SelectQuote(SLQT)2023-11-03 02:22Financial Data and Key Metrics - The company achieved stable and strong profitability in Q1 2024, marking seven consecutive quarters of improved operating results across all business segments [18] - Consolidated revenue for Q1 2024 was $233 million, with adjusted EBITDA at negative $11 million, representing a year-over-year improvement of over $16 million compared to Q1 2023 [54] - SelectRx surpassed 52,000 members, with healthcare services revenue exceeding senior revenues for the first time in company history [19] - Senior distribution business grew revenue by 16% year-over-year, with MA approved policies increasing by 17% to 98,000 [29][63] - Life and Auto & Home segments combined revenues were $47 million, up nearly 7% year-over-year, with adjusted EBITDA totaling nearly $9 million [47][44] Business Line Performance - SelectRx membership grew by over 60% year-over-year, reaching 52,000 members, driven primarily by Medicare Advantage interactions [67] - Healthcare services revenue grew by 50% year-over-year, driven by the maturation of the membership base and increased full-box utilization [5] - Senior distribution business saw a 22% decline in operating expense per policy, a 30% improvement in marketing expense per policy, and a 25% increase in agent close rates year-over-year [65] - Life business benefited from the adoption of the SwiftTerm Select product, while Auto & Home remained stable despite a challenging P&C insurance market [47] Market Performance - The company is well-positioned to serve all 50 states, with a single pharmacy system that is more efficient and integrated with automated fulfillment and shipping functions [58] - The Medicare Advantage market continues to show strong demand, with over 4 million Americans turning 65 each year, providing a long-term growth opportunity [40] - The company has seen deeper coordination with carriers, improving onboarding experiences and retention behavior [22] Strategic Direction and Industry Competition - The company’s strategy focuses on tenured agents, high-quality leads, and advanced technology tools to drive efficiency and policyholder persistency [20][21] - SelectRx is seen as a key differentiator, with the platform enabling differentiated customer acquisition and engagement, positioning the company at an advantageous intersection in the healthcare ecosystem [59] - The company is exploring additional market opportunities to leverage its platform for delivering value in the healthcare ecosystem [60] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the company’s preparation for the AEP and OEP seasons, with early results aligning with expectations [53] - The company expects to achieve attractive EBITDA margins in the low 20s for the senior distribution business in fiscal 2024 [32] - Management highlighted the importance of the healthcare services segment in offsetting seasonal expenses and driving future profitability [28] Other Important Information - The company emphasized its unique value proposition, combining Medicare Advantage distribution with tailored prescription drug delivery to drive higher patient medication adherence [25] - SelectRx’s revenue per member per month is more than 35% higher than the prior business, reflecting improved unit economics [24] - The company’s tenured agent retention remains strong, providing a key strategic advantage in the competitive Medicare Advantage market [55] Q&A Session Summary Question: Impact of regulatory changes on AEP performance - The company noted that regulatory changes, such as the 48-hour rule, had some impact but were in line with expectations, with no significant disruptions observed [34][69] - Management highlighted that the company’s alignment with carriers and focus on high-adherence solutions has been well-received, contributing to positive persistency and adherence metrics [77][71] Question: Growth trajectory and operational readiness for SelectRx - Management expressed confidence in SelectRx’s growth trajectory, expecting membership growth of 25% and healthcare services revenue growth of 50% for the year [5] - The company has scaled operations effectively, with customer satisfaction and NPS scores being strong indicators of operational readiness [70] Question: Outlook on P&C insurance market - The company acknowledged the challenging P&C insurance market but noted that carriers are adjusting underwriting practices, with the business continuing to perform well [80] Question: EBITDA cadence for fiscal 2024 - Management expects the EBITDA cadence to follow historical patterns, with healthcare services projected to achieve low single-digit EBITDA margins, improving as the business scales [74] Question: Plan design and shopping behavior - Management observed that plan features this year are similar to last season, with carriers focusing on maintaining critical consumer benefits, leading to stable shopping behavior [86][92]