MediaAlpha's Q3 2025 Earnings Call: Shifting Narratives in Carrier Spending, Medicare Advantage, and Under-65 Health Vertical

Date of Call: October 29, 2025

Financials Results

• Revenue: $280M–$300M expected in Q4, representing a ~4% year-over-year decrease at the midpoint (guidance)

Guidance:

• Q4 transaction value expected $620M–$645M (~+27% YoY at midpoint)
• Q4 revenue $280M–$300M (~-4% YoY at midpoint); revenue as % of transaction value to decline as private marketplace ≈54% of TV
• Q4 adjusted EBITDA $27.5M–$29.5M (~-22% YoY at midpoint), including $8M–$9M impact from under‑65; excl. under‑65 EBITDA roughly flat YoY
• Q4 take rate ~7%; P&C transaction value ~+45% YoY; Health TV ~-45% YoY
• 2025 under‑65 TV $95M–$100M, contribution $10M–$11M (Q4 contribution ~$1M–$2M); under‑65 to be mid‑single‑digit M annually
• Overhead roughly flat to Q3; net debt/adjusted EBITDA <1x; repurchase authorization up to $50M

Business Commentary:

* Record P&C Insurance Performance: - MediaAlpha reported record transaction value of $589 million for Q3 2025, with a 30% year-over-year increase, driven primarily by the P&C insurance vertical, which grew 41% year-over-year. - The growth in the P&C vertical was fueled by increased marketing investments from leading auto insurance carriers, leveraging strong industry fundamentals and high underwriting profitability.

• Health Insurance Vertical Reset:
• Transaction value in the Health vertical declined by 40% year-over-year, consistent with expectations, due to the recent reset in under-65 health insurance.

• This decline is attributed to carriers pulling back on marketing spend in challenging market environments, with an expected stabilization at a lower baseline.

• Take Rate Dynamics and Market Recovery:

• MediaAlpha's take rate decreased year-over-year, reflecting a shift towards private marketplace transactions with lower take rates.

• The company anticipates future improvements in take rates as carrier demand broadens, leading to a shift back towards open marketplace transactions, driven by the integration of managed services and platform solutions.

• Financial Guidance and Outlook:

• For Q4, MediaAlpha expects transaction value to grow approximately 45% year-over-year, with P&C transaction value projected to increase 45% year-over-year.
• This growth is supported by strong carrier spend and strategic investments in technology and AI, positioning the company for future share gains in digital insurance distribution.

Sentiment Analysis:

Overall Tone: Positive

• Management stated they delivered "record third quarter results" with transaction value $589M (+30% YoY) and adjusted EBITDA $29.1M (+11% YoY), described strong P&C momentum, multiyear soft‑market tailwinds, and repurchased $32.9M of shares while authorizing up to $50M more.

Q&A:

• Question from Maria Ripps (Canaccord Genuity Corp., Research Division): It seems like a lot of investors are focused on carrier profitability sort of peak margins currently. And as you know, one of the largest carriers recently recorded a sizable credit expense to reflect excess profits. Can you maybe talk about sort of your view on how sustainable current profitability levels are and what that might mean for customer acquisition spend overall?
  Response: Management: Peak carrier profitability signals the start of the soft‑market cycle, not an end — expect several years of elevated carrier marketing spend and a broadening of demand that will drive growth.

• Question from Maria Ripps (Canaccord Genuity Corp., Research Division): Can you maybe share a little bit more color on the transition within your Health vertical? Is that largely complete at this point? And I guess, how are you thinking about the long-term opportunity within that vertical sort of outside of under-65?
  Response: Under‑65 has been rebaselined and is stabilizing at a much smaller scale (Q4 contribution ~$1M–$2M; mid‑single‑digit M annual going forward); Medicare Advantage is a large, strategic long‑term opportunity once plan economics normalize.

• Question from Cory Carpenter (JPMorgan Chase & Co, Research Division): I was hoping you could drill down a bit more into what you're seeing in the discussions you're having with carriers. I think, Steve, last time we talked, carriers kind of hit the pause button a little bit just given the tariff uncertainty started to ramp in 3Q, and now you're guiding to accelerating growth in 4Q. So maybe just talk about some of the dynamics you saw intra-quarter? And then also, how much visibility do you have into year-end budgets at this point in the cycle?
  Response: There was a short pause related to tariff uncertainty but spend resumed intra‑quarter; Q4 guidance reflects current budgets (28 days of data) and early 2026 discussions are encouraging, indicating an expected broadening of demand next year.

• Question from Thomas Mcjoynt-Griffith (Keefe, Bruyette, & Woods, Inc., Research Division): A couple of questions on your comments around the take rate. Can you remind us, is there seasonality in 4Q? And then I just want to confirm that you're expecting both those quarters, the fourth quarter and then the start of 2026 to be 7% take rate. And then just your expectation about increasing the take rate over time, is that a function of a broader array of demand partners or supply partners or both?
  Response: Seasonality has reduced after under‑65 stepped down; Q4 take rate guidance ~7% and is the near‑term benchmark; long‑term take‑rate improvement will be driven primarily by broadening demand (more large advertisers on the open marketplace).

• Question from Thomas Mcjoynt-Griffith (Keefe, Bruyette, & Woods, Inc., Research Division): Got it. And then switching over to some of our expectations for the overhead expenses. Do you guys have any plans to either add or account managers or technology headcount or make any other major new technology investments that we should be thinking about as we enter 2026 and think about the fixed expense leverage in the business next year?
  Response: They will continue measured, thoughtful investments; the business remains lean (~150 employees) and they expect operating leverage over time with overhead roughly flat to Q3 levels and mapping from contribution to adjusted EBITDA flat or improving.

• Question from Andrew Kligerman (TD Cowen, Research Division): First question is around open versus private. And as private becomes a bigger proportion, I think first 9 months, it's now 48%. Steve and Pat, how do you see that kind of playing out long term, maybe 3 years out, 5 years out? Like where does that mix kind of settle down if it ever settles down?
  Response: Current private‑heavy mix is an artifact of a few large early adopters; as demand broadens among top‑25 carriers, more spending should flow through the open marketplace and the mix should shift back toward open over time.

• Question from Andrew Kligerman (TD Cowen, Research Division): I see. So maybe even next year, it could start to inflect more toward open again?
  Response: Yes — management anticipates an inflection toward greater open marketplace share beginning next year as additional carriers ramp spend.

• Question from Andrew Kligerman (TD Cowen, Research Division): In your shareholder letter, you talked about how most carriers were investing well below their full potential... Where are we versus 2019 in where carriers are investing?
  Response: Marketplace has scaled and more carriers are active (13 carriers spending >$1M/mo, an all‑time high); the recovery remains top‑heavy but there is nascent broadening versus 2019 with more carriers poised to adopt the channel.

• Question from Andrew Kligerman (TD Cowen, Research Division): Do you ever see the Medicare Advantage business getting back to what it looked like in 2021 or 2020 or 2019?
  Response: Unlikely to return to prior 'frothy' levels; MA will mature and resemble auto insurance with competitive ad spend, but it remains a large, profitable market and online penetration should grow over time.

• Question from Michael Murray (RBC Capital Markets, Research Division) on behalf of Ben Hendrix: It looks like normalizing for the under-65 segment, adjusted EBITDA grew 31%. But then looking at your guidance, you expect EBITDA to be flat on transaction value growth of 38%, excluding the under-65 segment. So is there a level of conservatism baked in there? Any color on the puts and takes would be helpful.
  Response: CFO: Guidance is conservative and based on high‑confidence inputs (28 days of Q4 actuals); they guide to numbers they believe they can achieve and thus err on realism.

• Question from Michael Murray (RBC Capital Markets, Research Division) on behalf of Ben Hendrix: A large MA payer recently indicated that they would be suspending their relationship with a large telebroker... Do you see any opportunity to gain share here given payers' increased focus on quality leads?
  Response: Yes — management sees opportunity as payers shift toward direct customer acquisition and reduce reliance on brokers; MediaAlpha can capture share as carriers invest in direct‑to‑consumer channels.

Contradiction Point 1

Carrier Spending and Market Dynamics

It involves differing perspectives on carrier spending behavior and market dynamics, which are crucial for understanding MediaAlpha's growth trajectory and revenue outlook. Changes in financial forecasts for carrier spending and market dynamics can impact investor decisions.

What are you seeing in carrier discussions about customer acquisition spending? - Cory Carpenter (JPMorgan Chase & Co, Research Division)

2025Q3: Carriers resumed prior spending levels after a brief pause due to tariff uncertainties. 2026 budget discussions are encouraging, indicating a broadening of demand and greater advertising participation from more carriers. - Steven Yi(CEO)

What are the key variables affecting carrier budgets in the second half of this year and into next year? - Maria Ripps (Canaccord Genuity)

2025Q2: Automotive tariffs are looking increasingly manageable. The industry is coming off a hard market, making carriers especially attuned to inflationary pressures, but current profitability is robust. - Steven Yi(CEO)

Contradiction Point 2

Medicare Advantage Business Outlook

It involves differing expectations regarding the growth and sustainability of the Medicare Advantage business, which is a significant revenue driver for MediaAlpha. Changes in market strategy and financial forecasts for this segment can impact investor decisions.

Do you see the Medicare Advantage business returning to prior levels? - Andrew Kligerman (TD Cowen, Research Division)

2025Q3: As market matures, it will evolve like the auto insurance industry with increased direct advertising. Consumer penetration of Medicare Advantage continues to rise, and online shopping trends favor our business. - Steven Yi(CEO) and Patrick Thompson(CFO)

Assuming the Type 16 business has normalized and there's greater visibility into 2026, is this a valid assumption? - Unidentified Analyst (BMO Capital Markets)

2025Q2: We are excited by the secular growth dynamics in Medicare Advantage, particularly as this market matures and evolves, we see a secular trend toward a typical market function that will increase awareness and demand for our solutions. - Steven Yi(CEO)

Contradiction Point 3

Carrier Advertising Behavior and Market Trends

It involves differing perspectives on carrier advertising behavior and market trends, which are critical for understanding the company's growth potential and market positioning. Changes in market strategy and financial forecasts for carrier advertising behavior can impact investor decisions.

What are carriers' customer acquisition spending trends? - Cory Carpenter (JPMorgan Chase & Co, Research Division)

2025Q3: Carriers resumed prior spending levels after a brief pause due to tariff uncertainties. 2026 budget discussions are encouraging, indicating a broadening of demand and greater advertising participation from more carriers. - Steven Yi(CEO)

Could you elaborate on P&C pricing trends and market conditions this year? - Cory Carpenter (J.P. Morgan)

2024Q4: Bullish about the P&C vertical in 2025. Profitability of carriers leading to increased competition. Carriers relying less on rate actions and more on customer acquisition. Growth opportunities in personal auto insurance. - Steve Yi(CEO)

Contradiction Point 4

Medicare Advantage Market Dynamics

It involves differing views on the dynamics and growth potential of the Medicare Advantage market, which is a crucial segment for the company's long-term success. Changes in market strategy and financial forecasts for this segment can impact investor decisions.

Can you provide details on the Health segment's transition and the long-term opportunities beyond the under-65 demographic? - Maria Ripps(Canaccord Genuity Corp.)

2025Q3: Focus is on Medicare Advantage, a $0.5 trillion market new to direct-to-consumer advertising. Expect increased direct-to-consumer adoption and integrated solutions to support this vertical's growth. - Steven Yi(CEO)

Can you discuss Medicare Advantage? - Tom McJoynt(KBW)

2025Q1: Medicare Advantage in temporary hard market cycle, similar to P&C experiences. Medicare Advantage benefits from bipartisan support, potential regulatory changes, and growing senior population. - Steve Yi(CEO)

Contradiction Point 5

Pressures in the Under-65 Health Vertical

It involves differing explanations for the pressures and strategic decisions within the under-65 health vertical, which impacts the company's financial performance and market positioning. Changes in market strategy and financial forecasts for this segment can impact investor decisions.

Can you provide details on the transition in the Health vertical and the long-term opportunities beyond the under-65 demographic? - Maria Ripps(Canaccord Genuity Corp.)

2025Q3: The under-65 business is stabilizing with a new baseline, and recent actions are expected to normalize financial performance in 2026. - Steven Yi(CEO)

What drove the increase in P&C pricing in March? Is the decision to reduce the under-65 health business linked to FTC changes? - Cory Carpenter(J.P. Morgan)

2025Q1: We agreed and participated in an enhanced industry-wide approach to compliance related to the FTC's rules for online marketing in the Health vertical. These actions included a conscious decision to partially scale back our business in the under-65 market opportunity. - Pat Thompson(CFO)