Business Wire | Aug 25, 2021 04:15PM EDT

SelectQuote, Inc. Reports Fourth Quarter 2021 and Fiscal Year 2021 Results

Aug. 25, 2021

OVERLAND PARK, Kan.--(BUSINESS WIRE)--Aug. 25, 2021--SelectQuote, Inc. (NYSE: SLQT), reported consolidated revenue for the fourth quarter of fiscal year 2021 of $188.4 million, which was a 33% increase year-over-year. Consolidated net income for the fourth quarter of fiscal year 2021 was $3.3 million, which was a $16.7 million decrease year-over-year. Finally, consolidated Adjusted EBITDA for the fourth quarter of fiscal year 2021 was $21.3 million, which was a 47% decrease year-over-year.

Consolidated revenue for the fiscal year ended June 30, 2021, was $937.8 million, a 76% increase over consolidated revenue for the fiscal year ended June 30, 2020, of $531.5 million. Consolidated net income for the fiscal year ended June 30, 2021, was $131.0 million, an increase of $49.9 million over consolidated net income for the fiscal year ended June 30, 2020, of $81.1 million. Finally, consolidated Adjusted EBITDA for the fiscal year ended June 30, 2021, was $228.0 million compared to consolidated Adjusted EBITDA of $154.0 million for the fiscal year ended June 30, 2020, a 48% increase.

Chief Executive Officer Tim Danker commented, "2021 was a landmark year for SelectQuote both in terms of our growth but also in the significant opportunity established through the initiation of our Population Health strategy. For the full year we grew Adjusted EBITDA by $74.0 million or nearly 50% following growth of 46% in 2020. We continue to have high conviction in our differentiated model and our ability to scale quality growth in 2022 and beyond. We believe that SelectQuote's strong connection with our end customers creates differentiated value and we expect Population Health to strengthen that bond in the years to come."

Chief Financial Officer Raffaele Sadun added, "Our Senior full-year revenues grew 101% year-over-year, which follows full-year growth of 88% in fiscal 2020. New MA approved policies also grew in excess of 100% at attractive unit economics with a Revenue to CAC of 3.0x. Our MA LTV was down 2% for the year, which includes a full-year true-up in our 4th Quarter results for additional provision due to higher than expected intra-year lapse rates. Despite some persistency pressure compared to original expectations, we expect cohort-level IRRs to remain very attractive."

*See reconciliation from non-GAAP measure, Adjusted EBITDA, to net income on pages 11-12.

Segment Results

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

Senior

Financial Results

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

(in 4Q 2021 4Q 2020 % FY 2021 FY 2020 %thousands) Change Change

Revenue $ 124,391 $ 87,865 42 % $ 728,701 $ 361,673 101 %

Adjusted 24,830 33,387 (26) % 243,777 145,738 67 %EBITDA*

AdjustedEBITDA 20 % 38 % 33 % 40 % Margin*

Operating Metrics

Submitted Policies

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

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

4Q 2021 4Q 2020 % FY 2021 FY 2020 % Change Change

Medicare Advantage 95,549 59,276 61 % 550,321 264,546 108 %

Medicare Supplement 2,498 7,702 (68) % 26,785 24,085 11 %

Dental, Vision and 30,287 17,212 76 % 132,106 70,018 89 %Hearing

Prescription Drug 1,193 2,378 (50) % 11,436 13,513 (15) %Plan

Other 3,884 2,278 71 % 16,487 5,890 180 %

Total 133,411 88,846 50 % 737,135 378,052 95 %

*See reconciliation from non-GAAP measure, Adjusted EBITDA, to net income on pages 11-12.

Approved Policies

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

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

4Q 2021 4Q 2020 % FY 2021 FY 2020 % Change Change

Medicare Advantage 83,448 54,305 54 % 467,585 225,404 107 %

Medicare Supplement 2,062 6,362 (68) % 21,911 18,102 21 %

Dental, Vision and 26,645 16,564 61 % 111,015 55,556 100 %Hearing

Prescription Drug 1,191 2,481 (52) % 10,747 13,009 (17) %Plan

Other 3,880 2,058 89 % 14,089 4,654 203 %

Total 117,226 81,770 43 % 625,347 316,725 97 %

Lifetime Value of Commissions per Approved Policy

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

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

(dollars per 4Q 2021 4Q 2020 % FY 2021 FY 2020 %policy): Change Change

Medicare Advantage $ 1,121 $ 1,256 (11) % $ 1,260 $ 1,287 (2) %

Medicare Supplement 1,323 1,382 (4) % 1,269 1,376 (8) %

Dental, Vision and 121 125 (3) % 136 140 (3) %Hearing

Prescription Drug 180 226 (20) % 224 229 (2) %Plan

Other 160 (48) (436) % 113 34 232 %

Per Unit Economics

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

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

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

Twelve Months Ended June 30,

(dollars per approved policy): 2021 2020 % Change

Medicare Advantage and Medicare Supplement 489,496 243,506 101 %approved policies

Medicare Advantage and Medicare Supplement $ 1,260 $ 1,293 (3) %commission per MA / MS policy

Other commission per MA/MS policy 39 45 (13) %

Other per MA / MS policy 190 147 29 %

Total revenue per MA / MS policy 1,489 1,485 0 %

Total operating expenses per MA / MS policy (991) (887) 12 %

Adjusted EBITDA per MA / MS policy* $ 498 $ 598 (17) %

Adjusted EBITDA Margin per MA / MS policy* 33 % 40 % (17) %

Revenue / CAC multiple 3.0X 3.5X

Life

Financial Results

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

(in 4Q 2021 4Q 2020 % FY 2021 FY 2020 %thousands) Change Change

Revenue $ 59,905 $ 42,423 41 % $ 185,503 $ 129,967 43 %

Adjusted 10,310 12,258 (16) % 30,376 27,812 9 %EBITDA*

AdjustedEBITDA 17 % 29 % 16 % 21 % Margin*

Operating Metrics

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

*See reconciliation from non-GAAP measure, Adjusted EBITDA, to net income on pages 11-12.

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

(in thousands) 4Q 2021 4Q 2020 % FY 2021 FY 2020 % Change Change

Core Premiums $ 19,983 $ 18,965 5 % $ 76,251 $ 75,451 1 %

Final Expense 33,700 18,860 79 % 88,294 34,839 153 %Premiums

Ancillary 976 732 33 % 3,166 2,507 26 %Premiums

Auto & Home

Financial Results

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

(in thousands) 4Q 2021 4Q 2020 % FY 2021 FY 2020 % Change Change

Revenue $ 7,161 $ 12,127 (41) % $ 30,913 $ 41,189 (25) %

Adjusted EBITDA* 1,316 3,104 (58) % 8,178 8,699 (6) %

Adjusted EBITDA 18 % 26 % 26 % 21 % Margin*

Operating Metrics

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

The following table shows premiums for the periods presented:

(in 4Q 2021 4Q 2020 % FY 2021 FY 2020 %thousands): Change Change

Premiums $ 13,431 $ 21,162 (37) % $ 55,596 $ 70,087 (21) %

*See reconciliation from non-GAAP measure, Adjusted EBITDA, to net income on pages 11-12.

Earnings Conference Call

SelectQuote, Inc. will host a conference call with the investment community today, Wednesday, August 25, 2021, beginning at 5 p.m. ET. To register for this conference call, please use this link: http://www.directeventreg.com/registration/event/8844709. After registering, a confirmation will be sent via email, including dial in details and unique conference call codes for entry. Registration is open through the live call, but to ensure you are connected for the full call we suggest registering a day in advance or at minimum 10 minutes before the start of the call. The event will also be webcasted live via our investor relations website https://ir.selectquote.com/investor-home/default.aspx.

Non-GAAP Financial Measures

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

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

Forward Looking Statement

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

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

About SelectQuote:

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

SELECTQUOTE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

June 30,

2021 2020

ASSETS

CURRENT ASSETS:

Cash and cash equivalents $ 286,454 $ 321,065

Restricted cash - 47,805

Accounts receivable 113,375 83,634

Commissions receivable-current 89,120 51,209

Other current assets 4,486 10,121

Total current assets 493,435 513,834

COMMISSIONS RECEIVABLE-Net 756,777 461,752

PROPERTY AND EQUIPMENT-Net 29,510 22,150

SOFTWARE-Net 12,611 8,399

OPERATING LEASE RIGHT-OF-USE ASSETS 31,414 -

INTANGIBLE ASSETS-Net 40,670 19,673

GOODWILL 68,019 46,577

OTHER ASSETS 1,436 1,408

TOTAL ASSETS $ 1,433,872 $ 1,073,793



LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable $ 34,079 $ 22,891

Accrued expenses 20,676 14,936

Accrued compensation and benefits 40,909 22,228

Earnout liability - 30,812

Operating lease liabilities-current 5,289 -

Other current liabilities 7,864 4,944

Total current liabilities 108,817 95,811

DEBT 459,043 311,814

DEFERRED INCOME TAXES 140,988 105,844

OPERATING LEASE LIABILITIES 38,392 -

OTHER LIABILITIES 11,743 14,635

Total liabilities 758,983 528,104



COMMITMENTS AND CONTINGENCIES



SHAREHOLDERS' EQUITY:

Common stock, $.01 par value 1,635 1,622

Additional paid-in capital 544,771 548,113

Retained earnings (accumulated deficit) 128,254 (2,792)

Accumulated other comprehensive income (loss) 229 (1,254)

Total shareholders' equity 674,889 545,689

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,433,872 $ 1,073,793

SELECTQUOTE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

Three Months Ended June 30,

Year Ended June 30,

2021

2020

2021

2020

REVENUE:

Commission

$

162,294

$

122,679

$

826,606

$

476,606

Production bonus and other

26,155

18,768

111,209

54,909

Total revenue

188,449

141,447

937,815

531,515

OPERATING COSTS AND EXPENSES:

Cost of revenue

64,110

40,911

270,715

167,399

Marketing and advertising

86,595

51,911

385,291

184,157

General and administrative

18,618

9,504

63,114

35,283

Technical development

5,165

3,259

18,623

12,347

Total operating costs and expenses

174,488

105,585

737,743

399,186

INCOME FROM OPERATIONS

13,961

35,862

200,072

132,329

INTEREST EXPENSE, NET

(8,422)

(8,356)

(29,320)

(24,595)

LOSS ON EXTINGUISHMENT OF DEBT

-

(1,166)

(3,315)

(1,166)

OTHER EXPENSES, NET

(43)

(385)

(1,588)

(405)

INCOME BEFORE INCOME TAX EXPENSE

5,496

25,955

165,849

106,163

INCOME TAX EXPENSE

2,184

5,906

34,803

25,016

NET INCOME

$

3,312

$

20,049

$

131,046

$

81,147

NET INCOME (LOSS) PER SHARE:

Basic

$

0.02

$

0.15

$

0.80

$

(0.16)

Diluted

$

0.02

$

0.13

$

0.79

$

(0.16)

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

Basic

163,441

120,018

162,889

97,496

Diluted

165,689

152,404

165,544

97,496

OTHER COMPREHENSIVE (LOSS) INCOME NET OF TAX:

(Loss) gain on cash flow hedge

(186)

(1,254)

1,483

(1,254)

OTHER COMPREHENSIVE (LOSS) INCOME

(186)

(1,254)

1,483

(1,254)

COMPREHENSIVE INCOME

$

3,126

$

18,795

$

132,529

$

79,893

SELECTQUOTE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

Three Months Ended June Year Ended June 30, 30,

2021 2020 2021 2020

REVENUE:

Commission $ 162,294 $ 122,679 $ 826,606 $ 476,606

Production bonus and 26,155 18,768 111,209 54,909 other

Total revenue 188,449 141,447 937,815 531,515



OPERATING COSTS AND EXPENSES:

Cost of revenue 64,110 40,911 270,715 167,399

Marketing and advertising 86,595 51,911 385,291 184,157

General and 18,618 9,504 63,114 35,283 administrative

Technical development 5,165 3,259 18,623 12,347

Total operating costs and 174,488 105,585 737,743 399,186 expenses



INCOME FROM OPERATIONS 13,961 35,862 200,072 132,329



INTEREST EXPENSE, NET (8,422) (8,356) (29,320) (24,595)

LOSS ON EXTINGUISHMENT OF - (1,166) (3,315) (1,166) DEBT

OTHER EXPENSES, NET (43) (385) (1,588) (405)

INCOME BEFORE INCOME TAX 5,496 25,955 165,849 106,163 EXPENSE

INCOME TAX EXPENSE 2,184 5,906 34,803 25,016



NET INCOME $ 3,312 $ 20,049 $ 131,046 $ 81,147



NET INCOME (LOSS) PER SHARE:

Basic $ 0.02 $ 0.15 $ 0.80 $ (0.16)

Diluted $ 0.02 $ 0.13 $ 0.79 $ (0.16)



WEIGHTED-AVERAGE COMMONSTOCK OUTSTANDING USED IN PER SHARE AMOUNTS:

Basic 163,441 120,018 162,889 97,496

Diluted 165,689 152,404 165,544 97,496



OTHER COMPREHENSIVE (LOSS) INCOME NET OF TAX:

(Loss) gain on cash flow (186) (1,254) 1,483 (1,254) hedge

OTHER COMPREHENSIVE (186) (1,254) 1,483 (1,254) (LOSS) INCOME

COMPREHENSIVE INCOME $ 3,126 $ 18,795 $ 132,529 $ 79,893

SELECTQUOTE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

Three Months Ended June 30,

Year Ended June 30,

2021

2020

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

3,312

$

20,049

$

131,046

$

81,147

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

Depreciation and amortization

4,883

2,720

16,142

7,993

Loss on disposal of property, equipment, and software

425

125

686

360

Share-based compensation expense

1,476

216

5,165

9,498

Deferred income taxes

2,180

5,889

34,654

25,007

Amortization of debt issuance costs and debt discount

862

835

3,344

2,266

Write-off of debt issuance costs

-

237

2,570

237

Fair value adjustments to contingent earnout obligations

-

375

1,488

375

Non-cash lease expense

953

-

3,823

-

Changes in operating assets and liabilities:

Accounts receivable

25,077

1,472

(27,827)

(15,585)

Commissions receivable

(81,747)

(54,910)

(332,936)

(197,364)

Other assets

500

(4,772)

4,848

(3,352)

Accounts payable and accrued expenses

(6,495)

2,776

19,728

15,672

Operating lease liabilities

(1,151)

-

(3,782)

-

Other liabilities

(4,768)

5,243

25,609

11,970

Net cash used in operating activities

(54,493)

(19,745)

(115,442)

(61,776)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(8,387)

(3,260)

(14,907)

(9,446)

Proceeds from sales of property and equipment

-

-

-

3

Purchases of software and capitalized software development costs

(2,275)

(1,663)

(8,081)

(6,106)

Acquisition of business

(17,150)

(35,821)

(41,028)

(35,821)

Net cash used in investing activities

(27,812)

(40,744)

(64,016)

(51,370)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from revolving line of credit

-

2,014

-

87,989

Payments on revolving line of credit

-

(2,014)

-

(99,021)

Net proceeds from Term Loans

-

-

228,753

416,500

Payments on Term Loans

-

(100,000)

(84,118)

(100,000)

Proceeds from other debt

-

4,450

-

16,575

Payments on other debt

(62)

(29,015)

(251)

(31,447)

Proceeds from common stock options exercised and employee stock purchase plan

109

141

1,887

5,506

Cash dividends paid

-

-

-

(275,000)

Issuance of preferred stock

-

135,000

-

135,000

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

(336)

-

(10,362)

-

Payments of debt issuance costs

-

(160)

(885)

(7,854)

Payments of costs incurred in connection with private placement

-

(3,784)

(1,771)

(3,784)

Payments of costs incurred in connection with initial public offering

-

(1,100)

(3,911)

(3,218)

Proceeds from initial public offering, net of underwriters' discounts and commissions

-

340,200

-

340,200

Payment of contingent earnout liability

-

-

(32,300)

-

Net cash (used in) provided by financing activities

(289)

345,732

97,042

481,446

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

(82,594)

285,243

(82,416)

368,300

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH-Beginning of year

369,048

83,627

368,870

570

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH-End of year

$

286,454

$

368,870

$

286,454

$

368,870

SELECTQUOTE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

Three Months Ended Year Ended June 30, June 30,

2021 2020 2021 2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 3,312 $ 20,049 $ 131,046 $ 81,147

Adjustments to reconcilenet income to net cash,cash equivalents, and restricted cash used inoperating activities:

Depreciation and 4,883 2,720 16,142 7,993 amortization

Loss on disposal ofproperty, equipment, and 425 125 686 360 software

Share-based compensation 1,476 216 5,165 9,498 expense

Deferred income taxes 2,180 5,889 34,654 25,007

Amortization of debtissuance costs and debt 862 835 3,344 2,266 discount

Write-off of debt - 237 2,570 237 issuance costs

Fair value adjustments tocontingent earnout - 375 1,488 375 obligations

Non-cash lease expense 953 - 3,823 -

Changes in operating assets and liabilities:

Accounts receivable 25,077 1,472 (27,827) (15,585)

Commissions receivable (81,747) (54,910) (332,936) (197,364)

Other assets 500 (4,772) 4,848 (3,352)

Accounts payable and (6,495) 2,776 19,728 15,672 accrued expenses

Operating lease (1,151) - (3,782) - liabilities

Other liabilities (4,768) 5,243 25,609 11,970

Net cash used in (54,493) (19,745) (115,442) (61,776) operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and (8,387) (3,260) (14,907) (9,446) equipment

Proceeds from sales of - - - 3 property and equipment

Purchases of software andcapitalized software (2,275) (1,663) (8,081) (6,106) development costs

Acquisition of business (17,150) (35,821) (41,028) (35,821)

Net cash used in (27,812) (40,744) (64,016) (51,370) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from revolving - 2,014 - 87,989 line of credit

Payments on revolving - (2,014) - (99,021) line of credit

Net proceeds from Term - - 228,753 416,500 Loans

Payments on Term Loans - (100,000) (84,118) (100,000)

Proceeds from other debt - 4,450 - 16,575

Payments on other debt (62) (29,015) (251) (31,447)

Proceeds from commonstock options exercised 109 141 1,887 5,506 and employee stockpurchase plan

Cash dividends paid - - - (275,000)

Issuance of preferred - 135,000 - 135,000 stock

Payments of taxwithholdings related to (336) - (10,362) - net share settlement ofequity awards

Payments of debt issuance - (160) (885) (7,854) costs

Payments of costsincurred in connection - (3,784) (1,771) (3,784) with private placement

Payments of costsincurred in connection - (1,100) (3,911) (3,218) with initial publicoffering

Proceeds from initialpublic offering, net of - 340,200 - 340,200 underwriters' discountsand commissions

Payment of contingent - - (32,300) - earnout liability

Net cash (used in)provided by financing (289) 345,732 97,042 481,446 activities

NET (DECREASE) INCREASEIN CASH, CASH (82,594) 285,243 (82,416) 368,300 EQUIVALENTS, ANDRESTRICTED CASH

CASH, CASH EQUIVALENTS,AND RESTRICTED 369,048 83,627 368,870 570 CASH-Beginning of year

CASH, CASH EQUIVALENTS,AND RESTRICTED CASH-End $ 286,454 $ 368,870 $ 286,454 $ 368,870 of year

SELECTQUOTE, INC. AND SUBSIDIARIES

Adjusted EBITDA to Net Income Reconciliation

(Unaudited)

4Q 2021

(in thousands)

Senior

Life

Auto & Home

Corp & Elims

Consolidated

Revenue

$

124,391

$

59,905

$

7,161

$

(3,008)

$

188,449

Operating expenses

(99,561)

(49,595)

(5,845)

(12,128)

(167,129)

Other expenses, net

-

-

-

(43)

(43)

Adjusted EBITDA

24,830

10,310

1,316

(15,179)

21,277

Share-based compensation expense

(1,476)

Non-recurring expenses

(575)

Depreciation and amortization

(4,883)

Loss on disposal of property, equipment, and software

(425)

Interest expense, net

(8,422)

Income tax expense

(2,184)

Net income

$

3,312

SELECTQUOTE, INC. AND SUBSIDIARIES

Adjusted EBITDA to Net Income Reconciliation

(Unaudited)

4Q 2021

(in Senior Life Auto & Corp & Consolidatedthousands) Home Elims

Revenue $ 124,391 $ 59,905 $ 7,161 $ (3,008) $ 188,449

Operating (99,561) (49,595) (5,845) (12,128) (167,129) expenses

Other - - - (43) (43) expenses, net

Adjusted 24,830 10,310 1,316 (15,179) 21,277 EBITDA

Share-basedcompensation (1,476) expense

Non-recurring (575) expenses

Depreciationand (4,883) amortization

Loss ondisposal ofproperty, (425) equipment,and software

Interest (8,422) expense, net

Income tax (2,184) expense

Net income $ 3,312

4Q 2020

(in thousands)

Senior

Life

Auto & Home

Corp & Elims

Consolidated

Revenue

$

87,865

$

42,423

$

12,127

$

(968)

$

141,447

Operating expenses

(54,478)

(30,165)

(9,023)

(7,633)

(101,299)

Other expenses, net

-

-

-

(10)

(10)

Adjusted EBITDA

33,387

12,258

3,104

(8,611)

40,138

Share-based compensation expense

(216)

Non-recurring expenses

(1,053)

Depreciation and amortization

(2,720)

Loss on disposal of property, equipment, and software

(125)

Contingent consideration

(375)

Restructuring expenses

(172)

Interest expense, net

(8,356)

Loss on extinguishment of debt

(1,166)

Income tax expense

(5,906)

Net income

$

20,049

4Q 2020

(in thousands) Senior Life Auto & Corp & Consolidated Home Elims

Revenue $ 87,865 $ 42,423 $ 12,127 $ (968) $ 141,447

Operating (54,478) (30,165) (9,023) (7,633) (101,299) expenses

Other expenses, - - - (10) (10) net

Adjusted EBITDA 33,387 12,258 3,104 (8,611) 40,138

Share-basedcompensation (216) expense

Non-recurring (1,053) expenses

Depreciationand (2,720) amortization

Loss ondisposal ofproperty, (125) equipment, andsoftware

Contingent (375) consideration

Restructuring (172) expenses

Interest (8,356) expense, net

Loss onextinguishment (1,166) of debt

Income tax (5,906) expense

Net income $ 20,049

SELECTQUOTE, INC. AND SUBSIDIARIES

Adjusted EBITDA to Net Income Reconciliation

(Unaudited)

FY 2021

(in thousands)

Senior

Life

Auto & Home

Corp & Elims

Consolidated

Revenue

$

728,701

$

185,503

$

30,913

$

(7,302)

$

937,815

Operating expenses

(484,924)

(155,127)

(22,735)

(46,899)

(709,685)

Other expenses, net

-

-

-

(100)

(100)

Adjusted EBITDA

243,777

30,376

8,178

(54,301)

228,030

Share-based compensation expense

(5,165)

Non-recurring expenses

(6,065)

Fair value adjustments to contingent earnout obligations

(1,488)

Depreciation and amortization

(16,142)

Loss on disposal of property, equipment, and software

(686)

Interest expense, net

(29,320)

Loss on extinguishment of debt

(3,315)

Income tax expense

(34,803)

Net income

$

131,046

SELECTQUOTE, INC. AND SUBSIDIARIES

Adjusted EBITDA to Net Income Reconciliation

(Unaudited)

FY 2021

(in thousands) Senior Life Auto & Corp & Consolidated Home Elims

Revenue $ 728,701 $ 185,503 $ 30,913 $ (7,302) $ 937,815

Operating (484,924) (155,127) (22,735) (46,899) (709,685) expenses

Other - - - (100) (100) expenses, net

Adjusted 243,777 30,376 8,178 (54,301) 228,030 EBITDA

Share-basedcompensation (5,165) expense

Non-recurring (6,065) expenses

Fair valueadjustments tocontingent (1,488) earnoutobligations

Depreciationand (16,142) amortization

Loss ondisposal ofproperty, (686) equipment, andsoftware

Interest (29,320) expense, net

Loss onextinguishment (3,315) of debt

Income tax (34,803) expense

Net income $ 131,046

FY 2020

(in thousands)

Senior

Life

Auto & Home

Corp & Elims

Consolidated

Revenue

$

361,673

$

129,967

$

41,189

$

(1,314)

$

531,515

Operating expenses

(215,935)

(102,155)

(32,490)

(26,881)

(1)

(377,461)

Other expenses, net

-

-

-

(30)

(30)

Adjusted EBITDA

$

145,738

$

27,812

$

8,699

$

(28,225)

154,024

Share-based compensation expense

(9,498)

Non-recurring expenses

(3,721)

Depreciation and amortization

(7,993)

Loss on disposal of property, equipment, and software

(360)

Fair value adjustments to contingent earnout obligations

(375)

Restructuring expenses

(153)

Interest expense, net

(24,595)

Loss on extinguishment of debt

(1,166)

Income tax expense

(25,016)

Net income

$

81,147

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