What happened
SelectQuote (SLQT) shares exploded higher this week. As of 10 a.m. ET Friday, they were up by 118.8% from where they closed trading last week, according to S&P Global Market Intelligence. The penny stock, trading at about $1.83 per share, was also up by 176% year to date.
That eye-popping return came during a generally sluggish week for the markets as the S&P 500 was down 1.5%, the Dow Jones Industrial Average was down 0.7%, and the Nasdaq Composite was off by 2.7% as of 10 a.m. ET Friday.
So what
So, what happened with SelectQuote? The firm, which allows consumers to shop for insurance policies through its online platform, delivered a strong fiscal 2023 second-quarter report and a better-than-expected outlook.
For the period, which ended Dec. 31, revenue rose 64% year over year to $319 million. The company posted net income of $22 million, or $0.14 per share, up from a net loss of $138 million, or $0.84 per share, in the prior-year period. That blew away the consensus estimates -- analysts had, on average, projected a $0.03 per share net loss and about $300 million in revenue.
The company saw growth across the board with its biggest business line, called Senior, showing a 52% year-over-year revenue increase, to $224 million, in the quarter. This segment includes Medicare Advantage plans. Its relatively new business, Healthcare Services, which is designed to assist seniors with healthcare literacy, among other functions, saw revenue climb 401% to $55 million, as it increased its SelectRx membership more than five-fold to some 39,000 members.
"This is the fourth consecutive quarter of improving results, and best of all, we believe our strategy and right-sized platform is built for continued improvement in a range of market environments," CEO Tim Danker said in the earnings release. "The annual enrollment period was strong across the industry with improved policy features and customer engagement. What pleases us most though is that the out performance in our Senior business was driven predominately by our own strategic decisions and the resulting cost efficiency and operating leverage."
Now what
SelectQuote also got a boost from Citigroup (NYSE: C) analyst Daniel Grosslight, who upped his price target on the stock from $0.80 to $1.50 -- which it subsequently blew past. Grosslight, who maintained a neutral rating on the stock, cited sustained improvement in the Senior business unit as a reason for the price target increase, according to the Fly.
SelectQuote also raised its guidance at the midway point of its fiscal year, bumping up its expected revenue range from $850 million to $950 million to $910 million to $960 million. It also improved its bottom-line guidance. Where it had previously forecast a net loss in the $89 million to $113 million range, it now anticipates a net loss of between $94 million and $78 million. And on the adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) front, where it had been projecting results between a loss of $20 million and earnings of $10 million, it now expects positive EBITDA in the $5 million to $25 million range.
SelectQuote has been pretty volatile, as this week's run-up shows, but it seems headed in the right direction. Watch for the next few quarterly reports to see if its business maintains its momentum.
