Highlights of the first quarter include:
Revenue of $190.0 million, an increase of 118% compared to $87.1 million in Q1 FY20.Net income of $1.8 million, with non-GAAP net income of $30.8 million, an increase of 12% compared to non-GAAP net income of $27.4 million in Q1 FY20.Net income per diluted share of $0.03, with non-GAAP net income per diluted share of $0.43 in both Q1 FY21 and Q1 FY20.Adjusted EBITDA of $63.0 million, an increase of 62% compared to $38.9 million in Q1 FY20.5.4 million HSAs, an increase of 33% compared to Q1 FY20.$11.5 billion Total HSA Assets, an increase of 38% compared to Q1 FY20.12.7 million Total Accounts, including both HSAs and complementary CDB accounts, an increase of 169% compared to Q1 FY20.DRAPER, Utah, June 02, 2020 (GLOBE NEWSWIRE) — HealthEquity, Inc. (NASDAQ: HQY) (“HealthEquity” or the “Company”), the nation’s largest health savings account (“HSA”) non-bank custodian, today announced financial results for its first quarter ended April 30, 2020, compared to its prior quarter ended April 30, 2019, which did not include the acquisition of WageWorks.“The team’s remarkable response to the COVID-19 pandemic has strengthened HealthEquity’s culture and accelerated promised synergies,” said Jon Kessler, President and CEO. “During a tumultuous quarter, 17% year-over-year increase in new HSA openings and 33% Adjusted EBITDA margin show just how deeply growth and profitability are embedded in our model.”First quarter financial resultsRevenue for the first quarter ended April 30, 2020 of $190.0 million grew 118% compared to $87.1 million for the first quarter ended April 30, 2019. Revenue this quarter included: service revenue of $111.3 million, custodial revenue of $46.9 million, and interchange revenue of $31.8 million.HealthEquity reported net income of $1.8 million, or $0.03 per diluted share, and non-GAAP net income of $30.8 million, or $0.43 per diluted share, for the first quarter ended April 30, 2020. The Company reported net income of $41.8 million, or $0.65 per diluted share, and non-GAAP net income of $27.4 million, or $0.43 per diluted share, for the first quarter ended April 30, 2019.Adjusted EBITDA was $63.0 million for the first quarter ended April 30, 2020, an increase of 62% compared to $38.9 million for the first quarter ended April 30, 2019. Adjusted EBITDA was 33% of revenue compared to 45% for the first quarter ended April 30, 2019.Account and asset metricsHSAs as of April 30, 2020 were approximately 5.4 million, an increase of 33% year over year, including 245,000 HSAs with investments, an increase of 38% year over year. Total Accounts as of April 30, 2020 reached 12.7 million, including 7.3 million consumer-directed benefit (“CDB”) accounts.Total HSA Assets as of April 30, 2020 were $11.5 billion, an increase of 38% year over year. Total HSA assets included $8.7 billion of HSA cash and $2.8 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, 2020.New HSA openings and HSA asset balancesHealthEquity reported sales of 104,000 new HSAs in the first quarter ended April 30, 2020, 17% more than in the first quarter ended April 30, 2019. HSA members grew their cash balances by approximately $40.0 million during the quarter, while total member balances decreased by approximately $37.0 million due to the impact of market declines on invested balances, partially offset by net contributions from cash balances to investments.WageWorks integrationHealthEquity completed its acquisition of WageWorks on August 30, 2019. The Company accelerated its integration efforts and now expects to achieve the previously stated goal of $50 million in run rate synergies, including the on-shoring of all telephone-based member services to the United States, by the end of this year’s fiscal second quarter ending July 31, 2020.Business outlookDue to uncertainty regarding the pace of reopening during the COVID-19 pandemic, the Company is withdrawing its full-year fiscal 2021 guidance. For the fiscal second quarter ending July 31, 2020, management expects revenues of $168 million to $173 million. Its outlook for net loss is between $20 million and $15 million, resulting in net loss per diluted share of $0.27 to $0.21. Its outlook for non-GAAP net income, calculated using the method described below, is between $17 million and $22 million, resulting in non-GAAP net income per diluted share of $0.23 to $0.30 (based on an estimated 73 million weighted-average shares outstanding). Management expects Adjusted EBITDA of $42 million to $48 million.Said Kessler, “We believe the COVID-19 pandemic’s negative effect on our operating performance will fade as businesses gradually reopen, while the unprecedented economic fallout drives HSA growth and accelerates long-term trends favoring established market leaders like HealthEquity.”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 callHealthEquity management will host a conference call at 4:30 pm (Eastern Time) on Tuesday, June 2, 2020 to discuss the first quarter 2021 financial results. The conference call will be accessible by dialing 844-791-6252, or 661-378-9636 for international callers, and referencing conference ID 8297634. A live audio webcast of the call will also be available on the investor relations section of our website at http://ir.healthequity.com.Non-GAAP financial informationTo 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 adjusted earnings before interest, taxes, depreciation and amortization, amortization of acquired intangible assets, stock-based compensation expense, merger integration and acquisition-related costs, gains and losses on marketable equity securities, and other certain non-operating items.Non-GAAP net income is calculated by adding back to net income before provision for income taxes the following items: amortization of acquired intangible assets, stock-based compensation expense, merger integration and acquisition-related costs, and gains and losses on marketable equity securities.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 HealthEquityHealthEquity administers Health Savings Accounts (HSAs) and other consumer-directed benefits for our more than 12 million members in partnership with employers, benefits advisors, and health and retirement plan providers who share our mission to connect health and wealth and value our culture of remarkable “Purple” service. For more information, visit www.healthequity.com.Forward-looking statementsThis 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:the impact of the ongoing COVID-19 pandemic on the Company, its operations and its financial results;our ability to realize the anticipated financial and other benefits from combining the operations of WageWorks with our business in an efficient and effective manner;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 health savings accounts and other consumer-directed 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;recent and 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 and communications systems and successfully manage our growth;our ability to protect our brand and other intellectual property rights; andour 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, 2020, 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
801-727-1209
rputnam@healthequity.com
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