SelectQuote, Inc.

Welcome to SelectQuote's third quarter earnings conference call. 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 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 star followed by the number one again. 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 third 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 also have a question and answer session. As referenced on slide two during this call, we will be discussing some non gap financial measures. The most directly comparable gap financial measures and a reconciliation of the differences between the gap and non gap 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 appreciate everyone joining us this morning. We're pleased to report another quarter of strong financial results across each of our segments. We reaffirm our outlook for fiscal 2026 and continue to execute our goal to drive profitability and cash flow. We're especially proud of the results given the headwinds our industry has faced over the past year plus. This is a testament to our people and strategy. SelectQuote continue to advance our goal to expand cash flow and the company is very well positioned to accelerate that effort in fiscal 2027. To summarize, SelectQuote generated $431 million in revenue, driven by solid results across each of our segments. Adjusted EBITDA totaled $45 million, growth of 18% year-over-year. In Senior, we grew revenue by 8% year-over-year to $183 million. Growth was driven by a healthier OEP, strong agent productivity and customer retention, as well as a positive change to our commission's receivables that Ryan will detail. As we have mentioned before, we firmly believe the SelectWIP strategy and our agents make the difference. This now marks four consecutive years of strong operating performance in senior, despite widely varying Medicare Advantage backdrops each year. To say it lightly, we're very proud of the results and our differentiated model. Senior adjusted EBITDA totaled $59 million, which includes the positive $14 million adjustment I just mentioned. It is important to note that the adjustment reaffirms the value of the commissions receivable on our balance sheet and the approximate $1 billion in assets we expect to receive in the quarters and years ahead. When we offer bespoke advice to American seniors and do so year in and year out, they get the best care and we and our carrier partners benefit through strong retention. That said, excluding and normalizing the adjustment for comparison purposes, Blackwood's model once again drove strong senior margins of 26% and a Medicare Advantage backdrop that was mixed this season. Turning to health care services, revenue grew 5% compared to a year ago, totaling $199 million. Our revenue and profitability in SelectRx was impacted by both carrier-specific actions on reimbursement, which we detailed earlier this year, and the implementation of the Inflation Reduction Act. Ryan will provide detail on that impact shortly. Those headwinds notwithstanding, our adjusted EBITDA improved sequentially to $5 million, and we maintain our view that healthcare services will be a significant driver of profitable cash flow growth in fiscal 2027 and beyond. Overall, including our life insurance segment, we expect to exit fiscal 2026 on very strong footing in spite of what was a challenging environment. Looking ahead to 2027, we are encouraged by increasing visibility within the Medicare Advantage ecosystem. We're excited about Subway's ability to compound cash flow growth in the near future and see significant value for shareholders as a result, especially at what we believe is a wildly dislocated valuation for our company. To that end, let me be clear that we will take all necessary action to maintain our listing on the New York Stock Exchange. We remain confident our stock will continue to be traded on the NYSE for years to come. Lastly, I'd like to take a minute to highlight a new and important initiative called SelectQuote Local. As you know, we have long been proud of our company's ability to help underserved Americans. FlexQuote Local is a natural extension of our model and allows local community health care and life insurance participants to leverage our information and market advantages to help more people in need. The business offers our leading marketing, technology, product, and customer service platform through a franchise model with local sales and service. Put another way, we're offering local providers the information engine of SelectQuote on a fee-based arrangement, and we can do so with minimal capital investment. Similar to the expansion of our revenue to CAC metric with the growth of healthcare services, we see SelectQuote Local as another extension of how our model can help more Americans with the same scale dollar of investment. Stucco Local won't be a meaningful revenue driver in the near term, but strategically, it broadens our reach and addressable market. Now let's flip to slide four and let's take a look at the KPIs from our very strong quarter. We've shown these before, primarily for our senior business, but we've also included additional detail on SelectRx. Starting with senior on the left, we drove another strong quarter measured by agent productivity and OEP. Agent service and productivity are an evergreen And I'd remind you that this is all the more impressive considering the very strong compares and the previous two years. Specifically, we drove a 1% improvement in policies per agent over this timeframe despite historically wide swings in the environment from one season to the next. Moving down the page, we saw even better results on marketing efficiency, spending 14% less per approved policy compared to two years ago. Ryan will speak to elevated approval rates this season, but even excluding that unique impact, we saw strong return on marketing spend beyond just policy booking. Senior engagement was high across the full range of our channels. We're underscoring our senior division efficiency performance here because we oftentimes find investors and analysts overlook the progress we've made on cash conversion in this segment. Moving to the right side of the page, we highlight the significant progress we've made with onboarding of SelectRx members. As you can see, we've driven a 64% increase in prescriptions shipped compared to two years ago, relative to a commensurate 55% increase in SelectRx members. Progressive maturity and onboarding of our membership, combined with the improved operating efficiency of our Latha, Kansas distribution facility, has driven significant leverage on a relatively fixed cost base. As a result, SelectQuote generated a global revenue to cap multiple of 6.7x. Only SelectQuote offers this unique combination of capabilities to help patients in multiple ways. This increases the value we bring to consumers and drives additional profitability with each senior we engage with. For products and services that are inherently recurring, especially when done at our level of care, the cash flow streams from our customers drive very compelling returns on invested capital. As we've noted, there's a wide disconnect between the value we see in our platform and cash flow streams and the valuation of common equity. Take one simple example. Our Medicare Advantage Commission's receivable balance at the end of fiscal third quarter totaled nearly $1 billion, which compares to our market cap of under $200 million today. We fielded questions about the LTV assumptions in our commissions accounting going all the way back to our IPO. But I'd simply note that Selectbook has just operated in two of the most disruptive Medicare Advantage environments on record. Over those two years, we had a recapture rate of over 33% and were able to recognize a favorable adjustment to our receivables. The point being, We have visibility and conviction in our balance sheet asset, and multiple capital markets transactions would suggest others analyzing the business closely share that conviction. Before I hand the call over to Ryan, we're very proud of the great progress we've made over the past four years, both operationally and on our capital structure. We continue to prioritize cash flow generation and will deliver significant year-over-year improvement and operating cash flow in fiscal 26. We expect to build upon that meaningful cash flow improvement in fiscal 27 and beyond with a stated goal to deliver our balance sheet in the years to come. I'll end my comments by underscoring our commitment to remedying the disconnect in our equity value and see a very compelling opportunity in select quote for investors in the future. With that, let me turn the call over to Ryan to review our third quarter. Ryan?