SLQT - SelectQuote shares are down 40% on Thursday morning: here's why

SelectQuote Inc ( NYSE: SLQT ) said late on Wednesday its sales topped forecasts in the fiscal fourth quarter. Shares of the company, however, tanked about 40% this morning as investors focused on lower-than-expected earnings.

Q4 financial results

SelectQuote generated $188.45 million of revenue in its fourth quarter, representing a 33% growth from last year’s $141.45 million. But its net income and adjusted EBITDA in Q4 tanked more than 80% and 47%, respectively.

Adjusted for non-recurring items, the insurance company earned 2 cents per share – a significant decline from last year’s 13 cents a share. In comparison, analysts had called for 5 cents of adjusted EPS on about $181 million in revenue.

Revenue from the three business segments

SelectQuote’s ‘senior’ and ‘life’ insurance segments noted an annualised growth of 42% and 41%, respectively. This was partially offset by the ‘auto & home’ unit that posted a 41% decline in fourth-quarter revenue.

Full-year financial performance

For the full year, SelectQuote reported $131 million in net income that translates to 79 cents a share. The NYSE-listed company swung to a profit in its recently concluded financial year on the back of $937.8 million in revenue.

CEO Tim Danker’s remarks

Commenting on the financial update, CEO Tim Danker said in the earnings press release:

“2021 was a landmark year for SelectQuote both in terms of our growth but also in the significant opportunity established through the initiation of our Population Health strategy. We continue to have high conviction in our differentiated model and our ability to scale quality growth in 2022 and beyond. We believe that SelectQuote’s strong connection with our end customers creates differentiated value, and we expect Population Health to strengthen that bond in the years to come.”

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