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SelectQuote, Inc. (SLQT)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 revenue was $345.1M, up 12.3% YoY, with net income of $12.9M and Adjusted EBITDA of $2.7M .
  • The quarter beat S&P Global consensus on revenue by ~$11.0M* and on Primary EPS (actual $0.035 vs estimated -$0.203)*; GAAP diluted EPS was -$0.02 due to preferred dividends .
  • FY2026 guidance introduced: revenue $1.65–$1.75B and Adjusted EBITDA $120–$150M; management also guided Q1 FY2026 consolidated Adjusted EBITDA loss of $25–$30M, Senior margins to exceed 20%, and Healthcare Services EBITDA >$50M .
  • Management highlighted accelerating cash-flow focus and expects positive operating cash flow in FY2026, supported by SelectRx scaling and capital structure improvements (Oct securitization, Feb preferred equity) .
  • Potential stock catalysts: new FY2026 guidance, SelectRx profitability trajectory, and ongoing capital structure optimization, against a backdrop of improving Medicare Advantage rate dynamics .

What Went Well and What Went Wrong

What Went Well

  • Healthcare Services grew Q4 revenue 47% YoY to $214.0M and delivered $11.9M Adjusted EBITDA, with SelectRx members reaching 108,018 .
  • Life segment delivered Q4 revenue of $48.0M (+14% YoY) with $6.9M Adjusted EBITDA and strong term/final expense premium growth (total premiums $50.8M, +21% YoY) .
  • CEO: “We are proud to have delivered financial results well in excess of our initial expectations for the 3rd consecutive year... Adjusted EBITDA results have outperformed our forecasts by more than 20% each year.” .

What Went Wrong

  • Senior segment Q4 revenue fell 28% YoY to $82.5M; Adjusted EBITDA decreased 72% YoY to $7.7M, reflecting lower agent headcount and SEP changes; MA approved policies fell 20% YoY to 85,344 and MA LTV edged down to $837 (-1% YoY) .
  • Consolidated Adjusted EBITDA was only $2.7M versus $14.4M in Q4 FY2024; company recorded $4.2M impairment and elevated technical development expense ($41.6M in Q4 FY2025 vs $9.2M prior year) .
  • Operating cash flow was negative in Q4 (-$37.5M), reflecting working capital and investment cadence despite net income; management expects FY2026 positive operating cash flow .

Financial Results

Consolidated Performance (actuals)

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$481.1 $408.2 $345.1
Net Income ($USD Millions)$53.2 $26.0 $12.9
Adjusted EBITDA ($USD Millions)$87.5 $37.7 $2.7
Diluted EPS ($USD)$0.30 $0.03 -$0.02

Q4 2025 Actual vs S&P Global Consensus

MetricActualConsensusDelta
Revenue ($USD Millions)$345.1 $334.1*+$11.0*
Primary EPS ($USD)$0.0353*-$0.2033*+$0.2386*
EBITDA ($USD Millions)-$5.44*-$2.17*-$3.27*

Values retrieved from S&P Global.*

Segment Breakdown

MetricQ4 2024Q4 2025
Senior Revenue ($USD Millions)$114.1 $82.5
Senior Adjusted EBITDA ($USD Millions)$27.9 $7.7
Senior Adjusted EBITDA Margin (%)24% 9%
Healthcare Services Revenue ($USD Millions)$145.2 $214.0
Healthcare Services Adjusted EBITDA ($USD Millions)$0.9 $11.9
Healthcare Services Adjusted EBITDA Margin (%)1% 6%
Life Revenue ($USD Millions)$42.1 $48.0
Life Adjusted EBITDA ($USD Millions)$7.2 $6.9
Life Adjusted EBITDA Margin (%)17% 14%

Selected KPIs

KPIQ4 2024Q3 2025Q4 2025
MA Approved Policies (units)107,272 168,001 85,344
MA LTV ($ per policy)$847 $915 $837
SelectRx Members (period-end)82,385 105,523 108,018
Prescriptions Per Day (avg)22,950 29,015 30,630
Life Total Premiums ($USD Thousands)$41,863 $46,611 $50,796
Revenue/CAC multiple (TTM/FY)4.2x (TTM Q3) 5.8x (TTM Q3) 6.1x (FY25)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Billions)FY2026N/A$1.65–$1.75 New
Adjusted EBITDA ($USD Millions)FY2026N/A$120–$150 New
Consolidated Adjusted EBITDA ($USD Millions)Q1 FY2026N/A-$25 to -$30 New
Senior Adjusted EBITDA Margin (%)FY2026Mid-to-high 20s delivered prior years >20% expected Lower vs recent delivery
Healthcare Services EBITDA ($USD Millions)FY2026N/A>$50 New
FY2025 Revenue ($USD Billions)FY2025$1.500–$1.575 Actual $1.527 Achieved near midpoint
FY2025 Adjusted EBITDA ($USD Millions)FY2025$115–$140 Actual $126 Achieved above midpoint

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 and Q3)Current Period (Q4)Trend
AI/Technology & Agent ProductivityQ2: High-touch agent-led model; Rev/CAC 5.3x; AEP close rates rose; technology-enabled efficiency . Q3: 25% reduction in enrollment time and 300k+ AI interactions; margins resilient .7.5M calls routed via intelligent automation; 300k+ healthcare interactions; continued tech leverage to drive efficiency .Strengthening operational leverage via automation
Capital Structure Optimization & SecuritizationQ2: $100M securitization; $350M preferred equity; cost of capital down, cash interest -$30M . Q3: Progress and liquidity highlighted .CFO reiterates improving cash efficiency and expects further transactions to extend maturities and lower cost of capital .Ongoing improvements; more actions expected
Regulatory/Macro (Medicare Advantage rates)Q3: Final rate notice viewed as positive; improves carrier backdrop . Q2: Disruptive AEP, high plan terminations .FY2026 planning assumes flat Senior volumes and SAP dynamics; balancing cash flow vs growth .Environment stabilizing; cautious volume posture
Healthcare Services ProfitabilityQ2: Low single-digit margins for FY2025 expected . Q3: Q4 segment margin 5.5%; facility ramp pressure near-term .FY2026 EBITDA >$50M; sequential margin expansion after Q1 ramp .Improving margins with scale and member mix refinement
DOJ/LegalQ3: Company rejects allegations; emphasizes compliance culture .No new update in Q4 call; risks noted in 8-K .Ongoing monitoring

Management Commentary

  • CEO: “We ended the year with consolidated revenue of $1,500,000,000… Full year Healthcare Services revenue grew by approximately 55%… We drove $126,000,000 of adjusted EBITDA… We believe SelectQuote’s ultimate value is as a holistic solution provider across the $5 trillion U.S. Health care market.” .
  • CFO: “We expect revenue in the range of $1,650,000,000 to $1,750,000,000… Adjusted EBITDA $120,000,000 to $150,000,000… We anticipate generating positive operating cash flow in 2026.” .
  • CEO on cash flow strategy: “As our healthcare services business has continued to scale, it provides us better optionality… we believe our differentiated ability to accelerate cash flow generation through business mix is the right strategy…” .

Q&A Highlights

  • Healthcare Services margin path: Management expects margin enhancement with Kansas facility scaling and refined member targeting; near-term Q1 margin flat sequentially, then modest expansion thereafter .
  • Capital structure/financing: Securitization remains a viable path; broader options to lower cost of capital and extend maturities while generating “meaningful unlevered operating cash flow” .
  • Agent hiring and AI: Hiring underway for AEP; AI augments agent efficiency (real-time QA, call listening, data gathering), reducing enrollment time by 25% and improving productivity .
  • Senior policy volumes and SEP: Management plans for flatter MA submissions given SAP dynamics; Senior margins expected to remain >20% despite slight decline from recent mid–high-20s .
  • Healthcare Services scope: SelectPatient management and telemedicine (FlexSync Medical) seen as future value drivers, though not expected to contribute meaningful EBITDA in FY2026 .

Estimates Context

  • Q4 FY2025 beat on revenue and Primary EPS versus S&P Global consensus; EBITDA (S&P basis) missed consensus while company-reported Adjusted EBITDA was positive ($2.7M), reflecting non-GAAP add-backs and warrant fair value impacts .
  • Prior quarters: Q2 revenue and EBITDA exceeded consensus; Q3 revenue slightly below consensus; trajectory supports selective growth with margin management in Healthcare Services*.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue/earnings quality: Q4 revenue beat and Primary EPS beat versus consensus, despite GAAP diluted EPS reflecting preferred dividends; monitor EPS definitions in models .
  • Segment mix shift: Healthcare Services is now the growth and cash-flow engine (Q4 revenue +47% YoY), with improving margins and FY2026 EBITDA >$50M targeted .
  • Senior profitability durability: Margins remain attractive (>20% expected FY2026) even with flatter volumes and SEP headwinds; MA LTV pressure modest (commission mix/timing) .
  • Cash generation and balance sheet: Expect FY2026 positive operating cash flow, aided by SelectRx scale and lower cash interest after preferred/securitization actions .
  • Guidance and near-term setup: FY2026 revenue $1.65–$1.75B and Adjusted EBITDA $120–$150M; Q1 FY2026 EBITDA loss guided (-$25–$30M) due to seasonal senior production and AEP hiring .
  • Risk monitoring: DOJ matter remains a headline risk; regulatory backdrop improves with favorable rate notice; continued focus on capital structure optimization .
  • Actionable: Lean into Healthcare Services margin expansion drivers and capital structure catalysts; for trading, watch Q1 FY2026 loss inflection and AEP execution relative to Senior margin >20% target .