8-K: SelectQuote Q1 FY26: Healthcare Services Drives Revenue Growth

SelectQuote, Inc. reported consolidated revenue of $328.8 million for the first quarter of fiscal year 2026, driven by strong performance in its Healthcare Services segment, despite a consolidated Adjusted EBITDA loss worse than guidance.

Summary

• Consolidated revenue for the first quarter of fiscal year 2026 was $328.8 million, an increase from $292.3 million in the prior year quarter.
• Consolidated net loss for the first quarter of fiscal year 2026 was $30.5 million, an improvement from a net loss of $44.5 million in the prior year quarter.
• Consolidated Adjusted EBITDA for the first quarter of fiscal year 2026 was $(32.1) million, compared to $(1.7) million in the prior year quarter, and worse than the guided range of $(25) to $(30) million.
• The Senior segment reported revenue of $59.0 million, a 37% decrease from $92.9 million in the prior year quarter, with Adjusted EBITDA of $(21.0) million, down from $7.7 million.
• The Healthcare Services segment generated revenue of $221.4 million, a 42% increase from $155.7 million in the prior year quarter, with Adjusted EBITDA of $7.2 million, up 48% from $4.9 million.
• The Life segment's revenue was $46.6 million, a 19% increase from $39.3 million in the prior year quarter, while Adjusted EBITDA decreased 7% to $5.6 million from $6.0 million.
• Total SelectRx members increased by 24% year-over-year to 106,914 as of September 30, 2025.
• The revenue to customer acquisition cost (CAC) ratio reached an all-time high of 6.4x for the twelve months ended September 30, 2025, nearly 40% higher than a year ago.
• The company is not changing its fiscal year 2026 financial outlook of $1.65 to $1.75 billion in revenue and $120 to $150 million in Adjusted EBITDA.

Sentiment

Score: 4

Explanation: While revenue growth was strong, particularly in Healthcare Services, the consolidated Adjusted EBITDA was significantly worse than guidance, and the Senior segment showed substantial declines. The positive outlook for the full year and the high revenue/CAC ratio are offset by current profitability challenges and segment-specific headwinds.

Positives

• Consolidated revenue increased 13% year-over-year to $328.8 million.
• Net loss improved to $30.5 million from $44.5 million in the prior year quarter.
• Healthcare Services segment revenue grew 42% year-over-year to $221.4 million and Adjusted EBITDA increased 48% to $7.2 million.
• Total SelectRx members increased 24% year-over-year to 106,914.
• Life segment revenue increased 19% to $46.6 million.
• Achieved an all-time high revenue to customer acquisition cost (CAC) ratio of 6.4x, nearly 40% higher than a year ago.
• Management believes the Medicare Advantage business has durable competitive advantage and flexibility to drive strong results.

Negatives

• Consolidated Adjusted EBITDA was $(32.1) million, a significant decline from $(1.7) million in the prior year quarter, and worse than the guided range of $(25) to $(30) million.
• Senior segment revenue decreased 37% year-over-year to $59.0 million.
• Senior segment Adjusted EBITDA declined significantly to $(21.0) million from $7.7 million in the prior year quarter.
• Healthcare Services experienced a temporary reimbursement rate headwind in the SelectRx business, expected to drive Adjusted EBITDA around breakeven for the segment in fiscal Q2.
• Life segment Adjusted EBITDA decreased 7% to $5.6 million.
• Total operating expenses per MA/MS policy increased 32% for the twelve months ended September 30, 2025, driven by an increase in cost of goods sold-pharmacy revenue for Healthcare Services.

Risks

• Reliance on a limited number of insurance carrier partners and any potential termination of those relationships or failure to develop new relationships.
• Existing and future laws and regulations affecting the health insurance market.
• Changes in health insurance products offered by insurance carrier partners and the health insurance market generally.
• Insurance carriers offering products and services directly to consumers.
• Changes to commissions paid by insurance carriers and underwriting practices.
• Competition with brokers, exclusively online brokers and carriers who opt to sell policies directly to consumers.
• Competition from government-run health insurance exchanges.
• Developments in the U.S. health insurance system.
• Dependence on revenue from carriers in the senior segment and downturns in the senior health as well as life, automotive and home insurance industries.
• Ability to develop new offerings and penetrate new vertical markets.
• Risks from third-party products.
• Failure to enroll individuals during the Medicare annual enrollment period.
• Ability to attract, integrate and retain qualified personnel.
• Dependence on lead providers and ability to compete for leads.
• Failure to obtain and/or convert sales leads to actual sales of insurance policies.
• Access to data from consumers and insurance carriers.
• Accuracy of information provided from and to consumers during the insurance shopping process.
• Cost-effective advertisement through internet search engines.
• Ability to contact consumers and market products by telephone.
• Global economic conditions, including inflation and tariffs.
• Disruption to operations as a result of future acquisitions.
• Significant estimates and assumptions in the preparation of financial statements.
• Impairment of goodwill.
• Existing or potential litigation and other legal proceedings or inquiries, including the Department of Justice action alleging violations of the federal False Claims Act.
• Existing and future indebtedness.
• Ability to maintain compliance with debt covenants.
• Access to additional capital.
• Failure to protect intellectual property and brand.
• Fluctuations in financial results caused by seasonality.
• Accuracy and timeliness of commissions reports from insurance carriers.
• Timing of insurance carriers' approval and payment practices.
• Factors that impact the estimate of the constrained lifetime value of commissions per policyholder.
• Changes in accounting rules, tax legislation and other legislation.
• Disruptions or failures of technological infrastructure and platform.
• Failure to maintain relationships with third-party service providers.
• Cybersecurity breaches or other attacks involving systems or those of insurance carrier partners or third-party service providers.
• Ability to protect consumer information and other data.
• Failure to market and sell Medicare plans effectively or in compliance with laws.
• Other factors related to the pharmacy business, including manufacturing or supply chain disruptions, access to and demand for prescription drugs, contractual reimbursement rates, and regulatory changes or other industry developments that may affect pharmacy operations.

Future Outlook

The company maintains its fiscal year 2026 financial outlook of $1.65 to $1.75 billion in revenue and $120 to $150 million in Adjusted EBITDA. Healthcare Services is expected to experience a temporary reimbursement rate headwind in the SelectRx business, driving Adjusted EBITDA around breakeven for the segment in the fiscal second quarter, but is anticipated to exit fiscal 2026 at an Adjusted EBITDA run rate in the $40 to $50 million range.

Management Comments

• "The strength of our integrated healthcare model was exhibited again in our fiscal first quarter." Tim Danker, SelectQuote Chief Executive Officer.
• "Early work to prepare for new eligibility parameters in this year's Medicare Advantage special election period was evident in our Senior business. We successfully reallocated resources and agents for the expected decline in volume and, as a result, performed well in the quarter and more importantly positioned our Senior business for another strong season." Tim Danker, SelectQuote Chief Executive Officer.
• "We firmly maintain our view that SelectQuote's Medicare Advantage business has durable competitive advantage and flexibility to drive strong results in a range of environments." Tim Danker, SelectQuote Chief Executive Officer.
• "Our Healthcare Services business also continues to perform well, serving over 100,000 SelectRx members with convenient drug delivery that drives improved health outcomes." Tim Danker, SelectQuote Chief Executive Officer.
• "In this quarter, SelectQuote generated a revenue to customer acquisition cost (CAC) ratio of 6.4x, which is an all-time high and nearly 40% higher than it was a year ago." Tim Danker, SelectQuote Chief Executive Officer.
• "At this time, we are not changing our fiscal 2026 financial outlook of $1.65 to $1.75 billion in revenue and $120 to $150 million in Adjusted EBITDA*." Tim Danker, SelectQuote Chief Executive Officer.

Industry Context

The filing highlights a market backdrop conducive to robust customer engagement due to elevated levels of plan disruption in the Medicare Advantage market, as carriers continue to prioritize MA margins over growth. This has led to increased plan terminations and benefit curtailment. SelectQuote is adapting by proactively reallocating resources and agents, training new agent classes, and focusing on re-shopping beneficiaries, particularly in HMOs, SNPs, and geo-specific areas. The company's integrated healthcare model, including its SelectRx pharmacy, aims to provide differentiated value and improved health outcomes within this dynamic healthcare ecosystem.

Comparison to Industry Standards

• 5 15% Improvement in 90-day MA active rates when active on SelectRx.
• ~10% Increase in adherence based on Adherence for All program.
• ~20% Reduction in inpatient hospital days for patients using SelectRx.

Legal Proceedings

• Existing or potential litigation and other legal proceedings or inquiries, including the Department of Justice action alleging violations of the federal False Claims Act.

Stakeholder Impact

• Shareholders: Potential for volatility due to mixed financial results (strong revenue growth vs. worse-than-expected EBITDA), and ongoing risks related to market dynamics and regulatory changes.
• Employees (Agents): Reallocation of resources and agents in the Senior business, increased new agent hires to support AEP and OEP seasons.
• Customers (Beneficiaries): Impacted by 'elevated levels of plan disruption' and benefit curtailment in Medicare Advantage, with SelectQuote aiming to help re-shop and provide value-added services like SelectRx for improved health outcomes.
• Insurance Carrier Partners: Continued reliance on a limited number of partners, with potential for changes in relationships, commissions, and product offerings.
• Creditors: Existing and future indebtedness, and the ability to maintain compliance with debt covenants are noted risks.

Next Steps

• Host a conference call with the investment community on November 6, 2025, at 8:30 a.m. ET.
• Continue to prepare for the 2025 AEP/OEP enrollment season.
• Address the temporary reimbursement rate headwind in the SelectRx business, with an expectation for Healthcare Services Adjusted EBITDA to rebound and exit fiscal 2026 at a $40 to $50 million run rate.

Key Dates

Recommendation

The company shows mixed results with strong revenue growth in Healthcare Services and an impressive revenue/CAC ratio, indicating operational efficiency in customer acquisition. However, the consolidated Adjusted EBITDA missed guidance, and the Senior segment experienced significant declines. The unchanged full-year outlook provides some stability, but the temporary headwind in SelectRx and ongoing market disruptions in Medicare Advantage warrant a cautious approach. A 'hold' recommendation allows investors to monitor the company's ability to execute on its full-year guidance and navigate industry challenges, particularly the rebound in Healthcare Services profitability and stabilization of the Senior segment.

Keywords

SelectQuote, SLQT, Q1 Fiscal 2026, Earnings, Financial Results, Medicare Advantage, Healthcare Services, SelectRx, Insurance Broker, Life Insurance, Adjusted EBITDA, Revenue, Net Loss, SEC Filing, 8-K