SelectQuote, Inc. (SLQT) Earnings Call Transcript & Summary

All right. We'll get started. Good afternoon, everyone, and thank you for joining this SelectQuote fireside chat here at the Citi Healthcare Services Conference. My name is Daniel Grosslight. I'm the healthcare technology analyst here at Citi. And I'm very pleased to welcome with us today, SelectQuote. We've got Tim Danker, CEO; Bob Grant, the President, Ryan Clement, the CFO. So thank you so much, everyone, for joining us.

Thanks for having us. Appreciate it.

Absolutely. So I was talking to 1 of your competitors this morning. And I think I'm going to kick off this fireside chat, the same way I did with that and ask about the market? Because it seems like we are seeing some rationality come back into the market after a pretty irrational 2021 AEP. So the question is maybe if you can give us an overview of what happened during 2021? What you learned from it? How you applied those learnings to 2022? And if those shifts to more rationality is durable in '23 and beyond?

Yes. Great question, Daniel. And I'd agree with your assessment. Certainly, what we're seeing right now is a more rational environment. We're certainly seeing, I think, the broader e-broker community focus around the member experience, improving the member experience, business quality, cash flow and profitability over growth. So I would agree with your assessment. Back in '21, I think that was difficult across the industry, both in terms of kind of the growth and competitive dynamic combined with that particular year, a pretty difficult plan design. And specific to SelectQuote, we had a lot of operating leverage in our model. We took a step back in early calendar '22 as part of our strategic redesign that we've talked about externally quite a bit. And I think there have been a couple of tenants to that strategy that have really played out around -- real focus around marketing segmentation. It's a big market, but we really want to hit the fat part of the plate until we've made changes to or the marketing strategy to really concentrate on the most profitable segments. We've made changes with respect to our agent plan, and how we've really focused on more core tenured agents. 70% of our agents this AEP were core tenured agents versus 20% of the year prior and really seeing a lot of benefit from that strategy play out overall. I think more broadly for the industry in '22, we saw plan design be more attractive. And I'm sure you may ask questions about things that may impact plan design in the future. But we think, overall, that was an attractive backdrop this year with respect to plan design. I think the marketing, the broader competitive environment around marketing rationality, lead cost, quality has all been a positive for the industry. And I think, to the durability, we really feel like the changes that we've made over the course of the last year are durable. They are sustainable. We've taken a lot of costs out, both fixed and variable. And while LTVs are at a lower point than they were previously, we've also taken a tremendous amount of cost out such that we were able to drive significantly improved unit economics, and we think that we can continue to do that.

That's great to hear. So if I just look at the market broadly, there were a lot of players in 2021, even in 2020 that were probably a little less scrupulous in terms of how they marketed, which kind of caught the eye of the CMS. I'm curious, are you seeing less of those kind of smaller or less scrupulous brokers now? Have they been washed out? Is that leading to some more of this rationality that we've seen as AEP?

Yes. I think we applaud the broader efforts around how to improve the member experience and the quality component of that. I think we're big proponents of that. We've always been leading edge with respect to compliance and quality. And I think there was some of that, Daniel. And I think that's good for the industry longer term as that gets washed away, whether it's the providers or, quite frankly, smaller shops that really don't have the capital or the scale to be able to compete on a long-term basis. And I think it's, again, creating a better backdrop and environment long term for things like persistency and LTVs, our connectivity and integration with the insurance carriers.

And you mentioned that plan design change this AEP as well to your benefit. How did it change this year? And for the coming years, there are some headwinds facing Medicare Advantage like the advanced notice, which wasn't that generous since RADV audits, Star score re-rating. How do you expect that will change plan design and impact you in the future?

Yes. I think as far as this year goes, the right players that do things in a really, really effective way had really competitive plans, and that really helped because those carriers bring a level of stability to the marketplace and have good retention and really good customer experience. I think, echoing that into the next years with the maybe scrutiny that's coming on the back end of COVID and some of the leniency that was there during COVID, that's not going to be an equal distribution of how that's going to affect each carrier. It will affect some carriers more than it affects others. We feel good about our positioning just because we are kind of the largest partners of the most consistent players that have really good stars and have really good number of experience scores, NPS, all the things that I think that CMS is really looking for. So we feel good about our position in that because we've always been a very neutral choice platform and whoever is the most competitive, we wins on our platform. But we've also been more limited in the fact that we don't have 40 carriers, right? So we've always been such a meaningful partner to those players that we don't think will be impacted. It will invest a significant amount of dollars that we feel really good about our specific position. Not that there won't be challenges in the space given that scrutiny on certain carriers, we feel good about where we are.

Got it. Okay. Now let's talk about some of the changes that you implemented among the 2021 challenges. And I think you introduced a 4-pillar plan. So maybe if we can kind of take each of those pillars in turn. The first pillar, I think, is just your strategy around growth versus profitability. You really pulled back on growth to prioritize profitability. And it came out, right? This AEP close rates were up 54%. Medicare per cost -- or cost per Medicare approved policy down 50%, unit economics expanded to 3x revenue to CAC. Going forward, how should we think about that dynamic growth versus profitability? And for calendar year '23, do you think we're going to return to growth here?

Yes. We're certainly proud of the metrics. I appreciate you mentioning those. It's been a lot of work. And like we said, we think we can continue progress on that front. As a general orientation, we are going to continue to prioritize growth and our profitability and unit margin improvement over growth. We think that's a prudent thing to continue to do, and that will be the general rule of thumb. I think as far as '23 outlook on growth, I mean, certainly, we believe that the market rate of MA growth is certainly attainable, but we'll provide more clarity to that in our '24 guide. Ryan, do you want to add anything to that?

No. I think, obviously, the organization has made tremendous progress against strategic redesign in 4 consecutive quarters so significant improvements as you alluded to. And a really strong margins in this most recent quarter at 37%. If you look at our full year guide, we're 18% to 22%. I think the days of 30-plus percent on a full year basis are probably behind us, at least in the near term. But I do think 20%, low 20s is attainable, achievable and something we can work for going forward.

Got it. So as a guidepost for calendar '23 and beyond, we should be thinking, getting back to growth, perhaps eventually up to the market rate of growth and on a full year in Medicare around 20-ish, low 20% to mid-20% margin is where you're thinking?

That's right. And I think continued focus on unit economics and cash generation.

And 3x is a pretty good LTM rev to CAC that you achieved. Is -- are you kind of capped out at 3x or...

Absolutely not. I mean great progress. Again, I think a lot on the backs, right, of the operating cost per approved policy. We've taken on LTM basis over $400 of cost, which is pretty tremendous. LTV is again at a low point where we can maybe talk more about persistency and some improvements that we're seeing as the precursor to improved LTVs. But I also think you've got to think more broadly across the platform with respect to what we're doing in health care, SelectRx. Those, again, are new revenue sources primarily off of the backs of the spend that we're putting into distribution, I think on a longer-term basis. That's how we're viewing the platform. We need a healthy distribution, MA distribution business and those unit economics have to stand on their own, but we certainly believe there's opportunities as we connect more broadly into health care to grow that rev to CAC.

Yes. One of your competitors spoke about their dedicated carrier relationships, what you call your pop relationships and the strength they've seen there. How has the pod relation -- how have the pod relationships trended recently? And is that going to be a growth driver for you guys as well?

Our pod relationships are extremely strong, right? We've got some very large relationships there that we've done a very good job. And when we benchmark against others, if they have gotten the feedback that we continue to be really best-in-class can scale. The most effectively, we're very flexible with how we do those because the hours of operation can be a little bit unique sometimes, and we feel really good about that as far as the growth, right? We do anticipate some growth there, more measured, obviously, than where we were in the past, but it should hopefully follow the growth of Medicare overall. And we also feel good about the fact that our pod relationships are with carriers that are extremely stable and have a really good foothold in the marketplace.

And the cash flow dynamic there, it's a little more favorable, right, because you're not paying for the leads?

That's right. Our cash flow generation off of that, it's really strong.

Okay, let's move to your second priority, and that's just how you're managing your agent force going forward. And you're going to see a trend in my questions here, too. I'm going to ask about what happened in 2021, what should change and kind of where this is going? So maybe if we can take your agent force, what happened in '21? What did you change? What happened in '22? And where is this going in '23?

Yes, I'll start and maybe Bob will want to comment as well. Certainly, in '21 back to the point of operating leverage, right? We had a business model really oriented towards growth. We were hiring thousands of agents in a pretty challenging labor market. And I think as we've stepped back into 2022 as part of the redesign, we said, "Hey, we want to have a more higher percentage of core tenured agents." We know that core tenured agents, not only perform better from a customer acquisition efficiency standpoint, they also are better from a back-end retention. And so our mix is significantly higher. We're going to try to run the business more on what we call kind of a year-round agent force, where we're taking less of the peaks and valleys where you hire and onboard a significant number of agents and during slower periods offboard. We've really concentrated in 2022 around hiring earlier, enhancing our training regimen, which we think was really good, but it can always improve. And we've really focused on agent retention. We've got several initiatives with respect to agent retention around how we try to leverage our agent leveling model to ensure that we protect and keep our best, to hybrid sales and service models, where we take advantage of off-peak periods to kind of balance or even have done things around improving work-life balance. This is a tough job. There's opportunities during the slower period. And so our agent attrition levels are at the lowest they've been in several years, and we feel very good about the alignment with respect to the agents. And we think this strategy is playing out. I mean, 50% improvements in close rates, improvements in marketing efficiency, that has a lot to do with the way that we're managing the agent plan. Bob?

I mean I think the only thing I would add to that is our plan was so different than the past as far as the kind of the operating leverage that we took out of the business by having more core agents than flex agents. The one thing we did is we went and back test and said, okay, how much of the market and rationality is really contributing to us doing significantly better? And how much of it is taking the 70-30 mix on core agents to flex agents? And what impact do we have on the business? So what was really nice is as we ran the math, we believe that over 80% of ours was in our control. And that when we back test even in a tougher environment, like 2021 was, we have a much more controlled environment when we have more core agents than flex agents. Doesn't allow you obviously to maximize AEP like you probably could before with thousands of agents and seats, but it also allows you to really focus in and be very, very disciplined and measured in your approach. So we feel really, really good about that because it -- you don't have to invest in AEP like we used to. Where we used to have higher CPAs as something we're in Q1. We used to have all these things in anticipation of AEP. We don't have to have that anymore. So if you go back and look at that, we can very much weather and do well during tough years with that.

It's a great point. I mean that's part of trying to box in more of the range of outcomes. And I think the approach around agents around marketing segmentation, there will be changes, right, obviously, from year to year. But how do we put ourselves in the best position? We believe, fundamentally, we control a lot of those outcomes. This AEP was not a 1 quarter event. It's been 4 quarters of improved operational performance, but we also understand the market demands more predictable return profiles, and we're certainly signing up to do that.

So is that 70% core tenured agent the right number? Or can you go higher?

I think it's interesting. We will probably not go higher than that, but I do think that's the right number. I think even, more importantly, when we hire earlier, Daniel, we really get a very different result. The flex agent really are not flex agents at that point. We're hiring in January, February, March, April, May. We actually cut it off at that point. Historically, we went all the way to September for hiring. So the other thing that we're doing is creating an environment where Flex gets a lot closer to core on close rates. So it's not that 70% is the perfect number. We'll try to strive to be at that number, but at the same time, we will also create consistency through hiring earlier and being very measured in that too.

And you'll see some of that investment in our right fiscal 4Q, 1Q as we try to create more of that year-round force. We think it's definitely accretive on a full year basis and again, creating a more predictable model.

Right. So fair to say that we'll see a little bit more margin compression now during some of the slow periods because you're carrying more of these tenured agents a full year, but on a full year basis, it will be accretive?

Exactly right. It's absolutely right.

Okay. The third pillar of your strategy is just increasing touch points and expanding your relationships with carriers. We touched on the importance of the pod relationships. I'm curious, what else can you do to improve and enhance your carrier relationships?

Yes, that's a really good question. I think a lot of that has to do with other services that we can do on the carriers we have. And one thing that's been really good about the last couple of years, I think as we've gotten in the health care services and some other proof points, we've proved that we have a very, very strong relationship with the client. And as evident by taking a pharmacy and going from 2,500 members to nearly 40,000, we can use that as a proof point to the carriers that, "Hey, you should do more in partnership with us and use us as an extension of you." And I think we've successfully gotten there, and that's why you've also seen a shift in our year 1 cash and kind of our payback periods because we're doing more and more for carriers. And that's improving 90-day persistency. It's also improving some cash that comes to us because they're paying for those services. And we feel really good about that. And I think we'll continue to expand that as we prove that our relationship is incredibly strong with a really difficult cohort of customers that leans, as we've talked about before, a little bit more towards low income, a little higher health needs. And those are very important customers to carriers because they also have typically higher reimbursement rates, right, things like that. So we feel really strong about our position in there, and I think that will continue to evolve, and you'll continue to see that get more and more portion of our business.

Yes. Yes. And if I look at what the carriers are doing, this is kind of variable, but Humana made some noise 1.5 years ago now about some of the difficulties that they saw in the third-party broker channel, but -- so they were going to kind of retrench in the internal channels. So curious if you've seen more investment from the carriers in their own internal channels? Or is it manifesting more in kind of these pod relationships, these direct relationships? Or has there been no real big change at all in how they're looking at the distribution channels?

I think for us, personally, it has not changed how they knew the distribution channel. We've always been a very quality partner. While we did run into some challenges, obviously, like others in the marketplace, I think ours were lesser. And we've successfully, over the last year, partnered more deeply, right, to become an extension of the carriers. I also think they're valuing those partnerships more and more than they have in the past, right? I think their goal in the past was to expand distribution externally through diversification to make sure that they weren't too reliant on a couple of people we've heard that. I think that, that's changing, that they really want to build strong partnerships with their key partners and invest in those partners to make sure that the customer onboarding is seamless, to make sure that we know everything about kind of their internal operations so that we can help advise customers on what to do and where to go and things like that. And that's been really, really strong results for us. So we have not seen any changes. I do think there's been changes overall to the marketplace, who they partner with, how they expand those partnerships, comping, for example, marketing funds on different measures to make sure the quality is a huge portion of that. And we feel really good about that because we're in a really good pole position on those things.

Got it. One of the big trends also with some of your peers has been driving more growth through noncommissioned revenue streams. And obviously, you've built out your health care services, you're getting into the -- you've gotten into the pharmacy business, and that's growing rapidly. Let's talk about, first, your noncommissionable revenues, healthcare services revenues. Why did you decide to get into the pharmacy business to begin with?

Do you want to go?

Yes. So we started actually going back and started population health first as an extension of our business to try to understand our consumer base better. So if you go back to the beginning announcement that we made, we basically started a data gathering company that partners with the carriers to get around 50 data points for a customer that comes into that. We have thousands of net adds a day into that. We get hundreds of thousands of data points per day, and we can really understand the consumers' needs. We use that to go; a, partner with the carriers on certain services they offer, but then, b, to also say, hey, I think there's a gap in the marketplace on polychronic pharmacy. There's not a huge space. We think that the TAM is really large, and we also think that there's not enough connectivity from the folks that do exist to really expand that rapidly. So we went and bought those pharmacies with that thesis, and that's played out to be incredibly true. I mean we've gone from 2,500 really net clients to 39,000 in about 18 months. And the adoption from our customer base has been extremely strong. It's also -- it did $55 million in revenue last quarter, which up from when we bought it, obviously, tens of millions dollars more per month than we were seeing per year. So we feel really, really good about that. I think it's also just a proof point of what connectivity we have to customers, and what we can do within health care in partnership with the carriers, whether that's helping them offer their services or supplementing their services and things that we could be good at like the pharmacy.

Yes, I think it's really different than our competitors are doing, some wraparound services that we're doing as well. Bob described them, right, additional value-added services, HRAs, value-based onboarding, those are important to improving the member experience, we're doing those. We're thinking about this a little bit more broadly with respect to building out a broader health care services platform. And totally agree with Bob. The consumer demand has been pretty breathtaking. It's all premised on, right, the data that we have and the conversations and the connectivity we have with the seniors and that allowed us to do some MVP type evaluation before saying we're going to make a step forward to hire some subscale pharmacies, and we're going to get in that game. And I think that playbook will continue to be utilized across health care. It's -- we're already in a big addressable market. We're now getting into a significantly larger addressable market in health care. And we can do it in very smart ways. Back to models that are more lead generation, referral type relationships to joint venture, to owning and having owner's economics like we do in Rx, and that gives us some flexibility as we approach those opportunities. And now we can do it in a very, again, disciplined prudent way.

And similar to other models, I'd say, wallet share while adding value is something that gets talked about a lot, right, in direct-to-consumer businesses, and that's all we're really doing is expanding the wallet share of one of the most expensive services in the U.S. while adding a ton of value and saving the carriers money through adherence and first drug reactions and things like that. So we feel really proud about what we're doing there and think it's just scratching the surface of what we can do.

Yes. Makes a ton of sense. And then you said that this last quarter that, that business should be approaching EBITDA breakeven by the end of the fiscal year. You're currently slightly gross margin positive on that business. So can you just walk us through how you get to EBITDA, near EBITDA breakeven by the end of this year?

Yes. So with this business, we are building a recurring revenue and margin stream. And there's kind of 2 things that are expanding. One is customer count, obviously, going -- we've quintupled our customer count over the last year. And then, separately, these customers are taking 7, 8, 9, 10 plus drugs that are generating revenue perspective around $85. And the margin per drug is 25% to 27%. So strong unit margins. And so as you're expanding and gathering all of those prescriptions for the customers, there's an expansion component that happens there. In total, we're expecting around $6,000 per year in revenue from each of these customers that are coming on board. So yes, we'll -- the plan is, we'll be approaching breakeven towards the end of this fiscal year, and we're really pleased with the results and growth that it underscores the power of the platform.

How many members do you think you need to maintain that breakeven?

Yes, we've -- I don't think we would disclose that at this point. We are obviously well on our way. We've been growing at a pretty healthy clip. We slowed down a little bit. We announced that in the most recent quarter, really to focus on gathering the prescriptions and getting people, a larger portion to kind of mature phase where we've got full boxes going out each month, but that is -- that's the cadence each one these boxes are going out. Bob, anything you would add on from an operational perspective?

No, I think 1 of the interesting things since it is almost a SaaS revenue model, a recurring revenue model that doesn't get counted up front, right? That's one of the interesting part. As you grow, you're really investing in growth. So on a normalized basis, we feel really strong that if you were to "stop growing", which is what a lot of technology companies, things that Ryan talked about that our unit margins are really, really good, but we are also simultaneously preparing for growth. We're a bit overstaffed to keep supplementing that growth, which, to this point, we've pulled back a little bit, we're still talking about growth rates that are north of pharmacy growth rates in the marketplace by a pretty wide margin.

Yes. And once you do reach scale in this business where do you think margins settle out?

Yes. I think low to mid-teens is our expectations. We really think it's an attractive market.

Yes. Yes, makes sense. And as we think about other services that you can provide within that segment outside of the pharmacy, outside of some of the pop health that you guys are doing, is there anything near term that we should be watching out for?

Yes. I mean I think that we can do a lot of things, and we are evaluating a lot of stuff. Obviously, we haven't really disclosed exactly where we're looking. But anything that is value-added, that supplements the tricky kind of customer base that we have, whether that's virtual care components, chronic disease management, those types of things are really what we're looking at. And we believe we would have a really high adoption rate, which is within kind of each of those markets. And I mean -- I think we've already proven it with some of our partnerships that we've talked about before. Look at our partnership with Oak Street. We have a great partnership with Oak Street. We feel really strong about what we do together. We have helped educate a lot of members on the benefits of value-based care versus traditional care, especially when they express that they don't particularly love their current doctor experience. And if you think about that, we're doing that on a relatively small kind of referral cost basis or a really reimbursement rate for the education that we provide, but the TAM in that space is massive. So not saying we're going to get into value-based care, but I think we've proven we can do more than just pharmacy by the fact that we are pretty -- from what we heard, the largest referral base to value-based care, also pharmacy and then some other services that we currently provide.

There's lots of needs, needs to be positive for the senior. We want to do good, and there's a lot of opportunity there. From a financial perspective, I'd say paint a picture of things that are cash generative, cash accretive, higher-margin services businesses are things that we would attempt to target.

Yes. Would you ever think about expanding outside of Medicare, Medicare Advantage, going into the individual market, employer market, ICHRA?

Yes. I mean we've certainly looked at it before. There's nothing that's off the table, but we're pretty focused on. We are, again, as a reminder of a diversified multi-line broker today with a very large life insurance business, very nice and profitable P&C business. And I think, between that and health care, that's really been the focus. But there's nothing that's off the table.

Our MedSup and ancillary plans going to become a bigger portion of your senior business moving forward?

Yes. So I'd say on MedSup, that depends on the competitiveness of MA, things like that, we still place MedSup. We think that it's been a tougher go, right, just given the competitiveness in MA, we anticipate that to stay there. We still do produce quite a bit of Medicare Sup as far as ancillary products. We already produce a lot of ancillary products, especially in the dental space. We're the leader really in that space. We do anticipate that we'll find more things over time as supplemental benefits become a bigger and bigger piece, and we've proven that we can cross-sell better than anybody. So as new things come to market, and as we find new things, I think we'll monetize those things extremely well because we've proven we can do it over the years.

Talk about LTVs. This has been a tough issue recently. This AEP, LTVs fell 6-ish percent year-over-year. As I listen to you talk about all the changes that you've made, it seems like all of these changes should improve persistency at some level. So the question is, should we expect to see some uplift in near term LTV?

Yes. I'll let Ryan address the LTV question, but underlying around the issue, right, it's affected the sector and select quite around persistency. As part of that strategic redesign, we made lots of changes, really focused on stabilizing and improving persistency. Most of those efforts went into place around April of last year, again, things like the focus on marketing segmentation and really concentrated on the healthiest part of the market. We've talked extensively about agents. We've also made changes to our technology stack to help improve plan design, plan fit. And we have a series of retention strategies that, when someone's in market, we want to make sure that, that interaction is with SelectQuote. And so we have seen and we disclosed in our 1Q earnings deck, and I think some good information where you can see how that 90-day persistency, which is really where most of the customer churn in action happens has both stabilized and improved. And I think that while LTVs, with a 3-year weighted average or kind of lagged, the leading indicator of persistency, we feel significantly better about, that will take some time to kind of play through it. But, Ryan?

Yes. I think in Q2, we booked lifetime buys of $870, as you alluded to, was down a little bit. We also made some strategic decisions that drove that down a little bit as well. On a full year basis, we do still expect to hit the $875, that we put out there at the beginning of the year. As you mentioned, we're doing a lot internally that should improve overall persistency. We're seeing some encouraging trends. All that said, we're going to maintain our positive posture or conservative posture with respect to booking the 15% constraint. We think that's prudent at this time. But we're definitely seeing encouraging signs. And I think the thing that's going to be really important on the back side, all of that is while we would benefit from improved lifetime values, the business on the backside of taking cost out and strategic redesign, the margins are compelling. We have a great business as it is. So as we see lifetime values, persistency improve, it really only, I guess, it's the benefit of the business. But right now, we think it's attractive in the absence of any real movement there.

Yes, yes. We haven't really touched on marketing yet, but I think that was a core piece, too, of your improvement as AEP. Can you just talk a little bit about how your marketing strategy evolved this AEP, and how that might change in future AEPs?

Yes. I'll start, Bob, maybe you want to add to it. But that was a -- it was big change. And back to focusing on changes in marketing segmentation and really the healthiest part of the market. I mean, we still subscribe to an omnichannel approach to marketing. There's no 1 channel that's good or bad, but you really need to concentrate within those channels on the most profitable segments. And we've been in senior business for over 12 years now. We have a lot of data. We have a lot of intelligence around that. And we've done a lot to really work on the segmentation and try to work on reducing those that might shop or switch a lot or there's a lot of SelectBid proprietary on our end. And we think that we're certainly seeing those benefits. We're also seeing, again, a broader industry environment that there's -- we've seen softening of costs from a marketing perspective. But we think we can see from really April forward, not only the mix of customers and problematic versus good certainly improve, and then we can see it pulling through in terms of the 90-day results. Bob?

I think the only thing I would add to that is we really made an emphasis on control and quality over the last year, not that we didn't focus on that before, but one of that was really tightening the funnel even though we want -- we are still very omni-channel. That ended up being that we did let go of quite a few marketing partners that would not necessarily adhere to what we wanted from a focus and a targeting standpoint, and then we really leaned into the folks that were providing the best quality and the exact kind of targeting that we wanted. That's been a huge win for us. We are extremely well diversified now. We've helped some folks get larger in that space that we do rely on, but mostly we rely on ourselves now, which is great. We control over 50% of our marketing, which was not the case in the past, and that makes us be in a really good position to continue to expand on the relationships that we control.

Got it. Let's switch over to cash flow because that's been a pretty important topic recently. You've got around $36 million of cash on the balance sheet, $100 million of capacity under your revolver. You've noted that you breakeven on an MA policy now during the second renewal. So I guess as you slow down growth, as you collect more cash here, are you confident that you'll be able to return to growth in '23 without raising additional capital?

Yes. So we prioritized unit margins, and we really focused at the beginning of this year on getting into cash or breakeven in the fiscal year. And at this point, we have clear conviction in that. As you alluded to, we had $36 million in cash at the end of the AEP season, and undrawn revolver, something that candidly, we actually expect to draw on as part of our plan. In January, cash comes in. So at the end of January, our cash balance was approaching $100 million, and we're in a really great spot. We're well ahead of where we expected to be. Our goal was cash even or breakeven. Our next goal is operating cash flow. It is a focus. When we roll out our fiscal year guide for 2024 in August, we'll give additional insight into kind of when we see ourselves hitting operating cash flow positive, but it is a priority that we're going to continue to focus on unit margins, cash generation, we're in a really great spot.

And you do have $1 billion or so of receivables, commissions receivable. Are you looking at ways or can you look at ways to monetize some of those receivables to get liquidity out of that there?

Yes, it's a great question. Obviously, we do have $705 million in debt. But we do have that $1 billion in commission receivables. We certainly think that, that's a part of the equation with respect to how we put ourselves in a better capital structure. We'll look forward to sharing more around that in the future, but it's definitely a real asset.

Yes. Yes. I know we spent the bulk of the time talking about Medicare. But as you mentioned, you do also have life insurance and auto and home. And I'm a proud customer of the life insurance.

Thank you.

Good experience. But my question is, because most of your investment is going towards the health care segment, is there a reason to keep life insurance and auto and home? Why not spin those and off-sell those and get some capital out with?

Yes. I mean that would certainly be an option, but we believe in the value proposition and protection, right? Health and wellness is important. Protection products are important. Those are cash-generative businesses. We've taken a similar playbook that we have to senior to really focus on margin enhancement. And like our final expense business, we've slowed that down a bit in terms of top line. But you can see in our latest results, margins improved. We think auto and home has a great value proposition as well. And so we think that, that fits into the total picture. And as we build this broader platform, we've talked primarily around health care and how we can build upon that, but there are cross-sell opportunities, and we're concentrating on that as part of that broader kind of global customer economic view that we're taking.

Makes sense. Well, I think we're running out on time here. Really appreciate you guys making some time for us this afternoon. Very helpful. Thanks, Tim.

Thank you. Really appreciate it.

Thank you.

Thank you.

Thanks, everyone.