Second Quarter of Fiscal Year 2023 – Consolidated Earnings Highlights

Revenue of $319.2 million
Net income of $22.5 million
Adjusted EBITDA* of $63.6 million

Updating Fiscal Year 2023 Guidance Ranges:

Revenue now expected in a range of $910 million to $960 million
Net loss now expected in a range of $94 million to $78 million
Adjusted EBITDA* now expected in a range of $5 million to $25 million

Second Quarter of Fiscal Year 2023 – Segment Highlights

Senior

Revenue of $223.8 million
Adjusted EBITDA* of $83.6 million
Approved Medicare Advantage policies of 218,837

Healthcare Services

Revenue of $55.5 million
Adjusted EBITDA* of $(9.3) million
Over 39,000 SelectRx members

Life

Revenue of $34.0 million
Adjusted EBITDA* of $5.8 million

Auto & Home

Revenue of $7.8 million
Adjusted EBITDA* of $2.3 million

SelectQuote, Inc. (NYSE:SLQT) reported consolidated revenue for the second quarter of fiscal year 2023 of $319.2 million compared to consolidated revenue for the second quarter of fiscal year 2022 of $194.2 million. Consolidated net income for the second quarter of fiscal year 2023 was $22.5 million compared to consolidated net loss for the second quarter of fiscal year 2022 of $137.6 million. Finally, consolidated Adjusted EBITDA* for the second quarter of fiscal year 2023 was $63.6 million compared to consolidated Adjusted EBITDA* for the second quarter of fiscal year 2022 of $(164.0) million.

Chief Executive Officer Tim Danker remarked, "SelectQuote delivered outstanding results for the fiscal second quarter across the entire organization. We are proud of the team's execution and the continued validation of our strategic redesign to prioritize profitability and cash efficiency. This is the fourth consecutive quarter of improving results, and best of all, we believe our strategy and right-sized platform is built for continued improvement in a range of market environments."

Mr. Danker continued, "The annual enrollment period was strong across the industry with improved policy features and customer engagement. What pleases us most though is that the out performance in our Senior business was driven predominately by our own strategic decisions and the resulting cost efficiency and operating leverage."

"SelectQuote is a stronger company compared to a year ago, and given the strong results to date in fiscal 2023, we raised the low end of the guided ranges introduced with our pre-announcement in January. From our original guidance given with the year-end call in August of last year, our Adjusted EBITDA range has now increased $20 million at the mid-point. With a cash balance of $96 million as of January 31st and zero drawn on our revolving credit line, SelectQuote is very well positioned to drive continued improvement in fiscal 2023 and beyond."

Segment Results

We currently report on four segments: 1) Senior, 2) Healthcare Services, 3) Life, and 4) Auto & Home. The performance measures of the segments include total revenue and Adjusted EBITDA.* Costs of revenue, cost of goods sold-pharmacy revenue, marketing and advertising, selling, general, and administrative, and technical development operating expenses that are directly attributable to a segment are reported within the applicable segment. Indirect costs of revenue, marketing and advertising, selling, general, and administrative, and technical development operating 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, cost of goods sold, marketing and advertising, technical development, and selling, 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; and non-recurring expenses such as severance payments and transaction costs. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by revenue.

Senior

Financial Results

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

	Three Months Ended December 31,								Six Months Ended December 31,
(in thousands)	2022			2021			% Change		2022			2021			% Change
Revenue	$	223,826		$	147,694		52	%	$	301,340		$	248,299		21	%
Adjusted EBITDA*		83,617			(140,220	)	160	%		79,766			(169,261	)	147	%
Adjusted EBITDA Margin*		37	%		(95	) %				26	%		(68	) %

Operating Metrics

Submitted Policies

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

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

	Three Months Ended December 31,				Six Months Ended December 31,
	2022	2021	% Change		2022	2021	% Change
Medicare Advantage	251,847	340,317	(26	) %	341,875	436,106	(22	) %
Medicare Supplement	1,565	3,117	(50	) %	2,230	4,929	(55	) %
Dental, Vision and Hearing	22,004	53,432	(59	) %	38,338	82,036	(53	) %
Prescription Drug Plan	1,302	4,241	(69	) %	1,666	5,114	(67	) %
Other	1,512	2,967	(49	) %	3,538	6,529	(46	) %
Total	278,230	404,074	(31	) %	387,647	534,714	(28	) %

*See "Non-GAAP Financial Measures" below.

Approved Policies

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

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

	Three Months Ended December 31,				Six Months Ended December 31,
	2022	2021	% Change		2022	2021	% Change
Medicare Advantage	218,837	265,538	(18	) %	302,010	349,654	(14	) %
Medicare Supplement	1,127	2,097	(46	) %	1,627	3,495	(53	) %
Dental, Vision and Hearing	18,697	44,542	(58	) %	30,972	66,765	(54	) %
Prescription Drug Plan	883	3,352	(74	) %	1,273	4,220	(70	) %
Other	1,241	2,483	(50	) %	2,903	5,363	(46	) %
Total	240,785	318,012	(24	) %	338,785	429,497	(21	) %

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:

	Three Months Ended December 31,						Six Months Ended December 31,
(dollars per policy):	2022		2021		% Change		2022		2021		% Change
Medicare Advantage	$	870	$	922	(6	) %	$	845	$	936	(10	) %
Medicare Supplement		994		1,347	(26	) %		1,037		1,384	(25	) %
Dental, Vision and Hearing		116		112	4	%		97		125	(22	) %
Prescription Drug Plan		212		218	(3	) %		219		237	(8	) %
Other		115		9	1178	%		91		64	42	%

Healthcare Services

Financial Results

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

	Three Months Ended December 31,								Six Months Ended December 31,
(in thousands)	2022			2021			% Change		2022			2021			% Change
Revenue	$	55,480		$	11,077		401	%	$	98,546		$	17,060		478	%
Adjusted EBITDA*		(9,301	)		(8,415	)	(11	) %		(21,089	)		(12,345	)	(71	) %
Adjusted EBITDA Margin*		(17	) %		(76	) %				(21	) %		(72	) %

*See "Non-GAAP Financial Measures" below.

Operating Metrics

Members

The total number of SelectRx members represents the amount of active customers to which an order has been shipped, as this is the primary key driver of revenue for Healthcare Services.

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

	December 31, 2022	December 31, 2021
Total SelectRx Members	39,308	7,700

Combined Senior and Healthcare Services - Consumer Per Unit Economics

The opportunity to leverage our existing database and distribution model to improve access to healthcare services for our consumers has created a need for us to review our key metrics related to our per unit economics. As we think about the revenue and expenses for Healthcare Services, we note that they are derived from the marketing acquisition costs associated with the sale of an MA or MS policy, some of which costs are allocated directly to Healthcare Services, and therefore determined that our per unit economics measure should include components from both Senior and Healthcare Services. See details of revenue and expense items included in the calculation below.

Combined Senior and Healthcare Services consumer per unit economics represents total MA and MS commissions; other product commissions; other revenues, including revenues from Healthcare Services; and operating expenses associated with Senior and Healthcare Services, each shown per number of approved MA and MS 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 MA and MS commission per MA/MS policy represents the LTV for policies sold in the period. Other commission per MA/MS policy represents the LTV for other products sold in the period, including DVH prescription drug plan, and other products, which management views as additional commission revenue on our agents' core function of MA/MS policy sales. Pharmacy revenue per MA/MS policy represents revenue from SelectRx and other revenue per MA/MS policy represents revenue from Population Health, production bonuses, marketing development funds, lead generation revenue, and adjustments from the Company's reassessment of its cohorts' transaction prices. Total operating expenses per MA/MS policy represents all of the operating expenses within Senior and Healthcare Services. 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. These costs are included in marketing and advertising expense within the total operating expenses per MA/MS policy.

The following table shows combined Senior and Healthcare Services consumer per unit economics for the periods presented. Based on the seasonality of Senior 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.

	Twelve Months Ended December 31,
(dollars per approved policy):	2022			2021
Medicare Advantage and Medicare Supplement approved policies		617,687			574,682
Medicare Advantage and Medicare Supplement commission per MA/MS policy	$	880		$	1,067
Other commission per MA/MS policy		19			33
Pharmacy revenue per MA/MS policy		225			26
Other revenue per MA/MS policy		62			(73	)
Total revenue per MA/MS policy		1,186			1,053
Total operating expenses per MA/MS policy		(1,111	)		(1,195	)
Adjusted EBITDA per MA/MS policy ⁽¹⁾	$	75		$	(142	)
Adjusted EBITDA Margin per MA/MS policy⁽¹⁾		6	%		(13	) %
Revenue/CAC multiple	3.0X			1.8X

(1) These financial measures are not calculated in accordance with GAAP. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures" for information regarding our use of these non-GAAP financial measures and a reconciliation of such measures to their nearest comparable financial measures calculated and presented in accordance with GAAP.

Total revenue per MA/MS policy increased 13% for the twelve months ended December 31, 2022, compared to the twelve months ended December 31, 2021, due to the increase in pharmacy revenue and the downward Senior revenue adjustments from a change in estimate of MA cohort transaction prices that were made during the three months ended December 31, 2021. Total cost per policy decreased 7% for the twelve months ended December 31, 2022, compared to the twelve months ended December 31, 2021, driven by a decrease in our marketing and advertising costs, partially offset by an increase in cost of goods sold-pharmacy revenue for Healthcare Services due to the growth of the business.

Life

Financial Results

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

	Three Months Ended December 31,								Six Months Ended December 31,
(in thousands)	2022			2021			% Change		2022			2021			% Change
Revenue	$	33,995		$	32,036		6	%	$	70,830		$	78,019		(9	) %
Adjusted EBITDA*		5,843			1,106		428	%		11,068			1,961		464	%
Adjusted EBITDA Margin*		17	%		3	%				16	%		3	%

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. 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 "Non-GAAP Financial Measures" below.

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

	Three Months Ended December 31,						Six Months Ended December 31,
(in thousands)	2022		2021		% Change		2022		2021		% Change
Term Premiums	$	15,824	$	15,548	2	%	$	30,922	$	31,057	—	%
Final Expense Premiums		17,093		21,134	(19	) %		39,457		55,186	(29	) %
Total	$	32,917	$	36,682	(10	) %		70,379		86,243	(18	) %

Auto & Home

Financial Results

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

	Three Months Ended December 31,								Six Months Ended December 31,
(in thousands)	2022			2021			% Change		2022			2021			% Change
Revenue	$	7,808		$	6,135		27	%	$	14,890		$	13,604		9	%
Adjusted EBITDA*		2,284			1,435		59	%		4,725			2,808		68	%
Adjusted EBITDA Margin*		29	%		23	%				32	%		21	%

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:

	Three Months Ended December 31,						Six Months Ended December 31,
(in thousands):	2022		2021		% Change		2022		2021		% Change
Premiums	$	12,080	$	10,585	14	%	$	23,628	$	23,843	(1	) %

*See "Non-GAAP Financial Measures" below.

Earnings Conference Call

SelectQuote, Inc. will host a conference call with the investment community today, Tuesday, February 7, 2023, beginning at 8:30 a.m. ET. To register for this conference call, please use this link: https://www.netroadshow.com/events/login?show=dbc951d9&confId=46446. 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 at least 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 net income (loss) before interest expense, income tax expense (benefit), 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 (loss). We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. The most directly comparable GAAP measure is net income margin. We monitor and have presented in this release Adjusted EBITDA and Adjusted EBITDA Margin because they are key measures 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 these non-GAAP financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in the calculations of these non-GAAP financial measures. Accordingly, we believe that these financial measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects.

Reconciliations of net income (loss) to Adjusted EBITDA are presented below beginning on page 12.

Forward Looking Statements

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 and any other public health events, 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, including 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, including inflation; 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 other legal proceedings or inquiries; our existing and future indebtedness; our ability to maintain compliance with our debt covenants; 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") and subsequent periodic reports 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 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 and routes high-quality leads.

With an ecosystem offering high touchpoints for consumers across Insurance, Medicare, Pharmacy, and Value-Based Care, the company now has four core business lines: SelectQuote Senior, SelectQuote Healthcare Services, SelectQuote Life, and SelectQuote Auto and Home. SelectQuote Senior serves the needs of a demographic that sees around 10,000 people turn 65 each day with a range of Medicare Advantage and Medicare Supplement plans. SelectQuote Healthcare Services is comprised of the SelectRx Pharmacy, a specialized medication management pharmacy, and Population Health which proactively connects its members with best-in-class healthcare services that fit each member's unique healthcare needs. The platform improves health outcomes and lowers healthcare costs through proactive engagement and access to high-value healthcare solutions.


SELECTQUOTE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands)


	December 31, 2022			June 30, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	36,097		$	140,997
Accounts receivable, net of allowances of $1.8 million and $0.6 million, respectively		134,912			129,748
Commissions receivable-current		219,990			116,277
Other current assets		13,384			15,751
Total current assets		404,383			402,773
COMMISSIONS RECEIVABLE—Net		733,337			722,349
PROPERTY AND EQUIPMENT—Net		34,786			41,804
SOFTWARE—Net		16,099			16,301
OPERATING LEASE RIGHT-OF-USE ASSETS		27,285			28,016
INTANGIBLE ASSETS—Net		28,411			31,255
GOODWILL		29,136			29,136
OTHER ASSETS		24,476			18,418
TOTAL ASSETS	$	1,297,913		$	1,290,052

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	27,356		$	24,766
Accrued expenses		21,859			26,002
Accrued compensation and benefits		46,065			42,150
Operating lease liabilities—current		6,349			5,261
Current portion of long-term debt		21,400			7,169
Contract liabilities		38,752			3,404
Other current liabilities		2,374			4,761
Total current liabilities		164,155			113,513
LONG-TERM DEBT, NET—less current portion		670,119			698,423
DEFERRED INCOME TAXES		46,896			50,080
OPERATING LEASE LIABILITIES		31,749			33,946
OTHER LIABILITIES		3,229			2,985
Total liabilities		916,148			898,947

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
Common stock, $0.01 par value		1,665			1,644
Additional paid-in capital		561,435			554,845
Accumulated deficit		(197,070	)		(177,100	)
Accumulated other comprehensive income		15,735			11,716
Total shareholders' equity		381,765			391,105
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,297,913		$	1,290,052


SELECTQUOTE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (In thousands)


	Three Months Ended December 31,						Six Months Ended December 31,
	2022			2021			2022			2021
REVENUE:
Commission	$	230,033		$	139,957		$	336,368		$	270,764
Pharmacy		51,601			8,770			92,694			13,237
Other		37,554			45,510			52,610			66,315
Total revenue		319,188			194,237			481,672			350,316

OPERATING COSTS AND EXPENSES:
Cost of revenue		91,477			136,189			156,641			222,980
Cost of goods sold—pharmacy revenue		50,096			10,172			92,450			15,043
Marketing and advertising		89,925			193,246			147,519			283,923
Selling, general, and administrative		28,412			21,894			59,118			45,789
Technical development		6,245			6,386			12,427			12,239
Total operating costs and expenses		266,155			367,887			468,155			579,974

INCOME (LOSS) FROM OPERATIONS		53,033			(173,650	)		13,517			(229,658	)

INTEREST EXPENSE, NET		(21,044	)		(10,587	)		(37,780	)		(19,122	)
OTHER INCOME (EXPENSE), NET		(70	)		(51	)		88			(153	)
INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT)		31,919			(184,288	)		(24,175	)		(248,933	)
INCOME TAX EXPENSE (BENEFIT)		9,405			(46,725	)		(4,205	)		(63,138	)

NET INCOME (LOSS)	$	22,514		$	(137,563	)	$	(19,970	)	$	(185,795	)

NET INCOME (LOSS) PER SHARE:
Basic	$	0.14		$	(0.84	)	$	(0.12	)	$	(1.13	)
Diluted	$	0.14		$	(0.84	)	$	(0.12	)	$	(1.13	)

WEIGHTED-AVERAGE COMMON STOCK OUTSTANDING USED IN PER SHARE AMOUNTS:
Basic		166,486			163,966			165,655			163,829
Diluted		166,548			163,966			165,655			163,829

OTHER COMPREHENSIVE INCOME (LOSS) NET OF TAX:
Gain (loss) on cash flow hedge		(381	)		1,775			4,019			1,769
OTHER COMPREHENSIVE INCOME (LOSS)		(381	)		1,775			4,019			1,769
COMPREHENSIVE INCOME (LOSS)	$	22,133		$	(135,788	)	$	(15,951	)	$	(184,026	)


SELECTQUOTE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)


	Six Months Ended December 31,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(19,970	)	$	(185,795	)
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities:
Depreciation and amortization		13,990			11,278
Loss on disposal of property, equipment, and software		376			355
Share-based compensation expense		5,566			4,109
Deferred income taxes		(4,572	)		(63,498	)
Amortization of debt issuance costs and debt discount		3,919			2,974
Write-off of debt issuance costs		710			—
Accrued interest payable in kind		4,920			—
Non-cash lease expense		2,082			2,040
Changes in operating assets and liabilities:
Accounts receivable, net		14,036			(41,237	)
Commissions receivable		(114,701	)		(39,908	)
Other assets		1,578			(5,555	)
Accounts payable and accrued expenses		950			15,135
Operating lease liabilities		(2,460	)		(2,676	)
Other liabilities		18,002			(2,963	)
Net cash used in operating activities		(75,574	)		(305,741	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(598	)		(17,904	)
Purchases of software and capitalized software development costs		(3,870	)		(5,231	)
Acquisition of business		—			(6,927	)
Investment in equity securities		—			(1,000	)
Net cash used in investing activities		(4,468	)		(31,062	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Revolving Credit Facility		—			50,000
Payments on Revolving Credit Facility		—			(50,000	)
Proceeds from Term Loans		—			242,000
Payments on Term Loans		(13,375	)		—
Payments on other debt		(83	)		(93	)
Proceeds from common stock options exercised and employee stock purchase plan		1,078			2,271
Payments of tax withholdings related to net share settlement of equity awards		(33	)		(144	)
Payments of debt issuance costs		(10,110	)		(328	)
Payment of acquisition holdback		(2,335	)		—
Net cash (used in) provided by financing activities		(24,858	)		243,706
NET DECREASE IN CASH AND CASH EQUIVALENTS		(104,900	)		(93,097	)
CASH AND CASH EQUIVALENTS—Beginning of period		140,997			286,454
CASH AND CASH EQUIVALENTS—End of period	$	36,097		$	193,357


SELECTQUOTE, INC. AND SUBSIDIARIES Net Income (Loss) to Adjusted EBITDA Reconciliation (Unaudited)


	Three Months Ended December 31, 2022
(in thousands)	Senior			Healthcare Services			Life			Auto & Home			Corp & Elims			Consolidated
Revenue	$	223,826		$	55,480		$	33,995		$	7,808		$	(1,921	)	$	319,188
Operating expenses		(140,209	)		(64,781	)		(28,152	)		(5,524	)		(16,877	)		(255,543	)
Other income (expense), net		—			—			—			—			(70	)		(70	)
Adjusted EBITDA		83,617			(9,301	)		5,843			2,284			(18,868	)		63,575
Share-based compensation expense																	(2,936	)
Transaction costs																	(442	)
Depreciation and amortization																	(7,188	)
Loss on disposal of property, equipment, and software																	(46	)
Interest expense, net																	(21,044	)
Income tax expense																	(9,405	)
Net income																$	22,514


	Three Months Ended December 31, 2021
(in thousands)	Senior			Healthcare Services			Life			Auto & Home			Corp & Elims			Consolidated
Revenue	$	147,694		$	11,077		$	32,036		$	6,135		$	(2,705	)	$	194,237
Operating expenses		(287,914	)		(19,492	)		(30,930	)		(4,700	)		(15,175	)		(358,211	)
Other expenses, net		—			—			—			—			(51	)		(51	)
Adjusted EBITDA		(140,220	)		(8,415	)		1,106			1,435			(17,931	)		(164,025	)
Share-based compensation expense																	(1,894	)
Non-recurring expenses																	(1,602	)
Depreciation and amortization																	(6,175	)
Loss on disposal of property, equipment, and software																	(5	)
Interest expense, net																	(10,587	)
Income tax benefit																	46,725
Net loss																$	(137,563	)


	Six Months Ended December 31, 2022
(in thousands)	Senior			Healthcare Services			Life			Auto & Home			Corp & Elims			Consolidated
Revenue	$	301,340		$	98,546		$	70,830		$	14,890		$	(3,934	)	$	481,672
Operating expenses		(221,574	)		(119,635	)		(59,963	)		(10,164	)		(34,322	)		(445,658	)
Other income (expense), net		—			—			201			(1	)		(112	)		88
Adjusted EBITDA		79,766			(21,089	)		11,068			4,725			(38,368	)		36,102
Share-based compensation expense																	(5,566	)
Transaction costs																	(2,570	)
Depreciation and amortization																	(13,990	)
Loss on disposal of property, equipment, and software																	(371	)
Interest expense, net																	(37,780	)
Income tax benefit																	4,205
Net loss																$	(19,970	)


	Six Months Ended December 31, 2021
(in thousands)	Senior			Healthcare Services			Life			Auto & Home			Corp & Elims			Consolidated
Revenue	$	248,299		$	17,060		$	78,019		$	13,604		$	(6,666	)	$	350,316
Operating expenses		(417,560	)		(29,405	)		(76,058	)		(10,796	)		(28,258	)		(562,077	)
Other expenses, net		—			—			—			—			(153	)		(153	)
Adjusted EBITDA		(169,261	)		(12,345	)		1,961			2,808			(35,077	)		(211,914	)
Share-based compensation expense																	(4,109	)
Non-recurring expenses																	(2,155	)
Depreciation and amortization																	(11,278	)
Loss on disposal of property, equipment, and software																	(355	)
Interest expense, net																	(19,122	)
Income tax benefit																	63,138
Net loss																$	(185,795	)


SELECTQUOTE, INC. AND SUBSIDIARIES Net Loss to Adjusted EBITDA Reconciliation (Unaudited)


Guidance net loss to Adjusted EBITDA reconciliation, year ending June 30, 2023:


(in thousands)	Range
Net loss	$	(94,000	)	$	(78,000	)
Income tax benefit		(27,000	)		(25,000	)
Interest expense, net		74,000			74,000
Depreciation and amortization		24,000			24,000
Share-based compensation expense		12,000			12,000
Transaction costs		16,000			18,000
Adjusted EBITDA	$	5,000		$	25,000

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SelectQuote, Inc. Reports Second Quarter of Fiscal Year 2023 Results