SelectQuote(US:SLQT)2025-11-06 21:02Policy Submissions and Approvals - Total submitted policies decreased by 26% to 87,414 for the three months ended September 30, 2025, compared to 118,537 in the same period of 2024, primarily due to regulatory changes affecting Medicare Advantage enrollment[163] - Total approved policies decreased by 27% to 76,386 for the three months ended September 30, 2025, compared to 104,659 in the same period of 2024, correlating with the decrease in submitted policies[167] - The lifetime value of commissions (LTV) per approved Medicare Advantage policy decreased by 5% to $769 for the three months ended September 30, 2025, compared to $812 in the same period of 2024[170] - The Senior segment accounted for 82% of approved policies in the three months ended September 30, 2025, with Medicare Advantage and Medicare Supplement plans being the primary products[155] Membership and Service Growth - The total number of SelectRx members increased by 24% to 106,914 as of September 30, 2025, compared to 86,521 in the same period of 2024, reflecting the strategy to grow membership[172] - Average prescriptions shipped per day increased to 31,378 for the three months ended September 30, 2025, compared to 24,998 in the same period of 2024[174] - SelectQuote's strategy emphasizes expanding healthcare services and leveraging existing customer engagement to enhance service offerings and shareholder value[155] Revenue and Financial Performance - Total revenue for Q3 2025 was $328.8 million, a 13% increase from $292.3 million in Q3 2024[181] - Pharmacy revenue increased by $65.7 million, or 43%, primarily due to a 24% increase in members from the growth of the SelectRx business[181] - Revenue from the Senior segment decreased by $33,912 thousand, or 37%, to $58,996 thousand for the three months ended September 30, 2025, compared to $92,908 thousand in 2024[219] - Healthcare Services revenue increased by $65,612 thousand, or 42%, to $221,351 thousand for the three months ended September 30, 2025, compared to $155,739 thousand in 2024[218] - Life segment revenue increased by $7,357 thousand, or 19%, to $46,647 thousand for the three months ended September 30, 2025, compared to $39,290 thousand in 2024[218] Operating Costs and Expenses - Total operating costs and expenses rose to $369.6 million, an increase of 21.5% from $304.2 million in the prior year[181] - Cost of goods sold for pharmacy revenue increased by $63.3 million, or 49%, driven by a $59.5 million rise in medication costs[186] - Technical development expenses increased by $0.8 million, or 9%, primarily due to a rise in compensation costs from increased headcount[192] Net Loss and Adjusted EBITDA - The company recognized a net loss of $30.5 million for Q3 2025, compared to a net loss of $44.5 million in Q3 2024[177] - Adjusted EBITDA for the three months ended September 30, 2025, was $(32,079) thousand, compared to $(1,683) thousand in the same period of 2024[199] - Adjusted EBITDA from Healthcare Services increased to $7.2 million for the three months ended September 30, 2025, up from $4.9 million in 2024, despite a $63.0 million increase in cost of goods sold[224] - Adjusted EBITDA from Senior decreased to $(21.0) million for the three months ended September 30, 2025, down from $7.7 million in 2024, primarily due to a $33.9 million decrease in revenue[223] Cash Flow and Debt - Net cash used in operating activities was $21.6 million for the three months ended September 30, 2025, compared to $16.6 million in 2024, with a net loss of $30.5 million[237][238] - Net cash used in investing activities was $4.0 million for the three months ended September 30, 2025, compared to $2.6 million in 2024, primarily due to software and equipment purchases[241][242] - Net cash provided by financing activities was $4.2 million for the three months ended September 30, 2025, primarily from $80.0 million proceeds from the revolving credit facility[244] - Total debt obligations as of September 30, 2025, were $393.1 million, an increase from $385.1 million as of June 30, 2025[232] Interest Expense and Tax Rate - Interest expense decreased by $11.2 million, or 49%, due to lower cost of capital following a securitization transaction[193] - Interest expense, net, decreased to $11,808 thousand for the three months ended September 30, 2025, from $23,031 thousand in the same period of 2024[199] - The effective tax rate for Q3 2025 was 19.1%, compared to (27.2)% in Q3 2024, reflecting changes in state income taxes and valuation allowances[195] Market Sensitivity - A hypothetical 100 basis point increase in market interest rates would increase annualized interest expense by approximately $3.3 million based on outstanding balances as of September 30, 2025[252]