SelectQuote Inc

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 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.

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 93% and 92% of our approved Senior policies for the three months ended December 31, 2024 and 2023, respectively, and 91% and 91% for the six months ended December 31, 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 2.4 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.

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 44% and 47% of new premium within the Life segment for the three months ended December 31, 2024 and 2023, respectively, with final expense policies accounting for 56% and 53% for the three months ended December 31, 2024 and 2023, respectively. For the six months ended December 31, 2024 and 2023, term life policies accounted for 41% and 48% of new premium within Life, respectively, with final expense policies accounting for 59% and 52%, respectively.

Previous 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.

Current wording

The three and six months ended December 31 referenced throughout the commentary below refers to the second quarter and fiscal year-to-date performance of our fiscal years ending on June 30, 2025 and 2024.

Previous 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.

Current wording

Total submitted policies for all products increased 5% for thethree months ended December 31, 2024, compared to thethree months ended December 31, 2023. This was driven by a 24% increase in overall close rates, a 33% increase in production per productive agent offset by a 25% decrease in average total productive agents.

Previous 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.

Current wording

Total approved policies for all products increased 2% for the six months ended December 31, 2024, compared to the six months ended December 31, 2023. Fluctuations in approved policies are normally in direct correlation to submitted policies; however, the approved policies increased slightly less than submitted policies due to carrier mix.

Previous 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.

Current wording

The LTV per MA approved policy decreased 3% for thethree months ended December 31, 2024, compared to thethree months ended December 31, 2023, primarily due to carrier mix.

Previous 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.

Current wording

The total number of SelectRx members increased by 54% asof December 31, 2024, compared to December 31, 2023, due to our continued operating strategy to grow SelectRx.

Previous 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.

Current wording

Total term premiums decreased 1% for thethree months ended December 31, 2024, compared to thethree months ended December 31, 2023, due to a 7% decrease in the number of policies sold, partially offset by a 7% increase in the average premium per policy sold. Final expense premiums increased 14% for the three months ended December 31, 2024, compared to the three months ended December 31, 2023, due to a 4% increase in the average premium per policy sold and a 9% increase in the number of policies sold.

Previous 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.

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 income (loss) as commissions and other services revenue. Pharmacy revenue on the consolidated statements of comprehensive income (loss) includes revenue from the sale of prescription and OTC medication products from SelectRx.

Previous wording

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 wording

Three Months Ended December 31, 2024 and 2023–Commissions and other services revenue increased $4.4 million, or 1%, for the three months ended December 31, 2024 primarily due to an increase in Senior and Life commissions revenue by $7.9 million and $2.4 million, respectively, offset by a decrease in other commissions revenue of $6.3 million. Senior’s increase was primarily due to a $7.9 million increase in commissions revenue driven by a 5% increase in approved policies. The $2.4 million increase in Life commissions revenue was primarily driven by a $1.8 million increase in final expense revenue. The decrease in other commissions revenue is driven by a $6.3 million decrease in Auto & Home commissions revenue due to the change in strategic direction to reduce revenue growth for Auto & Home based on our limited resources. Pharmacy revenue increased $71.2 million, or 65%, primarily due to the 54% increase in members from the growth of the SelectRx business.

Previous wording

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 wording

Three Months Ended December 31, 2024 and 2023—Cost of commissions and other service revenue increased $3.7 million, or 4%, for the three months ended December 31, 2024, primarily due to a $4.8 million increase in compensation costs, offset by a $0.8 million decrease in other operating expenses in Senior. The $4.8 million increase in compensation costs is primarily made up of a $3.6 million increase in costs for our sales and customer care agents in Senior, and a $0.4 million increase in costs for sales and customer care agents in Life.

Previous 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.

Current wording

Three Months Ended December 31, 2024 and 2023–Cost of goods sold-pharmacy revenue increased $62.0 million, or 66%, for the three months ended December 31, 2024, primarily due to a $53.8 million increase in medication costs as the number of SelectRx members increased 54% over the prior year as well as a $4.7 million increase in compensation costs due to a 64% increase in the number of employees directly associated with fulfilling pharmacy orders.

Previous wording

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 wording

Three Months Ended December 31, 2024 and 2023–Selling, general, and administrative expenses increased $11.6 million, or 35%, for the three months ended December 31, 2024, primarily due to a $4.9 million increase in compensation costs, a $2.0 million increase in bad debt expense related to SelectRx, and a $4.5 million increase in corporate development. The increase in compensation costs was primarily related the growth of SelectRx. The increase in corporate development is related to the securitization transaction.

Previous 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.

Current wording

Three Months Ended December 31, 2024 and 2023–Technical development expenses increased $2.0 million, or 25%, for the three months ended December 31, 2024, primarily due to a $1.6 million increase in compensation costs due to an increase in headcount for technology personnel and a $0.2 million increase in costs related to trainings and seminars.

Previous 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.

Current wording

Six Months Ended December 31, 2024 and 2023–Interest expense increased $0.9 million, or 2%, for the six months ended December 31, 2024, as a result of higher interest rates during the period.

Previous 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.

Current wording

Three Months Ended December 31, 2024 and 2023–For the three months ended December 31, 2024 and 2023, we recognized income tax benefit and expense of $13.7 million and $11.5 million, respectively, representing effective tax rates of (34.6)% and 37.2%, respectively. The differences from the federal statutory tax rate to the effective tax rates for the three months ended December 31, 2024, were primarily related to state income taxes, the recording of a valuation allowance for federal and state tax attributes that the Company does not expect to utilize prior to expiration, vesting of restricted stock units, and non-deductibility of warrant market adjustments. The differences from the federal statutory tax rate to the effective tax rates for the three months ended December 31, 2023, 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.

Previous wording

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 wording

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 income (loss) before income tax expense (benefit) plus: (i) interest expense, net; (ii) depreciation and amortization; (iii) share-based compensation; (iv) goodwill, long-lived asset, and intangible assets impairments; (v) transaction costs; (vi) loss on disposal of property, equipment and software, net; (vii) other non-recurring expenses and income; and (viii) changes in fair value of warrant liabilities.

Previous wording

(1) These expenses primarily consist of financing transaction costs ($0.2 million) and non-restructuring severance expenses ($1.8 million).

Current wording

(1) These expenses primarily consist of financing transaction costs ($6.7 million).

Previous wording

(1) These expenses primarily consist of financing transaction costs ($0.3 million) and non-restructuring severance expenses ($0.5 million).

Current wording

(1) These expenses primarily consist of non-restructuring severance expenses ($0.5 million) and financing transaction costs ($7.0 million).

Previous wording

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 wording

Three Months Ended December 31, 2024 and 2023–Revenue from our Senior segment was $255.6 million for the three months ended December 31, 2024, a $8.0 million, or 3%, increase compared to revenue of $247.5 million for the three months ended December 31, 2023. The increase was due to an $7.9 million, or 4%, increase in commissions revenue.

Previous 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.

Current wording

Revenue from Healthcare Services was $183.4 million for the three months ended December 31, 2024, a $71.7 million, or 64%, increase compared to revenue of $111.7 million for the three months ended December 31, 2023, primarily due to a $71.2 million increase in SelectRx pharmacy revenue.

Previous wording

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 wording

Revenue from our Life segment was $39.9 million for the three months ended December 31, 2024, a $2.5 million, or 7%, increase compared to revenue of $37.4 million for the three months ended December 31, 2023, primarily due to an $2.4 million increase in commissions revenue.

Previous 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.

Current wording

Adjusted EBITDA from Healthcare Services was $2.2 million for the three months ended December 31, 2024, a $0.8 million decrease compared to Adjusted EBITDA of $3.0 million for the three months ended December 31, 2023. The decrease was due to a $71.7 million increase in revenue, offset by a $72.4 million increase in operating costs and expenses primarily as a result of a $53.8 million increase in medication costs and a $12.7 million increase in compensation costs to support and invest in the growth of SelectRx.

Previous wording

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 wording

Adjusted EBITDA from our Life segment was $7.4 million for the three months ended December 31, 2024, a $2.9 million, or 62%, increase compared to Adjusted EBITDA of $4.6 million for the three months ended December 31, 2023. The increase in Adjusted EBITDA was due to a $2.5 million increase in revenue and a $0.3 million decrease in operating costs. The decrease in operating costs was primarily due to a $0.8 million decrease in marketing and advertising, partially offset by a $0.7 million increase in compensation costs.

Previous 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.

Current wording

Our liquidity needs primarily include working capital and debt service requirements. Additionally, we are required under the Senior Secured Credit Facility and Indenture 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

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 wording

On October 15, 2024 and in connection with the Indenture, the Company entered into 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.

Previous wording

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 wording

As of December 31, 2024 and June 30, 2024, the Company had total debt obligations of $711.9 million and $683.3 million, respectively, under the Senior Secured Credit Facility and the Notes. 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 services.

Previous 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.

Current wording

We do not expect to generate sufficient cash flows from operations to enable us to make the remaining 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 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:

Current wording

As of December 31, 2024 and June 30, 2024, our cash, cash equivalents, and restricted cash totaled $13.6 million and $42.7 million, respectively. Additionally, the following table presents a summary of our cash flows for the periods presented below:

Previous 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.

Current wording

Six Months Ended December 31, 2024—Net cash used in operating activities was $45.3 million, consisting of net income of $8.7 million, adjustments for non-cash items of $41.0 million, and cash used in operating assets and liabilities of $95.0 million. Adjustments for non-cash items primarily consisted of $10.7 million of depreciation and amortization, $8.5 million of share-based compensation expense, $9.7 million of accrued interest payable in kind on the term loans, $2.4 million of amortization of debt issuance costs and debt discount, $1.8 million of non-cash lease expense, $4.2 million in deferred income taxes, $4.2 million in bad debt expense, and $7.6 million in the change in fair value of warrant liabilities. The cash decrease resulting from changes in net operating assets and liabilities primarily consisted of a decrease of $30.0 million in accounts receivable, an increase of $46.2 million in accounts payable and accrued expenses, offset by an increase of $155.5 million in commissions receivable, due to a 2% increase in approved policies for the six months, a decrease of $8.7 million in other liabilities, primarily related to an $7.1 million decrease in our contract liability, and a $1.9 million decrease in accrued compensation and benefits, a decrease of $2.3 million in operating lease liabilities and an increase of $4.8 million in other assets, primarily related to hedge activities.

Previous 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.

Current wording

Six Months Ended December 31, 2023—Net cash used in operating activities was $49.2 million, consisting of a net loss of $11.7 million, adjustments for non-cash items of $34.4 million, and cash used in operating assets and liabilities of $71.9 million. Adjustments for non-cash items primarily consisted of $11.9 million of depreciation and amortization, $7.0 million of share-based compensation expense, $9.0 million of accrued interest payable in kind, $3.4 million of amortization of debt issuance costs and debt discount, $1.5 million of non-cash lease expense and $2.7 million in bad debt expense, offset by $1.2 million in deferred income taxes. The cash decrease resulting from changes in net operating assets and liabilities primarily consisted of an increase of $113.9 million in commissions receivables, offset by an increase of $29.2 million in accounts payable and accrued expenses, a decrease of $9.2 million in accounts receivable, net and an $8.2 million increase in other liabilities.

Previous 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.

Current wording

Six Months Ended December 31, 2024—Net cash used in investing activities of $4.8 million was due to $4.1 million in purchases of software and capitalized internal-use software development costs and $0.7 million of purchases of property and equipment, primarily made up of machinery and equipment and leasehold improvements.

Previous wording

Three Months Ended September 30, 2023—Net cash used in investing activities of $2.1 million was due to $1.8 million in purchases of software and capitalized internal-use software development costs and $0.6 million of purchases of property and equipment, primarily computer equipment.

Current wording

Six Months Ended December 31, 2023—Net cash used in investing activities of $5.7 million was due to $3.9 million in purchases of software and capitalized internal-use software development costs and $2.1 million of purchases of property and equipment, primarily computer equipment and leasehold improvements.

Previous wording

Our financing activities primarily consist of payments on term loans and proceeds and payments related to stock-based compensation.

Current wording

Our financing activities primarily consist of payments on term loans, proceeds and payments related to the revolving credit facility, payments on notes issued in connection with the Indenture, payments for debt issuance costs, and proceeds and payments related to stock-based compensation.

Previous wording

Three Months Ended September 30, 2023—Net cash used in financing activities of $8.9 million was primarily due to $8.5 million of principal payments on the Term Loans.

Current wording

Six Months Ended December 31, 2023—Net cash used in financing activities of $17.4 million was primarily due to $16.9 million of principal payments on the term loans.

Previous wording

Other than the discussions in Note 7 and Note 9 to the condensed consolidated financial statements, as of September 30, 2024, there have been no material changes to our contractual obligations as previously described in our Annual Report.

Current wording

Other than the discussions in Notes 6, 9, and 11 to the condensed consolidated financial statements, as of December 31, 2024, there have been no material changes to our contractual obligations as previously described in our Annual Report.