SELECTQUOTE, INC. – 10-K – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – InsuranceNewsNet | Business Insurance

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in complete details.

You should read the following discussion and analysis of our financial condition
and result of operations together with our consolidated financial statements and
footnotes included elsewhere in this Annual Report on Form 10-K. In addition to
historical information, this discussion and analysis contains forward-looking
statements that involve risks, uncertainties and assumptions. The
forward-looking statements are not historical facts, but rather are based on
current expectations, estimates, assumptions and projections about our industry,
business and future financial results. Our actual results may differ materially
from those discussed below. Factors that could cause or contribute to such
differences include, but are not limited to, those identified below, and those
discussed in the section titled "Risk Factors" in Part I, Item 1A above.

company overview

We are a leading technology-enabled, direct-to-consumer ("DTC") distribution
platform for insurance products and healthcare services that provides consumers
with a transparent and convenient venue to shop for complex senior health, life,
and auto & home insurance policies from a curated panel of the nation's leading
insurance carriers. As an insurance distributor, we do not insure the consumer,
but rather identify consumers looking to acquire insurance products and place
these consumers with insurance carrier partners that provide these products and,
in return, earn commissions from our insurance carrier partners for the policies
we sell on their behalf. Because we are not the issuer of the insurance policy
to the consumer, we bear no underwriting risks. Our proprietary technology
allows us to take a broad funnel approach to marketing by analyzing and
identifying high quality consumer leads sourced from a wide variety of online
and offline marketing channels. Our primary sources of leads include search
engine marketing, radio, television, and third-party marketing partners. We
monitor our acquisition costs to dynamically allocate our marketing spend to the
most attractive channel, benefiting from over thirty years of data accumulated
through our proprietary, purpose-built technologies. Our advanced workflow
processing system scores each acquired lead in real-time, matching it with an
agent whom we determine is best suited to meet the consumer's need. Our platform
then captures and utilizes our experience to further build upon the millions of
data points that feed our marketing algorithms, which further enhances our
ability to deploy subsequent marketing dollars efficiently and target more
high-quality consumer leads. We have built our business model to maximize
commissions collected over the life of an approved policy less the cost of
acquiring the business, a metric we refer to as policyholder lifetime value and
which is a key component to our overall profitability.

Our unique platform has enabled us to expand our distribution business in recent
years to include additional products beyond insurance policies. In interacting
with thousands of consumers over the years, we identified a large opportunity to
leverage our existing database and distribution model to improve access to
healthcare services. In addition to improving consumers' health outcomes, this
service creates deeper relationships with our insurance carrier partners by
increasing policy persistency and, in turn, reducing their overall costs.
Additionally, we now offer pharmacy services through our closed-door, long-term
care pharmacy, which offers essential prescription medications, OTC medications,
customized medication packaging, medication therapy management, and other
consultative services.

We evaluate our business using the following three segments:

SelectQuote Senior ("Senior"), our fastest growing and largest segment, was
launched in 2010 and provides unbiased comparison shopping for Medicare
Advantage ("MA") and Medicare Supplement ("MS") insurance plans as well as
prescription drug and dental, vision, and hearing ("DVH") plans, and critical
illness products. We represent approximately 21 leading, nationally-recognized
insurance carrier partners, including UnitedHealthcare, Wellcare, and Humana. MA
and MS plans accounted for 82%, 78%, and 77% of our approved Senior policies for
the years ended June 30, 2022, 2021, and 2020, respectively, with other
ancillary type policies accounting for the remainder. Additionally,
InsideResponse (our lead generation business acquired in 2020) is included in
Senior for segment reporting purposes.

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In 2021, we expanded our Senior product offering with the introduction of
Population Health and SelectRx (together, "Healthcare Services"). Through
Population Health, consumers receive one-on-one assistance from our CSAs who
help patients understand the benefits available under their health plans and
connect them with additional healthcare related resources. We believe that
offering this service to our existing MA consumers helps drive customer
satisfaction and increase policy persistency, which, in turn, reduces costs for
our insurance carrier partners. Through SelectRx, our closed-door, long-term
care pharmacy, we provide simple solutions for prescription drug management and
support with a personalized approach to streamline the process of managing
multiple medications for seniors with chronic conditions. SelectRx uses a
high-touch, technology-driven approach to provide superior customer service and
achieve improved medication adherence. SelectRx has developed a pill pack
solution that is customized to the unique needs of each patient, focusing on
individual multi-dosages by day and time.

SelectQuote Life ("Life") is one of the country's largest and most established
DTC insurance distributors for term life insurance, having sold over 2.1 million
policies nationwide since our founding in 1985. Our platform provides unbiased
comparison shopping for life insurance products such as term life, final
expense, and other ancillary products like critical illness, accidental death,
and juvenile insurance. We represent approximately 22 leading,
nationally-recognized insurance carrier partners, with many of these
relationships exceeding 15 years. Term life policies accounted for 36%, 46%, and
68% of new premium within the Life segment for the years ended June 30, 2022,
2021, and 2020, respectively, with final expense policies accounting for 64%,
54%, and 32% for the years ended June 30, 2022, 2021, and 2020, respectively.

SelectQuote Auto & Home ("Auto & Home") was founded in 2011 as an unbiased
comparison shopping platform for auto, home, and specialty insurance lines. Our
platform provides unbiased comparison shopping for insurance products such as
homeowners, auto, dwelling fire, and other ancillary insurance products
underwritten by approximately 22 leading, nationally recognized insurance
carrier partners. Homeowners and 12-month auto products accounted for 76%, 79%,
and 78% of new premium within the Auto & Home segment for years ended June 30,
2022, 2021, and 2020, respectively, with six-month auto, dwelling fire, and
other products accounting for a majority of the remainder.

industrial trends

We estimate that the total addressable market for the insurance products we
distribute is greater than $180 billion. Further, while these markets are
already substantial, they are also growing, in part due to a number of highly
attractive demographic trends. Our Senior segment serves consumers predominantly
in the over 65 age category. The over 65 age category grew at a 3.4% CAGR from
2010 to 2016, and grew from 12.9% of the total population to 15.2% of the total
population according to the United States Census Bureau. The over 65 age
category, growing at a 3.2% CAGR from 2016 to 2025, accounted for 15.6% of the
population in 2020 and is expected to account for 18.9% of the population by
2025 according to the United States Census Bureau. On average, 11,000 "Baby
Boomers" are expected to turn 65 every day or nearly 4.2 million per year, for
the next 10 years. As a result, Medicare enrollment is growing steadily, with
the number of Medicare enrollees expected to grow from 63 million in 2021 (up
from 59 million in 2018 and 52.5 million in 2013), to approximately 82 million
in 2030, according to CSG Actuarial, with 55% of people above 65 and older
making online purchases monthly. Of this, Medicare Advantage plans are
representing an increasing share of the Medicare market. At the end of 2019,
there were approximately 34 million Medicare Advantage enrollees, representing
approximately 44% penetration of the Medicare market. According to LEK
Consulting, in 2021, 42% of all Medicare beneficiaries were enrolled in Medicare
Advantage plans and between 2020 and 2021, total Medicare Advantage enrollment
grew by about 2.4 million individuals. According to estimates, Medicare
Advantage penetration is likely to reach 50% penetration for all
Medicare-eligible individuals by 2025 and could reach as high as 60% to 70%
between 2030 and 2040, highlighting the pace with which this already large
segment of the Medicare market is growing. The degree to which we will realize a
corresponding increase in revenue will be determined by our ability to continue
to successfully place new Medicare policies for this enlarged potential consumer
base.

Our Life segment is one of the country's largest DTC insurance distributors for
term life insurance and provides unbiased comparison shopping for final expense
and ancillary products. The U.S. life insurance market is mature and has
experienced annual premium growth of 1.4% since 2013, according to S&P Global.
Growth in the
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life insurance sector is driven by a number of macro-economic factors including
population growth, general economic growth and individual wealth accumulation.

Our Auto & Home segment predominantly sells automobile and homeowners insurance.
The auto insurance industry has grown at an annual rate of 6.3% from 2013-2018
based on Statutory Direct Premiums Written, according to S&P Global, with 2018
written premium totaling $247 billion. Industry growth is driven by growth in
the number of registered vehicles, increases in insurance premium rates and
general economic growth. The homeowners insurance industry has grown at an
annual rate of 3.8% from 2013-2018 based on Statutory Direct Premiums Written,
according to S&P Global, with 2018 written premium totaling $99 billion.
Industry growth is driven by growth in housing supply, increases in insurance
premium rates and general economic growth.

Technological innovations, including the development of machine learning for
business applications and the proliferation of smart mobile devices as a means
of consumer purchasing, are changing the insurance distribution landscape. As
the composition of the U.S. population gradually shifts to the mobile-first
generation, consumers are becoming more tech-savvy and comfortable shopping
online. The internet plays a role in 8 out of 10 life insurance purchases,
according to LIMRA. Additionally, 71% of U.S. auto insurance shoppers obtain
online quotes annually, according to Comscore. We believe our proprietary
technology platform, vast datasets and use of machine learning in all aspects of
our business put us in an excellent position to take advantage of these consumer
trends.

Factors affecting our results of operations

Our primary source of revenue is commission revenue from selling policies in the
senior health, life, and auto and home markets on behalf of our insurance
carrier partners, the majority of which compensate us through first year and
renewal commissions. We use our proprietary technology and processes to generate
and obtain consumer leads and allocate those leads to agents who are best suited
for those consumers. As a result, one of the primary factors affecting our
growth is our total number of agents, comprised of both existing core agents and
the number of new flex agents that we hire and train to sell new policies. We
view agents as a critical component of helping consumers through the purchasing
process to enable them to identify the most appropriate coverage that suits
their needs. Through our years of experience, we have expanded our recruiting
efforts and enhanced our training programs, both of which have allowed us to
expand our agent force. We have also developed proprietary technologies and
processes that enable us to expand our lead acquisition efforts to keep pace
with our expanding sales force and maintain agent productivity despite the
significant growth in number of agents.

The amount of revenue we expect to recognize per policy is based on multiple
factors, including our commission rates with our insurance carrier partners and
the expected retention rates of different types of policies. The higher our
retention rates, the more revenue we expect to generate pursuant to our carrier
agreements, which generally entitle us to receive annual renewal commissions for
so long as the policyholder renews their policy. Additionally, we earn certain
volume-based bonuses from some carriers on first-year policies sold, which we
refer to as both production bonuses and marketing development funds, based on
attaining various predetermined target sales levels or other agreed upon
objectives, as presented in the consolidated statements of comprehensive income
as production bonus revenue. These commissions that we expect to generate over
the life of an approved policy less the cost of acquiring the business is a key
component to our overall profitability. Our goal is to maximize policyholder
lifetime value by increasing retention rates, which starts by providing
consumers with a transparent, valuable and best-in-class consumer experience and
making sure consumers are buying a policy that meets their specific needs.

recent events

As previously disclosed in our Current Reports on Form 8-K filed with the SEC on
February 7 and May 5, 2022, respectively, we updated our operating strategy in
the second half of the 2022 fiscal year in response to significant changes in
the insurance distribution market observed in late 2021. Our updated strategy is
designed to improve short-term cash efficiency and long-term profitability by
stabilizing the growth of our MA distribution business and focusing additional
efforts on the growth of Healthcare Services. One key element of this strategy
is mitigating our operational risk by embracing a growth strategy that reduces
our operating leverage and prioritizes our returns. At the core of this approach
is a planned pullback in our Medicare policy production to allow us to
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refine our sales, marketing, and operational approach to place greater emphasis
on cash efficiency, profitability, and writing business with greater potential
to persist over the long term. Additionally, our strategic direction provides a
differentiated approach to broader healthcare services that we believe will
create a significant competitive advantage in the years ahead. For additional
information about our updated strategy, please refer to our Current Report on
Form 8-K filed with the SEC on August 18, 2022.

Immaterial correction of the financial statements of the previous period

Subsequent to the issuance of our financial statements as of and for the year
ended June 30, 2021, we determined that the provision for first year commission
revenue for certain final expense policies offered by certain of our insurance
carrier partners should have been accrued based on a higher lapse rate. This
misstatement was initially thought to be isolated to an error in the lapse rate
for one of our insurance carrier partners, as disclosed in the Company's
Quarterly Report on Form 10-Q for the quarter ended December 31, 2021. However,
during the three months ended June 30, 2022, it was determined that the lapse
rate for other insurance carrier partners were also incorrect, resulting in an
additional misstatement being identified. See note 1 to the consolidated
financial statements for further details. As a result of the misstatements
found, we have corrected certain previously reported financial information for
the year ended June 30, 2021 and 2020, in this Item 7, Management's Discussion
and Analysis of Financial Condition and Results of Operations.

Key business and operating metrics by segment

SELECTQUOTE, INC. – 10-K – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – InsuranceNewsNet | Business Insurance Allianz 728x90 2022 08
In addition to traditional financial metrics, we rely upon certain business and
operating metrics to estimate and recognize commission revenue, evaluate our
business performance and facilitate our operations. In Senior, our primary
product, Medicare Advantage, pays us flat commission rates based on the number
of policies we sell on behalf of our insurance carrier partners. Therefore, we
have determined that units and unit metrics are the most appropriate measures to
evaluate the performance of Senior. In Life and Auto & Home, we are typically
paid a commission that is a percent of the premium that we generate for our
insurance carrier partners. Therefore, we have determined that premium-based
metrics are the most relevant measures to evaluate the performance of these
segments. Below are the most relevant business and operating metrics for each
segment:

Senior

Submitted Policies

Submitted policies are counted when an individual completes an application with
our licensed agent and provides authorization to them to submit it to the
insurance carrier partner. The applicant may have additional actions to take
before the application will be reviewed by the insurance carrier.

The following table shows the number of submitted policies for the years ended
June 30:

                                     2022          2021          2020
Medicare Advantage                 808,116       550,321       264,546
Medicare Supplement                  7,208        26,785        24,085
Dental, Vision and Hearing         145,716       132,106        70,018
Prescription Drug Plan               6,842        11,436        13,513
Other                               14,776        16,487         5,890
Total                              982,658       737,135       378,052



2022 compared to 2021-Total submitted policies increased by 33% for the year
ended June 30, 2022, compared to the year ended June 30, 2021. The increase was
driven primarily by a 47% increase in MA submitted policies and a 10% increase
in DVH submitted policies, partially offset by a 73% decrease in MS submitted
policies. The overall increase in submitted policies for Senior products was
primarily due to increases in the number of agents
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we employ, partially offset by lower agent productivity. During the year ended
June 30, 2022, we increased the number of average productive agents by 100% and
average productivity per agent declined by 29%.

2021 compared to 2020-Total submitted policies increased by 95% for the year
ended June 30, 2021, compared to the year ended June 30, 2020. The increase was
driven primarily by a 108% increase in MA submitted policies and an 89% increase
in DVH submitted policies. The overall increase in submitted policies for Senior
products was primarily due to an increase in the number of agents we employ and
an increase in productivity per agent. During the year ended June 30, 2021, we
increased the number of average productive agents by approximately 75% and
increased the productivity per productive agent by 16% from the year ended June
30, 2020. The increase in productivity was driven by improvements in agent close
rates and enhancements to our agent workflow and desktop.

Approved Policies

Policies Approved represents the number of submitted policies that were approved
by our insurance partners for the product identified during the
indicated period. Not all approved policies will go into effect.

The following table shows the number of approved policies for the years ended
June 30:

                                     2022          2021          2020
Medicare Advantage                 661,738       467,585       225,404
Medicare Supplement                  5,461        21,911        18,102
Dental, Vision and Hearing         124,989       111,015        55,556
Prescription Drug Plan               6,124        10,747        13,009
Other                               12,407        14,089         4,654
Total                              810,719       625,347       316,725



In general, the relationship between submitted policies and approved policies
has been steady over time. Therefore, factors impacting the number of submitted
policies also impact the number of approved policies.

2022 compared to 2021-Total approved policies increased by 30% for the year
ended June 30, 2022, compared to the year ended June 30, 2021. The increase was
driven primarily by a 42% increase in MA approved policies and a 13% increase in
DVH approved policies, partially offset by a 75% decrease in MS approved
policies. Fluctuations in approved policies are in direct correlation to
submitted policies; however, this year we experienced a 4% decrease in MA
submitted-to-approved conversion rates for the year ended June 30, 2022,
compared to the year ended June 30, 2021, driven by higher consumer switching
behavior. This resulted in MA approved policies growing at a slower rate than MA
submitted policies.

2021 compared to 2020-Total approved policies increased by 97% for the year
ended June 30, 2021, compared to the year ended June 30, 2020. The increase was
driven primarily by a 107% increase in MA approved policies, 100% increase in
DVH approved policies, and a 21% increase in MS approved policies. Fluctuations
in approved policies are in direct correlation to submitted policies; therefore,
the increases in the number of agents and the increased agent productivity noted
above also resulted in the increase in approved policies compared to the year
ended June 30, 2020.

Lifetime value of commissions per approved policy

The lifetime value of commissions (the "LTV") per approved policy represents
commissions estimated to be collected over the estimated life of an approved
policy based on multiple factors, including but not limited to, contracted
commission rates, carrier mix and expected policy persistency with applied
constraints. The LTV per approved policy is equal to the sum of the commission
revenue due upon the initial sale of a policy, and when applicable, an estimate
of future renewal commissions. The estimate of the future renewal commissions is
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determined using contracted renewal commission rates constrained by a
persistency-adjusted 10-year renewal period based on a combination of our
historical experience and available insurance carrier historical experience to
estimate renewal revenue only to the extent probable that a material reversal in
revenue would not be expected to occur. These factors may result in varying
values from period to period. The LTV per approved policy represents commissions
only from policies sold during the period. That figure excludes renewals during
the period from policies originally sold in a prior period with insurance
carrier partners whose contracts preclude us from recognizing variable
consideration for estimated renewal commissions and updated estimates of prior
period variable consideration based on actual policy renewals in the current
period.

The following table shows the LTV per approved policy for the years ended
June 30:

                                    2022        2021         2020
Medicare Advantage                $  925      $ 1,260      $ 1,287
Medicare Supplement                1,270        1,269        1,376
Dental, Vision and Hearing           123          136          140
Prescription Drug Plan               234          224          229
Other                                 73          113           34



2022 compared to 2021-The LTV per MA approved policy decreased 27% for the year
ended June 30, 2022, compared to the year ended June 30, 2021. The LTV per MA
approved policy was negatively impacted by lower MA persistency rates, which
includes an increase in constraint and higher provision for renewal year lapse
rates; higher provision for first year lapse rates; carrier mix; and the switch
to policy level persistency, somewhat offset by higher commission rates.

2021 compared to 2020-The LTV per MA and MS approved policy decreased 2% and 8%,
respectively, for the year ended June 30, 2021, compared to the year ended June
30, 2020. The LTV per MA approved policy was negatively impacted by lower MA
persistency rates, higher intra-year lapse rates and carrier mix, somewhat
offset by higher commission rates. The LTV per MS approved policy was negatively
impacted by a carrier mix shift of policies to a direct carrier pod that pays us
lower commissions but has lower marketing costs.

economy per unit

Per unit economics represents total MA and MS commissions, other product
commissions, other revenues, and costs associated with Senior, each shown per
number of approved MA and MS approved policies over a given time period.
Management assesses the business on a per-unit basis to help ensure that the
revenue opportunity associated with a successful policy sale is attractive
relative to the marketing acquisition cost. Because not all acquired leads
result in a successful policy sale, all per-policy metrics are based on approved
policies, which is the measure that triggers revenue recognition.

The MA and MS commission per MA/MS policy represents the LTV for policies sold
in the period. Other commission per MA/MS policy represents the LTV for other
products sold in the period, including DVH prescription drug plan, and other
products, which management views as additional commission revenue on our agents'
core function of MA/MS policy sales. Other per MA/MS policy represents the
production bonuses, marketing development funds, lead generation revenue from
InsideResponse, revenue generated through Healthcare Services, and updated
estimates of prior period variable consideration based on actual policy renewals
in the current period. Total operating expenses per MA/MS policy represents all
of the operating expenses within Senior. The Revenue to customer acquisition
cost ("CAC") multiple represents total revenue per MA/MS policy as a multiple of
total marketing acquisition cost, which represents the direct costs of acquiring
leads. These costs are included in marketing and advertising expense within the
total operating expenses per MA/MS policy.

The following table shows per unit economics for the periods presented. Based on
the seasonality of Senior and the fluctuations between quarters, we believe that
the most relevant view of per unit economics is on a rolling
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12 month basis. All MA/MS policy metrics below are based on the sum of
approved MA/MS policies, as both products have similar commission profiles.
These metrics are the basis on which management evaluates the business.

                                                          Twelve Months Ended June 30,
(dollars per approved policy):                      2022                 2021           2020
MA and MS approved policies                       667,199              489,496        243,506
MA and MS commission per MA / MS policy         $     928             $  1,260       $  1,293
Other commission per MA/MS policy                      27                   39             45
Other per MA / MS policy                              (62)                 190            147
Total revenue per MA / MS policy                      893                1,489          1,485
Total operating expenses per MA / MS policy        (1,183)                (991)          (887)
Adjusted EBITDA per MA / MS policy (1)          $    (290)            $    498       $    598
Adjusted EBITDA Margin per MA / MS policy (1)         (32)  %               33  %          40  %
Revenue / CAC multiple                                   1.8X                  3X           3.5X


(1) These financial measures are not calculated in accordance with GAAP. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-Non-GAAP Financial Measures" for information regarding our use of
these non-GAAP financial measures and a reconciliation of such measures to their
nearest comparable financial measures calculated and presented in accordance
with GAAP.

2022 compared to 2021-Total revenue per policy decreased 40% for the twelve
months ended June 30, 2022, compared to the twelve months ended June 30, 2021,
with the decrease driven by the lower LTV of MA policies, the $193.3 million
adjustment from a change in estimate of MA cohort transaction prices, and the
decrease in overall MS revenue, somewhat offset by higher marketing development
funds received per approved MA/MS policy and the addition of revenue from
SelectRx. Total costs per policy increased 19% for the twelve months ended
June 30, 2022, compared to the twelve months ended June 30, 2021, due to higher
fulfillment costs associated with scaling Healthcare Services, higher sales
expenses driven by a reduction in agent productivity during AEP, and an increase
in our marketing and advertising expense driven by lower close rates during AEP.

2021 compared to 2020-Total revenue per policy stayed flat for the twelve months
ended June 30, 2021, compared to the twelve months ended June 30, 2020, due to
lower MA/MS commissions driven by lower persistency, a decrease in the amount of
other ancillary insurance policies sold as a percent of MA/MS policies, and
lower marketing development funds received per approved MA/MS policy due to a
shift in mix towards carriers that do not pay us marketing development funds,
offset by higher lead generation revenue associated with InsideResponse. Total
cost per policy increased 12% for the twelve months ended June 30, 2021,
compared to the twelve months ended June 30, 2020, due to an increase in our
marketing and advertising expense consistent with our strategy to drive higher
absolute revenue and Adjusted EBITDA with slightly lower Adjusted EBITDA margin.

Life

Life premium represents the total premium value for all policies that were
approved by the relevant insurance carrier partner and for which the policy
document was sent to the policyholder and payment information was received by
the relevant insurance carrier partner during the indicated period. Because our
commissions are earned based on a percentage of total premium, total premium
volume for a given period is the key driver of revenue for Life.

The following table shows the term premiums and final expenses for the years ending
June 30th:

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(in thousands):                  2022           2021           2020
Term Premiums                 $  62,364      $  76,833      $  76,800
Final Expense Premiums            109,218         90,878         35,997
Total                         $ 171,582      $ 167,711      $ 112,797



2022 compared to 2021-Total term premiums decreased 19% for the year ended June
30, 2022, compared to the year ended June 30, 2021. The number of policies sold
declined 27%, driven by lower agent headcount, which was somewhat offset by a
12% increase in the average premium per policy sold. Final expense premiums
increased 20% for the year ended June 30, 2022, compared to the year ended June
30, 2021, due to an increase in the number of agents selling final expense
policies.

2021 compared to 2020-Total core premiums were flat for the year ended June 30,
2021, compared to the year ended June 30, 2020. The number of policies sold
declined 24%, which was somewhat offset by a 22% increase in the average premium
per policy sold. Final expense premiums increased 152% for the year ended June
30, 2021, compared to the year ended June 30, 2020, due to a significant
increase in the number of agents selling final expense policies.

Auto and Home

Auto & Home premium represents the total premium value of all new policies that
were approved by our insurance carrier partners during the indicated period.
Because our commissions are earned based on a percentage of total premium, total
premium volume for a given period is the key driver of revenue for our Auto &
Home segment.

The following table shows the premiums for the years ended June 30th:

(in thousands):         2022          2021          2020
Premiums             $ 50,114      $ 55,596      $ 70,087



2022 compared to 2021-Total premiums decreased 10% for the year ended June 30,
2022, compared to the year ended June 30, 2021, primarily due to our strategy to
reduce the growth in Auto & Home.

2021 compared to 2020-Total premiums decreased 21% for the year ended June 30,
2021 compared to the year ended June 30, 2020, primarily due to our strategic
shift of agents from Auto & Home to our Senior and Life divisions.

Non-GAAP Financial Measures

To supplement our financial statements presented in accordance with GAAP and to
provide investors with additional information regarding our GAAP financial
results, we have presented in this Annual Report on Form 10-K Adjusted EBITDA
and Adjusted EBITDA Margin, which are non-GAAP financial measures. These
non-GAAP financial measures are not based on any standardized methodology
prescribed by GAAP and are not necessarily comparable to similarly titled
measures presented by other companies.

Adjusted EBITDA. We define Adjusted EBITDA as income (loss) before interest
expense, income tax expense (benefit), depreciation and amortization, and
certain add-backs for non-cash or non-recurring expenses, including
restructuring, share-based compensation expenses, and any impairment charges.
The most directly comparable GAAP measure is net income (loss). We monitor and
have presented in this Annual Report on Form 10-K Adjusted EBITDA because it is
a key measure used by our management and Board of Directors to understand and
evaluate our operating performance, to establish budgets, and to develop
operational goals for managing our business. In particular, we believe that
excluding the impact of these expenses in calculating Adjusted EBITDA can
provide a useful measure for period-to-period comparisons of our core operating
performance.
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We believe that this non-GAAP financial measure helps identify underlying trends
in our business that could otherwise be masked by the effect of the expenses
that we exclude in the calculations of this non-GAAP financial measure.
Accordingly, we believe that this financial measure provides useful information
to investors and others in understanding and evaluating our operating results,
enhancing the overall understanding of our past performance and future
prospects.

Adjusted EBITDA is not prepared in accordance with GAAP and should not be
considered in isolation of, or as an alternative to, measures prepared in
accordance with GAAP. There are a number of limitations related to the use of
this non-GAAP financial measure rather than net income (loss), which is the most
directly comparable financial measure calculated and presented in accordance
with GAAP. These limitations include the fact that Adjusted EBITDA excludes
interest expense, depreciation and amortization expense, share-based
compensation expense, income tax expense (benefit), and other non-recurring
expenses that are one-time in nature. In addition, other companies may use other
measures to evaluate their performance, all of which could reduce the usefulness
of our non-GAAP financial measures as tools for comparison.

The following tables reconcile Adjusted EBITDA and net income (loss), the most
directly comparable financial measure calculated and presented in accordance
with GAAP, for the periods presented:

year ended June 30, 2022:

(in thousands)                        Senior              Life             Auto & Home           Corp & Elims           Consolidated
Net loss                                                                                                              $    (297,504)
Share-based compensation expense                                                                                              7,052
Non-recurring expenses (1)                                                                                                    4,730
Depreciation and amortization                                                                                                24,724
Loss on disposal of property,                                                                                                 1,456
equipment, and software, net
Goodwill impairment                                                                                                          44,596
Impairment of long-lived assets                                                                                               3,147

Interest expense, net                                                                                                        43,595
Income tax benefit                                                                                                          (92,302)

Adjusted EBITDA                    $ (193,799)         $   (129)         $      5,433          $     (72,011)         $    (260,506)


(1) These expenses primarily consist of costs incurred for amendments to the
Senior Secured Credit Facility, costs related to acquisitions, and severance
expenses.


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Year Ended June 30, 2021:

                                       Senior             Life             Auto & Home           Corp & Elims           Consolidated
Net income                                                                                                            $     124,859
Share-based compensation expense                                                                                              5,165
Non-recurring expenses (1)                                                                                                    6,065
Fair value adjustments to                                                                                                     1,488
contingent earnout obligations
Depreciation and amortization                                                                                                16,142
Loss on disposal of property,                                                                                                   686
equipment, and software

Interest expense                                                                                                             29,320
Loss on extinguishment of debt                                                                                                3,315
Income tax expense                                                                                                           33,156
Adjusted EBITDA                     $ 243,777          $ 22,542          $      8,178          $     (54,301)         $     220,196


(1) These expenses primarily consist of costs incurred for the First Amendment
to the Senior Secured Credit Facility, recent acquisitions, re-designation of
the hedge, and the Secondary Offering.

year ended June 30, 2020:

                                       Senior             Life             Auto & Home           Corp & Elims           Consolidated
Net income                                                                                                            $      79,484
Share-based compensation expense                                                                                                 9,498
Non-recurring expenses (1)                                                                                                       3,721
Fair value adjustments to
contingent earnout obligations                                                                                                     375
Depreciation and amortization                                                                                                    7,993
Loss on disposal of property,
equipment, and software                                                                                                            360
Restructuring expenses (2)                                                                                                         153
Interest expense, net                                                                                                           24,595
Loss on extinguishment of debt                                                                                                   1,166
Income tax expense                                                                                                              24,502
Adjusted EBITDA                     $ 145,738          $ 25,635          $      8,699          $     (28,225)         $     151,847


(1) These expenses consist of one-time consulting expenses associated with
adopting ASC 606, non-recurring compensation to certain former board members,
non-restructuring severance expenses, employer payroll taxes on the one-time
Distribution to stock option holders, costs related to our IPO, cost related to
the acquisition of InsideResponse, and expenses related to business continuity
in response to the COVID-19 pandemic.

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Key Components of our Results of Operations

The following table sets forth our results of operations and the related percentage of
total income for the years ended June 30th:

(in thousands)                                     2022                                2021                                2020
Revenue
Commission                            $  587,518               77  %       $ 818,772               88  %       $ 474,429               90  %
Production bonus                          89,057               12  %          70,653                8  %          50,308               10  %
Other                                     87,470               11  %          40,556                4  %           4,601                -  %
Total revenue                            764,045              100  %         929,981              100  %         529,338              100  %
Operating costs and expenses
Cost of revenue                          466,808               61  %         270,715               29  %         167,399               32  %
Marketing and advertising                484,084               63  %         385,291               41  %         184,157               35  %
General and administrative                89,837               12  %          63,114                7  %          35,283                7  %
Technical development                     24,729                3  %          18,623                2  %          12,347                2  %
Goodwill Impairment                       44,596                6  %               -                -  %               -                -  %
Total operating costs and              1,110,054              145  %         737,743               79  %         399,186               76  %

bills

Income (loss) from operations           (346,009)             (45) %         192,238               21  %         130,152               25  %
Interest expense, net                    (43,595)              (6) %         (29,320)              (3) %         (24,595)              (5) %
Loss on extinguishment of debt                 -                -  %          (3,315)               -  %          (1,166)               -  %
Other expense, net                          (202)               -  %          (1,588)               -  %            (405)               -  %
Income (loss) before income tax         (389,806)             (51) %         158,015               18  %         103,986               20  %
expense (benefit)
Income tax expense (benefit)             (92,302)             (12) %          33,156                4  %          24,502                5  %
Net income (loss)                     $ (297,504)             (39) %       $ 124,859               14  %       $  79,484               15  %



Revenue

Our primary source of revenue are the commissions earned for the sale of first
year and renewal policies from our insurance carrier partners, which are
presented in our consolidated statements of comprehensive income as commission
revenue. Additionally, we earn certain volume-based bonuses from some carriers
on first-year policies sold, which we refer to as both production bonuses and
marketing development funds, based on attaining various predetermined target
sales levels or other agreed upon objectives, as presented in the consolidated
statements of comprehensive income as production bonus revenue. Other revenue
includes the lead generation revenue from InsideResponse and the revenue
generated through Healthcare Services.

Our commission contracts with our insurance carrier partners contain a single
performance obligation satisfied at the point in time to which we allocate the
total transaction price. The transaction price is identified as the first year
commission due upon the initial sale of a policy as well as an estimate of
future renewal commissions and production bonus revenue when applicable. After a
policy is sold, we have no material additional or recurring obligations to the
policyholder or the insurance carrier partner. Therefore, we do not incur any
additional expense related to our receipt of future renewal commissions or
production bonus revenue. All of the costs associated with the sale of an
individual policy are incurred prior to or at the time of the initial sale of an
individual policy. Revenue is recognized at different milestones for each
segment based on the contractual enforceable rights, our historical experience,
and established customer business practices. Refer to Note 1 to the consolidated
financial statements for further details by segment. InsideResponse's lead
generation revenue is recognized when the generated lead is accepted by our
customers, which is the point of sale, and we have no performance obligation
after the delivery.
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Revenues generated from SelectRx are recognized upon shipment. At the time of
shipment, we have performed substantially all of our performance obligations and
do not experience a significant level of returns or re-shipments. There are no
future revenue streams associated as patients have the option to cancel their
service at any time with no further payments due.

The following table presents our commission, production bonus, other, and total
revenue for the years ended June 30 and the percentage changes from the prior
year:

                                                                                                                  Percent Change
(dollars in thousands)                      2022               2021               2020               2022 vs. 2021                 2021 vs. 2020
Commission                              $ 587,518          $ 818,772          $ 474,429                  (28)%                          73%
Production bonus                           89,057             70,653             50,308                   26%                           40%
Other                                      87,470             40,556              4,601                   116%                         781%
Total revenue                           $ 764,045          $ 929,981          $ 529,338                  (18)%                          76%



2022 compared to 2021-Commission revenue decreased $231.3 million, or 28%, which
included decreases in Senior, Life, and Auto & Home commission revenues of
$203.9 million, $21.0 million, and $1.8 million, respectively. For Senior, the
revenue decline was driven by the 27% reduction in LTV's of approved MA policies
and a $193.3 million downward adjustment from a change in estimate of Senior MA
cohort transaction prices. Life's revenue decline was driven by a $15.0 million
decrease in term life revenue, driven by lower agent headcount, and a $5.9
million decrease in final expense revenue, driven by an $9.5 million downward
adjustment from provision for loss and a change in estimate of cohort
transaction price, which was partially offset by an increase in the number of
agents selling final expense policies. The revenue decline for Auto & Home was
driven by our strategy to reduce the growth in that division. Production bonus
revenue increased $18.4 million, which was primarily driven by a $22.4 million
increase in marketing development funds received for Senior, partially offset by
decreases of $2.7 million and $1.3 million for Life and Auto & Home,
respectively. The $46.9 million increase in other revenue was primarily driven
by $65.8 million of new revenue from Healthcare Services, partially offset by a
reduction of $18.3 million in external lead generation revenue from
InsideResponse, as more of their leads were consumed within Senior than in the
prior year.

2021 compared to 2020-Commission revenue increased $344.3 million, or 73%, which
included increases in Senior and Life commission revenues of $307.1 million and
$49.1 million, respectively, offset by a decrease in Auto & Home commission
revenue of $10.4 million. For Senior, the revenue growth was driven by the
significant increase in our agent count that led to a 108% increase in Medicare
Advantage commission revenue. Life's $49.1 million revenue growth was driven by
$45.1 million growth in final expense revenue which was a result of the
investment we have made in agents to grow sales of these policies, and a slight
increase in core term life revenue. The revenue decline for Auto & Home was
driven by our strategic shift in agents from Auto & Home to our Senior and Life
divisions. The $20.3 million increase in production bonus revenue was primarily
driven by $19.5 million in marketing development funds received for Senior, and
the $36.0 million increase in other revenue was primarily driven by $35.8
million of lead generation revenue from InsideResponse.

Costs and Operating Expenses

cost of revenue

Cost of revenue primarily represents the direct costs associated with fulfilling
our obligations to our insurance carrier partners for the sale of insurance
policies. Such costs primarily consist of compensation and related benefit costs
for agents, fulfillment specialists and others directly engaged in servicing
policy holders. It also includes licensing costs for our agents and allocations
for facilities, telecommunications and software maintenance costs, which are all
based on headcount. Facilities costs include rent and utilities expenses and
other costs to maintain our office locations. Telecommunications and software
maintenance costs includes costs related to the internal phone systems and
various software applications that our agents use to make sales. These costs
directly
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correlate to the number of agents we have as we are primarily charged based on
per person usage for the phone systems and software applications. For SelectRx,
cost of revenue represents the direct costs associated with inventory used to
fulfill pharmacy patient orders.

The following table sets forth our cost of revenue for the years ended June 30th Y
percentage changes from the previous year:

                                                                                                                  Percent Change
(dollars in thousands)                      2022               2021               2020               2022 vs. 2021                 2021 vs. 2020
Cost of revenue                         $ 466,808          $ 270,715          $ 167,399                   72%                           62%



2022 compared to 2021-Cost of revenue increased $196.1 million, or 72%, in 2022
compared to 2021, primarily due to a $123.6 million increase in compensation
costs driven by the growth in the number of employees within Senior. The
increase in headcount also drove increases in the allocations of $13.7 million
for facilities, telecommunications, and software maintenance costs, and $8.4
million for licensing costs. Additionally, there was $43.8 million of new
inventory costs for SelectRx.

2021 compared to 2020-Cost of revenue increased $103.3 million, or 62%, in 2021
compared to 2020, primarily due to a $86.0 million increase in compensation
costs driven by the growth in the number of agents within the Senior segment and
to a lesser extent the Life segment to support the sale of final expense
policies. The increase in headcount also drove increases in the allocations of
$10.1 million for facilities, telecommunications, and software maintenance
costs, and $4.3 million for licensing costs.

Marketing and publicity

Marketing and advertising expenses consist primarily of the direct costs
associated with marketing and advertising of our services, such as television
and radio commercials and online advertising. These direct costs generally
represent the vast majority of our marketing and advertising expenses. Other
costs consist of compensation and other expenses related to marketing, business
development, partner management, public relations, carrier relations personnel
who support our offerings, and allocations for facilities, telecommunications,
and software maintenance costs. Our marketing and advertising costs increase
during AEP and OEP to generate more leads during these high-volume periods.

The following table presents our marketing and advertising expenses for the
finished years June 30th and percentage changes from the previous year:

                                                                                                                 Percent Change
(dollars in thousands)                      2022               2021               2020               2021 vs. 2020               2020 vs. 2019
Marketing and advertising               $ 484,084          $ 385,291          $ 184,157                   26%                         109%



2022 compared to 2021-Marketing and advertising expenses increased $98.8
million, or 26%, in 2022 compared to 2021, primarily due to a $88.4 million
increase in lead costs associated with generating more leads for our larger
agent base to consume and lower overall close rates which impacted our marketing
efficiency, and a $7.7 million increase in compensation costs, as we increased
the number of employees supporting our marketing organization to produce more
leads. Additionally, there was a $2.1 million increase in depreciation and
amortization expense due to additional fixed assets and software in service.

2021 compared to 2020-Marketing and advertising expenses increased $201.1
million, or 109%, in 2021 compared to 2020, primarily due to a $138.6 million
increase in Senior marketing and advertising costs associated with generating
more leads for our larger agent base to consume. Marketing and advertising costs
also increased $32.9 million in our Life segment driven by an increase in leads
specifically for our final expense policies.
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Additionally, compensation costs related to our marketing personnel increased
$30.4 million as we increased the number of people supporting our marketing
organization to produce more leads to support the growth of the business.

General and administrative

General and administrative expenses include compensation and benefits costs for
staff working in our executive, finance, accounting, recruiting, human
resources, administrative, business intelligence and data science departments.
These expenses also include fees paid for outside professional services,
including audit, tax and legal fees and allocations for facilities,
telecommunications, and software maintenance costs.

The following table presents our general and administrative expenses for the
finished years June 30th and percentage changes from the previous year:

                                                                                                                Percent Change
(dollars in thousands)                      2022              2021              2020               2022 vs. 2021                 2021 vs. 2020
General and administrative               $ 89,837          $ 63,114          $ 35,283                   42%                           79%



2022 compared to 2021-General and administrative expenses increased
$26.7 million, or 42%, in 2022 compared to 2021, primarily due to $13.7 million
in higher compensation costs due to additional headcount to support the growth
in the business; $4.3 million in depreciation and amortization expenses due to
additional fixed assets and software in service; $4.5 million in professional
services fees due to increases in recruiting, accounting and legal, and
insurance costs; and $3.1 million of charges related to the impairment of
long-lived intangible assets as described in Note 7 to the consolidated
financial statements.

2021 compared to 2020-General and administrative expenses increased
$27.8 million, or 79%, in 2021 compared to 2020, primarily due to $10.2 million
in higher compensation costs due to additional headcount to support the growth
of the business; $4.2 million in corporate development charges, primarily
related to the First Amendment to the Senior Secured Credit Facility, the recent
acquisitions, and the Secondary Offering; and $7.1 million in higher
professional fees and insurance costs.

Technical development

Technical development expenses consist primarily of compensation and benefits
costs for internal and external personnel associated with developing,
maintaining and enhancing our applications, infrastructure and other IT-related
functions as well as allocations for facilities, telecommunications and software
maintenance costs.

The following table presents our technical development expenses for the years
finished June 30th and percentage changes from the previous year:

                                                                                                               Percent Change
(dollars in thousands)                     2022              2021              2020               2022 vs. 2021                 2021 vs. 2020
Technical development                   $ 24,729          $ 18,623          $ 12,347                   33%                           51%



2022 compared to 2021-Technical development expenses increased $6.1 million, or
33%, in 2022 compared to 2021, primarily due to a $3.4 million increase in
compensation costs related to our technology personnel as we increased the
number of people in our desktop support and development efforts to support the
increase in total headcount. The increase in headcount also drove increases in
the allocations of $1.6 million for facilities, telecommunications, and software
maintenance costs.

2021 compared to 2020: technical development expenses increased $6.3 millioneither
51%, in 2021 compared to 2020, mainly due to a $7.2 million It increased in
compensation costs related to our technology

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personnel as we increased the number of people in our desktop support and
development efforts to support the increase in total headcount and the growth in
the business, offset by a $2.3 million decrease in professional fees as we
decreased our cost of external application developers.

Interest expense, net

The following table sets forth our interest expense, net for the years ended
June 30th and percentage changes from the previous year:

                                                                                                                  Percent Change
(dollars in thousands)                      2022               2021               2020               2022 vs. 2021                 2021 vs. 2020
Interest expense, net                   $ (43,595)         $ (29,320)         $ (24,595)                  49%                           19%



2022 compared to 2021-Interest expense increased $14.3 million, or 49%, in 2022
compared to 2021, primarily as a result of the increase in our outstanding
balances on the Term Loans and DDTL Facility, amortization of additional
deferred financing costs associated with the amendments to the Senior Secured
Credit Facility, and the ticking fee interest assessed on the remaining
available borrowing capacity of the DDTL Facility.

2021 compared to 2020-Interest expense increased $4.7 million, or 19%, in 2021
compared to 2020, primarily as a result of increases in interest incurred on the
Term Loans prior to the First Amendment to the Senior Secured Credit Facility,
partially offset by interest related to our non-recourse debt, which was
terminated on June 8, 2020.

Income Tax Expense (Benefit)

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The following table presents our provision for income taxes for the years ended
June 30th and percentage changes from the previous year:

                                                                                                            Percent Change
(dollars in thousands)                  2022              2021              2020               2022 vs. 2021                 2021 vs. 2020
Income tax expense (benefit)        $ (92,302)         $ 33,156          $ 24,502                  (378)%                         35%
Effective tax rate                       23.7  %           21.0  %           23.6  %



2022 compared to 2021-For the year ended June 30, 2022, we recognized an income
tax benefit of $92.3 million, representing an effective tax rate of 23.7%. The
differences from our federal statutory tax rate to the effective tax rate for
the year ended June 30, 2022, were primarily related to state income taxes.

2021 compared to 2020-For the year ended June 30, 2021, we recognized income tax
expense of $33.2 million, representing an effective tax rate of 21.0%. The
differences from our federal statutory tax rate to the effective tax rate for
the year ended June 30, 2021, were primarily due to the net effects of state
income taxes partially offset by Kansas High Performance Incentive Program
("HPIP") tax credits and the exercise of non-qualified stock options.

segment information

We currently have three reportable segments: i) Senior, ii) Life, and iii) Auto
& Home. Senior primarily sells senior Medicare-related health insurance products
and also includes Population Health, SelectRx, and InsideResponse. Life
primarily sells term life and final expense products, and Auto & Home primarily
sells individual automobile and homeowners' insurance. In addition, we account
for non-operating activity, share-based compensation expense, certain
intersegment eliminations, and the costs of providing corporate and other
administrative services in our administrative division, Corporate &
Eliminations. These services are not directly
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identifiable with our reportable segments and are shown in the tables below to
reconcile the reportable segments to the consolidated financial statements. We
have not aggregated any operating segments together to represent a reportable
segment.

We report segment information based on how our chief operating decision maker
("CODM") regularly reviews our operating results, allocates resources, and makes
decisions regarding business operations. The performance measures of the
segments include total revenue and Adjusted EBITDA because management believes
that such information is the most relevant in evaluating the results of the
respective segments relative to other entities that operate in the same
industries.

Costs of revenue, marketing and advertising, and technical development operating
expenses that are directly attributable to a segment are reported within the
applicable segment. Indirect costs of revenue, marketing and advertising, and
technical development operating expenses are allocated to each segment based on
varying metrics such as headcount. Adjusted EBITDA is calculated as total
revenue for the applicable segment less direct and allocated costs of revenue,
marketing and advertising, technical development, and general and administrative
operating costs and expenses, excluding depreciation and amortization expense;
gain or loss on disposal of property, equipment, and software; share-based
compensation expense; restructuring expenses; and non-recurring expenses such as
severance payments and transaction costs. Our CODM does not separately evaluate
assets by segment; therefore, assets by segment are not presented.

Effective July 1, 2022, we will realign our reportable segments as a result of
the change in strategic direction established for fiscal year 2023. This
realignment will separate the Healthcare Services business, which includes
SelectRx and Population Health, out of the Senior reportable segment and into
its own operating and reporting segment. The CODM will review discrete financial
information for the Healthcare Services business, separate from the Senior
segment, to make operational and financial decisions and allocate resources
beginning July 1, 2022. The tables presented below have not been adjusted to
reflect this change in reportable segments. All prior-period comparative segment
information will be recast in the Company's first quarter of fiscal 2023
Quarterly Report on Form 10-Q to reflect the change in reportable segments.

The updated strategy is designed to stabilize the growth of the MA distribution
business, focus additional efforts on the growth of the Healthcare Services
business, and enhance our competitive value proposition. Additionally, the
strategy is designed to improve short-term cash efficiency and long-term
profitability. Key elements of our strategic direction include committing to a
growth strategy that prioritizes our returns and mitigates our operational risk
to reduce our operating leverage. This includes a planned pullback in our
Medicare policy production which allows us to refine our sales, marketing and
operational approach, placing greater focus on cash efficiency, profitability,
and writing business with greater potential to persist over the long term.
Additionally, our strategic direction provides a differentiated approach to
broader healthcare services that we believe will create a significant
competitive advantage in the years ahead.

The following tables present information on the reportable segments for the
periods presented:

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Year Ended June 30, 2022

(in thousands)                         Senior               Life             Auto & Home           Corp & Elims           Consolidated
Revenue                             $  595,375          $ 153,973          $     27,881          $     (13,184)         $     764,045
Operating expenses                    (789,174)          (154,102)              (22,448)               (58,625)   (1)      (1,024,349)
Other expenses, net                          -                  -                     -                   (202)                  (202)
Adjusted EBITDA                     $ (193,799)         $    (129)         $      5,433          $     (72,011)              (260,506)
Share-based compensation expense                                                                                               (7,052)
Non-recurring expenses (2)                                                                                                     (4,730)

Depreciation and amortization                                                                                                 (24,724)
Loss on disposal of property,
equipment, and software, net                                                                                                   (1,456)
Goodwill impairment                                                                                                           (44,596)
Impairment of long-lived assets                                                                                                (3,147)
Interest expense, net                                                                                                         (43,595)

Income tax benefit                                                                                                             92,302
Net loss                                                                                                                $    (297,504)

(1) The operating expenses of the Corp & Elims division mainly include
$44.2 million in wages and benefits for certain general, administrative and
IT-related departments, and $18.2 million in professional service fees.

(2) These expenses primarily consist of costs incurred for amendments to the
Senior Secured Credit Facility, costs related to acquisitions, and severance
expenses.

Year Ended June 30, 2021

                                        Senior              Life             Auto & Home           Corp & Elims           Consolidated
Revenue                              $ 728,701          $ 177,669          $     30,913          $      (7,302)         $     929,981
Operating expenses                    (484,924)          (155,127)              (22,735)               (46,899)   (1)        (709,685)
Other expenses, net                          -                  -                     -                   (100)                  (100)
Adjusted EBITDA                      $ 243,777          $  22,542          $      8,178          $     (54,301)               220,196
Share-based compensation expense                                                                                               (5,165)
Non-recurring expenses (2)                                                                                                     (6,065)
Fair value adjustments to contingent
earnout obligations                                                                                                            (1,488)
Depreciation and amortization                                                                                                 (16,142)
Loss on disposal of property,
equipment, and software                                                                                                          (686)

Interest expense, net                                                                                                         (29,320)
Loss on extinguishment of debt                                                                                                 (3,315)
Income tax expense                                                                                                            (33,156)
Net income                                                                                                              $     124,859

(1) The operating expenses of the Corp & Elims division mainly include
$34.0 million in wages and benefits for certain general, administrative and
IT-related departments, and $13.4 million in professional service fees.

(2) These expenses primarily consist of costs incurred for the First Amendment
to the Senior Secured Credit Facility, recent acquisitions, re-designation of
the hedge, and the Secondary Offering.

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Year Ended June 30, 2020

                                        Senior              Life             Auto & Home           Corp & Elims           Consolidated
Revenue                              $ 361,673          $ 127,790          $     41,189          $      (1,314)         $     529,338
Operating expenses                    (215,935)          (102,155)              (32,490)               (26,881)   (1)        (377,461)
Other expenses, net                          -                  -                     -                    (30)                   (30)
Adjusted EBITDA                      $ 145,738          $  25,635          $      8,699          $     (28,225)               151,847
Share-based compensation expense                                                                                               (9,498)
Non-recurring expenses (2)                                                                                                     (3,721)
Fair value adjustments to contingent
earnout obligations                                                                                                              (375)
Depreciation and amortization                                                                                                  (7,993)
Loss on disposal of property,
equipment and software                                                                                                           (360)
Restructuring expenses                                                                                                           (153)
Interest expense, net                                                                                                         (24,595)
Loss on extinguishment of debt                                                                                                 (1,166)
Income tax expense                                                                                                            (24,502)
Net income                                                                                                              $      79,484

(1) The operating expenses of the Corp & Elims division mainly include $17.2
million
in wages and benefits for certain general, administrative and IT employees
related departments and $8.7 million in professional service fees.

(2) These expenses consist of one-time consulting expenses associated with
adopting ASC 606, non-recurring compensation to certain former board members,
non-restructuring severance expenses, employer payroll taxes on the one-time
Distribution to stock option holders, costs related to our IPO, cost related to
the acquisition of InsideResponse, and expenses related to business continuity
in response to the COVID-19 pandemic.

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The following table depicts the disaggregation of revenue by segment and product
for the years ended June 30:

(dollars in thousands)                    2022                 $                 %                2021                $                 %               2020
Senior:
Commission revenue:
Medicare advantage                    $ 409,090          $ (186,042)             (31) %       $ 595,132          $ 309,175             108  %       $ 285,957
Medicare supplement                       5,224             (18,207)             (78) %          23,431            (10,870)            (32) %          34,301
Prescription drug plan                     (170)             (1,822)            (110) %           1,652             (1,215)            (42) %           2,867
Dental, vision, and health               15,056                (913)              (6) %          15,969              8,211             106  %           7,758
Other commission revenue                  5,257               3,101              144  %           2,156              1,794             496  %             362
Total commission revenue                434,457            (203,883)             (32) %         638,340            307,095              93  %         331,245
Total production bonus revenue           66,888              22,381               50  %          44,507             19,460              78  %          25,047
Total other revenue                      94,030              48,176              105  %          45,854             40,473             752  %           5,381
Total Senior revenue                    595,375            (133,326)             (18) %         728,701            367,028             101  %         361,673
Life:
Commission revenue:
Term                                     65,539             (15,049)             (19) %          80,588              4,024               5  %          76,564
Final expense                            68,295              (5,932)              (8) %          74,227             45,104             155  %          29,123
Total commission revenue                133,834             (20,981)             (14) %         154,815             49,128              46  %         105,687
Total production bonus revenue           20,139              (2,715)             (12) %          22,854                751               3  %          22,103
Total other revenue                           -                   -                -  %               -                  -               -  %               -
Total Life revenue                      153,973             (23,696)             (13) %         177,669             49,879              39  %         127,790
Auto & Home:
Total commission revenue                 25,851              (1,770)              (6) %          27,621            (10,410)            (27) %          38,031
Total production bonus revenue            2,030              (1,262)             (38) %           3,292                134               4  %           3,158
Total other revenue                           -                   -                -  %               -                  -               -  %               -
Total Auto & Home revenue                27,881              (3,032)             (10) %          30,913            (10,276)            (25) %          41,189
Eliminations:
Total commission revenue                 (6,624)             (4,620)             231  %          (2,004)            (1,470)            275  %            (534)
Total production bonus revenue                -                   -                -  %               -                  -               -  %               -
Total other revenue                      (6,560)             (1,262)              24  %          (5,298)            (4,518)            579  %            (780)
Total Elimination revenue               (13,184)             (5,882)              81  %          (7,302)            (5,988)            456  %          (1,314)
Total commission revenue                587,518            (231,254)             (28) %         818,772            344,343              73  %         474,429
Total production bonus revenue           89,057              18,404               26  %          70,653             20,345              40  %          50,308
Total other revenue                      87,470              46,914              116  %          40,556             35,955             781  %           4,601
Total revenue                         $ 764,045          $ (165,936)             (18) %       $ 929,981          $ 400,643              76  %       $ 529,338



Revenue by Segment

2022 compared to 2021-Revenue from our Senior segment was $595.4 million for the
year ended June 30, 2022, a $133.3 million, or 18%, decrease compared to revenue
of $728.7 million for the year ended June 30, 2021. The decrease was primarily
due to a $186.0 million, or 31%, decrease in MA commission revenue driven by a
$193.3 million downward adjustment from the change in estimate of cohort
transaction prices, a $18.2 million decrease in MS commission revenue, and a
reduction of $18.3 million in external lead generation revenue from
InsideResponse, partially offset by $65.8 million of new revenue from Healthcare
Services and a $22.4 million increase in marketing development funds received.
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Revenue from our Life segment was $154.0 million for the year ended June 30,
2022, a $23.7 million, or 13%, decrease compared to revenue of $177.7 million
for the year ended June 30, 2021. The decrease was primarily due to a $15.0
million decrease in term life revenue, driven by lower agent headcount, and a
$5.9 million decrease in final expense revenue, which was the result of an
$9.5 million downward adjustment from provision for loss and a change in
estimate of cohort transaction price, which was partially offset by an increase
in the number of agents selling final expense policies.

Revenue from our Auto & Home segment was $27.9 million for the year ended June
30, 2022, a $3.0 million, or 10%, decrease compared to revenue of $30.9 million
for the year ended June 30, 2021, primarily due to our strategy to reduce the
growth in Auto & Home.

2021 compared to 2020-Revenue from our Senior segment was $728.7 million for the
year ended June 30, 2021, a $367.0 million, or 101%, increase compared to
revenue of $361.7 million for the year ended June 30, 2020. The increase was
primarily due to a $309.2 million, or 108%, increase in MA commission revenue,
$19.5 million in marketing development funds received, and $35.8 million of lead
generation revenue from InsideResponse included in other revenue. This was
partially offset by a $10.9 million, or 32%, decrease in MS commission revenue
primarily due to the recognition of $9.0 million of renewal year revenue from a
certain MS carrier whose contract was amended during the year ended June 30,
2020.

Revenue from our Life segment was $177.7 million for the year ended June 30,
2021, a $49.9 million, or 39%, increase compared to revenue of $127.8 million
for the year ended June 30, 2020. The increase was primarily due to a $45.1
million, or 155%, increase in final expense revenue which was the result of our
increased focus on selling final expense policies.

Revenue from our Auto & Home segment was $30.9 million for the year ended June
30, 2021, a $10.3 million, or 25%, decrease compared to revenue of $41.2 million
for the year ended June 30, 2020. The decrease was primarily due to a 21%
decrease in premium sold.

Adjusted EBITDA by segment

2022 compared to 2021--Adjusted EBITDA from our Senior segment was $(193.8)
million for the year ended June 30, 2022, a $437.6 million, or 179%, decrease
compared to Adjusted EBITDA of $243.8 million for the year ended June 30, 2021.
The decrease in Adjusted EBITDA was primarily due to a $304.3 million increase
in operating costs and expenses, driven by a $98.7 million increase in variable
marketing expenses as discussed above, a $96.2 million increase in personnel
costs associated with additional headcount, $51.0 million higher fulfillment
costs associated with scaling Population Health and SelectRx, and $43.8 million
in pharmaceutical costs for SelectRx. In addition, there was a $133.3 million
decrease in total Senior revenue, driven by the $193.3 million downward
adjustment from a change in estimate of MA cohort transaction prices discussed
above.

Adjusted EBITDA from our Life segment was $(0.1) million for the year ended June
30, 2022, a $22.7 million, or 101%, decrease compared to Adjusted EBITDA of
$22.5 million for the year ended June 30, 2021. The decrease in Adjusted EBITDA
was primarily due to a $23.7 million decrease in revenue as a result of the
decreases in term life and final expense revenue discussed above.

Adjusted EBITDA from our Auto & Home segment was $5.4 million for the year ended
June 30, 2022, a $2.7 million, or 34%, decrease compared to Adjusted EBITDA of
$8.2 million for the year ended June 30, 2021. The decrease in Adjusted EBITDA
was due to a $3.0 million decrease in revenue partially offset by a $0.3 million
decrease in operating costs and expenses. The revenue decline for Auto & Home
was driven by our strategy to reduce the growth in that division.

2021 compared to 2020-Adjusted EBITDA from our Senior segment was $243.8 million
for the year ended June 30, 2021, a $98.0 million, or 67%, increase compared to
Adjusted EBITDA of $145.7 million for the year ended June 30, 2020. The increase
in Adjusted EBITDA was due to a $367.0 million increase in revenue
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partially offset by a $269.0 million increase in operating costs and expenses
primarily attributable to an increase in variable marketing expenses and
personnel costs associated with higher headcount that was driven by a
significant increase in policies submitted and approved and an increase in the
number of licensed agents.

Adjusted EBITDA from our Life segment was $22.5 million for the year ended June
30, 2021, a $3.1 million, or 12%, decrease compared to Adjusted EBITDA of $25.6
million for the year ended June 30, 2020. The decrease in Adjusted EBITDA was
primarily due to a $53.0 million increase in operating costs and expenses
primarily attributable to an increase in variable marketing expenses and
variable sales commission expenses to agents driven by an increase in the amount
of premium sold for final expense policies, partially offset by a $49.9 million
increase in revenue. Adjusted EBITDA was also impacted by flexing a significant
amount of our Life and Health Advisor ("LHA") agents that sell final expense
policies into Senior to sell during AEP as we incurred expense to hire and train
some of these agents but didn't realize the full benefit of revenue within our
Life business for the quarter.

Adjusted EBITDA from our Auto & Home segment was $8.2 million for the year ended
June 30, 2021, a $0.5 million, or 6%, decrease compared to Adjusted EBITDA of
$8.7 million for the year ended June 30, 2020. The decrease in Adjusted EBITDA
was primarily due to a $10.3 million decrease in revenue partially offset by a
$9.8 million decrease in operating costs and expenses. Revenue was negatively
impacted by our shift of agents to 1) the Senior segment to maximize the
opportunity of the AEP and OEP seasonal increase in demand and 2) the Life
segment to sell final expense policies.

Liquidity and Capital Resources

Our liquidity needs primarily include working capital and debt service
requirements. We believe that the cash available under the Senior Secured Credit
Facility will be sufficient to meet our projected operating and debt service
requirements for at least the next 12 months. To the extent that our current
liquidity is insufficient to fund future activities, we may need to raise
additional funds. If we raise additional funds by issuing equity securities, the
ownership of our existing stockholders will be diluted. The incurrence of
additional debt financing would result in debt service obligations, and any
future instruments governing such debt could provide for operating and financing
covenants that could restrict our operations.

Risks and Uncertainties in Liquidity and Compliance Matters of our Senior
Guaranteed credit facility agreement

Under the Senior Secured Credit Facility, we are required to maintain a certain
asset coverage ratio, as discussed further in Note 10 to the consolidated
financial statements. In our Quarterly Report on Form 10-Q for the three months
ended March 31, 2022, we disclosed that there was substantial doubt about our
ability to continue as a going concern as a result of conditions that existed as
of March 31, 2022. Specifically, our financial projections indicated that we
would not be in compliance with a certain asset coverage ratio under the Senior
Secured Credit Facility within one year after the date that the consolidated
financial statements were issued. Subsequently, we entered into the Fourth
Amendment to the Senior Secured Credit Facility (as defined and discussed
further in Note 10 to the consolidated financial statements) to amend the
required debt covenants through October 31, 2024. Based on our financial
projections, we believe we will remain in compliance with the revised debt
covenants within one year after the date that the consolidated financial
statements are issued. Our future compliance is dependent upon the successful
implementation of our new strategic direction discussed above, and we will need
to continue to stay in compliance in the future with these revised covenants for
one year after the date our consolidated financial statements are issued.

As of June 30, 2022 and June 30, 2021, our cash and cash equivalents totaled
$141.0 million and $286.5 million, respectively. Additionally, the following
table presents a summary of our cash flows for the years ended June 30:

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(in thousands)                                  2022            2021        

2020

Net cash used in operating activities $(338,314) $(115,442) $(61,776)
Net cash used in investing activities (42,576) (64,016)

(51,370)

Net cash provided by financing activities 235,433 97,042

  481,446



Operating Activities

Cash used in operating activities primarily consists of net income, adjusted for
certain non-cash items including depreciation; amortization of intangible assets
and internally developed software; deferred income taxes; share-based
compensation expense; impairment charges; and the effect of changes in working
capital and other activities.

Collection of commissions receivable depends upon the timing of our receipt of
commission payments and associated commission statements from our insurance
carrier partners. If we were to experience a delay in receiving a commission
payment from an insurance carrier partner within a quarter, our operating cash
flows for that quarter could be adversely impacted.

A significant portion of our marketing and advertising expenses is driven by the
number of leads required to generate the insurance applications we submit to our
insurance carrier partners. Our marketing and advertising costs are expensed and
generally paid as incurred and since commission revenue is recognized upon
approval of a policy but commission payments are paid to us over time there are
working capital requirements to fund the upfront cost of acquiring new policies.
During AEP, we experience an increase in the number of submitted Senior
insurance applications and marketing and advertising expenses compared to
periods outside of AEP. The timing of AEP affects the positive or negative
impacts of our cash flows during each quarter.

Year Ended June 30, 2022-Cash used in operating activities was $338.3 million,
consisting of net loss of $297.5 million, adjustments for non-cash items of $2.2
million, and cash used in operating assets and liabilities of $38.6 million.
Adjustments for non-cash items primarily consisted of $92.7 million in deferred
income taxes as the Company defers revenue related to certain commissions
receivable into following years until it is collected, partially offset by $44.6
million of goodwill impairment charges, $24.7 million of depreciation and
amortization related to additional fixed assets purchases to accommodate our
growth in headcount and internally developed software in service, $7.1 million
of share-based compensation expense, $5.5 million in amortization of debt
issuance costs and debt discount, and $4.1 million of non-cash lease expense.
The cash decrease resulting from changes in net operating assets and liabilities
primarily consisted of increases of $25.7 million in accounts receivable, net
related to the increase in approved policies, increases of $10.9 million in
other assets primarily related to increases in prepaid balances and SelectRx
inventory, and decreases of $5.1 million in operating lease liabilities,
partially offset by a decrease of $7.3 million in commissions receivable.

Year Ended June 30, 2021-Cash used in operating activities was $115.4 million,
consisting of net income of $124.9 million and adjustments for non-cash items of
$66.2 million, offset by cash used in operating assets and liabilities of $306.5
million. Adjustments for non-cash items primarily consisted of $33.0 million in
deferred income taxes as the Company defers revenue related to certain
commissions receivable into following years until it is collected, $16.1 million
of depreciation and amortization related to additional fixed assets purchases to
accommodate our growth in headcount and internally developed software in
service, $5.2 million of share-based compensation expense, and $3.8 million of
non-cash lease expense. The cash decrease resulting from changes in net
operating assets and liabilities primarily consisted of increases of $332.9
million in commissions receivable and $20.0 million in accounts receivable, net
related to the increase in approved policies, partially offset by increases of
$19.7 million in accounts payable and accrued expenses and $25.6 million in
other liabilities, which consists primarily of commission advances and accrued
compensation and benefits, all driven by the increased marketing and personnel
costs required to produce our increased revenue.

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Year Ended June 30, 2020-Cash used in operating activities was $61.8 million,
consisting of net income of $79.5 million and adjustments for non-cash items of
$45.2 million, offset by cash used in operating assets and liabilities of $186.5
million. Adjustments for non-cash items primarily consisted of $24.5 million of
deferred income taxes as the Company defers revenue related to certain
commissions receivable into following years until it is collected, $9.5 million
of stock compensation expense primarily for the distribution to stock option
holders, and $8.0 million of depreciation and amortization related to the
additional fixed assets purchases and internally developed software in service.
The cash decrease resulting from changes in net operating assets and liabilities
primarily consisted of increases of $13.4 million and $197.4 million in accounts
receivable, net and commissions receivable, respectively, partially offset by
increases of $15.7 million in accounts payable and accrued expenses and $9.2
million in accrued compensation and benefits, all driven by the increased
marketing and personnel costs required to produce our increased revenue.

Investment activities

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Our investment activities consist mainly of the purchase of furniture and
fixtures, computer hardware, facility-related lease improvements
expansion and capitalized salaries related to the development of internal use
software.

Year Ended June 30, 2022-Net cash used in investing activities of $42.6 million
was primarily due to $24.8 million of purchases of property and equipment
primarily to support AEP and OEP and the growth of SelectRx infrastructure, $9.9
million in purchases of software and capitalized internal-use software, $6.9
million of net cash paid to acquire Simple Meds, and a $1.0 million
non-controlling interest equity investment.

Year Ended June 30, 2021-Net cash used in investing activities of $64.0 million
was primarily due to $41.0 million of cash paid net of the cash acquired for the
acquisitions of a lead distribution company and Express Med Pharmaceuticals as
well as $14.9 million of purchases of property and equipment and $8.1 million in
purchases of software and capitalized internal-use software spent to develop and
enhance new and existing systems to efficiently accommodate our increased
volumes.

Year Ended June 30, 2020-Net cash used in investing activities of $51.4 million
was primarily due to $35.8 million of cash paid net of the cash acquired for the
acquisition of InsideResponse as well as $9.4 million of purchases of property
and equipment and $6.1 million in purchases of software and capitalized
internal-use software spent to develop new programs and systems to efficiently
accommodate our increased volumes.

acquisitions

On May 1, 2020, we acquired 100% of the outstanding membership units of
InsideResponse for an aggregate purchase price of up to $65.0 million (subject
to customary adjustments). The purchase price was comprised of $32.7 million
that was paid in cash at the closing of the transaction and an earnout of $32.3
million that was paid in cash during the year ended June 30, 2021.

On February 1, 2021, we acquired substantially all of the assets of a lead
distribution company for an aggregate purchase price of up to $33.5 million
(subject to customary adjustments), comprised of $24.0 million in cash paid at
the closing of the transaction, $6.0 million of holdback for, if any,
indemnification claims, net working capital adjustments, and underperformance,
and an earnout of up to $3.5 million. The minimum earnout target was not
achieved; however, the remaining holdback was earned in full, and the Company
paid the remaining holdback of $5.5 million, with interest, after the net
working capital true-up of $0.5 million, during the year ended June 30, 2022.

On April 30, 2021, we acquired 100% of the outstanding shares of Express Med
Pharmaceuticals for an aggregate purchase price of up to $24.0 million (subject
to customary adjustments), comprised of $17.5 million in cash paid at the
closing of the transaction, an additional $2.5 million of holdback for
indemnification claims, if any, and an earnout of up to $4.0 million, if any. As
of June 30, 2022, the Company has accrued compensation expense of $1.0 million
with respect to the earnout.

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On August 31, 2021, SelectRx acquired 100% of the outstanding equity interests
of Simple Meds for an aggregate purchase price of $7.0 million (subject to
customary adjustments). The aggregate purchase price of $7.0 million was paid in
cash at the closing of the transaction.

See Note 2 to the consolidated financial statements for more details.
about our recent acquisitions.

Financing activities

Our financing activities consist primarily of proceeds from debt issuance
and capital and earnings and payments related to stock-based compensation.

Year Ended June 30, 2022-Net cash provided by financing activities of $235.4
million was primarily due to $242.0 million in net proceeds from the DDTL
Facility and $3.2 million in proceeds from common stock options exercised and
the employee stock purchase plan, partially offset by a holdback settlement of
$5.5 million for acquisition of a lead distribution company, principal payments
of $2.4 million and $1.2 million on the Term Loans and DDTL Facility,
respectively, and $0.3 million in debt issuance costs related to the amendments
to the Senior Secured Credit Facility.

Year Ended June 30, 2021-Net cash provided by financing activities of $97.0
million was primarily due to $228.8 million in net proceeds from the Term Loans
as a result of the First Amendment, partially offset by payments of $84.1
million related to the partial extinguishment of the Term Loans prior to the
First Amendment, $32.3 million of earnout for the InsideResponse acquisition,
and $10.4 million for withholding taxes related to net share settlements of
employee stock option awards.

Year Ended June 30, 2020-Net cash provided by financing activities of $481.4
million was primarily due to $416.5 million in net proceeds from the Term Loans,
$340.2 million in proceeds from our initial public offering, net of
underwriters' discounts and commissions, and $135.0 million in proceeds from the
issuance of preferred stock, partially offset by $275.0 million for the
Distribution, $100.0 million payment on our Term Loans with proceeds from the
IPO, and $31.4 million in payments on non-recourse debt, primarily to pay off
the Receivables Financing Agreement.

Senior Secured Line of Credit

We entered into the Senior Secured Credit Facility to provide access to cash, in
a variety of methods, when necessary to fund the operations of the business. As
of June 30, 2022, there was $469.6 million outstanding under the Term Loans and
$243.8 million outstanding under the DDTL Facility and no amounts outstanding
under the Revolving Credit Facility. Refer to Note 10 to the consolidated
financial statements for further details and defined terms.

Our risk management strategy includes entering into interest rate swaps
agreements to protect against unfavorable changes in interest rates related to
anticipated debt transactions. The firm’s modified interest rate swap is
designated as a cash flow hedge of interest payments on $325.0 million in
principal of the Term Loans. See Note 9 of the consolidated financial statements.
statements for more details and defined terms.

Credit facilities with deferred withdrawal

On December 14, 2018, we entered into a senior secured delayed draw credit
facility in which we had access to a senior secured delayed draw credit facility
consisting of up to $30.0 million aggregate principal amount of commitments,
with the commissions receivable from the Auto & Home insurance policies sold as
collateral. Over the life of the agreement, we received $32.8 million in
proceeds from seven draws on the facility and made principal payments of $4.5
million. On June 8, 2020, we repaid in full all indebtedness and other
obligations due totaling $29.3 million, and all security interests and liens
were terminated and released and the agreement was terminated. We repaid the
outstanding debt using proceeds from the IPO.
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Preferred Shares Series E Private Placement

On April 17, 2020 and May 6, 2020, we issued and sold an aggregate of 100,000
shares and 35,000 shares, respectively, of our Series E preferred stock to
certain "accredited investors" (as defined in Regulation D promulgated under the
Securities Act), at a purchase price of $1,000 per share, for aggregate proceeds
of $135.0 million and net proceeds to the Company of $129.4 million, after
deducting commissions and expenses. A portion of the net proceeds was used to
complete our acquisition of InsideResponse and the remaining was used for
general corporate purposes. Upon the closing of the IPO, all outstanding shares
of Series E preferred stock automatically converted into shares of common stock
at a fixed discount. Refer to Note 12 to the consolidated financial statements
for further details.

Initial Public Offering

On May 26, 2020, we completed our IPO whereby 18,000,000 shares of common stock
were sold to the public at $20.00 per share (in addition to shares sold by
selling stockholders). Net proceeds to us from the offering, after deducting
underwriting discounts and commissions and offering expenses, were
$333.1 million.

Contractual obligations

Our principal commitments consist of obligations under our outstanding operating
leases for office facilities; our Senior Secured Credit Facility which includes
the Term Loans, DDTL Facility, and Revolving Credit Facility (as defined in Note
10 to the consolidated financial statements); and our Amended Interest Rate Swap
(as defined in Note 9 to the consolidated financial statements). In addition, we
have outstanding service and licensing agreements with various vendors for
connectability, maintenance, and other services, including minimum purchase
requirements for pharmaceuticals. We believe that we will be able to fund these
obligations through our existing cash and cash equivalents and cash generated
from operations.

Recent Accounting Pronouncements

For a discussion of new accounting pronouncements recently adopted and not yet
adopted, see the notes to our consolidated financial statements.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of revenues, expenses, assets, and liabilities and disclosure of
contingent assets and liabilities in our financial statements. We regularly
assess these estimates; however, actual amounts could differ from those
estimates. The impact of changes in estimates is recorded in the period in which
they become known.

An accounting policy is considered to be critical if the nature of the estimates
or assumptions is material due to the levels of subjectivity and judgment
necessary to account for highly uncertain matters or the susceptibility of such
matters to change, and the effect of the estimates and assumptions on financial
condition or operating performance. The accounting policies we believe to
reflect our more significant estimates, judgments and assumptions that are most
critical to understanding and evaluating our reported financial results are:
revenue recognition for commissions revenue, commissions receivable, accounting
for income taxes, share-based compensation, the valuation of assets and
liabilities acquired from acquisitions, and the impairment of intangible assets
and goodwill.

Recognition of income from commissions and commissions receivable

In accordance with Accounting Standards Codification (“ASC”) 606, Income from
Contracts with Customers (“ASC 606”), revenue is recognized when a customer
obtains control of the promised goods or services and

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is recognized in an amount that reflects the consideration that an entity
expects to receive in exchange for those goods or services. We apply the
following five-step model in order to determine this amount: (i) identification
of the promised goods in the contract; (ii) determination of whether the
promised goods are performance obligations, including whether they are distinct
in the context of the contract; (iii) measurement of the transaction price,
including the constraint on variable consideration; (iv) allocation of the
transaction price to the performance obligations; and (v) recognition of revenue
when (or as) we satisfy each performance obligation. Significant management
judgments and estimates must be made in connection with determination of the
revenue to be recognized in any accounting period. If we made different
judgments or utilized different estimates for any period, material differences
in the amount and timing of revenue recognized could result. The accounting
estimates and judgments related to the recognition of revenue require us to make
assumptions about numerous factors such as the determination of performance
obligations and determination of the transaction price.

The estimate of renewal commission revenue is considered variable consideration
and requires significant judgment to determine the renewal commission revenue to
be recognized at the time the performance obligation is met and in the
reassessment of the transaction price each reporting period. This includes
determining the number of periods in which a renewal will occur and the value of
those renewal commissions to be received if renewed, which includes estimating
persistency, the renewal year provision, and an additional product specific
constraint applied to account for trends such as industry volatility or
uncertainty of consumer behavior patterns. Persistency is the estimate of
policies expected to renew each year and renewal year provision is the estimate
of policies expected to lapse during each renewal period. The estimated average
duration of expected renewals for our cohorts used in the calculation of LTV is
ten years. Effective for policies sold during the three months ended December
31, 2021, and thereafter, the Company increased the product specific constraint
for our largest product, Medicare Advantage, from 6% to 15%. The assumptions
used in the Company's calculation of renewal commission revenue are based on a
combination of the Company's historical experience for renewals, lapses, and
payment data; available insurance carrier data; other industry or consumer
behavior patterns; and expectations for future retention rates. The estimate of
variable consideration is recognized only to the extent it is probable that a
material reversal in revenue would not be expected to occur when the uncertainty
associated with future commissions receivables is subsequently resolved when the
policy renews or lapses. The Company is continuously reviewing and monitoring
the assumptions and inputs into the Company's calculation of renewal commission
revenue, including reviewing changes in the data used to estimate LTV's as well
as monitoring the cash received for each cohort as compared to the original
estimates at the time the policy was sold. The Company assesses the actual
renewal data and historical data to identify trends and updates assumptions when
a sufficient amount of evidence would suggest that the expectation underlying
the assumption has changed and a change in estimate of the transaction price is
warranted. The differences in actual cash received for current period renewals
may result in an adjustment by cohort ("cohort adjustment") to revenue and
commissions receivable. Cohort adjustments can be positive or negative and are
recognized using actual experience from policy renewals. The Company analyzes
cohort adjustments to determine if they are indicative of changes needed in our
estimates of future renewal commissions ("tail adjustments") that remain
unresolved as of the reporting period.

The Company recognizes revenue for both first year and renewal commissions when
it has completed its performance obligation, which is at different milestones
for each segment based on the contractual enforceable rights, the Company's
historical experience, and established customer business practices:

•Senior-Commission revenue is recognized at the earliest of when the insurance
carrier has approved the policy sold, when a commission payment is received from
the insurance carrier, or when the policy sold becomes effective.

•Life-Term commission revenue is recognized when the insurance carrier has
approved the policy sold and payment information has been obtained from the
policyholder. Final expense commission revenue is recognized when the carrier
provides confirmation the policy is active.

• Auto and home commission income is recognized when the sold policy becomes
effective.

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Commissions receivable are contract assets that represent estimated variable
consideration for performance obligations that have been satisfied but payment
is not due as the underlying policy has not renewed yet and are therefore
subject to the same assumptions, judgements, and estimates used when recognizing
revenue as noted above. The current portion of commissions receivable are future
renewal commissions expected to be renewed and collected in cash within one
year, while the non-current portion of commissions receivable are expected to be
collected beyond one year. Contract assets are reclassified as accounts
receivable, net when the rights to the renewal commissions become unconditional,
which is primarily upon renewal of the underlying policy, typically on an annual
basis.

Income Taxes

The Company applies ASC 740, Income Taxes ("ASC 740"), in accounting for
uncertainty in income taxes recognized in the Company's consolidated financial
statements. ASC 740 requires a "more-likely-than-not" ("MLTN") threshold for
financial statement recognition and measurement of tax positions taken or
expected to be taken in a tax return. The Company records a liability for the
difference between the benefit recognized and measured pursuant to ASC 740 and
the tax position taken or expected to be taken on the Company's tax return. To
the extent that the assessment of such tax positions changes, the change in
estimate is recorded in the period in which the determination is made.

In accordance with ASC 740, we account for income taxes using an asset and
liability approach. Deferred income tax assets and liabilities result from
temporary differences between the tax basis of assets and liabilities and their
reported amounts in the consolidated financial statements that will result in
taxable or deductible amounts in future years. The Company continues to
recognize its deferred tax assets as of June 30, 2022, as it believes it is MLTN
that the deferred tax assets will be realized. The Company recognizes a
significant deferred tax liability due to the timing of recognizing revenue when
a policy is sold, while revenue for tax purposes is not recognized until future
renewal commission payments are received. This deferred tax liability is a
source of income that can be used to support the realizability of the Company's
deferred tax assets. As such, the Company does not believe a valuation allowance
is necessary as of June 30, 2022, and will continue to evaluate in the future as
circumstances may change.

Share-Based Compensation

We recognize share-based compensation expense in the consolidated statements of
comprehensive income based on the fair value of our stock-based awards over
their respective vesting periods, depending on the plan. The estimated grant
date fair value of our stock options is determined using the
Black-Scholes-Merton pricing model. The expected term for stock options granted
is determined using the simplified method, which deems the expected term to be
the midpoint between the vesting date and the contractual life of the
stock-based awards. The dividend yield is determined by dividing the expected
per share dividend during the coming year by the grant date stock price,
however, we do not expect to pay any dividends in the foreseeable future. We
base the risk-free interest rate on the implied yield currently available on
U.S. Treasury zero-coupon issues with a remaining term equal to the expected
term of our stock options. Expected volatility is determined using historical
stock prices for a combination of publicly traded peer group companies and our
stock price. The estimated attainment of performance-based awards and related
expense is based on the expectations of target achievement. The assumptions used
in calculating the fair value of stock-based payment awards and expected
attainment of performance-based awards represent our best estimates, but these
estimates involve inherent uncertainties and the application of management
judgment. We will continue to use judgment in evaluating the expected term and
volatility related to our own stock-based awards on a prospective basis, and
incorporating these factors into the model. Changes in key assumptions could
significantly impact the valuation of such instruments.

Fair value of assets acquired and liabilities assumed from acquisitions

We account for business combinations using the acquisition method of accounting.
Identifiable assets acquired and liabilities assumed are recognized and measured
as of the acquisition date at fair value. Additionally, any contingent
consideration is recorded at fair value on the acquisition date and classified
as a liability. Goodwill is recognized to the extent by which the aggregate of
the acquisition-date fair value of the consideration transferred
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exceeds the recognized basis of the identifiable assets acquired, net of assumed
liabilities. Determining the fair value of assets acquired and liabilities
assumed requires management's judgment and often involves the use of significant
estimates and assumptions, including, but not limited to, the selection of
appropriate valuation methodology, projected revenue, expenses and cash flows,
weighted average cost of capital, discount rates, estimates of customer turnover
rates, estimates of terminal values, and assessment of the probabilities of the
earnout metrics.

Impairment of Long Lived Assets and Goodwill

The Company accounts for long-lived assets in accordance with the provisions of
ASC 360, Property, Plant and Equipment ("ASC 360"). ASC 360 requires that
long-lived assets be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset or asset group may
not be recoverable. Recoverability of assets to be held and used is measured by
a comparison of the carrying amount of an asset or asset group to its expected
future undiscounted cash flows. If the carrying amount exceeds its expected
future undiscounted cash flows, an impairment charge is recognized in the amount
by which the carrying amount of the asset or asset group exceeds its fair value.
For purposes of this test, long-lived assets are grouped with other assets and
liabilities at the lowest level for which identifiable cash flows are largely
independent of the cash flows of other assets and liabilities.

For the year ended June 30, 2022, the Company recorded impairment charges of
$3.1 million in general and administrative expense in the consolidated statement
of comprehensive income related to write-offs of previously acquired
definite-lived intangible assets from which the Company does not expect to
receive future economic benefit. There were no impairment charges recorded on
the Company's long-lived assets for the years ended June 30, 2021 and 2020.
Refer to Note 7 to the consolidated financial statements for additional details.

Goodwill represents the excess of the purchase price over the estimated fair
values of identifiable assets and liabilities acquired in a business combination
as of the acquisition date. Goodwill is not amortized in accordance with the
requirements of ASC 350, Intangibles-Goodwill and Other ("ASC 350"), rather,
goodwill is tested for impairment on an annual basis and whenever events or
circumstances indicate that the asset may be impaired. Further, goodwill is
allocated, and evaluated for impairment, at the reporting unit level, which is
defined as an operating segment or one level below an operating segment.

We have the option to perform a qualitative assessment to determine if it is
more likely than not that the fair value of a reporting unit has declined below
its carrying value. This assessment considers various financial, macroeconomic,
industry and segment specific qualitative factors. If we determine that it is
more likely than not that the fair value of a reporting unit is less than its
carrying value, a quantitative test is then performed by estimating the fair
value of the reporting unit and comparing it with its carrying value, including
goodwill. If the carrying amount of a reporting unit is greater than its
estimated fair value, goodwill is written down by the excess amount, limited to
the total amount of goodwill allocated to that reporting unit.

The Company estimates the fair value of reporting units under ASC 350 by using
an income approach, a market approach, or a combination thereof, which involves
the use of significant unobservable inputs, or Level 3 inputs, as defined by the
fair value hierarchy of ASC 820, Fair Value Measurement ("ASC 820"), and require
us to make various judgmental assumptions around future revenues and operating
costs, growth rates, and discount rates which consider our budgets, business
plans, and economic projections. As such, these estimates are uncertain and may
vary from actual results. Under the income approach, we utilize the discounted
cash flow method while under the market approach, we utilize a peer-based
guideline public company method based on published multiples of earnings of
comparable entities with similar operations and economic characteristics.

As a result of our annual goodwill impairment test as of April 1, 2022, the
Company recorded goodwill impairment charges of $44.6 million in goodwill
impairment in the consolidated statement of comprehensive income for the year
ended June 30, 2022. There were no goodwill impairment charges recorded for the
years ended June 30, 2021 and 2020. Refer to Note 7 to the consolidated
financial statements for additional details.


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