SelectQuote, Inc.

After the speaker's remarks, there will be a question and answer session. If you would 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. Gunter, 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 the 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, annual report on Form 10-K for the period ended June 30, 2025, and subsequent 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?

Thank you, Matt, and thanks to our investors and analysts joining us this morning. Picking up from the momentum of a strong fiscal 2025, SelectQuote executed well over the first quarter and is well positioned for a successful fiscal 2026. Beginning with the headline results, we generated consolidated revenue of $329 million, which represents 13% growth over the same period a year ago, driven by strong growth in healthcare services. As you saw in our press release, the year-over-year senior revenue compare was unique this period, given the changes to beneficiary eligibility requirements during the special election period. Specifically, our senior revenues were $59 million compared to $93 million a year ago. The con was driven by lower policy production, which was expected given the new SEP parameters we foreshadowed on last quarter's call. Additionally, as also forecasted last quarter, the segment recognized negative EBITDA of 21 million in the first quarter, driven by the combination of lower policy production, as well as increased year-over-year investment and new agent hiring in advance of AEP. I'll speak more to our readiness for AEP in a moment, but the high-level takeaway is that our senior business performed as expected in what was a unique year-over-year compare for SEP. In our healthcare services business, our new Kansas facility is ramping as planned, delivering efficiency gains in line with expectations. However, first quarter healthcare services EBITDA was impacted by a change in drug reimbursement rates with a SelectRx PBM partner. This is a headwind for our 1Q and 2Q healthcare services EBITDA margin. Without providing detail on the contract, it is important to call out from the perspective of the PBM The change in reimbursement rate relates to volume shipped over calendar year 2025, not just fiscal 1Q or 2Q. The change does not impact our prior period results, but instead disproportionately impacts the first half of this fiscal year by approximately $20 million. The majority of that impact will be recognized at our fiscal second quarter. As a result, we now expect second quarter adjusted EBITDA for healthcare services to be approximately breakeven. We are actively negotiating a longer-term reimbursement agreement with this carrier that creates better visibility for both parties. We have communicated our need for stability in our financials. The timing of this impact following our initial 2026 outlook is a clear example of that need. We're confident we'll reach a mutually beneficial agreement as this PBM partner recognizes the compelling clinical value provided by SelectRx, which I'll speak to later in my remarks. Regardless of the ongoing negotiation with this PBM, rates per our current contract revert to more normalized levels on January 1st, 2026, which underpins our updated fiscal 26 view. While we no longer anticipate reaching our $50 million target for fiscal 26, our confidence and visibility in the long-term economics of healthcare services are unchanged. Despite the 2Q impact, we plan to exit the fiscal year at an annualized EBITDA run rate in the $40 to $50 million range and continue to see SelectRx and healthcare services as a meaningful driver of profit and cash flow for SelectQuote. Speaking now at the consolidated level, quarterly EBITDA of negative $32 million was below our guided $25 to $30 million loss range communicated on the last call due to the select RX margin dynamics I just spoke about. Senior EBITDA was within expectations for the quarter, and our views on the upcoming AEP season are unchanged. If we turn to slide four, I'll detail those views for AEP. Beginning at the top of the page, let me start with our view of the overall industry. As you recall from last year, shifts in plan benefits and structures from carriers drove an elevated amount of policyholder volatility. Looking ahead to this year's selling season, we see a similar backdrop where carriers continue to prioritize Medicare Advantage margins over aggregate policy growth. The importance of a well-fit policy has never been more important to both the carrier and the policyholder. SelectQuote's data-enabled, agent-led model is specifically built for that purpose, which we believe is a lasting competitive advantage and one that is especially acute in this environment. Coincidentally, we expect the ongoing strategic shift by carriers to drive another elevated year of policy terminations. As we noted last year, these industry trends drive an increased need for the solutions SelectQuote provides, both for the carrier and certainly for the policyholder. Additionally, we see certain pockets of growth within health plans this season, including HMOs, SNPs, and in specific underserved geographies, which our model is uniquely well-positioned to help. If we move to the bottom of the slide, let me give our outlook for how SLECO disposition to perform this Medicare Advantage season. Looking back, the 2025 AAP season exceeded expectations. Our high-touch, data-driven model proved its value in a dynamic market where policyholder questions and confusions were elevated. In that environment, our agile agent-led approach delivered outsized growth per agent and near record margins in the senior segment. For the 2026 AEP and OEP seasons, we're optimistic that performance will be strong. We entered the season with excellent retention of tenured agents who were about twice as productive as new hires and had another successful preseason of hiring and training. This positions the platform well for continued growth and improved operating leverage. Moving to our focus on retention, we know carrier plan changes can drive confusion, and we have made a strategic priority to proactively work with policyholders to ensure they understand their plans. This is a differentiated approach that is highly appreciated by policyholders. In the upcoming year, we expect tangible benefits to our results from both keeping policyholders in plans that remain a good fit or helping them find a new plan that best fits their ongoing needs. In fact, we believe there's an opportunity to improve policyholder recapture rates from the 2025 season. We believe our agile sales function and focus on retention position SelectQuote to once again delivering what is to be sure another dynamic and disruptive AEP season. On slide five, let's add some context on SelectRx and the way our customers and carrier partners benefit. As we've talked about since the inception of the business, there are substantial problems and inefficiencies in how prescription drugs are paid for, distributed, and ultimately taken by Americans. SelectVote, as an efficient healthcare information hub, has significant insight an ability to eliminate inefficiency and improve the experience for all participants in the prescription drug value chain. At the highest level, SelectRx improves lives for Americans, introduces efficiency and cost savings into the system, and leads to better health outcomes. Here we provide a few examples, beginning on the left with improved MA retention. Given medication as a core piece of most treatment regimens, the fit of prescription drugs within a medical coverage plan has a synergistic benefit. We have seen this evidence with SelectRx members who tend to have lower rapid disenrollment rates and higher retention on the Medicare Advantage plans they select. Next is improved medication adherence in the middle column. Our approach recognizes a fundamental reality of patient care, medications change. Unlike the traditional 90-day bottle-filled approach prevalent elsewhere, We utilize adherence-friendly 30-day packaging with a high touch service model. This monthly cycle is critical because on average, roughly 10% of our SelectRx members experience a material change to their prescription regimen each month, whether it's adding a new medication, discontinuing an old one, or adjusting a dosage. When a patient's therapy changes, a 90-day supply creates a dangerous gap and an unnecessary drug waste. Our 30-day approach more quickly ensures that patients are taking the correct current medications, which is vital. This reduces the risk of patients taking incorrect doses or discontinued medications and lowers the risk of adverse drug reactions. It is well known that taking medication in accordance with the doctor's orders is critical. As we know, especially with American seniors, drug adherence is a tricky and persistent problem, which can lead to worse health outcomes particularly among the polychronic population we serve, nearly 70% of whom have limited pharmacy access. Nationwide, studies suggest that poor medication adherence contributes to around 25% of all hospitalizations, which translates to hundreds of billions of dollars in healthcare costs in the United States each year. Around 40% of our healthcare select members have reported either forgetting to take their medications or failing to pick up prescriptions from a pharmacy. We designed SelectRx with this specific problem in mind and have seen clear success in adherence rates. We attribute the success to the convenience and clarity that SelectRx custom drug delivery provides patients. When we enroll patients in SelectRx, we see a meaningful improvement in their active medication adherence over the next two years. With our new concierge-like program we call Adherence for All, we are further accelerating and enhancing medication adherence improvement, with beneficiaries in the programs improving by roughly 10% within the first year. Finally, the right-hand column is the most rewarding statistic, improvement in health outcomes, which benefits everyone within the ecosystem. By improving adherence, SelectRx members see a reduction in hospital days of around 20%. This directly translates to a better quality of life for the patient, but additionally provides a meaningful cost reduction for the overtaxed healthcare system and similarly for healthcare insurance payers. We provide this color not just because we're proud of the business, but it is important for investors to understand that these numbers matter to our insurance carrier partners. They, like us, see SelectRx and our healthcare services platform as a core value driver for long-term American healthcare improvement. With that, let me turn the call over to our CFO to detail our results. Ryan?