Welcome to the SelectQuote Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. It is now my pleasure to introduce Matt Gunter, Investor Relations, SelectQuote. Mr. Gunter, you may begin your conference.
Thank you, and good morning, everyone. Welcome to SelectQuote's Fiscal Third Quarter Earnings Call. Before we begin our call, I would like to mention that on our website, we have provided a slide presentation to help guide our discussion. After today's call, a replay will also be available on our website. Joining me from the company, I have our Chief Executive Officer, Tim Danker, and Chief Financial Officer, Raff Sadun. Following Tim and Raff's comments today, we will have a question- and- answer session. In order to allow everyone the opportunity to participate, we do ask that you limit yourself to one question and one follow-up at a time, and then fall back into the queue for any additional questions. As referenced on slide two, during this call, we will be discussing some non-GAAP financial measures.
The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available in our earnings release and investor presentation on our website. Finally, a reminder that certain statements made today may be forward-looking statements. These statements are made based upon management's current expectations and beliefs concerning future events impacting the company, and therefore, involve a number of uncertainties and risks, including, but not limited to, those described in our earnings release, annual report on Form 10-K, and other filings with the SEC. Therefore, the actual results of operations or financial condition of the company could differ materially from those expressed or implied in our forward-looking statements. With that, I'd like to turn the call over to our Chief Executive Officer, Tim Danker. Tim?
Thanks, Matt. Good morning, and thank you all for joining us. In my remarks today, I'll touch on two topics. First, I'll summarize the quarter and how we saw encouraging sequential improvement in our senior business during OEP compared to AEP. Second, I'll provide an update on the strategic redesign we discussed on our last call. It's certainly too early to declare victory, but we observed tangible improvement over the past quarter due to our preliminary actions, which gives us confidence a lower growth, returns-focused strategy is the best way to capitalize on the significant value opportunity we still see in Medicare Advantage distribution. With that, let's start on slide three with highlights from our fiscal third quarter. As I noted, our senior business performed better in OEP as compared to AEP across a number of key performance indicators.
Our agents delivered higher conversion rates, driven primarily by more comprehensive onboarding, training, and longer agent tenure. Again, early days, but this observed close rate improvement supports our plan to hire earlier and carry a higher mix of tenured core agents in future seasons. The second operating highlight in our senior business was a significant improvement in marketing costs, driven by our decision to optimize marketing partners and refine customer segmentation and targeting. Additionally, better conversion rates by our agents helped reduce cost per approved policy and overall marketing efficiency. Lastly, going forward, we are placing even greater emphasis on the cash flow and profitability of our business, and we are pleased with our early actions to reduce costs as part of our developed plan that should yield over $200 million of cost savings, excluding SelectRx.
About 20% of that total comes from fixed cost reductions, which are implemented during the quarter. We'll provide more detail on those actions in a minute, but again, these early steps give us increased conviction in our redesigned path to profitability. Turning to our financials, the quarter was better than our expectations, driven largely by the actions I just summarized. Our revenue totaled $275 million, up 4% compared to a year ago, and our Adjusted EBITDA for the quarter was $13 million, compressed primarily because of the year-over-year pressure on MA LTVs. Lastly, our population health and SelectRx businesses continued their momentum in the quarter. We ended the third quarter with around 20,000 active SelectRx members, and now total over 23,000 active members as of April 30.
We remain very confident in our ability to surpass 25,000 members by the end of fiscal 2022. That would equate to more than a tenfold increase in pharmacy members since we first acquired the business in May of 2021 and demonstrates the potential of the comprehensive healthcare services platform we are building to drive significant future revenue and profitability to our business. It is also important to understand our population health initiatives are much broader than just prescription drugs and SelectRx. Our holistic approach in partnering with a diverse set of leading healthcare service providers will continue to differentiate SelectQuote, as well as deepen our relationships with policyholders and carriers.
While many of the services beyond SelectRx are not yet significant revenue drivers in an explicit sense, we believe these diverse services will drive new revenue streams and deeper relationships with our customers, carriers, and providers over time, and ultimately boost our returns and profitability. On slide 4, I'd like to review our ongoing strategy and provide detail on progress we have made thus far. First, it is worth reiterating that the remainder of fiscal 2022 and next season will be a transition year for SelectQuote. That said, we've become increasingly confident in our plan over the past 90 days based upon the early impact we have seen in our results. As you can see here, our strategy encompasses four core pillars, which are all focused on improving SelectQuote's profitability and the predictability of our returns.
At SelectQuote, we are committed to a growth strategy prioritizing returns, visibility, and growing cash flow over volume. To be clear, we believe the opportunity remains large and long-tailed in our senior business. That said, years of 100%+ growth in policies are candidly less likely in our future. As we've noted, our initial policy forecast for 2023 assumes a year-over-year decline in submitted policies to rightsize our organization. That point leads to the second component of our strategy, which is to mitigate our operational risk or effectively reduce our operating leverage. As we noted last quarter, we are committed to a senior business strategy that can produce attractive returns in a wide range of environments.
Clearly, the 2021 AEP season was unique, but we believe the cost savings we have identified thus far will go a long way in ensuring better returns even during challenging seasons. At this point, the bulk of the $200 million we have identified will come from lower growth and variable costs. That said, I want to emphasize that we will remain focused on high return on investment capital allocation. In the quarters ahead, you can expect updates across a number of these initiatives, including agent hiring, onboarding, marketing, and our G&A. Perhaps even more importantly, the planned pullback in Medicare policy production 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.
For example, we plan to take a more conservative approach to our recruiting, training, and onboarding of new agents, ensuring that all will be fully prepared for the AEP busy season. We anticipate by next AEP our agent force will be a more tenured group than the 2021 AEP team. The pullback also allows us to reassess and optimize our training tools and systems that support our agents and their important role of advising customers on the best plan for their unique needs. The pullback allows us to optimize our marketing sources and to refine our targeting to focus more investment on the highest LTV producing lead sources going forward. If we move to the next pillar, we continue to bake more conservatism into our expectations for LTV. Recall from the last quarter, we significantly increased our constraint from 6% to 15%.
In addition, lower persistency in each of the recent cohorts has been incorporated into our LTV accounting. Raff will expand on this point, but the key takeaway is that while we cannot confirm LTV is a bottom, we believe volatility going forward has been significantly reduced. While we're still in the very early stages of layering in additional retention-focused operational improvements following AEP, we are encouraged by the early indicators we are seeing from some of our efforts. For instance, layering in more and more refined customer targeting based upon revised datasets and optimizations of our marketing sources aided in our conversion rates in the third quarter, and we believe that we will eventually see observable improvements in persistency with these customers over the long term.
Lastly, as I noted before in the update on SelectRx, we believe our differentiated approach to broader healthcare services will create a significant competitive advantage in the years ahead. From SelectRx to the creation of our Healthcare Advisory Board to the growing number of services we and our partners provide to customers, SelectQuote should become a stickier and more important relationship to customers, carriers, and providers. We're excited to share more about these growing capabilities in the quarters and years ahead. Lastly, let me turn to slide five to briefly describe some of the key differences we observed between the challenging AEP of last quarter and the recent OEP season. We know it can be difficult to track trends in our business, especially in a season as unique as this past one.
To be clear, we're not providing this detail to suggest an ongoing trend, but instead want to give context, especially as it relates to the impact of our new strategy. First, we saw a significant improvement in our marketing cost per approved policy, which decreased 27% year-over-year. As I noted, less competition likely had some impact, but more importantly, we realized benefits from our work to optimize our marketing and to target higher return policyholders. Next, the more seasoned agent workforce in OEP relative to AEP confirmed our strategy to onboard and train earlier next season. We leveraged the interval between the conclusion of AEP and the start of OEP to provide additional product and sales training to our agents and to fine-tune our plan recommendation engine. We feel the conversion rate improvements we saw during third quarter demonstrate that these investments helped.
Clearly, a tight labor market impacted our 2022 season, but regardless of the recruiting environment, we believe we can drive better productivity and conversion rates in future seasons with earlier onboarding and training. Third, as I highlighted before, we've already identified significant cost savings and will continue to optimize our platform to drive sustainable scale and profitability. Lastly, we are most encouraged by the progress we continue to see in SelectRx and our broader population health initiatives. We continued our strong SelectRx customer growth momentum and ended April with over 23,000 active members. We look forward to sharing more, including our forward growth expectation in the coming quarters.
That said, overall, we believe the biggest benefit to our business will come from our differentiated value proposition as we continue to evolve from a pure-play insurance distributor to a comprehensive healthcare services platform addressing a far greater range of our customers' health needs. To conclude my prepared remarks, I'll summarize by noting that while our work is far from finished, we are pleased with the progress demonstrated in the quarter and have growing conviction in the value our company can generate for shareholders in the future. With that, let me turn the call over to Raff to review our financial results. Raff?
Thanks, Tim. Turning to slide 6 in our consolidated results. During our last earnings call, we did say that while the margins of the business have certainly been compressed, we believe there are meaningful changes we can make that will have a positive impact on the senior distribution business going forward. In this quarter, we started to see some of the early benefits, especially around marketing efficiency and close rates. Consolidated revenue for the third quarter was $275 million, and consolidated Adjusted EBITDA was $13 million. Revenue was driven by growth in our senior business, which we will discuss later, somewhat offset by a reduction in our life business, driven by lower term life premium, which was the result of fewer agents and continued COVID pressure on conversion of sold policies to in-force policies. Our auto and home revenue was flat year-over-year.
While we did see significant improvement in per unit operating expenses in our senior distribution business, down 19% year-over-year, the 32% decrease in MA revenue per approved policy more than offset the expense savings. That plus the investment we're making to grow population health in SelectRx specifically negatively impacted Adjusted EBITDA year-over-year. During the quarter, we took certain actions to cut fixed and variable costs out of the business. Excluding SelectRx, we expect our fiscal 2023 overall operating costs will be over $200 million lower than fiscal 2022 as a result of these actions and the lower policy production we are expecting for next year. We also made significant progress in scaling SelectRx, which I will also touch on later. With that, let me now get into our senior operating results for the quarter. Turning to slide 7.
We grew our total approved policies 33% and our MA approved policies 48%. The MA policy growth was driven by more agents and better close rates year-over-year. This was a reversal of the trend we saw during AEP. We think some of this was driven by a less competitive marketing environment, optimization of our marketing sources, and the benefits of significant training we have done with our agent force, especially Flex agents, who saw the biggest improvements in close rates relative to the trends we saw during AEP. MA LTVs were down year-over-year as a result of the factors we spoke about last quarter, lower persistency, higher provisions, and higher constraints. We did continue to see pressure relative to first term lapse rates and increased the first-year provision for policies sold this quarter.
We've identified multiple opportunities to address continued persistency and entry year lapse pressure and implemented some of these initiatives toward the end of the quarter. While we believe these actions can have a positive impact, it is too early to tell, and we expect the impact of higher entry year lapse rates during OEP will weigh on lapses for the remainder of the year. For policies sold in the second year and beyond, we are seeing modest overall improvements in entry year lapses year-over-year, concentrated in years two and three, but still higher than original expectations. Now, moving on to operating costs. While it may not be apparent because of the impact that lower LTV has on profitability, we made significant progress on operating more efficiently.
Our per unit operating costs for our distribution business, excluding population health and SelectRx, were down around 19% or $190 to around $840. The majority of this improvement was driven by lower marketing costs, which were down about 27%. This improvement was driven by much more efficient marketing across the whole funnel, including lower cost per lead and higher year-over-year conversion rates driven by some of the actions I described above. With respect to the cohort tail adjustment that we took last quarter, we don't currently expect to take any further negative adjustments relative to that calculation for this year's renewals when we formally recalculate the number in the fourth quarter. Now, if we turn to slide 8, let me provide an update on the significant progress we've made growing our SelectRx pharmacy business.
We continue to see the high level of consumer interest in and demand for the pharmacy services we offer. We ended our second quarter with nearly 8,000 members. As of the end of April, we have now exceeded 23,000 members. This demand was generated almost entirely from enrollments of new and existing SelectQuote Medicare Advantage customers at very low incremental acquisition cost to the company. We remain excited about the positive and predictable cash flow impact this business can have on our overall results, and we remain confident with our forecast to exit this fiscal year with over 25,000 active SelectRx members, over 10 times what we started the year with. That member base would equate to a run rate of over $150 million of revenue in fiscal 2023, even without adding any net new incremental members in fiscal 2023.
Now, if we move to slide nine, let me provide an update on our capital position. Although the second quarter is always our biggest quarter for use of cash, as we have all the expenses of operating during AEP, marketing costs, and sales agent commissions, beginning in the third quarter, we start collecting the cash from first-year commissions associated with AEP activity. For the quarter, we generated approximately $21 million of cash from operations. In addition, we used approximately $9 million of cash for CapEx. As of March 31st, 2022, we ended the quarter with $199 million of cash and $715 million of debt. We also ended the quarter with $1 billion of accounts receivable and short- and long-term commissions receivable balances.
Finally, before I turn the call back to the operator for your questions, I'd like to comment on our guidance for fiscal 2022. As noted earlier, we are encouraged by the initial progress we have made and our positive results for the third quarter. Similarly, we do not expect trends to differ meaningfully in the fourth quarter relative to the third quarter. That said, we will not be updating our fiscal year 2022 guidance at this point, and instead are more focused on our fiscal 2023 and beyond. We plan to share our specific views with you on next quarter's earnings call. With that, let's get to your questions. Operator?
As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Your first question comes from the line of Daniel Grosslight with Citi.
Hi, guys. Thanks for taking the question. You know, I just want to stick on that reiteration of guidance, particularly on EBITDA and net income, because you did outperform pretty significantly on those two line items this quarter. Really in the senior segment, that outperformance really came through. I'm curious, was there any one-time benefit in the third quarter to senior profitability that's not going to repeat? Can you just kind of walk us through the cadence for 4Q of EBITDA and that pretty steep decline a reiteration of guidance implies on 4Q EBITDA?
Yeah, maybe I'll take that one. We're obviously encouraged by the performance of the business in the third quarter, certainly relative to our revised expectations. We decided to leave the guidance unchanged, as quite frankly, we're much more focused on developing the plan for fiscal 2023 and beyond, which we plan to share on our fourth quarter earnings call. I think it's important, though, to be very, very clear that leaving the guidance unchanged is not a signal about the fourth quarter performance, and there were no sort of one-time benefits in the third quarter. The trends that we're seeing so far in the fourth quarter are not meaningfully different than what we saw in the third quarter. I wouldn't read more into that than just being conservative.
Understood. Okay. Very encouraging trends in marketing. You mentioned less competition for leads, which is good, but also optimizing your marketing channels. I was curious if you could dig into that latter point a little more. Are you shifting away from certain areas, perhaps DIRECTV , direct mailers, to other more productive marketing channels? What are those productive marketing channels? Related to that.
Yeah.
CMS came out with some new rules that seem pretty prescriptive on how your agents will have to speak to Medicare members, particularly with, you know, some stock language at the beginning of the call. Curious how you're thinking about some of these new rules for marketing and agent scripts for fiscal 2023 and how that might impact productivity next year?
Yeah. This is Bill, and I'll take that. Certainly, you know, as it relates to marketing, I'd say we saw benefit in a number of areas during AEP. One, you know, we had fewer agents in terms of kind of the number of mouths we had to feed, so to speak, that we were delivering. That gives us and our marketing team more ability, right, to optimize the funnel. You know, we had new data sets and learning, so we were able to take a lot of what we saw during AEP, and as Tim mentioned, you know, in the opening remarks, it was a unique AEP.
We were able to layer in, and our data science team did a great job layering in these new data sets and really working with our marketing team, you know, to optimize what we were buying. I would say to your question around when you look at optimizing what we were buying, what does that mean? Are we cutting out channels or not? No, not really. We kind of look at it like that we still want a very wide funnel. Within those channels, there's varying degrees of goodness and amount we might cut within a channel. There may be one channel that, you know, is 90% good, and then ultimately we can let through the funnel.
There may be another channel where only 10% is good, and we let through the funnel. We layered on a lot of those things. Our marketing team did a really good job along with data science with getting those things in place. I think last, you know, just to comment, some of the things that we did in regards to retraining, which, you know, Tim spoke about earlier, with our agents themselves and making sure that they were really up to speed on the benefits of this year's plans, you know, also made a significant difference in being able to convert, you know, the raw marketing material.
As it pertains to the CMS things, we feel like we're very well prepared in terms of already a lot of the things that we do within our scripts. The marketing changes are really more around things that you would see in online presentations in terms of the order in which they present plans, which for us, you know, we've always been, you know, commission agnostic and are always going to go to the best plan for the consumer. Really, you know, no effect there that we see, and we're well prepared on that front.
Got it. Appreciate the color. Thank you, guys.
Your next question comes from the line of Jeff Garro with Piper Sandler.
Yeah. Good morning, and thanks for taking the questions. I want to ask about the planned pullback in MA submissions for FY 2023. What are the factors over the next couple of months that will influence the magnitude of that pullback you've signaled?
Yeah, Jeff, this is Tim. Good morning. I think we're definitely pleased with the progress that we're making on the operational front. Obviously, we think in light of you know, the current market conditions, it's made sense to pull back a bit and really optimize. I think we highlighted on the prepared remarks, we are seeing a lot of really good early signs around what we're doing with respect to marketing optimization and segmentation, you know, a lot of good work done on the sales side on retraining. We're going to come into next year with a much higher percentage of core tenured agents as opposed to more, you know, historically, a higher percentage of flex agents. We think there's some natural benefits from that.
A lot of good work that we're doing on the carrier side. Really, this is a drive for us to get to cash EBITDA breakeven moving forward. We look forward to providing more specifics on that in the fiscal 2023 guide we provide in August.
Got it. Thanks for that. To follow up, maybe ask a little bit more on the $200 million in expense reductions. Might be helpful for us if you could give a little more detail how that $200 million breaks down across the different line items in your P&L.
Yeah. I'll start and maybe have Raff provide some additional detail. As I just mentioned, yeah, I think it makes sense to pull back and really focus our attention on cash flow unit economics. In total, we're going to move about $200 million of run rate cost savings in fiscal 2023, excluding the necessary investments in SelectRx, which is very cash generative. That's a total of both variable sales and marketing costs. Those are our biggest cost driver, are people and leads, if you will. But we'd also note as part of that $200 million, you know, we did identify about $40 million of fixed expenses that we're going to start to realize some benefits as early as this fiscal fourth quarter.
Raff, anything you want to double-click down on?
Yeah. I guess, just to reiterate, the biggest part of that savings is gonna be on the marketing side. You know, probably two-thirds or so, of the savings, followed by agent headcount, fulfillment, and then more fixed costs.
Great. That helps. Thanks again.
Thanks, Jeff.
Your next question comes from the line of Jailen Young with Credit Suisse.
Hey, thanks for taking my question. I guess just in relation to the pullback in marketing spend that you're talking about, are there any concerns that the pullback may be too much where you may actually end up ceding market share as some of the MCOs have also talked about bulking up their own marketing capacity and internal sales force?
Yeah, Jailen, this is Tim. I'll speak first and then maybe ask Bill to comment. You know, I think in any scenario, we're gonna continue to be a very significant and critical part of carrier distribution. You know, this is a business that's historically policy growth of three-year CAGR north of 80%. Even if we pull back, it's gonna be a very significant player relative to almost anyone in the industry. You know, we continue to see a significant amount of momentum with our carriers. I know there's been chatter in the industry about their commitment to direct-to-consumer. We're certainly not seeing any of that pullback. They've remained very strongly committed and aligned to SelectQuote compensation. Still, no changes there.
Quite frankly, looking to continue to expand with our high quality model. I think we're in very good shape there. Bob, anything you'd like to comment on?
No, I think that was really well said, and I think just simply put, no, we are not concerned about that. Right now we've had really good conversations, you know, with the carriers about it, you know, that focus on quality, 90-day persistency and all of the things that we are doing to bolster the quality of the policies. The carriers are extremely supportive of and understand, you know, what that looks like and really, you know, could come with. It's obviously a decline in the overall number of submissions, not as big of a decline in the overall number of effective policies there.
Okay. Then just in terms of the marketing spend again, everyone's kind of talked about optimizing their spend and going to specific marketing channels. I guess, is there a concern that everyone may end up flooding a specific channel that they believe to have the highest return and then thus inflating the CAC? Any thoughts there?
You know, I think that we're really well-positioned to be able to deal with that with our approach because we're not narrowing down to, you know, to a single channel. Like, we're not saying, "Hey, we're eliminating TV," or, "We're eliminating, you know, some other source." I'd be concerned about it for us if we were saying, "Okay, we're solely gonna rely on one of those." You know, our attitude is more, "Hey, let's expand the number of channels," kind of when you look at the top, but let's tighten, ultimately, what we actually let through the funnel. Ultimately, we'll look at a lot, but we'll only kind of consume a certain amount.
We're very specific now about, you know, really what we've layered on in terms of our algorithms on what we'll buy and what we'll take. We'll only take, you know, 5% of a certain channel, or, you know, maybe 10%, depending on kind of the quality that's coming through. We certainly think that by remaining open and using kind of data to decide what we buy with the in channel will be a kind of a winning approach.
Great. Thanks.
As a reminder, if you would like to ask a question, please press star then one on your touchtone phone. Your next question comes from the line of Meyer Shields with KBW.
Hey, good morning, guys. This is Tommy McJoynt on for Meyer. Thanks for taking our questions here. Just wanted to clarify on the $200 million, is it meant to say that 80% of that is variable, kind of the marketing, and 20% is fixed? And then is that 20% or $40 million of that implies of fixed costs already actioned in terms of the takeouts, or are those just identified in the third quarter?
Yeah, no, great question. So 80% is variable, and the biggest piece of that is marketing. But there's obviously agent cost reductions there just based on the pullback that we're expecting next year-over-year for policy production and then, you know, corresponding fulfillment as well. So it's a mix of all those things, but marketing is the biggest piece of the fixed. Or on the variable, sorry. On the fixed side, yes, we took some actions in the third quarter to drive the vast majority of those fixed cost savings. They're not necessarily reflected in the full quarter results, but will start being reflected starting this quarter.
Great. Thanks for clarifying that. Then switching over, could you talk about the expected increase in spend with SelectRx as that continues to grow? Just how do the benefits of scale improve those economics over time?
Yeah. I'll start there. I think we're very pleased with the progress in SelectRx. I think we're, you know, we're becoming more and more confident about the potential of the business. As we've stated, you know, 23,000 active paying members, we're very confident about the ability to exceed our original goal of 25,000 members by the end of fiscal 2022. You know, tenfold increase in a very short period of time. I think it really demonstrates, you know, in a very tangible way the potential we have in healthcare services. Bob, you wanna speak to other metrics and things around scale of the business?
Yeah. There is, you know, some dollars that go into that growth because, you know, just like a more traditional kind of, I'd say SaaS or delivery business, right? You have to plan for the growth that's ahead. It's got lower margins to your point as you're scaling, but then it gets to a more stable place. I'll let Raff speak to what percentage that is, but it's still an extremely cash-efficient business, you know, when you look at it. Those margins expand pretty quickly through the life of a customer, and the payback period is pretty fast. Raff, do you wanna comment on payback and then ultimately what those margins look like?
Yeah. I guess certainly a new member we still expect to be cash flow positive within the first year. As we are scaling the business and as new members represent a very large percent of the overall book, that obviously weighs on margins in the short medium term. As the business grows over time and new members added are a smaller percent of the overall membership base, you know, most of the costs outside of drug costs really are geared towards onboarding new customers. As that percent of new goes down over time, you know, the margins will increase from there. We also expect to get some drug margin scale benefits as we continue to scale the business.
Great. Thanks for taking the question.
Your next question comes from the line of Jim Massocca with FactSet . Jim, your line is open.
Hi, this is actually Joe on for Elizabeth Anderson from Evercore. Apologies for that. Maybe just asking a bit about the life business in the quarter. You know, life business EBITDA was, you know, a little bit weak in the quarter. You know, was there anything in particular that caused that? You know, and then kind of how are you thinking about it in 2022? Then just a quick follow-up after that.
Yep. Maybe I'll touch on that first. The life business is predominantly driven by sort of legacy term life part of that business, which is actually consistent with our expectations during the quarter. The third quarter is seasonally a strong quarter for sales, so we have costs, and specifically marketing in the third quarter that drive fourth quarter revenue. In terms of the third quarter revenue, we had less agents selling year-over-year during our second quarter. You know, given the three-month lag between upfront sale and in-force policy, that impacted the third quarter revenue and hence sort of the profitability of the third quarter. It was also compounded by continued COVID pressures early in the quarter with the rise of Omicron that impacted our in-force conversion rates.
Paramedical examiner visits were impacted by that. We had I think those examiners also had staffing issues, and then the fourth quarter, you'll see the sort of benefit of the seasonal selling season within the third quarter. Bill, anything that you would add to that?
No, I would say, just to reemphasize, I mean, COVID certainly has impacted the term life business fairly significantly. When you look at kind of the, I'd say twofold, right? You have getting in people's homes, which people were very reluctant. Lots of cancellations in our exams, delays in what we call our CRI to, you know, ARS, which is basically moving that along in the funnel was delayed. You had major kind of staffing issues beyond that existed, you know, in a tough labor with a lot of the carriers actually processing some of that.
We are seeing some very positive signs, as we kind of getting out of what feels like, you know, light at the end of the tunnel, with, you know, the decline with kind of with COVID and feel like we're pretty optimistic that we can get back to kind of where we were traditionally on how that business moved through the funnel.
No, thank you for that. That's super helpful. Then maybe just as a quick follow-up, obviously the conversion rate was strong within senior. You know, I think there had been a trend to try to have some more tenured agents potentially flex between different divisions within the business. You know, was there any element of shifting some of those more tenured, maybe traditional life agents over into senior, knowing those dynamics were kind of happening within life, you know, within the period?
No, good question. No, that was not due to shifting. Really, the tenured agent percentage we're talking about was just more of a steep, you know, cut to the flex group retraining of kind of the lower performing flex agents. Then ultimately really optimizing the way we deliver also. If you look, you know, through our productivity, we actually were mildly down year-over-year with the large decline in cost per acquisition. That's because we did limit more of lead volume to our lower performing agents, given kind of some of the economic pressure and things like that, which did drive our CPA down. Really pleased with the results there on what that looks like.
Also pleased with what that means for the future, you know, as that kind of what we had on paper came true in Q3. I feel really strong about what we can do with that, but that was not due to flexing.
Awesome. Well, thank you. Congrats on the quarter.
Thank you.
That concludes our question and answer session. I will now turn the call back over to Tim Danker for closing remarks.
Yeah. Thank you all again for joining us this morning. To recap, you know, we're really proud of the early results of the strategy update. I think most notably the sequential improvements we've seen in OEP. Certainly the momentum we have in SelectRx. As I noted, you know, SelectQuote will continue to transition over the course of this year next, but overall, we're very encouraged by the early results of the actions we're taking. We look forward to sharing more about our progress on the quarters ahead. Thank you very much. Have a great day.
This concludes today's conference call. Thank you for participating. You may now disconnect.