Q3 2023 SelectQuote Inc Earnings Call
Hello, everyone and welcome to select <unk> third quarter earnings Conference call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there'll be a question and answer session.
If you'd like to ask a question. During this time simply press star followed by one on your telephone keypad.
If you'd like to withdraw your question Star.
Star followed by two.
Now my pleasure to introduce Gunther select quote Investor Relations Ms. <unk> you may begin the 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 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 climate.
Following <unk>, 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 maybe 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.
<unk> annual report on Form 10-K quarterly report on Form 10-Q for the period ended March 31, 2023, 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.
Good morning, and thank you all for joining the call as you saw on our press release select both delivered a strong third quarter and continues to post results that are better than internal forecast.
Management and the board Couldnt be more pleased with the execution against the strategic redesign and the continued momentum from AEP into OLED, which is our second highest volume quarter of the year.
Better yet we've driven consistent improvement in results over the past five quarters and firmly believe the company is well positioned to produce more predictable profitable and cash accretive growth in the quarters and years ahead.
That all said the past few weeks have driven a lot of confusion in the market about the Medicare advantage industry I'd like to address some of those topics upfront in my remarks, which we hope will be helpful, especially in considering the significant achievements. We've made this year and plan to build upon in the years ahead.
Our value to the Medicare advantage insurance carriers is critical when viewed through the lens of volume capacity and scale not all brokers in our industry are created equal and we firmly believe <unk> value as a significant source of quality volume is durable and strategic to the Medicare advantage insurers. We know this because of the.
Ongoing planning, we're doing jointly with our carrier partners for the upcoming season and the role we expect to serve for America's seniors to.
To that point, well care recently named select quote to its deferred sales and distribution partner program, which we feel serves as evidence of our select codes differentiated agent and data focused approach generates scaled volume of high quality. This competitive advantage and value is recognized by each of our carrier.
Partners and we believe will be a market share generative difference for our company in the future.
Second shopping or switching behavior by certain Medicare advantage customers does occur is one of our carrier partners noted this quarter. We've known this since the inception of our senior business and it's important to remember that a key pillar of select what strategy redesign over the past year was to refocus marketing and lead routing based on data that.
Rates with persistent policyholder behavior.
Simply put we have better line of sight and the ability to impact results than perceived by investors.
This strategic tenant is one of the major drivers of the improved financial results, we achieved in fiscal 2023.
Lastly regarding the rule as proposed by CMS in December last year.
<unk> has consistently excelled in compliance and customer service.
To my planning comment just a second ago, we're working closely with our carrier partners to ensure that any necessary changes are incorporated in our joint strategy for the upcoming season.
Remember CMS regularly updates rules and we and our carriers are accustom to intra season changes as part of our normal preparation.
Ultimately, we agree with industry comments that the new proposed rules will drive better quality and rational competition in our industry, which again should result in increased share for select quote.
To summarize contrary to the noise in the equity markets like what has made material progress in the past year relative to our strategic goals and the company has never been better positioned across all business lines to drive profitability cash flow and significant shareholder value, especially from these levels.
With that as a preamble lets discuss like halt and our very strong results for the quarter.
If we begin on slide three let's review, our consolidated results and highlights for the quarter.
Last quarter, our results were better than expected across the board consolidated revenue of $299 million and adjusted EBITDA of $44 million.
It's driven by our strategy to deliver operating improvements and follow through from our strong AEP.
Key performance indicators for our core senior business were incrementally better for the fifth consecutive quarter highlighted by agent close rates, improving 12% marketing cost per approved policy down, 17% and total cost per approved policy better by 12% year over year.
As important to recall that we took significant action following our results in AEP 2021 to reconfigure our sales agent force and deploy those tenured agents at leads generated by refocused marketing and targeting.
These efforts yielded significant improvements in close rates and other key metrics last AEP, despite significantly tougher comps on close rates and expense metrics, we still delivered year over year improvement again this quarter as.
As noted over the past year, we hold ourselves to a standard of continuous improvement going forward, but there is a firm foundation for our company to stand on and we're excited to deliver on the potential that we know our platform is capable of.
Our senior business also continues to demonstrate better stability and policyholder retention, which you'll recall is a key focus of our strategy retention rates of increase largely because of the strength of our customer underwriting as a result, our MAA ltvs increased 11% sequentially or 3% year over year to $965.
And year to date approval rates for new policies are up about 450 basis points compared to a year ago, Bryan will speak to this in more detail, but fourth quarter Ltvs are estimated to come in sequentially lower due to normal seasonality, it's still better year over year. This gives us growing conviction that we will hit our $875.
Our full fiscal year LTV guide.
Probably most encouraging we are seeing the actions that we took on the sales marketing and operational fronts to improve new business retention rates really start to take rates.
Year to date, we have observed meaningful improvements in both the leading indicators such as our customer risk, scoring algorithm as well as lagging indicators such as policy approval rates and 90 day active customer rates, while customer retention will remain an ongoing focus we are encouraged by the progress we're making.
In our healthcare services segment select Rx continues to show broad based adoption with nearly 45000 members.
Pleased with the sequential growth, but would remind everyone of the strategic decision to slow growth from here to prioritize profitability.
To that point, we've already seen that effort yield results as health care services revenue for the quarter more than tripled year over year to $71 million and we remain well on track to approach breakeven as we head into fiscal 2020 core.
It's worth noting the cash collection for the business is highly efficient. Furthermore, as the Rx business and customer base matures, our ability to improve margins and cash flow on an incremental customer basis becomes significantly more attractive.
Overall, we believe the healthcare services segment headlined by select Rx represents a defining proof point to the synergy of our customer focused model and the information value we provide to both the health care insurance and care provider industries.
High level of synergy between our MA distribution and health care services platforms is truly unique for the industry and demonstrates the long term value creation potential select click and deliver.
The ultimate proof will be in the future profitability and scale, we see possible within such a large addressable market.
Where we sit today the opportunity to improve the lives of Americans over 60 million seniors is as compelling as it is rewarding.
Lastly, as highlighted in the release, we are increasing our full year fiscal 2023 guidance ranges to $950 million to $970 million in revenue and $40 million to $50 million and adjusted EBITDA at the respective midpoint for background. The new guidance represents a $60 million increase the revenue.
And a $50 million increase for adjusted EBITDA at the midpoint from our original guide given during the fiscal fourth quarter of 2022.
As one important additional note we would emphasize select quote is now ahead of schedule and our goal to drive positive cash EBITDA for fiscal 2023 again, a good step forward in what we believe is just the beginning of what our model can achieve.
If we turn to slide four let's review the key performance indicators for our core senior FMA business.
As planned we slowed growth year over year, but were happy to produce policy counts above our internal forecast for <unk> based on the efficiency generated by our strategic redesign.
<unk> generated 166000, MA policies at an LTV of $965.
<unk> TV pick up of 3% was primarily driven by carrier mix and improved persistency similar to our experience in AEP.
The key takeaway from our view is that these metrics have improved significantly both in terms of predictability and stability remember that a key priority of the strategic redesign was to build processes that can be scaled while ensuring profitable return on invested capital and cash flow.
Our results through this year's AEP and <unk> did just that and our ability to onboard more policies than originally expected was a meaningful validation of the strategy.
We firmly believe <unk> has built industry, leading durability and our newly originated policies given observed improvement in persistency as well as the 15% constraint we apply in our modeling we will detail. The changes we have made and our policy on boarding and mix, but the most important point is that we have a much higher degree of confidence.
And our book to Ltvs.
<unk> commissions receivables and the ability to produce compelling returns than ever before.
If we turn to slide five let me give some additional detail on the key metrics that drove our success in senior profitability and LCB stability.
Present, these metrics on an LTM basis to illustrate the fact that our redesign strategy can and has produced steady sustainable results over several periods not just within a single given quarter.
First on the left side of the page, we delivered another quarter of significant year over year reduction in operating expense per approved policy, which includes the two major cost of our business agents and marketing operating cost per approved policy decreased 12% year over year and 29% on a trailing 12 month basis.
In the middle of the page, we isolate our marketing expense per policy, which improved 17% year over year and 36% on an LTM basis.
Recall last quarter, we generated a 50% improvement over the same period.
This period were driven primarily by our tighter screening and focus on quality leads and customers. These are very encouraging metrics, which allowed us to scale higher volumes than originally forecasted movie.
Moving right our agent close rates were approximately 28% higher year over year on an LTM basis. The improvement is primarily a function of our strategy execution. The season highlighted by earlier hiring ahead of AEP and a much higher mix of core tenured agents. These initiatives drove substantial gains in agent efficiency, which we believe.
<unk> durable in a range of Medicare advantage seasons as mentioned in previous quarters. The important takeaway from both the year over year and LTM results is that our strategy is producing policies at costs that drive very attractive returns.
The reduction in our operating cost metric as the key driver behind the 32% EBITDA margin generated this quarter for the senior division for.
For a point of reference that margin and a 37% margin achieved in the second quarter compares similarly to margins produced in fiscal 2021 that had ltvs that are nearly 30% lower.
To reiterate the point, we feel really good about the durability, we have built into our core senior returns and see a lot of opportunity to do the same in the future.
Turning to slide six let's take a minute to review the improvements in retention metrics since implementing our strategic redesign last fourth quarter.
While select quote has adopted a continuous improvement approach within our ongoing operations, we're very proud with the progress made to date.
Our efforts over the last several quarters position, the senior distribution business well to deliver compelling returns and results within a wide range of selling environment.
Again, with our segmentation and consumer targeting efforts developed by our data science team.
By analyzing dozens of qualitative and quantitative factors our models are able to segment consumers into various transactional categories based on lifetime persistency estimates.
We estimate that higher transactional consumer segments demonstrate 90 day lapse rates that are more than double the rates of lower transactional categories. Clearly a material difference year to date the mix of our high transactional category decreased by 19% compared to year to date fiscal 2022.
In addition, the very high transactional category, which has the highest 90 day lapse rates decreased by more than 70% over the same period. These positive changes in mix are driven by new target marketing tools and a higher quality lead routing to our best agents.
A year over year increase in the mix of tenured agents also benefited our retention during the 2022 AEP selling season tenured agents represented 70% of the overall mix versus just 20% during the 2021 AEP season.
As we've discussed in the past tenured agents have materially higher approval rates and 90 day active rates compared to non tenured agents that being said improved agent Onboarding and training tools. I've also led to increased productivity and retention metrics amongst our flex force will continue to play a critical role in our ability to scale.
Ill during peak periods.
This change in mix and enhanced training efforts and helped drive a 450 basis point improvement in overall approval rates since the start of our redesign efforts.
Post approval. We are also seeing an increase in 90 day active rates of about 875 basis points over the same period.
Similar to AEP the lion's share of these improvements can be tied to our new tools, which drive a better mix and quality of policies produce more so than to the overall strength of this year's Medicare advantage season.
With that let me formally congratulate our CFO Ryan format, who is officially appointed back in February .
As you all know the announcement was largely a formality given how integral Ryan has been to select quote that said the title has more than earned and we're lucky to have him.
Let me turn the call over to review our financial results in more detail Brian .
Thanks, Tim and as you well know I'm very excited to continue our work to leverage select coats model and drive the growth in value. We all know is achievable with that I'll begin on slide seven with a review of our consolidated financial results as Tim noted it was another strong quarter for select with revenue growth of 9% to 299.
10 million. This is the third highest revenue quarter in company history and trials in the second highest from last quarter by just $20 million. The reason for the comparison versus last quarter is the highlight select quote is not only improves the quality of our core senior business, where we.
<unk> also made great strides to reduce the volatility and seasonality in our overall financials with the growth of our health care services business.
Increasing visibility and generating consistent returns through a range of Medicare advantage season is a critical ask from our investors and we're very pleased to have delivered on that ask the season, and even intra quarter from AEP to OSB.
To that point, our profitability of $44 million and adjusted EBITDA represents a consolidated margin of 15%, which has significantly improved despite the drag from our ramping health care services business, which I will summarize in a moment.
If we move to slide eight you can see the financial performance and our senior business.
Tim mentioned the planned step down in growth was again smaller than expected driven by the efficiency and persistency gains our model has achieved to date are.
Our senior revenue of $185 million, while lower year over year. It was still the second highest in company history and its also all the more impressive is the LTV is associated with these revenues are nearly 30% lower compared to the revenues booked pre 2022.
Can you reiterate Tim's point.
There is a lot of excitement in the organization about select codes ability to drive highly profitable unit economics with a greater mix of core tenured agents and refocused customer targeting.
The positive surprise for us this year has been our ability to scale higher volume without taking marginal risk, which we believe is very encouraging for both select and the overall industry.
While our results from the redesign have led to strong efficiency and topline performance we.
We remain disciplined on the expense front as we move to the right of the page the senior Division delivered 32% adjusted EBITDA margin in the quarter, which is roughly on par with our historic peak profitability.
<unk> 9 million and adjusted EBITDA represents year over year growth of 48%, which is impressive in our view given in a policy volumes were 16% lower year over year.
That's an important comparison to reflect on for a minute. As this is the Prime example of what our strategy aims to achieve predictable returns and cash flow in favor of growth will put another way EBITDA growth over revenue growth.
Turning to slide nine let me review the Kpis of our growing healthcare services business highlighted by select Rx as.
As we discussed last quarter, we have decelerated, new membership enrollment to accelerate scale and profitability for the business.
As a result, we would expect the number of members to stabilize in the near term, but those numbers will continue to mature.
That said <unk> now has nearly 45000 active members, which is up 14% compared to last quarter and 165% versus a year ago.
Engagement with members continues to mature and improve as well.
This penetration is best seen in our revenue growth, which is beginning to outstrip member growth based on the maturity ladder.
For instance revenue in the quarter for health care services at $71 million was up nearly 30% sequentially or double the rate of member growth.
This trend is even more pronounced year over year, where revenues expanded at an even faster pace than the rate of member growth over that period.
To Tim's prior point, the business is becoming more efficient as evidenced by the sequential improvement in quarterly adjusted EBITDA.
The progress is in line with our plan and remain confident that this segment will breakeven as we move into fiscal 2024.
As you can see in the Orange bars, we made significant strides this quarter, improving our EBIT drag by two thirds.
Lastly, it is important to note the increase in cash contribution from health care services will speak to the progress we've made on our consolidated cash efficiency in a minute, but I wanted to leave this page with three minder than our select Rx business is highly cash efficient and this efficiency will only improve as the business continues to scale and absorbed the setup in men.
Acquisition costs, we have invested in over the past year or so.
Let's now turn to slide 10, and speak to our life and auto and home segments.
Revenue in both segments was relatively unchanged compared to a year ago as we instituted the same playbook used in our senior business to focus on EBITDA growth over revenue growth.
Drilling deeper into the life segment. The results were driven primarily by a 17% year over year increase in term life premiums, which materially outpaced market growth in the low single digit range, partially offset by a decrease in final expense premiums as we continued to rightsize, our agent force and marketing efforts in line with our broader company strategy.
The strong performance in term life as a result of an optimized marketing mix that has resulted in better close rates and average premium face values in.
In addition, we are seeing strong demand for our Swift terms select offering the instant decision point of sales term life insurance product launched in partnership with <unk> life during the fourth quarter of calendar 2022.
More importantly, as mentioned, both the life and auto and home segments, followed the trend of our senior business, where an increased focus on cost efficiency drove a meaningful year over year improvement in profit contribution specifically, our combined life and auto and home divisions drove $8 million of adjusted EBITDA compared to a $2 million drag a year ago.
It's also important to note both segments are positive cash EBITDA contributors as well.
Turning to slide 11, I'd like to take a minute to speak to how select both execution against our strategic redesign has improved the cash efficiency of the business and positioned us well to deliver long term value creation for shareholders.
Starting with cash efficiency as Tim has outlined for the past year plus each of the pillars of our strategic redesign have been focused on improving select close return on investment and cash flow.
On this slide we look at the strides we've made on efficiency through three different views.
Our fiscal year to date adjusted EBITDA has improved significantly over the past year to $80 million compared to a loss of $200 million year to date during fiscal 2022.
Second on our cash EBITDA basis select quarters generated $97 million year to date, which is a material improvement over fiscal 2022.
It is important to remember that the fiscal fourth quarter will be a drag on adjusted cash EBITDA due to normal seasonality as we invest to position the business for a successful 2020 for AEP season.
As we stated previously the unit cash EBIT breakeven for this full fiscal year was a key milestone for the company and we fully expect to deliver on that promise.
Third Celesio continues to collect a higher percentage of total revenue within the first year of writing a policy year to date, we received 62% of expected senior revenues in the first year up 10 percentage points from fiscal 2022.
This dynamic increases the confidence we have in the ongoing cash generation potential of our holistic platform.
And to the point of liquidity, we ended the quarter with a cash balance totaling $92 million, which provides adequate capital to fund our plans for 2024.
So excellent also remains well positioned to deliver long term value creation for shareholders evidenced by our commission receivable balance.
Despite all of the progress made from a cash efficiency perspective, Our commission receivable balance has remained essentially flat year over year and currently stands at $822 million.
Lastly, if we move to slide 12, we are pleased to update our full year fiscal 2023 guidance ranges again on the heels of another quarter of outperformance versus internal expectations.
Tim and I have alluded to a few times in his remarks, we are very excited by the progress. We've achieved this year and are looking forward to talking more about 2020 for next quarter as we continue to leverage our strategy and scale, our healthcare services segment.
For 2023, our revenue range for the full year is now $950 to $970 million, which is up $100 million at the bottom end and up $60 million at the midpoint compared to our original guide given nine months ago.
For net loss and the same applies with a new range of 68% to $48 million, which is $45 million higher at the lower end and up $43 million at the midpoint.
Finally, our full year adjusted EBITDA range is now $40 million to $50 million of $60 million at the bottom end of the range and up $50 million at the midpoint.
Also as a footnote for the implied <unk> modeling, we remind analysts and investors our comments last quarter about investment for the 2024 season.
As a refresh based on the success of our early agent Onboarding, We plan to do more of the same to prepare us for the next year's AEP season, and as a result, there will be some pull forward of expense in the fiscal Q4 2023 compared to previous years.
Expected benefit aside from improved efficiency and policy quality will be less comparative expense drag in fiscal first half 2024.
That concludes our prepared remarks, let's get to your questions operator.
Thank you, ladies and gentlemen, if you would like to ask a question. Please press star followed by one on your telephone keypad.
Star followed by one on your telephone keypad.
To withdraw your question press the star followed by two.
I'm pleased to also remember too unmeet microphone when you turn to speak.
Okay. We have our first question comes from Jonathan Young from Credit Suisse. Jonathan Your line is now open. Please go ahead.
Hi, Thanks, and congratulations on the strong results here.
I guess to start appreciate all the commentary on the CMS marketing will kind of came out.
But I guess from your perception.
What does the rules changed for you.
I guess, how are you think about what the impact would be or is it really de minimus in your mind that.
And the carriers are going to be able to work together to really work around any issues kind of in any given year.
With this rule that came out.
Hey, Jonathan Good morning. This is Tim great to have you on the call and thank you for those high quality question.
I'll make a few comments and then maybe also ask our chief operating officer Bill Grant to speak on this but overall our perspective I would share is 100% aligned with what CMS is striving to achieve trying to improve the beneficiary experience.
Improved transparency, we also don't see a world in which everyone wants to make it more difficult for seniors to access semi.
Very custom to changes in regulation, we have been in this business for a long time and I.
I think overall the good thing is everybody wants to accomplish the same thing that transparency and choice for the consumer. So we're going to continue to work very closely as we have been with our carrier partners are working to ensure we stay lockstep on any necessary modifications, but we do feel that.
Our underlying process and approach has us very well positioned.
We view this very much as a manageable of that bill.
Yeah, I mean, I'll just echo what Tim said, we've been working with our carrier partners since kind of the initial drafts of some of the rules come out we've been navigating.
The changes for.
For years, we feel like we're in a really good position.
To be able to execute our strategy both with the changes that are.
Presented now and potential future changes so feel like we really like where we are that our model sets us up to be able to navigate those and do a variety of things to operate successfully with them any environment. So.
Okay, Great and then just turning to the low care preferred distribution partner program.
What does this mean for you and how does this make this different from your prior relationship.
We're on it.
Sure I'll start Jonathan and then hand, it off to Bob <unk>, our president.
Quickly I think overall it points to a general theme that you're seeing.
And the industry and really the managed care organizations flight to quality.
We think this validates our model our critical importance to the ecosystem.
And I think it's.
It's a proof point of our combination of quality and scale.
Bob.
Yes, good question on how will it really.
It really change our relationship and I would say.
From a distribution standpoint, it really won't because.
We obviously are a choice platform, who will distribute the policy that makes the most sense for consumers less competitive as carriers, that's really the mix that they get when it does change though.
Is really to Tim's point that flight to quality and it's a partnership on quality and experience of Onboarding, we will continue to invest with wellcare.
Team to create a greater customer experience that should improve 90 day persistence, even more than we already have and I think Tim and Ryan really walk through improvements, we're seeing that across the board, including carriers, who struggled with that in the past.
And we believe we can make even more material strides on that as we partner with them to create a really seamless consumer experience.
Great. Thanks.
As a reminder, ladies and gentlemen to ask questions. Please press star followed by one on the telephone keypad.
Star followed by one on the telephone keypad.
And our next question comes from Daniel Crosslight from Citigroup. Daniel Your line is now open. Please go ahead.
Hi, guys. Thanks for taking the question and congrats on the strong quarter here.
Maybe more of a macro question for you.
Given the advanced rate notice and some stars had wins I think it's safe to assume that we'll see a slowdown in MA growth and some carriers have commented on that for plan year 'twenty for realizing you're not guiding for 'twenty for quite yet I'm, just curious how youre thinking about and may growth in general for 2024, and then specifically one of your major carrier sense.
<unk> Wellcare.
Ounce that they will be slowing growth dramatically for 'twenty four.
It's been a little while since you filed your last 10-K, but I'm curious if there has been any material change in the percent of your revenue that Centene represents I think it was around 19% in your last 10-K.
Yes, Daniel Good morning, I'll start and then hand, it off to Bob for the question around the <unk>.
Notice but.
Again as you said, we're not at this point guiding to fiscal 'twenty four and we're happy to do that in August , but I do think we're very well positioned I think when you look at the last.
Five consecutive quarters.
We really believe that.
Foundation is very strong across all of the major elements of the business.
We'll share more about that growth trajectory, but I would just reiterate that we feel the changes that we've made over the last five quarters I think demonstrate the strength of that foundation, we're going to continue to stay focused on.
These improvements in unit margins profitability.
The growth that we still see certainly growth potential Bob.
Yes, I mean, I think that's a great great point and to your point.
Daniel on a general slowdown right one the advanced rate notice ended up being a little bit more favorable than the carriers. They are actually looked at I'd say also as you know theres a little bit of a disparity between certain carriers and the impact of that to others.
And what we're hearing is set to Tim's point, they are going to focus on quality growth kind of across the board, which we feel like we can provide.
As evidenced by <unk>, saying, Hey, we're going to slow down overall, but then also separately announcing that theyre going to partner.
With us more closely I think thats going to be a fairly consistent thing where carriers are going to really hone in to their benefit they've made a lot of investments and other assets that can really help consumers and they are going to focus on the producers like us that can create an integrated customer experience and put up quality policies look good.
90 day persistence.
A unique portion of the marketplace that we said it.
We don't feel like it's going to be <unk>.
Deal for us at all we feel really really good about this upcoming year I don't know if thats going to be the case kind of across the board.
But we feel really good about our positioning going into this next year.
Yes that makes sense and you mentioned that youre seeing good proteins productivity out of agents not just your core agents, but also flex agents too I'm wondering if you can help size us for the full year what percent of your agent force will be core versus flax and how are you thinking about that for the full year 'twenty four.
And are there any metrics you can give us around the differential in close rates or productivity between core and flex agents.
Yes so.
Great question, our core agents typically are more productive than our flex agents. This most recent year, we went in with a.
More senior.
A group of agents and obviously the results were incredibly strong we did take a different approach to hiring and onboarding.
Sure.
In Q4, we're running that play again right.
Recognize that a lot of the.
Tactics used this most recent plan your work really well and so we will continue to execute on that.
In general our core agents, our I wanted to ask the two times more productive.
But again with the recent.
<unk> and Onboarding.
We are seeing.
<unk> agents perform.
It's closer to being in line with the core agent. So really really pleased with how the onboarding process is working this past year.
And are you able to share the split between core and flex out there for this full fiscal year and what Youre thinking about for next fiscal year.
Okay.
We are not.
Got it.
24, and we look forward to sharing additional details.
And the next quarter, but at a macro level.
The most recent AEP season, we were.
North of 70% in the core categories, so meaningfully meaningfully higher than years past.
Got it thanks, a lot just because of general themed yes, as a general theme Daniel.
We've kind of indicated last quarter.
Managing the business more around.
Our year round.
<unk> force less peaks and valleys than we've had historically that's really the way we've been running this year and to Ryan's point about the playbook, it's certainly.
Working and we plan to continue down that path.
Yeah makes sense. Thanks.
Our next question comes from Ben <unk> from RBC.
Your line is now open. Please go ahead.
Thank you just specifically about the work you've done with carriers ahead of the CMS rule and the changes you've made to ensure compliance.
From a consumer perspective, what specifically changed based.
Based on what work you've done with.
With the carrier.
Tumor and I'll come onto your platform, what specifically changes in terms of the way I engage your platform or the way your agents.
Communicate with the carrier going forward.
Okay.
Yeah, I can take that bill.
Really from a consumer perspective, right now and the way we were discussing this.
There's not much that would change in terms of the way that they engage with us.
Obviously, there are still some things.
We will get clarity on.
In terms of.
<unk> seen the things around inbound versus outbound and some of those things and obviously, we're working really closely with them but.
We feel like no matter, what those ended up or any changes in the future, we're well positioned to be able to navigate those and work with the consumers, but I think in terms of the way. They initially engage it's very very little change if any so and.
And again, we feel like we're lockstep with the carriers understand what CMS is trying to accomplish and thanks.
We're well positioned to be able to tell.
To do that but we want that we confidently know that CMS wants to be able to provide transparency and real time feedback to those consumers. So we think.
<unk>.
As we navigate it wont be well positioned to do that so.
Okay.
Okay.
Thanks.
Thanks.
Clearly a lot more throughput on better overall expense I was wondering if you could just kind of help us get an understanding of kind of how fixed and variable costs.
Kind of progressed and how should we think about that for modeling perspective.
Going forward into your new guidance.
Yes.
And then.
Oh go ahead Ron.
Go ahead Tim.
Sure.
Yes.
I was just going to say overall, Ben just like.
Thematic late how we're driving these improvements.
And unit costs.
Again.
We continue to see very focused on our marketing.
Both the customer segmentation driving to the highest ROI sources, but also great job by Bill and his team on disciplined cost management I think we've hit on the agent side today.
Very proud of.
What our agents our agents are performing the mix of those agents, who are seeing very low attrition rates.
All of this efficiency if you will.
Is dropping to the bottom line and I think well.
We continue to work.
Very intently on.
<unk> Tvs.
And we're seeing some very good signs that we highlighted in the prepared materials today, we're really proud of back to back over 30% margins and our senior business and again, we feel like it's durable.
To do that moving forward, Brian to the specifics of fixed and variable.
Yes.
Going into this year, we did take sizable.
It's been cut and kind of this time last year, I think $40 million out and we have been.
Very disciplined with respect to the investments we're making.
The investment was in the infrastructure for select Rx in the healthcare services platform.
And obviously, we're a protein breakeven.
These customers are coming on is driving.
Strong marginal profitability and so we see the business, reflecting on breakeven towards year end.
But.
Businesses absolutely Ben.
On expense management.
We currently have no further questions. So I would like to hand, the call back to Tim Dec our.
Our CEO for final remarks.
Please go ahead.
Thank you Bruno and thanks, everyone.
Just end by echoing <unk> comments about our excitement to share more with you about the quarters and years ahead, we're really proud of what <unk> has accomplished over the past.
Five quarters.
Taken a lot of talent and hard work by our teams.
But we really believe we've rebuilt our stronger and durable operation, we feel that we're well positioned.
The process of capitalizing on what remains a significantly large opportunity.
On health care for American seniors. So thank you all again, we look forward to speaking you towards the end of the summer and <unk>.
Sharing our outlook for fiscal 'twenty four we appreciate it thank you.
Ladies and gentlemen. This concludes today's call. Thank you for joining you may now disconnect your lines. Thank you.
[music].
Yes.
Yes.
Yes.
Okay.