SelectQuote secures $350 million investment for growth

OVERLAND PARK, Kan. - SelectQuote, Inc. (NYSE: SLQT), a prominent player in the distribution of Medicare insurance and healthcare services, has secured a strategic investment of $350 million. The funds are managed by renowned entities Bain Capital, Morgan Stanley (NYSE:MS) Private Credit, and Newlight Partners. This financial move is aimed at bolstering the company’s healthcare services division, enhancing partnerships with insurance carriers, and offering consumers more value and choice. The investment comes as SelectQuote demonstrates strong momentum, with a remarkable 206% return over the past year and nearly 40% growth in the last six months, according to InvestingPro data.

The investment is also a strategic step for SelectQuote to restructure its balance sheet, reduce annual cash debt service, and provide the liquidity necessary to support its growth initiatives. The company maintains a healthy current ratio of 1.84, indicating strong short-term financial stability. In line with this development, the company has successfully renegotiated its Senior Secured Credit Facility to secure a lower interest rate on the remaining balance. For deeper insights into SelectQuote’s financial health and growth prospects, investors can access comprehensive analysis through InvestingPro’s detailed research reports, available for over 1,400 US stocks.

SelectQuote anticipates that this investment will expedite its efforts to optimize its capital structure and explore strategic, accretive solutions with its insurance carrier partners. With a market capitalization of approximately $754 million and impressive revenue growth of 29% in the last twelve months, the company’s growth trajectory is expected to benefit from this financial injection, particularly in its expanding healthcare services business. InvestingPro analysis suggests the stock is currently trading below its Fair Value, presenting a potential opportunity for investors seeking undervalued healthcare sector investments.

In conjunction with the investment, SelectQuote will welcome Chris Wolfe from Bain Capital and Srdjan Vukovic from Newlight Partners to its Board of Directors. Both individuals bring over two decades of experience in investing and the healthcare sector, which is anticipated to enhance the company’s growth-oriented strategy. Their appointments are expected to be effective upon the transaction’s closing, slated for February 28, 2025.

SelectQuote CEO Tim Danker expressed confidence in the investment, highlighting it as a crucial step towards leveraging growth opportunities in the senior health insurance and healthcare services markets. Danker also noted the significance of the new board members’ expertise in driving the company’s long-term value creation.

The strategic investment follows SelectQuote’s 2024 receivables securitization and is viewed as another milestone in the company’s goal to refinance its business and significantly reduce its balance sheet leverage.

Ashwin Krishnan, Managing Director and Co-Head of North America Private Credit at Morgan Stanley Investment Management, voiced optimism about the partnership with SelectQuote and the company’s prospects for sustained success.

Jefferies acted as the Exclusive Financial Advisor, while Wachtell, Lipton, Rosen & Katz served as the legal advisor to SelectQuote for the transaction.

This news is based on a press release statement from SelectQuote, Inc.

In other recent news, SelectQuote, Inc. has made significant strides in its corporate governance. The company’s shareholders recently cast their votes on several key propositions. The election of directors and the approval of executive compensation were among the major points on the docket. Two Class II directors, Earl H. “Trace” Devanny III and Raymond (NSE:RYMD) F. Weldon, were re-elected to serve until the 2027 annual meeting.

In addition to this, shareholders ratified the appointment of Deloitte & Touche LLP as the company’s independent registered public accounting firm for the fiscal year ending June 30, 2025. The company’s executive compensation strategy also received approval on a non-binding advisory basis.

These recent developments underline the shareholders’ support for the current board of directors and the company’s executive compensation plan. The ratification of the accounting firm and the re-election of the directors are indicative of routine governance matters for the company.

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