SelectQuote 2025 Q3 Earnings Misses Targets as Net Income Surges 204%
Tuesday, May 13, 2025 7:16 am ET
3min read SelectQuote reported its fiscal 2025 Q3 earnings on May 12, showing significant growth in net income of $26.02 million, up 204.3% from $8.55 million in 2024 Q3. Despite this, the company missed earnings expectations, with earnings per share (EPS) at $0.03, below the analyst forecast of $0.04. Revenue totaled $408.2 million, exceeding expectations but guidance remains in the lower range, indicating potential challenges ahead. SelectQuote anticipates finishing the year with revenue between $1.5 billion and $1.58 billion.
Revenue
SelectQuote's total revenue increased to $408.16 million in 2025 Q3, representing an 8.4% rise from the previous year. The Senior segment contributed $169.44 million, while Healthcare Services added $189.57 million. The Pharmacy division played a significant role, generating $185.27 million. The Life segment saw revenue of $45.84 million. Additionally, the Medicare Advantage commissions amounted to $145.45 million, and other services contributed $20.64 million. The company faced eliminations totaling $1.97 million, impacting the overall revenue figures.
Earnings/Net Income
SelectQuote's EPS rose to $0.11, a substantial 120% increase from $0.05 in 2024 Q3, showcasing continued earnings growth. Net income also strengthened to $26.02 million, marking a remarkable 204.3% growth from the previous year's $8.55 million. However, the EPS fell short of expectations, indicating potential challenges.
Price Action
The stock price of SelectQuote edged up 2.17% during the latest trading day, dropped 6.75% over the most recent full trading week, and plummeted 32.28% month-to-date.
Post-Earnings Price Action Review
The strategy of acquiring SelectQuote shares after a revenue increase on the financial report release date and holding them for 30 days has underperformed the market, yielding an annualized return of -16.07% over the past five years, significantly lower than the US market's 8% return. This indicates that this strategy has not been profitable, suggesting that investors may benefit more from a passive investment approach. The decline in earnings and significant insider selling over the past three months point to potential underlying challenges that may affect investor returns. Despite the revenue growth, these factors highlight concerns that could impact future performance and investor confidence.
CEO Commentary
Tim Danker, Chief Executive Officer, expressed satisfaction with SelectQuote's performance, noting an 8% year-over-year revenue increase to $408 million. Danker attributed this growth to strong member onboarding in the SelectRx business, which saw a 41% membership increase. He acknowledged challenges in the Medicare Advantage market but emphasized strong margins in the Senior segment, with an adjusted EBITDA margin of 27%. Danker remains optimistic about future EBITDA opportunities in both Senior and Healthcare Services segments and reiterated the company's commitment to operational efficiency and profitability.
Guidance
SelectQuote maintains its full-year revenue and adjusted EBITDA ranges but expects to finish the year in the lower half of those ranges. The company anticipates headwinds to Healthcare Services EBITDA due to investments in the Kansas facility, potentially causing a modest decline in fourth-quarter EBITDA. Adjustments to net income expectations reflect a range of negative $1 million to $28 million, with leadership focusing on enhancing efficiency and consistent margins, particularly in the SelectRx business, while evaluating capital structure optimization strategies.
Additional News
SelectQuote recently announced a strategic investment of $350 million from Bain Capital, Morgan Stanley Private Credit, and Newlight Partners. The transaction aims to support the company's growth in healthcare services and deepen relationships with carrier partners. This investment is expected to recapitalize the balance sheet, reduce annual cash debt service, and provide liquidity for growth initiatives. Furthermore, SelectQuote appointed Chris Wolfe from Bain Capital and Srdjan Vukovic from Newlight Partners to its Board of Directors, bringing extensive healthcare sector expertise. This development follows the company's successful renegotiation of its Senior Secured Credit Facility, positioning SelectQuote for continued growth and operating flexibility.
Revenue
SelectQuote's total revenue increased to $408.16 million in 2025 Q3, representing an 8.4% rise from the previous year. The Senior segment contributed $169.44 million, while Healthcare Services added $189.57 million. The Pharmacy division played a significant role, generating $185.27 million. The Life segment saw revenue of $45.84 million. Additionally, the Medicare Advantage commissions amounted to $145.45 million, and other services contributed $20.64 million. The company faced eliminations totaling $1.97 million, impacting the overall revenue figures.
Earnings/Net Income
SelectQuote's EPS rose to $0.11, a substantial 120% increase from $0.05 in 2024 Q3, showcasing continued earnings growth. Net income also strengthened to $26.02 million, marking a remarkable 204.3% growth from the previous year's $8.55 million. However, the EPS fell short of expectations, indicating potential challenges.
Price Action
The stock price of SelectQuote edged up 2.17% during the latest trading day, dropped 6.75% over the most recent full trading week, and plummeted 32.28% month-to-date.
Post-Earnings Price Action Review
The strategy of acquiring SelectQuote shares after a revenue increase on the financial report release date and holding them for 30 days has underperformed the market, yielding an annualized return of -16.07% over the past five years, significantly lower than the US market's 8% return. This indicates that this strategy has not been profitable, suggesting that investors may benefit more from a passive investment approach. The decline in earnings and significant insider selling over the past three months point to potential underlying challenges that may affect investor returns. Despite the revenue growth, these factors highlight concerns that could impact future performance and investor confidence.
CEO Commentary
Tim Danker, Chief Executive Officer, expressed satisfaction with SelectQuote's performance, noting an 8% year-over-year revenue increase to $408 million. Danker attributed this growth to strong member onboarding in the SelectRx business, which saw a 41% membership increase. He acknowledged challenges in the Medicare Advantage market but emphasized strong margins in the Senior segment, with an adjusted EBITDA margin of 27%. Danker remains optimistic about future EBITDA opportunities in both Senior and Healthcare Services segments and reiterated the company's commitment to operational efficiency and profitability.
Guidance
SelectQuote maintains its full-year revenue and adjusted EBITDA ranges but expects to finish the year in the lower half of those ranges. The company anticipates headwinds to Healthcare Services EBITDA due to investments in the Kansas facility, potentially causing a modest decline in fourth-quarter EBITDA. Adjustments to net income expectations reflect a range of negative $1 million to $28 million, with leadership focusing on enhancing efficiency and consistent margins, particularly in the SelectRx business, while evaluating capital structure optimization strategies.
Additional News
SelectQuote recently announced a strategic investment of $350 million from Bain Capital, Morgan Stanley Private Credit, and Newlight Partners. The transaction aims to support the company's growth in healthcare services and deepen relationships with carrier partners. This investment is expected to recapitalize the balance sheet, reduce annual cash debt service, and provide liquidity for growth initiatives. Furthermore, SelectQuote appointed Chris Wolfe from Bain Capital and Srdjan Vukovic from Newlight Partners to its Board of Directors, bringing extensive healthcare sector expertise. This development follows the company's successful renegotiation of its Senior Secured Credit Facility, positioning SelectQuote for continued growth and operating flexibility.
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