SelectQuote Inc Aktie

Welcome to SelectQuote's third quarter earnings conference call. [Operator Instructions]

It is now my pleasure to introduce Matt Gunter, SelectQuote Investor Relations. Mr. Gunter, you may begin the conference.

Thank you, and good morning, everyone. Welcome to SelectQuote's fiscal third quarter earnings call. Before we begin our call, I would like to mention that on our website, we have provided a slide presentation to help guide our discussion. After today's call, a replay will also be available on our website. Joining me from the company, I have our Chief Executive Officer, Tim Danker; and Chief Financial Officer, Ryan Clement. Following Tim and Ryan's comments today, we will also have a question-and-answer session.

As referenced on Slide 2, during this call, we will be discussing some non-GAAP financial measures. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available in our earnings release and investor presentation on our website.

And finally, a reminder that certain statements made today may be forward-looking statements. These statements are made based upon management's current expectations and beliefs concerning future events impacting the company. And therefore, involve a number of uncertainties and risks, including, but not limited to those described in our earnings release, annual report on Form 10-K for the period ended June 30, 2025, and subsequent filings with the SEC. Therefore, the actual results of operations or financial condition of the company could differ materially from those expressed or implied in our forward-looking statements.

And with that, I'd like to turn the call over to our Chief Executive Officer, Tim Danker. Tim?

Thank you, Matt, and appreciate everyone joining us this morning. We're pleased to report another quarter of strong financial results across each of our segments. We reaffirm our outlook for fiscal 2026 and continue to execute our goal to drive profitability and cash flow. We're especially proud of the results given the headwinds our industry has faced over the past year plus. This is a testament to our people and strategy.

SelectQuote continued to advance our goal to expand cash flow, and the company is very well positioned to accelerate that effort in fiscal 2027. To summarize, SelectQuote generated $431 million in revenue, driven by solid results across each of our segments. Adjusted EBITDA totaled $45 million, growth of 18% year-over-year. In Senior, we grew revenue by 8% year-over-year to $183 million. Growth was driven by healthier OEP, strong agent productivity and customer retention, as well as a positive change to our commissions receivables that Ryan will detail.

As we have mentioned before, we firmly believe the SelectQuote's strategy and our agents make the difference. This now marks 4 consecutive years of strong operating performance in Senior, despite widely varying Medicare Advantage backdrops each year. To say it lightly, we're very proud of the results and our differentiated model.

Senior adjusted EBITDA totaled $59 million, which includes the positive $14 million adjustment I just mentioned. It is important to note that the adjustment reaffirms the value of the commissions receivable on our balance sheet and the approximate $1 billion in assets we expect to receive in the quarters and years ahead. When we offer bespoke advice to American seniors and do so year-in and year-out, they get the best care, and we and our carrier partners benefit through strong retention. That said, excluding and normalizing the adjustment for comparison purposes, SelectQuote's model once again drove strong Senior margins of 26% and a Medicare Advantage backdrop that was mixed this season.

Turning to Healthcare Services, revenue grew 5% compared to a year ago, totaling $199 million. Our revenue and profitability in SelectRx was impacted by both carrier-specific actions on reimbursement, which we detailed earlier this year, and the implementation of the Inflation Reduction Act. Ryan will provide detail on that impact shortly. Those headwinds notwithstanding, our adjusted EBITDA improved sequentially to $5 million, and we maintain our view that Healthcare Services will be a significant driver of profitable cash flow growth in fiscal 2027 and beyond.

Overall, including our Life Insurance segment, we expect to exit fiscal 2026 on very strong footing in spite of what was a challenging environment. Looking ahead to 2027, we are encouraged by increasing visibility within the Medicare Advantage ecosystem. We're excited about SelectQuote's ability to compound cash flow growth in the near future and see significant value for shareholders as a result, especially at what we believe is a wildly dislocated valuation for our company. To that end, let me be clear that we will take all necessary action to maintain our listing on the New York Stock Exchange. We remain confident our stock will continue to be traded on the NYSE for years to come.

Lastly, I'd like to take a minute to highlight a new and important initiative called SelectQuote Local. As you know, we have longed and proud of our company's ability to help underserved Americans. SelectQuote Local is a natural extension of our model and allows local community healthcare and life insurance participants to leverage our information and market advantages to help more people in need. The business offers our leading marketing, technology, products and customer service platform through a franchise model with local sales and service. Put another way, we're offering local providers the information engine of SelectQuote on a fee-based arrangement, and we can do so with minimal capital investment.

Similar to the expansion of our revenue to CAC metric with the growth of Healthcare Services, we see SelectQuote Local as another extension of how our model can help more Americans with the same scale dollar of investment. SelectQuote Local won't be a meaningful revenue driver in the near term, but strategically, it broadens our reach and addressable market.

Now let's flip to Slide 4, and let's take a look at the KPIs from our very strong quarter. We've shown these before, primarily for our Senior business, but we've also included additional detail on SelectRx. Starting with Senior on the left, we drove another strong quarter measured by agent productivity and OEP. Agent service and productivity are an evergreen goal of ours, but I'd remind you that this is all the more impressive considering the very strong compares in the previous 2 years. Specifically, we drove a 1% improvement in policies per agent over this timeframe despite historically wide swings in the environment from one season to the next.

Moving down the page, we saw even better results on marketing efficiency, spending 14% less per approved policy compared to 2 years ago. Ryan will speak to elevated approval rates this season, but even excluding that unique impact, we saw a strong return on marketing spend beyond just policy booking. Senior engagement was high across the full range of our channels. We're underscoring our Senior division efficiency performance here, because we oftentimes find investors and analysts overlook the progress we've made on cash conversion in this segment.

Moving to the right side of the page, we highlight the significant progress we've made with onboarding of SelectRx members. As you can see, we have driven a 64% increase in prescriptions shipped compared to 2 years ago relative to a commensurate 55% increase in SelectRx members. Progressive maturity and onboarding of our membership, combined with the improved operating efficiency of our Olathe, Kansas distribution facility has driven significant leverage on a relatively fixed cost base.

As a result, SelectQuote generated a global revenue to CAC multiple of 6.7x. Only SelectQuote offers this unique combination of capabilities to help patients in multiple ways. This increases the value we bring to consumers and drives additional profitability with each senior we engage with. For products and services that are inherently recurring, especially when done at our level of care, the cash flow streams from our customers drive very compelling returns on invested capital. As we've noted, there is a wide disconnect between the value we see in our platform and cash flow streams and the valuation of common equity.

Take one simple example. Our Medicare Advantage commissions receivable balance at the end of fiscal third quarter totaled nearly $1 billion, which compares to our market cap of under $200 million today. We have fielded questions about the LTV assumptions in our commissions accounting going all the way back to our IPO, but I'd simply note that SelectQuote has just operated in 2 of the most disruptive Medicare Advantage environments on record. Over those 2 years, we had a recapture rate of over 33%, and we're able to recognize a favorable adjustment to our receivables. The point being, we have visibility and conviction in our balance sheet asset and multiple capital markets transactions would suggest others analyzing the business closely share that conviction.

Before I hand the call over to Ryan, we're very proud of the great progress we've made over the past 4 years, both operationally and on our capital structure. We continue to prioritize cash flow generation and will deliver significant year-over-year improvement in operating cash flow in fiscal '26. We expect to build upon that meaningful cash flow improvement in fiscal '27 and beyond with a stated goal to delever our balance sheet in the years to come. I'll end my comments by underscoring our commitment to remedying the disconnect in our equity value and see a very compelling opportunity in SelectQuote for investors in the future.

With that, let me turn the call over to Ryan to review our third quarter. Ryan?

Thanks, Tim.

I'll pick it up on Slide 5 with a summary of our consolidated financial results. As Tim noted, SelectQuote had a strong quarter with revenue growth of 6% year-over-year, totaling $431 million. The growth was driven by both our Senior and Healthcare Services businesses, reflecting a strong OEP and continued demand for SelectRx.

Adjusted EBITDA of $45 million was aided by the positive change in estimate to our commissions receivable that Tim noted. Excluding the favorable adjustment, our consolidated EBITDA margin for fiscal 3Q would have been 7%, which is a strong result for an OEP quarter. Overall, given the volatile backdrop, we are proud of the progress we continue to make on profitability and cash flow generation. The fiscal third quarter was strong operationally, and we are very well positioned to end fiscal 2026 on a positive note and carry momentum into 2027.

Let me begin the segment overview on Slide 6 with a summary of our Senior business. As Tim noted, Senior revenue grew 8% compared to last year, totaling $183 million on 4% growth in approved MA policies and the positive change in estimate. Let's detail those 2 drivers, starting with approved policies. While growth in approved policies was strong, it's important to note that approval rates this OEP were materially higher than in previous years. While we are encouraged by these strong carrier approval rates, we will continue to monitor as it's possible some of this increase may reflect approval timing and volume that was pulled forward from 4Q, contributing to the outsized strength this quarter.

Shifting to the positive adjustment, the majority of the $14 million increase in receivables was due to a change in our estimate of expected renewals driven by additional anticipated renewals from our policyholders as we continue to gain visibility to retention through this most recent renewal event. Having now operated through 15 Medicare seasons, we are proud to say we still have customers from our earliest cohorts. As a reminder, our LTV accounting assumes 10 renewal years and also assumes a 15% constraint. We think this is yet another indicator that our commissions receivables balance represents a large and perhaps not appropriately understood source of future cash flow to the business.

Moving to adjusted EBITDA, Senior generated $59 million, including a favorable $14 million adjustment to our commissions receivable. Excluding that adjustment, the Senior segment produced an EBITDA margin of 26%. We have now maintained profitability of at least 25% during the AEP and OEP seasons for each of the last 4 consecutive years. Over that timeframe, the SelectQuote Senior business has averaged EBITDA margins of over 25% on a full year basis.

Moving to Slide 7, our Healthcare Services business performed in line with our expectations against the pressures Tim mentioned. As we forecasted, membership growth in the quarter was strong at 11%, but moderated compared to the recent past. To be clear, demand remains very strong, but we continue to focus on driving further improvement in segment profitability. Our nearly 117,000 members drove revenue of $199 million for the fiscal third quarter.

Let me take a moment to speak through the dynamic that changed booked revenue sequentially. The Inflation Reduction Act went into effect on January 1 of this year and set maximum fair prices for 10 higher-priced drugs. Essentially, all of the sequential drop in revenue was driven by that specific price change in the quarter. It's important to note that while the IRA drove a notable change to our top line, the actual impact to EBITDA was in the low single-digit millions and was fully accounted for in our original forecast. To that point, moving down the page, we drove adjusted EBITDA of $5 million despite the headwinds mentioned.

As we noted last quarter, we see significant profit and cash flow in our base of SelectRx members. We are driving profit improvement through the seasoning and higher utilization of our membership base. Additionally, we continue to grow more and more optimistic about the cost efficiency of our Olathe distribution facility, which came online in April of 2025. At this time, less than 20% of our prescriptions shipped from that facility, but we are already recognizing 30% plus efficiency gains on those shipments relative to our 2 legacy locations.

We have been investing in the development of a proprietary pharmacy management system to support all of our locations, and we are in the testing phase at this point. Upon successful completion of our testing, the new pharmacy management system will allow us to fulfill many more SelectRx members through the Olathe facility in the quarters to come. We currently use less than half of the facility space and run only 1 shift in that facility. So there's ample room to scale into this highly efficient operation.

Flipping to Life Insurance on Slide 8, the business remains steady with cross currents between our 2 main products, Final Expense and Term Life. Final Expense continues to be a tailwind for the business with commissions up more than 8% year-over-year at highly attractive margins. We continue to see strong demand for this product and believe it will be a consistent growth driver well into the future. Strength in Final Expense was partially offset by Term Life, which remains a competitive market as consumers are shifting where and how they consume media. Overall, Life revenue grew 4% to $48 million and generated adjusted EBITDA of $6 million. While small, it's worth noting that the Life business generates sufficient cash flow similar to our Healthcare Services segment. In summary, our Life division remains a steady contributor of profitability and cash flow.

Finally, on Slide 9, we are reaffirming our revenue range of $1.61 billion to $1.71 billion and adjusted EBITDA range of $90 million to $100 million. Despite realizing a positive adjustment this quarter, we believe it is prudent to maintain our guidance ranges at this time. As mentioned earlier, 3Q results were aided by approval rates in Senior that were materially higher than previous years. While we are encouraged by this approval rate increase, we want to continue to monitor whether some of this goodness may be timing related, impacting our fourth quarter approved policy levels.

To echo Tim's comment, the SelectQuote model is generating visible and strengthening cash profitability, and we are highly focused on closing the disconnect between our equity market value and the real value of those cash flows.

With that, let me now turn the call back to the operator to take your questions.

[Operator Instructions] Your first question comes from the line of Drew Sterrett from RBC Capital.

This is Drew Sterrett on for Ben Hendrix. You previously noted that PBM headwinds have continued for SelectRx. I mean for this quarter, it appears reimbursement came in a little ahead of our expectations. Do you have any additional commentary around this? And how should we think about the PMB (sic) [ PBM ] reimbursement environment going forward?

Yes, Drew, thanks for joining. This is Tim. I'll take the first part of the call and maybe have Ryan also speak to the IRA impact. But as far as the PBM reimbursement environment, it remains very stable. As we talked about earlier this year, we faced a challenge with the change in our reimbursement rate. We have successfully resolved that issue and have seen reimbursement rates normalize in the third quarter results. So, would categorize the environment from a reimbursement rate is stable, and we're happy to have secured a multi-year agreement with our largest PBM partner. Ryan, maybe you can elaborate a little bit more on the IRA dynamic Inflation Reduction Act that impacted revenue for the quarter.

Yes, happy to. As Tim noted and I mentioned on the call, the revenue sequentially declined and the biggest driver there or the driver is the Inflation Reduction Act, which when you look at it optically, revenue obviously dropping, but the bottom line impact, very different from what we see in the top line, top line is outsized. And the reason for that is we're receiving refunds from the drug manufacturers, and that's actually flowing through in the cost of goods line item. So for the quarter, we actually received $13 million in refunds. But again, there's a little bit of a geography change that's happening. And certainly, optically, it looks like there's a sequential decline, but that's really driven by the IRA impacts, which were fully accounted for in our guidance.

Your next question comes from the line of George Sutton from Craig-Hallum.

That's a new way to say, Craig-Hallum. So nice results. I wondered, Tim, if you could talk about, you mentioned in your prepared comments, you're positioned to accelerate the cash flow dynamics in 2027. Can you just give us a little picture of that?

Yes, I'd be happy to, George. And I appreciate you being on, George. As far as cash flow dynamic, we feel like we're making substantial progress year-over-year. I think it's a byproduct of the positive changes that we made in the capital structure and kind of cash interest obligations. Certainly, as you've seen the results for OEP, which I think we have highlighted is there's been a lot of change over the past 2 years around the environment. So we feel really good about the OEP results and the underlying efficiency that we're driving in our Senior distribution business, both from an agent productivity as well as from a marketing efficiency standpoint.

And clearly, we had a bounce back quarter in terms of SelectRx. And that's a big part of the story moving forward, really those 3 factors that would emphasize SelectRx is a significant opportunity for us to continue to improve the cash flow generation. So we highlighted the Olathe, Kansas or Metro, Kansas City facility and some of the things that we're doing there that are driving 30% plus efficiency relative to our legacy pharmacies, and we expect that to continue to compound as we exit fourth quarter this year into next year.

Great. You also mentioned increased visibility in the Medicare Advantage ecosystem. I wondered, you've got some fairly public comments from a large carrier about their plans, which don't necessarily align with the brokers. I'm curious where you're seeing this increased visibility? Can you give us a sense of the discussions that you're having with the carriers?

Yes, I'd be happy to. Great question, George. I think we are certainly seeing some positive developments relative to maybe a few quarters ago in the broader MA market recovery, if you will. But I think we would still caution at the pace of recovery. The things that we're seeing, I know that you and other analysts are covering from the payers that have reported is we're seeing some of the medical cost trends easing a bit, still expected -- forecasted to be up in high single-digit year-over-year, maybe coming in slightly favorable to that.

But a reimbursement trend that's not fully sufficient to cover those costs. So that's a bit of a mixed story there, if you will. Some of the changes to the stars rating changes, we think is a positive tailwind if the payers can manage the enhanced focus on the clinical factors. And then you're seeing the payers' margin improvement recovery happening. I think when you put all that into the blender, if you will, we think there will be a continued discipline in the market for plan year 2027. We believe that there's some potential reemergence to targeted growth for plan year 2028. So we're anticipating that there could be some elevated disruption again this next year as carriers try to get to those target margin goals.

But we have performed very well over the past 2 years. We certainly take the position that SelectQuote has been in this business for 15 years. Many members of this exec team have been in Medicare for 20 years. And we know these cycles don't last forever. We continue to have an optimistic outlook, I would say, cautious optimism.

Lastly for me, if I could. Both you and Ryan were pretty adamant about wanting to remedy the disconnect of your equity. And I'm just curious how broad you're thinking there. Obviously, execution is one factor, but I'm curious outside of that, how broadly you're thinking in terms of things like segment sale or monetizing receivables or other M&A. Just curious on that side?

Yes. Fair question, George. I mean we definitely plan to remedy it, and we made the public comments about ensuring that this company will be listed on the New York Stock Exchange. But beyond that, which we will certainly accomplish, we continue to evaluate a series of options. And I think we've been on record as a company that continues to evaluate various capital markets transactions, securitization, obviously, we've accomplished one. We think the positive development of how we've worked through the past 2 years on the renewal side and this positive change in estimate gives us more conviction, even increased conviction around our back book receivables, that's certainly an option.

And there's other M&A, we certainly believe that -- and we've said this before, there's -- the market is at the point where consolidation might make sense. We think there'll be a small handful of sophisticated and capability-rich players, and SelectQuote will certainly be one of those. We think the strength, the diversification, the durability of our business creates an option set for us that's quite wide.

Your next question comes from the line of Steven Couche from Jefferies.

I'm on for Dave. Maybe we can start on SelectRx. Do you still expect to exit the year at the $40 million to $50 million EBITDA run rate that you had previously messaged?

Hello, Steven, I appreciate you joining, and I'm happy to answer that. I think we are highly confident that in the very near term, this business will be at a $40 million to $50 million EBITDA run rate business. We continue to gain operational efficiencies like we've commented on in our Kansas City facility, and we expect that to continue to compound as we exit 4Q and enter fiscal '27.

Okay. Great. And then I actually wanted to ask about Kansas City and how you think about taking volumes out of the other 2 facilities, I believe they're in Indy and Pittsburgh and moving them into Kansas City. And I mean, does it create some sort of stranded costs or decremental margins in the other 2 facilities when you move into Kansas City?

Yes. I can take that one. As far as getting volume in, we are -- we've been very open that we've been working on kind of a new pharmacy management systems and things like that. And in order to really take more volume in, we are really close, but we're working on getting that done. We've sent our first patients through that process, it's gone very, very well. So pretty soon, we will be kind of moving more patients over. It doesn't -- actually, that should help the margins in the other facilities, because it should take a little bit of a burden off of some of the later night shifts and things that we have to do. So again, that cost savings that Ryan was talking about is very real. So we feel like that will just enhance margins even more as we run more volume through there.

Okay. And then maybe 1 or 2 on Senior. So the $14 million positive change of estimate, did I hear you correctly when it sounded like those -- that better performance was on recent policies. I don't know if it was this most recent AEP or maybe the one before that. And I guess the underlying question is how much of that $14 million should we think about folding into the underlying EBITDA run rate?

Yes. So I think with respect to -- obviously, the guide, we've kind of set that out, there is $90 million to $100 million, we weren't adjusting it. With respect to the positive tail adjustment, that's really -- we've been through another renewal event. We're sitting looking at our book of business, looking at persistency, making adjustments based off our expectations. And so through this enhanced visibility, it became clear that we would expect to collect more than what we currently have on the balance sheet, which led to the change in estimate. So I think it's less about any specific cohort and more broadly as we assess the book of business, it became clear that it made sense to go ahead and make this adjustment. But again, at this time, we're not modifying the guidance. I want to see how Q4 develops. And obviously, we've talked about the approval rates. And so just seeing how that develops, but we're very pleased with the overall business results as well as the way the book is holding up.

Okay. Great. And maybe I can sneak in one more here. So when we think about the LTV calculation, obviously, this last AEP was extremely disruptive, probably max disruption. And so when we think about moving forward the LTV calculation, do we just need the industry-wide enrollment disruption to be less and that would theoretically benefit the LTV calculation? Or are there other variables at play where just if the environment just stabilizes, that wouldn't necessarily result in the LTV also stabilizing or improving?

Yes. So I would say there are many factors that impact the LTV, it's customer retention, carrier mix, payment structures. Obviously, we have been through 2 disruptive seasons, and that does put some pressure on persistency. We're incredibly pleased with the 34% recapture rate. We've done phenomenally well navigating the season. And I think it's worth calling out that when we do help someone with a new policy that may have a plan term, we're actually putting that policy on the books at a very low cost. All that being said, I think clearly, strong performance and the ability to navigate through a range of Medicare seasons. Your question around stability, if we do see increased stability within the system, that would be a tailwind to lifetime values. And so again, I think that's what we're hoping for in the future, but clearly been able to navigate 4 very different Medicare seasons.

Your next question comes from the line of Michael Kupinski from NOBLE Capital Markets.

Congratulations on your quarter. Tough to kind of go a little bit later in asking questions. Most of my questions have been answered. I was just wondering in terms of the marketing spend by national carriers, have you seen any changes there? And then also just in trends on your Senior, I know that you've kind of touched around this. Just wondering if you can just kind of give us your thoughts in terms of the back half of the year and how that's trending, particularly? And I know you touched on all of this in terms of submission volumes, approval rates and average revenue. But just wondering if you can kind of give us your thoughts in terms of how things are trending as we kind of look into the next quarter?

Yes, Michael, thanks for joining. Just to clarify, your first question is regarding kind of a carrier marketing investment. I just want to clarify before I respond.

Yes, the carrier marketing spend.

Yes. Thank you, Michael. So the short answer to that, Michael, is no additional updates beyond what we shared on our second quarter call regarding strategic marketing investment other than to say what we had projected is what we're experiencing. So we're certainly in line there. Carriers will go through their annual planning cycles with us this summer, and we'll expect to have a clearer picture when we provide our fiscal '27 guide. But I think if you look at how we navigated this OEP, we obviously had to absorb some of the aforementioned $20 million impact, a material amount of that came through in our fiscal 3Q, and we were able to still drive, we believe, outsized results. So we think this is all certainly manageable.

I think the second part of your question was additional detail on how the back half of the year is going. And I would say that, again, we just went through our second biggest quarter in OEP, we think, with flying colors, and we're really proud of the results and the efficiency and how that also builds towards oFur commissions receivable as well as 4 straight years of 25% plus full year EBITDA margins, we're quite proud of that.

We now enter into the SEP period, and we are seeing -- honestly, SEP period looks a lot like last year. No substantial changes for us year-over-year. We do believe that our year-round model and the viability of our economics, inclusive of the quieter SEP periods is very unique amongst other direct-to-consumer players in our category. We're really able to make the quieter periods work economically and also enhanced by this unique asset we have called SelectRx and how our enterprise economics work even when the heartbeat might be a little slower during SEP. So everything is kind of in line, while early, and expect to finish the year strong.

At this time, there are no further questions. I will now hand the conference over to CEO, Tim Danker, for closing remarks.

Yes. Thank you all again for your time, and we appreciate your support of SelectQuote. As Ryan and I have both noted, the SelectQuote model continues to drive consistent and reliable value to our customers and insurance carrier partners. We know the underlying cash flows for our services are real and significant, and we look forward to convincing more and more investors of that value in our equity in the months and years ahead. We appreciate your time. Have a great day.

This concludes today's call. Thank you all for attending. You may now disconnect.

Welcome to SelectQuote's Second Quarter Earnings Conference Call. [Operator Instructions].

It is now my pleasure to introduce Matt Gunter, SelectQuote Investor Relations. Mr. Gunter, you may begin the conference.

Thank you, and good morning, everyone. Welcome to SelectQuote's Fiscal Second Quarter Earnings Call. Before we begin our call, I would like to mention that on our website, we have provided a slide presentation to help guide our discussion. After today's call, a replay will also be available on our website.

Joining me from the company, I have our Chief Executive Officer, Tim Danker; and Chief Financial Officer, Ryan Clement. Following Tim and Ryan's comments today, we will also have a question-and-answer session.

As referenced on Slide 2, during this call, we will be discussing some non-GAAP financial measures. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available in our earnings release and investor presentation on our website.

And finally, a reminder that certain statements made today may be forward-looking statements. These statements are made based upon management's current expectations and beliefs concerning future events impacting the company and therefore, involve a number of uncertainties and risks, including, but not limited to, those described in our earnings release, annual report on Form 10-K for the period ended June 30, 2025, and subsequent filings with the SEC. Therefore, the actual results of operations or financial condition of the company could differ materially from those expressed or implied in our forward-looking statements.

And with that, I'd like to turn the call over to our Chief Executive Officer, Tim Danker. Tim?

Thanks, Matt. Good morning, and thank you for joining us. It was a strong quarter for SelectQuote in a number of ways, which I'll summarize on Slide 3. As you saw from our press release, our team's execution this Medicare Advantage season drove a successful AEP. Despite another shifting backdrop for policy features, SelectQuote continues to prove its value to customers as the leading choice marketplace. As always, Senior receive bespoke information and assistance from live agents to select the policy that best fits their needs.

Better yet, our commitment to technology continues to arm our agents with an efficient and powerful service platform, which drove another strong quarter for agent productivity, aiding volume production and profitability. Strong operational execution and marketing efficiency drove near-record Senior EBITDA margins of 39% on modest growth year-over-year. Congrats to the team for yet again driving an AEP quarter with strong operating leverage and another dynamic market backdrop.

Beyond Senior, our Healthcare Services segment continues to grow rapidly, increasing revenue 26% year-over-year. Most importantly, SelectRx continues to make a significant impact in the health and quality of life for America's growing senior population. The impact is real and is being increasingly noticed. This is great validation of the clinical value SelectRx provides beyond simple drug delivery. I'll speak more to that topic in a moment. Additionally, over the past month, we made 2 announcements, which benefit our SelectRx business and capital flexibility.

First, for SelectRx, we entered a multiyear agreement with one of our most important pharmacy benefit manager, our PBM partners. With this agreement, SelectQuote's visibility into drug reimbursement pricing has significantly improved, which is critically beneficial to our strategic priority to expand profitability. Second, our new $415 million credit facility announced in mid-January greatly improves the company's capital flexibility, which is an important milestone in our ability to drive consistent profitable growth. Overall, we are very pleased with our results to date and have greater conviction in our ability to compound profitability and cash flow given this past month's announcement.

Lastly, despite another strong quarter, a recent action by a national carrier partner requires that we lower our fiscal '26 guidance. Specifically, this carrier significantly cut their strategic marketing budget across all distribution channel partners, including SelectQuote. As we've discussed, insurance companies continue to optimize profitability for Medicare Advantage. In conversations with the carrier, the decision was designed to slow growth following above-trend growth on MA. In total, we expect the fiscal '26 impact from this carrier action to be around $20 million.

Combined with the PBM reimbursement impact we discussed last quarter, which we know now will also create an impact of around $20 million, we need to reduce our guidance ranges for both consolidated revenue and adjusted EBITDA to reflect the $40 million aggregate impact. While frustrating, it's important to note that the change by this one carrier does not impact our long-term outlook about the growth, profitability and cash flow potential for our business. We stand by our previously announced fiscal '26 targets of 20% plus EBITDA margins for our Senior division and an annualized adjusted EBITDA exit rate of $40 million to $50 million for our Healthcare Services division.

Additionally, we think it's important to note the substantial improvement SelectQuote has made on cash flow generation despite the PBM and the action of this one carrier. We expect fiscal '26 to produce operating cash flow of $25 million to $35 million, which is up more than $40 million at the midpoint compared to last year. The improvement has been driven by increased cash flow from our Healthcare Services business and continued progress to optimize our capital structure. Overall, while the noise in our EBITDA driven by partner actions was not anticipated, we're very pleased with the execution and trajectory of our profitability and cash flow. Put another way, SelectQuote is delivering on the goals of our strategy, and we're confident in our ability to drive value for shareholders.

With that, let's move to Slide 4 to review our performance in AEP. Similar to the past Medicare Advantage season, we prepared early for a season of disruption given shifting policy and volume strategies across the industry. As we noted last quarter, our strategy entering AEP was to focus on tenured agent retention and proactive connection with our policyholders on their needs relative to changes in the overall policy landscape. This focus resulted in another successful season. Policy volume growth was 4%, modestly ahead of our expectations. SelectQuote's agents and technology performed well again, measured by productivity and profitability.

Senior grew EBITDA by 2% and drove near record margins of 39%, which marks the fourth consecutive AEP season of Senior EBITDA margins above 30% despite highly varied years for Medicare Advantage policy features. We're proud of the track record and believe the SelectQuote's strategy to prioritize profitable growth and cash flow has been more than battle tested at this point. Our team delivered strong agent productivity and highly efficient marketing cost per policy once again.

First, our agent population was comprised of a slightly lower, albeit still strong mix of tenured agents than the previous year. Our agent retention remained steady at north of 90%, but our tenured agent mix was lower due to additional agent hiring this past summer. Even with this higher mix of new agents, our productivity per agent remained 12% higher than 2 years ago, which is a testament to the effectiveness of our information and technology investments, which have always been a pillar of our model. In regards to marketing, you'll recall last season's marketing spend per approved policy was highly efficient. We've continued to refine our customer targeting and have placed intentional focus on owned and operated marketing channels, which provide a strong mix of attractive prospects.

Specifically, our marketing cost per approved policy and this AEP was $326, which is in line with last year and 20% lower than 2Q fiscal '24. To summarize, the unique strengths of our model drove significant value to our policyholders and carrier partners and another dynamic environment for Medicare Advantage. This resulted in impressive profitability and cash flow for our Senior segment.

On Slide 5, I'd like to provide additional real-world color on how SelectQuote helps America Seniors when the market is dynamic and disruptive. At the highest level, SelectQuote's optimized technology and data empowers our live agents to deliver excellent service to our customers. For the second consecutive year, insurance carriers have significantly shifted policy structures and coverage features. Additionally, this was the second straight year where a significant number of plans were terminated by carriers. In each of the past 2 seasons, approximately 7% of the total plans in force have been canceled by the carriers, which compares to a historical average below 1%. Beyond the elevated plan termination levels, the majority of our remaining beneficiaries saw a negative impact to at least one of their planned benefits on their legacy plans. This industry-wide dynamic created a market backdrop of elevated consumer shopping and engagement.

As you will recall, our strategy heading into this AEP was to replicate the success of policyholder recapture and retention compared to a year ago. Our operational focus to achieve this goal was to leverage our information and technology to work proactively with policyholders. Ahead of the season, we identified a subset of policies with higher change potential and anticipated coverage gaps based on each specific individual. In effect, we pulled forward as much of the work and disruption as possible. The end result is that SelectQuote is a more valuable broker partner for both the policyholder and the carrier, especially in dynamic seasons like the past few years.

When our customers call us looking for answers, our agents aren't starting from square one. Similarly, our carrier partners benefit from policies with better fit and persistency. We measure the success of this strategy with our recapture rate, which was 33% this year. We're very proud of our recapture performance last year, but this year, we delivered an even better result. This not only benefits market share, but each recapture means we preserve the cash flow from and the relationship with those beneficiaries. To summarize, in another dynamic environment for Medicare Advantage, we are proud of the service we provided to our beneficiaries, which resulted in strong customer recapture rates and retention. The unique strengths of our model drove significant value to our policyholder customers and carrier partners and aligned with optimal profitability and cash flow for our Senior segment.

Before we shift to Healthcare Services, let me take a moment to address last week's 2027 advanced rate notice from CMS. Several carrier partners have already voiced disappointment with the advanced rate notice, and we agree the preliminary rates don't reflect rising utilization and care costs. It's important to remember that these advanced rates are not final. Coming on the heels of 2 highly disruptive seasons for Medicare beneficiaries, we believe CMS will receive feedback from the industry highlighting the potential negative implications to beneficiaries in advance of the final rate notice in April. Regardless of the market backdrop, we will continue to prioritize outstanding service to our beneficiaries. SelectQuote's bespoke service model and information advantage remain highly valuable and will likely become even more important as carriers focus on optimizing returns and policyholders work to interpret plan changes.

On Slide 6, I'd like to provide important context about the value of our SelectRx prescription drug delivery and adherence service. America's medication system is increasingly inefficient, confusing and costly, issues that directly impact seniors' health. Recent Wall Street Journal articles highlighted 2 core problems. First, many seniors manage complex drug regimens prescribed by multiple physicians, which increases the risk of inappropriate medications and harmful interactions. Second, the widespread practice by many mail order pharmacies of repeatedly early filling 90-day prescriptions contributes to billions and waste of drugs when prescriptions change while also creating complexity that undermines medication adherence.

SelectRx was purpose-built to address the systemic challenges head on. Our 30-day time and date stamp medication strips reduce confusion, support adherence and substantially cut waste when members' prescriptions change, which occurs for roughly 10% of our population each month. Just as importantly, our pharmacists review and consolidate each member's full medication profile. In 2025, they identified nearly 50,000 potential dosage or adverse interaction concerns. When such concerns arise, our pharmacists contact prescribing physicians and an attempt to remediate these concerns for impacted members. These conversations with prescribing physicians have resulted in changes to tens of thousands of prescriptions, helping to safeguard the patients we serve.

This integrated approach is delivering real measurable outcomes, including an observed 20% reduction in beneficiary hospital days driven by better active medication adherence. These issues facing America seniors are exactly why we built SelectRx and why we continue working to improve the system that has long needed meaningful change. Before I turn the call to Ryan, I'd like to briefly touch on our January credit facility announcement and what it means for SelectQuote strategically.

First, for those that have followed us, the optimization of our balance sheet has and continues to be a core priority of our strategy to drive shareholder value. In short, we believe our model should command a lower cost of capital. It is our intention to achieve that through continued operational improvement, growing cash flow and the natural deleveraging that will follow. We've made progress on this goal with previous refinancings, but to date, have been limited by the near-term debt maturities, which hindered our operational flexibility, especially in our Senior Medicare Advantage business.

As you can see on the charts on Slide 7, the new credit facility significantly extends our debt maturities to 2031. To be clear, our strategic focus does not change, and SelectQuote will continue to prioritize profitability and cash flow over growth. This enhanced operational flexibility simply allows us to capitalize on growth opportunities when market conditions support them.

With that, let me turn the call to our CFO to detail our results. Ryan?

Thanks, Tim. I'll pick it up on Slide 8 with a summary of our consolidated financial results. As Tim noted, SelectQuote had a very strong quarter with revenue growth of 12% year-over-year, totaling $537 million. The growth was driven by both our Senior and Healthcare Services businesses, reflecting a strong AEP and continued demand for our SelectRx service. Our EBITDA results were temporarily depressed due to the PBM reimbursement headwind we highlighted last quarter. In January, we announced a new longer-term PBM agreement that provides increased visibility to these rates, which is important for our focus on predictable and profit-driven growth.

The PBM headwind in Healthcare Services was offset by Senior margins near record levels at 39%, driven by very strong efficiency in this AEP's marketing spend per approved policy. In total, the quarter was excellent. As Tim mentioned, the operating momentum within both sides of the business is evident, and SelectQuote's new balance sheet flexibility positions us well to navigate changing market conditions and capitalize on emerging opportunities.

Moving to Slide 9. SelectQuote had a strong AEP despite another volatile market environment driven by carrier plan changes and terminations. Senior revenue of $262 million grew 2% on increased approved policy volumes. This AEP, we were able to increase our agent population, which modestly aided volume. We expect these agents to become increasingly productive with experience this season and into the years ahead. The business was able to more than offset the productivity ramp of these new agents with strong marketing efficiency and other services revenue, which drove near-record EBITDA margins of 39% in the quarter. This resulted in Senior adjusted EBITDA of $102 million, which is in line with last year's strong season. To echo Tim's sentiment, we are very pleased with the consistent execution in our Senior business over the past 4 distinct seasons.

Flipping to Slide 10, we recognized strong demand for SelectRx in our Healthcare Services segment. Members grew 17% year-over-year to 113,000. Revenue grew even faster, expanding 26% year-over-year to $231 million as recently onboarded members continue to mature and take delivery of their full prescription regimen. As we have noted, we expect growth to be more modest on a sequential basis in the near term as we continue to prioritize cash flow and profitability, much as we have in the senior business. That said, the PBM announcement earlier this year goes a long way toward providing that visibility, and we have conviction in Healthcare Services exiting fiscal 2026 at an annualized run rate of $40 million to $50 million of adjusted EBITDA.

Most importantly, the demand for our SelectRx and the substantial value it provides to patients, caregivers and carriers remains unchanged. We are focused on driving profitability and cash flow volume. And with improved PBM visibility and a more flexible balance sheet, we are well positioned to expand health care services where incremental margins are best. We will further optimize customer targeting to focus enrollments on the patients who benefit most from the SelectRx offering and also deliver the best economics to the business. As a result, we expect membership to end fiscal 2026 flat to modestly down from the current 113,000 level while still generating 20% plus year-over-year revenue growth. The market opportunity is clear there. And with increased attention and demand, we believe SelectQuote is very well positioned to be the partner of choice across the value chain.

Turning to Slide 11. I will review our life insurance business. Revenue grew 9% to $44 million, driven by a strong quarter for final expense, where premiums increased 24% compared to a year ago. The business continues to execute at a high level and to deliver attractive margins and cash flow. Meanwhile, the Term Life business delivered flat premium levels in line with last year. Adjusted EBITDA for the Life segment totaled $6 million, down modestly year-over-year in the second quarter. Results reflect modest marketing expense pressure and increased competition within the Term Life business. Overall, the Life division continues to deliver attractive returns and cash flows for our shareholders.

Speaking of the balance sheet, let me quickly detail our new credit facility on Slide 12. As announced in January, SelectQuote closed on a new $415 million credit facility, which benefits us in a number of ways. First and foremost, increased balance sheet flexibility through the elimination of our 2026 and 2027 debt maturities will allow us to operate strategically. With a new maturity schedule that extends to 2031 and an increase in our peak season liquidity, SelectQuote has the optionality to invest in strategic trends like we are seeing with SelectRX and also capitalize on return opportunities within Senior in real time.

Lastly, we remain aligned with both equity and debt investors in our strategic priorities to reduce leverage and drive to a lower cost of capital in the future. The new facility provides a future path for SelectQuote to lower the term facility interest rate by up to 100 basis points. Overall, it is a significant positive for our business and the latest in a series of successes as we continue to improve our capital structure.

I'll end on Slide 13 with a review of our updated guidance, which Tim touched on earlier. I'll begin with the 2 distinct drivers of the change. First, the PBM reimbursement change, which we disclosed last quarter, drives an approximately $20 million headwind to fiscal 2026 EBITDA. Again, this impact will not recur beyond fiscal 2026. Second, as Tim detailed, the decision to curtail marketing budget by a national carrier partner is expected to drive an approximate $20 million headwind compared to our original expectations. As a result, we are revising our fiscal 2026 consolidated revenue range to $1.61 billion to $1.71 billion and our adjusted EBITDA range to $90 million to $100 million.

To be clear, we remain confident in our long-term outlook about the growth, profitability and cash flow potential for our business. We stand by our previously announced fiscal 2026 targets of 20% plus EBITDA margins for our Senior division and an annualized adjusted EBITDA exit rate of $40 million to $50 million for our Healthcare Services division. Lastly, as Tim alluded to, the change to our EBITDA forecast overshadows the meaningful year-over-year increase to operating cash flow, which we now forecast to total $25 million to $35 million for fiscal 2026. Aided by the increased operational flexibility from our significantly improved capital structure, we expect the business to continue to post meaningful cash flow gains in years to come.

In fact, let me pass it back to Tim to expand on that a bit.

Thanks, Ryan. Before we turn to your questions, let's review our cash flow generation on Slide 14. We wanted to put a visual behind our strategic priority to drive profitable cash flow as it can be less apparent in our reported EBITDA, especially this year given the 2 discrete impacts to our guided range. Here, we depict our EBITDA on a cash basis, which does not consider future policy renewal commissions, but does consider cash renewal payments received in the period. This is a clean way to view how profitable our business is on a cash basis in the current period.

As you can see in the bar chart at left, despite the impacts to our reported EBITDA, which considers future receivable accruals, we forecast significant growth in cash profitability. Specifically, we expect 2026 cash EBITDA to increase by approximately 20% compared to a year ago, which will help drive expected operating cash flow of $25 million to $35 million for fiscal '26. The key driver of that improvement is the operating cash efficiency we continue to talk about in both our Senior and Healthcare Services divisions. And Senior agent and marketing productivity gains have driven significant cash efficiency gains, which drive operating cash flow and cash profitability.

For Healthcare Services and SelectRx, the upfront nature of cash recognition relative to our Medicare Advantage business will continue to drive consolidated operating cash flow as the business becomes a greater percentage of our overall mix. Cash flow is the key to driving increased shareholder value as we move through the quarters and years ahead, and we believe it is important for our investors and analysts to see that we are executing well.

With that, let me now turn the call back to the operator to take your questions.

[Operator Instructions] Your first question comes from the line of David Windley with Jefferies.

I wanted to start, Tim, on the PBM deal that you were able to strike during the quarter. Can you give us a little more detail? I think you emphasized that, that makes this $20 million hit that you've had to take in fiscal '26, a onetime thing. Can I interpret that you've kind of reestablished the economics of the relationship back to where they were? Or just provide us with some more detail about how that relationship is now structured?

David, and we appreciate you joining this morning. Yes, we were pleased with the announcement that we made earlier in January regarding the new PBM arrangement with a large PBM. This is important for us. Really to be able to strike a multiyear term with the PBM, it provided the needed stability and predictability that we need. So we're very pleased with it. We're seeing that come absolutely in line with expectations, and we believe that helps really solidify our visibility moving forward.

Okay. And then a follow-up on the announcement today, I guess, on the marketing budget at the major carrier. I think I have a pretty strong suspicion of who that is. Wondered what -- essentially what risk there might be of other carriers following that pattern?

Yes. So with respect to what we talked about on the call with the carrier that we outlined, they made a decision in December to pull back in strategic marketing investment as a way to significantly truncate growth. That was not unique to SelectQuote. This was a decision that was made across all third-party distribution, e-brokers and FMOs alike. And we're confident, Dave, in our ability to navigate through this.

Certainly, the carriers are going through a very challenging cycle, but the beneficiary demand is there. We've built a resilient, diversified and agile business that can respond, and we feel like we have a lot of levers at our disposal to be able to manage this. With respect to other carrier partners, we don't anticipate anything of this level of materiality moving forward. Again, we're a very important part of the broad ecosystem. We drive high-quality volume, not just for new members, but how we perform from a retention standpoint, which is really critical in times like these when there's hyper focus on operating margins and retention.

Our next question comes from the line of Ben Hendrix with Capital Markets.

Just a follow up on that last question. It seems like with this MA advanced rate notice coming in a little more -- a little softer than expected, and we know that the -- there's a hyper focus on margin enhancement. I'm just wondering to the extent that there are carriers out there who are -- acknowledge your unique capabilities and acknowledging the fact that you promote better fit and persistency, if there's an opportunity to kind of stand out and specialize ahead of 2027 where you may get a little bit more share of marketing spend that does come on to the DTC platform for next year. Any thoughts on kind of how you might be positioned there?

Yes. Thank you, Ben. I appreciate you joining as well. Just real quick on the CMS advanced rate notice. As we said in the prepared remarks, we agree with the carriers that the current advanced rate notice doesn't reflect the realities of where beneficiary utilization is and the cost of care. And we think there'll be a lot of continued dialogue between the MCOs and CMS on this particular matter. And we hope through that conversation when we get to the final rate notice in April that we'll see some improvement.

To your underlying question around our unique capabilities, we certainly agree. The market right now is in a period of where health care has a lot of financial stress in the system. And that's a great opportunity for SelectQuote, primarily around the efficiency of our model. As you can see in the second quarter results and the 39% margins for Senior or if you look back over the past 3-plus years, we've really been able to deliver not only a very efficient model, but a very high-quality model.

And if you look at our retention results with respect to things we highlighted today, we think the book has performed very well in what we would kind of classify a turbulent market backdrop. You can see our recapture rate. I think that all bodes very well for our model because carriers will continue to look for quality and efficiency, and that provides more upside opportunities for us given our very tight relationship with all the major payers.

Great. Just as a follow-up on the PBM contract. Just in general, we're seeing more acceptance of these kind of cost-plus structures and the Cigna earlier this week announced in its FTC settlement as part of that, that it would go to a cost-plus PBM and pharmacy reimbursement model. I'm just wondering if your new contract has any kind of cost-plus components to it on individual drugs. And if that's something that you're seeing could be a stabilizing factor in the SelectRx business going forward.

Yes, go ahead, Bob. Go ahead, Bob.

Good question, Ben. I think as far as what you're seeing in momentum in the marketplace towards that, that's definitely right. I think that that's where the market wants to go and where CMS wants it to go. Ours is similar to that with a guarantee. And what I mean by that is there's less -- there is no risk of kind of MAC pricing updates and things that could be below market.

So yes, a cost plus effectively GER is where we are, and it is a GER. So we have that, not to the degree though of what kind of ESI is talking about. That's a standard cost plus with a higher dispensing fee. And I do think the market is going to move towards that. You're seeing that with the IRA drugs. And I do think you'll see that overall where the justification of service levels like ours, which is very high, is paid out through that dispensing fee. So we're moving more towards that. This one is very similar to that, just not structured exactly like that.

Our next question comes from the line of George Sutton with Craig-Hallum.

Tim, I wondered if you could go into more detail on what you mentioned are levers at your disposal relative to the MA options given this carrier move?

George, I appreciate you being here as well. Yes, I mean, we have a unique model. We have a 50-state direct-to-consumer business model, and we do have levers. First and foremost would be with respect to where we deploy marketing dollars geographically. That is something that our model can do versus other field type models in an easier fashion. Also, we're going to continue to focus our investment on certain customer segments where we think the carriers want to grow. We can use SNPs as an example, where many carriers are going, and we do a lot of SNP business, and we're well aligned to grow where they want to grow.

So that's another lever that we have. And at least we forget we have a diversified model beyond our MA distribution business, we have a cash accretive SelectRx pharmacy that can also factor into how we -- our capital deployment decisions.

So you mentioned that your new agreement -- your new loan agreement gives you additional operating flexibility. I wondered if you could give us -- and you mentioned you'd take advantage of it when the market supports it. You're obviously operating in kind of multiple markets now. So I'm just wondering how much change we might see in terms of, for example, an emphasis on health care services versus a deemphasis on Medicare Advantage? Or I'm not sure exactly what you meant by the flexibility. So I wondered if you could give us a better sense there.

Yes. I mean we have the utility given the diversification of our model to pursue where we think the returns are best. Certainly, we have a highly synergistic model between our Medicare distribution platform and health care services, right? We're garnering a lot of that SelectRx growth through the conversations that we have with seniors on our MA platform. So I think that provides us a lot of utility around capital deployment decisions. Again, we are -- hopefully, you're taking from our comments and our tone that we understand that there is some challenge and some noise out in the market right now, but we feel like we've built a very resilient, a very aligned, a very efficient model that gives us a lot of utility around how we deploy capital.

We've also shared today in kind of the last slide around the growing cash flow dynamic of the business. And that's something that we would point investors to despite the unfortunate events and the guide down on the [ 606 EBITDA ], we are continuing to grow our cash EBITDA. We are continuing to grow our operating leverage, and that will be the focus for the business, and that will be the lens in which we look around capital deployment.

Our next question comes from the line of Pat McCann.

I just wanted to ask you a little bit about the SelectRx situation. Given the scale that you've reached, I'm wondering how that affected your negotiating position in this most recent discussion. Maybe if you could compare that to previous agreements you've entered. Any significant positive effect on your negotiating position given that scale?

Yes. It definitely affects our negotiating ability. I mean we are starting to get to a point where we do have some leverage, right? We -- or just say a deeper partnership, right? We have 100-plus thousand extremely complex members that we successfully engage with, deal with and drive their adherence to a good place and more actually importantly in this group, their compliance towards the times that they take those meds and things like that. We've showed the past, right? We've got data now proving that helps bend the kind of cost curve of hospitalizations and other things. We're starting to partner even deeper to do more, whether that's enhanced MTM services, remote therapeutic monitoring where we can really make sure they are taking those at the times we think they are and other things that help drive not only data to our carrier partners, but ultimately action if somebody is not managing their health care the way that they should.

And with a population that has 3 plus chronic conditions is on 10 or more meds, that's extremely important. So I think -- or we know now that is giving us significantly more negotiating power, and we are being viewed as a valued partner, which is why we were able to get to where we were on the pharmacy negotiation with the PBM.

Great. And then my follow-up, just staying on SelectRx. Given where the Kansas facility is in its ramp, I was just wondering if you could talk a little bit about how much incremental volume could be absorbed with that facility before you need any meaningful new capital investment there?

Yes. That facility has actually a really, really high kind of -- you can have a lot of customers in there. So lots of room for expansion, but actually a lot of -- lot today in the machinery that we've bought. We bought much more efficient machinery. I think we've been open about the [ Indivion ] and what that does and how many customers we can drive through that. But more importantly, how we can do it with less staff and ultimately drive our cost down and our compliance and kind of everything else up.

We're also working on a lot of new technology initiatives to try to take, I call it, more of an archaic industry in the way that it's designed and modernize that to fit our needs because we have a different workflow, right, than most pharmacies. We're pretty far along in that now, and we're about to roll some really exciting things out that should even add more to efficiency. But more importantly, that allows us to use AI and other tools to drive efficiency in the future. And that's what we're trialing in that Kansas facility. That will allow us then to retrofit our other facilities to be similar. So we're very confident we can drive that down, all leading to a big growing cash flow line for us. We've got a lot of gross margin there. We just would like to get our gross to net margin or net to gross margin up even higher than we have it today, and we think there's a ton of opportunity there.

There are no further questions at this time. I will now turn the call back to Tim Danker, CEO, for closing remarks.

I want to thank you all for joining us again today. Although we've encountered some unexpected headwinds this fiscal year, we remain focused on narrowing the spread of outcomes and controlling the controllables. We continue to execute well operationally and with the diversification of our business model, no company in the sector is better positioned to navigate business cycles. We have the operating model, we have the competitive advantages, and we now have the balance sheet flexibility to significantly expand cash flows in the years to come. I want to thank you again. Everyone, have a good day.

This concludes today's call. Thank you for attending. You may now disconnect.

Welcome to SelectQuote's First Quarter Earnings Conference Call. [Operator Instructions] It is now my pleasure to introduce Matt Gunter, SelectQuote Investor Relations. Mr. Gunter, you may begin the conference.

Thank you, and good morning, everyone. Welcome to SelectQuote's fiscal first quarter earnings call. Before we begin our call, I would like to mention that on our website, we have provided a slide presentation to help guide our discussion. After today's call, a replay will also be available on our website.

Joining me from the company, I have our Chief Executive Officer, Tim Danker; and Chief Financial Officer, Ryan Clement. Following Tim and Ryan's comments today, we will have a question-and-answer session.

As referenced on Slide 2, during this call, we will be discussing some non-GAAP financial measures. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and the non-GAAP financial measures are available in our earnings release and investor presentation on our website.

And finally, a reminder that certain statements made today may be forward-looking statements. These statements are made based upon management's current expectations and beliefs concerning future events impacting the company, and therefore, involve a number of uncertainties and risks, including, but not limited to, those described in our earnings release, annual report on Form 10-K for the period ended June 30, 2025, and subsequent filings with the SEC. Therefore, the actual results of operations or financial condition of the company could differ materially from those expressed or implied in our forward-looking statements.

And with that, I'd like to turn the call over to our Chief Executive Officer, Tim Danker. Tim?

Thank you, Matt, and thanks to our investors and analysts joining us this morning. Picking up from the momentum of a strong fiscal 2025, SelectQuote executed well over the first quarter and is well positioned for a successful fiscal 2026.

Beginning with the headline results. We generated consolidated revenue of $329 million, which represents 13% growth over the same period a year ago, driven by strong growth in Healthcare Services. As you saw in our press release, the year-over-year senior revenue compare was unique this period given the changes to beneficiary eligibility requirements during the special election period.

Specifically, our senior revenues were $59 million compared to $93 million a year ago. The decline was driven by lower policy production, which was expected given the new SEP parameters we foreshadowed on last quarter's call. Additionally, as also forecasted last quarter, the segment recognized negative EBITDA of $21 million in the first quarter, driven by the combination of lower policy production as well as increased year-over-year investment and new agent hiring in advance of AEP.

I'll speak more to our readiness for AEP in a moment, but the high-level takeaway is that our Senior business performed as expected in what was a unique year-over-year compare for SEP.

In our Healthcare Services business, our new Kansas facility is ramping as planned, delivering efficiency gains in line with expectations. However, first quarter Healthcare Services EBITDA was impacted by a change in drug reimbursement rates with a SelectRx PBM partner. This is a headwind for our 1Q and 2Q Healthcare Services EBITDA margin.

Without providing detail on the contract, it is important to call out from the perspective of the PBM the change in reimbursement rate relates to volume shipped over calendar year 2025, not just fiscal 1Q or 2Q. The change does not impact our prior period results, but instead disproportionately impacts the first half of this fiscal year by approximately $20 million. The majority of that impact will be recognized in our fiscal second quarter.

As a result, we now expect second quarter adjusted EBITDA for Healthcare Services to be approximately breakeven. We are actively negotiating a longer-term reimbursement agreement with this carrier that creates better visibility for both parties. We have communicated our need for stability in our financials. The timing of this impact following our initial 2026 outlook is a clear example of that need. We're confident we'll reach a mutually beneficial agreement as this PBM partner recognizes the compelling clinical value provided by SelectRx, which I'll speak to later in my remarks.

Regardless of the ongoing negotiation with this PBM, rates per our current contract revert to more normalized levels on January 1, 2026, which underpins our updated fiscal '26 view. While we no longer anticipate reaching our $50 million target for fiscal '26, our confidence and visibility in the long-term economics of Healthcare Services are unchanged.

Despite the 2Q impact, we plan to exit the fiscal year at an annualized EBITDA run rate in the $40 million to $50 million range and continue to see SelectRx and Healthcare Services as a meaningful driver of profit and cash flow for SelectQuote.

Speaking now at the consolidated level, quarterly EBITDA of negative $32 million was below our guided $25 million to $30 million loss range communicated on the last call due to the SelectRx margin dynamics I just spoke about. Senior EBITDA was within expectations for the quarter and our views on the upcoming AEP season are unchanged.

If we turn to Slide 4, I'll detail those views for AEP. Beginning at the top of the page, let me start with our view of the overall industry. As you recall from last year, shifts in planned benefits and structures from carriers drove an elevated amount of policyholder volatility.

Looking ahead to this year's selling season, we see a similar backdrop where carriers continue to prioritize Medicare Advantage margins over aggregate policy growth. The importance of a well-fit policy has never been more important to both the carrier and the policyholder. SelectQuote's data-enabled agent-led model is specifically built for that purpose, which we believe is a lasting competitive advantage and one that is especially acute in this environment.

Coincidentally, we expect the ongoing strategic shift by carriers to drive another elevated year of policy terminations. As we noted last year, these industry trends drive an increased need for the solutions SelectQuote provides, both for the carrier and certainly for the policyholder.

Additionally, we see certain pockets of growth within health plans this season, including HMOs, SNPs and in specific underserved geographies, which our model is uniquely well positioned to help.

If we move to the bottom of the slide, let me give our outlook for how SelectQuote is positioned to perform in this Medicare Advantage season. Looking back, the 2025 AEP season exceeded expectations. Our high-touch data-driven model proved its value in a dynamic market, where policyholder questions and confusions were elevated. In that environment, our agile agent-led approach delivered outsized growth per agent and near record margins in the Senior segment.

For the 2026 AEP and OEP seasons, we're optimistic that performance will be strong. We entered the season with excellent retention of tenured agents who are about twice as productive as new hires, and had another successful preseason of hiring and training. This positions the platform well for continued growth and improved operating leverage.

Moving to our focus on retention. We know carrier plan changes can drive confusion, and we have made a strategic priority to proactively work with policyholders to ensure they understand their plans. This is a differentiated approach that is highly appreciated by policyholders.

In the upcoming year, we expect tangible benefits to our results from both keeping policyholders in plans that remain a good fit or helping them find a new plan that best fits their ongoing needs. In fact, we believe there's an opportunity to improve policyholder recapture rates from the 2025 season. We believe our agile sales function and focus on retention positions SelectQuote to once again deliver in what is to be sure another dynamic and disruptive AEP season.

On Slide 5, let's add some context on SelectRx and the way our customers and carrier partners benefit. As we've talked about since the inception of the business, there are substantial problems and inefficiencies in how prescription drugs are paid for, distributed and ultimately taken by Americans.

SelectQuote, as an efficient healthcare information hub, has significant insight and ability to eliminate inefficiency and improve the experience for all participants in the prescription drug value chain. At the highest level, SelectRx improves lives for Americans, introduces efficiency and cost savings into the system and leads to better health outcomes.

Here, we provide a few examples, beginning on the left with improved MA retention. Given medication is a core piece of most treatment regimens, the fit of prescription drugs within a medical coverage plan has a synergistic benefit. We have seen this evidence with SelectRx members, who tend to have lower rapid disenrollment rates and higher retention on the Medicare Advantage plans they select.

Next is improved medication adherence in the middle column. Our approach recognizes a fundamental reality of patient care, medications change. Unlike the traditional 90-day bottle-filled approach prevalent elsewhere, we utilize adherence-friendly 30-day packaging with a high-touch service model. This monthly cycle is critical because on average, roughly 10% of our SelectRx members experience a material change to their prescription regimen each month, whether it's adding a new medication, discontinuing an old one or adjusting the dosage.

When a patient's therapy changes, a 90-day supply creates a dangerous gap and an unnecessary drug waste. Our 30-day approach more quickly ensures that patients are taking the correct current medications, which is vital. This reduces the risk of patients taking incorrect doses or discontinued medications and lowers the risk of adverse drug reactions. It is well known that taking medication in accordance with the doctor's orders is critical.

As we know, especially with American seniors, drug adherence is a tricky and persistent problem, which can lead to worse health outcomes, particularly among the polychronic population we serve, nearly 70% of whom have limited pharmacy access. Nationwide studies suggest that poor medication adherence contributes to around 25% of all hospitalizations, which translates to hundreds of billions of dollars in healthcare costs in the United States each year.

Around 40% of our Healthcare Select members have reported either forgetting to take their medications or failing to pick up prescriptions from a pharmacy. We designed SelectRx with this specific problem in mind and have seen clear success in adherence rates. We attribute the success to the convenience and clarity that SelectRx custom drug delivery provides patients.

When we enroll patients in SelectRx, we see a meaningful improvement in their active medication adherence over the next 2 years. With our new concierge like program, we call Adherence for All, we are further accelerating and enhancing medication adherence improvement with beneficiaries in the programs improving by roughly 10% within the first year.

Finally, the right-hand column is the most rewarding statistic, improvement in health outcomes, which benefits everyone within the ecosystem. By improving adherence, SelectRx members see a reduction in hospital days of around 20%. This directly translates to a better quality of life for the patient, but additionally provides a meaningful cost reduction for the overtaxed healthcare system and similarly for healthcare insurance payers.

We provide this color not just because we're proud of the business, but it is important for investors to understand that these numbers matter to our insurance carrier partners. They, like us, see SelectRx and our healthcare services platform as a core value driver for long-term American healthcare improvement.

With that, let me turn the call over to our CFO to detail our results. Ryan?

Thanks, Tim. Beginning on Slide 6, the business executed well in the fiscal first quarter, advancing our strategic priorities across Senior, Healthcare Services and Life, even as we navigated the near-term reimbursement challenge within SelectRx.

Consolidated revenue grew 13% to $329 million, driven primarily by our SelectRx and Life Insurance business, which helped offset the unique comparison in Senior related to SEP. The fundamentals of our Senior business are unchanged, where we wrote 32% fewer policies in this year's fiscal first quarter compared to last year.

Similarly, first quarter EBITDA is not directly comparable to the prior year due to the new SEP environment and our normal upfront investment to prepare for the upcoming AEP and OEP seasons.

If we shift to Slide 7, our Senior financial results again show the impact from SEP. The results were in line with our expectations, and again, are a function of lower policy production because of new eligibility rules and the normal course of investment we make before the AEP and OEP season. I will reiterate that this level of volume was as expected. The impact can be seen primarily in our segment revenue, which declined 37% to $59 million due to the 32% fewer policies.

Our Senior EBITDA loss of $21 million was in line with our expectations given the production and investment dynamics I just spoke about. LTVs have remained relatively stable despite increased policyholder volatility in the past year, coming in at an average of 883 for the last 12 months.

We are now operating at a revenue to client acquisition cost of 6.4x, which continues to exhibit the synergy of our marketing spend against very attractive and durable cash flow streams for SelectQuote.

If we flip to Slide 8, I'll review the dynamics underlying our Healthcare Services results. Members held steady compared to last quarter, in line with expectations, given the first fiscal quarter is typically a slower one for onboarding SelectRx members. We feel well positioned to capitalize on the AEP and OEP enrollment seasons.

That being said, we continue to focus on driving profit and cash flow over aggregate member growth. As Tim highlighted, the primary factor impacting first quarter results was a change in the reimbursement structure with one of our SelectRx PBM partners.

As a result, fiscal 2026 will ramp more gradually than we initially anticipated. We expect the rate pressure to crest in our fiscal second quarter before we revert to a more normalized rate structure with this PBM starting in January 1, 2026, which is our fiscal third quarter.

Despite this near-term pressure, our medium- and long-term outlook for expanding operating leverage and improving margins in Healthcare Services remains intact. To reiterate Tim's point, this partner understands the clinical value our SelectRx solution brings to patients, and as such, we are in constructive discussions to solidify our longer-term rate structure. We believe this new arrangement will provide enhanced visibility and predictability for our growing SelectRx business.

Healthcare Services continues to be a highly attractive driver of profit and cash flow for SelectQuote. The value we deliver to customers through SelectRx, combined with strong attachment rates in our Senior Medicare Advantage business, remains central to our strategy. This approach supports increasing cash flows, which benefits shareholders through improved cost of capital and more self-funded growth.

Let's shift to Slide 9 to detail our Life Insurance business. The quarter was a strong one for growth as revenues expanded nearly 20%, driven by balanced growth in term life and final expense policies. The lack of pull-through to our EBITDA, as shown at the right, was also driven indirectly by the changes to this year's SEP.

As part of our preparations for the season, we shifted agents to our Life business given our expectation for less MA volume during the SEP period. The results for our Life business was a near-term increase in expenses related to production in the quarter. We expect this trend to reverse as the season progresses and agents are reallocated and new agents specifically become more tenured in life.

As a whole, the Life business continues to provide another steady stream of profit and efficient cash flow, similar to our Healthcare Services business.

In closing, we are pleased with the results from each of our divisions and SelectQuote's overall position for the year ahead. The Senior business is well prepared for AEP, supported by strong agent retention and a successful preseason. Healthcare Services continues on its strong growth trajectory, and our Life division is driving consistent, reliable cash flow.

At this time, we are not changing our fiscal 2026 financial outlook of $1.65 billion to $1.75 billion in revenue and the $120 million to $150 million in adjusted EBITDA. While the Healthcare Services adjustment is a headwind, we plan to update our outlook following our fiscal second quarter as we will have additional detail on the AEP period for our Senior business. That said, we remain confident today that we will be operating cash flow positive during fiscal year 2026.

With that, I'll turn the call over to the operator for Q&A.

[Operator Instructions] Your first question comes from Ben Hendrix of RBC Capital Markets.

It's Michael Murray on for Ben. On SelectRx, you seem to believe the reimbursement headwind is going to be contained in 2025. What gives you comfort that rates will improve next year? And is there a potential that you'll see a similar reimbursement headwind at the end of next year?

I appreciate your attendance here. Just to provide a little bit more context on what we mentioned in our prepared remarks. We did have one PBM that made some adjustments to the drug reimbursement rates. Despite this change, the PBM remains profitable. We have a very strong relationship with them. We're in the midst of updating our agreement. As we shared with the market today, they see what we see, an immense amount of clinical value that our SRx solution provides patients. And as such, we're in constructive discussions with them to solidify a longer-term agreement and rate structure.

So we are absorbing a short-term impact in Q1, Q2, but the long-term economics remain very attractive. They don't change our perspective on growth or margin profile. As we work towards this new agreement, we will provide enhanced visibility and predictability into the growing business.

Okay. I appreciate that. Just shifting gears a little bit. I appreciate the commentary that SelectRx is improving MA member retention. Could this have a potential positive impact on LTV? And how much data would you need to see before building that into the LTV calculation?

Yes. I mean we do -- yes, so we do see an improvement in the overall persistency when someone is a member of SelectRx and has a Medicare Advantage plan. So we do see that. We don't actually build that into the lifetime values themselves. So we're not booking that increase, but it's absolutely something we're observing.

Yes. And really quick to follow that up, just as a reminder, it's not a huge attachment rate, right? It's a very specific cohort of customers. So not a massive overall impact, but a positive.

Question comes from Pat McCann from NOBLE Capital Markets.

First, I was wondering, with regards to what you mentioned about helping policyholders understand their plans better to focus more on retention, could you talk a little bit more about what that looks like in practice?

Yes, I'd be happy to -- I'd be happy to start, and maybe I'll ask Bill Grant, our Chief Operating Officer, to expand on it. But obviously, last season was a very disruptive AEP, OEP season. We are really proud of our team's efforts and the service we provided beneficiaries.

I mean, just for perspective, this year, nationwide, about 2 million MA beneficiaries are going to be impacted by plan terms -- or planned exits and another several million that are having pullbacks in benefits. So helping beneficiaries, protecting our back book of business is a priority. We've taken several actions, several learnings from last year and feel like we've got a jump start on it. But Bill, maybe you can provide some additional detail on our approach.

Yes, happy to. So I think that our approach evolves every year. We learn a lot in terms of how we use AI, our center, all the different -- all the data we have in terms of how we approach our book. And then we marry that, right, with how the plans are changing, right, because it's an ever-evolving environment.

But we believe that we have a really good strategy to continue to offer our value proposition to consumers as we move along, and that we're targeting or talking to the right folks that need our help. And you can really see that play out in kind of our year-over-year -- in terms of the number of folks that we're recapturing, what it looks like in terms of how that strategy plays out.

But we're really using every tool in our arsenal. But I think the biggest thing that we have going for us by far is our long data history along with marrying that with our different AI strategies that allow us to be as cost effective as we can on who we treat, when we treat them, all of those things.

Excellent. And my next question was regarding the recent research you published on the social determinants of health. And I was wondering if -- how that is informing your strategy in terms of potential new offerings in the Healthcare Services segment, how you are leveraging that data going forward?

Yes, I'll actually start it, and then I'm going to have [Audio Gap] on what we do to solve those problems. I'd say first and foremost, right, we just want to understand our customer base better and better. That's really informed the products that we've picked from the healthcare side of the house. That's how we found SelectRx, was folks need for a better solution than they were currently on to save them time and money and then ultimately help them adhere better.

I think, though, there's also products within the actual SDOH space that we're looking at that would help folks afford their daily needs better and to really look at the actual membership side of the house. So Bill, do you want to speak to the membership side and ultimately kind of what we're trying to do to solve SDOH issues on top of just traditional healthcare issues? Because we kind of break those things apart.

Yes, sure. So as you know, we have over 2.5 million Healthcare Select members. Healthcare Select membership involves a fairly robust health risk assessment, where we determine through that health risk assessment social determinants of health and what services may be applicable and help with our overall charter with that group, right, which is improving their overall health lives, all those things. So we have a variety of products within that now. It's ever expanding.

Again, we use a combination of kind of AI, Next Best Action, our consumer data –- or MarTech tools, right, to be able to talk to those customers. We've now helped over 50,000, taking our services through FindHelp or SDOH. We have a number of products there and we're expanding quickly. But we feel really good about our value proposition of our membership, and that just helps our overall engagement with Healthcare Select.

Question comes from George Sutton from Craig-Hallum Capital Group.

This is Logan on for George. I wanted to start with just kind of a high-level one on AEP. You touched on it a little bit kind of talking about the similarities to last year, but I was hoping you could characterize a little bit more kind of anything you're seeing in the market different relative to last year.

Logan, I'll start and ask Bob Grant, our President, to elaborate as well. Early in the AEP season, but we're pleased with performance thus far. As we've shared before, it is certainly a dynamic AEP season, given some of the profit actions taken by the carriers to get their margins in line. We're seeing that play out. We are seeing a very high level of consumer engagement as MA beneficiaries are out evaluating options. We would share that we think both our new agents as well as our tenured agents are performing very well within expectations.

And as Bill shared, we've been spending a lot of time also working on our back book of customers to ensure that they understand all of their options. But thus far, the AEP environment is what we expected. It's still very early, but we feel very prepared in the early days, a lot more innings to play out. Bob, do you want to talk about some of the things you're seeing kind of more broadly in the market?

Yes. I think we're just seeing another year of kind of pullback from certain carriers, to Tim's point, and push forward from others, which does cause some switching. I think the difference this year, though, is that every carrier pulled back to a certain degree, as you guys have kind of heard them talk about, to really focus on profitability, which does create a lot of calls and education, which we feel really, really good about kind of helping people understand how to use their plan, a lot of the Healthcare Services benefits and things that we're doing.

So I'd say it's just a little bit of a unique environment relative to other years, but probably more similar to last year than any year we had seen prior. And we do like some of the simplification of benefits. I think HMOs typically are a really good plan for a customer, easier to understand, easier to cost contain.

And then ultimately, sometimes while ancillary benefits can be good, they can be a little bit confusing. So pulling back on those 2 simplifies offerings and I think really helps the payers.

So we feel really, really good about where AEP is going and where the plans are, especially from a multiyear view. I do think payers are really, really focused on making sure that's profitable into the long run.

Got it. That's helpful. And then maybe switching over to SelectRx. Obviously, you guys have shown the ability to grow that business. You more recently talked about kind of focusing on the profitability. Can you just talk about how you plan to manage the growth or manage the funnel kind of through the busier quarters here where you probably have more opportunities to grow? But it sounds like you're kind of looking for the right members. If you can just talk about that, that would be helpful.

Maybe you can talk about the -- our member growth, and I'll highlight one other item. Go ahead, Bob.

Yes, sure. So as far as member growth, we've been very -- I think we've been very measured on that. As we talked about before, we're very focused on profitability and members that need the service the most mixed with PBMs and payers that appreciate the service the most. I know that sounds funny, but just like in value-based care or any other thing, we have a closer partnership with some payers than we do others. And we are very focused on how we expand the clinical aspect of that business. We announced earlier our Adherence for All program. We have quite a few participants that are very curious in that program because it speeds up.

Tim alluded to how fast we improve adherence. That speeds it up by multiple months and is a very powerful program from SRx perspective and other things. So we are very focused on that. I do think the market is still massive for us, right? It is a very big need. And I think the more and more we have quality conversations with payers and PBMs, the better and better kind of results we get even with the short-term headwind that we've seen.

Ultimately, as Tim alluded to, that's still a great relationship. And we've had a lot of really good discussions about how we can get to a really stable yet powerful contract that really focuses on the clinical aspect of that. Go ahead, Tim.

Yes. I think it's a great point, Bob. And I would say, again, none of this changes our underlying conviction and the massive opportunity ahead of us. We think this is a very powerful model, certainly for the patients. We shared a lot around the clinical value. It's important to that patient. It's important to the payer.

Obviously, we're working through a very short-term reimbursement issue. We have our arms around it. We don't anticipate anything of this magnitude happening again. We're confident in our ability to continue to work with all of our PBM partners given the massive value that we see here. And we're confident in our ability. We feel like we have very strong line of sight into the business and a strong level of conviction around the go forward of this business.

This concludes our Q&A session. I will now turn the conference back over to Tim Danker, CEO, for closing remarks.

Thank you. We want to thank everybody for joining us today. We're really proud of the start to fiscal '26, the strong execution despite navigating the dynamic SEP environment this past quarter. The entire organization is very well positioned for another successful AEP and OEP season, and we plan to leverage our competitive advantages as a health care ecosystem across the entirety of our business.

It's early days, but we're very encouraged by AEP results thus far, and we look forward to sharing more about the season and our strategy on our next earnings call. I want to thank you again. Have a great day.

This concludes today's conference call. You may now disconnect.

Welcome to SelectQuote's Fourth Quarter Earnings Conference Call. [Operator Instructions]

It's now my pleasure to introduce Matt Gunter, SelectQuote Investor Relations. Mr. Gunter, you may begin the conference.

Thank you, and good morning, everyone. Welcome to SelectQuote's Fiscal Fourth Quarter Earnings Call. Before we begin our call, I would like to mention that on our website, we have provided a slide presentation to help guide our discussion. After today's call, a replay will also be available on our website.

Joining me from the company, I have our Chief Executive Officer, Tim Danker; and Chief Financial Officer, Ryan Clement. Following Tim and Ryan's comments today, we will have a question-and-answer session. As referenced on Slide 2, during this call, we will be discussing some non-GAAP financial measures. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available in our earnings release and investor presentation on our website.

And finally, a reminder that certain statements made today may be forward-looking statements. These statements are made based upon management's current expectations and beliefs concerning future events impacting the company and therefore, involve a number of uncertainties and risks, including, but not limited to, those described in our earnings release, annual report on Form 10-K for the period ended June 30, 2025, and other filings with the SEC. Therefore, the actual results of operations or financial condition of the company could differ materially from those expressed or implied in our forward-looking statements.

And with that, I'd like to turn the call over to our Chief Executive Officer, Tim Danker. Tim?

Thank you, Matt, and thanks to everyone on the call. Today, I will start with a review of fiscal 2025, which will be brief given the drivers of another successful year have been consistent with the recent past. I'll then provide additional color on the unique environment we saw this past quarter. I'll then spend the bulk of my time on what we're planning for the years ahead.

Additionally, I'll contextualize the near-term strategic goals for SelectQuote relative to the broad market opportunity we've spoken to in the past. So with that as the outline, let me begin on Slide 3 with an overview of our performance highlights for fiscal 2025. We ended the year with consolidated revenue of $1.5 billion, which grew 16% compared to a year ago.

As we've noted all year, the top line increase has been a function of the rapid growth of our Healthcare Services business and specifically, SelectRx. Full year health care services revenue grew by approximately 55% to nearly $0.75 billion. This is an incredible result in just a 4-year history for the business. Our senior Medicare Advantage business performed very well against a challenging market backdrop for the industry. With significant plan changes by carriers this season as well as new SEP parameters for beneficiary eligibility, American seniors relied on SelectQuote and our agents to advise and help find the best plans to fit their individual needs.

We're most proud of how our model and agents performed under pressure, where we drove another year of record agent productivity, up 24% and ultimately drove above target EBITDA margins for the third straight year. On a consolidated basis, SelectQuote drove $126 million of adjusted EBITDA, which represents an EBITDA margin of 8%.

Margins were relatively in line with last year's result despite adding $264 million and incremental revenue from our lower-margin health care services business. In short, we're very proud of what the team accomplished this year and how we are set up for the future.

If we turn to Slide 4, let me put those accomplishments in more detail. We have presented these metrics in the past, and I want to highlight them one more time to emphasize the consistency we have achieved in our Senior Medicare business. As you remember, we reset our strategic priorities back in 2022. And since then, our focus on profitability and repeatability has been paramount.

We're very pleased with the efficiency gains we've been able to yield in the senior business. We've become more efficient in the throughput of how policyholders are assisted via our year-round agent model and our ever-expanding use of technology. We've become certainly efficient in how our services are marketed in which leads we pursue in a given season or intra season.

It is also important to note that these decisions are rooted in the North Star of driving profitability and cash flow. As a result, SelectQuote Senior has been able to drive near record margins in each of the last 3 years despite wide variations in Medicare selling environments from one season to the next.

And finally, SelectQuote continues to leverage our information and connectivity advantage within Health Care, which you can see in our revenue to CAC ratios. We are increasingly able to help more beneficiaries, caregivers and payers by offering a wider set of health care solutions. Best of all, the model is well aligned that when our stakeholders do well, SelectQuote and our shareholders do well.

The revenue to CAC ratio, which includes both our Senior and Healthcare Services revenues is how we track the reach of our model. Over the past 3 years, we've expanded our revenue to customer acquisition cost ratio from 1.7x to 6.1x. We're excited about the year ahead for Health Care Services and believe we are in the early innings of how we can leverage our information advantage, technology and distribution to connect more services between those receiving care and those that provide it.

We're immensely proud of the ways our differentiated model and approach to health care serves such a wide breadth of Americans, but we're equally excited about the implications for our company's return and cash flow. Before I get to that, on Slide 5, let's review the highlights of our year in Healthcare Services, primarily driven by SelectRx.

As I've noted, it was another strong year of growth with revenue of $743 million. Most importantly, we made meaningful progress on the scale and profitability of the business despite concurrent investments and our new state-of-the-art distribution facility in Olathe, Kansas.

We ended the fiscal year with adjusted EBITDA of $25 million, which is up significantly year-over-year, but still small from a margin perspective relative to what we believe is ultimately possible. The best representation of that operating leverage potential is the difference in growth between our revenues and membership in fiscal 2025. As noted, revenues grew nearly 55% over the last year, while our membership grew roughly 31%. As we mentioned last quarter, we believe this year has been a pivotal one in terms of scale of membership.

To be clear, we believe there is significant growth capacity for new members on the platform, especially with the addition of our state-of-the-art Kansas distribution facility, which significantly increases our potential capacity. With that said, we expect to see increased margin and cash flow contribution in fiscal 2026 from SelectRx as scale from seasoned members continues to drive results.

It is clear that a revenue base nearing $0.75 billion is a significant asset and one that we are very focused on leveraging in 2026 and beyond. If we turn to Slide 6, let me quickly review our strategic vision for SelectQuote as a broader connector within the health care ecosystem. To date, we have clearly driven scale in both our Senior Medicare Advantage and SelectRx businesses.

More importantly, we have operated these businesses with a growing track record of profitability and have done so in a range of market environments for both Medicare Advantage and prescription drugs. As we've noted in the past, we believe SelectQuote's ultimate value is as a holistic solution provider across the $5 trillion U.S. health care market.

While there is a significant growth and value creation opportunity for shareholders in this endeavor, we also note that our integrated model can be a solution for what has historically been a very inefficient system. The information we harness, the connectivity we create as an intermediary in the health care ecosystem is tangibly valuable in a wide number of ways.

Americans get better and more tailored care based on individual needs. Payer expenses are reduced because patients have better treatment adherence, which leads to better health outcomes. And ultimately, the broader health care system benefits because Americans are directed to payers and caregivers that create the best and most efficient patient results.

This is particularly important given the traditionally underserved communities we serve, which skew more rural, lower income and with more chronic conditions than the general population. This alignment across patients, payers, caregivers, taxpayers and shareholders is why we believe we are just getting started in what is ultimately a very value-enhancing opportunity in health care.

Today, our challenge is not how to grow, as evidenced by the rapid adoption of our SelectRx platform, but instead, it's how we balance growth while simultaneously generating a growing stream of sustainable cash flows. This is a good problem to have. We believe our current revenue to CAC ratio of 6.1x, is a compelling proof point in our ability to address the much broader health care market and arenas, including Healthcare Select and Select patient management.

That brings me to Slide 7, where I'd like to provide additional detail on our evergreen work to drive operational and cash efficiency. First, I'll emphasize that SelectQuote has been using technology and computing power to automate tasks and optimize decision-making since our founding 40 years ago. That has not changed and it never will.

We are highlighting it here given we see AI as critical to our goal to become a comprehensive health care services platform, and we believe SelectQuote has a significant head start versus the competition. In our view, the reasons automation and technology are so important are threefold. First, technology is foundational to SelectQuote, and we know that our customers and partners get a higher level of service quality and reliability because of it. Second, our technology is dynamic and has the flexibility to solve for different market environments. The evidence is in the stability of our financial results relative to different Medicare Advantage markets we have operated through the past 3 years. Third and most pertinent in today's SelectQuote, technology represents a fixed investment that can be scaled efficiently.

Put another way, our technology has been part of SelectQuote since the beginning. It's not something that we are initiating with the advent of AI. In fact, AI will only amplify our tech-enabled model. The power of that leverage is evident in the efficiency metrics I shared for Senior as well as the metric at the bottom of this page.

SelectQuote has routed over 7.5 million calls through intelligent automation and AI has powered more than 300,000 unique health care services interactions. Technology is critical in organizing and optimizing those customer touch points and to do so at a high level of customer service is a significant fee. But we are not just the volume processor.

Enrollment time has improved by 25% over the past year. Our technology also makes a difference in the lives of our customers, most importantly, through better health care service fit and process efficiency. Our technology has also reduced the time and our health needs assessment calls with customers by 30%.

Most importantly, our technology is critical to our ongoing strategy to drive scaled revenues across the ecosystem, which results in compounding and sustainable cash flows, which brings me to Slide 8. Historically, we've talked a lot about the growth and profitability of our Senior and Healthcare Services segment separately, but we created this view to highlight an emerging attribute of our diversified platform that we believe is underappreciated.

As you know, the cash flows for our Senior business are different than our Healthcare Services business. The diversity of that mix is a valuable input for how we manage the business and ultimately drive value for shareholders. Specifically, Healthcare Services revenues and EBITDA are effectively immediate from a cash perspective, whereas our Medicare Advantage revenues accrue over the life of a policy as it renews year after year.

As our Healthcare Services business has continued to scale, it provides us better optionality in how we think about capital allocation from one season to the next. We believe and we've heard from shareholders that a sustainable and growing base of cash flow is important. In fiscal 2026, we believe our differentiated ability to accelerate cash flow generation through business mix is the right strategy to drive shareholder value.

For context, we know that Medicare Advantage currently is and will remain in flux for fiscal 2026. This has been well documented in the results of carrier partners and others in the industry over the past few earnings cycles. As I discussed earlier, we've demonstrated our ability to deliver attractive returns in our Senior business over the past 3 years through 3 very different Medicare selling seasons.

That said, the scale of our health care services platform now gives us strategic optionality that we didn't have before. In the year ahead, as we continue to balance cash flow production with growth, we plan for a flatter year in Medicare Advantage submissions through our Senior Distribution business. To be clear, we believe growth in MA is a choice, and we've built a nimble engine that is primed for growth at short notice.

We remain highly confident in our view that 20% plus EBITDA margins are achievable for the segment, driven by our technology and agent-led model. On the last point I'll make, and Ryan will elaborate on, is that while our fiscal '26 forecast shows a dampening effect on EBITDA margins because of the higher mix of SelectRx, it is important for analysts and investors to recognize the opposite will be true with regard to cash flow generation.

In fact, we expect SelectQuote to be operating cash flow generative in fiscal 2026, and much of that will be driven by our view that Healthcare Services EBITDA will grow and will exceed $50 million. As we've noted in our strategic redesign, our focus is to prioritize cash flow and profitability. We're excited about the overall business' embedded cash flow potential given our commissions receivable balance of approximately $1 billion and our growing health care services business, which is approaching $1 billion in annual recurring revenue with an improving margin profile.

We believe the decision to drive incremental cash flow will pay significant dividends and how we can compound and deploy that cash flow for more profitable growth and shareholder value in the future. The range of ways that, that can unlock the value is broad from future growth in MA and new health care service offerings to continuing to lower our cost of capital.

I'll turn the call over to Ryan to detail our financials, but I'll conclude by saying SelectQuote has never been better positioned to harvest the gains of our strategy than we are today. Ryan?

Thanks, Tim. On Slide 9, I'll start with our fiscal 2025 results. As Tim noted, it was another successful year across the organization with both revenue and EBITDA beating our original guidance set last September. SelectQuote grew revenue 15.5% to $1.53 billion. Our full year adjusted EBITDA totaled $126 million, which grew 8% compared to a year ago.

For the full year, our adjusted EBITDA margin was relatively stable, which we view very positively considering the majority of our revenue growth was generated by our lower margin but increasingly profitable and cash-generative Healthcare Services segment. Let's shift to Slide 10 to review our Senior segment, where full year revenue totaled $600 million and adjusted EBITDA totaled $162 million.

As we noted earlier in the year, our agent-led model performed extremely well in a unique season. With policy features in flux and a significant number of planned cancellations by carrier, we delivered strong results during the season with an agent force that was approximately 26% smaller than in fiscal 2024.

We are most proud of the operating efficiency exhibited over the year with a smaller agent workforce. Our revenues were only 8% lower. And more importantly, we drove EBITDA margins that were about 200 basis points higher, which ultimately drove similar EBITDA dollars compared to 2024. Turning to Slide 11. Let me detail our production and LTV metrics. For the full year, approved MA policies totaled $593,000 compared to $625,000 in fiscal 2024. The 5% decline was a strategic agent staffing choice, but we drove 24% more policies per agent compared to last year.

The agent efficiency, combined with lower marketing expense per policy were the key drivers of our margin expansion for the year. In the fourth quarter, our Senior segment produced 85,000 approved MA policies, down 20% year-over-year due to the lower agent headcount and the changes to the SEP. LTV for full year 2025 was $884 per policy, which is 3% lower compared to 2024.

As we mentioned previously, the decline was primarily a function of commission mix and timing. LTV for the fourth quarter of $837, was 1% lower compared to fourth quarter of 2024, which was in line with our expectations. On Slide 12, let's move to our Healthcare Services results. We continue to see strong demand for our SelectRx platform, where year-end members grew 31% compared to fiscal 2024.

In the fourth quarter, we grew membership by an additional 2,500. As a reminder, we believe there is significant runway to broaden this important and valuable service for both our senior Medicare Advantage customers and for all Americans with the need for reliable and convenient prescription drug delivery. While the addressable market for our SelectRx is massive, our business and shareholders can also benefit through the ability to drive higher cash conversion. You can begin to see the impact of our focus on efficiency and refined member targeting in the charts on the right side of the slide.

In the fourth quarter, we drove $12 million of adjusted EBITDA in Healthcare Services, which represents a margin of 5.5%, which on a year-over-year basis compares to a quarter where we effectively broke even for this segment. I'll share more on our outlook for Healthcare Services in a moment. But as Tim noted, it's an exciting time at SelectQuote to have an additional growth engine to not just drive revenue but increasingly contribute to our profit and cash flow.

Moving to Slide 13. Our Life division also performed well in the year and the quarter. Revenues grew 10% for the full year to total $173 million. The fourth quarter was even stronger with growth of 14%, driven predominantly by our final expense product. As a result, the segment grew adjusted EBITDA by an impressive 32% for the year to $27 million, which represents a 15% margin or more than 250 basis points higher compared to fiscal 2024. This was particularly welcome given the attractive cash flow dynamics of this segment.

On Slide 14, I'll be brief regarding our ongoing priorities to improve SelectQuote's cost of capital and leverage profile. Here, we outlined what we've accomplished over the past calendar year. While we do not have any specific update over the past quarter, we would simply reiterate that the improving cash efficiency of our model is an increasingly important driver to optimize our balance sheet. The October securitization and the February preferred equity offering significantly improved our operational flexibility and did so at a lower overall cost of capital.

We believe the structure can be further improved and expect future transactions will lead to extended maturity, increased operating flexibility and a lower cost of capital. We look forward to sharing more regarding this initiative as we believe a lower cost of funding will be a more readily apparent part of SelectQuote's value creation for shareholders.

Turning to Slide 15. We are excited to introduce our fiscal 2026 guidance. As we've talked about extensively, SelectQuote has built an MA engine that is primed for growth when the market allows, and we have a rapidly growing and increasingly cash-generative Health Care Services business. Overall, we are managing both businesses to drive increasing cash flow, which will generate long-term value for our shareholders. We expect revenue in the range of $1.65 billion to $1.75 billion, which represents year-over-year growth of approximately 11% at the midpoint.

This range assumes relatively flat senior policy volumes for the year based on our ongoing strategy to balance current period EBITDA with cash flow generation. Similarly, our agent productivity was exceptional this past season, and our 2026 forecast assumes a reversion to a more historical average productivity level as we onboard new agents. This measured year for Senior will be offset by continued strong growth in Healthcare Services, where we expect revenue growth of around 20%.

Moving to adjusted EBITDA. We expect to end the year in the range of $120 million to $150 million, which represents year-over-year growth of 7% at the midpoint. While we expect margins from our Senior segment to come down slightly from the mid-to high 20s that we've delivered over the past few years, we expect margins to remain attractive and to exceed 20%. For the first quarter specifically, we expect approximately 10% of our annual senior production to come in the quarter given the SEP dynamics that Tim discussed.

This, coupled with additional AEP hiring is expected to lead to a consolidated adjusted EBITDA loss of around $25 million to $30 million for the first quarter. In Healthcare Services, we expect to generate more than $50 million in adjusted EBITDA for fiscal 2026 as we continue to focus client acquisition on the patients that benefit most from the service and have the best unit economics.

From a margin perspective, we expect relatively flat sequential margins in the first quarter as we ramp investments in preparation for AEP enrollment and then modest sequential expansion as we move through the remainder of the year. Over the last few years, you've heard us speak to the incredible long-term value we see within the health care services space.

We believe the scale level of profitability we expect in 2026 for a business that will only be 5 years old demonstrates that value creation opportunity and is just the start of what we think is possible in the future. We also anticipate another strong year for our Life division, where we expect double-digit revenue and EBITDA growth with a similar margin profile to fiscal 2025.

Finally, we anticipate generating positive operating cash flow in 2026. This is an important step for us, and we see a path toward meaningful cash flow generation in the years ahead. On an annual basis, we expect to be operating cash flow positive for the foreseeable future as we continue to transition to a comprehensive health care services platform.

With that, I'll turn the call over to the operator for Q&A.

[Operator Instructions] Your first question comes from the line of Ben Hendrix with RBC Capital Markets.

Congratulations on the quarter. I appreciate the commentary on the Healthcare Services growth. And it seems like you've seen impressive revenue growth versus member growth this year. I just want to talk a little bit about margins and the commentary about the scaled margin as you see more seasoned SelectRx members. Maybe you can kind of talk about the path to your target margins and how you're thinking about that? And as we get to a more scaled margin, how do the fixed and variable cost dynamics work to get to kind of a target margin from a scaled member?

Thanks for the question. Bob, why don't you cover the color on the margin progression and the drivers, and then we'll hand it over to Ryan.

That sounds great, Tim. So on the margin progression, as we get larger Ben and continue to refine our business, have more tenured members, but also to the point you made later, really drive the variable cost down as we are scaled and can make more optimizations. I would expect that to continue into the future and pretty meaningfully, right?

We are really, really excited about what we can do now that we're at scale from both a COGS perspective and just general buying due to the fact that we're buying so many scripts now, but then also on automation and streamlining and really taking the time to refine the operation through opening Kansas City and then ultimately retrofitting the other facilities that we have.

We've got a lot of good findings. We're rolling out a lot of new technology. that we are incredibly excited about what that will do. And I think you've seen the power of what it already can do given the margin progression we've had. So we are very confident that we can get the margins to what we've shared and have a meaningful kind of path ahead of us to continue to enhance the cash flow dynamics of that really powerful business. Ryan?

Yes. And then I think, obviously, as we ramp our membership, especially within the Kansas facility, we do see a path to margin enhancements. And we shared on the call earlier today, we expect our first quarter to be relatively in line with what we had this most recent quarter that was 5.5%, which we're really pleased with.

And then as the year progresses, we see modest margin expansion. There will be some investment as we prepare for the AEP season and onboarding new members. But ultimately, we do expect the business will produce north of $50 million in EBITDA in fiscal 2026.

Great. If I could just one follow-up. As we think about scaling up this business and getting more margin from the Health Care Services, it seems like this could be a really powerful driver for the securitization program. I wanted to -- just based on your conversations with the market and with lenders, is there any kind of kind of catalytic level of either EBITDA contribution or margin from this business that could really kind of accelerate the securitization program?

Yes, that's a great question. What I'd say there's not a threshold, if you will. What I will say is the progression and the EBITDA generation is obviously becoming significant. And that obviously opens up a number of different paths with respect to the capital structure.

So securitization is still very much a path, but also as we generate more and more cash flow, which we do expect this coming year, we'll be generating meaningful unlevered operating cash flow will be positive operating cash flow for fiscal 2026. And on an annual basis on a go-forward basis, we would expect to be -- to see that grow sequentially in future periods. So I do expect to be operating cash flow positive for the foreseeable future.

Your next question comes from the line of George Sutton with Craig-Hallum.

I just wanted to go back a quarter. Your message, I think, coming out of the last quarter was you were refining the marketing. There was a notable caution, I think, in how fast you were growing SelectRx. It sounds like you're more optimistic now, maybe you have found some solutions. Can you just walk through sort of the dynamics that have changed quarter-over-quarter there?

Yes. On that, this is different than a growth from a membership and revenue standpoint. And George, where we were talking a little bit last quarter was that, right? We are far more focused now on EBITDA growth and expansion and what I talked about kind of getting variable costs down and getting your cost of goods sold, cost of your hard product down and enhancing our margins.

I would expect the kind of membership, and we're not commenting on it too much, but to grow at a lesser pace than we've seen just given we grew so fast in that. I'd also say that we're not going to have quite -- we'll still have good healthy revenue growth, but not quite what we've seen in years past, again, kind of essentially going from 0 to where we are today.

So that's a little bit of a clarification to what we were talking about last quarter. But I would expect our EBITDA to continue to progress and materially grow, given the opportunity we have in refinement. And just the deep partnership we have with a lot of our carriers now as far as the clinical services that we provide. And again, really last quarter talking about membership growth, where we'll have really healthy revenue growth of north of 20% like we talked about, again, not to the degree of going from 0 to what we've come to.

Got you. I wonder if you could discuss the actual AEP hiring plans that you have and how significant you are using AI as part of the mechanism to serve more customers, you mentioned the 300,000-plus interactions.

Yes. George, let me start. This is Tim, and then Bob, you can comment on AI. I think just kind of macro here for the AEP season, we are expecting an elevated level of planned disruption again this year, some similarities to last year given where carriers are with respect to their kind of profitability get well plans.

And so while we don't have full visibility to what those plan designs are going to look like just yet, we do expect further benefits pullbacks, plan terminations. Last year, that certainly aided our front-end customer acquisition dynamics, things like close rates and agent productivity. From a retention perspective, certainly, given the level of disruption last year, we were really pleased with the outcome. We've had good experience there. We're making incremental investments. We'll be prepared. Bob, do you want to speak to the technology and AI point?

Yes. I mean I think that the tech team on our end has done a really, really nice job of continuing to supplement our agents and drive more efficiency. It's what we've said in the past that we use technology and AI to make simple interactions faster and more efficient and ultimately save our agents' time.

And then that's the same on the health care services side. We will continue doing that. We are not in any -- we don't think anybody is close to fully replacing the 45-minute very, very high-powered conversations, right, that our agents have and/or complex interactions that our health care services business has. But we've made a ton of progress in making them more efficient, which is why you've seen our productivity per agent continue to rise. We're confident we can continue to do that.

As they said, we're going to continue to invest in the same way we have in the past. in technology. And we are very hopeful that, that will continue to lead to time savings for our agents, which every minute is extremely precious to us. So we've seen 25% reductions in enrollment time for our agents specifically, that's not necessarily for a customer. And we've also seen for less complex conversations as we touted Bill's team have more than 300,000 interactions on the health care services side with just using AI stand-alone.

Just one other question on Select patient. Can you give us any details in terms of where you're headed there? What kind of contribution you expect in '26 from that segment?

Yes. We're continuing to make really, really good progress on Select Patient Management and SelectSync Medical, which is our telemedicine practice as a whole, right? There's complexity there on carrier contracts and what we're doing, but we are building that the right way.

And we do think in the future, it will provide material value. In 2026, we don't think it will scale right as quickly and provide meaningful EBITDA this year. But again, it is a huge path to our future. So we're really excited about what we can do. And I think we've proven our ability to scale businesses with LHA and with SelectRx.

We think that, that's another door that's a big opportunity for us, given the fact that our clients, a lot of them don't have access to quality care. They're homebound and they really need to virtually interact. And we think there's a big gap in the marketplace today where that is.

Your next question comes from the line of Pat McCann with NOBLE Capital Markets.

I just wanted to piggyback really quickly on George's question about the AI usage. I think you have the slide on that in this quarter. And I know that's something that you have been using previously trying to use technology to increase agent efficiency.

But I was wondering if you could talk a little bit about to what extent there have been significant recent enhancements on that front? And if you could provide any further details on maybe some examples of what new additions you've made to the agent process in terms of added technology and AI.

Yes. So we have made a ton of recent advancements. And that's -- when we say, for example, like the health care services side, that's really an extension of our agents because that was work that they transfer over. And those interactions are brand new to us. Again, our technology team did an incredibly nice job with that.

When you look also higher level, every step of the funnel, we use [indiscernible] to our enrollments and taking kind of the mundane work out of that and pushing that over to AI. Those are all big levers that we continue to enhance. And what we really focus on is, let's say, right now, we're saving 5 minutes per enrollment by using technology, can we push that to 6, 7, 8 and make those more complex enrollments because again, every minute is extremely valuable to us.

We think the same thing on the agent side, right? Can we automate certain functions, whether that's gathering data, whether that's gathering prescription drug, those types of things, those are all big levers for us that we are continually trying and optimizing. And again, some don't pan out, but mostly ours do, and we've been really, really, really proud of that.

I think, two, I would love Bill to talk about how we're using it on the retention side and ultimately, the compliance kind of QA side because I think we're using as a big enhancement there, too. Bill?

Yes, sure. I mean in terms of specific examples, I mean, we've really, really ramped up kind of our overall usage. We use it all the way through from our initial recruiting process. Our initial scoring now is based on AI in terms of understanding how we're understanding applicants relative to their ability to produce for us.

We use it a lot in our training process in terms of our QA and providing real-time coaching, so call listening as opposed to having to be kind of more retroact. We can be proactive and we can be real time and provide instant feedback. We use it a lot in our recaptures and basically our ability to look at our block of business and analyze it quickly and decide how we're going to treat people and understanding what plans they're on to try to recapture them.

We use it also in our plan scoring to help us decide, okay, are they on the right -- are we making sure our plan rank is as accurate as it possibly can be. So really kind of list goes on and on, but we're using it more and more, and it's really, we think, having a compounding effect on our business.

Great question. Sorry for the long answer, but one final point. The proof is really in the results. If you look at all these things that Bob and Bill spoke to, you can see this evidence in our margins, 3 consecutive years of EBITDA margins in senior in the mid- to high 20s.

You're seeing this also ramp through our Healthcare Services business and our comments on our confidence around creating a diversified cash-generative platform. We think we are finding through technology with highly skilled human agents, right? We're getting the best of both worlds, data-driven, high touch. We're doing it at scale, and we think the results speak for themselves.

Great. I really appreciate that. And I'll just ask one more regarding capital allocation. I was just wondering if you could say any more about how you're thinking about how your priorities in terms of additional balance sheet improvement versus maybe a potential acquisition or things -- anything you might do to expand your health care services platform?

And when it comes to -- yes, when it comes to capital allocation, what are your priorities there? And how do you think about potentially making expansions in health care services while being able to continue to prioritize improving the balance sheet as well?

Yes. Great question, Pat. I'll start and see if Ryan has additional comments. I mean the immediate focus for the business, hopefully, it came through in our prepared remarks, is balancing, right, balancing growth in the underlying market opportunity with driving a strong cash-generative business.

We know that by driving a strong cash flow business, that's the key to a better balance sheet as many other benefits. You started to highlight some of those, right, optionality that we have from capital allocation around future growth in MA to new health care service offerings, certainly to a better cost of capital.

So we're going to, in the near term, be very focused on execution of this plan that we've outlined, driving stronger cash flow. We certainly -- and Bob did a good job highlighting and the results have demonstrated what we've been able to do in SelectRx, the green shoots in Select Patient Management. And so we see additional opportunity on the horizon, but that's really kind of our near-term focus. We think that we are proving that we can make a meaningful impact on health care that helps improve health outcomes while also being beneficial to the shareholder.

Ryan, any additional comments you'd make from a capital allocation perspective?

No, I really think you laid it out well. The capital structure is our priority. We're obviously -- we see lots of opportunity to grow the health care services business, but we also see a lot of opportunity to improve the capital structure, which really sets the stage for the subsequent actions and growth within Healthcare Services.

And so the capital structure is the focus at the moment, but we are making great progress, and we feel great about the financial plan and the guidance we shared today. We expect to generate meaningful unlevered operating cash flow, which we think certainly sets the stage for additional transactions to improve the balance sheet.

I will now turn the call back to Tim Danker, CEO, for closing remarks.

I want to thank you all again for taking time this morning. A very big thank you to our team here at SelectQuote for a very successful fiscal 2025. We all should be very proud of what we've accomplished thus far.

I'll close the call with one piece of perspective. We've spoken over the past 3 years about the operational stability we've built into SelectQuote since our strategic reset in 2022. If that was an initial stage, I believe 2026 and the years ahead represent the realization of the model we've built on that foundation. It's an exciting time for the company. We appreciate your time and support as we show you what SelectQuote can be. I want to thank you again. Have a great rest of your week.

Ladies and gentlemen, that concludes today's call. You can disconnect. Thank you, and have a great day.