HealthEquity, Inc. (NASDAQ: HQY) ("HealthEquity" or the "Company"),
the nation's largest health savings account ("HSA") custodian,
today announced financial results for its fourth quarter and fiscal
year ended January 31, 2024.
“We delivered fiscal 2024 with a record of nearly
$1 billion in revenue as well as over 500 bps expansion in Adjusted
EBITDA margin,” said Jon Kessler, President and CEO of
HealthEquity. “Building on these results, we believe we are
well-positioned to continue our growth in fiscal 2025 as our
technology investments enable us to continue taking market share,
with an initial outlook for increases of approximately 15% in
revenue and 20% in Adjusted EBITDA.”
Fiscal year financial results
Revenue for the fiscal year ended January 31,
2024 was $999.6 million, an increase of 16% compared to $861.7
million for the fiscal year ended January 31, 2023. Revenue
this year included: service revenue of $455.7 million, custodial
revenue of $386.6 million, and interchange revenue of $157.3
million.
HealthEquity reported net income of $55.7 million,
or $0.64 per diluted share, and non-GAAP net income of $195.5
million, or $2.25 per diluted share, for the fiscal year ended
January 31, 2024. The Company reported a net loss of $26.1
million, or $0.31 per diluted share, and non-GAAP net income of
$114.5 million, or $1.36 per diluted share, for the fiscal year
ended January 31, 2023.
Adjusted EBITDA was $369.2 million for the fiscal
year ended January 31, 2024, an increase of 36% compared to
$272.3 million for the fiscal year ended January 31, 2023.
Adjusted EBITDA was 37% of revenue, compared to 32% for the fiscal
year ended January 31, 2023.
As of January 31, 2024, HealthEquity had
$404.0 million of cash and cash equivalents and $875.0 million of
outstanding debt, net of issuance costs. This compares to $254.3
million in cash and cash equivalents and $925.3 million of
outstanding debt as of January 31, 2023.
Certain reclassifications have been made to prior
year amounts to conform to the current year presentation. The
reclassifications relate primarily to recordkeeping and advisory
fees associated with HSA investments of $25.6 million, $21.8
million, and $16.7 million for the fiscal years ended January 31,
2024, 2023, and 2022, respectively, which were reclassified from
custodial revenue to service revenue to better align our financial
statement presentation with the underlying drivers of our revenue
streams. The Company also reclassified certain immaterial
personnel-related costs from custodial costs to service costs or
general and administrative costs. The reclassifications had no
impact on our total revenue, income (loss) from operations, net
income (loss), cash flows, or stockholders' equity.
Fourth quarter financial
results
Revenue for the fourth quarter ended
January 31, 2024 was $262.4 million, an increase of 12%
compared to $233.8 million for the fourth quarter ended
January 31, 2023. Revenue this quarter included: service
revenue of $118.6 million, custodial revenue of $105.4 million, and
interchange revenue of $38.4 million.
HealthEquity reported net income of $26.4 million,
or $0.30 per diluted share, and non-GAAP net income of $55.0
million, or $0.63 per diluted share, for the fourth quarter ended
January 31, 2024. The Company reported a net loss of $0.2
million, or less than one cent per diluted share, and non-GAAP net
income of $31.3 million, or $0.37 per diluted share, for the fourth
quarter ended January 31, 2023.
Adjusted EBITDA was $98.8 million for the fourth
quarter ended January 31, 2024, an increase of 34% compared to
$73.6 million for the fourth quarter ended January 31, 2023.
Adjusted EBITDA was 38% of revenue, compared to 31% for the fourth
quarter ended January 31, 2023.
Account and asset metrics
HSAs as of January 31, 2024 were
approximately 8.7 million, an increase of 9% year over year,
including 610,000 HSAs with investments, an increase of 13% year
over year. Total Accounts as of January 31, 2024 were 15.7
million, including 7.0 million other consumer-directed benefits
("CDBs").
Total HSA Assets as of January 31, 2024 were
$25.2 billion, an increase of 14% year over year. Total HSA Assets
included $15.0 billion of HSA cash and $10.2 billion of HSA
investments. Client-held funds, which are deposits held on behalf
of our Clients to facilitate administration of our CDBs, and from
which we generate custodial revenue, were $0.8 billion as of
January 31, 2024.
BenefitWallet HSA portfolio
acquisition
On September 18, 2023, we signed an agreement to
acquire the BenefitWallet HSA portfolio from Conduent Business
Services, LLC, which portfolio consists of approximately
$2.8 billion of HSA Assets held in approximately 665,000
customer accounts, in exchange for a purchase price of
approximately $425 million and reimbursement of up to $20 million
of Conduent's transfer-related expenses. The acquisition is
expected to close in multiple tranches during the first half of
fiscal 2025, subject to the satisfaction of certain customary
closing conditions. On March 7, 2024, the first of the three
HSA Asset transfers occurred, with approximately 266,000 HSAs and
$1.1 billion of HSA Assets transferring to HealthEquity’s
custody. In connection with this transfer, HealthEquity paid the
applicable purchase price of $163.9 million using cash on
hand.
Business outlook
For the fiscal year ending January 31, 2025,
management expects revenues of $1.14 billion to $1.16 billion. Its
outlook for net income is between $73 and $88 million, resulting in
net income of $0.83 to $0.99 per diluted share. Its outlook for
non-GAAP net income, calculated using the method described below,
is between $247 million and $262 million, resulting in non-GAAP net
income per diluted share of $2.79 to $2.96 (based on an estimated
89 million weighted-average shares outstanding). Management expects
Adjusted EBITDA of $438 million to $458 million.
See “Non-GAAP financial information” below for
definitions of our Adjusted EBITDA and non-GAAP net income. A
reconciliation of the non-GAAP financial measures used throughout
this release to the most comparable GAAP financial measures is
included with the financial tables at the end of this release.
Conference call
HealthEquity management will host a conference
call at 4:30 pm (Eastern Time) on Tuesday, March 19, 2024 to
discuss the fiscal 2024 fourth quarter and year-end results. The
conference call will be accessible by dialing 1-833-630-1956, or
1-412-317-1837 for international callers, and referencing
conference ID "HealthEquity, Inc. call." A live audio webcast of
the call will be available on the investor relations section of our
website at http://ir.healthequity.com.
Non-GAAP financial
information
To supplement our financial information presented
on a GAAP basis, we disclose non-GAAP financial measures, including
Adjusted EBITDA, non-GAAP net income, and non-GAAP net income per
diluted share.
- Adjusted EBITDA is earnings before interest, taxes,
depreciation and amortization, amortization of acquired intangible
assets, stock-based compensation expense, merger integration
expenses, acquisition costs, gains and losses on equity securities,
amortization of incremental costs to obtain a contract, costs
associated with unused office space, and certain other
non-operating items.
- Non-GAAP net income is calculated by adding back to GAAP net
income (loss) before income taxes the following items: amortization
of acquired intangible assets, stock-based compensation expense,
merger integration expenses, acquisition costs, gains and losses on
equity securities, costs associated with unused office space, and
losses on extinguishment of debt, and subtracting a non-GAAP tax
provision using a normalized non-GAAP tax rate.
- Non-GAAP net income per diluted share is calculated by dividing
non-GAAP net income by diluted weighted-average shares
outstanding.
Non-GAAP financial measures should be considered
in addition to results prepared in accordance with GAAP and should
not be considered as a substitute for, or superior to, GAAP
results. We believe that these non-GAAP financial measures provide
useful information to management and investors regarding certain
financial and business trends relating to the Company's financial
condition and results of operations. The Company cautions investors
that non-GAAP financial information, by its nature, departs from
GAAP; accordingly, its use can make it difficult to compare current
results with results from other reporting periods and with the
results of other companies. In addition, while amortization of
acquired intangible assets is being excluded from non-GAAP net
income, the revenue generated from those acquired intangible assets
is not excluded. Whenever we use these non-GAAP financial measures,
we provide a reconciliation of the applicable non-GAAP financial
measure to the most closely applicable GAAP financial measure.
Investors are encouraged to review the related GAAP financial
measures and the reconciliation of the non-GAAP financial measures
to their most directly comparable GAAP financial measure as
detailed in the tables below.
About HealthEquity
HealthEquity and its subsidiaries administer HSAs
and other CDBs for our more than 15 million accounts in partnership
with employers, benefits advisors, and health and retirement plan
providers who share our mission and value our culture of remarkable
“Purple” service. For more information, visit
www.healthequity.com.
Forward-looking statements
This press release contains “forward-looking
statements” within the meaning of the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995, including but
not limited to, statements regarding our industry, business
strategy, plans, goals and expectations concerning our markets and
market position, product expansion, future operations, expenses and
other results of operations, revenue, margins, profitability,
acquisition synergies, future efficiencies, tax rates, capital
expenditures, liquidity and capital resources and other financial
and operating information. When used in this discussion, the words
“may,” “believes,” “intends,” “seeks,” “aims,” “anticipates,”
“plans,” “estimates,” “expects,” “should,” “assumes,” “continues,”
“could,” “will,” “future” and the negative of these or similar
terms and phrases are intended to identify forward-looking
statements in this press release.
Forward-looking statements reflect our current
expectations regarding future events, results or outcomes. These
expectations may or may not be realized. Although we believe the
expectations reflected in the forward-looking statements are
reasonable, we can give you no assurance these expectations will
prove to be correct. Some of these expectations may be based upon
assumptions, data or judgments that prove to be incorrect. Actual
events, results and outcomes may differ materially from our
expectations due to a variety of known and unknown risks,
uncertainties and other factors. Although it is not possible to
identify all of these risks and factors, they include, among
others, risks related to the following:
- our ability to adequately place and safeguard our custodial
assets, or the failure of any of our depository or insurance
company partners;
- our ability to compete effectively in a rapidly evolving
healthcare and benefits administration industry;
- our dependence on the continued availability and benefits of
tax-advantaged HSAs and other CDBs;
- our acquisition of the BenefitWallet HSA portfolio may not be
fully consummated, and if fully consummated, we may not realize the
expected benefits;
- our ability to successfully identify, acquire and integrate
additional portfolio purchases or acquisition targets;
- the significant competition we face and may face in the future,
including from those with greater resources than us;
- our reliance on the availability and performance of our
technology and communications systems;
- potential future cybersecurity breaches of our technology and
communications systems and other data interruptions, including
resulting costs and liabilities, reputational damage and loss of
business;
- the current uncertain healthcare environment, including changes
in healthcare programs and expenditures and related
regulations;
- our ability to comply with current and future privacy,
healthcare, tax, ERISA, investment adviser and other laws
applicable to our business;
- our reliance on partners and third-party vendors for
distribution and important services;
- our ability to develop and implement updated features for our
technology platforms and communications systems; and
- our reliance on our management team and key team members.
For a detailed discussion of these and other risk
factors, please refer to the risks detailed in our filings with the
Securities and Exchange Commission, including, without limitation,
our Annual Report on Form 10-K for the fiscal year ended
January 31, 2023, our Quarterly Report on Form 10-Q for the
quarter ended October 31, 2023, and subsequent periodic and current
reports. Past performance is not necessarily indicative of future
results. We undertake no intention or obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Forward-looking statements
should not be relied upon as representing our views as of any date
subsequent to the date of this press release.
Investor Relations Contact
Richard Putnam 801-727-1000 rputnam@healthequity.com
HealthEquity, Inc. and
subsidiariesConsolidated balance sheets
(unaudited) |
|
|
|
(in thousands, except par value) |
January 31, 2024 |
|
January 31, 2023 |
Assets |
|
|
|
Current
assets |
|
|
|
Cash and cash equivalents |
$ |
403,979 |
|
$ |
254,266 |
Accounts receivable, net of allowance for doubtful accounts of
$3,947 and $4,989 as of January 31, 2024 and 2023,
respectively |
|
104,893 |
|
|
96,835 |
Other current assets |
|
48,564 |
|
|
31,792 |
Total current assets |
|
557,436 |
|
|
382,893 |
Property and equipment, net |
|
6,013 |
|
|
12,862 |
Operating lease right-of-use assets |
|
48,380 |
|
|
56,461 |
Intangible assets, net |
|
835,948 |
|
|
936,359 |
Goodwill |
|
1,648,145 |
|
|
1,648,145 |
Other assets |
|
67,868 |
|
|
52,180 |
Total assets |
$ |
3,163,790 |
|
$ |
3,088,900 |
Liabilities and stockholders’ equity |
|
|
|
Current
liabilities |
|
|
|
Accounts payable |
$ |
12,041 |
|
$ |
13,899 |
Accrued compensation |
|
49,608 |
|
|
45,835 |
Accrued liabilities |
|
46,038 |
|
|
43,668 |
Current portion of long-term debt |
|
— |
|
|
17,500 |
Operating lease liabilities |
|
9,404 |
|
|
10,159 |
Total current liabilities |
|
117,091 |
|
|
131,061 |
Long-term
liabilities |
|
|
|
Long-term debt, net of issuance costs |
|
874,972 |
|
|
907,838 |
Operating lease liabilities, non-current |
|
48,766 |
|
|
58,988 |
Other long-term liabilities |
|
19,270 |
|
|
12,708 |
Deferred tax liability |
|
68,670 |
|
|
82,665 |
Total long-term liabilities |
|
1,011,678 |
|
|
1,062,199 |
Total liabilities |
|
1,128,769 |
|
|
1,193,260 |
Commitments
and contingencies |
|
|
|
Stockholders’ equity |
|
|
|
Preferred stock, $0.0001 par value, 100,000 shares authorized, no
shares issued and outstanding as of January 31, 2024 and 2023 |
|
— |
|
|
— |
Common stock, $0.0001 par value, 900,000 shares authorized, 86,127
and 84,758 shares issued and outstanding as of January 31, 2024 and
2023, respectively |
|
9 |
|
|
8 |
Additional
paid-in capital |
|
1,829,384 |
|
|
1,745,716 |
Accumulated
earnings |
|
205,628 |
|
|
149,916 |
Total stockholders’ equity |
|
2,035,021 |
|
|
1,895,640 |
Total liabilities and stockholders’ equity |
$ |
3,163,790 |
|
$ |
3,088,900 |
HealthEquity, Inc. and
subsidiaries Consolidated statements of operations
and comprehensive income (loss) (unaudited) |
|
|
|
|
|
|
Three months ended January 31, |
|
|
Year ended January 31, |
|
(in thousands, except per share data) |
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
Service revenue |
$ |
118,575 |
|
|
$ |
119,854 |
|
|
$ |
455,690 |
|
|
$ |
452,026 |
|
Custodial revenue |
105,433 |
|
|
77,886 |
|
|
386,594 |
|
|
261,282 |
|
Interchange revenue |
38,379 |
|
|
36,101 |
|
|
157,303 |
|
|
148,440 |
|
Total revenue |
262,387 |
|
|
233,841 |
|
|
999,587 |
|
|
861,748 |
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
Service costs |
83,859 |
|
|
85,373 |
|
|
317,357 |
|
|
318,516 |
|
Custodial costs |
8,398 |
|
|
7,739 |
|
|
32,502 |
|
|
26,101 |
|
Interchange costs |
6,810 |
|
|
5,956 |
|
|
27,091 |
|
|
25,196 |
|
Total cost of revenue |
99,067 |
|
|
99,068 |
|
|
376,950 |
|
|
369,813 |
|
Gross profit |
163,320 |
|
|
134,773 |
|
|
622,637 |
|
|
491,935 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
20,559 |
|
|
19,201 |
|
|
79,273 |
|
|
68,849 |
|
Technology and development |
55,238 |
|
|
52,722 |
|
|
218,811 |
|
|
193,375 |
|
General and administrative |
23,140 |
|
|
21,358 |
|
|
103,656 |
|
|
97,472 |
|
Amortization of acquired intangible assets |
23,218 |
|
|
23,166 |
|
|
92,763 |
|
|
94,586 |
|
Merger integration |
2,278 |
|
|
5,110 |
|
|
10,435 |
|
|
28,596 |
|
Total operating expenses |
124,433 |
|
|
121,557 |
|
|
504,938 |
|
|
482,878 |
|
Income from operations |
38,887 |
|
|
13,216 |
|
|
117,699 |
|
|
9,057 |
|
Other expense |
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
(13,641 |
) |
|
(14,305 |
) |
|
(55,455 |
) |
|
(48,424 |
) |
Other income, net |
4,471 |
|
|
1,097 |
|
|
12,796 |
|
|
1,271 |
|
Total other expense |
(9,170 |
) |
|
(13,208 |
) |
|
(42,659 |
) |
|
(47,153 |
) |
Income (loss) before income
taxes |
29,717 |
|
|
8 |
|
|
75,040 |
|
|
(38,096 |
) |
Income tax provision
(benefit) |
3,353 |
|
|
217 |
|
|
19,328 |
|
|
(11,953 |
) |
Net income (loss) and comprehensive income (loss) |
$ |
26,364 |
|
|
$ |
(209 |
) |
|
$ |
55,712 |
|
|
$ |
(26,143 |
) |
Net income (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.31 |
|
|
$ |
0.00 |
|
|
$ |
0.65 |
|
|
$ |
(0.31 |
) |
Diluted |
$ |
0.30 |
|
|
$ |
0.00 |
|
|
$ |
0.64 |
|
|
$ |
(0.31 |
) |
Weighted-average number of
shares used in computing net income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
85,975 |
|
|
84,718 |
|
|
85,564 |
|
|
84,442 |
|
Diluted |
87,435 |
|
|
84,718 |
|
|
86,957 |
|
|
84,442 |
|
HealthEquity, Inc. and subsidiaries
Consolidated statements of cash
flows (unaudited) |
|
|
|
|
|
|
|
Year ended January 31, |
|
(in thousands) |
|
2024 |
|
|
|
2023 |
|
Cash flows from operating activities: |
|
|
|
Net income
(loss) |
$ |
55,712 |
|
|
$ |
(26,143 |
) |
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities: |
|
|
|
Depreciation and amortization |
|
153,078 |
|
|
|
161,201 |
|
Stock-based compensation |
|
77,151 |
|
|
|
62,614 |
|
Impairment of right-of-use assets |
|
— |
|
|
|
— |
|
Amortization of debt issuance costs |
|
2,852 |
|
|
|
3,261 |
|
Loss on extinguishment of debt |
|
1,157 |
|
|
|
— |
|
Change in fair value of contingent consideration |
|
— |
|
|
|
— |
|
Gains on equity securities |
|
— |
|
|
|
— |
|
Other non-cash items |
|
— |
|
|
|
268 |
|
Deferred taxes |
|
(13,995 |
) |
|
|
(17,181 |
) |
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(8,058 |
) |
|
|
(9,570 |
) |
Other assets |
|
(32,790 |
) |
|
|
4,620 |
|
Operating lease right-of-use assets |
|
10,190 |
|
|
|
8,244 |
|
Accrued compensation |
|
2,951 |
|
|
|
(1,282 |
) |
Accounts payable, accrued liabilities, and other current
liabilities |
|
(204 |
) |
|
|
(26,673 |
) |
Operating lease liabilities, non-current |
|
(11,780 |
) |
|
|
(7,232 |
) |
Other long-term liabilities |
|
6,562 |
|
|
|
(1,477 |
) |
Net cash
provided by operating activities |
|
242,826 |
|
|
|
150,650 |
|
Cash flows
from investing activities: |
|
|
|
Business combinations, net of cash acquired |
|
— |
|
|
|
— |
|
Purchases of software and capitalized software development
costs |
|
(41,123 |
) |
|
|
(45,173 |
) |
Acquisitions of HSA portfolios |
|
(3,257 |
) |
|
|
(70,583 |
) |
Purchases of property and equipment |
|
(1,694 |
) |
|
|
(3,371 |
) |
Proceeds from sale of equity securities |
|
— |
|
|
|
— |
|
Net cash
used in investing activities |
|
(46,074 |
) |
|
|
(119,127 |
) |
Cash flows
from financing activities: |
|
|
|
Principal payments on long-term debt |
|
(54,375 |
) |
|
|
(8,750 |
) |
Proceeds from long-term debt |
|
— |
|
|
|
— |
|
Payment of debt issuance costs |
|
— |
|
|
|
— |
|
Proceeds from follow-on equity offering, net of payments for
offering costs |
|
— |
|
|
|
— |
|
Settlement of client-held funds obligation, net |
|
865 |
|
|
|
(603 |
) |
Proceeds from exercise of common stock options |
|
6,471 |
|
|
|
6,682 |
|
Payment of contingent consideration |
|
— |
|
|
|
— |
|
Net cash
provided by (used in) financing activities |
|
(47,039 |
) |
|
|
(2,671 |
) |
Increase
(decrease) in cash and cash equivalents |
|
149,713 |
|
|
|
28,852 |
|
Beginning
cash and cash equivalents |
|
254,266 |
|
|
|
225,414 |
|
Ending cash and cash equivalents |
$ |
403,979 |
|
|
$ |
254,266 |
|
HealthEquity, Inc. and subsidiaries
Consolidated statements of cash flows (unaudited)
(continued) |
|
|
|
|
|
|
|
|
|
|
|
Year ended January 31, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
|
|
|
|
Supplemental
cash flow data: |
|
|
|
Interest expense paid in cash |
$ |
49,560 |
|
$ |
43,570 |
|
Income tax payments (refunds), net |
|
35,352 |
|
|
1,526 |
|
Supplemental
disclosures of non-cash investing and financing activities: |
|
|
|
Purchases of software and capitalized software development costs
included in accounts payable, accrued liabilities, or accrued
compensation |
|
3,145 |
|
|
3,595 |
|
Purchases of property and equipment included in accounts payable or
accrued liabilities |
|
263 |
|
|
69 |
|
Acquisitions of HSA portfolios included in accounts payable or
accrued liabilities |
|
— |
|
|
— |
|
Decrease (increase) in goodwill due to measurement period
adjustments, net |
|
— |
|
|
(2,309 |
) |
Exercise of common stock options receivable |
|
429 |
|
|
382 |
|
Stock-based compensation expense
(unaudited) |
Total stock-based compensation expense included in
the consolidated statements of operations and comprehensive income
(loss) is as follows: |
|
Three months ended January 31, |
|
Year ended January 31, |
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
Cost of revenue |
$ |
3,240 |
|
$ |
3,540 |
|
$ |
16,462 |
|
$ |
13,591 |
Sales and
marketing |
|
3,419 |
|
|
2,685 |
|
|
13,182 |
|
|
9,821 |
Technology
and development |
|
5,793 |
|
|
3,440 |
|
|
20,891 |
|
|
13,828 |
General and
administrative |
|
4,760 |
|
|
2,639 |
|
|
26,616 |
|
|
25,374 |
Total stock-based compensation expense |
$ |
17,212 |
|
$ |
12,304 |
|
$ |
77,151 |
|
$ |
62,614 |
Total Accounts (unaudited) |
|
|
|
|
|
(in thousands, except percentages) |
January 31, 2024 |
|
January 31, 2023 |
|
% Change |
HSAs |
8,692 |
|
7,984 |
|
9 |
% |
New HSAs
from sales - Quarter-to-date |
497 |
|
445 |
|
12 |
% |
New HSAs
from sales - Year-to-date |
949 |
|
971 |
|
(2) |
% |
New HSAs
from acquisitions - Year-to-date |
— |
|
90 |
|
(100) |
% |
HSAs with
investments |
610 |
|
541 |
|
13 |
% |
CDBs |
7,006 |
|
6,933 |
|
1 |
% |
Total
Accounts |
15,698 |
|
14,917 |
|
5 |
% |
Average
Total Accounts - Quarter-to-date |
15,318 |
|
14,677 |
|
4 |
% |
Average Total Accounts - Year-to-date |
15,105 |
|
14,531 |
|
4 |
% |
HSA assets (unaudited) |
|
|
|
|
|
(in millions, except percentages) |
January 31, 2024 |
|
January 31, 2023 |
|
% Change |
HSA cash |
$ |
15,006 |
|
$ |
14,199 |
|
6 |
% |
HSA
investments |
|
10,208 |
|
|
7,947 |
|
28 |
% |
Total HSA
Assets |
|
25,214 |
|
|
22,146 |
|
14 |
% |
Average
daily HSA cash - Quarter-to-date |
|
14,210 |
|
|
13,375 |
|
6 |
% |
Average daily HSA cash - Year-to-date |
|
14,071 |
|
|
13,049 |
|
8 |
% |
The following table summarizes the amount of HSA
cash held by our Depository Partners and insurance company partners
that is expected to reprice by fiscal year and the respective
average annualized yield currently earned on that HSA cash as of
January 31, 2024:
Year ending January 31, (in billions, except
percentages) |
HSA cash expected to reprice |
|
Average annualized yield |
2025 |
$ |
2.1 |
|
3.6 |
% |
2026 |
|
3.5 |
|
1.6 |
% |
2027 |
|
3.2 |
|
1.6 |
% |
2028 |
|
1.9 |
|
3.8 |
% |
Thereafter |
|
3.6 |
|
3.5 |
% |
Total (1) |
$ |
14.3 |
|
2.7 |
% |
(1) Excludes $0.7 billion of HSA cash held in
floating-rate contracts as of January 31, 2024. BenefitWallet
HSA Assets and any subsequent growth in HSA cash are also
excluded.
Client-held funds (unaudited) |
|
|
|
|
|
(in millions, except percentages) |
January 31, 2024 |
|
January 31, 2023 |
|
% Change |
Client-held funds |
$ |
842 |
|
$ |
901 |
|
(7) |
% |
Average
daily Client-held funds - Quarter-to-date |
|
791 |
|
|
809 |
|
(2) |
% |
Average daily Client-held funds - Year-to-date |
|
845 |
|
|
827 |
|
2 |
% |
Net income (loss) reconciliation to Adjusted EBITDA
(unaudited) |
|
|
|
|
|
|
Three months ended January 31, |
|
|
Year ended January 31, |
|
(in thousands) |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net income (loss) |
$ |
26,364 |
|
|
$ |
(209 |
) |
|
$ |
55,712 |
|
|
$ |
(26,143 |
) |
Interest income |
|
(4,343 |
) |
|
|
(1,179 |
) |
|
|
(12,138 |
) |
|
|
(1,763 |
) |
Interest expense |
|
13,641 |
|
|
|
14,305 |
|
|
|
55,455 |
|
|
|
48,424 |
|
Income tax provision (benefit) |
|
3,353 |
|
|
|
217 |
|
|
|
19,328 |
|
|
|
(11,953 |
) |
Depreciation and amortization |
|
14,693 |
|
|
|
17,309 |
|
|
|
60,315 |
|
|
|
66,615 |
|
Amortization of acquired intangible assets |
|
23,218 |
|
|
|
23,166 |
|
|
|
92,763 |
|
|
|
94,586 |
|
Stock-based compensation expense |
|
17,212 |
|
|
|
12,304 |
|
|
|
77,151 |
|
|
|
62,614 |
|
Merger integration expenses |
|
2,278 |
|
|
|
5,110 |
|
|
|
10,435 |
|
|
|
28,596 |
|
Acquisition costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
53 |
|
Amortization of incremental costs to obtain a contract |
|
1,402 |
|
|
|
1,137 |
|
|
|
5,435 |
|
|
|
4,393 |
|
Costs associated with unused office space |
|
927 |
|
|
|
1,170 |
|
|
|
4,179 |
|
|
|
4,958 |
|
Other |
|
84 |
|
|
|
278 |
|
|
|
538 |
|
|
|
1,968 |
|
Adjusted EBITDA |
$ |
98,829 |
|
|
$ |
73,608 |
|
|
$ |
369,173 |
|
|
$ |
272,348 |
|
Reconciliation of net income outlook to Adjusted EBITDA
outlook (unaudited) |
|
|
Outlook for the year ending |
(in millions) |
January 31, 2025 |
Net income |
$73 - 88 |
Interest income |
(13) |
Interest expense |
63 |
Income tax provision |
29 -
34 |
Depreciation and amortization |
52 |
Amortization of acquired intangible assets |
112 |
Stock-based compensation expense |
98 |
Merger integration expenses |
13 |
Amortization of incremental costs to obtain a contract |
6 |
Costs associated with unused office space |
4 |
Other expense |
1 |
Adjusted EBITDA |
$438 - 458 |
Reconciliation of net income (loss) to non-GAAP net
income (unaudited) |
|
|
|
|
Three months ended January 31, |
|
|
Year ended January 31, |
|
(in thousands, except per share data) |
|
2024 |
|
|
2023 |
|
|
|
2024 |
|
|
2023 |
|
Net income (loss) |
$ |
26,364 |
|
$ |
(209 |
) |
|
$ |
55,712 |
|
$ |
(26,143 |
) |
Income tax
provision (benefit) |
|
3,353 |
|
|
217 |
|
|
|
19,328 |
|
|
(11,953 |
) |
Income
(loss) before income taxes - GAAP |
|
29,717 |
|
|
8 |
|
|
|
75,040 |
|
|
(38,096 |
) |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
Amortization of acquired intangible assets |
|
23,218 |
|
|
23,166 |
|
|
|
92,763 |
|
|
94,586 |
|
Stock-based compensation expense |
|
17,212 |
|
|
12,304 |
|
|
|
77,151 |
|
|
62,614 |
|
Merger integration expenses |
|
2,278 |
|
|
5,110 |
|
|
|
10,435 |
|
|
28,596 |
|
Acquisition costs |
|
— |
|
|
— |
|
|
|
— |
|
|
53 |
|
Costs associated with unused office space |
|
927 |
|
|
1,170 |
|
|
|
4,179 |
|
|
4,958 |
|
Loss on extinguishment of debt |
|
— |
|
|
— |
|
|
|
1,157 |
|
|
— |
|
Total
adjustments to income (loss) before income taxes - GAAP |
|
43,635 |
|
|
41,750 |
|
|
|
185,685 |
|
|
190,807 |
|
Income
before income taxes - Non-GAAP |
|
73,352 |
|
|
41,758 |
|
|
|
260,725 |
|
|
152,711 |
|
Income tax
provision - Non-GAAP (1) |
|
18,337 |
|
|
10,440 |
|
|
|
65,180 |
|
|
38,178 |
|
Non-GAAP net
income |
|
55,015 |
|
|
31,318 |
|
|
|
195,545 |
|
|
114,533 |
|
|
|
|
|
|
|
|
|
Diluted
weighted-average shares |
|
87,435 |
|
|
84,718 |
|
|
|
86,957 |
|
|
84,442 |
|
GAAP net
income (loss) per diluted share |
$ |
0.30 |
|
$ |
0.00 |
|
|
$ |
0.64 |
|
$ |
(0.31 |
) |
Non-GAAP net income per diluted share |
$ |
0.63 |
|
$ |
0.37 |
|
|
$ |
2.25 |
|
$ |
1.36 |
|
(1) The Company utilizes a normalized
non-GAAP tax rate to provide better consistency across the interim
reporting periods within a given fiscal year by eliminating the
effects of non-recurring and period-specific items, which can vary
in size and frequency, and which are not necessarily reflective of
the Company’s longer-term operations. The normalized non-GAAP tax
rate applied to each period presented was 25%. The Company may
adjust its non-GAAP tax rate as additional information becomes
available and in conjunction with any other significant events
occurring that may materially affect this rate, such as merger and
acquisition activity, changes in business outlook, or other changes
in expectations regarding tax regulations.
Reconciliation of net income outlook to non-GAAP net
income outlook (unaudited) |
|
|
Outlook for the year ending |
(in millions, except per share data) |
January 31, 2025 |
Net income |
$73 - 88 |
Income tax
provision |
29 - 34 |
Income
before income taxes - GAAP |
102 - 122 |
Non-GAAP adjustments: |
|
Amortization of acquired intangible assets |
112 |
Stock-based compensation expense |
98 |
Merger integration expenses |
13 |
Costs associated with unused office space |
4 |
Total
adjustments to income before income taxes - GAAP |
227 |
Income
before income taxes - Non-GAAP |
329 - 349 |
Income tax
provision - Non-GAAP (1) |
82 - 87 |
Non-GAAP net
income |
$247 - 262 |
|
|
Diluted
weighted-average shares |
89 |
GAAP net
income per diluted share (2) |
$0.83 -
0.99 |
Non-GAAP net income per diluted share (2) |
$2.79 - 2.96 |
(1) The Company utilizes a normalized
non-GAAP tax rate to provide better consistency across the interim
reporting periods within a given fiscal year by eliminating the
effects of non-recurring and period-specific items, which can vary
in size and frequency, and which are not necessarily reflective of
the Company’s longer-term operations. The normalized non-GAAP tax
rate applied to each period presented was 25%. The Company may
adjust its non-GAAP tax rate as additional information becomes
available and in conjunction with any other significant events
occurring that may materially affect this rate, such as merger and
acquisition activity, changes in business outlook, or other changes
in expectations regarding tax regulations.
(2) GAAP and Non-GAAP net income per diluted
share may not calculate due to rounding.
Certain terms |
|
Term |
Definition |
HSA |
A financial account through which consumers spend and save
long-term for healthcare on a tax-advantaged basis. |
CDB |
Consumer-directed benefits offered by employers, including flexible
spending and health reimbursement arrangements (“FSAs” and “HRAs”),
Consolidated Omnibus Budget Reconciliation Act (“COBRA”)
administration, commuter and other benefits. |
HSA
member |
Consumers
with HSAs that we serve. |
Total HSA
Assets |
HSA members’
custodial cash assets held by our federally insured depository
partners and our insurance company partners. Total HSA Assets also
includes HSA members' investments in mutual funds through our
custodial investment fund partner. |
Client |
Our employer
clients. |
Total
Accounts |
The sum of
HSAs and CDBs on our platforms. |
Client-held
funds |
Deposits
held on behalf of our Clients to facilitate administration of our
CDBs. |
Network
Partner |
Our health
plan partners, benefits administrators, and retirement plan
recordkeepers. |
Adjusted
EBITDA |
Earnings
before interest, taxes, depreciation and amortization, amortization
of acquired intangible assets, stock-based compensation expense,
merger integration expenses, acquisition costs, gains and losses on
equity securities, amortization of incremental costs to obtain a
contract, costs associated with unused office space, and certain
other non-operating items. |
Non-GAAP net
income |
Calculated
by adding back to GAAP net income (loss) before income taxes the
following items: amortization of acquired intangible assets,
stock-based compensation expense, merger integration expenses,
acquisition costs, gains and losses on equity securities, costs
associated with unused office space, and losses on extinguishment
of debt, and subtracting a non-GAAP tax provision using a
normalized non-GAAP tax rate. |
Non-GAAP net income per diluted share |
Calculated by dividing non-GAAP net income by diluted
weighted-average shares outstanding. |
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