$SLQT SelectQuote, Inc. Reports Third Quarter and Fiscal Year to Date 2021 Results

on May 11, 2021 News and Tags: , , , with 0 comments

SelectQuote, Inc. (NYSE: SLQT), reported consolidated revenue for the third quarter of fiscal year 2021 of $266.9 million, which was an 80% increase over consolidated revenue for the third quarter of fiscal year 2020 of $148.6 million. Consolidated net income for the third quarter of fiscal year 2021 was $36.5 million, which was a $12.8 million increase over consolidated net income for the third quarter of fiscal year 2020 of $23.7 million. Finally, consolidated Adjusted EBITDA for the third quarter of fiscal year 2021 was $65.2 million, which was a 48% increase over consolidated Adjusted EBITDA for the third quarter of fiscal year 2020 of $44.1 million.

Consolidated revenue for the nine months ended March 31, 2021, was $749.4 million, a 92% increase over consolidated revenue for the nine months ended March 31, 2020, of $390.1 million. Consolidated net income for the nine months ended March 31, 2021, was $127.7 million, an increase of $66.6 million over consolidated net income for the nine months ended March 31, 2020, of $61.1 million. Finally, consolidated Adjusted EBITDA for the nine months ended March 31, 2021, was $206.8 million compared to consolidated Adjusted EBITDA of $113.9 million for the nine months ended March 31, 2020, an 82% increase.

Chief Executive Officer Tim Danker commented, “Our Third Quarter results again demonstrated our strong growth potential. The quarter was led by a robust OEP, where our Medicare Advantage approved policies grew by 112% year-over-year driven by a 17% increase in average agent productivity while adding 75% more agents. We are also very excited about the huge opportunity with value-based care and our Population Health platform which we announced last week along with the acquisition of Express Med, which will be rebranded SelectRx. We continue to build our conviction that SelectQuote is designed to execute high quality growth for years to come and with Population Health, our addressable market is now bigger, and our ability to address that market has never been stronger.”

Chief Financial Officer Raffaele Sadun added, “With Senior revenue growth of 101% year-over-year, this was the fifth consecutive quarter of Senior revenue growth in excess of 100%. During the quarter, we also refinanced our credit agreement and secured an additional $292 million of committed capital, $147 million immediately and another $145 million in a committed delayed draw term loan. Lastly, we are reiterating our fiscal year revenue guidance but adjusting our guidance for Adjusted EBITDA due to the incremental dollars we are investing in Population Health and SelectRx.”

Segment Results

We currently report on three segments: 1) Senior, 2) Life and 3) Auto & Home. The performance measures of the segments include total revenue and Adjusted EBITDA. Costs of revenue, marketing and advertising, and technical development operating costs and expenses that are directly attributable to a segment are reported within the applicable segment. Indirect costs of revenue, marketing and advertising, and technical development operating costs and expenses are allocated to each segment based on varying metrics such as headcount. Adjusted EBITDA is calculated as total revenue for the applicable segment less direct and allocated costs of revenue, marketing and advertising, technical development, and general and administrative operating costs and expenses, excluding depreciation and amortization expense; gain or loss on disposal of property, equipment, and software; share-based compensation expense; restructuring expenses; and non-recurring expenses such as severance payments and transaction costs.

Senior

Financial Results

The following table provides the financial results for the Senior segment for the periods presented:

Three Months Ended
March 31,

Nine Months Ended
March 31,

(in thousands)

2021

2020

% Change

2021

2020

% Change

Revenue

$

215,600

$

107,351

101

%

$

604,309

$

273,808

121

%

Adjusted EBITDA*

75,489

46,182

63

%

218,946

112,352

95

%

Adjusted EBITDA Margin*

35

%

43

%

36

%

41

%

Operating Metrics

Submitted Policies

Submitted policies are counted when an individual completes an application with our licensed agent and provides authorization to them to submit it to the insurance carrier partner. The applicant may have additional actions to take before the application will be reviewed by the insurance carrier, such as providing additional information.

The following table shows the number of submitted policies for the periods presented:

Three Months Ended
March 31,

Nine Months Ended
March 31,

2021

2020

% Change

2021

2020

% Change

Medicare Advantage

160,233

76,196

110

%

454,772

205,270

122

%

Medicare Supplement

3,738

3,703

1

%

24,287

16,383

48

%

Dental, Vision and Hearing

38,757

18,935

105

%

101,819

52,806

93

%

Prescription Drug Plan

1,568

1,234

27

%

10,243

11,135

(8

)

%

Other

6,781

1,922

253

%

12,603

3,612

249

%

Total

211,077

101,990

107

%

603,724

289,206

109

%

*See reconciliation from non-GAAP measure, Adjusted EBITDA, to net income on pages 11-13.

Approved Policies

Approved policies represents the number of submitted policies that were approved by our insurance carrier partners for the identified product during the indicated period. Not all approved policies will go in force.

The following table shows the number of approved policies for the periods presented:

Three Months Ended
March 31,

Nine Months Ended
March 31,

2021

2020

% Change

2021

2020

% Change

Medicare Advantage

132,950

62,700

112

%

384,137

171,099

125

%

Medicare Supplement

3,073

2,702

14

%

19,849

11,740

69

%

Dental, Vision and Hearing

34,517

16,068

115

%

84,370

38,992

116

%

Prescription Drug Plan

2,109

1,647

28

%

9,556

10,528

(9

)

%

Other

5,129

1,399

267

%

10,209

2,596

293

%

Total

177,778

84,516

110

%

508,121

234,955

116

%

Lifetime Value of Commissions per Approved Policy

Lifetime value of commissions per approved policy represents commissions estimated to be collected over the estimated life of an approved policy based on multiple factors, including but not limited to, contracted commission rates, carrier mix and expected policy persistency with applied constraints. The lifetime value of commissions per approved policy is equal to the sum of the commission revenue due upon the initial sale of a policy, and when applicable, an estimate of future renewal commissions.

The following table shows the lifetime value of commissions per approved policy for the periods presented:

Three Months Ended
March 31,

Nine Months Ended
March 31,

(dollars per policy):

2021

2020

% Change

2021

2020

% Change

Medicare Advantage

$

1,362

$

1,377

(1

)

%

$

1,290

$

1,297

(1

)

%

Medicare Supplement

1,345

1,478

(9

)

%

1,263

1,372

(8

)

%

Dental, Vision and Hearing

129

155

(17

)

%

140

146

(4

)

%

Prescription Drug Plan

213

214

%

230

229

%

Other

60

93

(35

)

%

95

99

(4

)

%

Per Unit Economics

Per unit economics represents total Medicare Advantage and Medicare Supplement commissions, other product commissions, other revenues, and costs associated with the Senior segment, each shown as per number of approved Medicare Advantage and Medicare Supplement approved policies over a given time period. Management assesses the business on a per unit basis to help ensure that the revenue opportunity associated with a successful policy sale is attractive relative to the marketing acquisition cost. Because not all acquired leads result in a successful policy sale, all per policy metrics are based on approved policies which is the measure that triggers revenue recognition.

The Medicare Advantage and Medicare Supplement commission per MA/MS policy represents the lifetime value of commissions for policies sold in the period. Other commission per MA/MS policy represents the lifetime value of commissions for other products sold in the period, including dental, vision and hearing, prescription drug plan, and other products, which management views as additional commission revenue on our agents’ core function of MA/MS policy sales. Other per MA/MS policy represents the production bonuses, lead sales revenue from InsideResponse, and updated estimates of prior period variable consideration based on actual policy renewals in the current period. Total operating expenses per MA/MS policy represent all of the operating expenses within the Senior segment. The Revenue to customer acquisition cost (“CAC”) multiple represents total revenue per MA/MS policy as a multiple of total marketing acquisition cost, which represents the direct costs of acquiring leads which is included in marketing and advertising expense within the total operating expenses per MA/MS policy.

The following table shows per unit economics for the periods presented. Based on the seasonality of the Senior segment and the fluctuations between quarters, we believe that the most relevant view of per unit economics is on a rolling 12-month basis. All per MA/MS policy metrics below are based on the sum of approved MA/MS policies, as both products have similar commission profiles. These metrics are the basis on which management assesses the business:

Twelve Months Ended
March 31,

(dollars per approved policy):

2021

2020

% Change

Medicare Advantage and Medicare Supplement approved policies

464,653

204,519

127

%

Medicare Advantage and Medicare Supplement commission per MA / MS policy

$

1,286

$

1,300

(1

)

%

Other commission per MA/MS policy

38

51

(25

)

%

Other per MA / MS policy

166

154

8

%

Total revenue per MA / MS policy

1,490

1,505

(1

)

%

Total operating expenses per MA / MS policy

(947

)

(891

)

6

%

Adjusted EBITDA per MA / MS policy*

$

543

$

614

(12

)

%

Adjusted EBITDA Margin per MA / MS policy*

36

%

41

%

Revenue / CAC multiple

3.1X

3.6X

Life

Financial Results

The following table provides the financial results for the Life segment for the periods presented:

Three Months Ended
March 31,

Nine Months Ended
March 31,

(in thousands)

2021

2020

% Change

2021

2020

% Change

Revenue

$

46,400

$

30,956

50

%

$

125,598

$

87,543

43

%

Adjusted EBITDA*

3,175

3,494

(9

)

%

20,066

15,552

29

%

Adjusted EBITDA Margin*

7

%

11

%

16

%

18

%

Operating Metrics

Life premium represents the total premium value for all policies that were approved by the relevant insurance carrier partner and for which the policy document was sent to the policyholder and payment information was received by the relevant insurance carrier partner during the indicated period. Core premiums include term life and permanent life insurance policies while ancillary premiums include various smaller products. Because our commissions are earned based on a percentage of total premium, total premium volume for a given period is the key driver of revenue for our Life segment.

*See reconciliation from non-GAAP measure, Adjusted EBITDA, to net income on pages 11-13.

The following table shows core, final expense, and ancillary premiums for the periods presented:

Three Months Ended
March 31,

Nine Months Ended
March 31,

(in thousands)

2021

2020

% Change

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2021

2020

% Change

Core Premiums

$

18,951

$

18,637

2

%

$

56,268

$

56,486

%

Final Expense Premiums

23,881

8,639

176

%

54,595

15,979

242

%

Ancillary Premiums

1,028

525

96

%

2,190

1,775

23

%

Auto & Home

Financial Results

The following table provides the financial results for the Auto & Home segment for the periods presented:

Three Months Ended
March 31,

Nine Months Ended
March 31,

(in thousands)

2021

2020

% Change

2021

2020

% Change

Revenue

$

6,973

$

10,442

(33

)

%

$

23,752

$

29,061

(18

)

%

Adjusted EBITDA*

1,096

1,586

(31

)

%

6,863

5,594

23

%

Adjusted EBITDA Margin*

16

%

15

%

29

%

19

%

Operating Metrics

Auto & Home premium represents the total premium value of all new policies that were approved by our insurance carrier partners during the indicated period. Because our commissions are earned based on a percentage of total premium, total premium volume for a given period is the key driver of revenue for our Auto & Home segment.

The following table shows premiums for the periods presented:

Three Months Ended
March 31,

Nine Months Ended
March 31,

(in thousands):

2021

2020

% Change

2021

2020

% Change

Premiums

$

12,010

$

16,923

(29)

%

$

42,165

$

48,925

(14)

%

Update on Fiscal Year 2021 Guidance

SelectQuote is updating the guidance provided for the full-year ending June 30, 2021. As a reminder, these expectations are forward-looking statements and actual results may be materially different and are affected by the risk factors and uncertainties identified in this press release and in our annual and quarterly filings with the Securities and Exchange Commission.

SelectQuote is updating guidance for the full-year ending June 30, 2021 as follows:

Consolidated Revenue is expected to be in the range of $920 million to $940 million
Consolidated Net Income is expected to be in the range of $130 million to $138 million
Consolidated Adjusted EBITDA is expected to be in the range of $225 million to $235 million*

*See reconciliation from non-GAAP measure, Adjusted EBITDA, to net income on pages 11-13.

Earnings Conference Call

SelectQuote, Inc. will host a conference call with the investment community today, Tuesday, May 11, 2021, beginning at 5 p.m. ET. To register for this conference call, please use this link: http://www.directeventreg.com/registration/event/4967839. After registering, a confirmation will be sent via email, including dial in details and unique conference call codes for entry. Registration is open through the live call, but to ensure you are connected for the full call we suggest registering a day in advance or at minimum 10 minutes before the start of the call. The event will also be webcasted live via our investor relations website https://ir.selectquote.com/investor-home/default.aspx.

Non-GAAP Financial Measures

This release includes certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. To supplement our financial statements presented in accordance with GAAP and to provide investors with additional information regarding our GAAP financial results, we have presented in this release Adjusted EBITDA and Adjusted EBITDA Margin, which are non-GAAP financial measures. These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly titled measures presented by other companies. We define Adjusted EBITDA as income before interest expense, income tax expense, depreciation and amortization, and certain add-backs for non-cash or non-recurring expenses, including restructuring and share-based compensation expenses. The most directly comparable GAAP measure is net income. We monitor and have presented in this release Adjusted EBITDA because it is a key measure used by our management and Board of Directors to understand and evaluate our operating performance, to establish budgets and to develop operational goals for managing our business. In particular, we believe that excluding the impact of these expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core operating performance.

We believe that this non-GAAP financial measure helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in the calculations of this non-GAAP financial measure. Accordingly, we believe that this financial measure provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects.

Forward Looking Statement

This release contains forward-looking statements. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: the ultimate duration and impact of the ongoing COVID-19 pandemic, our reliance on a limited number of insurance carrier partners and any potential termination of those relationships or failure to develop new relationships; existing and future laws and regulations affecting the health insurance market; changes in health insurance products offered by our insurance carrier partners and the health insurance market generally; insurance carriers offering products and services directly to consumers; changes to commissions paid by insurance carriers and underwriting practices; competition with brokers, exclusively online brokers and carriers who opt to sell policies directly to consumers; competition from government-run health insurance exchanges; developments in the U.S. health insurance system; our dependence on revenue from carriers in our senior segment and downturns in the senior health as well as life, automotive and home insurance industries; our ability to develop new offerings and penetrate new vertical markets; risks from third-party products; failure to enroll individuals during the Medicare annual enrollment period; our ability to attract, integrate and retain qualified personnel; our dependence on lead providers and ability to compete for leads; failure to obtain and/or convert sales leads to actual sales of insurance policies; access to data from consumers and insurance carriers; accuracy of information provided from and to consumers during the insurance shopping process; cost-effective advertisement through internet search engines; ability to contact consumers and market products by telephone; global economic conditions; disruption to operations as a result of future acquisitions; significant estimates and assumptions in the preparation of our financial statements; impairment of goodwill; potential litigation and claims, including IP litigation; our existing and future indebtedness; developments with respect to LIBOR; access to additional capital; failure to protect our intellectual property and our brand; fluctuations in our financial results caused by seasonality; accuracy and timeliness of commissions reports from insurance carriers; timing of insurance carriers’ approval and payment practices; factors that impact our estimate of the constrained lifetime value of commissions per policyholder; changes in accounting rules, tax legislation and other legislation; disruptions or failures of our technological infrastructure and platform; failure to maintain relationships with third-party service providers; cybersecurity breaches or other attacks involving our systems or those of our insurance carrier partners or third-party service providers; our ability to protect consumer information and other data; and failure to market and sell Medicare plans effectively or in compliance with laws. For a further discussion of these and other risk factors that could impact our future results and performance, see the section entitled “Risk Factors” in the most recent Annual Report on Form 10-K (the “Annual Report”) filed by us with the Securities Exchange Commission. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as otherwise required by law, we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

About SelectQuote:

Founded in 1985, SelectQuote (NYSE: SLQT) provides solutions that help consumers protect their most valuable assets: their families, health and property. The company pioneered the direct-to-consumer model of providing unbiased comparisons from multiple, highly-rated insurance companies allowing consumers to choose the policy and terms that best meet their unique needs. Two foundational pillars underpin SelectQuote’s success: a strong force of highly-trained and skilled agents who provide a consultative needs analysis for every consumer, and proprietary technology that sources, scores, and routes high-quality sales leads. The company has three core business lines: SelectQuote Senior, SelectQuote Life and SelectQuote Auto and Home. SelectQuote Senior, the largest and fastest-growing business, serves the needs of a demographic that sees 10,000 people turn 65 each day with a range of Medicare Advantage and Medicare Supplement plans from leading, nationally-recognized carriers, as well as prescription drug plans, dental, vision and hearing plans.

SELECTQUOTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

March 31, 2021

June 30, 2020

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

369,048

$

321,065

Restricted cash

47,805

Accounts receivable

137,839

83,634

Commissions receivable-current

79,579

51,209

Other current assets

4,958

10,121

Total current assets

591,424

513,834

COMMISSIONS RECEIVABLE—Net

684,570

461,752

PROPERTY AND EQUIPMENT—Net

23,311

22,150

SOFTWARE—Net

11,513

8,399

OPERATING LEASE RIGHT-OF-USE ASSETS

30,381

INTANGIBLE ASSETS—Net

41,438

19,673

GOODWILL

49,955

46,577

OTHER ASSETS

1,522

1,408

TOTAL ASSETS

$

1,434,114

$

1,073,793

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable

$

35,467

$

22,891

Accrued expenses

23,090

14,936

Accrued compensation and benefits

41,693

22,228

Earnout liability

30,812

Operating lease liabilities—current

5,130

Other current liabilities

9,869

4,944

Total current liabilities

115,249

95,811

DEBT

460,615

311,814

DEFERRED INCOME TAXES

138,870

105,844

OPERATING LEASE LIABILITIES

37,716

OTHER LIABILITIES

11,149

14,635

Total liabilities

763,599

528,104

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS’ EQUITY:

Common stock, $0.01 par value

1,634

1,622

Additional paid-in capital

543,524

548,113

Retained earnings (accumulated deficit)

124,942

(2,792

)

Accumulated other comprehensive income (loss)

415

(1,254

)

Total shareholders’ equity

670,515

545,689

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

1,434,114

$

1,073,793

SELECTQUOTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

Three Months Ended March 31,

Nine Months Ended March 31,

2021

2020

2021

2020

REVENUE:

Commission

$

236,793

$

137,455

$

664,312

$

353,926

Production bonus and other

30,130

11,149

85,054

36,142

Total revenue

266,923

148,604

749,366

390,068

OPERATING COSTS AND EXPENSES:

Cost of revenue

71,439

43,367

206,605

126,488

Marketing and advertising

116,690

55,274

298,696

132,246

General and administrative

19,251

6,656

44,496

25,779

Technical development

4,860

2,865

13,458

9,088

Total operating costs and expenses

212,240

108,162

563,255

293,601

INCOME FROM OPERATIONS

54,683

40,442

186,111

96,467

INTEREST EXPENSE, NET

(7,355)

(9,356)

(20,898)

(16,239)

LOSS ON EXTINGUISHMENT OF DEBT

(3,315)

(3,315)

OTHER EXPENSES, NET

(349)

(4)

(1,545)

(20)

INCOME BEFORE INCOME TAX EXPENSE

43,664

31,082

160,353

80,208

INCOME TAX EXPENSE

7,183

7,366

32,619

19,110

NET INCOME

$

36,481

$

23,716

$

127,734

$

61,098

NET INCOME (LOSS) PER SHARE:

Basic

$

0.22

$

0.23

$

0.79

$

(0.38)

Diluted

$

0.22

$

0.17

$

0.77

$

(0.38)

WEIGHTED-AVERAGE COMMON STOCK OUTSTANDING USED IN PER SHARE AMOUNTS:

Basic

163,023

92,077

162,705

89,989

Diluted

165,731

138,754

165,495

89,989

OTHER COMPREHENSIVE INCOME NET OF TAX:

Gain on cash flow hedge
1,810

1,669

OTHER COMPREHENSIVE INCOME

1,810

1,669

COMPREHENSIVE INCOME

$

38,291

$

23,716

$

129,403

$

61,098

SELECTQUOTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

Nine Months Ended March 31,

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

127,734

$

61,098

Adjustments to reconcile net income to net cash, cash equivalents, and restricted cash used in operating activities:

Depreciation and amortization

11,260

5,273

Loss on disposal of property, equipment, and software

261

235

Share-based compensation expense

3,689

9,283

Deferred income taxes

32,475

19,117

Amortization of debt issuance costs and debt discount

2,482

1,431

Write-off of debt issuance costs

2,570

Fair value adjustments to contingent earnout obligations

1,487

Non-cash lease expense

2,869

Changes in operating assets and liabilities:

Accounts receivable

(52,905

)

(17,057

)

Commissions receivable

(251,188

)

(142,454

)

Other assets

4,349

1,420

Accounts payable and accrued expenses

26,223

12,896

Operating lease liabilities

(2,631

)

Other liabilities

30,378

6,726

Net cash used in operating activities

(60,947

)

(42,032

)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(6,520

)

(6,185

)

Proceeds from sales of property and equipment

3

Purchases of software and capitalized software development costs

(5,807

)

(4,443

)

Acquisition of business

(23,879

)

Net cash used in investing activities

(36,206

)

(10,625

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from revolving line of credit

85,975

Payments on revolving line of credit

(97,007

)

Net proceeds from Term Loans

228,753

416,500

Payments on Term Loans

(84,118

)

Proceeds from other debt

12,125

Payments on other debt

(189

)

(2,432

)

Proceeds from common stock options exercised and employee stock purchase plan

1,778

5,364

Cash dividends paid

(275,000

)

Payments of tax withholdings related to net share settlement of equity awards

(10,026

)

Payments of debt issuance costs

(885

)

(7,694

)

Payments of costs incurred in connection with private placement

(1,771

)

Payments of costs incurred in connection with initial public offering

(3,911

)

(2,117

)

Payment of contingent earnout liability

(32,300

)

Net cash provided by financing activities

97,331

135,714

NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

178

83,057

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of period

368,870

570

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of period

$

369,048

$

83,627

SELECTQUOTE, INC. AND SUBSIDIARIES

Adjusted EBITDA to Net Income Reconciliation

(Unaudited)

Three Months Ended March 31, 2021

(in thousands)

Senior

Life

Auto &
Home

Corp &
Elims

Consolidated

Revenue

$

215,600

$

46,400

$

6,973

$

(2,050

)

$

266,923

Operating expenses

(140,111

)

(43,225

)

(5,877

)

(12,507

)

(201,720

)

Other expenses, net

(15

)

(15

)

Adjusted EBITDA

75,489

3,175

1,096

(14,572

)

65,188

Share-based compensation expense

(1,429

)

Non-recurring expenses

(4,667

)

Fair value adjustments to contingent earnout obligations

(334

)

Depreciation and amortization

(4,323

)

Loss on disposal of property, equipment, and software

(101

)

Interest expense, net

(7,355

)

Loss on extinguishment of debt

(3,315

)

Income tax expense

(7,183

)

Net income

$

36,481

Three Months Ended March 31, 2020

(in thousands)

Senior

Life

Auto &
Home

Corp &
Elims

Consolidated

Revenue

$

107,351

$

30,956

$

10,442

$

(145

)

$

148,604

Operating expenses

(61,169

)

(27,462

)

(8,856

)

(7,059

)

(104,546

)

Other expenses, net

(4

)

(4

)

Adjusted EBITDA

46,182

3,494

1,586

(7,208

)

44,054

Share-based compensation expense

(19

)

Non-recurring expenses

(1,256

)

Depreciation and amortization

(2,105

)

Loss on disposal of property, equipment, and software

(236

)

Interest expense, net

(9,356

)

Income tax expense

(7,366

)

Net income

$

23,716

SELECTQUOTE, INC. AND SUBSIDIARIES

Adjusted EBITDA to Net Income Reconciliation

(Unaudited)

Nine Months Ended March 31, 2021

(in thousands)

Senior

Life

Auto &
Home

Corp &
Elims

Consolidated

Revenue

$

604,309

$

125,598

$

23,752

$

(4,293

)

$

749,366

Operating expenses

(385,363

)

(105,532

)

(16,889

)

(34,771

)

(542,555

)

Other expenses, net

(58

)

(58

)

Adjusted EBITDA

218,946

20,066

6,863

(39,122

)

206,753

Share-based compensation expense

(3,689

)

Non-recurring expenses

(5,490

)

Fair value adjustments to contingent earnout obligations

(1,487

)

Depreciation and amortization

(11,260

)

Loss on disposal of property, equipment, and software

(261

)

Interest expense, net

(20,898

)

Loss on extinguishment of debt

(3,315

)

Income tax expense

(32,619

)

Net income

$

127,734

Nine Months Ended March 31, 2020

(in thousands)

Senior

Life

Auto &
Home

Corp &
Elims

Consolidated

Revenue

$

273,808

$

87,543

$

29,061

$

(344

)

$

390,068

Operating expenses

(161,456

)

(71,991

)

(23,467

)

(19,248

)

(276,162

)

Other expenses, net

(20

)

(20

)

Adjusted EBITDA

$

112,352

$

15,552

$

5,594

$

(19,612

)

113,886

Share-based compensation expense

(9,283

)

Non-recurring expenses

(2,648

)

Depreciation and amortization

(5,273

)

Loss on disposal of property, equipment, and software

(235

)

Interest expense, net

(16,239

)

Income tax expense

(19,110

)

Net income

$

61,098

SELECTQUOTE, INC. AND SUBSIDIARIES

Adjusted EBITDA to Net Income Reconciliation

(Unaudited)

Guidance Adjusted EBITDA to net income reconciliation, year ending June 30, 2021:

(in thousands)

Range

Net Income

$

130,000

$

138,000

Income tax expense

34,000

36,000

Loss on extinguishment of debt

3,000

3,000

Interest expense, net

29,000

29,000

Depreciation and amortization

16,000

16,000

Fair value adjustments to contingent earnout obligations

1,000

1,000

Non-recurring expenses

7,000

7,000

Share-based compensation expense

5,000

5,000

Adjusted EBITDA

$

225,000

$

235,000

View source version on businesswire.com: https://www.businesswire.com/news/home/20210511005922/en/

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