Q1 2025 SelectQuote Inc Earnings Call

Welcome to select quotes first quarter.

Speaker Change: All lines have been placed on mute to prevent any background noise.

Speaker Change: After the Speakers' remarks, there will be a question and answer session.

Speaker Change: If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

If he would like to withdraw your question.

Speaker Change: The parakeet.

Speaker Change: It is now my pleasure to introduce Matt Gunter select quote Investor Relations. Mr. <unk> you may begin the conference.

Matt Gunter: Thank you and good morning, everyone welcome to select quotes fiscal first quarter earnings call before we begin our call I would like to mention that on our website. We have provided a slide presentation to help guide our discussion.

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

Speaker Change: Joining me from the company I have our Chief Executive Officer, Tim Denker, and Chief Financial Officer, Brian climate.

Following Tam and Ryan's comments today, we will have a question and answer session.

As referenced on slide two during this call we will be discussing some non-GAAP financial measures. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available in our earnings release and Investor presentation on our website and finally a reminder.

Speaker Change: Certain statements made today may be forward looking statements. These statements are made based upon management's current expectations and beliefs concerning future events impacting the company and therefore involve a number of uncertainties and risks, including but not limited to those described in our earnings release quarterly report on form 10.

Q for the period ended September 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.

Matt Gunter: And with that I'd like to turn the call over to our Chief Executive Officer, Tim Danker, Tim.

Tim Danker: Thanks, Matt and thank you all for joining today I'll start with a high level thoughts on the upcoming year. A few early observations from AEP and an update on <unk> position to add value to each of our stakeholders.

Tim Danker: As you saw from our press release, the year is off to a strong start and it's like what is executing very well and the ongoing AEP season. We are ahead of our original expectations and as a result increased our fiscal 2025 outlook on both the top and bottom line.

Tim Danker: Brian will detail our financials later, but the headline is it's like well prepared well for the Medicare advantage season and continues to perform in our healthcare services segment.

Tim Danker: As you know there's been a lot of commentary about Medicare advantage and how insurance carriers have shifted benefits for the ongoing enrollment period. The predominant question is how changing policy features by carriers would impact industry origination volumes and throughput this season.

Tim Danker: Speak to the strength, we've seen in our results in a minute, but the shifts. This season are a good example of wire bespoke service model is so important we employ a highly trained agents and support them with significant data and technology to help achieve one goal.

The best Medicare advantage policy, our prescription medication service for each customers unique set of needs.

Tim Danker: As we said we felt very good about our model and a wide range of Medicare advantage selling seasons and our high touch approach is even more critical to both policyholders and carriers. When decision factors are in flux. We think the ongoing season will validate that claim and based on our early reads, we expect to be highly.

Tim Danker: Vessel again this year.

Tim Danker: So let me begin on slide three with a brief overview of our quarter.

Tim Danker: It was a strong way to begin fiscal 2025, as we drove year over year revenue growth of 26% and minimized our adjusted EBITDA drag and what is traditionally select clubs largest investment quarter as we ramp into AEP and.

In fact, our year over year EBITDA improved by nearly $10 million driven by continued scale in our healthcare services business and the resulting efficiency of our marketing spend which ended the quarter at a very strong revenue to CAC ratio of four six sacks.

Tim Danker: Our consolidated financial results for the first quarter were very healthy and provide a strong foundation for a successful year ahead.

Tim Danker: With that as a level set let me speak to a few key things we are strategically focused on for both our senior distribution and health care services business.

Tim Danker: Beginning with senior as I mentioned, we are very encouraged by what we are seeing early in AEP relative to our initial expectations.

Tim Danker: First regarding our most important asset our agents.

Tim Danker: We had one of our highest retention years on record for our tenured agent workforce. This is important in three main ways for select quote first we were able to spend more time on policy education and customer service considerations for this specific season instead of basic training.

Tim Danker: Our recruitment and training expenses were modest which aided profitability for the fiscal first quarter and third we believe like what's competitive advantage likely widen headed into this AEP driven by Medicare advantage plan benefit volatility where the experience of our agents is all the more important for both our customers.

Tim Danker: And our carrier partners.

Tim Danker: Another theme I'd highlight in the early days of AEP has been our models consistent improvement in agent close rates and productivity.

Tim Danker: Spoken at length about our strategic focus on unit level returns and prioritizing profitability and cash flow over growth.

Tim Danker: We have achieved that in the past two years with rigorous lead targeting and the use of more tenured agents productivity is about twice that of non tenured agents.

Tim Danker: On that foundation, we continue to further improve productivity by adding data tools and technology, specifically designed to benefit customer fit and experience.

Tim Danker: I bring it up again now because agent productivity is the most attractive lever we have to drive additional growth as you know we continue to improve our capital flexibility and have more to do.

Tim Danker: In the current season, and the best way for select what to grow our senior business has higher throughput and season to date. The results have been very impressive in fact, we've accomplished a high level of agent policy productivity on a relatively stable marketing budget put another way our tenured agents are helping more seniors per lead than they have in the past.

This is a very strong proof point for why the agent lead select what model is built for all seasons.

Tim Danker: Before I detailed the AEP season, let me also give an update on our health care services business and the strong performance of select Rx. Our membership is now over 86000, which is up 64% year over year. Despite the strong growth, we drove our sixth straight quarter of profitability for the business and we are in the process.

Tim Danker: Expanding our capacity to serve customers, even more efficiently in the future.

Tim Danker: If we turn the page let me expand on the ongoing Medicare advantage annual enrollment period.

I will speak to our strategy heading into the season and then review some initial observations we've had so far.

Tim Danker: I'll start with our agents the only thing I'd add to my previous comments is that we continue to be impressed by the additional operating leverage that exists with our experienced agents the outperformance of our agents and the positive impact we're seeing on close rates relative to expectations is the biggest factor for select clubs operating performance.

Tim Danker: So far this season.

Tim Danker: Moving to marketing like what strategy for the past two plus years has been one of highly targeted lead sourcing for policy origination.

That approach has been successful and is even more critical for the ongoing AEP.

As a result of our focus on driving cash flow to improve our balance sheet. We have assigned a high bar for the use of marketing dollars specifically.

Tim Danker: Used early learnings about policy feature changes to develop specific targeted marketing campaigns, which are performing very well Susan today.

Tim Danker: If we move to the third column, we can review, how <unk> data and technology is being leveraged for the current AEP.

Tim Danker: Biggest change for the upcoming season has been the expansion of our AI tools to screen and prioritize calls as well as simplify and accelerate processes behind the scenes. This AEP has shown continued success with these tools, but also additional use cases that we will pursue in the future to drive additional value.

Tim Danker: Last but not least the close partnership we have with our carrier partners for critical to safety given the shift in planned benefits more than any other season. We've worked quickly to develop strategies to surplus existing policyholders that may seek a better policy set similarly, we've been able to match our lead targeting with plant feed.

Tim Danker: <unk> to optimize set for the end customer.

Tim Danker: While the ongoing season presents new challenges and opportunities.

Tim Danker: What's model with purpose built to deliver in a range of solid environments. There is always an opportunity to improve and evolve all with complete alignment between our policyholders carrier partners and our own financial returns.

Moving to slide five let's talk about the progress, we're making to optimize our balance sheet. As we've noted last quarter, we believe <unk> model and the market opportunity in front of us presents more growth potential and we are currently equipped to funds.

Tim Danker: We announced the first step in our recapitalization plan last month and with our initial Medicare advantage commissions receivable securitization, specifically, we raised $100 million in proceeds through an investment grade rated transaction. In addition to the proceeds the transaction accomplished three key things.

Tim Danker: First we extended our term debt maturities by approximately two years and have the ability with subsequent paydowns to further extend the maturity by an additional year.

Tim Danker: Second the initial securitization comes at a significantly improved cost of capital on a like for like basis. The blended cost of our securitization is in excess of 500 basis points lower than our term debt rate.

Tim Danker: This equates to real cash interest expense savings of $5 million per year.

With the time provided by our maturity extension. We believe there are opportunities to further decrease our cost of capital whether through subsequent securitization or other financing options third and probably most underappreciated. The initial securitization only pledged roughly 15% of our receivables balance to generate 100 million.

Tim Danker: Dollars and proceeds for illustration say the remaining roughly 85% of our receivables book would imply potential proceeds well in excess of $400 million.

Tim Danker: We feel very confident in the timeline and the available options, we have to improve our balance sheet over the upcoming year. Additionally, we have significant assets and cash flows to pursue better funding both in terms of structure and rate.

Tim Danker: With that let's turn to slide six and I'll conclude with a brief overview of our priorities in the near term and short the message. We've delivered has two parts.

Tim Danker: First we have a highly efficient operating model that has produced a strong track record of consistent returns in a market with significant growth opportunities. The highlights of that model is shown here on the left side of the slide and it is our intention to continue to drive the same type of performance in the future.

Tim Danker: The second part of our story is that of a company with our limited ability to achieve its true growth potential given our leverage profile as we just talk through like what has taken initial steps with our securitization, but we have much more to do.

Tim Danker: Our priority in 2025 is to eliminate the headwind our leverage creates and meaningfully improve our capital flexibility as we show on the right at this slide our plan is to work towards a target turn debt leverage range of two to three X.

We will share more in the coming quarters, but I'll end my comments by thanking our teams for their work and our shareholders for your support.

Tim Danker: No there is a tremendous value opportunity as a leading enabler in the health care ecosystem and it is our job as a management team to make sure. So likelihood is armed with both the model and balance sheet to capitalize.

Speaker Change: With that let me turn the call over to Ryan to discuss our financial results for the quarter Brian.

Ryan: Thanks, Tim I'll start on slide seven as you heard our first quarter consolidated revenue grew 26% to $292 million.

Speaker Change: Growth was primarily driven by our select Rx business as the first quarter is seasonally slowest for senior distribution ahead of the Medicare advantage selling season.

Speaker Change: More impressive year over year improvement within our consolidated EBITDA for the first quarter, which improved by nearly $10 million compared to last year, driven by our highly tenured agent force and senior and strong profitability in our healthcare services segment.

On slide eight I will briefly talk to the key performance indicators of our senior distribution business.

Tim Danker: As mentioned approved policies were stable year over year, and a seasonally slow quarter.

This performance was ahead of the original volume expectations, driven by close rates and agent productivity.

The 7% improvement year over year, and our Medicare advantage Ltvs to 812 was primarily driven by continued stable persistency in carrier mix.

Tim Danker: On the whole the senior business is very well positioned to drive strong unit economics, and consistent returns and the ongoing AEP season.

Tim Danker: Flipping to slide nine the earlier results of that consistency were displayed in our fiscal first quarter.

Tim Danker: Revenue for senior was up modestly to $93 million driven by strong ltvs, partially offset by lower policy volume.

More importantly, adjusted EBITDA improved significantly to $8 million. This.

This improvement in profitability is attributable to the fact that we hired two agencies season, which led to more efficient spending on recruiting training and onboarding, while we would've preferred to hire a larger agent class given the strong economics, we still see in the market. This operating leverage is a testament to our strategic redesign it took a significant amount of cost out of.

Business.

Speaker Change: Moving to our healthcare services business on Slide 10, we continue to see strong success across our member growth revenue and profitability as Tim noted our select Rx members now total over 86000, which is a 64% increase compared to a year ago. Additionally, our membership grew 5% sequentially, which is slightly.

Tim Danker: Lower than the quarter over quarter growth last year as we've noted in our $2025 forecast, we expect more modest growth in select Rx members in the first half of fiscal 2025 due to normal seasonal trends.

Tim Danker: Just curious services drove revenue of $156 million in the first quarter and adjusted EBITDA of $5 million, our highest quarter of profitability since launching the business.

Tim Danker: Looking ahead, we expect healthcare services profitability to temporarily stepped down in the second quarter in line with our expectations as we continue to invest in and prepare for the AEP season in.

Tim Danker: In addition to the seasonal dynamic we're also investing in our new state of the art if I can.

Tim Danker: This facility, which we expect to come online in the first half of calendar 2025.

These near term investments were contemplated in our original healthcare services guidance for the year.

Tim Danker: We still expect profitability to ramp in the second half and we are confident in our ability to deliver low to mid single digit margins for the full fiscal 2025.

Speaker Change: On slide 11, as Youll recall, we rationalize the auto and home Division and as a result, our Chilean our life insurance distribution results here.

<unk> business continues to perform with revenue of $39 million up modestly year over year more importantly, the business grew adjusted EBITDA by almost 14% and continues to drive stable margin.

Now, let's shift to our updated guidance for fiscal 2025 on slide 12, we are increasing our ranges for both revenue and adjusted EBITDA to reflect the outperformance in the first quarter and our expectations for the rest of the full fiscal year.

Revenue is now expected to be in the range of 145 to $1 55 billion up from the prior range of one four to $1 5 billion driven by better than expected policy production within senior and continued growth in health care services.

Adjusted EBITDA is now expected in the range of $100 million to $130 million up $10 million at the midpoint from the previous range of 90 million to $120 million. This is driven by our outperformance in the first quarter and our growing conviction around close rates productivity and marketing efficiency during AEP.

We are proud of our execution this quarter, both from an operational and a balance sheet perspective.

Early reads on AEP are encouraging and we remain focused on executing on our 2025 plan with that I'll turn the call over to the operator to take your questions.

Speaker Change: Thank you.

Speaker Change: As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.

Speaker Change: We will pause for just a moment compiled the roster.

Thank you we will begin the question and answer session.

Speaker Change: Now our first question comes from the line of Ben <unk> from RBC capital markets.

Speaker Change: Your line is open.

Ben: Great. Thank you very much guys and congratulations on the quarter.

Ben: Just a quick question on a couple of your comments you noted it's spending more time on policy education, which makes sense kind of in that.

Speaker Change: Dynamic AEP a lot of changes in Medicare advantage and you also talk about agent productivity being higher I'm wondering if you could talk a little bit about how you're balancing the two it seems like we've heard.

Folks talk about having to spend more time on the phone to deal with shopping as opposed to actually kind of closing transactions and thats been kind of a volume headwind. It seems like you guys are balancing that very very well with productivity just wanted to kind of get some color on how you're approaching that and then also how select rx fits into that into that.

Speaker Change: That dynamic thanks.

Hey, Ben Good morning, the system. Thanks for the Great question I'll start and maybe ask.

Speaker Change: Bob <unk>, our president speak as well again as we indicated we're very pleased with the start to AEP I think we're seeing a very high level of consumer engagement strong call volumes.

Speaker Change: While early very good close rates agent productivity and that typically leads to enhanced marketing efficiency, it's certainly a different environment. This year.

Speaker Change: And that was predicted we're seeing changes with respect to plan benefits.

Speaker Change: And elevated levels of planned terminations, but it's absolutely what our model has been built on and it's finding that balance to your question of.

Front end customer acquisition.

Speaker Change: Abilities as well as retention. So we've invested a lot in a retention process and I'll, let Bob elaborate on that Bob.

Bob: Yeah and directly to the question are we seeing agents kind of spend more time, which leads to less efficiency.

Bob: We really are we're seeing them spend I guess more time per per call taken.

Bob: Just given the fact that close rates are higher and so we always look at that balance right. The worst years or years, where talk time for customers up close rates are down. This is not one of those years, where we're seeing increased efficiency through that we're also seeing a big spike in our.

Speaker Change: Occupancy and we did a lot of work on the technology side to ensure that we would get really really high occupancy.

Speaker Change: Occupancy is kind of a percentage of time actually on the solid wood.

Speaker Change: Change in a lot of our routing technology those types of things. So we're actually seeing increased consumption as well, which is why it's leading us to have.

Speaker Change: Outsized results so far so not maybe seeing the same thing that others are saying about increased time, which is leading to less.

Speaker Change: The efficiency overall, we're actually seeing the opposite effect I think that also has to do with just our strategy of tenured agents not hiring a big summer classes. This summer.

Speaker Change: And those tenured folks really know how to deal with the complex environment, there, which again is just leading to outsized results given kind of the disruption in the market and then on the backend.

Speaker Change: <unk> point on retention, we spend a ton of time and money on the technology that we have out there education materials those types of things, which drive have driven really really strong results so far as far as consumer engagement.

Speaker Change: Answer rates and everything associated that we really track on the retention side. So we feel really good about both right now given where we are.

Speaker Change: Great and then how does how does the sale of select Rx kind of factor into that is that something that takes a little bit extra time that you have to budget in terms of the sales process or is that kind of seamless or separate after the initial.

<unk>.

Speaker Change: And I think it's a really good question just as it is completely separate the way that we set it up right. We wanted to have a completely separate opt in totally separate kind of business model over there. So it's taking no extra time for the agents, we have staffed up a little bit on <unk>.

Speaker Change: DSA, which is on the healthcare select side of the house, which is leading to a really really good results there as well. So no. We're not really seeing any increased time for our sales agents with that and we've also done some work to make sure that the no sales side, which is also a big funnel for us.

Speaker Change: Has stayed really high as a percentage as well so.

Speaker Change: All of those things are allowing us to really capitalize on the spend that we have and kind of the overall increase in consumption led to really good efficiency.

Speaker Change: There one thing to note too we have gotten better at using off peak hours for all of these things.

Speaker Change: And the reason I highlight that is thats really I talked about that occupancy, where we're doing a lot of our kind of extra work call. It retention work and those types of things that have been times, where leads are not an abundance.

Speaker Change: And we've really built our technology around that in this year to make sure that we can go into that kind of later hours.

Speaker Change: Of early evening and be really efficient during those hours, which is driving our results even higher.

Speaker Change: Great. Thank you for that and is there anything in the performance you saw the trends you saw this this past quarter and in your guidance. That's making you think that are changing the way youre thinking about the timeline for the next leg of your securitization.

Speaker Change: Yes.

Speaker Change: Brian I'll take that one Ben.

Ben: Great question, obviously really pleased with getting this first securitization crossed the finish line.

Speaker Change: It does provide the infrastructure in place and provides meaningful extensive your term debt.

Speaker Change: The collateral that was used.

Speaker Change: Its over collateralized, but it was actually a really small portion of the broader.

Speaker Change: I see the balance of the business so.

Speaker Change: We are excited about the opportunity to bring additional securitizations to market all of that being said.

Speaker Change: I was curious notion market is active and open it tends to slow down in late calendar Q4, which also happens to be our busy season with AEP.

Speaker Change: We would look forward to it.

Speaker Change: Path to providing.

Speaker Change: Peter securitization to market in the first half of calendar 2025.

Speaker Change: Great. Thanks for the color guys.

Speaker Change: Yes.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of George Sutton from Craig Hallum.

Speaker Change: Your line is open.

Speaker Change: Okay.

George Sutton: Thank you nice results, Tim I wanted to bring two thoughts together both of them competitive related you mentioned in your press release that the benefit plans has shifted significantly.

Speaker Change: But increasingly seniors and carriers are turning to select quote and separately in your prepared comments you mentioned your your competitive advantage is widened I wonder if you can go into a little bit more detail on on the significance of those statements.

Speaker Change: Good morning, George Thanks for the question.

Speaker Change: Yes, certainly.

Speaker Change: It's the noted theres certain carriers that.

Speaker Change: Highlighted their need to improve profitability.

Speaker Change: Some carriers really prioritizing member.

Speaker Change: Margins over membership if you will at the end of the day I think they are.

Speaker Change: <unk> really care about quality distribution and I think that is.

Speaker Change: Certainly something that.

Speaker Change: But we feel very passionate about right, we're helping consumers certainly in dynamic times like this helping.

Speaker Change: But the ability to help navigate some of the market complexity. We are certainly helping the carriers to I think beyond just high quality distribution.

Speaker Change: We're one of the only distribution partners that have has offerings like <unk>.

Speaker Change: From a pharmacy adherence perspective, as well as our select patient management and chronic care management, and we think that that is very differentiated.

Speaker Change: I think there is two sides of the coin that we can help with both through high quality and a distribution as well as.

Speaker Change: Extending that value to consumers to carriers to the broader ecosystem.

Speaker Change: So kind.

Speaker Change: Kind of done the politics Hasnt come up at all on this call. Obviously, we are doing.

Speaker Change: Horrific.

Speaker Change: Paul.

Speaker Change: Till tomorrow.

Speaker Change: And thats been a big chunk of the AEP. So you're you seem to be very encouraged about what you've seen so far I would have.

Speaker Change: We expected a little bit more caution based on slowness due to the political season can you just talk about that dynamic would you expect any extension of AEP.

Speaker Change: Yeah, I'll make a few comments and then maybe I can ask the Doe grant to chime in from a marketing perspective, but again, we're very pleased with the results thus far but a lot of this is based upon two facts. One we had a very strong Q1.

Speaker Change: And secondly, we get increased visibility early on into AEP.

Speaker Change: That visibility is.

Speaker Change: It made us confident in the underlying dynamics that we're seeing in terms of.

Speaker Change: Strong call.

Speaker Change: Lead availability consumer engagement close rates agent productivity, we all feel like that has positioned us well for.

Speaker Change: Our strong AEP Bill do you want to talk a little bit about kind of marketing dynamics and some seasons right that is.

Speaker Change: It has been something we've had to navigate.

Bill: Yeah, absolutely. So I think with some of the CMS regulation right that we supported around some of the television advertising that happens.

Bill: Starting really last AEP, you started to see a shift from TV and <unk>.

Speaker Change: And kind of Medicare marketing and <unk>.

Speaker Change: Certainly within our mix, we rely on it very very little whereas it used to be a pretty significant size of the book. So I think that's important because TV is by far the most affected by.

Speaker Change: By the political environment in terms of advertising. So you can't turn on the TV, obviously without saying different political at this time of year in that space taken up by those ads. So I think because it was kind of a.

Speaker Change: An unintended consequence, I guess it was positive we started looking and I think one of the benefits of our kind of wide funnel approach.

Speaker Change: We started seeing.

Speaker Change: Different our different opportunities and really.

Speaker Change: Got away from TV, So certainly I think that.

Speaker Change: That's been something that hasn't affected us and then I think second and really important.

Speaker Change: As Tim mentioned as we differentiate ourselves more and more I think we're one of the few that.

Speaker Change: Spending dollars and not pulling back right I mean, there are significantly pulling back when you look at a lot of our competition. We have a lot of tailwind of folks that have either recently transacted or dramatically pulled back in the environment. So I think overall when you look at it the good it certainly outweighed the bad even with some of the pressure that you might have.

Speaker Change: <unk>.

Speaker Change: Within TV or other but its cause we really haven't seen it and really optimistic about.

Speaker Change: About how things are playing out with AEP.

Got it and just to comment I don't think you can return anything on.

Speaker Change: That doesn't cause you to see or hear political ads. So it really has I think crowded out and everything else, but one other.

Speaker Change: And as we get into the latter part of the season, given that you have a reduced agent count relative to what you would've liked what kind of mechanisms do you have if you start to see excess flows.

George Sutton: Are there ways for you relative to your guidance to outperform expectations.

George Sutton: If the flows are much stronger.

Speaker Change: Now I'll make some initial comments and turn it over to Bob We're definitely pleased with what we're seeing thus far and I think we are absolutely capturing.

Speaker Change: Efficiencies as.

Speaker Change: As we see them and I think those that have followed the story over the past two years, our senior EMEA distribution team has done a really really nice job when efficiencies present themselves to be able to to capture those obviously, we talked last quarter about.

Speaker Change: Some of the capital constraints and what that meant for hiring going in.

Speaker Change: So this year, but we are now with that said, we're working obviously to resolve the balance sheet and we're very pleased with what our embedded tenure agent force is doing as incremental opportunities I'll turn it over to Bob.

Bob: Yes, I would say really what it allows us to do is be pickier.

Speaker Change: And lean on the marketing sources as Bill said, we're wide funnel, we can really see.

Speaker Change: Kind of what's driving outsized results.

Speaker Change: As we get later and later into the season, we can take advantage of that and lean into that.

Speaker Change: To Tim's point, though we can't.

Speaker Change: Necessarily make up for the fact that we don't have the people there and it would be great to have an extra four three or 400 people like we sometimes do I would say, though that our close rates are a little bit higher because of not having those people. Because these people are all 10 year and so it does allow us to take a different advantage of it.

Speaker Change: And really really.

Speaker Change: See incremental incremental policies with that so if we do see an excess environment I wouldn't say necessarily stay that allows us to take more leads it allows us to take kind of better and lean on our better marketing sources.

Speaker Change: Great. Thanks, guys I appreciate it.

Speaker Change: Thank you George.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Pat Mccann from Noble capital markets.

Speaker Change: Your line is open.

Pat McCann: Thanks for taking my question and.

Pat McCann: Congratulations on the quarter. My first question has to do with your use of technology. It certainly seems that with.

With such a complex marketplace for for Medicare advantage policies that the use of technology could really help out the agents I guess I'm wondering since you did touch on it if you could give any more.

Pat McCann: Color on on what sort of technology enhancements, you've made and how they bear on the <unk>.

Pat McCann: Consumer interactions with your agents.

Speaker Change: Yeah, It's a great question and what we have done is just continued to double down on agents led technology and what I mean by that is the enhancements that we've made bring in more and more data to allow the agents are kind of intake of customers' needs faster and more efficiently and then <unk>.

Pat McCann: Ultimately make recommendations using technology, a lot better and then a lot more efficiently and then on top of that we have.

Pat McCann: A lot of AI based and people based call monitoring that really allows us to more effectively coach.

Pat McCann: And get everybody on the same page to have a little bit tighter mix of agents. This is a record number of level. One agents. We've ever had we know exactly who to pull off the phone and why and how to coach them on how to do those things which has allowed us.

Pat McCann: Can be significantly more efficient.

Pat McCann: A lot of what we do is focused on just not having to necessarily gather word of mouth data. We can use third party data to kind of supplement and then ultimately validate.

Pat McCann: But then also really focus in on.

Pat McCann: Who needs kind of what coaching and guidance and lean there, which is why we're seeing record high.

Pat McCann: Consumption mixed with close rates.

Speaker Change: Thanks, and then my next question was regarding the marketing spending I guess I'm wondering if.

Speaker Change: If you could touch on how you optimize within the AEP period as far as.

Speaker Change: Your flexibility to see where the best ROI has come in and change your marketing strategy is that something that you're very comfortable with.

Pat McCann: I know you said that you are having.

Pat McCann: Nice returns so far with your marketing strategy, but I am wondering if you could touch a little bit on on the flexibility of that within the AEP.

Speaker Change: Yes, absolutely I can take that so yes, we've kind of set up ourselves with our wide funnel. So we have kind of Max flexibility in terms of we can focus of where we're seeing positive results. So we can look at.

Speaker Change: Zero in on where we are seeing those things. So we have a read pre AEP starting right. When we get a pre look at the plan and try to understand where we might see outsized results. So like if we see an area, where we believe that's going to have major disruption because theres a lot of plan terminations and we have a good solution.

Pat McCann: We'll wait that has the highest ranking right because by percentages. We think we may get somebody with ahead of planned termination and we have a very positive solution.

Pat McCann: So we will look at each of those areas and target and then we will adjust those based on what we're seeing in real time to understand where we want to spend our money.

Pat McCann: Obviously, I think that the results themselves will speak for themselves in terms of what we're seeing in terms of or a high close rate.

Pat McCann: Basically, allowing us to do.

Pat McCann: More with less in terms of more or more with the same in terms of the results we're seeing there so.

Speaker Change: Great question, absolutely can adjust in real time, and what we set up over the years has allowed us to be able to do that from source to area to whatever wherever we're seeing those positive results.

Speaker Change: Great and if I could ask just one more question it would be on the health care services side of the house.

Speaker Change: Given given the prospect for you to continue to improve.

Speaker Change: To improve your balance sheet.

Pat McCann: But that of course being a priority I'm wondering how that impacts how you view.

Pat McCann: The.

Pat McCann: Due to the potential for acquisitions in the healthcare services segment to to bring even more holistic approach to serving the consumer needs on the healthcare side.

Speaker Change: Yes, great question Pat.

Absolutely for us right now.

Speaker Change: <unk> heard us outline the priorities, we've done a great job on business execution, and we plan to continue to do that we've got a great business.

Pat McCann: That needs some balance sheet improvement.

Pat McCann: Really pleased with the $100 million securitization, but we're going to be very very focused on.

Pat McCann: Improving our balance sheet, we believe that that provides the company a lot of opportunity to do exactly what we've done with select Rx.

Pat McCann: Along with select patient management, while those are early days and so.

Pat McCann: We want to get through.

Pat McCann: Our current areas of focus, but we absolutely will keep our eye on additional opportunities to build out our health care ecosystem. We think we are in an extremely unique position.

Pat McCann: With consumers that have lots of needs we have.

Pat McCann: Drawing very strong level of connectivity.

Pat McCann: Informed by.

Pat McCann: Self reported data.

Pat McCann: That really enables us to capture additional opportunity so.

Pat McCann: Look for us to.

Pat McCann: Sequence those.

Pat McCann: As I kind of indicated there but.

Pat McCann: Certainly part of our go forward plan.

Speaker Change: Great I appreciate the color that's all I got.

Speaker Change: Thank you Pat.

Pat McCann: Thank you.

Speaker Change: Seeing as there are no more questions in the queue that concludes our question and answer session. I will now turn the call over to our CEO Kim Dang for closing remarks.

Kim Dang: Thank you again for joining us all close by again, noting our commitment to unlocking further growth and profit potential with select quote.

Kim Dang: We believe we have the operating model the talent and the asset base to be the leading information and service connectivity hub for the health care industry.

Speaker Change: Look forward to accelerating those efforts in the year ahead.

Speaker Change: You all again and have a great week.

Thank you. The meeting is now concluded. Thank you for joining have a pleasant day you may now disconnect.

Speaker Change: Please wait the conference will begin shortly.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].