Core Viewpoint - The U.S. Department of Justice has filed a False Claims Act complaint against SelectQuote and other health insurance companies, alleging illegal kickbacks related to Medicare Advantage plans, leading to a significant drop in SelectQuote's stock price [2]. Group 1: Legal Investigation - Bragar Eagel & Squire, P.C. is investigating potential claims against SelectQuote on behalf of its stockholders for possible violations of federal securities laws and unlawful business practices [1]. - The DOJ's complaint alleges that from 2016 to at least 2021, SelectQuote and other insurers paid hundreds of millions of dollars in illegal kickbacks to brokers for enrollments in Medicare Advantage plans [2]. Group 2: Stock Market Impact - Following the announcement of the DOJ lawsuit, SelectQuote's stock price decreased by $0.61 per share, representing a 19.24% decline, closing at $2.56 per share on May 1, 2025 [2].

Core Viewpoint - Pomerantz LLP is investigating claims of potential securities fraud and unlawful business practices involving SelectQuote, Inc. following a DOJ lawsuit alleging illegal kickbacks related to Medicare Advantage plans [1][3]. Group 1: Investigation and Legal Actions - Pomerantz LLP is representing investors of SelectQuote and is looking into claims of securities fraud or other unlawful practices by the company and its officers [1]. - The U.S. Department of Justice filed a False Claims Act complaint against SelectQuote and other insurers, alleging that from 2016 to 2021, they paid hundreds of millions of dollars in illegal kickbacks to brokers for enrollments in Medicare Advantage plans [3]. - Following the DOJ's announcement, SelectQuote's stock price dropped by $0.61, or 19.24%, closing at $2.56 per share on May 1, 2025 [3]. Group 2: Company Background - SelectQuote, Inc. operates in the health insurance sector and is involved in the marketing of Medicare Advantage plans [3]. - Pomerantz LLP is recognized for its expertise in corporate, securities, and antitrust class litigation, having a long history of fighting for victims of securities fraud and corporate misconduct [4].

Company Overview - SelectQuote, Inc. is an insurance broker that specializes in selling Medicare Advantage and other health insurance plans [3]. Legal Investigation - Robbins Geller Rudman & Dowd LLP is investigating potential violations of U.S. federal securities laws involving SelectQuote, focusing on whether the company and its executives made false or misleading statements or failed to disclose material information to investors [1]. - The U.S. Department of Justice filed a complaint against SelectQuote and other insurance broker organizations, alleging that they received illegal kickbacks from insurers in exchange for enrollments into Medicare Advantage plans [3]. Market Impact - Following the announcement of the DOJ complaint, SelectQuote's stock price experienced a significant decline, falling more than 19% [3].

Core Insights - SelectQuote, Inc. operates in the insurance and healthcare distribution industry but faces challenges with profitability and long-term growth potential [1] Company Overview - SelectQuote, Inc. is listed on NYSE under the ticker SLQT and is involved in the insurance and healthcare distribution sector [1] Financial Performance - The company is currently not very profitable, and the anticipated improvements are not expected to significantly alter its long-term investment appeal [1]

Group 1 - SelectQuote (SLQT) closed at $5.49, with a 23.1% gain over the past four weeks, and analysts set a mean price target of $7.33, indicating a 33.5% upside potential [1] - The average of three short-term price targets ranges from $7 to $8, with a standard deviation of $0.58, suggesting a 27.5% to 45.7% upside from the current price [2] - Analysts show strong agreement in revising earnings estimates higher, which correlates with potential stock price movements [4][9] Group 2 - The Zacks Consensus Estimate for the current year has increased by 65%, with no negative revisions, indicating positive earnings prospects for SLQT [10] - SLQT holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [11] - While consensus price targets may not be reliable for exact gains, they can guide the direction of price movement [12]

Financial Data and Key Metrics Changes - SelectQuote generated $481 million in revenue for Q2 2025, up 19% compared to the previous year [30] - Consolidated adjusted EBITDA totaled $88 million, reflecting a 30% increase year over year, with a company-wide margin of 18% [31] - The company raised its fiscal year 2025 guidance for revenue to a range of $1.5 billion to $1.575 billion, up from $1.425 billion to $1.525 billion [50] Business Line Data and Key Metrics Changes - The Senior segment reported revenue of $256 million, exceeding original plans, driven by strong performance from tenured agents [33] - Adjusted EBITDA for the Senior segment was $101 million, growing 28% year over year, with a margin of 39% [35] - SelectRx membership grew to 97,000, a 54% increase year over year, contributing to revenue of $183 million, up 64% [43][44] Market Data and Key Metrics Changes - The Medicare Advantage annual enrollment period (AEP) saw a 6% termination rate of plans, significantly higher than the typical rate of less than 1% [37] - SelectQuote recaptured over 30% of terminated policies, demonstrating the effectiveness of its agent-led model [38] - The lifetime value of Medicare Advantage policies decreased by 3% year over year to $907, primarily due to carrier mix [42] Company Strategy and Development Direction - The company is focused on optimizing its capital structure, including a $350 million preferred equity offering to improve operational flexibility and reduce debt [13][24] - SelectQuote aims to leverage its competitive advantage in the $5 trillion American health care market, particularly through its Medicare platform and health care services [25][26] - The company is exploring additional strategic alternatives to strengthen its balance sheet and enhance growth opportunities [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a unique AEP season and highlighted the importance of its agent-led model for seniors [18][20] - The outlook for the regulatory environment is more favorable, with expectations of growth within the Medicare Advantage market [89][90] - Management emphasized the importance of continued investment in technology and marketing to enhance agent productivity and customer engagement [96][100] Other Important Information - The company reported a revenue to customer acquisition cost (CAC) ratio of over 5x, indicating strong operational efficiency [28] - SelectQuote's strategic investments are expected to decrease ongoing capital costs by more than 150 basis points and reduce annual cash interest obligations by approximately $30 million [24] Q&A Session Summary Question: Guidance and OEP Insights - Management acknowledged the conservative nature of the new midpoint guidance and discussed ongoing investments in health care services [54][56] Question: SelectRx Market Opportunity - Management highlighted the synergies between SelectRx and the senior segment, noting strong market penetration and customer engagement [60][62] Question: Use of Proceeds from Preferred Equity Offering - The majority of proceeds will be used to pay down debt, reducing interest expenses and providing operational flexibility [73][75] Question: Regulatory Environment Outlook - Management expressed optimism about the new regulatory regime, indicating a more favorable outlook for Medicare Advantage [86][90] Question: Agent Force Strategy - Management confirmed that the strong performance of tenured agents does not change their strategy regarding agent count and productivity [94][96] Question: Adoption of Direct-to-Home Pharmacy - Management noted an increase in adoption of home delivery pharmacy services among seniors, driven by improved customer experience and regulatory changes [102][106]

分组1 - SelectQuote reported quarterly earnings of $0.30 per share, exceeding the Zacks Consensus Estimate of $0.09 per share, and compared to earnings of $0.11 per share a year ago, representing an earnings surprise of 233.33% [1] - The company posted revenues of $481.07 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 14.27%, and compared to year-ago revenues of $405.44 million [2] - SelectQuote shares have increased approximately 17.7% since the beginning of the year, outperforming the S&P 500's gain of 2.5% [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is $0.06 on $398 million in revenues, and for the current fiscal year, it is -$0.20 on $1.44 billion in revenues [7] - The Zacks Industry Rank for Insurance - Multi line is currently in the top 36% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]

Policy Submissions and Approvals - Total submitted policies for all products increased by 5% for the three months ended December 31, 2024, compared to the same period in 2023, driven by a 24% increase in overall close rates [147]. - Total approved policies for all products increased by 5% for the three months ended December 31, 2024, compared to the same period in 2023, correlating with the increase in submitted policies [152]. - Medicare Advantage plans accounted for 93% of approved Senior policies for the three months ended December 31, 2024 [139]. - Term life policies accounted for 44% of new premium within the Life segment for the three months ended December 31, 2024 [141]. Financial Performance - Total revenue for the three months ended December 31, 2024, was $481,069,000, a 19% increase from $405,438,000 in 2023, with pharmacy revenue rising by 65% to $180,000,000 [168]. - Operating income for the three months ended December 31, 2024, was $70,940,000, representing a 28% increase from $55,294,000 in 2023 [164]. - Net income for the three months ended December 31, 2024, was $53,236,000, compared to $19,392,000 in 2023, reflecting a significant improvement in profitability [164]. - Total consolidated revenue for the three months ended December 31, 2024, was $481.1 million, with external revenue from the Senior segment at $253.8 million [196]. - Revenue from the Senior segment for the three months ended December 31, 2024, was $255.6 million, a 3% increase compared to $247.5 million for the same period in 2023 [203][204]. - Revenue from Healthcare Services for the three months ended December 31, 2024, was $183.4 million, a 64% increase compared to $111.7 million for the same period in 2023, primarily driven by a $71.2 million increase in SelectRx pharmacy revenue [205][206]. Expenses and Costs - Total operating costs and expenses for the three months ended December 31, 2024, were $410,129,000, which is 84% of total revenue [164]. - Cost of goods sold for pharmacy revenue increased by 66% to $156,201,000 for the three months ended December 31, 2024, primarily due to a $53.8 million increase in medication costs [174]. - Marketing and advertising expenses decreased by $19.4 million, or 17%, for the three months ended December 31, 2024, primarily due to a $16.3 million decrease in lead costs [178]. - Selling, general, and administrative expenses increased by $11.6 million, or 35%, for the three months ended December 31, 2024, primarily due to a $4.9 million increase in compensation costs [182]. - Technical development expenses increased by $2.0 million, or 25%, for the three months ended December 31, 2024, primarily due to a $1.6 million increase in compensation costs [184]. Member Growth and Market Expansion - The total number of SelectRx members increased by 54% as of December 31, 2024, compared to December 31, 2023, reflecting the company's growth strategy [159]. - The company continues to seek opportunities for market expansion through acquisitions and partnerships in healthcare services [138]. - The company completed a $4.0 million acquisition of a chronic care management platform to enhance its healthcare services [140]. Cash Flow and Debt - Net cash used in operating activities for the six months ended December 31, 2024, was $45.3 million, consisting of net income of $8.7 million and adjustments for non-cash items of $41.0 million [231]. - Net cash used in investing activities was $4.8 million for the six months ended December 31, 2024, primarily due to $4.1 million in software purchases [235]. - Net cash provided in financing activities was $21.1 million for the six months ended December 31, 2024, mainly from $99.1 million proceeds on notes issued [238]. - Total debt obligations as of December 31, 2024, were $711.9 million, compared to $683.3 million as of June 30, 2024 [223]. - The company completed a $100.0 million securitization transaction on October 15, 2024, to pay down a portion of its outstanding term loans [219]. Tax and Adjusted EBITDA - The effective tax rate for the three months ended December 31, 2024, was (34.6)%, compared to 37.2% for the same period in 2023 [188]. - Adjusted Segment EBITDA for the Senior segment was $100.5 million for the three months ended December 31, 2024 [196]. - Adjusted EBITDA from the Senior segment for the three months ended December 31, 2024, was $100.5 million, a 28% increase from $78.7 million for the same period in 2023 [210]. - Adjusted EBITDA from the Life segment for the three months ended December 31, 2024, was $7.4 million, a 62% increase compared to $4.6 million for the same period in 2023 [212].

Financial Transactions - The Borrower has received not less than $350,000,000 in cash proceeds from the sale of preferred stock[10] - The Borrower will prepay Term Loans in an aggregate principal amount of $260,000,000 on the Twelfth Amendment Effective Date[11] - The Borrower has entered into a Senior Preferred Stock Purchase Agreement dated February 10, 2025[10] - The company secured a $425 million senior secured term loan facility and a $75 million senior secured revolving credit facility[67] - Proceeds from the term loans will be used for specified equity payments totaling up to $325 million, funding cash to the balance sheet for at least two years of interest payments, and general corporate purposes[68] - The company has drawn $145 million from the first amendment incremental term loans and established a delayed draw term loan commitment of $145 million, which has been fully drawn[69] - The second amendment included a fully drawn delayed draw term loan A commitment of $100 million and an undrawn term loan B commitment of $100 million[70] - The aggregate amount of revolving loan commitments was increased to $135 million following the third amendment[71] - Following the fourth amendment, all second amendment delayed draw term loan B commitments were terminated, and the aggregate amount of revolving loan commitments was reduced to $100 million[72] Loan Agreement Conditions - The amendments to the Credit Agreement will become effective upon satisfaction of specified conditions[9] - The Borrower must ensure that no Default or Event of Default has occurred prior to the effectiveness of the amendments[9] - The Administrative Agent will receive a written opinion from counsel for the Credit Parties as part of the conditions for effectiveness[11] - The Borrower must provide incumbency certificates and good standing certificates as part of the conditions for effectiveness[12] - The effectiveness of any Extension Amendment is subject to the satisfaction of specific conditions, including solvency and no existing defaults[161] - The Borrower must provide an Extension Request at least five Business Days prior to the response date for Lenders[159] - No Event of Default shall have occurred at the time an Extension Request is delivered to Lenders[158] - The Administrative Agent must receive a solvency certificate from the Borrower's chief financial officer prior to closing[166] Compliance and Obligations - The Borrower must comply with all Requirements of Law to avoid Material Adverse Effects[183] - The Borrower has no pending litigation that would reasonably be expected to have a Material Adverse Effect[186] - The Borrower must ensure compliance with representations and warranties as of the borrowing date, maintaining material accuracy[175] - No Default or Event of Default should occur as a result of the Loan or Letter of Credit obligations[176] - The Borrower must maintain a minimum Asset Coverage Ratio of 2.35:1.00 for January 31, 2025, following the sale of Non-Core Assets[178] - The operations of each Credit Party and its subsidiaries are in compliance with all applicable Environmental Laws, with no pending or threatened violations[195] - As of the Closing Date, the Borrower and its subsidiaries are solvent[196] - There are no strikes or work stoppages involving any Credit Party or its subsidiaries that would have a Material Adverse Effect[197] - Each Credit Party and its subsidiaries own or have the right to use all necessary Intellectual Property for their business operations[199] - As of the Closing Date, no Credit Party or its subsidiaries have any outstanding equity interests that are subject to liens other than permitted liens[200] Payment and Interest Terms - The Term Loan and Revolving Loans bear interest at a rate equal to Adjusted Term SOFR or the Base Rate plus the Applicable Margin[88] - Interest on each Loan is paid in arrears on each Interest Payment Date, with specific provisions for past due amounts[89] - The Borrower must pay an Unused Commitment Fee of 0.50% per annum on the daily balance of the Aggregate Revolving Loan Commitment, less the sum of all Revolving Loans and Letter of Credit Obligations[130] - Upon termination of all Revolving Loan Commitments, the Borrower shall pay a fee of $500,000 to the Revolver Agent[133] - A prepayment premium of 1.0% will be applicable if the Borrower makes a voluntary prepayment of Term Loans before specified termination dates[135] - The Borrower must pay all amounts due without set-off or deduction, and payments must be made in immediately available funds by 2:00 p.m. New York time[136] Borrowing Procedures - The Borrower must deliver a duly executed Notice of Borrowing to the Applicable Agent[176] - The Borrower must provide written notice for each Revolving Loan borrowing, which must be received by the Revolver Agent before 3:00 p.m. on the requested date[99] - The proceeds of each requested Borrowing will be promptly made available to the Borrower by deposit into its operating account[100] - The Borrower has the option to convert or continue loans as SOFR Loans, with a minimum amount of $250,000 required for such elections[102] - The Borrower may prepay Revolving Loans in whole or in part without penalty or premium[105] - Any prepayment of Term Loans must be in amounts greater than or equal to $100,000, with prior written notice required[106] - The Borrower can permanently reduce the Aggregate Revolving Loan Commitment by at least $500,000, with reductions allocated pro rata among all Lenders[107] - The Borrower is required to prepay an aggregate principal amount of Term Loans equal to 50% of Excess Cash Flow for the Excess Cash Flow Period, minus voluntary prepayments made during that period[121] Financial Reporting - The Borrower provided audited consolidated financial statements for the fiscal year ended June 30, 2019, including balance sheet and cash flow statements[173] - The unaudited consolidated profit and loss statements for July and August 2019 were also delivered[173] - The audited consolidated balance sheet for the fiscal year ended June 30, 2019, presents a fair view of the financial condition of the Borrower and its subsidiaries[192] - Since June 30, 2019, there have been no events that could reasonably be expected to have a Material Adverse Effect[193] - All financial performance projections have been prepared in good faith, acknowledging that actual results may vary significantly from these projections[194] Legal and Jurisdictional Provisions - The agreement includes a waiver of personal service for legal processes, allowing service by mail to specified addresses[25] - Each party consents to non-exclusive jurisdiction, permitting legal proceedings in various jurisdictions[26] - The parties waive the right to a jury trial in any actions related to the agreement[27] - The agreement includes provisions for the treatment of unknown claims and defenses[34] - The agreement reaffirms all payment and performance obligations under existing loan documents[30] - Each Credit Party releases claims against the Administrative Agent and Lenders related to the Loans and Loan Documents[31] Loan Modifications and Amendments - The agreement has undergone multiple amendments since its original date, with the latest being the Twelfth Amendment[49] - The transactions are treated as a "significant modification" of existing Term Loans for tax purposes[37] - New Term Loans will be treated as issued in "registered form" for tax purposes[38] - The exchange of Term Loans is treated as a "recapitalization" under U.S. tax law[40] - Non-Funding Lenders do not have voting or consent rights under Loan Documents[151] - Non-Funding Lenders will not earn or receive their portion of the Unused Commitment Fee during the period they are classified as such[155] - The Aggregate Excess Funding Amount for a Non-Funding Lender includes all unpaid obligations and Letter of Credit Obligations reallocated to other Lenders[154] - Each Applicable Agent is authorized to use cash collateral to pay the Aggregate Excess Funding Amount on behalf of Non-Funding Lenders[153]

Financial Data and Key Metrics Changes - The company reported a consolidated revenue growth of 26% year-over-year, reaching $292 million in Q1 2025 [26] - Adjusted EBITDA improved by nearly $10 million compared to the previous year, driven by a highly-tenured agent force and strong profitability in the Healthcare Services segment [26][30] - The Medicare Advantage Lifetime Value (LTV) increased by 7% year-over-year to $812, indicating stable persistence and career mix [27] Business Line Data and Key Metrics Changes - Revenue for the Senior distribution business was up modestly to $93 million, with adjusted EBITDA improving significantly to $8 million [28] - The Healthcare Services business generated $156 million in revenue and achieved adjusted EBITDA of $5 million, marking the highest quarter of profitability since its launch [29] - The Life insurance distribution business reported revenue of $39 million, up modestly year-over-year, with adjusted EBITDA growing by almost 14% [31] Market Data and Key Metrics Changes - Membership in the SelectRx program increased to over 86,000, a 64% year-over-year growth [15][29] - The company expects more modest growth in SelectRx members in the first half of fiscal 2025 due to normal seasonal trends [30] Company Strategy and Development Direction - The company is focused on optimizing its balance sheet and has initiated a recapitalization plan, raising $100 million through a securitization of Medicare Advantage commissions receivable [20][21] - The strategic focus includes improving agent productivity and maintaining a high-touch service model to navigate the complexities of the Medicare Advantage market [9][14] - The company aims to achieve a target term debt leverage range of 2x to 3x to enhance capital flexibility [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing Annual Enrollment Period (AEP) season, noting strong early results and high consumer engagement [47] - The company is optimistic about capturing efficiencies and leveraging its experienced agent force to drive growth [51] - Management highlighted the importance of technology enhancements in improving agent efficiency and consumer interactions [56] Other Important Information - The company has expanded its AI tools to enhance call screening and process efficiency during the AEP [18] - The management team emphasized the need to balance customer acquisition and retention strategies amid changing market dynamics [35] Q&A Session Summary Question: How is the company balancing policy education and agent productivity? - Management noted that they are seeing high consumer engagement and strong close rates, which has led to enhanced marketing efficiency despite increased time spent on calls [35][36] Question: How does SelectRx fit into the sales process? - Management clarified that SelectRx operates as a separate opt-in model, not affecting the time agents spend on Medicare Advantage sales [39][40] Question: What are the implications of the political environment on AEP? - Management indicated that they have not seen significant negative impacts from the political environment due to their diversified marketing strategy [48][49] Question: How flexible is the marketing strategy during AEP? - Management confirmed that they have a wide funnel approach, allowing them to adjust marketing strategies in real-time based on performance [57][58] Question: What are the company's plans for future acquisitions in Healthcare Services? - Management expressed interest in exploring acquisition opportunities to enhance their healthcare ecosystem once balance sheet improvements are made [60][62]