SelectQuote (SLQT) FY2026 10-K: $62M Profit, Minus 6 Cents EPS
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Net income of $62.2 million. Loss per share of six cents. Both numbers are correct.
RoboSystems initiating coverage · Insurance distribution · Source filing: FY2026 Form 10-K for the year ended June 30, 2026, filed August 25, 2026 (accession 0001794783-26-000057). All figures verified live from the SEC XBRL graph via RoboSystems unless attributed otherwise. Not investment advice. No price target.
1. The Hook
SelectQuote $SLQT just reported the largest profit in its history: $62.2 million of net income on $1.62 billion of revenue, its second straight profitable year after a $34.1 million loss in FY2024. Then, four lines further down the same income statement, it reported loss per share of six cents.
Both are true, and the distance between them is the company. Of $76.3 million in pretax income, $55.8 million was a non-cash gain on warrants that got cheaper because SelectQuote's own stock collapsed, and another $22.2 million came from raising the estimated value of insurance policies it sold in earlier years - a revision booked straight into revenue, with no new customer and no cash attached. Those two marks total $78.0 million against $76.3 million of pretax income. Strip both and FY2026 is a pretax loss of about $1.7 million. Then the preferred stock issued to fund the balance sheet took $73.8 million of accretion and dividends off the top, which is how a $62.2 million profit becomes negative $11.6 million available to common shareholders.
2. Company Snapshot
SelectQuote is a direct-to-consumer insurance distributor headquartered in Overland Park, Kansas, listed on the NYSE. Licensed agents sell Medicare Advantage, Medicare Supplement, term life and final expense policies on behalf of carriers, and the company earns commissions. Bolted onto that is SelectRx, a mail-order pharmacy that ships chronic-care prescriptions to the same Medicare population. Its fiscal year ends June 30, so FY2026 is the year ended June 30, 2026, and the September quarter is fiscal Q1 2027.
The mix has quietly inverted. Pharmacy revenue of $830.9 million now exceeds commissions and other services revenue of $787.6 million, the first crossover in the three years the filing presents. The brokerage that gives the company its name is no longer its largest line.
| Revenue line | FY2026 | FY2025 | FY2024 |
|---|---|---|---|
| Commissions and other services | $787.6M | $797.8M | $856.9M |
| Pharmacy (SelectRx) | $830.9M | $728.8M | $464.9M |
| Total revenue | $1,618.5M | $1,526.6M | $1,321.8M |
The stock closed at $0.529 on September 2, 2026, a $93.4 million market cap on 176.6 million shares, inside a 52-week range of $0.48 to $2.24 (price data: stockanalysis.com, quote timestamped September 2, 2026, 4:00 PM EDT).
3. The Financial Story
The mechanism is the whole company, so start there. When a carrier approves a Medicare Advantage policy, SelectQuote books as revenue not the first commission cheque but the estimated lifetime value of that policy: the first-year commission plus a projection of renewal commissions over a ten-year expected renewal period, adjusted for how many policyholders are expected to stick around, then reduced by a 15% product-specific constraint. The cash arrives over the following decade if the policyholder keeps renewing and the carrier keeps paying at the contracted rate. The 10-K names the load-bearing assumption without hedging: "The most sensitive assumption in the model is persistency, which is the estimate of policies expected to renew each year."
The result is the most unusual balance sheet in the sector. Commissions receivable of $991.4 million is 77% of SelectQuote's $1.29 billion of total assets, and 86% of that receivable is not expected to convert within twelve months. Against it sits $16.0 million of cash, down from $32.4 million a year ago. Three quarters of this company is an estimate about the next ten years.
In FY2026 that estimate got revised upward, and it flattered the year. Each period the company remeasures its cohorts against actual renewal experience. The FY2026 roll-forward, in the filing's own presentation:
| Commissions receivable roll-forward | FY2025 | FY2026 |
|---|---|---|
| Opening balance | $881.3M | $950.8M |
| Commission revenue from policies sold | $317.8M | $281.5M |
| Net adjustment from change in estimate | $(4.5)M | $22.2M |
| Amounts recognized as accounts receivable | $(243.8)M | $(263.1)M |
| Closing balance | $950.8M | $991.4M |
Read the third row across. FY2025 marked the back book down by $4.5 million; FY2026 marked it up by $22.2 million. A $26.6 million year-over-year swing in revenue that has nothing to do with selling a policy. To be fair to the company, cohort adjustments are "recognized using actual experience from policy renewals" - this is a revision informed by real renewal data, not an invention. But it is revenue recognized in FY2026 for business written in prior years, and it is 29% of FY2026 pretax income.
What makes that mark awkward is the direction of everything else. While the old policies were being marked up, the new ones got smaller and fewer. Medicare Advantage approved policies fell to 567,526 from 592,874 and 625,245 two years ago. The lifetime value assigned to each new MA policy fell to $873 from $884 and $910, which management attributes to "shifts in carrier mix and changes to plan designs." Submitted policies dropped 6% on a 13% decline in close rates. So SelectQuote sold 4% fewer policies, judged each one to be worth less than last year's, and simultaneously decided the policies it sold in prior years are worth $22.2 million more.
The second mark is stranger still. The warrants issued alongside the February 2025 preferred financing are carried as a liability at fair value. As SLQT fell from $2.24 toward $0.53, that liability shrank, and the shrinkage runs through the income statement as a gain: $55.8 million in FY2026, after $59.5 million in FY2025. The company earned $115.3 million of reported pretax income across two years from its own share price collapsing. It is also non-deductible, which the tax footnote confirms: the warrant mark-to-market added 15.3 percentage points to the effective rate.
| FY2026 pretax income, deconstructed | |
|---|---|
| Pretax income as reported | $76.3M |
| less warrant fair-value gain (non-cash) | $(55.8)M |
| less cohort change in estimate (non-cash) | $(22.2)M |
| Pretax income excluding both marks | $(1.7)M |
Cash tells the plainer version. Operating cash flow was $31.9 million, against $62.2 million of reported net income, and after $4.3 million of capital expenditure, free cash flow was roughly $27.6 million. That is real, and it is an improvement on FY2025's $11.7 million operating outflow. It is also small next to what sits above it: $370.2 million of debt and a preferred instrument whose liquidation preference grew from $367.1 million to $423.2 million during the year. The preferred's claim compounded by $56.1 million while the business generated $31.9 million of operating cash. The claim is growing at nearly twice the rate the company can fund it.
Tax: charged is not paid, and here the gap is the mechanism, not an evasion. SelectQuote was charged $14.1 million of income tax in FY2026 (us-gaap:IncomeTaxExpenseBenefit), an 18.5% effective rate. Cash income taxes paid, net, were $0.2 million (us-gaap:IncomeTaxesPaidNet). Those are different numbers measuring different things, and the reason they diverge is that book revenue lands when a policy is approved while taxable income follows the cash as it trickles in over ten years.
| Income tax, FY2026 | Amount |
|---|---|
| Total charged (expense) | $14.1M |
| of which current | $2.2M |
| of which deferred | $11.9M |
| Cash taxes paid, net | $0.2M |
| Deferred tax liability on commissions receivable | $275.8M |
The $275.8 million deferred tax liability on commissions receivable is the honest measure of how much of SelectQuote's reported profit the tax code has not yet recognised. It is not a scandal. It is the same mechanism showing up in a second place: the IRS has taxed almost none of this profit because almost none of it has arrived.
4. Valuation: What the Price Implies About the Receivable
Conventional multiples break on this name. Trailing earnings per share are negative, so there is no meaningful price-to-earnings. Price to sales of 0.06 times looks absurd only until you notice the equity is a thin sliver on top of a large capital stack. The useful question is narrower and answerable: at $0.529, what is the market saying the $991.4 million receivable is worth?
Work down the balance sheet. Total assets of $1,286.8 million less total liabilities of $636.8 million leaves $650.0 million of net assets. The preferred ranks ahead of the common with a $423.2 million liquidation preference, leaving $226.8 million of book value attributable to common shareholders. The market pays $93.4 million for it.
That $133.4 million shortfall, expressed against the only asset that could plausibly be wrong, is a 13% haircut to commissions receivable. A 23% haircut eliminates the common entirely.
| Scenario | Assumption on the $991.4M receivable | Implied common equity | Per share |
|---|---|---|---|
| Bull | Collects at book; business stabilizes | $226.8M | $1.29 |
| Base | 15% shortfall against book | $78.1M | $0.44 |
| Today's price | Implies about a 13% shortfall | $93.4M | $0.529 |
| Bear | 23% or worse shortfall | $0 | $0.00 |
Implied value under stated assumptions. Not a price target, not a recommendation. Every scenario holds the preferred at its $423.2 million liquidation preference and assumes the operating businesses are worth their remaining book carrying value, which is a simplification.
The enterprise cross-check says something similar. Market cap of $93.4 million plus $370.2 million of debt plus the $423.2 million preferred preference less $16.0 million of cash gives an enterprise value near $870.8 million, or 8.0 times FY2026 Adjusted EBITDA of $109.1 million. But that Adjusted EBITDA includes the $22.2 million cohort mark-up, because the company adds back warrants and interest and taxes but not the change in estimate. Remove it and Adjusted EBITDA is $87.0 million and the multiple is 10.0 times - a full turn and a half of the apparent cheapness is the mark.
What today's price implies, then, is not that SelectQuote is a broken operating business. SelectRx is growing, prescriptions per day rose from 27,867 to 32,215, and the company converted $27.6 million of free cash flow. It implies the market does not believe the ten-year renewal estimate at full value, and is unwilling to fund a preferred claim compounding faster than the cash.
5. Risks
The estimate has three separate ways to be wrong, and they are correlated. Persistency is the filing's own stated most-sensitive assumption, and the constraint applied is 15%, so a decade of renewal behaviour meaningfully worse than assumed flows back through revenue as a negative cohort adjustment - the mirror image of this year's $22.2 million benefit. Carrier concentration compounds it: per Item 7A, two carriers account for 34% and 21% of total accounts and commissions receivable, so 55% of the asset depends on two counterparties whose contracts the 10-K describes as "non-exclusive and can typically be terminated unilaterally by either party" and who "have the ability to amend provisions in the contracts relating to the commission rates." And the Department of Justice has intervened in a False Claims Act matter that the company's own risk factors carry as potentially having "a material adverse effect on our business, operations, and financial condition." That complaint concerns the commission arrangements with the very carriers whose future payments the receivable capitalizes.
The capital structure is the near-term pressure. The preferred preference grew $56.1 million in a year against $31.9 million of operating cash flow, $16.0 million of cash sits against $370.2 million of debt, and the 10-K's risk-factor summary states the company may be unable to "regain or maintain compliance with NYSE listing standards" - its own word is "regain." A sub-dollar share price with a delisting risk factor and a compounding senior claim is a narrow path, and it is the reason a company reporting record profit trades at $93 million.
6. The Bottom Line
SelectQuote is not a fraud and this is not an accounting scandal. It is a legitimate application of ASC 606 to a business whose product is a ten-year cash flow, and the company discloses the mechanism carefully enough that you can rebuild the entire argument from its own tables. The problem is that the mechanism has now produced a year in which the reported profit, the cash, and the shareholder's actual outcome all point in different directions: $62.2 million of net income, $31.9 million of operating cash, and negative six cents a share.
Watch three things. First, the sign on the cohort adjustment line in the fiscal Q1 2027 filing, due around October 29, 2026 - this year's $22.2 million write-up is the number most likely to reverse. Second, the LTV per approved Medicare Advantage policy, which has fallen two years running, through the Annual Enrollment Period that opens October 15. Third, the preferred preference, which will keep compounding whether or not the estimate holds.
Every figure above was pulled from SelectQuote's FY2026 Form 10-K and its underlying XBRL through the RoboSystems SEC Shared Repository. Structured filing data for every public company that files: robosystems.ai/pricing. New customers get 50% off your first month with code ROBO50.