Health Vertical Plunges as P&C Drives MediaAlpha’s Surge

Date of Call: Feb 24, 2026

Financials Results

• Revenue: $291M, down 3% YOY, up 9% excluding Under-65 Health

Guidance:

• Q1 2026 transaction value expected $570M-$595M, up ~23% YOY at midpoint, with P&C growing ~35% YOY.
• Q1 2026 health transaction value expected to decline ~50% YOY.
• Q1 2026 revenue expected $285M-$305M, up ~12% YOY at midpoint.
• Q1 2026 adjusted EBITDA expected $29.5M-$31.5M, up ~4% YOY at midpoint.
• Excluding Under-65 Health, adjusted EBITDA expected to grow ~25% YOY at midpoint.
• Contribution less adjusted EBITDA expected $500k-$1M higher than Q4 2025.
• 2026 free cash flow expected $90M-$100M, including final FTC payment.
• P&C transaction value expected to drive healthy YOY gains in 2026.
• Health vertical expected to be mid-single-digit percentage of total transaction value in 2026.
• Medicare Advantage seen as meaningful long-term growth opportunity.

Business Commentary:

Strong Financial Performance and Shareholder Returns:

• MediaAlpha Inc. reported $2 billion in transaction value and $1 billion in revenue for 2025, with a 45% growth in transaction value, driven by a 65% increase in the P&C insurance vertical. Adjusted EBITDA reached $100 million, marking a record year.
• The company returned $47.3 million to shareholders through share repurchases, representing 7% of shares outstanding.
• The growth was driven by increased advertising spend by auto insurance carriers and agents, as well as disciplined expense management and efficient operating models.

P&C Insurance Vertical Growth:

• Transaction value in the P&C vertical grew 38% year-over-year in Q4, contributing to the overall transaction value growth of 23%.
• The growth was supported by strong carrier demand and increased advertising budgets, benefiting from a soft market environment where carriers focus on growing their customer base.

Impact of AI on Business Operations:

• MediaAlpha observed a 20% year-over-year increase in P&C click volume in Q4 due to AI-driven search, with expectations for stronger growth in Q1 2026.
• The company is leveraging AI to enhance its platform, improving traffic pricing and optimizing ad spend, which strengthens its network effects and market position.

Health Insurance Vertical Challenges:

• The Under-65 health insurance vertical saw a decline in transaction value by 40%, contributing $7 million in revenue in 2025, down from $41 million in 2024.
• This decline was due to the company's strategic decision to narrow the scope of this business to improve its risk profile and focus on more profitable segments.

Cash Flow and Strategic Investments:

• MediaAlpha generated $99 million in free cash flow for 2025, including a $34 million FTC payment, and ended the year with $47 million in cash.
• The company plans to utilize its strong cash flow outlook to support strategic priorities, including the execution of a $100 million share repurchase program authorized by the Board for 2026.

Sentiment Analysis:

Overall Tone: Positive

• Management described 2025 as a "pivotal year" with "exceptional results" in P&C and significant free cash flow generation. They noted Q4 adjusted EBITDA was above the high end of guidance, and P&C business is "off to a strong start in 2026" with "continued positive momentum expected." CEO stated they are "well-positioned to capture that opportunity and to continue delivering sustainable, profitable growth."

Q&A:

• Question from Thomas Mcjoynt-Griffith (KBW): Does anything functionally or financially change with your role and your value proposition to carriers when a consumer starts their search with an LLM rather than through Google?
  Response: No fundamental change; AI impacts upper-funnel research but carriers maintain control over quote/display, making MediaAlpha's infrastructure handoff layer essential regardless of starting point.

• Question from Thomas Mcjoynt-Griffith (KBW): You made some encouraging remarks about continuing to scale with the underpenetrated carriers in the marketplace. Is there anything different about your go-to-market strategy or sales pitch that's getting more of these underpenetrated carriers to sign up?
  Response: Investment in platform solutions that offer hosted, optimized conversion experiences beyond just marketplace media, leveraging proprietary data and capabilities to help these carriers compete more effectively.

• Question from Michael Zaremski (BMO Capital Markets): On seasonality, are we not seeing as much seasonality as you had maybe thought 6 months ago or 3 months ago? Or is this kind of the normal expectations you'd say?
  Response: Q4 2025 was robust but slightly less than expected; Q1 2026 is muted but off to a good start, with underpenetrated carriers leaning in. Overall, early in the year but optimistic about the year.

• Question from Michael Zaremski (BMO Capital Markets): If we were to bucket up into a profile of insurance carrier that was much more sophisticated data-wise than peers and also offered on average, a much lower cost or a lower cost policy on average, would that profile make that insurance carrier more likely to test the waters to offer their pricing to third parties and LLMs?
  Response: No, major carriers (captive and direct) are unlikely to allow rates on LLMs due to historical reluctance to commoditize product or transfer transactional control, similar to current resistance to side-by-side comparison models.

• Question from Michael Zaremski (BMO Capital Markets): On some free cash flow, quick clarification. The $90 million to $100 million, is that subtracting the final payment? So we should -- and also, is there any cash taxes or cash receivable payments within the $90 million or whatever that's the number you're guiding.
  Response: Guidance includes the $11.5M FTC payment; TRA payment of mid-single-digit millions is expected in Q1 2026.

• Question from Andrew Kligerman (TD Cowen): Is it possible down the road, or is it actually happening now that big names such as Progressive, Allstate, GEICO are already in the mix and starting in these early stages with the LLMs? And why wouldn't that be the case a few years from now regardless?
  Response: Unlikely; major carriers are not in a hurry to make rates available on LLMs due to significant brand investment and concerns about commoditization and bindable quote consistency, similar to historical resistance to rate aggregation.

• Question from Andrew Kligerman (TD Cowen): Could you talk a little bit about why you kind of -- it sounds like you're seeing an inflection point now. And why do you see that? And how do you see the trajectory of Med Advantage business on your platform?
  Response: Medicare Advantage is long-term bullish due to large market size, growing eligibility, and digital shopping trends, but near-term outlook remains challenging due to reimbursement pressures; health vertical will be a mid-single-digit percentage of total transaction value in 2026.

• Question from Andrew Kligerman (TD Cowen): Do you see the proprietary component kind of continuing to pick up? Or do you see that -- because I guess private this quarter was about 53.7%, up from 41% last year and the full year was a similar pickup. So it's been happening. Where do you see the private percentage of transaction value leveling out? Are we there yet? Or does it get bigger?
  Response: Trend continues toward open marketplace; Q1 guidance reflects further shift as smaller/midsized carriers lean in, but no long-term target provided.

• Question from Eric Sheridan (Goldman Sachs): As you see this underpenetrated opportunity playing out in the coming quarters, how much of it is a dynamic in which you need to execute on putting the right tools and mechanisms in place of folks across the carrier landscape to incent them to come on to the platform, invest in the platform? And how much of it is just an output of some of the competitive environment we're seeing today?
  Response: Both factors are important, but market forces (soft market cycle, carriers leaning into growth) are more dominant, driving partners to invest in new channels; MediaAlpha's platform/AI capabilities then help them scale effectively.

Contradiction Point 1

Nature of LLM Ecosystem and Supply Partner Integration

Contradiction on whether LLMs will be a new traffic source or a direct replacement for existing marketplace models.

What are your thoughts on Thomas Mcjoynt-Griffith's (KBW) recent analysis? - Thomas Mcjoynt-Griffith (KBW)

20260224-2025 Q4: The ecosystem with LLMs is expected to resemble the current system, not replace it. - Steven Yi(CFO)

Do LLMs act as suppliers, or do existing suppliers integrate into them directly? - Thomas Mcjoynt-Griffith (KBW)

20260224-2025 Q4: LLMs are expected to evolve into something like Google, not as direct supply partners. - Steven Yi(CFO)

Contradiction Point 2

Characterization of P&C Seasonality

Contradiction on the performance and expectations for the P&C seasonality in Q1 2026.

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20260224-2025 Q4: Q1 2026 is a bit muted compared to past years, but underpenetrated carriers are leaning in. - Patrick Thompson(CFO)

Is the reduced P&C seasonality observed compared to expectations normal? - Michael Zaremski (BMO Capital Markets)

20260224-2025 Q4: Strong performance from underpenetrated carriers has offset some larger carriers. - Patrick Thompson(CFO)

Contradiction Point 3

Medicare Advantage Business Outlook

Contradiction on near-term financial contribution and market recovery timeline.

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20260224-2025 Q4: MediaAlpha is long-term bullish but not expecting significant near-term financial contribution. - Patrick Thompson(CFO)

Why is Medicare Advantage seen as a long-term growth opportunity despite recent distribution pressures? - Andrew Kligerman (TD Cowen)

2025Q3: The market is expected to mature and resemble the auto insurance industry more, with carriers competing for market share through advertising." "Consumer penetration of Medicare Advantage is rising steadily. Online shopping trends among seniors are positive for the business. - Steven Yi(CEO) and Patrick Thompson(CFO)

Contradiction Point 4

Private vs. Open Marketplace Transaction Mix

Contradiction on the primary driver for future take rate improvement.

Andrew Kligerman (TD Cowen)? - Andrew Kligerman (TD Cowen)

20260224-2025 Q4: Underpenetrated carriers are leaning in, and this dynamic is expected to continue, making the business more open than some may have expected. - Patrick Thompson(CFO)

Where do you expect the private transaction value percentage to stabilize? - Thomas Mcjoynt-Griffith (Keefe, Bruyette, & Woods, Inc.)

2025Q3: The primary driver for future take rate improvement is a broadening of demand from more carriers." "As demand broadens, the increased use of open marketplace services (which have higher take rates) will drive improvement. - Patrick Thompson(CFO) and Steven Yi(CEO)

Contradiction Point 5

P&C Carrier Spend and Advertising Budget Outlook

Contradiction on whether carrier budgets are strong and growing or lighter and conservative.

What was the specific question raised by Michael Zaremski of BMO Capital Markets during the earnings call? - Michael Zaremski (BMO Capital Markets)

20260224-2025 Q4: Underpenetrated carriers are leaning in. It’s been years since a normal seasonality year; Q1 is off to a good start, and the outlook is optimistic. - Patrick Thompson(CFO)

Has P&C seasonality been less pronounced than expected six months ago, or is this typical? - Unidentified Analyst (on behalf of Ben Hendrix from RBC Capital Markets)

2025Q2: Carrier budgets for the upcoming AEP are anticipated to be lighter than previous years due to carrier conservatism and uncertainty. - Steven M. Yi(CEO)