SelectQuote, Inc.

Welcome to SelectQuote's first quarter. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. It is now my pleasure to introduce Matt Gunter. SelectQuote Investor Relations. Mr. Venter, you may begin the conference.

Thank you, and good morning, everyone. Welcome to SelectQuote's fiscal first quarter earnings call. Before we begin our call, I would like to mention that on our website, we have provided a slide presentation to help guide our discussion. After today's call, a replay will also be available on our website. Joining me from the company, I have our Chief Executive Officer, Tim Danker, and Chief Financial Officer, Ryan Clement. Following Tim and Ryan's comments today, we will have a question and answer session. As referenced on slide two, during this call, we will be discussing some non-GAAP financial measures. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available in our earnings release and investor presentation on our website. And finally, a reminder that certain statements made today may be forward-looking statements. These statements are made based upon management's current expectations and beliefs concerning future events impacting the company, and therefore involve a number of uncertainties and risks, including but not limited to those described in our earnings release, quarterly report on Form 10-Q for the period ended September 30th, 2024, and other filings with the SEC. Therefore, the actual results of operations or financial condition of the company could differ materially from those expressed or implied in our forward-looking statements. And with that, I'd like to turn the call over to our Chief Executive Officer, Tim Danker. Tim?

Thanks, Matt, and thank you all for joining today. I'll start with a high-level thoughts on the upcoming year, a few early observations from AEP, and an update on SelectQuotes' position to add value to each of our stakeholders. As you saw from our press release, the year is off to a strong start, and Selectwood is executing very well in the ongoing AEP season. We are ahead of our original expectations, and as a result, increased our fiscal 2025 outlook on both the top and bottom line. Ryan will detail our financials later, but the headline is that Selectwood prepared well for the Medicare Advantage season and continues to perform in our healthcare services segment. As you know, there's been a lot of commentary about Medicare Advantage and how insurance carriers have shifted benefits for the ongoing enrollment period. The predominant question is how changing policy features by carriers would impact industry origination volumes and throughput this season. We'll speak to the strength we've seen in our results in a minute, but the shifts this season are a good example of why our bespoke service model is so important. We employ highly trained agents and support them with significant data and technology to help achieve one goal, find the best Medicare Advantage policy or prescription medication service for each customer's unique set of needs. As we've said, we feel very good about our model in a wide range of Medicare Advantage selling seasons, and our high-touch approach is even more critical to both policyholders and carriers when decision factors are in flux We think the ongoing season will validate that claim, and based on our early reads, we expect to be highly successful again this year. So let me begin on slide three with a brief overview of our quarter. It was a strong way to begin fiscal 2025 as we drove year-over-year revenue growth of 26% and minimized or adjusted EBITDA drag in what is traditionally SLECWA's largest investment quarter as we ramp into AEP. In fact, our year-over-year EBITDA improved by nearly 10 million, driven by continued scale in our healthcare services business and the resulting efficiency of our marketing spend, which ended the quarter at a very strong revenue-to-CAC ratio of 4.6x. In all, our consolidated financial results for the first quarter were very healthy and provide a strong foundation for a successful year ahead. With that as a level set, let me speak to a few key things we are strategically focused on for both our senior distribution and healthcare services business. Beginning with senior, as I mentioned, we are very encouraged by what we have seen early in AEP relative to our initial expectations. First, regarding our most important asset, our agents, we had one of our highest retention years on record for our tenured agent workforce. This is important in three main ways for SelectQuote. First, we were able to spend more time on policy education and customer service considerations for this specific season instead of basic training. Second, our recruitment and training expenses were modest, which aided profitability for the fiscal first quarter. And third, we believe Selectbook's competitive advantage likely widened headed into this AEP, driven by Medicare Advantage plan benefit volatility, where the experience of our agents is all the more important for both our customers and our carrier partners. Another theme I've highlighted in the early days of AEP has been our model's consistent improvement in agent close rates and productivity. We've spoken at length about our strategic focus on unit-level returns and prioritizing profitability and cash flow over growth. We have achieved that in the past two years with rigorous lead targeting and the use of more tenured agents, whose productivity is about twice that of non-tenured agents. On that foundation, we continue to further improve productivity by adding data tools and technology specifically designed to benefit customer fit and experience. I bring it up again now because agent productivity is the most attractive lever we have to drive additional growth. As you know, we continue to improve our capital flexibility and have more to do. In the current season, the best way for Selectwood to grow our senior business is higher throughput, and season to date, the results have been very impressive. In fact, we've accomplished a high level of agent policy productivity on a relatively stable marketing budget. Put another way, our tenured agents are helping more seniors per lead than they have in the past. This is a very strong proof point for why the agent-led SelectQuote model is built for all seasons. Before I detail the AAP season, let me also give an update on our healthcare services business and the strong performance of SelectRx. Our membership is now over 86,000, which is up 64% year-over-year. Despite the strong growth, we drove our sixth straight quarter profitability for the business and we are in the process of expanding our capacity to serve customers even more efficiently in the future. If we turn the page, let me expand on the ongoing Medicare Advantage annual enrollment period. I'll speak to our strategy heading into the season and then review some initial observations we've had so far. I'll start with our agents. The only thing I'd add to my previous comments is that we continue to be impressed by the additional operating leverage that exists with our experienced agents. The outperformance of our agents and the positive impact we are seeing on close rates relative to expectations is the biggest factor for SelectQuote's operating performance so far this season. Moving to marketing, SelectQuote's strategy for the past two plus years has been one of highly targeted lead sourcing for policy origination. That approach has been successful and is even more critical for the ongoing AEP. As a result of our focus on driving cash flow to improve our balance sheet, we've assigned a high bar for the use of marketing dollars. Specifically, we've used early learnings about policy feature changes to develop specific targeted marketing campaigns, which are performing very well season to date. If we move to the third column, we can review how SelectQuote's data and technology is being leveraged for the current AEP. The biggest change for the upcoming season has been the expansion of our AI tools to screen and prioritize calls as well as simplify and accelerate processes behind the scenes. This AAP has shown continued success of these tools, but also additional use cases that we will pursue in the future to drive additional value. Last but not least, the close partnership we have with our carrier partners proved critical to this AAP given the shift in plan benefits. More than any other season, we've worked quickly to develop strategies to serve both existing policyholders that may seek a better policy set Similarly, we've been able to match our lead targeting with plan features to optimize fit for the end customer. While the ongoing season presents new challenges and opportunities, Blackboard's model was purpose-built to deliver in a range of selling environments. There's always an opportunity to improve and evolve, all with complete alignment between our policyholders, carrier partners, and our own financial returns. Moving to slide five, let's talk about the progress we're making to optimize our balance sheet. As we've noted last quarter, we believe Slecowit's model and the market opportunity in front of us presents more growth potential than we are currently equipped to fund. We announced the first step in our recapitalization plan last month and with our initial Medicare Advantage Commission's receivable securitization. Specifically, we raised $100 million in proceeds through an investment-grade rated transaction. In addition to the proceeds, the transaction accomplished three key things. First, we extended our term debt maturities by approximately two years and have the ability with subsequent paydowns to further extend the maturity by an additional year. Second, the initial securitization comes at a significantly improved cost of capital. On a like-for-like basis, the blended cost of our securitization is in excess of 500 basis points lower than our term debt rate, which equates to real cash interest expense savings of $5 million per year. With the time provided by our maturity extension, we believe there are opportunities to further decrease our cost of capital, whether through subsequent securitization or other financing options. Third, and probably most underappreciated, the initial securitization only pledged roughly 15% of our receivables balance to generate $100 million in proceeds. For illustration's sake, The remaining roughly 85% of our receivables book would imply potential proceeds well in excess of 400 million. We feel very confident in the timeline and the available options we have to improve our balance sheet over the upcoming year. Additionally, we have significant assets and cash flows to pursue better funding, both in terms of structure and rate. With that, let's turn to slide six, and I'll conclude with a brief overview of our priorities in the near term. In short, The message we've delivered has two parts. First, we have a highly efficient operating model that has produced a strong track record of consistent returns in a market with significant growth opportunity. The highlights of that model are shown here on the left side of the slide, and it is our intention to continue to drive the same type of performance in the future. The second part of our story is that of a company with a limited ability to achieve its true growth potential given our leverage profile. As we just talked through, Slequid has taken an initial step with our securitization, but we have much more to do. Our priority in 2025 is to eliminate the headwind our leverage creates and meaningfully improve our capital flexibility. As we show on the right of this slide, our plan is to work towards a target term debt leverage range of 2 to 3x. We'll share more in the coming quarters, but I'll end my comments by thanking our teams for their work and our shareholders for your support. We know there is a tremendous value opportunity as a leading enabler in the healthcare ecosystem. It is our job as a management team to make sure SelectQuote is armed with both the model and balance sheet to capitalize. With that, let me turn the call over to Ryan to discuss our financial results for the quarter. Ryan.