Highlights of the third quarter
include:
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 third quarter
ended October 31, 2018.
“HealthEquity delivered robust third quarter results,
strengthening our momentum going into the important fourth quarter
and year end,” said Jon Kessler, President and CEO of HealthEquity.
“By adding more than $1.5 billion in additional custodial assets
since the end of our third quarter last year, our growth continues
well ahead of the market, allowing us to raise guidance for fiscal
year 2019. Importantly, with custodial investment assets growing by
53% over the third quarter end last year, we are delivering on our
promise to help our HSA members connect health and wealth and put
them on the fast track to retirement readiness.”
Third quarter financial results
For the third quarter ended October 31, 2018, HealthEquity
reported revenue of $70.5 million, an increase of 24% compared to
$56.8 million for the third quarter ended October 31, 2017.
Revenue consisted of:
- Service revenue of $25.0 million, an increase of 9% compared to
Q3 FY18.
- Custodial revenue of $31.6 million, an increase of 43% compared
to Q3 FY18.
- Interchange revenue of $13.9 million, an increase of 18%
compared to Q3 FY18.
Net income was $15.7 million for the third quarter ended
October 31, 2018, compared to $10.5 million for the third
quarter ended October 31, 2017.
Net income per diluted share was $0.25 for the third quarter
ended October 31, 2018, compared to $0.17 for the third
quarter ended October 31, 2017.
Non-GAAP net income per diluted share was $0.28 for the third
quarter ended October 31, 2018, compared to $0.17 for the
third quarter ended October 31, 2017.
Non-GAAP Adjusted EBITDA was $29.7 million for the third quarter
ended October 31, 2018, an increase of 40% compared to $21.2
million for the third quarter ended October 31, 2017. Adjusted
EBITDA was 42% of revenue for the third quarter ended
October 31, 2018, compared to 37% for the third quarter ended
October 31, 2017.
As of October 31, 2018, we had $330.3 million of cash, cash
equivalents and marketable securities and no outstanding debt. This
compares to $240.3 million in cash, cash equivalents and marketable
securities and no outstanding debt as of January 31, 2018.
HSA Member and Custodial Asset metrics
The total number of HSAs for which we serve as a non-bank
custodian ("HSA Members") as of October 31, 2018 was 3.7
million, an increase of 22% from 3.0 million as of October 31,
2017. Total Active HSA Members as of October 31, 2018
was 3.0 million, an increase of 17% from 2.5 million as of
October 31, 2017. An Active HSA Member is an HSA Member that
(i) is associated with a Health Plan and Administrator Partner or
an Employer Partner, in each case as of the end of the applicable
period; or (ii) has held a custodial balance at any point during
the previous twelve month period.
Total Custodial Assets as of October 31, 2018 was $7.1
billion, an increase of 27% year over year, consisting of:
- Custodial Cash Assets of $5.6 billion, an increase of 22%
compared to October 31, 2017; and
- Custodial Investment Assets of $1.5 billion, an increase of 53%
compared to October 31, 2017.
Business outlook
We have increased our outlook for the year ending January 31,
2019. We expect our revenue to be between $281 million and $285
million. Our outlook for net income is a range of $66 million to
$70 million, resulting in a net income per diluted share range of
$1.03 to $1.09. Our Adjusted EBITDA outlook is a range of $110
million to $114 million. We also expect our non-GAAP net income to
be in a range between $68 million and $72 million. Our non-GAAP net
income is calculated by adding back to net income all non-cash
stock-based compensation expense, net of an estimated statutory tax
rate of 24%, and the impact of excess tax benefits due to the
adoption of Accounting Standards Update ("ASU") 2016-09. Our
non-GAAP net income outlook results in a non-GAAP net income per
diluted share range between $1.06 to $1.13 (based on an estimated
64 million weighted-average shares outstanding).
A reconciliation of the non-GAAP financial measures used in this
release to the most comparable GAAP financial measures is included
with the financial tables at the end of this release.
Executive appointment
HealthEquity also announced the appointment of Larry Trittschuh
as Executive Vice President and Chief Security Officer (CSO).
“As CSO, Larry will have oversight of information security,
privacy, fraud prevention, incident response and physical
security,” said Mr. Kessler. “He will implement our vision of
HealthEquity as a leader in data protection and privacy and will be
a catalyst for progress in these areas throughout our client and
partner ecosystems and the broader industry.”
Mr. Trittschuh will join HealthEquity from his current position
as CSO for Barclays Americas. Mr. Trittschuh was Senior Vice
President, Information Security for Synchrony Financial prior to
joining Barclays, and was Executive Director, Threat Management /
Deputy Chief Information Security Officer (CISO) for General
Electric prior to that. Mr. Trittschuh has more than 25 years of
experience including service in the USAF. Mr. Trittschuh holds a
Bachelor of Science from the USAF Academy.
Conference call
HealthEquity management will host a conference call at 5:00 pm
(Eastern Time) on Tuesday, December 4, 2018 to discuss the fiscal
third quarter 2019 financial results. The conference call will be
accessible by dialing 844-791-6252, or 661-378-9636 for
international callers, and referencing conference ID 6682979. 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 Information
To supplement our financial information presented on a GAAP
basis, we disclose Adjusted EBITDA, which is a non-GAAP financial
measure. We define Adjusted EBITDA as adjusted earnings before
interest, taxes, depreciation and amortization, stock-based
compensation expense, and other certain non-operating items.
Non-GAAP net income is calculated by adding back to net income all
non-cash stock-based compensation expense, net of an estimated
statutory tax rate, and the impact of excess tax benefits due to
the adoption of ASU 2016-09. 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. 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. 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 connects health and wealth,
delivering health savings account (HSA), 401(k) and
other consumer driven health and retirement solutions in
partnership with over 40,000 employers and 124 health plans and
administrators nationwide. HealthEquity members have
access to its end-to-end platform and remarkable “purple” service
to become consumers of healthcare while building health and
retirement savings for tomorrow. HealthEquity is the
custodian of $7.1 billion in assets for 3.7 million HSA
members nationwide. 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, 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,”
“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 compete effectively in a rapidly evolving
healthcare industry;
- our dependence on the continued availability and benefits of
tax-advantaged health savings accounts;
- the significant competition we face and may face in the future,
including from those with greater resources than us;
- recent and potential future cybersecurity breaches of our
platform 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, investment advisor and other laws applicable to
our business;
- our reliance on partners and third party vendors for
distribution and important services;
- our ability to successfully identify, acquire and integrate
additional portfolio purchases or acquisition targets;
- our ability to develop and implement updated features for our
platform and successfully manage our growth;
- our ability to protect our brand and other intellectual
property rights; 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 most recent Annual Report on Form 10-K 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. These
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
Putnam801-727-1209rputnam@healthequity.com
HealthEquity, Inc. and its
subsidiariesCondensed consolidated balance sheets
(unaudited)
(in thousands, except par value) |
October 31, 2018 |
|
January 31, 2018 |
Assets |
|
|
|
Current assets |
|
|
|
Cash and
cash equivalents |
$ |
289,007 |
|
|
$ |
199,472 |
|
Marketable securities, at fair value |
41,250 |
|
|
40,797 |
|
Total
cash, cash equivalents and marketable securities |
330,257 |
|
|
240,269 |
|
Accounts
receivable, net of allowance for doubtful accounts as of October
31, 2018 and January 31, 2018 of $153 and $208,
respectively |
24,465 |
|
|
21,602 |
|
Inventories |
164 |
|
|
215 |
|
Other
current assets |
8,953 |
|
|
3,310 |
|
Total
current assets |
363,839 |
|
|
265,396 |
|
Property and equipment,
net |
8,743 |
|
|
7,836 |
|
Intangible assets,
net |
80,730 |
|
|
83,635 |
|
Goodwill |
4,651 |
|
|
4,651 |
|
Deferred tax asset |
1,435 |
|
|
5,461 |
|
Other assets |
18,300 |
|
|
2,180 |
|
Total
assets |
$ |
477,698 |
|
|
$ |
369,159 |
|
Liabilities and
stockholders’ equity |
|
|
|
Current
liabilities |
|
|
|
Accounts
payable |
$ |
1,495 |
|
|
$ |
2,420 |
|
Accrued
compensation |
9,933 |
|
|
12,549 |
|
Accrued
liabilities |
5,972 |
|
|
5,521 |
|
Total
current liabilities |
17,400 |
|
|
20,490 |
|
Long-term
liabilities |
|
|
|
Other
long-term liabilities |
2,836 |
|
|
2,395 |
|
Deferred
tax liability |
661 |
|
|
— |
|
Total
long-term liabilities |
3,497 |
|
|
2,395 |
|
Total
liabilities |
20,897 |
|
|
22,885 |
|
Commitments and
contingencies |
|
|
|
Stockholders’
equity |
|
|
|
Preferred
stock, $0.0001 par value, 100,000 shares authorized, no shares
issued and outstanding as of October 31, 2018 and January 31, 2018,
respectively |
— |
|
|
— |
|
Common
stock, $0.0001 par value, 900,000 shares authorized, 62,380 and
60,825 shares issued and outstanding as of October 31, 2018 and
January 31, 2018, respectively |
6 |
|
|
6 |
|
Additional paid-in
capital |
298,064 |
|
|
261,237 |
|
Accumulated other
comprehensive loss |
— |
|
|
(269 |
) |
Accumulated
earnings |
158,731 |
|
|
85,300 |
|
Total
stockholders’ equity |
456,801 |
|
|
346,274 |
|
Total
liabilities and stockholders’ equity |
$ |
477,698 |
|
|
$ |
369,159 |
|
|
|
|
|
|
|
|
|
HealthEquity, Inc. and its
subsidiariesCondensed consolidated statements of
operations and comprehensive income (unaudited)
(in thousands, except per share
data) |
Three months ended October 31, |
|
Nine months ended October 31, |
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Revenue: |
|
|
|
|
|
|
|
Service revenue |
$ |
25,041 |
|
|
$ |
22,962 |
|
|
$ |
74,797 |
|
|
$ |
68,258 |
|
Custodial
revenue |
31,564 |
|
|
22,105 |
|
|
90,713 |
|
|
62,709 |
|
Interchange revenue |
13,890 |
|
|
11,722 |
|
|
45,956 |
|
|
38,122 |
|
Total
revenue |
70,495 |
|
|
56,789 |
|
|
211,466 |
|
|
169,089 |
|
Cost of revenue: |
|
|
|
|
|
|
|
Service
costs |
17,562 |
|
|
17,251 |
|
|
52,808 |
|
|
47,824 |
|
Custodial
costs |
3,551 |
|
|
2,784 |
|
|
10,492 |
|
|
8,370 |
|
Interchange costs |
3,565 |
|
|
3,027 |
|
|
11,418 |
|
|
9,625 |
|
Total
cost of revenue |
24,678 |
|
|
23,062 |
|
|
74,718 |
|
|
65,819 |
|
Gross profit |
45,817 |
|
|
33,727 |
|
|
136,748 |
|
|
103,270 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Sales and
marketing |
7,502 |
|
|
5,892 |
|
|
21,605 |
|
|
15,707 |
|
Technology and development |
8,678 |
|
|
6,866 |
|
|
25,055 |
|
|
19,905 |
|
General
and administrative |
9,161 |
|
|
6,252 |
|
|
24,561 |
|
|
18,354 |
|
Amortization of acquired intangible assets |
1,490 |
|
|
1,155 |
|
|
4,438 |
|
|
3,320 |
|
Total
operating expenses |
26,831 |
|
|
20,165 |
|
|
75,659 |
|
|
57,286 |
|
Income from
operations |
18,986 |
|
|
13,562 |
|
|
61,089 |
|
|
45,984 |
|
Other expense: |
|
|
|
|
|
|
|
Other
expense, net |
(1,555 |
) |
|
(395 |
) |
|
(1,631 |
) |
|
(523 |
) |
Total other
expense |
(1,555 |
) |
|
(395 |
) |
|
(1,631 |
) |
|
(523 |
) |
Income before income
taxes |
17,431 |
|
|
13,167 |
|
|
59,458 |
|
|
45,461 |
|
Income tax provision
(benefit) |
1,745 |
|
|
2,685 |
|
|
(1,322 |
) |
|
4,004 |
|
Net income |
$ |
15,686 |
|
|
$ |
10,482 |
|
|
$ |
60,780 |
|
|
$ |
41,457 |
|
Net income per
share: |
|
|
|
|
|
|
|
Basic |
$ |
0.25 |
|
|
$ |
0.17 |
|
|
$ |
0.98 |
|
|
$ |
0.69 |
|
Diluted |
$ |
0.25 |
|
|
$ |
0.17 |
|
|
$ |
0.96 |
|
|
$ |
0.67 |
|
Weighted-average number
of shares used in computing net income per share: |
|
|
|
|
|
|
|
Basic |
62,088 |
|
|
60,562 |
|
|
61,718 |
|
|
60,160 |
|
Diluted |
63,923 |
|
|
61,868 |
|
|
63,628 |
|
|
61,703 |
|
Comprehensive
income: |
|
|
|
|
|
|
|
Net
income |
$ |
15,686 |
|
|
$ |
10,482 |
|
|
$ |
60,780 |
|
|
$ |
41,457 |
|
Other
comprehensive gain (loss): |
|
|
|
|
|
|
|
Unrealized gain (loss) on available-for-sale marketable securities,
net of tax |
— |
|
|
7 |
|
|
— |
|
|
(23 |
) |
Comprehensive income |
$ |
15,686 |
|
|
$ |
10,489 |
|
|
$ |
60,780 |
|
|
$ |
41,434 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HealthEquity, Inc. and its
subsidiariesCondensed consolidated statements of
cash flows (unaudited)
|
Nine months ended October 31, |
(in thousands) |
2018 |
|
|
2017 |
|
Cash flows from
operating activities: |
|
|
|
Net income |
$ |
60,780 |
|
|
$ |
41,457 |
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
Depreciation and amortization |
13,498 |
|
|
11,142 |
|
Loss on
disposal of software development costs and other |
844 |
|
|
97 |
|
Deferred
taxes |
394 |
|
|
5,093 |
|
Stock-based compensation |
15,461 |
|
|
10,468 |
|
Changes
in operating assets and liabilities: |
|
|
|
Accounts
receivable |
(2,863 |
) |
|
(4,482 |
) |
Inventories |
51 |
|
|
423 |
|
Other
assets |
(4,568 |
) |
|
(3,027 |
) |
Accounts
payable |
(1,087 |
) |
|
(425 |
) |
Accrued
compensation |
(2,617 |
) |
|
(2,219 |
) |
Accrued
liabilities |
451 |
|
|
2,586 |
|
Other
long-term liabilities |
441 |
|
|
770 |
|
Net cash provided by
operating activities |
80,785 |
|
|
61,883 |
|
Cash flows from
investing activities: |
|
|
|
Purchases
of intangible member assets |
(1,195 |
) |
|
(15,529 |
) |
Acquisition of a business |
— |
|
|
(2,882 |
) |
Purchases
of marketable securities |
(574 |
) |
|
(343 |
) |
Purchases
of property and equipment |
(3,467 |
) |
|
(3,382 |
) |
Purchases
of software and capitalized software development costs |
(7,352 |
) |
|
(7,654 |
) |
Net cash used in
investing activities |
(12,588 |
) |
|
(29,790 |
) |
Cash flows from
financing activities: |
|
|
|
Proceeds
from exercise of common stock options |
21,338 |
|
|
12,320 |
|
Net cash provided by
financing activities |
21,338 |
|
|
12,320 |
|
Increase in cash and
cash equivalents |
89,535 |
|
|
44,413 |
|
Beginning cash and cash
equivalents |
199,472 |
|
|
139,954 |
|
Ending cash and cash
equivalents |
$ |
289,007 |
|
|
$ |
184,367 |
|
Supplemental
disclosures of non-cash investing and financing activities: |
|
|
|
Purchases
of property and equipment included in accounts payable or accrued
liabilities at period end |
$ |
6 |
|
|
$ |
238 |
|
Purchases
of software and capitalized software development costs included in
accounts payable or accrued liabilities at period end |
156 |
|
|
501 |
|
Purchases
of intangible member assets accrued during the period |
— |
|
|
3,429 |
|
Exercise
of common stock options receivable |
28 |
|
|
— |
|
|
|
|
|
|
|
Stock-based compensation expense
(unaudited)
Total stock-based compensation expense included in the
consolidated statements of operations and comprehensive income is
as follows:
|
|
Three months ended October 31, |
|
Nine months ended October 31, |
(in thousands) |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Cost of revenue |
|
$ |
788 |
|
|
$ |
720 |
|
|
$ |
2,008 |
|
|
$ |
1,903 |
|
Sales and
marketing |
|
990 |
|
|
561 |
|
|
2,586 |
|
|
1,403 |
|
Technology and
development |
|
1,386 |
|
|
831 |
|
|
3,677 |
|
|
2,365 |
|
General and
administrative |
|
2,570 |
|
|
1,553 |
|
|
7,190 |
|
|
4,797 |
|
Total stock-based compensation expense |
|
$ |
5,734 |
|
|
$ |
3,665 |
|
|
$ |
15,461 |
|
|
$ |
10,468 |
|
HSA Members (unaudited)
(in thousands, except percentages) |
|
October 31, 2018 |
|
October 31, 2017 |
|
% Change |
|
January 31, 2018 |
HSA Members |
|
3,677 |
|
|
3,013 |
|
|
22 |
% |
|
3,403 |
|
Average HSA Members -
Year-to-date |
|
3,540 |
|
|
2,873 |
|
|
23 |
% |
|
2,952 |
|
Average HSA Members -
Quarter-to-date |
|
3,642 |
|
|
2,977 |
|
|
22 |
% |
|
3,189 |
|
New HSA Members -
Year-to-date |
|
338 |
|
|
339 |
|
|
— |
% |
|
723 |
|
New HSA Members -
Quarter-to-date |
|
119 |
|
|
123 |
|
|
(3 |
)% |
|
404 |
|
Active HSA Members |
|
2,972 |
|
|
2,536 |
|
|
17 |
% |
|
2,863 |
|
HSA
Members with investments |
|
153 |
|
|
98 |
|
|
56 |
% |
|
122 |
|
Custodial assets (unaudited)
(in millions, except percentages) |
|
October 31, 2018 |
|
October 31, 2017 |
|
% Change |
|
January 31, 2018 |
Custodial cash |
|
$ |
5,583 |
|
|
$ |
4,593 |
|
|
22 |
% |
|
$ |
5,490 |
|
Custodial
investments |
|
1,507 |
|
|
987 |
|
|
53 |
% |
|
1,289 |
|
Total custodial
assets |
|
$ |
7,090 |
|
|
$ |
5,580 |
|
|
27 |
% |
|
$ |
6,779 |
|
Average daily custodial
cash - Year-to-date |
|
$ |
5,503 |
|
|
$ |
4,470 |
|
|
23 |
% |
|
$ |
4,571 |
|
Average
daily custodial cash - Quarter-to-date |
|
$ |
5,551 |
|
|
$ |
4,550 |
|
|
22 |
% |
|
$ |
4,876 |
|
Net income reconciliation to Adjusted EBITDA
(unaudited)
|
|
Three months ended October 31, |
|
Nine months ended October 31, |
(in thousands) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net income |
|
$ |
15,686 |
|
|
$ |
10,482 |
|
|
$ |
60,780 |
|
|
$ |
41,457 |
|
Interest
income |
|
(358 |
) |
|
(185 |
) |
|
(919 |
) |
|
(521 |
) |
Interest
expense |
|
68 |
|
|
69 |
|
|
204 |
|
|
205 |
|
Income
tax provision (benefit) |
|
1,745 |
|
|
2,685 |
|
|
(1,322 |
) |
|
4,004 |
|
Depreciation and amortization |
|
3,092 |
|
|
2,851 |
|
|
9,060 |
|
|
7,822 |
|
Amortization of acquired intangible assets |
|
1,490 |
|
|
1,155 |
|
|
4,438 |
|
|
3,320 |
|
Stock-based compensation expense |
|
5,734 |
|
|
3,665 |
|
|
15,461 |
|
|
10,468 |
|
Other
(1) |
|
2,209 |
|
|
511 |
|
|
3,392 |
|
|
839 |
|
Adjusted
EBITDA |
|
$ |
29,666 |
|
|
$ |
21,233 |
|
|
$ |
91,094 |
|
|
$ |
67,594 |
|
(1) For the three months ended
October 31, 2018 and 2017, Other consisted of non-income-based
taxes of $114 and $113, other costs of $207 and $0,
acquisition-related costs of $849 and $398, amortization of
incremental costs to obtain a contract of $363 and $0, and loss on
disposal of previously capitalized software development of $676 and
$0, respectively. For the nine months ended October 31, 2018
and 2017, Other consisted of non-income-based taxes of $334 and
$303, other costs of $263 and $54, acquisition-related costs of
$1,074 and $482, amortization of incremental costs to obtain a
contract of $1,045 and $0, and loss on disposal of previously
capitalized software development of $676 and $0, respectively.
Reconciliation of net income outlook to Adjusted EBITDA
outlook (unaudited)
|
Outlook
for the year ending |
(in millions) |
January 31, 2019 |
Net income |
$66 -
$70 |
Income
tax provision |
~
1 |
Depreciation and amortization |
~
13 |
Amortization of acquired intangible assets |
~
6 |
Stock-based compensation expense |
~
21 |
Other |
~ 3 |
Adjusted
EBITDA |
$110 - $114 |
|
|
Reconciliation of non-GAAP net income per diluted share
(unaudited)
|
Three months ended |
Nine months ended |
Outlook for the year ending |
(in millions, except per share data) |
October 31, 2018 |
October 31, 2017 |
October 31, 2018 |
October 31, 2017 |
January 31, 2019 |
Net income |
$ |
16 |
|
$ |
10 |
|
$ |
61 |
|
$ |
41 |
|
$66 -
$70 |
|
Stock
compensation, net of tax (1) |
|
4 |
|
|
2 |
|
|
12 |
|
|
6 |
|
~
16 |
|
Excess
tax benefit due to adoption of ASU 2016-09 |
|
(2 |
) |
|
(2 |
) |
|
(14 |
) |
|
(12 |
) |
~
(14) |
|
Non-GAAP net
income |
$ |
18 |
|
$ |
10 |
|
$ |
59 |
|
$ |
35 |
|
$68 - $72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
weighted-average shares used in computing GAAP and Non-GAAP per
share amounts |
|
64 |
|
|
62 |
|
|
64 |
|
|
62 |
|
64 |
|
Non-GAAP
net income per diluted share (2) |
$ |
0.28 |
|
$ |
0.17 |
|
$ |
0.92 |
|
$ |
0.57 |
|
$1.06 - $1.13 |
|
(1) For the three and nine months ended October 31, 2018,
the Company used an estimated statutory tax rate of 24%, to
calculate the net impact of stock-based compensation expense and
38% for the three and nine months ended October 31, 2017.
(2) Non-GAAP net income per diluted share does 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. |
HSA Member |
An HSA for which we
serve as custodian. |
Active HSA Member |
An HSA Member that (i)
is associated with a Health Plan and Administrator Partner or an
Employer Partner, in each case as of the end of the applicable
period; or (ii) has held a custodial balance at any point during
the previous twelve month period. |
Custodial cash
assets |
Deposits with our
federally-insured custodial depository partners and custodial cash
deposits invested in an annuity contract with our insurance company
partner. |
Custodial
investments |
HSA Members'
investments in mutual funds through our custodial investment fund
partner. |
Employer Partner |
Our employer
clients. |
Health Plan and
Administrator Partner |
Our Health Plan and
Administrator clients. |
Adjusted EBITDA |
Adjusted earnings
before interest, taxes, depreciation and amortization, stock-based
compensation expense, and other certain non-operating items. |
Non-GAAP net
income |
Calculated by adding
back to net income all non-cash stock-based compensation expense,
net of an estimated statutory tax rate, and the impact of excess
tax benefits due to the adoption of ASU 2016-09. |
Non-GAAP net income per
diluted share |
Calculated by dividing
non-GAAP net income by diluted weighted-average shares
outstanding. |
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