HealthEquity Announces Year-End HSA Sales Outlook; Presentation at J.P. Morgan Healthcare Conference; Investor Day
- Strong sales year with new HSAs and custodial asset growth
- Estimated HSAs to be approximately 8.7 million by January 31, 2024, up from 8.0 million a year earlier
- Estimated HSA assets to be approximately $24.5 billion, up from $22.1 billion at the end of fiscal year 2023
- Estimated total accounts to be approximately 15.6 million compared to 14.9 million at the end of fiscal year 2023
- Over 30% of HSA cash assets expected to be in Enhanced Rates and a 40% increase in capacity with highly rated insurance partners in fiscal 2024
- None.
Insights
The announcement by HealthEquity, Inc. regarding its fiscal year-end estimates signifies a robust growth trajectory, particularly in the health savings account (HSA) sector. The reported increase in HSA accounts from 8.0 million to 8.7 million, alongside a rise in HSA assets from $22.1 billion to an estimated $24.5 billion, suggests a solid expansion in HealthEquity's market share and customer base. This growth is further underscored by the significant $15 billion in HSA cash, which is a critical liquidity metric for the company.
An important aspect to consider is the performance of the 'Enhanced Rates' offering, which appears to be outperforming expectations. With over 30% of HSA cash assets projected to be in Enhanced Rates and a 40% capacity increase with insurance partners, there are implications for increased revenue streams and potentially higher profit margins. The favorable repricing of maturing HSA cash contracts could also contribute to financial stability and growth momentum in the coming years.
Investors should note that these estimations do not account for the BenefitWallet HSA portfolio acquisition, which is expected to close in fiscal 2025. This pending acquisition could further bolster HealthEquity's position in the market, potentially leading to increased economies of scale and a more diversified revenue base.
HealthEquity's growth in new HSA accounts and assets indicates a successful penetration of the healthcare financial services market. The company's strategic partnerships with over 200 health and retirement plan partners, brokers and benefit advisors have likely played a pivotal role in driving new logo growth. The addition of approximately 900,000 new HSAs within a year points to effective marketing strategies and a strong value proposition offered to consumers.
The HSA market itself is of particular interest, as it is directly influenced by healthcare costs and the increasing trend of consumer-directed health plans. As such, HealthEquity's performance can be seen as a barometer for the broader HSA industry. The company's success in this area may encourage competitors to innovate and expand their offerings, potentially leading to increased competition and market dynamics.
Furthermore, the growth of the 'Enhanced Rates' program suggests that HealthEquity is not only increasing its customer base but also deepening relationships with existing clients. This dual strategy of acquisition and retention is crucial for long-term market positioning and could have positive implications for shareholder value.
The financial health of HealthEquity, as indicated by the estimated increase in HSA assets, reflects a growing consumer demand for health savings accounts. HSAs are becoming increasingly popular as a tax-advantaged way to pay for medical expenses, particularly in a climate where high-deductible health plans are more common. The company's focus on HSAs, a niche yet expanding market, positions it well within the healthcare sector, which is known for its resilience and steady growth.
It is also worth noting the strategic significance of the Enhanced Rates offering. By providing higher interest rates on HSA cash assets, HealthEquity is incentivizing members to maintain larger balances, which can lead to more stable and predictable revenue flows. This strategy not only benefits members through potentially higher returns but also aligns with the company's financial objectives by enhancing asset retention.
The anticipated favorable repricing of maturing HSA cash contracts could further improve the company's interest income. As interest rates fluctuate, the ability to renegotiate contracts at more favorable rates is a testament to the company's financial acumen and market adaptability.
DRAPER, Utah, Jan. 08, 2024 (GLOBE NEWSWIRE) -- HealthEquity, Inc. (NASDAQ: HQY) (“HealthEquity” or the “Company”), the nation’s largest health savings account (“HSA") custodian, today announced estimates of HSAs, HSA assets and total accounts for its fiscal year ending January 31, 2024, reflecting a strong sales year with new HSAs and custodial asset growth.
- Estimated HSAs to be approximately 8.7 million by January 31, 2024, up from 8.0 million a year earlier.
- Estimated HSA assets to be approximately
$24.5 billion , up from$22.1 billion at the end of fiscal year 2023, with approximately$15 billion of HSA cash. Invested balances included in the estimated assets are subject to market fluctuation. - Estimated total accounts to be approximately 15.6 million compared to 14.9 million at the end of fiscal year 2023.
These estimates do not include the BenefitWallet HSA portfolio acquisition that is expected to close in fiscal 2025.
Commenting on the results, Jon Kessler, President and CEO said, “Together with an integrated network of over 200 health and retirement plan partners, brokers and benefit advisors, Team Purple delivered strong new logo growth, opening approximately 900,000 new HSAs this year and providing a base for continued growth in FY25 and beyond.”
The Company also announced that it expects to beat its full-year goals for its Enhanced Rates offering, with over
HealthEquity will discuss these results and estimates during a presentation by Jon Kessler, President and CEO and James Lucania, EVP and CFO, at the 42nd Annual J.P. Morgan Healthcare Conference on Tuesday, January 9, 2024, at 4:30 pm Pacific Time in the Elizabethan Room of the St. Francis Hotel.
An audio webcast of the presentation along with a copy of the presentation slides will be available and archived on HealthEquity’s investor relations website at http://ir.healthequity.com.
HealthEquity also announced the registration links for its investor day are now open for institutional investors and analysts. The February 22, 2024, investor day will be held at its corporate offices at 121 W. Scenic Pointe Drive, Draper, Utah from 8am to 1pm MT. Participants are encouraged to attend by registering at http://ir.healthequity.com. Management presentations, discussion panels and materials will be webcast and archived for those not able to attend the event in Draper, Utah.
About HealthEquity
HealthEquity and its subsidiaries administer HSAs and other consumer-directed benefits for more than 15 million accounts in partnership with employers, benefits advisors, and health and retirement plan providers who share our vision of saving and improving the lives of healthcare consumers. 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 acquisition of the BenefitWallet HSA portfolio may not be consummated, and if consummated, we may not realize the expected benefits;
- 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, 2023, our Quarterly Report on Form 10-Q for the fiscal 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
FAQ
How many HSAs are estimated by January 31, 2024 for HealthEquity, Inc. (HQY)?
What are the estimated HSA assets for HealthEquity, Inc. (HQY) at the end of fiscal year 2024?
How many total accounts are estimated for HealthEquity, Inc. (HQY) at the end of fiscal year 2024?
What are the full-year goals for HealthEquity, Inc. (HQY) Enhanced Rates offering?
