SLQT

SelectQuote's FY2025 optics look like a turnaround: revenue grew to $1.53B (+15.5%), the company swung to $47.6M net income after three straight loss years (FY2022 -$298M, FY2023 -$58.5M, FY2024 -$34.1M), and it materially deleveraged — total liabilities fell 23.2% and long-term debt halved (-50.3% to $317M). On a price-to-sales basis of 0.1x and a $137M market cap, the stock is optically dirt cheap. That's the bull case, and it is not nothing.

But the earnings quality undercuts it. Operating cash flow was NEGATIVE $11.7M in FY2025 even as the income statement showed a profit — the classic tell of SelectQuote's LTV model. The MD&A confirms revenue is booked on the 'constrained lifetime value of commissions per policyholder,' an estimate collected in cash over years, and management flags that results 'will be impacted by factors that affect our estimate' of that LTV. This is the same accounting that produced the $298M FY2022 loss when cohort assumptions were revised. So the $47.6M 'profit' is an actuarial mark, not cash in the door, and diluted EPS is a rounding-error $0.01. Meanwhile cash fell 24% to just $32.4M against $68.5M of current debt due (+49.4% YoY) — a genuine liquidity pinch for a business that isn't self-funding, and the 10-K itself warns growth 'will require additional capital, which may not be available.'