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SelectQuote, Inc. Reports Second Quarter and Fiscal Year to Date 2021 Results

02/08/2021

Second Quarter of Fiscal Year 2021 - Consolidated Earnings Highlights

  • Revenue of $358.3 million, Up 103% Year-Over-Year
  • Net Income of $90.4 million, improvement of $51.3 million Year-Over-Year
  • Adjusted EBITDA of $129.5 million, Up 88% Year-Over-Year*
  • Raising Full-Year 2021 Revenue, Net Income and Adjusted EBITDA Guidance:
    • Revenue expected in a range of $920 million to $940 million
    • Net Income expected in a range of $138 million to $146 million
    • Adjusted EBITDA expected in a range of $230 million to $240 million*

Second Quarter of Fiscal Year 2021 - Segment Highlights

Senior

  • Revenue of $315.5 million, Up 127% Year-Over-Year
  • Adjusted EBITDA of $134.6 million, Up 98% Year-Over-Year*
  • Approved Medicare Advantage policies grew 132% Year-Over-Year

Life

  • Revenue of $36.4 million, Up 26% Year-Over-Year
  • Adjusted EBITDA of $6.4 million, Up 3% Year-Over-Year*
  • Final expense premiums grew 229% Year-Over-Year

Auto & Home

  • Revenue of $7.2 million, Down 15% Year-Over-Year
  • Adjusted EBITDA of $2.2 million, Up 42% Year-Over-Year*
  • Total Auto & Home premiums declined 10% Year-Over-Year

OVERLAND PARK, Kan.--(BUSINESS WIRE)-- SelectQuote, Inc. (NYSE: SLQT), reported consolidated revenue for the second quarter of fiscal year 2021 of $358.3 million, which was a 103% increase over consolidated revenue for the second quarter of fiscal year 2020 of $176.3 million. Consolidated net income for the second quarter of fiscal year 2021 was $90.4 million, which was a $51.3 million increase over consolidated net income for the second quarter of fiscal year 2020 of $39.1 million. Finally, consolidated Adjusted EBITDA for the second quarter of fiscal year 2021 was $129.5 million, which was an 88% increase over consolidated Adjusted EBITDA for the second quarter of fiscal year 2020 of $69.0 million.

Consolidated revenue for the six months ended December 31, 2020, was $482.4 million, a 100% increase over consolidated revenue for the six months ended December 31, 2019, of $241.5 million. Consolidated net income for the six months ended December 31, 2020, was $91.3 million, an increase of $53.9 million over consolidated net income for the six months ended December 31, 2019, of $37.4 million. Finally, consolidated Adjusted EBITDA for the six months ended December 31, 2020, was $141.6 million compared to consolidated Adjusted EBITDA of $69.8 million for the six months ended December 31, 2019, a 103% increase.

Chief Executive Officer Tim Danker commented, “Our Second Quarter results again demonstrated our strong growth potential, exceeding our internal expectations. The quarter was led by a strong AEP, where our Medicare Advantage approved policies grew by 132% year-over-year. We continue to show our differentiated model delivers superior financial results driven by a 32% increase in average agent productivity despite adding 70% more agents. We continue to excel in a fast-growing industry, and we’re pleased that our results continue to validate our strategy.”

Chief Financial Officer Raffaele Sadun added, “With Senior revenue growth of 127% year-over-year, this was the fourth consecutive quarter of Senior revenue growth in excess of 100%. This is especially impressive given all of our hiring, onboarding, training, and licensing was done virtually. We continue to deliver industry leading and stable LTVs, which demonstrates the soundness of our strategy. As a result of our strong results during AEP, we are raising our fiscal year 2021 guidance for the third time this year.”

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)

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

Revenue

$

315,510

 

 

$

138,875

 

 

127

%

 

$

388,709

 

 

$

166,458

 

 

134

%

Adjusted EBITDA*

134,555

 

 

68,110

 

 

98

%

 

143,457

 

 

66,170

 

 

117

%

Adjusted EBITDA Margin*

43

%

 

49

%

 

 

 

37

%

 

40

%

 

 

Operating Metrics

Submitted Policies

Submitted policies are counted when an individual completes an application with our licensed agent and provides authorization to them to submit it to the insurance carrier partner. The applicant may have additional actions to take before the application will be reviewed by the insurance carrier, such as providing additional information.

The following table shows the number of submitted policies for the periods presented:

 

Three Months Ended
December 31,

 

 

 

Six Months Ended
December 31,

 

 

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

Medicare Advantage

246,548

 

 

108,223

 

 

128

%

 

294,539

 

 

129,074

 

 

128

%

Medicare Supplement

13,273

 

 

9,179

 

 

45

%

 

20,549

 

 

12,680

 

 

62

%

Dental, Vision and Hearing

43,020

 

 

23,946

 

 

80

%

 

63,062

 

 

33,871

 

 

86

%

Prescription Drug Plan

6,250

 

 

8,374

 

 

(25)

%

 

8,675

 

 

9,901

 

 

(12)

%

Other

3,939

 

 

1,021

 

 

286

%

 

5,822

 

 

1,690

 

 

244

%

Total

313,030

 

 

150,743

 

 

108

%

 

392,647

 

 

187,216

 

 

110

%

*See reconciliation from non-GAAP measure, Adjusted EBITDA, to net income on pages 11-13

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,

 

 

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

Medicare Advantage

208,714

 

 

89,920

 

 

132

%

 

251,187

 

 

108,399

 

 

132

%

Medicare Supplement

10,451

 

 

6,412

 

 

63

%

 

16,776

 

 

9,038

 

 

86

%

Dental, Vision and Hearing

33,614

 

 

15,630

 

 

115

%

 

49,853

 

 

22,924

 

 

117

%

Prescription Drug Plan

4,815

 

 

7,379

 

 

(35)

%

 

7,447

 

 

8,881

 

 

(16)

%

Other

3,256

 

 

779

 

 

318

%

 

5,080

 

 

1,197

 

 

324

%

Total

260,850

 

 

120,120

 

 

117

%

 

330,343

 

 

150,439

 

 

120

%

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):

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

Medicare Advantage

$

1,268

 

 

$

1,268

 

 

0

%

 

$

1,251

 

 

$

1,250

 

 

0

%

Medicare Supplement

1,233

 

 

1,367

 

 

(10)

%

 

1,248

 

 

1,340

 

 

(7)

%

Dental, Vision and Hearing

138

 

 

140

 

 

(2)

%

 

148

 

 

140

 

 

6

%

Prescription Drug Plan

232

 

 

226

 

 

3

%

 

235

 

 

232

 

 

1

%

Other

127

 

 

211

 

 

(40)

%

 

130

 

 

106

 

 

23

%

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 as 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 represent 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 which is 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):

2020

 

2019

 

% Change

Medicare Advantage and Medicare Supplement approved policies

394,032

 

 

170,043

 

 

132

%

Medicare Advantage and Medicare Supplement commission per MA / MS policy

$

1,276

 

 

$

1,281

 

 

0

%

Other commission per MA/MS policy

39

 

 

57

 

 

(32)

%

Other per MA / MS policy

168

 

 

141

 

 

19

%

Total revenue per MA / MS policy

1,483

 

 

1,479

 

 

0

%

Total operating expenses per MA / MS policy

(916)

 

 

(837)

 

 

9

%

Adjusted EBITDA per MA / MS policy*

$

567

 

 

$

642

 

 

(12)

%

Adjusted EBITDA Margin per MA / MS policy*

38

%

 

43

%

 

 

Revenue / CAC multiple

3.2X

 

4.1X

 

 

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)

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

Revenue

$

36,375

 

 

$

28,980

 

 

26

%

 

$

79,198

 

 

$

56,587

 

 

40

%

Adjusted EBITDA*

6,414

 

 

6,240

 

 

3

%

 

16,891

 

 

12,059

 

 

40

%

Adjusted EBITDA Margin*

18

%

 

22

%

 

 

 

21

%

 

21

%

 

 

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. Core premiums include term life and permanent life insurance policies while ancillary premiums include various smaller products. 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 non-GAAP measure, Adjusted EBITDA, to net income on pages 11-13

The following table shows core, final expense, and ancillary premiums for the periods presented:

 

Three Months Ended
December 31,

 

 

 

Six Months Ended
December 31,

 

 

(in thousands)

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

Core Premiums

$

18,751

 

 

$

19,469

 

 

(4)

%

 

$

37,317

 

 

$

37,849

 

 

(1)

%

Final Expense Premiums

11,263

 

 

3,424

 

 

229

%

 

30,713

 

 

7,339

 

 

318

%

Ancillary Premiums

505

 

 

750

 

 

(33)

%

 

1,162

 

 

1,251

 

 

(7)

%

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)

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

Revenue

$

7,241

 

 

$

8,566

 

 

(15)

%

 

$

16,779

 

 

$

18,619

 

 

(10)

%

Adjusted EBITDA*

2,150

 

 

1,517

 

 

42

%

 

5,767

 

 

4,007

 

 

44

%

Adjusted EBITDA Margin*

30

%

 

18

%

 

 

 

34

%

 

22

%

 

 

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):

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

Premiums

$

13,255

 

 

$

14,716

 

 

(10)

%

 

$

30,155

 

 

$

32,002

 

 

(6)

%

 

Update on Fiscal Year 2021 Guidance

SelectQuote is raising the guidance originally provided for the full-year ending June 30, 2021. As a reminder, these expectations are forward-looking statements and actual results may be materially different and are affected by the risk factors and uncertainties identified in this press release and in our annual and quarterly filings with the Securities and Exchange Commission.

SelectQuote is raising guidance for the full-year ending June 30, 2021 as follows:

  • Consolidated Revenue is expected to be in the range of $920 million to $940 million
  • Consolidated Net Income is expected to be in the range of $138 million to $146 million
  • Consolidated Adjusted EBITDA is expected to be in the range of $230 million to $240 million*

*See reconciliation from non-GAAP measure, Adjusted EBITDA, to net income on pages 11-13

Review of Financial Results

SelectQuote, Inc. will host a conference call with the investment community today, Monday, February 8, 2021, beginning at 5 p.m. ET. To register for this conference call, please use this link: http://www.directeventreg.com/registration/event/6593229. 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 or via this link.

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 before interest expense, income tax expense, 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. 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 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.

SELECTQUOTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)

 

December 31, 2020

 

June 30, 2020

 

 

 

 

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

209,739

 

 

$

321,065

 

Restricted cash

36,168

 

 

47,805

 

Accounts receivable

146,989

 

 

83,634

 

Commissions receivable-current

76,265

 

 

51,209

 

Other current assets

7,383

 

 

10,121

 

Total current assets

476,544

 

 

513,834

 

COMMISSIONS RECEIVABLE—Net

655,828

 

 

461,752

 

PROPERTY AND EQUIPMENT—Net

24,512

 

 

22,150

 

SOFTWARE—Net

10,085

 

 

8,399

 

OPERATING LEASE RIGHT-OF-USE ASSETS

29,182

 

 

 

INTANGIBLE ASSETS—NET

18,015

 

 

19,673

 

GOODWILL

46,456

 

 

46,577

 

OTHER ASSETS

1,427

 

 

1,408

 

TOTAL ASSETS

$

1,262,049

 

 

$

1,073,793

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable

$

32,420

 

 

$

22,891

 

Accrued expenses

15,535

 

 

14,936

 

Accrued compensation and benefits

35,067

 

 

22,228

 

Earnout liability

31,966

 

 

30,812

 

Operating lease liabilities—current

5,093

 

 

 

Other current liabilities

20,938

 

 

4,944

 

Total current liabilities

141,019

 

 

95,811

 

DEBT

313,336

 

 

311,814

 

DEFERRED INCOME TAXES

131,121

 

 

105,844

 

OPERATING LEASE LIABILITIES

36,958

 

 

 

OTHER LIABILITIES

5,480

 

 

14,635

 

Total liabilities

627,914

 

 

528,104

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

Common stock, $.01 par value

1,628

 

 

1,622

 

Additional paid-in capital

545,441

 

 

548,113

 

Retained earnings (accumulated deficit)

88,461

 

 

(2,792)

 

Accumulated other comprehensive loss

(1,395)

 

 

(1,254)

 

Total shareholders’ equity

634,135

 

 

545,689

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

1,262,049

 

 

$

1,073,793

 

SELECTQUOTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)

 

Three Months Ended
December 31,

 

Six Months Ended
December 31,

 

2020

 

2019

 

2020

 

2019

REVENUE:

 

 

 

 

 

 

 

Commission

$

320,974

 

 

$

158,650

 

 

$

427,519

 

 

$

216,472

 

Production bonus and other

37,300

 

 

17,647

 

 

54,924

 

 

24,992

 

Total revenue

358,274

 

 

176,297

 

 

482,443

 

 

241,464

 

 

 

 

 

 

 

 

 

OPERATING COSTS AND EXPENSES:

 

 

 

 

 

 

 

Cost of revenue

84,121

 

 

50,484

 

 

135,166

 

 

83,121

 

Marketing and advertising

132,206

 

 

50,871

 

 

182,006

 

 

76,972

 

General and administrative

13,043

 

 

13,997

 

 

25,245

 

 

19,123

 

Technical development

4,750

 

 

3,510

 

 

8,598

 

 

6,223

 

Total operating costs and expenses

234,120

 

 

118,862

 

 

351,015

 

 

185,439

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

124,154

 

 

57,435

 

 

131,428

 

 

56,025

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE, NET

(6,782)

 

 

(6,178)

 

 

(13,543)

 

 

(6,883)

 

OTHER EXPENSES, NET

(416)

 

 

(3)

 

 

(1,196)

 

 

(16)

 

INCOME BEFORE INCOME TAX EXPENSE

116,956

 

 

51,254

 

 

116,689

 

 

49,126

 

INCOME TAX EXPENSE

26,540

 

 

12,184

 

 

25,436

 

 

11,744

 

 

 

 

 

 

 

 

 

NET INCOME

$

90,416

 

 

$

39,070

 

 

$

91,253

 

 

$

37,382

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) PER SHARE:

 

 

 

 

 

 

 

Basic

$

0.56

 

 

$

(0.56)

 

 

$

0.56

 

 

$

(0.62)

 

Diluted

$

0.55

 

 

$

(0.56)

 

 

$

0.55

 

 

$

(0.62)

 

 

 

 

 

 

 

 

 

WEIGHTED-AVERAGE COMMON STOCK OUTSTANDING USED IN PER SHARE AMOUNTS:

 

 

 

 

 

 

 

Basic

162,645

 

 

90,374

 

 

162,546

 

 

88,945

 

Diluted

165,563

 

 

90,374

 

 

165,377

 

 

88,945

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE GAIN (LOSS) NET OF TAX:

 

 

 

 

 

 

 

Gain (loss) on cash flow hedge

116

 

 

 

 

(141)

 

 

 

OTHER COMPREHENSIVE GAIN (LOSS)

116

 

 

 

 

(141)

 

 

 

COMPREHENSIVE INCOME

$

90,532

 

 

$

39,070

 

 

$

91,112

 

 

$

37,382

 

SELECTQUOTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)

 

Six Months Ended December 31,

 

2020

 

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income

$

91,253

 

 

$

37,382

 

Adjustments to reconcile net income to net cash, cash equivalents, and restricted cash used in operating activities:

 

 

 

Depreciation and amortization

6,937

 

 

3,168

 

Loss (gain) on disposal of property, equipment, and software

162

 

 

(2)

 

Share-based compensation expense

2,259

 

 

9,263

 

Deferred income taxes

25,321

 

 

11,759

 

Amortization of debt issuance costs and debt discount

1,644

 

 

592

 

Fair value adjustments to contingent earnout obligations

1,153

 

 

 

Non-cash lease expense

1,887

 

 

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

(63,355)

 

 

(13,050)

 

Commissions receivable

(219,132)

 

 

(110,792)

 

Other assets

1,906

 

 

856

 

Accounts payable and accrued expenses

15,692

 

 

4,985

 

Operating lease liabilities

(1,245)

 

 

 

Other liabilities

32,371

 

 

5,237

 

Net cash used in operating activities

(103,147)

 

 

(50,602)

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Purchases of property and equipment

(5,768)

 

 

(5,499)

 

Proceeds from sales of property and equipment

 

 

3

 

Purchases of software and capitalized software development costs

(3,449)

 

 

(2,434)

 

Acquisition of business

121

 

 

 

Net cash used in investing activities

(9,096)

 

 

(7,930)

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Proceeds from revolving line of credit

 

 

83,602

 

Payments on revolving line of credit

 

 

(91,778)

 

Net proceeds from Term Loan

 

 

416,500

 

Proceeds from other debt

 

 

8,425

 

Payments on other debt

(108)

 

 

(1,440)

 

Proceeds from common stock option exercises

391

 

 

4,819

 

Cash dividends paid

 

 

(275,000)

 

Payments of tax withholdings related to net share settlement of equity awards

(5,320)

 

 

 

Payments of debt issuance costs

 

 

(7,694)

 

Payments of costs incurred in connection with private placement

(1,771)

 

 

 

Payments of costs incurred in connection with initial public offering

(3,911)

 

 

(1,603)

 

Net cash (used in) provided by financing activities

(10,719)

 

 

135,831

 

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

(122,962)

 

 

77,299

 

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of period

368,869

 

 

570

 

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of period

$

245,907

 

 

$

77,869

 

SELECTQUOTE, INC. AND SUBSIDIARIES
Adjusted EBITDA to Net Income Reconciliation
(Unaudited)

 

Three Months Ended December 31, 2020

(in thousands)

Senior

 

Life

 

Auto & Home

 

Corp & Elims

 

Consolidated

Revenue

$

315,510

 

 

$

36,375

 

 

$

7,241

 

 

$

(852)

 

 

$

358,274

 

Operating expenses

(180,955)

 

 

(29,961)

 

 

(5,091)

 

 

(12,746)

 

 

(228,753)

 

Other expenses, net

 

 

 

 

 

 

(21)

 

 

(21)

 

Adjusted EBITDA

134,555

 

 

6,414

 

 

2,150

 

 

(13,619)

 

 

129,500

 

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

 

 

 

 

 

 

 

 

(26,540)

 

Net income

 

 

 

 

 

 

 

 

$

90,416

 

 

Three Months Ended December 31, 2019

(in thousands)

Senior

 

Life

 

Auto & Home

 

Corp & Elims

 

Consolidated

Revenue

$

138,875

 

 

$

28,980

 

 

$

8,566

 

 

$

(124)

 

 

$

176,297

 

Operating expenses

(70,765)

 

 

(22,740)

 

 

(7,049)

 

 

(6,775)

 

 

(107,329)

 

Other expenses, net

 

 

 

 

 

 

(3)

 

 

(3)

 

Adjusted EBITDA

68,110

 

 

6,240

 

 

1,517

 

 

(6,902)

 

 

68,965

 

Share-based compensation expense

 

 

 

 

 

 

 

 

(9,241)

 

Non-recurring expenses

 

 

 

 

 

 

 

 

(564)

 

Depreciation and amortization

 

 

 

 

 

 

 

 

(1,728)

 

Interest expense, net

 

 

 

 

 

 

 

 

(6,178)

 

Income tax expense

 

 

 

 

 

 

 

 

(12,184)

 

Net income

 

 

 

 

 

 

 

 

$

39,070

 

SELECTQUOTE, INC. AND SUBSIDIARIES
Adjusted EBITDA to Net Income Reconciliation
(Unaudited)

 

Six Months Ended December 31, 2020

(in thousands)

Senior

 

Life

 

Auto & Home

 

Corp & Elims

 

Consolidated

Revenue

$

388,709

 

 

$

79,198

 

 

$

16,779

 

 

$

(2,243)

 

 

$

482,443

 

Operating expenses

(245,252)

 

 

(62,307)

 

 

(11,012)

 

 

(22,264)

 

 

(340,835)

 

Other expenses, net

 

 

 

 

 

 

(43)

 

 

(43)

 

Adjusted EBITDA

143,457

 

 

16,891

 

 

5,767

 

 

(24,550)

 

 

141,565

 

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

 

 

 

 

 

 

 

 

(25,436)

 

Net income

 

 

 

 

 

 

 

 

$

91,253

 

 

Six Months Ended December 31, 2019

(in thousands)

Senior

 

Life

 

Auto & Home

 

Corp & Elims

 

Consolidated

Revenue

$

166,458

 

 

$

56,587

 

 

$

18,619

 

 

$

(200)

 

 

$

241,464

 

Operating expenses

(100,288)

 

 

(44,528)

 

 

(14,612)

 

 

(12,188)

 

 

(171,616)

 

Other expenses, net

 

 

 

 

 

 

(16)

 

 

(16)

 

Adjusted EBITDA

$

66,170

 

 

$

12,059

 

 

$

4,007

 

 

$

(12,404)

 

 

69,832

 

Share-based compensation expense

 

 

 

 

 

 

 

 

(9,263)

 

Non-recurring expenses

 

 

 

 

 

 

 

 

(1,394)

 

Depreciation and amortization

 

 

 

 

 

 

 

 

(3,168)

 

Gain on disposal of property, equipment, and software

 

 

 

 

 

 

 

 

2

 

Interest expense, net

 

 

 

 

 

 

 

 

(6,883)

 

Income tax expense

 

 

 

 

 

 

 

 

(11,744)

 

Net Income

 

 

 

 

 

 

 

 

$

37,382

 

SELECTQUOTE, INC. AND SUBSIDIARIES
Adjusted EBITDA to Net Income Reconciliation
(Unaudited)

Guidance net income to Adjusted EBITDA reconciliation, year ending June 30, 2021:

(in thousands)

Range

Net Income

$

138,000

 

 

$

146,000

 

Income tax expense

42,000

 

 

44,000

 

Interest expense, net

28,000

 

 

28,000

 

Depreciation and amortization

14,000

 

 

14,000

 

Fair value adjustments to contingent earnout obligations

1,000

 

 

1,000

 

Non-recurring expenses

2,000

 

 

2,000

 

Share-based compensation expense

5,000

 

 

5,000

 

Adjusted EBITDA

$

230,000

 

 

$

240,000

 

 

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

Source: SelectQuote, Inc.

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