SelectQuote finalizes $350M preferred stock sale, adds directors

OVERLAND PARK, KS - SelectQuote, Inc. (NYSE:SLQT) announced today the completion of a significant financial transaction involving the sale of preferred stock and warrants, alongside changes to its board of directors. The insurance brokerage firm, headquartered in Overland Park, Kansas, finalized agreements with NL Monarch Holdings LLC and NL Monarch Holdings II LLC, entities associated with Morgan Stanley (NYSE:MS) and Bain Capital, respectively. According to InvestingPro data, the company, currently valued at $783 million, has demonstrated remarkable performance with a 160% return over the past year, despite experiencing high price volatility.

On Thursday, SelectQuote closed the sale of 350,000 shares of Senior Non-Convertible Preferred Stock with a par value of $0.01 each and a face value of $1,000 per share, alongside 30,833,333 warrants to purchase common stock. The total investment from the purchasers amounts to $350 million. In addition to the preferred stock, the company issued 85% of the allocated warrants to each purchaser, with the remaining to be issued on January 2, 2026, unless earlier redemption of preferred stock shares occurs.

The Preferred Stock carries an initial 14.5% dividend rate, subject to adjustments. If certain financial conditions are met, the rate may decrease to 13.5%. Conversely, in the event of a Preferred Default, the rate may increase by 2%. The Preferred Stock ranks senior to common stock and other securities, with respect to dividend payments and distributions upon liquidation. InvestingPro analysis shows the company maintains strong liquidity with a current ratio of 1.92, indicating sufficient assets to cover short-term obligations. The platform’s Financial Health Score rates SelectQuote as "GOOD" with particular strength in growth metrics.

SelectQuote has the option to redeem up to 50,000 shares of Preferred Stock from December 1, 2025, to December 31, 2025, at 114.5% of the original liquidation preference. After six years from the issue date, the company may redeem any portion of the Preferred Stock at the accreted liquidation preference plus accrued dividends.

The Preferred Stock is non-convertible into common stock, and holders have limited voting rights, primarily related to changes that would adversely affect their interests. The company also agreed to certain restrictions on its operations and corporate actions as long as the Preferred Stock remains outstanding, requiring consent from the lead investors for significant corporate decisions.

Furthermore, SelectQuote expanded its board from seven to nine members, appointing Srdjan Vukovic and Christopher Wolfe as directors. Vukovic is a partner at Newlight Partners LP, and Wolfe is a Managing Director at Bain Capital Insurance. Both bring extensive experience in private equity and insurance to the board.

The securities were sold in a private offering exempt from registration under the Securities Act of 1933. This strategic move by SelectQuote is aimed at bolstering its financial position and governance structure as it continues to navigate the competitive insurance brokerage industry.

This news is based on a press release statement and information contained in a recent 8-K filing with the Securities and Exchange Commission.

In other recent news, SelectQuote, Inc. reported fiscal second quarter earnings that significantly exceeded analyst expectations, leading to a surge in its stock price. The company posted adjusted earnings per share of $0.30, surpassing the consensus estimate of $0.09. Revenue for the quarter increased by 18.7% year-over-year to $481.1 million, which was above the analyst projections of $441.5 million. SelectQuote’s performance was bolstered by growth across its business segments, with the core Senior division’s revenue rising by 3% year-over-year to $255.6 million. The Healthcare Services (NASDAQ:HCSG) segment experienced robust growth, with revenue increasing by 64% year-over-year to $183.4 million. Additionally, SelectQuote raised its fiscal 2025 revenue guidance to a range of $1.5 billion to $1.575 billion, higher than the previous analyst consensus of $1.46 billion. The company also announced a $350 million strategic investment led by Bain Capital and Morgan Stanley Private Credit. CEO Tim Danker noted that this investment would provide improved liquidity and operating flexibility for growth opportunities.

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