SelectQuote Posts Mixed Q2 Results as Pharmacy Growth Offsets Medicare Headwinds
SelectQuote Inc (NYSE:SLQT) reported financial results for its second quarter of fiscal year 2026, delivering a bottom-line beat but falling slightly short on the top line. The insurance and healthcare services platform's performance highlighted the ongoing transition of its business model, where rapid growth in its pharmacy segment is beginning to counterbalance pressures in its core Medicare operations.
Earnings and Revenue Versus Estimates
The company reported non-GAAP earnings per share (EPS) of $0.26 for the quarter, surpassing analyst consensus estimates of $0.21. This represents a significant beat on profitability.
However, consolidated revenue of $537.1 million came in just below the estimated $545.0 million. This marks a year-over-year increase of 11.6% from $481.1 million in the prior-year quarter.
The market's immediate reaction was negative, with the stock trading down in pre-market activity following the release. This suggests investor focus may be on the revenue miss and management's revised full-year guidance, despite the stronger-than-expected earnings.
Segment Performance and Key Press Release Highlights
The earnings report painted a picture of a company navigating external challenges while successfully scaling a newer business line.
- Senior Segment Stability: The core Senior business, which markets Medicare plans, showed resilience. Revenue grew 2% year-over-year to $261.5 million for the quarter, while Adjusted EBITDA margin held steady at a robust 39%. Approved Medicare Advantage policies increased by 4%. However, the lifetime value of commissions per approved Medicare Advantage policy declined 4% to $874, reflecting industry-wide pressures on plan benefits and commissions.
- Healthcare Services Acceleration: The Healthcare Services segment, led by the SelectRx pharmacy, was the standout growth driver. Revenue surged 26% to $230.7 million. The pharmacy's member base grew 17% to over 113,000, and average prescriptions shipped per day increased to 32,578. This growth is strategically important as it diversifies the company's revenue streams beyond insurance commissions.
- Life Segment Growth: The Life insurance segment posted a 9% revenue increase to $43.6 million, driven by a 14% rise in total premiums written, particularly in final expense products.
- Revised Guidance and Partner Headwinds: Management revised its fiscal 2026 outlook downward, citing two specific, partner-driven challenges: a national carrier's decision to constrain Medicare Advantage marketing spend and previously communicated pharmacy benefit manager (PBM) reimbursement changes. CEO Tim Danker emphasized these were "discrete" headwinds unrelated to the company's internal execution, which he described as strong. The company's conviction in its long-term platform strategy remains unchanged.
Outlook and Analyst Estimates
While the press release did not provide specific quantitative forward guidance beyond stating the revised outlook, analyst estimates for the coming periods offer a benchmark. For the next quarter (Q3 FY2026), the consensus revenue estimate stands at approximately $469.1 million. For the full fiscal year 2026, analysts are currently modeling sales of about $1.73 billion.
The company's commentary suggests the second-half performance will be impacted by the noted partner constraints, making the achievement of these estimates contingent on the continued strong growth of the Healthcare Services segment offsetting Senior segment pressures.
Market Reaction and Strategic Positioning
The pre-market stock decline indicates investor caution. The slight revenue miss, coupled with the lowered guidance, appears to outweigh the positive EPS surprise. Investors are likely weighing the near-term headwinds from large carrier partners against the long-term potential of the rapidly scaling pharmacy business.
SelectQuote's story is increasingly one of diversification. The quarter demonstrated that its operational model can produce strong margins in its legacy business while simultaneously building a substantial, fast-growing healthcare services arm. The success of SelectRx is becoming a critical lever for the company's overall financial performance and a key factor in its ability to navigate a volatile Medicare Advantage landscape.
For a detailed look at SelectQuote's upcoming earnings estimates and historical performance, you can review the data here.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
