Highlights of the first quarter include: Revenue of $287.6 million, an increase of 18% compared to $244.4 million in Q1 FY24. Net income of $28.8 million, compared to $4.1 million in Q1 FY24, with non-GAAP net income of $70.3 million, an increase of 64% compared to $42.8 million in Q1 FY24. Net income per diluted share of $0.33, compared to $0.05 in Q1 FY24, with non-GAAP net income per diluted share of $0.80, compared to $0.50 in Q1 FY24. Adjusted EBITDA of $117.4 million, an increase of 36% compared to $86.6 million in Q1 FY24. 9.1 million HSAs, an increase of 13% compared to Q1 FY24. Total HSA Assets of $27.3 billion, an increase of 22% compared to Q1 FY24. 16.0 million Total Accounts, including both HSAs and complementary CDBs, an increase of 7% compared to Q1 FY24. The Company completed its acquisition of the BenefitWallet HSA portfolio on May 9, 2024. DRAPER, Utah, June 03, 2024 (GLOBE NEWSWIRE) -- HealthEquity, Inc. (NASDAQ:HQY) ("HealthEquity" or the "Company"), the nation's largest health savings account ("HSA") custodian, today announced financial results for its first quarter ended April 30, 2024. "Record first quarter HSA sales, greater Enhanced Rates adoption, and timely transition of two of three BenefitWallet tranches made for a great team start to fiscal 2025" said Jon Kessler, President and CEO of HealthEquity. "With momentum on both growth and margins, we are raising full year guidance and pushing forward our platform investments to deliver remarkable experiences, deepen partnerships, and drive member outcomes." First quarter financial results Revenue for the first quarter ended April 30, 2024 was $287.6 million, an increase of 18% compared to $244.4 million for the first quarter ended April 30, 2023. Revenue this quarter included: service revenue of $118.2 million, custodial revenue of $121.6 million, and interchange revenue of $47.7 million. HealthEquity reported net income of $28.8 million, or $0.33 per diluted share, and non-GAAP net income of $70.3 million, or $0.80 per diluted share, for the first quarter ended April 30, 2024. The Company reported net income of $4.1 million, or $0.05 per diluted share, and non-GAAP net income of $42.8 million, or $0.50 per diluted share, for the first quarter ended April 30, 2023. Adjusted EBITDA was $117.4 million for the first quarter ended April 30, 2024, an increase of 36% compared to the first quarter ended April 30, 2023. Adjusted EBITDA was 41% of revenue, compared to 35% for the first quarter ended April 30, 2023. Account and asset metrics HSAs as of April 30, 2024 were 9.1 million, an increase of 13% year over year, including 665,000 HSAs with investments, an increase of 20% year over year. Total Accounts as of April 30, 2024 were 16.0 million, including 6.9 million other consumer-directed benefits ("CDBs"). Total HSA Assets as of April 30, 2024 were $27.3 billion, an increase of 22% year over year. Total HSA Assets included $15.9 billion of HSA cash and $11.4 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 $0.9 billion as of April 30, 2024. BenefitWallet HSA portfolio acquisition In September 2023, we entered into an agreement to acquire the BenefitWallet HSA portfolio from Conduent Business Services, LLC. Pursuant to the purchase agreement, approximately 616,000 HSAs and other accounts and $2.7 billion of HSA Assets were transferred from Conduent to HealthEquity in three separate tranches during the first and second quarters of fiscal 2025 for an aggregate purchase price of $425.0 million. We paid the aggregate purchase price using $225.0 million of borrowings under our revolving credit facility, with the remainder paid using cash on hand. Business outlook For the fiscal year ending January 31, 2025, management expects revenue of $1.16 billion to $1.18 billion. Its outlook for net income is between $90 million and $105 million, resulting in net income of $1.01 to $1.18 per diluted share. Its outlook for non-GAAP net income, calculated using the method described below, is between $261 million and $276 million, resulting in non-GAAP net income per diluted share of $2.93 to $3.10 (based on an estimated 89 million diluted weighted-average shares outstanding). Management expects Adjusted EBITDA of $454 million to $474 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 Monday, June 3, 2024 to discuss the fiscal 2025 first quarter financial 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." 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 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 various other consumer-directed benefits for over 16 million accounts, working in close partnership with employers, benefits advisors, and health and retirement plan providers who share our unwavering commitment to our mission to save and improve lives by empowering healthcare consumers. Through cutting-edge solutions, innovation, and a relentless focus on improving health outcomes, we empower individuals to take control of their healthcare journey while ultimately enhancing their overall well-being. Learn more about our "Purple" service and approach at 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 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, 2024 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 ContactRichard HealthEquity, Inc. and subsidiariesCondensed consolidated balance sheets (in thousands, except par value) April 30, 2024   January 31, 2024   (unaudited)     Assets       Current assets       Cash and cash equivalents $ 251,229   $ 403,979 Accounts receivable, net of allowance for doubtful accounts of $3,741 and $3,947 as of April 30, 2024 and January 31, 2024, respectively   106,218     104,893 Other current assets   47,455     48,564 Total current assets   404,902     557,436 Property and equipment, net   5,083     6,013 Operating lease right-of-use assets   48,108     48,380 Intangible assets, net   1,071,371     835,948 Goodwill   1,648,145     1,648,145 Other assets   68,875     67,868 Total assets $ 3,246,484   $ 3,163,790 Liabilities and stockholders' equity       Current liabilities       Accounts payable $ 18,167   $ 12,041 Accrued compensation   23,103     49,608 Accrued liabilities   41,192     46,038 Operating lease liabilities   9,755     9,404 Total current liabilities   92,217     117,091 Long-term liabilities       Long-term debt, net of issuance costs   925,675     874,972 Operating lease liabilities, non-current   48,253     48,766 Other long-term liabilities   19,273     19,270 Deferred tax liability   63,282     68,670 Total long-term liabilities   1,056,483     1,011,678 Total liabilities   1,148,700     1,128,769 Commitments and contingencies       Stockholders' equity       Preferred stock, $0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of April 30, 2024 and January 31, 2024, respectively   —     — Common stock, $0.0001 par value, 900,000 shares authorized, 87,010 and 86,127 shares issued and outstanding as of April 30, 2024 and January 31, 2024, respectively   9     9 Additional paid-in capital   1,863,334     1,829,384 Accumulated earnings   234,441     205,628 Total stockholders' equity   2,097,784     2,035,021 Total liabilities and stockholders' equity $ 3,246,484   $ 3,163,790 HealthEquity, Inc. and subsidiariesCondensed consolidated statements of operations and comprehensive income (unaudited)     Three months ended April 30, (in thousands, except per share data)   2024       2023   Revenue       Service revenue $ 118,214     $ 111,073   Custodial revenue   121,644       88,480   Interchange revenue   47,739       44,879   Total revenue   287,597       244,432   Cost of revenue       Service costs   82,347       80,873   Custodial costs   9,057       8,038   Interchange costs   9,055       7,051   Total cost of revenue   100,459       95,962   Gross profit   187,138       148,470   Operating expenses       Sales and marketing   23,494       19,935   Technology and development   56,090