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Ryan Clement

Thanks, Tim. I'll start with a review of our consolidated results. Select quote generated $481 million in revenue for the second quarter, up 19% compared to a year ago. While the growth was primarily driven by our SelectRX business, Senior also delivered impressive results as MA volumes were higher than anticipated given very strong agent productivity and close rates.
Consolidated adjusted EBITDA totalled $88 million, up 30% compared to a year ago. This represents a company-wide margin of 18%, which remained relatively flat year over year, as the rapid growth of SelectRX contributed a higher percent of company revenues.
We are very pleased with financial performance at AEP. Importantly, we believe the embedded future returns in both new policyholder customers, as well as those that change plans, will accrue to shareholders in the quarters and years ahead.
With that, let me briefly detail our Senior segment financial results.
Revenue totalled $256 million in the second quarter, which is better than our original plan, which assumed a lower policy volume on a lower capital budget. The strong results were driven by the performance of our tenured agent force. While difficult to isolate the numbers, we believe certain nuances regarding this year's AEP drove seniors in need to seek the help of an agent-led model. This is another good example of the value of our platform, as well as the alignment between our business and our customers. As Tim noted, we win when our customers win.
The best representation of that can be seen on the right side of this page, where adjusted EBITDA of $101 million grew by 28% year over year at a margin of 39%, which is a near record high for the segment. Since we undertook our strategic redesign in early 2022, we've delivered three consecutive AEP seasons with adjusted even of margins of over 30%.
We stated at the time that one of our goals was to reduce operating leverage and deliver attractive returns in a wide range of sound environments. We believe this quarter's results underscore the progress we have made on that front over the past three years.
Next, I'll provide context on how unique this Medicare Advantage season was and how SelectQuote's model delivered strong performance. First, for reference, in a typical AEP, we see less than 1% of Medicare Advantage plans terminated by the carrier. This season, terminations were about 6% or about 15 times higher than normal as carriers restructured policies.
We specifically planned for this impact ahead of AEP and knew that American seniors would be in search of answers from experienced people and their policy changed or not. This is where SelectQuote's high-touch model came in.
For the 6% of policies that were terminated, we recaptured over 30%. Recall that we received a majority of the cash flows of a policy's lifetime value during year one and two, so the net cash impact from terminated and recaptured plans was modest at around $5 million.
Before we move on, I'll make one more point very clear. Policyholder persistency trends for policies that were not terminated by carriers were stable, and we have confidence that our current LTV constraint is appropriate. Our commission's receivable balance of over $1 billion is a highly attractive asset and one that we believe remains significantly undervalued.
Now, I'll walk through the key performance indicators for each of our segments. First, for Senior, we drove total Medicare Advantage policy volume of 248,000, which represents growth of 6% compared to our original guidance rejecting a 10% to 15% decline year over year.
Our strong customer recapture efforts certainly contributed to the closed rates in policy production as customers on terminated policies are recognized as new customers on a new policy. However, robust new customer acquisition and highly attractive economics represented the lion's share of this year's policy production.
On the right, you can see the impact in year over year Medicare Advantage lifetime values, which decrease 3% year over year to $907. It is important to note the decrease in lifetime value is primarily due to carrier mix rather than destabilization and persistency. We continue to be pleased with the stable persistency trends we see within our receivables.
On the next slide, you can see the continued strength in SelectRX membership growth. We ended the quarter with 97,000 members, up 54% compared to a year ago. This result continues to demonstrate the value our service provides when paired with our information advantage and connectivity and healthcare.
Member growth and the continued maturity of membership drove revenue of $183 million. Growth of 64% compared to a year ago, now representing an annual run rate exceeding $700 million.
This impressive growth in membership and revenue was primarily driven by recent robust senior division results. As previously communicated, the majority of our selector ex members find us after originally engaging to discuss their health insurance options. This underscores the significant synergies between the two businesses. The growth is also a testament to our improving onboarding process.
We not only capitalized on enrollments during the AEP season, but we converted a higher percentage of these enrollees to new members within the same quarter than in prior years. Moving down the page, Healthcare Services produced $2 million of adjusted EBITDA. Two things to note here. First, the AEP quarter is typically our highest upfront spend quarter to onboard new members. As a result, our profit margins are somewhat dampened relative to the rest of the year, in line with what we communicated last quarter.
Second, as Tim noted, we continue to see a very large market opportunity within healthcare services and are pursuing measured investment in areas that we believe can be as compelling as SelectRX.
I'll end the segment review with a look at our Life business where we continue to be pleased with the results. The business performed well on both the top line and from a cash flow perspective. Revenue during the quarter was $40 million and adjusted EBITDA was $7 million, which was up 62% year over year. Even a margin of 19% represents a stair step increase compared to 12% a year ago. The results were driven by strong performance of our final expense business and continued momentum with our swift-term Select product.
I will conclude my remarks with an update to our fiscal 2025 outlook. As Tim mentioned, we are raising our fiscal year 2025 guidance ranges for revenue adjusted even in net income. Revenue is now expected to be in the range of $1.5 billion to $1.575 billion, up from our previous range of $1.425 billion to $1.525 billion. This is driven by our impressive Senior results during AEP and the corresponding top line growth in Healthcare Services.
As I mentioned earlier on SelectorRX membership, we converted a higher percentage of AEP enrollees to members during the second quarter versus our original expectations. As a result of this pull forward, we are now expecting SelecterRX membership growth to moderate in the second half. Consolidated adjusted EBITDA is now expected to be in a range of $115 million to $140 million, up from our previous range of $100 million to $130 million driven by the near record senior margins we delivered in fiscal second quarter.
Net income is now expected to be in a range of a loss of $24 million to income of $11 million, up from a loss of $59 million to a positive $3 million. We are proud of the results we delivered this AEP and look forward to continuing to execute as we move through the second half of fiscal 2025. With that, we will open up the call for questions.

Question and Answer Session

Operator

Thank you, ladies and gentlemen, we will now begin the question-and-answer session.
(Operator Instructions)
Ben Hendrix, RBC Capital Markets.

Ben Hendrix

Great, thanks guys and congratulations on the quarter.
Just a quick question on guidance. The new midpoint still feels a little conservative against the beat, and I'm just hoping you can give us some thoughts on what you're seeing thus far in OEP and then in what you've slated for investment through the fiscal year end, and then anything else that can kind of help us bridge the way you're thinking about the midpoint. Thanks.

Timothy Danker

Good evening, Ben. I appreciate your question and I'll start maybe ask Ryan to provide some color. Overall we're just so extremely proud of our team, the operating results, the continued momentum in the business, again on the strength. These results we had raised our guidance in November, raising again this evening. With all that said, we think, it is a unique season. I think we want to see how the rest of the fiscal year plays out. Might ask Ryan to provide some commentary on back half of the year investment.

Ryan Clement

Yeah, no, I appreciate the question and I feel we're pleased with the results. We are making some investments. We've talked about in the Healthcare Services space. We're working on a facility here in Kansas that we think will drive meaningful improvements and overall efficiency. And so there are investments being made in the back half of the year on that front and, obviously, really pleased with the business.
More broadly, we'll be focused on continuing to onboard our Healthcare Services members. And with respect to, margins and kind of back off our expectation from the senior division is that we will be in the low to mid-20s consistent with the two prior years. So we're really pleased with the results and development on that front. And then, the Healthcare Services margin perspective, would expect Low single digits for fiscal 2025 and would expect that to continue to scale, and improve as we add to our customer base.

Ben Hendrix

Great, thanks. Just if I could follow up on the SelectRX side, clearly you guys have seen really good momentum there, and we get a lot of questions about kind of the total market opportunity. It seems like it's vast and really tracking well with your Senior engagement. I just wanted to know if you could or just wondering if you could go into a little bit more detail about the synergies between the segments.
You needed some moderation and growth through the second half, but overall kind of longer term, how should we think about that penetration and a kind of the correlation that we should be modeling between kind of SelectRX and the Senior segment?

Ryan Clement

Yeah, then we feel great about where we are from kind of an attachment rate standpoint ultimately on both sales and no sales which we talked about, right? We've gotten better at working with our customers who ultimately are on the plan that that suits their needs right now, so we call those no sales and, working with them on other healthcare assets being a really big piece of that, obviously.
So we feel great about that. As far as market penetration, we are starting to get more our feet under us, as far as finding customers from other places and getting better, market penetration, we've proven that this is a great, business to drive adherence. To drive waste down because these folks are on so many drugs, that really the 30-day supply works extremely well versus kind of the 90s.
This is such a good hybrid, and then also driving outcomes. We feel really good about that and I think there's more market opportunities than just our customer base. So, feel very, strongly about that. The space itself, we know. It is absolutely massive.
So we'll continue to think of creative ways to kind of tackle that space, but we feel really good about where we are today and excited, with our new capital structure and those things to kind of get towards moderate growth like we discussed, because the more we can moderately grow on the senior side, that grows our calls and ultimately that that creates a down funnel effect in the SelectRX. So feel really good about where we are.

Ben Hendrix

That's great, guys. Don't forget to squeak one last one in. Congratulations obviously on the investment from Bain and others. I just wanted to see how that's making you think about the pace of securitization and how you can get and if it's changing the pace at which you believe you can kind of get more benefit from that billion dollar receivable?

Timothy Danker

Thanks. Yeah, great question, Ben, and we are very pleased to bring on sophisticated institutional investors in Bain and Mortgage Stanley Private Credit and Newlight Partners. They have a lot of experience in insurance and healthcare and strong conviction about what we, jointly can create in the future in terms of value creation to your securitization question.
We actually think that the sequencing benefit of this preferred transaction puts the company in a position of strength. Certainly, with respect to continued deleveraging and also with respect to securitization. As we noted, we had our inaugural $100 million securitization. As Ryan noted, we like what we're seeing in terms of that performance.
And so now with the prop behind us, a capital stack that has more stability in it, really outstanding business results, we're going to continue to look at securitization, as an option for a continued deleveraging as well as other benefits we think that it can create around creating a more of an asset li type model. So yeah, we we're going to continue to pursue that and see that as a very viable option for the company.

Ben Hendrix

Thanks guys. I'll jump back in the queue.

Operator

George Sutton, Craig Hallum.

George Sutton

Thank you. Guys, this seems like the real Super Bowl. I wanted to make sure I understood the use of proceeds for the $350 million. Looks like $250 million will go towards paying down some debt that'll reduce your interest expense. There's an additional $100 million of operating flexibility, and I really wanted to see if we can attack that a little bit, give us a sense of what kind of operating flexibility that will give you that you simply haven't had, you didn't certainly have this season.

Ryan Clement

So as you mentioned, we are using a large portion of the proceeds to retire term debt, and so we expect around $260 million to be used for that purpose. We'll also fully repay any balances on a revolving facility and we'll have liquidity of roughly $100 million on the back side of that.
And so, really sets the business up nice. I think, in addition to that, it's worth calling out our ongoing debt service obligation, from a cash perspective, drops by about $30 million. And so it really sets the organization up to continue to grow. We've got a Healthcare Services business that's scaling its cash generative, and we're really excited about the cash that we expect that business to be generating in the quarters and years to come. And so, it does allow us to lean in, as well as find other healthcare services opportunities.
Tim, I'm not sure if there's something you want to add there.

Timothy Danker

Yeah. Well, first off, as a company headquartered in Kansas City, I like your intro, George. That was a painful watch for us last night. But back to the business, we've said for a long time, George, we think this is a business that has a better capital structure. We've been working really hard on it, and it's great to bring this to market. And as we've said in the prepared remarks, we are going to continue to be very focused, that the work is not done and there's more for us to do there.
Getting to the growth part of the equation, I think that's what made us so excited about bringing the preferred investors that we outlined. I think that there was respect and recognition for what we've built, but really, A lot of conviction around how we can further build out our insurance distribution platform where we've really focused on our Medicare platform as well as healthcare services.
So Bob alluded to this. I think there's a great opportunity for us to grow organically in terms of our MA platform. You're seeing lots of great pull through benefit. You're seeing the leading. Indicator around Rev-to-CAC, we believe that'll translate to cash flow, here in the very near future and that has us all very excited about, what I would say, measured and responsible growth, gives us in a better position to assess other opportunities in healthcare, and we're really excited about where we stand today.

George Sutton

So I understand it's hypothetical, but you went into this season with a lower agent count in large part because you didn't have the receivable securitization done in time. How much more MA business could you logically have done if we had these transactions completed beforehand?

Timothy Danker

Yeah, I think we've and I'll ask Bob to comment as well. I think we've certainly said, growing minimally at the market rate of growth is something that we can do and maybe there's situations where it's more than that. I think we have been really working hard to on the mousetrap, I think you've now seen for three consecutive years very successful AEPs. Ryan alluded to the fact that we think again on a full year senior in the load to mid-EBITDA margins. So we certainly think that there's a lot more growth opportunity and pull through impact to health care, Bob.

Robert Grant

Yeah, I mean we continue to get more efficient, which I think is clear in our numbers given that we had significantly less people this year and then deliver the results we did. I think our plan, we said it on an earlier call would have been to hire a similar amount of people last year.
On top of the little bit larger force that we had, I can't say exactly how many policies that would have been, but it would have, been growth on top of what we're already seeing, so I think we want to be very balanced in this we're not looking to grow.
Like we did before and really create too much leverage within our model, but we are very confident in hiring, pretty large classes, during what would be our fiscal year Q4 ultimately training those folks and getting them very successful for AEP that that structures work for us. That's the structure will continue as we go forward. So there was a lot more business to be had, if we would have had the capital and now, we do.

George Sutton

One more question if I could. We have been through three very challenging regulatory years. The outlook now with the new regulatory regime coming in looks to be much more favorable. Can you just talk about the early indicators you're getting there?

Timothy Danker

Yeah, we would agree with you. Oh, go ahead, Bob, you're fine, go ahead.

Robert Grant

I'm sorry about that. Yeah, we definitely agree that this will be a much more favorable environment and believe that this administration with some of the current appointees and things have a much more favorable outlook on Medicare Advantage in general. So we follow it was a challenging environment, we actually agree with some of the decisions that were made, as far as the way you market and things like that, so we feel very good about that, but excited to get back to an administration that's excited about growth within this market.

Timothy Danker

Yeah, I mean there's a great point. I just, I would just, yeah, I would just add, George, I think, certainly, things are turning in the right direction. I think we like what we saw, and I'm sure the payers, I've seen this as well just in terms of the advanced rate notice. I think that's been welcome news and hopefully can help ease some of the profitability concerns, some reinvestment back into the plan benefits, some further stabilization in the market. We think those are all positive events.

George Sutton

Great, thank you.

Operator

Pat McCann, NOBLE Capital Markets.

Patrick McCann

Hey, thanks for taking my questions, guys, and congrats on the quarter and on the strategic investment. My first question was just, kind of the piggyback on one of the recent questions regarding the agent force I guess given that you had expected the volume submissions to be down and of course it was, it ended up being a really strong quarter with really good close rates and whatnot.
I was wondering, although you said you, with more capital there could be more upside if you had more agents at the same time, is there any, do you look at the performance of the tenured agents of it in this quarter, does that shape does that change your perspective on agent force going forward as far as how you strategize on the number of agents and the tenure of the agents? Is it just seeing how strongly they outperformed; I'm just wondering if your strategy for agent for shifts at all.

Ryan Clement

No, a good question, but no, it really doesn't change our strategy. I mean, we've seen every year where we have continued to invest in our technology, our process, our marketing, which Bill does a great job of running that, and ultimately efficiency. And that made our tenured agents much more productive than they had even been in the year before, which was a record year for us from a productivity standpoint.
So we were confident that if we would have hired our normal kind of summer class, with those investments in AI and tech and marketing that we would have seen the same outperformance so it doesn't really change our strategy per se because we're confident that if we do hire those classes we would have seen the same results on kind of outpacing our historical per agent productivity. Tim, you want to add to that?

Timothy Danker

Yeah, I just, I think it's a great outcome by our team when you think about, obviously everybody knows that the capital constraint situation we're in when we got it earlier this year, we said, hey, we're going to do 10% to 15% less policies.
We really feel like, what Bob mentioned that the power of our tenured agents, the high-quality marketing, the investment we're making in tech and tools, to produce 6% year-to-year policy growth with 22% fewer agents. Now, we're in a position with the capital to responsibly grow and we feel we feel really good about that, it'll be more that we'll share in future commentary, but I do think, we'll be getting back to responsible growth and a real focus on.
Our Healthcare Services business, we're very pleased with SelectRX. We think that was a good opening act, but there's a lot more for us to do and this additional capital will allow us to further explore opportunities like we said where we think there's inefficiencies in the market and where our, high connectivity engagement model can win.

Patrick McCann

Great, that that's helpful. And then and then my other question just had to do with SelectRX. I was wondering if you could talk about sort of what you're seeing with the typical senior consumer when it comes to how they view the value proposition of a direct to your home pharmacy. I mean certainly seems like there there's it it's working out very well but I guess I'm just wondering.
What do you think is kind of driving this adoption, your ability to get consumers to adopt the home direct pharmacy sort of from a qualitative big picture sense if you could kind of give an outlook for how, as people are getting more used to using technology and so forth and shipping a lot of things direct to your home might be Instacart, it might be things like that. How you see the consumer developing over time to embrace that even more.

Ryan Clement

Yeah, I mean, I think that that this population specifically too, right, we've been very open that it's a lot of complex customers who historically were not as used to the technology and things shipped their house and then went to the local pharmacies, things like that. We are definitely seeing a shift there.
We're seeing them engage, much more, I think again, Bill's CLM team does a great job and it's increased that member experience pretty dramatically, as we've done this, but we are definitely seeing adoption go up. As this customer base gets used to this and sees the value in it, and, I think we'll just continue to see that more and more.
I think also, some of the things on the regulatory front, like reducing the donor holdout of $2000 and those types of things also are really helping our value right because these are folks that. That really historically took a lot of medications and would get into that doughnut hole a lot.
And now with that reduction, we're just seeing better customer satisfaction and I don't anticipate that going in any way, plus what we're doing for that consumer, driving their adherence from some 80% to 90% on most disease states helps the carriers of stars, and we're doing it on a really complex patient population which really reduces overall cost, whether that's reducing it because of waste or just reducing it because you really need to be over that 80% threshold on adherence to say medical costs.
I think both of those are starting to really ring true, and carriers are really starting to notice that, and they're really happy with what we've done and what we've been able to kind of drive forward with that. So, very unique model and we're very proud of what we've built, but we're going to continue.
To work with Bill's customer life-cycle management team and our customer experience team to just enhance that more and more and try to add more relevant products to that. We talked about that historically, but it's not just SelectRX, but there's a lot of things that we can do on a remote basis that will really help those customers, drive the needed health outcomes they have.

Patrick McCann

Great, thanks so much and congrats again on the quarter.

Ryan Clement

Thank you very much.

Operator

There are no further questions at this time. With that, I will now turn the call back over to Tim Danker, Chief Executive Officer, for final closing remarks. Please go ahead, Tim.

Timothy Danker

Yeah, thank you, everyone. We really appreciate everyone's time this evening. As you can tell, we have a lot of momentum and along with the entirety of the organization, I'm personally very energized to make 2025 a pivotal year for the company and our shareholders. We want to thank you again. We look forward to sharing more updates about our strategic initiatives in the months and quarters ahead. Everybody, have a great evening. Thank you.

Operator

Ladies and gentlemen, that concludes your conference call for today. We thank you for participating and asking to please disconnect your lines.