SelectQuote (NYSE:SLQT) narrowed its adjusted EBITDA loss in the first quarter of fiscal 2027 despite a 15% decline in revenue, as the insurance distributor emphasized cost controls and profitability ahead of the Medicare Advantage enrollment season.
Revenue fell to $280 million from $329 million a year earlier. The company reported an adjusted earnings before interest, taxes, depreciation and amortization loss of $17 million, an improvement of more than $15 million from the prior-year quarter. Management said the first quarter is typically a seasonal low as SelectQuote prepares for Medicare enrollment periods.
Chief Financial Officer Ryan Clement said the company’s decision to operate with a smaller Senior agent force accounted for approximately 15% of the year-over-year revenue decline. Most of the remainder came from Healthcare Services, principally because of the Inflation Reduction Act’s effect on drug pricing, he said.
SelectQuote maintained its fiscal 2027 target of at least $60 million in operating cash flow. Clement cautioned that the fiscal second quarter is historically the company’s peak investment period, before cash flow rises in the second half.
Early Medicare Enrollment Results
Chief Executive Officer Tim Danker said early results in the Medicare Advantage Annual Enrollment Period were encouraging, with customer engagement elevated amid plan terminations and benefit changes. The company has prioritized retaining affected policyholders while hiring fewer new agents than in prior years.
Danker said experienced agents historically have been about twice as productive as new agents. The company’s agents have already spoken with more than half of its beneficiaries facing plan terminations this season, he said.
In response to a question from Jefferies analyst David Windley, Danker said SelectQuote was aiming to improve on last year’s 30% recapture rate. He did not provide a current-season rate, saying it was still early.
RBC Capital Markets analyst Michael Murray asked whether SelectQuote still expected approved Medicare Advantage policies to decline 10% to 15% this year. Danker did not give a revised forecast, but said strong agent productivity and technology investments could potentially temper the previously anticipated decline in volumes.
SelectQuote President Bob Grant said the plan termination environment was broadly similar to last year, but described commissions as more stable so far. He said carriers could decide as late as mid-to-late November to increase targeted marketing efforts.
Segment Profitability Improves
Senior revenue declined to $51 million from $59 million a year earlier, primarily reflecting the smaller agent force. Its adjusted EBITDA loss narrowed to $12 million from approximately $21 million. Clement said the company’s experienced agent force was effectively flat year over year, while it hired fewer new agents.
Healthcare Services revenue fell to $186 million from $221 million, while adjusted EBITDA rose 56% to $11 million. The segment’s adjusted EBITDA per SelectRx member reached $108, up more than 60%, supported in part by a more mature membership base, Clement said.
Management said lower drug prices under the Inflation Reduction Act reduced Healthcare Services revenue, but that manufacturer reimbursements largely offset the effect on profitability. Asked when the business would have a clean year-over-year comparison, Clement said the program spans multiple years, including additional drugs in 2028, and did not provide a specific quarter.
Life Insurance revenue declined to $43 million from $47 million. Adjusted EBITDA rose 31% to $7 million, helped by improved efficiency in final expense insurance and leads transferred from the Senior business, Clement said.
Technology and Capital Plans
Danker said technology is responsible for most of the more than $30 million in permanent annualized costs SelectQuote previously identified for removal. More than one-third of incoming calls are screened and routed using artificial intelligence, he said, while another tool screened more than 200,000 unique calls in the quarter and saved over 600,000 minutes of agent talk time.
The company is also using a voice AI enrollment agent to handle administrative steps after licensed agents help beneficiaries assess their needs. Danker said the technology supports rather than replaces licensed agents.
In Healthcare Services, SelectQuote expects its pharmacy management system to help route more prescriptions through its Olathe, Kansas, facility. Fewer than 20% of prescriptions are currently shipped from the site, which Danker said operates about 30% more efficiently than legacy distribution locations. Bob Grant said the initial increase will largely come from new members, with transfers from other facilities taking more time.
Clement said SelectQuote will seek shareholder approval for a reverse stock split at its November 10 annual meeting, with the split planned for later in the month. He said the move is intended to support the company’s New York Stock Exchange listing and does not involve raising capital.
Asked about the preferred dividend, Clement said the company sees a path to paying it in cash as operating cash flow rises, though he did not provide a timetable or fiscal 2028 guidance.
About SelectQuote (NYSE:SLQT)
SelectQuote, Inc (NYSE: SLQT) operates a technology-enabled insurance distribution platform that helps consumers compare and purchase insurance products from third-party carriers. The company combines digital tools, proprietary data and licensed agents to connect customers with coverage suited to their needs.
SelectQuote’s primary business is its Senior segment, which provides access to Medicare Advantage, Medicare Supplement and prescription drug plans. The company has also historically offered life insurance, as well as auto and home insurance, through its Life and Auto & Home businesses.
