We’re going to continue down the path of a refined segmentation on marketing, very disciplined around costs and we would expect for that to play through with respect to, I think, the last comment you made on CMS and some of the rules that came out, maybe most notably the 48-hour rule. Our viewpoints haven’t really changed from the last time we spoke with you and others. We feel that we’re in very close dialogue with our carrier partners, we don’t see a material impact to that with the business moving forward. Bob, any other comments on other levers as we think about fiscal ’24 for the Senior business?
Bob Grant: Yeah. I’m going to kind of double down on Tim’s statements on the retention. Not only has it been good, it’s really been a record retention of agents, especially our higher-level agents. What that gives us coming into this AEP is the most Level 1 agents we’ve ever had, the highest percentage of core agents we’ve ever had even more than last year through our strategic redesign. This year will be even higher, and we feel really, really good about that where we are. And I think we’ve been really open in the past that having tenured agents, especially Level 1, gives us a huge leg up on close rates and just predictability and those things, which is why we had gone through the strategic redesign. I think it really gives us a huge win for AEP coming in. We feel really good about that.
Daniel Grosslight: Yeah. Good to hear. And last one for me, just on cash flow. Good to hear that you’re going to be kind of approaching breakeven on operating cash flow for fiscal ’24. Just curious how you’re thinking about capital deployment. And really how you’re thinking about the debt. You’ve got more than a year left on until you’re going to see maturity there, but just curious how you’re thinking about the debt, potential refinancing? And then on the asset coverage ratio that bumps up to around 1.8 times by the end of the next fiscal year — by end of fiscal ’24, which would imply you would need — assuming you don’t pay down a bunch of debt around $1.2 billion of commissions receivable. Are you comfortable with that asset coverage covenant?
Bob Grant: Yeah. That’s a great question. With respect to operating cash flow, obviously, it’s carrier focus for the organization. We had a really fantastic 2023, kind of set out cash EBITDA breakeven, significantly beat that with $72 million. And actually, setting aside Healthcare Services would have been positive — the investment in Healthcare Services would have been positive on a full year basis in 2023. As you mentioned, expect to be approaching operating cash flow breakeven in 2024. It is — what we’re managing towards — it is the next big key milestone for the business. With respect to the impending maturity, we’re in regular dialogue with our term lenders. We absolutely recognize an opportunity to improve the overall capital structure and total cost to debt.
So I think that’s — first and foremost, it’s a priority. It’s something we’re working on. We do believe that there is a path to a lower cost. Business results have been very strong. And certainly, when you look at that paired with our cash position and commission receivable balance has remained steady, it really broadens the option set with respect to refinancing and facilitates discussions with our existing lenders. So, yeah, I think those certainly bode well and help with the cause. With respect to the covenant in Q4 of 2024, we’ve recently worked with our term lenders on an amendment on that. So we do have clear runway on our fiscal 2024 plan. We have adequate cash and liquidity to execute against it. And from a compliance perspective, we feel good about where we sit relative to the amendment that’s been put in place.
Daniel Grosslight: Got it. Thanks for the color.
Operator: Our next question comes from Ben Hendrix with RBC. Your line is open.
Ben Hendrix: Hey, thank you. Just a quick question on your growth expectations. In Senior, growth slowed 13% this year. And I think you said 25% expected in guidance. Just wanted to get your sense of kind of how you’re thinking about a run rate for the industry and for you guys going forward? And the extent to which there is influence there from expectation we’ve heard from carriers of this being increased shopping year this year. Should we expect that 25% to moderate as we go forward? Or how are you thinking about the kind of the go-forward run rate and growth?
Tim Danker: Yeah, I’ll be happy to answer your first question and maybe have Bob talk about the second one. Certainly, here, we operate in a large market. And if you really look at healthcare, an even bigger market. Ben, we’re really focused on delivering high-quality business for our carrier partners, driving attractive returns. We certainly felt like we did that in ’23. And ultimately, we’re going to prioritize profitability and cash flow and take any extra volume that might fall through to the bottom line to the efficiency of the model. I think last year, we guided to a 35% to 45% pullback and ended up with the pullback only being 13%. So I think that shows you what’s possible in the model. Also, make a note that when you think about growth, growth in market share is not all created equal.
If you look at what we did from a Senior perspective, we had 26% margins. You also need to tack on that additional benefit of SelectRx that came at very low marketing costs. And I think that, right, kind of underscores the power of our model, and we really kind of point the market to the collective growth. It’s a combination of what we’re doing on our Senior business, coupled with our Healthcare Services and kind of a perspective on enterprise growth. Bob, to Ben’s second question?
Bob Grant: Yeah. We try to be very, I’d say, balanced and measured coming to the AEP on what our expectations of close rates will be. And to the point that the carriers have made on increased shopping, we believe we’ve attracted a really sticky customer this year, given what the focus has been on, which, again, it’s kind of the demographic that we bring on. And historically, increased shopping has been a windfall for us or a good guy for us tailwind, I should say, sorry. As far as what we see, especially if those — these steps do kind of take shape and we see that group the one that shops more, especially if they’re not on a special needs plan today and they’re eligible to get on one. So I think when you look at what we’ve done, we are being very measured on our approach towards what we expect. But there could be some tailwinds to that if what the carriers are saying plays out especially towards the demographics we attract.
Ben Hendrix: Thank you. And in your prepared remarks, you alluded to changes in lead targeting strategies. I’m just wondering if there’s any lessons learned from 2023 that are informing your 2024 strategies, how we expect kind of lead generation and targeting to evolve for next year?
Tim Danker: Yeah, sure. Great question, Ben. Broadly, in terms of the market, we do think the market environment has continued to be favorable, but kind of the rationalization that we’ve seen in the industry over the past two years has created a favorable backdrop. But I think most importantly, kudos to our entire operational team has done a great job with respect to marketing segmentation, target marketing [Technical Difficulty] and with our partners to just demand higher quality and find it’s a very big market. And so we really feel like we’re finding that sweet spot. So, by and large, we’re going to continue with the approach that we had in ’23. I think we’ll also have an eye to kind of the pull-through economics we get on our Healthcare Services business.
