Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to SelectQuote, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Delaware 94-3339273 (I.R.S. ...

4 th Quarter Fiscal 2022 Earnings Conference Call Presentation August 29, 2022 | We shop. You save. Disclaimer Forward-Looking Statements This presentation contains forward-looking statements. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as "may," "should," "could," "predict," "potential," "believe," "will likely result," "e ...

Financial Data and Key Metrics Changes - For Q4 2022, consolidated revenue was $139 million, with senior revenue at $98 million, and a net loss of $105 million or negative $0.64 per share [9][42] - The company experienced a 31% increase in agent close rates and a 35% decrease in marketing cost per approved policy compared to the previous year [10][28] - Adjusted EBITDA for Q4 was negative $61 million, or negative $13 million excluding a $48 million cohort tail adjustment [42] Business Line Data and Key Metrics Changes - Total improved policies from the senior division increased to 144,000, up 23% year-over-year [44] - The Life business saw a reduction in revenue due to lower term life premiums, attributed to fewer agents and COVID-related conversion issues [42] - Auto & Home revenue remained flat year-over-year [42] Market Data and Key Metrics Changes - The company anticipates a 35% to 45% decline in Medicare Advantage policy production for 2023, aligning with its strategy to focus on consistent returns rather than pure growth [15][56] - The healthcare services business, primarily SelectRx, is projected to generate over $275 million in revenue for fiscal year 2023 [24][59] Company Strategy and Development Direction - The company is shifting its focus from growth to generating consistent unit economics and cash flow, with a goal of achieving cash EBITDA breakeven in fiscal 2023 [12][16] - Cost reductions exceeding $250 million have been identified, including around $40 million in fixed expenses [19][60] - The strategy includes a more tenured agent sales force and targeted marketing to improve productivity and customer retention [18][31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about early achievements since the strategic redesign, noting improvements in customer retention trends [7][11] - The company is confident that the adjustments made have significantly de-risked potential future adjustments in financial results [13][23] - Management emphasized the importance of establishing credibility with investors through improved financial results [40][110] Other Important Information - The company has completed hiring its sales agent force for the upcoming AEP season and is focused on training and onboarding [20][29] - A credit covenant amendment has been agreed upon with lenders, providing adequate liquidity for operations in the coming quarters [62][106] Q&A Session Summary Question: What is different about the agent hiring for the 2023 AEP season? - Management highlighted that they secured flex agents early and improved training processes, leading to better quality and readiness compared to previous years [65][66] Question: What gives comfort that the $875 LTV is appropriate for fiscal 2023? - Management noted that the majority of switching occurs in the first year, providing better visibility into cash streams from older cohorts, and emphasized the conservative nature of their assumptions [68][70] Question: Can you provide color on MA enrollment and policy growth rates? - Management confirmed a pullback in overall policy production as part of the strategic redesign, but expressed confidence in the market opportunity for future growth [73][76] Question: Can you elaborate on the credit covenant changes? - Management confirmed that the amendments include a step increase in the overall interest rate but provide necessary liquidity for operations [84][106] Question: How will the slowdown in MA membership acquisition impact SelectRx growth? - Management expressed confidence in the synergistic relationship between MA policies and SelectRx, indicating room for growth despite potential slowdowns in MA membership [90][91]

| --- | --- | --- | --- | --- | |-------|---------------------------------------------------|-------|-------|-------| | | Quarter Fiscal 2022 | | | | | | Earnings Conference Call Presentation May 5, 2022 | | | | | We shop. You save. Disclaimer Forward-Looking Statements This presentation contains forward-looking statements. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, m ...

Financial Data and Key Metrics Changes - Revenue for the third quarter totaled $275 million, representing a 4% increase year-over-year [11][34] - Adjusted EBITDA for the quarter was $13 million, impacted by year-over-year pressure on Medicare Advantage (MA) Lifetime Values (LTVs) [11][34] - The company expects overall operating costs to be over $200 million lower in fiscal 2023 compared to fiscal 2022, excluding SelectRx [36][61] Business Line Data and Key Metrics Changes - The Senior business saw a 33% increase in total approved policies and a 48% increase in MA approved policies, driven by more agents and improved close rates [37] - Marketing costs per approved policy decreased by 27% year-over-year, contributing to improved marketing efficiency [27][41] - The SelectRx business grew significantly, ending the quarter with over 23,000 active members, with expectations to surpass 25,000 by the end of fiscal 2022 [12][44] Market Data and Key Metrics Changes - The company noted a less competitive marketing environment during the Open Enrollment Period (OEP), which contributed to improved performance [38] - The overall market for Medicare Advantage remains large, but the company anticipates a year-over-year decline in submitted policies for 2023 to right-size the organization [16][60] Company Strategy and Development Direction - The company is focusing on a growth strategy that prioritizes cash flow and profitability over volume, with a commitment to reducing operational risk [15][17] - A strategic redesign is underway, with early actions yielding tangible improvements and a focus on optimizing marketing and agent training [7][14] - The company aims to evolve from a pure insurance distributor to a comprehensive healthcare services platform, enhancing customer relationships and driving future revenue [31][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the early results of their strategic actions and the potential for improved profitability moving forward [32][60] - The company is optimistic about the impact of their cost-saving measures and the growth of SelectRx on future cash flow [44][78] - Management acknowledged the challenges posed by COVID-19 on the Life business but noted improvements in conversion rates and operational efficiency [82][85] Other Important Information - The company is committed to a conservative approach in recruiting and training agents, ensuring they are well-prepared for the upcoming busy season [20][21] - Management highlighted the importance of optimizing marketing sources and refining targeting to focus on high Lifetime Value (LTV) producing leads [21][22] Q&A Session Summary Question: Clarification on guidance for EBITDA and net income - Management confirmed no one-time benefits in the third quarter and reiterated guidance for the fourth quarter, emphasizing a conservative approach [50] Question: Details on marketing channel optimization - The company is optimizing marketing channels without eliminating any, focusing on improving the quality of leads and training agents effectively [54][56] Question: Factors influencing the planned pullback in MA submissions - Management indicated that the pullback is a strategic decision to optimize operations and improve cash flow, with a focus on tenured agents [60] Question: Breakdown of the $200 million in expense reductions - The majority of the savings will come from variable costs, particularly marketing, with some fixed costs also being reduced [62][64] Question: Concerns about market share due to marketing spend pullback - Management expressed confidence in maintaining a significant role in carrier distribution despite the pullback, citing strong relationships with carriers [66][67] Question: Expected increase in spend with SelectRx - The company anticipates some initial costs associated with growth but expects margins to improve as the business scales [78][79] Question: Performance of the Life business in the quarter - Management noted that the Life business faced challenges due to COVID-19 but expects improvements in the fourth quarter as conditions stabilize [81][85]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 (913) 599-9225 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ...

PART I FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents SelectQuote, Inc.'s unaudited condensed consolidated financial statements for the periods ended December 31, 2021, including balance sheets, income, equity, cash flows, and notes on accounting policies and a prior period correction Condensed Consolidated Balance Sheets (In thousands) | (In thousands) | December 31, 2021 | June 30, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$1,444,833** | **$1,425,795** | | Total current assets | $555,556 | $485,358 | | Commissions receivable | $683,516 | $756,777 | | Goodwill | $73,732 | $68,019 | | **Total Liabilities** | **$952,429** | **$757,235** | | Total current liabilities | $135,407 | $108,817 | | Long-term debt, net | $700,350 | $459,043 | | **Total Shareholders' Equity** | **$492,404** | **$668,560** | Condensed Consolidated Statements of Comprehensive Income (Loss) (In thousands, except per share data) | (In thousands, except per share data) | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | Six Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$194,981** | **$357,565** | **$352,508** | **$480,339** | | Income (Loss) from Operations | ($172,906) | $123,445 | ($227,466) | $129,324 | | **Net Income (Loss)** | **($137,008)** | **$89,856** | **($184,161)** | **$89,591** | | Diluted EPS | ($0.84) | $0.54 | ($1.12) | $0.54 | Condensed Consolidated Statements of Cash Flows (In thousands) | (In thousands) | Six Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($305,741) | ($103,148) | | Net cash used in investing activities | ($31,062) | ($9,096) | | Net cash provided by (used in) financing activities | $243,706 | ($10,719) | | **Net Decrease in Cash** | **($93,097)** | **($122,963)** | - The company identified an error in its provision for first-year commission revenue for certain final expense policies due to using an **incorrect lapse rate**, resulting in **misstatements of commission revenue and accounts receivable** in prior periods[28](index=28&type=chunk)[29](index=29&type=chunk) - Management concluded the error was **not material to prior periods** but is **correcting the financial statements** for comparative purposes to avoid a significant impact on the current period's results[28](index=28&type=chunk)[29](index=29&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion of financial condition and results for Q4 2021, detailing a significant revenue decline, segment performance, liquidity, and cash flow dynamics [Key Business and Operating Metrics](index=34&type=section&id=Key%20Business%20and%20Operating%20Metrics) - In the Senior segment, total submitted policies increased **29% YoY** for the quarter, driven by a **140% increase in average productive agents**, offset by a **45% decrease in average agent productivity** and lower submitted-to-approved conversion rates[133](index=133&type=chunk) Medicare Advantage and Supplement Approved Policies | Metric | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :--- | :--- | :--- | | Medicare Advantage Approved Policies | 265,538 | 208,714 | | Medicare Supplement Approved Policies | 2,097 | 10,451 | Life-Time Value (LTV) per Approved Policy | Metric | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :--- | :--- | :--- | | LTV per MA Approved Policy | $922 | $1,268 | | LTV per MS Approved Policy | $1,347 | $1,233 | - In the Life segment, final expense premiums grew **82% YoY** for the quarter due to an increase in agents selling these policies, while term life premiums decreased by **18%**[148](index=148&type=chunk) - In Auto & Home, total premiums decreased **20%** as part of a strategy to reduce growth in this segment[151](index=151&type=chunk) [Results of Operations](index=43&type=section&id=Results%20of%20Operations) - Total revenue for the three months ended December 31, 2021, decreased **45% YoY to $195.0 million**[167](index=167&type=chunk) - The primary driver was a **56% drop in commission revenue**, largely due to a **$145.0 million downward adjustment** from a change in estimate of Senior MA cohort transaction prices because of higher-than-expected policy lapses[167](index=167&type=chunk) Operating Expenses (in thousands) | Expense Category (in thousands) | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | % Change | | :--- | :--- | :--- | :--- | | Cost of Revenue | $148,108 | $84,121 | 76% | | Marketing and Advertising | $193,246 | $132,206 | 46% | | General and Administrative | $20,147 | $13,043 | 54% | - Operating costs increased significantly, with cost of revenue rising **76%** due to higher agent compensation and new medication costs from SelectRx[171](index=171&type=chunk) - Marketing and advertising expenses increased **46%** due to higher lead generation costs for a larger agent base and lower marketing efficiency during the Annual Enrollment Period (AEP)[174](index=174&type=chunk) [Segment Performance](index=48&type=section&id=Segment%20Performance) Segment Adjusted EBITDA (in millions) | Segment Adjusted EBITDA (in millions) | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :--- | :--- | :--- | | Senior | $(148.6) | $134.6 | | Life | $1.9 | $5.7 | | Auto & Home | $1.4 | $2.2 | - The Senior segment's Adjusted EBITDA plummeted from **$134.6 million to a loss of $(148.6) million YoY** for the quarter[208](index=208&type=chunk) - This was caused by a **$157.5 million revenue decrease** (including the large cohort adjustment) and a **$125.6 million increase in operating costs** from higher marketing spend and personnel costs for AEP[208](index=208&type=chunk) - The Life segment's Adjusted EBITDA decreased by **68% to $1.9 million**, driven by lower term life revenue and higher marketing and sales commission expenses for the growing final expense business[209](index=209&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) - As of December 31, 2021, the company had cash and cash equivalents of **$193.4 million**, a decrease from **$286.5 million** at June 30, 2021[216](index=216&type=chunk) - For the six months ended December 31, 2021, net cash used in operating activities was **$305.7 million**, a significant increase from **$103.1 million** in the prior-year period[216](index=216&type=chunk)[221](index=221&type=chunk) - This was driven by a net loss and increased working capital needs to fund upfront marketing and personnel costs for AEP[216](index=216&type=chunk)[221](index=221&type=chunk) - Financing activities provided **$243.7 million** in cash, primarily from drawing **$242.0 million** from the senior secured delayed draw term loan (DDTL) facility[227](index=227&type=chunk)[229](index=229&type=chunk) - As of December 31, 2021, **$471.9 million** was outstanding under the Term Loans and **$245.0 million** under the DDTL Facility[227](index=227&type=chunk)[229](index=229&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure is to unfavorable interest rate movements, with no material changes to policies or positions since the 2021 Annual Report - The company is primarily exposed to market risk from **adverse changes in interest rates** and reported **no material changes** to market risk policies or positions during the quarter[235](index=235&type=chunk) [Item 4. Controls and Procedures](index=56&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were ineffective as of December 31, 2021, due to a material weakness in internal controls over financial reporting related to commission revenue provision, with remediation initiated - The CEO and CFO concluded that disclosure controls and procedures were **not effective** as of December 31, 2021[236](index=236&type=chunk) - A **material weakness** was identified in internal controls over financial reporting, specifically that controls over the completeness and accuracy of carrier and policy data for determining the first-year commission provision for certain Life segment final expense policies were **not designed effectively**[236](index=236&type=chunk) - Management has initiated a **remediation plan** that includes obtaining complete carrier information feeds, reviewing policies for risk mitigation, and enhancing procedures to assess data accuracy[238](index=238&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to two putative securities class action lawsuits alleging securities fraud, which it believes are without merit and intends to vigorously defend - A putative securities class action lawsuit (Hartel v. SelectQuote, Inc.) was filed on August 17, 2021, alleging **securities fraud** for the period between February 8, 2021, and May 11, 2021[76](index=76&type=chunk) - A second putative securities class action lawsuit (West Palm Beach Police Pension Fund v. SelectQuote, Inc.) was filed on October 7, 2021, alleging violations related to the company's IPO and the period between May 20, 2020, and August 25, 2021[77](index=77&type=chunk) - The company believes the allegations in both complaints are **without merit** and has not accrued a liability, but notes the cases could be **costly to defend**[79](index=79&type=chunk) [Item 1A. Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have occurred since those disclosed in its amended Form 10-K/A for the fiscal year ended June 30, 2021 - There have been **no material changes** to the risk factors as disclosed in the Company's Form 10-K/A for the year ended June 30, 2021[244](index=244&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) Details an immaterial correction of prior period financial statements due to an error in the lapse rate for first-year commission revenue, to be corrected in future comparative filings - An error was discovered where the provision for first-year commission revenue for certain final expense policies should have been accrued based on a **higher lapse rate**[248](index=248&type=chunk) Prior Period Commission Revenue Misstatement and Net Income Impact | Period | Commission Revenue Misstatement | Net Income Impact | | :--- | :--- | :--- | | Year Ended June 30, 2021 | $6.1 million | ($4.8 million) | | Year Ended June 30, 2020 | $2.0 million | ($1.5 million) | | Three Months Ended Sep 30, 2021 | $2.4 million | ($1.8 million) | - The company plans to **correct the consolidated financial statements** for prior periods that will be presented in future Form 10-K and 10-Q filings to reflect these adjustments[248](index=248&type=chunk)[249](index=249&type=chunk) [Item 6. Exhibits](index=66&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the quarterly report, including amendments to the Credit Agreement, CEO and CFO certifications, and XBRL data files - Key exhibits filed include the **Second Amendment** (dated Nov 2, 2021) and **Third Amendment** (dated Dec 23, 2021) to the company's Credit Agreement[269](index=269&type=chunk) - Certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are included as exhibits[269](index=269&type=chunk)

Financial Performance - Consolidated revenue totaled $195 million in 2Q 2022[11] - Consolidated Adjusted EBITDA was $(163) million in 2Q 2022[11] - Consolidated net loss totaled $137 million, or $(0.84) loss per diluted share in 2Q 2022[11] - SelectQuote anticipates a net loss between $(255) million and $(236) million for FY2022[61] - SelectQuote projects Adjusted EBITDA to be between $(260) million and $(235) million for FY2022[62] Key Performance Indicators - Approved policies in MA and MS were 209,000 and 10,000 respectively in 2Q 2022, compared to 261,000 and 2,000 in 2Q 2021[42] - MA LTV (Lifetime Value) decreased from $1,268 in 2Q 2021 to $922 in 2Q 2022[42] Factors Affecting Performance - Actual results have significantly underperformed internal expectations year-to-date[10] - Greater parity in plan benefits for the 2022 benefit year suppressing close rates relative to prior year[10] - Hiring and onboarding delays related to the tight labor market[10] - CMS marketing review process that created advertising delays early in AEP (Annual Enrollment Period)[10] - Increased falloff in approved policies post-submission[10] - Persistency and lapse rate pressure continue to create earnings volatility[10]

Financial Data and Key Metrics Changes - SelectQuote's consolidated revenue for Q2 2022 totaled $195 million, a decrease of 45% year-over-year, while adjusted EBITDA was negative $163 million [9][10][44] - The company recognized a cohort sale adjustment of $145 million, reflecting lower persistency primarily due to higher intra-year loss rates experienced in 2021 [9][10][45] - The new outlook for full-year revenue is projected to be between $810 million and $850 million, with adjusted EBITDA expected to be negative between $235 million and $260 million [10][71] Business Line Data and Key Metrics Changes - The total approved policies grew by 22%, and Medicare Advantage (MA) approved policies increased by 27%, although the growth was lower than submitted policy growth due to higher switching activity [51][52] - Agent productivity declined by 45%, with average close rates down more than 20% compared to the previous season, significantly impacting overall performance [52][54] Market Data and Key Metrics Changes - The Medicare Advantage market experienced increased shopping behavior among consumers, but this led to lower close rates due to greater parity in plan features across carriers [17][19][76] - The company noted that the competitive landscape has changed, with carriers focusing on specific benefits, which has created challenges in closing sales [88] Company Strategy and Development Direction - SelectQuote is actively reviewing its business strategy, particularly in the senior Medicare Advantage distribution business, aiming to reset growth philosophy to focus on repeatable unit operating margins and predictable cash flows [11][25][30] - The company plans to reduce the number of flex agents and hire core agents earlier to improve training and onboarding, thereby enhancing close rates and agent productivity [40][48] Management's Comments on Operating Environment and Future Outlook - Management described the quarter as disappointing and acknowledged the need for a strategic shift to mitigate volatility and improve profitability [7][10][47] - The company remains committed to leveraging its unique position in the healthcare landscape, particularly through its Population Health initiatives, which are expected to contribute to future growth [29][72] Other Important Information - SelectQuote's SelectRx pharmacy solution has seen strong consumer interest, with over 40,000 gross customer enrollments and 10,000 active members receiving prescriptions [12][64][67] - The company ended the quarter with $193 million in cash and $717 million in debt, indicating a significant cash outflow during the quarter due to operational expenses [68][70] Q&A Session Summary Question: Understanding the impact of plan parity on close rates - Management explained that the AEP was unique due to industry-wide CMS issues and a tight labor market, which masked underlying issues, with plan parity being a significant factor in lower close rates [76][77] Question: Long-term growth expectations - Management indicated that while they are not providing specific guidance for fiscal '23, they plan to reset the baseline for policy production and expect modest growth thereafter [79][81] Question: Correlation with competitors' results - Management acknowledged that while some issues may correlate with competitors like Humana, they believe their engagement with carriers remains strong and beneficial [86][87] Question: Cash flow breakeven timeline - Management stated that by pulling back on growth and resetting the baseline, they expect to see benefits in cash flow and aim for breakeven in the near future [91][93] Question: Customer acquisition and lead generation - Management noted that while lead costs have remained stable, the focus will be on optimizing lead channels and improving the quality of leads to enhance close rates [94][96]

SelectQuote, Inc. (NYSE:SLQT) Q3 2021 Earnings Conference Call November 4, 2021 5:00 PM ET Company Participants Matt Gunter - IR Tim Danker - CEO Raff Sadun - CFO Bob Grant - President, Senior Division Bill Grant - COO Conference Call Participants Jailendra Singh - Credit Suisse Elizabeth Anderson - Evercore Jeff Garro - Piper Sandler Daniel Grosslight - Citi Frank Morgan - RBC Capital Markets Meyer Shields - KBW Operator Good day, and thank you for standing by. Welcome to the SelectQuote fiscal first quart ...