Reassessing SelectQuote's Long-Term Growth: Navigating EBITDA Volatility and PBM Partnership Risks

SelectQuote (SLQT) has long been a polarizing name in the insurance and healthcare services sectors, oscillating between periods of robust growth and sharp volatility. As of November 2025, the company faces a critical juncture: its EBITDA performance has swung from a $37.7 million Adjusted EBITDA in Q3 2025 to a staggering negative $32.1 million in Q1 FY2026, while its PBM (Pharmacy Benefit Manager) partnerships-central to its Healthcare Services segment-remain fraught with reimbursement risks and opaque contractual terms. This article dissects these challenges and evaluates whether SelectQuote's long-term growth narrative can withstand the turbulence.

EBITDA Volatility: A Tale of Two Segments

SelectQuote's financials reveal a stark divergence between its Senior and Healthcare Services segments. The Senior segment, once a cash cow, has deteriorated sharply. Q3 2025 Adjusted EBITDA for this segment fell 26% year-over-year to $45.7 million, and by Q1 FY2026, it had cratered to a $21.0 million loss, with revenue declining 37% to $59.0 million, according to a GuruFocus report. This collapse reflects broader headwinds in the Medicare Advantage market, including regulatory shifts and pricing pressures.

Conversely, the Healthcare Services segment-led by SelectRx pharmacy-has shown resilience. Q1 FY2026 revenue surged 42% to $221.4 million, driven by a 24% membership increase in SelectRx, according to a Finimize report. However, this segment's Adjusted EBITDA margin contracted to 3%, and it faced a temporary reimbursement rate headwind in Q1 FY2026, pushing it toward breakeven, as noted in a Business Wire report. The company's guidance for 2026-$120–$150 million in Adjusted EBITDA-suggests optimism, but the path to profitability remains uncertain.

PBM Partnership Risks: The Hidden Cost of Complexity

SelectQuote's PBM collaborations, while a strategic pillar, expose it to systemic risks. The company's SelectRx program, which achieved 90% medication adherence in a pilot, is laudable but sits atop a fragile reimbursement model. PBMs often employ opaque pricing structures, such as spread pricing and rebate recharacterization, which inflate costs for health plans and participants, according to a JDSupra report. For example, PBMs may charge health plans more than the amount paid to pharmacies, pocketing the difference as profit-a practice that erodes margins and transparency.

Moreover, contractual terms with PBMs are rife with risks. Gag clauses and non-disclosure agreements (NDAs) prevent pharmacies from informing patients of lower-cost alternatives, while restrictive audit clauses limit oversight, as noted in the JDSupra report. These practices not only inflate costs but also expose SelectQuote to regulatory scrutiny, particularly under ERISA and the CAA (Consolidated Appropriations Act).

Strategic Resilience: Can SelectQuote Adapt?

Despite these challenges, SelectQuote's long-term prospects hinge on its ability to adapt. The company's Q1 FY2026 results, while alarming, were partially offset by a 12.5% year-over-year revenue increase to $328.8 million, according to a Finimize report. Analysts remain cautiously optimistic, with a median 12-month price target of $5.50-60% above its current level-suggesting confidence in its Healthcare Services pivot, as noted in the Finimize report.

Key to this pivot is SelectQuote's focus on value-based care. Its SelectRx program, which improved HEDIS Star ratings for chronic disease management, aligns with industry trends toward outcome-based reimbursement, as reported in the GuruFocus report. However, the company must address its PBM partnership structures. As one industry expert notes, "Plan Sponsors must demand full pricing transparency and performance guarantees in PBM contracts to mitigate fiduciary risks," according to an Xevant blog post. SelectQuote's ability to renegotiate terms or diversify its PBM partnerships could determine its survival.

Conclusion: A High-Stakes Rebalance

SelectQuote's EBITDA volatility and PBM risks underscore a company in transition. While the Senior segment's decline is a drag, the Healthcare Services segment's growth trajectory-bolstered by SelectRx's adherence program-offers a lifeline. However, the path to long-term durability requires more than revenue growth; it demands structural reforms in PBM partnerships and a clearer EBITDA recovery plan.

For investors, the question is whether SelectQuote can navigate these challenges without sacrificing its core mission. The 2026 guidance hints at cautious optimism, but the road ahead remains treacherous. As the company's Q1 FY2026 results demonstrate, even a $328.8 million revenue beat cannot mask a $30.5 million net loss, according to the GuruFocus report. The next 12 months will be pivotal.