A SelectQuote IPO is coming to the markets. Since November 2019, the company filed registration statements and amendments. Now, investors want to know when to expect SelectQuote stock.
But more importantly, is SelectQuote a good investment? Here’s what we know…
SelectQuote IPO: The Business
Charan Singh founded SelectQuote in 1984. Singh currently serves as a chairman. Tim Danker has been the CEO since 2017. The Kansas-based company provides an online platform to compare insurance policies for life, home and auto. SelectQuote doesn’t insure the consumer directly. Instead, the company works with over 50 carriers to choose from.
In late March, SelectQuote announced it will hire more than 1,000 new employees. And in the company’s latest filing with the SEC, it identified as an “emerging growth company.” But is this growth why the SelectQuote IPO is happening now?
Why SelectQuote is Going Public
During the coronavirus pandemic, the IPO market slowed down. But there are companies successfully making public debuts. And SelectQuote could be one of them.
As more people stay home, online services have increased in popularity. This is great for SelectQuote…
The company saw an increase in activity on its platform. The pandemic is expected to affect rates for some insurance companies. That makes it a good time for some policyholders to switch insurers.
SelectQuote is an established company that continues to grow. But the SelectQuote IPO will help raise money to grow faster.
SelectQuote: The Finances
First, there is a financial reason for the SelectQuote IPO. The company has a loan for its new Senior Secured Credit Facilities. That loan matures in November 2024. So, the company states it will need at least 25% of the IPO profits (up to $150 million) to pay towards the loan. The remaining profits will go to capital expenditures and general corporate purposes.
Next, SelectQuote is on the path to double its revenue from 2018. In 2018, sales were $233.7 million. And the next year, sales increased to $337.5 million. But in the company’s latest S-1 filing, SelectQuote provided financial information for the nine months ended March 31, 2020. Recorded sales were $390 million. Analysts project 2020 year-end sales will be $464.5 million.
Also, net income should more than double. In 2018, the company’s net income was $34.9 million. And for the nine months ended March 31, net income was $61 million. But analysts project year-end net income will be $74 million.
Lastly, however, the company has debt. And it grew from 2019 to 2020. As of June 30, 2019, SelectQuote recorded debt of $11 million. But for the nine months ended March 31, 2020, debt was $411 million. Although this is a large increase, analysts note this debt comes primarily from paying preferred stock dividends. But SelectQuote is converting those preferred shares to common equity.
So, it looks like SelectQuote has solid finances in place. And the money from the SelectQuote IPO will mostly be used to help expand company operations. If you’re looking to invest in SelectQuote stock, let’s look at the IPO …read more
Source:: Investment You