SelectQuote, Inc. (SLQT) on Q2 2021 Results - Earnings Call Transcript

Operator: Welcome to SelectQuote's Second Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. It is now my pleasure to introduce Matt Gunter, SelectQuote Investor Relations. Mr. Gunter, you may begin your conference. Matt Gunter: Thank you and good afternoon everyone. Welcome to SelectQuote's fiscal second quarter earnings call. Before we begin our call, I'd like to mention that on our website, we have provided a slide presentation to help guide our discussion this afternoon. After today's call, a replay will also be available on our website. Tim Danker: Thank you, Matt and thank you as usual to our investors and analysts. We're excited to share another very strong quarter of results for SelectQuote driven in large part by a highly successful AEP in our Senior business. Let's start on slide three with some highlights from the second quarter which exceeded our internal expectations yet again. SelectQuote ended the second quarter with consolidated revenues of $358 million, up 103% year-over-year; and adjusted EBITDA of $130 million, up 88% over last year. As for highlights in the second quarter our Senior business was the main event again. We're most excited by another quarter of stable and industry-leading LTVs combined with our outsized revenue growth. Our Senior division grew rapidly on a challenging year-over-year compare with revenue up 127% and adjusted EBITDA up 98%. Let me pause on that statement for a second to call out that the 127% year-over-year growth in topline and 98% growth in EBITDA was on top of similar outsized growth we experienced last year. Specifically, we grew Senior revenues by 62% and adjusted EBITDA by 51% in the second quarter of last year. I'm emphasizing to highlight not only how significant and lasting the growth opportunity is for our business, but more importantly, to note the scalability of our differentiated model. Raff Sadun: Thanks Tim. I'll start on slide 9 with our consolidated results. For the second quarter, we generated $358 million of revenue and $130 million of adjusted EBITDA. Revenue grew 103% and adjusted EBITDA grew 88%. As we discussed last quarter, the investments we made in the first quarter in hiring and training paid off in the second quarter as we had a very successful AEP season. We'll discuss the performance of the divisions in more detail on the next few slides, but the revenue growth was driven by our Senior segments and by our investment in final expense policies within our Life segment. Our consolidated margins were down a little consistent with our stated strategy of growing faster and producing more absolute revenue and EBITDA at slightly lower margins. Turning to slide 10 and our Senior division. As you can see, we had a very strong AEP season, generating revenue of $316 million and adjusted EBITDA of $135 million during the second quarter. This represents year-over-year revenue growth of 127% and adjusted EBITDA growth of 98%. It also represents the fourth quarter in a row that we have grown revenue over 100%. Adjusted EBITDA margins were down a little from 49% to 43% consistent with our stated strategy of growing faster and producing more absolute revenue and EBITDA at slightly lower but still highly attractive margins. Question-and: Operator: Your first question comes from Elizabeth Anderson with Evercore ISI. Your line is open. Elizabeth Anderson, your line is open. Elizabeth Anderson: Hi sorry, I was put my cell phone on mute. I apologize. Congrats on a nice AEP season. I was wondering if you could talk a little bit more about the sales productivity, because I thought that that was pretty interesting given that you're COVID, and you didn't have sort of the ability to be there with people, in terms of helping the new to the process and things like that. What kind of -- could you maybe give a couple of examples of that? And then, sort of what do you see, sort of going forward as areas that you could future invest in additional productivity there? Tim Danker: Yeah. Elizabeth this is Tim. Great question, I'll start. And then maybe kick it over to Bob Grant President of our, Senior Division, for more commentary. But as we talked about on the call right, the productivity gains are really a function of our model in total. Investments we're making in marketing, our workflow, our skilled agents technology, the back end customer care. So it's really all aspects of the business model that, impacts the whole if you will. We feel very confident that, the investments that we're making in the underlying operation everything from, our national hiring platform, to the virtualized training that we did in a COVID environment, all the technology enhancements that drove both efficiency as well as good plan alignment, and the coaching are really working well. I think we have built a model that is very fortunate to have excellent sales conversion, industry-leading LTVs. That has allowed us really to lean into the massive market opportunity with incremental investments on the marketing front. So we really saw gains both, from -- there were a function of improved conversion on leads as well as agents being able to consume more leads. With that, I'll turn it over to Bob. Bob Grant: Yeah. I think to Tim's point, we really focused in on, making sure that we improved our technology that was available to the agents, to make sure that they can take more raw material. And with that, we really improved our raw material, and really focused on the quality of lead which we talked about a lot. As we were looking at last year's opportunity, we could have taken more of our call it more expensive raw material that have higher close rates. We really honed in on that this year, increased our close rates. But in order to do that we also really had to focus our training to improve our curve, because if you look at the more expensive leads right if our close rates aren't where they need to be on our newer agents, we struggle at taking that raw material. So SelectQuote University's focus on getting people more ready and faster, even in a remote environment really paid off for us. And we completely redid our training modules, and actually made it feel a lot more like a smaller training environment even though it was with a larger class. So we're really proud of what we did there, but it enabled us to have all three of those things really work together, and add to the overall efficiency. So it's not really just one thing. It was really those three key tenants that allowed us to grow that quickly, and have higher productivity on significantly higher headcount. Elizabeth Anderson: Perfect. That was really helpful. And can you expand on sort of, how you see your offerings and value-based care initiatives? And sort of over what time frame you should -- you see that unfolding? Tim Danker: Sure. Just a few brief comments. I want to kick it over to Bob again. We're big proponents, as we've discussed before. We think this is a great way to help consumers achieve better health outcomes. We have aligned with numerous market-leading care providers and we're serving, right, as educator to our customers about the benefits of these innovative care models. And we've -- so we publicly announced one partnership. We've got four additional that are in place and we're building out capabilities. Bob is leading this effort for the company. He's quite passionate about it. I think you should hear from him firsthand. Bob Grant: Yes. We are really focusing on healthcare literacy and having value-based care and other, kind of, heat of star rating activities as a portion of our offering. And what's unique is our contact rate on the back end and all the things that we're able to do there. We have a great relationship with our customers. Tim alluded to it. We get a hold of over 85% of our customers after sale, which we feel like is industry leading, as we talk to the carriers. Their mind is almost mind blowing how many folks we're able to get a hold of using data. And then, with that, we are also, just, I'd say, healthcare educators in general. That's how you ultimately properly align with the Medicare Advantage plan. So it's just a good further offering for us. And as Tim talked about it, we see a big growth in that space and we think that we can help align the industry with our consumers and get them into value-based care solutions and ultimately save them money and save our carriers money in the process while improving star ratings. And there's other activities that we're looking at that can do that as well. Elizabeth Anderson: Okay. Thanks so much. Operator: Your next question comes from Jailendra Singh with Crédit Suisse. Your line is open. Jailendra Singh: Yes. Thank you and congratulations on a very strong quarter. I know it's a little too early for you guys to talk about fiscal 2022 guidance, but looking at the strong seniors enrollment growth the company experienced during the AEP and various puts and takes the industry is experiencing from COVID perspective and some other factors. I was wondering, if you can discuss the future sustainability of some of these growth drivers and any other potential incremental growth drivers you see in future years. Raff Sadun: Yes. So I think with respect to 2022 guidance, we're not giving specific guidance yet. I think we've said before that the next several years we can sort of look at the Senior business and think about a revenue CAGR of over 40%, with margins in the mid-30s and on a consolidated basis above 35% with margins in the mid-20s. And I think that's sort of consistent with our thought process, at least for now. We are growing a little bit faster than that, based on the current results in the last couple of quarters, but we haven't updated that view going forward. In terms of how sustainable some of these things that we're working on are, I think, from an agent perspective, we don't model in increasing agent productivity. We think that's prudent not to do. I think we've shown that we've been able to do that year in year out, but that's not something that we necessarily model. And I do think that, as we hire bigger and bigger classes, right, it does become harder to some extent to continue to push on some of that agent productivity. Having said that, I think, the changes that we made are very sustainable. And maybe I'll hand it to Bob, if he has any other comments from that perspective. Bob Grant: No, I would agree with that, that the changes that we've made are very sustainable. We are going to continue to try to optimize -- increase our agents' ability to take more raw material. As Raff alluded to, we are also going to make further investments in our core group, which should really help us for next year. We still see higher productivity out of core than we do out of flex, even though we really would dramatically increase the productivity of flex this year. But really excited about the results that we see and, again, in trying to model conservatively, don't model in increases, but we see an opportunity still within our data to drive more increases. Jailendra Singh: Okay. That's helpful. And for my follow-up, one of your peers recently flagged challenges in some of their marketing channels, particularly direct response TV. I was wondering if you could talk about your experience during the quarter, with respect to some of these marketing channels. Did some particular marketing channels outperform or underperform in terms of leads or profitable leads? Tim Danker: Yes. Jailendra, this is Tim. I'll make some brief comments and turn it over to our COO, Bill Grant, for comments specific to marketing. So, overall, you did see marketing cost per submission increase this quarter. Margins went down a little bit from 49% last year to very, we would say highly attractive 43% EBITDA margins for Senior. In that push for marketing, we saw about half of that overall increase come from growth of our choice model growing significantly faster than our carrier pod model where in some instances we don't pay for those leads. The other half of the increase in cost per sale was on the core business as we really intentionally leaned into the growth opportunity. This was a conscious decision on our part and one that was more about kind of channel mix for us than a broader cost trend. So we think as we've talked about it before part of our express strategy is to grow absolute EBITDA dollars while maintaining solid KPIs and margins. We certainly believe we accomplished that, Senior revenue north of 127%. We added $67 million of adjusted EBITDA year-over-year; as Raff highlighted fourth consecutive quarter of over 100% senior revenue growth. And at the end of the day, we grew AEP about three -- EBITDA about 3x what we did last year all at attractive margins, Rev to CAC north of 3x. So maybe we'll turn it over to Bill to answer some of the specifics of your question, but I just wanted to provide that as a backdrop around kind of the intentional nature of our strategy there. Bill? Bill Grant: Yes sure. Yes. Well as Tim and Raff mentioned, I mean we had a very intentional strategy about ramping up, I would say our higher-quality more efficient sources. So we knew that we were going to spend a bit more on marketing this year relative to years past because we thought we were leaving some stuff on the table. We thought we could put more through the funnel, which is exactly what we executed on. I would say the part about this AEP may be different than what we expected just a bit would be just the constant amount of breaking news that the election had on our marketing. So as everyone knows, there was lots of surprises I would say is an understatement. And certainly that did put some pressure on us during AEP getting clearance whatever it may be. With that said, I think we're extremely pleased that we were able to navigate through that. And on days that I would call more normal days or kind of when news die down a little bit, we feel really good about where we were with TV in particular and a lot of our channels. But the thing that I think we're the most proud of is during that time when there was really large breaking news and virtually no clearance on certain days. We could still make our model highly functional by being able to turn the dials with kind of our omni-channel approach and take other sources. But as it specifically relates to TV, I would say certainly the election had the biggest impact on TV. But I'd say, we feel very good that we were able to navigate through that still have TV be a huge source for us and feel really good about where we are when some of that dies down post-election. Tim Danker: Just to accentuate Bill -- yes, just to accentuate Bill's good points there. I would say us versus some of the competitors, right. We can make TV work because of our agent productivity and because of our LTVs, right? We have a business model that can make these channels economical for us. And you're hearing from some of our competitors challenges in that. So we feel like this is very viable for us to Bill's point. This is in essence why you need a wide omni-channel approach because you can't just have dependency on a handful of channels. We like the ability if you will the fish in multiple ponds. Jailendra Singh: Great. Thanks a lot. Tim Danker: Thank you. Operator: Your next question comes from Frank Morgan with RBC Capital Markets. Your line is open. Frank Morgan: Good afternoon. Certainly, nice to see the improvement in the cash conversion and being ahead of schedule there. Curious, can you attribute that better result? You mentioned things like productivity and growth in final expense. But how would you sort of characterize what was really the key driver there? And then really any thoughts around when you -- does this make you change your view over when you think your enterprise can actually flip over to sort of a cash generation mode? That would be my first question. Raff Sadun: Yes. So I think in terms of using cash more efficiently, I think a couple of things that we talked about. Certainly agent productivity is a driver of that starting to sell more of that final expense product where we're receiving a one-year payback versus four plus in some of our other products. Those are definitely big drivers. We also -- we talked about it a little bit, we restructured some of our deals with carriers to basically have a little bit more of our cash come from sort of year one items. And so, I think we talked about that on the call. That sort of went up to about 45% of our total revenue for the quarter and that's another component that just from a cash efficiency standpoint definitely helps. Having said that, we are growing materially faster, right? And so that does require capital. And so far, we've been able to do it a little bit more efficiently. I think as we think about the business, we said we would raise enough capital to grow the business at the types of growth rates that we've talked about for the next several years. I don't think that's necessarily changed in terms of our expectations. As we work on sort of the fiscal '22 budget and our guidance for that as we flow in some of the assumptions around final expense and value-based care and some of the investments that we're making there, I think we'll have a better perspective of what sort of that looks like and we'll update you over time as we provide that guidance. Frank Morgan: Got you. And then I guess the follow-up, obviously, you're updating your guidance. Just curious, what you built into your numbers for additional core agents that you'll be adding in the fourth quarter of this year ahead of the next annual enrollment season this year? Thanks. Raff Sadun: In terms of the number of agents? Or -- is that the question? Or... Frank Morgan: Yes, yes. Like, what is built into the updated guidance with regard to the growth of those core agents that you called out in the opening? Raff Sadun: Yes. So, I won't go into too much detail, but I mean we have several new hiring classes that are going to be spread out over several months. Each of those hiring net classes is sort of 100 or so each. I would say that that obviously will then feed into next year and next year's AEP. I think one of the things that we'll look at and it'll be part of the guidance that we gave for fiscal '22 when we get there is, how much of that class next year will be core versus flex agents. And one of the things we like about being able to hire during the course of the year is that it gives us more visibility into the flex hiring need once we get to that and so that's one of the reasons why we're doing that a little bit sooner this year Tim Danker: Yes. I'd just add -- I mean I'd just add there's a combination right of additional investment into the core platform around the headcount as well as investment in value-based care kind of the platform of the future if you will. I think that's one of the things about the company. So we've always been what I'd say appropriately aggressive around trying to find ways to add value to our client base. So we think we have a pretty decent track record, both senior final expense of growing new business opportunities. So we want to take it as an opportunity to reinvest if you will a portion of the success we're seeing into the model as we've got a lot of conviction around it. Frank Morgan: Thanks a lot. Great quarter. Raff Sadun: Thank you, Frank. Operator: Your next question comes from David Styblo with Jefferies. Your line is open. David Styblo: Hi there, good afternoon. Thanks for the questions. I echo congratulations on the quarter as well. I wanted to ask a little bit about calendar year 2022 with the CMS rate notice now being out. Looks like commission rates will probably be up about 6% plus. Can you talk a little bit about some of the opportunities you alluded to there earlier to improve the LTV over time, having the 6% as a starting point for a tailwind going into the next calendar year as well as things along the lines of care or mix and other opportunities that you have there with the insurers? Raff Sadun: Yes. So, I think the best way to describe that is maybe reiterate some of the comments we've made before around persistency. This quarter, the persistent -- there's a 36-month weighted average persistency, right? This quarter 90% of that weighted average does reflect the persistency that we saw last year which was a little bit lower. That basically has been offset by rate for the most part this quarter which is why LTVs are flat. In terms of going forward, we don't model improving persistency. We sort of hold persistency flat. We have seen obviously rate increases and there's -- there are some rate increases that we sort of assume going forward. So that -- all else being equal that would sort of drive some of that sort of long-term LTV tailwinds that we've talked about. But just from a modeling perspective and when we set guidance, we do not assume that we're going to see some improvements in agent productivity from where we are now. David Styblo: Okay. Great. And then a follow-up would, -- excuse me -- just be on your hiring and I appreciate the comments there. Can you talk a little bit more about what that environment looks like with the unemployment rate steadily coming down now? Is it getting a little bit harder to find great candidates to bring in that fit the profile for what you guys are looking to versus a few months ago when there was more uncertainty higher unemployment in the market maybe that being offset just, because you can hire across the country now with being more remote. But would love to hear the puts and takes as you're looking to bring in new talent? Tim Danker : Sure. Dave this is Tim. Good to hear from you. I'll make a few comments and turn it over to Bill who leads up our recruiting effort. But I would underscore, this is our most successful AEP class in company history. We are -- we do not see really any headwinds there. I think our ability to move to national hiring model, we're now recruiting an over -- we've got associates in over 40 different states. We recruited a pretty big step function increase of 2,000 new associates in support of AEP. That was a 70% year-over-year lift. You've heard about the massive improvements in agent productivity, which are a testament to the model. And we're actually retaining a higher percent of our flex agents than we did in years past. So we see a lot of tailwinds. And this is a huge growth driver for us, but let me turn it over to Bill who's really responsible for that. Bill Grant: Yes. I mean, I'd say the first thing is -- that was kind of accelerated by COVID was the work-from-home solution how fast that became a reality for us. We thought that would be a couple of year transition, maybe even more when it related to the flex force and we were forced to modernize very quickly there. And I think the team did a great job executing on that, but what that means for recruiting is now we're able to recruit all 50 states, all towns, little towns. As long as they have high-speed Internet we can get them. So I feel like -- we feel like that our tailwinds in terms of recruiting there are way better than they were a year ago in terms of kind of the breadth of what we can recruit. So I'd say that number one, I think that we feel really good about that just in terms of kind of where we can reach out to. Two, I think success breeds success and I think that we have great stories to talk about from all 50 states really. And what we've been able to do with a lot of those folks in terms of what Tim just mentioned in terms of how successful they've been in our environment winning kind of these national best places to work all those things really make it easier and easier for us to recruit people. So I think we feel really good about where we are and where we'll be going forward. David Styblo: Great. Thanks for the responses. Operator: Your next question comes from Daniel Grosslight with Citi. Your line is open. Daniel Grosslight: Hi, guys. Thanks for taking the question, and I will add my congrats here. Really great to see. I just want to focus in on the pod performance this AEP. It does seem like it was a little under-indexed relative to the exchange performance vis-à-vis other years. So just curious if you're seeing any change at the carrier level on the usage of pods and if they're relying more on their internal agents and sales force there. And anything we can read into that going forward? Raff Sadun: In terms of its mix, it does represent a lower mix of our volume this year. I wouldn't read into that anything in terms of carriers' interest in doing those types of relationships with us. If anything especially this year, we had very productive conversations with our carriers and they were looking to partners like us to help them grow. I think it's just a function of the fact that our choice platform is growing at huge multiples relative to the overall market. And so our carriers by themselves are not growing at those types of rates. And so that's basically what drives that dynamic. So it's not that it was down year-over-year. It actually grew quite a bit and probably faster than the overall market. It's just our choice platform actually grew even faster. I'm not sure Bob if you want to add anything in terms of the types of the discussions you've been having with carriers. Bob Grant: Yes, absolutely. We don't model in for a ton of growth there given that if you think about the carriers themselves, they grow at about 10% a year whereas we're growing at a significantly faster pace than that. However, we're constantly negotiating with new folks that could make that a larger growth curve year-over-year. It depends, right? If you win a new large contract with a carrier, then you may see outsized growth one year and then the next year not see quite as much growth, because you may have the same relationships with those carriers that are growing at that kind of steady 10% range. So we feel really good about our Pod performance. The carriers continue to give us great feedback that we are their top-performing partner by a fairly wide margin. Where we do see opportunities though is in our -- the way that we flex employees and the way that we staff our group, we feel like we have some opportunities to better partner with the carriers in the future in those final kind of weeks where we can bring employees in from other parts of our business and bring them into Medicare for the really big final push as Tim alluded to on the opening that we see a lot more marketing volume in kind of the final week or final two weeks and kind of help the carriers if they see the same thing we see. So we do have opportunities to grow those, but it's not going to be at the same pace that we grow our core business. Daniel Grosslight: Understood. Very helpful. And then just on the cash conversion. It seems like you guys have been able to really improve that collection in year one from 34% to 45%. Are you kind of tapped out at 45%? Or can you grow that year one cash collection higher? Raff Sadun: There's obviously -- there is certain structural limitations on that just in terms of how commissions are structured specifically on the biggest product that we sell. MA policies where there are certain caps around first year commission versus renewals. So I don't know that 45% necessarily is the max, especially as we grow some other things that pay us sort of year one dollars whether it's value-based care or advertising revenue. Having said that, it's not going to go to 75% of revenue, so I think that there is continue to be things that we are working on -- that I think will improve cash efficiency, but there are some -- ultimately some structural limitations on that. Daniel Grosslight: Got it. Thanks again. Operator: Your next question comes from Jonathan Yong with Barclays. Your line is open. Jonathan Yong: Hi. Thanks for taking my question and congrats on a good quarter. Just on OEP, I was wondering if you could provide some color on kind of what you're seeing so far volume, how the volume is looking. That persistency I know that you mentioned, it's relatively in line with last year. But is that persistency also going to -- is that your working assumption for the rest of your fiscal year and then just the volume dynamics? Thanks. Raff Sadun: So I guess with respect to OEP -- and we're not going to provide any commentary around OEP other than whatever we're seeing is embedded in the updated guidance that we've given. With respect to persistency, specifically the renewal event that happened in January does give us some visibility into that although it does take several months for that to really sort of play itself out. And so we really won't know for certain on some of those things until the end of March. And effectively the way that that will play into sort of LTV calculations is that once that's locked in that will then roll into sort of our 36-month weighted average and be applied to policies that we're selling from that point onward. So that's sort of how it gets impacted. Jonathan Yong: Great. And then just on the value-based care initiatives that you're doing, if I remember correctly I believe you've mentioned that the economics there were relatively small. I'm just curious how you guys are thinking about the investments that you're going to make in the back half of the year and whether the economics change for you or not? Thanks. Raff Sadun: I think the more value that we can prove that we add to the carriers the more we'll be able to share in that value. And so it is relatively small as a percent of the revenue that's coming in now. But I do think that we think there's a lot of opportunity going forward to enhance those programs. Bob? Bob Grant: Yeah. The direct economic impact is what we were alluding to before on the direct payment that we get are relatively small. However, we do know through data that the indirect revenue could be higher. And the more value, we provide to the consumer, the more value we provide to the carriers, the more economics there are for us, the higher our retention rates can go up, more satisfied consumers are and the more engaged we are in their kind of health care savings and better alignment journey, which again we're working on lots of different things within that space to help consumers understand their plans better get into better economic solutions, increase adherence for our carriers, and then ultimately, save both the carriers and consumers money through that education. We do think the transition to Medicare and the health care literacy associated with that is tricky, and it's very different than being under 65 and we want to be a part of that journey in a bigger way than we are now. So I don't want to understate the fact that, there's not money there. It's just what we were talking about before is that direct dollars associated with sending somebody to a BDC solution. Tim Danker: Yeah. I'd just underscore it right the scalability of our platform, the interactions that Bob mentioned. We've got 150,000 care conversations going on every month and that continues to grow. So this is an effort where we're making a lot more investment in and we'll be kind of back in the market to share more in the very near future. Jonathan Yong: Thank you. Operator: Your next question comes from Lauren Schenk with Morgan Stanley. Your line is open. Lauren Schenk: Thanks for taking my question. Just a model one, if I can. Wondering, if you can quantify the magnitude of the 4Q investments that you mentioned. And I guess, the impetus for the question is, is you raised the high end of your EBITDA guidance by $5 million but the second quarter would be by around $20 million. So just wondering, if that $15 million delta if not more is all the investments. Just any color there would be really helpful. Raff Sadun: So, I don't want to be too specific on the level of investments, although it is in the millions of dollars. I think, the best way to think about sort of the guidance and the reason why we provided a little bit more clarity with respect to sort of the third and the fourth quarter, as a percent of the overall year is that the primary driver of the increase was the second quarter outperformance. Our – nothing has really changed internally with respect to our view of the third and the fourth quarter outside of these investments. But given that we don't provide sort of quarterly guidance, we felt like it was appropriate to give a little bit more visibility into how that will come in during the course of the year. Lauren Schenk: Great. Thank you. Operator: Your next question comes from Meyer Shields with Keefe Bruyette & Woods. Your line is open. Meyer Shields: Great. Thanks. If I can go back again to the year one revenue negotiation changes, should we assume that the 45% is the right base level going forward? Is that sort of subject to volatility? Raff Sadun: We're always looking at ways of collecting cash sooner, right? I think that – I don't know that we'll guarantee that it will be at that level, but that is something that we are focused on. And I wouldn't expect it to – based on what we have in place right now, I would not expect it to drop significantly from there. Meyer Shields: Okay. Yeah. That's what I was looking for. Second question, I think early in your comments you talked about monetizing some leads late in AEP. I was hoping you can just give a little color on what that means and what the opportunities are to recapture that next year. Tim Danker: Bill, do you want to speak to that? Bill Grant: Yeah sure. And I'll clarify what we mean by that this year. I think we had – we saw some of our spending in terms of how we were marketing relative to TV or where we might be spending, I would say, kind of spike go up or down based on what was happening with the election. So the more – the more news was breaking right the more that we might not get clearance or consumers might be paralyzed and not respond. So what really happened that last week is we spent based on what we thought it would take to generate enough leads to keep us really busy and push us through so based on what we'd seen. And then basically, that week we didn't have as much breaking news. And if you look at kind of what occurred, we had this huge influx of leads over the last week. So I think there was a lot of pent-up demand that last week. And I think that our marketing which bodes well for the future our marketing was very efficient that week because that just happened to be a week where we didn't kind of see the same level of breaking news was a little calmer those type of things. So I think overall, we feel really good about kind of where we are there and exactly kind of what occurred during that time and what we would expect really going forward. Tim Danker: Yeah. Just to piggyback on Bill's comments right, I mean, it was an absolutely great to – AEP season. It could have been even better, right? There were a few kind of anomalies, if you will around the election. We talked about being overly flushed with leads towards the end of AEP. It's a great thing about our management team. We're always looking for ways to get better. We're humble. We're hungry and we think that there's ways to make it an even better result next year. But we're very proud and this is really a fantastic AEP for us. Meyer Shields: Clearly, understood. Thank you very much. Tim Danker: Thank you, Meyer. Operator: There are no further questions at this time. I'll now turn the call back over to Tim for closing remarks. Tim Danker: Well, thank you all again for your support and interest in SelectQuote. I'll briefly close by reemphasizing, how excited we are to present these results. First, it's always nice to outperform your own expectation. So hats off to the over 4,000 fellow SelectQuote associates, who made that happen. Equally exciting as we think about the future is the track record we are establishing, and the continued validation of our unique model. We think given the long-tailed opportunity in our core markets our constant focus on execution we continue to see very bright days ahead. So, thank you again for your time. We wish you all a great 2021. Thank you very much. Operator: This concludes today's conference call. You may now disconnect.
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  • Comparatively, Erie Indemnity Company (ERIE) and eHealth, Inc. (EHTH) also face negative growth potentials, with ERIE showing a more substantial decline.
  • Huize Holding Limited (HUIZ) presents a positive growth potential of 8.46%, contrasting with the negative outlooks of its peers.

SelectQuote, Inc. (NYSE:SLQT) is a prominent player in the insurance solutions sector, focusing on life, auto, and home insurance. Despite its efforts to make a mark in the insurance market, SLQT's current stock price of $4.38 overshadows its target price of $2.79, suggesting a negative growth potential of -36.29%. This significant discrepancy has led to a pessimistic outlook from investment analysts, resulting in the stock being excluded from coverage.

When comparing SLQT to its peers, Erie Indemnity Company (ERIE) exhibits a more pronounced negative growth potential of -49.41%, with a stock price of $404.88 and a target price of $204.84. Despite this, ERIE maintains a robust market cap of $18.70 billion and a PE ratio of 34.68, indicating a relatively stable financial position compared to SLQT.

eHealth, Inc. (EHTH) also encounters a negative growth potential of -32.88%, with a stock price of $9.53 and a target price of $6.40. EHTH's market cap is significantly lower at $282.41 million, and it has a negative PE ratio of -8.66, which may reflect financial challenges similar to those faced by SLQT.

Arthur J. Gallagher & Co. (AJG) and Brown & Brown, Inc. (BRO) both face negative growth potentials of -38.52% and -3.86%, respectively. AJG's high PE ratio of 49.85 and BRO's PE ratio of 28.97 suggest that these companies are valued more optimistically by the market compared to SLQT, despite their negative growth outlooks.

Among SLQT's peers, Huize Holding Limited (HUIZ) stands out with a positive growth potential of 8.46%, with a stock price of $3.23 and a target price of $3.50. HUIZ's low PE ratio of 1.14 and small market cap of $1.49 million indicate a different market perception, potentially offering a more favorable investment opportunity compared to SLQT.

SelectQuote Reports Better Than Expected Q3 Earnings

SelectQuote, Inc. (NYSE:SLQT) reported its Q3 earnings results last week, which came in well above the Street estimates driven by improved operating efficiency from management’s strategic redesign.

Revenue came in at $299.4 million, beating the Street estimate of $260.7 million, driven by better-than-expected volume with approved MA policies of 165,000. Improved close rates from longer-tenured agents using higher quality, targeted leads led to a 17% improvement in marketing expense per approved policy.

The company continues to gain solid adoption with SelectRx, with membership growing 14.5% sequentially to around 45,000.

SelectQuote Reports Better Than Expected Q3 Earnings

SelectQuote, Inc. (NYSE:SLQT) reported its Q3 earnings results last week, which came in well above the Street estimates driven by improved operating efficiency from management’s strategic redesign.

Revenue came in at $299.4 million, beating the Street estimate of $260.7 million, driven by better-than-expected volume with approved MA policies of 165,000. Improved close rates from longer-tenured agents using higher quality, targeted leads led to a 17% improvement in marketing expense per approved policy.

The company continues to gain solid adoption with SelectRx, with membership growing 14.5% sequentially to around 45,000.

SelectQuote Shares Crash Following Disappointing Q2 Results

SelectQuote, Inc. (NYSE:SLQT) shares were trading more than 9% lower Wednesday morning followed by a 10% drop yesterday, driven by the company’s Q2 earnings miss.

Q2 EPS came in at ($0.64), worse than the Street estimate of ($0.17). Revenue was $139.4 million, missing the Street estimate of $200.55 million.

While the full 2023-year guidance fell short of expectations, analysts at RBC Capital noted that the preemptive Q4 tail adjustment and conservative loan-to-value (LTV) assumption should de-risk the outlook.

The analysts were encouraged that lower marketing spend industry-wide may be rationalizing shopping behavior and fostering higher persistency. Furthermore, reduced turnover and higher agent tenure bode well for AEP productivity. The analysts lowered their price target on the company to $2 from $3, while reiterating their sector perform rating.