Q4 2024 SelectQuote Inc Earnings Call

September 13, 2024

Operator: Hello, and welcome to SelectQuote's fourth quarter earnings conference call. All lines have been placed on mute to prevent any background noise.

Hello, and welcome to select <unk> fourth quarter earnings Conference call. All lines have been placed on mute to prevent any background noise.

Operator: 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 the star, followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by the number two.

After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press the star followed by the number one on your telephone keypad.

Speaker Change: If you would like to withdraw your question. Please press star followed by the number two it is now my pleasure to introduce Matt is going to set quite Investor Relations. Mr. <unk> you may begin the conference.

Matthew Gunter: 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.

Matt: Thank you and good morning, everyone welcome to select quotes fiscal fourth quarter and full year 2024 earnings call.

Matthew Gunter: Welcome to SelectQuote's fiscal fourth quarter and full year 2024 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.

Speaker Change: 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.

Speaker Change: After today's call a replay will also be available on our website.

Matthew Gunter: 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.

Joining me from the company I have our Chief Executive Officer, Tim to anchor and Chief Financial Officer, Ryan climate.

Following <unk>, Tim and Ryan's comments today, we will have a question and answer session.

Matthew Gunter: As reference on slide two, during this call, we will be discussing some non-GAAP 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 on 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 at June 30th, 2024, and other filings with the SEC.

Speaker Change: 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.

Speaker Change: And finally, a reminder that certain statements made today may be forward looking statements. These statements are made based on 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.

Tim tanker: <unk> 10-K for the period ended June 32024, 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 tanker.

Matthew Gunter: Therefore, the actual results of operations or financial conditions of the company could differ materially from those expressed or implied in our forward-looking statements.

Timothy Danker: And with that, I'd like to turn the call over to our Chief Executive Officer, Tim Danker. Tim. Thanks, Matt, and thank you all for joining us today.

Speaker Change: Tim.

Tim tanker: Thanks, Matt and thank you all for joining us today before diving into the results. Let me start with a few high level takeaways.

Timothy Danker: Before diving into the results, let me start with a few high-level takeaways. Flucco had a highly successful fiscal 2020 floor across each facet of our business. Our senior Medicare Advantage business performed well, driven by strong operational execution, which resulted in high margins. Our health care services segment continued to see growth in scale, highlighted by our select direct prescription drug business. Overall, we continue to produce results that reaffirm our strategic goal to prioritize unit profitability and cash efficiency. The fourth quarter marks the 10th consecutive quarter outperforming our internal expectations, and we are ever more confident in Suckwood's value within a very large US health care ecosystem.

Speaker Change: <unk> had a highly successful fiscal 2024 across each facet of our business our senior Medicare advantage business performed well driven by strong operational execution, which resulted in high margins. Our healthcare services segment continued to see growth in scale highlighted by our select Rx prescription drug business over.

Speaker Change: We continue to produce results that reaffirm our strategic goal.

Speaker Change: Prioritize unit profitability and cash efficiency the <unk>.

Speaker Change: Fourth quarter marks the 10th consecutive quarter outperforming our internal expectations and we are ever more confident in <unk> value within a very large U S health care ecosystem.

Timothy Danker: I'll share more in a moment, but it's worth noting that we are continuing to make meaningful progress on our capital structure. We recently signed a non-binding letter of intent with certain of our term lenders to complete an initial securitization of around $100 million. Provided the deal closes, we think this transaction will represent a critical first phase and ultimately achieving a more appropriate capital structure for Select Quote. Perhaps most importantly, the proposed transaction would include an extension of our term debt maturity to the fall of 2027, which would provide us the runway we need to achieve our long-term objectives.

Speaker Change: I'll share more in a moment, but it's worth noting that we are continuing to make meaningful progress on our capital structure. We recently signed a non binding letter of intent with certain of our term lenders to complete an initial securitization of around $100 million.

Speaker Change: Provided the deal closes we think this transaction will represent a critical first phase and ultimately achieving a more appropriate capital structure for select quote perhaps most importantly, the proposed transaction would include an extension of our term debt maturity to the fall of 2027, which would provide us the runway we need to achieve our.

Long term objectives.

Timothy Danker: We've made significant progress over the last two-and-a-half years since undertaking our strategic redesign. But to give context to our capital structure, SelectQuote is still not as strong as we believe it can be. To be clear, SelectQuote has ample liquidity, but in 2025, our growth will be tempered for two reasons. The first is the latest in expected timing of our initial securitization, and the second is a change in commission structure with one of our larger carrier partners for the upcoming Medicare Advantage season. All elaborate on both in a minute. Overall, I'd like to emphasize that our growth in 2025 would be significantly higher with a more flexible capital structure.

Speaker Change: We've made significant progress over the last two and a half years since undertaking our strategic redesign but to give context to our capital structure. So I quote is still not as strong as we believe it can be to be clear. So <unk> has ample liquidity, but in 2025, our growth will be tempered for two reasons. The first is the <unk>.

Speaker Change: Later than expected timing of our initial securitization and the second is a change in commission structure with one of our larger carrier partners for the upcoming Medicare advantage season, I'll elaborate on both in a minute.

Operator: Hello and welcome to SelectQuote's fourth quarter earnings conference call. All lines have been placed on mute to prevent any background noise.

Speaker Change: Overall I'd like to emphasize that our growth in 2025 would be significantly higher with a more flexible capital structure.

Speaker Change: In fact, we've never been more optimistic about the future given our strong underlying performance in both senior and health care services. The strong fundamentals in these businesses remain unchanged and it is our priority to improve liquidity and deleverage. So we can capitalize on the large opportunity that we know is ours to win.

Matthew Gunter: 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.

Timothy Danker: SelectQuote is a leading broker of value-added information and service connectivity for America's seniors. As a critical conduit, an enabler of choice for Americans, and the insurers and healthcare providers that serve them, our ability to create profit and cash flow for our shareholders continues to increase. Best of all, we are adding value with increasingly diversified services and with less seasonal volatility and results. The constant in all of this is that when our customers do well, we do well, and we believe our shareholders will be rewarded.

Speaker Change: <unk> is a leading broker or value added information and service connectivity for America's seniors is a critical conduit and enabler of choice for Americans and the insurers and health care providers that serve them our ability to create profit and cash flow for our shareholders continues to increase.

First of all we are adding value with increasingly diversified services and with less seasonal volatility in results the.

Speaker Change: Constant in all of this is that when our customers do well, we do well and we believe our shareholders will be rewarded.

Matthew Gunter: As reference 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.

Timothy Danker: With that, let me begin with a review of our fiscal year. First, as I mentioned, we have outperformed our guided forecasts in each of the past two years. This has been driven by both our Medicare Advantage distribution business and healthcare services, highlighted by the success of SelectRx. Looking at fiscal 24, our actual results significantly outperform the original outlook we set this time last year. We outperform the midpoint of our initial revenue expectation by more than 17%, and more importantly, we are adjusted EBITDA target by over 26%. Ryan will go into more detail, but what's more impressive about fiscal 24 was that we achieved the majority of the revenue beat in healthcare services, but our EBITDA outperforming to this driven both by our senior segment and the ramping profitability in SelectRx.

Speaker Change: With that let me begin with a review of our fiscal year first as I mentioned, we have outperformed our guided forecast in each of the past two years. This has been driven by both our Medicare advantage distribution business and health care services highlighted by the success of select Rx looking at fiscal 'twenty for our actual results significantly.

Matthew Gunter: And finally, a reminder that certain statements made today may be forward-looking statements. These statements are made based on management's current expectations and beliefs concerning future events impacting the situation. 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 at June 30th, 2024, and other filings with the SEC. Therefore, the actual results of operations or financial conditions of the company could differ materially from those expressed or implied in our forward-looking statements.

Speaker Change: It performed the original outlook, we set this time last year, we outperformed the midpoint of our initial revenue expectation by more than 17% and more importantly beat our adjusted EBITDA target by over 26%.

Speaker Change: Ian will go into more detail, but what's more impressive about fiscal 'twenty four was that we achieved the majority of the revenue beat in health care services, but our EBITDA outperformance was driven both by our senior segment and the ramping profitability in select Rx.

Timothy Danker: Best of all, our outperforming some senior was comped against the fiscal 23 that was tremendously strong for us. This again validates our strategic shift to focus on EBITDA and cashflow over volume. Specifically in senior, we grew overall MA policies by 8% in fiscal 24, which also marks outperformance versus our original outlook for a 10 to 15% decline in policy production. The better than expected results work, again, driven primarily by improved efficiency in our model. The senior business generated strong EBITDA margins of 25%, which compares to 26% margins in fiscal 23. Our close rates were impressive as our strategy to focus on the best leads and direct them to tenured agents continues to be successful.

Timothy Danker: And with that, I'd like to turn the call over to our Chief Executive Officer, Tim Danker. Thanks, Matt, and thank you all for joining us today. Before diving into the results, let me start with a few high-level takeaways. Flucco had a highly successful fiscal 2024 across each facet of our business. Our senior Medicare Advantage business performed well, driven by strong operational execution, which resulted in high margins. Our health care services segment continued to see growth in scale, highlighted by our SelectRx prescription drug business. Overall, we continue to produce results that reaffirm our strategic goal to prioritize unit profitability and cash efficiency.

Speaker Change: First of all our outperformance in senior was comped against the fiscal 'twenty three that was tremendously strong for US. This again validates our strategic shift to focus on EBITDA and cash flow over volume.

Speaker Change: Specifically in senior we grew overall MA policies by 8% in fiscal 'twenty, four which also marks outperformance versus our original outlook for a 10% to 15% decline in policy production.

Speaker Change: The better than expected results were again, driven primarily by improved efficiency in our model.

Speaker Change: The senior business generated strong EBITDA margins of 25%, which compares to 26% margins in fiscal 'twenty three our close rates were impressive as our strategy to focus on the best leads and direct them to tenured agents continues to be successful. Additionally, we continue to see strong policyholder retention.

Timothy Danker: The fourth quarter marks the 10th consecutive quarter outperforming our internal expectations, and we are ever more confident in floodquets value within a very large US health care ecosystem. I'll share more in a moment, but it's worth noting that we are continuing to make meaningful progress on our capital structure. We recently signed a non-binding letter of intent with certain of our term lenders to complete an initial securitization of around $100 million. Provided the deal closes, we think this transaction will represent a critical first phase, and ultimately achieving a more appropriate capital structure for Select Quote. Perhaps most importantly, the proposed transaction would include an extension of our term debt maturity to the fall of 2027, which would provide us the runway we need to achieve our long-term objectives.

Timothy Danker: Additionally, we continue to see strong policyholder retention, as evidenced by higher year-over-year LTBs.

Speaker Change: As evidenced by higher year over year Ltvs and.

Timothy Danker: and Healthcare Services. The business continued to exhibit momentum as we ended the year with 82,000 members. This was up 68% year-over-year, and well ahead of our original guided expectation to grow around 25%.

Speaker Change: In health care services business continued to exhibit momentum as we ended the year with 82000 members. This was up 68% year over year and well ahead of our original guided expectation to grow around 25%.

Timothy Danker: If we turn a page, let me review the key performance indicators for our senior Medicare Advantage business. As I noted, our strategy to produce consistent returns with a focus on cash efficiency was again successful in fiscal 2024. As you can see in the charts, at left and in the middle, 2024 experienced modestly higher expenses per policy, driven by the implementation of the new CMS marketing standards. Despite these increased costs, SelectQuote has maintained stable and strong senior EBITOP production per policy, which was essentially flat year-over-year when compared to fiscal 23. This was driven by increased LTVs, strong policy close rates, and overall Asian productivity.

Speaker Change: If we turn to page, let me review the key performance indicators for our senior Medicare advantage business as I noted our strategy to produce consistent returns with a focus on cash efficiency was again successful in fiscal 2024.

Speaker Change: As you can see in the charts at left and in the Middle of 2024 experienced modestly higher expenses per policy driven by the implementation of the new CMS marketing standards. Despite these increased costs, but quote has maintained stable and strong senior EBITDA production per policy, which was essentially flat year over year when compared to fiscal.

Timothy Danker: We've made significant progress over the last two and a half years since undertaking our strategic redesign. But to give context to our capital structure, SelectQuote is still not as strong as we believe it can be. To be clear, SelectQuote has ample liquidity, but in 2025 our growth will be tempered for two reasons. The first is the latest in expected timing of our initial securitization, and the second is a change in commission structure with one of our larger carrier partners for the upcoming Medicare Advantage season. All elaborate on both in a minute. Overall, I'd like to emphasize that our growth in 2025 would be significantly higher with a more flexible capital structure.

Speaker Change: 23, this was driven by increased Ltvs strong policy close rates and overall agent productivity.

Timothy Danker: Put simply, our focus on court-tenured agents and the most profitable lead sourcing continues to be successful. Lastly, we continue to drive more revenue per dollar of customer acquisition with our red to CAC ratio, increasing to 4.5x. As we've said, the synergy of our healthcare services segment is driving these returns, which is core to our strategy to leverage our position as a value conduit within the broader healthcare ecosystem. What is less apparent is that this improved efficiency was also driven by strong LTVs, which demonstrates stability and policyholder persistency. LTV can be a function of benefit trends, but we believe lead targeting paired with our personalized agent-led service is a differentiator for SelectQuote in every MA season.

Simply our focus on core tenured agents and the most profitable lead sourcing continues to be successful.

Speaker Change: Lastly, we continue to drive more revenue per dollar of customer acquisition with our Rab to CAC ratio increasing to $4 five X.

Timothy Danker: In fact, we've never been more optimistic about the future, given our strong underlying performance in both senior and healthcare services. The strong fundamentals in these businesses remain unchanged, and it is our priority to improve liquidity and de-leverage so we can capitalize on the large opportunity that we know is ours to win. SelectQuote is a leading broker of value-added information and service connectivity for America's seniors. As a critical conduit, an enabler of choice for Americans and the insurers and healthcare providers that serve them, our ability to create profit and cash flow for our shareholders continues to increase.

Speaker Change: As we've said the synergy of our healthcare services segment is driving these returns which is core to our strategy to leverage our position as a value conduit within the broader health care ecosystem.

Speaker Change: What is less apparent is that this improved efficiency was also driven by strong ltvs, which demonstrate the stability and policyholder persistency LTV can be a function of benefit trends, but we believe lead targeting paired with our personalized agent lead service as a differentiator for select quote and every may season.

Timothy Danker: That said, we do expect the upcoming season to potentially see an uptick in policyholder shopping. As you have seen from insurance carrier commentary, there are shifts expected in benefit design this season. As you know, this is not uncommon in any given Medicare-advanced season, and SelectQuote's true choice model becomes even more important to consumers when policy features are in flux.

Speaker Change: That said, we do expect the upcoming season to potentially see an uptick in policyholder shopping as.

Speaker Change: As you've seen from insurance carrier commentary there are shifts expected in benefit design. The season. As you know this is not uncommon in any given Medicare advantage season, and select clubs true choice model becomes even more important to consumers. When policy features are in flux.

Timothy Danker: Best of all, we are adding value with increasingly diversified services and with less seasonal volatility and results. The constant in all of this is that when our customers do well, we do well, and we believe our shareholders will be rewarded.

Timothy Danker: With that, let me begin with a review of our fiscal year. First, as I mentioned, we have outperformed our guided forecasts in each of the past two years. This has been driven by both our Medicare Advantage distribution business and healthcare services, highlighted by the success of SelectRx. Looking at fiscal 24, our actual results significantly outperform the original outlook we set this time last year. We outperformed the midpoint of our initial revenue expectation by more than 17%, and more importantly, we are adjusted EBITDA target by over 26%. Ryan will go into more detail, but what's more impressive about fiscal 24 was that we achieved the majority of the revenue beat in healthcare services, but our EBITDA outperformed; this was driven both by our senior segment and the ramping profitability in SelectRx.

Timothy Danker: Flipping ahead, let's look at our short but highly successful history and healthcare services highlighted by SelectRx. As we've noted, 2024 was a milestone year for the scale of SelectRx. Members have grown rapidly and continue to mature, which drives top-line revenue. We are now seeing those recurring revenues lap onboarding costs, which will continue to contribute to our profitability. Specifically, our full-year revenue for healthcare services through nearly 90% to 479 million, underpinned by a membership of 82,000. Our EBITDA ended 2024 at 8 million, which is an impressive turnaround from the $23 million drag experienced in fiscal 23.

Speaker Change: Flipping to add let's look at our short, but highly successful history in healthcare services highlighted by select Rx.

As we've noted 2024 was a milestone year for the scale of select Rx members have grown rapidly and continue to mature which drives top line revenue. We are now seeing those recurring revenues lap onboarding costs, which will continue to contribute to our profitability.

Speaker Change: Specifically, our full year revenue for health care services grew nearly 90% to 479 million underpinned by our membership of 82000.

Speaker Change: Our EBITDA ended 2024 at $8 million, which is an impressive turnaround from the $23 million drag experienced in fiscal 'twenty three.

Timothy Danker: Best of all, the business is highly cash efficient, with a payback on customer acquisition costs of less than six months.

Speaker Change: First of all the business is highly cash efficient where the payback on customer acquisition cost of less than six months.

Timothy Danker: Best of all, our outperformance in senior was comped against the fiscal 23 that was tremendously strong for us. This again validates our strategic shift to focus on EBITDA and cashflow over volume. Specifically in senior, we grew overall MA policies by 8% in fiscal 24, which also marks outperformance versus our original outlook for a 10 to 15% decline in policy production. The better than expected results work, again, driven primarily by improved efficiency in our model. The senior business generated strong EBITDA margins of 25%, which compares to 26% margins in fiscal 23. Our close rates were impressive as our strategy to focus on the best leads and direct them to tenured agents continues to be successful.

Timothy Danker: Looking ahead, we see SelectRx and broader healthcare services as an increasingly self-funded business, given how critical medication delivery is to the customer. This high-value added services built around convenience for our members, which supports better medication adherence outcomes, a win for customers and carriers alike.

Looking ahead, we see select Rx and broader healthcare services as an increasingly self funded business given how critical medication delivery as to the customer. This high value added services built around convenience for our members, which supports better medication adherence outcomes a win for customers and carriers alike.

Timothy Danker: Turning to the next page. Now, let me expand on our strategy to improve Slequoise capitalization. As I noted before, we agreed to another short-term extension on our term debt. More importantly, we recently signed a non-binding letter of intent related to our first securitization with certain of our term lenders and are working through definitive agreements. We see the proposed approximately $100 million transaction as an important first step on the on-ramp to future securitizations and a reduction of our term debt. Provided this deal closes, we expect this initial securitization to improve our cost of capital, establish the legal and operational infrastructure necessary to support future potential securitizations, and enable the extension of our term debt maturity to fall of 2027 with staggered payments.

Speaker Change: Turning to the next page now let me expand on our strategy to improve cyclist capitalization as.

Speaker Change: As I noted before we agreed to another short term extension on our term debt more importantly, we recently signed a non binding letter of intent related to our first securitization with certain of our term lenders and are working through definitive agreements. We see the proposed approximately $100 million transaction as an important first step.

Timothy Danker: Additionally, we continue to see strong policyholder retention, as evidenced by higher year-over-year LTBs.

Speaker Change: On the on ramp to future Securitizations and a reduction of our term debt.

Provided this deal closes we expect this initial securitization to improve our cost of capital established a legal and operational infrastructure necessary to support future potential securitizations and enable the extension of our term debt maturity to fall of 2027 with staggered payments. This allows adequate runway to achieve.

Timothy Danker: If we turn a page, let me review the key performance indicators for our senior Medicare Advantage business. As I noted, our strategy to produce consistent returns with a focus on cash efficiency was again successful in fiscal 2024. As you can see in the charts, at left and in the middle, 2024 experienced modestly higher expenses per policy driven by the implementation of the new CMS marketing standards. Despite these increased costs, SelectQuote has maintained stable and strong senior EBITOP production per policy, which was essentially flat year-over-year when compared to fiscal 23. This was driven by increased LTVs, strong policy close rates, and overall Asian productivity.

Timothy Danker: This allows adequate runway to achieve future deliveraging.

Speaker Change: Future deleveraging, we currently expect the transaction to close in the coming weeks and look forward to sharing more details at that time.

Timothy Danker: We currently expect the transaction to close in the coming weeks and look forward to sharing more details at that time.

Timothy Danker: Moving to the next page, I'd like to give context to our fiscal 2025 outlook. Let's start with the foundation of what we see as unchanged and Medicare-Advantaged landscape. First, MA demand remains a tail end, and the aging American population continues to grow. Second, policy persistency is stabilizing and has been less volatile, especially for leads and customers we actively target. This allows us to maintain our strong unit economics, which we're on; we'll detail later. Third, the outlook for healthcare services remains strong and not just for selectRx. Fourth, the attractive unit economics that have underpinned the senior business in recent quarters are unchanged and we're confident in our ability to deliver target margins of 20% plus.

Moving to the next page I would like to give context to our fiscal 2025 outlook, let's start with the foundation of what we see is unchanged in Medicare advantage landscape.

Speaker Change: First MAA demand remains a tailwind and the agent American population continues to grow second policy persistency is stabilizing there has been less volatile, especially for leads and customers. We actively target. This allows us to maintain our strong unit economics, which Ryan will detail later.

Third the outlook for health care services remained strong and not just for select Rx fourth the attractive unit economics that have underpinned the senior business in recent quarters are unchanged and we're confident in our ability to deliver target margins of 20% plus.

Timothy Danker: Put simply, our focus on court-tenured agents and the most profitable lead sourcing continues to be successful. Lastly, we continue to drive more revenue per dollar of customer acquisition, with our red to CAC ratio increasing to 4.5x. As we've said, the synergy of our health care services segment is driving these returns, which is core to our strategy to leverage our position as a value conduit within the broader health care ecosystem. What is less apparent is that this improved efficiency was also driven by strong LTVs, which demonstrates stability and policyholder persistency. LTV can be a function of benefit trends, but we believe lead targeting paired with our personalized agent-led service is a differentiator per SelectQuote in every MA season.

Timothy Danker: As for recent commentary by carriers about Medicare-Advantage and the re-evaluation of their benefit designs, our view is too cold. First, the range and shape of coverage can and does change from year to year, as it always has. Second, and most importantly, the need and demand for tailored coverage from American seniors remain strong and is growing. Select what's important to both seniors and our carrier partners as a true choice platform is only amplified as shifts in coverage occur from year to year.

Speaker Change: As for recent commentary by carriers about Medicare advantage and the reevaluation of their benefit designs. Our view is twofold.

Speaker Change: First the range and shape of coverage can and does change from year to year as it always has second and most importantly, the need and demand for tailored coverage from American seniors remains strong and is growing.

Speaker Change: Its importance to both seniors and our carrier partners as a true choice platform is only amplified as shifts in coverage occur from year to year.

Timothy Danker: With that as a level set, let's shift to what is changing and speak about the specific carrier action that will impact our 2025 fiscal year. In the middle of our fourth quarter, a large carrier partner of ours shifted to an industry-wide, radical commission structure and fiscal 2025, compared to a structure that was more front-loaded in fiscal 24. While the new deal structure remains economically attractive for the business, it does impact our cash flows ahead of the M.A. busy season. Prior to the shift, our initial planning was to partially fund 2025 AEP and OEP season volumes with these front-loaded commission dollars.

Speaker Change: With that as a level, let's shift to what is changing and speak about the specific carrier action that will impact our 2025 fiscal year.

Timothy Danker: That said, we do expect the upcoming season to potentially see an uptick in policyholder shopping. As you've seen from insurance carrier commentary, there are shifts expected in benefit design this season. As you know, this is not uncommon in any given Medicare-advanced season, and Select Quote's true choice model becomes even more important to consumers when policy features are in flux.

Speaker Change: In the middle of our fourth quarter, a large carrier partner of ours shifted to an industry wide ratable commission structure in fiscal 2025 compared to a structure that was more frontloaded in fiscal 'twenty four.

Speaker Change: While the new deal structure remains economically attractive for the business. It does impact our cash flow is ahead of the MA busy season prior to the shifts our initial planning was to partially fund, 2025% to AEP and OE peak season volumes with these Frontloaded Commission.

Timothy Danker: Flipping ahead, let's look at our short but highly successful history and health care services highlighted by SelectRx. As we've noted, 2024 was a milestone year for the scale of SelectRx. Members have grown rapidly and continue to mature, which drives top-line revenue. We are now seeing those recurring revenues lap onboarding costs, which will continue to contribute to our profitability. Specifically, our full-year revenue for health care services grew nearly 90% to $479 million, underpinned by a membership of 82,000. Our EBITDA ended 2024 at $8 million, which is an impressive turnaround from the $23 million drag experienced in fiscal 23.

Timothy Danker: As a result, given the balance sheet limitations I noted, we expect our approved policy count in fiscal 25 to be about 10 to 15 percent lower than it was in fiscal 24. To be clear, our expected growth in fiscal 25 is a reflection of the temporary capital constraints for SelectQuote and not the health of the Medicare Advantage industry. Provided we close, we expect this initial securitization along with intended future D-leverage and transactions will increasingly mitigate capital constraints. The market remains highly attractive, and without these capital constraints, we would have leaned in by hiring a larger class for this coming AEP, and our policy growth expectations would have certainly been higher.

Speaker Change: As a result, given the balance sheet limitations I noted, we expect our approved policy count in fiscal 'twenty five to be about 10% to 15% lower than it was in fiscal 'twenty four.

Speaker Change: To be clear our expected growth in fiscal 'twenty five is a reflection of the temporary capital constraints for select quote and not the health of the Medicare advantage industry.

Speaker Change: Provided we close we expect this initial securitization along with intended future deleveraging transactions will increasingly mitigate capital constraints the market remains highly attractive and without these capital constraints, we would have leaned in by hiring a larger class for this coming AEP and our policy growth expectations would have certainly been higher.

Timothy Danker: Best of all, the business is highly cash efficient, with a payback on customer acquisition costs of less than six months. Looking ahead, we see SelectRx and broader health care services as an increasingly self-funded business, given how critical medication delivery is to the customer. This high-value-added service is built around convenience for our members, which supports better medication adherence outcomes; a win for customers and carriers alike.

Timothy Danker: Ultimately, the results of this change, paired with business seasonality, led us to choose to hire a smaller class for this coming AEP season. While we confidently believe we could hire more, produce more, and deliver compelling returns, it was important to manage our capital investment given current constraints.

Speaker Change: <unk>.

Speaker Change: Ultimately the result of this change paired with business seasonality led us to choose the higher smaller class for this coming AEP season, while we confidently believe we could hire more produce more and deliver compelling returns. It was important to manage our capital investment given current constraints.

Timothy Danker: Welcome back. Turning to the next page, now let me expand on our strategy to improve select voice capitalization. As I noted before, we agreed to another short-term extension on our term debt. More importantly, we recently signed a non-binding letter of intent related to our first securitization with certain of our term lenders and are working through definitive agreements. We see the proposed approximately $100 million transaction as an important first step on the on-ramp to future securitizations and a reduction of our term debt. Provided this deal closes, we expect this initial securitization to improve our cost of capital, establish the legal and operational infrastructure necessary to support future potential securitizations, and enable the extension of our term debt maturity to fall of 2027 with staggered payments.

Ryan Clement: Ryan will speak more to our balance sheet and strategy to improve both liquidity and our overall leverage.

Speaker Change: Ryan will speak more to our balance sheet strategy to improve both liquidity and our overall leverage before that let me speak to our platform and how we believe the diversification of our business and cash flows will dampen seasonality in the future.

Timothy Danker: Before that, let me speak to our platform and how we believe the diversification of our business and cash flows will dampen seasonality in the future. If we move to the next page, let me end my remarks with what we mean by SelectQuote's platform value and how we continue to leverage our information and connectivity advantages within healthcare. To summarize, we know that SelectQuote has established a real right to win and multiple business lines within healthcare. Our significant data assets paired with tailored customer service from our agents has proven its value and an expanding number of ways to a growing number of market participants.

Speaker Change: If we move to the next page, let me end my remarks, with what we mean by <unk> platform value and how we continue to leverage our information and connectivity advantages within health care.

Speaker Change: Summarizing we know that's like what has established a real right to win and multiple business lines within health care.

Speaker Change: Our significant data assets paired with tailored customer service from our agents has proven its value in an expanding number of ways to a growing number of market participants.

Timothy Danker: As you know, we've built this platform since SelectQuote's inception, building upon our senior Medicare Advantage distribution business, which is a platform designed to best serve individual needs. With the launch of the healthcare services segment in 2021, we began to identify meaningful market inefficiencies, both in how customers access care and how insurance companies and caregivers connect with those consumers in a scaled but tailored way. As healthcare becomes increasingly localized and focused on individual patient outcomes, we see additional services with large demand but inefficient fit and delivery to the end customer. Services that are inherently local, like value-based care and chronic care management, have been challenging for caregivers and insurers to access.

Speaker Change: As you know we built this platform since <unk> inception building upon our senior Medicare advantage distribution business, which is a platform designed to best serve individual needs.

Timothy Danker: This allows adequate runway to achieve future leveraging.

Timothy Danker: We currently expect the transaction to close in the coming weeks and look forward to sharing more details at that time.

Speaker Change: With the launch of Health care services segment in 2021, we began to identify meaningful market inefficiencies, both on how customers access care and how insurance companies and caregivers connect with those consumers in our scale, but tailored way.

Timothy Danker: Moving to the next page, I'd like to give context to our fiscal 2025 outlook. Let's start with the foundation of what we see as unchanged and Medicare-advanced landscape. First, MA demand remains a tail end, and the aging American population continues to grow. Second, policy persistency is stabilizing. There's been less volatile, especially for leads and customers we actively target. This allows us to maintain our strong unit economics, which we're on; we'll detail later. Third, the outlook for healthcare services remains strong and not just for SelectRx. Fourth, the attractive unit economics that have underpinned the senior business in recent quarters are unchanged, and we're confident in our ability to deliver target margins of 20 percent plus.

Speaker Change: As health care becomes increasingly localized and focus on individual patient outcomes, we see additional services with large demand, but inefficient fit and delivery to the end customer services that are inherently local like value based care and chronic care management had been challenging for caregivers and insurers to access.

Timothy Danker: For SelectQuote, we are the natural manabler because we already capture an action critical data and are connected to each stakeholder point within the value chain. To bring it all together, we believe the healthcare services opportunity is important for shareholders, not simply for profit growth, but we believe our holistic platform strategy will transform and diversify SelectQuote's revenue and cash flow strings. We already see that with Select our X, and as we launch new initiatives in the future, SelectQuote will benefit from multiple growth avenues with less seasonality and smoother cash flows. Similar to our strategic focus to prioritize stable profitability and cash efficiency, we believe the SelectQuote of the future can accomplish that in an expanding range of large addressable markets.

Speaker Change: Select quote we are the natural enabler because we are already capturing action critical data and are connected to each stakeholder point within the value chain.

To bring it all together, we believe the healthcare services opportunity is important for shareholders not simply for profit growth, but we believe our holistic platform strategy will transform and diversify <unk> revenue and cash flow streams.

Timothy Danker: As for recent commentary by carriers about Medicare and the re-evaluation of their benefit designs, our view is too cold. First, the range in shape of coverage can and does change from year to year, as it always has. Second, and most importantly, the need and demand for tailored coverage from American seniors remains strong and is growing. SelectRx is important to both seniors and our carrier partners as a true choice platform is only amplified as shifts in coverage occur from year to year.

Speaker Change: We already see that with select Rx and as we launch new initiatives in the future Black will benefit from multiple growth avenues with less seasonality and smoother cash flows.

Speaker Change: Similar to our strategic focus to prioritize stable profitability in cash efficiency. We believe this liquidity future can accomplish that an expanding range of large addressable markets not glossing over our need to improve our capital structure, but we want to be clear that we are more confident in our profit and cash flow outlook now.

Timothy Danker: With that as a level set, let's shift to what is changing and speak about the specific carrier action that will impact our 2025 fiscal year. In the middle of our fourth quarter, a large carrier partner of ours shifted to an industry-wide, ratable commission structure in fiscal 2025 compared to a structure that was more front-loaded in fiscal 24. While the new deal structure remains economically attractive for the business, it does impact our cash flows ahead of the M.A. business season. Prior to the shift, our initial planning was to partially fund 2025 AEP and OEP season volumes with these front-loaded commission dollars.

Timothy Danker: Not glossing over our need to improve our capital structure, but we want to be clear that we are more confident in our profiting cash flow outlook now than we have ever been.

Speaker Change: Now than we've ever been with that let me turn the call over to Ryan to detail our financial results Brian.

Ryan Clement: With that, let me turn the call over to Ryan to detail our financial results. Ryan? Thanks, Tim. I'll start briefly with the summary of our results. On a consolidated basis, SelectQuote grew fourth quarter revenues 39% to 307 million, driven by double-digit growth in our senior business and continued strength in Select our X. The revenue was up 75%. More importantly, our consolidated, even expanded by over 20 million, driven by a strong balance of execution in our senior business, and the continued scale of our health care services platform. In senior, we delivered another strong year of 25% EVIT margins, which was well above our long-term targeted range of 20% plus.

Ryan: Thanks, Tim I'll start briefly with a summary of our results on a consolidated basis select quote grew fourth quarter revenues, 39% to $307 million driven by double digit growth in our senior business and continued strength in select correct Reg.

Speaker Change: <unk> was up 75% more.

More importantly, our consolidated EBITDA expanded by over $20 million driven by a strong balance of execution and our senior business and the continued scale of our healthcare services platform.

Speaker Change: In senior we delivered another strong year of 25% EBIT margins, which is well above our long term targeted range of 20% plus.

Stable persistency and higher resulting in Ltvs for fiscal 2024 healthy profitability.

That said our teams deserve the lion's share of the recognition as our strategy to target. The best leads for our core tenured agents led to excellent close rates and throughput.

Ryan Clement: Shifting to healthcare services, the story in 2024 was similar to 2023, but better. Select our ex-member and revenue growth continued to demonstrate the significant value we are delivering to our prescription drug customers. As a segment, healthcare services delivered the fifth straight quarter of profitable adjusted even a contributing close to 8 million and adjusted even a fiscal year 2024. This was accomplished despite the rapid growth in select our ex-members, which ended the year 82,000. As a reference point, our healthcare services segment finished fiscal 2023 with an adjusted even a loss of 23 million, as the business was still ramping.

Shifting to healthcare services. The story in 2024 was similar to 2023, but better select Rx member and revenue growth continue to demonstrate the significant value we are delivering to our prescription drug customers.

Speaker Change: The segment healthcare services delivered the fifth straight quarter of profitable adjusted EBITDA.

Speaker Change: <unk> close to $8 million and adjusted EBIT for fiscal year 2024. This was accomplished despite the rapid growth in select Rx members, which ended the year at 82000.

Ryan Clement: Ryan will speak more to our balance sheet and strategy to improve both liquidity and our overall leverage.

Speaker Change: As a reference point, our healthcare services segment finished fiscal 2023 with an adjusted EBITDA loss of $23 million as the business was still ramping.

Timothy Danker: Before that, let me speak to our platform and how we believe the diversification of our business and cash flows will dampen seasonality in the future. If we move to the next page, let me end my remarks with what we mean by SelectQuote's platform value and how we continue to leverage our information and connectivity advantages within healthcare. To summarize, we know that SelectQuote has established a real right to win and multiple business lines within healthcare. Our significant data assets paired with tailored customer service from our agents has proven its value in an expanding number of ways to a growing number of market participants.

Ryan Clement: The rapid time to scale is the prime example of how our position in the healthcare services market can be leveraged to drive synergistic value for our customers and ultimately our shareholders.

Speaker Change: The rapid time to scale is the Prime example of how our position in the healthcare services market can be leveraged to drive synergistic value for our customers and ultimately our shareholders.

Ryan Clement: On the next page, we present another URR consolidated results for 2024. As Ten noted, it was an impressive year relative to our original expectations. The revenue outperformance was driven predominantly by selector ex, and the overall improvement and profitability was driven by both our senior and healthcare services segments. Our full year consolidated revenue expanded by 32% to 1.3 billion. As Ten mentioned, the more important pivot in 2024 was the inflection of profitability in our healthcare services segment, which eliminated the drag on our consolidated EBITDA. Overall EBITDA for 2024 grew 57% to 117 million, resulting in a full year margin of 9%.

Speaker Change: On the next page we present another view of our consolidated results for 2024.

Speaker Change: As Tim noted it was an impressive year relative to our original expectations. The revenue outperformance was driven predominantly by select <unk> and the overall improvement in profitability was driven by both our senior and healthcare services segments. Our full year consolidated revenue expanded by 32% to $1 3 billion.

Timothy Danker: As you know, we've built this platform since SelectQuote's inception, building upon our senior Medicare Advantage distribution business, which is a platform designed to best serve individual needs. With the launch of healthcare services segment in 2021, we began to identify meaningful market inefficiencies both in how customers access care and how insurance companies and caregivers connect with those consumers in a scaled bit tailored way. As healthcare becomes increasingly localized and focused on individual patient outcomes, we see additional services with large demand, but inefficient fit and delivery to the end customer. Services that are inherently local, like value-based care and chronic care management, have been challenging for caregivers and insurers to access.

Speaker Change: As Tim mentioned, the more important pivot in 2024, it was the inflection of profitability in our healthcare services segment, which eliminated the drag on our consolidated EBITDA.

Speaker Change: EBITDA for 2024 grew 57% to $117 million, resulting in a full year margin of 9% again very strong outperformance compared to our original expectations.

Ryan Clement: Again, very strong outperformance compared to our original expectations. The only point I'd add here for context is on revenue growth relative to EBITDA growth. In the recent past, our revenues have outpaced our EBITDA as selector ex members continue to mature. 2024 will mark the year where we begin capturing operating leverage in the business.

Speaker Change: The only point I'd add here for context is on revenue growth relative to EBITDA growth in the recent past our revenues have outpaced our EBITDA at select Rx members continue to mature.

Speaker Change: 2024 will mark the year, where we began capturing operating leverage in the business.

Ryan Clement: Now, let me detail the results in our senior segment. Table growth and production resulted in 8% expansion and may approve policies to 625,000 for the full year. As Ten noted, we maintained discipline, and the leads we targeted and the growth we saw in policy production was largely driven by the execution and efficiency of our agents. Moving to the right side of the page, we saw a modest increase in LTVs for the policies written in fiscal 2024. While the impact to our top line is favorable, the more important takeaway is the underlying stability we have seen in policyholder retention in recent years.

Speaker Change: Now, let me detail the results in our senior segment.

Speaker Change: Growth in production resulted in an 8% expansion in EMEA approved policies because 625000 for the full year.

Speaker Change: As Tim noted, we maintain discipline in the leads we targeted in the growth. We saw in policy production was largely driven by the execution and efficiency of our agents.

Speaker Change: Moving to the right side of the page we saw a modest increase in ltvs for the policies written in fiscal 2020 for.

Speaker Change: While the impact to our topline is favorable the more important takeaway is the underlying stability we have seen in policyholder retention in recent years.

Ryan Clement: As Ten noted, the upcoming season will likely see increased policy changes, but we do not expect the type of volatility experience that fiscal 2022. As a reminder, our LTVs today are nearly 30% lower on average than our high water mark a few years ago, much of which is due to our own changes in the conservatism of our persistency assumptions. But another way, since our strategic redesign, select what has targeted and underwritten policyholders to a much more predictable and narrow range of persistency outcomes.

Speaker Change: As Tim noted the upcoming season will likely see increased policy changes, but we do not expect the type of volatility experienced in fiscal 2022.

Speaker Change: As a reminder, our ltvs today are nearly 30% lower on average than our high water Mark a few years ago much of which is due to our own changes and the conservatism of our persistency assumptions.

Speaker Change: Put another way I'm sorry.

Speaker Change: Our strategic redesign select code is targeted and underwritten policyholders to a much more predictable narrow range of persistency outcomes.

Ryan Clement: With that, let me turn the call over to Ryan to detail our financial results. Ryan. Thanks, Tim. I'll start briefly with the summary of our results. On a consolidated basis, SelectQuote grew fourth quarter revenues, 39% to 307 million driven by double-digit growth in our senior business, and continued strength in Select or X. The revenue was up 75%. More importantly, our consolidated, even expanded by over 20 million, driven by a strong balance of execution in our senior business, and the continued scale of our health care services platform. In senior, we delivered another strong year of 25% EVIT margins, which was well above our long-term targeted range of 20% plus.

Ryan Clement: comes.

Ryan Clement: Now, I'll quickly summarize the top line and profitability performance of our eight-year segment. So, a revenue of $656 million represents growth of 11% in fiscal year 2024. Our Q4 results were similar, with revenue of $114 million or growth of 10%. As Tim noted, the highlight of the quarter in year was the poll through Selectquote achieved in senior profitability, which ended both the quarter and the year with mid 20% even of margins, which for the second 10 second year was well above our target of 20% plus. Moving to our Life and Auto and Hum division, which both contributed positively to our overall results.

Speaker Change: Now I'll quickly summarize the topline and profitability performance of our senior segment.

Speaker Change: Total revenue of $656 million represents growth of 11% in fiscal year 2024, our Q4 results were similar with revenue of $114 million or growth of 10%.

Speaker Change: As Tim noted the highlight of the quarter and year was the pull through select achieved in senior profitability, which ended both the quarter and the year with mid 20% EBITDA margins, which for the second consecutive year was well above our target of 20% plus.

Speaker Change: Moving to our life and auto and home Division, which both contributed positively to our overall results.

Ryan Clement: Starting with the life business, revenue for the fourth quarter was 42 million, up 11% year over year. For a full year 2024, the segment grew revenue by 8% year over year to 158 million. The life business continues to be a strong EBITDA contributor, generating $7 million and $20 million for the fourth quarter and full year, respectively. Moving to auto and home, revenue was $8 million for the fourth quarter and $36 million for the full year. Adjusted EBITDA for the fourth quarter was $2 million, and $14 million for the full year.

Speaker Change: Starting with the life business revenue for the fourth quarter was $42 million up 11% year over year.

Ryan Clement: Stable persistency and higher resulting LTVs for fiscal 2024 helped in profitability. That said, our teams deserve the lion's share of the recognition, as our strategy to target the best leads for our core tenured agents led to excellent close rates and throughput. Shifting to healthcare services, the story in 2024 was similar to 2023, but better. Select our ex-member and revenue growth continued to demonstrate the significant value we are delivering to our prescription drug customers. As a segment, healthcare services delivered the fifth straight quarter of profitable adjusted even, a contributing close to 8 million and adjusted even a fiscal year 2024.

Speaker Change: For full year 2020 for this segment grew revenue by 8% year over year to $158 million. The life business continues to be a strong EBIT contributor generating $7 million and $20 million for the fourth quarter and full year respectively.

Speaker Change: Moving to auto and home revenue was $8 million for the fourth quarter and $36 million for the full year adjusted EBITDA for the fourth quarter was $2 million and $14 million for the full year.

Ryan Clement: In line with our commitment to discipline, capital allocation, and cash generation, we have made the strategic decision to rationalize our auto and home business by pulling back on agent headcount and external lead sourcing. We believe it is in the best interest of shareholders to deploy our capital and other parts of the business where the cash efficiency is more attractive.

Speaker Change: In line with our commitment to disciplined capital allocation and cash generation. We have made the strategic decision to rationalize our auto and home business by pulling back on agent head count and external lead sourcing.

Ryan Clement: This was accomplished despite the rapid growth and selector ex-members, which ended the year at 82,000. As a reference point, our healthcare services segment finished fiscal 2023 with an adjusted even a loss of 23 million, as the business was still ramping. The rapid time to scale is the prime example of how our position in the healthcare services market can be leveraged to drive synergistic value for our customers and ultimately our shareholders. On the next page, we present another UR consolidated results for 2024. As Tim noted, it was an impressive year relative to our original expectations. The revenue outperformance was driven predominantly by selector ex, and the overall improvement and profitability was driven by both our senior and healthcare services segments.

Speaker Change: We believe it is in the best interest of shareholders to deploy our capital in other parts of the business, where the cash efficiency is more attractive as a result. This is the last quarter, where we will breakout the auto and home results.

Ryan Clement: As a result, this is the last quarter where we will break out the auto and home results. Before we jump into our outlook for fiscal 2025, it's worth calling out that our 2024 adjusted EBITDA of $117 million would have been approximately $103 million when the auto and home results are backed out. While we expect there will be some modest EBITDA contribution from the runoff, it's important to note for comparison purposes. Revenue is expected to be in the range of $1.4 to $1.5 billion, which at the midpoint represents growth of 10% year-to-year. Adjusted EBITDA is expected to be in the range of $90 to $120 million, representing a year-over-year decline of 10% at the midpoint before normalizing for the auto and home impact I just mentioned.

Speaker Change: Before we jump into our outlook for fiscal 2025, it's worth calling out that our 2024 adjusted EBITDA of $117 million would have been approximately $103 million when the auto and home results are backed out while we expect there will be some modest EBIT contribution from the run off it's important to note for comparison purposes.

Speaker Change: Revenue is expected to be in the range of one four to $1 5 billion, which at the midpoint represents growth of 10% year over year.

Speaker Change: Adjusted EBITDA is expected to be in the range of $90 million to $120 million, representing a year over year decline of 10% at the midpoint before normalizing for the auto and home May impact I. Just mentioned, we will walk through the main drivers of the decline on the next slide.

Ryan Clement: Our full year consolidated revenue expanded by 32% to 1.3 billion. As Tim mentioned, the more important pivot in 2024 was the inflection of profitability in our healthcare services segment, which eliminated the drag on our consolidated EBITDA. Overall EBITDA for 2024 grew 57% to 117 million, resulting in a full year margin of 9%. Again, very strong outperformance compared to our original expectations. The only point I'd add here for context is on revenue growth relative to EBITDA growth. In the recent past, our revenues have outpaced our EBITDA as selector ex members continue to mature. 2024 will mark the year where we begin capturing operating leverage in the business.

Ryan Clement: We will walk through the main drivers of the decline on the next slide. Finally, net loss is expected to be in the range of $6 to $42 million.

Speaker Change: Finally, net loss is expected to be in the range of $42 million to $6 million.

Ryan Clement: Now, provide more context on the drivers of our EBITDA guide for fiscal 2025 across each of our businesses, starting with senior. Again, the primary drivers of the 2025 decline in the justice EBITDA are an approximate 10 to 15% pullback and anticipated senior MAProduction as we enter the year with fewer agents. As Tim mentioned, the new commission structure implemented by one of our carriers resulted in a temporary capital constraint, which prevented us from hiring a larger agent class ahead of the upcoming AUPC them. This pullback and volume is the direct result of that constraint and is not reflective of what we believe would be possible in the otherwise strong, attractive Medicare-Vantage market.

Speaker Change: Now I'll provide more context on the drivers of our EBIT guidance for fiscal 2025 across each of our businesses starting with senior.

Speaker Change: Again, the primary drivers of the 2025 decline in adjusted EBITDA is an approximate 15% pullback in anticipated senior M&A production as we enter the year with your agents.

Speaker Change: As Tim mentioned, the New commission structure implemented by one of our carriers resulted in a temporary capital constraint, which prevented us from hiring a larger agent class ahead of the upcoming AEP season.

Ryan Clement: Now let me detail the results in our senior segment. Table growth in production resulted in an 8% expansion in AMA approved policies to 625,000 for the full year. As Tim noted, we maintained discipline in the leads we targeted, and the growth we saw in policy production was largely driven by the execution and efficiency of our agents. Moving to the right side of the page, we saw a modest increase in LTVs for the policies written in fiscal 2024. While the impact to our top line is favorable, the more important takeaway is the underlying stability we have seen in policyholder retention and recent years.

Tim tanker: This pullback in volume as the direct result of that constraint and does not reflect what we believe would be possible in the otherwise strong and attractive Medicare advantage market from a unit economics perspective, we're confident we can continue to deliver EBITDA margins of 20% plus and arrange a medicare selling environments.

Ryan Clement: From a unit economics perspective, we are confident we can continue to deliver even a margins of 20% plus in a range of Medicare selling environments. The temporary MA volume headwind will be partially offset by continuing strength within healthier services and a particular selector X. We anticipate continued strong membership growth in the range of 20 to 25%, which should drive revenue growth of about 35 to 45%. We expect membership growth to be higher in the second half of 2025, which is the first half in line with normal seasonality trends, is the onboard more SRX members on the heels of the busy AEP and OEP periods.

Speaker Change: The temporary MA value headwind will be partially offset by continued strength within health care services in particular select Rx. We anticipate continued strong membership growth in the range of 20% to 25%, which should drive revenue growth of about 35% to 45% we.

Speaker Change: We expect membership growth to be higher in the second half of 2025 versus the first half in line with normal seasonality trends as we onboard more srs members on the heels of the busy AEP and <unk> periods.

Ryan Clement: As Tim noted, the upcoming season will likely see increased policy changes, but we do not expect the type of volatility experienced in fiscal 2022. As a reminder, our LTVs today are nearly 30% lower on average than our high water mark a few years ago, much of which is due to our own changes in the conservatism of our persistency assumptions. In another way, since our strategic redesign, Select Vote has targeted and underwritten policyholders to a much more predictable and narrow range of persistency outcomes. For the first time in the year.

Speaker Change: We expect EBIT margins in health care services to be in the low to mid single digits range for fiscal 2025, and expect margin improvement as the year progresses.

Speaker Change: Finally, as I mentioned before we are rationalizing the auto and home business and while we plan to maintain a small presence in this space auto and home will no longer be a material contribution to <unk> earnings and therefore will be a headwind for fiscal 2025, adjusted EBITDA, but a tailwind to overall operating cash flow for the year.

Ryan Clement: It's your own contribution to select what's earnings and therefore will be a headwind for fiscal 2025's adjusted EBITDA, but a tailwind to overall operating cashflow for the year. While select what's underlying business trends remains strong, I'd reiterate Tim's point that we see an abundance of opportunity.

Ryan Clement: Now, I'll quickly summarize the top line in profitability performance of our state-new segment. The revenue of $656 million represents growth of 11% in fiscal year 2024. Our Q4 results were similar, with revenue of $114 million or growth of 10%. As Tim noted, the highlight of the quarter in year was the poll through Selectquote achieved in senior profitability, which ended both the quarter in the year with mid 20% even margins, which for the second 10 second year was well above our target of 20% plus. Moving to our life in auto and hum division, which both contributed positively to our overall results.

Speaker Change: <unk> underlying business trends remained strong I'd reiterate tim's point that we see an abundance of opportunity we remain highly committed to further improving our balance sheet to capture the value. We know is available within the large and attractive markets. We serve with that I will turn the call over to the operator for questions.

Ryan Clement: We remain highly committed to further improving our balance sheet to capture the value we know is available within the large and attractive markets we serve with that.

Operator: I'll turn the call over to the operator for questions. Thank you. If you would like to ask a question, please dial StarFlood by one on your telephone keypad now. If you change your mind, please dial StarFlood by two to exit the key.

Speaker Change: Thank you if you would like to ask a question. Please I'll start off by one on your telephone keypad now if you change your mind. Please dial star followed by two to exit the key.

Operator: Finally, if you are using a speaker phone, then please pick up your handset before asking your question, and when preparing to ask a question, please ensure that your phone is unmuted locally.

Finally, if youre using a speakerphone please pick up your handset before asking your question and when preparing to ask a question. Please ensure that youll phone is on mute locally.

Ryan Clement: Starting with the life business, revenue for the fourth quarter was $42 million, up 11% year over year. For four years 2024, the segment grew revenue by 8% year over year to $158 million. The life business continues to be a strong EBITF contributor, generating $7 million and $20 million for the fourth quarter and full year, respectively. Moving to auto and home, revenue was $8 million for the fourth quarter and $36 million for the full year. Adjusted EBITF for the fourth quarter was $2 million and $14 million for the full year. In line with our commitment to discipline, capital allocation, and cash generation, we have made the strategic decision to rationalize our auto and home business by pulling back on agent headcount and external lead sourcing.

Benjamin Hendrix: Our first question today is from the line of Ben Hendrix of RBC. Please go ahead; your line is open. Thank you very much, guys.

Speaker Change: Our first question today is from the line of Ben Hendrix of RBC. Please go ahead. Your line is open.

Alright, Thank you very much guys.

Timothy Danker: I wanted to talk about the securitization in the $100 million of letter of intent of intent you signed you noticed. You are you noted that that's non ramp to future securitization. So what if you can sort of let us give some idea of how you're thinking about the bridge from the current, current LOI to the fall 27 maturity and kind of the prospects for kind of ramping that securitization up over the next couple of years. Thanks.

Ben Hendrix: Wanted to talk about the securitization.

Speaker Change: The $100 million.

Speaker Change: Letter of intent signed you noticed.

Speaker Change: You noted that thats non ramp to future Securitizations I'm wondering if you can kind of let us give us some idea of how youre thinking about the bridge from the current LOI to the to the fall 2027 maturity and kind of the prospects for kind of ramping that securitization up over the next couple of years. Thanks.

Timothy Danker: Good morning, Ben. This is Tim. I appreciate the question. We are very excited about this LOI and feel that it's definitely the right deal for Select Code in our shareholders. As we highlighted, there are several benefits here. I think most importantly, the matured extension of our term debt in the fall of 2027. This first $100 million securitization is that critical first step. I'm locking further delivery in the balance sheet. This is something we've been very focused on. A lot of work is going on to carry your contract, technology, operational infrastructure. And we think that once this, you know, proposed transaction quotes that, that gives us further optionality for future securitization.

Speaker Change: Hey, Good morning, Brendan This is Tom I. Appreciate the question we are very excited about.

Ryan Clement: We believe it is in the best interest of shareholders to deploy our capital and other parts of the business where the cash efficiency is more attractive.

Speaker Change: This LOI until that it's definitely the right deal for <unk> and our shareholders as we highlighted there is.

Ryan Clement: As a result, this is the last quarter where we will break out the auto and home results. Before we jump into our outlook for fiscal 2025, it's worth calling out that our 2024 adjusted EBITF of $117 million would have been approximately $103 million when the auto and home results are backed out. While we expect there will be some modest EBITF contribution from the runoff, it's important to note for comparison purposes. Revenant is expected to be in the range of 1.4 to 1.5 billion, which at the mid-point represents growth of 10% year over year. Adjusted EBITF is expected to be in the range of $90 to $120 million, representing a year-over-year decline of 10% at the mid-point before normalizing for the auto and home impact I just mentioned.

Tom I.: Several benefits here I think most importantly, the maturity extension of our term debt in the fall of 2027.

Tom I.: First the $100 million securitization is that critical first step.

Tom I.: Locking further delevering of the balance sheet, that's something we've been very focused on.

A lot of work has gone on to carrier contracts technology operational infrastructure, and we think that.

Tom I.: Once this.

Tom I.: The proposed transaction closed that gives us.

Tom I.: Further optionality for future.

Timothy Danker: This also helps reduce our cost of capital to meaningfully inside our current cost of capital. But securitization is a lever. It's not the only lever for the company. And so, you know, we will continue to evaluate other options. The company is blessed with lots of assets, a significant backbook, a very robust business, and a growing healthcare services business. And so we feel like there are lots of options. We feel very confident in our ability to continue to operate well, to grow, and certainly to deliver. And so, you know, we'll provide more clarity here in the coming weeks as we work through the, you know, the definitive documents and hopefully bring us to the market.

Future securitization.

Tom I.: Also helps reduce our cost of capital.

Speaker Change: Meaningfully inside our current cost of cost of capital, but securitizations to lever. It is not the only lever for.

Ryan Clement: We will walk through the main drivers of the decline on the next slide. Finally, net loss is expected to be in the range of $6 to $42 million.

Speaker Change: For the company and so we will continue to evaluate other options for the company.

Ryan Clement: Now provide more context on the drivers of our EBITF guide for fiscal 2025 across each of our businesses, starting with senior. Again, the primary drivers of the 2025 decline in the justice EBITF is an approximate 10 to 15% pullback and anticipated senior MA production as we enter the year with fewer agents. As Tim mentioned, the new commission structure implemented by one of our carriers resulted in a temporary capital constraint, which prevented us from hiring a larger Asian class ahead of the upcoming AUPC them. This pullback and volume is the direct result of that constraint and is not reflective of what we believe would be possible in the otherwise strong, attractive Medicare Advantage market.

Speaker Change: The last with lots of assets a significant back book, a very robust business, a growing health care services business and so we feel like there are lots of options, we feel very confident in our ability to continue to operate well to grow and certainly to delever and so we'll provide.

<unk>.

Speaker Change: More clarity here in the coming weeks as we work through the the definitive documents and hopefully bring this sale of the market.

Benjamin Hendrix: Thank you for that. And if I can get that's cool and about SelectRX, niceeva.contribution in this past quarter.

Speaker Change: Thank you for that and if I could ask one about select Rx.

Ryan Clement: From a unit economics perspective, we are confident we can continue to deliver even a margins of 20% plus in a range of Medicare selling environments. The temporary MA value headwin will be partially offset by continued strength within healthcare services and particular selector acts. We anticipate continued strong membership growth in the range of 20 to 25%, which should drive revenue growth of about 35 to 45%. We expect membership growth to be higher in the second half of 2025, which is the first half in line with normal seasonality trends as the onboard more SRX members on the deals of the busy AEP and OEP periods.

Speaker Change: Nice EBITDA contribution.

Timothy Danker: How do we think about margins for 2025 and that ramp up, and where that could go over time? Yeah, thanks to the questions, Ben. I think we're certainly pleased with the SelectRX business and the rapid growth, exceeding 68% over the past year and well ahead of our original guide. As the year progresses for 2025, we've highlighted, we expect personal growth, 20s, 25% revenue growth of 35 to 45%, and highlighted margins in the low-to-mid-pinkle budget. And we do see this continue to progress as the year unfolds, so it's like a half we would expect to be higher.

Speaker Change: And this past quarter kind of how do we think about margins for 2025, net ramp up and where that could go over time.

Speaker Change: Yes, Thanks for the question Ben I think.

Speaker Change: Really pleased with.

Speaker Change: The select Rx business and the rapid growth.

Speaker Change: It's hitting 68% over the past year and well ahead of our original guide.

Speaker Change: As the year progresses for 2025, we have highlighted we expect.

Speaker Change: Customer growth, 20% to 25% revenue growth of 35% to 45% and highlighted margins in the low to mid single digits and we do see this continuing to progress.

As the year unfolds second half, we would expect to be higher and long term.

Timothy Danker: In long-term, you know, our position is still that the even a margin potential within this business is in the low-to-mid teams. And we are making investments to drive operational efficiency in the business. We think that there's a meaningful opportunity there, including making investments in a new facility in the Overland Park, Kansas area.

Speaker Change: Our position is still that.

Ryan Clement: It's your own contribution to SelectQuote's earnings, and therefore will be a headwind for fiscal 2025's adjusted EBITDA, but a tailwind to overall operating cash load for the year. While SelectQuote's underlying business trend remains strong, I'd reiterate Tim's point that we see an abundance of opportunity.

Speaker Change: Our margin potential within this business in the low to mid teens, and we are making investments to drive operational efficiency in the business, we think that there's a meaningful opportunity there.

Speaker Change: <unk>, making investments in our new facility in the Overland Park, Kansas.

Ryan Clement: We remain highly committed to further improving our balance sheet to capture the value we know is available within the large and attractive markets we serve with that.

Speaker Change: Yes.

Benjamin Hendrix: Got you, and we've been going back to the senior side. I appreciate the commentary about the insurance carrier kind of going back to a ratable commission structure. And then that, producing kind of along with the balance sheet considerations, kind of, I guess, driving to slower growth than you had maybe hoax-flooring guidance.

Gotcha, and then going back to the senior side I appreciate the commentary about the insurance carrier kind of going back to a ratable Commission structure.

Speaker Change: And then that producing kind of along with the balance sheet considerations kind of I guess driving some slower growth than you had maybe hoped for and guidance.

Operator: Finally, if you are using a speaker phone, then please pick up your handset before asking your question. And when preparing to ask a question, please ensure that your phone is unmuted locally.

Timothy Danker: But is there any, any reason, believe that this slower growth and maybe the smaller new agent pool could de-risk the growth that you do see this year, kind of what I'm thinking about, you know, the switching period and chance for churn through that period. Is there a reason to believe that the new members that you do onboard just given a more tenured structure than maybe some of your peers might have that we could see better retention in this quarter and essentially de-risk the chance of churn in the switching period? Yeah, very question.

Speaker Change: Is there any any reason to believe that this slower growth and maybe.

Speaker Change: The smaller new agent pool could de risk.

Benjamin Hendrix: Our first question today is from the line of Ben Hendrix of RBC. Please go ahead. Your line is open. Thank you very much, guys.

The growth that you do see this year kind of what I'm thinking about.

Speaker Change: The switching period and chance for churn through that period is there.

Timothy Danker: I wanted to talk about the securitization in $100 million of letter of intent of intent you signed. You noticed that that's non-ramp to future securitization. I wanted to give you some idea of how you're thinking about the bridge from the current L.O.I. to the fall 2027 maturity and kind of the prospects for kind of ramping that securitization up over the next couple of years. Thanks.

Speaker Change: Is there a reason to believe that.

Speaker Change: Debt.

Speaker Change: New members that you do.

Onboard just given a more tenured structure than maybe some of your peers might have that we could see.

Speaker Change: Could see better retention this quarter end.

Speaker Change: Essentially de risks.

Speaker Change: Chance of churn in the switching.

Yes, Ben Great question, Let me, let me address the front part and ask Bob to maybe address the specifics on retention, but I do think with respect to our overall goal and we've been on record on this quite a bit.

Timothy Danker: Let me address the front part and ask Bob to maybe adjust the specifics on retention. But I do think, with respect to our overall goal, and we've been on record that on this quite a bit, has been right to be able to deliver in a range of selling seasons, right? That was the whole part of the strategic redesign. That was everything about a highly tenured agent course, right? Even better targeting and customer segmentation. And I think if you look at the last two years' results, you can see what we've been doing from a unit economic and margins perspective.

Timothy Danker: Good morning, Ben. This is Tim. I appreciate the question.

Timothy Danker: We are very excited about this L.O.I. and feel that it's definitely the right deal for select code in our shareholders. As we highlighted, there's several benefits here. I think most importantly, the matured extension of our termed that in the fall of 2027. This first $100 million securitization is that critical first step. I'm locking further delivery in the balance sheet. This is something we've been very focused on. A lot of work is going on to carry your contract, technology, operational infrastructure. And we think that once this proposed transaction closed, that gives us further optionality for future securitization.

Bob: Has been right to be able to deliver in a range of solid seasons right that was the whole part of the strategic redesign that was everything about a highly tenured agent force right even.

Speaker Change: Better targeting and customer segmentation and I think if you look at the last two years results.

Speaker Change: You can see what we've been doing from a unit economics and margins perspective, we would reasonably expect that to continue with respect to retention I'll kick that over to Bob.

Robert Grant: We would reasonably expect that to continue with respect to retention.

Robert Grant: I'll kick that over to Bob. Yeah, and specific, I'll go specific to new policy retention and then also book retention because it's kind of a blended question, which is a good question. So yeah, I mean, I've been with data with say on our more tenured agents; they do a significantly better job of placing people on the right policies than ultimately those persisting throughout AEP and to that kind of vital 90-day period. We'd also say that when we drive inbound calls on all the plan changes and everything that everyone has talked about this year, that we have a very tenured right choice team and very tenured agent course.

Bob: Yes specific I'll go specific new policy retention and then also book retention because maybe it's kind of a blended question, which is a good question. So.

Timothy Danker: This also helps reduce our cost of capital to meaningfully inside our current cost of capital. But securitization is a lever. It's not the only lever for the company. And so we will continue to evaluate other options. The company is blessed with lots of assets, a significant backbook, a very robust business, and a growing healthcare services business. And so we feel like there are lots of options. We feel very confident in our ability to continue to operate well, to grow, and certainly to deliver.

Speaker Change: Yes.

Bob: Then with data would say on our more tenured agents they do a significantly better job of placing people on the right policies and then ultimately those persisting throughout AAP and to that kind of vital 90 day period.

Bob: We'd also say that when we drive inbound calls on all the plan changes and everything that everyone has talked about this year that we have a very tenured right choice team.

Bob: And very tenured agent force. So when we answer those calls we feel really really confident about our ability to.

Robert Grant: So when we answer those calls, we feel really, really confident about our ability to really drive home the benefits of the plans people are on and just timber worries of folks in the market, which there's definitely going to be given that changes on the plans that are out there that the carriers have been very open about. So it's a really thoughtful question, and yes, we believe that our more tenured force is better equipped to deal with that complexity than anybody.

Timothy Danker: And so we'll provide more clarity here in the coming weeks as we work through the definitive documents and hopefully bring us to the market.

Bob: And really drive home the benefits of the plans people are on and.

Bob: Tempur worries.

Folks in the market, which there's definitely going to be given quite given the changes on the plans that are out there that the carriers have been very open about so it's a really thoughtful question and yes, we believe that our more tenured force is better equipped to deal with that complexity than anybody.

Timothy Danker: Thank you for that. And if I could ask one about SelectRX, Niceiva's contribution in this past quarter. How do we think about margins for 2025 and that ramp up, and where that could go over time?

Benjamin Hendrix: Thank you for that.

Speaker Change: Thanks for that and then my.

William Grant: My last question was just from a CMS marketing standards. I know you had some a little bit of margin pressure from that. Can you talk about how much of that maybe you might be able to kind of mitigate going forward? Is that something that you believe you could fully offset? Does something that'll be ongoing at current levels, or just how do we think about that progression?

Timothy Danker: Yeah, thanks to the questions, Ben. I think we're certainly pleased with the SelectRX business and the rapid growth, exceeding 68% over the past year and well ahead of our original guide. As the year progresses for 2025, we've highlighted, we expect personal growth, 20, 25%, revenue growth of 35% to 45%, and highlighted margins in the low-to-mid-pinkle budget. And we do see this continue to progress as the year unfolds, so it's like a half we would expect to be higher. In long-term, our position is still that the even-a-margin potential within this business is in the low-to-mid-team. And we are making investments to drive operational efficiency.

Speaker Change: Last question was just talking to CMS marketing standards I know you had some some a little bit of margin pressure from that can you talk about how much of that.

Maybe.

Speaker Change: You might be able to kind of mitigate going forward is that something that you believe you can fully offset that suddenly there'll be ongoing at current levels or just how do we think about that progression.

William Grant: Bill, would you like to address up? Yeah, absolutely. So there's both the historical CMS changes that cause a little bit of pressure, and then there is some of the newer stuff regarding kind of the one-to-one consent. We're all changes that CMS kind of throws at us and feel like it took just a little bit to kind of figure out exactly with the 48 hour rule some of the things we were doing exactly what we needed to do there because it was just change, but feel like we're very well equipped and that's pretty stable now. So I wouldn't expect anything going forward in terms of additional pressure related to those rules.

Speaker Change: Bill would you like to address ups.

Bill: Yeah, absolutely. So there is both the historical.

Speaker Change: CMS.

Speaker Change: What kind of changes that caused a little bit of pressure and then there is.

Speaker Change: Some of the newer stuff regarding kind of the one to one concern. We're always we felt like we're very well equipped to deal with.

Timothy Danker: In the business, we think that there's a meaningful opportunity there, including making investments in a new facility in the Overland Park, Kansas area.

Speaker Change: With Chi.

<unk>, the CMS kind of throws at us.

And feel like it took just a little bit to kind of figure out exactly what the 48 hour roll some of the things that we're doing exactly what we needed to do there because it was just change but feel like we're very well equipped and thats pretty stable now.

Timothy Danker: Yeah, Shane, we've been going back to the senior side.

Timothy Danker: I appreciate the commentary about the insurance carrier kind of going back to a ratable commission structure. And then that producing kind of along with the balance sheet considerations, kind of, I guess, driving to slower growth than you had maybe hoax-flooring guidance.

So I wouldn't expect anything going forward in terms of additional pressure related to those rules also the new stuff on in terms of the one to one concern we've always done Linda one concern. So that's no change for us So don't feel like any of the rules that came out for this year have any additional.

William Grant: Also, the new stuff in terms of the one-to-one consent, we've always done one-to-one consent, so that's no change for us. So don't feel like any of the rules that came up for this year have any additional. We'll put any additional pressure on as relates to kind of lead buys. Also feel like, you know, kind of back to your other question just a bit on, you know, what kind of a smaller force does in terms of allowing us to be used the same wide funnel we've always had, but let fewer leads through the funnel. It just allows us to be more and more specific about what we take.

Timothy Danker: But is there any, any reason to believe that this slower growth, and maybe the smaller new agent pool could de-risk the growth that you do see this year, kind of what I'm thinking about, you know, the switching period and chance for churn through that period? Is there a reason to believe that the new members that you do onboard, just given a more tenured structure than maybe some of your peers might have, that we could see better retention in this quarter and essentially de-risk the chance of churn in the switching period. Yeah, very question. Let me address the front part and ask Bob to maybe address the specifics on retention.

Speaker Change: We'll put any additional pressure on.

As it relates to kind of lead buys also feel like kind of back to your other question just a bit on.

Speaker Change: What kind of a smaller force does in terms of allowing us to be used the same wide funnel, we've always had.

Speaker Change: But.

Speaker Change: Fewer to lead through the funnel. It just allows us to be more and more specific about what we take.

William Grant: It helps in terms of, you know, both not only close rates, but, you know, policies that go in force, all those things. So believe we're well equipped to deal with those both through, you know, what we've seen with the way we've dealt with those and through our lead buys strategy itself.

Speaker Change: It helps in terms of.

Speaker Change: Not only close rate but.

Speaker Change: Our policy is that going for us all of those things. So I believe we're well equipped to deal with those both through what we've seen with the way we've dealt with those and through our lead by strategy itself.

Timothy Danker: But I do think, with respect to our overall goal, and we've been on record on this quite a bit, has been to be able to deliver in a range of selling seasons, right? That was the whole part of the strategic redesign. That was everything about a highly tenured agent course, right? Even better targeting and customer segmentation. And I think if you look at the last two years' results, you can see what we've been doing from a unit economics and margins perspective. We would reasonably expect that to continue with respect to retention.

Operator: Thank you very much, guys.

Thank you very much guys.

Patrick McCann: Our next question today is from the line of Pat McCann of Noble Capital Markets. Please go ahead; your line is open. Hey, good morning, and thanks for taking my questions, and congrats on our strong year. My first question has to do with marketing. I was just wondering if, given the prospect for heightened shopping and disruptions in the upcoming AEP, I was wondering if you were making any adjustments to your marketing strategy. Any changes there? Yeah, could you, could you comment about that?

Our next question today is from the line of of.

Speaker Change: <unk> Noble capital markets. Please go ahead your line is open.

Speaker Change: Hey, good morning, and thanks for taking my questions and congrats on a strong year. My first question has to do with marketing I was just wondering if given the prospect for heightened shopping and disruptions in the upcoming.

Speaker Change: I was wondering if you were making any.

Robert Grant: I'll kick that over to Bob. Yeah, and specific, I'll go specific to new policy retention and then also book retention because it's kind of a blended question, which is a good question. So, yeah, I mean, I've been with data with say on our more tenured agents; they do a significantly better job of placing people on the right policy than ultimately those persisting throughout AEP and to that kind of vital 90-day period. We'd also say that when we drive inbound calls on all the plan changes and everything that everyone has talked about this year, that we have a very tenured right choice team and very tenured agent course.

Speaker Change: Adjustments to your marketing strategy.

Speaker Change: Any changes there.

Speaker Change: Could you comment about that.

Speaker Change: Yeah.

William Grant: Bill, do you want to go ahead and address that? Thank you. Bill, I think you might have a few minutes. Yeah, Bill, okay. Going back to your question, we think while certainly, you know, it creates some challenges with the changes; absolutely creates a massive opportunity with the marketing, and our strategy is built around the changes. So when you really look at where we'll target, you know, we'll target within the disrupted areas, right? So when you look, we know exactly, as example, you know, where planned terminations are occurring; they are in kind of isolated areas, so we can target those areas and provide it.

Speaker Change: Bill do you want to go ahead and address that.

Speaker Change: Okay.

Speaker Change: Bill.

Speaker Change: Okay.

Speaker Change: I was just wondering about that.

Speaker Change: Does that mean.

Robert Grant: So, when we answer those calls, we feel really, really confident about our ability to really drive home the benefits of the plans people are on. And, you know, just timber worries of folks in the market, which there's definitely going to be given the changes on the plans that are out there that the carriers have been very open about. So, it's a really thoughtful question, and yes, we believe that our more tenured force is better to deal with that complexity than anybody.

Speaker Change: Going back to your question.

Speaker Change: Well certainly.

Speaker Change: It creates some challenges with the changes.

Speaker Change: Absolutely it create massive opportunity with our marketing and our strategy is built around the change there. So when you really look at where we will target will target within the disrupted areas right. So when you look we know exactly as example, where plan terminations are occurring.

And kind of isolated areas. So we can target those areas.

William Grant: We think a huge service to those folks, which should really play into close rates in those sense. As it relates to the election, I think that we're very well equipped to be able to handle the election in terms of our wide tunnel approach. We've handled election years in the past, and while certainly could put a little bit of pressure on TV, we think, you know, with certainly what the awareness is going to be around the plant changes this year, that that won't really present a challenge.

Speaker Change: Provided we think.

Robert Grant: Thank you for that.

Robert Grant: And then my last question was just from a CMS marketing standard. I know you had some a little bit of margin pressure from that. Can you talk about how much of that maybe you might be able to kind of mitigate going forward? Is that something that you believe you could fully offset, that something that will be ongoing at current levels, or just how do we think about that progression?

Speaker Change: Service.

Folks, which should really play in the close rate.

Speaker Change: Yes.

Speaker Change: As it relates to the election.

Speaker Change: I think that we're very well equipped to be able to handle the election in terms of kind of.

Speaker Change: Our Wi funnel approach with <unk>.

Speaker Change: Handled election years in the past.

Speaker Change: Certainly it could put a little bit of pressure on TV, we think.

Robert Grant: Bill, would you like to address us? Yeah, absolutely. So there's both, you know, the historical CMS kind of changes that cause a little bit of pressure. And then there is, you know, some of the newer stuff regarding kind of the one to one percent. We're always, you know, we feel like we're very well equipped to deal with changes. It changes the CMS kind of throws at us. And feel like, you know, it took just a little bit to kind of figure out exactly, you know, with the 48 hour rule, some of the things they were doing exactly, you know, what we needed to do there, because it was just change, but feel like we're very well equipped and that's pretty stable now.

Speaker Change: What's the awareness.

Speaker Change: <unk>.

Speaker Change: The plant changes this year.

Speaker Change: That won't relate to that challenge.

Timothy Danker: So, as a marketer, I think we're very excited about being able to really target, and again, believe with that wide tunnel that, you know, target those areas and what we left through that we can really have a good opportunity to maximize close rates. As they, I would just underscore, Pat, that, you know, two consecutive years of EBITOM margins in the mid-20s are guide for this year and plus EBITOM margins for senior North to 20 percent. So I think a great question on the marketing front that we feel very well equipped there.

Speaker Change: The market I think we're very excited about.

Speaker Change: About being able to really.

Speaker Change: Again believe without wide funnel.

Speaker Change: The argument there.

Speaker Change: We can really have a good opportunity to maximize close rates.

Speaker Change: Yes.

Speaker Change: Yes, I would just underscore Pat.

Two consecutive years with EBITDA margins in the mid twenties, our guide for this year.

Speaker Change: <unk> EBITA margins for senior North of 20%. So I think great question on the marketing front, but we feel very well equipped there Phil.

Timothy Danker: I feel, you know, very well equipped with respect to our agent force and, you know, we're looking forward to the upcoming season.

Speaker Change: Well equipped with respect to our agent force.

Robert Grant: So I wouldn't expect anything going forward in terms of additional pressure related to those rules. Also, you know, the new stuff in terms of the one-to-one consent, we've always done one-to-one consent, so that's no change for us. So don't feel like any of the rules that came out for this year have any additional. We'll put any additional pressure on as relates to kind of lead buys. Also feel like, you know, kind of back to your other question just a bit on, you know, what kind of a smaller force does in terms of allowing us to be used the same wide funnel we've always had.

Speaker Change: We're looking forward to the upcoming season.

Patrick McCann: Great, thanks for that.

Speaker Change: Great. Thanks for that my next question was regarding the new distribution facility, there and the KC area.

Patrick McCann: My next question was regarding the new distribution facility there in the KC area. I think, as you mentioned, it would increase the capacity and, of course, the pharmacy business is growing rapidly. So that makes sense.

Speaker Change: As you mentioned it would increase the.

Speaker Change: The capacity and of course, the pharmacy business is growing rapidly. So that makes sense I was just wondering.

Timothy Danker: I was just wondering if there are any other specific improvements or anything else to note about that new facility and how it enhances the business outside of strictly capacity, which, of course, is a good enough reason on its own, I would think. Yeah, it's a great question. It does have a ton of other benefits. We came in and retrofit two facilities that were older, right? And when you do that, you don't have the opportunity once kind of designed it the exact way that you want to. And then two, you don't really get the benefit of using newer technologies that are more efficient because your size and scale was lower.

Speaker Change: If there are any other specific improvements or anything else to note.

Speaker Change: About that new facility and how it enhances the business outside of strictly capacity, which of course is a good enough reason on its own I would think.

Robert Grant: But, you know, let fewer leads through the funnel; it just allows us to be more and more specific about what we take. It helps in terms of, you know, both not only close rates, but, you know, policies that go in force, all those things. So believe we're well equipped to deal with those both through, you know, what we've seen with the way we've dealt with those and through our lead buys strategy itself.

Speaker Change: Yeah, It's a great question.

Speaker Change: It does have a ton of other benefits.

Speaker Change: We came in and retrofit two facilities that were older right and when you do that you don't have the opportunity one kind of design in the exact way that you want to.

Speaker Change: And then two you don't really get the benefit of using newer technologies that are more efficient because your size and scale with lower so we definitely think there is a big opportunity in cost.

Operator: Thank you very much, guys.

Timothy Danker: So we definitely think there is a big opportunity in cost savings on shipments out the door. One, you know, no surprise, Kansas City is in the middle of the country, right? Right now we're going east coast to west coast on a lot of our shipments, which costs you more money than it should. I know that doesn't sound like a big deal, but when you're shipping out as many trips as we are, it does start to add up. But more importantly than that, the streamline facility and modernization that we can put into it should get significantly more efficiency out of it.

Patrick McCann: Our next question today is from the line of a can of Noble Capital Markets. Please go ahead; your line is open. Good morning, and thanks for taking my questions, and congrats on the strong year. My first question has to do with marketing. I was just wondering if, given the prospect for heightened shopping and disruptions in the upcoming AEP, I was wondering if you were making any adjustments to your marketing strategy. Any changes there. Yeah, could you, could you comment about that?

Speaker Change: Cost savings on shipments out the door.

Speaker Change: One <unk>.

Speaker Change: No surprise, Kansas City is in the middle of the country right now, we're going east coast to West coast on a lot of our shipments which cost you more money than it should I know that doesn't sound like a big deal, but when youre shipping out as many as we are it does start to add up but more importantly than that the streamline facility in modernization that we can put into it.

Speaker Change: Should get significantly more efficiency out of it and it allows us to test some new things that we could retrofit the old facilities with so yes. There are definitely other benefits, which is why we think that the back half of the year.

Timothy Danker: And it allows us to test some new things that we could retrofit the old facilities with. So yes, there are definitely other benefits, which is why we think that, you know, the back half of the year should start. You should start to see that increase in margin even more, not just tied to growth, but also tied to efficiencies.

Speaker Change: Should start you should start to see that increase in margin, even more not just tied to growth, but also tied to efficiencies.

Robert Grant: Well, do you want to go ahead and address that? Okay. Yeah, so, okay. Sorry about that. I was going back to your question. We think while certainly, you know, it creates some challenges; with the changes, absolutely create a massive opportunity with the marketing, and our strategy is built around the change. So when you really look at where we'll target, you know, we'll target within the disrupted areas, right? So when you look, we know exactly, as an example, you know, where planned terminations are occurring; they are in kind of isolated areas, so we can target those areas and provide it.

Patrick McCann: Great. And if I could ask you one last question, I was wondering what, when it came to the commission structure for the large carrier that you guys mentioned, would sort of impact 2025. I was wondering if you could just suppose the original commission structure and the new commission structure for me. That would be very helpful.

Speaker Change: Great and if I could ask just one last question I was wondering when it came to the comes to the commission structure for the large carrier.

Speaker Change: You guys mentioned would sort of impact impact.

Speaker Change: The impact 2025, I was wondering if you could just.

Speaker Change: Suppose.

Speaker Change: The original commission structure and the New Commission structure for me that would be.

Timothy Danker: Thank you so much. Yeah, I'll take that one. You know, as you noted, and that's what you called on the call. You know, we do have a carrier make change. And it wasn't you could select what it all. And I think it's also important to note that, like, the overall compensation is still attractive, but it is moving back to what would be kind of a more traditional structure, where it's, you know, you're compensated upfront to the sale. And then there's more, you know, revenue that's generated as the policy persists over time. And so there is, you know, it's just a little more back in loaded.

Very helpful. Thank you so much.

Speaker Change: Yes, I'll take that one.

Speaker Change: As you noted and as we called out on the call. We didn't have a carrier make change.

Speaker Change: And it.

Speaker Change: It wasn't you can sell equity at all.

Speaker Change #100: And I think it's also important to note that like the overall compensation is still attractive, but it is moving back to what would be kind of a more traditional structure where it.

Robert Grant: We think a huge service, you know, to those folks, which should really play into close rates and, you know, the sense.

Speaker Change #100: Youre compensated upfront in the sale and then there is more.

Speaker Change #100: Revenue that's generated as the policy persist over time and so there is.

Timothy Danker: As it relates to, you know, the election, I think that they were very well equipped to be able to handle the election in terms of kind of our wide funnel approach. We've handled election years in the past and, you know, while certainly it could put a little bit of pressure on TV. We think, you know, with certainly what the awareness is going to be around the plan changes this year, that that that won't relate to that a challenge. But as a marketer, I think we're very excited about being able to really target and, again, believe with that wide funnel that, you know, target those areas and what we left through that we can really have a good opportunity to maximize close rates as they come through.

Timothy Danker: And it does create a working capital constraint, which led to, you know, some pressure and decision to hire a smaller class. But again, we're, you know, absolutely confident in our ability to generate strong, compelling margins. And to work through this kind of short-term capital need. And you know, you know, the value here is that you, you actually do have more revenue in subsequent years. But in the near term, it does create a little bit of a trough.

Speaker Change #100: Just a little more backend loaded and it does create a working capital constraint, which led to.

Speaker Change #100: Some pressure in the decision to hire a smaller class.

Speaker Change #100: But again we're at.

Speaker Change #100: Absolutely confident in our ability to generate strong and compelling margins.

Speaker Change #100: And to work through this kind of short term capital need.

Speaker Change #100: And.

Speaker Change #100: The value here is that you actually do you have more revenue in subsequent years.

Speaker Change #100: But in the near term it does create a little bit of a trough.

Timothy Danker: Yeah, and I would just add Pat. I mean, great. And we have, you know, materially de-risked that particular element moving forward. And if you think about securitization that we talked a lot about, I mean, clearly securitization is the lever to help a lever to help us, you know, deliver the balance sheet. But it also is we think about the potential for future securitizations. Right. We can move to an even more working capital-like model. And really kind of be agnostic. Like, if you will, about the types of the commission structure from the carriers.

Speaker Change #101: Yeah, and I would just add Todd.

Speaker Change #100: We have.

Todd: Materially Derisk that particular element moving forward and if you think about securitization that we've talked a lot about I mean, clearly securitization as a lever to help a lever to help us.

Timothy Danker: I would just underscore, Pat, that, you know, two consecutive years of EBITOM margins in the mid-20s are guide for this year and plus EBITOM margins for senior north to 20%. So I think a great question on the marketing front that we feel very well equipped there, feel, you know, very well equipped with respect to our agent force and, you know, we're looking forward to the upcoming season.

Speaker Change #103: Delever the balance sheet, but it also as we think about the potential for future Securitizations right. We can move to an even more working capital light model and really kind of be agnostic. If you will about the types of the commission structure from the carriers.

Patrick McCann: Great, thanks for that.

Patrick McCann: My next question was regarding the new distribution facility there in the KC area. I think, as you mentioned, it would increase the capacity, and of course, the pharmacy business is growing rapidly. So that makes sense.

Patrick McCann: Excellent. Thanks so much, guys.

Speaker Change #104: Excellent. Thanks, so much guys I appreciate it.

Patrick McCann: I appreciate it.

Operator: Thanks, Pat. Thank you.

Speaker Change #105: Thanks Pat.

Timothy Danker: And this will conclude the Q&A session.

Speaker Change #105: Thank you and this will conclude the Q&A session. So I'd like to hand back to Tim Duncan for any closing remarks.

Timothy Danker: So I'd like to hand back to Tim Duncan for any closing remarks. Yes, thank you, Harriet. I want to thank you all for joining us. Clearly, our priority is to accelerate growth initiatives with an improved capital structure. We're confident in our ability to do so and are taking an important first step as we work towards closing on our initial securitization. Fiscal 2024 was another successful year for SelectQuote. And I'll repeat what I said before: we know there's a significant opportunity for the power of our holistic health care platform to connect participants in a growing number of ways.

Patrick McCann: I was just wondering if there are any other specific improvements or anything else to note about that new facility and how it enhances the business outside of strictly capacity, which, of course, is a good enough reason on its own, I would think. Yeah, it's a great question. It does have a ton of other benefits. We came in and retrofit two facilities that were older, right? And when you do that, you don't have the opportunity, one, to kind of design it the exact way that you want to. And then two, you don't really get the benefit of using newer technologies that are more efficient because your size and scale was lower.

Tim Duncan: Yes. Thank you Harry I want to thank you all for joining US clearly our priority is to accelerate growth initiatives with an improved capital structure.

Speaker Change #107: We're confident in our ability to do so and are taking an important first step as we work towards closing on our initial securitization.

Fiscal 2024 was another successful year for select quote and I'll repeat what I said before we know there is a significant opportunity for the power of our holistic health care platform to connect participants and a growing number of ways. We believe these opportunities are ours to win and we're committed to.

Timothy Danker: We believe these opportunities are ours to win, and we're committed to delivering that value to our customers and investors in fiscal 2025.

Speaker Change #107: Delivering that value to our customers and investors in fiscal 2025, we want to thank you all again and we will see you this fall.

Timothy Danker: We want to thank you all again, and we'll see you this fall.

Timothy Danker: So we definitely think there is a big opportunity in cost savings on shipments out the door. One, you know, no surprise, Kansas City is in the middle of the country, right? Right now we're going east coast to west coast on a lot of our shipments, which cost you more money than it should. I know that doesn't sound like a big deal, but when you're shipping out as many trips as we are, it does start to add up. But more importantly to map the streamlined facility and modernization that we can put into it should get significantly more efficiency out of it, and it allows us to test some new things that we could retrofit the old facilities with.

Operator: This concludes select quotes for quarter earnings conference call. Thank you to everyone who is able to join us.

Speaker Change #108: This concludes <unk> fourth quarter earnings conference call. Thank you to everyone, who is able to join US you may now disconnect your lines.

Operator: You may now disconnect your lines.

Speaker Change #108: [music].

Timothy Danker: So yes, there are definitely other benefits, which is why we think that, you know, the back half of the year should start; you should start to see that increase in margin even more, not just tied to growth but also tied to efficiencies.

Patrick McCann: Great. And if I could ask you one last question. I was wondering when it came to the, comes to the commission structure for the large carrier that you guys mentioned would sort of impact, impact 2025.

Timothy Danker: I was wondering if you could just, just suppose the original commission structure and the new commission structure for me, that would be very helpful. Thank you so much. Yeah, I'll take that one, you know, as you noted, and that's what we called on the call. You know, we did have a carrier make change.

Timothy Danker: And wasn't, wasn't you going to select what it all. And I think it's also important to note that, like, the overall compensation is still attractive, but it is moving back to what would be kind of a more traditional structure where it, you know, you compensated up front to the sale and then there's more, you know, revenue that's generated as the policy persists over time. And so there is, you know, it's just a little more back in loaded, and it does create a working capital constraint which led to you. You know, some pressure and decision to hire a smaller class.

Timothy Danker: But again, we're, you know, absolutely confident in our ability to generate strong and compelling margins. And to work through this kind of short-term capital need. And you know, you know, the value here is that you, you actually do have more revenue in subsequent years. But in the near term, it does create a little bit of a trough.

Timothy Danker: Yeah, and I would just add Pat. I mean, great. I mean, we have, you know, materially de-risked that particular element moving forward. And if you think about securitization that we talked a lot about, I mean, clearly securitization is the lever to help a lever to help us, you know, deliver the balance sheet. But it also, as we think about the potential for future securitizations, right. We can move to an even more working capital-like model. And really kind of be agnostic. If you will about the types of the commission structure from the carriers. Excellent.

Patrick McCann: Thanks so much, guys. I appreciate it.

Patrick McCann: Thanks, Pat. Thank you.

Operator: And this will conclude the Q&A session.

Timothy Danker: So I'd like to hand back to Tim Duncan for any closing remarks. Yes, thank you, Harriet. I want to thank you all for joining us. Clearly, our priority is to accelerate growth initiatives with an improved capital structure. We're confident in our ability to do so and are taking an important first step as we work towards closing on our initial securitization. Fiscal 2024 was another successful year for Select Quote. And I'll repeat what I said before. We know there's a significant opportunity for the power of our holistic healthcare platform to connect participants in a growing number of ways.

Timothy Danker: We believe these opportunities are ours to win, and we're committed to delivering that value to our customers and investors in fiscal 2025.

Timothy Danker: We want to thank you all again, and we'll see you this fall.

Operator: This concludes select quotes for th quarter earnings conference call. Thank you to everyone who is able to join us.

Operator: You may now disconnect your lines.

Q4 2024 SelectQuote Inc Earnings Call

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