SelectQuote's Q2 2025 Earnings: Navigating Market Challenges

SelectQuote Inc (SLQT) reported its second quarter fiscal 2025 earnings on February 10, 2025, showcasing the company's ability to navigate market challenges and maintain growth. Despite a higher-than-usual plan termination rate by carriers during the Medicare Advantage Annual Enrollment Period (AEP), SelectQuote delivered impressive results across both its Senior and Healthcare Services segments.



The Senior segment performed exceptionally well, with a 39% adjusted EBITDA margin, up approximately 750 basis points year-over-year. This strong performance was driven by high agent productivity and close rates, as well as the company's high-touch, agent-led business model and targeted marketing strategies. Despite a 3% decrease in Medicare Advantage lifetime values due to carrier mix changes, the Senior segment's revenue grew by 3% year-over-year.

SelectQuote's Healthcare Services segment, led by SelectRx, also showed significant growth. The segment's membership increased by 54% year-over-year, reaching over 96,000 members, while revenue grew by 64% to $183.4 million. The global Revenue to CAC (Customer Acquisition Cost) for SelectRx expanded to 5.3x, demonstrating the segment's ability to generate attractive returns.



To maintain or improve agent productivity and close rates, SelectQuote can focus on several strategies. First, the company should continue investing in technology, process, and marketing to make tenured agents more productive. Additionally, SelectQuote should prioritize the retention and development of experienced agents, as well as optimize agent allocation to maximize productivity. By refining its targeted marketing strategy and providing ongoing training and development opportunities for agents, SelectQuote can maintain high close rates and productivity even with a 22% lower agent headcount.

In conclusion, SelectQuote's Q2 2025 earnings call demonstrated the company's ability to navigate market challenges and maintain growth across both its Senior and Healthcare Services segments. By focusing on its high-touch, agent-led business model, targeted marketing strategies, and diversifying its revenue streams, SelectQuote can continue to deliver strong financial performance and create value for shareholders. As the company continues to adapt to the changing landscape of the Medicare Advantage market, it will be crucial to monitor the trends in Medicare Advantage lifetime values and agent productivity to ensure the long-term sustainability of its growth.