HealthEquity Reports First Quarter Ended April 30, 2025 Financial Results

Highlights of the first quarter include: Revenue of $330.8 million, an increase of 15% compared to $287.6 million in Q1 FY25.Net income of $53.9 million, an increase of 87% compared to $28.8 million in Q1 FY25, with non-GAAP net income of $85.8 million, an increase of 22% compared to $70.3 million in Q1 FY25.Net income per diluted share of $0.61, an increase of 85% compared to $0.33 in Q1 FY25, with non-GAAP net income per diluted share of $0.97, an increase of 21% compared to $0.80 in Q1 FY25.Adjusted EBITDA of $140.2 million, an increase of 19% compared to $117.4 million in Q1 FY25.9.9 million HSAs, an increase of 9% compared to Q1 FY25.Total HSA Assets of $31.3 billion, an increase of 15% compared to Q1 FY25.17.1 million Total Accounts, including both HSAs and complementary CDBs, an increase of 7% compared to Q1 FY25.The Company repurchased 0.7 million shares of its common stock for $60.3 million. DRAPER, Utah, June 03, 2025 (GLOBE NEWSWIRE) -- HealthEquity, Inc. (NASDAQ: HQY) ("HealthEquity" or the "Company"), the nation's largest health savings account ("HSA") custodian by number of accounts, today announced financial results for its first quarter ended April 30, 2025. "The HealthEquity team started fiscal 2026 with a strong first quarter that included record quarterly revenue, record Adjusted EBITDA, and increased guidance for the year,” said Scott Cutler, President and CEO of HealthEquity. “We enhanced our member-first secure mobile experience to strengthen the security of our members’ $31 billion of HSA Assets, increase member resources, and reduce costs. We also applaud and support the efforts of our nation’s leaders to improve and empower healthcare consumers by expanding the benefits of HSAs, as well as extending eligibility to more American families." First quarter financial results Revenue for the first quarter ended April 30, 2025 was $330.8 million, an increase of 15% compared to $287.6 million for the first quarter ended April 30, 2024. Revenue this quarter included: service revenue of $119.8 million, custodial revenue of $156.5 million, and interchange revenue of $54.6 million. HealthEquity reported net income of $53.9 million, or $0.61 per diluted share, and non-GAAP net income of $85.8 million, or $0.97 per diluted share, for the first quarter ended April 30, 2025. The Company 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. Adjusted EBITDA was $140.2 million for the first quarter ended April 30, 2025, an increase of 19% compared to the first quarter ended April 30, 2024. Adjusted EBITDA was 42% of revenue, compared to 41% for the first quarter ended April 30, 2024. Account and asset metrics HSAs as of April 30, 2025 were 9.9 million, an increase of 9% year over year, including 770,000 HSAs with investments, an increase of 16% year over year. Total Accounts as of April 30, 2025 were 17.1 million, including 7.2 million other consumer-directed benefits ("CDBs"). Total HSA Assets as of April 30, 2025 were $31.3 billion, an increase of 15% year over year. Total HSA Assets included $17.1 billion of HSA cash and $14.2 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 $0.9 billion as of April 30, 2025. Stock repurchase program The Company repurchased 0.7 million shares of its common stock for $60.3 million during the first quarter ended April 30, 2025. As of April 30, 2025, $117.5 million of common stock remained authorized for repurchase under the Company's stock repurchase program. Business outlook For the fiscal year ending January 31, 2026, management expects revenues of $1.285 billion to $1.305 billion. Its outlook for net income is between $173 million and $188 million, resulting in net income of $1.96 to $2.13 per diluted share. Its outlook for non-GAAP net income, calculated using the method described below, is between $320 million and $335 million, resulting in non-GAAP net income per diluted share of $3.61 to $3.78 (based on an estimated 89 million diluted weighted-average shares outstanding). Management expects Adjusted EBITDA of $530 million to $550 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, June 3, 2025 to discuss the fiscal 2026 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 other consumer-directed benefits for more than 17 million accounts in partnership with employers, benefits advisors, and health and retirement plan providers who share our mission to save and improve lives by empowering 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 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;risks relating to our recent CEO transition;the impact of increased fraudulent account activity involving our member accounts or our third-party service providers on our reputation and financial results;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;potential regulatory changes and changes in the enforcement environment under the new U.S. administration;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; 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, 2025 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 Putnam801-727-1000rputnam@healthequity.com HealthEquity, Inc. and subsidiariesCondensed consolidated balance sheets (in thousands, except par value)April 30, 2025 January 31, 2025 (unaudited) Assets Current assets Cash and cash equivalents$287,894 $295,948 Accounts receivable, net of allowance for doubtful accounts of $1,041 and $2,070 as of April 30, 2025 and January 31, 2025, respectively 116,256 118,006 Prepaid expenses and other current assets 68,646 63,795 Total current assets 472,796 477,749 Property and equipment, net 3,173 3,239 Operating lease right-of-use assets 41,446 43,185 Intangible assets, net 1,179,430 1,204,658 Goodwill 1,648,145 1,648,145 Other assets 71,283 71,574 Total assets$3,416,273 $3,448,550 Liabilities and stockholders’ equity Current liabilities Accounts payable$13,496 $14,361 Accrued compensation 24,433 69,330 Accrued liabilities 68,444 62,631 Operating lease liabilities 9,969 10,001 Total current liabilities 116,342 156,323 Long-term liabilities Long-term debt, net of issuance costs 1,056,566 1,056,301 Operating lease liabilities, non-current 40,223 42,219 Other long-term liabilities 22,178 22,962 Deferred tax liability 57,158 55,834 Total long-term liabilities 1,176,125 1,177,316 Total liabilities 1,292,467 1,333,639 Commitments and contingencies Stockholders’ equity Preferred stock, $0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of April 30, 2025 and January 31, 2025, respectively — — Common stock, $0.0001 par value, 900,000 shares authorized, 86,714 and 86,536 shares issued and outstanding as of April 30, 2025 and January 31, 2025, respectively 9 9 Additional paid-in capital 1,905,444 1,905,628 Accumulated earnings 218,353 209,274 Total stockholders’ equity 2,123,806 2,114,911 Total liabilities and stockholders’ equity$3,416,273 $3,448,550 HealthEquity, Inc. and subsidiariesCondensed consolidated statements of operations and comprehensive income (unaudited) Three months ended April 30,(in thousands, except per share data) 2025 2024Revenue Service revenue$119,784 $118,214 Custodial revenue 156,455 121,644 Interchange revenue 54,605 47,739 Total revenue 330,844 287,597 Cost of revenue Service costs 88,005 82,347 Custodial costs 10,747 9,057 Interchange costs 7,781 9,055 Total cost of revenue 106,533 100,459 Gross profit 224,311 187,138 Operating expenses Sales and marketing 25,984 23,494 Technology and development 61,436 56,090 General and administrative 25,536 38,236 Amortization of acquired intangible assets 27,002 25,545 Merger integration 1,275 2,143 Total operating expenses 141,233 145,508 Income from operations 83,078 41,630 Other expense Interest expense (14,858) (11,795)Other income, net 2,733 3,404 Total other expense (12,125) (8,391)Income before income taxes 70,953 33,239 Income tax provision 17,038 4,426 Net income and comprehensive income$53,915 $28,813 Net income per share: Basic$0.62 $0.33 Diluted$0.61 $0.33 Weighted-average number of shares used in computing net income per share: Basic 86,655 86,472 Diluted 88,415 88,324 HealthEquity, Inc. and subsidiariesCondensed consolidated statements of cash flows (unaudited) Three months ended April 30,(in thousands) 2025 2024Cash flows from operating activities: Net income$53,915 $28,813 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 38,741 38,938 Stock-based compensation 14,336 32,020 Amortization of debt discount and issuance costs 265 703 Deferred taxes 1,324 (5,388)Changes in operating assets and liabilities: Accounts receivable, net 1,750 (1,325)Other assets (5,702) (227)Operating lease right-of-use assets 1,649 1,741 Accrued compensation (42,210) (25,757)Accounts payable, accrued liabilities, and other current liabilities 3,422 (2,347)Operating lease liabilities, non-current (1,968) (1,745)Other long-term liabilities (784) 3 Net cash provided by operating activities 64,738 65,429 Cash flows from investing activities: Purchases of software and capitalized software development costs (16,057) (13,106)Purchases of property and equipment (86) (721)Acquisitions of HSA portfolios — (256,123)Net cash used in investing activities (16,143) (269,950)Cash flows from financing activities: Repurchases of common stock (59,065) — Proceeds from long-term debt — 50,000 Settlement of client-held funds obligation, net 1,451 (546)Proceeds from exercise of common stock options 965 2,317 Net cash provided by (used in) financing activities (56,649) 51,771 Decrease in cash and cash equivalents (8,054) (152,750)Beginning cash and cash equivalents 295,948 403,979 Ending cash and cash equivalents$287,894 $251,229 HealthEquity, Inc. and subsidiariesCondensed consolidated statements of cash flows (unaudited) (continued) Three months ended April 30,(in thousands) 2025 2024Supplemental cash flow data: Interest expense paid in cash$20,809 $18,850 Income tax payments (refunds), net (46) 277 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 2,774 2,404 Purchases of property and equipment included in accounts payable or accrued liabilities 546 32 Repurchases of common stock included in accrued liabilities 2,000 — Exercise of common stock options receivable — 42 Stock-based compensation expense (unaudited) Total stock-based compensation expense included in the condensed consolidated statements of operations and comprehensive income is as follows: Three months ended April 30,(in thousands) 2025 2024Cost of revenue$3,387 $4,525 Sales and marketing 4,870 4,323 Technology and development 5,920 5,940 General and administrative 159 17,232 Total stock-based compensation expense$14,336 $32,020 Total Accounts (unaudited) (in thousands, except percentages) April 30, 2025 April 30, 2024 % Change January 31, 2025HSAs 9,886 9,097 9% 9,889 New HSAs from sales - Quarter-to-date 150 194 (23)% 471 New HSAs from sales - Year-to-date 150 194 (23)% 1,040 New HSAs from acquisitions - Year-to-date — 400 * 616 HSAs with investments 770 665 16% 753 CDBs 7,174 6,913 4% 7,144 Total Accounts 17,060 16,010 7% 17,033 Average Total Accounts - Quarter-to-date 17,122 15,919 8% 16,677 Average Total Accounts - Year-to-date 17,122 15,919 8% 16,302 * Not meaningful HSA Assets (unaudited) (in millions, except percentages)April 30, 2025 April 30, 2024 % Change January 31, 2025HSA cash$17,066 $15,850 8% $17,435 HSA investments 14,205 11,427 24% 14,676 Total HSA Assets 31,271 27,277 15% 32,111 Average daily HSA cash - Quarter-to-date 17,281 15,388 12% 16,634 Average daily HSA cash - Year-to-date 17,281 15,388 12% 16,206 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 April 30, 2025: Year ending January 31, (in billions, except percentages)HSA cash expected toreprice Average annualizedyieldRemainder of 2026$1.7 2.4%2027 4.0 1.9%2028 2.2 4.0%2029 1.5 3.7%Thereafter 7.0 4.4%Total (1)$16.4 3.5% Excludes $0.7 billion of HSA cash held in floating-rate contracts as of April 30, 2025. Client-held funds (unaudited) (in millions, except percentages)April 30, 2025 April 30, 2024 % Change January 31, 2025Client-held funds$925 $858 8% $896 Average daily Client-held funds - Quarter-to-date 902 840 7% 798 Average daily Client-held funds - Year-to-date 902 840 7% 817 Reconciliation of net income to Adjusted EBITDA (unaudited) Three months ended April 30,(in thousands) 2025 2024Net income$53,915 $28,813 Interest income (2,733) (3,881)Interest expense 14,858 11,795 Income tax provision 17,038 4,426 Depreciation and amortization 11,739 13,393 Amortization of acquired intangible assets 27,002 25,545 Stock-based compensation expense 14,336 32,020 Merger integration expenses 1,275 2,143 Amortization of incremental costs to obtain a contract 1,926 1,632 Costs associated with unused office space 852 790 Other — 759 Adjusted EBITDA$140,208 $117,435 Net income as a percentage of revenue (unaudited) Three months ended April 30, (in thousands, except percentages) 2025 2024 $ Change % ChangeNet income$53,915 $28,813 $25,102 87%As a percentage of revenue 16% 10% Adjusted EBITDA as a percentage of revenue (unaudited) Three months ended April 30, (in thousands, except percentages) 2025 2024 $ Change % ChangeAdjusted EBITDA$140,208 $117,435 $22,773 19%As a percentage of revenue 42% 41% Reconciliation of net income outlook to Adjusted EBITDA outlook (unaudited) Outlook for the year ending(in millions)January 31, 2026Net income$173 - 188Interest income(9)Interest expense58 Income tax provision58 - 63Depreciation and amortization47 Amortization of acquired intangible assets108 Stock-based compensation expense77 Merger integration expenses7 Amortization of incremental costs to obtain a contract8 Costs associated with unused office space3 Adjusted EBITDA$530 - 550 Reconciliation of net income to non-GAAP net income (unaudited) Three months ended April 30,(in thousands, except per share data) 2025 2024Net income$53,915 $28,813 Income tax provision 17,038 4,426 Income before income taxes - GAAP 70,953 33,239 Non-GAAP adjustments: Amortization of acquired intangible assets 27,002 25,545 Stock-based compensation expense 14,336 32,020 Merger integration expenses 1,275 2,143 Costs associated with unused office space 852 790 Total adjustments to income before income taxes - GAAP 43,465 60,498 Income before income taxes - Non-GAAP 114,418 93,737 Income tax provision - Non-GAAP (1) 28,604 23,434 Non-GAAP net income 85,814 70,303 Diluted weighted-average shares 88,415 88,324 GAAP net income per diluted share$0.61 $0.33 Non-GAAP net income per diluted share$0.97 $0.80 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, 2026Net income$173 - 188 Income tax provision58 - 63 Income before income taxes - GAAP231 - 251 Non-GAAP adjustments: Amortization of acquired intangible assets108 Stock-based compensation expense77 Merger integration expenses7 Costs associated with unused office space3 Total adjustments to income before income taxes - GAAP195 Income before income taxes - Non-GAAP426 - 446 Income tax provision - Non-GAAP (1)106 - 111 Non-GAAP net income$320 - 335 Diluted weighted-average shares89 GAAP net income per diluted share (2)$1.96 - 2.13 Non-GAAP net income per diluted share (2)$3.61 - 3.78 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.GAAP and non-GAAP net income per diluted share may not calculate due to rounding. Certain terms TermDefinitionHSAHealth Savings Account, which is a financial account through which consumers spend and save long-term for healthcare on a tax-advantaged basis.CDBConsumer-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 memberConsumers with HSAs that we serve.Total HSA AssetsHSA members’ custodial cash assets held by our federally insured depository partners and our insurance company partners. Total HSA Assets also includes HSA members' investments held by our custodial investment fund partner.ClientOur employer clients.Total AccountsThe sum of HSAs and CDBs on our platforms.Client-held fundsDeposits held on behalf of our Clients to facilitate administration of our CDBs.Network PartnerOur health plan partners, benefits administrators, and retirement plan recordkeepers.Adjusted EBITDAEarnings 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 incomeCalculated 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 shareCalculated by dividing non-GAAP net income by diluted weighted-average shares outstanding.

HealthEquity Reports First Quarter Ended April 30, 2025 Financial Results

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