# SelectQuote, Inc.: Form 10-Q for the period ended Dec 31, 2024

- Company: [SelectQuote, Inc.](/companies/slqt.md) (CIK 1794783)
- Form: 10-Q
- Filed: 2025-02-10
- Accepted by EDGAR: Feb 10, 2025, 17:23 ET
- Period: 2024-12-31
- Accession: 0001794783-25-000009
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1794783/000179478325000009/slqt-20241231.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1794783/000179478325000009/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-10-01 to 2024-12-31 | $481.1m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2024-07-01 to 2024-12-31 | $773.3m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-10-01 to 2024-12-31 | $156.2m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2024-07-01 to 2024-12-31 | $285.7m | us-gaap:CostOfGoodsAndServicesSold |
| Selling, general and administrative | 3 months, 2024-10-01 to 2024-12-31 | $45.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2024-07-01 to 2024-12-31 | $81.2m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-10-01 to 2024-12-31 | $70.9m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-07-01 to 2024-12-31 | $59.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-10-01 to 2024-12-31 | $23.7m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2024-07-01 to 2024-12-31 | $46.8m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-10-01 to 2024-12-31 | −$13.7m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-07-01 to 2024-12-31 | −$4.2m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-10-01 to 2024-12-31 | $53.2m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-07-01 to 2024-12-31 | $8.7m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-10-01 to 2024-12-31 | $0.30 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-07-01 to 2024-12-31 | $0.05 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-10-01 to 2024-12-31 | $0.31 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-07-01 to 2024-12-31 | $0.05 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-10-01 to 2024-12-31 | 175,101,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-07-01 to 2024-12-31 | 175,024,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-07-01 to 2024-12-31 | −$45.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-07-01 to 2024-12-31 | $741.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-12-31 | $7.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-12-31 | $372.4m | us-gaap:AssetsCurrent |
| Total assets | at 2024-12-31 | $1.28bn | us-gaap:Assets |
| Current liabilities | at 2024-12-31 | $194.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-12-31 | $953.2m | us-gaap:Liabilities |
| Long-term debt | at 2024-12-31 | $684.3m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-12-31 | $27.6m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2024-12-31 | $326.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 65,628 characters.

*You should read the following discussion and analysis of our financial condition and result of operations together with our condensed consolidated financial statements and footnotes included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Please refer to a discussion of the Company’s forward-looking statements and associated risks in “Cautionary Note Regarding Forward-Looking Statements” in our Annual Report. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” in our Annual Report and in Part II, Item 1A hereof.*

### Company Overview

SelectQuote, Inc. (together with its subsidiaries, “SelectQuote”, the “Company”, “we”, “us”) is a leading technology-enabled, direct-to-consumer (“DTC”) distribution and engagement platform for selling insurance policies and healthcare services. Our insurance distribution business, which has operated continuously for nearly 40 years, allows consumers to transparently and conveniently shop for senior health, life, and automobile and home insurance policies from a curated panel of the nation’s leading insurance carriers. As an insurance distributor, we do not insure the consumer, but rather identify consumers looking to acquire insurance products and place these consumers with insurance carrier partners that provide these products. In return, we earn commissions from our insurance carrier partners for the policies we sell on their behalf. Our proprietary technology allows us to take a broad funnel approach to marketing by analyzing and identifying high-quality consumer leads sourced from a wide variety of online and offline marketing channels including digital marketing, radio, television, and third-party marketing partners. We monitor our acquisition costs to dynamically allocate our marketing spend to the most attractive channels, benefiting from nearly 40 years of data accumulated through our proprietary, purpose-built technologies. Our advanced workflow processing system scores each acquired lead in real time, matching it with a sales agent whom we determine is best suited to meet the consumer’s need. Our platform then captures and utilizes our experience to further build upon the millions of data points that feed our marketing algorithms, further enhancing our ability to deploy subsequent marketing dollars efficiently and target more high-quality consumer leads. We have built our business model to maximize commissions collected over the life of an approved policy, a metric we refer to as “ lifetime value of commissions” or “LTV”, which is a key component to our overall profitability.

Our proprietary routing and workflow system is a key competitive advantage and driver of our business performance. Our systems analyze and intelligently route consumer leads to agents and allow us to monitor, segment, and enhance our agents’ performance. This technological advantage also allows us to rapidly conduct a needs-based, tailored analysis for each consumer that maximizes sales, enhances customer retention, and ultimately maximizes LTV’s. Our expertise and value add stems from the coupling of our technology with our skilled agents, which provides greater transparency in pricing terms and choice and an overall better consumer experience. When customers are satisfied, their propensity to switch policies decreases, thereby improving retention rates (“persistency”), increasing LTV’s and, ultimately, optimizing our financial performance and shareholder value.

SelectQuote has a long history of successful DTC product distribution and consumer engagement, and we bring this same capability to healthcare services. We saw a large opportunity to leverage our existing customer base and distribution model to improve education and access to healthcare services for our senior consumers and to create value for our shareholders and insurance carrier partners. SelectQuote’s value lies in our ability to engage the consumer, capture critical self-reported information in real-time, and then take action on that information to offer each consumer personalized solutions. Our healthcare services business seeks to provide consumers with a wide breadth of products supporting their needs, such as SelectRx, our Patient-Centered Pharmacy HomeTM (“PCPH”) accredited pharmacy, which has already demonstrated SelectQuote’s ability to leverage our strong consumer engagement to drive immediate value using our existing operational infrastructure. Whether through acquisitions or new partnerships, we continue to look for more opportunities to leverage our strengths to expand our healthcare services business.

We evaluate our business using the following three reportable segments:

Senior was launched in 2010 and provides unbiased comparison shopping for Medicare Advantage (“MA”) and Medicare Supplement (“MS”) insurance plans as well as prescription drug and dental, vision, and hearing (“DVH”) plans, and critical illness products. We represent approximately 25 leading, nationally-recognized insurance carrier partners, including UHC, Humana, Aetna, and Wellcare. MA and MS plans accounted for 93% and 92% of our approved Senior policies for the three months ended December 31, 2024 and 2023, respectively, and 91% and 91% for the six months ended December 31, 2024, and 2023, respectively, with other ancillary type policies accounting for the remainder.

Healthcare Services, launched in 2021, offers various health-related products and services through SelectRx, Population Health, and most recently, SelectPatient Management. SelectRx offers essential prescription medications, OTC medications, customized medication packaging, and medication therapy management, providing long-term pharmacy care that enables patients to optimize medication adherence to drive positive health outcomes, while enabling patients managing polypharmacy and multiple chronic conditions to remain at home. Through Population Health, we utilize our excellent consumer engagement capabilities to capture valuable self-reported information in real-time for our insurance carrier partners by completing Health Risk Assessments (“HRAs”). We then use that data to take a real-time, proactive, and personalized approach to offer various health-related products and services to the consumer, such as our pharmacy services from SelectRx. In 2024, we launched SelectPatient Management (“SPM”), via a $4.0 million acquisition of an existing chronic care management platform, which offers providers, payers, and Accountable Care Organizations scalable, technology-enhanced services for patients living with chronic conditions. Through consistent, trust-based patient engagement, SPM helps patients navigate the care continuum, focusing on non-clinical factors so physicians can focus on the more critical needs of their patients. We believe that offering these services enables healthcare to be more accessible, convenient, and personalized for our members.

Life is one of the country’s largest and most established DTC insurance distributors for term life insurance, having sold over 2.4 million policies nationwide since our founding in 1985. Our platform provides unbiased comparison shopping for life insurance products such as term life, final expense, and other ancillary products like critical illness, accidental death, and juvenile insurance. We represent approximately 20 leading, nationally-recognized insurance carrier partners, with many of these relationships exceeding 20 years. Term life policies accounted for 44% and 47% of new premium within the Life segment for the three months ended December 31, 2024 and 2023, respectively, with final expense policies accounting for 56% and 53% for the three months ended December 31, 2024 and 2023, respectively. For the six months ended December 31, 2024 and 2023, term life policies accounted for 41% and 48% of new premium within Life, respectively, with final expense policies accounting for 59% and 52%, respectively.

Our other operations which do not meet the criteria to be a separate reportable segment are consolidated and reported as “All other” which represents a shopping platform for auto, home, and specialty insurance lines.

The three and six months ended December 31 referenced throughout the commentary below refers to the second quarter and fiscal year-to-date performance of our fiscal years ending on June 30, 2025 and 2024.

### Key Business and Operating Metrics by Segment

In addition to traditional financial metrics, we rely upon certain business and operating metrics to estimate and recognize revenue, evaluate our business performance, and facilitate our operations. In Senior, our primary product, Medicare Advantage, pays us flat commission rates based on the number of policies we sell on behalf of our insurance carrier partners. Therefore, we have determined that units and unit metrics are the most appropriate measures to evaluate the performance of Senior. For Healthcare Services, our primary source of revenue is pharmacy revenue from SelectRx, so the total number of SelectRx members and the prescriptions shipped per day are the most appropriate measures used to evaluate the performance of Healthcare Services as these metrics drive top-line revenue. In Life, we are typically paid a commission that is a percent of the premium that we generate for our insurance carrier partners. Therefore, we have determined that premium-based metrics are the most relevant measures to evaluate the performance of the segment. Below are the most relevant business and operating metrics for each segment:

### Senior

### 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.

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

|  | Three Months Ended December 31, 2024 | 2023 | Six Months Ended December 31, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Medicare Advantage | 284,774 | 271,712 | 387,055 | 376,244 |
| All other (1) | 26,861 | 24,049 | 43,117 | 38,969 |
| **Total** | 311,635 | 295,761 | 430,172 | 415,213 |

(1) Represents the submitted policies for medicare supplement, dental, vision and hearing, prescription drug plan and other.

Total submitted policies for all products increased 5% for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. This was driven by a 24% increase in overall close rates, a 33% increase in production per productive agent offset by a 25% decrease in average total productive agents.

Total submitted policies for all products increased 4% for the six months ended December 31, 2024, compared to the six months ended December 31, 2023. This was driven by a 12% increase in overall close rates, a 19% increase in production per productive agent offset by a 13% decrease in average total productive agents.

### 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 December 31, 2024 | 2023 | Six Months Ended December 31, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Medicare Advantage | 247,849 | 234,576 | 339,529 | 332,257 |
| All other (1) | 19,714 | 19,985 | 32,693 | 32,180 |
| **Total** | 267,563 | 254,561 | 372,222 | 364,437 |

(1) Represents the approved policies for medicare supplement, dental, vision and hearing, prescription drug plan and other.

In general, the relationship between submitted policies and approved policies has been steady over time. Therefore, factors impacting the number of submitted policies also impact the number of approved policies.

Total approved policies for all products increased by 5% for the three months ended December 31, 2024, compared to the three months ended December 31, 2023, which correlates to the increase in submitted policies.

Total approved policies for all products increased 2% for the six months ended December 31, 2024, compared to the six months ended December 31, 2023. Fluctuations in approved policies are normally in direct correlation to submitted policies; however, the approved policies increased slightly less than submitted policies due to carrier mix.

### Lifetime Value of Commissions per Approved Policy

The lifetime value of commissions (the “LTV”) 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 LTV 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 estimate of the future renewal commissions is determined using contracted renewal commission rates, which does not include marketing development funds or production bonuses, constrained by a persistency-adjusted 10-year renewal period based on a combination of our historical experience and available insurance carrier historical experience to estimate renewal revenue only to the extent probable that a significant reversal in revenue would not be expected to occur. These factors may result in varying values from period to period. The LTV per approved policy represents commissions only from policies sold during the period; it does not include any updated estimates of prior period variable consideration based on actual policy renewals in the current period.

The following table shows the LTV per approved policy for the periods presented:

|  | Three Months Ended December 31, 2024 | 2023 | Six Months Ended December 31, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Medicare Advantage | $907 | $934 | $881 | $883 |
| All other (1) | 111 | 112 | 134 | 131 |

(1) Represents the weighted average LTV per approved policy.

The LTV per MA approved policy decreased 3% for the three months ended December 31, 2024, compared to the three months ended December 31, 2023, primarily due to carrier mix.

The LTV per MA approved policy decreased less than 1% for the six months ended December 31, 2024, compared to the six months ended December 31, 2023, primarily due to carrier mix.

### Healthcare Services

The total number of SelectRx members represents the amount of active customers to which an order has been shipped and the prescriptions per day represents the total average prescriptions shipped per business day. These two metrics are the primary drivers of revenue for Healthcare Services.

### SelectRx Members

The following table shows the total number of SelectRx members as of the date presented:

|  | December 31, 2024 | December 31, 2023 |
| --- | ---: | ---: |
| Total SelectRx Members | 96,695 | 62,623 |

The total number of SelectRx members increased by 54% as of December 31, 2024, compared to December 31, 2023, due to our continued operating strategy to grow SelectRx.

### Prescriptions Per Day

The following table shows the average prescriptions shipped per day for the periods presented:

|  | Three Months Ended December 31, 2024 | 2023 | Six Months Ended December 31, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Prescriptions Per Day | 26,846 | 17,010 | 25,922 | 16,244 |

### Life

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. 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 Life.

The following table shows term and final expense premiums for the periods presented:

| (in thousands): | Three Months Ended December 31, 2024 | 2023 | Six Months Ended December 31, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Term Premiums | $17,311 | $17,398 | $32,529 | $35,588 |
| Final Expense Premiums | 22,139 | 19,388 | 46,612 | 39,087 |
| **Total** | $39,450 | $36,786 | $79,141 | $74,675 |

Total term premiums decreased 1% for the three months ended December 31, 2024, compared to the three months ended December 31, 2023, due to a 7% decrease in the number of policies sold, partially offset by a 7% increase in the average premium per policy sold. Final expense premiums increased 14% for the three months ended December 31, 2024, compared to the three months ended December 31, 2023, due to a 4% increase in the average premium per policy sold and a 9% increase in the number of policies sold.

Total term premiums decreased 9% for the six months ended December 31, 2024, compared to the six months ended December 31, 2023, due to a 4% increase in the average premium per policy sold and a 12% decrease in the number of policies sold. Final expense premiums increased 19% for the six months ended December 31, 2024, compared to the six months ended December 31, 2023, due to a 3% increase in the average premium per policy sold and a 16% increase in the number of policies sold.

### Key Components of our Results of Operations

The following table sets forth our operating results and related percentage of total revenues for the periods presented:

*(in thousands)*

| Revenue | Three Months Ended December 31, 2024 |  | 2023 |  | Six Months Ended December 31, 2024 |  | 2023 |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Commissions and other services | $301,069 | 63% | $296,643 | 73% | $440,449 | 57% | $434,584 | 68% |
| Pharmacy | 180,000 | 37% | 108,795 | 27% | 332,883 | 43% | 203,583 | 32% |
| Total revenue | 481,069 | 100% | 405,438 | 100% | 773,332 | 100% | 638,167 | 100% |
| Operating costs and expenses |  |  |  |  |  |  |  |  |
| Cost of commissions and other services revenue | 101,138 | 21% | 97,424 | 24% | 166,872 | 22% | 169,935 | 27% |
| Cost of goods sold—pharmacy revenue | 156,201 | 32% | 94,180 | 23% | 285,724 | 37% | 178,188 | 28% |
| Marketing and advertising | 97,725 | 20% | 117,078 | 29% | 161,489 | 22% | 179,400 | 28% |
| Selling, general, and administrative | 45,021 | 9% | 33,412 | 8% | 81,166 | 10% | 62,078 | 10% |
| Technical development | 10,044 | 2% | 8,050 | 2% | 19,119 | 2% | 15,687 | 2% |
| Total operating costs and expenses | 410,129 | 84% | 350,144 | 86% | 714,370 | 93% | 605,288 | 95% |
| Income from operations | 70,940 | 15% | 55,294 | 14% | 58,962 | 8% | 32,879 | 5% |
| Interest expense, net | (23,721) | (5)% | (24,415) | (6)% | (46,752) | (5)% | (45,811) | (7)% |
| Other expense, net | (7,663) | (2)% | — | —% | (7,674) | (1)% | (39) | —% |
| Income (loss) before income tax expense (benefit) | 39,556 | 8% | 30,879 | 8% | 4,536 | 2% | (12,971) | (2)% |
| Income tax expense (benefit) | (13,680) | (3)% | 11,487 | 3% | (4,154) | (1)% | (1,312) | —% |
| **Net income (loss)** | $53,236 | 11% | $19,392 | 5% | $8,690 | 1% | $(11,659) | (2)% |

### Revenue

We earn revenue in the form of commission payments from our insurance carrier customers, for the initial year the insurance policy is in effect (“first year”) and, where applicable, for each subsequent year the policy renews (“renewal year”), in addition to production bonuses and marketing development funds received from some insurance carriers. Production bonuses are based on attaining various predetermined target sales levels or other agreed upon objectives, whereas marketing development funds may or may not contain such predetermined targets and are used to purchase leads. These, along with other services revenue from Healthcare Services (excluding SelectRx revenue discussed below) and our lead generation business, InsideResponse (of which the majority is eliminated as intersegment revenue), are presented in our consolidated statements of comprehensive income (loss) as commissions and other services revenue. Pharmacy revenue on the consolidated statements of comprehensive income (loss) includes revenue from the sale of prescription and OTC medication products from SelectRx.

Revenue is recognized at different milestones for Senior and Life and is based on the contractual enforceable rights, our historical experience, and established customer business practices. Other services revenues from our Healthcare Services segment (excluding SelectRx revenue discussed below) is recognized when the performance obligation has been met, which is at different times for our various services (e.g. the HRA has been performed, a transfer has been made to a health-related partner, or SPM has provided care management services to a member), the transaction price is known based on volume and contractual prices, and we have no further performance obligations. Lead generation revenue is recognized when the generated lead is accepted by our customers, which is the point of sale, and we have no performance obligation after the delivery. Revenues generated from SelectRx are recognized upon shipment. At the time of shipment, we have performed all of our performance obligations and control of the product has been transferred to the customer. There are no future revenue streams or variable consideration associated as the transaction price is fixed at time of shipment, and any subsequent new order is its own performance obligation.

The following table presents our revenue for the periods presented and the percentage changes from the prior year:

*(dollars in thousands)*

|  | Three Months Ended December 31, 2024 | 2023 | Percent Change 2024 vs. 2023 | Six Months Ended December 31, 2024 | 2023 | Percent Change 2024 vs. 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Commissions and other services | $301,069 | $296,643 | 1% | $440,449 | $434,584 | 1% |
| Pharmacy | 180,000 | 108,795 | 65% | 332,883 | 203,583 | 64% |
| **Total revenue** | $481,069 | $405,438 | 19% | $773,332 | $638,167 | 21% |

**Three Months Ended December 31, 2024 and 2023–**Commissions and other services revenue increased $4.4 million, or 1%, for the three months ended December 31, 2024 primarily due to an increase in Senior and Life commissions revenue by $7.9 million and $2.4 million, respectively, offset by a decrease in other commissions revenue of $6.3 million. Senior’s increase was primarily due to a $7.9 million increase in commissions revenue driven by a 5% increase in approved policies. The $2.4 million increase in Life commissions revenue was primarily driven by a $1.8 million increase in final expense revenue. The decrease in other commissions revenue is driven by a $6.3 million decrease in Auto & Home commissions revenue due to the change in strategic direction to reduce revenue growth for Auto & Home based on our limited resources. Pharmacy revenue increased $71.2 million, or 65%, primarily due to the 54% increase in members from the growth of the SelectRx business.

**Six Months Ended December 31, 2024 and 2023–**Commission and other services revenue increased $5.9 million, or 1%, for the six months ended December 31, 2024, primarily due to increases in Senior and Life commissions revenue of $8.8 million, and $3.8 million, offset by a decrease in other commissions revenue of $9.3 million, respectively. For Senior, this was driven by a 2% increase in approved policies. The increase in Life commissions revenue was primarily by a $6.0 million increase in final expense revenue offset by a $2.2 million decrease in term revenue. The decrease in other commissions revenue is driven by a $9.3 million decrease in Auto & Home commissions revenue due to the change in strategic direction to reduce revenue growth for Auto & Home based on our limited resources. The $129.3 million increase in pharmacy revenue was due to the increase in members due to the expansion of the SelectRx business.

### Operating Costs and Expenses

### Cost of Commissions and Other Services Revenue

Cost of commissions and other services revenue represents the direct costs associated with fulfilling our obligations to our customers in Senior, Life, and Healthcare Services (excluding SelectRx discussed below); primarily compensation, benefits, and licensing for sales agents, customer success agents, fulfillment specialists, and others directly engaged in serving customers. It also includes allocations for facilities, telecommunications, and software maintenance costs, which are all based on headcount. Facilities costs include rent and utilities expenses and other costs to maintain our office locations. Telecommunications and software maintenance costs includes costs related to the internal phone systems and various software applications that our agents use to make sales. These costs directly correlate to the number of agents we have as we are primarily charged based on per person usage for the phone systems and software applications.

The following table presents our cost of commissions and other services revenue for the periods presented and the percentage change from the prior year:

*(dollars in thousands)*

|  | Three Months Ended December 31, 2024 | 2023 | Percent Change 2024 vs. 2023 | Six Months Ended December 31, 2024 | 2023 | Percent Change 2024 vs. 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Cost of commissions and other services revenue | $101,138 | $97,424 | 4% | $166,872 | $169,935 | (2)% |

**Three Months Ended December 31, 2024 and 2023—**Cost of commissions and other service revenue increased $3.7 million, or 4%, for the three months ended December 31, 2024, primarily due to a $4.8 million increase in compensation costs, offset by a $0.8 million decrease in other operating expenses in Senior. The $4.8 million increase in compensation costs is primarily made up of a $3.6 million increase in costs for our sales and customer care agents in Senior, and a $0.4 million increase in costs for sales and customer care agents in Life.

**Six Months Ended December 31, 2024 and 2023—**Cost of commissions and other service revenue decreased $3.1 million, or 2%, for the six months ended December 31, 2024, primarily due to a $1.0 million decrease in licensing fees in Senior, combined with a $0.7 million decrease in compensation costs and a $1.1 million decrease in other operating expenses in Senior. The $0.7 million decrease in compensation costs is primarily made up of a $3.2 million decrease in costs for our sales and customer care agents in Senior, offset by a $5.4 million increase in costs for sales and customer care agents in Healthcare Services and a $0.9 million increase in Life.

### Cost of Goods Sold-Pharmacy Revenue

Cost of goods sold-pharmacy revenue represents the direct costs associated with fulfilling pharmacy patient orders for SelectRx. Such costs primarily consist of medication costs and compensation costs for licensed pharmacists, pharmacy technicians, and other employees directly associated with fulfilling orders such as packaging and shipping clerks. It also includes shipping, supplies, other order fulfillment costs including part of the one-time customer onboarding costs, and certain facilities overhead costs such as rent, maintenance, and depreciation related to the pharmacy production process.

The following table presents our cost of goods sold-pharmacy revenue for the periods presented and the percentage change from the prior year:

*(dollars in thousands)*

|  | Three Months Ended December 31, 2024 | 2023 | Percent Change 2024 vs. 2023 | Six Months Ended December 31, 2024 | 2023 | Percent Change 2024 vs. 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Cost of goods sold—pharmacy revenue | $156,201 | $94,180 | 66% | $285,724 | $178,188 | 60% |

**Three Months Ended December 31, 2024 and 2023–**Cost of goods sold-pharmacy revenue increased $62.0 million, or 66%, for the three months ended December 31, 2024, primarily due to a $53.8 million increase in medication costs as the number of SelectRx members increased 54% over the prior year as well as a $4.7 million increase in compensation costs due to a 64% increase in the number of employees directly associated with fulfilling pharmacy orders.

**Six Months Ended December 31, 2024 and 2023–**Cost of goods sold-pharmacy revenue increased $107.5 million, or 60%, for the six months ended December 31, 2024, primarily due to an $92.0 million increase in medication costs as the number of SelectRx members increased 54% over the prior year as well as a $10.0 million increase in compensation costs due to a 74% increase in the number of employees directly associated with fulfilling pharmacy orders.

### Marketing and Advertising

Marketing and advertising expenses consist primarily of the direct costs associated with marketing and advertising of our services, such as television and radio commercials and online advertising. These direct costs generally represent the vast majority of our marketing and advertising expenses. Other costs consist of compensation and other expenses related to marketing, business development, partner management, public relations, carrier relations personnel who support our offerings, and allocations for facilities, telecommunications, and software maintenance costs. Our marketing and advertising costs increase during AEP and OEP to generate more leads during these high-volume periods.

The following table presents our marketing and advertising expenses for the periods presented and the percentage changes from the prior year:

*(dollars in thousands)*

|  | Three Months Ended December 31, 2024 | 2023 | Percent Change 2024 vs. 2023 | Six Months Ended December 31, 2024 | 2023 | Percent Change 2024 vs. 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Marketing and advertising | $97,725 | $117,078 | (17)% | $161,489 | $179,400 | (10)% |

**Three Months Ended December 31, 2024 and 2023–**Marketing and advertising expenses decreased $19.4 million, or 17%, for the three months ended December 31, 2024, primarily due to a $16.3 million decrease in lead costs and a $2.2 million decrease in compensation costs. The decrease in lead costs was attributable to an increase in close rates of approximately 25% for Senior during the 2024 AEP period.

**Six Months Ended December 31, 2024 and 2023–**Marketing and advertising expenses decreased $17.9 million, or 10%, for the six months ended December 31, 2024, due to a $15.2 million decrease in lead costs and a $1.9 million decrease in compensation costs. The decrease in lead costs was attributable to an increase in close rates of approximately 25% for Senior during the 2024 AEP period.

### Selling, General, and Administrative

Selling, general, and administrative expenses include compensation and benefits costs for staff working in our executive, finance, accounting, recruiting, human resources, administrative, business intelligence, data science, and part of the SelectRx customer onboarding departments. These expenses also include fees paid for outside professional services, including audit, tax, and legal fees and allocations for facilities, telecommunications, and software maintenance costs.

The following table presents our selling, general, and administrative expenses for the periods presented and the percentage changes from the prior year:

*(dollars in thousands)*

|  | Three Months Ended December 31, 2024 | 2023 | Percent Change 2024 vs. 2023 | Six Months Ended December 31, 2024 | 2023 | Percent Change 2024 vs. 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Selling, general, and administrative | $45,021 | $33,412 | 35% | $81,166 | $62,078 | 31% |

**Three Months Ended December 31, 2024 and 2023–**Selling, general, and administrative expenses increased $11.6 million, or 35%, for the three months ended December 31, 2024, primarily due to a $4.9 million increase in compensation costs, a $2.0 million increase in bad debt expense related to SelectRx, and a $4.5 million increase in corporate development. The increase in compensation costs was primarily related the growth of SelectRx. The increase in corporate development is related to the securitization transaction.

**Six Months Ended December 31, 2024 and 2023–**Selling, general, and administrative expenses increased $19.1 million, or 31%, for the six months ended December 31, 2024, primarily due to $10.1 million increase in compensation costs, a $4.2 million increase in bad debt expense related to SelectRx and a $3.1 million increase in corporate development. The increase in compensation costs was primarily related the growth of SelectRx. The increase in corporate development is related to the securitization transaction.

### Technical Development

Technical development expenses consist primarily of compensation and benefits costs for internal and external personnel associated with developing, maintaining and enhancing our applications, infrastructure and other IT-related functions as well as allocations for facilities, telecommunications and software maintenance costs.

The following table presents our technical development expenses for the periods presented and the percentage changes from the prior year:

*(dollars in thousands)*

|  | Three Months Ended December 31, 2024 | 2023 | Percent Change 2024 vs. 2023 | Six Months Ended December 31, 2024 | 2023 | Percent Change 2024 vs. 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Technical development | $10,044 | $8,050 | 25% | $19,119 | $15,687 | 22% |

**Three Months Ended December 31, 2024 and 2023–**Technical development expenses increased $2.0 million, or 25%, for the three months ended December 31, 2024, primarily due to a $1.6 million increase in compensation costs due to an increase in headcount for technology personnel and a $0.2 million increase in costs related to trainings and seminars.

**Six Months Ended December 31, 2024 and 2023–**Technical development expenses increased $3.4 million, or 22%, for the six months ended December 31, 2024, primarily due to a $3.2 million increase in compensation costs due to an increase in headcount for technology personnel.

### Interest Expense, Net

The following table presents our interest expense, net for the periods presented and the percentage changes from the prior year:

*(dollars in thousands)*

|  | Three Months Ended December 31, 2024 | 2023 | Percent Change 2024 vs. 2023 | Six Months Ended December 31, 2024 | 2023 | Percent Change 2024 vs. 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest expense, net | $23,721 | $24,415 | (3)% | $46,752 | $45,811 | 2% |

**Three Months Ended December 31, 2024 and 2023–**Interest expense decreased $0.7 million, or 3%, for the three months ended December 31, 2024, as a result of the Company’s lower cost of capital after completing the securitization transaction.

**Six Months Ended December 31, 2024 and 2023–**Interest expense increased $0.9 million, or 2%, for the six months ended December 31, 2024, as a result of higher interest rates during the period.

### Income Taxes

The following table presents our provision for income taxes for the periods presented and the percentage changes from the prior year:

*(dollars in thousands)*

|  | Three Months Ended December 31, 2024 | 2023 | Percent Change 2024 vs. 2023 | Six Months Ended December 31, 2024 | 2023 | Percent Change 2024 vs. 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Income tax expense (benefit) | $(13,680) | $11,487 | (219)% | $(4,154) | $(1,312) | 217% |
| Effective tax rate | (34.6)% | 37.2% |  | (91.6)% | 10.1% |  |

**Three Months Ended December 31, 2024 and 2023–**For the three months ended December 31, 2024 and 2023, we recognized income tax benefit and expense of $13.7 million and $11.5 million, respectively, representing effective tax rates of (34.6)% and 37.2%, respectively. The differences from the federal statutory tax rate to the effective tax rates for the three months ended December 31, 2024, were primarily related to state income taxes, the recording of a valuation allowance for federal and state tax attributes that the Company does not expect to utilize prior to expiration, vesting of restricted stock units, and non-deductibility of warrant market adjustments. The differences from the federal statutory tax rate to the effective tax rates for the three months ended December 31, 2023, were primarily related to state income taxes and the recording of a valuation allowance for federal tax attributes that the Company does not expect to utilize prior to expiration.

**Six Months Ended December 31, 2024 and 2023–**For the six months ended December 31, 2024 and 2023, the Company recognized income tax benefits of $4.2 million and $1.3 million, respectively, representing effective tax rates of (91.6)% and 10.1%, respectively. The differences from the federal statutory tax rate to the effective tax rate for the six months ended December 31, 2024, were primarily related to state income taxes, the recording of a valuation allowance for federal and state tax attributes that the Company does not expect to utilize prior to expiration, vesting of restricted stock units, and non-deductibility of warrant market adjustments. The differences from the federal statutory tax rate to the effective tax rate for the six months ended December 31, 2023, were primarily related to state income taxes and the recording of a valuation allowance for federal tax attributes that the Company does not expect to utilize prior to expiration.

### Segment Information

As of July 1, 2024, the Company has realigned its reportable segments for fiscal year 2025. The Auto & Home business does not meet the quantitative thresholds to be required to continue to be separately disclosed as a reportable segment in accordance with ASC 280. As a result, the Auto & Home business will be included in an “All Other” category. Prior period information has been recast to conform to the current presentation.

The Company’s operating segments have been determined in accordance with ASC 280. We currently have three reportable segments: i) Senior, ii) Healthcare Services, and iii) Life. Senior primarily sells senior Medicare-related health insurance products. Healthcare Services includes SelectRx, Population Health, and most recently, SelectPatient Management. Healthcare Services provides products and services to our Medicare policyholders, which are focused on improving patient health outcomes. Life primarily sells term life and final expense products. The All Other category is reflective of the revenue generated from selling individual automobile and homeowners’ insurance. Additionally, the Company accounts for non-operating activity, share-based compensation expense, depreciation and amortization, goodwill, long-lived asset and intangible asset impairments, certain intersegment eliminations, and the costs of providing corporate and other administrative services in our administrative division, Corporate & Eliminations. These services are not directly identifiable with our reportable segments and are shown in the tables below to reconcile the reportable segments to the consolidated financial statements. We have not aggregated any operating segments together to represent a reportable segment.

Our operating segments are determined based on how our chief executive officer, who also serves as our CODM manages our business, regularly accesses information, and evaluates performance for operating decision- making purposes, including allocation of resources. Adjusted EBITDA is our segment profit measure and a key measure used by our CODM and Board of Directors to understand and evaluate the operating performance of our business and on which internal budgets and forecasts are based and approved. We define Adjusted EBITDA as income (loss) before income tax expense (benefit) plus: (i) interest expense, net; (ii) depreciation and amortization; (iii) share-based compensation; (iv) goodwill, long-lived asset, and intangible assets impairments; (v) transaction costs; (vi) loss on disposal of property, equipment and software, net; (vii) other non-recurring expenses and income; and (viii) changes in fair value of warrant liabilities.

The following tables present information about the reportable segments for the periods presented. We do not report total assets by segment as our CODM does not use this information to evaluate operating segment performance. Accordingly, we do not regularly provide such information by segment to our CODM.

Our segment disclosure includes intersegment revenues, which consist of affiliate marketing fees for services provided by our Senior segment to our Healthcare Services and Life segments as well as services provided by Life to other segments. These intersegment transactions are recorded by each segment at amounts that we believe approximate fair value as if the transactions were between third parties and, therefore, impact segment performance. However, the revenue and corresponding expense are eliminated in consolidation. The elimination of such intersegment transactions is included within the “Eliminations of intersegment revenues” and “Corporate & elimination of intersegment profits’ captions in the tables below.

### Three Months Ended December 31, 2024:

*(in thousands)*

|  | Senior | Healthcare Services | Life | Total |
| --- | ---: | ---: | ---: | ---: |
| External revenue | $253,805 | $183,281 | $39,840 | $476,926 |
| Intersegment revenue | 1,773 | 89 | 21 | 1,883 |
| Total revenue from reportable segments | $255,578 | $183,370 | $39,861 | $478,809 |
| All other revenue |  |  |  | 4,143 |
| Eliminations of intersegment revenues |  |  |  | (1,883) |
| **Total consolidated revenue** |  |  |  | $481,069 |

*(in thousands)*

|  | Senior | Healthcare Services | Life | Total |
| --- | ---: | ---: | ---: | ---: |
| **Adjusted Segment EBITDA** | $100,521 | $2,212 | $7,423 | $110,156 |
| All other Adjusted EBITDA |  |  |  | 2,303 |
| Corporate & elimination of intersegment profits |  |  |  | (24,940) |
| Share-based compensation expense |  |  |  | (4,699) |
| Transaction costs (1) |  |  |  | (6,719) |
| Depreciation and amortization |  |  |  | (5,060) |
| Loss on disposal of property, equipment, and software, net |  |  |  | (122) |
| Change in fair value of warrant liabilities |  |  |  | (7,642) |
| Interest expense, net |  |  |  | (23,721) |
| **Income before income tax expense (benefit)** |  |  |  | $39,556 |

(1) These expenses primarily consist of financing transaction costs ($6.7 million).

### Three Months Ended December 31, 2023

*(in thousands)*

|  | Senior | Healthcare Services | Life | Total |
| --- | ---: | ---: | ---: | ---: |
| External revenue | $245,897 | $111,710 | $37,344 | $394,951 |
| Intersegment revenue | 1,632 | — | 23 | 1,655 |
| Total revenue from reportable segments | $247,529 | $111,710 | $37,367 | $396,606 |
| All other revenue |  |  |  | 10,487 |
| Eliminations of intersegment revenues |  |  |  | (1,655) |
| **Total consolidated revenue** |  |  |  | $405,438 |

*(in thousands)*

|  | Senior | Healthcare Services | Life | Total |
| --- | ---: | ---: | ---: | ---: |
| **Adjusted Segment EBITDA** | $78,713 | $2,981 | $4,569 | $86,263 |
| All other Adjusted EBITDA |  |  |  | 4,725 |
| Corporate & elimination of intersegment profits |  |  |  | (23,574) |
| Share-based compensation expense |  |  |  | (3,822) |
| Transaction costs (1) |  |  |  | (2,400) |
| Depreciation and amortization |  |  |  | (5,898) |
| Loss on disposal of property, equipment, and software |  |  |  | — |
| Interest expense, net |  |  |  | (24,415) |
| **Income before income tax expense (benefit)** |  |  |  | $30,879 |

(1) These expenses primarily consist of financing transaction costs.

### Six Months Ended December 31, 2024:

*(in thousands)*

|  | Senior | Healthcare Services | Life | Total |
| --- | ---: | ---: | ---: | ---: |
| External revenue | $345,169 | $338,947 | $79,106 | $763,222 |
| Intersegment revenue | 3,318 | 161 | 45 | 3,524 |
| Total revenue from reportable segments | $348,487 | $339,108 | $79,151 | $766,746 |
| All other revenue |  |  |  | 10,110 |
| Eliminations of intersegment revenues |  |  |  | (3,524) |
| **Total consolidated revenue** |  |  |  | $773,332 |

*(in thousands)*

|  | Senior | Healthcare Services | Life | Total |
| --- | ---: | ---: | ---: | ---: |
| **Adjusted Segment EBITDA** | $108,247 | $7,089 | $13,383 | $128,719 |
| All other Adjusted EBITDA |  |  |  | 6,099 |
| Corporate & elimination of intersegment profits |  |  |  | (48,983) |
| Share-based compensation expense |  |  |  | (8,545) |
| Transaction costs (1) |  |  |  | (7,544) |
| Depreciation and amortization |  |  |  | (10,659) |
| Loss on disposal of property, equipment, and software, net |  |  |  | (157) |
| Change in fair value of warrant liabilities |  |  |  | (7,642) |
| Interest expense, net |  |  |  | (46,752) |
| **Income before income tax expense (benefit)** |  |  |  | $4,536 |

(1) These expenses primarily consist of non-restructuring severance expenses ($0.5 million) and financing transaction costs ($7.0 million).

### Six Months Ended December 31, 2023

*(in thousands)*

|  | Senior | Healthcare Services | Life | Total |
| --- | ---: | ---: | ---: | ---: |
| External revenue | $334,458 | $209,078 | $75,116 | $618,652 |
| Intersegment revenue | 2,987 | — | 54 | 3,041 |
| Total revenue from reportable segments | $337,445 | $209,078 | $75,170 | $621,693 |
| All other revenue |  |  |  | 19,515 |
| Eliminations of intersegment revenues |  |  |  | (3,041) |
| **Total consolidated revenue** |  |  |  | $638,167 |

*(in thousands)*

|  | Senior | Healthcare Services | Life | Total |
| --- | ---: | ---: | ---: | ---: |
| **Adjusted Segment EBITDA** | $77,376 | $5,304 | $9,808 | $92,488 |
| All other Adjusted EBITDA |  |  |  | 8,045 |
| Corporate & elimination of intersegment profits |  |  |  | (44,495) |
| Share-based compensation expense |  |  |  | (6,997) |
| Transaction costs (1) |  |  |  | (4,305) |
| Depreciation and amortization |  |  |  | (11,887) |
| Loss on disposal of property, equipment, and software |  |  |  | (9) |
| Interest expense, net |  |  |  | (45,811) |
| **Loss before income tax expense (benefit)** |  |  |  | (12,971) |

(1) These expenses primarily consist of financing transaction costs.

The following table depicts the disaggregation of revenue by segment and product for the periods presented:

*(dollars in thousands)*

| Senior: | Three Months Ended December 31, 2024 | 2023 | $% |  | Six Months Ended December 31, 2024 | 2023 | $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Medicare advantage commissions | $226,716 | $217,969 | $8,747 | 4% | $301,187 | $292,340 | $8,847 | 3% |
| Other Senior commissions | 2,185 | 3,048 | (863) | (28)% | 4,765 | 4,840 | (75) | (2)% |
| Other services | 26,677 | 26,512 | 165 | 1% | 42,535 | 40,265 | 2,270 | 6% |
| **Total Senior revenue** | 255,578 | 247,529 | 8,049 | 3% | 348,487 | 337,445 | 11,042 | 3% |
| **Healthcare Services:** |  |  |  |  |  |  |  |  |
| Pharmacy | 180,000 | 108,795 | 71,205 | 65% | 332,883 | 203,583 | 129,300 | 64% |
| Other services | 3,370 | 2,915 | 455 | 16% | 6,225 | 5,495 | 730 | 13% |
| **Total Healthcare Services revenue** | 183,370 | 111,710 | 71,660 | 64% | 339,108 | 209,078 | 130,030 | 62% |
| **Life:** |  |  |  |  |  |  |  |  |
| Term commissions | 18,666 | 18,113 | 553 | 3% | 35,030 | 37,227 | (2,197) | (6)% |
| Final expense commissions | 16,283 | 14,482 | 1,801 | 12% | 34,607 | 28,602 | 6,005 | 21% |
| Other services | 4,912 | 4,772 | 140 | 3% | 9,514 | 9,341 | 173 | 2% |
| **Total Life revenue** | 39,861 | 37,367 | 2,494 | 7% | 79,151 | 75,170 | 3,981 | 5% |
| **All other:** |  |  |  |  |  |  |  |  |
| Commissions | 3,972 | 10,275 | (6,303) | (61)% | 9,767 | 19,090 | (9,323) | (49)% |
| Other services | 171 | 212 | (41) | (19)% | 343 | 425 | (82) | (19)% |
| **Total All other revenue** | 4,143 | 10,487 | (6,344) | (60)% | 10,110 | 19,515 | (9,405) | (48)% |
| **Eliminations:** |  |  |  |  |  |  |  |  |
| Commissions | (1,022) | (662) | (360) | 54% | (1,665) | (1,118) | (547) | 49% |
| Other services | (861) | (993) | 132 | (13)% | (1,859) | (1,923) | 64 | (3)% |
| **Total Elimination revenue** | (1,883) | (1,655) | (228) | 14% | (3,524) | (3,041) | (483) | 16% |
| Total Commissions and other services revenue | 301,069 | 296,643 | 4,426 | 1% | 440,449 | 434,584 | 5,865 | 1% |
| Total Pharmacy revenue | 180,000 | 108,795 | 71,205 | 65% | 332,883 | 203,583 | 129,300 | 64% |
| **Total Revenue** | **$481,069** | **$405,438** | **$75,631** | **19%** | **$773,332** | **$638,167** | **$135,165** | **21%** |

### Revenue by Segment

**Three Months Ended December 31, 2024 and 2023–**Revenue from our Senior segment was $255.6 million for the three months ended December 31, 2024, a $8.0 million, or 3%, increase compared to revenue of $247.5 million for the three months ended December 31, 2023. The increase was due to an $7.9 million, or 4%, increase in commissions revenue.

Revenue from Healthcare Services was $183.4 million for the three months ended December 31, 2024, a $71.7 million, or 64%, increase compared to revenue of $111.7 million for the three months ended December 31, 2023, primarily due to a $71.2 million increase in SelectRx pharmacy revenue.

Revenue from our Life segment was $39.9 million for the three months ended December 31, 2024, a $2.5 million, or 7%, increase compared to revenue of $37.4 million for the three months ended December 31, 2023, primarily due to an $2.4 million increase in commissions revenue.

**Six Months Ended December 31, 2024 and 2023–**Revenue from Senior was $348.5 million for the six months ended December 31, 2024, a $11.0 million, or 3%, increase compared to revenue of $337.4 million for the six months ended December 31, 2023. The increase was due to a $8.8 million, or 3%, increase in commission revenue combined with a $2.3 million increase in other revenue.

Revenue from Healthcare Services was $339.1 million for the six months ended December 31, 2024, a $130.0 million, or 62%, increase compared to revenue of $209.1 million for the six months ended December 31, 2023, primarily due to a $129.3 million increase in SelectRx pharmacy revenue.

Revenue from Life was $79.2 million for the six months ended December 31, 2024, a $4.0 million, or 5%, increase compared to revenue of $75.2 million for the six months ended December 31, 2023, in line with our updated operating strategy to stabilize our distribution business.

### Adjusted EBITDA by Segment

**Three Months Ended December 31, 2024 and 2023–**Adjusted EBITDA from our Senior segment was $100.5 million for the three months ended December 31, 2024, a $21.8 million, or 28%, increase compared to Adjusted EBITDA of $78.7 million for the three months ended December 31, 2023. The increase was due to a $8.0 million increase in revenue and a $13.8 million decrease in operating costs and expenses, primarily due to a $14.4 million decrease in lead costs partially offset by a $3.6 million increase in compensation costs in Senior.

Adjusted EBITDA from Healthcare Services was $2.2 million for the three months ended December 31, 2024, a $0.8 million decrease compared to Adjusted EBITDA of $3.0 million for the three months ended December 31, 2023. The decrease was due to a $71.7 million increase in revenue, offset by a $72.4 million increase in operating costs and expenses primarily as a result of a $53.8 million increase in medication costs and a $12.7 million increase in compensation costs to support and invest in the growth of SelectRx.

Adjusted EBITDA from our Life segment was $7.4 million for the three months ended December 31, 2024, a $2.9 million, or 62%, increase compared to Adjusted EBITDA of $4.6 million for the three months ended December 31, 2023. The increase in Adjusted EBITDA was due to a $2.5 million increase in revenue and a $0.3 million decrease in operating costs. The decrease in operating costs was primarily due to a $0.8 million decrease in marketing and advertising, partially offset by a $0.7 million increase in compensation costs.

**Six Months Ended December 31, 2024 and 2023–**Adjusted EBITDA from Senior was $108.2 million for the six months ended December 31, 2024, a $30.9 million increase compared to Adjusted EBITDA of $77.4 million for the six months ended December 31, 2023. The increase was due to a $11.0 million increase in revenue and a $19.8 million decrease in operating costs and expenses primarily due to a $14.4 million reduction in sales and marketing costs, and a $4.5 million reduction in compensation costs.

Adjusted EBITDA from Healthcare Services was $7.1 million for the six months ended December 31, 2024, a $1.8 million increase compared to Adjusted EBITDA of $5.3 million for the six months ended December 31, 2023. The increase was due to a $128.2 million increase in operating costs and expenses primarily as a result of the $92.0 million increase in medication costs and a $24.6 million increase in compensation costs to support and invest in the growth of SelectRx. The increase in operating costs and expenses was offset by the $130.0 million increase in revenue as discussed above.

Adjusted EBITDA from Life was $13.4 million for the six months ended December 31, 2024, a $3.6 million increase compared to Adjusted EBITDA of $9.8 million for the six months ended December 31, 2023. The increase was due to a $0.4 million increase in operating costs and expenses primarily due to a $1.6 million increase in compensation costs, offset by a $1.0 million decrease in advertising and marketing costs. The decrease in operating costs and expenses was offset by the $4.0 million increase in revenue as discussed above.

### Liquidity and Capital Resources

Our liquidity needs primarily include working capital and debt service requirements. Additionally, we are required under the Senior Secured Credit Facility and Indenture to maintain compliance with certain debt covenants, as discussed further in Note 6 to the condensed consolidated financial statements. Based on our financial projections, we believe we will remain in compliance with the debt covenants through the 12 months following the date of issuance of our condensed consolidated financial statements.

### Long-term Debt

Significant changes and activity related to our long-term debt since our Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 are discussed below. Refer to Note 6 “Debt” for further discussion on our debt agreements and activity.

### Securitization and Indenture

On October 15, 2024, the Company completed a $100.0 million securitization transaction to provide advanced financing against the expected collections for policies previously sold. The Company used the proceeds to pay down a portion of its outstanding term loans. During the six months ended December 31, 2024, the Company received proceeds of $99.1 million, and as of December 31, 2024, had outstanding borrowings of $93.7 million. Refer to Note 6 for further information.

### Senior Secured Credit Facility

On October 15, 2024 and in connection with the Indenture, the Company entered into the Eleventh Amendment to its Credit Agreement to (1) extend the scheduled maturity date of the existing term loans, (2) modify financial covenant ratios required to be maintained by the Company for various reporting dates to allow the Company to stay in compliance with the required covenants, and (3) allow the Company to enter into the securitization transaction.

During the six months ended December 31, 2024, the Company repaid $123.2 million of the outstanding term loans, and as of December 31, 2024, had outstanding borrowings of $574.7 million related to the term loans. Refer to Note 6 for further information.

During the six months ended December 31, 2024, the Company received proceeds of $84.9 million and repaid $26.9 million, and as of December 31, 2024, had outstanding borrowings of $58.0 million related to the revolving credit facility. Refer to Note 6 for further information.

### Liquidity

As of December 31, 2024 and June 30, 2024, the Company had total debt obligations of $711.9 million and $683.3 million, respectively, under the Senior Secured Credit Facility and the Notes. Management expects that our existing cash, cash equivalents, funds available under the revolving credit facility and cash provided from operations will be sufficient to finance normal working capital needs, investments in properties, facilities and equipment and debt services.

On February 10, 2025, the Company entered into the Senior Preferred Stock Purchase Agreements, pursuant to which the Company will receive aggregate cash proceeds of $339.5 million in connection with the issuance of the Preferred Stock and Preferred Warrants after giving effect to a 3% original issue discount. The Company will use the proceeds to pay $23.0 million of fees incurred in connection with the transactions contemplated by the Senior Preferred Stock Purchase Agreements, pay down $260.0 million of the outstanding term loan balance, and the remainder to fund operations and pay down the revolving credit facility.

We do not expect to generate sufficient cash flows from operations to enable us to make the remaining milestone payments contemplated in the Eleventh Amendment. If we are unable to secure additional financing from outside sources or otherwise amend the Senior Secured Credit Facility, we will need to obtain additional capital through other means, including future securitization transactions, selling one or more material assets, or substantially reducing the scope of certain of our operations. If we are unable to satisfy our repayment obligations under the Senior Secured Credit Facility or maintain compliance with the covenants therein, we may be in default, which would significantly affect our liquidity.

As of December 31, 2024 and June 30, 2024, our cash, cash equivalents, and restricted cash totaled $13.6 million and $42.7 million, respectively. Additionally, the following table presents a summary of our cash flows for the periods presented below:

*(in thousands)*

|  | Six Months Ended December 31, 2024 | 2023 |
| --- | ---: | ---: |
| Net cash used in operating activities | $(45,304) | $(49,239) |
| Net cash used in investing activities | (4,846) | (5,692) |
| Net cash provided (used in) financing activities | 21,093 | (17,376) |

### Operating Activities

Net cash used in operating activities primarily consists of net income, adjusted for certain non-cash items including depreciation; amortization of intangible assets and internally developed software; deferred income taxes; share-based compensation expense; amortization of debt issuance costs and discount; accrued interest; non-cash lease expenses; and the effect of changes in working capital and other activities.

Collection of commissions receivable depends upon the timing of our receipt of commission payments and associated commission statements from our insurance carrier partners. If we were to experience a delay in receiving a commission payment from an insurance carrier partner within a quarter, our operating cash flows for that quarter could be adversely impacted.

A significant portion of our marketing and advertising expenses is driven by the number of leads required to generate the insurance applications we submit to our insurance carrier partners. Our marketing and advertising costs are expensed and generally paid as incurred and since commission revenue is recognized upon approval of a policy but commission payments are paid to us over time, there are working capital requirements to fund the upfront cost of acquiring new policies. During AEP, we experience an increase in the number of submitted Senior insurance applications and marketing and advertising expenses compared to periods outside of AEP. The timing of AEP affects the positive or negative impacts of our cash flows during each quarter.

***Six Months Ended December 31, 2024—***Net cash used in operating activities was $45.3 million, consisting of net income of $8.7 million, adjustments for non-cash items of $41.0 million, and cash used in operating assets and liabilities of $95.0 million. Adjustments for non-cash items primarily consisted of $10.7 million of depreciation and amortization, $8.5 million of share-based compensation expense, $9.7 million of accrued interest payable in kind on the term loans, $2.4 million of amortization of debt issuance costs and debt discount, $1.8 million of non-cash lease expense, $4.2 million in deferred income taxes, $4.2 million in bad debt expense, and $7.6 million in the change in fair value of warrant liabilities. The cash decrease resulting from changes in net operating assets and liabilities primarily consisted of a decrease of $30.0 million in accounts receivable, an increase of $46.2 million in accounts payable and accrued expenses, offset by an increase of $155.5 million in commissions receivable, due to a 2% increase in approved policies for the six months, a decrease of $8.7 million in other liabilities, primarily related to an $7.1 million decrease in our contract liability, and a $1.9 million decrease in accrued compensation and benefits, a decrease of $2.3 million in operating lease liabilities and an increase of $4.8 million in other assets, primarily related to hedge activities.

***Six Months Ended December 31, 2023—***Net cash used in operating activities was $49.2 million, consisting of a net loss of $11.7 million, adjustments for non-cash items of $34.4 million, and cash used in operating assets and liabilities of $71.9 million. Adjustments for non-cash items primarily consisted of $11.9 million of depreciation and amortization, $7.0 million of share-based compensation expense, $9.0 million of accrued interest payable in kind, $3.4 million of amortization of debt issuance costs and debt discount, $1.5 million of non-cash lease expense and $2.7 million in bad debt expense, offset by $1.2 million in deferred income taxes. The cash decrease resulting from changes in net operating assets and liabilities primarily consisted of an increase of $113.9 million in commissions receivables, offset by an increase of $29.2 million in accounts payable and accrued expenses, a decrease of $9.2 million in accounts receivable, net and an $8.2 million increase in other liabilities.

### Investing Activities

Our investing activities primarily consist of purchases of property, equipment, and software and capitalized salaries related to the development of internal-use software.

***Six Months Ended December 31, 2024—***Net cash used in investing activities of $4.8 million was due to $4.1 million in purchases of software and capitalized internal-use software development costs and $0.7 million of purchases of property and equipment, primarily made up of machinery and equipment and leasehold improvements.

***Six Months Ended December 31, 2023—***Net cash used in investing activities of $5.7 million was due to $3.9 million in purchases of software and capitalized internal-use software development costs and $2.1 million of purchases of property and equipment, primarily computer equipment and leasehold improvements.

### Financing Activities

Our financing activities primarily consist of payments on term loans, proceeds and payments related to the revolving credit facility, payments on notes issued in connection with the Indenture, payments for debt issuance costs, and proceeds and payments related to stock-based compensation.

***Six Months Ended December 31, 2024—***Net cash provided in financing activities of $21.1 million was primarily due to $123.2 million of principal payments on the term loans, $6.3 million of payments on the notes issued in connection with the Indenture, $26.9 million of payments on the revolving credit facility, offset by $99.1 million of proceeds on the notes issued in connection with the Indenture and $84.9 million of proceeds from the revolving credit facility.

***Six Months Ended December 31, 2023—***Net cash used in financing activities of $17.4 million was primarily due to $16.9 million of principal payments on the term loans.

### Contractual Obligations

Other than the discussions in Notes 6, 9, and 11 to the condensed consolidated financial statements, as of December 31, 2024, there have been no material changes to our contractual obligations as previously described in our Annual Report.

### Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements during the period covered by this report.

### Recent Accounting Pronouncements

For a discussion of new accounting pronouncements recently adopted and not yet adopted, see the notes to our condensed consolidated financial statements.

## Market risk

As filed, 417 characters.

We are primarily exposed to the market risk associated with unfavorable movements in interest rates. The risk inherent in our market risk-sensitive instruments and positions is the potential loss or increased expense arising from adverse changes in those factors. There have been no material changes to our market risk policies or our market risk-sensitive instruments and positions as described in our Annual Report.

## Controls and procedures

As filed, 2,435 characters.

### Evaluation of Our Disclosure Controls and Procedures

As of December 31, 2024, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) was carried out by our management, with the participation of our chief executive officer (principal executive officer) and our chief financial officer (principal financial and accounting officer). Based upon our management's evaluation, our chief executive officer and our chief financial officer have concluded that as of the end of the period covered by this report, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.

In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only a reasonable level of assurance of achieving their desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

### Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the first quarter of fiscal 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

### PART II

### OTHER INFORMATION

## Risk factors

As filed, 506 characters.

There have been no material changes to the risk factors set forth in our Annual Report. Before investing in our securities, we recommend that investors carefully consider the risks described in our Annual Report, including those under the heading “Risk Factors.” Realization of any of these risks and any additional risks and uncertainties not currently known to us or that we have deemed to be immaterial could have a material adverse effect on our business, financial condition, or results of operations.

Filed Feb 10, 2025.
Source: SEC EDGAR, the filing index for accession 0001794783-25-000009. Last ingested by Listed: Nov 4, 2026, 09:23 ET. No prices; not investment advice.