SelectQuote Inc
For the period ended Sep 30, 2024. Filed Nov 4, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 4, 2024
SLQT$0.48+23.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0001794783-24-000026
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-04.
0001794783-24-000100
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 175 previous paragraphs and 121 current paragraphs.
55 unchanged; 43 reworded; 23 added; 72 removed; 5 previous and 0 current paragraphs rearranged.
Tables are not compared: 27 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
Our proprietary routing and workflow system is a key competitive advantage and driver of our business performance. Our systems analyze and intelligently route consumer leads to agents and allow us to monitor, segment, and enhance our agents’ performance. This technological advantage also allows us to rapidly conduct a needs-based, tailored analysis for each consumer that maximizes sales, enhances customer retention, and ultimately maximizes LTV’s. Our expertise and value add stems from the coupling of our technology with our skilled agents, which provides greater transparency in pricing terms and choice and an overall better consumer experience. When customers are satisfied, their propensity to switch policies decreases, thereby improving retention rates (“persistency”), increasing LTV’s and, ultimately, optimizing our financial performance and shareholder value.
Current report
SelectQuote has a long history of successful DTC product distribution and consumer engagement, and we bring this same capability to healthcare services. We saw a large opportunity to leverage our existing customer base and distribution model to improve education and access to healthcare services for our senior consumers and to create value for our shareholders and insurance carrier partners. SelectQuote’s value lies in our ability to engage the consumer, capture critical self-reported information in real-time, and then take action on that information to offer each consumer personalized solutions. Our healthcare services business seeks to provide consumers with a wide breadth of products supporting their needs, such as SelectRx, our Patient-Centered Pharmacy Home TM (“PCPH”) accredited pharmacy, which has already demonstrated SelectQuote’s ability to leverage our strong consumer engagement to drive immediate value using our existing operational infrastructure. Whether through acquisitions or new partnerships, we continue to look for more opportunities to leverage our strengths to expand our healthcare services business.
Current report
Healthcare Services, launched in 2021, offers various health-related products and services through SelectRx, Population Health, and most recently, SelectPatient Management. SelectRx offers essential prescription medications, OTC medications, customized medication packaging, and medication therapy management, providing long-term pharmacy care that enables patients to optimize medication adherence to drive positive health outcomes, while enabling patients managing polypharmacy and multiple chronic conditions to remain at home. Through Population Health, we utilize our excellent consumer engagement capabilities to capture valuable self-reported information in real-time for our insurance carrier partners by completing Health Risk Assessments (“HRAs”). We then use that data to take a real-time, proactive, and personalized approach to offer various health-related products and services to the consumer, such as our pharmacy services from SelectRx. In 2024, we launched SelectPatient Management (“SPM”), via a $4.0 million acquisition of an existing chronic care management platform, which offers providers, payers, and Accountable Care Organizations scalable, technology-enhanced services for patients living with chronic conditions. Through consistent, trust-based patient engagement, SPM helps patients navigate the care continuum, focusing on non-clinical factors so physicians can focus on the more critical needs of their patients. We believe that offering these services enables healthcare to be more accessible, convenient, and personalized for our members.
Current report
Our other operations which do not meet the criteria to be a separate reportable segment are consolidated and reported as “All other” which represents a shopping platform for auto, home, and specialty insurance lines.
Current report
(1) Represents the submitted policies for medicare supplement, dental, vision and hearing, prescription drug plan and other.
Current report
(1) Represents the approved policies for medicare supplement, dental, vision and hearing, prescription drug plan and other.
Current report
(1) Represents the weighted average LTV per approved policy.
Current report
SelectRx Members
Current report
Three Months Ended September 30, 2024 and 2023–Commissions and other services revenue increased $1.4 million, or 1%, for the three months ended September 30, 2024 primarily due to increases in Senior and Life of $3.0 million and $1.5 million, respectively. Senior’s increase was primarily due to a $0.9 million increase in commissions revenue driven by a 5% increase in LTV’s. Life’s increase was driven by a $4.2 million increase in final expense revenue offset by a $2.8 million decrease in term revenue. The increase in Commissions and other services revenue was partially offset by a $3.1 million decrease in Auto & Home. Pharmacy revenue increased $58.1 million, or 61%, primarily due to the 64% increase in members from the growth of the SelectRx business.
Current report
Cost of Commissions and Other Services Revenue
Current report
Three Months Ended September 30, 2024 and 2023—Cost of commissions and other service revenue decreased$6.8 million, or 9%, for the three months ended September 30, 2024, primarily due to a $5.5 million decrease in compensation costs, combined with a $0.9 million decrease in fulfillment costs for licensing fees in Senior. The $5.5 million decrease in compensation costs is primarily made up of a $6.9 million decrease in costs for our sales and customer care agents in Senior, offset by a $0.5 million increase in costs for sales and customer care agents in Life.
Current report
Three Months Ended September 30, 2024 and 2023–Marketing and advertising expenses increased$1.4 million, or 2%, for the three months ended September 30, 2024, primarily due to a $0.8 million increase in lead costs and a $0.3 million increase in other marketing costs to generate additional senior and life commissions revenue as noted above.
Current report
Three Months Ended September 30, 2024 and 2023–Selling, general, and administrative expenses increased $7.5 million, or 26%, for the three months ended September 30, 2024, primarily due to a $5.2 million increase in compensation costs and a $2.2 million increase in bad debt expense related to SelectRx. The increase in compensation costs was primarily related to a $3.5 million increase in Healthcare Services compensation attributable to the growth of SelectRx.
Current report
As of July 1, 2024, the Company has realigned its reportable segments for fiscal year 2025. The Auto & Home business does not meet the quantitative thresholds to be required to continue to be separately disclosed as a reportable segment in accordance with ASC 280. As a result, the Auto & Home business will be included in an “All Other” category. Prior period information has been recast to conform to the current presentation.
Current report
Our operating segments are determined based on how our chief executive officer, who also serves as our CODM manages our business, regularly accesses information, and evaluates performance for operating decision-making purposes, including allocation of resources. Adjusted EBITDA is our segment profit measure and a key measure used by our CODM and Board of Directors to understand and evaluate the operating performance of our business and on which internal budgets and forecasts are based and approved. We define Adjusted EBITDA as net loss plus: (i) interest expense, net; (ii) expense (benefit) for income taxes; (iii) depreciation and amortization; (iv) share-based compensation; (v) goodwill, long-lived asset, and intangible assets impairments; (vi) transaction costs; (vii) loss on disposal of property, equipment and software, net; and (viii) other non-recurring expenses and income.
Current report
Our segment disclosure includes intersegment revenues, which consist of affiliate marketing fees for services provided by our Senior segment to our Healthcare Services and Life segments as well as services provided by Life to other segments. These intersegment transactions are recorded by each segment at amounts that we believe approximate fair value as if the transactions were between third parties and, therefore, impact segment performance. However, the revenue and corresponding expense are eliminated in consolidation. The elimination of such intersegment transactions is included within the “Eliminations of intersegment revenues” and “Corporate & elimination of intersegment profits’ captions in the tables below.
Current report
Three Months Ended September 30, 2024 and 2023–Revenue from our Senior segment was $92.9 million for the three months ended September 30, 2024, a $3.0 million, or 3%, increase compared to revenue of $89.9 million for the three months ended September 30, 2023. The increase was due to a $0.9 million, or 1%, increase in commissions revenue and a $2.1 million increase in other services revenue.
Current report
Revenue from our Life segment was $39.3 million for the three months ended September 30, 2024, a $1.5 million, or 4%, increase compared to revenue of $37.8 million for the three months ended September 30, 2023, primarily due to an $1.5 million increase in commissions revenue.
Current report
Three Months Ended September 30, 2024 and 2023–Adjusted EBITDA from our Senior segment was $7.7 million for the three months ended September 30, 2024, a $9.1 million, or 678%, increase compared to Adjusted EBITDA of $(1.3) million for the three months ended September 30, 2023. The increase was due to a $3.0 million increase in revenue, a $6.1 million decrease in operating costs and expenses, primarily due to a $6.3 million decrease in compensation costs due to a decrease in the number of agents, partially offset by increases in lead costs.
Current report
Adjusted EBITDA from our Life segment was $6.0 million for the three months ended September 30, 2024, a $0.7 million, or 14%, increase compared to Adjusted EBITDA of $5.2 million for the three months ended September 30, 2023. The increase in Adjusted EBITDA was due to a $1.5 million increase in revenue, offset by a $0.8 million increase in operating costs. The increase in operating costs was primarily due to a $0.9 million increase in compensation costs, partially offset by a $0.1 million decrease in fulfillment costs.
Current report
On October 15, 2024, the Company completed a $100.0 million securitization transaction to provide advanced financing against the expected collections for policies previously sold. The Company will use the proceeds from the securitization to pay down a portion of its outstanding term loans. The new securitized debt offers a lower cost of capital than the Company’s term loans. In connection with the securitization transaction, and subsequent to September 30, 2024, the Company entered into an Eleventh Amendment (the “Eleventh Amendment”) to its Credit Agreement to (1) extend the scheduled maturity date of the existing term loans, (2) modify financial covenant ratios required to be maintained by the Company for various reporting dates to allow the Company to stay in compliance with the required covenants, and (3) allow the Company to enter into the securitization transaction.
Current report
As of September 30, 2024 and June 30, 2024, the Company had total debt obligations of $680.4 million and $683.3 million, respectively, under the Senior Secured Credit Facility. Management expects that our existing cash, cash equivalents, funds available under the revolving credit facility, and cash provided from operations, will be sufficient to finance normal working capital needs, investments in properties, facilities and equipment, and debt service.
Current report
Three Months Ended September 30, 2024—Net cash used in financing activities of $13.1 million was primarily due to $8.5 million of principal payments on the Term Loans and $3.9 million of tax payments for stock-based compensation.
Removed paragraphs (72)
Previous report
Our unique platform has enabled us to expand our distribution business in recent years to include additional products beyond insurance policies. In interacting with thousands of consumers over the years, we identified a large opportunity to leverage our existing database and distribution model to improve access to healthcare services for our consumers. In addition to improving consumers’ health outcomes, this service creates deeper relationships with our insurance carrier partners by increasing policy persistency and, in turn, reducing their overall costs. Additionally, we offer pharmacy services through SelectRx, our accredited Patient-Centered Pharmacy Home pharmacy, which offers essential prescription medications, OTC medications, customized medication packaging, medication therapy management, providing long-term pharmacy care that enables patients to optimize medication adherence to drive positive health outcomes while enabling patients to remain at home.
Previous report
Healthcare Services, launched in 2021, includes SelectRx and Population Health. Through SelectRx, we provide simple solutions for prescription drug management and support with a personalized approach to streamline the process of managing multiple medications for seniors with chronic conditions. SelectRx has developed a pill pack solution that is customized to the unique needs of each patient, focusing on individual multi-dosages by day and time. SelectRx uses a high-touch, technology-driven approach to provide superior customer service and achieve improved medication adherence. Population Health helps members understand the benefits available under their health plans, contracts with insurance carriers to complete HRA’s on members, partners with VBC providers for a variety of healthcare-related services, and introduces them to the pharmacy services we offer through SelectRx. We believe that offering these services through SelectRx and Population Health to our existing consumers helps drive customer satisfaction and increase policy persistency, which, in turn, reduces costs for our insurance carrier partners.
Previous report
Auto & Home was launched in 2011 as an unbiased comparison shopping platform for auto, home, and specialty insurance lines. Our platform provides unbiased comparison shopping for insurance products such as homeowners, auto, dwelling fire, and other ancillary insurance products underwritten by approximately 25 leading, nationally-recognized insurance carrier partners. Homeowners and 12-month auto products accounted for 71% and 73% of new premium within Auto & Home for the three months ended March 31, 2024 and 2023, respectively, and 75% and 74% for the nine months ended March 31, 2024 and 2023, respectively, with six-month auto, dwelling fire, and other products accounting for a majority of the remainder.
Previous report
Total submitted policies for all products increased 9% for the nine months ended March 31, 2024, compared to the nine months ended March 31, 2023. This was driven by increases in overall close rates (12%), the number of average productive agents (9%), and productivity per agent (7%).
Previous report
The LTV per MA approved policy increased 4% for the nine months ended March 31, 2024, compared to the nine months ended March 31, 2023, primarily due to carrier mix.
Previous report
Total Members
Previous report
Combined Senior and Healthcare Services - Consumer Per Unit Economics
Previous report
The opportunity to leverage our existing database and distribution model to improve access to healthcare services for our consumers has created a need for us to review our key metrics related to our per unit economics. As we think about the revenue and expenses for Healthcare Services, we note that they are derived from the marketing acquisition costs associated with the sale of an MA or MS policy, some of which costs are allocated directly to Healthcare Services, and therefore determined that our per unit economics measure should include components from both Senior and Healthcare Services.
Previous report
Combined Senior and Healthcare Services consumer per unit economics represents total MA and MS commissions; other product commissions; other revenues, including revenues from Healthcare Services; and operating expenses associated with Senior and Healthcare Services, each shown per number of approved MA and MS 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.
Previous report
The MA and MS commission per MA/MS policy represents the LTV for policies sold in the period. Other commission per MA/MS policy represents the LTV for other products sold in the period, including DVH prescription drug plan, and other products, which management views as additional commission revenue on our agents’ core function of MA/MS policy sales. Pharmacy revenue per MA/MS policy represents revenue from SelectRx, and other revenue per MA/MS policy represents revenue from Population Health, production bonuses, marketing development funds, lead generation revenue, and adjustments from the Company’s reassessment of its cohorts’ transaction prices. Total operating expenses per MA/MS policy represents all of the operating expenses within Senior and Healthcare Services. The revenue to customer acquisition cost (“CAC”) multiple represents total revenue as a multiple of total marketing acquisition costs, which represents the direct costs of acquiring leads. These costs are included in marketing and advertising expense within the total operating expenses per MA/MS policy.
Previous report
The following table shows combined Senior and Healthcare Services consumer per unit economics for the periods presented. Based on the seasonality of Senior 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.
Previous report
(1) These financial measures are not calculated in accordance with GAAP. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for information regarding our use of these non-GAAP financial measures and a reconciliation of such measures to their nearest comparable financial measures calculated and presented in accordance with GAAP.
Previous report
Total revenue per MA/MS policy increased 31% for the twelve months ended March 31, 2024, compared to the twelve months ended March 31, 2023, primarily due to the increase in pharmacy revenue. Total operating expenses per MA/MS policy increased 22% for the twelve months ended March 31, 2024, compared to the twelve months ended March 31, 2023, primarily driven by increase in cost of goods sold-pharmacy revenue for SelectRx due to the growth of the business.
Previous report
Total term premiums increased 8% for the nine months ended March 31, 2024, compared to the nine months ended March 31, 2023, due to a 5% increase in the average premium per policy sold and a 3% increase in the number of policies sold. Final expense premiums increased 7% for the nine months ended March 31, 2024, compared to the nine months ended March 31, 2023 due to a 4% increase in the average premium per policy sold and a 3% increase in the number of policies sold.
Previous report
Auto & Home
Previous report
The following table shows premiums for the periods presented:
Previous report
Total premiums increased 11% for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, due to a 18% increase in the average premium per policy sold offset by a 6% decrease in the number of policies sold.
Previous report
Total premiums increased 17% for the nine months ended March 31, 2024, compared to the nine months ended March 31, 2023, due to a 15% increase in the average premium per policy sold and a 2% increase in the number of policies sold.
Previous report
Non-GAAP Financial Measures
Previous report
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 Quarterly Report on Form 10-Q 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.
Previous report
Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) before interest expense, income tax expense (benefit), depreciation and amortization, and certain add-backs for non-cash or non-recurring expenses, including restructuring, share-based compensation expenses, and any impairment charges. The most directly comparable GAAP measure is net income (loss). We monitor and have presented in this Quarterly Report on Form 10-Q 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.
Previous report
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.
Previous report
Adjusted EBITDA is not prepared in accordance with GAAP and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of this non-GAAP financial measure rather than net income (loss). These limitations include the fact that Adjusted EBITDA excludes interest expense, depreciation and amortization expense, share-based compensation expense, income tax expense (benefit), and other non-recurring expenses that are one-time in nature. In addition, other companies may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.
Previous report
The following tables reconcile Adjusted EBITDA and net income (loss) for the periods presented:
Previous report
(1) These expenses primarily consist of costs related to the Senior Secured Credit Facility and non-restructuring severance expenses.
Previous report
Nine Months Ended March 31, 2024:
Previous report
Nine Months Ended March 31, 2023:
Previous report
(1) These expenses primarily consist of costs related to the Fourth Amendment to the Senior Secured Credit Facility and non-restructuring severance expenses.
Previous report
We earn revenue in the form of commission payments from our insurance carrier customers, for the initial year the policy is in effect (“first year”) and, where applicable, for each subsequent year the policy renews (“renewal year”), as presented in our condensed consolidated statements of comprehensive income (loss) as commission revenue. After an insurance policy is sold, we have no material additional or recurring obligations to the policyholder or the insurance carrier partner. Therefore, we do not incur any additional expense related to our receipt of future renewal commissions. All of the costs associated with the sale of an individual policy are incurred prior to or at the time of the initial sale of an individual policy.
Previous report
Three Months Ended March 31, 2024 and 2023–Commission revenue increased $33.5 million, or 17%, for the three months ended March 31, 2024, and included increases in Senior, Life, and Auto & Home commission revenue of $29.0 million, $3.8 million, and $0.9 million respectively. For Senior, this was driven by a 9% increase in approved policies and a 5% increase in LTV’s. Life’s revenue increase was driven by a $0.1 million increase in term revenue and a $3.7 million increase in final expense revenue. The $53.3 million increase in pharmacy revenue was due to the increase in members due to the expansion of the SelectRx business. The $9.8 million decrease in other revenue was driven by a $9.0 million decrease in production bonus revenue.
Previous report
Nine Months Ended March 31, 2024 and 2023–Commission revenue increased $78.1 million, or 15%, for the nine months ended March 31, 2024, and included increases in Senior, Life, and Auto & Home commission revenue of $64.4 million, $7.4 million, and $5.9 million respectively. For Senior, this was driven by an 8% increase in approved policies and a 6% increase in LTV’s. Life’s revenue increase was driven by a $5.6 million increase in term revenue and a $1.8 million increase in final expense revenue. The $164.2 million increase in pharmacy revenue was due to the increase in members due to the expansion of the SelectRx business. The $8.8 million decrease in other revenue was driven by a $6.5 million decrease in production bonus revenue and a $2.0 million decrease in lead sales revenue.
Previous report
Cost of Revenue
Previous report
Three Months Ended March 31, 2024 and 2023–Cost of revenue increased $5.1 million, or 6%, for the three months ended March 31, 2024, primarily due to a $5.0 million increase in compensation costs mostly from our Senior segment.
Previous report
Nine Months Ended March 31, 2024 and 2023–Cost of revenue increased $18.4 million, or 8%, for the nine months ended March 31, 2024, primarily due to a $18.0 million increase in compensation costs mostly from our Senior segment.
Previous report
Nine Months Ended March 31, 2024 and 2023–Cost of goods sold-pharmacy revenue increased $129.6 million, or 84%, for the nine months ended March 31, 2024, primarily due to an $117.7 million increase in medication costs as the number of SelectRx members increased 67% over the prior year.
Previous report
Three Months Ended March 31, 2024 and 2023–Marketing and advertising expenses increased $19.1 million, or 21%, for the three months ended March 31, 2024, primarily due to a $17.2 million increase in lead costs. This increase can be attributed to the increase in MA submitted policies and an increase in customer acquisition costs on a per policy basis.
Previous report
Nine Months Ended March 31, 2024 and 2023–Marketing and advertising expenses increased $51.0 million, or 21%, for the nine months ended March 31, 2024, primarily due to a $45.6 million increase in lead costs. This increase can be attributed to the increase in MA submitted policies and an increase in customer acquisition costs on a per policy basis.
Previous report
Three Months Ended March 31, 2024 and 2023–Selling, general, and administrative expenses increased $7.4 million, or 27%, for the three months ended March 31, 2024, primarily due to increases in compensation costs of $5.0 million and corporate development costs of $2.7 million.
Previous report
Nine Months Ended March 31, 2024 and 2023–Selling, general, and administrative expenses increased $10.4 million, or 12%, for the nine months ended March 31, 2024, primarily due to an increase in compensation costs of $8.1 million.
Previous report
Nine Months Ended March 31, 2024 and 2023–Technical development expenses increased $5.4 million, or 29%, for the nine months ended March 31, 2024, primarily due to a $5.3 million increase in compensation costs.
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Reworded paragraphs (43)
Previous wording
We are a leading technology-enabled, direct-to-consumer (“DTC”) distribution platform for insurance products and healthcare services. Our insurance distribution business, which has operated continuously for over 35 years, provides consumers with a transparent and convenient venue to shop for complex senior health, life, and automobile & home insurance policies from a curated panel of the nation’s leading insurance carriers. As an insurance distributor, we do not insure the consumer, but rather identify consumers looking to acquire insurance products and place these consumers with insurance carrier partners that provide these products. In return, we earn commissions from our insurance carrier partners for the policies we sell on their behalf. Our proprietary technology allows us to take a broad funnel approach to marketing by analyzing and identifying high quality consumer leads sourced from a wide variety of online and offline marketing channels including search engines, radio, television, and third-party marketing partners. We monitor our acquisition costs to dynamically allocate our marketing spend to the most attractive channels, benefiting from over thirty years of data accumulated through our proprietary, purpose-built technologies. Our advanced workflow processing system scores each acquired lead in real time, matching it with a sales agent whom we determine is best suited to meet the consumer’s need. Our platform then captures and utilizes our experience to further build upon the millions of data points that feed our marketing algorithms, further enhancing our ability to deploy subsequent marketing dollars efficiently and target more high-quality consumer leads. We have built our business model to maximize commissions collected over the life of an approved policy less the cost of acquiring the business, a metric we refer to as policyholder lifetime value and which is a key component to our overall profitability.
Current wording
SelectQuote, Inc. (together with its subsidiaries, “SelectQuote”, the “Company”, “we”, “us”) is a leading technology-enabled, direct-to-consumer (“DTC”) distribution and engagement platform for selling insurance policies and healthcare services. Our insurance distribution business, which has operated continuously for nearly 40 years, allows consumers to transparently and conveniently shop for senior health, life, and automobile and home insurance policies from a curated panel of the nation’s leading insurance carriers. As an insurance distributor, we do not insure the consumer, but rather identify consumers looking to acquire insurance products and place these consumers with insurance carrier partners that provide these products. In return, we earn commissions from our insurance carrier partners for the policies we sell on their behalf. Our proprietary technology allows us to take a broad funnel approach to marketing by analyzing and identifying high-quality consumer leads sourced from a wide variety of online and offline marketing channels including digital marketing, radio, television, and third-party marketing partners. We monitor our acquisition costs to dynamically allocate our marketing spend to the most attractive channels, benefiting from nearly 40 years of data accumulated through our proprietary, purpose-built technologies. Our advanced workflow processing system scores each acquired lead in real time, matching it with a sales agent whom we determine is best suited to meet the consumer’s need. Our platform then captures and utilizes our experience to further build upon the millions of data points that feed our marketing algorithms, further enhancing our ability to deploy subsequent marketing dollars efficiently and target more high-quality consumer leads. We have built our business model to maximize commissions collected over the life of an approved policy, a metric we refer to as “ lifetime value of commissions” or “LTV”, which is a key component to our overall profitability.
Previous wording
We evaluate our business using the following four segments:
Current wording
We evaluate our business using the following three reportable segments:
Previous wording
Senior was launched in 2010 and provides unbiased comparison shopping for Medicare Advantage (“MA”) and Medicare Supplement (“MS”) insurance plans as well as prescription drug and dental, vision, and hearing (“DVH”) plans, and critical illness products. We represent approximately 25 leading, nationally-recognized insurance carrier partners, including UnitedHealthcare, (“UHC”), Humana, and Wellcare. MA and MS plans accounted for 92% and 90% of our approved Senior policies for the three months ended March 31, 2024 and 2023, respectively, and 92% and 90% for the nine months ended March 31, 2024, and 2023, respectively, with other ancillary type policies accounting for the remainder.
Current wording
Senior was launched in 2010 and provides unbiased comparison shopping for Medicare Advantage (“MA”) and Medicare Supplement (“MS”) insurance plans as well as prescription drug and dental, vision, and hearing (“DVH”) plans, and critical illness products. We represent approximately 25 leading, nationally-recognized insurance carrier partners, including UHC, Humana, Aetna, and Wellcare. MA and MS plans accounted for 88% and 89% of our approved Senior policies for the three months ended September 30, 2024 and 2023, respectively, with other ancillary type policies accounting for the remainder.
Previous wording
Life is one of the country’s largest and most established DTC insurance distributors for term life insurance, having sold over 2.2 million policies nationwide since our founding in 1985. Our platform provides unbiased comparison shopping for life insurance products such as term life, final expense, and other ancillary products like critical illness, accidental death, and juvenile insurance. We represent approximately 20 leading, nationally-recognized insurance carrier partners, with many of these relationships exceeding 15 years. Term life policies accounted for 41% and 48% of new premium within Life for the three months ended March 31, 2024 and 2023, respectively, with final expense policies accounting for 59% and 52% for the three months ended March 31, 2024 and 2023, respectively. For the nine months ended March 31, 2024 and 2023, term life policies accounted for 45% and 45% of new premium within Life, respectively, with final expense policies accounting for 55% and 55%, respectively.
Current wording
Life is one of the country’s largest and most established DTC insurance distributors for term life insurance, having sold over 2.4 million policies nationwide since our founding in 1985. Our platform provides unbiased comparison shopping for life insurance products such as term life, final expense, and other ancillary products like critical illness, accidental death, and juvenile insurance. We represent approximately 20 leading, nationally-recognized insurance carrier partners, with many of these relationships exceeding 20 years. Term life policies accounted for 38% and 48% of new premium within the Life segment for the three months ended September 30, 2024 and 2023, respectively, with final expense policies accounting for 62% and 52% for the three months ended September 30, 2024 and 2023, respectively.
Previous wording
The three and nine months ended March 31 referenced throughout the commentary below refers to the third quarter and fiscal year-to-date performance of our fiscal years ending on June 30, 2024 and 2023.
Current wording
The three months ended September 30 referenced throughout the commentary below refers to the first quarter and fiscal year-to-date performance of our fiscal years ending on June 30, 2025 and 2024.
Previous wording
In addition to traditional financial metrics, we rely upon certain business and operating metrics to estimate and recognize revenue, evaluate our business performance and facilitate our operations. In Senior, our primary product, Medicare Advantage, pays us flat commission rates based on the number of policies we sell on behalf of our insurance carrier partners. Therefore, we have determined that units and unit metrics are the most appropriate measures to evaluate the performance of Senior. For Healthcare Services, our primary source of revenue is pharmacy revenue from SelectRx, so the total number of SelectRx members is the most appropriate measure used to evaluate the performance of Healthcare Services. In Life and Auto & Home, we are typically paid a commission that is a percent of the premium that we generate for our insurance carrier partners. Therefore, we have determined that premium-based metrics are the most relevant measures to evaluate the performance of these segments. Below are the most relevant business and operating metrics for each segment:
Current wording
In addition to traditional financial metrics, we rely upon certain business and operating metrics to estimate and recognize revenue, evaluate our business performance, and facilitate our operations. In Senior, our primary product, Medicare Advantage, pays us flat commission rates based on the number of policies we sell on behalf of our insurance carrier partners. Therefore, we have determined that units and unit metrics are the most appropriate measures to evaluate the performance of Senior. For Healthcare Services, our primary source of revenue is pharmacy revenue from SelectRx, so the total number of SelectRx members and the prescriptions shipped per day are the most appropriate measures used to evaluate the performance of Healthcare Services as these metrics drive top-line revenue. In Life, we are typically paid a commission that is a percent of the premium that we generate for our insurance carrier partners. Therefore, we have determined that premium-based metrics are the most relevant measures to evaluate the performance of the segment. Below are the most relevant business and operating metrics for each segment:
Previous wording
Total submitted policies for all products increased 11% for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. This was driven by increases in overall close rates (18%), the number of average productive agents (7%), and productivity per agent (13%).
Current wording
Total submitted policies for all products decreased 1% for thethree months ended September 30, 2024, compared to thethree months ended September 30, 2023. This was driven by a 1% decrease in overall close rates and a 2% decrease in production per productive agent.
Previous wording
Total approved policies for all products increased 9% for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Fluctuations in approved policies are normally in direct correlation to submitted policies; however, primarily due to carrier mix, we experienced a 2% decrease in the submitted-to-approved conversion rates for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.
Current wording
Total approved policies for all products decreased by 5% for thethree months ended September 30, 2024, compared to thethree months ended September 30, 2023. Fluctuations in approved policies are normally in direct correlation to submitted policies; however, primarily related to carrier mix, we experienced a slight decrease in the submitted-to-approved conversion rates for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.
Previous wording
The lifetime value of commissions (the “LTV”) 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 LTV 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 estimate of the future renewal commissions is determined using contracted renewal commission rates constrained by a persistency-adjusted 10-year renewal period based on a combination of our historical experience and available insurance carrier historical experience to estimate renewal revenue only to the extent probable that a significant reversal in revenue would not be expected to occur. These factors may result in varying values from period to period. The LTV per approved policy represents commissions only from policies sold during the period; it does not include any updated estimates of prior period variable consideration based on actual policy renewals in the current period.
Current wording
The lifetime value of commissions (the “LTV”) 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 LTV 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 estimate of the future renewal commissions is determined using contracted renewal commission rates, which does not include marketing development funds or production bonuses, constrained by a persistency-adjusted 10-year renewal period based on a combination of our historical experience and available insurance carrier historical experience to estimate renewal revenue only to the extent probable that a significant reversal in revenue would not be expected to occur. These factors may result in varying values from period to period. The LTV per approved policy represents commissions only from policies sold during the period; it does not include any updated estimates of prior period variable consideration based on actual policy renewals in the current period.
Previous wording
The LTV per MA approved policy increased 3% for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to carrier mix.
Current wording
The LTV per MA approved policy increased 7% for thethree months ended September 30, 2024, compared to thethree months ended September 30, 2023, primarily due to carrier mix.
Previous wording
The total number of SelectRx members represents the amount of active customers to which an order has been shipped, as this is a primary key driver of revenue for Healthcare Services.
Current wording
The total number of SelectRx members represents the amount of active customers to which an order has been shipped and the prescriptions per day represents the total average prescriptions shipped per business day. These two metrics are the primary drivers of revenue for Healthcare Services.
Previous wording
The total number of SelectRx members increased 67% as of March 31, 2024, compared to March 31, 2023, due to our operating strategy to grow SelectRx.
Current wording
The total number of SelectRx members increased by 64% asof September 30, 2024, compared to September 30, 2023, due to our continued operating strategy to grow SelectRx.
Previous wording
The following table shows the prescriptions shipped per day for the periods presented:
Current wording
The following table shows the average prescriptions shipped per day for the periods presented:
Previous wording
Total term premiums decreased 4% for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, due to an 11% decrease in the number of policies sold offset by an 8% increase in the average premium per policy sold. Final expense premiums increased 23% for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, due to a 4% increase in the average premium per policy sold and a 18% increase in the number of policies sold.
Current wording
Total term premiums decreased 16% for thethree months ended September 30, 2024, compared to thethree months ended September 30, 2023, due to a 17% decrease in the number of policies sold, offset by less than a 1% increase in the average premium per policy sold. Final expense premiums increased 24% for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, due to a 1% increase in the average premium per policy sold and a 23% increase in the number of policies sold.
Previous wording
We also receive certain volume-based bonuses from some carriers on first year policies sold based on attaining various predetermined target sales levels or other agreed upon objectives. These bonuses are referred to as “production bonuses” or “marketing development funds” and are included in other revenue in the condensed consolidated statements of comprehensive income (loss). Pharmacy revenue includes revenue from the sale of prescription and OTC medications from SelectRx. Other revenue includes production bonuses and marketing development funds, revenue from Population Health (excluding SelectRx pharmacy revenue), and external lead generation revenue from InsideResponse.
Current wording
We earn revenue in the form of commission payments from our insurance carrier customers, for the initial year the insurance policy is in effect (“first year”) and, where applicable, for each subsequent year the policy renews (“renewal year”), in addition to production bonuses and marketing development funds received from some insurance carriers. Production bonuses are based on attaining various predetermined target sales levels or other agreed upon objectives, whereas marketing development funds may or may not contain such predetermined targets and are used to purchase leads. These, along with other services revenue from Healthcare Services (excluding SelectRx revenue discussed below) and our lead generation business, InsideResponse (of which the majority is eliminated as intersegment revenue), are presented in our consolidated statements of comprehensive loss as commissions and other services revenue. Pharmacy revenue on the consolidated statements of comprehensive loss includes revenue from the sale of prescription and OTC medication products from SelectRx.
Previous wording
Revenue is recognized at different milestones for Senior, Life, and Auto & Home and is based on the contractual enforceable rights, our historical experience, and established customer business practices. Lead generation revenue is recognized when the generated lead is accepted by our customers, which is the point of sale, and we have no performance obligation after the delivery. Revenues generated from SelectRx are recognized upon shipment. At the time of shipment, we have performed substantially all of our performance obligations and control has been transferred to the customer. There are no future revenue streams associated as patients have the option to cancel their service at any time with no further payments due. Revenue from Population Health is recognized when the HRA has been performed or the agreed-upon task has been completed for a VBC partner, the transaction price is known based on volume and contractual prices, and we have no further performance obligation.
Current wording
Revenue is recognized at different milestones for Senior and Life and is based on the contractual enforceable rights, our historical experience, and established customer business practices. Other services revenues from our Healthcare Services segment (excluding SelectRx revenue discussed below) is recognized when the performance obligation has been met, which is at different times for our various services (e.g. the HRA has been performed, a transfer has been made to a health-related partner, or SPM has provided care management services to a member), the transaction price is known based on volume and contractual prices, and we have no further performance obligations. Lead generation revenue is recognized when the generated lead is accepted by our customers, which is the point of sale, and we have no performance obligation after the delivery. Revenues generated from SelectRx are recognized upon shipment. At the time of shipment, we have performed all of our performance obligations and control of the product has been transferred to the customer. There are no future revenue streams or variable consideration associated as the transaction price is fixed at time of shipment, and any subsequent new order is its own performance obligation.
Previous wording
Cost of revenue represents the direct costs associated with fulfilling our obligations to our customers in the Senior, Life, Auto & Home, and Population Health divisions, primarily compensation, benefits, and licensing for sales agents, customer success agents, fulfillment specialists, and others directly engaged in serving customers. It also includes allocations for facilities, telecommunications, and software maintenance costs, which are all based on headcount. Facilities costs include rent and utilities expenses and other costs to maintain our office locations. Telecommunications and software maintenance costs includes costs related to the internal phone systems and various software applications that our agents use to make sales. These costs directly correlate to the number of agents we have as we are primarily charged based on per person usage for the phone systems and software applications.
Current wording
Cost of commissions and other services revenue represents the direct costs associated with fulfilling our obligations to our customers in Senior, Life, and Healthcare Services (excluding SelectRx discussed below); primarily compensation, benefits, and licensing for sales agents, customer success agents, fulfillment specialists, and others directly engaged in serving customers. It also includes allocations for facilities, telecommunications, and software maintenance costs, which are all based on headcount. Facilities costs include rent and utilities expenses and other costs to maintain our office locations. Telecommunications and software maintenance costs includes costs related to the internal phone systems and various software applications that our agents use to make sales. These costs directly correlate to the number of agents we have as we are primarily charged based on per person usage for the phone systems and software applications.
Previous wording
The following table presents our cost of revenue for the periods presented and the percentage change from the prior year:
Current wording
The following table presents our cost of commissions and other services revenue for the periods presented and the percentage change from the prior year:
Previous wording
Cost of goods sold-pharmacy revenue represents the direct costs associated with fulfilling pharmacy patient orders for SelectRx. Such costs primarily consist of medication costs and compensation and related benefit costs for licensed pharmacists, pharmacy technicians, and other employees directly associated with fulfilling orders such as packaging and shipping clerks. It also includes shipping, supplies, other order fulfillment costs including part of the one-time customer onboarding costs, and certain facilities overhead costs such as rent, maintenance, and depreciation related to the pharmacy production process.
Current wording
Cost of goods sold-pharmacy revenue represents the direct costs associated with fulfilling pharmacy patient orders for SelectRx. Such costs primarily consist of medication costs and compensation costs for licensed pharmacists, pharmacy technicians, and other employees directly associated with fulfilling orders such as packaging and shipping clerks. It also includes shipping, supplies, other order fulfillment costs including part of the one-time customer onboarding costs, and certain facilities overhead costs such as rent, maintenance, and depreciation related to the pharmacy production process.
Previous wording
Three Months Ended March 31, 2024 and 2023–Cost of goods sold-pharmacy revenue increased $43.9 million, or 70%, for the three months ended March 31, 2024, primarily due to a $37.0 million increase in medication costs as the number of SelectRx members increased 67% over the prior year.
Current wording
Three Months Ended September 30, 2024 and 2023–Cost of goods sold-pharmacy revenue increased$45.5 million, or 54%, for the three months ended September 30, 2024, primarily due to a $38.2 million increase in medication costs as the number of SelectRx members increased 64% over the prior year as well as a $5.3 million increase in compensation costs due to a nearly 79% increase in the number of employees directly associated with fulfilling pharmacy orders.
Previous wording
The following table presents our marketing and advertising expenses for the periods presented and the percentage change from the prior year:
Current wording
The following table presents our marketing and advertising expenses for the periods presented and the percentage changes from the prior year:
Previous wording
The following table presents our selling, general, and administrative expenses for the periods presented and the percentage change from the prior year:
Current wording
The following table presents our selling, general, and administrative expenses for the periods presented and the percentage changes from the prior year:
Previous wording
The following table presents our technical development expenses for the periods presented and the percentage change from the prior year:
Current wording
The following table presents our technical development expenses for the periods presented and the percentage changes from the prior year:
Previous wording
Three Months Ended March 31, 2024 and 2023–Technical development expenses increased $2.2 million, or 34%, for the three months ended March 31, 2024, primarily due to a $2.1 million increase in compensation costs.
Current wording
Three Months Ended September 30, 2024 and 2023–Technical development expenses increased $1.4 million, or 19%, for the three months ended September 30, 2024, primarily due to a $1.6 million increase in compensation costs due to an increase in headcount for technology personnel, partially offset by a $0.2 million decrease in costs related to trainings and seminars costs.
Previous wording
Three Months Ended March 31, 2024 and 2023–Interest expense increased $3.2 million, or 15%, as a result of higher interest rates during the period. The increase was partially offset by interest income received from the interest rate swap.
Current wording
Three Months Ended September 30, 2024 and 2023–Interest expense increased $1.6 million, or 8%, for the three months ended September 30, 2024, as a result of higher interest rates during the period.
Previous wording
The following table presents our provision for income taxes for the periods presented and the percentage change from the prior year:
Current wording
The following table presents our provision for income taxes for the periods presented and the percentage changes from the prior year:
Previous wording
Three Months Ended March 31, 2024 and 2023–For the three months ended March 31, 2024 and 2023, we recognized income tax expense of $0.2 million and $3.2 million, respectively, representing effective tax rates of 1.9% and 25.4%, respectively. The differences from the federal statutory tax rate to the effective tax rates for the three months ended March 31, 2024, were primarily related to state income taxes and the recording of a valuation allowance for federal tax attributes that the Company does not expect to utilize prior to expiration. The differences from our federal statutory tax rate to the effective tax rate for the three months ended March 31, 2023, were primarily related to state income taxes, RSU vestings, and the recording of a valuation allowance for state tax attributes that the Company does not expect to utilize prior to expiration.
Current wording
Three Months Ended September 30, 2024 and 2023–For the three months ended September 30, 2024 and 2023, we recognized income tax expense of $9.5 million and and income tax benefit of $(12.8) million, respectively, representing effective tax rates of (27.2)% and 29.2%, respectively. The differences from the federal statutory tax rate to the effective tax rates for the three months ended September 30, 2024, were primarily related to state income taxes and the recording of a valuation allowance for federal tax attributes that the Company does not expect to utilize prior to expiration, and vesting of restricted stock units. The differences from our federal statutory tax rate to the effective tax rate for the three months ended September 30, 2023, were primarily related to state income taxes.
Previous wording
The Company’s operating and reportable segments have been determined in accordance with ASC 280, Segment Reporting (“ASC 280”) and include four reportable segments: i) Senior, ii) Healthcare Services, iii) Life, and iv) Auto & Home. The Company includes non-operating activity, share-based compensation expense, certain intersegment eliminations, and the costs of providing corporate and other administrative services in its administrative division in Corporate & Eliminations. These services and activities are not directly identifiable with the Company’s reportable segments and are shown in the tables below to reconcile the reportable segments to the condensed consolidated financial statements. The Company has not aggregated any operating segments into a reportable segment.
Current wording
The Company’s operating segments have been determined in accordance with ASC 280. We currently have three reportable segments: i) Senior, ii) Healthcare Services, and iii) Life. Senior primarily sells senior Medicare-related health insurance products. Healthcare Services includes SelectRx, Population Health, and most recently, SelectPatient Management. Healthcare Services provides products and services to our Medicare policyholders, which are focused on improving patient health outcomes. Life primarily sells term life and final expense products. The All Other category is reflective of the revenue generated from selling individual automobile and homeowners’ insurance. Additionally, the Company accounts for non-operating activity, share-based compensation expense, depreciation and amortization, goodwill, long-lived asset and intangible asset impairments, certain intersegment eliminations, and the costs of providing corporate and other administrative services in our administrative division, Corporate & Eliminations. These services are not directly identifiable with our reportable segments and are shown in the tables below to reconcile the reportable segments to the consolidated financial statements. We have not aggregated any operating segments together to represent a reportable segment.
Previous wording
The following tables present information about the reportable segments for the periods presented:
Current wording
The following tables present information about the reportable segments for the periods presented. We do not report total assets by segment as our CODM does not use this information to evaluate operating segment performance. Accordingly, we do not regularly provide such information by segment to our CODM.
Previous wording
(1) These expenses primarily consist of financing transaction costs and non-restructuring severance expenses.
Current wording
(1) These expenses primarily consist of financing transaction costs ($0.3 million) and non-restructuring severance expenses ($0.5 million).
Previous wording
(1)These expenses primarily consist of financing transaction costs and non-restructuring severance expenses.
Current wording
(1) These expenses primarily consist of financing transaction costs ($0.2 million) and non-restructuring severance expenses ($1.8 million).
Previous wording
Revenue from Healthcare Services was $124.2 million for the three months ended March 31, 2024, a $53.5 million, or 76%, increase compared to revenue of $70.7 million for the three months ended March 31, 2023, primarily due to a $53.3 million increase in SelectRx pharmacy revenue.
Current wording
Revenue from Healthcare Services was $155.7 million for the three months ended September 30, 2024, a $58.4 million, or 60%, increase compared to revenue of $97.4 million for the three months ended September 30, 2023, primarily due to a $58.1 million increase in SelectRx pharmacy revenue.
Previous wording
Adjusted EBITDA from Healthcare Services was $1.6 million for the three months ended March 31, 2024, a $5.0 million increase compared to Adjusted EBITDA of $(3.4) million for the three months ended March 31, 2023. The increase in Adjusted EBITDA was due to a $53.5 million increase in revenue as discussed above, offset a $48.5 million increase in operating costs and expenses primarily as a result of a $37.0 million increase in medication costs and a $7.9 million increase in compensation costs in support of the growth of SelectRx.
Current wording
Adjusted EBITDA from Healthcare Services was $4.9 million for the three months ended September 30, 2024, a $2.6 million increase compared to Adjusted EBITDA of $2.3 million for the three months ended September 30, 2023. The increase was due to a $58.4 million increase in revenue, offset by a $55.8 million increase in operating costs and expenses primarily as a result of a $38.2 million increase in medication costs and a $7.6 million increase in compensation costs to support of the growth of SelectRx.
Previous wording
Our liquidity needs primarily include working capital and debt service requirements. We believe that the cash available under the Senior Secured Credit Facility will be sufficient to meet our projected operating and debt service requirements for at least the next 12 months. Additionally, we are required under the Senior Secured Credit Facility to maintain compliance with certain debt covenants, as discussed further in Note 7 to the condensed consolidated financial statements. Based on our financial projections, we believe we will remain in compliance with the debt covenants through the 12 months following the date of issuance of our condensed consolidated financial statements.
Current wording
Our liquidity needs primarily include working capital and debt service requirements. Additionally, we are required under the Senior Secured Credit Facility to maintain compliance with certain debt covenants, as discussed further in Note 6 to the condensed consolidated financial statements. Based on our financial projections, we believe we will remain in compliance with the debt covenants through the 12 months following the date of issuance of our condensed consolidated financial statements.
Previous wording
We do not expect to generate sufficient cash flows from operations to enable us to repay all outstanding amounts under the Senior Secured Credit Facility at the time of its maturity on May 15, 2025. If we are unable to secure additional financing from outside sources or otherwise refinance the Senior Secured Credit Facility, we will need to obtain additional capital through other means, including by selling one or more material assets or substantially reducing the scope of certain of our operations. If we are unable to satisfy our repayment obligations under the Senior Secured Credit Facility or maintain compliance with the covenants therein, we may be in default, which would significantly affect our liquidity.
Current wording
We do not expect to generate sufficient cash flows from operations to enable us to make the milestone payments contemplated in the Eleventh Amendment. If we are unable to secure additional financing from outside sources or otherwise amend the Senior Secured Credit Facility, we will need to obtain additional capital through other means, including future securitization transactions, selling one or more material assets, or substantially reducing the scope of certain of our operations. If we are unable to satisfy our repayment obligations under the Senior Secured Credit Facility or maintain compliance with the covenants therein, we may be in default, which would significantly affect our liquidity.
Previous wording
As of March 31, 2024 and June 30, 2023, our cash and cash equivalents totaled $37.8 million and $83.2 million, respectively. Additionally, the following table presents a summary of our cash flows forthe periods presented below:
Current wording
As of September 30, 2024 and June 30, 2024, our cash and cash equivalents totaled $10.4 million and $42.7 million, respectively. Additionally, the following table presents a summary of our cash flows for the periods presented below:
Previous wording
Net cash used in operating activities primarily consists of net income, adjusted for certain non-cash items including depreciation; amortization of intangible assets and internally developed software; deferred income taxes;
Current wording
Net cash used in operating activities primarily consists of net income, adjusted for certain non-cash items including depreciation; amortization of intangible assets and internally developed software; deferred income taxes; share-based compensation expense; amortization of debt issuance costs and discount; accrued interest; non-cash lease expenses; and the effect of changes in working capital and other activities.
Previous wording
Nine Months Ended March 31, 2023—Net cash used in operating activities was $12.8 million, consisting of net loss of $10.7 million, adjustments for non-cash items of $47.1 million, and cash used in operating assets and liabilities of $49.2 million. Adjustments for non-cash items primarily consisted of $21.1 million of depreciation and amortization, $8.5 million of share-based compensation expense, $8.5 million of accrued interest payable in kind on the Term Loans, $6.3 million of amortization of debt issuance costs and debt discount as a result of amendments to the Senior Secured Credit Facility, and $3.1 million of non-cash lease expense, offset by $1.4 million in deferred income taxes. The cash decrease resulting from changes in net operating assets and liabilities primarily consisted of an increase of $62.7 million in accounts receivable, net and a decrease of $8.9 million in other liabilities, partially offset by a decrease of $17.1 million in commissions receivable and an increase of $6.4 million in accounts payable and accrued expenses.
Current wording
Three Months Ended September 30, 2024—Net cash used in operating activities was $16.6 million, consisting of net loss of $44.5 million, adjustments for non-cash items of $26.3 million, and cash used in operating assets and liabilities of $1.6 million. Adjustments for non-cash items primarily consisted of $5.6 million of depreciation and amortization, $3.8 million of share-based compensation expense, $5.3 million of accrued interest payable in kind on the Term Loans, $1.1 million of amortization of debt issuance costs and debt discount, $0.9 million of non-cash lease expense, and $9.5 million in deferred income taxes. The cash increase resulting from changes in net operating assets and liabilities primarily consisted of an increase of $50.5 million in accounts receivable, related to an increase in revenue, an increase of $12.8 million in accounts payable and accrued expenses, offset by a decrease of $38.5 million in commissions receivable, due to a 5% decrease in approved policies for the three months, a decrease of $18.5 million in other liabilities, primarily related to an $5.1 million decrease in our contract liability, and a $12.9 million decrease in accrued compensation and benefits, a decrease of $1.1 million in operating lease liabilities and a decrease of $3.5 million in other assets, primarily related to hedge activities.
Previous wording
Nine Months Ended March 31, 2024—Net cash used in operating activities was $4.8 million, consisting of a net loss of $3.1 million, adjustments for non-cash items of $48.4 million, and cash used in operating assets and liabilities of $50.0 million. Adjustments for non-cash items primarily consisted of $18.6 million of depreciation and amortization, $10.5 million of share-based compensation expense, $14.3 million of accrued interest payable in kind, $4.9 million of amortization of debt issuance costs and debt discount, and $1.9 million of non-cash lease expense, offset by $2.2 million in deferred income taxes. The cash decrease resulting from changes in net operating assets and liabilities primarily consisted of a $98.5 million increase in accounts receivable, net, offset by a $36.1 million increase in accounts payable and accrued expenses, an $11.5 million increase in other liabilities due to an increase in accrued compensation, and a $7.4 million decrease in commissions receivables.
Current wording
Three Months Ended September 30, 2023—Net cash used in operating activities was $23.7 million, consisting of net loss of $31.1 million, adjustments for non-cash items of $2.1 million, and cash used in operating assets and liabilities of $5.2 million. Adjustments for non-cash items primarily consisted of $13.0 million in deferred income taxes, offset by $6.0 million of depreciation and amortization, $3.2 million of share-based compensation expense, $3.6 million of accrued interest payable in kind, $1.6 million of amortization of debt issuance costs and debt discount, and $0.8 million of non-cash lease expense. The cash increase resulting from changes in net operating assets and liabilities primarily consisted of a decrease of $38.7 million in accounts receivable, net and an increase of $5.3 million in accounts payable and accrued expenses, offset by an increase of $29.1 million in commissions receivable and a $6.0 million decrease in other liabilities.
Previous wording
Nine Months Ended March 31, 2023—Net cash used in investing activities of $6.9 million was due to $1.1 million of purchases of property and equipment, primarily to support the growth of SelectRx infrastructure, and $5.8 million in purchases of software and capitalized internal-use software development costs.
Current wording
Three Months Ended September 30, 2024—Net cash used in investing activities of $2.6 million was due to $2.1 million in purchases of software and capitalized internal-use software development costs and $0.4 million of purchases of property and equipment, primarily made up of machinery and equipment and leasehold improvements.
Showing the first 40 of 43 pairs. Open the source sections for the rest.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
Total approved policies for all products increased 8% for the nine months ended March 31, 2024, compared to the nine months ended March 31, 2023. Fluctuations in approved policies are normally in direct correlation to submitted policies; however, primarily due to carrier mix, we experienced a slight decrease in the submitted-to-approved conversion rates for the nine months ended March 31, 2024, compared to the nine months ended March 31, 2023.
Previous report — wording carried elsewhere
Prescriptions per day represents the total average prescriptions shipped per business day, as this is a primary key driver of revenue for Healthcare Services.
Previous report — wording carried elsewhere
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 Auto & Home.
Previous report — wording carried elsewhere
Nine Months Ended March 31, 2024 and 2023–For the nine months ended March 31, 2024 and 2023, we recognized income tax benefit of $1.1 million and $1.1 million, respectively, representing effective tax rates of 26.9% and 8.9%, respectively. The differences from the federal statutory tax rate to the effective tax rate for the nine months ended March 31, 2024, were primarily related to state income taxes and the recording of a valuation allowance for federal tax attributes that the Company does not expect to utilize prior to expiration. The differences from the federal statutory tax rate to the effective tax rate for the nine months ended March 31, 2023, were primarily related to state income taxes, RSU vestings, and the recording of a valuation allowance for state tax attributes that the Company does not expect to utilize prior to expiration.
Previous report — wording carried elsewhere
share-based compensation expense; impairment charges; and the effect of changes in working capital and other activities.