Q2 2025 SelectQuote Inc Earnings Call
Kelvin: Good afternoon ladies and gentlemen and thank you for standing by. My name is Kelvin and I will be your conference operator today. At this time, I would like to welcome everyone to the SelectCode's fiscal second quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session.
Kelvin: And finally, a reminder that certain statements made today may be forward looking statements. These statements are made based upon management's current expectations and beliefs concerning future events impacting the company and therefore involve a number of uncertainties and risks, including but not limited to those described in our earnings release.
Kelvin: Quarterly report on Form 10-Q for the period ended December 31, 2024, 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.
Kelvin: And with that I'd like to turn the call over to our Chief Executive Officer, Tim Danker, Tim.
Tim Danker: Thank you, Matt and we appreciate everyone joining us today.
Tim Danker: Proud to report another successful quarter across the entirety of our differentiated healthcare services platform, but ill begin with highlights from the recently wrapped Medicare advantage annual enrollment period.
Our senior segment performed well in the historically disruptive selling season as carriers change plan benefits and in many cases terminated policies and response, our high touch agent led business model aided policyholders more than ever as they navigated a challenging and confusing set of decision factors are.
Tim Danker: <unk> over weighting tenured agents paired with targeted marketing proved to be the right strategy for cycle, yet again, and with certainly valuable for policyholders and a season, where plans changed meaningfully Lockwood had another quarter of strong policy close rates and excellent agent productivity are.
Tim Danker: Our senior Division delivered robust AEP results for a third consecutive year highlighted by sales volume outperformance and agent efficiency, which drove very attractive adjusted EBITDA margins of 39%, surpassing last year's strong performance.
Tim Danker: Momentum also continued in our healthcare services segment led by select Rx, where we delivered another quarter of profitability and our view the profitability is impressive given the upfront investment that drove another quarter of significant new member growth.
Tim Danker: On a consolidated basis <unk> grew revenues by 19% over last year and achieve that growth with an attractive Rev to cap a five three X.
Tim Danker: This helped drive consolidated adjusted EBITDA growth of 30% compared to a year ago.
Tim Danker: On the strength of both of our senior in healthcare services results. Today, we are raising our 2025 guidance ranges for revenue and EBITDA and net income, which Ryan will detail during his comments.
Tim Danker: And lastly, as we announced today.
Significant next step in our strategy to improve our capital structure with a $350 million preferred equity offering led by Bain capital Morgan Stanley private credit and New life partners. This transaction gives the company greater operational and commercial control, while simultaneously increasing our flexibility to grow.
Tim Danker: Both our industry, leading Medicare business, and our comprehensive health care services platform.
As we have repeated often our financial goal focuses on growth.
Tim Danker: <unk>, increasing and consistent profitability and cash flow with this strategic move to improve our balance sheet. We continue execution towards that goal, while understanding our work to optimize our capital structure is not yet finished.
Tim Danker: With that let's review our results in more detail on slide four similar to Q1, our policy production and profitability continue to outperform our original expectations. We are getting credit our success the strong agent close rates and impressive efficiency in our marketing and operating spend.
Tim Danker: In fact, our agent head count was 22% lower than last year, but produced 6% more MA policies during the quarter, a testament to our model and it's operating efficiency.
Tim Danker: We're very pleased with the performance of our senior segment and believe our model firing on every cylinder we were able to leverage our nationwide reach our scale and the flexibility of our model to adapt to market conditions and focus our resources on the areas of greatest opportunity.
Our tenured agent force delivered close rates, 24% higher than the strong prior year performance.
Tim Danker: This improved close rates helped drive a 33% increase in agent productivity and a 22% decrease in marketing expense per policy year over year.
The best holistic measure of this performance was our senior EBITA margin, which totaled 39% compared to 32% a year ago.
Tim Danker: As we've mentioned over the past two and a half years, we firmly believe the operating and cash flow efficiency and our senior segment is repeatable and a wide range of Medicare advantage environments.
Tim Danker: We're also tremendously proud of how our team's engagement model provided existing customers. The help they needed during this highly unique AEP season.
Tim Danker: We believe this Medicare advantage season underscores how important our agent lead and information enabled model as the seniors we invested in our customer care function, leading into AEP and helped tens of thousands of customers impacted by both carrier plan terminations and plan benefit changes our agents helped customers.
Tim Danker: I understand these changes and when appropriate find a new plan to better fit their needs.
Tim Danker: Our industry experienced the seismic shift, but the select quote model focused on information connectivity and experienced agents with the safe Harbor for American seniors for.
Tim Danker: For shareholders. The importance of this AEP planning was evidenced by strong returns and profitability.
Tim Danker: <unk> results are aligned with helping seniors find the right care as we've said before like what wins when our customers win.
Tim Danker: Turning to slide five I'll review, our ongoing strategy to optimize our capital structure on October 15, 2024, we completed the first step of this strategy by closing an initial $100 million securitization of Medicare advantage receivables the capital cost of this first transaction was more than 500 basis points.
Tim Danker: Lower than our term debt and also significantly extended our term debt maturities while still early we've been very pleased with the initial performance of our securitized policies. During this AEP period. It is important to remember that we believe future securitizations of our MA receivables could be a fundamental part of our future funding model.
Tim Danker: The next step in the optimization journey is the $350 million preferred equity offering I touched on earlier.
Tim Danker: Unlike securitization this action should be viewed as a singular deliberate decision made as part of our ongoing strategy to better position our balance sheet. We now have capital structure stability for the foreseeable future and can further increase our focus on operating and growing the business as.
Tim Danker: As discussed on prior calls we continue exploring additional strategic alternatives to further strengthen the balance sheet. We believe this strategic investment enables us to more easily pursue these additional capital structure actions, including the continued evaluation of follow on Securitizations our.
Tim Danker: Our capital actions taken to date will decrease our ongoing cost of capital by more than 150 basis points and will reduce our annual cash interest obligations by approximately $30 million.
Tim Danker: Most importantly, our company is in a much better position to grow both in our senior and healthcare services segments in the quarters and years ahead.
Tim Danker: We have more to accomplish to reach our ultimate capitalization goal, but we are proud of the progress we have made over the past few quarters.
Tim Danker: Let me conclude my remarks on the next slide with the summary of our company's mission as we've said before our platform has a unique competitive advantage to create tremendous value and the five trillion dollar of American health care market.
Tim Danker: Our senior MA business is the foundation, we've built our data and service expertise around as I've mentioned our performance. During this unique AEP season is the latest in a set of proof points that the business represents a durable and large return opportunity, while serving America's seniors and the approximately 10000, new 65 years.
Tim Danker: The joined them each day.
Tim Danker: Beyond senior are improving capital position allows us to more fully capitalize on the significant growth demonstrated in health care services, most notably through select Rx.
Tim Danker: Increasing balance sheet flexibility and cash flow conversion will allow us to not only accelerate growth in the core business, but in other healthcare service verticals that are inefficiently offered to Americans today.
Tim Danker: Finally, I'll touch on our revenue to customer acquisition cost or CAC.
Tim Danker: Clearly EBITDA and cash flows are the financial metrics that matter, most but we believe revenue to cash illustrates the power of scale in our model.
Tim Danker: We are incredibly proud to have steadily grown our revenue to cash over the last few years from less than <unk> to over five X this quarter.
Tim Danker: As our company increasingly becomes the epicenter for health care information and coordinated service, we believe the potential to offer additional value added services to the same customer and drive multiple revenue streams has tremendous <unk>.
Tim Danker: Healthcare select can be the definition of scale and we look forward to delivering the financial reality of those scaled cash on cash returns to our investors.
Tim Danker: With that let me turn the call to Ryan to speak to our financial results in more detail Brian.
Ryan: Thanks, Tim I will start with a review of our consolidated results <unk> generated $481 million in revenue for the second quarter up 19% compared to a year ago. While the growth was primarily driven by our select Rx business Senior also delivered impressive results as they may volumes were higher than anticipated given very strong <unk>.
Tim Danker: Productivity and close rates.
Tim Danker: <unk> adjusted EBITDA totaled $88 million up 30% compared to a year ago misrepresent the company wide margin of 18%, which remained relatively flat year over year as the rapid growth. This electric contributed higher percent company revenues.
Tim Danker: Very pleased with financial performance with AEP Importantly, we believe the embedded future returns in both new policyholder customers as well as those that change plans will accrue to shareholders in the quarters and years ahead.
Tim Danker: With that let me briefly detail our senior segment financial results.
Revenue totaled $256 million in the second quarter, which is better than our original plan, which assume a lower policy volume on a lower capital budget.
Tim Danker: The strong results were driven by the performance of our tenured agent force.
Tim Danker: While difficult to isolate in the numbers. We believe certainty you want this regarding this year's AEP drove seniors in need to seek the help of an agent led model.
Tim Danker: Another good example of the value of our platform as well as the alignment between our business and our customers.
Speaker Change: Jim noted we win when our customers win.
Speaker Change: The best representation of that can be seen on the right side of this page right adjusted EBITDA of $101 million grew by 28% year over year at a margin of 39%, which is a near record high for this segment.
Speaker Change: Since we undertook a strategic redesign in early 2022, we have delivered three consecutive AEP seasons with adjusted EBITDA margins of over 30%.
Speaker Change: We stayed at the time that one of our goals with reduced operating leverage and deliver attractive returns in a wide range of sound environment. We.
Speaker Change: Believe this quarter's results underscore the progress we have made on that front over the past three years.
Speaker Change: Next I'll provide context on how unique this Medicare advantage season was how select close model delivered strong performance.
Speaker Change: First for reference in a typical AEP, we see less than 1% of Medicare advantage plans terminated by the carrier.
It isn't terminations were about 6% or about 15 times higher than normal I was curious restructured policies.
Speaker Change: Specifically planned for this impact ahead of AEP and knew that American seniors would be in search of answers from experienced people and then their policy changed or not.
Speaker Change: Whereas select close high touch model came in.
Speaker Change: For the 6% of policies that were terminated we recaptured over 30%.
Speaker Change: Calls we receive a majority of the cash flows of our policies lifetime value during years wanted to so the net cash impact from terminated and recaptured plants was modest at around $5 million.
Speaker Change: Before we move on I'll make one more point very clear policyholder persistency trends for policies that were not terminated by curious were stable and we have confidence that our current LTV constraint as appropriate our commissions receivable balance of over $1 billion is a highly attractive asset and <unk>.
Speaker Change: One that we believe remain significantly undervalued.
Speaker Change: Now I'll walk through the key performance indicators for each of our segments.
Speaker Change: First for senior we drove total Medicare advantage policy volume of 248000, which represents growth of 6% compared to our original guidance projecting a 10% to 15% decline year over year, our strong customary capture efforts certainly contributed to the close rates and Paul to production as customers on terminated policies are recognized as new customers.
Speaker Change: New policy.
Speaker Change: However, robust new customer acquisition at highly attractive economics represented the lion's share of this year's policy production on.
Speaker Change: On the right you can see the impact in year over year, Medicare advantage lifetime value, which decreased 3% year over year to 907 it.
It is important to note the decrease in lifetime value is primarily due to carrier mix rather than destabilization in persistency. We continue to be pleased with the stable persistency trends, we see within our receivables.
Speaker Change: On the next slide you can see the continued strength in select our ex membership growth. We ended the quarter with 97000 members up 54% compared to a year ago.
Speaker Change: This result continues to demonstrate the value of our service provides when paired with our information advantage and connectivity in health care.
Speaker Change: Member growth and the continued maturity of membership drove revenue of $183 million.
Speaker Change: A 64% compared to a year ago, now representing an annual run rate exceeding $700 million.
This impressive growth in membership and revenue was primarily driven by recent robust senior division results.
Speaker Change: As we communicated the majority of our electronics members find us after originally engaging to discuss their health insurance options.
Speaker Change: Your scores the significant synergies between the two businesses.
Speaker Change: The growth is also a testament to our improving onboarding process.
Speaker Change: We not only capitalized on enrollments during the AEP season.
Speaker Change: We converted a higher percentage of these enrollees to new members within the same quarter than in prior years.
Speaker Change: Moving down the page healthcare services produced $2 million of adjusted EBITDA two things to note here first the AEP quarter is typically our highest upfront spend quarter to onboard new members. As a result, our profit margins are somewhat dampened relative to the rest of the year in line with what we communicated last quarter.
Speaker Change: As Tim noted, we continued to see a very large market opportunity within health care services and are pursuing measured investment in areas that we believe can be as compelling as select correct.
Speaker Change: All in the segment review with a look at our life business, where we continue to be pleased with the results.
Speaker Change: Business performed well on both the top line and from a cash flow perspective revenue during the quarter was $40 million and adjusted EBITDA was $7 million, which was up 62% year over year EBIT.
Speaker Change: EBIT margin of 19% represents a stair step increase compared to 12% a year ago.
Speaker Change: The results were driven by strong performance of our final expense business and continued momentum with our Swift terms select product.
Speaker Change: I will conclude my remarks, with an update to our fiscal 2025 outlook.
Speaker Change: As Tim mentioned, we are raising our fiscal year 2025 guidance ranges for revenue adjusted EBITDA and net income.
Speaker Change: Revenue is now expected to be in the range of $1 5 billion to $1 $5 75 billion up from our previous range of 145 to $1 55 billion. This is driven by our impressive senior results during AEP and the corresponding topline growth in health care services.
Speaker Change: As I mentioned earlier on select Rx membership, we converted a higher percentage of AEP enrollees to members during the second quarter versus our original expectations. As a result of this pull forward. We are now expecting select Rx membership growth to moderate in the second half.
Speaker Change: Consolidated adjusted EBITDA is now expected to be in a range of $115 million to $140 million up from our previous range of $100 million to $130 million driven by the near record senior margins, we delivered in fiscal second quarter net.
Speaker Change: Net income is now expected to be in a range of a loss of $24 million to income of $11 million up from a loss of $59 million to a positive $3 million. We are proud of the results. We delivered this AEP and look forward to continuing to execute as we move through the second half of fiscal 2025.
Speaker Change: With that we will open up the call for questions.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session. At this time I would like to remind everyone in order to ask a question press. The button followed by the number one on your telephone keypad, we will pause for a moment to compile the Q&A roster one moment. Please for you.
Speaker Change: First question.
Speaker Change: Your first question comes from the line of Ben Hendrix of RBC capital markets. Please go ahead.
Speaker Change: Great Thanks, guys and congratulations on the quarter.
Speaker Change: Just a quick question on guidance, the new midpoint still feels a little conservative against the beat and I was just hoping you can give us some thoughts on what youre seeing thus far in OAP, and then and what you've slated for investment through the fiscal year, and then anything else I can kind of help us bridge the way Youre thinking about the mid point. Thanks.
Speaker Change: Hey, good evening Ben.
Speaker Change: Appreciate your question and I'll start and maybe ask Ryan to provide some color.
Speaker Change: Overall, we are just so extremely proud of.
Speaker Change: Our team the operating results.
Speaker Change: The continued momentum in the business.
Speaker Change: Again on the strength of these results we had raised our guidance in November brazen again this evening.
Speaker Change: With all that said we think.
Speaker Change: It is a unique season I think we want to see how the rest of the fiscal year plays out might ask Ryan to provide some commentary on back half of the year investment.
Yes no.
Speaker Change: I appreciate the question.
Speaker Change: Yes.
Speaker Change: Pleased with the results.
Speaker Change: We are making some investments we've talked about in the healthcare services space. We are working on the facility.
Speaker Change: Here in Kansas that we think.
Speaker Change: We will drive meaningful improvements in overall efficiency and so there are investments being made in the back half of the year on that front.
Speaker Change: And obviously really pleased with the business more broadly.
Speaker Change: We focus on continuing to onboard our health care services members.
Speaker Change: And then with respect to margins and kind of back out.
Our expectation from senior Division is that we will be in the low to mid twenties consistent with the two prior years. So we're really pleased with.
Speaker Change: The result in development on that front, and then health care services margin perspective, we would expect low single digit.
Speaker Change: For fiscal 2025, and we'd expect that to continue to scale.
Speaker Change: And improve.
Speaker Change: We add to our customer base.
Speaker Change: Great. Thanks, and just if I could follow up on the select Rx side. Clearly you guys are seeing really good momentum there and we get a lot of questions about kind of the total market opportunity it seems like.
Speaker Change: His vast and really tracking well with your senior engagement just wanted to know if you could just wondering if you could go into little more detail about the synergies between the segments. You know you noted some moderation in growth through the second half, but overall kind of longer term, how should we think about that penetration and in kind of the correlation that we.
Speaker Change: We should be modeling between kind of select Rx and the senior segment.
Yes, Ben we feel great about where we are from a.
Speaker Change: From kind of attachment rates standpoint, ultimately on both sales and those sales, which you've talked about right. We've gotten better at working with our customers who ultimately are on the plan that suits their needs right now as we can.
Speaker Change: Colors no sales.
Speaker Change: And working with them on other healthcare assets since <unk> been a really really big piece of that obviously so.
Speaker Change: So we feel great about that as far as market penetration, we are starting to get our feet under us as far as finding customers from other places and getting better market penetration. We've proven that this is a great.
Speaker Change: Business to drive adherence.
Speaker Change: To drive waste down because these folks are on so many drugs.
Speaker Change: That really the 30 day supply works extremely well versus kind of the 19th this is such a good hybrid.
Speaker Change: And then also driving driving outcomes. So we feel really really good about that and I think there is more market opportunity than just our customer base. So.
Speaker Change: Feel very strongly about that.
Speaker Change: Space itself, we know it's absolutely massive so we will continue to think of creative ways to kind of tackle that space, but we feel really really good about where we are today and excited with our new capital structure in those things to kind of get towards moderate growth like we discussed because the more we can moderately grow on the senior side.
Speaker Change: Grows our calls and ultimately that creates a down funnel effect in the select Rx So feel really really good about where we are.
Speaker Change: That's great guys, if I could sneak one real last one and congratulations obviously on the investment from Bain.
Speaker Change: Just wanted to see how that's how that's making you think about the pace of securitization and how you can get and if it does.
Speaker Change: Changing the pace at which you believe you can kind of.
Speaker Change: Get more benefit from that 1 billion receivable.
Speaker Change: Yes, Great question, then and we are very pleased to bring on.
Speaker Change: Sophisticated institutional investors and vein and Morgan Stanley private credit new light.
Speaker Change: They have a lot of experience in insurance and healthcare and.
Speaker Change: Strong conviction about what we jointly can create.
Speaker Change: And the future in terms of value creation to your securitization question, we actually think that the sequencing benefit of this preferred transaction puts the company in a position of strength.
Speaker Change: Certainly with.
Speaker Change: With respect to continued deleveraging and also with respect to securitization as we noted.
Speaker Change: We had our inaugural $200 million securitization as Ryan noted.
Speaker Change: We like what we're seeing in terms of that performance and so now with the <unk> behind us.
Speaker Change: Capital.
Speaker Change: Stack.
Speaker Change: Some more stability and it.
Speaker Change: Really outstanding business results, we're going to continue to look at securitization.
Speaker Change: As an option for continued deleveraging as well as other benefits, we think that it can create around creating more of an asset light.
Speaker Change: Type model, so where.
Speaker Change: We're going to continue to pursue that and see that as a very viable option for the company.
Speaker Change: Thanks, guys I'll jump back in the queue.
Speaker Change: Your next question comes from the line of George Sutton Craig Hallum. Please go ahead.
Speaker Change: Yeah.
Speaker Change: Thank you guys. This seems like the real Super Bowl.
Speaker Change: I wanted to.
Speaker Change: Make sure I understood. The use of proceeds for the 350 looks like $2 50 will go towards paying down some debt that will reduce your interest expense.
Speaker Change: There is an additional $100 million operating flexibility and ultimately wanted to.
Speaker Change: See if we can attack that a little bit.
Speaker Change: Give us a sense of what kind of operating flexibility that will give you that you simply haven't had.
Speaker Change: You didn't certainly have this season.
Speaker Change: Yes, absolutely.
Speaker Change: So as you mentioned we are using.
Speaker Change: A large portion of the proceeds to retire term debt and so.
Speaker Change: That's around $260 million to be used for that purpose will also.
Speaker Change: Fully repay any balances on our revolving facility.
Speaker Change: And we will have liquidity of roughly $100 million on the back side of that and so.
Speaker Change: And it really sets the business up nice.
Speaker Change: In addition to that it's worth calling out our ongoing debt service obligation.
Speaker Change: From a cash perspective.
Speaker Change: Drops by about $30 million and so it really sets the organization up to continue to grow we've got a health care services business.
Speaker Change: Scaling is cash generative and we're really excited about.
Speaker Change: The cash that we expect that business to be generating.
Speaker Change: In the quarters and years to come and so it does allow us to to lean in.
Speaker Change: As well as find other health care services opportunities, Tim I'm not sure. If there is something you want to add there Jeff.
Speaker Change: First off is.
Speaker Change: As a company headquartered in Kansas City.
Speaker Change: Like your intra George that was.
Speaker Change: Painful lots for us last night, but back to the business, we've said for a long time George.
Speaker Change: This is a business that has a better capital structure.
Speaker Change: <unk>, we've been working really hard on it and it's great to bring this to market and as we've said in the prepared remarks, we are going to continue to be very focused.
Speaker Change: Work is not done and there's more for us to do there getting to the growth.
Speaker Change: Part of the equation I think thats, what made us so excited about bringing in the preferred investors that we outlined I think there was respect and recognition for what we've built but really a lot of conviction around how we can further build out our.
Speaker Change: Our insurance distribution platform, where we can really focus on our Medicare platform as well as health care services. So Bob alluded to this I think there's.
Speaker Change: A great opportunity for us to grow organically in terms of our.
Speaker Change: Platform Youre seeing lots of great pull through benefit youre seeing the leading indicator around Rev to CAC, we believe that will translate to.
Speaker Change: Cash flow here in the very near future and that.
Speaker Change: Is this all very excited about what.
Speaker Change: What I would say measured and responsible growth gives us.
Speaker Change: Better position.
Speaker Change: To assess other opportunities in healthcare.
Speaker Change: And we're really excited about where we stand today.
Speaker Change: So I understand it's hypothetical but you went into this season with a lower agent count in large part because you didn't have the receivable securitization done in time.
Speaker Change: How much more MAA business could you logically have done if we had these transactions completed reporting.
Speaker Change: Yes, I think we've said it all.
Bob: Ask Bob to comment as well I think we've certainly said.
Speaker Change: Growing minimally at the market rate of growth is.
Speaker Change: Something that we can do and maybe there is situations, where it's more than that I think we have been really working hard.
Speaker Change: On the mouse trap I think you've now seen for three consecutive years very successfully.
Speaker Change: Ryan alluded to the fact that we think again on a full year senior in the low to mid <unk> EBITDA margin. So we certainly think that there is a lot more growth opportunity and pull through impact of health care Bob.
Speaker Change: Yes, I mean, we continue to get more efficient, which I think is clear in our numbers given that we had significantly less people this year and deliver the results we did.
Speaker Change: I think our plan we set it.
In an earlier call would've been to hire a similar amount of people last year.
Speaker Change: On top of the little bit larger force that we had.
Speaker Change: I can't say exactly how many policies that would have been but it would have.
Speaker Change: Then growth on top of what we're already seeing so I think we want to be very balanced and that's we're not looking to grow.
Speaker Change: Like we did before and really create too much leverage within our model, but we are very confident confident in hiring.
Pretty large classes.
Speaker Change: During what would be our fiscal year Q4, ultimately training those folks and getting them very successful for AEP that structure has worked for us that structure will continue as we go forward. So there was a lot more business to be had.
Speaker Change: If we would've had the capital and now we do.
One more question if I could.
Speaker Change: We have been through three very challenging regulatory years.
Speaker Change: Outlook now with the new regulatory regime coming in it looks to be much more favorable can you just talk about.
The early indicators youre getting there.
Speaker Change: Yes, we would agree with you.
Speaker Change: Sure.
Speaker Change: Oh go ahead go ahead, Bob if I could.
Bob: I'm, sorry about that yes.
Speaker Change: We definitely agree that this will be a much more favorable environment.
Bob: <unk> believes that distant.
Bob: This administration with some of the current appointees and things have a much more favorable outlook on.
Bob: Medicare advantage in general.
Bob: So we thought it was a challenging environment, we actually agree with some of the decisions that were made as far as the way you market and things like that so we feel very good about that but but excited to get back to a administration's thats excited about growth within this market.
Bob: Yes, great. Thanks, guys.
Speaker Change: I would just I would just add George I think.
George: Certainly things are turning in the right direction I think we like what we saw and I'm sure the payers.
George: I've seen this as well just in terms of the advance rate notice I think thats been welcome news and hopefully can help ease some of the profitability concerns some reinvestment back in the planned benefits.
George: Some further stabilization in the market, we think those are all.
George: All positive events.
George: Great. Thank you.
Speaker Change: Your next question comes from the line of Pat Mccann Noble capital markets. Please go ahead.
Pat McCann: Hey, Thanks for taking my questions guys and congrats on the quarter and on the strategic investment.
Speaker Change: First question was just.
Speaker Change: Kind of the piggyback on one of the recent questions regarding the.
Speaker Change: The agent Force I guess, given that you had expected the volume submissions too.
Speaker Change: To be down and of course it was it ended up being a really strong quarter with really good close rates and whatnot I was wondering.
Speaker Change: Although you've said with more capital there could be more upside if you would had more agents at the same time is there any.
Speaker Change: Do you do.
Speaker Change: If you look at the performance of the tenured agents.
Speaker Change: This quarter does that shape does it change your perspective on agent force going forward as far as how you strategize on the.
Speaker Change: The number of agents and the tenure of the agents is it just seen house how strongly they they outperformed I'm just wondering if you're you are.
Speaker Change: Strategy for agent force shifts at all.
Speaker Change: Okay.
Speaker Change: No.
Speaker Change: Good question, but no it really doesn't change our strategy I mean, we've seen every year. We have continued to invest in our technology, our process, our marketing, which bill does a great job of running that.
Speaker Change: And.
Speaker Change: Ultimately efficiency.
Speaker Change: And that made our tenured agents much more productive than they had even been in the year before which was a record year for us from a productivity standpoint. So we were confident that if we would have hired our normal kind of summer class with those investments in AI in tech and marketing that we would have seen the same outperformance.
Speaker Change: So it doesn't really change our strategy.
Speaker Change: For say because we're confident that if we do hire those classes. We would have seen the same results on on kind of outpacing our historical per agent productivity, Tim you want to add to that.
Tim Danker: Yes, I'll just I think it's a great outcome by our team when you think about <unk>.
Speaker Change: Obviously, everybody knows the capital constrained situation, we were in when we guided earlier this year.
Speaker Change: We said, hey, we're going to do 10% to 15% less policies.
Speaker Change: We really feel like what Bob mentioned, the power of our tenured agents.
Speaker Change: High quality marketing and the investment, we're making in tech and tools.
To produce 6% year over year policy growth with 22% fewer agents.
Speaker Change: Yes.
Speaker Change: Now we're in a position with a capital to responsibly grow and we feel we feel really good about that and it will be more that we'll share.
And future commentary, but I do think.
Speaker Change: We'll be getting back to responsible growth.
Speaker Change: We'll focus on our health care services business, we're very pleased with <unk>. We think that was a good opening act, but theres a lot more for us to do and.
Speaker Change: This additional capital will allow us to further explore opportunities like we said, where we think there's inefficiencies in the market and where our high connectivity engagement model can win.
Speaker Change: Great. That's helpful. And then my other question just had to do with select Rx I was wondering if.
Speaker Change: If you could talk about sort of what youre seeing with the typical senior consumer when it comes to.
Speaker Change: How they view the value proposition of a direct to your home pharmacy, I mean, certainly it seems like there is.
Speaker Change: Working out very well.
Speaker Change: But I guess I'm just wondering.
Speaker Change: Okay.
You think what do you think is kind of driving the adoption that your ability to get consumers to adopt our home direct pharmacy sort of from a qualitative big picture.
Speaker Change: So if you can kind of give an outlook for how.
Speaker Change: As people are getting more used to using technology and so forth and then shipping a lot of things direct to your home might be instant card it might see things like that.
Speaker Change: How.
Speaker Change: How you see the consumer.
Speaker Change: Developing over time to embrace that even more.
Speaker Change: Yeah, I mean, I think that this population specifically do right. We've been very open that it's a lot of complex customers, who historically were not as used to the technology and things shipped to their house and went to that local pharmacies things like that we are definitely seeing a shift there.
Speaker Change: We're seeing them engage much more I think again bill CRM team does a great job and its increased that member experience pretty dramatically as we've done this but we are definitely seeing adoption go up.
Speaker Change: As this customer base gets used too.
Speaker Change: And sees the value in it and I think we'll just continue to see that more and more I think also some of the things on the regulatory front.
Speaker Change: Like reducing the donut hole down to $2000 in those types of things also are really helping our value right. Because these are folks that.
Speaker Change: It really historically took a lot of medications and would get into that doughnut hole lot and now with that reduction, we're just seeing better customer satisfaction and I don't anticipate that going any way plus what we're doing for that consumer driving their adherence from.
Speaker Change: About 80% to 90% on most disease states helped.
Speaker Change: Helps the carriers on Starz.
Speaker Change: We're doing it on a really really complex.
Speaker Change: Patient population, which really reduces overall costs, whether that's producing it because of waste or just reducing it because you really need to be over that 80% threshold on adherence to state medical costs. I think both of those are starting to really ring true and carriers are really starting to notice that and they are really happy with with what we've done what we've been able to kind of drive forward.
Speaker Change: With that so very unique model and we are very proud of what we've built but we're going to continue to.
Speaker Change: To work with bills customer lifecycle management team in our customer experience team to just enhance that more and more and try to add more relevant products to that we talked about that historically, but it's not just select rx, but theres a lot of things that we can do on a remote basis that will really help.
Speaker Change: Those customers drive that needed health outcomes they have.
Speaker Change: Great. Thanks, so much and congrats congrats again on the quarter.
Speaker Change: Thank you very much.
Speaker Change: There are no further questions at this time I will now turn the call back over to Tim <unk>, Chief Executive Officer for final closing remarks. Please go ahead Tim.
Speaker Change: Yes. Thank you everyone. We really appreciate everyone's time. This evening as you can tell we have a lot of momentum.
Speaker Change: Along with the entirety of the organization.
Speaker Change: We are very energized to make 2025, a pivotal year for the company and our shareholders. We want to thank you again, we look forward to sharing more updates about our strategic initiatives in the months and quarters ahead, everybody have a great evening. Thank you.
Speaker Change: Ladies and gentlemen that concludes your conference call for today, we thank you for participating and ask to please disconnect your lines.
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