Please ensure Javascript is enabled for purposes of website accessibility

SelectQuote Delivers Largest IPO Since February

By Bram Berkowitz – May 22, 2020 at 12:12PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The insurance sales platform was trading at over $26 per share on Friday after going public at $20 on Thursday.

The largest U.S. initial public offering since February did not belong to some ride-sharing service or a new biotech firm working on a coronavirus vaccine, but rather to a decades-old insurance industry company.

SelectQuote (SLQT 7.58%), a platform that connects consumers to insurance carriers, issued 18 million shares of common stock earlier this week, and previous shareholders sold 10.5 million shares. The stock began trading Thursday at $20 and had risen by 31.5% to around $26.30 as of noon EDT Friday. 

SelectQuote Office

Image Source: Glassdoor

The company will have roughly 162.65 million shares outstanding, giving it a market cap of $4.39 billion. 

The Wall Street Journal, citing research from Renaissance Capital LLC, reported that the last company to issue a significant IPO was the contract drug-development company PPD Inc. (PPD), which went public in February. 

Renaissance also reports that there have only been 56 IPOs filed this year as of May 22, which is down more than 24% compared to the same period of last year.

Founded in 1985, SelectQuote helps consumers purchase complex senior health, life, auto, and home insurance policies from a curated panel of the nation's leading insurance carriers.

The company doesn't provide the insurance, but rather finds consumers looking to buy it and matches them with insurance carriers. SelectQuote earns commissions from the insurance carriers for the policies it sells on their behalf. The company promotes itself as having been the first direct-to-consumer term life insurance exchange platform in the U.S.

SelectQuote in its prospectus said it expected to raise about $334 million from the IPO, but it ended up with about $360 million. It plans to use up to $100 million of the proceeds to repay a term loan, with the rest going toward working capital, capital expenditures and general corporate purposes. 

For the nine-month period that ended March 31, SelectQuote delivered a profit of close to $62 million, up about $2.3 million year over year. As of March 31, it had debts of about $411 million on its books.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

SelectQuote, Inc. Stock Quote
SelectQuote, Inc.
SLQT
$0.97 (7.58%) $0.07
PPD, Inc. Stock Quote
PPD, Inc.
PPD

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.