SELECTQUOTE 2026 Q2
Earnings Overview & AI Insights

Earnings Performance

Summary of Financial Performance: SelectQuote delivered fiscal 2026 revenue of $1.62 billion, up 6% year over year, and adjusted EBITDA of $109 million, above guidance of $90 million to $100 million. Fourth-quarter revenue was $322 million versus $345 million last year, while adjusted EBITDA improved to $12 million from $3 million. Operating cash flow improved by $44 million year over year. Senior revenue fell 4% to $576 million, but maintained a 26% adjusted EBITDA margin. Healthcare Services revenue rose 14% to $845 million and generated $25 million of adjusted EBITDA, with a fourth-quarter exit EBITDA run rate near $50 million. Life Insurance revenue increased 8% to $186 million, with $27 million of adjusted EBITDA.

Company Outlook & Strategy: Management said the company’s top priority is profitable cash flow and leverage reduction, not top-line growth alone. For fiscal 2027, SelectQuote plans to be prudent on Medicare Advantage growth investment and focus on profitability and cash generation. The company guided 2027 consolidated revenue to $1.35 billion–$1.45 billion, adjusted EBITDA to $90 million–$115 million, operating cash flow to $60 million+ and free cash flow around $50 million. Management expects Healthcare Services to become an even larger profit contributor, with margins roughly doubling in 2027, while Senior margins should remain above 20%.

Key Industry Trends: Medicare Advantage remains highly dynamic, with carriers adjusting benefits and marketing strategies, creating volatility in policy volumes. Management expects 2027 to be another transition year for MA carriers, with “green shoots” of recovery but continued uncertainty around AEP. In Healthcare Services, the Inflation Reduction Act is creating revenue headwinds, particularly in the first half of fiscal 2027, though management said it does not materially hurt EBITDA. Broader healthcare providers are under pressure to improve efficiency, which SelectQuote believes its technology and pharmacy platform can address.

Operational Highlights: SelectQuote identified more than $30 million of annualized run-rate expense improvements for fiscal 2027, driven by AI-enabled tools, workflow automation, process improvements, organizational rightsizing, and cost control. The company expanded use of AI for enrollment support, sales assist, and quality assurance. It also launched and began leveraging a custom pharmacy management system and its new Olathe, Kansas facility, which is already delivering about 30% shipment efficiency gains versus legacy locations. Healthcare Services membership ended Q4 at 109,000, with management prioritizing higher-quality, better-economics members.

Challenges & Risks: Medicare Advantage volatility remains a key risk, including carrier strategy changes and reduced approved policies expected to decline 10% to 15% in 2027. Healthcare Services faces revenue pressure from the IRA and prior PBM reimbursement renegotiation impacts. Management also noted competition and customer acquisition cost pressure in the life insurance business. In addition, the company expects first-quarter EBITDA moderation due to seasonal investments for AEP/OEP.

Key Analyst Questions & Responses: Management emphasized that 2027 guidance reflects intentional discipline rather than demand weakness, especially in Senior. On Healthcare Services, they said membership may moderate early in the year but should end 2027 roughly in line with 2026, supported by strong demand and better unit economics. They also underscored that the Kansas facility and pharmacy system should continue driving efficiency and margin expansion. On capital allocation and valuation, management stressed that the equity is undervalued relative to the platform’s cash flow potential and that increasing cash generation is the best path to shareholder returns.