HealthEquity Reports Fiscal Year and Fourth Quarter Ended January 31, 2024 Financial Results
- Revenue for FY24 increased by 16% to $999.6 million compared to $861.7 million in FY23.
- Net income for FY24 was $55.7 million, a significant improvement from a loss of $26.1 million in FY23.
- Adjusted EBITDA for FY24 stood at $369.2 million, marking a 36% increase from $272.3 million in FY23.
- HealthEquity agreed to acquire the BenefitWallet HSA portfolio, consisting of approximately $2.8 billion in HSA assets.
- The company expects revenues between $1.14 billion to $1.16 billion for FY25, with a positive outlook on net income and Adjusted EBITDA.
- The conference call to discuss fiscal 2024 results will be held on March 19, 2024, accessible through dial-in or live webcast.
- None.
Insights
The reported fiscal year revenue growth of 16% and a significant turnaround from a net loss to a net income highlight a robust financial performance for HealthEquity, Inc. This turnaround is particularly noteworthy as it reflects not just an increase in revenue but also effective cost management and operational efficiency, as evidenced by the 500 basis points expansion in Adjusted EBITDA margin.
From a financial perspective, the shift from a net loss in FY23 to a net income in FY24 could be attributed to multiple factors including scale economies, successful integration of acquisitions and perhaps, improved margins on HSA custodial services. The increase in non-GAAP net income and Adjusted EBITDA by 70.7% and 36% respectively, indicates a strong underlying business performance that outpaces revenue growth, suggesting an enhanced profitability profile.
The company's liquidity position, with an increase in cash and a reduction in outstanding debt, is another positive sign for stakeholders. This improved balance sheet strength provides the company with strategic flexibility for future investments or to weather potential economic downturns. However, investors should be mindful of the ongoing debt level and monitor the company's ability to service and reduce it over time.
The acquisition of the BenefitWallet HSA portfolio is a strategic move that is likely to contribute to HealthEquity's market share growth. With approximately $2.8 billion of HSA Assets and 665,000 customer accounts being added, this could significantly bolster the company's position as a leading HSA custodian. The sector's growth is driven by the increasing adoption of high-deductible health plans and the rising demand for health savings accounts, which offer tax advantages and serve as a tool for medical expense planning.
The company's outlook for fiscal 2025 suggests confidence in its growth trajectory, projecting revenue and Adjusted EBITDA increases of approximately 15% and 20% respectively. This outlook may influence investor sentiment positively, as it reflects management's expectation of continued strong performance and market expansion.
However, it is essential to consider industry trends such as regulatory changes, competitive dynamics and consumer behavior shifts in health savings and investment decisions. These factors could impact the company's growth and profitability and thus should be monitored closely by investors.
HealthEquity's notable increase in HSAs and total HSA assets represents a growing consumer preference for health savings accounts as a means to manage healthcare expenses. This trend is consistent with the broader movement towards consumer-directed healthcare, where individuals are taking more control over their healthcare spending and savings.
The reclassification of revenue streams to better align with the underlying drivers is a positive step towards transparency in financial reporting. It allows stakeholders to have a clearer understanding of the company's revenue generation sources. Such clarity is beneficial for informed decision-making by investors.
Considering the long-term implications, HealthEquity's growth in account numbers and assets under management indicates a scalable business model that could lead to sustained revenue streams through custodial and service fees. However, the company must continue to innovate and provide competitive services to retain and grow its customer base in a market that is becoming increasingly competitive.
Highlights of the fiscal year include:
- Revenue of
$999.6 million , an increase of16% compared to$861.7 million in FY23. - Net income of
$55.7 million , compared to net loss of$26.1 million in FY23, with non-GAAP net income of$195.5 million , compared to$114.5 million in FY23. - Net income per diluted share of
$0.64 , compared to net loss per diluted share of$0.31 in FY23, with non-GAAP net income per diluted share of$2.25 , compared to$1.36 in FY23. - Adjusted EBITDA of
$369.2 million , an increase of36% compared to$272.3 million in FY23. - 8.7 million HSAs, an increase of
9% compared to FY23. - Total HSA Assets of
$25.2 billion , an increase of14% compared to FY23. - 15.7 million Total Accounts, including both HSAs and complementary CDBs, an increase of
5% compared to FY23. - The Company agreed to acquire the BenefitWallet HSA portfolio.
Highlights of the fourth quarter include:
- Revenue of
$262.4 million , an increase of12% compared to$233.8 million in Q4 FY23. - Net income of
$26.4 million , compared to net loss of$0.2 million in Q4 FY23, with non-GAAP net income of$55.0 million , compared to$31.3 million in Q4 FY23. - Net income per diluted share of
$0.30 , compared to net loss per diluted share of less than one cent in Q4 FY23, with non-GAAP net income per diluted share of$0.63 , compared to$0.37 in Q4 FY23. - Adjusted EBITDA of
$98.8 million , an increase of34% compared to$73.6 million in Q4 FY23.
DRAPER, Utah, March 19, 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 fourth quarter and fiscal year ended January 31, 2024.
“We delivered fiscal 2024 with a record of nearly
Fiscal year financial results
Revenue for the fiscal year ended January 31, 2024 was
HealthEquity reported net income of
Adjusted EBITDA was
As of January 31, 2024, HealthEquity had
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
Fourth quarter financial results
Revenue for the fourth quarter ended January 31, 2024 was
HealthEquity reported net income of
Adjusted EBITDA was
Account and asset metrics
HSAs as of January 31, 2024 were approximately 8.7 million, an increase of
Total HSA Assets as of January 31, 2024 were
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
Business outlook
For the fiscal year ending January 31, 2025, management expects revenues of
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 subsidiaries Consolidated 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 | 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, | — | — | |||
| Common stock, | 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
| 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 | |
| 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 |
| 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
| 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 | |
| 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 | |
| Diluted weighted-average shares | 89 |
| GAAP net income per diluted share (2) | |
| Non-GAAP net income per diluted share (2) |
(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
(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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