overall lower
persistency from the January 2022 renewals. Based on that data, the
potential risk discussed during our fourth quarter earnings call in
August 2021 was accelerated.”
Mr. Danker continued, “SelectQuote is committed to our Senior
distribution business and the large value opportunity it presents
in tandem with our growing Population Health initiative. That said,
the disappointing performance year-to-date will result in changes
to our strategy, with a focus on driving efficiencies. We aim to
reduce earnings volatility and downside risk through a reset of our
growth and operating leverage philosophy. Moving forward, growth
will be more focused on cash flow and predictability. We are
confident in our ability to deliver value to shareholders despite a
challenging year and look forward to proving our potential beyond
fiscal 2022.”
*See reconciliation from GAAP to non-GAAP measures starting on
page 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; gain or loss on disposal of property,
equipment, and software; share-based compensation expense;
restructuring expenses; and non-recurring expenses such as
severance payments and transaction costs.
Senior
Financial Results
The following table provides the financial results for the
Senior segment for the periods presented:
Three Months Ended December
31,
Six Months Ended December
31,
(in thousands)
2021
2020
% Change
2021
2020
% Change
Revenue
$
157,967
$
315,510
(50
)%
$
264,287
$
388,709
(32
)%
Adjusted EBITDA*
(148,635
)
134,555
(210
)%
(181,606
)
143,457
(227
)%
Adjusted EBITDA Margin*
(94
)%
43
%
(69
)%
37
%
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, such as
providing additional information, before the application will be
reviewed by the insurance carrier.
The following table shows the number of submitted policies for
the periods presented:
Three Months Ended December
31,
Six Months Ended December
31,
2021
2020
% Change
2021
2020
% Change
Medicare Advantage
340,317
246,548
38
%
436,106
294,539
48
%
Medicare Supplement
3,117
13,273
(77
)%
4,929
20,549
(76
)%
Dental, Vision and Hearing
53,432
43,020
24
%
82,036
63,062
30
%
Prescription Drug Plan
4,241
6,250
(32
)%
5,114
8,675
(41
)%
Other
2,967
3,939
(25
)%
6,529
5,822
12
%
Total
404,074
313,030
29
%
534,714
392,647
36
%
*See reconciliation from GAAP to non-GAAP
measures starting on page 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 periods presented:
Three Months Ended December
31,
Six Months Ended December
31,
2021
2020
% Change
2021
2020
% Change
Medicare Advantage
265,538
208,714
27
%
349,654
251,187
39
%
Medicare Supplement
2,097
10,451
(80
)%
3,495
16,776
(79
) %
Dental, Vision and Hearing
44,542
33,614
33
%
66,765
49,853
34
%
Prescription Drug Plan
3,352
4,815
(30
)%
4,220
7,447
(43
)%
Other
2,483
3,256
(24
)%
5,363
5,080
6
%
Total
318,012
260,850
22
%
429,497
330,343
30
%
Lifetime Value of Commissions per Approved Policy
Lifetime value of commissions per approved policy represents
commissions estimated to be collected over the estimated life of an
approved policy based on multiple factors, including but not
limited to, contracted commission rates, carrier mix and expected
policy persistency with applied constraints. The lifetime value of
commissions per approved policy is equal to the sum of the
commission revenue due upon the initial sale of a policy, and when
applicable, an estimate of future renewal commissions.
The following table shows the lifetime value of commissions per
approved policy for the periods presented:
Three Months Ended December
31,
Six Months Ended December
31,
(dollars per policy):
2021
2020
% Change
2021
2020
% Change
Medicare Advantage
$
922
$
1,268
(27
)%
$
936
$
1,251
(25
)%
Medicare Supplement
1,347
1,233
9
%
1,384
1,248
11
%
Dental, Vision and Hearing
112
138
(19
)%
125
148
(16
)%
Prescription Drug Plan
218
232
(6
)%
237
235
1
%
Other
9
127
(93
)%
64
130
(51
)%
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
per number of approved Medicare Advantage and Medicare Supplement
approved policies over a given time period. Management assesses the
business on a per-unit basis to help ensure that the revenue
opportunity associated with a successful policy sale is attractive
relative to the marketing acquisition cost. Because not all
acquired leads result in a successful policy sale, all per-policy
metrics are based on approved policies, which is the measure that
triggers revenue recognition.
The Medicare Advantage and Medicare Supplement commission per
MA/MS policy represents the lifetime value of commissions for
policies sold in the period. Other commission per MA/MS policy
represents the lifetime value of commissions for other products
sold in the period, including dental, vision and hearing,
prescription drug plan, and other products, which management views
as additional commission revenue on our agents’ core function of
MA/MS policy sales. Other per MA/MS policy represents the
production bonuses, lead sales revenue from InsideResponse, and
updated estimates of prior period variable consideration based on
actual policy renewals in the current period. Total operating
expenses per MA/MS policy represents 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. These costs are 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 December
31,
(dollars per approved policy):
2021
2020
% Change
Medicare Advantage and Medicare Supplement
approved policies
574,682
394,032
46
%
Medicare Advantage and Medicare Supplement
commission per MA/MS policy
$
1,067
$
1,276
(16
)%
Other commission per MA/MS policy
33
39
(15
)%
Other per MA/MS policy
(49
)
168
(129
)%
Total revenue per MA/MS policy
1,051
1,483
(29
)%
Total operating expenses per MA/MS
policy
(1,193
)
(916
)
30
%
Adjusted EBITDA per MA/MS policy*
$
(142
)
$
567
(125
)%
Adjusted EBITDA Margin per MA/MS
policy*
(14
)%
38
%
(135
)%
Revenue/CAC multiple
1.9X
3.2X
Life
Financial Results
The following table provides the financial results for the Life
segment for the periods presented:
Three Months Ended December
31,
Six Months Ended December
31,
(in thousands)
2021
2020
% Change
2021
2020
% Change
Revenue
$
32,780
$
35,666
(8
)%
$
80,211
$
77,094
4
%
Adjusted EBITDA*
1,850
5,705
(68
)%
4,153
14,787
(72
)%
Adjusted EBITDA Margin*
6
%
16
%
5
%
19
%
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 reconciliation from GAAP to non-GAAP measures starting on
page 12.
The following table shows term and final expense premiums for
the periods presented:
Three Months Ended December
31,
Six Months Ended December
31,
(in thousands)
2021
2020
% Change
2021
2020
% Change
Term Premiums
$
15,548
$
18,888
(18
)%
$
31,057
$
37,742
(18
)%
Final Expense Premiums
21,134
11,631
82
%
55,186
31,450
75
%
Total
$
36,682
$
30,519
20
%
86,243
69,192
25
%
Auto & Home
Financial Results
The following table provides the financial results for the Auto
& Home segment for the periods presented:
Three Months Ended December
31,
Six Months Ended December
31,
(in thousands)
2021
2020
% Change
2021
2020
% Change
Revenue
$
6,135
$
7,241
(15
)%
$
13,604
$
16,779
(19
)%
Adjusted EBITDA*
1,435
2,150
(33
)%
2,808
5,767
(51
)%
Adjusted EBITDA Margin*
23
%
30
%
21
%
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 December
31,
Six Months Ended December
31,
(in thousands):
2021
2020
% Change
2021
2020
% Change
Premiums
$
10,585
$
13,255
(20
)%
$
23,843
$
30,155
(21
)%
Revision
The Company discovered that the first year provision for certain
final expense policies offered by one of our insurance carrier
partners should previously have been accrued based on a higher
lapse rate. We identified approximately $2 million of additional
provision that should have been accrued in fiscal year 2020, $6.1
million in fiscal year 2021 and $2.4 million in the first quarter
of fiscal year 2022. The method of accruing the provision for the
particular product has been corrected, and the figures reported in
this release reflect the accrual of $1.4 million in the first
quarter of fiscal year 2021, $0.7 million in the second quarter of
fiscal 2021 and $2.4 million in the first quarter of fiscal year
2022. Management believes the foregoing correction is not material
to prior period results. The reconciliation of these corrections
will be included in our Form 10-Q for the period ended December 31,
2021.
*See reconciliation from GAAP to non-GAAP measures starting on
page 12.
Earnings Conference Call
SelectQuote, Inc. will host a conference call with the
investment community today, Monday, February 7, 2022, beginning at
5 p.m. ET. To register for this conference call, please use this
link: http://www.directeventreg.com/registration/event/1649099.
After registering, a confirmation will be sent via email, including
dial-in details and unique conference call codes for entry.
Registration is open through the live call, but to ensure you are
connected for the full call we suggest registering a day in advance
or at minimum 10 minutes before the start of the call. The event
will also be webcasted live via our investor relations website
https://ir.selectquote.com/investor-home/default.aspx.
Non-GAAP Financial Measures
This release includes certain non-GAAP financial measures
intended to supplement, not substitute for, comparable GAAP
measures. To supplement our financial statements presented in
accordance with GAAP and to provide investors with additional
information regarding our GAAP financial results, we have presented
in this release Adjusted EBITDA and Adjusted EBITDA Margin, which
are non-GAAP financial measures. These non-GAAP financial measures
are not based on any standardized methodology prescribed by GAAP
and are not necessarily comparable to similarly titled measures
presented by other companies. We define Adjusted EBITDA as income
(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 this non-GAAP financial measure helps identify
underlying trends in our business that could otherwise be masked by
the effect of the expenses that we exclude in the calculations of
this non-GAAP financial measure. Accordingly, we believe that this
financial measure provides useful information to investors and
others in understanding and evaluating our operating results,
enhancing the overall understanding of our past performance and
future prospects.
Forward-Looking Statement
This release contains forward-looking statements. These
forward-looking statements reflect our current views with respect
to, among other things, future events and our financial
performance. These statements are often, but not always, made
through the use of words or phrases such as “may,” “should,”
“could,” “predict,” “potential,” “believe,” “will likely result,”
“expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,”
“intend,” “plan,” “projection,” “would” and “outlook,” or the
negative version of those words or other comparable words or
phrases of a future or forward-looking nature. These
forward-looking statements are not historical facts, and are based
on current expectations, estimates and projections about our
industry, management’s beliefs and certain assumptions made by
management, many of which, by their nature, are inherently
uncertain and beyond our control. Accordingly, we caution you that
any such forward-looking statements are not guarantees of future
performance and are subject to risks, assumptions and uncertainties
that are difficult to predict. Although we believe that the
expectations reflected in these forward-looking statements are
reasonable as of the date made, actual results may prove to be
materially different from the results expressed or implied by the
forward-looking statements.
There are or will be important factors that could cause our
actual results to differ materially from those indicated in these
forward-looking statements, including, but not limited to, the
following: the ultimate duration and impact of the ongoing COVID-19
pandemic, our reliance on a limited number of insurance carrier
partners and any potential termination of those relationships or
failure to develop new relationships; existing and future laws and
regulations affecting the health insurance market; changes in
health insurance products offered by our insurance carrier partners
and the health insurance market generally; insurance carriers
offering products and services directly to consumers; changes to
commissions paid by insurance carriers and underwriting practices;
competition with brokers, exclusively online brokers and carriers
who opt to sell policies directly to consumers; competition from
government-run health insurance exchanges; developments in the U.S.
health insurance system; our dependence on revenue from carriers in
our senior segment and downturns in the senior health as well as
life, automotive and home insurance industries; our ability to
develop new offerings and penetrate new vertical markets; risks
from third-party products; failure to enroll individuals during the
Medicare annual enrollment period; our ability to attract,
integrate and retain qualified personnel; our dependence on lead
providers and ability to compete for leads; failure to obtain
and/or convert sales leads to actual sales of insurance policies;
access to data from consumers and insurance carriers; accuracy of
information provided from and to consumers during the insurance
shopping process; cost-effective advertisement through internet
search engines; ability to contact consumers and market products by
telephone; global economic conditions; disruption to operations as
a result of future acquisitions; significant estimates and
assumptions in the preparation of our financial statements;
impairment of goodwill; potential litigation and claims, including
IP litigation; our existing and future indebtedness; developments
with respect to LIBOR; access to additional capital; failure to
protect our intellectual property and our brand; fluctuations in
our financial results caused by seasonality; accuracy and
timeliness of commissions reports from insurance carriers; timing
of insurance carriers’ approval and payment practices; factors that
impact our estimate of the constrained lifetime value of
commissions per policyholder; changes in accounting rules, tax
legislation and other legislation; disruptions or failures of our
technological infrastructure and platform; failure to maintain
relationships with third-party service providers; cybersecurity
breaches or other attacks involving our systems or those of our
insurance carrier partners or third-party service providers; our
ability to protect consumer information and other data; and failure
to market and sell Medicare plans effectively or in compliance with
laws. For a further discussion of these and other risk factors that
could impact our future results and performance, see the section
entitled “Risk Factors” in the most recent Annual Report on Form
10-K (the “Annual Report”) filed by us with the Securities 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
direct-to-consumer model of providing unbiased comparisons from
multiple, highly-rated insurance companies allowing consumers to
choose the policy and terms that best meet their unique needs. Two
foundational pillars underpin SelectQuote’s success: a strong force
of highly-trained and skilled agents who provide a consultative
needs analysis for every consumer, and proprietary technology that
sources, scores, and routes high-quality sales leads. The company
has three core business lines: SelectQuote Senior, SelectQuote Life
and SelectQuote Auto and Home. SelectQuote Senior, the largest and
fastest-growing business, serves the needs of a demographic that
sees 10,000 people turn 65 each day with a range of Medicare
Advantage and Medicare Supplement plans from leading,
nationally-recognized carriers, as well as prescription drug plans,
dental, vision and hearing plans.
Source: SelectQuote, Inc.
SELECTQUOTE, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In thousands)
December 31, 2021
June 30, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
193,357
$
286,454
Accounts receivable
149,399
105,298
Commissions receivable-current
202,289
89,120
Other current assets
10,511
4,486
Total current assets
555,556
485,358
COMMISSIONS RECEIVABLE
683,516
756,777
PROPERTY AND EQUIPMENT—Net
42,676
29,510
SOFTWARE—Net
15,009
12,611
OPERATING LEASE RIGHT-OF-USE ASSETS
30,571
31,414
INTANGIBLE ASSETS—Net
37,727
40,670
GOODWILL
73,732
68,019
OTHER ASSETS
6,046
1,436
TOTAL ASSETS
$
1,444,833
$
1,425,795
LIABILITIES AND SHAREHOLDERS’
EQUITY
CURRENT LIABILITIES:
Accounts payable
$
47,579
$
34,079
Accrued expenses
22,904
20,676
Accrued compensation and benefits
43,384
40,909
Operating lease liabilities—current
5,251
5,289
Current portion of long-term debt
7,169
2,360
Other current liabilities
9,120
5,504
Total current liabilities
135,407
108,817
LONG-TERM DEBT, NET—less current
portion
700,350
459,043
DEFERRED INCOME TAXES
76,942
139,241
OPERATING LEASE LIABILITIES
36,951
38,392
OTHER LIABILITIES
2,779
11,743
Total liabilities
952,429
757,236
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Common stock, $0.01 par value
1,640
1,635
Additional paid-in capital
551,002
544,771
Retained earnings (accumulated
deficit)
(62,236
)
121,924
Accumulated other comprehensive income
1,998
229
Total shareholders’ equity
492,404
668,559
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
$
1,444,833
$
1,425,795
SELECTQUOTE, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In thousands)
Three Months Ended December
31,
Six Months Ended December
31,
2021
2020
2021
2020
REVENUE:
Commission
$
140,701
$
320,265
$
272,956
$
425,415
Production bonus and other
54,280
37,300
79,552
54,924
Total revenue
194,981
357,565
352,508
480,339
OPERATING COSTS AND EXPENSES:
Cost of revenue
148,108
84,121
240,273
135,166
Marketing and advertising
193,246
132,206
283,923
182,006
General and administrative
20,147
13,043
43,539
25,245
Technical development
6,386
4,750
12,239
8,598
Total operating costs and expenses
367,887
234,120
579,974
351,015
INCOME (LOSS) FROM OPERATIONS
(172,906
)
123,445
(227,466
)
129,324
INTEREST EXPENSE, NET
(10,587
)
(6,782
)
(19,122
)
(13,543
)
OTHER EXPENSE, NET
(51
)
(416
)
(153
)
(1,196
)
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
(BENEFIT)
(183,544
)
116,247
(246,741
)
114,585
INCOME TAX EXPENSE (BENEFIT)
(46,536
)
26,391
(62,580
)
24,994
NET INCOME (LOSS)
$
(137,008
)
$
89,856
$
(184,161
)
$
89,591
NET INCOME (LOSS) PER SHARE:
Basic
$
(0.84
)
$
0.55
$
(1.12
)
$
0.55
Diluted
$
(0.84
)
$
0.54
$
(1.12
)
$
0.54
WEIGHTED-AVERAGE COMMON STOCK OUTSTANDING
USED IN PER SHARE AMOUNTS:
Basic
163,966
162,645
163,829
162,546
Diluted
163,966
165,563
163,829
165,377
OTHER COMPREHENSIVE INCOME (LOSS), NET OF
TAX:
Gain (loss) on cash flow hedge
1,775
116
1,769
(141
)
OTHER COMPREHENSIVE INCOME (LOSS)
1,775
116
1,769
(141
)
COMPREHENSIVE INCOME (LOSS)
$
(135,233
)
$
89,972
$
(182,392
)
$
89,450
SELECTQUOTE, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended December
31,
2021
2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
(184,161
)
$
89,591
Adjustments to reconcile net income (loss)
to net cash, cash equivalents, and restricted cash used in
operating activities:
Depreciation and amortization
11,278
6,937
Loss on disposal of property, equipment,
and software
355
162
Share-based compensation expense
4,109
2,259
Deferred income taxes
(62,940
)
24,879
Amortization of debt issuance costs and
debt discount
2,974
1,644
Fair value adjustments to contingent
earnout obligations
—
1,153
Non-cash lease expense
2,040
1,887
Changes in operating assets and
liabilities:
Accounts receivable
(43,429
)
(61,251
)
Commissions receivable
(39,908
)
(219,132
)
Other assets
(5,555
)
1,906
Accounts payable and accrued expenses
15,135
15,692
Operating lease liabilities
(2,676
)
(1,245
)
Other liabilities
(2,963
)
32,370
Net cash used in operating activities
(305,741
)
(103,148
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
(17,904
)
(5,768
)
Purchases of software and capitalized
software development costs
(5,231
)
(3,449
)
Acquisition of business
(6,927
)
121
Investment in equity securities
(1,000
)
—
Net cash used in investing activities
(31,062
)
(9,096
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving line of credit
50,000
—
Payments on revolving line of credit
(50,000
)
—
Net proceeds from senior secured delayed
draw term loan facility
242,000
—
Payments on other debt
(93
)
(108
)
Proceeds from common stock options
exercised and employee stock purchase plan
2,271
391
Payments of tax withholdings related to
net share settlement of equity awards
(144
)
(5,320
)
Payments of debt issuance costs
(328
)
—
Payments of costs incurred in connection
with private placement
—
(1,771
)
Payments of costs incurred in connection
with initial public offering
—
(3,911
)
Net cash provided by (used in) financing
activities
243,706
(10,719
)
NET DECREASE IN CASH, CASH EQUIVALENTS,
AND RESTRICTED CASH
(93,097
)
(122,963
)
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH—Beginning of period
286,454
368,870
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH—End of period
$
193,357
$
245,907
SELECTQUOTE, INC. AND
SUBSIDIARIES
Adjusted EBITDA to Net Income
(Loss) Reconciliation
(Unaudited)
Three Months Ended December
31, 2021
(in thousands)
Senior
Life
Auto & Home
Corp & Elims
Consolidated
Revenue
$
157,967
$
32,780
$
6,135
$
(1,901
)
$
194,981
Operating expenses
(306,602
)
(30,930
)
(4,700
)
(15,979
)
(358,211
)
Other expenses, net
—
—
—
(51
)
(51
)
Adjusted EBITDA
(148,635
)
1,850
1,435
(17,931
)
(163,281
)
Share-based compensation expense
(1,894
)
Non-recurring expenses
(1,602
)
Depreciation and amortization
(6,175
)
Loss on disposal of property, equipment,
and software
(5
)
Interest expense, net
(10,587
)
Income tax benefit
46,536
Net loss
$
(137,008
)
Three Months Ended December
31, 2020
(in thousands)
Senior
Life
Auto & Home
Corp & Elims
Consolidated
Revenue
$
315,510
$
35,666
$
7,241
$
(852
)
$
357,565
Operating expenses
(180,955
)
(29,961
)
(5,091
)
(12,746
)
(228,753
)
Other expenses, net
—
—
—
(21
)
(21
)
Adjusted EBITDA
134,555
5,705
2,150
(13,619
)
128,791
Share-based compensation expense
(1,336
)
Non-recurring expenses
(362
)
Fair value adjustments to contingent
earnout obligations
(395
)
Depreciation and amortization
(3,590
)
Loss on disposal of property, equipment,
and software
(79
)
Interest expense, net
(6,782
)
Income tax expense
(26,391
)
Net income
$
89,856
SELECTQUOTE, INC. AND
SUBSIDIARIES
Adjusted EBITDA to Net Income
(Loss) Reconciliation
(Unaudited)
Six Months Ended December 31,
2021
(in thousands)
Senior
Life
Auto & Home
Corp & Elims
Consolidated
Revenue
$
264,287
$
80,211
$
13,604
$
(5,594
)
$
352,508
Operating expenses
(445,893
)
(76,058
)
(10,796
)
(29,330
)
(562,077
)
Other expenses, net
—
—
—
(153
)
(153
)
Adjusted EBITDA
(181,606
)
4,153
2,808
(35,077
)
(209,722
)
Share-based compensation expense
(4,109
)
Non-recurring expenses
(2,155
)
Depreciation and amortization
(11,278
)
Loss on disposal of property, equipment,
and software
(355
)
Interest expense, net
(19,122
)
Income tax benefit
62,580
Net loss
$
(184,161
)
Six Months Ended December 31,
2020
(in thousands)
Senior
Life
Auto & Home
Corp & Elims
Consolidated
Revenue
$
388,709
$
77,094
$
16,779
$
(2,243
)
$
480,339
Operating expenses
(245,252
)
(62,307
)
(11,012
)
(22,264
)
(340,835
)
Other expenses, net
—
—
—
(43
)
(43
)
Adjusted EBITDA
143,457
14,787
5,767
(24,550
)
139,461
Share-based compensation expense
(2,259
)
Non-recurring expenses
(822
)
Fair value adjustments to contingent
earnout obligations
(1,153
)
Depreciation and amortization
(6,937
)
Loss on disposal of property, equipment,
and software
(162
)
Interest expense, net
(13,543
)
Income tax expense
(24,994
)
Net income
$
89,591
SELECTQUOTE, INC. AND
SUBSIDIARIES
Revenue to Adjusted EBITDA -
Senior Cohort/Tail Adjustment
(Unaudited)
Three Months Ended December
31, 2021
(in thousands)
Senior
Life
Auto & Home
Corp & Elims
Consolidated
Revenue
$
157,967
$
32,780
$
6,135
$
(1,901
)
$
194,981
Net commission revenue adjustment from
change in estimate for Senior cohort/tail adjustment
145,000
—
—
—
145,000
Revenue, excluding net commission revenue
adjustment from change in estimate for Senior cohort/tail
adjustment
302,967
32,780
6,135
(1,901
)
339,981
Operating expenses
(306,602
)
(30,930
)
(4,700
)
(15,979
)
(358,211
)
Other expenses, net
—
—
—
(51
)
(51
)
Adjusted EBITDA
$
(3,635
)
$
1,850
$
1,435
$
(17,931
)
$
(18,281
)
SELECTQUOTE, INC. AND
SUBSIDIARIES
Net Loss to Adjusted EBITDA
Reconciliation
(Unaudited)
Guidance net loss to Adjusted EBITDA
reconciliation, year ending June 30, 2022:
(in thousands)
Range
Net Loss
$
(255,000
)
$
(236,000
)
Income tax benefit
(86,000
)
(80,000
)
Interest expense, net
43,000
43,000
Depreciation and amortization
22,000
22,000
Share-based compensation expense
11,000
11,000
Non-recurring expenses
5,000
5,000
Adjusted EBITDA
$
(260,000
)
$
(235,000
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220207005886/en/
Investor Relations: Sloan Bohlen 877-678-4083
investorrelations@selectquote.com
Media: Matt Gunter 913-286-4931 matt.gunter@selectquote.com
Kelly Hale 913-653-4375 kelly.hale@selectquote.com
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