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#Is SelectQuote on Track to Become the Next Big Thing in Healthcare Services?

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs

SelectQuote Inc. is experiencing a positive shift this Tuesday, trading up by 10.38 percent. Significant market drivers include the company’s announcement of better-than-expected quarterly earnings and a strategic partnership aimed at bolstering its service offerings. These developments have buoyed investor confidence, leading to marked gains in stock price amidst broader market optimism.

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Live Update at 16:25:14 EST: On Tuesday, September 17, 2024 SelectQuote Inc. stock [NYSE: SLQT] is trending up by 10.38%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Latest Developments

  • SelectQuote reveals a new fulfillment center for SelectRx Pharmacy, highlighting rapid expansion and new job growth.
  • Anticipated release of Q4 and full year 2024 earnings includes a call hosted by top executives.
  • Positive growth noted despite a net loss, focusing on revenue increase and EBITDA improvements.

Quick Overview of SelectQuote Inc.’s Recent Earnings Report and Key Financial Metrics

Understanding SelectQuote’s recent performance is critical to foreseeing its market behavior. In its latest earnings release, SelectQuote exhibited mixed results. Revenue for fiscal Q4 came in strong at $307.21M, exceeding analysts’ predictions of $272.95M. However, the company faced a net loss with an EPS of (18c), slightly lower than the expected (15c). Despite these figures, SelectQuote marked its 10th consecutive quarter of surpassing projections, with fiscal year revenue and adjusted EBITDA up by 17% and 26%, respectively.

One notable driver for this growth was a massive 68% increase in SelectRx memberships. This surge underscores the burgeoning demand in the pharmaceutical sector and hints at the company’s robust business model. Interestingly, the Senior segment hit a 25% Adjusted EBITDA margin, showcasing efficiency and profitability in long-term insurance services. The firm’s Healthcare Services division completed its fifth profitable quarter in a row, adding $7.8M in Adjusted EBITDA, compared to a loss the previous year.

Financial reports further reveal that while the company struggled with profitability, it managed to optimize its balance sheet through a $100M commission receivable securitization deal—an effort to improve liquidity and capitalization. SelectQuote projects fiscal 2025 revenue between $1.4B and $1.5B, although this falls short of the $1.53B consensus. The company foresees a $14.4M EBITDA and a net loss of $31M for FY25.

SelectQuote’s financial strength is underscored by strategic moves in debt management, leveraging a solid balance sheet with total assets amounting to $1,235.9M and strong liquidity reinforced by a current ratio of 2.1. Despite encountering a lower-than-expected revenue outlook for FY25, the company’s strategic measures indicate prudent financial planning and a targeted approach to market growth.

More Breaking News

SelectQuote’s Market Impact

The latest developments involving SelectQuote are poised to exert significant influence on its stock price movement. The unveiling of a state-of-the-art fulfillment center for SelectRx Pharmacy stands out as a pivotal development in this narrative. This 54,000-square-foot facility, based in Olathe, Kansas, is not only an indicator of SelectQuote’s expanding footprint in the healthcare sector but also testifies to its scaling operations to meet escalating demand. Scheduled to be operational by the first half of 2025, the facility will create over 50 new positions, solidifying SelectQuote’s presence in the healthcare market and showcasing its capacity for job creation and economic contribution.

This expansion ties into broader revenue growth trajectories. From a mere 5,000 members, the SelectRx business expanded its membership base to over 75,000 in just a few years since its 2021 launch. This meteoric rise mirrors the company’s strategic focus on full-service medication management, a sector with immense growth potential. Consider the widely-fluctuating performance in stock prices, ranging between $1.76 and $2.1. Short-term volatility doesn’t overshadow long-term potential driven by sound operational strategies and market expansion.

Moreover, the forthcoming fiscal Q4 and full-year 2024 earnings report scheduled for September 13, 2024, will undoubtedly be a critical event for stakeholders. This event, headlined by CEO Tim Danker and CFO Ryan Clement, will provide insights into the company’s financial health, operational efficiency, and future guidance. Investors and analysts will be hawk-eyed, parsing through revenue figures, net income, and other financial metrics that speak volumes about SelectQuote’s trajectory. A crucial aspect here will be SelectQuote’s strategic emphasis on leveraging its Medicare insurance distribution prowess while nurturing its Healthcare Services platform.

Interestingly, SelectQuote reported substantial positive growth. Despite a net loss, the firm’s ability to generate a revenue surge aligns with its focus on optimizing financial performance while tackling challenges head-on. The balance sheet optimization, underscored by the recent $100M commission receivable securitization deal, paints a picture of prudent financial stewardship and strategic foresight.

From a market sentiment perspective, news of SelectQuote’s anticipated earnings release fosters a sense of anticipation among investors. Although the company’s latest report indicates both highs and lows, the strategic initiatives and growth metrics signal a profound commitment to scaling its operations and enhancing shareholder value. Investors will be keenly observing the consistent efforts to balance growth with profitability, leveraging operational efficiencies, and sustaining competitive positioning in the dynamic healthcare market.

Conclusion: Market Predictions and Future Outlook

SelectQuote’s recent strides in expanding its SelectRx Pharmacy and robust membership growth foster optimism about its market prospects. Despite the net loss, fiscal stability remains anchored in strategic initiatives optimizing liquidity and capitalization. The forthcoming earnings release will be a crucial determinant of investor sentiment, with the potential to reinforce or recalibrate market expectations.

For investors, the mixed performance metrics necessitate a cautious yet opportunistic approach. The stock’s inherent volatility requires diligent monitoring of financial reports and strategic developments. SelectQuote’s ability to execute its growth strategy and respond to market dynamics will dictate its stock performance and long-term market positioning.

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”