Q3 2022 SelectQuote Inc Earnings Call
[music].
Welcome to the select quote third quarter earnings conference call all lines have been placed on mute to prevent any background noise.
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's now my pleasure to introduce Gunther.
<unk> select quote Investor Relations Mr. Gunther you may begin your conference.
Thank you and good morning, everyone welcome to select quotes 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 todays call. A replay will also be available on our website. Joining me from the company I have our Chief Executive Officer, Tim banker, and Chief Financial Officer Raster Dude.
Following Tim and Ralph's comments today, we will have a question and answer session in order to allow everyone. The opportunity to participate we do ask that you limit yourself to one question and one follow up at a time and then fall back into the queue for any additional questions as referenced on slide two during this call we will be discussing some non.
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 annual report on Form 10-K, 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 Good morning, and thank you all for joining us and my remarks today I'll touch on two topics first I'll summarize the quarter and how we saw encouraging sequential improvement in our senior business during the OBP compared to AEP.
Second I'll provide an update on the strategic redesign we discussed on our last call.
It's certainly too early to declare victory, but we observed tangible improvement over the past quarter due to our preliminary actions, which gives us confidence of lower growth returns focused strategy is the best way to capitalize on the significant value opportunity, we still see in Medicare advantage distribution.
With that let's start on slide three with highlights from our fiscal third quarter as I noted, our senior business performed better than OHP as compared to AEP across a number of key performance indicators, our agents delivered higher conversion rates driven primarily by more comprehensive onboarding training and longer agent tenure again.
Early days, but this observed close rate improvement supports our plan to hire earlier and carry a higher mix of tenured core agents in future seasons. The second operating highlights and our senior business was a significant improvement in marketing costs, driven by our decision to optimize marketing partners and refine customer segmentation and targeting.
Additionally, better conversion rates by our agents helped reduce cost per approved policy and overall marketing efficiency lastly.
Lastly, going forward, we are placing even greater emphasis on the cash flow and profitability of our business and we are pleased with our early actions to reduce costs as part of our developed plan that should yield over $200 million of cost savings, excluding select Rx about 20% of that total comes from fixed cost reductions.
<unk> implemented during the quarter, we will provide more detail on those actions in a minute, but again. These are early steps gives us increased conviction in our redesign path to profitability.
Turning to our financials for the quarter was better than our expectations driven largely by the actions I just summarize our revenue totaled $275 million up 4% compared to a year ago and our adjusted EBITDA for the quarter was $13 million compressed primarily because of the year over year pressure on Ma Ltvs.
Lastly, our population health and select Rx businesses continued their momentum in the quarter. We ended the third quarter with around 20000 active select Rx members now total over 23000 active members as of April 30, we remain very confident in our ability to surpass 25000 members by the end of fiscal 2020.
Two that would equate to more than a tenfold increase in pharmacy members. Since we first acquired the business in May of 2021 and demonstrates the potential of a comprehensive health care services platform. We are building to drive significant future revenue and profitability to our business.
It is also important to understand our population health initiatives are much broader than just prescription drugs and select Rx our holistic approach and partnering the diverse set of leading health care service providers will continue to differentiate select club as well as deepen our relationships with policyholders and carriers, while many of the service.
Beyond select Rx are not yet significant revenue drivers and explicit sense. We believe these diverse services will drive new revenue streams and deeper relationships with our customers carriers and providers over time, and ultimately boost our returns and profitability.
On slide four I'd like to review, our ongoing strategy and provide detail on progress we have made thus far.
Is worth reiterating that the remainder of fiscal 2022 and next season will be a transition year for select quote that said, we've become increasingly confident in our plan over the past 90 days based upon the early impact we have seen in our results.
As you can see here our strategy encompasses four core pillars, which are all focused on improving <unk> profitability and the predictability of our returns at left we're committed to a growth strategy prioritizing returns visibility and growing cash flow over a volume to be clear, we believe the opportunity remains large.
<unk> and long tailed and our senior business that said years of 100% plus growth in policies are candidly less likely in our future and as we've noted our initial policy forecast for 2023 assumes a year over year decline in submitted policies to rightsize our organization at.
That point leads to the second component of our strategy, which is to mitigate our operational risk or effectively reduce our operating leverage as we noted last quarter. We are committed to a senior business strategy that can produce attractive returns in a wide range of environments. Clearly the 2021 AEP season was unique but we believe the cost savings we have.
<unk>, thus far we will go a long way in ensuring better returns even during challenging seasons.
At this point the bulk of the $200 million, we have identified will come from lower growth in variable costs.
I want to emphasize that we will remain focused on high return on investment capital allocation in the quarters ahead, you can expect updates across a number of these initiatives, including agent hiring onboarding marketing and our G&A.
Perhaps even more importantly, the planned pullback in Medicare policy production allows us to refine our sales marketing and operational approach, placing greater focus on cash efficiency profitability and writing business with greater potential to persist over the long term for example, we plan to take a more conservative approach to our recruiting.
Training and Onboarding of new agents, ensuring all will be fully prepared for the AEP busy season, we anticipate by next AEP, Our agent force will be a more tenured group and the 2021 AEP team.
<unk> also allows us to reassess and optimize our training tools and systems that support our agents and their important role of advising customers on the best plan for their unique needs and the pullback allows us to optimize our marketing sources and to refine our targeting to focus more investment on the highest LTV producing lead sources going forward.
If we move to the next pillar, we continue to make more conservatism into our expectations for LTV recall from our last quarter, we significantly increased our constraint from 6% to 15%.
In addition, lower persistency in each of the recent cohorts has been incorporated into our LTV accounting Ralph will expand on this point. The key takeaway is that while we cannot confirm LTV as a bottom we believe volatility going forward has been significantly reduced.
While we're still in the very early stages of layering in additional retention focused operational improvements. Following AEP. We are encouraged by the early indicators, we're seeing from some of our efforts for instance to layering in more and more refined customer targeting based upon revised datasets and optimizations of our marketing sources aided in our conversion rates and.
The third quarter, and we believe that we will eventually see observable improvements and persistency with these customers over the long term.
Lastly, as I noted before the update on select Rx, we believe our differentiated approach to broader healthcare services will create a significant competitive advantage in the years ahead from select Rx to the creation of our health care Advisory Board to the growing number of services, we and our partners provide the customers select what should become stickier.
And more important relationship customers carriers and providers, we're excited to share more about these growing capabilities in the quarters and years ahead.
Lastly, let me turn to slide five to briefly describe some of the key differences we observed between the challenging AEP of last quarter and the recent AEP season, we know it can be difficult to track trends in our business, especially in the season as unique as this past one to be clear, we're not providing this detail to suggest an ongoing trend, but instead want to give.
Context, especially as it relates to the impact of our new strategy.
First we saw a significant improvement in our marketing costs per approved policy, which decreased 27% year over year as I noted less competition likely had some impact but more importantly, we realized benefits from our work to optimize our marketing to target higher return policy holders.
Next the more season agent workforce and OUP relative to AEP confirmed our strategy to onboard and train earlier next season.
We leveraged the interval between the conclusion of AEP and the startup AEP to provide additional product and sales training to our agents and to fine tune our plan recommendation engine.
And we feel the conversion rate improvements we saw during third quarter demonstrate that these investments helped clearly a tight labor market impacted our 2022 season that regardless of the recruiting environment. We believe we can drive better productivity and conversion rates in future seasons with earlier Onboarding and training.
Third as I highlighted before we have already identified significant cost savings and will continue to optimize our platform to drive sustainable scale and profitability.
Lastly, we are most encouraged by the progress we continue to see in select Rx and our broader population health initiatives. We continued our strong select Rx customer growth momentum and ended April with over 23000 active members, we look forward to sharing more including our forward growth expectation in the coming quarters.
That said overall, we believe the biggest benefit to our business will come from our differentiated value proposition as we continue to evolve from a pure play insurance distributor to a comprehensive health care services platform addressing that far greater range of our customers health needs to conclude my prepared remarks, I'll summarize by noting.
While our work is far from finished we are pleased with the progress demonstrated in the quarter and have growing conviction in the value of our company can generate for shareholders in the future with.
With that let me turn the call over to Ralph to review our financial results.
Thanks, Tim turning to slide six and our consolidated results.
Our last earnings call, we did say that while the margins of the business and certainly been compressed. We believe there are meaningful changes we can make that will have a positive impact on the senior distribution business going forward and this quarter. We started to see some of the early benefits, especially around marketing efficiency and close rates.
Consolidated revenue for the third quarter with $275 million and consolidated adjusted EBITDA was $13 million.
Revenue was driven by growth in our senior business, which we will discuss later.
Offset by a reduction in our life business driven by lower term life premium, which was the result of fewer agents and continued COVID-19 pressure on conversion of sold policies enforced policies.
Our auto and home revenue was flat year over year.
While we did see significant improvement in per unit operating expenses, and our senior distribution business down 19% year over year to 32% decrease in revenue per crude policy more than offset the expense savings.
That plus the investment, we're making to grow population health and select Rx, specifically negatively impacted adjusted EBITDA year over year.
During the quarter, we took certain actions to cut fixed and variable costs out of the business.
Excluding select Rx, we expect our fiscal 'twenty three overall operating cost will be over $200 million lower than fiscal 2002 as a result of these actions and the lower policy production, we are expecting for next year.
We also made significant progress in scaling select Rx, which I will also touch on later.
With that let me now get into our senior operating results for the quarter.
Turning to slide seven.
We grew our total approved policy is 33% and our and they approved policies 48%.
The M&A policy growth was driven by more agents and better close rates year over year.
This was the reversal of the trend we saw during AEP.
Some of this was driven by a less competitive marketing environment optimization of our marketing sources and the benefit of significant training, we have done with our agent force, especially cross agents. We saw the biggest improvement in close rates relative to the trends we saw during AEP.
And the Ltvs were down year over year as a result of the factors, we spoke about last quarter, lower persistency higher provisions and higher constrained.
We did continue to see pressure relative to first term lapse rates and increased the first tier provision for policies sold this quarter.
Identified multiple opportunities to address continued persistency and entering new or lapsed pressure and implemented some of these initiatives towards the end of the quarter.
While we believe these actions can have a positive impact it is too early to tell and we expect the impact of higher entry year lapse rates during OAP will weigh on lapses for the remainder of the year.
Per policy sold in the second year and beyond.
We are seeing modest overall improvements in entry and lap this year over year concentrated in years, two and three.
Still higher than our original expectations.
Now moving on to operating costs, while it may not be apparent because of the impact that lower LTV has on profitability, we made significant progress on operating more efficiently.
Per unit operating cost for our distribution business, excluding population health and select Rx, we're down around 19% or $190 to around $840. The majority of this improvement was driven by lower marketing costs, which were down about 27%. This improvement was driven by much more efficient manner.
Operating across the whole funnel, including lower cost per leads and higher year over year conversion rates driven by some of the actions I described above.
With respect to the cohort tail adjustment that we took last quarter. We don't currently expect to take any further negative adjustments relative to that calculation for this year's renewals when we formally recalculate the number in the fourth quarter.
Now if we turn to slide eight let me provide an.
Update on the significant progress we've made growing our select Rx pharmacy business, we continue to see the high level of consumer interest in and demand for the pharmacy services. We offer we ended our second quarter with nearly 8000 members.
As of the end of April we have now exceeded 23000 members. This demand was generated almost entirely from enrollment in new and existing select quote Medicare advantage customers very low incremental acquisition cost of the company.
We remain excited about the positive and predictable cash flow impact. This business can have on our overall results and we remain confident with our forecast to exit this fiscal year with over 25000 active select Rx numbers.
10 times, what we started the year with.
That number base would equate to a run rate of over $150 million of revenue in fiscal 'twenty, three even without adding any net new incremental members in fiscal 'twenty three.
Now if we move to slide nine let me provide an update on our capital position.
Although the second quarter is always our biggest quarter for use of cash as we have all the expenses of operating during AEP marketing costs until they can commissions beginning in the third quarter, we start collecting the cash from first year commissions associated with AEP activity.
For the quarter, we generated approximately $21 million of cash from operations. In addition, we used approximately $9 million of cash for Capex as of March 31, 2022, we ended the quarter with $199 million of cash and $715 million of debt.
We also ended the quarter with $1 billion of accounts receivable and short and long term commissions receivable balances.
Finally, before I turn the call back to the operator for your questions I'd like to comment on our guidance for fiscal 'twenty two.
I noted earlier, we are encouraged by the initial progress we have made on our positive results for the third quarter.
Generally we do not expect trends differ meaningfully in the fourth quarter relative to the third quarter.
That said, we will not be updating our fiscal year 2022 guidance at this point and instead are more focused on our fiscal 'twenty three and beyond we plan to share our specific deals with you on next quarter's earnings call.
Let's get to your questions operator.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please stand Bob will begin the Q&A roster.
Your first question comes from the line of Daniel <unk> with Citi.
Hi, guys. Thanks for taking the question.
Just want to stick on that reiteration of guidance, particularly on EBITDA and net income because you did outperform.
Pretty significantly on those two line items this quarter.
Really in the senior segment that outperformance really came through.
I'm curious was there any one time benefit in the third quarter two senior profitability.
That's not going to repeat and can you just kind of walk us through.
The cadence for <unk> of EBITDA in that pretty steep decline a reiteration of guidance implies on.
<unk> EBITDA.
Yeah, maybe I'll take that one.
We're obviously encouraged by the performance of the business in the third quarter, certainly relative to our revised expectations.
We decided to leave the guidance unchanged as quite frankly, we're much more focused on developing the plan for fiscal 'twenty three and beyond.
We plan to share our fourth quarter earnings call.
I think it's important though to be very very clear that leaving the guidance unchanged.
<unk> is not a signal about the fourth quarter performance.
And there were no sort of onetime benefits in the third quarter.
The trends that we're seeing so far in the fourth quarter are not meaningfully different than what we saw in the third quarter. So I wouldn't read more into that and just being conservative.
Yeah.
Understood, Okay and then.
Encouraging trends in marketing and you mentioned less competition for leads which is good but also optimizing your marketing channels. I was curious if you can dig into that latter point a little more are you shifting away from certain areas, perhaps direct TV direct mailers to other more.
<unk>.
Marketing channels, what are those productive marketing channels and really after that CMS came out with some new rules that.
Seem pretty prescriptive on how your agents will have to speak to Medicare members, particularly with.
Stark language at the beginning of the call curious how youre thinking about some of these new rules for for marketing and EBIT scripts for fiscal 'twenty, three and how that might impact productivity next year.
Yes. So this is bill I'll take that.
Certainly as it relates to marketing I would say we saw benefit in a number of areas. During during no EPS, one we had fewer agents.
In terms of kind of the number of miles we had to feed so to speak.
That we were delivering so that gives us and our marketing team more ability to optimize the funnel.
We had new data sets and learning so we're able to take a lot of what we saw during AEP and as Tim mentioned in the opening remarks. It was a unique AEP. So we were able to layer in and our data science team did a great job layering in these new datasets and really working with our marketing team to optimize what we were buying.
<unk>.
And I would say to your question around when you look at optimizing what we were buying what does that mean are we cutting out channels or not.
No not really we kind of look at it like that we still want a very wide funnel within those channels, there's varying degrees of goodness and Mt.
Amount, we might cut within a channel. So there may be one channel that.
Is 90% good and then ultimately we can.
Let through the funnel and there may be another channel. We're only 10% is good and we let through the funnel. So we layered on a lot of those things and again, our marketing team did a really good job along with data types of getting those things in place and I think last.
To comment some of the things that we did in regards to retraining, which Tim spoke about earlier with our agents themselves and making sure that they were really up to speed on the benefit the benefit of this year's plans.
<unk> made a significant.
<unk> difference in being able to convert the raw marketing material as it pertains to the CMS things, we feel like we're very well prepared.
In terms of already a lot of the things that we do within our <unk>.
Within our scripts and the marketing changes are really more around.
Things that you would see in online presentations in terms of the the order in which that they present plans, which for US. We've always been commission agnostic and are always going to go to the best plan for the consumer so really no effect there.
That we see and we're well prepared on that front.
Got it I appreciate the color. Thank you guys.
Your next question comes from the line of Jeff Garrow with Piper Sandler.
Yes, good morning, and thanks for taking the questions wanted to ask about the planned pullback in MAA submissions for FY 'twenty three.
The factors over the next couple of months that will influence the magnitude of that pullback you've signal.
Yes, Jeff This is Tim good morning, and I think we're.
Definitely pleased with the progress that we're making.
On the operational front, obviously, we think in light of.
Current market conditions, it's made sense to pull back a bit and really optimize I think we highlighted on the prepared remarks, we are seeing a lot of really good early signs around what we're doing with respect to marketing optimization and segmentation.
A lot of good work done on the sales side on retraining, we're going to come into next year with a much higher percentage of.
<unk> co.
Core tenured agents as opposed to more historically, a higher percentage of flex agents, we think theres. Some natural benefits from that a lot of good work that we're doing on the on the carrier side really.
This is a drive for us to get.
Cash EBITDA breakeven moving forward, we look forward to providing more specifics on that.
The fiscal 'twenty as regard we provide in August .
Got it thanks for that and to follow up maybe ask a little bit more on the 200 million in expense reductions might be helpful. For us if you could give a little more detail how that 200 million breaks down across the the different line items in your P&L.
Yeah.
I'll start maybe perhaps provide some additional detail.
We just mentioned I think it makes sense, but.
It's a pullback and really focus our attention on cash flow unit economics.
In total we're going to move about $200 million of run rate cost savings in fiscal 'twenty three excluding the necessary investment in select Rx, which is very cash generative.
That's a total of both variable sales and marketing costs those are our biggest.
Cost driver our people and leads if you will.
But we'd also note as part of that $200 million, we did identify about $40 million of fixed expenses.
We're going to start to realize some benefits as early as this fiscal fourth quarter, Ralph anything you want to double click down on.
I guess just to reiterate the biggest part of that savings is going to be on the marketing side.
Probably two thirds or so.
The savings followed by agent head count fulfillment and then what.
So.
Yeah.
Great that helps thanks again.
Thanks Chip.
Your next question comes from the line of Jonathan Young with Credit Suisse.
Hey, Thanks for taking my question I guess just in relation to the pullback in marketing spend that you're talking about are there any concerns that the pullback maybe too much where you may actually end up stealing market share.
Amongst the Mcs have also talked about bulking up their own marketing capacity and internal sales force.
Hey, Jonathan This is Tom I'll also personnel maybe ask.
All the comments.
I think in any scenario, we're going to continue to be a very significant and critical part of carrier distribution.
This is a business that has historically policy growth of three year CAGR north of 80% so.
Even though we pulled back it's going to be a very.
Significant player relative to almost anyone in the industry.
We continue to see.
Significant amount of momentum with our carriers I know theres been chatter in the industry about their commitment to direct to consumer we're certainly not seeing any of that pullback vague remained very strongly.
Strongly committed and aligned to select quote compensation. So no changes there quite frankly looking to continue to expand with our high quality model. So I think we're in you can.
Very good shape, there Bob anything you'd like to comment on.
No I think that was really well said and I think just simply put no are we are not concerned about that.
Right now we've had really good conversations with the carriers about it's that focus on quality 98 persistence in all of the things that we are our doing so.
Bolster the quality of the policies carriers are extremely supportive and understand.
What that looks like and really could come with a it's obviously a decline in the overall number of submissions not as big of a decline in the overall number.
Approved I'm sorry.
Active policies there.
Okay.
And then just in terms of.
Our marketing spend again.
Everyone's kind of talked about optimizing their spending going to specific marketing channels. I guess is there a concern that everyone may end up flooding a specific channel that they believe to be the two had the highest return on them.
Im planning to attack any thoughts there.
I think that we're really well positioned to be able to deal with that with our approach because we're not narrowing down too.
Two eight to single channel like we're not saying, hey, we're eliminating television or we're eliminating some other source I'd be concerned about it for us. If we were saying okay were solely going to rely on on one of those but our attitude is more hey, let's expand the number of channels kind of when you look at the top but let.
Titan ultimately, what we actually let through the funnel. So we've got an extremely tight ultimately we'll look at a lot, but will only kind of consume a certain amount where very specific now about.
Really what we've layered on in terms of our algorithms on what we'll buy and what will take so will only take five.
5% of a certain channel.
Or maybe 10% depending on kind of the quality, that's coming through but we certainly think that by remaining open and using kind of data to decide what we buy with the channel will be kind of a winning approach.
Great. Thanks.
And as a reminder, if you would like to ask a question. Please press Star then one on your Touchtone phone.
Our next question comes from the line of Mayor Shields with K B W.
Hey, Good morning, guys. This is Tommy joint on for Meir, Thanks for taking our questions here.
Just wanted to clarify on the $200 million is it meant to say that 80% of that is variable kind of the marketing and 20% is fixed and then is that 20% or $40 million of that implies of fixed costs already action in terms of the takeouts are those just identified in the third quarter.
Yes, no great question, so 80% is variable and the biggest piece of that is marketing, but theres obviously.
Agent cost reductions there just based on the pullback that we're expecting next year year over year policy production, and then corresponding fulfillment as well.
So it's a mix of all those things, but marketing is the biggest piece of the fixed and then on the <unk>.
Sorry, and then on the fixed side.
Yes, we took some actions in the third quarter.
To drive the vast majority of those fixed cost savings.
They're not necessarily reflected in the full quarter results, but will start being reflected starting this quarter.
Great. Thanks for clarifying that and then switching over could you talk about the expected increase in spend with select Rx as that continues to grow and just how did the benefits of scale improve those economics over time.
Yeah I'll start there I think we're very pleased with the.
Progress in select Rx I think.
We're becoming more and more confident.
About the potential of that business as we stated 23000 active paying members.
We're confident about the ability to exceed our original goal of 25000 members by the end of fiscal 'twenty two.
Tenfold increase in a very short period of time I think it really demonstrates.
Tangible way the potential we have them on health care services, Bob do you want to speak to other <unk>.
Our metrics and things around the scale of the business.
Yes, there is.
Some dollars that go into that growth because just like that.
A more traditional kind of.
SaaS or delivery business right you have to plan for the growth. That's ahead. So it's got lower margins to your point as you're scaling, but then it gets to a more stable place I'll, let rob speak to what percentage that is but it's still an extremely cash efficient business.
When you look at it and those margins expand pretty quickly through the life of a customer and the <unk>.
Hey back period is pretty fast wrapped you want to comment on payback and then ultimately what those margins look like.
Yes, I guess certainly in new member, we still expect to be cash flow positive within the first year.
As we are scaling the business and as new members represent a very large percent of the overall book.
That obviously weighs on margins in the short and medium term, but as the business grows over time and new members added.
<unk> percentage of the overall membership base.
Most of the cost outside of drug costs really are geared towards onboarding new customers.
And so as that percentage goes down over time.
We will increase from there.
We also expect to get some drug margin.
Scale benefits as we continue to scale the business.
Great. Thanks for taking questions.
Your next question comes from the line of Jim Masako with Factset.
And Jim Your line is open.
Hi, This is actually Joe on for Elizabeth Anderson from Evercore.
Apologies for that.
Maybe just.
Asking a bit about the life business in the quarter.
Life business EBITDA was.
A little bit weak in the quarter was there anything that in particular that caused that.
And then kind of how are you thinking about it in <unk> and then just a quick follow up.
After that.
So maybe I'll touch on that.
First.
So the life life business is predominantly driven by our legacy term life part of that business, which is actually consistent with our expectations during the quarter.
The third quarter is seasonally a strong quarter for sales. So we have cost and specifically in marketing in the third quarter that drives fourth quarter revenue.
In terms of the third quarter revenue, we had less agents selling year over year during our second quarter and given the three months lag between upfront sale and enforce policy that impacted the third quarter revenue and hence some of the profitability of the third quarter.
It was also compounded by continued COVID-19 pressures.
Early in the quarter with the rise of omni crime that impacted our enforced conversion rates. So.
Paramount examiner visits that were impacted by that.
I think those <unk> also had staffing issues.
And some of the carriers had processing delays. So we did start to see some of those pressures improved towards the end of the quarter.
And.
And then the fourth quarter Youll see that the.
Instead of the benefit of the seasonal selling season within the third quarter Bill anything that you would add to that.
No I would say just to reemphasize I mean COVID-19 certainly.
Has impacted the term life business.
Fairly significantly and when you look at kind of the I would say twofold right you have.
Getting in People's homes, which people were very reluctant lots of cancellations in our exams delays in what we call our cri.
Yes, which is basically taking moving that to.
Moving that along in the funnel was delayed and then you had major kind of staffing issues beyond that.
That existed in a tough labor with a lot of the carriers actually processing some of that.
<unk> seen some very positive signs as we kind of got out or getting out of what feels like a light at the end of the tunnel.
With.
The decline with kind of with Covid and feel like we're pretty optimistic that.
We can get back to kind of where we were traditionally on how those that business move through the funnel.
Thank you for that that's Super helpful. And then maybe just as a quick follow up.
Obviously, the conversion rate was strong within senior.
I think there had been a trend to try to have some more tenured agents potentially flex between different divisions within the business was there any element of shifting some of those more tenured maybe traditional life agents over into senior knowing those dynamics were kind of <unk>.
<unk> within life.
Within the period.
No. Good question, but no that was not due to shifting really the tenured agent percentage. We're talking that was just more of a steep cut should that flex group retraining of kind of the lower performing flex agents and then ultimately really optimizing the way we did.
Liver also if you look through our productivity.
We actually were mildly down year over year with the with the large decline in.
And cost per acquisition and Thats, because we did limit more of lead volume to our lower performing agents given kind of some of the economic pressure and things like that which did drive.
Our CPE.
CPA down so.
Really really pleased with the results there on what that looks like also pleased with what that means for the future as that kind of what we what we had on paper came true.
In that.
Q3, so I feel really strong about what we can do with that but that was not due to flex.
Oh, well thank you congrats on the quarter.
Thank you.
That concludes our question and answer session I will now turn the call back over to Tim Baker for closing remarks.
Yes. Thank you all again for joining us this morning to recap, we're really proud of the early results of the strategy update I think most notably the sequential improvements we've seen in OAP certainly the momentum we have in select Rx.
I noted, yes, like what will continue to transition over the course of this year next but overall, we're very encouraged by the early results of the actions. We're taking we look forward to sharing more about our progress on the quarters add thank you very much have a great day.
This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
Yes.
Sure.
Okay.
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Sure.
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Hello.