SelectQuote outlines $1.65B–$1.75B revenue target for 2026 as healthcare services drive cash flow focus

Earnings Call Insights: SelectQuote, Inc. (SLQT) Q4 2025

MANAGEMENT VIEW

* CEO Timothy Robert Danker opened by highlighting a 16% annual revenue increase to $1.5 billion, attributing the growth to the Healthcare Services segment, particularly SelectRx. Danker stated, “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.” He underscored record agent productivity, up 24%, and above-target EBITDA margins for the third consecutive year.
* Danker emphasized the company’s focus on “profitability and repeatability,” noting efficiency gains in the Senior Medicare business driven by technology and selective marketing. He explained that the revenue to CAC ratio expanded from 1.7x to 6.1x over three years, calling it a proof point of the model’s scalability.
* Strategic attention was placed on leveraging SelectRx’s revenue base, expanding the Kansas distribution facility, and achieving operational efficiency through automation and AI. Danker stated, “We expect to see increased margin and cash flow contribution in fiscal 2026 from SelectRx as scale from seasoned members continues to drive results.”
* “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,” Danker said.
* CFO Ryan M. Clement reported, “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.” Clement highlighted that margins remained stable despite a revenue mix shift toward the lower-margin Healthcare Services segment.

OUTLOOK

* Management introduced fiscal 2026 guidance with revenue expected between $1.65 billion and $1.75 billion, representing 11% year-over-year growth at the midpoint.
* Adjusted EBITDA is forecast in the range of $120 million to $150 million, with Senior segment margins expected to remain above 20% but decrease from recent mid- to high 20% levels.
* Healthcare Services revenue is projected to grow around 20%, with adjusted EBITDA for the segment anticipated to exceed $50 million.
* The company expects “positive operating cash flow in 2026,” and operating cash flow positivity is anticipated on an annual basis for the foreseeable future.
* Management indicated Q1 2026 will see a consolidated adjusted EBITDA loss of around ($25 million) to ($30 million) due to SEP dynamics and AEP hiring.

FINANCIAL RESULTS

* Consolidated revenue for fiscal 2025 was $1.53 billion, up 15.5% year-over-year. Full year adjusted EBITDA reached $126 million, an 8% increase.
* Senior segment revenue totaled $600 million, with adjusted EBITDA at $162 million. The agent force was approximately 26% smaller, but agent productivity and EBITDA margins improved.
* Healthcare Services revenue was $743 million, with adjusted EBITDA of $25 million for the year. In Q4, the segment produced $12 million in adjusted EBITDA at a 5.5% margin.
* The Life division posted $173 million in revenue, growing 10% for the year, and adjusted EBITDA of $27 million with a 15% margin.
* LTV for full year 2025 was $884 per policy (3% lower than 2024); Q4 LTV was $837.

Q&A

* Benjamin Hendrix, RBC Capital Markets: Asked about margin progression in Healthcare Services as SelectRx scales. Robert Clay Grant responded that “as we get larger... 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 very confident that we can get the margins to what we've shared and have a meaningful kind of path ahead of us.” Clement added that ramping membership, especially in Kansas, should drive margin enhancements and expects over $50 million in EBITDA from the segment in 2026.
* Hendrix followed up on EBITDA contribution as a driver for the securitization program. Clement replied there is no specific threshold, but “we'll be generating meaningful unlevered operating cash flow... for fiscal 2026.”
* George Frederick Sutton, Craig-Hallum: Noted the shift from a focus on SelectRx membership growth to EBITDA growth and asked about AI’s impact on agent efficiency. Danker expected “an elevated level of planned disruption again this year” in AEP and described AI as a key efficiency driver, with “25% reductions in enrollment time for our agents.” Grant explained increased AI use in both agent process and healthcare services, emphasizing efficiency gains.
* Sutton also asked about the Select Patient initiative. Grant said material EBITDA contribution is not expected in 2026, but sees it as “a huge path to our future.”
* Patrick Joseph McCann, NOBLE Capital Markets: Asked for examples of recent AI enhancements and capital allocation priorities. Danker and Grant described AI’s role in recruitment, QA, and retention, while emphasizing the current focus on balance sheet improvement and cash flow.

SENTIMENT ANALYSIS

* Analysts pressed for details on margin improvement, technology investment, and capital structure, showing a neutral to slightly positive tone, with questions indicating constructive skepticism about execution and scalability.
* Management maintained a confident tone, repeatedly affirming the scalability of the model and expressing optimism about cash flow and margin expansion. Danker stated, “We are very confident that we can get the margins to what we've shared.”
* Compared to the previous quarter, analyst tone was more focused on operational efficiency and margin sustainability. Management’s confidence increased, with greater emphasis on SelectRx’s role in driving cash flow and technology’s impact on efficiency.

QUARTER-OVER-QUARTER COMPARISON

* Fiscal 2026 guidance marks a notable shift from the prior quarter, with an explicit focus on cash flow generation and a slightly moderated outlook for Senior segment policy volumes.
* The previous quarter focused on refining SelectRx’s growth and margin profile, while the current quarter emphasizes EBITDA growth, margin improvement, and technology’s role in efficiency.
* Analyst questions shifted from concerns about market turbulence and regulatory changes to scalability, AI, and capital allocation.
* Key metrics—agent productivity, EBITDA margin, and revenue to CAC ratio—continued to improve, with management projecting ongoing gains.
* Management’s sentiment shifted from cautious optimism to strong confidence, while analysts remained inquisitive but acknowledged strategic progress.

RISKS AND CONCERNS

* Management highlighted the dynamic Medicare Advantage market, anticipating “further benefits pullbacks, plan terminations” in the upcoming AEP season.
* The company faces the challenge of balancing growth and sustainable cash flow as SelectRx scales.
* Margin pressure may result from the expanding lower-margin Healthcare Services segment, but management expects this to be offset by increased cash flow.
* Analysts raised questions about the pace of SelectRx growth, AI adoption, and the timing of incremental profitability from new initiatives such as Select Patient.

FINAL TAKEAWAY

SelectQuote management remains focused on scaling its Healthcare Services business, particularly SelectRx, to drive revenue and cash flow growth in fiscal 2026. With a targeted revenue range of $1.65 billion to $1.75 billion and over $50 million in anticipated Healthcare Services EBITDA, the company is prioritizing operational efficiency and technology investment. Management expects positive operating cash flow and views AI and automation as key levers for continued margin improvements, while maintaining optionality in capital allocation and seeking to further optimize its balance sheet.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/slqt/earnings/transcripts]

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