GICS Sector : Financial Services
SelectQuote, Inc.operates a technology-enabled, direct-to-consumer distribution platform that sells a range of insurance policies to consumers from various insurance carriers in the United States.The company operates through three segments: Senior; Life; and Auto & Home.
SelectQuote reported consolidated revenue of $329 million, representing a 13% growth over the same period last year, driven primarily by the company's Healthcare Services and Life Insurance businesses. The revenue growth helped offset the unique comparison in the Senior business related to the Special Enrollment Period (SEP). The company's EPS came in at -$0.26, beating estimates of -$0.32. Despite near-term pressure on Healthcare Services EBITDA margin due to a change in drug reimbursement rates with a SelectRx PBM partner, the company remains confident in its medium- and long-term outlook for expanding operating leverage and improving margins.
Publication Date: Nov -23
The Healthcare Services business saw a ramp-up in the new Kansas facility, delivering efficiency gains in line with expectations. However, the change in drug reimbursement rates impacted the segment's EBITDA margin in the first quarter. The Life business continued to provide a steady stream of profit and efficient cash flow. The Senior business wrote 32% fewer policies in the fiscal first quarter compared to last year, but the fundamentals remain unchanged.
SelectQuote expects the rate pressure to crest in the fiscal second quarter before reverting to a more normalized rate structure with the PBM starting in January 1, 2026. The company remains confident that it will be operating cash flow positive during fiscal year 2026. Analysts estimate revenue growth of 11.6% for the next year, indicating a continued strong performance.
With a Price-to-Sales Ratio of 0.16 and an EV/EBITDA ratio of 2.96, the stock appears to be reasonably valued. The company's Return on Equity (ROE) stands at 10.02%, indicating a decent return for shareholders. The Net Debt / EBITDA ratio is 0.74, suggesting a manageable debt burden. As the company navigates the dynamic SEP environment and focuses on growing its Healthcare Services business, investors will be watching to see if SelectQuote can sustain its momentum and deliver on its growth expectations.
As per Timothy Danker, the company is seeing an improvement in persistency for Medicare Advantage plan members who are part of SelectRx, which has a positive impact on Lifetime Value (LTV), although it's not a huge attachment rate. The company is also expanding its clinical aspect of the business with its Adherence for All program, which should help drive growth in the MA market.
Berman Tabacco Announces Investigation of SelectQuote, Inc. (NYSE:SLQT)
Dec -02
Berman Tabacco Announce s Investigation of SelectQuote, Inc. (NYSE:SLQT)
Nov -24
Head to Head Survey: Radian Group (NYSE:RDN) & SelectQuote (NYSE:SLQT)
Nov -22
Berman Tabacco Announces Investigation of SelectQuote, Inc. (NYSE:SLQT)
Nov -10
SelectQuote: Shaky Carrier Trends Rattle My Confidence (Downgrade)
Nov -07
SelectQuote, Inc. (SLQT) Q1 2026 Earnings Call Transcript
Nov -06
SelectQuote (SLQT) Reports Q1 Loss, Tops Revenue Estimates
Nov -06
SelectQuote, Inc. Reports First Quarter of Fiscal Year 2026 Results
Nov -06
SelectQuote's senior segment growth is driven by increasing demand for Medicare Advantage and Medicare Supplement plans, expansion into new markets, strategic partnerships, and effective marketing strategies. Additionally, the company's proprietary technology platform and data analytics capabilities enable efficient customer acquisition and retention, contributing to the 9% growth rate.
SelectQuote, Inc.'s 11% growth in Healthcare Services is driven by increasing demand for Medicare Advantage and Medicare Supplement plans, expansion into new markets, strategic partnerships, and investments in digital marketing and technology. Additionally, the company's data-driven approach to customer acquisition and retention, as well as its focus on customer experience, contribute to its growth momentum.
SelectQuote's 8% growth in Life segment is driven by increasing demand for term life insurance, expansion into new markets, and strategic partnerships. Additionally, the company's proprietary technology platform and data analytics capabilities enable efficient customer acquisition and retention, contributing to sustained growth.
SelectQuote's Auto & Home segment growth is driven by increasing online insurance shopping, rising demand for bundled policies, and expansion into new markets. Additionally, strategic partnerships, investments in digital marketing, and a user-friendly platform contribute to the 12% growth rate.
SelectQuote, Inc.'s Corporate & Eliminations segment growth of 7% is driven by increasing demand for insurance products, expansion into new markets, and strategic partnerships. Additionally, investments in digital marketing and technology enhancements have improved operational efficiency, leading to higher revenue and profitability.
Term life insurance provides coverage for a specific period of time (e.g., 10, 20, or 30 years) and pays a death benefit to the beneficiary if the policyholder dies during the term.
Permanent life insurance provides lifetime coverage and a cash value component that grows over time, which can be borrowed against or used to pay premiums.
Auto insurance provides financial protection against physical damage to a vehicle and liability for bodily injury or property damage to others.
Home insurance provides financial protection against damage to a home and personal belongings, as well as liability for accidents that occur on the property.
Medicare Supplement Insurance helps cover out-of-pocket healthcare expenses not covered by Medicare, such as deductibles, copays, and coinsurance.
Dental insurance provides coverage for routine dental care, such as cleanings and fillings, as well as more complex procedures like crowns and dentures.
SelectQuote, Inc. operates in the insurance industry, where substitutes are limited. However, customers may opt for self-insurance or alternative risk management strategies, posing a moderate threat.
SelectQuote, Inc. serves a large customer base, reducing the bargaining power of individual customers. Additionally, the company's online platform and agent network make it difficult for customers to negotiate prices.
SelectQuote, Inc. partners with various insurance carriers, reducing dependence on individual suppliers. The company's scale and market presence also give it bargaining power in negotiating with suppliers.
The insurance industry is highly regulated, and new entrants face significant barriers to entry, including obtaining licenses and building a network of agents. However, the rise of insurtech companies and digital platforms poses a threat to traditional insurance brokers like SelectQuote, Inc.
The insurance brokerage industry is highly competitive, with many established players and new entrants vying for market share. SelectQuote, Inc. faces intense competition from online brokers, traditional agencies, and carriers' direct-to-consumer channels.
| Value | |
|---|---|
| Debt Weight | 67.83% |
| Debt Cost | 7.88% |
| Equity Weight | 32.17% |
| Equity Cost | 7.88% |
| WACC | 7.88% |
| Leverage | 210.85% |
Value: 2.1
Growth: 6.7
Quality: 7.1
Yield: 2.0
Momentum: 6.0
Volatility: 9.3
1-Year Total Return ->
Value: 9.3
Growth: 6.4
Quality: 6.9
Yield: 0.0
Momentum: 3.5
Volatility: 1.0
1-Year Total Return ->
Value: 9.3
Growth: 4.6
Quality: 7.6
Yield: 0.0
Momentum: 4.0
Volatility: 1.0
1-Year Total Return ->
Value: 4.8
Growth: 1.9
Quality: 4.1
Yield: 4.0
Momentum: 8.5
Volatility: 2.7
1-Year Total Return ->
Value: 6.7
Growth: 6.4
Quality: 1.8
Yield: 0.0
Momentum: 5.0
Volatility: 2.7
1-Year Total Return ->
Value: 9.6
Growth: 4.8
Quality: 4.0
Yield: 0.0
Momentum: 0.5
Volatility: 2.0
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