Q3 2025 SelectQuote Inc Earnings Call
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Speaker Change: Ladies and gentlemen, this is your operator speaking. Today's conference call will commence shortly. You will be placed back on musicals until then. Thank you for your patience.
Speaker Change: Welcome to Selectquote's George Quarter Ernie's Conference Call, all lives of its place and youth to prevent any background noise. After the speaker remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press far followed by the number one on your telephone keypad.
Speaker Change: If you would like to withdraw your question, press Darwin again. It is now my pleasure to introduce Matt Gunter, Selectquote Investor Relations. It's your Gunter, you may begin the conference.
Speaker Change: Thank you and good morning everyone. Welcome to Selectquote's fiscal third quarter earnings call. Before we begin our call, I would like to mention that on our website, we have provided a slide presentation to help guide our discussion.
Speaker Change: After today's call, a replay will also be available on our website.
Speaker Change: Joining me from the company, I have our Chief Executive Officer, Tim Danker, and Chief Financial Officer, Ryan Clement.
Speaker Change: Following Tim and Ryan's comments today, we will have a question and answer session.
Speaker Change: As reference on Slide 2, 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 gap 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.
Speaker Change: Quarterly report on Form 10-Q for the period ended March 31st 2025, and other filings with the SEC.
Speaker Change: 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.
Speaker Change: And with that I'd like to turn the call over to our Chief Executive Officer, Tim Dagger Kim.
Speaker Change: Okay.
Speaker Change: Thank you, Matt and thanks to everyone joining us today.
Speaker Change: Well continue to drive strong results in fiscal 2025 and had another successful quarter across each of our three segments senior healthcare services in life insurance on a consolidated basis, our fiscal third quarter revenues of $408 million grew by 8% compared to a year ago. The growth was again driven by very strong.
Speaker Change: Remember onboarding and our select Rx business, which now has nearly 106000 members representing a 41% increase compared to a year ago. It's remarkable to us that the business has nearly $675 million and trailing 12 month revenues, but only started four years ago with two small pharmacies that had.
Speaker Change: <unk> $20 million in revenues and fewer than 5000 members at the time of acquisition.
Speaker Change: The businesses rapid success remains a Touchstone example, about lifeboat can drive value for customers through personalized coordination of information and service delivery.
Speaker Change: Our consolidated EBITDA of $38 million in the quarter demonstrates strong execution across our segments as we maintained healthy overall margins. Despite a large shift in our mix between senior and health care services mix shift was again a factor in the pace of our consolidated EBITDA growth relative to revenue given lower <unk>.
Speaker Change: Relative margins in health care services compared to senior.
Speaker Change: We're proud of the result, and believe there remains significant EBIT opportunity in both our senior and our healthcare services segments.
Speaker Change: Speak more to our strategic focus on health care services as a source of profit and cash flow later in my remarks.
Speaker Change: As mentioned third quarter operating highlights were strong across each of our three segments.
Speaker Change: <unk> delivered healthy 27% margins for the third quarter, which is very strong considering such a unique into March with Medicare advantage season.
Speaker Change: As we indicated on prior calls given a more restricted capital structure last summer, we did not hire as large of a class as we normally would have in this environment.
Speaker Change: We're especially proud of our execution given we operated an agent force that was 26% smaller this season, which dampened volumes I'll touch on senior in the Medicare advantage environment as a whole in just a minute.
Speaker Change: Along with others in the industry, we were pleased to see the higher than anticipated final rate notice that came through in April for the 2026 pioneer.
Speaker Change: We believe the increase will progressively help carriers with the Medicare advantage pressures they faced in the most recent season.
Speaker Change: Our select quote we expect these higher carrier reimbursement levels to create a less disruptive market backdrop for our customer base and seniors more broadly as we prepare for the next AEP.
Speaker Change: Turning to health care services, we delivered strong profitability. Despite rapid growth as I alluded to earlier, we believe the scale of our membership now provides select quote with a great Foundation, and we see an opportunity to drive more consistent margins and cash flows going forward.
Speaker Change: Our life insurance business, we drove another impressive quarter on both the top and bottom line life revenues grew 13% and profits more than doubled compared to a year ago. The business continues to drive a stable and strong source of EBITDA margin profitability and a highly visible source of cash flow.
Across our entire platform <unk> continues to generate highly attractive revenue compared to the cost to acquire customers for the third quarter. Our trailing 12 month revenue to cash was $5 eight act, which compares to $4 two X a year ago.
Speaker Change: A lot of pride in this metric as the financial Brahma <unk>, <unk> overall marketing efficiency and as an indicator of the value we provide to our customer base when we leverage our superior data and agent led capabilities, our customers receive better service and care.
Speaker Change: Clearly the economic outcome is good for our business, but the metric is especially rewarding given the tangible benefits of Americans, particularly in what has been a volatile and confusing year for health care policy.
Speaker Change: Continues to solidify our reputation and the health care ecosystem as a trusted and valuable partner, which is more important now than ever.
Speaker Change: Now on slide four let me focus on Medicare advantage and <unk> performance through the period.
Speaker Change: As noted we're very pleased with our execution, you're such a unique and challenging Medicare advantage season.
Speaker Change: While our agent force was smaller compared to a year ago. The team drove impressive volume and efficiency results third quarter policies totaled 168000 down less than 10% compared to an agent force that was 26% smaller.
Speaker Change: As we noted last quarter carrier plan terminations and significant changes. The policy features created noise in decision stress for seniors to this Medicare advantage season.
Speaker Change: Back drop made our agent led model all the more important we're very proud that we were able to help so many people.
Speaker Change: Even more impressive are the efficiency and profitability improvements and senior during <unk>.
Speaker Change: As you can see at the right of this page our strong close rates year to date serve as a testament to how our technology arms, our agents with new data and tools in each unique season.
Speaker Change: Looking forward to fourth quarter as we exit the season, we're refining our approach due to the introduction of changes the beneficiary eligibility during this special election period.
Speaker Change: Although we're pleased with the continued performance of our agents. These industry changes present, a headwind to close rates and volume relative to prior years.
Speaker Change: In addition to throughput our senior segment also drove efficiency across both marketing and operating expenses marketing expenses per approved policy was down 9% and overall operating expenses per policy were down 4%.
We focus each season on optimal profitability, but are especially proud of our operating expense performance given a lower year for policy volume.
Speaker Change: Again like what its technology and information advantages continue to benefit our overall business not just through incremental revenue opportunity, but also through operating efficiency.
Speaker Change: The combination of each of these factors contributed to the strong 27% adjusted EBITDA margins, despite lower year over year policy volume.
Speaker Change: Over a year, where Medicare advantage pose challenges for many industry participants we're proud that our platform not only succeeded but improves on a very strong fiscal 2024.
Speaker Change: Typically our year to date senior margins are currently at 30%, which compares to 26% at this point last year.
Speaker Change: Past three years' results across a wide range of selling seasons gives us a great deal of conviction and our ability to consistently drive profit margins above our long term target of 20%.
Speaker Change: On slide five I'd like to expand on our plan to drive higher profitability in our healthcare services segment as I noted, we believe a 106000 members and our select Rx business represents critical mass having created a revenue base of nearly $675 million over the past year, we see an opportunity to focus.
Speaker Change: On generating more consistent margins and cash flows to drive shareholder value.
Speaker Change: As we've discussed select Rx profitability has lagged membership and revenue given growth investment and the seasoning of our member base. We're proud of the progress we've made to date, but believe there is an opportunity to better identify the customers who will benefit from the select Rx offering the most you.
Speaker Change: You have heard us speak to the ramp of <unk> members to full box shipments while that continues to be a focus for new members. We've also observed a wide range of customer use cases, we will share more when we speak to our 2026 outlook, but we believe there is some opportunity to align <unk> best service attributes with those Americans that need us.
Speaker Change: Yes.
Speaker Change: Over the remainder of fiscal 2025 and into fiscal 2026, we plan to increase the mix of members that benefit most from select Rx typically also have the most attractive unit economics.
Speaker Change: Now that we've achieved meaningful scale, our primary goal will be to increase efficiency and build a more consistent margin profile for the business in the near term this will likely translate to slower membership growth.
Speaker Change: As we've announced last September.
Speaker Change: <unk> volume growth required additional investment in facility expansion with the opening of our Olathe facility here in Kansas, which shifted the first box on April 7th in the medium and long term, we believe the scale and efficiency gains of this new facility will be accretive, but we expect a near term headwind to profitability, which will dampen our fourth quarter.
Speaker Change: Results.
Speaker Change: Brian will share more about the pacing of this dynamic in our outlook, while I'll close this topic by emphasizing three unchanged attributes about select Rx and our health care services capabilities.
Speaker Change: First select Rx members drive visible revenue and cash flow, it's been clear to us that the value of our medication management adherence solution is widely proven our job now is to improve efficiency and drive a more consistent margin profile for the business.
Speaker Change: Regardless of the membership mix there remains significant operating leverage potential in health care services, which you continue to grow as we broaden our value added service offerings.
Third while less visible we know from our policyholders and agents that there is a halo effect to the differentiated value. We deliver policyholders that are also select Rx members become further attached to select quote.
Speaker Change: As a result insurance providers and caregivers increasingly seek us out for partnership.
Speaker Change: In the past we've called this concept of health care information hub, our flywheel, whatever we call. It we know that it is a reality with our customers and partners.
Finally, before I turn the call over to Ryan I'd like to briefly comment on the department of Justice complaint that was recently filed against many participants in the Medicare advantage system.
Speaker Change: We've been cooperating fully with the department of Justice as inquiries since we first received the previously disclosed subpoena and 2022.
Speaker Change: However, we firmly reject these obligations, which we believe represents a misunderstanding of our industry and our business we plan to Mount a vigorous defense as this case moves forward.
Speaker Change: <unk> has a 40 year history as a high integrity organization that has helped millions of Americans find the right coverage for their health needs. Additionally, we have invested significant capital into compliance across our whole organization from our agents to our management and take significant measures to fully comply with all federal laws.
Speaker Change: Regulations.
Speaker Change: Sure you that the culture at select quote is one where the customers needs are prioritize we look forward to detailing this history is the matter develops.
Speaker Change: I've always been and we will continue to be compliant and fair dealings standard bear in the Medicare advantage industry, we will continue to deliver high quality advice.
Speaker Change: Customers, we help to navigate the complicated array if Medicare health plan options. This.
Speaker Change: This is obviously an active legal matter. So we won't be commenting further on any particulars at this point and with that I'd like to hand, the call over to Ryan Brian.
Ryan: Thanks, Tim starting on slide six select generated $408 million in revenue for the third quarter up 8% compared to a year ago.
Ryan: Similar to last quarter, our topline growth was driven by our select Rx business, but as Tim mentioned operating performance across each of our businesses was very strong.
Ryan: Fresenius, specifically, the ODP period with similar to AEP, where agents delivered higher Medicare advantage volumes than originally forecasted driven by impressive productivity and close rates.
Consolidated adjusted EBITDA totaled $38 million for an overall margin of 9%.
Ryan: We are pleased to have maintained healthy consolidated margins. Despite a significant mix shifts from the growth in select Rx, which is still a lower margin business.
Ryan: And as Tim noted, we see health care services as a strategic opportunity not just for our new revenue streams for scaled profitability in the coming years.
Moving to slide seven our senior results were quite strong despite operating with a smaller agent population for the season Rev.
Ryan: Revenue totaled $169 million in Q3, driven by the strong agent efficiency, we mentioned.
Ryan: Similar to last quarter's AEP, we continued to see seniors CCAR tenured agents for much needed answers in such a confusing and volatile Medicare advantage backdrop.
Ryan: The end result, with high value service to our customers, but also significant operating efficiencies in both marketing and agent throughput.
Ryan: More plainly more seniors came to us when they needed us most and are aligned model drove very strong margins.
Ryan: Adjusted EBITDA in Q3 was $46 million, which declined by 26%.
Ryan: In line with the 26% reduction in agent head count compared to last year.
Ryan: Despite a smaller agent population the senior business drove attractive EBITDA margins of 27%.
Ryan: The performance since our strategic redesign has exceeded our expectations and three distinctly different Medicare advantage environment.
Ryan: As originally intended or strategic redesign was undertaken to build a select group for all seasons.
Ryan: Firmly believes that goal has been achieved and we see a highly durable value creation engine for customers and shareholders as a result.
Ryan: On slide eight I will briefly review our senior operating performance.
Ryan: As mentioned was at 26% reduction in our agent workforce compared to last year. We're very pleased with the increased agent level efficiency, which led to only a 10% decline in our Medicare advantage approved policy generation.
Ryan: The difference again was a combination of seniors proactively seeking us out and our tenured agents every improving the ability to leverage <unk> data and tools that provide the most effective and valuable service possible.
Ryan: We are proud of the division's strong result is worth noting on the heels of meaningful progress on the capital structure, we have already begun planning for the next AEP and <unk> seasons.
Ryan: Next let me speak to LTV, which was 915 for Q3 down 8% compared to a year ago.
Ryan: The key driver was the shift in our commission structure.
Ryan: Select few carrier partners, you will recall that we had shifted to a higher mix of upfront commissions compared to what we've historically been a ratable timeline there.
Ryan: The changes in our models Ltvs as a result of the upfront structures largely reverted back to ratable structures.
Ryan: On slide nine as Tim noted our select Rx membership continues to grow substantially in Q3.
Ryan: <unk> ended the quarter with 106000 members up 41% compared to a year ago.
Ryan: As a result healthcare services revenue of $190 million grew 53% year over year and has a trailing full year revenue base of $674 million.
Ryan: Healthcare services produced $6 million of adjusted EBITDA, which we are very pleased with.
Speaker Change: I'll provide more detail on our outlook for health care services in fiscal 2026 in our next earnings call, but as Tim noted our goal is to drive improvements in both profitability and cash flow in the future we have confidence in our economics and believe the medium term results will drive value for shareholders.
Tim Danker: On slide 10, I will in the segment review with our life business, where we continue to be pleased with results.
Speaker Change: The business performed well on both the top line and from a cash flow perspective.
Speaker Change: Revenue during the quarter was $46 million and adjusted EBITDA was $6 million, which was up 103% year over year.
Speaker Change: EBITDA margins of 14% nearly doubled compared to 8% last year.
Speaker Change: With our final expense and term life business contributed to the highly successful quarter with term life premiums up 13% and final expense premium up 17% year over year. These.
Speaker Change: These results were fueled by strong agent retention and a highly tenured agent force that drove both strong productivity and customer retention.
Speaker Change: Turning to slide 11, I will conclude my remarks, with an update to our fiscal 2025 outlook.
Speaker Change: We maintain our full year ranges for revenue and adjusted EBITDA that said, we do expect to finish the year in or towards the lower half of the range is based on the following.
Speaker Change: First as Tim noted new beneficiary eligibility parameters during the special election period could drive additional correction for policy volumes in close rates compared to previous seasons.
Speaker Change: Second as we ramp our Kansas distribution facility and focused less on member growth and more on achieving consistent margins and cash flow you could encounter near term headwinds to our healthcare services EBITDA.
Speaker Change: While accretive in the long term, we expect fiscal fourth quarter EBIT to potentially take a modest step back in.
Speaker Change: In addition, fourth quarter growth with paper due to seasonal trends as we exit AEP and <unk> season.
Speaker Change: Lastly, we are adjusting our net income expectations to a range of negative 1 million to $28 million to reflect the impact the change in our stock prices had on the fair market value of the warrants issued as part of the transactions announced during this fiscal year.
Speaker Change: I'll conclude by echoing <unk> comments about the strength and potential of our overall model.
Speaker Change: Fiscal 2025 has been a year of significant progress and transition for our company. In addition to the strong growth and results in all three business lines.
Speaker Change: Meaningful progress on our capital structure, including the $100 million securitization in October and the 350 million strategic investment in February <unk>.
Speaker Change: These deals have lower interest expense.
Speaker Change: And our maturities and increased our available liquidity.
Speaker Change: We produced $71 million in operating cash flow during the quarter and ended the quarter with an $86 million cash balance at.
Speaker Change: Our commissions receivable balance of over $1 billion remains a significant asset and source of future cash flows as we continue to evaluate additional alternatives to further optimize our capital structure.
Speaker Change: We are proud of the results we delivered this Medicare advantage season, and look forward to sharing updates on our plan to scale of our sizable health care services opportunity.
Speaker Change: With that we will open the call up for questions.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session. Once again, if you are dialed in and would like to ask a question. Please press star followed by the number one on your telephone keypad and if you would like to withdraw your question simply press Star. One again, if you are called upon to ask your question and I will let you maybe allowed speaker all your device please speak up.
Speaker Change: Hence if any that youre fully start R&D had been asking your question. Your first question comes from the line of George Sutton with Craig Hallum. Please go ahead.
Speaker Change: Thank you I wondered if you could walk through the separation of the growth or the decline you saw in Medicare advantage and obviously the significant growth of select Rx and I'm asking from the concept of the feeder of customer opportunities into select Rx and any.
Speaker Change: Adjustments that you might be making there going forward.
George Sutton: Yes, I'd be happy to good morning, George Thanks for the call.
George Sutton: On this two part question I might ask our President Bob Grant and talk about our Medicare dynamics I'm happy to touch on health care as well Bob.
George Sutton: Yes, so on the Medicare side George.
Speaker Change: S&P was sorry, OUP was was a really strong quarter for us from a.
George Sutton: Overall.
George Sutton: Close rate perspective, and cost, but to Ryan's point earlier, we were down.
George Sutton: 26% on our agent Count, which is why we ended up.
Speaker Change: <unk> seen a little bit lower volume and lower overall EBITDA. There. However, one of the reasons for such a strong quarter, which Tim will get into health care services from a growth perspective in the Srs space as we did have a lot more tenured agents and we've been very open in the past that they are better at understanding how to deal with customers' needs both on sales.
George Sutton: And folks that don't.
George Sutton: By a policy, where they end up transferring them over to health care services. So we did see a little stronger.
George Sutton: I would say attachment rate or just overall efficiency in that number which is why you saw one kind of outpace.
George Sutton: The other so that also helps our attachment rates and a good way on customers.
George Sutton: Customers that really really need them select Rx and we see that as a positive. So that's why you saw what you saw there timken broadly speak about health care services from direct to your question.
George Sutton: The reason, we didn't see kind of a reduction in both on the growth side of the staff.
George Sutton: Yes, just to add to Bob's comments, there I mean overall, we're really pleased with the ability of the model too.
George Sutton: Leverage our strong.
George Sutton: <unk>.
George Sutton: Growth and have that translate into opportunities for health care services platform.
George Sutton: <unk> seen that through the growth of.
George Sutton: Critical mass not over 100000 members.
George Sutton: We will.
George Sutton: Anticipate though.
George Sutton: The senior health care services will lag our senior just a bit and just in terms of timing and there is some seasonality that we called out as well, but overall really really pleased with the synergy between both sides of the platform.
George Sutton: So I wondered if you can give us thoughts on agent growth going into this next season.
Speaker Change: Are the plans to.
Speaker Change: Take advantage of of <unk>.
Speaker Change: Improvements in that market.
Speaker Change: Particularly from a regulatory perspective.
Speaker Change: Yes, great question hiring is underway right now.
Speaker Change: It's not going to be the same as last year per se, but we will talk more about that in our upcoming guide on the next call.
Speaker Change: We feel good about where we are with hiring now.
Speaker Change: And then just highlighted yes.
Speaker Change: Yes, George just real quick certainly as we highlighted on the last call I think the.
Speaker Change: The improved capital position that we're in.
Speaker Change: It gives us some opportunity, we're very focused and feel good about where we're at in the early stages of hiring and do look forward to sharing more on our fiscal 'twenty should start in August.
Speaker Change: And then just finishing up on your better financials can you talk about receivables securitization my anticipation.
Speaker Change: Patient has been that we might see additional receivable securitization.
Speaker Change: Yes, Great question, George Obviously, we've made great progress.
Speaker Change: Yes.
Speaker Change: On the capital structure more broadly with the first securitization and we've been obviously focused on getting the profit crossed the finish line is you are happy to share with her last earnings call.
Speaker Change: We hired Jeffries to explore a variety of options, but we do see securitization as a potential path if.
Speaker Change: It's not the only path, we look forward to sharing additional updates when the time is right, but we do have several.
Speaker Change: Irons in the fire.
Speaker Change: Thanks, guys.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Ben Hendrix with RBC capital markets. Please go ahead.
Michael: Hi, This is Michael <unk> on for Ben.
Michael: Appreciate your commentary on MAA, LTV and the impact of the shifting commission structure.
Michael: Just wanted to see how should we think that MAA LTV moving forward do you anticipate an ongoing headwind as the shift continues.
Michael: Yes.
Michael: Yes, so we.
Michael: As you noted.
Michael: We did see.
Michael: A shift from upfront to ratable, which did lead to a decline.
Michael: But simply continuation of changes, we had announced in prior quarters.
Michael: All that said, we do expect in the fourth quarter, it will be down year over year.
Michael: We'll look forward to sharing additional details on our longer term outlook.
Michael: On our next earnings call.
Michael: But in fourth quarter, we do expect it to be down year over year.
Speaker Change: Okay, and then just shifting to select Rx, obviously, another great quarter.
Speaker Change: It's exciting to hear about the new facility opening in Kansas.
Speaker Change: Obviously, we heard your commentary on fourth quarter margin expectations, but just longer term bigger picture, how should investors think about.
Speaker Change: The growth and margin targets for this business.
Speaker Change: Yes, Michael So Paulo.
Speaker Change: Comment on that and Ryan maybe have you to it here, but yes, I do think just stepping back we're really pleased with the progress we've got critical.
Speaker Change: Critical mass and scale here with over 100000 patients and so I think.
Speaker Change: We would ask investors to also think that part of our job now is to further prioritize efficiency and consistency of margins. So we are spending a lot of time.
Speaker Change: Focus on that and in analyzing that and I think we are finding that those.
Speaker Change: Members that generally benefit the most from our adherence solution also have the best unit economics again customers with multiple products.
Speaker Change: They are juggling a lot of prescription drugs and so we're seeing some opportunities to refine that so that we can drive even improved margins and cash flow profile. We had mentioned on the call some investments in the Kansas facility.
Speaker Change: We think longer term that is certainly going to drive these efficiency gains, but there is some near term costs there in the fourth quarter as we as we scale that up Brian.
Speaker Change: I think you said it well.
Speaker Change: For the fiscal 2025, we still expect single digit EBIT margins.
Speaker Change: For the year and as we refine our membership parameters.
Speaker Change: So you do see a path to margin enhancement and expansion in future quarters.
Speaker Change: Alright, thank you.
Pat McCann: Your next question comes from the line of Pat Mccann Noble capital markets. Please go ahead.
Pat McCann: Hey, guys. Thanks for taking my questions I wanted to ask about the final rate notice could you I know, it's early but could you give us your.
Pat McCann: Kind of your view on.
Pat McCann: How you think the upcoming AEP hobby.
Pat McCann: How the environment should look relative to the one that we just came out of as far as market dynamics, what would be your early read.
Pat McCann: Given the final rate notice and how that changes.
Pat McCann: Hi, good morning, Pat Great.
Speaker Change: Great question.
Pat McCann: We definitely believe the final rate notice was a positive development.
Pat McCann: As the carrier reimbursement rates were substantially higher than the preliminary rates as we've been in discussions with carriers. They.
Pat McCann: They definitely felt like this was a step in the right direction.
Pat McCann: This helps improve revenues and you've heard many carriers commented on higher medical cost trends and elevated planned utilization. So we certainly view that as a positive development.
Pat McCann: We would we would say that the carriers. Some carriers are still focused on increasing margins that are in the middle innings of a multiyear plan to get to their target profitability, but we certainly believe that this is a positive development Bob anything you'd like.
Pat McCann: No I mean I think that.
Speaker Change: To Tim's point.
Speaker Change: It was a little bit I think.
Speaker Change: In the air as far as what CMS was going to do right just coming in.
Speaker Change: Early and then also the rate.
Speaker Change: Maybe in a little bit higher too in December I think than people anticipated, but it was great that they took into account this year versus a lagging year like they had in the past with where inflation is gone and other things. So I think so.
Speaker Change: Those.
Speaker Change: CMS is support for.
Speaker Change: The private side of Medicare now do they want to clean some things up that we're very supportive of them frankly.
Speaker Change: As far as making sure that everyone.
Speaker Change: <unk> has access to quality healthcare, especially a lot of the focus that we have as we've talked about the past in rural areas things like that yes, but as far as just the advance rate notice in that rate notice very positive.
Speaker Change: From all sides.
Speaker Change: Thanks, and then I just wanted to briefly touch on the health care services segment first of all congrats on opening the new facility and with that I'm wondering.
Speaker Change: If you could reiterate.
The.
Speaker Change: The benefits you expect to realize the incremental incremental benefits from that facility.
Speaker Change: As well as maybe if you could touch on the profitability drag that you mentioned for fiscal Q4 and with that.
Speaker Change: Go beyond Q4 or what.
Speaker Change: What's sort of the timeframe for the initial drag on profitability before you sort of get through that thanks.
Speaker Change: Yes, so with respect to the Kansas facility, we're obviously really excited about having it open and longer term.
Speaker Change: See benefits.
Speaker Change: Operating efficiency throughput and even customer experience.
Speaker Change: With that all being said there is a short term.
Speaker Change: I guess in terms of profitability a drag on profitability as a result of assembly.
Speaker Change: Adjustments into the facility as we scale up we will outgrow and we'll see margin expansion.
Speaker Change: But in the near term I think on a quarterly basis, you can think of it as low single digit.
Speaker Change: Investment and again.
Speaker Change: Over the next couple of quarters.
Speaker Change: Great. Thanks, guys, that's all I had and I'll jump back in the queue.
Tim Danker: I will now turn the call back over to Tim for closing remarks.
Tim Danker: Thank you everyone and we appreciate your time and support this morning.
Speaker Change: First of all thank you to our incredible teams that select quote for another season of World class service and execution.
Our customers needed more than ever this year.
Speaker Change: Because of our high touch and information driven approach they received the help they needed and our business benefited as well looking ahead, we are energized and have conviction that our overall business can generate additional operating leverage and resulting value to our shareholders will share more on our view for fiscal 2026 on the next call and hope to see in state.
Speaker Change: Many of you.
Speaker Change: Between now and then thank you again for your time this morning have a good day.
Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change:
Speaker Change: [music].